Five Things You Need to Know to Start Your Day: Americas

Traders brace for the US presidential debate, regulators slash capital requirements for Wall Street banks, and Apple loses a fight over a ta [View in browser]( [Bloomberg]( Traders brace for the US presidential debate, regulators slash capital requirements for Wall Street banks, and Apple loses a fight over a tax bill worth billions. Here’s what’s moving markets. — [Kristine Aquino]( Debate jitters [Signs of market angst are emerging ahead of the first US presidential debate]( Vice President Kamala Harris and former President Donald Trump on Tuesday evening. A measure of volatility for the dollar is near its highest mark since the March 2023 banking crisis. While US equity futures were little changed in the run-up to the event, the so-called fear gauge in stocks is once again on the upswing. “This debate could be pivotal to the momentum of both campaigns,” according to Kathleen Brooks, research director at foreign exchange broker XTB. “Although there are political shocks happening all over the world, the biggest risk is still the US election in November.” Capital hike [The biggest US banks would face a 9% increase in capital requirements]( under proposed revisions to the Biden administration’s signature plan for the sector, according to people familiar with the matter. That’s less than half the 19% hike in the original plan by the Federal Reserve and other regulators. Sharp reductions to the capital mandates are more likely to appease banks, and could help Fed Chair Jerome Powell meet his goal of drawing broad support from the central bank’s board. Fed Vice Chair for Supervision Michael Barr plans to preview the changes in a speech Tuesday. A representative for the Fed declined to comment. Apple tax [All eyes on Apple shares after the company lost its court fight over an Irish tax bill worth the equivalent of more than $14 billion](. The European Union’s Court of Justice backed a landmark 2016 decision that Ireland broke state-aid law by giving the iPhone maker an unfair advantage. The ruling comes a day after Apple unveiled the iPhone 16 — a phone built for artificial intelligence “from the ground up,” according to Chief Executive Officer Tim Cook,  Separately, [Google lost its challenge]( against the regulator over a once-record fine equivalent to $2.6 billion. The court backed a 2017 decision, which found the US tech giant illegally leveraged its search-engine dominance to give a higher ranking to its own product listings. Oil steadies [Brent crude steadied on Tuesday, trading below $72 a barrel, as Tropical Storm Francine menaced some supplies in the Gulf of Mexico]( On its expected track, Francine may rake nine major platforms. While the return of risk-on to markets buoyed prices on Monday, caution abounds. “Eyes have been on the risks of supplies disruption with Tropical Storm Francine, but apart from that, there just has not been much conviction for dip-buying,” said Yeap Jun Rong, a market stategist for IG Asia. China rout [China’s stock rout has deepened to $6.5 trillion, sending the nation’s benchmark index toward the lowest since January 2019](. The selling pressure is mounting as China’s property crisis drags down consumer spending, spurring a deflationary feedback loop. State-backed funds have unsuccessfully tried to prop up stock prices, heaping pressure on policymakers to halt the downward spiral. Yet Beijing has so far shown no appetite for the kind of big bang measures that helped revived the economy and stock markets in past cycles. “It’s been an amazingly bad period for markets — the problem is the economy is in a worse place than I thought six months ago,” Ron Temple, chief market strategist at Lazard Asset Management, said in an interview. What We’ve Been Reading This is what’s caught our eye over the past 24 hours. - [Goldman’s trading unit is on track to drop 10%]( from the prior year - Upstate New York will get a Siemens plant for[200-mile-per-hour trains]( - [AI-driven cloud expansion]( helps Oracle top profit estimates - A closer look at [US Supreme Court Justice Samuel Alito’s stock portfolio]( - American, Chinese military commanders [hold call on South China Sea]( - [Miami Dolphins’ Tyreek Hill criticizes police]( a day after he was detained - ‘Beetlejuice’ sequel [scores $111 million in its domestic debut]( And finally, here's what Joe’s interested in this morning A week from today, the Fed will begin its two-day meeting, at which it's widely expected to start a rate-cut cycle. There continues to be a very loud debate about whether they'll go 25 or 50 basis points, with the market leaning towards 25, while assigning a non-trivial chance of the other. From a strictly economic sense, the difference between 25 and 50 isn't that big. A 50-basis-point cut would be seen as kind of a line in the sand type of move, that the Fed is serious about not letting the labor market deteriorate further. 25 would be more in keeping with institutional inertia, that aggressive cuts are reserved for crises, which we're not in right now. Anyway, here's an interesting chart. It shows the Bloomberg Labor Surprise Index, which looks at how the totality of the labor market data is coming in relative to expectations. As you can see, we're basically near the lowest levels of the last two decades. In 2021 it got a hair worse. And it was lower in 2009 and 2006. But the big picture is that most data has been coming in solidly worse than expectations. So even though last Friday's unemployment showed a modest sequential improvement from the prior month, the overall story is one of ongoing softening. Joe Weisenthal co-hosts Bloomberg’s Odd Lots podcast. Follow him on X [@TheStalwart]( [Bloomberg Markets Wrap: The latest on what's moving global markets. Tap to read.]( Follow Us Stay updated by saving our new email address Our email address is changing, which means you’ll be receiving this newsletter from noreply@news.bloomberg.com. Here’s how to update your contacts to ensure you continue receiving it: - Gmail: Open an email from Bloomberg, click the three dots in the top right corner, select “Mark as important.” - Outlook: Right-click on Bloomberg’s email address and select “Add to Outlook Contacts.” - Apple Mail: Open the email, click on Bloomberg’s email address, and select “Add to Contacts” or “Add to VIPs.” - Yahoo Mail: Open an email from Bloomberg, hover over the email address, click “Add to Contacts.” Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. 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