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With lawmakers still debating over spending bills and foreign aid, President Joe Biden will meet the top four Congress leaders in the White House today to push them to break the deadlock and avoid a partial shutdown on Friday. The leaders are House Speaker Mike Johnson, Senate Majority Leader Chuck Schumer, House Minority Leader Hakeem Jeffries, and Senate Minority Leader Mitch McConnell.

More aid: Biden also plans to press for the Senate-passed foreign aid package, which includes aid for Ukraine and Israel, as well as humanitarian assistance in Gaza. Johnson has refused to bring the bill up for vote in the GOP-controlled House unless Democrats agree to border restrictions. "While we hoped to have legislation ready this weekend, it is clear now that House Republicans need more time to sort themselves out," said Schumer. Johnson responded: "House Republicans will continue to work in good faith and hope to reach an outcome as soon as possible."

What's at stake: Lawmakers have been trying to hammer out the details of 12 funding bills totaling $1.6T, resorting to temporary extensions since Sept. 30 to avoid a shutdown. Funding for the Transportation Department and some other agencies will expire on March 1, while the rest - including the Pentagon - will expire on March 8. Federal employees and military service members will be furloughed if the additional funding isn't approved, and economic data releases will be delayed. Moody's previously warned that a shutdown would be credit negative for the U.S.

SA analysis: "Washington has a long history of 'kicking the can' to avoid doing its job of governing," Investing Group Leader Lance Roberts previously noted. "The problem with using 'Continuing Resolutions' is that it uses the previous spending levels and increases that spending by 8%. Such is why, since 2008, the debt has exploded as spending is compounding annually."

AI glitch

Alphabet (GOOGGOOGL) fell more than 4% on Monday as Google's AI-powered face generator won't return for a couple of weeks. "We hope to have that back online in a very short order," said Demis Hassabis, head of Google DeepMind. "This is one of the nuances that comes with advanced AI." Google paused image generation of people from its Gemini model last week amid criticism over how it handled race, including the AI tool's refusal to depict white people. "The bigger issue is the cause of these output errors," said SA analyst A.J. Button. "Google appears to be playing it so 'safe' with its AI rollout, that the 'safety' features are producing results that aren't what users intended." (158 comments)

Surge pricing

In a first for the fast-food industry, Wendy's (WEN) is planning to test surge pricing next year, like Uber (UBER) and Lyft (LYFT). This means menu items would be more expensive during peak hours, with prices updated in real time depending on demand at no extra cost to the restaurant operator. Wendy's plans to invest around $20M to roll out digital menu boards by the end of 2025. While dynamic pricing is the standard in the airline industry and ridesharing sector, there are some concerns that Wendy's could face consumer backlash for the initiative. "If people feel like they're getting gouged, they're not going to take kindly to this pricing strategy," warned George Washington University Professor Steven Suranovic. (83 comments)

CRE risk

It looks like JPMorgan (JPM) CEO Jamie Dimon is not too worried about commercial real estate, saying the sector's issues will only worsen if there is a recession. "If we don't have a recession, I think most people will be able to muddle through this, refinance, put more equity in," he said, adding that a lot of property owners can handle the current level of stress. Dimon noted that offices are worth less only because of higher interest rates, and mounting defaults are part of the "normalization process." He also said markets are pricing in 70%-80% odds of a soft landing. "I give it half that. We may have one, but there's also a higher chance than the market thinks of rates being a little bit higher." (4 comments)

Today's Markets

In Asia, Japan flat. Hong Kong +0.9%. China +1.3%. India +0.4%.
In Europe, at midday, London flat. Paris +0.1%. Frankfurt +0.4%.
Futures at 7:00, Dow flat. S&P +0.1%. Nasdaq +0.1%. Crude -0.5% to $77.23. Gold +0.4% to $2,047.60. Bitcoin +10.7% to $56,587.
Ten-year Treasury Yield -3 bps to 4.27%.

Today's Economic Calendar

8:30 Durable Goods
9:00 S&P CoreLogic Case-Shiller Home Price Index
9:00 FHFA House Price Index
10:00 Consumer Confidence
10:00 Richmond Fed Mfg. Index
1:00 PM Results of $42B, 7-Year Note Auction
1:00 PM Money Supply

Companies reporting earnings today »

What else is happening...

WSB survey results: Cash is not king, investors want to go all in.

Biden administration to seek bids for 3M crude barrels to refill SPR.

FTC sues to block Kroger's (KRplanned acquisition of Albertsons.

Unity Software (U) slumps as guidance widely misses estimates.

Exxon to weigh pre-emption rights to Hess (HES) Guyana oil stake.

Whirlpool (WHR) to cut more debt as rates to stay higher for longer.

Broadcom (AVGO) halts $1B Carbon Black sale amid weak interest.

Alibaba (BABA) leads record $1B funding round for Chinese AI firm.

Palo Alto Networks (PANW) surges as Pelosi discloses purchase.

Author Larry McDonald publishes long-term high conviction list


Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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