STOCK MARKET NEWS: IMF’s recession warning, stocks volatile, Uber, Lyft and Biden’s gig rule

El Pollo Loco is higher in after hours trading. The nation’s leading fire-grilled chicken restaurant chain declared a special dividend of $1.50 per share and a program to buy back up to $20 million shares.

The special dividend is payable on November 9, 2022 to shareholders of record at the close of business on October 24, 2022.

The repurchase program will terminate on March 28, 2024, may be suspended or discontinued at any time and does not obligate the Company to acquire any particular number of shares.

El Pollo Loco is down 37% year to date.

Plant Vogtle Unit 3 AP1000 plant near Waynesboro, Ga. (Photo: Georgia Power)

Brookfield Business Partners has agreed to sell Westinghouse Electric Company to Cameco Corporation and Brookfield Renewable Partners for a total enterprise value of $8 billion.

Brookfield Renewable, with its institutional partners, will own a 51% interest in Westinghouse and Cameco will own 49%.

Westinghouse has four key business lines:

• Operating Plant Services

• Nuclear Fuel

• Energy Systems

• Environmental Services

The transaction is expected to close in the second half of 2023.

Westinghouse Electric Company is the world's leading supplier of safe, innovative nuclear technology and is shaping the future of carbon-free energy.

TECHNOLOGY

Crypto exchange Bittrex to pay $29M over sanction violations

The Treasury Department said crypto exchange Bittrex Inc. was fined more than $24 million on Tuesday over apparent violations of multiple sanctions programs.

Bittrex agreed to remit $24 million to the Office of Foreign Assets Control settle its potential civil liability for 116,421 apparent violations of multiple sanctions programs, the Treasury Department said.

OFAC said the cryptocurrency exchange failed to prevent persons apparently located in the Crimea region of Ukraine, Cuba, Iran, Sudan, and Syria from using its platform to engage in approximately $263 million worth of virtual currency-related transactions between March 2014 and December 2017.

Bittrex has agreed to remit $29 million for its willful violations of the Bank Secrecy Act. An investigation by the Financial Crimes Enforcement Network found that, from February 2014 through December 2018, Bittrex failed to maintain an effective anti-money laundering program (AML).

FinCEN will credit the payment of $24 million as part of Bittrex’s agreement to settle its potential liability with OFAC.

“For years, Bittrex’s AML program and [suspicious account reporting] failures unnecessarily exposed the U.S. financial system to threat actors,” said FinCEN Acting Director Himamauli Das. “Bittrex’s failures created exposure to high-risk counterparties including sanctioned jurisdictions, darknet markets, and ransomware attackers.”

ECONOMY

Major rail union rejects deal: What’s next?

Workers in a major rail union have voted against a deal with the nation's railroads, renewing the chances of a strike following the midterm elections.

Members of a major railroad union have rejected a tentative nationwide deal, raising the possibility of a nationwide strike.

The Brotherhoold of Maintenance of Way Employes Division off the International Brotherhood of Teamsters voted against ratification by a vote of 6,646 (56%) against to 5,100 (43%) in favor.

"BMWED members are concerned with the direction of their employers and the mismanagement and greed in which they have consistently implemented, and are united in their resolve to improve their working conditions across the entire Class I rail network,” said union president Tony Cardwell.

POLITICS

Uber, Lyft and DoorDash react to Biden's gig worker rule

Uber, Lyft and DoorDash reacted Tuesday to the Department of Labor's proposed rule about classifying workers as employees versus independent contractors.

Uber, Lyft and DoorDash fell Tuesday after the Department of Labor announced a proposed rule to change way employees and independent workers are classified.

The rule seeks to combat employee misclassification.

“While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation’s most vulnerable workers,” said Secretary of Labor Marty Walsh. “Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages.”

Dust and debris blasted from the surface of the asteroid Dimorphos by NASA’s DART spacecraft (CTIO/NOIRLab/SOAR/NSF/AURA/T. Kareta (Lowell Observatory), M. Knight (US Naval Academy) (when it impacted on 26 September 2022.

NASA has confirmed that DART changed the orbit of Dimorphos. The successful test marks humanity's first time purposely changing the motion of a celestial object and the first full-scale demonstration of asteroid deflection technology.

Prior to DART's impact, it took Dimorphos 11 hours and 55 minutes to orbit its larger parent asteroid, Didymos. Since the intentional collision, Dimorphos' orbit was 11 hours and 23 minutes.

Neither Dimorphos nor Didymos poses any hazard to Earth before or after DART's controlled collision with Dimorphos.

Credit Suisse headquarters in Zurich, Switzerland October 4, 2022. (Reuters/Arnd Wiegmann)

The U.S. Justice Department is investigating whether Credit Suisse continued helping U.S. clients hide assets from authorities, eight years after the Swiss bank paid a $2.6-billion tax evasion settlement, Bloomberg News reported on Tuesday.

Investigators are examining whether the bank aided U.S. account holders, particularly those with South American passports, who may not have told the Internal revenue Service about assets worth hundreds of millions of dollars, the report said, citing people familiar with the matter.

The investigation adds to the embattled bank's woes.

"Credit Suisse does not tolerate tax evasion," the bank told Reuters in a statement on Tuesday. It also added that it is "cooperating extensively with U.S. authorities, including the U.S. Senate and Department of Justice."

A spokesperson for the Justice Department did not immediately respond to a Reuters request for comment.

BUSINESS-LEADERS

Peloton co-founder John Foley faced Goldman Sachs margin calls as stock sank: WSJ

Foley pledged about 3.5 million Peloton shares as collateral as of the end of September 2021, or about 20% of his stake at the time, according to the Wall Street Journal.

Peloton Interactive co-founder and former CEO John Foley was hit with multiple margin calls from Goldman Sachs as shares of the exercise equipment and media company plunged, according to The Wall Street Journal. 

Foley had borrowed money against his company stock prior to leaving the board and Goldman wanted additional capital or collateral to offset the declining value of Foley's falling Peloton shares.

The Journal reported that Foley pledged roughly 20% of his stake as collateral, totaling about 3.5 million shares, as of the end of September 2021. At the time the stock was worth more than $300 million. Those same shares are worth $30 million at current prices.

Peloton directors or executives can pledge no more than 40% of their shares or vested options toward margin loans, according to company policy.

Leggett & Platt fell more than 12% in Tuesday training before recovering some losses. The maker of beds, mattresses, furniture and automotive components lowered full year guidance.

The company now sees full year sales of $5.1 to $5.2 billion, down from $5.2–$5.4 billion due primarily to lower than previously expected volume.

Earnings per share is not seen at $2.20 to $2.45 versus $2.65 to $2.80.“Demand in the U.S. bedding market is fairly stable but remains at relatively weak levels as industry headwinds persist, including inflationary and monetary policy impacts on consumer spending and consumer sentiment as well as higher inventory levels,” said CEO Mitch Dolloff. “Given the bedding demand environment and slowing market for steel generally, we are cutting production in our Rod and Wire businesses to reduce inventory.”

MARKETS

Honda announces new $4.4B Ohio battery plant

Honda Motor Co. and LG Energy Solution announced on Tuesday that the two companies will build a new $4.4 billion battery plant in Fayette County, Ohio.

Honda Motor Co. and LG Energy Solution on Tuesday announced that a new electric vehicle battery production plant will be built in Ohio.

The companies will invest $3.5 billion and create 2,200 jobs, pending final government approvals. The overall investment by the joint venture is projected to reach $4.4 billion.

The plant will be located in Fayette County, Ohio, about 40 miles south of Columbus.

Walgreens store in Manhattan, New York City, Nov. 26, 2021. (Reuters/Andrew Kelly)

Walgreens Boots Alliance is paying $392 million to acquire full ownership of CareCentrix.

CareCentrix is an industry leader in the $75 billion post-acute and home care industry, providing care coordination and outsourced benefit management services.

WBA’s full acquisition of CareCentrix follows WBA’s 55% majority investment in the company, which closed on August 31.

The full acquisition is subject to limited customary closing conditions and is expected to close by March 2023.

The company operates stores under the Walgreens, Boots, Duane Reade, the No7 Beauty Company, Benavides in Mexico and Ahumada brands in Chile.

Walgreens reports quarter earnings on October 13.

Angi Homeservice fell as much as 10% in Tuesday trading. The website that connects customers with home improvement pros announced a chief executive transition.

Oisin Hanrahan stepped down. He’s being replaced by Joey Levin, CEO of IAC and chair of Angi.

Hanrahan joined Angi from Handy Technologies, which he co-founded. Angi acquired Handy in 2018. He was chief product officer until he was promoted to CEO in February 2021.

Customers in department store in the Manhattan borough of New York City, Nov. 26, 2021. (Reuters/Jeenah Moon)

ECONOMY

Americans' inflation expectations dropped again in September, New York Fed says

The New York Federal Reserve released a closely watched survey on Tuesday revealing that Americans' inflation expectations dropped in the short-term again.

Americans expect lower inflation in the short-term, but higher prices in the medium and longer terms, according to a survey by the Federal Reserve Bank of New York.

The survey found one-year-ahead inflation expectations continued to decline in September, falling by 0.3 percentage point to 5.4%, its lowest reading since September 2021.In contrast, Americans expect 2.9% inflation looking three years ahead, up from an expectation of 2.8% in August.

Looking out five years, respondents’ inflation expectations increased by 0.2 percentage point to 2.2%.

American Airlines Boeing 737 (Photo: American Airlines)

American Airlines is raising its third quarter guidance ahead of reporting third quarter quarterly financial results.

The world’s largest airline estimates Q3 revenue rose by 13% to $13.46 billion compared to the same quarter in 2019, up from its previous forecast of +10% to 12%.

Total revenue per seat miles probably increased 25%, higher than the previously forecast 20% to 24%.

Pre-tax income excluding a $20 million special credit is expected to be $606 million.

The company expects its cost of fuel to be between $3.73 and $3.78 per gallon of jet fuel (including taxes) and to have consumed 1,031 million gallons during the third quarter of 2022. The price is unchanged from previous guidance issued in July.

American reports third quarter financial results on October 20.

London bus travels past the Bank of England in London, Oct. 10, 2022. (Reuters/Hannah McKay)

The Bank of England is expanding its temporary bond buying program to include purchases of index-linked gilts. This enhancement will be in effect from Tuesday until Friday alongside the Bank’s existing daily conventional gilt purchase auctions.

“The Bank continues to monitor developments in financial markets very closely in light of the significant asset repricing of recent weeks,” England’s central bank said.

Russ Mould, investment director at AJ Bell, said the move will only serve to worry investors more. “It’s another red day for markets. There are few reasons for investors to regain optimism at present, as we continue to see stocks slide amid a backdrop of doom and gloom,” Mould said.

The FTSE 100 fell as much as 1.4% as of mid-afternoon in the U.K.

Amazon is front loading holiday spending with special deals starting today prompting others including Target and Walmart to jump in the game. The move, say experts, may signal retailers are bracing for what may be a tougher holiday due to inflationary pressures.

ECONOMY

Amazon’s Prime Day II signals holiday spending hurdles

Major retailers like Amazon, Walmart and Target are offering earlier holiday deals this year as they extend the shopping season amid rising inflation.

Bitcoin, Ethereum and Dogecoin were all lower overnight. (Getty Images)

Cryptocurrency prices for Bitcoin, Ethereum and Dogecoin were all lower early Tuesday. 

At approximately 5 a.m. ET, Bitcoin was trading at $19,100 (-0.21%), or lower by $40. 

For the week, Bitcoin was trading lower by nearly 2.4%. For the month, the cryptocurrency was lower by nearly 12%. 

Ethereum was trading at approximately $1,285 (-0.5%), or lower by more than $6.4. 

For the week, Ethereum was trading lower by more than 2.5%. For the month, it was trading lower by approximately 25.25%.

Dogecoin was trading at $0.059246 (-0.51%), or lower by approximately $0.000303.  For the week, Dogecoin was lower by nearly 1.5%. For the month, the crypto was lower by nearly 8%.

Gas and diesel prices were both higher early Tuesday morning. (gasprices.aaa.com)

Gasoline prices nationwide edged slightly higher early Tuesday morning, reaching $3.923. The price on Monday was $3.919. The price Sunday was $3.91. 

Gasoline prices had dropped for several weeks after reaching an all-time high of $5.016 on June 14, approximately 17 weeks ago, before starting to rise once again almost two weeks ago. 

One week ago, the average price of a gallon of gasoline nationwide was $3.805. One month ago, that same gallon of gasoline cost $3.718. On year ago, a gallon of gasoline cost $3.274. 

Diesel prices nationwide Tuesday morning shot up to $5.122. On Monday, a gallon of diesel sold nationwide for $5.064, while on Sunday morning a gallon of diesel on Sunday cost $5.03. 

One week ago, a gallon of diesel cost $4.863.One month ago, a gallon of diesel cost $5.013. One year ago, a gallon of diesel cost $3.466.

Fed Vice Chair Lael Brainard reiterated the central bank's plan to keep raising rates until definitive signs appear the recession is on the downturn. (Getty Images)

Federal Reserve Vice Chair Lael Brainard on Monday reiterated the U.S. central bank's plan to continue tightening monetary policy until there is clear evidence that inflation has slowed down, warning the U.S. economy will likely slow further as a result of elevated interest rates. 

"Monetary policy will be restrictive for some time to ensure that inflation moves back to target over time," Brainard said. "It will take time for the cumulative effect of tighter monetary policy to work through the economy and to bring inflation down." 

The Fed has already raised interest rates five times this year as it tries to wrestle inflation that is still running near a 40-year high back to its 2% target goal. 

In its latest move, the Fed approved a third consecutive 75-basis-point rate hike, lifting the federal funds rate to a range of 3% to 3.25% – near restrictive levels. It also indicated that more super-sized increases are likely in the coming months. 

Brainard – the Fed's No. 2 and a permanent voting member of the Federal Open Market Committee – said during prepared remarks delivered before the National Association for Business Economics in Chicago that the economy is likely to cool over the next year as rates remain elevated. 

"The moderation in demand due to monetary-policy tightening is only partly realized so far," she said. The economy has already cooled significantly in the U.S., with gross domestic product – the broadest measure of goods and services produced in a nation – contracting by 1.6% in the winter and 0.6% in the spring. 

Brainard noted that Americans' savings have also dwindled faster than the Fed anticipated, suggesting there could be a pullback in spending soon. 

There is a growing expectation on Wall Street that the Federal Reserve will trigger an economic downturn as it raises interest rates at the fastest pace in three decades to catch up with runaway inflation. 

Fed Chair Jerome Powell has all but conceded the central bank will tip the economy into a recession with its rapid rate hikes, warning that higher rates will cause economic "pain."

US stocks whipsawed early Tuesday morning as investors continue to show concern about what the Fed will do next. (Associated Press)

U.S. stocks whipsawed early Tuesday morning as investors voice concerns about the Federal Reserve tightening rates and making borrowing more difficult.

Stocks fell Monday, continuing a stretch of volatility as concerns about Federal Reserve tightening, escalation in the Ukraine war, and China-trade policy shake markets. 

The S&P 500 turned lower after opening with slight gains, shedding 27.27 points, or 0.7%, to close at 3612.39. The Dow Jones Industrial Average edged down 93.91 points, or 0.3%, to 29202.88 while the Nasdaq Composite fell 110.30 points, or 1%, to 10542.10. That's the lowest closing value for the tech-heavy Nasdaq since July 2020, according to Dow Jones Market Data.

Shares of chip-manufacturers suffered losses stemming from the Biden administration's new restrictions imposed on semiconductor exports, aimed at hampering China's military.

The PHLX Semiconductor Sector dropped 3.5% on Monday to its lowest closing level since November 2020. Those losses also helped drag down stocks for businesses that are major chip users.

"The new restrictions placed on selling semiconductors to China are big reason why we are seeing the downtrend in those stocks," said Randy Frederick, managing director of trading and derivatives at Schwab Center for Financial Research.

Technology stocks represent about one-fourth of the S&P 500, noted Mr. Frederick. Chip maker Qualcomm sank $6.31, or 5.2%, to $114.60 on Monday while Broadcom fell $22.78, or 5%, to $437.70. Technology was the worst performer among the S&P 500's 11 sectors, down 1.6%.

Shifting expectations about more interest-rate increases from the Fed have been the primary driver of recent stock-swings.

Friday's jobs report showed the labor market is still tight as the unemployment rate fell back to a half-century low, exacerbating concerns that the Fed could tighten financial conditions more aggressively.

Hopes for a "Fed pivot" -- in which the central bank would pause interest-rate increases and jolt stocks higher -- have largely been dashed.

Traders now expect the benchmark federal-funds rate to touch 4.7% by the second quarter of 2023, according to FactSet derivatives data, more aggressive than the Fed's own forecasts.

"Inflation is still high and the labor market is red hot -- there's nothing to suggest the Fed will be dovish or pivot for at least several months," said Michael Antonelli, market strategist at Baird. Investors are looking ahead to the next U.S. inflation data release Thursday as another important indicator for where monetary policy might be headed.

"There's still that hangover in markets. The U.S. labor market is still incredibly strong and the Fed has a single mandate right now: inflation, " said Fahad Kamal, chief investment officer at Kleinwort Hambros. "The most important number in the world right now" is the coming inflation figure, he said.

Meanwhile, Asian shares were mostly lower on Tuesday as losses in technology-related shares weighed on global benchmarks. 

Taiwan dropped 4.4% after reopening from a holiday in the first trading session since the U.S. imposed new limits on exports of semiconductors and chip-making equipment to China. TMSC, the world’s biggest chipmaker, plunged 8.3%. 

Japan's Nikkei 225 declined 2.6% to 26,401.25. South Korea's Kospi lost 1.8% to 2,192.07. Both markets also were reopening after holidays on Monday. Hong Kong's Hang Seng dropped 2.2% to 16,830.73. The Shanghai Composite gained 0.2% to 2,979.79, while Australia’s S&P/ASX 200 lost 0.3% to 6,645.00. 

“Japan and South Korean markets are catching up to previous global market losses, with their exposure to the tech sector spurring a greater extent of the sell-off as mirrored in Wall Street,” Yeap Jun Rong, a market strategist at IG in Singapore, said in a report. 

In a bit of encouraging news, Japan reopened to generally unrestricted tourism on Tuesday after more than two years of COVID-19 restrictions. Pent-up travel spending could help lift the world's third largest economy as it grapples with slowing global growth and inflation.

Oil prices fell for the second consecutive day early Tuesday after falling 2% on Monday. (Getty Images)

Oil prices slid on Tuesday , extending losses of nearly 2% in the previous session, as a stronger U.S. dollar and a flare-up in COVID-19 cases in China raised concerns of slowing global demand. 

Brent crude futures fell 21 cents, or 0.2%, to $95.98 a barrel by 0618 GMT, after falling $1.73 in the previous session. 

U.S. West Texas Intermediate crude was at $90.82 a barrel, down 31 cents, or 0.3%, after losing $1.51 in the previous session.

The dollar hit multi-year highs on Tuesday, with worries about rising interest rates and geopolitical tensions unsettling investors. A strong greenback reduces demand for oil by making it more expensive for buyers using other currencies. 

Rate increases to date were starting to slow the economy and the full brunt of tighter policy would not be felt for months to come, Fed Vice Chair Lael Brainard said on Monday. 

"Strong jobs data has strengthened expectations of another 75 basis points rate hike at next month's Fed meeting, leaving downside risk for global oil demand," said ANZ Research analysts in a note. 

The sustained zero COVID-19 policy in China ahead of the Communist Party Congress is "not helping" demand, the analysts added. 

COVID-19 cases in the world's second-largest oil consumer rose to their highest since August. Its services activity in September contracted for the first time in four months, as pandemic restrictions weighed. 

Capping losses, the Organization of the Petroleum Exporting Countries and allies including Russia, together known as OPEC+, decided last week to lower their output target by 2 million barrels per day, further raising concerns about tightening oil supplies. 

"More critical is the bullish signal OPEC+ sends here by responding to short-term market dynamics and trying to stabilise or raise prices despite the medium view that demand growth will outpace supply growth for the remainder of the year," said Stephen Innes, managing partner at SPI Asset Management. "We are back on the teeter-totter trying to weigh this week's economic demand malaise versus tight market," Innes added.

EU sanctions on Russian crude and oil products will take effect in December and February, respectively, while the bloc last week gave its final approval for a new batch of sanctions against Russia including a price cap on Russian oil exports. 

On Friday, Russia issued a decree allowing it to seize Exxon Mobil's 30% stake and gave a Russian state-run company the authority to decide whether foreign shareholders including India's ONGC Videsh can retain their participation in the project.