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Uncertainty around U.S.-China relations was a dominant theme at the New York Times DealBook Summit Wednesday, as well as a potential conflict with Taiwan.

Driving the news: "I think the Chinese leadership at this juncture is overwhelmed by its internal challenges," Taiwan President Tsai Ing-wen told Andrew Ross Sorkin.

"My thought is that perhaps this is not a time for them to consider a major invasion of Taiwan ... [and because] the international community has made it loud and clear that war is not an option and peace and stability serves everybody's interests."

JPMorgan CEO Jamie Dimon commented earlier in the day that "no one thinks [an invasion] is going to happen," given the more dire consequences that China would suffer.

"I'm not afraid of China," he said during the summit's opening interview, noting its "complex" Asian neighbors and "terrible demographics," alluding to its aging and shrinking population.

The big picture: Foreign investment into China turned negative for the first time on record during the third quarter this year — a reflection of deteriorating economic prospects, Axios' Matt Phillips has written.

Multinationals, most notably Apple, have been steering more of their operations away from direct ties to China after the pandemic revealed the risks of supply chain concentration.

What to watch: As U.S. regulations are being built to prevent China from advancing its AI technologies, chip makers are eying more ways to pull manufacturing out of the country.

"We are somewhere between a decade or two decades away from supply chain independence," Nvidia CEO Jensen Huang said Wednesday. 

"Our systems [have] 35,000 parts ... supply chain independence is going to be really challenging ... [But] we should absolutely go down the journey of it."

Go deeper: What Biden-Xi meeting says about U.S. economic ties to China

What Biden-Xi meeting says about U.S. economic ties to China

China risks take center stage at DealBook summit

Uncertainty around U.S.-China relations, potential conflict with Taiwan, were dominant themes.

photo of a journalist, Andrew Ross Sorkin, and a woman, Taiwan's president Tsai Ing-wen, side by side in a virtual interview

Andrew Ross Sorkin and Taiwan President Tsai Ing-wen during The New York Times Dealbook Summit. Photo: Slaven Vlasic/Getty Images for The New York Times

China

Latest news on Wall Street, Corporate America and financial regulation.

Business

China is becoming the most formidable rival America has faced, and the risk of confrontation with Russia, North Korea or Iran still looms. Authoritarians are rising, the chaotic Afghanistan exit revealed the limits of U.S. power, and the pandemic, climate change and other critical challenges continue to pose grave threats.

World

The UAW is launching a campaign to organize 13 non-unionized automakers as it bids to extend its momentum from a strike against the Detroit Three manufacturers.

Why it matters: After securing record contracts with the Detroit Three automakers, UAW president Shawn Fain promised to organize other American automotive operations.

"When we return to the bargaining table in 2028, it won't just be with the Big Three but with the Big Five or Big Six," Fain said at the time.

Driving the news: The union announced Wednesday that it's targeting nearly 150,000 workers across 13 automakers: BMW, Honda, Hyundai, Lucid, Mazda, Mercedes, Nissan, Rivian, Subaru, Tesla, Toyota, Volkswagen and Volvo.

At Toyota, employees at multiple U.S. Toyota plants are coordinating efforts with the UAW to unionize their operations, Axios has learned.

Zoom in: Workers have formed a voluntary organizing committee at Toyota's plant in Georgetown, Kentucky, in partnership with the UAW, according to sources familiar with the efforts who spoke to Axios.

The committee — whose establishment is the first step in building support for a union — is in direct discussions with UAW officials as part of a broader attempt to organize Toyota operations throughout the country.

At Toyota's plant in Princeton, Indiana, "some Toyota Indiana employees met with UAW representatives at the Vanderburgh County fairgrounds to discuss the possibility of unionization," Evansville, Indiana TV station WEHT reported. 

Between the lines: Organizers are already collecting union authorization cards through a UAW-sanctioned website, where they're blasting corporate profits and executive compensation at non-unionized companies.

The other side: Soon after the UAW reached the last of three settlements with the Detroit Three in late October — deals that included an average of a 25% pay hike over the course of a 4.5 year contract — several companies announced pay increases for their workers, including Toyota, Honda and Hyundai.

Fain called it the "UAW bump," which he said stood for "u are welcome."

"Imagine what you could accomplish if you join the UAW and stand up and fight for yourselves," Fain said in a teaser video recently from the UAW.

By the numbers: As the world's largest automaker, Toyota has some 49,000 employees at nine factories in the U.S., including facilities in Kentucky, Mississippi, Tennessee, West Virginia and Indiana.

The crown jewel of the company's American footprint is the Georgetown, Kentucky factory, which has some 8,000 workers and is the largest Toyota assembly plant in the world.

"We've had a tremendous amount of calls coming in from Toyota" workers wanting to unionize, Tim Smith, director of UAW Region 8, recently told Axios. "The main thing that's going to help us is these record, historical contracts. Why wouldn't you want to organize?"

Reality check: The UAW, which declined to comment for this story, has tried to organize plants in the South before and failed on multiple occasions.

Its targets have includes operations at Tesla, Nissan, Volkswagen and, in the mid-2000s, Toyota itself.

Republican politicians and anti-labor laws in the South have been an obstacle — though experts have noted that some Republicans were more welcoming to the UAW during its recent strike. Sen. Josh Hawley (R-Mo.) and Sen. J.D. Vance (R-Ohio) were among the conservatives visiting UAW picket lines and voicing support for the workers.

"They're going to have to be prepared for tough fights, but I think it's a much greater possibility than there has been," Kate Bronfenbrenner, a professor at Cornell University's School of Industrial and Labor Relations, tells Axios.

The bottom line: The UAW is looking to parlay its recent momentum into wins on an even tougher playing field.

UAW launches organizing campaign at 13 non-unionized automakers

The union is launching the campaign to extend its momentum from a strike against the Detroit Three manufacturers.

Illustration of a fist holding a wrench. 

United Automobile Workers

Macro

Axios Macro

Investors and analysts are growing confident that the Fed will enter rate-cutting mode relatively soon — with many now betting on a policy pivot in the first half of 2024.

Why it matters: After months in which Fed officials have preached the importance of keeping rates higher for longer to ensure inflation is truly vanquished, market sentiment has abruptly turned in the other direction.

At their policy meeting in two weeks, Fed officials will need to decide whether to embrace the possibility of near-term rate cuts — or push back against an outlook that is rapidly becoming the consensus baseline.

Driving the news: The rate cuts narrative got a boost Tuesday in comments from Fed governor Christopher Waller, one of the central bank's leading monetary hawks.

Waller noted that standard monetary rules suggest if inflation continues trending down for several more months, and if "we feel confident that inflation is really down, and on its way ... you could then start lowering the policy rate just because inflation is lower."

In other words, if inflation returns to 2%, the Fed should ease to avoid throttling economic activity more than necessary. "If inflation goes down, you would lower the policy rate," Waller said at the American Enterprise Institute.

State of play: But rate-cut fever was settling in long before Waller's comments, fueled by benign readings on inflation and the labor market released since the start of November.

Futures markets now price in an easing by June, with a full percentage point of rate cuts by the end of 2024.

It has helped fuel a stunning rally in the bond market. The 10-year Treasury bond is yielding 4.27% Wednesday morning, after kissing 5% last month. November is on track to be the best month of returns on bonds since 1985, the Financial Times notes.

What they're saying: "I think there's a risk of a hard landing if the Fed doesn't start cutting rates pretty soon," hedge fund billionaire Bill Ackman said in an interview with private equity magnate David Rubenstein this week.

Yes, but: This pricing is at odds with how Fed officials themselves described their plans as recently as two months ago.

In the last formal projections issued in September, the consensus view implied only one rate cut in 2024 — presumably near the end of the year.

The pivot in market expectations since mid-October has been driven by a relative handful of economic data points, so it is an open question how much that will have persuaded the Fed to change its views.

The bottom line: Chair Jerome Powell and his colleagues face a big choice in two weeks — whether to ratify the view that near-term rate cuts are in play or push back against it.

The Fed rate cuts discussion heats up

After months of higher rates for longer Fed talk, market sentiment has turned in the other direction.

Illustration of graph showing stock arrowing upwards being cut by a hand holding scissors

Interest rates

Fresh data released Wednesday shows U.S. economic growth in the third quarter was even better than previously thought: Gross domestic product increased at a 5.2% annualized rate, the Commerce Department said.

Why it matters: The data, from the July to September period, is the latest indicator pointing to a booming economy that continues to defy gloomy warnings of a slowdown. 

By the numbers: The revision is a slight upgrade from the 4.9% annualized growth initially estimated. The data will be revised again in December.

The Q3 figure shows the economy recorded the fastest growth in nearly two years. In the prior quarter, GDP increased 2.1%. 

Between the lines: The update to the Q3 data reflects stronger spending on the part of corporations for structures, equipment and intellectual property. 

It also shows upgrades to state and local government spending. Imports, which act as a drag on the GDP figure, were also revised lower.

That was offset by a downward revision to consumer spending — which still increased at a rapid 3.6% annualized rate. 

The intrigue: The release also includes the first estimate of an alternate measure of economic growth: gross domestic income (GDI), which sums up all income across the economy.

By that measure, growth increased rapidly compared to the second quarter. In Q3, GDI increased 1.5%, a full percentage point above the prior quarter's reading. 

The bottom line: Economic growth is expected to slow from Q3's torrid pace. Still, the data shows that the U.S. economy remained solid.

U.S. economy was hotter than previously thought, new GDP data shows

New revisions show America's economy expanded by 5.2% last quarter.

President Biden at a "Bidenomics" event in Largo, Maryland, in September. Photo: Al Drago/Bloomberg via Getty Images

Gross domestic product (GDP)

Data: Morning Consult; Chart: Axios Visuals

Evidence is stacking up showing Americans are saving less and drawing down their existing savings cushions.

The latest: The share of adults who say they can cover six months of expenses using their savings is considerably lower than it was last year, according to polling from Morning Consult. 

And the share that simply doesn't know how long their savings will carry them has grown, to about 21%, from 15.5% in July 2022.

The big picture: The savings drawdown shows how consumption patterns are sticky — people want to maintain their lifestyles, even if it costs more and they have to dip into their savings, says Jesse Wheeler, senior economist at Morning Consult.

This spending has been buoying the economy — though it's unclear how long that'll last.

Between the lines: The rise in the cohort that doesn't know how long they can live off their savings is particularly notable, says Wheeler.

It shows that "people are feeling pretty uncertain about what lies ahead," — and that may be one reason that sentiment has remained so gloomy while the data shows the economy humming, he says.

Go deeper: Consumer sentiment drops this fall as Americans feel worse about the economy

Consumer sentiment drops this fall as Americans feel worse about the economy

Americans' savings are dwindling, new poll shows

Chart shows share of adults who say they can cover basic expenses using savings for at least six months.

Markets

Axios Markets

The dollar is down big this month, putting in its worst performance in a year.

Why it matters: The decline in the greenback — as measured by the U.S. dollar index — is a reflection of growing certainty in financial markets that the Federal Reserve has basically vanquished inflation and will start to cut short-term rates in 2024. 

The dollar index is down 3.6% through Nov. 28, the sharpest monthly slide since last November's 5% drop. 

How it works: The Fed sets monetary policy by moving short-term interest rates up and down. Those same short-term interest rates are also big drivers of currency values.

When central banks raise short-term interest rates, their country's currency tends to rise, all else equal. 

Flashback: That's what happened in 2022. As the Fed ramped up interest rates to counter inflation, the dollar — as measured by the U.S. dollar index — soared nearly 20%. 

State of play: But now inflation is down to nearly 3%, and Fed officials are sounding dovish (Tuesday it was Governor Christopher Waller), so expectations are growing that 2024 will bring rate cuts.

What they're saying: More weakness for the buck could still be yet to come, Bank of America analysts said in their recent 2024 currency outlook. 

"Our economists expect three Fed cuts next year, starting in June ... The bottom line is a soft landing in the US that allows the Fed to cut rates and helps bring the USD down from a still overvalued level," they wrote.  

Dollar on track for biggest monthly drop in a year

The decline is a sign that financial markets think the Fed will begin to reduce short-term rates in 2024.

U.S. Dollar Index

The Tesla Cybertruck is finally ready to hit the road, boasting a degree of unconventionality that's both its selling point and its Achilles' heel. 

Why it matters: The Cybertruck is the first brand-new Tesla model in three years — and it's the company's first-ever crack at the lucrative American pickup market.

State of play: Four years after showing off a concept version of the Cybertruck for the first time, Tesla is poised to showcase the launch of deliveries at an event Thursday at its factory in Austin, Texas.

CEO Elon Musk said last week on X that the company had already started shipping vehicles in North America.

The upper-tier trim level is expected to have a towing capacity of 14,000 pounds, go from 0 to 60 mph in 2.9 seconds, and provide up to 500 miles of battery range range, according to Wedbush Securities.

The intrigue: The vehicle's angular shape yields sharp corners, giving it a polarizing futuristic look that distinguishes the vehicle from more conventional pickups but that may also make it difficult to manufacture.

The Cybertruck body is also made of stainless steel, an unprecedented material for a passenger vehicle that "has proven challenging to bend and manipulate," sometimes creating "large gaps when installed," the Wall Street Journal reported.

Bloomberg reported that the vehicle is  "already a production nightmare." 

What they're saying: Musk has already acknowledged this.

"I do want to emphasize that there will be enormous challenges in reaching volume production with the Cybertruck and then in making the Cybertruck cash flow positive," Musk told investors in October.

But, he added, "demand is off the charts."

By the numbers: The Cybertruck marks Tesla's first attempt at the pickup category, which accounts for the three best-selling vehicles in the U.S. — but it's not expected to crack the upper echelon.

Evercore ISI analyst Chris McNally estimated 2024 sales at 78,000 units and 2025 sales at 165,000.

By comparison, Ford sold 653,957 units of the best-selling F-series pickup in 2022, down from 726,004 in 2021.

Be smart: The Cybertruck has already fallen short of expectations on multiple levels.

It's two years behind schedule, falling behind pickup competitors like the Rivian R1T, Ford F-150 Lightning and GMC Hummer EV.

It's expected to cost at least $10,000 more than initially targeted: While the starting price was once set to begin at $39,900, the actual figure is expected to be in the $50,000 range, according to Wedbush Securities analyst Dan Ives.

To be fair, inflation has driven up prices of all vehicles since Musk first unveiled the Cybertruck in 2019.

💭 Nathan's thought bubble: The Cybertruck's debut comes amid concerns about slowing EV momentum, but this vehicle is just about as unconventional as it gets — and early adopters are likely to be unfazed by market conditions.

What's more important to the company's future, however, is the long-awaited debut of a so-called Model 2 — an affordable model that, at this point, looks a long way off.

Go deeper: Car dealers tell Biden: Customers aren't ready for electric cars

Car dealers tell Biden: Customers aren't ready for electric cars

Tesla Cybertruck to debut Thursday amid production challenges

The Tesla Cybertruck is finally ready to hit the road, boasting a degree of unconventionality that's both its selling point and its Achilles' heel.

A pre-production version of the Tesla Cybertruck during a tour of the Elkhorn Battery Energy Storage System in Moss Landing, California, on June 6, 2022. Photo: Nic Coury/Bloomberg via Getty Images

Tesla

Elon Musk

Investment giant Charlie Munger, known as second-in-command to Warren Buffett at Berkshire Hathaway, has died. He was 99.

The big picture: Berkshire Hathaway, where Munger was vice chairman, said in a statement that "he peacefully died this morning at a California hospital."

"Berkshire Hathaway could not have been built to its present status without Charlie's inspiration, wisdom and participation," Buffett said in a statement.

Context: Munger grew up a few hundred feet from Buffett's family grocery store, where the Oracle of Omaha worked as a kid. 

But the two didn't meet until 1959, introduced by a doctor, by which point Munger had decamped to Los Angeles.

Buffett often credited Munger with keeping him grounded.

"If you've attended our annual meetings, you know Charlie has a wide-ranging brilliance, a prodigious memory and some firm opinions," Buffett said in a 2014 letter to shareholders.

"I'm not exactly wishy-washy myself, and we sometimes don't agree," Buffett added. "In 56 years, however, we've never had an argument."

Zoom in: Munger had a passion for architecture, a hatred of cryptocurrency and a love of capitalism.

He made his first fortune designing and building apartments near LA. More recently, he designed dorms for his alma maters, Stanford University and the University of Michigan.

"Charlie's most important architectural feat was the design of today's Berkshire. The blueprint he gave me was simple: Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices," Buffett wrote.

A one-time lawyer, Munger stopped practicing law in 1965, according to CNN, and became a close adviser to Buffett. 

Together, they grew Berkshire into an investment behemoth, its stock having gained 20% annually from 1965 through 2021, according to Bloomberg.

Of note: In his later years, Munger often told interviewers about the dangers of envy, preaching the wisdom of contentment.

"The world is not driven by greed. It's driven by envy," Munger said in 2022, according to CNBC.

"I have conquered envy in my own life. I don't envy anybody," he added. "I don't give a damn what someone else has. But other people are driven crazy by it."

This story has been updated with more details throughout.

Berkshire Hathaway adviser Charlie Munger dies at 99

"Berkshire Hathaway could not have been built to its present status without Charlie's inspiration, wisdom and participation."

Berkshire Hathaway vice chair Charlie Munger attends the annual Berkshire shareholders meeting in Omaha, Nebraska, on May 3, 2019. Photo: JOHANNES EISELE/AFP via Getty Images

Berkshire Hathaway

Two top Federal Reserve officials have intriguing speeches out Tuesday morning. One expresses optimism about how the economy is evolving while the other is much more cautious.

Driving the news: Fed governor Christopher Waller is feeling good about growth, made apparent by the title of his talk Tuesday morning: "Something Appears to Be Giving."

That's a contrast from his last policy speech just over a month ago called "Something's Got to Give." At the time, he cautioned booming economic growth alongside moderating inflation could not continue.

What they're saying: "I am encouraged by what we have learned in the past few weeks—something appears to be giving, and it's the pace of the economy," Waller said at the American Enterprise Institute.

"All in all, it seems like output growth is moderating as I had hoped it would, supporting continued progress on inflation."

The other side: Fed governor Michelle Bowman was a bit more cautious, flagging a slew of risks that could keep price pressures elevated.

"My baseline economic outlook continues to expect that we will need to increase the federal funds rate further to keep policy sufficiently restrictive to bring inflation down to our 2 percent target in a timely way," Bowman said at a banker's breakfast in Salt Lake City.

Waller said he was "increasingly confident" that policy was "well-positioned to slow the economy and get inflation back to 2 percent."

The intrigue: In a subsequent Q&A, Waller said that rate cuts could be possible as inflation continues to drift lower.

If progress on inflation continues for "several more months," he said, "you could then start lowering the policy rate just because inflation is lower."

On the economy, a tale of two Fed officials

One expresses optimism about how the economy is evolving while the other is much more cautious.

Federal Reserve governor Christopher Waller (L) speaking in New York in 2021, and Fed governor Michelle Bowman speaking in Washington, D.C., in 2022. Photos: Bess Adler/Bloomberg and Al Drago/Bloomberg via Getty Images

Millions of Americans are doing casual work while not counting as employed for the purposes of the government's official statistics, based on new research that sheds light on the true prevalence of informal gig work.

Why it matters: If more Americans are open to working than is implied by traditional economic data, the job market may be less tight than it seems — with more people open to opportunities for higher-paying, more stable work.

The details: The share of adults who are counted as employed would be higher by up to 5.1 percentage points (using generous estimates) if the people doing causal gig work properly reported doing so in the Current Population Survey, on which the jobless rate is based.

That's from a paper by Anat Bracha of Hebrew University Business School and Mary A. Burke of the Federal Reserve Bank of Bost0n, presented earlier this month at a conference.

Using more conservative estimates, the employment-to-population ratio would have been 0.25 to 1.1 percentage point higher from 2015 to 2022.

State of play: Uncounted gig workers are disproportionately older, more likely to be disabled and less likely to be doing casual work as a primary source of income. 

Imagine, for example, a retiree who babysits a neighbor's child a few hours a week in exchange for cash.

When the CPS asks whether they have worked in the preceding two weeks, they may answer "no," not thinking of their casual gig as a job.

Yes, but: Bracha and Burke took a novel approach to probing just how many of the people who say they aren't working in that survey actually are not.

Using a separate survey, the New York Fed's Survey of Consumer Expectations, they first ask the same questions as the CPS to identify people who would be classified as either unemployed or out of the labor force in the official statistics.

They then asked those people about specific paid activities they may have undertaken — house cleaning, driving for Uber and so on.

Those answers revealed uncounted Americans who are earning money in exchange for work but do not answer as such when first asked.

What they're saying: "There are reasons for thinking about gig work differently with respect to labor market slack," Bracha and Burke write, "because it points to a hidden labor supply that could be tapped by traditional employers."

"Many gig workers in our survey reveal a preference to work additional hours on top of either a part-time or even a full-time job, and often for very low pay," they write.

The bottom line: The uncounted gig workers may be an untapped source of new labor supply, as their side-jobs indicate some desire to earn more money.

America's gig workers are hiding in plain sight

The job market may be less tight than it seems, with more people open to opportunities for higher-paying work.

Economy

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