TUE, JUL 25, 2023

MORNING SQUAWK

1. 11th heaven

The streak lives. The Dow notched its eleventh consecutive positive session Monday, leaving it at its highest close since February 2022. But while the good times are rolling on Wall Street, this week promises multiple variables that could derail things. More earnings are on the slate, including tech giants Alphabet and Microsoft after the market closes Tuesday. Also Tuesday, the Federal Reserve begins its July policy-setting meeting. The central bank is expected to raise its benchmark interest rate again after taking a pause in June. What Chairman Jerome Powell says about the Fed’s next steps, however, is where the market’s focus will be – especially as the economy looks like it’s headed for a soft landing, after all. Follow live market updates.

2. GM raises outlook, cuts more costs

General Motors on Tuesday boosted its 2023 outlook for a second time, as it reported strong second quarter results. But the guidance came with a caveat. “This is the second time we’ve raised guidance this year and it assumes that we successfully negotiate new labor agreements without a work stoppage,” CEO Mary Barra said in a letter to shareholders, referring to the recently started negotiations between the United Auto Workers union and Detroit automakers. GM also said it slash even more costs – $3 billion vs a previous target of $2 billion – through next year. The company reported $44.75 billion in second quarter revenue, a 25% increase from a year earlier.

3. China's new normal

It’s starting to sink in that China’s economic growth isn’t going to be what it once was, or what the nation’s government wants it to be. Policmakers unveiled enhanced measures to help the country’s property sector and increase consumption. The new moves came after Beijing announced Monday that China’s GDP grew 6.3% year-over-year in the second quarter, well below the expected rate of 7.3%. Still, the Chinese government was otherwise short on details about what it would do next. “The absence of any major announcements or policy specifics does suggest a lack of urgency or that policymakers are struggling to come up with suitable measures to shore up growth,” Julian Evans-Pritchard, head of China economics at Capital Economics, wrote in a note. “Either way, it’s not particularly reassuring for the near-term outlook.”

4. IRS ends surprise visits

Agents with the Internal Revenue Service will no longer make surprise visits to households and businesses in attempts to recoup lost tax revenue. The decadeslong practice, which enabled officers to show up at residences and places of business with a median tax debt of $110,000, came under fire in recent years, with IRS agents encountering increasing amounts of threats and hostility. “We have the tools we need to successfully collect revenue without adding stress with unannounced visits,” said IRS Commissioner Danny Werfel, who’s overseeing a broader reorganization of the agency.

5. Back at the table

UPS and the Teamsters union, which represents 340,000 employees at the delivery giant, kicked off last-ditch talks Tuesday to prevent a strike next week. The union is seeking higher wages for its members after securing agreements on air conditioning in delivery trucks and other matters. The union’s contract expires at the end of the day July 31, and a strike would start the next day if there’s no deal. The stakes are high. Even a brief strike could cost the economy billions of dollars.

— CNBC’s Mike Calia wrote this newsletter. Hakyung Kim, Michael Wayland, Elliot Smith and Kate Dore contributed.

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