Shrinking pains

MARKETS

• Trump vs. the Fed: The drama continued on Friday, when the president attacked the Fed's interest rate hikes on Twitter. Treasury Secretary Mnuchin assured the public that Trump supports the Fed's independence.
• The G20: Where were the world's leading finance ministers this weekend, you ask? At the G20 meeting in Argentina. The U.S. floated free trade deals, but France wasn't having it.

AUTO

A Quick Change at the Top for Fiat Chrysler

The auto industry changed forever on Saturday. Fiat Chrysler's (FCA) legendary CEO Sergio Marchionne stepped down after his health deteriorated following shoulder surgery. He's 66 years old.

Think we're being overdramatic? Let's learn a little more about Marchionne's accomplishments.

He was a masterful turnaround artist, resuscitating a floundering Fiat and engineering a deal to merge with a bankrupt Chrysler (completed in 2014). He also spun off Ferrari two-and-a-half years ago.

This might come as a surprise: Before joining Fiat as CEO in 2004, Marchionne hadn't stepped a foot in the auto industry.

What else should you know about Marchionne? Well, the guy has a few quirks. He always seemed to be wearing one of his patented black sweaters. He was also known for his attention to detail and for working around the clock.

Bottom line, courtesy of the NYT:

• "When Mr. Marchionne took the helm at Fiat, the company had a market value of about $7.5 billion. Today, the combined market value of Fiat Chrysler and Ferrari, which was spun out of Fiat Chrysler, is about 10 times higher, at about $71.5 billion."

So what's FCA's plan moving forward?

It's a big driver's seat to fill, but new CEO Mike Manley should be more than capable. Scratch that, he seems just about perfect for the job. Here's why:

• Manley has been leading the surging Jeep and Ram brands. Those two accounted for 67% of FCA's total U.S. volume last year, per Bloomberg Intelligence.
• Jeep, especially, is on the up. Some analysts peg its value at $30 billion...which would be more or less equivalent to FCA's entire market cap.
• The goal for Jeep: 2x sales volume by 2022.

Still, Marchionne left Manley with some clean-up work. In recent years, FCA's been accused of cheating on diesel emissions tests and bribing union leaders.

+ Update on Marchionne's health: He's being treated at Zurich's University Hopsital.

INDUSTRIAL

GE Powers Down in Q2

Here's what GE taught us: Companies can have both growing pains...and shrinking pains. As CEO John Flannery wraps up his plan to sell off $20 billion in assets, GE reported a 30% drop in profit in Q2.

What's weighing it down?

If you guessed, "heavy-duty gas turbines"...that's a helluva guess. After selling 107 of these massive, electricity-generating machines last year, GE plans to move about 50 in 2018. In GE's defense, they do look heavy...

This isn't great news for its power division. But Flannery needs to get the unit back on its feet. Because, along with aviation and renewable energy, it'll form the backbone of a new, slimmed-down GE.

• Remember, GE is spinning off its health care division and selling its majority stake in oil & gas company Baker Hughes.

An (optimistic) bottom line, courtesy of John Flannery: "We've described 2018 as a reset year and in the quarter we made significant progress on that journey."

TECH

China + Everyone Else: 5G or Bust

5G technology, the next wave of mobile and internet connectivity ft. lightning-fast speeds, is expected to change the way the world communicates.

And what's that led to? Oh, just your classic global arms race to lead the 5G revolution. So who's playing?

• China, definitely. But the pressure is intense. Some of the top leadership at state-owned telecom giants has undergone significant turnover this summer.
• A bunch of U.S. companies want to make their mark. There's AT&T, which on Friday announced three new cities where it's rolling out 5G tech in the next year. As for the others, just Google "5G" and you'll see everyone from Verizon to Qualcomm to Skyworks tossing their hat in the ring.

So why does 5G matter?

It's the technology that'll power cutting-edge tech like autonomous driving and virtual reality. Plus, there's huge opportunity—while U.S. and European firms led the push toward predecessor 4G, the 5G top slot is still up for grabs.

If you're interested in showing off your expert knowledge of 5G to your friends, here's a handy explainer.

INTERNATIONAL

Let’s Take a Quick Jaunt Around the World, Shall We?

• Japan legalized casino gambling and greenlit three new casino resorts. Las Vegas Sands and MGM Resorts said they'll spend as much as $10 billion on each location they build in Japan.
• China's yuan has fallen more than 8% over the last three months, as the threats of a global trade war and slowing economic growth take their toll. China's economy just grew at the slowest rate in almost two years.
• Iran is facing the heat of U.S. sanctions before they even go into effect. BMI Research previously projected 4.3% economic growth this year. Now? It forecasts 1.8% growth, followed by a 4.3% contraction in 2019.
• In Venezuela, the most dangerous country in the world, police officers are getting a 10 million-bolivar bonus. Which is great, until you realize it only amounts to $3 due to hyperinflation.
• Russia may not have won the World Cup...but visiting soccer fans did drop $1.5 billion there while it hosted the one-month-long soccer tournament.

CALENDAR

The Week Ahead

No, we aren't getting a lot of sleep this week.

Monday: 22nd International AIDS Conference; Earnings (Alphabet, Caterpillar, Papa John's)

Tuesday: National Tequila Day; Earnings (Apple, P&G, Pfizer, Square)

Wednesday: Pakistan holds national elections; Earnings (Facebook, AMC, Sprint, U.S. Steel Corp., GM, Boeing, Etsy, Ford, FCA, Tesla)

Thursday: National Intern Day...shoutout to our awesome interns; ECB meets; Longest lunar eclipse of the century; Earnings (Amazon, Blue Apron, GoPro, Shake Shack)

Friday: Fox and Disney shareholders vote to approve Disney's purchase of Fox assets; Q2 GDP estimates; Earnings (Chevron, ExxonMobil, Merck)

WHAT ELSE IS BREWING

• Papa John's board is deciding whether to use a "poison pill," which would prevent founder and ex-chairman John Schnatter from gaining control (per the WSJ).
• SpaceX launched a satellite early Sunday morning, its 13th launch this year.
• Congress nixed a plan to reinstate a U.S. supplier ban on ZTE.
• Mondelez recalled some Ritz crackers "as a precaution" over possible salmonella risk.
• Atos, a French IT services company, is buying fellow IT company Syntel for $3.4 billion.

BREAKROOM

WHAT WE'RE READING
Selfie: How We Became So Self-Obsessed and What It's Doing To Us, by Will Storr—In this book, you'll learn how the West has amplified the "self" and diminished the "collective"...and why this isn't the case everywhere. You'll also learn how culture shapes your mind more than you'd think. A fascinating look at our society.

TRIVIA
Match the country with its currency:

Country: South Africa, Hungary, Thailand, Peru, Tanzania

Currency: Sol, shilling, rand, baht, forint

(Answer located at bottom of newsletter)

Breakroom Answers