Monday, October 19, 2026

Flyover Finance

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Monday, October 19, 2026

Good Morning! On this day in 1987, the Dow fell 22.6% in a single day, a crash that came to be called Black Monday. It’s still the index’s biggest one-day percentage drop. One lasting result is “circuit breakers,” rules that now pause trading across U.S. stock markets if the S&P 500 falls 7%, 13%, or 20% in a day. You can read the full story here.

Would you let an AI assistant do your holiday shopping? Online stores are bracing for it, and we’ve got the details in Loose Change. Hit reply and tell us whether you’d hand over your list.

If you have $1 million or more, your financial life may be too complex for disconnected advice. Today’s sponsor, Fisher Investments, is offering a guide to help you discover the fundamental retirement questions.

Washington’s deficit swelled to nearly $2 trillion.

Let’s start with stocks. The S&P 500 and the Nasdaq both had their worst week since June as worries deepened about how long the AI building boom will last. For the week, the Nasdaq fell 4.5% and the S&P 500 lost 1.9%, while the Dow managed a 0.7% gain. Even after the selloff, the S&P 500 is still up about 12% this year. Stock futures pointed to a higher open this morning, with S&P 500 futures up about 0.4% and Nasdaq futures up about 1%.

Fed Chair Kevin Warsh wouldn’t say which way the Fed is leaning ahead of its meeting later this month. “I don’t prejudge meetings,” he said on Friday. The Fed raised its key interest rate in September for the first time in three years, and inflation has since picked up to 3.7%. Traders now see about an 85% chance the Fed holds rates steady this month, but roughly 89% odds of a hike in December.

The federal budget deficit hit nearly $2 trillion in the fiscal year that ended Sept. 30, up about 12% from the year before. It was the 25th straight year Washington spent more than it took in. Interest on the debt is one reason: net interest costs topped $1 trillion for the year, now that the country owes more than $40 trillion.

What to watch today: At 10 a.m. ET, home builders’ monthly confidence gauge comes out. More regional banks also report earnings, with Fifth Third before the opening bell and Zions after the close.

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➤ Buy: Bank of America upgraded Fox Corp. (FOXA) from Sell to Buy and raised its price target from $54 to $85. The bank says Fox’s planned purchase of Roku, expected to close early next year, gives the owner of Fox News and Fox Sports a real path from traditional TV into streaming. (More)

➤ Hold: Oppenheimer downgraded Equifax (EFX), one of the three major credit bureaus, from Buy to Hold. The firm expects slower home lending to weigh on its mortgage business, which brings in about a fifth of its sales. (More)

➤ Sell: Williams Trading downgraded Birkenstock (BIRK) from Hold to Sell and lowered its price target from $39 to $27. Some of the sandal maker’s most loyal store accounts are trimming their orders, and discounts are becoming more common—especially in Europe. (More)

Manufacturing

U.S. factory output barely grew last quarter, but chip production rose at an annual pace of 28.4%.

➤ U.S. factory output grew at a 0.7% annual pace from July through September, much slower than the 5.6% pace in the spring. Computer chips were the bright spot, as companies poured money into AI. Factories that make long-lasting goods (like machinery and appliances) grew, while those making goods that get used up (like food and fuel) actually shrank.

Production lost steam this summer as the war with Iran disrupted supply chains and drove up energy prices. Rising borrowing costs and the trade fight with Canada are also weighing on manufacturers. One good sign: factories made 0.3% more in September than in August.

Source: Federal Reserve.

Company Spotlight

PepsiCo is losing KFC, the chicken chain it once owned, to Coca-Cola.

KFC said it will stop serving Pepsi drinks at its U.S. restaurants and pour Coca-Cola instead, starting in January and finishing by spring 2027. Pepsi has been KFC’s drink supplier since 1986, when PepsiCo bought the chain.

PepsiCo spun KFC off in 1997 but kept supplying its drinks. KFC’s president says the switch is part of a push to modernize the chain.

PepsiCo still serves its drinks at Taco Bell, Pizza Hut, Subway, and KFC restaurants overseas. But the loss lands as the company’s CEO says getting sales and profits back on track is taking longer than planned, and a big investor, Elliott Investment Management, has pushed for changes.

By the Numbers: PepsiCo

Market value: about $179 billion
Stock, past year: down about 13%
Annual sales: $93.9 billion in 2025, up 2%
Profit: $8.2 billion, or about 9 cents of every dollar of sales
Employees: about 306,000
Dividend: $5.92 a share per year

➤ Online stores are bracing for a new kind of holiday shopper: AI assistants that browse and buy for people. One firm said that traffic from these AI agents jumped 100-fold in 45 days, however Amazon and eBay have blocked them from their sites. (More)

➤ ExxonMobil said bigger profits from turning crude oil into fuels like gasoline and diesel added about $4.5 billion to its third-quarter earnings. Lower oil prices cut about $1.3 billion. (More)

➤ A group of lawmakers introduced a bill that would force bank regulators to release their records on Jeffrey Epstein and investigate banks tied to him. Executives involved could be banned from banking, fined, or referred for criminal charges. (More)

➤ Epic Systems, which makes medical records software, is building a tool that shows a drug’s pharmacy cash price next to the insurance price before a prescription is sent. Amazon Pharmacy and Mark Cuban Cost Plus Drugs are partners. (More)

➤ Tesla unveiled a Roadster sports car that can briefly fly, using bursts of high-pressure air to lift off the ground. It’s set for production in 2028, but the flying version isn’t approved for public roads. (More)