The finance world is on edge because of an auto supplier that you’ve probably never heard of: First Brands, a midsize maker of spark plugs and other automotive accoutrement, is in the midst of a multibillion-dollar meltdown. Weeks after declaring bankruptcy, the company’s founder and CEO resigned yesterday amid suspicions around its accounting practices.

ICYMI: First Brands filed for bankruptcy late last month, revealing more than $10 billion in debt from loans that it took out over the past decade to fund ambitious acquisitions and expand quickly across five continents. But the company suddenly ran out of money, and now Wall Street financiers are clutching their IOUs:

• The investment bank Jefferies appears to be the most exposed. Its stock fell last week after it announced that one of its subsidiaries lent First Brands $715 million.
• Funds run by other major firms, including UBS and BlackRock, are also owed hefty checks that likely aren’t coming any time soon.

With as much as $2.3 billion in assets unaccounted for, federal officials are now investigating what exactly went wrong at First Brands. According to court filings, part of the problem was that the company would pledge the same invoiced revenues to several of its lenders, like when you promise your last slice of pizza to both your partner and your roommate.

Alarms sound in the private credit sector

Many of the companies that lent money to First Brands aren’t traditional banks, meaning their financing falls into the far less regulated world of private credit—a $3 trillion market that exploded after banks got more cautious with loans following the 2008 financial crisis.

Since private credit deals are often complex and inked off the public markets, “if something is going disastrously wrong, it might only be detected once it’s too late,” per Politico.

Zoom out: First Brands’ bankruptcy isn’t expected to be market-shattering, but some analysts think it suggests a growing risk that private credit-related collapses could ripple out into broader financial trouble.—ML

Israeli hostages exchanged for Palestinian prisoners. Hamas freed all 20 living Israeli hostages and Israel released nearly 2,000 Palestinian detainees yesterday as a ceasefire to end the devastating two-year war in Gaza was signed by President Trump and the leaders of Egypt, Turkey, and Qatar, who helped broker the agreement. Earlier in the day, Trump became the first US president since George W. Bush in 2008 to directly address the Israeli Parliament, where he declared the “historic dawn of a new Middle East” and urged Israel’s president to pardon Israeli Prime Minister Benjamin Netanyahu’s corruption charges. Questions remain about Gaza’s postwar governance and who will pay to rebuild the enclave, among other issues that the first phase of the ceasefire did not cover.

OpenAI and Broadcom ink custom chip deal. You are not having déjà vu—this is a different OpenAI deal than the three others you may have read about in recent weeks. The ChatGPT maker agreed with semiconductor giant Broadcom to jointly develop 10 gigawatts of custom AI chips starting next year. The arrangement follows similar ones OpenAI has made with Oracle, Nvidia, and AMD to increase the computing capacity needed for its AI expansion. Broadcom, whose stock popped by nearly 10% following news of the deal, has been one of the biggest winners of the AI boom, thanks to its custom chips called XPUs.

Apple minused its plus. Apple’s streaming service will henceforth be known as Apple TV after the company dropped the “+” in Apple TV+, it announced yesterday. That means the service will have the same name as Apple’s smart TV device and associated app. The tech giant did not explain the decision beyond wanting to give the streaming service, which is home to The Studio and Severance, a “vibrant new identity.” It’s the latest streaming rebrand after Warner Bros. Discovery reverted Max to its original name of HBO Max in July.—AE

Shein’s brick-and-mortar debut in Paris has inspired the biggest French backlash since the American tourist who asked for barbecue sauce with his steak au poivre. The Chinese e-commerce giant's boutique opening inside the historic BHV Marais department store next month is drawing outrage from French fashion brands and unions, Paris Mayor Anne Hidalgo, and over 100,000 petitioners.

Detractors argue Shein’s business model of purveying cheap made-in-China clothes undercuts local competition, harms the environment, and is built on labor abuses. Shein maintains it wants to adapt its production to European requirements.

Shein shaming

The Shein boutique hasn’t yet arrived at BHV Marais, but the company that operates the couture emporium, Société des Grands Magasins (SGM), is already getting dinged:

• Several brands who would have to share square footage with Shein are pulling their merchandise from the store in protest. Sheingate comes as many brands are already displeased with SGM over delayed payments for their wares.
• A state-owned bank nixed plans to finance SGM’s purchase of the BHV building over the Shein deal.

Meanwhile, SGM has plans for several other Shein boutiques inside stores it operates in multiple French cities.

Governments are also taking action…with the EU and the US recently introducing taxes targeting goods shipped from Chinese fast-fashion sites like Shein.—SK

Shutdown effects are mounting. Now two weeks old, the government shutdown could begin to take a substantial bite out of the US economy this week as more furloughed federal employees miss their paychecks due on Wednesday. The shutdown has already led to flight delays, national park closures, and IRS phone lines going down. And as more employees don’t see a paycheck (and more get laid off), it could dent consumer spending, which drives the bulk of economic growth. Neither Democrats nor Republicans seem to be in a rush to resolve this.

Dreamforce starts today. Salesforce begins its annual takeover of San Francisco today with its massive Dreamforce conference. More than 50,000 people who definitely know what Salesforce does will descend on the city to hear CEO Marc Benioff give a keynote address on what he calls agentic enterprise, a new corporate model in which AI and humans collaborate. But some political comments Benioff made ahead of the conference may overshadow this business push: In an interview with the New York Times last weekend, the longtime liberal called on President Trump to deploy National Guard troops to San Francisco, saying that Democrats had “destroyed” the city.

Earnings season kicks off. It’s the most wonderful time of the year. No, not the winter holidays, but Q3 earnings season, which starts this week. A slew of big companies will get the festivities going, including JPMorgan, Goldman Sachs, Bank of America, Domino’s, Johnson & Johnson, and Taiwan Semiconductor. Last quarter’s earnings were some of the best in history, with strong corporate profits underpinning the summer’s stock market rally.

Everything else:

• Federal Reserve Chair Jerome Powell will deliver a keynote speech today at the NABE annual meeting in Philadelphia.
• The IMF and World Bank’s semi-annual gathering of central bankers and finance ministers kicks off this week in Washington, DC.
• The MLB championship series are underway to determine who will play in the World Series, with the Dodgers taking on the Brewers in the National League and the Blue Jays facing the Mariners in the American League.
• Make sure to wish your dad a happy NCIS Week. NCIS, NCIS: Origins, and NCIS: Sydney all premiere new seasons today.
• The Victoria’s Secret Fashion Show is tomorrow night.
• Netflix’s Frankenstein, starring Australian heartthrob Jacob Elordi as the monster, comes out in select theaters on Friday before hitting the streaming platform on Nov. 7.
• Blink-182 and Panic! At the Disco headline the When We Were Young Festival in Las Vegas on Saturday and Sunday.
• A second set of “No Kings” protests against the Trump administration is planned throughout the US on Saturday.

Have you ever done your job so poorly that your employer gave you nearly $50 million to go away? No? Well, you must not be a prominent college football coach.

Penn State fired head coach James Franklin on Sunday after the team’s loss at home to unranked Northwestern. It was apparently the final straw after the Nittany Lions—who entered the season ranked No. 2 in the country and had national championship aspirations—lost three games in a row, including as a 24.5-point favorite to winless UCLA:

• Penn State now must pay Franklin the remainder of his 10-year contract, reportedly worth more than $49 million.
• That’s the second-biggest buyout in college football history, behind the $76 million that Jimbo Fisher was given to stop being the Texas A&M coach in 2023.

Observers expect these monstrous buyouts to continue as more money is poured into college sports and as universities value winning above all else.—AE