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Hi John, here's what you need to know for November 1st in 3:15 minutes.

⏳ Keep it brief

• With two months left of the year, we take a broader look at the US economy and its stocks
• Rival carmakers Fiat Chrysler and Groupe PSA have agreed to a $50 billion merger

Game On

What’s Going On Here?

We’re into the fourth down – quarter, sorry – of the year and investors are lining up their next maneuvers. US third-quarter economic growth hut… hut… hiked higher than economists’ predictions – but the Federal Reserve (the Fed) still tackled interest rates again this week.

What Does This Mean?

Consumer spending led the charge behind a stronger-than-expected American economy last quarter. That might’ve been thanks to some tactical gameplay from the Fed, whose previous rate cuts have made saving less rewarding and should, in turn, encourage spending. That’s especially true since more Americans than ever were working, not to mention earning more than they were the same time last year. Still, inflation – the rate at which prices of goods and services increase – hasn’t risen as much as the Fed would’ve liked. It’s likely hoping that cutting rates further will coach consumers into even more spending that’ll push up prices – and businesses too, whose investment took a pummeling last quarter.

Why Should I Care?

The bigger picture: Interception!
After its cut, the Fed said it’ll effectively leave the US economy be for a while. So absent an unexpected touchdown or foul ball, the country will be running plays on its own. The signing of an initial US-China trade deal should, for one, help boost demand for American products and could push their prices up. But without an all-encompassing long-term deal – which China doesn’t think is possible – inflation’s unlikely to rise high enough to justify intervention from the country’s economic referee.

For markets: The crowd goes wild!
Stock prices hovered at record highs this week. And given that over 90% of investors correctly anticipated Wednesday's rate cut, the continued ascent of stocks is instead likely down to two other factors: better-than-expected economic data (which suggests higher momentum this quarter) and companies’ better-than-expected quarterly updates. That also makes it 18 of the last 19 Fed rate cut announcements where stocks have climbed soon after.

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Carpooling

What’s Going On Here?

Italian-American carmaker Fiat Chrysler and France’s Groupe PSA – owner of Peugeot and Opel – agreed a merger that would value the combined company at $50 billion. Europe might see if it can grab a lift…

What Does This Mean?

Fiat’s been looking for a partner to ride shotgun for a long time: it was left stranded after opening its doors to General Motors in 2015, and an effort to link up with rival Renault span off the road in June. But Fiat’s ride-along with Groupe PSA will make it the world’s fourth-largest carmaker – and if it can reduce costs and drive growth, that’d boost the eurozone economy at large.

Fresh data released on Thursday showed the eurozone economy grew 1.1% larger than the same time a year ago last quarter – more than economists predicted (tweet this). But with Germany’s carmaking-dependent economy expected to have shrunk, auto industry growth elsewhere in the bloc would probably come as a welcome relief.

Why Should I Care?

The bigger picture: Two hands on the wheel.
Given that Europe’s economic engine has been spluttering for several years, new mergers and acquisitions might help fix things up. Consumers are buying fewer cars these days, so Fiat and Peugeot might plan to decrease car production – reducing supply and hopefully increasing prices. Those are savings they can then spend on the company’s electric vehicle business. Still, not all mergers have worked out this year: many have been blocked by regulators, making it tougher for firms to increase their earnings – and for the region to boost its economic growth.

For markets: Banks’ health check.
Banks are a good indicator of an economy’s health since they’re at the center of spending. Several have been cutting jobs and shuttering businesses in Europe, and their third-quarter updates this week didn’t offer much respite. German giant Deutsche Bank’s revenue fell versus last year, and it made a loss overall – and even Credit Suisse’s strong update wasn’t enough to keep its shares from falling.

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