Bloomberg - Evening Briefing - The good slowdown

US employers are forecast to have added the fewest jobs in over a year in June, but economists say that slowdown isn’t concerning. The jobs report from the Labor Department on Friday is expected to show the unemployment rate remaining at historically low levels and another month of solid wage growth, suggesting that employers are still eager to find qualified workers and retain the ones they already have. Job openings are hovering near record highs, while layoffs are well below pre-pandemic levels. While the prediction lends a helping hand to the Fed’s maneuvering to cut inflation while avoiding a downturn, Bloomberg Economics says it’s good news for workers regardless: “Even if ‘soft landing’ ultimately proves as taboo a term as ‘transitory inflation,’ there are reasons to think the job market will not fall off a cliff this year.” —David E. Rovella

Bloomberg is tracking the coronavirus pandemic and the progress of global vaccination efforts.

On Thursday, two of the Fed’s most hawkish policymakers backed raising interest rates another 75 basis points this month to curb inflation, while playing down fears the economy was headed for recession. Wall Street this week seemed to agree. Here’s your markets wrap.

Boris Johnson finally got the memo and resigned, but he plans to remain as “caretaker prime minister” for months while his party decides on its next leader. Who will replace him, at least for the time being? Of course UK betting firms have laid odds. And now it seems Johnson’s plan for an extended swan-song may not fly.

Carrie Johnson, wife of Boris Johnson, center, watches as he announces his resignation on July 7. The UK prime minister folded as dozens of ministers, junior aides and cabinet members quit in the wake of a host of scandals that have hobbled the Tory government. Photographer: Chris J. Ratcliffe/Bloomberg

As the world grapples with a growing hunger crisis driven by Russia’s war on Ukraine, Vladimir Putin’s forces again attacked the Odesa region with missiles, destroying two agricultural hangars, according to local authorities. In the east, Russian troops attempted to conduct assaults in Slovyansk in the Donetsk region and to establish full control over Luhansk, Ukraine’s General Staff said. But the Institute for the Study of War said there were no claimed or assessed Russian territorial gains in Ukraine on Wednesday for the first time in 133 days of war.

China’s Ministry of Finance is considering allowing local governments to sell 1.5 trillion yuan ($220 billion) of special bonds in the second half of this year, an unprecedented acceleration of infrastructure funding aimed at shoring up the country’s beleaguered economy.

But Beijing still has big problems. Charlene Chu, famed among China watchers for warning about a debt bubble while at Fitch, warns that the pain is only beginning for credit extended to Chinese property. In the wake of Beijing’s crackdown on leverage built up in real estate, China Evergrande Group and others famously defaulted on a slew of bonds. Chu, now a senior analyst at a division of Sanford C. Bernstein & Co., estimated there are “30 companies who’ve defaulted with total liabilities of around $1 trillion.” While banks have the safeguard of collateral for their loans to developers, Chu recently said that “where things could start to get a lot more ugly” is if lenders start revaluing that collateral lower.

In the space of five years, Saudi Arabia’s sovereign wealth fund has become a major international investor, snapping up US blue chips like Uber and investing in electric cars. It’s also made forays into sports, buying UK soccer team Newcastle United and investing $200 million in an international golf venture. This is the making of Saudi Inc.

Mohammed bin Salman Al Saud Source: Bloomberg

Globally, Covid-19 infections are on the rise again. Nevertheless, Hong Kong’s newly installed leader suspended a system that banned airlines if they carried passengers infected with Covid-19, raising hopes he’ll ease travel curbs. In Europe, a new infection wave is forming up as the ongoing wave in the US remains at more than 106,000 new confirmed cases per day (though the real number is likely much higher) along with still-rising hospitalizations. With infection and reinfection of individuals with even four vaccine shots now common, all eyes are turning to the fall, when a fifth, updated dose addressing omicron variants is to be ready—and whether by then the rapidly evolving virus will have already passed it by.  

• US warns Beijing risks destroying Hong Kong’s status as a financial hub.
• Pandemic rescue checks had no lasting impact on US poor, study shows.
• Germany urges Canada to help it thwart Putin over a gas pipeline.
• Pakistan is in trouble, too: No one will sell it natural gas.
• Tycoon whose bet broke the nickel market walks away a billionaire.
• Apple plans an extreme sports watch with larger screen and metal case.
• The culprit in Mexico’s beer shortage isn’t just Supply—it’s demand.

Following our list of 50 Companies to Watch in January and second-quarter update in April, we’re back with 10 specifically for the third quarter based on scenarios from Bloomberg Intelligence analysts. The companies in the spotlight span sectors and regions, and each scenario outlines important catalysts coming in the next few months that support our case.

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Bloomberg Sustainable Business Summit: Anchored in Singapore, the inaugural Asia-Pacific summit on July 27 will focus on helping companies and investors meet ambitious ESG goals while exploring the region’s unique challenges and opportunities. Also discussed will be strategies for successful stakeholder collaboration, the latest in green financing and how to best measure and report progress. Register here to attend virtually or in-person.