Bloomberg - Evening Briefing - Where the Fed stops

Bloomberg Evening Briefing

US stocks snapped two days of losses after Federal Reserve Bank of Atlanta President Raphael Bostic said the central bank could be in a position to pause rate hikes sometime this summer. While Bostic’s remarks boosted sentiment Thursday, other central-bank officials in recent days have reinforced their hawkish rhetoric. After January’s party and February’s let-down, the focus now is back on how much higher interest rates might go in the US and Europe. Swaps markets are pricing a peak Fed policy rate of 5.5% in September while some traders are betting the benchmark interest rate could rise to 6%. Relentless data showing a historically tight American job market may have job seekers smiling, but Wall Street is gritting its teeth. “What we saw in January and really going back to October was the markets were incorrectly interpreting a pivot,” said David Spika, president and chief investment officer of GuideStone Capital Management. “Now the market is accurately pricing in, alright, the Fed is going to have to keep raising rates.” 

Here are today’s top stories

In America, you really have to be rich to buy a home. First-time buyers made up the smallest share of sales on record last year, at 26%, and that even as home values started to cool. Rising borrowing costs and still-high prices have pushed housing to the most unaffordable levels going back almost four decades.

Blackstone defaulted on a $562 million bond backed by a portfolio of Finnish offices and stores, as rising interest rates hit European property values

Public cross examination by Senator Bernie Sanders may have been too much for Howard Schultz. The embattled Starbucks CEO and his coffee chain have been under fire from the federal government, organized labor and employees for alleged widespread union-busting. Now it turns out the company doesn’t want to send its CEO in response to an invitation to testify before the Vermont lawmaker’s Senate committee. But it seems Sanders isn’t done with Schultz yet.

Howard Shultz and Bernie Sanders Source: Bloomberg/Bloomberg

German Chancellor Olaf Scholz warned China not to arm Russia in its war on Ukraine and expressed disappointment that the government in Beijing has dialed down its condemnation of the Kremlin’s aggression. US Secretary of State Antony Blinken pressed his Russian counterpart, Sergey Lavrov, to end the invasion during a brief and unexpected encounter on the sidelines of a Group of 20 meeting in India, their first in-person encounter since the war began a year ago. 

Billionaire Oleg Deripaska said Russia could find its coffers empty by next year and needs investment from “friendly” countries to break the hold of sanctions on the economy. “There will be no money already next year,” Deripaska said Thursday at the Krasnoyarsk Economic Forum in Siberia. Funds are now running low and “that’s why they’ve already begun to shake us down,” said Deripaska. Here’s the latest on the war in Ukraine.

Oleg Deripaska Photographer: Natalia Kolesnikova/AFP

China has pledged to invest an additional $1.9 billion in the country’s biggest maker of memory chips. The scale of the investment suggests Beijing is again powering up spending on its beleaguered semiconductor industry, which is struggling to circumvent US curbs on technology while grappling with slumping global demand.

Yes, it’s been raining and snowing in California like it’s going out of style. No, it doesn’t mean much for the long-term, climate-driven megadrought that’s plagued the US West for years. Water is (literally) drying up, impacting everything from the food Americans eat to the electricity supply for tens of millions. In this episode of Getting Warmer With Kal Penn, Kal explores what the future of water in the West, and the rest of the world, may look like—and how much will be left

The Hoover Dam Lookout observation deck above the Colorado River in 2021. US officials may soon impose draconian cuts on water usage by western states after local officials failed to reach an agreement. Photographer: Roger Kisby/Bloomberg

Bloomberg continues to track the global coronavirus pandemic. Click here for daily updates.

 What you’ll need to know tomorrow

The Disaster Lurking Inside Your Chocolate Bar

A visit to the chocolate aisle of any grocery store can yield a bewildering array of certification logos, each seeking to assure you that the cocoa used to make it was produced according to some measure of sustainability. But suppliers and human rights advocates contend the broader reality is very different: that much of the world’s cocoa production is unsustainable. Famously marked by widespread child labor and allegations of brazen greenwashing, there’s a third curse being visited upon the planet courtesy of your chocolate craving: Rainforests across Africa are being destroyed at a frightening pace so more cocoa can be grown.

In Ivory Coast, the world’s top cocoa producer, large swaths of rainforest have been destroyed to grow more cocoa. Photographer: Andrew Caballero-Reynolds/Bloomberg

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