Bloomberg - Evening Briefing - Inflation and chaos

It was a week of more chaos for banks—and fear the crisis will finally tip the global economy into recession. Silicon Valley Bank died quickly, filing for bankruptcy, though it turned out that regulatory concern about the bank went back more than a year. After officials shuttered New York’s Signature Bank, worry that San Francisco-based First Republic was also on the verge of collapse prompted JPMorgan, Citigroup and others to inject $30 billion in deposits to quell investor panic. While the rescue attempt initially boosted sentiment, billionaire Bill Ackman was among those questioning whether it would be enough. Embattled Credit Suisse won a $54 billion lifeline, giving it a chance to rebuild its business—though some clients aren’t waiting around. More broadly, US banks borrowed a combined $164.8 billion from two Federal Reserve backstop facilities over the span of one week—breaking a record from 2008 and the financial crisis. US Treasury Secretary Janet Yellen sought to reassure Congress, testifying that the banking system remains sound. But John Authers writes in Bloomberg Opinion that, with the era of easy money over, “anything that relied on low interest rates should fall into question, and that implies issues for the sprawling fields of private equity and private debt.” The real question now, he says, is what the next crisis will be.

When the Federal Reserve jacks up interest rates, as it’s been doing for the past year, a downturn is always a risk. And while the central bank’s monetary policy is aimed at correcting inflation, it can also reveal hidden weaknesses. Next week, the Fed will weigh the banking crisis—arguably one of those weaknesses—against a still-hot labor market and sticky price pressures as it decides on a rate hike. While the European Central Bank raised rates by an expected half-point this week, in the US investors feel there’s some hope for a pause. But economists surveyed by Bloomberg News predict a quarter-point rise. Either scenario is complicated, though: “Behind Door No. 1: an ever-approaching recession. Behind Door No. 2: entrenched inflation,” Jonathan Levin writes in Bloomberg Opinion. “Unfortunately, it’s looking like a lose-lose scenario of policymakers’ own making.”

Turkey approved Finland’s entry into NATO, a step toward transforming Europe’s security landscape. The ratification leaves Russia-friendly Hungary as the last holdout on Finland’s accession, and Turkey remains opposed to Sweden’s acceptance. Also this week, NATO member Slovakia said it will send its entire fleet of 13 Soviet-era fighter jets to Ukraine to help in its effort to beat back Kremlin forces. Poland said it will send four Soviet-era fighter jets in the coming days.

Ukraine will soon get more MIG-29 fighter jets like these  Photographer: Omar Marques/Getty Images Europe

A salary topping $100,000 a year can feel like a mark of success, but if you live in New York City, that’s worth just $36,0000 after taxes and accounting for the steep cost of living. That’s according to SmartAsset, a consumer-focused financial information provider. The city tops the company’s list of most expensive in the US, followed by Honolulu, San Francisco and Washington, DC. Memphis, Tennessee, is where you keep the most of your take-home pay, SmartAsset contends, though the median salary is about $44,000 compared with a little over $70,000 in New York. And for that $1 million laying around, experts offered some ideas where to invest amid the banking turmoil. Music royalties maybe?

Volkswagen unveiled an affordable electric vehicle for the masses, with Europe’s largest carmaker targeting an opening left by Tesla. VW has struggled to keep pace with Tesla’s EVs and needs to halt sales declines in China, where domestic manufacturers led by BYD have stepped up their game. In the US, the Biden Administration took the next step in rolling out more EV charging, unveiling two grant programs that will dole out $2.5 billion for stations nationwide. 

A Bloomberg reporter went undercover as a staff member at the famed Turtle Bay Resort in Hawaii (think White Lotus). Key findings: Most everyone’s special—or at least thinks so. Sunning Mormons and topless European ladies often aren’t a great mix. Guests steal about $150,000 a year from the hotel, from beach towels, to satin coat hangers, to teaspoons and forks. For worse weather, and draftier rooms, the 16th century Myres Castle in Scotland is on sale for $4.3 million. 

What life is really like in the world of White Lotus. Illustration: Mark Wang

• Xi Jinping will meet Vladimir Putin in Moscow.
• The Fed, BOE and Swiss National Bank officials meet amid bank fallout. 
• IMF Executive Board will decide on Sri Lanka’s $2.9 billion bailout.
• EU foreign ministers, defense ministers gather in Brussels.
• Nike earnings to be a litmus test for global consumer spending power.

In an era in which Republicans and Democrats find little common ground, TikTok is the rare exception—at least in the halls of Congress. Lawmakers are putting forth several bills aimed at limiting the power of the Chinese social media platform, by far the most popular in the US, with detractors (including, reportedly, the Justice Department) worried it may be used by Beijing to spy on Americans. With a White House ban on the table, TikTok’s leadership is considering separating the company from its parent, China-based ByteDance. But across America, limiting TikTok may be too unpopular for Washington to pull the trigger. 

Senator Mark Warner, a Democrat from Virginia, center, speaks during a news conference in Washington on what lawmakers say are the national security risks posed by TikTok. Photographer: Al Drago/Bloomberg

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