Bloomberg - Evening Briefing - Winning the war

Another week, another stack of data showing Jerome Powell’s year-long campaign to cool the US economy may be working. The Fed Chair’s task now is to avoid overtightening. The economy looks to be stalling (by design) and there’s softening in the labor market as well as housing. Despite the unpleasantness in Silicon Valley last month, regional banks look like they'll come through the inflation fight in one piece (if earnings this week are any measure). But some may still be in for a tough time—and so too will the consumers and companies who rely on them for credit. Those credit conditions are worsening and profit margins are getting squeezed, perhaps enough to give the Fed room to pause its rate-hiking cycle after next month’s still-expected hike. But while inflation persists, several Fed officials said they support further interest rate rises to help  crush sticky price pressures. The US economy, however, is like an aircraft carrier—it doesn’t stop on a dime. And that means if growth keeps slowing, that long-predicted recession might finally come to pass.

Nevertheless, there are some corners of the market where no one seems all that concerned. Big banks have benefited from worried customers leaving their smaller counterparts, and hedge funds are also notching wins. The biggest new funds are raising money at levels not seen since before the start of the pandemic. Four new firms are poised to eclipse $1 billion by year-end. So at least they have something to cheer about. 

Elon Musk has trouble above and below. The explosion of his SpaceX Starship system on its first test flight complicates the company’s goal of sending humans back to the moon and eventually Mars. The test was a crucial one for Starship, meant to show it could reach space and complete a partial orbit of Earth—both of which it failed to do in spectacular fashion. SpaceX engineers are still trying to figure out what went wrong. Meanwhile Musk’s Tesla is having a fire sale, cutting prices for a second time this month on some models in a desperate bid to keep powerful rivals at bay. Later, he increased prices on Model S and X vehicles after steep markdowns took a toll on Tesla profitability—not to mention its shares.

SpaceX attempted to send its Starship system into space on April 20, but the massive rocket failed to separate stages, spun wildly out of control and exploded. Photographer: Kenneth Hughes/Bloomberg

Ukraine’s key allies are considering moving closer to an outright ban on most exports to Russia, tightening pressure on Vladimir Putin over his war. So far sanctions have almost halved the value of EU and G-7 exports to Russia, with limits on everything from electronics to luxury items. But that still leaves $66 billion worth of goods from Europe, the US, Canada and Japan going in. On the China front, President Joe Biden is poised to sign an executive order that will limit investment in key parts of its economy by US businesses.

India, now the world’s most populous country after surpassing China, has a college problem. While business is booming in India’s $117 billion education industry, thousands of young Indians find themselves with limited or no skills when they graduate. And India isn’t alone. In China, the urban jobless rate for those between the ages of 16-24 hit 19.6%. And in the US, where college tuition has skyrocketed, the “system is beginning to molder,” Adrian Wooldridge writes in Bloomberg Opinion. 

Donald Trump hopes to bury Ron DeSantis’s expected presidential campaign before it officially begins, aiming to hit the Florida governor on two things he’s proudest of: his handling of Covid-19 and his state’s economy. DeSantis’s poll ratings among Republicans are already falling, and some major donors are losing confidence that he or any other GOP hopeful can displace Trump. This despite (or perhaps because of) Trump’s prosecution on felony charges in New York, his upcoming civil trial for sexual assault and three more possible state and federal criminal cases. Whoever wins the GOP nomination, they’re likely to face Biden. He’s expected to formally launch his reelection campaign as early as next week.

High-end hospitality brands are offering treatments aimed at executives suffering from rising rates of burnout: Options include a month in a clinic at Larry Ellison’s semiprivate Hawaiian island ($25,000) to a weeklong stay at Switzerland’s Kusnacht Practice (as much as $133,000). Once a bulky pocketwatch on a strap, wristwatches are downsizing, judging by trends at Watches and Wonders, the annual luxury watch fair in Geneva. And finally, it’s time for dinner: Fish and chips have gone from the everyman’s dish to a Michelin-level meal.

From left: Girard-Perregaux Aston Martin, 38mm ($25,000); Panerai Radiomir Quaranta, 40mm ($18,200); Chopard L.U.C 1860, 36.5mm ($23,200); Zenith Pilot automatic, 40mm ($9,600); Bulgari Octo Roma Precious Tourbillon Lumiere, 38mm (€57,000), IWC Ingenieur, 40mm ($11,700). Source: Bloomberg

• European bank earnings kick off with UBS, Deutsche Bank and Barclays.
• India’s Supreme Court begins hearing landmark same-sex marriage case.
• Tech earnings, with concerns over consumers’ economic health.
• Data from China, with first-quarter GDP growth, retail sales.
• 30,000  athletes run the the 127th Boston Marathon. 

In the third part of our series on TikTok and its trust and safety issues, we look at how an algorithm has led some teenagers down rabbit holes related to body image, self-harm, depression and suicide. This includes the story of parents in New York whose son stepped in front of a train. After his suicide, his mother was stunned to discover that he'd been taking in a stream of very dark content on the social media site. The family has now filed one of the dozens of lawsuits against TikTok or other social media companies, alleging that their product designs are harming kids. (We've removed the paywall on this story.)

Michelle and Dean Nasca at home in Long Island, New York, with a photo of son Chase, who killed himself at the age of 16. Photographer: Kylie Corwin for Bloomberg Businessweek

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