Bloomberg - Evening Briefing - Now the hard part

The Federal Reserve under Jerome Powell has been shooting for a soft landing of the overheated US economy, slowing it down without causing a recession. And in some ways, today’s economic numbers could be seen as lining up with the runway. Gross domestic product rose at a 1.1% annualized rate as business investment in equipment posted its biggest drop since the start of the pandemic, and inventories subtracted the most from GDP in two years. But at the same time, consumer spending came in at its strongest level in almost two years, led by a surge in purchases of motor vehicles. The outlook now depends on the resiliency of the job market: historically low unemployment and persistent wage gains have so far allowed consumers to keep spending. “Inflation remains stubborn, and along with the continued strength in the labor market, it should keep the Fed on pace for a May and potentially a June rate hike,” said Cliff Hodge of Cornerstone Wealth. —David E. Rovella

Then again, some say the new numbers reflect a darker horizon. The combination of a slowing economy even before the brunt of any credit crunch stemming from recent bank failures—all while inflation accelerates—highlights the challenge facing the Fed. “This morning’s data was the worst of both worlds, with growth down and inflation up,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

Germany is in talks to limit the export of chemicals to China that are used to manufacture semiconductors. Berlin is stepping up efforts to reduce its economic exposure to the Asian nation as part of a package of measures being pushed by Chancellor Olaf Scholz.

Olaf Scholz  Photographer: Valeria Mongelli/Bloomberg

Halid Hamadi was determined to get his bachelor’s degree from Penn State even though he had less than $7,000 in financial aid and no support from his parents. He crunched the numbers and figured he could make it work—barely. But the financial aid letter he received from the college failed to paint a complete picture. Hamadi didn’t realize tuition and other costs could vary or weren’t disclosed at all. The result? An unfinished degree and $120,000 in student debt.

Wall Street traders see good reasons to short First Republic Bank anew as the standoff grows between the US government and the banking industry.  The problem? Only 4% of shares are actually available. Trouble at the San Francisco-based lender has rewarded short sellers, who’ve netted paper profits of about $1.2 billion this year as shares plunged roughly 95%. It’s a winning trade—if you can locate some shares. 

Egypt’s debt markets are on edge like never before, increasingly consumed by the threat of it missing a payment on its bonds. Crunch time appears closer because some investors are losing confidence in a government that’s struggled to regain access to external financing after a succession of crises. The cost of insuring against a sovereign default in the next 12 months has surged to a record.

Argentina’s central bank raised its benchmark interest rate by 10 percentage points as a renewed peso selloff in parallel markets adds to the sense of crisis there. The board boosted its key Leliq rate to 91%, the highest in at least five years.

There are not enough people to repossess all of the motorcycles. That was the message from Harley-Davidson, which said Thursday its credit losses in the first quarter were due in part to a shortage of repossession agents.  The repo industry is seeing an uptick in demand as more Americans struggle to afford their car payments. And bikes too it seems.

Employee motorcycles parked outside of the headquarters Harley-Davidson in Milwaukee, Wisconsin Photographer: Scott Olson/Getty Images

• Powell gets tricked by Russian pranksters posing as Zelenskiy.
• At Charles Schwab, being a big bank has become a big problem.
• A tax loophole makes EV leasing a no-brainer in the US.
• Amazon surged after profit and cloud-unit sales top estimates.
• Bloomberg Opinion: Memo to Zuckerberg—be like Satya Nadella.
• Microsoft Xbox chief seeks to reassure game staff on Activision.
• Electronic Arts “Star Wars” sequel was made in record time.

You’ve seen them on TV ads and TikTok, or heard them joked about at the Oscars: Ozempic, Wegovy, Mounjaro. They’re weekly injections known as  GLP-1 receptor agonists that help people lose a significant chunk of their body weight. These drugs can indeed produce dramatic results. But do they make people healthier? Most people may never know, since they cost as much as $10,000 a year and most insurers won’t cover them.

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