Bloomberg - Evening Briefing - The stagflation scenario

Bloomberg Weekend Reading

While some economic observers still predict a soft landing as others double down on year-old recession bets, there’s a growing contingent who worry the US economy is headed for a stall. This week’s mixed bag of data—tepid growth, sticky inflation, better-than-expected tech earnings, a strong labor market, and most importantly high consumer spending—has renewed chatter of stagflation. That’s the dynamic in which inflation remains elevated but growth is anemic, and it’s an ugly state of affairs. In Europe meanwhile, there’s a different concern: greedflation. Globally, even if inflation continues its unsteady retreat, how far will it ultimately go? Is the goal of 2% inflation really attainable without a lot of pain? John Authers writes in Bloomberg Opinion that “inflation, the issue of the moment, is grounded in the difficulty we have in trusting each other, and the intensity with which we all tend to defend our share of any spoil.”

What you’ll want to read this weekend

Russia unleashed a fresh wave of attacks against Ukrainian civilians, killing at least two dozen people with aerial strikes on residential buildings. A counteroffensive is expected soon as Ukraine seeks to take back more of its territory from invading Kremlin forces. Chinese leader Xi Jinping, a Russian ally looking to bolster his image as a peacemaker, made his first call to Ukraine’s Volodymyr Zelenskiy since Vladimir Putin attacked. But Xi’s proposals may cement gains made by Moscow in a 14-month war that’s claimed thousands of Ukrainian lives. 

Angst is building that a political fight picked by House Republicans over the debt limit may not be resolved until the government is close to default. The fight escalated this week after Republicans pushed through a bill proposing cuts to Democratic priorities like climate, student loan forgiveness and education. To raise the debt limit so the government can pay what it owes (and avoid a likely instantaneous recession), the GOP wants the administration to agree to its spending priorities in the unrelated bill. While dead on arrival in a Democratic-controlled Senate, the GOP is attempting to use its bill to pressure President Joe Biden to negotiate. With the so-called “X-date” as soon as June, there’s a moribund corner of  Wall Street cropping up—where speculators are betting on something that once seemed unthinkable: that the US will default. 

US House Speaker Kevin McCarthy, a Republican from California, is trying to force President Joe Biden to negotiate over the debt limit. Photographer: Valerie Plesch/Bloomberg

First Republic Bank has been exploring divesting $50 billion to $100 billion of assets in an attempt to save itself after the collapse of Silicon Valley Bank and two other regional lenders. The bank also has reportedly been in talks with US officials for a rescue. Its customer deposits plunged 41% in the first quarter, and the lender said it intends to terminate 25% of its employees. Then late on Friday, the situation worsened significantly. Over at Charles Schwab, better known as a stock brokerage, its foray into banking has gotten caught up in the broader drama. 

If you’re looking to purchase an electric vehicle, you’ve probably noticed a change in the $7,500 tax credit under the Biden’s Inflation Reduction Act. To qualify for the credit, a purchased car must be manufactured in the US—bur leased cars, on the other hand, qualify for the credit no matter where they’re made. Such factors are likely to make leasing the dominant way Americans gain access to EVs. Or  you can just wait to see how low Elon Musk will go as Teslas keep getting cheaper.

While the average home buyer—or seller—is struggling with high interest rates and a dearth of inventory, there’s a different reality in the luxury market. High-end home prices in New York’s Hamptons soared to record highs in the first quarter. On the other end of the wealth spectrum, a movement is gaining traction among renters to bolster tenant rights, including right to counsel laws for those facing eviction.

What you’ll need to know next week

  • Fed’s rate decision, with a quarter-percentage point hike expected.
  • Inflation reading for the  Euro area ahead of the ECB’s rate decision.
  • More European banks report with a close watch on liquidity, loans.
  • India Supreme Court panel reports on Adani v. Hindenburg matter.
  • King Charles III’s coronation takes place.

One Firm Will Define the US-China Chip War

ASML’s rapid rise to become Europe’s most valuable tech firm has put it at the heart of the US-China chip war. With the company’s high-end machines churning out chips for state-of-the-art weapons and AI devices, the Dutch firm is effectively being treated as critical infrastructure for US national security.

US President Joe Biden holds a semiconductor. ASML is still growing and its long-term outlook seems intact, thanks to the insatiable demand for computing power. Photographer: Doug Mills/The New York Times

Key phrases

Older messages

Small enough to fail

Friday, April 28, 2023

Bloomberg Evening Briefing View in browser Bloomberg First Republic Bank shares took another nosedive Friday, falling a whopping 43% in regular trading. Then, as a news report foretold a potential

Now the hard part

Thursday, April 27, 2023

Bloomberg Evening Briefing View in browser Bloomberg The Federal Reserve under Jerome Powell has been shooting for a soft landing of the overheated US economy, slowing it down without causing a

Disney goes after DeSantis

Wednesday, April 26, 2023

Bloomberg Evening Briefing View in browser Bloomberg Walt Disney is taking its feud with Ron DeSantis to court. On Wednesday, the company sued the likely contender for the Republican presidential

Damage by default

Tuesday, April 25, 2023

Bloomberg Evening Briefing View in browser Bloomberg It's still April, and by most measures there's at least a few months left. But the threat of a US default at the hands of a Republican-

More bad news at Disney

Monday, April 24, 2023

Bloomberg Evening Briefing View in browser Bloomberg Walt Disney began terminating thousands of employees on Monday as part of the entertainment giant's ongoing campaign to cut about 7000 workers

🫂 Tesla's sharing

Sunday, May 28, 2023

Tesla's letting Ford drivers use its charging stations | UK retail sales ticked up | TOGETHER WITH Hi Reader, here's what you need to know for May 29th in 3:13 minutes. 🍦 It's time for the

🚀 It's NVIDIA's world....

Sunday, May 28, 2023

Plus, TikTok launches Shopping! ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Homebuyers are screwed

Sunday, May 28, 2023

Plus: Bill Gates' AI bet, and the best early-stage investors. View in browser Subscribe May 28, 2023 Hi, I'm Matt Turner, the editor in chief of business at Insider. Welcome back to Insider

Welcome to the ‘Airbnbust’

Saturday, May 27, 2023

Plus: $2.5 million cruise cabin, and airline catering truck tiny home. View in browser Subscribe May 27, 2023 Hello, Insiders. Ever find yourself sitting on your couch, mindlessly scrolling through

‘We made progress’

Saturday, May 27, 2023

Bloomberg Weekend Reading View in browser Bloomberg A debt limit deal seems near, and just days before the full faith and credit of the US would be placed in question for the first time in the

Sticking point

Friday, May 26, 2023

Bloomberg Evening Briefing View in browser Bloomberg Treasury Secretary Janet Yellen announced the department expects to be able to make payments on US debt up until June 5, four days longer than her

The Most Important Bank in the World

Friday, May 26, 2023

Plus: Starling Bank, Norinchukin, Citigroup ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Musk’s coming for your brain

Friday, May 26, 2023

Plus: ChatGPT's making people money, and the hack airlines hate. View in browser Subscribe May 26, 2023 Hello, Insiders. Jack Sommers, senior editor in the UK, here. You may love Elon Musk, or you

Wall Street: So about that US default

Friday, May 26, 2023

The latest in finance. View in browser INSIDER INSIDER Subscribe 10 THINGS ON WALL STREET Finally Friday! Dan DeFrancesco checking in from an undisclosed location (most likely with a drink in my hand).

💵 Nvidia aced it

Thursday, May 25, 2023

Nvidia's update had investors falling in love | A recession hit Germany| TOGETHER WITH Hi Reader, here's what you need to know for May 26th in 3:10 minutes. It's 2023: these days, crypto