Bloomberg - Evening Briefing - Now the Fed waits

Bloomberg Evening Briefing

The US Federal Reserve did what almost everyone said it would do, raising interest rates by a quarter percentage point and hinting it could be the final move in the most aggressive tightening campaign since the 1980s. With a slight tweak to its language, the central bank let the world know that the time to step back and watch may have arrived. Fed Chair Jerome Powell has made it his mission since the days of “Team Transitory” to thread the needle of a soft landing. With America’s long-thrumming economy finally showing signs of lassitude, the question now is whether the inflation fight went too far, or not far enough, or ends up being just right. Throw in the wild cards of the banking crisis and the GOP’s threat to let the US default, and it may make for an interesting summer for the economy. “The committee will closely monitor incoming information and assess the implications for monetary policy,” the Federal Open Market Committee pledged. 

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Powell put a point on the risk posed by a failure to pay debts already incurred by the federal government, albeit with typical understatement. He warned that not raising the debt limit would be unprecedented, with highly uncertain and negative effects on the economy.

Jerome Powell Photographer: Al Drago/Bloomberg

JPMorgan’s emergency acquisition of First Republic Bank over the weekend meant the troubled lender’s branches opened as usual Monday to keep serving its well-to-do clientele. But will those spots stay open? The vast majority of First Republic’s full-service branches—known for their prowess in catering to wealthy people across the greater New York and San Francisco Bay area—are within a mile of existing Chase locations.

Washington is turning to its favorite Wall Street cleaning crew to pick up after the US banking industry. After almost two months of smoldering turmoil, BlackRock has only just begun its work. The firm’s Financial Markets Advisory unit has been retained to size up and sell investments related to two of the failed lenders—Silicon Valley Bank and Signature Bank. 

The CEO of IBM has a message for remote workers: “Your career does suffer.” Working from home is suitable for some roles, says Arvind Krishna, but those who aspire to move up the ranks need to be in an office.

Arvind Krishna Photographer: Christopher Goodney/Bloomberg

Even with mass firings and lower bonuses across global financial firms, banking jobs remain plentiful and salaries are surging in one unexpected country.

The selloff in Icahn Enterprises triggered by a Hindenburg Research report deepened Wednesday, sending the stock to its lowest since December 2010. Shares sank as much as 21% intraday, adding to a 20% plunge in the prior session when the renown short seller sent Icahn stock spiraling in its worst one-day drop on record.

In the two weeks since Tesla alarmed investors by revealing how much of a toll Elon Musk’s discounts were taking on its profit margins, the billionaire pushed prices back up. But the increases on the Model S and X, and tiny markups on the Model 3 and Y, probably aren’t all-clear signals indicating Tesla’s pricing will stabilize for long.

What you’ll need to know tomorrow

Messi Said to Be in Talks for a $400 Million Deal

Saudi Arabia is reportedly preparing to offer football star Lionel Messi a $400 million annual contract to play with the Saudi Pro League this summer. The deal, reported by the Telegraph, is being negotiated by Messi’s father and would far exceed the more than $200 million Cristiano Ronaldo got to sign up with Saudi Arabia until the summer of 2025. 

Lionel Messi Photographer: Hernan Cortez/Getty Images

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