Bloomberg - Evening Briefing - ‘Something really, really bad’

There has been a lot of talk, both here and elsewhere, about how the US Federal Reserve might pull off a so-called soft landing, even with sticky inflation, record employment, a banking crisis, a potential credit crunch and, oh yes, the possibility the world’s largest economy will shoot itself in the foot. Well, some people see that list of calamities and are less than hopeful. Stanley Druckenmiller, for one, foresees a decidedly bumpier denouement. And unlike recession prognosticators who predict a downturn will come at the end of the year, the billionaire founder of Duquesne Family Office warns it may happen before July. “I am not predicting something worse than 2008,” Druckenmiller said. “It’s just naive not to be open-minded to something really, really bad happening.”

Stanley Druckenmiller Photographer: Christopher Goodney/Bloomberg

In markets Tuesday, US equities slumped ahead of a critical inflation report while the debt ceiling standoff dragged on investor sentiment.  Airbnb shares tumbled after the vacation home-rental company gave a cautious forecast for revenue in the second quarter, suggesting rising prices and a murky economic outlook are beginning to weigh on consumer appetite for trips. Here’s your markets wrap. —David E. Rovella

UBS Group appointed Ulrich Koerner to its top management body, giving the chief executive of  Credit Suisse Group a key role in overseeing the complex combination of the two firms. Koerner, a veteran of both lenders who unsuccessfully tried to stabilize Credit Suisse over the past nine months, will oversee the latter’s operating businesses as UBS plans to integrate them over time. 

The world’s biggest producer of hardwood pulp is considering selling its products to China priced in yuan, adding to signs that the dollar is losing its dominance in commodity markets. The use of the renminbi in contracts for everything from oil to nickel is gathering speed, and sanctions that have ensnared Moscow over its war on Ukraine have added to that pace. 

Faced with allies worried about the consequences of a fragmented world, the Biden administration is working hard to stress that—despite all the angst—it isn’t pursuing a long-term “decoupling” of the US and Chinese economies. US Treasury Secretary Janet Yellen will carry this message to the meeting of Group of Seven finance ministers in Japan this week, and President Joe Biden will bring it to leaders’ summits in Japan and Australia later this month.

Janet Yellen Photographer: Anna Moneymaker/Getty Images North America

Women should undergo breast cancer screening every other year starting at age 40, a panel of US experts said, 10 years earlier than previously recommended. Breast cancer is among the most common and deadly cancers for American women. 

The growing mountain of potential civil and criminal liability looming over Donald Trump dropped another boulder onto the twice-impeached former president, this time in the form of a $5 million jury verdict for sexually abusing writer E. Jean Carroll. Already a criminal defendant in New York state court for allegedly hiding payoffs tied to his 2016 presidential campaign, Trump’s businesses are the subject of a New York state civil probe and the 76-year-old himself is under state and federal criminal investigation for his handling of top secret documents, his role in the Jan. 6 insurrection and what Congress has called the first attempted coup in American history.

But there was some good news for Trump on Tuesday. Republican megadonor and Blackstone billionaire Steve Schwarzman says he’ll hold off donating money to Trump rival Ron DeSantis for now. A meeting with the expected presidential aspirant apparently left him unconvinced of the Florida governor’s prospects. 

Is London a financial has-been? Jan du Plessis was quick to offer a withering assessment of the City of London’s place in the world. After a career that included stints as chairman of Rio Tinto, SAB Miller and BT Group, Du Plessis took over Britain’s accounting watchdog last year following a series of scandals that left investors nursing heavy losses. “It’s clear that over the last five, 10 and 15 years, we have been declining as a financial capital in almost any metric,” he says in an interview with Bloomberg. He blames various factors for the decline: a cultural objection to high executive pay, the unwanted influence of proxy agencies and a reluctance to embrace change. As for Brexit, he declines to comment. “You’re setting a trap,” he smiles.

Jan Du Plessis Photographer: Carlotta Cardana/Bloomberg

• US default threat talks begin; both sides disavow short-term deal.
• Bloomberg Opinion: Putin’s “Victory Day” brings evidence of defeat.
• Italy plans to dump China’s Belt and Road as relations with Beijing sour.
• Palantir sees record demand for its new AI tool. Here’s what it does.
• Your next trip to a Wendy’s drive-thru may involve an AI chatbot.
• Obscure Swiss watchmaker finds Patek-like demand, one-year wait lists.
• The buzziest California wine region isn’t Napa or Sonoma.

Manhattan’s commercial real estate market is reeling, offices are sitting partially empty and rising interest rates threaten to bring widespread defaults. But for a subset of wealthy investors, the allure of owning New York City property is particularly strong. With large institutional buyers pulling back on deals, high-net-worth families and little-known developers are bargain-hunting for Manhattan office buildings. 

An entity co-founded by the son of a Quebec businessman bought AIG’s former Manhattan headquarters (above) at a 7% discount from the previous sale price in 2019. Photographer: Amir Hamja/Bloomberg

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