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Bloomberg Weekend Reading

Just a couple of months ago, the world was eagerly awaiting a signal from the US Federal Reserve that its policy tightening was near an end as it wrestled down inflation. And while Fed Chair Jerome Powell finally gave that sign on Friday, his comments were supplanted by a new economic obstacle out of the central bank’s control. With June 1 being the expected last day the US can fully pay its bills, Republican negotiators abruptly walked out of talks with White House negotiators on Friday, renewing fears of a catastrophic debt default. Just hours earlier, President Joe Biden, in Japan for the Group of Seven summit, urged his deputies to keep pursuing a deal with Republican House Speaker Kevin McCarthy amid indications from both sides that progress was being made.

From left, Canadian Prime Minister Justin Trudeau, US President Joe Biden, Japanese Prime Minister Fumio Kishida, and Kazumi Matsui, mayor of Hiroshima, at the G-7 leaders’ summit in Hiroshima. Photographer: Franck Robichon/EPA

McCarthy triggered the crisis when he decided to use the debt ceiling deadline to demand unrelated cuts to enacted measures, including education loans and climate initiatives. Biden responded to the ultimatum by calling for a “clean” rise of the debt ceiling and separate talks on the budget. A default could plunge the country into recession and send borrowing costs soaring. And even as Treasury Secretary Janet Yellen continues to sound the alarm and some Democrats raise options such as the 14th Amendment, Biden is unlikely to have the power to unilaterally save America from a default. But maybe he won’t have to, because on Friday evening, McCarthy said the talks would resume. “The obligation to pay the government’s debts lies with Congress—where the framers put it,” Noah Feldman writes in Bloomberg Opinion. If McCarthy decides not to pay the nation’s bills, there’s nothing Biden can do about it.” 

What you’ll want to read this weekend

Ukrainian President Volodymir Zelenskiy attended an Arab summit along with two men at odds with his most powerful ally: Saudi Crown Prince Mohammad bin Salman and Bashar Al Assad of Syria. The latter is behind the killing of tens of thousands of civilians in his country’s ghastly civil war and a strong ally of Kremlin leader Vladimir Putin. Zelenskiy was then headed to the G-7 meeting in Japan in one of his highest profile trips abroad to raise global support. On the ground in Ukraine, it’s too early to tell if his forces have begun their long-anticipated counteroffensive, a top US official said, while a new study warns the Russian military has changed the way it fights, posing a significant threat to any new Ukrainian push.

Point72 founder and New York Mets owner Steve Cohen thinks investors are too worried about a market downturn. “I’m making a prognostication—we’re going up,” he said, thanks to a boost from artificial intelligence. Startups producing tools that can generate fake content (see below) are raking it in, with venture capitalists pumping $187.7 million into the space last year, up from just $1 million in 2017. OpenAI Chief Executive Sam Altman testified on Capitol Hill about safeguarding the technology in a “bizarre congressional hearing that ignored good policy ideas already in play,” writes Parmy Olson in Bloomberg Opinion. 

A fake image of Pope Francis generated by Midjourney AI, left, and a real photo of Pope Francis. Source: Midjourney; AFP/Getty Images

The US Supreme Court left in place a broad liability shield for social media companies for content posted by users, insulating the likes of Twitter (which may have a new competitor via Instagram soon), Facebook and Google. Montana became the first US state to ban TikTok, beginning next year, a law the state’s governor said was aimed at protecting “Montanans’ personal and private data from the Chinese Communist Party.”

What does it mean to be part of the 1%? It depends on where you live: In Monaco it takes $12.4 million, while in the US $5.1 million will do. But in the Philippines, just $57,000 makes the cut. The new data underscore how the pandemic and surging living costs are widening the gap between rich and poor nations. Inside one of the richest nations, inequality reigns as well. About 38.5% of American adults struggle to just make ends meet each month. That’s up from 26.7% from the same period in 2021. Then there’s the rent, which reached another record in New York City in April.

In a world that undoubtedly feels less formal, ties of every shape, size, color and pattern are back this spring. As we move closer to summer, here are seven of the best places to drink in the Hamptons. Meanwhile, tourism to Uganda, one of the few places to see the endangered mountain gorilla, is falling because of anti-LGBTQ legislation in the African nation.

What you’ll need to know next week

  • Greece goes to the polls just as it tries to regain investment-grade status.
  • Goldman Sachs holds its annual tech event, TechNet.
  • Lowe’s, Costco and more US retailers report amid a cautious outlook.
  • Turkey’s central bank meets three days before presidential runoff vote.
  • Business and finance leaders gather for the Qatar Economic Forum.

A Champion Boxer for the Influencer Era

Devin Haney has 2.2 million Instagram followers, a roster of luxury cars and eight-pack abs—often on display in photos. He’s also the lightweight boxing champion of the world. As he seeks to defend his title against Vasiliy Lomachenko, he’s sweating his selfies as hard as the speed bag.

Devin Haney takes a break from training for his upcoming fight against Vasiliy Lomachenko on May 20 in Las Vegas. Photographer: Martina Albertazzi for Bloomberg Businessweek

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