Bloomberg - Evening Briefing - Pause, not stop

Pause, not stop. That’s the message from the US Federal Reserve, which as widely predicted (thanks to a dollop of foreshadowing by Fed officials) shelved its 15-month rate-hiking campaign for now. With inflation cooling and America’s employment picture remaining robust, the game is watch and see how it all shakes out over the next month. The Fed is hoping to bring the post-pandemic US economy in for a gentle landing, but said it wants to take time to assess. Simultaneously, the central bank went out of its way to make sure everyone knows it may raise rates down the line, predicting inflation will still be a problem. But this month the Fed “judged it prudent” to hold rates steady given how quickly they have risen, Powell said, adding that the pause is a continuation of its moderating pace of policy measures. “We’ve covered a lot of ground, and the full effects of our tightening have yet to be felt,” the Fed chief said. But according to Bloomberg Economics, the threat of inflation going forward is somewhat less than the Fed would have us believe: “Inflation will likely be lower than these projections by year-end, and ultimately the Fed will hike less than what the new dot plot indicates.” —David E. Rovella

Wall Street got the message nevertheless. The relentless rally in US stocks lost some traction Wednesday as the Fed made clear more interest-rate hikes are still on the table. Here’s your markets wrap.

And Citadel’s Ken Griffin still sees a recession coming. “We’re much more cautious about 2024,” the billionaire hedge fund titan said. “We’ll look at the credit markets as a source of opportunity.” He said he’s particularly focused on the high-yield credit market, with a mixture of long and short strategies.

Ken Griffin Photographer: Saul Martinez/Bloomberg

The International Monetary Fund criticized the Pakistan government’s budget as insufficient to meet the goals of its aid program, a sign that the two sides will likely fail to meet a deadline this month to unlock aid payments. The criticism from the Washington-based lender comes as a July 31 deadline nears for the latest review of a $6.7 billion loan program.

With interest rates elevated and the number of UK mortgage deals shrinking on a daily basis, many borrowers there are seeking to shore up their finances by paying down their home loans early. However, as Stuart Trow writes in Bloomberg Opinion, just because you can doesn’t mean you should.

The USS Connecticut, a premier submarine that struck an underwater mountain in the South China Sea 19 months ago, won’t be back in service until early 2026 at the soonest. It adds to a large backlog of maintenance overhauls just as the US faces a growing Chinese fleet, already the largest in the world. 

The USS Connecticut in 2018 Source: Smith Collection/Gado/Archive Photos

While China’s Navy may be gaining advantage, it’s finances are still in trouble. Senior Chinese officials are soliciting advice from business leaders and economists on how to revitalize the economy in a flurry of meetings attendees have characterized as unusually urgent in tone. 

The worldwide boom in generative artificial intelligence will usher in an age of accelerated productivity and greater prosperity for some—and profound disruption for others, primarily knowledge workers. Whole swaths of business activity, from sales and marketing to customer operations, are set to become more embedded in software. For many, that will be very bad news.

• Bloomberg Opinion: Big Oil doubles down on, well, fossil fuels.
• Summer rate hikes threaten to push UK housing market to brink.
• Meanwhile UK interest rates may remain where they are for years.
• Saudi airline embraces luxury to challenge carriers Emirates and Qatar.
• Luxury Banff resort is bought by Ontario pension for $128 million.
• Dubai’s most expensive house is for sale—for $204 million.
• Idris Elba is about to star in a video game.

Wednesday was a bad day for Google. The US search giant was accused of abusing its dominance over advertising technology to crush competition, part of European Union antitrust allegations that could force divestment. But at the same time, Google is trying to get a jump on future tech by introducing generative AI into online shopping, aiming to outdo e-commerce rivals like Amazon.

Sundar Pichai, chief executive of Google-parent Alphabet  Photographer: David Paul Morris/Bloomberg

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