Bloomberg - Evening Briefing - Spinning the Fed’s wheel

Predicting the Federal Reserve’s next move on interest rates can seem like a game of roulette. On any given day—Thursday for instance—America’s powerful labor market can churn out surprisingly hot numbers that make additional hikes more likely. In turn, Wall Street’s dream of a return to rate cuts is pushed further out of reach. Stocks, of course, plummet. Then take another day—say Friday—when more labor numbers come out. These seem to show the country’s half-century strong employment picture beginning to cool. Maybe inflation will slow, and thus investors won’t have to wait too long for rate cuts. Stocks dutifully edge higher. While yesterday’s scenario is seen as indicating the US will avoid recession but perhaps not prolonged inflation, today’s setup is more in line with Fed Chair Jerome Powell’s plan to rein in the economy. His strategy, however, has always risked over-hiking into a downturn (he’s managed to avoid one for a year now).

Jerome Powell, chairman of the US Federal Reserve, during a Senate Banking, Housing and Urban Affairs Committee hearing in Washington on June 22. A rate hike from the central bank this month seems all but assured, Wall Street analysts say. Photographer: Nathan Howard/Bloomberg

The wild card on Friday was stronger-than-expected wage growth for June, which arguably keeps the Fed on track to raise interest rates this month. Those payroll numbers, says Seema Shah of Principal Asset Management, aren’t weak enough to stop the Fed’s hikes right away. “Jobs growth has slowed but remains too strong to justify an extended Fed pause,” she says. “Wage pressures are still too strong.” The big picture to keep in mind though is that the US economy is still firing on all thrusters while much of the rest of the world struggles to emerge from the pandemic. Come next week, the wheel will spin again. Where it lands, not even Jerome Powell knows. Here’s your markets wrap. —David E. Rovella

China imposed more than $1 billion in fines on tech giants Ant Group and Tencent Holdings, signaling a possible end to a wide-ranging probe that’s weighed on Jack Ma’s empire and the broader sector for years. China has been making lots of moves to reverse it’s recent descent, and one of them is to tie up loose ends from its tech crackdown. The probe into Ant marked the symbolic start of Xi Jinping’s broader attack on China’s internet industry, which wiped hundreds of billions of dollars off the value of sector leaders. Allowing the fintech giants to resume business growth would kindle hopes that Beijing will finally unfetter its giant private sector, part of a nationwide effort to resuscitate a flagging economy. 

Alibaba founder Jack Ma Photographer: Thibault Camus/AP

Later this month, the Fed plans to roll out its FedNow Service, offering banks a way to make instant domestic payments available to their customers at any time of day, and any day of the year. Bloomberg’s editors write that this long-awaited upgrade is welcome, finally helping the US  catch up with the rest of the world.

Dutch Prime Minister Mark Rutte’s government collapsed over a migration policy dispute, setting up the Netherlands for its second general election in little more than two years. Rutte, who has led the Dutch government since 2010, failed to marshal an agreement on Friday within his four-party governing coalition to limit an influx of asylum seekers.

NATO allies have agreed to a new pledge to spend at least 2% of GDP on defense, firming up the alliance’s previous goal to “move toward the 2% guideline” as it looks to give an aggressive Russia pause. The pledge is set to be signed by NATO leaders when they meet for their annual summit in Vilnius July 11-12. They are also slated to agree to a package of long-term support for Ukraine, including efforts to upgrade political ties and a possible pledge to fast-track membership when conditions allow. Meanwhile, Turkey continues to object to Sweden joining NATO, and in doing so puts its chances of getting any F-16s from the US in jeopardy.

A US Air Force F-16 fighter jet on display at the Paris Air Show on June 20 Photographer: Nathan Laine/Bloomberg

Seven Petroleos Mexicanos workers are unaccounted for after a natural gas platform in the Gulf of Mexico exploded early Friday morning. Six people were reported injured, the company said. The state-owned company said 321 workers had been evacuated and four vessels were sent to control the fire. Pemex has come under scrutiny from analysts for its environmental and safety record after frequent accidents and explosions at its facilities. The company is shouldering $107.4 billion in debt, the most of any oil major, and is struggling under a liquidity crunch.

The fight between Microsoft and the UK competition watchdog over the software giant’s pursuit of Activision Blizzard is no longer just an intellectual argument about how markets work, Chris Hughes writes in Bloomberg Opinion. It’s a battle of legal firepower and tactical common sense. And guess who has the upper hand?

Meta Platforms’s new social media app Threads has garnered 70 million users in just two days after its launch, a sign of enthusiasm that Chief Executive Officer Mark Zuckerberg said was “way beyond our expectations.” Threads launched on Wednesday as an alternative to Elon Musk’s Twitter, which has been beset by controversy. On Threads, people can post text and links and reply to or repost messages from others. The app will let users port over their existing follower lists and account names from Instagram, Meta’s photo and video-sharing app that counts major brands, celebrities and creators among its more than 2 billion users. Over in Europe, they can’t wait to get their hands on the app it seems.

The Threads app Photographer: Paul Hanna/Bloomberg

• Russia disregards UN watchdog advice to power down Ukraine reactor.
• Oil is hard to quit—even in Norway where electric cars rule the road.
• Indeed, President Joe Biden to buy 6 million barrels for strategic reserve.
• This CEO grew up in poverty only to build a $1.4 billion fish unicorn.
• Want a $3,500 Apple Vision Pro headset? Make an appointment.
• Omega raises luxury watch prices as other brands struggle.
• The new Barbie movie is about a lot more than selling dolls.

It’s getting riskier to embark on a vacation in Europe this summer, with the aviation industry bracing for the possibility of widespread strikes during the peak travel season. Industrial action has already come to airports in France, the UK and Switzerland and affected the likes of  Ryanair, Air France-KLM and Deutsche Lufthansa. Now staff at Europe’s air route coordination body may walk off the job, too. Thousands of flights could be delayed or outright canceled as a result. Maybe a staycation is in order?

Orly Airport in France Photographer: Nathan Laine/Bloomberg

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