Bloomberg - Evening Briefing - Unforeseen consequences

This year’s record global temperatures are playing out on many fronts including the unforeseen, from tourism to mental health, labor and diplomacy. In the US, almost one quarter of the population—some 80 million people—will again this weekend experience actual temperatures or a heat index of 105F (40.5C). Labor groups are pushing for measures to protect outdoor workers, including rests and water in Florida’s Miami-Dade County (while Texas bans such requirements). It turns out the heat is not just bad for human bodies (at least 61,000 people died in Europe last summer from heat-related causes), but there may also be a link to suicides and hospital trips for mental illness. Germany’s top health official is recommending midday breaks for workers similar to the Spanish siesta. The heat in Europe could break a record this weekend, and while it doesn’t seem to have affected tourism this year, the weather in popular destinations like the Maldives and Greece may become too extreme–for would-be travelers.

A wildfire in Agios Charalampos, near Athens. The temperature in Greece is becoming so extreme tourists may stay away. Photographer: Aris Messinis/AFP

In Asia-Pacific, temperatures in central Tokyo soared to almost 9C (16F) above the seasonal average. China says it has enough electrical capacity to meet this summer’s demand—its stockpiles of dirty-burning coal are at a record. This summer is also a reminder of the underlying causes of the climate crisis and how far the world has to go if it’s ever to bring global warming under control. US climate envoy John Kerry was in Beijing this week to discuss better collaboration on cutting greenhouse gas emissions. The two sides didn’t reach an agreement, but said they would continue talks. Kerry offered one of the few positive assessments of the grim reality facing humanity: “We’re in the chase.”

With inflation ebbing and job creation strong, the US Federal Reserve will soon decide whether it should again hike interest rates to further beat down inflation spurred by the pandemic and war on Ukraine. While Fed staff economists have anticipated an eventual downturn, Fed Chair Jay Powell says a soft-landing is quite possible, as have many on Wall Street. Even economists have become more optimistic. That should be good news for President Joe Biden, who wants voters to acknowledge his economic accomplishments. With a tight labor market, workers still hold many the cards, and now 650,000 of them—from Hollywood to UPS—are threatening to strike or have already walked off the job.

But corporate losers are emerging in the global inflation fight. A $500 billion debt storm is brewing, threatening a wave of corporate bankruptcies that could slow economic growth and strain credit markets. Private credit firms are extending their reach into the more than $260 billion global asset-based lending business, seizing on a pause by some traditional Wall Street banks to take on more corporate debt. Speaking of banks: federal regulators are set to release new regulations that are likely to be more stringent given the regional bank meltdown. 

Apple is quietly working on artificial intelligence tools, including a framework to create large language models called “Ajax.” But the company has yet to devise a clear strategy for releasing the technology to consumers. Apple was caught flat-footed over the past year with the introduction of OpenAI’s ChatGPT, Google’s Bard and Microsoft’s Bing AI. Tesla, for its part, will spend more than $1 billion to become a player in supercomputing. Chief Executive Officer Elon Musk also said the EV company will have to keep lowering prices if interest rates continue to rise.

The highly-anticipated Barbie and Oppenheimer films are finally here, and they may drive the box office to its best weekend in years. But even with many planning for a Barbenheimer double-feature, there are doubts the films will be enough to power further gains in movie-theater stocks as a strike by Hollywood writers and actors clouds the outlook for the industry.  For the next few weeks, though, “it will be Barbie’s world and we will all be living in it,” writes Andrea Felsted for Bloomberg Opinion. 

Cillian Murphy in Oppenheimer Photographer: Melinda Sue Gordon/Universal Pictures

Tourism to Britain surged to near pre-pandemic levels in the first quarter, with visitors spending some $7.3 billion. Fewer than 2% of executives in the US hospitality industry are Black, a disparity that Stephanie Jones, head of Blacks in Travel & Tourism, is trying to reverse by working with Black tour operators on cultural heritage tours. And believe it or not, wool is an ideal fabric for summer travel: Merino wicks sweat, is odor-resistant and great for traveling light.

• Oil, tech, automakers and Europe’s largest banks report earnings.
• Spain national election amid a resilient economy, drop in real income.
• Fed, ECB rate decisions, while the BOJ is expected to keep easy policy.
• The FIFA Women’s World Cup continues with record attendance.
• Cambodia’s long-serving ruler prepares to hand power to his son. 

For decades, WeightWatchers taught dieters there was only one way to shed the pounds: hard-won behavioral change. For many members, losing weight included in-person meetings to step on a scale, discuss struggles, triumphs, tips and tricks. Then, this March, debt-strapped WW International reversed course, shutting down thousands of in-person locations to clamp down on rent costs. It also agreed to pay $132 million to acquire Sequence, a two-year-old telemedicine startup, as the company gets in on the hottest new thing in weight loss: obesity medications such as the much touted celebrity staple Ozempic. The new strategy could save—or bury—the company.

WeightWatchers’ sharp turn to pharmaceuticals is the work of its new chief executive, Sima Sistani. Photographer: Adrienne Grunwald

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