Bloomberg - Evening Briefing - ‘Positive trajectory’

US economic growth picked up steam in the second quarter thanks to resilience among consumers and businesses despite high interest rates. Gross domestic product rose at a 2.4% annualized rate compared with 2% over the previous three months, the government said. Consumer spending increased at a 1.6% pace, which was more than predicted. The Federal Reserve’s staff is no longer forecasting a recession, Chair Jerome Powell said yesterday after the central bank raised rates by a quarter percentage point. Powell also said that he expects the Fed can cool inflation without a big increase in unemployment. “Growth is outpacing expectations even as the monetary policy stance has become restrictive,” Rubeela Farooqi, chief US economist at High Frequency Economics, said in a note. “A strong household sector that continues to benefit from positive job growth and rising real incomes should keep growth on a positive trajectory this year.” —David E. Rovella

Europe is a different story. Christine Lagarde is confronting how tighter monetary policy is driving the euro-zone economy into the ground. The European Central Bank president on Thursday offered a downbeat assessment of a “deteriorated” economic outlook as she delivered a ninth consecutive interest-rate increase and said that the Governing Council is open to another potential hike in September.

Christine Lagarde  Photographer: Alex Kraus/Bloomberg

How did PacWest manage to avoid the same doom visited upon other regional banks a few months back? The California lender had borrowed its way into a corner, but the trifecta of a rival smelling opportunity, private equity eager to swoop in and, well, Jamie Dimon, allowed it to pull off a deal without the government stepping in.

With Wall Street’s Cassandras coming around to the possibility of a US soft landing, they went looking for something else to worry about, and found it. Speculation about a tweak in policy on the other side of the world roiled markets across the board. Here’s your markets wrap.

This isn’t turning out to be Xi Jinping’s year. The sudden ouster of his handpicked foreign minister sent another signal of how the Chinese leader’s tightening grip isn’t protecting him from setbacks on his biggest policy priorities. Qin Gang’s removal is widely seen by China watchers as a blow to Xi, who had elevated him over more experienced contenders. Xi’s ideological fight with the US has fueled a global campaign to block China’s access to high-tech chips, while his declaration of a “no limits” friendship with Kremlin leader Vladimir Putin has drawn widespread criticism from key trading partners. China’s economic growth has trailed estimates as the effects of Xi’s stringent Covid Zero strategy and the deadly wave of infections following his botched reopening linger. All of this diplomatic turbulence adds to a long list of challenges facing China that can be traced, in part, to his signature initiatives.

Xi Jinping Photographer: Leah Millis/AFP

When Farmers Insurance Group said last month that it would stop writing new homeowners policies in Florida, it became the 15th insurer in the state to take that step. Farmers said it needed to “manage risk exposure” in a place where the climate crisis threatens ever-more natural disasters. The odd thing though is that Florida’s slow-motion insurance meltdown is happening just as new people race to buy property in places on the fast-track to becoming uninhabitable, a pattern playing out across the US. 

Remember 1MDB? A former Bank Negara Malaysia chief just testified against the country’s ex-Prime Minister, Najib Razak, in a trial linked to 1Malaysia Development Bhd. She allegedly expressed concern on the rising debt at the state fund and had no knowledge some money in the then-leader’s accounts were from 1MDB.

Office buildings are poised to set records for a bad reason this year: The amount of office space in the US is declining for what is likely the first time in history.

• Property pain from London to Paris has just begun as well.
• Bloomberg Opinion: We’re actually using more oil than ever.
• The I bond party comes to an end as US inflation cools down.
• Intel jumps after an upbeat forecast fuels optimism about chips.
• The use of AI in making movies is becoming an existential crisis.
• Ever wondered what Tesla owners think of Elon Musk? We did.
• Where are all the rich Russians going on vacation? Thailand.

US women’s soccer has more often been associated with its national team—thanks in large part to four World Cup victories—than professional play, given the latter’s two failed efforts at establishing a successful pro league. But now, through major investment, celebrity star power and a wide-open field for growth, the National Women’s Soccer League could be the turning point. In this episode of the Bloomberg Originals series Next in Sports, we speak to investors who contend the NWSL is an untapped opportunity with high valuation potential.  

Alex Morgan Photographer: Elsa/Getty Images

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