Bloomberg - Evening Briefing - Warning for 2024

Mohamed El-Erian is warning that a swath of corporations will be hurt by higher interest rates when they have to refinance next year. “If you look at high yield, if you look at commercial real estate, there’s massive refinancing needs next year. Massive,” he said Friday. El-Erian, chief economic adviser at Allianz SE and a Bloomberg Opinion columnist, warns that there are “things that have to be refinanced in this economy that cannot be refinanced in an orderly fashion at these rates.” His warning may underscore why the stakes are so high for understanding how much longer the US Federal Reserve will keep interest rates at elevated levels. And El-Erian isn’t the only one warning that the US economy is just beginning to feel the effects of the central bank’s aggressive monetary policy tightening. Apollo’s Torsten Slok said the impact of rate hikes is beginning to ripple through credit markets, with delinquency rates on credit cards rising. —David E. Rovella

Nevertheless, US inflation expectations fell in early September to the lowest levels in more than two years as consumers grew more optimistic about the economic outlook. Consumers expect prices will climb at an annual rate of 3.1% over the next year, down from the 3.5% expected in August, according to the preliminary reading from the University of Michigan. That marked the lowest reading since early 2021.

The United Auto Workers began a strike Friday against all three of the legacy Detroit carmakers, an unprecedented move that could launch a costly and protracted showdown over wages and job security. After the midnight deadline for a new contract passed, workers walked out on a Ford plant in Michigan that makes Bronco SUVs, a General Motors factory in Missouri that assembles Chevrolet Colorado pickups and a Stellantis plant in Ohio that builds Jeep Wrangler SUVs. The union and automakers are still far apart after weeks of talks. The strategy of targeting individual plants is designed to methodically cut production of profitable vehicles while minimizing the impact on the UAW’s strike fund. The union said it will add strike locations depending on how bargaining progresses.

Wells Fargo’s former head of retail banking avoided prison for misleading regulators investigating one of the biggest banking scandals in modern US history, as a judge imposed a sentence of three years of probation. Carrie L. Tolstedt, 63, the only Wells Fargo executive to be charged in the fake-accounts scandal of 2016, had pleaded guilty to obstruction of a bank examination by the Office of the Comptroller of the Currency.

Carrie Tolstedt Photographer: Louis Lanzano/Bloomberg

The US Internal Revenue Service plans to hire 3,700 employees to help fuel its efforts to target large corporations and complex partnerships. President Joe Biden’s Inflation Reduction Act set aside tens of billions of dollars for the IRS to intensify its enforcement of tax cheats. The Friday announcement followed agency news last week that it would open examinations for 75 of the largest US partnerships by the end of this month.

Canada is postponing a trade mission to India that was planned for early October, a move that comes as broader trade talks between the two countries have stalled. It also follows a contentious meeting between Canadian Prime Minister Justin Trudeau and Indian Prime Minister Narendra Modi during the recent G-20 summit in New Delhi. Modi’s office publicly criticized Trudeau after the meeting for allegedly tolerating “anti-India activities of extremist elements in Canada,” while Trudeau said he raised concerns over foreign interference in Canadian politics.

Indian Prime Minister Narendra Modi, left, and Canadian Prime Minister Justin Trudeau at the G-7 summit in Germany in 2022. Photographer: Liesa Johannssen-Koppitz/Bloomberg

Apple’s new iPhone 15 Pro quickly saw initial delivery times slip well into November as the new flagship device went on sale for pre-orders Friday, suggesting strong demand for the most-expensive models.

China’s property market is in crisis. Real estate prices that skyrocketed over the past few decades have begun to fall back to Earth. Now the danger is that collapsing home values will also bring the world’s second-biggest economy down along with them. In the Bloomberg Originals mini-documentary China’s Property Meltdown, we explore how this upheaval started and look at what the implications could be for the global economy.

• Libya flooding has reportedly killed more than 11,000 people.
• At least 3,000 were killed in the Morocco earthquake.
• Saudi Arabia to raise $11 billion in biggest EMEA loan this year.
• China defense chief mystery deepens amid leadership upheaval.
• Nigeria inflation surge increases odds of ninth rate hike in a row.
• Flawed US home-loan system neglects the buyers who need it most.
• Stock drop has volatility gauge rising: Here’s your markets wrap.

Sooner or later, every parent asks Christopher Rim the same question: What will it take to get my kid into Harvard or Yale? His answer: $750,000. That’s Rim’s going rate for advice on landing a coveted spot in the Ivy League for students who want to start college prep in the seventh grade. Rim and his team at New York-based Command Education serve as a sort of white-glove college concierge service for the ultra-wealthy and their ultra-wealthy kids. His fee is more than twice what it can cost to actually attend one of those eight elite schools.

Harvard University Photographer: Simon Simard/Bloomberg

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