Bloomberg - Evening Briefing - More rate hikes

As cooler air descends across some parts of the US, so too has a chill arrived on Wall Street to dispel warm feelings of inflation’s defeat and a possible soft landing. A rout in Treasuries intensified and US stocks lost ground Monday after Federal Reserve officials alluded to the need for the central bank to leave borrowing costs high. Vice Chair for Supervision Michael Barr said that the biggest question was how long to leave interest rates elevated. But Fed Governor Michelle Bowman reiterated her call for multiple additional rate hikes. Here’s your markets wrap. —Natasha Solo-Lyons

Office prices in the US are due for a crash, and the commercial real estate market faces at least another nine months of declines, according to Bloomberg’s latest Markets Live Pulse survey. About two-thirds of the 919 respondents surveyed said they believe the US office market will only rebound after a severe collapse.  

Tesla shipped 435,059 cars globally in the third quarter as factory downtime led to its first delivery decline in more than a year. The results, posted Monday, missed expectations. Several Wall Street analysts had slashed their delivery estimates in recent days, and the consensus compiled by Bloomberg fell to 456,722 on Friday. Tesla delivered 466,140 cars in the second quarter.

Bill Ackman said on CNBC on Monday that he would be interested in a deal to take Elon Musk’s X public with his investment vehicle, but hasn’t spoken to Musk or the company about it yet. Ackman said he’s a backer of the troubled social media platform already, with a small $10 million investment through his firm’s foundation.

Bill Ackman Photographer: Christopher Goodney/Bloomberg

Microsoft Chief Executive Officer Satya Nadella said artificial intelligence could help Google extend its dominance of the search market, as he took the stand Monday in the Google antitrust trial.

Meanwhile, JPMorgan CEO Jamie Dimon revealed AI is already being used by thousands of employees at his bank. He contends the tech will likely lead to dramatic improvements in workers’ quality of life—even if some people get fired as a result of it. “Your children are going to live to 100 and not have cancer because of technology,” Dimon said in an interview on Bloomberg TV Monday. “And literally they’ll probably be working three-and-a-half days a week.”

GOP disunity is intensifying in the aftermath of a last-ditch deal to avert a US government shutdown. Far-right Republicans behind the near-debt default in May and the near-shutdown this weekend are now moving to punish House Speaker Kevin McCarthy, who they helped install at the beginning of the year. This latest GOP civil war arguably threatens to shake the balance of power in the Capitol. 

Guess what US taxpayers? The most-expensive and perpetually defect-ridden defense program in American history is about to get even more expensive. Lockheed Martin is the maker of the beleaguered F-35 fighter jet, which the Pentagon now says will cost $438 billion, up $26 billion from the last estimate a year ago. The 6.5% increase is actually relatively modest by the standards of the program, which originally was $233 billion when Lockheed won the contract—22 years ago.

Military personnel look inside the cockpit of a model of a F-35 Lightning II joint strike fighter jet at a UK airshow in 2014. Photographer: Simon Dawson

• Bloomberg Opinion: Shutdown averted. Now what?
• With banks offering 5% returns, financial advisers fight irrelevance.
• T. Rowe and Oak Hill start private credit fund for mass-affluent market.
• Austin wealth boom expands healthcare for the poor seeking relief.
• Airbnb is fundamentally broken, its CEO says. But he plans to fix it.
• Silicon Valley billionaire is mystery figure behind $70 million penthouse.
• Japan Airlines revamps first class with luxury double-bed suites.

Companies are trimming their budgets for merit raises next year, a sign of belt-tightening that could surprise some employees who had enjoyed two straight years of increases. US employers surveyed by Aon, which compiles compensation data on more than 5,500 employers, said merit raises will average about 3.7% across all industries next year, down from 3.9% this year, as companies rein in labor budgets and inflation eases from last year’s highs. A separate survey from workplace consultant Mercer found a similar trend. Here’s how much compensation budgets are changing. 

Photographer: Michael Nagle/Bloomberg

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