Bloomberg - Evening Briefing - Maybe no rate cuts

Perhaps the last thing impatient investors want to hear but music to the ears of savers, US Federal Reserve Bank of Minneapolis President Neel Kashkari said interest-rate cuts may not be needed this year if progress on lowering inflation stalls—especially if the economy remains robust. He called the January and February inflation readings “a little bit concerning,” and said he needs to see more progress on prices to gain confidence that they’re moving toward the Fed’s 2% target. “In March I had jotted down two rate cuts this year if inflation continues to fall back towards our 2% target,” Kashkari said Thursday. “If we continue to see inflation moving sideways, then that would make me question whether we needed to do those rate cuts at all.” —David E. Rovella  

However, his colleague in Cleveland suggested the central bank could be getting close to its happy place for lowering interest rates in the next few months. “I did anticipate that we’ll see inflation moving down and now we need to see more evidence that confirms that,” Loretta Mester said. “And once I see that, then I think we’re in a position to move interest rates down.”

Loretta Mester Photographer: David Paul Morris/Bloomberg

Even without a rate cut though, Wall Street is eager to get ahead of the curve at depositors’ expense. Goldman Sachs’s consumer bank Marcus lowered the rate on its high-yield savings account for the first time in more than three years. The bank’s flagship product now offers a 4.4% annual percentage yield, down from 4.5% in March.  

Stocks fell ahead of Friday’s jobs report as a rally in oil pinned to geopolitical tensions triggered a flight to safety. Treasuries climbed and the dollar ended near session highs. The S&P 500 dropped 1.2%, erasing gains. Brent crude topped $90 a barrel. “The real issue lies in the reason why oil is rising again,” said Matt Maley at Miller Tabak + Co. “If we get a direct conflict between Israel and Iran, that’s something that will likely restrict the supply of oil coming from the Middle East. That has not been an issue up until now, but it could become one very quickly.”

Emergency personnel extinguish a fire at the site of strikes on a building next to the Iranian embassy in Syria’s capital of Damascus. Iran has blamed Israel for the April 1 attack. Photographer: Louai Besharal/AFP/Getty Images

President Joe Biden told Israeli Prime Minister Benjamin Netanyahu that US support for his military’s operations in Gaza depends on new steps to protect civilians. The warning, delivered in a Thursday phone call between the two leaders, signaled that Biden is toughening his stance after an Israeli strike that killed seven international aid workers delivering food to displaced Palestinians in Gaza. Biden said Israel must “announce and implement a series of specific, concrete, and measurable steps to address civilian harm, humanitarian suffering and the safety of aid workers.” 

Prime Minister Justin Trudeau’s government is creating a C$1.5 billion ($1.1 billion) program to help Canadian nonprofit organizations buy affordable apartment buildings and keep the rents down. It’s the latest in a series of pre-budget announcements focused on housing and affordability, as Trudeau tries to ease Canada’s severe housing crunch. 

A tent encampment at Clarence Square park in Toronto, Canada. Toronto is at the epicenter of the country's housing crisis. Photographer: Chloe Ellingson/Bloomberg

The use of YouTube videos to train OpenAI’s text-to-video generator would be an infraction of the platform’s terms of service, YouTube Chief Executive Officer Neal Mohan said. In his first public remarks on the topic, Mohan said he had no firsthand knowledge of whether OpenAI had, in fact, used YouTube videos to refine its artificial intelligence-powered video creation tool, called Sora. But if that were the case, it would be a “clear violation” of YouTube’s terms of use, he said.

Hollywood uses spring to rev its engines: Blockbusters start creeping into theaters ahead of summer, and series premiere before the cutoff for Emmy consideration in late May. With the industry still playing catch-up from last year’s twin writers and actors strikes, this season will notably also see the debut of major star vehicles that had been lying in wait. Here’s what you should be watching.

A scene from the upcoming film Challengers, starring Zendaya, center. Source: MGM Studios

• Tel Aviv GPS scrambled as Israel awaits Iran retaliation for Syria attack.
• Bloomberg Opinion: Fed is wrong about how low rates will go.
• Bloomberg Opinion: GOP seeks advantage from Baltimore disaster.
• Bloomberg Opinion: Wall Street just doesn’t get retirement.
• Day after Special Counsel’s outburst, judge rejects Trump dismissal bid.
• In the City: Why Scaramucci is predicting Trump will lose the election.
• Saudi Arabia’s $100 billion foreign investment quest is faltering.

From George Steinbrenner to Jerry Jones, Gerry Cardinale has done deals with some of the biggest names in sports. These days, the Goldman Sachs alum is making moves under the auspices of RedBird Capital, the firm he created in 2014. His purchase of the AC Milan soccer franchise and the resurrection of American football’s XFL stem from two decades spent at the intersection of sports, finance and media. Back when he was starting out on Wall Street, that nexus was a lot less obvious. “I happened to hit an inflection point in sports that I couldn’t have possibly seen coming,” Cardinale said on the latest episode of The Deal with Alex Rodriguez and Jason Kelly. 

Gerry Cardinale, left, on the The Deal with Alex Rodriguez and Jason Kelly

Get the Bloomberg Evening Briefing: If you were forwarded this newsletter, sign up here to receive Bloomberg’s flagship briefing in your mailbox daily—along with our Weekend Reading edition on Saturdays.

Bloomberg Invest Summit: Led by Bloomberg Global Finance Correspondent Sonali Basak, this event at Convene in New York on June 25-26 will offer top strategies for navigating current market risks and seizing opportunities. Covering topics from artificial intelligence to geopolitical risk, central bank policy and future economic trends, the industry’s most influential speakers will engage allocators, dealmakers and investors. Learn more.