Bloomberg - Evening Briefing - Higher for longer

Bloomberg Weekend Reading

Looks like it’s still going to be higher for longer. That was the consensus after jobs data released Friday showed nonfarm payrolls rose 303,000 in March, well above expectations and the most in almost a year. “It’s much too soon to think about cutting interest rates,” Federal Reserve Bank of Dallas President Lorie Logan said after the report. She echoed other Fed members in recent days, including Chair Jerome Powell, all of whom say they’re in no rush. The day before, Minneapolis President Neel Kashkari floated the possibility of no cuts at all this year, citing concern about the rise in inflation in January and February. As a result, all eyes will be on next week’s inflation report. 

Lorie Logan Photographer: Nitashia Johnson/Bloomberg

The good news for job hunters—the unemployment rate ticked down to 3.8% from 3.9% a month earlier—did worsen an already rough start for bond traders this year. Nevertheless, Jonathan Levin writes in Bloomberg Opinion, “investors should take the resilient labor market for what it plainly is: a good thing for American workers and the economy at large.” He quoted Powell, who has previously said a weakening labor market could warrant intervention. This week, the Fed Chair stated that the “capacity of the economy has actually moved up more than the actual output, so it’s a bigger economy but not a tighter one.” Part of that is due to increased immigration and more workers being added to the pool. George Mateyo at Key Wealth said, given all the good news, the Fed “will likely need to reconsider its current stance of three rate cuts this year.”

What you’ll want to read this weekend

Israel’s air strike that killed seven aid workers from World Food Kitchen drew international condemnation and ratcheted up tensions between the US and Israeli leaders. In a call on Thursday, President Joe Biden told Prime Minister Benjamin Netanyahu that US support for his military’s operations in Gaza depends on new steps to protect civilians. But no specific consequences, like cutting off weapons to Israel, were made public—and the incident underscored the limits of Biden’s leverage even as famine threatens northern Gaza. Amid growing public demonstrations against Netanyahu and his hard-right government, Benny Gantz, a member of Israel’s war cabinet, called for early elections. Israel also braced for a possible attack by Iran as revenge for a strike on a diplomatic compound in Syria that killed senior Iranian military officials.

The destroyed World Central Kitchen vehicle after it was hit by an Israeli strike in Deir al-Balah in Gaza. Photographer: AFP

Treasury Secretary Janet Yellen chided China for “unfair” treatment of American and other foreign companies and said the Asian nation’s factories risk producing more than the world can easily absorb. Her remarks came at the start of her second visit to China in nine months. En route, she suggested the US will retain the option of protecting new industrial sectors after what she described as China’s massive state investment in its own domestic industries, including clean energy.

Tesla delivered just 386,810 vehicles in the first three months of the year, missing Bloomberg’s average estimate by the biggest margin ever in data going back seven years. The company is slashing prices of its best-selling vehicle, the Model Y sport utility, in a bid to clear its biggest-ever stockpile. The global slowdown in electric vehicle demand, along with robust domestic competition, is hurting Elon Musk’s standing in China, the world’s biggest automotive market. Musk, meantime, is having to make special efforts to retain artificial intelligence specialists, some of whom have left the carmaker in the past year to join his AI venture. And here’s how Hertz’s bet on Tesla’s went horribly sideways.

The New York area’s strongest earthquake in 140 years rattled northern New Jersey on Friday morning, shaking office buildings in Manhattan and halting air traffic, with an aftershock afterwards. The preliminary 4.8 magnitude temblor occurred near Whitehouse Station, New Jersey, and was felt as far away as Massachusetts and Washington DC. But there’s another planetary event coming that’s likely to cause less worry. “I’m here to tell you,” Bloomberg space reporter Loren Grush writes, “It’s going to live up to the hype.” American cities and towns along the “path of totality” for Monday’s full eclipse of the sun are expecting huge crowds for an event that won’t occur at the same scale in the US again until 2045. “You feel like the world is ending but your mind knows it’s not,” Grush writes. Some 32 million Americans live where the sun will be blotted out completely, but here’s a handy interactive map of just how dark and spooky it will get where you live. Please don’t forget to take proper precautions to protect your eyes. 

Global travel is expected to reach a record-breaking $11.1 trillion  this year, surpassing its prior high of $10 trillion in 2019. In another decade, tourism is forecast to become a $16 trillion industry. The island nation of Malta wants to lure the rich with more than a golden passport: it’s holding the first-ever Malta Biennale, a contemporary art exhibition showcasing very new works in very old places. The rock band KISS is selling its song catalog, as well as its name, image and likeness, to Pophouse Entertainment Group for more than $300 million. 

Gene Simmons, left, and Paul Stanley of KISS. Photographer: Kevin Winter/Getty Images

What you’ll need to know next week

India’s Path to World Economic Heavyweight

As China’s economy slows, India is vying to take its place as the world’s biggest driver of growth. Global business and finance giants are increasingly looking to the country as a prime destination for investment. But first, it has a few issues to deal with. In the mini-documentary Can India Take China’s Growth Crown, Bloomberg Originals reports on how the world’s biggest nation by population faces four thorny problems that must be overcome.

Watch Can India Take China’s Growth Crown


 

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