Fed to Inflict More Pain on Economy as It Readies Big Rate Hike [Bloomberg via Yahoo!]
After raising rates in June by the most since 1994, Fed Chairman Jerome Powell and his colleagues are expected to approve another 75 basis-point hike this week and signal their intention to keep moving higher in the months ahead. Powell has said that failing to restore price stability would be a “bigger mistake” than pushing the US into a recession…. Traders in the federal funds futures market are betting the Fed will raise rates to about 3.5% by year end, from 1.5% to 1.75% now, before beginning to cut them in the latter half of 2023.
There Are Signs Inflation May Have Peaked, but Can It Come Down Fast Enough? [WSJ]
Ed Hyman, chairman of Evercore ISI, pointed to many indicators that 9.1% might have been the top. Gasoline prices have fallen around 10% from their mid-June high point of $5.02 a gallon, according to AAA. Wheat futures prices have fallen by 37% since mid-May and corn futures prices are down 27% from mid-June. The cost of shipping goods from East Asia to the U.S. West Coast is 11.4% lower than a month ago, according to Xeneta, a Norway-based transportation-data and procurement firm…. Inflation expectations also fell recently—an upbeat signal for the Fed, which believes that such expectations influence wage and price-setting behavior and thus actual inflation….
“The moment of truth comes at the end of this year,” said Mr. Hyman. “If the Fed keeps on raising rates, then they’d invert the yield curve. I think that would increase the odds of recession enormously. It would probably also lower inflation, although it also seems to already be slowing, and will probably be even slower by then.”
Strong dollar wipes billions off US corporate earnings [FT]
“Even if the rise of the dollar was to stop here, the strengthening we’ve seen over the past 12 months would be enough to prompt further downgrades to earnings estimates just because of the foreign exchange headwinds,” said Max Kettner, a strategist with HSBC…. Big Tech is acutely exposed to the dollar given the industry’s overseas footprint. Goldman Sachs estimated that 59 per cent of sales for tech companies in the S&P were generated outside of the US. That is far above the average US large-cap publicly traded company; the S&P 500 groups as a whole made 29 per cent of their $14tn of revenues in 2021 abroad.
Banks Start Using Information-Sharing Tools to Detect Financial Crime [WSJ]
Data privacy concerns are one of the primary obstacles to more widespread adoption of information-sharing platforms in most countries. For TMNL, the next step would be to recruit more banks and add transactional data from individual customers. But that would require legislation clarifying how such information sharing relates to the European Union’s stringent data protection rules, a move the Netherlands is considering…. The U.S. was among the first countries to give financial institutions a legal gateway for sharing information about customers to identify money laundering or terrorist financing activity, with the enactment of the USA Patriot Act in the aftermath of the Sept. 11 terrorist attacks. But such information-sharing is voluntary, and use of the gateway has been slow to pick up.
China Evergrande C.E.O. Resigns After Loans Come Under Scrutiny [NYT]
The company said the chief executive, Xia Haijun, had resigned over his involvement in a plan to funnel $2 billion into Evergrande’s coffers from one of its subsidiaries…. The debt problems facing Evergrande have spread to other overextended property developers in China, fueling concerns about a potential housing crisis that could threaten an already fragile economy.
Elon Musk denies affair with Sergey Brin's wife Nicole Shanahan [CNN]
"I work crazy hours, so there just isn't much time for shenanigans," the Tesla boss said in a Monday tweet…. In an earlier tweet, Musk, the world's richest man, described the report as "total BS" and said he and Brin were still friends -- and had attended a party together the night before.