Know someone who would like this newsletter? Forward it to them.
The World
Fed jacks rates again 75 basis points, Powell vows no surrender in inflation battle: The Fed said it would not flinch in its battle against the most intense breakout of inflation in the United States since the 1980s even if that means a "sustained period" of economic weakness and a slowing jobs market. Fed Chair Jerome Powell was peppered with questions about whether the U.S. economy was in or on the cusp of a recession - a notion he rejected because U.S. firms continue to hire in excess of 350,000 additional workers each month. "I do not think the U.S. is currently in a recession," he told reporters. "It doesn't make sense that the U.S. would be in recession." (Reuters)
BofA CEO says the strong American consumer is one of the Fed’s biggest obstacles. (CNBC)
Senator Joe Manchin III of West Virginia, a key centrist Democrat, announced that he had agreed to include hundreds of billions of dollars for climate and energy programs and tax increases in a package to subsidize health care and lower the cost of prescription drugs, less than two weeks after abruptly upending hopes for such an agreement this summer. The package would set aside $369 billion for climate and energy proposals, the most ambitious climate action ever taken by Congress, and raise an estimated $451 billion in new tax revenue over a decade, while cutting federal spending on prescription drugs by $288 billion (New York Times)
Here's what to know about the Manchin-Schumer tax deal: New minimum tax on big business; carried interest; boosting tax enforcement. (Politico)
Sen. Kyrsten Sinema (D-Ariz.) has spent the summer out of the spotlight. That's now going to change. Solving the Democrats' tax and spending puzzle in the Senate — where President Biden's agenda has stalled for over a year — has always involved two key pieces: Sinema and Sen. Joe Manchin (D-W.Va.). But as they hammered out the details of their $740 billion reconciliation package — which they rechristened the "Inflation Reduction Act of 2022" — Manchin and Senate Majority Leader Chuck Schumer didn't include Sinema in their secret talks. That decision may not be fatal to winning her support. But much of Washington is flying blind on whether she'll back spending $369 billion on climate and another $64 billion on health care by raising the corporate minimum tax rate to 15%. (Axios)
US aircraft carrier group heads towards Taiwan as tension over Nancy Pelosi’s possible visit continues to grow. The USS Ronald Reagan and its escorts left Singapore on Monday sailing northeast, according to ship tracking information. The ship’s deployment comes after Beijing warned it would ‘take strong measures’ if the US house speaker visits the island. (South China Morning Post)
Russian forces took over Ukraine's second-biggest power plant and are conducting a "massive redeployment" of troops to three southern regions, a Ukrainian presidential adviser said, amid expectations of a Ukrainian counter-offensive. (Reuters)
Turkey says Sweden and Finland not fulfilling NATO deal: Foreign Minister Mevlut Cavusoglu slammed Finland and Sweden for allowing "terror propaganda" as the two countries await Ankara's permission to join NATO. (Deutsche Welle)
Falls in Europe’s crop yields due to heatwaves could worsen price rises: From Spain to Hungary, output of staples such as corn forecast to fall by up to 9%, adding to impact of Ukraine war on food security. (The Guardian)
Russia Tightens Squeeze on Gas Flow to Europe. (Statista)
North Korean leader Kim Jong Un said his country is ready to mobilize its nuclear war deterrent and for any military clash with the United States, amid signs the North could conduct its first nuclear test since 2017. Kim made the remarks during a speech at an event to mark the 69th anniversary of the July 27 Korean War armistice, which left the two Koreas technically still at war, according to the official KCNA news agency. (Reuters)
Demonstrators broke into the Iraqi parliament inside Baghdad’s fortified Green Zone to protest against a prime ministerial candidate backed by Iran. The protesters breached the secure area, which includes the US Embassy, after hauling down barricades, with the security forces offering only minimal resistance. (The Times)
Ron DeSantis Takes Aim at ‘Woke CEOs’: Florida Governor Ron DeSantis criticized ESG investing and companies including PayPal Holdings Inc., saying he would work with the state legislature to battle what he called a “woke ideology” being promoted by Wall Street banks, asset managers and big tech companies. “Do we govern ourselves through our constitution and through our elections or do we have these masters of the universe occupying these commanding heights of society?” DeSantis said at a press briefing Wednesday. “For every master of the universe who’s prattling on about, you know, no emissions and all this stuff, I don’t see very many of them giving up their private jets.” (Bloomberg)
Millions of people worldwide may have long-term smell or taste problems as a result of Covid-19, with women more likely to be affected, a study suggests. About 5% of adults infected with the coronavirus may develop long-lasting changes to their sense of smell or taste, according to the research published in the BMJ. (The Guardian)
The Worst Flight Delays at the World’s Busiest Airports: Most of the 100 busiest airports have had at least 20% of their flights delayed in recent weeks. (Wall Street Journal)
Economy
Federal Reserve Chair Jerome Powell is raising interest rates at the steepest pace in a generation and he said that another big increase is possible. Yet investors sent stocks surging on his comments that the hikes will eventually slow. Some Fed watchers say markets read Powell’s press conference too narrowly. (Bloomberg)
The Strong Dollar Is Wreaking Havoc Globally— And It’s Just Getting Started. (Bloomberg)
Boise’s Housing Market Boomed Early in the Pandemic. Now It Is Cooling Fast. ‘Zoomtowns’ that drew remote workers are now expecting prices to fall as interest rates rise and companies call employees back to the office. (Wall Street Journal)
Chinese banks are rushing to boost capital as they prepare for a potential spike in bad loans due to the economic slowdown and spreading housing crisis. A record amount of fresh money has come from financial markets, with banks selling 29% more bonds in the first half of the year compared to last year to replenish capital and cover credit losses. Local authorities also provided funds from government bond sales to help cash-strapped regional lenders. (Bloomberg)
European gas prices jumped higher after Russia followed through on its threat to further reduce supplies to the region, increasing the risk the continent could face shortages in the winter months. Gas prices rose as much as 13 per cent on Wednesday as flows on the Nord Stream 1 pipeline were cut to just a fifth of normal capacity. (Financial Times)
Boeing reported encouraging trends in its commercial aeroplane segment, but further charges in its defence business weighed on net profits in the latest quarter. Helped by an increase in deliveries of the 737 Max, chief executive David Calhoun said Boeing remained on track to achieve positive free cash flow in 2022, but combined charges of $400mn, mostly related to two of its defence programmes, reflected continued production challenges at the company. (Financial Times)
Technology
The Senate passed bipartisan legislation aimed to help the U.S. compete with China by injecting tens of billions of dollars into the domestic production of semiconductors. The bill will now head to the House, where lawmakers hope to pass it and send it to the White House for President Joe Biden’s signature before Congress leaves town. The package includes more than $52 billion for U.S. companies producing computer chips, as well as a tax credit for investment in chip manufacturing. It also provides funding to spur the innovation and development of other U.S. technologies. (CNBC)
Facebook parent Meta Platforms posted its first decline in revenue and issued a muted outlook on digital advertising as it contends with growing competition from rival TikTok. The company reported quarterly revenue of $28.8 billion, down almost 1% from a year earlier and slightly below the $28.9 billion Wall Street was expecting. It marks the first time that the company has posted a quarterly drop in revenue from the year earlier. (Wall Street Journal)
Mark Zuckerberg believes that Apple and his company are in a “very deep, philosophical competition” to build the metaverse, suggesting the two tech giants are ready to butt heads in selling hardware for augmented and virtual reality. The Meta CEO told employees earlier this month that they were competing with Apple to determine “what direction the internet should go in,” according to a recording of his comments during an internal all-hands meeting obtained by The Verge. He said that Meta would position itself as the more open, cheaper alternative to Apple, which is expected to announce its first AR headset as soon as later this year. (The Verge)
Spotify reports Q2 revenue up 23% YoY to €2.9B, a €125M net loss, up from €20M YoY, MAUs up 19% YoY to 433M, and Premium users up 14% YoY to 188M; stock up 12%. Meanwhile, CEO Daniel Ek says Spotify plans to reduce the pace of hiring by 25%: “I do believe only the prepared survive, and we're preparing as if things could get worse.” (Variety, Hollywood Reporter)
Smart Links
Best Buy forecasts steeper sales drop as inflation dents demand. (Reuters)
From avocados to coffee, some food costs are starting to ease but prices are still high. (CNBC)
Teacher exodus leaves Hong Kong schools scrambling to fill vacancies. (South China Morning Post)
South Korea struggles to spend its way to more births. (Nikkei Asia Review)
Hulu now accepts political issue ads, after Democrats complained over rejected ads around guns and abortions, matching the policies of Disney's cable networks. (Axios)
Nationwide rail strike disrupts travel for millions in UK. (Financial Times)
Everybody Into the Hotel Pool! That’ll Be $200. Some hotels now charge swimmers and sunbathers to reserve a basic poolside lounge chair, often with few other perks. (Wall Street Journal)