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The World
The Fed approved the largest interest-rate increase since 1994 and signaled it would continue lifting rates this year at the most rapid pace in decades to fight inflation that is running at a 40-year high. Officials agreed to a 0.75-percentage-point rate rise, which will increase the Fed’s benchmark federal-funds rate to a range between 1.5% and 1.75%. New projections showed all 18 officials who participated in the meeting expect the Fed to raise rates to at least 3% this year, with at least half of all officials indicating the fed-funds rate might need to rise to around 3.375% this year. (Wall Street Journal)
Powell says a rate increase of 75 or 50 basis points is likely in July. (Bloomberg)
Asia-Pacific markets rise after largest Fed rate hike since 1994. (CNBC)
Americans’ retail spending declined in May, as consumers felt the pinch from inflation, higher gasoline prices and rising interest rates. Retail sales fell a seasonally adjusted 0.3% in May from the previous month, the first decline in month-over-month retail spending this year. The pullback in spending is another indicator showing the economy is losing momentum as the Fed takes action to raise interest rates and combat historically high inflation. (Wall Street Journal)
Chinese President Xi Jinping spoke by phone to Russian leader Vladimir Putin on Wednesday for a second time since the start of Moscow’s war in Ukraine. They exchanged views on Ukraine, with Xi saying that all parties should “promote a proper solution to the crisis in a responsible manner”, according to the Chinese foreign ministry readout. Xi also told Putin that Beijing “actively promotes world peace and the stability of the global economic order”. (South China Morning Post)
Turkey rejected invitations by Nato to participate in trilateral talks with Finland and Sweden aimed at finding a solution to Ankara’s opposition to the Nordic countries’ applications to join the western military alliance. Ankara has demanded concrete proposals from Helsinki and Stockholm to address its concerns over terrorism before agreeing to mediated talks, according to three people with knowledge of the discussions, forcing Nato officials to attempt to broker a deal through bilateral talks with each country. (Financial Times)
New textbooks sent to Hong Kong secondary schools teach that the city was not a British colony, but an occupied territory — a recasting of history that is part of Beijing’s ideological clampdown in the city. The textbooks seek to head off calls for self-determination in the city following a wave of anti-government protests in 2019, in which some participants called for independence. (Financial Times)
Poll: Half of Americans now predict U.S. may 'cease to be a democracy' someday. A new Yahoo News/YouGov poll shows that most Democrats (55%) and Republicans (53%) now believe it is “likely” that America will “cease to be a democracy in the future” — a stunning expression of bipartisan despair about the direction of the country. Half of all Americans (49%) express the same sentiment when independents and those who do not declare any political affiliation are factored in, while just a quarter (25%) consider the end of U.S. democracy unlikely and another quarter (25%) say they’re unsure. (Yahoo! News)
The FAA urged the chief executives of major U.S. airlines to move quickly to address risks from a 5G wireless rollout, in a bid to avoid potential disruptions at key airports from next month. (Reuters)
Mothers are dying in the world’s hottest city: “If we go to hell, we’ll take a blanket,” is a common joke in Jacobabad, Pakistan, where people are accustomed to hot weather. But during the current extreme heatwave, with temperatures peaking over 51 ℃, even they are finding life unbearable — and the burden is particularly high during pregnancy and for homemakers. A global meta-analysis found that, for every 1 ℃ in temperature rise, the number of stillbirths and premature deliveries increases by about 5%. In Jacobabad, many women work long days in hot fields, broken up by spells cooking in stifling kitchens, sometimes over open fires. Widespread poverty and frequent power cuts mean many people have no means of cooling, or even sufficient water. (Reuters, Nature Briefing)
The UK recorded the hottest day of the year after the temperature exceeded 28C in parts of southern England. The warm weather is predicted to continue into the weekend, with temperatures expected to rise to 34C in southeast England tomorrow. (The Times)
Economy
China's holdings of U.S Treasuries tumbled in April to their lowest since May 2010, with Chinese investors likely cutting losses as Treasury prices fell after Federal Reserve officials signaled sizable rate hikes to temper soaring inflation. Chinese holdings dropped to $1.003 trillion in April, down $36.2 billion from $1.039 trillion the previous month, according to U.S. Treasury Department figures. China's stock of Treasuries in May 2010 was $843.7 billion, data showed. (Reuters)
Hong Kong raises key interest rate by 75 basis points in lockstep with Federal Reserve hike overnight. The interest rate increases will add stock market volatility worldwide and increase the burden on mortgage borrowers, analyst says. (South China Morning Post)
China home prices drop for ninth month as demand stays weak. (Bloomberg)
New Zealand's economy unexpectedly contracted in 1Q22 as a slump in exports swamped strong domestic spending, though many analysts believe it will dodge a recession as activity rebounds from coronavirus lockdowns. (Nikkei Asia Review)
Inside the plans of the country's top union leader: The new leader of the AFL-CIO is zeroing in on the tech sector as one of organized labor's top targets and plans to shift more of the powerful union's resources to organizing and growing its members, she and her deputy told Axios in a joint interview. Liz Shuler will be confirmed today as the group's president at its constitutional convention in Philadelphia, the first woman to lead the federation of 57 U.S. and international labor unions representing 12 million workers. (Axios)
Robinhood Markets shares slumped to a fresh low, giving the beleaguered brokerage a market value that’s less than the cash on its balance sheet. After posting more than $3 billion of losses since its IPO in late July, Robinhood’s shares have plunged more than 80%, cutting its market capitalization to as low as $5.99 billion. The firm had $6.19 billion of cash and cash equivalents at the end of the first quarter. (Bloomberg)
Technology
Elon Musk is expected to confirm his desire to own Twitter when he speaks to the social-media company’s employees today. Musk is slated to answer pre-submitted employee questions for roughly an hour at a virtual Twitter all-hands meeting. In addition to reiterating his interest in owning the company and his view of its importance in the world, Musk is likely to clarify recent comments about remote work and touch on aspects of his strategy for Twitter, including the role of advertising and subscriptions. (Wall Street Journal)
Spotify will slow hiring growth by 25%, the latest sign of how fears of a recession are weighing on the economy. The world’s largest on-demand audio service has been on a hiring spree for years, adding more than 2,000 employees between 2019 and 2021 for a total of 6,617 at the end of last year. The company will continue to add headcount in the coming months, but it will adjust its plans in light of macroeconomic factors, Chief Executive Officer Daniel Ek said in a note to staff. (Bloomberg)
Microsoft retires Internet Explorer after nearly 27 years, disabling the desktop app and directing users to Edge, which arrived with Windows 10 in 2015 . Japan's business and government agencies are panicking as Internet Explorer shuts down; a March survey showed 49% of organizations use the browser for work. (Nikkei Asia Review)
Video: How is America’s number one auto brand gearing up for a new era of innovation? Morgan Stanley sits down with Ford’s CEO, Jim Farley, to discuss why the company is splitting into two divisions—one focused on traditional internal-combustion engines and one dedicated to electric vehicles. (Morgan Stanley)
Smart Links
The Delta airport lounge puts passengers on the clock: ‘We’re not a WeWork’. (Wall Street Journal)
Chaos at European airports strands travelers. Here’s why. (Washington Post)
Disney delays moving Southern California jobs to Florida, blaming construction holdup. (Los Angeles Times)
American casino development has hit its saturation point. (Slate)
Stripe’s growing pains: A payments star hits snags in push for big business. (The Information)