Know someone who would like this newsletter? Forward it to them.
The World
The prospect of faster-than-expected monetary tightening rattled Wall Street and dragged the S&P 500 deeper into bear territory, forcing investors to reassess a stock market that doesn’t look cheap even after its dramatic selloff. It has been an ugly spell in markets, reflecting concerns about how the economy will hold up as the Fed embarks on its sharpest campaign of interest-rate increases in decades. Investors expect an increase of 0.75 percentage point today, which would be the largest since 1994. (Wall Street Journal)
President Biden is weighing whether to roll back some of the tariffs that former President Trump imposed on Chinese goods, in hopes of mitigating the most rapid price gains in 40 years, according to senior administration officials. Business groups and some outside economists have been pressuring the administration to relax at least a portion of the taxes on imports, saying it would be a significant step that the president could take to immediately cut costs for consumers. (New York Times)
Europe’s gas supplies suffered a double blow after a major US liquefied natural gas export terminal said it would be offline for at least three months and Russia said it would cut flows through a key route to Germany. (Financial Times)
The U.S. backed Taiwan's assertion that the strait separating the island from China is an international waterway, a further rebuff to Beijing's claim to exercise sovereignty over the strategic passage. On Monday, China's Foreign Ministry said the country "has sovereignty, sovereign rights and jurisdiction over the Taiwan Strait" and called it "a false claim when certain countries call the Taiwan Strait 'international waters'." (Reuters)
New offshore wind power capacity tripled worldwide in 2021, driven by China in a buildup that is transforming the industry. Last year, 21.1 gigawatts of offshore wind generation was commissioned last year, according to the Global Wind Energy Council, roughly equivalent to 21 nuclear reactors. China is responsible for the bulk of this growth. The country commissioned 16.9 GW of offshore wind capacity last year, or 80% of the total, more than quadruple the volume in 2020. In comparison, Europe added 3.31 GW in 2021 -- a modest 13% gain that was overshadowed by Chinese investment. (Nikkei Asia Review)
Senate Minority Leader Mitch McConnell said he is “comfortable” with the contours of a bipartisan deal on gun legislation and will back it if the measure “ends up reflecting what the framework indicates.” McConnell’s support has tended to be an indicator of whether there are sufficient GOP votes to defeat a filibuster. The remarks represent his clearest endorsement of the deal struck between Sen. Chris Murphy, D-Conn., and Sen. John Cornyn, R-Texas. (NBC News)
The U.S. unemployment system was plagued by delays, fraud and racial gaps during pandemic, says watchdog agency. The U.S. Government Accountability Office issued a pair of reports critiquing shortfalls in the nation’s unemployment benefit system during the Covid-19 pandemic. Among them were delayed payments, elevated fraud and “substantial” disparities in benefit receipt along racial and ethnic lines. (CNBC)
Massachusetts’ top court blocked an effort to ask voters whether app-based ride-share and delivery drivers should be treated as independent contractors rather than employees, in a setback for companies such as Uber and Lyft. The unanimous decision by the Massachusetts supreme judicial court marked a victory for labor activists who sued and argued the ballot measure proposal contained loopholes that would create a sub-minimum wage for drivers for the companies. (The Guardian)
Economy
Caterpillar to move global headquarters from Illinois to Texas: The move is expected to affect about 230 employees in the Deerfield office, the majority of whom will be relocated to Texas over time. The mining and construction equipment-maker will begin transitioning its headquarters this year. (Chicago Tribune)
The move is the latest in a series of recent relocations that have drawn major manufacturers closer to corporate and government customers, and tech giants from Silicon Valley to Texas. Companies including Tesla Inc., Oracle Corp. and Hewlett Packard Enterprise Co. have cited cheaper real estate and access to bigger or more flexible workforces as reasons to pack up and move their corporate offices over the last two years. Boeing Co. said in May that it would move its global headquarters to Arlington, Va., from Chicago, bringing its leadership closer to federal officials and an engineering talent pool. Defense giant Raytheon Technologies Corp. said this month that it would move its global headquarters to the Washington, D.C., area from Waltham, Mass., seeking proximity to the Pentagon, regulators and lawmakers. (Wall Street Journal)
‘The music has stopped’: Crypto firms quake as prices fall: Crypto companies are laying off staff, freezing withdrawals and trying to stem losses, raising questions about the health of the ecosystem. (New York Times)
Coinbase will cut almost a fifth of its workforce after sharp price declines and a downturn in cryptocurrency trading volumes rocked some of the industry’s biggest players. The Nasdaq-listed exchange said it would cut 1,100 employees as it grappled with a slowdown in trading that has forced it to abandon its growth plans. Bitcoin has lost more than 60% of its value since November, when it hit an all-time high of almost $69,000. On Tuesday Bitcoin dipped below $21,000. (Financial Times)
China’s economic numbers come in better than expected, but ‘difficulties and challenges’ remain. Industrial production rose mildly by 0.7% in May from a year ago, versus an expected 0.7% drop, according to analysts polled by Reuters. In April, industrial production unexpectedly fell, down by 2.9% year-on-year. Fixed asset investment for the January to May period rose by 6.2%, topping expectations of 6% growth. (CNBC)
China’s central bank refrained from lowering a key policy rate, falling short of market expectations again and missing another window of opportunity on a key policy rate change to cushion the nation’s economic slowdown amid the US’ progressive rate-hike plans. The People’s Bank of China kept the interest rate of one-year medium-term lending facility (MLF) loans unchanged at 2.85% for the past five months, after the previous cut from 2.95% in January. (South China Morning Post)
Calling all shoppers: Big discounts are coming. Target, Walmart and Macy’s announced recently that they are starting to receive large shipments of outdoor furniture, loungewear and electronics everyone wanted, but couldn’t find, during the pandemic. The problem for retailers—that these goods are delayed by almost two years—could be a windfall for those in the market for sweatpants or couches. Look for prices to start dropping around July 4, analysts say. “There are going to be discounts like you’ve never seen before,” says Mickey Chadha, a Moody’s Investors Service analyst who tracks the retail industry. (Wall Street Journal)
Americans suffer pay cut as inflation outpaces wage growth: While average hourly earnings climbed 5.2% from $30.36 to $31.95 over the past 12 months, consumer prices soared 8.5% on a seasonally adjusted basis, resulting in a three percent decline in real hourly earnings. (Statista)
Technology
Five of the world's largest tech companies owned more than half (53%) of all global ad revenues last year, up from 46% last year. Macroeconomic factors like inflation and rising wages are making it harder for new entrants to disrupt the ad market, analysts explain in the latest midyear ad forecast from GroupM. The world's top 25 advertisers now account for 74% of global advertising spend, up from 68% last year and just 43% in 2016. While Chinese companies continue to grow their portion of the ad market, they are mostly focused on capturing domestic dollars, with TikTok being the notable exception. (Axios)
Chicago offers a blueprint for expanding urban internet access: Since the start of the pandemic, Chicago has provided about 64,000 public school students in need with high-speed internet access through its Chicago Connected initiative. It’s now the largest K-12 broadband connectivity program in the US, and will expand eligibility over the next two years to reach as many as 228,000 students, as the city considers a permanent government-supported system. Some cities, like Philadelphia and Miami, have already launched programs emulating Chicago’s. (City Lab)
PepsiCo Inc.’s Gatorade is dropping its NHL sponsorship to focus on women’s sports and college athlete deals, its global head of sports marketing Jeff Kearney said in a LinkedIn post. “For us, the future of sport means continuing to invest in young and diverse athlete communities, cutting edge leagues, and embracing all athletic journeys,” he wrote. He cited the brand's endorsement deals with college athletes Paige Bueckers and Shedeur Sanders. (Bloomberg)
Warner Bros. Discovery will this week offer buyouts to members of its U.S. ad sales team, as part of a plan to shrink the global sales force by as much as 30%, according to people familiar with the situation. The buyouts are one of the first big cost-cutting steps taken since the formation of the company from Discovery’s acquisition of WarnerMedia in April. The company has a global ad sales force of about 3,000, about half of whom are in the U.S. Warner’s goal of cutting up to 30% implies it wants to eliminate nearly 1,000 jobs over time, including through the buyouts, layoffs and natural attrition, the people said. The company has already imposed a hiring freeze in ad sales. (The Information)
Redfin plans to lay off ~470 staff, or 8% of its workforce, and Compass is laying off ~450 staff, or ~10%, as housing demand softens amid rising interest rates. (TechCrunch)
Smart Links
Parents seek more support from employers during school holidays. (Wall Street Journal)
New Zealand’s house price boom cools as rate rises bite. (Financial Times)
The “capital of Silicon Valley” is ignoring its privacy experts. (Vice)
Buoyed by federal aid, state higher ed funding rose by 4.5% in fiscal 2021. (Higher Ed Dive)
Your kids’ apps are spying on them. (Washington Post)
Yellowstone flooding forces 10,000 to leave national park. (Associated Press)
The states with the most and least expensive gas prices. (Wall Street Journal)