Know someone who would like this newsletter? Forward it to them.
The World
The Federal Reserve is steering toward another three-quarter-point interest rate increase later this month even as the economy shows early signs of slowing and recession fears mount. (New York Times)
Top Federal Reserve officials think entrenched inflation is a “significant risk” to the US economy and fear tighter monetary policy will be needed if price growth exceeds their expectations, according to an account of their most recent meeting. The minutes of the US central bank’s June meeting, when the Fed delivered the first 0.75 percentage point rate rise since 1994, also showed that policymakers now support raising interest rates to the point at which economic activity is restrained, with the possibility that they could become “even more restrictive” if warranted by the data. “Many participants judged that a significant risk now facing the committee was that elevated inflation could become entrenched if the public began to question the resolve of the committee to adjust the stance of policy as warranted,” the minutes said. (Financial Times)
Boris Johnson’s turbulent three-year premiership was nearing its end on Wednesday night after he was urged to quit by a delegation of his closest cabinet allies on a night of chaos in Downing Street. As his premiership hung by a thread, the UK prime minister retaliated by sacking Michael Gove, one of the ministers who told him to go, in a sign that Johnson intended to go down fighting. Johnson was warned that unless he stepped down there would be further cabinet resignations, followed by an inevitable humiliating defeat by Tory MPs in a no-confidence vote next week. (Financial Times)
Allies of Boris Johnson suggested to the prime minister that he could try to call a snap election in an effort to see off attempts to oust him. However, Simon Case, the cabinet secretary, is expected to argue against trying to force an election, warning that it would embarrass the Queen and risk a constitutional crisis. (The Times)
Former Russian President Dmitry Medvedev said attempts by the West to punish a nuclear power such as Russia for the war in Ukraine risked endangering humanity, as the near five-month conflict leaves cities in ruins and thousands homeless. (Reuters)
The US and its allies have discussed trying to cap the price on Russian oil between $40 and about $60 a barrel. Allies have been exploring several ways to limit Russia’s oil revenues while minimizing the impact on their own economies in discussions that began in the run-up to the Group of Seven summit. (Bloomberg)
The heads of the FBI and Britain’s domestic security service issued sharply worded warnings to business leaders about the threats posed by Chinese espionage, especially spying aimed at stealing Western technology companies’ intellectual property. In a rare joint appearance on Wednesday at the headquarters of MI5, Christopher Wray, director of the Federal Bureau of Investigation, and Ken McCallum, director-general of MI5, urged executives not to underestimate the scale and sophistication of Beijing’s campaign. “The Chinese government is set on stealing your technology—whatever it is that makes your industry tick—and using it to undercut your business and dominate your market,” Mr. Wray told the audience of business people. “They’re set on using every tool at their disposal to do it.” (Wall Street Journal)
British Airways is to cut another 10,300 flights over the next four months, the latest in the thousands of cancellations that have caused widespread disruption in aviation this summer. The cuts to short-haul flights, between now and the end of October, take advantage of new government rules that allow airlines to hand back take-off and landing slots at busy airports without permanently losing them. (Financial Times)
Economy
The recession calls are getting louder on Wall Street, but for many of the households and businesses who make up the world economy the downturn is already here. Goldman Sachs Group Inc. economists put the risk of such a slump in the US in the next year at 30%. A Bloomberg Economics model sees a 38% chance in the same period, with the risks building beyond that time frame. But for many it already feels like it’s here. More than one-third of Americans believe the economy is now in a recession, according to a poll last month by CivicScience. The worries among small business owners, consumers and others are illustrated by so-called Misery Indexes, which blend unemployment and inflation rates. The gauge for the US is already 12.2%, similar to levels witnessed at the start of the pandemic and in the wake of the 2008 financial crisis, according to Bloomberg Economics. (Bloomberg)
The job market is still ‘red hot’ despite recession fears, as the Great Resignation continues. (CNBC)
Rental markets in some of the hottest US cities are showing early signs of cooling down. One-bedroom rents fell month-over-month in formerly hot cities like Miami, San Diego, Fort Lauderdale and Nashville. After surging 11.4% over the past 12 months, the median national rent for a one-bedroom apartment rose just 0.5% in June compared to a month earlier, while the median two-bedroom rent fell 2.9%. (Bloomberg)
Commodities prices are tumbling from historic highs, as investors reverse bullish bets on everything from corn to copper and oil in the latest sign of recession fears gripping financial markets. Brent crude dropped below $100 a barrel on Wednesday for the first time since April, leaving it 29 per cent below its recent peak. Other markets have also faced severe falls, with the broad S&P GSCI agricultural prices index down 28 per cent since its all-time high in mid-May and a London Metal Exchange benchmark tracking half a dozen industrial metals losing a third of its value since peaking in March. (Financial Times)
Commodities have lost 20% since June’s peak amid recession fears. (Bloomberg)
Technology
Apple announced a new feature for iPhones called Lockdown Mode. It’s intended for high-profile users such as politicians and activists who may be targeted by state-sponsored hackers. Lockdown Mode turns off several features on the iPhone in order to make it less vulnerable to spyware by significantly reducing the number of features that attackers can access and potentially hack. (CNBC)
Since its introduction, the iPhone has generated more than $1.5 trillion in sales, almost single-handedly making Apple the most profitable and most valuable company of all time. The iPhone alone is now bigger (in terms of sales) than some of the most well-known companies in the world, including household names such as Nike, Coca-Cola and McDonald’s. (Statista)
Apple plans its largest smartwatch display to date, a bigger battery and a rugged metal casing as part of the upcoming Apple Watch geared toward extreme sports athletes, according to people with knowledge of the plans. The rugged version of the Apple Watch will get a screen that measures almost 2 inches diagonally, while a new, standard Apple Watch Series 8 will keep the 1.9-inch diagonal screen size of the current Apple Watch Series 7. A planned update to the low-end Apple Watch SE also will retain the current screen size. (Bloomberg)
Amazon agreed to add Grubhub to its suite of Prime services in the U.S., in a deal aimed at expanding the food-ordering company’s reach by tapping Amazon’s membership program. (Wall Street Journal)
Samsung forecasts an 11% YoY rise in Q2 operating profit to $10.7B, as strong demand for its memory chips from server customers offset slowing smartphone sales. (Reuters)
Smart Links
Inflation, Travel, and the Metaverse: 10 Companies to Watch in Q3. (Bloomberg)
Soaring rents and electricity prices are squeezing Singapore retailers’ margins. (CNBC)
Peloton sweetens employee pay incentives as it fights to boost morale and stage a turnaround. (CNBC)
Creator Economy Startup Funding Drops 60% From a Year-Ago. (The Information)
Dallas Cowboys Face Backlash After Partnering With Gun-Themed Coffee Company. (Wall Street Journal)