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The World
US stocks closed in a bear market after a dramatic late-session sell-off, while government bond yields soared, with investors unnerved over stubbornly high inflation and the prospect of aggressive monetary tightening by central banks. The S&P 500 slid 3.9% to close at its lowest level since January 2021. The move left the index more than 20% below its January 2022 all-time high, a decline commonly identified as a bear market. Government bond prices on both sides of the Atlantic also dropped, sending yields to the highest levels in more than a decade. (Financial Times)
A string of troubling inflation reports in recent days is likely to lead Fed officials to consider surprising markets with a larger-than-expected 0.75-percentage-point interest rate increase at their meeting this week. Last week’s inflation report from the Labor Department showed a bigger jump in prices in May than officials had anticipated. The Fed last raised rates by 0.75 percentage point at a meeting in 1994, when the central bank was rapidly raising rates to pre-empt a potential rise in inflation. (Wall Street Journal)
Bitcoin’s selloff has now become the fourth-deepest in the cryptocurrency’s 13-year history. Bitcoin fell to as low as $22,611, according to CoinDesk. That is down more than 20% from Friday, and down 67% from its November high of $68,991. (Wall Street Journal)
Morgan Stanley CEO James Gorman sees 50-50 odds of recession ahead. That’s up from his earlier 30% recession-risk estimate, said Gorman. (CNBC)
Sri Lanka PM says he’s open to Russian oil: Sri Lanka may be compelled to buy more oil from Russia as the island nation hunts desperately for fuel amid an unprecedented economic crisis, the newly appointed prime minister said. Prime Minister Ranil Wickremesinghe said he would first look to other sources, but would be open to buying more crude from Moscow. (Associated Press)
South Korea will "dramatically" strengthen its defensive capabilities, its defense minister said amid international concern that Pyongyang is reviving its nuclear testing program. Meanwhile, the U.S., Japan and South Korea will resume joint exercises as North Korea picks up the pace of its missile tests. (CNN, Nikkei Asia Review)
North Korea has spent as much as $650 million, or 2% of its gross domestic product, so far this year on 17 rounds of missile tests, according to a state-backed South Korean think tank. (Nikkei Asia Review)
A weeklong trucker strike in South Korea over fuel costs and wages is tying up supply chains in one of Asia’s export powerhouses. Thousands of truckers are refusing to drive, while deliveries by truckers who are working have been thwarted by protesters—shutting steel plants, disrupting car production and delaying shipments of raw materials needed for semiconductors. The cost to key industries over roughly the past week comes to about 1.6 trillion won, equivalent to about $1.2 billion. (Wall Street Journal)
The mass quarantine measures imposed this past weekend in Shanghai, including highway closures, severely affected trucks carrying exports bound for the city’s port, according to logistics company Orient Star Group. “Trucks loaded with cargoes and containers were unable to enter the Shanghai terminal,” said the company. (CNBC)
The EU will relaunch legal action against Britain for violating the terms of Brexit after Boris Johnson announced detailed plans to override large parts of the Northern Ireland protocol. The EU accused the prime minister of abandoning “constructive co-operation” in favour of new legislation to unilaterally curtail the influence of Brussels in Northern Ireland. (The Times)
Mexico’s populist president Andrés Manuel López Obrador has turned his guns on foreign investors, the media and the business elite to rally his base and drive an anti-establishment message. But his latest target seems an unlikely one: the body that certified his landslide election victories. López Obrador has proposed to slash the National Electoral Institute’s (INE) budget and replace its 11-member council chosen by political consensus with seven directly elected delegates. He also wants to save money by cutting the size of Mexico’s senate by a quarter, its lower house by over a third and ending public financing of election campaigns. (Financial Times)
Air quality worsens as drought forces California growers to burn abandoned crops. In a region that already suffers from some of the worst particulate pollution in the nation, San Joaquin Valley residents are learning that extreme drought conditions can be as hard on human lungs as they are on local crops. (Los Angeles Times)
Economy
CEO confidence falls to decade low, but few predict recession: Chief Executive’s June survey of 278 U.S. CEOs shows leading confidence indicator now at 5.5/10, the lowest reading in nearly a decade. Majority forecasts worsening conditions in the year ahead, though not a recession. (Chief Executive)
Nomura chief predicts weak yen will kick off foreign M&A wave: Kentaro Okuda says rate rises and Toshiba privatization will usher in ‘paradigm shift’ for corporate Japan. (Financial Times)
Private markets AUM hit $9.8 trillion through July 2022, which is up from just $7.4 trillion one year earlier, with over $2 trillion held by venture capital firms. In 1999, U.S. startups raised around $47 billion. Last year they topped that during several individual months, raising a total of $330 billion. Neither macro economic growth nor inflation can explain away those numbers. Why it matters: The private markets are more critical to the broader economy than they were in 1999, or during the Great Financial Crisis a decade later. Which means the fallout could be more messy. (Axios)
High-net-worth individuals and wealthy families last year pumped more cash into private equity in the search for higher returns. According to a report published by the Swiss bank UBS, family offices increased their allocation to private equity to 20% last year, up from around 15% in 2019. (Private Equity News)
The bulls and bears of 2022’s sluggish VC market: Venture funding overall is retreating amid public-market turmoil, record inflation and rising concerns about an economic recession. Even so, several startup sectors stand out—either for still outperforming, or for being particularly hard-hit by the venture pullback. (Crunchbase)
Technology
Microsoft updates Teams to improve echo cancellation and room acoustics on calls using ML models, resulting in less clipping when callers interrupt each other. (The Verge)
Amazon Prime Members are suing Amazon for ending free Whole Foods delivery. It's $9.95 per order now. (Insider)
Microsoft to curb use of non-competes, drop NDAs from worker settlements, disclose salary ranges, launch civil rights audit. (GeekWire)
Facebook is re-examining its commitment to paying for news, prompting some news organizations to prepare for a potential revenue shortfall of tens of millions of dollars. The company has paid average annual fees of more than $15 million to the Washington Post, just over $20 million to the New York Times and more than $10 million to The Wall Street Journal. The Journal fee is part of a broader Facebook News deal largely negotiated by parent company Dow Jones & Co., including annual compensation worth more than $20 million. (Wall Street Journal)
Andreessen Horowitz’s Sriram Krishnan on crypto social networking: Web3 has plenty of money going for it — well, yes quite a bit less than a few months ago — but it’s still hard to argue that mainstream consumers have lined up to embrace web3 internet services. There have been some flash-in-the-pan hits so far, but investors are still searching for consumer use cases that make the most of blockchains, tokens and NFTs, beyond just trading them. Andreessen Horowitz (a16z) GP Sriram Krishnan believes the incentive structures of web3 makes the space a natural fit for social networking. Krishnan has ample experience at Web 2.0 social networking companies; he’s served as an executive at Twitter, Facebook and Snap before joining a16z, which notably just debuted its latest $4.5 billion crypto fund. (TechCrunch)
Smart Links
Google suspends engineer who claimed the company's AI Bot had become sentient. (Bloomberg)
American Airlines regional carriers hike pilot pay more than 50% as shortage persists. (CNBC)
64% of service sector workers report having unpredictable schedules. (CNBC)
Stripe’s growing pains: A payments star hits snags in push for big business. (The Information)
Disney wins TV rights for Indian T20 cricket but loses out on streaming. (Financial Times)
Silicon Valley braces for tech pullback after a decade of decadence. (Washington Post)
High optimism linked with longer life and living past 90 in women across racial, ethnic groups. (Harvard T.H. Chan School of Public Health)