5 Things You Need to Know to Start Your Day

Apple reins in hiring and spending plans, energy problems persist and the Fed prepares to hike. Apple limitsApple Inc. is the latest major t [View in browser]( [Bloomberg]( Apple reins in hiring and spending plans, energy problems persist and the Fed prepares to hike. Apple limits Apple Inc. is the latest major technology company to [rein in hiring](and spending plans, adding to the evidence that even Silicon Valley stalwarts are worried about a recession in the coming months. The iPhone maker is looking to limit expenditures and job growth at some of its divisions, Bloomberg [reported]( Monday, though Apple hasn’t adopted a companywide policy. The more cautious stance mimics the approach of its tech peers, including Amazon.com Inc., Alphabet Inc.’s Google and Microsoft Corp. The news sent [stocks sliding]( and increased trepidation surrounding tech earnings season, which goes into full swing this week. International Business Machines Corp. [lowered its forecasts]( for free cash flow this year due to the impact of a strong dollar and the loss of business in Russia, sending the shares down and overshadowing  better-than-expected sales growth. Heating up Some Democratic Party senators are urging President Joe Biden to [declare a climate emergency]( as the route to enact legislation in Congress on the issues remains blocked. The move would allow Biden to exercise executive powers to curtail the fossil fuel industry and direct funding towards green initiatives. Meanwhile, in Europe, the [energy problems are mounting](: record temperatures are [expected in the UK]( while low river levels and reduced nuclear capacity in France and Germany means alternatives to Russian gas are becoming scarce. Natural gas prices in the region [rose this morning]( as concerns remain high over the restoration of supplies from Gazprom PJSC. The company [declared force majeure]( on several shipments to buyers last month. Fed hikes With the Federal Reserve meeting next week, investors are pricing in an interest rate increase of at least [75 basis points.]( Markets are watching if the Fed can control inflation and avoid tipping the economy into a recession. The Fed is the theme of this week’s MLIV Pulse survey.  How high will it go in this hiking cycle? If a recession sets in, will the Fed keep raising rates regardless? It takes one minute to participate, so please click [here]( to get involved anonymously. Dollar drops The euro jumped about 1% against the dollar as of 5:15 a.m. New York time on suggestions that the European Central Bank may consider [raising interest rates]( by 50 basis points because of the worsening inflation backdrop. Bonds fell with European stocks on the more hawkish outlook, worries over a slowing global economy and lower earnings estimates. US equity futures posted modest gains in the wake of another reversal for the S&P 500 on Monday on Apple’s plans to slow hiring. Coming up... It's a quiet day as far as scheduled events are concerned, with central bank decisions fast approaching -- in particular the ECB and Bank of Japan on Thursday. US housing starts and building permits at 8:30 a.m. will give a view on the strength of the property market. Earnings include Netflix Inc., Johnson & Johnson and Lockheed Martin Corp. What we've been reading Here's what caught our eye over the last 24 hours. - Former Trump adviser [Pottinger](to testify to Jan. 6 panel. - California [home sales]( plunge 21%. - GM to have rival to [Tesla’s](Model Y. - [Xi’s invite]( to top Europe leaders met by silence. - Chinese[worth $48 billion]( want to leave. - [Celsius]( details reorganization goals. - How Manchin left a [global tax deal](in limbo. And finally, here’s what Justina's interested in this morning Yesterday we had a [look]( at the liquidation filing for the failed crypto hedge fund Three Arrows Capital, which gave a bit more detail on its creditors. It confirmed that 3AC had relationships with many of the bigger crypto lenders such as Genesis, Celsius and Voyager. There was some collateral, but not enough, so it still boiled down to trust. It reminded me that in Voyager's conference call in mid-May, an analyst asked about its lending risks in the wake of Luna/Terra's collapse. The CEO said only a small portion of its loans are collateralized, but it lends to the biggest names in the industry and verified there was no contagion in its conversations with every one of them. I'm sure they said everything was fine! I mean, they also offered a self-declared statement of net asset value in lieu of audited financials to their prospective debtors, as we reported last week. Another intriguing question the filing raises is 3AC's structure. Its creditor list also included the co-founder Su Zhu (a $5 million claim) and the wife of the other co-founder Kyle Davies (a $65.7 million claim). As we wrote in our story, there's something fishy in the fund's structure. The two men like to say they only run their own money, but in fact there are sub-share classes within their fund that are externally branded as independent money managers, with their own external investors. 3AC was authorized to run other people's money in Singapore, but these "funds" weren't, and way back in March the central bank put one of them, DeFiance Capital, on a [list]( of unregulated entities that might be perceived as regulated. DeFiance is now also a creditor, with a $35 million claim. All of this has led to an argument in recent weeks that none of it would have occurred in decentralized finance. Indeed, it's still business as usual for Aave, one of the largest lending protocols that was also actively used by 3AC. The idea is that when trading and lending are all done on platforms governed by code, reputations will be irrelevant and collateral liquidated instantly after margin limits are breached. But the system as it stands now remains limited. Since crypto is so volatile, most DeFi lenders require more collateral than the amount borrowed. For trading firms like 3AC, that defeats the whole purpose of borrowing. And as long as there are still CeFi institutions lending to these whales, the financial liabilities of each debtor won't be entirely transparent. Follow Bloomberg's Justina Lee on Twitter at @justinaknope Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. You received this message because you are subscribed to Bloomberg's Five Things - Americas newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](