5 Things You Need to Know to Start Your Day

Microsoft and other big tech companies posted strong sales growth, the Fed is expected to hike 75 basis points and Credit Suisse gets a new [View in browser]( [Bloomberg]( Microsoft and other big tech companies posted strong sales growth, the Fed is expected to hike 75 basis points and Credit Suisse gets a new CEO. Tech beats Alphabet, Microsoft and Texas Instruments posted double-digit quarterly revenue growth on Tuesday and expressed optimism about the coming months, [reassuring investors]( who had been fretting that the tech industry was poised for a dour second half. Microsoft gave an [encouraging sales forecast]( for the current fiscal year, soothing fears that the strong US dollar and a weakening economy would ravage sales. Alphabet, the parent company of search giant [Google,]( managed to post advertising revenue that surpassed analysts’ expectations. An online ad slowdown had been a [particular concern]( of investors. This week’s MLIV Pulse survey zooms in on big tech and Elon Musk’s bid for Twitter. It takes one minute to participate, so please [click here]( to get involved. It’s Fed day The Federal Reserve is expected to raise its benchmark rate by 75 basis points when it concludes its two-day meeting Wednesday. However, investors will be [watching for]( any dissent and what the Fed thinks about signs of a slowing economy. The Fed's decision is, meanwhile, likely to [heap pressure]( on its Asian counterparts to speed up monetary tightening. Credit Suisse CEO Credit Suisse replaced its chief executive officer and said it would embark on a [new turnaround plan]( just nine months after the last one, as the Swiss bank indicated it aims to slash the size of its investment bank in the face of mounting losses. The firm tapped asset-management head Ulrich Koerner to be CEO starting next week, replacing Thomas Gottstein, who is resigning after a two-year tenure marked by scandal and huge losses. [Deutsche Bank]( scrapped an efficiency target for the year and warned a key profitability goal was getting harder to reach, overshadowing a strong performance at the corporate bank as well as in fixed-income trading, which beat Wall Street in a volatile market. Firms in the US and Europe worth more than [$9.4 trillion]( will report their latest figures tomorrow. Stocks climb European stocks and US equity futures [climbed]( after surprisingly good company earnings helped limit fears about a coming recession. The Nasdaq is the top performer in the US, climbing 1.6% as of 5:30 a.m. New York time. Major technology and internet stocks advanced in premarket trading, but the rest of the trading day is likely to be subdued as traders await the Fed's interest rate decision. Coming up... It's (almost) all about the Fed today. But outside the almost inevitable 75 basis point hike and the prognostications about what Chair Jerome Powell and friends will do in September, there's plenty for markets to chew on in data and earnings. US MBA mortgage applications and June pending home sales will give a view on the strength of the housing market, while wholesale inventories and durable goods orders at 8:30 a.m. will give early indications on the health of the consumer. The slew of companies reporting include Meta, ADP, Boston Scientific, Kraft Heinz, Boeing, T-Mobile, Ford and many others. What we've been reading Here's what caught our eye over the past 24 hours. - Biden to speak with [China's Xi.]( - Trump efforts to create[fake electors]( probed. - Cathie Wood dump [Coinbase shares.]( - Biden considers extending[student loan repayment]( pause. - Black swan [hedge funds]( are booming. - Russian [gas cuts]( risk fracturing EU unity. - [Low-cost cities]( with strong economies remain attractive. And finally, here’s what Joe’s interested in this morning Good morning and Happy Fed Day. This afternoon afternoon we get the latest FOMC decision, and the expectation is for a 75 basis point rate hike. But before we get to the Fed, I want to back up to yesterday for a second. Yesterday, the [White House announced]( a more robust plan to use the Strategic Petroleum Reserve (SPR) to stabilize the price of oil. What's important about the plan isn't just the release of oil in order to ease the price of gasoline now, but the building out of explicit commitments to repurchase oil after fiscal year 2023, at fixed prices, in order to replenish the SPR (replace what's being released). The idea is that by making a clear commitment to buy oil down the road, producers today should have greater confidence in stepping up their capital expenditures, knowing there's a guaranteed purchaser when the investments start yielding crude. The White House plan is very much in line with a proposal that think tank [Employ America has been championing since early this year](. And in fact we had Employ America's head [Skanda Amarnath]( alongside analyst [Rory Johnston]( on our podcast [just last month laying out the exact idea](. The whole discussion is [worth a listen](. But the basic idea can be understood by the shape of the oil futures curve right now. While the current (spot) price of West Texas Intermediate crude is just south of $100, if you go a couple years out on the curve, the price drops off precipitously. What that means is that oil producers can't actually lock in today's very high prices when thinking about the cost-benefit of a new project. As such, while domestic production of oil has certainly climbed a lot in the last year, it hasn't risen as much as you'd expect (or hope) given the high price at the pumps. So the policy objective is to somehow (yes) flatten the curve: push down near-term prices to deliver immediate relief for drivers, while lifting the curve a few years out in order to incentivize production by giving producers a higher guaranteed price for when the wells start actually flowing. It's interesting that the group primarily associated with pushing this proposal is Employ America, a think tank focused on policy ideas to promote full employment. But it actually makes total sense in this current macro environment. Inflation is way too high. And the Fed is aggressively moving to constrain it. Everyone knows that rate hikes are a really blunt instrument that really only operate by causing layoffs and a possible recession. But if layoffs and recession are what it takes to constrain inflation, then the Fed will induce them in order to hit the price stability part of the mandate. In the 2010s, the pursuit of tight labor markets basically involved various proposals to boost demand (easier Fed policy, fiscal stimulus, etc.). In 2022, it's trickier. The pursuit of tight labor markets now involves finding ways to constrain inflation and ease supply-side capacity in manners other than putting people out of work. It's just one area, but you could make a lot of progress on this front by bringing relief to energy markets. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart]( 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. 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