5 Things You Need to Know to Start Your Day

Fed’s inflation battle could harm the economy, the ECB may raise 75 basis points and California avoids blackouts again. The Federal Reserve’ [View in browser]( [Bloomberg]( Fed’s inflation battle could harm the economy, the ECB may raise 75 basis points and California avoids blackouts again. Fed hikes Federal Reserve’s battle to bring inflation under control will likely cause [more harm to the US]( and world economy than is currently appreciated, according to a pair of papers set for presentation at a renowned economic conference this week. Fed Chair Jerome Powell and his colleagues will probably have to push unemployment significantly higher in order to hit their 2% inflation target, according to [one]( of the papers. [Goldman Sachs]( now expects the Fed to hike by 75 basis points this month and 50 basis points in November, up from their previous forecasts of 50 basis points and 25 basis points respectively. Fed Vice Chair Lael Brainard said the US central bank will have to raise interest rates to [restrictive levels,]( while cautioning risks would become more two-sided in the future. ECB meeting For interest-rate traders, it's almost a given that the European Central Bank will [raise rates]( today, but the question really comes down to how much. [Most economists]( seem to be convinced that the benchmark interest rate will go up by 75 basis points, though the ECB's revision of its economic growth and inflation forecasts will share center stage. Meanwhile, two [floating]( liquefied natural gas terminals are being set up in a Dutch port, the first in a wave of the specialist tankers that Europe is banking on to ease the worst energy crunch in decades. And investors might still be in denial about how much worse it could get for [European stocks](and corporate bonds. California power California’s power grid [once again]( didn’t break despite being stretched to the limit as a punishing heat wave continues to test the state’s ability to keep the lights on. Thursday promises to be another tense standoff, with demand forecast near a record high [set Tuesday.]( Meanwhile, California’s wine country, including the famed Napa and Sonoma valleys, faces a climate crisis [so dire]( that it’s posing an existential threat to the future of the state’s industry. Dollar rises European stocks pared early gains ahead of the ECB meeting. [US equity futures](were little changed as of 5:40 a.m. New York time following a near-2% advance in the S&P 500 and Nasdaq 100 on Wednesday. A dollar gauge rose as traders assessed comments from Federal Reserve officials on their commitment to fighting inflation. The pound weakened after sliding to its lowest level against the greenback since 1985 on Wednesday while the yen slid for a fourth day after a meeting of senior Japanese officials to discuss the currency’s slide failed to generate a change in sentiment from traders. Oil held a sharp slide this week. Coming up... US traders will have a busy morning with the ECB decision at 8:15 a.m. and press conference at 8:45 a.m. Then Powell speaks at 9:10 a.m. Chicago Fed President Charles Evans and his Minneapolis counterpart Neel Kashkari are also due to speak. Data include initial jobless claims and consumer credit. DocuSign and RH report earnings. What we've been reading Here's what caught our eye over the past 24 hours. - [Work from home]( is loved worldwide. - Apple’s [iPhone 14.]( - Amazon.com’s $13 billion [NFL bet](. - Most-accurate [US artillery shell]( sent to Ukraine. - Biden delays [China tariff](decision. - One-week [superyacht]( rentals. - Justice Department’s response to [Trump ruling.Â]( And finally, here’s what Joe’s interested in this morning [Yesterday at Bloomberg HQ](, we recorded a special episode of our podcast with two legends: Zoltan Pozsar of Credit Suisse and his sometimes collaborator Perry Mehrling of Boston University. The debate was about the "future of the dollar" and it will be public on Monday, so for now no need for too many spoilers. (Find it on [Apple]( or [Spotify]( or elsewhere when it drops.) Anyway, there's always a lot of interest in this question of whether the dollar's dominance is going to fade in some measurable way at some point in the future. But while we wait for the future to unfold, the present tense story is that the dollar is unbelievably strong. Major trading pairs like the euro, the yen, and the British pound are all at multi-decade lows. One thing that Zoltan said during the discussion is that central banks don't have any great answers to the supply side, commodity-driven dislocations we're seeing across the world economy right now. That's probably not too controversial. Today is ECB day, and while there is a possibility that they could do 75 basis points, I don't think many people expect a rate hike of any amount to be particularly useful in a crisis that's in large part about a shortage of natural gas. But per Zoltan, perhaps the central banks can still aim for currency stability via rate hikes. And so while they may not have any obvious answers to commodity shortages, they may still try to do something to get those lines moving in the other direction. 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. 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](