5 Things You Need to Know to Start Your Day

The Federal Reserve has more work to do to fight inflation, the FTX fallout continues and Elon Musk sells billions in Tesla shares. - Heathe [View in browser]( [Bloomberg]( The Federal Reserve has more work to do to fight inflation, the FTX fallout continues and Elon Musk sells billions in Tesla shares. - [Heather Burke]( Fed aftermath The Fed raised rates 50 basis points at Wednesday's meeting, as expected. Chair Jerome Powell says the central bank has more work to do to vanquish inflation but investors seem to see the outlook for 2023[differently.Â]( Policymakers projected rates would end next year at 5.1%, according to their median forecast, before dropping to 4.1% in 2024 — a [higher level](than previously indicated. The higher forecasts were [not a surprise]( to MLIV Pulse Survey respondents, of whom 52%  said they weren’t surprised by the ratcheting up of the rate estimates in the dot plot. Survey respondents also expected a stronger dollar and weaker stocks into the end of the year. FTX fallout A GitHub account bearing the name of former FTX executive Nishad Singh authored code that hid Alameda Research’s [ballooning liabilities](on the now-collapsed cryptocurrency exchange, according to internal documentation reviewed by Bloomberg News. FTX executive Ryan Salame told Bahamian regulators on Nov. 9 that client assets were transferred to Alameda to [“cover financial losses”]( at the trading firm, court filings show. The grim conditions FTX founder Sam Bankman-Fried is encountering in the [Bahamas prison]( where he’s currently being held could change his attitude on extradition to face fraud charges in the US. Guggenheim’s Scott Minerd warned investors of [more shakeouts](to come as years of easy money end. Musk selling Elon Musk sold another [$3.58 billion of Tesla]( shares, bringing the total amount he’s offloaded since late last year to almost $40 billion. The latest disposal coincided with Musk falling from the top spot in the Bloomberg Billionaires Index, a position he’d occupied since September last year. Still, others are buying Tesla -- a gamut of Cathie Wood’s Ark Investment Management funds scooped up nearly [75,000 shares]( this week. Stocks fall US equity-index [futures]( and European stocks fell after the Fed pushed back on expectations for a dovish tilt and said interest rates will go higher for longer. Contracts on the S&P 500 and Nasdaq 100 gauges dropped at least 1% each as of 6:10 a.m. New York time. Demand for haven assets sent the dollar and Swiss franc higher amid a wave of rate hikes from Taiwan to Norway. The euro halted a two-day advance as traders awaited policy decisions from the European Central Bank and Bank of England. To catch up on the trading day in the UK and Europe, check out [today’s edition of City Latest.Â]( Coming up... It’s a busy day for central banks after the [Swiss National Bank]( raised its interest rate by 50 basis points and [Norges Bank]( by 25 basis points. The 7 a.m.[Bank of England](decision is likely to show a slowdown in the pace of hiking, as is the[European Central Bank]( at 8:15 a.m. Mexico’s central bank is expected to increase the key rate 50 basis points to 10.50%. In the US, data include retail sales, initial jobless claims, Empire Manufacturing and Philadelphia Fed business outlook at 8:30 a.m., followed by industrial production and business inventories. What we've been reading Here's what caught our eye over the past 24 hours. - Xi stays silent as [Covid Zero]( strategy crumbles. - House passes one-week spending bill to[avert shutdown](. - US seizes websites in sting of [cyberattack-for-hire](services. - [Long Covid’s]( effects go beyond respiratory issues. - New York risks [losing wealthiest.Â]( - [Binance’s]( biggest platform shows crypto contagion concern. - Secret to France’s [World Cup]( success. And finally, here’s what Joe’s interested in this morning We didn't exactly get a pivot yesterday. Yes, the Fed stepped down its pace of rate hikes (from 75 to 50 bps). Also, there are signs that we're nearing the end of the cycle overall. But it's clear that despite some cooling in measured inflation over the last couple of months, the Fed still feels it has more work to do. Or to put it another way, the Fed is not convinced that we're seeing a sustainable deceleration that will get it back to 2%. So right now, two big questions come to mind. 1) What would it take for the Fed to really believe in a soft landing? What we've seen recently is that prices can come down (or at least increases can decelerate) without major weakness in the labor market. The unemployment rate is just 3.7%. And wage growth came in hot last month. Yet inflation has declined from its peak. So it's at least theoretically possible, in the short term, for a strong labor market and declining inflation to coexist. But a couple of months’ worth of data is just that: a couple of months’ worth of data— not exactly a major trend yet. But if we got another cool report next month, would the Fed start to believe that it can hit its inflation target without unemployment significantly jumping? We'll see. 2) Can the Fed just have a little bit of an unemployment increase? In the summary of economic projects, the FOMC sees the unemployment rate increasing to 4.6% before stabilizing. But the question is, once the layoffs gather steam, does it stop there? Or do layoffs snowball, sending the unemployment rate significantly higher? During the press conference, Powell expressed optimism on this front, owing to the tightness of the labor market. Again, we'll see. On a semi-related note, and speaking of the Fed, today we released a great Odd Lots that came out of a live recording with Josh Younger and Lev Menand of Columbia. The conversation is on the history of modern banking, and how we got to the existing system. There's a lot in there, but there's an interesting point from Menand that's worth thinking about more. The common view is that the independent Fed exists to fight inflation, that politicians -- left to their own devices -- would spend like drunken sailors and need to be counteracted by monetary policy to keep prices stable. But per Menand, this is a false history or a false story about the Fed's existence. As he argues, it's really the opposite. Before we had our existing setup, the banking system was prone to frequent busts and actually regular collapses in the money supply. And so, as he argues, a foundational purpose of the Fed is not fighting inflation necessarily, but fighting deflationary collapse... almost the exact opposite of how the central bank is usually discussed. Anyway, it's a fascinating big-picture conversation that helps us zoom out from the here and now of finance and banking. Check it out on [Apple](, [Spotify]( or elsewhere. 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](