Good morning. The rate hike debate, pessimistic investors and Berkshire Hathawayâs insurance profits. Hereâs whatâs moving markets. â Sam Un [View in browser](
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Good morning. The rate hike debate, pessimistic investors and Berkshire Hathawayâs insurance profits. Hereâs whatâs moving markets. â[ Sam Unsted]( More hikes [Further rate hikes may be needed]( by the Fed to to get inflation down to its 2% target, according to governor Michelle Bowman. Bowman said that even as data released since the last Fed meeting has indicated slowing inflation, she wanted to see âconsistent evidence that inflation is on a meaningful path down toward our 2% goal.â Two other Fed officials â Raphael Bostic and Austan Goolsbee â both said the jobs data last week indicated the labor market is getting to a better balance and that the Fed may soon have to think about how long to hold rates at these higher levels. Treasuries over stocks The latest Markets Live Pulse survey paints a gloomy picture. A clear majority of investors [see a US recession before 2024 is over](, which has them favoring long-term US Treasuries over what they consider an ephemeral bull market in stocks. About a fifth of the respondents reckon there could be a slump in 2023, despite the Fedâs staff ditching their recession forecast, [JPMorgan following suit]( and a [boost from Bidenomics](, even if the latter ultimately results in too much debt and too-high inflation. Profitable insurance Berkshire Hathawayâs operating profit rose in the second quarter[thanks to its insurance businesses](, which helped to offset the inflationary pressures weighing on Warren Buffettâs conglomerate. The $10.04 billion of operating profit it reported for the quarter came largely from a 74% rise in insurance underwriting earnings. The results came in spite of Buffett having cautioned in May that earnings in most of the groupâs operating units could soften this year as an âincredible periodâ for the US economy comes to an end. Yields rising Yields are rising across the curve in Treasuries, while the dollar is a little stronger against G10 currencies. Stock futures are higher, in contrast to the decline across European markets and following a mixed session in Asia. Oil and iron ore prices are lower. Coming up⦠Itâs relatively quiet on the economic data front today, with eyes trained on the inflation numbers later in the week. Meat producer Tyson Foods and media group Paramount Global will report earnings. And the Fedâs Bostic and Bowman, both aforementioned, will be taking part in the Fed Listens virtual event. What weâve been reading This is whatâs caught our eye over the past 24 hours. - [HSBC executive]( slams the UK for siding with the US against China
- Trucking firm Yellow Corp. has [filed for bankruptcy](.
- Elon Musk said he [may need surgery]( ahead a proposed cage fight with Meta founder Mark Zuckerberg.
- âBarbieâ crossed the [$1 billion]( ticket sales milestone.
- Hindenburgâs [short-selling haul](.
- [Guandan poker]( and deals in China.
- Influencer-influenced [chaos in Union Square](. And finally, here's what Joeâs interested in this morning... Hello and happy CPI Week. Here are 5 disconnected things on my mind today. - It doesn't seem like last Friday's Jobs Report changed all that much. The results were a little bit less than great. The number of new payrolls came in a little bit below expectations, while wages came in a bit hotter. Also the unemployment rate dropped back to 3.5%. Nothing too major either way. On the margin, perhaps a bit less robust, and a bit tighter than optimists or the Fed would like to see. Nonetheless, for unemployment to hang in there at these levels remains impressive. - Speaking of tight labor markets, it stands to reason that they give workers the best bargaining power. And this year has seen a number of prominent labor actions, including at UPS, where a new contract has likely been secured by The Teamsters. [On today's Odd Lots podcast](, we talk about the UAW's fight with the Big 3 with Dan Vicente, the head of UAW District 9, [and labor reporter Alex Press](. For organized labor this moment is in a way the polar opposite of 2008//2009, when unions made major contract concessions in order to keep the auto companies alive. Now they see an opportunity to reverse the agreements made roughly 15 years ago. - It's interesting that even with last week's stock and bond selloff, prominent office REIT Vornado continues to climb out of its depths. It's now at its highest since mid-February. - The German [industrial output chart]( looks bleak. - The data calendar this week is a little sparse. But obviously Thursday is going to be interesting with CPI. Economist consensus is that core CPI rises by 0.2% sequentially. Some people think it could be lighter than that. On Friday, we get the latest UMich sentiment numbers. This measure has been very depressed, and it'll be interesting to see if some of the lower inflation causes the number to pop. On the other hand it may be a drag that gasoline prices are back to their highest level since last November. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart]( Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before itâs here, itâs on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals canât find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Five Things to Start Your Day: Americas Edition newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox.
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