Powell’s hawkish pause won’t make the Fed any more popular

Plus: Botnets, carbon capture and star cities. Bloomberg This is Bloomberg Opinion Today, a growing army of infected internet-connected opinions. [Sign up here](. Today’s Agenda - [Powell]( did nothing. - [Botnets]( infiltrate your home. - [Austin and Nashville]( shine. - [Carbon capture’s]( second coming. The Most [Hawkish Pause]( You Ever Did See There’s a truly thrilling [social experiment]( taking place on TikTok right now, where a young woman named Millie says she is going into her boyfriend Angus's closet every morning and purposefully leaving [a gap]( between two T-shirts. Her theory is that Angus, being a simple guy who likes all his shirts, will simply [pick out]( one of the shirts in the gap. She’s [4/4]( at this point, with her boyfriend opting to wear one of the two “gap” t-shirts every day. If only the economy were so predictable. Today marks Fed Day, and although Jerome Powell did indeed pass on a hike, he told reporters [not to call the decision a “skip”]( because July’s meeting will be “live.” Reading between the lines, it was [the most hawkish]( a pause can get — suggesting that more rate hikes may be just around the corner. “Policymakers are still [feeling their way around in the dark](,” Jonathan Levin writes, noting that although Powell was able to fend off dissenters today, some Fed officials “are clearly getting uncomfortable with the way that inflation is reacting — or failing to react — to the 500 basis points of rate increases since March 2022.” Confidence in the Federal Reserve is beyond low — only 36% of US adults say they have a “great deal” or a “fair amount” of confidence that Powell can keep the economy afloat. As society teeters on the edge of a painful recession, some — including Bloomberg’s editorial board — believe the decision to pause now, when [core inflation remains frustratingly sticky](, is a major mistake. “If the Fed allows [inflation expectations to become entrenched](, it will ultimately have to take rates much higher — and cause much greater hardship — to compensate and restore its credibility. Better to get it right the first time, even if imperfectly,” the editors argue. Others say “inflation is no longer accelerating, so there’s [no need to push too hard against it](,” John Authers explains. While the Fed’s decision to pause this time around was unanimous, there’s clearly no outside consensus on whether the economy can come to that ever-majestic soft landing. Bonus Fed Watching: Three of our columnists — John Authers, Jonathan Levin and Claudia Sahm — [livestreamed their reactions]( to the Fed rate decision on Twitter. Troll Heaven There are times when I think this newsletter is simply a newsletter about AI, given [how]( [frequently]( [we]( [revisit]( [the]( [topic](. Just today, Parmy Olson wrote about how [European regulators]( are practically [foaming at the mouth at the prospect of regulating it](. But instead of our usual AI-is-coming-for-humanity rodeo, we’re going to turn to what Tim Culpan [says is]( “another type of bot that’s already causing damage in our daily lives: Growing armies of infected internet-connected devices.” Our lives have been long been filled with digital death traps, but Tim says the botnets that can infiltrate and spread malicious code are getting far sneakier. Not to go all Big Brother on you, but “there’s a good chance a bot has already been installed in your home,” he writes, adding that “internet cameras — used for household security, to monitor the baby, or keep tabs on the dog — are a common target. As are routers that sit in almost every home, largely forgotten by their owners.” Penetrating these systems only takes a few steps — it’s probably more straightforward than the average [skincare]( [routine](: - A bad guy scans the internet for insecure gadgets. - They use fancy software to find out the login and password. - The breached gadget and its security info are added to a database. - The bad guy installs evil code in the memory of all the database devices. It’s an internet troll’s dream!!! “Suddenly, your nanny cam is a bot, although it may still function normally and show no signs of being possessed by alien code. Put thousands of these zombie gadgets together in a directory and you have a network of bots ready to execute whatever its owner decides,” Tim writes. The only way to stop such nefarious behavior is to click “yes” when your computer asks to do a security update and make sure your password isn’t something dumb like “123456” or “b00bs.” Both of these things feel like rather anticlimactic and old-school solutions. I suppose if it ain't broke, don't fix it. But botnets aren’t the only method for spying on your enemies. James Stavridis says foreign countries take advantage of a bevy of options, including sophisticated satellites, cyber-espionage and electronic “vacuum cleaners” that sound like they’re straight out of a Spy Kids film. Such is the concern over Cuba, which allegedly agreed to host a tea party with a Chinese electronic eavesdropping facility. Now Beijing may have better access to an entire surveillance network that’s situated a mere 100 miles away from the US. (Crime sounds convenient, doesn’t it!) China, in true form, says the [reports are false](. Regardless of whether that’s the case, James says China’s increasing influence in the Caribbean is a gigundous red flag. Read [the whole thing](. Telltale Charts As the cliché goes, there was always that one kid in high school who, seconds before the bell rang, would ask the teacher “is there any homework?” and the whole class would collectively groan in response. The 15 cities in this table — including places like Austin, Nashville, Charleston, Indianapolis and Philadelphia, even — are also annoyingly goody-goody, [outperforming their respective states economically](. Justin Fox ranked each city by the gap between its five-year job growth rate and that of the rest of the state, finding that standouts are mostly in states that have a “[red-blue mash-up](” of elected officials, meaning the voters are in favor of Republican presidents yet have Democratic mayors. Carbon Capture and Storage, or CCS, for short, is the Cinderella of the energy world. For years, it was mostly considered a joke, having been forced to the wayside by flashier renewable options like wind and solar. But “there are signs that [CCS may be about to get the last laugh](,” David Fickling writes, now that C02 has a price point that makes it economically attractive to foreign investors. “In places, the carbon content of a barrel of oil is already worth more than the fuel,” he notes, pointing to Canadian crude as an example. It’s a revenue stream that oil-dependent countries like Kenya could capitalize on, and Tyler Cowen says [the nation already has a head start](. Further Reading Thinking about [reducing your mortgage](? Yeah, that miiight not be the move. — Stuart Trow [EV's are no longer a niche](, and that’s complicating the GOP’s message. — Conor Sen The US is over China. But that doesn’t mean [Mexico’s moment]( has arrived. — Eduardo Porter Ukraine is a test for future wars and [the West is getting an F](. — Hal Brands Lina Khan is giving up the [FTC’s best deterrent]( to deals it doesn't like. — Ed Hammond [Radical Republicans]( are holding the House — and Kevin McCarthy — hostage. — Jonathan Bernstein ICYMI Trump [raised $2 million]( post-arraignment. People are [boycotting]( Oreos’ parent. Saturn’s [frozen moon]( has [a life-sustaining ocean](. The mandatory [retirement age for pilots]( might rise. Kickers Galore Harvard’s morgue manager [sold body parts]( on the black market. Floating [naked in a tank]( might help you calm down. [Dadfluencers]( are honestly [the best](. Olivia Rodrigo is [a Twilight stan](. McDonald’s has a new [Game Boy Color game](. (h/t Scott Duke Kominers) Amazon’s [gay romance]( is coming out soon. Notes: Please don’t send body parts but do send feedback to Jessica Karl at jkarl9@bloomberg.net. 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