Rolls-Royce takes the fast lane out of pity city

Plus: China's crumbling economy, New Jersey's congestion tax troubles and more. [Bloomberg]( This is Bloomberg Opinion Today, a burning platform of Bloomberg Opinion’s opinions. [Sign up here](. Today’s Agenda - [Rolls-Royce]( is speeding. - [China]( is receding. - [New Jersey]( is pleading. - [Tesla]( is bleeding. Rolls-Royce Is [on Fire]( Remember in April when the CEO of that furniture company said “you can visit Pity City, but you can’t live there” and everyone [gasped]( in horror? It was clearly the wrong tactic to get employees jazzed about their jobs. But MillerKnoll’s Andi Owen is hardly the first CEO to crash and burn after giving employees a healthy dose of “tough love,” loosely defined. In fact, months before the words “pity city” were ever uttered, brand-new Rolls-Royce CEO Tufan Erginbilgic dared to call his business a “burning platform,” which was just another way to scare his staff into performing better and prepare them for [painful layoffs]( ahead, Chris Hughes writes. But a half a year later, dare I say, it looks like his choice words … actually [worked](?? Today, Rolls’s shares jumped as much as 25% after the company delivered an operating profit that was way more than the consensus forecast. In the time since Erginbilgic announced that the company was in an existential crisis, the stock has almost doubled. “Of course, it helps that the airline industry has bounced back faster than expected following the pandemic,” Chris says. The world doesn't have nearly enough planes after a slowdown in manufacturing during Covid, particularly the twin-aisle models that feature Rolls-Royce engines and are primarily used for international flights. That supply-demand imbalance should continue to bolster aircraft manufacturers. But Brooke Sutherland says the post-Covid travel boom appears to be [running out of steam](, particularly in the US, as people lose the itch to “revenge spend” on vacations. Several US airlines have run promotions to help fill seats this fall. “Even in Europe, where it seems just about everyone is vacationing this summer, some cracks are emerging in the demand picture,” she writes. Rolls-Royce may have extinguished the worst flames from its “burning platform,” but there’s no telling what [other fires]( may lurk around the corner. Read the [whole thing](. Bonus Rolls-Royce Reading: Max Hastings writes that the [company’s cutbacks]( — especially at German subsidiary mtu, which provides engines for tanks and armored vehicles — had set back the West’s effort to supply Ukraine with much-needed weaponry. What Happened to China? There’s always that one overachiever in high school who absolutely crushes it. Maybe they were the valedictorian. Or the star athlete. Everyone joked that they’d become president or win the X Games or something like that. But then you run into them at your 10-year reunion and it’s just like, wait, what happened?? They’re doing fine, sure, but they by no means possess a resumé that remotely qualifies them to lead a nation … or make it to the Olympics. This, my friends, is China. After graduating from Zero Covid, everyone was so ready for the country’s economy to pop off. And it did, for a second there: After restrictions were lifted, “Shanghai quickly turned into a party town. Restaurants were packed. Young people crowded into trendy cafes and wine bars. No one wore masks at yoga studios,” Shuli Ren [wrote]( in January. Promises of the “[China luxury boom](” proliferated and growth targets were [criticized]( as too low, Dan Moss [says](. But now, more than half a year into the supposed rebound, things are undoubtedly [meh](: The path of China’s faltering economy is now being described as “[wavy](” by leaders, with “bumps during progress.” “Put politely, the message is that the country won't provide the lift for the global economy that was widely anticipated six months ago,” Dan writes. Consider LVMH, which was depending on China to pick up America’s “bling baton,” Andrea Felsted writes. While that’s sort of happening, it’s not at the pace that Bernard Arnault — and the luxury sector as a whole — was banking on. China’s struggles are forcing President Xi Jinping to rethink his approach to [the private sector](. “State-owned enterprises are not big enough to wrestle the economy from a double-dip downturn that is marked by [soaring youth unemployment](, [penny-pinching]( consumers and weak fixed-asset investments,” Shuli argues. But efforts to woo skeptical tycoons won’t be easy. Now would be a fantastic time to pump some [stimulus]( into the tank, but China's politburo has been rather [sketchy]( when it comes to broaching that topic. The country’s fate now rests in the hands of the new governor of its central bank, Pan Gongsheng. Isabelle Lee says the 60-year-old’s “appointment can be taken as a sign that the leadership wants a coordinated plan to steer the economy out of its current downturn.” That’s certainly more pressure than needing to impress at a high school reunion. Crash Course “All of a sudden, everybody's eyes changed ... I was no longer Elizabeth, the expert on microfinance. I was the pregnant girl." Elizabeth Rossiello CEO of AZA Finance On the latest episode of [Crash Course](, Timothy L. O'Brien spoke with the head of AZA Finance, a fintech and foreign-exchange company based in Nairobi and London, about [the myriad challenges]( that women face while working on Wall Street. Telltale Charts As someone who grew up in [Connecticut](, rarely do I condone discourse that pities the residents of New Jersey, but I’ll allow it just this once. Justin Fox says the Garden State gets [the short end of the stick]( when it comes to commuting (and [pumping gas](, but I digress). Just take one look at all the bright-red toll dots that line the Hudson River on the below map and you’ll understand why. Drivers who cross the bridges between New Jersey and New York already have to pay $14.75 to drive into Manhattan at peak hours with an E-ZPass, and the city’s [new congestion-pricing plan]( for motorists who drive south of 60th street could more than double that already-steep fare. “With New Jersey [suing last week]( to halt the implementation of the plan, and possessing the ability through its half-control of the Port Authority to gum up area transportation, some sort of compromise seems necessary,” Justin writes. The basic earnings plan for an electric vehicle company seems to go like this: You come up with a [fancy]( [deck](. You refer to “robotaxis” and/or “cybertrucks” at least five times during your presentation. You watch as investors drool in delight. Of course, you omit the fact that all of the “next-gen” models you tease will take years to produce and sell in the real world. But if you’re GM, you have a backup plan: The good old-fashioned combustion-engine! [GM]( delivered about 20% more vehicles last quarter compared to that period last year, and less than 2% of them were electric, Liam Denning writes, noting that [operating profit]( increased by 32%. [Tesla](, meanwhile, sold 83% more vehicles, but its overall operating profit — as in the total amount of dollars made — actually fell. “As a slogan, this would approximate something like selling twice the cars for less money!” he quips. GM has flexibility where Tesla does not; that’s why the gap between their profit margins is closing: Further Reading The [deadly hot]( summer is a warning for [cities](. — Bloomberg’s editorial board If your private-jet pilot has puppy-dog eyes, [beware](. — Matt Levine The Fed must be wary of oncoming [vibe shifts](. — Conor Sen The [Era of AI]( is all about efficiency and cutting costs. — Tim Culpan Spain’s voters show Europe’s right where it [went wrong](. — Pankaj Mishra Want to be a Republican without mingling with [extremists](? Good luck. — Francis Wilkinson If ESPN wants to thrive in the streaming age, it needs to [pay up](. — Adam Minter ICYMI The [demise]( of Daily Harvest. [UFOs]( are [freakYyYyy](. Ocean [so hot]( right now. [Syphilis]( drugs are running low. Melania Trump’s [small world](. Kickers The real [fake news]( has arrived. [Polly Pocket]( is coming to theaters. Barbie pink is actually [an earth tone](. (h/t Ellen Kominers) Free sandos for life! (Yes, there’s a [catch](.) The [devil]( is not very popular. [Jeffrey]( is such a tough sell. (h/t Mike Nizza for the last two kickers) Notes: Please send tofu and feedback to Jessica Karl at jkarl9@bloomberg.net. [Sign up here]( and follow us on [Threads](, [TikTok](, [Twitter](, [Instagram]( and [Facebook](. Follow Us You received this message because you are subscribed to Bloomberg's Opinion Today 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](