Is Jay Powell directing a rom-com or a horror movie?

Endings are always the hardest to get right. [Bloomberg]( This is Bloomberg Opinion Today, a Grand Slam of Bloomberg Opinion’s opinions. [Sign up here](. Today’s Agenda - The Fed’s [path]( forward. - US-China [financial ties](. - Jewelry [trends]( change. - [Coffee cups]( can’t save the planet. He’s Not Going to Like This Movie I watched a rather frustrating [rom-com]( this past weekend, Meet Cute. One minute, Kaley Cuoco and Pete Davidson are eating at an Indian restaurant in the East Village. The next, they’re walking past Jane’s Carousel in Brooklyn Bridge Park — an impossibility, logistically speaking. All told, I think they traversed from Manhattan to Brooklyn more than four times in a single evening. Perhaps you’ve experienced something similar when watching a movie that features a subject familiar to you. You know the landmarks. You know the logistics. There’s simply no way for you to suspend your disbelief and enjoy the movie. Which, of freaking course, leads me to The Federal Reserve: Softest Landing Known to Man, a movie I just made up. Let’s say our columnist Mohamed A. El-Erian decides to go see this movie, which follows Jerome Powell (played by Pierce Brosnan) on his hero’s journey to administer the Fed’s most concentrated set of rate increases in decades. It’s a rather [impressive tale](, with headline consumer-price inflation falling from a stunning 9.1% in June 2022 to 3.2% in July 2023. The movie concludes with the leader of the world’s most powerful central bank declaring that the hiking cycle is over. It even hints at a sequel — The Rate Cuts — which is slated to start filming as early as next year. But as Mohamed watches the credits roll, he’s annoyed: He knows the core CPI benchmarks. He’s read the FOMC transcripts. There’s simply no way for him to suspend his disbelief and enjoy the movie. The current inflation battle is far more nuanced than Softest Landing would have it. In reality, Mohamed writes, there are [two scenarios]( for the ending of the real-life tale of Jay Powell and the Fed, which has yet to be written: The good one, where inflation does indeed fall all the way to 2% and the Fed can announce that it slayed the dragon, with little cost to growth or financial stability. And the bad one, where he says the “economy may well experience an uptick in the widely reported annual headline inflation number in the next few months,” causing a whole host of other headaches. Mohammed, seeing and knowing all these complexities, is still hopeful for a happy ending. He’s just not sure we’re going to get one. Sadly, it’s still too soon for this particular drama to hit the theaters yet. Let’s just hope that the Fed’s final script will be more of a feel-good movie and not a horror film. That, we could not bear (or afford) to watch. Bonus Central Bank Reading: - A [pause in rate hikes]( won’t mean Europe’s inflation battle is over. — Marcus Ashworth - The Fed's bank capital [proposal]( isn’t the right answer. — Bill Dudley He’s Not Going to Invade Taiwan Listen, I’m not a president of anything. I write a newsletter. The last thing I searched on Google was how to bake [a potato](. So when I ask this question, please take it with a gajillion grains of salt: Is it really a good idea for the president of the United States to tell the entire world that he doubts China can invade Taiwan?? That’s like Coco Gauff’s [haters]( telling her she couldn’t win a Grand Slam!! She could, and she did. You see, the CIA is pretty confident that Chinese President Xi Jinping expects his army will be able to invade Taiwan as soon as 2027. “But one cannot wholly rule out a confrontation earlier than 2027 if the Chinese were to calculate that the US and its allies were unprepared, and that the element of surprise would compensate for Chinese unreadiness,” Niall Ferguson [warns](. At the same time, “Xi’s current preference for maintaining state control over liberalizing the economy — and his objections to consumption-driven growth — may very well plunge the country into a period of sustained deflation,” Charles Dunst, author of the new book [Defeating the Dictators](, tells Tobin Harshaw. Over the weekend, Biden told reporters that Xi “has his hands full right now” with the economy. He added: “I don’t think it’s going to cause China to invade Taiwan, matter of fact the opposite, probably doesn’t have the same capacity as it had before.” Niall argues that Biden faces similar troubles on his own turf: “What was a $19.9 trillion debt when Donald Trump was inaugurated is now close to a $32.3 trillion debt,” he writes. A war between the US and China with their current balance sheets would be financially irresponsible, if not catastrophic. Plus, the two countries can’t have champagne taste — standoff missiles, harpoons, tomahawks and warships — on a beer budget: Back in the 1960s, as the Soviets played a game of nuclear capacity catch-up with the US, the phrase “mutually assured destruction” was born. In the words of Henry Kissinger, “vulnerability contributed to peace, and invulnerability contributed to war.” Today, the US and China are on the precipice of a different kind of terror: a mutually assured financial destruction. “In the case of a showdown over Taiwan, the US might impose financial sanctions on China — but the effect would be to impose a form of secondary financial sanctions on itself,” Niall notes. Truth be told, both Biden and Xi’s hands are tied in the same knot, and no press conference can untie it. She’s Not Going to Jared Speaking of tying knots! The main issue with Signet Jewelers — the owner of Kay, Jared and Zales — is that it’s marketing love. Just look at these slogans: “Every Kiss Begins with Kay.” “Dare To Be Devoted.” “He Went To Jared.” “Zales: The Diamond Store." Aside from being blatantly heteronormative, these marriage-coded taglines feel tired. We’ve got kisses, devotion, diamonds — the mass-produced Hallmark Channel love-fest formula is all there. But shoppers don’t want that! They want dainty pearl necklaces from artists on Etsy and second-hand watches from TheRealReal. Savvy jewelers know this, which is why they’re de-emphasizing the bridal business and focusing on shoppers who want to splurge on some gold hoops after getting that promotion. And yet Leticia Miranda says Signet is still dead-set on selling engagement rings — one of numerous missteps that’s led to a streak of weak earnings results. Signet’s slogans stand in sharp contrast with successful jewelers such as [Pandora]( (whose stock gained about 42% this year) and [Mejuri](, which boasts the tagline “Buy yourself the damn diamond.” Romance rituals are changing, Leticia explains: “Valentine’s Day has [become less of a moment]( to buy fine jewelry. Couples are choosing to celebrate anniversaries in new ways — experiences, homemade gifts, dinner — instead of a $400 silver heart necklace that shoppers once would have purchased at the mall.”He may have gone to Jared, but she’s certainly not. Read [the whole thing](. Telltale Chart Remember those heinous [colostomy coffee bags]( that were cropping up in New York City this summer? The ones I introduced to you a few weeks back in [this very newsletter](? Well!!! I have an update for you, [courtesy of]( David Fickling: “The argument in favor of such Capri Sun bags — ‘[flexible packaging](,’ to use the industry jargon — is that manufacturing them uses about half the energy and less than half the materials used in rigid plastic bottles. At the same time, manufacturing isn’t the be-all and end-all. For instance, less than 1% of flexible packaging gets [recycled](, compared to more than 40% of rigid packaging.” In other words, it’s a mixed bag — for both your coffee and the environment. David says regulation is needed so that consumers can see the environmental credentials of the packaging itself, similar to how food labels provide information about a product’s ingredients, allergen risks and health benefits. Further Reading Uhh, what happens when [the price]( of solar and wind projects goes up rather than down? — Matthew Yglesias A [juicy new book]( from Rory Stewart delves into the UK’s era of disastrous politics. — Adrian Wooldridge What a rapper’s six-week [jail sentence]( says about racism in Singapore. — Karishma Vaswani Want to speed up the renewables energy transition? Normalize “[climate hacks](.” — Danny Kennedy Pssst! Stocks are on sale in the UK — that is, if you know [where to look](. — Merryn Somerset Webb ICYMI Generic drugs are getting [expensive](. � is getting under [Volkswagen](’s skin. Popeyes tries to keep its [chicken sando]( magic alive. Barstool’s “burner” Twitter accounts are [in trouble](. Smucker bought a boatload of [Twinkies](. Kickers How an egg autographed in 1951 turned into [a heartfelt tale](. (h/t Ellen Kominers) Stop trying so hard: 85% is the best [number]( for productivity. Pumpkin spice fatigue has us side-eying [the apple](. New Yorkers take their French fries [very seriously](. Ribbons and bows are high fashion’s [hidden tax](. Notes: Please send Balthazar fries and feedback to Jessica Karl at jkarl9@bloomberg.net. [Sign up here]( and follow us on [Threads](, [TikTok](, [Twitter](, [Instagram]( and [Facebook](. 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](. Want to sponsor this newsletter? [Get in touch here](. 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