Inflation is the enemy

The US Federal Reserve raised interest rates by a quarter percentage point and indicated there may be more hikes to come. In doing so, the Fed signaled that, banking turmoil or not, its battle against inflation must go on. Forecasted rate hikes were unchanged, too. Chair Jerome Powell emphasized his belief that the banking system remains resilient, but markets fell as hopes for rate cuts in the near future thinned. As for that turmoil, Treasury Secretary Janet Yellen said on Capitol Hill that regulators aren’t looking to provide “blanket” deposit insurance, despite calls from some quarters to raise it beyond the current level of $250,000. Here’s your markets wrap.—Margaret Sutherlin

Kremlin leader Vladimir Putin and his Chinese counterpart Xi Jinping announced a deal to continue developing a key atomic technology. It’s an agreement that has the Pentagon on edge given its potential to upset the global balance of nuclear weapons. The announcement followed Xi’s visit to Russia and a flurry of other deals between the authoritarian governments, more closely aligned since Putin invaded Ukraine. But there was one crucial agreement Moscow didn’t get.

As bidders picks apart the remnants of Silicon Valley Bank, the merger between a small New England commercial bank and SVB is back in the spotlight. Meanwhile Apollo Global Management and Carlyle Group are zeroing in on about $10 billion in loans up for grabs now that the former parent company of SVB has filed for bankruptcy.

In more signs of anxiety at regional banks, PacWest moved to shore up liquidity by securing $1.4 billion from a financing facility. Customers have pulled about 20% of their deposits at the bank since the start of the year. Rising interest rates have depressed the value of regional banks’ fixed-income investments, and a sudden surge in customer withdrawals has forced them to sell assets at a loss. All of this uncertainty at regional banks, and the UBS takeover of Credit Suisse, is ushering in a new era in capitalism, write John Micklethwait and Adrian Woolridge in Bloomberg Opinion. It’s one where the government picks winners and losers.

Thousands of factory jobs could be at stake depending on how the US Treasury distributes tens of billions of dollars in EV tax incentives. The issue turns in part on where a critical part of the battery supply chain will be focused—in North America or Asia.

Top tech companies including Google, Meta and Apple are mounting a push to limit how US intelligence agencies collect and view texts, emails and other information about their users, especially Americans. The Foreign Intelligence Surveillance Act is up for renewal in Congress and there is a growing bipartisan consensus to make some changes after internal abuses were uncovered.

After becoming Europe’s largest center for trading equities in November, the French bourse has only widened the gap with post-Brexit London. In the wake of the split, the Paris stock market’s market capitalization of $3.13 trillion exceeds that of the UK capital by $250 billion.

The Iranian government has built a large and sophisticated cyber army with which to target domestic and foreign opponents. As the brutality of government crackdowns on widespread protests reverberates across social media, activists have asked tech companies to do more to limit the regime’s reach.

Bloomberg continues to track the global coronavirus pandemic. Click here for daily updates.

The problem isn’t new or unique to Los Angeles: Cities across the US are struggling to contain a spike in unsheltered homelessness. The rise is driven by a cycle of interwoven factors led by housing costs, a new drug crisis and the disruptions of Covid-19. Now LA Mayor Karen Bass is trying a new approach.

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The Bloomberg Wealth Asia Summit returns on May 9. Join us in Hong Kong or online as we sit down with the region’s leading investors, economists and money managers to discuss the mindset of next-generation investors, Web3 and investing in art. Speakers include top executives from the Hong Kong Monetary Authority, Sotheby’s and Two Sigma Asia-Pacific. Register here.