Your Sunday Briefing: Racing Toward 5%

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Ease yourself into the new week

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(Bloomberg) — Hello again.

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After a hectic seven days, brace yourself for another busy week of rate decisions, earnings reports and elections. Here’s something to help you get set up.   

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The big rate decision: With a 75-basis-point hike by the Fed this week virtually baked in, most investors are looking ahead to how high rates could go. The answer: 5% by March 2023, at least according to economists surveyed by Bloomberg and also Goldman Sachs. Still, fallout from a strong dollar — already up about 13% this year — could weigh on the US economic outlook and ultimately tilt the Fed’s path. 

Elsewhere, the BOE is also seen lifting rates this week by 75 basis points, in what would be their biggest increase since 1989.  

The big stat: The jobs report that comes days after the FOMC rate decision will likely show the smallest increase in payrolls since  President Joe Biden’s administration began. Still, labor markets overall remain stubbornly robust, a phenomenon that’s defying central bank efforts to tamp down inflation globally.  

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The big earnings: Last week’s earnings reports from the big tech firms exposed their vulnerability to a slowing economy. Overall, corporate earnings are on a bleaker trajectory than last quarter, based on the number of negative surprises so far, and this week’s slew of reports could further confirm that trend.

Among the companies due: AMD, Aflac, Airbnb, AIG, Electronic Arts, Eli Lilly, Estee Lauder, Marathon Petroleum, Marriott, Moderna, Mondelez, PayPal, Pfizer, Qualcomm, Restaurant Brands, Starbucks, Uber and Yum! Brands. 

The big market thought: While disappointing earnings from the likes of Microsoft and Alphabet have hurt shareholders, one  group of people would likely have cheered the trend as good news — or at least a necessary evil. They include Jerome Powell and other Fed officials, who would have seen the slowdown as evidence of cooling demand and ultimately, positive for economic stability.  

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The big election: Brazil’s elections enter its home stretch, with voters going to the polls on Sunday to pick their new president. The race between incumbent Jair Bolsonaro and former president Luiz Inacio Lula da Silva has gotten increasingly tense over the past few weeks as the former ratcheted up his rhetoric against electoral authorities. Join Bloomberg on Sunday afternoon, as we cover the results live as they roll in. 

The big opinion: In the US, early voting is already underway for the midterms and candidates are making their final pitches. But don’t worry if you missed any of the debates, says David A. Hopkins in Bloomberg Opinion; rather than valuable democratic institutions that shed light on a candidate’s ability to lead, they’ve become a forum for zingers and blunders.

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Francis Wilkinson looks at how election-deniers are increasingly bringing the propaganda and conspiracies of national politics into small towns and local counties. While Matthew Yglesias talks to two diners at an IHOP and comes away with the realization that while some voters may have “crazy” views, all of them have legitimate concerns. 

The big dark: Daylight savings time ended Sunday in the UK and much of Europe, and clocks “fall back”  over here in a week. That tends to kick off a debate about whether DST should exist at all, or whether permanent daylight savings is the better option, to have more afternoon light in winter and potentially use less energy by doing do.

ICYM our Big Take: America’s middle class have had a good five years — on average, the average adult in that group was more than $120,000 richer at the peak than in January 2017. But that era is ending, if not already over, and that could spell trouble for the Democrats at the ballot boxes next month. 

And finally, enjoy reading our Big Takes? Check out the new Big Take podcast, which provides even more insight into one important story every weekday. Listen and subscribe on Apple Podcasts, iHeart or Spotify.

Have a good week. See you on the other side. 

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