Business

Brace yourself for a potentially brutal summer as El Niño begins to form

This is an El Niño yearand thats going to adjust the weather patterns weve been experiencing for the past few summers, forecasters say.

We just had the eight warmest years on record, even though we had a cooling La Niña for the past three years and this acted as a temporary brake on global temperature increase, said Prof. Petteri Taalas , Secretary-General of the World Meteorological Organization (WMO) in a statement on Wednesday. The development of an El Niño will most likely lead to a new spike in global heating and increase the chance of breaking temperature records.

Much of the country is looking at above average temperatures this summer, with the Eastern and gulf coast seaboard, as well as all of Florida and most of Texas, looking at the highest chances of an especially hot summer. The upper Midwest, Nevada and California are less likely to see spikes.

It could also be an especially wet summer in the Southeast, with above average seasonal precipitation forecast for virtually all of the area east and south of Missouri. The Northwest and parts of the Southwest could see less rainfall.

Despite the higher temps, there are some upsides to the El Niño. They typically bring fewer Atlantic hurricanes and could help the drought in the West.

Like pretty much anything weather related, of course, an El Niño is not a certainty, forecasters say. The latest update from the National Oceanic and Atmospheric Administration says theres a 62% chance of El Niño conditions for the MayJuly period. By the fall, that probability increases to 80%.

If the weather phenomenon does form, its also uncertain how strong it will be. Still, the WMO is warning citizens and governments to be prepared, indicating we could be looking at a repeat of 2016the warmest year on record, due to a double whammy of El Niño and global warming.

7 side hustles that pay daily (up to $200)

If youre in a cash crunch, take a breath before applying for a personal loan. Theres likely a side hustle out there that can help you earn money fastand even get paid on the same day you work.

Whether you tap the wonders of the gig economy or resources in your hometown, same-day pay could be closer than you think. And with many employers adding daily pay options as an employee benefit, you could say farewell to Payday Friday and hooray to payday every day.

7 side hustles that pay up to $200 per day

Getting paid biweekly or bimonthly is pretty much the standard. But daily pay comes with both financial and mental health benefits, says Safwan Shah, CEO of Payactiv, a financial services company. He notes that daily access to earnings can help workers avoid hefty fines in overdraft fees and predatory lending options such as payday loans. Plus, it can decrease stress by giving workers access to their wages on their schedule, not their employers.

So a side hustle might be in order if you imagine a cash flow closer to daily than once every two weeks. If daily pay is important for your finances, you can compare gigs and find one that aligns with your talents, time, and expected payment schedule.

1. Deliver for DoorDash

If you want to connect neighbors with everything from hot meals to pet supplies, delivering for DoorDash could be the cash infusion you need. And with this app, theres no shopping involved. Instead, when you accept a delivery, youll simply pick it up and drop it off at the designated address.

DoorDash offers two options for daily pay: Fast Pay and Dasher Direct. With Fast Pay, you can cash out earnings once daily directly to your debit card for a $1.99 fee. DasherDirect is a fee-free program that cashes you out after every delivery. To use DasherDirect, youll need to sign up for DoorDashs Visa debit card. But by doing so, youll also get 2% cash back on gas purchases.

Average pay: $15$25 per hour / $120$200 per 8-hour day

2. Drive for Uber

Uber gives you two different side hustle options: rideshare driver and delivery driver. And dont worryyou dont have to choose. When you sign up for Uber and are approved, youre eligible to do one or both.

Whichever path you choose, you wont have to wait long for your earnings. Ubers Instant Pay feature costs $0.85 per transaction and lets you cash out and up to five times per day. Youll receive funds in your bank account through your debit card.

To qualify, youll need a debit card with a Visa, MasterCard, or Discover logo and must successfully complete one trip. From there, youre good to go with Instant Pay and see your hard-earned cash in a flash.

Average rideshare pay: $15$25 per hour (varies by market) / $120$200 per 8-hour day

Average delivery pay: $8$20 per hour (varies by market) / $64$160 per 8-hour day

2. Share your opinion on Swagbucks

Youve heard that saying about opinions: Everybody has one. Now, you can get paid for yours (and more) through Swagbucks. From the comfort of your home or on the go with their app, you can watch videos, shop online, answer surveys, and play gamesall of which earn you points. Then you can redeem your points for gift cards or cash back through Paypal.

Once you sign up and verify your account, you can start earning Swagbucks that you can redeem for cash. You can cash out whenever you have enough points to redeem for a $5 Paypal Reward, which could be daily if you rack up enough Swagbucks.

Average pay: $1 to $5 per day

3. Respond to surveys on Drumo

If you love online surveys and games, Drumo might be an app to add to your daily payday routine. When you download and sign up for the platform, youll complete a short profile survey that Drumo uses to match you with survey opportunities.

Heres the best part: You can cash out of Drumo to Paypal and receive funds within 24 hours when you earn as little as $0.50. Drumo says that those with longstanding accounts can work their way up to instant payouts. Drumo gives every user a quality score based on their responses in the app. The higher your score, the better your chance of accessing higher-paying earning opportunities and that instant payout.

Average pay: Depends on the survey and earning opportunity

4. Go shopping with Shipt

Get paid to go shopping? Its not a myth. With Shipt, youll shop for customers and then deliver their orders. And its not just groceries, either. One day, you may find yourself at Target and Sephora. The next, at a wine shop or Petsmart. But wherever you go, you can get paid daily using Shipts Instant Pay, which doesnt require additional fees.

To be eligible for Instant Pay, which sends money directly to your bank account, youll need one successful weekly payout through direct deposit. Once you hit that threshold, you can select Instant Pay once every 24 hours inside the Shipt app instead of waiting for the standard weekly payout.

Average pay: $11$20 per hour / $88$160 per 8-hour day

5. Serve at a local restaurant

If you want to keep things local, consider picking up a few shifts at a local bar or restaurant. While you might need to pass a food handling class to be eligible to apply, daily tips can keep cash in your pocket every day you work.

To maximize your chance for tips, dont be shy about speaking to current servers where you hope to work. You can inquire about the most profitable shifts and, potentially, average tips for a new server. If you provide table service, you may find that tips are higher than in a cafe where customers pick up their orders at the register.

Average pay: $14$16 per hour / $112$128 per 8-hour day

6. Work for a company offering a daily pay benefit

Some employers may already offer a daily pay benefit thanks to a new wave of apps that let employees access their pay on a daily instead of bi-weekly basis.

First, your employer needs to partner with one of the many earned wages apps such as DailyPay, EarnIn, or Instant. If they dont already have an agreement, you could make the case and see if your employer is game. And if you need fodder for your case, Tal Clark, CEO of Instant Financial, an earned wages app, has plenty of data to bolster your argument.

Having access to pay immediately after a shift has proven to improve employee engagement, with employees more likely to feel a sense of connection and loyalty to their employer, says Clark. According to Instants 2022 Wages and Wellbeing study, the numbers on daily pay speak for themselves.

79% of respondents would be more interested in applying for a job that pays them the same day they work.
62% of respondents would feel more valued as an employee if their employer provided immediate access to their earned pay after every days work.
58% of respondents said they left a job in the last two years that they would have stayed at longer if they were offered immediate access to a portion of their pay after every days work at no cost.

If your employers on board, how you receive funds depends on the app. Typically, youll link a bank account, payroll card, or debit card during the signup process. Some apps issue their own debit card that youll use to access your money. The amount you can advance differs between companies and fees for daily pay can be none, fixed, or variable. For example, Instant has no fees and DailyPay charges $2.99 per instant transfer, while EarnIn operates on a tipping model where you name your own fee.

Average pay: Depends on the employer

7. Donate plasma

If you want to earn extra cash and actually save lives, donating plasma can be a service to your community and wallet. Your community likely has at least one donation center, and all you have to do to get paid the same day is relax and let the cash flow.

The process for donating plasma is similar to donating blood, so yes, theres a needle involved. Its also a bit more time consuming at 12 hours per appointment. However, youre well compensated for your time. While rates vary by geography, youre paid same-day via a donation center-supplied debit card, with some donation centers offering bonuses for new donors.

You can also donate up to twice per week, giving you multiple earning opportunities per month until you hit the annual 24-donation maximum set by the Food and Drug Administration (FDA).

Average pay: $5075 per day / donate up to twice per week and 24 times per year

The takeaway

These options are a great place to start your search for a side hustle that offers daily pay. Now you can turn the dials and find the gig and pay that make sense for your situation.

But before you jump in, its important to do your research. Do some digging on Reddit forums and gig economy sites that offer honest reviews of what its like to work for certain companies and in your locale.

And if youre in a pinch for cash between the time you read this article and your daily pay gig-in-the-making, you may want to check out a payday advance app to help tide you over.

Feds probe Goldman Sachs role in failed SVB fundraising deal

Goldman Sachs Group Inc.s role in Silicon Valley Banks attempt to raise funds in March is under review by US governmental agencies, which are looking into the failed transaction that helped push the US regional-banking system into turmoil.

The Wall Street titan is cooperating and providing information to the government in connection with their investigations and inquiries into Silicon Valley bank, including the role the firm played with the now-failed bank in March, according to a regulatory filing.

SVB offloaded a $24 billion portfolio to Goldman at a loss and sought the firms help in raising more than $2.2 billion to cover the shortfall, according to disclosures in March. Goldman couldnt pull off the deal and a bank run in the wake of that offering effectively doomed SVB.

What started off as troubles at a niche bank catering to the Silicon Valley tech industry quickly snowballed into a pile of worries for regional banks as investors questioned their stability. The reverberations echoed in Europe, sparking a renewed slump in Credit Suisse Group AG share prices, which resulted in a hastily arrange marriage with cross-town rival UBS Group AG orchestrated by the Swiss government.

A representative for Goldman Sachs declined to comment.

Lawmakers from California had been pushing for a federal investigation into what role Goldman Sachs might have played in the collapse of SVB. The 20 Democratic House members led by Senate candidate Adam Schiff asked the Justice Department, the Securities and Exchange Commission and the Federal Deposit Insurance Corp. to include the New York-based firm in their preliminary investigations.

Goldmans Role

SVBs demise began with the risk of its credit ratings getting cut by Moodys Investors Service that would have pushed it to the brink of junk-bond status. In response, SVB tapped Goldman to help it raise fresh capital. Goldman purchased a chunk of SVBs investment portfolio with plans to flip it. That meant that SVB realized a $1.8 billion loss, with Goldman in a position to pocket fees from selling the portfolio back into the market at a higher price.

Then, on March 8, Goldman pitched a plan to investors to help plug that hole, and then some, by raising $2.25 billion in capital from General Atlantic and other investors.

Rival banks and investors have privately and publicly pointed fingers at Goldman for failing to line up the capital in advance and spooking the market. In the bankers view, they were racing the clock to defuse the Moodys threat. That didnt leave them enough time to canvass the market, line up the funding and present a neatly put-together deal.

SVBs customers raced to pull their deposits from the bank, concerned about its health. On March 9, customers sought to yank $42 billion of deposits from SVB, or roughly a quarter of its year-end deposits.

The spiraling chaos forced Goldman to shelve the offering, and by the end of the week regulators had seized the California firm, which at the time was the second-biggest bank failure in US history. First Republics seizure earlier this week meant that the SVB dropped back to third place on the list.

Navan's GPT-enabled Ava is now a data analyst that loves poetry

If youre a CFO who appreciates poetry, a tech company has created an automated virtual assistant that can create verses about corporate travel and expenses in multiple languages. It can also answer questions on how to save money.

As a focus on generative A.I. in finance continues, Navan (formerly TripActions), founded in 2015, a business-travel software startup with a private-market valuation of more than $9 billion, has incorporated OpenAIs ChatGPT to expense reports. But starting today, in addition to assisting in travel arrangements, its automated virtual assistant, Ava, is taking on additional duties as a data analyst.

Avas role is intended to streamline T&E programs. Navan uses conversational business intelligence (CBI), designed to automate data analysis and turn it into a conversation, that allows CFOs and travel administrators to have ChatGPT-style conversations with Ava.

To find out more, I sat down with Ilan Twig, cofounder and CTO of Navan, who designed Avas capabilities. Basically I think that everything that we do, as well as everything that most companies do, can be rethought of with generative A.I., he says. Ava will be able to provide more granular analytics, responses to questions on data, and cost savings in real-time, Twig says.

Courtesy of Navan

He walked me through a demo of how Ava works. At the time of the demo, Ava was not voice-activated. But thats a quick adjustment, Twig says. I can make it so tomorrow, no joking, he explains. I just need to see that its valuable. The prompts listed were: save 10% on your travel spend; summarize my travel spend; analyze spend vs. policy; and hotel spend and analysis. Benchmarking and forecasting are items to come, he says. We chose hotel spend analysis for 2022, and he clicked on analyze.

In the demo, Ava made suggestions based on Navans own data. One suggestion: Encourage employees to go to hotels with rewards because our program with rewards incentivizes employees to locate hotels that are slightly cheaper, still high quality within the same loyalty program. Only 11.6% of the hotel bookings are with the rewards program. Its a reward program that weve had from day one, Twig says.

Theres a dropdown with an option for several languages and options to distribute the information, such as an outline. The outline is the essence; its what CFOs are used to, he says. Other options include an email or a poem. I think that we saw a really, really unique opportunity to delight the CFO, Twig says.

Heres a sample poem:

Courtesy of Navan

The generative A.I. is looking solely at your company data and generates the report, Twig says. It is not a report that a data analyst or product manager at Navan dictated or designed, he explains. Its whatever makes sense for your data for your company.

I asked Twig about data security as its a major concern for CFOs. I want to make something very clear: We do not share our database with OpenAI or any other vendorall data is aggregated and involves no [personally identifiable information], he says. The CBI system Twig created using generative A.I. has fewer limitations, and goes even deeper within a companys own dataset, he says. For example, the A.I. can basically emulate a brainstorming process, creating that process within itself. This can increase the IQ of the existing large language models, and improve reasoning abilities, he says.

As A.I. continues to heat up in finance, other tech companies also offer innovative options for T&E reporting such as Expensify Inc., and Workday (CFO Dailys sponsor) with Workday Expenses within the enterprise resource planning platform, for example. The company has been using large language models, the technology that has enabled generative A.I. for quite some time, Terrance Wampler, group general manager for the Office of the CFO at Workday, recently told me; and will continue to look into use cases where generative A.I. can add value, Wampler said.

Though the debate continues on how to prevent the bad actors from manipulating generative A.I., the techs momentum isnt slowing down anytime soon, and CFOs understand its relevance. Were not, today, using generative A.I. in the finance function, Debbie Clifford, CFO at Autodesk, recently told me. But I tell you what, I think we should be. I think that this is an area that we absolutely need to explore. Its just moving so fast that we dont have a strategy around it within finance at this point.

If you like technology, these are really exciting times because something big is happening, says Twig, who has spent 20 hours a day building Avas capabilities for the past four months. There is a lot of buzz around generative A.I. Every entrepreneur, investor, VC, company, CTO, and CEO talks about generative A.I. I do not talk about generative A.I., I live generative A.I., for real. Just ask Ava.

Sheryl Estrada
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Big deal

New S&P Global Market Intelligence data finds short sellers are boosting their positions against tech stocks, likely betting that a recent rally in the sector will be short-lived. As of mid-April, short interest in information technology stocks was at 3.31%, which is the highest level since the end of October 2022, according to the report. As companies have cut costs and had massive layoffs, tech stocks have rallied after sliding throughout much of 2022, the research finds. The S&P 500's IT sector has climbed about 23.23% since the beginning of the year through April 28, compared with the overall index, which has gained about 9.03%, according to the report. Short interest rose from the end of March to mid-April in every sector except energy, where it fell to 3.64% from 3.70%.

Courtesy of S&P Global Market Intelligence

Going deeper

"Why so Quiet? Breaking the Workplace Taboo of Silence," a new report by Gallup finds that quiet quitting hasn't gone away, but has morphed into quiet thriving," chaotic working, or bare minimum Mondays.

"At the heart of quiet quittingand its many spinoffsseems to be the feeling that we cant speak up at work," according to Gallup. "Either we dont feel safe enough to speak our minds, or we feel like, even if we did speak up, it wouldn't make any difference." Using data, Gallup explains the rationale behind these ideas.

Leaderboard

Tim MacCarrick was named CFO at project44, a supply chain visibility platform. MacCarrick has over 25 years of senior executive experience in finance and operations roles. He's held both COO and CFO roles at public and private companies including Qlik, Xerox, DLL, and most recently OutSystems. MacCarrick joins the executive team to focus on core cross-functional initiatives. To date, project44 has raised over $900 million in capital from top venture and growth equity capital investors including Insight Partners, Emergence Capital, Goldman Sachs, TPG, Sapphire, Generation Investment Management, Thoma Bravo, and Chicago Ventures.

Jay Matushak was named CFO at Bright Health Group, Inc. (NYSE: BHG), the technology-enabled health care company, effective May 12. Matushak will succeed Cathy Smith, who is stepping down to pursue another opportunity. Matushak, a seasoned finance and operational executive, joined Bright Health in 2021. He currently serves as SVP of finance and is responsible for the wind-down of the companys ACA insurance business. He also serves as CFO of Bright HealthCare, the companys insurance business. Before joining Bright Health, Matushak served for six years as CFO of Blue Cross Blue Shield of Minnesota.

Overheard

This is going to change the world. One year from now, will there be a script written by A.I.? Yes.

Todd Lieberman, a film and TV producer whose credits include "Chip n Dale: Rescue Rangers," said Wednesday on a panel at the Milken Institute Global Conference in Beverly Hills, Bloomberg reported. Entertainment executives said its inevitable that TV shows and films will be written using A.I.

A billionaire businessman wants to build a five star luxury resort on Jeffrey Epstein's islands

The infamous islands owned by Jeffrey Epstein, the late financier accused of sex trafficking, could be turned into a world class resort under its new owner.

Great St James and Little St James have been purchased from the estate of the convicted sex offender by entrepreneur and investor Stephen Deckoff, under his firm SD Investments.

Deckoff snapped up the locations in the Virgin Islands for less than half of the sum they were originally on the market for.

The properties had been advertised with an asking price of $125 million in March 2022 but after a number of reductions finally sold for $60 million, according to Forbes.

Deckoff plans to purge the land of its grim past, developing the location into a state-of-the-art, five-star, world-class luxury 25-room resort.

Whether or not luxury visitors will flock to the location dubbed Paedophile Island and Orgy Island by locals remains to be seen.

SD Investments did not respond to Fortune when approached for comment.

The government of the U.S. Virgin Islands will receive half the proceeds of the sale, as well as $105 million in cash, as agreed in a 2022 settlement with the Epstein estate.

The estate will also pay a further $450,000 to the Virgin Islands after it was discovered Epstein had destroyed the remains of centuries-old structures to make way for his development.

The Virgin Islands former attorney general said the payout was to restore the faith of the People of the Virgin Islands that its laws will be enforced, without fear or favor, against those who break them. We are sending a clear message that the Virgin Islands will not serve as a haven for human trafficking.

Reputation rebrand

The sale announcement highlights that Deckoff has built a successful career crafting and executing plans to turn distressed situations into successful enterprises.

The release further seeks to ensure Virgin Islands stakeholders, saying the investment will help bolster tourism, create jobs, and spur economic development in the region, while respecting and preserving the important environment of the islands.

The founder of Black Diamond Capital Management, who has lived in the Virgin Islands for more than a decade, added: I am tremendously pleased to be able to bring the area a world-class destination befitting its natural grace and beauty.

There is simply no place in the world as special as the U.S. Virgin Islands and I am humbled by the opportunity to share its splendor with visitors in a manner that will provide economic benefits to the region while respecting its culture, history and natural beauty. I very much look forward to working with the U.S. Virgin Islands to make this dream a reality.

Deckoffreportedly worth around $3 billion hopes to open the resort by 2025, adding that architects and engineers have been retained to begin work on the project.

Whats on the islands?

Little St James, around 70 acres, was where Epsteins main residence and guest houses were.

It is the location where lawyers allege Epstein took girls as young as 12 and held them captive in sexual servitude, assaulting them alongside his associates.

The Caribbean resort has now become a morbid tourist attraction following Epsteins apparent suicide in jail, the Associated Press reports. Previously, passers-by were put off by armed guards on the shore of the island.

Little St James has its own gas station, port, three private beaches, a lagoon home to flamingos, a helipad, a mysterious temple structure, a cinema, pools and a gymas well as a life-sized Fresian cow statue and two giant depictions of cockatiels.

To the north of the island is the larger Great St James, which Virgin Islands lawyers claim Epstein bought to obscure the smaller island from surveillance.

The suit adds: By acquiring ownership and control of Great St. James to the exclusion of others, the Epstein Enterprise created additional barriers to prevent those held involuntarily on Little St. James from escaping or obtaining help from others.

Godfather of A.I. to talk to Elon Musk, Bernie Sanders and the White House

Geoffrey Hinton, the 75-year-old tech trailblazer who recently said he regrets his lifes work in the field of artificial intelligence because of the threat it poses to humanity, has been inundated with requests to share his knowledge.

In fact, he claims, he has been receiving such requests to talk every two minutes since he announced his resignation from Google so that he can speak freely about the dangers of A.I.

Now, the Turing award-winning scientist often referred to as the godfather of artificial intelligence has told the Guardian that he will share his wisdom with Bernie Sanders, Elon Musk and the White Housebut they might not like the advice he has to offer.

The U.S. government inevitably has a lot of concerns around national security. And I tend to disagree with them, he said. For example, Im sure that the defense department considers that the only safe hands for this stuff is the U.S. defense departmentthe only group of people to actually use nuclear weapons.

The London-born pioneer added that as a socialist, hes not on board with the private ownership of the media and of the means of computation.

If you view what Google is doing in the context of a capitalist system, its behaving as responsibly as you could expect it to do, he said. But that doesnt mean its trying to maximize utility for all people: its legally obliged to maximize utility for its shareholders, and thats a very different thing.

Hintons advice for policymakers

Its clear that the dangers of A.I. is a growing concern among the worlds most powerful people and policymakers.

The chief executives of Alphabet Incs Google, Microsoft, OpenAI and Anthropic are today meeting with the White House to discuss how to ensure their A.I. products are safe before public release.

Its why Elon Musk, Apple cofounder Steve Wozniak and over 1,100 prominent technologists and artificial intelligence researchers are calling for a 6-month ban on any A.I. developments so that governments can catch up and put in place governance systems.

Meanwhile, Sen. Bernie Sanders recently proposed introducing a robot tax to mitigate millions of workers losing their jobs at the hands of billionaires.

Having spent decades researching deep learning and laying the groundwork for A.I., one might have expected Hinton to have some sage advice for policymakers on how to safely move forwards.

Unfortunately, even the godfather of artificial intelligence is stumped for answers.

Im not a policy guy, he told the Guardian. Im just someone whos suddenly become aware that theres a danger of something really bad happening. I wish I had a nice solution, like: Just stop burning carbon, and youll be OK. But I cant see a simple solution like that.

Why Hintons not that optimistic about the future

In 1972, Hinton began his career as a graduate student at the University of Edinburgh, where he first started his research on neural networks, mathematical models that roughly mimic the workings of the human brain and are capable of analyzing vast amounts of data.

He and two of his students went on to launch DNNresearchwhich Google acquired in 2013 for $44 millionwhere their breakthrough Turing Award-winning research would ultimately pave the way for the creation of A.I. today.

Looking back over the past 50 years of his career, Hinton told the Guardian that hes been trying to make computer models that can learn stuff a bit like the way the brain learns.

But it was only until very recently that he realized these big models are actually much better than the brain.

We need to think hard about it now, and if theres anything we can do, he said while warning that its not looking promising.

The reason Im not that optimistic is that I dont know any examples of more intelligent things being controlled by less intelligent things, he added.

You need to imagine something that is more intelligent than us by the same degree that we are more intelligent than a frog. Its all very well to say: Well, dont connect them to the internet, but as long as theyre talking to us, they can make us do things.

Fed chair Powell and investors disagree on US economy

Within hours of the Federal Reserves latest policy decision, traders and commentators alike had started to challenge Chair Jerome Powells assessment of the economy.

The bond market waved off the prospect that Powell might have one more hike up his sleeve, instead adding to bets the US central banks next move will be to cut its benchmark interest rate. A slide in crude oil prices indicated mounting concern over a recession that the Fed chair said could be avoided. And financial stocks tumbled anew even after Powell had seen a line being drawn under US bank turmoil.

DoubleLine Capitals Jeffrey Gundlach told CNBC theres an increased likelihood of a recession and the Fed likely wont lift interest rates again following its latest increase. Meanwhile, over at the Milken Institute Global Conference, talk among the panelists suggested a consensus view that a contraction is inevitable.

WTI crude sank 4.3% Wednesday, reflecting concerns about weakening economic growth in major economies. It tumbled as much as 7.2% in a chaotic market open Thursday before recovering.

Our view is for a technical recession, when is the question mark, said Lindsay Rosner, multi-sector portfolio manager at PGIM Fixed Income. If Powell just laid out the framework they are operating under is one of modest growth, not recession, it would suggest they need to change their course if they see a recession. That is why we believe they will have to cut.

To be fair to Powell, he did hint Wednesdays interest-rate increase, which took the benchmark rate above 5%, could be the last one in a cycle thats lifted borrowing costs from near-zero levels last year. While the Fed chief said there was strong support for raising rates by 25 basis points this week, he suggested officials may pause their tightening campaign in June.

Powell also acknowledged that the pace of bank lending has slowed. And US economic data, while pointing to a slowdown in the labor market, dont yet signal a recession is on hand.

Rapid Response

But news moves fast and traders are wont to anticipate rather than wait to see how things pan out.

Treasuries surged Wednesday as investors reinforced bets that Fed rates will be lower by the end of this year, despite Powells insistence that the central banks inflation outlook doesnt support easier policy. By the end of the day even swap contracts for June were pointing to the effective fed funds rate being lower.

Meantime, a Bloomberg News report that PacWest Bancorp was considering its strategic options redoubled concern that turmoil among smaller US banks would claim more victims and tighten credit conditions.

Four US banks have collapsed since early March, including First Republic Bank, which federal regulators seized this week. Powell called the resolution of First Republic an important step toward drawing a line under bank turmoil.

Yet the PacWest report triggered a fresh selloff in financial stocks in after-market trading.

The market will be looking for signs that credit tightening is starting to impact activity and labor market data, said Vassili Serebriakov, FX and macro strategist at UBS Securities in New York. Since the Fed hinted at a pause today, any weakness in the data would reinforce the view that the tightening cycle is over.

Powell said Wednesday its possible the US could experience what he hopes would be a mild recession, but the case of avoiding a recession is in my view more likely than that of having a recession. Wage increases have been moving down, and job openings have declined but have not been accompanied by rising unemployment, he said.

But at the Milken conference attendees expressed concerns. Guggenheim Capital Chairman Alan Schwartz told Bloomberg Television hes worried about the effects of credit tightening and how far banks will have to pull back. Jenny Johnson, chief executive officer at Franklin Templeton, also pointed to the stress in the banking system caused by the pace of Fed hikes and the possibility of further retrenchment as a result.

Gundlach, DoubleLine Capitals co-founder, cited the cumulative rate increases by the Fed since March 2022 and credit contraction for reasons hes turning more bearish at this point in time. The Fed likely wont lift interest rates again following its latest increase, he said. Recessionary odds are pretty darn high right now.