Bloomberg Businessweek June 27, 2022

● Recession warnings are multiplying for the US economy, with Elon Musk joining the chorus of prognosticators saying a contraction is likely. The uncertain economic outlook has led to a stock market rout that’s erased about $2t from the S&P 500 since the middle of June. ▷ 10 ● Kellogg will split into three independent companies. The move will give the cereal giant’s spinoffs—focused on global snacking, North American cereals, and plant-based foods—more room for growth. The snack business is by far the biggest of the three, with sales of about $11.4 billion last year. ● War in Ukraine ▶ Given the level of destruction in the country, the head of the European Investment Bank says Ukraine may need as much as €1 trillion ($1.06 trillion) to rebuild. ▶ Two Americans captured in Ukraine could…

In agreeing to visit Saudi Arabia next month, US President Joe Biden has stepped back from his vow to treat the country as a “pariah.” Critics have blasted him for overlooking Saudi human-rights violations, including the brutal murder and dismemberment of Washington Post columnist Jamal Khashoggi. In exchange, Biden has won only a token increase in oil production that won’t do much to lower gasoline prices at home. Even so, Biden’s trip can serve a valuable purpose. Healthy US-Saudi ties are critical to calming a volatile part of the world and stabilizing energy markets. When he meets with Saudi Arabia’s de facto leader, Crown Prince Mohammed bin Salman, Biden should make clear that improved relations require each nation to respect the other’s core interests. The US-Saudi relationship has always had a strongly…

▶ Credit Suisse hosts an investor event on risk, compliance, technology, and wealth management on June 28. The bank has issued multiple profit warnings after recent strategic blunders. ▶ NATO meets in Madrid on June 28 for a summit. Japan and South Korea will attend as observers for the first time, highlighting the military tension that’s reverberating globally. ▶ The ECB will gather in Sintra, Portugal, on June 27 for its annual Forum on Central Banking. The bankers are fighting twin threats: inflation and an economic contraction. ▶ Swedish fast-fashion pioneer H&M reports earnings on June 29. Consumers have cut back on spending as the rising cost of living eats into disposable income. ▶ On July 1 the Czech Republic takes over the EU presidency from France, giving it oversight over the bloc’s daily…

Monetary regimes don’t fall often. Half a century ago, in 1971, Richard Nixon ended the Age of Gold by formally eliminating the dollar’s peg to the precious metal. Since then, the dollar and other currencies have rested on fiat—they’re worth something because governments say they are. You could call this the Age of Credibility. In place of gold, a currency’s anchor is the trust in the central bank that issues it. Now credibility appears to be at an end. With central banks desperately ripping up their playbooks to try to rein in inflation that’s veered far beyond target, they’re admitting they’ve been wrong and giving up on trying to steer the markets on their plans for the future. That’s alarming, because the precedent of the 1970s isn’t encouraging. Oil briefly took…

Think Elon Musk and words like “measured” or “cautious” aren’t usually the first to come to mind. But the billionaire visionary and often erratic entrepreneur struck a sober tone on June 21 as he forecast a probable recession in the US and left doubts about his commitment to a $44 billion takeover of Twitter Inc. In an interview with Bloomberg News Editor-in-Chief John Micklethwait at the Qatar Economic Forum in Doha, the Tesla Inc. chief executive officer said the electric-car maker’s workforce needs to be trimmed as supply chain snarls crimp growth. He was also unguarded in his view that the US economy is headed toward contraction. It’s just a question of when. “A recession is inevitable at some point,” said Musk, who joined the forum via video linkup from the US.…

Ever since he transformed Louis Vuitton from a venerable maker of steamer trunks into a handbag juggernaut more than 30 years ago, Bernard Arnault has pursued a simple yet lucrative strategy: buy respected but slightly fusty brands; freshen up their management, marketing, and operations; and weave them into the ever-expanding luxury tapestry known today as LVMH Moët Hennessy Louis Vuitton SE. Over the years the targets got bigger, and Arnault became Europe’s wealthiest individual. From Christian Dior to Fendi to Bulgari, price tags kept rising, as shiny new luxe toys became scarcer. Last year, Arnault made his biggest bet yet with a $16 billion takeover of Tiffany & Co., shoring up LVMH’s position in fine jewelry and reinforcing its presence in the US. But revitalizing the brand immortalized by its robin-egg-blue…