Red alert recession signals

On the agenda today:

• Miami’s crypto party is over — and the city is facing the fallout.
• The inside story of the $12 billion HR startup Deel’s breakneck growth.
• The “Airbnbust” proves the Wild West days of online vacation rentals are over.
• Why Goldman Sachs alumni are being poached by elite hedge funds.

But first: Everyone is back to talking about a recession. I break down the latest below.

Red alert

Inflation has persisted even as many commodity prices have dropped sharply. Tensions with China have intensified after the US shot down a spy balloon from the country. Add in the recent turmoil in the banking sector, and conditions have taken a serious turn for the worse.

The Federal Reserve last week responded by raising rates by 25 basis points, fewer than the 50 that had been expected just a few weeks ago, but still a hike. Financial conditions are likely to get tighter still as a result of the stress facing small and midsize lenders, which play a significant role in US bank lending.

Tougher lending standards could have the impact of one or multiple rate hikes, Fed Reserve Chair Jerome Powell said in a post-decision presser. Goldman Sachs agrees, quantifying the effect as 25 to 50 basis points of rate increases.

That has big name investors and market signals predicting a recession, and soon. Bill Gross and Jeff Gundlach, both considered “bond kings” thanks to their investing prowess, sounded the alarm. “Red alert recession signals,” Gundlach said.

Even Powell’s preferred bond-market indicator says a recession is on the way this year.

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The party is over 

When Linette visited Miami in 2021, it was the capital of crypto and a paradise for a new type of “too-online stock jockey.” She returned in January after the market’s meteorological reversal to search for survivors, only to find that the years of wild partying had ended.

What it’s like in Miami now. 

Deel’s turbocharged growth scored it a private valuation of $12 billion. But according to more than 30 current or former Deel workers, the startup has a growth-at-all-costs mentality that’s blistering even by Silicon Valley standards.

Behind the scenes of Deel’s rapid rise.

• Workers at $12 billion HR startup Deel say it may have misclassified them as independent contractors. Deel says it has not.

The market is a bust for some, a boom for others. But one thing is clear: We’ve hit a turning point in the long-running battle over short-term rentals.

Why the Wild West days are over.

• Is your Airbnb watching you? Hosts and guests often clash over security cameras

Amid a substantial post-financial-crisis growth spurt, hedge funds have supplanted the world’s top investment banks as the most desirable posts for premier Wall Street personnel — and Goldman alumni are top of their wish list.

We’ve charted the migration. 

• Credit Suisse’s investment bankers are so concerned about cuts, employees are being told to look for new jobs. ‘They encouraged it.’

Vice, Amazon, & more

• Inside the demise of Vice, the media giant that’s now scrambling for a buyer.
• Mistakes by the US’s top spies let China turn a deadly midair collision into an intelligence coup.
• Leaked document shows Amazon’s flawed job-posting process led to “over-hiring.”
• Ukraine is using captured Russian tanks, but their new gear may not last long.
• How one guy is using ChatGPT to launch a business with just $100.
• The 26 hottest proptech startups of 2023, according to venture capitalists.
• Finland is offering free vacations for people to come and learn how to be happy.
• The Google engineering head Urs Hölzle’s plan for increased efficiency.

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