More US high-grade borrowers at risk of downgrade as economy slows

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Rise of resort day passes offers travelers luxury on a budget

Day passes at hotels and resorts offer guests access to amenities without the cost of reserving a room. ResortPass holds 95% share of the day-guest market, according to the company, and has partnered with more than 1,300 luxury hotels, including the Waldorf-Astoria, JW Marriott and Fontainebleau. Wellness travel can be enjoyed with a loved one, the entire family, or even solo. Getty Images

Avid traveler Lora Bowler is cutting back on vacation spending. That doesn’t mean she’s skipping the resort.

The New York resident said she spent more in 2023 than she had expected to, including on travel, and is now reining in her expenses. She uses travel hacks and benefits to cut some of the cost, and she’s part of a growing number of people turning to hotel day passes as a cheaper option for relaxation.

“It’s like a neat way to escape and feel like you’re at a five-star hotel,” Bowler said, “but you can’t afford to stay.”

Day passes at hotels and resorts offer guests access to amenities without the cost of reserving a room. Bowler said she’s booked daybeds and poolside services and even found a pass that offered a room where her husband could work from his laptop.

Hotels and third-party partners are making day passes more readily available to help bridge the gap between travel-minded consumers and luxury prices.

A typical luxury hotel room in the U.S. between Jan. 1 and April 6 cost roughly $400 per night, according to CoStar, a global provider of real estate data, analytics and news. Those rates are about 1% higher than the same period a year ago.

Luxury hotel room rates in July are expected to be 85% higher than the same month in 2019, before the Covid pandemic, according to the luxury travel company Virtuoso.

“People are back to thinking about travel budgets,” said Hayley Berg, lead economist with travel site Hopper. “They’re prioritizing expenditure on vacations, more so than consumer goods.”

In a survey conducted in July 2023 by Booking.com, more than 60% of respondents said their cost of living will determine their travel planning in 2024, while slightly more than half said they were likely to pay for accommodation upgrades.

A majority of U.S. travelers said they would be willing to pay for day passes to use the amenities in a five-star hotel

CNBC

The Fed probably won’t be delivering any interest rate cuts this summer

It looks increasingly unlikely that the Federal Reserve will be cutting interest rates after a batch of stronger-than-expected economic data coupled with fresh commentary from policymakers. Economic growth is at least stable if not on the rise, while inflation is ever-present. Central bankers still lack the confidence to cut and even an unspecified few say they could be open to hiking if inflation gets worse. Traders work on the floor of the New York Stock Exchange during morning trading on May 24, 2024 in New York City.  Michael M. Santiago | Getty Images

Investors likely will have to sweat out a summer during which it looks increasingly improbable that the Federal Reserve will be cutting interest rates.

A batch of stronger-than-expected economic data coupled with fresh commentary from policymakers is pointing away from any near-term policy easing. Traders this week again shifted futures pricing, moving away from the likelihood of a reduction in rates in September and now anticipating just one cut by the end of the year.

The broader reaction was not pleasant, with stocks suffering their worst day of 2024 on Thursday and the Dow Jones Industrial Average breaking what had been a five-week winning streak ahead of the Memorial Day break.

“The economy may not be cooling off as much as the Fed would like,” said Quincy Krosby, chief global strategist at LPL Financial. “The market takes every bit of data and translates it to how the Fed sees it. So if the Fed is data dependent, the market is probably more data dependent.”

Over the past week or so, the data has sent a pretty clear message: Economic growth is at least stable if not on the rise, while inflation is ever-present as consumers and policymakers alike remain wary of the high cost of living.

Examples include weekly jobless claims, which a few weeks ago hit their highest level since late August 2023 but have since receded back to a trend that has indicated companies have not stepped up the pace of layoffs. Then there was a lower-profile survey release Thursday that showed stronger than expected expansion in both the services and manufacturing sectors and purchase managers reporting stronger inflation.

No reason to cut

Both data points came one day after the release of minutes from the last Federal Open

CNBC

Book Bits: 25 May 2024

● Shock Values: Prices and Inflation in American Democracy
Carola Binder
Interview with author via Marketplace.org
The word “inflation” is everywhere today, and it continues to shape how people feel about the economy. That’s the case despite the pace of inflation retreating from its high of June 2022, when prices were up nearly 9% from the year before, as measured by the consumer price index. Last month, prices were up only 3.4% on an annual basis. While it’s easy to think those feelings are unique, inflation has long been a top concern for Americans, going back to the founding of the country. One key thing that’s changed is how the government has intervened in the movement of prices… In her book, “Shock Values: Prices and Inflation in American Democracy,” Binder looks back at the long history of politics, inflation and how the government has tried to respond, at times through fiscal policy like price controls, at others with monetary policy.

● Plastic Capitalism: Banks, Credit Cards, and the End of Financial Control
Sean H. Vanatta
Summary via publisher (Yale U. Books)
American households are awash in expensive credit card debt. But where did all this debt come from? In this history of the rise of postwar American finance, Sean H. Vanatta shows how bankers created our credit card economy and, with it, the indebted nation we know today. America’s consumer debt machine was not inevitable. In the years after World War II, state and federal regulations ensured that many Americans enjoyed safe banks and inexpensive credit. Bankers, though, grew restless amid restrictive rules that made profits scarce. They experimented with new services and new technologies. They settled on credit cards, and in the 1960s mailed out reams of high-interest plastic to build a debt industry from scratch. In the 1960s and ’70s consumers fought back, using federal and state policy to make credit cards safer and more affordable. But bankers found ways to work around local rules. Beginning in 1980, Citibank and its peers relocated their card plans to South Dakota and Delaware, states with the weakest consumer regulations, creating “on-shore” financial havens and drawing consumers into an exploitative credit economy over which they had little control. We live in the world these bankers made.

● Money Capital: New Monetary Principles for a More Prosperous Society
Patrick Bolton and Haizhou Huang
Summary via publisher (Princeton U. Press)
A conventional economic theory, monetarism, holds that inflation is a monetary phenomenon

UN climate summit in Baku risks being again co-opted by fossil fuels, US lawmakers say

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The key UN climate summit hosted by Azerbaijan this year risked being “co-opted” by the fossil fuel industry that was the key driver of climate change, a group of leading US Democrats said in a letter to White House officials.

The 26 signatories, including senators Jeff Merkley, Bernie Sanders and Elizabeth Warren, as well as congresswomen Alexandria Ocasio-Cortez and Jan Schakowsky, said they were “deeply concerned by the appointment of Mukhtar Babayev” as the president-designate of the UN COP29 summit.

Babayev, the minister of ecology in Azerbaijan, spent more than two decades at the state-owned oil and gas company Socar before becoming a member of the cabinet of President Aliyev.

The letter, addressed to US secretary of state Antony Blinken and Biden climate envoy John Podesta, stopped short of pushing for Babayev’s removal, but urged the UN to update its conflict of interest guidelines to “ensure this situation does not happen again.”

It echoes the call by more than 100 US lawmakers and members of European parliament last year for the withdrawal of Sultan al-Jaber, the head of state-owned oil company Adnoc, as president-designate of COP28.

“When Mr Babayev is elected, it will be the second year in a row that COP is headed by a fossil fuel executive,” the politicians wrote. “Given these conflicts of interest, we risk the process being co-opted by the same fossil fuel industry that is the greatest driver of our climate crisis.”

The UN climate change arm introduced rules last year requiring summit delegates to disclose their affiliations. At least 2,456 fossil fuel lobbyists were registered at COP28 in Dubai, or fourfold the attendance at COP27 in Sharm el-Sheikh, after the United Arab Emirates hosts widened access.

The UN aims to have smaller gatherings after peak attendance of more than 65,000 in Dubai. The COP30 summit in 2025 is to be held in Brazil.

“Time is running out, and this international process is too important for the United States to stand by as yet another negotiation is captured by fossil fuel interests,” the letter said.

COP29 declined to comment. But President Aliyev last month defended Azerbaijan’s fossil fuel-based economy, saying that its “god-given” gas would be needed for decades to come.

Oil and natural gas brings in about 90 per cent of its export revenues, and finances about 60 per cent of

Labour should break fiscal rules to fund energy transition, says Greenpeace

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Investment theme du jour: don’t overthink it

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