Author: openjargon

• Fitch Ratings revised its office delinquency forecast for 2024 and 2025.
• The sector's recovery will be slower than after the global financial crisis, it said.
• Maturing office loan refinanceability will reach no more than 16%-21%.

Things are not looking up for the US office sector, with loan performance set to slump even further in 2025, Fitch Ratings said.

After the market significantly underperformed Fitch's year-to-date expectations in May, the rating agency has revised its office delinquency forecast to 8.4% and 11% through this and next year. That's up from projections of 8.1% and 9.9%, respectively.

Driving the fallout are still-elevated interest rates, cooling economic growth, and a stricter lending environment, Fitch wrote on Friday. That's all happening against a broad decline in office demand, as hybrid or fully remote work has become an entrenched norm.

By one estimate, the work-from-home trend could fuel a 30% peak-to-trough price correction for office properties, and vacancy rates have only kept rising, hitting a record high of nearly 14% in May, the National Association of Realtors found.

"The recovery of the office sector will be slower and more drawn out during this cycle than following the global financial crisis and will lead to permanent impairments in property values, weaker performance, and higher loan losses," Fitch wrote on Friday.

Fitch anticipates low refinanceability on maturing office loans through this year, with 16%-21% able to refinance. Already, offices have the lowest refinancing percentage of major property types, the rating agency noted, with the year-to-date refinancing rate hitting 5% in May.

While most loans will remain cash-flow positive in the next two years, lower-quality office properties are more at risk.

"Eighteen out of 44 Fitch-rated office [single asset, single borrower] transactions are Fitch Loans of Concern due to refinance concerns, elevated tenancy rollover, declining occupancies/rents, high concentrations of dark/sublease spaces, limited performance stabilization and deteriorating market fundamentals," the note said.

A looming commercial real estate loan crash has been a persistent worry among analysts and market observers, with $2.1 trillion in debt expected to mature by the end of next year.

• Microsoft's GitHub Copilot is partly responsible for bringing a focus on generative AI to Apple, a report says.
• Apple's senior vice president of software engineering became a "convert" after trying it, per The Wall Street Journal.
• Apple execs were also impressed by ChatGPT and subsequently wanted to upgrade Siri, The New York Times previously reported. 

An Apple exec was inspired to drive a focus on generative AI in his division after using one such tool from the competition, a new report says.

Craig Federighi, Apple's senior vice president of software engineering, became a "convert" over the 2022 Christmas break after using GitHub Copilot, an AI code completion tool, according to a Wall Street Journal article published Wednesday, citing people familiar with his experience. GitHub was acquired by Microsoft for $7.5 billion back in 2018.

Federighi subsequently asked employees in his software engineering division to devise ways to integrate generative AI into products, former engineers and execs told the Journal.

In other words, we might have Microsoft's GitHub to thank for Apple seeing the light on AI — at least in part. It's not the first time competitors' generative AI tools reportedly motivated Apple to work on its own.

Federighi and John Giannandrea, Apple's senior vice president of Machine Learning and AI Strategy, decided Siri needed an upgrade after spending weeks using ChatGPT themselves, The New York Times reported last month, citing two people familiar with the matter.

Apple hopes generative AI will help Siri perform better at existing tasks and take on new ones, like summarizing texts and chatting, the Times reported, citing three sources familiar with Apple's work.

Apple is expected to make some sort of AI announcement at WWDC, its annual developers conference, on Monday.

Apple did not immediately respond to Business Insider's request for comment.

• After growing up in Los Angeles, I moved to Barcelona in early 2020.
• Life abroad has brought many unforeseen challenges, like only seeing my family once a year.
• It was harder to open a bank account and find an apartment in a new country than I expected.

After taking annual vacations to Europe for over a decade, I followed my dream and moved abroad right after my 32nd birthday. I spent six months in Bordeaux, France, before heading to Barcelona, Spain, in early 2020.

Leaving Los Angeles and building a new life here hasn't been all rainbows and butterflies — after all, the coronavirus pandemic hit three weeks after my arrival — but I'm so grateful I've put down roots here.

Now, I'm engaged, I found steady work as an English teacher, and I'm pursuing my passion for music.

Looking back, here are the 10 things I wish I had known before moving abroad.

Living so far from home has made me realize that I can't always be there for people when they need me and vice versa.

The majority of my close friends and family members live in Los Angeles, approximately 6,000 miles away. If something were to happen to me, it would take them 14 hours to get here.

During the early months of the pandemic, I was in constant fear that I wouldn't be able to help my loved ones if they got sick. I also had to factor in quarantine guidelines since I'd be traveling from outside the US.

Luckily, nothing serious happened to my friends or family during the height of the pandemic, but I still deal with some lingering stress and fear from that time.

 

The time difference between Los Angeles and Barcelona makes it hard to stay connected with friends and family.

When I lived stateside, I talked with some of my friends and family members daily. So, I knew the nine-hour time difference between Barcelona and Los Angeles would be challenging, but I couldn't have imagined how much it would affect my life.  

We still chat whenever we can, but it's difficult to find a time that works for everyone. When I take my lunch break at 1 p.m., my best friend is fast asleep in Los Angeles, where it's 4 a.m. And we tend to have different energy levels when we do talk since it's the beginning of her day and the end of mine.

If I need to reach family or friends in Los Angeles on short notice, there's a good chance they'll be unavailable because of the massive time change. I've found it's best to schedule the calls ahead of time.

When my friends have visited, it's been so wonderful to connect with them in the same time zone, enjoying coffee together in the mornings and a glass of wine together in the evenings. 

I inevitably end up missing a lot of important milestones, like weddings and birthdays.

When I moved abroad, I wasn't sure how long I'd be gone. I told myself that I'd visit Los Angeles after a year, but that became difficult during the pandemic. Multiple years passed before I was able to visit home. 

Many of my friends have had children, weddings, or huge career breakthroughs. I wish I could've been there to celebrate these special occasions, and I wish they could've been in Barcelona to celebrate my birthday and accomplishments.

I've vowed to prioritize more frequent trips to Los Angeles to make up for lost time; however, long flights and pricey tickets make it hard to visit more than once a year. Luckily, when I get to see my friends in person, it feels like no time has passed, even if our lives have changed.

Because flights are so expensive around the holidays, I rarely get to spend them with my family.

Before I moved, I didn't realize that I'd often spend holidays alone or with other expats. Plane tickets can be outrageously expensive during the holidays, making it unrealistic for me to travel during this time. 

I've made the best of it by introducing Thanksgiving to my friends from around the world and learning about their Christmas traditions.

I still can't help but feel homesick, as I miss my mom's Christmas brunch and my annual Friendsgiving celebration. Though I'm grateful for new, multicultural traditions, I hope I can make it back home for the holidays soon.

When I'm feeling homesick, I have a hard time relating to my friends from Spain and other parts of Europe.

It took time to make new friends, but after about six months in Barcelona, I'd started to form a solid group. Many of my friends were from Barcelona or nearby European countries. At times, I found it hard to relate to them since I felt so far from home.

Thankfully, I met my fiancé the first summer I lived in Barcelona. He's also an expat and arrived in the city around the same time as I did, so we bonded pretty quickly.

Barcelona is a pretty transient place, which makes it hard to form lasting friendships.

Like so many large cities, Barcelona is transient. It's a melting pot of many cultures, making it an exciting place to live, but not everyone is looking to settle down here. 

I've made some friends who moved away after six months. I'm always sad to see them go, and it can be hard to put effort into making new connections when you don't know how long someone plans on staying in the city.

It didn't take long to learn that living in a foreign city is vastly different than visiting one.

When I thought about living in Europe full-time, I pictured myself sitting at a café, sipping wine, and journaling. All of these things do happen, just not on a daily basis.

Living here is very different than vacationing here, and I still deal with day-to-day stresses. I have to work, commute during rush hour, and do laundry, just like I did in Los Angeles.

Finding an apartment and opening a bank account in Barcelona was much more difficult than I expected.

Not only were all of the baking and lease documents in a language I didn't speak, but the requirements for opening a bank account and finding an apartment were different from those in Los Angeles.

To open a bank account, I needed a lot of documents I didn't have right when I moved to the city. 

The apartment hunt wasn't easy either. When I first arrived, I stayed in an Airbnb and then rented a room from a friend, but eventually, my partner and I wanted to find our own place.

I was shocked by how expensive moving into an apartment was in Barcelona. Many apartments required two months of rent, a deposit, and a real-estate agency fee, so we had to cough up a lot more money than we expected.

I haven't been able to find familiar over-the-counter medications in Spain.

There was something comforting about knowing exactly which over-the-counter medicine to take in the US.

Because I wasn't able to find Advil, Midol, or Pepto Bismol in Barcelona, I've had to learn from scratch what works for me. The pharmacists here have been incredibly helpful, but I still miss the comfort of some of my go-to medicines in the US.

Starting over in my 30s made me feel stressed and insecure, and I constantly compared myself to other people.

I had a well-established life in Los Angeles, with a full-time job, an apartment, and friends. When I moved to Europe at 32, I had to start over, which gave me a lot of insecurities. I started comparing myself with others all the time. 

Starting over in a new city meant I had to work my way up from the bottom. When I moved, I had a part-time teaching position and a dream to pursue music.

I always imagined my life to be more stable in my mid-30s, but I chose to take a different path, I've learned to accept that I can't have it all and that stability comes with time.

Life abroad isn't always easy, but it's worth every single challenge I've faced.

Although moving abroad has its fair share of struggles, my overall quality of life has tremendously improved. Barcelona's walkability, sunny weather, and beaches have all been game-changers.

I also live steps from a labyrinth of delicious restaurants and chic bars, which are generally more affordable than similar spots in Los Angeles.

Even though I sometimes feel homesick, I'm glad I took the risk of moving to a different part of the world.

This story was originally published on July 28, 2023, and most recently updated on June 10, 2024.

• Eleven GOP state attorneys general filed a lawsuit to block the SAVE student-loan repayment plan.
• A district judge in Kansas ruled that only three of those states have standing to sue.
• Even so, the judge said, their case is weak.

Student-loan borrowers enrolled in President Joe Biden's new repayment plan may have just gotten some relief from legal challenges.

In March, 11 GOP state attorneys general filed a lawsuit in Kansas to block the SAVE income-driven repayment, arguing that the plan — which gives borrowers lower monthly payments and a shortened timeline to debt relief — goes against the Supreme Court's decision last summer to block Biden's broad debt cancellation plan.

The states requested that the court stop the SAVE plan's implementation. Kansas District Judge Daniel Crabtree issued his response on June 7, and he said that only three states — South Carolina, Texas, and Alaska — "just barely" have standing to provide the SAVE plan will reduce their states' revenues.

To prove standing, plaintiffs have to show that they'd be injured by the policy, that the injury can be directly traced back to the defendant, and that the relief they're seeking would address those injuries. Crabtree wrote that the three states' standing is "weaker than the one that prevailed" at the Supreme Court.

Crabtree also said that the other eight plaintiffs' argument that the SAVE plan's relief would undermine their recruiting efforts through the Public Service Loan Forgiveness program has not, and will not, hold up in court.

"No court has ever bought into this theory, and this court declines to become the first," he wrote. "These plaintiffs simply have no skin in the game. Their answer to Justice Scalia's colloquial expression of standing—What's it to you?—is this: It's nothing."

Crabtree explained how this case is different from Biden v. Nebraska, the case brought before the Supreme Court. In Biden v. Nebraska, the plaintiffs argued that Biden's plan at the time to forgive up to $20,000 in student debt for borrowers making under $125,000 a year would harm student-loan company MOHELA because it would no longer be able to collect revenue from servicing forgiven loans.

In the case to block SAVE, the states are not arguing they would lose money from servicing loans. They're instead arguing that SAVE would cost them interest revenue because borrowers would have an incentive to consolidate privately held loans into direct loans, making the federal government their sole lender.

Biden's student-debt relief efforts are no stranger to legal challenges. In April, another seven GOP attorneys general filed a separate lawsuit to block SAVE, and in October, the New Civil Liberties Alliance filed a lawsuit on behalf of conservative groups the Cato Institue and Mackinac Center for Public Policy to block the Education Department's one-time account adjustments.

With regards to the latter case, the Sixth Circuit in May rejected the groups' appeal to block the account adjustments because their argument that the relief would undermine PSLF recruiting was "unconvincing and illogical."

The Education Department has maintained that its relief efforts are in accordance with the law. It's also in the process of implementing a broader student-loan forgiveness plan to replace the one the Supreme Court struck down, which is also likely to result in lawsuits.

•  Buying a home won't get cheaper from here, Kevin O'Leary said. 
• The "Shark Tank" investor predicted high mortgage rates were here to stay.
• Pandemic migration trends also aren't reversing, which has kept home prices elevated. 

The housing market probably isn't ever going to get any cheaper, according to "Shark Tank" star Kevin O'Leary.

Speaking to Fox Business on Sunday, the investor pointed to the rapid run-up in interest rates, which has been the main culprit behind higher housing costs, and that's not going to change.

Central bankers kicked off the most aggressive monetary policy tightening campaign ever in 2022 in order to tame inflation. Prices have come down significantly from their highs, but central bankers look poised to keep rates higher for longer, as they're still keeping an eye on inflationary pressures in the economy.

"Only 12 months ago, we were thinking seven rate cuts, of which none have appeared because inflation remains rampant," O'Leary said, noting that consumer prices remain well above the Fed's 2% target. "I'm not sure that's going to change at all."

That's bad news for home buyers, given that interest rates influence mortgage rates and home prices. The 30-year fixed mortgage rate stuck close to 7% last week, according to Freddie Mac data. Meanwhile, the median sales price for a US home rose to a record-high of $407,600 in April, according to the National Association of Realtors.

Meanwhile, pandemic migration trends look like they're here to stay, O'Leary said, which has also pushed up housing prices. Work-from-home trends have fueled more interest in suburban areas and areas away from the biggest metros, which isn't likely to reverse, he predicted.

"The prices of those houses in rural regions went way through the roof," O'Leary said. "It's a new America. It's a digitized America, and housing is more expensive."

Other real estate experts have warned affordability conditions aren't improving anytime soon. Zillow economists expect home prices and mortgage rates to stay mostly level this year, which could bring another tough year for home sales.

• This post originally appeared in the Insider Today newsletter.
• You can sign up for Business Insider's daily newsletter here.

Welcome back! Despite last summer's OceanGate tragedy, someone else wants to take a submersible to the Titanic. Meet billionaire thrill-seeker Larry Connor.

In today's big story, we're giving a preview of what to expect at Apple's annual event. And be sure to follow along with our live blog.

What's on deck:

• Markets: We're close to a soft landing, but the US economy needs to thread the needle or risk a bumpy ride.
• Tech: Sam Altman might be the ultimate personality hire.
• Business: No, Gen Z, your manager is not your therapist.

But first, showtime for Apple.

If this was forwarded to you, sign up here.

The big story

Apple's AI unveiling

Apple kicks off its big event today from a unique spot: behind.

The Worldwide Developers Conference (WWDC) is Apple's annual showcase for splashy announcements about cutting-edge tech.

But when CEO Tim Cook takes the stage for his keynote address this afternoon, it'll be about catching up with Apple's fellow Big Tech peers. The event is expected to be Apple's long-awaited unveiling of its AI strategy, writes Business Insider's Jordan Hart.

(You can follow along with our live blog here. The event kicks off at 1 p.m. ET.)

Google, Amazon, Microsoft, and OpenAI have all placed their proverbial flags in the AI ground over the past month. But Apple has remained noticeably quiet on AI, much to investors' chagrin.

All signs point to Apple confirming the rumors of an OpenAI partnership. It wouldn't be the first time Apple announced a deal with a fellow tech company that has massive implications, writes BI's Hasan Chowdhury.

In 2005, Apple and Google struck a deal to make the latter's search engine the default option on Apple's Safari browser. Two years later, Apple introduced the iPhone with Google as the core search tool.

The rest, as they say, is history.

It's unclear if the expected Apple-OpenAI partnership will last as long as Apple's nearly two-decade relationship with Google.

As beneficial as OpenAI is for Apple, it doesn't come without risks. The startup and CEO Sam Altman are, to put it mildly, in the midst of some chaos.

OpenAI has faced criticism over transparency and safety protocols, and people have started questioning Altman's true motivations. Apple usually tries to avoid that type of drama. Remember how quickly it pulled that iPad ad?

Further complicating matters is that OpenAI's biggest backer happens to be a key rival of Apple: Microsoft.

The fellow tech giant reportedly has reservations about the Apple-OpenAI tie-up. CEO Satya Nadella met with Altman to discuss how the deal might impact his company's AI plans involving the startup, The Information reported.

Apple likely won't be interested in putting all its AI eggs in one basket anyway. As successful as the partnership with Google has been, it didn't come cheap. And more importantly, it led to plenty of regulatory attention Apple would probably like to avoid this time around.

News brief

Your Monday headline catchup

A quick recap of the top news from over the weekend:

• Far-right, nationalist parties gain strong support in European Parliament election.
• South Africa could be the first-ever country to provide a no-strings-attached universal basic income.
• Elon Musk is pitching a daring idea to Tesla shareholders: A vote for Musk is a ticket to the 'Muskonomy'.

3 things in markets

1. The final stretch of a soft landing for the US won't be easy. The European Central Bank's decision to cut rates last week puts the US in a tricky spot. A delay from the Fed in cutting rates could mean foreign money floods the economy, making the central bank's job even harder.
2. Trying to make sense of the latest GameStop meme madness. The company has already turned its latest rally into a $1 billion windfall by selling shares. Now it could make even more by selling additional shares, which has further jolted the stock. Meanwhile, Roaring Kitty's livestream didn't help things.
3. Election results are serving up major stock-market surprises. It's the year of the election around the world, and wins for leaders in India and Mexico sent their respective country's stocks tumbling. Meanwhile, European stocks opened lower today after far-right, nationalist parties saw major wins.

3 things in tech

1. Introducing the ultimate personality hire: Sam Altman. "Personality hires" contribute to a company with their soft skills, and arguably make for a healthy workplace. In AI, we can stretch that definition to include people who are really good at hyping up the product — and right now, Altman is AI's greatest hype man.
2. Advertisers don't want to use Grok. X employees have been pushing advertisers to use Grok, the platform's sarcastic, not "woke" AI chatbot. The problem? Advertisers really aren't interested.
3. Nvidia's key supplier seems to want in on its hype. Nvidia's market value hit $3 trillion last week after another blowout earnings report. Now, its main chip supplier, Taiwan Semiconductor Manufacturing Company, is hinting at raising prices.

3 things in business

1. "Friendly" fraud is on the rise. Credit cards offer the ability to dispute a transaction to get a refund. But some customers, accidentally or intentionally, are abusing the perk. They're claiming legitimate transactions were fraudulent — and, in the process, they're engaging in first-party fraud themselves.
2. Your manager is not your therapist. Gen Z is more open to talking about their mental health, sometimes doing so at the office. And while destigmatizing mental illness is important, a workplace overly focused on mental health isn't always a recipe for better mental-health outcomes.
3. Amazon withdrew from huge investment in the eleventh hour. Amazon made a last-minute decision to not invest in Figure, an AI-robots startup, earlier this year, two investors told BI. A funding round valued the startup at $2.6 billion, and sources said Amazon committed to $50 million at one point.

In other news

• Your Uber Eats orders may be more likely to get stuck in NYC traffic now.
• See the private island outside NYC that a hedge fund exec is listing for $35 million.
• The 20 best restaurants in the world, ranked.
• Sports Illustrated's ex-publisher wants $200 million from Authentic Brands Group, saying it stole website and employees.
• An AI boom and market rebound helped create 500,000 new millionaires in the US last year.

What's happening today

• Apple's Annual Worldwide Developers Conference (WWDC) kicks off.

The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London. George Glover, reporter, in London. Annie Smith, associate producer, in London.

• China's exports in May blew past estimates, rising 7.6% year-over-year in dollar terms.
• It showcases Beijing's growing dependence on foreign buyers to support its growth.
• But as cheap products flood the US and EU, Western leaders are responding with trade barriers.

Chinese exports jumped above forecasts in May, as the second-largest economy is leaning more and more on foreign markets to boost growth.

But as Beijing unloads its products on the world, it's turning up the heat on trade tensions.

In dollar terms, exports rose 7.6% year-over-year, surpassing 6% estimates among economists polled by Reuters. According to customs data from Friday, that's the second month of accelerated growth.

At the same time, import data was lackluster, and withdrawn Chinese consumption has been a headwind so persistent that China is the sole country undergoing deflation.

For an economy increasingly needing alternatives to domestic consumers, Beijing is pinning its hopes for economic growth on foreign buyers. Friday's data suggests that technology products are boosting China's exports, resulting from the country's growing emphasis on advanced manufacturing.

That's not a welcome development for international competitors, however. With Chinese tech and green energy goods sweeping foreign producers away, both the US and European Union have responded with trade barriers.

Last month, President Joe Biden announced fresh tariffs against Beijing's advanced products, including quadrupling the duties on Chinese electric vehicles. Last week, tariffs resumed on Chinese-made solar panels coming through Southeast Asia after a brief moratorium.

Meanwhile, Republican candidate Donald Trump has pledged even steeper protectionist policies, vowing to apply 60% tariffs on Chinese goods.

Whichever US presidential candidate is elected in November, analysts have been warning that China's dependence on international markets is sure to spark a trade war. This could happen as soon as next year, China Beige Book CEO Leland Miller forecast.

Although one already took place prior to the pandemic, Beijing's manufacturing output has only grown since — it can no longer lean on smaller countries to absorb its product, a Capital Economics note said in March.

"China's exporters are probably more reliant now on US consumers than they were when the trade war began during Donald Trump's first term," group chief economist Neil Shearing then wrote.

• A US-made Bradley rescued a soldier after a drone spotted him hiding in some trees, a video shows.
• Ukraine's army said the soldier had five bullet wounds and waved his military ID to be recognized.
• Medics waited for the right moment to leave the fighting vehicle and rescue the soldier, it said.

A video shared on Sunday shows a wounded Ukrainian soldier being rescued by a US-made Bradley fighting vehicle, after being spotted hiding among some trees.

The drone footage, captured by Ukraine's 47th Mechanized Brigade, shows the soldier hiding in the foliage and waving a blue piece of paper at the drone above.

According to the text accompanying the video, the brigade spotted the wounded soldier, named Dmytro, in the bushes during an aerial reconnaissance.

Dmytro had been ambushed and sustained five bullet wounds, it said. He pulled out his military ID and waved it at the drone to prove he wasn't Russian, per the brigade.

In the video, a Bradley can be seen arriving, with the back doors opening and two soldiers going out to pick up the limping soldier, before taking him inside the vehicle.

Medics from the brigade waited for the right moment to get out of the Bradley and evacuate the soldier, the text said.

"We thank the aerial reconnaissance men for their vigilance, the crew for their maneuverability, and the medics for saving lives," the brigade said, per a translation by military website Militarnyi.

It didn't specify where the rescue operation took place.

The text said that Dmytro was being treated in a hospital.

US-supplied Bradleys have played a crucial role in rescue operations on the front lines of the war in Ukraine.

Last summer, Ukrainian soldiers used a Bradley to rescue civilians while under heavy Russian fire in the village of Robotyne.

They have also helped Ukrainian soldiers fight off Russian advances, take out Russian tanks, and resist Russian fire thanks to their heavy armor.

The vehicles have prompted fear among Russian soldiers, a Ukrainian commander told Newsweek in January.

The Bradley, initially built as a response to Soviet infantry fighting vehicles, has an operational range of about 300 miles and can drive at speeds of more than 40 miles an hour.

They can move up to six fully armed soldiers to and from the battlefield, and are highly maneuverable.

The US has provided Ukraine with more than 300 Bradleys since the start of the war, according to the Department of State.

In early January, Pentagon Press Secretary Air Force Brig. Gen. Pat Ryder said the infantry fighting vehicle was "not a tank, but a tank killer" capable of giving Ukraine a "significant boost" on the battlefield.

• President Emmanuel Macron called snap parliamentary elections in France.
• It came after a big win for rival Marine Le Pen's National Rally in the European Parliament vote.
• This could dissolve Macron's coalition, risking cohabitation with an opposition prime minister.

French President Emmanuel Macron shocked the world on Sunday by calling a snap election in France.

The move came after a big win for his rival Marine Le Pen's National Rally party at the European parliamentary elections. Macron's centrist alliance secured a 14.6% vote compared to the far-right National Rally's staggering 31.4%.

The French president's defeat by hard-right nationalists had been expected. But his response hadn't.

There's now a chance Macron "would have to govern with his nemesis," Daniel Hamilton, a senior fellow at the Foreign Policy Institute of Johns Hopkins University SAIS, told CNBC.

"His gamble is to use the three years before the next presidential elections to show they did a really bad job and that somehow the voters will reward him," he said.

France's snap election

Macron said the decision to hold a snap election was "an act of confidence" and that he believed "in the capacity of the French people to make the best choice for themselves and for future generations," according to a translation by The Guardian.

"I have confidence in our democracy, in letting the sovereign people have their say. I've heard your message, your concerns, and I won't leave them unanswered," he said.

He presented it as a choice for voters: give him a mandate or risk being governed by hard-right nationalists.

Le Pen said her party was "ready to take over power if the French give us their trust in the upcoming national elections."

Investors reacted by selling off French stocks and bonds. On Monday, the country's Cac 40 stock index fell by as much as 1.8% to its lowest since February, the Financial Times noted.

There is likely more volatility ahead. The election, set to take place between June 30 and July 7, could jeopardize Macron's influence — which has steadily waned since the formation of the current coalition government in November 2021.

'This is a severe defeat for Macron'

Macron's term as France's president still runs for three more years, which means he will stay in charge of foreign policy, justice and defense.

However, the snap election could likely end the current coalition, which comprises Macron's party, Renaissance, the Democratic Movement, Horizons, En commun, and the Progressive Federation.

Macron may have to form a cohabitation government with a prime minister from an opposition party, such as the National Party or Les Republicains.

They would have a huge say over France's domestic and economic policy.

Alain Duhamel, a veteran political analyst, told the FT that this outcome is inevitable: "A dissolution means a cohabitation."

According to the FT, the decision to call a snap election was a high-stakes attempt to prevent National Rally's Marine Le Pen on her trajectory to succeed Macron as president in 2024.

But the plan could backfire if the far-right continues to dominate votes.

"This is a severe defeat for Macron given that he has been president for seven years and he has long said his goal is to combat the far right," Bruno Cautrès, an academic and pollster at Sciences Po in Paris, told FT.

Antonio Barroso, a deputy director of research at the consultancy firm Teneo, told CNBC that "the available information suggests Macron has called an election he might lose."

Representatives for President Macron did not immediately respond to a request for comment.

• A recession indicator with a flawless record has been flashing red for 20 months.
• The economist behind the inverted yield curve says it's too soon to declare it's wrong this time.
• Campbell Harvey, a Duke finance professor, pointed to signs of a cooling job market to back his concerns.

A recession indicator with a perfect track record has been flashing red for 20 months now, but the economist who pioneered its use warned against dismissing it just yet.

"I think it's way too early to declare a failure," Campbell Harvey told Fox Business about the inverted yield curve.

The 3-month Treasury yield has climbed above the 10-year yield before eight of the past eight recessions dating back to the 1960s, without any false positives. Harvey, a finance professor at Duke University, first identified that pattern over 30 years ago.

The same yield curve has been inverted for around 20 months since October 2022. But past recessions have struck with up to a 23-month lag, Harvey noted.

"We're still not out of the woods," he said, noting the indicator will only exceed its historical lead time if there's still no downturn by October.

Even so, he advised investors not to rely on his alarm bell alone, but to combine it with other measures to gain a fuller picture of the economy's health and outlook.

Harvey pointed to several economic "red flags" including employment figures for May that were released on Friday. Headline unemployment ticked up to 4%, with Black unemployment jumping from 5.6% to 6.1%. The labor force participation rate also dropped to 62.5% as some people exited the job market.

It's worth emphasizing that Harvey has been sounding the recession alarm for a while. Last May, he warned the economy seemed to be slowing and might contract for the next six to nine months. In January, he cautioned a mild downturn could take hold this year.

Recession fears have faded in recent weeks, even though GDP growth has slowed from nearly 5% in the third quarter of last year to just 1.3% last quarter, unemployment has edged higher, and inflation has remained well above the Federal Reserve's 2% target for months.

There was widespread fear of a downturn after inflation spiked to a 40-year high of more than 9% in the summer of 2022, spurring the Fed to raise interest rates from nearly zero to north of 5%.

Higher rates deter spending, investing, and hiring, and increase monthly debt payments owed by consumers and businesses, which tends to cool the economy and boost the risk of a recession.

It may be tempting to dismiss Harvey's inverted yield curve as a false alarm, but it's certainly worth monitoring.