The US labor market continues to deliver better-than-expected job and wage growth, which is great for working stiffs but is keeping inflation elevated and interest rates at a 23-year high.

To practically nobody’s surprise on Wednesday, the Fed once again left rates alone.

The Cost of Inflation

When prices start accelerating, the Federal Reserve can increase the cost of borrowing, making it more expensive for consumers to acquire loans for a home or a car — or for businesses to borrow for investing in expansion. The idea is to weaken demand and purchasing power to make prices drop. The real trick is slowing the economy while just avoiding a recession — that oh-so-coveted “soft landing.”

So far, no such luck. Inflation reached an annual rate of 4.4% in the first three months of the year, well above the Fed’s target of 2%. And it’s harder to get prices to drop if the labor market continues to grow, wages increase, and the overall economy keeps expanding like it has been in the US:

• Private companies added 192,000 workers to their payrolls in April, according to ADP, beating the median estimate in a Bloomberg survey of economists. Additionally, the Employment Cost Index — a broad gauge of US labor costs — increased by 1.2% in the first quarter. The Labor Department will release its official jobs report for April on Friday.
• On Wednesday, the Fed maintained the funds rate at 5.25% to 5.5%, citing a “lack of further progress toward the Committee’s 2% inflation objective.”

Keep Waiting: In a column for Bloomberg, Jonathon Levine said that while higher wages can delay rate cuts, it’s still more money in people’s pockets. “First and foremost, they’re a clear positive for American workers trying to maintain their purchasing power,” he said. “For inflation, they’re probably a neutral development in the medium term. But in a world in which Fed policymakers were already on edge about stalling disinflation, they’re clearly not great for the near-term interest rate outlook.” 

Wage gains and resilient consumer spending are good, but it’s also why financial markets and experts have pushed back their expectations of a Fed rate cut to September from June. And to think only a few months ago we really thought six cuts were coming this year.

If you thought Ukraine was tricky, try Yemen on for size.

Starlink, the satellite-powered internet service offered by SpaceX, was originally pitched to the public as a way to get high-speed internet to remote parts of the globe. With the outbreak of the war in Ukraine, however, its value as a military service became abundantly clear. Although CEO Elon Musk has expressed some equivocacy about Starlink’s military uses, Bloomberg reported Wednesday that it’s set to receive official approval to enter Yemen, where a civil war has been raging since 2014. So like it or not, Musk appears to be coming to terms with his reluctant role as a military contractor. 

War and Broadband

Exactly how much money Starlink makes and from whom is not clear, since parent SpaceX is a private company that isn’t required to report financials. Musk tweeted last November that the service had achieved “breakeven cash flow,” but a Bloomberg report from last month cast some doubt on that accomplishment, with sources saying the division has mountains of undisclosed costs. What’s known for certain is that Starlink, like SpaceX, has some pretty meaty contracts with the US government. The Department of Defense last October awarded Starlink a $70 million contract, and the Pentagon signed a contract last June with Starlink to continue providing internet coverage to Ukraine.

Now it appears Starlink is poised to enter Yemen as well, and the company’s motivation might include both more revenue — and keeping control over its product:

• A Bloomberg investigation in March revealed a thriving international black market for Starlink terminals has spread as far as Yemen and Sudan. A Wall Street Journal investigation published a few weeks later reported similar findings, adding that some terminals had been smuggled into Iran and that Russian soldiers had been able to use Starlink.
• Starlink is only authorized to operate in countries where it has obtained licenses and it started cracking down on the illicit network last month. A Yemeni official told Bloomberg the terms of its license in Yemen are being hammered out, but it could still take a month or so to finalize.

A Star is Born: While Starlink executes the delicate dance of a military contractor, a new rival may have arrived. Satellite internet firm SES said Tuesday it’s buying fellow satellite player Intelsat for $3.1 billion. It’s part of a major consolidation trend in the sector but it didn’t inspire much investor confidence, as the deal involves taking on a chunk of debt. Defying gravity? Easy. Defying interest rates… less easy.

Who’s on first? On TV, no one. 

As the latest Major League Baseball season kicks into full gear, fans in 15 markets across the US can’t watch local game broadcasts after Comcast and regional sports network (RSN) Diamond Sports failed to reach a new contract agreement by a Tuesday night deadline. It’s the latest sign that RSNs may be permanently down in the count.

Diamond Sports in the Rough

Call it negotiating hardball. Comcast, in a constant war to ward off cable customer cord-cutting, is desperate to give subscribers a newfound sense of options. Essentially, the cable provider wants to offer cheaper cable bundles that exclude Diamond Sports channels — breaking with the tradition of including RSNs in even the most basic of bundles. Competitor and fellow flagging cable provider Charter pulled off a similar so-called sports-fee skinny package last year.

Diamond, in the midst of bankruptcy proceedings, naturally wants to maintain the sports-centric status quo. But talks broke down ahead of an end-of-April deadline — itself an extension from a previous September deadline — resulting in no new deal, and plenty of winners and losers: 

• Diamond has previously said its prior deals with Comcast, Charter, and DirecTV generate 81% of its revenue. While the group struck a deal with Charter last month and is reportedly close to one with DirecTV, losing Comcast could make a huge dent.
• Winners include internet-TV providers like FuboTV, now one of the only ways fans in blacked-out markets can legally watch their teams. Another winner could be the non-sports fan Comcast subscriber, who soon may be spared a lifetime of having to pay for stuff they’d sooner not watch. 

Adam Silver Lining: While the collapse of Diamond Sports could disrupt a major distribution channel for the NBA, league commissioner Adam Silver likely isn’t sweating. Sources tell The Wall Street Journal that Disney is prepared to pay up to $2.6 billion per year to retain its NBA rights, up from around $1.5 billion on its current deal, while Comcast’s NBC may edge out Warner Bros. Discovery with a $2.5 billion-per-year offer, more than double what WBD currently pays. Amazon, too, is likely to get in on the action with a streaming-only package, the WSJ reported, which means the NBA will likely pull in at least $6 billion per year. Whatever happens, we just hope someone keeps employing TNT’s legendary Inside the NBA crew.