As a hub of American invention—and reinvention—it feels like a perfect place to talk about the state of the U.S. economy. While issues like tariffs, energy costs, geopolitical tensions, and AI have shaped cities like Detroit, there’s no consensus on how they will play out. 

For business leaders gathered in Detroit, few questions loom larger than what the Fed does next. Kevin Warsh held his first meeting as Federal Reserve chairman yesterday, with the central bank holding its benchmark rate steady. Whether Warsh will prove to be a dove or hawk remains unclear. For now, as my friend and longtime Fed watcher Jon Hilsenrath said, “that was the hawkish Kevin talking.” Some takeaways for leaders:

Interest rates could become less predictable. Warsh indicated that he’s not going to be signaling what’s on the radar in the same way that his predecessor Jerome Powell did. That means less visibility. With four dissenting votes among the 12 cast on the Federal Open Market Committee—the most since 1992—that could mean more volatility, too. Three regional Fed presidents (Beth Hammack, Neel Kashkari and Lorie Logan) voted against the FOMC statement because they objected to language hinting at rate cuts. Meanwhile, Fed Governor Stephen Miran voted against because he thinks rates should be lowered. 

Borrowing costs are unlikely to come down. The 10-year Treasury is above 4.4%. The Consumer Price Index hit 4.2% in May. Oil and gas prices should come down if the Iran peace deal holds and the Strait of Hormuz opens up, which could ease inflation and give the Fed more room to move. But electricity prices will likely swing in the opposite direction, thanks to demand for AI and the state of the grid. Anyone with a large debt load or plans to buy a company, home or other asset shouldn’t count on a rate cut. 

And the Fed rate does not determine who will win in this new era of innovation or how cities like Detroit can reinvent and grow again. That will be determined by the creativity, resilience and skills of the talent—homegrown and immigrant, of all races and creeds. We will not publish this newsletter tomorrow to honor Juneteenth, a federal holiday that marks June 19, 1865, a day when Union troops arrived in Galveston, Texas to announce the end of slavery. Having long been the country’s largest Black-majority city—with Memphis now catching up—Detroit thrived when it unlocked excellence in all its forms and gave many the path to a good life.

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

Top leadership news

Europe’s Most Innovative Companies

Fortune’s second-annual Europe’s Most Innovative Companies list, out today, ranks 300 firms across 18 countries and 21 industries, evaluated on product, process, and culture innovation. ASML tops the list, leading Europe’s semiconductor ecosystem that powers AI chips. The ranking highlights deep industrial expertise, long-lived companies like Siemens and Rolls-Royce reinventing themselves, and the 56 German companies helping drive the continent’s industrial engine.

CFO pay

CFO pay surged 8% last year, with long-term incentives now making up 63% of the average package, according to new data. The bigger message: boards are leaning more heavily on performance-based pay to retain finance leaders and tie compensation to future results.

Bezos’s AI jobs prediction 

At VivaTech on Wednesday, Jeff Bezos said AI will create a labor shortage, not mass unemployment, because productivity gains will spur new demand for workers. He argues the technology will lift output, lower costs, and open up new jobs rather than replace humans, even as many executives warn of layoffs.

The markets

S&P 500 futures are up 0.82% this morning. The last session closed down 1.21%. The STOXX Europe 600 was down 0.42% in early trading. The U.K.’s FTSE 100 was down 0.89% in early trading. Japan’s Nikkei 225 was up 1.65%. South Korea’s KOSPI was up 2.25% today. China’s CSI 300 was up 0.21%. Hong Kong’s Hang Seng was down 1.59%. India’s NIFTY 50 was up 0.40%. Bitcoin was down at $64K.

Around the watercooler

The G7 just pledged to break China’s rare earth grip — there’s a lot of work to do by Mia Osmonbekov

How surging gold prices led to the biggest jump on this year’s Southeast Asia 500 by Angelica Ang

Tokens are getting cheaper, but companies are spending even more on AI as a result, top economist warns by Sasha Rogelberg

PayPal mafia member and ex–Sequoia steward Roelof Botha joins SpaceX board—reuniting with Elon Musk after decades by Allie Garfinkle

Exclusive: Karta raises $15 million to bring WhatsApp-run U.S. credit cards to global travelers by Camila Grigera Naón

CEO Daily is curated and edited by Joseph Abrams, Jason Ma, Claire Zillman, and Lee Clifford.