Good morning.

The Fed’s modest rate increase yesterday has sparked hopes that the U.S. can get inflation back to 2% without a serious recession. Count me as skeptical. Wage inflation is still running close to 5%, and there’s not a lot of historical evidence to suggest you can beat that back without an economic slowdown.

But what’s interesting to me is that while businesses are clearly bracing for recession—a PwC survey I reported on recently found 73% of CEOs expecting a decline—they seem even more focused on the need for long-term transformation of their businesses, driven either by new technology or by the demands of the energy transition or by a retooling of their supply chains.

The question that raises is: How do you batten down for a recession and tool up for transformation, both at the same time? That was a topic we explored at virtual meeting of the Fortune CEO Initiative yesterday, sponsored by PwC. A few excerpts:

“I’ve been through cycle after cycle of both technological change and economic change. And my philosophy has always been that we have to always look to the long term. Because the one thing I know is that over 10 years, travel will pretty much grow a little bit faster than GDP. So I have to always say, ‘Let’s not worry too much about the short term. Let’s make sure that we’re going for the long term.’”
—Glen Fogel, CEO, Booking Holdings

“My advice is: Get your company fit for growth. Do all the cost restructuring that needs to be done, then reinvest in growth. And that growth needs to be powered by technology. That will be the future.”
—Mohamed Kande, global advisory lead, PwC

“If there is one thing we’ve learned during the pandemic, it is that the only way to be agile and to react every day…is really to empower teams on the front line. And that’s really the one theme that we have been consistently developing over the last years, and increasingly accelerating in the last 36 months.”
—Alexis Garcin, CEO, Michelin North America

“The thing that I always, always try to overemphasize to my people is: Please, don’t get distracted by headlines. Don’t get distracted by noise. Focus on the North Star. Ultimately…the day-to-day debates about crypto shouldn’t take away from the long-term conviction we have around the asset class.”
—Michael Sonnenshein, CEO, Grayscale

And speaking of crypto, we at Fortune are teaming up with Mark Wahlberg’s production company, Unrealistic Ideas, to tell the epic story of the crypto-rivalry between Sam Bankman-Fried and Changpeng Zhao that led to the monster meltdown of FTX. So stay tuned. This saga is better than fiction.

Other news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

TOP NEWS

Zuckish efficiency

Mark Zuckerberg just set the hearts of Meta’s investors aflutter by promising a “Year of Efficiency.” Meta’s share price, which has plunged 64% this year, soared by 19% in after-hours trading on the slogan’s unveiling. Which is remarkable, given that Zuck was also announcing a $4.3 billion Q4 loss and a 55% drop in profits, and he insisted his prioritization of the not-yet-a-thing “metaverse” hasn’t changed. (Bonus read: The FTC has reportedly lost an attempt to block Meta’s purchase of virtual-reality startup Within Unlimited.) Fortune

Adani saga

Remember that $2.4 billion share sale that Gautam Adani pulled off earlier this week despite his empire being targeted by short-seller Hindenburg Research over alleged fraud? The fully-subscribed Adani Enterprises secondary offering has been scrapped at the last minute, following a continued slump in share prices for companies in the Adani stable, including Adani Enterprises itself. “Given these extraordinary circumstances, the company’s board felt that going ahead with the issue will not be morally correct,” the company said. Fortune

Green subsidies

The European Union has unveiled its response to the American subsidy-fest that is the Inflation Reduction Act. The EU’s executive body said yesterday that its new Green Deal Industrial Plan would involve revising state aid rules. There will be a new “European sovereignty fund” later this year, which could help plaster over the EU’s big problem in responding to the U.S. green push: some of its countries, like Germany, are much better equipped to throw subsidies at their local companies than others are. Politico

AROUND THE WATERCOOLER

The White House just said it agrees with Elon Musk’s point about Apple’s ‘secret 30% tax on everything.’ And don’t forget Google, by Nicholas Gordon

McCarthy claims he had a ‘good meeting’ with Biden in hourlong debt ceiling talks despite ‘no agreement, no promises’, by Associated Press

Mass layoffs come with surprisingly large hidden costs, by Geoff Colvin

A power crisis in Elon Musk’s birthplace of South Africa is killing its switch to EVs—and putting 100,000 auto jobs at risk, by David Meyer

Bitcoin could hit $1.5 million in just 7 years according to a new report from Cathie Wood’s ARK Invest, by Tristan Bove

This edition of CEO Daily was edited by David Meyer.