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Hi, I’m Zach Warmbrodt, POLITICO’s financial services editor, co-author of our Morning Money newsletter and your guide this week for coverage of the Milken Institute Global Conference.

Good morning from the Beverly Hilton, where the final day of this year’s Milken conference is just about to kick off. Let’s get into the latest highlights.

BRACING FOR A SLOWDOWN, MAYBE?

For Milken attendees, this week has made clear that even the most seasoned financial executives and policymakers are struggling to figure out where the global economy is going next. They know turbulence is ahead but they’re not quite sure how bad it will get.

“I’ve been to this conference several times, and this time there’s a sense of people really trying to figure out what’s going on,” Citigroup general counsel Brent McIntosh told me.

Wells Fargo CEO Charlie Scharf told attendees Tuesday that the giant bank is starting to tighten lending a bit. That’s the big thing econ watchers are looking for as they try to game out how soon a potential recession might come and how bad it might be.

Scharf described Wells Fargo’s moves as “marginally tightening up in places that you would expect” for certain consumers and businesses. He said it wasn’t a “meaningful cutback in credit availability.”

Scharf is banking that the Federal Reserve won’t relent in its fight against inflation, which has led to a dramatic hike in interest rates. The Fed is set to announce Wednesday whether it will raise rates again or pause after a string of bank failures.

“We know that things are going to slow,” he said. “The Fed is working extremely hard to make that happen. They’ve been clear that they’re not going to stop until that happens, and I think you’ve got to take them at their word.”

MNUCHIN’S VIEW

Former Trump Treasury Secretary Steven Mnuchin — a veteran investor — hedged a bit on where the economy is going.

Asked on stage by MSNBC anchor Stephanie Ruhle if he was bullish or bearish, he said “cautious,” citing the U.S. debt limit conflict, his expectation of one more Fed rate increase and credit risks following banking instability.

“We’re going to have a bumpy ride but when we get through this I think on the other side the economy will be strong,” he said.

Mnuchin made the case in the strongest possible terms that he’s bullish on the U.S. economy in the long-term, despite huge domestic and global challenges.

“If I had to put money to invest for the next 10 years,” he said, “I’d put 100 percent of it in the U.S. economy. Because when I look at the rest of the world, I think we still are positioned very well.”

TODAY AT MILKEN

Full events details | Watch the livestream

New York Times columnist Nicholas Kristof moderates a panel on the “challenges of manhood” with Reddit co-founder Alexis Ohanian, former House Rep. Tim Ryan and Black Emotional and Mental Health Collective founder Yolo Akili Robinson … POLITICO deputy sustainability editor Debra Kahn leads a panel on the race for global green energy … Munich Security Conference CEO Benedikt Franke and NATO Deputy Secretary General Mircea Geoană talk European Union membership … World Bank President David Malpass is interviewed by Michael Milken … House Democratic Rep. Brendan Boyle and former Trump acting chief of staff Mick Mulvaney discuss the U.S. debt limit stalemate … Keegan-Michael Key and Chris Tucker talk about the evolution of comedy … Snoop Dogg shares stories of his journey as a rapper and entrepreneur

What we’ll be watching: I’ll be listening for what Boyle, the top Democrat on the House Budget Committee, signals about the next steps in the political fight over raising the U.S. borrowing authority. Congress faces a roughly June 1 deadline — much sooner than expected — to increase Washington’s debt ceiling before it runs out of cash and defaults on Treasury bonds that undergird the global financial system.

Boyle told me ahead of Milken that he wants to use his appearance at the conference as a kind of call-to-action for financiers to intervene. Wells Fargo’s Scharf warned Tuesday that the stalemate is “a gigantic risk.”

Former Obama budget chief Peter Orszag, now an executive at Lazard, told the Milken audience that the Biden administration should take a novel approach: Invoke the U.S. Constitution’s 14th Amendment — which deals with the validity of public debt — and “just ignore the debt limit” to keep paying the government’s bills.

SPOTTED: Former Yankees slugger Alex Rodriguez hustling through the hallway to an invite-only panel at Milken.

GLOBAL RISKS AND TRENDS

HANDICAPPING THE END OF THE PUTIN ERA: Mikhail Khodorkovsky, a former Russian oil executive who is now an opposition leader, believes there’s a 50-50 chance of regime change in the country within the next five years.

“I’m a conservative person,” he said on a panel at Milken. “I personally feel like the likelihood of such a scenario taking place in the next five years is about 50 percent. In the next 10 years, 70 percent. Fifteen years, 90 percent.”

Garry Kasparov, another Putin opponent, tried to pitch a more optimistic outlook.

“I believe Ukrainian victory, which I believe will happen relatively soon — hopefully next year — will dramatically increase these chances,” he said.

SIGNALS ON AI REGULATION

Artificial intelligence is freaking everyone out, but Silicon Valley leaders at Milken warned against slowing down, and California Gov. Gavin Newsom signaled a light regulatory touch.

“We assert ourselves before first seeking to understand, and we overregulate and we overcompensate,” Newsom told attendees. “I want to be careful in this space, to understand its contours, before California asserts a paradigm around it.”

Officials have started to raise concerns about the misuse of AI chatbots, for example, in disinformation and cybercrime, not to mention other AI concerns around discrimination, bias and copyright.

Former Google CEO Eric Schmidt said the U.S. slowing down “would simply advantage our opponents. “You don’t think China’s going to slow down,” he added.

Schmidt said he thought the U.S. would strike the right balance with AI regulation but other countries would not.

“We’re already talking about it and everyone’s screaming about it, which we didn’t do with social media,” Schmidt said. “I do not have confidence that we’ll get it globally.”

He warned about the “empowerment of asymmetric actors who are evil and doing bad things.” The AI panel discussion at Milken covered the potential use of AI to disrupt social media, journalism and democracy.

OUT IN THE WORLD

IN DEFENSE OF JOURNALISTS: Reuters reports that the U.S. is launching a program to protect journalists around the world from legal threats designed to crack down on criticism.

“Many independent outlets can’t afford to be sued, so they are driven out of business or they try to self censor to avoid attracting the interest of those who might target them,” said Samantha Power, administrator of the U.S. Agency for International Development. “Corrupt leaders know all this, which is why they’re using lawfare more and more.”

ONE FUN READ

FACT CHECKING ‘THE DIPLOMAT’: POLITICO’s Nahal Toosi and Rosa Prince have a rundown of where the new Netflix show “The Diplomat” veers from the reality of serving in the Foreign Service. Career diplomats appear to be hooked on the show — and love its embellishments.

Thanks to Sam Sutton, Debra Kahn, editor Heidi Vogt and producer Sophie Gardner.

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