Five Things You Need to Know to Start Your Day: Americas

All eyes on US inflation data this week, bond investors debate the Federal Reserve’s next steps and Bitcoin ETFs suffer outflows. Here’s wha [View in browser]( [Bloomberg]( All eyes on US inflation data this week, bond investors debate the Federal Reserve’s next steps and Bitcoin ETFs suffer outflows. Here’s what’s moving markets. — [Kristine Aquino]( Inflation ahead [US equity futures are pointing to a partial recovery as traders look toward inflation numbers due Wednesday.]( Stocks saw their worst week since March 2023 on Friday after data  showed hiring slowed more than expected. Economists expect gains in American consumer prices to have moderated in August, which would further support the case for at least a quarter-point interest-rate cut by the Federal Reserve later this month. “The pivotal question for stock investors is whether the Fed waited too long to cut rates, because recession risks are higher now than just two months ago,” [said Eric Diton]( president and managing director of the Wealth Alliance. “All of the sudden, inflation is no longer the big issue.” Bond debate [How quickly the Fed delivers rate reductions will be crucial to the bond-market rally]( and investors are debating how much further it can go. TCW Group’s Jamie Patton is convinced that even the swift easing that’s now baked into financial markets doesn’t go far enough, leaving shorter-dated Treasuries plenty of room to keep rallying. Meanwhile, JPMorgan Asset Management’s Bob Michele is betting the bond market has already run too far ahead of the Fed as the economy keeps chugging along. As a result, he’s favoring corporate bonds — which carry higher payouts — over Treasuries. Bitcoin outflows [US Bitcoin exchange-traded funds have posted their longest run of daily net outflows since listing at the start of the year]( Investors pulled close to $1.2 billion in total from the group of 12 ETFs over the eight days through Sept. 6, data compiled by Bloomberg show. That said, Bitcoin rallied along with other risk assets on Monday, though its year-t0-date gains have cooled to about 30%. The token will likely trade in its recent $53,000-to-$57,000 range until US inflation data on Wednesday, said [Caroline Mauron]( co-founder of Orbit Markets. Apple event [Apple investors are bracing for the company’s most important event of the year on Monday]( when it rolls out its latest iPhones and set the stage for a new artificial intelligence platform. The event kicks off from Apple’s headquarters in Cupertino, California, at 10 a.m. local time. The most significant product announcement will be the iPhone 16 line, but the company is also preparing major updates to both the Apple Watch and AirPods earbuds. Apple Intelligence — a new suite of AI tools that includes an updated Siri digital assistant — will also feature prominently. China worries [Troubles continue to brew in China as core inflation cooled to the weakest in more than three years]( providing further evidence that consumer demand is slowing in the world’s second-biggest economy. “The deflationary pressure in China is getting more entrenched,” said Michelle Lam, Greater China economist at Societe Generale. China’s CSI 300 Index lost more than 1% on Monday, and is on the verge of falling to a five-year low. What We’ve Been Reading This is what’s caught our eye over the weekend. - [Trump pledges `100% tariff’]( for countries that shun the US dollar - Treasury Secretary Yellen says [no `red lights flashing’ for the economy]( - How Americans [voted their way into a a housing crisis]( - [A strengthening Gulf storm]( threatens to slam Texas, Louisiana - [Boeing reaches a deal with its largest union]( after a weekend of talks - Trader Trafigura says [Brent crude is set for around $60s — with a caveat]( - Wealthy Americans are [spiking Portugal’s Algarve housing market]( And finally, here's what Joe’s interested in this morning On Friday, [Bloomberg's Josh Wingrove]( reported that some Biden aides have been quietly working on a proposal for a sovereign wealth fund, of sorts, for the United States. Every once in a while, you hear people talk that the US should use its financial might to start buying up equity stakes in companies in the same manner as, say, Saudi Arabia or Norway. Frequently, though not always, sovereign wealth funds are associated with national economies dominated by energy exports. [Donald Trump has talked]( about a US sovereign wealth fund as well on the campaign trail. Anyway, reading through Wingrove's report, I think this is the key issue: "Countering US adversaries’ grip on critical materials and emerging technology is a key motivator of the project, and aides are particularly concerned about being able to tap capital at the pace and scale of other countries. The China Investment Corporation, for example, has made substantial investments in natural resources, leveraging the country’s foreign exchange reserves." To me, this sounds distinct from how people usually conceptualize these funds. It doesn't sound like the vision here is to build a huge lump of assets that would generate steady cash flows, or be used to stabilize the currency, or anything like that. What this sounds like is that the government perceives a need to make investments in critical areas (such as minerals, or batteries, or semiconductors, or something else) and that it lacks good vehicles to directly make these outlays. One of the challenges of the US political system is that it can be very slow and gridlock-prone. We all know this. Democratic obstacles to policy is a feature and a bug of our system. We don't do five-year plans. Every once in a while, the stars align to pass something like the CHIPS Act or the Inflation Reduction Act, and a bunch of checks go out, and companies get funding, or access to cheap capital. There's an interesting live question out there about whether the US would benefit from more quasi-autonomous investing vehicles. A good example of this exists in the Loan Programs Office at the Department of Energy, which was given nearly $12 billion in the Inflation Reduction Act, and which saw its lending authority increase by $100 billion. Now, because of the IRA, the DOE has this arm that can move with some autonomy and agility to directly back individual companies. So back to the original news of a possible US sovereign wealth fund. Again, it doesn't sound like it would be a gigantic vehicle that buys stocks, and airports, and hotels, and sewer systems, and sports teams around the world. What it sounds like is some (still) hazy or sketchy vision for entities more like the Loan Program Office that would be seeded with public money, and which would have a mandate to make more investments that work towards US strategic interests. On the Odd Lots podcast today, Tracy Alloway and I spoke to [US Trade Representative Katherine Tai]( about this new era of trading with China. One of the points that she made was that it would only makes sense to curb trading in key areas if we also were playing offense, building out our capacity in those same industries (batteries, semiconductors, etc). You could imagine such a sovereign wealth fund (which would need an act of Congress, and therefore be a long way off) fitting into that vision. Joe Weisenthal co-hosts Bloomberg’s Odd Lots podcast. Follow him on X [@TheStalwart]( [Bloomberg Markets Wrap: The latest on what's moving global markets. Tap to read.]( Follow Us Stay updated by saving our new email address Our email address is changing, which means you’ll be receiving this newsletter from noreply@news.bloomberg.com. 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