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

Technology stocks power a global rally, oil pulls back as signs of slowing demand emerge, and China sentiment falters. Here’s what’s moving [View in browser]( [Bloomberg]( Technology stocks power a global rally, oil pulls back as signs of slowing demand emerge, and China sentiment falters. Here’s what’s moving markets. — [Kristine Aquino]( Tech rally [A global stock rally powered by tech buoyed S&P 500 futures on Thursday]( amid signs of red-hot demand for products related to artificial intelligence. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” [Nvidia CEO Jensen Huang told the audience at a Goldman Sachs technology conference]( San Francisco. Risk appetite also re-emerged a day after data that showed US inflation remains in check, setting the stage for a quarter-point interest-rate cut from the Federal Reserve this month. Oil demand Brent crude pared gains while remaining above $70 a barrel, after [the International Energy Agency said growth in global demand is “slowing sharply” as China’s economy cools]( World consumption increased by 800,000 barrels a day in the first half of the year, barely a third of the expansion in the same period of 2023. It’s the lowest rate since oil demand crashed during the 2020 pandemic. “Chinese economic growth is slowing down, and the penetration of the transportation system by electric cars is going at a very strong pace,” IEA executive director Fatih Birol said in an interview from Paris. Europe rates Euro-area bond yields edged higher ahead of a [policy decision by the European Central Bank, where officials are expected to deliver a quarter-point rate reduction](. That would put the deposit rate at 3.5%, as forecast by all 68 economists surveyed by Bloomberg. Beyond the cut, investors will be watching President Christine Lagarde’s press conference for any hints on future moves — but they may end up disappointed. “I would be very surprised if there is any clear guidance whatsoever on the future interest-rate path,” said Janet Henry, global chief economist at HSBC. China woes [China’s equity rout continued, pushing its benchmark index to the lowest since January 2019]( as confidence in the economy dwindles. That comes as a years-long property crisis hurts consumption and threatens the country’s growth target of around 5%. In an additional blow to sentiment, [the nation is also turning up the heat on its army of 8,700 investment bankers]( At least three top investment bankers from different securities firms have been detained by Chinese authorities since August. “All these crackdowns and restrictions will hurt the morale of financial workers,” said Shen Meng, a director at Beijing-based boutique investment bank Chanson & Co. Banker relief Meanwhile,[two of Wall Street’s largest investment banks are rolling out measures that may ease junior bankers’ workloads](. JPMorgan will limit junior banker hours to 80 per week in most cases, according to a person with knowledge of the matter. Over at Bank of America, a new internal platform is being launched this month that will more closely monitor individual workloads, according to a person with knowledge of the plan. The firm began testing the so-called banker diary earlier this year. These measures will be tested as demands on the US banking rank and file have swelled in recent months, with executives racing to capture an upswing in corporate deals. What We’ve Been Reading This is what’s caught our eye over the weekend. - [OpenAI valuation set to vault to $150 billion]( in fundraising round - Only tough options:[Intel’s long, stinging fall from grace]( - [New York City renters set to get relief]( record-high prices - In a rare industry revolt, [K-Pop stars NewJeans give managers ultimatum]( - [Taylor Swift brings 283 million fans]( to razor-thin US presidential vote - Earth has overshot[key `planetary boundaries,’]( according to scientists - [Olsen twins’ The Row gets investment]( from Chanel owners, L’Oreal heir And finally, here's what Joe’s interested in this morning After yesterday's CPI report, which saw the core rate come in slightly higher than expected, odds of a 50 basis point cut are probably slipping away. The market is solidly expecting a 25 bps cut, though it's still not a done deal. Maybe we'll get some movement with today's release of the PPI, though that doesn't seem particularly likely. We also have an Initial Jobless Claims report out today, which might give us some more hints on the labor market front. With that out of the way, one of the things you hear from time to time is that the Fed shouldn't go 50 because that might "spook" the market. People imagine traders going "what does the Fed know?" and then panicking. I think there are a few things wrong with this logic. One is that when it comes to economic data, the Fed is looking at the same stuff as all of us. We all see the jobs reports. We all see the same inflation data. We all see the same credit card spending data and so forth. There is very little reason to think that, at least when it comes to a current snapshot of the US economy, that the Fed would know something we don't. In the past, aggressive rate cuts have been associated with periods of financial panic. But at least as of right now, there's no such thing underway. If there were concerns about the banking system seizing up, or something of that variety, perhaps one might surmise that the Fed could have some view into something that we can't see. But that's speculative, and again, that's not what's going on. The other issue is that the Fed could cut 50 and project confidence. To my mind, this was basically the gist of Powell's Jackson Hole speech. Right now the levels of the economy are good. 4.2% is a historically low level of unemployment. But the trajectory is not so good. Unemployment has been rising, vacancies have been tumbling, hiring has become anemic. So it’s reasonable to think that if the Fed wanted to, it could cut 50, and basically argue "The overall state of the economy is good, and we are moving decisively to keep it that way." Again, at this point, 25 is looking more and more likely, and time is running out to meaningfully change the narrative, or change market pricing. But there’s no reason that a more aggressive start to the cutting cycle has to be something that would scare the market, or be seen as evidence of Fed panic. 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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