Good morning. European stocks and bonds are trading lower as the world digests yesterdayâs commentary from the Fed as well as concerns close [View in browser](
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Good morning. European stocks and bonds are trading lower as the world digests yesterdayâs commentary from the Fed as well as concerns closer to home, while the S&P 500 and Nasdaq 100 are set to extend record highs. In the corporate world, Musk is on course to have his $56 billion pay package ratified. â [Morwenna Coniam]( Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. Fed fallout European stocks relinquished some of Wednesdayâs gains after a softer US inflation print as the Federal Reserveâs [more hawkish tone on interest rates]( weighed on sentiment. Policymakers expect to lower borrowing costs[only once in 2024]( instead of the three reductions penciled in previously, though Chair Jerome Powell kept the door open for more. Still, traders have held onto increased bets that the Fed will move to cut rates in September. Futures contracts for the S&P 500 and Nasdaq 100 are pointing higher, while the dollar and Treasuries are little changed ahead of Thursday trading. European caution Adding to the sense of caution in Europe, meanwhile, European Central Bank Governing Council member Joachim Nagel warned that consumer price growth in the euro zone is [proving stubborn](. The Bundesbank president reiterated that he and his colleagues wonât simply lower borrowing costs automatically, but rather judge conditions at each meeting as it comes. European Union bonds also fell after MSCI announced late Wednesday it wonât add the blocâs debt to its range of [government bond indexes](. The news dented investor speculation the bloc would swiftly be included in the more widely followed benchmarks. Muskâs pay deal Elon Musk said late Wednesday that two key proposals to re-ratify his[$56 billion pay package]( and move Teslaâs legal home to Texas from Delaware are currently passing by âwide margins.â  The electric car maker set a deadline for investors of 10:59 p.m. central time June 12 for votes, a day before the annual shareholder meeting. Those in support of the pay deal include Scottish asset manager Baillie Gifford, Cathie Woodâs Ark Investment Management and Ron Baron, who runs Baron Funds. Those against include Norwayâs sovereign wealth fund, Norges Bank, and California Public Employeesâ Retirement System. Nuclear boom The surge in the price of uranium is a testament to the magnitude, and speed, of the pivot back to nuclear. Over the past five years, the metal has climbed 233% â more than triple the gains in gold and copper even after declining a bit in 2024. The mania has spilled over into the stock market and some of the biggest names in finance have piled into the sector. But that boom could, of course, go bust and then the world will have to grapple with how to dispose of the radioactive waste. [You can read all about uraniumâs boom in todayâs Big Take.]( Coming Up⦠Economic data today is expected to show producer-price growth slowed to 0.1% in May as gasoline prices declined while core PPI also likely moved down. Meanwhile jobless claims will likely come down in the week ended June 8, with the upside surprise the previous week due to seasonal-adjustment issues. The U.S. Treasury is also scheduled to sell $22 billion of 30-year bonds. In corporate events, eyes will be on Tesla as it holds its annual meeting. What Weâve Been Reading This is whatâs caught our eye over the past 24 hours. - What the Fedâs[rate-cut delay]( means for the US and the World
- G-7 leaders agree on a huge [Ukraine aid dealÂ](
- Some [Israeli scientists]( are being shunned by universitiesÂ
- How the first casino near Dubai is [sparking a gold rush](
- Apple [isnât paying OpenAI]( to use its chatbot, itâs paying through distribution And finally, here's what Joeâs interested in this morning It was an interesting, and perhaps unusual, day on the macro front yesterday. First we got that cool CPI report. The headline was a flat 0%. And then the core rate came in at 0.2% vs. the 0.3% that was expected. And if you're the type who likes to go out to multiple decimal points, it was actually at 0.16%. Markets boomed on the news. Traders priced in two rate cuts at some point for the rest of 2024. Then in the afternoon we got the Fed news. And on paper, it was on the hawkish side. According to the dots, FOMC members anticipate just 1 cut this year. And then during the press conference (more on that in a second), Powell didn't really do anything to downplay the dots, or distance himself from them. But then the market... just didn't seem to care. Here's a look at S&P futures over the last two days. Futures jumped after the CPI report, and as of the time I'm typing this, they just held their gains. You wouldn't know that the entity that sets rates came in and indicated that the market was ahead of itself in pricing cuts. Now the timing is interesting. As Powell said during the press conference, the dots were submitted prior to CPI having been released, but that each participant did have the opportunity to revise their dots after the number came out. Whether anyone actually changed their dot is unclear. But the opportunity existed. Regardless, markets didn't seem to care too much. Bloomberg's own Cameron Crise wrote that the "dot plot looks obsolete already". Omair Sharif, founder of Inflation Insights, [wrote]( that Fed officials have "Q1 inflation PTSD," having been burned by the hotter-than-expected start to the year for pricing. In a note to clients, Neil Dutta of Renaissance Macro wrote: "The SEP is fluid. It is NOT an iron clad promise, but a conditional forecast. Conditions can change. Today's inflation data are laying the groundwork. This statement notes "modest further progress" on the Fed's inflation goals." Generally speaking, there wasn't a ton of meat in the actual press conference itself. So for now, there seems to be sort of two things going on. One is that maybe the Fed is still just going to be (understandably) conservative, in light of having gotten over-optimistic before about disinflation. (One note though on that is that the unemployment rate has been drifting higher, so the risks are getting a bit more balanced. And during the Q&A, Powell indicated that the Fed does not want to wait until the labor market has already broken before cutting rates). The other thing is -- and nobody from the Fed would ever acknowledge this is a factor, but traders can't help but wonder -- is how the election effects the calendar? Is September a weird time to be cutting rates, on the eve of the vote? And then there's the fact that the election itself is on November 5, and the FOMC meeting for the month starts the very next day (the decision will be on the 7th). Yeah, that's after all the voting's been done, but still it's guaranteed that the meeting will be viewed and discussed through the lens of whatever just happened on that Tuesday. Anyway, probably the most important takeaway from yesterday is that the broader disinflation story remains intact. The dots, as Dutta put it, are not "iron clad." The dots can move all over the place. And from an econ standpoint, whether we get fewer cuts in 2024 but more in 2025 may not be a huge deal, if inflation keeps on cooling. Follow Bloomberg's Joe Weisenthal on X [@TheStalwart]( [Bloomberg Markets Wrap: The latest on what's moving global markets. Tap to read.]( Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before itâs here, itâs on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals canât find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Five Things to Start Your Day: Americas Edition newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox.
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