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

Good morning. Steady markets, stocks may have peaked, bond market signals and crypto declines. Here’s what’s moving markets. — Sam UnstedWan [View in browser]( [Bloomberg]( Good morning. Steady markets, stocks may have peaked, bond market signals and crypto declines. Here’s what’s moving markets. — [Sam Unsted]( Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. Steady trading The dollar is steady, Treasuries are flat and stock futures are fluctuating a little as the [market awaits catalysts]( set to come later in the week. Sights are trained on the release of the [Federal Reserve’s favored inflation gauge](, which is expected to show the slowest advance since late last year and open the door to possible interest rate hikes. [Oil prices have calmed]( after a drop last week, while iron ore futures sunk amid further fears about a recovery in the Chinese property market. Peak gains The gains for the S&P 500 this year [have likely peaked](, with investors growing increasingly nervous on rich valuations in the stock market, according to the latest Bloomberg Markets Live Pulse survey. One of the driving forces of the rally, Nvidia, is the most expensive stock in the index now. However, analysts and executives are [struggling to quantify what its sales will actually be]( given the AI boom, making it hard to calculate whether the shares are pricey or not. Bond signals The US bond market, meanwhile, is facing [one key indicator flashing a bearish signal](. Treasuries are on the cusp of erasing their declines for the year and traders are getting more confident on the possibility of rate cuts emerging from the Fed. However, the neutral rate — the theoretical level at which borrowing costs neither stimulate or restrict growth — is much higher than currently being projected by policymakers. Crypto declines The [selloff in crypto markets]( that resulted in the second worst week of the year are continuing. A gauge of the 100 largest digital assets fell by around 5% in the week through to Sunday and remain in the red, with Bitcoin falling by around another 2% to slip below $63,000. The drop is being driven by uncertainty about monetary policy and by cooling demand for Bitcoin exchange-traded funds. Intervention The yen [remained under pressure]( even after Japan’s top currency official warned that interventions may be used if necessary. Vice Finance Minister Masato Kanda said authorities are “prepared to take appropriate action,” though the comments had minimal impact. An army of retail traders appear to be [reloading bets for a yen rebound]( on the chances of more interventions. What We’ve Been Reading This is what’s caught our eye over the past 24 hours. - Trump says he knows who [his running mate]( will be. - How the [empire of Jeff Yass]( was pulled into the spotlight. - The second bout of [turmoil for Norinchukin]( came after a clear warning. - Adidas ride the [craze for Sambas]( after the Ye debacle. - The hedge fund luring retail investors into [high-risk debt](. And finally, here's what Joe’s interested in this morning Stocks are basically at all-time highs thanks to booming earnings and a handful of well-known stocks that have staged a tremendous rally so far in 2024. That being said, it's worth listening to the [most recent episode of the Renaissance Macro Research podcast](, where Neil Dutta lays out some of the economic risks emerging here. For the most part, Neil has been bullish and optimistic throughout the last several years, so it's notable that he's concerned here. Neil's basic gist is that the odds of a Fed “mistake” are rising. At its most recent meeting, it signaled only one rate cut through the end of the year. Meanwhile, inflation has been cooling, there are some signs of the consumer losing momentum, housing is slowing, and the unemployment rate has been slowly ticking higher. Meanwhile, FOMC members may still feel burned having gotten overly optimistic about disinflation at the end of 2023, only to see the data coming in warm during this year's first quarter. So they don't want a repeat of that scenario — getting too dovish, perhaps cutting, and then watching inflation accelerate. That concern is understandable, but if you do share that concern, then an important question to ask is: what sector is going to drive that upward momentum, in either pricing or growth? For the last several years, the inflation pessimists (i.e., the people predicting higher for longer) have pointed to tightness in the labor market as a cause for concern. And, generally, this narrative has worked out, though we've seen a lot more disinflation than people would have guessed, with unemployment staying as low as it has. But now it's hard to argue that the labor market is overheating. The pace of job creation has slowed. Measures like job openings have come way down. Quits have come way down. And as Goldman's top economist Jan Hatzius warned earlier this month, we may soon be at an "[inflection point](," where we actually start to see a pickup in layoffs (rather than unemployment rising simply because job seekers are having a hard time finding work). It's obviously not a lock that inflation keeps coming down as it has, but still at this point, with the labor market pretty clearly having shifted gears, homebuilder permits clearly slowing, it seems like the onus is on the inflation pessimists to identify where the upward impulse will come from. If we don't get a rebound, and inflation continues to slow, and the labor market continues to see the air come out of it, then the big question is whether the Fed can pivot (at least rhetorically) on time before layoffs start feeding upon layoffs, and we get a real, sustained slowdown. Of course, cycles come and go. For a more optimistic take, check out [today's Odd Lots with longtime stock strategist and Fundstrat founder Tom Lee](, on why he believes the S&P 500 can get to 15,000 by the year 2030. 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 it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. 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