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

Good morning. Bets on when the Fed will cut rates remain the dominant theme, a big week for Bitcoin and a tough start to the year for Boeing [View in browser]( [Bloomberg]( Good morning. Bets on when the Fed will cut rates remain the dominant theme, a big week for Bitcoin and a tough start to the year for Boeing. Here’s what’s moving markets. Rate cut narrative Last week was dominated by fluctuating bets on when the Federal Reserve will start cutting interest rates. That is likely to [remain the dominant narrative]( this year, Bloomberg Economics said, with the focus on how much inflation is slowing and getting closer to central bank targets. Bond traders [are unfazed by the pullback in rate-cut bets](, however, seeing this as an opportunity to lock in elevated Treasury yields before the Fed starts to ease policy. Stock strategists, however, [are paring their high-flying profit forecasts]( and saying that [economic growth will have to pick up]( for US stocks to repeat last year’s rally. Bitcoin’s big week [It’s a big week for Bitcoin](. A series of deadlines are set to fall to mark the culmination of a years-long push to launch exchanged-traded funds backed by the crypto token in the US market. Bitcoin bulls say this would be a watershed moment for digital assets and optimism grew when a [major hurdle was cleared]( last week. Would-be issuers have until Monday morning to submit any last-minute revisions to pending applications, and the Securities and Exchange Commission has until January 10 to take action on at least one of those. Boeing’s challenges Boeing CEO Dave Calhoun entered 2024 saying this would be a key year for the turnaround of the plane maker. [That has been upended]( in the first few days after a door-shaped panel ripped out of an Alaska Airlines flight leaving Portland, Oregon, an incident which followed months punctuated by quality lapses. Regulators and carriers acted quickly to ground the 737 Max 9 planes for inspections and a key piece of the plane which suffered the blowout [was found]( in a teacher’s backyard. Boeing shares have fallen by 9% in US premarket trading and Spirit Aerosystems, maker of the fuselage, has plunged 21%. China’s reforms China is in the midst of reshaping its economy toward manufacturing and away from its struggling property sector, which could continue to [raise trade tensions]( with the US, Europe and others. Government-linked economists in China, meanwhile, have suggested that the fiscal reforms being made by Beijing need to [better incentivize local authorities](. Elsewhere, China [sanctioned five US defense contractors]( over arms sales to Taiwan and said it has [caught a foreign consultant]( alleged to be spying for the UK. Coming Up… US stock futures are lower, falling through the session so far, while Treasuries are pausing after a choppy start to the year. The week begins relatively quietly in terms of economic data, ramping up by Thursday when the latest US inflation reading will arrive. The earnings calendar is also quiet until Friday when a deluge of earnings arrives from major US financial names, including banks JPMorgan, Wells Fargo and Citigroup plus investment management giant BlackRock. What We’ve Been Reading This is what’s caught our eye over the weekend. - Boeing groundings and government shutdowns [on the Daybreak podcast](. - Oppenheimer and Succession win big [at the Golden Globes](. - Biden populism vs Trump populism [in this year’s election](. - Bracing for another [scorching year]( for weather. - Amazon and Microsoft [boost their Saudi offices](. - Congress leaders strike a deal to [ease shutdown risk](. - iPhone sales in China could [fall by double-digits](, Jefferies predicts. And finally, here's what Joe’s interested in this morning On the surface, Friday's nonfarm payrolls report looked fine. The unemployment rate held steady. More jobs were created in December than expected. And average hourly earnings growth accelerated a little bit. But underneath, there are some signs of softening. Measures such as U6, the Labor Force Participation Rate, and Prime-Age Employment-to-Population all showed worsening. The last measure fell to its lowest level since last January, as seen in the chart here. This softening isn't necessarily anything major. But it's something to think about as people discuss the timing of the (presumed) first Fed rate cut. So that's a near-term cyclical concern. Meanwhile, the big story over the weekend was the blown out door and near disaster aboard Alaska Airlines Flight 1282. Shares of Boeing are sliding this morning, as the company once again faces concerns over its 737 Max jets. The company has massively underperformed rival Airbus over the last 5 years, thanks to concerns over its manufacturing and engineering. Boeing is one of the standout American manufacturers. It's one of two companies that produce jets at this size and scale. The fact that it continues to face concerns about its ability to put planes together should be a major source of long-term economic concern. In the short-term for the US economy, you can focus on things like monetary policy, and mortgage rates, and fiscal loosening or tightening, or various other sources of macro pressure. But in the longer-term what matters for the economy is our ability to produce advanced, high-value goods and services. In some areas obviously the US excels (e.g. in software), where the big Silicon Valley giants generally lap the global competition. But in complex manufactured goods such as planes or cars, there are obviously reasons to be concerned. And there are issues that can't easily be remedied by things like rate cuts or fiscal expansion. Follow Bloomberg's Joe Weisenthal on X [@TheStalwart]( Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. Tell us what you want to see in the Five Things newsletter! 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