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

Good morning. The Federal Reserve is today’s biggest game in town for markets and Wall Street, which has been wrong-footed by the dollar’s r [View in browser]( [Bloomberg]( Good morning. The Federal Reserve is today’s biggest game in town for markets and Wall Street, which has been wrong-footed by the dollar’s rise this year. And Gucci’s troubles in Asia send a chill through the luxury sector. Here’s what people are talking about. — [Sofia Horta e Costa]( Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. It’s Fed day There’s a lot of excitement about today’s Fed policy decision considering no rate change is expected at the 2 p.m. announcement. Fed Chair Jerome Powell is also likely to [avoid signaling]( that rate cuts are imminent when he holds a news conference after the decision. It’s why Wall Street will be focused on the so-called dot plot, which will show how much officials expect to cut interest rates in 2024 and 2025. Bond traders are [stepping up short bets]( against Treasuries and buying derivatives to protect against a selloff, positioning for the risk that new forecasts will show increased reticence to ease monetary policy. Today’s meeting is also about the path forward as the Fed begins in-depth discussions about [reducing its balance sheet](, or quantitative tightening. The funding market signals the Fed [still has time](to determine exactly how and when to do this. Wrong-way dollar bets Oops, Wall Street has gotten the dollar wrong this year. Or [“gloriously wrong,”]( as Vishnu Varathan at Mizuho Bank puts it. While a gauge of the greenback has jumped more than 2% in 2024 — and the US currency has beaten most of its major peers — consensus was calling for the opposite to happen. The [bet]( was that virtually every G10 currency would gain against the dollar on expectations the Fed would begin an aggressive cycle of rate cuts. Despite getting wrong-footed by the moves so far this year, dollar bears remain the market’s dominant voice and asset managers are clinging to wagers that the dollar will fall. That’s a bet they’ve had since 2017. Gloomy Gucci Shares of Gucci owner Kering have fallen as much as 15% in Paris, the steepest drop since 1992. That’s after the group warned [sales at its flagship brand]( have fallen about 20% in the first quarter, mainly due to a steep decline in the all-important Asia-Pacific region — its biggest market. Analysts at Citi called it a “rather worrying signal” for the luxury-goods market overall, and concerns of a broader slowdown are weighing on shares of Burberry, Christian Dior, LVMH, Richemont and even the ever-resilient Hermes, which yesterday closed at an all-time high. Movers and shakers S&P 500 futures are little changed, signaling caution before the Fed and after the index closed at yet another all-time high yesterday. Treasuries are also mostly flat, while the dollar is charging higher. In Japan, the yen fell to the weakest level since 2008 against the euro. Nasdaq Inc. is one of the top decliners in early US trading as its biggest shareholder [plans to sell]( roughly one third of its stake. Intel is rising after [winning almost $20 billion]( in chips incentives for US plants. Social media platform Reddit will likely [price its IPO]( today before its trading debut on Thursday. And aside from the Fed, we’re also due a rate decision in Brazil, GDP and unemployment data from Argentina and the latest international reserves figures from Mexico. Bitcoin drops The digital asset is falling again today, trading near a two-week low as demand for dedicated US exchange-traded funds [dries up](. The products have garnered a net inflow of $11.7 billion since their Jan. 11 launch but the group as a whole suffered its biggest outflow on Tuesday. Digital-asset optimists continue to anticipate a fillip for Bitcoin from an upcoming reduction in the token’s supply growth, known as halving. But maybe excited and nervous Bitcoiners shouldn’t be looking at history to figure out what will happen next, according to Bloomberg’s [Olga Kharif]( in this [great edition](of the Bloomberg Crypto newsletter. What we’ve been reading This is what’s caught our eye over the past 24 hours. - UK inflation [cools more than expected]( to slowest pace since 2021. - BlackRock [isn’t happy]( about Texas’s decision to divest $8.5 billion. - JPMorgan unexpectedly [lifts its dividend]( by 9.5% after record profit. - Wages at US crypto firms [are 13% higher]( on average than elsewhere. - Apple’s Tim Cook is in Shanghai for the [grand opening](of a new store. - SBF says a [50-year sentence]( is only suitable for a “super villain.” - The US is the world’s [23rd happiest nation](, sliding down the ranking. And finally, here's what Joe’s interested in this morning Hello and Happy Fed Day. The big question is whether the FOMC will continue to price in three cuts for the year, or whether that will be reduced to two. The general view among economists surveyed by Bloomberg is that the committee will stick with its current path (three cuts, with the first one in June), but that's not a slam dunk outcome. At least on the inflation side, the story of 2024 has been the hotter-than-expected prints. Speaking of prices going up, gasoline futures quietly rose to a 6-month high this week. Granted this doesn't go directly into "core" measures of inflation, but you can't ignore it because it's a highly salient category and because obviously it feeds into other categories in various ways. If we keep seeing upward pressure, it will almost certainly become a bigger news story this summer. On the other hand, while there are reasons to be concerned about the inflation side of the mandate, there continue to be signs of labor market slowing or normalization or whatever you want to call it. [The Kansas City Fed's measure of labor market activity](, which is based on 24 different variables, continues to roll over from previously very high levels. So yes, things are noisy. There are signs of heat and loose financial conditions in some areas. And there are signs of deceleration elsewhere. The Fed also has to be concerned about some sector-specific risks, such as the effect of high rates on housing supply (and energy investment), and what that means longer-term for economic capacity. All that being said one thing I keep thinking about is that for years there was a persistent complaint that markets were just too Fed focused. That all investors had to become Fed watchers, parsing the words of the various speakers non-stop to do their jobs. Maybe that was true. Maybe that wasn't. But it's striking that in 2024, even with all the talk about Fed having to stay higher for longer, and rate cuts getting pushed back, the S&P 500 closed at another all-time high yesterday. At least in 2024, there's more to life than the Fed. Joe Weisenthal is the co-host of Bloomberg’s Odd Lots podcast. 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