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

Good morning. Stocks are poised for higher open after Friday’s inflation data, gold hits a new record and sentiment in China is picking up. [View in browser]( [Bloomberg]( Good morning. Stocks are poised for higher open after Friday’s inflation data, gold hits a new record and sentiment in China is picking up. Here’s what traders are talking about. — [David Goodman]( Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. Holiday Catch Up US equity futures [are rising on Monday]( as inflation figures last week did little to alter views that the Federal Reserve will cut interest rates this year. Data released during the market holiday on Friday showed the [core personal consumption expenditures price index]( — which excludes volatile food and energy costs — rose 0.3% in February, slower than the previous month and in line with economist expectations. Powell Weighs In Federal Reserve Chair Jerome Powell said later Friday that the readings were “pretty much in line with our expectations.” Powell added that it wouldn’t be appropriate to lower rates until officials are sure inflation is in check and the Fed [doesn’t need to be in a hurry to cut rates](. Investors are betting the US central bank will make that first cut in June. Gold Record Those bets on Fed easing are juicing a rally in gold, [which hit a fresh record](. Bullion jumped to as much as $2,265.73 an ounce on Monday, up 1.6% from Thursday’s close, after setting a series of peaks in recent sessions. A host of other drivers have helped push up the metal by around 14% since the middle of February, including elevated tensions in the Middle East and Ukraine and strong buying by central banks, particularly in China. China Optimism Markets around the world are also getting a boost from [improving sentiment in China](, where data today showed factory activity beat expectations in March, boosting optimism about the country’s ability to achieve its ambitious growth goal of around 5% this year. That followed government data that showed manufacturing PMI in March [snapped]( a five-month contraction to rise to the highest in a year. China’s CSI 300 Index climbed as much as 1.8% on Monday, the most since Feb. 29. Coming Up With much of Europe on holiday, it could be a quiet session. The US is set to report a pair of manufacturing numbers today, but attention is already turning to [Friday’s payrolls number](. That’s set to show healthy US employment gains likely continued in March, with economists looking for an increase of at least 200,000 for a fourth straight month. What we’ve been reading This is what’s caught our eye over the past 24 hours. - BOJ’s stash of bonds is [set to shrink](for first time since 2008. - Lira weakens as [Erdogan suffers historic loss]( in municipal elections. - [London is losing out]( on new job listings for head office staff. - Bridgewater CEO's turnaround hinges on [wooing restless clients.]( - [Tesla China price hike]( meets slew of cuts from other carmakers. And finally, here's what Joe’s interested in this morning Here is a chart of Vornado, a major real estate trust with a lot of office property in New York City. As you can see, not only is it massively down from pre-Covid levels. It's sill lower than it was when stocks crashed in March 2020. Despite many employers pushing to get workers back to the office over the last couple of years, office vacancies haven't stopped climbing, at least through the end of last year. [On the new Odd Lots out today](, Tracy Alloway and I spoke with NYU Stern Assistant Finance Professor [Arpit Gupta](, who co-authored a paper in 2022 pleasantly titled "WORK FROM HOME AND THE OFFICE REAL ESTATE APOCALYPSE." The paper basically attempted to quantify some of the spillover effects from rising office vacancies in key cities like NYC and SF. So far, at least one disaster scenario hasn't played out and that is the effect on banks. Yes, there’s been struggles in the banking sector, but by and large, the willingness for borrowers and lenders to come together to extend and amend loans has softened the blow. Some knock-on effects are still unclear and may take time to play out. One factor is that there are still pre-Covid leases that have yet to expire. So we may not have hit the bottom yet in terms of cash flow. Also property-tax reassessments take time, so we may take awhile before we see the real hit to urban budgets, from the loss of this money. Thus we don't know the full extent that the effect that urban budget decisions -- whether they manifest in higher taxes or reduced services -- will have on the livability of the city. And of course, if taxes go up or services go down, that may spur more people to leave the city, which is how you have the “loop” effect. Furthermore, population loss doesn't just affect budgets directly. It has an effect on local businesses, schools, crime and other things that aren't as easily measured in dollars and cents. On the other hand cities -- including NYC famously -- have experienced doom loops before, and bounced back. One interesting thing that I've thought before is that, in theory, technology that may allow people to spread out — may also raise the value of urban living. Of course, mobile phones, the Internet and Zoom let you live and work from anywhere. But other applications, like food delivery and dating apps, may raise the value of living in dense areas, where these services can be used to full effect. So for now, the verdict seems to be that there's a slow moving, structural problem facing some major cities. But as of today, the effects are cloudy. One crazy stat is that in SF, at the current pace of new lease signings — which is being helped by the AI boom — would only get the city back to old levels of occupancy in 37 years. So part of the question is the degree to which cities can reinvent their space, including possibly office-to-residential conversions, which Arpit has also done research on. Anyway, it was a fascinating conversation. Find it on [Apple](, [Spotify]( or elsewhere. Joe Weisenthal is the co-host of Bloomberg’s Odd Lots podcast. Follow him 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. [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](. 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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