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

Good morning. Fed Chair Powell soothes some nerves and reassures markets, though the dollar continues to cause some international headaches. [View in browser]( [Bloomberg]( Good morning. Fed Chair Powell soothes some nerves and reassures markets, though the dollar continues to cause some international headaches. 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](. Powell soothes  Federal Reserve Chair Jerome Powell said policymakers will wait for clearer signs of inflation slowing before any interest rate cuts emerge. However, he said that the recent, hotter readings on price-growth [don’t “materially change” the overall view]( and that it will likely be appropriate to start cutting later in the year. Fed Governor Adriana Kugler echoed the sentiment, setting the stage for a parade of Fed speakers this week — five more policymakers are due to speak Thursday. Reassuring ripples Powell’s reassuring words [settled markets](, with stocks closing the day higher and futures pointing to another positive session. Gold extended and hit [yet another record](, copper prices are at the highest in more than a year and the risk-on sentiment is on display in Europe. The dollar steadied following its biggest drop in four weeks. John Authers said the reaction indicates that [Powell’s reassurance still means something in markets](, where traders increasingly believe they and the Fed are on the same page. Dollar headaches Notwithstanding the dovish tone Powell struck, Fed officials signaling higher-for-longer interest rates are backstopping dollar [strength](. The knock-on effect has pressured currencies around the world, forcing remedial action by central banks and governments. The Fed’s path is also [likely to influence policy beyond the US]( despite its insistence that this won’t be the case. Trade protections US Treasury Secretary Janet Yellen has suggested that the US will [retain an option to protect new industrial sectors against China](, commenting on the huge state investments made in areas like clean energy. That follows President Joe Biden have raised China’s “unfair trade policies and non-market economic practices” with Chinese Premier Xi Jinping earlier in the week. Investor Ray Dalio, in a LinkedIn post, said [he won’t abandon his investments in China]( even with the problems its economy faces and the risks around its relationship with the US. Coming up… Fed speakers aside, the US economic calendar is thin ahead of the all-important jobs report on Friday and there are no major earnings scheduled. Apple shares may be in focus with the group said to be investigating [a move into personal robotics](. Elsewhere, [denim retailer Levi Strauss]( has bounced after cost-cuts and better sales meant its profit topped expectations, while [CBS and MTV owner Paramount Global]( is getting closer to a merger with production company Skydance. What We’ve Been Reading This is what’s caught our eye over the past 24 hours. - [Increasing pressure]( on Israeli Prime Minister Benjamin Netanyahu. - How [Hertz’s bet on Teslas]( went sideways. - [American exceptionalism]( in the bond market. - The ongoing challenges for [Disney’s boss](. - Europe’s biggest asset manager is [ready to buy the dip](. And finally, here's what Joe’s interested in this morning Stocks exploded in the final two months of last year, in part due to soft landing optimism and the expectation that rate cuts would soon becoming. In 2024, two things are true. Stocks are still on a tear. But also the rate cut optimism has dissipated. We didn't get a March cut and even a June cut is looking iffy. On the [new episode of Odd Lots out today](, Tracy Alloway and I spoke to Savita Subramanian, the head of US Equity and Quantitative Strategy at Bank of America. about how to think about the stock market right now. Find the episode on [Apple](, [Spotify](, or elsewhere. She's been bullish for awhile, and believes the market can keep going higher. Because growth remains robust and employment remains strong, corporate earnings are strong. And contrary to the view that all the action is happening in a handful of megacap tech names, we're seeing a broadening out of strength, as more companies across a range of industries catch a tailwind. Anyway, there's a lot in there, but one interesting thing that came up is the question of measuring sentiment. That seems easy to do in theory, trying to figure out whether people are generally bullish or bearish at any given moment. But it's easier said than done. There's all kinds of different approaches to gauging this. People do surveys that literally ask people how they're feeling about the market. There are surveys of newsletter writers. There are technical measures. People look to the options market and so on. At Bank of America, one of the things they do is simply gauge the sentiment of sell-side analysts. What are people on Wall Street recommending to clients? Are they telling them to go all in on stocks? Or are they telling them to be cautious and diversified. And per their research, when Wall Street consensus swings too hard in one direction or the other that is often the tell that the market is at a turning point. As for right now, despite the rally, the sell-side is pretty in the middle of the road. They're not that bullish (like they were in 2021). And they're not as bearish as they were throughout 2022. But if you're looking for signs that we're in some kind of euphoria right now, or a bubble that must burst, you're not going to find it in this measure. 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](. 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. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](