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

Good morning. S&P futures are poised for a rebound as traders look to corporate earnings to take the sting out of uncertainty around the tim [View in browser]( [Bloomberg]( Good morning. S&P futures are poised for a rebound as traders look to corporate earnings to take the sting out of uncertainty around the timing of interest rate cuts. Meanwhile, President Biden is calling for higher tariffs on Chinese steel and aluminum. Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. Fed in focus Treasury yields and the dollar are easing back from recent highs as markets absorb comments from Federal Reserve Chair Jerome Powell yesterday which indicated a delay to interest rate cuts given sticky inflation. The central bank can stand pat for “as long as needed,” he said. [Gold]( traded near a record high, while oil dipped as traders await to see how tensions in the Middle East develop. Eyes on earnings US stocks are poised to follow European[equities higher](amid positive earnings from consumer companies such as Adidas, with LVMH leading luxury names higher. Miners also rose after Rio Tinto said elevated steel exports by China will continue to support demand for the raw material. Chinese exports Speaking of those exports, President Joe Biden is calling for [higher tariffs on Chinese steel and aluminum]( as he seeks to win over workers in America’s industries in this year’s election. In a visit to Pittsburgh on Wednesday, Biden will propose new 25% tariffs on certain Chinese steel and aluminum products as part of an ongoing review, while the US also launches a formal probe into China’s shipbuilding industry. Biden will reiterate that United States Steel Corp., based in Pittsburgh, should remain American-owned. Chip demand European technology shares, meanwhile, were dealt a blow after [chip equipment-maker ASML](posted new orders that fell short of analyst expectations. The company was particularly hit by weaker demand from Taiwan and the US — ASML’s biggest market for EUV machines — though its China business remained relatively resilient. Coming Up… Several financial firms are scheduled to release earnings today, with names including US Bancorp and Citizens Financial, while pharmaceutical firm Abbott Laboratories is also due to report. Key speeches include Biden’s address at the United Steelworkers’ headquarters, while Treasury Secretary Janet Yellen meets with German Finance Minister Christian Lindner. Will earnings reports rescue the US stock rally? Will Nvidia deliver another set of amazing results and lift S&P 500? Or is it time to look away from big tech and buy dividend stocks, a buffer against potential market volatility? Share your views in the latest MLIV Pulse [survey](. What We’ve Been Reading This is what’s caught our eye over the past 24 hours. - [UK inflation]( slows less than expected in warning for BOE - Marcus Ashworth says [it’s time to retire the 2% inflation target]( - BlackRock’s aggressive hunt for [growth in Saudi Arabia]( - [Morgan Stanley]( is planning its biggest China job cuts in years - Dubai’s[record rainfall]( forces flight diversions and floods city And finally, here's what Joe’s interested in this morning One of the themes that I keep coming back to from time to time, is how the 2020s are like a funhouse mirror version of the 2010s. Many of the same vibes, just coming from the opposite direction. In the 2010s, the crisis was financial. The problem was in spreadsheets and on bank balance sheets. In the 2020s, the crisis stemmed from the real world (both the pandemic itself, and the massive disruptions to the supply chain). Meanwhile, private sector balance sheets (including bank balance sheets) appear to be quite strong. To the extent that banks are a problem this time around, it's been in smaller, niche banks (SVB etc.). In the 2010s, the problem was at the gigantic banks. When it comes to real estate, in the 2010s, the big sore spot was residential real estate. These days the price weakness is all in commercial. And then obviously in the 2010s, the main challenge for the Fed was slow employment growth. In the 2020s, the main challenge for the Fed is inflation. Last decade, economists consistently mis-estimated the timing of the hiking cycle, as economic conditions kept causing the Fed to push back the start of getting off ZIRP. And even once the first rate hike did occur, it was a halting process that took time to take hold. And now this time around, we seem to be experiencing the opposite situation. There was a point last year, when there were whispers about the first rate cut maybe even coming this January. Then the consensus drifted to March. Then it was June. Now June is seen as a [longshot](, with the swaps market pricing in just 40 basis points of cuts before the end of the year. There are even some people who think the next rate move could be a hike, or at least there are whispers of that. [After Powell spoke yesterday in DC](, the yield on the 2-year briefly went above 5%. I guess that's another difference. Part of the issue last time around is that 0% was a hard floor for rates, and to compensate for that, the Fed did all kinds of stuff like QE and aggressive forward guidance and such. These days, there's no hard cap on what the Fed can do to hit its inflation goal. 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. 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