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

Good morning. Stock futures edge higher, the challenges facing bonds and stocks and Warren Buffett’s love for Apple. Here’s what’s moving ma [View in browser]( [Bloomberg]( Good morning. Stock futures edge higher, the challenges facing bonds and stocks and Warren Buffett’s love for Apple. 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](. Futures edge up US stock futures [are edging higher](, taking their lead from gains in Europe and Asia, amid thinner trading volumes with the UK and Japan closed for holidays. The yen [wiped out its Friday gains](. The focus remains on the path of US interest rates, following a ramp up in bets for earlier and more cuts to come in 2024. State Street’s Yie-Hsin Hung told Bloomberg TV that the Fed could start cutting in July, earlier than markets suggest. Treasury rally Tentative signs that the US labor market is cooling were welcomed by bond traders, though that’s only the [first part of what’s needed to fire up the rally]( they have been hoping for this year. As investors cautiously increase bets on policy easing this year, inflation remains sticky and could limit what the Fed can do, which in turn could keep bonds in their recent ranges. Inflation and stocks This week will be much quieter for economic releases in the US, but the inflation print in the following week will be [essential for stocks and bonds](. Morgan Stanley strategists said that the price action that follows the consumer inflation data, specifically, may be even more important than the actual numbers given the influence that market moves have on investor sentiment. The team at Goldman Sachs, meanwhile, thinks investors are failing to sufficiently price in US election risk. Buffett on Apple Warren Buffett [heaped praise on Apple]( at Berkshire Hathaway’s annual meeting over the weekend, after having revealed he cut his stake in the iPhone maker. [Buffett told the meeting in Omaha that Apple is “even better”]( than American Express and Coca-Cola, two other “wonderful” businesses that Berkshire owns stakes in. Selling off some of the Apple stake bolstered Berkshire’s cash pile and Buffett said he’s been unable to locate acquisitions that would “move the needle’’ for the company. Fed communication A trio of Fed officials spoke over the weekend, including Austan Goolsbee and John Williams on the same panel, though neither discussed the interest-rate outlook. Goolsbee, however, suggested that policymakers should [consider ways to improve how they communicate their views]( on economic conditions and how that feeds into their rate projections. Though it’s a quiet week for data releases, there are plenty of Fed speakers on the slate, including Williams and Thomas Barkin on Monday. What We’ve Been Reading This is what’s caught our eye over the past 24 hours. - [Jack Dorsey]( leaves the board of Bluesky. - The [zero-day options boom]( could turn into a bust. - Israel starts [moving civilians]( out of Rafah. - A [global housing crisis]( hits immigration-fueled growth. - The new [wealth-effect from crypto](. And finally, here's what Joe’s interested in this morning A few weeks ago, Tracy Alloway and I traveled down to Mt. Airy, North Carolina to follow Richmond Fed President Tom Barkin as he talked with business and community leaders about what they're seeing in the economy. [Today we released a special episode of the Odd Lots podcast](, in which we recorded these meetings, and interviewed Tom about what he learned from them. He explained to us how he incorporates on-the-ground anecdotal observations with big picture macro data to inform his decisions at the FOMC. Among the topics that came up on the road: What's happening with prices and competition? How are higher rates being felt by small businesses? Are banks lending? Do companies still have unfilled job openings? How are employers thinking about things like adequate childcare and housing for their employees. The housing dimension was particularly interesting. Most of the housing crisis discourse centers on big cities, where prices have soared and new development is stymied by NIMBYism, or just the bad economics of development. In the rural context, the story is flipped on its head. There's plenty of developable land out there. But the issue is that the towns and economic development boards have to go out and make the case to the housing companies that they should build in their town. Otherwise, the existing housing stock continues to degrade, young people move out, and you get the rural version of the housing doom loop. Here's Tom [from the transcript of our interview](, on how there's really just a handful of significant homebuilders out there, and how the small towns are competing for their scarce attention and development money:  Tom: You know, every small town is competing for developers, and there's a limited number of developers -- I gave a speech on this in November -- and developers care a lot about availability of cheap land. Developers care a lot about permitting and infrastructure in the land, and developers have the ability to choose. And so what they told us here is, if you go a little bit further south where it's closer to an interstate, the developers are prioritizing there. Now, they had a bit of a roadshow for developers and they think they're making some progress. So that says something about what a community can do in terms of proactively seeking developers. And I think that's actually a pretty important thing if you want housing built in your community. Joe: I find this actually to be kind of fascinating dynamic, right? Because in my mind you would think of like the developers are all competing against each other to find the cheapest land available or whatever it is. But this idea that from maybe like a community standpoint, it's the other way around arguably, and that it works in such [a way] that they need to basically pitch the developers on coming here. Tom: So after the Great Recession, what happened is a lot of developers went under and left the business. A lot of banks stopped financing development. We underbuilt housing for a decade, so we're light developers. In addition, what's happened during the post-pandemic era is there's been so much construction going on, not just houses, but also data centers and warehouses and state and local government, you know, educational, that we're short construction people too. And so, if you took the entire economy, you'd say we're actually really short construction capacity, and that's what leads to it. It's an adjustment issue. It doesn't mean it's a permanent problem, but it is right now an adjustment issue. And if you're short housing your community, you really need that housing to get launched today. There's a lot more in the episode. We heard from one textile manufacturer that makes advanced fabrics out of recycled bottles, and the CEO explained how much his businesses is affected by swings in plastic prices, and the post-pandemic bullwhip effect in ordering. We heard from a carport manufacturer about their difficulties in bank lending, and how it reduced labor market churn by cutting its work week to give employees more time off. Another textile company talked about its plans to relocate weaving from Mexico to El Salvador. And we heard from the head of a non-profit about its plan to build out childcare by helping providers with their facilities and back end services. The whole thing was an unusual and fascinating glimpse into part of being a Fed President that typically the public is unable to see. Read the full transcript [here](, or listen to the episode on [Apple](, [Spotify](, or wherever you get your podcasts. 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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