Good morning. Global stocks hit record highs ahead of a crucial jobs report and a huge weekend for Joe Biden. Hereâs whatâs moving markets. [View in browser](
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Good morning. Global stocks hit record highs ahead of a crucial jobs report and a huge weekend for Joe Biden. Hereâs whatâs moving markets. â [Sam Unsted]( Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. Record highs Global stocks are [trading at record highs]( ahead of crucial jobs market data due to be released today and US futures are flat following the Independence Day holiday. A series of softer economic readings has revived hopes that the Federal Reserve will cut rates, potentially as soon as September. The dollar is slightly weaker and Treasury yields have dipped. Jobs day The [payrolls report is expected to show]( a step-down in hiring in June, along with a moderation in wage growth. Unemployment is seen holding at 4%, the highest level in more than two years. âWe think the Fed will have enough evidence by the September FOMC meeting to begin cutting rates,â a team of Bloomberg economists said. Bidenâs challenge President Joe Biden is heading into the [most consequential weekend of his political career](, knowing he needs to restore the faith of voters, donors and party officials currently deeply skeptical of his acuity. The president has an interview with ABC News on Friday, the first unscripted, high-pressure look at Biden since he faltered in the debate. And he will be visiting two must-win swing states â Wisconsin and Pennsylvania. Labour landslide The pound and UK stocks [are rallying]( following a [landslide election victory for the Labour Party]( in the countryâs general election. Labour has won a large parliamentary majority, ending 14 years of the Conservative Party in government. Thatâs been partly down to a [surge in support for smaller parties](, including Reform UK, which helped to eat into the Conservative vote. Bitcoin slides In stark contrast to the records being notched by stocks, Bitcoin [has tumbled to the lowest level since February](. The largest digital coin slumped as much as 8% on Friday, a fourth-consecutive trading session of losses. Other assets like Ether, XRP and Cardano all dropped too. Waning demand for Bitcoin ETFs, signs governments are disposing of seized tokens and political risk are all being blamed. What Weâve Been Reading This is whatâs caught our eye over the past 24 hours. - [Hurricane Beryl]( nears Mexicoâs Yucatan Peninsula.
- Yen traders [get ready]( for the Bank of Japan meeting.
- [Early marriage regrets]( in Singaporeâs housing market.
- A $2 billion [biofuels writedown]( at Shell.
- The [department store chains]( relying partly on Amazon. And finally, here's what Justinaâs interested in this morning There are many world-changing political headlines to ponder today, but if you want a break from that, have you thought about [equity dispersion](? This truly nerdy options strategy has gone so mainstream this year that even the New York Times [covered]( it last week. It essentially goes long single-stock volatility and short index volatility. What ties those two elements together is correlation, or how much the stocks in an index â typically the S&P 500 â are moving together. Correlation recently plunged to the lowest in more than 20 years, according to this Societe Generale chart. That's good for the dispersion trade because it means all the swings in the stocks themselves are being canceled out more at the index level. Indeed, the VIX has been hovering near 12, the lowest level since before Covid. But at the same time, US mega-caps have been unusually volatile: just think Nvidia dropping nearly 7% one day last week and then recovering that much a day later. It doesn't feel like blue-chip behavior. Now, when I said correlation has dropped recently I'm referring to both the realized and implied measures â meaning both whatâs actually been happening as well as whatâs priced into the options market. So this is an expensive time to get into the dispersion trade. Or to put it another way: you're essentially counting on correlation to fall even further. Could that happen? There's a view that we're just in a different world now. Higher-for-longer rates, as well as AI, are fueling greater dispersion between winners and losers in the market. A lot of the biggest names are moving on idiosyncratic, rather than macro, stories. But of course ultimately they are not entirely insulated. For that to change weâll have to see clear signs of a broad economic slowdown. Follow Bloomberg's Justina Lee on X [@Justinaknope]( [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 itâs here, itâs on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals canât 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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