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

Good morning. Traders brace for much-awaited US inflation data, Big Tech’s AI splurge worries investors and President Joe Biden faces more p [View in browser]( [Bloomberg]( Good morning. Traders brace for much-awaited US inflation data, Big Tech’s AI splurge worries investors and President Joe Biden faces more pressure. Here’s what’s moving markets. — [Kristine Aquino]( Slower inflation [US inflation is expected to have moderated in June](, with economists surveyed by Bloomberg forecasting a 3.1% annual pace, the slowest in five months. Bloomberg Economics sees a lower reading of 3% and expects the Federal Reserve’s preferred inflation measure to edge closer toward policymakers’ 2% target. That said, Fed Chair Jerome Powell told lawmakers on Wednesday that while he believes inflation is receding, [he isn’t yet confident it’s sustainably slowing](toward the central bank’s goal. Ahead of the data due later on Thursday, S&P 500 futures pulled back a day after the index’s longest winning streak in eight months. Treasuries were little changed, with [traders sustaining their bets on a rally]( while awaiting the report. AI worries Investors are growing increasingly concerned that [US technology megacaps are spending too much on artificial intelligence](, according Goldman Sachs strategists. Companies that the strategists refer to as “hyperscalers” — including Amazon, Meta, Microsoft and Alphabet — have utilized about $357 billion for capital expenditure as well as research and development in the past year, the team led by Ryan Hammond said. “Today’s hyperscalers will eventually be required to prove that revenues and earnings will be generated from their investments,” Hammond wrote in a note. Biden pressure Traders are no closer to finding clarity on the US election landscape[ as President Joe Biden faces mounting pressure to withdraw from the race for the White House](. Top officials from his reelection campaign are set to meet Senate Democrats on Thursday. That comes a day after Former House Speaker Nancy Pelosi told MSNBC that Biden should quickly decide on his position. “For now it’s pretty clear that politics is not a major consideration driving major US and dollar-denominated asset prices,” though the election may start to matter more as it approaches, Bloomberg macro strategist Cameron Crise wrote. Apple settlement [Apple has agreed to open up its mobile wallet technology to other providers free of charge](, avoiding the threat of fines from European Union regulators. Under the settlement, consumers in Europe will be able to use alternative digital wallets to pay for goods and services at checkouts. The commitments remain binding for 10 years and Apple risks a fine of as much as 10% of global annual revenue if it violates the agreement. The move brings to an end an investigation into the US tech giant’s closely guarded payments technology, after the EU earlier warned that restricting access amounted to an abuse of its market power. Quant quandary [The money-making trading formulas for China’s quantitative hedge funds are disappearing](as regulators deepen restrictions on short selling. The China Securities Regulatory Commission approved an increase in margin requirements while major stock lending provider China Securities Finance will suspend its business of lending securities to brokerages. The steps pile pressure on quants that have this year been hit by trading curbs and tightened rules, and jeopardizes long-short products that manage an estimated equivalent of more than $6 billion. What we’ve been reading Here’s what caught our eye over the past 24 hours: - Larry Fink is preparing the [next generation of BlackRock leaders]( - [Manhattan renter bidding wars](hit a record high in June - General Mills CFO Kofi Bruce [ponders shrinkflation, $1-a-day dog food]( - [Toy drones, duct-taped bombs]( aid Ukraine’s fight against Russia - Wealth French [spooked by the election explore possible moves abroad]( - [`It feels like cheating’](: the golf putter that works so well - Heir of Asia’s richest person [counts Kim Kardashian among wedding guests]( And finally, here’s what Joe is interested in today Hello and happy CPI Day. As I've been writing recently -- and as Powell's testimony on Capitol Hill this week has made clear -- it certainly feels like we're getting close, for real this time, to the start of the rate cut cycle. The unemployment rate has been ticking higher. Inflation readings have been ticking lower. There's more direct acknowledgment of the two-way risks to the outlook and the fact that the slackening in the labor market is removing inflationary pressure. Of course, the Fed still wants to see more data, and they'll get that chance today. For a long time now, there's been a lot of slicing and dicing of each report, with a shifting focus on what is a signal and what is noise. Sometimes it's all about the core rate. Sometimes it's about super core. Sometimes it's about services. Sometimes the concern has been headline inflation, and the degree to which high oil prices could contribute to an increase in inflation expectations. But we seem to be at a state in which all that matters now is for the general trend to continue, without particularly much concern for specific categories. Or to put it another way, the data is innocent until proven guilty now. If the headline numbers look good, there's probably not going to be much anxiety about some specific sub-index. For the moment, the Fed and the market have passed that type of thing. And so as we await the numbers at 8:30 a.m., here are the official expectations. We'll see what happens when it all gets filled in. Joe Weisenthal is the co-host of Bloomberg’s Odd Lots podcast. Follow him 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. 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