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

Good morning. Investors boost bets Donald Trump will win the US presidential election after an assassination attempt. markets await Powell c [View in browser]( [Bloomberg]( Good morning. Investors boost bets Donald Trump will win the US presidential election after an assassination attempt. markets await Powell comments and luxury shares have a bad day in Europe. Here’s what traders are talking about. — [David Goodman]( Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. Trump trades As world financial markets reopened after the attempted assassination of Donald Trump, [trades that anticipate the Republican’s return to the White House](gathered momentum. The [dollar and US stock futures rose](, while Treasuries fell as trading kicked off on Monday, with long-dated bonds leading losses on bets Trump’s fiscal and trade policies will spur growth. That saw the yield on 30-year bonds rise above two-year equivalents for the first time since January. Fed speakers Federal Reserve Chair Jerome Powell and San Francisco Fed President Mary Daly are due to speak later on Monday after what our [global wrap]( calls “a watershed week in the Federal Reserve’s fight against inflation.” The appearances come after economic reports last week [bolstered bets on two rate cuts in 2024.]( Alphabet acquisition Google parent Alphabet [is in talks to acquire]( cybersecurity startup Wiz in a transaction that could total as much as $23 billion, according to a person familiar with the matter. If completed, that would be the tech giant’s largest acquisition to date and help Google catch up to Microsoft and Amazon in an increasingly competitive cloud market. Alphabet was flat in pre-market trading. Luxury problems In Europe, it was a bad day for the luxury sector. [Burberry slumped]( as much as 15% after it issued a profit warning, replaced its chief executive officer and suspended its dividend. Meanwhile, [Swatch Group shares fell]( the most in four years after sales and profit plunged amid a China-led slowdown for Swiss watchmakers. China stumbles The other big decliner in Europe were mining stocks, which were hit by weak [Chinese economic growth figures](. Data released Monday showed the nation’s economy grew at the worst pace in five quarters as efforts to boost consumer spending fell short, piling pressure on Beijing to lift confidence at a twice-a-decade policy meeting this week. Retail sales rose at the slowest pace since December 2022, showing a flurry of government efforts to juice confidence have done little to reinvigorate the Chinese consumer. What we’ve been reading This is what’s caught our eye over the past 24 hours. - Apple’s annual sales in[India hit a record]( of almost $8 billion. - Nir Kaissar says Gen Z’s [alternative investing will cost them dearly.]( - A rate cut from the BOE next month [is in the balance.]( - [Wall Street pushes back](after activists escalate protests. - Economists[ look past Lagarde]( for clues on ECB rate cuts. And finally, here's what Joe’s interested in this morning Over the years, there's been a lot of ink spilled about the end of our current era of central banks. The criticism comes in all kinds of flavors. Maybe monetary policy isn't that effective. Maybe central bank independence is undemocratic. Perhaps central banks are relied on too much, and are given an undeserved aura of omnipotence. This is just scratching the surface. Some of the criticism might even be true. That said, there's the possibility of inflation returning to target without a significant, simultaneous increase in the unemployment rate. At least what we're seeing right now -- unemployment in the low 4% range, with inflation close to 2% -- would have been seen as a true, dream outcome when the Fed first started raising interest rates over two years ago. Of course, there's no widely-accepted narrative for what actually happened after rate liftoff. Did tighter policy cause inflation to fall? Could it be that inflation was likely going to fall either away (as the economy normalized) and that higher rates have had relatively little impact (for reasons that get discussed all the time)? We don't know the answers to any of these counterfactuals and they'll be discussed for decades to come. Nonetheless, it is true that we had a bout of the worst inflation in over four decades, and then the Fed started raising rates, and at least at the moment, we have the possibility of a soft landing. In other words, you could argue that not only is independent central banking working, it's working better than anyone expected. At least from the perspective of market and business participants, perhaps the Fed will come out of this period with its reputation higher than ever. Between its response to the initial Covid shock, and then the response to high inflation two years later, monetary policy looks to have been very powerful at addressing a wide range of economic outcomes. Meanwhile, the widespread perception is that fiscal policymaking is broken and that the government is engaged in reckless, profligate spending. And what's more the view is that elected officials, due to the reality of electoral politics, are unable to make difficult, agile decisions to achieve macro-economic stability. Something to think about is, if you're an investor (or a business manager) looking back over the last four or so years, you might think that cool inflation is still the norm you can expect, and that if there are any bumps in the road the Fed has what it takes to address them. Why not then engage in more risk? Why not speculate further? Of course, there are all kinds of caveats and asterisks. A big part of the story when Covid hit was, in fact, the aggressive agile fiscal policy. And of course, we still don't know the full story of the hiking cycle. And for that matter, we don't actually know if a soft landing has been achieved. There are certainly reasons for optimism. But it's not a guarantee that we have escaped recession, or that inflation is really dead. There are limits though to the types of crises that monetary policy could ever deal with. Political instability, for example, is not the type of thing that central banks can address by moving an interest rate up or down. Wars and other exogenous shocks may damage the economy in ways that go beyond their scope. Still, just from a reputation and perception standpoint, it would certainly appear as though the Fed is capable of a lot, with less public pain than might have been expected. And so again, the aura of Fed omnipotence may only grow among the investing or business class. Joe Weisenthal is the co-host of Bloomberg’s Odd Lots podcast. Follow him on X [@TheStalwart]( Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. [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](