5 Things You Need to Know to Start Your Day

There’s little relief for stocks, we’re waiting on the Fed and there’s trouble in the UK.Some relief, little rallyWhile the rapid selling of [View in browser]( [Bloomberg]( There’s little relief for stocks, we’re waiting on the Fed and there’s trouble in the UK. Some relief, little rally While the rapid selling of the past few sessions is not on display in markets this morning, there is not much sign of a [turn-around Tuesday]( mood taking hold. After the index [entered a bear market]( yesterday, dropping more than 20% from highs, S&P 500 futures are pointing to a relatively small rise at the open. An early-session rally in bonds seems to already be running out of steam while oil extended gains [toward $122 a barrel](. The volatility across assets has been driven by Friday's inflation print and expectations of a [more robust response]( from the Federal Reserve tomorrow. Fed fever Traders in the bond markets are fully prepared for the Federal Reserve to raise its benchmark rate by 75 basis points on Wednesday. While Chair Jerome Powell had vowed to increase the Fed funds rate by 50 basis points this month, a report in the Wall Street Journal [suggested]( that policy makers were considering a bigger move after inflation accelerated in May. Meanwhile, JPMorgan Chase & Co. said there was a ["non-trivial risk"]( of a 100-basis point increase. Bitcoin drops Liquidity draining out of financial markets sent Bitcoin to the the [lowest in about 18 months](. But crypto’s trouble isn’t all external, with the freezing of withdrawals by the Celsius lending platform adding to concern that systemic risk in the crypto ecosystem will accelerate the digital-asset market meltdown. Meanwhile, [MicroStrategy Inc.]( may need to post additional collateral for a loan as Bitcoin tests a key price range flagged by the company last month. Trouble in the UK The Bank of England faces more grim economic data ahead of Thursday's meeting. Household spending power fell the most in at least 21 years as wage increases were eaten up by inflation. Brexit is causing tension almost six years after the UK voted to leave the European Union -- and the pound has never fully recovered. Prime Minister Boris Johnson is heading for a fresh fight with his own Conservative Party over a plan to override the deal, which risks a trade war with the EU and renewed legal retaliation. The UK is the theme of this week’s [MLIV Pulse survey](. What are the next levels for the pound? Will the FTSE 100 continue to outperform its peers this year? Click here to participate. Coming up... Data picks up slightly today with May's NFIB Small Business Optimism due at 6 a.m. and PPI data due at 8:30 a.m. Producer prices are expected to rise 0.8% m/m versus April's 0.5% release due to energy and food, with significant upward pressures seen in April's data at the stages of processing closely tied to commodities. Central banks are relatively quiet: day one of the two-day FOMC meeting will commence and the ECB's Isabel Schnabel will deliver a speech on euro area bond market fragmentation at 1:20 p.m. What we've been reading Here's what caught our eye over the past 24 hours. - Could the Fed [hike by a full percentage point](? - [Elon Musk]( to address Twitter staff. - A window into the [world after Roe](. - The world’s [richest lost $1.4 trillion]( in 2022. - The [Fed just has to let it rip](. - [Property values]( are falling. - The fight for the [future of golf](. And finally, here’s what Joe’s interested in this morning There are probably many drivers of the high inflation that we're seeing right now. But one factor is that investors are tired of losing money. Yesterday [Derek Thompson at The Atlantic]( wrote about how a bunch of VC-fueled millennial lifestyle brands lost a bunch of money last decade selling services below cost. You know, all the gig economy (Uber, Grubhub etc.) or DTC companies that sold $1 for $0.95 in order to gain share. Losing money isn't cool in an environment in which investors are demanding cash flow, so no more below cost goods for you! But beyond all of the Ubers and Caspers and all that, the really big story still has to be energy. Between 2010 and 2020, [US shale alone lost over $300 billion](, which dwarfs anything in tech/VC in that timeframe. This was a huge subsidy to everyone, particularly drivers. In terms of why things are getting more expensive, this has to be one of the biggest factors, that ever since the pandemic, investors lost interest in funding money-losing energy. So the price of everything has gone up. There's probably more that could be done, right now, to induce more energy production, both domestically and around the world. But it's extremely hard to imagine investors enthusiastically putting their money into negative cash flow oil and gas companies again for a long time. So that's a big subsidy, beyond just VCs funding various hip lifestyle brands, that isn't coming back for everyone anytime soon. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart]( 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](. You received this message because you are subscribed to Bloomberg's Five Things - Americas 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](