5 Things You Need to Know to Start Your Day

China fires missiles near Taiwan, Democrats’ bill would reduce deficits and crypto has another hack.Taiwan falloutChina fired 11 missiles in [View in browser]( [Bloomberg]( China fires missiles near Taiwan, Democrats’ bill would reduce deficits and crypto has another hack. Taiwan fallout China [fired 11 missiles]( into the sea around Taiwan on Thursday in response to US House Speaker Nancy Pelosi’s visit, even as Taipei played down the impact on flights and shipping. Pelosi’s trip left a [fuming White House]( scrambling for a plan. The Biden administration is lobbying Democratic senators to put the [brakes on a bill](that would alter US policy toward Taiwan, including by designating it as a major non-NATO ally, according to people familiar with the matter. China said it called off a [face-to-face meeting]( between Foreign Minister Wang Yi and his Japanese counterpart over a G-7 statement expressing concern about Beijing’s “threatening actions” around Taiwan. Economic package The Senate Democrats’ tax, climate and drug-price bill [would reduce]( federal budget deficits by $102 billion over 10 years, the nonpartisan Congressional Budget Office said. A tax credit for [nuclear power]( is included in the bill, which is slated for a Senate vote as soon as this week. Meanwhile, Arizona Democrat Senator Kyrsten Sinema, a pivotal vote in the Senate, is seeking [to preserve]( a tax break for investment managers and narrow a levy hike on large corporations in the economic package Democrats want to pass as soon as this week, people familiar with the discussions said. Michigan Democratic Senator Debbie Stabenow is pushing for last-minute [changes to]( stringent new electric-vehicle tax-credit limits. Crypto setbacks Cryptocurrencies' difficulties continue as a prominent Swiss wealth manager cautions against crypto forming part of private-wealth portfolios. The CEO of Pictet Group's Asia wealth management arm, [Tee Fong Seng](, spoke on a panel at the Bloomberg Asia Wealth Summit this week, commenting that "today I don't think [crypto] is a place for private bankers and for private-bank portfolios." This comes amid news of of another [crypto hack](. Hackers targeted Solana's ecosystem on Wednesday, with estimates of the total amount stolen from victims' wallets ranging from $5.6 million to $8 million. Meanwhile, beleaguered crypto exchange Coinbase has [asked the US Supreme Court]( to halt two suits by users of the exchange who claimed to have lost money on the platform. Market calm There's little by way of volatility to speak of in markets, with futures on US equity indexes [near unchanged]( on the day. The Stoxx 600 is 0.3% higher at 5:30 a.m. New York time, led by retail and car companies. Currencies were also broadly unchanged, with the Bloomberg Dollar Index down 0.1% ahead of Friday's key jobs numbers. US and European bond yields mostly rose, with flattening twists seen. Oil advanced 0.5% on the day after the modest OPEC+ supply increase. Coming up... This week’s heavy dose of Fed speakers continues with Loretta Mester at 12 p.m. Data at 8:30 a.m. include the trade balance and weekly jobless claims. Earnings reports include Expedia, Kellogg, ConocoPhillips, NRG Energy, Live Nation and Motorola. Also, this week’s MLIV Pulse survey is asking about your outlook for corporate bonds, mergers and acquisitions and the health of US corporate balance sheets through the end of the year. It takes one minute to participate, so please[ click here]( to get involved anonymously. What we've been reading Here's what caught our eye over the past 24 hours. - [Ken Griffin](added to Twitter-case subpoena list. - US ratifies [NATO membership](for Finland, Sweden. - [Walmart cuts]( 200 corporate jobs. - [Podcast guests]( paying up to $50,000. - Stocks rally can [fizzle out.]( - Mickelson, 10 other [golfers sue PGA](. - [Netflix](struggles to learn ad business. And finally, here’s what Joe’s interested in this morning Stocks have been on a pretty nice run. The S&P 500 is up 14% from its June low. The NASDAQ 100 is up roughly 20% in that time frame. The rally has certainly taken a lot of people by surprise. Sentiment has been pretty dismal lately. But maybe investors are growing more optimistic about a soft landing? Here and there, you can find some encouraging signs: -- Housing may already be [stabilizing a little bit]( after the initial mortgage-rate shock -- Yesterday we got an ISM Services reading [showing]( an unexpected gain in July -- June durable-goods orders also came in better than expected -- [Monday's ISM Manufacturing index]( came in better than expected as well. And not only that, there was a major drop in the prices paid index. -- Gas prices have fallen for 50 straight days. -- Earnings have been decent, not amazing, but no widespread signs that the bottom is falling out of demand. Yesterday, Booking Holdings, the online travel company, warned of some softness out there, but it noted that North America [was holding up the best of all regions](. This is just a snapshot in time, but you could make the case that at least right now, a number of cost pressures are easing even as demand holds up. Soft landing vibes. Ok, so you can tell a story for why the market rebound makes some sense based on economic fundamentals. That being said, even as risk assets have rallied off the bottom, the yield curve continues to deepen its inversion. Here is the 2-5 spread, which is one way of seeing that the market is pricing in rate cuts fairly imminently, even as the next few meetings are virtually certain to see hikes. Even members of the FOMC are scratching their heads over what the market is showing. Here are some headlines just from yesterday: *KASHKARI: 2023 RATE CUTS SEEM LIKE `VERY UNLIKELY SCENARIO' *DALY: MARKETS ARE AHEAD OF THEMSELVES ON FED CUTTING RATES *DALY: WON'T BRING RATES DOWN IN JUST A FEW MONTHS Just intuitively, it seems like it would take a LOT for the Fed to get back into rate cut mode. After the painful inflation of the last year, that's naturally going to bring about reluctance to ease again soon. Presumably it would take some real, further pain to get there. Just getting inflation low again wouldn't be enough. So on the one hand, you have about six weeks now of sanguine risk assets, and some decent macro news flow. And on the other hand, you have this steepening inversion that has regional Fed Presidents questioning the wisdom of the markets. Definitely a confusing time. 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](