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Economists puzzle over a US recession, Microsoft delivers a warning on corporate demand and Wall Street banks make a move on talent. — Krist [View in browser]( [Bloomberg]( Economists puzzle over a US recession, Microsoft delivers a warning on corporate demand and Wall Street banks make a move on talent. [— Kristine Aquino]( Recession riddle Predicting a recession this cycle is proving to be [more confounding]( than ever. Sectors such as manufacturing, housing and technology are probably already in recession, while industrial and construction employment remains elevated. "The signals are mixed in way we haven't seen before," according to Claudia Sahm, an economist. Other indicators are being scrutinized for recessionary signs but many suffer from having an insufficient track record, meaning their reliability is less known. The bond market, though, has already been pricing in Fed rate cuts later this year. And traders have been [increasingly hedging]( the possibility that the rate hike in February will be the last before a pause beginning in March. Earnings warnings [Microsoft]( erased early post-earnings gains on Tuesday after it said revenue growth in its Azure cloud-computing business will decelerate and warned of a further slowdown in corporate software sales. Separately, customers [reported difficulties]( across multiple regions in accessing Microsoft 365 services, which the company attributed to networking issues. Over in semiconductors, [Texas Instruments]( posted its first sales decline since 2020 and its outlook doesn't suggest a quick bounce. Meanwhile, [ASML forecast]( better-than-expected first-quarter sales due to strong demand for its advanced chip-making machines. Banks’ talent grab Bank of America [is rewarding]( the majority of its employees with a pool of $1 billion in restricted stock in a bid to [retain workers](. The incentive, which comes on top of regular compensation, goes to staff who earn up to $500,000 in total annual pay. Meanwhile, Barclays is [appointing]( Taylor Wright and Credit Suisse veteran Cathal Deasy as its new investment banking chiefs in a major reshuffle of its top dealmaking ranks. It joins rivals including Citigroup and Deutsche Bank in hiring top bankers from Credit Suisse amid a major restructuring in the Swiss bank. Futures slide S&P 500 futures fell 0.7% as of 5:56 a.m. in New York, while Nasdaq 100 contracts declined more than 1%. The Bloomberg Dollar Spot Index was little changed, leading to mixed trading in Group-of-10 currencies. Treasuries edged higher, mirroring gains in most UK and German government bonds. Brent crude was little changed, while gold and Bitcoin fell. To catch up on the trading day in the UK and Europe, [check out today’s edition of City Latest.Â]( Coming up… AT 7 a.m., we’ll get data on US mortgage application. The EIA will release figures on oil inventories at 10:30 a.m. The US will sell $24 billion of two-year floating-rate notes and $36 billion of 17-week bills at 11:30 a.m., followed by $43 billion of five-year notes at 1 p.m. Key earnings include Tesla, IBM, AT&T and Boeing. What we’ve been reading Here’s what caught our eye over the past 24 hours: - Investor Jeremy Grantham warns of a [17% plunge in US stocks this yea]( - The US and Germany are poised to [send battle tanks to Ukraine]( - [Josh Kushner is richer than Trump]( after billionaires back his firm - Elon Musk’s gags are becoming [a serious problem for TeslaÂ]( - [Big Tech layoffs]( are hitting diversity and inclusion jobs hard - [WWE investors split](over way forward after Vince McMahon’s return - [The Doomsday Clock]( is 90 seconds away from striking midnight And finally, here’s what Joe’s interested in this morning As I've been writing about for the last couple of weeks here, there seems to be a renewed bout of optimism that a soft landing is achievable. The market has generally been buoyant this year. And a number of Fed officials or other economic commentators have expressed hope that inflation can cool without a significant weakening in the labor market. That being said, there has been weakening in the labor market. We shouldn't lose sight of this. It's true that the unemployment rate is at a 50-year low. However various measures of labor market momentum have shown weakening impetus. Job openings have come down from their peak. The sentiment among workers has weakened. Fewer small businesses say they are having a hard time hiring, and so forth. Again, the numbers are still good on an absolute level. But the direction has shifted. And so it's worth being mindful of the possibility that the direction keeps shifting and eventually shifts to a more painful degree. In a note that was put out yesterday, Macquarie's David Doyle and Neil Shankar argue that a number of red flags are popping up in the labor market and that a recession is on the cards. Among the stats they highlight is a decline for two straight months in the total number of hours worked, something that they point out has only only occurred in three other periods since 2006. Again, overall levels are strong. But the direction is toward softening. And the question is how soft things will get. Initial jobless claims show the challenge in getting a firm read on the labor market. They too are very low. But they are also above their trough. On the other hand, they've been improving lately. Here's Doyle and Shankar’s chart of the 13 week moving average of Initial Jobless Claims (in red) and how the trajectory compares to the lead up of other previous recessions. You can read this chart as showing that we're well above the low. Or you can read this chart as we've seen some softening, but that softening has stopped. In the meantime, layoffs are in the news. Every day it seems, we're getting headlines about some tech or media or finance company cutting workers. But optimism is in the air too. [As my Bloomberg colleague Katia Dmitrieva writes about today](, it seems trickier than ever right now to get the call right on whether a recession is in the cards. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwartÂ]( Follow Us 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](