5 Things You Need to Know to Start Your Day

Powell’s remarks spark a curious market reaction, Biden taunts China and the Republicans in his State of the Union and the death toll is ris [View in browser]( [Bloomberg]( Powell’s remarks spark a curious market reaction, Biden taunts China and the Republicans in his State of the Union and the death toll is rising from Turkey’s devastating earthquakes— [David Goodman]( Powell paradox Federal Reserve Chair Jerome Powell last night[ stuck to his message]( that interest rates need to keep rising to quash inflation, in a set of remarks that suggest that the 5.1% interest-rate peak forecast by officials in December is a soft ceiling. Still, stock investors seemed more keen to seize on his view that disinflation has begun, [sparking a jump in equities]( that belied the outwardly hawkish message. Biden baits US President Joe Biden[ taunted Xi JinpingÂ](in his State of the Union address, saying autocracies had grown weaker around the world and no one would want the Chinese leader’s job. He also [baited Republicans]( with calls for unity, prompting jeering from the opposition. Aside from that, [the speech]( hewed heavily to [economic themes](, striking a blue collar tone in calling for higher taxes on billionaires and stock buybacks, new consumer protections and antitrust efforts, while urging Congress to break through partisan gridlock and pass new measures. Earthquakes aftermath Turkey declared a three-month [state of emergency]( in areas struck by two [massive earthquakes]( earlier this week, allowing the government more leeway for rescue and reconstruction efforts. The death toll across Turkey and neighboring Syria is nearing 8,000, while more than 11,000 buildings have been damaged by the temblors, trapping many. Turkish President Recep Tayyip Erdogan’s government is overwhelmed by the extent of the logistical problems and aid needed to assist the 13.4 million people living in the areas affected by the disaster. Turkey’s stock exchange on Wednesday [suspended trading](of equities for the first time in 24 years, following a deep selloff triggered by the disaster. Futures drop [US equity futures]( signaled a slightly lower open after yesterday’s rally, although stocks in Europe were still buoyant, with the FTSE 100 posting a new record high. The dollar slid,  Treasuries reversed some of Tuesday’s losses, and an index of commodities rose a second day. To catch up on the trading day in the UK and Europe, [check out today’s edition of Markets Today.]( Coming up… The US will report mortgage data at 7 a.m. New York time, before a barrage of Fed speakers including John Williams, Lisa Cook, Raphael Bostic and Neel Kashkari. In company news, Uber and Disney are among firms reporting earnings today. What we’ve been reading Here’s what caught our eye over the past 24 hours: - Zoom Video is cutting 1,300 jobs, or 15% of [global workforce](. - Volkswagen missed its full-year cash target after supply [chain woes](. - Pentagon says China refused to take call over [balloon uproar](. - [Zelenskiy is visiting the UK]( ahead of an expected Russian offensive - Four in five Gen Z workers [want to move jobs this year](. - The UK is suffering a [‘permanent’ reduction]( in living standards. - LeBron James [last night broke]( the NBA’s all-time scoring record And finally, here’s what Joe’s interested in this morning Going back about two years ago, it was used cars that really proved to be one of the harbingers of high inflation more broadly. Turns out, throughout much of 2022 used car prices fell, but by that point, the inflation had spread to more categories. Anyway, yesterday we got another reminder that the path back to the Fed's target [is likely to be rocky](. Manheim reported that used car prices jumped last month at the fastest pace since November 2021. According to the report, the increase for the month was "not typical" and so can't be attributed to some kind of seasonal factor. Between the super-strong job market, and numbers like these, it's a reminder that upside risks remain in economic growth and inflation, which could possibly result in the Fed going higher than anticipated with rates. The other thing that's on my mind besides real economic activity is how hard it is to quash that speculative fever. Three years ago, when the whole Robinhood phenomenon got going, and then meme stock mania picked up, it was easy to attribute it all to some combination of ZIRP, stimulus checks, and people sitting at home with nothing to do. Well the stimulus checks haven't gone out in a long time. ZIRP feels like an ancient era. And the pandemic restrictions are over. And yet the story of 2023 so far is surging speculative tech (ARKK is up 41% YTD), a meme stock echo boom (see: [Bed Bath & Beyond](), a crypto recovery and more. Last week we saw the biggest on-day volume in call option activity since 2021. There are a lot of assumptions being tested now. The strength of the labor market, in the face of all these rate hikes, has taken plenty of people by surprise. And the difficulty in extinguishing these trader animal spirits should also get people to question certain quasi-mathematical assumptions about the connection between monetary policy and behavior in the markets. 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](