5 Things You Need to Know to Start Your Day

The “unidentified aerial phenomena” keeping the world on edge, Manhattan counts the multi-billion cost of remote work, and why Morgan Stanle [View in browser]( [Bloomberg]( The “unidentified aerial phenomena” keeping the world on edge, Manhattan counts the multi-billion cost of remote work, and why Morgan Stanley thinks traders are ignoring reality— [David Goodman]( Flying Objects Three flying objects [were downed]( over North America over as many days and another was reportedly spotted over a Chinese port city, showing how “unidentified aerial phenomena” are keeping the world on edge since entering the international mainstream last week. After US fighter jets downed objects [over Alaska]( and [Canada]( on Friday and Saturday, another one was taken down on Sunday over Lake Huron in Michigan. The action stemmed from a decision to pay closer attention to North American skies and[take a more cautious stance]( toward intrusions after US forces brought down an alleged Chinese spy balloon on Feb. 4, the Pentagon said. Meanwhile, China said US balloons illegally [flew over the country](more than 10 times since the beginning of 2022, WFH costs Three years into the pandemic, business leaders and city officials around the world are still trying just about everything to lure employees back into offices and revive local economies. But in a number of cities across the US, Fridays at the office are dead. Mondays aren’t much better, and returning to pre-pandemic work schedules looks like a lost cause. That is being felt very keenly in [Manhattan, where workers are spending at least $12.4 billion less a year](due to about 30% fewer days in the office, according to a Bloomberg News analysis using exclusive data from Stanford University economist Nicholas Bloom’s WFH Research group. Ignoring reality US stocks are ripe for a selloff as traders [ignore the reality](of earnings and prematurely price in a pause in Federal Reserve rate hikes, according to Morgan Stanley strategists. “While the recent move higher in front-end rates is supportive of the notion that the Fed may remain restrictive for longer than appreciated, the equity market is refusing to accept this reality,” a team led by Michael Wilson wrote in a note. Wilson, a staunch Wall Street bear, sees the S&P 500 ending the year at 3,900 index points, about 4.7% below where the gauge closed on Friday. He expects stocks to fall as earnings estimates come down, before rebounding in the second half of the year. Stocks rise European stocks[posted modest gains](and Wall Street equity futures were little changed as investors positioned themselves for an action-packed week. The dollar pushed higher, Treasuries were little changed and oil slipped after Friday’s jump. To catch up on the trading day in the UK and Europe, [check out today’s edition of Markets Today.]( Coming up… There’s no major US data today, with investors already gearing up for Tuesday’s CPI release. and a slew of reports during the rest of the week. The pace of earnings and Fed speakers also takes a breather, although central bank speakers are out in force again from Wednesday onwards. What we’ve been reading Here’s what caught our eye over the past 24 hours: - A Bank of England official says [Brexit Cost Each Household £1,000]( - BOJ Governor pick’s out-of-print book is [suddenly in huge demand]( - Global bond bulls’ biggest BOJ fear already well [under way](. - The little research firm that took on India’s [richest man](. - An ex-Goldman banker’s activist fund sparks [battle over K-Pop giant]( - UK’s [exorbitant child-care](costs are becoming a top political issue - Here’s a recap of last night’s [instant classic Super Bowl]( And finally, here’s what Joe’s interested in this morning Why has there been a "[Vibecession](" but not an actual recession for the US economy? Or to put it another way, what explains the big disconnect between survey-based data ([which has been down in the dumps]() vs. actual measures of economic activity, which remain robust? Intuitively you'd think that if businesses are all expressing pessimism (which you can see in something like the NFIB Small Business Optimism Survey) that it would only be a matter of time before these negative vibes turn into hiring cutbacks, layoffs, and canceled investment. And yet so far this hasn't happened. Here you have the worst small business sentiment in roughly 10 years, while at the same time the unemployment rate is at its lowest level since 1969. What gives? [On Friday's episode of the podcast, we talked to Jan Toporowski](, a Professor of Economics and Finance at SOAS University of London, who among other things is an expert on the economics of [Michał Kalecki](, a Polish economist who died in 1970. Kalecki's work has been repopularized in recent years, much in the same way Keynes experienced a revival after the Great Financial Crisis. Both believed capitalism to be unstable, though while Keynes is most known for his work on reviving a depressed economy, Kalecki is famous in part for a [1943 essay]( he wrote on why capitalists are repelled by full employment. Anyway, back to the question at hand. Kalecki also had a different view on the question of "Why do businesses invest?" than Keynes. Specifically he had a problem with the fuzzy notion of animal spirits as a driving force behind corporate activity. [Here's Toporowski from the podcast](: The problem is that uncertainty and animal spirits are not measurable in the same way that, for example, steel production is measurable. It's really pushing the solution onto what cannot be seen and cannot be observed. And Kalecki's background was as an engineer, and he found this deeply unsatisfactory. So he tried to resolve it. Certainly he thought the rate of interest didn't have much impact. Businessmen, he thought, were, on the whole much more cynical, much more hard bitten than to be influenced by, let's say, ephemeral moods and temperament. In fact, the way in which corporations are constructed, the hierarchical bureaucratic way in which business corporations are constructed is really in order to eliminate the effect of passions and biases on issues like investment. In the end, what Kalecki thought was really most importantly was the issue of capacity utilization. Businesses will invest if they've got customers that cannot be satisfied from existing production, even at full capacity. That last line in particular sounds like an apt description of the last couple of years. Lots of frustration with the state of the economy, but at the same time, lots of factories maxing out production and lots of restaurants short on waitstaff and kitchen staff, always with a Now Hiring sign in the door. The vibes may not be immaculate, but if you can't satisfy all the demand with your existing staff and capacity, then you're going to grow and invest, even if you don't like it. 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](