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Powell kicks off two days of testimony, Meta eyes more job cuts and US-China relations sour further. — David GoodmanTo catch up on the tradi [View in browser]( [Bloomberg]( Powell kicks off two days of testimony, Meta eyes more job cuts and US-China relations sour further. — [David Goodman]( To catch up on the trading day in the UK and Europe, [check out Markets Today](. Powell speaks Federal Reserve Chair Jerome Powell kicks off his his two-day biannual monetary policy testimony on Capitol Hill today, and investors are [treating the hearing as a major risk event.]( With bets on future action having ramped up in recent weeks, the remarks are likely to offer hints on the US economic outlook, specifically inflation, wage pressures and employment. The reaction could be spicy. As Emily Hill, founding partner at Bowersock Capital, told Bloomberg this week: ``the market is clinging to every single positive thing Powell says” at the moment, setting the stage for some choppy trading amid the usual ebb and flow of comments. Meta cuts Meta Platforms, the owner of Facebook and Instagram, is planning a [fresh round of layoffs]( and will cut thousands of employees as soon as this week, according to people familiar with the matter. The world’s largest social networking company is eliminating more jobs, on top of a 13% reduction in November, in a bid to become a more efficient organization. In its earlier round of cuts, Meta slashed 11,000 workers in what was its first-ever major layoff. The company has also been working to flatten its organization, giving buyout packages to managers and cutting whole teams it deems nonessential, [Bloomberg News reported in February](, a move that is still being finalized and could affect thousands of staffers. US-China tensions Tension between the US and China rose overnight as a brace of comments from the latter’s top officials underscored the souring relationship between the two global titans. First, President Xi Jinping [sought to rally](China’s private sector to help overcome “containment” by the US and other countries — a rare direct criticism of the nation’s biggest trading partner. Later, China’s new foreign minister warned the strains could [blow past any guardrails in the relationship](.  “The US claims that it seeks to outcompete China but does not seek conflict,” Foreign Minister Qin Gang said Tuesday at his first news briefing since taking office late last year. “Yet in reality, its so-called competition aims to contain and suppress China in all respects and get the two countries locked in a zero-sum game.” Washington’s approach toward Beijing “is a reckless gamble with the stakes being the fundamental interests of the two peoples and even the future of humanity,” he added. Stocks rise US stock futures [ticked up Tuesday as investors]( avoided large bets before Powell’s appearance and Friday’s monthly payrolls data. Treasury yields fell, the dollar was steady and a commodities index fell for a second day. Meanwhile, the pound slid as Bank of England policy maker [Catherine Mann told Bloomberg TV]( that the currency could weaken further in the coming months as investors absorb the implication of the Fed and ECB’s plans to raise interest rates. Coming up… The Powell testimony, which kicks off at 10 a.m. in Washington, is by far the biggest event on the slate today. Aside from that, there’s data on consumer credit, while the US also sells three-year notes. Do you see the recent changes in China's government as positive or negative for global markets? What about China's reopening and recovery- will that be inflationary or disinflationary for global bonds? Share your views in our latest MLIV Pulse [survey](. What we’ve been reading Here’s what caught our eye over the past 24 hours: - The debt ceiling is the risk Wall Street doesn’t want to [think about](. - UK grid issues energy supply warning for Tuesday amid [cold snap](. - Dimon says war in Ukraine, China relations are [top concerns](. - Europe bond sales blast past half-a-trillion mark in [record time](. - BofA’s Moynihan says ChatGPT needs work, [sees rates at 5.5%]( - Two of China’s best-known hedge funds are [embroiled in a court dispute]( - Dance’s communal ethos is [moving into the office and boardroom]( And finally, here’s what Joe’s interested in this morning Good morning and Happy Powell Day. The Fed Chairman has the first of his two Capital Hill appearances today, in which he will deliver his Semi-Annual assessment of monetary policy and also take questions from Senators. Here's a few scattered things on my mind. 1) Obviously it will be interesting to hear Powell talk about the seemingly renewed growth momentum. Earlier in the year, virtually nobody was using terms like "no landing." How much acceleration is happening now? And more importantly, why would there be acceleration happening after such a rapid pace of rate hikes in 2022? 2) More broadly, you know, going back to the beginning of 2022, even the most hawkish of pundits didn't expect such a fast pace of rate increases. And yet we got these rate hikes exceeding everyone's forecasts, and still inflation is hot. 3) To some extent the answer to this mystery is going to be some combination of "Well the economy was stronger, and inflation was more entrenched, than had been appreciated at the beginning of the year." But then to some extent, this is question-begging. What is giving the economy this durability? And why didn't mainstream forecasters recognize this strength earlier in the year? 4) Speaking of labor market strength, the next Non-Farm Payrolls report will be interesting. There continue to be incremental signs of labor market easing -- companies saying that it's getting less hard to find workers, and so forth. Meanwhile yesterday LinkedIn came out with its latest [Workforce Report]( which indicates a meaningful slowdown this year. LinkedIn Chief Economist Guy Berger has more on the data [in this great thread](. Anyway, the point is, yes, the unemployment rate has been ultra-low and surprisingly sticky. But the possibility that it eventually starts to buckle can't be ignored, particularly as corporate layoff news remains ongoing. 5) Hopefully some Senator today (or at least a House member tomorrow) asks an articulate question about whether the Fed would accept a trillion dollar coin from the Treasury in the event of a debt ceiling impasse. And hopefully that Senator or House member has followups prepared to specifically get at what Powell means if he talks about the Fed's role as a "fiscal agent" for the Treasury. 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