5 Things You Need to Know to Start Your Day

Biden ups the pressure on China for engagement, Trump weighs-in on the debt ceiling debate and Microsoft freezes pay rises. — Liza TetleyThe [View in browser]( [Bloomberg]( Biden ups the pressure on China for engagement, Trump weighs-in on the debt ceiling debate and Microsoft freezes pay rises. — [Liza Tetley]( US-China The [Biden administration is pressing on with plans to engage with China](, seeking a flurry of meetings and phone calls in a strategy aimed at easing tensions and putting pressure on President Xi Jinping to respond. The proposals range from talks at the lowest level all the way up to a conversation between the two Presidents; something that’s been stalled for months. Some critics have said it makes the US look weak. Chinese Foreign Ministry spokesperson Wang Wenbin said it sends conflicting messages: “The key is that the US cannot stress the importance of communication while keeping up suppression and containment against China.”  Trump weighs-in Former President [Donald Trump used a CNN interview Wednesday to rally Republicans to extract concessions from Biden]( over spending, or push the US into its first-ever default. His comments came a day after Biden held a meeting with congressional leaders that by all accounts made little headway toward an agreement on raising the debt ceiling. During the interview, he said the US was “spending money like drunken sailors,” adding: “I don’t believe they’re going to do a default because I think the Democrats will absolutely cave, will absolutely cave because you don’t want to have that happen.” Microsoft freezes In a warning for Big Tech, [Microsoft has decided to freeze pay for all full-time workers this year to help it navigate macroeconomic uncertainty](. CEO Satya Nadella said the move was necessary to fund the company’s shift towards artificial intelligence. This is the latest move by a US tech leader to tighten its belt to account for tepid demand and short up finances ahead of a potential recession. This year, Microsoft began cutting thousands of jobs, joining peers from Meta to Amazon. Nadella said: “This year the economic conditions are very different across many dimensions.” Improving sentiment Contracts on the Nasdaq and the S&P 500 are higher this morning, showing investor relief at the soft CPI print on Wednesday. Futures on both indexes are both up around 0.4% as of 5:39 a.m. in New York. Short-dated Treasury yields are climbing on debt ceiling anxiety, while longer-dated yields are flat-to-lower. A measure of the dollar is strengthening a little to bounce back from yesterday’s decline. Oil prices are gaining slightly, while gold continues to lose momentum for a second day. Iron ore futures are sliding, paring some of their weekly gains. Coming up… Today we’ve got jobless claims data and April PPI coming up at 8:30 a.m. Then the Fed’s Kashkari will speak at 8:45 a.m., followed by the Fed’s Waller at 10:15 a.m. At 11:30 a.m. the US will sell $35 billion 4-week and $35 billion 8-week bills, and at 1:00 p.m. it will sell a further $21 billion 30-year bonds and $45 billion 149-day CMB. A thinner earnings day, including News Corp, US Foods, Brookfield, Petrobras. JPMorgan’s Jamie Dimon will be interviewed on Bloomberg TV at 8:15 a.m. Is this year's debt-limit standoff going to be as bad as the one in 2011? Which asset is a buy if the US fails to meet its debt obligations? Share your views on our latest MLIV Pulse [survey](. What we’ve been reading Here’s what caught our eye over the past 24 hours: - [CPI in China slows to the weakest pace in two years](, while producer prices fall into deflation - [Chinese President Xi Jinping is set on creating a new flagship city]( - [Credit Suisse credit default swap prices are surging](as some hedge funds say they should be triggered - Disney direct-to-consumer segment, which includes[Disney+, suffered a loss of $659 million in the fiscal second quarter]( - Consumer expectations for[euro-zone inflation rose “significantly” in March]( - [Traders await Bank of England rate decision in the UK with inflation and housing in focus]( - [Ukraine’s weapons will soon outstrip Russia’s in sophistication](bbg://news/stories/RUHL5GTP3SHS)as the latter resorts to aging stock And finally, here’s what Joe’s interested in this morning This week we saw the first meeting between Biden and Congressional leaders over raising the debt ceiling. Nothing substantive came out of it. But it is notable that there are plans to meet again on [Friday](. So while The White House's position is that they won't negotiate over the debt ceiling itself, presumably they're going to talk about something when they get back together. After the meeting on Tuesday, Biden did say that there has been some tentative consideration of invoking the 14th Amendment as a means of avoiding a default, even in the event of no debt ceiling hike. Section 4 of that Amendment, which was adopted after the Civil War, states: "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void." The idea here, basically, is to claim that any law which potentially forces the US government to default would be unconstitutional. But what would it mean to actually invoke The 14th Amendment? To that end, [I'd recommend reading this note posted]( to Twitter by law professor Tommy Bennett. His assertion is that simply "invoking" the 14th Amendment as a mean of bypassing the debt ceiling is an unwise course of action. Instead he argues that first The White House should attempt to use the written laws available to it, as a means of diffusing any potential crisis, rather than fighting on constitutional grounds. The most obvious moves here are the minting of a platinum coin or selling consols (bonds which have no face value only interest payments). As he puts it, it's tough to argue that the debt ceiling (as written) is unconstitutional, if others laws exist that allow the executive branch to continue servicing the debt. Of course, per Bennett, if these alternate end runs were to not work for some reason, then it might make sense to simply say that the 14th Amendment makes the debt ceiling unconstitutional. But to him, this is the backup argument that should be made only after The White House makes other attempts to comply with laws passed by Congress. 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](. 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