5 Things You Need to Know to Start Your Day

Larry Summers says the US economy is still “very, very hot,” hedge funds continue short selling Treasuries, and the S&P 500 bull market has [View in browser]( [Bloomberg]( Larry Summers says the US economy is still “very, very hot,” hedge funds continue short selling Treasuries, and the S&P 500 bull market has strategists pointing in different directions. — [Liza Tetley]( Hot economy Former Treasury Secretary[Larry Summers has said the US economy is still “very, very hot” though cooler than it was six-12 months ago](, adding to speculation around what the Federal Reserve will decide to do at its meeting later this week. Summers also pointed towards commercial real estate as an area where there are likely to be “pockets of distress” and called for stronger ties between the US and China during his interview. Short selling [Hedge funds are continuing to bet against short-dated Treasuries, extending their record selling streak as wagers mount that the Federal Reserve’s tightening cycle is far from over.]( Leveraged traders boosted their net-short positions on two-year Treasuries for an 11th straight week to June 6, the longest run on record. Investors are “signaling that rates will have to hold at a higher level for longer than previously thought,” said Andrew Ticehurst, rates strategist at Nomura Holdings Inc. in Sydney. Split forecasts Strategists are pointing in different directions after the S&P 500 entered a technical bull market last week, gaining 20% from its October low as traders weighed the economy and rate bets. [Goldman Sachs expects the gains to continue as other sectors catch up with tech’s rally, while Morgan Stanley says the index could enter a bear market](. “More are declaring the bear market officially over; we respectfully disagree due to our 2023 earnings forecast,” Morgan Stanley’s Michael Wilson said in a note. Risk-on markets S&P 500 futures and contracts on the Nasdaq are heading higher this morning, up 0.4% and 0.6% respectively as at 5:31 a.m. in New York. Treasury yields are ticking higher across the curve, with the sharpest rises in two- and three-year notes. A measure of the dollar is weakening, helping drive gains in spot gold prices. Oil prices are continuing their decline, while iron ore drops slightly. Coming up… A light day for data and earnings today. The US will sell $58 billion 26-week bills and $40 billion 3-year notes at 11:30 a.m. and then $65 billion 13-week bills and $32 billion 10-year notes at 1:00 p.m. We’ll get the May Budget Statement at 2:00 p.m. and NATO's Stoltenberg is due to meet with Biden and Blinken in Washington today. Oracle and Catalent are due to report earnings today. What we’ve been reading Here’s what caught our eye over the past 24 hours: - [UBS has completed its acquisition of Credit Suisse]( in what is the biggest merger in banking since 2008 - London based [Odey Asset Management sacked disgraced founder Crispin Odey]( - [Tesla’s Superchargers](are proving to be the shrewdest of all its products - [Silvio Berlusconi, Italy’s longest-serving postwar prime minister, died aged 86]( - [Oil traders are starting to ignore Saudi Arabian Energy Minister Prince Abdulaziz bin Salman]( - Consumer spending is driving economic forecasters away from predictions of a [UK recession this year]( - [WeWork is faced with more trouble after its CEO departs](bbg://news/stories/RW4UETTP3SHS) And finally, here’s what Joe’s interested in this morning... We talk a lot about building these days. Building factories. Building public transit. Building electricity transmission lines. The focus is usually on physical things. Of course, in 2023, another crucial aspect of infrastructure is on the digital side. Everyone remembers the disastrous Obamacare launch. And more recently the trouble that states had administering Unemployment Insurance during the worst of the pandemic. Meanwhile, public sector websites -- like, say, the [Treasury Direct website]( -- is perhaps not as easy to use as equivalent private-sector services. So what impedes the government's ability to build solid, usable digital infrastructure? That's the topic of [the latest Odd Lots]( podcast, with [Jennifer Pahlka]( and [Dave Guarino](. Pahlka is the author of the new book Recording America, and is the former Executive Director of Code for America, along with several other roles. Guarino recently left the Department of Labor where he worked on Unemployment Insurance modernization. Both know an incredible amount about how the sausage is made when it comes to public software. Not surprisingly, the problem has many dimensions. Public sector budgeting, for example, allocates a lot of money to a new project in the beginning, but often not very much for further development and iteration. This impedes the ability to undergo ongoing improvement, as developers learn more about how a piece of software is actually used. Challenges in hiring are another problem. It tends to take the public sector a lot longer to make an offer than it does the private sector. The internal hierarchy at public institutions, where the policymakers are senior to the tech workers is another challenge. But a big part of Pahlka's argument is that public sector software is complicated and difficult because actual policy is complicated and difficult. The outward facing mess is a reflection of the internal mess. Laws are complicated. Rules that determine how laws work are complicated. Laws are always changing. Political regimes come and go, as parties switch control back and forth, which then further changes the rules or how they should be implemented. This creates all kinds of continuity issues, and documentation issues, and a vacuum when it comes to knowing how a piece of software actually works. Oftentimes, nobody knows. In a recent [Bloomberg Opinion]( piece, [Kathryn Anne Edwards]( wrote about work and other eligibility requirements for public welfare problems: By official measures, nearly 40 million Americans are living in poverty. Yet not a single public program serves them on that criterion alone. To qualify for benefits, they must also be something else, such as old, disabled, or pregnant. Even then, access isn’t categorical: People must get through a labyrinth of multi-contingent eligibility tests, which might include anything from the size of their savings account balance to some minimum time spent on work-related activities. And if there’s a natural disaster, everything can change. Worse, different programs don’t often work together. Consider children who age out of foster care, typically at 18. The new debt-ceiling deal exempts them from the work requirements it imposes on recipients of food stamps (officially the Supplemental Nutrition Assistance Program, or SNAP), but only until they turn 24. They’re eligible for Medicaid until age 26, but only if they were in the program on their 18th birthday. They can apply for housing assistance until age 21, but it’s not guaranteed and depends on school enrollment and special education vouchers, which they must use before age 26. Navigating all this would confound anyone, let alone an 18-year-old with no parents. When politicians and policy experts talk about work requirements, there's often this moral dimension to the conversation. And of course there's some economic theory that informs the optimal distribution of benefits, based on this or that. But then it's this complexity that drags the whole thing down, when the government actually has to build the systems that distribute these benefits in some way. This isn't to say improvement is impossible. But the root causes of these challenges run deep. And learning about the actual building and implementation of public digital services is incredibly fascinating. Check out the full episode on [Apple](, [Spotify](, or anywhere else you get your podcasts. Follow Bloomberg's Joe Weisenthal on Twitter @TheStalwart 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](. Want to sponsor this newsletter? [Get in touch here](. 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](