5 Things You Need to Know to Start Your Day

Good morning. It’s a risk off start to the week in markets, the Biden administration looks to strengthen supply chains and a longtime Novo N [View in browser]( [Bloomberg]( Good morning. It’s a risk off start to the week in markets, the Biden administration looks to strengthen supply chains and a longtime Novo Nordisk bull says there’s too much hype around weight loss drugs. Here’s what people are talking about. —[ Sofia Horta e Costa]( Risk off There’s a risk-off tone to markets to start the week after data in China showed industrial companies are struggling to [generate better profit growth](, a sign of weak domestic demand and a reminder of the country’s fragile economic recovery. The narrative for iron ore keeps swinging between China property stimulus (bullish) and Beijing’s resolve to clamp down on speculation (bearish). [A conundrum](. Meanwhile, after the bounce back in Treasuries this month, many US debt watchers say the path is clearing for a [real revival in the market](. The Bloomberg US Treasury Index is showing a positive return for the year after spending chunks of 2023 underwater, helped by of slowing inflation and measured jobs growth. US stock-index futures are pointing to a softer open in New York while gold has climbed to the highest since May. Oil is down a fourth day [before this week’s delayed OPEC+ meeting](. Fixing supply chains The Biden administration [will announce a redoubling]( of measures to strengthen supply chains later today. Part of the rollout will include a set of bureaucratic actions: the invocation of the Defense Production Act to invest $35 million in starting materials for sterile injectable medicines, and a new report on US reliance on high-risk foreign suppliers to the pharmaceutical supply chain. Central to the effort is a new White House Council on Supply Chain Resilience, a cabinet-level body that Biden will inaugurate Monday. An analysis by the Federal Reserve Bank of San Francisco in June concluded that supply chain pressures following the pandemic accounted for 60% of the surge in inflation — and explanation the White House has been eager to adopt because it would downplay the price impact of the government’s fiscal stimulus during the pandemic. Novo bull retreats One stock investor [is calling time on what he calls the “hype”]( around weight-loss drugs that has sent Novo Nordisk’s shares up more than 50% this year. Niall Gallagher, who runs an equity fund for GAM Investments that’s returned 14% in 2023, has reduced a position in the Danish maker of [Ozempic and WegovyÂ](by about half in the past few months. It’s all about valuations, he says, with Novo shares trading at 33 times earnings. Speaking to Bloomberg’s Sagarika Jaisinghani, Gallagher notes that “where we are right now is probably as much as we want to pay in terms of the valuation multiple.” Extended truce Israel and Hamas signaled that a temporary cease-fire in Gaza [could be extended]( beyond Monday.  President Joe Biden [backed prolonging the war pause](, saying it’s allowing for the delivery of “critically needed” aid to Gaza and the recovery of hostages. Hamas has handed over 58 hostages through Sunday, including non-Israelis, and is slated to free another 11 Israelis on Monday to fulfill a four-day agreement. Israel has released around 120 Palestinians in recent days. Coming up… It’s Cyber Monday today so if you missed out on special promotions — and the [record $9.8 billion spent online]( on Black Friday — here’s your chance. Data is due on October’s new home sales, with economists expecting a decline after September’s surprise surge in sales volumes. Higher mortgage rates and increased inventories of existing homes are likely to weigh on sales of new homes, Bloomberg Economics says, though this may not last as many current homeowners are reluctant to list their homes. The Dallas Fed manufacturing activity index is also due later for November. What we’ve been reading This is what’s caught our eye over the past 24 hours. - We spoke with UK leader Rishi Sunak, who said [austerity isn’t coming](. - Musk, facing furor over antisemitism, [meets with Israeli officials](. - Battery giants are putting their money on new [sodium-based technology](. - An [outbreak of pneumonia]( among children alarms parents in China. - Green stocks look set for [another bad year](, the MLIV Pulse survey shows. - Taiwan’s[opposition alliance collapses]( weeks before January’s election. - Russia said it [downed 24 drones](, including some over Moscow. And finally, here's what Joe’s interested in this morning On the new Odd Lots, [we have an interview with Jan Hatzius](, the top economist at Goldman Sachs, who says the hard part is over, and that the soft landing will be achieved in 2024. As he sees it, we already have proof of concept that significant disinflation can be achieved without a substantial weakening of the labor market. And furthermore -- in large part due to rent -- more disinflation is already baked in for 2024. Beyond the specifics of the call itself, there are two overarching ideas that I think are important from the episode. The first is that the dominant story of the last several years has been the Covid cycle. There's been a lot of talk about excessive fiscal policies, or central banks asleep at the wheel and whatever else. But the overwhelming story is that the Covid's fingerprints are seen everywhere across the economy, all around the world. It's this fading of the Covid shock that explains the initial inflation surge, and the broader settling down of activity into something that resembles normality. Our interview with Hatzius builds off of the outlook his team published earlier in November, and one striking chart in there is the degree to which this disinflation is global. A wide swathe of countries, with various different policy responses to the pandemic, all saw the same big inflation spike, and now have all seen significant improvement. The one thing all these countries have is that all experienced huge disruptions thanks to the pandemic. And all of these countries have seen a fading of these disruptions over time. The other key takeaway here, and it's a related one, is that history hasn't been a particularly useful guide. At the peak of the inflation, there were all these predictions about needing a deep recession to cool inflation, and those predictions haven't panned out. Those views were formed based on past patterns of historical inflations and recessions. But those turned out not to be useful guides, because those episodes weren't the result of global pandemics, and the aftershocks thereof. One problem in general, with reasoning from history, is that we just don't have that many episodes to draw form. [This was a point that Chicago Fed President Austan Goolsbee made as well](. People draw from a shallow well of historical examples, and each one is kind of different. There aren't many patterns frequent enough to approach anything statistically robust. The one thing we have is the right now, which has shown in practice, that you can have significant disinflation, without a major weakening of the labor market. And per Hatzius, that's set to continue in 2024. Check out the conversation on [Apple](, [Spotify]( or elsewhere. Joe Weisenthal is the co-host of Bloomberg’s Odd Lots podcast. Follow him on X [@TheStalwart]( Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. Follow Us Like getting this newsletter? 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