5 Things You Need to Know to Start Your Day

Good morning. The US IPO market could see a flurry of activity in the new year, central bankers debate risks and hedge funds have stuck to a [View in browser]( [Bloomberg]( Good morning. The US IPO market could see a flurry of activity in the new year, central bankers debate risks and hedge funds have stuck to a long dollar trade that’s no longer working. Here’s what people are talking about. — [Sofia Horta e Costa]( IPO season There’s plenty of activity coming for US primary markets — potentially in the new year. Social-media firm Reddit, whose users championed the meme-stock frenzy in 2021, [is holding talks]( with potential investors and eyeing a listing as early as the first quarter. Rubrik, a cloud and data security startup backed by Microsoft, is also considering holding its IPO at the beginning of 2024. Kim Kardashian’s Skims underwear label, valued this summer at $4 billion, is discussing strategic options including going public. And fast-fashion retailer Shein, founded in China but based in Singapore, has [filed confidentially]( with US regulators for an IPO that could take place next year. This is all good news for equity capital market bankers who have had to contend with yet another slow year — total US volume is set to only barely surpass 2022, which the country’s worst IPO year in over a decade. Rate debate Global central bankers congregating in Hong Kong [are talking about a number of uncertainties]( and risks and debating whether the worst of the fight against inflation is behind us. Topics mentioned by officials from Australia, the UK, Spain and Thailand — along with ex-governors from central banks in Israel and Switzerland — include the stickiness of inflation, better-than-expected economic activity, credit risks arising in the banking sector and the role of central bankers to take the kind of actions that ensure inflation becomes transitory. Speaking of the resilient economy and credit risks — US shoppers will have spent as much as [$12.4 billion online during Cyber Monday](, according to Adobe, which adjusted its initial forecast of $12 billion because of strong spending on Black Friday and the popularity of buy-now-pay-later features that let shoppers stretch their budgets with credit. Long dollar The Bloomberg Dollar Index is slipping slightly this Tuesday morning, perhaps wrongfooting hedge funds [who have piled into bullish dollar bets this month](. A metric of leveraged funds’ net longs on the greenback against eight currencies rose to its highest level since February 2022 as of Nov. 21, according to data from the CFTC. Here’s an outlier trade for you: at least one trader in the options market is positioning for[as much as 250 basis points]( of easing by the Fed next year — and made using SOFR options. That’s far off consensus, with swaps data showing investors pricing in around 95 basis points of rate cuts from the January meeting into the end of next year. And as strategists’ outlooks for 2024 continue to roll in, [here’s a roundup]( of what people are expecting from the equity market. Citi’s team says the US stock rally is [running out of steam](. Israel latest Secretary of State Antony Blinken, who late Monday landed in Brussels for a NATO meeting, [will also visit Israel for the third time]( since Hamas attacked Israel in early October. Blinken will also visit the West Bank and go to Dubai for the COP28 summit. Israel and Hamas extended their truce[, which was originally due to end Tuesday](, after agreeing to release more hostages and prisoners. Separately, Elon Musk [was welcomed by Israel’s political elite](on Monday only a week after facing a backlash for endorsing antisemitic content on X. The visit showed world leaders can’t afford to criticize or alienate him for long because he holds the keys to a powerful technological tool: Starlink. His satellite internet provider has provided him with the ability to woo world leaders by offering essential communications services. Coming up… A gauge of September home prices will be released at 9 a.m. New York time. Data due an hour later include the Conference Board index of consumer confidence for November, with economists expecting a slight deterioration, as well as the Richmond Fed’s manufacturing index and survey of business conditions. The U.S. Treasury will sell $39 billion of 7-year notes, while there are several Fed speakers on the calendar today, including Fed Governor Chris Waller and Chicago Fed President Austan Goolsbee. If you earn a raise or a significant bonus this year, what are you planning to do with that money? Do you feel like you need to build out your emergency fund or pay off some debt? Are you thinking about sticking with cash or buying stocks, expecting that Big Tech will continue to rally? Share your thoughts about best steps to boost your personal finance in 2024 in our latest [MLIV Pulse survey](. What we’ve been reading This is what’s caught our eye over the past 24 hours. - Just how bad is the cost-of-living squeeze in the US? [We did the math](. - Argentina’s Javier Milei [seals his commitment](to a pro-Israel stance. - MLB and Formula 1 are facing [fraud lawsuit](s for promoting FTX. - Amazon is seeking about 50,000 square feet of [Miami office space](. - BlackRock researchers map out a way to unlock[$4 trillion in investment](. - Barclays is [considering dropping]( thousands of clients, FT says. - North Korea says its spy satellite took [photos of the White House](. - Want to WFH in Europe? [London is more flexible]( than Paris. And finally, here's what Joe’s interested in this morning For the last couple of years, pundits who straddle the worlds of economics and politics have been having a very repetitive discussion about consumer sentiment. Why are consumer sentiment measures so dismal amid a booming job market? Well it must be due to inflation. Yeah, but even with the inflation, wage gains have been rapid as well, and many workers have seen positive wage growth over the years. Yeah. But maybe people just hate inflation. Right. But why do people hate inflation if their wages have kept pace? Well, maybe it's partly inflation and partly the sentiment surveys are broken due to partisan bias. Or maybe it's not about partisan bias but high interest rates and housing affordability. Or maybe it's not the rate of inflation per se, but rather just eye-popping prices for everyday things, and they just don't feel normal yet. On and on this discussion goes. Rarely does anyone say anything new. And much of it is being conducted by politics types, who aren't really that curious about consumer sentiment or the economy, except insofar as it relates to next November's election. Anyway, I'm loathe to contribute more to this discussion. But I did see something in yesterday's Dallas Fed Manufacturing Survey that I thought was interesting that might add a glimmer of insight. But before I get to that, I want to [highlight something]( that Goldman's top economist Jan Hatzius pointed out to us, in our Odd Lots interview with him from yesterday. As he noted, the question about sentiment isn't confined to consumer surveys. There's been an interesting dynamic with business surveys as well. [Here's Jan](: Sentiment effects can sort of overstate a weakening of the economy. I think we've had a couple of instances in 2023 when the sentiment based indicators deteriorated a lot. And then even within, for example, business surveys, something like general business confidence was significantly weaker than questions that asked about orders or production or employment, which in turn was weaker than what the hard indicators were saying. This is interesting and important. There are all kinds of surveys that ask businesses things like: How are orders? How is hiring? How is access to credit? How are your own margins and costs? And there's been this dichotomy where businesses say decently good stuff about actual details of their business. And then when they're asked about their sentiment overall, it's terrible. In fact, the NFIB creates a version of this chart each month in their Small Business Optimism Survey. I've posted a few times in the past, and it shows quite clearly how their own "hard" data has held up much better than their "soft" data over the last two years. Actual business numbers are good. Sentiment for this set of businesses is as bad as it was in 2009. The numbers are ok. The vibes are dismal. It's at least somewhat similar to the debate that's happening on the consumer side. Anyway. Yesterday we got the latest [Dallas Fed Manufacturing Survey](. And there was a special supplemental question that asked businesses specifically how they see demand for their firm's products over the next 6 months. The results seem fine. 38.1% of firms expect an increase in demand. 33.4% see demand remaining roughly the same. 28.5% are expecting a decline in demand. Doesn't look like much to write home about. But then they asked a follow up question. And here's where things get interesting. Of the companies that expect increasing demand, 27.4% cite factors that are unique to their own firm, when driving growth. But of the companies expecting a decline in demand, only 4.9% cite firm-specific factors. The rest cite macro or industry wide factors. This is interesting. Of course, one possibility is simply that the growing firms really are doing something special, and the shrinking firms are just victims of broader conditions. But another possibility, is that when things are going good, managers are inclined to assign themselves credit. And when things are going bad, they blame broader factors outside of their control. So getting back to the consumer question, one popular idea is that people don't see their own job gains or wage gains as being macro. They certainly don't feel like it, because people earned that job or wage gain. Price gains on the other hand are clearly macro, because most people don't have much control over the price they pay for things. This survey at least hints at the possibility when it's bad news the inclination is to say it reflects "the economy" and when it comes to good news, there's more inclination to see it as unique and idiosyncratic. Of course it's just one question. And it's a business survey. But it does seem to be the case that sentiment patterns have some similarities between business and consumer. And it's an interesting question, that I'd never seen before, that might help shed light on how people think about their situation within the broader landscape 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. [Bloomberg Markets Wrap: The latest on what's moving global markets. Tap to read.]( Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. 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