5 Things You Need to Know to Start Your Day: Americas

Good morning. The Federal Reserve decision is coming up, big tech stocks disappoint and Elon Musk’s pay package is struck down. Here’s what’ [View in browser]( [Bloomberg]( Good morning. The Federal Reserve decision is coming up, big tech stocks disappoint and Elon Musk’s pay package is struck down. Here’s what’s moving markets. — [Sam Unsted]( Fed Day The Federal Reserve’s latest policy decision is ahead, with an expectation it [will hold interest rates steady and avoid signaling any imminent plans]( for a first cut. The majority of Fed officials have pushed back on the market betting on a first cut coming in March, a 40% chance of which is still being priced in. Chair Jerome Powell, who will hold a press conference following the decision, may use that to reiterate the message that while recent declines in inflation are encouraging, there is little urgency to start cutting given ongoing labor market strength and robust economic growth. The decision is at 2 p.m. in Washington. Bond gyrations Being a bond trader nowadays means having to put up with [more frequent gyrations in the market](, something that big investors like Pimco and BlackRock are happy to deal with. “We really like this environment,’’ Pimco’s Daniel Ivascyn said. Traders are heading into a packed week of risk events for bond markets too, with the Fed top of mind, and there has been a [ramp up in wagers targeting a bigger selloff](. And for investors who have gorged on Treasuries, a [pullback in bill supply]( is coming at just the right time. Big tech disappointment Meeting investor expectations on the growth offered by artificial intelligence [is proving a tough task](. Software giant Microsoft, Google-owner Alphabet and chipmaker Advanced Micro Devices all fell short of the bonanza required to satisfy. Microsoft’s revenue growth was the [strongest since 2022]( and AI products helped with that, but there were hopes for even more given the run in its shares in recent weeks that took its market value over $3 trillion. Alphabet, meanwhile, was [hit by a miss]( in its core Google search advertising business, and AMD’s [lackluster outlook]( overshadowed its AI chip prospects. All three are lower in premarket trading. Elon’s pay A Delaware judge has [struck down the $55 billion pay package]( for Elon Musk at Tesla which had been challenged by a shareholder in the electric-vehicle maker. The ruling means that the board of Tesla will have to come up with a new proposal for Musk, five years after he had been granted the largest executive compensation plan in history. Musk [took to social media]( to express his feelings over the decision. “Never incorporate your company in the state of Delaware,” he wrote on his X platform. Tesla shares are falling by around 3% in premarket trading. Coming Up… The Fed’s meeting will be the main event in the calendar, accompanied by earnings from plane manufacturer Boeing and payments group Mastercard. Shares in Paramount Global are surging after media mogul Byron Davis [made a $14 billion offer]( to buy the movie and TV group, or $30 billion when debt is included. Elsewhere, Danish obesity drug giant Novo Nordisk’s [market value topped $500 billion for the first time]( as it predicted a further profit and sales surge in the year ahead on the global rollout of its Wegovy shot. Americans are sitting on almost $4 trillion of cash in checking accounts, about $3 trillion more than before the pandemic. But, they have also been dealing with higher mortgage rates and some underwater car loans. Will they continue splurging on concert tickets, food and travel, or are they about to cut back? Share your views in the latest MLIV Pulse [survey](. What We’ve Been Reading This is what’s caught our eye over the past 24 hours. - Tech stocks slammed on [the Daybreak podcast](. - Steve Eisman [shrugs off]( deficit and stocks warnings. - Gearing up for a bareknuckle [private credit fight](. - [AI versus humans]( in discovering new drugs. - High-end home prices are [set to slump everywhere](. - Easing demand for [Bitcoin futures](. - Companies [need a better read]( on what workers actually do. And finally, here's what Joe’s interested in this morning It's Fed Day. And the expectation is that there will be no change in policy, but traders will be looking for confirmation that the rate hiking cycle is officially over and that the next move will be a cut. Whether that cut will be in March, May or some other meeting is obviously still the subject of a lot of debate. The Fed has good reason to start paying more attention to the employment side of the mandate. There appears to have been a meaningful deceleration in hiring. The Quit Rate (as seen in the latest JOLTS report from yesterday) remains below pre-Covid levels. We also have seen a slew of layoff announcements lately. A lot of these have been in tech, but not all. Yesterday, UPS said it would be [cutting 12,000 workers](. Last week on the podcast, [we talked to Brevan Howard economist Jason Cummins](, who has an out-of-consensus call for a recession this year, and one of his views is that layoffs will gather steam as a means of letting companies boost their margins at a time when price increases aren't on the menu anymore. Back in October 2022, I used the term "[The Paradox of Greed](" to describe an environment where companies were pushing price increases to boost margins, with the perverse effect being that the ensuing inflation prompted the Fed to jack up rates, thus slamming stock prices. In theory boosting margins is good for the shareholder, but if everyone tries to do it at once, then stocks go down. The same could be said in the other directions. An individual company might be able to boost profitability by cutting workers. But the more companies do that, the greater risk of a recession. And in a recession, profits (and usually stocks) tend to go down. Again, that's not to say we're here now. But it's a risk the Fed probably should be paying attention to. Follow Bloomberg's Joe Weisenthal 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. 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](