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

Good morning. It’s payrolls day and the debate is whether the US jobs market is as strong as Powell says. Plus, Meta and Amazon’s belt-tight [View in browser]( [Bloomberg]( Good morning. It’s payrolls day and the debate is whether the US jobs market is as strong as Powell says. Plus, Meta and Amazon’s belt-tightening pays off and Apple trips up in China. Here’s what people are talking about. — [Sofia Horta e Costa]( Jobs day The monthly US payrolls report is due at 8:30 a.m. New York time. ADP Chief Economist Nela Richardson explains [in this video]( the three things she is watching for in today’s release. Bloomberg Economics [sees the unemployment rate](edging up to 3.8%, from 3.7% in December, and says the numbers will show a slower pace of hiring in 2023 following annual revisions. These revisions matter, according to economists Anna Wong and Stuart Paul, because they ``could show the labor market was actually softer than realized last year.’’ Fed Chair Jerome Powell earlier this week described the labor market as strong after the central bank left its benchmark interest rate unchanged ---and [tempered expectations]( for a cut in March. While Americans may be spared from mass layoffs this year, they’ll face [dwindling options to change positions](, many will hold multiple jobs to make a decent living, and a rising number of college graduates will struggle to find what they want. Meta, Amazon surge Shareholders are rewarding cost cuts. Meta Platforms, the owner of Facebook and Instagram, is surging about 17% in early trading this morning as the headcount reduction it made last year helped it deliver [better profit, a first-ever quarterly dividend and a $50 billion buyback.]( Amazon, which kickstarted its biggest-ever round of corporate job cuts beginning in 2022 that affected about 35,000 people last year, is rising 6% after its belt-tightening strategies also helped it report better-than-expected earnings and provide an operating income outlook that [surpassed estimates](. The stock moves are set to add a combined $272 billion to their market values if they hold through today’s close. Apple’s China troubles Apple shares are falling after the company reported a deepening slump in China [during the key holiday quarter](. Sales in the country fell 13% in the three months to Dec. 30, well below estimates and Apple’s worst performance in China since the early pandemic days of 2020. The results are triggering fears that the company [is losing clout in China](, a long-prized market that generates roughly a fifth of its sales. Challenges for Apple include Beijing’s [stricter bans]( on the use of foreign technology in the workplace and successes from local rival Huawei, which released a [hot new smartphone]( last year. Bloomberg Businessweek has looked at whether 2024 would be the year US-China tensions[finally trip up Apple](. Bank angst Concerns around the health of US regional banks continue to be a leading theme in markets this week. Shares of New York Community Bancorp closed at their lowest level since 2000 on Thursday, sinking 11% and adding to the prior day’s record 38% plunge. The bank at the center of [the renewed panic]( said it believes its stock will recover as investors consider what it called ``value-enhancing actions.’’ Citizens CEO Bruce Van Saun says the industry is fine and the issues disclosed by NYCB this week make it an ``outlier,’’ [telling Bloomberg TV]( that the problems that led to the collapse of several regional lenders last year are largely in the past. Analysts at JPMorgan said the [broader market has had an ``overreaction’’]( to the regional bank news and suggested investors take profit on five-year Treasuries. Coming up… Aside from January’s payrolls report, the University of Michigan will release its final reading of consumer sentiment for last month and data on factory orders is also due for December. There are no Federal Reserve speakers on the calendar today. Exxon Mobil, Chevron, Cboe Global Markets and Bristol-Myers Squibb are among companies expected to release earnings before the bell. And cocoa futures rose above $5,000 per ton earlier today for the first time in 46 years. What we’ve been reading This is what’s caught our eye over the past 24 hours. - Chinese stocks have a chaotic end to a [wild week](. - El Salvador’s crime crackdown tactics spread [across Latin America](. - X urges advertisers to come back with a [pitch on child safety](. - Brookfield Asset Management has a new [CEO of private equity](. - Ukraine’s army chief doubles down on his [criticism of the government](. - A Japanese lender made bad bets on [US commercial real estate](. - New York’s Carbone is opening an [outpost in London](. And finally, here's what Kristine’s interested in this morning After two weeks of hearing from the world's biggest central banks, what do we know and what does it all imply for markets? 1. Interest rates are going down, but not anytime soon The uniform message from policymakers is that the next direction of rates is lower, but the first-quarter timing that markets had priced prior to decisions from the Federal Reserve, European Central Bank and Bank of England was far too soon. Interestingly, rates markets had slightly different reactions to the pushback. While ECB President Christine Lagarde mentioned summer as the potential timing for the first rate cut, traders have instead set sights on April. Similarly, after Fed Chair Jerome Powell made it clear a move in March was unlikely, rate-cut bets appeared to have simply rolled over to the next FOMC meeting after that, which is set for May. Meanwhile, traders were tepid over the BOE's clearest signal yet that its next move will be a cut -- they're not fully pricing the UK central bank's first quarter-point reduction until June, heeding officials' concern over continued signs of inflation pressures from the labor market and the services sector. These timing variances could potentially spur some volatility and tactical relative trades, especially heading into spring. Expectations for which central bank flips the switch on rate cuts first are likely to shift as more data become available, and that will produce short-term winners and losers in bond and currency markets until the second half of the year. By then, all policymakers will likely have at least started the process of lower borrowing costs. 2. The soft landing narrative is everywhere, sort of The pushback from central banks against early rate cuts makes sense in the context of the soft landing scenario that all of them are dealing with currently, in varying degrees. It appears to be the most compelling in the US, where a sustained pullback in inflation rates comes with continued signs of resilience in the labor market and the consumer sector despite evidence of a slowdown in other parts of the economy. Today's payrolls data, which Bloomberg Economics predicts will be confusing due to seasonal factors and revisions, will be another test of the Fed's resolve to wait on rate cuts. Regardless, forecasters in a Bloomberg survey essentially agree with the Fed's soft landing outlook, predicting a 0.7-percentage-point moderation in both the real GDP growth rate -- to 1.5% -- and the CPI rate -- to 2.7% -- by year-end. While the UK and euro area have seen a similar disinflationary trend to the US, both economies are barely expected to grow this year. It marks an interesting contrast with the market's outlook for the total amount of rate cuts from these respective economies this year. The ECB and Fed are expected to deliver at least five quarter-point reductions, while traders are pricing four such cuts from the BOE. Rate-cut bets for Fed stand out as the most misaligned with the central bank's more modest projection for three reductions, as well as the current resilience of the US economy, so those wagers are probably the most at risk of a painful reality check at some point. 3. Wanted: inflation confidence A desire for greater confidence that inflation is heading toward the Fed's target was a key feature of Chair Jerome Powell's speech, and it featured similarly in BOE Governor Andrew Bailey and ECB President Christine Lagarde's remarks, too. The path of inflation in their respective economies is headed in the desired direction, but the speed at which it reaches the target could vary if some sort of inflation shock comes into play. Enter the Red Sea conflict, which has upended key trade routes and raised shipping costs -- and a risk that Europe is more vulnerable to than the US. Worries over its potential to once again boost supply-side inflation cropped up in recent UK and euro-area business surveys, and was addressed by both the BOE and ECB in their policy decisions. And while there's little evidence at the moment that any price pressures from the Red Sea turmoil rival the more intense bout from Covid-driven disruptions, it's clearly on policymakers' radar and could cast further doubt over rate-cut expectations for the UK and euro area. [Kristine Aquino]( is managing editor for Bloomberg Markets Today. Follow her on X at [@krisaqnews](. 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. 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