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

Good morning. Stocks struggle for direction after another record day on Wall Street and Ken Griffin becomes the latest big hitter to tell th [View in browser]( [Bloomberg]( Good morning. Stocks struggle for direction after another record day on Wall Street and Ken Griffin becomes the latest big hitter to tell the Fed to move cautiously on rate cuts. Here’s what’s moving markets today — [David Goodman]( Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. Inflation impact Markets are [struggling for direction]( in the wake of another record-breaking session on Wall Street yesterday, as the slightly uncertain reaction to Tuesday’s slight CPI beat continues. Futures on the S&P 500 were little changed after hitting another all-time high yesterday, while Treasury yields, which bore the brunt of any negative reactions to the numbers, ticked lower again. US bonds came under additional pressure yesterday after a[lackluster auction](, putting more focus on a $22 billion sale of 30-year notes later today. More Fed warnings Market pricing for three Fed rate cuts this year remained solid after the CPI numbers, but there’s a growing chorus from big names in markets suggesting policy makers should move more cautiously. After JPMorgan CEO Jamie Dimon yesterday warned the bank should [wait for additional clarity]( before cutting, Citadel founder Ken Griffin opined that officials should [move slowly in lowering interest rates]( to avoid the possibility of having to reverse course later. “Pausing and then changing direction back toward higher rates quickly, that would, in my opinion, be the most devastating course of action to pursue,” Griffin said Tuesday at the Futures Industry Association conference in Boca Raton, Florida. Oil climbs Oil rose, [ending four straight days of losses](, after an industry report pointed to shrinking US crude stockpiles, offsetting wavering OPEC cuts. West Texas Intermediate futures rose to trade near $78 a barrel after falling 2% over the previous four sessions as the industry-funded American Petroleum Institute reported crude inventories slid by 5.5 million barrels last week. That would be the first drop in seven weeks if confirmed by US government data later Wednesday. Japan update Speculation over the Bank of Japan’s meeting next week is really heating up. Japanese equities declined on Wednesday as Toyota and a slew of other companies [agreed to pay increases,]( adding to signs of a sustainable wage-price cycle that may support rate rises as early as next week. BlueBay Asset Management is certainly bracing for an immediate change, and has made selling Japanese government bonds its [biggest macro bet](. Meanwhile, our colleagues [report today]( that officials are considering scrapping the buying of exchange-traded funds. For his part, BOJ Governor Kazuo Ueda said this morning he’ll make a comprehensive check of the economy and inflation in order to take an appropriate policy decision. Will the departure from negative interest rates in Japan, when it finally comes, also bring the end of the bull market in Japan's stocks? Is Nikkei a better bet for this year than S&P 500? Will Japanese dump US Treasuries and stocks once the Bank of Japan starts increasing rates? Share your views in the latest MLIV Pulse [survey](. Breaking the silence Staying in Japan, a stock investor who has [racked up a return of more than 1,900%]( is increasingly speaking out with calls for change. Silchester International Investors’ Stephen Butt has traditionally kept a low profile as he amassed the stellar returns, but now is urging companies to improve their capital allocation and pay out more to shareholders. Silchester’s demands have caused the conservative regional banks and others in its sights to take note. What we’ve been reading This is what’s caught our eye over the past 24 hours. - [Trump wins Republican nomination](, setting up rematch with Biden - The hedge fund [using science to bet on nature](, and win - UK’s January growth boosts hope [its recession is already over](. - ECB more likely to [cut rates in June than April](, Villeroy says. - Basis trade is [seen dwindling]( as asset managers pivot to credit. And finally, here's what Joe’s interested in this morning Shares of Boeing hit a fresh low for the year yesterday, with the stock now well below where it was after the initial Alaska Air-related slide. The crisis at the company is rippling outward, with its production challenges impairing the expansion plans of its customers. [Yesterday]( Southwest Airlines said that it would actually be cutting capacity and halting hiring in response to reduced deliveries from the plane maker. And it's not just Southwest. Here's [Bloomberg's Mary Schlangenstein and Ryan Beene](: Major carriers from United Airlines Holdings Inc. to Southwest Airlines Co., Delta Air Lines Inc. and Alaska Air Group Inc. gathered at an industry conference on Tuesday, and most of them had a similar story about how Boeing’s troubles are bleeding into their businesses. Most notably, airlines lack the aircraft they had previously planned on receiving in 2024 because Boeing has slowed output. And the troubles run deeper than just this year. At the JPMorgan investor event, United Chief Executive Officer Scott Kirby said he’d gone as far as telling Boeing to stop building 737 Max 10 jets for the carrier because the timeline for certification of the largest variant of the single-aisle jet has become so uncertain. It's obvious, but fewer planes will mean fewer flights, and presumably costlier flights, all things considered. The last few years of supply chain crises have been a bracing reminder to everyone about the real costs of impaired productive capacity. Some of the stress we see is acute (such as the backlog at the ports during the peak of the goods consumption boom in 2021). Some of the stress is long-running (a shortage of housing that was partly a result of the dearth of new production following the great financial crisis). So now Boeing is already causing one airline to reduce its capacity. And another airline is telling Boeing to not focus on a new version of the 737 Max, but just focus on the existing version. [In a recent episode of the Odd Lots podcast](, Tracy Alloway and I spoke with longtime aerospace analyst Richard Aboulafia, who warned about one way the crisis could compound on itself. The longer the company goes without launching a fresh new plane, the fewer the people remaining at the company who have been involved with a fresh plane launch. The internal muscle memory of pushing new products risks atrophying, making the problems at the company even worse. So the stakes are high all around, and the risk is not just for Boeing itself, as it has the potential to impoverish the situation for any part of the economy (which is everything) that depends on air travel. 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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