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

Good morning. Eyes are on today’s US PPI report ahead of next week’s Fed meeting. Plus, the oil market may be headed for a supply deficit af [View in browser]( [Bloomberg]( Good morning. Eyes are on today’s US PPI report ahead of next week’s Fed meeting. Plus, the oil market may be headed for a supply deficit after all, and commodities traders are betting against volatility. Here’s what people are talking about. — [Sofia Horta e Costa]( Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. More inflation data US producer price data due later today will be the [last piece of the inflation puzzle]( available before the Federal Reserve’s rate-setting committee meets next week. The figures feed into the Fed's preferred inflation measure — the PCE -- which will only get released after the Fed decides on interest rates and releases its dot plot on March 20. Treasuries are steady heading into the report today, the dollar is flat and S&P 500 futures are pointing to a stronger open as markets wait for the data to provide direction. Meanwhile, US Treasury Secretary Janet Yellen [said it’s “unlikely” that market interest rates]( will return to pre-Covid-19 levels. And [here’s how Wall Street is thinking]( about the Fed’s unwinding of its balance sheet — known as quantitative tightening. Calm, everywhere People keep betting against market mayhem, with the short volatility trade now spreading to commodities. Traders are [betting on calm in raw materials prices](, countering the sector’s notoriously boom-and-bust history. While it’s unusual to see such a prolonged period of stagnation in commodities, there have been plenty of factors keeping the prices stuck: OPEC+ cuts and abundant spare capacity are suppressing swings in oil, copper prices are torn between surging renewable demand and strains in more traditional consumption areas, while gas volatility is back to where it was before a supply crisis in Europe. The wagers chime with what’s going on in the stock market, with billions of dollars pouring into [exchange traded funds]( counting on continued calm— inflows that are now making some investors [nervous](. Oil supply deficit Speaking of oil, prices are rising as I type after Brent futures closed at a four-month high and above $84 a barrel on Wednesday. The International Energy Agency has just said that global oil markets face [a supply deficit throughout 2024](, instead of the surplus previously expected. That’s after Saudi Arabia and its partners agreed [earlier this month]( to prolong roughly 2 million barrels day of production curbs to the middle of the year — curbs that IEA assumes will continue until the end of 2024. While OPEC+ [hasn’t fully implemented]( those curbs, the measures are putting a floor on the market. Paris-based agency IEA, which advises major economies, also boosted forecasts for global demand this year. China’s quants Some managers in China’s private quant industry, with 1.6 trillion yuan ($223 billion) of assets under management, are now on the mend after [unprecedented failures]( by their stock-trading models earlier this year. And they’ve recovered mostly by leaving their computer models alone and sticking to the algos that have helped them withstand years of turmoil in one of the world’s most volatile equity markets. The top 23 quantitative funds tracked by China Merchants Securities [beat the benchmark]( in the week of Feb. 19, some by as much as 12.5 percentage points. Coming up… Robinhood shares are up 12% in the US premarket after the online brokerage platform said assets under custody rose in February and trading volume surged. As well as US PPI, economic data releases today include February’s retail sales — which the team at Bloomberg Economics expects will show a modest rebound — as well as initial jobless claims and a report on business inventories. Meanwhile, NATO Secretary General Jens Stoltenberg [is presenting his annual report]( for 2023 at a press conference in Brussels. What we’ve been reading This is what’s caught our eye over the past 24 hours. - Manhattan apartment rents [climb to $4,230]( in February. - Oil giant Shell [moderates its targets]( for carbon-emissions cuts. - Amazon says [it sold ads]( for products shoppers couldn’t buy. - John Authers says the stock market[doesn’t care]( about rate cuts. - China urges the US to stop ‘[unreasonably suppressing’]( TikTok. - [Warning signs]( from an $80 billion crash in India’s small caps. And finally, here's what Joe’s interested in this morning Yesterday in the newsletter, I wrote about Boeing, and the ripple effects from the manufacturing struggles the company’s having. Because it's having problems making and delivering planes, that's impairing the capacity of the airlines that depend on Boeing (which makes sense). And it stands to reason that therefore tickets will be more scarce and costlier than they otherwise would have been. It's a clear example of the impoverishing effect of this supply side degradation in manufacturing. Well, it's not as strategically important as Boeing, but on the flip side of the coin, exciting things are happening in the world of snack foods. Not sure if you've noticed, but the variety of snack foods is way greater than when we were all children. Back in the old days, maybe there were Doritos and Cool Ranch Doritos and that's about it. Nowadays, exotics flavors of chips, from prawn to durian to yam are all over the place. You can find almonds that are salt and pepper flavored, but also lemon lime, sriracha, elote, wasabi, coconut, and blueberry flavored. It turns out, there's been a technological revolution happening in the factories and warehouses that deliver America's supplies of snacks. [On the Odd Lots podcast today](, Tracy Alloway and I spoke to Ryan Harlan of the E-Tech group about how much more advanced assembly lines make it much easier for snack food giants to quickly churn out new flavors. For example, sensors in the tubes (that deliver the flavoring) can identify when they're sufficiently clean, so that they can quickly switch over the shop floor to another flavor. Before the sensors, the washing process had to go extra long just because they had be absolutely sure that all the old flavor had cleaned out. This shortening of the cleaning process creates more time for the plant to run and more capacity to switch flavors. Warehouse technology has also improved the variety of what we get, allowing any given warehouse to carry more SKUs than they previously could, even given a fixed amount of space. Like I said, probably almonds and chips aren't as important for the economy or consumer welfare as abundant, functioning airplanes. But it's still a good news story about how something we've all seen -- the flourishing of snack variety -- was made possible by behind-the-scenes technological gains. Find the episode 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. [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](. 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