Naughty traders bring 2023’s sins into 2024

New year, same old wacky bond market! [Bloomberg]( This is Bloomberg Opinion Today, the who-moved-our-jobs edition of Bloomberg Opinion’s opinions. [Sign up here](. Today’s Agenda - The [labor market]( is great! No wait, it’s doomed! Actually, no… it’s just so-so. - M&A still faces [challenges](. - Beverly Hills Wayne is [out at the NRA](. Mr. Toad’s Wild Ride It’s the start of 2024, and what better way to end Week No. 1 than a Bureau of Labor Statistics report on the state of US employment? Would it finally provide clarity on the direction of the US economy? Alas, it would not! In fact, Friday’s report left investors as confused about the economy’s prospects as ever. As yours truly [says]( in a reaction column, the confusion started at 8:30 a.m. New York time with the revelation that nonfarm payrolls grew by a better-than-expected 216,000 (stock futures down; bond yields up). The prevailing explanation for the move was that labor market strength risked fanning inflation, which would delay the start of any Fed policy rate cuts. But just 90 minutes later, a separate report from the Institute for Supply Management suggested that services employment was in fact collapsing (stocks up; yields down). By about lunchtime, the market had more or less figured out that the signals from both releases were more or less useless — and prices ended the day hardly changed from Thursday. So what are we to make of all this whiplash? First, markets seem intent on overreacting to month-to-month movements in inherently noisy data with wide margins of error. The ISM Services number is based on a panel of a few hundred purchasing managers and executives. The BLS’s establishment survey — though vastly larger — tends to get revised by tens of thousands of jobs each month, meaning the initial data can be highly misleading. Second, traders look determined to exaggerate the extent to which the labor market has been influencing inflation and, ultimately, Federal Reserve policy rates. On the topic of the direction-less economy: there’s one particular area that’s looking particularly lost, and that — as Paul J. Davies [says]( — is the business of M&A banking. As Paul says, M&A activity is coming off an anemic 2023 and hoping to find its footing in 2024. Unfortunately, private equity activity has been hampered by high funding costs and the shuttered IPO market (which is preventing exits from older investments to pave the way for new ones). Bankers are still hopeful they can make a decent year of it with corporate deals, though the broader trajectory may depend in part on what transpires at the Fed. “Assuming interest rates have at least stopped rising, this year ought to be better than last for bankers squeezing real work out of their healthy pipelines and dialogues,” Paul says. “But it probably won’t be until the second half before we can be sure that’s the case — and in truth there are enough economic and political dangers to slam all of this into a ditch at any moment.” The US labor market isn’t alone in starting the year with conflicting signals and mixed messages. Wayne LaPierre in Beverly Hills While Wall Street was trying to make sense of economic data, the big news elsewhere was the resignation (effective Jan. 31) of long-time National Rifle Association President Wayne LaPierre. The resignation comes before the start of a civil trial next week in which New York Attorney General Letitia James sought his ouster. As Francis Wilkinson [says](, LaPierre allegedly used NRA membership dues to finance shopping sprees in Beverly Hills, among other things. The corruption scandal wasn’t the only thing working against LaPierre, either. The NRA’s dues revenue has been in a major slump, and the organization has had to slash hundreds of jobs. But don’t weep for LaPierre, Francis writes. No matter what happens next, he and the NRA have left a lasting mark on America. “For all its moral degradation, political atrophy and financial decline, the NRA still reigns,” Francis says. “It’s like a parasite that has dissolved into its host, but only after having seized control of the organism. A controlling interest in a political party and a Supreme Court majority is an impressive achievement by any standard.” Telltale Charts No matter where your political loyalties lie, odds are that you have strong feelings about wealth redistribution. Tyler Cowen [says](that the US tax-and-transfer system has been getting more progressive and the US, therefore, more redistributionist “whether you like it or not.” The confusion around the issue often comes from the observation that the top marginal tax rate used to be 70% before President Ronald Reagan’s reforms, and now it’s in the 40s. But Tyler says you have to look at the entire tax-and-transfer system, and doing so reveals pretty clearly — even in the opinion of researchers of differing political persuasions — that redistribution is happening “toward the bottom half of the US income distribution.” One final note on the opening theme of this newsletter: labor markets. Apparently, as Brooke Sutherland [says](, there’s still a significant pilot shortage around the world. A report in the Wall Street Journal and Aero Crew News showed that Delta Air Lines Inc. plans to hire 1,100 pilots this year, and that’s part of a broader issue across the entire globe. Brooke cites Robert Mann, president of RW Mann & Co., as saying that a natural peak in attrition among commercial pilots was exacerbated by the pandemic. Further Reading Biden shouldn't [stand in the way]( of Nippon Steel Corp.'s acquisition of United States Steel Corp. — The Editors Republicans may actually fear the [success]( of Biden's green loans, not their failure. — Liam Denning Luke Littler is helping give [darts]( its Tiger Woods moment. — Matthew Brooker ICYMI The Supreme Court agreed to weigh whether Colorado can [bar]( Donald Trump from the ballot. Southwestern and Chesapeake are [close to](bbg://news/stories/S6T1J10799MQ) a $17 billion merger, WSJ reports. A former police officer who defended the Capitol on Jan. 6 is [running](bbg://news/stories/S6T6B3TVI5MO) for Congress. NYC [may escape]( significant snowfall from the first big winter storm of the year. Kickers Need more rizz? Here's [29 slides]( explaining Tenet. Taco Bell is getting into [meal kits](. What will Taylor Swift [wear]( to the Golden Globes? Notes: Please send your ridiculously high-margin-of-error labor market forecasts and feedback to Jonathan Levin at jlevin20@bloomberg.net. [Sign up here]( and follow us on [Threads](, [TikTok](, [Twitter](, [Instagram]( and [Facebook](. 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 Opinion Today 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