Bloomberg - Evening Briefing - America’s sizzling job market

The sizzling US labor market is good news for American workers and President Joe Biden, whose message on the nation’s booming economy may be starting to get through. It’s a bittersweet state of affairs though for those on Wall Street hoping for the Federal Reserve to start dropping interest rates soon. The January jobs report blew estimates out of the water and appears to affirm (yet again) the wrongheadedness of almost two years of recession predictions. The Fed is still pursuing its soft landing in the fight against inflation while the US has added thousands of jobs and broken with the pre-pandemic trend of weak wage growth. In the US version of post-Covid recovery, employers have been able to to hire at a steady clip, allowing for business growth, while wages continue to outpace inflation, boosting workers’ spending power even in the face of rising prices. Women entering the workforce helped drive January’s job gains, while average hourly earnings rose again, increasing 0.6% from December and 4.5% from a year ago. Consumer sentiment also jumped for the month with people upbeat about their household finances, even if some are cautious about their ongoing job prospects—especially given all the high-profile mass firings by tech companies and others of late.

Still, the picture is largely good news for the Biden administration, which has been touting the country’s economic strength (and how the Democratic president’s legislative victories on climate, infrastructure and technology have played a role in it) going into the presidential election. So what happens now? While the Fed has indicated it will start cutting interest rates this year if inflation continues to retreat, the strength of the job market could keep the timing in flux. Fed officials are hoping employment growth will remain strong enough to keep the economic expansion intact but says it would like to see more moderate pay gains as it awaits confirmation that inflation will keep slowing to its 2% target. While investor expectations for rate cuts are now shifting from March to June, some economists say it’s better to be slower than faster. The upshot, Allison Schrager writes in Bloomberg Opinion, “is an economy with more uncertainty—and a healthier relationship with risk.”

The US is getting dragged deeper into the widening conflict sparked by the war between Israel and Hamas. Biden made no secret of his intention to attack an Iran-backed group the US said killed three of its soldiers last week, and followed through on Friday, striking 85 targets at seven locations linked to Iran’s Islamic Revolutionary Guards Corps’ Quds Force and affiliated groups. He also signed an executive order allowing the US to impose more sanctions on Israeli settlers—and possibly government officials—involved in violence against Palestinians. Meantime, Secretary of State Antony Blinken is returning to region as negotiations advance to pause the war and free civilian hostages captured by Hamas, in a deal that could be a crucial step toward ending the four-month conflict.

Iranian missiles are exhibited in a park in Tehran Photographer: Majid Saeedi/Getty Images

From New York to Tokyo, commercial real estate turmoil is raising bank angst. New York Community Bancorp, one of the winners as regional lenders struggled (and collapsed) last year, slashed its dividend this week, and Tokyo-based Aozora Bank warned of a loss tied to investments in US commercial property. Lenders face $560 billion in debt maturities by the end of next year and an ongoing slide in commercial property values that links back to the onset of the pandemic. In China, still dealing with its own property crisis, the embattled developer Evergrande received a liquidation order from a Hong Kong court. 

Sultan Ibrahim Iskandar, a motorcycle-riding, Ferrari-driving billionaire, took the throne this week as Malaysia’s new king. With close ties to the leadership of Singapore and business partners that include one of China’s biggest property developers, the sultan is poised to have more influence on both domestic and foreign policy than any previous Malaysian monarch. Also, ex-Prime Minister Najib Razak’s prison sentence was  shortened to six years from 12.

Sultan Ibrahim Iskandar. Photographer: Hasnoor Hussain/AFP

Dozens of British wind farms run by some of Europe’s largest energy companies have routinely overestimated how much power they’ll produce, adding millions of pounds a year to consumer electricity bills. Airlines could struggle to reach their near-term climate goals because the supply of lower-carbon sustainable aviation fuel is “coming online slower than anticipated,” Kristof Van Passel, head of procurement operations and development at Cathay Pacific, said at the BloombergNEF summit. And Biden is tapping veteran Democratic strategist John Podesta to be the top diplomat representing the US in global climate talks, succeeding John Kerry.

Don’t cheap out this Valentine’s Day with supermarket flowers. Here’s a list of deluxe gifts for your loved one. The Loire Blue Range Rover that was used by Queen Elizabeth II is up for sale. Price: $225,000 with just 18,206 miles on it. This year, the most exciting hotel openings in Greece are popping up in spots less known to an international crowd.

Louis Vuitton’s “Keep My Heart” bag is too tiny to fit most phones, but it packs a big price tag at $$2,040. Source: Louis Vuitton

• Supreme Court hears arguments on Trump, insurrection and the  ballot.
• US President Joe Biden hosts Germany’s Olaf Scholz to discuss Ukraine. 
• Japan auto earnings,  with Toyota still the world’s No. 1 automaker.
• The Lunar New Year ushers in the Year of the Dragon.
• South African president’s last state of the nation before elections.

El Salvador President Nayib Bukele has waged a “war on gangs,” imprisoning 1.6% of the population while suspending civil liberties across the country. While the nation has been in part transformed from one of the most dangerous in Latin America to among the safest, that progress has come with criticism and fear of his increasingly authoritarian bent. On this week’s mini-documentary by Bloomberg Originals, The Price of El Salvador’s War on Gangs, we explore how the country’s upcoming election may be a referendum on his approach.

El Salvador President Nayib Bukele has waged a “war on gangs” at the expense of civil liberties. Photographer: Jeenah Moon/Bloomberg

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