Bloomberg - Evening Briefing - Can’t wait for cuts

Wall Street just can’t wait. As closely watched as the US Federal Reserve is in normal times, these less-than-normal times have placed every central bank utterance (or omission) under an even brighter klieg light. On the fourth anniversary of the formal declaration of a pandemic, investors are predicting the end of high interest rates that (mostly) crushed the inflation which followed. With the US economy in soft-landing mode, Federal Reserve Chair Jerome Powell and his colleagues are moving closer to lowering the gear for touchdown. In congressional testimony last week, Powell emphasized the central bank needs “just a bit more evidence” that inflation is headed toward its 2% target before lowering borrowing costs. “We’re not far from it,” Powell told lawmakers. Much of the focus by investors this month will be on the Federal Open Market Committee’s quarterly forecasts for rates, including whether fresh employment and inflation figures have prompted any changes. Should Fed officials pencil in three quarter-point reductions for 2024, it may set the stage for a potential cut in the next few months. And while the central bank is widely expected to hold interest rates steady when policymakers meet next week, after that it’s anyone’s guess. —Natasha Solo-Lyons and David E. Rovella

Bank of America disclosed pay increases of more than 10% for two of its highest-ranking executives. The news comes a month after it reported that Chief Executive Officer Brian Moynihan’s compensation was cut for 2023. Chief Financial Officer Alastair Borthwick’s total compensation climbed 14% to $12 million last year, while Jim DeMare, head of the bank’s global-markets division, saw his pay rise 11% to $21 million.

Brian Moynihan Photographer: Hollie Adams/Bloomberg

Reddit and its investors are said to be seeking to raise as much as $748 million in what would be one of the biggest initial public offerings so far this year. The social media platform and some of its current shareholders plan a sale of 22 million shares for $31 to $34 each. The company was seeking a valuation of as much as $6.5 billion in the listing, Bloomberg News has reported.

After hitting a record low in January, US consumer expectations for inflation over the next three years climbed to 2.7% in February, a Federal Reserve Bank of New York survey showed. Five-year expectations climbed to 2.9%. Projected year-ahead inflation was unchanged from January at 3%, the data out Monday showed.

A water brand with a popular social media following is now a billion-dollar company. Los Angeles-based Liquid Death has raised new capital that values the startup at $1.4 billion, double its $700 million valuation in 2022. The business has seen its momentum continue with newer categories such as iced tea and flavored waters, Chief Executive Officer Mike Cessario said in an interview.

President Joe Biden’s $7.3 trillion fiscal 2025 budget proposal lays out a second-term vision that would deliver more services, middle-class tax breaks and price controls to voters, paid for with higher taxes on the wealthy and corporations. The document builds on Biden’s blistering State of the Union address and likely seeks to draw a sharp distinction between his policies and those of his likely opponent, Donald Trump. In 2017, Trump and a Republican-controlled Congress pushed through a $1.5 trillion tax overhaul that largely benefitted corporations and the rich.

US President Joe Biden Photographer: Leigh Vogel/Abaca

China’s unceasing economic malaise threatens to ripple across rallying global markets, according to the latest Bloomberg Markets Live Pulse survey. Global stocks are at records as US economic resilience, buzz around artificial intelligence and growth in places like India and Indonesia keep the rally going. That’s despite troubles in the world’s second-largest economy that include property-sector turmoil, entrenched deflation and geopolitical tensions with the US. About three-quarters of MLIV Pulse respondents said they are somewhat or very concerned about China’s problems spilling into other major economies this year.  

The most-exciting trade on Wall Street right now might just be betting on boring. As winners of the AI boom like Nvidia power benchmark stock gauges, a less remarked-upon phenomenon has been unfolding at the heart of the US market: Investors are sinking vast sums into strategies whose performance hinges on enduring equity calm. Known as short-volatility bets, they were a key factor in the stock plunge of early 2018 when they wiped out in epic fashion. Now they’re back in a different guise—and on a much bigger scale.

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Executive coaching is all about achieving peak performance. For a growing offshoot of the field, the recipe for success includes hallucinogenic drugs. Unregulated advisers are employing ecstasy, ketamine and “magic” mushrooms in their quest to help clients get ahead—despite concerns about the credibility of research on psychedelics, or the effects of daytime dosing at work. Allegations of drug use by Elon Musk, Sergey Brin and murdered Cash App executive Bob Lee have brought fresh attention to how the business world is affected by rising use of psychedelics. But even in traditional financial circles, coaches are finding eager clients.

A New York “ketitation” session. Photographer: Kaia Roman

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