| It's payrolls day, the US is monitoring a suspected Chinese surveillance balloon and big tech firms are hitting troubled waters. — David Goodman After a week of central bank action, the market's attention is now focused on today's nonfarm payrolls report. Hiring likely continued to moderate in January, although still-solid wage growth, an unemployment rate near historical lows and high vacancies are seen stiffening the Federal Reserve's resolve to keep rates elevated for some time. Payrolls growth is forecast to have slowed to 189,000 from 223,000 in December, while unemployment may have ticked up to 3.6% from 3.5%. Meanwhile, US employers in January announced the most job cuts since 2020, according to data compiled by Challenger, Gray & Christmas. The Pentagon is tracking what it said was a Chinese surveillance balloon over sensitive nuclear sites in the western US, an incident that injected new strain into relations before a planned Beijing visit by Secretary of State Antony Blinken. The balloon was first spotted earlier this week and had been hanging over Montana, where Minuteman III intercontinental-ballistic-missile silos are located, a senior Defense Department official said. Here's the rundown of what you need to know. Apple, Amazon and Alphabet, technology giants with a combined market value approaching $5 trillion, posted a set of troublesome results Thursday, showing the economic slowdown is throttling demand for electronics, e-commerce, cloud computing and digital advertising. That's left Nasdaq futures pointing lower this morning, although that might not trouble Cathie Wood, founder and chief executive officer of ARK Investment Management. She told Bloomberg her flagship fund now gives investors better exposure to long-term innovation than most of the market's most popular growth stock benchmarks. "We are the new Nasdaq," she said. The pessimism looks set to extend beyond the Nasdaq, with all US equity futures signaling a lower open. Markets were more muted in Europe as stocks and bonds only gave back some of Thursday's huge rallies. The dollar was flat and an index of commodities fell for a third day. To catch up on the trading day in the UK and Europe, check out today's edition of Markets Today. The payrolls data will be released at 8:30 a.m. in Washington, followed by a couple of services reports later in the day. Later, San Francisco Fed President Mary Daly speaks in an interview on Fox Business/ Meanwhile, after a busy week, the relentless pace of earnings slows right down. Here's what caught our eye over the past 24 hours: Central banks in the US, Europe and the UK all raised interest rates to fresh multi-year highs, while signaling there is more tightening to come plus a willingness to hold policy at restrictive levels for a long time. Bond investors responded by piling in to bets that policymakers will soon start cutting borrowing costs. The International Monetary Fund was among those warning the battle between markets and central banks could cause pain for both economies and investors by counteracting policymakers' efforts to restrain growth in order to curb cost pressures. Part of the problem is that the Fed is starting to sound less hawkish than before. Chair Jerome Powell's speech palpably failed to offer the pushback against the pivot narrative that heavyweight bond investor Jeffrey Gundlach for one was expecting. Ray Dalio of Bridgewater Associates, told markets to pay heed to Powell's warnings about higher rates even after the press conference, but few seemed to listen. Financial advisers felt the need to warn clients against Fed FOMO. It's also possible that the record shorts hedge funds had placed against Treasuries helped boost this week's rallies. Given that background, even the European Central Bank's relatively hawkish moves — raising rates by half a point and making it clear another step-up would come next month — made barely a splash. Investors are becoming ever more convinced each hike is just bringing the world closer to the day when central banks will again act to ensure asset prices stay elevated. The fact that similar bets last year on imminent rate cuts went awry is also being set to one side. One of last year's top-performing bond funds is again positioning for a sell-off in 2023, figuring other investors are wrong in their pivot optimism. There are also some investors for whom the pivot question is well and truly moot — US defined-benefit pension funds sitting on their biggest surplus for two decades. Emerging-market investors were simply relieved Powell seemed pleased with the progress made on inflation. A key driver for bond investors' conviction may be the growing signs of distress in the world's highly-leveraged housing markets — the sort of development that usually means a slowdown is coming for economies. Data in the coming days will offer plenty of tests for the pivot thesis, starting with Friday's US payrolls, and continuing with US January inflation and retail sales figures due in mid-February. | 
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