| Good morning. Will the S&P 500 keep setting records in a week full of earnings and central bank risk? Plus, Saudi Aramco throws the oil market a surprise and Bitcoin is on a pandemic-era-like winning streak. Here's what people are talking about. — Sofia Horta e Costa US stock-index futures are a smidge lower as I type, indicating a pause for the rally that's pushed the S&P 500 to a new record. Earnings will be a key test as will the Federal Reserve's decision tomorrow, with bulls likely to be on the lookout for dovish signals from Chair Jerome Powell. But some of Wall Street's biggest optimists are growing concerned that the good vibes are sending a contrarian signal on the market. At a sector level, Morgan Stanley analysts are turning bullish on major US banks, saying regulatory changes for higher capital levels may be less onerous that current proposals — allowing for more stock buybacks down the road. The spotlight is as ever on oil prices as the market waits for how the US will respond to the deadly attack on American troops in Jordan, with Iran urging the White House to use diplomacy to ease tensions in the Middle East. (Have a listen to today's Bloomberg Daybreak podcast for more.) A big surprise for oil traders came from Saudi Aramco, which abandoned a plan to boost its oil output capacity in a significant reversal that's raising questions about the kingdom's view on future demand. Bloomberg Economics estimates Saudi Arabia needs an oil price of $108 a barrel to balance its budget and meet domestic spending by the sovereign wealth fund. Crude is steady in London today, trading near $82 a barrel. Bitcoin is on course to advance for a fifth straight month — just. It's up about 2% in January, a whirlwind month for traders and speculators marked by the rollout of the first US spot Bitcoin exchanged-traded funds. The last time the largest digital asset managed a winning streak like this was the October 2020 to March 2021 stretch oiled by pandemic-era easy money. On Monday, Invesco and Galaxy Asset Management said their BTCO ETF will waive fees for the first six months and eventually charge a lower expense ratio than previously — the latest move in the nascent industry's already-established fee war. China's policymakers will need to take more steps to revive investor confidence, judging by the gloom in markets. The planned liquidation of China Evergrande Group isn't helping the mood this week, with creditors set to recover just a fraction of the billions of dollars worth of the builder's debt they hold. China's 10-year government bond yield fell to its lowest in nearly 22 years, suggesting hopes for further monetary easing. Here's a handy timeline of everything that's been done by Chinese authorities in recent weeks to support the economy and put a floor on sliding stock prices. Meanwhile, the team at Morgan Stanley cut its targets for major Chinese stock indexes while raising estimates for Japanese benchmarks as two of Asia's biggest stock markets continue to diverge. It's earnings day for Microsoft and Alphabet. The Conference Board is set to release its consumer confidence index for January, plus we'll get the JOLTS jobs openings data for December and the latest S&P CoreLogic Case-Shiller index for home prices across 20 American cities. Mexico will release GDP data and weekly international reserves numbers, while Chile's unemployment figures are due. Plus, the US-EU Trade and Technology Council meeting is set to take place in Washington.
American consumers are sitting on almost $4 trillion of cash in their checking accounts, far more than before the pandemic. Will they continue splurging on concert tickets, food and travel, or are they about to cut back? Share your views in the latest MLIV Pulse survey. This is what's caught our eye over the past 24 hours. Here's something I've been thinking about. Throughout 2021 and 2022, we had a blistering hot labor market, high inflation, and terrible consumer sentiment. Of course, one weird aspect of the terrible consumer sentiment is that it wasn't translating into terrible consumer activity. This was kind of a strange thing. People were obviously telling pollsters that things were bad, yet spending on discretionary goods and activities (trips to Vegas, cruises, flights etc.) were all on fire. Normally you'd think if the consumer is dour there would be less consumption.
Anyway, right now we know that inflation has decelerated quite a bit. There are also hints that hiring is not at the same pace it was a year or two ago. And of course, we know that sentiment is bouncing back. The latest CIVIQS sentiment tracker found that 8% of the population finds the economy in "very good" shape, which is the highest since the middle of 2021. Other measures have trended up as well.
Anyway, it'd be interesting if it all reversed. The labor market turns from hot to mild. Inflation turns from hot to mild. And while consumer sentiment is trending up, maybe actual consumption tapers off.
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. | 
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