| Bloomberg Evening Briefing Americas |
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| US consumers pulled back on spending on goods like cars in January amid extreme winter weather. Inflation-adjusted consumer spending fell 0.5%, marking the biggest monthly decline in almost four years after a robust holiday season. The drop in outlays was driven by an outsize decline in motor vehicle purchases and drops in categories like recreational goods. "The key question is whether this is the onset of a more cautious consumer in 2025," said Gregory Daco, chief economist for EY. "Spending on the services front was modest, so it may be a little bit more than just a post-holiday breather." After two weeks of sobering news on the inflation and employment front, there was however a little silver lining: the Federal Reserve's preferred measure of underlying inflation offered some relief on Friday from all those ill tidings. —David E. Rovella | |
What You Need to Know Today | |
| Ukraine President Volodymyr Zelenskiy came to Washington on Friday to seal a deal in which he would give the Trump administration access to mineral resources in his country. This accord though came with no US security guarantees as part of any ceasefire deal with Vladimir Putin or otherwise. Instead, it was payment for services rendered—the tens of billions of dollars in US aid over three years during which Russian soldiers, mercenaries and convicts laid waste to Ukrainian cities and towns. In an Oval Office meeting, Zelenskiy sought to explain to President Donald Trump that Putin (who is wanted in The Hague for alleged war crimes) has repeatedly violated previous agreements. Zelenskiy said Ukraine would never accept a simple ceasefire to conclude the war and insisted a mineral deal wasn't enough to ensure Ukraine's security. He did all of this in front of the cameras. That's when the fireworks began.  WATCH: Ukraine President Volodymyr Zelenskiy, left, and US President Donald Trump in a heated exchange in the Oval Office on Friday. | |
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| Flailing consumer confidence, a big jump in jobless claims, gloomy housing data—there are lots of reasons to worry about the fate of the US economy, and anxiety has been taking hold across markets. To be sure, it's nice that a late-day rally on Friday boosted the S&P 500 (see the aforementioned silver lining), but it's inescapable that investor sentiment is deteriorating. Treasuries are off to their strongest start to a year since the pandemic arrived in early 2020, while stocks have nearly wiped out 2025 gains. Now the big money managers, like those at Manulife Asset Management and Penn Mutual Asset Management, are paring equity positions while building bond exposure. "If the consumer weakens materially and corporations pull back on growth plans, economic growth deterioration becomes a major headwind," said Nathan Thooft at Manulife Investment Management in Boston, which oversees $160 billion. "There is little room for policy missteps." | |
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| Trump may have found a way to force the Fed to lower interest rates after all, Nir Kaissar writes in Bloomberg Opinion. It's no secret that Trump wants lower rates. He also wants more say in monetary policy. It would be a mistake for the central bank to cede any more of its independence to this president or any future one, Kaissar writes, but Trump may have a backdoor. The central bank's monetary policy garners a lot of attention and often criticism. Less noticed is the impact of fiscal policy. | |
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| S&P Global Ratings put a negative outlook on its assessment of France's creditworthiness, underscoring enduring uncertainty over the country's finances after a prolonged period of political turmoil spurred in part by a snap election last year and the ascendance of the far right National Rally party. The change in outlook reflects "rising government debt amid weak political consensus for tackling France's large underlying budget deficits, against a backdrop of more uncertain economic growth prospects," the ratings firm said in a statement late Friday. S&P kept its AA- rating on France, seven notches above junk and in line with the Czech Republic and Slovenia. | |
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| The news is somewhat better for Turkey. The country emerged from a technical recession in the fourth quarter with stronger-than-forecast growth and a nascent rate-cut cycle bolstering investor hopes for the year. The $1.3 trillion economy expanded 1.7% compared to the third quarter, Turkey's statistics agency said Friday. That was slightly more than the median forecast of 1.5% in a Bloomberg survey. The comeback at the end of last year came as interest-rate cuts kicked off by the central bank in late December started to make their way into the real economy. An analyst survey by the central bank sees a 3% expansion at end of 2025. | |
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What You'll Need to Know Tomorrow | |
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