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Investors are concerned about what strong jobs data means for the economy

    Stock markets will be closed for Good Friday, but investors will still tune in early for one of the most sweeping jobs reports of the past year.

    Employers in the US added about 240,000 jobs in March, said economists polled by Reuters. Investors worry that a strong reading on jobs — coupled with potentially disappointing inflation numbers coming out next week — will force the Fed to raise interest rates at its next meeting, on May 3, in hopes of lowering skyrocketing prices. To add to the jitters: the job number has come in above analyst expectations in each of the latest 11 reports.

    Despite the layoffs in the tech and financial sectors, the labor market remains strong. Employers added about 4.3 million jobs in the 12 months to February, according to the Bureau of Labor Statistics, bringing the unemployment rate to its lowest point in 53 years.

    The hot labor market has made the Fed’s job of curbing inflation more difficult. A combination of robust hiring and higher wages has put pressure on prices, even as other parts of the economy have shown signs of slowing down.

    The labor market appears to be at a turning point. This week’s JOLTS report from the Labor Department indicated that employers were beginning to slow the pace of hiring. But the quit rate rose, an indicator that workers feel confident to quit one job and find another.

    The mixed signals add to the volatility in the equity markets. After an impressive rally in the first quarter, interest rate sensitive technology stocks are on a three-day losing streak as investors become increasingly concerned that the Fed will be forced to raise rates even as the economy slides into recession. “The stock market has fallen and the likelihood of a recession has increased,” Jamie Dimon, CEO of JPMorgan Chase, wrote this week in his annual letter to investors.

    The recession forecasts add to the importance of Friday’s jobs data. “Perhaps it is a good thing that markets are closed on Friday for the release of the payroll report, given its importance in terms of the recession debate,” Quincy Krosby, chief global strategist for LPL Financial, wrote in a note to clients on Wednesday.

    Speaker of the House Kevin McCarthy meets with the President of Taiwan in California. President Tsai Ing-wen’s visit to the Republican leader’s home state was carefully choreographed to show solidarity as Washington tries to challenge China without triggering a military crisis. Beijing condemned the US and Taiwan for the meeting.

    Rupert Murdoch may have to testify in the Dominion trial for defamation. The judge presiding over the lawsuit against Fox News ruled that he would not stop trying to force Mr. Murdoch and his son Lachlan to testify in person. In more personal Murdoch news, the billionaire has reportedly called off his two-week engagement to Ann Lesley Smith.

    Twitter labels NPR as “state-affiliated media.” The social network changed its policy to put the broadcaster in the same category as China’s Xinhua and Russia’s RT, sparking protests from the US media group (which receives only a small portion of its funding from the US government). It’s the latest sign of Elon Musk’s unpredictable and often controversial Twitter makeover.

    Switzerland is considering cutting bonuses for 1,000 Credit Suisse bankers. Federal officials urged the Treasury Department to scrap about $66 million in payouts at the bankrupt Swiss bank following its sale to UBS, and pushed for possible recoveries of bonuses already paid. The decision came days after Credit Suisse shareholders expressed anger at the bank’s collapse.

    Disney appoints its new streaming chief. Joe Earley, who leads the Hulu platform, will also oversee Disney+ as he becomes the media giant’s new direct-to-consumer leader; he will oversee expected streaming cuts. Separately, former Marvel chief Ike Perlmutter told The Wall Street Journal that he was fired — not fired — after a clash with top Disney executives.

    The turmoil that bankrupted Silicon Valley Bank and gripped the broader banking sector last month has analysts bracing for a potential crisis in the approximately $20 trillion commercial real estate market.

    Commercial real estate, the lifeblood of lending, now faces “a huge hurdle,” Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, warned investors in a note this week. The sector is precarious thanks to a potentially toxic cocktail of post-pandemic office vacancy rates, rising interest rates and a massive mortgage refinancing on the horizon.

    More than half of the $2.9 trillion in commercial mortgages will need to be renegotiated by the end of 2025. Local and regional banks are on the hook for most of those loans. And interest rates are expected to continue to rise by as much as 4.5 percent, Morgan Stanley estimates. That debt burden will weigh on businesses, even if low occupancy means real estate values ​​will come under pressure.

    The effect is likely to cool lending, experts say. “We hesitate to declare “all clear” about the recent regional banking stress,” Candace Browning, who leads global research at Bank of America, wrote in a note this week. In a sign of market uncertainty, the FDIC is still looking for a buyer for collapsed lender Signature Bank’s $60 billion loan portfolio.

    The economic impact is enormous. Even as it struggled with the effects of the pandemic, commercial real estate — including office buildings, shopping centers and warehouses — contributed $2.3 trillion to the U.S. economy last year, an industry association calculated. It is unclear how the sector would survive a looming credit crisis. “It’s a perfect storm right now,” Varuna Bhattacharyya, a real estate attorney at Bryan Cave Leighton Paisner, recently told The Times.

    Is the Fed at fault? A growing chorus of critics say that with parts of the banking sector so fragile, the central bank should reconsider its aggressive interest rate policy. The high price of refinancing commercial real estate loans in coming years will “probably lead to the next big crisis,” The Kobeissi Letter, a newsletter covering the economy and markets, wrote on Twitter last weekadding that “the Fed plays an important role.”

    So far, the Fed is unfazed: there is at least one rate hike planned this year.

    — Chamath Palihapitiya. In his annual letter to investors, the outspoken venture capitalist wrote of how rising interest rates caused “absolute value destruction” in money-losing start-ups like the one he had invested in. That fall in valuations also seems to have led to its facing a margin call on a loan that he used for other investments.

    Bob Lee, a tech executive and investor who founded the payment service Cash App, was stabbed Tuesday in San Francisco. Mr. Lee was the chief product officer of cryptocurrency start-up MobileCoin and a former chief technology officer of Block, the payments company formerly known as Square.

    According to his LinkedIn profile, he was also an investor in companies like SpaceX and Clubhouse. As news of his death spread on Wednesday, members of the tech community posted memories of him online.

    • Elon Musk tweeted that he was “deeply sorry to hear” of Mr Lee’s death and urged the city council to do more to tackle violent crime. “Violent crime in SF is horrific and even if attackers are caught, they are often immediately released,” he wrote.

    • Joshua GoldbeardMobileCoin’s founder and CEO said, “Bob was brilliant,” adding that you could choose a topic “and Bob would be right there with you to tell you all the ways he’s already thought about the idea.”

    • Jack Dorsey, the founder of Block and co-founder of Twitter, called Lee’s death “heartbreaking” on the social media site Nostr, saying “Bob was instrumental in Square and Cash App.”

    • The CEO of design platform Figma, Dylan fieldtweeted that he first met Mr. Lee in 2006. “He didn’t care I was only 14 and we were talking tech/nerds about programming,” he said.

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    • The FDIC hired BlackRock to sell the securities portfolios of Silicon Valley Bank and Signature Bank, which are collectively worth about $114 billion. (Reuters)

    • Two New York City pension funds have announced plans to reach “net zero” emissions by 2040, including by asking asset managers not to invest in fossil fuel production. (Pensions & Investments)

    • The FBI and other global law enforcement agencies have shut down Genesis Market, an online hub for stolen passwords and personal information. (BBC)

    • The foreign ministers of Saudi Arabia and Iran met at a Chinese-brokered summit in Beijing, the first high-level talks between the rivals in seven years. (WSJ)

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