| | | | | | | Presented By J.P. Morgan Wealth Management | | | | Axios Markets | | By Dion Rabouin ·Apr 06, 2021 | | Good morning! Was this email forwarded to you? Sign up here. (Today's Smart Brevity count: 1,124 words, 4 minutes.) Situational awareness: The IMF will release its latest World Economic Outlook at 8:30am ET today. 🎙 "I think I'm the first man to sit on top of the world." - See who said it and why it matters at the bottom. | | | | | | 1 big thing: Service sector sentiment survey surges to record high |  Data: FactSet; Chart: Danielle Alberti/Axios The March reading of the ISM services index reached the highest level on record last month (with data going back to 1997), far outpacing economists' forecasts. At 63.7, it jumped more than eight points from the month before. The big picture: Readings from business owners in the U.S. services sector now have joined the manufacturing sector in ebullience about the future, as stimulus checks hit bank accounts, vaccination rates rise and job growth returns. Between the lines: "The details were just as strong as the headline," Lou Brien, economic strategist at DRW Trading, said in an email. - Business activity rose 14 points to a record high, new orders rose 15 points and employment increased 4.5 points.
- And of course, business owners noted that the prices they paid for goods were rising, with the index for prices climbing to its highest since 2008 — a long-running theme of sentiment indexes this year.
What they're saying: "Respondents' comments indicate that the lifting of coronavirus (COVID-19) pandemic-related restrictions has released pent-up demand for many of their respective companies' services," Anthony Nieves, chair of ISM's services business survey committee, said in a release. - "Production-capacity constraints, material shortages, weather and challenges in logistics and human resources continue to cause supply chain disruption."
State of play: Analysts at Jefferies noted that their U.S. economic activity index rose last week to the highest level since March 14, 2020. - "Since bottoming on Jan 15, the index is up over 14 points," Jefferies money market economist Thomas Simons says in a note to clients.
- "Consumer activity accounts for half of that increase, consistent with the lift from fiscal stimulus and the reopening. Our employment and movement composites have also increased meaningfully, as confirmed by March payrolls. Our real-time tracking points to extremely strong retails sales for March."
But, but, but: The recovery may not be such a good sign for stock prices, Deutsche Bank chief global strategist Binky Chadha says. - "Equities have historically traded closely with indicators of cyclical macro growth such as the ISMs (correlation 73%). Growth (ISM) typically peaks around a year (10-11 months) after recession ends, right at the point we would appear to be," he says in a note to clients.
- "The S&P 500 sold off around growth peaks by a median -8.4%, but even episodes which saw the ISM flatten out rather than fall, saw a median -5.9% selloff."
|     | | | | | | 2. Catch up quick | | Credit Suisse said it will take a $4.7 billion hit from the meltdown of Archegos Capital Management, slashed its dividend and announced its investment banking and risk chiefs would leave the bank. (WSJ) West Virginia Sen. Joe Manchin, seen as a necessary swing vote for Democrats, says he won't support raising the corporate tax to 28% but could see 25%. (Bloomberg) The Supreme Court ruled 6-2 in favor of Google in its copyright dispute with Oracle over Android software. (Axios) Cryptocurrency market capitalization hit a record $2 trillion, with bitcoin's market cap touching $1.1 trillion. (Reuters) | | | | | | | | 3. "Business travel will be forever lower" | | Axios' Hope King writes: Booking.com CEO Glenn Fogel says it plainly: "The share of business travel will be forever lower than pre-pandemic." Why it matters: Business travel has an outsized impact on parts of the travel and leisure industry, which is in the midst of adapting to post-pandemic demand. - For example, only about 12% of air travel comes from business passengers, but they represent 75% of an airline's profits, according to travel software provider Trondent.
What's happening: Booking.com introduced a new $50 credit for future travel as an incentive to help drive demand for leisure trips — a segment that is expected to pick up faster than business travel. - "We need to help get this industry back up and running, traveling safely," Fogel said.
The big picture: The CDC issued new guidelines on Friday for U.S. domestic travel as the number of people who have been fully vaccinated climbs to near 20%. Our thought bubble from Axios transportation correspondent Joann Muller: There are unmistakable signs of pent-up demand for leisure travelers, but business travel is likely going to take much longer to recover, in part because companies are still trying to figure out what return-to-work looks like. - It will be easy to replace some corporate travel with virtual Zoom meetings, but when it comes to things like sales, where competition is intense and it's important to "read the room," travel will become a necessity once more.
| | | | | | | | A message from J.P. Morgan Wealth Management | | A partner to help you grow your wealth | | |  | | | | At J.P. Morgan Wealth Management, local advisors work with global experts to create smarter investing strategies for you. Why it's important: For over 200 years, J.P. Morgan has guided investors through every kind of market. And when it comes to your most important goals, experience matters. Learn more. | | | | | | 4. The post-pandemic career shake-up |  | | | Illustration: Rae Cook/Axios | | | | Axios' Kim Hart writes: Millions of workers are planning to jump to new jobs or new lines of work after the pandemic eases up. Why it matters: High-skilled workers with plenty of opportunities are the hardest to replace. This massive reshuffling also will create major headaches for employers, and will likely expand the gaps between men and women in the workplace. By the numbers: A quarter (26%) of workers plan to look for a job at a different company once the pandemic threat has subsided, according to Prudential's latest Pulse of the American Worker Survey, conducted by Morning Consult in March. - That number is even higher (34%) for millennials, the largest generation in the workforce today.
- Of those planning to leave their current job, 80% are concerned about career growth, and nearly 75% say the pandemic made them rethink their skill sets.
"If there's one thing that keeps me up at night, it's the talent flight risk," said Prudential vice chair Rob Falzon. - Now that the pandemic's economic threat is easing up, business leaders "need to get back to looking more intently at our talent and ensuring we are giving them opportunities even in a remote environment, or we're going to lose them," Falzon said.
- High-performing workers are the most concerned about career advancement in their current jobs, and they no longer feel geographically tied to local employers in a remote world.
The big picture: Most workers say they want to work remotely at least part of the time even after offices reopen, multiple surveys suggest. Despite the benefits, "hybrid" environments also create new workplace tensions. - Nearly half of remote workers say they'd be nervous about job security if they stayed remote while colleagues returned to the office, per Prudential's survey.
Between the lines: Worker burnout will also contribute to the "talent flight," as workers put in more hours remotely, take less time off, juggle child care duties and deal with general pandemic stress. - Nearly half of employees surveyed by Prudential said they feel disconnected from their companies after a year of working remotely, partly because they are missing the benefits of interacting with people outside their teams and getting "face time" with higher-ups in the office. This "culture decay" can lead people to be more likely to hop to a new employer.
Reality check: The new work dynamics may have profound consequences for women, who at least initially are less likely to return full time to the worksite. - This may worsen the gender pay gap if managers perceive on-site workers to be higher performers, Axios' Erica Pandey has reported.
| | | | | | | | A message from J.P. Morgan Wealth Management | | 200 years of expertise, in the palm of your hand | | |  | | | | Get the tools and information you need to make smarter investing decisions with J.P. Morgan Wealth Management. Here's how: When you trade commission-free on the Chase Mobile app, you get access to timely investment research and insights, and a support team of real people. Learn more. | | | | Thanks for reading! Quote: "I think I'm the first man to sit on top of the world." Why it matters: On April 6, 1909, explorer Matthew Henson became the first man to set foot on the North Pole. His expedition party also included Robert Edwin Peary and four Native Americans. - Henson, a Black man, was born to sharecropper parents who were free before the Civil War.
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