the future is nothing but power and it's all yours. the all new godaddy airo. get your business online in minutes with the power of ai. ♪ >> there is more risk that they don't this year. if you get more of those inflation numbers i think those risks increase. >> the start of is not about easing, it is about normalizing. >> the u.s. economy continues to do with the well. >> the data needs to confirm we get the 2% all over before we cut rates. we need to leave everything on the table. announcer: this is bloomberg

surveillance. jonathan: good morning, good morning. this is bloomberg surveillance. posited by 0.2% on the s&p. chairman powell would like a little bit more data. going into the federal reserve meeting last -- next week, will he have sufficient evidence to change his view on the economy? lisa: people are really looking at this as being one of the most important in the last couple of years which is what we hear every single time, this time or option -- more often. the idea here is if you see another hotter than expected cpi print, you will start to reprice the federal reserve so they cannot cut rates until well after june. >> the question is exactly the same. the question on wall street has not changed. while the upside surprise a one-off or not? we don't expect the report to provide clear and of evidence of

disinflation to boost the fed confidence to cut interest rates. this is about how we set up that meeting going into next week. >> what i extrapolated yesterday was actually how they view inflation averaging the rest of the year. when we sit and talk at stabilization of inflation, the fed is going to get closer to 3%, the white house is actually more pessimistic than even our own economist we surveyed. jonathan: can we talk about the boj as well? i feel like we are going to be doing this every single day going into the bank of japan according to people familiar with the matter it could come as soon as next week. the first interest rate hike since 2007 and going back to what you set over the last 24 hours, it will come down to what those negotiations look like on friday.

lisa: i thought this latest piece of reporting was pushing back a little bit and that the outcome was too close to call. markets saying that this is a done deal. do they have a path to walk through and how much the bank of japan depends in some ways on the cpi print and what that means for the federal reserve. jonathan: we could get the first hike from the boj since 2007 i want to talk about tiktok as well. this is the number two republican on whether this bill is going to pass on wednesday. yes, it will. some opposition from dollar trump, it does not look like that is going to shake votes. >> looks like it is going to sail through the house as it sailed through that committee and then it is set up for the senate. schumer put it on the senate floor. biden says if it passes congress even though his campaign is currently using it, he will sign this bill. and then it is off to the races.

and a lot of people are talking about the fact that they don't actually see a ban, they just see someone else taking it over and potentially that would mean a safer tiktok in the eyes of regulators and officials. lisa: so here is what former president trump had to say. frankly there are a lot of people at tiktok that love it. a lot of young kids will go crazy without it. there is a lot of good and a lot of bad but the thing i don't like is that without tiktok you make facebook bigger and i consider facebook to be an enemy of the people along with a lot of the media. so that is his view. jonathan: some people might share that view. let's park tiktok and the former president and approach the story like this. any other story, if we conclude that it poses a national security risk and there are politicians down in washington that are unwilling to take people from national security risk, we would all be saying what on earth are they doing? so i think we should all be saying that regardless.

they have all concluded that this could pose a national security risk. the sitting president is campaigning on it and there are people in washington can do during not to pass a bill that would protect you from the. that is kind of bizarre to me. lisa: if you wonder why washington, d.c. has lost some credibility, show us all the evidence and then do something about it. it is not, take a laissez-faire attitude. annmarie: all they need to do is look at what happened yesterday in terms of intel hearing is for ray talking yet again about a national security threat and also the global report on national threats, and they mentioned tiktok specifically. playing politics of the united states midterm elections. if you are an elected official and you read this report through and through, there's obvious concerns. some of this has to do with money and campaign donations and on the left it has to do with taking sure you are reaching that youth vote. jonathan: without a doubt, that

is why people cannot stand what happens in the nation's capital. lisa: pleasing kids and getting money. jonathan: you're facing a national security risk and you are worried about what the kids might say. are you serious? lisa: are you actually surprised? you actually feigning surprise right now? jonathan: i'm not, but if you are wondering why people get frustrated with politicians, wonder no more. annmarie: he's obviously having a grueling week yet again, if this is not banned any u.s. company takes it over, the 150 million users it has in being the number one new source for jens the -- gen z may still exist. i'm not sure what this means for some republican voters but washington may actually act this week. steve scalise says it has the votes. jonathan: that's two minutes to many of tiktok.

positive by 0.2%. a morning full of inflation conversation. yields lower by a single basis point. coming up this hour, brian levitt of invesco awaiting the latest cpi print. tensions between president biden and his prime minister benjamin netanyahu ramp up and the impact of housing at labor on today's inflation data. we begin with our top story, brian levitt looking for disinflationary trends to stick, saying this. it would be a meaningful deterioration of economic growth that we are not forecasting. in celebration -- acceleration of inflation would not be at the top of my list for 2024. good to see you and let's start with the date of the drops at 8:30 eastern time. what are you into the team looking for? >> when i said inflation is moving up a little bit when you look at the momentum, the good

news is that is really not coming from the consumer, it is really not coming from wages. you are seeing it more on the import side which of course is what is happening commodities space. i'm not extrapolating that to be heading back to where we were, this is extremely problematic. seems like every cycle we go through including 2007, let's remember that, there is another head fake on inflation. ultimately the effects of policy tightening start to hit. jonathan: the obsession today is about shaping the federal reserve decision of tomorrow. you don't seem to be dependent at all on homely times they cut this year. >> i'm not overly concerned about the number of cuts. there recent nuance with regard to market leadership but my northstar has been the last 50 on set the markets to well after the peak of laois and, after the peak of tightening. there's a nuance around how many

cuts you are going to get when the market initially priced in six cuts which was sort of strange in hindsight. huge small-cap rally, huge mid-cap rally. now that you are backing some of that out, the market became a little bit more concentrated. ultimately after what we went through i'm just happy to tightening is over and over the next year we are going to normalize the bell curve. lisa: even the people who sort of sound bearish are actually bullish. it sort of depends on your timeframe. people to see a short-term selloff see that as a reason to buy. you might not be fomo anymore but if there is a 10% pullback you are all in. >> this year is likely to be no different. they don't emerge out of nowhere. they are almost always the result of policy uncertainty. if you get a couple of unexpectedly strong inflation

numbers, that will be a catalyst for some type of pullback. remember, we had an incredible start to the year and say should expect some of that, but ultimately you have to ask yourself are we on a path toward policy normalization following 520 five basis points of interest rate increases? ultimately that is where we are headed in that is a positive. lisa: the key risk event really is the cpi print, talking about this across-the-board retracement. where do you think gets most punished if we get a hotter than expected cpi print today? >> you are going to see some pain in the bond market, some pain in small caps, mid-caps. really more of that cyclical trade, we are finally coming out of this covid environment, we are finally going to be able to lower rates, finally able to normalize the yield curve. i think investors will not shift back but remain in the highest

quality names if that is the case. jonathan: haven't heard that word covid for a long time. finally making our way out of that fireman. you think we are stuck in it? >> not from the since we are all living in our basement anymore and it is nice to be here on set with all of you after so many years, but when i mean the covid environment, it has been such a strange for years. your knee recently got inflation is because we put so much money in people's pockets. businesses have cut workers and tory at the worst time. and you have to raise interest rates, get a growth scare because every time the fed raises rates, getting scare. the markets fall 25% and now we are coming out of that environment and is a soft landing, is it the heartland? until we know what that landing looks like, until we normalize the yield curve, that is still moving our way out of this bizarre environment.

annmarie: but people no longer have that money in their pocket from the government and we haven't seen the supply chain bottlenecks themselves, so what is left? >> not a lot. what has really been driving the consumer price index shelter. shelter the way it is calculated comes in with a lag. the owners equivalent brand that nobody actually pays continues to drive this. so you see this in every cycle that it lags. the fed says they are going to be data-dependent but we should be looking out the future. jonathan: sounds like you got some questions about the data they are dependent on. >> ultimately we are going to have a two-handed year-over-year on cpi. the core personal consumption expenditure year-over-year is already there so i think inflation is a story of the past. you may have some pickups here

in the short term that could create some near-term volatility been over the next year or two i'm sticking with peak inflation, pete tightening, peak rates as being very good for us. jonathan: i know who else has got some questions. lisa: i love this. data dependency and the date it is unclear and messy and i don't the trusted. what do you do with that? i was reading report after report saying that people are not responding to the surveys for unemployment rate and for jobs. you're not getting responses so you are extrapolating out into a void. jonathan: how dependent are you on the economic data given how perhaps direct questions about how dependable it actually is? >> we look at leading indicators so you don't want to be too focused on things like lag. you focus on the leading indicators were we continue police -- to believe in the data, real data points. what it has been suggesting is a

global economy that is low trend. market sentiment has been suggesting maybe things pick up a little bit here, but i would still call it a below trend environment that the fed is likely going to ease into. jonathan: brian levitt sticking with us, self-described fomo guy with us for another segment. here's an update on stories elsewhere. >> bank of america disclosed pay raises of more than 10% for two of its highest ranking executives, even as its ceo's compensation was cut for 2023. the ceos total pay climbed 14% to $12 million last year while the head of the global markets division saw a rise of 11% to $21 million. meanwhile, moynahan's pay was cut to $29 million in 2023. a bill that would force the sale of tiktok is gaining steam in the house. the legislation would block app

stores and internet service providers from offering the video sharing app unless it's chinese owner sells it within six months. fbi director christopher wray told a senate intelligence committee there are significant national security concerns associated with tiktok. the bill comes up for a vote in the house tomorrow. the rally issuing little signs of slowing. futures slowing as shipments from the ivory coast came in far below last year's level. futures rising as much as 4%, erasing losses from the previous two sessions and pointing to a tighter global market. the risk of lower output from the smaller mid-crop harvest has added steam to the rally which has seen the price of cocoa jump that almost 60% this year. that is your bloomberg brief. jonathan: thank you. up next, division among allies. >> i'm telling you that we are not getting off the gas. i'm telling you that we have to take care of our future and

eliminating the terrorist army, that is a prerequisite for victory. jonathan: live from new york city this morning, good morning. j.p. morgan wealth management knows it's easy to get lost in investment research. get help with j.p morgan personal advisors. hey, david! ready to get started?

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♪ jonathan: two hours away from the cpi report, equity futures positive by 0.2%. 10 year yield a little bit lower. 4.09%. division among allies. >> i'm telling you that we are not getting off the gas. i'm telling you that we have to take care of israel's security and our future and that requires eliminating the terrorist army. that is a prerequisite for victory. victory will come sooner the more united we are, at least not

giving the appearance of division. jonathan: tensions rising between president biden and benjamin netanyahu amid the rising civilian death all in gaza. netanyahu not expected to change courses president biden calls a planned attack redline. president biden's comments are the clearest reflection today of a growing divide between the u.s. and israel, at least biden painted into a corner if israel moves forward with operations. john, i want to talk about that redline and they want to talk about the policy potential behind the threat. what happens if netanyahu does cross that line that the president has set? >> i think what you get is a mostly symbolic high-profile offensive arm that the u.s. is sending over to israel. biden was very explicit when talking about the redline that he would not be cutting things like the iron dome, that he believed israel still had a

right to defend itself, but the situation reflects because of his own domestic political concerns. this is a really difficult balancing act for president biden to cite israel has a right to defend itself and that israel cannot trigger a humanitarian crisis in gaza. lisa:lisa: a sizable majority of his voters oppose weapons shipments to israel. when he spoke and gave an interview, could you see the white house saying we prefer things like the iron dome to protect israeli civilians, but we might ratchet back some of the offensive weapons we give to israel? >> it is that might ratchet back issue that i think is the biggest question because there's a lot of americans who want israel to continue to push the offensive and win this war.

and a lot of those americans are going to be voting for joe biden in november. i don't think there was a ton of room for the u.s. here to condition aid. you may see some effort to do so assuming this operation goes ahead, and we assume the operation will go ahead, but israel is doing this with or without biden. it doesn't seem like the pressure the united states is putting on them is making any difference whatsoever. so it shows the limits of even the united states'power and influence. annmarie: just a few hours ago the first ship has set to go to this port they are building for aid. will that dissuade biden voters? >> it's a step in the right direction. i think that really, building port and getting more aid to the country is going to be a significantly smaller piece than the images of the offensive in

rafah assuming it goes ahead and that is really what is getting biden right now. you've got a massive humanitarian crisis in gaza. aid is not going to help. we've got orphan children and images of families across american social media and that is really the political vulnerability that is going to hurt biden here. the aid is only a tiny push in the other direction. annmarie: i want to shift gears a little bit. this is definitely going to be a massive issue for president biden. another massive issue are going to be some of the trade policies that we have going into the election. we heard from former president trump yesterday that he said i'm a big believer in tariffs and if he does impose 60% tariffs on chinese goods and they retaliate by doing the same, he doesn't care. this is basically his policy. how much is this signal and how much is this noise? > if you look at the u.s. reliance on imports in china it is really difficult to imagine

the u.s. economy without all the consumer goods that are coming into china. the latest iphone model already costs $1000. imagine that price going up. this is the most popular phone in the united states of america. i think that is a really big hit for consumers. it just seems really unlikely the trunk and follow through on such an aggressive threat. that said, that threat can be used to open some kind of negotiation which is exactly what president trump did with the first administration in order to get to what could eventually become a phase two trade deal. it is through the early days. trump does seem that the republican party has moved in a more hawkish or action on china, but the actual practical impacts of that on the ground make the political cost of that extremely high, therefore probably make that 60% threat unrealistic. jonathan: great to be up-to-date with you and what is happening in d.c.

some insight into the locker room talk of mar-a-lago. lisa: i'm a big believer in tariffs. maybe. jonathan: are you a fomo diet the president come through with 60% tariffs? >> any time you protect trade or any time there is protectionism there is less optimal economic outcomes. that is just how it goes. but in terms of the market, the market really just needs clarity. if you remember 2018, 2018 was a year in which we just have clarity around trade policy. we ended up with business investment drawing a significant downturn at the end of the year. the tariffs did come through but ultimately that clarity put the markets higher in 2019. less optimal but as long as we have clarity around, the markets tend to push past it. which is one >> of the reasons i've been confused about the

lack of clarity on who is going to leave the united states. has that led to more deals being brought forward or fewer deals being put on hold until more certainty comes to the floor? >> it seems as if they are being put on hold right now until there is more certainty, but i would advise investors not to put too much otis on elections. i know it becomes a lot of focus in the election years. if you go back over time you find that market performance is fairly similar across most administrations. in fact, if you go back to the eisenhower administration when the s&p 500 came out, every president had a positive return over the course of their administrations but two, that was george w. bush whose term ended in the global financial crisis and richard nixon whose term ended in the recession. other than that, not only are they all positive, they are all double digits, all 10% per year on average.

jonathan: brian, good to see you as always. we will be catching up with david kelly a little bit later this morning. a great interview with him. i worry that people worry too much about politics. i worry that people let how they feel about politics affect how they think about investing. there are a lot of republicans who missed out on a good stock market under obama and biden and a lot of democrat who missed out under donald trump. coming out, that's the boj will hike next week. it's not just a federal reserve meeting, we might get the first hike from the boj since 2007. from new york, this is bloomberg.

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♪ jonathan: two day losing streak on the s&p 500, equity futures up by a quarter of 1% on the s&p. on the nasdaq, up by 0.5%. it has been super mild stuff over the last couple of days. in many ways, the week begins in about two hours when we get that cpi report. two-year year 10 year, 30 year. a couple of tuesdays ago, 430 now back to about 4.1% on a two year yield. that was not the 4.70 a few mondays ago. yields have dropped away in quite a significant way in the last couple of weeks. lisa: which is the reason why

you can't wait until 1:00 p.m. today.yes , the news starts in about two hours. and do we get the same kind of demand coming to the or after eltek coming so dramatically given that people are saying i don't buy it? there growth is still pretty good. jonathan: looking for a backup in the long game. we will talk to him if he is looking for that. i want to finish on foreign-exchange and talk about the japanese yen. i want to talk about sterling as well. sterling a little bit weaker at 127.91. i'm looking to the labor market data from earlier this morning. unemployment just a little bit higher. wage growth just a little bit softer. lisa: basically you see a labor market cooling that is positive for the bank of england and their ability to potentially cut rates that raising questions about just how strong this economy is. is this good or bad for the currency? if they cut rates sooner, a little bit of weakening better comes along with weaker growth. jonathan: under surveillance this morning, two hours away

from cpi. bloomberg economic expecting headline data to accelerate. 0.4% with core slowing down a touch. higher gasoline prices putting pressure on the inflation rate. the team that bloomberg also expecting the bulk of disinflation to come from goods led by easing in new and used car prices. i go back to the payrolls conversation again. with a confirm the upside surprise the first month of this year? lisa:lisa: that's what a lot of people are looking for. he's talking about how the options positioning means that he could potentially be a pretty significant response one way or another. huge strengthen the dollar, selloff risk assets. how much is this a catalyst? annmarie: you mentioned bloomberg intelligence looking at not just rental cost, but also gasoline. it is up 3.5%. prior, it was a negative reading and the forecast energy cost and 15 basis points to monthly

headline print. this was the sticky inflation that the fed really was trying to deal with and also this could be a massive headache not just for jay powell, joe biden. jonathan: just a ship was estimates with you, the median estimate, 0.4% month over month from 0.3 in the previous month. down just a touch from 0.4% the previous month. when you like a weather forecast on the economy from jamie dimon? a u.s. recession is not off the table. speaking at the australian financial business review summit, adding the world is pricing in a soft landing. probably 70%-80%. i think the chain than the next year or two is half of that. the worst case would be stagflation, warning that hurricane was about to hit the u.s. economy of the fed was taking off the hiking cycle two years ago. your thoughts? lisa: i can keep track this is someone who was also talking

about 7% rates and the potential that the that should keep rates high because of concerns about stagflation. meanwhile, two of his j.p. morgan analysts are warring. they are both coming out with completely opposite views, saying we are going to have a problem, watch for the selloff, the sky is falling, and meanwhile on the other cytec earnings have been so strong that these stocks could hold up better than traditional cyclical. so do you pay attention to the boss, who is running the house? maybe just check the weather. jonathan: can we take 60 seconds? i'm frustrated by the way people interview him as if he is a southside economist who is going to keep his base case. when you run a business you are not operating on a base case, you've got to manage risk across the spectrum. they need this to do well. i always find it frustrating when they are like how many cuts do you think we are going to get? what kind of insight is he going to have against anyone else?

on business, on policy, what it means for your business. stick your finger in the air. what is the weather forecast today? i find it really frustrating. lisa: you know, if you were going to be in the seat to run chief commander of the united states, would you argue for the fed to potentially cut rates or to hold them where they are? if you are going to go into politics and i make these prognostications for that reason, would you do so sooner than later? annmarie: when i constantly hear him pontificate i always think it is not potus that he wants. he wants treasury of the secretary and i felt this way at davos when he talked about it. he said trump had a few things right when it comes to taxes, immigrations, china and nato and now throwing some cold water on a soft landing no you previously said it was a hurricane. you have to wonder is he may be auditioning for treasury secretary?

jonathan: i can see what anyone with a lot of stop and find it interesting going back to washington, d.c. taking a government job and being able to sell that stock cox free. -- tax-free. lisa: jamie dimon completely out the table with that discussion? jonathan: we should talk about people who actually have done that. i'm not saying it is his motivation, i don't know because i'm not going to give into other peoples' heads. i'm just saying that in the past people might have done that and i could see why people would be interested in doing so. lisa: i just keep thinking about libby cantrell who has to keep going around saying he's not running for president because people are still thinking he may be might be. jonathan: equities right now just about positive by 0.2%. i did mention the japanese, so let's do that. boj expecting growth in japan to continue despite some weakness in household spending. every comment had a decision on the week from today.

a slim enjoyment -- majority. jimmy stretch of cibc joins us now for more. expectations for next week? >> we've long-held that we anticipated the rate hike coming in april. i think it may be a case that some are trying to perhaps bounce the decision into a rate adjustment next week but i think probably we feel comfortable looking at april because after all, when you think about the period between april and march meetings you're only talking about 38 days. in a sense, i think it is really apt for the doj to wait for the full, final information but clearly very nervous going into next week's decision. >> we've got a move on

dollar-yen. some strength we haven't seen in quite a while. talk to me about what the world looks like toward sustainable, durable strength and why maybe a couple of rate hikes might not be sufficient. >> we have to remember that if we look at this particular move over the course of the last couple of, it actually is probably more a function of what is been happening in the u.s. treasury space, not necessarily purely driven by presumptions or expectations of an adjustment in terms of boj policy. but having said that, we do need to see the boj adjusting policies and allowing yields to continue to move higher, looking at a higher level of front-end rate, and i think also we need to see is squeezing out of what is still a very sizable short position in terms of the real money yen players.

i think it is interesting that we are debating this process at the same time as even next week we could be considering the bank of england moving in the opposite direction. there is certainly something to play for in terms of -- lisa: how much do you think this decision for the boj hinges on today's cpi report aced on the fact that it is looking for a window to execute this with the least volatility? >> i think that's absolutely true. all roads inevitably lead back the u.s. story and what is happening in terms of its macro. so i think there is going to be a substantial reaction function in terms of a cpi miss, whether we go to the upside or the downside today. probably more aggressive risk if there were to be another upside surprise in terms of cpi. but i think if we do get this degree of sort of a benign

narrative coming out from the cpi print, of course we shouldn't lose sight of the fact that we've also got that retail number on thursday which i think is also potentially quite impactful the fed. but we do see this presumption of that generalized modernization as early as june. but if the market continues to go up in june, that might provide some degree of scope for a benign backdrop. jonathan: a bit of a shaky line on your end or maybe even on our end. great to catch up. jimmy stretch of cibc. i want to talk about a single line, southwest and the premarket negative. they plan to cut 2024 capacity, setting the challenges with boeing. we had warnings about this from other airlines including ryanair in europe and you are seeing it right now from southwest. lisa: you can see those shares

lower by more than a percent, less capacity meaning potentially lower revenues. on the flipside from alaska air we saw that they actually had a little bit better profit margins some would because they weren't paying as much for some of the boeing planes. i'm curious how this shakes out especially given some of the new disclosures overnight that owing failed a whole host of different investigations and that there are some real concerns about their safety protocol. how do they claw out of this one every single day we get some more additional negative inflammation? jonathan: reevaluating all prior for year 2024 guidance plans to cut capacity, citing these challenges and re-optimized schedules as well. annmarie: no aircraft deliveries so that completely recalibrate. washington post reporting

yesterday and then we added on top of that, the justice department has now convened a grand jury is part of that criminal investigation so that means that is going to open up the ability for interviews and documents. so we're going to see a lot more of what is going on behind the scenes of going from the factory floor. jonathan: just another note on southwest, they are still making the point of a expect to return to profitability in march. this is a classic example of a business may be planning for the worst case and not the base case. boeing has advised the company according to southwest to expect 46 737 a deliveries. and as a company, basically planning to assume no deliveries whatsoever. lisa: they are planning for the work because they've already been through some real disappointment the market and they don't want to do that again. they are trying to claw out of that disasters winter holiday season when everybody's planes got canceled. southwest is fascinating to me also because they hinge more on domestic travel in particular

having to do with vacation. there are kind of a great read on a lot of things. the fact that they are assuming the worst might mean -- jonathan: let's get you an update on stories elsewhere. here is your bloomberg brief. >> four astronauts from four countries have touched down on earth after a half year missing aboard the international space station. spacex's dragon capsule splashed down in the florida panhandle in the early hours this morning. the replacement arrived last week in their own space capsule. oracle shares are on track for their biggest rise in more than two years at the company sees a spike in bookings for its cloud computing business. the stock had been down about 10% over the last six months monday's close. oracle, which is known for its database software is now focused on expanding its cloud business

to compete with the likes of amazon, microsoft and alphabet. the fda has approved a weight loss drug for heart disease patients, a move that could open the door for medicare coverage since it raises the question of whether medicare could now cover the cost for patients with a history of heart disease. about one third of state medicaid programs currently cover the use of wegovy and other glp1 drugs for weight loss. jonathan: thank you. up next, targeting 2% inflation. >> i do think that we are seeing enough of those inflations for a cut in june. let's say retail sales are weaker, we have a soft inflation report. then i think we start pressing that rate cut again. jonathan: that conversation just around the corner. live from new york, this is bloomberg. ♪ ...whoa... you've got all kinds of bright ideas, that your customers need to know about.

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how am i going to find a doctor when i'm hallucinating? what about zocdoc? so many options. yeah, and dr. xichun even takes your sketchy insurance. xi-chun, xi-chun, xi-chun! you've got more options than you know. book now. ♪ jonathan: breaking news on

southwest planning to cut 2020 four capacity citing challenges with boeing. a new assumption now assuming no 737 7 aircraft deliveries. stop down almost 7%. lisa: also talks about not hiring for a number of different types of groups including pilot and attendance. this really raises questions about where they are going to flying, how they are going to be flying and how much is this really going to reduce profitability after really going through a difficult period of time. jonathan: equity futures hanging in, doing ok. under surveillance this morning, inflation data on deck. >> i think we're a scenario in that we have inflation that is running above target and we will have this emerging weakness in the activity data. i do think that we've seen enough of that inflation that we will get into a cut in june. let's say retail sales is

weaker, we have a softer inflation report. then i think we start pricing that rate cut again. jonathan: the median estimatejonathan: from bloomberg survey: fran light print of 0.4% month over month. slightly higher than last months higher-than-expected data. my view is that inflation will continue to decline to a point, and that point maybe is difficult for the fed to maintain as it was to reach. great to see you. let's get into that. this is about housing in the labor market. what is it about housing that you think is going to make this path to 2% difficult? >> it's the achilles' heel, the juggernaut on the way to inflation. why? we are in a classic inventory shortage that has been chronic for the last decade, that is not cyclical and not going away and people have to live someplace. it's not something they can avoid. if you have a for sale market that is challenged with inventory, that challenges the

rental market especially in key cities, and you see that play out over and over again, it's also the biggest part of the consumer budget. one third of a a lot of people actual consumer budget. it plays out in terms of inflation. it is a really big issue for the fed, hard for them to get around. jonathan: have higher rates boosted prices were held them back? annmarie: here's the problem of economics, there's two sides to every markets of interest rates may holdback demand and also supply. wages have gotten up, labor shortages are there. you have both sides of that market struggling under higher interest rates, who wins? what i've seen for too long to quote on television in the housing market is that home buyers to pull back from higher interest rate and then they go back in. they test the temperature, a

little hotter than expected, then they go back in because at the end of the day, the house is the goal. lisa: exactly for that reason, how much do you think that some of the easier monetary policy debate into market expectations, how much has that already supported a reigniting of some of the valuations of the housing market? how much is that already making things more expected? >> housing wealth has been incredible since the pandemic. if you look at house prices, they've gone up, but home equity with lower interest rates, remember, most homebuyers are locked in at under 3%, so that equity has been warmest. and i think you do have people who are trying to cash out. cash out, i upcoming trade up. but it also means that some homebuyers are locked into their atm. ironically, even though there is

a segment of homeowners who are flush with cash in their homes, it is too expensive to withdrawal right now. lisa: i guess that goes to this question of if the fed starts cutting rates and we do get easier financial conditions which we been talking about, does that boost longer-term inflation because people start to cash out of their homes? because people then start to take out mortgages, because that sort of keeps everything and play at a time when there is a stickier, underlying component you are talking about. >> exactly, we are on a hair trigger. a drop in interest rates will unleash a lot pent-up demand, and that is the story of the housing market. not just this year, the past 10 years. this is a story we've seen over and over again. as soon as there is a window, the buyers will come. >> how much do rates have to go down before people get in? >> i think it's all about inventory. there are enough wealthy buyers in the market, enough cash buyers in the market that they can actually support this

housing market if there is a drop more inventory. it is an inventory story, not a rate story and that is why the fed is going to have such a challenge. if they could control it, this with the foregone conclusion that we could get cpi down to 2%. the problem is inventory is going to be resistant to even the fed attempts at lowering interest rates. annmarie: we are hearing a lot about housing from washington, president biden mentioned it, talking about rebates tal people get on the property ladder. wouldn't that exacerbate the problem and drive up demand? >> maybe. maybe. but the problem is that there's not enough affordable housing. so it is a question of whether those rebates will actually be meaningful in a market where, if you look at a lot of the inventory, it is way out of reach of where wages have been even though wages have accelerated. so maybe at the margin, some people do benefit from a rebate that that is not going to

characterize the entire market. annmarie:annmarie: because they need to do something on the build side. what can they do? >> that is the problem with housing, it is all at the local level. it is local zoning rules, local property taxes. it is hard to have a national housing policy. we did before the great financial recession. we don't as much now and i think that is playing out with the affordability issues that we are seeing right now, which points back to inflation, which leads to the fed. so housing to me is the watch point. it is the big boulder, maybe even the elephant in the room when it comes to inflation. jonathan: let's finish on the labor market, you got tons of data. what are you learning? >> this is really interesting because if you go back with me a couple of years, we've been looking at payroll data. so about 20 million, 25 million workers overall, about 10

million that we can match over the course of a year in the adp payroll data. we seen some interesting stuff here. wages basically peaked in 2022, spring and summer. they moved sideways for the better part of that year and then in 2023 they started to edge down. that's great news. but more recently we've seen for people who have actually changed jobs during that year, that is the first bump up since november 2022. that to us is an interesting watch point because it may be symptomatic of a market that is not quite as cool as we think, depending on the jobs that are being produced. you might see some increases in wages. they may not decline in a straight line. lisa: if you don't get a crack in the labor market and there still is this strength that you see as being likely, then do we really kill inflation? does it all come down to the fact that we are not having real weakness and enough weakness? you need that in order to get

inflation lower. >> i think the fallacy of the narrative around inflation right now is that we are at the end of the book instead of the end of the chapter, and inflation is going to be a reoccurring phenomenon in the economy. because you have these two big drivers of inflation, jobs and pay, and labor shortages which in my view will be persistent and housing and inventory, also shortages that will be persistent. those two big drivers keep this as a never-ending story. every chapter you make it down to 2% and don't stay there for very long. let me put a fine button on this. it is like the fed is holding a very complicated, intricate yoga position and they could tip over at any time but they have to hold that position for a very long time. this is where we are right now. i thought that that would -- jonathan: images of chairman pala trying to do yoga this morning. no thank you.

this was great, really thoughtful stuff. i love this quote. my view is that inflation will continue to decline to a point in that point may be difficult for the fed to maintain as it was to reach. lisa: like a yoga position. but this is true, because of these issues and this concern about preventing another recession given how damaging it can be and how hard it is to clawback. that is so in the forefront of their minds that they are willing to maybe not hold a position quite as long. jonathan: what is the scorpion handstand? annmarie: you are doing a handstand bite your legs are still kind of bent over. do you think it is more that or the crow post? i would love to see jonathan do this. jonathan: you can show me during the commercial break. coming up, george ferguson of bloomberg intelligence and earl davis, the second tower of bloomberg surveillance coming up next.

♪ >> let's make it clear, we will get cuts this year. this talk about no landing, no cuts, we think a market is going to start pricing that out. >> the likelihood of them not cutting this year is basically zero. >> to be cut in may come to be cut in june, in july? the timing of that rate cut, it doesn't really matter. >> they have to realize the groundwork has been set for

consistently lower inflation. >> we're still living through this experiment get to be played out on inflation and interest rates. announcer: this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: cpi data 90 minutes away. live from new york city, good morning. this is bloomberg surveillance. equity futures posited by one quarter of 1%. it is the last read on inflation until next week's fed meeting and the recent data, some of the happy talk around disinflation. lisa: given the fact that we saw hotter than expected cpi and ppi, how vulnerable is this marketer really a gut check about just how quickly this inflation actually is happening and how hard the last mile really is? jonathan: the market has been more vulnerable than the federal reserve has been. the fed has been unchanged, unmoved by any of this and they are coming into their meeting next week making a new set of projections.

lisa: i feel like the market is kind of a histrionic person who keeps switching because there is nothing else to do and they are basically board. at a certain point everyone is trying to figure out how to get the edge and a time when the data is messy and nobody can really predict the future, so you get these really messy moves. right now if you look at options trading it looks like there could be a lot of volatility. annmarie: messy moves and revisions but above the top line, what is interesting about inflation is we can actually see where they are make progress and where they are not, how long it is going to be difficult. really looking at housing and shelter costs. bloomberg intelligence billy looking at gasoline. this is really important. what this means for americans, polls continue to show that americans identify prices of goods and services as the best indicator for have a national economy is doing. jonathan: i want to turn to a single lane, southwest on the premarket.

a couple of headlines dropping in the last 30 minutes or so, reevaluating all prior guidance, planning to cut 2024 capacity and citing one company in particular, boeing. lisa: i'm wondering if they have to pay anything. also talking about otherwise, first quarter bookings are actually up. there were actually increasing faster than expected. this is sort of a strange story. on one hand, the disaster that is boeing and how that is going to evolve with the doj lawsuit and all sorts of other claims. but another thing, and a lot of these airlines are still doing well and is a question of still getting enough capacity to meet demand times economy just that might be one of the most interesting angles of this kitchen sink report. jonathan: bowing down another 1%, this is a line from southwest on when we get that updated outlook. april 25 is the day. planning to get updated guidance on april 25.

annmarie: but it feels like we have the update guidance, deliveries that we know, we assume there are going to be no deliveries and they continue to assume in this report no aircrafts are placed into service this year based on the current certification status. so until boeing get its act together this is going to be a ripple effect across the industry. jonathan: broadly speaking, equity futures doing ok. yield a little bit lower on the 10 year. basically unchanged. coming up this hour, ed mills of raymond james as the tiktok bill gathers momentum in d.c. and the quote great buying opportunity in treasuries earl davis has been dead on in this bond market, looking forward to his thoughts on the longer end of the 10 year. lisa: especially because barclays just came out and

talked about potentially, he has been dead on and it has been tactical. jonathan: great start to the year for the team. we've been given the top story this hour, 90 minutes away after a hotter than expected january print. give investors more clues on the fed soon, but not too soon. a slowdown of the economy will likely be one back to trend rather than intercession. that that is likely to fill the projection of 75 basis points of rate cuts this year with the first starting in june. good morning. >> good morning. jonathan: you came into this year calling at the 2024 economy. 20,. 24 can you explain the meaning behind it? >> sure. 20, 24. 2% gdp growth, 0% inflation, 2% inflation somewhat controversial, and just under 4% unemployment.

that is probably where we are trending to if you look at the data that we've got in the atlanta fed gdp tracking. unemployment just below 4%. the key is inflation, does that continue to progress? i think we have multiple inflation prints. not only cpi, but also pce. and i do think it is not going to be an even path, but that data will increasingly confirm that the fed should be ready to implement modest cuts night economic environment. jonathan: has that dayshift it out or stay the same? >> it has shifted out from may to june, so not a huge shift. that speakers have been pretty consistent in the way that they've approached their timeline this year in terms of the long engagement. we've committed to doing this but we are not setting a date yet. now they are getting closer and closer toward let's do this in the summer given what the data might show. and i also think a very helpful

thing for the markets is finally we've seen that and the markets converge so i do think that d risks a lot of these jobs and cpi prints that we are getting because there's not that much of a delta between the two. lisa: i love this. you get people unlike yourself and they start talking about it doesn't really matter if they cut in may or june, and then you have report saying that the market is going to go haywire because it is going to push out how many cuts and when they start. so which is it? how vulnerable is this market? >> how vulnerable is the market to surprise? with that expectations and market expectations fairly aligned, a lot less vulnerable than it was a few months ago when you would see a lot more volatility around any time a fed speaker got up to the podium or any piece of data that we got. i think there's a little bit more comfort and look at some of the projections. we will see next week cap of change, but if you look at headline core pce, we are really not that far today relative to

where they want to be at the end of the year, so isn't that a pretty good sign that they came up with these projections last december and we are kind of getting to the right place? lisa: is another question, not just how much is the market potentially vulnerable, but which stocks are most vulnerable given that we see this huge run-up in the magnificent seven? do you see this fragility there, or is it elsewhere? a select number of companies that can make them less vulnerable to some of the volatility that some people are expecting. >> i think the micro is very much defying the micro because you would think if there is some vulnerability around the macro outlook in terms of the path of rates, that is going to shock stocks. but instead we are seeing a broadening out if it is still a reasonably good environment, the mag 7 can do fine, but as everything else going to start to come along? you are starting to see that underpinned by earnings. last year you had profit growth that was essentially in

aggregate negative across everything in the s&p 500 except the magnificent seven. this year we are expecting to see about 40% of profit growth coming from magnificent seven. about 60 from all the other stocks in the s&p 500, and each quarter that is going to improve until we get to the end of the year where we are actually projected to see a flip, more growth coming out of the rest of the index relative to the mag 7. still very impressive numbers but it is hard to get too spooked by stocks when earnings have been as strong as they have. jonathan:jonathan: i struggle with the logic in terms of how gdp is set to accelerate but earnings contributions from elsewhere will increase. why do you think strong growth has resulted in such a narrow leadership? how has that happened and why is it almost like the reverse for this year where we are going to get less u.s. exceptionalism but better contribution for earnings for elsewhere? >> a big part of it is the fact that earnings were relatively poor when you think about

earnings growth last year across the board. despite the fact that the economy defied expectations, we didn't see that as much in the profit numbers last year. i think disinflation is helping as we see more margin stability and revenues seem to be holding up pre-well in light of accelerated economic growth, so i think that the profits for the actually lagged or told a different story last year than the economy did i think this year as we get to a reasonable place with the economy, you do see profit growth pickup from flat to double digits. that is what really propels stocks this year. jonathan: what have you noticed of how they are protecting margins, these cost cuts, are they laying people off? >> a little bit of both. you do hear a fair amount of layoff announcements and people being worried about hiring going forward. i think in sales they will be more pressure and in terms of cost cuts we haven't seen it across the board companies are certainly within to do what it takes to defend margins throughout the year.

the question is what will it take? if we see a reasonably healthy consumer backdrop, there may be less of that that they need to do. lisa: given that we keep talking about american exceptionalism, that we are not seeing layoffs, that we were just talking at how sticky some of this ration is, what is the threshold for rates at which point stocks can keep gaining, at which point stocks are still type of investment? >> what we have seen his stocks have done pretty well through the 3%s into the fours, getting into the fives as well. overall if the economy is reasonable, if the earnings picture is a reasonable, stocks can be quite resilient in a variety of environments even in just the last six months so again, i really do focus more on the micro men the macro and you are seeing that globally. despite the fact that we have potentially technical recession for near technical recessions in areas like the u.k. and japan and europe, you are seeing that

not only are u.s. stocks at all-time highs, but within europe, germany, france, over to japan, you are seeing that disconnect which i think is a healthy thing. if you look over the last 25 years, you've basically seen half of the best 50 performing stocks each and every year essentially come from international companies. i think it does make the case for really being pretty deserving in terms of which companies were going after as opposed to worrying too much about the rate and inflation environment which is where we policing the gamut over the last couple of years. jonathan: stick with us, a lot to get through. if you are just joining us, inflation data 8:30 eastern time. the estimates look like this, month over month 0.4% in our survey, up from 0.3 percent in a previous call, stripping out food and energy. looking for 0.3% vs. 0.4%. let's get you an update on

stories elsewhere this morning. here is your bloomberg brief. yahaira: speculation is growing that bank of japan may be getting closer to raising interest rates. sources say a final poll will be made friday. this is when wage talks between japanese companies and unions wrap up. april remains the most popular prediction for a rate move among economists. we will see what the boj decides next week when in hold of policy meeting. jamie dimon issuing a warning on the u.s. economy saying recession is not off the table just yet. he told a business, and sydney the chance of a soft landing in the next year or two is about 35%-40%. economic indicators have been distorted by covid-19 and he takes them with a grain of salt, saying the fed should wait for more clarity before lowering interest rates. the coco rally is shoving little signs of slowing as bean shipments from the ivory coast cayman far below last year's

level. new york futures rising as much as 4%, erasing losses from the previous two sessions and pointing to a tighter global market. the lower output from the smaller crop harvest has added steam to the rally which has seen the price of coco jumped by over 60% this year. that is your bloomberg brief. jonathan: thank you. i love the story from the washington post. former president trump asking elon musk last summer whether the billionaire industrialist would be interested in buying truth social. according to two people with knowledge of the conversation. annmarie: maybe that's recently why he was meeting with former president. everyone was talking about elon musk getting into the campaign for nations came. he said on twitter that that wasn't it. maybe it is abouttruth social. jonathan: i'm not sure how much capacity elon has to make another acquisition. lisa: i just want to know why he wanted to raise the money. jonathan: true. that is the latest. next, the tiktok bill gaining

the mentor him in washington. >> this bill is not banning tiktok, just the chinese communist party from essentially owning it. i hope it gets a vote. i think that we don't need the chinese communist party telling our kids what to watch online. jonathan: that conversation up next. live from new york city this morning, good morning. j.p. morgan wealth management knows it's easy to get lost in investment research.

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...with a perfect name, a great logo, and a beautiful website. just start with a domain, a few clicks, and you're in business. make now the future at godaddy.com/airo how am i going to find a doctor when i'm hallucinating? what about zocdoc? so many options. yeah, and dr. xichun even takes your sketchy insurance. xi-chun, xi-chun, xi-chun! you've got more options than you know. book now. ♪ jonathan: posited by 0.2%. 4.09%, cpi data just around the corner. in new tiktok bill gaining momentum in washington. >> this bill does not ban tiktok, just the chinese communist party from essentially owning it.

i hope it gets a vote. i think that we don't need the chinese communist party telling our kids what to watch online, which is essentially what is going on here. i just want to see tiktok survive and thrive. jonathan: it's the latest bipartisan bill that would force tiktok's parent company to sell the platform or face being banned. official set house members on the bill today ahead of a vote tomorrow. while the bill has a hypermobility of passage out of the house, we believe the senate may be more skeptical given concerns about the legality of the bill with the multiple pushback from tiktok users adding to bipartisan concerns about losing the younger voter crowd. ed, we've been talking about this for the best part of for years and nothing happened. is that about the change? ed: maybe? i think this bill is absolutely going to have a massive vote tomorrow in the house of representatives but after that it slows down. the senate has a different approach. the senate commerce committee

chair has said that she would prefer to have larger authority to take a look at different apps controlled by countries of concern and potentially regulate that here in the united states. so joe biden has said that he would sign this if it comes to his desk, but he knows that there is the ability to change this in the senate, deal with some of those legal and political issues. to me, the real question before it passes is how long does it take between the senate and the house to work out those differences before it even could get the joe biden's desk? lisa: or potentially someone just buys it in the medium-term as they go along on this very long process. yesterday we got the annual report on global threats. china, stem inserting a higher degree of sophistication. it goes on to say tiktok accounts run by a prc propaganda arm reportedly target candidates from both political parties during the u.s. midterm election cycle in 2022. if they know this, and you also

had christopher wray yesterday talking about concerns, how could any politician vote against this? >> that's what i've always said. in politics when you're explaining you are losing. last week the vote was 50-0, so no one wants to vote against it, but as soon as that bill passed, the top democrat on the committee, he's in the minority, came out and outlined a number of those concerns. it is bonkers to think that you would have a foreign government that is not an ally controlling what people are seeing here in the united states. when i talk to national security officials after the october 7 terrorist attacks in israel, there was a lot of concern of how quickly, especially among the youth, there were sentiment shifts that were not expected. as we go into the election, there's going to be even greater concern of those influences on voting.

so ultimately, something has to change here. it is just a question of that process and the timing at this point in my mind. annmarie: former president trump has thrown some cold water on this bill. does that change the minds of some republicans? >> a little bit, yes, but that is why the fbi director, the national director of intelligence is going to be up on the hill today, to discuss with the members of the house why they think this is a national security imperative. i do think it part of the sauce senate come out and say we are not willing to just not the house version. first and foremost, the senate almost never takes what the house does and find it into law, but what you need to do in the senate if you were to take the house bill is unanimous consent. so it denies the ability of unanimous consent. it is actually a gift to democrats want to make some of these changes that republicans are not going to be able to blame them.

it will be at least one or two republican senators blocking this bill, giving the opportunity for the senate to do their part. the question is can what the senate produce and with a house produce get reconciled and make joe biden's desk? will we see actual impact on tiktok before the election? i'm pretty skeptical. jonathan: i'm going to ask you to read the trump team leaves if we can. what do you think his position signals more broadly about how he might govern regarding china? >> it's a quick question. i think that all of the conversations we've had about trump's potential reelection in china, first and foremost, a less breakable relationship. number two seems to be very focused on tariffs and number three, somewhat transactional. there's going to be a question of business interest in truth social, any of the campaign contributions he's had. what this is ownership of truth social to as it relates to other

social media companies? he highlighted facebook and meta yesterday. a lot more questions of what is driving that decision-making and that unpredictability and volatility is where a lot of our conversations have been with the clients of raymond james. jonathan: less predicable and more volatility does not necessarily mean more than what we currently have, right? >> we have viewed the current administration as picking up everything that trump did on china and bringing it to the next level, but has done it in a more process-driven basis than it is going to be easier to uphold on legal challenges. so neither is good for china. it is a question of how bombastic that relationship would be. jonathan: appreciate the clarity. they go to question for us

around the table over the last few weeks, how tough is this going to be for multinationals to navigate and mark is that really what they want exposure to? a volatile relationship between the u.s. and china? >> that is almost regardless of the political situation we are undergoing because this has been a long-standing issue for six to eight years now, something that they are accustomed to dealing with especially after the pandemic with some of the non-politically related challenges. i think companies have readjusted some of the global strategies in terms of how they would operate the certainly in is an additional headwind. it will be an additional challenge, but not necessarily a new one that companies are going to have to deal with. >> you right in your note it is not always policy and politics. he talked about the energy sector. clean energy, fossil fuels doing well under biden. how do you prepare for potentially trump 2.0?

>> i think you have to remember that because sector implications don't play out how you think they will, these sectors will do well under republican, these will do well under a democrat, what you point out is essentially during the trump administration, you saw essentially clean energy up almost three times whereas you saw traditional energy down by about percent. within the biden administration you saw clean energy were as he saw traditional energy double. that had to do with under trump, low oil cost because of the pandemic, low interest rate helping some of that clean energy financing. under biden had to do with the war between russia and ukraine. also, some of that uncertainty around policy itself. so sometimes policy can have equal and opposite reaction in terms of how you think things will play out in markets. really important not to try to play politics with your portfolio because it rarely works the way you think it will.

jonathan: appreciate it. donald trump, i do wonder. too early to draw conclusions? if he gets back in the white house. >> i thought we put it really well, it shows how complicated and transactional it's going to be. does it change the scenario or his question about national security means? >> does it affect his ability to bring in top dollar donors? jonathan: campaigning vs. governing are two different things i guess. >> are they? jonathan: shares of southwest falling after the airline announced plans to reduce capacity in 2024.

jonathan: not going there at all. zero .2% of the nasdaq. two days of losses. last week a very rare week of losses. a stellar run this equity market. starts with cpi data later this morning. use a touch higher. basically unchanged.

a real picture of inflation going into the federal reserve decision. lisa: we have already had this incredible rally. all those zero client call people have come on the show to say i do not think so. i keep going back to what neil richardson was saying. labor market by p stronger than it seems under the hood. jonathan: another rate cut call. let's turn to foreign-exchange. japanese yen is a little bit weaker. another report. suggesting that they are very close to hiking interest rates. it is dependent on what happens

with wage negotiations. lisa: thinking about how they are trying to calibrate the least disruption possible. the fact that you get a weaker yen highlights any uncertainty. it is hard to get your mind around a now. it is also about what anyone else is doing. this is where people's minds are vague no. jonathan: i am with you. rate hikes, not make cuts. guests do that as well. it just depends on what you are used to. it's ok, lisa. a little under an hour away after a hotter than expected january print.

bloomberg economics expecting increased figures. we do not expect the february report to provide clear evidence of disinflation to cut interest rates. it is too soon. if they want more evidence. lisa: a lot of people are looking to june. gas prices, nobody really cares because it will be a seasonal thing, but we did see expectations climb up a little bit. it will not be conclusive. why would they make a move? annmarie: it will not be conclusive. i was looking at the index. this has worked cumulative rate stated.

voters say it is worse. that spells a massive problem for this white house. that is why cpi prints are so important jonathan:. had died month over month. this versus 0.4 the previous month. tensions rising as the death toll rises and cease-fire talks stall about gaza. benjamin netanyahu is not backing down. >> we have to take care of israel's security and our future and that includes eliminating the terrorists already. that is a prerequisite for victory. jonathan: what happens if he crosses the red line. annmarie: biden would put

strings attached weapons. he said we have agreements on the basic goals and disagreements on how to achieve them. they have no such plan yet about how they plan to go in to rafah and make sure that palestinians are not in harm's way. jonathan: is this a big separation between two leaders or a convenient narrative for the president of the u.s., given his political challenges at home? suggesting that maybe they brings up conditionality if the redline is crossed. what will the policy look like if they cross that medline? is it a division between two

leaders or to be expect this to be a convenient narrative for the president? annmarie: i tend to read the tea leaves in the way that there is a shift. i cannot remember the last time that they spoke. for me, it is not just, did they speak recently, it is about how much they were speaking. what was the last time that we saw the with that level of regularity? jonathan: shares of southwest are falling. deciding boeing's ongoing challenges. this after the doj opened a coble investigation of the blowout of a fuselage panel. 20 as now for more. tell us how seriously we should be taking this criminal investigation. >> any criminal investigation

has to be taken seriously. the leg has its reputation on the line. it would like the criminal investigation to come out well for it. my understanding is that criminal investigation are typical in this kind of event. and does not necessarily indicate that they have evidence of criminality, but they want to make sure there is no will act that created the problem. but i am not an attorney. i am typically an analyst by day. lisa: i am struck by the fact that the news gets worse and worse for boeing every day. safety regulators went there and found keeping errors. where is the floor? shares are dropping there is also a lack of me said.

>> it seems like the bad news keeps coming here. i think the reports that i have seen indicate that part of the fix has to be the spirit aerosystems. there might be a floor as boeing explores how to take away -- take apart spirit. they cannot afford to have the buddy blinds about what they want to do with quality, production and spirit management. i think it is something that they never wanted to do. they spun spirit out because it was a lower margin of business and they did not want to be involved in it. they just looked down there and said it was too integral to the build of their most important

airliners, and they cannot control what is going on down there. they have to get in there and fix it from the very beginning, up to annmarie: annmarie: washington. could we see anymore shifts? >> their job is to build airplanes correctly the first time, all the time. making sure that all the processes are followed. it is not being done right now. annmarie: the crash investigators are accusing boeing of not even cooperating the probe. that fell a massive error at this moment when they should be trying to >> cooperate? >>i would think that they would want to cooperate as well, but there are probably situations where you might have differing opinions on how things should be , but it is a tough spot to be

in right now and boeing needs to be more receptive to some of the feedback and trying to manage it. lisa: the debacle seems to be asking a lot of good news under the hood. people are still traveling a lot more than many airlines expected with southwest. they had a greater number of bookings than expected. how much has this blocked out the sun that has been cast over the rest of the travel industry? >> an interesting they will be, if you are a bowling flyer, you may not have enough cap has to be to take advantage of that. it may have been a bit of a overlying. we seafarers and big down. does that look like it will be like it was the last decade.

i think that could or has held up ok. we are starting to see inside, but one of those overlying could be that there is not enough air planes market. maybe glass half-full and last half in for words fires. lisa: does this mean that prices are probably going to go up if capacity is constrained? >> typically would capacity is constrained, profit do go up. it is not last decade profitability. the pilots got big pay increases. the fairies duty to go up for a return on capital. jonathan: george, thank you. we got that same morning.

it was almost like a trial balloon. lisa: prices are going up. jonathan: you know what is happening next. lisa: basically, i'm going to book my flight as soon as you're done with this call. jonathan: that data coming up later. here is your blue word brief. >> bank of america disclosed pay raises for two of its highest ranking executives. the cfo climbs while the head of the global markets division saw a rise. another saw his pay cut in 2023. small business optimism hit a

nine-month low. the report citing higher prices and borrowing costs taking a toll on expansion plans. mall is a good time to expand their business. 39% the business conditions getting worse. in talks for a takeover of the telegraph. they are said to be working with the owner of the investment fund on a potential deal. a joint bid would reportedly ease concerns by british politician over foreign state control. that is you are bloomberg brief. jonathan: the coast is clear. >> we continued to have stronger u.s. growth and this story keeps coming back with pockets of

weakness and concern. markets are concerned about regional banks. none of these are systemic issues. jonathan: that conversation, up next. ♪ get help reaching your goals with j.p. morgan wealth plan, a digital money coach in the chase mobile® app. use it to set and track your goals, big and small... and see how changes you make today...

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their clickety-clacking... clickety-clackier. but no one loves logistics as much as they do. you need tamra, izzy, and emma. they need a retirement plan. work with principal so we can help you with a retirement and benefits plan that's right for your team. let our expertise round out yours. jonathan: an update on stocks, positive. lower by a single basis point. under surveillance this morning, markets signal that the coast is clear. >> we continue to have stronger u.s. growth. they are all having trouble contextualizing why the u.s. economy is so strong. it comes back to that.

it is hard to see sides of that. you have pockets of weakness and pockets of concern. jonathan: buckets -- markets are not concerned with supply. dave say that, we believe that there will be continued pressure . this will be a great buying opportunity. a solid risk to assets. extremely low probability of recession. let's get into it. i gave you the victory lap last time. i had to stop complementing you. further out on the curve, we were still looking at yields to climb. what has been happening on that side of things? >> we have had a good underlying

rally since we last spoke. but that bid into supply on duration and credit tells us that there is significant underlying demand, so we are going to be slightly overweight. the reason we will not be more overweight is because we are in the middle. the range we anticipated was from 2023. right in the middle, but a respectful demand. we will be slightly overweight coming out of supply next week. lisa: the incredible demand has shifted your opinion. where has the demand come from? >> demand to start the year was

from retail. we had a strong fourth quarter. markets were valuing. they reduced the volatility in the bonds. there is little bit of a question mark. to tell you the truth, i am not quite sure, but given our view that we are coming towards the end of the business cycle, we think we prefer to error on the side of being overweight and underweight. lisa: it is an interesting moment to do this. the expectation is that the economy is stronger than a lot of people have been expecting. market strategist actually turning short on treasury saying

and coming data suggest that they remain resilient while delivering solid growth. we recommend shorting 10 year u.s. treasuries. why don't you agree with that, given the fact that you probably agree with the assessment of the economy, but you are seeing something the market does not cohere with that? >> you are getting tremors. you are seeing it in the employment number and other numbers. the totality is not as strong as the headline. our point, if we do get a strong cpi number and we do get a selloff in bonds, we will be a buyer. lisa: but leave the buying with?

some people are saying there is no rush because rates will be staying here for quite a while. do you adhere to that? >> it is a good question. we are not a buyers here. if we get weakness, we will be a buyer, but we still think the possibility will be pushed out. not a jude were july. 10 year bonds, we do not mind dipping our toes. we will be slightly overweight. we will buy some more and save our last for above 450, and casey get there. volatility, we do not believe

that we stay here. there are a lot of credible views. we will see both sides of that, but we like it from a structural position given geopolitical risks. lisa: are some of the risky credit spots allowed not to be the case with the likelihood of retaining their value? >> that is a good question. we bought protection. we still think the economy will be resilient, but we want to move the structure to safer credits. we still have a little bit of high-yield. we think that volatility will impact markets and refinancing,

we have had a record of corporate issuance. we have valuation discipline. we do not see anything immediate that will selloff credit. jonathan: is it just getting to rich? >> we are in it for the meat, not the fat. it is all fat, so we will move to areas with war -- more meat on the bone. jonathan: i will ask a similar question in regards to supply. where is the demand coming from? >> i think what you are seeing are some real money players. de-risking, moving from higher risk asset were lower rated into

higher credit or duration. you are probably fully funded. we believe that is adding. basically immunization strategy. lisa: they have all been putting calm. when do we start sequeira again and talk about it? >> people will buy treasuries as long as the economy is resilient. a lot of things were talking about is inflationary. the salaries of the pilot, we

spoke about those wages of executives. we are not talking about it now. we think inflation is the next part of the story. jonathan: great to catch up with you. the longer and is a surprise. encouraged by the economic data. lisa mentioned the supply. we hope to make this relevant. i believe tomorrow we get $22 billion in bonds. lisa: what i'm trying to do,

that is not my business, but my business is supplies increasing. at what point does it become a story unto itself? basically they are not paying attention until they have to. jonathan: the backdrop matters. if you start to see the numbers continue through the year, base case, they will. then supply starts to matter. if it happens with trends that are durable, then the market can take it. lisa: at the same time, the supply is coming and. jonathan: you know what you want to say. you are not wishing for.

cpi, up next. ♪

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>> i think we are seeing enough the inflation meeting.