>> the everything rally is peaking for a little longer. >> stocks will continue to do

well, high quality stocks. >> the winners themselves when momentum is high can continue to do well. >> there still a speculative fervor in the market. >> we still very much seem to be in the sweet spot. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: one last one for bramo . live from new york city, good morning, good morning. this is bloomberg surveillance. this is exhausting and a major way. the s&p 500 negative by 0.1 percent. a four-day winning streak on the s&p 500. here is the flavor of the last two hours. bullish. seriously. really bullish. really constructive. bob michele from jp morgan comes on the program. we estimate very straightforward question. -- we asked him a very

straightforward question. he said when was the last time that you were this bullish? mid to thousands. mohamed el-erian said the same thing. lisa: the question that you asked is the theme of the morning. how far do we have to go back before we see this all-encompassing bullishness? there might have been consequences down the line, but it took long enough for people to make a lot of money in the meantime, and that seems to be where we are at. jonathan: you hear things like that and it makes you feel uncomfortable, but it has been upgrade after upgrade.we had one from socgen taking price targets from 4750 to 55 hundred. u.s. exceptionalism is going from strength to strength. despite widespread market optimism we view this as rational rather than excessive. this is not a bubble. , times have we heard that in the last couple of weeks? lisa: this is not a bubble. to me it raises the question. there is a lot of early cycle types of behavior in terms of economic strength, different

corporate cycles. where are we? we thought we were late cycle and now we are early cycle. that is infusing the optimism feeling like we have more to go with money coming out of all spigots. jonathan: it is overwhelming. overwhelmed by happy talk whenever they talk about financial markets. . speak to an expert on geopolitics, a very different conversation. annmarie: it is very dark. when you look at geopolitics, and it's a good point to bring up because we have secretary blinken in israel, there are two hot wars in the world right now at any of these can have a huge impact on commodities and inflation expectations. of course, you look at the tech darlings of the united states, 90% when they get their chips are exposed to taiwan and that is growing tension in the south china sea with china. lisa: it hasn't worked for the

market. it raises the question, are we going to become increasingly fragile as we keep going with the momentum until something happens that we can't predict or plan for? jonathan: right now, not much is happening. annmarie: she is bearish again. [laughter] jonathan: we are getting close. lisa is almost bullish. still in the bunker. lisa: almost. jonathan: yields lower by three basis points. the fx market, the dollar strength against the -- against the euro, negative on the currency pair by .4%. the fed-fueled rally. kim wallace as congress races to avoid a government shutdown. and .72 on the fed's path forward. the fed-fueled rally pushing stocks to all-time highs. the s&p 500 hitting his 20th

record this year. not even tech losses curbing the momentum. the fed meeting this week seems to have confirmed that the central bank is also on the soft landing path and gave markets enough to imply that even with elevated inflation readings and 24 the path is still open for lower rates. sarah joins us for more. how constructive have you become after what you heard from chairman powell? sarah: it is difficult not to be constructive. first in december of last year we had the concern of the hawkish fed in august into october. december, they basically said we think that the risks are balanced. he had a chance this week to say we think that there has been some irrational exuberance or over enthusiasm, and he didn't. that says that the fed is comfortable where things are going. sort of overlooked to the higher inflation readings in january. that has to be positive for equity.

we are still saying it's lower. we aren't even saying we aren't going to do it. that we didn't go to 2 from 3, that might change this year, but in this game that was still a go ahead and keep buying things. jonathan: we have been buying almost everything. including banks. banks are up by something like 5%. sarah: i think on the bank side, there was an issue that happened in march of last year with silicon valley bank. banks are realizing that even though we keep hearing these dire commercial real estate stories and dire stories about we have this refunding, all of this debt has to be termed out, there is the realization that if something goes wrong there will be a backstop for it. that makes people feel better about banks.

that hasn't been explicitly said, but if you take the totality of the evidence, the odds are you will get something done if you see a crisis in commercial real estate, which we keep hearing that valuations are lower. the fact that you have private credit being able to do that may let that be less of the crisis than we are expecting. lisa: does this mean there are other areas that could benefit from the fed implicitly being thrown into the market in a massive way that you are leaning into? sarah: that is where you switched. in august and september of last year you were worried that the fed was gone, and now it seems the fed put is back. it is hard to argue. it is the don't fight the fed idea of where they are going to an are going to follow.i could list a whole bunch of things to be worried about, but a lot of them aren't playing out. the global political scene is a disaster. plenty of things could happen. i see a line, a time, and catalyst. lisa: how much have you shifted allocations and bought banks, bought riskier credit, bought everything after the meeting? sarah: the answer is more, what

didn't we do when things were ugly? sell those things. you keep those things. you didn't have to double down on technology because we were already there. we saw things in 2022 even when the market cracked in september and october last year, not shifting out and trying to get into things into safer bets would have been more difficult from a performance standpoint into 2020 four. december happened and the market hasn't looked back. jonathan: since the end of october, it has been a phenomenal run in the equity market with three weeks of losses since the end of october. two of them were the previous two weeks. we have taken them all back this weekend then some. lisa: the statistic was one third of the days that the s&p has traded has been at record highs. jonathan: 20 record highs so far this year. it has been absolutely amazing. we called goldman sachs earlier and they said look elsewhere. get away from the dominance and concentration of u.s. equities,

big cap text, look to japan. what do you say to that? sarah: it is interesting when the yen didn't do what people expected, so that's positive for their stock market. it strengthens too much people worry about the currency movements. it is fine to look outside, but you have to be careful. if anything is going to derail the u.s. it will derail outside too. it won't be the u.s. goes down and the rest of the world says everything is great even with massive valuation discrepancies. there is room for other things, but you have to think of them as working together. jonathan: i want to frame that more tightly. the u.s. can decouple from the u.s. but the rest of the world cannot decouple from the u.s.? sarah: yes. that wasn't how i was framing it in my mind, but -- jonathan: the obvious bet is to own u.s. equity risk if you earn any at all? sarah: from our standpoint it is

difficult to think of not owning u.s. equity risk. you can add other things, but as a u.s.-based investor you can't say i will go other places because i want to go other places. lisa: american exceptionalism. how long we can keep the privilege of borrowing in less money and fueling our economy through that kind of financing. does the fed pitted make you less optimistic on longer-term -- fed pivot make you less optimistic on longer-term bonds because it implies a higher inflation target and more tolerance by the fed to price instability? sarah: what it does is it means that you aren't going to go back to zero interest rates, giving bonds a place in the portfolio. especially if you have a demographic that is older. you don't want to only be in equities because there is the risk. the bond at this point has less risk because of the fed's dovishness.are long-term bonds going to go higher because the economy is better or because they're worried about the u.s.'s financial system?

the joy of having a reserve currency as you have more room to act within that than other countries do. lisa: mohamed el-erian was talking about the one place you see asset concerns is real assets, particularly gold. how much has this turbocharged enthusiasm for things like metals and gold? sarah: i have always had a predilection for gold. most clients who don't like that so i can do that more personally than in other ways. there is an argument for the debasement of global fiat currencies coming out in other places. that will come out and things like gold, commodities, and coins that we don't talk about. people will buy things where they feel like there is a difference rather than just a fiat currency. the u.s. having the reserve currency makes a huge difference in how we can act and other people can't do that. even if it is a race to the bottom, the u.s. ends up in a privileged position. jonathan: two all-time highs on

wednesday, stocks and gold. gold, it is notable what is happening in the last few weeks. lisa: this might be the concern about the debasement of fiat currency. jonathan: it is good to catch up with sarah hunt. equities are doing ok. all-time highs coming into friday. here is your bloomberg brief. hey. >> hi, jon. ending the fentanyl crisis is a high priority for voters ahead of the u.s. election. a counsel shows eight in 10 swing state photos ranking the issue as a high priority. fentanyl has been linked to more than a quarter of a million deaths since the start of the pandemic. fedex shares are rallying in premarket trading as the

cost-cutting measures deliver better than expected earnings. they are in the process of restructuring the delivery networks, part of a sweeping plan that includes shrinking its workforce by tens of thousands of jobs. fedex also plans to buy back $5 billion of its shares. like rock is calling a texas decision to pull a $.5 billion from asset managers funds reckless. the texas board of education says the blackrock's involvement in environmental, social, and governance known as esg makes investments in eligible under state law. this is one of the biggest actions taken against blackrock as states with republican leaders push ahead with an anti-esg campaign. blackrock denies wrongdoing and says that the company holds three billion dollars in energy investments, including in texas-based companies. jonathan: that story is just the beginning. this has been brewing for a

while. we saw it in florida, a little in texas, it's not going away anytime soon. annmarie: it is going to ramp up towards the november election. we hear from companies that it is hard to decipher how to do business if it is a blue state or a red state. jonathan: next, congress is racing to avoid a shutdown. >> democrats have repeatedly made clear that we will find bipartisan common ground with our republican colleagues.under no circumstances can we tolerate a government shutdown. jonathan: if market participants had a list of things they didn't care about, is this at the top? lisa: it never happens, and if it does, it doesn't matter. jonathan: this is bloomberg. ♪ is personalized based on your goals, whatever they may be. all that planning has paid off. looks like you can make this work. we can make this work. and the feeling of confidence that comes from our advice... i can make this work. that seems to be universal.

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jonathan: equities pulling back a touch on the s&p 500.

into the bond market yields lower by five basis points on the 10-year. on surveillance this morning, congress is racing to avoid a shutdown. >> from the very beginning of this congress, democrats have repeatedly made clear that we will find bipartisan common ground with our republican colleagues. we are prepared to do it once again in order to make sure that the final six appropriations bills are passed and on a path to be signed into law. under no circumstances can we tolerate a government shutdown. jonathan: lawmakers racing to vote on a 1.2 trillion dollar bipartisan spending package, which would keep the government funded through the end of september. house speaker johnson facing opposition from within his own party as the gop lead is shrinking further. both chambers have until midnight to get the bill to

president biden. kim wallace joins us for more. this might be the shortest segment ever. the market participants look at this and glaze over. really, again, this? do we need to care about this? kim: no, you don't. jonathan: thank you very much for joining us. [laughter] why is it easier for this speaker than mccarthy? kim: we are nearing the election and he has a shrinking margin. more importantly, as the chair of the rules committee said two or three weeks ago, the deal that was cut in may 2020 three on topline spending has been substantiated four or five times since then. you roll all of those together, there is no play. lisa: what about october 1? kim: we will get there again, but you have bigger things to worry about in the market. is it growth for a head fake? if it is growth, do we have to

worry about what that means for policymakers and fiscal policy? yes and no. not now, but in december we go through debt ceiling again and that is when we pay attention to washington. annmarie: if it is growth, what do they do between now and the election? kim: tread water. there has been rising bipartisan agreement on the u.s.-china competition front. yesterday, we saw the house pass 393-24 legislation that would require a review of all ships at u.s. ports, to check them for cybersecurity risks, because those ships and much of the cranes were built in china. substantive stuff, but that doesn't get the headlines. annmarie: what about ukraine? that has been a stalemate. kim: slowly, torturous lead, they are headed towards

providing assistance to ukraine and israel. lisa: you talk about bigger fish to fry. that bipartisan effort for the u.s. to compete with china. i wonder if having a cohesive type of policy shift is happening here or if it is ad hoc throwing stuff at the wall to see what sticks and it sounds good but doesn't come together in something that businesses can plan around? kim: we'll have to answer it next year after the election. the u.s.-china competition generates a lot of noise, but points to a lot of deficiencies in the u.s. manufacturing base. shipbuilding, chips. we have defense industrial base. the deputy secretary of defense addressed the defense industrial base and how far behind we are. the chief naval officer almost a week ago said that if you go through history, nations that can build ships have navies, have commerce. it is connected. we are way behind. we were number one in shipbuilding in 1975 and we are 19 now.

it will matter more as we have the great power. lisa: a lot of people pointed that u.s. is at the bottom of the list even with recent spending packages that have been approved. i'm wondering, how much more appetite is there, as well as capacity, for this country to borrow more to invest more as so many people are betting on in markets? kim: washington will have to start multitasking. but, after the election. it is scary but real. they have to decide the path forward on fiscal policy that includes a pro-growth stance. we did it in the early 1990's and reduced deficits. just as we were having desktop computing coming from microsoft. it helped boone the 1990's. it is in front of us now with technology that could be bleeding edge that might be applicable across many sectors. and we have a fiscal problem. those are decisions on the way forward. that doesn't do away with the

challenges that you have geopolitically. nor the deficiencies that we've had across our industrial base that makes those challenges worse. jonathan: why are we going after our national champions in the united states? why are we going after the likes of apple? kim: maybe we would have 20 national champions instead of seven if we had better competition. that is not a view, that is just what we hear from competition policy analyst. jonathan: what was your reaction? kim: it has been brewing for half a decade. given the doj press release, they think that they have a strong multilayered case. it cannot be that we've had these fantastic tech companies for the past 20 years, and increasingly their network effect has resulted in power for them in the market and that not stump competition. the question is, has it been illegal? annmarie: the chief antitrust head under the trump

administration notably said that these technology companies are "digital gatekeepers." very similar to what we hear out of the current doj. where can this go we we get trump back into the white house? or do you think that this stays the same? kim: annmarie, we don't know. if trump is back in the white house, we have to ask the question almost every day. he changes his mind based on how he feels on topics and based on with whom he speaks in their interests. jonathan: you said wait until the election. don't we know would both stand for on these issues? isn't this administration similar to what we saw from the former administration on a number of these topics? kim: i liked the first half of that. we are nearing a very stark choice. i would push back strongly in the long term that they are very similar. you do see some similarities, but if you look at the strategic level it is different. jonathan: give us an example.

kim: the tariffs on steel and agriculture. that was the brunt of the u.s.-china competition under trump. when he was about to ban zte and huawei, he was contacted by people in the u.s. who knew him who had positions in those companies and he backed away. similar to tiktok. it is strategic versus what you feel like at the moment, in my view. annmarie: the biden administration kept the tariffs and is weighing potentially more aggressive tariffs. a 10% wall for the world and 60% for china specifically. kim: true, but when you look at geopolitics or trade, those tariffs are small part of the overall story. the two men approach that question differently. jonathan: would you think the approach will be regarding china in the near term, especially biden. what happened over the weekend,

a lot of these organizations went for the headline about blood baths. the story for us was the former president talked about a 100% tariff on chinese ev's. the former president talks about tariffs and the current president talks about protecting union workers. what can he do between now and november to attack the same thing? kim: the current president? make promises. that is all he can do. and see that his inflation reduction act continues to unfold. we have to accept that the u.s. is behind. if they are going to compete on industrial base technology, we will be talking about this in terms of the decade in terms of the catch up. the promises would be if you reelect me i will double down on bo -- on boosting the defense industrial base. you have to ask each candidate, what is your plan?

jonathan: and we will if they join us. they like joining their respective tv networks, which is what happens in america often. kim wallace. coming up, the fed's path forward. that conversation just around the corner. equity futures negative by 0.1%. in the bond market the rally continues. down about five basis points to 4.21. from new york city, this is bloomberg. ♪

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>> let's wrap up the trading week. four days of gains on the s&p. all-time highs at the close thursday. to the bond market. a snapshot of treasuries. yields down across the curve. on twos, quite a round-trip this

week. briefly to 4.5% this week. >> the fed put his back. that's the message the bond market is getting. does this make sense on the long end given the fact there's a tacit under station inflation -- tacit understanding inflation might run hotter for longer? >> how do you put this together? >> anything with a dollar sign has done well. dollar strength in the whole of the g10 with the exception of the japanese yen.

stronger on the session, weaker on the week. the week has been the story. >> they raised rates to zero. they are still doing yield curve control. there does not call you that. even though we got a hotter than expected print with respect to inflation in japan, does not matter, because the fed put seems to be back in play. >> what our guest said earlier this morning, the early signs of a long game, but the early signs of maybe accepting higher inflation without actually being mandated. i think it will be controversial. >> it's essentially what powell said. an emphasis on take a while. i am lost in my head. thank you. but there's this question of how long they will be patient and allow inflation to drift down to

2%. has the target change? >> under surveillance, our top stories. regulators hitting apple. the doj filing a lawsuit accusing apple of blocking rivals from features. losing $113 billion in my -- in market value. the eu is planning to investigate apple. it is underperforming the s&p and the nasdaq. there are many interesting dimensions. typically we accuse the europeans of going after the darlings of u.s. tech. now it is the americans going after their own babies. >> is been years in the making that it's been years in the making -- it's been years in the making.

how they deal with digital players. years in the making also in terms of what is going on -- what will be the remedy for this . who wins if the doj is successful? maybe china. they will meet with a group of business leaders. the list of participants is not complete. the president of the national committee on u.s. china relations is expected to attend. executives are heading to beijing for the china development forum. the names include tim cook and stephen schwarzman. this is the charm offensive. the data point that matters is fbi. that number is not a pretty one. >> it's the most negative we have seen going back decades.

there's a question of how much executives will hear what xi jinping has to say and how much the executives are going there are being forced to hear what it has to say because of how much their businesses are dependent on a china economy. >> do they have to show up? i was with xi jinping and biden in san francisco. $40,000 to sit at his table. this will be expensive probably. >> the fact that tim cook was in china as this was unfolding with the doj, kind of tallies -- kind of tells you what's important to them right now. >> they cannot get away from it. how many tim cook farther? not as many as there used to be. >> apple the big mover yesterday. nike and lululemon under pressure, anticipating challenges in the u.s. market. they are recalibrating the merchandising lineup, shifting

sneaker offerings. lululemon seeing a sales slowdown. the activewear company focusing on expansion in china as competition rises stateside. that reinforces the conversation we had. >> it's a very populated country that has a lot of money. it's where businesses want to be. at what point will they be so hesitant to get and because the geopolitics? >> those are struggling. a slew of fed speak today, including powell, michael barr, and atlanta fed president raphael bostic. weighing in on the fomc path forward, writing we continue to look for three rate cuts this year starting in june and continuing quarterly. that should prove supportive for broader wrist sentiment.

with us around the table is sophia. good morning. >> thanks for having me. >> what a week. on the program, our guest was talking about central banks almost tacitly accepting higher inflation. is that a you you would endorse -- is that if you you would endorse? >> they are starting to focus on other aspects of their mandates and are supportive of the idea that inflation has come down and they are making progress on that front. we are seeing policy shift. what is interesting is that central banks are cutting in tandem globally but we don't have a negative catalyst driving. for me, it's like central banks are taking out some insurance to help the growth side of their mandate, particularly in the u.s.. that is supportive of risk assets. >> do you think this could be explained by some kind of supply-side renaissance who

helping these central banks out -- renaissance helping these central banks out? >> i think powell put his marker down in january saying that monetary policy is tight but we have not felt the full effects in the economy because the supply has been shielding us from the. it's rare that we see such dynamism on the supply-side and certainly rare that we see it globally but something is happening because goods prices are falling across the board in all major economies. when i look at producer prices in major economies, they are either in negative territory or flat, like in the u.s.. so the goods side of the economy and supply-side is doing a lot of the work for the fed. >> i want to get into one aspect that may be got less attention, the balance sheet. a lot of people were looking to

-- looking for the fed to talk about how they would be cooling off on the balance sheet rolloff. they still are not going to do that even with stocks at record highs and bonds continuing to rally. have a really drained that have a really drained liquidity from the system -- have a really drained liquidity from the system? >> what's interesting is the fed's balance sheet was about $4.5 trillion pre-pandemic. we got to $9 trillion. the fed has done some qt but the balance sheet is still large. certainly the supply of money seems like it's higher than what one would have expected it to be -- would have expected to be supplied by the fed in a normal environment. so we are still dealing with liquidity and with regard to qt the fed is being smart about it. they learned some lessons from 2019, where they continued at a

relatively aggressive clip, and eventually this led to some frictions in the money markets and prompted them to abruptly end qt and start qe. what they are doing here is slowing the pace. it means they can go for longer. it probably means that qt is less volatile for financing markets. >> you put this all together. the fed is being cautious. they want to support the economic cycle. you have fiscal spending that keeps pouring into support some of the technological advances. just as you advise investment professionals at your own firm, was to say this is not early cycle and it cannot keep going for a long time and if the rally, even if it's getting to higher levels, has legs? >> again, going back to what i said, i have never seen a cycle where global central banks are cutting in tandem and there is not a negative growth stock. so it is a positive tailwind for growth expectations.

when i think about it in terms of the global economy, it seems to me that the way that central banks are acting in unison is reducing risks to the global economy. it should be raising expectations for global growth. we should start to see pockets that are more tied to the global cyclical cycle start to percolate more. that is why you are seeing that japan is still a very heavily subscribed trade. europe as well. italy is one of the best-performing stock markets year to date. that would surprise a lot of people. >> not this guy. >> for aris and banks i guess -- ferraris and banks i guess. it's a positive global growth environment. in that context, it's not surprising. people have cash on the sidelines. every thursday i look at the money market assets and they

don't decline measurably. central banks are taking out some of the growth risks. >> we talked about a lot of this story. how relevant is the price? given how strong the storytelling is. >> i think it does matter. that's one of the reasons investors might be looking for catch up trades. again, if central banks are perhaps giving us more assurance on the growth side, it's giving some investors the opportunity to look for value. that was one of the catalysts for europe and japan, for their equity markets to start to catch up to the u.s., and now we are seeing it in other pockets. we are starting to see more interest in small caps and value. i was looking at the screens this morning, the russell 1000,

the s&p 1500, those are all moving in tandem. >> we were talking about the outperformer's in the russell as powell was talking. people are itching for catch up trades. are there some trades you advise people against taking that maybe you think are in a desirable direction. >> in this kind of environment, i think a lot of things look good. there's a lot of positive outlook in terms of growth expectations. inflation is coming down. this is one of the reasons you are seeing the everything rally. it's hard to differentiate. we have the tide that lifts all ships. we are seeing a bit of that. pricing could be an issue for some investors. this is one of the reasons people are looking for catch up trades. where can i find good value, see an opportunity to see more of a catch up to what's happened in the s&p? >> there's been a debate on the

show. do you go outside the u.s. or stay with the u.s.? a lot of this is being driven by u.s. exceptionalism. peter oppenheimer of goldman sacks san go elsewhere. >> when we get to a cutting cycle historically, i look at the starting point for the dollar, and it seems strong. on an inflation-adjusted basis, we are at the levels we were in the 2000's. currencies do mean revert over time because expectations for growth in other parts of the world will also catch up to the u.s. we could see more capital flows and allocations to other parts of the world. the u.s. has a deficit of about 3%. extreme by historical standards but something we need to finance, whereas other economies are in a surplus position. in some cases they are seeing their surpluses expand in places

like japan and brazil. i think this global environment gets investors look outside the u.s. for sure. >> thanks for being with us. sophia of point72. let's give an update on stories elsewhere. here is your bloomberg brief. >> hi. bitcoin is set for one of its worst weeks of the year as demand weekends. it's pullback after touching all-time highs. bitcoin etf's are also on track for their biggest weekly outflows since trading began in january. a net of 742 million dollars have left the funds from this monday through wednesday. reddit rose 48% in its trading debut yesterday, closing at more than $50 a share, well above its ipo price of $34. investor enthusiasm for the listing, driven by the company's pitch to profit from the growth

of ai. it is the fourth-largest ipo on a u.s. exchange this year. the company had a market valuation of $8 billion at close. tesla is reducing electric car production in china amid sluggish sales and a tense competition in the world's largest auto market. the company instructed employees at its shanghai factory to lower production of both the model y and model three sedan by working five days a week instead of the usual 6.5. >> next, regulators hitting apple at its core. >> it's a white knuckle period no doubt that apple is going through. but my view is after one or two quarters, they get to the other side. >> i was reading it and i knew it was dan ives before i saw his name. white knuckle ride. dan ivesisms.

that conversation next. ♪

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innovative companies one etf. before investing, carefully read objectives, risks, charges,t expenses and more in prospectus at invesco comm. the opening bell 42 minutes away. hitting apple at its core. it's a white knuckle period apple is going through. my view is that after two quarters, they get to the other side. and i believe it's about ai. you don't want to be selling into ai. this is why it's my opinion that now is not the time to throw in

the towel. >> apple being sued. the company expected to face a probe in europe as part of another crackdown. the news putting pressure on the stock. underperforming s&p and nasdaq. mark gurman and apple guru mark gurman. what is the defense coming from apple? >> the defense is the doj lawsuit is littered with nonsense. they make five points and three of them are about things that have either already been resolved or things apple said would be resolved so there is confusion as to why the doj is making allegations against apple about issues that have already been rectified or are in the process. the suit is filled with technical inaccuracies, inaccuracies related to things that apple may have done or is doing.

apple believes that the doj is throwing as many items as it can gather against them but none of them prove the company is a monopoly. none of them show apple is harming consumers. you see apple harming some app developers and partners. the major pieces that seem relevant are the inability to create third-party tap to pay payment applications in the u.s. and the way the company throttles third-party smart watches when paired with the iphone. i don't think this will be a couple quarter situation. i think this will be a three or four year situation where ultimately you see the doj adjust their case. you will see a back-and-forth between apple and the doj. you see apple making tweaks to

operating systems to meet those requirements. i think you will see the same thing happened in the u.s. to some extent. i would imagine that apple will pick items one by one and rectify what could be changed and try to come to some sort of settlement here, whether this is a fine with the doj for past behavior and tweaks to ios. >> this sounds incremental. it does not sound catastrophic. does this justify some of the existential fear that seemed to come through the market yesterday when everything else was rallying? >> i don't agree with the selloff related to existential fear about this case with apple. i could make a better case of why you should sell your apple stock that has nothing to do with these allegations. there are obviously ai features coming soon. apple has done little to nothing to prove to the consumers and

the marketplace over the last decade plus why anyone should trust these new features will be impressive or on par with what you have seen from competition. i think there are concerns about apple's category. i think the cancellation of the self-driving car is a massive disappointment and underscores some serious innovation related problems at the company. so you can sell your stock. i think you probably just sold it for the wrong reasons. >> i'm glad you mentioned ai. apple held talks with baidu to put their ai generative technology on devices in technology. we have tim cook in china now. was that also part of the defense when it comes to the u.s. doj? >> i don't think the two have to do with each other. i reported last week that apple's artificial intelligence plans includes a combination of in-house ai, which is not the

more advanced generative ai you were talking about, and the other piece will be partnering with an outside ai company. they have held talks to license gemini from google. they have held talks to license chatgpt from openai. and for china and other markets, you probably need a more localized ai player. that's why you see conversations with baidu. it's the same, whereas, in the u.s., you have google as the default search engine. in china, you have baidu. china is a big market for apple. if you want to generative ai features to work in china, you need a local partner. >> i would love to finish on your latest article in business week. i want to go to the third paragraph. this year, the magna 77 -- the magnificent seven has looked

more like the middling two and the mediocre two and the mid three. >> i would not put the doj specifically in that category. i would put regulation in a category of its own. they have suits in almost every country you can name off the top of your head with the u.s. being at. obviously the 27 nations that make up the eu. you have australia. you have countries in europe not within the european commission. this car thing is a major disappointment. what is the legacy for tim cook in terms of a major new product when he eventually steps down? i mean, spatial computing. the headset is cool but does it have the potential to be a $100 million category like the car could have been? apple is the creator of siri.

they have had 10 or 15 years. who is to say their new ai will be great? >> mark gurman of bloomberg. enough time for a final thought. what a week. >> everything rally. this idea of mid 2000's sums it up. we heard that from bob michele and reiterated. >> mohamed said where are we at the peak? look at the upside down u. then came the financial crisis. >> equities negative by 0.1%. the opening bell just around the corner. this was bloomberg surveillance. ♪

her uncle's unhappy. i'm sensing an underlying issue. it's t-mobile. it started when we tried to get him under a new plan. but they they unexpectedly unraveled their “price lock” guarantee. which has made him, a bit... unruly. you called yourself the “un-carrier”. you sing about “price lock” on those commercials. “the price lock, the price lock...” so, if you could change the price, change the name! it's not a lock, i know a lock. so how can we undo the damage? we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. okay, that's uncalled for.

>> good morning. the euphoria for a rally in the s&p is momentarily interrupted. we are keeping an eye on fedex and read it. a little bit of bloodletting after a rally. the countdown to the open kicks in now. >> everything you need to get to the start -- get ready for the start of u.s. trading. this is the open when jonathan ferro.