>> i feel great because i feel post-financial crisis we have sort of been in a lala land. >> continuing to win and that's a great environment for investment. >> evaluations are high, they could go higher. stocks are increasingly priced for perfection. >> it's difficult to think of not -- >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. >> when you get to the office on monday and it feels like you never left on friday. that time in between like a total blur. feel that this monday morning. good morning for our audience worldwide. this is bloomberg surveillance. holiday shorts trading week which is good news for many of

you. all-time high after all time high. in europe, stoxx 600 last week record high in japan, to 25. on the s&p 500 our 20th all-time high at one point last week. again and again the bullishness overwhelming on this program. the start of this one this hour. saying i feel good read i think that basically sums it up. >> deutsche bank did their latest fund manager survey and they found everyone's in the no landing. and it's not a problem. they are not that concerned about the fed keeping inflation hotter as they really reduce rates going forward. >> today we will hear from the likes of bostick, goolsby even later on friday when the markets closed a few hours after you get pce we are from chairman powell. a little bit later, in the ft this morning, amh saying this if the economy is doing well with

the current level of interest rates, while lower them. there's a few on the fomc you of the same thoughts. >> i'm looking at bostick who signaling one cut. given what you're hearing from some economists saying do we really need easier financial conditions? you have to think was the fact he even said one rate cut is good happen this year is that potentially actually more significant the fact he is still saying we will have one. it's interesting we will get pce and then powell speaks in the markets cannot trade it? jonathan: it is fewer and fewer and that seems to be the direction of travel. that's the direction of travel over the last few months or so. do your point even without this equity market is doing better than good. lisa: at what point will bonds wake up to this idea of a fed that's accommodating for risk assets but might let inflation

run hot? did you see this for 6000 at the end of this year because they could see mega caps up another 15%. i'm looking at all of this saying to myself at what point to people care about hotter inflation because it's not getting priced into the market with the exception of gold. >> this is the point where japan starts to care about the japanese currency. so we are totally unchanged on the session if you miss this and are just waking up this morning. this is the vice finance minister, regarded as the top currency chief over in the japanese government, the current weakness of the end is not in line with fundamentals and driven by speculation. we seek appropriate action against excessive fluctuation. that's the first shot some double intervention. >> let's see if it becomes action. we've heard this so many times, how many times as the bank of japan tried to jawbone strength into the yen.

at what point will they start talking about tightening rates further. are people going to buy it because they've been through this before. same thing with the chinese authorities over the weekend everyone saying you've said that before prayed where is that. >> flanked by our team here at bloomberg last week on apple. apple, google probed by the u under the new digital law. the headline crossing. probed by the eu under the new digital law last week at times for apple was a tough week. on thursday down by 4% with the investigation from the doj. this investigation is, start with europe. annmarie: we have seen europe flat from our team that this would become. -- this would be happening. the hits keep coming for apple. google has been in the crosshairs of regulators.

it feels like for apple they cannot catch a break especially when looking at what's happening in china and the fact that their sales are slowing in china. we have tim cook as well in china and he's leaning into ai and potential climate. what else can you talk with chinese authorities given the geopolitics between washington and beijing. jonathan: down about one quarter of 1% on apple. 0.6%. alex webb will join us on the story. equities on the s&p 500 looking a little something like this. it just yields are higher by two basis points. the dollar stronger through last week. we pick up on that theme later. just a little bit firmer on the euro of things. it's posited by .1%. >> which is somewhat ironic. you mentioned today we will be

austan goolsbee as well as raphael bostic. fed governor lee sukuk. chris waller on wednesday prayed fridays the big event which is ironic given markets are closed. as well as the fed chair jerome powell will be speaking. wednesday this is one of the most important events of the week. xi jinping america ceos. this to me is notable because usually he outsources it to other people. usually it is some sort of subject it and the fact that it's not is interesting. we get u.s. jobless claims. consumer sentiment data. it's not that important relative to what we get on friday given the fact we do get the pce deflator. >> let's get to the next 60 minutes or so. stocks coming off their best week of the year. terry haines on a shrinking gop majority and alex webb with the eu launching new probes into big

tech. the s&p 500 coming off the best week of the year with the return of fed speak and another read on inflation around the corner. we see a stronger 2024 performance as investors look ahead to the final inflation yards. a slowing but not recessionary u.s. economy. interest rate cuts on both sides of the atlantic. ben, you say a stronger but different rally this year versus last year. what's different about it? ben: not very much so far. the differences, so far this has been very u.s. lead, i think what we just started to see anything for six alireza's we go through the year is the rally moves out and smaller more cyclical bits of the world starts a lot better. i think we started to see that.

the u.s., of the u.k. dare i say it outperforming the u.s., not much but i will take it. financial industrials outperforming so far this year. this is where i think the difference comes and this i think will be the story. jonathan: can you talk to us about the pillars that hold up that theme through the second half of the year? what's driving that? ben: the broader rally only has two pillars. the one so far has been this re-accelerating earnings cycle that started in the u.s. being very tech lead. from here it spreads to the rest of the world. europe is having an earning session right now as we get the rate cuts in places like germany stabilize. we see an accelerated earnings in europe given how cyclical. that's pillar one. that's what gave you the strong performance last week. central banks globally whether

it's a swiss national bank whether it's a one and done. central banks are really coming back into focus we are going to get those cuts in u.s. in june. it helps support evaluations. i think the u.s. is, the slower little bit from here but this is semantics whether it's a slow slow down or landing. reaccelerating both sides of the landtag. >> the reason it matters a bit is it seems in the past no landing had the unwelcome consequence of potentially higher inflation.

it's something that's not formally in the cards. this idea we will not see some sort of material slowdown. why is that not a consumer we will see greater inflation on the other psych? ben: one risk is we cannot afford the u.s. to stop here. we are reliant on this immaculate disinflation continuing in the way we have been able to square the circle so far. stronger than expected growth, inflation in those last five yards is this productivity boon in the u.s. weathered companies forcing use them better. the tech productivity paradox. all the investment we see from's -- from ai. that's the risk and it remains a risk.

but the fact of the matter is is running twice average long-term levels prayed we don't have that inflation problem. if it disappears we do and we need to reconsider. jonathan: different to actively shorting mega cap tax paid ben: it is fine. this is been a fundamentally driven rally. these valuations of 20 to 30 times on aggregate. i think are absolutely fine. but profits are high, margins are high, valuations let's call it full and fair. that's not where the next big driver performance is going to come from. it will come from everyone else.

valuations are lower. earnings are still in recession. that is where you're going to get the delta to desta delta move, the macro base cases of's soft landing. tech is fine but it's not in the lead from here. jonathan: great to catch up with you. looking for gains elsewhere after we printed a new all-time highs. in japan as well many k to 25. -- as well 225. i don't see the reason for the fed to cut. i think the bond market is in the same camp he is bearish on bonds. lisa: other guests might feel similar. in the ft article talking about why cut. if there is no consequence, at what point do we get this immaculate disinflation.

him with the fed put saying this is one of the questions. jonathan: i'm still reflecting on what mohammed told us friday morning on this program. we look back at which central banks abandon the inflation target for range. lisa: one of the top quotes last week was when the fed said over time we want to see inflation, down. that is tacit acceptance of inflation at a higher pace. something they did not really do in the past. >> equity futures on the s&p 500 negative by 0.2%. here's your bloomberg brief. yahaira: four men appeared in court. the islamic state has claimed responsibility for friday's attack as russian officials continues to suggest a ukrainian role in the massacre.

a claim that kyiv denies. vice president, harris's warning israel against israel against an attack on rafael. israel set -- rafah. israel says they must send troops in. and the u.s. federal aviation administration ramping up oversight of united airlines. sources telling bloomberg the faa considering temporary measures against the airline after a series of safety incidents. the measures could include preventing the carrier from adding new routes or barring paying customers from flying on newly delivered aircraft. the incidents include a plane in houston veering off the runway while another aircraft lost a tire shortly after departing from san francisco. >> up next, the shrinking gop

house majority. >> happy to move on. serious problems with priorities prayed we focus on messaging bills that get us nowhere. jonathan: live from new york city this morning, good morning. ♪ welcome to ameriprise. i'm sam morrison. my brother max recommended you. so, my best friend sophie says you've been a huge help.

at ameriprise financial, more than 9 out of 10 of our clients are likely to recommend us. our neighbors, the garcía's, love working with you. because the advice we give is personalized, -hey, john reese, jr. -how's your father doing? to help reach your goals with confidence. my sister's told me so much about you. that's why it's more than advice worth listening to. it's advice worth talking about. ameriprise financial.

jonathan: pulling back a touch this morning. down by about a quarter of 1% on the s&p 500 yields creeping higher. under surveillance this morning the shrinking gop house majority. >> happy to move on. dysfunctional place. serious problems with ascending priorities prayed a very tragic

circumstance in ukraine. we have spiraling debt, all kinds of out-of-control problems and we focused on messaging bills that get us nowhere. jonathan: two republican congressmen announcing their departures. 10 buck leaving immediately and mike gallagher departing on april 19. this leaves the house speaker mike johnson with a one-vote majority. terry hines writing if that majority goes away democratic leader jeffries become speaker and there's an all democratic washington. what happens immediately as democrats do a simple majority only reconciliation bill. innings to accomplish much of the biden program that would be immediate markets negative. how close are we to some big changes in the nation's capital? >> you've summarized it well. you are quoting me so you did.

the bottom line is you have the incredible shrinking republican majority. what markets and businesses haven't quite woken up yet to is what you have is if you have a speaker jeffries it's not just a flip in the majority in the house. you may have the ability and all democratic washington to run another one of these reconciliation bills that uniquely needs only a simple majority to do and biden is in a want to try to enact as much of his program as possible. i think democrats will as well. the idea of going into the election with a solid record of accomplishment, even more accomplishments. be a resistible to them. annmarie: the wall street journal put it similar to how you are putting. , honey we shrunk the gop majority. they talked about this heart attack moment. putting the leader hakeem jeffries in charge.

i want to push this forward to april 30 we have a special election in western new york. it's a democratically held strong position. what happens after that special election? >> you've got a partisan split, and equally split congress and there's can be a lot of interesting machinations about who can bring up an acceptable speaker, who can get at least one vote from the other side and you'll see though you resuscitation of all the speculation. from last fall, everybody was reminded there didn't have to be a speaker that was a member of the house so you saw a lot of that speculation about good so-and-so or such and such, forward. a dysfunctional house even more is the bad news. the good news is markets do not need the house to do anything else this year.

they will probably deadlock for a while if that happens. annmarie: what happens to the current aid for ukraine, taiwan, israel that is still waiting in the wings? terry: probably not consensus on this because consensus in washington is it's not can happen and things you can generally bet on not happening in be ok. there's a group of centrists that really want this to be done in the house and i think there's a good opportunity for them when they come back in a couple of weeks to push that forward. the incentive to stay with the republican on this is lower than ever particularly as a teacher in the balance of being majority or not. there is i think a really good chance what ends up happening is centrists push forward and get a majority, despite what some of the house purists like marjorie taylor greene want to have happen.

annmarie: given the fact we have the slimmer gop majority doesn't mean the way speaker johnson is bringing some of this to the floor with suspension of the rules would make it easier for legislation like you are discussing, the supplemental? terry: they've used that before. suspension requires a two thirds majority of the house to pass and so they could do that. it might be the only way they get anything done before the end of the fiscal year. lisa: i have to switch gears given the fact some questions around with the turmoil of the house can mean for the former president trump. today he is supposed to post a bond for his 464 million dollar fraud judgment. i'm wondering how much of the legal stuff is noise and how much really matters and will carry through with consequences other than just fundraising opportunities for donald trump?

terry: i think the trump travails and the court matters are largely priced in. it continues to inflame the base which i think is no bigger than it was in 2020. those who hate trump revel in his travails. and the broad middle is reminded of the trump show and probably made tired her of it. so there is that number one. the idea trump is trying to turn and they on new heads of the rnc are trying to turn the republican party machine into a trump fundraising machine i think will not go down well with party regulars. it also has the collateral effect of not only starving a fundraising source for down ballot republicans in the senate

and house but it has the ability of kind of starving the grassroots folks that naturally neat -- actually need funding to turn out the vote. that i think is bad for trump. lisa: especially with some of the dysfunction we are talking about this leading republicans to quit. is that problematic for the republican party or is that kind of by design? >> i think it's very problematic. the average voter, and i've talked to people political people were out in the field talking to real voters and focus groups, the average voter is really tired of this stuff. and they see it as a complete distraction from the really important issues that frankly cut against president biden, of the economy and border security. the impression they are left with is a republican party that is not ready to govern given the

issues they care about even the republicans continue to get net positives from voters in the polls on the economy. i think it drags them down. >> how detached you think the average american is right now from u.s. politics of the moment and wears a showing up in the polls? terry: i think they're fairly detached. i think where it shows up in the polls is there's a lot of interest in independent voters, this kind of low favorables across the board for both candidates and there's low voting terms for both. one thing up and pointing out consistently including markets yesterday is you can talk about trump leading all you want. trump is by enlarging the low 40's which is a bad place for a leader to be and it's basically topped out.

my impression is trump has a floor with the ability to move up. -- biden has a floor able to move up. jonathan: we should take a moment to congratulate former president trump for his big win in west palm beach from international golf club trophy did you see that? lisa: can you do that if you own the club? jonathan: we are all happy for him. from new york city, this is bloomberg. ♪

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jonathan cohen equities on the s&p 500. down about a third. another all-time high. 20 and them so far this year. the nasdaq on a five day winning streak. no drama there. we will talk about the range that we saw. up by two basis points or so. right now, somewhere in between. lisa: it seems to be the tail risk, yet markets are accepting

the message that it will continue despite rate cuts. recently we have seen it creep up higher. maybe we will see what a no landing means for bonds. jonathan: you have this move in foreign exchange. the dollar had its best to meet. always a relative trade that struggles elsewhere. maybe had different effects on currencies. lisa: it is being doubled down even more so in places like europe and switzerland. it raises the question of which would you rather. where they are cutting rates, maybe even aggressively or somewhere where they are cutting rates and the economy is strong.

i was thinking about this week -- i was thinking about this, this week. jonathan: fed speak is picking back up. markets are closed on friday. but we are still going to get income and pending data and the read on inflation. watch out for a speech a little bit later. wondering which side of the mandate will be on that side of the address. lisa: before, they had not said that because it was not balanced with inflation. one prong of it is getting attention. annmarie: i know everyone says this is tainted with politics, but also the conference board.

there was more optimism but in february, people pulled back. jonathan: the willingness and response. this is from chairman powell. an unexpected weakening in the labor market could warrant a policy response. please know that willingness is there. can we talk about the ability? is it hot enough to temper the ability? lisa: the question of stagflation. can they counter this? there was talk about the potential for stagflation. at what point do they gain a with that inflation is sticky, even with growth softening? jonathan: it is worth pointing out again. some strong thoughts on this issue.

the currencies the -- vice minister saying the current weakening of the yen is not in line with fundamentals and is clearly driven. japan hiked but has since seen a weaker japanese yen. getting close to those levels all over again. what did they follow it up with? lisa: if they do not, are they losing patience with verbal theater? that is what it has been, time and time again. they are not buying the story that they are going to john -- jump in. they will keep things at an easy pace. jonathan: the consensus is one or two. lisa: some speculate that the

spiral is just beginning. this is back-and-forth where they are wondering if they really have it under control. jonathan: the eu opening a full-blown investigation with strict new laws. announcing the probe earlier this morning. >> we will continue to use all available tools should they try to circumvent or undermine the obligation. it is important for us to achieve the object lives such that consumers have the benefit of open, contestable markets. jonathan: alex webb joins us for more. the digital markets act.

what was it set out to accomplish? how was it brought into law? >> what it deems gatekeepers, there are a number of criteria. they are kind of an -- engineered to target the tech companies. things like market cap, the users that they have the european union. plus eight different categories aimed at targeting these companies. essentially, it was put together because it did not seem like the law was keeping pace with landscape. there were certain behaviors that they did not think were acceptable, so they sort of risk -- reverse engineered legislation. this is the first time we are

really seeing that they have given time to catch up with the law. now they are over sticking and bringing them into mind on issues. manus: we have -- jonathan: we have heard 20 of complaints. further down the road is probably in line with some of these companies. will this be different this time? >> what we have seen in the past is not necessarily the behavioral solutions that really change a company's behavior. this locus -- this looks as though it is targeting those behaviors and is meaningful. it can be repeated until they fall in line. it is different from what we saw last week where the justice department looked at a range of

things pertaining to apple. here is very targeted, at least on this first perry were thrust into what they are targeting. it is very discrete parts of those businesses, which suggests that they might have about it more carefully. annmarie: what can they do to make up some of these losses when they are facing things that they are in the eu? >> they have not scrapped it entirely. they have just reduced it. services overall have become a far larger part of apple's revenue. a lot of that has to do with the money that they get from google. it has to do with apple tv plus.

when it comes to how they offset some of that, there will be a little bit of a decline. there are new product categories. it is something that they have been trying. this staying is not a massive slice of apple's revenue. lisa: it is important to double down. everyone just kind of shrugged and said it will not be that substantial. how much is this time different in particular for apple because of everything that has happened, given the overhang with china and some of the slowdown we saw in sales there. >> he pointed to a few things that are making this different. apple is starting to stutter a little bit when it comes to

growth. when it comes to revenue, it seems to be shrinking a little bit. that is something harder to fix from if you have the second thing that i'm going to get onto. this fear of being in the crosshairs, as a company, your culture can change and you can start second-guessing yourself. this is the sort of thing that we saw in microsoft 25 years ago and it took some time to recover from that. of course, they did recover from that, but it did change the culture there. that is now the big fear with apple. lisa: is this more of -- less of an apple soy simply because there is this feeling that they are going to be disproportionately affected with

culture changes at a time when their business model is being challenged in terms of global presence? >> i think they are higher. it does not mean that they will not be targeted at all. the thing you have to remember is that the european commission only has so much capacity. they are relatively small teams actually. if apple is the one in the headlines right now, you can expect they will be spending a lot of time and attention on it. jonathan: great to catch up with you. alex webb going through what the findings could be. up to 20% in the case of repeated breaches. they could be big numbers. lisa: they could be. this does feel slightly

different just because of some of the other pressure that apple in particular is under with the increasing animosity over certain u.s. trade rules. if it were european companies, would they have the same approach? i have to question that. jonathan: it is unlike anything we have seen in years now. this is a classic case of european envy, going after names that they do not have. it is coming from all sides now, coming from the u.s. as well. lisa: we were wondering, what is the consistency? what is the goal? i do not have a sense of what the motivations are on all side. it is an interesting moment for

apple and particular but also all of the tech giants. jonathan: i am on my of -- i am on my iphone looking for an alternative for it anyways. annmarie: it felt almost personal and petty when you're looking at the doj. one name that he mentioned is bytedance. they also come into this purview. jonathan: let's get you an update on stories elsewhere. >> president biden signed a deal this weekend avoiding a partial government shutdown. the dealer triggered a new attent -- attempt to remove mike johnson.

he says he does not see the motion picking up much traction. donald trump faces a deadline. if he cannot pony up half $1 billion, the attorney general could start the process of seizing the former president's assets. he is said to appear regarding charges relating to his hush money case. opening the door to win the australian grand prix with his variety teammate finishing runner-up opinion this was after undergoing an emergency appendectomy. that is your bloomberg brief. jonathan: thank you. i appreciate it. for re: closing the gap.

it is nice that you finally see red bull failing and it is you who has been failing for a long time. >> this is your moment, your for re: moment of glory. take it. jonathan: can i have the camera? the path to 2%. >> i think we will look back on this week as the week that central banks abandoned a inflation target. jonathan: that conversation, up next. ♪ ameritrade is now part of schwab. bringing you an elevated experience, tailor-made for trader minds. go deeper with thinkorswim:

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jonathan: for re: fans are getting excited. let's see where we are in a couple months time. -5.25%. under surveillance this morning. >> we will look back on this week as the week that they abandoned and inflation target. we will look back and say this is the point where they realize it is no longer a good idea to have 2%. this is an important moment, but it will play out very slowly. jonathan: expected to show still elevated pressure.

anticipating it now. saying, we are about at the point of no cuts at all. still a few cautious cards. let's get straight to that quote from friday. i think we are going to look at last week as the week where they appoint -- they abandoned a point and target for a range. how do you respond? >> it is a big statement, but i can he is point though. how does that work in practice? there are arranged components to it. what was more interesting is that he put the range at 2% to 3%.

the idea of that higher inflation level. it is certainly possible. we have seen a lot of stickiness. i also think it is too early to call in and to that target. jonathan: let's say he is right. is that bad news for bonds based on how they are priced currently? >> no. i do not think it is. two or three years ago, it would have been absolutely disastrous. where yields have reset to, both government bonds and credit, there is a lot more juice in the market. there is an appeal to bonds that was not there two years ago

lisa:. it raises the question of when they end the cutting cycle. you do think there will be a rate cut this year, but you think the window closes at the end of the third quarter. what does that mean for where you think rates will it end up? >> possibly, i think that out of all the central banks that the u.s. federal reserve looks to be the one with the least space to cut rates and need to cut rates. i think we will see more out of the ecb. the bank of england might follow a little. for the fed, think about the journey we have taken this year alone. they were pricing in seven rate cuts. we are now back at three, which

looks optimistic to me, but we do run out of space, as you said. that is ok. if they are talking about a june start to rate cuts, that gives them time to do a couple of moves and then stop and reassess. i think all the central banks will need to be aware of that. lisa: it is interesting on the idea of the fed loosening. how much of that is the function of the fact that all central banks will be doing this now? and the u.s. will just still be the strongest economy. >> that is a huge part of it, absolutely. we have had this growing differential.

but yes, absolutely, there is room for the fed to cut a couple of times but still be the highest on a global basis. jonathan: typically we dissociate a cutting cycle with global economic weakness, but it does not feel like that this time around. can you think of a parallel to observe how the dollar performed in this scenario? where global growth is not bad, that growth will be ok? >> absolutely. if rates are tight right now, we can get couple getting us to neutral. it works with the global economy and it is all that relative valuation and aces. historical parallels, i'm not sure.

maybe it is a late 2000 type of feel to it, but history does repeat. for me, the big plate is going to be that shift in policy from tight to neutral. jonathan: such a good final point there. thank you. the last point, from tight to neutral. lisa: we do not know what neutral is. what if it is a whole lot higher? do not fix something that is not broken. this raises the question, how do we know that it is not using? we do not even know what neutral is. jonathan: it is like the market has moved to ed and now it is less comfortable. lisa: it is more of a prolonged

cycle rather than incredibly robust. he was tempering. it does not have a lot of upside baked in. this idea of inflation to pick back up. jonathan: coming up, we will catch up on the latest piece in the financial times. and the latest finds that might be right around the corner. an old desire. i can tell you somebody is going to have some stronger thought and what tacitly accepting inflation could mean for level bonds. lisa: any idea that the neutral rate looks more like 4% and 2.5%. it is a very different

proposition. it is looked at as potentially capping. jonathan: we will start with equities on s&p 500. down one quarter of 1% after a series of all-time highs. in japan on the nikkei 225, we had the 20th record high. x -- equities are better than ok. that was not the consensus coming into 2024. we are up by three basis points this morning. live from new york city. the second hour of bloomberg surveillance, up next. ♪

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>> the u.s. is exceptional when it comes to its economy. >> it has been based on solid. >> the good side of the economy and the surprise site is -- side is doing a lot of work now. >> there are more signs going the other way. jonathan: the bullishness on friday is just overwhelming. i feel great. i feel like that just sums it

up. welcome to the program. equity futures negative by .25%. so far this year, light economic data through the week. that is the one this week builds up to. lisa: the five that we get that after all of the fed speak will be compelling. jonathan: so why cut interest rates? they said something similar. why do anything? if the economy is doing well,

why lower them? lisa: right now, people are assuming that the neutral rate is two-year point earlier. somewhere in the 3.5 range. it is just neutralizing. annmarie: he is going to speak, --he is going to speak. jonathan: the eu opening a full-blown investigation into compliance. this is the so-called digital markets act. no drama here.

meta-a move of 1.5%. apple is not operating from a position of strength. lisa: i liked alex's point. it challenges a company that has thrived off of innovation and moving at their own pace, but how much do they have to be more paranoid? regardless of exactly where this goes? jonathan: it closed long time ago. lisa: correct. it comes down to who has the advantage to move forward and donate? it has not been apple. jonathan: this is how this stage

is set this morning. maybe surprising to see some dollar strength last week. the euro at the moment is a little stronger. coming up this hour, posing the question, why mess with success? the biden administration considers action at the border. watching a probe. equity markets coming off. investors looking ahead to friday. writing this in the financial times. at this level, all is right with the u.s. economy because it is growing while inflation remains moderate. if the economy is doing well, why lower them? a fantastic piece.

you say why mess with success? do you think that they will mess with success? >> based on what i heard from the press conference that jay powell had, it seems like he is continuing to tell us that they are going to lower interest rates. that kind of raises the question, why exactly is that? we had hot cpi and ppi a few days before the press conference. he expressed confidence that all was well. he is right about the economy. i think there are some fed officials who believe in the concept of real interest rates, that if inflation continues to come down, real rates will be constricted.

i concluded that the fed put might be back. jonathan: given you believe that, does it really matter? are equities up, up and away? >> it is fine for the economy. i think they will still moderate. with oil prices going up the way they have, that is an area that could always deliver to the rest of the economy. i do not think they will want to get everybody thinking about the possibility of inflation coming back, but this is starting to be reminiscent of the 1990's. if you ask me where we are, i would say 1996, where we are looking at rational exuberance. i'm concerned the market would go up too fast. it is great on the way up, but

by definition, they can be mowed down. i have been forecasting 5400 by the year-end, but we could hit that by the end of the week, the way things are going. lisa: what you are talking to you with respect to commodities. we have seen a number come out with raw materials in part because the fed will allow growth to continue. mike wilson also talking about the likelihood that a commodity why and to boom gets united. at what point does this become a problem? >> i'm not worried about the inflation story. china will continue to export deflation. we continue to see that import

prices for the u.s., coming in from china are negative on a year-over-year basis. china is in a property depression, similar to what happened in japan a while ago. it takes years to come out of that deflationary experience. i'm not particularly worried about the inflation. it is not just the stock market, it is gold and bitcoin spread between corporate bonds and treasuries. that is where the fed is running a risk. i think there should be a mandate. keep the unemployment rate down. they have to be concerned about financial stability. annmarie: he said it may not be a pinpoint. maybe the fed is targeting a range.

there was a good moment when you saw that shift. do you think the fed is looking at a range instead of 2%? >> it seems based more on what powell said that their target is based on 2%. he kept saying over and over again that they are shooting for 2% over time. they said it several times. the message before seemed to be that they are not going to lower rates until they are at 2%. i think the message right now is pretty ambiguous, quite honestly. it makes me wonder, what did they know that i do not know? what is the rush to lower rates?

jonathan: given everything you have said, what are you advocating for in equity market? what are you advocating now till the year-end? >> i'm still going to use 5400. we are about 2% to 3% away from that, but i still believe it is a bull market. i think we are still in april market. i think we stay invested. we will have to discuss whether it is time to take profits before a meltdown, but that is a risk scenario. lisa: where does the financial stability come into play? >> it is like the 1990's in that

regard. we may be early on in the financial instability issue, but things move pretty quickly these days and everyone knows the history of the stock market. for the fed, it really gives us a rate cut before we are expecting it. i think you will see the market moving a lot higher. lisa: how concerned are you about bonds waking up to sticky inflation? >> i think the bond market is happy to see the inflation coming down. i think the bond market is struggling the way that all of us are. the statement made it sound like we are going to wait until we have the data that gives us confidence that inflation is coming down. they said, things probably will not work out in that direction.

jonathan: it raises a question about the cycle. many people say that we are late cycle. just how late are we? >> i think we have discovered over the past few years that history does not always repeat itself, but it does rhyme. we are somewhere in the middle of the cycle. i do not think that we are late. i think the economy is showing plenty of signs of inflation coming down. you have to put everything in a global context. you have to put in the context of what is happening in china and europe. jonathan: giving us a lot to think about. are we going to look back at this as a midcycle adjustment for the first in a series of

cut? lisa: i asked exactly where we were in the cycle they had completely different answers. it gives you a sense. it was a fascinating panel. it went on for a wild. this is the level of disagreement among people who have been in the market for decades because it is so unclear where we are in the cycle and what it looks like to others. jonathan: we said, when was the last time you were this bullish? he said the 90's. we are talking about the foundation before the bubble. lisa: so before the rep, before the crash. everyone sees it coming, that

there is going to be a problem. jonathan: they are both constructive right now because right now, no problem. here is your bloomberg brief. >> the s&p could hit 6000 this year according to goldman sachs. sticking with their year in target but they have a scenario where mega caps could lead another 15%. that has already left many in the dust. janet yellen is set to visit china next month to meet with senior leaders, according to a report from politico. it follows her meetings last july. show him otani is sent to speak

to the media today for the first time since the illegal gambling allegation involving his former interpreter emerging. his manager was fired following claims that he had been the victim of a massive theft. major league baseball is investigating the matter while the are -- irs firm that they are under criminal investigation. that is your bloomberg brief. jonathan: almost always tread carefully around stories like this. lisa: pretty much every level. they are also kicking him out at a time when everyone is jumping more because it is legal. there are a lot of confusing aspects here. jonathan: up next, president biden's next depth on the border. >> we have a broken system and we need to fix it.

but they are refusing to put it up for a vote. jonathan: that conversation, up next. good morning. ♪

jonathan: equities pulling back. kicking off a shortened trading week. yields higher by three basis point. under surveillance this morning, president biden's next steps on the border. >> we have a broken system and we need to fix it. they are considered to be very conservative and came to a bipartisan resolution, but they are refusing to put it up for a

vote. >> it does not absolve the fact that the real fix will be when congress acts. >> still on the table. jonathan: president biden is still considering a string of action on the border. it remains a key issue heading into november. trump's talk about the border wall is rhetoric. can we get into this? the options on the table going into november. what are they? >> at this point, based on the dysfunction with members up and quitting, and some cases months earlier than anticipated to get out of dodge.

right now, we know that speaker johnson has said that he will bring a lots of the board after the recess, but we have heard that for months now. they keep saying, we want to see action on the southern border before we provide aid to ukraine. millie powerful circles like minority leader mitch mcconnell. the congress on the house side cannot move legislation. as the vice president was saying, executive action is something that they have to increasingly acknowledge. it is not realistic, and my opinion. annmarie: how does biden push for an executive order? how does he do that while maintaining the support of

progressive, heading into november? >> some of the data that we are being out of wing states like arizona, where we have a massively important race -- it is a critical state fair president biden. but the moderates, to win that state, they are giving kari lake 77% on the immigration issue or favorability on that issue, but on the economy, you see democrats getting credit. i think it is a message that they will have to slice and dice several states to see which ones resonate. they are more concerned about the israel and hamas conflict. in red state or mainly

republicans, that is where you see the concern with crime. it speaks to the polarization of america right now. annmarie: you are seeing a key state like arizona where republicans are running out, but democrats are winning when it comes to the economy. >> this is one of the unique ones where there are 50 point swings and it is really more partisan than anything, but the key states to watch will be michigan. there is pennsylvania where they are competing and that with the economy. ohio, the union and auto issues, along with the economy, but

crime is right up there. interestingly has a lead. a down ballot. tied a few points away. but the down ballot in pennsylvania and ohio, georgia, arizona, nevada -- the races where their arsenate races, those members are pulling away versus their republican counterparts. something is going on where president biden is not getting the same amount of support. in america, we do not split the ticket anymore. something is either going to be a massive split ticket voting cycle, or president biden has more room to run.

lisa: succumb full circle, given that backtrack, but can actually get done? what is mike johnson's role where his party members are threatening to oust him in a similar move of what they did to mccarthy? will democrats comes to the rescue of mike jack's -- mike johnson? >> i think with one-vote margin to deal with now, the full will be on republicans, if they choose to go that route of ousting the speaker again. i think they know that. you saw much less support for it this time around. this is not how it felt with john or paul ryan. we kept the lights on and we got

the deal be agreed to last year. let's go campaign and make it through november. we will job alone about the southern border. i think there is a lot of effort to get the ukraine bill passed, but they are about to go home. it does affect lowering the temperature. i think things will have simmered by then. jonathan: on the calendar in congress. can we talk about no labels and movement without a leader? annmarie: there are double haters. people do not like trump or biden, but people are still waiting for them to pick a leader. jonathan: if we get a credible third option, who does that take votes from? annmarie: we are seeing that

right now with rfk. he has the legacy kennedy name but he also has these far right individuals who also like him. jonathan: enjoy your vacation. it is like school. lisa: they are feeling better about themselves. we want you to be refreshed from all your hard work. jonathan: coming up, the eu lodging investigations. the latest, up next. ♪ happening here. retailers are moving inventory quickly and securely. that's because cdw designed and built a solution with cisco security. end to end protection, defends against attacks and makes better decisions in real time. so warehouse and customer data stay protected every step of the way. make amazing happen. cisco and cdw.

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jonathan: have to be careful what you say on the commercial break just in case. >> you think that was picked up? jonathan: maybe. on the nasdaq we are down .6% a bit softer off the back of five days of gains. another all-time high. into the bond market, two year, 10 year, 30 year. two year yield higher i3 basis points. the 10 year up three basis points. i want to finish on foreign exchange and have a little look at dollar-yen. dollar-yen 151.31. this is what verbal intervention buys you. not much at all.

this is what the vice finance minister for international affairs had to say. will take appropriate action without rolling out any option. i always say verbal intervention needs to have some kind of policy thrust behind it but i'm not sure what that is. lisa: the communication was clear. they push that rate over the finish line but were dovish all other things being equal. pantheon came out when was talking about japan's wage price spiral in its infancy. there is still question come even as they adopted dovish stance. jonathan: it is something there nervous about killing off. that is the difference between the boj and the federal reserve. lisa: conditioned by circumstances. if there is anyone conditioned by circumstances it would be japan. jonathan: once in a generation

opportunity to reset inflation expectations. will they start hiking by 50 basis points? lisa: i think we got the answer which is the reason the currency is responding the way it is. at what point does the japanese authorities come out and fight back against the weakening we have seen in the yen? jonathan: a steady diet of fed speak on tap. the head of remarks from chairman powell on friday. on the data front markets closed for good friday but we will get personal income and spending data as well as the core pce. this whole week will build up to that moment on friday morning. lisa: and people can trade that coming in when they come back because we will all be off. we are talking about a data independent fed. they say they are data-dependent and the hotter than expected inflation reads do not seem to affect them. this raises the question about what the data points will mean to markets. we know what this will look like

because jay powell said so. going forward how is the balance of risk shift based on the recent pivot in communication? jonathan: i think this beach to watch is maybe governor cook of the federal reserve -- i think the speech to watch is maybe governor cook of the federal reserve. the bias of the moment seems to be fed weakness in the labor market. if we get any they respond. lisa: that was new and he had not said that before. this comes at a time inflation is higher than a lot of people would like to see. torsten slok putting out a piece on how wage inflation is still stickier at 5% in the united states. not necessarily pointing to that immaculate disinflation. jonathan: shares of united slightly lower on the heels of reporting from bloomberg the faa is weighing measures to curb growth that the airline following u.s. during of safety incidents.

these could prevent united from adding new routes and preventing united flying paying customers on new aircraft. united declining to comment. we are lower almost 4%. annmarie: if this will be a clampdown on growth -- lisa, you're trying to thinking of booking up your holiday travel -- what does this mean for prices if their roots are being clawed back and we're going into peak summer travel. lisa: it is not my airline so they can go for it. [laughter] jonathan: we know your airline. i will not mention your airline. annmarie: there is a chain of fact. jonathan: we have been looking at the issues we've seen with boeing and we're trying to work out who was ultimately responsible -- more broadly the responsibility of the airline, the responsibility of the plane maker, and what we are seeing some of the issues happening at the moment -- potentially it

will be down to the airline. lisa: it is at a time or a virtual -- where we are still trying to work through the consequences of the pandemic era. one of it is a loss of seasoned professionals in service industries. we think about all of the layoffs and all of the attrition. how much talent was lost during that period. we talk about that with the billing factory. i wonder how much of that is true for the airlines? jonathan: every time we have done a segment with boeing we have done a warning, turn the volume down if you're going to fly later. that is the latest on united. here is the latest on apple, google, and meta. the eu announcing investigations that could lead to the tech giants facing fines of 10% of global revenue. the eu antitrust chief saying "we suspect the solutions put forward by the companies do not fully comply with the digital

markets act." my -- mandeep singh joins us with more. initially we sensed here we go again with the eu going after major tech players. not a big deal. why is this different to you? mandeep: they just rolled out the additional markets act and now they've rolled out a commission to investigate whether these companies are in compliance are not. i think the focus is on the gatekeepers. primarily alphabet and apple and to an extent meta. alphabet and apple have the operating system. they have the apps on the phone and they have the option to keep those as default. i think the other aspect of it is the commissions they charge on the pp store. there are two burning issues around with the eu is focused on but these companies have to change behavior to comply with that. lisa: it is not the fines, it is

the behavior shifts. what types of behavioral shifts do you expect and how does that affect the future profitability of some of the tech behemoths? mandeep: look at the commissions these companies charge. any transaction to the apple app store is a 30% cut for apple and now they are lowering the commissions for smaller developers but larger developers it is 30%. what the eu is saying is if there is a third-party app store that wants to rollout apps, they should be able to do that. it may pose a security issue, which is the argument apple and google will take. there operating system becomes less secure as a result. that is the push and pull of it. the other aspect is the default apps. why does the android operating

system have google maps as a default and how easily can users be allowed to change those defaults? it has always been a case whenever you own an operating system, you rollout your browser. why is safari the default browser? all of these things are at play. the defaults and the commission. the focus is on gatekeepers. meta is not a gate keeper but it does share data across its family of apps. why is it data sharing? what is the consent required to share data is under focus. annmarie: what is more worrisome? the doj or the eu? mandeep: i would say the e.u. in the interim because they have been digital markets act and they are trying to work of these companies are complying. i feel fines will be imposed. the doj trial will take years. annmarie: what is imminent?

mandeep: imminent is the fact that these companies have to change behavior. if they do not there will be fines. jonathan: you are focused on the potential for partnerships, specifically one between apple and google. gemini, the eye partnership we've been talking about. do you think this'll be a huge road -- a huge roadblock to those partnerships? mandeep: how do you allow these companies to share data for trading large language models, to rollout a voice assistant everyone is so excited about on your phone? it will be very hard for apple to make a case it can continue to use google, even though google is paying 20 billion dollars in traffic acquisition costs to apple. that behavior has not changed but you can argue it makes it harder for them to collaborate. jonathan: where would that leave apple in september? mandeep: they have to do things organically. there is no doubt apple has to

invest in developing its large language model to implement ai and leverage siri or and more and they are behind. the fact that they were looking to use google is probably now seen as somewhat of a setback given all of the regulators have. lisa: there is a larger issue and it is something we were talking about, the issue of whether this action from the european union disproportionately affects apple because of the other baggage affecting apple more than google , even though those shares are down a similar .6%. is that your sense that this is a 1, 2, 3, four, five punch with apple that makes it difficult? mandeep: with apple the scrutiny is around their app store. google is involved in everything the eu is raising, whether it is app store commissions or your default apps.

i think google is probably affected more and they have 30% revenue coming from just the services they are rolling out in the eu. apple is more hardware centric. they have a services bucket but it is still relatively small compared to google or meta. jonathan: does this feel like end of empire stuff for these big names, that maybe they will not be the winners of the next big wave of technology? mandeep: their ability to do acquisitions has been reined in. the ability to tie things together, whether it is the bundling aspect, that has been reined in. whether you are a hardware maker and you want to vertically integrate, you will not be able to do that very carefully as you are able to do that before with apple. apple's value proposition is all vertical integration. now it will be very hard for somebody to vertically integrate and not open up the platform. that is what regulators are focused on. annmarie: to john's point about

ai, end of empire, there is new research that top talent with ai is from china. they are overtaking the united states. are they the big winners when you see the eu and u.s. going after western champions? mandeep: probably not because when it comes to large language models they do not have the data. one of the things going for the u.s. companies is they have the data. there is a reason why eu is going after all of these companies. the data is so valuable and now would be using the goods with large like which models. i do not think china has the data. the domestic data is there but they cannot rule out the large language models. jonathan: should sam altman buy nokia? mandeep: i think it is too far of a stretch. he has other things he can do with all of the funding he is getting. jonathan: thank you.

mandeep singh of bloomberg intelligence. you never know. lisa: to your point about the end of empire, to this mean they are on the pathway to the new utility creation? if they are the bread-and-butter of the economy, how much are regulators saying we want you to look just like at&t? jonathan: i am joking, but what mandeep singh said about the new iphone being compromised could be interesting questions for apple bulls for pinning their hopes on that big upgrade in september. lisa: we can get dan ives. jonathan: i'm sure he has a very different view on things. here is your bloomberg brief. yahaira: donald trump faces a deadline today to post the bond to cover the civil fraud judgment against him. if he cannot pony up half $1 billion, new york's attorney general could start the process of seizing the former president's assets.

trump is also set to appear in a manhattan court in a bid to dismiss charges related to his hush money case. kamala harris's morning israel against a major attack on the gaza city of roff where more than one million -- of rafah where more than one million palestinians have sought refuge. israel says it must send troops into rafah. israeli intelligence estimates there around 5000 8000 hamas fighters and group leaders in the city. four men have appeared in court charged with carrying out a terrorist attack at a moscow concert venue where at least 137 people were killed. two of the men pleaded guilty. the islamic state has claimed responsibility for the attack as russian officials continue to suggest a ukrainian role in the massacre. that is your bloomberg brief. jonathan: up next, fed speak following a dovish chair powell. >> people are worried about a

re-acceleration where we will eventually roll into a recession. they are waiting for a better buying opportunity. jonathan: that conversation up next. bob michele says he feels great. he has not been as bullish since the mid to thousands. from new york, this is bloomberg. ♪

jonathan: starting the week a little bit lower on the s&p 500. yields a low bit lower. spent some of the weekend thinking about if mohamed el-erian is right, is it good or bad for bonds. what does it mean for fixed

income? if this fed is willing to tolerate a range of inflation between 2% and 3%, what does it mean for fixed income? lisa: the answer is it depends. he saw the 10-year within range making sense. longer-term it strikes me that it is not a good proposition for bonds because longer-term there is this question of the fed's ability to counter downturns. jonathan: can i reiterate i spent some of the weekend thinking about that. the rest of the time watching football. the national anthem. fantastic. amazing. lisa: it sounds like you had a great vacation weekend. jonathan: some of the weekend thinking about bonds too. [laughter] this morning, fed speak following a dovish chair powell. >> >> people are worried about a

reacceleration where we roll into recession. they're waiting for a better buying opportunity. we can toss away the last 15 years and look at the period pre-financial crisis when there will be a demand for capital, there will be a cost to it, and there will be a productive use to it. i am very optimistic. jonathan: fed speak returning this week. chair powell again on friday. investors looking to see where the committee stands ahead of core pce. "last mile of disinflation will be a lot harder than markets expect and the fed will need to be patient on monetary easing. the new equilibrium we are trending to will have markedly higher rates than we've been used to in the pre-inflation surge period." sonal joins us for more. ultimately if the federal reserve is willing to accept higher inflation for longer and

you believe this journey could be a lot longer, where does it leave your view on fixed income? sonal: i like fixed income. the only thing is people have to adjust what they expect to get out of fixed,. it is time for fixed income to says -- to do what it says it will do which is deliver boring returns. they are not looking for capital gains. jonathan: where across the curve do you prefer? sonal: we have been neutral for a while but between 425 and 450 we've been adding duration. clearly spreads are extremely tight. one has to look for pockets of value wherever we can find them. terribly tight right now on most of credit spreads. lisa: this is why i find it compelling you see the neutral rate closer to 4% than 2.5%, yet you're still investing in

longer-term bonds that are close to the 4% rate. how do you square those ideas? sonal: we are neutral and we are only slowly getting there. why would i say long-term rates might end up between 4.25% and 4.50%? there are technicals now. globally we have interest plates -- interest rates which are lower and we have an outstanding amount of liquidity which will not go away. the fed is talking about sitting on a balance sheet far larger than it used to. if it decides to ease off on balance sheet tightening sooner than bringing the balance sheet back to something like $4 trillion, you have an extra couple of trillion dollars to support. if the fed decides not to start that process of runoff of the bound sheet, at that stage the fit continues to be a player in

the bond market. i think you have additional sources of demand. you look at the yield and recognize you are not going to get fair value, which i would say is probably closer to 5% or above 5%. lisa: this is shocking to me because every investor says longer-term there could be risks , whether this is mid to thousands or mid 1990's. in the near term there is no reason not to buy. is there a medium-term risk about exuberance or some other consequence? sonal: medium-term risk will come from the fiscal side. i think that issuance is a wildcard. no politician has a desire to reduce the fiscal deficit. longer-term that is something we would be watching extremely carefully, especially if it appears inflation comes down even slower than i think it will come down.

i am not anticipating reacceleration. if we got that i think that is a significant risk. jonathan: i want to share this quote. "the ability of the fed to manage inflation above 2% assumes a level of control they do not possess. it is called hubris and does not tend to end well." can you talk about your understanding of inflation and whether they possess an understanding of patient that would allow them to control inflation between 2% and 3%. sonal: i think a certain degree of being humble is necessary. none of us completely understand this. what my baseline has been is it is not purely monetary. it is fiscal and monetary. the move from 9% to 4% was always about low hanging fruit and the supply chains.

4% to 2% is also a function of things like wages, of the fact that financial conditions are so easy people feel comfortable continuing to spend come and you have consumer demand, which is robust. that is why maintaining between 2% and 4% is a risky proposition and that is why i think the fed will be a bit more prudent and only start using much later in the year in the june markets are currently pricing. sonal: looking at the price of -- annmarie: looking at the price of oil going up steadily, how concerned are you about supply shocks? sonal: supply shocks are an added variable. with what is going on in the middle east the background of russia and ukraine, you could get in additional supply shock

effect coming from oil. historically those have been more temporary, unless they stick around long enough to get a second round effects. if we have a sustained shocked of oil we would get into a difficult situation because that does have negative impact on demand and you get accrued shock with it inflation shop and that is a pretty ugly environment. jonathan: this seems like a change. typically you are going against the grain. do you feel the market has moved in your direction? sonal: yes. [laughter] i do not think i was ever against the grain simply to be against the grain. i think it has moved significantly closer to where i've been calling it. i see divergence more over the medium-term. i continue to see the fed talking about 2.6%. i hear 2.5%, two .6% constantly in the market.

people who look at commercial real estate are horrified by the idea neutral fed funds might be closer to 4%. that is another shoe that might need to drop. if rates are closer to 4% than less than 3%. that is the one area i think i'm still somewhat separate from markets. jonathan: you're always one of the best. great to catch up. the conversation continues. the third hour bloomberg surveillance is up next. jim bianco of bianco research. neil dutta. that conversation and a lot more still to come. from new york city, this is bloomberg. ♪

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>> i feel great because i feel post-financial crisis we have been in a lala land. >> what has been winning has continued to win and that has been a great environment. >> although valuations are high they could go higher.