>> to me the strength of the economy, that is a reason to expect a ceiling on how many cuts the fed can deliver. >> think the fed is going to be more prudent and only start using much later in the year. >> if they're not careful, we could end up with higher yield. >> banks are coming back into focus. we are going to get those cuts. >> this is "bloomberg surveillance." jonathan: good morning.

this is "bloomberg surveillance." your equity market is positive. what a snooze estar to holiday shortened trading week. one word to sort of echo around wall street, stretched. rbc sentiment is stretched. just how stretched is this uppity market? lisa: it is a good question given that max kettner is on the show. it is stretch, but not bubble. what do you do? jonathan: saying this over evercore will join us later on, we are in the exuberance zone. my question, how irrational is that exuberance in the stock market? annmarie: good question. have we gone over in the since we talked about mid to thousands, what happens then? it is the start of potentially the bubble bursting.

interesting what the data shows today and if the fed takes it on board or if they ignore it and say, talking about the fact is a matter for the fed because are they now going to potentially start to move toward targeting an inflation range not pinpoint of 2%? lisa: you think it is contrarian that they are less bearish? that's basically if you have such earnings growth hanging in there, maybe you could be justified tiptoeing away? jonathan: where we are currently. lisa: i thought that was interesting because he has been bears and contrarian and i welcome that feeling but it shows how it is difficult to be a bear right now. jonathan: front page of the financial times this morning, see? i thought of barmo -- bramo who

coined that. a high debt america, much harder to fight inflation without dramatically adding to an already unsustainable debt servicing bill, warning of the snowballing dent in the u.s. economy. lisa: this is a no-brainer. everyone says this is going to be a problem unless rates go to zero. the person was one of the heads of the congressional budget office. we are talking about people who are in the government looking at how unsustainable this is. the problem is we have been talking about it for a while. we've a record five-year option today. my guess is we want to be talking about it tomorrow. jonathan: raising that scenario cover late 1990's and early to thousands. this is the kind of stuff that repeatedly comes up on the program the last few weeks. annmarie: when you look at the

budget progression, what we will see in the next 10 years is the top line item on the list budget paying off our debt before we start to pay off our actual bills are things society needs. it is election season and then we already know next year there's going to be more debt because the tax debate is going to come full throttle to washington, d.c. whether we get trump or biden come on some level those tax cuts will continue for some americans. jonathan: we will have that debate in a moment with greg valliere. we will bring you regular updates on the bridge in baltimore. we will bring you notate on that story. equity futures on the s&p 500 posited by 0.4%. that is a session high. we were up double digits or other down double digits last

weekend and yesterday we were up by five basis points and took half of that back. looking at yesterday, what was that about? lisa: from everything i read, the trading option seems to suggest people wanted to hedge their bets about rate cuts coming through this year. it seems like people are worried about what we heard from larry fink. they want to hedge a little in cases goldilocks is getting a little over. jonathan: clicked out on crude, just a little bit lower. bridge crew, 86.64. new 3q price target, $19 on a tight oil market. you saw what mike wilson had to say, bullishness on energy names. lisa: not only on energy, but commodities more brother which raises the question at which point as the robust growth and

the easing policy of central banks enable inflation stemming from goods and commodities in addition to other places? jonathan: coming up, max kettner of hsbc and why he says the stock market is not a bubble. we begin with our top story, whether the stockmarket rally has run its course. max kettner of hsbc writing, risk as evaluations may be late cycle i look like a bubble but lots of macro variable increasingly look like early cycle. i am pleased to say max joins us for more. earlier this year, you came out in 2024 looking back at 2023 where you are very bullish and you made a change. you called it reversed goldilocks. you have anticipated interest rates higher in alternately causing damage in the equity market. yet the first half of the story

right. struggle with the second half. why the change? >> look, what we did not get right was interest rate did not increase. when we look at shorted data, inflation expectations, they did increase. we have seen january and february cpi data clearly surprise to the upside. we have seen rates up and the long end of the yield curve up. we have seen this but contrary to last september, october, contrary to last february for example, we have not seen interest rate volatility go up. that usually is the one thing that is needed to weigh on equity valuations, to bring equity multiples down and then to spur it a bit across the asset classes. that is what has been missing. when we look at longer data, date -- even if we do push back toward 4%, at least maybe two

thirds of that story is gone so that is why about a month and half ago we said, look, even after such a short time, does not pay to be bearish. the data is where to good. you have to stay bullish on equities and high-yield in particular. jonathan: this is a tactical call, short-term call, window where we think we could do ok or longer-term call? >> i think it is at least for the next couple of months. it is not where i would expect next week to say, actually, let's reverse course again. i do think that can go well into the second half of this year. perhaps toward the q3 reporting season, so october, november we are seeing obviously the u.s. election volatility but more crucially, earnings expectations are much, much higher, much more challenging to beat. we might also see perhaps the fed and i discussion that you

guys were just having around the fed, we might have this discussion come to the fore where we might start to discuss can the fed really cut 4, 5, 6 times? can they cut down even to 3 or they stuck at 4 or 4.5 or my they have to reverse course again in 2025? so far i think central bank policy, particularly with regard to the fed, is very binary. they either cut or not. to be honest, as long as they cut, i think we're still going have a great relief rally in equities and high-yield and risk assets more broadly because there is still so much cash on the sidelines. annmarie: -- lisa: as long as they cut at all this year, that is enough to keep his rally going in a significant way, why? >> absolutely. those kinds of changes floating

around right now are people look at december 2024 fed fund futures versus the s&p and this big wedge opening up, this divergence opening up. it doesn't make sense because what really matters is the starting point where then the markets can start pricing interest rate cuts. once the fed has started to cut once, twice, three times and then in the second stage we start discussing about, hold on, now that we are in the cutting cycle, how far is it going to go? that then the second stage will be crucial. but the first stage is simply this binary nature, are they going to cut or not going to cut? there are a lot of investors there contemplating whether this revival of growth, very easy financial conditions, there is a risk, let's not deploy all the cash we have on the sidelines. so i think once the fact is happening, i think there is

still a lot of silence that will be deployed in markets. lisa: you said it doesn't pay to be bearish and that makes me nervous that typically a two-sided market tends to be healthier. yesterday, talking about alan greenspan in 1996 when he talked about a rational exuberance, sowing the seeds for the internet bubble. are we in a similar period where does not pay to be on the other side of reporting rally that potentially is headed a little too high? >> absolutely not. i am going to throw something at you that you cannot argue. i have seen the survey i think from bloomberg last week where you guys were asking, is this a bubble or not? i thought it was around 45% said it is a double and another 45% would say it is not a bubble. i would be generally concerned if you had 80%, 90% of the people saying it is not a

bubble. i think that would validate your thesis around a rational exuberance. as long as it is still pretty balanced in terms of the views, to me that is not really bubble territory. in terms of the macro data, when we look at things like ceo confidence, consumer expectations around financial situation in the future, when we look at global manufacturing as leading indicators. we would look at globally, central banks moving away from hikes towards cuts where we should start to be talking about the lack of monetary easing -- all of those things look much more like early cycle, not late stage were close to recession. that is why i don't take it is really bubble territory. one last point, when we look at the s&p, it is only about 8% higher compared to the peak in early 2022. if you look at u.s. nominal gdp since then, it is up 13.5%. you can make the argument particularly some of the

cyclical sectors that have got your proper earnings recessions, that they really have some catch up to play on the earnings i. jonathan: have to be careful with any survey that bramo has access to. you have the potential to distort surveys. lisa: we think that is why they don't call me? jonathan: if they did call you, it would be 10% over the next one to five years. max kettner, thank you. we promised updates on the british -- bridge collapse. the ship that immersed charted --masersk singh to ship it charted because the baltimore bridge collapse. that stock is down by 4%. lisa: the company said we are closely following the investigations conducted by authorities. the question lies with liability. they did say no crew or

personnel were on board the vessel -- no maersk crew or personnel were on board the vessel. >> a warning about graphic images, that francis scott key commuter bridge has collapsed after being rammed by container ship. the associated press reporting at least 20 people in multiple giggles plunged into the river. maersk says the ship was under its charter. the bridge carries more than 11 million vehicles a year. commuters have been warned to avoid interstate 69 this morning. ron desantis signing of the limiting access to social media accounts for minors under the age of 14. the law would drink our parental permission for 14 and 15-year-olds and would force all social media users in the state to submit identification documents to verify their age. the move comes as some states clamp down on social media

platforms over mental health concerns and their role in spreading sexually explicit content. adam neumann offering to buy the company for more than $500 million. it is unclear how he would finance the deal, which comes five years after he was ousted by the board of wework. wework is currently undergoing restructuring. jonathan: a round of applause for adam neumann. lisa: he won the pandemic. jonathan: he won the bubble era. he wants to buy back again. lisa: at a discount. be a rock star. he exudes that feeling. jonathan: walking around in no shoes and socks, floppy hair.

lisa: you understand. jonathan: up next, a trial date set for donald trump. pres. trump: i don't know how you can have a trial like this in the middle of a presidential election. this is election interference. jonathan: that conversation is next. ♪ [alarm beeping] amelia, turn off alarm. amelia, weather. 70 degrees and sunny today. amelia, unlock the door. i'm afraid i can't do that, jen. why not? did you forget something? my protein shake. the future isn't scary, not investing in it is. you're so dramatic amelia. bye jen. 100 innovative companies, one etf. before investing, carefully read and consider fund investment objectives, risks, charges expenses and more in prospectus at invesco.com.

jonathan: a small bounds on the s&p 500. -- a small balance on the s&p 500. trial date set donald trump. pres. trump: we have a man who just rolled would like the trial to start in 21 days or

something. i don't know how you're going to have a trial in the middle of an election. not fair. i don't know how you can have a try like this in the middle of a presidential election. this is election interference. they're doing things that have never been done. jonathan: donald trump first criminal trial set april 15 sintering round hush-money payments, to 2016 campaign. an appeals court allowing trump 10 days to post a reduced $175 million bond in a civil fraud case. he still is holding a steady lead over president biden in four key states. joining us is greg valliere. let's talk about our new poll this morning. are we narrowing the gap between the two leaders? >> i think so. it is a pull yet to take seriously. there were 5000 people polled. it is so march.

a lot can change. there will be momentum swings in this campaign. this is significant for a couple of reasons. the public seems to feel the economy is getting better. that is a big shift. more are saying they are not voting for biden, there voting against trump. lisa: wisconsin, biden is leading by one point. he trailed in february. he is tying in pennsylvania and michigan. how critical is the blue walter president biden getting reelected? >> that is a good point. you have to win those states. what biden has going is money. believe it or not, the democrats and biden have far more money than the republicans and trump. annmarie: do you think potentially trump's social media

company can help him? it looks like a huge windfall for him. >> sure could help him. the public might say he is spending all of his personal funds on this and it might create a backlash. hard to say on that. trump has a long history of not spending any of his money when it comes down to it. he finds others to spend the money. lisa: we were talking about these trials, starting with the former president talking about how it is complicating this effort. is a complicating or add fuel to his ability to raise money since all of these trials have traditionally been fundraising opportunities? >> i think it is the latter. he can raise money claiming they are taking his properties away, treating him unfairly. he is say we are in the middle of an election. it is still march. he plays martyr better than any politician i have ever seen.

i think you will do that again very effectively. annmarie: we're wondering what president biden with ramifications will be from some of the u.s. policy with respect to israel and gaza, given the fact the u.s. did not veto the latest resolution at the united nations calling for cease-fire. there has been an increasing kind of tension between the u.s., israel. do you think that will bolster president biden when it comes to support from the more progressive wing? >> it may help him with the progressive wing. at the same time, it might hurt in a state like florida that has a heavy jewish population. when you see netanyahu and biden not even speaking to each other, that is shocking. the israeli-u.s. ties of the last few decades have been rock solid. now they are not. annmarie: what you think biden's response should be? do you think people are going to vote on foreign policy in november or just something he

needs to do to make sure he is showing up smaller bases like in michigan? >> he needs to shore up bases. i am intrigued by the finding in this new poll that people now see the economy getting better. they're probably looking at the side market that has been rocky for a couple of days but the stock market has been pretty good the last couple of on's. i think that is a real plus for him. annmarie: but if you look into the poll, people still trust trump more when it comes to interest rates and everyday pocketbook issues. how does biden change that? >> i think he has to stay on message and talk about tax cuts for the rich, things like that. let me add one other really interesting wildcard. that is robert f kennedy. he is probably going to announce today his running mate. i am shocked to see in some polls kennedy is at or above

10%. he could have a big impact. lisa: in the around the world kind of moment in politics with ukraine, i want to finish up with something a little different. the markets care little more about the front and center which is a tit-for-tat around tech. between the u.s. and china that seems to be heating up. overnight, we heard about china potentially banning these or limiting the use of u.s. produced technology in government -- super infrastructure. how much is this going to lead to a response from u.s. and highlight how much this could potentially escalate into the november election? >> the friction is real and the courage to say janet yellen is going back to china and a couple of months. there is a need for serious negotiations. i think u.s.-china relations another big wildcard and a negative one potentially for biden. jonathan: greg, always good to hear from you, greg valliere.

stunning pictures out of baltimore overnight. the francis kottke ridge -- francis scott key bridge collapsing. maersk saying a ship it chartered caused the baltimore ridge collapse. that stock is negative today. this from the white house moments ago saying no indication of any nefarious intent in baltimore. annmarie: the white house will be getting briefed on everyone including all the local personnel on the scene. we do know there has been a time given this took place early morning. they are saying no to various intent right now in baltimore. they are monitoring the situation. the situation where we're talking about maersk but people are potentially going to be drowning. this is a number of cars that fell off this bridge. there's going to be a tremendous amount of local authorities on

the scene. i imagine the white house at this moment will be monitoring every single moment of the situation. jonathan: still piecing together what happened. another update in 20 minutes or so. financial markets briefly. s&p 500 bouncing back by 0.4%. yields a little bit lower. plenty of fed officials have to say pretty consistent with what we heard from last week. lisa: he used to be the dove and now he is a hawk saying he thinks only one cut this year. an interesting shift in the birds. jonathan: and i know you're interested in the cocoa futures. lisa: sort of shocking. ♪

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jonathan: i am anticipating how bearish the conversation about to take place in five minutes will be. equity futures on the s&p 500 positive, bouncing back .4%. the nasdaq snapping a five-day winning streak. muted losses. higher today .5%. the upgrades in the bond market from goldman, raising the year end 10 year target of 4.20 5% from 4% which is basically where

we are, the 10-year at 4.23%. lisa: what point does the long end wake up to the idea that the federal reserve is allowing inflation to run hotter for longer? right now we are not seeing at all even with another record a uction today. jonathan: unit with the cheat code is in consensus? you hear we will get a steepener and basically it is a cheat code . something will happen on the long end. if you ask them to be specific about where they think the 10 year yield is going, that is where they struggle. to get inflation higher, it may be stabilizing, you start to factor in a fed looking at a neutral that has a four handle, not a three, not a two. lisa: i get the sense there is a great deal of humility from a lot of strategists, whether it

is bonds or stocks by the wall of money that keeps flooding in. people who could make a case are seeing the money flooding in and not sing the case bed against it, which raises the question what makes it wash out and that is one of the key questions. or will it always be there. jonathan: we will dig into that case in just a moment. let's turn to foreign-exchange. the euro stronger, we are at 1.0 863. divisions growing between israel and washington. the israeli government canceling a trip by senior officials to d.c. after the white house opted not to veto a u.n. resolution demanding an immediate cease-fire in gaza. the office of benjamin netanyahu had demanded the u.s. veto the resolution. the u.s. abstained, citing a failure to explicitly condemn hamas for its attack.

the first time the security council has openly endorsed a cease-fire. we will catch up with the israeli government later this morning. annmarie: an individual supposed to head to the united states. this trip is now suspended because the u.s. decided not to go ahead with the veto. we have been seeing it for weeks. weather was over the weekend, kamala harris saying she is not ruling anything out when it comes to consequences if israel is to go into rafah, and that groundbreaking speech by senator schumer saying benjamin netanyahu should be stepping down. the gap keeps widening. jonathan: let's listen to the response from the biden administration. it says nothing has changed, why the overreaction? what did change for israel? the u.s. is turning around and say nothing has changed. annmarie: it is the first time the u.n. lay openly endorsed a

cease-fire. i do not know if it is just this moment. this was a moment for benjamin netanyahu to push back on all of the rhetoric i just mentioned, whether it was schumer or kamala harris, it is more of a wider gap between these governments. jonathan: there is a story on lisa's radar. handful of u.s. ceos extending their stay in beijing for wednesday meeting with the chinese president xi jinping. sources telling bloomberg there is an "understanding" xi will be there. his name is not listed on any invitations. the same tactic was used in november when he attended a dinner with u.s. business leaders including the pfizer and fedex ceos. what you make of this? lisa: i am not sure. will this be an outrage to get them to stay or will this be a

frank conversation about why they are unclear about how quickly and how much they can commit to a country that does not seem committed to them. we look at foreign direct investment coming down for a second straight month. this has been an issue for companies that want consistency. to me it is an issue they are all there kissing the ring. do they get a promise in response they can bank on? jonathan: things have changed. used to be them rolling out the red carpet for xi. it seems like xi is now rolling out the red carpet for them. lisa: i am curious to see if it is the same kind of tone given the fact that all the public proclamations by officials are pretty sanguine on the economic picture. annmarie: we have to make sure xi actually does intend to go, but it is really the optics. what he is trying to show is we want foreign direct investment. the issue is it comes just ahead

of the secretary set to go. does this pave the way for that more frank conversation people have with the u.s.? jonathan: the next story out of blackrock. the ceo larry fink warning of a mountain of debt hitting the u.s. economy, saying the nation cannot rely on taxes and spending cuts to get the problem under control. more later should pay attention to america's snowballing debt. high debt america would also be one word is much harder to fight inflation. he sang a debt crisis is not inventive of all -- he says a debt crisis is not inevitable. lisa: how do you pay for it? the question is there is a lot of disagreement about how you grow the economy and then the second question is what are proper investments to pay for at a time is getting more costly to borrow? it is a real debate. i'm not saying this with snark. i do not have the answer. jonathan: we are way out of it

will be the response we hear from washington. lisa: you grow out of it by cutting taxes? has that been proven to work? jonathan: that will be one offer from one party. lisa: will it be removing restrictions from businesses? you invest in infrastructure. jonathan: another party would say we tax the 700 billionaires in america and that would address everything. lisa: a lot of people agree on the premise but not the resolution. jonathan: larry mcdonald warning the fantasy of return to normal is unlikely in his new book how to listen when markets speak. he writes "an unprecedented error of easy money is coming to a screeching halt. were about to witness a new error defined by sustained and a series of sovereign corporate debt -- " larry joins us now. thank you for being with us.

the word crisis comes up a lot. what you anticipate will happen into the thoughts of larry fink resonate with you? larry: first of all, gratitude. i'm grateful to be here with you guys. i am coming up on 20 years on the bloomberg terminal. in this book democratize his information for the viewers. we have been having these conversations for the last couple of years with the professional investors. what we want to do is bring the intelligence gathering we have done around the world and bring it out to a broader audience. the bottom line is everybody in america come everybody's 401(k) is set up for a 2010 to 2020 portfolio that was a disinflation decade for most people. post lehman brothers, i was fortunate enough to write that book, this is about the 2020 to 2040 portfolio.

then when you look at heart assets like copper and aluminum, oil and gas, things that will bring forth our economy to the next generation, you are only talking about $3 trillion in those asset classes. lisa: this raises the question of how do you get this wall of money shifted in those directions and is there enough to go around? is there not the fear of massively rising yields because there is so much cash created by the 2010 to 2020 decade. larry: this year is very political and we have had a disinflation cycle, a disinflationary moment in the last three or four months where inflation came down and a lot of people are encouraged by that. that has brought on a lot of cheerleaders going back to the previous world. when you look underneath the

surface there is a multi-polar world, we have sea lanes not working properly. we have drone attacks on refineries. the probability that inflation normalizes three to four instead of one to two is high and if that is the case there are trillions of dollars in the wrong place. lisa: what will be the wake-up call? we have been talking about a fed that said we will allow inflation to run hotter for longer. markets do not seem alarmed. when does that change? larry: when you have a $35 trillion debt hole, there are two ways back. one is debt jubilee. that is going back thousands of years. the other way is to monetize your way out. they will not tell us that that is their plan, but when you look at the fed meeting and all of the questions, nobody is asking the fed -- he says higher for

longer. when he says that somebody have to ask if it is $80 billion a month of interest how can you stay higher for longer? at one point they will have to hold down the front end and bring up 80% of all debt issuance is in t-bills with that massive amount of debt issuance. they are trying to play the waiting game. eventually they will have to suppress the front end. jonathan: how well understood is the corporate story? we have understanding there is a decent story there. how much of this has been taken down? how well understood as the corporate side of the story? larry: i look at the super regional banks like comerica and u.s. bank. they are underperforming the s&p 500 by close to 40% or 50%. that is very unusual. that tells you there is a debt problem that is out there.

the corporations did a great job of pushing out the maturity to 24 or 25. the problem is in the next 24 months, if you add up all of the commercial real estate loans plus the leverage loans plus high-yield and investment grades, it is $2.5 trillion. that will be an issue later in the year. jonathan: you think there is something incompatible about where the market is versus where the regime is going relative to where we were 10 years ago. how do we get 10 or 20 years down the road in this cycle if we have to work through all of those debt issues? i am not sure how the things are compatible. if the fed has to stay higher for longer because you believe inflation will be a problem for longer, doesn't that address itself? larry: typically this kind of debt load would cause a financial crisis event. look what happened.

the moment they smelled a lehman brothers moment, the fed juiced the balance sheet and they will basically attack any financial problem with rate cuts and balance sheet. at the end of the day that gets you into a weaker dollar regime because that is one way out of a financial crisis. now they have all of this firepower. 5.25% rate cuts. they can attack the financial crisis aggressively with rate cuts. if they do that that gets you a much weaker dollar on the heels of what is happening in commodities. then you have the big commodity boom. lisa: which is the liz truss moment when the u.s. loses its reserve currency. is this a matter of the leverage shifting away from the private sector to the government sector, and for the fed to have to rescue the government by keeping rates lower and allowing inflation to run hotter. how hot are you seeing inflation running? are we talking 3%, 3.5%, or

something more in the fours that does way on people that go to stores and see their grocery bills picking up materially. larry: right now the boomers control about $76 trillion of wealth whereas the millennials control a trillion dollars to $9 trillion. the boomers are sitting on a lot of capital and getting a terminus event of money in the banks for money market funds. the bottom 30%, the bottom 60% are being suppressed with higher inflation and they have $400 in their checking accounts according to the new york fed. $400 in their checking accounts. it is two economies. one is booming because powell gave the wealthy boomers a pay raise. the bottom 60% is under inflation stress. you can see this in some corporate earnings. it is two economies fighting it out right now.

jonathan: i've a feeling we'll be talking about this for a long time. fantastic to catch up. larry mcdonald on his new book. let's get your update on stories elsewhere. an update on the bridge collapse in bottom more. here is your bloomberg brief. yahaira: baltimore's fran just got key commuter bridge has collapsed after being struck by a container ship -- francis scott key bridge has collapsed after being struck by a container ship. it is described as a mass-casualty incident with as many as 20 vehicles falling into the water. in a statement mirsky says the container ship was operating under its charter. the white house as there is no evidence of bavaria's intent. lucid is getting -- of nefarious intent. the u.s. company lucid saying

new financing will be partly used for capital expenditure and as working capital. lucid shares gained nearly 6% yesterday, though they were still down roughly one third this year. former president donald trump social media company is rising ahead of its first session as a publicly listed company. front media and technology group will begin trading today on the nasdaq following its merger with the so-called blank check company. the deal gives the parent company of trump social media platform more than $275 million of much-needed capital, plus providing a windfall for trump as he faces a mounting series of legal and financial issues. that is your bloomberg brief. jonathan: the fed proceeding with caution. >> the risk of easing monetary policy too soon or too much is that it could allow above target inflation to become entrenched

and halt the progress we have seen. jonathan: that conversation is up next. you are watching bloomberg tv. ♪

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the chase ink card made it easy. when you go for something big like this, your kids see that. and they believe they can do the same. earn unlimited 1.5% cash back on every purchase with the chase ink business unlimited card. make more of what's yours. jonathan: fascinating conversation with larry. i spent the commercial break thinking about it. we will have to pay for financial stability with higher inflation. is that the trade? lisa: and pay for a deficit that otherwise would be unsustainable with inflation at the expense of the dollar. essentially the fed will have pressure to cut rates to bailout the government rather than the private sector, because the government is where the debt is actually. jonathan: got it. this is bearish stuff.

lisa: it is bearish stuff but he is not alone. it sounds blue and doom but larry fink was kind of nodding to this. jonathan: yes he was. more on that later. equity futures on the s&p positive .4%. 4.20 277% in the bond market. the fed proceeding with caution. >> the risks to achieving our inflation and employment goals are moving into better balance. the risk of easing monetary policy too soon or too much is that it could allow above target inflation to become entrenched and halt the progress we have seen. jonathan: fed officials emphasizing caution with more economic data on deck. durable goods due today at 8:30 eastern. barclays expecting three incremental cuts in 2024, four more in 2025, lowering the

target range to 3.50% to 3.75%. that sounds like a rate cutting cycle. some people on the street are starting to look towards a midcycle adjustment of a couple of rate cuts and then look around. why are you in the former camp and not the latter? >> thanks for having me on the show. two reasons. one is our own baseline outlook of how we think data are likely to evolve, which is where we were before the march fomc meeting. we had the same expectation. we think there is a plausible path where we see inflation continuing to deceleration through the end of this year, which gives the fomc the right chance to initiate a rate cutting cycle, and at the same time we think there is a gradual slow down in the macro economic backdrop that is quite likely.

a slowing but nothing more than that. we have always been saying risks to the baseline outlook look secured in a sense we could have fewer rate cuts. that is what we were starting to see after the january and february inflation data. what took us by surprise is the march fomc meeting. this gave us more understanding of how the fed is thinking about this, what their reaction function might be. from all of that, it seemed quite dovish and it seemed like they are also looking for a window to go in there and start cutting rates. that aligns with what we had expected earlier. lisa: a lot of people have, this program and said the march pivot or the continuation of the december pivot highlights this federal reserve will be tolerant of an nation at a higher level

for a longer time -- tolerant of inflation at a higher level for a longer period of time. why are you seeing that in market expectations? pooja: we would not read it as them being tolerant of higher inflation expectations. i think what we learned from the march fomc meeting is they did not infer much from the january and february inflation prints. there baseline outlook remains one where they expect the future inflation prints to evolve lower. nothing has changed in terms of their baseline forecast from december to march. a lot of participants did note that risks to inflation are skewed to the upside. they are definitely cognizant of that. i think chair powell was also clear that every meeting is live and data dependent.

nothing in that seems to suggest they will be tolerant of higher inflation. it is just that at this point in time we believe they have a path to lower inflation, even with the strong macro economic backdrop and they believe they will find a way to cut. jonathan: why don't you believe a higher tolerance of inflation is implicit in the forecast? isn't that in the sep? pooja: the sep has inflation coming down to 2% by 2025 despite them marking their growth forecast higher with a benign unemployment rate. if you want to look at the projections, they believe they will have core pce inflation close to 2% by the end of next year. that allows them to have a slightly shallower rate path and to proceed with the rate cuts they have projected. jonathan: your projection is

3.50 to 3.75 by the end of next year. could you share where you think neutral is? pooja: here's what we think. rather than looking at the long run projection for the fomc, we tend to think that where the 2026 median rate projection is is perhaps where the policy-setting should be. that is a slightly higher neutral rate than we had in the past. 2026 median projection is where we think the neutral rate currently stands. jonathan: low threes is the guest from you. you would suggest that even at 3.5% that is somewhat restrictive for the u.s. economy. is that right? is that because you believe this inflation story will hang around a larger -- will hang around

longer than expected? pooja: it could be. they do not need to wait for inflation to come down to 3% to start cutting rates. we need to be confident that things are evolving in the right direction and we will find a window for that to happen. a slightly higher neutral rate is a consequence of more macro fundamentals, slightly higher productivity, there is also the immigration story that the fomc has alluded to earlier, where we think there is a positive aggregate supply shock which is something that continue to expect in their baseline, which also explains why we can see a slightly higher interest rate. jonathan: appreciate your time as always. catch up soon. coming up, julian emanuel of evercore, bloomberg's mario parker, israel strategic affairs minister, and megan robson of

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>> to me the strength of the economy is a reason to expect a ceiling on how many cuts the fed can deliver. >> i think the fed will be amid more prudent and only start easing later in the year. >> if they are not careful they could cut rates and we could end up with higher yields. >> federal banks are coming back

into focus. >> i am concluding the fed book might be back. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: live from new york city this morning, good morning. the second hour of bloomberg surveillance begins right now with your equity market pushing higher, bouncing back .4%. s&p 500 yesterday briefly snapping some of the momentum on the nasdaq. a five-day winning streak on the nasdaq 100 but muted stuff into the big print on friday. the print we have been waiting for an chairman powell told us what the number is. annmarie: which is the reason -- lisa: which is the reason we can take the day off. jonathan: we get back into the equity market. julian emanuel on the show in about two minutes. we are in the exuberance zone. first question, rational or not? lisa: and how long can exuberance last? the issue is people can identify

something that feels like it is getting frothy but it continue for a long time. the key question remains with the bond market. how long will the bond market go along with the message the fed intends? inflation will come down. when do people start to challenge that? jonathan: we cannot identify a story that sounds bad but it can remain bad for a long time. i'm thinking of the fiscal trajectory of the united states of america. larry fink of blackrock coming out with the annual letter to shareholders saying "a high debt america would be one where it is much harder to fight inflation since monetary policymakers cannot raise rates without adding to an already unsustainable debt service bill." complaints this morning warning about the snowballing debt in the u.s.. annmarie: he also talks about the cost of servicing the debt and how much that has ballooned. he calls that very dangerous,

although he does say about a looming retirement crisis. he says he understands why millennial and gen z are annoyed with the boomer generation like him because they are the ones who will have to pay for all of this. lisa: there be a lot of people who dismiss this. he is trying to act the politician. he is trying to say i understand and feel your pain. however pimco's andrew paulson -- did you see this story? jonathan: not long duration the u.s. but elsewhere. lisa: because of this concern of the deficit. right now it is under control. people talk about the wall of money. jonathan: we promised you updates on the latest in baltimore. stunning pictures to wake up to as the francis scott key bridge collapses following a ship pollution. just piecing together what happened. the big global shipping company saying the ship it had chartered

because the baltimore bridge collapse. the ship they -- maersk, the ship they chartered because the collapse. in the last 30 minutes we have a news conference with the baltimore fire chief. a couple of headlines worth sharing. still an active search and rescue underway. a large water area, subsurface come and deck of ships still being searched. they've been able to remove two people from the water. they are looking for upwards of seven individuals. lisa: a total tragedy for anyone involved in this. on a larger scale it raises questions about the infrastructure of the nation if we are talking about air control safety and bridges collapsing. they are all anecdotes. you have to wonder when this raises questions about updating certain types of security infrastructure that would make the country more secure. annmarie: the baltimore fire

chief is talking they're not able to determine if there is an active fuel spill because of the darkness. in the later hours of the morning they will be assessing this and if there is a fuel spill that will allow a lot more issues. jonathan: the message from mayor scott, thoughts with families. the focus be on search-and-rescue. promising you regular updates. we will get another one in about 10 minutes. let start with the price action. equity futures on the s&p bouncing back .4%. yields lower by a basis point or two. coming up this hour, julian emanuel of evercore on whether the rally in stocks is different. israel strategic affairs minister, and megan robson of bnp paribas. we begin with the top story. fed officials maintaining a cautious view on rate cuts. julian emanuel writing "the

phrase it is different this time is being heard everywhere, especially since the fed has promised to cut rates from a position where the economy is not slowing. we think friday's core pce number could surprise to the upside and a cut would get quickly priced out in the market would respond with stock week this." -- with stock weakness." julian joins us. the exuberance zone. can you describe what that is? julian: it is not irrational. when we think about history we have to go back to the time where having run money during that time, you knew there was irrationality in the year 2000. that was 20 times earnings. we are at 23 times earnings. the s&p would have to get a lot closer to 6000 to get to irrational. we are seeing signs of the wall of worry having been completely dissolved.

aberrant behavior in the options markets. betting on the nasdaq rallying a further 33% to june after already rallying 30% since october. all of these signs you see short interest being at decade lows. all of these things say there is a feeling the market is invincible. when you think about the narrative of the last several months where we bought back from six rate cuts to three rate cuts without the market pausing for a moment, you can understand why we are there. we think the reaction to hotter inflation may be different. jonathan: just because you found someone playing blackjack does not mean we are in las vegas. you can always find something like that. you can find the gambling somewhere.

that always exists. what is new about this? julian: what is new is this phenomenon is the equivalent of what we saw back in the late 1990's. it was called daytrading then. it is called high-frequency quantitative trading now. the speculation that you can cause to happen every single day come and we saw it in this earnings season, this last earnings season and we are likely to see it again this earnings seasons where you have the stocks that have enormous gaps to the upside and the downside because of the exuberance that has no precedent in the options market. lisa: which raises the question where is the reality check? you say it comes from inflation data and fed expectations and the bond market. what is the trigger at a time the market is hearing what the fed is saying and then some?

they are hearing the rosy is to picture that the fed will let inflation come down slowly but they would get it under control. julian: when you have momentum of this kind of strength and we have to acknowledge this is among the most record-setting periods of momentum we have seen their tense not to be a discrete trigger. one think we would point to is when you think about it, the month of april is an outlier in that what you tend to see is momentum reversals. what we have looked at over the month of march is some of these names have stalled. they've not reversed, they have stalled. when you are trying to feed that exuberance, stalling is something we take note of. with this tendency, turning the page to the second quarter, there is a potential of momentum taking a backseat. lisa: how do some of the retail investors that use these options you were talking about fit into

the picture of how this will develop? do you think they increase the agility of markets or you think they are just a feature of the moment we are in? julian: we said this when expiration options first became a thing that we felt highly convicted it would suppress volatility. if you think about it, the casino is open from 9:30 to 4:00 and then you cash your chips in and there is no overnight risk. as a professional investor, that gives you opportunities you might not normally have because when you are pushing the action on a day-to-day basis in this way and you get these moves come if you are a disciplined buyer and seller of stocks you get these opportunities to add to positions to trim positions that actually increase the alpha and make this the environment we are in also unlike anything we have

seen, but a lot of this is driven by this constant exuberance we see on the part of the public. jonathan: can you talk to us about opportunities right now? julian: we think there is a likelihood of the economy slowing in the second half and into 2025. when you think about it some of these more defensive sectors that tend to do well in the period from the last hike to the first cut have lagged. they have had idiosyncratic issues. health care, consumer staples. we think there is a lot of value there. there is also an entire subset of names whose valuations have not moved out in the way the index has that still have strong earnings. jonathan: can we get the health care? what am i buying when i by health care? what am i buying? julian: that is what held the

rest of the sector back from the majority of last year. when you look at it, there is this notion that we started to see m&a activity comeback because financing conditions have remained favorable as they have and that points to the future in terms of biotech, small-cap biotech has done pretty well this year. we think there is a broadening. in this environment where the likelihood is with the yield on some of these names of 4%, 5%, 6%, barb elling into some of the -- barbellings into the safer names it makes sense to us as well. jonathan: julian emanuel of evercore in the exuberance zone. promised you regular updates on the latest out of baltimore. here is your latest with the bloomberg brief. yahaira: we begin with a

warning. some viewers may find these images disturbing. a search and rescue operation is underway in baltimore after container strip dashed after eight container ship struck the francis -- after the container ship struck the francis cocky bridge. does a people have been reviewed from the water. >> we are still in active rescue posture. there are likely multiple people on the bridge of the collapse and as a result multiple people were in the water. we may be looking for upwards of seven individuals. that is latest information we have. yahaira: it'd emailed statement the mayor saying the -- maersk saying the container ship was operating under its charter. no indication of the various intent. a bloomberg news investigation has found black market for

space-x starlink terminals. they've have been popping up in iran, sudan, and yemen. iran has accused russian forces of also using the services. elon musk says the company is not knowingly providing the terminals. los angeles dodgers star show a otani says he has never bet on sports. the japanese baseball player addressing media for the first time since allocations related to his friend and interpreter surfaced. ohtani says he only found out last week his interpreter had a gambling problem and was in debt and he never willfully sent money to a bookmaker. espn reported the interpreter racked up $4.5 billion in gambling debts with wire transfers set from ohtani's account to the alleged bookmaker. jonathan: president biden closing the gap. >> it is still march and a lot can change.

there will be four or five momentum swings in this campaign. jonathan: the latest poll out of bloomberg morning console is up next. ♪

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the chase ink card made it easy. when you go for something big like this, your kids see that. and they believe they can do the same. earn unlimited 1.5% cash back on every purchase with the chase ink business unlimited card. make more of what's yours. jonathan: equities on the s&p 500 positive .4%. yields lower by a single basis point. under surveillance this morning, president biden closing the gap. >> it is still march and a lot can change. there will be four or five momentum swings during this campaign, maybe even more. what biden has going for him is money. the democrats and biden have far more money than the republicans and trump and that will make a difference. president -- jonathan: president

biden gaining ground in six of seven swing states, seeing the biggest gains in pennsylvania and wisconsin following the present state of the union. joining us is bloomberg's mario parker in washington. let's start with this story. can you go through this poll and how it stacks up versus what we have heard in the last few months? mario: this poll shows president biden continues to trail former president donald trump but this is the brightest for president biden so far to date. he has gained ground in some of the crucial blue wall states that he will need for november. one of which is wisconsin where he has made up ground and covered about four percentage points just take -- to take a slightly on former president trump. pennsylvania essentially deadlocked, as well as michigan. these are the bedrock's to president biden's pathway

towards the 270 electoral votes he needs in november. annmarie: the president ended february with $71 million of cash on hand. the former president ended with $33 million of cash. biden has a huge advantage when it comes to money. where is he putting that money? mario: that money is going to the battleground states. you are seeing the significance of that cash advantage. president biden is blitzing the airwaves in the swing states. that is important this point of the campaign cycle, running television ads. sometime deeper into the election cycle it will be important for putting people on the ground, knocking on doors. this is a good position to be in for president biden and seeing how he will deploy those resources relative to former president trump. annmarie: the other interesting point our poll finds is taxing the rich is resonating among

swing state voters. is this something biden will be leading into? mario: absolutely. you've heard president biden say he will raise taxes on anyone making below $400,000 per year. one thing, as divergent as president biden and president trump's policies are, there is this populist tint that has gone through the political discourse. one of those things is having the rich pay their fair share. that is one thing you do see with bipartisan support. jonathan: i would like to turn to the shocking pictures we woke up too earlier on this morning which appeared to show a ship colliding with a bridge in baltimore. that bridge collapsing in baltimore. we have learned a few details. one detail speaking to wear that ship was coming from. chartered by maersk. what else have we heard?

mario: right now the great news is two people have been recovered. one of those folks are in serious condition but that is a bright spot so far. the bridge, i've traveled across it time and time again living in washington, d.c. remarkable images to see it collapsing the way it did. there are a couple of implications. we are heading into easter weekend, busy thoroughfare up and down 95. it is one of the biggest u.s. east coast ports for light trucks and cars. you will see some time of economic impacts there as well. the white house has engaged in said there is nothing nefarious at this point. annmarie: what should the white house be doing? is this something the president has to address? mario: absolutely. this appears to have been an accident with the ship colliding

with a bridge. we know infrastructure is one of the key components of president biden's platform and something he speaks about all the time. he continually boasts about the ability of u.s. manufacturing to rebuild infrastructure in quick ways. we will expect to see him there. he has close with governor wes moore, is one of biden's top surrogates on the campaign trail. baltimore is right here near d.c. also. you will see the president say something about this. lisa: as we try to recover everyone that is where the focus is in the human story. going forward there'll be a lot of questions about what went wrong. whether this was traffic controllers in the channel, whether it was miscue communication. to have a knowledge what went wrong and whether it was a bone ability in the bridge. how much of an issue is this?

we don't -- mario: we don't know just yet so it is tough to speculate at this point as to what happened, whether it was traffic control or a mistake on the part of the ship captain and the crew there. the mass of that ship hitting that bridge is something that was remarkable and i think that is what we have seen. jonathan: media focus will be on search-and-rescue. we have any idea of the number people involved, the number of organizations? can you walk us through the current effort? mario: right now the coast guard is engaged and the great news is that two people have been recovered. pete buttigieg has said they will have the full resources of the federal government. governor wes moore of maryland has declared a state of emergency to marshal all of the resources that state has research and recovery. jonathan: appreciate the update.

thank you very much. mario parker on the latest on that bridge collapse. the focus of officials on the ground will be on search and rescue. need to get a better idea of the destruction caused. you cannot use this g. beyond that, then you start to get into what went wrong. what led to this commission? lisa: as we get into those questions it becomes reminiscent of air traffic control issues and this focus on aging and the structure some say has not been focused in. it reminds me of the shipbuilding and the fact that the grains we have are imported from china. annmarie: remember the supply bottleneck crisis? i was at this port with president biden when he was talking about this. it is a massive port. to mario's point, it will be a

massive interagency response. jonathan: another update in the next 20 minutes or so. coming up, israeli prime minister bennett should net yahoo! canceling a trip to the -- israeli prime minister benjamin netanyahu canceling a trip. plenty of questions on this. as far as the u.s. is concerned, nothing has changed, why did you cancel this trip? lisa: they might say nothing has changed but the tone has shifted. anybody who is not see that would be being disingenuous. there is a push back to israel's approach and a question of the recursion in rough -- in rafah. the question is how much you depend on the u.s. for weapons and you plan to pull away from the u.s.? annmarie: it is also international embarrassment. benjamin netanyahu said we need you to veto this when it comes

up in the united states and no. then benjamin not you who -- then benjamin netanyahu says my officials are not going to washington. it was a suspended trip so potentially they could be going to washington next week. jonathan: s&p futures positive .4%. bouncing back from mild losses yesterday. 10-year, 4.2356. a new target at morgan stanley. $90 on brent crude. wti $82.11. from new york city, this is bloomberg. ♪

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♪ jonathan: spots on the s&p hundred up a third of 1%. the rustle outperforming once again. of three quarters 1% on the russell 2000. in the bond market, two-year, tenure, 30 year, and a warning from larry fink of blackrock yields down a basis point this morning, the warning, lisa, the warning is a snowballing debt piled in the united states that needs to be addressed by the boomers, apparently. lisa: i wonder if you are trolling larry fink a little bit.

basically we could talking about this warning about the debt overhang and the deficit in the united states, and yet continually yields go lower despite some of these concerns being out there. again, when does that come to the floor given the fact that gas, this is something we've been talking about, but to me, just going forward, when does it actually get reflected in yields? jonathan: i remember the line, it was something like the boiling of the fraud except the fraud knows it is being oil. that is kind of what is bizarre, because we all know that it exists. the all know the trajectory is unsustainable and here we are talking about the same thing still. what we don't know is where the line in the sand actually is. it is like the frog is aware that the water is getting hotter but ultimately is not going to get out. >> ultimately as long as the

dollar is the reserve currency, the u.s. will have the privilege to act recklessly. if you do start to get a weaker dollar, you do start to say slowly people pulling away from it, maybe things can change. jonathan: your member when we asked him about this topic and he said yes yields have risen and there might be concerns about supply but it is hard to reconcile that with dollar strength that we saw in the same period? >> which is the same reason we said a game on a continued to drop. jonathan: boeing plotting a path forward without dave calhoun. calhoun announced he will step down at the end of the year after three of boeing's largest u.s. customers reportedly asked the company directors for a meeting to air concerns without the ceo present. the story picked up almost immediately yesterday and this is where things changed quickly. >> why would you want a listening tour without ahead head of the company?

it is because you want to complain about that individual. they are giving him a long runway, to end of the gear which says to me they are trying to sort out a serious succession problem bloomberg intelligence set this is someone who doesn't need to know the financials, just needs to have an engineering mind. jonathan: u.s. ceos on a visit to china extending their stay after receiving a last-minute invitation to a meeting with the country's top leaders. ceos of pfizer, fedex and amway are among those visiting the china development for of which ended yesterday. bloomberg reporting the meeting is expected with president xi even know his name doesn't appear on any invitations. i guess it is just one of those things where you sort of know. >> if you know, you know. at this point i'm curious to see what they actually hear. is it really the welcome carpet, is a more nuanced message? this just highlights how intertwined the economies are, the u.s. and china regardless of

all of the noise, and u.s. corporate executives, do they walk away, to the pullback or do they double down as referred a number of them, qualcomm included, do? jonathan: that is going to be one to watch. one to watch right now, benjamin netanyahu's office canceling a planned visit to washington, coming after the u.s. abstained from voting a u.s. resolution demanding an immediate fire in as a. one of the aides scheduled to visit was the strategic affairs minister. wonderful to catch up with you once again, sir. i want to begin our conversation with o.a.t. from john kirby, spokesperson for the national security council. this is what he had to say. no reason for this to be seen as something of escalation. we still want to get hostages out. and we just begin with that line coming from the administration?

what exactly do you believe has changed as they turn around and say nothing has? >> i believe the policy has been pretty consistent since the beginning of the war about six months ago was to not accept a cease-fire that with the unconditional, and would have to be connected to an agreement to release hostages. unfortunately in this text that was passed, those two issues were separated for the first time. in fact five days before there was a resolution that the that states put forward that was vetoed by china and russia and one of the reasons why they vetoed it is because it connected those two issues. if you look at the text and you look at the resolution, five days ago and the resolution that passed today, you will see a huge difference. that is a change in u.s. policy. i'm glad to hear that john kirby said it is not, and i hope they will continue to connect those issues, but that is not the text of the resolution, and that is why hamas welcomed it.

that is why iran welcomed it. any resolution by the un security council is not a good resolution for israel. jonathan:jonathan: minister, you were due to travel yesterday evening. can you share what you said directly after that decision? >> i haven't spoken to them after that decision, i spoke to them before that decision. when we first learned about which direction this was going, i think it was sunday night. when i heard what was happening i said look, you're going to have the wrong message at the wrong time. it is not connecting the issue of a cease-fire with the return of the hostages. he had negotiated it trying to get an agreement to release hostages, and it is not surprising that hamas decided to reject polin's proposal put forward by the americans. they think they are going to get a cease-fire without giving up

the hostages because that is what the resolution said. i appreciate the united states has said that is not our policy but that is not the text of the resolution. i told them before if this would be the case, i would find it very difficult to believe the prime minister would send a delegation to washington. because the purpose of us going to washington was to discuss and actually listen to american ideas of how we should go in. the other ideas that they said they had without a major military operation. what message isn't going to send to them that the day after the americans to separate these issues and say you know what, you can have a cease-fire without a hostage negotiation, and then the united states is presenting its proposal how we should not go interoffice? that is the real big problem and that is why the prime minister made the right decision to stop the delegation which i leading to go to washington. >> so this trip was suspended. if there any plan for you to come to washington, then, in the

future? >> we will have to discuss it with the u.s. administration. i think the context it was particularly problematic. obviously the u.s. has ideas and ensure they will share it with us. i don't know if you will be in a delegation in washington, but they have ideas they want to present us. the president asked the prime minister of israel to share a delegation submitted hear their ideas. i'm sure he is discussing this with them, but i think the timing was particularly problematic because of the message that this un security council resolution was sending. it was a very common. bad message both for the hostage negotiations and also we have to be very clear with hamas. we have to be very clear we are going to fight this war until the end. in the last thing we want them to believe, that international pressure on israel will get us to simply not finish the war. that is not going to happen. i don't decide what the united

states will or won't do, they are a sovereign government that will have to make their own decisions, but israel has to make clear to hamas that we intend to fight this fight to the very end and hopefully that pressure, their understanding will enable us to get we hostage deal. lisa: the israeli defense minister is in washington. we have benjamin netanyahu approving an operation, but the israeli defense minister said he had a good meeting with officials in washington. did anyone convince anyone on either side to change? >> we've been in discussions with the u.s. and ministrations for a long time. the initial policy was essentially not that they are against an operation in rafah full stop. what they said initially is that israel has to make efforts to get civilians out of harms way and to shortly military assistance to get them, and we agree. we've been working on a plan to get civilians out of harm's way and ramp-up military assistance. this is something with a two

government should be able to get the common ground and should be able to get on the same page. if the position of the united states is there should not be a major military operation, and we are not going to be on the same page because we have to go in to rafah. we have to finish the job, we can't leave 20% or 25% of the force in gaza so they could simply reorganize and come back. israel's major operations have enabled us to do much smaller operations and achieve rate success. i don't know if you're following that in the northern part of the gaza strip, we were there a few months ago and did a major operation. just now we went back last week and we have done one of the most successful operations in our history. nearly 200 terrorists were killed. over 800 terrorists were captured, and there had been zero civilian cache teas. in fact, there have been more israeli soldiers who have died

in that operation pins billion casualties why can we do that? because once you do the major military operations, once you crush these battalions and feed them, israel has to commit with a much smaller force, much more careful military operations and achieve great success. that is why it is so important for us to finish the job. >> you keep saying fight this until the end. when you have people living in dire situations, people who have seen their love being killed, that breeds an extremist type of behavior. you are already seeing that in certain places, but even if you kill hamas, something else will come in its place because there isn't leadership and isn't a sense of what is how do you say there is an end that you have insight? >> first of all, understand what we are trying to achieve. we are trying to destroy hamas' military in gaza.

they are not a terror organization, they are a military terror organization and we have to rush the military and it is divided up into battalions and we are doing that i think very well. but what you just said about it breeds extremism, do you think the action of the united states against germany, do you think that fred extremism on the germans? the actions of the united states and japan bread extremism? you were smart enough to finish the job and when the war, and you demanded unconditional surrender to achieve it, and then you are smart enough to be magnanimous in victory and provide a different path to the future. but you have to finish the job. if you don't finish the job situation will actually be worse. you have to finish the job, defeat them, and then you could talk about a day after, they will be no day after hamas if they are still there. that is why we have to finish the job. >> we don't have a clear sense

of how you provide that type of structure, with respect even whether they will be two states and what that will look like how do you address those kinds of questions that do need to be put into place before you finish the job? >> i don't believe they have to be put in place before you finish the job. i think if you try to put that in place now, you could actually undermine the effort to get to a real good plan afterwards. first, everybody have to understand that gaza in hamas is finished. until they understand that, no one will step forward. the second you win, that is the time the national community obviously led by the united states, israel, arab partners in the region after come in.

to think that anyone is going to emerge now when you have four terrace battalions, maybe around 50,000 terrorists fighting and that somebody is going to step forward, kidding themselves. saw what happened in the northern part of the gaza strip and we try to work with vocal actors. hamas took them out and executed them. that is why it is in the business of all countries are not only interested in israel security but a better future for the palestinians to get israel to finish the job as quickly as possible so we can move onto to a day after. and the truth is, we have real partners in the region for the day after. the saudi's, and they have worked to the radicalized their own societies. i think we need to look for them it to their leadership to see what we can do in the day after and then we can talk about all of those legal issues. but first we have to get to a day after, we have to finish the job. you cannot leave that force. it would be like as one israeli minister said, it would be like

fighting 80% of a fire, leaving 20% of the fire and simply hoping it is not going to come back. of course it will come back. we have to douse the spires and then we can talk about the day after. jonathan: i had a few direct questions to work, if i may. the vice president of the united states look over the weekend. any major military operations be a huge mistake. i'm not trying to understand from your side why you think that is not a mistake, i'm trying to understand what the consequences would be if you cross that perceived threat line now. have they communicated with the consequences would be for israel and the relationship between you and the united states, have you heard anything whatsoever? >> no, they haven't communicated that with us but i can tell you what the consequences would be if we don't go in and finish the job. october 7 will happen again and again. people in the united states have to understand that the people of israel have seen what happened is an extension threat to the country.

it is not because i think they can destroy the state of israel. they cannot. but if we do not destroy the terror organization that did that, if we do not take them out as a military organization in gaza, actually believe this country has no future. they have to understand that as a military is finished. they said hamas is an idea and you can destroy an idea and i countered by saying naziism is an idea and there are nazis in charlottesville that they don't have a state called germany. isis is an idea and there are people who follow isis. you saw the attack in moscow just a few days ago and there are black lags that are in bedroom, not just in the middle east but in europe and even in places in the united states, but

they don't have a state, they don't control the territory of the caliphate between iraq and syria. it is one thing to deal with a terror organization. it is another to deal with a military that is a terror group. that is a totally story, and we are going to dismantle their military regime in gaza. it is going to happen. and i would like to have the united states by our side. they've been there for the last five months, 5.5 months with support out of the gate, the more clarity of the present: hamas people, worse than isis. the fact that they sent isis carriers -- aircraft carriers, the fact that the president himself visited 10 days into the war when we could have had an escalation into the northern art. what i have implored them is to stand with israel until the end because we are going to achieve this victory. it is not only in israel's interest, i think it is in america's interest to achieve that victory because they've been part of this victory up until now and now we are down

the home stretch. stay with us, let us finish the job, and let's get to a day after we could have a real peace process that can give hope not just to israelis, but also the palestinians. jonathan: this is a conversation that requires a heck of a lot more time than the 10 minutes we just had. thank you for joining us today. let's get you an update on stories elsewhere this morning. here's your bloomberg brief. >> a massive certain rescue operation is underway in baltimore this morning after a container ship struck a bridge in the early hours. emergency services say two people have been removed from the water, one was seriously injured. >> we are still very much in an active search and rescue posture at this point. we will continue to be for some time. there were likely multiple people on the bridge at the time of the collapse, and as a result, multiple people were in the water. we may be looking for upwards of

seven individuals as the latest information we have. >> maryland's governor has declared a state of emergency. traffic has been suspended around the area with a advised to avoid the 695 interstate. in a statement earlier this morning, the mayor said the container ship was operating under its charter, baltimore ship traffic to the port has also been suspended as a rescue and cleanup operation continues. aunt donald trump is now among the world's 500 richest people. trump social media company ramping up a merger process, giving the former president billions of dollars worth of shares. at the same time, a jug -- judge slashing the amount of payments he owed by several hundred million dollars. his fortune had previously pete at around $3.1 billion. this network worth now climbs to a new high of $6.5 billion. that is your bloomberg brief. jonathan: the opening bell about

one hour 40 minutes away. near session highs, up about one third of 1% on the s&p. under surveillance this morning, tighter for longer. >> we have been adding duration. we can slowly adding to that duration, clearly our spreads are extremely tight. we have to look for pocket value wherever we can find them. i usually and terribly tight. jonathan: here's the latest this morning. u.s. corporate bond spreads with a chance of tightening further at the fed signals and is on track to start cutting rates. expecting a credit soft landing, two or three rate cuts expecting some relief of financing costs while rates will still behind up to encourage a yield buying from investors. megan, can you describe that, describe what is a credit soft landing? >> credit soft landing to us

means we won't have a default or downgrade cycle and essentially skip the downturn phase of the cycle. as you just described, we're seeing signals of a credit soft landing play out and i think the fed messaging last week, we interpreted it as very dovish, really reinforced that sentiment in the market that we can still get three rate cuts despite some of the hotter inflation data which will continue to support credit markets both on a fundamental basis and on technicals. >> ali price for a credit soft landing or a credit nirvana? >> with spreads appetites, a lot of optimism is certainly priced in. we do think we have overshot the spread targets for the air, but we are relatively close to where those are the i think in april, we are expecting the technicals to be very supportive, but the

argument to buy credit from this point is not spread upside, it is really more of a carrying story where you are buying credit to earn yields. lisa: which creates a really interesting question. do you go into the higher quality debt that has pretty narrow spreads and don't get as much, or do you go with the risky debt were all of a sudden companies might have less of a perfect soft landing given that they have it get to the faced refinancing costs that are much higher than where they used to be and mark is that the correct trait to go down it to go into some of these riskier companies? i think >> it really depends on the market. even though triple b is already outperformed, we think you are still getting that pickup in carry and spread and fundamentals look good. within the high-yield market i think you have to be much more selective. even though spreads are at two-year tights, underneath the surface you can see the stress ratio with a number of bonds trading over 1000 basis has climbed higher, and it is

unusually high for this type of environment, where people are so optimistic. i think that tells you you are seeing some of these issuers with a quality struggle. lisa: earlier this week, or actually last week, bob michele said he is really changing his tune when it comes to investment debt but also more broadly with respect to private credit and how much that has been a stabilizer for the override this credit market. do you agree that this is actually a source of stability, not necessarily a source of potential hidden risks that are out there that are sort of in a landscape? >> i think private credit was a source last human and syndicated public markets are closed and it provided an avenue for some issuers that couldn't access high-yield traditional loans, that could actually borrow. this year i think the story has changed where there is such a competition for capital that you really have started to see the competition between public markets and private markets drive credit spreads tighter, start to make covenants a little

bit less strong, and unlike the past when be sought by lateral loads between one private lender and one issuer, now you are seeing it look much more similar to public markets where there are lending groups including private and public lenders and i think over time you're going to see a convergence of those two markets, and it does create a bit of froth with pushing spreads tighter. jonathan: some breaking news, the latest from abc news this morning on the major baltimore bridge collapse, give me some details. if you are just tuning in, some tragic images coming out of baltimore, the collapse of the francis scott bridge following a collision with a ship. details about the nature of this collision, this from abc approaching them directly. classified agency reports that the container ship lost propulsion as it was leaving port and warned maryland officials of a possible

collision. the crew notified officials that they had lost control. this report goes onto say that the vessel notified md department of transportation that they had lost control of the vessel and a collision with the bridge was possible. the vessel and struck the bridge causing a complete collapse. just adding a little bit more color in the last minute or so. lisa: report also talking about how this waterway into and out of the port has been closed, there is no other route. second biggest port in the mid-atlantic, but abc looking at this unclassified agency starts to show part of the story of what went wrong. they actually alerted maryland officials that this collision could possibly happen, and that they actually lost control of this vessel. jonathan: more details in the last five minutes or so. lisa: it was 1:30 a.m., there were fewer people on the bridge, but right now the idea that there was a warning that they had lost propulsion, that they

could potentially hit the bridge, it raises a lot of questions. what could have been done, is this precedented, how do you just lose propulsion? is this something that gets checked or not before leaving the dock? jonathan: the president has been briefed, biden to get updates on the bridge throughout today. more updates from us around about every 30 minutes or so. coming up on this program, the former american airlines ceo breaking down his experience with boeing, ultimately what changed in the last decade or so and the pressure from airlines to make a change at the top of the company in the last week or so. that is the stage set for the next hour or so on bloomberg surveillance. equity futures posited by 0.4%. yields going nowhere. the euro-dollar, 108.58.

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♪ >> it appears that inflation really comes down even slower