>> we are at an inflection point in the fed's policy path and the fed communications. >> seeing different fed narrative involved. still i think the cuts are on the table. >> there's a little bit of froth and maybe it's deserved as a sea power shift. two things that allow them to be cut. >> the important thing is the fed end markets are in sync after being out of sync. >> if you look at the market expectations, the fed is optimistic about this over the next few years. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and

annmarie hordern. >> live from new york city and good morning. for audience worldwide this is bloomberg surveillance. en jonathan ferro, your equity market for the s&p 500 negative by 0.2% taking off q2 hitting a bump in the road when it comes to manufacturing. manufacturing data entering expansion for the first time since september of 2022. prices paid a little bit firmer. setting off right across the curve. lisa: the idea they came in at the hottest level since 2022. people are wondering is this a commodities led blip that is temporary or transitory or is this something deeper that has to do with the ends of goods disinflation. jonathan: the commodities board, wti through $85 a barrel. brent getting closer and closer. we are talking about the highest level since october.

throwing gold all-time highs on gold again. what is happening on the board right now. annmarie: obviously you will see a risk premium because of what happened yesterday which is an israeli strike on a key individual in the iranian revolutionary guard as well as the iranian embassy in damascus. more potential upside for the market because of the risk we can see. iran is pledging revenge. on the supply side opec is not willing to add more supply to a market that clearly needs it. lisa: it's been sort of a creeping cloud and now the reasons people are giving to it at what point does this become a problem. it's also chocolate, it's not just some of the other commodities ahead of easter and after easter, all the different commodity sectors can we just say it's an isolated thing having to do with idiosyncratic. >> do you think this is a

reflection of the extension of the cycle or a recipe to end it. it's out of china as well. a bit of inflection in the last few days. >> basically his whole comment when he was talking to you guys saying wake up people it's commodities, it supply and demand. this people coming to this view saying this one conviction is be long oil. >> is this the real deal. that's the question we have to ask. for a long time for the best part of a couple of years we had a big spread between services and manufacturing. we've been asked how that spread will close. i think what we saw yesterday was that first early sign manufacturing is coming up to services. saying we've gone from rolling recessions to rolling recoveries. lisa: especially with inflation.

i would take it a step further and say how much does this support the idea of broadening out in the market rallied. we were talking about how much does this really stymie it at a time when people are hoping yields remain lower and the fed can cut. >> equity futures on the s&p 500 at least a little bit negative. down on the s&p. bleeding a little bit harder once again. your tenure very close to the highs of the year at 43391. federated hermes on factory data. as the u.s. and israel look to ease tensions looking ahead to payrolls friday. we begin with the top story. stronger than expected factory data ahead of this week's jobs data. we are not bias of the spx here. still expect a rally in stocks will broaden out to include

domestic large-cap value, small-cap growth in international. let's get straight to it, the data of yesterday. how much weight would you put on that manufacturing? >> thank you again for having me back on. i think yesterday's data was significant. the ism as you pointed out was back above the 50 level, the contraction line of demarcation for the first time in 16 months. as lisa pointed out the number that was stunning was the prices paid component so you have a situation where the economy is strengthening yet inflation is sticky, perhaps even accelerated. pair that with the le i we saw last week. leading economic indicators went back positive for the first time in 22 months. you sit down and tell bond people they look at these inverted yield curves we were watching for the last two years,

three month to tens, they are flattening out, bond guys think those may become positively sloped again. so the risk of recession or lower risk of a lot of soft landing, shift to a stronger period of economic growth. the inflation question is the more important one. look at last week's pce print, core, 2.8 percent for february. what caught our attention was the changes in the fed's last meeting. during the increase, core pce forecast, 2.6% from next year and cap that in place for calendar 26 so the fed is telling us that inflation is still a problem. it will be a problem as the economy comes back. what that means is it's good to be less rate cuts relative to what the market is expecting. >> given everything you've said

every item on that list, is that good or bad. good or bad for stocks. phil: the s&p 500 up 10% here the first three months of the year of 28% since october. in our view stocks are headed themselves. we expect a rolling correction, the mag seven in the last 15 months is up. the forgotten for 93 is up 22%. our view has been this rally will broaden out. we see that in the mag seven and the domestic large-cap value stocks and small-cap stocks, the international stocks which are largely left for dead over the last year or so. we would start to see some improvement in the share prices of those. lisa: how much do higher rates challenge the idea of broadening out particularly to small caps given these companies usually are more leveraged and are more

vulnerable to higher rates? phil: remember the u.s. economy is doing relatively better in a lot of our trading partners. the reality is small-cap companies here in the united states right here at home. and from an economic standpoint, we are doing better here. in terms of underlying fundamentals, the sectors in the small-cap of market, biotechnology for example is our favorite is really well positioned to read biotech stocks have very strong pipelines, the value asians have probably never -- the valuations have never been cheaper. the prospect of m & a activity is enhanced today versus where they were a year or so ago. so we do like small-cap. lisa: how much is oil the new mag seven at this point.

there's the reality of supply and demand and the factors rolling over. phil: music to our ears, we are very lonely at the beginning of the year talking about oil in the mid 60's. thinking we could see 80 to $90 a barrel by the end of the year. we are sitting in the mid 80's three months of the year. this is happened a lot quicker than we thought. the accommodation of increased geopolitical risk in combination with the fact we do not have a lot of levers here. in the pastor might have utilize strategic petroleum reserve to perhaps adjust the price of oil. we took the spr down 350 million barrels a couple years ago and did not replace it. at this point we are at the mercy of the vicissitudes of what's going on globally. crude oil last september was at $95 a barrel. we could see the crude oil market retest that. gasoline prices up could be at

four dollars over the course of the next couple of quarters. so this move in energy is real. energy is one of her favorite categories on the domestic large-cap value side. annmarie: with brent already in your range, what do you see for year end? phil: high year. we could see it trade up another $10. brent maintaining that spread could probably approach $100 a barrel. jonathan: you were talking about double-digit rallies on the s&p 500 did you ever expect things to go as far as they have in the stock market? phil: not as quickly as it has. we got a 6000 target on the s&p fully discounted calendar 2025 earnings, of the market seems to be focusing on that number. we didn't think we would get up to the 52, 53 hundred level in

the first quarter this year so the rally over the last five months has been much faster than we have expected last fall. jonathan: great to catch up, sir. this came from jim at deutsche bank, up more than 10% in q1. marking the first time in over a decade it's been back-to-back quarterly gains in double digits. first time in more than a decade because the -- because they weren't convinced. thinking about how they came out of that. having seen back-to-back double-digit quarterly gains in more than a decade. lisa: we get numb to this idea. what's new. that was the pandemic era. a lot of disruptions but you talk about another era and we saw that with the japanese stock market pointing out the fact the japanese nikkei is the most going back to 2009. we are talking about post great

financial crisis recovery types of level. jonathan: this morning just a little bit softer down on the s&p 500. here is your bloomberg brief. >> iran vowing revenge against israel blaming the country for a deadly airstrike on its embassy in syria, the strike killing at least seven iranian personnel including military commanders. they've yet to confirm the attack but the country's forces have struck iran linked -- this be the first time it's directly hit an iranian facility. ubs says it plans to buy back up to $2 billion of its shares with up to one billion of that total expected to take place this year. the swiss bank confirming the repurchase plan after having suspended its previous plan a year ago amid its government-backed takeover of its former rival credit suisse. they expect to complete the

merger by the second quarter. homer president trump has posted a 175% milk -- one hut at $75 million bond. the move preventing new york state from seizing his assets at least for now. it halts the collection of the more than $450 million he owes after a judge ruled he inflated the values of his assets for years to get better long-term -- loan terms. plus millions in interest if his appeals fail. bet your bloomberg brief. >> up next, the u.s. and israel easing tensions. >> we are very concerned about a military operation into roff up. there are more than one million palestinians in rafah right now and we want to make sure if there is going to be a military operation we have to understand how they will move forward. jonathan: live from new york city this morning, good morning. ♪

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with godaddy airo jonathan: when i said we were hitting the ground running, i said manufacturing shaking things up big time in the bond market. we had a number of basis points, the equity market down just a little bit again negative by

zero .2% on the s&p 500. the u.s. and israel easing tensions. >> we have obviously been clear about our concerns on a military operation into roff up. there are more than one million palestinians in roff are right now, if there is good to be a military operation we also know there are hamas operators in roff as well. if they are going to move forward with military operations we have to have this conversation, moving forward. jonathan: israeli officials agreed to take concerns from the u.s. into account. the white house and both sides share the objective to see hamas defeated in rafah and plan to hold follow-up discussions as soon as next week. if that is easing tensions, tensions were in easing between

israel and iran. let's talk about the strike in syria, can you talk about the test how great the risk is. >> iran's behavior today is not suggested they are looking -- the israelis killed another commander in syria. this is probably the most important since sue lamont he was killed. that's probably the first order of response is how iranians can go after this against the u.s.. a bit of a pause in these types of strikes since early in the year, the other factor that's more worrisome would be one of

iranian proxies like hezbollah to attack israel from the north. so far iran has not wanted them to escalate in that matter and for now it looks like the u.s.. annmarie: given that he is basely the highest ranking individual that's been assassinated since cost him soleimani is there a potential for a more direct confrontation between iran and israel not through proxies? >> that would be an unprecedented escalation especially given the iranians have so many proxy forces in the region. it's always possible that has not been there, over a while now. they are heavily armed, well-trained. it seems to be the iranian preference even -- the iranians haven't tried stoking direct

confrontation because they don't seem to want to. that could change, every thing that's happening is unprecedented but the pattern here has been pretty clear. the iranians don't seem to want that type of conflict. annmarie: it does seem like the temperature was taken down between washington and jerusalem , this relationship is been very acrimonious especially in public between netanyahu and biden. how important is it for these two countries to show a united front at this time when we see this escalation in the region. >> it is certainly important for israel. for washington it's more dangerous particularly for the biden administration given this remains one of the political vulnerabilities they face. you seen the administration shift their views on their support for israel including by abstaining at the u.n. security council vote last week. for washington their relationship with the is raley's -- for the israelis, it is one

they are willing to take on because the support went so deep in washington. public opinion is starting to shift with more americans questioning u.s. support given the images out of gaza. but that has not deterred the biden administration. they have been effective so far. the roff operation could've started weeks ago when israel was looking at troops down there. you have to think the only reason it hasn't happened yet was the strong u.s. pushback and concerns. lisa: you did mention something that was important, the idea of a potential x -- escalation. and some sort of direct attack from hezbollah on israel. how much power does the u.s. have to prevent israel from going on the offensive which is what a lot of people has suspected is the next step and this strike shows a willingness to do. >> the u.s. has not been

particularly effective in slowing israel down other than this roff operation. israel is intent on rooting out hamas and they are intent on reestablishing dominance and deterrence in the regions. and what the u.s. is -- nothing from the u.s. saying right now is shifting that. in order to arm israel. i don't get the sense, we do not get the sense israel is looking to stoke conflict at the northern border. it seems it's focused in gaza. but that could be depending on the perceived threat that could easily be another front that opens up. lisa: she pointed to this as being the biggest potential escalatory risk. the reason why she says this is a considerable escalation when

it comes to domestic politics how much power does this administration have two counter gasoline prices will continue rising inevitably on the heels of any further escalation. >> the american administration? lisa: yes. >> rising prices are obviously a huge vulnerability for biden. it's one of the reasons everyone so worried about bringing the iranians into this is they don't want that to get off of the market. and neither do the americans. they need prices to remain low during an election season. it does not seem to have a lot of implications for conflict purely with an israeli territory. i think the americans are desperate to keep the iranians out, but the is raley's have a singular focus on their own security and that's what's driving them now and that will continue to drive them. >> one side of that is not

worried about the oil market. john of eurasia group. wti through $85 for the first time since october. brent crude getting closer and closer to 89. what we are seeing pair that with what we are seeing, new highs for the year on the u.s. 10 year just months ago very close to 435. >> 30 year yield spiking on the heels of some of these concerns. the ongoing pressure and this inability to see how you de-escalate it. you've one actor in the space. iran is trying to not to escalate but there is a question of how this remains contained if the u.s. doesn't have more influence. jonathan: it might be a stretch to call this a haven trade. yields rose, gold rallied. i find inflation component of this story to be quite interesting. started going into the federal

reserve meeting. i wonder we keep hearing that same question out of a news conference just how committed are they to that 2% inflation target. the language around it has changed. august of 2022 it will require pain. the inflation numbers of developed. the story is it will require time. the emphasis on time and not on pain. >> subtly under the hood. it's not a wholesale rejection sing the fed is a necessarily can have its target there. but look at the five year forward breakeven rates. you get a sense especially with the oil market people started to realize something is percolating here. it's really reflected still down 11% since the end of 2020. jonathan: abigail joining us to weigh in on the federal reserve. what this means for the fed going through this year as traders pushback once again the

perspective rate cuts. cutting the probability in half. a 50% chance now. weaker yesterday, a week again this morning. down by 0.2% on the s&p. new highs for the year. that new high for the year just moments ago. up next, an ev surprise in china and tesla deliveries coming out a little bit later this morning. from new york city, this is bloomberg green -- this is bloomberg. ♪ ♪♪ hello, mia. are you ready to meet your demise? man, we really need to upgrade your trash talk. ♪♪ nice shot... shot... taker. who programmed you?!

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jonathan: what a difference the print makes snapping 16 straight months, 16 consecutive months of shrinking activity. negative by zero .2% on the s&p 500. the nasdaq 100 negative one quarter 1%. we were looking at something like double digit gains on the 10 year yield. up again this morning by four basis points. just moments ago in the last 20 minutes or so new high for the year yields up lisa for basis

points. lisa: it doesn't seem to be hampering this idea of abroad -- which raises this question how much are we seeing the point people dismiss the idea of stagflation. it's finally the commodity sector realizing how much strength there is led by the united states percolating out everywhere else. >> prices paid as part of the story. how do you stay stagnant when you see manufacturer recovery we have seen so far the can change and be pretty solid. >> bill dudley answered this yesterday are we really sufficiently restrictive? does this give the sense the rate currently on 10 year or 30 year yields are hampering the growth rates of the united states. it does not seem like that is the case. jonathan: think about how we

answer the question on financial conditions. you asked the chairman about financial conditions and he says they are tight. we look at what's happening in broader markets. stocks at all-time highs. the amount of individuals and companies that came to marketing q1 of this year and issue debt getting ahead of crunching a bit later this year. >> which is the reason why people are ratcheting back expectations for rate cuts and now we are back to pricing and fewer than the fed sees. we've gone from this is dependent on rate cuts as long as the fed begins the rate cutting cycle that's good to be sufficient to send risk assets to the moon. i wonder whether you can say a real broadening out if you see the companies that are most vulnerable to higher rates face off with much higher rates. jonathan: how lonely is president bostic right now at the federal reserve.

how lonely is he at the fed given the data we've seen. lisa: sounds like neel kashkari is with him. everyone in the market sees it. do they have to do more than one rate cut. that's one question. is it the signal of process. both are there in the lunchroom eating their chicken sandwiches. >> they were eating lunch together and i was trying to listen in. >> this is what they were talking about. i've got no idea if they were ahead of the curve last year. let's talk about tapping in commodities. new highs for the year brent getting closer and closer to 90. went through 85 on wti. saw that in march as well. what's happening in gold. all-time highs once again. quite a run on gold at the moment. >> we saw this after china

reported their manufacturing numbers. central banks come out and buy more gold. to lisa's point earlier it's not just gold, it is not just copper isn't -- across the entire commodity space. oil in focus and people starting to say we are ready the year-end target for where oil was. this whole feeling where ism is, where oil is reminds me of the summer of 2022. that's good be troubling for this white house. jonathan: gold up. under surveillance, weighing on markets, the acid manufacturing for the first time in 16 months. investors will look ahead to fed speak plus factory orders at 10:00 a.m. eastern time. how important is jobs data. the federal reserve chairman believes it is important.

maybe this labor market story starting off just a bit. >> i was reading a lot of notes about the ism data yesterday. sony people were explaining it away. if we get higher job openings do you start getting people explaining it away is an insignificant number because they are looking at the desire of fed chair powell to cut rates. when do these data points matter versus serving as anecdotes along the path to it fed chair powell wants to do and will do anyway. >> i think we are on the same page. the federal reserve chair basically characterizes anything that goes against the grain as a pump in the road. he's used that word quite a few times. >> so many people are saying manufacturing we expected this, we are knocking to get more. oil prices are transitory. this is an issue of things researching. at a certain point if there's -- is there something real here.

that is something an increasing number of people are really thinking about. >> it certainly feels like a turn. united airlines is asking pilots to take unpaid time off last month. staffing cutbacks could extend into late 2024 thanks to late deliveries from boeing. united announcing flight hours will be trimmed. united is set to receive 80 max tends but is looking to convert those two smaller planes if it means it will receive the chats sooner. united is down by three quarters of 1%. annmarie: telling pilots from ember there was a crunch after covid and they were saying we need more pilots. now they are saying what is this mean going into the summer. higher airfares. lisa: if you have -- jonathan: i know your personal concerns. >> i have concerns about the experience of flying.

i also have concerns about high talent getting shafted yet again. this idea if you have people who are put to the sidelines yet again how many remain in the workforce and if you have that experience leaving the workforce to end up with more boeing type issues. this is one of the key questions people have been asking. jonathan: we find chaos through the industry. let's get to crude. crude futures hitting $85 a barrel since the first time since october. ongoing conflicts in the middle east lifting prices. brent nearing $90 a barrel. u.s. gasoline demand up for six straight weeks. very close to a story of four dollars a gallon in the summer at the pump for americans. we know last time around they reached a strategic midterm reserve and basically unloaded in markets. and to a great extent it worked. do they even have that option

this time around? annmarie: now will be the strategic presidential election reserve. we have seen the u.s. go out they been refilling the reserve but they brought it to a 40 year low so the basis on which they can draw from its much harder this time around. they've already done it and they got a ton of pushback about it. if they do it again it will look very political. what is the blame now will be the crisis in the middle east. >> we can talk about whether it's political or not. if they say it's political, want you to have lower prices are people going to care? it's essentially where we've been. they can talk about the strategic midterm reserve and we can talk about it with some kind of irony they would probably say it worked. we basically sold high-end bought low. >> strategic presidential reserve, we will talk about that in a few months am sure. brent crude just south of 89. elsewhere shares jumping as much

as 16% in hong kong. orders on the first electric vehicle saying it received 90,000 orders within the first 24 hours. meanwhile facing another setback. lowering projections in the first quarter with waning demand on purchases. craig joins us from london for more. we can talk about the competition in china at the moment. what are you looking for. >> i think the general consensus is absolute pessimism. the number of revisions we saw on the last week or two i counted at least nine and interestingly one analyst actually cut twice in the first couple of weeks. initially they were looking for 476,000 units. last week they went down to 414,000.

the last number would be below where they were a year ago. the last time we saw tesla report a year-over-year decline was the second quarter of 2020. that is not a milestone we see very often. and it speaks to the sort of tired nature of the model three and model why getting a bit long in the tooth and they don't have reinforcements to get consumers interested. >> how much of this is a tesla problem and how much is a broader ev issue? >> we are seeing the case that there may be some issues with finding the sort of next incremental ev buyer. the early adopters to some extent rc seated and these companies are having a little bit of trouble finding the consumer who is willing to take that leap and go electric. we have seen this across-the-board even byd which

has been on this incredible run the last couple of years even they had a bit of a setback in the first quarter in terms of where they were last year particularly to end the year so we expect for all of the negativity around tesla going into this trend we expect them to out -- to take back leadership of the global ev market. >> it's interesting you're talking about this being ev market problem. it raises questions about a smartphone company that came out with a new phone -- a new car but did much better than expected. how can we understand that? does that highlight the barrier to entry of this business isn't as high as it used to be. >> there was all this hype and speculation about the apple car roughly a decade. now are seeing not just one, but two big smart phone companies get involved in the ev sector in

china before and i think this does speak to the interest on the part of the chinese consumer in technology. we have seen that for years with tesla having real serious competition and elon musk speaking highly of the chinese manufacturers. the fact that we have seen some of these companies that are seen as the best of the best in terms of technology in the mobile home sector as they enter the car market they sort of bring this interest on the part of the consumer. and we've seen four way really close the doors off in terms of expectations coming in and sort of replicating that, just based on what we've seen thus far from these companies they are going to keep pressing the envelope there until they run into any resistance. >> can we just compare contrast what's coming out to the model

three and tesla. these vehicles look very similar. what you think is coming -- going on here? >> they absolutely look similar preview here the executives talk about how they are looking to take on tesla in that head on fashion which might be a little bit given where they are pricing the vehicle but they want to be seen as more upscale. you've seen a lot of the competition with tesla in china coming in at lower prices. byd in particular is really aggressive on the pricing front. while i do think this will sell for less than a lot of what tesla sells. they are little bit at a discount. but closer to tesla, we've seen out of some other companies. going both for value and volume as opposed to the competition

that sort of been a race to the bottom. that we've seen particularly in the last six months. jonathan: waiting for those numbers to draw from tesla. in our office in london i cannot think that i said this yesterday of many sectors where the competition is as fierce as the auto sector in china right now. >> that's the politically correct way of saying it. the implication is potentially and historically companies -- there's a concern about the intellectual property and what happens with that. it raises the question of if companies will go back to china and do business how much assurance to they have their intellectual property will be secured. >> it is quite the achievement for the smartphone company to develop particularly the setback apple of had ultimately through that. lisa: doesn't mean there's something different going on with this company or markets diverging dramatically from the u.s. market because there's a

different incentive for the electric vehicle adoption then say in the united states. >> tesla negative, let's give an update on stories here. here is bloomberg just your bloomberg brief. yahaira: disney is ahead in its proxy battle. with more than half of all the votes cast according to the wall street journal. the paper says blackrock and t. rowe price are among the major investors backing disney. the journal says investors are casting votes and can change them through the annual meeting tomorrow. peltz is seeking a board seat for himself and former disney cfo. more job cuts at city. a fresh round of reductions at its investment bank for managing directors and the technology media and technology division plus those covering equity capital markets. the latest cuts says it's concluded the major actions around its reorganization plan which aims to streamline

operations by eliminating 20,000 roles. mckenzie has made unique offer to some of its staff. taking nine months pay and go away. the confirm -- they are offering it to some u.k. staff who they would like to leave. the move is the latest personnel shakeup at the firm and, shortly afterward warned some u.s. consultants were running out of time to get a promotion. that's your bloomberg brief. it's not just nine months off and you can go back to the job. lisa: i like the way that they tried to shape this. really challenging themselves. they are going to trim headcount likely if no one takes this. >> i thought this was a new european social program but apparently not. nine months off a paper in >> as long as you have a job. >> you could >> write a book. >>up next, hire for longer.

>> monetary policy is not really concerning that much strain on the economy. that's why the fed is been on this path of hire for longer. >> that conversation up next. ♪

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that's the privacy business. manufacturing on demand? you're talking cloud business. got a few million hyper-connected customers? digital experience business. that was fast. that's where deloitte comes in. with the right combination of talent and technology to help advance and connect all that it takes to excel in business ... to the business i'm in. deloitte. >> the cross asset price actions anything but boring. in the last hour and a high for the year on the u.s. 10 year, 43491. yields up this morning. $85 on wti. down about one quarter of 1%. higher for longer. >> the long legs and monetary

policy versus the easing of financial conditions. if not really exerting that much restraint on the economy. that's why the fed has been on this path of being higher for longer. jonathan: odds of a june rate cut dipping below 50%. the jolts report ahead of friday's main event the march payrolls report. we expect an employment report that would concede exist -- consensus expectations. dialing back the restrictiveness of monetary policy. what i'm pleased to say abigail is with us. we need to look back just yesterday and talk about the manufacturing read. how much would you put on those numbers out yesterday. >> the ism came in a little bit stronger. when we look at the broad swath

of manufacturing surveys from regional feds alongside of that ism print we are seeing the generally they are remaining in contractionary territory. i think when we look across the broader spectrum of data we have for the manufacturing secretary -- sector we are seeing a weak upturn in manufacturing. >> this is a lot of people were writing in notes i read over the last couple of days that they dismiss certain data points we are looking at as simply aberrations with respect to the other data and doesn't highlight something more than a bump in the road. what would give you pause that some of these prints are more than just a bump in the road. >> we would be looking for a cooperation of that signal. the fact that you see a range of data coming in hotter than expected and also looking at the data that matters the most

policymakers looking at the market data we will get later this week seeing how that plays out looking at the inflation data focusing in on those metrics we think are front and center for policymakers as they head into the monetary policy decisions in may and june. >> one of the points that have been on a tear and people are pointing to that saying how much more evidence do you need but manufacturing is picking up around the world and we are seeing that robust activity into copper and the precious metals as well as into oil? abigail: if we look at the hard data, of the actual manufacturing output is down year-to-date this year. when we pair that with the idea we are not necessarily seeing a big pickup and maybe capex intentions and some of the survey levers are still

maintaining contraction. i think when we look across the broad spectrum of data we are not necessarily seeing that resurgence and improvement in the manufacturing sector in some of those harder data. >> we put up a quote of yours and you said this. we do not think recent data will derail the plan to dial back the restrictiveness of monetary policy. bill dudley said his personal opinion monetary policy is not exerting that much restraint on the economy. could you explain the difference between you and bill dudley at the moment? abigail: there are pockets where you seen the impact of higher rates. if we look at business investment it was pretty weak through 2023. use our residential investment hit by those higher rates. i think given the headline we've seen for the consumer one of the things that can be missed is where you are seeing signs of stress on the consumer side and one thing we put in our outlook we published was that the

distribution of wealth across consumers is unequal and what we are seeing is at the lower end of the income spectrum you're seeing delinquencies rising on credit cards and auto loans and this is also exacerbated by that return when we look at those age groups that are more likely to have student loan debt those of the age groups where you are seeing those delinquencies rising so there are pockets of the consumer sector feeling those higher rates. >> do you think this federal reserve would be willing to cut rates to ease some of the pressure on those segments even at the risk of allowing inflation to run higher for longer? abigail: i think the fed have been clear what they are for is that continued . they don't necessarily need see it return to 2% before they begin to dial back the policy.

given the strength to sing in the labor market given they have seen revisions to growth in q4 last week given the fact we seen the activity data remaining resilience that gives them the space to wait and see and digest that data before moving policy restrictiveness. >> abigail, thank you looking ahead to that economic data. it starts with job openings later this morning. going through to adp and jobless claims and then payrolls on friday. i will sherry sneak peek that meets an estimate right now. 203,000 as you know that can move around and move about as we get more estimates into friday. lisa i remember going into payrolls you're less interested in the current economic data and far more interesting the revisions working out how boomy

january was. lisa: it was based on historical standards. have we priced it all in. how do people explain it away of not being inflationary. that everyone wants to see. >> as weak and soft as evidence of restraint at the federal reserve. jonathan: abigail was -- lisa: abigail was talking about lower income families that have been is proportionately hit. you just wonder is this a more patient fed but wants to prevent getting hit hard on that particular aspect of higher rates even at the expense of waiting. >> i would say a socially conscious chairman powell. we saw a few hints of that in the pandemic. steven cook of cfr, mark

chandler and kathy jones of charles schwab. this is bloomberg. ♪ so, what are you thinking? i'm thinking... (speaking to self) about our honeymoon. what about africa? safari? hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment... ...on a ranch ...in montana ...with horses let's take a look at those scenarios. j.p. morgan wealth management has advisors in chase branches and tools, like wealth plan to keep you on track. when you're planning for it all... the answer is j.p. morgan wealth management.

it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. >> look at the fundamentals. i do not see earnings moving lower anytime soon. >> we want to be looking for the new areas of opportunity. >> anything that's been deputized into ai, i think people will be telling the same story. >> it's a sign of more confidence in the market. >> i think the market wants to rotate and it's starting to happen. >> this is bloomberg

surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: we have a lot to talk about this morning. live from new york city good morning for our audience worldwide your equity market on the s&p 500 softer yesterday. a little bit softer this morning. new highs for the year on the u.s. 10 year in the last hour. that high is 4.3491. new highs on brent and wti. gold on quite a streak. >> which is the reason why we look into that as a read on inflation more than bonds right now given the fact you haven't really seen as much nervousness expressed there when you talk about this threshold of bonds continuing to sell off at what point you people worry about oil prices rising and a deficit heading into the election and this is a federal reserve facing obstacles. >> a strong whiff of inflation on that board. brent crude very close to 90 in

and around 89. wti bridging 85 for the first time since october. just keep going through the numbers repeatedly. commodities breaking out of the last few weeks. annmarie: you have three dynamics at play. opec-plus cutting production. we are hitting mexico is ratcheting back supply from their state-controlled oil company. demand picking up in places like china and the risk premium of yesterday in the middle east. there's concern given iran has said there will be revenge on this strike at their embassy in damascus. that just means more upside potential for crude. >> manufacturing is spending, in the united states, seeing that expansion for the first time in 16 months. it's been a year-and-a-half. the economy perhaps re-accelerating in certain parts

away from services towards manufacturing. >> jay was pretty solid. lisa: this is a quote from him. everyone is talking mag seven. commodities people it's really basic. it supply and demand. we keep asking is this a symptom or a cause. is this a symptom of the growth under the hood but could continue or is this going to be the cause of inflation that will hamper growth. our higher oil prices inflationary or disinflationary. it's inflationary not disinflationary. jonathan: we will see but that's the debate we have this morning. equity futures negative by one quarter of 1%. yields are higher by close to four basis points. those levels just will not go away. lisa: i went back to 2020 at the end of the year to see how much

bonds of lost since then. they have not recovered ground. this grind raises the question what if this fed can only cut once? what does a neutral rate look like for the for siebel future. jonathan: you mentioned neel kashkari is on team bostic perhaps. we cannot officially stay -- say they have have lunch together. lisa: you said they were having lunch. jonathan: last august. lisa: please write in. how often do you have lunch. i think they should answer. jonathan: troy of fs investments and why he's calling for spring cleaning of portfolios. steven cook on rising -- and rising tensions between israel and iran. following a selloff in u.s. treasury yields. stocks and bonds steady after

strong factory data left traders pushing down rate cut bets once more. troy saying the performance in the u.s. economy is an opportunity for spring cleaning of portfolios writing cash has been a great place to head down for quite some time still offering some positive real rates of return but gradually deploying those into a select group of alternative strategies can substantially increase return potential without having to take on uncomfortable levels of risk. troy is with us for more board -- for more. going into a week full of weak -- economic data concluding with payrolls on friday morning. would you see that as a good thing or a bad thing for risk assets? >> for risk assets it still continues to be a good thing over the medium-term in that stronger economic growth leads to more revenue and lord -- lower default rates. we are giving to that inflection point where we have the violent

enough curve move if you think of q1 you have another quarter were fixed income is down like a broken record we joke around about but equities now not only do you have strong earnings but the economic growth surprise is relatively robust and powell talking about premature cuts. we are in a more dangerous level in terms of valuations but generally that rebounded manufacturing should be looked at as a positive outcome and positive driver. >> i've got a question we were down .2% yesterday on the s&p. down this morning. i think the equity market is still snoozing isn't it? >> compared to previous higher rate driven dislocations. the most was august to october of last year where you had that move it's kind of a rounding error but when he won times earnings you have to ask yourself how much more upside do you have. when so much of the good news is

priced in into the points you been making already. there's a material risk for substantial higher rates. we are still fairly inverted. the curb -- the curve gradually pricing out cuts. the bottom line to lisa's point in this scenario where there are no cuts your to think back the curve is going higher. i did could move given the substantial supply coming on. obviously the technical picture that is not terribly supportive. >> we still think that's definitely possible. when you think of the form in function for the fed always said this cutting cycle is the mirror image -- hiking cycle will be a mirror image of the 1518 cutting cycle. very slow and steady. there's a reasonable probability the back end cells offers inflation expectations get higher. in the event they do not cut it

all and continue to pursue qt, there is certainly a risk we make higher heights this cycle. we think they price up far too fast. it's not that fixed incomes is tragic like it was in 2020 early 21 as well. it's just that the risk reward still isn't fantastically many people have been articulating. >> there is a question about what assets get hit hardest if a 10 year yield us climb back up to 5% and retest some of the levels. is it public equity markets or some of the private market seen incredible amounts of cash flow in that are pegged to flowing rate types of instruments? >> when you start with private credit is one example which has been an area of tremendous growth it really -- with really very attractive positive returns

it's up in a very tough year. you are always rooting for higher front-end rates for longer. with the lowest probability of those -- the tighter fed policy greater than the economy. when he first came up with the scenario from a probability standpoint it's a most too good to be true. that's not the base case. keeping rates higher for longer and the economy continues to be incredibly robust. to your point if you get higher in that end, that could lead to slightly higher defaults over time so you give back some of that excess income. so far what we are seeing its very low default rates. the ability for companies to restructure with private equity and public equity partners and that means less income being returned through defaults which

is really as good of the scenarios you can hope for in private credit markets. >> i get the sense investment managers say cash you are running out of time. you have to deploy it, the forgotten 493 as we heard earlier. is there really a pressure for time and for cash. there is this question of if the fed will hold rates higher for longer it doesn't seem like this is that restrictive. why couldn't you clip on a money market for the foreseeable future. >> for the last two years what you want to focus on is northwest quadrant strategies. that have higher returns with lower risk and it's one of those alternatives to traditional fixed income and also equities. when you look at where you are today, really 5.25, 5.5 is the peak.

it still is nonexistent. you only of one way to go and that is lower. as we discussed it will be very slow, very plotting cutting cycle so you still have income. whether you're looking at actuarial studies or what folks need to retire comfortably. typically you're in that low 10's range. the question is do you gradually think about the extra 2.5 trillion in money markets, into strategies where you're not taking uncomfortable levels of risk or if you have equities in your reaching for duration right now as many of done much to their chagrin with that duration related drawdown. we certainly you could see in liquidity you'll have more risk but you're seeing the return potential and one of the unique things about private credit now

which is really fascinating is you have potential higher returns on the capital structure than the equity part of the capital structure. extra debt goes at the expense of free cash flow. the equity will be lowered to benefit the debtholders. it's an unusual period of our history for sure. a lot of people's tingle -- single names. lisa: i'm not showing my hand. we don't have to continue. jonathan: the ft had a strange front page. i would love your thoughts on that. the bond issuance we had in the market. about the election in the back end of this year. are we linking the boom in supply in the first quarter of 24 to the prospect that the market closing up in 4q this

year? >> i think that is a bridge too far. what's happened here, a lot of the explanatory variables for what's going on in terms of market price action as well as in terms of risk appetite gets back to those huge cash boards the fed created during the pandemic and still works with us today. what we've seen across the board whether it's corporate lending, real estate lending or high-yield bonds and which have really horrific technicals it is a gradual steady relentless tightening. obviously issuers were taking the edge of that looking at the past two years thinking of the next six to nine months forward it's probably one of the better points to issue new debt and lock in new financing or justice critically if you have

floating-rate debt or fixed this is the window you are getting and if you have turbulence in the back half of the year you can probably get in better pricing now than perhaps q4. jonathan: thank you sir. we will see what we get in q4. i haven't attribute what's happening in q1 two it may happen later this year. the bottom line is the improvement was seen in the labor market is real combined with low jobless claims likely to surprise to the upside in march. the number we are looking for something in and around 200 k. here is your bloomberg brief. yahaira: boeing's bumpy year is being held -- felt by pilots. they have been asked to take unpaid time off next month as they grapple with delayed deliveries of new boeing planes. but delivery delays have reduced the number of flying hours

united had planned for its pilots this year. the staffing plan could be extended into the summer and potentially the fall. a cloud and data security startup backed by microsoft is called for an ipo. disclosing growing revenue and losses. the size and price of their planned share will be disclosed in a later filing. it is -- it's expected ipo following trading debuts. the iowa hawkeyes are heading back to the final four after defending raining champions the lsu tigers. iowa was led by caitlin with a game-high 41 points. angel reese finished with 17 points and 20 rebounds. iowa is seeking its first title and will face the winner of the usc uconn game on friday. that's your bloomberg brief. >> tensions rising between israel and iran. >> this is probably the most senior person who's been killed

since sewall imani. -- sulemani. the easiest way for them to respond would be by attacking u.s. forces in the region. jonathan: live from new york city, good morning. ♪ [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.

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attack would be via u.s. forces in the region. it would be one of iranian proxies like hezbollah attacking israel from the north. iran does not seem to want to escalate in that manner and for now it looks like the u.s. will probably be its main target. jonathan: a strike on its embassy in israel killed at least seven military personnel. the strike marking a direct confrontation between the two as a proxy conflict threatens to escalate. joining us to discuss is steven cook, wonderful to get your insight on this program. could you talk to us about possible consequences from the strike in damascus. >> this is a significant escalation and the risk of the iranians responding in any number of ways is very high. the iranians have attacked american forces and they are in

iraq and iran which are obvious places. we've seen that happen over the course of the conflict that began on october 7. there is the real possibility whatever restraints the iranians have placed on lebanon and hezbollah may start to loosen. there is already a very significant conflict between israel and hezbollah, the two have been trading fire since october 7 and strikes against each other's countries have been deeper in recent months. this is a very big step who quite rightly point out the multi-front conflict they are fighting is a consequence of the iranian sponsorship of the access of resistance in the north. as well as the who these on israel from yemen. they want to go after what they consider to be the head of the state.

annmarie: the iranian minister saying he summoned the switzerland envoy to give a message. what kind of back channel between washington and tehran to trying take the temperature. >> it has long been robust communication through the swiss embassy. the united states communicated to the iranians at the outset of the conflict. communicated after the incident in tower 22 13 american soldiers were killed. iranians music back off otherwise there would be significant consequences for them. i imagine the iranians are using that in reverse mitigating to the united states says unless washington brings the israelis to heal the iranians have the capability of raising in the region. annmarie: given the fact they

had this call yesterday. potentially we will see israeli officials in washington next week. >> american influence at this point is rather limited. the israelis frame their conflict with hamas and the conflict on multiple fronts as an existential threat. although the united states is obviously an important strategic partner of the israelis. advice given is not always advice taken. we have seen this throughout the conflict. president biden believed the bearhug of the israeli government would give the leverage to shape operations in the gaza strip. that has not happened. the conversations between washington and jerusalem yesterday are about is really military planned operations. prime minister netanyahu said those plans have been approved

and ready to execute them. it is unclear whether these talks will bear fruit in shaping the way the israelis undertake this operation. lisa: you honed in on the northern border of israel. the hezbollah conflict that's been ongoing. that being the true source of an escalation that could draw in a large swath of the region. i'm wondering how close we are to that. if you could quantify how much closer we are now after these assassinations than we were before them. it's really what a lot of strategists are honing in on this morning. >> it's hard to put numbers on it. but i would say it is a strong likelihood we will see a significant conflict between israel and hezbollah. the constraints both parties have been loosening in recent weeks and months, the strike in

damascus that killed two generals, something the iranians will be unable to not respond to. billy thing holding them back is an odd and twisted way, the israelis need that security assistance. they would like to use in terms of the next six months we are likely to see an escalation in the north. >> what's that -- what's to stop that the broader trade markets in the way a lot of people of suspected was the worst case scenario. >> the major factor is the israelis and has blogging involved in the major conflict that the iranians and who these -- houthis interfering with global shipping.

there's a lot -- on the iran and access could disrupt the local dutch the global economy as they try to do in the red sea is something everyone needs to be well aware of. jonathan: thank you for insights. need to talk about this crude market. can we play the what if. wti 85. if crude output was not 13.1 million barrels a day. lisa: that's why people looking at the saying at a time where it's not clear how much more the u.s. can ramp up production how much can that serve as an offset if there some sort of major disruption. >> could put pressure on opec-plus to get more involved. busy critical meeting this week. they are likely to continue on the supply cuts but jake sullivan is going to riyadh.

talking about normalization. i don't think anyone thinks in this market you can see normalization of what's going on but potentially talking about the oil market. jonathan: i wonder how different it will be this time around going into the election. >> is that something they want to sway? >> it on most felt like a cut. >> up next on the program the yen weakening. raising the risk of intervention that conversation up next with mark chandler. from new york city this is bloomberg. ♪

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♪ jonathan: equities from 500, future this morning looking little something like this. down on the nasdaq by zero point four. underperformers are small caps down by about half of 1%. we will talk about small caps a little bit later. lisa:lisa: this is the whole question, people say broadening out but how far can you get broadening out? i don't know. jonathan: first thing she said when she sat at the desk this morning, does it derail the rotation? does this derail the rotation? let's check out the bond market together. we will talk about them levels, let's start with the 10 year.

yields up five basis points, on a two year at the moment, up a single basis point, if you're interested in the highest level of the year so far that was in the middle of arch. not a million miles away at the moment. that yield curve just shifting higher in the last 24 hours. lisa: and it has been sustainable. well, it has come from good intentions, the idea we are seeing more robust growth and demand. there's a level at which it will hurt, but we are not there yet. what is that level? is this going to be a problem for an economy that is chugging along? jonathan: chairman powell, his comments suggest the fed is on track for cuts in the manufacturing barely above 50.0. the federal reaction function now places a larger weight on labor market data and we see downside risk to friday's jobs report projecting one under

$50,000 increase on payrolls on friday. where is the greater emphasis at the moment? what is the biggest number? payrolls on friday for cpi next week? lisa: people would say it should be cpi but it is going to be the payrolls number. it's going to be very much job-dependent and that wants to protect the economy. we don't know and that is part of the issue. this is a fed that wants to cut rates. the question is what we start to reach a point where they should is creeping back in, we didn't see that with the university of michigan survey that cannot friday. inflation expectations were not coming up so it doesn't seem like that is pressuring them. if that changes, how much does that change where the emphasis have to be for the fed that has to deal with the mandate of ringing inflation back to 2%? jonathan: just two weeks ago he said this fed wants to cut, will the data cooperate? we will see. what is happening with brent and

wti, getting very close to 90. wti for 85 early this morning. we've seen that development over the last month or so. gold, six-day winning streak. anne-marie, another all-time high on gold as well. the commodity market breaking out. what it's curious to me is the recipe for a higher crude price was there in october, it was there in november, it was present in december and we ignored it. if last month that is all coming together as we start to break out. annmarie: one of the bee thing analysts were saying with that supply actually wasn't impacted after the october 7 attack now when you have this escalation which everyone is talking about, the greatest escalation since the killing of soleimani, this means there's going to be an upside to risk premium. then you look at the demand side, then you look at the supply side. opec-plus is not willing to step in right now and what you are seeing as they are potentially going to continue branching back that's life. every dynamic is pointing to higher crude prices coming down the line. jonathan: brent crude 88.69.

under surveillance this morning, trade is pushing back of the timing of rate cuts falling better than factory data. manufactory showing expansion for the first time since 2022. the data reinforcing the patient outlook on rate cuts. more fed speak, we will hear from william staley ahead of chairman powell tomorrow. we've got so much fed speak this week. what are you looking for from all these official through the week? lisa: do raphael bostic and yell kashkari -- jonathan: our friends -- lisa: have lunch together? how much are they sitting in the lunch room muttering why aren't they seeing what we are's seeing? how much to other people realize this isn't necessarily all that restricted still see this kind of roof? jonathan: does the message change from chairman powell? lisa: i think it will change tomorrow considering the fact that he didn't change at the end of last week. it doesn't really matter.

i honestly don't know if you are looking for data, what data supports the idea of praising hegel to the highest since 2022 and higher manufacturing data in the commodities face? i keep going back to that, isn't this the gut check that this is something broader? annmarie: it felt like chairman palpitate flute it may be sent on friday. now it is a little bit more interesting, potentially hearing him after factory, after prices paid and what we are seeing in terms of geopolitical risk. does he have to say anything about this? jonathan: way more fed officials for the week. you're not going to get tired of fed speak this week, that is for sure. want to turn this story from tesla, shares of the premarket a little bit lower. the average estimate in the survey calling for about 150,000 deliveries, a drop of more than 7% from the previous quarter. falling demand, higher rates taking a toll. the shares, the stock down by

about 30% so far this year. it's the worst performer on the s&p 500. there are massive competitive issues in places like china. we said a few times on the program this week that you will struggle to find many sectors in many regions that are more competitive, as competitive as was happening in the auto sector with china. a great example is what happened with tesla this week. they thought prices were going to go up. what did nero do on the same day? provides for up to 15 -- $138 million for drivers of gasoline cars to make a switch. cherry on a mobile came out and said it will cover the cost of purchased tax on selected models, plus offered better treated for used cars as well. these stories, that market just gets more and more competitive. lisa: tesla has been trying to make itself out as something more than a car company and has been hampered by the fact that people are looking at it as a car company and that is the

case, its valuation doesn't make sense. i will just say maybe this is going to be the key mom -- moment where we say it is either part of the mag seven or has officially been from that. jonathan: that is for sure in a major way. let's turn to japan to talk about foreign-exchange. the yen making its biggest single day moving over a week after strong factory data boosted the dollar. high alert following comments in the japanese finance minister that authorities are prepared to take appropriate measures against what they call excessive moves. joe namath now to discuss the chief market strategist. mark, i want to talk about foreign-exchange yesterday. it was interesting just taking a snapshot of g10, wcrs on the bloomberg terminal. everything was weaker against the u.s. dollar but the japanese yen, just a touch of weakness. i wonder whether that with the first real sign this market was taking the aspect of intervention right seriously. >> i think you are right but i

don't think it was just yesterday the market has been taking the bank of japan intervention seriously. just slightly shy of level, the market has been really head that -- hesitant for fear of intervention. partly because the last time they intervened, it was around that level. jonathan: what do you think intervention is actually going to look like if they do intervene? what does it look like? >> i think the japanese made a mistake by not intervening at the end of last week when the u.s. and european markets were closed. but i'm looking at is as you mentioned, this consensus is for a relatively robust or at least a decent u.s. jobs report on friday and a firm's cpi next week. i think the dollar is going to move higher on the back of that. i think that the japanese, by not intervening they are going to be sort of forced to put the

toothpaste back in the two, so to speak. reactionary rev than first depressed the dollar again so that rally on the data and not have to take out that level. i think they are worried if we go above 152, we can go to 155, 157. lisa: some people are betting that they've got no willingness or ability to do so including mark mobius who is over television and basically said there is no way that the japanese authorities are going to do anything to strengthen the yen, that there isn't the appetite, there wasn't at the end of last week there would be going forward. how dangerous is it to bed at the game will continue to weaken despite some of the verbal intervention attempt that referred? -- that we've heard? >> a large market sentiment is already shifting from using the yen as a on the currency to moving to the swiss franc a funding currency. you can see that even today, where the swiss franc of the weakest of the major currencies and we also get cpi data from the swiss next week -- excuse

me, tomorrow. they already cut interest rate on center think the market is hoping that will cut interest rates again in june. it comes down to rest-reward. is the risk-reward there to be adding onto short yen positions right now? i think the market is rightfully being cautious about it. i do think the boj will intervene. i think they made a tactical error by not intervening with a had a chance, but i think that is the only way by watching the market urgently or with a sense of urgency or we will do anything, i think these are all cues of intervention. if they don't make good on it, it sort of dilutes the street credibility. lisa: there is a bigger point that you made that this is a stake is swiss franc story as it is a japanese yen story. i wonder how much a global rate cutting cycle actually helps some of the weaker currencies

and hurts the likes of the swiss franc like the dollar if you do get this idea that we are shifting away from what people thought were restrictive policies. >> it's really remarkable. not only has the market moved away from a fed cut in june, but when i just looked at the future, the market is not even fully pricing in the cut in july. yesterday we saw the atlanta fed gdp tracker take up to 2.8%, and so i think there is a strong dollar environment. we shift to different ones for funding currencies. the mexican peso is the only emerging-market currency, the only major currency higher on the year, and i think that is reflected. jonathan: good to touch base with you again, let's catch up again soon. particularly dollar-yen, let's do some scenario analysis.

this is what he had to say. the yen could slide to 1.60 per dollar unless the fed cuts interest rates this year. intervention is very likely but it would be more likely that they would be leaning against the wind if they do intervene and goes on to say the yen could rally to 1.42 but a lot of this is central banking depended. it is federal reserve independent. lisa: which raises the question, do japanese authorities have the ability to really intervene even if they wanted to? essentially that indicates not so much for that as we heard from mark mobius, the fact that they didn't make a move last week tells you a lot. jonathan: dollar-yen, 151.65. let's check in with your bloomberg brief. yahaira: ubs says it plans to buy back of the $2 million of

its shares with up to $1 billion of that total expected to take place this year. the swiss bank confirming the repurchase plan today after having suspended its previous plan a year ago amidst takeover of former violet credit suisse. it expects to complete the merger by the end of the second quarter. meanwhile at citi, more job cuts. a fresh render productions some managing directors and the technology, media and telecom division plus equity capital markets leave the wall street lender. the latest cuts coming of citigroup says it has ramped up the major actions surrounding its reorganization plan which aim to streamline operations by eliminating 20,000 roles. and disney is in the lead in its proxy battle against nelson peltz' partners with more than half of all votes cast. wall street journal says blackrock -- price are among the major investors backing disney.

the journal says investors are still casting both and can change them through the annual meeting tomorrow. he is seeking a board seat for himself and former disney cfo j pursue love -- jonathan: up next on this program, pricing in a patient fed. >> in the scenario where there are no cuts, you have to think they are going higher and we could retest the 5% level at some point. there are certainly the risk that we make higher highs this cycle. jonathan: kathy jones of charles schwab just around the corner from new york. this is bloomberg. ♪

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♪ jonathan: stocks down one third of 1% on the s&p 500.

up four basis points. under surveillance this morning, pricing in a patient fed. >> in the scenario where there are no cuts, you have to think the curve is going higher and we could retest the 5% level at some point given the substantial supply that is coming on. there is a reasonable probability that if the fed first starts to cut, the backend sells off as inflation expectations get angered higher, there is certainly the risk and we make higher highs the cycle. jonathan: treasuries something off after strong u.s. factory data put the odds of a gene rate cut below 50%. casei jones of charles schwab writing this -the economy is doing well and that of the big problem for the bond market. he keeps that that on hold for longer waiting for either inflation to fall decisively with the job market slow and neither the inflation data nor the job data likely to provide a break at moment in the near term and that is likely to mean more choppy trading.

kathy i'm pleased to say is with us now for more. your asset class together with the commodity market are the two asset classes to watch right now. in the last few hours this morning, you high of the year. one of the strongest argument to buy the long end of the curve this morning? >> i think the strongest argument is that inflation is still falling and i know it got a lot of excitement around commodity prices going on right now, but in general, what we're seeing is the trend is still over in elation, the court pce is in the mid to low twos. i think cpi will continue to ease down. we are probably going to see a somewhat slower growth rate in the job market, so we are in a soft landing, which is great. the economy is doing well and that is all very positive, but the overall trend in inflation is still going in the right direction and that is the strongest argument for buying or

extending duration in the bond market. jonathan: last time we spoke he talked about rate cuts might not begin until july. is that the barstow for you, middle of summer, or are you pushing that out just a bit? >> we haven't pushed it out yet, obviously we want to wait and see more data just as the fed is waiting to see more data on patient and the labor market to make that call, but right now we are still looking at a couple of rate cut in the second half of year but not starting until july because obviously the fed wants to wait and see how things are going and actually, taking no action right now is probably the best course of action for them to take. instead of making a mistake one direction or another they can just sit tight for a while. lisa: jon asked me a question earlier and i had no good answer to it. which is a more important data point, the jobs report begin on friday or cpi next week? ultimately it seems like the jobs market is almost more important than this federal reserve.

>> i would say so. with the inflation now kind of in the range for the fed would like to be, i'm it breaks out substantially one direction or another, i think the focus can shift to the job market. if you were to start to see substantial softness in the job market, i think the fed would be more inclined to move more because that would imply a slowdown in consumer spending down the road. again, it remains to be seen but i think right now jobs take on a much bigger proportion of the thinking of the fed than the inflation numbers. lisa: what about the other side of that? what is the jobs numbers are significant a higher-than-expected or comes in strong the way it has been for a number of aunts now and we wages remaining sticky? will you reset your view over longer-term rates just based on the idea that maybe these rates aren't all that restrictive? >> we will have to adjust as the data just right now. average hourly earnings about

4.1% year-over-year. they've been in that low for percent area for a while after having much higher levels. if it fails to come down i think the fed's comfort level is probably closer to 3, 3 .5%. assuming we continue to get some decent productivity, is not a bad story. but if this wages take up or stay sticky at 4%, then we would have to adjust our expectations for the fed and for the bond market. jonathan: how divided you think this is? when we look at the dot plot relative to the last set of projections it looks like things have tightened up when you listen to the conversations, the speeches, the rhetoric, it looks like some distance between president bostic and others on the committee. just how united is this fomc? >> no doubt they will probably try to come up with a consensus opinion at the next meeting, but bostic is an interesting person to follow because he has been a

bit on the leading edge of fed decision-making. i think he is probably going to build a bigger faction if the data stay relatively strong. you will probably see more people migrate over there but again, keep in mind that this is very fluid. i don't think anybody is to anchored to the soft view, to the dovish view. powell seems to be probably the most dovish publicly speaking, but i don't know that he is 100% anchored that if the data change. he will change his mind. jonathan: his dovish stance has prompted some people to talk about a lack of commitment to the 2% patient target and some people might draw a line between that and what is happening with gold, what is happening the treasuries this morning. is that a step too far for you? kathy: it is. i don't think the fed have given any indication that given up on

the 2% target on inflation and i don't think they will. i don't see why they would. with the economy doing as well as it is, they can stand pat and push for lower inflation. what is going on in gold, what is going on in other markets, there is always a narrative around it. my experience with gold is there is always a narrative around, and it usually includes sums of inflation and monetary policy story, but i don't know that any of that has changed for the u.s. there's been no indication from the fed they are giving up on 2%. lisa: there's also always a narrative around oil prices and the perennial russian, is it inflationary or disinflationary when prices go up significantly because he could act as a dampening effect on growth or it could spur prices to increase and a robust economy. this time around, which is it? have concerning is it to see oil prices really taking up to the highest of the year? >> what interesting about the

rising oil prices to me is that there's no evidence that we are supply-constraint. this is all the expectation that demand is going to ramp up, right? so we will have to see if that becomes the case. we do have china may be doing a little the better than expected in the u.s. manufacturing sector , showing signs of life. it seems to be in anticipation of demand. super cycles and commodities usually are derived from the fact that we underinvested for a long period of time in commodities and that certainly isn't the case now where we are pumping record amounts of oil so this has to be a demand story. we will see how far that carries if economic growth doesn't accelerate from here, but for consumers, it ultimately becomes a tax on consumption. they have to shift consumption from somewhere else to pay for higher gasoline prices at the pump, so i think it has more of

a negative effect that economic growth at the end of the day than positive. jonathan: wonderful to catch up with you. treasury yields breaking out to new highs for 2024, new highs recruit as well. new note, a strike on their money in consulate definitely impact in crude and that pressure on oil translating into higher bond yield longer and as the lesion and potentially military spending on escalation is outweighing any flight to safety. >> this is the risk premium we've been talking about that we haven't seen since october really start to come into the market the escalation of this strike. who with the individual hit, and what was said? this was a government building in damascus and they already cannot and send they will have to respond. what that response look like remains to be seen but everyone the same year bond likes to do this proxies. is it potentially going to maybe

escalate into the indian ocean? we don't know yet, but there will be escalation. jonathan: escalation risk front and center. annmarie: the reason this is nerve-racking for the bond market is what kathy said. this could be some disruption to supply for this is much more of a story driven by demand and a better something that is more elation area at least in the short term because it can continue and it is not because of a supply shock, it is because of growth, sustained resilience and potentially even a stronger china. jonathan:jonathan: the conversation continues, the third hour of bloomberg surveillance up next. david leibowitz and m rita send -- amrita sen. tesla numbers coming out a little bit later this morning. little bit later this morning. ok y'all we got 10 orders coming in... big orders!

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♪ >> we are at an inflection point in the fed's policy path and communication. >> we are start