>> i don't think any individual inflation report sways the narrative but inflation will further the story the economy is doing well. >> i don't think we need rate cuts. the market has digested rates just fine. >> the data continues to be strong. >> i believe there is no rash -- rush to cut. >> this is bloomberg surveillance. jonathan: a snooze newsy start to the week. good morning. this is bloomberg surveillance. monday afternoon the close, -0.0 and equity futures unchanged.

chris from wells fargo is doing his best. he had a target of 4625 and is now 5535. lisa: the answer is artificial intelligence and we are getting the sense of productivity boom which is a story that has been the case for the last six months , which raises the question, is it anything that could trigger the end to this. jonathan: this is happening even with the rate cuts changing all the way through the year, if you are cuts in the equity market and they are still doing ok. lisa: even though we have seen yields at the highest since 2023, people think it is because growth is coming in start of

three options for treasuries 30 year on thursday. how much will it test how much people are convinced yields will continue in this range. annmarie: james bullard overnight saying listen to what they are saying. they are making a lot of calls and the base case is three. jonathan: the new york fed had to say in the survey yesterday, the perceived probability of debt payment over the next three months rest at 12.9% in march. it is the most since the onset of the pandemic. there are pockets of stress, building in the economy away from the surface level where things look decent. lisa: they are building and have been there but haven't gotten much worse. we heard it yesterday where she said she was seeing signs of

weakness but now less so. it is the persistent sense that there are pockets of weakness but hasn't spread out to be pervasive. the pockets are moving at different speeds and it is hard to get an overall aggregate picture. jonathan: did you preface that in the mirror this morning, formal, -- womo, womo. jonathan: a little bit of a lift in the equity market. yesterday the headline was in the market. this morning yields coming back a little bit, down to basis points. we have an interesting week ahead. not just auctions but cpi and fed is tomorrow. ppi jobless claims thursday. the new york fed president speaking thursday as well. bank earnings on friday.

lisa: this is one of the most fascinating weeks. you have the question of his inflation under control and people don't even talk about the possibility of earnings coming out. we have delta coming out and make earnings on friday. how much do they continue to show growth that needs to continue for the yield spike to be ok? that will be the interesting test between inflation and the growth outlook. jonathan: she will break down delta. lisa: it is consumer spending. bond yields ease from highs of the year. tesla shares jump on robotaxi hopes. we begin with the top story, investors looking ahead to cpi and ppi as bond yields ease. the deteriorating credit conditions can apply systemic

risk but the bottom rungs of the corporate ladder aren't seeing anything out of step with high-quality credits, even as 10 year yields have broken through the key level. chris joined us now for more. how much of the high yields and the two-year, 10 year, 30 testing new highs? chris: quote have the ability to disrupt the tranquil last four months -- it will have the ability to disrupt the tranquil last four months. does leadership begin to evolve? if there is one thing that has caught my eye as rates have moved back, you have seen hanging there and a little different. we always start to get a little uncomfortable when the defensive starts to keep up even as eels work higher and that is a very subtle at this point. by and large, everywhere i look is the utilities may be in the

last few weeks is the first change. lisa: one at j.p. morgan thinks there is a sign there will be resilient. this comes from a conviction that yields are going to move lower and this is a temporary blip and will be one of the fuels to continue the rally. how much are you pushing back against the thesis that yields are here to stay? chris: i am in the camp that yields won't run away from us. when you look at the macro tone, if bond yields were going to run away from us, i don't think gold would be this persistent. i think yesterday was interesting where you had the real estate acting well despite the pump higher and the banks were fine through it. if we were going to use yields, the leadership fabric of the market might look different. we just don't see it yet.

global bond yields have not move the same extent that u.s. yields have. tens are still below and to are closer than the lows than highs and german tens have not run away. lisa: the confucian aspect is interesting. and the bank of america derivatives strategist came out and said probably better to rent then own it. how much are you seeing that more broadly? people don't want to own because they don't understand the thesis behind it. chris: i have the luxury of not caring what the thesis is behind it. we look at price action and momentum. lisa: will good for you. we have to discuss it everyday. chris: this has been years in the making. are the short-term overbought? of course they are. i have lost more money trying to play silver so we will leave

that on the side. we look at the massive breakout but related equities in freeport or southern copper and chinese copper and aluminum names have moved as well. it is also replicating. look at the european auto stocks and the huge bases that bmw and mercedes breaking out. there is something happening globally. maybe china is the impulse for all this. jonathan: you have the move in base metals and precious metals. what is developing between the two? chris: the traditional rule would be look at industrial versus precious metals. a lot of those relationships have not worked since covid so i am reluctant to make any broad a proclamation about what that pairing is today. what is known as -- notable is if gold was sending and ominous

message, i would expect credit to be worse and copper to be breaking down and neither of those two things are happening. jonathan: is it just inflation as the catalyst? chris: inflation expectation hasn't moved a lot. i go back to what is the leadership message of the equity market aside from this improvement we have seen in energy and materials. it has yet to be at the major detriment of things you would expect to get hurt if inflation was returning in a long-standing way. discretionary stocks are still ok. there is a point where too much energy or materials can work against the equity market and i am not convinced we are at that point. jonathan: listening to you, it says -- seems like you might be not a list of things to into -- undo. would you include crude? chris: i would roughly call it

november of 2021 when discretionary started to falter and crude pushed through 90. we will see if we get there or not. it is an election year and i wouldn't be surprised if more tricks were pulled out of the bag over the next six months. the bigger picture, where are we in the cycle? i think conditions leading up to this moment would look different and credit would look different and leadership and internals would be deteriorating. none of that means you can't have a correction or a pause. there are parts of the market that look fatigued. you see a little in tech but by and large are conditions in place for a big problem, probably not. lisa: i love that you say that any pullback is a reason to buy an any more material downturn isn't the beginning but the end of something and something that should be an opportunity. does it worry you that we haven't gotten any opportunities

and so many people want to buy and the dips have been some of the smallest we have seen over the past almost year going back to 1928? chris: if anything, in my world it is a testament for the uptrend of the better 14 or 15 months. i think the inability for the consensus to put some neat narrative or tight narrative around it has prohibited people from participating or playing to the extent they probably should have. we felt that in the first half of last year until finally the leadership and conditions were so strong you have to play trends that look like this. lisa: i like to look for what we might be missing and some might say when you have such a strong trend momentum it can lead you to places that are lofty. how far are we from that from momentum getting so divorced

from having to have any narrative just because so many people have missed out and it seems like there isn't anything to torpedo it. chris: you can get an easy technical target of 6100 on the s&p and that would be the break out in the last half of 2023 versus the low earlier in 2022 that projects 260 mathematically i can get you there. trends decay from the inside first and you see the percent of stocks and the average moving over. none of this has happened to this point. i think the question we are always grappling with is when do you start to bet against the trend, and of information? i don't think we are there. jonathan: the launch of the macro momentum etf, congratulations. what is it? chris: i am excited about it.

it is taking what we have done the last 20 years in our research and putting it out in an investable product. our goal has always been to seek momentum wherever it is found. i think the market right now is a good example of how the momentum impetus is shifting from tech to copper or materials or energy. we are trying to catch those early inflections before some elegant macro narrative is formed. lisa: you are looking at me. none of mine are elegant. jonathan: what my exposed to? chris: materials, copper, financials. they have done great despite the story they should be working as bonds have moved forward. consumer discretionary and industrials are good too. jonathan: congratulations to you. chris verrone. equity market positive on the

s&p 500. here is your bloomberg briefly. dani: j.p. morgan has finally found something to buy, utilities and real estate. he has been warning since late last year that investors should stay away from equities broadly, a call that hasn't gone right. a quote of interest to its bond yields a correlation. blackstone nearing a deal to take a cosmetics company private. a private equity term may team up with the billionaire owner for the bio, trading in the company in hong kong and was suspended pending an announcement. the company has a market value of $5.6 billion with the chairman owning more than 70%. the uconn huskies are back atop the college basketball world. uconn defeated purdue in the

national championship game, 75-60, the second straight title win. the huskies cap off a dominant season in which they only lost three games and become the first team to win back to back titles since 2007. now you can't boast a 6-0 record in a national championship games going back to 1999. that is your bloomberg brief. jonathan: for everybody at home, have you ever seen anyone in that store? i walk past it and i say is anyone going to be in there and they are. lisa: i have gone into the nut factory. jonathan: was anyone else in their? lisa: no comment. jonathan: up next, tesla's

robotaxi pivot. >> i read recently that tesla has decided not to pursue the loan and car because they don't think they can compete with the low-end chinese cars. they might want to rethink that. jonathan: that conversation is next. it live from new york, good morning. ♪ (upbeat music) there's more to business than the business you're in. if you use data, that's the privacy business.

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jonathan: a single -- not a single message from anyone who has been in lesotho. lisa: why don't you think people go in there? jonathan: i don't have a theory. i'm just saying i don't see people in there. annmarie: this is the quintessential moisturizing get in a gift basket. they just need to cater to the between crowd. lisa: just have them in with their moms. jonathan: what airlines are you going on to get that? equities look like this, positive 0.1%. yields lower by three basis points. in the commodity market, it is 6.67 on crude, a bounce by .3%.

the text loan -- tesla robotaxi pivot. >> they are not pursuing the low-end car because they don't think they can compete with the low-end chinese car. i think it is a shame. they might want to rethink that. tesla needs to focus on cost instead of focusing on technology for the sake of technology. jonathan: tesla ceo pushing back against reports that it is scrapping the low cost model to vehicle as it faces tough competition from chinese rivals. musk reports, instead of announcing a planned reveal of robotaxis on august 8. we have had promises of this developing and we have had promises repeatedly over this developing. is this the real deal? craig: color me skeptical.

i think they will reveal a prototype and as we wrote yesterday, it is often the case that years go by between prototype and when tesla puts something into production. i fear this may be an even longer delay or a process that we see play out. it is an open question to me whether or not this robotaxi will be something that the lady consumer will be able to buy. the entire -- the lay consumer will be able to buy. they are still pursuing robotaxis for dedicated fleets for a company like weibel going -- waymo going to wear the cars can safely pilot themselves. jonathan: one of the worst performing on the year, something about them scrapping

the model two. what do we know about the release of the model? craig: we know very little about what is going on. there is some possibility that what reuters reported and musk has said and what the designer of the company said over the weekend that there could be some way for both of them to be telling the truth. the robotaxi and this cheaper car are supposed to be built off of the same platform. he cheaper vehicle could be delayed or de-prioritized in favor of this robotaxi and yet they may still show that cheaper vehicle later this year along with the robotaxi. we had an analyst speculate as much just this morning. i think it is the case that based on the fact that musk has hyped up this robotaxi yet again and announced only that for the

august, speaks to the fact that reuters was hearing that this is what he was after and he being elon musk. this also meshes with walter isaacson's biography that musk had to be talked into sticking to this plan of bringing this cheaper electric vehicle to market. lisa: martin ever heard -- ev said they need to be focused onerhard cost -- everhard said they need to focus more on the cost and not technology for the sake of technology. how much is this the sake of technology? craig: when i heard him make those comments i thought, musk is all but certain to weigh in on this at some point today. the two of them had eight messy a falling out going back many years when he left the company.

this idea that robotaxis and other companies pursuing them aren't offering them to consumers. the reason is they are really expensive. the hardware that it takes for these to work and work safely really costs quite a bit. we have seen that tesla has taken this approach of putting hardware into all of its cars regardless of whether people pay for that technology that they have marketed as full self marketing and try to use hardware that isn't really enough to get to this point of it being able to offer full autonomy and it just hasn't worked. it is absolutely the case that the technology has progressed and some are happy with this. but it is the case that people still have to keep their eyes on the road and hands on the wheel, according to tesla. annmarie: we just learned that we know that tesla settled the

case when it comes to the apple engineer, the phaedo -- fatal autopilot crash. what can you tell us? craig: i was surprised by it in the sense that musk has long been pretty aggressive in terms of his approach to litigation. he has talked about having a hard core department within tesla to fight lawsuits and even initiate suits. in this case, before this settlement, there were some comments that engineers made that were troubling if you are a fan of tesla and admirer of the company and musk, and the fact that this did manage to generate negative publicity for months in the lead up to this settlement at the 11th hour before this came to trial was damaging to tesla. it is also not a story that is over. there are more of these cases

coming from by folks who have been involved in crashes using autopilot and more to come there. jonathan: appreciate the operate . only two stocks can say they have had a worse year than boeing your today and one of them is tesla, down more than 30%, even with a 5% pop yesterday. from new york city, this is bloomberg. ♪ 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.

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jonathan: equity markets going absolutely no land. equity futures plumage unchanged. the week ahead is a busy one. it just starts later. lisa has a lot to say. cpi fed minutes tomorrow. let's turn to the bond market. yields coming back just two basis points. why is it important this time around? lisa: we are getting to the point where they keep surprising to the upside. i think that is fascinating and it is not a small one. today we will see one of the biggest.

you put this together with a lack of understanding of even where we are headed in terms of a neutral rate and you could get -- you could get messiness that feeds itself. i am watching it. jonathan: we want to talk about the euro and then we will get to the dollar-yen. really important ecb meeting coming up. did you see the euro lending survey? it was pretty bad, looking at a substantial decline for demand for corporate loans. it has been that way for some time now. lisa: it speaks to how hibernates are dampening demand or there is not that growth but there is in the u.s., where you are seeing loan demand. as opposed to this dilemma that

they face. on one hand airfare -- they facing a low growth backdrop. jonathan: it contrasted with higher expectations of a stabilization. let's talk about the japanese yen. hovering near a 34 year low. many expect it will prompt intervention by the boj. saying, we have to consider using if it rises with the outlook. the question is if that is happening right now. lisa: what i find more interesting is that it hinges on the cpi number. their hands are going to be tied.

my guess is, who knows about boj guessing, but my guess is they are waiting take see what comes out of that meeting to really understand how much they can intervene with a currency that stands to weaken substantially. jonathan: what is the most likely timing for intervention? they will most likely wait for cpi april 10. they would be fighting market fundamentals and that is the problem that they have. words will not buy you much if you are going into a surprise. lisa: can we start pricing another incremental hike or less easing by the bank of japan just because they do not have a lot of other tools to fight this? jonathan: let's get to it.

one more warning to china as janet yellen wraps up her trip abroad. any country who helped -- the foreign minister arriving in beijing to meet with chinese officials. anne-marie, where they listening? annmarie: firms worldwide are helping russia attain a lot of these materials and janet yellen wanted to hone in on the fact that anything that could be used as dual use, that is what the administration is going to go after. but it is awkward. we know that trade continues to flourish. lisa: how do you parse out good trade from that trade? if it helps the war effort, that it is problematic paring and that gives the money, you could argue it feels the fight in

ukraine. intercoms a fuzzy line being drawn. jonathan: words, policy, we want to see the policy. most people assume he will not see a policy shift until you get closer to the election. you might have to wait until september or october. lisa: we are learning that sanctions -- i believe this is the first time they have publicly talked about sanctioning chinese banks and companies that do business directly with russia. we are getting a sense of what some of that might be. jonathan: lawmakers returning to capitol hill today and pressure growing to pass aid for israel and ukraine but with a low majority to do so.

he is increasingly on that nice. marjorie greene only needs a vote or two to boot him. is the congresswoman willing to do that? >> i think so. she put out the word that she would wait and see what happens on ukraine legislation, but if mike johnson keeps his word and sends a bill to the house, i think that she could erupt. in early may, we would once again be talking about a new speaker of the house. annmarie: at the same time we had david cameron meeting with former president donald trump to try to pressure republicans to help johnson get that aid through. is the pressure potentially going to be enough to get some of these republicans to back off?

>> they will need concessions. it will have to be a loan, not outright aid. they will have to give them to ukraine. there will be other provisions in the bill that could delay it by a few weeks, but the international community is adamant that we need this. johnson himself realizes that we need this bill. annmarie: there will be a ban on lng applications. republicans want to stop that. if that bill gets through the house, can it pass the senate? >> not sure. they may not go along with something like that. that will be a close call. annmarie: i wanted to bring up what mitch mcconnell said the other day. he said it is a matter that deserves congress' attention and

he said he would support it and that it makes sense in a bipartisan way. do you see the tiktok bill coming to fruition before the election? >> i do. they have to talk about ukraine and there is a growing and intense debate on abortion, but by the fall, you will see a tiktok bill. lisa: i think i would like to run for congress because they work one out of every 2.5 days. go back on recess in less than two weeks. how much are the actually working at a time where we are talking about 18 ukraine, a deficit -- how much are they actually working to get stuff done? >> when there is gridlock, it means that they do less harm. i do not lose sleep over this. if they do not do much, i do not

lose sleep. the big story overnight is abortion. for all that people denigrate donald trump, he basically that the states handle it. he infuriated the far right wing , which is probably not a bad thing for trump. he has shown that he can be a clever politician. who knew? lisa: is that really true given that he has been selling bibles and getting out there? >> look who came out overnight infuriated by this decision. mike pence was at 4%, 5% during the primaries. if they are upset about this and the mainstream of the republican party, the more moderate

republicans like the proposal, that is pretty shrewd on his part. jonathan: we want to get to something you said that i think is absolutely critical. to see the british prime minister go to florida and meet with the former president to pass policy in congress is amazing to me. i find that absolutely stunning. annmarie: you have not seen it so outright and obvious, but it goes to show how much hold he has on the republican party. if the likes of david cameron are struggling to want to see the u.s. come to the table and get ukraine a done, they know they have to get donald trump involved. lisa: it is because he is the one pulling the strings right now in congress. it raises the question about how

different this woman is that we have a candidate who is a former candidate, pulling the strings in one house, and one half of congress. jonathan: this is about this government right now. it is absolutely amazing. let's get tiered bloomberg brief. >> the bank of japan will consider raising their forecast. the central bank is expected to discuss revising its projection for consumer prices higher. surprisingly strong results from annual wage negotiation are behind the move. the doj is widely expected to keep its policy study. president joe biden has out loan -- out find his plans to forgive student loans. his plan b would see loans reduced for millions or wiped out for millions of american.

the proposal is expected to face challenges in court that could stretch into the next year. the records keep coming from within's basketball. john the record audience. espn saying that the numbers peaked around 24 million viewers in the second half. those numbers are expected to rise later today. the most viewed basketball game, pro or college the men's championship five years ago. i do not think you can overstate what she has done for women's sports. lisa: that is a wise way to take the story. we are supposed to talk about london and how powerful her performance is.

it is not just simply the other choice that is there as some sort of messaging, it is actually the main story, and that is wonderful. annmarie: i love when the south carolina coach came down and said, i'm so glad that we won, but thank you, caitlin clark for bringing all this enthusiasm for the sport. >> should probably take the committee and the chair at face value. i think there will still be three cut this year. the data can go one way or the other, but that is the base case. jonathan: that conversation, up next. ♪

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jonathan: how excited you are.

a day ahead. annmarie: i have never seen her more excited about any. lisa: i do not want to talk about that. jonathan: that is the story of the moment. negative 500. yields are lower by two or three basis points. a quiet start to the week. cpi little later on. the case for three rate cuts. >> i think we have enough data in hand right now to justify the first rate cut. you could justify the first rate cut. you should take the committee and the chair at face value. i think their best guess is still three cuts this year. the data can go one way or the

other, but that is the base case. jonathan: signs of inflation calling. march cpi should be telling of whether it was a function for a journey drawn out materially. we show the progress' slowing. shannon joins us now for more. let's get into that, the details. what are you and the team going to be looking for? shannon: it is about the composition, going forward. was it seasonal or are we seeing renewed acceleration when you strip out shelter? the composition is key for tomorrow's report. we got stuck with rates, but if

the composition shows a shift, the fed will be moving in the right direction for sustained progress. i think it will be a little bit of both brady see a sticky trend in place with core inflation coming close to its fourth-quarter average, in terms of growth rates. we look for inflation later this year. lisa: on the margins at this point, given where rates are, they are almost inflationary based on what they do to the housing market and insurance premiums. inflation will get back to that level when the fed cuts rates. do you agree? >> when we think about what is inflationary, it is coming from a demand-side. we have somewhat underestimated

the strength of the consumer and resiliency of the economy. for consumer spending in february, they spent the fastest pace since the summer of 2021 in terms of service consumption. some of that is still feeding back and it is a question for the fed, if it causes sticky inflation. the are in an economy that still has a lot of inflationary pressure, whether through housing or other assets. it gives businesses less reason to ease prices. i think the fed is looking for a slower period of growth for a sustained trajectory. there is still pressure that needs to be stopped out before they are confident. lisa: something we have been grappling with is where commodities fit, given that we

have seen the resurrection of goods inflation and we see commodities like copper, silver and gold. is it disinflationary? does it deafen growth, or is it a sign of how much demand there is on a global level as we see a benign backdrop? shannon: i think it is a little bit of both. they remain pretty sturdy, in terms of demand. i do think it is inflationary, at the end of the day. we expect the headline to absorb over the past month. when you strip out some of the commodity effects, we are looking for a return to deflation. i do think the normalization we have had will continue to get

some deflation, just not as much as we have over the past year, which raises the bar, going forward. raised by the composition is important from here, as we get back to that 2% target. annmarie: how much does that rally under the fed? shannon: i think they are paying attention to it. it is obviously a challenge for consumers to high on gasoline. those price levels are significantly higher. it really gets to the consumer. you are not really optimistic.

obviously, they feed back into the headline. i do think that they can look past some of the spike in gasoline as well, as they try to focus on the service side. it does tend to be sticky. i think the fed is in a position where they are trying to see sustained progress. we have a higher-than-expected data at the end of the year. they want to ease policy. they are in a very much data dependent mode. i do not anticipate that they begin to ease. it is getting somewhat

underestimated and you are seeing the market we ingest. i believe the fed will act as they warrant this year. lisa: they will say not at all and that they do not care, but we started looking at some of the deficit projections. how much does that factor in, given the fact that this is becoming a hangover and a self-fulfilling prophecy within the yields space. shannon: i think they pay attention to all these factors as we translate to yields come but they are not going to act to counteract those measures. i do not think the presidential

election -- the way that they communicate becomes more tricky. to the extent that the projections do cause yields to move higher, it could add financial tightness and because the fed to begin te's earlier. it comes down to the inflation data. the fed may not be as willing to push the economy into a modest contraction, since we are closer to those five plus handles. i think they are still focused on inflation. they have gotten closer to target before they began the easing cycle. jonathan: that cpi report right around the corner. 8:30 eastern time. we had a few bumps in the road. how many before they are no longer called bumps?

lisa: i was hoping that we would hear something different yesterday from the fed. let's cut rates. jonathan: still talking about high rates. lisa: yesterday, i said i share the difficulty. this morning we did get a little bit of data. we have small business optimism. here b.i. talking to large-cap investors. high inflation, high wages, issues with all sorts of potential. it is a different scenario. jonathan: equity futures negative by 0.1%. the brilliant mohammed joining

us. a lot more in the next hour. lisa: 100%. he has some interesting perspective. crazy. jonathan: amazing. the third hour of bloomberg surveillance is up next. ♪ 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?

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>> the longer the fed keeps policy higher, i think there is a potential that is going to feed through to the broader economy. >> the longer we are at these interest rates, it i do not think it will be much problem for the markets to digest. >> as the interest rate environment gets better, they will be tailwinds for laggards of 2023. >> titer for longer will build credibility. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: i should correct myself. the second hour of "bloomberg surveillance" begins right now, not the third. i am trying to press the

fast-forward. equities on the s&p 500 negative by 0.04%. a very quiet start of the week. monday went a sickly nowhere. tuesday basically unchanged. wednesday, firework start at 8:30 eastern time. lisa: and earnings are tomorrow, not today. we will be looking at cpi. how much that will change the narrative in terms of the bump in the road becoming the new transitory or potentially highlighting the disinflationary narrative so many economists and fed officials are buying into. i find it fascinating that in line is the new beat. it will be just enough to kick off the market and keep it going. jonathan: and an upside surprise as well. this is interesting. the relationship and what has happened with equities, because so for, the consensus has been dead wrong. massive upgrades.

a 1000 point swing and some of these calls. not to pick on chris harvey at wells fargo, but to go from 2645 to 5645 is massive. we were all predicating this rally on low interest rates, and that is not what is happening. we are reducing the magnitude, the amount of rate cuts that will happen in 2024, yet a lot of people are still very bullish on the stock market. lisa: there is an existential,, which is if this economy can keep chugging along with rates at this level, maybe they are not that richard durbin we will not go down that much -- maybe they are not that restrictive, and we will not go down that much. that is underpinning a lot of the optimism. yes, this looks high, but it is not as restrictive as people thought, because you can still see economic growth. annmarie: -- is the domestic

financial markets are fully priced for these fed rate cuts, which we continue to see the market push down the timeline. jonathan: i have seen that phrase a million times -- november, priced to perfection. listen to this. morgan stanley's michelson, soft landing delayed indefinitely. lisa: people talk about whether this is the immigration story, whether this is basically there is that much more diamond is him in the economy, but it raises the question -- everyone is ready to buy a dip that is not happening. we have not seen a down to present day since february of 2023. jonathan: the dips are very, very small. here is a snapshot of the market for you. bond market, yields 4.3917. call it three basis points lower.

in the fx market, 1.0870. crude $86.60 about. coming up, mohamed el-erian. citi's stuart kaiser. and meghan graper of barclays. we begin with investors on inflation watch. u.s. cpi data out tomorrow, followed by ppi data thursday. the former fed president jim bullard calling for three rate cuts, saying, at this point, you should probably take the committee and chair at face value. their best guess right now is still three cuts this year that is the base case. mohamed el-erian joins us around the table here in new york. good morning. mohamed: good morning. jonathan: let's get to that line from mr. bullard. your base case is still two. when do we start to see another

bump in the road, along with all the other bumps in the road? mohamed: i think it is going to take time. chair powell has made it clear he is willing to look through these bumps, to use his phrase, the inflation story has not changed. they will need overwhelming evidence it is more than a bump in order for them to change their views. jonathan: you think they are too sensitive to recent data and are not being strategic enough. what deeming by that? mohamed: if you look forward -- you talked about, last hour, business confidence -- there is reason to believe this economy may slow. if you are setting a policy not according to what may happen but according to the lags with which policy operate, you would be more dovish than you would be otherwise. if, however, you focus exclusively on the data, you will end up being too hawkish. lisa: you talk small business optimism. it came in at the lowest level since 2012.

sometimes it is hard to reach these gauges, especially because we have people on all the time saying it is broken. mohamed: this is really important. the big mistake made in 2021, when people embraced the transitory narrative, was they did not listen to the companies. the companies were clearly saying we have inflationary pressures in the pipeline, we have pricing power, we will pass on that imported inflation, if you like, that was coming in. this time around, listen to the earnings call. they are worried for the outlook for the rest of the year. i do think you need to listen to them, because often, the aggregate data does not capture what senses are feeling on the ground. lisa: when you say businesses, though -- we will hear from j.p. morgan. my guess was jp -- jamie dimon was raising concerns more broadly. when he talked about his own bank, my suspicion is that he is doing quite well and the bank is issuing another record quarter

in one way or another. how much does it matter that the pain is being felt in a small subsection of companies that are smaller, more leveraged the high rates, and more leveraged to a consumer that would likely be price-sensitive? mohamed: it matters, because they are also employees. everyone should read jamie's let ter. i've read it. there is so much content there. he has the situation where he is worried about the world. he says, looking forward, here are the things i am worried about -- sticky inflation, strong economy, complete change in global economy. but his bank is extremely well-positioned to take advantage of this world. why? because it has got a very strong balance sheet and dominate in so many different areas. this duality can exist at jpmorgan but not economy wide. lisa: you believe the fed should cut rates. do you think the risk of acceleration is overstated by

some? mohamed: inflation will be sticky. inflation will be absolutely sticky. we will get stuck at around 2.5% to 3%. i think that warrants, over the long-term, the fed read thickening the king its inflation target. it may not now but it may well tolerate it. service inflation has not come down quickly enough. and goods deflation is going to stop. inflation will be sticky, but that should not stop the fed because the 2% inflation target is too tight for a global economy going through a major rewiring. that is well discussed in jamie dimon's letter about the rewiring. jonathan: we are at risk of this conversation becoming circular, but let's run with it. if they showed signs of tolerating higher inflation, and you believe we are setting to get that shift east on the news conference with chairman powell,

if we see signs of that higher tolerance, doesn't that make it harder for inflation to come down? doesn't inflation become even stickier? isn't that the risk? mohamed: there is a difference between inflation rotations adjusting to 2.5% to 3% and, if you look at the 10 year breakeven, we are at 2.4%. we are not that far already. inflation being the anchored -- de-anchored. jonathan: whatever happens, this equity market is rallying. we have had bank failures, a higher rates, two wars, sticky inflation, people talking changing inflation targets, yet equity markets are absolutely ripping. what underpins our ability to brush aside issue after issue in the stock market? mohamed: one, top down, two,

bottom up, three, behavioral. economic surprise has activity around the world, including europe. the u.s. economic exceptionalism continues day after day. two, on top down, is policy. people truly believe, and you heard it again in the first hour on your show -- jonathan: not the second. [laughter] mohamed: but you have heard it. people believe the fed put us there. then you have a bottom up, very strong destructive technology coming along that could increase productivity. generative ai, life-sciences, then more spending on health care and defense. finally, the behavioral aspect. fomo. that is why you do not get these people react very quickly. put these three things together, it will power this market for longer than people expect. jonathan: i will ask you to

respond to this quote from chris harvey from wells fargo. you touched on this issue in your piece on "the ft." the bull market, ai's secure -- are we saying valuation metrics do not matter in a market driven by themes like this one? mohamed: yeah, i think they have been suspended for a while. it happened in tech and amazon, where people basically suspend their conventional wisdom about this. what hours trying to say was look longer-term, and you have got to factor in that the world is changing in a way that the markets right now are not even looking at. we used to have three really important tenants -- tenets. when the at -- one at the domestic level. now we have an economy with industrial policy and deficits out of control. on the global side, ever closer

globalization, integration of trade and investment. now we have weaponize asian of trade and investment and fragmentation. on the market side, now we are having fomo, we are having liquid instruments being created for illiquid tools. so fundamentally, if you look three to five year, this is changing. but right now, the short term factors are so strong that people should maintain this. you had, early on the show, someone released an in momentum vehicle. what does that do? overshoot on the way up and overshoot on the way down. lisa: m.o.m.o. -- "mo-mo" stands for " more momentum." -- mohamed: it is not just

inflation. it is about central banks around the world looking for alternatives to the dollar. so, yes, in october, the discussion was who was going to buy this massive issuance happening, and you have to keep an eye on all three auctions this week. jonathan: you went there. gold. you believe underpinning the all-time highs as central banks trying to diversify from dollar dominated assets? mohamed: the data is out. china, in particular, has been adding month after month after month. if you are outside the u.s. and witnessed the weaponization of the dollar, you would ask yourself what can i do at the margin? you cannot do anything major, but you can start at the margin, and i think central banks' buying of gold is indicative of that. jonathan: is that because of the state department or treasury, issuance or sanctions? mohamed: mainly sanctions, but issuance plays a role. annmarie: do you think now that this cap is out of the bag with

what the u.s. is willing to do, it means long-term de-dollariza tion? mohamed: the image you should have is people building real -- little pipes around the dollar. you have seen it not just in how they hold reserves but also trade. people have been shocked how russia has been able to trade as much as it has. it has built a very clunky, inefficient system, but that works, that involves four currencies. never anywhere near the dollar. what you see our little pipes being built around the system. they will not fundamentally change the function of the dollar but will make the dollar less dominant. -- jonathan: mohamed will be sticking with us. equities turning positive by less than one -- 0.1% a let's turn to dani burger. dani: mitch mcconnell has voiced

support for a bill that would face tiktok's parent company to create an app or face a ban. the yukon -- uconn huskies are back on top the basketball world, feeding perdue in the ncaa to win their second straight title. they have become the first team to win back to back title since 2007. uconn's record is 6-0 in national championship games going back to 1999. the u.s. will have to wait another 21 years to witness what most of us, maybe some of us, saw yesterday. williams from texas to maine were dazzled by a total solar eclipse -- millions from texas to maine were dazzled by a total solar eclipse. the path of totality traveled through several major cities, including dallas, cleveland, and

buffalo, new york. millions of saw the moon pass in front of the sun. jonathan: one of the great moments that brings humanity together. wasn't it beautiful? lisa: you did not watch that. jonathan: wonderful to be a piece of that. >> inflation is probably the most important thing to pay attention to. inflation will further the story that the economy is doing well. jonathan: just touched by that. the whole world stops, pauses for a common cause. annmarie: i thought it was wonderful. lisa: says the man who did not watch it, and i even brought the eclipse glasses -- jonathan: i was outside with the people, taking in the moment. lisa: you did not see the moment, though. jonathan: the traffic stopped, it got a bit darker. mohamed: with the people? which people? jonathan: in the local economy -- in the local community. this is bloomberg. ♪

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jonathan: so quiet this market is. i've never seen people so excited about the eclipse. yields lower by two or three basis points, 4.39 37. under surveillance this morning, all eyes on cpi. >> inflation is probably the

most important thing to be paying attention to. at least, that is how the market is going to interpret it. i do not think any individual inflation report sways the fed narrative, but inflation will further the story of the economy is doing well. as inflation continues to normalize, all of these things will be tailwinds for those laggards of 2023. jonathan: bloomberg economics expert in core cpi to rise 3.7% year over the year, the smallest gain since april of 2021. stuart kaiser rides -- writes it should prolong -- we remain positive on u.s. equity risk-reward. stuart, i am pleased to say, is with us. 282 days -- 283 now, since the last 2% pullback, the 12 longest streak since 1988.

what can you learn from a rally like this one? stuart: what you have learned is when the economic data is doing what it is doing, the market will behave accordingly. i think the fact is you have had very strong growth, inflation is easing -- not as fast as you may like, and -- jonathan: can tomorrow's data change that? stuart: it could. you would need a significantly high print. you will need internals to the inflation data that are troublesome. if you print out a consensus number, i think it is 29 basis points. if you print a number like that, equities will respond modestly positive. it is not as big an event this month in terms of client conversations. lisa: compelling, given the fact it seems this could be another bump in the road that leads to this question of whether or not we are getting it right. how far could momentum go?

we were just talking about chris harvey upgrading his forecast. we were talking earlier about the idea of 6100. are you getting on that train? stuart: coming into the year, we basically said, if you avoid a recession and the fed starts doing insurance cuts, the top end of your outlook has to be quite high. in that type of situation, you're talking high 5000 to low 6000. that is where the bogey is going to be. if they do, they will support equity risk. lisa: which raises this question that momentum feeds on itself. we talk new vehicles being created to funnel more money into momentum trades, and things that overshoot on the way up overshoot on the way down. do we have a sense where we are in that? are we halfway through the overshoot? mohamed: i do not know if we are overshooting it. the stuff that is momentum leadership should be momentum

leadership. these would be vstoxx last year where those small group generated earnings growth, that becomes momentum. the momentum trade is tricky, because the long end is tech heavy. most people trade along-short, which is utilities, real estate. hard to get momentum to have a negative return in a rising market, because you have low data living in the short leg. you really need small-cap to pick it up, because small-cap is what people were short and underweight. small-cap is an important risk metric. mohamed: staying on momentum, there is suddenly a lot on commodities -- how does that feed into the inflation story, particularly first and second round effects? stuart: we would categorize it in three spots. you have copper -- copper is growth sensitive. equity markets would read higher copper prices probably as net positive because it suggests a

net impulse. gold -- gold bugs have a lot of reason they do not want to own gold, so it is a lot to dissect bigger than oil -- oil is the most troublesome from an equity perspective. there is obviously a big geopolitical aspect to that as well. most investors said, unless oil starts to move, i will ignore what is going on in the middle east, or at least compartmentalized it. the move in oil is telling from an inflation and geopolitical perspective. we are worried about the surge in commodities, but oil is what we are worried about. jonathan: does the crude will address itself? is that the way you would view things as a policymaker, from outside looking in? stuart: oil has been tricky the last 12 or 18 months. if you told me you would have russia-ukraine war, opec cutting production, think most folks expected oil to maintain a higher price for a more significant period of time.

the u.s. is producing a lot of oil. there is probably discount oil being bled out of russia to other markets. the fed obviously is not going to ignore the price of oil, but the reason they look at core inflation, they assume that stuff is transitory and self-correcting. i think they will try to ignore it. other than immediately after russia invaded ukraine, you have not sustained a $90 oil price since 2014. oil needs to show as it can stay at those levels before we can really change policy based on it. jonathan: brent crude $90.55. lisa: i like this idea that you are not a gold bug, but mohamed was talking gold earlier. are you a gold bug? stuart: no -- lisa: he also commented on

having gotten it wrong a bunch of times, so that may be an idiosyncratic monitor. -- moniker. jonathan: stuart, thank you. coming up, meghan graper of barclays. the yield near high. live from new york city, this is bloomberg. ♪

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jonathan: equities positive by 0.1%. a little bit of a bounce. the small caps outperforming just a touch. in the bond market, new highs for 2024 in yesterday's russian down two basis points. i'm told that is important actions coming up the next couple of days. lisa: we are focused on the supply of debt into the country. we had 10 year tomorrow and a 30 year denomination on thursday. could it change the narrative? people worry about that.

jonathan: given how much everybody liked bonds to start the year, shouldn't they love them at 440? they were doing that at the start of 2024. lisa: people do not understand where the price-sensitive buyer is going to step in. that is why the actions are important because we got a sense of how sensitive people are. jonathan: you mentioned pimco before opinion he is talking about taking duration risks outside the u.s. because of some of the dynamics we have talked about. is that the sort of thing that resonates with you? mohamed: absolutely right. look at what is happening with the treasury bond, it could go higher.

two things are not happening here. a slower growth momentum and shepherd disinflation. i suspect that we could see the ecb cut off, if not more than the fed, which was unimaginable. jonathan: this meeting was a lie you go that far? mohamed: i think the most in quite strongly that june is when they will cut, something that others will not do. jonathan: the euro-dollar is away. we share this quote on the program yesterday. i would like to get your response to it. the huge difference that they are seeing between the european central bank and the federal reserve. the fence as they do not know when it will start the rate cuts no but talked about the expected pace of cut.

they have all but announced the first may cut but insist the path thereafter remains virtually invisible. how important are those distinctions right now? mohamed: it is important and counterintuitive. having a huge impact on relative pricing between europe and the u.s. lisa: it raises the question about parity and whether you think that is possible, given that if the ecb does signal with more definitive ms., it could lead to a devaluation. mohamed: it is a possibility. the signaling that has happened -- he says he does not know where the interest rate is. if you do not know where it is,

it is hard to figure out where you are going. when he is asked where is it, he distances himself, saying it is a collective view of 19 people. but when asked directly, he said come i do not know where it is. and yet, we know where you're going to end up, which is a little counterintuitive. jonathan: it is higher than it was before. mohamed: that is the correct answer. it is significantly higher. 2 3.5% than anywhere that we have heard about. i think he was absolutely correct when he said 100 points higher than where they suggest we might end up. jonathan: what will force them to close the gap? is it a conversation they refused to engage in? mohamed: you can hide i data

dependence for a long time. that is what they are doing right now. the problem with that, that i keep stressing, data dependency is a backward looking concept. at some point, it becomes a real problem. jonathan: we look forward to the decision coming up. under surveillance, some top stories for you, seeing opportunities. the worst-performing groups so far this year. this despite the warning that investors should stay away from equities more broadly. front and center for me away from these commodities, overweighting commodities, sticking with commodities because of inflation risk. lisa: they see that coming from demand-side. those ideas are paired together. it is tied somewhat to the idea that yields will stay here and go lower.

you also are betting that yields are going to go lower. it speaks to the goldilocks getting baked in. annmarie: the question i continue to have for commodities is, is this temporary? can we actually see this gearing up to the year and daca they are reaching their peak in the summer. people are putting on how high this market could go. jonathan: we are not out of the woods yet with inflation. it raises the risk that inflation will reemerge. we were having a conversation with stuart kaiser about how sustainable brent crude is. let's look at the global economy. how sustainable do you think it is? mohamed: impure growth trends, it can be absorbed.

i do not know how this will impact growth behavior. they react. you might think it is transitory , but it does impact how they think about standards of living. that is the big uncertainty. jonathan: they could cut climate again? mohamed: and wage behavior could change again. jonathan: tesla's ex ceo says it is a shame that they might be scrapping the low cost ev because bringing down the cost of eds is the key to their adoption. i think we can agree on that. where is this ongoing? yesterday it was up by 5%. annmarie: elon musk came out with a pretty vague denial when the taxi report out. he had a weird smirk emoji on

twitter. when it comes to the low cost car, it just seems like elon musk does not want to have that competition with byd in china. lisa: what struck me read the discussion about technology for technology's take. his tesla a tech company or a car company. it is wanting to be a tech company, but it is looking more like a car company. that seems to be what elon musk is trying to fight. jonathan: promise after promise of certain things being released and then not being released or developed. annmarie: part of it is that there is bad news on reuters and then something super exciting coming down the pipeline, it is a little bit of oak and numerous. lisa: he wants someone who is an

idea generator. you want someone who is provocative. it becomes more challenging. jonathan: it works. the stock was up. pricing in two hikes seeing. expecting more. >> you should probably take the committee and the chair at face value. still three cuts this year. of course, the data can go one way or the other, but that is the base case. jonathan: can one number and smiled change that for you? it might be three cuts, down to two or nothing. mohamed: i think i'll stick to two for a while.

whether it is two or three is not the issue. lisa: we saw that they came out with a new projection in june. then they came on to say 150 basis points entirely in this year. mohamed: what we need to happen between now and june to get 50? lisa: they say the economy is not as strong as it seems. why do you reject that kind of idea? mohamed: i think the economy is weakening, but to get enough to prompt a 50 basis point cut the fed? i do not see it. lisa: if they cut and then they did not cut again and said they were done, do you think that is appropriate? markets have been pricing a

greater number of cuts, even as we have seen people moving away from rate cut this year. mohamed: to be clear, i do not see a 50 basis point cut them about if it were to materialize, that would be a massive policy mistake. he would panic the markets and create dislocation in the market place. annmarie: i want to ask about the jobs report in terms of immigration. how much are you buying that this is an economy that is becoming bigger and not tighter? mohamed: it is on the demand and supply side. it is a good story for the market. but for u.s. domestic labor market, immigration has something to do with that, but there is also a good demand-side story. it equals outcome of that if we did not have the supply story, we would be in a more difficult

place right now. jonathan: i am not satisfied with the response i have had on this program so far. i do not understand how they can point at the evidence that they are tight when the reason that is not wage growth is because of the supply-side story that everyone is pointing to. the supply-side story has become a rebrand of what is developing right now, mass immigration, which is laying on wages. isn't that what is happening? mohamed: this is a supply-side story. what they point to, they look at a few indicators, that they do not think -- it is a supply-side story. participation went up. it could change.

you have to conduct monetary policy with what you know and what you expect. if you start being sensitive to political issues, then it becomes problematic. you take into account the promise and it is true. he would have had -- you would have a different view of the world. jonathan: positive by zero point 1%. let's get to the bloomberg brief with dani burger. dani: pfizer plans to apply for approval after new test results. rsv is a flulike illness that affects elderly adults and babies more severely. blackstone is taking a deal. they have learned that the firm may team up with the billionaire owner for the buyout. they have a market value of 5.6

billion dollars while the chairman owns more than 70%. gm pesci is autonomous division is set to start testing again in phoenix. they could be back behind the wheel as early as today. one of the cars struck and dragged a pedestrian last year in san francisco. the company had not set a timeline for deployment. that is you are bloomberg brief. jonathan: up next, bond yields studying. >> i think it will be difficult for yields to rise from here. that -- jonathan: that conversation, up next. ♪

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higher. bond market yields a little lower. all eyes on crude recently, backing away the highest going back to october. yields studying from 20 -- 2024 highs. subadra: i see this environment as different than what we saw the fourth quarter of last year now the fed bias is clearly towards easy. they have told us that they are thinking about rate cut in the second half of this year. that kind of mechanically puts a cap on how high yields can rise from now on. jonathan: the 10 year closing in. megan graber writing, we think that any easing cycle in response to lower inflation

should be priced in. clearly doing fine with higher real rates. she joins us for more. is that problematic for credit, with spreads trading very tight over the last few months an meghan: -- few months? meghan: i think it is really positive, motivated by underlying yield. if it continues to be elusive, our strategists have the view that we should longer yields trend substantially higher, not lower. i underpins the bid that we are seeing from an array of investors in the credit markets. jonathan: i was wondering how many bricks we have removed from the maturity wall. how much smaller is that now? meghan: we certainly have not lost any steam.

what is the defining force but taught -- behind issuance is this theme. if you have maturity into early 2025, we are seeing borrowers pull that forward to take advantage of the technical backdrop. i was on the road with some of our clients in europe. a wide cross-section. the average issuer i spoke with was deliberately or two thirds of the way through their needs, which is pretty astonishing when we are only three months into the year. i think it is fair to say that pulling forward, tackling those maturity walls is well underway and something that will continue to fuel activity. lisa: i am struck by the difference between the u.s. and europe, especially with loans in

your region, showing a substantial decline in the first quarter. is that consistent with what you see and hear, and how different it is? meghan: the landscape has really changed. there is an anticipatory factor talking to european corporate's, trying to get ahead of a divergence of policy, going forward. you are seeing a decent number of non-us domicile. they wanted -- they want to open up multiple funding avenues ahead any change. i think you are seeing access to long-duration, a long-duration bid for those borrowers, so there is not any eggs, but there is preparation happening, as we

watch this larger subset of corporate and banks starting to appeal to the dollar market. mohamed: when you look forward, is it lower than baby are now, where you start worrying will by the issuance? meghan: the interesting part in talking to investors regularly, on point come in terms of where we are forcing the dialogue, it feels like down to 4.5%, you should see a healthy bid. also from traditional pension and insurance money. we have a ways to go. lisa: what you are talking about is fascinating, that maybe you are seeing demand come down because a lot of the borrowers are going to the u.s. market to raise money. is that really what is going on?

the u.s. is considered the most robust place and most consistent place to raise cash. even foreign borrowers are coming here rather than going to their home markets. meghan: some of this was a bit counterintuitive. you see a rash from non-us banks in january. out of the gates in 2024, you saw many of those borrowers staying in their home markets for that first bout of issuance. we look at this april, which will be a finance centric calendar. it is really about the diversification piece. if they took advantage of euros in january, making sure that they reengaged with investors in the u.s., they mitigate the risk , moving forward. it is not wholly obvious right

now with the tone having been more driven with a bias towards good news at the moment. downside is noticeably shrinking , so it is trying to lay the groundwork for volatility ahead. they are about as good as they can be and priced to perfection. annmarie: since we are talking about issuance, i want to bring up the monthly budgeting review. increasing $133 billion, how concerning is this? how concerning is this for the second half of the fiscal year? meghan: i'm less concerned about that because i think fundamentals are in good shape. from a fundamental perspective, they are defensively positioned. many operated as though a recession has already happened.

use cash on corporate balance sheets having increased meaningfully. growth has slowed. even if we see a departure of that later into the year, i do not expect there to be a material reversal in the near term. jonathan: thank you. we will leave it there. the latest on fixed income. some final thoughts. a big week ahead. cpi tomorrow. we have bank earnings on friday. out of those things, what are you focused on? mohamed: cpi and ppi. jonathan:jonathan: and then bank earnings. bank earnings -- and then bank earnings. jonathan: bank earnings after ppi. mohamed: interest has picked up

and differentials are healthy. ppi and cpi is where there is a lot more uncertainty. i think the unknown will be with the disinflation, persisting long enough to come down. if you put me on an island and pick me up in a years time and asked me what is the one set of data i would like to know? i would ask, what is happening with the different components. lisa: you think they should go twice this year. you think that they should adopt an easing policy. you actually disagreed with the market longer-term pricing in a significant number of cuts. can you talk about the distinction between your view and where the market is at? mohamed: it has to do with the economic weakness ahead of us.

longer-term, if you look at where our star is, but i think are the right premiums attached, it is hard to see the fed cutting more aggressively from where they might end up this year. the fed assumes that they will cut even more. i am above the market. jonathan: this is great. there is more chance of you picking me up and taking me to the island. just one of the guys. i know. working class. mohamed: did you say hello to the people downstairs? jonathan: they were celebrating the eclipse. lisa: elbow, elbow, wrist, wrist. you know he has a cancel in his town. -- castle and his town. -- in his town. ♪

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>> i don't think any individual in place reports report sweats the--sways the fed's narrative. >> i don't think we need these rate cuts. i think markets have digested these interest rates just fine. >> the fed could very well not cut interest rates. >> i believe there is no rush to cut at this point. >> the fed may get that

supply-side increase and still see inflation slow. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: the third hour of "bloomberg surveillance" begins right now. live from new york city, good morning. for our audience worldwide, this is bloomberg. s&p futures positive by 0.1% higher after being virtually unchanged on the s&p in yesterday's session. plenty of commentary from the likes of morgan stanley, evercore, goldilocks overextended. mohamed saying maybe there is a slow down below the surface. lisa: and he pointed to small business optimism. he talked about the earnings we have to look at that speaks to more concern by executives that are looking at inflation still being sticky, consumers that are pushing back on pricing, and them struggling to pay the higher wages and inflation and generate the revenues to keep

themselves in business. jonathan: consumers are struggling with the higher rates as well. we talked about this quote from the fed survey. the so-called perceived probability of missing a minimum payment over the next three months has risen to 12.9% for the month of march. that is the most since the pandemic. for most people, these interest rates are the problem. lisa: you put this well about immigration, the fact it is keeping wages down when a lot of people need their wages to grow to keep up with inflation. this speaks to how there are pockets getting badly hurt by rates where they are. it may not be reflected by the mega caps, and that difference is starting to weigh on certain people's expectations of how far growth can go. anne-marie: this is why i was keyed into the uptick of individuals who had to go out and get more than one job because they can't afford their bills right now. if you think you are on payments, whether it is autos, mortgages, or just grocery prices, the summer gas prices, that is a concern under the hood

of this stellar top number. jonathan: does that speak to why the president has struggled so much in polls? annmarie: exactly, because inflation hasn't gone away. it is also the perception of you go to the grocery store and your room or where prices were before the pandemic. prices are not going down to that level. the rate of change is going down. that is hard to communicate. jonathan: we have talked about the inflation of the last four years. that is still a bill people are struggling with. lisa: it is still 25% for certain things. think of how much higher the bill is now. feeding a family of four, theoretically when you go out in new york city, it costs double what it did four years ago. but if you think about'it from the restaurants point of view, they have to pay higher wages to their employees, paying higher fees for the upkeep, and even rents are going up. it is a difficult situation. annmarie: john authers has a brilliant chart out, presidential food fight.

for president biden, it is the highest level of inflation for food going back to nixon. this is where politics and a healthy economy get difficult. jonathan: have you noticed the inverse correlation between services and prices? price up, service down. have you witnessed that, too? it is not just a new york thing. lisa: it's not. i don't want to go there. and you have to pay the tip. jonathan: it is included. lisa: heavily suggested. i don't know what to do with that. when you get a coffee and they make it, i feel like it is important to tip. jonathan: i think it is an important change. america is 20 years behind on fintech. most would agree with that statement when it comes to payment technology. it has not been adopted here quickly compared to asian, europe, or latin america. but now they are starting to bring machine to the table, like they do in the u.k. they bring machine to the table, you swipe the card, and they turn the tablet around to you while you are sitting at the table. 25%, 30%, shaming you into

clicking the high one. lisa: or if you are buying something. the difficult one for me as if you go to a bakery or your butcher and you pay for something, then they turn it around and it suggests a tip. what do you tip for? if they just get something from the counter, do you tip for that? or do you not? is it offensive to them? there's a lot of psychological guilt aspects to this. jonathan: you get shamed into it. i am a good tipper. i like to think i am. i have adopted the american approach. lisa: but do you tip for just buying -- jonathan: i will do a dollar for a coffee. that seems like baseline. which works out to about 20% depending on where you buy your coffee. based on new york prices. equities right now up by 0.2% on the s&p 500. the stocks with a bit of a bounce. in the bond market, 10 year

treasury-year-old lower by 4 -- treasury yield lower by four basis points. coming up, jp morgan on the soft landing outlook. so carpenter looking ahead to inflation data. and afsaneh beschloss on the fed's rate cut path. investors in wait and see mode. the camp ready saying, the backdrop of better-than-expected growth, slightly higher inflation, and a commitment to three rate cuts are driving our overweight to stocks. phil is with us. let's get to it. you love bonds and stocks. you have loved it all year. why hasn't the story for you? -- why hasn't the story changed for you? phil: it is like seeing an eclipse without the special glasses. now the glasses are on and we can see the soft landing view play out. when you say we love stocks and bonds, i want to be clear about something.

the soft landing view that was hope is now reality. the fed is saying this hot inflation number that started the year are bumps in the road, and the story is essentially the same. at the same time, they took their growth forecast this year from 1.4 to 2.1, and said we are good on three cuts. they are easing into strength, which supports the nominal growth view. on the bond side, we are not bullish on rates falling or core bonds. what we are saying is we don't have a recession view, and we like credit. the credit story is not a homerun. it is additional yield over the index, which is a form of alpha. big picture things, the double sevens, the $7 trillion balance sheet that the fed seemed intent to keep, and the 7% u.s. deficit, these are major liquidity things that are pushing the nominal growth view higher. jonathan: can we start with soft landing? what is the definition of a soft landing when you're talking about nominal gdp growth and we

have 300,000 something in payroll growth last month? phil: the soft landing view for us, it is a difference from goldilocks. the soft landing view for us is about 2.5% gdp growth rate. trend rate is above growth. inflation staying at above 3% this year. that allows the fed to slowly and methodically bring rates lower, which is different from where we came into this year when we were at our new year for you -- new year eve parties. jonathan: what parties are that? phil: the parties you go to. [laughter] that we are talking about 60 basis point cuts. that is soft landing. that is not goldilocks. that leads us back to large-cap versus small-cap trade, and it leads us to the quality earnings story. lisa: let's talk about the gold

part of the goldilocks story. it is the same kind of party. there is a question about if you don't like bonds, and credit is in a homerun, if gold starts to make it into that 60-40 ballast in a more meaningfu y? phil: not right now for us. gold is not the commodity allocation we are looking to get. over a long period of time, we upgraded our view on gold because there is now to weigh risk on inflation. it is not that story of the last cycle where there was only downside risk on inflation. from a long-term capital market assumption, you could structurally put some gold. but right now, we think the income we are getting from the high yield story supersedes and is better than what we can get on the gold story, even though it has had a nice run. we are talking about inflation behaving. we are not talking about inflation accelerating. in that environment, we would rather have credit than gold.

lisa: it sounds like you are agreeing with mohammed, who said inflation would run hotter for a longer period of time, that the fed would allow this, that the fed would cut rates this year, but not as much as people would think, and it would not necessarily be all that restrictive because the economy is much hotter. phil: i don't think a quarter of a per cent is going to do anything for this economy. i think you have a u.s. economy so interest rate incensed. that is the reason this 550 basis points of hikes did not break the back of the economy and put us into recession. what they're saying is they are way into restrictive territory. they believe that even though the real interest rate is. much higher. they want to get this thing started. our base case is june or july, one cut, then we will see from there. lisa: why is that not bullish for small-cap companies left behind? phil: i think you will get a pop

in small-cap once we see the whites in the eyes of the rate cut. i don't know how you can create a long-standing view of small-cap over large-cap in a world where the fed is moving slowly. i think small-cap does well into reasons. one, goldilocks, which we don't believe in. that is multiple cuts because inflation is falling like a stone, or the start of a new cycle. you need a recession to get there. we are not underweight small-cap, but we would rather play the quality earnings story large-cap. lisa: what is the risk to all of this? phil: shelter cost. the fed is making a huge bet right now on supply side, immigration, and cbo predicts 1% inflation. that doesn't seem like a lot until you realize it is the highest since 1910. the other one is shelter costs. the line where the chair said

that they expect market measures of rents, things like zillow, to look more like what is actually happening for shelter to come down. they are making a huge bet on that. we believe if you look at the tail risks, the risk of them accelerating inflation is higher. that is why we would rather be in quality earnings companies. jonathan: it is strange we are willing to embrace the supply-side story in the labor markets. we are talking about tons of people coming into this country, loads of them getting jobs, then we are not talking about them living somewhere and renting houses. isn't that part of the story? phil: that is part of the story. i say this all the time. the three point 8% average mortgage rate that folks are paying in this country is good and bad. good is three point 8% we are not worried about someone having debt. the only problem is, their first time holmes became there forever

homes. because of that 3.8% mortgage. annmarie: are you talking about lisa? [laughter] lisa: i am talking about lisa. phil: that is the story. jonathan: the higher rates are supporting shelter prices? phil: yes. jonathan: isn't that weird? phil: because nobody wants to move. inventories are staying low and rents are staying high. as this comes down, people will have to buy homes over the next couple years, but very slowly. we are taking the glass half-full on that, the fact that the u.s. consumer remains very interest rate incensed. annmarie: do you believe what one of our guests said yesterday, the fact that if interest rates come down, it could solve the fed's issue with shelter because that is two thirds of the inflation? phil: yes, as long as -- there are a lot of components. as long as it doesn't spur the

service sector. but i am with you. that shelter number is the number one thing we are looking at through the end of the year, and what they are looking at. they are making a big bet that the market measure and shelter costs will converge. jonathan: good to see you. phil camporeale of j.p. morgan. equity sessions highs up 0.25% on the s&p. let's get to the bloomberg brief with dani burger. dani: blackstone is set to be nearing a deal for locks at -- l'occitane. trading in shares in hong kong were splits of ended -- suspended pending an announcement today. the chairman owns more than 70%. tesla has reached a settlement over the case involving its autopilot self-driving future. it involved a 2018 crash in which an apple engineer was killed on his commute to work while using the future.

the investigation found the driver had likely been distracted with a game on his phone, while also pointing to limitations with the autopilot system. the settlement comes one day before the case was to go to trial. the terms were not publicly disclosed. gm's autonomous driving division is set to resume testing of the robotaxi service in phoenix. drivers could be back behind the wheel as early as today. gm had grounded the fleet last year after one of its cars struck and dragged a pedestrian in san francisco. a spokesperson says the company had not yet set a timeline for deployment. that is your bloomberg brief. jonathan: next, boeing oncoming issues. >> they have a reputation of safety and consistency. you simply cannot compete. that is why everyone is worried about boeing. we have to get boeing back to the point where it produces an impeccable product. jonathan: that story is up next. live from new york this morning,

good morning. ♪

jonathan: stocks positive by 0.3 percent, looking for a bounce after a quiet start to the week. yields lower by four basis points, taking out some of the high from yesterday's session. the commodity market pretty steady on crude. $86. this morning, boeings ongoing issues. >> you are looking at airbus and boeing as purchasing airplanes. but you try to find the best quality, the best price, the best operating cost without the reputation of safety and consistency. you simply cannot compete. that is why everybody is worried about boeing. we have to get boeing back to the point where it produces an impeccable product.

jonathan: the plane maker may not have delivered any of its 777 jets in the first three months of the year. the delays adding to the company's cash flow concerns. boeing also they sing another investigation after a 737 engine cover came apart during takeoff in denver. josh ferguson is with us with the story. what are we expecting on deliveries? george: we know it is not going to be a good delivery quarter with the faa review of their manufacturing process. we are thinking it is about 70 737s. a lot of them will come out of inventory. it may be up to triple sevens -- 777s, 787s. i think the market will look more towards earnings and see how bad cash burn was during the quarter. jonathan: can you tell me what

is happening in the factories? are people sitting around not able to do anything? what does it look like at the moment? george: i don't think it is people sitting around with nothing to do. i think one of the ways boeing will push deliveries this quarter will be they have a lot of inventory. they have inventory of 737s that are built. they need modifications before they go to the customer. they have 787s in the same position. if you go to boeing, there are some people reviewing the manufacturing process. there is probably a slow level of manufacturing going on in the factory. but there is probably more in getting the airplanes built but not delivered, needing slight modifications. getting them out to customers, trying to get them off the balance sheet. they become a pain from a maintenance standpoint because they have batteries that need to be maintained. they become a real drag. lisa: a lot of people are

grappling with when this story will take a corner. how much we are seeing a deadline for when we will have investigations finished, some sort of sense of who the successor is going to be of dave calhoun, and when they can start rebuilding at a time when it is a duopoly and a lot of airlines depend on them? do we have a sense on that? george: it is difficult because the aerospace industry is just not a fast industry. everything takes a little bit longer. i suspect we will be well into second quarter before your hearing about the manufacturing and what boeing is putting in place to ensure quality. i expect it will be well into the third quarter before you hear the ceo change. i think you have two quarters of variability. i think a lot of people are hoping that by year end we will know who the ceo's, we will know what the game plan is. i expect that rates will get better in 2q and 3q, but not be

at target 737s until the end of the year. lisa: to expect any good news at all coming out of boeing? george: i suspect not. the other challenge is you have a management team waiting for the next one to come in. they are waiting for the board to go out and find a new ceo. i don't know that they have an incentive to try and show you a good face. i don't think they will show a bad face, but they will give you the straightforward numbers, and they don't have all the answers about where boeing is going because they are not the management team that will take them there. i think you will find a pretty bland matter of fact first quarter report. lisa: how much is airbus taking advantage of this and trying to consolidate how much an advantage they have? george: they would love to take advantage of this, but the challenge is the supply chain industry is strapped as well.

airbus has the same problems with their supply chain. not to the same degree but they have the same problems that boeing has, and that is that the supply chain cannot find workers as well. the supply chain is bouncing back after the pandemic. they have to be very careful about their quality. the challenge for airbus is they can't really make as much hay out of this whole event. one of the interesting things we are seeing out there as we see spirit airlines, talking about not taking some of their airplanes from airbus, jetblue as well. what we are seeing is airbus working their customer base to figure out who wants airplanes now, who might be willing to take them later, trying to get conquests. i think they are working with that. they have loved to get united into their books. jonathan: do you see that flight taking off from denver? the engine cover? what was that?

lisa: it was falling off as they were going up. these are not headlines you want to hear. do we hear more about this now because we are more attuned? jonathan: i was asking myself that question. i don't know. lisa: there have to be mishaps. so many passengers have mobile phones and are all taking photos and videos and posting it. now it just means another bad headline for boeing because the faa is investigating. jonathan: i think i will become an aisle seat guy. lisa: do you pervert the window seat because you can go to sleep -- do you prefer the window seat because you can go to sleep? or the aisle because you can get up without asking other people first? jonathan: it is control. lisa: which control do you prefer? jonathan: both. [laughter] lisa: he wants a private jet. have you ever bought the whole aisle so you don't have to deal with it? jonathan: that is ridiculous. like by two-seat? absolutely not. [laughter] lisa: i never would.

but there is always a debate with the kids about who gets the window, who gets the aisle. they all want the window to sleep. but if they are not tired, they argue over the aisle. annmarie: but you have control over the whole row. it sound like you're getting stuck in the middle. lisa: always. annmarie: that is awful. jonathan: window for leisure, i'll for work. get off the plane quick. i am just an aisle guy. get back home quick. coming up next, seth carpenter looking ahead to inflation data. that conversation just around the corner. equity futures on the s&p positive by 0.2%. in the bond market, new highs across the curve yesterday, to year and a third year. we have backed away since then. we are down three or four basis points to 4.3837. lisa tells me to get excited about some auctions. we have a three year note later.

$58 billion worth. then we will get 39 billion dollars of 10 year notes. $22 billion of 30 year bonds. the party starts later this afternoon. lisa: i think you could not sound more excited if you tried. jonathan: i was excited. lisa: let's talk about rate cuts. jonathan: that and the eclipse. lisa: the eclipse was fantastic. jonathan: i was excited about that. annmarie: and if you had a window seat? jonathan: brilliant. ♪

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jonathan: you never have to choose between the i'll end of the window in the bloomberg private jet. the aisle is the window. a couple comments like that on the bloomberg terminal. [laughter] you either fly first class with a private jet with bloomberg. tk's life. lisa: i will give you that. jonathan: everyone believes we live a certain life we do not. equities on the s&p 500 positive by 0.2%. equities are up 0.25%. let me tell you how quiet this morning is. on the terminal, there is a function where you can look at the most read stories on the terminal. the most read story in the last eight hours is a former fed president's view on rate cuts this year. that tells you how quiet things are in this market. lisa: it does feel like there is absolute stasis.

the one anxiety point is, what about rate policy? and somebody saying, you are fine is the most read story. we heard from mohamed el-erian that there should be apostle. jonathan: that is if something goes wrong. what is state street say about that? if i think 50 basis point cuts, i think problems, not supply-side solutions. lisa: that is what their argument is, the economy is not as strong as it seems. the point to strong business -- they point to small businesses. jonathan: it hasn't come through the bond market because yields have been higher, not lower. high off the session yesterday at the front end of the curve. we came really close to .80 -- 4.80. we are down three basis points

on the 10 year. we have been joking about the supply. we can go to the numbers again. let's start with the three year. $58 billion worth. tomorrow, we get the 10, 30 $9 billion worth. the 30 year bond later in the week, $22 billion worth. does supply start to reassert itself in a negative fashion in the same way it did back in september, october? lisa: i am not sure it is the supply itself because people have said that is not in play. what it is is a domestic buyer base that is more price sensitive. what is the rate they see us compensating them for the risk that the mohamed el-erian view of the world of higher inflation for longer is the correct one? that is what i am looking for. jonathan: take a look at dollar-yen. the euro against the u.s. dollar shaping up as follows. positive by 0.1%. dollar-yen is boring. unchanged at the moment. lots of suspicion the closest

you get to 152 the likely it is the bank of japan steps in. we got to 151.93 in today's session. the moves have been tiny over the last few days, really small moves. there is this idea that the boj will step in. i think the inflation numbers tomorrow will be important for the bank of japan as to what they can do. if you get the hot cpi print, they have a bigger problem. lisa: they have to deal at that from the monetary standpoint. they can't support it with some fiscal response. that is the reason why people are looking to cpi before they make anything significant in terms of moves. jonathan: our top stories look like this. treasury secretary janet yellen wrapping up for days of talks with her chinese counterpart, threatening sanctions for any chinese bank that aids russia's war machine. that comes as sergei lavrov arrives in beijing. i imagine that was a message for

him as much as them. annmarie: we have seen the u.s. talk about this, but this was more of a direct message from the treasury secretary what this could mean. but we heard from mohamed el-erian in the last hour talking about the fact that sanctions don't really work. what they do is create other markets. and potentially what we could see if there were to be harder sanctions on china in terms of these dual use cases for certain goods going to russia, russia will just find them somewhere else. jonathan: u.s. policy and the weaponization of policy, mohamed 's thoughts on this and precious metals was interesting. when you go to the record high on gold and we started to ask what is behind it, he started talking about u.s. policy and diversifying away from the u.s. dollar denominated assets, and we said, why? is that about sanctions policy or about treasury supply? he thinks it is about sanctions policy. this is the d dollarization theme.

lisa: or diversifying away from it more. that is why you saw the buying of gold tick up, led by china. that is why you have people front running, expecting additional purchases by foreign central banks of gold to continue diversifying as they go. that has been one of the suspicions behind the gold rally we have seen. jonathan: gold up by another 0.4%. let's get to the most read story on the terminal. two fed rate cuts this year, but former fed president bullard expecting more. he says, you should probably take the committee and chair at face value. their best guess right now is still three rate cuts this year. lisa: he doesn't want to make waves. i don't know what else i could say about that. jonathan: nothing else to say. and if that is the most read story on the terminal, i don't know what to say either.

lisa: it is not a very active morning. jonathan: it is a very quiet morning. it is a quiet morning and nobody wants to make big bold bets before cpi or earnings. jonathan: the week begins tomorrow. as the week of data kicks off tomorrow, the cpi fed minutes coming, and big earnings on friday, seth carpenter joins us to talk about a few of these themes. it is good to see you. i want to begin with immigration into the u.s. because the numbers are stunning. could you frame how big those numbers are, and the kind of forces they are having on the economy? seth: thanks, jonathan. before we get there, i am a window seat guy. [laughter] stay with me in the window seat. jonathan: i will fight you for it. [laughter] lisa: for sleep? seth: primarily, exactly. but on immigration, the numbers are really big. a big shout out to our u.s.

economics team led by ellen zentner. we spend a lot of time with folks, looking up these numbers, looking at our own take on the information that is available. the tech way really is -- the take away is a huge increase in the number of workers in the economy. if you thought the breakeven level of job creation each month had been about 100,000 per month, it is at least twice that. i do mean that is a big change. as a result, you hear comments like chair powell saying it is a bigger economy, a bigger labor market, not a tighter labor market. we are in line with that view. jonathan: visit inflationary more broadly in the economy? the additional demand and competition for housing, how does that play out beyond the labor market? seth: i think there is no doubt there is a demand component for this and a supply component. what we have to remember is on the inflationary side of things,

this is all playing out against a backdrop where consumer goods inflation have been boosted so much because of supply chains and the shifts we saw during covid, and those levels are coming back into place. we saw a rent inflation that had jumped up because people's housing demand had changed with covid. the normalization we are seeing there is actually more important than the additional aggregate demand we are getting from the extra labor supply. we are still looking for a disinflation to continue through the rest of this year. lisa: i am struck by how much fiscal policy broadly and federal policy has driven so much of the story and will continue to, in a way that makes it difficult to predict. i think not just about the immigration story, but the fiscal deficits that have been incurred as the government has given all these school stimulus payments across the nation. you had a projection about how deficits would increase either under the democrats or

republicans, and that the republican deficit would be twice as big versus democrats. how concerned are you about this? how much is this playing into the overall story? seth: i think it is impossible to ignore. it will clearly be a critical question that everybody is going to see what happens in november. who wins the white house, the senate, the house of representatives, and what policies are being pushed. the house view now at morgan stanley from our public policy team is the democrats biggest priority of her time has been infrastructure and green energy. a big extra boost for spend probably isn't there. for republicans, the tax cut and jobs act, the biggest priority. probably not another huge change there. we are thinking, the democrats, you get a bit more in terms of spending. you get a bit more in terms of tax increases under democrats, whereas for republicans you get

some tax cuts and you get some extra spending, hence the difference in terms of what happens under the two scenarios. but we cannot rule out the very likely possibility that we get the white house controlled by one party and congress either split or controlled by the other party, which adds another layer of complexity. annmarie: even if the white house is controlled by a republican with a split in congress, we will get tariffs and restrictive immigration. what does that mean for inflation? seth: great question, and i think it is exactly the sort of scenario that every investor has to be thinking about right now. tariffs, no question, on the table. former president trump has referred to it explicitly. i think we have to balance what we know has happened in the past, which is to say a bit extra cost for importers, some of which gets translated to final prices. however, we also know that last

time there was a massive hit to the u.s. manufacturing sector, so as a result you will get an adverse hit to growth, so that goes in the opposite direction for inflation. when it comes to immigration, that is the tricky part. if we look at the cbo's projection, already some reversion back to pre-covid rates of immigration. the real question is, what is the marginal effect of more restrictive policy? directionally, it has to be less of the beneficial supply boost, but also a little less of the aggregate demand. but it is coming at a time, say, in late 2020 five, early 2026 after a new administration is in place and policies have time to take effect where we already have most of the inflation run out of the system under our forecast and the federal reserve forecast. lisa: that is the longer term view that any of these policies wouldn't necessarily filter into true economic data for a while.

but do you see some of these proposals as spurring a market reaction that could shift the economic projection? for example, if you did get the scenario annmarie was talking about with higher tariffs, lower immigration, could yields spike to a level that could be per automatic -- problematic for the economy? seth: unquestionably. one of the most common sets of questions we have from clients are exactly along these lines. would that republican scenario be very inflationary? ? would it cause a further selloff in rates? lots of people are angling and seeing if they need to position for that. i will hasted to add, if we go back to last june, july, september, while we did see a big selloff in rates, there were a lot of narratives people were looking for, and we saw a reversal. i think this will be one of those tricky periods, where legitimate concern over one scenario that is very plausible people could easily run with for

a while, but we do have to wait and see how the election turns out to see if those policies go into place. annmarie: how do you plan for what the fed is going to do in 2025? seth: i think the fed right now is at a place where they are taking it one meeting at a time and one data print at a time. you referenced at the beginning jim bullard's comments about taking the fed's baseline path at face value. we have been our base case for rate cuts from the fed this year because we are looking for inflation to keep coming down. we are a little below consensus for tomorrow's number. we see disinflation continuing all year and picking up speed in q3 and q4. we think they will cut rates more. by the time we get to 2025, there will be so much more information about where inflation is, so much more information about how sustainable this increase in immigration has been that i think the fed themselves don't

really put much stock whatsoever in their own forecast for policy for next year. jonathan: are you still sticking with that mid-90's story? seth: the 1990's were great. that is when i became a real economist. graduated from college in 1992, got my phd in 1990 seven. that is where i became an economist. i don't think any two cycles are alike. you can't take one cycle and use it as a template for the next. however, lots went on in the 1990's. we were still seeing a rise in labor force participation, so there was a bit of that supply-side to the story. there was an overall aggregate side to the story. the fed pulled off a soft landing, which most people at the time and even now think can't be done. i think there are a lot of lessons to be learned, but we would be misguided to try to take it literally at face value. jonathan: a precedent for the unprecedented. seth carpenter of morgan stanley up with the latest. let's get you an update on stories.

pfizer's plans to approve for wider approval of its rsv vaccine has been spurned by new test results. a single dose of the vaccine produced a strong immune it response in adults 18 to 59, with conditions such as asthma, diabetes, or chronic lung disease. rsv is a flulike illness that affects adults and babies most severely. the market for adult vaccines alone could reach $11 billion by 2032. elsewhere, senate minority leader mitch mcconnell voicing support for a bill that would require tiktok's parent company to sell the app. the senator says requiring bytedance to divest lands squarely within established precedent and deserves urgent attention. finally, the records keep coming for women's college basketball. sunday's championship game between south carolina and iowa drew a new record, a tv audience of 18.7 million viewers. espn saying that number peaked

at over 24 million viewers in the second half. those numbers expected to rise when the final nielsen numbers are released later today. it will be the most viewed basketball game pro or college since the men's championship five years ago. fantastic figures coming out of that. lisa: it is the only one i ever tuned into. jonathan: we are not talking about the men's championship. lisa: they got the same message. jonathan: i love this. he spoke to bloomberg in the middle of the game. why wasn't he watching the game? lisa: evidently, he wasn't as interested because he is more interested to say, the fed, take them at their word. annmarie: because they don't have caitlin clark. jonathan: i love that. up next, rethinking the fed's 2% target. >> inflation will be sticky. inflation will be absolutely

sticky. we will get stuck around 2.5% to 3%. i don't think that warrants over the long term the fed rethinking its target. jonathan: that is up next. this is bloomberg. ♪ do you want to close out?

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jonathan: 41 minutes away from the open. equities up a quarter of 1%. yields down four basis points. the yield on the 10 year, 4.3777 . rethinking the fed's 2% target. >> i think chair powell has made it very clear he is willing to look through these bumps. they will need overwhelming evidence that it is more than a bump in order for them to chair their views -- change their views. inflation will be absolutely sticky. we will get stuck around to print 5% to 3%.

i think that warrants over the long-term the fed rethinking its inflation target. jonathan: controversial thoughts from mohamed el-erian. investors waiting to see if we will get another hop in inflation print. joining us is afsaneh beschloss. great to catch up with you. it is always great to see you. mohammed was talking about where inflation prints and our future. the federal reserve calls it a bump in the road. how many more bumps until they are no longer just bumps? afsaneh: that was the type of our letter last week. we should expect more bumps along the road, and i think we are seeing the different factors that are contributing to inflation changing, though. pre-covid, we had everything going into the inflation numbers, whether it was oil, whether it was commodities. everything was going up at the same time. what we are seeing today is very different in the sense that, for

example, oil prices are going up and we could argue they could just as easily, if the middle east tensions came down, there would be the oil prices coming down with them. that is why we do think the road will be bumpy, because those kinds of geopolitical events are kinds of things you cannot plan for. and at the same time, a lot of the supply chain issues that contribute broadly to the markets have disappeared. so, i would not assume inflation numbers would be super sticky, but they would certainly be bumpy. lisa: one thing we have been talking a lot about this morning is it is not just about oil prices, it is copper, iron ore, a whole host of other commodities that are being driven by demand, which is not necessarily as transitory. how are you understanding that in your investment thesis? afsaneh: there are factors like copper. we have seen chinese demand

growth because they are starting to produce more ev cars, and we had janet yellen talking to them, and the europeans concerned they are dumping the market with ev cars. that is a positive force, getting more electric cars into the market. that force will continue and push certain commodity prices with them and we will continue to see that. i think we are seeing some short-term impacts them up for example, specifically on copper. the other impacts are completely different. i think the biggest force is central banks trying to diversify their sources of reserves, post what happened to russia a couple years ago when their reserves got frozen. you are seeing gold become a value for the central banks that are trying to have, particularly in china, russia, and some other emerging markets, as a source of reserves. annmarie: we heard that for a second time. mohamed el-erian had a similar

point. but to the commodities, the whole story in china is that the property market is still deteriorating. when you look at ev's, both are cobalt and lithium. where we sing the spectrum going higher even though the stories are different coming out of china? afsaneh: i think what we're seeing are the factors that in china you have not been able to generate profits from the production and manufacturing of certain goods, but at the same time there are certain political forces and market forces and forces in companies to produce more goods for the green economy. by the way, it is not just china. you are seeing that in india and parts of latin america, in the u.s.. huge forces going that direction. it is not just the chinese

factor. i think we will continue to see these forces. there are also at the same time as the demand is going up for these goods, there are supplies being found in places like norway. it is a long delay to get these supplies into the markets. but no question that the supplies will also start dampening things in the longer run. in the shorter run, we will see bumpy ups and downs. lisa: how much more does the gold trade have to run given the fact that this diversification story has legs? afsaneh: this diversification story will continue. if we look over the last 50, 1 hundred years in terms of the place of gold in central bank reserves, it has gone up and down through time. at times when people were less certain about certain political factors, you have seen the place of gold taking a much bigger

share. right now what we are seeing is more of the medium-term impact. there is more central banks that will be continuing to add to their reserves. but it is not -- and some retail will follow that -- but it is not like a major change in the value of gold. gold does not generate returns beyond its asset value, but it does not have rate attached to it. i don't think it will be very long term impact. jonathan: very quickly, you are now on the board of carlisle. do you support baseball? afsaneh: i am not yet on the board. i am joining the board. i will have to look more for all the baseball teams that my sons are supporting. the orioles is definitely one of them. jonathan: very wise. great to catch up with you. afsaneh beschloss.

coming up tomorrow, things get interesting. cpi comes down. a lot to talk about tomorrow morning. lisa: especially given the fact we have the consulates of delta, cpi, and the treasury option. annmarie: it does look like delta sales, according to bloomberg's second measure, they fell. jonathan: the opening bell 34 minutes away. live from new york city this morning, good morning. this was "bloomberg surveillance ." ♪

a very good morning manus cranny and for jonathan farrow. this is what the fed needs to pay attention to at least according to mohamed el-erian. everything you need to know to get set for the u.s. start of trading this is countdown to the open with jonathan ferro. marcus on the edge ahead of a big inflation report and jim bullard makes the case for three cuts. we begin with