>> the consumer is starting to say these prices are becoming problematic. >> the consumer has softened a little bit which makes some sense. >> the one thing causing people to go home are these risks of stagflation we keep seeing. >> the biggest down risk is inflation and if it spikes higher that's the big risk. >>'s cpi data i think you will show this trend disinflation has stalled. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: live from new york

city this morning, good morning. for our audience worldwide, this is bloomberg surveillance coming in to wednesday with the nasdaq at all-time highs. equity futures just about positive. your lineup looks a little something like this. cpi data in america alongside u.s. retail sales neel kashkari, nikki bowman with a lot to say about this inflation backdrop. >> if they really want to give some sort of hawkish message this market is not listening. they want to rally on the disinflationary pivot regardless of the data it gets. fed chair powell yesterday coming out saying he's less confident in the disinflation narrative we are seeing near all-time highs in a massive rally in bonds. >> the consensus is overwhelming. i was going through the estimates. 68 estimates into the survey. 63 of them have put down 0.3

percent for core cpi. annmarie: we also have retail sales which a lot of people are saying might be more important because we get three point whatever it is on cpi. the fed needs to see consistency in that data but retail sales if they come in softer than we've seen consumer sentiments turning to drift lower. potentially that's one piece of data that shows maybe at some point the fed will be ready for that. jonathan: we have had some contradictory signals for the u.s. consumer. i was catching up with brian moynihan. his view is clear, the consumer is pretty resilient. if you look at that it's still pretty high relative to the 2019 average. it sounds pretty dreadful so which one is it. lisa: i think bank of america had an average fight go score for portfolio something like north of 700 so this isn't exactly the average consumer.

which consumer are we talking about? is it the lower income or some of the people who have savings and the ability to spend, right now it's clear people are feeling inflation but on the other hand you are seeing sales coming in strong a lot of places. >> welcome to the program if you are just joining us. it's kick off at the price action. on the s&p we are just about positive yields are a little bit lower. down two basis points on the 10-year. just reclaiming 108 on the euro. positive thereby 0.1%. coming up we will catch up with george as investors are weighing cpi print. we speak to john lever on new tariffs against china and the global equity market outlook. we begin with our top story. global stocks rallying. retail sales 8:30 eastern time. george saying we think there is

a risk of seeing a rounded up 0.3 core reading which would be music to the ears of most market participants yet as with all releases watch the details. george joins us to talk about the details. what element of this printer you focused on? >> we had a lot of one-off factors in q1. there was a big debate on wall street. and look at the price action as you recapped at the start. markets are confident. the rates market as well as equity markets are confident the stock will be in line or maybe softer as i quoted there. we would publish see a keep running here especially rates feel like they want to rally and i think it comes down to we have had two issues. a real strong jobs market, and the last reading we got a recur in print. maybe the jobs market is not as strong under the surface. looking at the same sort of outcome with inflation.

q1 was a one-off and we get this april meeting coming in softer led by the biggest lagging factor. that really comes in and can help out the inflation reads. jonathan: i think we are all familiar with how we respond to a downside surprise. less familiar with how we respond to an upside surprise more recently because of the fed's reluctance to hike. if you ask a few months ago i would tell you what markets would do. what are your thoughts on that today? are we reaching the limits of taking comfort in the fed's reluctance to hike. would we look at this is bad news getting another upside surprise? >> it depends on the upside surprise and the magnitude and composition as you know. the market is very confident going into this number if we get any sort of deviation to the upside i don't think we brak up -- backup the idea. again we have the 10 year at 450

which can quickly go back above and that's the one to watch as we get a move towards 5%. the last few big upside surprises losing 15, 20 basis points moves on the day. lisa: if we get a downside surprise but also a significant surprise in the retail sales howdy markets respond given the fact on the edges people are worried bad news is bad news. george: you can easily get spun around. this can be very tricky navigating the back-and-forth between how good or bad inflation was and is retail sales coming out of the pressure here. you can get retail sales depending on the way the readings coming through. i think were going to have to judge that britain -- judge that. lisa: jay powell really did seem

to want to cut and take rate hikes off the table. it seemed powell was trying to push back saying it would take longer to feel confident saying they've been surprised by how hot the data is coming in for the first part of this year. do you think he can put this genie back in the bottle? they've heard the dovishness and are not to go back. george: they've managed to do that number of times. there hawkish speakers in the day. if we get a market that overreacts to the softer inflation reading i'm sure to try and instill the idea they are not rushing to cut but i do think the genie is out of the bottle britain you've done it twice, they got the market excited. and you also just qt. the market is looking for any sort of signs of economic weakness to justify earlier cuts. annmarie: you are looking into the weaker than expected jobs report. can you walk us through what you are seeing? george: it's a whole host of

features. the early morning signals, there's a whole litany of crack's that are there. if you start looking at the actual annual growth rates of full-time and part-time. there is a reason the consumer sentiment keeps coming in weaker with stocks at the highs and unemployment rate low. the consumers feeling pressure from inflation, the lack of wage increases and worried about the jobs outlook. it starts to resonate and we are seeing layoffs. i do think the crack's are there. this is why i've been more dovish leaning that they should be prophylactic and ahead of the curve. i think a lot can change in the next few months. jonathan: certainly on the same page as mickey bowman. she is not alone.

he's got the same call. this consumer story is interesting from the equity markets perspective it's a big conversation whether you want staples or discretionary. what exactly are you in the team advocating for? >> we like buying dips in the front end. if we were to get a more protracted weakness on the economic data we have to figure out both into the summer. we have an election cycle that the markets are to contemplate and the consumer is the key focus here. lisa mentioned this idea we can think about it as a monolithic entity. the u.s. consumer reminds me of emerging markets and this will sound strange, with the u.s. consumer will go on credit. once it loses access to credit and liquidity with a sudden stop of capital inflow.

that can easily happen over the summer. . jonathan: some of the moves to the front end we had a double-digit print on the 10 year yield. i'm threatening to 5%. do you think that price action is in the mirror -- rearview mirror? >> they will be with us until the fed makes the decision on whether they start to normalize it. starting early being preventative, own the narrative on the rate cuts. you see its normalization. the more you deny and push it back you have to do bigger cuts later on. lisa: something akin to a true recession is the longer the fed sticks withholding things higher for longer. how are you gaining that out. george: you have to think

through the consumer and the slowdown there. it's more about if we get a catalyst from left field that really triggers financial conditions and markets going down. >> the natural econ 101 grinding lower the consumer has floating-rate risk and other loans. we had compositional issues. they probably don't own homes or the linkage back to financial wealth. i think the consumers under pressure, a slow burning economic drag. if we were to get a shock between them that would be the catalyst. jonathan: yesterday wench -- lisa: yesterday they talked a lot about the deficit. we are from jamie dimon worried about the deficit. they hosted a panel on the deficit people try to figure out how much to worry about that. how do you think about that in terms of when it becomes a market event given the fact the dynamics have to do with what we are talking about which is cpi

and growth. george: we have seen supersized treasury auctions could create their own demand and liquidity in the more we do this the more we increase our deficits and debt it starts to cut out credit. this is what matters most. will force the banks to start buying treasuries again. and though go back at the private sector level. jonathan: is there any sign of that happening. given what we've had in the amount of demand that's met. >> on the ign capital market side, that has its own sort of buyer base as well. there's been a higher focus on credit in general. it's this kind of constant they keep doing it over time and starts to compete. it doesn't require super high rates it just means is a lot more treasuries to be taken down relative to other bonds. jonathan: thank you.

looking ahead to that data later this morning. u.s. cpi and u.s. retail sales and now every time we talk abut the deficit. steve sitting here last week saying the deficit, they've been saying the same thing for the best part of 40 years. lisa: i did this panel on this and it was fascinating because people in the government were saying this is a huge problem britain if you look forward what's can actually trigger it? they said the biggest problem is the size of the treasury market is getting too big for primary dealers. and he's concerned about primary dealers not being able to absorb some of the flow. otherwise it's not really showing up. >> equity futures just about unchanged on the s&p 500 with an update on stories elsewhere there's your bloomberg brief with dani burger.

dani: china considering buying unsold homes per they are currently seeking feedback on the plan which would involve state owned enterprises buying homes at steep discounts using loans from state banks and turning them into affordable housing britain openai's cofounder and chief scientist is leaving the company since kiefer was a key figure in the ousting of sam altman last year he will be replaced by the company's research director in a post on at he called it miraculous and said he was confident it would filled technology that is safe and beneficial under current leadership. the secretary of state antony blinken has received mixed reviews for a one song dig in a ukrainian bar. he is reaffirming the support for ukraine as it demands more weapons for the russian offensive. here is the u.s. secretary of state and his guitar.

>> the united states is with you, so much of the world is with you. they are fighting not just for you, but for the free world and the free world is with you. maybe we can try something. ♪ dani: the performance of neil young's rocking in the free world drew criticism from some with the former economy minister calling for more action over words of support. that's your bloomberg brief. >> i'm not sure what i think of this. annmarie: he said made we could try something. and then started playing and i think people are still judging whether or not he pulled it off. as the war wages on. look at me.

up next on the program. the biden administration raising the stakes with china. >> not taking action is going to allow the takeover of so many strategic sectors by beijing that we have seen before, steel and aluminum, solar and now batteries and ev's. >> live from new york city this morning, good morning. ♪ [city noise] investment opportunities are everywhere you turn.

do you charge forward? freeze in your tracks? (♪♪) or, let curiosity light the way. at t. rowe price, we're asking smart questions about opportunities like clean water. and how clean water advances can help transform our tomorrows. better questions. better outcomes. t. rowe price

jonathan: equity futures just about unchanged on the s&p 500 two hours away from the big economic data paid equity futures going nowhere. yields are lower on the 10 year. under surveillance this morning the biden administration raising the stakes with china. >> we have indicated to china this is not an intention to escalate. or even to confront.

it is as set of defensive measures. we know that not taking action is going to allow the takeover of so many strategic sectors by beijing but we have seen before. steel and aluminum. solar and now batteries and ev's. >> china valley to take resolute measures in response to a fresh round of tariffs from the biden administration. the terrorist targeting imports of strategic materials including solar cells and critical minerals including a 102% tariff on chinese ev sprayed to discuss is john lever of eurasia group. wonderful to hear from you unless interested in how china will respond to this and more interested in what europe is going to do. is europe going to have to eat all this overcapacity coming out of china? >> until they have time to put in the tariff regime of their own. european strategy seems like

it's more about partnering with chinese companies to encourage domestic development in europe of these chinese producers they've been far more open on their roads that the americans have and it looks like their long-term strategy is to try and help build up manufacturing base the way the japanese automakers and german automakers have inside the united states. this is a big market opportunity for china to get in there because they are not getting into the american market anytime soon. >> we've seen this administration want to take a multilateral approach when it comes to china. why did they do this on their own and not wait for europe to be there with them? >> i think that raises the question about chinese overcapacity and industrial development or if it's about the united states ongoing national security concerns and the election which is looming large over all these decisions. joe biden cannot win this

election unless he wins probably all three of the blue wall states. and these ev tariffs get right at the heart of that auto production sector and if there's any doubt this is about the election look at the way they delayed the effect of these terms until after 2025 suggesting they know there's good to some inflationary impulse but what they are worried about is this china narrative stowed by donald trump than they are about the inflation. annmarie: when trump did this, biden criticized him saying they are inflationary prayed then we had the ambassador say she was asked about this and that link in terms of tariffs to prices largely debunked. what does this administration do? do you have an answer for them but i certainly do not. if they believe tariffs are inflationary. >> this is a relatively small number. there is also a delay but the fact is it's hard to see how these don't end up increasing

prices in some of the sectors they are targeting. one of things it's most interesting is solar cells. the united states as -- is very reliant on imports from china to deploy the magnitude and levels of solar that the biden administration wants to get out there and of course this runs contrary to that. it's good to make it harder to deploy in solar cells in the united states so they seem to be willing to take that head on and the threat from china is real and either this is in the long-term interest of the united states or their own short-term political interest. >> this isn't necessarily can get to be so inflationary i believe one report said $18 billion of goods. it's nothing in the schema trade relations in the u.s. economy. it's a signal of noise. you have a sense of what's next of what this is a predecessor to in terms of joe biden's policies and additional tariffs that could be levied. >> the thing to watch next would

be mexico. if this is about getting -- mexico obviously is a free-trade agreement with the united states. a lot of those goods can sneak into the american supply chain through mexico and both donald trump on the campaign trail and katherine tai at the white house called out mexico is the next place where they will be looking to get chinese goods out of this. it's a potential threat. trump tried using tariffs to that effect and i think that something the biden administration is looking at closely. lisa: i'm wondering if this is what you think is the correct approach given the fact it certainly seems like china is ramping up the tension, ramping up the pressure. vladimir putin in china meeting with xi jinping reiterating some of what they've been engaged in. how much do you see them sort of calling the bluff of the united states in some ways and saying a

lot of this has been lipservice we heard for a long time but does not have the teeth to prevent what we are planning to do witches sell cheap goods to the rest of the world. >> china has taken over the manufacturing supply chain of so many industries over the last 30 years with the help of u.s. technology and investment and it seems unlikely the u.s. will be able to unwind that or the u.s. would want to unwind that. given what he can do to consumers and prices. that said these are critical sectors the u.s. wants to be a leader in the future and it's very difficult for the u.s. to complete -- compete. so directly confronting them through tariffs is probably not the best way. the u.s. used to do this through engagement with china by bringing in the wto. obviously that did not work well. this will be a major long-term challenge for than whoever the next president of the united states is.

balancing those domestic needs with the national security and economic in china. annmarie: do you think we are at the start of a new trade with china? >> i think it started when china took the opportunity to take american dollars and finance our deficits and send us cheap goods. the u.s. started -- attitude toward that trade war started to shift in 2016 with donald trump's presidency and now there is clearly bipartisan consensus it will escalate for the next five to 10 years. jonathan: thank you. the story going away no time soon. breaking down the latest efforts out of the united states. this has nothing to do with economics and everything to do with november. isn't that just to remove this is an election issue. annmarie: 100 on what? there's not a single chinese ev in the united states. what the administration will tell you is they are looking at

potentially wanting to make sure that the walls are up so they cannot get here taking it that much harder. jonathan: are europeans just in a sit there and take it? lisa: it's a great question we heard emmanuel macron welcoming xi jinping so here is the question how much do they build walls and how much do they get divergent policies. >> much more on this story later. we will catch up with allianz global investors. two hours away. live from new york city, this is bloomberg. ♪ so, what are you thinking? i'm thinking... (speaking to self) about our honeymoon. what about africa? safari? hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment... ...on a ranch ...in montana ...with horses let's take a look at those scenarios. j.p. morgan wealth management

has advisors in chase branches and tools, like wealth plan to keep you on track. when you're planning for it all... the answer is j.p. morgan wealth management. life's daily battles are not meant to be fought alone. - we're not powerless. so long as we don't lose sight of what's important.

don't be afraid to seize that moment to talk to your friends. - cloud, you okay? because checking in on a friend can create a safe space. - the first step on our new journey. you coming? reach out to a friend about their mental health. seize the awkward. it's totally worth it.

jonathan: good morning. within striking distance of all-time highs worldwide here in the united states equity futures just about positive on the nasdaq 100 just about negative by 0.02%. going into two big prints. cpi and retail sales. getting to the bond market i want to talk about where we were the last time we did this. the two year on april 10 opened up 474 and closed at 4.97, a higher by more than 20 basis points. following a hot cpi print we had a few of them. lisa: i think about how far

we've come back down given we are ready 10 year yield around the same level as it was before we got the last cpi print so we've gone full in that time. the way the market is prepared is for a rally they are looking for some sort of positive downside surprise. 49% of investors expect a market reaction to cpi to be positive which speaks to the idea of everyone is looking for a reason to buy rates. jonathan: based on the price action we've seen we've rallied into this move in the equity market and in the bond market as well. let's finish on the euro just briefly prayed 10827 we are positive by 0.1%. that's a slightly stronger euro. as we've seen really muted price action. you wonder how high percentage we still are in either direction in two hours time. >> part of the complication today is the one to punch of retail sales and cpi. you have cpi in the front center

but on the other what happened to stagflation. now her back to goldilocks. you'll miss the narrative shift. how much do we get some sort of conflicting narrative discussion on the heels of some of these data points. >> stagflationary wins. you don't argue against that. does that work? annmarie: we heard yesterday from bank of america talking about this potential of people concerned about stagflation but when you talk about 49% are expecting the market reacting to cpi to be risk on. i come back to the previous month. that revision was massive. this was the problem being overly data dependent. lisa: this is the reason you have people talking about some sort of thesis. jay powell laid this out yesterday they are getting more confidence. that is up from 3.3% yes proposed for the lowest month

over month cpi rate. that's down from something that's been too high. >> the base case has not shifted. that's what really strikes me about chairman powell. has it really changed his ultimate view about what's can happen in the back half of this year. they're still a belief on the surface right now stated we are heading back down to a rate environment similar to what we've known in the past, they haven't shifted that even though the market seems to of moved on. >> the markets moving on without seemingly not engaging. if you're just joining us our top story investors looking ahead to cpi and retail sales in about two hours time. the survey expect in core cpi did tick down to 0.3% month over month. plus another read on the u.s. consumer with retail sales data ahead of earnings tomorrow. multiple reports saying the biden administration is looking to send $1 billion in aid to

israel. the first shipments is the transfer of 3500 bombs was halted. the white house is opposing a republican bill in congress it would force the president to send assistance to the country. that fight in washington heating up again. >> this is the balancing act the administration is trying to strike. they did not say they would stop all aid and what you are seeing is they have this procedural move telling congress we are continuing but what kind of message does this send to the progressive left that they have been trying to come on board saying we are doing our best to temper what's going on in israel. lisa: messaging versus policy has been the difficulty all along this only adds to the confusion. i'm more interested not just in with the u.s. is doing but what egypt is doing and what saudi arabia is doing in response to israel's move into rafah and wondering how closely the u.s. is speaking with allies to come

up with cohesive policy. jonathan: comcast betting on the return of the bundle. the cable company saying it will offer a streaming package which will include apple tv+, netflix and peacock at a vastly reduced price. the new bundle will be officially introduced later this month. lisa: stream saver? i feel like it's a grocery store. to me this screams of peacock listening to what you had to say as you were talking about how you can ever find what you're looking for, they are the worst at this. they have the lowest retention rate. starz only has the worst but in terms of their turn, you sign up for free and then cancel it. they've got the lowest duration of subscribers. this is what they are trying to combat by lumping it together with others. annmarie: apple tv+, netflix, that's not a bad deal.

but how do they decide who gets paid what out of this bundle? jonathan: i don't know but lisa is right, that -- this is about turn. once the season is finished i don't need it anymore. whether i will stick with that possibility but for a lot of people that are a bit more active and focused on this i would cancel that on the final game of the season in the final minute. lisa: i want to be one of those people who just can cancel and then reintroduce it. but that's why. they don't have that stickiness. it's something like less than a year is the average duration of their subscriber versus four years for netflix. i was thinking why are they doing this. jonathan: this is where the world has been going for quite a while. i'm not the only one complaining about this. lisa: it's legitimate. jonathan: fed chair jay powell looking to wait and see. >> the first quarter in the

united states was notable for its lack of further progress on inflation. we had higher readings but we did not expect this to be a smooth road but these were higher than anybody expected so what that has told us is if you're willing to be patient and let restrictive policy do its work. jonathan: jay powell reiterating the fed will likely keep rates higher for longer sighting lack of inflation progress. following yesterday's ppi report which powell called mixed. expecting headline inflation to stay in the range of 0.4% month over month in line with the latest cpi report. core inflation likely to moderate month over month. virginie joins us. if we get these numbers what kind of reaction to be expected in equities? virginie: it's a symbol of this transition period we are in

looking at growth deceleration and inflation stickiness but we know there is always a lag so i think the market just -- has positioned itself for a positive perspective and if we have something in line with last month i think we could have a little bit of a backup into the market. but after that if you want the information that we are in fact in this transition period, the higher for longer will stay there but i think if you look at some of the indicators, 80% of the inflation overshoot has been from auto insurance for example. when you look at rents for new tenants it's up about 1%. rent cpi is going at about 6%. this lag existing house prices are 6%. so i think you are in that transition and we just need to go through it. >> cpi is the main event.

that's what a lot of people are focused on today. some people are more focused on retail sales. how much more important to you as an equity focused investor are retail sales to gauge the exceptionalism of the united states versus an inflation story that's difficult to get a handle on with any precision? virginie: from an equity perspective if you look at it from that angle inflation is still important because it carries some pricing power or cost increases depending on where it hits so it is something you want to have in mind particularly with the impact it has on rates because rates particularly if you look at the growth style long-duration stocks will be impacted by that. the retail side clearly is a bit different. it's more stock related if you look at of the u.s. economy is

dominated by that consumption, understanding this lag and relative deceleration just a minute ago about growth inflation is very important in terms of pricing power. but also to understand if companies have ridden the revenue growth we see in margins and proctored profit growth not following and there could be a turning point. lisa: certainly the bond market is position for a rally. are you looking for a blind spot with respect to equities on the heels of something that really comes in line with respect to cpi and retail sales? virginie: from a bottom-up perspective whatever this location we might have it's all about price relative to her expectations of growth valuations there's always opportunities. what's it interesting is clearly the u.s. is done well i am

noticing really some factors in europe at this point for the first time we've had growth after five quarters of stagnation. especially in portugal and spain as well as france and germany we are seeing rate cuts coming. i think it's about 20% cheaper on the sector than the u.s.. when you have global pmi's moving differently than u.s. pmi generally that favors europe and of course the aspect of the lending condition is quite important because we have to remember 70% of financing in europe is done via bank lending versus 30% in the u.s. so i think there's a position in general to be underweight europe and i think it might be an opportunity to add to that area. annmarie: when you look at the international space how concerned are you about what you saw out of the united states and more of a tit-for-tat between

washington and beijing and how investors might get in the middle of those cross fires? >> let's put things in perspective, to major items. talking but 18 billion worth of goods versus a much larger amount, i think imported from china, 23 from the u.s. so it's very small. i think there's definitely a political move here. the only impact is on the lithium battery which is 20% of total export for china and of course 72% as a percentage for the u.s.. at the same time if you look at the export of china to the u.s. about 400 million versus 7.5 billion equivalent for europe. it is still very small so you have that political movement paid biden has never taken off

the tariffs that trump has put in. what's interesting is how do we think of the world decarbonizing in the face of very steep climate issues without china. we have to remember china has built a lot of this capacity because as the largest it wanted to contribute at a profit but to that solution and if you look it ev's and solar, etc.. what do we do with china. we delay dealing with climate for trade reasons. it's going to be really interesting discussion and the key here for china is what does europe do. annmarie: if you want exposure to that trade does that mean by europe? that's role these chinese goods are ending up. virginie: europe is a leader in electrification, absolutely. the key thing is that would have

a big impact i think depending on the election in the u.s. particularly for germany it's important to keep that legal from an economic standpoint. >> what happens to domestic sales of mercedes-benz to bmw if they don't put up the walls in the way the americans of done in the past 24 hours? virginie: clearly very large employer in europe and the auto industry. definitely a topic of discussion so you have that employment if you want aspect versus the long-term aspiration. and so ultimately what it will have is some level of collaboration that leads to that. to combine both and evolution in europe. >> we will find out which one it is.

thank you. is it about addressing climate change, big focus for the europeans or is it about keeping people employed at german companies. >> this has been one of the criticisms leveled that he has to pick one. taking a step back this has been the criticism levied at germany for a long time with respect to russian oil. there's been so much discussion that wonder how much others really does conflict. when you look at the overproduction in china they could supply 20% of the cars in this world if they start to export what they have available. this is not some that could be tenable. >> the bmw chairman recently came out and said you might end up hurting ourselves. elon musk in january said there were not trade barriers. very different views. >> what the german automaker say

publicly and what they might say privately could be very different on this issue. are you telling me they are ready to compete with the likes of byd and mainland europe and a big way. the same kind of tariffs from president biden in europe. >> are you saying they could say that publicly given the fact one the biggest markets is selling to china. a lot of lack of clarity. this is a big challenge. jonathan: here is dani burger. dani: boeing may face criminal prosecution after the u.s. justice department said it violated an agreement tied to two deadly crashes rate these settlement in 2021 had allowed boeing to avoid criminal charges but according to the filing boeing has breached it by failing to design, implement and

enforce a compliance. now boeing has four weeks to respond before the next steps are decided. london may get its first sizable ipo since february. raspberry pie is considering an ipo in the city. they did not disclose how much it plans to raise but seeking evaluation of $630 million. they first considered a listing in 2022 but has since raised funds through the likes of arm and sony's semiconductor unit. caitlin clark's wnba debut got off to a top start. -- tough start. clark shook off early nerves missing her first four shots and going scoreless for him was the first 15 minutes of the game. the fever host the new york liberty and that's your brief. >> we will catch up with danny again. coming up on this program we

will take you live to the qatar economic forum for discussion between john micklethwait alongside dena powell mccormick and that conversation is just around the corner. ♪

♪♪ sandals jamaica sale is now on! with rates from $199 per person per night. visit sandals.com

or call 1-800-sandals you have to make it. and if you want a successful business, all it takes is an idea, and now becomes the future where you grew a dream into a reality. the all new godaddy airo. put your business online in minutes with the power of ai. jonathan: good morning to you and welcome to the program. equity futures treading water a little bit later this morning. let's take a second now over to the qatar economic forum where the bloomberg editor-in-chief is joined by -- of bridgewater. >> we think this reality is here to stay prayed everybody thought we are going back to that world and now we've seen the market

correct and we think that's can it be the dance of the fed and all of us will have. you look at that and the divergences we tend to talk about the u.s.. you the thing you see in europe and other places is vastly different. it doesn't make sense to us, still probably wouldn't make sense to us if we had easing's this year. we look at europe and what switzerland jested. you see divergences in the world that are also interesting for investors looking for opportunities of how to deploy their capital. >> you look at europe having just come from seeing macron on monday. his whole pitch is europe is sclerotic. it needs to reform itself dramatically. even france which has done quite well since he became president has grown half as fast as america. for the past decade to the next

pretty see any sign of rebirth in europe. >> secular think there's a lot of things that fundamentally need to be reformed in europe that's been talked about. cyclically i do think they are in a better spot. if the u.s. i believe in order to slow inflation will need actual restrictive policy. the reality is to bring inflation down we have to slow the economy. that's the way it works. >> in europe they are much more ready to ease. >> slowing the economy europeans are brilliant at. >> at this point they can stimulate. they are past that hump and in that sense cyclically there's room for optimism in europe. >> maybe we could come up to the middle east as well. >> i want to follow up on what

was said. and the levers of almost all been used. we are where we are for the foreseeable future. i think it's interesting if you look at any of the poles you guys recently did a bunch of polls. if the number one issue on voters mind so while it's talked about a lot again from what the perspective of the federal reserve i actually think it's good to be a deciding issue in the u.s. election and i think people feel it in a way that is stronger than it's been felt in the cost of goods and the decreasing in wages. i think that's going to be the big issue to watch in terms of economic policy people think it's going to be national security or social issues i think inflation is number one. >> especially a think the economy but i agree with everything that was said especially because the type of

stuff the changes politics so we talk about social inequality. wealth is also incredible. one of the things with inflation is, there's a lot of stuff that creates wealth that is certainly blooming in this environment. so it's a subset of the population feels the inflation going in and a part of it feels incredibly wealthy and so it's both what dena is saying and the fact that it's tearing society apart from a socially quality standpoint. >> you were talking about what's happened in the last 10 to 15 years and why that wealth gap has grown so much and people who had assets, bridgewater is uniquely smart. if you had assets and your wealth and income rose and if you didn't you got really squeezed and i think that's

where you see the tension in that income inequality. >> this region obviously as you can see is a massive source of capital for financial firms to redeploy. in terms of a target for investment how do you see that? dina: over the last several years i've worked on these issues and been in the region. i see the genuineness of the desire to move forward on the reforms although imperfectly and certainly with some steps taken back. it's in the national -- u.s. national security interest of those are employed. once you get moving in that direction it's hard to go back and i think it's very likely, and we knew this that the saudi's and israelis were close to normalization. in some ways there is a saying

don't waste a good crisis. and this could actually be the final straw in those access of resilience and resistance. jonathan: you can watch the rest of this and all of our coverage on the bloomberg terminal at live go. that conversations pretty interesting. monetary policy unchanged for the rest of the year seems to be the consensus view on that stage. >> saying this is good to be the number one issue that's really going to affect the election. >> we will continue this in the second hour of bloomberg surveillance. coming up the former house speaker kevin mccarthy, david livingston and ian from new york. inflation data and retail sales just around the corner. ♪

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

i don't want you to move. the answer is i'm gonna miss you so much. you realize we'll have internet waiting for us at the new place, right? oh, we know. we just like making a scene. transferring your services has never been easier. get connected on the day of your move with the xfinity app. can i sleep over at your new place? can katie sleep over tonight? sure, honey! this generation is so dramatic! move with xfinity.

>> market can do well with the fed on hold so the good nominal growth has been supportive. >> we are still growing. >> we are just still running too hot for the fed to comfortably cut rate significantly with the economic data as strong as it is. >> the path to normalize rates and normalize its could be longer. then the market perceives. >> chair powell has been the

lead bartender on this. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. >> live from new york city this morning good morning. 90 minutes away from inflation data in america. 8:30 eastern time look something like this. u.s. cpi and retail sales then fed speakers follow up. quite hawkish over on the fomc the estimates this morning headline month over month 0.4 core stripping out energy. >> which could be the lowest reading of the year which is the reason why people are prepared to lean against this pivot party. you said serving drinks yesterday was he? he's trying not to everything he does, they say this is actually spiked. it's hard seltzer that seems to be the disconnect that we hear. >> the biases to cut interest rates and i think the base case

hasn't changed. the probability of that must've shifted. the talk about the loss of confidence over the last few months but ultimately they still believe they will cut later this year. annmarie: he says all those things lead us to believe that policy is restrictive and it looks like it will take longer. we will get there but it will take longer. looking at a month over month that bring cpi year-over-year at 3.4%. how any good data points to they need to get closer to 3% not even on the to handle he's looking for. >> is it enough to say we won't hike anymore? to keep this going given the fact we've gotten that they are not a hike. it's higher for longer if they don't cut rates at all, does that really have no effect on equities whatsoever. that seems to be one of the themes we have. >> i think it's the right one are we reaching limits of that. how much comfort can you take from data moving in the wrong direction because you believe

the fed won't hike. what about that phrase to credit investors. do you get to a point where interest rates are so pushed off into the horizon that it becomes a problem and bad news really is bad news. lisa: this is why you have people beating the bearish drum saying it will fall apart. and it might fall apart later than we previously expected. others say this is it. we can chug along at these rates and just move forward. this is the divide between people who want to rally in the bond market and the equity market at the same time. jonathan: equities and bonds have been rallying. equity futures at the moment, of just about positive on the s&p 500 and the bond market. yields are lower. on the u.s. 10 year. coming up we will check in with evan with stocks near all-time highs we speak to the former house speaker kevin mccarthy on the 24 election race and what the cpi print could mean for

markets prayed we begin with our top story. evan brown of ubs writing a risk on positioning has been informed by a simple premise. if central banks are cutting rates into an environment to our already healthy backdrop of phenomenal growth that would be unique -- good morning. do we have a uniquely positive backdrop for stocks. >> i still think so. maybe we've pushed out the timing of rate cuts a bit but the fact is we are in a healthy nominal gdp environment talking about 5% to 6% gdp this year. in the prior cycle we were under 4% on average and that's a good -- for earnings. that's the best since 2021. >> going back to where we used to be 20 years or so ago what is the new equilibrium if we can call it that? >> i think where we are now is

essentially the new equilibrium. i don't think we are getting back to 2% or below 2% inflation on a sustainable basis. 2% was more of the ceiling of the last cycle and it's going to be probably more the floor of the cycle. i know that the fed is talking about we have to get back to 2% but i think there's a little wiggle room there. i think when it comes down to it if they say those last few tenths of a percent are worth destroying the labor market they will hold off on that and there can be very sensitive if you start to see the labor market crack they'll be sensitive even if we are not at that 2% level. >> a lot of people been surprised about the strength of the economy and a lot of this is stem from the great fiscal transfer but we have incredible amounts of government money funded not just to consumers but also businesses. how much you can the fiscal

impulse overwhelming any monetary impulse for the for siebel future. is that the bet on equities right now. evan: certainly it is help the economy and certainly helped the economy coming out of covid to get those big fiscal numbers but i think people overstate the fiscal and this is an income driven cycle. real incomes have been improving significantly as inflation is come down. nominal incomes have been remarkably steady over 5%. so if that is the case if people -- wages are in decent shape and employment growth is in decent shape. then they will be ok even as some of those excess savings are dwindling. lisa: if the way you portray it is the way -- more midcycle than certainly late cycle why not get

into small caps. and say it's going to start broadening out we've already seen the beginnings of something that is sustainable and based on fundamentals. >> you need to start seeing rate cuts. small caps really depend much more on financing then some of these cash-rich large companies. so their margins, the longer we have -- if we have rates higher for longer that's guinness day lead in their margins and so that's -- to really get that small cap rebound similar to what we saw in q4 you really need the start of the rate cutting cycle is not here just yet. >> i would go back even longer than that but we will save that. i want to congratulate you want to call you made there's been a big spread between manufacturing and services and the question

around this table is how to be close that spread from either direction. you said manufacturing would come up to services. that started to happen over the last few months can you talk about another spread between the u.s. and the rest of the world. how do you think that will converge in the years to come? evan: i think it will converge. it's more about the rest of the world picking up and it's related to that manufacturing versus services call that most of the rest of the world is more export driven than the u.s.. we want to be early to trends and if you look at your bloomberg machine and you look at the growth revisions this year, they have just skyrocketed for the u.s. and then you see europe and china hanging out, japan on the low-end. you see a little life and those growth predictions.

economists -- inflation has come down and that is finally getting the european consumer more confident about spending. so i think the combination of this improvement in manufacturing which is linked to inflation coming down faster in some of these countries than in the u.s. and that helps the domestic consumer and also helps manufacturing exports. >> markets equities rate differentials and implications for fx. where does that leave the dollar. >> dollar we've got room for a little bit of weakness in the near term as you get this global rebound but i wouldn't extrapolate that too far for two reasons. one thing structurally is there's this big disconnect in terms of how sensitive the consumers and businesses are two higher rates in the u.s. versus the rest of the world.

we were year fixed mortgage and most of the countries are dealing with a variable rate. rate cuts outside of the u.s. but that's still a constraint. the second reason is we have 50% chance of a trump presidency, maybe more. people aren't talking about it as much but a few months from now we are going to be talking about 10% tariffs on all u.s. imports. 60% tariffs on all chinese imports. there is going to have to be some risk premium put in every other country outside the u.s. to reflect that. >> why is it a risk premium on the other countries and not on the united states for becoming increasingly isolated? evan: it's part of this natural global rebalancing when you have tariffs. we would need in the u.s. if trump was going to put on the kind of tariffs he's talking

about we need a stronger dollar to make sure inflation does not get out of control. the dollar needs to offset that to bring inflation down here. i would expect the tariffs for the u.s. as well. but there's two sides of the same coin here where it's weakening the rest of the world but also we need that stronger dollar to contain inflation. >> we will catch up with speaker mccarthy in about five minutes time. great to see you in person. let's get your update on stories elsewhere. >> primary elections were held yesterday in maryland, west virginia and nebraska. one race could determine control of the senate in november, that is maryland where one of the richest members of congress was defeated in the state democratic primary. she will face larry hogan in november affected to be a

competitive race to tip the balance of power in the senate. copper is rallying to a new record high in new york by some 24% in the last year. future surpassed a previous record that was reached in march of 2022. traders have snapped that with the premium widening demand for upside protection against further rally. a group of tiktok readers filing suit to block a law forcing the parent company to divest or face a band. a lawyer said they hope to vindicate not only their first amendment rights but the rights of the other approximately 170 million americans who also use tiktok. a spokesperson said the government looks forward to defending the law in court. that your bloomberg brief. jonathan: up next on the program the u.s. wrapping up tensions with china -- ramping up tensions with china. >> has port state money and chinese companies across a whole range of issues. with tactics like these they are

not competing. it's not competition is cheating. >> we catch up with kevin mccarthy on the side of the break. good morning. ♪

jonathan: live from new york welcome to the program. one hour 15 minutes away from the economic data around the corner. just about unchanged treading water here. your 10-year this morning for 4120 per yields are lower by two or three basis points. under surveillance the u.s. ramping up tensions with china. >> for years the chinese government poured state money and chinese companies across a whole range of industries. electric vehicles, solar panels. industries of the future. china heavily subsidize these products.

pushing chinese companies far more than the rest of the world can absorb. with tactics like these you are not competing. it's cheating. jonathan: president biden unveiling a sweeping new round of tariffs. the decision looks to escalate measures put in place a former president trump. the former house speaker kevin mccarthy joins us now. good to see you. what did you think of that from president biden did he out trump trump? >> he can do that. biden oppose these tariffs before and actually believe a republican administration always has a better relationship with china and a stronger one. we watch the current administration we've crated and access of people with russia, ran in china. something we haven't seen since the 1930's. an interesting piece by henry kissinger, 79, 79 and nine.

79 years since a nuclear weapon was used and nine countries with potential. in the 70's you thought would be 25 or 30. it does not just happen. so foreign policy really matters. the world is in a different place they are looking for a strong american western leadership and i think that's the challenges we have. biden's decision in afghanistan and what he's just doing with israel is really harming the world. i think greater stability would go a long way. annmarie: when it comes to china, biden and trump are largely on the same path trump is talking what 60% tariffs on imports coming from china on top of a 10% tariff wall for all imports. isn't that the only place that there's bipartisanship in washington when it comes to china? kevin: trump's policies on china

he believed long before he was elected. biden has flipped his position in the last year. so it's kind of what you believe. in china's position china looks long-term so if they have somebody with a strong position usually can negotiate something. i believe and i think looking at the new york times latest polling trump today if the election were today would win. you would have an agreement with china. you might think there's tension and you get a lot of good news for a while but i think we would be in a much stronger place because of respect and that we could come to an agreement. annmarie: but on what? kevin: agreement on trade, agreement on the movement of china and russia and iran. i think china moving into the middle east bringing iran and saudi arabia you won't see that as much anymore prayed i think america take plaque -- take back the place. annmarie: you are with the

former president last night. what are you hearing from him and his team about what 2.0 like? would it also include someone like yourself? kevin: you never prejudge where it is. i think the president is very upbeat with what he's going through. interesting thing i think the white house has taken a position and a most everyone they are taking this china position, israel position, if you look at biden in the last elections. you are station the plays with numbers. biden won the last election by 48,918 votes. but his favorability rating in that time was plus 10. now it's -20. you are six states that were swing states and trump has been leading in five of them for like 14 months and now minnesota which republican is not one since 1972. when ronald reagan swept 49 states he did not win minnesota but now it's a much different

play going forward. i think their position they thought going after trump in a judicial way would help them. i think it hurt them. you also see independents now. by a margin of 53-42. independents believe another four years of biden would harm democracy. it's interesting what they have planned out. my advice to the biden administration if you are in denial you're knocking to solve your problems and they are kind of in denial of the problems. annmarie: you did not answer my question would you consider going to a trump administration? jonathan: i think -- kevin: i think in america we need the best and brightest. what i think that the last thing you look at. you want to make sure it's good policies pretty want the election to be about policies and ideas and then people can govern in a better way. lisa: i want to strip away some of the politics from the policy

and understand looking forward prayed you talk abut under a trump administration this idea of agreeing with china. i'm more focused on europe because under a trump administration it was america first going out of nato pressuring the european union to do more. how much will that be basically the state of play going forward in a republican administration in a time when people are saying you need an alliance to counter some of these threats you are talking about. kevin: that's a great question. we have time to compare what transpired in the trump administration. was trump tough with nato? yes but you are watching the european nations spend more than what they had promised to do on their defense. now what you have you did not have war in europe. for the first time in any american administration in modern history putin had not invaded another country. now we have war. you have five american embassies that have now had to be evacuated.

we have a base in africa where the russians are coming into where you have 1000 u.s. troops, it's a place we use our drones and others. i know what the topic is and may be the brush in this of trump's message but we have positive returns within there. it's a difference of opinion whether you like the headlines are not but you have actual facts on the basis of what a biden administration looks like in europe and what a trump administration in europe. lisa: there are a lot of variable lags with policy so it's hard to determine where the gains come from. kevin: the abram hat -- the abraham accords. had biden embraced the abraham accords i don't think you would've had october 7. lisa: my question was with europe and what we hear from a lot of executives is they don't know how to shape policy given they don't understand what the policy in the u.s. will be. are they can a start to put up walls to those two tryon really

enhance the industrial production of the united states? are the going to work together, france seemed open to the idea of accepting vehicles in china. how does a trump administration deal with issues given the fact a lot of people say we need these alliances to win on some of these issues. kevin: i think we have strong alliances. i was there with macron in the white house. every country is going to want to compete with one another. what america wants to see is a level playing field. it's a disadvantage of america starts further behind. france, they want to have a level playing field. every country will compete in different ways. i believe at the end of the day you will find policies we had under the trump administration and the policies today america doesn't have -- didn't have inflation, we were stronger around the world. incomes were rising and what we are finding the new york times polls, america sees that. the number one issue people

derive is inflation, the border are the two largest drivers of this election. jonathan: you don't think birth control and abortion will be a big factor as well? kevin: in certain spots. it was a big factor in the last election. you also look to what's can happen in the senate and in the house. i was leader for five years and every single cycle when i was leader republicans picked up seats even though republicans lost everywhere else. when biden was on the ticket it was the first time since 1994 not one republican house lost. in the last election abortion was a very big issue but as leader i picked up five seats in new york and california. abortion to be the top issues there. i believe pockets, arizona could be an issue. florida could be an issue. i think it will be more in the pocket. annmarie: you talk about your leadership. speaker johnson had 11 republicans vote to oust him. you only had eight.

democrats came to save him prayed are the democrats in charge of the house at this point? kevin: hakeem seems to think so. annmarie: they saved speaker johnson. he actually had more republicans vote against him than you did but you lost. kevin: i don't believe in the motion to vacate. if they didn't think the motion to vacate was right then why did they take it under me. it is politics. the think they will play it for political purpose. republicans have a better chance on winning seats this election and the house than they did in the last two elections. i think it will be a big night. you watch what happened in the primaries last night. hogan is going to make maryland competitive and it expands the playing field. republicans will win the senate. it's a simple math question. the presidential election. it's still up in the air but if you look at every polling today trump is in the lead and biden

is doing nothing to change that. in the house there's a better opportunity for republicans. the only advantage the democrats have is they are beating us now on money rather largely and that will make a difference. jonathan: can you give us a name for vp? who would you like to see in that seat? kevin: i think tim scott is great. and i think our governor in north dakota is excellent. if he picked nikki haley i would say the race is over. if you look at the primaries. jonathan: we've got to go. speaker mccarthy thank you. from new york city this is bloomberg. ♪

(jennifer) the reason why golo customers have such long term success is because we focus on real foods in the right balance

so you get the results you want. when i tell people how easy it was for me to lose weight on golo, they don't believe me. they don't believe i can eat real food and lose this much weight. the release supplement makes losing weight easy. release sets you up for successful weight loss because it supports your blood sugar levels between meals so you aren't hungry or fatigued. after i started taking release, the weight just started falling off. since starting golo and taking release, i've gone from a size 12 to a 4. before golo, i was hungry all the time and constantly thinking about food. after taking release, that stopped. with release, i didn't feel that hunger that comes with dieting. which made the golo plan really easy to stick to. since starting golo and release, i have dropped seven pant sizes and i've kept it off. golo is real, our customers are real, and our success stories are real. why not give it a try? and they're all coming? those who are still with us, yes.

grandpa! what's this? your wings. light 'em up! gentlemen, it's a beautiful... ...day to fly. it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life,

then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. jonathan: 60 minutes away from a ton of economic data in america. u.s. cpi and retail sales. positive .04%. the nasdaq going nowhere. this market has been going somewhere. will be talking about them as we get closer to the opening bell at 9:30. we've been talking about these levels for a while. the last time we got cpi date it was mid april. 497 was the closing yield. higher on the session of than 20 basis points. we came all the way back down to

the 400 70's. down to 478.92. -- down to 4.7892. lisa: how much are we set up for a rally and how much have we baked in the good news of the softest cpi print of the year at a time when everyone has been waiting for disinflation. it has not come to the degree people are looking for. euro looks like this against the dollar. one euro 1.0 826. that is a slightly stronger euro. a key data drop under an hour away. cpi and retail sales due 8:30. bloomberg's economics expecting the cpi print to show disinflation has resumed. core cpi at the lowest mark this year. a short squeeze driving copper futures to a record high. the premium compared to other

global commodity exchanges is prompting a rush by traders to divert the mental u.s. shores. more trouble for bowing. the company facing possible criminal prosecution after the justice department founded violated agreement tied to deadly crashes five years ago. boeing breached a $2.5 billion settlement by failing to implement and enforce a compliance in preventing and detecting violations. that is down another 1% this morning. lisa: can we stop getting news from them that indicates things are just getting worse? the answer is no. at what point can they put a stopper on this at a time people are saying will we have a shortage of planes given the orders that are coming through? annmarie: also how important bowing is to the industrial base in the united states. what can the justice department do? how do you punish a company that is so critical to the united states? not just people getting on

planes but the defense sector. jonathan: is a total mess. let's turn to the ipo market where listings are poised to slow following five straight weeks of more than $1 billion being raised. david livingston is the sitting chief client officer and david joins us now. let's talk about where the action is. we've been saying around this table that may be the investment banking recession is over. we want to talk about where things are picking up. the ipo market. how strong is the pipeline? david: it is building, it is solid. not so much the absolute but the volatility in the rate outlook is sitting here with some of the biggest spread in terms of potential for year end rates and dollars. the issuers are looking at that nsync how does that impact not just the premarket but also

right now. we have seen a strong last few weeks. we expect those conditions to continue. a broader rally and deepening of the markets. jonathan: has there been a structural shift because of what is developing in private markets? companies are deciding they do not need to go public and the way they needed to decades ago? david: there has been a shift over decades and the growth of private markets not just in the united states but around the world give alternative capital formation opportunities. the u.s. is the standout in terms of the public market deeply accepting a strong following in sectors with multiple comparables. you go elsewhere around the world, the u.k. very challenging in terms of the number of companies leading exchanges, moving to the united states, or not coming to market. lisa: i have to go there.

zeeker came to the market, this electric vehicle maker that did really well. do you see the same degree of cross-border ipo. just in china but in other places coming to new york? how much are people concerned about the geopolitics behind it. david: is not just a lot of people have money but the quality of the u.s. government markets. it is significantly ahead of the rest of the world. i've mentioned the u.k. but also the european markets are not as deep as the need to be. i think it is that continued attraction of the quality of the markets in the u.s. lisa: is their arrival? you are hearing about paris, talking to david solomon and brian moynihan. jonathan: it was emmanuel macron

doing the selling. lisa: they were doing the buying. david: particulate europe, europe is the place that has to do the most structural change post-brexit. they been trying to build capital markets and banking unions for many years. what you're seeing in france and the netherlands is the states realize they need to deepen their independent capital markets before there can be -- there are too many impediments. what president macron is talking about is sensible. paris will grow, the markets will deepen. i do not think it will be a competitor to the united states. jonathan: what does that mean for your regional footprint? where you want to boost staff and pull back on staff? david: we follow clients. talking about an ipo market, it is a very narrow bit of what we do. our network remains in 160

countries around the world and we see brought opportunity and all of those regions we operate in. there will be different times, different areas of more positive growth. i'm back to the u.s. with the characteristics of not just economic but information stimulus. europe, cautious, but many european clients see that as an opportunity to take their business models outside of europe. jonathan: do you think the u.s. policymakers risk undermining the exceptionalism we talk about on programs like this? i am thinking more broadly around things like m&a, being able to know what kind of deal can get done in this economy with this white house? david: governments clearly need to look at policy, particular in terms of foreign direct investment in certain industries.

that has always been present and will always be effective. i would not point to one administration decision. if you're involved in cross-border m&a you have to examine whether you are in the tech sector or the defense sector, banking, whatever it might be. annmarie: as you travel around you hear from clients. how concerned are they about policies that may change drastically next year depending on a change at the white house? david: they're all asking the question who will win and what will be the policy. that is very sensible. the news announced yesterday in terms of the tariffs the u.s. is imposing may indicate policy differential will not be that great depending on who is in the white house. that is just speculation. looking through that it is the volatility in the second half of this year that a lot of investor clients are looking at in on the strategic side people want to see more certainty.

talking about the range of potential outcomes on monetary policy around the world. they want to see more certainty in the fiscal situation and also that policy-setting. they are not making big decisions leading into the election but they want to be as formal as possible as what might be afterwards. lisa: you have clients in a lot of different countries, potentially in china come at a time we will get a big disruption. how is that informing some of their instruction -- some of the instruction citi has done in terms of how you're rearranging your suite of projects? david: nothing about the reorganization we have done is to do with our geographic footprint. we have reconfirmed the importance of our global footprint. what we have done is sharpen our ability and the focus of our businesses and also the

capabilities we have to address clients needs is to make sure they are directed clearly towards the client. where that footprint in that product set remains unchanged from what we had previously. lisa: you said the reorganization has been largely completed yet there have been a number of recent exits and i'm wondering how difficult it is to retain some of the top talent at a time of change, which is always tough. david: it is tough. in terms of what we announced yesterday with senior retirement, absolutely planned, all part of the execution jane fraser had in mind. this was normal and expected. i would go back and say our ability to attract senior talent is high. tim ryan who we announced yesterday will be joining us as head of technology.

this is very high quality talent. top-tier talent attracted to citi i form we have. jonathan: you think something has changed to attract that talent? citi stock a lot of people has been dead money for a long time. what is it that has changed for you? david: i think you need to go well above the share price. it is clarity of strategy. our executive has laid out a clear strategy and make clear decisions in 2021 in terms of some of the business activities we continue and be clear through this reorganization that of the accountability she wants the businesses to have but also perform and that is the fact which is attracting this talent. jonathan: you keep saying reorganization. what is the difference between a

reorganization and a restructuring? david: restructuring implies you are changing your business mix. we have had a management reorganization so structure catches up with our strategy and a simpler management strategy than we have had recently. jonathan: it seems to be paying off big time. citi over the last six months or so, pretty phenomenal price action. thank you very much. david living stone of citigroup. here is your bloomberg brief with dani burger. dani: some of japan's biggest banks say they will be seeing record profits this year. predict profits over $21 billion taken together. the banks expect earnings to grope thanks to strong loan demand. they also seen earnings boost from the boj shift away from rates. let's get a check on burberry shares in london. trading lower. the company warned of a

challenging first half. legal has been trying to engineer a turnaround but those efforts have run first into pulling demand for brands that find themselves in a luxury market. caring has been struggling while more resilient plans like -- more resilient brands like hermes have seen revival. we are down for amc and gamestop. the rally was driven by the return -- it has gotten to the point where even the former bond king has strayed from the world of debt to trade meme stocks. that is your bloomberg brief. jonathan: will catch up with dani in about 30 minutes. coming up, inflation data on deck. >> it pushes cuts back further.

rates could get volatile today if we get an upside surprise. jonathan: 8:30 easter. inflation -- 8:30 eastern. inflation data just around the corner. this is bloomberg. ♪

so, what are you thinking? i'm thinking... (speaking to self) about our honeymoon. what about africa? safari? hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment... ...on a ranch ...in montana ...with horses let's take a look at those scenarios. j.p. morgan wealth management has advisors in chase branches and tools, like wealth plan to keep you on track. when you're planning for it all... the answer is j.p. morgan wealth management. olukai sandals capture the feeling of stepping barefoot into wet sand. the perfect balance of instant comfort

and lasting support. say aloha to olukai. anywhere comfort. anywhere aloha. (♪♪) jonathan: equities are doing nothing. stay tuned for 8:30 when they might do something. futures going nowhere on the s&p. yields lower two or three basis points. under surveillance, inflation data on deck. >> the market is in. if we get any deviation to the upside i do not think it brings back the idea of hiking but it puts the cuts back further. the few upside surprises we have seen 15 or 20 basis points move

on the day so rates can get really volatile today if we get an upside surprise. jonathan: treasury yields lower ahead of u.s. cpi print at 8:30. ian lyngen writing stronger inflation numbers will be far more bond bearish than the consensus print would be bullish. we still suspect a .3% core cpi print will initially trigger able steepening in range for the two 10 curve. that runs counter to what we've been hearing where people say the risk is skewered to lower yields. why is it the other way around to you? ian: the price action over last week and a half has reset the market expectations for what it would take to get 10-year gilts before .30 or 4.25. we need to see a .2 or lower encore. the onus is on the realized data

and maybe even a retail sales to drive the market further. jonathan: could we go a little bit further forward to the front end of the curve and sit on the two year. how cap is the upside given the reluctance of the federal reserve to raise interest rates? ian: there is very little chance we go back to 5% to your yields and if we do it is a buying opportunity because jay powell took a rate hike off the table. that will simply eat the front end of the market from rallying as opposed to push rates to a higher plateau from here. i would think anything that gets us close to 4.95% or 5% will quickly trigger buying interest. lisa: how much does the idea in terms of the upside on short-term rates, how much fuel does that give to the rally we have seen in longer-term bonds? you say you question that.

at the same time that certainty has been enough to feel a lot of risk appetite, especially in the bond space. ian: that this part of what is going on. the longer-term assumption for how high monetary policy rates can go. let's not forget we recently heard from the treasury department and they said they had no intention to increase option sizes for several quarters, which puts us into 2025 before we start worrying about supply again. that is part of it. then the jobs figures have been less rate, not bad. that combined with a refocus on the employment part of the dual mandate has shifted investor thinking about adding duration. lisa: are you viewing a selloff in the near term as stemming from positioning, that people have gotten overly excited about the pace of disinflation and

reintroducing the chance of a july late -- a drive -- a july rate cut and you think that is premature? ian: i think the market sentiment has swung too far in one direction and without further confirmation from the data we will trace back into the range we were in through much of this year. lisa: when we talk about the different dynamic it raises the question of what reaction will there be to retail sales lighter than expected. this is the bigger mystery than cpi that has been dissected again and again and goes to the question of stagflation. how closely are you watching that and does the software print give that rally into the bond market pump especially if it is paired with an in-line print on cpi? ian: and as expected cpi number come people within the range on headline, all focus will shift

to retail sales. keep in mind retail sales is not an inflation-adjusted number. it'll be difficult for that to materially surprise on the downside. when we think about the pace of consumption during the first quarter and the data in the labor market, people will start to become nervous we are finally beginning to see the anticipated impact of a restricted monetary policy that has been in place for several quarters. annmarie: you're talking about cracks in the labor market. we have the michigan survey friday, the new york fed report monday. eu yet see consumer starting to withhold some of that spending? ian: we have not seen it go through to the data get. that is the biggest concern. people are starting to increase credit card utilization. people are starting to make fewer on-time payments. we are starting to see defaults

increase. all of that suggests there is some evidence we are seeing a bit of a slowdown. it has not made it through to the aggregate data. to a large extent that is why the retail sales print could be such a wildcard. jonathan: i want to ask you as a bond guide to talk about the equities, just go with me if we can. a lot of people in equity markets are taking comfort from the idea it does not matter how high inflation might be or data might be, the federal reserve will not entertain another rate hike. they see that as bullish and take comfort from that. even if we get an upside surprise, there will be people who want to buy the dip because of that reason. what are the limits of taking comfort from that? we get to the point where higher for longer is just as big a problem as entertaining the idea of an interest rate hike ian: ian:? my biggest -- of interest rate hike? ian: my biggest concern is what

has it been doing to financial conditions. it has been making conditions easier which means the fed runway to start cutting should be longer. that is problematic when you think of the context of the wealth effect and comfort with the amount of savings they have driving inflation as opposed to being a recent to save because you need more of a return. that is one of the biggest oddities of this cycle is that stocks have not retraced despite what the fed has been doing. i would be a bit cautious, especially if we have another material leg higher. jonathan: why do you think chairman powell does not share that view? ian: he is worried about the wealth effect and he has doubled down on this idea that he can pull off a soft landing radio landing -- 48 no landing or 8 --

or a no landing and it would be great for his legacy. if he can pull it off and begin cutting rates and reassure the equity market and business leaders that it will not be restrictive forever, that is an ideal outcome. jonathan: how serious should we take him about getting inflation back to target if legacy is everything and he does not want a recession? are we also saying that maybe that speech in jackson hole in 2022 was not the real deal? ian: i think he believed at that moment the economy was suffering more pain and i think above all the fed understands that reestablishing price stability is key. they are holding the 2% inflation target. they are not giving up the 2% inflation target.

that part of powell's legacy is a lot more important than avoiding a recession. if he can have both that is a win-win. jonathan:'s september still the date and the diary for you? ian: i think it is the most likely. my mind might change at 8:31. jonathan: [laughter] i will message you at 8:31. in lincoln on bonds and stocks and what is he looking for from chair powell. lisa: you've raised this question -- what we are dealing with the federal reserve. the answer is who knows. we do not have answer. he wants to preserve the legacy of soft landing in a rally in the market will not challenge that. right now the market is still buying powell because you're not seeing longer run inflation expectations runaway. jonathan: credit to ian and powell.

there was a belief you need pain to get inflation down. inflation has calmed down a lot without much pain. are we going to say pain might be required? lisa: this is my fear and this is the reason stagflation is something people worried about. the idea people will say it finally we will get disinflation. if that doesn't happen, how much do people start to think about the higher inflationary environment? if it does happen and we get retail sales that also underperforms, how much do people say maybe things are slowing down anymore material way and that is the reason we are seeing inflation lower in a substantial way. jonathan: for 60 minutes coming our way. david kelly. tom porcelli. ed your danny. -- ed yardeni.

from new york, this is bloomberg. ♪

>> the consumer is starting to say that these prices are becoming problematic. >> the consumer has softened

which makes some sense giving the pressures out there. >> the one thing causing people to go home is the stagflation we've been seeing. >> the biggest tail risk is inflation. if inflation is higher, that is a big risk. >> the cpi data will show this trend that disinflation has stalled. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: this is what it is all about. 30 minutes away from u.s. inflation data together with retail sales. the third hour of bloomberg surveillance begins right now. 8:30 eastern, the two data points to watch. this just dropped from citi and andrew hollenhorst. andrew saying we expect soft retail sales to show consumer demand is slowing and why they think the fed is on track for a cut in july. lisa: if we get the in-line print for cpi which is expected

as we just heard all focus goes to retail sales. if it is softer than expected the bias will be back on the economy given the fact this is a fed that wants to see the soft landing. jonathan: that he will get the fed speak and hear from some hops. neel kashkari of the federal reserve. interesting how they respond to the data that drops. annmarie: they will echo that maybe we will not see any rate cuts. i love andrew hollenhorst -- also important retail sales. ian lyngen said they have not seen the lack of willingness for consumers to spend. what we have seen in sentiment is consumers are starting to get concerned. jonathan: equities unchanged. a total snooze. the bond market going somewhere. we are down to two or three basis points. this is the definition of treading water in the stock market. lisa: yesterday we were treading water and the day before we were

treading water also. at the end of the day it was not treading water, it was a sudden rally. it was a whisper number. basically people are looking for an excuse to rally and that is how we are set up for today's data. jonathan: you look to move everyone is like it is leak and they start buying it. lisa: what is the whisper number? jonathan: gamestop as well. what does it mean? i will buy it encase it mean something. i say this a lot. just because you found a casino does not means you're in las vegas, it just means you found a casino. it does not mean the whole thing is an institution dedicated to gambling. this is a serious business. lisa: who are you talking to? it sounds beautiful. jonathan: connecting with the audience. ed yardeni of yardeni research

and david kelly together with tom porcelli. global stocks rallying ahead of key data in just a moment. ed yardeni weighing in on the state of the consumer writing, "there is mounting chatter the consumer is cracking. we are not cracking. they continued to predict consumer spending will grow and so will the economy. that is our story and we are sticking with us." what you say to the consumer confidence reads that say things are bad and getting worse? ed: americans are extraordinary. when we are happy we go shopping, when we're depressed we go shopping even more. i think consumers are still shopping and i do not think they are dropping. i think retail sales will be on the weak side because we had weak income numbers for the month. that is retail sales, that is merchandise. people are spending a true menace amount on services. getting through airplane --

getting through airports is a pain. everyone is getting into restaurants. baby boomers are retiring. jonathan: particularly terminal four at jfk. awful. lisa: i hate clear. jonathan: clear helps you at some terminals and not in others. lisa: is paid to play. annmarie: clear with tsa pre-check is pretty quick. jonathan: very long lines. things to say about terminal four which i will savor another day. are you saying if we get a disappointment at 8:30 not to read too much into it? ed: we know consumers went on a buying binge for goods once we got freed from the lockdowns during the pandemic we all wanted to do some shopping after the lockdowns. we cannot do it in services but it was a big buying binge that

lasted until early 2021. march, when the services started to open up. we have signature minutes amount of spending and services. it is a month-to-month kind of number. i suspect it will be on the weak side but it will be off since by services. -- it will be offset by services. lisa: your household sounds like a lot of fun. we have bank of america credit card data that shows increase in spending. citi credit card data showing the opposite. there is discussion around a shrinking pile of savings and what that might do? what is your lodestar at a time where everything is telling a different story depending on where you look? ed: i am a card-carrying member of the baby boom generation and a lot of my friends are retiring. i am still working for a living because i have five kids and i am still supporting a few of them. the baby boomers are retiring and many of them only had two

kids on the kids or adults. what are the baby boomers doing? they are spending retirement money. they do not need to spend on credit other than just for convenience. lisa: a lot of people are looking for confirmation of a goldilocks slow down or stagflation. if we see a disappointing retail sales number and you see stickier cpi above where we are, why should people dismiss that and not talk about stagflation at a time where it makes logical sense why that would happen? ed: i am in the same camp as jerome powell. in this press conference he said something like there is no stag

and no inflation -- take out shelter and we have it two handle on cpi. i think the shelter inflation rate is coming down. it is a bizarre component of the cpi. i do not see stag for inflation. i see the economy doing well and the stock market seems to be on board. lisa: you talk about the roaring 20 20's, how much is being fueled by industrial policy and the incredible investment in bringing back manufacturing. how much is that something you want to ride in the copper rally as well as the equity rally? how much are you seeing it priced into stocks now being priced more into other areas that might be more inflationary. ed: the roaring 20 20's scenario started to get disconnected -- discounted by the market in

november 2022 when openai introduced chatgpt and investors have been looking for ways to play artificial intelligence. they did that first with nvidia and a few days ago we started utility rallies. all of a sudden utilities are the power-play rai and copper has been going straight up. it is the markets way of validating things are looking good. a lot of people are making bets hey i will be an important source of productivity and i think it will be. lisa: you into that? there is more to go? annmarie: you say the consumer keep shopping but the michigan survey sentiment is low. also the york fed report says inflation expectations are much higher. how do you make sense of the two? ed: the consumer sentiment index reflects inflation much more than the consumer confidence index, which reflects employment. i think people are still very

annoyed that prices are much higher than they were before the pandemic or even a couple years ago. a lot of the sensitivity of the consumer sentiment index, the michigan survey is gasoline. it is the most widely seen price you pass every day. gasoline has been coming back down over the past couple of weeks. the main reason it went up a few weeks ago was because of all of the geopolitical risk. the price for oil has been coming down. i think that will leave some of that. jonathan: happy to say you will be stiffing with us. ed yardeni looking ahead to the roaring 20's. i was thinking about this last night. it is 2025 next year. we are halfway through ed's all. lisa: so far it has been it right. the tentacles of this.

we were talking about evan brown about the widening of the exceptionalism of the u.s. how much of that is because everyone is getting on board with investigated industrialization? jonathan: the sector composition interests me. we used to talk about tech as purely offense of and that it became defensive. people used to talk about it being defensive. utilities now offense of. i cannot keep up. i'm not sure what part of the market is for what. jonathan: all of these -- lisa: the different factors are getting more and more muddied. you are right to say about utilities come is that almost an aggressive play on ai? and you pull some of the data centers? i find that interesting. let's get you an update on stories elsewhere. here is your bloomberg brief with dani burger. dani: google glass babysit for a

comeback thanks to artificial intelligence -- may -- google glass may be set for a comeback thanks artificial intelligence. reacting to the world like people do -- a pair of glasses with the global individual interface. executives confirm their experiment with the idea of making glasses for project astra. openai's founder is leaving the company. there been months of speculation about his future after he played a role in the brief ouster of sam altman last year. he had clashed with sam altman on how rapidly to develop ai. openai announced it will be replaced by its research director. a new potential buyer has emerged for tiktok business. real estate billionaire and former dodgers owner frank mccourt says he plans to build a consortium.

he joins a diverse group who expresses interest in buying the platform including steven mnuchin and former google ceo derek schmidt. whether any of them can buy tiktok is a different story. bytedance has it has no intention of selling the asset. jonathan: that is a minor detail. we will catch up with dani again in 30 minutes. coming up, the morning calls before we set the stage for cpi and retail sales. from new york, this is bloomberg. ♪

jonathan: here is the state of play going into cpi and retail sales. equities a little bit negative. the emphasis on a little bit. we are down .2%. -- the 10 year 4.4159.

morgan stanley resuming coverage of exxon mobil. overweight. seeing attractive growth after the acquisition of pioneer. jp morgan upgrading ne-yo to neutral come expecting shares to benefit -- upgrading nio to neutral. bernstein upgrading general mills to market perform come expecting a stronger second half of 2024. we are looking ahead to cpi in retail sales. ed yardeni is back with us. we have been talking about defense and offense. i want to talk about which sectors do what? we mentioned utilities were almost exclusively defensive and now there is this ai theme. everything has changed. ed: is a moving target. i am sticking with what i've been promoting is overweight and that is technology. industrials. communication services.

those continue to do well. we are seeing a lot of materials are doing quite well. copper related stocks are doing well. i think it is becoming early bull market. jonathan: a lot of people say we are late cycle. ed: i have 5400 on the s&p by the end of this week or the year. i am still working on the timing. jonathan: might be the end of this week. ed: than 6000 next year and 6500 by 2026. my forecast is a sustainable long-term bull market. lisa: he said the biggest risk right now is a melt up and any rate cuts by the federal reserve would be a huge mistake. why would a rate cut fuel another leg higher that would be such a big mistake? ed: the bull market is constantly stampeding over my

forecast. last year i thought we would get to 4600 by the end of the year and we got to 4800 and we got to 36 -- 240 600 by the end of last year. we are already at 5200. i thought we would get to 5400, which seemed aggressive. now people are asking me if you will be raising your number. the concern i have is if the fit does start lowering interest rates that could create a melt up and that would be an issue for me. lisa: we have been talking about the idea that fed chair powell does not seem to think financial conditions are problem. why you think that is? ed: i cannot figure out what jay powell is thinking because he has been fairly dovish while his colleagues have been more on the hawkish side. i think it makes more sense for the fit to provide guidance that they are not sure they have got

inflation down and they are not only in no rush but they're not necessarily in the camp that interest rates have to go down. my view is the fit has normalized interest rates. this is where they should be. i do not think they should be interested in bringing interest rates down aggressively. annmarie: if powell goes to say that an clause back the idea of a rate cut, how bearish would that be for the market? ed: the markets have demonstrated they can live with disappointments in the interest rate outlook. we started out the year with the markets thinking six or seven rate cuts. i cannot find out where that would come from other than the people that we've never a session. that was one of their stealth way of saying we're not out of the woods yet. there are still people talking about a possible recession. if everything is working out

well, why mess with it. if you just say that that would be reasonable and consistent with what the data has been showing. jonathan: it is clear the 5400 price target on the s&p is not dependent on chairman powell cutting at all. is that fair? what could derail it? ed: if we get a continuation of hot inflation news, that would be an issue. i do not think that would be the case. will see how the cpi comes out. every time we get a cpi is the most important we have ever had. jonathan: it is the most important one until the next one. that is how we play the game. ed: market has learned to take it in stride and keep going higher. jonathan: are there limits to that after three upside surprises? ed: certainly there already people thinking about the possibility the fed may have to

consider raising interest rates. if that becomes a rally -- a reality and they start talking about that, that could be a 10% -- lisa: the biggest risk is the fit does cut rates and that ignites the rally. how much with the market rally if we get a july or september fed rate cut? ed: we blew right through 5400 in a heartbeat. we could very well get to 6000 for the end of next year by the end of this year. the market, there is at best love -- amount of the pretty. -- if you put it altogether it could be a powerful bull market. lisa: this is a fascinating call when you put it together. if there are no rate cuts it does not affect the 5400 call.

if there any rate cuts that could affect the call. is that where the market is? there is an asymmetric risk where higher for longer does not make anyone worry but rate cuts will turbocharge what we have seen? ed: we have seen people are looking at the citigroup economic surprise index and it has come down a bit, and that has been supportive to the bond market and supportive to the stock market. why would disappointing economic indicators be good for the stock market? the market watchers love to see the fed cut interest rates. jonathan: we have heard that again and again for a lot of people. you're looking for downside surprise in retail sales. cpi, what are you looking for? .3 like everyone else? ed: like everyone else. gas prices may have boosted it but they will reverse that next month. jonathan: standing by is michael

mckee come our economics and policy correspondent. what is the focus? michael: we will start with housing to see if that gadot of economic indicators finally shows up. we will also be looking at insurance numbers. auto insurance has been rising at a crazy rate that has pushed up cpi quite a bit. we will see what americans are buying with retail sales. it is a big drop for seen in the retail sales numbers and i could make a big difference in the outlook for the second quarter. lisa: yesterday into the close of trading there was a substantial rally and people were saying why. there was a rumor it was a whisper number that came out. is that what you are hearing that the guidance for a lot of people is the downside surprise that has been fueling optimism? michael: i am not sure that is

the case. people believe what they want to believe. the thing about cpi's most economists get that right. it is easy to figure out. the retail sales would be based on anecdotal feeling while the cpi is placed more on excel spreadsheets. annmarie: what is important for you under the hood in the cpi report that trickles down into pce? ed: you will be looking at hospital work in medical care and we will be looking at insurance and airfares. the big thing that has moved the pce is the portfolio management category is up a lot in ppi. we'll see how it comes out in cpi. jonathan: typically we refer to inflation.

what is that doing their? michael: one is how much people are paying for the services, like if you were paying ed yardeni. the ppi is what ed yardeni is charging for those services. there may be a difference. there are also methodological differences. jonathan: i want to look ahead to the fed speak. we will hear from neel kashkari who is opening to the idea of not putting that all this year . how much company do you think those will get on the fomc? michael: jeff schmidt of the kansas city fed said it is not one number and the market will focus on number and neel kashkari and bowman will get a lot of ink if we get a surprise to the upside it makes it looks like we will push out rate cuts. who will get a lot of talk but it will not have a huge impact

yet. it will have impact on the market. jonathan: mike mckee, five but it's away from breaking down economic data. not just one number. there are many. 15. loads of cpi, a lot of retail sales. all of that is just around the corner. first-class lamp stop equity futures trading water. live from new york, the data is up next. ♪

do you want to close out? should i? normally i'd hold. but... taking the gains is smart here, right? feel more confident with stock ratings from j.p. morgan analysts in the chase app. when you've got a decision to make... the answer is j.p. morgan wealth management. you know what's brilliant? boring. think about it. boring is the unsung catalyst for bold. what straps bold to a rocket and hurtles it into space? boring does. boring makes vacations happen, early retirements possible, and startups start up. because it's smart, dependable, and steady. all words you want from your bank. for nearly 160 years, pnc bank has been brilliantly boring so you can be happily fulfilled... which is pretty un-boring if you think about it. hi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement,

i said, "yeah, whatever. there's no way this works like this." and threw it to the side. a couple weeks later, i seen it again after getting not so pleasant news from my physician. i was 424 pounds, and my doctor was recommending weight loss surgery. to avoid the surgery, i had to make a change. so i decided to go with golo and it's changed my life. when i first started golo and taking release, my cravings, they went away. and i was so surprised. you feel that your body is working and functioning the way it should be and you feel energized. golo has improved my life in so many ways. i'm able to stand and actually make dinner. i'm able to clean my house. i'm able to do just simple tasks that a lot of people call simple, but when you're extremely heavy they're not so simple. golo is real and when you take release and follow the plan, it works. when i was your age, we never had anything like this. what? wifi? wifi that works all over the house,

even the basement. the basement. so i can finally throw that party... and invite shannon barnes. dream do come true. xfinity gives you reliable wifi with wall-to-wall coverage on all your devices, even when everyone is online. maybe we'll even get married one day. i wonder what i will be doing? probably still living here with mom and dad. fast reliable speeds right where you need them. that's wall-to-wall wifi with xfinity.

jonathan: this is what you've been waiting for. retail sales in cpi data just around the corner. on the s&p 500 totally unchanged. in the bond market the two year, 10 year, 30 year. two year 4.7765. last time we got a cpi print upside surprise, move more than 20 basis points. with your economic data here is michael mckee. michael: fair waiting for the numbers to drop and they have just fallen. we have a downside surprise to cpi. up .3% as does the core rate for the month. that pushes the year-over-year

cpi to 3.4% from 3.5%. ex and energy, -- retail sales come in a little weaker than expected. .0%, last month revised down 2.6% -- -- revised down to 0.6%. the core group is down after 1% rise the month before. at this point what we are looking at is an economy that seems to be slowing down, consumer spending is slowing but prices dropping at the same time , which could be a recipe for fed rate cuts if you want to overreact. jonathan: the market reacting to it. not overreacting but certainly reacting. equity futures positive .6% on

the s&p. nasdaq moving higher a similar amount. on the russell, .15%. in the bond market, double-digit move at a 10 year. we are down by 10 basis points on a u.s. 10 year to 4.3361. if you turn to foreign-exchange come you can guess what the euro is doing. the euro is stronger .5% at 1.0 869. congratulations to the 63 of 68 people surveyed for cpi, looking for .3% encore and .3 is what they got. lisa: this is the rally everybody was expecting. about 49% of people surveyed expected just this result. the question i have is where does retail sales fall into that given the fact that if you look at the control groups, the control group down .3% versus a

gain of 2.5%. jonathan: epi headline coming at .3. the estimate in our survey .4. stripping out food and energy we get .3% against an estimate of .3 in the previous number is .4. as you as you get into the detail, what stands out for you? michael: we did not get a big drop in rotors -- in order's equivalent rent and the real estate part of cpi. odors equivalent comes in .4%, which is the same as it has been so rent of shelter comes in at .4%, gasoline prices of 2.8%. food was flat. contributes to a higher impact overall. i keep looking through those numbers.

looking at retail sales, it looks like motor vehicles made a difference. down .8%. that subtractive lot from the top line number. other than that sporting down .9% but clothing -- the food services and drinking places, which is the one services industry thing we get is up .2%. at this point the weakness seems to be in areas that are not directly -- not something people spend a lot of money on a regular basis, but the things people were spending money on still saw increases. i will let the smarter people analyze all that. lisa: but we are seeing in markets is a full pricing of september rate cut as people bring forward the idea this is

the disinflation some laypeople have been looking for. you took out owners equivalent rent. is that when people are doing at this point? we heard from ed yardeni. michael: that is kind of what the fed will do. we know the fed numbers are like in terms of housing and it will take a while for that number to come down, longer than they anticipated. it is not representative of what overall inflation is doing, which is what jay powell brought up the super core. it rises on a year-over-year basis and a month of her month basis. 0.42 is down over a month basis. the super core, which takes out housing does this show progress in terms of services inflation. jonathan: stay close, will come back to you.

in tokyo, raise a glass to the ministry of finance. down .8% on dollar-yen. 1.5520. inflation numbers, .3%, stripping out food and energy -- bond yields are lower, the dollar is weaker. david kelly of j.p. morgan asset management and tom porcelli of pgim. good morning to you. your reaction? david: we have moderation in the u.s. economy in terms of growth and inflation. inflation is taking its time coming down but we still think it is a downward trend. the reason for the market reaction is we did not get an upside surprise. we have now had the jobs report in the consumer sentiment report and that we have the retail sales report all saying overall

things are moderating. we look at the jolts number things are moderating. it looks like the economy is easing itself into a 2% corridor of 2% growth, inflation gradually coming down to 2%. the good news is we did not get another upside surprise stop jonathan: is the whisper of a july cut louder after this? tom: i don't know if it will become less of a whisper but i think it stays where it is. that is reasonable. it does not go away. i think you can still linger. as a practical matter it will probably be pushed and i have no challenge with that. i have been critical of jay powell when it has been mostly deserved -- jonathan: no pushback around this table. tom: recently i think he has good done a good job with the narrative.

he said we will not worry after a strong string of inflation reports just like we didn't overreacted to a soft strain the last go around. this is a chair who want to cut. i think if he has the opening he will go two and as he persists that would give him the opening. that brings us to one last point. if you look at the control number on retail sales, it was pretty weak the -- no one -- things are slowing down and that would be consistent with the fed having the ability to cut. lisa: we spoke with ed yardeni who says the consumer is strong. there was weakness in the control group but as mike was saying it has to do with auto sales. does not people going on and spending things. at what point do you look at that and say things are fine,

why the rush to cut? i know you're in these you should have already cut camp. why is it that they're not doing the splash. only a cut would turbocharge the rally which is the reaction we are getting today. david: if the federal reserve has been trying to micromanage the economy with rates too low or too high. the more the federal reserve tees off financial markets the more financial markets act like babies. you should not have this much of reaction but you get this reaction because the federal reserve is so sensitive about saying anything one way or the other. jonathan: is it fair to say the direction function is set up for us to be -- david: markets have an overreaction function. you have to expose the markets to normal policy.

normal policy is the economy is doing ok and rates ought to get back to normal levels. i think september is possible. i think jay powell himself will make a decision about whether he wants it himself. one thing we have seen about jay powell's he wants to build consensus and he builds hard. it is important he talked to all 19 participants of the meeting before the meeting and say this is by view. if he thinks let's get going on a slow rate cut cycle before the election cycle, let's get it going so we cannot be accused of playing politics. it might want to do that in september. tom: i think david is spot on. this is a recalibration cycle.

people hear cuts and that conjures images of the fed getting aggressive. we think this will be a very modest reduction in funds. lisa: talking about markets as babies, the question of how they react has been featured on financial policy. this was the transmission mechanism. how much do we get a rally on the idea we will get a cut and that will be a problem that will set us back further -- david: the federal reserve makes a big deal they do not allow politics to overrule what they are doing. they should also do the same thing to market reactions. also, what they need to do on a recalibration year. what they need to talk about is not monetary easing but monetary normalization. i did not think we are heading into a higher for longer revive it, we are heading into a normal for longer environment.

there is nothing wrong with 4.5% on the 10 year treasury. jonathan: normal for fed funds? annmarie: somewhere between 3.50% and 4%. before the financial crisis is was four in the long run. tom: i just found my new best friend. i agree. jonathan: it is love. tom: this is quite right. this is the right way of thinking about where we are going. i think 3.5% to 4% is probably the right range to consider this in. the good thing about that is that is roughly what the market is expecting. i do not think there has to be a big recalibration as it relates to the market because expectations seem to be right although the market has tended to things -- to take things too

far. jonathan: equity futures positive on the back of the economic data. this is what you missed. .3% is the number for cpi. 0.4% was the estimate. stripping out food and energy, .3 against estimate 1.3. the russell is outperforming. the two-year down seven basis points. michael mckee, what stands out to you? michael: a lot of the categories performed as expected. health insurance only up .3% but auto insurance still posting a big gain. down a little bit from last month but still an outsize gain. airfares were down .8% because

the cpi tends to include what people are buying for vacation time. we will see if airline fares can continue to behave. for the record -- jonathan: for the record it was taylor swift weekend in paris and i booked the flight the day before i got it. it was not cheap at all. i did not get to watch the concert. can you imagine me at a taylor swift concert? mohamed el-erian would be there. lisa: he is now a swiftie. jonathan: he will join us for a review of the taylor swift performance on saturday apparently. this will work itself out over the next 12 months. is that still your stance? david: if you look at airline fares, we have air travel back

above pre-pandemic levels. plenty of demand. the airline industry is competitive enough repairs to go down. in some areas of services and throughout the good industry is enough competition to push inflation down. this is not an inflationary economy. the only time this is an inflationary economy is when you have a huge supply chain disruption and huge fiscal stimulus when you are giving money to low and middle income households. that is one way to generate significant inflation. once you take that away inflation will drift down. annmarie: you think the market reaction is retail sales? tom: i think it is better than feared. this could have easily been .4%. the thing about inflation -- i don't know about the wisdom of

stripping out an assortment of different things. stripping out 50% of more from the weight of inflation, i've no problem stripping things out of inflation. what i would say is if you want to do that, go the next step. what we know his auto insurance has been a thorn in the side of inflation. there is nothing the fed can do about that. if you strip that out inflation will do better. there idiosyncratic sectors that are really impacting inflation that the fed has no ability to control. david: the fed have a good reason to set target at 2%. so long as you are thereabouts, you are ok. then what you do is do know people. do not distort financial markets by having rates at an incorrect level. annmarie: should the fed be targeting 2% or 3%?

david: in canada they have a range of 1% to 3%. if we get in that range we are fine. tom: i agree. this is terrible, i am sorry. [laughter] david is using canada, i've used the rba as an example. saying 2.0% to me just rights me as the pinnacle of hubris. you rarely see 2.0% for any time. a range is the right way of thinking. david: it caused tremendous problems last decades because they kept rates too low for too long as they were trying to get inflation to 2% that fueled a lot of asset bubbles and real estate bubbles. anyone who took the university of michigan survey was listing to this and saying "what are they talking about, we are in goldilocks land, it'll be a great economy, we can sustain

this. jay powell is great." where is the disconnect? tom: it is an important idea. i think about my parents who do not have the foggiest idea what i do for a living despite me trying to explain it. when i tell them inflation is improving, my father loves to say what the hell are you talking about? i am still paying more first off. that is the disconnect. we look at the percent change in price level terms. in price level terms it is elevated and that is a problem from a consumption perspective because a lot of these things are fixed costs like auto insurance or food prices that will continue to chew into disposable income. david: you need to fade the university of michigan sentiment index because they have changed their methodology and are starting to interview people on the web as well as the phone. jonathan: i have been waiting

for that call for ages. 560 lucky people. now you get asked at the moment. lisa: how antiquated is calling someone on the phone? david: the problem is they changed methodology headed not to a level adjustment. -- they changed methodology and did not do a level adjustment. this is technical. if they do not do a fix to this the university of michigan survey will be about 6.6 index points below where it was a few months ago forever. this change in methodology messes up the numbers. i know everyone get excited if number mrs. consensus a lot and that happened. tom: just to amplify, for whatever confidence numbers are worth, confidence has been downbeat. spending has been robust. we are faders of the michigan

numbers, too. i think the inflation expectation numbers within michigan are useful. jonathan: sometimes it is nice to get along. this was great. tom porcelli alongside david kelly. equity futures positive .6%. i've said a few time in line is the new beat for economic data. in line encore. rally in the equity market. downside surprise on the retail sales. down on the two-year nine basis points to 4.73. let's cross over to dani burger with your bloomberg brief. dani: shareholders of bhp and anglo american expect bhp to come back with one more bid. anglo has twice rejected bids but shareholders told bloomberg they think is the third one is on the way before may 22.

anglo said it will exit diamonds, platinum, and coal to a piece shareholders. boeing may face criminal prosecution after the u.s. justice department says it violated an agreement tied to deadly crashes five years ago. the settlement reached in 2021 had allowed boeing to avoid criminal charges. according to a recent filing boeing breached it by failing to design and implement, and enforce compliance. now boeing has four weeks to respond. comcast is betting on the return of the bundle. comcast says it will offer a streaming package that will include apple, netflix, and peacock at a vastly reduced price. the new bundle will be called stream saver it looks exactly like -- the new bundle will be called stream saver. jonathan: coming up, setting you

up for your day ahead. from new york, this is bloomberg. ♪ finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah.

jonathan: this is the recipe for a rally in the equity market. retail sales softer than expected. cpi on headlines lower-than-expected and core cpi in line, .3% against an estimate of .3%. equity futures positive .5% on the s&p and lower by nine basis points on the 10 year. here is the trading diary for the next 24 hours. a host of fed speak. plus another look at a consumer with walmart reporting before the opening bell followed by jobless claims. final thought? lisa: it is the dissonance

between financial conditions when the stock market rallies not being a problem and when it falls not being a problem for the fed? is this market saying a rate cut will be positive for stocks and anything else will be neutral? is ed yardeni right? annmarie: 3.6% annual inflation rate is the lowest in years. this will be welcome news in the white house. this is the new factoid the president can talk about. there was a new poll and this is what is on the mind of voters. the biggest financial challenge for 80% of voters is what is weighing down the poll numbers. jonathan: d has the calendar on his side. lisa: does it matter if it is a matter of the absolute value going up? it has been disinflation for a while and it has not translated? how do you translate this story on wall street to a main street story that has been levied on the internet that is an effective is leaving people

feeling sour. jonathan: consumer sentiment speaks for itself. futures are positive .5%. the conversation continues through the day. coming up tomorrow we will catch up with julian emanuel, the brilliant libby cantrill of pimco, and michelle meyer of mastercard. if you are just joining us, retail sales a little softer. cpi in line encore and equities doing all right. .5% on the s&p 500. in the bond market yields are lower. on the two-year down nine basis points. on the 10 year we are down nine basis points. the dollar is weaker against the euro. positive .4% on the currency pair. dollar-yen down to 1.55. -- down to 155. from new york city, good morning. this was "bloomberg

surveillance." ♪ her uncle's unhappy. i'm sensing an underlying issue. it's t-mobile. it started when we tried to get him under a new plan. but they they unexpectedly unraveled their

“price lock” guarantee. which has made him, a bit... unruly. you called yourself the “un-carrier”. you sing about “price lock” on those commercials. “the price lock, the price lock...” so, if you could change the price, change the name! it's not a lock, i know a lock. so how can we undo the damage? we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. okay, that's uncalled for.

live from new york for our viewers worldwide i am matt miller. the countdown to the open, starts right now. matt: coming up a downside surprise.