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. ♪ >> the fed is putting pressure on the economy, more pressure than frankly is needed to get inflation down. >> i think the fed wants alacrity in the decision so they can get off the pot. >> we learn collectively have interest rate insensitive the u.s. economy in particular has become. >> the rates policy is definitely restrictive. >> i think they are restrictive and it can take out some readouts. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: live from new york city this morning, good morning, good morning for our audience worldwide.

this is bloomberg surveillance. all-time highs in the s&p 500 with the three day winning streak, 20 fourth record close so far for 2024 and the main event is coming right up, $2 trillion market cap. there is only one name, nvidia. lisa: the most important macro economic event, one of the most important events on the calendar that's where we are at with one name, one company can dictate the macro economic backdrop for an entire market and that's today. jonathan: raising the bar once again going into the numbers later this afternoon. barclays raising their price target, expecting a beat and a raise. annmarie: it's not about if they beat expectations but it's by how much. the bar continues to increase for nvidia that they need to clear. to avoid a selloff, they have to

be estimates by 15%. jonathan: it's about target or tarjee. lisa: it's the upper crust of that kind of store which maybe they want to get away from. jonathan: up 2.5% in the premarket. we will get price reductions on 5000 goods. i imagine they will give us more detail on that later this morning. we know consumers are feeling pressure. just last week, walmart executives receiving customers trade into walmart. last week was macy's as well. customers will continue to be discerning and that's the theme across retail. lisa: we have profound uncertainty with the consumer, slowing but not slow, softening but not soft.

more discerning but still spending dramatically and that's the key question -- how much is this a statement of why these companies are shifting their product mix rather than projecting weakness in their earnings? annmarie: mohamed el-erian came out with a piece talking about the risks with the fed being data-dependent and one is the concern of the data dependent fed coming at the risk of a number of companies expressing concern about weakening consumer demand. that is particularly the case for those serving a lower income household where pandemic savings have been depleted. jonathan: the little later this morning, we hear from target and after the close this afternoon, we hear from nvidia. we will also hear from fed speak as well. also we get the fomc minutes later today. the standout for me for the comments in the last 24 hours, the fact that the last inflation report was graded and only gave it a c+.

this market got carried away with it. lisa: it's passing but not great. he said they need to see several more months of good data. that can give them the confidence. this was the theme for all the fed speakers. none of them are comfortable talking about rate cuts in the near future with the idea that maybe we are talking about only one this year. i wonder how much the market will come around to this. annmarie: c+ is a grade that would be unacceptable to my parents, far from failing but not stellar. what is the confidence they need to find by? some say three months. this poses us -- this pushes us well past the election. jonathan: governor waller and others seem comfortable with where policy is right now so will they cut but they definitely won't raise rates.

it will cost the economy to go off a cliff? would they respond to weaker data? are they expecting it to fall of a cliff? no. later this hour, we expect the first basis point rate cut in july. that's just around the corner. what do we need to see between now and july to get that first cut? lisa: how much do governor waller's comments change things being that they've set the bar higher and given the fact we're just not seeing it in the data? we don't have the luxury of three months of data before july in order to get that confidence. what kind of weakness would we have to see? jonathan: the big theme this morning so let's turn to the price action on the s&p 500. we are negative by only 0.1% and yields are higher in the bond market by a couple of basis

points. looking at foreign-exchange, christine lagarde saying this about inflation -- we are confident we have inflation under control but that's not what you will hear from the bank of england after the print we got early as morning and not what you hear from fomc officials either. the ecb seems to be in a unique spot at the moment where they are able to commit to their next move. they commit to the idea they've got inflation and price pressure under control. lisa: germany's been basically in recession and you've seen pockets of weakness. that is either a luxury or not but they are catering to that and at summer obvious area to cater to than in the united states. the u.k. is in its own world and the economy is not great but it can -- but inflation is not coming down nearly enough. europe seems like less of a mystery with the weakness offsetting the inflationary pressure. jonathan: in the u.k., one

dollar $.32 on sterling. if you are looking for a cut in june, london is shifting to later this summer or perhaps august. think about the growth policy mix in europe. it was absolutely dreadful in the last 12 months. you talked about recession in certain countries and that was at a time when the ecb had to remain committed to higher interest rates. now you could make the argument that the weakness is behind us and they will start cutting interest rates to a recovery in the euro zone while -- which is why some people are you looking at non-u.s. equities. lisa: they've been talking bout that all year and its work. it you look at the stocks 500, it's outperform the s&p 500 by a wide margin. europe is talking about industrial policy more than the u.s.

jonathan: let's talk about industrial policy and the prospect of tariffs on the european automakers. that was the standout overnight. a little bit of a teaser of china's reaction potentially to tariffs that might come through from europe. annmarie: that's what it was, a teaser because the china chamber of commerce went to the european union and went on twitter and says it was informed about this potential move of tariffs by insiders. this would affect u.s. and european auto companies. those goods going into china, china signaling it's ready to unleash these tariffs as high as 25%. this sets the stage for not just tit-for-tat washington-beijing but tit-for-tat beijing-brussels. jonathan: i wonder what mercedes-benz is saying on the record and behind closed doors of this happens? lisa: shares are declining right now but who has the bigger leverage? who is importing more cars? that raises the rate -- the

concern of retaliation given what the imports are from china now into europe. annmarie: the bmw chairman recently said we do not want to shoot ourselves in the foot with these kind of tariffs, warning the european union. what do they say publicly because they want the access to chinese markets and what do they say behind the scenes? jonathan: they want to maintain access to what's happening in china. can they achieve that? can you continue to sit on the fence and entertain chinese markets at the same time as maintaining a presence in places like europe? i think it will be tougher companies to do. they will have to pick a side in the years to come. jonathan: olaf scholz said you automakers have to deal with weakness when we put up those walls. i don't understand how this will happen if they don't, what is that mean if china is overproducing so many electric vehicles at cheaper rates. what does that mean for the auto sector long-term?

jonathan: let's get you some stories elsewhere. dani: u.k. inflation came in hotter than expected in part due to continued price pressures at restaurants and pubs. it was 2.3% which is the smallest increase since 2021 but that's the upper end of where the forecasts were at. andrew bailey said he expected a drop in the inflation prices. the less investors push back now less than two are -- to cut surprised into the boe. tiktok is told employees it plans to lay off staff in its marketing and operations teams this week. the exact number of job cuts is not clear but unlike other tech giants, tiktok rarely conducts large-scale layouts but at this moment, tiktok is battling with an uncertain future facing the law that will ban the app in a year unless it divests from its parent company. barclays is latest wall street firm to consider asking its

workers to get back to the office. some managers of already started warning employees to prepare for five days per week in the office . the decision comes after a series of requirements are set to take effect in coming weeks which includes requiring brokerages to list home offices and regulatory records. jonathan: thank you. i'm not the only one who read that story and thought that there are people at banks not in the office five days a week? lisa: i think there are certain places where that's their one selling point. how many people are surprised by this? really? they have to go to the office? annmarie: i like that because they are doing that for a finra rule change. jonathan: i thought everyone was back in the office. annmarie: you hated being at home. jonathan: i couldn't stand it. up next, biden closing in on the swing states. >> folks, the threat that trump

poses is greater in the second term than the first. >> i talk about them differently now because now the gloves are off. jonathan: the gloves are off, that is next from new york city's morning, good morning. ♪

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jonathan: equities on the s&p 500 at another all-time high close yesterday. they are now down by 0.1%. biden closing in on the swing states. >> folks, the fact that trump poses a threat in the second term. the fact that he lost in 2020, something snapped. >> the whole world is laughing at him.

he is a fool. he is not a smart man and he never was. i talk about them differently now because now the gloves are off. jonathan: here is the latest, former president donald trump's leading -- lead in swing states is taking a small tip. biden is leading by no more than two percentage points in michigan and pennsylvania. jennifer joins us now for more. going into november, what are the policy options the white house has left? >> i think they just did one this past week in announcing the release of oil reserves. they will have to try to find some way of affecting those prices that people are feeling when they go to the gas station

and paper food and they are looking at the mortgage rates right now. the fed is not very helpful so this administration will have to do things that allow for the family moving forward in the economy and folks to feel more is in their pocket. right now, compared to three years ago, everything just cost more. annmarie: the white house may deal with student debt. does that resonate with the electorate? >> it depends who is affected. sometimes, it sort of alienates those who don't go to college. we forget there is a huge segment of the population of people who don't go on to further education post high school. those blue-collar workers or small businesses, entrepreneurs sometimes, those folks are not affected by that.

sometimes there is a disconnect between those who feel like they are paying for those student payoffs and those who are actually receiving them. annmarie: looking at michigan, pennsylvania and wisconsin, is very tight. how critical are these three states to joe biden? can he win without holding the blue wall? >> that's an excellent point. that's exactly what he has to do. his pathway to a second term is through the states of pennsylvania, wisconsin, michigan. and he needs to bite off one of the sun belt states. it's the reverse for donald trump. as we look at the polls, his best route is probably through nevada, arizona and georgia and getting one of the steel belt states. this is where their focus will be. we are 166 days away from the election. we know it will tighten and it

will tighten further once folks really start focusing when kids go back to school in september. lisa: people have been talking about not voting at all because of the same race being reenacted. will they stay home and some of those swing states? >> yes, once you do the cross tabs, you will find demographics , you will find swing voters sometimes are those who are willing to swing, progressives, young people, these are folks or not necessarily go to to vote for trump they may stay home. they may have their vote suppressed. that really matters when you are in a state like michigan and the 20,000 voters you were trying for don't show up.

the fundamentals of this election are still true and we see this in the polling. it comes down to the issues of inflation and immigration, crime. on the others, abortion and the democracy chaos issue on the democratic side. lisa: is there anything the biden administration can do around inflation when it might be decelerating but the inflation is baked in? will it change before the election? >> some suggested maybe be about messaging and having a better message and looking forward to the future. i think you've hit on the question and that's the question the biden campaign are wrestling with constantly. they probably will up to election day especially if our economic circumstances and the way people are feeling the economy stays the same. jonathan: i want to talk about financial regulation. the head of the fbi seat is stepping down.

--the fdic and the bank lobby has won out over capital requirements. what you think the future of financial regulation will be regardless of who wins the white house in november? >> mr. bloomberg has announced he will resign but he will step down only when his seat is filled by a confirmed new director. i think we may have a little more time with him. of course, the bank lobby to your point, there is a real push to get a proposal. the fdic would like to make some minor changes on the basel three issue. but the fed seems to be a little more open to pre-proposal. you will see congress push on this issue. there have been some interesting

hearings were you've seen some bipartisan concern with the proposal and the request for re-proposal. i think this will continue to play out over the rest of the year. lisa: do you think we will see anything substantial when it comes to this ahead of the election? >> if i had to armchair and look at this issue as the likelihood of the time we have in washington, i think it's unlikely. i think it's very possible that we see reproposal. i know many folks downtown and those on the hill are constantly working to see that happen. annmarie: i know you focus on policy and one of the biggest policy fights will be taxes in terms of the financial umbrella. what are you expecting in terms of the extension of the trump you're a tax cuts?

at what level do you think they get extended? >> no matter who is president next year, you are right, there are number of provisions in 2025 that are expiring. it's going to look very different depending on the makeup of congress and the presidency. so much is riding on this election as it relates to taxes. if you have a trump presidency with a majority in the house for republicans and the senate, you can have a much larger reconciliation package on taxes, something similar to 2017. if it is a biden presidency and you have a split congress, it will have to be negotiated package. you have a number of different provisions from salt to the individual tax rates and child tax credits. those will all be part of the negotiation. it will have to be a bipartisan

package. lisa: we are about eight minutes away from the spec did release of target earnings. this comes at a time when it will be key to see what kind of messaging they can do to make people feel better about the fact that things are more expensive than they were three years ago. the white house said monday that they want grocery chains to lower prices and target have lowered prices and say they are delivering. is this what will win when it comes to messaging? >> that's a great question. i think we saw this in the state of the union, the idea of shrink inflation and forcing the issue onto corporations come onto those who deliver services, onto those who deliver goods. i don't see that that is where americans are focusing their concern. i do know as far as institutions

go, grocery stores are pretty high and the support of the american people. institutions in washington, much lower. i think that might be a difficult one for the american people. jonathan: thank you for your input this morning. this is still the number one issue going into november, isn't it? annmarie: looking at the poll results and you asked respondents, name transit -- three things about the economy want, prices of goods is a concern. the biden administration talk to a bunch of target executives and others. they are cutting prices because they see they had to further business. potentially, you are seeing weakness in the consumer and the white house is trying to act like target is cutting prices because of the outreach from the west wing. that's not factual. jonathan: let's talk about walmart. walmart is getting business because of a trade down. trade down from home?

it's a trade down from target. that's why the target numbers are so important. lisa: they might push back against tarjee because they just want to be target. i wonder if the people trading down or going for more expensive stores. people are looking to be cost-conscious and they want to compete. you are raising skepticism that maybe this wasn't because of the white house meetings. you can make your own conclusion that this is what they are doing. jonathan: i don't think it's because of the white house meetings. the stock is down about 0.4% in the premarket. look out for david malpass, the former world bank president and annmarie called -- caught up with him last week. thank out think -- how busy things will be for the next administration. spending bills will likely be extended long enough to kick the can into next year and tax rates will rise at the end of 2025 and

was congress and the president can agree to extend the provisions in the 20 tax cuts and job act. we will pick up on that conversation later this morning. coming up shortly, we will talk about the cuts coming to disney and the return of the bond op. equity futures are pulling back a touch. we closed at all-time highs in yesterday's session. from new york, this is bloomberg. ♪

♪ jonathan: live from new york, welcome to the program and equities on the s&p 500 are lower by almost zero point 2% after closing at all-time highs in yesterday's session. on the nasdaq, 20 four record closes on the s&p 500 so far this year. in the bond market, yields bleeding a little bit higher. just getting numbers from targets a let's switch gears.

they see second-quarter adjusted eps at 235 in the estimate was 219. we are listening to what some of the executives are saying and they are a little cautious. lisa: they're full-year adjusted earnings expectations is within the lower range of what was expected, $8.60 to $9.60. the comparable sales were lower on the first quarter, down 3.7% versus the estimate. this doesn't scream of the strength we saw at walmart. let's dig under the hood to understand what the cost cuts have done to their margins. jonathan: the range is just about in line but to your point, the outlook is not convincing. target is down by 3.7%. we've heard from executives that they are cutting prices on 5000 goods and is clear companies like target don't have the pricing power they once had coming out of the pandemic.

lisa: so many people of questions over how much they can compete with the likes of walmart with her online offerings. i want to understand whether this is an execution issue or a branding issue or its what has gone on with management or this has to speak to the consumer. annmarie: the cheap growth officer spoke about pressure in the future adding that demand for home products is staying soft. they say they continue to search for value. we continue to hear that nuts are some target and walmart but consumers searching for value and discretionary spending is already to get more judicious. jonathan: looking at the communication we've had from a range of names and retail over the last few weeks -- we heard from target but walmart said customers are trading down at walmart. macy's said customers continue

to be discerning in the year ahead. at starbucks, we feel the impact of the cautious consumer mcdonald's, the consumer is more discriminating. lisa: how much is this the new currency headwind? how much is this the blanket coverall as companies try to navigate this? while the rhetoric has been similar, the actual performance has been different. this raises the question of how important is execution? can we extrapolate into a macro statement about the consumer? we saw that for macy's and the fact they were going to the higher income consumer. with walmart, they say people are trading down. there are different sides of execution. annmarie: there is a bifurcation where it comes to consumers and their ability to spend. mohamed el-erian talks about what fed officials are saying and he says the concern he thinks the fed has on data-dependent comes with risks

and one of them is how companies are expressing concern about weakening consumer demand. he said those of the transitory people were not listening to the earnings calls. for fed officials listening to corporate's that are saying there is concern when it comes to a healthy u.s. consumer. jonathan: the messages coming through loud and clear from the retailers. target is down 6% in early trading. elsewhere, some top stories for you -- fed governor christopher waller says softening data in the 3-5 months could allow the fed to cut by end of the year. messer in college also urging patients and more data. i've got no idea what additional information we could get from them this afternoon after we've heard from all of them repeatedly in the last week or so? lisa: you can ask them later today or tomorrow or on friday

because there's plenty more fed speak. the one thing people are not talking about as much was rafael bostick in one of his speeches. he talked about how everyone is rethinking the dynamic of where neutral is. we heard that from paul krugman as well saying he is fanatically uncertain about where the neutral rate is. this raises the question of how they can have any conviction whatsoever when coming up with projections. if they are talking about dots, these dots are highly confused. jonathan: in fairness to rafael bostick, he wasn't overseeing his own press conference. lisa: we welcome every single one of them. jonathan: in china, sending signals about retaliating trade tension over ev's saying levees could be raised in europe up to 25% and europe will announce a probe into chinese ev subsidies next month. the timing is not a coincidence.

this is a potential threat against what might happen if the europeans go through with it. annmarie: they are trying to fend off what the eu potential he going to follow through with in this probe when it comes to not just ev's but a number of things they see that are being dumped on the european market from china. china is going to their chamber of commerce to the european union and this is the statement -- china chamber of commerce, the eu was informed by insiders that china may consider increasing the tariffs in the insiders are the official at that ccp in beijing. jonathan: we can see all through this. disney announcing job cuts. they pick up about 14% or 175 employees. bob iger is looking to cut because and comcast is announcing its streaming bundle will start at $15.

we can do all of that. let's start with pixar. what is the strategy here and why pixar? >> the strategy is nothing new. it's all about the cost cuts. what they are moving to now is his new era of the media streaming ecosystem. it's less is more and especially with disney, they are going back to a more normal cadence of content output and the mantra for bob iger has become quality over quantity. you had the whole pandemic air when they were rushing to put out all types of content on the streaming platforms and that did not serve them well. they did not think through all those ideas. it led to a lot of content saturation but also cost them because there was $4 billion in streaming losses in that year. they are trying to rationalize -- ration their content out and that is what is driving these

cost cuts at pixar. if you think about why they hired people in the first place given it was to produce a lot of contact for the disney platform and looks like they are walking that back in focusing on the feature films. jonathan: when you say getting back to a normal cadence, can you give us some numbers around that? what was the traditional cadence, what to do become and what will it be in the future. is pretty dry this year and it's expected to pick up next year so what can we expect? >> in terms of disney's content budget which includes tv, the studio and streaming business, during the pandemic when they were producing a lot of content especially on the streaming platform, almost 33 billion dollars, that came down a little bit last year but now it's down substantially. it will be about $25 billion. that's really what they are looking at. they are looking to come down in terms of producing content

titles of making sure it resonates with audiences and this whole focus on quality versus quantity. in terms of the output, this year the theatrical output is light due to the hollywood strike last year but we will get back to a kind of more normal cadence going forward. we will see that on the pixar front as well. we have the big inside out2 coming in june and we have toy story2 coming out in the next couple of years. lisa: we said pixar is the jewel, the hopping lamp that people love. is this peak content but we been passed that for a couple of years? is there just too much out there and there's a recognition of that from every streaming service that they need to consolidate and produce less and have more streamlined way of delivering to consumers? >> it absolutely is.

there is this recognition across netflix even which has won the streaming wars. it's now talking about really walking things back when it comes to putting out content. if you take the instance of netflix, they were having about 80 new films they were producing and throwing on their platform. that is down to about 25 this year. there is this huge content rationalization across the space and in terms of pixar, they got burned pretty bad especially during covid because they had three of their movies go direct to the streaming platform. that hurt the studio pretty bad. when they came out with their theatrical releases like lightyear and elemental, they didn't perform as well as people had hoped. i think that's why you are seeing this walk back on the

strategy especially on the streaming side. the studio executives are really going back to what they know best which is putting films in theaters because that is how you really make money. annmarie: will they deliver on their promise to break even when it comes to streaming by september of this year? >> they are already there. the court or they just reported, they actually had a modest profit. in the fiscal third quarter, they said they will have some losses but if you look at it in the context of the entire year, we will probably see them near breakeven. that is a huge improvement. two years ago, it was about $4 billion in losses and last year it was 2 billion. hopefully, they will drive that going forward. jonathan: great to catch up with you as always. let's turn back to the target story in that name is down by 1% in the premarket. if you don't beat this earnings

season, you get punished and this is another example that this morning. the numbers for the fourth quarter came in largely in line and they are still fighting to get back to growth and it was a down quarter down by 3.7%. but the outlook totally was unconvincing. the estimate was 219 and the outlook for second-quarter comp sales, an increase of 0-2% as the fight to get back to growth. lisa: and they are facing a lot of protest or over a number of their sales items. they had a number of different people cutting some of their offerings. this goes to starbucks as well. how much has the political component challenge the recovery the time when consumers are being discretionary? it might move the dial at a time when consumers are facing a number of different headwinds. jonathan: you are saying

idiosyncratic? when i mention the quotes about starbucks, there is an absence in the conversation about boycotting star cuts -- starbucks because of developments in the middle east. is this about the broader consumer for individual names like what happened with target 12 months ago, like what's happening with starbucks now and how much is about execution and the i-word. lisa: idiosyncratic can be broadened out to the people in the strongest position will win and the people who have any weakness will lose most because this is a time of exacerbating differentials. that's one of the messages we keep hearing. jonathan: that stock is getting hammered in the premarket. we've seen moves like this with target as they get pushed around and they are getting pushed around now. dani burger has more for you. dani: donald trump's defense team will not be calling the former president to the stand in his hush money trial.

they've wrapped the case in closing argument start next week. lawyers in the classified documents case are due in court today. it's the first time since the judge and deftly postpone the trial earlier this month. the judges scheduled their arguments on the trump request to dismiss the indictment on grounds it fails to clearly articulate a crime. along with target, we got another retail reporting results, urban outfitters rising 5.5% in the premarket trading post posted first-quarter sales that beat estimates. it's anthropology and free people brands are what drove the momentum. the chains posed a higher-than-expected hells that help offset the weakness. boeing and nasa have delayed the launch of the star liner space taxi yet again. this time is the to reviewing a helium leak. the launch set for may 25 has been put on hold. it's another delay in another setback of which there have been many.

cost overruns on the project and technical glitches in botched test flights as far back as 2019. that's your bloomberg green. jonathan: we will catch up with danny again in 30 minutes time. next up, >> in the absence of significant weakening in the labor market, i need to see several more months of good inflation data before i would be comfortable supporting easing the stance of monetary policy. jonathan: governor waller freezing the policy and we will talk to a man who thinks we can get somewhere up next. ♪ [introspective music] recipes. recipes that are more than their ingredients. ♪ [smoke alarm] recipes written by hand and lost to time... can now be analyzed and restored using the power of dell ai.

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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. jonathan: equity futures any s&p 500 are negative by 0.2%. bond yields are higher by three basis points.

the path to a july cut -- >> in the absence of significant weakening in the labor market, i need to see several more months of good inflation data before i would be comfortable supporting the easing of monetary policy. the latest cpi data was a reassuring signal that inflation is not accelerating. data on spending and the labor marts -- larp market suggest that monetary policies at an appropriate setting to put downward pressure on inflation. jonathan: several fed speakers echoing higher for longer before the fed decision. they are rethinking views on the initial rate. good morning to you. what needs to happen between now and the end of july to make this happen? >> like i was saying the peas,

it comes down to the data. we could spend all of our time listening to fed speak which is important and gives us guidance but where they will go will depend on the data. we think we will see the softer inflation and softer activity and labor markets. it will probably get less attention because we been so focused on inflation. if you put those together, that will be a pretty powerful signed to the fed that is time to start cutting rates. jonathan: governor waller gave the last inflation print a c+. that's not great. c+ four inflation last month. what needs to happen in the next print? >> if we are going to run that with this analogy, it was interesting because he gave the c+ to the april report but he didn't say would gpa i will need

for the next one. i think ab is probably where he wants to be. we are coming in this core pce rating at about 25 basis points. if we can get around 20 basis points, that's probably enough. i think that's where we will be. lisa: our circuit -- are certain economic data points more heavily rated? if you get an a on the unemployment right, they are ready to go? >> it's been an a or a+ on the labor market for a while. >> that means it's good. the good data you've had unemployment is why we have so many fed speakers talking about higher for longer and patience and the idea there is a luxury

of not being in a rush and not having the urgency. that will change if we see more weakness in the labor market. lisa: you have one ear open to fed speak and your focus on the data. governor waller's comments in tandem with a host of other fed speakers has to put a little bit of damper on the july rate cut. how much higher is the bar now to achieve what you are predicting? >> i think what we heard from waller is his base case is to cut rates around the end of this year or next year. the dovish thing he said is he certainly not thinking about hiking rates. he is headed to a cut and once he starts cutting, he will be cutting at least every quarter is what he told us. the bar for him to move that rate cut earlier is not that high. if you read the full quote come he says i need to have better gpa on the inflation data or see some weakening in the labor market area if he sees

significant weakening, then they will move earlier. i don't think the bars that high for him to move and why are we saying several months? because that gives you flexibility. annmarie: that doesn't bring us to july. don't you have to push back here? >> his base case is that he will cut but it sounds more like november/december. if the labor market data comes in on inflation and its gradually slowing, then i think waller would support november -- december. the core of the committee might be earlier than that. it sounds like they are a little more dovish. it will come down to the data is what they say. jonathan: your research has been on the labor market. it's important we develop that idea more. you are looking for weakness or are we seeing cracks in retail with target down more than a percent in the premarket this

morning. we talked about warnings after various retailers. where do you see convincing information from executives that tells you we will see the pronounced weakening of the labor market in the next several months? >> we are always looking for mutual confirmation between what we hear from corporate's and what we see in the macro data and what we see in some of the survey data. i think were getting that now. we've been waiting for high prices leading to consumers pulling back. when will that be a problem for consumer confidence and spending? it's taken a long time because there was excess savings and there was an ability to go out and spend it looks like we finally hit the point where consumers are maybe not dropping off a clip in terms of spending behavior but saying on the additional latte i might buy, maybe i will not buy it because the price has gone up a lot.

i'm more worried about my job and that's where we look to the labor market data. people are more worried about losing a job. the unemployment rate is still low but it's come up from its low. it's rising unemployment rate in an environment where the hiring rate has come down, it's becoming harder to get hired into a job. the excess savings is run out and we see credit card delinquencies and these things mutually upbraid each other. lisa: we talked about confusing this economic cycle. which sectors will drive the layoffs because we've seen depressions and recessions in the industrial sector and then coming back. we've seen the incredible layoffs in the travel sector and they had to hire massively. who will lay off everybody? >> it's a tale of two economies for consumers if you are a renter, if you are not a

homeowner whose experienced a big rise in the house price, you are pulling back on your consumption and then it's a tale of two economies in the corporate sector. if you are a large corporate and you've taken advantage of low interest rates tomorrow for a long time, you have healthy profit margins. maybe you are not laying people off. if you are a small business or restaurant and you are experiencing higher interest costs, higher input costs and higher labor costs, that's where the pain is being felt. part of what's difficult in the aggregate, until this point, the upper end of the income spectrum, the upper end of large firms has been supporting the economy. it looks like were getting to a point now where the smaller businesses are feeling the pain and that's where we see weakness. jonathan: the three month payroll averages north of 200 k, does it need to come down? >> diff we get under 150 and we

were at 175 in the last report, i think that would be assigned to fed officials that it's a softening labor market environment. jonathan: thank you, thoughtful stuff as always. not the first time he will get consensus. remember when the hiking cycle started? he called for jumbo rate hikes. that's exactly what we got. lisa: he was ahead of the curve when he said stop expecting six or seven or eight cuts. he was more hawkish at that point versus market expectations. he's been right more than not. jonathan: coming up, we will catch up with metlife in the former world bank president on the latest from target with target in the premarket. a tough morning so far, we are down hard from new york city, this is bloomberg. ♪

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>> the fed is putting pressure on the economy, more pressure than frankly is needed to get inflation down. >> i think the fed wants alacrity on this decision so they can get off the pot. >> we have learned collectively how interest rate insensitive the u.s. economy in particular has become. >> i would say the rates policy is definitely restrictive. >> i think they are restrictive and it can take out some readouts. >> this is bloomberg

surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: live from new york city this morning, good morning, good morning. the second hour bloomberg surveillance begins now. it is a massive day for earnings. later on, nvidia after the closing bell. it's up more than 90% year to date and it's ridiculous. they are expecting another beat this morning we start with target. target in the premarket is down by more than 8%. retailers are in choppy waters. lisa: especially because it's not the same story for all of them. walmart came out and talked about a cautious consumer and those shares ended up more than 1% because they were talking about some of the gains particularly in some of their online offerings and with their people but target is a different story. annmarie: they say consumers are searching for value and

discretionary spending is under pressure. they say they are seeing a more judicious consumer. is this idiosyncratic to certain companies? when it comes to wall map -- to walmart or target or starbucks? there is some cracks and we are seeing it in the earnings data. jonathan: retailers are losing pricing power, that's the story. if the retailer is losing pricing power and they want to maintain margins, they need to cut costs so what might they have to do, they have to cut people off? many think we get a rate cut in july because we will start to see the three-month average of payrolls growth decelerate to under 150 and that lays the groundwork for the fed to move. that's against the grain of the moment.

lisa: it could be for a few months. what does it take to get the unemployment rate higher? do we see smaller businesses who are acknowledged being in a weaker position particular in the russell 1000 cracking around the margins? restaurants are struggling and that might be the story rather than large cap names managing this in a more resilient way. jonathan: more fed speak this afternoon. look out for more clarity at 2 p.m. eastern time. equities right now in the s&p 500 are negative by 0.1 percent and yields are higher by three basis points on the 10 year. yields are up across europe as well and inflation surprise in the u.k. meaning a slightly stronger pound against the u.s. dollar.

coming up this hour, we will catch up with metlife woodstock at all time high ahead of nvidia earnings and the former world bank president david malpass t and coreyarlowe about target. we begin with their tap story, stocks hitting all-time highs ahead of the earnings report we been waiting for, nvidia. it's facing sky high expectations and analysts predicting a revenue jump of 243% in the first quarter. good morning to you. i ask this all the time, who is more important to this market? >> i don't think they know what they're going to do. we are in andrews camp with the july rate cut. it will be the weakening of the labor market that will cause it. you've already seen it.

last month, everyone was focused on 175 in 88% of workers saw a decline in real wages. you think how many hours are being given even though there average hourly warnings going up, the number of hours they work is going down in many cases and when you net that with inflation, 88 percent of people are falling behind and that explains why people are responding the way they are. they are wondering how to reduce spending. it's because you buy a cup of coffee and you are in shock. it's not just rate shot for mortgages anymore, it's latte shock. jonathan: three month payroll averaged north of 200 k, where will that be later this summer? >> i think it will be the 150 that andrew was talking about but i think the unemployment rate will be higher. politics at the fed will change as unemployment reaches 4%. lisa: how come this doesn't come through in the earnings which

are ratcheting higher in terms of expectations? the commentary from retailers is that it hasn't been positive but there was an incredible high shortselling quotient of retail companies. it's not like this is unexpected. where do you expect the unexpected to materialize? >> it has been somewhat unexpected. people went from a hard landing and then they went to there will be a completely soft landing. we went somewhere in between which is where andrew ended up as well. what you are seeing in the equity market is planning for the future. what is the next 3-5 years looking like? what are the productivity enhancers in the economy and wearable spending go in the economy? you still have to keep planning for a future that will be driven by certain technologies. you don't necessarily have to plan where the consumer will be shopping. lisa: where does this leave you

in terms of where you think the market is getting it wrong? many say the stock market has shown resilience regardless so it's not this is surly the con ami. at the same time, these rate cuts will not lead to a 2% fed funds rate. you won't see the neutral rates we saw a pre-pandemic. how are you pushing against the grain with the most contrarian call you have? >> i think what you are seeing is if you are going to take a risk coming might as well have some upside so everyone will lean toward the equity space. spreads are tight in terms of credit, you just want to get your money back. it's a matter of doing a beat for the risk i'm taking and people are shifting where the answer is yes. we are not heading back to a zero rate environment. some of the best things that

ever heard our japan moving off the zero rate balance. zero rates are bad ideas and i think people have come around to that view. i think the longer we are off zero the better from a bank of japan perspective and the rest of the world cutting gradually is ok. the real trick will be if the fed can manage to cut rates just enough to keep us from going into a deep recession or downturn? i think the risk right now is that they either hold out and cut too much too quickly and overstimulated things which they are trying to avoid or they don't cut enough. they have to thread this needle in order to keep everything on an even keel and avoid singing on a plummet rate with a five handle or higher. jonathan: you mentioned bank of japan. this is not the disruptive journey we thought it would be.

we thought he was season real problems in fixed income. why have things been much calmer not only in japan but europe as well? we didn't have the peripheral debt explosion. >> the qe is a special, you could do two hours on that. on 10 year yields, the vast majority of people saving for the long-termer saving for retirement. if you have a zero rate on your 10 year yield, people have to save more, not less. so you reduce the rate of growth in your economy. you boosted by allowing yields to move higher. rick read her was hinting at stuff like this is not surprising we work at the same place at long time ago. if rates are at the levels they are at in the united states now at 4.5, that's the optimum level for reducing the rate of savings and stimulating the economy.

this might be more of a future where the 10 year yield is around this barrier. if it drops below four that's a problem but if it goes above five that's a problem. jonathan: what is the new equilibrium with that in mind? i don't want to call it the new normal but what is the normal now? >> it's kind of 4.5 on the 10 year and 3.5 on funds. it depends on the activity going forward and we are bullish on productivity going forward because of artificial intelligence and related areas around that and what that can do for people and what it can do for the training of labor force. we think that's the material that it will have an impact on. lisa: we also get existing home sales today and a slew of housing data this week. there is a school of thought that if the fed cuts rates, this will cause housing prices to fall. do you agree? >> lisa: lisa: yes.

how does this play out given that people think of high rates as restrictive and if you lower rates, you actually end up triggering a cell often certain asset classes? >> i think it will play out on the upper end consumer that's paying off their mortgage and might be more invested in stocks to see there is overall net wealth and an increase that they did not count on and they cut back on spending or pay more attention to prices. as well declines, people make -- pay more attention to their outflows and they are accelerating. go to a grocery store and when was the last time you put something back? you picked up something off the shelf and looked at the price and said i can do without. lisa: i can't deal withevel over a certain amount. my level is six dollars. blackberries, raspberries but not live varies. when they are eight dollars,

absolutely night. jonathan: you got that? >> i will try to bring it in at $7.99. jonathan: thank you, we appreciate it. target is down by seven or 8% in the pre-market. dani: the shares of target are lower in the company's outlook fell short of estimates. the company said they remain cautious on their growth outlook and expect discretionary spending to remain under pressure. target announced they would cut prices of about 5000 items other stores. tesla is losing ground in europe. it sold under 14,000 cars in the month of april. that's down 2.3% from a year ago and it's its worst month since last january. there is an exception europe coming ev sales overall rose 14% in the month. there is a downturn in shipments from their chinese factory which

contrasted the strong growth for china's plug in car industry. oaktree capital is taken ownership of the italian football giant not because they bought the team because the club's owner defaulted on a loan. it is rare for them to take over the loan instead of extending it. they had been in talks with pimco to refine its debts but couldn't get a deal done before the oaktree deadline. enter milan had just won their championship last month and that's your bloomberg brief. jonathan: i would left except on most the same thing happened to my club a few years ago. what is about milan clubs being taken over by asset managers because they can't pay their loans? lisa: the coaches suddenly responsible?

jonathan: we own football clubs now? when we were taken over, we won the league. we hope the same thing doesn't happen at inter milan. up next, closing the gap in swing states. >> the fundamentals of this election are still staying true and we see this. it comes down to the issues of inflation and immigration, crime. we are 166 days away from the election and we know it will tighten. jonathan: that conversation is just around the corner. live from new york this morning, good morning. ♪

jonathan: live from new york city, welcome to the program. equity futures are softer by 0.1 percent after closing at a record high yesterday.

closing the gap in swing states -- >> fundamentals of this election are still staying true and we see this in polling. it comes down to the issues of inflation and immigration, crime. on the others, abortion and the threat to democracy is the issue on the democratic side. we are 166 days away from the election and know it will tighten and it will tighten further once folks really start focusing. jonathan: president biden closing the gap of donald trump, making gains with swing state voters in the month of may according to the latest bloomberg poll. the poll also shows more than half of swing state voters are worried about violence following the election. this is the argument we hear a lot. good morning. the closer we get to the election, the more focused the voters will have in the base

case is those voters once they become more gains will lead to president biden. why is that the base case of so many people? >> nice for having me this morning. that's what you're polling data is telling us. a disproportionate number of undecided voters in your polls and many others are independent voters, female voters, minority voters and dual haters. that basket of voters was bidens demographic in 2020. when you look at the date at now versus 2020 turn out, trump is not ahead of where he was in 2020.in a state like wisconsin, he is underwater by 10 points with seniors 65 end up in those swing states, the same is true in arizona where is down by about seven. the dealt test the delta between trump and biden is because biden support level is withholding. those withholding voters will

either go to rfk junior because they are undecided. the natural tendency of that basket should they get off the fence most likely after labor day or after the debates next month will be an inclination toward biden. they are not a natural restingplace for a trump voter. that's the basket of undecideds. annmarie: your research talks about the demographic shift would biden winning the older crowd while trump is bringing in some of the youth. what is responsible for this? >> it's fundamental stuff, little morbid but the 65 and older demographic is very different than it was 10 years ago. last time trump was elected, the supporters went for him in 2016 are no longer with us. that's no longer the greatest generation. this is the woodstock generation and those are some liberal democrats or are disproportionately coming out in favor of biden.

the delta is seven points in your pole in arizona and 10 points in michigan. these are high propensity constant turnout voters. they represent a 30% basket of the overall democratic that turns out the vote and a lot of trump's gains were swapped for wildly unreliable voters. that's your 29 and under cohort. if you look specifically at young black voters, the delta between 65 and up demographic on the 29 and under is something like a 300% more likely voter for trump in the youth demographic. i think those are pretty unreliable numbers but the most defining characteristic of those specific cohorts is that they don't vote. he has swapped support in the polls for a demographic that doesn't traditionally turn out. he swap them for a group that's

reliably voting and happens based off of time having gone by that these are a cohort of voters that are more democratic than republican. annmarie: biden cannot win without holding onto the blue wall. he performs estimable wall states but he still behind. in wisconsin, trump is still beating him in michigan is the only place he's winning in pennsylvania, 46% biden and 48% trump. what does he need to do in these states critical to winning the white house? >> you see the administration deciding trade is the direction to go. there was a two-year review of the section 301 tariffs so we got higher tariffs on steel, electric vehicles and the components that go into them. more export controls on semiconductor equipment and you have the influx of manufacturing with some cities in those states

in old bonds of red states. it's like 53% of the job creation and revenue from things like the inflation reduction act in clean energy and alternative batteries. those components are going to red states. i think the administration is pouring on the trade stuff heavily. in michigan, you have a pretty substantial block of the voter base who are uniquely involved in the israel-gaza conflict. you see the administration paying attention to those issues specifically. on the youth voter side in all age demographics side, you have a focus on reclassifying marijuana and the administration will focus on abortion as much as possible and pass an executive order strengthening the amnesty restrictions around them is -- around immigration. they are using their bully pulpit to go after every facet

of voter issues. you mentioned the democracy piece. that used to be something that split democrats and republicans who were concerned equally. now it's showing a clear bias toward democrats who are afraid and independence as well of violence and the fact that trump might try to run for a third term in office a b runs the second one and the stuff about the united right from yesterday. those are pieces that turn off your independent and democratic voters. in 2020, and motivated them to come out and that's where biden i think takes it. lisa: how much will this be a motivating factor since it's been a known factor for so long? we've seen president biden try to lean into it and the court cases on going with former president trump deciding not to testify the latest trial. does any of this matter or is it baked in? maybe they will use this is fodder to donate or to trump? >> what's interesting is that

you have data suggesting the court trial isn't move anything until the last week. your polling release last night shows very clearly it's tried to become an issue. one of the things i encourage investors to do and our clients to say is what can we hold onto and what's tangible we can see? look at indiana last week. you have a candidate who is in the moderate wing of the republican party out of the race for two whole months and she just got 22% of the vote in suburban, wealthy, affluent, married, white districts and those of the grips that trump lost in 2020 and is losing again to a candidate who's literally not even running. i think the trial stuff is translating in real time. maybe not necessarily as quickly as it would for another candidate. we know we've got it teflon situation but it's starting to get thin and it plays into the narrative that this is an

unreliable guide we don't know what he would do if he is in the white house. jonathan: let's finish on the double haters in the sitting president. what we would expect is for biden to move toward the center. for those of us that watch the commencement speech over the weekend, that was deeply divisive and it wasn't someone trying to hold the center. will that be the approach in the months ahead and how successful will that be? >> i think that speech was targeted specifically at the black audience i think the administration should rightly be very concerned about. the level of apathy you see to biden from that demographic something they need to work with. winning georgia or north carolina or any state in the south is something you really need to turn out latino and black voters. that speech was clearly targeted at the black voter audience. they have hemorrhage support. a 300% decline between black voters under the age of 29th versus the 65 and up voter.

that something the biden voter relied on heavily in 2020 to get elected emmett -- and they need to motivate those voters. voters in america are increasingly more democratic oriented than they are republican. these voters have issues of climate change come abortion, gun control, things that do not naturally lend themselves to the traditional evangelical christian conservative republican demographic. this is a democratic base and that's what the biden team is trying to turn out. jonathan: it's good to catch up. from new york, equity futures are just about negative, this is bloomberg. ♪

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and looks at the most effective ways, to get resources to them, to get services to them. the idea that we have saved five million people's lives, it's overwhelming. it's everything. jonathan: equity features on the s&p 500 down by 0.1%. on the nasdaq 100, totally unchanged after closing at another record high in yesterday's session. pushing a little higher on the yield side. just creeping higher on the 10 year by 10 basis points to 4.4414. a switch on the board. the pound looks like this against the u.s. dollar. i do not think it changes the

journey for the bank of england. it might change the start point. ultimately, most people assume the next move out of the u.k. will be a cut. lisa: one thing you have picked up on is how the ecb stands out in their most unwavering commitment to june as a rate cut. how important is it for consistency data when we know where we are heading? jonathan: how many central bank chiefs do you hear say, everything is fine, we have everything under control. lisa: frankly, it is a myriad of different economies, not just one, that are facing headwinds. it is more than inflation.

they have that threat still hanging over the economy. jonathan: i know that is your favorite conversation. the top story, a light day of fed speak. also getting the fed minutes at 2:00 p.m. loretto says she wants to see more inflation data come down before cutting meat. shares are lower. retail giants saying that they remain cautious on the growth outlook and expect discretionary spending to remain under pressure. annmarie: the consumers are searching for value and spending more on services and out of home entertainment. they remain cautious. we had an in-line cpi that everyone is saying was a be, but it is coming in the earnings report jonathan: jonathan:. this is target and if you miss,

you get punished. what is going to happen to nvidia come if nvidia misses estimates? stocks are soaring more than 90%. the poster child of ai facing sky high expectations. estimating a revenue jump in the latest quarter. this stock has had quite a run. lisa: some of the swings have been something like -- it gives you an idea of why this is so important. i think it will be more important to see the broader market response to nvidia. if corporate spending is falling off in any shape, way or form, what does that mean in terms of the change everyone is betting on for productivity etc. that

people are saying is fueling the overall rally? jonathan: later on this morning, caroline hyde and ed ludlow picking up the mantle and driving the story forward on bloomberg technology. sounding the alarm on u.s. debt. >> we have running deficits and we are going to have to deal at this sooner rather than later. it is more attractive than later. >> there is a payoff that is assumed, and it is necessary to make sure that we are in a fiscally sustainable path. >> the level of spending is something that we need a sharper focus on and more dialogue on that what we have seen. jonathan: u.s. government debt is on the path to 116 percent of gdp by 2024, meet -- even higher in world war ii. david, good to see you.

we caught up with morgan stanley yesterday. the risk for the story is, do the markets start to bulk. >> i think we are in a box and there is not really a process to slow down this ending growth, but the market is receptive to any message that makes it look like he will make progress on it. you cannot say how close are we to the moment because it depends on what kind of communication is done. jonathan: and the decisions that we have to make. i want to quote the story again. all the things are lining up for the next president, whether it is the last one or the sitting one. bills will be extended to kick the can and to 2025. what are the outcomes of those decisions going to be and how

consequential will they be for the conversation we are having? >> each one is important. they have this hard stop that you default, if you do not raise the debt limit. it makes congress do something and also the president. at the end of it, the president comes down and says, we are doing this because we have to. i have advocated strongly that we rewrite the debt limit so that it is stronger. it has to have measures that penalize washington when they are over the debt limit that they are trying to achieve. on spending, it is problematic and on taxes, it will be a complicated process to try to stop the harm from the tax increases that are planned. they are automatic. president biden has said that he would add more to those already

large planned tax increases. you need a break from that or the market will start pricing in. annmarie: the cap is about $5 trillion. how do you square that? >> i challenge whether you can say $5 trillion. that is in economist saying, we know what the future is. the forecast has not been closer than the blue-chip, the idea that you could have 0% interest rates and not do anything about it. they were saying it would not cause asset bubbles, but now gary in a box. the fiscal policy is in their own box. you mentioned the very central banks are all trying to figure out what they can down the inflation rate.

i have one thing, which is production. they have to realize that they are not the ones causing inflation. it is the government spending and lack of production going on in all sectors, but i think it is happening across the board. the regulatory policies are impeding it. the central bank should be pointing the finger back at that. annmarie: we know all the policy fights are in the spending. it is not making a dent when it comes to this. we have not seen the former president a he wants to go -- unless the country decides on a plan for entitlement, there is no trajectory toward sustainable fiscal health. >> i do not think you can start there because you have made commitments to the elderly. how devious established checks and balances within the system

so that the entire washington network, the white house, the congress and also the lobbyists -- everybody has to realize that they are going to feel pain, if they keep spending the way that they are. and then it will politically figure out what to start with, but i do not think it is fair to say let's start with the entitlements because they are the biggest ones. you have to restrain growth in any kind of spending to give confidence to people that you are actually looking at the problem and dealing with it. we heard all those quotes from famous people prior saying, they have to do something about it, but washington's plan is not to do anything about it. lisa: if you let or reduce the tax rolloff, that will actually be a reality check for the market, in terms of pushing back. is it more tax cuts in tandem

with more tariffs going to be concerning for people, and terms of the deficit and u.s.'s position? >> air trying to say that the economy is doing well, but for a lot of people in the bottom half, the affordability problem is giant. there are not a lot of people in the labor force because they do not see the path forward. there is a lot that can be done that would allow more growth through tax policy. if it is a tax cut, that is not the way it worked in the past. we are a growth economy through production, through good policies. that will make the bond market

more comfortable. where should interest rates settle? lower than where we are right now, but how do we get there? you have to show that you have enough supply chain that inflation is not going to be a problem. if you are specific on where they are, that is to have skills developed in the u.s. rather than elsewhere. historically, there has always been some range of tariffs. i worked a lot on this section. washington has been thinking about this issue. what is an effective way to interact with investment. it helps the economy.

it is very important to think about, what is the growth plan? my concern is, there is no growth plan at all. the u.s. is expected to grow slowly and the bond market will get more and or worried. lisa: what you are saying is fairly radical. more tax cuts and higher tariffs could cause a reckoning in the bond. especially if the u.s. policies are nationalistic. you actually think that will entice more people. how much pushback is there when you put that out there? >> i think that is a supply-side approach that says that the economy should not be satisfied with 2% growth.

it was a major issue. there was a difference in the dialogue on it. i think otherwise, what is your plan for paying off debt? you cannot do it with slow growth. you have to rewrite the debt limit. you cannot default at the end. there are consequences that do not scare the bond market. same on the fed side. we are not now causing inflation. we have the rate high. and then just stop talking. this is not the fed's responsibility now. they have to answer for why they had the rates so low.

they have done a lot now. jonathan: would you be interested in seeing the central bank? >> actually talking about it, there has to be some debate overcome is to percent growth good enough for the economy? jonathan: have you had a conversation with the campaign team? >> they are busy trying to get the message out. i am talking -- we have to look at what the current plan is by the u.s. government. keep spending like crazy. it is not a very good plan.

that is what the risk is that is in the bond market. jonathan: he saw that story in the journal recently suggesting that the former president would like to take more of a role in the decision-making taking place. is there anything that suggests that is true? >> know. people are doing this to leaders all the time. i think they are thinking this. what do leaders actually want to do? what does candidate trump or president biden what to do. reporters look around and we can get somebody to say this, but let's write it down. it will come down to what the leaders want and do they see growth as a way to create good jobs across the economy?

jonathan: thank you very much. the former world bank president. an update on stories elsewhere with your bloomberg brief. dani: christine lagarde is giving -- she said that she is confident that inflation is under control. what happens after june is another story. even if i cut in june, that does not mean that we will cut rates further. voters headed to the polls the other day. state representative vince vaughn won the race with about 60% of the vote over mike boudreau. a slim majority in the house.

it may be tempting to those who want to travel to japan. the database says flights leaving from tokyo have the most long-held turbulence than any other flights. bolivia tops the list. the most unstable routes are in the spotlight after the deadly turbulence on a singapore airlines flight killed one man and crudely injured others. that is your bloomberg brief. lisa: you know i have a fear of flying. absolutely not. jonathan: every time we do a story, i always tell people to turn the volume down. up next on the program, the consumer under pressure. >> we think the consumer is concerning right now.

the consumer is looking for lower prices. jonathan: this is bloomberg. ♪

jonathan: equities on the s&p 500 negative by 0.1 -- a sneak peak. yields up by four basis points. under surveillance this morning, the consumer under pressure. >> we think the consumer is discerning right now. >> what we are the earning is that the customer is under the greatest amount of stress. the wealth effect of the equity markets being strong over the couple years are more resilient. they're looking for lower prices. jonathan: shares of target are falling after estimates. expecting discretionary spending

to remain under pressure. cory joins us now for more. good morning. what did you make of those numbers? are they as bad as the price move suggests that they are? ? i think that we are seeing is a pullback. with consumers shifting from needs or wants, and we saw this in the walmart print last week. discretionary sales were pressured. discretionary is also a big part of sales for target. there are some breadcrumbs that we have been able to pick up from other companies reporting and it has led to this point where we knew, trading down into value and pricing and value

really do matter. lisa: as you get a shrinking pool of endless spending, there will be winners and losers. this has consistently come in on the back foot when it comes to walmart. >> the key is that target has had issues. they had inventory issues a few years ago and now they have market share issue, comp sales declines -- what we are looking for is a return to growth and good news is that we saw that and we see that in the full year guide, but it will take time. they were down single digits in the first quarter, second quarter, flat to 2%. that will be driven by likely traffic, return to growth and ticket. billy see that an it is likely.

but we will see what they say on the call and i think that over time, you are seeing more and more shift to walmart. this will be a narrative that is in existence for a long time. annmarie: you believe that the cuts are a win -- a win-win. you expect them to cut more items? >> we know that inflation has been relatively sticky. and walmart management in our offices not too long ago and what they told us is that their private labels, $100 billion of a $600 billion retailer is running deflationary. what did we see in the relate -- and the release earlier this week? 1500 of those items have already seen price cuts. a significant portion are also private label. as you start to see more private-label growth, it is a

third of target's business. you will see little bit more focus on value and price, which will probably be accelerate market share needs ahead. jonathan: thing away from names that we are talking about right now. what can they do to make sure that this is not just a moment in time and that they stick around for years and not quarters. >> one of the things that walmart did recently was a reinvigorated their program. we saw the 360 program unveiled. they talked about it in new york at their analyst meeting in february. right now, that is on promo for $50 a year. but it gives you free shipping, free same-day shipping and -- in as little as three hours. this type of membership program

and loyalty program could help to add some of those market share losses and start to retain those customers and really high-value customers because that 50 to $100 that they are paying, those revenues are pretty sticky and they flow pretty nicely into the bottom line. lisa: walmart is now a data company and entertainment company. what will bump up their profitability? >> there are two main vehicles that i would point to an the first would be advertising. they are ramping there advertising business. we estimate 60% to 70%. what is interesting is that you are taking a traditional income statement with sales of your inventory, minus the cost to pay

your people, minus some benefits and you are left with a 4% operating margin. combine that with this high-margin recurring segment and it becomes a really attractive story. so target has the membership program as well in addition to that advertising and we think that should help with sales and profits ahead. jonathan: good to see you. this from tjx just moments ago. $4.03 to $4.09, the previous range. lisa: they are rewarded. we will get to some of the commentary, coming up. jonathan: target is getting hammered but tjx is doing ok. bryson of wells fargo -- all of

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>> how much has ai given us an >> ai at large is the story.

question investors have been looking for ways to play artificial intelligence. >> we are a believer in ai. >> all eyes will be on nvidia and what they say. jonathan: the third hour of bloomberg surveillance begins now. in morning. two big stock stories this morning. nvidia just hours away. what a run that name has had. it is unbelievable. let's talk about a smaller company but an important one. 7% to 8% this morning. the outlook from the company. it was not terrible or dire, but it was not good enough. lisa: to me, in terms of how

much share they have lost to walmart at a time when they are facing a lot of controversy, how do they revive that. airlines are becoming credit card company is in you have retailers becoming media and advertisement companies. annmarie: how to get an edge and how important that will be when you have consumers saying they will be more discerning about what they purchase. this shifting of once to need. that is what people are experiencing right now and what is influencing the decision. jonathan: communication coming from retailers and what it means for policy. you get that first interest rate cut from the reserve and that is not consent. but he thinks up next, deceleration in jobs growth. lisa: she things that the fed

speak is not preclusive of that july rate cut. maybe do not have a latte and then you will not have a latte shock. the question that they are looking at is not the starbucks and the target of the world, it is the smaller company and how much they have been struggling. the larger cap companies doing just fine overall cannot really pay over anymore. jonathan: i do not know who you are calling outcome of the people buying this expeller lattes or the ones selling them? lisa: america is big. shrimp cocktail? the markup is always big. jonathan: the path to beginning -- becoming a millionaire, give up the latte and avocado toast.

this is where it comes from. lisa: exactly. that is my. jonathan: we are lecturing you on what to spend your money on. lisa: hold on a second. you can have avocado toast, just make it at home. jonathan: lisa will let you eat at home. good stuff. we are down by about 0.2%. the hate mail is coming your way. the privilege of the older generation. what things cost. it would be nice if you had savings. coming up, less of that and more of this. previewing nvidia's earnings.

looking ahead to a september rate cut. we began with the magnificent one in the spotlight. aaron brown this, all eyes will be on nvidia. a significant portion is gearing towards this theme. aaron is with us around the table. as the bar a little too high? place if you look at where they are trading a couple years ago, it is trading at that same valuation today and there is a lot of attention with the stock up and all eyes have been on nvidia. i think there are opportunities

outside of nvidia to play the aip. jonathan: let's talk about what people have been doing stateside. when we think about what is at risk, what is the hold of this market? >> they are more independent users that have the ability to lean into the ai theme which has brought the entire utility market up. utilities have been known for a long time. when rates study peak in the fed likely to kite, utilities look really attractive. if nvidia goes down today, the

whole market is going down. that is probably a short-term debt. right now it is about playing the expectations of the rollout of the next chip and what we know will be a very strong earnings picture over the next couple of years for the company. lisa: it would be very nice to know how to pronounce the name. you're talking about industrial policy and terms of utilities and industrial stocks more generally. has it been played in the u.s.? it is outside the country that you are seeing it not fully priced. >> the first answer is that it has not been fully priced. with respect to the utility usage on the water usage needed to fuel the ai evolution that the u.s. is envisioning, it will require a lot more

infrastructure and no doubt. who will provide the gridlines in the water? all that is still very early stage. the u.s. has some focus on the industrial policy going forward, but you look outside the u.s. and we are in early stages. we are likely to see a lot more investment and focus from the government side in terms of being able to provide the infrastructure to fuel the revolution that ai is coming. lisa: is there any concern about people getting too excited about infrastructure? it takes years to get the permitting not only the pigs in the ground. what is your fear factor with

the overpricing at this point? >> that is a huge concern right now. i think they have probably frontloaded a lot of the performance. this is likely to play out over the next 10 to 20 years so i think there has been a lot of optimism priced into the short, but you will see earnings going higher and some of the new chips will require a lot more power usage in the near term. there is significant capacity constraints to build out new power supply that will keep prices elevated over the short term. there is a lot of sentiment is positive right now.

annmarie: asia where we see a lot of buildout? >> korea is the sweet spot for the markets right now. it has bought in the last couple months but broadly underperformed vis-a-vis taiwan over the last year or so. you're starting to see exports that just went positive over the last two months coming out of korea. china, we are still cautious on. we are seeing some signs of the tides turning. i think that creates a challenge for investors meaningfully sizing up their positions. jonathan: looking out 12 months, who has the most favorable

growth policy makes? >> i think the u.s. does because the fiscal overhang will continue to create growth. you are some to see an inflection stabilization in europe. you can start to back so european cyclicals, but i think the u.s. by far will be the outperformer. jonathan: do you want to play that through bonds or stocks? >> me like to ration, but we really like the other durations. we think they will be much faster in terms of the cutting cycle than what is currently priced into market. when you look at what is priced into markets, they are pricing in the same interest rate path.

jonathan: why do you think that is? >> historically you see convergence but the fed themselves are expecting this to be a fairly normal fed cutting cycle between now and the end of 2026. that is a normal fed cutting cycle. you will probably see about half of those cuts than what the fed is currently anticipating. i think we will get some projections in june. jonathan: we have not done this in person for years. good to see you. let's get your bloomberg brief. dani: awaiting the macro event. ai is not going to produce as

big of a economy boost. >> the internet that came around in the 1990's -- is that more important and has a bigger positive effect on the economy that yeah i -- then ai? are they going to be smaller than the productivity gains from ai apple ai is not going to deliver the same productivity gains that we saw in the 1990's. dani: he said ai would not be as large of an inflation dampening source and it may disappoint investors. barclays is asking its workers to potentially return to the office five days a week. some managers have warned the employees to prepare for the commute.

this comes as they passed some requirements that are set to take effect in the next few weeks. and shares of target are lower in the premarket. target remains cautious on the near growth outlook and expects discretionary spending to remain under pressure. consumers continue to search for value but are still cautious with their purchases. target announced they would cut prices of about 5000 items at their stores. jonathan: target up by about 9% to date. the opening bell about one hour 15 minutes away. up next, the morning calls. previewing earnings from nvidia right around the corner. from new york, this is bloomberg.

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jonathan: equity futures are negative. big movers out there including target. in the market, yields are higher. time for the morning calls. first up, jp morgan raising its target. highlighting upbeat quarter results. eps rising its price target. questioning whether north american sales growth is temporary. the stock is negative. maintaining the price target on nvidia. the chipmaker's continued ai

leadership and looking at the launch of its super chip. let's talk about high bars. everyone looking for the same little bit later. how high is the bar for this company? >> the expectations are high. we think that 90 billion in the next five years. jonathan: given how late they report in the quarter and based on the fact we have heard from alphabet and microsoft, we understand the account for 40% of the company revenue. what is not known about the report? what is the new information? >> the vague information will be

on the products. how the pipeline of that is building. moving away from the trades. that is a huge price for them. a bigger year than 2024. the best is yet to come. you're going to see more commentary on gpu's and ai beyond hyper scale. how the cloud is evolving. lisa: you probably hear a lot of people are trying to become experts on nvidia. they understand very little of what goes into building out the system.

there is a theory that nvidia's gain will diminish as you get to adoption moving the hard -- moving the software away from the hardware. >> i think they are very connected. for the software to work, you need robust hardware. they build a softer platform on top and then build the hardware. almost no other offering and combine that. it is a close second, but they have done very well on the hardware site. i think there is a lot more to go. but we have talked about is one trillion that will probably go towards replacement.

plus, the capacity coming on. that is over the next couple of years. definitely a strong roadmap. lisa: do you expect any commentary around the heightened rhetoric around ships, the sector, questions about taiwan and its resilience? and how are they planning to diversify, just in case? >> this is a very touchy topic. it is where a lot of the servers come out of. it is definitely a hub for the manufacturing site. as been minimized significantly. china is mixing a little bit

lower, but it is not limited to just nvidia. it probably impacts all industries. it goes beyond nvidia. i think everybody is looking at it. annmarie: they spoke about it. that will be the expectation from the near-term and long-term. when they start to build out, where would they go? >> stephen lee should see some of the manufacturing moving back into the u.s. you are seeing them build out. building out supply chains in the u.s. they have made a lot of moves.

there is a very strategic move. it definitely takes time. but by far, i think they are in the lead. the leading edge hub should be positive for semi supply chain. jonathan: the companies that fall under your coverage, i believe there are 27 of them. a couple things stand out. ne-yo is neutral. what is going on there? >> they have done fairly well. i think what you are seeing is demand starting to slow down a little bit. many of them have gone through it. you are seeing a little bit of

slowdown in 2024. a lot of the subsidies -- at the same time pricing has been pretty high. interest rates have been pretty high. it has not been conducive to driving demand. most of them have pooled back. in europe as well, pushing out. it has been a combination of not seeing the desired level of profitability, consumer subsidies and general demand maturing. they will need lower pricing to stimulate the demand. that obviously comes at a price. low margin for the supplier. i think that is obvious. jonathan: what do you make of the tariff war's?

>> i think the threat from china ev is real. they continue 10,000 to $15,000. many of them started all the way up to 80,000. the china supply chain can be very competitive. it does not faze them. it is definitely a very competitive market. it is very challenging. jonathan: is it nvidia or nvidia. >> it is the letter n and then

vidia. lisa: that was incredibly helpful. i was wondering if i was saying it wrong every time. how they establish that it actually is nvidia. everyone says something different. jonathan: he would think we would agree on this stuff. lisa: everyone disagrees on it. jonathan: coming up shortly, a conversation you do not want to miss. we will talk about the economy and then we will get into trade. from new york, this is bloomberg. ♪

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jonathan: equity futures on the s&p 500 negative. just about unchanged through most of the morning after closing yesterday at another all-time high. 24th record close. a third day of gains. third day of the week in the hands of nvidia. let's turn to the modern market. yields are higher, creeping higher by four to five basis points. a two-year up by five basis points. setting the tone for this, a

little upside surprise. raising the prospect that may be the first rate cut gets pushed back until later this summer. lisa: it is when they cite the recut's not whether they will start the rate cuts. there seems to be more of a debate over whether they need to cut rates at all. u.k., it is a matter of timing. at what point will not become weakness? i'm just saying. jonathan: europe is not debating either. they are just cutting rates next month. it is done. it will be owned -- it will be interesting to see what the news conference looks like with president lagarde in a months time. lisa: it is kind of refreshing. they can launch that at a time when they are seeing real economic weakness and policy divergence.

you have to think about the idea that they are thinking about tariffs on sheeny -- chinese cars. a rate cut kind of eases things. jonathan: what does the future look like? it does start to look a little bit better. about the recessions in europe. we need to keep rates up here. the economy starts to show signs of life. a mix of things starts to improve. i know it was a low bar, but it is looking better. my personal bias -- lisa: you're basically making the argument. jonathan: what are you laughing at? negative by 0.2%. the latest poll showing that half of the soup state voters are worried about violence following the election.

this is donald trump, leading against -- leading across key states. meanwhile, 51% support -- if the chinese company fails to divest. annmarie: when it comes to tiktok, it is what they think is -- it is doing to the minds of young americans. what stood out to be in the poll is that the economy maintains number one. which of the following factors is most important year ago? the cost of everyday goods, 63%. you have the likes of target and walmart coming out to say that there are cracks in the can. they are trading down. the polling shows that this is the economy's number one concern. lisa: student relief for you --

how much can you play whack-a-mole politics before it starts to work? jonathan: there is more still to come. nvidia. did i do that right? earnings coming after the closing bell. getting insight into the spending boon due to the outside role. confirming enthusiasm. it has not just been tech. it has been utilities as well. lisa, you got into this and we talk to somebody else about it this month as well. if utilities had been rallying, what kind of characteristics do they have in the downdraft, if that is led by disappointing ai numbers like nvidia, a little later? lisa: i the growth stocks or safety stocks? have we gotten a little bit over thinking that we are going to get all the permitting with all

the utilities built up? i do not know the answer to that. there are clearly other people who see value and maybe it does not matter if other people see value. jonathan: the favorite quote yesterday, ai was everywhere except in the numbers. we are thinking about utilities and all these derivative themes that they were talking about. lisa: i want to know the first derivative. i want to know they are using artificial intelligence to remove some of that shifting and whether you get some products that you actually want. annmarie: the best is yet to come when it comes to nvidia. jonathan: that is amazing given the gains we have had so far. just incredible. the fed speak parade winding down. christopher waller saying softening dates are in the next few months.

also urging patients. their comments coming ahead of the fed minute at 2:00 p.m. eastern time. to have the very best joining us now. can i come to you first commissary? i want to get your review of the assessment from governor waller yesterday. given that inflation print, ac plus grade. would you give it the same grade? >> d-or c++. it is coming down. i think we will continue to see that as we go forward. the sticky part has been inflation and what we know about housing prices. you are going to continue to see disinflation there. when you look at the age growth, we saw this in the earnings print last month. only up 0.2%.

you annualize that and we are below 3% right now. it is all pointing in the direction of moving forward. >> we host for the speech and i think what was striking was that he was trying to put a dovish spin on what was actually a pretty hawkish message. he basically said, i have to see real slowing in the u.s. economy before i want to cut. he ridiculed the fact that they are pursing out the second decimal place on the inflation privilege. i thought it was very well taken . i think the message is, they do not want to admit that there is a possibility, but they are backing off. lisa: fed speak is our shock test. it was a dovish message under the hood.

you are saying it is a hawkish message. >> i watched before i came over. we have been on the same side. they were not going to cut a lot. my first divergence with him in a while. you look at waller and all the fed speak and it is all -- even chris was the one you said he could have disinflation with vacancies dropping. yesterday he made it clear that we are on the flat part of the beverage. . i do not view it as dovish at all. lisa: why do you disagree? would you push back at all saying that there is room, especially if you get weakness in the labor market?

>> you were mentioning earlier some of the retailers. starting to see cracks in the consumer. delinquencies are going up. monetary policy measured by conventional measures and real rate still remains restrictive. i think you will see continued slowing as we go forward. certainly not looking for a rate cut anytime soon. we went to make sure we are coming back to 2% on a sustained basis, but things can downshift very quickly, as we go forward. >> i think -- jay, i know well, and he is making a legitimate point, but after the nvidia run of the consumer, it is not necessarily -- it is actually very unlikely.

more importantly, what the fed is talking about is what happens after the election? you were talking a minute ago about whack-a-mole and target and policies. what happens after the election is we get a physical boom, particularly under biden. if it is under trump, we get a huge energy shift. and internal combustion engines. either way, you will get probably an unsustainable boom in 2025 and the fed will have to start raising. jonathan: do you think they will be hiking interest rates again next year? what is the lesson say of 2016 and 2017 when we are waiting for those tax cuts? is that a decent experience an -- experience?

>> is a good example. depending on who is in congress, there will be a very protracted negotiation. if you are biden, you have to spend more on defense and energy and you have to spend more on the policy. if you are trump, you're pushing out tax cuts, whatever it is. both of them are pushing towards a big fiscal swing. whatever result that we get on the taxes, it is not going to be tax rates jumping up. jonathan: i'm so pleased he brought this up. i think we are flying blind. i have not heard that. lisa: if you have a boom on top of what we already had, a real

negative for bonds. what is your reaction to that? >> we are talking about president biden and essential president trump. it looks -- it depends on whether congressional makeup looks like as well. we pretty much need to have congress and the white house kind of aligned. if we have a split decision and nobody knows what will happen but we will see what happens in terms of fiscal policy. between now and the end of the year, i could potentially see a lot of downshifting in terms of the economy. you could see some fed rate cuts, but a lot of it will hinge on the election and what the election outcome is, in terms of whether congressional makeup looks like as well. lisa: it is hard to have any visibility whatsoever.

a compelling case. either way, why would the federal reserve want to cut rates ahead of that, knowing that there could be some ups i to reverse course? >> i think the earliest you would see a rate cut depends on what is going on with the data in september. there is another meeting right after the election. do they cut rates there? they will really have to see how the smoke clears. you will potentially get a physical boom and it will not happen right away. this will be legislated sometime in 2025. we are at least a year out from things being legislated. annmarie: i'm glad he brought up congress. this idea you have about having

to hike is dependent on the makeup of congress. biden would need a mechanic house and a democratic senate, correct? >> yes and no. first is that the bill is already past. a mostly open-ended subsidy. they do not require the authorization from congress. it can be interfered with window -- wind -- if trump comes in. the defense spending generally gets taken out and voted on separately. often bipartisan or at least more bipartisan. two of the big places where you will get spending are not going to be subject even by a republican senate. jonathan: on this downshift you are asking for, can you put some numbers on it?

what are you expecting to see? what did they come down to? what are you looking for? >> we are looking for roughly the same. our average for the third quarter, we are looking at one for and slowing to 120 or so by the fourth quarter of the year. we're also looking for the unemployment rate to be up. if you believe in the role, if you get up to four point 1%, the economy should be tipping into recession. we are looking for sub trend economic growth later this year. less than 2%, not being dragged down by inventories or a big import surge, a downshift in consumer spending that is lackluster at best. jonathan: still with us around

the table. adam, i wanted to talk about trade. there are some really strong thoughts about this and i think it will be a valuable portion of this program. a time when global challenges could benefit from it. >> i appreciate that you keep coming back to this. biden is drawn the line at some of the craziest policies that are proposed but he has done nothing to reverse some. there is an anti-china element but there is more about what this does to u.s. relationships, business relationships technology, market opportunities, investment flows throughout the world. we just published two days ago and how the proposed trump

tariffs would be a huge hit to middle-class and working-class. they looked at the proposals. they used the same apparatus that people use meaning which kinds of the distribution. the average household would lose $1700 a year if the trump tax cuts went through and the distribution is highly aggressive. even if you continued to tax cuts, we would still be 20% of the distribution. it goes to what you are saying about how purchasing power, feelings of inflation and high prices. it is really core. biden could make that better by cutting tariffs by trump that

are not national security, not china. he could do it through executive order and increase people's purchasing power. the worst thing if they go crazy is convicted valid -- phelan said in an interview that this is the policy that trump is going to do. they will cost american households. lisa: you referenced that conversation. he was saying that lower taxes and targeted tariffs could be a growth policy to get the u.s. to a place to allow the deficit to be manageable. do you agree? >> no. that is what the right-wing populists tried in the 1970's, 1980's and 1990's. there is a reason the world bank has recommended against that for development for millions of people around the world. it is revenue positive for the treasury. that is true, but when you are

choosing how to raise revenue, it is one of the more distortionary ways with the most negative impact and most intrusiveness of the government. it is about getting government out. tariffs are the most intrusive way. annmarie: all-night concerns that you have about the school boom and the makeup of congress, trump could come in and -- how inflationary can those be that the fed needs to start thinking within days of a potential trump 2.0? >> they are able to do a lot of stuff through executive orders. they can change policy, raise tariffs, he can bar direct investment through executive order, change energy regulation.

the level of inflation's we are talking about, if he does that, we are about to see some studies in the next few weeks, but order of magnitude, you see a jump in inflation immediately. if you do the kind of crazy and humane migration deportation policy that they are talking about, we are seeing much bigger numbers. it is creating huge uncertainty for small businesses. you are looking at very large jumps in inflation. they may not want to address that, but i would put the odds at them being able to do the cuts in 2025. jonathan: we will have a lot to talk about this year. for international economics. equities just a little negative on s&p 500. here is your bloomberg brief

with dani burger. dani: recalling ambassadors to ireland and norway after saying that they would recognize a palestinian state. the war in gaza is focusing global attention on the issue of statehood for palestinians and hurting israel's relationship with other nations. donald's defense team has wrapped up the case without calling the former president to the stand. lawyers in the classified documents case are due in court today for the first time since judge indefinitely postponed the trial earlier this month. label here arguments. tjx shares are rising this morning. the company amazed its outlook for next year and reported net sales, which means the average estimate -- the companies under the banner saw a decline in

merchandise inventories. sales were up at every division which underscores the strength of opposition. jonathan: thank you for this morning. up next on the program, setting you up for the day and week ahead. you are watching bloomberg surveillance. ♪

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jonathan: here is the trading diary for the day ahead. last fed meeting. nvidia reporting earnings. tomorrow, another round of jobless claims. can we pick up on the conversation that we just had? he is talking about hikes in

2025 off the end of the election in november. lisa: whoever comes to office is going to want a stimulative policy. regardless of who wins, it raises the question of it is the potential risk for inflation and fed outlook, being forced to respond at a time when there is so much growth. annmarie: when it comes to the fiscal spending, tax cuts come to mind and tariffs, but for things like tax cuts and defense spending, you need to have congress lined up with the president, if you want a full suite. she would need a democratic congress to go along with him to infuse more money into the system. get in washington means less spending. it could be done almost immediately. jonathan: we will spend the rest of the day probably talking

about nvidia reporting. when we asked about the risk in equity markets, it was about the bond market. it was this line here. that is the risk going into november. lisa: adam host is saying absolutely not. complete disagreement about what the implications would. jonathan: those people have been wrong for 40 years. coming up tomorrow is the line of you. dana peterson on the conference board.

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>> from new york city for our viewers worldwide, i'm matt miller. after another fresh record high for the s&p 500 yesterday, it's all eyes on nvidia after the bell. futures are mixed. the countdown to the open starts right now. matt: stocks sitting at fresh record highs ahead of nvidia's pivotal earnings report. retailers deliver a mixed bag as target misses the mark, and traders trimming their rate cut bets appears the fed speak tour continues. we begin with the