>> that last mile of 3% inflation to do percent will be top. -- will be tough. >> we hope we do get a cooling in inflation. that is what matters the most for the fed. >> as long as the market believes we are entering a cutting cycle risk assets can perform well. >> the market believes companies will continue to make money and as long as that happens we will be fine. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie

hordern. jonathan: welcome back from the long weekend. this is bloomberg surveillance. equity futures positive by one third of 1%. just about squeezing out a fifth week of gains. higher 0.03% which is remarkable given nvidia was up 15%. we are light on data. we are easing into the summer. the tsa say if you flew on friday you were part of a record-setting day. congratulations. lisa: you don't say let's get your week started if there is already one day in. jonathan: is a short week. just taking it easy. lisa: the idea of people traveling is the mystery of the moment we are in. everybody has money and time to travel. first and experience it is

pretty expensive. where does the money come from? jonathan: going into driving season the clear line is not a problem internally. if you fly delta you do. you need clear and terminal four over at jfk. lisa: so we are attaining. -- so irritating. jonathan: heightened tensions in the middle east. a bigger story to talk about regarding that. opec later this weekend. annmarie: what everyone is expecting for opec's to keep supply cuts into the second half of the year. the geopolitical risk premium we have seen ebb and flow -- they want to make sure they can maintain price and not have a supply glut. what we saw over the weekend, this was welcomed by hops on twitter, saying this is very good news. what you saw for gasoline prices as they were down two cents a gallon from prior memorial day.

jonathan: we need to talk about the heightened tensions in the middle east. israeli airstrikes killing 45 palestinians. benjamin netanyahu "despite our utmost efforts not to saw -- not to harm innocent civilians last night there was a tragic mistake." a tragic mistake? i'm not sure that is going to cut it with the international community. annmarie: it is not. we saw the president of france say this needs to stop. axios also reporting that the biden administration is weighing what to do about this and whether or not it crossed the president's redline. lisa: that is the key. at one point does this become something he responds to other than rhetoric? we have heard a lot of rhetoric of the policy continues to be the weapon shipments. we heard over the weekend that biden hews more to the gop side of things than the liberal wing.

jonathan: will be asking those questions this hour. equity futures positive .3%. getting closer towards the all-time highs. yields lower on a 10 year after shifting higher on a two-year last week off the back of pmi. 4.4551 on the u.s. 10 year. euro-dollar 1.0 877. a quiet week. setting the stage for payrolls friday and the big one in the middle of june. cpi june 12. lisa: there is parenti of fed speak. -- there is plenty of fed speak. we will not go into all of it. in the meantime we do get auctions. today we get a two-year, a five year. $69 billion and $70 billion of notes. tomorrow we get seven-year notes auctioned off and the beige book.

thursday we will get earnings from dell, dollar general, and cosco. dollar general, how much they are getting pinched. friday is the key data point. pce. the key inflation metric the federal reserve is looking at. jonathan: you know it is a quiet week when the highlight is the beige book. things are pretty quiet. lisa: don't you think the beige book has taken on renewed importance? it is called the beige book for a reason but this point the anecdotes matter and the qualitative data matters that much more. what are companies feeling? jonathan: what are they feeling? last week what we saw is in s&p global pmi mean more to this market them blowout nvidia earnings. why are we putting so much weight on second-tier data? lisa: loretta mester address that ended it overnight when she talked about a framework for a sense of how we respond to economic data.

she thinks they need to speak more and communicate more. i do not think they can agree on what framework they will be judging the economic data points and deciding whether that is enough to go ahead with rate cut. coming up this hour, lori calvasina. norman roule on the international pressure facing israel come in bloomberg's alex webb as the iphone makes rebound in china. u.s. stocks look to turn to record highs. lori calvasina saying "for a material move higher to be justified we think investors need to start focusing on the outlook for 2025, where visibility still seems limited." lori is with us in new york. let's talk about 2025. it is difficult to do without knowing what happens in november. lori: that is a great point and it is the point applied client i spoke with made.

i have equity investors saying there is not to do on the election. we are not putting on any trades. visibility is limited. what happens in november really matters. a lack of clarity about what to do is also contributing. jonathan: you had a line repeated over and over again. you said talking about the election with clients was like staring at the sun. is it still? lori: it has shifted a little bit and my joke is not funny anymore post eclipse, but now i am using the line safety in numbers. the u.s.-based people still do not want to talk about the election that much. i have heard very impassioned defenses of i traded this in 2016 and in 2020 and i am not trading this again. along onlys are like they will believe it when they see it. they are getting questions from

their clients in europe and canada and asia and having to come up with talking points and dust off the historical playbooks and from up with something to say. i do not think there is a lot of conviction from investors on which way the outcome will be but there is a general sense congress will be divided and you will have a split government generally so not much will get done down the road. we joke safety in numbers. let's talk about the data and we will keep you out of fights. annmarie: is it that conviction itself that there will be gridlock in washington? lori: i think so and that is by base case. if you separate the investor bases and talk to people not in the u.s., they have been leaning into the republican sweep idea for some time. it is always a question. what are investors expecting. different parts of the market are pricing in different things. i do not think anybody is pricing in the democratic sweep.

i have been telling people yet to think about it because nobody is. annmarie: what if you think about it and you said yourself this is how i would position for a blue sweep versus red sweep. what is the number one trade for each? lori: i heard one comment from a non-us investor talking about divided government and we said i guess no more fiscal stimulus. it was a kind, innocent comment. that was interesting because there has been so much consternation about this market should not be this high, gosh darn that fiscal stimulus, taking that idea out from the market backdrop is puzzling to some investors. we did a survey in early to mid april when we asked our investors what would you buy and what would you sell and what is your outlook for different industries? the democratic sweep scenario, we had 17% of our analysts were

bearish, most were in the neutral camp. generally it is the health care sector and energy sector that, as bullish or bearish. health care analysts will downplay the impact and say they are not expecting too much out of either candidate. with energy i wonder if people are looking back at 2020 do not realize biden is running a different campaign than back then. lisa: you said it is a kind and innocent comment to think there will be no fiscal stimulus with divided government. are you saying there is going to be fiscal stimulus regardless who wins? lori: when i look at trump and biden and the different issues. we went through the trump campaign website closely. it is a struggle to figure out what to focus on and what is noise and what is real. when i cut through the rhetoric and go through the policy ideas of the different camps, it seems like they are both talking about wanting to keep jobs in the u.s..

i talked to investors. they think both of these candidates are inflationary in terms of their views on trade and immigration. u.s.-based investors are struggling to come up with salient differences from an investment perspective. lisa: why are you just neutral? why are you feeling not that great about stocks given the fact that probably either candidate will try to stimulate the economy? lori: we know the turn-based case is politics 11. my politics 101 class used to tell us all politics is local and he also told us how bills get created. it does not matter what the candidates say. you have to have cooperation from congress to get anything done. as you look at the landscape, you see anybody cooperating with anybody in the next four years may not sell much. that informs our view and a lot of investors views. on the one hand, is anything

going to be able to get done? jonathan: we are looking up to november because there is very little happening over the next week. what we saw happening last week, we saw a lot of people putting a lot of weight over what people would consider to be second-tier economic today to -- economic data. ignoring nvidia. nvidia up 15%, the s&p 500 flat. what was that about? lori: i don't know much about that data point but a couple weeks ago people were freaking out about the employment cost index and i did not remember that was a thing. the next week investors were making fun of the people freaking out about that. it all goes back to if you look at 2025, we want to be forward-looking. there is a lot of fog. a lot of clouds, a lack of visibility. we are stuck talking about the fed. i joked with a friend of mine that inequity land we have all

had to become great strategists and make friends with the economist. any breadcrumb of information that can shed light on the will day, won't they, when, will they go? that is all people seem to care about. investing has changed. we all get access to information. we can analyze things much faster. that accelerated during covid. people are looking for any incremental piece of data to get a clue on this debate. jonathan: do you think we are just as sensitive to upside surprises as downside surprises and what you advocate for inequities? lori: in my mind the rotation thesis still makes sense and i can see that being consistent with a sideways market. it did give think about the rate of upward revisions as a good gauge for earning sentiment it has shifted in favor of the top 10 market cap names but throughout most of this reporting season most of the upper revisions were coming from the other 490 stocks in the s&p.

we have seen a little bit of bumps. that make a cap growth trade is still quite expensive, still crowded, and it has decelerating earnings growth. that makes growth investors nervous. the rotation is not just about valuation but about the economic tailwinds building. if you look at 2024 gop it has stalled out. that is right at average. we have not seen any movement to the 2025 numbers. that is weak gdp. that is why i feel stuck. to get excited on 2025 i need to see that number go up. it is not. it is not going down. it is not doing anything. the tail risks on both sides, i think we are fairly priced for a fed that may be cuts once, moderating inflation, may stickier than we thought. if we start to see inflation

expectations deteriorate in terms of moving up, if we see the fed narrative fall apart again, there is downside risk to this market that is underappreciated. jonathan: flying blind into 2025 is becoming a theme. here is the latest from hsbc. funding and sentiment is supported for risk assets. max kettner still overweight high-yield credit, overweight equities, underweight dm sovereigns and investment grade. lisa: badish news is good news. it just has to be bad enough to be disinflationary. that is what we saw last week. jonathan: after work out what "badish" is in payrolls. futures on the s&p 500. welcome back to work for those of you who enjoy the long weekend. let's get you an update on stories elsewhere. your is your bloomberg brief. yahaira: a series of powerful

storm swept through the southern and central u.s. over the memorial day weekend, killing 22 people and leaving a trail of destroyed homes, businesses, and power outages. joe biden sent console and says to the family -- sent condolences to the people who died and -- to the families of the people who died and contacted governors to see what federal support they need. ubs is ruling out an external successor to replace the ceo. the financial times reported the bank is planning to choose a new ceo from a shortlist of three internal candidates when he steps down in three years. the candidates identities may be released as early as the 2025 annual meeting. ubs declined to comment. tokyo is getting its own elevated pedestrian park. after discussions on whether to demolish the tokyo expressway the city decided it would instead revitalize the one mile stretch of road into a place for

pedestrians. the project was inspired by the highline in new york. it is set to partially open in 2029 with full completion in the 20 30's or 20 40's. that is your bloomberg brief. jonathan: thank you. up next on the program, biden's redline for israel. >> we seek to go after hamas and limit civilian casualties and we will investigate if it investigation is needed. jonathan: that conversation is just around the corner. live from new york city, good morning. ♪ at morgan stanley, old school hard work meets bold new thinking. to help you see untapped possibilities and relentlessly work with you to make them real.

jonathan: equities on the s&p 500 positive .2%. yields unchanged as we kick off a holiday shortened week stateside. 4.4610 on the u.s. 10 year.

tons to talk about on the ecb. 1.0 879 on the euro-dollar. on surveillance, biden's redline for israel. >> according to initial reports of fire broke out after the attack. any loss of civilian life is grave and awful. we seek to go after hamas and limit civilian casualties and we will investigate if an investigation is needed. jonathan: israel's prime minister benjamin netanyahu calling the airstrike "a tragic mistake." the white house assessing israel violated president biden's redline. an egyptian soldier was killed during your lash with israeli troops at the gaza boarding -- during a clash with israeli border troops at the gaza crossing the --

norman: the white house position remains israel has the right to go after hamas and it must do everything it can to protect civilians and its approach must be tailored to those goals. the investigation one to look at that -- the investigation might want to look at that and it might be this terrible tragedy is an accident to pending on the nature of munitions and the target. this is a compressed area, very small distances, enemy that hides behind civilians. this is a hard challenge. annmarie: emmanuel macron immediately tweeted that he was outraged by what israel did. a lot of international condemnation. does this mean israel will be under more pressure and may be we get closer to a cease-fire? norman: it is difficult to imagine what more pressure would be. you have the international courts. you have three european nations

recognizing the palestinian authority as national leadership. a cease-fire depends on hamas more than israel. israel has made multiple proposals that the white house describes as generous that hamas has rejected. hamas continues to demand end to the fighting in a victory for hamas. annmarie: with the killing of an egyptian soldier, how concerned are you about the peace between israelis and the egyptians? norman: i think egypt and israel will take whatever steps necessary to de-escalate. neither of them want to threaten the peace treaty. you are likely to see the europeans or another entity come in and try to manage the border crossing to prevent this. lisa: given what happened over the weekend, do you think this makes it more or less likely that there can be a negotiation on the hamas side? norman: prior to this event there was very little likelihood hamas was changing its position.

we are now less likely because this provides an opportunity for hamas to say it will not cooperate because of the death of 70 civilians in that terrible tragedy. lisa: -- of so many civilians in that terrible tragedy. lisa: given this does not seem to have an end, what you think the likelihood is israel gets increasingly isolated on a geopolitical level? norman: it's isolation will continue because the narrative will continue. the issue becomes does that matter for israel on the ground? their operations around rafah are doing what they want to do. they are the hamas positions. if they can get or and release hostages, that is the end everyone is seeking but a lot of luck is involved in that. annmarie: there is a long list of conflicts and crisis the united states is dealing with in

this region, and to top it off we learned about how iran has higher capabilities of being able to get a nuclear warhead. what should the u.s. response be to this? the wall street journal is reporting that what the u.s. is trying to do is not rebuke iran over this the way the europeans may want to. norman: you are correct. i have never seen a weekend with so many complicated high-priority challenges. regarding the iran nuclear program, iran looks like what you would want to see -- what you would not want to see in a country that looks like it is seeking to build a nuclear weaponization program with a capacity to create multiple weapons. you need to have multilateral diplomatic unity and economic pressure on iran to change its leadership you. that is not -- it's leadership views. it does not appear there is a focus on building that multilateral coalition.

jonathan: former senior u.s. intelligence official norman roule. the calls from the left for this president to split with israel will grow louder and louder in this country. annmarie: which is why you have axios saying the biden administration is weighing whether this is crossing the president's redline. this will be an issue not just with the college campus protests we have seen on the progressive left but also what does the dnc look like later this year? many are expecting tons of protests outside. lisa: it is interesting to see donald trump coming out and say he would toss out all the protesters and stand behind israel and they should go for this and then some. this dichotomy. joe biden is trying to tow this line in his own party. donald trump is coming out with a hose. this is how i feel. jonathan: on certain topics there is lack of daylight

between the candidates. i do not think this is one of them. lisa: donald trump's rhetoric is more fiery. joe biden has views that you closer to the gop side than the far left of his party. jonathan: coming up we will talk about apple, up 2.15% in early trading. we will catch up with bloomberg's alex webb with a positive surprise for apple out of china. that conversation just around the corner. equity futures pulling back a touch. we are positive .1%. from new york city, this is bloomberg. ♪ do you want to close out? should i? normally i'd hold. but... taking the gains is smart here, right? feel more confident with stock ratings from j.p. morgan analysts in the chase app. when you've got a decision to make... the answer is j.p. morgan wealth management.

get your business online in minutes with the power of ai... ...with a perfect name, a great logo, and a beautiful website. just start with a domain, a few clicks, and you're in business. make now the future at godaddy.com/airo - after military service, you bring a lot backness. to civilian life.

leadership skills. technical ability. and a drive to serve in new ways. syracuse university's d'aniello institute for veterans and military families has empowered more than 200,000 veterans to serve their communities and their careers. from professional certifications, to job training, to help navigating programs and services, we give veterans access to support from anywhere in the world.

jonathan: welcome to the program. equity futures just about positive 0.08%. gaetz of .03%. -- gains of 0.3%. nasdaq if you want real price action. up on the month close to 8%. decent gains fueled by the likes of nvidia. last week nvidia knocking it out of the park, up 3%. i love -- lisa: i love how you pair that with a 0.2%. the s&p has been a snooze because there is but a

tug-of-war between nvidia and the ai story. you saw two your treasuries had their increase in six weeks based on this idea of better-than-expected economic data and more hawkish fed speak. jonathan: let's turn to the bond market. double-digit move last week. pulling back a little week -- pulling back a little bit. 12 basis points higher last week. off the back of an upside surprise on the s&p global pmi. for those of you familiar with u.s. markets, way more weight is put on the ism. that was unexpected, not just the data but how the market responded. lisa: which has become an increasing question. which data are they dependent on? is it any data that is aberrant or goes outside of the model along economy? badish is goodish.

bad news is good news. that is what max kettner of hsbc is saying. jonathan: will that catch on? badish is goodish. lisa: i don't think it has. jonathan: the move-in yields help the dollar index to the best week since april. we are gearing up for a june meeting that is more about july. this is important at the ecb. the meeting in june is nailed on. now we start to get this debate playing out publicly about what to do in july. the bun just bank president saying maybe we have to wait until september and get another range of forecast and have a look out to next year. we saw the pushback in the last 24 hours. other officials on the governing council suggesting we cannot close the door to july. let's keep all options open and see if we need to go back to back. your friend in france? lisa: he is a funny human being.

i thought it was interesting that he said why should we tie our hands? if we are meeting to meeting why should we commit not to going in july? let's keep up our freedom. that is the commentary from the ecb. jonathan: we will spend time talking about the european central about 10 minutes. under surveillance, fed president loretta mester singh the fed can do a better job explaining how the economy affects future decisions. more fed speak coming up. we get williams in a few days. personal income and pce deflator due friday. what does that mean to them? lisa: the retta master said something fascinating. she talked about -- loretta mester said something about how they should put more details out about how they will evaluate economic data so maybe the global pmi's will not mean as much. to me that is fascinating.

does the federal reserve have agreement on how to do scenario analysis? if they do i think those would be words worth listening to. annmarie: what really matters is the data on friday. what our economists are saying it would mark the smallest advanced so far this year. that would be a good of -- that would be a bit of good mood music. jonathan: payrolls two fridays away. we can call this summer now after memorial day weekend. things start to ramp up into the june 12 week. the fed decision and cpi. docking about easing of the summer, nothing easy at u.s. airports. travelers breaking a record. the tsa screening 2.9 million people on friday at checkpoints across the country that set -- that breaks the record set during the thanksgiving holiday last year. aaa saying this is the busiest memorial day weekend in 20 years. if you're looking for economic

slow down you do not find it at the airport. lisa: this goes to the heart of why this is such a confusing moment will step you have places like walmart and target they consumers are pulling back. the point being, it is still going gangbusters. we sought guidance from the cruise liners. they were robust. this speaks to a resilient consumer, perhaps more discretionary. annmarie: npr put it as america is back. we are coming out of covid and everyone is still spinning on services even if there is more of a premium. gas buddy is talked about the fact that for down of gasoline it was too since lower this memorial day than the previous memorial day. it is clear and tsa. jonathan: tsa pre-check is overridden by what happens with the people who do clear. annmarie: do both is the power move. lisa: it is paid to play.

we talk about a power differential. it is one thing if you can pay for first class. it is another thing if you do not have the money. it is the basic class division. annmarie: unless you go to an airport like i did over the weekend where everyone had a clear and tsa and that is where the line was. you go through the normal line, no one cares. jonathan: you say america is back. how different does this story show up in the polling? you ask people about the economy, still come the president is doing dreadfully and he does not seem to be bouncing back on the number one issue. annmarie: the wall street journal had an interesting story over the weekend and they use the political report to talk about this. the concern americans feel is overwhelmingly about the economy , it is not about the stock market or the housing market. it is about consumer goods and inflation. the wall street journal was talking about how democratic

aides were members of congress are telling the president you need to speak with more empathy when you talk about the economy, to talk about the high cost americans are feeling, less so the good economic data. jonathan: there's no point in pointing to the dow and telling people things are alright when they're dealing with what they think is a cost-of-living crisis . if you tell people things are great when they do not believe they aren't they feel like they are being lied to. no wonder the message is not landing. lisa: which is the reason i would love to have a fly in the oval office to see what these conversations are like. have more empathy -- but the numbers are so good? jonathan: how are you in touch with the public when you are in the white house? it is a massive challenge for any sitting president. lisa: i don't know how you message it with different words. i do not know how to practice nugget because there are so many different economies overlaid on top of one another. how do you have a cohesive idea if you do not know how to cater

to all of those constituencies? jonathan: let's finish on this story. the iphone rebelling in china. a 52% -- the iphone rebounding in china. it follows steep declines in the first two months of the year. apple and chinese sellers have been slashing prices as competition heats up with domestic phone makers. alex webb joins us for more. the stock is up or than 2%. i understand they do not give you a breakdown on the numbers. we were engaging this on our analysis. alex: it certainly looks as though there has been an increase. all of these things are estimates. we do not get a breakdown from apple anymore on how a unit sales they get in total, let alone by geography. the increase is after months of declines and the declines that happened in december and january, the crucial christmas selling period.

china had been a bright spot in recent years. there had been declines as much as 30% in that timeframe. the thing to remember is the month we are looking at now is not a big sales period for apple. looking at something like 3 million units. in other months they are as high as 10. a small increase can be reflected in the high percentage. it is a glimmer of hope for what had been overwhelmingly bad news in china. jonathan: is this unit volume or price? is this about cutting prices? what has led to this? alex: it looks as though price cuts are a big part of this. there may also be more consumer confidence driving it. a little bit were money to spend. there been surveys suggesting more people are willing to spend more than $500 on a smartphone that had bid on the past year or so -- then had been over the last year or so. there are discounts of $180 on

the iphone promax. the reason that is significant is in recent years when apple has seen a tapering of iphone sales it has managed to sit to sell people the more expensive models. you have seen the average sale price increase to offset the unit declines. fascinating to see whether apple is still managing to do that in china and whether the high unit sales do come at the expense of that higher gross margin you get from selling with a higher sales price. lisa: there is a growing roar from people in the industry that chinese grown artificial intelligence chips as well as smartphones are getting on the u.s. and international capabilities to go it alone as they become more isolated, particularly when it comes to chips. we have any sense of how far or how quickly chinese manufacturers develop or do innovators catch up with what we see in the west? alex: we have estimates from what we can see in the product pipeline.

we saw what way come out with it -- we saw while weight -- we saw huwai come out with a phone that was a lot more advanced than people thought was possible but there is analysis that suggest that was not done at a scale that was economical. it was using machines from the previous generation of technology. they have managed to squeeze more juice out of them, trying to not get access to these extreme ultraviolet machines which make the bleeding edge chips, all of the things you see from nvidia and all of the apple chips you see in the next iphone. they have a long way to catch up. it could take a decade by some estimates to get close to that. in a decade it is very likely the western chipmakers will have progressed beyond that further. it is a big ask. the thing with china is a few years ago they were importing something in the order of $250

billion worth of chips each year. even if you might see a smartphone that says assembled in china, assembled is the crucial word. a lot of the high-value components were being brought in from abroad and built into the smartphone in chinese factories. that is something china is trying to change. lisa: given a lot of people do assess that china is far behind the u.s. in terms of sourcing materials to make these chips, does that give apple a competitive advantage going forward that china cannot avoid, especially if they adapt new artificial intelligence technology or could apple be forced not to sell those phones given some of the competitive threat the u.s. has identified? jonathan: i think it -- alex: i think at the moment apple is not suffering of technology will deficit to its chinese peers but it is selling smart phones that do the same as its chinese peers but they are more expensive. iphone is more of a status

symbol and having the ability to do much -- more of a status symbol then having the ability to do much more than the others. we will have -- after apples worldwide developers conference where they will unveil the new operating system that will give us a good estimate as to what sort of technology apple will be bringing to the table whether this phone or the one afterwards has hardware capabilities to support that. that will potentially be a big differentiator with what chinese peers are able to do. it is a big if and there is riding on the potential for a hardware upgrade cycle around ai. that might be over egged a little bit but there is a lot of expectation around it. annmarie: we did hear elon musk's ai startup brought in $6 billion but elon musk was part of a group of industry leaders who said they should pause ai development last year.

what you make of this? alex: they did not bring in $6 billion, they had a $6 billion valuation. this is clearly a big investment cycle for ai. it reminds me very much of the thing we saw with the thomas cars in 2015 -- with autonomous cars in 2015 or 2016. they sprung up everywhere. there were acidic saying when elon musk was calling for a positive element of ai and might be because he wanted his technology to catch up. he was an early investor in openai. ostensibly some of the motivation behind openai was to ensure ai was to love safely. there has been criticism -- ai would develop safely. there has been some criticism of that. elon musk, since he left openai, he has been trying to get back

in the game with his new startup. jonathan: alex on the latest with apple. that is up 2.2% in the premarket. 2.2% advance in the premarket with apple. let's get you to on stories elsewhere. here is your bloomberg brief. yahaira: in taiwan thousands are taking to the streets in protest just a week after the new president was inaugurated. opposition lawmakers are trying to push through controversial legislation giving them more investigative powers and curbing the president's authority. the changes would have spent their ability to summon the president and general public for questioning. the opposition party advocates for closer ties with china. a group of hackers has claimed responsibility for breaching christie's auction house early this month. the group posted it had gained access to personal information of the firms wealthy clients and

published what it claims was a sample of the data. the authenticity of the claims cannot be verified, but a spokesperson did acknowledge some client information was taken. the attack led the auction house to take down insight for about 10 days. it was a disappointing weekend at the box office. furiosa: a mad max saga okin $32 million domestically. the results are likely the worst performance for a number one film released memorial day weekend in decade. sony is the garfield movie came in at second with $31 million. jonathan: much more in about 30 minutes. what is behind it? are people no longer going to the movies or does the content suck? i am leading to the later and not the former. i think barbenheimer put that to

rest. lisa: no one wants to see a post-apocalyptic film in memorial day weekend when you're with family and thinking about people who lost their lives. annmarie: and tsa is talking about record travel. which is why people do not want to go to the movie theater. jonathan: clearly people are not spending. the movie slate for 2025 improves. the writers strike has been a feature. this content is terrible. why would you pay to watch that over the weekend? lisa: you are thinking about it. then he decided he would say the quiet part loud. jonathan: this is terrible content. i saw the trailer for this and chris hemsworth is like thor in a different costume. lisa: what did steve say? jonathan: scathing. lisa: a comic character totally script of his dignity.

-- totally stripped of his dignity. jonathan: euro -- going into june. >> i have a forecast for june that is not far from where we are the moment. it marks the range pretty well. jonathan: the latest on the ecb on the program. ♪

jonathan: equities positive .1% on the s&p. on the bond market yields unchanged. 4.4610 on the tenure. 1.0 878 on euro-dollar. under surveillance, going into june and gary go for a fight over july. -- and gearing up for a fight over july. >> i have a forecast for year end that is not far from where

we are at the moment. 1.06 to the downside, one point tend to the upside. near the top end of the range you will see interest just -- you will see interest to sell euro-dollar. jonathan: new dovish comments setting up the fight for a second cut from the ecb. a governing council member saying he favors backs some of and questions why cuts should only be once a quarter. the european central bank widely expected to deliver its first cut next week. jane foley of rabobank joins us for more. june looks done. july is where the fight will be. what should we expect? jane: if they do not go in july i think there is a chance they will go twice more before the end of the year. possible they could pause, it is very data dependent. we are looking at a fairly dovish ecb between now and the end of the year.

inflation data is more or less beginning to behave. i think a softened euro is something that will worried the ecb not too much in this environment as long as inflation remains close to the 2% level. jonathan: when you say data dependent, what data are they dependent on? jane: the inflation data, but they have their eyes further afield. oil prices are watching supply-side issues. will that be affected by the suez canal? so far so good. if that remains the pace they will begin to relax more about inflation risks into the end of the year. at this point we have to recognize one of the big differences between the eurozone and the u.s. is growth is very weak and has been weak for years. from that point of view there is a need for growth, particularly if we begin to look at the

budget tree restraints many countries have. growth would be very useful. from that point of view, as long as inflation remains in its box around the 2% level, as long as the apparent risks of it inflation shop remain contained -- the apparent risks of inflation shock remain contained, the ecb will be less worried about euro-dollar at current levels and willing to ease further into the end of the year. jonathan: things are different yet the language they use seem so similar. i was listening to the eu chief economist talking about policy needs to remain restrictive. for the ecb, what is restrictive? jane: if we have restrictive policy, we can see that coming through, the restrictiveness of a policy coming through in a number of data points. the fact is now that inflation is close to target and assuming

it can remain close to target, it is time to switch the focus and move away from inflation to growth. we can see that in some of the comments by some of those members. lane is talking about restrictive. the data could still be telling us policy conditions and monetary conditions are still relatively restrictive after they've announced an interest rate in june. it may take another couple of moves before we can say a policy is no longer restrictive. we have a while to go before they can say that. jonathan: do you understand -- tom: do understand why we have -- lisa: to understand why we have this discussion from ecb members and hawkish from fed members and we have not seen material dollar strengthening. can you make sense of that? jane: i should probably point out that if you look at model

valuations for euro-dollar, many models are around 1.20 or 1.25, even up to 1.46. at current levels the dollar is undervalued relative to fair value. that can remain the case for years. there is no quick draw for currency pair towards model valuations or fair value but it does give you a benchmark. the dollar is already extremely strong and that is why we are not necessarily seeing the short-term movements in response to hawkish fed officials. i would imagine the market is thinking the dollar is strong. we are going to see some movement by the fed at some point. the market a little bit reluctant to extend its long dollar positions. lisa: i am wondering when we have the election in november, do you view increasing protectionism as good for the dollar or bad for the dollar? jane: i think it'll be strong

for the dollar. there are two reasons. if you imagine we were to get trump and we were to have more tariffs over and above the ones biden has talked about in trump has talked about strong tariffs, he does not need congress to push those through. he could announce those relatively quickly and it could mean the price increases, the impact of that on the cpi index could beat the fed cutting cycle could be over by the end of next year. that is one thing that could be supportive for the dollar. the other factor is if you think of the chip side of the inflation reduction act this is a big carrot for companies to invest in the u.s.. jonathan: jane foley of rabobank. thank you on the latest for the ecb and what deglobalization could mean for the u.s. dollar. coming up, barry knapp, and terry haines, we'll catch up

with the boston celtics co-owner and tom tzitzouris of strategas. this is bloomberg. ♪ [introspective music] recipes. recipes written by hand and lost to time. are now being analyzed and restored using the power of dell ai. ♪

>> policymakers are debating whether policy is restrictive or not. >> we definitely do not see any restrictiveness in financial conditions right now. >> the policy was restricted we would not be growing the way we are. >> we are seeing moderation in economic activity. >> earnings are better than expected because we have a strong economy. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie

hordern. jonathan: second hour of bloomberg surveillance begins right now. live from new york city, good morning, good morning. let's get to the calendar items for the week ahead. beige book coming up later this week. monster week ahead. lisa: [laughter] jonathan: ece deflator on friday. you can tell lisa made this one. $69 billion worth. 5-year note's, $70 billion worth. lisa: is it so obvious i did this? jonathan: this has lisa all over it. lisa: this will be a light week. supply does better to test the appetite. does it increase given the fact there is so much supply coming? almost $70 billion into your notes. the idea the beige book is not very exciting, which is why it

is called the beige book. it has taken on more importance which makes me wonder if you have better understanding of how these data points went into the fed assessment. jonathan: let's get into some of that. i want to focus on supply. mike wilson of morgan stanley was around this table. he has become more constructive on the equity market. one is the risk is in the bond market. let's fast-forward into november. bill gross speaking over the weekend saying donald trump is the big risk for the market, not joe biden, which is a different way of looking at his administration given how market friendly he was initially at the start of trump volume one. bill gross saying for the deficit that is the number one issue. annmarie: the quote is "trump is the more bearish because his programs advocate continued tax cuts and more expensive things which would add to the continued burgeoning we see in the u.s. deficit. trump's election would be more

disruptive." lisa: i would argue immigration is a big part of this because that has been such a huge part of why we see the employment picture turned better and wages. increased that much or as much as people expect. before we get there i want to understand how sensitive the market is to policy. you can talk about it. here is steve eisman saying it is the deficit crowd. when we see it in the options? that is why it is so important to watch the auctions. jonathan: there is no sign yet this year the extra issuance out of the treasuries is crowding out things in the corporate debt market given the supply we have had through the start of 2024 and the amount of demand that has met it. lisa: i would argue it has shown for investors are willing to come back into the united states if the yields are big enough and that was a surprise to a lot of people who were thinking foreign investors will stay clear from the united states.

they are coming back because yields looking credible. jonathan: cap whose expense? -- at whose expense. i did that just for you. lisa: thank you. jonathan: will be kind to each other for a couple days at least. on the s&p we are positive .1%. in foreign-exchange the euro 1.08. coming up we catch up with barry knapp of micro -- with barry knapp of ironsides on why the fed will cut. terry haines on the white house response to the latest in israel, and the bostick celtics co-owner as his side advances to the nba finals. that conversation 30 minutes away. fed officials reiterating patients ahead of key inflation data this week. barry knapp saying "i think the fed will cut before the election because of financial sector stress where the unemployment

rate going above 4%." barry is with us right now. let's divide those things and start with financial sector stress. any sign of that whatsoever? barry: a deeply inverted yield curve has impaired bank profitability. you just look at the return on equity of the s&p bank index over the last two quarters as deposit betas have caught up and started to pressure margins. you had return on equity fall from 12%, which is a level where banks tend to build capital and stocks trade at a premium to about 96. it looks like it will hit into the eighth and this quarter. the small regional banks are still struggling to provide credit. you go through the weekly fed data and you can see bank credit contracting. you were just talking about the

auctions. two's will probably do well at 5%. the fives and sevens is the part of the curve that the banking system helped out on. they have been divesting themselves of treasuries for about a year and a half. there is no sign of stabilization there. that is where i think the stress will be. those smaller regional banks. it is similar to thrifts and savings and loans in 1980. the last time we had this deep of a yield curve inversion. that is where i would expect problems to rise. michael: -- jonathan: we have a case study for this and it is about a-year-old. some of the biggest bank failures took place and the fed. on hiking. it did not dictate monetary policy. why would this time around?

barry: the model everyone thought about a year ago, those couple of banks that got in trouble was back to 2008, this idea there are bad assets on bank balance sheets. i referenced the 1980 episode with savings and loans. they were 80% of the supply of mortgage credit. we are not talking about a 2008 style prices we get a big run on banks. we are talking about profitability getting more negative in the supply of credit getting cut off to the small business sector. that is why reported to the unemployment rate. other els surveys like the qc ew which lags two quarters shows small business employment is much weaker than the establishment survey implies. in the foundation i think there is a struggle and it may become apparent in the unemployment

numbers, it may become apparent in various small business surveys that there is a real issue at the base of the economy. you were talking about financial conditions, it is the same idea. if you are a floating rate borrower who depends on the banking system, financial conditions are tight. bank credit is tight if you are a real estate of an upper or small builder or borrower who can borrow out the curve in the investment-grade credit market. the fed balance sheet is still providing lots of accommodation and conditions are not tight for those borrowers. certainly if you are a beneficiary of the loosest fiscal policy we've have ever had during expansion, conditions are quite loose. for me it is looking get that small business sector and it is the toughest sector to measure in terms of the data we get. i think it will start to crack through the course of the summer. at least it will be obvious is

cracking in the fed would respond to that. that is where i've come from what i say the problems we have been forced to ease. lisa: i am a little bit distracted. it is the unofficial start to summer and you have a ski map behind your head. i know you're probably telling your beloved colorado. we saw lots of travel. lots of people going skiing. there is a question on how long you can continue to bank on enough consumer spending at the higher end to keep this going, to keep unemployment from rising too much and to keep things on site indicate people investing. barry: there is no doubt there is a bifurcation. even with respect to your comments about immigration and the effect on wages, the atlanta fed wage tracker does break down wages into poor tiles. the bottom quartile, their wages

were growing faster than the top tile in late 2021 that has collapsed just down to a couple tenths of 1%, below 2019. the immigration surge is putting pressure on the low end. clearly they have that inflation problem. we have this problem on the low end. on the other cited the equation, for transfer payments or government transfer payments to individuals are at record levels. not record levels, but smoothing the pandemic there is still a lot of money being sent out there. it is a very bifurcated economy. lisa: it is bifurcated and there is played to be had at certain incomes. why do you like cash so much? if people have so much money in cash and people are talking that that will keep equities rising higher. barry: the cash is a funny

situation because the sectors i am recommending in market weight tech, being overweight tech seems reckless. a 30% allocation to tech overweight in industrials and energy. these are high volatility sectors. -- nothing utilities come which may is a miss. nothing utilities, staples, or real estate. then you add to that 20% cash. you have a greater vol than you would have just in the s&p 500 with the opportunity that if we have a correction as a consequence of tens going back to 5%, a risk off shock because of rates moving sharply higher, or we get the unemployment rate to deteriorate. in either case, you are in a

position to add more risks to your portfolio. i have a lot of cash but i also have exposure to high vol sectors. annmarie: you write in your notes about the current default into election is to assume either candidate has little interest in reducing spending. you say you would caution that perspective. why? barry: because it looks like the republicans will most likely take the senate. if you think about the probability and the math, let's call it 55% chance trump wins. that is roughly the betting market. even were biden to pull off a victory, most of the analysis i have seen suggests the senate will still go to the republican side, in which case you have a bit of a break on any additional inflation reduction act or chips acts and a chips act was a bipartisan -- that is not a good

example. any big spending programs would be checked by a republican senate. on the other hand if trump wins there is a good chance he will have control of all three bodies , in which case the tax policy will wind up extending and keeping a fairly low corporate tax rate. jonathan: barry knapp on a permanent vacation. nice of you to give us some time. bramo is so jealous of that. lisa: i am looking up if you can still ski. it is almost june. i know there are certain mountains you get in washington state. annmarie: it is summer and barry is surrounded by snow. jonathan: permanent vacation. working from home. decades in the industry, he deserves it. i want to do the same thing. beach behind me.

the amalfi coast or something like that. let's get you update on stories elsewhere with your bloomberg brief. yahaira: ecb executive board member isabel is urging caution over quantitative easing. she says qe program should be used in times of crisis due to the pronounced cost. the ecb started purchasing large-scale assets in 2015 in a bid to revive inflation that had become too slow. in 2023 policymakers started rolling up assets while they hiked interest rates. the central bank's monetary policy strategy is up for review next year. former president donald trump's hush money trial is entering its final stage as closing arguments are said to begin. prosecutors and defense lawyers will give takes on the evidence and testimony presented over five weeks, then the jury will begin deliberations.

trump is accused of falsify business records to add payments to an adult film star to keep her quiet about an alleged affair. the presumptive republican nominee has denied wrongdoing. the most dominant rotted tennis history may be an end. raffaella dollar was defeated by out and sanders feta at the french open. -- nadal was cheered throughout the match but cannot overcome his opponent. nadal has won the french open 14 times and has 22 grand slam singles titles to his name. after the match he said "if his last time i play here, i'm at peace with myself." yahaira: that is your bloomberg brief. jonathan: we are all a little bit emotional after that. i think he has lost four times in his career.

it was not summer people play well, i know andre agassi won one. raffa change the way people played on clay. lisa: he is 38 years old. that is not young for tennis. the fact he continued to win as long as he did is shocking. jonathan: i would not just say for tennis. any sporting event. at his peak on the surface i do not think there's anything more difficult to do in sport then be that man on clay in paris. lisa: that comes not just with the serving game that pete's same wristed but with real footwork and -- that peter sampras did but real footwork. jonathan: coming up next, biden's position. norman: the operational approach

must be tailored to achieve both of those goals. the coming investigation will want to look at that. jonathan: that conversation just around the corner. live from new york city, good morning. ♪

jonathan: equity futures positive .1%. yields unchanged on the 10 year. 4.4610. euro 1.0 888. under surveillance, biden's redline. >> the white house position remains israel has the right to go after hamas and its operational approach must be tailored to achieve the goal. the coming investigation will want to look at that and it may well be that this terrible tragedy is an accident. this is a compressed area. very small distances and an enemy that hides behind

civilians. this is a hard challenge. jonathan: ask eos is reporting if israel violated joe biden's redline. biden threatening to hold back more weapons if israel invaded rafah. terry haines of pangaea policy joins us for more. how do you expect the white house will respond? terry: what the white house will end up doing is taking whatever israel and the idf come up with. they will not have the ability to second-guess that. net-net, israel will be able to continue the rafah operations despite these difficulties. annmarie: we heard from the white house that they have been clear with israel that israel needs to take every precaution possible to protect civilians. beyond that, which we have heard

a number of times, can they take any tangible actions? terry: theoretically sure they could but i doubt they will. the idf and israel generally have a very strict set of engagement guidelines of their own. if they are not following them in a particular case, there will be a lot of repercussions. on that, the white house is hemmed in in two ways. one is politics. everyone is quick to start talking about the effect in swing states for biden. let's not forget that you have jewish americans, israeli americans who are very numerous and will have an effect if biden breaks with israel. then there is the diplomatic end of this where biden needs the

israelis as well as the more moderate arab states to counter iranian influence. they cannot accomplish any of that without israel. annmarie: can you have donald trump promising to crush pro-palestinian protests on campuses. how do you see these individuals dividing their policy and israel into november? terry: i see biden as nuanced because he has to be, in part because this white house predilection is for nuance. trump has the freedom to be about bluster and cheerleading and trying to paint in vivid colors so that is what he is doing. at the same time what we saw in a trump presidency before was a much more nuanced approach to israel and the middle east, albeit with the idea there needed to be policy goals set as they were before.

lisa: you said this administration likes nuance. is it working? terry: i think it creates a great deal of model. you draw the light -- a great deal of muddle. you draw the line from afghanistan to ukraine in the back on ukraine and on to china and everything else, they take too literally churchill's adage -- churchill would never have said jaw jaw -- if it is not getting a result you should keep jaw jawing. they are precariously close to running out the string and a lot of places. as you pointed out, as the bloomberg terminal points out, we now have more rattling from iran on a nuclear program. that is a lot of u.s. back-and-forth over 10 years to try to make that not happen.

lisa: what you make of the fact that the wall street journal is reporting u.s. pressuring allies not to go after iran after reports they've gotten weapons grade uranium ed could have the capabilities for a number of warheads. what you make of the news the u.s. administration wants there to be a pullback from addressing that? terry: i hope the journal has not got it completely correct. i would like to see, coupled with restraint towards iran, the idea there will be consequences for any particular action and other acts they continue to surround iran and hamstring it from doing many of the things it and its proxies are doing in the middle east. if the journalist is correct is

a situation where nuance and mixed signals are getting out of control but contributing to the dicing us of the situation. annmarie: there are a lot of mixed signals when it comes to iran and this administration. they say their enforcing oil sanctions but when you look at the data you still see a lot of oil leaving iran. you understand with this a ministration policy on iran is? terry: i don't. annmarie: that is a lot of people. jonathan: terry haines of pinching a policy. earlier we were talking about whether there might be daylight. this issue, iran, huge difference. annmarie: this was an administration that came in talking about having those talks for the jcpoa under the obama administration trump pulled out of. trump will not have discussions with iran on the jcpoa. if it is trump 2.0 will they go

after the barrels of oil's leaving iran? jonathan: this is heavy stuff. let's lighten the mood. coming up next, the boston celtics booking their place in the nba finals. we'll catch up with the teams co-owner on the other side of the break. a man having a lot of success in the world of sports. equity futures positive .1%. in the bond market, unchanged. lisa will tell you the highlights of this week have been bond supply, the beige book, the climax on friday, pce data. lisa: so exciting. [laughter] jonathan: a good week ahead. from new york, this is bloomberg. ♪ so, what are you thinking? i'm thinking...

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

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

jonathan: equity each is shaping up as follows. the nasdaq up by 0.2. there is a lift in this equity market. lisa has talked about the front end of the curve last week. a double-digit move at the front end of the curve. year yield this morning is 4.967. we put more emphasis on data we would not. lisa: basically how much that

moves the dial. it is the reason why it might be interesting tomorrow. businesses are seeing a revival or they have more confidence. they are worried about getting enough people to hire. you could see more than you expect from the beige book. jonathan: the u.s. dollar with its best week since april. we talked a little bit about this already. it is amazing, isn't it? june is done. they are going to cut interest rates. june meeting seems to be about a fight the following month. lisa: basically locking in a june rate cut, it really does shift the debate. talking about how -- it is

shocking how different the rhetoric is. is the eurozone really not facing the same inflation fight? that seems to be the rhetoric. jonathan: it is a different growth profile, for sure. cleveland fed president already speaking in tokyo saying the fed could do a better job and talking about how it could affect conditions. fed speak has gone global this week. lisa: basically, kashkari did kashkari. in terms of disinflationary trend to cut rates. it was fascinating. the scenario analysis. she is directly respond to us on surveillance. she is saying, they have to give a better sense of how they are going to respond to different risk -- different surprises. in other words, we need more

words. jonathan: the iphone staging a rebound in china. steib declines the first few months of the year. offering rare price cuts. looks like a little bit of a turnaround. lisa: there was some news overnight that they were much higher than expected. a 50% increase in iphone shipments is giving people the sense that maybe they are not losing ground as much. it is coming off of a small base. jonathan: let's turn to this. in 18th title is insights for the boston celtics. completing a series sweep of the pacers in the finals. a successful season.

it is wonderful to catch up with you. i was so happy for you. congratulations to you and the team. i wanted to go through what this means for you. they are the underdogs, overshadowed by their counterparts. how important was that for you, for the history of that club? >> it was huge. they have not won the cup in 100 years. the city is ecstatic right now. when the team came back from the game, there was a nice shot of the fans in the stands. when they came back, they could not even get out of the airport. they took a bus to the facility and that was also mobbed. they are feeling great.

it was a wonderful time. jonathan: your approach to this club and how it is run should be a case study and a lot of schools. you have taken a chance on a lot of players. he picked up and identified talent. this has not happened once or twice but repeatedly. it is not an accident. where does that come from? >> we have a lot of critics. they have done a fantastic job of evaluating talent. one of the mainstay is their academy. they invest heavily in the academy in the west. it has paid a lot of dividends. i think really taking players

and putting them into a team oriented system, having them pass the ball and putting them in the right spots. it has been wonderful to watch. it also helped that we took a risk to years ago. he is a very young player. i met him in austria. he was 18. we plant -- we paid a record some at the time. manchester united came knocking on the door. the best did several other players. jonathan: can we talk about the difference between them? you get manchester united coming in with money. whether that is still the future. is that inevitable? are you going to continuously

have to reinvent yourself? >> when you win a championship, everybody wants your players. we think we can continue to prosper with a mix of young players and a mix of players who have great opportunities. i think we would change that a bit. before that, when we qualify for the champions league, that will be really helpful in our recruitment. jonathan: has it been hard to run a football club or a basketball team? >> they both have similar challenges. it is about getting top talent and trying to do everything you can to make their life easy and to play hard. they are kind of the can-do kings. the favorite team of many but

also as probably everyone's second favorite team. we came back from rome, i went to my hotel room and found a large cake with the symbol on it. lisa: you are pretty much living everyone's dream. you have done it. there is this idea as you had really successful teams heading to the nba finals. how do you monetize this? i know that is not the reason you do this. you are in it for the love of the sport. do you find it more compelling right now? you have the actual intellectual property in a way that has changed with new technological advancements. >> absolutely. when we purchased the celtics, there was no facebook or minimal social media.

emailed was the technology of the day. now what we have, now they are counted in the millions, for global soccer teams. also the nba prospering in europe and china. these teams have become teams of the world. the boston celtics certainly have that reputation. in terms of monetization, it is just a circle. if you are more popular, you get more players, if you get more players, then you get marfan. annmarie: when you get that trophy, when does it translate into money? is it immediately in ticket sales? >> it translates into a sponsorship. for the celtics, just having a championship team was more sponsorship income. now it is in the tens of

millions. brands want to be associated with brands like the celtics. having that championship culture and brand and reputation, that is what does it for the long term. annmarie: you went through what makes atalanta so special. what about the celtics? they are always winning. why are they so good? >> that is one of the best russians i have ever had. they are good because we have had a incredible management team for years now. started out with danny. they all work together as a team and have been very smart in player trading and acquisitions. it is all about trying to get the top talent on the field. both organizations are doing

more work and exploring statistics. from when they are eight years old, to high school and college. the will to win championships pervades and we have never been happier with those folks. it is good to see and both of the situations. and in indiana, it is a great basketball town. there was a huge celebration after that victory. it is just really hard to win championships. same thing in europe. it is just hard to get up every night and overcome injuries. i'm just pinching myself and helping the dream will continue next week. lisa: it sounds like you are a metrics believer. i will say that right now, you

must be on such a high and probably have not slept for weeks. are you still interested in buying other teams? do you think that been bid up to such a degree that the opportunities are not there anymore? >> when we bought the celtics, the headline was that venture capitalists pay a record price. that has been a question every single year. the fact that the technology has changed, in the fight for eyeballs between the new media and facebook, and apple. they continue. everybody wants, -- properties that have eyeballs. they want those that have room to go up. jonathan: we have to talk about

a loss in the basketball world. we would like a last word from you on his legacy. >> i was devastated. i'm so glad that we won the game. i felt i was really close to bill. he worked for us at the celtics. i texted bill two weeks ago. he sent me a message about winning the europa cup. he was an avid celtics fan. the world and the nba has had a major loss. we are really going to miss bill . hopefully our players -- jonathan: let's catch up soon. congratulations for all your hard work and success. if you are just joining us,

equity features positive by 0.1% with stories elsewhere this morning. here is your bloomberg brief. >> signaling it is mostly done with job cuts in asia as they go after a merger with credit suisse. they are present in 13 regions and laughs are mostly over. the swiss lender has been cutting thousands of staff following the emergency rescue last year and a government broker-deal. the takeover is due to close officially this week. former president donald trump is taking a hard line stance on demonstrations on college campuses. trump told donors at a recent event in new york that he would deport student protesters. he supports the right to continue the war on terror, but donors say he did not mention

israeli prime minister bennett you may not. trump has complained about him publicly after he complained about biden's win in 2020. a powerful storm swept over the u.s. over memorial day weekend, killing at least 22 people and leaving a trail of destroyed homes, businesses and power outages. president biden sent condolences to the families of those who died and said fema is conducting damage assessments. he contacted governors to see what support they might need. jonathan: more updates on that throughout the morning. up next on the program, trading, the inverted curve. >> right now, you do not want to be invested in the long run. there is an implicit handicap. short-term yields are high. jonathan: that conversation is

up next. this is bloomberg. ♪

this is our future, ma. godaddy airo. creates a logo, website, even social posts... in minutes! -how? -a.i. (impressed) ay i like it! who wants to come see the future?! get your business online in minutes with godaddy airo olukai sandals capture the feeling of stepping barefoot into wet sand. the perfect balance of instant comfort and lasting support. say aloha to olukai. anywhere comfort. anywhere aloha. (♪♪)

jonathan: equity features just about positive by about 0.1%. for .4689. >> the normal typical shape of the yield curve should be upper the slope. right now, you would not want to be invested in the long bond. there was an implicit handicap come if you are buying 4.5%. sure -- short-term yields are likely to stay high. jonathan: treasury is holding steady.

writing this, yields have room to drop further that should rise again early next year as inflation push higher. we see inflation rising back towards for percent by the end of next year. tom, that is quite a call. what is driving that? >> labor market rigidity. this labor market looks a lot like what you found in the 1970's. organized labor is gaining steam every year. you have the consumer base out of work but consuming and getting social security gains. you have a substantial portion of the labor force in the public's sector getting gains. that is a huge tailwind to inflation and wage inflation for the next few years. we have a period where inflation

should continue to come down. that is where we are until september. jonathan: what does that mean for policy? >> it means the odds of a policy mistake are growing. the fed is likely to bite on the decline. by bite, we are likely to see rate cuts. last week saying something to the effect of wanting to see a few more months of declining inflation. i think we will get declining inflation out until september or october. that should be enough for the fed to cut. the fed has already begun to ease. they are slowing the pace. that is effectively a cut. policy is already moving towards the easing phase. i think the data will support that and it likely raises the odds of policy mistake.

lisa: this is something that we heard from adam. a policy shift over november. regardless of the policies, based on year-over-year comparisons, there will be a shift higher into next year that could cause a policy mistake by the fed, if they cut this year. >> what it comes down to is if we have no correction in the market. wage inflation is just going to cause a/v acceleration of broad inflation later on. this happens 85% of the time after you see inflationary shock like we saw in 2021 and 2022. everyone is saying, we have beaten back goods inflation and that second wave is likely to be

driven by wage inflation. lisa: do you see this as more of a 1970's moment? >> very likely. more like the 1970's. we have a large-scale mismatch between the demand and supply. the jobs are moving out of the northeast and upper midwest. younger employees are not living with jobs. we have those who are boycotting the market. add to the fact that the baby boomers are retiring and you have a rigidity. now you're getting agitation we

are progressing in that. lisa: i'm curious what you make of some of the surveys. you are seeing companies allowing attrition to take place. we are seeing this in a more consistent fashion. >> it has to progress for quite some time. i think we are getting softening of the labor market and we are seeing small businesses fold and refrain from hiring positions that they need. you are seeing a very gradual softening in the labor market and it needs to progress at a much higher pace to arrest the

consumer driven wage inflation that we are seeing. it could put in ending to it before it gets off the ground. what we are seeing is not enough. you are talking about wage gains tilt into public sector unions. they are already in the pipeline. very likely a similar story on social security. for households that are dependent upon that, that may not be enough, but it keeps it migrating. irrespective of who is in the white house, you will face this

potential. annmarie: there will be some kind of tax cuts and also there will be tariffs. with trump, it would be a lot bigger. do you think if we get 60% tariffs that this 4% will be even higher? >> absolutely. it does not even factor in the potential for a trade war. we are expecting, as of right now, we are using as our baseline. an interest costs will exceed defense spending in matter who is in the white house, that will be a huge headache. both republicans and democrats will be sensitive to the potential of crowding out defense spending. tax cuts make that even harder to accomplish. i'm not even factoring into my

baseline. people have surveys that level of baseline inflation. jonathan: he is thinking about 25 and the of rate hikes. lisa: there is a question of at what point we are seeing a head fake. you see the lack of immigration or whatever else happens. i do not know how realistic this is. at what point do you get some pushback from the commentary there? jonathan: just getting some news. deciding witnesses that -- the report coming from afp. coming up next, we will catch up with mike.

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

food isn't just fuel to live. it's fuel to grow. my family relied on public assistance to help provide meals for us. these meals fueled my involvement in theater and the arts as a child, which fostered my love for acting. the feeding america network of food banks helps millions of people put food on the table. when people are fed, futures are nourished. join the movement to end hunger and together we can open endless possibilities for people to thrive. visit feedingamerica.org/actnow craig here pays too much for verizon wireless. so he sublet half his real estate office...

[ bird squawks loudly ] to a pet shop. meg's moving company uses t-mobile. so she scaled down her fleet to save money. and don's paying so much for at&t, he's been waiting to update his equipment! there's a smarter way to save. comcast business mobile. you could save up to 70% on your wireless bill. so you don't have to compromise. powering smarter savings. powering possibilities.

>> that last mile of getting from 3% will be tough. >> we are more worried about acceleration.

>> we are hopeful. i think that is what matters most to the fed. >> as long as the market believes that the next move is a cut, then i believe risk assets can >> continue to perform well. >>-- can continue to perform well. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: the third hour of bloomberg surveillance starts now. good morning. for our audience worldwide, a gain of zero point 03%. positive by 0.15%. let's get back to that. witnesses that is really takes are deployed in the center of rafah. annmarie: it comes after a strike over the weekend where

civilians were killed. benjamin netanyahu says this was a fatal accident. we heard from the national court of justice ordering israel to halt their movements. lisa: it is hard to understand this. we do not want to miss cast in any way, shape or form, but it is clear that they have not halted. i think that is interesting. has joe biden any influence or visibility over what israel is doing? jonathan: evidence over the last few weeks suggests that he has. you get the feeling that we are going to go deeper and deeper into summer and already people are focusing on november. it is just how much are we flying blind? trying to gauge what next year

looks like, how do you do that without knowing the outcome of november? do we have a split government? what does that mean for policy from here? lisa: they will need to start focusing on the outlook for next year. how do you get visibility given the policy shift and given the fact, the year-over-year comparisons pointing at an inflationary upswing at the same time the fed is likely to cut rates. annmarie: this is why adam called on this program hikes. this is what happens if we get a trump to plano. the -- 2.0. those in the u.s. are expecting more gridlock. things will be slow and take time. people need bipartisanship to

get anything done. they are preparing for a red wave across the board. jonathan: who is the bullish candidate and who is the bearish candidate? trump is the more bearish of the candidates because he advocates more tax cuts. we will see where consensus lands. lisa: that said, we saw this before, that trump reverses course. at what point do we understand who his advisers will be? we do not have any clue. jonathan: 2016, remember going into that? there was a drop by 20%, literally an hour or so. it is a rally and we never look back.

lisa: this is the challenge for a lot of extra people. what would it be? would it be some kind of additional tax cuts or fiscal spending? the issue i'm seeing is the gravitational force seems to be moving towards the greater risk of inflation rather than disinflation or recession. that is a shift in the overall discussion. jonathan: how this bond market responds in november to any of these policy initiatives will set the tone for mo -- for markets. the fixed income --do they let it go? lisa: you have to keep watching. so far they have not been that concerned about fiscal deficit. i'm not going to say liz truss. but that situation, you could get that kind in the u.s. jonathan: equity futures on the

s&p 500 look like this. futures positive. yields unchanged on the 10 year. and in the calm oddity market, we will build on this later in the hour. coming up this hour, catching up with michael. he sees the market continuing to grind higher. brent holds. looking ahead to friday's inflationary data. stocks heading back towards all-time high. volatility is low with rate volatility hiking and very strong corporate earnings. seeing 6000 this year on the s&p is not as crazy as it sounds. michael joins us now for more. >> i call it the dual

goldilocks. the fed going from very hawkish from march 2022 to when they got to terminal. very importantly, they walled off the hiking concept. that means the hawkish case for the near term is to do nothing and the dovish case is anything different than that. you had that combined with the dual goldilocks on the concurrence of the worker consumer is doing pretty well right now. employment is tight and real wages are not accelerating but they are positive. a little bit more disinflation over the summer against some wage gains. your prior guests was talking about union workers. the others are kind of locked. if you saw the report from the few weeks ago, workers are getting 6% to 7% nominal gains.

it is a pretty strong and powerful thing. out of the 11 sectors, every sector had higher operating margins than it did from december, except for energy and health care. that is a pretty impressive thing. many are at record highs. they have proven that they are good at navigating some disinflation, very complex cycle here. companies, you have to take your hat off to them. jonathan: this is what she said. from a material move higher, we think investors will have to focus on the outlook where visibility seems a little bit limited. what do you have to make these kind of calls? >> she is right.

what are we going to learn between now and november? it is not that much. if you look at a joe biden win -- let's assume it is a deadlock. maybe the democrats get the house and the republicans get the senate. that seems to be the probable case right now. he is not going to be able to do anything massively -- she will not be putting through a new ira. it will probably be like, this is what we know. earnings have grown pretty well over the last few years. i do not really look at that as an equity market negative. like you guys were discussing, there is a lot that you do not know. who will he pick for his team? what are his policies going to be an textbook would tell you,

lower regulation, lower taxes, lower corporate taxes, and criminally more bullish. i would suggest this. a trump win -- whatever asset prices do, they will come with more volatility under trump than a gridlocked biden. lisa: that is probably fair. you said he would agree with laurie about the uncertainty and lack of visibility. it seems that you disagree that that kind of visibility is required because you see it possibly climbing. can you explain why you differ on that? >> they change higher than where we are right now. corporate earnings are growing really well. not hawkish, but marginally dovish here. i think under a trump win or a joe biden win, either scenario

is probably more supportive of the same. a corporate earnings a year from now, will it matter that much further 2025 earnings estimates, who is president? i do not think it does. lisa: john was talking and he said bond traders are the masters of the universe but there is this feeling that people are going to push back on the idea that there is more of the same come inovio addressing of the deficit. at what point do bonds by any kind of rally in stocks? >> i think you are touching on a theme that i vote up a month ago , that the real question about november is the bond market and not the equity market. if the bond market does selloff, that spills into equity eventually. but at the margin, under a trump

presidency, you are looking at what he can do versus tariffs and deportations of workers. many of whom are workers, those are largely more inflationary than biden. you are not hearing from anyone about inflation down. that is biden's achilles' heel. i think there is another concept. if trump ends up putting in a replacement, that is only a year down the road. if he puts in a dove and you have a progrowth fiscal policy, you have your foot on the accelerator. if you have joe biden, what have we been working with?

if you lose that, i think you could see premium build up in the bond market under a trump win. there are a few if, but we will see a fair amount of volatility with trump, as his policies and his cabinet picks are unfolded. annmarie: you have this note out talking about this. when do you think they would start to price this in? >> if trump -- it looks like right now he is the favored. if it looks more obvious, the journal put out this article about how he wants to have more direct impact on monetary policy . have you ever known a real estate guy who did not want lower interest rates? but look, if you start seeing that as part of the policy, we need to get rates down. that is how consumers will

benefit with lower interest rates. the fed controls -- jonathan: it will start looking like this. >> exactly. that is the risk. and what is trump's reaction function if you get steeper on that. does he back off? those are some of the questions. jonathan: can you tell me whether you think equities rise or fall? >> there are periods where you have high correlations and you have periods where there are low correlations. 2021, very high correlation. 2023, we saw them break. if we come in the here and now, one of the risks to my call is, if we see the 10 year, for whatever reason become that short treasury trade that we saw last september or october -- you saw that, when you see the most

important asset under the sun doing weird stuff and moving very quickly, that will be destabilizing there. but generally, from a fundamental point of view, this rally is about earnings growth and earnings growth has been remarkable. it is about earnings. earnings growth has well exceeded its price appreciation this year. they achieved their earnings target the first four months. jonathan: nvidia was part of that story. we have a lot to think about, going back into 2025. let's get you an update on stories elsewhere. >> t-mobile will buy most of u.s. cellular, plus some of its asset.

in the deal is worth 4.4 billion dollars and includes a mixture of cash and debt. they would get u.s. cellular's wireless customers, retail stores and 30% of its spectrum assets. u.s. travelers breaking a record over the holiday weekend. the tsa screening over 2.9 million people on friday i checked across the country. it breaks the last record set during the thanksgiving rush holiday -- giving holiday rush last year. and the boston celtic's advance to the nba finals after completing a series sweep of the indiana pacers. the celtics 105-102 when -- window sealed their second trip to the finals in the past three years. they will meet either the dallas mavericks or the timberwolves.

the mavericks lead the best-of-seven series three p0 with game four tonight in dallas. jonathan: once again, congratulations to steve and the team in boston. up next, the morning calls. looking ahead to the opec-plus meeting as we go into driving season. this is bloomberg. ♪

jonathan: we have send us a few times, a massive leak coming up. 24 hours away. lisa: you are crushing me. it is not a massive leak. i understand. it will make a comedy out of every option. but -- every auction. jonathan: we like this sometimes. a little bit of a break before we pick up.

a federal reserve different -- a federal reserve decision. things can happen. positive by 0.1%. yields lower by a single basis point. let's get you some morning calls. lowering the price target. maintaining a meeting. implying sluggish u.s. sales. ms. ivo upgrading with an attractive valuation. that stock is up another 3%. a 165 price target. some upside next to resilient growth opportunities. talking about travel and the upcoming meeting. prices could test a floor. opec ministers are scheduled to

meet virtually this weekend. joining us now for more. great to catch up with you. what are you looking for? >> the most important thing is how they communicate to everyone on board. how are they going to reply? annmarie: do you look to potentially the plus side of russia or will it be about what the print size? >> number one is what the prince says. russia will do what it needs to do to keep fighting in ukraine, however, the communication on that relationship being intact is what is important. what we have seen is forgiving russia for under compliance. annmarie: there are other

individuals who are under complying. how is the kingdom potentially pressuring then to make sure that they come into ? >> we have seen detailed ideas about how compliance is going to improve. we had field maintenance happening in kazakhstan and iraq. we still have a say on the pipeline being out. we have producing and we could see that job at some point. while this opec agreement is in tact with the level of cuts, we are not going to see any progress on that side. it is much easier for the national iraqi side to say that they need to hold back on that side. we have seen the compliance

continue month on month. the are in a tight range. if we get up above 90, that is when we think compliance will really start to slip and that messaging from opec would need to change. annmarie: when you look at the prices, we have seen them ebb and flow. do you think there is any priced in right now? >> not really. yesterday we saw a potential escalation between egypt and israel. they did not shift out of its very tight range. there was also on the low side prior to that. we do not really see that being priced in. as we have seen with what can happen in the shipping industry, and attack could really have an impact, but right now -- lisa: what would it take to spur

some kind of premium? what would that premium look like even the ballast of production and some of the offsets we have seen suppressing volatility? >> we are at a very low volatility in terms of crude. an actual attack on a tanker, closing down or slowing down, shipping escorts around the streets -- some sort of outage like that would have a real impact, or if it were in escalation involving the producers themselves. we saw this escalation potential between iran and israel, but really it was a tit-for-tat response and not creating any real damage on that side. u.s. crude has been resilient. it signifies 600,000 barrel per day shift up versus those

january lows, where we had the winter outages. we think production could be higher than that this summer. another 100 to 150,000 barrels a day. but when we look at the q3 balances on the crude side, forecasters are seeing a minimum of 500,000 barrels per day. that builds up over the course of q3, but that is where the market has big expectations for big draws and that u.s. incremental supply is really insufficient. jonathan: we appreciate the update. the latest for crude in the middle east. the last thing this president needs going into november is higher gas prices. annmarie: we asked where is the risk premium and she said it is not really priced in at the moment. we heard from gas buddy over the

weekend. this weekend, they were to sense lower to last week. what did biden's energies are saying active -- energy czar say? this is where they want to keep it before november. jonathan: are they embracing production up now? annmarie: it depends on who you ask an industry. lisa: we want nuance. it is a necessity. annmarie: i think more than 13 million barrels a day is what they would like to see. jonathan: equity futures on s&p just about positive. ♪

her uncle's unhappy. i'm sensing an underlying issue. it's t-mobile. it started when we tried to get him under

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

when you show generosity of spirit to someone. and you want people to be saved

and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. jonathan: equity futures about 60 minutes away from the opening bell. positive by 0.1%. the nasdaq is having quite the run, close to 8% so far this month. a few more days to go. a lot of focus on the front end of the curve getting closer and closer. lisa: every time you want to discount, you get pulled back in. it is the biggest increase in

two year yields. questions about whether we are shifting the goalpost. do we have to write it back in as people talk about a real acceleration? jonathan: we got slapped around the face by the global pmi. we have to talk about why we have that move. on the morning where jobless claims retreated a little bit more, we have this pmi that seemed to wake people up to growth starting to be accelerate, which is odd. lisa: it is odd. there is this question of how valid is this or how indicative is this? it came with profits. it came with ongoing consumer spending. showing an acceleration of spending in the month of may.

there are also other kinds of validating data points. jonathan: some of them are very closely watched over in europe and elsewhere. we have tier one central banks. you have tier one and tier two data. on a day where nvidia was up 10%. lisa: that is the key. why did nvidia not drive the bus? a lot of people are talking about the tier two data as being a given. jonathan: it is why the base book is so important later this week. under surveillance, top stories. an israeli airstrike is drawing global condemnation. the strike killed an estimated

45 palestinians at a camp for displaced people. benjamin netanyahu called the incident a tragic mistake. annmarie: they are reporting that israeli tanks have reached the center of roth. even the you had them come out and say that they needed to halt the offensive, israel saying that they are not going to back down. the last bastion. they seem to be the center of the city. residents saying that there were clashes in the middle of the city. lisa: you wonder how much this pushes back any kind of discussions. what kind of negotiations could there be to release the hostages? there were missiles fired from roth into israel overnight. looking at what the status is of

hamas. jonathan: getting the latest updates on mach 5. we will get them to you. iphone shipment seeing a rebound last month. showing a 52% jump in april as apple and its chinese resellers continue after steep declines to start the year. a lot of confusion over where apple was in china. tim cook was giving us the idea that things were getting better. this will certainly speak to that. annmarie: lisa: -- lisa:lisa: this is not the biggest month for iphone sales, but there is the idea that maybe there is more demand than people previously thought. i want to see how much they cut prices because we did hear about the price cuts on iphones in

china. jonathan: the fence the parade continues. the central bank could enhance the way it communicates with the general public. speaking later today. investors also looking at the deflator on friday. michael mckee joins us around the table. she is trying to make this happen. >> it is a big week. we could start with friday and talk about the pce numbers. the good news is that friday marks the last day that they can comment. pce inflation. the interesting thing is over the last six months, pce has come in lower than forecast by the markets.

if we get something like that again, you could see some of this volatility. said something interesting and i have no idea how to answer it other than traders have to trade and we are trading for humans. whether this little bit means anything or not, it means something to the commissions for the guys on wall street. jonathan: how much weight should be put on data? how much weight should be put on that? >> just a little bit of weight. the s&p are sentiment index is. are things better or worse than they were last month? things are a little better than they were last month. things are a little bit better, so not falling off of a cliff. lisa: it is something that

people talk about given that the anecdotal data has given people more color and more visibility into the future than some of the hard data. that is what we heard at the philadelphia fed. d think it would be that much more important this time around? >> it is important in the sense that it gives you a sense of what they are hearing out in the districts, but many have been taking the initiative on interviews to bring that point up. we're hearing from ceos that things are getting a little slower. they are not seeing price increases the way that we were. wall street has probably absorbed much of that. you get a lot of that in the earnings calls. it may not move the markets a lot, but it will give a better idea of what they are hearing out there.

jonathan: this started in august of last year and they have continued to point to that. lisa: that is why i thought beige book was so exciting. i guess we could write that one off as well. >> it depends on how much attention they have been paying to the fed. they basically send the same thing, higher for longer. except for john williams. john williams could be a big deal. he speaks twice and then once on thursday. that is the kind of place that if you want to deliver a message, you might deliver a message. we might get something out of him. jonathan: how might they do that? >> there has been a lot of talk

about, how they talked too much? if you say, we are going to be higher for longer, isn't that forward guidance an last time they changed was, what are the odds for any particular forecast? everybody just looks at it. how do they adjust these sorts of things? they will start the review of the policy framework where they said they would average inflation targeting. jonathan: the timing of that is not great when they introduced it. thank you. joining us now for a conversation about the federal reserve. you talked about the healthy skepticism that you had for the degree of receptiveness for this

policy rate with this economy. where do you stand on that now? >> thank you for having me on the show. we have had doubts about is because he restrictive enough. one thing that keeps fueling the doubt is how resilient the backdrop remains. we saw pretty firm data in q1. on the retail sales trend, it is really that demand normalized after a big march increase. the fundamentals for the consumers look pretty firm. i think we echo what we learn from the minutes that there is some uncertainty regarding restrictiveness of monetary policy. jonathan: how skeptical are you? >> probably not that skeptical. i believe that even in an

environment where inflation remains at 2% to 4% with the yield curve fairly flat, inverted to some degree as we go out the curve, where expectations are different from a timeframe standpoint, i do believe given where we are from a standpoint of growth in the economy, where we are from inflationary levels, having come down as far as they are, but still with a ways to go, the level that is currently being dictated in the market at five plus percent for the money markets, five minus percent small amounts from the bond market seems to be doing its job. i feel like the fed rhetoric that we have been hearing for pretty much everyone is that it is high enough and does not need to go higher at this point. lisa: do you think it would be a

mistake to cut rates here evan enough momentum in the economy to risk the potential for the acceleration of inflation? >> i do. we do not need to see cuts to inflation yet. barring some of the second-tier data, when you look at some of the employment statistics, if you look at the data, it certainly is not a crack that would turn into a big fissure or a canyon. it probably takes the growth side down a little bit. more dependent upon services than goods and all that plays into keeping rates where they are. i do not think there is any need

nor are they being compelled in either direction. lisa: he was saying it would be a policy error to cut this year, given the fact that there is so much momentum and inflationary pressure coming through next year. you agree? >> it depends on how the data evolves. our baseline expectation is that they will find an opportunity to initiate a rate this year. most likely in september and december. particularly the inflation prints playing out. if we get a series of .2% encore pce and that evidence accumulates, i think it will be very hard. there would be no reason why. i think they can get their foot in.

from a risk management perspective, policy would still be relatively restrictive in that world, but that would be -- disinflationary progress started. jonathan: this is the struggle that we always have. steve ignore the solid jobless claims? de put some emphasis on the slowdown and retail sales? where do you place the most emphasis right now? what do you choose to discount and ignore? >> we know that the fed is highly data dependent and it is really the only guide to give us a sense of how restrictive monetary policy is and how the conditions are to support the disinflation process. just in terms of what we are looking at, it is the inflation

outcomes themselves, which i think our top-of-the-line, very important at this point in time. after that comes the data and prints related to consumer spending. retail sales and personal spending estimates like we get this friday, i think that is the hard data that we are really looking for and keeping and i out. it seems like every little data plane is important. as he pointed out, the markets reacted last week. at this point in time, we are not looking to discount anything. lisa: it seems like one comment that we are not aware of could move things, if it is something that confirms a sneaking fear or suspicion in the market. >> i agree it is a mosaic. taking in as much information as

what you are being given, trying to digest that and put it into a mosaic form that you can theorize based on what your expectations are off of that collection of information with the intention that it has something to do with what the fed's intentions are. the slowdown in labor market, maybe the ratio of open positions to those available to be hired, certainly the retail sales. they have been driving this economy, so really anything that has to do with the consumer specifically, but also from a broader mosaic standpoint. you cannot ignore the nonconsumer aspect of the market either. the theory that you are trying to come up with is higher for longer. when we talk about rate cuts this year, we are only in may.

there is a lot of this year to go. i think many things can happen. what the fed is still trying to do is gain confidence. in 2000 24, but we are there. >> to lisa's point earlier, a lot of guests have come on to talk about the pressures potentially in 2025. how do you think they think about 2025 anything about inflation? >> i think that is overthinking it at this point. they need to take what is available for them now and they do give different forecasts but in fact, i think they are really focused on what they need to do

now and to the extent that it has some impact on the next two years, they will deal with that particular point in time. i think they are focusing on what happens the rest of this year. maybe energy prices stop being the deflationary trend they had been. maybe housing stops being the inflationary trend it has been. maybe there are offsets that are different, but i think that is something that will address as it happens, not as it is forecast in the next year or in the next six months or so. lisa: we are in the business of overthinking things. how much? we do see in november, either policy shift from either candidate turbocharging any kind of inflationary pressure. how are you gaming out how this percolate, whether it is tariffs

changes or being inflationary this year. >> i think in terms of being inflationary this year, i do not think those policy changes are likely to have an immediate effect. in terms of tariffs, we have done some work in the past, when we had the previous round of tariffs imposed. it takes time for the prices to filter through the economy. if there is a change, it will be an added -- it will be added, but it is unlikely to be something that we feel in 2024. the second step for that thinking is the scale of the policy. how many goods are we talking about? even then, the share of imports in the pce basket is fairly limited. the effects are limited and it will take time for the artifacts to play -- for the effects to

play out. jonathan: thank you very much. looking ahead to the federal reserve decision. a sprinkle of data in between. we do this periodically on this program. here is the quote. at the beginning of the year, the market was pricing in six cuts. five from ble. now pricing 1.5 by the fed. we do this every now and again, a reminder of where we were at the start of this year and where we are now as we start to anticipate things happening 12 months out. this is how wrong things have been over the last five. lisa: the stocks have also been on fire trying to beat the drum. stop expecting the recession. today's latest missive, the economy is not slowing down. housing is actually recovering.

super court inflation trending higher. one heartbeat after another saying that we are getting it wrong. jonathan: let's get an update on stories happening elsewhere. >> a series of powerful storm swept through memorial day weekend, killing at least 22 people and leaving a trail of destroyed homes, businesses and power outages. the president expressed condolences for the families of those who died. former president donald trump's hush money trial is entering its final stage with closing arguments set to begin today. mabel give group doing takes presented over five weeks, and then the jury will begin deliberations. charged with falsifying business

records to pay a adult film star to keep her quiet about their alleged affair. and the most dominating run in tunis history might be coming to an end. rafael the doll was defeated by alexanders vered -- alexander zverev. he could not overcome his number four ranked opponent. he has won the french open four times. after the match, he said, if it is the last time that i played here, i am at peace with myself. jonathan: i think you have had one emotional outbreak from me about rafael. it was not an outburst, it was just emotional.

i'm going to miss rafa. this is bloomberg surveillance. ♪ is smart here, right? feel more confident with stock ratings from j.p. morgan analysts in the chase app. when you've got a decision to make... the answer is j.p. morgan wealth management.

how am i going to find a doctor when i'm hallucinating? what about zocdoc? so many options. yeah, and dr. xichun even takes your sketchy insurance.

xi-chun, xi-chun, xi-chun! you've got more options than you know. book now. jonathan: counting down to the opening bell. here is the trading diary test set you up for the week ahead. 10:00 a.m., we will get consumer data. we will get u.s. gdp and found out the week on friday with the pce deflator. lisa, final word? lisa: we did not talk about the options. $70 billion of five-year notes. i think it will be interesting. bonds hold the key. i believe that. annmarie: final thoughts from me has to be about what we're hearing about israeli forces reaching the center of rafa. another issue that the white

house needs to look at. jonathan: it is very much on our radar through the rest of the day and the week as well, going into june. here is the lineup. lack rock. looking forward to being with you tomorrow. thank you for being with us this morning. this was bloomberg surveillance. ♪

ow! uh oh.

you, ok? no... i mean yeah. -just hit my melon. -yikes! should we see a doctor? i can't tell a doctor i slipped on a toy. i'm a triathlete! i had a concussion. most happen doing ordinary things. sometimes the tough thing to do is to get help to prevent serious damage. i like your sensitive side. don't mess with your melon. if you hit it, get it checked.

>> we get off a shortened trading week. the countdown to the open starts right now. we begin with the big issue, counting down to pce. >> we are fairly priced for it may be cut once and inflation stickier than we thought. if we start to see inflation expectations deteriorate, the