katie: 38 minutes into the u.s. trading day on this tuesday, may 28. minneapolis fed president neel kashkari said policies and folders should take their time in cutting rates. settling stocks faster, the equity markets get to t plus one, trades it settled in a single day. is wall street ready for the shift? higher for longer with housing. mortgage rates hovering near 7%. what does it mean for the dream of home ownership?

compass director robert r efkin joins in just a bit. i'm katie greifeld in new york. welcome to bloomberg markets. looking at markets tuesday morning, slightly lower on the s&p 500. it did manage to have a very slight gain last week. that would have been a fifth straight week of gains at all-time highs but seeing a bit of a breather this morning. the nasdaq 100, the same thing. small caps outperforming. we have seen this before with this index and may be seeing it again. currently up .3% when it comes to the russell 2000. we have consumer confidence data crossing right now. let's get to mike mckee who has all of the details. michael: for those worried about the u.s. economy will see a rebound today that might change their minds about the course of

the economy. i suppose this could get us some reaction in the markets. what we are getting is the consumer confidence headline number, a big move up. the present situation goes to 1.4301. the expectations index goes to 74.6. obviously people feeling a lot better about where things are at the moment. one other number i want to get to the data point on is people tend to watch this index for what people think about the labor market. next week we get the may payrolls number and in terms of the employment numbers, jobs plentiful, falls to 37.5, jobs hard to get falls. people still feeling the labor market has some strength in it. the change came not so plentiful

but people don't think it is jet -- hard to get jobs and they feel it will be another factor for the fed to consider when they think about how strong the economy is and what they need to do next. katie: we are talking about small moves but a little bit lower on the s&p 500. two year treasury yields up slightly, up to basis points. before we get to the next week payroll print we have to get through pce coming at the end of this week. what we expecting there? michael: we expect slightly lower inflation on a month over month basis and it probably won't change the year-over-year numbers but probably still at two point eight according to economists for the core pce and year-over-year basis. over the last six months or so, the pce numbers have come in lower than the economists forecasts. if it happens again that will make ways on wall street. katie: michael mckee, really

appreciate it. let's broaden out and talk about the markets with stephaniie guild the robinhood head of investments. you say it will soften but be slow. how does that translate into markets at all-time highs? stephanie: has more of an effect on the economy in my opinion and markets. i think because we are in a consumer economy, higher inflation has really fatigued the consumer and you are seeing it in consumer earnings and that is maybe where it will affect the market. but broadly i think it is much more of an economy story than market story. katie: attired consumer, i think we can all relate to that at this point. how does that translate into what we are seeing in terms of retail names, especially apparel. you are seeing us back to

staples rather than discretionary. stephanie: it is mixed in the discretionary space and it depends on the country -- company and how they are managing it. you are talking about the consumer being more discreet and how they are spending money, focused on more necessities and in other areas focused where it is not a necessity but being strategic about spending. i can't blame them. i think about how tiring it is that inflation has been sticky. that demand and difference is impacting what you will see in the inflation numbers on friday and in the future. katie: does a company's management team become more important in this environment, the tired consumer and how they are managing this which is been pretty prolonged. how important is the c-suite right now? stephanie: it is becoming more important than ever.

prolonged companies could pass on increasing costs. shipping especially for those in getting their goods and other parts of the world. how they manage through keeping margins where they want them to be, what either attempt -- potentially affect the labor force in those sectors or it will be something else and we are seeing a lot of consumer companies coming out and think about ways to increase demand and foot traffic through discounts and different meals at restaurant companies. katie: it seems like we are seeing an uptick in those discounts. we are seeing that maybe it is not the best lever for every type of company but nonetheless you are seeing that. and reflecting on the past earnings season, it felt like the house and have-nots. you think of the one-day reaction in markets, brutal for some of those names. how did expectations match up to reality when you look at broad strokes? stephanie: it is almost like a

bifurcated reaction or function in the market. the one area it like in the high-growth area, i think it was all about high expectations and then you our reactions that were really relative to those high expectations, meaning that even if they beat a little bit, if expectations were high, they didn't be enough. you can think about the story of apple perhaps versus meta. in the more traditional parts of the market, consumers and materials, it was much more about beating earnings and guidance and more traditional. you so that perhaps with walmart versus target. katie: walmart versus target and some interesting case studies there as well. you point out in your notes that cash is still earning 5%. we talked through the earnings

and then you think about the competitor that cash is right now and it seems like a high bar. stephanie: we are seeing and amongst our customer base. can you really blame people for saying, i am just going to not take a risk with at least some part of my portfolio. the market is still up well more than cash this year, up 12%. it is not that you should have all of your money in cash in my opinion, it obviously depends on your own personal preferences and tolerances, but it is that it is a real asset class, whereas for a long time it wasn't. i think that is something the market is still getting used to. katie: it is not just a safe haven play, but its own standalone asset class. that has been a psychology shift we have undergone in the past couple of years. in terms of where to take risks, it is interesting, not ready for small caps yet. stephanie: no.

it has been asked quite a bit because they haven't done well and there have been blips of them doing well but it comes down to what makes up small caps would distill the financials and industrial sectors which are very economically sensitive -- small caps which are still the financials and industrious specters which are economically sensitive. next year is a bigger ear for having to refinance. i am just not -- a bigger year for having to refinance that. i am just not there. katie: what will be the catalyst, a rate cut or something else? stephanie: it could be a rate cut for more certainty that we are heading for a soft landing versus something not so soft. there is a whole political whirlwind that is about to start

that can affect things globally and a lot of those companies while domestic they can be impacted by global things because of the sectors they are in. if we get a rate cut that is based on the fact that inflation is lower but jobs and unemployment is low, then i think small caps can be a good place to go. i think the market in general is a good place to be in that situation but it is not clear yet. so i would rather sort of stay away from the high risk area. katie: a lot of crosscurrents to look at. let's look at what is moving under the markets. we will do that. we were mentioning apple, what is going on with the shares? emily: we are seeing shares up 1% off of new figures showing that iphone shipments in china posed a small rebound in april, a search of 52% uptick in

iphones for the month, a big rebound from the start of 2024 where shipments were slumping in china. it has come at a cost for apple, the manufacturer had to slash prices in order to stimulate sales but it is a big rebound from earlier in the year. apple still underperforming the s&p 500 by 13 percentage points year to date as the volatility in the china shipments has weighed on the stock. we will have to watch. figures came from the china academy of information and communications technology showing shipments surged roughly 3.5 million units came from foreign brands according to a bloomberg calculation, most from the apple iphone. katie: is a reminder that it has been a tough year for apple, getting relief right now could tell me about gamestop. we can't get away from the story for too long. emily: it always comes back,

that stock up 17% after it surged in the post-market on friday after the company announced that it bought nearly $1 billion from a share sale program that was helped in part by the spike earlier in may in shares of gamestop. according to a statement friday, they sold 45 million shares to raise roughly $933 million and the proceeds of the share sale will be used for general corporate purposes which could include acquisitions, investments, and that stock up 60% in may, all from the return of the famous meme trader. katie: tell me about draftkings having a terrible morning, lowest since 2022. emily: that stock falling within

10% after a progressive tax on online sports betting past in the illinois senate on saturday. analysts are saying that draftkings could see a $44 million tax increase in 2024 just on this tax in illinois where the key risk is whether other states are going to also implement a tax price hike for these online gambling companies. it is not just weighing on draftkings, but also seeing shares of fan dual another -- fa nduel and will have to see if it is just in illinois but another state is considering a similar tax hike on these online sports companies. katie: a pretty violent reaction in shares today, draftkings down double digits. thank you so much. coming up, wall street returns to the fastest settlement of

trades as t-1 kicks in today. we will break down what it means. this is bloomberg. ♪

katie: wall street switching to the system known as t plus one today, meaning stock trades will now settle in one day for the

first time in 100 years. i am thrilled to say we are joined by sam potter. why wasn't t plus two good enough? why are we doing this now? sam: it is a result of the original gamestop saga back in 2021. the idea behind the new rule is they will reduce the time between when you click the buy button on a trade and when you actually have to fulfill the trade, provide the cash or stock. by reducing the time between those two things, you reduce risk in the system and less chance of default of something going wrong. from the sec's point of view, it is about making the market safer and domestically that is ultimately going to be the outcome. katie: you have been editing a lot of the t plus one coverage for the past several months and

we have heard from a lot of different institutions, banks, etc. at saying how they have been preparing for that. even with that preparation, where could we see the most hick ups? what market should we be keeping an eye on? sam: you always get with these changes some doomsday years coming out. one particular area is in the fx market. it will be good domestically but internationally, most currencies settle on the people's two basis, so now if you were abroad and you want to buy a u.s. stock you had to find the dollars much faster in a system that isn't really set up for that. i think in reality they say you've gone from having $12 -- 12 hours to find your dollars you now have two hours. we are expecting to see quite a lot of pressure on currency

markets after the new york close which is the window between 4:00 p.m. new york and 6:00 p.m. new york went a lot of trades have to be funded. katie: the currency market is huge and doesn't really close. we will keep an eye on that. thank you so much. we have breaking news and that is that japan's en has fallen to the weakest in almost 16 years versus the pound. we have been on a yen watch for now, mostly against the dollar but it has been weakening against the pound as well. we will keep an i on that. let's get back to stephaniie guild, robinhood head of sales. -- strategy. earnings season not over yet. how are you thinking about salesforce when we think about the bifurcation we have seen in markets versus tech versus

everything else? stephanie: it is in the area of growth for me. i'm still a mix of defensive and growth and i put it in the area of growth. it is a stock that i think is very well run or the company is very well run. i think they will benefit longer-term from ai although they haven't been doing as much as other places. the big question for them this earnings season is coming down to the fact that some of the peers reported not as good earnings but they are pretty attractively priced, 20 seven times earnings which is much less than their peers and they are around 70% and have a bite rating and i think about that from a sentiment perspective and that is -- and have a buy rating and i think about that for me sentiment perspective. are they going to be slowing down like their peers have seen in the near term but i think the

company is well run so i am looking forward to what they have to say. katie: may be an underappreciated by. but it is cheaper than peers. stephanie: it is attractive. katie: i want to talk about costco. when you think about it, you are positive on. stephanie: valuation is 47 times earnings, a lot higher than peers. they have a loyal customer base. they have an international toehold which is a place they could expand it longer-term, 27% outside the u.s.. you saw walmart earnings that the sam's club did pretty well. i think they could benefit from this kind of bifurcation of the consumer which is focusing on

necessities and looking to go cheap there which walmart benefited from. walmart ceo said it is 4.3 times more expensive to eat out than it is to eat at home. costco could benefit from that and the company is not very inexpensive or attractively valued. katie: once you get to the 40's i feel like it is a little tricky. but very loyal. i know people who love costco. how should an investor be thinking about it, are you buying it for the groceries, the food business? stephanie: for now i think that is where you can see the growth. i also think you could see expansion like i said internationally and i think they are known for the cheaper gas prices and we know that oil has been more elevated lately and more risk of that continuing. it is a pretty diversified play and so i think the biggest hang up is the fact that it is

certainly seeing a big price increase. there is a small, pure speculation of me that wonders if that can be us but that yes it a couple times. katie: we have definitely seen an uptick as well. costco now sells gold bars like crazy. a little bit of a play there as well. really enjoyed this conversation. great to see you. that is stephaniie guild, robinhood head of strategy. now we are going to look at our social climbers segment up next. 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. katie: time now for social climbers, a look at the stocks making waves on social media. first up, crawled straight

gaining social traction -- crowd strike gaining some social traction and a firm said it could be the next company to go over hundred billion in market cap. we have paypal reportedly planning to start its own ad network using the data it collects on millions of users. the financial service site also hired uber's former head to run the division. we do have t-mobile agreeing to buy u.s. cellular's wireless operations and some of its spectrum assets for nearly $2.5 billion. that deal expected to close it in mid-2025. for all of the latest buzz, file on the bloomberg terminal. we have headlines from minneapolis fed president neel kashkari speaking at an event saying he thinks the odds of raising rates are quite low

where they can take time on cuts but when it comes to raising rates, probably not going to happen. we will continue to bring you headlines from the event. coming up next, speaking to the ceo of compass. this is bloomberg. ♪ 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. ♪♪ sandals jamaica sale is now on! with rates from $199 per person per night. visit sandals.com or call 1-800-sandals

katie: mortgage rates are near 7% causing home buying sentiment at all-time lows. abigail: it is a pretty extreme picture. take a look at the start in the bloomberg terminal. we will see these lows for home buying sentiment. in the top panel in blue we have the 30 year fixed mortgage backed above 7%. in white, overall home sentiment at the all-time low.

yellow, favorable time to buy a home is at a low that matches the last low in 1980 when rates were significantly higher. in purple, unfavorable time. americans are putting their foot down. if you take a look at the stocks connected to the home market you would not to guess that picture is happening year today. the s&p 500 11.24 on homebuying and realtor stocks. that includes pulce homes encompass. katie: a really great round up. let's keep the real estate market on robert reffkin.

great to see you in person. let's talk about 7% mortgage rates. where we were a year ago, people expected rates to come down. how has that impacted the sales you expected to see at this point? robert: 67% is worse than six but better than a .2. -- 8.2. it is also higher than 3.7 than it was last november. we are seeing more demand than last year and prices are higher. the average price is 7% above

luster. katie: the narrative has been that people are locked into lower mortgage rates. where are we on that story? robert: the theme of last year, i have a 2.5 percent rate nothing will get me out of the home. you have the five d's in a must move market you have life events that require you to move and we see people with low mortgage rates being forced to move. now the theme of this market, it has been 2.5 years since mortgage rates started rising. february 2022 and i have been holding off on life events and i

am tired of waiting. that's the theme of this year. we see inventory on log. we have 36% more inventory in the market. 60% more existing home inventory. in the million plus has 40% more inventory. katie: you see that as it relates to different tiers but inventory is still 40% below pre-pandemic level. what does it take? lower rates to get back to those levels? robert: i would expect one of two things will happen. the fed will bring down raise which will reduce the lock in effect at 7% with homeowners with the mortgage had 4% rates are below. at the beginning of last year it

was 57%. within two years it will be 25% and inventory will unlock. that will happen even without the fed bringing down rates. if we get those six price cuts inventory will unlock. it will require a change in the rate environment. katie: if they want to cut six times this year they will have to start moving fast. let's talk about when rates to come down. how much demand is waiting on the others? even if you get relief on the mortgage front where monthly payments are less, could we see house prices increase? robert: this will be a different environment than any year in recent history. as an agent i would tell you as

a buyer you want to buy before mortgage rates go down because when they go down a ton of buyers will flood the market. what's different in this environment, when mortgage rates come down there will be more buyers and more sellers. i would assume that the price will stay relatively flat. katie: it's a fun market to talk about, the supply/demand dynamics. when you look at different markets and geographies, where do you see the strength and weakness? robert: we see the weakness in texas, and florida. there are more price drops in those markets than any other market. in florida, there is a lot of older inventory coming on the market and they saw the most

price appreciation year before last. overall, in may we are seeing more price drops with existing inventory. 30% of all existing homes have a price drop. that compares to 30% last year and 23% of all existing homes in may of 2022. this is a good time to be a buyer. they are starting to push back on the upper ends of affordability. in march, the closed homes had 7.7 increase year-over-year but march reflects the mortgage rate environment in january. maybury reflects march and a march they were up at 7.5 percent. katie: there is a number of

interesting things you said. it's interesting you said florida and texas. is that the return to office. robert: we are seeing that trend across the country. you saw last week a number of the banks decided to bring back a large group of employees into the office. citigroup, ubs and they were the last ones. you see across the country companies bringing employees back to office. it's hard to build trust virtually. it's hard to develop your people over screen. we brought our regional staff back to the office.

that is driving movement. katie: it's interesting to see that movement around the country. let's talk about the rental market. when we think about the trends we are seeing with prices being cut on houses. what are we seeing with the rental market? robert: the last five months rental prices were down each consecutive month which was good. this year, we have seen it but it looks like it is starting to plateau and hopefully plateaus going forward. katie: robert, great to see you again. our thanks to robert reffkin the ceo of compass. abigail: it feels like the trading of a shortened holiday

week. this is showing in some of the volatility indexes. if we take a look in white, this is the vix at 12.89. super complacent, bluest the bond index with the volatility off its silicon valley bank highs. in yellow, currency. i'm not surprised in pensee currency. you can see back in 2020, this movement down to complacent creates a coil where there is no reason for investors to become less complacent they spring higher.

finally, beneath the surface we look at the movers going on we will see gamestop of 13.84%. this company has raised $1 billion. there is a fundamental reason there. apple is of .64%. sales surged in china. draftkings down more than 11%. you can see how the index has gone down ever so slightly. katie: coming up, measuring the effect of political pressure on the fed. we will speak to thomas drechsler about his work on past fed

independence.

thanks to avalara, we can calculate sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh

abigail: this is bloomberg markets this is a live shot of the principal room. coming up, dana tesley is live at 4:00. this is bloomberg. katie: it's time for our wall street week conversation. donald trump's allies said that he will seek to influence the federal reserve which could have implications on inflation. joining us now is thomas dres chsler along with david westin. david: it's a big topic. president trump's advisors wanting to move on jay powell.

is particularly timely right now. what were you taking a look at and what did you find? thomas: i studied how past u.s. presidents pressured the fed and what impact it had on the economy. it is a timely question in a very challenging question because political pressure can take many forms and it is quite difficult to measure it over time. i went through archival records and collected information on personal interactions with fed officials. i can do that from 1933 until 2016 and that data is fascinating because the differences between presidents

is a norma's. president clinton had only six interactions with fed officials. president nixon had 160 interactions. there is a massive variation. there is not a clear partisan divide, it is more that there were different eras in which it was more common for presidents to interact directly with fed officials and those were the times we saw high inflation. of course, correlation does not imply causation. i do more in the paper, collecting the data and presenting the data i also combined the data with statistic analysis where i tried to filter out those meetings that are

indicative of pressure. katie: can we talk about what of your main takeaways. the larger number of annual interactions the president had with the fed chair, that coincided with higher inflation. what is the transmission mechanism there? how would that translate into higher inflation? thomas: that is the key question. the interactions only happen as a consequence of inflation and they don't cause inflation. the paper tried to get at that and isolate that inflationary effect caused by meetings. to do that i used historical information where we know there was pressure exerted by presidents on the fed and we

know richard nixon and lyndon b. johnson did directly pressure the fed. when i coordinate those meetings to the analysis i find increasing pressure through personal interactions is inflationary. it raises inflation expectations strongly and persistently. it does not do much to economic activity. nixon leaned heavily on the fed because he wanted to be reelected in 1972 and in the run-up to that he told the fed chair you have to ease monetary conditions. but when they used that pressure they get a very gradual increase in inflation and they don't get

stimulus because the economy adjust its expectations and reacts to the loss of credibility. david: you talk about personal interactions. i am not sure merb president trump wants to meet with him i think he wants to fire him. the president publicly saying i want a different head? thomas: political pressure can take many forms. it can be exerted in public, through personal interactions. either way, the implicit threat that the president makes is that there are consequences for the fed chair such as being fired. that is a threat that nixon made personally to arthur burns.

it is a threat stock makes publicly against jerome powell. that is something presidents do at times to pressure the fed and they can do it in different forms. these personal interactions are measurable over a long time period. katie: this set of data incident 2016. could you walk us through why the decision to in in 2016 and what the data might have looked like? thomas: the data on what presidents do every day comes from the presidential libraries. a presidential library gets built. and you have the

daily calendars and those are what i went through. for former president trump we don't have a presidential library yet so those documents are not available. we can look at the public pressure he exerted but in terms of personal interactions, i cannot see them yet. i am eager to look at those in the future once we have a trump presidential library. david: it sounds like we should take seriously about influence on the fed? thomas: yes. based on my research it can have severe consequences for inflation. we should take this seriously and i'm glad you are reporting on it. katie: it is a great paper and we thank you for taking the time to discussing it with us. thank you to thomas drechsler

of the university of maryland. david: we will speak to glenn august who spoke about distressed credit and is not clear where that money is coming from. katie: our thanks of course to david westin.

katie: hitting highs today we will start with deck wood outdoors. we can see shares up nearly 3.37%. dupont up, they plan to separate

into three companies's been us. shares are up .70%. if you look at the broader market we are seeing a lift of two tenths of a percent. we closed out with a slight gain which was a fifth straight week of mains. as we close on earnings and look ahead to the fed meeting in june. the russell 2000 the leader on the day up .33 percent. we will see if that dynamic can hold. there is a lot to look forward this week before pce on friday.

we have bloomberg technology with caroline hyde and ed ludlow. this does it for bloomberg markets. ♪ 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. 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. food isn't just fuel to live. it's fuel to grow. my family relied on public assistance

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i've run this place for 20 years, but i still need to prove that i'm more than what you see on paper. today i'm the ceo of my own company. it's the way my mind works. i have a very mechanical brain. why are we not rethinking this? i am more... i'm more than who i am on paper.

from the hardware innovation, money and power collide in silicon valley and beyond. this is bloomberg technology with caroline hyde and ed ludlow. ♪ caroline: i am caroline hyde at bloomberg world headquarters in new york. ed: and ed ludlow in san francisco. we will have full crypto