>> the fed would prefer to keep policy in a typesetting for a longer period of time. >> there is not an urgency to

cut. we think one cut, may be too by the end of the year. the fed is going to be very uncertain in its path forward which is why we will have a volatile market going forward. this is bloomberg surveillance. jonathan: live from new york city, good morning, good morning for our audience worldwide. your lineup today looks like this you will hear from john williams the new york fed president in 90 minutes times job claims and cosco. how restrictive his policy right now?

the fed thinks it fighting inflation, think again. lisa: we don't appreciate where the baseline is. he says is substantially higher than where the fed put it. lisa: when he entered for -- interviewed him will we have any information about r-star from john williams today. jonathan: 183 billion worth of debt and a little bit of pushback over the past few days. lisa: it's hard to parse out what is driving this as it concerns about a neutral rate? is it because of where they see

inflation coming down or is that the deficit? there needs to be a preemie and on debt because of the deficit? people are uncertain and that is why you are getting tepid demand. jonathan: eric johnson said sis and parts of the market are starting to break down which indicates equity slowing. bond yields are rising higher which may seem at odds with equities. are we talking past each other right now? lisa: could you be seeing the slowdown in the economy? consumer cyclicals that eric cantor was talking about or the potential for restrictiveness on the bond side.

peter oppenheimer put it well, levels where stocks are currently. higher yields are bad. whether it comes on the heels of stronger than expected prince. jonathan: something has to give. right now, bond yields. 4.96 on the two-year. negative by 0.4. nvidia is up by more than 20% in the market is still down. the bond market, yields pulling back on the 10 year. we will catch up with seema shah, kathy jones looking for a bond market rally.

a tale of two continents. the ecb is preparing to reduce rates next week. europe is meaningfully less stressed than the economic -- american market. it will catch up, let's go there. where are you expecting a performance in the european market? seema: the interesting thing about europe is you are getting asked closer to value parts of the market. as we look across europe, even the u.k. is looking a lot more attractive to us now in the past couple of months. jonathan: energy names, mining,

a couple of names? seema: energy, mining, pharmaceuticals, biotech. commodities as well. there is a range of sectors in the u.k. because it's multinational. a lot of these companies have exposure internationally and trading at such a discount. you see opportunity of growth in the u.s. given the u.k. -- u.k. versus u.s.. lisa: how much is predicated on the number of rate cuts? seema: for your we know what the rate cut is. the ecb will cut rates next week and to compare that to the u.s.. the debate is dan, day out when mystified going to cut?

there are surprises to the upside. it will need more rate cuts in the u.s.. from that perspective, that rate path does add to its attractiveness. i think this is a tactical opportunity. lisa: with the gross store coming from china given the fact that a lot of people are upgrading expectation for china's growth because of stimulus coming from the chinese government that could feed over into europe? seema: in the china market we have become more positive because of the upside surprises and valuation in the deep sense of negativity towards china.

the close synchronization of their economies. we do move with hesitation because of the political tensions that could spill over. there are elements you don't want to get too excited about, you have to be careful. lisa: do you like anything in a show? i know you think japanese valuations are expensive. what else do you like in that region? seema: we do like japan. we can still see the corporate reforms you are seeing. the 30 year market has performed badly. there is still a lot of interest despite valuations. for china, although we have shared that sentiment of the rest of the market, we have

become positive about china. we still feel like india, valued the same as the u.s. in terms of history. the fundamentals are pretty strong. that is a market that could work very strongly. jonathan: let's pick out two of those three. japan and china have currency issues at the moment. the likes of china letting that currency weaken. how do you factor that into the decision? seema: with japan we are not so much worried about the yen. where it is that the moment is a hole to the corporate earnings story. we are also expecting the bank of japan to shift is stocked to

reduce potential for a further decrease. jonathan: it sounds like you have a long-term fundamental view of japan can you say the same about china or is that a tactical call? seema: at the moment is tactical. we look at this as an opportunity. there is such negativity towards china that's priced and now. they are not doing enough to really prompt a major credit stimulus. there is an opportunity for our performance and you are starting to see interest in the market. jonathan: upgrades from the imf recently. china, in vogue at the moment. lisa: people saying it's been

undervalued and they are supporting their economy through buying homes. it's hard to know how sustainable it is? annmarie: they talked about the weakness in the property sector there this is still a concern and drag in china. jonathan: let's talk about earnings and china. lisa: if you have ever been to kohl's it came in with weaker than expected earnings. the expectation of $2.10 this is a massive mess across the board with sales and operating margin cells. at what point do you see these discounters that catered to the

middle and lower income households struggle? jonathan: we are seeing that this morning we lost a fifth of the capital in that company down like this. dani: benjamin netanyahu is starting to regain popularity in the country. 36% choose netanyahu when choosing prime minister. last month his competitor was ahead. the jury in donald trump's hush money case will return this morning. they were asked to review testimony regarding a 2015 meeting in trump's tower.

it was attended by michael cohen and david packer. after deliberations began trump called the trial rig. apple is gearing up that would work to bringing apple tv to android platforms it was set aside his rivalries to achieve market share. apple launches its tv service back in 2019. that is your bloomberg brief. jonathan: i'm next on the program, a game changing ev. do i feel it is unfair competition? i absolutely do.

do i think a $13,000 car is a game changer in terms of clean energy? i also think that. jonathan: that conversation, up next. live from new york city this morning, good morning. ♪ ♪ do you want to close out?

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jonathan: equities down by 0.4%. a little softer in the bond market yields over by two basis points. a game changing ev. >> i think china has a troubled economy and they are using the power of the government to try to win in the clean energy arena. do i think it gets advantages and it's unfair competition? do i think at $13,000 car you

can drive to miami from new york is a game changer in terms of clean energy? i also think that. jonathan: stelantis announced bringing an affordable jeep. the hybrid can travel from new york to miami on a single charge. they will invest more than 800 million into new ev battery technology. what does the white house say when consumers ask i want that car and i want it for $13,000? >> the biden administration would say they are looking for this kind of production in the u.s.. they are looking for more fruits of the investment into manufacturing including green

vehicles to take fruit here and make these less expensive models here. we heard the stellantis ceo to bring the jeep here. a $13,000 car is hard to come by in the u.s. but even a 25,000 ev would be a game changer. jonathan: do they have a comparative advantage here to address concerns this administration has about climate change that we should be embracing rather than building walls? >> it's a great question because of the potential we see in other areas and technology likes semiconductors and ai.

as part of the rays to dominate the future of the global economy and one driven by technological advances. the u.s. concern is on security grounds. this applies to vehicles as well. one concern at his side with electric vehicles from china is the amount of data that they can gather on their users and surroundings and where with that data go? is part of the broader package. other than the question of making sure the domestic industry does not suffer the same fate as the solar industry a decade ago with the advances that were overtaken by china and china dominates in the area of making solar panels. annmarie: is national security

another concern about losing jobs? >> you can't support national security from economic security. the issue of whether the u.s. can maintain an edge in terms of security in the traditional sense but also making sure that people feel like we have a domestic manufacturing base. there are high-paying jobs here in america that the country can look to and feel we don't have to depend on a foreign supply chain for everything. we saw how during the pandemic the disruption to the supply chain.

annmarie: a man synonymous with ev's is elon musk in overnight they reported that elon musk and donald trump have discussed an advisory role for elon musk if trump captures the white house. >> that's a great question. i was thinking the same thing is i saw those headlines because we have seen skepticism expressed by the president and his stump speeches. we are not seeing as much uptake and electric vehicle purchases in part because of the range question and in part because people are suspicion.

will this work here, for me? could elon musk change the conversation with donald trump but we will have to see how it plays out because it would also require donald trump to accept some of joe biden's programs, including the inflation reduction act that he has been criticizing. annmarie: i was at the white house when they had all of those evs but there was no elon musk. was it a mistake to shrug them off? >> the administration hasn't completely disengage from elon musk. that event may be an example of some of the distance they have maintain from him but that may also be due to the fact that

tesla does not have a unionized workforce in the president wanted to make sure he was showing support for the traditional victory automakers that have uaw representation on their factory floors. they recognize that tesla accounts for the lion share of ev sales. while other companies are starting to catch up, they have a long way to go to catch up where tesla is. lisa: the idea of building up industry here in inflation which is looming large over the politics of d.c.. do we have a sense of what kind of framework is being used when there is an increasing focus of near shoring the technology.

>> the question of inflation emerged in the discussions on the tariffs that were just announced by the biden administration about 10 days ago. they quadrupled the tariff rate on chinese ev's and you would think, why would we do that? i think we've gone over the reasons why they did so. but inflation was a big factor in the larger conversations about what to do and how to respond to those tears. the administration waited a while before unveiling this package of tariffs. they kept a lot of the tariffs in place that trump imposed during his presidency and increase some including those ev tariffs.

in waiting so long, they met for almost two years, that gave time for inflation took cool enough to give them a little bit of space to do so. it is a core question. how do you balance that access to less expensive goods with the need to make sure the domestic industry here has enough space to grow in addressing the security name. jonathan: it's wonderful to catch up with you sir. it's not just cheap but volkswagen looking to release an suv. this administration wants more ev's. they want national champions and make sure those three automakers in detroit are still going to be

successful. lisa: how do you weigh that idea with domestic industry and national security? the conflating is difficult. you don't necessarily want to chinese company knowing where people are driving all the time but how do you get a read on what is going in on what? jonathan: they're going have to explain that. 13,000 on an ev with the really long wage and you put of tariff on it. can you explain that to your electorate? lisa: the inflation story is tough to crack. jonathan:--

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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 negative by 0.4%. on the russell, positive by 0.15.

all three of those options are softer than expected. lisa: this is usually a good environment for longer-term bonds. this raises questions of why, is an inflation or the deficit? higher yields are bad news for stocks. jonathan: 4.95a.d. yields are lower by a single basis point. the two year getting closer to 5%. let's look at foreign exchange, the euro at 1.0820. a slightly stronger euro looking to the ecb week today and that first cut from the council. raphael bostic saying he is optimistic the fed will be able to cut later this year.

jobless claims data and gdp numbers at 8:30 let's have a conversation, deutsche bank. he said this, with the inflation above the fed's target, upside inflation risks top of mind we see trade policies adding another reason to keep the fed on hold and 2025. lisa: a lot of people talking about tariffs being inflationary. if trump's baseline 10% tariff represent a topping off he expects the additional 120 points added to core pce, this highlights just how much

inflationary these policies could be. it is early days what goes through, but these are the calculations being put out there. annmarie: raphael bostic says we will have the conversation on cutting rates by the end of this year. by the end of this year we will know who will be in the white house. and that might be inflationary. jonathan: the difficulty they will have at the federal reserve we saw this play out in 2016 when trumpet come in there would be a big push to cut taxes. that will be the problem this time around. it doesn't matter what they propose is what they can get through congress.

you can anticipate the outlook of the election and you can anticipate what policy books like a year out. lisa: i wonder if that will affect policy? is the greater risk cutting too soon if they have to raise rates again if there are more inflationary policies when no one is talking about cutting the deficit. on the margins this could trade the risk/reward. annmarie: for tariffs, some could move a different way. jonathan: that's why things tend to go quiet around september is not about the political stuff or an implicit bias.

you framed it perfectly, it's about the risk reward. we are flying by and we have no idea what 2025 looks like. lisa: just being politically motivated to support one candidate or another. jonathan: boeing preparing to submit quality breakdowns at his factory leaders will discuss the action plan with the faa today. lisa: i am hoping we end up with some sort of conclusion. maybe this is the beginning of a framework for what they can do. this has to do with people leaving during the pandemic and not coming back.

it becomes a qualitative aspect that's much more ambiguous. jonathan: we don't even know who the next executive is going to be? lisa: what does the pool look like for people to choose from? jonathan: the stock is positive by 0.4. shares of dell in the premarket, dit company surging 134% today. i don't think this one has been talked about enough. a year to date move of 134%. let's have this conversation with wamsi mohan

, good morning to you. what is behind that monster move in dell? >> i would post this is a hardware renaissance we haven't seen these hardware value stocks performance road stocks. it's a change of perception and valuation and this is happening because a iata score is going to be driven on physical servers and physical servers as we all know, are in big demand and who are those suppliers? as you think about ai options more broadly, that is where dell really shines. it is been able to come up with

a great story putting this technology together. he was one of the executives climbed out. jonathan: you have a bunch of reasons to be constructive. where does refresh -- wamsi: servers as a magnitude of opportunities are much larger dollar wise. when you think about storage, they are high in stores with mainframe refreshes. when you think about pcs, the

refresh is not about ai's per se that will take longer. we see the echo of the boom of the demand that came up in covid . you had 150 million pc's sold during covid. commercial pc's are coming up for a refresh in that's material. that coupled with the commercial refresh driven by windows 10. those are two big catalyst that can drive pc units higher. lisa: i wish i could go back and when people said the personal commuter -- computer is dead. how do you understand who the winners are going to be in the

renaissance of the pc and the losers considering apple has been adapted as quickly? wamsi: when you think about the devices that hold most of the continent information consumers want to use on a daily basis, it's going to be the smart phone. the smartphone is becoming in the intelliphones is where the intelligence is embedded. we think that adoption cycle will overtake the ai adoption on pc's. the winners and losers on the pc side, they consolidated around the large oems. on the apple

front, ai will be across all devices. they wanted to partnerships as opposed to driving capability at the edge and these partnerships will be server-based. the ai ec story is marginal in the near term there are not a lot of apps that require heavy computing power on the device. you think about the way most people are describing the ai capability, apple is right there. lisa: the quicker adopters and the winners have been on the hardware side. whether it is the chips for the pc's to bring in capabilities. how long will it take before

becomes a software story? when does the shift to benefit some of the other players? wamsi: the wave of ai has started first in the chip centric world and moved to physical devices, servers, pc. i think the next leg is services. we spoke about machine learning five years ago. and no one really adopted machine learning in a big way and there was a lot of help that enterprises needed to even get there. enterprises going to need a ton of help. as an enterprise you have to have a strategy, plan, what is the data that will run on it?

what is the training software and what architecture will you use? there are open question where the service companies will step in and help map out that strategies. we think the b software. when you have pointed solutions of software that are deeply seated in vertical. even in terms of consulting, that's proved to be true. the more vertical, smaller sleeves of productivity improvements that can come from small places like technology knowledge, you can see real disruption.

adopting ai within software as a long-term story where companies that are successfully able to blend that and be much more platform base will be the winner there. we thought about this and it was a fun play on words. the way we thought about the concept and it's appropriate to say this on bloomberg. context is everything. ai phones, data is the difference. you can go back and have a conversation with an ai agent because it knows the context of your last conversation. it's not usually book meanness and is done. in the options when you look at

that, let me look it up and give you more options. jonathan: you are welcome back anytime. let's give an update on stories elsewhere let's do this with bloomberg brief. dani: call down nearly 22%. sales will short of estimates and lowered its guidance. demand for apparel remained weak. the ceo of kohl's saying it will approach more conservatively. birkenstock of 8.26%. it has been working to expand its reach targeting untapped countries like china and india and benefited from growing

demand in its sneakers and boots. charges against scottie scheffler have been dismissed by the kentucky court. he faced charges that included assault and wound up finishing in a tie for a. the saga saw the world's top golfer in a jumpsuit and completing a championship in the same day. jonathan: up next on the program, clinging to speak. >> fed speak and swing the narrative day-to-day but there is not an urgency to cut. jonathan: that conversation up next. live from new york, this is bloomberg. ♪

jonathan: the s&p 500 negative

by the third of one person. yields lower by two basis points. 4.570. >> fed speak and swing the narrative day-to-day but in general there is not an urgency to cut and when there is the start of a cutting cycle we expected to be shortened. jonathan: investors turning attention from the speakers today. we are looking for a rally in the bond market and the second half of this year. kathy let's go to the options first. what is behind the weakness there and why you think it's largely irrelevant to the second

half rally you are expecting? kathy: options come and go and mencius discussed about their impact on the market. in the absence of any other news, regular tivoli -- a week later does the auction really matter? from a long-term perspective we can worry about options and the size of the deficit in the supply meant to come. in the short run, it's a fleeting factor. when we look at what drives treasury yields and what is the fed doing, what is inflation doing and what is the economy doing? those are the overriding factors that drives bond deals. we are looking for inflation to come down. jonathan: let's talk about those

factors and encounter view from a former fed official. the fed thinks is finding inflation, think again. even more than 5.52% the target might not be high enough to call the economy. kathy: i think what the fed is doing is not far from what bill dudley is talking about. higher for longer is show us where inflation will end up. the upper band of 5.5 and inflation at 2.5. we are seeing inflation come down. when we look at the next few quarters we will see up and flow

in terms of the economic outlook flows. we see big chains cutting prices on a widespread number of items. the economy is not as interest rate sensitive as in previous cycle. but i am not sure the fed is doing anything wrong by taking it slowly. they are doing a wait and see. see where inflation goes and follow the trend. that's a rational approach. lisa: received tenure yields rise in the past two weeks. the pace of the increase is what is getting the attention of equity investors. does this mean by and the conviction to buy long-term treasury has gone up in the past few weeks? kathy: we save look beyond treasuries.

when we talk about extending duration we are really referring to parts of the fixed income market where you don't have an inverted yield curve. we have no problem with these deals but if you can lock in a corporate rate bond 5.5, 6%. even highly rated municipal bonds on a tax-equivalent basis are high. what we are referring is not only the treasury market but the fixed income market where there is an opportunity to hold onto yields for 5, 7 years. lisa: you may have dismissed bill dudley's concern in the idea we are not restrictive at all. what if there is a policy

shift raising the pc index by more than a percentage point. how much does that force the fed to keep rates higher than what would otherwise be warranted? kathy: fiscal policy, tariffs i personally think they are never a good idea. they tend to backfire and not be useful. if we had a big change in the tariff outlook after the election, a big change in fiscal policy where we don't see any reversion from the 2017 tax act expiring we could be looking at a higher, lower down. is the lower bound 3.5? i think it is what goolsby

called our sasquatch you can aim at a number but if you have no confidence in the number what do you do with that? annmarie: to lisa's point about potential tariffs, we could see more tariffs either -- and either administration should the fed factor this in? kathy: they have to take it into consideration. so far it looks that bidens recent tariffs are on things that we don't currently import like chinese evs. i don't think it will raise the price of ev's here because there's tons of

downward pressure in terms of price. we will have to keep it in consideration which means going slowly and not hitting the lower band until we got into the new administration, new congress. those are all things up in the air and i think what is behind this higher for longer. jay powell said is like driving down the road and the fog and doing it slowly so they can can continue assess. jonathan: kathy jones speaking about that jackson hole speech. june will be a big month, debate start. people think about the outlook of november. lisa: the metaphor in jackson hole driving a car in the fog on

an icy road with no salt. jonathan: that's going to be a great speech. coming up in the next hour we will speak with bankim chadha from deutsche bank and michael cloherty from ubs. this is bloomberg. ♪ 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.

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