>> so much growth is priced into earnings expectations. there is so much optimism >> priced into markets. >>a lot of areas are susceptible to fast a pullback. >> there is sticker shock and you are seeing stress in businesses. >> the market has been selling off a bit, technology being the only group >> in positive territory. >>we are still in a full market, but it is going to be slowing down from here. >> this is "bloomberg surveillance." jonathan: let's get your weekend your month started. live from new york city, good morning, good morning. to our audience worldwide, this

is "bloomberg surveillance." equity market, hitting the ground running. the calendar is absolutely packed. payroll on friday, sneak peek at the estimate of 190 k. the last major data point going to the fed decision last week before we get to the federal reserve on thursday, the next big question about the ecb. the extent of divergence that we can achieve between the ecb and the federal reserve. lisa: europe didn't materially shift the view that it's basically locked in. this week it is locked in for a rate cut but to your point, it will be the rhetoric around how unified is the ecb committee in saying they want to hike in july at a time when inflation is sticky. jonathan: how split is that news conference? it's one to watch. before we get there, we need to talk about the federal reserve with cameron dawson later this

morning. the new consensus, no cuts in 2024. lisa: raising the specter of ok, is that bullish or bearish? how we priced in the greatest amount of economic momentum that could be behind the no cut scenarios. if there is a cut, will it be negative for risk assets? that is what michael hartman seemed to signify. that was the reaction we got this past week. last week we saw weaker than expected for in-line pc numbers that didn't boost equities materially, that was the signal. jonathan: can nvidia do the heavy lifting in the premarket again? we were higher in the month of may on one of the biggest names on the planet in the free market this morning. lisa: we will talk about this later, the new technology and the iterations later in the year. problem is, this isn't

materializing into a broader boom that many were expecting and until it does, there was a feeling that we saw last week that there are winners and losers and ai cannot lift all boats and there is too much enthusiasm baked into how this is adopted. jonathan: equity futures look like this, positive zero .1% on the s&p 500. on the 10 year, the fx market is slightly weaker with the euro going into the ecb later this week. lisa: you pointed to it, this is a massive week. last week was stagnant, but this week it will be the drumbeat to friday. jobs data, jolting tomorrow, adp jobs data. you can debate the importance of that. wednesday, thursday, the initial jobless claims, that's the jobs related aspect. other data, talking about manufacturing, ism, if not the s&p global read, it should be very interesting with service

pmi on wednesday and of course there is the ecb rate decision on thursday that will signal how quick this divergence can be at a time when people upgrade growth expectations for europe and keep them the same for the u.s. as the divergence shrinks. jonathan: i'm with you on the ism. pmi's seems to be whipped sawing . manufacturing service this week, two data points to keep in mind. coming up in the next 60 minutes or so, we catch up with martin at state street as stocks look to build on the gains of may and julie norman on the plans for gaza with sonny martin -- sonja martin on the ecb. s&p 500 looking to build on its best month since february. martin low writing "itm remains intact and as such we thinkartin

martin joins us for more. good morning, sir. why do you think we should be constructive for them remainder of the year? martin: for sure the waters are getting a bit cloudier. we are getting much more mixed data that keeps discussions of the fed wanting or needing to hike off the table. that is important. i mean, we have taken out probably the biggest risk to the market with the fed saying that hikes are not something we need to consider. then you put in all the cutting that is going to start with the ecb moving to the bank of canada and whether or not it is the asset that the market expects. the next moves across the biggest monetary authorities are to lower yield. jonathan: data stateside, 190 friday. if we get 190 k on payroll this coming friday, is that good news or bad news for the equity market? martin: i think it's probably good news, still. it shows moderation that really

gets the fed super concerned. the fed might look at that as a reason to signal that they only need to go one more time this year. we will see how that parses. we only get one more number on the day they make the announcement, but if it continues to show stickiness, the fed might be hesitant, which would be a bit of a bump, but that doesn't apply in economy that is doing anything other than chugging along silently -- solidly. lisa: a shift, no rate cuts baked in for 2024, but the sense also that artificial intelligence cannot save everybody, cannot increase activity, cannot allow immaculate disinflation to continue forever. on the jobs front, it's going to equal inflation. why do you reject that? martin: i don't, the market is

willing to accept it in the data is moving in the right direction. the next move is going to be a cut. i agree with you. longer term inflation is probably mispriced. we don't get to a pre-pandemic world with a fund perspective, that means we need to start thinking about divergences where other parts of the world need to look in on the technical sphere of where the rates need to be and that gets us back to where we were and that creates a bit more volatility. but the market is not focused on that at the moment. lisa: and it's difficult to go long term, but there is this question now. let's say that there is a rate cut in the expectation. i want to go to michael's point, the first rate cut will be a raisin -- a reason to buy bonds and cut stocks. this is counterintuitive to what the market said earlier this year.

boosting risk assets as well, do you agree that if there are rate cuts, it will be for the wrong reason,. ? -- full stop? martin: i think the rate cut will start the conversation of how deep it can be. i expected to be much more shallow, much less deep, if you will, than what the market is expecting. it puts a spotlight on what parts of the risk paradigm in the inflation environment isn't necessarily as sanguine as the four price around it. jonathan: is this the right conversation to be having, or is it still whether we get one or not? martin: i think it is. we are -- whether we are going to be range bound or coming from an interest rate perspective, it's lower volatility input that goes into the discussion.

looking at what the world is going to look like one year from now, that's not far. jonathan: most important fed speaker, it's not even the fed, used to be, but it's bill dudley, former fed president speaking in a bloomberg opinion column on the fed mantra that instead of higher for longer it should be higher indefinitely. as you read that piece? martin: it highlights the fact that the fed is not going to be as effective in cutting rates as the market thanks. the neutral rates are a lot higher than what people expect. jonathan: talk to me about leadership and the equity market at the moment. last month, the usual suspects, nvidia. where is the leadership going to come from? martin: it's a continuation of that. it's discouraging that we haven't seen a broadening out of the equity rally. so, people are still buying winners. it's the easiest path of least

resistance. to keep going down those routes. annmarie: european trade -- lisa: european trade, the u.s. in particular, i wonder about the divergence, not just fx, as you see decreasing prospects for the region and on equity values as well. martin: you know what, the challenge for the rest of the world is that nvidia is not on their exchanges. those are powerful companies. europe itself is a bit more value oriented and it keeps us shy from that. credit becomes interesting in europe. you can see it there from here. the companies are generally well-capitalized. so, i look at europe as reviving opportunities on a not necessarily just the end of the world. lisa: given that, how important is the guidance going to be from the ecb. not just from a foreign-exchange standpoint, but an aggressive investment thesis.

martin: for sure. the view that all of these central banks are going to be locked and loaded and going in succession is something that will be tested. it's not just the ecb. i personally think a lot of the central banks want to avoid a doj kind of environment where they get too far ahead of the fed. where it seems like the fed is not going to cut or it's questionable if they will cut in the fourth quarter, with sticky inflation they might hold off a little bit. jonathan: martin, great to see you, buddy. breaking on the week ahead, going into the federal reserve. equity futures, positive by 0.1%. on your stories elsewhere, we have dani burger. dani: mexico elected its first female president in its history. claudia shein bomb was the winner --sheinbaum is seen as

the continuity candidate who saw the rise of the super peso. it's weaker versus the dollar by as much as 2.2% and the wider victory led analysts to worry about the lack of checks on state control over the economy. the fed faces significant risk of losing independence to political interference of donald trump is elected again. that's according to the latest survey. 14% say they expect fud -- trump to demote fed chair powell and that he will try to weaken the fed independence and its power. if biden wins the election, 54% said that they think he will leave the fed alone. an online fast fashion retailer set to file for ipo this week i could value the company at 64 billion dollars according to a person familiar, saying it could become one of the biggest ever in the u.k., reporting that she was actively looking at the

budget after deciding it would be unlikely the sec would approve ipo in new york. jonathan: more from dani in about 30 minutes. i cannot decide if this is a big win for london or if it's just about china not wanting to list in the united states. lisa: to me it has raised the question on london and paris with regulatory approvals and it could be a potential win, but you are right, how much is it about china? jonathan: maybe both? up next on the program, putting a deal on the table. >> prime minister netanyahu and the foreign minister just said that they welcome the announcement by the president and they did in fact agree this was their proposal. jonathan: that conversation, just around the corner. live from new york city this morning, good morning. ♪

from recent grads... ...to rising stars... ...to living legends. —you got this. —thank you. vanguard's retirement solutions can help all your employees be well on their way to their financial goals. that's the value of ownership. just stop calling each other rock stars. and using workday to put finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah.

jonathan: live from new york city, welcome to the program. counting you down to payroll friday around the corner, look at that, the estimate in a survey is south of 200 k. still pretty punchy. estimates are positive to kickoff june. yields are lower in the bond market on the 10 year. 10-year yield, 4.47 29. under surveillance this morning,

putting a deal on the table. >> we have every expectation that if hamas agrees to the proposal as was transmitted to them, israeli proposal, they would say yes. the foreign minister just said that they welcome this announcement by the president and that they did in fact agree that this was their proposal. jonathan: the israeli defense minister touting that israel is committed to dismantling hamas. over the weekend, benjamin netanyahu saying that a permanent cease-fire is a nonstarter. julia, it begs the question, what exactly is on the table? julia: yeah, good morning. this is a proposal that has in some ways already been discussed in the past but it has already been moved through as a six-week proposal with a six-week cease-fire seeing a release of hostages in exchange for many palestinian prisoners in

cessation of hostilities and a crucial influx of humanitarian aid that would be followed by a second phase that would have some kind of agreement negotiations for a permanent cease-fire and the remaining hostages. i would say that this is the trickiest part, getting to the permanent cease-fire with a phase of reconstruction that is unarticulated. this is the model we have been working on for a while. jonathan: was this proposal just for domestic consumption in the united states or was it for israel to play out publicly? julie: great question. i think it is easy to look at the move from biden, where he is in a tough spot on the issue, as are many others. i think there might be some merit to that. it's really a last-ditch effort to revive the cease-fire talks that keep stalling.

behind closed doors, you don't want the public pressure from politicians. this time it's about taking a hat, turning on its head, showing them what's on the table and let the regional domestic pressure, international pressure, push it forward. lisa: in the meantime, julie, lots of pressures around the netanyahu responsys i'm where some are saying that his response are for domestic consumption and he is facing a lot of internal pressure from the leading party that backs him in israel. do you buy that? or is this a way for biden to say that we tried, wash the hands of it, and move on. julie: i think it's a bit of both. we are used do not yahoo! speaking around both sides of his mouth when it comes to the war, trying to nod to the biden administration wishes and suggestions, but at the same time dealing with the reality of

the far right elements of his cabinet that could essentially just knock on the government. that has been ongoing for netanyahu, though. finishing the war on the terms of israel and in terms of depleting hamas and its capacity has been articulated from the beginning. i would note that many israelis are behind this. it's not just net yahoo!. we have seen 80% of those israelis supporting the war. thinking it should be going further. i would say that he's dealing with public opinion and his cabinet. he's trying to navigate between all these different pieces. lisa: i'm trying to understand how much this conflict is reshaping the ties the u.s. has with other nations when it comes to other conflicts as well with certain european nations condemning israel. we have seen a number of nations

pull away from the united states with heated rhetoric in the united states. have you seen any increasing troop fissures between the u.s. and allies over this that is lasting and could cross into other conflicts? julie: i would say that it is underappreciated how much of a hit the u.s. image has taken overseas regarding the stance since the start of it. it's definitely true in the region and i would say it's true across much of the global south and it is certainly being exploited so to speak by u.s. adversaries, russia, china, etc. , and in europe it is a bit more of a balancing act. in many places, civilians and young people are watching this closely, but we still see many governments trying to balance between what they see as concern for gaza and keeping up relationships with the united states. lisa: i ask because there were a

number of foreign defense leaders in singapore, including with the u.s. and china, where it seemed like there was an appeal going on for moral leadership and this idea that -- who could offer more to some of the nations in the region to generate a coalition and i'm wondering how much the u.s. image has been dampened or what the lines are that are being drawn that are part -- purely economic or if there is leadership on another level that is coming through on these. julie: i would agree, much of the world is asking -- who can move this forward? the cease-fire bid i biden was one -- five biden was one response to it. -- by biden was one response to it. it's been regional diplomacy, getting most in the region on board with long-term visions of globalization. as you seen before, on that

governmental level the u.s. has been doing the work, even if they are losing ground unpopular opinion. jonathan: do we have a sense of how things might change in the next 12 months? julie: massively, we are all aware of that. in the middle east there are some that think it is the difference between substance and style on trump and biden, both being seen as supportive in israel, what have you, and they have the type of diplomatic engagement that we see on the biden administration being much more intense around the region that it would be under trump, as is a push for a sort of resolution to the conflict. many actors in the region are well aware of that, including netanyahu and israel. jonathan: interesting. julie norman there, on the prospect of change in israel over the next 12 months or so. on the conviction of the last week or so, poles are coming out.

we will talk about this in detail later this morning. over half of voters, 50 4%, approve of the historic condition -- conviction of the president -- former president last week. the friday survey showed just 15% of republican voters nationwide want trump to drop the white house bid, telling you the support on one side of the aisle is still very strong. lisa: 96% of democrats say the guilty verdict was the right one. 56% of independents. eight out of 10 republicans, to your point, call it the right -- basically, saying it was a bad trial and he should move forward. this split, the fissures, the trial did nothing to push the believers one way or the other. to me moving forward, what does it do in putting the legal system into the crosshairs of the discussion and trying to sort of cast it in one light or

another. jonathan: look out for that conversation in the next hour. coming up in a second, we catch up on manufacturing in china gaining at its fastest pace in two years. compare and contrast that to the official data we got last week and we got a different picture, didn't we? lisa: manufacturing as a red herring anyway, they are juicing it, that's part of the issue, choosing it to create cheap exports for the rest of the world and a lot of people say this isn't actually stimulating growth. the other numbers that are getting out there, the issue is ultimately how sustainable is it . what happens if china isn't able to sell those cheap goods? is this going to be building bridges to nowhere with entire cities that are empty? this is one of the angsts people have about what china is doing. jonathan: the cheap is piling up

abroad with walls going up in places like the united states. just joining us, welcome to the program. massive week ahead of us. ecb rate decision, payroll on thursday, and throughout the week a spring to live economic data. equity futures have hit positive by 0.1% with a bit of a lift in the equity market, building on the gains of may as we kick off the month of june. bond market yields are coming down just a touch. the 10 year, from new york, this is bloomberg. ♪ 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.

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jonathan: live from new york, welcome to the program. equity futures at the moment are positive by zero on the s&p. the nasdaq is close to .5. russell small caps outperforming on the morning i .9, leaving behind a decent month of may with the s&p closing out a month close to 5% with the nasdaq 100 higher by 6%. in the s&p, utilities are higher. for the best month in a year, up by 8%. we will figure it out in a moment. two-year, 10 year, 30 year, first day of may trading up by

5%, retreating and putting closer to it with a yields lower bunk -- by one basis and closer to a double-digit to's and 10's. 447 .09, tons of economic data this -- 4.47 09, we will talk about it in just a moment, concluding on friday with payrolls around the border. getting a switch on the euro like this, currency negative by .1%. the dollar had its first monthly drop since december. dollar weakness last month, we will see if we get more of that this month. the big conversation is the split between the ecb and federal reserve, not over the next month but the 6, 9, 12 months. under surveillance, a busy week of economic data is on deck. wednesday, jobless claims within ecb rate decision on thursday. payroll is friday, just around

the corner. lisa: the potential bigger surprise for the markets is not just the number itself but how the markets respond to it. is there asymmetry here about upside surprise not necessarily causing as much reaction is a downside surprise bringing back the specter of a weakness that seems to me to be the new fear at a time when people are pushing back rate cuts for the right reason to support things where they are. jonathan: the federal reserve has stated clearly that they will not be hiking interest rates, speaking to what you're talking about, the asymmetric risk on the downside surprise. i'm not so sure, anymore, the market has responded in ways i would not have been able to anticipate. nvidia is a great example of this. comes up, crushes it, stocks urges with equity markets doing nothing. things are getting more unpredictable in the equity market. lisa: peter put it well, a lot

of algorithm traders with a lot of conviction one way or another, leading to a lot of jumpiness. the way that the move goes is instructive. downside surprise is maybe positive, in the past we thought about it as rate cuts that could potentially support equity valuations. i don't think that that will be true this time. feels that weakness will not be treated well by risk assets, people are really worried about rapid deceleration and growth not in christ in anywhere. to me that is the bigger issue. jonathan: we will get the guests to define what weakness is on friday. lisa: fairpoint. jonathan: put them on the spot. brent crude, wti, 76.70. opec plus and on the timetable for production cuts with supply reductions that can come to an end starting in october. however, voluntary cuts from key

members like saudi arabia and russia are expected to continue into next year. a bit of give-and-take. lisa: i always try to go over to rbc for insight, because i didn't know what to make of this. bullish? harish? she said she saw the decision as potentially providing a backdrop for the u.s. saudi grand bargain negotiations that open up the door to more diplomacy between a white house watching the price of oil carefully and the timeframe, think about october. and the desire to keep some stability here. this is not an opec that wants $100 per barrel or trying to job every thing higher. they want stability and diplomacy, which i thought was an interesting take away. jonathan: triple digit crude, that was the opinion coming in from overnight. chinese manufacturing activity growing at its fastest pace in two years, boosting sentiment out of the country on top of

improving vehicle sales. two of their biggest cities with housing market pickup after government measures to lower payments and fund purchases. down in d.c., enda has more. help us out, data suggested manufacturing was not as great as anticipated but then pretty decent. which is it? julie: -- enda: two different takes. one looks at smaller companies, export oriented with different gauges from the official data out of the country. private sector looking upbeat, seasonal factors are behind that , some technical reasons underneath the suggestions from companies in the consumer company doing ok. but the real big takeaway over the weekend was the official reading speaking to a broader swath of companies still in contracting territory.

it's all coming off the boiler bit. and net, the take away from the chinese manufacturing data over the weekend was the sector was under pressure. more given what was underway in the u.s. with the eu set to take on its own decisions jonathan:. jonathan:we are all aware of some of the problems and where they are, policymakers are as well. number one, the property market. the headline that i just read, two of their biggest cities are seeing housing market pickup from a low base with problems that have plagued the economy for a while. where are you seeing developments? where is the policy effort starting to bite? enda: its early stages. the pickup and prices is a welcome sign but a lot of people are making the point that it will take months before this polity starts to see the traction needed over the past few weeks where the authorities

have now decided to ramp up efforts to turn around the sector. that's important. we had a raft of measures from the month of may where most agreed it was the most significant step taken by the party to become clear. it will be worth closely watching. new vehicle sales pickup by the way are an important indicator for china and for a lot of people, its auto sales that have to be pickup. -- picked up. lisa: details in the bigger picture, chinese leaders bizarrely looking to support government spending for consumer demand with increased production of goods that they can export to the rest of the world doing nothing to support the average consumer.

is that how you see it or is that overly simplistic with a western shaded view that doesn't take into account certain things that domestic people are counting more for? enda: the authorities have to hit that, with one of the key cogs in terms of target is the manufacturing sector. having it in the slope that it is with early stages of return, the consumer side of things is somewhat subdued, which leads to the manufacturing side, and they are trying to juice that to look at the growth activity they can. the political objective is to hit the 5%. on the way that brings up problems of its own, manufacturing a lot of surplus goods they clearly cannot sell at home that are being put into the global market, creating political demand. where the chinese authorities respond and counter is saying -- look at what we are doing now

and the property sector where we are putting money into making it easier for people to get home loans and for developments to get finished, given how cheap the financial aid is to the bank system there. that will get consumers buying up more projects at home. remember, the political objective for china is to hit the 5% target. yes, that creates a criticism on the manufacturing side but they also say that they are putting money on the table to revive the real estate sector. lisa: one thing that was apparent from the singapore meeting will everyone got together with a host of different governments was that u.s. and china were trying to repeal -- appeal to southeast asia to see get on board with us. economically, do you see china making inroads greater than the u.s.? particularly in the region as they try to shore up an alternative access to what they see as u.s. pushback becoming increasingly apparent. enda: china is clearly deepening

trade in the region. the great supply chain story going on at the moment, lisa, production having shift out of china into part of southeast asia that remains a part of the china value chain. if you listen to the government on that part of the world where they are keen to stress they won't choose sides in this. called is a mid or -- middle connector economy, it's doing business on both sides of the world for the u.s. is obviously involved. israel gaza conflict on the one hand, china steering somewhat clear that. taking a bench -- advantage of the u.s. medic globally. not just southeast asia. don't forget, trying to peel off europe from the u.s., don't forget the visit to president xi as an alternative to the u.s. jonathan: speaking of choosing

sides, the former president has joined tiktok, the platform he tried to ban several years ago. what about this effort to ban or ultimately sell the platform? enda: it's fair to say that this has become a confusing topic as a symbol, speaking to its potency as a communications tool, i suppose, but no doubt that pez -- president trump led the push to ban it in office and then did the u-turn when congress look at it a few months ago and if anything it speaks to the idea that yes, if there is a change in the administration, president trump will be even more hawkish on china trade but there will be an element of uncertainty and lucky carriage around what china policy will be, given what's been performed as an example a tiktok -- on

tiktok with plenty of skilled confusion within the volatility. jonathan: this is one of those instances, for sure. enda, trying to figure out what 25 looks like and we have no idea. this is a great example of that, how quickly things have changed. lisa: so donald trump joined tiktok over the weekend. appealing to younger voters, wants to. the irony seems to be in bipartisan agreement in washington, d.c., which is that tiktok needs to be brought away from chinese ownership were taken out of the u.s. one of trump's main advisors is a backer of tiktok and a big investor of tiktok. in raises a question around what's more important and how do you understand a framework for next year given the uncertainty? jonathan: with difficult -- difficulty. it will be difficult to draw broad-based conclusions, making it even harder. larry summers at the atlantic,

saying that there has never been a presidential platform so self-evidently inflationary as the one from trump. i have little doubt that with the trump program we will see substantial acceleration and inflation. lisa: we saw this report out of clock tower where treasuries were facing a massive risk and others said that they had no clue what the policies would be and either candidate could be coming out with inflationary policies, it was a complete black box where you try to arrange these theories that make us deeply uncomfortable. jonathan: first debate, looking forward to it. anne-marie is all for the next several days, getting some rest before the campaign really picks up. equity futures on the s&p 500 are positive by 0.1% on the s&p. bloomberg brief, other stories this morning with dani burger. dani: as you guys were just saying, donald trump joined

tiktok over the weekend in a bid to court younger voters. he made his debut alongside dana white, of all people, of the ufc. president biden and former president trump have both joined. trump telling us they raised $15 million in the day following the verdict. saudi aramco with a series of events in london to coordinate international investors. the $12 billion shares sold out in just a few hours, key executives will be attending roadshows in london this week with a separate event in the u.s.. foreign participation will be watched closely considering the ipo in 2019 relied on local buyers with overseas investors questioning valuations. shares of paramount this morning are higher by 6.8% and we have learned that the movie producer david allison's latest our -- offer includes a sweetener of nonvoting shareholders than

offer to cash out the stock with $15 per share and a 26% premium. it's the latest attempt to court the nonvoting shareholders and a bid for the heavily favored sherry redstone and her controlling class. jonathan: thank you. that stock is higher by close to 7% with more from dani burger in 30 minutes. up next, pre-committing to a rate cut. >> ecb has already committed to cutting rates in june. the inflation data that we got recently doesn't really justify to cut rates in june. jonathan: that's all coming up this week. from new york city, this is bloomberg. ♪

in the foreign exchange, the euro just had its best month of the year. euro-dollar positive on the month 51 point 7%. as the kickoff june it's a touch weaker. euro-dollar, 108.32. under surveillance this morning, pre-committing to a rate cut. >> the ecb is committed to cutting rates in june and they will do it, even though the inflation data that we got recently doesn't really justify them to cut rates in june. the question really becomes what comes after that. jonathan: that's the big question. here's the latest. the ecb is expected to kick off a rate cutting cycle on thursday despite recent upside inflation surprises for the bank is set to release new forecasts, setting

up the big debate for the next move. july is very much in sight. sonny martin writing that the ecb will take extra care not to send aggressive new dovish signals for the end of the year and data-dependent will be the name of the game. sony has more. how big is this by going to be? how big is the fight going to be about july and beyond? sonja: it's going to be a lively debate. the problem is we mentioned on your program just now is that the inflation data has been supporting dynamics for take-up where there has been disappointment as far as the wage data is concerned. that has raised the bar. the ecb will cut this week. what comes after that is going to go into a difficult and data dependent. they are not going to rush into the next rate cut right away. i think that an approach where they cut once a quarter is much

more realistic as it gives them time to look at the data, see how it develops, and basically they will need to see the disinflationary trend continuing to pick up the pace, which will take a bit of time. i'm thinking they will cut and wait until the coming next quarter to do another with one more before the end of the year, but the language is going to be very cautious on thursday. jonathan: your line of thinking seems to be what deutsche bank is thinking as well, moving the balance from four to two with a baseline of three and a landing zone for a terminal of two to 2.5, putting the emphasis on optionality over normalization. feels like we won't talk about normalization on thursday, but i've got to ask you, what do you think the ultimate destination is? stateside we are having the conversation about what neutral might look like, but what does that sound like in europe for the ecb? sonja: the discussion of the neutral rate has become almost a

container because when you think about how many times the market has been revising its opinion on where the neutral rate might be, i am not really that interested in trying to second-guess that. to be honest, it's a moving target at this point. what i would agree with is that it is definitely higher than what we thought it would be. there are structural issues, re-inflation, a lot of debt issuance. debts remaining higher for a long time. it doesn't just depend on the ecb, but it also depends on what happens in the u.s. with the election coming up. whether trump or biden becomes president will have a massively different impact on the european economy, trump gang much more negative for europe, with the ecb cutting more next year. if the u.s. election has a big role to play for the ecb as well. lisa: u.s. election is a black

box, unclear what they can do ahead of it other than not provide guidance. i wonder though as an fx trader if long euro is the new hot trade given that economic data is coming in stronger and the ecb is going to launch a rate cutting cycle that the fed seems far away from. sonja: i'm going to say that i was never a big fan of the parity discussion we had not long ago. you are perfectly right in saying that we have seen some positive news out of the euro zone and if you look at the recent indicators, the numbers have been better than expected. we have seen some relief, especially with spain and portugal. very strong data there. it's moving in the right direction, supportive of the euro despite the ecb cutting rates before the fed. having said that, it's a very anemic recovery. it's not a very dynamic recovery for export.

it's not a strong recovery, i don't think it is enough to justify a bullish take on the euro. i don't think that we should give up on the u.s. dollar, either, despite the fact that here we have seen disappointment in the data of late. lisa: you mentioned the election. seems like right now you don't see a real catalyst for dramatic action one way or another based on the soup of information that you just laid out. how is the election kind of shaping your trading strategy heading into the end of the year , considering it is kind of a black box, who will win, and what the policies will be. sonja: basically we are sort of driving two scenarios at the same time. it is a trump scenario and a biden scenario with clients going through conviction tastes, personally we cannot predict who is going to win the election, but we can say that the trump scenario is the dollar positive.

that's the one moving towards parity. at least initially. this is a short-term affair, initially, because it is going to be good for u.s. growth initially. in the longer run it becomes harder to predict because none of us really know what trump is going to do, but we suspect his economic policies are going to backfire and become a risk for the dollar but short-term it's positive, so if you are betting on trump, you are looking at short euro-dollar here. jonathan: what have you identified that leads initially to that burst of growth with dollar strength and problems further down the road? sonja: there will be tax cuts for carpets and households. that is going to be a big boost for spend negative and sentiment. delivering the initial growth spurt. on the others of that equation, we have the leveraging of tariffs that will be used to

finance the tax presence, but it won't be enough, so the fiscal situation in the u.s. becomes more perilous under a trump administration. ultimately, that is going to be the medium to long-term problem for the u.s., but initially again it is going to be positive. lisa: quickly, you didn't mention the biden playbook, sonja: what is that? sonja:pretty much more of the same. looking at the growth forecast under that scenario, the growth rate for the year as a whole, 2025, is not that different. the big difference is the path. with trump it's an initial boost of growth that dies down and becomes weaker. then it's a level playing field. making the job easier than it would be under a trump scenario where they might find themselves handicapped by the fact that inflation is going to rise rapidly. jonathan: appreciate the update and the opinion therefrom sonj.:

here's another opinion, from peter chair, "as campaigning begins in earnest, it won't be great for treasuries. neither candidate nor party seems interested in doing anything about a ballooning national debt weighing on the markets again. irrespective of who the winner might be, november or beyond. lisa: we have heard this from everyone, no one is talking about reducing the deficit, neither candidate. looking at the trump administration it's about what you will see with ongoing tasks cuts. what are you going to do about the deficit? jonathan: coming up, terry haynes, michael krishna, and scott kirby, sitting down with guy johnson in the middle east. all of that in the next hour on "bloomberg surveillance." ♪

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>> with us again that the dead could be raising interest rate, that is in a sense causing >> to appear today. -- cracks to appear today. >> the fed, the most likely scenario, is september. >> for the fed to think about moving earlier, they will have to see more stress in the labor market. >> i'm trying not to overthink it, i think we are in a good place for the economy. x this is -- >> this is

"bloomberg surveillance." jonathan: we live and breathe to overthink it. it's what we are here for. [laughter] lisa: i feel seen. jonathan: for our audience worldwide, the second hour of "bloomberg surveillance" begins now. we can start for the week ahead looking at jobs. adp, we will get jobs, jobless claims, payrolls. you want a sprinkle of data elsewhere, manufacturing services, central-bank decision, that's the appetizer, one week away. jonathan: it's fascinating -- lisa: it's fascinating, we had a shift in may and then it faded going back to april 19. it comes on the idea that maybe there is some weakness under the hood. that seems to be an increasing fear. downside surprise, i want to see , if the risk assets are

rallying in tandem or if they are weakening for the wrong reason. jonathan: you have alluded to this twice. it's not just the data this week, but how the market response to it. taking payrolls, do we have a decent idea for how the market will respond? lisa: suddenly you can talk about july rate cuts again with a labor market crackdown allowing the fed to really step in and enact its easing midcycle adjustment. whatever you want to call it. i wonder, though, he sees it as a potential negative but i cannot imagine that stocks can rally tremendously. maybe gain on the margins, but recent activity has not shown that being a boost. with accelerated valuations. jonathan: if last week was boring, we will kick off with anything but.

a little bit of a lift. down on the 10 year in the foreign exchange with the euro weaker. almost everyone apart from everyone else in the survey anticipate an interest rate cut from the ecb on thursday. coming up this hour, we catch up with dan green house on by the fed is likely to cut, michael kushma and scott kirby. shifting attention to the friday data report. inflation is likely to continue slowing, but it remains too hot right now for the fed to justify near-term cuts. with the economy and further labor markets slowing, the fed will likely feel justified in cutting rates this summer.

dan, good morning to you. can we start on friday? what are you expecting on friday and the payroll report and how do you expect the market to it? dan: there are no indicators used to forecast payrolls that suggest reading for deviation and job creation. 190, 2 hundred 70, 210, it's largely irrelevant. weakening the labor market, there's nothing to suggest it could come in at 80 with a number that could move things along inside of the fed investor community. jonathan: it has been difficult. let's take nvidia as an example. maybe the example. decent numbers, stock runs up 30% for the month of may. the equity market doesn't run with it to the end of may. we would have said these things would have happened but they didn't. what did you make of that? dan: listen, nvidia, i don't

even know how to describe it anymore. it's a powerful company driving revenue and growth, changing the narrative for the market and for the economy as a whole. i don't know that you can make any larger comment about nvidia and its performance. at the end of the day, there is just a larger sense around what's happening. mobile, cloud, ai. we are on desktop's now. terminal loaded. with us for years? i don't know if market buys you can read anything into it. lisa: there was a feeling that you could never price the narrative highly enough, but that seems to have faded as people took a signal from the price action. it seems that when he looked at

the numbers it wasn't being adopted as quickly as people previously thought, ai wasn't being monetized and spreading tentacles of glory to industries in the same way. you don't read that into what we have seen? dan: obviously the rates of growth will slow at some point, but to the extent that we use the 90's tech boom as an analogy, the netscape ipo was the middle of 95 and we are still living with the repercussions of that today, decades later. i am just wary of making larger narrative adjustments to this change based on one quarter, two quarters, three quarters. if this is going to be what we all think it is going to be, we will be reaping the benefits for the next 20, 30, 40 years. one quarter to the next is largely irrelevant in that sense. jonathan: i get the sense that you are shifting the anything

but bonds thesis with michael hartnett to if you see a pullback, buy it, because if the fed cuts rates, bonds will be good and stocks less so on the heels of weakness. do you agree with that or do you think that rate cuts are supportive of further gains in valuation? dan: in my forecast, i don't have material economic weakening that you mentioned before. i don't have the fed cutting rates for the wrong reasons. i don't -- i could be wrong, could be the first time, won't be the last, but i have inflation drifting down into the mid-twos. that should be the type of weakness everyone is expecting around consumer weakening. that should give the fed breath to reduce interest rates. the election obviously complicates that and further stickiness in inflation is going to complicate that story, but i

don't have material weakening. with respect to bonds versus stocks, there is a larger conversation here around weakness and larger conversations that can be had around the market rate s&p and equal weight s&p. i don't think that enough credence or benefit is given to the fed for slowing things down if you look at the equal weighted index. there is this argument that the fed has raised rates and you have seen no material weakness in the stocks, but that's not really true. lisa: i'm hearing that you like small-cap that cuts? dan: actually i don't know why we talk about the russell 2000. this is an index of stocks -- [laughter] lisa: ok. dan: listen, coming into the year, i was asked if you prefer the equal weighted s&p versus the market rated s&p. jonathan: what about now? dan: i like the broadening

theme. soulless is idiosyncratic. we were looking for the most attractive risk-adjusted returns. jonathan: find them in stocks or credit? dan: certainly stocks. in both, but there is a narrowness to the credit market right now that is undeniable. down in that portion of the market where we spent some time, double b's, singles, wearing out, with the triples being frontier. these aren't the best companies, so to speak, but there is a lot to do. they are in credit. on balance we have found more to do in equity. to that point, we are not an index, we are not trying to beat it by 100 basis points or whatever. there are themes playing out, and i have mentioned this a number of times but i will do it again, i think it is important.

we need chips, but we need to build the data centers. some is going to build the data center. someone is going to cool the data center. someone is going to build the racks. it's all playing out right now in profitable ways. they just don't get nearly the attention that the bank 6 get in a day, 7, . but these8 other names, they don't get the same attention. which is fine for the investors in there, they are reaping the benefits without getting the public benefit they might have. jonathan: teasing it out a bit more, utilities, is that where you are focused? dan: that's a good example. we have done plenty there, but only three sectors are beating the s&p this year. tech com services and utilities. more narrow and interesting about this, just 40% of those

respective sectors are beating the s&p. utilities, it's just a third. you have a steadily narrowing market, depending on how far you want to go. are we finding stuff to do with utilities? we paid attention to the space. to the point we just made, if that is your goal, there is a select few names around doing that. lisa: we have learned about the money going into private credit and private equity funds. a golden age of competition to find all of these opportunities. how much is that a concern for you, given that everyone is looking for the cooling sector. who is going to get the strongest floor to hold the weight of these chips with stories around any of the edges and a lot of cash. dan: i don't think that's different from any time in my career or modern market history. competition has always been there for companies, for asset managers, and overtime,

performance wins out, so to speak. mind you, we don't do a ton of private credit. we have done idiosyncratic loans over the past 15 years but it isn't a regular part of our investment thesis. we are trying to find the best risk-adjusted return. to the question earlier, there is stuff to do in equity and credit that on balance we are finding more to do in equity right now and at any given moment, including when i walk out of here, it's likely to change. lisa: more likely in the u.s.? dan: yeah, we spend a lot of time here. we have a fairly large position in canada, brazil, on so many idiosyncratic issues. especially europe, london as well. on balance, the portfolio is domestic. that is where our focus has been and is likely to stay, given the

risk, which we are not as comfortable as we were in the past. jonathan: i'm getting a mid-90's field for this from you, is that fair? don't worry? dan: i tend to take a pretty simplistic view, some might say naïve, of the investment landscape, which is that corporate profits are expanding, the economy is expanding, valuations are important but in that context of the fed is likely to start increasing interest rates and it's all positive if you find the themes you're able to exploit. it's not easy. if it were easy, nobody would be sweating every day way that some of us to. again, as long as things are expanding and we are finding opportunities, don't overthink it. before you mentioned the treasury issuance. [laughter] the coming of them -- coming election and fiscal spending. jonathan: regular listener. dan: i quoted the 5:00 hour and

now the 6:00 hour. i don't just show up here. jonathan: bramo is thoroughly entertained by the fact that you have sheep on your tie. lisa: yeah what's the meaning? dan: can't say it on air. [laughter] lisa: all right, then. dan: i don't know why this isn't a weekly thing. jonathan: maybe it should be. right in, right in with your own complaints. [laughter] here's your bloomberg brief with dani burger. dani: the ruling african national congress in south africa has been in talks with his rival to form a government. the party lost the parliamentary geordie for the first time since nelson mandela led them to power at the end of apartheid. the leader says that it's a sign that the south african people want more cooperation between major parties. amc got a vote share of just over 40%, down from 57% five years ago. opec set out a timetable for

gradually unwinding oil production cuts. the new agreement extends the voluntary curves from key members into 2025 and begins rolling back supply reductions in october faster than some had assumed. goldman called the decision bearish and that the plan to unwind cuts would make it harder to maintain production. gamestop shares are surging in the premarket nearly 90% because roaring kitty is back again for real this time, saying it appears to be in a $116 million position for gamestop. they posted a screenshot -- screenshot in the super stomp subreddit. it's his first post in three years and he tweeted an image of a reversed who know card for whatever reason. he returned to twitter in the middle of may. it was a bad day, if you believe in efficient markets. jonathan: appreciate the update.

more from dani in about 30 minutes. next, trump stays strong after his conviction. >> the judge can say house arrest or jail. >> i'm ok with it. so, that could happen. i don't of that the public would stand it, you know? i don't know that the public would stand for it. there's a breaking point. jonathan: we will talk about that next on the program. live from new york city, good morning. ♪ the future is not just going to happen. you have to make it. and if you want a successful business, all it takes is an idea, and now becomes the future where you grew a dream into a reality. the all new godaddy airo. put your business online in minutes with the power of ai.

jonathan: payroll, friday, a few days away. before we get there, the s&p is positive by 0.2% with the yield on the 10 year at 44 650. under surveillance, trump stays strong after his conviction. >> the judge could say house arrest or jail. >> he could. i saw one of my lawyers on television the other day saying you don't want to do that. i said, you just do it the way it is. so, that could happen. i don't know that the public would stand it, you know? at a certain point, there's a breaking point. jonathan: a new morning poll finding that more than half of voters approve of his conviction, but a large majority of republicans still want him to run.

just 15% of gop voters want the former president to drop out. for more, terry haynes joins us now. what are you learning from the postconviction poles of the last several days? terry: not much, i think they have a lot of time to play out. these are essentially weekend flash poles and i think that whatever the effect is on trump, it's going to take days and weeks to play out, frankly. meanwhile, trump has the same situation that he has had before, which has -- is he has a split republican party, 24% of republicans not preferring him, underwater with independence -- independents. if he doesn't write those ships, he likely loses. jonathan: how do you think the sitting president will navigate this issue in the coming months? at the debate, will he campaign on it? terry: two things.

one, there is some tension between both of them. one, he personally tries to stay above the fray. the other one is that he and the campaign repeat convicted felon over and over as much as possible. i think that what ends up happening is biden needs two things for the next five months, to put the cognitive issues addressed. that's the alternative, the frames of the campaign. a lot of the people have said that issue x or y will be the make or break, but really as far as a referendum on biden, it's really a referendum about whether he continues to be up for the job. secondly, he's the steadier alternative to trump and that independents and some republicans particularly do not want a return to the old days. lisa: going back to something that you said where trump has

split the republican party, is that still true given the consolidation we have seen around trump by republicans over the past couple of days with conviction coming out around the party line that it was a flawed prosecutorial discretion, that there wasn't a venue change. this is really splitting the party. terry: the party has been split since mid-january, when the first primary happened. i'm not relying on the polls, i'm looking at how people actually voted. what you have got is a republican party that by all indications it doesn't completely want trump. the thing is, trump has demonstrated that he knows this. in the past several days and weeks, the reason i say that is because he is gradually pulling out to court haley into the

tent. haley is the protest candidate, essentially. is not really working for him or anything serious, but he needs to address the needs and concerns of those many people that voted for him. there is a dance going on right now, it may be successful, it may not be, to try to get haley into the tent to unify the party. it's not there, yet, but it is real. lisa: i wonder your take on him joining tiktok over the weekend, the idea that donald trump has wavered a touch in terms of him banning it or not, what the messaging is. how important is that type of thing to the support that he's going to get or not among the electorate, or is that windowdressing at a time when there is much more fiery talking points on both sides? lisa: the policy of -- terry: well, the policy of both as far

as an election goes is nothing more than convenience. you can hear the political people whispering in the years of everyone saying look, we have to use every weapon we possibly can to get to the maximum number of voters. we have got to use tiktok, there's no alternative. they will both go ahead, just as they do for campaign finance, for that matter. they will use every tool available until it is not available anymore, then they will try to use something else. consistency is the hobgoblin of little minds, like emerson said. but when you are in hand-to-hand combat for the next five months, expediency will rule over all. jonathan: i would love your thoughts on policy. let's continue that conversation. larry summers saying that there has never been a presidential platform so self-evidently inflationary as the one put forward by trump and i have little doubt that we will see substantial acceleration in inflation under the trump

program. others noting there's not much daylight between the candidates between the issues. how much is there, currently? terry: between cheer and summers, i will take cheer on this one. the fact of the matter is, it's a campaign season. campaigns want to over emphasize differences. that is part of for the campaign argument is all about. in reality, what you have got is a situation where there is not going to be any fiscal discipline in the united states, regardless of who the president is. there is a situation where foreign will largely be united like it is now, very bipartisan issues on the margin. what you will see is a move towards showing up, improving, and pumping up the end -- the -- the defense him dust real base. frankly i think it's unifying. trump will want to do it at a

somewhat faster pace than biden, who is trying to get the goldilocks move, the just right move, without alarming people. that's going to happen. you know, there's not a lot left, really. the markets get excited about regulation, but based on 2017 particularly, that is a triumph of spirit over reality. jonathan: i will let him know that he gets your vote. terry, thank you, sir. equities right now, positive 1%. coming up michael kushner looking ahead to payroll. mr. kirby out of united air lines with guy, 15 minutes away.

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jonathan: two hours away from the opening bell, equity future look like this. positive across the boards. 0.1% on the snb. it is a new month so we talk about the same old conversation, can we get that rotation in the russell small caps? lisa talking about the perspective of weakness and payrolls. what is weak? stupid kaiser says payrolls may be a banana peel. the mix can be positive but had done below 150 would be worrisome. citi is looking for 140. the median estimate is 190.

lisa: i would guess andrew hallman horse would agree with him, talking about how this would indicate rate cuts for the wrong reason, everyone can roll their eyes, good news is bad news, bad news is good news. but you get real weakness in the economy not supportive. the interesting twist that we have seen from bank of america recently. jonathan: that takes us to the bond market. treasuries shaping up as follows. down two basis points on the two-year. down another four on the 10-year, 4.4591. given that retreat, this is one foreign looks like this morning. the euro just had its best month of the year, getting close to 1.09. negative on the session by 0.6%.

the ecb will cut interest rates thursday, pretty much in the minds of everyone, except for this one person, who doesn't think they will cut interest rates on thursday. what happens in july, what does the data look like? something we can talk about with mohamed el-erian when we catch up with him on thursday. lisa: this might be the most interesting part of the week. hotter than expected inflation data out of europe, stronger than expected growth. deutsche bank actually upped their expectations for growth by half a percent while keeping the u.s. the same. is that positive, does the ecb keep that going, or do the hawks win out and say inflation is is not quick to kill off? jonathan: you will find it around things like optionality. keep your options open. we don't want to shut down july

completely, but you don't want to start talking about kicking off the process of normalization. the chief economist on the ecb executive board talks about the need for the rest of the year, you can reduce interest rates but still remain restrictive. lisa: you don't want to talk about normalization because what is normal? if you have to talk about what the neutral rate is, that is a dangerous place that nobody wants to talk about. jonathan: one is normal for this stock? nvidia, the ceo, saying that the rise of generative ai is a new industrial revolution. he expects nvidia to play a major role as ai shifts personal computers. he says they also plan to upgrade their accelerators every year. that stock is up another 3% this morning. lisa: is that another $50

billion? just the scale of this is overwhelming. when i look at this, it raises the question that we asked before, at what point do people not want to buy currently because future iterations will be stronger, more powerful, more efficient? there is such a shortage of chips, people want to get ahead, any advancement is a benefit. i'm curious how much amd can follow on. they were also talking about improved technology they are unleashing. can they catch up? jonathan: do you think we have had the melt up for this stock? the right conversation to have at the end of last year was whether the stock could double again. that was the right question to ask, could we rally another 100%? i didn't hear that nearly enough at the end of last year.

now what is the right conversation? lisa: we should talk about this being a $5 trillion stock by next year? what is the limit to its ascent? up 120% this year, talking about how they own the market. at what point is there pushback? when one of the big tech giants pushback, how much may they are funneling to nvidia's coffers. when do they start investing materially in their own chip production? otherwise i don't see a limit to this. jonathan: how long is the runway? quickly on paramount, shares up in the premarket, news that david ellison is sweetening his offer to buy the company. the paramount shares, redstone also weighing the option of

taking the offer from apollo global management. lisa: this had been the ongoing consolidation that hasn't happened as quickly as people expected. it seems that people with a very wealthy people in their lives are the ones that are taking over media. jonathan: are you calling this nepo acquisitions? lisa: [laughter] i am just sitting there seems to be a theme going through this. otherwise, why are people going through the acquisitions? jonathan: no interview if this one closes. john's due tomorrow. adp on wednesday, claims on thursday, payrolls report on friday. investors looking about what it could mean for the fed's path forward. michael kushma saying the fed will cut once or not at all this year given the current economic situation. inflation could easily be too

high given solid economic performance to cut rates. michael is with us now. can we pair this with friday, when you expect to see in a few days time? michael: it seemed job growth is decelerating, which it should. the economy cannot maintain reasonable economic growth. quit rates are slowing. unemployment seems to be decelerating toward more normal levels, don't know exactly where it is. this immigration issue makes it clear how much underlying demand is versus the labor supply issue. labor supply can be growing rapidly and the man could be slowing at the margin. suppose the unemployment rate goes up job growth remains strong because of labor supply. that is a perfect scenario where we have wage growth, the economy stays firm, and the fed has the

runway to do what it wants down the road. jonathan: you think what it wants is nothing in the near term? michael: everything is perfect right now. inflation year on year is falling. as long as that continues, unemployment rate stays below 4%, the fed stays tight. live mess with something that seems to be going just fine? but leaving the option on the table, we will cut rates if there is any sign that things get worse. there are dovish undertones despite the recent commentary. on the other hand, it seems they will pull the trigger as soon as possible. lisa: in this scenario, you see 10 year treasuries, yields stock at 4.25%. with an upside risk to five percent, what does that risk look like? michael: inflation gets stickier, unemployment drifts

up, and the fed cuts rates. it has a dovish desire to support the economy and avoid recession. a combination of the inflation staying sticky, or with being ok, unemployment rising at the margins, you get a steepening of the yield curve, back end yields rising. the other thing is debt dynamics, the treasury issuing the larger coupon bonds and quarterly options. global growth is improving as well. it is not just the u.s. decelerating a bit from very strong levels last year. the rest of the world is doing better. from the ecb perspective, things are looking up for europe right now. inflation is proving stickier. they are having their scenario now like the u.s. experienced earlier in the year. how much can they cut rates? lisa: a lot to unpack there,

options, deficit, but before we get there, i want to talk about the reaction function to the data that we get this week. if we get a weaker than expected number, what bonds do -- michael: the bond market is desperate for good news, lawrence a reason to rally. lisa: what is good news? if you get, for example, a weaker than expected on employment report, pushes forward the idea of near-term rate cuts, how does that go with your idea of stickier inflation? michael: it will not in the short term. we will see it as inflation materializes over the next couple of months whether that number comes down at the same time that employment deteriorates. if inflation is falling and unemployment is going up, then you will see the 10-year back at 4%. jonathan: your baseline is the

fed doesn't do much, we stay range bound on 10-year treasuries, so when is the argument to go out of her? -- of curve? michael: this is the longest inversion of the yield curve that we have seen in postwar history. what is the incentive to move out of short duration cash? not just 50, 100 basis points, talking about a normalization of the yield curve. we will not see a 10 year treasuries below 3.75, which means cash rates ticket below 4. now we are talking the end of next year at some point, barring any sudden deterioration. we have not seen a reason to extend deterioration. we are more likely to take on more credit than normal despite

credit spreads being on the tiger side. what is the downside? you have a fed willing to cut rates at the first signs of economic trouble barring any weird inflation data, the rest of the world doing better, yields are attractive when you think about the bread or absolute yield. u.s. high index spreads over 7.5%. that is pretty attractive compared to other alternatives in the world. jonathan: things can change but you just described the dynamics of fixed income pretty perfectly. thank you. let's get you an update on your bloomberg green with dani burger. dani: waste management has agreed to buy medical waste disposal company stericycle for about $7.2 billion. it strengthens waste management's position as the largest trash hauler in the u.s. the company has bought several other firms over the past few years.

saudi aramco is planning a series of events in the u.s. and london to court international investors. the share sale on sunday sold out in just a few hours. now executives will be attending roadshows with a separate event in the u.s.. participation will be watched closely considering their ipo relied on local buyers. overseas investors had questions about valuation expectations. the fed faces a risk of losing its political independence if donald trump is elected again, according to the latest poll survey. 44% said that he would try to demote powell. if biden wins reelection, 54% of those surveyed said that he would leave the fed alone. jonathan: i appreciate the update. up next, high demand for summer air travel. >> consumer demand, priority to invest in experiences continues

to be really healthy. the capacity that we are able to fly is significantly constrained. jonathan: the view of scott kirby from united airlines sitting down with guy johnson. that is just around the corner.

jonathan: live from new york city, under surveillance this morning, high demand for summer air travel. >> experiences continues to be really healthy. our industry's capacity is low where a the constraints around oems, bowling, engine issues. our economy is a lot larger than we were historically going back pre-pandemic yet the amount of capacity we are all able to fly is significantly constrained. jonathan: the global airline sector poised for a strong summer travel season, high

demand fueling over $30 billion in net income, more than 10% from a year ago. to continue the conversation, guy johnson is sitting down with united airlines ceo scott kirby in dubai. guy: thank you. if you look at the data, it will tell you a lot of the profitability in the sector is coming from the united states, and within the united states it is coming from the big carriers. we are joined by one of those now, ceo of united, scott kirby. scott: thanks for having me. guy: a few days ago, american comes out, changes their guidance, the market reacts. you are quick to come out and reaffirm your guidance on the back of that. are you seeing any indication the consumer is softening at the moment? scott: demand is steady as she goes, in a way, morning. -- boring. not getting stronger but not

weaker, it is really steady. guy: what changes that, the fact that the labor market may be showing some cracks, maybe rates stay higher for longer, do any of these factors impact that strong consumer we are seeing in the u.s.? scott: we spent the last two years talking about the risk of recession and the consumer just keeps going. i think that is likely going to continue. the more likely change for aviation is on the supply side. the number of seats is growing a whole lot faster than the demand in the united states. as we move into the third and fourth quarter, those numbers are scheduled to come back down. i think the supply balance will counteract. guy: where are those seats going through, with the full-service carriers? scott: across-the-board be made southwest is probably the biggest grower of seats but it is across-the-board.

just the peak, this is still a lot of recovery from covid. this is the time the people by getting all of their ability to grow back in place. guy: i can see that capacity making sense in your end of the market, and does it make sense at the bottom end of the market? do all of those low costs carriers survive? scott: it doesn't make sense but we do all the routes really accurately where everyone. low cost in order low cost carriers was an awful lot of money -- lose an awful lot of money. it is a fatally flawed business model. i think some of them will struggle to survive. guy: back to the american issue, they pushed the corporate market harder. you benefit from that? scott: small benefit in market share. we watch the market closely. while we got some market share

from them, we thought they were making up close to 100% of their revenue change in terms of distribution expenses. it has gotten a lot of press but we certainly thought it was a marginal issue both for them and for us. guy: you talk about the supply side, the industry is supply-constrained right now. issues with pratt & whitney engines, issues with the boeings. is there a sense that we are past the worst of that, worse is still to come? scott: i think we are past the worst. we have acknowledge the problem volume large. you talked about two of the big manufacturers, pratt and bowling. --boeing. it is not overnight, not going to get back to 100% quickly but that's ok. i am not worrying about the next 12 to 18 months.

they want to also. get them back to delivering high quality, delivering on time, on schedule. that is the path that is most important. guy: tim clark told me five years at boeing, do you think that's a realistic number? scott: i think it will be faster but it depends on them making the cultural changes they need to make. if they make the cultural changes, boeing gets back, gets their mojo back quicker. if they don't, they will not get their mojo back. guy: if you were to give advice as to what person needs to sit in that seat as ceo, what advice would you give? scott: when i'm hoping they do is somebody that focuses on the culture of boeing. boeing has 140 thousand great people, engineers, mechanics. let them build, design great products, build great technology, focus on that, not

on the short-term financials. that is the biggest issue. focus on the upfront, build great airplanes, products, and the financials will take care of themselves. guy: sticking with the faa you have been under review, any indication how long that will last? scott: everything has gone well so far, no major findings. i know the faa would tell you the same thing if you asked the question. we have taken this as an opportunity, really we had a great safety foundation, but we had a number of events happen. take that as an opportunity to make top of mind awareness all the time. for the rest of my career, every time i talk to employees, i will talk about keeping safety top of mind. we all believe it is in aviation, but when things are going great, still focus on that. all the little things matter.

guy: what do you want to see from the next administration, the next income into the white house? what helps america? scott: it is more about helping america, helping the world. the united states is the greatest country in the history of the planet, but what makes us great is positivity, optimism, vision for the future. i want to get us back to look into the future, how we can make things better, focusing on that. we need that for the united states, people would respond positively to that, we can make the country in the world a better place. guy: you are by far and away the most international airline. what a trump presidency make it harder, but we see more fragmentation? scott: i don't think it affects demand or our ability to fly around the world in any measurable way one way or the other. guy: great to see you, scott.

scott kirby, the ceo of united. jonathan: thank you. fantastic work over the last week, not just with scott kirby, but with delta over the last couple of days. what we heard from scott kirby, what we heard last week, we are not american airlines, seems to be the phrase to repeat. lisa: also saying it is unclear how terrible it was, maybe people overreacting, saying there is stability. maybe we are past the peak recovery and travel, revenge travel of the post-pandemic era, but flyers are flying. there is still that stability in profits. jonathan: guy is giving us a flavor of this over the last couple of days, how difficult it would be to get u.s. executives to talk about the election.

lisa: pretty much every industry. we are focused on the consumer. we expect them to do the right thing for our country. by else can they say? they are the ultimate diplomats. they have to work with whatever administration they are dealt with. jonathan: in the next hour, we catch up with cameron dawson about that rotation, is it going to happen? we will talk to alex webb over in london on the latest on nvidia. stock up close to 3% throughout the morning. and the marriott to president joining us as well. the outlook looking at china, how things may look in 2025 and beyond. lisa: i am sure he will weigh in on the administration and what that means for his expansion. jonathan: tons of details, i'm sure. lisa: there is an interesting aspect. how exceptional is the united states when it comes to travel? how much are u.s. citizens going

international because of the strong dollar? we have seen that with airfares. are you going to see much expansion in the luxury exit class -- asset class? that is where people have the capacity to spend, potentially at the expense of the lower end? jonathan: china has chosen for a long time what they would and would not allow in their economy, certain industries income and taken certais others -- certain others out. the u.s. is doing sort of the same thing. but we will see potential he a response from china. why wouldn't we see a response? if you are building up a presence in china right now and you are a u.s. business, how much risk are you taking? lisa: i believe they are expanding right now pretty significantly in china. jonathan: all of that and more in the next hour. as we kick off the month of june, one a june we have coming up for you.

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>> so much growth is priced into earnings expectations, and there is so much optimism priced in the markets. >> i think we have price

perfection in a lot of areas. >> there is a sticker shock, and you are seeing the stress and business. >> the market has been selling off technology being the only group in positive territory. >> we are in april market, but it will be slowing down from here -- we are in a bull market, but it will be slowing down from here. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: live from new york city, good morning, good morning. we have been through this lineup a few times. payrolls friday, reporting out eight: 40 eastern friday morning. here is the number for you. citi says it is a hiring slowdown and are working for 140 thousand friday. you have asked the question all morning. if we get a downside surprise, how does the market respond? lisa: basically have heard the bond market, front end, will rally. what we see in risk assets is

less clear. the beginning of weakness that percolates regularly into the perception of the u.s. economy -- we shall see pay last week, we did see weakness not translate to a riproaring rally the way it has in stocks. the weight had in bonds. jonathan: guy johnson just sat down with scott kirby, and what did he say? i feel like we happen talking about this two years, the recession that never happened. head of a number with an estimate of 190 thousand, unemployment south of 4%, and here we are still talking about the same aspect of labor market weakening being just. around the corner. lisa: because this is coming at a time when a lot of people are discounting a recession ever coming to what would the surprise be? that ever arrives. everyone is saying have gotten it wrong repeatedly, so how much have we priced it out?

that might be the question we should be asking kay how much i we discounted the labor market ever happening when people are talking about no rate cuts, ongoing strength in the equity market, but is only taking a pause for a couple weeks in the middle of summer. jonathan: this is what it feels different. earnings season. retailers trading down, what we heard from walmart, target, what we saw from certain retailers really struggling in this environment. it is the caution that came out of retail that ramps up the risk around the story just a little more. lisa: best buy's ceo came out with consumers are making tough choices with their budgets. we heard also from walmart, they are being really discerning with their purchases, all of this coming at a time where it is clear there is pain being felt, it just is not uniform enough to show up as true weakness in the overall numbers. jonathan: the moment you get a limbs of it, you get punished. american airlines -- a clips of

weakness, poor execution based on what we have heard so far, stock that's, and you start asking bigger questions. is it them or the whole industry? what we have heard so far is it is not the whole industry. lisa: at this point, it is also who can capitalize on the wealthier customers, and that is the key bifurcation. we will be hearing from marriott's ceo and i am looking forward to hearing how many people are traveling on his end as well. jonathan: the airline ceos have been abiding at their nails of the last couple days, speaking to guy johnson. s&p 500 positive by 0.2%. bonior market, yields lower by three basis points. it is not just a ton of it into look at kate also the ecb thursday. widely expected to cut interest rates thursday. the euro slightly weaker at 1.0842, coming off its best year in the euro-dollar so far.

the euro-dollar advancing by 1.7% in may. coming up, we catch up with cameron dawson as the first trading day of june kicks off, bloomberg's alex webb, and marriott international ceo tony capuano asked the summer travel season again. cameron dawson of newedge wealth remaining cautious, saying we see large-cap equities experiencing volatility in the short term, given fading momentum and breadth. cameron joins us now for more. good morning. cameron: good morning. jonathan: what are you advocating for this quarter? cameron: patients in the very near term, just because you have a deer to -- deterioration in breadth and momentum. it is not fatal. liquidity and trend are still positive things, but there has been this fraying under the

surface, enough to say expect little volatility. as long as growth estimates hold in, then that volatility is viable, meaning any kind of correction, viable. jonathan: you have been quoting green day over the weekend, at least the team has pit what is it, "when i come around"? or will it be a "boulevard of broken dreams"? [laughter] cameron: very nice. i feel like an "american idiot." the challenge with small caps as they are so unloved that you could see a sharp rally over the short period of time that could be ephemeral. look at the november and december at rallies. they were very short but powerful. if you look over the medium to longer term, you still have the early -- really weak fundamental conditions in small caps. they hate higher for longer. they have 50% more debt than large-cap's.

but appreciate that small caps are trading at a new relative low versus the market, so do not be surprised if you have one of those face ripping countertrend rallies. lisa: so "wake me up when september ends" -- this is basically what we are looking at. are you saying that, if there is weakness, and the fed does cut rates, that is a viable dip, particularly in small caps? cameron: it depends what you're doing with ruth forecasts. we wonder if, gone are the days of the world where we have a fed cutting rates simply because inflation is moderating. if the fed starts to cut rates and we start pricing them in, is it because of a bad reason? is it because growth is coming in weaker? look at real personal spending last week coming in much weaker than expected. we are watching pmi's closely. we were hoping to see some re-acceleration in pmi's.

that did not happen in april. what it calls into question is consensus forecast that have moved up materially. they are up 200 basis points for gdp over the last year. that means nobody is pricing in a recession, which means we have to ask, what could surprise us? lisa: ism manufacturing coming out at 10:00 a.m. this morning. i am watching that closely, as are you and jon. if we get 140,000 for the headline payroll numbers friday, will there be a set off in the selloff market? cameron: potentially. we still think bad news is bad news, simply because you need to have the starting point of estimates. if estimates where the starting points, you could get bad news, but it would not be that bad because you are pricing in weaker growth. you are not pricing in weaker growth in this economy or the emaar -- or the market. consider eps estimates for 24.

there sent to be up to $277 per share. if you start asking the question if that is too high, that is when bad news would become bad news. jonathan: how relevant is the election to your call? cameron: the election is relevant in the context of yields, mostly because of treasuries, and the fact that neither party is talking about austerity. neither party is talking about balanced budgets, which means all of this concern about treasury auctions likely continues, given the fact that you're not going to see any movement to pull back on deficit spending. jonathan: so fiscal policy is a basket case, regardless? of who wins? cameron: we are still doing the green day thing. [laughter] i think yes because you are not seeing any sign you will move to more physical balance, which means we should get used to more deficits, more high treasury auctions, and the fact that yields could be pressured higher on the long end of the curve. lisa: at what point does it

become punitive for stocks? cameron: it becomes punitive if you start questioning the growth story. you can forgive a lot of things if growth is remaining resilient. you can shake off a tighter fed, higher interest rates, but if you start cutting growth estimates, which relies on the consumer at 70% of gdp, that is when you have the punitive action. lisa: you said you advise patience. how receptive are people to that recommendation, considering it does not really work for the dna of most people on wall street? cameron: i think there is still fomo. look at gamestop this morning, and have seen a big appetite to rush into risk. when you think about patience, yet a thing about positioning and sentiment. sentiment is in the 90 percentile, meaning bullishness is not based. when you look at positioning, the ai positioning is only about -- the aai positioning is only a

few basis points off its highs. what we look at with clients is, if you enjoyed this rally, you need liquidity, some kind of patients before -- patience before adding back into that market is warranted. jonathan: you mentioned gamestop. how relevant is this? every time we get a move like this, they tried to say this means this, this is a signal for whatever their bias was. what does this mean to you, if anything? cameron: it probably means nothing, but if we try to get anything from it, it would be a measure of sentiment and risk appetite as well as liquidity. if you that's all the meme speculative things together, that is a reflection of risk appetite in the market. the thing that is missing is some of your riskiest parts of the market, small caps, have been completely sitting out of this rally. so there's a lot of conflict data points. jonathan: cameron dawson of newedge wealth.

i thought my green day quotes were subtle. who's jesus of suburbia? [laughter] we'll leave that there. here is your bloomberg brief with dani burger. dani: an online retail -- they are offering the company for about $60 billion, according to a person familiar. shein's ipo could be one of the u.k.'s biggest ever. it was actively looking at london after decided it would be likely that s.e.c. would approve it to have an ipo in new york. former president donald trump joined tiktok over the weekend. it was a bid to court younger voters. both trump and president biden are active on the app that they have both publicly called to ban . trump joined its first office

conviction on 34 felony counts. shares of nvidia and amd both gaining in their pre-market, at least about 2%. both companies showcased a new generation of chips that came to power the global boom in ai. at a conference in taiwan, they announced a new black while ultra chip for 25. amd also announced plans to speed up production of ai processors. he said companies that do not embrace and will be left behind. this is ceo's math, which is not accurate but correct. jonathan: love that quote. i will use that. more from dani in about 30 minutes. nvidia higher by about 3% in their premarket. coming up, bloomberg's alex webb on nvidia's latest ai announcement. this is bloomberg. ♪

jonathan: live from new york, opening bell one hour and 15 minutes away. to kick off a brand-new trading month and a new week, s&p futures positive by one quarter of 1%. yields lower by two or three basis points. time now for morning calls. morgan stanley lowering its price target on american airlines to 18, noting a second quarter guidance cut but believes it is still an attractive risk reward. that stock higher in their premarket. citi double of grading best buy to buy -- double upgrading best buy to buy.

bank of america hiking its price target on nvidia to a street hi 1500, analysts citing ai. the hike coming as nvidia announces longer-term initiatives, including another so-called super chip. the stock is up. alex webb joins us now from london for more. what is on the table now for the future? alex: it feels like only yesterday they announced the most recent chip among known as lackwell. they announced, coming into 2025, there will be blackwell ultra, then rubin, named for rubin who found the early evidence for dark natter. i wonder if there some sort of metaphor there. it is all about accelerating what they are doing now while others are racing to catch up. that is what has got lots of investors very excited. jonathan: we have seen big spend

coming out of big tech, the likes of meta, microsoft, alphabet. how long is this runway? how much more spending can we anticipate from some of these big players? alex: if you look at the multiples in which nvidia is trading, investors think it has got a long way to go. what will be super interesting in the next 12 months as we are going to start eating the consumer products in particular leaning on this tech and we did see a little bit of this announced over the past few days, in the past week or so, some laptops with ai capabilities built into them. interestingly what they will do is decide what is on the device itself and what to hand off to the cloud and how much the demand picks up for cloud services. the lions share of that will be from the enterprise, which will presumably then determine the spending from the likes of google, microsoft, amazon,

particularly azure, to support that demand. the next 12 months will be important as we try to ascertain how much people are adopting this stuff. lisa: why aren't we asking could nvidia shares double again in the next year? that is the question people should have been asking at the end of last year. what is the limit here, to assess and question in another way, at a time where it does not seem like there is another competitor? alex: we saw some announcements from amd, the closest thing right now nvidia has to a competitor, but to your point, nvidia grew its sales of essentially ai chips in the last year by about a billion dollars, amd is expected to do $4 billion in the comparable category. it has got a long, long way to catch up. the hurdle here is most likely to be, at this stage, supply rather than demand. there are only so many devices made by asml. they make the equipment that

lets you manufacture the chips. they can only produce so many of those a year. that interns means the likes of a tsm -- its foundry ventures -- b usiness. it's really supply that seems to be the biggest constraint. lisa: i was looking out a profit margins. there is something like 76%, which is unheard of for most businesses. when do people start pushing back, if they are most concerned about getting a hold of the chips? do you see any pushback from some of the big tech layers trying to develop their own offerings? alex: interestingly, we did see what looked like a little bit of pushback about a month ago, when it was reported amazon was cutting back spending on some of these chips. and it transpired this was not necessarily to do with seeking more pricing power, it was actually because they want to get the next generation. as long as nvidia keeps innovating and continues to be sort of the only show in town,

it is hard to see how others will manage to compete effectively. that is why we are seeing many of these same companies try to invest and develop their own competing products. it perhaps gives them a little more leverage when they are coming to the negotiating table. apple is the past master of this. presumably others will turn our -- will try to take a leaf out of apple's books. but who is likely to be manufacturing those chips? it is still going to be tsmc. there will be constraints on the supply there. and videos presumably has a lot of that supply locked in for the next three years, so they are in a powerful position. jonathan: one of the best functions on the bloomberg terminal -- anr. you can take things back to where we were at the start of the year, so let's do that. the start of the year, the stock is in the 490's. here is the consensus 12 month

price target for this stock -- 654. that was only at the start of january. have just had a street hi estimate from bank of america of 1500. the reason i am talking about this is, yes, this company keeps performing and outperforming and over delivering. but the consensus now is 1195. the question we have to ask is why the southside has struggled to keep up with this, why this is moved so quickly that so most analysts, who were employed to watch stuff like this and know better than i was where this is going -- why is this moving so much faster than everybody believed, even the most bullish analysts on the street? alex: fundamentally because it was incredibly difficult to predict the level of demand and whether nvidia would be able to meet it. it seems as though this train continues to run at a great pace. the fact that this is the next big thing that finally the tech

industry has been looking for -- there was a period where some thought the blockchain was the next big thing. this is a huge innovation. artificial intelligence is something that is tangible. we can see the applications across the board. as companies notice their rivals that do have ai capabilities across all sorts of different industries, companies that have ai capabilities are being rewarded by the stock market. that also means they have to try to find these capabilities of their own. that benefits aws, microsoft, google, the cloud computing companies, and in turn benefits and video. it is almost like a self fulfilling prophecy. as nvidia and companies different from ai continue to do so, others want a piece of that same tailwind, and that continues to boost the company making the picks for this gold rush. lisa: as we start talking about the potential valuations of this company, from a policy

perspective, is nvidia celebrated, or does it start to become increasingly questioned as a monopoly in burgeoning an important industry? alex: when there are issues to do with monopolies, that is often to do with whether they have carried things out that -- enacted policies in terms of the way they behave with their customers that are unfair. i am at to see any evidence that has been the case with nvidia. now, is there a risk that, economically, if one company is the gatekeeper for a lot of this key technology? quite possibly. but if they continue to have enough supply, we will, over a time, gradually start to see others come into the space. there's a headstart they have now. the technology will get there, though. it does not look as if the systemic monopoly really exists, apart from this kind of knock on

the tsmc production capabilities, but there is nothing in there that says they are doing so in an unfair manner. it is hard to see how lawmakers could have much complaint. jonathan: alex webb there. with the stock up by 3%. certainly not throwing shade at the southside community. this is difficult to do. the reason i frame it that way is we just had 1500. it would be to easy to throw shade at the 1500. you have two remember how quickly this has moved since the start of the year. in some ways, that 1500 is like catch up to where we have been. lisa: it also shows how difficult it has been to quantify what the ai boom will look like and exactly how quickly it will benefit a whole host of players. that is the anxiety coming to play a number of different names. we just do not know. people are trying to game out where to go in terms of the coolers for these potential processors. how do you get an edge in a

fast-moving? -- up next, we catch up with the marriott this is bloomberg. ♪ president this is bloomberg. ♪ -- -- this is bloomberg. ♪

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jonathan: 60 minutes away from the opening bell. equity futures on the s&p positive five point 25%, up .6% on the nasdaq. the rustle up by one full percentage points. payrolls friday. the two-year, 10 year, 30 after double-digit basis point declines through the month of may, this is what we look like this morning, down by a single basis point at 4.8580, the 30 year, 4.6152. on the euro dollar, 1.0847, a

decent month in the month of may for the single currency going into what we expect to be the first interest rate cut. lisa: this comes as people expect there to be definitely a rate cut this week on thursday except for the one person we want to interview because it seems like an out of consensus call saying the ecb is going to cut once. hotter than expected inflation rate. if they cut rates, how much do you see people increasing expectations for growth? we saw deutsche bank do that but have seen better than expected economic data out of the region and i wonder how much travel will weigh in on that. jonathan: are you going to have some input on that? lisa: i'm going to do some deep research. . annmarie: another busy week of data for the labor market.

adp on wednesday, another round of claims thursday and the main event friday, the may payrolls report. the fed meeting we will get an ecb rating. michael mckee will give us some of the data points. below consensus calls coming through for big banks, citi at 1.40. what i focused on going into friday? michael: jobs report is the big of the numbers this week. we saw a weak spending number and the pce report on friday and we have seen weak retail sales. we are waiting to see if that is a slowdown in the overall economy, a significant slowdown in the number of jobs created and/or unemployment would give people a clue. those are lagging indicators.

they may or may not come through. that is what wall street is going to be watching. the fed will be looking at average hourly earnings, no change expected. with average hourly earnings are starting to fall than a labor markets might be looser and that is what the fed is looking for as far as reduced inflation pressure. jonathan: i heard it referred to second-tier data this morning. we are looking at the second-tier data. i would put it as top-tier about whatever. given what we saw at the s&p with the pmi's, is there extra emphasis on data for manufactures and services through the week? michael: it yes. the ism for manufacturing at 10, still expected to be below 50, a suggestion that the manufacturing economy is not growing. we get a pushback from the ism people who say basically if you

look at the trend it is going up. it we will see if that continues. in the services industry, the big question for the fed and therefore markets, is it slowing its growth and does that mean inflation and services come down . the prices paid index in both numbers will be perhaps what people are looking at the most. lisa: if you want to talk about second-tier data, most people will say, it is fuzzy in terms of how accurate it can be. why are some people looking at this as the most important report given that it tends to be a forward looking indicator for sentiment among businesses? michael: our business is starting to no longer need a lot of workers? the number of job openings has continuously fallen since the beginning of the year and that should be good news but it is still running above the pre-pandemic trend. as long as there are a lot of job openings out there in the theory is it could push wages up

and that could create inflationary pressure. the more it comes down toward trend, which is around 6 million to 7 million, than people will feel better about the economy. jonathan: next wednesday it will get some forecast. how can they change on this week's data? michael: they are not going to change. the fed is locked into no change at this point. what we are looking at is a longer term change, maybe not even for july but does it pull it pull forward into september or pushback out of this year entirely? that will be the data question that hopefully this week will answer. jonathan: thank you, sir. michael mckee teeing us up. nvidia stock higher, continuing the string of ai breakthroughs. the ceo announcing a black well altered ship for 2025 and next-generation ai platform called rubi theyn see a

generative ai. lisa: see the picture of him running out in his leather jacket and i think of dan ives, the rock star of the future revolution. it seems to be with the market is saying. are we even underestimating what they are going to do in terms of profitability given that they do seem like the only game in town and seems like the prophet markets are shocking and continue to be. annmarie: the stock was up 30 -- jonathan: the stock was up 30% in may. 1500 the price target at bank of america which is a street high. global airlines on track to turn a $30 billion profit. the international air transport association expecting north american airlines to lead the way pulling in under 15 billion. the boost coming from higher

demand. while profit is rising, so our expenses. we landed at airlines ceo weighing in on the consumer this morning. >> we've spent the last two years talking about the risk of recession and the consumer keeps plowing ahead and going. i think that is likely going to continue. the more likely change for aviation is on the supply side. we are at a peak and the number of seats is growing faster than the demand in the united states. as we move into the third and fourth quarter, those numbers are scheduled to come back down. jonathan: better insight into the summer travel season. tony capuano is joining us. we have heard mixed reviews. american having problems

executing. united and delta same things are ok. in the summer tell travel, walk us through it. tony: it is interesting listening to the airlines ceos. when we look at q1 results across geography and segments come we saw strong and steady growth. here in the u.s., our biggest market, we are seeing demand start to normalize a little bit. we had global power up and 16% in asia. there is no benefiting from some favorable comparisons but we are seeing more rapid growth internationally. jonathan: in the airline business you have the international exposure in are doing better, is that the affluent consumer traveling more? tony: i think the strength of the dollar is driving lots of outbound u.s. travel. looking at the numbers for this

summer in western europe and this is off of the back of a record 2023, forward-looking revenue is up 7% going into destinations like france, italy, spain, greece. at the same is true for asia. there was a study that came out that set for outbound u.s. travelers, among the most desirable destinations as tokyo. you talked a little about exchange rates. the strength of the dollar is certainly driving that travel. lisa: sitting on the idea of what the characteristics of some of these consumers are, is there a feeling that wealthier consumers are going to keep traveling and keep spending and the more you can capture them with international offering the better you are versus mid and lower income? tony: we are trying to capture at both ends of the spectrum. we are lucky enough to have the industry's largest portfolio in and announced a few more

conversions this morning, resorts like turtle bay on oahu and pelican hill out in california. we continue to see strong demand and pricing power in the luxury tier. on the other end of the spectrum, over the last year, we have had for the first time in our history moved into the midscale tear and that has more value focused customer and they are absolutely traveling but just looking for better value proposition. lisa: talking about international travel, there is a feeling that companies that go international struggle with respect to some of the international relations that have been fraying in the battles they are in. has that become an issue? tony: we are insulated from that because of our business model. we have 9000 hotels globally and almost the entirety of the portfolio is owned by third party owners and franchisees. most are owner based in a local market base.

you go to china for instance where we are operating within 500 hotels today, almost the entirety of that portfolio is owned by chinese ownership. so that maybe insulates us from the friction. jonathan: is that deliberate? or an outcome? tony: it is largely deliberate. the real estate at its core is a local business so aligning with partners that have a deep connection both in public and private sector and understand local business practices that have existing relationships with lenders in those markets has served us quite well. jonathan: he met with the president in the last month. how did that go? tony: i was lucky enough to be invited a second time. it gave me a short window to describe with the administration can do to support the constituents we serve. jonathan: can you share some of that with us? tony: i started with our

associates and employees and talked about particularly in seasonal destinations, the help we need from the administration to expand the number of temporary work visas to try to fill in some of the gaps in high demand markets. as it relates to owners and franchisees, i talked about some of the constriction we see in the debt markets. many of the regional banks who have been big lenders in the hospitality sector are sitting on the sidelines waiting to see what is offered in mid 2025 and what sort of burden it will put on balance sheets. in our pipeline we have hundreds of shovel ready projects which the administration was keen to hear about because of both temporary construction job creation and permanent operating job creation. but we need help loosening up the debt markets and then for guests, we spent a lot of time talking about wait times for

visas. you have a market like india. their stock market is going to all-time record highs. the growing middle class has a ravenous appetite for travel. if you are an indian national trying to get a visa to come to the u.s., the current wait time is over 400 days. lisa: let's start on the idea that you are looking for more workers to come to the u.s. to help you out. how much does that change under one administration or another after the election? tony: i am not sure we know. we have seen support from the biden administration in terms of working with department of homeland security to expand some temporary worker leases. we will have to see if there is an administration change what their posture will be. lisa: immigration has been a lot of the economists saying it is the big surprise that has kept

wages down and inflation from spiraling will continue to allow growth to expand. how much have you seen that at a practical level in your own business? tony: coming out of the pandemic we obviously saw a very strong wage growth. here in the u.s. we are starting to see that more normalize, align better with inflation. lisa: if there wasn't as much immigration, how much more difficult would it be for your business? tony: it would be challenging. lisa: how much are you seeing wage inflation keeping pace given the fact that it is challenging to get the number of workers? tony: it's sorta moderated a bit. we are never fully staffed at the hotel level. in the pre-pandemic world in any given time in the u.s. we may have had 1000 or 5000 open positions. during the pandemic and early days of recovery that swelled to 12,000 or 14,000. it is back down to 4000 or 5000.

as a result of feeling as fully staffed as we might be, some of the wage pressure has been moderating. jonathan: let's talk about debt markets. it depends on who you are. if you are a big company right now it is wide open to financing. it doesn't matter where you are apparently. if you're at the bottom and local and trying to get financing from a small or medium sized regional lender and have a couple hotels, it is a struggle. how are you going to help them? how do you help them? tony: it is project specific construction financing debt. we see plentiful data available for existing assets but if you are trying to put a shovel in the ground and get a construction loan, that is quite challenging. the irony is when you talk to many lenders and they look across the commercial real estate portfolios, they say are hospitality loans of the best performing sector but because we've got this uncertainty into

mid-2020 five about what balance sheet requirements we might have , unfortunately they are saying call us middle of next year. lisa: it seems like your business is thriving, seeing a lot of travel, but it could be even better if rates were lower. are you basically saying the economy with it growing you would see that much more expansion if rates were lower but not necessarily hampering your business? tony: i think when you look at our own or community, the vast majority are long-term investors in the sector and so they understand they have chosen a real estate sector that is cyclical by nature. they are less impeded by current interest rate environment and were impeded by just the sheer availability of new origination for construction debt. jonathan: i want to get to the three hotels. pelican hill, a whole team waking up in another hotel very

well in newport beach. how exciting are you? tony: early in my career i ran development in the west and so i was in newport beach when that hotel was developed. as you point out, it is an iconic asset. the company has built a generational asset there and we are extraordinarily proud they have selected us and the saint regis brand for that hotel. it will be a terrific addition to the portfolio. jonathan: how did things change when you do things like this, successful resort, good area, what does that look like? tony: we are still working through some of the specifics. i think the saint regis brand will maybe be underneath the pelican hill resort name. it is such an iconic name and so much equity in that name. this will be a good question for the folks at irvine company. from their perspective, among the things that attracted them

to us, the power of our revenue and the reach of our global loyalty program and the strength we are seeing in the group segment which is an important part of demand. jonathan: are you going to tell me which luxury hotel in new york? tony: on friday. jonathan: nice to see you. tony capuano there. equity features on the s&p 500 positive by a similar amount. let's get an update. here is your bloomberg brief with danny. i. dani: waste management buying stericycle. it is strengthening the company's position as the largest trash hauler in the u.s.. the houston-based company has

bought several other disposal firms over the past few years. shares of paramount higher in premarket trade, up by 5%. the news team has learned the latest offer for paramount includes a sweetener and they would have the option to cash out stock at $15 a share, roughly 26% premium to friday's close and only for some of the shares. it is the latest attempt by ellison who are fearing the bid for cherry red stone. laptop users will be able to leave the power bricks behind and said the efficient semiconductors will power is smaller and thinner laptops. >> people are going to not only have the best performance and now have a very small and thin laptop and will have better battery life for everything they need to do. you will leave your charger at home. dani: they will also copilot the

plus pc's. the elite systems will have as much is twice battery life of traditional parts. that is your brief. jonathan: that is what we want to hear. better battery life. one might using a laptop or a pc? lisa: if you are using -- i don't know. jonathan: this is a big upgrade cycle of pc's. lisa: if they can cook dinner for you and manage her children which is the promise that happened. jonathan: that is probably not the promise of the latest dell pc. speeches positive by 0.2%. -- futures positive by 0.2%. this is bloomberg. ♪ i can't believe you corporate types

are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working. you people are (guitar noises). hand over the air guitar. i've got another one.

jonathan: we are hitting the ground running, this week picking up, things pick up

quickly through the month of june. it concludes with a big debate between biden and trump. this is what things look like, the trading diary to kick off the week. manufacturing data, 10:00 a.m.. tuesday, factory orders. wednesday, adp. thursday, ecb rate decision and jobless claims on friday. the main event is payrolls friday. the estimate is 190 and we are trying to figure out the same thing, is that slow just around the corner? let's talk about what we have heard so far from the airlines, delta. the ceo of delta saying things are ok. they are not stellar, fantastic but ok for what we are from marriott, things are normalizing, not weakening just normalizing. lisa: i'm trying to think about

and as you are talking i'm writing words down, how do you sugarcoat a slowdown, you call it normalizing. what is the distinction between normalizing and a slowdown? it is the beginning -- is it the beginning of a path or the lack of effects of the pandemic coming off? what does that look like? we don't have a sense of this. people have gotten so wrong that we don't know what normal we are going to. we talk about rates, what is a normal rate in this environment? we have no clue. what is the normal pace of demand? it depends on what cohort you're in. all of these questions make it difficult to know the distinction between normalizing and a true slowdown. jonathan: one is relative and one is absolute. one is relative to where we were before. the other is absolute, if you landed from mars, how would you describe the current situation. if you are sub for, -- sub four, it wouldn't be called week.

six months ago, north of two or three, big numbers and you would say things are cooler but not cold. lisa: people don't like to say this time is different and typically in historical periods where there is weakening in the labor market, has deteriorated quickly. the difficulty people have it right now and this is what and her hollow horse at citigroup has been grappling with -- alan hollinghurst at citigroup has been grappling with, he is saying it is not going to work like the 1990's. i want to see the downward revisions almost as much as i want to see the headline number. if we get weakening, do people rethink what is normal and a true slowdown. that will be an interesting exit we are seeing under the surface in terms of how the stock is reacting. jonathan: we have been wrestling this for months, what is a welcome easing an unwelcome

deterioration and it won't matter with the number look like on friday we would still be having that debate. the nvidia, higher in the free market. nvidia running away with it once again, up by 3.1% going into the cash open. tomorrow, it looks a little something, evercore, blackrock, former federal reserve bank of india governor. from new york, this is bloomberg. ♪

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>> from new york city for our viewers worldwide, i am matt miller. markets are rising and the countdown to the open starts right now. matt: we begin with the big issue thanked that is the consumer slowdown. >> i have as the year progresses inflation continuing to drift down to the mid 2's. that should be with the type of weakness everyone is expecting. maybe additional consumer weakening. that should give the fed some breath to reduce interest rates. obv