♪ sonali: welcome to bloomberg markets so let's get a check on the markets because we are seeing a down the on the s&p 500 only about 0.3% but a down day nonetheless. the nasdaq 100 is down on the day. the two year yield ahead of fed day about two basis point moves on that short end of the curve and that 10-year essentially flat heading into a lot of data wednesday.

look at the european notes. the spread against the german bond is at its highest level. we will talk more about the political situation in france and yesterday, bill gross shared his take on bloomberg television. >> in terms of an attraction, german 10-year bunds, the spreads have narrowed in the last months or two and today by eight or 10 basis points. there comes to a point where european bonds are more attractive than treasury bonds in my opinion. sonali: bloomberg's bill horobin joins me now from france so you can you explain what this surprise call was regarding emmanuel macron's calling of an

election? >> he took everyone by surprise by calling a legislative election on sunday night after he had a huge defeat in the european pole for the european parliament. it's surprising because there is a huge risk of translating that into a defeat in the national election but the same time, defending the logic of it, he was probably up for political difficulties in the autumn around the budget but he did not have an absolute majority. his hope is that by calling this election, you will be able to expose what he sees as the flaws in maria lepenn's plan. sonali: his position as president won't be affected and

any pushback of talking and's resignation, we seen a stark move in the bond market. it's exactly why investors are concerned. they are beginning these jitters. >> emmanuel macron has injected a huge degree of political risk. there was a report earlier today that he would consider his resignation if they severed a huge defeat in the legislative elections. that's been denied more or less and is no constitutional reason he would have to stand down. there is a lot of uncertainty about what the new government could look like coming out of the elections. while le penn may not be in a

position to leave -- to lead that government, whatever the government is, it's unlikely they will have the same economic program for the same commitment to fiscal consolidation. that creates uncertainty at a time when france's fiscal position was in question within s&p downgrade a couple of weeks ago and they've missed their budget targets recently. they have to revise their longer-term plans. sonali: thank you so very much for bringing us the latest. turning to politics in the united states, hunter biden was found guilty of gun charges by a federal court in delaware. the first child of u.s. president to be convicted of crimes. kailey leinz joins us from d.c.

and perhaps explain what the town is like in d.c. and what people are watching for next regarding this case. kailey: we can't underscore the consequence of this. its historic nature because this is the first time the child of a sitting president has been found tilting in federal court. three charges he was charged with in relation to his purchasing of a gun when he was addicted to crack cocaine, each of them could carry a sentence combined a 25 years been no sentencing date has been said. he is a first-time offender but could be facing prison time here and that speaks to the red poser and political experts weigh in. he says i am the president but i'm also a dad. jill and i love our son and we are proud of the man he is today. as i said last week, i will

except the outcome of this case and will respect the judicial process as hunter considers an appeal. he said we will always be there for him with their love and support. emphasizing his support for his son but his respect for the judicial system. this was a case brought by a special counsel. they will expect -- they will address the media in half an hour. while biden could have intervened, he has not done so in this case. he has also said he will not desert will not pardon hundred hunter for these crimes. how does this case and a separate trial that hunter biden still base california, how does that impact the election cycle. kailey: it could potentially impacted significantly as potentially donald trump's conviction when he was found

guilty of 34 felony counts could as well. time will tell but you are right that the second trial at this point is scheduled for september in california for hunter biden and in that case committees charged with multiple crimes related to tax evasion. that could potentially be more politically damaging not just because of the nature of the case will it may not garner much sympathy from the public because of the timing. the september case is closer to the actual election september 5 than that cases now and i could bring litany of one welcome news for the biden family. as biden is competing for a second term, there is potential political damage that could be done here but there could also be political cover provided to president biden given that he has been facing accusations from

former president trump of weaponizing the justice system against donald trump. it is the same genesis susan. sonali: we appreciate you sue very much. coming up next, we will talk about apple hitting record highs after the tech giant introduced its long-awaited new ai features yesterday. it was a low reaction but that is rebounding nicely today. we will talk about it next, this is bloomberg. ♪ how am i going to find a doctor when i'm hallucinating? what about zocdoc? so many options. yeah, and dr. xichun even takes your sketchy insurance. xi-chun, xi-chun, xi-chun! you've got more options than you know. book now.

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sonali: this is bloomberg markets. it's time for the stock of the hour. apple at record highs ever unveiling with a suite of new features including a partnership with openai. a major tech etf could be forced to sell around 11 billion worth of apple shares to comply with rebalancing. we will talk about it more with james who wrote a report on what to expect here. we are thinking through the implications for xlk which is the technology spider fund run by state street. we wrote an interesting report about how apple being so heavily weighted in this fund can be overtaken by nvidia or at least reduced for the sake of nvidia, what would that take? >> right now, nvidia is larger than apple. that's what needs to remain the

case by the close of business friday, june 14. as long as nvidia has a higher market cap in april -- than apple. we will see a flip. what's happened with his etfs it holds the tech stocks in the s&p 500 and it weighs them by market cap at if there is too big weighting to the top holdings, they are forced to cap the weight of a particular stock. for the last few quarters, despite the fact that if it was just normal market cap weighted index, nvidia would have had a 17% weight recently. if you just look at the market cap basis, it should be 20%. they should all be over 20% weighting but investment company rules don't allow you to do that. there is diversification requirements of the smallest stock gets capped. in the past, nvidia has been capped 4.5% but because apple is

technically smaller than nvidia, they will be the one that gets capped so you will see an $11 billion potential sale of apple and then you will see 9-10,000,000,000 dollars of nvidia stock and that would happen on june 21. sonali: there are implications for nvidia but if you think about how much index funds on the likes of apple and large impact stops -- stocks could be quite a bunch more money flowing into nvidia and less flowing into apple. >> apple is on a tear right now with what's happened over the last couple of days but the impact is hard to know. this is not something that comes out of the blue and no one knows it will happen. the impact likely will be felt or at least known long before the trade happens. the date that matters is june 14 but the date the trade would occur for the $67 billion fund

won't be until june 21. this is $11 billion of selling apple and that's 100% of the average daily trading volume. if you have two weeks to plane -- plan for that and line up trading process beforehand, who knows how big that impact will have? for nvidia if you are buying 10 billion, it could change to the week, nvidia is the most traded stock in the world. you might not need a super complex path to get that trade done without having too much impact. we are talking massive dollars being moved around and it will be flipping between two stock so it will be interesting to see how it plays out but it will be planned out and the impact will likely be priced in somewhat before the trade officially occurs. sonali: sometimes it's about the fundamentals and sometimes it's about the flows. coming up next, morgan stanley's

head of m&a joins me next in an exclusive interview. that's up next, this is bloomberg. ♪

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22 but if you look at it, private equity activity is kind of was -- what it was pre-covid. that activity is not terrible. it's not active but it's not as active as we got used to. you do see a number of things happening on the buy side of provo the kitty -- side of private equity where we see deals happening over $1 billion. you are seeing activity but it's not what we are used to seeing over the last couple of years. sonali: what matters the most? are we still in the higher rate environment or is it valuations? where is the disconnect compared to last couple of years. >> you've got rates which are higher for longer. when we talked about in early 24, the expected boom of private equity, it was based on rates coming down and they have not so

the cost of capital is higher and that makes it harder for buyers to afford what the sellers want. the second thing is the business performance and the visibility and earnings in outlook is tougher to get buyers and sellers to agree. you've got covid era issues and companies and supply chain issues. getting buyers to agree has been difficult and finally, we don't talk about this as much but in 21 in the first half of 22, we saw 2.5 years of activity in less than a year-and-a-half. if you had a company that was going to be sold, you pulled forward the activity. there was a lot of transaction that happened in 21 and 22 that probably would've normally happened in 2024 with a big inventory of companies owned by private equity that are only two years into their investment. they will be coming in the future but from a market perspective, we would love it to happen now but we expect the

activity to be strong over 25, 26 and 27 if not at this moment. sonali: so you're waiting to see those deals come to fruition and it raises the bastion, we are at halftime, almost halfway through the year and you all -- and you are almost seemed deals above 10 billion nothing above $35 billion. what will fuel things for the rest of this year? >> dealmaking the rest of this year is quite healthy. you talk about nothing over 35 billion. i think there are 16 deals year to date which is as good as any other year has been. mna from a large company perspective is real important strategy. they are deploying the capital and they will keep doing that. whether it's 10 or 12 or 14 or 20 billion, that will define the rest of the year which is corporate activity continuing to put capital to work across the

globe. sonali: how much are bidens antitrust because keeping away the large-scale dealmaking? >> the regulatory environment is unfriendly from an m&a perspective and then it -- and that is intentional. companies, boards, bankers and lawyers have generally adjusted to it because if you look at it, is not that the rate of deal blockage is happened that a higher rate in history because, it hasn't. a number of deals that would or could have been considered prior to this administration are not being considered. the risk associated with either a long review or an unpredictable review is keeping people from doing certain things. 0 is tan the new 50? >> i think 20 may be the new 50. you haven't seen a deal this year over 35 but over the last couple of years, you haven't seen something over 40 or 50 for

a couple of years now. very large deals will track and they are harder to do. it's not impossible and you could see those kind of deals but they take longer to come to fruition and not only regulatory but a lot has to go through like valuation, governance and right for each company. i think you will continue to see the deals. they will be fewer because you have to have those vectors exactly right area sonali: how much are your clients talking about the election cycle? are some waiting to get past the election cycle for certainty or trying to rush things through before we hit the cycle in full swing? >> it hasn't been a big driver of m&a discussion. that may surprise people but it really hasn't. mna is a long-term strategy so an individual election will not drive that activity generally

speaking. i think that's the main driver. you have a situation where each of the candidates has been president before. if i am a management team, i've operated in that area before. that's why it hasn't been a big driver of discussion. the things a starkly that driven people back quickly or slowed down his big policy differences were changes. obviously, regulatory might be one of those. we expected different environment if we were in a republican administration. that will not drive someone to do something right this second or wait until after the election. the other thing would be taxes. if you had a higher tax rate environment in one administration or another, you might see people move quickly to monetize assets ahead of that in recent rates. sonali: i would love to talk about sectors. are there certain ones that are

more favorable right now? >> if you look at the last 18-24 months, the energy sector is undisputed will now. it's very active in their large deals and some of the largest companies have done large deals and that's at a slightly different regulatory regime. you've got the freedom to do that and you've seen a lot of that. that has certainly been the biggest sector from value or volume perspective. we've seen technology rise off of its low last year and financial institutions is probably the third. it's probably the third area where we've seen a lot of activity. those three areas of been the most active and i don't know how long energy can continued to do the deals they are doing but we expect tech and financial institutions to continue and

health care to come into that grouping as well. sonali: we are looking forward to seeing what the rest of the year looks like. that's the head of morgan stanley mna in the americas. that does it for bloomberg markets. before i let you go, we have a down day with the s&p 500 not as bad as it was earlier in the hour. the nasdaq is trying to flip into green territory. very slim moves in the market. inflation data will be in the morning, busy 24 hours of trading and hopefully no more surprises out of the political landscape. stick with us through the close, busying trading day, this is bloomberg. ♪

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>> from the world of politics to the world of business, this is balance of power.

live from washington, d.c.. joe: joe biden says he will respect the judicial process is hunter biden becomes the first child of a president to be convicted of crimes. welcome to the fastest show in politics. guilty on three counts. we will explore the political and legal implications this hour but a lot of questions about kailey: kailey: what might happen. hunter biden found guilty of these three crimes in relation to his purchase of a handgun in 2018 when we -- when he was addicted to crack cocaine. the president spoke about his support for his son but this brings nuts his personal ramifications but potentially political as well. joe: we've got a couple of different ways to balance that. there is an effort on capitol hill by the republican