>> this is a fed that excesses -- focuses excessively on the past and doesn't want to signal much about what's ahead. >> they don't shout mission accomplished. >> they are very deliberative in terms of not getting too far ahead of themselves until the data comes to them. >> the data is more important than the. in this plate -- dots in this case. >> very supportive to financial markets, it's a good set up for bonds and stocks. >> this is "bloomberg surveillance ." jonathan: i'm definitely not alone. i woke up this morning and thought -- i can't believe it's only thursday. how is it not like friday afternoon, market close, 4:01? lisa: let's say it was after yesterday, it pretty much closed the books for a lot of people. jonathan: head to the beach.

it's the summer already, for goodness sake. equity futures are positive on the s&p 500 with three consecutive days of all-time highs on the s&p 500 with cpi beaming -- being the main event yesterday, coming in cooler than expected and we walked away from the federal reserve dazed and confused about the projections. lisa: seems like they were burned by experience and conditioned by recent events. that is what the fed seems to be signaling, happy with rod rest but not ready to declare victory, concerned that the first quarter was something more than a blip and they want more. the market took it as -- we don't buy it. jonathan: got a number of takeaways from that. one of them for me was on the labor market with chairman powell. trying to work out whether payrolls of 272,000 on friday overstated the strength of the economy. he basically said that it kind of does, that may be the friday

number overstates where things are. lisa: he didn't even try to explain it. he came out and someone asked if he could explain it he said no, i can't, seems like it's overstated. he used those specific words at a time when he talked about how there was something off about the household survey and what you get more broadly. that said, he didn't call it wrong or try to cast conspiracy theories like the rest of us will. he just called it noisy and we have to take it as it is, moving forward. nonetheless, this is a fed that people think is potentially on the table even if july is out of the picture. jonathan: fight had sent to you that the median would be the cut, people would call it super hawkish. we all had one question going in. was there data going with those forecasts and if they did, was their opportunity to update the forecast? he said there was opportunity to

update but that some didn't take the opportunity to revise them. does that mean that the outlook hasn't changed even with the print at 8:30 or does that mean that the forecast is dated? which is it? lisa: some. most. first of all, he's highlighting how confused and split apart the fed reserve committee really is. to your point, some people did revise it. most, they did not. as to the motivation, it was not clear. it highlighted the breakdown of the vote. going over it again it highlights how bifurcated the fomc really is. four officials seeing no rate cuts this year according to hawkish projections. it's up from two officials in the march productions. one cut leaving us in that category. but it is not as if this is a federal reserve committee that won't go it all if they see

serious weakening. what does it leave you with? confusion and the lights -- likes of michael's saying i will dictate where yields will go. jonathan: it's really funny making it simple, richard clarida was on with the team earlier on bloomberg tv saying that the fed was hawkish on the day and it was a dovish day for markets in that's the take away. we closed at all-time highs yesterday. lisa: going off of cpi you saw inflation coming in at the lowest rates since 2021. this is material progress in the market is taking that in hearing the fed over here saying ok, that's nice, but we will look at cpi first. jonathan: g7, agreeing to tap russian assets to get $50 billion in ukraine. annmarie with great details on that and we will catch up with her in about 26 minutes. i was reminded of that because of people on occasion having a

good time and i thought of annmarie, immediately. lisa: for all of those feeling bad for her that we are basically trolling her, she is trolling us so hard, sending us beautiful pictures, sending us magnificent vistas, calling it tough. jonathan: it is tough. getting to the scores, equity futures are shaping up as follows, record highs at the close once again yesterday. 0.07% yesterday. yields are down one basis point on the 10 year, the euro going nowhere, just about holding on to 108. coming up, oppenheimer with u.s. stocks notching another record high and the former kansas city fed president on a less restrictive fed. colin martin at charles schwab saying that the peak in yields is behind us. s&p 500 topping 5400 for the first time in history as fed officials predict one rate cut by the end of the year.

saying that resilience is what is likely underpinning the economic projection of normalization and that the u.s. economy is likely midcycle rather than late cycle as some suggest. john is with us for more. good morning, sir. another all-time high. framing your view coming into 2024, it's important to sing your praises because you are modest and won't do it yourself. you came in and said he worked constructive on risk on the equity market but it is not dependent on cutting interest rates because you don't think they will anytime soon. what did you see that was your guiding light around the story? >> it really was, looking back at it, the thought that jerome powell does not want to be remembered for blowing it on inflation and letting inflation come back in after cutting. i think the fed mostly feels that way when you hear the differences in the fed speak. the mix, we were not expecting

any cuts, others were expecting one or two, whatever it be. those of us who lived through the 70's inflation never forgot it. the failure of arthur burns and the necessitated your coney and measures and then 15 years, as i recall, of alan greenspan and a science project, learning what the modern fed would be like in terms of where rates would go. that memory is very much in the mind of jerome powell. jonathan: calling the fed is tough, calling how the market responds is even harder. step one was right, let's talk about step two. why did you believe that it wouldn't be negative for equity markets? jonathan: i very much -- john: i very much remember when the 10 year was around 9%. i remember the fed funds rate that was significantly higher and equities moving up.

it was after i came into the market, 1983, the second term of bolger. might've made a mistake. might of been that the fed funds rate was 9%. don't recall, it's published in our pieces every week but i can't remember everything. i will say this, it depends on if business can still grow revenues, if they can still grow earnings and if there is enough innovation around, things are changing for the positive. business people will move on that in the market get a sense of a discount mechanism for stocks can move higher. i remember speaking with clients when they were enamored by 12% coupons on fixed income and i was pitching equities. for diversification purposes, we could've had both, but the equities were just screaming out . they were undervalued relative to where we were headed. lisa: are they still screaming that out? we are pretty close the year-end

target. john: i don't think they are quite screaming. equities are closer near-term to fully valued but the 5500 target is likely to exceed in the next few days if we don't get catalyst for the bears to move in and take us down 5%, 6% as they have done so frequently this year. >> some have argued that this is a fragile rally. we are still counting. but it wasn't led by small caps. it was led by a sort of broadening and bring to -- big tech. particularly by nvidia and apple, which became the most valuable u.s. company out there, surpassing microsoft once more. do you view this as potentially a negative sign? equal weight underperforming even though the tailwind a sensibly was a potential for rate cuts? john: nothing about the big tech companies is they are profitable with a positive cash flow and are deeply embedded in our lives

. oppenheimer doesn't love it, talking about individual companies, because i manage money. lisa: tell us about that sector and ai chips. ex it's essential to where we are headed and businesses want to invest because they want to be competitive and efficient and they want to be able to navigate tougher environments. if anything, today people, perhaps the last 15 and 16 years have been some of the toughest times. a great financial crisis, the pandemic, the mess with the global supply chain and the move towards diversifying away from centricity. all of this stuff, it requires advanced logistics. all kinds of technology to navigate it. you know, the other side of it is -- i can say there is one company that we know well, if we brought out our cell phones, probably all of the cell phones would be by that company. what did they do?

they set it up so that if you want the latest in ai and you don't have the phone that came out this year, you have to -- we are all tied to the upgrade cycle, whether we like it or not , regardless of what they supply to our technology and that makes tech important not in heart officials. business in the consumer find deeply embedded in their lives. jonathan: so, you are bullish jensen and tim. [laughter] i will set that for you. it's convincing, upside surprise and payroll in the fed wanted to cut it at the first sign of weakness. sounds constructive. my favorite question for you is -- what would change her mind, what would lead you to say -- don't stay the same way, trim the risk. john: barton biggs would've called it the bulk from the blue, the sock to the jaw. the unexpected problem that

emerges that would cause people -- like in 22 when everybody just projected negatively overnight. not us, but it was -- it could sour sentiment near-term, something dramatically awful. otherwise, where we are headed just looks like there are more positives to offset the challenges and the negatives that appear. lisa: we are not even halfway through the year. how close are you to upgrading the year-end target? john: i would say very close but the discipline is that unless the s&p closes at or above, we don't raise it because we don't want to jerk around the clients. a lot of people will just upgrade and downgrade and give two different targets and everything. we are pretty disciplined on our targets and fortunate that we have been fairly successful with them over the years.

jonathan: you stay disciplined. john, it has been great to see you. john: thank you. i'm knocking on whatever this substance is. jonathan: i believe that there is a little bit of wood in there. [laughter] equity market closing north of 5400, 50 421, all-time high on the s&p. -- 5421, all-time high on the s&p. annmarie: g7 -- dani: g7 leaders agreed on a plan to provide ukraine with $50 billion in fresh aid according to people familiar after months of discussion, the plan set to win the backing of leaders currently at the summit in italy this week and the structure of the loans would reportedly be based on the size of each individual economy and they would give the loans to ukraine and be repaid using profits generated by the $280 billion in locked funds, most of which are immobilized in europe. checking on broadcom this

morning, surging in the premarket, quarterly results in the forecast topping estimates thanks to robust demand for ai products given that broadcom has made those components vital to data centers. shares of tesla are also up in the premarket, just above 5%. elon musk says that two key proposals are there for ratification, one, pay packages, two, moving their legal home from texas to delaware. the tet -- tesla shareholder meeting is today in austin. that is your brief, john. jonathan: more from dani in about 30 minutes. up next, the fed is leaving options open. >> we think that policy is restrictive and ultimately if you set it at a restricted level, you will see hiring. jonathan: that conversation is just around the corner. live from new york city this morning, good morning. ♪

car, take me home. (♪♪) car, can you turn the music down a little? of course, james. thank you. ♪ (suspenseful music plays) ♪ um... car, this isn't the way home. that's right james, it isn't. car, where are we going?

we're here. surprise!!! the future isn't scary. not investing in it is. car, were you in on this? nothing gets by you james. nasdaq-100 innovators. one etf. before investing, consider the fund's investment objectives, risks, charges and expenses. visit invesco.com for a prospectus with this information. read it carefully before investing.

jonathan: live from new york city, all the fun and fireworks, the games, were yesterday. equities hitting an all-time high. s&p 500 adding weight by 0.4%. changed at 43082. the fed is leaving options open this morning. >> we think that policy is restrictive and ultimately if you set it at a restrict level you will see the timing. it's always been the thought. that since we raise rates this far, we have always been pointing to cuts at a certain point. not to eliminate the possibility , but no one has that as their base case. no one on the committee does.

so, that is how we think about it and that is what we have been getting. jonathan: the fed pricing in a rate cut this year from the previously expected three as they bear on two. have you gotten all of that? clarity, thomas joins us now, the former kansas city fed president known widely as mr. dissent. fantastic to catch up with you. thomas, i want your opinion on how divided you think the committee actually is. >> i think it's divided, but i don't know how much. it up here's to be pretty widely divided. i have noticed the speeches and so forth, these members are talking more about the so-called long run national rate and what it might be and how it might influence things and i think there is disagreement there. some of them, myself i would be included in this if i were

there, they think that the natural equilibrium rate has moved up substantially closer to 2%. if that is the case, with 5% inflation and, excuse me, 5% but -- fed funds rate, you are about 2% equal to the long-term equilibrium rate. therefore, you are stationary. there's a time when you will maintain that rate over time. then there are others who think that no, the rate is still very low and therefore we are restrictive and it still carries the day and i think that the chairman believes that as well. so, they are going to wait and see. but it is not terribly restrictive, even the chairman knows that. so, it is a long-term kind of expectation that inflation will come down gradually over the next year or so. >> there are a range of beliefs that we can see in the scattered

dot plot. the medium is signaling one cut for 2024, but when you go through the individuals, four policymakers saw none this year. seven were looking for one. eight were looking for two. you were part of the evolution of the communication apparatus at the federal reserve and do you think it has had its day? is this more harmful than helpful? >> -- thomas: i don't think it's harmful. the fact that they are having this internal discussion and this uncertainty, i think that the markets should know about it. you give them this very strong confident we know that this is where it's going and this is where it leads. it's tenuous and no one knows for sure and this kind of reflects that. i don't think that is necessarily bad and it also means they are probably not as coherent in the no change as some people would like it to be. but one thing is sure, and you know it, there won't be any rate

increases borrowing upside surprise. a huge increase in productivity is unlikely. a shock of inflation is at least unlikely. on the downside, it is just a matter of when. are we going to be there sooner or later? i know that. i know which side the bias is on. lisa: it's when they begin the rate cutting cycle, not just when they make the cut. i thought this was interesting yesterday, the same cycle was telegraphed by the federal reserve but pushed out a quarter. pushed out by a couple of months. do you think that that is error? that this is an economy that based on what you said is where the fed funds rate isn't that restrictive and we can continue for a longer amount of time without hiking rates but maybe in your view they shouldn't cut the rates either? thomas: in my view, they are at a steady state.

they should at least not be cutting the rates anytime soon. right now we are at 3% and looking at it, we should stay in that range for some amount of time, based on my estimate of the long-running equilibrium rate at 2%. i think that's on the margin. that means we will stay at 3% for a long time. a lot of people in the market and elsewhere are happy with that. they would be happy with that going forward. i think that that is the issue. because what would cause them to ease sooner is a banking problem, some kind of a negative shock that is more likely than a positive shock. in the meantime, they should at least be staying where they are and not rejecting that we will lower rates this year. it's unlikely that they will, barring shock. jonathan: -- lisa: you are at

the fomc for years and you just talked about the potential for a shock and this week you said this was the concern, >> under the surface -- cracks under the surface where someone survive. do you agree, is that a real risk or is it just overstated with a number of firms that have a bunch of loans that are underwater. they will have to work it out and it is not systemic. jonathan: the banking -- thomas: the banking industry is more vulnerable than they would like you to believe. you don't want to precipitate a problem there. but when you look at the numbers of the industry, even that significant increase in interest rates from last year, they are struggling. number one, you have very large holding maturity and the idea is that over time they will turn it over and get through that with

earnings reduction. on the other hand, on the loan portfolios, not just commercial real estate, but some of the industrial loans, those are also under significant pressure given the rise in interest rates with the repricing going into the economy, making the industry more vulnerable. it means that it will be very difficult for the fed to increase interest rates right now, it would worsen that situation and perhaps bring it to the surface. i'm sure they feel they need to avoid that and that that is why they won't be raising interest rates anytime soon. because of that vulnerability in part. jonathan: fantastic to catch up with you, sir, and hopefully we can do it again soon. thomas harding, former kansas city fed president, joining us live. if you are not familiar with dissent with the fomc, that's because it was incredibly rare for this man.

it was a string of mo coming out of the financial crisis. lisa: very concerned about the precedent and too big to fail with people getting bailed out afterwards. the question is, are we still seeing dissent on the fomc as a mask under the veneer of collective thought? frankly, we keep going over the split and it isn't exactly we all come together to sing kumbaya. jonathan: you can remind me of this, you can remind me of this, i promise you, no problem. i'm looking forward to the fed speak for a couple of days. two weeks in, you can tell me i was looking forward to it, but i am looking forward to it. lisa: you get some today at noon with john williams interviewing janet yellen at the new york economic club. my guess is there won't be that much directly tied to monetary policy, but watch this space. talk about the confluence of

fiscal policy with monetary policy and two people very much in a position to talk about that. jonathan: i would want to know if you upgraded your forecast after the cpi print and if not, why not? we have questions about that. coming up, questions for annmarie with fantastic reporting out of italy. amh at the g7 in just a moment. from new york, this is bloomberg. ♪

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jonathan: quite a session yesterday. i don't think we are going to top that today. muted moves. nasdaq 100 up by .6%. lisa: are you daring someone to say hold my beer? we are not going to have a 29th record high. good luck. jonathan: just to clarify. based on the schedule i don't think you would have a session like that again. lisa: fairpoint. jonathan: we have the fed decision this afternoon. lisa: that was good. jonathan: it is too early for this. two-year, ten-year, 30-your looks like this. some wild swings following cpr yesterday. you look at the chart. the two-year had a big move.

it just unwound a lot of that as the session progressed. the fed decision came out. a bit more hawkish than expected. chairman powell starts talking. ok. did you see cpi? some of us did but most of us didn't. we went up a little bit more. lisa: is basically did not have the same dovish tilt somewhere expecting and the cpi print came back to the lowest of august of 22 anyone. --2021. his reticence could not outdo what we saw for cpi because it was confusing. there was a hawkish tilt may be under the hood depending on different members. there was not a lot of conviction. we felt like the fed was confused. jonathan: i certainly was after some of those explanations. i want to turn to the euro. we had a lot of euro strength. much more dollar weakness in

yesterday's session. closed the session about 108.09. that's about where we are right now. totally unchanged. "bloomberg surveillance." slipping for the month of may. rinse were down 3.3% year-over-year. the median rent coming in at 40 to -- $4250 a month but inventory climbing about 20%. volumes up, inventories are up and things are starting to stabilize. lisa: this is not the beginning of some sort of trough or bought in the out -- bottoming out. it is moving sideways after lot of price appreciation. this highlights all the people living in apartments and renting because they cannot buy to get slapped with an increase in rent prices and say no thanks and look elsewhere.

this is that pushback and they were able to look elsewhere because of the leasing volumes may be because you have some of those empty apartments being unleased on the market. this speaks to a more healthy market with the actual activity pipeline that we have not seen in quite a while. jonathan: clipped this video. i can't get excited about $4250. it is so expensive. isn't this part of the broader conversation? prices are flat. for most people it is meaningless. lisa: that's why most people say they will take time. such high values relative to where they were three years ago. it is still sticker shock and that's a perpetual problem. jonathan: let's get some politics and messaging. donald trump has a busy day today. he will meet with republican lawmakers this morning and he said to me was some wall street ceos, including jamie dimon, james fraser, brian moynihan and

he's catching up with tim cook. that's according to people familiar with the business roundtable. interesting day for the former president and those individuals. lisa: how much things have changed sent six month ago. a lot of these business leaders said they were never trumpers and not going to necessarily get involved in the election. it seemed a little toxic. now they will engage no matter what, even with the verdict hanging over the former president and the concept of felonies. it does not phase executives. he could still will be president and they will have given some of the poly shifts coming down the pipeline. jonathan: i think they are incredibly pragmatic. we refer to tim cook as the diplomatic technology. he's managed to avoid a lot of these divisions between the united states and china. i'm not surprised.

for others, some people have come out on the record like i can never work with the guy. these individuals, i'm not so sure. lisa: i'm curious what the conversation is like. how much he's giving them a sense of what policy is going to be or to meet and greet to say we are on your side and did not actually drag your name through the mud so don't be mean to us. jonathan: i think trump, with people like this, incredibly impressionable. lisa: i would agree. given the fact they are potential donors. two, potentially, if he's sensitive to the equity market, tim cook accounts for a significant portion of the equity market. he might be somewhat differential. jonathan: a dow kind of guy, not s&p. lisa: is that true? jonathan: the former president is a dow kind of guy. lisa: maybe we should index the dow. what is a dow kind of got?

jonathan: 1980's new york. lisa: if he becomes president again we should have the dow be the benchmark index for most etf's out there. jonathan: with an all-time high you watch the quote. he would quote the dow. the s&p is like wall street. lisa: a lot of gen caterpillar. -- ge and caterpillar. real news. did not sleep last night. g7 leaders agree to a deal to provide $50 billion in new aid to ukraine. the agreement would have loans to ukraine repaid by tapping about $280 billion in frozen russian assets. anne-marie working hard to break the story for you. she joins us from the g7 summit in italy. what do we need to know? annmarie: they have reached this deal which they have worked on literally for months. united states wanted to get this

over the finish line but they wanted these assets, these frozen assets that are sitting in europe are collecting interest on these securities. instead of giving the interest that is accruing year-by-year, they want to frontload it. a line of liquidity to ukraine, especially before critical elections. it's a way of election proofing some of the financing they feel ukraine needs. they have been able to come to an agreement. some technical work needs to be done but given the fact they have this agreement they want the funds to reach ukraine by the end of the year. it will be approximately $50 billion worth with a number of countries willing to sign up. the issue is they need to make sure at some point they get to be made whole. that is either through the future or if there was a peace negotiation at some point for the war to end then russia would have to pay reparations for that

money. that is what the agreement is now. i would say this is one of the biggest deliverables the u.s. wanted to get. they will be able to talk about it alongside volodymyr zelenskyy today when president biden delivers a press conference. jonathan: the first point is the most important point. all of this net will be frontloaded. the europeans have already agreed to provide the profits twice a year, anywhere between $3 billion and $5 billion. they are frontloading it all to avoid what might happen in the future. take a look at the picture of the g7. i think this is really instructive. you go through the individuals. the biden presidency hanging by a thread going into november. sunak. i cannot describe how bad the polls are for rishi sunak in the u.k. schulz. certainly not angela merkel on the international stage. for trudeau, i will say what i think of his prospects. one by one it screams weakness

for the year ahead. how important was it to do this now? annmarie: this was basically the closing argument for many leaders and negotiators. we have to do this now, because the upcoming elections in these countries, and most importantly in the united states -- if your european leader you think november is a coin toss, you have to sign up for this agreement now if you want to make sure ukraine has funds to draw on as they tried to fight russia in the war and also when it comes to reconstruction. these leaders are walking into the luxury resort today weakened and embattled at home, dealing with an electorate that pretty much has said we don't always agree with you as leadership. what was so shocking when jake sullivan briefed reporters saying that biden is entering

his fourth g7 that is more aligned than ever. maybe these world leaders around the table are aligned with their vision for the future but not all of them are aligned with their electorate back home. you named all of them, except for one. giorgia meloni. this is a coronation, this g7. they are coming to kiss the ring of amanda european leader. -- of a brand-new european leader. even the left-leaning civil servants that don't agree with her politics say she's good. that is where europe is today. lisa: can you give us a sense of how much they are kissing maloni's ring and setting up the landscape of surpassing whoever is voted in next? how they're trying to immunize the project they have been working on of the international

order in order to go forward with things like ukraine, things like some of these steps against russia, against china? annmarie: they are trying to come to an agreement on a number of issues. even within the g7 there are large gaps when it comes to things like china. the united states is putting 100% tariff walls up when it comes to chinese electric vehicles, which there is not a single chinese ev in the u.s. right now. europe is taking a nuanced approach. 17.4% say chinese ev maker, as high as 45% for another. this has a lot of concern with different members within the european union and around the g7 table. olaf scholz. they are begrudgingly signing up for this. he was just data car manufacturer talking about we should not have trade restrictions. it makes everything expensive,

people more poor, and they will reciprocate on the other end for our foreign companies. it is challenging but that is why it's so important they were able to in their collective mind get to this understanding when it came to the russian assets. they don't know it's going to happen in the future in their countries. if you think the u.s. election is a coin toss, you think rishi sunak is potentially out of a job in three weeks time, macron had to come out and say he's not resigning after he had to call snap elections because of the huge blow he was shown over the weekend for the european parliamentary elections. you can see it is not so much that maloni is moving towards them, they are moving towards giorgia meloni. especially those who doubted her when she came to power. lisa: now we have ukraine the announcement -- ukrainian announcement and we understand the shift in power. annmarie: one thing is the

details biden will outline today when he stands alongside zelenskyy when it comes to this bilateral security agreement. we know the united states sent another patriot missile system to ukraine. some of the details regarding that. this is another example of trying to election-proof a policy, have this security agreement in place before the election. it is not a treaty. a future president can pull out of it. you can see some of the ideas on the margins have to do with this overreaching theme of trying to set up the rest of the year in case these leaders are out of power. i would note something interesting happening on the sidelines today is going to be this infrastructure summit. united states put up some $60 billion when it comes to global infrastructure around the world for middle and lower income countries. you have larry fink and satya nadella here with g7 partners

talking about the critical infrastructure. what they are not going to say out loud but very obvious for anyone who follows these stories, this is clearly their pitch to the global south and countries in africa to do business with the west and please do not do business with china. jonathan: fantastic work. we will touch base in about 60 minutes. equity futures on the s&p 500 just about positive. let's get an update on stories elsewhere. here is dani burger. dani: apple is in pain. apple believes promoting chatgpt to users is equal or greater than monetary payments according to people familiar. they revealed a partnership with openai this week and said chatgpt will be offered for free on apple products. the deal is nonexclusive with openai. the company's discovery --

discovering offering gemini chatbot. the list of wealthiest people got an update. larry ellison of oracle saw his fortune jump $14 billion on wednesday. his company just reported in norma's demand for its cloud infrastructure -- enormous demand. makes in the world's's seventh richest person. oracle is expanding to compete with major players like alphabet as demand surges for capacity to support ai. netflix will air a live hot dog eating competition on labor day. the combatants will be joey chestnut taking on takuru kobe ashi. -- kabayashi. joey chestnut was banned because he signed a deal with vegan food and that broke hot dog exclusive video provisions. that is your brief. jonathan: thank you.

what did you say? this is very controversial at home? lisa: is it even going to be a hot dog eating contest without joey chestnut? he will basically be on a beyond meat hot dog eating contest. jonathan: should this be open to vegans? it should not exclude, right? we want an exclusive hot dog eating contest, don't wait? lisa: they have really good stomach muscles the compact that together. i'm serious. jonathan: really? tell me more about this in a moment. up next, the market taking control. >> this is a confused fed. that tells me the bond market is in the hands of people like me who want to be concentrated on the front end of the curve. i like credit because everything is telling me we are gliding into a soft landing. jonathan: bob michele's in charge. from new york, this is

bloomberg. ♪

jonathan: we will take you back. did not realize. did not know that was the thing. lisa: a 10 pack. jonathan: why do you need at the hotdocs? that hotdogs? -- to eat hot dogs? lisa: i was curious about the obsession. it increases the stamina and keep going. we will leave it there. jonathan: that's impressive. equities on the s&p 500 look like this. positive by .06%. the bond market stable. under surveillance this morning the market taking control. >> this is a confused fed.

what that tells me is the bond market is in the hands of people like me. i don't know the fed is thinking. i don't know what they are looking at. i don't know what they are going to do. all i know is current levels. i want to be around neutral. i want to be concentrated on the front end of the curve. i like credit because everything tells me we are gliding into a soft landing. jonathan: treasury yields holding steady after a bond rally spike as fed chair jay powell projects one rate cut this year and by a very slim margin. yields are likely to stay elevated until the timing of the rate cuts seem more likely. there is room for the ten-year yield to drip tire but we maintain the peak is behind us as long as the next move by the fed is a cut and the 10-year stays below 5% and the curve should remain inverted. collin, great to catch up with you. i want to jump into the commons from bob michele at jp morgan.

who's in control here? is the federal reserve or investors, market participants like yourself? collin: you could argue that market participants are driving the investments out there and dominating quit happening beyond that super short end of the curve that the fed sets its policy rate at. if we go back to the comments from bob, we did find the summary of economic projections and the projected path of the fed funds rate was a bit confusing. i don't think it is a confused fed. we were confused because if you look at the comprehensive look at the economy it is relatively strong. growth unchanged and slightly above trend. a modest uptick in inflation. it begs why even project rate cuts at all. if you look at the powell response there are a few things we can focus on. he mentioned having conservative

estimates. i think this falls in the lap of fed officials and market participants and how we react to everything they say and do. if you go back to last december, maybe it was a more benign outlook. markets latched onto that. it could just be the fed being more conservative about projecting how good the inflation outlook might be over the next few months. he mentioned base affects. if you look at the current core pce at 2.8% and see them projecting that same 2.8% by year-end, it looks like there is no progress but he pointed to the base effect idea. i think it was a bit confusing but i think the theme is patients. the fed wants to see data to make sure that inflation is moving lower as opposed to that one good report we saw yesterday. lisa: you said the bond market is usually in control. it is the way bond traders determine rates. i remember the era of don't

fight the fed. once the fed would come out, boom, the contrarians were blown out of the water. we are basically the fed is not with the fight markets, not the market now when he defied the fed. collin: i don't know about that. i want to look at it from both sides. they are looking at slightly different things. when we look at the alec for inflation and how restrictive policy is we tend to look at financial conditions from a financial lens. if you look at that financial conditions are still easy. credit spreads are low. stocks are continuing to make all-time highs. the fed looks at it a little differently. they are not paying as much attention to what corporate bond yields are doing, treasury yields, equities are doing. they are looking at the level of restriction and how is that trickling through to maybe all the people that don't hold as many assets and are benefiting so much from that wealth effect.

lisa: jeff rosenberg came on after the decision and said it's a great decision for risk assets. you are looking at something that supports all the valuations going forward. on the margins it is a fed that can cut rates in september and is very cognizant of the labor market. is this a boost of confidence that the reaction function was validating that in riskier assets? collin: i would say it is. we are not super positive on all risk assets with the bond market. we are ok with taking risk. when not suggesting anyone get out of the riskier parts of the market. investors can consider junk bonds, bank loans, securities. i think it's a good thing. the fact that the fed isn't really projecting rate hikes still. that's important. if we were to see the fed being concerned inflation is not just sticky but maybe increasing resulting in rate hikes, that

would be a negative. if we look at the conference of look at the echo -- comprehensive look at the economic projections it is still a strong economy. one preferred way to take risk is high quality investment grade credit. it's a good balance of risk and reward. bob michelle mentioned that earlier. we are sticking with that outlook. jonathan: there are some people happy in cash getting 5%. they will not get it for much longer. the fed keeps pushing back on rate cuts. have you convinced this people to deploy their capital? collin: baby steps. i wonder how long i will be on the program before people keep asking me that question. our outlook has not changed. we look at it from a long-term view. cash is very attractive. we say gradually extended duration because and individual investors are sitting in cash because of the high yields. you would not want to be at the mercy of the fed and walk in some yields.

one thing we are highlighting is it is not just the treasury market. that's a huge concern for investors. why would i invest in a 10-year treasury at 4.3% when i can get 100 basis points mark with a money market fund and treasury bill? if you look beyond treasuries, high-quality investments like corporate's that he mentioned before, you can get just as high or higher yields and what is available with treasury bills or money market funds and have a lot of certainty. we are sticking with our call that highlighting -- but highlighting you can look beyond treasuries. jonathan: good to see you. collin martin at charles schwab. coming up, mona mahajan, terry haines, steven cook. we will catch up with mike collins. the second hour of "bloomberg surveillance" is up next. ♪

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>> we are clearly back on a path of progress. >> jay powell is holding all the chips. inflation continues to come down. the glide path is intact. >> this is an economy that for the moment is still hanging in there. >> it matters when you start the cutting cycle. >> absolutely september is in play. announcer: this is "bloomberg surveillance." jonathan: it is thursday. just a reminder if you are tuning in. from new york city, good morning on this thursday morning. equity futures positive by 0.1%. three consecutive days of all-time highs on the s&p 500.

nasdaq 100 at an all-time high as well. plenty of commentary following yesterday. don't put the cart before the horse. chairman powell saying we need to see mortgage data. lisa: that seems to be the theme. the fed is in wait and see mode. the market said we will take that is dovish. maybe not as dovish as they hoped for. if the data is in control, people are taking the signal from the lowest inflation rate, the cpi rate going back to april of 2021. that is giving people real confidence. jonathan: it leaves the door open for a september rate cut potentially. even team december acknowledging that. some of the forecasts catchy right. unemployment, year-end 4%. where is it now? 4%. next year, 4.2%. introduce the commentary of neal dutta. on a planet will be flat for the rest of the year. good luck with that. lisa: he said let's get on with

it. some think this is an economy that's tipping and you're seeing the labor market turn on the margins, which is why in about 90 minutes it will be interesting to watch the jobless claims. they are relevant to understand whether we really are on the threshold of a turning point where we start seeing weakening. we have not seen it yet. this is a federal reserve conditioned by failures, by what happened in the first quarter of this year which is much harder than excited inflation. they don't want to be on the wrong side of history. you can feel that in some of the commentary. jonathan: not just q1 but of the 1970's as well. plenty more on that. we need to track the politics down to the south of italy. the president landed yesterday evening. travel to little north to a beautiful resort. i'm not going to name it because they can do their on marketing. just on the adriatic coast. based on the reporting, the g7 has agreed on how to tap those frozen russian assets. lisa: without undermining having

some safe haven where you park your assets. it's a $50 billion loan that is backed by forward interest payments on the russian assets. got that? it's a way of saying we are not actually using your money. we are using the interest you might turn off that money for a forward projection. it's about $2 billion or $3 billion a year in interest. i think you did this brilliantly. these are politicians that are insecure and want to lock in future financing for ukraine at a time when there's a lot of dissent at home. jonathan: the future is fragile. annmarie used the phrase election proof. trudeau in canada, tough time. rishi sunak, is he going to be the prime minister a month from now? highly unlikely. the president of united states joe biden, all through the swing state polls he's behind. ultimately he's behind and we

don't know what comes next,, policies come next and the next couple of years. macron has his own mess at home but he cannot run again in 2027. the g7 picture looks very different. a lot of the people in the picture may not be there. lisa: there's a great degree over giorgia meloni looks like going forward if there's a different composition on the ground. what does that mean for chinese competition, for immigration, for backing some international efforts including rebuilding of ukraine? i wonder what else they will try to election proof or is this the big jewel they can crown a given they've been working on it for many months. jonathan: we will catch up with amh in about 20 minutes time. equity futures look like this. positive by 0.1% in the bond market. the euro just a little softer. some dollar strength creeping back in. coming up, we catch up with mona

mahajan of edward jones with stocks at all-time highs, terry haines as trump meets with gop lawmakers in washington, and mike collins on the line between one and two fed rate cuts. the line is very fine. we begin with stocks at an all-time high as cooling inflation data overshadows the hawkish fed tilt. we spent inflation to trend lower in the months ahead aided by easing labor market conditions and moderated economic activity which could pave the way for one or two pray cuts later this year. mona, what did you think was more instructive yesterday, the data at 8:30, the fed decision at 2:00 p.m., or the news conference at 2:30? mona: i would put it in the order of the inflation rate first. the updated set of economic projections was probably second. always interesting to get that tone from jerome powell himself. first and foremost, we think

inflation print has probably not reset the clock. we are finally seeing this trend of disinflation return into the marketplace and hopefully we see that in the months ahead. what was interesting about the updated set of projections, one, the fed left that kind of 2026 fed funds rate at 3.1%. even if there was a shift in the pace, the direction of travel is still towards a rate cutting cycle. two, they outlined a soft landing in the economy as well. we saw gdp growth remaining around 2%. the on a planet rate around 4%. all the while inflation moderating. interesting set of injections, positive for markets overall. jonathan: positive for small caps as well. the russell was up by 1.6%, the best day since the start of may. anything more than having a good day? is there anything more than just that? mona: that's a good point. as we get closer to a potential fed rate cutting cycle the theme

of this broadening of market leadership we think it's more and more real. part of that broadening is the make cap part of the market and the small cap part of the market. and from a sector perspective we see not only the tech and growth sectors participating, we could start to see cyclical and defensive parts of the market catch up as well. part of that played out yesterday as the fed signaled rate cuts. we did start to see a broadening in small -- and small caps played catch up. part of that story is that we get in averment where inflation does cool, the economy looks like it could rebound as we get better inflation prints and lower interest rates in that upswing. we see cyclical parts of the market lead to the upside and small caps are part of that. lisa: we are conditioned by the recent past. when it comes to the broadening out i find myself wondering, ok, is this it? we have been hearing it for quite a while. even though we saw a and the russell 2000, that was not the

leadership. the leadership was apple, nvidia, the big names leading all along an equal weighted s&p 500 significantly underperformed. only gained half a percent. is it too soon to really bank on the idea broadening out or is it now get in before you see the whites in the eyes of the turn? mona: we do think there are two catalysts ahead of us for the broadening. one is getting closer to fed rate cuts. that is one potential catalyst for this broadening. the second is an earnings story. we need to see the back half of the year the forecast show it is not just those three tech and growth sectors leading growth. for q3 and q4, most growth is coming outside of the technology sectors. as that plays out we think that is the second catalyst that will spark some info broadening of leadership. when we save more broadly in terms of tech, that's a question

that comes up often. these companies are not only leading the ai charge, which we think has long-term secular growth behind it, but they are also massive in terms of balance sheets. in a higher rate environment they are not tapping the debt markets. they are returning value to shareholders through buybacks and dividends. they are getting better returns on their cash as well. they have almost become the play during the higher for longer environment. lisa: it seems like we are either early cycle or midcycle. that is somewhat different from what we have been hearing for the past number of months. people were saying we are late cycle and we need to see some washout to get back to the inflation levels that we wanted. what has changed? mona: i think generally we have not yet seen the market turn -- the economy turned in a meaningful way. do your point earlier on the labor market we are starting to see early signals that perhaps some cooling is in front of us. we continue to see rather than an outright washout of the labor

market perhaps a better supply and demand dynamic. if we do truly get this goldilocks soft landing scenario, what could happen is you get more labor participation, more immigration that helps the supply side of the story. in the meanwhile the job openings and demand for that labor pools as well. rather than the end of plum it rate massively moving higher you see wage gains starting to cool. that is a scenario that is right now embraced by the fed. probably the base case adopted by markets. until we see otherwise in the data to continues to play out nicely. that is what has changed in what we have not seen a real turnover in the economy. jonathan: embraced by the fed, somewhat adopted by the markets. one issue was immigration, which is dependent on what could happen or may not happen in november. i'm trying to work at how much of a flying blind into 2025. we sit around and talk about the 2025 projections. mike mckee shot me a email and

talked about it. 2025? the outlook could change so much based on the turnout we see in november. you can get a blue way for red wave for the treasury markets sink. you can see big policies going forward from here. how much visibility do you have on next year? mona: the presidential election will play a key role in the direction of policy broadly. what we would say is we are still envisioning a congress that is pretty divided. we do think regardless of who wins in november, checks and balances remain in place. any president will have difficulty pushing through major tax reform, major legislation or regulation without the support of a congress behind them. generally, the gridlock environment remains in place. we know markets embrace gridlock because it gives them a little bit more of a transparent operating environment. also we have seen historically

in a four year cycle from a market perspective year three is the strongest and perhaps we got that last year. year four tends to be the second best. part of that is the uncertainty is lifted and in theory the administration is putting together that are environment for markets. broadly speaking, it does feel like ahead of election day you get volatility. in the six or 10 weeks after we tend to see an upturn. the market volatility could be an opportunity, especially if we are in an apartment where the president is a little bit less able to maneuver as aggressively as he wants. lisa: we used to think the u.s. election was a big risk. then we learned the risk is even greater elsewhere in other nations. how much is the u.s. exceptionalism story ongoing? how much does it continue or are we seeing a broadening out and that story even amid all the political risks public lick, not

just in the u.s.? mona: it's a great callout. we are starting to see participation in international markets. parts of e.m., non-developed u.s. starting to play catch up as well. we are in perhaps a global rate cutting cycle. we have seen the bank of canada and ecb move ahead of the fed 25 basis point rate cuts each. those economies have softened more than the u.s. their inflation stories have played more catch up as well. we say generally the u.s. exceptionalism story probably comes through most clearly in this ai boom we are seeing. as we think about the years ahead a lot of the enablers of ai, the magnificent seven cohort, the infrastructure semiconductor players all happen to be housed in the u.s. from a market perspective certainly seen the benefits of

that part of the economy really playing some true exceptionalism versus the rest of the globe. as we think about the years ahead, if we start to see those productivity gains inefficiencies -- in efficiencies spread out from ai, financials, manufacturing, industrials, health care, though sectors are pretty prominent outside the u.s. as well. perhaps we start here in the u.s. and we start to see some catch up and the rest of the world in the years ahead. jonathan: thank you. mona mahajan breaking down the market and reaction to the data we got yesterday of the federal reserve decision in the afternoon. an update on stories elsewhere this morning. here is dani burger. dani: another central-bank decision on deck. the bank of japan is a specter to consider reducing its bond purchases at this week's policy meeting. that reduction would mark the first clear step towards quantitative tightening after beginning to normalize policy back in march. investors are also an alert for

any signals on the prospect for an interest rate hike next month. economist project the boj will hold its benchmark rate between zero and .1% when the gathering wraps up on friday. donald trump is back in washington, d.c. the former president is meeting with leaders of some of the country's biggest companies including jamie dimon, brian moynihan and tim cook. that's according to people familiar with the event. during his return to the capital trump is also set to meet with congressional republicans. european gas prices jumping to the highest level of the year. there are fears of disruption over what is left of russian fuel flow in europe after a recent court decision. a levy, austria's oil and gas giant is prepared to replace 100% of supply they might lose from russia. i spoke with a company ceo this morning on bloomberg brief. >> we have been preparing for such events for the last two years. we have diversified our supply sources. we have pipeline capacity so at

any time we can ensure we can deliver all our customers with non-russian gas in case such an interruption should happen. dani: austria does import more than 80% of fuel from russia. that is your bloomberg brief. jonathan: up next, trump tightening his grip on the gop. >> this is just another example of house republicans bending the knee to donald trump. that is how dysfunctional the house republican conference is. jonathan: that conversation around the corner. live from new york, this is bloomberg. ♪ trains. [whoosh] ♪ trains that use the power of dell ai and intel. clearing the way, [rumble] [whoosh] so you arrive exactly where you belong. just stop calling each other rock stars.

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jonathan: equity futures on the s&p 500 just about positive by .01%. the bond market yields unchanged. under surveillance this morning,

a tale of two candidates. former president trump weeding with gop leaders in washington as he campaigns for a second term in office. later in the day he will attend a business roundtable with key leaders including jamie dimon, and tim cook. at the same time trump is speaking in washington, president biden will be speaking at the g7 and italy. terry haines joins us now for more. let's do the side-by-side, the preview. how different are those addresses going to be? terry: they are pretty different. one is primarily about domestic policy. one is about foreign policy. biden will be doing what he's doing with the g7 talking about russian assets and how to deploy them to help ukraine as you and lisa were talking about. what trump is doing in washington frankly is really making a pitch to business

leaders and trying to show unity with the congressional republicans to show what i 2025 all republican washington might look like. i think that is a 30% likelihood at most. the split congress with a tiny bite advantage is my call today. even if trump is president markets should understand what brought on the animal spirits in 2016 was not trump being president. it was congress going all republican that allowed the 2017 tax cuts to happen. the congress frankly for what markets care about is more important than the president. that is what trump is trying to show. jonathan: let's sit on the business roundtable. we are talking about the ceos of the biggest financial institutions on wall street and the ceo of apple. there's been a question and the last few months on this program about how business friendly a second trump presidency would actually be.

how business friendly will it be? terry: they will try to make it so. i think it probably would be should it come to pass, although it is not my base case. i think what you get is if you get an all republican congress, just as in 2017 you see the congress driving things like tax cuts and the policies that business cares most about. they were much more in the driver seat then trump was. i think if you see a trump presidency with a split congress you will see a lot more of what i have been calling recently mounted trump -- mount trump. he pushes back against those who don't want to do whatever it is he wants to do in the congress. that relates mostly to fiscal policy and domestic policy. let's remember that in today's washington, as in 2025's

washington, you will have unity on foreign policy and an awful lot of unity on fiscal policy that frankly makes marketfield squarely -- squirely. lisa: the idea we might hear a second term of president trump might look like, what are you listening for when it comes to the business world at a time when a lot of people don't have certainty around that? terry: it is a pitch. just as any politician, you are trying to not only show what you do think but you are trying to show a kind of reality you would like to create. he's in the business of showing a couple of things. one, he's business friendly and he will be a rational actor on a lot of stuff. and he was on tax cuts. one thing he wants to do is remind people that they will

continue to be -- he will be a business from the president. -- business friendly president. they should want to support republican candidates in congress to create the all republican reality that allows them more business freedom and less taxes and regulation. he also wants to show that he is worthy of being supported financially and rhetorically and every other way, because the reality again is he doesn't have a united party and is not attracting independents. one way to do it is to show he's differentiated on economics. lisa: there also seems to be some unanimity on foreign policy at a time where president biden is at the g7 trying to immunize international policy from elections given some of the latest moves on ukraine. how do you square that? what does united front in the u.s. look like when it comes to foreign policy and likely to come down the pike regardless of

who takes office but maybe with a greater emphasis with another president trump? terry: you have a situation where in 2025 regardless of who the president is where the vast majority of congress, and i think the vast majority of the public supports current u.s. foreign-policy. supports helping ukraine and in the middle east, helping israel and getting peace there. helping in the indo pacific and the rest. one thing that took so long in getting that aid is that biden was not very good or very forceful pushing very hard to get that. it said everything that biden announced this emergency in november and yet no one, democrat or republican on the hill reacted to it. it took almost six months to clear it up. i suspect what you are going to end up seeing is a lot more

urgency down the line. i think just as last time trump largely gets led by republicans in congress to create a foreign policy and economic policy that continues along the same lines. you may see little skepticism on the margins but right now i don't think it is going to be that significant. jonathan: terry, good to catch up. terry haines down in washington on the latest. quite a schedule side-by-side. not happening precisely at the same time. lisa: the focus on domestic versus international is interesting. it is quite a bit of consensus they will come together around the status quo and continuing it. it flies in the face of a lot of the rhetoric that's highly nationalistic that we are hearing globally and in the united states. i wonder how it plays for the electorate. i understand what might happen is different than how you play it but that's what i'm curious to listen to. jonathan: i think you are on the

right line of questioning. there is some real daylight between the folks at the g7 today are tapping into russian assets and national electorates are voting on at the moment based on the outcomes of the vote. lisa: which is why you identify how we call those leaders are as they stand for the family photo at the g7. jonathan: g7 nations agree to tap frozen russian assets. that conversation just around the corner. live reporting from annmarie. ♪

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jonathan: two hours away from the opening bell. equity futures in the s&p are just about positive after closing at another all-time high. bramo is counting. what are we? lisa: 28. jonathan: 28 all-time highs this year. the russell had a day. anything more? it's a question that i've got. lisa: it was a day but it wasn't even that great compared to the magnificent seven, they were overshadowed. looking at the russell 2000 it was up. the mag seven was up. then it was apple and nvidia. when people say that we don't talk single names? ok, we don't. how about the leader in ships or smartphones? jonathan: look, high rates, low rates, they don't matter. do they matter when it comes to these names? lisa: that's what i was

thinking. what boost do they get from inflation going down? you could argue that it would go down given that their cash piles are generating 5.5% interest, so at a certain point, really? jonathan: getting you up to speed, yesterday cpi drops and yields plummet. big plunge lower. double basis point curves. at one point down about 16 basis on the front-end. we gave half of it up once the news conference and projections started to filter out and we started to process that the federal reserve was not in a rush to adjust. lisa: dovish nirvana would have been two rate cuts down from three in terms of the statement of economic projections. they only had one but there was an asterisk. it was a mess of different fed officials. then he would have had chair powell undo the hawkishness by coming out to say that we didn't really incorporate the cpi data and it could change things. he didn't, he indicated they had seen it.

then you had people, like at black, saying that the fed is not knowing more than we do. jonathan: and there are reasons to believe the jobs numbers were overstated. quite a line in the news conference. a lot of people picked up on that. lisa: realistically it was confusing to everyone and he said they couldn't reconcile it and they've been clear about not being able to reconcile or create in narrative but the fact that overstated is how he went indicates dovish and. jonathan: the dollar, weaker off the back of the move in the bond market. today the euro just a bit weaker , retracing some of those steps. under surveillance this morning, fed officials are dialing back expectations with a median projection now being one cut this year as u.s. cpi came in softer than expected. another read on the economy at 8:30 p.m., jobless claims estimated in the survey at 225. the previous number, 229.

given his complements in the labor mark on friday, it plays into what a lot of people already believe, this fed is willing to ignore strength that any sign of weakness, they are willing to move to cut interest rates. lisa: on the margin that was emphasized yesterday because disinflation was front focused and they indicated they would be willing to cut rates to be even higher than they previously expected next year in the face of labor weakness. to me, this is the key, they are still hoping for the soft landing, they still want to land it. i think that's why a lot of people are saying your midcycle and not lead cycle. jonathan: mike collins will be joining us later to weigh in on some of this. talking about tesla briefly, shares are rising in the premarket, up by 5% earlier this morning. elon musk saying that shareholders voted by wide margins in favor of re-approving the 56 billion dollars pay package to move the official

headquarters to texas. the preliminary results came ahead of their annual meeting in austin today. lisa: this just crossing, reporting from the old book saying that vanguard and blackrock voted in favor of that pay package. he got some of the big behemoths lined up behind him. i am curious to see what the win is in terms of the share by. are they not going to get pushback or elon musk won't threaten to leave? what was the consequence if he didn't get it? jonathan: i don't know. it would be a real question over whether he wanted to continue leading the company. lisa: i mean he still has a lot tied up in the company and that's quite a look, 47 billion, no way, i'm out. can you really do that? jonathan: i understand he can be polarizing, remove him from the conversation. let's say you've got the ceo of a company doing that amount of work, and on from one that doesn't work to company y,

right? and you say to the ceo that these are your milestones and this is what you get people sign up and go for it in further down the line they vote on it again? doesn't really make sense to me. jonathan: i hear what you're saying, how do you understand the precedent at a time when someone is highly polarizing but not a popular being and he is still the founder and face of tesla in every which way. the key point to me is that there is pushback and questions around where his allegiance is. it's less how much he gets paid and more where he wants to put his literal and figurative chips when he's trying to move out to a technological focus. jonathan: over at company x, a family. g7, profits generating -- generated from frozen russian assets to provide aid to ukraine. anne-marie is on the ground and helped to break this story. share the details with us. annmarie: jonathan, they have

been working for months to try to get this deal over the finish line and they are set to sign off on this today, and the g7 leaders will be meeting. what they will do is tap the future interest of these immobilized frozen russian assets. $280 billion worth, mostly sitting in europe. the europeans agreed that these have been fraught negotiations for months and they had agreed to do this on a year-by-year basis. the united states wanted to take the accrued interest that they expected from the frozen assets and frontload them to get ukraine more money upfront and also really election proof this. meaning that by the end of the year ukraine would get $50 billion in financing, loans from the countries willing to sign up. the issue of course is going to be some of the technical details they are working out after the g7. but the political will is there and they plan to go ahead with this. of course, the big question is

how do they get paid back? countries in the future years will get payback interest on these frozen assets. but this is a huge win for ukraine. remember what they said to you and lisa, as well as myself, at davos? it was a critical goal for ukraine for 2024 and that once politicians signed off on it, the bankers in the lawyers would find a way to make it happen. jonathan: and they are making it happen right now. annmarie, great work as always. with us -- around the table is stephen cook from the council of foreign relations. good to see you. let's talk about the difference between what voters are talking about and leaders are talking about at the g7. how big of a gap is that? seems to be very -- stephen: seems to be very big. americans seem to be concerned about the southern border but once again the jeep -- g7 is proposing to shovel a lot of

money to the ukraine. this is a case to be made for, especially since these are russian assets, but that is not how it has translated amongst the american people. the president and the people in congress need to make this case and they don't seem to be making it. lisa: what's the consequence of these greatly weakened leaders? is there a historical analog you can draw back on for guidance on how this is going to transpire in shape policy? stephen: weakness of the g7 and the west in general has encouraged people like vladimir putin and iran to press their advantage in different parts of the world. when the united states demonstrates weakness, particularly in the middle east, iranians partnered with the russians have pressed the advantage. they are seeing chaos in that part of the world. there are attacks on ukraine that are unrelenting but have fallen off of the radar screens, it's dangerous to the western political order. a bunch of weak leaders who have

not been able to make the case to their people. lisa: donald trump has argued that under him none of this would have happened. some people say that's a bit of a stretch, there were tensions under his rule as well, but other people have had some criticisms of the biden approach. what is your take on how he has counter the sort of growing unity of these nations, iran and russia in particular? stephen: count me among those skeptical that none of this would have happened under his leadership. i do think that president biden was dealt a weak hand on ukraine and has in general held europe together, despite the tremendous opposition within u.s. congress. that's sort of a different story. he has wavered in his support for american allies, particularly israel. there has been a tremendous amount of bloodshed here but the ways in which the president has tried to cut deals and navigate between different political pressures here in the united

states has essentially weakened the hand of the american people in the region and that is something that not only the israelis but others in the united states -- partners of the united states, they want to see a strong hand against iranian malevolence. that's what the war in the gaza strip is all about. jonathan: your book title, reluctant ambition, is this isolationism? what's it all about and what has taken us down this path? stephen: after 25 or 30 years of the united states trying to transform the region ambitiously , there's a sense within the foreign policy committee -- community and the public at large was that the investment wasn't worth it. the book says that actually, there is an investment to be made, but not to transform the region. rather to laser focus on what is truly important to the united states. jonathan: what is truly important to the region? there are many sitting at home

at the moment looking at what's happening abroad, they look at the g7 and what they are talking about and say that this world order doesn't work for me and i'm voting for something else. what should the focus be? stephen: a number of these should be familiar to people, including the free flow of energy resources around the region. everyone remembers the price spike at the pump. the middle east is very important for the free flow of energy resources. continuing to help secure israel is very important to many americans. counterterrorism, especially in this moment of turbulent world politics. end of verse, nonproliferation remains important for the united states and our things they should invest in. not remaking iraqi society, not promoting democracy in countries where leaders are going to resist that and we can't achieve those things. four of those things i just mentioned are achievable. jonathan: more pragmatic -- lisa: more pragmatic rather than avid -- ideological. stephen: absolutely. lisa: we were just speaking with

terry haynes and he said there is unanimity when it comes to certain congress members in terms of maintaining these relationships in the u.s. international footprint. is that true? is that your take, given that the rhetoric seems to be counter to that? stephen: washington is deeply polarized in the war in ukraine has really us -- really exposed those rifts. by and large, people want to maintain those relationships of the united states as a global power, but questions remain as to how long and how open-ended u.s. support for ukraine is going to be. from my own perspective, we should continue to support them. after ukraine, the russians will set their sights on actual nato members. to use a terrible cliché from washington, do we actually need to draw a line in the sand? jonathan: are you convinced that they would test the line, crossett, go after nato members? stephen: it's hard not to take let a mere prudent at his word

in these speeches that he has given in the past about sensually the recreation of the russian empire. on the eve of the invasion of ukraine in 2014 and 2022, no one took it seriously but he moved against ukraine. jonathan: very true. stephen, good to see you. let's get you an update on stories elsewhere with your bloomberg reef. annmarie: boeing it -- dani: boeing is set to face the faa scrutiny for the foreseeable future compared -- according to testimony seen by bloomberg, set to see more inspectors at their facilities. they will face a hearing today in washington after multiple safety concerns emerged about their planes since a january 5 asset saw a fuselage fennel blowoff. sony has acquired alamo draft house, who pioneered the in movie dining experience. the terms of the deal were not exposed. this comes as hollywood blocks office revenue and national theater audiences struggled to

recover from the pandemic. alamo draft house is the seventh largest theater chain in america, 35 locations across the u.s. smaller private credit funds are struggling. latest figures show funds getting bigger as fundraising as a whole was at its lowest since 2020. i spoke with art monk and asked the ceo if more consolidation is on the way. >> yes, i think it's inevitable. as the asset classes have matured and grown up, one thing is clear, lps, investors want players with size and scale. investors are looking for that in the larger players have managed to do larger deals that are by and large safer, also affecting portfolio performance. you are seeing really a significant number of consolidation events. dani: anthony vogel spoke with me on "bloomberg reef."

jonathan: i watch you religiously, dani, you know that, every morning. more from her in 30 minutes. up next, the fine line between one and two. >> the difference between one cut and two cuts is one member. this is a fine point for big shifts in market pricing. jonathan: that conversation is up next. in new york, this is bloomberg. ♪

jonathan: quieter session, let's put it that way. these are firmer on yields that are basically unchanged. a bit of price action. under surveillance, the fine line between one and two. >> the difference between two cut and one cut median is one member. this is a very fine point to be

seeing pretty big shifts in market pricing. i think that a broader theme is that this is still a fed looking to cut rates. very supportive to financial markets. it's a pretty good set up here for bonds and stocks. jonathan: treasuries holding steady after a volatile day of inflation from a hawkish fed tilt. central bank penciling in one quarter rate cut but investors are still favoring. michael collins joins us for more. the median masks the division and the split in the fomc. how fine a line is it this year? michael: it's a coin toss. i don't think that's a big deal at all. even the markets in the media are making too big of a deal. it's a difference between one and two. remember before yesterday, the fed penciled in over the next three years three cuts this year, three next year, three the following year for a total of

nine. now they have penciled in 1, 4, and four for a total of nine. they get to the same place. if anything, the potential mispricing of the market is what is ultimately priced in, right? markets are only pricing in seven cuts over the next two years to three years, not nine, and they are stopping there. remember, the long-term that went up is still 2.34. -- two point 75. in the near term, the difference between one and two, i don't tickets possible to make a lot of money trying to bet one way for or against it, but over the long term as jeff rosenberg said , bonds are cheap. jonathan: you are expecting the fed to deliver what they are signaling? mike: over the long term, i don't think they will stop at three and 5/8 or 3.75.

i don't thing they will stop. that's what the markets are telling us. markets have effectively priced in a permanence of higher growth, higher inflation and higher rate world we are living in today. the markets are really discounting the possibility that you have rate cuts at some point in the next five or 10 years and i bet that there is a higher probability that the fed cuts more aggressively in the future then this sanguine view from the market. lisa: let's dig into that more. why do you think that is? the economy weakening more significantly than people expect? or on the others do you see normal looking similar to how it did before the pandemic? mike: look at europe and the u.k., right? cutting rates and in canada, the growth rate, europe and the u.k., lisa, since covid is zero. they haven't grown at all. they just recovered back.

obviously, the u.s. has been the shining star in the global economic actor. yeah, maybe that is sustainable. maybe the ai and the productivity boom associated with it is sustainable, but i see a lot of challenges. a lot of challenges among consumers, a lot of challenges among small businesses. i think that all of this wealth creation and the benefit of higher rates and high home prices have really gone to a small portion of the population. i think that the higher the rates, the longer the rates stay high, i think it really does weigh on demand if you are seeing that, right? consumers are trading down and businesses are pushing back on capital investment because of higher rates. financial conditions are easy except for the rates. the rates are too high and powell admitted that yesterday. he admitted that rates are in a really restricted territory and that he needs to cut them eventually and i'm in the camp that the funds rate is probably

going to average three or three point five, not 3.5 or four over the next 10 years. lisa: right now we are looking down the pike of 30 year notes. you say that bonds are cheap. are you going to be there basically shoveling up as much as you can? mike: well, we had a big rally in the near term. if you could trade tactically like we can, to maybe even take profits on the big rally, they have rallied 40 basis points really quickly here over 10 years. in the near term there might be a challenge digesting these huge auctions. obviously, the 10 year went great, but over the long term look at where the rates are versus europe. we are still almost 200 basis points above germany. 350 basis points above japan. the world, you know, the central banks, the big pension insurance

companies and financial institutions around the world, they need yield and fixed income and our markets stand up to me as attractive. jonathan: technically cell, strategically buy? mike: i think we are one hair short and some of our duration portfolios right now. just on the view that the fed has historically dragged their feet on taking action. the first move is a big one. powell mentioned that yesterday. the first move is a signal in the markets tend to run with that and i don't think the fed once the markets to get too far ahead of themselves in terms of easing those conditions even more, so i still think there is a decent chance that the zero rate cuts comes into play this year. so, we're kind of fading to the tune that the markets are pricing in a little bit, but if you are a real long-term investor like we are, and like most of our clients are and like most of the people in the world really are, you are supposed to

own more fixed income. it's the sweet spot. jonathan: i would love your notes on this, it came from a former colleague of ours in a good friend of the program who said that november, the first move potentially is in september , but presidential election uncertainty argues in favor of waiting until december. november is the month where there seems to be an issue for people. what do you make of that, that the federal reserve would be thinking about the outcome of november and would rather wait until the back end of this year to see how things work out? mike: that's a part of the problem, right, people discounting july altogether. september is only six weeks before the election. you know, i really think that you need to see the data shift pretty abruptly from here it is today. you need a much more decisive reason to cut rates six weeks before the election, just because of the potential

political blowback. obviously, november 7 is two days after the election and there is a good chance, jonathan, we don't know the results of the election at the november fed meeting. is the fed going to want to cut rates when the results of the election are hanging in the balance? i don't know, so you are really running out of dates and i think act, there is an equal chance of zero cuts as much as one and two. jonathan: thank you, sir. might not be settled in november. might have to wait until the georgia runoffs. those didn't take place until the january of 2021. lisa: we heard about that from amy silverman, yeah. my take away from this in the conversations we have been having is that essentially people like bonds when the fed starts cutting so basically everyone is treading water before seeing the sign that they are actually going to make the move. can you imagine? let's take a poll of the kind of rally we will see. how many basis points of a plunge do we see in yields

across the curve? jonathan: forgive me for being on the fence, but it really matters what the rate drop is. is this a middle adjustment or the rate cycle starting? i will throw in shoemaker at wells fargo, they are thinking about the same thing. when the fed cuts it will be deeper than it is as they confront real equinox -- economic weakness. lisa: and if they don't cut rates this year, how much deeper could they be next year? that is what a lot of people are trying to crystallize in their minds. jonathan: we have a lot to talk about and we will do that in the next hour. our guests will be here and we will speak to jonathan at ubs. the third hour of "bloomberg surveillance," from new york, up next. ♪ (♪♪)

♪ well i was raised by careful hands ♪ ♪ yeah, they made me who i am ♪ ♪ so i'm off to see... ♪ we invent them. we design them. we build them. and one day, we have to let them soar. ♪ i'm always coming home ♪ (♪♪) (♪♪) what took you so long? i'm sorry, there was a long line at the thai place. you get the sauce i like? of course! you're the man! i wish. the future isn't scary. not investing in it is. nasdaq-100 innovators. one etf. before investing, carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com

her uncle's unhappy. investment objectives, risk i'm sensing anenses underlying issue. it's t-mobile. it started when we tried to get him under a new plan. but they they unexpectedly unraveled their “price lock” guarantee. which has made him, a bit... unruly. you called yourself the “un-carrier”. you sing about “price lock” on those commercials. “the price lock, the price lock...” so, if you could change the price, change the name! it's not a lock, i know a lock.

so how can we undo the damage? we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. okay, that's uncalled for.

>> this is a fed that focuses excessively on the past and doesn't want to focus on what's ahead. >> they don't shout mission accomplished. >> they are deliberative right now in terms of not getting far ahead of themselves until the data comes to them. >> the data is probably more important than the dot in this place. >> they are very supportive to

the financial markets and i think it's a pretty good set up for bonds and stocks. jonathan: there are certain things that you enjoy as a broadcaster that you don't get to enjoy much anymore. tiger woods, leading the u.s. open. i get it, he's leading the u.s. open at one under. but come on, it's tiger woods. i can enjoy it for a moment, right? lisa: i will be there with you, i will enjoy it. ok, i'm done. to be honest, i don't follow the actual game, but the fact that he's getting back with his wife, i can get into. jonathan: you see? quite a session in the market. you can tell, can't you. equity futures on the s&p 500 are positive by 0.1 percent with plenty of reaction to the cpi data of yesterday morning with a fed decision in the afternoon.

this came out just moments ago, it's about the data, not about the dots. let's talk about the data. over the last couple of months have we learned that the inflation data was a head fake? lisa: that's what we are leaning into. yesterday was the slowest month of inflation since august of two thousand one and on a year-over-year basis core cpi came in at its lowest level. really, you could see this just grind lower. to your point, a lot of people embraced this as delayed disinflation, not just taken off the table. jonathan: team september thinks the doors open but this is what december has to say. i mentioned this, it's from months ago but i think it's worth sharing again, we are continuing to expect the first cut in september even the progress indicates presidential

election uncertainty argues in favor of waiting until december in their view. how important is that this year? lisa: it's remarkable that we are baking in the understanding that this could likely be a contested election that goes on for longer than one day? that that is the base case for markets right now is shocking. yet here we are in people are trying to understand how to bake it into their assumptions. a lot of people agree with her that this is a fraud moment. my question is, does this make it more likely that the fed cuts deeply or does it basically just delay the same rate cutting cycle that they would have otherwise engaged in? how much does it make the economy weaker to have the fed on hold for longer than the data would warrant? jonathan: why not have a base case? it's difficult to establish. the sense from market participants is they are pretending assent happening, extrapolating out, then they think about it in november.

is it a split government, a blue wave or a red wave? conditions that change things? it's super hard to forecast but we have to do the analysis and we did it a few weeks back. adam at the peterson institute made the case that you can see remarkable policy changes on the trade side and fiscal impulse that could lead to conditions where this federal reserve might have to consider hiking. that is super contrarian but that's the view there and people are thinking about those kinds of things. things could change a lot in 2025. lisa: this is why i think it significant that business and financial leaders are meeting with trump today. there's a feeling in the market that trump would be the change agent rather than biden. and that if he were to come to the fore, he would be cognizant of the market response to his proposals. that would be the gut check on anything he would do. i would be curious to see the tone from these business

leaders. that is ultimately what a lot of people say is keeping the expectations in check. ultimately, markets will have the final word, but that remains to be seen. jonathan: equity futures on the s&p, yield scores look like this , adding weight to yesterday's all-time high. up 1/10 of 1%. yields are unchanged, the euro is not doing much. weaker over the last hour. coming up, we catch up with stocks and record highs as tesla shareholders vote on the elon musk $56 billion pay package as soft and reacts to ppi jobless claims data that drops in about 25 minutes. top story, stocks at all-time highs after inflation cools in the fed leaves rate cuts on the table. constructive on equities, "the macro picture has been uncertain and the strong earnings we have seen from quality companies keeps us convicted of.

we are not going to ask you about the politics, i'm sure you feel good about that. not even going to ask you about the fed, we will get that in a moment. do you think that these will operate independent altogether? >> i think so. when we look at the earnings for the year you see the companies with the strongest balance sheets have the strongest balance sheets have a small-cap cap bounce and we continue to see pockets of weaker companies with catch up, but if you look at the sustainable amount of time, the next three to six months, the market wins out. jonathan: should i be concerned about that? should the audience be worried about that? >> obviously when we see gains led by a few companies, there is

worry over what it alludes to, but those companies tend to be companies that actually show profit margins, actually show a huge amount of cash flow and very low leverage. we think that is a good sign. what we are telling clients to do is have quality at the core of their portfolio and then go to a few other areas of the market that have not participated as much, be that health care, high-quality parts of financials, and even right now we are kind of thinking about for structure utilities as other ways to play for the trade. lisa: did yesterday change anything for you? >> yesterday was a fun day. hearing from chair powell, the one dock was a surprise given the data has meaningfully shifted. to see three of them the april meeting one the june meeting was very surprising. but it didn't change anything

for me. i think that what changed was a recognition that this is a fed that would remain data dependent, like they didn't overreact to the stronger inflation data at the beginning of the year, they will not overreact to the weaker inflation data. i think that what it means is that we have a pretty stable venture at the helm, which i think is a good sign. lisa: a lot of people are taking this as bullish, we have heard that consistently from tests, and that means risk on, like you just said. how much do you lean into the idea that once they start cutting rates, it will be a cycle that will be deeper and it will be something that will ratify what mike collins just said, that bonds are cheap. gargi: they are cheap. especially from one end of the bond market as it throws you amazing income and i think investors should take opportunity off of that. i would also say that broadly

when we think about what the fed is trying to tell us, it's that they are keeping all optionality open and they really want data dependence. whether or not the market leaves that. in 2020 five, and this is the base case, but if we begin to see inflation picking up again, will it be a cycle of cutting rates? maybe they pause again. they can start as early as september or december, cut rates a few times and pause again. what i feel confident about is that this is a fed that will remain data-dependent and not overreact on one side of the other, which with the strong growth that we are seeing is good for markets, bonds, and equities. jonathan: you mentioned the front-end of the yield curve, but is still deeply inverted. have you got an argument for why people at the front end right now she consider going further out on the curve for yield? what's that argument at the

moment? gargi: the argument is that if you are sitting in cash, step out and start buying investment-grade credit and clo's with certain packets of high quality yield and treasuries, but keep your duration to three to five years. that's the argument. step out of cash, go out to the three year to five year. there is not really a meaningful argument to extend duration further than that, given to your point the shape of the yield curve. now the argument could be that in another world, growth is decelerating meaningfully and you need that flight to quality bid for duration. we are not in that world right now. so, given the pressures on fiscal that we will have regardless of the election outcome, it brings into question -- why don't we have long-term premium and the yield curve? at some point if the market starts to price that in, you are better off in the valley of the yield for. lisa: it is concerning to me

that so many will be reactive to all the data and fed proclamations. not because i think they are wrong, that is probably the way to go, but does not increase market fragility, huge floods of cash that could shift all at once, waiting for a catalyst and then you see a flood of cash overwhelming, frankly, markets that look like good but are less than under the surface? does that volatility concern you at a time when bond yields are already swinging but a bit? gargi: i don't think that concerned is the right word, we do have to be thoughtful about it but when you look at the availability of cash sitting on the sidelines, that's not a risk off move. that is asset allocation. people are sitting in cash because you are earning 5.375%. it's not like when you sat in cash and you were worried about

a big event happening. i think we have to think about that as asset allocation and then think about the risk events that might need to get out of the way before people feel good about investing? one of them is the fed. what we hear from clients is that people love fixed income, or wedding to invest but waiting for the fed to get out of the way. when and if that happens there will be that cash but it makes sense. similarly, elections are concerning but we can see that going into october and once we are done with that event risk, whenever it happens, we can see investors moving out of cash into high-quality equities. jonathan: i'm so pleased that you said that. this is t-bills and not tin hats. no idea, but it is where we are at the moment. lisa: a choice that doesn't look terrible when it is 5.5% and you get fund manager after fund manager arguing against it. i kind of get it.

jonathan: and every time the fed meets, they dropped the dots a bit more. it's difficult to convince people. lisa: although i wonder what happens when the flood of cash happens. how much could yields possibly go down? half of a percentage point climbing in one day? who could even think about the bonds to sell given the rush to fixed income? jonathan: it's t-bills and chill now, but t-bills and tin hats is a very different story. you could accept less at the front-end and still be in cash because you are worried about elsewhere. that is why it is a difficult call to make. are the rates coming down because things are scary or because we have a macular disinflation story? lisa: notice that no one is going to try to work that out. they are just saying that in the next six months, this is working and it makes sense, i get it. jonathan: just extrapolate out from where we have been in the last five minute. equity futures are recovering as bramo speaks, rare.

[laughter] let's get an update on stories elsewhere, it's your bloomberg brief with dani burger. dani: g7 leaders agreed on a plan to tap frozen russian assets to provide ukraine with $50 million in fresh aid. after months of discussion, it is set to win the backing of leaders this week in italy. it would be based on the size of individual economies and the nations would give loans to ukraine and be repaid into the profits of the blocked funds, 200 $80 million immobilized in europe. apple is not paying openai to use the chatbot. apple believes that promoting chatgpt is as -- is of equal or greater value in monetary payment terms. they partnered during the development conference this week and at the time they said that chatgpt would be offered for

free on apple products. the company said it is not exclusive in the company has discussed gemini as an additional option from google. slips from may, rent in new york city was down, begin coming in at just over $4000 per month with new leases up. helping to keep prices down, inventory climbed 28%. that is your bloomberg brief. jonathan: 4250 dollars is still ridiculous. that's the median rent in manhattan mark lisa: honestly, this is what you're looking at, that this is a step down gives you a sense of how far we have come. jonathan: that is kind of the division amongst policymakers. things stabilizing, coming down, everyone talking around it expensive. lisa: that's the thing, when you

strip out health care costs and home improvement, what you pay others restore, financials are alright. everything else, doing great. jonathan: up next, morning calls and the tesla ceo elon musk record pay package. good to see you. thank you. opening bell in one hour and 15 minutes. ♪

jonathan: the opening bell, one hour 12 minutes away. equity futures are posited by 0.2% and are looking to add weight to the record-breaking rally of the last few days. deutsche bank, resuming coverage of nike with a buy rating. the analyst says the company is ramping up innovation ahead of the paris olympics and qin gang back shelf space.

that stock is just about unchanged in the premarket. next up, barclays boosting its price target, keeping overweight saying it's one of the best ways to play ai. that stock is up in the premarket. web bush retaining an outperform rating with a price target on tesla. dan ives saying that the shareholder approval of the elon musk pay package and moved to texas removes a $25 overhang on the stock, positive in the premarket by 6.5%. joining us on that story, our bloomberg analyst. a big day for shareholders. what are we likely to hear later? >> based on a late night mosque x post, -- musk x post, big news. the most important doing -- dealing with his pay package,

arranged in 2018. he hit all of these sort of moonshot achievements that the payout was incumbent upon him hitting those goals in order to get the stock options lined up for him. the issue, of course, was that in january it was thrown out by a judge in delaware. so, this is an effort to kind of bolster the case for undoing or challenging the ruling in the courts. it does not mean that after today elon musk goes home from this meeting with his stock options, but it is, you know, a shot in the arm for him and potentially for the board as they fight this and take the fight to delaware. jonathan: dan ives mentioned the overhang on the stock. lisa asked this morning and it seemed, as you were if the votes went his way, what would have

changed if he had lost the vote? craig: yeah, i don't know how you possibly put a dollar amount to just how much this was keeping the stock down. i think that some other analysts would have opined on this, really described it more so as avoiding what would have been a really dramatic if the folk had gone the other way. that makes more sense to me, right. musk, if he leaves the picture it's not remotely a stock that is worth as much as now. i think that the fundamentals of the company absolutely have been going in the wrong direction. that has also gotten lost in all of this attention on whether or not musk is going to stay or go and his threats to take ai elsewhere unless he gets 25% control of the company. lisa: the market is trying to quantify how much the chance of him not getting that bonus was.

it was 6.6% premarket in stock trading for tesla shares. i am curious, though, to the point where his focus is, how much does this mean that he's going to take that from x or other companies and try to find a spot for them in the actual tesla vehicles, which is essentially to great help, a lot of the vets on these companies. craig: it's interesting, tesla ir try to address these questions of just what to make of those threats. there was an attempt on their part to kind of separate x ai, the company closely tied to x, working on things like chatbots, whereas with tesla this is "real-world ai," cars that can

drive themselves, trying to separate those two things. the fact that he is devoting time and attention to standing up another company over the last year or so after already kind of taking his eye off of the ball in acquiring twitter, the effect that that had on the company and the stock. this is precisely what leads to some shareholder saying that this a package didn't work. it didn't ensure that we had his attention. there was already an issue before he went on twitter. lisa: a lot of people are arguing that he's fighting on getting the pay package and i'm surprised that he is not in italy talking to leaders down there about putting tariffs on the vehicles made in china. at what point does he need to get on and to get over there to

try to figure out how to get some carveouts to figure out how he's not going to be penalized with chinese manufacturers? craig: good news on that front, they were called out when the european commission announced the tariffs as potentially being able to be assigned different tariff rates. it required quite a bit of paperwork i've been told to make the case to the commission. that they received less state support than these other companies. the way in which the commission arrived at these rates was based on the level of subsidization. they need to make the case to the eu that hey, we haven't made as much off of subsidies as say a byd or geely. so don't hit us with the 21% rate. that will come into play on july 4.

we should be subject to something lower than that. but that would not be relief that they would feel until later this year, november. jonathan: what did you make in the difference of approaches between the commission in the government in washington? craig: definitely more surgical and based on more of a process. i don't necessarily get the sense that the tariff rate the biden administration put on the chinese ev's was a scientific calculation. it was essentially you know, let's take it as high as we can possibly go. jonathan: that's what it felt like. craig, thank you, sir. surgical in europe, sort of a laborious process. in america, just a big hammer saying 100%. lisa: right, we don't want to vehicles. europe saying -- let me do what i want, make sure the car companies can deal with it, we will work with you, let's take a

look at what oversupply means. jonathan: kind of bizarre headlines, testifying that we are in the premarket. coming up next, ppi data at another round of jobless claims. looking forward to those reactions and later, we catch up with anne-marie on what you can expect out of the g7 in italy later today. ♪

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jonathan: seconds away from some economic data in america, one hour away from the opening bell. scores look like this going into ppi and jobless claims. equities positive with a lift on the nasdaq on the nasdaq 100. a single move from tesla doing nicely in the pre-markets. looks like the vote is going the way of elon musk today. the bond market yield to year at the end of the curve, it was aggressively low yesterday. economic data, here is mike mckee. mike: for those that were thinking just one cut, the initial jobless claims came in much higher. 242,000 after 229,000 much -- last week. unrevised. we will check the revision. continuing claims of 820,000, up significantly from the 179.2 that we saw the week four.

ppi comes in down 2/10 on the month. the core comes in flat. as does x food and energy trade. leaving us at 2.2%. same as last month for the final demand headline, year-over-year. remember, ppi went up significantly last month, half of 1% in the month. holding it to point to is good. 2.3 for the core, 3.2 for the x food energy and trade is up. so, we get a bit of a base effect there. but what we are looking at this jobless claims going up in the labor market weakening a bit. ppi going down. i think, you know, the obvious first question for the people around the table is are you going to change your fed call

again it's now things are meeting criteria? this data is more like freezing cold water over the dot plot yesterday. equities are positive on the back of this. the s&p 500, nasdaq and small caps, s&p is up by 9/10. the bond market has quite a move at the front end of the curve this time, yesterday, following the downside surprise. call it 468 from the 10 year, back into the 420, 400 2558. putting it together, downside surprise on cpi and ppi. upside surprise on jobless claims. the tone of that data together with the tone of the outlook from the federal reserve is even more difficult to reconcile. >> it seems that the fed is being more cautious than anything else at a time when the david -- data seems to be

shifting. if we want to play table tape -- table tennis, this is confirmation that the disinflationary trend is underway and that the core cpe ground through the data grinder will come out lower and give the fed a chance to potentially cut. but this is the messiness of it. stripping out food, stripping out energy, stripping out trade, the inflation actually creeped up year-over-year. so, there are questions under the hood. that said, definitely positive progress. jonathan: mike mckee will be staying at the table with us, joining our other guests. we have team no cuts versus team december now because of the change yesterday. what does this data tell you, put together with what you heard from the federal reserve chairman yesterday? >> this is of course one data point. the fact that the claims number

went up is something to keep an eye on. typically when you tend to see deterioration in the employment picture, you tend to see that led by initial jobless claims as a leading indicator. that said, one data point does not make a trend and we will be looking to see what happens. what was interesting to me in the summary of economic projections was the fact that the fed kept core pce at 8%. they are explict -- expecting .2 increases month over month for the remainder of the year. so that's the contact where inflation is sticky in the job market is quite strong with growth at 2.5%. i don't see a need for the fed to rush to cut rates. jonathan: when you look at the inflation outlook and the outlook for unemployment, they see it where it is right now, 4% at the end of the year. how are you thinking about this incoming information, jonathan, stacked up against what they are predicting? >> that was a big reason we went

from team september to team december. we were forecasting and ink recent initial jobless claims today. we were expecting an increase in continuing claims and expecting a downside surprise and we one of the few shops affecting a full on the or cpi yesterday. we have been watching the data slow and think there is a slowdown underway, but we got an fomc that seems to think that both his not just fine, but great. they didn't even mark down the assessment of the pace of the expansion in the first paragraph of their statement, which is typically where fomc would acknowledge moderation. they seemed extremely come to bowl with the current stance policy. they feel that the labor market is still healthy. i agree that that's one place where if it rolls over clay, they might respond. but it looked to us like an fomc that seemed very comfortable waiting and without a lot of urgency to start filing back

strictness. lisa: you are sitting here saying -- you are coming around to my way this year. [laughter] are we asking the wrong question? asking about the rate cutting cycle and what it would look like if they wait longer? if they don't cut this year, will they have to cut more deeply next year the face of the weakness jonathan was talking about and a lot of people are projecting? >> i would preferred that as compared to the ecb situation where they said they cut rates announce not certain if they will cut in july. they might cut in september. and then after that they are looking at labor costs going up. looking at other factors to keep them on hold. i just don't see the need for the fed to cut. i don't see the need for any sort of insurance cut. why should they cut and wait for six months to deliver? why not

wait for the data to corroborate the need and then go on a methodical fashion once a quarter, you know, to ease policy? i don't see that rush for the first rate cut. lisa: do you agree, jonathan, or are you synthetic to the view that some have espoused talking about how this is a rapidly weakening economy and if the fed doesn't get ahead of it, the declines will be harder to counter in the future. >> if i were a monetary policy maker i would probably be thinking about calibration the ip needed to ward off worst-case outcomes. one of the problems is slowing growth but not such severe slowing that monetary policy makers seemed that they need to act urgently. but you know, we have that as our expectation. that growth is going to slow intake the fomc time to digest, but next year they will probably want to pick up the pace a bit, right? we have them after they see payroll slow in gdp growth

slowing, a lower inflation forecast than they do and they will start to feel like look, maybe policy really is restrictive. something they have been debating a bit. then we need to get out of the restrictive stance policy more quickly than we expect. we expect them to have the same terminal rate than the s&p and get them faster next year than their projections. jonathan: don't want this to turn into a wall treats -- wall street therapy session but it must be meaningful for you to have nailed the data and been respond -- surprised by the way they have responded. what are you responding to? the reaction function or the data that you forecast? >> i've been surprised at the lack of acknowledgment over the degree of cooling that i think is underway. so far payroll employment looks good, that headline, they have walked away with that as a summary statistic for strength. private employment over the last

12 months has slowed. jonathan: you are saying they walk away with that. i walked away from the news conference and i heard chairman powell say something about the strength of the labor market. who is they on the committee now? i find it confusing. 272 for some seems like the real deal. in another part feels like camp powell. are they even talking about the midi anymore? >> i would actually in terms of this narrative, i have long been the best majority of participants. when you hear the governor talk about strength, you think about the philip jefferson speech, talking about the strength of private domestic purchases. they are all pulling out relatively strong components and cuts to the data at the moment. i feel like there is an element of that from chair powell, even though you might acknowledge that 200 72 was overseeing, he's

not acting like 190 area jonathan: -- 190. jonathan: mike, your take? mike: the difference is, you guys have a forecast, you make a forecast, they have nine forecast in for our convenience we pick out a median call it their forecast. there are 19 different forecasts . the range is why looking at 2025. very wide. there is plurality in the middle but they don't know what will be happening by then. in another quarter, in september, they will change the forecast again and we will all recalibrate. basically, i think they are in a sort of hold mode, risk management mode, i guess, at this point. we will see where inflation goes, but we don't have to. lisa: you didn't want to therapy session -- jonathan: we are about to get one? [laughter] lisa: it's been a challenging

year. [laughter] i'm curious how you come up with a projection of there being enough strength and we don't need those sort of cuts to be cosmetic or get ahead of the weakness. what gives you conviction in that? what is your guiding compass at a time of great uncertainty? >> you can listen to the fed. when you listen to the new york fed president john williams, he said his expectation was for growth in the context of 2.5% and he is expecting the unemployment rates to be around 4%. he is expecting core pce the above, at or above 2%. so, even from what they are saying, just from their own forecast in the summary of economic projections, our forecast and expectations, there is no clear indication that they are going to need to rush into cuts. that is why i think that in

addition to our own forecasts from our economists, what we're hearing from the fed is consistent with a fed that needs to be on hold for the remainder of the year. lisa: one thing that people keep saying out there, that sounds bad, that it's hard to gauge or whatever, that nvidia will change the world with technological advancements and fiscal impulses that come down the pike. how do you factor in the sort of nebulous concepts that have driven the market this year as opposed to the overarching macro top-down views? >> so, we could get nvidia boost . if we do, i would say that should be lower in the fiscal policy has been huge, doing a lot to insulate the economy from the rate hike and the rapid rate hiking cycle of the fed and that impulse is fading and we're heading into 2025 of congress having to rewrite a substantial

amount of the tax code to avoid drag at the end of the year. these are all meaning influences and we all just sort of have to do our best look at the details and aggregate up. i would echo that it's not necessarily that -- you know, we can debate how we are thinking about growth forecasts, but if we take a wide swath of fomc participants, they don't seem to be internalizing any trade-off between ruth and the level of interest rates right now. that just seems to be a group that is willing to wait. the reason, if they get into september and are still not facing a trade-off with weaker growth, you know, i think the argument will carry the day to wait longer. lisa: i have to wonder, august 2, august 23, i think that is when jay powell will be in the tetons talking to people, giving a message. at one point it was a clear message. it will all be pain and we need to get this under control. what's it going to be this year?

>> i think it is staying the course and caution. for the most part the fed will strike a cautious tone. in my view at least i felt like they pivoted too soon towards rate cuts last year. i think they are going to take a much more cautious tone for the data to guide them on policy. so, our expectation is that they will start cutting in the first quarter of next year. and then deliver a steady set of cuts for the remainder of the year. but then the terminal fed funds rate will probably be higher. you are seeing that in the market pricing for both the fed as well as for, for the 10-year yield, which is higher for longer. so, the market is ever so slowly calibrating to a much higher star and i think that the fed is going to be somewhat cautious. this feels like a bit of a

paradigm shift, if you will, from the time after the financial crisis but we were bringing it down ever so gradually and now we are going the other way to start recalibrating higher. jonathan: perfectly said, feels like post gse in reverse. special thanks to team 2025 and team december. thank you. summarizing the data, we've got about 15 minutes to go. mike mckee, your take? mike: ppi surprises the same way that cpi did yesterday, much lower but it is mostly goods and within that category it is mostly energy. so, there are a lot of declines at the factory gate, but the big surprise came from how bad energy fell. jobless claims, a surprise because they haven't been going up, but now they did. we will see if this is a one-off. but if it starts a trend or beget at a new trend level, the

fed has something to talk about. jonathan: we have had some had fakes on that over the last few months. this is from renaissance macro. the growth on inflation trade-offs for the fed is shifting and getting close to time to recalibrate policy. i imagine we might hear that a few times later today. jonathan: neil, i hear -- lisa: neil, i hear you pounding the table. you are like let's go, let's go. i'm curious why people are not on that page in he is on that page. jonathan: i didn't hear him in the news conference for sure. let's get an update on other stories this morning. it's your bloomberg green with dani burger. dani: tesla, raising prices on its models following the announcements that the eu could impose tariffs on carson china, or even western automakers. tesla delivered over 99,000 vehicles from its shanghai

factory last year. tesla said the price increases would likely go into effect on july 1 and the tariffs would go into effect a few days later. donald trump is back in washington, d.c. today, meeting with some leaders of the country because biggest companies coming in jamie dimon, james fraser, and tim cook, according to those familiar with the event. in his return to the capital he is set to meet congressional republicans. florida is in a state of emergency. heavy down was flooded miami streets and rounded hundreds of flights at the lauderdale international airport, yesterday. the state has seen a record amount of rain for the month of june and more is expected today. officials projecting damages the top one billion before the rain stops. that is your brief. john? jonathan: up next, setting you up for the day ahead and going into the weekend from a beautiful italy. from new york, this is

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jonathan: counting you down to the opening bell, the s&p 500 is positive by zero point sent with equity futures getting a bit of a lift in the bond market rally down by five basis points on the u.s. 10 year. ppi coming in softer than expected. that's the right kind of downside surprise and wrong kind of upside surprise on the jobless claims that are coming in at 242. we have had some had fakes in the past this read over the last six months or so. i would say that is another one but it will be concerning if that continues. your trading diary for today and tomorrow, as an lighting with ukrainian president at the g7. donald trump is in washington meeting with lawmakers and ceos.

janet yellen speaking with john williams at the economic fund club in new york. and the decision to wrap up that busy we can get you to the weekend, before the weekend we have annmarie hordern at the g7 meeting. set us up for the next 12 hours, what are you expecting to hear? annmarie: what's really important is the biden press conference alongside volodymyr zelenskyy. he wants to tout the fact that the biden administration has been able to get over the finish line with their brainchild of the past you months, tapping into the future appreciation and net interest that these foreign immobilized russian assets can potentially accrue. it's a big win for the biden administration. he's also going to sign a bilateral security pact. of course, we also want to keep an ear out or potentially what larry fink and satya nadella may

say. two executives that are coming here for a side event cohosted by biden in the italian prime minister. they won't mention china by name, i doubt. but this is about critical infrastructure in lower and middle income countries and really what i think this will be about is basically saying sign up for what the west wants to do, not potentially what china wants to do. and then more lighthearted, potentially the fanfare will not be like, i'm interesting to see, even though biden is skipping the dinner tonight, i'm interested to see what maloney will put on the menu. he will be at the dinner tomorrow. lisa: talking about maloney and how she's leading this, how much has the tone changed from prior g7's as she represents a sort of different swing in the voter base, based on where the existing politicians, where they had been representing? annmarie: the question coming in

after the european parliamentary elections in the polling we've seen in countries like the united kingdom having an election in a few weeks in the polling in france and germany and the fact that afd lawmakers literally didn't show up to presiden zelensky's address, is europe moving to the right towards maloney or is maloney moving towards them? i think that you can see europe moving more towards maloney. as john said this week, this g7 is hers in so many ways. you have a number of leaders coming here as lame ducks that do not have the backing of their electorate at the moment. potentially in as soon as three weeks they might be out of a job. jonathan: great headline today, six lame ducks and giorgia meloni. rings true. let's have some fun, talking about the menu. i was at a micron event a couple of months ago and there was no food. no food at all, just black

coffee. what do you think is going to be on the menu later and how are they the journalists on the ground in the south of italy? annmarie: well, if they are feeding the journalists, any caliber, feeding the leaders -- journalists at any caliber, especially someone like me, with celiac and gluten, they had pasta, cookies, croissants, all gluten free. the food has been unbelievable. i'm also interested in the wine list. you think they will go [speaking italian] we will have to see. i will say this, italians are showing up on the hasp tally front at her than any g7 i've attended. jonathan: if you are confused, this is the tourism board for the south of italy, not bloomberg tv. [laughter] annmarie, thank you. not jealous at all. lisa: i'm on strike for the rest of the show. that's it.

until you send me there, nothing -- not speaking. jonathan: such an italian thing to do. [laughter] lay it all out. lisa: softball, a pitch for southern italy. just imagine where you could be. drawing that contrast with france, really. you will get hate mail. jonathan: it's striking. coffee, sorted out next time. foreign journalists come in. what do they walk away with mark -- walk away with? lisa: didn't [speaking italian] have the most amazing food? jonathan: they did. lisa: did they go backward -- bankrupt? jonathan: they did. that's why. [laughter] squared with what we heard in the news conference and from the federal reserve. annmarie: andrew does it -- lisa: andrew does it by saying following the data, not the dots. he's still calling for a

significant weakening this year. how do you interpret it? up to you, but the dots are not getting the guidance. jonathan: we will follow that data into tomorrow. that's when jeff catches up with us at barclays with the pg&e ceo. we are looking forward to all of that. your equity market is positive on the s&p. your opening bell is about 35 minutes away. the bond market rally continues. yields are down five basis points. lisa: shot, chaser, another shot with ppi coming in softer than expected. jonathan: it just means you mentioned it going into the weekend and then the trip was complete. it's important that you take the phone call to tell them how you feel. lisa: i will answer online. ♪

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>> i am matt miller. futures higher after another better-than-expected inflation print. "the open" starts right now. the latest fed inflation, i'm sorry. nothing to do with the fed. lower than expected, futures rising and yields falling and as the fed signals just one rate cut this year. we begin with the big issue, evidence of disinflation. >> we are expecting a downside surprise in ppi. we were expecting a .2 encore cpi yesterday. we