♪ >> growth is strong. that's great for all sorts of trades. if growth is weak, the fed will step in and cut interest rates. >> if we see inflation coming down and the labor market continue to cool -- >> it's an inflection point for the inflation story as well. >> they need to double down on their commitment to inflation stability and targeting inflation. >> they would be doing themselves in markets a disservice if they tried to be precise at a time when you can't be precise. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and

annmarie hordern. lisa: welcome back. this is bloomberg surveillance for our audience worldwide. annmarie hordern, dani burger, lisa abramowicz, jonathan ferro will be back. nvidia gaining the gains. i have to say, that really is the ultimate question, how fragile has this market become, given that its rise and its fall seems to hinge? dani: it's a live and die by the sword kind of moment. when you have 58% of stocks in the s&p gained yesterday put the overall index fell, one day does not make a trend. but if momentum really turns, how will it look, especially when everybody piled into tech funds. lisa: there's this feeling of

what's going to drive the further gains? especially as there are challenges to the growth prospects i had. annmarie: we had growth numbers and we are seeing a little bit of softness. business activity unexpectedly losing that momentum. i was struck by pmi falling as well. a lot of concerns for what does this mean when there is more risks on the margins politically? bank of america coming out, consumer weakness intensifying. that means inflation will drive a slowdown. but how much and how do you time it is the big question. lisa: i'm glad you brought that up. we've been saying slowing but not slow. we are going into a trajectory that is more sustainable but is not necessarily falling off a cliff into recession kind of territory. it feels like increasingly, the data is a little weaker than we previously thought it would be. this is the key question. regardless of whether we are heading into a recession, are we

underestimating some of the weakness under the hood? dani: it's a lot weaker. you could say the survey data has been so bad, that's why it's falling. when you break it up, it's the hard data that has surprised the downside. that's a problem for the bulls who say the tech rally is not a problem. everything will rise and play catch up but how is it supposed to play catch up when we are not slow but slowing? lisa: some people say the weakening that we saw, the unexpected weakening of the pmi's, especially in france was due to the snap election that was going to be called in a couple of weeks time. annmarie: it's concerned everyone's mind on what this means for the trajectory of france. you see people talking about a premium, potentially what it means for french bonds and on the margins, there is that risk

of does this mean we get a more euro skeptic france? lisa: to your point, some people are speculating what we will see is a wider risk premium. it ain't going back to where it was before. in markets, we are up just a little bit, a nudge for the week. we can erase that if some of the losses continue today. it will be a second day of losses, albeit incredibly marginal, down about a 10th of a percent. it could all change very quickly. we have a few features at 55 and 37. the euro, south of that 107 level. this is what's interesting. grinding lower, grinding weaker versus the dollar consistently, albeit at a slow pace. yields are lower. this is interesting to me. you can see this across the board. yields of price down, in part as people wonder are we under

pricing the risk of a harder landing? crude prices basically stagnant at $1.33. coming up, christian nolting, greg val year and marc on the u.s. economy's mighty tailwind. stocks edging lower as the ai powered rally takes a bit of a breather. christian nolting writing the strong performance of mega cap and ai stocks coupled with healthy eps growth and expectations have been driving the forces behind the rally. we see the s&p 500 at 5600 by mid-2025. that means it's going range bound for the foreseeable future. before we get to 2025, can you give us a sense of how fragile you think this rally at the u.s. equity market is right now? christian: i think markets are a bit priced to perfection if i may say so.

but as long as we get the earnings in place, expectations are quite high. i think it is sustainable. but, if there is some disappointment with the earnings, -- we wouldn't rule out this little drop we see in the economy. but they are not going to recession and going to move slightly upwards. that is the trajectory we have in mind. lisa: it matters how the consolidation happens. but so far, we aren't seeing a broad-based rally. jim read had this statistic that only 2% of the 500 three constituents currently in s&p 500 are at all-time highs. 7% are at one month lows. we are not looking at something that speaks to this broad-based recovery.

we are speaking to nvidia. where is consolidation other than potentially nvidia? christian: if you see some kind of consolation, you would look at those mega cap stocks. a slightly upward trajectory, we are saying it is utter if you look at your portfolios to do a -- strategy. maybe that is broadening out and you get a better market breadth if we see after time of consolidation the economy starts going higher again. dani: you lay out a few risks and a few growth potentials for the u.s. economy but amid that, the hedges are nowhere. take whatever asset class you want, pick the vix, around 12.

fx volatility, which is nowhere to be seen. are we complacent in the face of potential consolidation? christian: we've been discussing diversification. you say it doesn't make sense, diversify. but that is wrong. i think you should not give up your traditional strategy, how can you diversify the portfolio? especially after you've seen this pricing to perfection. from that perspective, yes. we like investment grade. do a barbell strategy on the equity side, that make a lot of sense for us. dani: it's been a year where traditional strategies have been challenged, whether it is how do you hold bonds on your portfolio when they are more volatile and how do you diversify when europe looks like a hotbed of political instability?

can the broadening out happen across countries, christian? christian: i think so. we are not so negative on europe. i know if i go to the u.s. and asia, what's happening is concerning. if you look at the earnings, maybe there are some upside surprises. it needs the markets to understand that first before we see a broadening out of europe. but it's not as bad as many say. especially on the earnings side of the companies. annmarie: do you expect europe and france in particular to have a new regime from more bond borrowing costs? are we never going back to the place we were a month ago? christian: i would say with all of the elections coming up here in europe, i refer to france and the u.k., we are also close to that day, i think the market is watching. you can see that french spreads to german bonds have been at the

highest levels since 2011. i think it depends a lot on what's happening with that spending, that fiscal spending. there could be some risk we are seeing. but, if it's going step-by-step, it doesn't need to be so negative. that is clearly something we need to watch. remember what we saw in the u.k., right? the many budget, i think there is some learning as well. annmarie: we know what was in the u.k.. lisa loves to talk about it all the time, a liz truss. do you expect a liz truss part two coming out of paris? christian: i don't. if it has not happened before, maybe. but there is some learning. from that perspective, you already see some comments in that direction. if you look at the setup of france, from that perspective, i would be surprised.

lisa: if you don't believe in a liz truss moment, how much are you saying by bonds, that's your best bet right now? christian: i would say what's important on the bonds side is you need to reposition a little bit. if you look at the structure of the curve, you have these inverted curves and maybe over one year of time, the center bank will have cuts. desk central bank will have cuts. we don't expect -- central bank will have cuts. we don't expect many. lisa: in the u.s., is that still a haven, a fixed income trade at a time where i don't want to say the u.s. is also facing a liz truss moment, i won't say it's the big bang but there are concerns percolating. is that still a haven that you think has gotten overblown with too much risk premium baked in? christian: i think people look

at the dollar and that's not changing to be honest. you see what's happening to the dollar and the swiss franc. the patterns we have seen before have not really changed. i think it will take some time before we see a substantial change in them. lisa: christian nolting, thank you for being with us on this friday morning as we take a look at a week of bifurcated gains where you have nvidia driving any kind of tech preeminence. annmarie hordern, it lost its title in a swoop yesterday. heading into the close. annmarie: you have to think, is it u.s. exceptionalism when you see is it softer or is it soft? when we look at consumer spending and housing, are there

starts of trends of serious weakness and pockets of weakness in the economy or is it exceptionalism or is it nvidia exceptionalism? dani: it feels that way. it was interesting to hear christian nolting talk about the dollar as a haven. the problem it presents is for all of these other central banks who want to start their cycle and can't because of the strength of the dollar. some of them have been bold enough to do it. but people have been flooding into the swiss anyway. lisa: they actually wanted it. they are trying to get ahead of everybody else in order to get weakness that may not even last. we will talk about this throughout the day. let's get you an update on stories elsewhere. here is your bloomberg brief. >> u.k. retail sales rising last month at the strongest pace since january as consumers return to shops to buy everything from clothes to furniture. the volume of goods sold in stores and online rose 2.9

percent in may, erasing a 1.8% drop seen during a rainy april. this coming after a survey showed consumer confidence rose to the highest level in three years. in japan, inflation is rising thanks to a sharp increase in electricity prices. consumer prices excluding fresh food rose 2.5% in may from a year ago. this coming as the yen is easing losses against the dollar after trading near a 34 year high. just this week, the u.s. treasury department added japan to its list for foreign exchange practices but stopped short of calling it a currency manipulator. and canada is the latest country set to announce tariffs on chinese electric vehicles. people familiar with the matter telling bloomberg that justin trudeau is preparing the measures after announcements from the u.s. and e.u..

the value of chinese ev's imported has surged more than 2 billion canadian dollars from less than 100 million in 2022. yesterday, doug ford called on justin trudeau's government to act, saying the ev's are a risk to canadian jobs. that's your bloomberg brief. lisa: up next, the gloves are coming off. >> the threat that trump poses is greater in the second term than the first. he can't except that he lost. and he lost. >> he's not a smart man. i talk about it differently now because now the gloves are off. lisa: this is what we will be watching in about a weeks time, face-to-face. that is coming up next. you are watching bloomberg surveillance. this is bloomberg. ♪

♪ >> nvidia has gained 160 4% this

year. one statistic said that right now, the market valuation of nvidia crossing the $3 trillion line is equal to all of the real estate in new york city. this is bloomberg surveillance. annmarie hordern, dani burger and myself, jonathan ferro is off and will be back next week. s&p futures are down. you hear a growing number of analysts, who has not come on the show and said they are more optimistic about england -- not england -- the european union, about france than even the u.s.? in terms of expectations versus the reality? annmarie: people are looking at the polls and you can see the far left will squeeze macron's

party. then what do you have? you have this cohabitation that we love to talk about. it will be hard to get a lot done. they potentially think too much is bank in and now is the time to get in and get exposure while it's cheaper. dani: we don't know what this will look like. we don't know what cohabitation looks like and what the policies will be and how much they spend. that throws a wrench into the works of this bullishness we been hearing. we saw the pmi's, heavily influenced by politics. businesses don't want to do deals and don't want to make decisions when they don't know what's going on. but once we have the election, will we have a clear picture? we need to work out what these governments will look like. to me, that speaks to issues with some of these bullish arguments. lisa: that's not just for europe, it's also for the u.s.. the gloves are coming off. >> folks, the threat trump poses is greater in the second term than the first. >> the whole world is laughing

at him. he's a fool, he's not a smart man and never was. >> he can't accept that he lost and he lost it. >> i talk about him differently now because now the gloves are off. >> my predecessor failed the most basic presidential duty, the duty to care. >> we will make america great again, november 5 is the most important day in the history of our country. lisa: the trump campaign writing a surge in donations -- riding a surge in donations, outpacing biden for a second straight month. it will come down to who scares the voters the least says greg valliere. that's why biden has a chance, he's slow but less scary if well program. trump will be aggressive and relentless but could he overplay his hand? i want to talk about some of the donations, given the fact that there seems to be more of an acceptance of trump by frankly big business in a way that there

was not a couple of months ago. can you talk about the shift that you are seeing as evidenced by some of the donation flows? greg: it's been really interesting, hasn't it? all, the money is pouring in. i think a lot of wall street, silicon valley, wealthy ceos see the train leaving the station, i'm not sure that's accurate. i think biden still has a chance. a lot of's nest leaders see the train leaving the station and don't want to be -- business leaders see the train leaving the station and don't want to be left behind. annmarie: speculation will begin immediately about replacing biden on the ticket, is that viable? greg: it all depends on what happens in the debate. i'm not predicting this but if biden should look like mitch mcconnell did a few months ago and freezes up or loses it toward the end of the debate, i think that will make a lot of democrats worried about a tidal wave that would go against them.

if it is a decent performance by biden, a pleasant surprise like the state of the union address, they will be set within the party. but if biden stumbles, there will be some dissent within the party, i think. annmarie: those are biden's biggest vulnerabilities, what's donald trump's? greg: he scares the daylight out of people and has no filter, no filter at all in what he says. what he says sometimes rubs people the wrong way. i think there is still a fair amount of moderates and independents, maybe nikki haley supporters who could be persuaded to vote for biden. i think trump needs to sound more moderate. he has lately. he has sounded a little more moderate. he even endorsed larry hogan, which surprised a lot of people. dani: is that what it is, do you think it is trump's awareness that he needs to go after nikki haley voters? greg: i was shocked after nikki

haley dropped out, instead of being gracious, he ripped her and ripped her supporters, mocked them. trump can't do that. he will need those nikki haley supporters in a state like pennsylvania on november 5. dani: it will take a lot of persuasions to get voters off the sidelines because you have two candidates who are so well known. bringing this back around to the fundraising question, how valuable is the fundraising dollars this time around, is money this time when it is so much difficult to break through to voters or the double haters who are on the sidelines and are hard to convince to come under either tent? greg: it's a good point. i'm starting to come around to this view that there is only a certain amount of money that will make a difference. vast amounts of money and buying vast amounts of tv commercials will turn people off. i think the incessant commercials on tv, at some

point, become a negative rather than a positive. annmarie: there was a policy proposal floated by the former president. he suggested that foreign students who graduate from colleges in the u.s. should basically automatically receive green cards to continue building their careers in the united states. is this -- this is something that democrats would usually say they are on board with. what do you make of this? do you see the former president trying to come to the middle? greg: i think so but it smells of desperation. if trump -- if biden loses this election, the postmortem will be he didn't have a plan on immigration or whatever he had came too late. yeah, he had this proposal yesterday but i think a lot of people will say too little, too late. lisa: everyone is saying next year will be incredibly hard to predict because we don't know who will win the election or what president that is going to be. how much clarity do you have?

do you think it is more clear then maybe some people are making it out to be? greg: no. i wish i could say yes. but i think there is a real risk of something close to a tie. we've seen this movie before. we didn't like this movie but you could see after november 5, no clear winner. but recounts, charges of voter irregularities, lots of litigation. that is something that not only the public won't like but i think the markets would not enjoy seeing something that drags on into december. we have to have an inauguration on january 20. that's in the constitution. i think we could go well into january without being sure of who actually won the election. lisa: let alone the policies that are tagged on as a result. greg valliere, thank you for being with us. this is the reason why we see calls for 2026 and we wonder, what kind of parameters are they looking at?

>> what cristobal do they have that we don't? -- crystal ball do they have that we don't? i'm talking about the debate next week because biden won the coin toss and he decided he will pick his podium but trump gets the last word. >> what difference does the podium make? >> i guess he has a certain side he likes. >> don't we all? [laughter] >> that's what you have to look forward to. right now, we are seeing a softening across the board, whether it is driven by nvidia but also, the general jitters that maybe we are overestimating growth. that's what we will be talking about for most of the morning. this is bloomberg. ♪

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lisa: it was a shorter week. welcome back. this is "bloomberg surveillance ." people start to worry about political risk having a consequence on the growth trajectory with the latest data out of your. also, fragility dominated by one name, nvidia. nvidia evidently can go to the moon based on yesterday's trading. maybe today people can try to reverse that. down .2%. 5534 on the s&p. nasdaq down close to the same.

the s&p is outperforming the nasdaq in a long time. this will be curious if it continues. the russell 2000 outperforming the nasdaq 100 week to date. you can see yields lower, basically bouncing back to where they were before the selloff we saw yesterday. 10-year yields at 422. the real question will be how much people respond to weaker than expected economic data in the u.s. by continuing to pile into bonds. dani: there is little conviction in the long bond rally. sure, the data is weakening but you have the deficit ringing in people's ears. will these forces come to the fore? can i be so bullish on duration when a word about the deficit and the options to come next year? lisa: that is why france is

fascinating. the political risk embedded in some of the recent economic data that came out of europe. particularly of france. a real concerned by companies but also by bond investors that we will not back to the levels french bonds enjoyed relative to germany. annmarie: the french elections are so soon. it is not like the u.s. for the is months of filled up -- buildup. it feels like there is a concern so they are saying we can wait a few months. that might not mean we actually know what this cohabitation we think will happen might be. at least, potentially, there is more of a roadmap forward. when it comes to the bond market, zurich insurance company said, "we had a step change." i don't think french bonds will

trade at the level of the spread they had in the past. the damage it has done regard this of the outcome. lisa: even if there is not some sort of big bang moment, there is a bleed weaker. we have gone beneath 107 at a time when people seem to be saying they are going optimistic about europe is notable. 106.87. just grinding weaker people said this would be the year of the euro as the ecb got ahead of the fed and then got more stability and strength in the economy. under surveillance, fed speak to give us some sort of guide. can they do it? this morning tom barkan calling for clarity on inflation before cutting rates. this comes as jim says the latest cpi print sparks hope for a september rate cut. yesterday we got some discussion from the likes of austan goolsbee of the chicago fed,

basically saying just take a couple more prints to really gain that confidence. dani: this was the thing i liked. he said there were times we want to give forward guidance and have given forward guidance. this does not feel like one of those times to me. it's an exercise and how many times you can say forward guidance. this is what seth carpenter was talking about. the data as it stands, it's not a time to gives you a clear forecast. it would be a mistake for policymakers to try to pretend like they have one. if policymakers were as reactive to last month's data as they were -- they were that reactive in the first quarter, surely they would have peaked in the first quarter. lisa: what is data dependency? if it going to come up with scenario analysis, what is your game plan if one candidate wins versus another and if they hike tariffs and if they cut taxes further?

this is from austan goolsbee. "for decisions are not about politics or elections." we heard the same discussion from the bank of england. how you do analysis if you don't factor in some of the biggest wildcards every market participant says is on their minds? annmarie: you can't until you have policy. maybe you can start thinking about it but you cannot say this is what we are going to do if this is this president. you also have to get the composition of congress. the optics make it very difficult. i like something barkan said. it feels like if you made a cut, you made a cut. maybe we will make a cut but after that we are in no man's land. we don't know what comes next. how do you plan for 2025? lisa: we know what comes next week, the presidential debate. the fundraising figure showing donald trump out raising joe biden for a second straight month. biden picking up $85 million,

well short of the $141 million donated to trump. it's compelling that we heard from craig bell that people are trying to play catch up the mainstream corporations, realizing there's a good chance he will be president and they don't want to be left behind. annmarie: also that trump campaigned heavily on his conviction in new york. biden mocked trump, saying he's broke, crossed by debt. now it is the biden campaign putting up their own fundraising emails trying to say post conviction we need the cash flow. dani: there are 70 people who are pretty t -- so many people who have already tuned this election out. lisa: european stocks are heading lower as pmis on effectively lost steam. the latest pulling out of france showing support for marine le

pen's far right party getting support ahead of the elections. sabastian raedler of merrill lynch writing, "would remain negative on european equities, underweight on france on pectations of weakening growth it could easily offset the drag from a more fraud political and varmint." -- environment." which is it? some people say we could get that weakness if some of this political uncertainty continues or if it does transpire in a way that is market unfriendly. europe is the place to go, especially next to inexpensive u.s. sabastian: absolutely. we see that a lot. people highlighted data weakness in the u.s. we have discussed this earlier. in europe, the micro data was holding up. this is a safe port in a storm. we safely disagree. we think it will weaken. monetary tightening works and

they will have both economies -- and the lags will hit both economies. lisa: when you talk about european equities possibly being at risk for further losses, are you saying the u.s. is preferable or that all regions, particularly equity markets that have gotten a boost from recent optimism are subject to potential risk on that kind of weakening growth outlook that you are suggesting might be understated? sabastian: that's a good summary. if you give me the option of which statement, i would make both. all equity markets are at a risk because the unemployment rate in the u.s. is very low and starting to pick up. the savings ratio is low and starting to pick up. we are seeing the weakness in the consumer. consumer confidence declining sharply in the u.s. the u.s. so far has held up the global growth story. if it weakens on the back of a weakening u.s. and europe, that is negative for risk assets across the board.

with think european equities are particularly vulnerable. they are more cyclical and have more value names which would underperform if the weakness in economic activity with fed inflation leads to bond yields. dani: what can i buy? sabastian: the defensive sectors of your. take food and beverages. at a 12-euro low relative to the market. to got clobbered by the compression in risk premium. global risk premium effectively at all-time lows. if this leads macro risk premium to rise, that's a fantastic catalyst for outperformance for the defensive sectors and beaten up food and beverages sector. lisa: besides maybe the defensive sector, on european equities he remained negative at the moment for now. what happens after the election will be get more clarity? sabastian: you were talking about economic downturn is a

function of the election. i would think about them as separate. there is political risk and economic risk. investors have to decide always which it is priority list is the thing we need to focus on. we think the economic risk is the more important point. when the labor market starts to affect negatively, bad things happen for risk assets and for risk premium. we think that will be the dominic dynamic. because of the normal functioning of the macro cycle, cyclicals underperform but a lot of room for bonds to rally and that my colleague has the same view. dani: there's a lot of talk -- annmarie: there's talk about extension and getting this potential exposure to places like the -- japan. does that make sense? sabastian: i'm a european equity strategist but we run our models in the background.

japan is a value trait. it has benefited from the spike in volumes because he got a lot of value sectors. it has benefited from the weakening of the yen. it will strengthen if you get a weakening in global growth. japan had a good run but the macro environment i'm describing is not one which japanese equities will continue to do well. lisa: the picture you're painting goes to the question we've been asking consistently for the past couple of months. weakening but not weak. that has been the hope for a lot of markets, the idea of goldilocks. how do we know the threshold between weakening and weak when it's a good thing and a bad thing? what data are you watching to see when we have gotten to the tipping point? sabastian: i agree. that is the number one question. a little bit of data removes the overheating fear the market has been grappling with.

until now bad data has been good data. in simple terms, you will see bad data being bad data if you get clear cracks in the labor market. that means payrolls potentially rising by less than 100,000 per month or going zero or negative and more clear-cut increase in the end of limit right. if you look at the atlanta fed gdp tracker, the best current estimate of where the run rate of growth is, if that goes close to zero or below, as it did during the recession of 2022, there's a lot of scope. dani: something like 3% with the most recent data. you talked about the weak pmi's and europe -- in europe. investors need to recognize political and economic risk and they are separate. wooden today's data argue they are becoming the same thing? the political risk is turning

into an economic one? sabastian: that's a very fair point. there is an intersection. if you look at the country breakdown have germany down two points, arguably little to do with the political situation in france but france is down four points. they are understood that they have nothing to do with politics. that is the inventory cycle that is now running over. it is the monetary tightening. it is the negative physical impulse in the euro area. they would be sufficient to weaken the micro picture -- macro picture if nothing was going on on the political front. lisa: sabastian, thank you for being with us. sabastian raedler of merrill lynch joining us from london. now stories elsewhere. pher is the bloomberg. >> microsoft taking -- retaking the crown of the most valuable company. nvidia losing over $100 billion in market value.

the stock is down in premarket trading. in a filing with the sec, it was revealed nvidia ceo jensen wong sold a fraction of his stake in the company for just under $32 million. hackers are selling consumer data of lending tree subsidiary growth wizard after the company detected unauthorized access on a cloud database according to a person familiar. there have been several listings of the data on cyber criminal forums being sold to the highest bidder. that hack has had no impact on operations and lending tree is still investigating the size and scope of the theft. american airlines unionized flight attendants are threatening to strike after the latest round of talks ended without an agreement on a new contract. the flight attendants are demanding better pay, saying they have not received a raise in five years. american airlines says at expect additional dates for negotiations to be scheduled and a deal is within reach.

that is your bloomberg brief. lisa: it is convenient to be discussing this when everyone is trying to get on the airplanes. it's a good time to negotiate. got the leverage. up next, the long road to 2%. >> it will probably take a year or two to get back to that 2% target. the good news is the labor market has remained markedly strong. lisa: that is coming up next. you are watching bloomberg. ♪

lisa: we are looking at a market that is really holding on, trying to hold on the gains for the week. just of marginally on the nasdaq. losing ground this morning. the nasdaq underperforming a bit. s&p down about .1% as well. euro weakening versus the dollar as people look at some of the concerns around french

elections. yields lower as they retrace some of the gains that were lost yesterday. the long road to 2%. >> wage growth is still good for workers. by some measures, be a little too high. getting although it back to 2% will take a little more time but i'm confident we will get there. it will probably take a year or two to get all the way back down to the 2% target. the good news in all of this is the labor market has remained remarkably strong. lisa: s&p global pmi data due out today at 9:45 a.m. today from fed governor chris waller and fed president mary daly who will be on monday. march iannone writing this --marc giannoni writing this. "in the absence of this influence we think they were shortages would have been a more meaningful headwind."

an increasing number of economists are discussing this. it is politically charged. people don't want to go there because there is such a strong feeling on both sides. just how significant has some of the immigration been for job creation and some of the increased productivity we have been seeing? marc: we think it has been very significant. if you look over the past year, we think there are about 75% of the new jobs created in the private sector going to immigrants. this is a sharp contrast to what we had if you look at the five years prior to the pandemic. we were also creating about 180,000 jobs per month in the private sector and off these jobs about 80% of those go to u.s.-born. only 20% went to immigrants. again, now the situation has

flipped. in the past year we estimate about 75% of the new jobs created going to immigrants and 25% going to u.s.-born. lisa: it raises the question about the accuracy of the data as a historical analogue that can be similar to some of the employment information in the past. we are talking about different kinds of numbers. you might have job creation of people newly in this country but it doesn't speak to mobility of existing americans being able to go out and get a job, able to get hired. how do you factor the immigration tracker that you put out there, this proprietary of barclays, factor that into the payrolls growth we should be seeing to have some healthier growth and better sentiment in the u.s.? marc: as you pointed out, we put together a tracker of immigration by combining about 14 different statistics coming

from the government. it was incredibly difficult to put all the stated together. the definitions of immigration have changed over time. over the past year we have seen a big surge in humanitarian immigrants, those seeking refugee status or seeking asylum in the u.s. the interesting feature about this group is that after entering the u.s., while being processed after six month they can apply for a job and get a job in the u.s. and be fully counted as part of the u.s. nonfarm payroll statistics. in relations to these statistics, yes, there's a lot of discussions about the issues measuring the employment in the u.s. we focus on the payrolls statistics that covers a broad sample, much broader than the

household survey used for the unappointed rate. it's also more noisy and less reliable to count the number of jobs created over time. we focused on the payroll survey. all our estimates went to assessing as best we could the contribution from immigrants. annmarie: there are three or five different types of immigration. people that overstay, visas, green cards. when you see the uptick is a coming from the humanitarian? likely that is the one that is going to get the biggest lyrical backlash. marc: that's right. is the humanitarian immigrants category of individuals that has surged over the past two years or so. especially last year. we expect this to continue in the first half of this year. it will continue to contribute to payroll gains in the second half of this year.

despite the fact resident biden -- president biden initiated this executive action that stops the flow of immigrants to the southern border. the reason is the six-month delay i alluded to. people who have common in the first half of the year -- come in in the first half of the year will likely get a job in the second half of this year. that will contribute to growth gains in the second half of this year. dani: this note is fascinating. you spent a lot of time on the labor supply. we have talked about the labor supply but what about the demand-side? has there been a difference in the economy by just having more people here? marc: very good point. on the demand-side i would point to the jolt survey. job opening labor turnover survey. it has shown 12 million job openings back in 2022. we have seen the numbers gradually come down. we had about two job openings

for unemployed back in 2022. this is where the immigration story comes back in. a lot of the job openings were filled by immigrants. they filled the gap in the shortage of workers that we had two years ago. it has gradually dissipated. what we are seeing is it coming down. the labor market moderating. the tightness of the labor market coming back to normal. we have firms hiring now at a pace roughly in line with what we had pre-pandemic. we have individuals also quitting their jobs to find another higher-paying job at about the same rate as what we had pre-pandemic. all these statistics have normalized. we think this is fitted very much from this immigration flow that has filled the gap. lisa: dani was talking about the

demand-side for goods, for in general things the u.s. produces but also the demand for housing. that is something that is key as far as the inflation data. how much do you think some of the housing price stickiness is going to be something long-lasting in part because of how any people have come into the country? marc: that is a great point. we think there is a structural shortage of housing in the u.s. there was a shortage of housing in 2019 already. we had not built much housing in the whole decade following the great financial crisis. we are now stuck with a relatively low stock of housing. now is more people enter the u.s. and enter the labor force any housing units, we have a structural shortage of housing. that will maintain but we think

of a floor under the house prices. this is why we have not seen house prices really drop significantly. they dropped a little bit in 2022 when the fed started tightening its policy and the rate hiking campaign. but then house prices stabilized and went back up. we think this is reflecting this underlying strength and continued strength. lisa: jonathan miller was talking about that as well. marc giannoni, thank you for being with us. really interesting research. we will speak with andrew szczurowski talking about some of the housing data. katy kaminski will join us. andrew szczurowski of eaton vance. all of that is coming up in the next hour of "bloomberg surveillance" at a time with the market is trying to cling on the weekly gains. this is bloomberg. ♪ ♪

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>> it's really about a couple of stocks over small number having an outside effect on the markets. >> there is an underlying risk. folks have gotten so bullish. >> definitely a whiff of a bubble about it. >> this is the biggest megatrend we have today. you will either implement artificial intelligence or be left behind. >> you can't stand in the way of that freight train.

>> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. lisa: is the economy weakening or weak? the gap is getting narrower and narrower. this is "bloomberg surveillance ." jon will be back next week. we are seeing a bit of exhaustion in the market as it has hinged on one stock. dani, gift feels as though people are starting to lose confidence for the foreseeable future. dani: they are also putting other money into tech and nvidia. a period of raging quiet. we can talk about nvidia selling off but the market refuses to lose steam. we have not had a single 2% down day for all of 2024. there's only been seven days were we have fallen by more than 1%. lisa: under the hood a little

less than that kind of quiet. perhaps a little more. this is from deutsche bank's jim reed. only 2% of the s&p 500's 503 constituents are currently at all-time highs or knew that. 7% are at one month lows. we are talking about complete bifurcation in the half's and the have -- have's, nvidia, and everyone else. annmarie: the s&p 500 may rally close to 10% this year. they are lookingis overdone and it's a bubble, and the call for mid 2026 is the 4800 level. into a crystal ball for 2026, good luck. lisa: if they can look into a ball for next month i would be grateful. the discussion around weakening versus weak is growing increasingly loud. something you mentioned that is

important. the economics of price index turning the most negative going back to august of 2022 as we have seen a downward shift in a new way. it seems as though people weren't expecting the economy to weaken quite as quickly as it seems to be doing. dani: it did sneak up on us but if we listened to the companies we might have seen it. you discussed it here so you definitely saw it. consumer facing corporation saying something has changed in consumer habits. we are seeing that pickup was some. mcdonald's offering five dollars value means. hertz trying to get cheaper cars into the fleet because people are paying. it is like a shrink disinflation thing of company tried to maintain their margins but cater to a consumer that is more budget conscious. at what point does that turn into all-out margin deterioration? lisa: and is it idiosyncratic story of the have's and have nots.

here is the state apply to end the week -- state of play to end the week. marginal gains for the week. can we continue with that given the weakness we have seen? it is early days. the s&p down about .1%. 5540. the euro. keep watching this space. 106.83. terry wiseman saying he sees 105, albeit not very far away from where we are but the steady growing weaker of the euro potentially poised to continue on political risk. 10-year yields going downward about three basis points. people taking a look at some of the selloff from yesterday and continue to see bonds as a haven. this is something we will pick up on just a second. crude marginally lower hovering just north of $80 a barrel. coming up, katy kaminski of alphasimplex on a roller coaster first half of the year for

treasuries. andrew szczurowski of eaton vance following week housing data. and craig trudell. cyberattacks shut down car dealerships across the u.s. we begin with the top story, treasuries looking to a race this year's losses as investors ramp up their rate cut bets. "fixed income short signals dissipate as yields moved to lower on a better-than-expected cpi print and helps our rate cut." katie joins us now, incredibly brave to short bonds when everyone else was going long. we talked about 10-year getting to 6% on trend following. you noticed a shift in treasuries, hinting at more of a long position. tell us with the shift is at how much conviction you have around it. katie: something is very different this month. what we have seen, weaker economic data, and secondly, we are hearing murmurs of demand

destruction. what does that mean from a technical perspective? we have seen synchronous selloffs in the cross asset space, the agriculturals, the metals, but particularly rallying in yields. sorry, rallying in bonds. a big adjustment in the yield space. we have seen risk off behavior which we had not seen most of this year. if you think about that, did feels like the other asset classes are telling us something about the economic picture we are still not seeing in the equity markets. for us, this means signals in fixed income have started to dissipate for the first time since the beginning of this year. to me this looks a lot like an inflection point and the pivot where we might look at some sort of change for markets we had not seen before. lisa: fascinating at a time when people are wondering about the difference between weakening and weak. you point to commodities in

addition to some of the individual corporate moves that point to some kind of weakening that was unexpected or weak. what does this do in terms of your conviction to say go long bonds? particularly the highest flyers? katy: the big challenge is seeing risk off behavior in the market. it's an indication that for the first time this year the market is starting to get nervous about the potential or higher probability of some sort of harder landing. that was not in the data before. when we saw weaker data it usually meant relief. it meant we might have cuts and we could get a soft type landing that we wanted. right now you are seeing this type of flee to bonds causing people to be more likely to be long to hedge the potential risk we might have a correction, particularly if you think about

the equity markets where there's a bifurcation in the sense that valuations are very high even though we are seeing stabilization of economic data. that is something we have not seen stabilize and nobody would like to stabilize. multiples remain high as data starts to get back to normal. dani: is interesting to look at the flee from bonds. we are on track for tlt etf to put on its best month in terms of flows so far this year. you have households buying bonds. you have hedge funds buying bonds. is clear with this discussion people are but the type of people are price-sensitive buyers. what is that due to the volatility of the bond market when those of the types of folks who now are the majority owners of the market? katy: that's a good point. we have really seen bond volatility remain elevated since covid. protectively on -- particularly

when we see higher rates. there's more bifurcation of virus and sell it -- buyers and sellers. it was focus on rate cuts but now people are also embedding some sentiment in their flows, meaning as they get concerned about the high valuations in equities you start to see the risk off pattern where people think about bonds again as a safety trade, something to lock in if rates go up or something goes wrong and we end up in a situation where weak is actually weak. dani: what does that due to an automated strategy like yuan? you can see the clear trend of people buying bonds, bonds rally but it's more volatile. it is not as steady as the market once was. katy: this is definitely an issue. it means you have less conviction in general and signals. we have seen that in fixed income.

fixed income volatility doubled in 2022 and is still up and elevated, which means the overall direction of fixed income has been difficult to follow. you can see that by looking at the graph this year being short. that was the right call until recently. now it looks like the trajectory of bonds is actually lower yield. that suggests technical strategies are just picking up on price behavior and where markets are moving at the moment. markets are definitely moving somewhat towards this risk off hedging bets against equity potential weakness. annmarie: you have some research on potentially how the markets can trade with the upcoming election. a third of cfos see the elections impacting investments. given the fact we are on the edge of waiting for potential cuts from the fed and we still don't know the outcome of this election, howdy position for this? -- how do you position for this? katy: it's actually quite tricky but really about following with

the price trends are and they usually tend to be pretty strong around volatile environments. i think this fall what will be interesting will be to see how the market -- how people react to how the election unfolds and what potential trends might emerge. it feels right now because of the uncertainty around this that there's a wide range of outcomes. that means there could be very interesting trends in the fall. could it be long bonds? maybe. right now it is starting to hit that could be the case and there could be much lower yields. we have to wait and see from the data if we actually see that pivot and fixed income positioning completely to long. lisa: when it comes to the election potentially this is going to be dragged out for weeks. potentially not knowing the actual makeup of what washington is going to look like. bank of america today has a note talking about the zeitgeist. if there is a clean sweep there

is potential concern about a liz truss moment. whether we get trump or biden, how much are you taking into account the concerns about the u.s. fiscal deficit? katy: this is a great question this week. numbers came out this week and the bond market and people have been watching it, because with deficits up there is definitely concerned about valuation in fixed income. people definitely have their eyes on fixed income markets. they will be a lot of focus on auctions and also a lot of questions about how does that impact the overall valuations of u.s. fixed income. again, that goes back to the point that things are very volatile for fixed income. it is not an easy trade like it used the be. a simple risk of asset. with high deficits, bonds are not as easy to call. i think that goes to the volatility point, plus correlations being positive this year so far with stocks. lisa: earlier this year you had

high conviction to be short bonds based on the trend following. now you see a pivot point. where is your conviction level? can you have conviction in the near term to be long bonds? katy: i think in the near term is deafly very mixed. you have seen a pivot. we have seen more long signals in the european debt and international debt. that to me is sort of ahead of the curve in the sense you have seen the cutting in the ecb. you have seen other central bankers cutting which has definitely pivoted those particular markets to long. the u.s. curve especially with the cautious fed still remains a short view in the short term. if we continue to see evidence of risk off behavior, you will see that pivot as well. lisa: katy kaminski, thank you so much. great insight. let's get an update on stories elsewhere this morning. here is the bloomberg brief. yahaira: united airlines flight

leaving connecticut had to turn back shortly after takeoff after a piece of the engine cover fell off yesterday. crewmembers said they heard an abnormal noise after the parting of or the airbus a320. united says a part of the engine sound dampening outer liner was later found on the runway at bradley international airport near hartford. donald trump raised more money than joe biden for the second straight month in this election cycle, pulling in $141 million. the contributions have come from online donors, billionaires and super pac's with investor timothy mellon donating $50 million the day after trump was convicted. president biden's campaign is flush with cash, having $212 million on hand entering me. trump and the rnc have not disclosed their total on hand. red bull is looking at ways to expand its sporting empire

considering a bid for a new nba team. bloomberg reporting deliberations are focused on an expansion franchise in las vegas which would cost more than $4 billion. red bull already has significant experience in sports, owning two formula one teams and football clubs in germany and the u.s. an nba team would likely be its biggest asset yet. that is her bloomberg brief. lisa:, homebuyers awaiting on the fed. >> when you see rates cut you will see a surge in the short run in demand. lisa: that is coming up next. this is bloomberg. ♪

lisa: coming into the heat of summer, literally and figuratively, trying to eek out

gains after a multi-performance over the past week. s&p futures lower by about .1%. you have seen this bifurcation with nvidia leading all the gains up to this year, something like a third of all gains have been attributed to one name that gained about $2 trillion in market valuation. how far can continue to power a rally that is showing signs of exhaustion? exhaustion in the euro region with pmi's coming out showing weakness, possibly because of what is happening politically. there are some questions about how much this is in the pipeline and what you see on 10-year yields, marginally lower. under surveillance, homebuyers patiently and not so patiently waiting on the fed. >> the last two and half years have been this era of pent-up demand that suddenly the legs were cut out from under the housing market and people that were in the process of thinking about it were stopped in their tracks and everybody is waiting.

when you see rates cut you will see a surge at least in the short run and demand. -- in demand. lisa: home sales data duet at 10:00 eastern after housing starts building permits was at a for your love. andrew szczurowski writing, "the homebuyer needs to come to terms of the fact that 2010 to 2020 to for the anomalies for mortgage rates. don't expect to get a 2.5% mortgage ever again. lack of supply is keeping home prices elevated in most markets. that is unlikely to change." andrew, your note was bleak. rather bleak for anyone who was to buy a home considering we are talking about massive increases for mortgage premiums you are paying every month if you want to buy a home at these values and at these rates. in your view, you don't see that going down much, do you? andrew: we talked about mortgage

rates and they went to 7% and your 8% at the peak. all that is locking renters out of the market and preventing people from selling their homes because they do want to have the mortgage shock. your mortgage has gone from up almost 150% from where we were and 2020 when you factor in home prices and mortgage rates. that is a huge deterrent to actually moving. it has not killed home prices. ultimately, there is no supply and there is some demand. you look at the commercial real estate market, it's a different story. for housing inflation, the fed's desired goal to not actually occur. essentially there is no supply on the market. that is unlikely to change when you look at homebuilders pulling back on building. we have this building problem and that will further exacerbate the home price going forward.

normally you have expected this huge mortgage shock to create this decline in home prices. this is a case for if there is no supply there is some demand and you cannot get there. lisa: that raises issues about inflation going forward considering how significant a part of some the inflation rates housing costs are. from your vantage point do you see real relief on that front? this expected this inflationary trend a lot of people have said will transpire in the rental market, will happen with housing prices. are you saying it won't happen? andrew: we will see a moderation in rental inflation. i think we will see home prices kind of slowly moderate from here. not decline but come down from the 5% to 6% level to maybe 2% or 3% level. that's on the right path for the fed. the problem is we have this under building problem. over 1.5 million households being created on an annual basis but only building 1.2 r 1.3

million homes. dashboard -- or 1.3 million homes. for the fed it is killing activity. i think the fed is on the right path. they never would have dreamed you could go from 2.5% a percent mortgage rates and not have home prices fall, but we went up by so much the average mortgage holder has a mortgage rate sub 4%. it basically is if we had gone from 4% 5%, there would be more housing activity than there is today. the flipside is mortgage rates continued to decline, which i expect they will, you can see mortgage rates fell 5800 basis points and see activity pickup that actually home prices taking another higher and continuing on the path they are. dani: we are seeing mortgages come down. choose your range. is that enough to have homebuilders come back in force? they are not chasing prices now.

does that change the flow of rates? andrew: one of the interesting things with homebuilders is if you look at the average square footage of a home new home builders are building, it has come down from just under 2000 square feet a debt -- 2800 square feet a decade ago to 2300 square feet. they are trying to meet at a better price point. they know the affordability is way down because of mortgage rates. they are trying to do their part there. i think you are probably getting close to a bottoming in housing activity. permits are down. existing home sales are way down. we are getting close to a floor. as mortgage rates declined if the fed cuts rates that will give homebuilders a confidence to pick up on -- pick up for that coming cycle. the issue is we live in a country where we have already had a lot of people moved out of cities and builders have been

buying outside of these regions, whether it is 20, 30, 40 miles out. at some point there's not enough land to keep building at the same pace as you work unless you are going into the multifamily route. that is an area where it's a much different market when you look at the multifamily market where i mentioned commercial real estate prices. a lot of those buildings could be down 25%, 30%. your end investor is looking at whether capitalization rate is today and what the opportunity costs are. are you going to buy building with the yield of 5%? it doesn't make as much sense anymore. annmarie: if mortgage rates come down and we see people trying to get on the housing ladder, wouldn't that mean housing prices are going to go up? the demand is not there for that scenario. andrew: the scenario where home prices go down is kind of -- we

would've already seen it by now. it is tougher home prices to fall. it's a question of how much will they grow going forward. i don't think home prices will fall in any scenario other than a severe recession where you ultimately need the end consumer and on appointment to pick up substantially. assets, it's unlikely home prices fall. you can have it in certain regions that ultimately see in certain regions that are moderating. they might fall a little bit. on the national average is unlikely to see home price declines without some severe recession. that is the one trigger that can actually get you there. that is not something i'm forecasting in my projections. lisa: andrew szczurowski marc giannoni, thank you for being with --andrew szczurowski, thank you for being with us. if you are expecting for some reason housing prices to fall significantly to make it easier to get in, is looking unlikely the opportunity will present itself as the annmarie: unlikely

for dani and myself. the question for those people, if we wanted to move, do you wait for mortgage rates to come down? is that enough to want to give up your home? where is the supply going to come from? lisa: if you have much higher valuation on your home you are doing a better job, which gets into the division of people who are younger who don't have a home under belt versus those who aren't, witches of other issue that's figuring into the polls significant late. cyberattacks shutting down thousands of car dealerships across the u.s. we will discuss that with bloomberg' crg trudell. this is bloomberg. ♪

lisa: a quiet week trying to eat gains after a bit of softness yesterday and this morning. stocks treading water although coming back from some of the earlier lows. 5542. always funny seeing people say we see the bullish call for markets, 5600 by years end. nasdaq futures, completely unchanged. nvidia uncertain whether it wants to rescue the markets. russell 2000, a bit of a reversal over the past few weeks. in the bond space, twos, tens, 30's, yields lower across the board.

people await some of the snb global pmi data which could potentially show the weakness that we saw in europe, at least the weakening trend that a lot of people say may not be major data but seem to be heavily traded. euro crossing below that 1.07 mark as political risk grinds on. down .2%. given the political turmoil and the sense of a weakening in europe, maybe not over, in terms of how much it can recover at a time of increased price pressure and geopolitical turmoil. cdk telling car dealership they are likely to be without services for several days after two cyberattacks in the company which serves almost 15,000 dealerships. craig trudell joins us now. what is this, people using pens

and paper trying to sell vehicles? craig: cdk is not a conventional name but they are huge players in the space of providing what is called dealership management systems. that is a way of referring to basically all of the backend systems you need to line up credit checks, insurance for customers, track down replacement parts, basically everything a dealer needs to run their day-to-day business is run through these dealer management systems. there is only a handful of players. for one of them to go down is hugely disruptive to the car industry. we heard reports across the country that this has led to a standstill. as you have alluded to, returned of the stone ages of having to

do business with pen and paper. lisa: raises the issue of cybersecurity, given the other hats we have seen with other providers, at a time when cars are increasingly a national security risk. at least that is the word from this administration. how protective our systems selling cars, but also within cars, managing most of the vehicles that we operate at this point? craig: it's a great question and kind of ironic because cdk has built itself to dealers as a provider of software that helps them with cybersecurity and rejecting their customer information. this is a case of a company, this was supposed to be their role, to put customers data and information and trust that it would be kept safely. we don't know a whole lot at

this point the extent to which customer data has been compromised but we know the national automobile dealers association is absolutely pressing the company on this, the extent to which their members are affected. dealers themselves are telling us this is a concern we had. one dealer told us, that just moved onto the terminal, alluded to the idea that probably 50,000 customers have their data stored in cdk as a result of business with this company. annmarie: do we know who is behind this cyberattack and also how long these car dealerships will be dealing with this, going back to the stone age of pen and paper? craig: we don't have a lot of information at this moment of who is behind this. we know that cdk, as of last night, notified its customers that they expected this to continue for several days.

this first brought down their systems on wednesday which was really an inopportune moment because the juneteenth holiday would have otherwise been a busy day for dealers, people have time off, have time to go through getting a new car, getting the car serviced. that was disruptive to wednesday. we are now going into a weekend," or push, so this is -- end of quarter push, so this is not good for dealerships to run their business. dani: at a time now when cars are more complex than ever, they are very confusing. at this moment in time, how important has the dealer become? if you have a car, that's great, but you cannot go to any shop to get it fixed. has the relationship fundamentally altered?

craig: it is the case that people think about gm or ford having customer information and that is not necessarily the case. the manufacturers have absolutely wanted to get more in on that pipeline of very valuable data, but they work with franchise car dealers who are actually the front facing, closer to the customer companies. it absolutely is the case that these cars have more of their customer's information in them. some of that information is increasingly getting to the manufacturers themselves. a lot of that intel on people who are buying new vehicles is ending up with the dealers. companies like cdk that we don't necessarily talk a lot about. i do think this series of hacks is only going to spotlight these handful of companies that are left in providing the services.

lisa: craig trudell, thank you for being with us today. i am sure we will be catching up next week as we get more tariff announcements, in addition to cybersecurity. under surveillance this morning, jim bullard saying the latest cpi report has brought a september rate cut back into play. no sense of urgency in the real economy. there is this real push, pull right now on the fed. on the one hand, you can be patient, they have gotten it wrong. at the same time, others are saying, this is a pivot point. you are seeing the market wake up the downside risks. dani: i can understand the consciousness. we had a lot of hot data, they were reactionary, maybe they would have hiked in the face of this data. sometimes we can the idea of central-bank hawkishness with caution.

they are just uncertain. this goes back to what seth carpenter said yesterday, it is not a time when you can give a clear forecast. he says it's a mistake to do so. annmarie: forget september, have you seen the waiters were a july move? if you look at others, it looks like july is not a live meeting, but even now people are starting to talk about it. maybe it is not just one. by the end of the year. lisa: maybe the market is unprepared for a couple of weak prints that are not expected, akin to some of the hits we have seen in the data. the department of justice dropping one of two claims against tiktok, dismissing allegations that tiktok misled consumers about data privacy, planning to focus instead on a lawsuit over children's privacy violations. this comment to me, is also an interesting story, a mother of children who use tiktok.

on the one hand, politicians hate it, want to ban it, on the other hand, it's a tool to reach the young people. what is the legality versus the politics? dani: lots of campaigns are using tiktok -- annmarie: lots of campaigns are using tiktok to try to gain a younger voters. millennials and gen z are now the biggest voting block. when it comes to the story, the justice department decided to represent another agency in court, it has the authority to decide which litigation is better. potentially they think this is one they can win rather than the other. dani: interesting that this had come up before with tiktok, said that they have been working with the government. tiktok also released their brief for the lawsuit against the government. they said we tried to work with the administration, tried to do things to address motor safety. they had a national security government draft where they

said, we will give you a kill switch if you decide we are a threat. they say they wouldn't work with us. i wonder if we can look at this lawsuit and say maybe they are not working with tiktok, maybe they are just going after them. we don't actually know what is going on behind the scenes, but this is the case they are trying to build. lisa: not only when it comes to markets and tariffs, but specific companies, when it is unclear what the will is, and the ability is given these specifics. if you are getting on a plane, united airlines flight leaving connecticut at two turn back shortly after taking off. a piece of its engine cover that a lot of the airbus a320. they said a part of the sound dampening outer liner was found on the runway and bradley international airport near hartford.

dani, i know you are not having a phd in airplane maintenance, but this is a question, is this because the planes are older, they are not getting replacements, are they overwhelmed, certain airlines are having difficulty finding the people? dani: 22 years old, a plane that probably shouldn't have been in the sky. doesn't mean that they are unsafe, just that there may be more delays. maybe this will not comfort any of us, but the drive to the airport is more dangerous than getting in the plane itself. if you plan to drive instead of light, it is more dangerous. annmarie: what i know is the aviation industry is under immense pressure. when i looked at is is this another bad sign for boeing? ok, this is an airbus. but the faa still has a safety concern that airbus, as well,

and on united. there is just a lot of concern about what is going on right now in the aviation industry. when i saw this, i thought boeing must be breathing a sigh of relief. lisa: i wonder if we have these kinds of incidents all the time and nobody paid attention to them, and now, what are we going to do? let's get an update on stories elsewhere this morning. here is yahaira jacquez. yahaira: four oil refineries in southern russia were targeted overnight in one of the largest drone attacks since the war in ukraine began. the military said thousands of drones were intercepted over the black sea. one of the refineries was reported to have been damaged. ukrainian drone attacks against refineries have been increasing over the past weeks with at least two other facilities damaged. canada is the latest country set to announce tariffs on chinese electric vehicles.

people familiar with the metal telling bloomberg that prime minister justin trudeau is repairing the measures after announcements here in the u.s. and eu. the value of chinese ev is imported by canada has surged to more than 2 billion canadian from less than 100 million in 2022. yesterday, ontario premier doug ford called on the government to act, saying that the ev's are a risk to canadian jobs. kylian mbappe looks set to play today with a protective mask. but it will not be the one that he was hoping to use. he broke his nose in france's opening win over austria and had hoped to play wearing a mask wherever the french team colors. however, tournament rules say any protective equipment must be a single color and be free of team identification. that is your bloomberg brief. lisa: thank you so much.

we appreciate this. so he cannot look like captain america? captain france? the guy is playing with a broken nose. annmarie: he should be able to wear the mask that he wants to wear. dani: it is a little bit distracting. annmarie: he is playing for france and wearing a mask that represents a french flag. he should put a cape on. lisa: looking for a soft landing. >> if we get the impossible dream which is the goldilocks scenario of a soft landing, that has to imply the yield curve re-normalizing. lisa: still a lot of discussion about the mask. we will be talking about what is going on in the economy. this is bloomberg. ♪

lisa: still discussing mbappe's

mask, trying to understand the psychological effect of people playing against him and him. pause for a second. how can you be just as aggressive in order to protect your nose while also potentially winning? annmarie: and potentially in pain, if you are going for that header, this will hurt so much more. dani: it is for the glory of the country. annmarie: it is all depressing now. lisa: the economy under surveillance this morning. looking for a soft landing. >> higher for longer earnings allows markets to stay here even though we will get higher for longer rates. if we get the impossible dream which is the goldilocks scenario of a soft landing, that has to imply the yield curve re-normalizing. lisa: u.s. treasuries coming

close to you raising losses for the year as investors await upcoming s&p global pmi data. leslie falconio of ubs writing, we expect two non-recessionary hikes in 2024 starting in september with economic growth and inflation slowing. we think inflation -- investors should invest cash and money into market holdings and high-quality corporate and government bonds. do you go into pounds as a bearish bet when we have weakening data or is this still the goldilocks soft landing on a rate cut adjustments? leslie: i think it is a bit of both. if you look at what the yield curve has done since may, we have bull flattened. strong payrolls report. the market was pricing in two cups before the fed meeting, two after the meeting. the only thing that changed was the terminal rate coming down. the market is expecting this slower growth outlook.

that doesn't mean that you'll have a hard landing. we think interest rates will come down toward the end of the year as we have a drop in inflation, growth stays above trend. the issue is where you go in the curve. the sweet spot is the five-year part of the curve. we have no problem extending out into the 10-year area. lisa: this really has come down to this idea of disinflation, the idea of a federal reserve that is cutting. can you have that conviction on the very long and given the this agreement we have heard, in terms of whether we will see another bout of inflation, supply chain disruptions, a whole host of risks heading into 2025? leslie: no question, the risk is that we have this repletion scenario. supply chain disruptions would cause goods to go up again. we believe there is enough

demand from insurance companies, pension funds, foreign entities into treasuries. i know you often talk about the deficit. when you talk about supply coming into the marketplace, it has to be about what the market is expecting. we view the deficit as a passenger, not a driver. if you have a scenario where you have re-inflation or strong growth above consensus and supply, that is when you come out with that bear steepener movement which would be a risk to our scenario, but we don't think that is the case. we think inflation comes down, growth comes down, and supply -- which will be high, but the market is expecting that -- will have good demand from domestic and foreign players. dani: something similar that steve meadors said, already in the price as it stands. if i can throw in another risk that we are monitoring, the price of oil. especially as we head into a hot

summer, those disruptions, what good that due to your call on bonds if we see a pickup in prices? leslie: it is not just about the pickup but it is the sustainability of the pickup. we expect that you will see bouts of a pickup in oil prices, but it needs to be sustained to impact inflation over the long-term. no one is expecting necessarily a straight shot down. we have had two great cpi numbers, things looking positive as we talk about joints coming down which should lead to lower wages. that doesn't mean, to your point, that you can have these bouts of increases, whether in oil or gasoline prices. that might cause a little bit of vulnerability. over the longer term, we think that trend will be down. two good prints, not enough for the fed to move in july -- nor do we think they should -- but on the table for september. dani: you could argue that that's good cause volatility on this bond market, but as you

point out, this fed has become much more in line from where it used to be. you have seen the options market, extremely low. have we passed, not the peak in yields, but the peak in volatility? leslie: i think so. especially those of us that own instrument that would be considered short vol. you have had so much reassessing and repricing from the fixed income market which is forward-looking, versus the fed which is backward looking, a lot of volatility. but going forward we believe that volatility should decline. you will have pockets of vulnerability, no question. but most of that volatility came around the cpi numbers. we think now and going forward, the projection and print should be much closer than what we have seen in the first quarter. annmarie: we have been talking a lot about the data. softer, not soft, weaker, not week.

do you think we are moving into it is soft, it is weak, we are seeing these trends? leslie: i go with the weaker, not weak. we expect growth to slow. the market expects growth to slow. there is no way that the fourth quarter of 2024, when you look year-over-year over the third quarter of gdp, will be up. it is our expectation that as we slow, we will still stay above trend. we think the economy will weaken. we have all been surprised at how long of a lag we have seen given the fact that the fed has been on hold for almost a year next month. that will still come into play. we think it will be weakened but not weak. fairly strong balance sheets. the consumer, well not as strong as it was, is still a fairly resilient. lisa: i want to hone in on your call about going into high quality corporates, especially

when spreads are pretty narrow. the extra yield that investors are earning over benchmark rates are pretty low. they are actually at the highest going back to march, still under one percentage point in terms of yield. at what point do you have faith in corporations more than you do in the full faith and credit of the united states? in other words, that premium will shrink over time as people look to yield. anything more than that weakening in credit worthiness. leslie: absolutely agree with you. ig right now is not cheap by any stretch. most of the yield is coming from the level of treasuries. that said, even if you look at the foreign demand we have seen come into corporate's, which has really been able to be a great tailwind do not have the extra supply we have seen spread out, but we think the demand will be there. no demand the corporate market

is where the total return will come from, from a bit of carrie and price appreciation. but that is just a part of the picture in terms of high grade. things like treasuries. where we don't want to be right now, and we talk about compressed risk premium, and we look at the widening as opportunistic. but you are not being compensated for it. while corporate's are not on the cheap spectrum by any stretch, it will be a steady carrie. you will have that price appreciation going forward. it is just one of the sectors in high diversified. lisa: leslie falconio, thank you for being with us. maybe others agree with her, which is why hurts is having to pay 13% in order to raise money in the debt market. dani: the supply has been really

remarkable this week. it was light last week, the thinking that it was too much volatility in this market for corporate appetite to be there. it is clear the volatility is not an issue. in that hertz announcement, more than the bond thing they did, it was interesting, they said they are seeking lower-priced vehicles in their fleet. customer don't want to pay up anymore for the expensive cars. it is something we are seeing across companies. mcdonald's, five dollar menu. price fatigue israel. -- is real. lisa: yes but they are not buying? electric vehicles. amy wu silverman from rbc, some interesting things to say about nvidia. veronica clark of citigroup, dana peterson of the conference board. basically a day where markets are trying to find direction after a week of minor gains led by nvidia.

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>> growth is strong. that's great for all sorts of trades. if growth is weak? the fed will step in and cut interest rates.

>> if we see the labor market continuing to cool, it will go into september. >> it's an inflection point for the inflation story. >> the fed needs to double do on that commitment to inflation stability and targeting inflation. >> they would do themselves and markets a disservice at a time like this when you can't be precise. >> this is "bloomberg surveillance." lisa: i can't say let's get you to the weekend, that's trademarked and i would have to pay royalties, but this is the last hour of the show ahead of the weekend and i will say this, later this morning at 9:45 a.m., we will be getting data that traditionally hasn't moved the needle but in recent months things are different because people are looking for any sign of weakness to confirm that maybe we are not just weakening but heading towards a week. dani: on my show before this one, i heard jonathan on this

one coming out for that i guess tier two data, but i think it is in order and we trade on that. we traded on housing starts yesterday. it's data-dependent fed and we have to be data-dependent on literally every piece. lisa: literally a reason why i found what we got from france and europe are generally overnight interesting. s&p global manufacturing service pmi at a time when you are seeing just a slow rolling over. again, not necessarily recessionary but definitely weakening. how much of it is political as people set in france and to the point that you were talking about, that lack of ability to have visibility as a company, how much conviction can you have? annmarie: and how many people have come on to say that we are at an inflection point? data even if it is here to could give you a clue as to what's going on. with the weakening of the manufacturing or the business

sector, the director of the survey came out to say that anecdotal data tells you businesses at the moment see that political risk and say -- i'm just going to wait it out. why get in now when i could wait a month and get clarity. lisa: and the lack of clarity means the people have clarity around one thing, nvidia, reaching record highs, it lost the title yesterday, back to microsoft, biggest company in the united states. but the reason there is this question about how perilous and fragile the market rally is at a time where there was one stock powering one third of all the gains in the s&p this year, people are really starting to question valuations. dani: yesterday was the perfect example of what could go wrong, the biggest stock falls and it brings down the whole market. michael hartnett today it bank of america says everyone talks about feeling like they missing

out but at the same time they're worried about concentration risk. it doesn't matter, people have been piling in, meaning that once it turns, it's more painful because a lot of people will be holding the bag. lisa: if you are looking for a dip to buy, maybe we are seeing 1/10 to 2/10 of a decline on the s&p and nasdaq. you are just seeing it fluctuate around that on the s&p. the euro, weakening yet again. to me this is interesting. sub 107, can we get down to 105? 10-year yield headed lower, four basis points lower, now, as we await key data with housing data at a time when people continually tell us don't expect affordability to get easier. crude is just down a touch, north of $80 a barrel on the nymex. coming up, the rbc amy lee silverman and why she's calling

the equity market a paddling duck. the fast versus casual dining price for heats up over breadsticks and other things, five dollar happy meals, and veronica clark on the continued call for a september rate cut. nvidia continues to drive markets, ai driven rally losing steam, chip giant giving up its once recent spot as the world's most valuable company. amy silverman says that you know that seen on the titanic or roses at the helm with her arms open? that's nvidia right now. despite the bull run in the stock, this has not been reflected in options sentiment and it's a notable change to the first three months to four months of the year where the options sentiment matched the bullish meant -- bullish sentiment. amy joins us now. this really speaks to what we have been seeing in the market, which is not the same kind of evelyn's -- a boolean's --

ebuilliance. how much can they keep bumping up the phone mode trade? amy: when i look at nvidia and the mag seven, it's really telling. on the surface, everything looks fine, right? but when you look at the options sentiment underneath, it's a completely different sentiment than the first few months of the year where the bullish sentiment matched the exuberance that we saw. people benchmarked foam a. they jumped in the pool because nvidia was so much of await on the benchmark and you are seeing the opposite happen right now. it's not true for everything, so it is not this holistic move, but you are seeing it specifically in nvidia with the sentiment shifting a bit.

lisa: this is fascinating and a time when we hear about inflection points from person after person. are you seeing inflection points in terms of how people are hedging against downside risk rather than upside risk in the rest of the s&p 500 99 that haven't really caught up in the same way? amy: yeah, if i had to characterize it, i would say that we are at pre-inflection points in the sense that you see the tail being sucked out of the market, that's important, but you haven't seen the left tail swing to all-time highs. we are nowhere near the expansiveness of the levels we have seen in the past. one thing i have been calling this summer is a do-nothing summer and i mean that for a lot of these stocks like nvidia, apple, those that have gone so well, overriding selling the funding on the downside. those are the compelling strategies for a summer with

seasonal volatility, but i don't think we have got to the point where people capitulate. annmarie: it's actually rising and apple. -- in apple. why? amy: that is striking to me. if you had looked to march, which i would have called peak exuberance, essentially the mirror opposite was happening at apple. a lot of it was related to the china story and i would have said look, this is the tale of paddling things up with everything looking calm and great on the surface from a vic's headline level but you get these violent rotations and often at a time where look, only four or five names are the massive contributions of return to the market. the fact that one of them is going one way in the other is going the other, it's a diversifier in the market. investors have been joking with me -- why do i need a bond for folio when i have a mag seven? dani: a lot of people had been

decrying that the options market is fundamentally changing. it is something that we heard about so much to start the year, the options expiring the next day, the same day, they are gaining in popularity and it is causing more popularity. j.p. morgan even said it would lead us to armageddon. what is the status of that? it's not like we have seen huge volatility destruction -- disruption. the vix has been calm all year. is this no longer a threat or is it something still simmering below the surface? amy: it's really interesting and one thing to bear in mind is that zero data options have been popular for s&p, where it has accounted for half of all volume, even a little more at this point, but it is not impacting or stocks like apple, nvidia, meta-. talking about the volatility outlook, you have to look to the single stocks for the drama.

yes, headline volatility with something like s&p, that's quite low, that's what the vix is based off of, but it isn't true under the surface. it's a tale of two different options markets, which is why we think that selling calls like this owns the volatility on the s&p level. again, two different stories for two different markets. lisa: the do-nothing summer, let's talk about the contours of what that looks like were people who say don't say it twice, i'm out of here. how much of this is the fact that it won't be much in terms of performance versus people not wanting to take bold action ahead of what could be a pivot point, the pre-inflection point you talk about? amy: i like to go back to this stat, we look at the sharp ratios of all constituents on the s&p in the russell in the reason we do this is it's a good mechanical quantitative way to look at the risk-adjusted return in the market. i have to tell you that across

every sector it declines and it has been declining for the past few years we have been tracking it. the only exception being energy. how much more upside objectively are we seeing in the market and if that is the case, essentially from an asymmetric interview does it make sense to hedge and any exogenous risk could shake us out of the doldrums. that has always been true, but the costs of protecting against exogenous risks have always been low. dani: is it also a summer of complacency? amy: very possibly, yes, but when you are a derivatives strategist and it -- in other girl who has cried wolf for and it hasn't banned out, you have to realize that there's a reason realized volatility is low but that doesn't mean that the costs of protection is not at historic lows, it is, it's just we don't know the timing of exogenous risks and that's always the problem, we don't know when the music stops. lisa: amy silverman, always

illuminating to hear about that, the risk reward getting thinner and thinner. this all seems to be pointing to the risks mounting, but if you have been calling wolf all these years, you don't want to be on the wrong side of a trade that has turned out to be more foam oh then hiding under a mattress. dani: this is the thing with options. you can be right, you can want hedges and it gets more expensive to hold them, you've got that deterioration. to amy's point it gets tricky to hedge this stuff. you can say it is as cheap as it ever was and i want to be ready for these shocks, but you have to risk so much money to do so. lisa: zero data expiration and you will be fine. updating other stories this morning, here's your bloomberg brief. >> the trump campaign out raising joe biden for the second straight month. the trump campaign saying it raised a draw dropping 148 million in may amid a

fundraising boom over the historic conviction. the biden campaign sending a troubling update around fundraising ahead of the debate. traders could have some short-term market swings today. triple witching will see 5.5 trillion in options tied to indexes, stocks, and you tf's falling off the board according to the estimate from spot gamma. as contracts expire, investors will adjust positions, adding a first volume capable of swinging visual holdings. shares of spirit air systems rising after a report saying going is close to a deal to buy back the aircraft parts supplier , latest development coming after substantial progress was made in talks over airbus. boeing initiated talks earlier this year to buy back spirit, but the talks hit a snag over

the work for airbus. reports on the exact timing of the deal are unclear but it could come within days or weeks. up next, early morning calls. sarah senatorial, mcdonald's escalating a fast food's price war, coming up next.

lisa: still talking about that face mask, right now we are trying to find direction that's indicated lower as people reassess just how much more room there is to rally, deepening the losses on the s&p, down .2%. you can see that in the nasdaq as nvidia doesn't come to the

rescue as it has so many times before. time for the morning calls with her and seen raising its price target on apple, maintaining the outperform rating, reportedly increasingly convinced that apple will be nai beneficiary and if that takes longer to materializing -- materialize. oppenheimer, the sportswear giant portably on the mend after tough quarters, reinstating nike as a top i get cap picked. finally, bank of america securities maintaining a neutral rating on mcdonald's. sarah senatorial saying that the upcoming rollout of the five dollar combo addresses the lack of a national value menu but it isn't enough to overcome the cumulative price increases. sarah, can you set the stage about how much more expensive donald's items are then they have been in the past? the idea that they are not

thought of in the same way of value meals that they once were? sarah: as you alluded to, every year mcdonald's has increased the average menu price by a little bit more than what we had seen from some competitors, at least for the last three years. pricing was very competitive in terms of increasing loss the board 1%, 2% every year, then there was a real spike than nation 2021, 2000 22. most restaurants responded with higher prices, but mcdonald's pricing led to competitors by two points, three points per year, 2020 222 thousand 23 and again we see that in the first quarter, where the gap is a bit wider. we think that mcdonald's increases prices in the high single digits versus the 3% to 4% range impaired to the biggest national burger competitors.

lisa: this is a compelling state of play. is mcdonald's catering to an increasingly price-sensitive consumer, or is it that they are losing share to other fast food companies that have done maybe less inflation with their menus? sara: i think the answer is both. the consumer has been more selective, particularly with lower income households where there has been more cumulative input pressure from spending power. what we know is that as inflation broadly across the economy has slowed, consumers are more cognizant of which companies, restaurants or someplace else, have taken price increases faster than others. i think we are seeing more selectivity and some of those consumers are going not just to direct burger competitors, but elsewhere. we have heard for example from chipotle that they are seeing

strength in the lower income customer. we have heard from texas roadhouse that they think they have seen some trade up into casual dining. perhaps from other segments, because their value proposition is so strong. dani: not just a different value propositions, kroger had earnings yesterday and they talked about for the first time and sometimes seeing real growth in what they call the budget customer. how much is overall eating out volume down because people are saying hey, we don't have the money. sure we missed it in covid but now while it's our pinched and we are just going to the grocery store? sara: what you just described is to some extent the status quo, consumers under budget pressure typically eat more at home. what we saw during covid was sort of what i will characterize as pent-up demand or a kind of spending of demand. in the last two or three years we saw something that's quite

different from normal, the consumers actually trading up. we heard from darden about how lower income households were dining at places like capital grille and now they are returning more to normal patterns. to your point, year-over-year we are seeing traffic declines with low income households but it's a more normal environment now where people allocate budgets like they typically would. still, the long-term trend is to eat out more over time but with consumers under pressure we have more dining at home. dani: so, it may be normalizations, but are there any signs that it's more than that? sara: to date, no. in terms of seeing a mix, listening to darden and the mix of households, it's back to where it was pre-covid. the mix of lower, middle, upper income households, the price point, it's finally back to

where things were pre-covid. it looks, to use your words, like normalization, as opposed to consumers being under intense pressure or falling off a cliff here. there is no room for panic just yet. annmarie: how much our labor costs weighing on these companies, especially with care follow -- california and those wages? sara: california is a unique circumstance, wage inflation was very high. the labor market had been quite tight for restaurants and in early 2022 we were seeing low double-digit teens wage inflation across the board but now again, i will reuse the word normalization. we are hearing from most restaurants that outside california the wage inflation is more that 3%, 5%, mid digit range, precisely where it was before 2021 and the reopening

really drove wages up dramatically. the exception, as you say, is california, where we saw the $20 minimum wage overnight raise wages for the companies to which it applied by 17, 20%. most of them were paying more than minimum wage before the minimum wage went to $20, but you still want to maintain a gap those with entry-level rages and those that are more senior or tenured. all wages come up, to some extent, even if you are paying above minimum wage. lisa: i don't know if you can talk about this but -- annmarie: i don't know if you can talk about this but we would love to get your take on these viral mishaps with ai mcdonald's. are more companies going to pause before they start using ai because of what we saw take place at mcdonald's? sara: i think technology always

brings some pickups with it. i would say that when mcdonald's rolled out the experience of the future, kiosk ordering, you saw some initial challenges, right? it wasn't totally smooth. people had to learn how to use the kiosk and mcdonald's had kiosk ambassadors in the restaurants when they read -- were reopening with them. initially you had more labor, not less, you had to introduce customers to the idea of using a gigantic ipad, effectively, to place her order. we shouldn't be too surprised that when new technology rolls out, it takes operators and consumers time to learn how to use it and it takes time for the technology to be perfected. i don't think that this is -- this is not a new dynamic. employees, social media coverage may be new, but it's always the case that there is an initial bump in the road with new technology. lisa: what is it, the avocaddo

at chipotle? cut in half, i should endorse it at home. [laughter] sara: yeah. lisa: sara, thank you so much, really appreciate your time. that was sara from bank of america. annmarie mentioned that avocado on a mcclary be positive? dani: -- mcflurry might be a positive thing? dani: my favorite example of this is amazon go where it says ai analyzes what you take out. a lot of the interactions had just been thousands of workers in india watching you through cameras. amazon just told you it was ai. lisa: that makes more sense than what i've seen.

also, that idea of ordering on a big ipad, to me that is so deeply frustrating. can i give you my order? no, do it here. use the qr to get the menu, order online. it's just all of these hiccups. dani: maybe this is german phobic, but it is kind of close, kids poking at, then you have to use your hands to eat the food? lisa: hope you are enjoying breakfast right now. [laughter] coming up, we tease ahead to s&p global data on manufacturing and services. markets are a bit softer as people lose luster for nvidia. ♪

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lisa: heading into the close of the week with a bit of softness across the board, led by the nasdaq. a reversal after frankly it had led the way or quite a while. s&p futures in nasdaq jurors are both down. the russell 2000, finally outperforming by not losing anything. that is sort of the state of lay any time where it you had been leading the charge but doesn't doing so at the moment. right now in the bond space you are seeing a bid into bond. this morning really highlighted how much people are shifting from leslie falcone io to katie kaminski. this idea that we are at some

sort of tipping point for the week this we see in the economic data signals something else. this perhaps a little bit more protected. dani: feels like there is finally momentum to the bond market. and if the trend is for yields to come in, there is still a lot of potential for volatility. sure, we are more in line with the fed and that helps with volatility, but are these opportunities for the fed to spike, supply or the price of oil, doesn't mean it's an easy road ahead. lisa: even the price of housing, with a pent-up demand to buy, declines in mortgage levels could lead to that kind of increase in activity. what you are seeing in the euro space is a bit of softness after people reassess just how much more political risk there could be. really, the issue here is how much is priced in and how much has yet to be. earlier you mentioned that quote, annmarie, saying that

this is the new normal. some people are saying that this is just waking up political risk in the sovereign debt markets in a way that it hasn't been since 2012. annmarie: zürich insurance says they are basically not owing back to those levels. once the snap election was called and once the risk was introduced, and france this is the new normal. a lot of people are saying to take advantage of the moment, then. they don't think it is going to be as bad as some people suggest, so they say now is the time to position yourself. lisa: more turbulence for major airlines this morning, a united flight turning after losing part of a liner from inside the engine cover. the faa saying they will investigate the incident. the united safety procedures are already under scrutiny and flight attendants are threatening to strike. the latest round of talks with company concluding without an agreement on a new contract.

we are talking about all of these airplane stories with respect to those airlines in the troubles they have had, but annmarie, this is the kind of time where we see ongoing demand fly that is pretty consistent, record potential travels for the july 4 weekend. so, which is it? is this just people looking to capitalize on the strength by getting their due? have airlines mismanaged their finances don't have all of their planes? or is this a shifting point that we should be focusing on? annmarie: we have been here before with american, last month union talked about going on strike. but that's a great point, the leverage that they have right now on the cusp of a massive summer traveling season, can you imagine 28,000 of these airline workers not running and working, these flight attendants for american, meaning that those flights will be grounded. dani: this feels like the summer of discontent, insanely hot,

waiting forever in line, everyone wants to go somewhere. annmarie: unless you have clear and tsa. dani: i think she's in the pocket of big clear, i'm concerned. [laughter] lisa: will investigate after the show. in may, donald trump out raised joe biden for a second straight month, picking up 85 million dollars, short of the $141 million donated to the trunk campaign. how much is this just catch up? basically, trump has not gotten the big business donations from the billionaires who might have gravitated towards him previously as opposed to a greater acceptance by more mainstream donors? annmarie: every day you see a story of someone else -- someone else coming out saying that they were going to distance themselves from the former president but then decided to come on board. biden has been way ahead of trump when it comes to building up war chest and out trump is playing catch-up.

one thing that is interesting is even though we saw the monthly figures, biden has a lot of money on hand and trump has not said how much she actually has in the bank. certainly right now the money is rolling in for him. lisa: the former st. louis fed president said that the cpi print is in play with two cuts expected about pricing. just before we get to our guests , how much are we even listening to fed speak at this point? how instructive can it be given that ultimately everyone just believes we are ultimately squarely in the data dependent zone? dani: not to be cruel, but they are not really saying anything. the only thing that we hear is we have got to wait. what do we do with that? you could be really harsh, there was a critique saying -- look at them, the economists, they are technique rats. not in a position to lead us.

they have to rely on the forecast of the central bank and those have not been working out, so we are left with data dependence central bankers, a term that means they don't know what to do. lisa: so maybe we shift to the scenario analysis. joining me now, veronica clark and dana peterson. veronica, seems like the world is shifting your way in terms of looking for more economic weakness and not necessarily celebrating resilience the same kind of way. do you think that maybe there is a tipping point in the economy that is becoming more clear or do you think that people are realizing they got over their skis with betting the soft landing? veronica: it was only a couple of months ago where the narrative was more acceleration but now the data has slowed and i don't have trouble convincing people like i had to a couple of months ago, but it does feel new to us that this has been a gradual slowing.

we may be at the tipping point where you are the nonlinear weakening with layoffs a building on each other and a much worse economic backdrop. lisa: do you see this tipping point from your vantage point, dana? dana: for a long time we predicted slowly in the economy and a recession call for a long time. now we think the second or third quarters will be growth between 0% and 1%. consumers leading the decline. the thing is, consumer spending could be wiped out but not really have a recession, because -- or even a bad recession, because most consumers are working, the labor market is to well, wages are elevated, and businesses are not looking to let go of workers. that's a key factor that will keep the unemployment rate low, even if we see layoffs on the margins. dani: this looks like an area where you disagree, so let me rescue, dana says you could

start to see what we typically see in a cycle, layoffs turning nonlinear and going up speed. why would this time be different? dana: well, this time is different because of labor shortages and the reason we have them is because of demographics. it's never been the case that we had 10,000 people retiring every day. those are the baby boomers. that's why businesses are saying that even though they expected the recession to happen, they were not interested in letting go of employees. two reasons. yes, of course labor shortages and people retiring but also the sting during the pandemic of trying to find qualified workers and raising wages to do that. you don't want to that, even if you think there will be a slowdown. this is a structural change in the economy that we haven't seen. dani: not to do this to you, veronica, but why could they not be wrong? veronica: we have experienced labor shortages over the last

couple of years where they have to get hired back at a higher rate, but i think that is still a precarious position if you have been holding onto workers for too long and suddenly you have to let people go, it could mean that you are letting even more people go and i don't think it prevents layoffs. annmarie: barclays came on with a report talking about how pretty much we have had this insane surge of immigration we are seeing so many jobs filled by that. so, where exactly is the shortage? dana: well, when you think about immigration, a lot of it is catch-up. during pandemic we had travel bans. if you were an immigrant then, you could not enter. a lot of it was getting back to the levels that we saw in terms of immigration right before pandemic, but the shortages are definitely happening, especially in leisure and hospitality, health care and social

assistance. if you have noticed, many of these jobs, you have to physically show up for work. the companies that we speak to, the ceos of the fortune 500 firms have been saying that they can't mind the qualified workers they need for jobs that are dirty or uncomfortable in there is no flexibility in terms of hybrid work. annmarie: when it comes to immigration, veronica, how do you view it as putting a app on inflation? have we reached that point where that story is over and starting to normalize? veronica: it has been loosening the supply side with more workers, so it is helpful on that front, but immigration is a boost to supply and demand. those are people who are going to buy goods and need housing. it's not clear what that does. overall it is a disinflationary force but not necessarily a big

one. lisa: i'm glad that you brought up the report from barclays that showed it counted for three quarters of all job creation so far in recent years as immigration flows. to me, this is shocking. i love both of your takes. this idea, is this the right kind of job creation that is really going to create sustainable stronger economies? as opposed to early in gaps and doing it on the cheap in a way that aches people understand why, even though we have a good labor market on the surface, people seem so dissatisfied? veronica: i don't think the immigration story is one that is going to last with the strength we have had of the last couple of years. maybe five years from now. it is not so clear that these workers have been hired at lower wages. still see average earnings 4% year-over-year, so there hasn't

been disengagement. >> something that we were talking about with mark at barclays was the idea of how much can we understand the numbers years for the labor market as being strong if they are very different from what they have been in the past and the jobs being added are new people coming to the country that don't account for job mobility or how much the economy has grown and how many more will are in the labor force when talk about absolute is? how much is this view of the labor market overly rosy based on historical comps that are no longer valid? dana: laborers are laborers, doesn't matter if they are foreign-born or domestically born. look at the labor force participation rate overall, it has not returned the pre-pandemic level. why? raking it out, looking at people

who are prime age, 16 to 64, yes, that's participation rate recovered over have not. there are people exiting the labor market and immigration is certain going to continue to be an important solution for addressing the fact that we are losing workers hand over foot during retirement but it is also getting the domestic workers out . certainly, when you look at the wage gains we have seen, they are in goods. those are the types of jobs where many people who are immigrants might gravitate in those wages are rising aggressively. even among services, wages growth has slowed, but it is still particularly elevated relative to the range that we saw pandemic. i don't see an issue with the types of jobs people are taking, foreign-born or domestically born, the point is they are working, wages are elevated, they are getting in and these people will be consuming and

spending and they desire the same things domestic workers are. annmarie: and it's a structural thing. there are still not enough to fill all the jobs, so when we are talking about the world of trying to bring inflation down, waiting to see if there are >> in the labor market, is it waiting for ghetto? do we need to get used to something more uncomfortable because there are still persistent supply issues? dana: when i look at the services, it's flowing through, certainly excluding insurance premiums. that is probably not going away. that is something the fed will have a very difficult time resisting, because again it is a supply in the bed is a good at addressing demand issues. where we will get a lot of traction as 12 months is from housing. if you look at the home price

index and he laughed at by 18 months, -- lag that by 18 months, where -- that with how you her oer is going. then insurance costs for housing and autos. those are different reasons but we don't know when they are going to end in the fed is going to be challenged in terms of getting asian back to its sustainable target. lisa: dana peterson and veronica clark, with us as we look back at the data we got recently. glad you brought up home sales and values in terms of the inflation we expect to see, we have existing home sales later today and the latest read on corelogic home prices. how much do you believe what we have been hearing from the likes of jonathan miller and others who say that at this point if the fed cuts rates, it will just reignite a housing market reading for any catalyst for people to have a more affordable entry point? veronica: it is

something we are watching and and it feels like we could get some buyers coming back but even with mortgage rates above 7%, last year there was a surprisingly resilient amanda for housing in 2023, there was resilient demand for everything because people were not willing to buy homes, they were not willing to sell, but we have seen listings come up over the last several months and there is not demand now, so it does feel like the resilient consumer is waiting everywhere. dani: i think this question of prices is fascinating. not just -- will come back, but what happens to the pricing of homes? could we be in a scenario where ironic the fed nuts but housing rises go up because demand comes back? veronica: it's not clear, we have seen softer demand over six month accompanied by softer prices. we haven't seen the extraction

-- exceptionally strong prices of the last six months, so in the near term it is still a soft demand story without the upward pressure on prices but longer term we are structurally short housing and new construction will be back. you are going to stay short on housing and that could longer-term pressure on prices. lisa: the american consumer, you talked about them trading down on the services they purchase. what kind of >> are you seeing -- cracks are you seeing in the u.s. consumer? dana: fundamentals, while most are working, the excess savings from stimulus is gone and many consumers are financing expenditures with that. it's all coming home to roost. consumers are not buying goods. we saw the goods spending slow at the end of next year -- last year, it was negative in gdp growth. retail sales in the second order is signaling another downswing in terms of big spending.

services, consumers are still interested in going on vacation, but they are trading down the types of services. instead of going to the movies, they are going to stay home and stream. consumers are also looking at spending on services that are necessities. for example, health care and insurance for your car, but certainly not the highly discretionary types of services. lisa: just to put it altogether, what are you looking for in terms of this being a welcome softening of disinflation versus something that has more pernicious legs? dana: this is basic monetary economic theory and a part of the fed plan, right? slow demand inflation. the challenge is that the fed has all of these other supply-side elements leaning against what they want to do, going back to the labor shortage, that's a supply issue but it is all part of the

program, making sure the consumers pull back on spending, including home purchases and if you are not dying house, you're not buying the items that go along with it, so this is good. the thing is the fed is probably pleased with what's happening because you don't have massive layoffs and we think that the unemployment rate will tick upwards, but maybe it will land or .2% below the rate of unemployment and that is really low. if we have this perfect scenario of beleaguered consumer demand, weaker demand for housing and most people working with inflation slowing, it suggests the fed can start cutting interest rates probably by the end of this year. lisa: dana peterson, veronica clark, thank you so much for being with us as we set you up for the week ahead. here is your bloomberg brief. yahaira: move over, nvidia, microsoft retakes the title of most valuable public company.

nvidia lost ground after slumping yesterday .5%, losing $100 billion in market value. the stock is down again this morning. in a filing with the sec, it was revealed that jensen long sold a fraction of his stake in the company for just under $32 million. shares of carmax are higher in the premarket, earning stronger-than-expected first quarter profit overshadowing a revenue drop. retail unit sales decreased .1%. the average used vehicle price dropped around 3%. carmax said vehicle affordability challenges continue to impact sales, with ongoing headwind expected because of inflation, higher interest rates, and tightening lending standards. new jersey transit says rail service has been suspended for trains going in and out of an station, saying that unspecified issues with overhead wires owned

by amtrak were causing the disruption. this is the third time this week that local commuters have faced delays. amtrak says that services between new york and philadelphia will be on a delayed and modified schedule because of a delayed commuter train. lisa: thank you for those updates throughout the morning. setting you up with a day in the week ahead, this is bloomberg. ♪ (♪♪) ♪ 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 ♪

[introspective music] recipes. recipes written by hand and lost to time. are now being analyzed and restored using the power of dell ai. ♪ lisa: counting you down to the opening bell, the trading diary for the week ahead, s&p global data coming out at 9:45 a.m. and

then existing home sales, which should be interesting given the discussion we have had throughout the week on that. mary daly and chris waller speaking. tuesday, new-home sales. thursday, durable goods with another round of jobless claims. so, honestly to me when i take a look at what you heard from today, a lot of it was this tipping point, this inflection point that people are not willing to lean into. dani, what's your final take away? dani: the output is specifically for the consumer with retail sales data that showed weakness than some folks expected and also what we heard from companies, dana peterson that it, instead of going to the movies, people are saying homey and streaming. budget shoppers are coming to kroger for the first time in a long time. restaurants we heard from saying they're getting less traffic. this idea that it was the ptsd of consumers locked up in covid, coming out and revenge shopping and it would last forever

because we were so scarred, this week has really laid bare the truth, as soon as you are worried about prices, that goes away. lisa: mcdonald's coming out with a five dollar meal. starbucks coming up today talking about half-price. this coming off, that's coming up, 50% off a drink is on. deals are coming your way after we sales. especially given the concerns that people have. annmarie: inflation concerns are in the polls every day, which is why people are not spending big on lavender lattes and starbucks dropping vices. that's why am interested in the weekend politics. feels like the final call before the storm. debate is on thursday and terry haynes said earlier in the week that this will be both candidates trying to frame the next few months before november 5. lisa: what are you looking for? annmarie: republicans are saying in private is that trump's

overconfidence, is it too much of a risk? does he come out to angry, too boisterous, potentially question mark providing, the point was -- does he carry the debate with a lot of excitement and energy for the entire 90 minutes? greg said this, that if eitan shows he's clearly into fine, speculation will begin immediately about replacing him on the ticket. that's a major risk. lisa: something that we haven't heard a lot of. will that gain discussion? amanda lynam and stephanie roth, coming up from wolf research. we will be looking at housing prices next week, looking at consumer confidence and at some personal spending data. right now, you can see the essence claw back a bit of the losses from earlier, down one sent has yields go lower. this is bloomberg. ♪

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katie: futures taking a bit of a breather on this friday, the countdown to the open starts nono -- starts now. ♪ traders place -- brace for volatility as options are set to expire preyed business activity loses momentum on french election fears per u.s. pmi numbers out and expensive markets stay expensive.