>> there is a bit of fog when you think about the 2020 outlook -- 2025 outlook. >> do think that trump is more market-friendly than biden. >> i think you know what you are getting in terms of policy. >> both candidates are going to run on more spending. >> have to be super humble about what is going to happen. announcer: this is "bloomberg surveillance." jonathan: i have genuinely forgotten how to do this. live from new york city this

morning, good morning, good morning. this is "bloomberg surveillance." equity futures negative on the s&p 500. main event, it is debate night in atlanta, georgia. the president, joe biden, facing off with the, donald trump. lisa: at a time when people are wondering whether something pivotal could shift the odds. there is a since they are and that could. the polls showing trump is edging ahead. what could potentially move the needle if there is some sort of flub? could that reset the top of the ticket? annmarie: the next debate is not until september. if there is any sort of big moment that could hurt one of these individuals it is going to be replayed. when you start looking at some of the polling, who do they need to get to? it is those individuals who have not made up their mind. there is only about one in five voters planning to watch the debate to look at some of their plans and policies to decide who to vote for.

jonathan: can we just talk to -- talk about the debate before we get into policy? it is june 27 and we are talking about the first debate of this election cycle. the conventions haven't even happened. why is this happening so early? annmarie: exactly. it is the first presidential debate ever in history, which is why it makes it so interesting to watch. remember a few months ago, we were wondering, with these two individuals ever even spar again? and here they are. it is a long few months until september until they meet again. this is why it feels so high-stakes. sides the substance, the style is going to be important. jonathan: a lot of market participants focused on the dollar. we will catch up with deutsche bank's alan ruskin. this is what deutsche bank has to say. our forecast is dependent on the u.s. election and the extent to which a protectionist trade policy is pursued. if this is the case we would

like to revise our euro-dollar call to parity. that is how big some of these calls are. lisa: i highlighted that in my notes, because this is the interesting stakes of this. if there is a more protectionist policy, how much does that lead to dollar strength and ongoing american exceptionalism? this is counterintuitive. some people saying it will hurt the economy, it will slow growth. guess what? it is going to hurt everybody else so much worse. jonathan: dollar-yen, 1.6048. -- 160.4 a. macron is down by about 6% in the premarket. missing some very high expectations. lisa: let's put the actual numbers on this. the guidance was that fourth-quarter sales would be seven point $4 billion to $7.8 billion. the average estimate was about

$7.6 billion. it was in range. basically, there are sky high expectations for companies that have been associated with ai. they have big in profitability. if these companies cannot deliver they are going to get penalized. the shares of micron had rallied ahead of this earnings report. how many other microns are there? ai darlings without the numbers to prove it? jonathan: the broader scores look like this. the s&p 500, negative by point 15%. -- .15%. crew just north of $81. coming up this hour, fantastic lineup for you. we will catch up with chris merengue. -- chris merengue. and maya mcguiness of the committee for responsible federal budget. at one still elusive.

we begin with all eyes on atlanta tonight. president biden and donald trump going head-to-head in the first debate of the campaign. the tough part about this election is it is not entirely clear which candidate is truly better for the market. chris is with us around the table. morning tea. two focal points for you. one is alexion dynamics and the other is policy. what do you mean by election dynamics? chris: having an elected president on november 6 and one that is inaugurated in january. we have been here before. we have seen these dynamics play out in institutions survive, but there is going to be some stress around it. we will see how the consumer and economy reacts to that. jonathan: was january 6 a study for that? chris: possibly. you have bush-gore and other instances. we live in a different world. good news is we have experience in this new world. annmarie: if that is a concern

that means likely a lot of volatility for the market. how do you prepare for that? chris: i think the market has been a little complacent. we haven't talked about this election enough. mostly about the fundamental policy divergences between the two candidates. no one can argue that part of the run for the magnificent six, people just hiding in those names because they have such great balance sheets you don't have to worry about the election. but obviously this point when we are making an investment decision we are thinking about, what would this country -- company's fortunes look like? lisa: do you have a model for that? chris: it goes back to the quote we just started with. i don't know which candidate is truly better for the u.s. economy and market. we all remember 2016 and the run that the market had upon trump's election. i think that is going to be going through most people's heads. knee-jerk would be for the

market to go higher on a trump win. but there are other elements there, including perhaps a greater inflationary policy, tariffs, etc., which we have to first of all gauge how serious he is about those policies and with the impact is on a variety of stocks. lisa: is this a watch and cya, or do something now to prepare? chris: i think it is find good companies with strong balance sheets. lisa: like nvidia? [laughter] chris: it is why we are favoring what we call defensive quality names. talk about utilities. we talk about industrials with recurring revenue, etc. i don't think you want to be taking a whole ahead of the selection. chris: i can think of a country with really good balance sheets. france, for instance. in those companies can drown in friends politics. is there something about that it -- that that is uniquely french? are the things we can get away with in america other countries can't?

chris: there is something to american exceptionalism, but each of those cases is a little bit of a morning. we still like mexico as an investment place. but we were caught off guard. if you would to win. but look what happened to the peso. that is a little bit of a fear, that suddenly the market wakes up in november and decides they need to change the outlook during -- outlook. chris: have you added to those positions in mexico? chris: we have added to them. more attractive today given what has happened to the peso. jonathan: can you share with us what those are? chris: a media company with a stake in univision. that is going to be a huge beneficiary of this election. jonathan: would you do the same thing in u.k., in france? if you saw in france adverse

developments politically would you add positions there as well? chris: the core of europe is a value trap. i'm sorry, johnny, but -- jonathan: i'm not taking it personally, don't worry, chris. chris: i would love to view it as a safe haven. as a place we can get away from these u.s. dynamics, but i think they are worse in the core. lisa: this goes back to our additional question about the dollar. we were talking about alan ruskin, that basically a lot of trump policies are going to end up favoring the dollar regardless. how much does it lead you back to u.s. companies regardless because as dysfunctional as it might be with trump or biden it is going to be better than elsewhere? in other words, that none of it actually matters? that maybe people are getting over their skis with how different both of the candidates will be for the market? chris: listen, obviously there are a lot of other factors to consider, putting, is this a republican trifecta?

one of the things we saw from trump in his first term was, he was very sensitive to the market. and would back off certain policy measures, especially when the market appear not to like them. that is why i say it is a little unclear as to how this plays out. but, listen, i think this election in many ways goes to our strengths, which is we have a home bias in the u.s., which is not always good. i think it is a pretty good place to be. lisa: we started out talking about how everyone is heading out to nvidia. there is this idea of hiding out in names you know ahead of this uncertainty. it speaks to the lack of breadth we have been seeing in markets. today or yesterday the s&p 500 rose on negative breadth for the sixth straight day. that would tie the longest streak going back to 1999. does this give you pause, that should there be conviction on

some level you were going to see a selloff in the names that have been the ballast for this market, and drag down the index regardless of whether you see strength in the economy? chris: it is why we recommend clients not necessarily own the index. because that will happen. what goes up will come down and there will be mean reversion. it has been frustrating for those of us who are not overweight the mag six. there are some bargains, obviously, in those other 494 names. small-cap in particular, which i have been talking about. i don't want to talk about being a barbell i'm a but we have some risks which will benefit in a soft landing or rate-cutting scenario. we are sticking to some defensive large-cap names. annmarie: when you look at what you should be in ahead of november but do you have a base case on the outcome of not just the president also congress?

-- but also congress. chris: -- annmarie: in that sense we did see a lot of the market unnerved around a lot of debates when it comes to the debt ceiling. if you think it is a republican trifecta to those sort of issues in washington basically get a lot easier because house republicans will, of course, want to basically get on board with what president trump wants to do? chris: i think one thing is certain, and it is that we are not going to see fiscal sanity with either president. we are not even going to go there. obviously patching the trump tax cuts will be easier with a republican trifecta and we will have less friction on that front, whether that is a good or bad thing is another question. jonathan: my question is, blue wave or red wave? lisa: the question is, if you get some sort of joint effort, joint sweep, how much is it

worse under one then another? i have seen opposite expectations from both. again, you can pick all of the election outcomes correctly and still not understand the policy ramifications. jonathan: we will have this conversation for the next five months. chris marangi there of gamco funds. we are negative by .1%. with an update he was your bloomberg brief with dani burger. dani: rishi sunak and keir starmer have gone head-to-head in their final tv debate before next week's election. economic proposals have featured heavily during the event. starmer accused sunak of being out of touch and attacked the conservatives' record in government. wall street's biggest banks past the fed's stress test. staying above the minimum capital requirements doing a hypothetical recession. jp morgan said the test results

are rosier than their own projection. amazon has joined an elite group of companies. the tech giant reached a $2 trillion market valuation for the first time ever yesterday. the ai rally has pushed the company into new records. even so, goldman data suggests hedge funds selling tech aggressively. that is your brief. jonathan: we will catch up with dani in about 30 minutes. it all starts tonight. pres. biden: during the previous administration my predecessor made promises that he broke more than cap. >> now under cricket joe biden the world is on play. pres. biden: my predecessor failed in the most basic presidential duty. jonathan: it is this on repeat all the way until early november. that conversation up next. this is bloomberg. ♪

jonathan: live from new york city this morning, good morning. quiet start. in the bond market, some stability for you. under surveillance this morning, at all starts tonight. pres. biden: during the previous administration my predecessor made promises which he broke more than cap. >> now under cricket joe biden, the worst president in the history of our country, the world is in flames. pres. biden: my predecessor failed in the most basic presidential duty. >> is not getting the job done for america. he is incompetent, ladies and gentlemen. pres. biden: i'm a grown man running against a six-year-old. >> i just want to debate this guy. jonathan: here is the latest. president biden and donald trump taking the stage at 9:00 eastern tonight. james lucier seeing three likely

outcomes. a snooze fest, start of a longer-term story, or a catastrophic error that could decide the raised -- the race. out of those three what is your money on? james: my money is on the snooze for us. -- snooze-fest. presidential debates tend to be boredom waiting for someone to make a mistake. that is what we will be looking for tonight. annmarie: when it comes to mistakes potentially that we could see this evening, do you think, like, what of the vulnerabilities for both of these candidates? james: i think there is nothing donald trump can say at this point that would shock the public. he has already proposed having ufc fighting competitions for undocumented migrants. he can say anything he wants as long as he says it in a genial way. it is all about trump's temperament. i don't think anyone is listening to what joe biden says. they want to make sure joe biden

does not freeze at any one moment. it is about losing temper versus freezing up. annmarie: what do you make of their debate prep styles? james: you cannot see a more spectacular comparison. at camp david the biden administration has dealt in an airplane hangar an actual mockup of the debate stage they will be on. biden has taken off the entire week to stay at camp david to rest up, to get his exercise, to dedicate all of his energy to one hour and 30 minutes of focus. whereas trump has been doing his usual thing, talking to people and staying loosened up. it is sort of the hyper-controlled, hyper-study model versus donald trump's let it go. the fact is that most people really do need to study and prepare and be disciplined. but people like trump's style of letting things rip.

either way he could work, i would bet on letting things rip in this circumstance as long as trump does it in a genial way. a charming way. he could have a very good evening. james: annmarie: isn't that -- annmarie: is like going to be harder that once your time is up your mike is muted? james: in the first debate in 2020 then-president donald trump had just been diagnosed with covid, and you can see his anxiety coming through. he felt he had to destroy biden on screen and he really won over the top. having the microphones turned off 14 that trump could not interrupt biden for badger biden . it could work both ways. having the microphones turned off means trump would have to keep under control. it means that biden also, you know, needs to maintain his own focus through his own a lot of times.

lisa: we spent the first 15 minutes of the show talking about how it does feel like a tossup. it does feel contra -- consequential, yet it is very difficult to protect the policy ramifications of that. when you talk to clients, what are you advising them to listen to? what you looking for as a consequence for policy and us in markets? james: frankly, a lot of it does come to the election outcome. if we have a narrow outcome, even if you have a republican trifecta, as you mentioned, narrow margins does not necessarily mean you're going to be able to make changes. either the president will have to deal with the congressional majority he has. while people are predicting the eschaton, i think in fact we are looking at probably a narrower range of outcomes because both potential candidates would have a very difficult and of cards to play if they become president. lisa: we were speaking with a

number of strategist over the past couple of weeks who indicated there is this possibility, especially how early this debate is taking place, that if there is some catastrophic error, particularly by joe biden, that he could potentially be replaced at the top of the ticket. do you adhere to that kind of thinking? james: i don't, because i think it is too late. the scenario here is not inherently credible that barack obama, nancy pelosi, jon clyburn, the great and good, the eldest of the democratic party would go to joe and say, you have done a great service to the republic, but now it is time for you to move on. you still run into the kamala harris problem, which is that i don't think there is any viable alternative to kamala harris for the democrats. it's not going to be a white guy. it's not going to be gavin newsom, no matter how tall he is, no matter how good he is here. you cannot overcome the optics

of displacing a black female with the white male candidate. the fact is, i think the odds are very low. it would take a truly spectacular moment for joe biden to try to replace him before the convention. in the convention itself, we have not had a real political convention that chooses candidates since probably the 1920's. really, it is a very dicey maneuver to say to your symbol delegates that, guess what, you're going to ask you to recall your reptilian dna, to go back to the way you used to operate 100 years ago, and ratified candidate. i think it is basically joe biden or joe biden. annmarie: i understand the odds are low for that, but the fact that we are having this conversation and that a lot of people are coming on this program, greg valieva, does that

mean the damage is already done for the biden campaign? james: i think it is largely baked in. you can see it in the sense of massive preparation. you can go back to the maggie haberman story about loading a mock stage for joe to practice on. does show that the damage has been done. frankly, that is why we have a unique collection here, where the incumbent president who has an overwhelming advantage does not in this case. incumbent presidents in the second quarter of the year usually have a financial advantage over their opponents and the use it to great effect. joe biden dumped $30 million of advertising on donald trump in the second quarter. since trump's config -- conviction he has dropped another $50 million of negative advertising on donald trump. it is had virtually no effect. instead of arguing and policy, joe biden's advisors are working

with the president to find him ways to needle donald trump, to provoke some sort of outburst. to get the angry trump instead of the jolly trump. it is literally, we are having a debate about who has the most powerful office in the world. it is about which of these two older gentleman has problems with his mental health. jonathan: we will get you in the promo for our coverage later. james lucier of r for partners. -- capital alpha partners. echoing how people feel about this country this year. lisa: 90 minutes of boredom waiting for someone to make a catastrophic error kind of feels like what we have been talking about on repeat. it feels like either way, unclear, unless something catastrophic happens. he was dead panning there some of the most inflammatory comments. that is how everyone feels about one of the most unpopular races i could possibly imagine. annmarie: james was talking

about the money the biden campaign is using to go after the fact that trump was convicted in this manhattan truck. within two thirds of voters say that outcome may no difference to their vote. this was supposed to be one of the vulnerabilities they wanted to harp on when it came to the former president. jonathan: it makes it so difficult to predict 2025. think about this, how difficult, how different the biden presidency would have been if the democrats did not win the georgia runoffs in early 2021. lisa: to push that forward to the debates, whether they try to cater to the middle or cater to the extremes of their parties. jonathan: coming up, we will catch up with alan ruskin of deutsche bank on why the u.s. dollar will remain stronger for longer. that conversation just around the corner. from new york, good morning. nking. to help you see untapped possibilities and relentlessly work with you to make them real.

jonathan: live from new york city this morning, good morning, good morning. your equity market, -5.1%. the nasdaq only down by about .1%. likewise on the russell. macron is down about 5% in early trading. let's turn the page and get to the bond market. the thirty-year looks like this. the 10 is stable. 2-year, monitoring your supply, your debt auctions.

brammo, yesterday what did we get, the five-year? lisa: yes. yesterday's auction went all right. the two-year option before that went all right. today the question will become a seven year notes tend to be messier at a time where you are seeing this creeping higher in yields. jonathan: so far, so good. look for that later this afternoon. let's get to foreign exchange. want to talk about dollar-yen. when you hear japanese officials say things like rapid, the weakest level going all the way back to 1986 in yesterday's session. 160.43. lisa: we were talking about intervention at 140, and then 150 and 155. the question is, are you going to throw good money after bad to prop it up when ultimately that is not going to work? it has to come in the form of some rate hike by the bank of japan. is that on tap next month? that is what an increasing number below gaming out. jonathan: have you heard about

what happened -- what would happen if they have to defend their currency more? lisa: if they have to liquidate treasury holdings and anything else, how much does that have upper pressure on u.s. bond yields and frankly a knock on effect globally? at this point what is the willingness by the japanese authorities to do that? given that it has had a negative -- a negligible impact? there is this fear that there could be some sort of market knock on, which maybe is the reason why janet yellen was saying, we don't like this. you have to warn us in advance. jonathan: that started at the imf world bank meetings earlier this year. under surveillance this morning, president biden going head-to-head with donald trump tonight in what will be the earliest presidential debate in u.s. history. biden spending the week preparing, while trump has been on the camping trip. embry, you can often learn something about where they are campaigning and who they are targeting. what is donald trump doing?

annmarie: on some of these rallies he has been to he is riffing off the audience. should i be tough, should i be nice? that is something he's not going to have this evening, which potentially hurts trump. but what he is doing is biden has been hunkered down. he has been at camp david. he has someone filling in as trump, bashing him in doing these things that potentially they should be planning for. so, very different styles, but both are prepping, just maybe in different ways. lisa: when james lucier was talking, it struck me, how seriously do we take this? people try to say it is that one man cannot do that much given the infrastructure of the governing body. even the fact that you have the congress and power that might be inflicted. that might be the angst underneath the market right now. this lack of clarity on just how much clout one person at top the republic can really change all

of the policies that we have in terms of tariffs. that is one of the anxieties underpinning the lack of market response to some of the iterations we see in this campaign season. annmarie: before we get to any of these policies it is going to be about style tonight. people want to see, is there going to be a stumble? politico this morning has this. call at the highest-steaks hate watch of any presidential campaign. more than 70% of americans plan to tune in. it is those people that are undecided that they maybe have a chance to flip. jonathan: this is going to feel like halftime at a football game print and not halftime of a political debate with serious implications for the country. it is going to be about performance, style, energy. lisa: he's looking a little angry, i don't know. he's looking a little tight. jonathan: that if -- that is the state of things right now. lisa: how seriously do we take this office? how much of people going to look

at that and say, what is the knock on effect of policy? jonathan: we will catch up with henrietta treyz in the next hour. shares of micron falling. failing to satisfy investors. the selloff highlighted the challenges companies face meeting skyhigh ai expectations. that stock is down about five percent. difficult to get a read on how much this was expectations around ai and whether the more traditional parts of the business underwhelmed here. lisa: morgan stanley saying that ai momentum trade, the enthusiasm is not necessarily creating a bubble in the likes of nvidia, but is caring along some stocks that might not deserve to be carried along. wonder how many stocks have seen their share prices increase not because they are offering the goods, but they are writing sentiment. -- they are writing the sentiment. jonathan: that move is not dragging down this market.

i want to talk about foreign exchange. a gauge of the u.s. dollar, hovering near an eight-month high after a slew of economic data might drop and change this story. we will get jobless claims, as well as a third read on first-quarter gdp. alan ruskin has been writing this. the dollar will remain stronger for longer. big dollar cycle can barely be called a cycle. good morning. it is good to see you. stronger for longer and you have quite a call around euro-dollar based on the outcome of this election. can you frame that for us? how important is the next 12 months going to be? alan: i think it is going to be important. you have to dollar looking like it is going to outperform almost regardless of the election. i think we could certainly see euro-dollar remaining in the 110 range for a while. -- 1.10 range for a while. a lot of this has to do with weakness elsewhere. it is not really always a

dollar-positive story as much as a comparison where the u.s. shines. the election when that kicks into gear and you start to think of, are we going to get 50%-plus tariffs for china? are we going to get tariffs directed at europe, at mexico? all of that changes the dynamic, and potentially in a positive way for the dollar. then the geopolitics as well. the commitment to nato. the commitment to taiwan. those are the elements that will shape the dollar going forward. jonathan: that policy will not hurt the u.s. dollar, it will help it. this is a know you and the team put out yesterday. our 2025 euro-dollar forecast is hardly dependent on the election and the extent to which a protectionist trade policy is pursued. if this is the case we would like to revise our euro-dollar closer to parity. what is behind that story? alan: initially it is going to be this classic supply-side shock. the market, i think, will

ultimately swing to the left side of the smile, in essence, which has historically been risk-off, equities tend to go down, carry trade tend to have a much harder time of things, and the dollar tends to benefit in that an environment. it would likely prompt some sort of fed response as well. that is part and parcel to this, which is, again, the fed will remain tighter for longer. in essence, the dollar remains higher for longer. annmarie: are both these candidates protectionist? alan: yes, but i think there is orders of magnitude here. the orders of magnitude are significant in this regard. biden has played his cards, in a sense. the market's view is he represents continuity. i think trump is talking a whole another level of protections, particularly when it comes to china. he is willing to push back on traditional allies like europe, and that is different.

he has already shown in the past he is prepared to put a link between immigration and tariffs, with a country like mexico as well. when you were talking about all of these major trading partners, if you add them all up and they are all potentially going to be weaker, then by default on the others the dollar tends to be stronger. lisa: is there any inflation forecast embedded in that? that some of these policies could be inflationary, keeping rates higher? also giving a lift to the dollar? alan: absolutely. look, if we do see tariffs on the order of 50%-plus directed at china it's going to come back in the form of higher inflation. in that regard you are sort of second-guessing with the second-order effects are, because i think there will be pushed back to that. and therefore you don't get tariffs of that sort of order of magnitude. but you do have to think, at least, it is a stickier inflation environment going forward. lisa: it is late june, when

people are coming out with game theory around the mental workings of some of these presenter candidates, saying that donald trump, if he were to become president and issue some of these tariffs the market pushback dramatically, he would change course. do you adhere to that? there is a market put on these policies? i'm not talking about the liz truss-type moment in the treasury market, but also stocks? if they get a whiff of protectionism hurting business models? alan: i think the market has enormous influence here. the story is, you don't get 50% tariffs, maybe you go back to something of the order of magnitude we are used to. 10% tariffs. i don't think we're going to push back against protectionism. that seems to be too much part of the trump thought and terms of second administration. jonathan: let's get to dollar-yen. 160.44. we are talking about levels we haven't seen since 1986. what are your thoughts on how

the japanese authorities are going to approach this issue? how big is this issue for them? given their failure over the last month to stem some of the losses in their currency? alan: i don't think it is a disaster. there is a self-corrective mechanism here as well. jonathan: what is it? alan: if the yen weakens, they do tighten in a way, but what you are seeing is little by little they are letting yields go up. the back end of the curve has gone up. what is interesting is how little the yen has responded. you have seen a very substantial compression of yield in favor of the yen. if you took the 10-year yields spread yen should probably be trading of 140 at this time. i feel sorry for them, but what they are needing to do is break the momentum. and once the momentum breaks you have yields already on your side. but at this point in time there is an awful lot of momentum. jonathan: given the rate

differentials and we have not seen the response in the fx market, why haven't we? alan: psychology gets quite perverse. initially it is, well, dollar-yen cannot go up on good news, so it must be going down, you know? you have that sort of psychology. or the boj is clearly not effective. but eventually -- it sometimes takes quite a long time. i've seen back in 2001, 2002 the dollar just continued plowing ahead as the fed was cutting rates. it just had a lot of momentum. and it broke eventually. i think you will see a break, but it is hard in terms of forecasting timing. jonathan: final question. it's going to be a long one, so forgive me for going on here. for as long as i have been doing and i have been interviewing your -- interviewing you. i know this is your last day and you're going to be retired. you have been so kind to me,

especially in my early years when i didn't know what i was talking about. you educated me on foreign exchange. can we talk about your history in the market, four decades? just leave us with a little bit of alan ruskin wisdom. what is your big takeaway in your career? alan: that is a big question. certainly in terms of foreign exchange it has always been exciting. we are going through a lowell now, a period of, the heyday of foreign exchange has passed. i don't think so. there is always something that comes up. the world is interesting. you cannot predict some of the real economic effects, global politics looks far from stable, and i think there is always something interesting going on. we have to some extent moved a little bit away from developed currencies to the e.m., now to frontier currencies.

there is always this evolvement. the market is going to remain interesting as long as we have floating exchange rates. jonathan: this community has been lucky to have you. alan ruskin of deutsche bank. anka. your bloomberg brief. let's get to dani burger. dani: bolivian president luis rsa has sworn in a new army commander. hours earlier troops stormed the palace in an attempted coup. libyan troops crashed the tank into the building. his administration has struggled with an economic crisis amid dwindling natural gas exports, a shortage of dollars, and a currency peg that has effectively collapsed. a boeing whistleblower alleges he was retaliated against after raising concerns about a subcontractor's work during mechanic claim to have substandard manufacturing practices. he says he was fired after reporting issue.

boeing whistleblower reports have surged since january's midair blowout. the round of 16 matchups at the euro are set. george's shock went over portugal secured their passage, where they meet spain. belgium's draw with ukraine means they face a daunting clash against france in the next round. the round of 16 kicks off saturday. that is your brief. jonathan: looking forward to it. more in about 30 minutes time. up next, america's looming debt crisis. >> the situation is bad and it is probably going to get worse. the congressional budget assumptions are optimistic. they don't have a recession forecast over the next 10 years. jonathan: that conversation up next. live from new york city this morning, good morning. ♪ (♪♪) the road to opportunity. is often the road overlooked.

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jonathan: live from new york city, good morning to you all. equity futures recovering. we are negative by about .1%. no drama on this board. in the equity market, yields just about unchanged. under surveillance this morning, america's looming debt crisis. >> the situation is bad and it is probably going to get worse. the congressional budget office's assumptions are pretty optimistic. they don't have a recession forecast in the next 10 years. they assume the tax cuts in 2017 expire. things are probably going to be worse. jonathan: u.s. debt level set to be one topic at tonight's presidential debate. a recent congressional budget office, warning u.s. federal debt will jump from 99% of gdp this year to 120 2% in 2024. maya mcguiness of the committee for responsible will federal budget writing this. when a 25 will be a consequential year. now the candidate has offered plans for addressing the

important fiscal deadlines they will face within the first year of the next term. maya is with us now for more. can we start there? important deadlines they will have to -- deadlines they will have to face within the next 12 months? maya: 2025 is going to be a crucial year when it comes to fiscal policy. as soon as we are swearing in the next president, the debt ceiling is going to be returning. that will start in january, but we will have a number of months where there are extraordinary measures. we know that is something the next president is going to have to deal with. that has been a struggle in the past. opportunity to save money. opportunity to save debt. we have seen both. they also have a huge expiration of the tax cuts and extending those, which is something candidates have said they want to do in one form or another. could cost upwards of $5 trillion. you may see people trying to expand them. we also have the end of the spending caps that were part of the fiscal responsibility act. so we will have to figure out

what we are doing there. i'm pretty certain that whoever is president is going to have made a number of promises for more borrowing. it is going to be a year where there is the potential for editions of trillions of dollars being added to the debt just at a time where the congressional budget office has been warning us, we are in deep trouble and we do have to change course. you're not hearing much about how we would change course. lisa: there are a lot of people listening, including politicians who would shrug off the idea that spending increases and tax cuts in and of themselves will increase the deficit. they would argue there are tax cuts that would expand the economy and certain setting plans that would also expand the economy significantly. where is the truth in that and where is the fiction? maya: there are fiscal myths everywhere, because everybody wants an excuse to not to have to pay for the ink they do in the budget. the greatest thing a candidate can do is give away spending increases without a plan to offset those costs.

frankly, none of it is true when it comes to policies, tax cuts, or spending increases paying for themselves. the trump tax cuts appear to have paid for 20% of their cost. if you look forward, it looks like from the estimates out there it would cover even less, because there have been a lot of ways there have been workarounds within those tax cuts and they have been dumped draining more from revenue sources then we might have anticipated. spending side it is probably more difficult to offset the costs. those are not the only myths. we hear people saying, don't worry, print money. i hope that inflation is a reminder that that is a serious misstep. and there are regularly times when people say, what is the deficit doesn't matter. what we are saying is -- seeing as our huge debt levels have led to higher inflation, higher interest rates, not being as prepared for the next emergency, recession, or otherwise. and probably is a real drag and threat to our national security. so, this underpinning every week

fiscal foundation is hurting the entire rest of the country. you still have politicians making promises not to fix it and not to pay for the new things they want, trying to come up with fairytales for why they shouldn't have to. lisa: you talk about borrowing costs. some people say the fed could cut rates dramatically to offset the deficit and it could actually do factor decrease the deficit dramatically. at least the borrowing costs the u.s. will have to pay. how much do you understand different yield levels as being sustainable and completely unsustainable in the near term? is there a pivot point within the yield space where you say, this is going to have alarm bells? lisa: that is -- maya: that is a great question. what is the timing of the market saying, we cannot tolerate this? when there -- might there be a situation? we don't know the timing come off course. all we know is that the fiscal policies of this country are making monetary policy for our

monetary policymakers much more challenging. because when they are trying to control a situation of inflation we have fiscal policy makers are more, pushing inflation up more, and making the ramifications of changes even more threatening to our fiscal position. annmarie: this evening's debate is interesting because it is basically two incumbents and they are going to be asked about the record. who is worse for the federal deficit? trump or biden? maya: we have recently looked at a record, what they did in terms of the borrowing they approved while they were in office. all the numbers we look at or over the coming 10 years. admittedly no president owns their economy or the fiscal situation, and covid was a you'd, huge sort of unexpected thing that affected both presidents. what we saw was that with covid president trump added as much as eight point $4 trillion to the debt over 10 years without covid it was about $4.8 trillion.

that is an astronomical amount of money, particularly that so much of it was put in place when the economy was incredibly strong. so far -- and president biden's term is not over and there is still a chance he is going to add more to it, but he added 4.3 trillion dollars without counting covid, and his covid was not bipartisan the way president trump's was. those numbers will be $2.2 trillion. there is a huge take away here, and that is that neither of these presidents, and the economy was strong and needed less borrowing, neither of them have heated that morning. they both have engaged in borrowing when there was no economic reason to do so. and that raises real warning signs for what would happen when either of them were in office in 2020 five, which as we just covered, is a huge year for fiscal policies. annmarie: entitlements. that is the biggest chunk of this budget, and defense. have you heard anything from either pollock -- either party

that they are looking at showing the sub? maya: i have heard they do not plan to fix it, which is the biggest pander you can have. with them are trying to scare american seniors that the other party would do something to harm their benefits and reassure people that they will not do anything to fix the program by calling it protecting it. to be clear, social security and medicare are both facing insolvency. if we don't make changes in roughly a decade there will be across-the-board automatic cuts for providers and retirees. this is a terrible policy, and what we need to hear from the candidates is how they would shore up those programs. whether it is looking at retirement ages, means testing, raising revenues, they are hard choices. that is what the budget is, but it is also what leadership is. we need to hear from them how they would fix entitlements. that is what threatens seniors and all of the people play -- people paying into the program. jonathan: thanks for being with

us. maya mcguiness of the committee for a responsible federal budget. on a not so responsible federal budget. fact that we have been doing this for the best part of two years is pretty shocking. lisa: especially because we have not been tested by recession. that is the real question. if you can't get a response to some sort of financial downturn, what happens in terms of inflation and the fed's ability to respond? annmarie: and how difficult next year is going to be? there is going to be a that fight immediately, and as senator warner is calling it, it is basically tax armageddon next year. there is going to be a massive fight, regardless who wins. it's going to be some level of these tax cuts continuing. but a massive fight about the corporate tax rate and the like. jonathan: the first place i will be looking is the treasury market, without a doubt. coming up, tpw's jay polonsky. deputy assistant to the president.

and joanne feeney of advisors capital management. all that and more from new york. this is bloomberg. ♪

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>> it's hard to get too bearish in the markets at this time. >> is that just the mag seven that's high quality growth. this him good stocks outside of tech. >> the trading nature of markets at this point is a feature not a bug of the ai theme. >> the impact of ai on those things it's positive for a lot of sectors. >> it's hard to find someone who's not bullish.

>> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: the second hour of bloomberg surveillance begins right now. good morning for audience worldwide is debate time in the united states of america and atlanta georgia facing off the sitting president joe biden and the former president donald trump. this comes from you from capital alpha. three likely outcomes he says, a boring snooze fest, the start of a longer-term story or the catastrophic error that could decide the race. lisa: probably 90 minutes of pure boredom waiting for someone to make a catastrophic error. that kind of sums up how a lot of people will feel of the next five months. annmarie: everyone will be looking for style less so than substance. basically it's two incumbents. we know what they stand for but

people want to see their style. is he going to be badgering biden and despite an come out looking robust like he did at the state of the union. does he come out looking tired? jonathan: it's coming so early in the year, before the conventions even take place. the sitting president wanted this to happen. there are concerns about his age and concerns about his energy and you look at polls in swing states he's not doing so well and hasn't been for a long time. the hope is if you get engagement that things start to turn and turn in his favor. and they want to get that engagement quite early on. annmarie: they want to make sure those whispers about potentially could it not be a candidate biden that those are put dead. maybe they can do that this evening. bruising polls for the sitting president from quinnipiac

yesterday in the new york times and what i found so interesting about the new york times siena poll is for trump it's not really vulnerability that's the conviction. people are ignoring that but for biden it comes up the concerns of his aged 81 years old. lisa: people are listening and then they're going to watch the debate purely for entertainment and then is there can be something that changes. people don't want to make a prediction because you can put it tuesday and a win and you can't predict what the outcome of the markets is good to be after such a win. jonathan: it's unclear which one is good to be the best one for markets. we all remember in 20 what happened then. a lot of people thought president trump would be bad for markets and it turned out they were wrong. lisa: people of been hiding out in the big tech names in order to get independent of the risks they cannot control.

regardless of the outcome do you get a rotation out of those names when policy comes back and people don't want to be in the most crowded areas. does a lot of interesting aspects onto the market that will potentially unravel as a result of the lack of clarity. >> macron down 5.6% in the premarket. disappointing high expectations but you look at the numbers they weren't that bad. we've seen this move over the few months. lisa: there is a fear and mike wilson highlighted it well that there are some companies that are getting wrapped up in the legacy around ai. if you don't have the numbers to back up economic or similar to nvidia how much do rates get punished. jonathan: the broader market looks like this. equities coming off the back of two days of gains pulling back just a little bit.

yields on the 10-year. foreign-exchange just about reclaiming 107 on euro-dollar. we catch up with jay looking ahead to the first presidential debate. growing that's trumbull win a second term, deputy assistant to the president on energy risk in the middle east. that conversation but when five minutes away. president joe biden and former president trump set to debate tonight in the earliest meeting in u.s. history. jape a loss give tp w saying we find trump's economic plans to be a potential disaster at a possible crash landing for an overbought u.s. dollar but we look forward to the debate where some of this will presumably be surfaced. j it's fantastic to catch up with you. this is a very different view on the u.s. dollar, the view we had about 20 minutes ago. let's start the conversation like this.

you tell us why you think about this differently. the dollar will remain stronger for longer. they said this about euro-dollar. the 20 25 euro-dollar forecast highly dependent on the u.s. election and the extent to which an aggression -- aggressive protectionist trade policies pursued. we like to devise that closer to parity. they think some of the trend damage your kind of alluding to what attribute is a stronger u.s. dollar and not a weaker one. >> that's what makes a market for sure and their deftly different views on this and we do have a distinct counter consensus point of view here and it's actually interesting because we think biden is going to win in a landslide and that's been really since the start of the year. we also hold the contrary thought that if trump wins it could be the catalyst for a crash. so let's start with the dollar.

the dollar has been in the trading range according to the market which is one of the top missions. for 18 months prayed that suggests it's going to break out at some point and have a big move. if it breaks lower as we think from 105 today, it could get to 95 or below very quickly. why is that likely to happen? we had 16 nobel laureates letter together outlining the problem with trump's economic policy such as it is. it's highly inflationary. it's antigrowth, it's likely to lead to stagflation. it could create a period where the fed is in confusion because the fed cuts in september as the markets expect and then trump is elected. markets fear inflation, continuing the tax cuts, he's going to impose massive tariffs.

most -- both significant inflationary and so the market forces rates higher to your earlier discussion. the fed looks like it may have to hike so you have infusion in the markets, at the same time the dollar is the most over owned asset in the world. foreign ownership of u.s. financial assets is at an all-time high. so the rest of the world is in recovery. europe is in recovery. asia is in recovery and therefore the opportunity set to take profits in the dollar and to go elsewhere could be extremely compelling. we simply look at it like this. trump has made his views clear. nobel laureates no way more than i do and made their view clear. it's a contrast between that outlook and a biden second term which for all the concerns about biden's age, he has a masterful

policy response, the u.s. growth coming out of covid is by far the best in the world of any developed economy with lower inflation so the policy mix, forget the age. the policy mix of the biden administration has been fantastic. >> aside from political prognostication there's a pretty big call here. how much conviction do you have? are you avoiding u.s. dollar assets entirely and shifting to where instead? >> you can talk but have to invest in a certain way. we own u.s. assets, we run a global macro so it's stocks and bonds and commodities. we are overweight equities, overweight commodities. significant the underweight fixed income. and we have used for example in emerging-market local currency

debt which were anti-dollar obviously. that's hurt us this year. that position is down 5% year-to-date. so we are i would say overweight non-us assets. remember the u.s. to my earlier point represents 62% of all country world index. that's a record high. 50% u.s. and our equity position we are probably little bit less than that. so that's underweight but still a big position. annmarie: if i can go back to what you're looking at it's not just that you think biden is going to win you think it's good to be a blue suite. what gives you that conviction especially when many people are talking about it's good be difficult for democrats to control the senate. >> we have a point of view and it's a distinct point of view and we think you can supported by looking at things in every swing state the democratic candidate for senate is running

ahead of the republican candidate. and every race over the last couple of years virtually every race democrats have done significantly better than forecast, better than the polling would suggest. so there's a level of success that democrats have had running for office across the country over the last several years but would support the idea of much more enthusiasm than people think. in addition there are things like abortion on the ballot in key states that we think are going to drive democratic turnout to a significant level that is not being captured applicable he. the house is in play. the senate every close swing state race in the senate is leaning democratic the senate level and we think the issues around biden versus trump are going to break for biden as

where they already are doing in a sense that if you look i'd only a couple months ago versus today biden is doing better and only now is indicative, it's too early. tonight's debate will be very interesting as everyone has pointed out. jonathan: lisa talked about your market calls. how do you think bonds would respond to the outcome you're looking for. >> i just want to understand if you get that blue wave out as the treasury market response to that. >> i think president biden's policies on the fiscal side are more in line with controlling the deficit. he's not going to extend the tax cuts we were seeing earlier. 25 is a huge year because of the trump tax cuts either have to be extended or reversed. biden is going to reverse them. trump is going to extend them.

i would think the market fixed income side depending on where the economy is at that point it's hard to say. the economy is going to drive it. it either backs up the bond market a little bit if trump wins it's going to be i believe a significant backup in yields which could potentially put the fed in a box creating significant uncertainty around currency in -- if the dollar breaks lower and you have a dollar that's crashing versus talking about the yen at 160. it's at 160. it could go to 140 very easily. jonathan: very different view to alan at deutsche bank. that's what it takes to make a market. we've got presidential advisor in the green room might be reaching out looking to hire you.

thank you. i imagine if they're watching this in the green room probably ask what he heard right. >> a blue wave is better for the economy, better for the market. the white house -- jonathan: not the stuff on president trump if he gets a second term, or would it mean for inflation. this consensus in the economics community but this idea of constructor for fixed income for treasuries the consensus view is blue wave a red wave the treasury market sales often coming november. >> differing views on who would be worse for the present -- treasury market. lisa: there are also encountering views on who can win. you have people saying absolutely. saying 200% the donald trump is going to get reelected. annmarie: it's hard to have conviction right now so these people who do pray we have so many months left ahead of us and a black swan event could happen. a number of events but also jay

is talking about what biden is doing in the polls. one of them although he's saying abortion will be the big issue and they're trying to campaign on this the economy and inflation remains number one also even some democrats are starting to say immigration is a top concern. when you look at those two issues. on the whole they trust trump more than biden on it. go go out and the number one and number two issues is lining up behind trump's favor bread >> months and months of scenario ahead of us. jonathan: let's get you an update on stories elsewhere with your bloomberg brief. >> softbank's vision to fund is investing in ai. the deal is the latest bet on one that he deems crucial to securing his legacy. complexity is a u.s. startup starting to stink which itself from the ai chatbots while providing real-time information. amazon is launching an online

storefront for low-priced apparel and home goods. the plan to start shipping home goods directly to consumers from china. amazon is sought to hold its ground. it previously encouraged chinese merchants to use logistic services that cap merchandise of u.s.-based warehouses. this is amazon's biggest move today to capture the rise of discount upstarts. elon musk space x will sell insider shares in and offer higher-than-expected price. they will be sold at $112 apiece that values the company close to $210 billion per that's up from when they last got evaluation in december. a source says the jump in value is due to significant demand. the valuation is a new record for an american private company and that's your bloomberg brief. jonathan: we will check in and about 30 minutes. up next, the rematch begins. >> everybody knows he's a liar.

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jonathan: live from new york city welcome to the program. equity futures down to tens of 1% on the s&p 500. a bigger mover in the premarket for you. previous range 320 to 335. they've slashed that. this is a tough retail environment. there can a close a lot of stores. >> thousands of stores potentially this was reported by the wall street journal they interviewed the ceo of walgreens who said 75% of our stores drive

100% of our profitability today. others want to take a hard look at he also went on to say with -- include persistent pressures on the u.s. consumer. to me i wonder how much that's the story and how much this is the story in the plastic containers you walk into you have to get someone to unlock. i think doesn't that sort of hamper your desire to go into a drugstore to buy goods. >> it's not exactly the nicest experience. you've got to call an assistant you want to unlock the toothpaste. >> you up to stand there with people who want to be served first then you get your one thing it if you want something else you don't go. jonathan: the stock is down by little more than 5%. one hour and about 10 minutes away. new data on jobless claims. the rematch begins. >> everybody knows he's a liar. >> you are the liar. >> take a look at what he's

done. he's done very little. >> you could never of done the job we did. >> i don't understand why this president is unwilling to take on prudent. >> there's been nobody tougher to russia between the sanctions prayed nobody tougher than me on russia. >> china's perfected the art of the steel. we have a higher deficit with china now than we did before. >> we handed him a booming economy. he blew it. >> president biden and donald trump returning to the debate stage for the first time in four years tonight on cnn. the candidates agreed to shake up the rules with no live audience, no notes and microphones muted after their turns her over. henrietta what are you looking for out of this very -- this debate in 2024. >> at this point i'm hoping people will genuinely watch it and it won't just be sort of something that goes live on tiktok. i suspect people who will be

swayed by this according to the latest data last night are actually the ones that early younger voters, specifically black and hispanic voters who are saying i'm to watch this debate to find out who i'm get a vote for prayed that the largest undecided basket right now. my attention is on how they feel as clips go by. annmarie: similar vote similar polling. what does each candidate need to say to the gen z's out there? henrietta: it's the only question that and -- matter spread undecided voters will decide this election. polls are off by about nine points versus where they landed november. it doesn't mean they're wrong. the polls are telling you about a big basket of undecideds and third-party voters who organized a there. those are disproportionately female voters who are plus 17 for biden right now. and they're double the number of

undecided male voters out in the ether. they're just proportionally younger voters. they are black and hispanic voters and they are low education voters. these are folks who will be deciding based on what happens tonight into september and the biggest issue biden has is his age with this demographic so him performing well tonight the way he did at the state of the union could have a material impact on polling data in the next few weeks as people decide how they're going to vote are predisposed to be the democratic basket. that's where we spend our time. annmarie: last when he four hours we had a point of the act and cnn poll and biden is down in both of them. you have a lot of data on how the polling is off and by how much print what you inferring from these latest numbers? henrietta: as the new york times right up it self suggests is really important to watch but also important to put in context it's not good news for biden. there hasn't been much in the

way of good news for biden except for the fact trump remains at his ceiling. his supporters are locked in and will not be deviating prayed its biden since november of last year who's been on the slow uptick and that's from a whole bunch of things. democrats coming home. i spent a lot of time with clients talking about who would replace biden on the tip -- ticket. any indications that biden can do tonight to dispel the narrative being spewed by the republican party that he is not able to do the job for the next four years would go along way because that's where the resistance is. talking about immigration reform. immigration is down 40% since the president enacted his executive order. that's lower than it was when he took office. so the issue republicans have a lot of salience around has been

muted and is now on par print gilgo for the debate stage where the gen z vote is one that's up for grabs you should talk about abortion all day every day. lisa: his policy can be relevant to this debate? henrietta: i sincerely doubt it. i would be surprised. i'm sure the will be conversations about things like the economy prayed taglines. resonant biden has a plan for extending most of the 2017 tax cuts. former president trump has a plan to extend all of them. the cost is $4.6 trillion. no talk about how they can provide tax cuts for the middle class or in trump's case all classes. i think that's the most extent you get out of the discussion. >> 9:00 p.m. eastern time, premo is not watching. henrietta, thank you. jay polaski will be, just want

to clarify something quickly. he thought rates would back in either scenario but much more on a trump when versus say a biden win but ultimately he shares the view red sweep. >> it's a reason why he's out of the treasury market and going into other non-us assets at the same time that he's not completely exiting certain ones in the u.s.. jonathan: we will catch up with the deputy assistant to the president on tensions in the middle east and the risks to the energy market. live from new york, this is bloomberg green ♪ -- this is bloomberg. ♪ so, what are you thinking? i'm thinking... (speaking to self) about our honeymoon. what about africa? safari? hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment...

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her uncle's unhappy. an i'm sensing anave underlying issue. it's t-mobile. it started when we tried to get him under a new plan. but they they unexpectedly unraveled their “price lock” guarantee. which has made him, a bit... unruly. you called yourself the “un-carrier”. you sing about “price lock” on those commercials. “the price lock, the price lock...” so, if you could change the price, change the name! it's not a lock, i know a lock. so how can we undo the damage? we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. okay, that's uncalled for.

>> equities negative by 0.2% on the nasdaq a little bit softer as well down by .2. similar move in the russell. talked about macron already this morning. the stock is down by 6% in the premarket prayed talking about walgreens prayed softer story there. we are down by more than 10% in premarket trading. >> wall street journal reporting walgreens plans to close a significant share of its 8600 stores in the united states after it already announced last year a turnaround plan, they

came out with a much lower than expected forecast range of four year adjusted earnings and they said we continue to face and upbringing environment including persistent pressures on the u.s. consumer and the impact of marketplace dynamics, also i'm wondering how much of the antitheft measures have made it difficult for people to want to go. jonathan: when they talk about specific dynamics they just talk about theft? lisa: it's not just the theft itself, but also the fact the experience of going into the stores and you see the plastic covers and you've got to get some to come over and unlock it, why not just do it on amazon? jonathan: is this just about walgreens or is this about the u.s. consumer prayed getting more data on the u.s. consumer later. under surveillance this morning, the cnn presidential debate starting at 9:00 p.m. eastern tonight and what will be the earliest u.s. presidential debate in history.

facing off without a studio audience and microsoft will be muted unless it's the candidate's turn to speak. the country's biggest banks passing the federal reserve stress test. hoping it will pave the way for higher dividends and stock buybacks. each firm joining a hypothetical recession. interesting take away prayed did you see that response saying our expectations. >> it was less stringent what they did than their own stress test basically posturing prayed saying you want the stress test, so take that. jonathan: not sure what it says about the regulators and the stress test. that's the latest on that front. israel's prime minister benjamin netanyahu warning the country's military shift will shift to hezbollah in lebanon, u.s. officials maintaining ironclad support for this while looking to de-escalate tensions which are crucial for trade and energy supplies.

the deputy assistant to the president joins us around. right to see you. i know you have the president's ear, you've been a key voice in the middle east conflict as well particular to the gaza strip and involves lebanon. can we start there. how connected are the two issues? the tension we see in gaza and the potential on the horizon with lebanon. >> on october 7 after the horrific attack by hamas, hezbollah decided to enter the conflict on october 8 at night with an attack on israel. israel responding. we've been in this low to mid range conflict ever since. of a back-and-forth of attacks between rocket attacks. it's resulted in significant amount of israelis being evacuated from their homes in the north and not being able to go back there because of the firing from hezbollah. and an equal number of lebanese

who are now evacuated from their homes in south lebanon. this has been a terrible low range conflict where the tension has been in gaza for good reason. this has been on a simmer so clearly we've been trying to work hard to keep it at that level from escalating into a larger conflict and more intense conflict and able to do that with some escalation periods then bringing it back down. we will try to do two things, one is to de-escalate the current conditions and then find a solution that will enable people to go back to their homes prayed that's the charge. jonathan: what are both sides asking for? amos: at the end of the day we have to get hezbollah away from the border because the status quo of october 6 is not possible anymore. so we have to take a number of measures we've been discussing on both sides that could be taken by both sides in order to

bring that back. i do believe it is possible. hezbollah has said they are attaching their actions to what happens in gaza. we understand that, that is the reality. we have to work within those parameters to see what we can do as things shift and we are working very hard nonstop to trying get a cease fire that allows all the hostages to come home and end this war in gaza. that would make things a lot easier to reach a settlement but it's not automatic. you don't get the cease-fire in gaza and then the cease-fire in lebanon. we have to have its own solution in lebanon but it is enabled considerably by a cease-fire in gaza. annmarie: the concern everyone has is what this means for the wider region more so than what it means in gaza. lloyd austin saying it could

become a wall of constance -- regional war in the middle east. amos: we are worried and concerned about any israel -- any increase in violence. the most important piece right now is the effort to get the hostages back from gaza into a cease fire that ends the conflict. that's how we ended the current conditions and escalation. annmarie: a big vulnerability for a wider regional conflict is the red sea. even reports this morning that a ship crossing the red sea was attacked by houthis. how concerned are you about a spike in energy prices because of what we are seeing in the gulf. amos: i think the houthis who are proxy of around have been

attacking the international commercial fleets, there is really no apparent reason why we are accepting the fact that the houthis backed by iran can fire missiles into the red sea and affecting global shipping rates, global shipping routes and the ability of ships themselves so that is something we will continue to do what we can to bring a stop to that. as far as the energy markets look. i think clearly the middle east is the most important, one of the most important energy regions and we have to make sure there is a free supply of energy. that has been done. there other routes on the red sea and clearly we've seen the supply not disrupted even if it takes up the price of shipping rates by the fact they have to go a longer route. by and large it is not affected the image of markets. >> one story about you mentioned

iran about sanctions when it comes to this administration and how tough their being on their adversaries. many will say there sanctions on the books but they're not always enforced. there seems to be some tension between the white house and people who are enforcing those sanctions because it's an election year this is some of the reporting the wall street journal has prayed the administration is not to be as tough on say russia or iran because they want to keep prices low. would you say that's accurate? amos: that is complete the false. we have been as tough as can be on russia and iran when it comes to a broad range of sanctions. also including energy. when you do energy sanctions you have to be smart about it. when you do the sanctions you want to make sure that the bad actors is the one that's affected. so if you do the kinds of sanctions because a major spike in price. what is that due, it increases the revenues to the regime they are trying to affect.

this is not about putting down a hammer. you have to do this in a smart way that reduces their revenues. that's the ultimate goal is to reduce their revenues. this an alignment between the fact we would like to see to mystically in the united states lower prices. we like to see lower gasoline price for consumers at home at the pump so we want to prevent a spike in energy prices but this a total alignment between what we want on the domestic side to reduce prices. and our national security goals because when prices rise they don't only affect consumers they also affect increase revenues. >> you talk about gasoline prices. i'm looking at just under $3.50 a gallon on average basis. that's down from a high in june of 2022 and the average over the past five years is north of three dollars. is this an appropriate price where it is right now.

>> we would like to see lower than this. we have a growing economy in conflict and that's why the president has pursued a policy of doing two things at the same time. one is to make sure we have enough production in the united states and the energy markets are supplied. second is to accelerate the energy transition. we've done both with the passage of the ira, the chips act, all that is investing in the future. you can do that at the flip of a switch and that's why the united states today is at the highest level of energy production that we've ever had. so he has done everything he can to make sure we are at maximum supplies to reduce prices on inflation while making sure we have a pathway to not having this dependence on oil producers at home or from adversarial countries. lisa: how will the strategic petroleum reserve act as a

buffer in response to price is not going down on their own? amos: the spr is a critical tool for the united states. we've used it over the decades to address emergencies and conflicts and natural disasters. the president had an unprecedented use of the spr with the release of 180 million barrels because of the russian conflict when prices soared to over one under $20 a barrel. and we will continue to use any tools we have if there is a need for it we are going to -- we conflict around the world, we have to make sure we have that tool. since releasing from the spr, the department of energy has been buying back. the plot -- for the audience at bloomberg we sold about $95 paid we are buying it back at 77, 78. that's a good trade.

annmarie: it's not just the five dollars a gallon when the spr came into effect. the first time the biden administration tapped the spr was over, third of 2021. today it's at $3.50 so why not tap it today? amos: at that time it was a very small release and coordinated with our european allies. -- european and asian allies so it was a global action we talk. that was around the run-up for this war. the president of the united states saw this were coming in russia and called it in advance. so it's about the surrounding environment of what's happening in the markets. what's generating the increase in price. we would like to see the prices go down. we've called on oil companies to address that, they are producing more than they ever have, both in the united states and around the world. i think they can do more to make

sure americans are not suffering at the pump and that the effects on inflation are reached. jonathan: you haven't closed that trade yet you have to refill the spr. doing it but haven't done it relative to where you were. amos: we purchased back about 40 million barrels. we were required by congress to sell 140 million which we worked with congress to cancel that sale so net we are basically back to where we would have been had we not sold from the spr. so we take that point. we have enough in the spr to address the concerns we may face in the future. that is something every american should know we have enough to address any security or natural disaster. we will buy those barrels back to refill the spr because the president believes it's important tool. jonathan: you said were making sure were fully supplied when it comes to energy and two is to

accelerate the transition. i would argue you're also putting up the walls to china and chinese ev sprayed can you help me square that circle. why shouldn't american consumers be able to buy cheap chinese ev's and ensure they can do the things you're talking about. amos: we want to make sure we have energy security and economic security so those are always challenges you have we would like to see a lot of lower prices. we put sections on russia and iran because at the right security call. the way the chinese have acted in the market is not a free market and we have to make sure we are securing the american economy for the future and if you allow somebody to come into a market and flood it with below cost products and you will lose -- ultimately lose your economy and we've seen it with product after product and i think people who watch the show and care about financial markets should be worried about that. every place they've done this and they've done the same thing,

they dump on the market. they limited the local competition and local markets. look at what happened in the solar industry 15 years ago and then they dominate. and those prices are knocking to stay low forever. just until they kick out and then they will raise those prices so if you want a strong american economy you have to take a strong action the president has taken. >> if people could get much cheaper electric vehicles the transition might happen faster. the fact that they are more expensive and it might be a slower transition, how much more do you expect the united states to depend on fossil fuels. how much longer as a result of prolonged the transition in the name of national security. amos: i don't want a booming ev's that's on the back of slave labor, child labor, coal power plants that are energizing the ev car manufacturing.

we want to have a transition to a green economy and a clean economy that has the standards and values of the united states. there's a livable wage worker should have. hiring children and certain minority communities just because you can and pay them nothing and say i have a cheap product. that's not were working to build the clean energy economy on. we have the workers and the skills in the united states and we should build as much as we can. our partners agree. if you look at what were discussing in the g7, that's what everyone wants. they want to have a clean economy that's competitive and we should have this around the world. country should have their own manufacturing bases but it should be done on a free economy. with the chinese are doing is not a free economy. it is based on loans, 0% loans from the central bank and we have company ceos coming out whether it's in chips and ai or in ev's who say i don't plan to

make a profit for several years. you don't take a genius to say here's a wad of cash go build a business don't worry about a return. we discussed around the table is getting returns. that's not a free market. so yes we want a clean energy economy. we will accelerated by doing it in a fair way that produces more jobs and manufacturing is back in america. that's because we have these infusions of the laws that we passed, again the ira, as well as the build act and the chips act. that's how you do it. making it competitive and better. jonathan: good to see you. debbie assistant to the president. equity futures just about unchanged but is a big story in the free market but -- in the premarket. let's get some stories elsewhere with the bloomberg brief. >> 14.5% for the drop in

walgreens. the company lowered its earning outlook for the rest of the year and in doing so pointed to worse than expected consumer environment. it also plans to close more stores in the u.s.. walgreens is reviewing about a quarter of its stores and could shut a meaningful percent of them in the next few years. amazon has joined an elite group of companies, of the tech giant has released a $2 trillion market valuation for the first time in trading yesterday. the ai rally has pushed the company deeper into record territory even so, goldman data out this morning suggest had funds -- hedge funds are selling aggressively. the bank data going back to 2017. another boeing whistleblower has come forward. it's a contractor mechanical work on the 787 dreamliner and claims he was retaliated against for raising concerns about work he saw on the plane.

according for a statement through attorneys whistleblower said he saw substandard manufacturing and maintenance practices on a crucial part of the jets knows for maintaining cabbage -- cabin pressure. the claims -- boeing says the claims are reported and investigated and were not involved in the personal claims of subcontractors. jonathan: looking beyond big tech. >> we've seen people perceive certain things like -- boats like this when they have holes in them. people running to different sides of the boat. it can remain fairly stable. jonathan: mike wilson at morgan stanley. that's next on the program or your watching bloomberg surveillance. ♪

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down on the benchmark on the s&p 500. under surveillance this morning beyond big tech. >> because of the ai narrative in particular we see people perceive certain boats as lifeboats when they have holes in them. people are running to different sides of the boat. it can actually remain fairly stable. it's not just the mag seven that's high quality good. there's some good high-quality growth stocks outside of tech that is been performing well. jonathan: disappointing earnings forecast for micron. the ai fueled rally. joann looking beyond the big tech writing this, the lower interest rates and betting prospects appear to have driven the market higher. the build out of artificial intelligence infrastructure by the likes of microsoft and others are a big part of that but the increase in earnings growth occurred across sectors beyond technology prey joann joins us now for more.

one name straightaway and it's in retail. walgreens in the premarket getting absolutely hammered down by something like 15%. 14.81% by now. new range for the year, a that big time. they had seen 320 to 335. lisa's been talking of reports of store closures as well. were trying to work out if it's a sign of what's happening in the broader consumer or just the sign of a retailer struggling for its own reasons. joann: i think it's walgreens having its own issues and the reason for that is walgreens had a business model of trying to build clinics and their locations, adding a new business line driving more traffic to help the retail side. we sold it last year because one of the things we noticed in the wake of covid was the shortage of skilled medical staff, whether it's physician assistants, nurse practitioners

so we expected it was good to be really hard for walgreens. you have a staff, of business locations. workers themselves going on strike. it's pretty clear to us this will be a challenging business model so were not surprised, we sold it last year and we think it will continue to be challenged. >> this isn't just a walgreens story at least when it comes to the market. how much is this simply because of the medical side of things with respect to shortages and how much does it speak to the changes post-pandemic with some of the stores to prevent theft with the fact basically amazon had an upper hand in this just turbocharged it. joann: the frustration going into any of the shops and trying to buy whatever, it removes that convenience that those shops were supposed to afford. that's a real problem and they

needed to be more judicious and where they deploy such theft prevention devices. we are here in suburban new jersey. i don't think there's a lot of theft like that going on. i walked to my local walgreens or cvs and have to get through those barriers. i think they need to rethink the cost of this to their traffic. >> how do we get can it -- exposure to the consumer what's the best play. >> the consumer remain strong and we been hearing about the demise of the consumer for a few years now. people are basically employed. they are employed in nominal wages are going up. that said we have weakening in the labor market. we are seeing those high interest rates translate to higher cost of buying a car and rental costs. parts of the consumer spectrum are really challenged right now so one of the plays we like is to go through where the consumer goes to save money at a place like t.j. maxx.

so that's one that's a core holding for us. but then also look at housing. there are shortages that will persist for a long time and playing shortages as an investor is a pretty good bet. so looking at a lennar or williams-sonoma which is also tied to the new house trade and first-time buyers are still out there, they cannot find a place to live and companies are offering them ways to take down the cost of buying that. jonathan: some hands were going up around the studio. joanne feeney at advisors capital management. much more from the consumer later on this morning. jobless claims around the corner. the previous read 238. coming up we will catch up with mandeep singh and david gara. looking ahead to all of that data, a four minutes away. the third hour of bloomberg surveillance up next. ♪

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>> when we look at the soft landing scenario we are very

positive into the second half of the year. >> we still have to view that the fed will be able to cut, two likely. >> that is not a bad thing for the markets. >> the patient approach that the fed is delivering is the right one. >> if the fed cuts, not so good inflation and the fed stays on hold. the data has been mixed. >> this is bloomberg surveillance with jonathan ferro , lisa abramowicz and annmarie hordern. jonathan: the third hour begins right now. good morning and good morning. 19 minutes away from the opening bell with equity futures doing ok. if you want drama pick out this name, walgreens down by 14%. double-digit declines and slashing the outlook and talk of mass store closures. lisa: walgreen is planning to close a significant share of

their 8600 stores in the united states saying that they face a difficult environment. two things we were talking about challenges for hiring and then there is a question of how convenient are these convenience stores in an inconvenient way and moment of preventing theft. jonathan: two threads. we could have a conversation about consumer and jobless claims or about theft and link that to a debate that will take place later on this evening at 9:00 p.m. eastern and that will come up repeatedly you can imagine in this campaign over the next five or six months. annmarie: trump is going to try to hammer home and asked the question are you better now than four years ago and do you think that tings are more expensive and you are making more money and you have a better ability to pay for things. and do you feel safer? this is something major that the trump campaign wants to hammer home. i love what henrietta treyz said. how important will they be to speak to the youth, these

individuals and may be first-time voters who might not have made up their mind but they are going to sit there or watch 90 minutes or wait for the clips to be circulated on tiktok. that is why the style of this debate is as morten tessa substance. lisa: we cannot put the right narrative on the so -- on the story. walgreens wants to blame the consumer and we also want to talk about how penalize these retail theft ring -- rings have been. we are all cherry picking anecdotal data. jonathan: i felt like you were friends again. annmarie: they are not friends. you missed it. lisa: he has basically saying the fed should get onto it. we can re-hatchet later. the issue is how do you get a clear narrative at a time where it is not just me, a lot of people are cherry picking because what aspects do you have to pick from.

annmarie: lisa was like you cannot sit with us, you are not part of the table. it did, yesterday. a little bit like mean girls. we were all wearing pink. lisa: he could have come to the studio and we welcome him. please come to the studio and we would love to have you back. carry on. annmarie: what i thought was so interesting talking about walgreens is these stories need to care more about the foot traffic than the theft. how many times have you gone into a walgreens and you need deodorant quickly and you are waiting for the attendant to and you're like i'm going to be late for my train, to be late for the dinner i'm am going to and you move on. but then you move on and how actually the theft issue is becoming more important. jonathan: i wanted to know what happened to the show in my absence. i'm trying to figure that out. jobless claims money five minutes away and the data looks like this. 235,000. that is the estimate.

the previous number is 38. equity futures going into that by -0.2%. the yield is unchanged on the 10 year. and your-dollar in around 1.0 697 positive by .15. we will catch up with tony rodriguez looking ahead to november after the presidential debate. mandeep singh as micron fails to meet lofty expectations and ed hyman weighing in on the new economy and economic data that drops. the mother of all debates moving to tony rodriguez saying this. "the debate is likely a material to the investment outlook the election however has the potential to be material. a single party sweep will lead to the greatest potential volatility. either window will -- winner will face significant physical and geopolitical challenges. let us get into what that could mean to the treasury market.

tony: the markets do like gridlock. we have some split government. so right now you cannot look at either party and say that there is any fiscal responsibility that exists in washington, d.c.. the prospects of further fiscal blowout type of policy is a big risk. and we think about tariff policy as well. right now there are parameters that people are held within because of split government. to the extent you get the sweep you have the ability to implement pretty significant tariff differences from where we are today. that could be inflationary. it can hurt global growth and it would have effects on the fx side. the least volatility would come from a continuation of where we are today. we have policies in place for four years and that continues

and i think that markets can get comfort after that. any big shift, look out. jonathan: does the bond market speak french? tony: it might. jonathan: you know what i am getting into? tony: i do, ultimately. i do not think we will go in that direction that quickly but we could get there eventually because there is no preface it for the deficit to come down. when that moment happens like it did with france, we think down the road, but it is something to be careful about. lisa: i want to talk about the options if the u.s. can look like the french market's considering the fact that nobody has come on and said that the physical backdrop for the united states is responsible in any measure. we do have an auction of seven-year notes. are you still buying even though you have this trepidation that there could be a moment where the bond market pushes back? tony: it does not matter if i am buying because there are plenty

of buyers. we have had 30 is tips and all of this month and only one of those had a tail to. there is a lot of demand. some of it is around flight to safety because there are some uncertainties. monetary policy, fiscal policy. you have seen these election results in india that surprised the market so, the dollar has a lot of demand for it. we look at lot -- we look a lot about dollar-yen and what japanese investors are doing. when you look historically at insurance companies in japan typically only hedging two thirds of the u.s. dollar. they are hedging under 45% now. again, high cost of hedging, the dollar is trending. there are a lot of pockets of demand for both the dollar and u.s. treasuries. lisa: you went there and we had alan ruskin's swansong of his four decade career and he is

talking about how it is a dollar strong market and jay polonsky saying that the dollar will crash. he is getting out of treasuries altogether. where do you stand on a? tony: we think that the dollar will remain strong because right now look at where the policy has set up and at the start of the year whatever the part -- the market was pricing six or 78 cuts. that the doj has been aggressive with timing. the boj has difficulty being hawkish enough for the markets. the fed is trying to be somewhat dovish and not as dovish as it had been. that is pro-dollar and u.s. economy is outperforming. we do not see that changing dramatically. u.s. economy growth will moderate and inflation is taking. it is a slow inpatient fed -- and patient said -- fed with the dollar and the u.s. will perform

and behave well. we do think that the dollar is overbought. one your outlook would be for the weaker dollar now and for the yen to strengthen. the yen at these levels both four years when he started his career. we do not think that is sustainable in the long term. lisa: do you call this regardless of who wins the election? tony: if you get the sweep particularly from the tariff side. if it ends up implementing some of these talked about policies of 10% tariffs across the board or 50 or 60 plus, that is going to be dollar positive because it is a little bit inflationary for the u.s. and the fed will not be able to respond and it is really a tax on global trade and growth which means flight to safety and the dollar. in that case that will prolong we think the dollar strategy.

jonathan: if you think about the material consequences and how they are coming up with very fine margins and a handful of states. how do you put together a view sitting in the middle of 2024? tony: one of the main things about it is that you cannot have tremendously high conviction in your view. you have the conviction with some caution. we talk about it being in the middle or slightly higher of the risk budget. part of that as you want powder dry to respond and react to what might come from the election or some other geopolitical or repricing because it is a french truss type of moment. you lay out your plan and invest more cautiously than you would because the uncertainty is high. jonathan: detail that more. a little bit of cash and when you take risk where you taking

it? tony: duration is kind of neutral or maybe a little bit long. range bound and gluing -- and moving lower over the balance of the year from a credit risk perspective. we are comfortable with credit risk at the higher-quality segment so if you look at high yield leverage loans and cielo's and emerging markets. we do not want to go to the deepest center of the risk pool. those of the companies being heard by the higher rates which we think will be in place for longer. they can save us from being hurt the most. when you look at the higher-quality side there you can find companies that will be pretty resilient to what we think is a moderating growth environment and not recessionary. lisa: are you preparing investors for a clipping coupon environment where they are getting five or 6% returns and nothing more. to shoot for higher potentially means losing a shirt? tony: we say we can shoot for

higher, 5% or 7% is a place where you want to build that target. we need to start talking about achieving 9% or more. now you're taking risks that are somewhat unwise at the moment. 5% to 7% meaning that cash is competitive for the moment. and the minute you get the second and first cut from the fed. all of a sudden that comes along with a little bit of a decline and longer-term rates. and you will see portfolios yielding 6% or 7% generated returns and in the six to 8% area which is a significant outperformance to cash and probably competitive with equities even though we are up 15% on the year. it seems like that always happens. it should be competitive for what you get in non-fixed income accept quest -- asset classes as well. jonathan: appreciate it.

equities negative by 0.1%. let us get an update on stories elsewhere with the bloomberg reef. dani: jeffries is out with results after the bell and profit sword. second quarter investment banking revenue jumped 59% and debt underwriting more than doubled. this is a sharp shift from last year overdue -- over geopolitical concerns. a broader recovery and capital markets activity and m&a was underway. elon musk's space x will sell insider shares at a higher price. they will shelf -- sell for $112 a piece valuing it at 220 -- $210 billion. the jump in value is owed to a significant investor demand. evaluation is a new record for an american private company. when it comes to mcdonald's,

u.s. consumers are not loving it. the plant-based burger was not a success in the test markets of san francisco and dallas saying that customers are not looking to mcdonald's for a plant-based protein. the company has said that plant base food fared better in european markets. they are investing in the chicken offerings stateside. jonathan: thank you very much. it is official people do not want the plant-based burger at mcdonald's because why would you go to mcdonald's for that? lisa: it is not that much healthier. you look at the sodium and you start wondering what is the appeal? it is not like you are going full vegan. jonathan: really? at mcdonald's. it is fairly new in the last full month -- last few months. lisa: full vegan when he goes to mcdonald's? jonathan: full vegan for life. we had a long chat over breakfast with martinis. and he told me that he went full

vegan. lisa: liquid dial it -- diet. jonathan: alcohol still. baby steps. mandeep singh on the disappointing ai just around the corner. you are watching bloomberg surveillance. ♪

jonathan: tons of messages about tk going vegan. lisa: it is not true. jonathan: we will do a segment about this at a later date. we will have a serious conversation. lisa: with a martini and stakes. jonathan: watch this space. the s&p making it by 0.1%. the bond market unchanged. 4.3 94 -- four point 3294. micron, citi recently lifting

its price target. now saying to buy shares on post-earnings weakness and expecting better results. the stock is down to close to 6%. keybanc highlighting the company's stronger-than-expected results and noting fourth-quarter guidance and finally ubs lowering its price target to 153, keeping the buy ranking. they ultimately see it as noise expressing -- expecting the gross margin to move higher. what is it, is or noise. mandeep singh is with us. is it noise or news? what is your view? mandeep: there were clear data points around ai and micron is coming out of a trough compared to nvidia that have seen the tailwind for the past five quarters. memory is needed for ai as the models get bigger and that is

what they guided it. that is the revenue, one core related to ai was 100 million this quarter and it will be multibillion's next year. they have a lot a visibility to the ai side. the one other thing is on the under -- the on device side. it is for your smartphone. if there is a way of interns of refreshes and apple intelligence taking off that is when you see real upside. they pointed to the non-aip's being tepid hence the start reaction. -- stark reaction. they are sold out for the next five corridors. that tells you something, how much they have in terms of this ai. jonathan: it raises the issue of how much the market got ahead of itself by projecting a lot of gains to artificial intelligence that take longer than the market expects. how much is that a takeaway?

there is a feeling that markets have gotten ahead of themselves and every ai related stock is another nvidia dressed down in disguise. mandeep: micron is one of the three renders. every data center provider needs a memory chip and they need dsm c to fabricate the gm -- the gu, but they have a nice tailwind where everyone -- nvidia has the competitive thread that they started making their own chip. but the votes are going to micron for a memory and fabricating the chips. it is a nice place to be and because of the massive investment going on. it will be slow to monetize that we are not seeing on the

software side. the ai investment is real and it will continue happening for the next 18 to 24 months. jonathan: two months ago -- annmarie: two months ago the president went to micron and was talking about unveiling billions of dollars and he might talk about that today as one of the policy goals that they were able to see through. where are we in terms of that money going to places like micron. the united states needs to make sure that it is secure. mandeep: that is fair. my oligopoly comment suggests that micron is like a monopoly in the u.s.. you are not sourcing from outside? to micron. they guided into capex going up 6% next year. a lot of investors are freaking out, what does it do to free cash flow but micron is getting the handouts from the government to invest. that kind of offsets that

increase that they are making. from that positioning i think that micron is in a great position and obviously it is cyclical. you want to get it early in the cycle. as i said it is coming out of a trough whereas nvidia is six quarters into it so the early cycle is important. annmarie: one aspect that is interesting they have a shortage of parts and they talked about potentially raising prices because it is in such demand. how much are we underestimating just how much prices have to go up and how inflationary this ultimately has to be because of a rush to ai and a lack of capacity to meet demand? mandeep: what happened in the last cycle and every memory maker was cutting back was capacity increase flatlined. there was no capacity increase the past six quarters. now that they are coming up and

talking about ramping up capex. by the time capacity comes online it will be another six to seven quarters. that is where the supply demand works in their favor because the market is supply constrained as is the case with nvidia. that is where you see the increases and a similar dynamic play out on the memory side because hpm demand is more than the supply. you cannot create a factory overnight even if the government is handing you money. jonathan: you brought out apple and the prospect of a smartphone upgrade. we have a decent idea of what it will look like later this year? mandeep: apple intelligence is compatible with iphone 15 but not backward-compatible. you need a -- eight gigabytes of ram. the content of memory will double because the iphone 6 -- iphone 16 will have 16 gigabytes or more because that is the only

way you will be able to run on device ai. it is good for memory makers and tsmc but not so good for nvidia because nvidia is about running things in the data center. if you are doing things on device that is not good for nvidia. jonathan: are you telling me there will be enough to get packed into this phone that get people who may or may not be rocking around with iphone tends to upgrade? mandeep: it is apps for apple. you can show to leverage this capability when it comes to the chips and memory that they are powering, then i think people will want to upgrade because there is a lot of promise with generative ai. it is a function of how these companies are able to roll out functionality and monetize it. there is no free lunch and investing and no new revenue to show. jonathan: the latest with micron down in the free market and looking ahead to potentially a big upgrade wave.

lisa: not for one person sitting at the table was still -- who is still skeptical. he has one app running on his phone. jonathan: let me say something positive about apple. they created a product that run so well and last so long that i have not needed to upgrade for years. lisa: unless you get a slowdown in the battery. jonathan: if they get more aggressive maybe i have to upgrade. the echo system -- the ecosystem is so sticky you are trapped there. annmarie: i found my old blackberry the other day and i was thinking of bringing it back. jonathan: get ready for this. jobless claims coming four minutes away. evercore reacting. this is bloomberg. ♪

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jonathan: equity futures negative by zero point 1%. 60 minutes away from the opening bell. in just a moment, we'll get a ton of data for you, including a bead on gdp and jobless claims. just to see if the breakout stakes. the previous read, 238. the two-year looks like this. totally unchanged with the data. here is mike mckee. mike: i wish i had data for you.

continuing claims, up from the previously reported. we will see what the revisions are. gdp comes on the forecast, up 1/10. it goes down actually. the forecast was for 2%, which was a little bit i'd. capital goods owners is what everybody cares about and is down. that will be a little bit worrying for those considering what second-quarter gdp will be. the initial jobless claims revisions, a drop of 6000, but

does not really get us out of this range that we are in. continuing claims revised. that is an increase, which is not a lot. there is not much to say about the numbers. 3.7% since the first quarter we have seen revisions to the numbers. they do not have any forecasting ability. jonathan: are you seeing concrete signs of slowdown? >> the issue is how bad of one is it? is it what the fed is trying to

do or does a fall off a click -- fall off a cliff? jonathan: thank you for doing the schedule that way. i appreciate it. lisa: there was a heated discussion about cherry picking data. really, there are two things that matter, the unemployment numbers and what we are seeing with inflation. they are seeing inflation come down. why not get on with it? why is it not that simple? mike: they went to make sure that what they are seeing will continue. they need convincing and they need to know that the trend is going to continue. we will see them go back and forth in ways that we never saw before. everybody says it is data

dependent but they forget that the fed is not just going backwards. they are always talking to a small business owners and have many surveys that -- to see what is happening now. lisa: when you talk about consumer appetite, there is personal income and spending. there was a story out on the terminal saying that they reached $2.1 million. it has completely evaporated and now it has gone negative. how much have we not seen to the degree? mike: they are stumped as to the

lags. there is probably a lot of different things that have caused this, but it seems to be aiding the economy. it does not seem to be crashing the economy. they pulled back there spending. employments come back in for an indicator. >> say close. bonds reacting a little bit to this. down to about point -- down to about 432. fantastic and brilliant to see you.

if unemployment starts to climb and inflation is falling, why won't the fed and on with it? >> the quality of what you do is so good, but the fed is just being patient. i have a strong view of what is happening. i am not for sure about the unemployment brand number. like swimming pool sales.

the thing that we should keep in mind, once they start, this is a march. they are going to have a program of cuts. lisa: it is controversial to say they are not making a mistake. there is a growing school of thought and a growing number of analysts that say this is the tipping point. we are seeing a tipping point. what do you make of the arguments? >> i am very sympathetic to them. what she did was very important.

that is why the claims numbers are so critical. get another increase or two. but i think i have almost perfect knowledge of the economy today. do not hit me. but it is not falling off a cliff. i talked to a couple friends of mine in atlanta. in atlanta, they say it is a little bit cooler. atlanta is a real estate based place. when estate, real estate. it has cooled off a little bit, but we do a set of surveys with companies, very systematic. it was 60, 0 to 100 now it is 50. it was up point last week to 50.

it is not 45. i think your point is well taken. they could be criticized for not acting a little bit more, but i can see where they would want to look over around the corner and get one more or two more data. the daily comments were important. lisa: many say you have a good sense of where the economy is right now, we have been talking about how difficult it is to get a consistent story from an notes that tell different tales, depending on the socioeconomic bracket in particular. how much more fragile is the strength that we are seeing, given that it is hinged to the top tier of income earners in this country? you are seeing real signs of softening in the middle income brackets. flex we survey about 200

companies a week, the same companies and same person at the company. we found that if we switch people, the results would go up and down. the same company. it varies. we cover all socioeconomic strata. for example, we have -- we asked them whether they are trading up or down in terms of quality and we do a survey of shopping guide companies. when you go to the supermarket and get a free flyer, this is definitely a low income shoppers. on balance, it is ok. there are some places that are booming. this sort of pins your years back it is so strong, but it is at the top. so the economy is overall. housing starts a little bit that way. small builders are having a

tough time. national builders are doing much better because they can finance their own building and help the client by a place. but right now i'm not stressed out that i am missing it. sometimes i am stressed out, but sometimes it is upstairs downstairs. annmarie: you mentioned calling some people in atlanta because of the debate. if you think the fed will be on a marching cycle to the downside, how do they plan on 2025 to potentially cut rates when we can get more inflation depending on the policy of who will be in the white house? >> talk to lisa. that is the issue. i have a strong view that the monetary tightening has been significant.

we have rates, quantitative tightening, inverted yield curve, supplies slowing dramatically. it is not just one thing. that is my overarching view of what is happening. when we get a strong data point, i say, that is an outlier. it does not fit with my view anyways. when i get a soft view, i think that is part of a trend. to get your point, i do not think inflation is going to pick back up. i think it is slowing and will keep slowing. core pce comes down tomorrow. it will be something like 2.5. to a pretty good extent, i tried to establish what the trend is. sometimes you can. but it seems like the trend is slowing.

it had bumps early in the year, but it is still slowing. i do not think it will pick back up. annmarie: can you ignore politics? >> not my wheelhouse. all -- annmarie: all of this will affect the economy. >> my northstar is that monetary tightening is the dominant force. for example, life -- economics is always more complicated than what i view it to be. for example, if they put on tariffs, as you have reported here, the dollar goes up. the gates, some of the inflationary -- that negate some of the impact. that is an inflation risk and we will find out more tonight where

that goes. but my team, who covers the topic we are discussing does not believe that either candidate will have a knockout punch. still going to watch a. jonathan: to wrap it up, monetary policy. how tight do you think monetary policy is right now? >> i will let you know in a year. like i mentioned, the yield curve has been converted. it has been inverted for 450 days. who is counting? it is the most ever. we had just getting into you where it is longer than average impact but not a lot. i think the community has been too aggressive. but yield curve is one. i'm probably older than anybody

else you have on your show, but this is my 13th inversion for our seventh reversion and they have all led to recession. then we have the money supply. i by the milton friedman. it was 30% and now it is -- that is a second aspect. they have done quantitative tightening. the san francisco fed where mary daly is, they have not had a new estimate but the latest estimate three weeks ago had the proxy funds rate adjusted for qt. 6.25%. inflation is not 6.25. maybe it is by .25 or 4.25. however i look at it, people are tired of this. i can tell my team -- i do not know if you have this thing,

sometimes you have a view that you say over and over again paper -- again. lisa: never. actually all the time. jonathan: are they in their early 30's and they think it is the print this time, but you say, i have seen this movie before? >> it is not that so much. my team is an intergalactic vessel of community. i talked to people constantly and not many, but a number of them are older than i am and sharper. but i think about that. jonathan: i do not think you are. we would like to do this again soon. thank you. always appreciate your time. let's get an update on stories elsewhere. dani burger.

dani: claims came in shy. the expectation was 235,000. continuing claims most of the highest level since 2021, suggesting it is taking unemployed people longer to find a job. we will get the next big for you tomorrow with the core pce deflator. a quick check on shares in walmart -- or walgreens, falling 19%. the company lowered its outlook for the rest of the year. it also plans to close more stores in the u.s., according to the journal. they are reviewing about a quarter of their stores that are not profitable and could shut a meaningful percent of them in the next few years. reporting earnings after the bell today. consumers were spending less and rising competition.

analysts expect nike sales grew a full percent for the year. that would be its worst results in the last two decades. nike also announced it was cutting 2% of its workforce earlier this year. layoffs take effect tomorrow. jonathan: we appreciate this morning. up next, setting you up for the day ahead, including the mother of all debates. you are watching bloomberg surveillance. ♪

jonathan: equity futures negative point 01%. nike reporting earnings after the closing bell this afternoon. tomorrow, we get the pce deflator and ending numbers. plus, more than fed speak. that is all after the cnn

presidential debate. biden and trump facing off. in atlanta, georgia is david. it is june 27. why are we doing this on june 27? >> the sitting president is wanting to reinforce his message. we will see if we get another scheduled to be, but this is earlier than we have had in past cycles. that is one thing that is novel and another is who is running this. we have a news network calling most of the shots. but the last few cycles, we have had this bipartisan presidential debate commission. this is something else entirely, so we will see how this debate takes place. annmarie: there are a ton of new things that we have not seen. there is no audience and mics

are muted. how are they preparing for this different setting than the use to the an >> it is a stark contrast. you have had him going through his policy points. really getting ready in a traditional way. you have some, who has talked to policy experts and has been out on the campaign trail. they wanted to see how the audience responds to what he is saying. that will be strange as well. they want to hear how the audience responds. it will be radically different. annmarie: what you think each of

them needs to drive home? >> he is obviously very keen to talk about his tenure. same thing is true of president biden. i think that those watching the debate are few and far between. i think what they want to know is what -- it is incumbent on them to spell out in a clear way. lisa: do you think this is the case? 70 people have come on the show. they said it would be the tone. you will be listening for policy.

>> i think there is wide consensus on that. there is interest on what will come out of this. there will be discerning viewers that will be looking for that. to your point, there is so much focus on age and style and how they interact with each other. the moments when they break will be all the more important. jonathan: 9:00 p.m. eastern time, the debate is kicking off. donald trump with the sitting president, joe biden. lisa: i agree with him. i hope that is how we get some policy. everyone has what the implication is on the others. there is little agreement.

that will be an interesting question. annmarie: everyone is coming into this with a bias. you made an excellent point. 10,000 people and about three states. jonathan: a calamity that would be a black mark against the campaign. lisa: it is interesting how they change their views accordingly.

aside from just who wore what that area. jonathan: many of us will be live on very. just let me complete a sentence, come on. annmarie: i think i am the only one here that will stay up to watch. lisa: i would like the viewers to weigh in. annmarie: i know you came back from your holiday just for this debate. jonathan: we will be watching the debate later. an absolutely stacked program

for you, to get you to weekend. this is bloomberg. ♪ i can't believe you corporate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working. you people are (guitar noises). hand over the air guitar. i've got another one.

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matt: markets wondering if ai is going to be a revolution if it will happen later on. the countdown to the open starts now. coming up, micron results throwing cold water on bullish ai vents. hedge funds aggressively cut back.