>> all fed officials will tell you it is about the totality of the data. not just the labor market but inflation. >> rate cuts will be forthcoming. >> the fed will not move at the end of this month but september is live. >> september is another round of data. >> what will drive the fed is inflation. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: let's get the week started. live from new york city, good morning, good morning. coming off the back of the best week since april. coming into monday at all-time highs. there is something for everybody this week. a double dose of chairman powell later.

cpi later on in the week. q2 earnings taking up with jp morgan. we have to begin with another upgrade to the s&p 500, this time with a good friend of the program, the new numbers 5900 from 5500. the second boast bullish on the street. the line is the bull market has legs. lisa: given the fact we have seen the multi-cylinder aspect of the rally over the past couple of weeks, this is the first time in history we have seen -- we've not seen all of the magnificent seven names being down on the same day. this has been built up by fundamentals in many different names pulling their weight. jonathan: the drama has been in the politics, the political world. pressure building on president biden. more and more house democrats lining up, calling for him to step aside. annmarie: whether publicly or reported by bloomberg out of

this meeting yesterday with hakeem jeffries, nine democrats at this moment are calling for the president to step aside and pass the torch to a new generation. lawmakers are coming back to washington, d.c. today. between the senate and the house there will be meetings. does that number grow? look at what senator chris murphy said? this is a very critical week for biden. not only will be he hosting world leaders, he is giving a press conference on thursday. it is not only what he says at the press conference, it is how he says it, how he looks come all this will be scrutinized. lisa: stuart kaiser put it really well. he said near term it data. medium-term is the political drama as well of the fact that jobs and inflation, the question of how much they are going to work to the fed's favor. this is the issue.

people do not know how to play this. i do not understand if the idea of a trump trade was the same one we saw in 2016 but it reversed as soon as people gathered what would happen. jonathan: before we get into market consequences there is a subtle but important disconnect between house democrats and the country. house democrats are freaking out about the prospects of winning in november. the rest of the country is talking about the next four years. i think that is an important disconnect. this has been a conversation in the general public for the best part of three years. we have been talking about this for a while. it has been in the polls. it is only last couple of weeks house democrats have started to freak out about the prospects of winning in november. annmarie: the debate open the doors for people to vote that i some of these concerns and consternation's they had behind closed seats. what we have seen in the polls for the better part of the year that americans have been concerned about his age, but the

debate performance was so disastrous for biden that democrats are coming out. the ones we know of, a lot of them come after this weekend's call, a lot of those officials are top of the right when it comes to committees. wait until the ones in serious elections in november and at risk of losing their seats, the calls are going to grow. lisa: peter baker put it well when he said the conspiracy of silence was broken. it was a silence among elected officials and a lot of media members, it was not silence among the voters who had been indicating their concern. jonathan: i want to talk about the other side of the atlantic and focus on politics out of france. let's bring up the board and look at the euro. the euro is doing nothing. 1.0 836. if you came into all of this worried about france's fiscal trajectory, if you came into the weekend worried about france's ability to govern itself i think

you come of the weekend still worried about what is happening in france. lisa: is political gridlock a good thing? is a good thing for markets and government? in french markets it is less clear than u.s. markets where it is clearly something welcomed by governments. we saw chronic instability may require the president to resign. this is the fear a lot of people have in a time the need to make budget decisions. annmarie: when it comes to what the left is calling for, you have ubs saying this is basically two liz truss. fact that they have not gone all the seats, there will have to be a coalition or gridlock, a hung parliament. this is to the financial market status quo. jonathan: on the s&p 500 equity futures not doing much. positive every single trading day last week. a stellar week of gains on the s&p and the nasdaq. not so much on the russell.

yields higher by three basis points. in foreign-exchange, euro is 1.0 836. coming up terry haines of pangea policy on the growing number of voices calling on biden to bow out. traders raising bids for the fed to cutting rates in december and nila richardson of adp with the busy week of data on deck. the week coming up, not just the data but chairman powell twice. lisa: i feel there is this competing discussion about is it immaculate disinflation or is it the wind of stagflation. this will be in cold relief this week. we have economic data front and center. ppi in university of michigan sentiment survey on friday. before that, policy very much in front and center with testimony on capitol hill from jay powell. janet yellen will also be speaking amid those swirling you

-- those swirling rumors about the biden race and whether he will drop out amid the native meetings, and the start of q2 earnings. we get jp morgan and citigroup. i think this will raise the question of their outlook, their visibility into the future. jonathan: i was going to say something serious about the week ahead and then he mentioned delta. it has gotten worse. you have to get a shuttle. it takes 15 minutes to get on a shuttle. lisa: have you seen laguardia? it is beautiful. it is finally a first world airport and that is what jfk wants to get to. it just takes more effort. jonathan: that is the price you have to pay. your coming out of jfk and working the way back to manhattan, traffic is backed up. you can see the roadwork. there is a sign saying this is a consequence of the bipartisan infrastructure at come and you are thinking i'm not sure that

is good promotion for washington, d.c.. let's begin with our top story. pressure mountain -- pressure mounting on joe biden to end his reelection bid. several top democratic lawmakers are joining the calls for biden to step out of the race. five house democrats of gone public. terry haines writes biden is is giving the middle finger to a class that has always viewed him as their creation that they can cast off as well. it is not as simple when you're the president and the nominee. wonderful to catch up with you. in about an hour we will catch up with henrietta treyz, saying there 70% odds on biden stepping aside in the days ahead. you take a very different perspective. what is behind the view? terry: i do not she the pressure -- i do not see the pressure on the president and more importantly the president does not see the pressure. the ballyhoo over the weekend is

a bunch of mid bench democratic lawmakers and a supposedly brewing insurgency by mark warner. what these things have in common is they are nods to the democratic institutional political and donor class who two weeks ago were heading up the peter baker conspiracy of silence you all referenced. today they are screaming to get out. you make a very good point that largely what this is about is about whether he can win, not whether he is still fit to be president. that tells you an awful lot about the motivations. lisa: this list of individuals is likely growing. what is the threshold for the biden team to hang on? terry: i think is very simple. the weekend press was full of stories and videos showing the

congressional delegation going down to tell nixon he was through in 1974. look at who those people were. the republican leader in the house, a former presidential nominee of the party among other things, a bunch of mid bench democrats does not get that done. a bunch of folks in the senate does not get that done. what i think the white house is looking at is we are here, he is fine, we can walk through the next week and show he is fine, and then what will happen as the press and a lot of people will see this fizzle and the press will turn its attention to the republican convention. i bet that is what is going on. annmarie: biden over the weekend accidentally said he is the first black woman to serve in the white house.

they're going to be more moments like this. what is the next event you see like the debate that can about up the floodgates even more -- that can open up the floodgates even more to mount pressure on this president? terry: you know i am not a biden apologist. one other thing i wrote friday night after the interview is this is not baseball. biden has one more strike. he has to prove every day from now until the election that he is up to this. if there is one more slip of the kind he had in that debate, i think he is basically through. i think the floodgates open for the democrats if that happens. absent that i do not think it will happen. what you are seeing from biden is disdain towards the democratic political and donor class that helped him until last week and now decide they want him out.

the white house is not buying it. biden personally is not buying it. lisa: is the conspiracy of silence already waking up and everybody else has been this game, or has this been a market change whereas things are going, given that time is running out for biden to step aside, donald trump likely win? terry: i do not think that is the case at all. that is one other thing i pushback on. there is a great over belief in the democratic establishment among those who think biden will resign soon. the almighty has to tell him. none of those people are the almighty. the other thing is they're looking at the wrong polls. the polls including bloomberg simple show the race still on a dead heat in the electrical -- including bloomberg's own show the race in a dead heat in the electoral college. biden has four months to convince those people in the

democratic party will do that by turning itself more into an institutional party of the kind where we are for all of the right things that you like. social issues. economic issues. we are for all of the things you want and we will convince independent voters that we are worthy of your vote regardless of who the president is and we will spare you even more about trump. jonathan: great to catch up. of pangaea on what the president thinks is good for the party and what the party thinks is good for the president. a very different view on all of this in about one hour. with your bloomberg briefed let's get to dani burger. yahaira: -- dani: protesters rallied in israel calling for benjamin netanyahu to step down and a cease-fire bring back hostages still held by hamas. talks did advance after talks

hamas has agreed to a u.s. proposed cease-fire plan. france could see political gridlock after a surprise win by a left-wing coalition in the country's parliamentary elections. the new popular front won the most votes sunday but it was about 100 short of a majority. president emmanuel macron's group came in second in the far right national rally in third. now the focus comes to what sort of coalition is built and how emmanuel macron makes nice with the party that wants to undo many of his reforms. hurricane barrel made landfall in texas. forecasters warned rainfall could drive seven feats of water onto the coast. oil companies warned to adjust operations. the storm already caused severe damage in mexico and across the caribbean. jonathan: thank you. more from dani and 30 minutes. up next, september in the crosshairs. >> i think this keeps september on the table.

as long as we are seeing slowdown in topline unemployment rate, broader measures normalizing, i think that will be enough. jonathan: looking ahead to this week, looking back at last week, from new york city, good morning. ♪

jonathan: from a steamy new york city, welcome back. equity futures going nowhere. unchanged in the bond market. yields higher two or three basis points. crude lower, down 1%.

$82.15. under surveillance, september in the crosshairs. >> this keeps september on the table. >> what will cement september is another round of data and what we see in terms of the inflation data next week and next month. that will be the case. as long as we see the trend towards slow down in topline, the unemployment rate, broader measures of labor markets normalizing, i think that will be enough. not enough to say that today but once we get to september that will be there. jonathan: traders reviving bets for a september rate cut. investors looking for further clues with the double dose of jay powell on capitol hill plus uscp on thursday. geoffrey yu writing the potential for sharpening weaker third-quarter growth makes this a summer of discontent with recession risk rising. we are expecting a september

rate cut as we think inflation will behave better over the next few months. geoff is with us now. a lot of people back from the beach after a long weekend stateside. looking back at payrolls friday but also the ism right before july 4. tremendously weak. when you look at the totality of the economic data do you think there is reason to worry? geoff: i do not think there is reason to worry but the direction of travel is clear. there is a difference between an outright recession which would need much more aggressive central bank intervention versus a slow ride towards normalization or a more normal environment during previous it -- during previous cycles. the fed have said they do not need to wait for inflation to seriously undershooting targets before acting. that is where we are. markets are pricing in on course for a september move. jonathan: you can feel the

tension in the bond market. you have a prospect of a deceleration economy combined with an election decision that might produce a president with a higher inclination for policies that might deliver for it and the patient -- that might deliver more inflation. should i be buying the 10 year or selling it? geoff: i think a steeper curve is nailed on at this point. the back end, the reasons behind it is where we need to dissect things. i think europe are providing guidelines right now. markets are going to start extracting physical premia. the front end lower, that is reflationary and that helps steepen curves. if you'll at dose of fiscal, which could have questionable funding so to speak, which is what we are talking about in europe right now, than that is a different story. a steeper curve but a gradual steady manner or is it going to

be something less so, that is what markets need to watch out for? lisa:'s political gridlock the best case scenario? i'm talking about the u.s. but also france. geoff: perhaps is the least worse scenario. that seems to be the thinking out of france. one side pushing for spending news, that seems to not be happening. germany looks to have manage their own budget gridlock. this is mildly reflationary for europe but goes against my euro-dollar lower view. caution in terms of pushing forward with the fiscal narrative is important. from the u.s. point of view if nothing aggressive gets done that is something bond markets will be willing to accept. we will cross that bridge when we get there. lisa: john was talking about tension with long-term bond yields and fiscal policies

coming down the pike versus growth concerns. given jobs numbers, given the unemployment rate rising to 4.1% , giving ism services below expectations, where are we in this balance between disinflation and slowing growth? geoff: from central banks point of view they would like to see disinflation and gradual slowing growth. on the political side and on the fiscal side when politicians see slower growth and lower jobs numbers, the reflexive reaction is to get fiscal injection to boost demand and get growth going again. that is what could spook markets further down the line. we have seen what has happened in europe already. on the other hand the u.s. has had reserve status, international reserve or continue to buy the dollar. maybe the u.s. can push that narrative. the fiscally driven growth

narrative further. how far will we tested? that is where we need to be more cautious. annmarie: you say there are plenty of reason story about the dollar and the euro. both have their sense of problems. which one worries you more? geoff: in the short-term term is clearly still the euro. if we look at manufacturing in the u.s. versus europe, ism versus pmi, nothing to be inspired about. the value added components from europe are coming from manufacturing there is no outlet. the ecb cannot adopt any stimulus where the u.s. still has a services upon me to push forward and also the dollar general lie the reserve angles. even though the u.s. is expected have the worst fiscal outlook in terms of the g7 nations it is still europe in the short term and over the medium-term i worry about more. jonathan: we have to ask you about this analysis out of goldman sachs.

assuming what could happen with proposals out of a trump presidency could raise the average u.s. tariff rate by 16% to nearly 20%. plug that into monetary policy in this is what they had to say. the implication is hawkish to the tune of 130 basis points because the hawkish inflation effect outweighs the smaller growth affect. how are you in the team thinking about the same thing? geoff: also tariffs would be imposing effective exchange rate appreciation on other currencies as well. will there be a disinflationary impact on the dollar? we have talked about benign neglect in terms of the dollar. given where valuations are and you impose potential reflation, than the additional strength of the dollar brought about by tariffs, will that start to import disinflation? there are quite a few dynamics but i agree the initial part is

to look towards an inflationary outlook for the u.s. so it is not going to look great for the fed, that is something they want to push back against behind the scenes. jonathan: jeff you of bny -- geoffrey yu of bny. around this table come adam posen at 7:30 eastern time. he and the team doing work on what changes to immigration policy could mean, changes to trade policy, and the expectation this fed is hyping, not putting in 2025. lisa: that might be the next move. we have heard the fed could be posed to hike rates not just once but six times. the equivalent inflationary hit from some of these policies. this is the question when you hear from fed officials, we are not political, we will deal with the economy. interesting to hear them pushing back behind the scenes. jonathan: they have to deal with the policy in front of them but this gets complicated,

particulate going into september. lisa: they do not want to be accused of what happened in the 1970's and that is looming over them even as the data points in their direction with an extra dose of growth worry, more than many people expected. jonathan: adam posen joining us in about 60 minutes. up next we will catch up with nila richardson of adp. from new york city, good morning. your equity market unchanged. ♪ (♪♪) (♪♪)

(♪♪) (♪♪) sandals rhythm and blues caribbean sale is now on. visit sandals.com or call 1-800-sandals.

want to save on some of the biggest names in streaming on visit sandals.com the network made for streaming? x marks the spot. now you can add the new xfinity streamsaver™ that includes netflix, peacock, and apple tv+.

that's xfinity streamsaver™ for just $15 a month. all your favorites. all in one place. only from xfinity. for more watching and less spending... x marks the spot. do it all on the network made for streaming, and bring on the good stuff.

jonathan: let's get you up to speed. good morning to you all just tuning in. your equity marker on the s&p 500 totally unchanged similar move on the nasdaq. just about positive on the russell. the scores last week indicative of the concerns people have on the broader market, the s&p up about 2%. nasdaq up something like 3.6%. the russell down on the week. lisa: because the idea you have right now is any rate cut will come with weakness. take, example, the jobs number we got friday. on the surface, it beat expectations, but there was a downward revision to the previous month. then you have the unemployment rate going up to 4.1%.

jonathan: what did chairman powell to talk about? crosscurrents? not crosswinds under the current? lisa: i am sure i said it wrong. sorry, it is monday after a long weekend. jonathan: now i am confused. let's talk about the crosswinds under the current and fixed income. [laughter] lisa: please. jonathan: i have no idea which one is right. let's pick one. 10-year, 4.30. last monday, we close at about 4.46. it got bought on a week of data, then the crossroads under the current -- [laughter] lisa: next er going to say i will beat the dead horse with a drum, something i've also said before. anyway, let's move on. by the way, wednesday, we have

10 year notes being auctioned off, which i think will be interesting. you are right, there is this feeling, and you have to think about an investor. if they are going out, they want safety. do they go into a 10 year yield of what inflation could look like under different administrations, or do you say, let's just stay with the two-year? there was a shift, and this comes from real growth concerns, especially with the atlanta gdp coming down so significantly but also the unemployment rate. i think we need to dig further into why it rose and what it is worrisome. jonathan: one, i love that a.m.h. is hanging us out to dry not saying anything. [laughter] two, steeper curves. the longer end will rise more than the two-year at the moment. lisa: and it could be for either reason, because the fed cuts rates more aggressively because of growth concerns, or because of general disinflation, or it could be because you get a sticky inflation, a fed fed but

longer-term concerns about the fiscal trajectory. jonathan: it is one of the worst market checks we have ever done. we will be meeting with abc's george stephanopoulos for a bit. too soon? under surveillance this morning, our top stories get at least nine democratic lawmakers calling on president biden to end his campaign, bloomberg reporting senator mark warren will not hold a previously discussed meeting today to discuss biden's bid. talks will continue during a regularly scheduled caucus tomorrow. congress is back it is there anything to talk about? annmarie: congress is back, and crosscurrents in d.c. is you have those sticking by the president and others saying he needs to step aside. just on this program, terry haines thinks biden will stand the ballot, and he things it is 50-50. then you have greg valley eigh

-- saying their base case is biden does step aside, the pressure becomes too palatable for the biden camp. lisa: by the way, i saw you googling crosscurrents. either way, i think this comes down to who replaces biden on the ticket versus this real fear that he could be a liability to their racers. a difficult moment for down ballot politicians. annmarie: at the moment, some of the names that are coming out, at least that bloomberg have reported, are individuals insecure positions in the party come on committees, and also within their districts. so wait until the voices come back from those who have really tough races and say the top of the ticket is not looking good for my race in my district. jonathan: i am looking forward to the conversation with henrietta treyz in about 40

minutes time. she think that is a really big chance that biden has to step aside. let's get you the latest on france, heading into political relock after a surprise showing from the left. the new popular front will not capture enough seats to permit government, but president macron's central -- in light politically agnostic, you're facing a prospect of a france that cannot govern itself, cannot do things about what most people assume is unsustainable fiscal trajectory, and the problems in the bond market do not go away anytime soon. lisa: i spent time over the weekend trying to understand the french political system, because gridlock over there is different . it could render the president complete toothless and unable to govern, which creates a problem at a time when the fiscal overhang is significant. it does not do anything. right now, bond markets are not

responding because they do not know. it is a clock that is taking care of the crisis continues with this question of exactly who will rule and if they can come to some kind of coalition. annmarie: and it could take a very long time to get this coalition together. i have to say, this really was not about french voters going out and voting for a party. they coalesced and voted against something kate i find that very interesting, because the first round of the election, marine le pen's party did very well. then when you have the coalition come together, macron's party and the left saying let's try to pull candidates to try to fend off the right, that is when the left did better. it is very hard to understand where politics is going in france. marine le pen came out and said we did not win, but the tide is rising. jonathan: i think there are similarities to what happened in the u.k. last week and what happened in france over the weekend. the electorate voted against something. the u.k. voted against conservative leadership, and france voted against the right

and marine le pen, coming together to do that. the consequences, though, so different that you and up with a massive majority for starmer in the u.k. and gridlock in france. lisa:i would love dull confidence. annmarie: just wait. this is a government that, at one point, was trying to figure out if the prime minister would last as long as let us. lisa: i am things having positive about politics. let me. jonathan: a busy weekend. u.s. i thursday. a lot to look forward to. a lot to look backwards on after payrolls last week and they really soft ism services repaired with us around the table is nela richardson with adp, a bloomberg tv contributor. great to catch up yet i think we have to start with last week before we talk about this week. what is your take away from payrolls friday? nela: there is two. the labor market is cooling, and

it is becoming more concentrated. if you look at the sectors driving that hiring, that 2006 topline number, government and health care. more than 70% of the hiring was done from two sectors. if you peel back, just to the private sector, only 136,000 private-sector jobs were actually created last month. that is a concentrated deceleration of hiring, and it is concerning. jonathan: favorite question of ours -- welcome calling or unwelcome deterioration? nela: what was that again? [laughter] welcome cooling or unwelcome deterioration. i think it is an unwelcome deterioration. if it was broad-based hiring, if you are seeing a slowdown consistent still hiring in key sectors, like manufacturing, especially interest-rate sensitive sectors, or sectors that really affect shelter costs in the cbi, like construction, i am all for it to but what you

are seeing is pockets of weakness, and that weakness could be problematic for inflation, not a coolant for inflation. that is what we have to really be careful of, because wages are in the driver's seat and the fed's decision this month and for future months. lisa: are you seeing wages fall more than you are seeing some of the labor market suggest? nela: are wages falling fast enough is the key question, and we are not seeing it fall fast enough to be consistent with a 2% target. we look at wages all the time at adp and in fact, i looked at 22 million over the weekend while i was barbecuing, and what we found his wages are different. the complexion is different. it used to be low-wage workers were seeing the highest paid gains for that is not true anymore. high earners are seeing the highest wage gains. that has an effect on the overall composition of wage growth, and that is the fed is paying very close attention to. it is not topline numbers

anymore, that is too easy. you have to peel back -- now i will mix my metaphors a bit -- peel back the hood? the onion? jonathan: you're talking to the wrong -- lisa: you're talking to the wrong person. nela: you have to look under the top line number. it is a wage picture much more complex now than it was in the pandemic time. annmarie: that frankly actually is why you're seeing ongoing strength in airlines and all the hotels, etc., because wealthier individuals can keep spending and they are getting wages, even though you are seeing real weakness in some of the smaller businesses. when you start to take a look at the overall picture, does this suggest the economy is stronger or weaker than the fed currently seems to be making out? nela: there are key pockets of weakness. this is a lopsided economy. you have some industries really driving the economy forward, but then some stepping back, like consumer durables.

i look at that closely, these big-ticket items are losing steam in terms of the consumer'' ability to keep up. then you look at the housing market, which is a sickly plateauing right now. it's stalled, it's frozen, really stalled of inventory. the housing market is not doing what it traditionally does, which is translate to main street, that will be a big for nga to what the fed can do going forward. i do not say cut -- trims interest rates. i think it is going to trim here and there and see how the coming plays out. lisa: that brings us to thursday, when we get cpi. people will look at owners equivalent rent, because they're looking for cooling there that could indicate the fed has an open door in september, like a lot of people were saying, to cater to the pockets of

weakness, despite some of the strength you are talking about. do you agree? do you think we will see real housing disinflation going forward? nela: no. because housing's problems are structural. the interest rates are not high enough people from buying houses. what is keeping people from buying is too low inventory, not too high interest-rate spear that will continue that is trickling down to all shelter costs. i've always disagreed with this notion shelter costs would be the game changer for cpi in the second half -- what used to be the second half of 2023, then second half of 2024. it is off the table. housing will not be the savior of cpi. it has to come from somewhere else. annmarie: do you see supply coming back online if the fed were to cut interest rates? nela: no. because it is unfortunately not just interest rates. we had very low interest rates for a long time, and still, we did not have enough affordable housing to go around. it is regulation.

it is local politics, not just national politics. annmarie: you also have data on promotions. what are you seeing in terms of, internally, feeling back the onion, under the hood come of how management is promoting individuals? nela: they are not promoting as fast as they did last year. that is the punchline. what you are seeing in the labor market is one that is stalling out a little bit. people are not leaving, even if they are unhappy. also have an article out on our website that young people would rather be unemployed than unhappy, but they are still not quitting their jobs. they say they would rather be unemployed, but they are not actually leaving. so there is some style out in their labor market. people are not getting promoted as much. they are staying in their chair longer. you are missing that dynamism that keeps the labor market moving, progressing, hiring, and increasing wages and profits. jonathan: i love that young people think that is a choice, that you could be unemployed,

without money, and be happy. lisa: i love that they are realizing it is not possible and just staying in their jobs and miserably quiet reading, which explains why a lot of people have opinions about new entrants to the workforce that, in some cases, might be unjustified. jonathan: i know you have opinions, too. nela, thanks for doing this. nela richardson of adb. more of bramo's thoughts later. lisa: i think i am done. [laughter] jonathan: with more on your bloomberg brief, here is dani burger. dani: indian prime minister modi will visit russia for the first time in five years. russia is india's biggest supplier of weapons and oil. however, moscow has been keeping its ties with china, which has seen its relationship with india stuck at a low point. thousands of workers at samsung electronics walked off the job today, staging a rally demanding better page it is the biggest it -- organized labor action in the

company's half century. negotiations collapsed last month. union leaders say the strike is intended to drive home demands. boeing will plead guilty to conspiracy, criminal conspiracy, and connection to two fatal crashes of its 737 max jets. the justice department complained the company failed an earlier settlement. the company will also install a corporate monitor. that is your bloomberg brief. jonathan: thank you. more from dani in about 30 minutes time. next on the program, a surprise out of left field. >> i think the market is trying to digest the surprise of last night, which is the left alliance did better-than-expected and came out first. jonathan: the latest on the french election. this is bloomberg. ♪

jonathan: stocks just about unchanged, futures going nowhere. yields creeping just a little bit higher. that by double digits last week. we are up two basis points this morning. 4.3018. under surveillance this morning, a surprise out of left field. >> i think the markets is probably trying to digest the surprise of last night, which is the left alliance did better-than-expected and came out first. what remains, i include main message of last night, is that there is not going to be a majority for anyone. obviously, it is an issue, because it means it will be difficult to find a sense of direction. jonathan: france's heading into political gridlock after a shock

defeat for marine le pen's national rally. the country's left-wing coalition winning the most seats in parma by failing to catch a majority. george saravelos writes the divisions undermine europe's longtime competitiveness and unity, and receipt euro-dollar staying below 1.10. great to catch up yet i know you have a broader view at deutsche bank. i want to start with a single currency in the weekend's events. after the weekend, what does it mean for french policy, for you and the team? george: good to see you. i think it is important to contextualize what the market was pricing into this event. if you look at the euro trade-weighted, european equities excluding france, if you look at peripheral spreads, they were all its ackley where they were before the first round of the first parliamentary rounds announced.

in terms of the outcome, it probably will prevent any sort of spill in that we have a period of prolonged standstill in france. what it means for the rest -- next few months is nothing will happen. the market was already pricing that, which is why the response was so muted. the more interesting question is what happens on a more medium-term basis, and a one to two year basis, and on that point, we are more pessimistic. lisa: define a bit more pessimistic. we saw a number of different notes over the weekend, where people were saying it looks like the least bad option now, but might be the worst option going forward if there is no political governance. walk us through what kind of reaction we could see in the euro in response to this? george: i think its all about the transmission of what is going on in france to the rest of europe. we should not be exciting the euro to weekend if it is just bund spreads -- we thing about

what does it mean for a broader europe? i thing about the transmission channel by essentially two dimensions for the first is growth, what does this do to growth? you could say maybe fiscal policy is slightly easier that would be good for growth. i took the more pessimistic view of prolonged uncertainty with regards to the relationship with europe. there may well be another election over the next one to two years. uncertainty to depress growth. we have seen that under pmi's care that has more dovish applications for the ecb. that is one side of the argument. the second is how does that impact europe's capacity to deal with these strategic challenges, europe's independence versus the new bipolar will between the u.s. and china? france and germany were always the locomotives in terms of moving forward.

we are exciting, and defense spending to be right on top of the agenda of the new commission . the european parliament reelection paid with the french government being weak, all of that discussion will slow down and effectively make europe more fun normal to any sort of external shock that could hit the continent. lisa: the nato conference will be taking place this week. this usually is not a market moving event. is it going to be a market moving event this year, given some of these concerns, and the concerns about how european nations are going to find some of their promises to defense spending? george: i think it is not going to be a market moving event in the most immediate future, but for sure, it could be very relevant, depending on the outcome of the u.s. election. i thing what we are seeing in this world of essentially the political center is shrinking, becoming more fluid, you are seeing these political events become more intertwined.

what we have seen in france makes the outcome of the u.s. election even more important for europe, because europe's weaker in its capacity to respond, and potentially, if we get president trump winning a second term, i would argue that would have very important consequences for europe. you mentioned defense. but even more important, trade policy. this is one point we have been making in our discussions with clients. i think trade policy is much more important as far as the u.s. goes than fiscal policy, where the market would tend to overstate the risks. annmarie: deutsche bank parity for the euro-dollar as the path if there is a trump election. how do we get there? george: going back to this discussion of all the different implications of the u.s. election, i would say the most important one, by far, from an fx market perspective, is trade policy. if some of these trade proposals get realized, on the one hand -- and this is where all the discussion is focused on the

moment -- he would have inflationary consequent is for the u.s. i think the bigger impact will actually be the disinflationary consequences it would have for the rest of the world, because imagine a situation where the u.s. puts up a huge tariff would have to get diverted into other markets, including europe, so therefore we would see a big deflationary shock in europe. therefore that fed-ecb imagery would become even sharper in terms of relative reaction function. that is one. of was, depends out happens on the tariffs between the u.s. and europe, which would be a direct shock in europe. trade policies absolutely the key variable as we are thinking about the u.s. election. annmarie: even if we get another biden administration, there will still be tariffs, potentially more when it comes to places like china. do you see the same trajectory for euro-dollar, whether or not it is trump or biden? george: that is a statement we are often, that the approach and

trade is similar. i would strongly disagree while the direction of travel looks similar, the speed is incredibly different. if you look at what the biden administration has done over the last two years, yes, it has kept tariffs, imposed marginally higher tariffs as far as china goes, but a potential republican administration will be talking about an entirely different order of magnitude k this is where it early makes a big difference. of course, we have a potential situation where we are discussing tariffs on europe as well, which is something on the table as far as the biden administration goes. if i could make a last point on fiscal, the market would tend to emphasize finches in fiscal policy, but when you actually do the fiscal scoring between the two different potential administrations, you end up with very similar numbers. we have to remember, tariff policies also tax policy. it entails an increase in taxes. i am not convinced the big fence between the outcomes would be on

the fiscal side but more on the trade side and, by extension, affect the fx market. jonathan: thanks. george saravelos of deutsche bank on how trade policy can exacerbate monetary policy divergence. -- lisa: given the fact the u.s. has basically all but banned their electric vehicles, and europe's is not. their walls are porous. jonathan: kind of sitting on the fence. the euro-dollar 1.0829. coming up, stuart kaiser of citi, henrietta treyz of veda, adam posen of peterson, and collin martin of schwab, the second hour of "surveillance," up next. ♪

(♪♪) sandals rhythm and blues caribbean sale is now on. visit sandals.com or call 1-800-sandals. say aloha to olukai golf. waterproof leather. breathable fabrics. spikeless traction. the most comfortable golf shoe in the game. grab your pair today at olukai.com.

>> the fed is somewhat of a cheerleader for the economy. >> there is still a broad feeling of uncertainty out there with a consumer, so it may not take much for the consumer to pull back. >> it really does come back down to the labor market in terms of how much consumers can keep spending. >> everyone is very focused on growth for the fed, but we dropped the ball that inflation is the key metric. >> if inflation returns to trend, they are excited to cut rates. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: the second hour of "bloomberg surveillance" begins

right now. your equity market slightly negative on the s&p 500 after closing at all-time highs friday. the week ahead is stacked. double dose of chairman powell kicking off tomorrow. second does sao paulo closing on wednesday, just before you get cpi thursday. i feel like this has cropped up on us a little bit. q2 earnings kicking off friday. lisa: i would agree with that. i feel we are not prepared mentally for this deluge friday. i do sort of take issue with the idea that these are the banks that kicked off the earnings season with a tone, because every single time we say this will set the tone or earnings season, then we always spend that friday talking about how it no longer sets the tone, because it is completely divorced from what we see under the hood of smaller businesses. jonathan: sort of up to speed with where we have got.

chairman powell setting the tone. we often say he will get a grilling on capitol hill, then there is not much grilling. i am interested in the numbers. i am far more interested in how he will respond to questions about fiscal policy, whether someone throws in a question there about tariff policy that could come later next year. lisa: he will say -- annmarie: he was all of this obviously relies with lawmakers in the white house, and what the fed can do only after their policy is an active kid what can they do about rhetoric coming up from either side? until we see who will be in the white house and what the composition of congress is, how does the fed actually an act policy? are they having these conversations behind closed doors? absolutely. can they talk about it? no. chairman powell will look as a political as he can. jonathan: we just had a conversation with george

saravelos of deutsche bank. if you missed that, we will place that to the webpage later. how tariff policy in the white house can exacerbate monetary policy divergence next year between europe and the united states. what he essentially said is, if the walls go up here in america, someone has to eat the chinese capacity. it is likely to be the europeans care that would be disinflationary for the europeans, inflationary for the states. what does that mean? monetary policy will be very different at the fed compared to the ecb, and euro-dollar will face a lot of pressure. lisa: this raises the question of who the tariffs will hurt most, whether this will be a tax in the united states, and to this question of how jay powell response to that. i would advise a policymaker to ask, how do you deal with the fact that you could see slowing growth while you also see sticky inflation? how do you deal with that? where do you prioritize inflation, given the fact that that slowdown in the labor

market has clearly been a concern for you. and, by the way, how do you see that playing out this year with what is going on in the current labor versus inflation dynamic? jonathan: we are talking about who wins november without early knowing who runs and who faces off with each other in november. there is still a question mark over the by denomination -- over the biden nomination. there is a growing divide over what the president existed for the party and what the party things is good for the president. dani: there is a schism now the democratic -- annmarie: there is a schism not in the democratic party. nine democrats are coming out and saying the president needs to resign, he should not be the nominee for this party. on friday, given lawmakers are coming back and they will have all these behind-the-scenes conversations, which will likely get leaked out to the press, what number does that stand out on friday, and how does the president perform thursday, when

he gives a press conference? in the press, now, are almost, as some opinion pieces from out, have -- feel like they've been gaslit and have come up with a vengeance. lisa: all i can say now is thursday, if he does not come out to that -- what did terry haines say? he has two strikes now. annmarie: i struggle with that, because over the weekend, the president said he was a first black woman to be elected president. is that in -- isn't that another strike? but to your point, this has been showing up in polls for months, but that debate was the window that allow democrats to openly come out and say we have a lot of anxiety and are concerned. jonathan: more on this later. equity futures, equities closing friday at record highs. every single trading day last week, there were four stateside. we closed in positive territory

on the s&p 500. a four day winning streak with yields, just a few basis points higher. talked a lot about the euro, just a little negative here by 0.1% at 1.0829. coming up later, we catch up with stuart kaiser of citi. henrietta treyz of veda partners as house democrats call on president biden to drop out. and collin martin of charles schwab, amid growing that's on a september rate cut. we begin with s&p 500 looking past election drama and reaching another record high. citi's stuart kaiser writing the three things we are monitoring our corporate taxes via high versus low effective tax rate players, two, tariffs via stocks most sensitive to tariff-related headlines, and three, sector exposure. stuart is with us around the table. we have to ask you whether it is too early to be thinking about these things.

stuart: it does feel a little early, but when you move the debate schedule up, it forces the market to gravitate towards these things earlier than we would have liked. if equity markets are talking about politics, it is probably a bad thing. it is political risk, not political opportunity in most cases this is definite was something that obviously, equity markets are performing well, but it is an additional risk factor. you do not know what congress will look like, so it is a little bit harder to get a good handle on what that policy would look like. and tariffs are like a coiled spring at this point, in terms -- you mentioned monetary policy. the question is how does powell message that if this happens? is this just a step function change and then you are back to trend, so you do not want to alter policy to deal with that, or do they believe that is something that creates a risk to the downward trend in inflation we are seeing, and they have to remain tighter for longer? jonathan: after that debate a couple thursdays ago, ethic a lot of people reached for the

2016 trump playbook, dusted it off, and had another look at things. how useful do you think that playbook is? stuart: not very. it matters. you obviously need to pass performance tests. in this case, it does inform you about where he may go, but i think people would view trump's policies as fairly fluid. we are not sure what congress will look like, what his cabinet look like, what the economic it will look like. her -- she is sensitive to those things. it matters. if you are more bullish on a trump outcome, you're probably gravitating more to that deregulatory impulse and how that might impact a sector, particularly small-cap stocks. if you are more negative, it is the tariff policy your balancing out. annmarie: when it comes to tariffs, it does not really matter the composition of congress. trump could unilaterally change tariffs. are you viewing the rhetoric now

may not be the policy of tomorrow? stuart: i view both candidates that way. there's a lot of stuff being put out there. both candidates are probably floating ideas as well, and they want to see how the markets are reacting to them. there is a lot of things that get said at this time in an election cycle that may be -- may be core policies they want to implement, may be things that are nice to have. annmarie: you say both candidates. we are all under the assumption, i guess at this moment, it is going to be biden. but if it will be someone else, does that change the playbook? stuart: i think it has to. it depends who the candidate is and under what circumstances it happens. obviously, if vice president harris takes over the ticket, those policies would probably be more in line with what happened the last couple years. if you bring in a new candidate, there is clearly policy uncertainty around that. even if they want to toe the party line now, once they were

theoretically in power, you do not know what direction that policy will go. you have to add some sort of uncertainty premium in. lisa: i love the way you frame things in some of your recent research. where you state medium-term, election risk, whether talking about their jobs market or consumer spending, will kind of rule the roost when it comes to market activity. near term, it is inflation data and the start of earnings. you think the start of earnings really does begin with the banks. are they going to give any sense of the direction of travel, or are they just sort of a world unto themselves? stuart: people will look particularly to the ceos and how they talk about economic and lending activity. there is a signal in terms of what do the banks view the outlook in terms of economic outlook as. those would both be very important. to your point, as a share of market cap and earnings, they are much smaller than they have been in the past. to be honest, a lot of the large brings have generally guided or talk negatively about the economy for most of the last

couple of years, so how does the market react to that? is it a boy who cried wolf situation? or given the actual slowing we are seeing an economic data now, do those comments carry more weight? i think it matters much more from that perspective, what are they sing about growth, lending, and the strength of the consumer? lisa: a lot of people say it is because i've been reporting record profits, so they want to recognize how people are hurting out there to sort of mask incredible and they have been having. how do you see, in general, the balance of risks as market participant are worrying about that in terms of weakening and growth picture? it is maybe a little bit more than this immaculate disinflation. stuart: the growth has definitely turned over the last month. it got more broad. usually, we had pockets of weakness. now it seems, we are seeing more of a broad feeling of economic data. i think that is why the banks will matter from that perspective. in terms of risk reward around earnings, it seems like the bar

is a little higher this quarter. if you back to last quarter, you had a lot of large-cap stocks, particularly on the consumer side, really discuss weakness, whether that was mcdonald's or starbucks or others in that category. the bar is pretty high going into earnings, both because the prices high and also because when the economic data is slowing, you want to see the earnings and earnings guidance and outlook buttress things. jonathan: you have a consistent -- when they data gets back, it is time to sell. how bad -- how close are we to the danger zone? stuart: i guess we are getting closer by the day. the tough part for the economic data right now is the soft landing versus half landing boundary that you could push up against it if you believe in the soft landing, that is great, but as you are approaching a soft landing, you have to increase the odds the hard landing is where you end up.

that is what the market struggling with a little bit right now. it does feel we have to thread a needle a bit. the economic it is much more broad-based weak. there are key things and economist in particular would look like and say this is a big deal, and the meathead strategist in me is saying we just pointed 160,000 -- it has gone our attention. we have gotten closer to when the market will need to make that decision. if you are bidding on a soft landing, it is just a very poor risk reward trade, because -- let's use payrolls as an example. once you get below 100,000 payrolls, you have to increase the risk you will go negative and into a recession, so even if you believe you will soft land, you are threading a needle and the risk reward around that trade is tricky. that is why small-cap in particular is under so much pressure. jonathan: i cannot think of a single cycle where the sound will has been talked about more

than this one, and it is investors and traders who reference the rule more. how do you think this market would respond if on a plumbing did climb to four point 2%, even if fed officials are sort of hands off and deemphasized it. do you think the market would behave as if a recession had started? stuart: we would get i do not say a recession had started, but if you trigger a rule like that -- we have been acutely focused on the labor market. if you get unemployment accelerating in that way, you have to respect that and take some risk off the table and hedge it, in my having a. jonathan: another 10 basis points in on employment? stuart: look, we are kind of splitting hairs there. yes, if you get on employment rate above 4.2% and are approaching 4.3%, yes, it matters. the same, on -- i think it matters. that said, you have had other

"rules." a lot of them related to 2's/10's that prevent ineffective. does that matter? yes, it will matter. you have to respect that is an additional negative on risk reward going forward. we would tell people it is time to reduce risk or be a little more careful if that were to happen. jonathan: stuart kaiser of citi. your equity market just about turning positive k let's get stories elsewhere with the bloomberg brief. here is dani burger. dani: iran elected a reformist president who wants to revive the nuclear deal. the heart surgeon won in the runoff election. turn out, though, was below 50%. the u.s. state department said that was due to electives not being or fair. prime minister keir starmer is expected to launch great british

energy. he also plans to convene a business task force to advise on the creation of a national wealth fund, designed to drum up private investment on a so-called five missions p those include economic growth and clean power. microsoft is ordering its china-based employees to swap their androids for iphones. bloomberg obtained an internal memo that said, starting in september, employees will be required to use only apple devices to verify their identities. the measure will impact hundreds of workers across mainland china . that is your bloomberg brief. jonathan: more from dani in about 30 minutes time. up next, pressure mounting on president biden to bow out. >> we do not oppose the president, we simply ask him to make the very important decision of stepping aside. >> mr. president, your legacy is set. we owe you the greatest debt of gratitude.

the only thing you can do now is to step down and let someone else do this. jonathan: that conversation up next on the program. live from new york city this morning, good morning. ♪

jonathan: equities just about unchanged on the s&p 500. in the marne -- in the bond market, yields drifting higher. under surveillance this morning, pressure mounting for president biden to bow out. >> this is not just about whether he gave it the best college try but rather whether he made the right decision to run or to pass the torch. >> voters do have questions.

personally, i love joe biden. i do not know the interview friday night did enough to answer those questions. >> we do not oppose the president, we simply ask him to make the very important decision of stepping aside. >> mr. president, your legacy is set. jonathan: the latest this morning, nine democratic lawmakers calling on president biden to drop out of the race as out grow over his ability to serve a second term. henrietta treyz writing, unless biden improves in the polls, the screams to drop out will wrote deafening. it is our expectation that staying in the race is untenable, and the president will choose to step aside. henrietta joins us now for more. wonderful to have you on the program. will it be the polls, the donors, officials in the party that get the president to take that decision? henrietta: it is interesting.

they are getting off the right now. the donors are leaving. the best older president had in the last week was actually the bloomberg consult whole you conducted, which showed him down in every state except michigan and wisconsin. he is under water in pennsylvania by seven points in the bloomberg morning consult whole. all three of those points, including the members, are coming out against joe biden right now, which is why we have 70% odds he will ultimately decide to step aside and open this up to you, as i would phrase it, the chaos of what would either be passing the torch to vice president paris or opening it up to a contested mini convention, as they are calling on the democratic side now. annmarie: a range of 70% on days big. what is the time when you could see this unfolding? henrietta: these things happen very slowly and then suddenly all at once, to paraphrase. right now, there are a lot of different big-ticket items you have been mentioning the nato events this week and -- let's step back ethic about this from

perspective of the average voter. no one is watching that. americans are not particularly enthusiastic about foreign politics the majority of the year kate i do not expect it to be a major narrative in the 2024 election. obviously, israel-gaza and ukraine are important topics, but in the grand scheme of things for the american voter, that does not register. when will president trump announce his vp? the number one way to supersede that is for the democrats to nominate someone else. i do not see a lot of rationale for democrats to step out and say, actually, we will fix all this and open it up to a new situation, biden will step down, before the rnc. i would expect it to happen after that. that is about a week, we can have, for investors to wait here. we have been through this a million times with d.c. they do not do anything until they absently have to pay this is just another example of that. technically, you would not have to get any movement on this

until mid-august i think we could -- we are already seeing a lot of movement underneath the surface, but a real action after the rnc. lisa: but -- annmarie: but mid-august puts the potential individual to take over at a disadvantage. you write that no one could beat trump when it comes to name recognition, national stature, to compete with trump katie would have the best chance? henrietta: that is exactly the case right now, but we are already talking about gretchen whitmer, pete buttigieg, and name recognition of those candidates is increasing rapidly. due to this concept of the invisible primary, where voters excited either a biden or trump to drop out of this race all year, people are primed to learn about a new candidate care what you are seeing his name recognition is going through the roof, very quickly, and you are seeing improved bowling for members like -- improved polling for members like kamala harris,

gretchen whitmer. what we are focusing on here is 24% of the electorate, including mostly independents, decide who they will vote for after labor day. there is about 60 days from now that matter most in this election, and we are not there yet. any of these democratic edits have the benefit of what will be an onslaught of media, sort of earned media. on the republican side with trump, that earned media that you do not have to pay for that comes from just natural attention, intrigue, and that is now housed within the democratic party for the first time since 2016. lisa: i have been confused by some of the polls after the debate and that interview with joe biden friday night. some have shown a widening of the gap, widening in the lead donald trump. others, like the bloomberg morning consult bowl, showing a narrowing of trump's advantage in swing states. is any price good press?

is it people already knew this and it was factored in? how do you reconcile the different narratives we see? henrietta: i think it really hinges on, for lack of a better phrase, attention to the democrats, certainly, but the fact that donald trump has not run his face -- has not grown his base. trump is at his ceiling. the has been the case since november the question is can you beat 48%, 47%? the bulk of biden voters are who do not like trump, so it creates a scenario where the democratic voter base, and, increasingly, independents, moderates, and female voters are primed to migrate to whomever the democratic party taps next. it really matters less to that candidate is than the fact that they are not trump, and that is just the nature of the duality between trump and the democratic party right now. jonathan: let's catch up in the next week or so. henrietta treyz of veda partners with the call the president will

step aside. think about the spread of officials between officials and the democratic party. democratic officials are waking up to the reality the rest of the country has been looking at now for months and months. lisa: the conspiracy of silence was among some of that democratic elites. it was not among the rank-and-file, who are watching all along. jonathan: coming up on this program, more on the u.s. election. what a trump policy could mean for monetary policy next year. adam posen of the peterson institute, up next. ♪

jonathan: just want you to think about a number. the average target on the s&p 500 for year end 2024, coming into 2024, with all the craze of the last few months, 4833. equity futures look like this on the s&p. unchanged today. we will be talking about 5600. and oppenheimer now talking about 5900. that is their newest price target on the s&p year end. mr. stoltzfus the second-most bullish on the street. lisa: he basically stayed -- gave a nod to that when he was on the show. it does not matter whether the

fed cuts rates, as he said all along. right now, he does not see a reason to stop betting with momentum. jonathan: things could change. we only just started talking about policy coming out of washington. we are starting to see the cracks in the labor market as well. you can see that breathing life into this bond market, just as it was selling off, it started to rally on a really weak ism services going into the july 4 holiday. the 10 year, 4.3018. lisa: stuart kaiser it sounded up beautifully, where betting on a soft landing is a poor risk reward trade, talking about how people already baked in this narrow landing impact or basically inflation coming down and ruth cooling just enough. now we are getting this crunch space, and you can see that tension playing out in the bond market. on the one here, you have fiscal overhang, which people have talked about. you are talking about this idea that growth is slowing, and where else are people going to

park their money? jonathan: we have to get the auctions now. lisa: $39 billion of 10-year note tuesday, $1 billion of 10-year note. jonathan: you remembered that. annmarie: she is like an ai auction bot. jonathan: lisa plugs in and then comes on tv. let's talk about the psalm rule. the three-month average rises about half of a percentage point over the lower of the last 12 months. if we get a 4.2% triggered, ultimately, the way people viewed that -- maybe not claudius on herself -- that we are in a recession that -- maybe not claudia sahm herself, that we are in a recession. it is amazing to me how many officials do not talk about that and how many investors do talk about this. stuart kaiser said that if unemployment climbs another 10 basis points, he is changing his call. a massive change in their stance

in another 10 basis points move in on the employment. lisa: this is what happens when you have people basically trying to dance on the head of a pin, get to the place where they can cross over and satan now we can cross over. i will say the fact that every revision we have seen in the labor market has been fewer jobs. we see the jobless numbers climb bit i that. it is making people nervous, but not enough to that against momentum, as we heard from solt -- from stoltsz -- stoltzfus. jonathan: the next on the plumbing report will be much more closely watched because of that issue. foreign exchange, the euro 1.03 830. we knew the left was getting together with micron. i guess on that front, micron succeeded. but when it comes to the govern ability of france, you have the left in front, micron -- macrons

second, le pen in third. ultimately, have gridlock. lisa: george saravelos said, longer-term, it makes the u.s. election more important, given the fact that europe's ability to respond to crises is dramatically reduced. jonathan: the year at 1.083 zero. under surveillance this morning, boeing set to plead guilty to criminal conspiracy in relation to two crashes. the company facing a criminal fine of as much as $487 million on the the agreement with u.s. prosecutors. this has been on that table, based on our reporting, for the last. . week lisa: the idea it is government appointed oversight is actually interesting. how much they really wanted, a lot of the people, the victims families, wanted this to be. why hasn't?

annmarie: how complicated will this be for boeing, which actually does a lot of interaction with the government, because it is a major defense contractor? now the government is saying you have to take a guilty plea, but we still have to do business with you. it feels like a very low point or boeing. jonathan: i guess lower, that low point. we have been saying that the last six months or so. the commodities market, oil trading lower, even after hurricane beryl made its way through the gulf of mexico and made landfall on the texas coast. officials urging residents to take caution as companies adjust operations. these things happen. see them in increasing frequency, and it seems to be happening earlier this year. lisa: we can go into the climate forecasting. you are talking about the commodity response to it. torsten slot, on cue, put out this chart talking about how it u.s. energy production is higher than u.s. energy consumption. the offset to some of these

potential headwinds, whether the potential for a hurricane to disrupt supply, middle east disruptions from a why have we not see more of a reaction in terms of higher oil prices? that is the answer. annmarie: absolutely. it is the u.s. exceptionalism when it comes to these "stranded assets" actually, they are pumping at a rate no country has seen ever. the issue for this summer is contingent on weather, but i would say does also contingent on what is going on in the middle east, in the red sea, and if he were to see the cease-fire between israel and hamas. there is geopolitical risk and weather risk, and that is not something the oil industry or the government can control. jonathan: our final story, president biden entering a pivotal week or his election campaign, vowing to continue his run despite calls for him to step aside. adam posen of the peterson interested writing tariffs and

migration research and are coming, which are inflationary. whatever the election results, there is an 80% chance that the fed will hike by the end of third quarter, 2025. adam joins us now for more. wonderful to catch up with you. congratulations on the latest were, particularly on tariffs, and what you're doing around immigration as well here before we get deep into that analysis, let's start with that and call for next year. you say there is an percent chance regardless if he takes the white house in november? adam: yeah. 80% net. thank you for having me back, jonathan kate i think it is slightly lower if you have fighting and much higher, meaning close to certainty, if you have trump. there are just too many things feeding in. inflation coming from tariffs, stagflation coming from migration restrictions. a rotation to fossil fuels even

further and fashion engines under trump, which would be a boom that is unsustainable. then, as we talked about last time i was on, i see physical laxity either way, no matter who wins congress. there is just too much demand. the shape of the laxity, tax cuts come is very different. either way, you put that together, and notwithstanding the points you legitimately make about the labor market, the fact is that fed is probably looser than it actually thinks it is. to me, it is inflation. lisa: that say, we will get cpi thursday, and supposedly, it will come down to 0.1% over month, 0.2 percent when you strip out food and energy, leaving us with a three point something type of inflation rate, which is not so terrible. it has come down significantly. why do you think that should justify a fed rate cut, certainly in september, but even this year? adam: my forecast is the fed

will cut, probably november rather than september because of politics, but they will cuts. then they will have to reverse. the question is how quickly do they reverse? if i were sitting there, i would say, i might vote against they cut in september, but i am probably ready to cut in november. but i have to be ready to pivot hard when the circumstances change. lisa: in other words, you think this could be a similar type of episode as what we saw in the 1970's, when it was sort of a head fake with disinflation, then a whole other host of factors came into play? is that what you are pretty thin, this will be more like a 1970's redux than most people are counting for? adam: it is a fair parallel, but i would go to the parallel of the second volker disinflation, that in 1982, they got inflation down, it was trending down, then things got out of hand again, in part because of the reagan

deficits in 1984, 1985. that is the analogy we have got to look at. that means, conditional on what they see now, we will see whether the sam rule applies or not -- sahm rule applies or not. if the fed decides they are going back to inflation targeting, they should not be cutting. if they are doing data dependence and trying not to people, then they may be should be cutting. either way, they have got to be prepared to turn around, as volker did in 1985, that is something central banks are usually reluctant to do. part of the reason i am saying this is not just to get the call right to try to set up a ground for the fed to be willing to reverse. annmarie: but for the fed to rivers, we need to actually see those policies. is there an indication that potentially trump has rhetoric now that we not actually mean policy, he was enacted into the

white house, potentially rhetoric to get beijing to come to the table and strike a deal? adam: the possibility of that is much bigger on the trade front than the fiscal front. trump keeps saying to different audiences, circuits for trump saying to different audiences, this is all about negotiating position. if that is the case on tariffs, great. not great compared to not doing it, but it is better than putting up across the board tariffs, which would cost $1700 in household more. if that is true, great. but on migration, he has been very clear. he has legal and political authority. his voters want anti-migration policies. a lot of democrat voters want anti-migration policies. leaving aside the human cost, it is going to be vague. he has said repeatedly we will do the largest migration crackdown in history. the second largest or the largest date was eisenhower's

operation, which kicked out 1.2 million human beings. so we do the modeling, if it is 1.2 million human beings, that is mildly stagflationary. if you do 7 million, which is all illegals, as he puts it, then you're talking massive recession in manufacturing. annmarie: leaving behind nsi the humanitarian effects of this, what kind of deficit are you seeing in the amount of people in the labor force? adam: biden, unfortunately, has undercut -- for political reasons or maybe some of his people leave it -- undercut his success stories, which we had roughly 2 million to 4 million more immigrants over the last years, and this came with record low unemployment, came with high labor force dissipation. they were not taking jobs from natives, they were creating jobs for natives. either will -- anyway, biden cracked down on the border.

that is one of the recent services inflation is creeping up a bit. like you say, leave the human aspects of this aside. on the pure economics, this is taking away the secret sauce that has made the u.s. grow without inflation and with low unemployment for the last couple years. in addition, before we get to the stuff about high skilled immigration and entrepreneurship, which i know you and your colleagues have covered a lot. jonathan: i want to offer you the opportunity to develop the idea a little bit more, give you space to talk about it. tariffs are regressive. we agree on that, no dispute whatsoever. there is a story on immigration that that regression has held down wages. we hear people talk about that all the time as if that is a good thing. i want to understand, from your perspective, what the argument is, contrary to that. what is the counterpart to that? adam: it is a fair question, and

i understand people are concerned about it, because it seems like obvious luggage -- logic. but as my colleague pointed out, the economy is not one market, it is a much more complex system than that, and it is a very straightforward complexity, which is, for the most part, lower skilled migrant workers take jobs that are different from the jobs even lower skilled or lower paid nativeborn take. they are separate labor markets. we see this repeatedly. we saw this in miami, we have seen this and a lot of macroeconomic studies, we see this in texas now, where there are border searches, yet on employment is low and wages continue rising for the nativeborn. as michael clemens points out, we basically create one new job for every 10 migrant workers, for a native born person, one new job, and vice versa. you take away 10 native -- migrant workers, you kill one native job. it is like you have iron and

copper going into a metal. you need both to make steel. in the case of migration, manufacturing, it includes service in commodity, in hospitality in the u.s., you cannot make it as well without having both elements, and they are separate elements. the evidence is there. there is nothing strange about this. it is just the fact that migrant vote -- migrant workers, both legal and illegal, basically take jobs the natives will not do. jonathan: if we can take that a step further, if we clampdown on migration, an obvious question people might have listening to this conversation would be why would that lead to higher interest rates, given what you just said does not happen? adam: it is a question you're actually right to raise. it is a question of, whenever you look at stagflation, in the 1970's, as it looked for a moment like we would have in 2020, the question is, how much does the recessionary effect

outweigh the inflation effect, and how much do inflation expectations stay low? if the recessionary effect is much sharper, than the fed can look the supply shock and say, ok, we have got to cut. but, especially if, as you just raise, or lisa just raised, that a trump administration word to only deport one million, one point 5 million people, the inflation ethics in the short run would outweigh the recessionary effects, and they would be visible. then you have these other moving parts, the fiscal policy, the rotation into energy, fossil fuels. that would be inflationary as well. if they do a full bond massive deportation of millions, then the recession is much bigger, and that is the least of our problems, and the fed does not

raise. more likely, we will be in the mildly stagflationary, mostly inflationary scenario. jonathan: super thoughtful stuff. fantastic analysis. we have enjoyed everything coming out from you and the team at the peterson institute. adam posen, thank you. we have a lot to talk about on two fronts. lisa: i am thinking about this, this idea that jobs that native americans will not do get i want to understand a little bit more about that. is there a price at which they would do that? is there someplace where there could be increases in efficiencies? forza ultimately this economy runs on people who are desperate enough to take jobs in slaughterhouses, picking cotton, informs, etc., the americans just -- in farms, etc., that americans just won't do? and what impact will that have on the economy as we talk about the -- growth and inflation? jonathan: and these are complex conversations.

up next on the program, we talk about the economic data, the jobs data of last week, and why september is very much on the table. >> i would be leaning towards looking very carefully, especially in these numbers, and then in the next month's numbers, to think about whether september would be the time for starting to cut. jonathan: we talk about the prospects of cuts and hikes, up next on the program. ♪

(♪♪) (♪♪) sandals rhythm and blues caribbean sale is now on. visit sandals.com or call 1-800-sandals.

jonathan: stocks are unchanged, bond yields a little bit higher ticket's office monday morning. your 10 year yield higher by almost three basis points now. under surveillance this morning, september on the table. >> the fed has made it really clear that, until they are confident that inflation is going to be coming down in a sustained and systematic way,

they are not cutting rates. i would be leaning towards looking very carefully, especially at these numbers, then, into next month's numbers, to think about whether september would be the time for starting to cut. jonathan: fed chair jay powell heading to capitol hill for his semiannual testimony. plus we get in cpi data thursday. collin martin of charles schwab writing we still expect at least one rate cut this year, given the disinflationary trend. may's inflation readings were a step in the right direction. a couple more readings like last month's pc report would raise the prospects of a cut in september. he joins us now. let's throw in the ism numbers for good measure. chair powell speaks twice this week. can he open the door for july, let alone september? collin: i do not think so katie has been consistent about his idea of more data, and i do not think we are at more yet. we expect it to continue, but if you look at may readings, last

friday's jobs report, that is certainly a step in the right direction, but rate cut in july is near zero. jonathan: he is talking about the data, we are talking more bad data. when does the focus shift in the dual mandate to the full implement side of it and less about price stability -- full employment side of it and less about price stability? collin: i think we are getting there. what we are looking was not necessarily a sharp weakening but coming more into balance. that is the key phrase there. when you look at and unemployment rate of 4.1% or so, that is an orderly rise. you talk about the sahm rule earlier, why it has not been triggered -- because it is an orderly increase. if you start to see more consistent pickups, you are also talking about a 4.2% unemployment rate, i think they will start to get worried about that, when you look at what their forecasts are. they are not exciting a sharp rise in unemployment, so if they start to see those actual numbers coming in higher than

expected, i think they will start to focus on it a little bit more rather than just talking about the balance. lisa: there is this key tension we have been talking about, what you do with that weakness. when you see the whites of the eyes of some sort of economic downturn in terms of the jobs market, do you buy duration? is that a trade you can make? collin: the political overhang is something we are focused on right now. our view there is it is too early to get too much into the weeds, because we still have a lot of time, but when you look at both sides of the election, there's really not much signs of restraint, fiscal restraint. we do not think that will lead to a surge in long-term yields, that just limit the downside a little bit. but we are still ok in duration. our key theme lately is to look the on treasuries. we talked to our clients, a lot of them are individual investors. it is tough to accept lower yields, but there are a lot of investment out there that are high quality and can much of

those short-term yields, so that is where we suggest clients take duration. lisa: a number of our guests say they are less focused on fiscal policy than they are on some of the immigration we talked about, as well as tariffs. do you agree with that? will that create tension or the fed next year and bought investors at a time when you could see increased inflationary wins by depressed growth? collin: maybe. i think your previous guests mentioned this. it is one thing to talk about policy, it is one thing to get them enacted. there are some inflationary wins on the horizon. we look at both candidates, whether on the inflation side, whether on the debt deficit side, whether on the tariff side to. it is something we are thinking about now, more for the next two or three years. in the here and now, we are focused on more monetary policy, the easing jobs market, this is -- the disinflationary trend. annmarie: next two or three years but the election is in november. we potentially get a new president in january. if that is trump, we could get tariffs in days or weeks.

isn't this a 2025 issue? collin: it could be. we still think there is time for before we make some bold claim or change to our outlook, we want to see how the chips fall a little bit. for now, we are focused on the trends we are seeing and not just a hard data about the soft data, with a lot of leading things like ism indices. jonathan: how concerning was the ism last week? collin: i think it is concerning ky have been focused on more -- services had been holding up pretty well. but when you look at that number, the lowest in a number of years, and pretty much every component was down. i think we saw a pickup in you order, but employment down, prices paid it down, and the headline, it was a pretty sharp declines are that is telling. but we have seen headfakes before with the soft data and the hard data. new look at last quarter's gdp,

i think it means we will see more slowing. jonathan: collin martin with charles schwab. last week, services i some contracted the most in four years. both of them contracting. unemployment rate above 4% for the first time since 2021. april, may, payrolls lower that combined 111,000. lisa: yes, i worried, but i do not need more reasons to worry i hope this economy does not roll over in some sort of serious -- some sort of serious recession. our do not want to see it tested whether the fed has all the munition -- ammunition it needs for it i want to put that on the record. jonathan: no one things it is a goal of yours to have a recession. but it is a fear of yours. lisa: a constant fear. jonathan: feel better? good. third hour up next. ♪

say aloha to olukai golf. waterproof leather. breathable fabrics. spikeless traction. the most comfortable golf shoe in the game. grab your pair today at olukai.com.

want to save on some of the biggest names in streaming on the network made for streaming? x marks the spot. now you can add the new xfinity streamsaver™ that includes netflix, peacock, and apple tv+. that's xfinity streamsaver™ for just $15 a month. all your favorites. all in one place. only from xfinity. for more watching and less spending... x marks the spot. do it all on the network made for streaming, and bring on the good stuff.

>> all fed officials will tell you it is about the totality of the data. it is not what is happening with the labor arc it with them nation. >> rate cuts would be forthcoming. >> the fed will not move at the end of this month. >> september is another round of

data. >> what will drive the fed to september is inflation. >> this is bloomberg surveillance with jonathan ferro, lisa abramowitz, and annmarie hordern. jonathan: cpi on thursday, right in front of us, a double dose of carmen powell. i would typically say what i'm really interesting -- interested in his quarter to earnings. scrap that, this is what i'm interested in, tuesday and wednesday, how are they responding to what we are seeing develop in this labor market? annmarie: has there tipping point been breached with the labor market showing more concern than the inflation picture still creeping into a better balance? this to me, where the balance of

risk hasn't shifted more. are they willing to allow inflation to remain at three point something while they get ahead to a more protracted downturn. jonathan: welcome back, we are doing the same thing. you put together the payrolls report. down by a combined 111,000. the unemployment rate though creeping higher. you look at this line by line, things are getting worse, they are not getting better in this economy. annmarie: you have to think this is not such good signs for the biden administration. especially when it comes to manufacturing. this is their whole pitch. you are interested in the economics of what powell has to

say. i'm interested in the test biden races. he's going to be out in the public, in front of the press, will he have another mishap like he had at the debate? will that open the doors even further for democrats to come in to say he should step aside? jonathan: our opinion is not worth anything. it's not about whether he could campaign, it's whether the individual could campaign and govern. any conversation about his ability to govern for the next four years. the conversations we have, that's what we have to keep knowing back to. it's not about the next four months. lisa: he says i wouldn't have

run otherwise. on that note, the nato conference down in washington, d.c., will be fascinating. what about his ability to govern right now with the perception of international leaders that are getting concerned? i'm curious how much that will come to light at some of these meeting. annmarie: we reported how there was this concern in the room about his physical health. he was there a lot of the time. also there would be these moments where he would just stare off into the distance. you will hear a lot more of these leaks. they are very concerned. given the fact that there is still a war in europe. jonathan: fantastic work or let's talk about how they responded. this is the beauty of broadcast

television as opposed to print. when you ask the ukrainian leader about whether he could govern, this is not something you could write down in a quote. he can't do the job he is doing 40 years later. annmarie: he wouldn't bite, he said it wouldn't be ethical for me to weigh in. there is differences potentially. when he turned around on him, could you do the job you are doing, he just laughed in my face. he literally laughed and said i'd have to think about that. jonathan: how many moments will we get like that this week. s&p 500 positive by 0.03. the 10 year, 430.96.

coming up this hour, we catch up with sam stover, posing the best week of games. the director of research on why he's downgrading nvidia. looking ahead to this week's inflation data. we begin with the big issue. kicking off the trading week at record highs. sam stovall saying this, prudence is not synonymous with protection. concentration has been a major can turn of this market's outsized advanced. driven by a handful of tech oriented stocks, never was so much owed by so many to so few. sam joins us now. let's get straight to it. the economy is being driven by the fed reserve may be reducing interest rates at some point.

i want to talk about the reality of where we are right now. the labor market data, when we get to friday, what do you think ? sam: the ceos have been very cautious. they passed their stress test. they are cautious about the consumer, the economy. as we worry about heading into a recession, i remind investors that hoping is a lot more beneficial than having. we saw the first rate cut, the s&p was up only 5.5%. jonathan: being hopeful pays off

in the equity market, we just had a guest from citi that says if we climb another 10 basis points he will turn bearish. what would you say back to that? sam: yes, historically when we have seen at least a 0.6% change in unemployment rate off of the bottom that this ends up being favorable to the likelihood of a slowdown or recession. even though we are not forecasting a recession, i have to look to historical precedent. history has not been a very good guide. typically week see the inverted yield curve. economic recession not materialized. does the boy who cried wolf get

patted on the back many months after the years of the first call? lisa: if you are optimistic this will be a soft landing, you say you are worried about concentration risk. when does it start to work? sam: this is the 64,000 dollar question when it was heading south of the s&p was continuing north? i do worry. i see the s&p 500 is trading at

a 35% premium to its average. we look to the tech sector trading at a 74% premium and the highest level going back to the 2000 tech bubble bursting. the equal weight tech and cap rated tech with standard deviations above the mean, we need to reset the dials to make sure this market is not at risk. who knows how long this will continue. lisa: how are you expressing your caution? is it holding more cash? is it offsetting utilities that were considered defense at one point? sam: utilities have been beneficial to ai.

three of the four top utilities in the sector, take them out and the sector would have continued to underperform. i think you have an awful lot of groups that are peripheral to tech, benefiting from the tech euphoria. are we likely to be seeing a rotation? there are 154 of them in the s&p 1500 declining. when you look at those above their 50 day, 200 day, both of those levels which implies to me we are not getting the participation that we should. i have to wait to see what the market is likely to be doing. will we see the softening as we await the changes in earnings for the second quarter. expectations are for an 8% gain

with the sectors in positive territory. i think investors are saying prices lead fundamentals and that will be improving. lisa: do you just ignore the politics? sam: politics is headline. i think the concern is should former president trump get reelected, we have the tariff threat out there. we have concerns for additional debt being added to the books. that could be the undoing of the market if we see the 10 year yield start to climb once again. throwing off the valuation picture even more so. jonathan: great to get your thoughts. sam stovall of cfra. banks reporting this friday on concentration risk. talk a lot about what tech has done here today.

nvidia, all of that. jp morgan is up 20% today, goldman up 20, citi of 24.5. deutsche bank is up 26%. they've had a decent run. lisa: capital markets are going gangbusters. you could just look at all of them, talk about the debt races, you could see activity creeping back as we have peak rates. that will support the bottom line. let's get you some news elsewhere with your bloomberg brief. dani: hurricane beryl made landfall on the texas coast early this morning. it brought heavy rains and life-threatening storm surge to texas after devastation and destruction in the caribbean and

mexico. forecast to move through the lower mississippi valley and the ohio valley tomorrow and wednesday. microsoft ordering its china-based employees to swap androids for iphone. bloomberg obtained an internal memo that stated of employees will have to use apple to verify their identities. hundreds of workers across mainland china, it ensure staff is using the microsoft authenticator app when logging in. after a 945 day victory doubt, -- drought, lewis hamilton wins the british grand prix. periods of ray lead to a dramatic battle for the podium. it was hamilton's final british gp for mercedes before he joins for ari. that is your bloomberg brief. jonathan: a beautiful moment.

he was choked up at the end of the race, a little tear. lisa: i actually watched soccer. i watched a number of them. which one was the best one? it was probably england losing yet again. having a tough time of it. jonathan: moving on. i think we need to chat about how to watch sports. you have to wait until the end. that's not how it works. i like that score, it is finished now. lisa: let's move on. jonathan: a rare downgrade on the stock, nvidia. from new york, this is

bloomberg.

jonathan: i can't let it go. lisa: it was on in the house and i was watching. germany looked really good. they played really well. jonathan: the sporting reality, watching a game and when he gets to a score i like. fantasy football, she decides what the score was. lisa: auctions are coming out tomorrow, wednesday and thursday. still have three more games left, this will be fun. jonathan: lisa watches the final

in a couple of weeks. yields a little bit higher up two or three basis points. let's get you some morning calls. jp morgan, analysts recommending investors take some chips off the table citing explosions of headwind and a rich valuation versus it peers. maintaining an equal weight rating. expecting solid second-quarter result but also a slightly more challenging path. with a rare downgrade. saying the upside for the ai will only materialize, adding he would only buy again in prolonged weakness. the downgrade to nvidia, just tell me what are you seeing the

company? is it what the company is doing or what the stock prices are doing that has led to its downgrade? >> seeing ai, we have been comparing expectations are on nvidia. the supply chain of nvidia is increasing capacity for the accelerating ai. for 18 months we have only seen expectations for nvidia below what the supply chain was planning. they are lining it up with expectations. we realized that now when you look at the expectations, the

revenues of 60% or so. it lines up pretty well with the capacity plans. we came to the conclusion that for nvidia to beat expectations again, we would need to see the supply chain moving further. we felt it was a good time for investors and our clients, this business has grown 10 x with the ai business. at some point it's going to take a breath. seeing expectations for nvidia beating the supply chain felt

like a good point in time to grow more cautious. the valuation of nvidia is still reasonable. it is rich enough to suffer if nvidia disappoints not by missing expectation but by not beating them. lisa: there's a distinction with the valuation call versus the cisco trajectory of big up, big down. the darling in the early to thousand's and really lost some luster. do you foresee that type of reaction or do you think it might plateau for a while before continuing its dominance? pierre: really we don't see any challenges on nvidia's market position. one of the key anchors in this

market, it is not a market where you have to be the best chip, you have to have the chip that people will use. today, nvidia is largely in the data center with ai. they will continue to have a very strong market share. we expect the in-house chips to continue. nvidia, we don't see the ai collapsing badly and going away. at some point, resetting the size of the market where we are today, we see it stabilized. we see that as a proposition of course.

jonathan: i have to ask you this question, just the career associated with not being bullish on the most bullish stock on the planet right now, how do you think about those things when you put this together? pierre: thanks for the question. it is a very good one. my professional success is about how much my client value my opinion. i think that is important for us with research values my ability to say that i see things i did not say -- c. a position like that might've said to those people, the couple days following at that overall what truly matters is we get

what they are saying and compile that and compare that to expectations for nvidia. the capex have increased significantly. we are worried there isn't much room. that is where it is always valued. jonathan: we certainly value your opinion and i don't think you are taking a career risk. thank you. one of the best out there. top analysis thinking about this. that's how you think about some of the analysis with stocks like this. you are missing out on the move. lisa: how about being a mutual fund, not to own it and actively be bullish, let alone recommend the client the bullish. jonathan: so many stories like

this from the 1990's saying this is a bubble, this is a bubble. just waiting for that big run-up in the last year. lisa: we heard that today, do we want to get in the way of a freight train? even though people could be cautious, to bet on that, it becomes tricky. jonathan: coming up on the program, high-frequency economics, chairman powell, two days of testimony, coming up. ♪

(♪♪) (♪♪) sandals rhythm and blues caribbean sale is now on. visit sandals.com or call 1-800-sandals.

jonathan: equities on the s&p 500, 60 minutes away from the opening bell. record highs i close on right it. it worth consecutive decade of game. will we add some more weight to it? the russell down on the week by 1%. the s&p and nasdaq puts up the best week since april. this morning russell futures positive by half of 1%. great conversations throughout this morning. one of the bank from deutsche bank. changing trade policy could mean for monetary policy on both five of the atlantic. we thought a lot about what it would mean or the fed reserve. the disinflation was shocked. if you could get all of that

overcapacity out of china even by the european, we have another round of donald trump, it puts up the walls even higher. lisa: this idea of we are missing the boat when it talks about china's effort to create not just copy and manufacture but be the initiator of a lot of these goods. the key question is how will this happen regardless? at this point we have seen the u.s. has much more stringent rules to keep out certain chinese goods. that could become a currency call increasingly if you see that come to the forefront. jonathan: the peterson institute said the fed will hike in 2025 if you get trump. regardless of who is the president come next year in 2025 he things there's an 80% chance the fed's hiking next year. don't shift that much,

regardless of who the candidate is. lisa: this is something we were teasing out on air and in the break, the question of the dual mandate, what does growth do if you have some of these more inflationary policies? what is the fed's response, will they prioritize and ration the same way that they have in the past? it creates that, it could be potentially temporary. it is unclear right now, it is some of the bond price action. annmarie: he said yes, there is this idea that travel when it comes to tariffs is quite similar. it is the speed and the magnitude of the trump administration that is really going to make it inflationary and difficult for the fed to fend off. jonathan: let's talk about europe briefly. one away point or one is what

the euro-dollar is. we are just about unchanged on both of those issues. we are chasing the overall issue of governance in france as well. the market doesn't know what to do with results this weekend. emmanuel macron's group comes in second. annmarie: do you know who else doesn't know what to do? france. could emmanuel macron create some sort of consensus, left-center consensus or coalition? there will be a real question about how long he could continue in that role. those of the questions at a time when either way it a response function that is highly in doubt among one of the major european economies in the face of these issues. jonathan: u.s. a little bit lower by a single basis point on the french 10-year. at least nine democratic lawmakers are calling president

biden to end his reelection campaign. he would not hold a previously scheduled meeting. talks will continue with a regularly scheduled caucus tomorrow. there's only one thing to talk about. it is this right here area -- right here. lisa: lawmakers will be back in town and have these meetings, whether or not they are in public or behind the scene. does it get even harder for biden given the fact that thursday he will be on display at the this is a test he needs to overcome. he gave a sit-down interview on friday which a lot of people said didn't do enough to a suede concerns. how does he act on thursday? every movement he makes is going to be under a microscope. lisa: i just wonder about the time limit. charles myers saying he had five days. you have to wonder how much time he would have to give another

candidate to really develop their nomination to really gain enough steam. i wonder how much time there is and what kind of action people could take if they find out that time is running out. annmarie: we are four months until the election. one really cares until after labor day. there has already been this invisible primary happening. all of these names, they don't have the same name id or recognition, names like kamala harris, gretchen whitmer, newsom . they have been there. the polls show there is this appetite from the electorate to want to be introduced to someone new. jonathan: we talked about it briefly, the risk associated with the record now, the career risk of not saying anything. what do you think is the greatest risk? i think the vice president is between a rock and a hard place. if the vice president said something similar, if kamala

harris came out and said things, everybody would say it was out of self-interest. what will people say that about what wasn't said over the last 12 months? lisa: did you see this behind the scenes when it was on full display? her name is on the ticket. jonathan: that's the latest on the politics. let's turn to boeing. set to plead guilty with the 737 max crashes. find as much as $487 million. this has been on the table for much of the last week. that's where investors looking ahead to a busy week. fed chair jay powell heading to capitol hill for his semiannual testimony. we will get dates on cpi and ppi.

out of all of those events, what is top of the pile for you? mike: it will be jay powell talking to the house and senate. we will see what the possibilities for a rate cut r. the possibilities are good, which he may say. the timing, does he give us a sense that it is september? after him we get the cpi, which is important in the market deciding whether it is september or not. all of these events could be overshadowed by the biden drama, which will be into the markets if something happened. i expect powell might get asked about that during the next two days. he will duck under the table, i'm sure. lisa: i find that fascinating. i wonder if any congress member could follow up and say could you give us a sense of how you weigh your dual mandate?

unemployment and the jobs picture or whether you are looking more at the inflation aspect of this. do you still pledge to bring down inflation to 2% at the expense of jobs if it comes at the expense of some of these policies? mike: you just repeat what he has been saying. it is the basics for them. they are committed to 2%. they will keep going until they get there. it doesn't mean they can't cut rates before that. they have not been paying more attention to what is going on in the labor market. as soon as they start hinting, this goes into a different discussion. traditionally, they don't start without doing three total cut. will they go beyond that? annmarie: a lot of people

talking about 2025, tariffs, migration. at some point will powell lean into what this could mean for the federal reserve? mike: he will avoid that as much as possible. these are all speculative situations. we don't know who's going to be running for president for sure right now. what policies are going to be adopted for 2025? we have the tax bill, debt ceiling, funding the government. their first meeting is in 2025. it will take a while for all of this to percolate through markets for the fed to think

about what it's going to do, they will see what is actually happening. jonathan: mike is going to stay close. a question i have, the data last week, doesn't open the door for a real conversation in july about cutting interest rates? >> good morning. we think the data, if you look at the growth side of things, spending, inflation and on top of that what you are seeing, there is better balance between inflation and the labor market. we do think there is enough evidence in the data to start the conversation. we don't think there's enough for them to move in the july meeting, with july and september, it will be important.

also, not surprising the markets. the discussion, if things do turn out the way we think they will do, also in terms of what we are seeing on the labor market. the unemployment rate for three straight months. perceptions about the labor market have been generated for the input into our household approach. what that means for the growth. jonathan: does that mean we have made enough growth to put more weight on the others of the jobs mandate and protecting the labor market? >> i think we have and that's what you are seeing in the minutes. going through what fed

participants are going through. shifting towards the labor market. that's not to say they won't remain acutely focused. i think the labor market gets a bigger weight going forward. they are looking for more normalization there. in the second half of this tier, we don't think they will go in july area and we agreed that the conversation should begin and we are expecting the first cut in september. lisa: when you talk about some of the split screen we are seeing, inflation is still a concern in those segments. on the other hand you have a lot of places that are struggling and you could see that with the russell 2000. how much are you seeing pickup in certain companies as the overall picture looks stable? zachary: not seeing a ton of distress i would say right now. what we are seeing is signs the consumer is slowing down.

not necessarily taking prices down, i think there will be a mismatch in when that shows up in the inflation data and when it is actually taking place in the real economy and how they are responding to a slowing consumer. we think fundamentals will become part of the picture in terms of credit spreads in the second half of this year and the first half of 2025. versus a more bullish view of the past 18 months or so. lisa: what you get -- make of that given that it is so bifurcated? inflation exportation's -- expectations tomorrow. these are peripheral measures that have been a little bit out of sync. how much you pay attention to that at a time when you see such

dominance of particularly high income companies fueling specific sectors of the economy? rubeela: there is a split if you look at what high-end consumers are doing. if you look cumulatively, it is still the same. the consumer side of the economy is desegregating. this is what drives the economy. it is really important. that is now moderating. that is something we have been looking for, for a while. what we are seeing with airline travel and things like that, there is a deceleration, our base case remains that the combined message is that the economy is slowing.

inflation is on a decelerating path. those things are going to be what drives it forward. the fed has to make the policy sooner rather than later. managing the risks, that is a very tricky thing. there are a lot of uncertainties. in terms of the policy arena. we think that means the fed has to consider changing the policy. annmarie: is this a welcomed cooling or unwanted deterioration? rubeela: managing the risk between a welcomed cooling and the contraction, that is very

difficult. what they are talking about is an unexpected weakening in the labor market. they do expect the labor market to rebalance more completely. that unexpected weakening is what they will be ready to respond to. it is still in our view justifies making that policy less restrict. jonathan: when you speak to people about the unemployment rate, particularly in the market , they are focused on whether we trigger the sahm rule. if next month we go to 4.2% and that rule gets triggered, do you think it would trigger a broad selloff in this market? zachary: we have to see somewhat of a repricing, that's what we are looking for. repricing of credit risk.

when we think about the balance of risk going forward, with the fed having held policy in our view. there's a lot of uncertainty there. if they don't start to respond in what we are seeing in the economy broadly, we have a higher risk that we are so fearful of. emerging perhaps in the second half of this year or first half of 2025. if we do see more deterioration, you will see that reflected in asset prices. jonathan: the line between welcome calling and unwelcome deterioration is that sin over the last -- thin over the last week or so. lisa: right now, people threading the needle and saying

other expressions i could actually relate to. some of the others i don't understand. jonathan: that is not an expression. lisa: it's sort of like -- moving on i think it is that narrow landing path. that is the concern for people. there is a calling and it is hard to characterize where we are at. jonathan: let's get an update on stories elsewhere with your bloomberg brief. dani: paramount shares premarket up 2.7%. finally agreed to merge with sky dance media. it also ends one of the industry's most dramatic acquisition. agreeing to sell her families national amusements. that was for $2.4 billion. thousands of workers at samsung walked off the job monday, it is

the biggest organize labor action in the half-century history. the strike is intended to drive home their demand at one of the company's most advanced chip facilities. despicable me four was the big winner at the holiday weekend box office. the latest movie made an estimated $123 million in domestic ticket sales. disney's inside out two continued its strong run. that is your brief. jonathan: up next on the program, setting you up for a busy week ahead. you are watching bloomberg surveillance. ♪

do you want to close out? should i? normally i'd hold. but... taking the gains is smart here, right? feel more confident with stock ratings from j.p. morgan analysts in the chase app. when you've got a decision to make... the answer is j.p. morgan wealth management.

jonathan: 40 minutes away from the opening bell. equity futures on the s&p 500 just about positive by 1/10 of 1% coming off the back of an all-time high. record high to start the week. what a way to start the week with a brand-new show on bloomberg tv, "open interest." katie joins us now for more. what is coming up this hour? katie: you are well familiar with the 9:00 a.m. hour, it will be fast, fun, a focus on single stocks. we want to tell the macro stories through the micro. you will see more simple stock analyst, a lot more ceos. lisa: how difficult will it be to get people interested other than the mag seven.

katie: you've seen a lot of drama in this community with them saying they are backing out from s&p 500 targets. morgan stanley saying they are staying away from those big old calls. he joins us right at 9:00. how do you forecast in the age of that super concentration you are seeing? lisa: what do you do after 9:00? the markets open, what's the discussion like? katie: we take a breath and we come up with those conversations in the 10:00 a.m. hour. we have the ceo of lamborghini on. that is basically the ultimate luxury asset. of course ev's. they have taken themselves out of the race. jonathan: that is the most matt miller thing ever, starting a

new program on the market but squeezing in the lamborghini ceo. katie: his goal is to interview every carmaker ceo. jonathan: that show kicking off in seven minutes time. leading "open interest," starting at 9:00 a.m. eastern time. counting you to the opening bell in 36 minutes time. fed powell -- fed chair jay powell on capitol hill. the nato summit begins on wednesday. thursday, we get uscpi and delta earnings. friday, ppi plus the big ones, it is jp morgan. citi reporting earnings too. lisa: i wonder how much the banks will lead the charge. whether that could actually get more attention just based on the balance of risk.

cpi seems like it's important but less so given what some of the data has been coming out. annmarie: it is a critical week for biden. it is a crisis of their own making. it is a another hurdle he needs to clear when he comes out and speaks to the press that feels gas lid about how this administration and members of his team talk about the president. jonathan: do think there's anything he could do to take away what took place last thursday apco the answer to that question is no. annmarie: it could be worse if he comes out thursday and has a disastrous performance. lisa: some people say it was worse he didn't totally bomb friday night because it leaves the democratic party in limbo. at what point does it become

basically you are out of time. there has been a loss of confidence in president biden. that is the fear under the hood for the democratic party. jonathan: let's see where we are at this time tomorrow morning. congress gets back to work. we will catch up with george of mufg. wei li is back on the program from blackrock and emily roland. good morning to you all, the opening bell about 35 minutes away. this was bloomberg surveillance. ♪

(♪♪) (♪♪) (♪♪) (♪♪) sandals rhythm and blues caribbean sale is now on. visit sandals.com or call 1-800-sandals. the moment i met him i knew he was my soulmate. visit sandals.com "soulmates." soulmate! [giggles] why do you need me? [laughs sarcastically] but then we switched to t-mobile 5g home internet. and now his attention is spent elsewhere. but i'm thinking of her the whole time. that's so much worse.

why is that thing in bed with you? this is where it gets the best signal from the cell tower! i've tried everywhere else in the house! there's always a new excuse. well if we got xfinity you wouldn't have to mess around with the connection. therapy's tough, huh? -mmm. it's like a lot about me. [laughs] a home router should never be a home wrecker. oo this is a good book title.

>> stocks sitting at record highs with the monster week ahead. >> bloomberg "open interest" starts right now. coming up, investors gearing up for a host of events from testimony to earnings season. >> a shocking surprise in elections while democrats debate biden's future. katie: paramount agrees to a deal with sky dance. let's take a look at where markets are trading about 30 minutes until those bells ring.