the markets are essentially price for fed perfection. >> it's already get the point where you are likely to cut two times. >> the concern is that if they move too quickly, the expectation could set ahead of themselves. >> i'm seeing over optimism. >> it's a dangerous time for the economy. >> this is "bloomberg surveillance." jonathan: let's get you to the weekend. what a long week. good morning, good morning, from our audience worldwide, "surveillance" starts right now. here is your day ahead, wall street kicks off earnings season , later in the hour we get numbers from jp morgan, wells fargo, and citi. later this morning, ppi data

with, 10 a.m. eastern time, new consumer sentiment. beginning again this morning, i have never seen people so happy with a drawdown coming to 1% you have you? lisa: everyone praying for the broadening out in that's what you saw yesterday. mag seven fell the most, going back to october of 2022. people are cheering but you asked a question off-line and i'm going to cheat and say -- how many people are in the broadening out trade? not just celebrating the paper. jonathan: certainly yesterday. broadening out again, the move on the nasdaq, down hard on 2.2% with the russell up i 3.6% and small caps are outperforming the nasdaq 100 by the most since november of 2020 and you posted the russian -- how many people today think that something

material has changed after the date of price action from yesterday? lisa: that's a great question. suddenly september is very much on the table with mary daly and austan goolsbee coming out and saying if you are looking for confidence, guess what, we kind of got it, giving the sense that the fed is prepared to cut rates . now the question is -- will the data hang in there enough to make it a good rate cut, a midcycle adjustment allowing some of the more leveraged companies to actually do better given the borrowing costs extensively heading lower? jonathan: you asked michael mckee the question -- what's the most important number, cpi or jobless claims? we've talked about this, i don't think it looks as good without the jobless claims number. the jobless claims number cemented the idea that we can get back to 2% and we don't need to worry about the labor market too much. but that goes against the grain of the last couple of weeks.

those claims yesterday, were those a decent you done where the labor market is? is that the kind of strength around where the chairman thinks we have it? lisa: that's a great point when we look at these earnings around pepsi, delta, conagra, the pushback being felt around pricing, even in the best-performing industries, like travel, we had better-than-expected jobs print that was goldilocks, but his goals a lot -- goldilocks the margin that we see in these companies that is a factor with inflation coming down and people saying we would see marginal compression, or is it a sign that things are moving more quickly than the headline data can reflect? jonathan: talking about the politics as well, it started at 7:30 turn time and was a seven minute address from the president of the united states with q&a lasting 50 minute. i think that for some it wasn't bad enough to drop out, for others, it wasn't good enough to

stay in. i'm not sure that you can put the toothpaste back in the tube after the last couple of weeks. lisa: that's the key point, how much can you change that? joe biden last night said it would never be enough for some people. they will say wait another day, wait another month, see what else happens. look, i'm fine. the key issue is there were a couple of gas. everyone is focused on that. looking more at just his demeanor, the fact that couldn't answer how well he would be able to do this in four years with a lot of russians going forward about his energy and of the quickly deteriorating levels that we don't feel have accurately been reflected by the people closest to him. jonathan: let's put off the gaffes, we will talk about them later. we will play some of that and about 10 minutes. he opened the door yesterday to something new. some humility there that we did see in the last couple of weeks. opening the door to the idea that it is not just him that can beat the former president.

if you think about the whole reason he's been running for a long time, him and the people around him, the whole argument was that he was the only one who could beat donald trump. this was the first time we have heard the acknowledgment that others can, to, and i wonder how much oxygen will be breathing life into that story. lisa: the oxygen is just waiting to be had given the reports we've gotten that his campaign is looking at what a matchup between kamala harris and trump would look like, secretly pulling people. we don't know why, maybe it is so that he can come out and say he really is the only person, but it seems like a tacit admission to them being open to what's going on in the polling and the best opportunity to beat the former president. honestly, people will speculate and talk about the gas a lot and to me last night was sad, going to this question we all have when dealing with aging relatives or friends, when they

cannot have the same kinds of energy and performance they have had in the past. it's difficult to know how to go forward and you can feel the torture that a lot of people feel and the party right now. jonathan: and i'm sure you can feel it in the small caps, you like that transition? let's move on. a bit of a lift going into the weekend. yields are higher by two basis points yesterday, post cpi there was a breakup 420 on the 10 year . coming up in this hour, catching up with oppenheimer on a mega -- mega rotation with a new course for joe biden to step aside. wall street kicks off earnings season. we begin with a top story, the seven-day winning streak for the s&p 500 coming to a big close with the tech. writing that midterm volatility could -- continue to present opportunities for investors to catch the babies getting thrown

out with the bathwater as market data levels the uncertainty that isn't uncommon for a transition. getting into the new price target on the s&p 500 in a moment, we all want your reaction to the price action yesterday in response to the data that we got. >> most certainly, the markets celebrating the thought that the data that came out would give jerome powell the opportunity to cut earlier then the election, looking more like september when the future went from 70 to 90 in terms of a rate cut. i think it's overdone in terms of that with fed independence being an issue ahead of an election before they do that. it does seem that the one thing,

for sure at the moment, not with any other data crossing the trend from the other, contrary to that it looks like the fed really is getting very near the end of the fed funds hike cycle in the market and they like that, of course, doing it without recession. jonathan: you have always talked about earnings, pretend yesterday didn't happen, a big ask, and let's pretend that those mechanic some come out later this morning -- long less, longest, granted, but the only other thing we would be talking about would be the numbers from delta and pepsi that were not a great start to earnings season. i wondered how you felt about that. >> without getting specific on the names, put it this way, if you fly on a plane, you know that capacity has been commercial aircraft and that's been the backend of the plane. more seats are available than

before. upfront, tough to get a seat, tough to get the app rate because both business and the every dave fun traveler are flying, but you are not surprising on the airline related to the soft drink snacks maker, these are staples stocks. dividends, but of course it's got all of these drugs coming out to kill people's appetites. are you still going to down a bag of potato chips or other brand names, as you would before? lisa: hold on a second, so sorry, john, i have to break in their. are you saying that some of the weakness we are seeing in the likes of pepsi and conagra is because of ozempic? >> i think very well, with conagra i don't know but with

pepsi it is a question that has been raised by components of the market moving forward. personally, you know, i feel i don't know everybody is going to do these drugs. pepsi will probably do well, but i believe that the analysts to speak with you about that, i manage money in the firm doesn't like me getting in the weeds related to individual stocks, regrettably. lisa: all right, let's talk about the overall index. you upgraded the year-end forecast from 5400 to 5900 and terms of the resilience overall of the ai related names with a trend fueling a lot of the optimism right now. i am just curious whether some of the recent price action, the knee-jerk reaction of markets to the prospect of a rate cut make you question that. >> no, they actually don't. because what we have in technology is both cyclical and

secular in nature. it looks like some kind of a watershed, as was the introduction of the pc and later on laptop, later on smartphones in technology. beyond the point of the early internet. not a tech bubble, let's put it that way. if you look at the declines yesterday, i think that the -- with the s&p you had real estate yield materials where the top performers were communication services being at the bottom with information technology and if you consider the fact that tech is still after yesterday up 30% year-to-date, communications services is up 27%, it's a haircut, not a rally. the market is broadening. stocks appeal across the sectors . it's a realization that among the nine other sectors, there are lots of what i would call ai proxies in terms of companies that can utilize the ai that

exists today, the ai coming down the pike to become more efficient. efficiency goes to both companies and it also goes to the consumer. if business and the consumer are using this, it's a big thing, but i believe that people are recognizing now that after the trend that started this year, the narrow rally of among seven stocks, the reality is that there are financials, there are consumer discretionary that have been fairly well ignored, even though it had double digit earnings last reporting season and is off to a pretty good start right now. all in all, when you look at it it is, the prospect of the industrials picking up with infrastructure spending, re-shoring, then shoring, all that stuff, it's an interesting time and it should be good for stock prices because it will drive revenue and profits.

jonathan: wonderful to get in touch with you again this morning, john. over there at oppenheimer, where small caps are once again outperforming. outperformance once more on the russell. lisa: lots of fish in the sea. looking around and things are not so bad. that's what we have been hearing from a lot of people. the key question is can the index continue to climb higher without robust participation from the high flyers, as many have called them, for the remainder of the year? john said yes because of these other names with a test for financials. jonathan: it was quite a move yesterday having just less than 400 members of the s&p 500 higher on the day. lisa: it highlights just how dominant some of the magnificent seven r. tesla was down more than 8% and that's a pretty big component of the index. if you start looking at this,

it's more fundamental. jonathan: ed ludlow is going to join us on that later. let's get your bloomberg -- bloomberg brief with dani burger. dani: more trouble for bowing with 737 max customers being warned that there could be further delays on deliveries with timelines slipping by three months to six months on top of already late handovers. another reminder that the production of the cash cow model faces a long road to recovery. a teaser for the ed ludlow story, tesla shares are down in the premarket trade and they are postponing the long awaiting -- long-awaited unveiling of the robotaxi by two months. sources tell bloomberg that the company is pushing back their date to allow themselves more time to build additional prototypes. optimism had contributed to an 11 day streak of gains that added to the company's market cap. that was before shares dropped on thursday by the most since

january. the late silvio berlusconi will join the likes of leonardo da vinci and marco polo in having one of italy's airports named after him. the billionaire turned politician will have an airport re-named after him. he was a flamboyant media mogul and his reign as italy's longest-serving postwar prime minister was plagued by corruption allegations. the announcement upsetting many italians. more than 120 thousand people signed a petition demanding a reversal of that decision. that is your bloomberg brief, john. jonathan: what do we want to know? were they all into milan? lisa: i like that. how do you feel about it, john? jonathan: different you. much more controversial, later on. but when he took over the club in the 80's, it was a very different view between

berlusconi and the success. ask a chelsea fan what they think of roman a. lisa: all i can say is i immediately googled his favorite food. jonathan: what was it? lisa: i don't know. manzo a la california. [laughter] jonathan: ok, you keep looking. up next, mistaking your allies for your animal -- for your enemies. handing it over to the president of ukraine. ladies and gentlemen, presiden zelensky. president putin? no, presiden zelensky. jonathan: that conversation, coming up next. i can't believe you corporate types are still at it. just stop calling each other rock stars. and using workday to put finance and h.r. on one platform. tim, you are a rock star.

using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah. (♪♪) (♪♪) (♪♪) (♪♪) sandals rhythm and blues caribbean sale is now on. visit sandals.com or call 1-800-sandals. you have to make it. and if you want a successful business, all it takes is an idea, and now becomes the future where you grew a dream into a reality.

the all new godaddy airo. put your business online in minutes with the power of ai. 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. at morgan stanley, old school hard work meets bold new thinking. to help you see untapped possibilities and relentlessly work with you to make them real. jonathan: live from new york city, welcome to the program. equity futures are ahead by 1/10 of 1%. outperformance on the small caps are like yesterday, let's see if

that sticks. under surveillance, mistaking allies for enemies. >> now i want to headed over to the president of ukraine, who has as much courage as he has determination. ladies and gentlemen, president putin. president? going to be president. -- beat president putin. jonathan: dropping the ball straight out of the gate in the news conference that followed. >> look, i wouldn't have picked vice president trump to be vice president because i think she's not qualified to be president. jonathan: overshadowing a news conference that demonstrated a decent command over complex topics. for some, it would never be enough. three house democrats adjoining the list of lawmakers calling on biden to join us -- to step aside. anne-marie joins us now from washington.

you were in the room. how did they react? annmarie: he pretty much lost the new cycle before we even stepped into the news conference because he introduced presiden zelensky as president putin at his prior event, so you sense that could be tense and he needed to outperform. in his first answer he mixed up his vice president, kamala harris, calling her vice president trump. the room was silent and you can see people trying to hold in gasping. the faces on people clearly said -- oh. then they were on the edge of their seed to see if he was going to make another gaffe. completely overshadowing the fact that when it came to complex issues like you mentioned, talking about gaza, china, ukraine, he had a good handle on the material and it wasn't like the debate where he was losing a train of thought, but the gaffes have taken off on social media and just a few

moments ago, a five minute segment on russian tv, a compilation, composition of all of his gaffes. that is why it wasn't enough to stem the bleeding. but it was enough, his performance, to give them a few more weeks and we will see how he performs monday evening when he sits down with nbc. jonathan: isaac, i don't know about you, but my sense of that news conference, it was the first time in the last couple of weeks where the sitting president showed humility. being somewhat open relatively speaking to being replaced. what was your sense of things? >> if we start with the overarching view of last night, undeniably it was a rorschach test. everyone got a little something of what they wanted from last night. we could focus on the gaffes, that is what the folks wanting him to step aside are going to highlight. but as annmarie said, he had an

impressive command of the issues. you will hear that from his supporters. the way i'm thinking about this right now is that he has been in survival mode. it's been about survive in advance. last night will let him advance and now he's going to advance to next week where we look at how he's going to do at these press events and these -- this interview monday evening. lisa: as he progresses, how much does this give the chances of trump winning the presidency bigger and bigger and bigger? >> i think that trump was the favorite before the debate and is even more so now. i firmly believe that the trump campaign is more than happy to let the biden cap fight it out with elements of its own party. they love the intraparty fighting and they would be happy if that continued the foreseeable future.

i wouldn't be surprised if they would like this to overtake the headlines of their convention next week. my message here to clients has been straightforward, trump was the favor before, trump is the favorite after, and to me the last few weeks really underscores the likelihood of, the increased likelihood of gop sweep. i firmly believe the house will go whichever way the white house goes and the margin is going to continue to increase if democrats are swallowing the top of the ticket. lisa: there is reporting that the biden campaign is quietly pulling the public to see how kamala harris does against trump. what do you make of that? >> part of that is the humility that john talked about, open to the idea that he had a terrible debate and ultimately the goal is to beat donald trump for the democrats. one of the things that didn't get as much coverage because we were all just dealing with

fallout from the debate was his follow-up where he said that if he lost, he would be ok with it. democrats have to square the circle, there. either trump represents an existential threat to democracy that needs to be stopped at all costs, or it's ok, we can lose the election. that is something we are trying to see democrats grapple with in the wake of the debate. jonathan: there are three pressure points. party officials, donors, polls. of them, what do you think is going to be the greatest for this president? >> i think that there is a committee to unelected president that is growing by the day. it grew last night. for me, i think that their main cudgel, their main influence in the debate will be the polls and we have to continue living and breathing everything global. number two, the president in some way is going to be sisyphus. he will have to push this

boulder up the hill every single time he walks out of 1600 pennsylvania avenue. every single gaffe he makes in public is going to be one that we analyze to the hilt. look, it's no longer your crazy uncle joe, right? we are talking about cognitive capacity to be president now and do so for another four years after this. i am watching the polls, course, number one, but every single outing he has is now going to be like the super bowl for him. jonathan: isaac, thank you, sir. yesterday was a difficult day for the president. the lead up to it. report after report from the times that biden advisors were discussing how to convince him to step aside, testing the strength of kamala harris, and politico saying that obama was in touch with clooney, didn't advise him but didn't object. headline after headline, relentless. lisa: which was maybe part of

the reason why i was interested in the jabs he had against his own staff last night. they just keep adding things to my schedule? they talk a lot. how much is he pushing back. jonathan: credit where it's due, a good golf joke and that news conference. [laughter] that was a decent golf joke, i'll give them that. from new york city this morning, good morning. ♪

>> live from new york welcome to the program equity futures on the s&p 500 firmer by almost 1/10 of 1% to stand out once again check out the russell. the small caps up another three quarters of 1%. this after a meg again in yesterday's session. lisa: the best performance going back to december. equal weight s&p 500 versus the market cap weight had the biggest divergence going back to 2020. this was a seismic day shifting back to broadband. how long can this last and how long will this be a positive given xavier becerra in to the effect this is having. >> enough to save the obvious -- state the obvious. seeing on the bandwagon yesterday was phenomenal. i'm sitting here thinking a lot of people just open the s&p 500. but i can it take much comfort from the almost 400 members were

up even though we are sort of down by almost 1%. >> there are two interpretations. one is ok maybe there is something amiss here that people aren't understanding how the index can keep climbing. and then you have the job -- the view of things which is it so nice people are taking some profits and going into the others. realizing everyone gets lifted up and it's wonderful evolutionary cycle of innovation and growth and all of a sudden it can get higher. that sort of attention right now. jonathan: switch on the board and get to the bond market. a double-digit move yesterday across -- 10 basis points. we've said repeatedly on this program not all rate cuts are created equally. keep talking about it some are bullish and some are bearish. if you responding to the collapse in the markets. if you're responding to inflation and that backdrop improving in the labor market is holding up that's a really decent picture not just for the

economy but for financial markets. that's what we got in yesterday's session. lisa: the fact initial jobless claims came in lower than expected basically gave a nod to this goldilocks that they've been holding for. cpi gave people a real sense of relief. michael reed of rbc pointed this out they finally started to see some decline in owners equivalent rent. that's been the key aspect keeping people back when you see that dis-inflate and things get cheaper. the point is right now it seems like the fed is threating that needle just perfectly and that's the reason why number of fed officials are saying let's go before we don't read this needle anymore. we don't know yet, the jury is still out and i think the earnings season will be so important. >> jp morgan about 10 minutes or so away we will break that down in the moment. no needle threaded whatsoever over in japan for the ministry of finance. this is about hammers and when dollar-yen is down just beat it

up even more. we broken 160. yesterday we had a little look at 158. we had seen yesterday's session close to 162 so you get the dollar weakness and according to reports it sort of gone and intervening. lisa: with intervention in terms of trying to encourage this move that was perfectly described. that was my image last night they saw cpi, they saw the move and were like let's go. this is our chance to put good money after bad. but actually make it count. are they just trying to propel a move already in the market? take advantage of opportunities or is this durable in a time where there are structural differences. jonathan: a big move across the equity market, of the bond market and foreign-exchange as well. at least three democratic lawmakers calling on president biden to step aside after his

news conference last night. by making two major gaffes in about two hours. preparing for another high-stakes interview with lester holt on monday. we ask a question at one point our interviews no longer high-stakes interview and if you look ahead, my question would be not for the president or the campaign, it would be for the rnc. can the republican convention do a good job of keeping out of the news cycle and keeping the pressure on the sitting president? lisa: it's not something donald trump has been particularly good at considering he enjoys the spotlight great he's quite good at in terms of getting it. at what point are people coming out against joe biden regardless of what he does or does not do in terms of messing up or having a fatal blow in terms of an irreversible gaffe. at a certain point it feels like people are trying to gain momentum earlier so the damages staved off and they allow another candidate to get some momentum. that's what i'm watching, how much people are coalescing not

because they're concerned on another gaffe or even any kind of disappointment with his performance which a lot of people think has been pretty good. the issue is let's get ahead of this because right now you are losing and you need to get ahead of this now. jonathan: a big week for the president of the united states. big day yesterday for tesla. the company pushing back the debut of its new robotaxi according to people familiar with the matter telling bloomberg it won't happen until october after originally being asked sick at -- being scheduled for august 8. we are down again this morning by 2%. ed ludlow and the team breaking down the story. this has been the carrot over the stock. since april this august today we would get an update on robotaxi still talking about the negative growth. >> there are two questions.

is he trying to get it perfectly so so that when he unveils it it will be something viable or does this highlight some of the difficulties in creating these types of products. we saw the flip side of uber and lift shares gaining quite a bit on the heels of this because the competition wasn't necessarily to come to the floor quite as quickly. to me it seems like the cans get ticked again and again and how long will it be forgiveness in the market. we saw a sniff of that yesterday. interesting to see if that continues. jonathan: let's get to the earnings per lisa mentioned it. earnings season kicking off wall street. jp morgan wells fargo expected by 7:00 a.m.. city expected to report at 8:00 eastern time. gerard cassidy of rbc joins us for more. i love doing this with you every single time he took off her earnings season for the big banks walk us through what to look out for the next hour or so. >> i think what we are going to see is a couple of real big trends. first and foremost net interest

income, the net interest income comparisons for all the banks on a year-over-year basis has been negative with the exemption, i think that's good to be one of the biggest trends but most investors will focus on. you're looking for the inflection point on a year-over-year basis turns positive. we expected to happen in the second and third quarter this year. second is credit quality. we've talked about it in the past. the office markets in the united states and big cities in class b and c buildings is very weak. many losses being taken in that area so we will look for insights into that market. for the big banks that are reporting over the next 48 hours or 72 hours we are expecting what's going on in capital markets. the guidance they gave in june. investment banking results as well as what we see are going to be very strong. trading results are going to be more muted but we could see may be a surprise to the upside

there due to the volatility that was created in the second half of june with what was going on in france. jonathan: we have to talk about the last 24 hours this is a market environment at least recently in the last day or so where smaller companies have been rewarded and bigger companies have done well so far this year have pulled back. given the environment you describe can you -- do you think this is an environment where the big keep getting bigger or is this an environment where the smaller names can start performing? >> you put your thumb on it. the smaller names can start performing if as lisa was just talking about the fed threads the needle and we see fed funds rate cut in september and december the smaller names rely more on net interest income as a revenue driver rather than fees which focus the biggest banks on a much bigger percentage of revenue coming from fees so therefore if you do believe the feds will cut maybe once or

twice this year, maybe three times next year smaller regionals and regional banks should now take the leadership amongst the bank group because of that driver for revenue. >> there is this issue of benchmark rates and what that does to some of these banks. yesterday we saw a motley performance. at what point does it become difficult for low growth and making profits on loans given the fact companies are still dealing with trying to retain deposits? >> what's interesting is if the fed starts to cut rates we are going to see what we call the third act of the interest rate cycle which is your funding cost, your deposit rates start to come down as the fed cuts rates but you might remember many of the banks to put on their books bonds in 2020 and 2020 with bonds that were anywhere from 1% to 3%. as those pay off those cash

proceeds are reinvested in higher-yielding assets. you're going to see spreads in margins until they're no longer. so longer would be the icing on the cake for these companies but even if you get modest loan growth over the next 18 months and margin expansion just on the dynamic being reinvested into higher-yielding assets and funding cost coming down means net interest income will be positive. >> we are about to get reports from jp morgan, then we will hear from bank of america and also hearing from wells fargo and then from citigroup, which of those companies will be the most interesting? >> i think what could be interesting is bank of america. when you look at jpmorgan chase, obviously they have delivered very strong numbers. everybody expects such trend to continue. you look at bank of america they have been the bigger net

interest income story. we don't think about net interest income as we just talked about. but this company has had more focus on net interest income and you might recall back in 2023 when we had the problems with banks in the spring of 23 it was a big focus on the unrealized losses in the portfolio and if this 10 year government bond yield continues to fall, those concerns of the lower yields in that portfolio become less of an issue as we move forward so that's going to be of the big three could be the most interesting one today when they announce their numbers. jonathan: year-to-date up by more than 25% at bank of america. stay closer we will break down those numbers from jp morgan with you in a couple minutes time. an update on stories elsewhere this morning with your bloomberg brief years dani burger. >> the bank of japan in the currency market for third time this year on thursday for a

forecast estimate the boj intervened to the tune of about ¥3.5 billion, $22 billion. the figures indicate their authority a buildup of young shorts. the yen strength and sharply from around one versus the dollar to 157 but it is back above 159 this morning. the world's biggest hedge funds are often on the best starts of the year. thanks to a tech lead bull market and successful quant strategies. tech focused equity funds lake street and whale rock lead the path of the first half. as a whole, a multi-managers made 6%, that's her second-best start to the year. david -- data showed. lagging macro funds both posting losses for six months. food delivery in new york city has become a luxury. the city agency report found new yorkers have paid nearly 60% more in delivery fees in the state since minimum wage laws went into effect last year.

customers paid an average of $20 million a week in delivery fees in the first quarter of this year. that's a 58% increase year-over-year. delivery couriers saw their overall earnings grow even as tips fell sharply. it suggests delivery companies are passed on higher costs to customers. that's your bloomberg brief. jonathan: certainly getting more expensive. lisa: the delivery fee, tip, then there's the price. at that point you just start to without the cookbooks and tell the kids just deal with it. >> deal with it, mom's cooking again which i'm sure is a good thing. up next on the program the big banks taking off her earnings season. >> even under this administration we are seeing relief in the constructs. this whole endgame rule that would be really tough on capital for the banks chair powell said

he will propose that. and there's nothing more effective for banks at the time. jonathan: bank earnings season begins in a couple minutes time. ♪ (♪♪) ♪ well i was raised by careful hands ♪

♪ yeah, they made me who i am ♪ ♪ so i'm off to see... ♪ we invent them. we design them. we build them. and one day, we have to let them soar. ♪ i'm always coming home ♪ you have to make it. and if you want a successful business, all it takes is an idea, and now becomes the future. a future where you grew a dream into a reality. it's waiting for you. mere minutes away.

the future is nothing but power and it's all yours. the all new godaddy airo. get your business online in minutes with the power of ai. jonathan: welcome to the program. equity futures by 1/10 of 1%. big banks kicking off the earnings season. >> even under this administration we are seeing some relief and some of the regulatory constructs so this basel three endgame rule that would be really tough on capital for the banks, chair powell said he will re-propose that. there is nothing more effective for banks then time. if we have a trump presidency that reaction will be we need to buy the smaller banks because there's going to be potentially a logjam break in terms of consolidation. >> waiting for numbers from jp

morgan, numbers from wells fargo dropping. city reporting at the top of the 8:00 hour. all reporting next week. to break it all down for you, sonali platt -- sonali basak joins us. >> to your point we are bringing in numbers from wells fargo just crossing the wire. net interest income coming in short of expectations. this is the fear on wall street. what happens through the remainder of the year. net interest income of 11.9 billion is under the estimate of 12.1 billion. the questions as we absorb these numbers is not only what happens with net interest income, this is a lot of the reason you saw the big banks falling yesterday on the heels of lower interest rates potentially. you also see questions moving forward about credit losses ahead. i would also point out if we can we have jp morgan numbers crossing the wire as well. some interesting numbers because you do not see the same kind of

muted numbers in jp morgan as you do in wells fargo. i'll point from right off the bat jp morgan's return on equity is coming in much higher than expected here and we will absorb the numbers as they come through but that is a very interesting number to focus in on as jp morgan's number across the wire because there's a lot of worry here. but also what you would have had in terms of costs rising over a jp morgan. the bottom line jp morgan was the question at the end of the day. >> taking a look we have a wells fargo missing interest income. jp morgan leading it. you also jp morgan coming in in going forward with revenues. i am wondering about credit loan losses. we saw a big cap up in jp morgan in terms of what they expect credit losses to be buried how much does that indicate some sort of forward view in terms of

caution going forward. >> what we saw from the new york fed expectations from consumers and that worry about availability of credit. and how much the banks pulled back on the heels of those losses starting to rise. ultimately that will be the biggest question. how willing is jp morgan, is the bank of america, citigroup willing to lend in the wake of these higher losses. >> revenue coming in at 2.4 6 billion u.s. dollars for jp morgan. the estimate was 2.13. the commentary, how many times have we heard this over the last few quarters we continue to be vigilant about potential tail risks. >> that's kind of his job is essentially to be vigilant and handle tail risks. the way your successful through cycles is not to get lost in the euphoria on the way up and not to get lost in the sob stories and trauma on the way down which you see is a company that's benefiting broadly from that half. getting equity spots of trading. fixed income sales, they

actually missed a little bit pretty much in line. net interest income coming in strong. the question is how much do they keep saying this simply to offset incredible profits even though the banks don't share that strength? jonathan: going through business aligned to business line what jumps out for you? sonali: definitely those core wall street businesses. there was a debate about how much main street versus wall street will start to show up in these numbers and wall street is showing you they are alive. these trading numbers, equities for example winning here, fixed income winning a jp morgan. interesting set up for the rest of the earnings season. the volatility in the markets is where these guys start to win. under the surface one of the big debates here is what the federal reserve and other regulators put more capital rules or frankly other types of guardrails on these trading businesses. they are certainly for the time being money. jonathan: down in the premarket.

early days we will see what happens here and if this moves we are down 1.5%. cassidy of rbc. what jumps out for you. >> what's impressive is the investment banking and turning results. when you look at wells fargo as a net interest income going a little bit below expectations there were stronger. most likely led by their capital markets business. wells has been expanding that business under the leadership. so when we look at the numbers today so far the investment banking and capital markets numbers are good. when it comes to credit we know credit is normalizing but these companies can absorb these higher credit card costs because their diversified revenue numbers. >> what you make of the idea wells fargo missed on an interesting one and jp morgan beat. is this a function but they're

stickier jp morgan and they can afford to not pay that much more to their depositors which is different than other banks anyone other than jp morgan frankly. >> it's interesting, of the two big banks that have super sticky deposits, bank of america and jp morgan. i would say wells does too. with wells, they have that cease-and-desist order with the asset cap so they are unable to grow their balance sheet so when you have pressure on your net interest margin, you are not able to grow through that which jp morgan, bank of america and the other banks can. that's showing up here today for wells is the asset cap is holding it back because they cannot extend that balance sheet and therefore there was pressure on the margin which brought the net interest income number slightly below expectations. >> wells fargo saying they saw growth in the deposit balances in all businesses. going back to the capital

markets aspect we did see a real boom there when it comes to most of jp morgan's businesses. a slight mist on the fixed income side of things. how much is this durable at a time when people are trying to get deals done ahead of the election, but the boom is happening now but then could dry out later in the year. >> it's a really good question because there's much uncertainty , we are now moving into the slow summer months, a capital markets businesses this is their weakest quarter. then we get spring right into the full speed election in the fourth quarter so that could certainly end of the volatility. volatility is good for trading results. that's what the markets and business wants. on the other hand it's not as positive for the investment banking business. all of these companies, jp morgan, citi in particular, the trading businesses are larger than the investment banking businesses so when you increase

volatility and interesting move to your point, maybe this is a slowdown in the investment banking business alongside but the trading business could offset that if the volatility turns out to be beneficial to trading. jonathan: talking about jp morgan and wells fargo later we get numbers from citi. on jp morgan, the comments we've heard before but i want to talk about the value of this perspective, that's helped jp morgan over the last couple of years. saying there's been some progress with inflation. but there are still multiple inflationary forces. inflation and rates may stay higher than the market expects. that seems to be the biased view of jamie dimon for quite a while. how does that help jp morgan navigate this rate story. as otherwise banks on wall street. >> it's a good point because jp morgan has navigated the rate market better than some of their peers by keeping the duration of

their assets shorter than some of their peers. a good contrast here is between bank of america and jp morgan. if rates continue to fall and the fed starts to cut rates in the long end of the curve comes down that obviously will weigh on jp morgan more so those who pointed it out. that net interest income falling the rate environment. will be adversely impacted more so than their peers so they've done a very good job. they are very conservative. jamie dimon the chairman and ceo has always been a glass half empty to be protective and that's worked very well. since he's done a great job running this company for the last 20 years. jonathan: thank you for joining us here today alongside sonali basak of bloomberg. just going through these numbers. big headline, the big takeaway. lisa: jamie dimon said inflation rates may stay higher but there

are still multiple inflationary forces. i'm curious about what that's about going forward. some of our conversations have suggested about policy shifts. but also how that is shifting our balance of businesses. what they're doing to get ahead of that to navigate the waters. otherwise to mean it's a win for wall street trading arms. and is a win for jp morgan. >> the big you are the better you've been doing. jp morgan is down by a little less than one percentage point. she and ali will be back -- sonali will be back. charles marrs of sigma global advisors. laura of fs investments. secretary-general of nato sitting down with bloomberg's and marie. >> sound familiar. if you don't know us yet, you should. supporting

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.

>> we are seeing that slowdown in growth. >> we are expecting growth to continue to slow. we think we are going through a soft patch here but we think it will be a moderate soft patch. >> things are moving lower in the economy. historically the fed has been able to cut rates before the recession. >> we don't necessarily think there's a recession on the horizon. we think having a soft landing is quite possible at this point. >> inflation looks as if it's coming down. to me this is a winning hand. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. >> the second hour of bloomberg surveillance begins right now. breaking down about earnings heading towards the studio she

turned to us and said wall street wins. this is what it looks like this morning. if you've got a big investment bank and are winning on that side of things you are doing ok. jp morgan softer in the premarket. if you don't have that and the focus is elsewhere this is what it looks like. wells fargo down five. lisa: this is a consequent of them missing on net interest income. and then beating on interest as well. blowing out of the water, when it comes to equities trading. we have the best quarter for advisory revenue coming back to the third quarter of 2022 when there's still a lot of uncertainty. this is the biggest bank winning yet again and that's really the story that stands out. >> also talking about the thoughts of jamie dimon for jp morgan. so we have to talk about his thoughts on rates, inflation in rates must stay higher than the market expects.

just contrast that guidance out of jp morgan and the leadership there to what we heard from pepsi yesterday. what we heard from other companies including delta as well. lisa: there is a tension here. are we looking at inflationary pressures might be subsiding for now but that are going to reverse back to the forefront later on. jamie dimon saying there was multiple inflationary forces coming down the pike, that something people of been talking about with respect to policies. on a broader level, there is this feeling that there is a weakening and that's going to be the credit loan loss reserve actually built more than previously people expected to jp morgan. it's a confusing picture and this is a cautious bank preparing for that. they have enough cash. >> they still see full year net interest income of about $91 billion the estimate just a little bit north of that. the stock is $91.33 billion. just a little bit softer in the

premarket so we had jp morgan, wells fargo. later on we get numbers from citi as well. after that we will get ppi so inflation data for you and then after that the university of michigan consumer sentiment numbers through the weekend as we look at the totality of dangers, of the data this week looking a lot better after what we saw yesterday. >> a goldilocks kind of feel. you had cpi coming down at one of the fastest pace is back several years you had the lowest level going back on an annualized basis you saw actually the housing component of this print, down in a way that gave them the confidence that maybe it has legs and you had jobless claims coming in higher-than-expected -- not coming in higher-than-expected but lower. the immaculate disinflation. the key question to me, how much do earnings change that story. i'm talking about delta. lufthansa which came out this morning also downgrading their

forecast for revenues. it gives a sense of just global travel. pepsi, conagra. when you see weakness coming out in other ways. >> get on with it, that's the message to chairman powell and the federal reserve as they get together to consider reducing interest rates. most people assume they will execute that call later on this year perhaps even september. the scores look like this. welcome to the program. equity futures on the s&p 500 just about positive. the move like yesterday was an small caps once again this morning it's in small caps. the bond market yields much lower across the curve through yesterday's session. a little bit higher on the 10 year maturity off by a single basis point. the lineup for the outlook ahead of us looks like this. they will be joining us as stocks snapped their longest winning streak since november. charles myers of sigma global

advisors -- signum global advisors. amid growing bets on his september rate cut. we begin with our top story, the s&p 500 seven-day winning streak coming to an end as big tech tumbles, of the most since 2022. raising the s&p 500 year-end target to 5800 from 54 writing this. we've been among the most bullish investment strategist since november 22. but not bullish enough. the market by continue to achieve our targets ahead of schedule. ed, we keep coming back to this. the rotation of yesterday how durable is that rotation? ed: it might've been significant because we see it was based on expectations that the fed is going to start lowering interest rates sooner rather than later. rather than sometime next year. and i think everybody agrees

especially after listening to the fed chair that this is going to happen and if that's the case that rotation makes sense and that will continue. >> is it the everything trader the everything else trade. >> i think look, from my perspective, the fed doesn't really need to lower interest rates. the economy is doing fine. maybe it's a soft patch but it's certainly not a recession and inflation is coming down so why mess with success? the risks they are taking by lowering rates in september is that they will perpetuate a situation in stock market, a deja vu all over again the 1990's. but look just because i have an opinion on what the fed should do is irrelevant. what matters is what they are going to do and they seem very intent on cutting rates. >> it actually matters just in terms of what the market seems to believe as well. i'm wondering how much of a small cap trade right now is hinged in the idea the u.s.

economy has more risk of actually heating back up then cooling back down to some sort of recessionary state. ed: if in fact the consensus view now that the fed will lower interest rates happens in the stock market continues to move ahead, i've been bullish but not bullish enough. so if it continues to move ahead here that can certainly have a positive effect on the economy here. financial conditions are not tidy here. the fed keeps talking about the need to lower interest rates because otherwise they are too restrictive. we are talking about the stock market basically at a record high here after yesterday was kind of the first week day for the s&p 500 but the broad market actually did pretty good bringing down to the small caps and the mid-caps. i think that continues.

lisa: if the fed cuts in september the risks will shift to a reignition of inflation. at what point does it make you more bearish on bonds. we see in the short-term bond space not a lot of hiccups but one option after another came out pretty well until yesterday and we saw that 30 year option not do so hot. >> pretty bearish on the process for u.s. government debt if the fed cuts. >> we've all been excited by yesterday cpi, but that was the morning and then the afternoon the federal deficit came out and that certainly reminded us that there's less supply of government securities as a matter of fact the net interest income now is bigger than defense spending. you put it all together and we still have a supply demand issue in the bond market that i think keeps the bond yield above 4%

even though we continue to see moderation and inflation which we expect and even if we see a fed rate cut in september, the worst thing that could happen to the fed is you cut in september and regret it shortly thereafter. we've seen a couple of other central banks go into this regret mode after they cut rates, of the ecb being a good example of that. >> i can't believe how quickly lisa managed to make this a bearish conversation. how did she manage that. >> i'm just trying to figure out what the implications are if you see that there is enough momentum in the economy to not warrant a rate cut. we talked about the deficit. >> political considerations how dominant are they for you going into november. >> you have to take jay powell at his word and he is insistent that politics has no impact whatsoever on what the fed does.

maybe that's his view, but the views of each of the fed officials may very well have some political context in which they make their decisions. in a political world and a partisan world like this the fed would probably from a political standpoint be best off doing nothing. , but powell has made it clear they are going to go with the economic data, they are knocking to be influenced by the political cycle. >> how much does it influence your views as it pertains to capital allocation, equity decisions. weighing that money in stocks. >> over the years i think we've all learned you never want to let the political considerations bias your investment decision-making, whether it was obama or trump or biden, of the stock market just kept going up

even though the policies were radically different among those three for example. we can go back further in history and find washington more often than not is sort of a sideshow. what matters is the strength of the economy which is driven by all of us working staffs that are working. in making the economy work for everybody. so, i am concerned. i guess we always look at the next presidential election is the most important one and i think everyone has that view about the upcoming one. certainly we have the most divisive partisan candidates we've ever had for that job and that creates uncertainty for the stock market. we would like the political process to be smooth without a whole bunch of drama. just because we like it doesn't mean we get it. >> let's go to regulation.

i'm curious before we finish up there is this feeling regardless of who wins there has been a seismic shift in part by the supreme court in the chevron doctrine and how much some of these companies are more highly regulated industries will be regulated going forward. is that something as we get these financial earnings. is that something that could shift you into more regulated sectors with the anticipation that they will be released from the shackles? ed: i think it's a great point. it's a huge development that is getting some press but really maybe deserves a lot more press and that is the supreme court decision you are alluding to in which the regulatory bodies have just been shackled. they are not going to be as powerful and as independent to decide how the rest of us need to be regulated. it's going to be much tougher for them to have that kind of power and we the citizens can go

to court and challenge their legitimacy and some of the rulings they make. so we are entering a period of supreme court imposed deregulation if you will and that could be very significant as you said. for highly regulated companies. particularly in the energy field. >> we covered a lot of ground. on the equity market, a new price target on the s&p. 5800 up from 54. if you're just joining us, the answer is to some extent we are up by 8/10 of 1% on the russell. down on the nasdaq 100 by 1/10 of 1%. the s&p 500 going nowhere. your bloomberg brief, here's dani burger. >> a quick recap of what we've heard from the big banks. reporting so far this morning jp morgan a record profit that included a 50% jump in

investment banking fees and 21% jump in equity trade revenue to nearly $3 billion. different story for wells fargo. net interest income missed estimates. it did reaffirm for the full year. we will get the results in less than an hour's time. at&t is suffering a massive hack of customer data, one of the biggest breaches in private communications data in recent memory. it included references of calls and texts for a six month period in 2022. it separate from an incident earlier this year. regulatory filing said the breach included records for customers of wireless server providers that use the at&t network between may 1 and october 31 of 2022. some more bad news for the biden campaign. reuters reporting the united auto workers president met with the union's executive board late thursday to discuss his some concerns about president biden. the unions considering next steps as worries continue to spread among biden supporters

following his most recent gaffe including this naming vice president harris and president zelenskyy and postnatal remarks by the uaw and biden campaign declined to comment. dr. bloomberg brief. >> appreciate the roundup of all the news this morning. we will catch up in about 30 minutes time. the president not backing down. >> a long way to go in this campaign and so i am just going to keep moving. i'm not in this for my legacy. i'm in this to complete the job i started. jonathan: that conversation up next. live from new york this morning, good morning. ♪

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

(♪♪) ♪ well i was raised by careful hands ♪ ♪ yeah, they made me who i am ♪ ♪ so i'm off to see... ♪ we invent them. we design them. we build them. and one day, we have to let them soar. ♪ i'm always coming home ♪ jonathan: equities on the s&p 500 just about unchanged. no drama there. the 10 year yield for 2150

eight. again small caps outperforming. under surveillance this morning the president not backing down. >> the consideration is i think i'm the most qualified person to run for president. i beat him once, and i will beat him again. it's a long way to go this campaign. and so, i am just going to keep moving. and because i've got more work to do. i'm not in this for my legacy. i'm in this to complete the job i started. >> president biden vowing to stay in the race despite deepening concerns about his fitness to serve for a second term. at least three more democratic lawmakers calling for biden to drop out of the race following last nights press conference bringing the total up to 17. andrea's in washington this weekend has more. >> good morning john. the press conference last night absolutely overshadowed by biden's age. every single question the majority of them linked back to

his age. of course they were overshadowed that the gaffe the president had going into that press conference. the fact that he called president zelenskyy president putin and his first question at the press conference he called his vice president vice president trump trade that's why it wasn't enough to assuage these concerns. and that's why you had more lawmakers coming out last night most notably the ranking member on the intel committee congressman jim himes coming out saying he thinks this is really sick what is going on. the fact of the matter is is that it's aspect, of these aspects they are watching every speech, every rally, every debate to see if the president messes up and that's why there is concern, the democratic party even have policy discussions if they're going to continue to focus on the president's >> mishaps and his age. >>thank you. this was the problem yesterday it didn't matter how well that was going to go. that wasn't good to change anyone's mind anytime soon.

lisa: you got the sense some congress members were waiting until the nato confab was done before coming out expressing their displeasure. it almost didn't matter how the press conference went. jonathan: press sent almost as soon as it ended. >> it was a predetermined kind of decision and that's what stands out to me. charles miles joins us now of signum global advisors. great to catch up with you. a line you've mentioned before and i'll read it again for our audience i think he stays in longer than most people predict. what are the pillars that underpin that view? >> absolutely, things for having me back. quickly if i can on the press conference probably the most-watched cognitive test and the entire history of the world. there was something in there for everyone. i don't totally agree with the reporter's assessment that two main gas. he had gaps all the time. they have gone viral but there was also some pretty substantive

answers on foreign policy and domestic policy. so there was a bit of something in there for almost everyone. he wanted to not like him or worried about his age you got it. if you want to be reassured you were also reassured. here's what i'm watching to answer your question. there are really three things. will the democratic congressional leadership stick with him. nancy pelosi, hakeem jeffries, chuck schumer and jim clyburn. schumer and pelosi in the last three days have opened the door a little bit for him to possibly think about dropping out. but they have not abandoned him if you watch that most closely to 17 members of congress that have now called for him to step aside but we need to watch the leadership. very quickly pulling in the swing states. in the six swing states it hasn't moved much yet but it is early. third is fundraising. is fundraising drying up or is it still a handful of donors that have come out publicly against the president. we need more data and will probably get that in the next two weeks. >> time is against him and

frankly the democratic party especially in a time when we were talking about the press conference we were talking about the inflation data sort of goldilocks reports and at what point will there be a sense of urgency not let's wait and see. let's gather some sort of consensus. will there be some sort of come to jesus moment where people say let's make some actions here. >> i think you are right because the issues around his age, his cognitive decline, his fitness is dominating the news cycle as opposed to let's talk about the issues in this election and let's try to back to biden versus trump of the president's out to get a read because the republican national convention is happening. he will pick his vp between monday and wednesday. we will get a bit of a break on this question of biden's fitness. secondly i would point out while the media and a lot of other

folks are focused on biden's age and again fitness for office, the truth is the average voter in the six swing states actually really cares about the issues, the economy, a woman's right to choose, border security, defense of democracy. they really care about issues. i think in two weeks we will not be talking about biden's age. lisa: there is a concern at an event like tomato where internationally there are some more consequences to how your leader comes across, to how he presents himself or herself and there is a sense of where the vulnerabilities are if there are sorts of discussions about not being able to respond at certain times. i'm just wondering at what point that gets enough attention by the donor class who say wait a second this isn't the image we want to project. charles: absolutely. there are a lot of americans and donors who worry about trump's response to any international crisis even though he is sharper.

i am not discounting the importance of the decision-making of the president of the united states. the truth is as you mentioned earlier in part of your earlier question he is not in a drop out any and there is mechanism to remove him aside from the delegates at the convention. 99% of the delegates is that they're knocking to do it. so it will take again the congressional leadership, democratic leadership and donors but also polling to force him out. i'll add there's been a lot of reporting of pelosi and obama colluding or talking about his exit. i hope party leaders are meeting and considering all options. that's what you do in politics pretty need a plan b, c and d. i'm glad pelosi is talking to obama, etc.. >> as i said last time we have to keep doing this and get an update from you. just to build on some of this. what we've seen over the last

couple of weeks we've seen many things. regretting deeply in public. having a more robust primary and the democratic party and if they had of had one, a key tenet of biden's campaign would have been i'm the only guy who can beat the former president trump. and in some sense i think the take away from that news conference yesterday is we agree with charles he did have command of some pretty complex subjects around the hour that you and day but a key question i have is he opened the door and undermined a key tenet of his campaign which is i'm the only guy that can beat the other guy. >> which places such key emphasis on polling. will that be the ultimate cudgel that can get him out of office if you get the polls that start to push against his ability to win and maybe give the opening to somebody else who could win. there just is this feeling that maybe he would then consider stepping aside. i thought it was really interesting somebody asked weren't you the bridge candidate between a younger generation.

what happened. that was a bit of a fumbled answer in my opinion. jonathan: the conversation continues. coming up we will speak to laura of fs investments. that's up next, this is bloomberg. ♪

the moment i met him i knew he was my soulmate. "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.

jonathan: equity futures on the s&p 500 unchanged. the word of the last 24 hours starts with r. rotation. you going to hear it again this morning with a rustle up again by another .9%. the moves we saw yesterday coming out of tech, if you strip out the muscle of cap tech, the market looks good. lisa: the fact that people wait s&p 500 gained nearly 1.2% at a time where the overall index was down a similar amount, when you saw the nasdaq down almost 2%, gives you a sense of how big of a divergence there is. the question you happen asking is the right question. how durable is it? and how much of this is people selling the winners in order to have bigger gains? is this fear? i mean, is this greed, not fear? how long cannot go on? jonathan: i have one question

about one specific dimension. it was the homebuilders. homebuilders did nicely in a rising rate environment and now we have these bets that do well as we cut rates as well. you have asked this question. our house prices going up or down when they cut interest rates? it happens here? lisa: nobody knows. you can make an argument that if you cut rates prices go up because more supply comes onto the market, but it is not enough to offset the lack of housing. other people say prices will go down because the supply glut will overwhelm the demand, right? pick your poison, go for it. homebuilders have been struggling more of late because costs have become more punitive. could there be some sort of reversal of that just to add to their broom? i guess that is why we've got a market. jonathan: let's get into the race story. your 2-year yield at the moment, 4.5082. yields dropping across the curve

yesterday. jobless claims, a downside surprise. can we repeat that data in the weeks to come? that data point yesterday goes against the grain of the last couple of weeks. lisa: especially because we got earnings in the morning that were not positive at all. it is a great question, especially at a time when people have been talking about signs of weakening. the flipside is, if there is that labor market strength what is to say this disinflation is durable? it raises this question of if the labor market is so good why should the fed cut at all if there is this risk of some reignition of inflation? i find it fascinating that you are seeing the yield curve steepening out. it is because of both the short and going down, but the fact that the long end is going up gives you a sense of hedging that longer-term inflation story. jonathan: how many times has chairman powell said something along lines of, we don't have

the confidence we are on a sustainable path back to 2%? didn't you hear a couple of officials that said basically that got it. i wonder if we get dissent at the end of this month going into the september meeting? lisa: i'm looking at you austan goolsbee. mary daly is a bit more heads. austin goals be saying this is what the path to 2% looks like. mary daly saying this goes a long way. the key question for me is, do you still feel there is a sense of shared commonality among officials? do they come out aggressively? jonathan: let's see how much pushback we get. a bit of pushback on dollar-yen. that coming from the japanese authorities. yesterday we got some real dollar weakness. dollar-yen cap is lower and they piled on, reportedly. the low of the session, 157.56. lisa: is this their playbook? that anytime there is data that

would indicate weaker dollar they pile on an ad aliens of dollars to try to exacerbate the strength of the yen on that particular day? is this what new intervention looks like? the estimate is that they intervened to the tune of $22 billion in yen. jonathan: they would love to introduce some two-way risk. these are levels that do not want. we all remember the days when we were talking about breaking 150 and that was the line in the sand. that is the price action. under surveillance this morning, president biden vowing to stay in the race amid deepening concerns about his fitness for a second term. at least three more house democrats growing the list of lawmakers calling on him to step aside. it is unusual to say that every interview, every news conference is high-stakes, but that unusual backdrop is likely to continue. on monday we will get another interview and everyone will say it is a high-stakes interview for president biden. lisa: when it comes to the market implication how much is

this giving ammunition to the whole trump trade? is there sort of a sense of what they, like harris trade would be or some other potential options? i'm just wondering about the volatility this could introduce when so many guests come around this table and say, it is noise. jonathan: a bloomberg customer moments ago, a subscriber. i love how lisa says "the donor class." i want to be in the donor class. money i can set on fire. lisa: [laughter] i'm just thinking, who has the capacity to do that? jonathan: throw money on a burning fire? lisa: you could talk about civil duty. jonathan: true. some people might have a different opinion on that. a wide range of perspectives, as always, on this program. jp morgan delivering unexpected revenue. it misses interest income. the ceo of jp morgan, jamie dimon, going on to say this.

there has been some progress bringing down inflation, but there are still many inflationary forces in front of us. wells fargo getting punished. we are down 6%. jp morgan doing ok, down 1.5%. lisa: that interest was the reason why. wells fargo, which is a lending bank. he came in at $11.9 billion. it was a big blow. jp morgan is bolstered by everything because they are the biggest and always seem to win. they have been bolstered significantly by the fact that wall street mines. we will see with citi. i'm curious with citi, given the restructuring. jonathan: that stock has done so well, hasn't it? just a programming note for you. 8:00 eastern time will not just get citi numbers, we will also get the call for jp morgan. expect more headlines coming from c-suite executives in the next 60 minutes or so.

let's talk about the data. ppi data after a soft cpi print yesterday. bolstered bets on a september rate cap. chicago fed president austan goolsbee saying he is confident inflation is on up after 2%. lara rhame of fs investments writing this. we believe the fed will cut in september as the june report will confirm inflation momentum. we expect rate cuts will be surgical, not programmatic. lara, where does that distinction come from? surgical versus programmatic? lara: when i look ahead not just at what is expected from markets this year but next year, this idea that they are going to be able to just cut once a quarter, sort of on autopilot, i think is a huge mistake by markets. because today, why we have seen two reports in a row that have looked good, we have also still gotten some inflation whack-a-mole. not as badly as we did in 2020 two, early 2023, but we are

still getting sectors popping off that our problem. the latest one, the insurance data really had caused that super core number to continue to stay really elevated. it is dissipating now, but we cannot, i think, get too him -- too complacent on inflation. when i look ahead i see even at the beginning of 2020 five rents becoming a problem again. this is not something that is just going to happen sort of miraculously as everybody had expected at the end of last year. jonathan: it sounds like you agree with jamie dimon. we quoted him moments ago. there are still many flight -- many inflationary forces in front of us. when you say rents might be a problem what is driving that? what is that come from? lara: when you look ahead you are starting to see, you know, after quarters of rents coming in below trend we are now looking, and you talk about supply dynamics, it is actually pretty easy to look ahead and

see supply dynamics in the multifamily space. we have seen construction in that space plunge. that is an 18 to 20-month lead time. when you look ahead at supply expected in 2025, 2020 six, it is as low as it was during the financial crisis. at a time when, let's face it, the supply of single-family homes is not really, i think, going to be able to come online, and again that the dynamics of the millennium cohort. they are just a big cohort, and they want homes. put it together, you are going to see some of the rent pressure. don't know what policies are going to be in place at the beginning of next year. should we get a trump presidency those policies are inflationary. you put it all together i think it is not the time to get them -- to get complacent. the fed is going to want to pick and choose depending on the data. we cannot assume they are going

to be able to just sort of go on some automatic program. lisa: we will get to the politics in just a second. but putting together this idea of surgical rate cuts, and then this concept of a fear of a policy error in terms of cutting too soon that could really inflation, how big of a difference with 25 basis points or 50 basis points of a rate cut make in terms of helping to reignite inflation? lara: i think you are right, lisa. when you look at sort of the risk of cutting a little bit and making a nip and tuck is not significant. especially because, you know, we all look at things like having affordability, that is more of a long-term interest rate story than a fed funds rate story. i think there is no real harm to a 25 basis point rate cap. it is not going to cause some inflationary brush fire to pick up. that is why the fed, i think, is

going to seize this moment in the wake of these good inflation reports and start down that rate cut path. but it is really looking ahead, and markets getting too cavalier and assuming that they are going to be able to take this opportunity and read that forward into multiple quarters. i think that is where we need to make the distinction. lisa: just going back to the politics of the moment, because you went there. i'm sure some people immediately tune out. i'm curious about the idea of trump being more inflationary at a time when some people say some of the proposals would be inflationary would also dampen growth and would therefore have a one-time inflation effect, longer term if anything this inflationary. what is your take on that? lara: when i look at both candidates' proposals one of them is, you know, strongly sort of pro-spending, which is the

momentum that got inflation on the higher end of the comfortable spectrum to begin with. the other 1 -- and i think when i think about the labor supply dynamics and some of the cute -- acute wage pressure that has emerged in that services worker sector, when you think about removing a large amount of labor supply from that you end up with, i think, a wage dynamic that makes inflation hard to get back to 2%. i actually think neither candidate -- you know, both candidates won a strong economy at the end of the day. and until we actually get a policy proposal i am very careful to take campaign rhetoric and impose that on a policy recommendation. but i think when you look ahead to next year we got really complacent on inflation. everything has to go perfectly

to keep it at 2%. when you think about next year i think you are probably still looking at inflation that is sticky and stubborn above that 2% target. jonathan: that is the difference between being an economist and a traitor. traders are like, this is what i feel, let's go. it's going to be the inflationary candidate. lisa: i love how people on the show are saying, the market needs to have patience. and then traders are like, what? jonathan: lara rhame of fs investments. anchor. let's get you an update with your bloomberg brief. dani: never notice ozempic was linked to lower rates of dementia and a range of other mental problems according to university of oxford study. after a year on ozempic patients had a 48% lower risk of dementia versus those who took an older medicine. the study is the latest to show benefits beyond diabetes and obesity control. i'm gary and prime minister viktor orban traveled to florida to meet donald trump. the latest stop on his

self-style peace mission. or upon posting on acts, an apparent reference to his belief that a trump presidency would result in a quicker resolution, saying "is going to solve it. " viktor orban is the european leader what the closest ties to vladimir putin. last week he blindsided the eu by meeting with vladimir putin in moscow and xi jinping in beijing. yours in that bribery trial of senator bob menendez are set to begin deliberations today. menendez faces 18 criminal counts, including bribery, conspiracy, and acting as a foreign agent of egypt. he is accused of taking 13 gold bars, nearly five hundred thousand dollars, and a mercedes-benz from three businessmen. an index of passion gas lawyers blamed his wife. -- menendez's lawyers blamed his wife. jonathan: i have thoughts.

i probably should not share them. lisa: let's imagine the cases not happening. jonathan: talking about the case, blaming your wife or something like this is something it, isn't it? really just throwing your wife under the bus? lisa: it basically is what happens if you know you were going to be in jail. if you might end up in jail it is sort of, basically throwing everything you've got. jonathan: it is rough. lisa: home life? jonathan: yeah. if you are in that situation. not this case. lisa: let's assume. jonathan: the u.s. reaffirming ukraine's military limits. pres. biden: firstly, about solesky -- zelenskyy asking for the ability to strike deep into russia. we have allowed zelenskyy to use u.s. weapons in the near term into russia. jonathan: we will get you some clarity on those comments in a moment. from new york, this is

bloomberg. ♪ ♪

(♪♪) (♪♪) beaches rhythm and blues caribbean sale is now on.

visit beaches.com or call 1-800-beaches. jonathan: the s&p 500, just about unchanged. yields going nowhere too. under surveillance this morning, the u.s. reaffirming ukraine's military limits. pres. biden: first thing about zelenskyy asking for the ability to strike deep into russia. we have allowed zelenskyy to use american weapons in the near term, in the near abroad, into russia. if he had the capacity to strike moscow, strike the kremlin, would that make sense? it wouldn't. the question is, what is the best use of the weaponry he has? jonathan: this is what is upsetting about the last week or so. that was the president wrapping up nato's 75th anniversary

meeting at a time where there are two hot wars. we have just had a news conference were a lot of people were more preoccupied in what time the president of the united dates goes to bed. that is a distraction at a time when we need to be having serious conversations about american policy. lisa: especially because the implications of what he was talking about is the potential for a broadening out an existential threat for europe. this is a real issue of, why are we not talking about how to resolve this in a more concrete way? and help people get back to their lives and not watch and witness jonathan: mass death? that distraction is not going away. the president is only getting older. annemarie is alongside a special guest in d.c. good morning. annmarie: good morning. the distraction is not going away, but one individual that is hyper-focused on the actual policies that were discussed this week is of course the nato secretary-general, jens stoltenberg.

this was his final nato summit. you are going to be retiring in the fall. you're going to get into some of those distractions that were happening at the summit, but i want to get into some of the policies. we heard president biden talking about the limits they have placed on ukraine about striking deeper into russia. he said they don't want to give them the capacity to hit the kremlin. zelenskyy is asking to attack russian trip -- russian jets. do you get the sense that the u.s. does not trust zelenskyy? sec. gen. stoltenberg: the u.s. and allies have loosened restrictions imposed on the use of weapons they have denied to ukraine. so, ukraine is able to strike against military targets inside russia. remember, this is a war of aggression. russia has attacked ukraine. that is a violation of international law. ukraine has the right to defend themselves. i think also striking legitimate

military targets inside the territory of russia. some allies have given them that permission. other allies have restrictions, but -- annmarie: the most important ally sending the weaponry is the united states and they have said you can only go about 40 kilometers. to zelenskyy's point, it is to push back the russians and be defensive they need to get on top of it, meaning going 300 kilometers. you were part of these discussions. do you think this is something the united states -- we have seen them before dragged their feet and then make decisions that zelenskyy was pushing for. could you see them come around to this? sec. gen. stoltenberg: this was an issue discussed at the summit. some allies have no restrictions on the weapons they have to live. others have restrictions but have loosened them. the u.s. is important, but half of the military support to ukraine comes from non-u.s. allies. comes from europe and canada.

when it comes to ukraine the europeans have stepped up. the decision of the summit was to have a long-term pledge to ensure that those in the future european allies will provide half of the military support, because they have half of the economic strength of the alliance. annmarie: ukraine did not get the formal invitation they were hoping for. so, they are still at the gates knocking on the door and they are not let into nato just yet. while they do this, though, it unnerves putin. you think they are in a sense in the worst position, this security purgatory, because they are stuck in the middle? even asking to be in the alliance really underscores the issue they are having with their neighbor next door. sec. gen. stoltenberg: at the summit allies were very clear that ukraine will become a member. we also stated that this is an irreversible path to membership.

but actually as important or more important than the language in the statement we agreed is that we took actions to move ukraine closer to membership. we established a nato command with 700 personnel to organize the training and military support to ukraine. we agreed to this long-term pledge and stepped up the work to do what we call interoperability to ensure that ukrainian forces are interoperable with nato forces. these are concrete actions that helps them to prevail, that help ukraine to prevail as a sovereign nation in europe. all of that moves them closer to membership, and then when the time is right they will become members straightaway. annmarie: as you know, politics overshadowed the summit. evernham was talking about, if not officially unofficially, president biden's age. as the nato secretary who have worked with both of the candidates for november, do you

see potential change in the future u.s. commitment to the alliance? sec. gen. stoltenberg: i expect the united states will remain a strong nato ally. also in the future for at least three reasons. this is in the u.s. interest, to have a strong data. the u.s. has something that russia and china has asked does not have. friends and allies. in the public we have seen opinion polls also confirming that, but also in the u.s. congress. congressmen from both parties express strong support of nato. third, the main criticism from former president trump and others have actually not been against nato. it has been against nato allies not spending enough on nato. and that has changed. just in the last year we have seen a significant increase in the number of allies spending at least 2% of gdp on defense.

annmarie: is your expectation that trump's rhetoric will not match his policies on the ground? sec. gen. stoltenberg: i worked with him when he was president last time, and again i expect the united states will remain a strong nato ally. because this also makes the united states safer and stronger. the united states is big. when he 5% of the world's gdp. together with nato allies we are 50% of the world's gdp. 50% of the world's military might. this makes the united states stronger, and the main criticism, the fact that unique -- that european allies did not spend, that changed. this has really improved. not least because of the criticism from the united states was valid, and europeans have heard the call and stepped up. annmarie: jens stoltenberg, thank you so much for your time. that was the outgoing nato

chief. jonathan: thank you very much. in the incoming chief, mark ritter, former dutch prime minister, who we know well on this program. stoltenberg saying the same thing. that the former president was right to point these things out and we are doing something about it. lisa: we spoke with him and davos and he said, honestly he was not wrong. frankly, it makes us stronger to think internally about increasing our defense spending. jonathan: coming up, here is the lineup for you. keith lerner of truist. ed ludlow. mohamed el-erian. and ashok battier of neuberger berman. from new york city, this is bloomberg. ♪

the moment i met him i knew he was my soulmate. "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.

>> the markets are essentially priced for fed perfection. >> the market has gotten to a point where you are likely to cut two times this year. >> the expectation set in the market could get ahead of themselves. >> i'm more cautious in the near term because i'm seeing investor over optimism. >> this is bloomberg surveillance with jonathan

ferro, lisa abramowicz and annmarie hordern. jonathan: the line of the week goes to david kelly. from new york city, good morning to the third hour of -- to all of you. the third number of "bloomberg surveillance" begins now. the russell on top, advancing by around about 1.1%. on the s&p 500, lisa, going nowhere. lisa: the question is how durable is this rotation? we were talking about a goldilocks type of report, a two prompt idea. ongoing disinflation, does the goldilocks feel continue through the earnings cycle? jonathan: the earnings cycle continues, kicking off with j.p. morgan and wells fargo. sonali basak. what do you see? >> a few things. as we watch for the rest of earnings to continue to cross the tape, a few pieces that

missed, investment revenue and investment banking revenue, coming in below analyst estimates and thick sales and trading revenue coming in below analyst estimates to a degree that we saw, that is a greater miss them what we saw at j.p. morgan. j.p. morgan just about met. citigroup missed expectations. why is this important? we have talked about it all morning, these wall street businesses are expected to move down meaningfully. at citigroup, there has been a lot of change at the top ranks of these businesses. there are new investment banking heads, which they brought in from j.p. morgan, just really started a matter of weeks ago. his pay package crossed the line when he four hours ago. and so, a lot of questions about how jane fraser brings in those businesses at this market. yes, we have had a rebound so

far this year but it has not been as robust as anybody would have expected. lisa: looking through some of the numbers, the adjusted earnings per share, they had a miss the fixed income sales and trading revenue. they had a slight mist on the investment banking revenue. loans came in stronger than expected. wealth management and revenue came in stronger than expected. we have the three banks to really kick off the earnings season. what are some of your takeaways? i understand it is early and you are parsing through the numbers. is there a thing that has emerged in these earnings reports? >> you have investors banking on this idea that wall street businesses right now can save you from the weaknesses you are seeing in key mainstream businesses. even when you look at j.p. morgan, which minted a record profit, you are looking at income from consumers coming in from credit cards. the question about credit cards is can the consumer keep maxing out on credit cards? at citigroup, to your point, it's a really strong sign that you are seeing strength in the

management -- wealth management business. you have banks leaning on wealthy consumers to drive that extra dollar, when youth about net interest income and the ability to lend to clients. but, you are still seeing broad concerns across the banks about credit quality at this part of the cycle, even if it's not really extreme. you are seeing numbers starting to mount at these banks. jonathan: great work as always, looking forward to your coverage at the top of 9:00 eastern time. if you are just joining us, some numbers this morning from j.p. morgan and wells fargo city. here is the price reaction to all of that. j.p. morgan, positive. wells fargo, negative by close to 6%. that's the loser of this morning. looking ahead to next week, morgan stanley and bank of america on tuesday. lisa: really interesting story. some of the price action is messy. is it because they missed net

interest income or is it to sonali's point, concerns about the quality of credit card loans? i'm talking about commercial real estate. they flagged an increasing number of nonperforming loans in that space. this goes to the question that would -- that we set the show up with. at what point will the earnings season fly in the face of this goldilocks soft landing? does it indicate more strength than people are expecting? or less strength that might make it a less auspicious moment for some of these other more leveraged names? jonathan: there is a theme and i think you are on top of it. coming up to explore that theme in the next hour or so, we will catch up with keith lerner. ed ludlow, it is a long-awaited tax event. and mohammed, reacting to the inflation data. responding to what we had yesterday on cpi.

stocks snapping a seven-day winning streak as investors rotate out of big tech. keith lerner staying bullish, saying stocks are in a bull market that deserves the benefit of the doubt. moreover, strong first half's tend to lead to further gains by year end with normal corrections. we anticipate stocks will trade in a choppy or fashion. but still, the primary uptrend appears intact. keith is with us for more. i want to build on what lisa has been talking about. i think it's perfect and the way to think about things. yesterday, we had data that spoke to this goldilocks optimistic earnings. i wonder how you view things on the economic data side of things and in terms of earnings in the last one he four hours. -- 24 hours. >> sure. we downgraded in late june after upgrading in november. after 40% gains since we upgraded it, things have gotten too stretched. in july, we saw they had to

grind higher. on the other, what we saw on this mean reversion tree, the relative performance of small caps up until yesterday was, on a six-month basis, that the latest under -- greatest underperformance we have seen since 2000. a 20% underperformance in six months. the average stock had the greatest underperformance on a six-month basis since 2000. what we are seeing right now or what happened yesterday is the bank got too stretch -- nor ed. the big cap tech stocks were -- they came in and the market service was strong but the headline index was weak. it's interesting how this has played out. lisa: i had this image of kids in rubber band fights, stretching it out and waiting to let go. the letting go yesterday was the potential for rate cuts on this goldilocks like kind of environment.

at what point do you start to get concerned that maybe it is still not threading the needle perfectly, that some of the guidance that we heard from banks and other companies that have reported earnings so far, it's early days, signals something else, that might pretend a bit more weakness? >> i think we are seeing a quarter of the economy -- cooling of the economy, i don't think we would call it week. earnings will be fine, not the blot that we have seen in the past but enough to continue to move the market forward. one thing we have seen is don't asked her -- underestimate corporations resiliency around profits. we have this once in a generation pandemic and inflation backdrop. we have seen corporations and of that pretty well. i think we are beating -- being a little bit choppy in fashion. think the trend is still high and the economy is moving toward

a trend growth from this post-pandemic stimulus boom that we had that is behind us now. lisa: let's talk about the areas where we are seeing a broadening, smaller banks, one of the most beaten up areas. we saw some gains yesterday. as we guessed from some of the bank earnings, wells fargo and citibank, is there a thing that makes you more positive or constructive in the financial sector? >> longer-term, we like tech on a longer-term basis. on the shorter basis, we like -- i think areas like the financials, even the smaller financials, along with some of the industrials, they will likely outperform because expectations are so low. i think right now, we should be thinking more about how things are coming in relative to expectations. i think some of these areas that have been beaten up with the small-cap index, the s&p small-cap index, was actually

negative for the year up until yesterday. i think when you about the tech side, expectations are higher. i think we will have may be more of that bifurcation during this earnings season. jonathan: give us clarity on financials. not effect we left for dead. goldman is up to 4%. citibank is up 27, close to 28%, before today's moves. keith, are you talking more specifically about the smaller plans, the regionals? >> that's right, jonathan. yesterday, during that big rebound, the big banks were actually down. what we have seen, it was not just tech, it was a gravitation for the highest quality companies in the different sectors. not just tech. you saw smaller banks actually outperformed and the other ones came in a bit. i think we will see more of that because of that divergence. longer-term, as we move past this snapback, which i think of last week's if not a few months. i think the rotation will go back toward these larger quality companies.

i think it got overdone as far as the quality theme on a short-term basis. we will see more of that unwind. the position has further to go, based on our work. jonathan: keith, thank you. keith lerner of truest on the latest on this market. lisa: i was very bad at rubber band fights. so when people start talking about stuff. jonathan: you used to do that at school? lisa: at home, at school. you've never been engaged in that? i would always get it wrong and it would fling back at me. i would be really embarrassed. jonathan: were you that person in the class? lisa: never. jonathan: let's go to stories elsewhere. i just got that vision now. lisa: by myself, evidently. jonathan: here's your bloomberg brief with dani burger. >> a roundup of the earnings from the bank, citigroup reported earnings that beat estimates. trading revenue fell short of

estimates. for jp morgan, they had record profit, including a 50% jump in investment banking fees and a 21% jump in equity trading revenue. over at wells fargo, there was a net interest income that missed estimates, following to its lowest -- falling to its lowest levels in two years. another airline reporting a gloomy view for the summer travel period. lufthansa has cut its profit output for the full year. output will be challenging with harmful unit costs and fallen ticket prices. they struggle to fill planes, resulting in struck down ticket prices weighing on profits. donald trump is looking for another win in his court cases. the former president asked a new york judge to toss out his hush money conviction in response to the supreme court's ruling that presidents have some immunity from criminal charges. they said some of the evidence used in the case should not have been.

that is your brief. jonathan: thank you. more from dani burger in 30 minutes time. up next, the morning call's, plus we will catch up with ed ludlow, reporting that tesla is postponing its highly anticipated robotaxi unveiling. ♪ at morgan stanley, old school hard work meets bold new thinking. to help you see untapped possibilities and relentlessly work with you to make them real.

what does a good investment and relentlessly curiosity light the way.owet asking smart questions about opportunities

like clean water. and what promising new treatment advances can make a new tomorrow possible. better questions. better outcomes. ♪ jonathan: counting you down to the opening bell at one hour and 15 minutes away. equity futures just about unchanged at the s&p 500. the outperformance from the small caps continues, going into the we can. let's get you some morning calls with one stock very much in focus. it is tesla. citi rating it's price target at 230 four.

they are not inclined to chase the stock. up by 2%. raising the price target of the ev to 230, maintaining a neutral rating. better than expected june vehicle deliveries. the company's focus on new markets with humanoid robots and robotaxis could be more difficult to pursue. and ups, getting tesla to sell but raising its price target to 197. the concerns and shares have risen too much, too soon on ai plans, adding that any winning market enthusiasm for ai could impact tesla's multiple. the stock in focus yesterday after this move. the stock was lower at the close by 8.4%. off the back of this headline right here. the company is planning to delay robotaxi unveiling to october from august. the man behind the story, ed ludlow, joins us now for more.

it's great to catch up. thanks for waking up with us. walk us through what you and the team have been learning. ed: it's a delay of two months. we were expecting a robotaxi unveil on august 8 because elon musk posted on x that it would be august 8. what sources told us is in the last 48 hours or so, teams have been directed that the delay to october is because they need more time. they are not ready. they want to have more to show at this big reveal, more prototypes. one source told me that literally on wednesday, the design team was told by elon musk to rethink the design of this purpose built robotaxi. the market reaction is interesting. you have to give the context of the huge run-up that happened or proceeded it. -- preceded it. there is not as much progress on

a robo bill taxi or uber like service as we thought. jonathan: a couple of issues to work through. this was not just about the robotaxi business, they are doing better on deliveries, better than we expected. can we talk about the run-up into this new story that you and your team put out and what was behind it? we are from some prominent -- heard from some prominent investors who said tesla was some kind of meme stock and it did not make sense. it was divorced from fundamentals prayed what did you think of the rally? -- fundamentals. what did you think of the rally? ed: there is legacy wall street investors who have to trade on fundamentals and have to consider that tesla is in the business of manufacturing and delivering electric vehicles to consumers. that tension is against of -- a large body of retail investors who say it's going to be a negligible part of the bigger

pie and the rest of the pie will be software or selling a service. and the people i of the audience who watches the tesla video and this ties together the last way for hours, would have seen a short video clip where a tesla employee demos and app -- an app similar to hoover's -- uber , where they have a ride-hailing service. look at the stocks that jumped, uber and lyft, up over 5%. it's the idea that tesla stakes this idea that they will operate on a fleet of a community and we are not there yet. lisa: there are institutional investors who are betting not on the fundamentals but are betting on the idea of a brilliant and volatile founder, who has big ideas. tesla is going to be -- was going to be the showcase for them. the reason why your scoop may be

hit hard was the idea that maybe this is a company over its skis with respect to what it is promising. is that what you gathered, that they were not able to accomplish the highfalutin goals that would distinguish them from just being a car company? ed: i have a bit of relief that you asked that question. the reason being is first, bloomberg stands by its reporting. every time we report something like this, we spent time on it. the people we speak to inside the company, we do so thoroughly and carefully prayed we also wrote to elon musk. in my career so far, i've never seen a reaction like the one the other night. it started with bloomberg cannot possibly be right about this. we are talking about a two month delay. and they are calling out to elon musk on social media. please tell us what's going on, tell us the truth. and he did not comment on the story. he has not posted on xp. i have written to him multiple times in the last when he for hours and said do you want to

talk about this? they all panned the idea that this is a vision he owns. and his vision for the future of the company, which he codifies from time to time through a document he calls the master plan, has evolved. this is the problem with investor relations at this company. it is funneled through him and his personal use of his social media account. whether you are an institutional investor or a retail investor that has different rationale for wanting to hold or -- hold the stock, it's incredibly difficult because the information pipeline from the company is not there. lisa: thank you for doing what you do. it's wonderful to get some insight on this. as you are carefully reporting this out, did you get a sense of why there was this delay? was it simply they did not have the timeframe to test the technology and get it perfectly down pat? or was there some fundamental issues that have plagued every company that has try to come out with some sort of robotaxi or

automated car and frankly faces off with different types of testing and regulations, but also just technical challenges? ed: we had the sense that some stuff -- staff at tesla were caught off guard with first-quarter earnings earlier this year. there was the reuters report tesla scrapped a plan for $25,000 ev to pivot to robotaxis specifically. what we did was clarify the situation that it is more complicated than that. they are working on engineering the cost of their consumer cars while being focused on a robotaxi. the two specifics we reported 24 hours or so ago were that they did not have much to show where they wanted more prototypes, more physical things to unveil in october. but also, elon appears not to be happy with whatever it is they have -- currently had to show. they have been asked to think of been -- think again.

go read the master plan documents on the website through the origin of the robotaxi plan was you take a consumer car with the bells and whistles to make it drive itself and when the lease was over, you give it back to tesla and that made up its fleet and that evolved into you being able to opt in to an airbnb style platform. the car drives itself to be a robotaxi. the purpose for the robotaxi is a more recent iteration of the plane. it will be accommodation of all three. i will end by saying as you guys know very well, elon musk often misses his own deadlines and the timelines he has outlined what he often does get there in the end. i think that accounts for a lot of the confusion and panic we saw on social media in particular about the severity of the decline in this stock in yesterday's session. jonathan: before you go, we wanted to give you some space to talk about your column, hyperdrive. we talked about rivian as well

prayed you outlined what was going on with tesla. what is going on with rivian? ed: i reported in a 4000 word is this week's story about rivian's latest plan. according to my sources, rivian applied to the doe for some loans made available through the inflation reduction act. the doe said sure, you can have the loans if you change your stocks on unions in the state of georgia. rivian, like tesla, is not going to welcome unions. they don't believe it's the right approach. i think it is so interesting in this presidential election year, the doe's function, it's been emboldened by biden. item last night spoke about his stance on unions and labor rights very clearly what happens if trump takes the presidency? in his first term, the doe is almost -- was almost in that department loans for ev programs, almost sort of thinned out, ground down to a very small group and entity. so, read the column but i think there is an interesting

situation about what happens to the money made available through the inflation reduction act, and how it is given out. especially in the context of the news yesterday of more might infer the -- more money for the biden administration to close down plants that were building gas cars. jonathan: i want to squeeze in one more question. you are living in new york and don't have a drivers license and maybe you want to use the robotaxi, do you need a drivers license for that? can i sign up and get a subscription? ed: that's an excellent question. i don't know the answer. the bigger question is liability and insurance. would you put your kids in a vehicle that can drive itself? i guess in your case or my case, what i get in and who is in control of this? we don't even know what the robotaxi looks like or the specs of it. i will find the answer but i don't know. jonathan: i'd love to know prayed i've been thinking about it for ages. as i explore getting a drivers

license for new york. lisa: the bigger question is why don't you have a drivers license? jonathan: maybe we are a few months away from the robotaxi and i won't need it. lisa: it's a bet on the robotaxis? ok. all right. jonathan: bpi is up next. lisa: [laughter] lisa: [laughter] ♪

so, what are you thinking? i'm thinking... (speaking to self) about our honeymoon. what about africa? safari? hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment... ...on a ranch ...in montana ...with horses let's take a look at those scenarios. j.p. morgan wealth management has advisors in chase branches and tools, like wealth plan to keep you on track. when you're planning for it all... the answer is j.p. morgan wealth management.

♪ jonathan: data just around the corner, following cpi. the equity market of the s&p 500, unchanged. up by one percentage point. in the bond market, scores on the two-year yields, just a little lower by a basis point. here is the data. a 0.2%, the survey, 0.1. month over month, we come in at 0.4. that is an upside surprise. the number released is 0.2. lisa: especially when you strip out energy and food. we also have year-over-year.

that means it is substantially higher when you take out food and energy, year-over-year ppi comes in at about 3% versus the estimate of 2.5%. this goes into the gdp print. this goes into some assumptions that people look at. typically people way cpi more significantly. i'm wondering how much this dampens the enthusiasm we got yesterday. jonathan: the market reaction is more important than the economic data or more interesting. look at the bonds, the two-year, front end of the curve, treasuries, yields were lower i a couple of basis points, yields are higher by a single basis point. 452.92. are we getting too carried away over the back of one set of economic data from yesterday? lisa: the inflation base has not been killed. that's what people are reconciling. it won't be this easy path to a september rate cut by the federal reserve. whether we see this stick will

be interesting. i wonder how leveraged this broadening out trade is to this idea of the imminent rate cut and if we don't get that, how much of it will be reversed back to what we had previously? ppi is an interesting measure. people did not put that much energy on it. they think cpi is the main one. this has been enough to take a lot of the wind out of the sails. jonathan: if you are just joining us, a little upside surprise. we come in at 0.2 percent on ppi. final demand, month around, the estimate surveyed up to 0.1. coming in at 0.4, the survey, lisa at 0.2. lisa: revised to flat basically on the prior month versus the initially reported net down 0.2%. the revisions have been inconvenient. i want to note that and sit on that. whether it is jobs or inflation,

the jobs picture looks worse when the data gets reflected. inflation looks stickier when the data gets reflected. it raises the question, how much are we banking on the soft landing goldilocks scenario? jonathan: a lot of people bank on it continuing. i will share it with you in a moment. course cpi cements upcoming cuts. jp morgan with the call for the first rate cut of november to september. sticky inflation is coming unglued. michael capon, more of the data. that note trust -- just dropped from citi. they expect a strong signal from july. cuts will begin at an upcoming meeting. august is a chance to not only confirm the upcoming september cut. it will be the first in a series of steps to reduce policy rates. lisa: it is early days but based

on fed funds futures, you're looking at a 98% chance of being priced in a september rate cut. we will see whether that gets readjusted. point being, people seem to be coalescing around this. this data that we just got seems to be a bit of a fly in the ointment. jonathan: a good friend of ours on this program joins us. mohamed el-erian. let's work through this economic data that we got through this morning and the data yesterday as well. when you look at the totality of the data, what conclusions are you drawing, currently? >> i have two conclusions when you look at the totality of the data. one is based mostly on the cpi, which is that what we see as demand destruction -- is demand destruction and a rise of pricing power. mikey said it is very broad based, benign inflation numbers. you are really starting to see the demand destruction and the

loss of pricing power. that's consistent with what we have heard from companies. and it will be consistent with what we will hear from companies next week and the week after. it is also consistent with the macro data that is starting to weaken. that's conclusion number one. conclusion number two is on the cost side. we live in a global economy that, despite trying -- china's displace neri impact, is not -- disinflationary impact, it's not helping what is on the demand destruction. that will force something that you don't like me talking about but i will. there will be a lot more discussion as to what is the inflation target given the dual mandate. i expect the fed to focus much more going forward on the two cited risks. and within that, much more on the employment side of those risks. jonathan: you brought it up so

let's talk about and then we can talk about the labor market. the right inflation target, the question the chairman has been asking for a while, he talked about it in his testimony, it's a fair question, are we on a sustainable path back to 2%? do we need more confidence? he said repeatedly we need more confidence. if some officials say they are more confident, we are on a sustainable path back to two -- 2%, not two point 5% or 3%, why would you caution them? why do you think i would be so difficult? mohamed: if they say we are on the path to 2% and leave it wide open as to when we will get there, already the chair has said we will not get there in 2024 or 2025, if they leave it open, i am fine with that. if however they feel they need to deliver the 2% this year or next year, i would worry as to all of the undo losses to

output. i would worry about the employment side as well. john, the only thing keeping segments of the household sector, the loan income one and the small business going, the only thing keeping those going is labor income. and if we lose labor income, we no longer have the strength we had before. and it would resolve in a much, much stronger decline in demand. mohamed: what you're saying is fascinating in a time where they said his fear is you are seeing companies lose pricing power, aside from delta and pepsi. at the same time that surprise high inflation is still present. if inflationary cuts rates, they will pass along the price increases to consumers and inflation will go higher from here. why is that a preferable outcome in your view? mohamed: i listens to him and the only question i asked was

what about the lags? it's not going to happen. in fact, we still had the lagged effects of one of the most concentrated hiking cycles in history. so, the lags right now are working the other way. it does not work instantaneously. that's not how monetary policy works. lisa: when you talk about the labor market, let's go there. yesterday, we got a good sign in terms of initial jobless claims and how much they came down below expectations. why are you looking through that as an anomaly, a blip, rather than a sign of strength underpinning the economy? mohamed: you said earlier how much should we conclude from data every month? how about every week? the data, the jobless claims data is inherently noisy. if you want to take a moving average of three months, six months, there is absolutely no

doubt that you will see that that indicator is not as strong as it was before. from week to week, it will differ enormously. it's noisy data. lisa: we talk about we should be thinking what the right inflationary target is, what's the right balance between inflation target and employment at a time where we are talking about something like 4.1% on unemployment and inflation of 2%? mohamed: and it's this notion of undo damage to employment and to the economy. there is also a very important distributional effect here. so, it's very easy now, because the fed told us that they expect unemployment at 4%. we are above that normal it -- number in june. we are likely to go even higher than 4.1%. already, that part of the mandate is flashing yellow. meanwhile, the other part of the mandate, even though the chair

did not call it such this week, but did call it last week, the disinflationary trend is continuing. the big question is to where and what time? i think the fed will keep this wide open. they will keep saying to percent is our target and we get there when we get there. they are not going to sort of be very precise as to when they will get there. and they will wait and see how the economy accommodates. that's their way of doing slightly higher inflation targeting without calling it that. jonathan: if you are joining us, welcome to the program. i want to go through some of that data, coming in hotter than expected. the small caps was up by something like 1%. faded off the back of it and started to climb again. it was posited by three quarters of 1%. if you switch up the term to the bond market, years were lower -- yields were lower on the front end by a couple of basis points. we have changed at about 450 --

4.5082. you have said some interesting things. i want to pinpoint one. you said the labor market was starting to flash yellow. when you hear from the fed chair, he describes the labor market as being strong as a reason to get this right. you said before that this fed should be thinking about moving to july, not waiting until september. what is a couple of months between friends? why do you think it is important to start getting it going and getting moving earlier and sooner rather than later? mohamed: if i was as certain as he is that the market would move in september, -- however, you have two factors that may complicate a september cut for this fed. i want to stress for this fed. one is they may get one bad data point. and then, because they are so overly data dependent and they are not looking forward enough, that could cause -- postpone the

first cut to november. and then we are starting to talk about a longer lag. the second issue is the politics . what does the politics look like when we get to september and how worried are they that there will be an inflationary shock? after the elections, due to policies. so, it's not a simple as saying well, the market thinks it is over 80%, it's going to happen. because this fed is very impacted by high-frequency indicators. lisa: let's flip this on its head. a number of people have said the big fear for the fed and the worst case outcome would be to reverse course and hike rates. do you think that isn't that big of a risk or it would not be that problematic if they had to reverse course, say next year, after starting cutting, either in july or september? mohamed: i agree it is their

biggest fear. they don't want to be, in any way, resembled to the 1970's. and it's a huge fear. and they have already made two mistakes in the last three years. first, a transitory call that was horribly wrong. secondly, at the end of last quarter, they got too excited about what was happening on the inflation numbers and had to reverse their view. and we saw the amount of pivots. i have never seen so many pivots. the whole point of forward guidance is to provide smooth market adjustments. instead, we have had this enormous number of pivots from the fed. i understand that hesitation and i agree that this will be in the back of their mind. if they do have to-year, -- hike next year, it's because something has happened externally, we had a major shock somewhere or the policies elsewhere, fiscal trade has

fundamentally changed. and i think people will understand that and they won't bring the fed. they will see something else has happened elsewhere. i don't want to say the u.s. will have a liz truss moment, they won't. but people understand the credibility of an institution when the shock is coming from outside. jonathan: do you have more confidence in chairman powell's federal reserve are garrett's england team? mohamed: that's a tough question . at every interview, you get very close to the line that separates courage from stupidity. i will stay on the right side of that line. [laughter] jonathan: it was good to catch up. a lot loaded in that response. the brilliant mohamed el-erian. a lot to say, particularly on the federal reserve. if they get to september, great. but don't take it for granted

that they will go in september. things could change. he said this a few times. he's characterized the federal reserve to being hypersensitive to incoming information. it might take one data point to put them off. lisa: if you think about the rhetoric we have heard, the idea from austan goolsbee, this was it. this was what we needed to be confident. you get ppi and there is this idea that the inflation based on the supply side is not killed. if they wait until september, does politics start to bleed in just a bit? jonathan: we are confusing hikes with cuts. this line came in from chris harvey. here's a quote. we believe the great rotation needs to lower rates and earnings optimism. cpi delivered the rates. earnings concerns linger after delta. this was your point. lisa: this might be the bigger takeaway. earnings was -- data was noisy, earnings less so if you have an overarching consensus.

we have seen concerns about not being able to price pricing. there is concerns about credit quality among the financial institutions. that might speak louder, to me, than anything else. jonathan: been quite a week. here's your bloomberg reef with dani burger. >> at least three new democratic lawmakers are calling on president biden to step aside after his news conference last night. he made two major gaps in two hours. first recurring -- referring to president zelenskyy as president putin and calling his vice president trump, rather than harris. the president for paris for an interview on monday with lester holt -- prepares for an interview on monday with lester holt. sources tell us boeing's timelines may slip by 3-6 months, on top of already late handovers. a boeing spokeswoman declined to comment, noting the company is in a quite period ahead of its

july 31 earnings release. at&t suffered a massive hack of customer data. the hack included records of calls and texts for nearly all of its mobile phone users for a six-month period in 2022. the company said in a regulatory filing that the breach included records from customers of wireless service providers that use at&t's network between may 1 and october 31 of 2022. that is your brief. jonathan: thank you. thanks for this morning. we will catch up on monday. up next, the program setting you up for the day ahead, you are watching "bloomberg surveillance." ♪

jonathan: counting you down to the opening bell, here's the lineup for next week. when a lineup we have. on monday, the republican national convention began speed we will get fed speak from chairman powell himself at 9:00 p.m. eastern time.

lester holt will interview president biden. that's must watch tv. tuesday, we will get retail sales. wednesday, we hear from beige book. thursday, another round of jobless claims and we wrap up the week with more feds from williams and bostick. joining us is ashah. is this a week where you put more weight on the data, which was good or the earnings, which have not been great? >> i think for the bond market, it's a bit of a common nation but more of the data. you take a quick step back after a strong first half of the year, with good payrolls and higher inflation rates, june and july really brought deterioration in the job market. and a couple of soft inflation trends. we think that will be the trend for the next few months. from now until that september meeting, our estimate is we will

see continued softness in inflation and a little bit of continued deterioration in the jobs market. that leads to the fed easing in september. i think the point you make is there is softness in earnings. we have heard from some of the airlines and consumer goods companies. there is a lot of idiosyncratic things or stuff going on. there is a bit of a theme that the consumer seems to be pulling back. our expectation is that will be a continuing trend as well the next couple of months. jonathan: that tees up a question about the labor market, you are expecting for the softening. can you tell us what that will look like? yesterday, people were empowered by this idea that cpi was softer than expected and jobless claims -- claims dropped back as well. what is the softening you are expecting? is it unemployment going from 4.1% to 4.5%? is it something worse than that? what is it? ashok: there's two things.

the unemployment rate has been rising. we get another 20 or 30 basis points rise in the unemployment rate from here, that would be about 100 basis points off the low. maybe not lost but certainly underlying a lot of the job market data has been this gradual rise in the unemployment rate. i think the biggest concern that we have about the job market is just the continued narrowing of where job games -- gains are coming from. we have seen layoffs and job deterioration in technology, finance, real estate. really now, you look at the private sector jobs markets. 60% of the jobs markets have been created in two sectors. education services and health care. the last is continuing to narrow primarily to health care. typically what you will see in a labor market is that in the late cycle, you will see a narrowing of job gains in those sectors

reduce or stop hiring and that leads to weakness. that is broadly what we are expecting. short answer to your question, the narrowing of job gains is our biggest concern. lisa: especially at a time where we are seeing a number of companies talk about credit concerns. and the loss of ability for consumers to keep spending and to keep on paying back their bills. how much do you think that has or has not been reflected in credit markets, in particular? ashok: it's a tricky one. credit spreads, as we know, they are pretty low and pretty tight. high yield is spending a lot of time around 300 basis points at the index level. these are not the all-time lows. they are closer to that than something else. i think, you know, the tricky part of this is the company balance are generally in good shape.

they are in a position to whether modest or moderate deterioration in the economy. you get to something more significant and that can be more of a fundamental risk for credit. the environment that we see of how the macro developed is the impact will be more in the rates market and the central banks and the fed and ecb, rather than something that the deterioration will show up in the credit markets. so, credit is more about just dealing with these type valuations, rather than there is a big fundamental story during -- brewing in our view. jonathan: we have to wrap up the week and look ahead to next week. let's go over to annmarie hordern in washington, d.c.. another key interview for the president of the united states on monday. annmarie: he will be sitting down with lester holt of nbc monday in austin, texas.

today, he will be in detroit, michigan. he wants to make sure he can sell his campaign not just the american people but the democratic party. 17 democratic lawmakers have come out and said he needs to resign as the political nominee. politico put it fantastically, saying democrats are living in purgatory. yesterday did not do enough to dissuade concerns, the fact that these gaffes completely overshadowed the policy and the substance of what we should have been talking about. your point, jonathan earlier, was right on target. there are two hot wars in the united states and everyone was wondering about president biden's bedtime, his health, can he do this another three or four years? can he sit across the table of autocrats like xi jinping and vladimir putin? yesterday, was it so bad the game is over for him? no, he still fighting for his political life. next we will be entirely focused

on biden, potentially until we get to the are in c and we find out from -- rnc, and we find out who former president trump vp nominee is. jonathan: this is the presidency. this were the clues game of when we can get through -- whether we can get through an interview or a press conference? we stop playing this? lisa: a lot of people have been treating it like that for a wild. that's why it people look at investment companies. jonathan: that's -- it's a good time to take a break. next week, steve, we catch up with matthewette, jim karen and stephanie roth. -- matthew bartlett, jim caron and stephanie roth. ♪

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.

matt: it is friday. the end of a long way. we have 30 minutes until the start of trading. i am miller. sonali: i'm sonali basak. katie: and i'm katie greifeld. sonali: bank earnings are rolling in. jp morgan post record profits. in wells fargo warns cost-cutting efforts have started to slow. matt: we get a fresh read on inflation. u.s. producer prices climbed slightly more than forecast in june. we are going to get consumer sentiment data from the university of michigan. katie: i defined biden strikes again, with the president bowing to stay in the 2024 race despite a series of missteps. let's take a look at where markets are trading. about 30 minutes to go until the bell rings. we