>> it's is still expected to do most of the heavy lifting for earnings growth. >> it's been a momentum of growth in size market. >> it's spread into the smaller cap area. >> we all know that leadership needs to expand. >> i really want to see which way the earnings go. big tech names continued dominance and things get better? i could see investors going back there pretty easily.

>> this is "bloomberg surveillance." jonathan: good morning, good morning, live from new york city , the features on the s&p 500 are a bit softer after snapping a three-day losing streak on the s&p, the nasdaq with its best day since early june. the mat -- the mag seven is back in a major way and begins after the close. we will hear from tesla and alphabet and then they will start to report in a much better way. lisa: we have gm, coca-cola this morning, with 20% of the market cap reporting this week alone. this is when we start to report on what companies are actually doing, which is what investors on this show say is tradable as opposed to speculation or political noise. jonathan: how many people have

come on this program and put cold water on the small caps in the last 24 hours? morgan stanley made a singular -- similar point saying don't chase this, don't chase this. barclays, media outlook, upgraded the price target, 5600 from 53. guess what they like? growth stocks. a valuation reset leaving more room for preferred themes and one of them is large over small. lisa: this is what we heard from so many investors, even later this morning when we have cary hall from bank of america, who thinks they are undervalued and sees a reason for it in terms of small caps. the issue is that the winners will keep on winning and a selloff or pullback in the magnificent seven is being viewed as a buying opportunity. it's the same idea at a time when people really recognize

that the economy is slowing. jonathan: phrase of the week so far, cut through the noise, politics being the noise. kamala harris, 81-year-old joe biden stepping aside. what does she raise in 24 hours? 81 million dollars, can't miss that. annmarie: can't miss it. a lot of the donors were drying up when there was speculative concern about whether biden could continue on this path but in 24 hours you see the momentum behind her, she's reenergizing the base. the more interesting statistic is 50% of the donors are first-time contributors to the race, showing that she's bringing a lot of excitement. obviously, she's somewhat of a fresh face. she's young when it comes to the democratic ticket, exciting a lot of people, and today she will be kicking off the campaign in earnest when she heads off to milwaukee, wisconsin. jonathan: before we get deeper

into politics, ups, coming in after the drop, revenue coming at a 21 point 8 billion, the estimate was 22 point 21. a bit of a downside surprise. lisa: talking about full year's expected revenue of 93 million. even ratcheting back expectations for the full year, when you look inside the numbers what i find interesting in the macro economic backdrop is how much of this being consumers spending less on shipping packages? u.s. package revenue was down below estimates with international package revenue been -- below at -- below estimates. how much of this is tracing the goods versus services shift to people being more discretionary? jonathan: isn't this the biggest challenge, the earnings picture from the airlines, pepsi, have we seen it again this morning

with ups? lisa: that is what it smells like, although ups has been facing a lot of issues around revenues and expenses, cutting certain businesses in response to labor negotiations. however, that said, they are definitely looking at increasing commentary from companies calling this a different consumer who is ratcheting back, more price-sensitive. jonathan: that stock is down by 4% in the premarket. in about 26 minutes we will get the numbers from gm, look out for that. equity numbers are softer, down 1/10 of 1% in the bond market. yields are lower by a couple of basis points. cannot get through a bond market check without talking about what? supply. lisa: what's coming up? $70 billion in supply notes tomorrow. this matters at a time when people are talking about the one constant, no matter who wins the

presidential election, the fiscal deficit that no one is talking about reducing in a material way. that is the reason why bonds climaxed. >> that's the promise, more debt, something that they can deliver if you want it. coming up, the best day of the s&p 500 in more than a month. kamala harris closes in on the democratic nomination. and they are ahead of tesla earnings at of the bell earlier. the top story of the s&p 500, posting its best day in a month as investors look through messy politics. "i don't believe that these markets will be trading based on the trump or harris prospects but on the direction of the economy, i find talk of the trump trade versus non-trump trade to be much ado about nothing. brian, good morning, that's news to the ears of a lot of people as politics have dominated the market. what do you think is the number

one issue right now? brian: the economy. for the first time in a while, getting a bit more defensive, but then you have small caps where these folks will never have me back. i continue to believe that we want to be more defensive. doesn't mean that equities cannot do well, but it is the larger cap and higher qualities with growth slowing. ultimately, the fed will reserve pivot. for the week after i was on the show, the focus was on the fed cutting rates but now it's back towards growth slowing. we will get back to the focus being on the fed and things will broaden out, but in the near term, the economy slows. jonathan: i've got a line here from lisa shalett, where unlike fed of cuts receiving recession with economic growth sustainably impacting the cohort, this time

the goldilocks soft landing is active with large cap quality names that can deliver gains despite modest economic growth. is that how you are thinking about things? brian: it is but i would not say that it doesn't revolve around small caps. if you can get through without, the broad market should do well, but typically looking historically when the yield curve normalizes, you tend to see more participation from smaller value with investors wondering why the market has been so narrow. we have had 20 months of inverted yield curve now. that's the challenge. this will change as we normalize the curve. the problem in the short term is we have priced in rate cuts and the economy is slowing, so we will need to see more carry through with signs that the economy can be resilient before things start to broaden out again. >> it's the economy, stupid. look at what is going on with respect to consumers and their

happiness level. are we getting a signal from the likes of ups, the airlines, from the commentary that we heard earlier in this earnings season that highlights how quickly growth is slowing to you? >> yeah, i think so. remember, that was the wish. i year ago when things were robust and everyone was worried about inflation and we heard about things like stagflation and hyperinflation and everyone was trying to be hyperbolic on these things, that was never going to be the case. the reality was the fed was going to slow the economy, consumers were going to start to slow down and inflation would start to come back into a comfort zone. that's where we are. we cannot wish for something and then when it happens, be disappointed that that is what is happening. the global economy is slowing in the u.s. is a big part of that. annmarie: how do you assess if this is one data point on a different trajectory downwards that is more dramatic as opposed

to the goldilocks softening that everyone was hoping for? brian: guideposts for recession are usually cyclical. we don't have the -- we do have the inverted yield curve, one out of two, signs that the economy is slowing, survey data is not great but not collapsing. the most important one is our credit spreads widening, but not really. you would look at that and say that the economy is in reasonably good shape and it doesn't suggest recession, but the -- certainly it suggests things are slowing down. annmarie: if you don't think that right now the trump or not trump train is much ado about nothing, when does it become something to do with something? [laughter] brian: i'm not sure it does. i've been watching it from the day that trump was a length bid to the day that biden was elected. i'm not sure why people focus on

this that much. i will give you an example. look, post debate when the trump numbers were growing up and there was a probability of winning, i was getting notes in my mbappe -- inbox about the trump trade, crypto going up, european defense going up, you want to be short chinese equities and i was like -- isn't that the last four years? that's exactly what happened over the last four years. if i were here in november of 2016 when trump was the winner and i said what would win, traditional or clean energy, everyone would have said that clean energy was the winner by a lot and the exact opposite happened under biden. i had people saying to me drill, baby, drill. if trump wins, we will get back to drilling. but we are drilling more than ever before in u.s. history. i think that people have their own perceptions and confirmation bias that they bring to it, but

when you dig deeper, the trump trade is energy in financials. it did better under biden then under trump and it doesn't add up. jonathan: history, with one specific thing, policy and where we are right now. if you come in now and put up tariffs and walls around the united states of america, do you not see how that would be inflationary if you extended the 2016 tax cuts, boosting the deficit at the time at a time when they have things that people are nervous about, the prospect of inflation re-accelerating and the ability of the treasury market to handle additional supply? brian: and that's the same time that the consumer has counteracted forces with things like ai and an older population. i wouldn't necessarily say it is inflationary. to the market what will matter most is clarity. give us understanding of what this looks like rather than when we did it in 2018, there was

uncertainty with business investment drying up for a while with a lack of understanding over what it would look like. so long as there is clarity, consumers will be able to handle it. look, the reality is that both sides seem to want to pursue something of an america first agenda. there is not a substantial amount of difference with regards to this approach. jonathan: wall street politics all over. brian, good to see you. thank you, sir. let's get you an update on stories with your bloomberg briefing and dani burger. dani: the secret service director is facing calls for resignation. she took responsibility for security lapses that led to the assassination attempt on donald trump and that they were aware of a suspicious person two to five times on the day the rally

and when trump was shot but did not go into further detail. shares of porsche slumping, saying shortage on aluminum parts could impact output by several weeks. the shortage will also cause stock production to stop on some models with a return of sales of two 15%, down from 17, reducing their forecast in china and the proportion of ev's they will sell. warner bros. discovery offered to take advantage of a clause in an expiring contract with the nba, which is on the verge of signing an 11 year deal, 76 mitt -- 76 billion dollars with a broadcast package from two new partners and amazon agreeing to pay $1.8 billion annually. warner bros., which has $40 billion in debt, has obtained a letter of credit to support their bid.

that is your brief. jonathan: thanks for that, and up next we have kamala harris hitting the campaign trail. >> it's my great honor to have joe's endorsement in this race and it's my intention to go out and earn the nomination and to win. jonathan: that conversation, just around the corner. that's up next. live from new york city this morning, good morning. ♪

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. jonathan: live from new york city, welcome to the program. pulling back on equity futures, down by 0.05 percent after a decent day yesterday across the board with supply from the weekly and we bring you those numbers again and just a moment. the 10 year, 4229 one. kamala harris hits the campaign trail. >> it is my great honor to have

joe and his endorsement in the race and it is my intention to go out and earn this nomination and to win. >> the name has changed about the mission hasn't changed. by the way, i'm not going anywhere, i will be out there campaigning with her, working like hell. jonathan: harris has her surpassing and a new tally for securing the top of the ticket and joe biden calling into campaign headquarters to offer his support in his first public comments since ending his campaign. isaac pork and ski says that they continue to believe it will be a close race in that trump is the slight favorite. isaac, let's start with the numbers, following the money, 81 billion dollars raised, 100 billion donated to the campaign since sunday, yet your fundamental view has not changed. why? >> the money that came in for the harris campaign is i think a representation of the relief

that has washed over the democratic party given that biden -- biden is stepping aside and they think they have someone who can prosecute the case against trump in the election. our view of this is that we still have probably seven or eight different narrative changes between now and november 5. when i peel back the onion and i look at the swing states, the ones that will decide the election, those six states, the issues that animate voters the most in those states so far have been immigration and inflation and if that is still the case on november 5, i think that donald trump will be the next president. the caveat here is no one knows what we will be talking about in 105 days. keep in mind it was 25 days ago or so when a debate happened that reset the entire election. we will have to deal with these narratives changing and during a

time of great uncertainty i will keep going back to what animates the swing state voter. annmarie: recent polls show that a majority of americans thought that trump's presidency was a success compared to biden. if that's the case, how does harris differentiate herself? he said he wants to go on the campaign trail with her. does she want him there? >> looked, in certain places, absolutely. he will spend a lot of time in pennsylvania over the next few months, but i think that the harris campaign, got to get used to saying that, it is going to enjoy some of those contrasts. i don't think that there is any example in modern political history of vulnerability like age becoming weaponized this quickly with the switch at the top of the democratic ticket. age was their greatest weakness and it is now the cudgel that they will use to push back

against trump. that is what you are going to hear a fair amount. the fact that trump is a convicted felon. the vice president is a former prosecutor. and we will hear an enormous amount about reproductive rights given that that is the one area you have seen democrats have success animating the voters. >> she has been the face of that for this administration but beyond reproductive rights she was a prosecutor, a vice president, and a senator, but we haven't really understood her core values. what differentiates her? >> at the moment the way i'm thinking about it is i'm telling clients that there isn't much daylight between biden and harris. i think that for harris one administration would look a lot like a biden administration in there is good reason to believe that she's more progressive ideologically than he is, but this has been a relatively progressive administration the last few years, i don't see much of a shift in there.

furthermore, presidents are often limited by the other side of pennsylvania avenue and we firmly believe that the senate will switch republican. what can be done is limited. i think that there will be subtle areas of difference in terms of trade policy and in how they would push forward on the issue of fiscal, fiscal policy and the expiring tax cuts, but it's all subtle compared to how trump would do those things. lisa: markets seem to agree with you, believing that generally trump still has the edge, though it has narrowed slightly. i am wondering though about the bigger issue from some people, that there is new energy in terms of bringing out voters and that that could affect down ballot races for congressional house and senate feeds. do you buy that argument? >> for the moment, yes. look, the most surprising statistic of many over the past

few months has been the yawning enthusiasm gap when biden is at the top of the ticket. 77% of republicans were happy with their candidate. only one third of democrats were happy with biden at the top of the ticket. you will see that gap close. that will have an impact on the house races. this is something that i think is important, the house is going to be close no matter what. that's the reality from the gerrymandered system that we all live in. the house will be plus 10 or 15 seats one way or the other and be very close and in that instance i believe that you are going to have an impact from this and i do think that it pushes back against the red wave narrative that we have all been seeing over the last few weeks. the house will be very close and my bet is that it goes the way of the white house, within a few seats. jonathan: in terms of what you are telling your client base and the investor community, when you

put out a note over this decision there was a line that jumped off the page to all of us , you said focus on electability and not policy. build on that more. what have you been telling clients about that? >> after the disastrous debate performance everyone was trying to parse where the policy differences would be between harris and biden, right? going through her senate record, going back to her actions as ag in california, i don't think there is much value in that because they replace to the top of the ticket on the democratic side not because of policy but because of age and cognitive capacity. the similarity between harris and biden is a feature and not a bug. to me it's a question of how she impacts this race rather than the policy substance. is she able to change the dynamics in georgia and get voter turnout within the black population? which is unclear.

how is she going to impact women and independent voters in some of those swing states in the sunbelt? those things matter more for markets and all of us trying to get our arms around the election and the subtle differences between biden and harris and their policy perspectives. annmarie: that being said, was j.d. vance the right pit for trump? >> at the moment it sure doesn't look like it was. i think hindsight is something that really underscores the humility that all of us should have here, but at that moment i think trump wound up running the score up. he wanted to run up the score in ohio and pennsylvania, michigan and wisconsin with white, non-college-educated voters and at that moment, he didn't worry much about some of the other subsets. j.d. vance really does not help with many of the other voters.

at the moment it doesn't look like the right one but i think it also underscores the importance of who the vice president picks as a running mate and she is going to focus intently on someone who can help her in the swing states to broaden the base. that's why you are looking at josh shapiro, the governor of pennsylvania, or even andy beshear. jonathan: isaac, thank you, sir. based on how the race has gone so far, we will have to wait for that trump change of gp -- vp. you can do what you want here, right? lisa: breaking news? [laughter] jonathan: come on. lisa: there will be a different nominee. jonathan: coming up, tesla earnings a little bit later. ♪

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

the moment i met him i knew he was my soulmate. visit sandals.com "soulmates." soulmate! [giggles] why do you need me? [laughs sarcastically] but then we switched to t-mobile 5g home internet. and now his attention is spent elsewhere. but i'm thinking of her the whole time. that's so much worse. why is that thing in bed with you? this is where it gets the best signal from the cell tower! i've tried everywhere else in the house! there's always a new excuse. well if we got xfinity you wouldn't have to mess around with the connection. therapy's tough, huh? -mmm. it's like a lot about me. [laughs] a home router should never be a home wrecker. oo this is a good book title.

jonathan: yesterday we snapped a three-day losing streak on the s&p 500, which was quite a strong boat -- bounce. equity futures just about turning positive on the s&p. lower on the nasdaq 100 by .1% and .25% on the small caps. the 10 year looks a little bit something like this on the two year, down a single book basis point later this hour when we catch up with ian shepherdson, who thinks this fed is going to

ease more than you think and more than they think. lisa: the number of people lining up behind him, they pointed to fed models that put the neutral below 1.5% as opposed to the current 5.5%. if that were the case, it would suggest what shepherdson is talking about, a much more dramatic rate cutting cycle. jonathan: look out for that chat with him in just a moment. switching up on the border, looking at the strength we are seeing in the yen for the second session, the dollar-yen is down with all of this chat and talk, bigger conversations about rate hikes in japan. we published this story here today from tokyo. bank of japan officials are seeing weakness and complicating a decision over whether to raise interest rates next week, at least according to people familiar with the matter. lisa: they are dealing with an

economy that seems to have the inflation required to normalize policy rates for the first time in however many decades, but this will be difficult because if they are seeing weakening trends, how do they justify it as opposed to saying it's just a currency move? essentially it's a recognition of the difficulty they are facing because the yen has become weaker and maybe that is enough to placate that fair currency. jonathan: does this speak to the lack of strategic views at central banks leading them to become hypersensitive on one data point here, there, and everywhere? if you didn't take a strategic view, the date it wouldn't matter much, would it? one hike at the boj, does it change things? >> absolutely not. everyone saying be humble? i'm feeling humble because everyone has gotten it wrong and you could make a strong argument for this market being ready for surging inflation with this being a pause before something

more significant if you could make a legitimate argument that we are seeing softening that will get dramatically worse later in the year. you could make either argument looking at both sectors and i would believe you. i understand the humility and the difficulty coming up. jonathan: i don't know about anyone who hasn't been humbled at some point. under surveillance, top stories, the first one is kamala harris closing in on the democratic nomination with an unofficial telling from the associated press, getting the required number of delegates to seal the top of the ticket. in milwaukee, the rnc held the convention last week. annmarie: she will be in and out of that state a lot over the next 100 or so days but what i found interesting was not so much her showing up, but senator tammy baldwin showing up. she wrote a letter a few weeks

ago expressing concerns over biden being at the top of the ticket. if kamala harris is not able to her self win the election on november 5, potentially she could help down ballot, which is what we hear about these crucial seats in swing states. they were concerned about biden ruining the ticket. jonathan: that's what we heard from chris, down ballot it's good for democrats, the house and senate became more interesting. possible but far less likely for the gop with biden as the nominee. let's talk about the race between trump and harris. making this point, can she make this a choice between harris and trump? or is this still a referendum on the biden administration that she is a major part of? annmarie: it depends and it has to do with what voters care about right now, but to the point of isaac, does the narrative change? we've seen those changes in the election cycle with the top

issues being immigration and who they trust more, so they go to trump. if they vote on their top issue, this looks like trump has the leeway and is ahead on these crucial issues. but she is going to lean hard into women's reproductive rights, which we have seen as a winning issue in the midterms. lisa: the reason why i'm so interesting -- interested to see how republicans coalesce to attack kamala harris, seems like there are counter forces in terms of what to go after her with and i think that will be telling in terms of its of a referendum on biden or something else. jonathan: big questions that we will all be asking over the next four months or so. trouble for delta, they have customers expecting more cancellations this week as they try to recover from the tech outage, grounding almost 4700 flights in the last four days when most other airlines resolved their issues by sunday. this does not look good for them, does it?

lisa: i want to say that for all the people who have been stranded, i feel for you, we have all been there, it's a horrible feeling and it's happening to so many people looking for hotel rooms, waiting in long lines. this is a disaster. why? the crowdstrike outage hit the crew organization charts, essentially. getting it all together has been complicated and difficult to get up to speed. it just goes to show how airlines were kind of dancing on a high wire. on the one hand, they may have raised prices too much for the rank-and-file consumer but on the flipside, they are on the hook for big costs, judges coming out saying you got to pay more, do more, complaints that they are not doing enough. lisa: when you are left stranded, somewhere like avante -- it's a horrible feeling. jonathan: those videos out there

of atlanta from the last couple of days? brutal. you said this on friday, the biggest difficulty for the airlines is finding out where the airplanes in the people are. over the weekend they clearly did -- other airlines clearly did a better job -- better job than delta. gm, rising in the premarket big time. the numbers dropped just moments ago. lisa: why did they do it -- do better than expected? because of gas powered trucks. going back to what they do best, the gm truck, really highlighting just how much maybe some of these companies are going back to their roots to get the earnings that they previously expected. earning $3.06 per share, up from $1.91 a year ago. talking about ups going down 30% in revenues? you are seeing a doubling in income at gm as they adopt the

hybrid model of sales. jonathan: that's a keyword, they've had to pivot big time over the last 12 months. tesla a little bit later. we've got more now from london. we just had general motors and as lisa said, it has been tricky for these legacy players to make the trade. what are we expecting to hear from tesla? >> it's going to be interesting. we heard them beat expectations for vehicle sales with a huge move in the stock as a reaction to that and if you ducked through the numbers, you notice that -- my goodness, the consensus came down in a dramatic fashion in what we have seen with the earnings estimates is something very similar. looking at revenue, margins, or just earnings in general for this company, the expectations, the bar has been lowered in a

dramatic fashion. eps has been cut in half over the last year. it will be absolutely interesting to see how the numbers are taken, of course, but as we all know with tesla, more so than the numbers what matters is what elon musk has to say and what has been remarkable this year is the deterioration in fundamentals for this company that has been just absolutely overlooked over the last few months as elon musk has leaned into his ai messaging, his robotaxi promises. that's been effective in moving the shares and staging a massive recovery. lisa: the latest is humanoid robots. you phrased it beautifully, it shows how tesla is often viewed as a car company, a company of hope and technological prowess that never seems to come on schedule. at what point are we going to see the nuts and bolts of a car company, a true died in the wool

car company like general motors showing the differential between gm and tesla that is still riding out a lot of hope? craig: i think it's interesting. i'm reminded of a few months ago when tesla put out an earnings presentation and alluded to the idea of their competitors sort of pairing back their plans for ev's reinvesting in hybrids, pivoting back to hybrids as gm has, tesla coming out and sort of speaking, taking a stance on their competitors saying that they believe that this is the wrong call. i think we are seeing left and right companies only adding to those decisions to make that call that tesla has come out and criticized and it does make you wonder, with tesla, you would not have thought that this could possibly be within the realm of possibility, but just this week elon musk talk about the need

for oil and gas for civilization. i never would have thought i would see that coming off of his twitter fingers. i guess not out of his mouth. but he has talked about this idea of being realistic about, you know, the, what's needed in the future. for him to so dramatically change his messaging to kind of fit with the change in his politics, that will of course be something we are listening for on the call. to what extent do they press him a bit about his political transformation? jonathan: can we step back to talk about the developments over the last month? the carryover for the stock was robotaxi. we had reporting here on bloomberg that the robotaxi announcement wasn't happening and then we sat here waiting and waiting for pushback from the company, a pushback i didn't see. are we going to get clarity on when we could hear from them?

craig: we did get confirmation from elon musk that he asked for a change to the design of these prototypes. he did not specifically confirm when, exactly, the event will be staged. there's a lot of expectation on the basis of our report that it will slip to october as we had heard. but of course, i think that musk is also the ultimate showman and likes to really keep pressure heaped on his team. so, i think it is an open question whether or not he in the last few days, week or so, said i was going to give you until october but now it's september. that will be something that people are keen to hear more about. it is not just a matter of staging the event and living up to the hype he has built up over the last few months, but also

really having something to show in terms of a business plan, taking these from the prototype stage to actually building a business, which i think will be a lot more difficult than the market is baking in here. jonathan: tesla is up in the premarket by something like .75 percent. that stock has ripped off the bottom this year, up by 70% plus . elon musk had a major win, a massive win sunday afternoon in delaware. why? the president did not address the cameras, he did not put out a statement in the way that you might anticipate, where did it drop? on x, the platform formerly known as twitter. we can talk about his management of that platform but when the president made a major political decision, historic in 50 years,

he chose that platform. lisa: bottom line, want to distribute things en masse, that's a way to do it. there is still that question, why was it done that particular way? annmarie: open question, it's on the president. we haven't seen him from -- since july 17. it was awkward with trump out there embracing musk, so excited that he's donating some $40 million a month to his campaign, kind of weird that biden would then give musk a win and make this major historic announcement on his platform. jonathan: it's a big win, that's for sure. here's dani burger with your bloomberg brief. annmarie: ups sliding into the premarket down more than 7.2% with soft demand for packages leading them to fall short in the second quarter, grappling with higher costs from the teamsters union contract.

the shipping giant trimmed their outlook while restarting a buyback program, turning one million dollars annually. spotify reported moments ago that shares are soaring in the premarket, up 4%. they had big gains in subscriber growth with paid subscribers growing to 246 million, beating estimates. even though spotify has been rolling out price increases, they've been able to add subscribers with a premium plan that currently costs 1199 -- $11.99 per month. they have reduced workforce and are pulling back on podcast production. there is a projected 23 million dollars takeover bid from alphabet, with a plan to go public. their parent company offered to buy it in in effort to catch up with microsoft and amazon in the competitive crowd source crowd service market like aws,

scanning for security and risks. alphabet did not immediately respond for comment. they are reporting earnings after the bell today. jonathan: up next on the program, a tax flight on the horizon. >> if you are focused on what the platform is going to be, call up the house democratic ways and means committee members, they voted on this bill years ago and it was signed, sealed, delivered for kamala harris. jonathan: that's up next. you are watching "bloomberg surveillance." ♪

jonathan: the biggest day of gains in a month on the s&p 500 so far and in yesterday's session things were just about unchanged on the s&p and in the bond market. down to four to 2.71.

a tax fight on the horizon. >> we can talk about the kamala harris position on taxes, but frankly she wasn't on any of the relevant committees and doesn't have the authority to write the tax bill in the first place through the constitution. if you are focused on what the platform is going to be, call up the democratic ways and means committee, they published this bill several years ago and it was signed, sealed, delivered, ready to go to kamala harris. jonathan: here's the latest, kamala harris mapping out her agenda, with the trump tax cuts set to expire at the end of next year. "we assume that part of the tax cuts will expire next year but the revenue raised will be offset by spending. in this scenario inflation falls , dipping below the target in the second half, prompting much faster fed easing than the

markets or policy makers expect. let's get straight into that. the numbers, when you say more than markets and policy makers expect, how much more? what are you thinking about? in: potentially quite a lot. the fed is late and they need to be cutting already. they should have been cutting months ago. the inflation picture is much better than they think, lower than their forecast from back in june. potentially another boost before the end of the year. cutting all the way through 25. how low do we need to go to prevent elation from falling below the target that is sub 2% expectations. i could easily see them cutting 150 further into thousand 25 after cutting more quickly in the second half of this year. yeah, we are aggressive on this and it's driven by the inflation forecast.

assuming -- annmarie: assuming that those tax cuts expire next year, what's a base case from congress to get to this result? i don't have a -- ian: i don't have a sense of how it's going to end up, anyone who says they do is a bit delusional, but you do have to assume something when you make a forecast. the only sensible starting point is to say there will be no big policy changes. if by the time the election gets nearer and we see more polling that it is blindingly obvious that things will go one way or the other, you have to change your forecast to reflect the most likely i've come, but after the weekend everything is completely up in the air. one week ago, it was becoming much harder to assume no change in policy, it seemed quite likely that trump would be back in office and that republicans would take the house and senate.

in that environment you will get a very different policy and i was on the verge of thinking that the base case forecast needs to change to reflect this. for now, i think you know, you could generate 100 different scenarios working that out, but it makes no sense given that we don't know. unchanged policy is what drives the interest rate forecast for now, but it may will change a lot. lisa: regardless of who wins, the deficit is still a concept of the about. we are still looking at the occasional indigestion that inflation will increase regardless of why it's not inflationary. why ongoing disinflationary even in that environment? ian: well, it was, given hindsight, with the stimulus leg

being too big and precipitating an enormous increase in retail markets, directly pushing up on inflation substantially. that is now pretty much over. on an incremental basis, remember when you look at the impact of the deaf a set, you have to look at the increment going up a level with the deficit being stable next year, depending on the policy changes, but what it isn't doing is jumping higher like it did during pandemic, re-triggering that part of the inflation from covid and afterwards. that element of the inflation story is greatly diminished. if policy carries on as currently written, which may change, but as currently written i don't see an incremental threat. i see margins beginning to recompress back towards normal. it will take a long time but they will get there eventually and at the same time we have slower wage growth in the market with oil prices and that supply

chain chaos being done. really, i see benign inflation and i do understand why the fed has been so cautious over the transitory fiasco. they want to be absolutely sure for they start easing but i'm getting close to the point where i think they are too late now. lisa: people are watching this and they are throwing things at the screen, i know, sometimes they call me after the show, asking how people can even say that this disinflation will be sticky because in the corporate health pictures we have a strong and robust economy with gm reporting better-than-expected earnings and record revenues with big sales of major products. how can you say that this sort of disinflation is going to continue when there is this consumer spending with pent up demand and some people arguing that the disinflation we have seen so far has little to do with the fed, it's simply normalization after pandemic? ian: i have sympathy with all of

those views. making it clear, i don't think that inflation is collapsing, i think it's on a sustainable downward trend. it not being due to the fed? i think that's true until recently but now we are in an environment where the lack of effective fed actions are beginning to kick in and consumer spending has been much weaker, growing at a much slower pace than in the second half of last year and that is a really material change in the environment. i don't have a recession as a base case forecast, but i have sustained amount of time of cysts -- significantly slower growth with a squeeze on the smaller sector, different from what's going on with gm, the squeeze is quite intensive. small businesses across the country are employing roughly half the workforce and paying 90% for their money. it's a very aggressive squeeze. jonathan: what's your forecast for unemployment, your end?

ian: 4.5%, 4.75%, not where it is now but heading in the wrong direction. jonathan: not much higher than for the fed thinks it will be. ian, thank you, sir. the fed has got unemployment at 4% year-end. the difference between 4% and close to 5%, that's a big difference. start pushing five and you get bigger recession calls. lisa: this is the reason that the thursday jobless claims actually matter quite a bit. with the implications of the hurricane or if it is simply a gradual and gradually faster weakening of the labor market. jonathan: how much weakness is there? delta saying things are not great, gm saying things are pretty good. democratic congressman jay gotkine class of massachusetts,

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.

>> we are not changing our election odds, we are not calling for a major market collection. we could see us stalling out of the trump trade. >> we will still have a deficit, we will still have high government spending. >> regardless of which party wins we were looking at big fiscal deficits. >> the reality is this is a big

pocket of uncertainty. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: the three pillars of this program over last month, the politics, the economic data, and now the earnings. after the closing bell later big tech kicks off. we hear from tesla and alphabet. this morning already hearing from these three. if you wanted a clean read on earnings in america i cannot give you one. gm, people are buying trucks. might not be buying flights but they are buying trucks. ups, i think the word you might hear from lisa is idiosyncratic. as for coca-cola, the numbers were pretty good in the face of pepsi numbers which were not so good. those three names. let's make sense of earnings season this quarter. lisa: good luck. the soft data is as confusing as the hard data.

let's dig into it. ups has been dealing with a new contract with its union that has tied its hands and led to a restructuring. one of the reasons they say we are on the upswing here, they reported a real decline in earnings, something like 30%. gm, record revenues in the first half. this as there are increasing reports about dealers discounting cars and trucks to move them off their lots. and then coca-cola coming in better than expected. it is confusing even if you listen to what the companies are saying. jonathan: week ahead for earnings, take a sneak peek. you'll hear from tesla and alphabet. we will hear from microsoft next week. we will hear from meta, apple, and amazon. you have to wait until august for nvidia. that is the focused at a time when many people have been

entertained by this massive rally in small caps. lisa: at a certain point it comes down to the nuts and bolts of what big companies are doing. what we have heard from guest after guest is the big companies will do better regardless of what happens or who is in office or how much the fed cuts rates. if it cuts rates allots it means -- this year -- this week more than 20% of the s&p 500 will be reporting. i wonder if this is when we see the pivot away from the noise to what actually is happening. jonathan: the noise of this program means politics so let's talk about the politics. let's start with the numbers. in 24 hours, $81 million raised by the campaign for harris at a time when money had completely dried up, donors had stepped back from president joe biden. the last couple of days since

sunday, more than $100 million has been raised. annmarie: and 60% of these it is the first time donation into the 2024 cycle. people are feeling excitement she is going out. donors in the past month pretty much evaporated because no one knew if they would be donating to a campaign to nowhere. there were lots of calls for the president to step aside and not seek reelection. she has this restart. a lot of questions remain. she will get the nomination. they will likely bring up the virtual rollcall so they go in with the ticket to august 19. how does she reestablish herself? because she is attached to biden will that work with swing state voters where biden is ahead -- where trump is ahead. jonathan: let's talk about biden. there is still governing to do. the israeli prime minister is here and there are conflicting reports about when they are scheduled to meet.

we have not seen the sitting president since last week. annmarie: july 17 as last time we saw him leaving air force one when he was going to depart to delaware for isolation. we will see him today. his schedule says he is set to come back to the white house. benjamin netanyahu's team said the meeting was supposed to be today. we are hearing it will be on thursday, which means likely tomorrow. before he sits down with netanyahu he needs to sit down with the american people. the american people found out -- found out the sitting president is not seeking reelection through a letter. there were questions about why that was done. he will have to get in front of the camera. lisa: benjamin netanyahu is also meeting with kamala harris in a separate meeting and there are real questions about who will be pulling the strings between now and november. jonathan: equity futures on the s&p positive .1%.

let's get into the bond market. yields are lower four basis points the dollar snapping back. dollar strength against the euro. we are negative about .25%. coming up we will catch up with ed yardeni. we will speak with congressman jake arkin because as harris strengthens her hold on the ticket come in jill carey hall on the bullish case for small caps. the s&p 500 snapping a three-day losing streak as investors reassess election risks. ed yardeni writing "the second presidential term for former president donald trump still looks likely. for now the financial markets are uncertain has to how to prepare for trump to point out -- for trump 2.0." how can there be more than one consensus? ed: there are several financial

markets and among the financial markets there are different views. in the commodity market there is quite a bit of weakness in copper prices. there is quite a bit of weakness in oil price. oil price has been remarkably subdued in the face of all of the geopolitical risk. on the other hand the stock market does suggest things are just fine. some of the differential is the commodity market is looking at things more globally, whereas the stock market, especially if we are looking at the nasdaq is looking at things more locally. that is part of the virgins. -- that is part of the vergence. in the fixed income market we have a vergence. the fixed income market is looking at something like five rate cuts, yet the bond yields

held up remarkably well at 4.25%. i don't think we've been discounting the possibility of rate cuts the way the fed funds future has been discounted. a lot of opinions in the financial markets all over the place. jonathan: given the fact that we have three different asset classes, do you think those three worlds can coexist? ed: the answer is something has to give. there will only be one scenario that unfolds in the scenario that will unfold is more of the same. i think the global economy is muddling along, it is hard to get excited about anything happening in europe. the chinese economy looks downright weak. i think they still have a property depression they just cannot really seem to offset with easier monetary policy. just yesterday they lowered their interest rate and the price of copper went down.

that is not a real vote of confidence in the government's ability to deal with the chinese weakness. on the other hand there is no recession in the u.s. the u.s. looks fine. atlanta fed reading on gdp is 2.7%, which is very good, and inflation is moderating. it is an ideal scenario for the stock market. jonathan: the roaring 20's come back. you are one of the first to talk about the roaring 20's. a lot of people have gotten on that boat and met you and some of your forecasts which you brought forward as we have seen markets increase at an accelerating rate. at this point there is so much disagreement about whether there can be a broadening app in this rally or whether ultimately the blip we saw over the past couple of weeks in big tech come in some of the growth stocks is a buying opportunity to double down because those will be the winners no matter what. ed: i think they are going to be

the winners no matter what. i do not think they can be sustainably the winners unless the market does broaden out. it is my pet theory that in the roaring 20 20's every company is a technology company. they either make technology or the use technology to increase their productivity. there is still a significant shortage of labor out there. there are a lot of technologies that can boost productivity, cut costs. if you do not use those technologies and your competitors do you will be out of business. i think we start the productivity growth boom last year and it continues through the end of the decade. i think margins go up and profits goes up and the stock market goes up in that scenario. lisa: given that as your base case, how you interpret a very different view from company to company on what is going on the

bottom line? you have ups talking about following package volume in the united states. you hear from the airlines. their hands are tied in terms of how much they can increase prices. we have heard that from some snack food companies. how do you understand differing messages depending on which company you look at? ed: i certainly look at the individual companies and try to start from the bottom up and see how that all adds up. at the same time as an investment strategist and macroeconomists i also do the exercise from the top down and see where they meet in the middle. what i see is overall earnings growing in line with an economy that is doing fine. analysts are expecting earnings to be up 8% on a year-over-year basis during the second quarter. i think they will commit at 10% to 12% on a year-over-year basis.

that is the reason we had a strong stock market in the first half of the year. i see signs the goods economy is bottoming. we have had a recession in the goods economy as we see things are starting to improve in that area as consumers start buying goods again. still buying services. jonathan: ed yardeni. apparently not paying enough for flights which i'm struggling to get my head around. i am still struggling with that one. the airline's capacity has gone up too much, flight costs have gone down, then we see the seed is in atlanta with all of the canceled flights. these planes have been packed all summer and i did not see a

real identifiable drop in ticket prices. lisa: not when you look at certain popular routes. we look at certain domestic routes that is what people are saying. you see that when you look at pretty esoteric cities. you can see the prices go down more significantly. i will not share those. jonathan: you can share that in the commercial break. equity futures on the s&p positive .1%. let's get you an update on stories elsewhere. dani: gm shares higher 4.6% in the premarket. they topped forecasts. profits surged 60% from a year ago thanks to demand from its gas powered pickup trucks and suvs in the u.s.. on the other hand there was a slowdown in sales growth for eb's which are losing money. it does highlight a pipit away from eb's -- from ev's into the gasoline fueled cash generator. shares of coke are higher 1.1%.

it raised its guidance and reported comparable earnings-per-share that beat estimates. the company says it was encouraged by its results. coca-cola's results come in contracts to pepsi, which reported weaker than expected revenue and tempered its annual outlook. general electric reporting a jump in second quarter profit, shares up 2%. it raised its guidance for cash flow for the year and profit. the jet engine manufacturer capitalized on strong demand for the busy summer travel season. it also become an independent company in early april. it was able to navigate consistent turmoil in the aerospace supply chain, responding to strong demand for maintenance and spare parts as aircrafts age. do not miss our interview with larry culp, ge chairman and ceo. jonathan: must watch conversation with guy johnson later in the program. up next, democrats charting a path forward. >> vice president kamala harris

has excited the community. she has excited the house democratic caucus. she is exciting the country. jonathan: the money over the last couple of days has followed. from new york, that is next. this is bloomberg. ♪

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

godaddy airo. creates a logo, website, even social posts... in minutes! -how? -a.i. (impressed) ay i like it! who wants to come see the future?! get your business online in minutes with godaddy airo jonathan: live from new york city, welcome to the program. equity futures on the s&p 500 shaping up as follows. we are little bit firmer on the back of the best day of gains on the s&p 500 since early june. yields on a u.s. 10 year look something like this going into supply later on. your tenure at the moment, yields lower two basis points at

4.23. that is the equity market. let's get to earnings. later we will hear from alphabet and tesla after the closing bell . those two the starting gun for earnings. next week look something like this. let's go through the next week and look at the likes of alphabet. later on to amazon and microsoft. next week meta and nvidia. lisa: the question is can the shift in conversation past the two pillars we've been talking about obsessively, being the politics, which has dominated conversation, and the economic data which does show a gradually weakening but not necessarily an economy falling off a cliff. what we have seen is pretty good. we have an analyst coming on that shows a beat is just a meet. if you see companies meeting expectations that will be viewed

as a time of increased expectations. michael: let's check out -- jonathan: let's check out the premarket movers we have seen so far. we heard from ups. we heard from gm in the last hour. we also heard from coca-cola. let's compare and contrast coca-cola to pepsi. coke was decent. pepsi we've been talking about consumer struggling, backing away from snacks. coke reports and you do not see a big problem, up about 1%. lisa: net income to point $.50 a share. being the forecast and having a more positive view of the world. but we are seeing -- i don't want to say idiosyncratic but i will say idiosyncratic -- certain stories coming to roost in a good way or bad way. ups union contracts eating into profit revenues.

the gm pipit back to gas fuel trucks helping to support record revenues. the time for this earnings season to not start well. it started with delta. we had all seen the airports absolutely packed. they talked about additional capacity at a time we cannot secure enough boeing airplanes and they talked about lower ticket prices. i want to cross over to bloomberg's guy johnson. i want to understand about the capacity issue some of the airlines are struggling with at the moment or whether that could get worse if boeing starts to get the job done and starts delivering planes faster? guy: you have to remember that the airlines are flying a lot of older aircraft. if they can start getting the newer aircraft in they will replace much of that. they will retire some of the older aircraft we are seeing. if you want evidence of the older aircraft -- take a look at

delta, which flies one of the older chief -- we will be talking to larry culp very soon. one of the reasons larry culp seems the stronger numbers -- the maintenance business is strong. the carriers are flying very old aircraft right now and that is boosting his bottom line because they need to have extra parts and that is helping him out right now. in some ways we are seeing older aircraft continue to fly. that is good news for ge. if boeing gets its act together and is able to start delivering narrow bodies you will see a lot of these airlines ring those aircraft in quickly. it is unlikely to happen this summer. it is too late. this will be a story for next year. lisa: i want to get your view on why we are hearing such different messages or conflicting messages from the airlines. you're talking about larry culp,

ge benefiting from the fact that older planes are being flown in the question over whether boeing can get its act together. will boeing tapped larry culp to get itself together? guy: that is not going to happen. larry has continued his contract. you will be at ge until 2027. that ship may be has sailed. he is not on the list for the boeing job right now. i will ask him about it and why he will continue at ge but he is managed to turn this business around. this is a company that spun out a lot of it's component parts. the jet engine business. this is the largest jet engine business in the world. this is almost a new business we are seeing on its own. he will probably continue at ge. the contract has just been renewed.

looks like the provement team at boeing will have to look elsewhere for a candidate. ge continues and today was a beat in the race. he is managing to deliver what he promised to set out for. the stocks are up in premarket. lisa: there are people listening to you saying he will still be the guy. they are saying who would be the person to run it, larry culp and only larry culp. in the airline industry, can you give us a sense about why we are hearing from airlines that they do not have the same kind of pricing power and they are about filling their flights at the same time our empirical evidence seems to suggest that flights are completely packed and it seems like people are traveling as much as ever. guy: the long haul business is still relatively strong. i've spoken to a number of long haul carriers. the message is there continuing to see strength.

if there is weakness it is the narrowbody end of the market where there is greater capacity. that is where you obviously have business models that require high yields. that is where the legacy carriers, let's call delta the legacy carrier having to compete with the likes of alaska. that is where the real competition is. if there is a crunch point that is where it is. you look at an airline like delta. it is flying in older fleet. ed bastian has ties to aircraft. he has already paid for those aircraft. he has the capacity to lower prices and be more dynamic in terms of his pricing. the aircraft are paid for and is he did not -- and he does not have to keep theirs as high. that is where the competition is and it is interesting to see

ryanair suggesting similar things are happening in europe. if you look at the back end of the statement, demand is strong. there is a capacity story in europe as well. we will see how that story develops. annmarie: i also notice this airshow is not immune to u.s. politics. glenn youngkin was there. donald trump calls him prime time. is there a sense he is are trying to get ahead of the election and get in front of each camp? who are they betting on? guy: uncertainty was a word i heard a lot yesterday and continuing this morning. i spoke to the ceo of airbus and he is kind of hoping the alabama plant he has. will be able to insulate him from a tariff story. everybody is talking about the potential for tariffs. this is an industry that has been upended by supply chain issues. you throw tariffs into the mix,

that can only compound the issue. a lot of these big manufacturers , they are reasonably geographically diversified. maybe that does not become a problem. the uncertainty is huge. the other factor is the defense side. take a look at what is happening with ge. low bit of weakness. if trump comes in does the fed spending start to creep higher? jonathan: looking forward to the conversation later. guy johnson sitting down with larry culp of ge. the first question, do you want the job at boeing. lisa: the first thing he says as he does not want the job. like he will say of, -- jonathan: 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: welcome to the program, futures just about positive by 1/10 of 1% on the s&p. let's get to the bond market. yields look a little something like this. your 10-year, 4.2291. going into the doj meeting in the next month, big conversation about whether we will get rate hikes or not. we are down about 6/10 of 1%. that's the price action come here are your top stories. cap -- crowdstrike ceo being

called to testify before congress: the defective software update that caused global i.t. outage house committee asking the company to probably schedule a date. your next story, tech earnings kicking off after the closing bell today starting with alphabet and tesla. analyst selected to focus on the google parent company ai revenue and pressing tesla's for answers about the delayed robotaxi rollout. and the harris campaign finally receiving more than $100 million in donations since sunday as an unofficial av tally shows are securing enough delegates for the democratic nomination. speaking at her campaign headquarters, harris saying i am proud to have secured the broad support needed to become our party nominee. i look forward to formally accepting the nomination soon. i'm pleased to say that joining us is demerara congress and jake of massachusetts. you've been a big supporter of the president. you weren't one of those that came out and asked him to stand down, you are one of those who highlighted the successes, his

track record of the last 3.5 years which makes me wonder how confused you might be that given how good you think that track record is been, why people within your own party have forced him to step aside. >> thanks for having me on. general elections are won or lost when the terms of the debate are set and the terms of the debate previously where that president agent acuity. with kamala harris taking the torch, the terms are the future vs. the past, rule of law vs. the law of the ruler, donald trump's obsession with the grievances of the past vs. the possibilities of a strong american economy. these terms debate democrats will win. lisa: do you think it was appropriate that the president told the american people through a letter and we have yet to hear him address the american people? he is a sitting president. haven't seen him since july 17 and he has yet to give remarks to the nation about why he is stepping aside. >> the president laid out his decision in a thoughtful and

well-crafted letter and he's going to address the nation this week, i believe. i think he is going to do what he has always done, which is put the country's interest ahead of his own, which is a stark contrast to what we see from donald trump who rather than cede power, incited an insurrection and caused the deaths of officers in the line of duty. they contrast will not be lost on the american public. lisa: but at the moment there's a lot of questions surrounding why we have yet to see him deciding to do the three letter. is your understanding that he didn't drop out, more of your colleagues in congress were going to come public with their concerns about his age and mental acuity? >> i don't think an gesture about the past is particularly fruitful right now. we have our nominee. the focus is how do we sprint through the next 100 days to wear this election because the contrast now is going to be on democrats at the party of the will of our, as americans

intuitively understand with applicability, without law and order, we cannot thrive as an economy and as a civil society republicans of nominated a convicted felon, they're trying to surge guns onto our street and into our schools. the democrats are the ones that the american public in trust to uphold the law, and that will be the conversation. lisa: does this look like physically a coronation of the vice president? the wall street journal editorial board pocket of the country is now losing the chance to see a genuine and rocket party debate unfold. she is running by acclamation among all the democratic party insiders and money men who swung behind her. how concerned are you that this looks like a coronation of vice president and not like a democratic process? >> i like competition in business and in politics. i think the democratic party should not be afraid of it. we should have an open and transparent process to choose our next nominee, but kamala

harris can help it if everybody endorses her and she gets the majority of the delegates within the first 20 four hours and she sees a surge of base port. she's going to compete hard, she said she was going to earn it and win it. she has earned it, now we have to make sure that she wins the general annmarie: there is this question of how can the democrats be the party of democracy if they fed on a president to run again and just months before the election date, he was pushed aside and somebody else was brought in. it raises questions about the democrats view on the democratic process of election. how do you counter some of those real concerns that people have? >> i think that is a flawed premise. i was here in the chamber on january 6, i've seen what a coup looks like. the democratic party is designed to win elections to effectuate policy that helps american voters. joe biden one the delegates. he then decided i'm going to step aside. the delegates were unbound, free

to choose whomever they wanted to carry the torch and they chose kamala harris. that is exactly the way the delegates are supposed to have another democratic party rule. voters are going to see a choice between harris and trump, they will have a final determination of whether they like that choice, and i'm confident that since 70% of americans previously said they want a change of the top of both tickets and only democrats have responded by actually doing it that they are going to choose, harris. lisa: this also a lot of concern about what people don't know and i think that is what the debate will be highlighted for a lot of people. what art receiving about the state of the current president who still has to rule until early next year regardless of who wins the white house? at what point can you truly allay those concerns at a time when we haven't seen him and there is this fear that it is something more that caused him to withdraw been simply pressure that has been mounting for a while and that he was pretty defiant in the face of? >> i know a few days is eternity

in the media but we actually have seen him a lot over the last month. we saw him on the debate stage, we see him at rallies. most importantly weeks in his track record of the last three and a half years. this president took an economy that was flat on its back and we now have strong jobs and inflation numbers. this president has restored u.s. mobile leadership, protecting civil rights and democracy at home. americans can see the track record in americans like the policies and that is what harris is to be able to run on now we put the agent acuity issue to bed. we have the policies front and center, a dynamic anthony, and we are going to win. jonathan: you just said that they liked the policies. can you point to the polls were shows up? >> medicare negotiation of drug prices, investing in infrastructure, the chips and science act to turbocharge against china, the electoral, bipartisan saver communities act that is up put homicide. jonathan: that is a long list of

issues, a successful part of the ministration, but he was behind in the polls to such an extent, the leadership within your party ? the ticket. it just feels like this conversation feels like we are in two different realities. let me just finish up. i felt like that was needlessly snarky. this is not about the news cycle, this is about a sitting president of the united states that chose to make one of the most consequential decisions of his career on twitter on sunday and we not really heard from him since. i find it odd that you don't think that is strange. >> it's tuesday, he issues a letter on sunday. he's going to address the nation, he laid out his reasoning. this country over the last 250 years has seen some of its most consequential moments described in print. there's nothing that is an affront to the american public about laying out in black and white texas reasoning he will address the public and most importantly he has demonstrated to the public over the last three and a half years that not only can he be president but he

can be a top 10 president in american history. jonathan: so why isn't he running? >> he isn't running because the concerns about his agent acuity are undermining his ability to beat donald trump and undermining the constituents' confidence that he can discharge the duties. jonathan: they are the concerns that your colleagues have, correct? from within your own party? that's not like something that has come from the media, it is officials. >> absolutely, i've been very clear about that. jonathan: if you believe the policy is more important than his age, i just really struggle here. you've come out a few times and i've seen some of your comments previously, this track record of policies, the policy for last three and a half years. don't you think if the public office policies were that good we wouldn't be in this position to begin with? >> no, get the public was focused on the president agent acuity. we now have a different candidate at the top of the ticket and elections are about the trip. what we are going to say to the american public is look at what we have accomplished over the last four years, with take us

forward as we debate tax policy in the next congress, as we debate immigration policy, as we debate reproductive freedom in the next congress and let's demonstrate that we can make this economy work everybody let's demonstrate that we can continue to heal our democracy after the degradations of the trump administration. an old truck is going to be able say is that same spe of grievancesw and egocentric limitations that we heard from his convention speech where he tried to go for 20 minutes and sound statesmanlike and he couldn't get past 10. annmarie: if it is your own colleagues, the elder state individuals of your democratic leaders, pelosi, schumer, if they are the ones concerned about his age and mental acuity, then should the president step aside, how can the american people be confident that he can fulfill his duties for the rest of his term? >> he absolutely should not step aside, this president is fully able to be commander-in-chief. we've seen him walk a tightrope in the middle east, protecting

the security of israel while not allowing for regional conflagration. we see him rally nato to ukraine. we've seen combined together south korea and japan and the philippines and australia to help counter chinese belligerents in the indo pacific. this president is a highly successful foreign policy president who has also implemented monumental domestic policy legislation. he's demonstrated he could do the job. he's 81 years old. voters had concerns about his ability to do the job for four more years. democrats listen and put forward a younger, more dynamic candidate and now the republican party is going to have to claim why they are not doing the same thing because 70% of americans wanted a difference at the top of both tickets. jonathan: appreciate the stern defense, thank you, sir. a stern defense of the president of the united states and some of the comment that think you heard, we are going to hear that a lot on the campaign trail over the next three and a half months. annmarie: republicans already sanctified and cannot seek reelection that he should be stepping aside and there's a lot of concern that we haven't for

almost a week. it was july 17, last wednesday when he stepped off air force one, went into isolation in delaware. there was this phone in to the harris campaign headquarters in wilmington yesterday, but we have not seen them on camera. and the reason why this is concerning it because he ran an entire election on camera. this was during the depths of the pandemic when people resuming in. so we have seen him take to his house to hit the airwaves. why did he decide to do this via letter? lisa: we will be hearing from him presume we were seeing him today. there is also this question of is this going to be really election about age? and if that is going to be the case, can the democrats pivot this around and now he is the oldest candidate ever to run for president and he needs to take a mental acuity test, etc.? you see how this goes, it goes to wonderful, beautiful dirty noise. annmarie: annmarie: i think annmarie: it was nikki haley who said whichever party dumps the 80-year-old candidate is the party that is going to win. that was from nikki haley who wanted to be at the top of the

republican ticket. but now everyone is just replaying that sound because the democrats are the ones to dump first there 80-year-old. jonathan: things can change again, they changed a lot over the last month, that's for sure. with your bloomberg breeze, cross over to dani burger. dani: prime minister netanyahu says prospects for a hostage deal with hamas are improving. he spoke while in washington as its first foreign trips and for conflict began almost nine months ago. netanyahu is scheduled to meet with biden on thursday. three day later than originally planned because biden has been isolating with covid-19. the first etf's investing either for maker treating bayview today. regulars have approved etf's according to filings in statements from asset managers that paved the way for the training. it is yet another landmark for this etf industry after spot bitcoin funding debuted in january. several issuers like blackrock and fidelity are partially or completely waiving fees, however

analysts to expect that either won't draw as much demand as its bitcoin counterpart. ups shares are sliding in the premarket trade, 7.7%. it reported profit that missed estimates amid heavy cost and unneeded demand. soft demand for packages led them to fall short of those second-quarter estimates. also grappling with high cost from a teamster union contract, ups says those costs will be frontloaded. the shipping giant also trimmed its for your outlook and is going to restarted buyback program targeting $1 billion annually, and that is your wreath. jonathan: we will catch up with dani again in about 30 minutes time. the great rotation debate. >> there's been a technical rebound likely driven by sentiment positioning for small-cap but we are not chasing that momentum because that rebound is not supported by fundamentals. >> we will get you the bullish view up next on the program. live from new york, this is

bloomberg. bloomberg.

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

♪ jonathan: want to continue the conversation. annmarie: please, let's not. jonathan: equities, let's into stocks. positive by 0.05%. yields are lower by a basis point or two. under surveillance this morning, the great rotation debate. >> when it comes to earnings, small caps for over one year now, they didn't deliver any earnings growth. for this ongoing season, they are expected to recover a lot of it, but they are still really lagging the broader picture. there has been a technical rebound likely driven by sentiment positioning for small-cap, but we are not chasing that momentum because that rebound is not supported by fundamentals. jonathan: small-cap stocks

looking to bounce back after coming off the biggest two-week rally in years with early-season ramping up. we still think pockets of small caps are poised for continued outperformance. focus on value stocks, where we would still stick with quality or profitable value. jill, good morning. this is your turf, your world. let's get straight into it. when i by the russell, what are my buying and why should i be buying it at the moment? >> we have gotten more cautious on the russell 2000 as an index back in april and the inflation data has continued to come in stronger. really there were two things that we need to see to get more bullish on the russell as an index. one is more confident that the fed will begin that cutting cycle which now is what we started to see and what was a big driver of the rally we've seen over the past week or two. i think the other is fundamentals and profitability. that is where the russell does have a high proportion of

proximal stocks that sought much bigger earnings recession than the as of 500 and that is where i think is our worried. at the beginning of the year, investors were saying that small-cap profits would have come back after, better than large-cap profits and that is not what we seen. we seen a lot of hope held out for fourth quarter this year, very strong recovery but the first, second and third quarter estimates have gotten revised out significantly. that is what we really need to see if you want to see this rally. can we get good earnings david is early-season, not only surprised to the upside but guidance that supports the fundamental backdrop is healthy. the >> sticky dominant sector in the financials. the regionals of any part of the story now for the best part of 12 months. we had 80 rally. do you think there's reasonably earnings will re-accelerate as we start to cut interest rates at the federal reserve, that things get better for that cohort of companies?

>> financial has definitely been a leader in the valley recently and certainly if we are looking for fed cuts, looking for soft landing, no significant deterioration of the economy, that should be supportive for financials. when you look at factors like the regionals and credit condition, that is still a risk that is out there. if we are in a backdrop in the fed is cutting because economic conditions have deteriorated significantly, credit spreads are rising, that would be more negative vd. a backdrop with the economy is still supportive. but certainly for financials i think we have been due for a catch-up, especially within small caps. we still would be more cautious on some of the regionals in an area you want to be selective relative to the large-cap. large caps already got regulated, they saw themselves contract for a number of years after the financial crisis.

regionals still could be subject to that if we see greater focus on some of these regional banks that haven't had the regulation of the larger cities have lisa: simply because they have gotten so beaten up, that on a valuation perspective they look great and then you look under the hood and you see a lot of concerns. more generally, you put this out that only 13% of second-quarter reporters of small-cap companies have beaten earnings-per-share in sales. that compares to 51% of large caps. can you give us a sense of why smaller companies are struggling to really meet some of the expectations even as large caps continue to outperform? >> it has been still pretty broad-based, the overall profits recovery has been much slower to come to fruition in small caps. the earnings decline was pretty much across the board and when you look at second-quarter expectations, most sectors are expected to still see negative earnings growth this quarter.

smaller companies have been more challenged, and when you look at the large caps, obviously a lot of the magnificent seven, some of the big tech stocks have been the drivers of earnings growth. we do expect that a broadening out to the rest of the s&p 500. a similar story for small caps but a lot of these smaller companies have still been challenged. less profitable companies within the index, you had sectors like health care where that is one of the sectors that saw the biggest decline and now is expected to see one of the biggest recoveries. when you are thinking about buying the fundamentals of these companies, that is why we can still more cautious on the overall index but i think in pockets of small caps there's still a lot of opportunity. the valuation backdrop, investors seven very under allocated to small caps.

we seen investors want to get more bullish on small caps. they've been such a laggard for such a small time. the areas that are perhaps less sensitive, areas that are still cheap but have positive estimate and a backdrop for that is still uncertain. lisa: you went to the area i wanted to go to. we are focusing on the first to, we talked about earnings but what is the read the economy? this question of small caps extensively have more floating-rate, are more sensitive to higher rates by the federal reserve. is that a key reason why you are not seeing earnings increase at a faster pace akin to some of the larger companies that were able to lock in some of those funding costs that were really cheap early on? >> small caps definitely have a lot more floating-rate, short-term debt, almost half of their debt falls into that

profile where his large caps about 80% of their debt is that long-term straight -- fixed rate debt. the fact that we think inflation start to come down in the fed to be on track to begin cutting rates, our expectation is december of this year but obviously the risks have been pulled forward. that eases some of the risk. the fact that we think credit spreads have been low. some companies have been willing to refinance the know rates are high because credit backdrop has been supportive. that risk is if we see credit spreads start to rise again, that could become a headwind to the often ability as well. i think this is a backdrop where you want to be selective within small caps, not just by the russell which we think further clarity on the often ability backdrop could help. but for now, our analysts cover about 1000 small the cap stocks in there's a lot of opportunities for alpha you can focus on the name but actually

just have positive estimate revision and have still been coming down. guidance has been a beaker in small caps, some of the value stocks we are wanting what companies are saying this earnings season. if guidance didn't get a bit better, then companies beating and raising could be supportive of a broader index rally similar to the risk rally we saw over the past week or two. >> i have to ask about the 13, the politics. how much is small caps a that on trump-vance? >> i think when you look at the rally over the past week, some of the initial drivers were more on positioning and risk on. we saw financials as a big rally, deep value stocks. we saw some initial short covering. and while certain political factors or political policies and certainly impact small caps when you're looking at rates or

policies that could impact growth, overall we found that profits tend to matter more than politics for small caps and for equities. i think what is going on with gdp and interest rate is going to be a bigger driver of the index then necessarily which political party is in office. jonathan: that's the piece of the story we are waiting for. great to catch up. sort of equitable heard from brian a. brian was much more brutal about it. lisa: basically all noise and anyone he talked about a trump trade, he finds a lot of logical fallacy as he put it earlier. jonathan: that is a kind way of putting it. coming up on this program, we catch up with john stoltzfus of oppenheimer, marc gionnoci of barclays and sophia drossoz of point72.

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 ai theme is still expected to do the heavy lifting

for earnings growth. >> we think the momentum has -- market has been a momentum, growth in size market this year. >> we are hoping that some of that can spread to the small caps area. >> we all know brett has been far too narrow and that leadership needs to expand. >> i really want to see which way the earnings go. the big tech names continue the dominance, i can see investors going back there pretty easily. announcer: this is "bloomberg serveillance" with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: live from new york city this morning, good morning. the third hour of "bloomberg serveillance" begins right now with a big focus on the earnings. a little bit later we hear from google and tesla already this morning. i want to document gm which is up nicely in the premarket by close to 5% and coca-cola. i know it is difficult to get a clean read on earnings and the best of times and always easy to cherry pick a company or two when trying to talk about a

clean story, but i will tell the story. we started earnings season with delta and pepsi and those two names didn't really spell out a good picture for the u.s. consumer. this is better. americans are buying trucks, coca-cola is telling you a story that pepsi couldn't a few weeks back. lisa: basically feeding it and raising for your outlook. it raises a question about whether the weakness that we see in some companies is due to just execution risks or issues with their actual business model or just failed bets, vs. and actually truly weakening economy in which you can see in gm is nice -- fascinating microcosm in the car industry, basically going back to gas trucks, selling them to americans and playback some of their investment in electrical -- electric vehicle factories. jonathan: this is going to become a bigger campaign issue. not the campaign issue, but a bigger campaign issue with elon musk and tesla at the epicenter of this conversation. >> absolutely because you have tesla which arguably would

benefit from some of fines policies and what a trump campaign calls, which isn't, but calls ev mandate. at the same time, elon musk is all in on the money and the endorsement to donald trump. i find it fascinating for gm. you know this very well because you spoke about this. the transformation at gm, this arc if we are going so hard on ev, well, actually we think people might naturally want hybrid and now we get the bottom line up, we are going to sell gas guzzlers. lisa: it goes to the point that we talked about extensively, this long-term outlook that is the same for a lot of those auto manufacturers. they still are moving to more electric or more environmentally friendly cars. the taste is exactly what is going to call the bottom line to go up it is the incentives in terms of government incentive or what the demand is in the market and right now the demand is u.s. trucks. if you go on any highway, that is what you can see. jonathan: this is just about the

pace, the time it is going to take to get there. if you're just joining us, welcome, this is what it looks like. really decent day of gains yesterday across the board. we are up this morning just short of 1/10 of 1% on the s&p. on market yields lower by two basis points. foreign-exchange, the dollar just a little bit stronger. we are down about one third of 1% on the currency pair. coming up this hour, we will catch up john stoltzfus oppenheimer. alphabet earnings a little bit later, and point72 on what this data might mean for the federal reserve decision next week. we begin with the big issue, big tech back in the spotlight. tech stocks driving the s&p best play since june. john stoltzfus permitting bullish and he has this to say. we see last week's market action as some prudent consideration by investors in addressing a need to redistribute the weighting of opportunity and risk.

your bottom line for him, we remain positive on starts suggesting that investors don't change horses in the middle of a stream. john, good morning to you. want to pick up on that last line, it's going to be a big week or so protect earnings. alphabet later, the bigger players next week. you say stick with those winners. >> i think you do stick with the winners. these are companies that have proven profitability and that are deeply embedded with the lives of both business and consumers. we are not going back to the abacus and we're not going back to the slide rule, either. i think in the process of that, we've got to see the chips indeed do rule, and where we are is that the transition in terms of where they are going to be manufactured, those are the issues. jonathan: at times in the last few weeks we have had people say trim some of those winners, rotate into things like small caps and banks. what you make of that argument? >> i think it is a good one.

the process of diversification is necessary. it just depends on the tolerance and risk of the institution the individual investor as to how you gadget. but you need exposure, and our belief, to these magnificent seven in the sense that they are just so important. one of them decided that the next phone that they put out is going to have a chip that you will have to have either this year's model or next year's model, everything underneath it becomes an anachronism. it looks like a huge upgrade cycle for laptop, pc, phones, and all things technical. as we move forward with ai, not the star wars stuff, but the ai in terms of where we are headed just making things more efficient. >> is that a raging enforcement of apple? >> i do not speak about individual companies because i manage money for the firm. if it sounds like it, what can i say. lisa: you were talking about not

changing horses in the middle of the stream, maybe trying to catch some of the babies being thrown out with the bathwater. so have some of the big tech darlings been thrown out with the bathwater? i does the baby that you want to catch after a little bit of a downturn? >> last week that certainly with the case. the bears jumped on the thing that it was just overdone and this is the end of this, but i think in terms of small caps, they fill positions in small caps and a portfolio that i manage for years now under much criticism, but luckily we were around-diversified and we also included exposure to technology and other areas. we performed well within our class. but i believe this is a watershed that is very similar to probably unparalleled where the automobile was in the early 20th century after henry ford

essentially upgraded the manufacturer of automobiles by mechanize in the assembly line. bringing up quality and lowering costs. when the genie comes out of the bottle, the technology genie, it never goes back. lisa: you can talk about the same language with the political cycle as well and that is a real question around the turmoil in that space, and what that means for markets. we were talking earlier this morning with brian levitt of oppenheimer and he said it was basically a fallacy, this whole trump trade. that this concept right now of this idea, how much do you look to bonds as being the real volatility drivers in election cycle? >> we think bonds are highly complementary in light of expectation for the fed will be cutting rates. so it is a good time to pick up some things. you got to watch for your call ability, your treasuries are probably a better bet.

a tax-free municipal's and things like that help to diversify. but when it comes to fixed income, i'm just not a big fan of thinking that bonds are going to outperform stocks in this particular period. annmarie: brian said the trump trade was much ado about nothing. do you start to put on some investment or do you start to look at potentially having an election base case in terms of putting on some traits? >> i think it is a little early for that. both sides are going to be doing the first shot across the bow in terms of what they talk about and when they talk about tariffs or if they are talking about tax cuts or raising taxes, all the stuff is the first part of the spin. but we have to see what actually happens. >> but not all of it is spin. there is likely going to be the nominee for democrats now, she's part of the current administration, incumbent in a sense. donald trump had four years in office.

so couldn't you take their policies over the years and implement them into the market? >> you could, but policy is often shaped by what occurs in the economy by monetary policy. for years you will see when we come out of a recession, whatever administration is in the white house will claim that they are the one doing it. the importance of the fed being independent we think is extraordinarily important this year. if anything we are concerned, we just hope they don't cut too soon, should they cut in september, which is all the highly leveraged crowd wants to see. jonathan: let's build on that. we had a gas an hour ago was that they need to cut soon and quick and fast and you are saying you are worried they might cut too soon. september might be too soon. >> i think september is too soon. the fed's detractors will say it is politically motivated and russian independence of the fed. the other side is inflation is having lived through it in the early 70's, i remember it very

well. there's almost an element of ptsd when you see inflation coming in the economic scene if you live through it. jonathan: are you saying it is sticky? >> i still think it remains sticky in certain areas. we haven't seen competition come back in force to battle that stickiness, and we think that the fed would probably be best advised -- i doubt they will listen to me, but i would go with november and december, it is a down payment for main street and wall street, but we are going to be cutting it, don't get too excited. we've got to still be data-dependent and i think jerome powell does not want to spoil legacy. he's done a pretty good job since march of 2022. in the beginning, he was behind the curve, but he got into it and he has done a great job with 19 fed meetings and no recession during a fed funds height cycle.

that is extraordinary. aided and abetted by the economy and trends, the and other stuff, but the fed has been right on. jonathan: unemployment still around 4% and i have to go back to jackson hole. i think we all set around this table and said 10 inflation get back down somewhere close to three with unemployment still in and around cointreau, there would have been big dance about that. you are still conditioned by a mortgage payment in the 80's. jonathan: i am, but you've got to remember property was so cheap back then but it looked expensive. lisa: music to his ears. jonathan: i don't feel sorry for you with that $200,000 penthouse apartment over central park. >> i love the stories. there's a difference between the myth, legend and the person. lisa: meanwhile, going forward i'm curious, what is the contrarian bet right now, has there been anything that has shifted? >> the contrarian bet really

that we have is if the fed cuts in september. it would necessarily be a good thing, and if the fed doesn't cut in september, you will probably see the small caps pulling back. they will give back a lot of these games, just as they did at the beginning. jonathan: to be clear, you think the small-cap move has been a rate story. >> i believe it is a rate story and small caps have been ignored because they are considered under duration. jonathan: it is higher together, then. how can you recommend small caps? >> because you want to build their positions while they are relatively cheap. this fanatic of today, the first shot across the bow, the interest that we are seeing in small caps. john stoltzfus there of oppenheimer, not pimco or invesco. lisa: i'm sorry, brian levitt of invesco, not of pimco, not of oppenheimer. we are trying here.

jonathan: it's your bloomberg briefing dani burger. >> phillip morris is higher in the premarket more than 2% reporting earnings in the last hour. it looked at annual profit growth forecast thanks to blockbuster demand for nicotine pouches, even though it has some supply shortage issues. philip morris has been focusing on efforts on cigarette alternatives and earlier this month that it's hundred million dollars on a new facility to make it in the u.s. able sales of the nicotine pouches will be as much as 500 80 million cans of from the previous 560 million forecast. does airways says that it expects the temple more flights this week as it tries to recover from friday's global tech outage. delta granted nearly 900 flights on monday, bringing the total since friday's meltdown to more than 4700. the company said it is working around the clock to restore operations. u.s. transportation secretary pete buttigieg criticized delta over the disruptions, saying the

department had received reports of unacceptable customer service conditions. china's richest man is at risk of losing metro station as losses continue to pileup area he runs a bottled water giant in the country and has seen network for my $30 billion so far this year, among the most for billionaires worldwide. losses are tightly price war among bottled water drains with the hong kong company on the wrong side of increasingly nationalistic and health-conscious chinese consumers in recent months. and that is your bloomberg brief. jonathan: met last line so important. for anyone selling the china right now, recent nationalism. we will figure applicant next week, if that is something that just sort of sticks around for a longer time because last time around, remember china was that an expected coming out of apple. i wonder if that sticks. >> if anyone listened to xi jinping's rhetoric, it was

talking about increasing production, increasing self-reliance and fortifying their supply chains. there was not any discussion, much discussion about housing as some of the property prices or potentially even consumer spending. jonathan: we talk a lot about the prospect of increased trade barriers on this side of the story. maybe not enough and what is happening on the other side. next, some morning calls and then will catch up, looking ahead to alphabet earnings out after the closing bell. all of that in more still to come from new york. you are watching bloomberg surveillance.

♪ jonathan: equities change on the s&p 500, going nowhere, into the opening bell. let's get you some morning calls. first up, lowering the price target on crowdstrike. outperform rating on the stock

with a firm saying the financial and legal ramifications remain top of mind after friday's double tech outage and apparently some airlines, delta, still struggling with that. that is up by 1.3% in the premarket. morgan stanley upgrading people wait with a $60 price target, highlighting improving outperformance and a more reasonable valuation compared to peers. finally, piper sandler raising its price target on microsoft of 4.85 maintaining an overweight rating. the firm highlighting that he could take three years to add $100 billion in revenue thanks to ai compared to the 13 years it took the first time. looking ahead to the big tech earnings the next week or so, raising its price target on alphabet to 210. in land might be the new raised this quarter.

typically more we talk about in-line being the new b, that is relative to pretty downbeat expectations. i'm looking at the stocks this year, google up by 30%. how can in-line be the new beat? >> thanks for having me on. obviously the last few weeks or couple months we've seen some sluggishness in i.t. demand overall. i think more on the software side we recently published enterprise software which did show significant weakening over the last three months. we are seeing some areas of tech where last night they came in line on the revenue, in-line on bookings. stock is up 5% or 6% because of concerns. i do think it is a little different in the digital advertising space. google expectations have been creeping up, so maybe they do need to continue the momentum here. jonathan: just breathe some life

into that conversation, help us understand your perspective. are we saying there is a pullback in ad spending? >> it has been holding up better than i.t. spend so have seen more weakening on the software side. that said, we do have a digital ad tracker for google and meta and they are both coming in pretty much in line with consensus. maybe even a smidge below. so we are kind of in-line. last quarter we raised our numbers going into results for google, we were 3% ahead. this quarter we are just in line. but we do see other benefits, as they benefit from using gemini to drive customers to google cloud platform, benefit from gemini for workspace, and we also think on the margin of continuing to stick with that sort of extended cap margin, see

a bit of a mixed quarter for alphabet coming up here tonight. lisa: i want to dig into the mix of that, this idea that the in-line may be the new beat and raise as long as there is a beat under the hood when it comes to cloud. as long as their capital expenditures budget continues to increase and beat expectations that they can invest in the future. is that kind of the asterisk next to this sort of in-line is the new beat and raise? >> the broader debate that we've been having with institutional investors the last few weeks has been the hardware versus software trade, but also hardware versus software versus large-cap internet. large-cap internet is up around 31%. so one of the things we are cautioning about is that second derivative. beware the second derivative we will see growth slowing and digital advertising year-over-year. we will see growth slowing for some of the big hardware names.

on the software side has underperformed this year today, and actually we have companies where softer revenue growth is actually accelerating. seeing a bit more opportunity on the second half of the year then maybe large-cap internet and hardware for the time being. lisa: this also kind of an elephant in the room especially after the whole crowdstrike issue that will be highlighted how companies use strike on the microsoft software in order to insure against cybersecurity attacks. race this question about the liability of being too dependent on one particular provider. do you expect that to come through either in the earnings or in writing for a risk? a lot of these companies are facing avenue. >> i don't think so. it's not necessarily something new. and i think obviously a lot of enterprises when they are buying i.t. try to diversify to a certain extent, so maybe we will see that creep up more in the risk section, but i don't think

it really changes find patterns. i think the other thing to mention here is when you do letter for various different components going into the second half of the year and the political risk around some of these companies with elections and tariffs and rhetoric, again on the software side of things, you don't have that, most of the large-cap software companies, even microsoft are very limited exposure to china. you do see that more on hardware and even potentially the large-cap internet names impacted from advertising trends for the chinese are large advertisers on some of the deplatforms. annmarie: if you are worried about political risk is that why you have underperformed for meta. >> it is part of the. i think the market is looking political risk on meta-as a potential tailwind with the banning of tiktok. we didn't really think that would play out because there is a lot of vested interest in making sure tiktok stays up and running in the u.s. and it certainly looks like based on president trump's recent

comments that he would allow tiktok to stay up and running, so that could turn into a headwind for meta, so that is a challenge. with the elections as well, it is uncertain if advertisers will want to be associated with the generated content election cycle maybe they will, maybe they won't, but that is another risk. but the caution there is a bit more on the ai spending and reallocating ending from core ai which is driving growth and that is the recommendation engine and targeting technologies to general ai, the large language models and the services which are nondriving revenues yet. if we do see meta next week say they are going to be cutting reality lab spend, that be a positive catalyst. but for now they are saying that reality lab losses will continue to accelerate. jonathan: great to get your thoughts going to these alphabet numbers a little later with some real thought of alexa is as well as the end the fantastic

exchange with emily chang. and i have to say, that one clip i've solve absolutely everywhere over the weekend. as mark zuckerberg comes out and says that he thought the former president reaction to that assassination attempt was one of the most fantastic nc has ever seen, i think we all thought listening to that being aware of the conversation we just had that sound like a guy who is maybe trying to cozy up to the former president just a little bit. annmarie: 100% because he also wended to saying he's not going to endorse one candidate or another. this is someone trying to place cards right so he avoid some of the crosshairs all it takes >> coming up next, we will catch up with point 72 alongside barclays. this is bloomberg.

♪ jonathan: just before the commercial he mentioned that sit down with mark zuckerberg and emily chang. that interview, i know many of you have seen the clips, that interview in its entirety a little later on bloomberg tv at 6:30 eastern time. don't miss it. equity featured on the s&p about an hour away from the opening ballot looking at something like this down about 1/10 of 1%. yesterday a fantastic they have gained across the board, best day since early june nasdaq had a day driven by mag seven stocks. the big names the like of nvidia

, you've got to wait until the end of august to hear from nvidia. and they sort that out? can we bring that in? i think we have to bring that in. >> we will jonathan: submit a call. jonathan:whoever sits down with jensen next, bring that in. the other request, bank earnings. >> you want to be able to digest them in the morning. we just have to break them. screening three budget numbers. maybe they like it that way, i don't know. in bonds, two years, 10 year, 30 year. yields down by about a basis point. i want to tour the foreign exchange to finish other japanese yen. it will talk more about this in just a moment. negative zero point 5%, stronger japanese yen.

every day this week going into next week, real conversation about whether or not we get this hike from the boj. lisa: which raises the question, is the strength from the yen because of a policy shift, especially considering the fact that they came out and put in the water over the idea of it, talking about some of the weakening of consumer spending in japan or raising questions around their confidence to really tighten policy, fourth is a u.s. three entirely, if this basically the idea that a sweep and some of the more protectionist policies would strengthen the dollar? that trade of these people are closing out a little bit and that is getting some steam to it. jonathan: at least we know if we get from volume two they will have a close partner in japan. the president wants a weaker currency, they want a stronger one. lisa: keep going with that but all i can say, did you read all of the skating notes about how is he going to get that? annmarie: i guess he needs a treasury secretary was going to buy a lot of yen. jonathan: i'm not sure how you engineer that.

big tariffs and cutting immigration aggressively, you would think that would outweigh everything else. lisa: this is the reason my people are having a difficult time understanding what the trump trade actually looks like. there's a lot of speaking out of all sides of the mouth. it's unclear whether that is actually policy and you don't know was going to be in the office. >> the backdrop is so different. in 2016 they are pleading for fiscal stimulus, we have low growth, low rates. we sat on this program all the time say he should probably do something. even the chair of the fed was saying you guys should probably do something. backdrop now, totally different. >> which is the reason why bond auctions matter. $44 billion and seven year note on thursday. this to me is a real presidential trait because either way you are going to get this skull that is it that is larger and we got to wonder how to be offset on the margins?

jonathan: that's your conclusion to everything. under surveillance this morning -- i agree, it matters, but every story? shares of gm, coca-cola rising in the premarket. the companies all reporting result that each wall street estimates. on the flipside, ups missing profit estimates a midwife -- rising pressure from wages and package demand as well. lisa, do you think we can park that story this morning and focus on the rest, or is that too simple? lisa: i would suggest it is too simple in light of what we heard from the airlines. it is not just higher expenses, it is lower package revenue. i be curious to see what we see from fedex and other places. you can't ignore certain signs of weakness, it is just how to know how to put together the signs of strength we are seeing the likes of gm and cobe ola, from the likes of the banks for better profits. it's very difficult to understand whether we are seeing weakness as evidenced by the lack of earnings growth in the russell 2000, or true strength,

the fact that people are still buying big trucks and going crazy with them. jonathan: early-season picking up big time. we'll hear from the likes of tesla and alphabet. tomorrow morning, lisa is going to drop it all back to the deposition america. i know you will. kamala harris starting to pick up key democratic endorsements. netlist now including nancy pelosi, cnn reporting the chuck schumer and house minority leader hakeem jeffries are expected to endorse terrorist soon. new york city, breakfast. i'm eating, i'm chill. scrambled eggs, decaf cappuccino, can handle the caffeine. for chuck schumer. walking through the restaurant, what does this one do? leaves breakfast. you go to endorse harris. what did he say to you yesterday? annmarie:annmarie: he said i'm not making any comments. then he said i have a statement later today. i said are you going to endorse or?

he says do not put words in my mouth, i am making statements. jonathan: if you go into a restaurant and you see this one, turn around and go back to the exit. >> we need to know answers. everyone was coming out, where was he? he was the one who was supposed to have this come to jesus moment with ayden in delaware, so where was his endorsement? potentially is going to come today. investors keeping an eye on u.s. data this week including gdp and pce. both will paint a better picture of what the fed next move would be. that officials are expected to hold rates steady, once more at next week's meeting. joining us around the table i'm pleased to say, still with us is sophia derosa's of point72 and i want to come to you first. the likes of goldman have said why wait, let's go. do you share that particular view because we had another guest on in the last hour who said that they should wait and

maybe they should wait until after the election. >> will give morning, and that is definitely a debate in the market, but what i would say is that this is a very unusual cycle. the fed facing the urgency of needing to cut because the economy is falling apart. usually when the fed is turning around two to rate cuts, we see more material weakness in the economy. this time around it's not what we are seeing, this time around we are seeing the economy hold up well as price pressures receded an the fed is making a judgment that it can cut back on the amount of policy restraint it has delivered to the economy. so there's not the same urgency. and while you consent discuss the fact that inflation has probably come down a little bit asked her in the last couple months than was expected, the fed doesn't need to be in a rush. it is a very consensus-based institution, as you know. perhaps it is this meeting with the fed gets its ducks in a row and unveils a strategy for reducing monetary restraint.

annmarie: jonathan: jonathan: that is why there is broad consensus that september may be the month to make a move. golden state why wait? it is interesting that you indicate you think why not wait? why not wait? >> good morning. the question for us is what is the rush? inflation has improved a lot, so yes it has come down and particular in june we had a lot of improvement. but we see in the first three months of this year that inflation bounces back for a few months before coming back down. so i think the situation that we are in is one where inflation is gradually trending down, but we will likely have a few bumps in the road, and on the labor market, the labor market is still pretty solid, pretty resilient we still create about 200,000 jobs. the unemployment rate of a little bit of we think this is

largely due to the boost to supply of labor coming from immigration, so we don't see any signs of a rapid deterioration. you noted before that consumption will have some information about that later this week but we think that so far, based on retail sales, consumption is still very resilient to this point. annmarie: you raise a point that flies in the face of what ian shepherdson this morning, that the fed could cut by 150 basis points in the next 18 months or so, possibly more simply because inflation is falling so quickly and will continue to do so. you seem to think that actually the fed isn't that restricted and we are seeing an economy that is handling just fine the rate where they are. can you explain sort of why you see inflation as sticky and rates being closer to neutral than not> >> yes. this economy still generates a fair amount of income. every month we keep hiring about

200,000 jobs. with these jobs created a lot of income. that income keeps pulling consumptions of the consumer turns around, buys all sorts of goods and services and that keeps pressure on prices. so yes, we are seeing the trend down. inflation is no longer as high as it was in 2022, 2023. but on a year-over-year basis, we still have around 3% inflation depending on what indicator you look at, and on a year-over-year basis, conditions are going to deteriorate going forward. so the improvement that we are seeing is really on a month-to-month basis that we see these inflation prints gradually coming down, and we could have a lot of surprises on the upside as well. lisa: sophia, do you agree that right now people are not really understanding to the full degree how much inflation is sticky and could reflect higher in the months to come in a way that maybe people are saying is sort of above the picture right now

at the project fed rate cuts? >> i think the beginning of year disruption we sought to the disinflation process was really driven by some idiosyncratic factors, whether it was some one offs in specific categories or omission measurement in rent and the like. certainly some of the typical beginning of the year seasonal pressures that you see in prices. so from my standpoint i think inflation really does now, if i look at the month on month run rates, i'm relaxed about where it is headed, obviously we want to see it continue to move in that direction. but the fed has changed the balance with regard to how they are looking at things. talking a lot more about not wanting to overstay their welcome, not the policy overly tight or tighter than the need to be, and i think that the market is catching onto that and of course, we've seen the dick schaap in market price that expectations in the last few weeks. annmarie: you talked about trump

momentum riding high. do you still see that potentially given the fact that we have basically a restart of the election? >> if we look just at market probability, it looks like the trump administration has ended vantage to this point, but we can see a lot of changes in the next 100 days or so. it's going to be pretty close race in any case. at this point, i think the trump administration would have some outside risk to inflation as well going forward but this is more 2025, 2026 problem. i don't think that is going to affect the fed decision this year, but this is something that could impose some upside risk to inflation next year. jonathan: those of you

struggling with delta airlines over the last few days, this is from secretary pete buttigieg, the doj -- department of investigation is -- continued widespread disruptions. all airline passengers have the right to be treated fairly. he goes on to say i will make sure that right is upheld. this get you some stories elsewhere. let's cross over to dani burger. dani: big tech earnings are going to be kicking off in the afternoon. both tesla and alphabet will be reporting. analysts are likely to be focusing on the google parent company ai-based revenue looking to compete with the likes of openai and microsoft. tesla investors what answers about the delayed robotaxi rollout as well as elon musk's decision to elevate ai over evs. kamala harris is on the campaign trail in milwaukee.

harris has secured the endorsement of nearly every major democrat and announced a record-breaking fundraising haul of more than $100 million during her first day as a presidential candidate. taiwan has suspended trading on $2.4 trillion stock market is a taking universal plan for. government stays and also sent i one would shut schools and offices in taipei. the intensity and size has increased and the trend is expected to continue with wind gusting up to 180 miles or our the typhoon is expected to make landfall sometime wednesday night in the early hours of thursday jonathan: jonathan:. up next, the ge chairman and ceo sitting alongside our good friend guy johnson. must watch tv up next on the program. this is bloomberg.

♪ jonathan: equity slightly softer

here, down by about 1/10 of one person on the s&p. the opening bell in about 44 minutes. this crossover to guy johnson in windsor, england sitting down with ge ceo. over to you. >> royalty in the room, as you say. the ceo and chair of general electric, the world biggest jet engine manufacturer. this is a company that is newly independent, it is a standalone business. the first time we've seen numbers being reported on that basis, the numbers we've seen being reported look good, being taken well by the market. it looks like a beat and a raise from larry cole. >> good afternoon, thanks for being with us. >> good to be with you. >> talked me through the strength, where is the strength feeding the rays within the business? >> truly rooted in the demand we see from the airlines and for

the air framers for more of what we do. 70% on a standalone basis comes in the aftermarket. supporting the airlines with parts, with services, of all types to keep today's fleets in the air. and given the activity that they are seeing with the flying public is all we can do to keep up with what they like to see from us. so the 60% plus improvement in earnings, the nearly 20% improvement in free cash we announced today is really a function of what we are seeing in out commercial engines and services business in the aftermarket. >> does that carry on throughout the rest of this year into 2025, is that something that is here now, gone tomorrow? we are starting to see some warnings coming through from operators in the u.s. and as of the beginning of this week, here in new york. >> we certainly seen those as well. seems like that is geared more toward pricing than anything else. but if you look at the second quarter alone, nearly 40% year-over-year.

we see our utilization of the fleets, both amateur fleet that has been steady, and engine that folks thought might begin to fade, our newer generation technology on both of the 737 max and airbus. so our utilization could not be higher. even just looking at the third quarter, probably 90% of our third quarter projection in backlog today with respect to parts. in terms of the demand signals, things are strong. >> i've got to remain consistent. >> we believe so. >> that is kind of the older story. that is the existing fleet that is already out there. the maintenance stories very strong, the margin of that is very strong. for the air shows throughout

this industry, airbus lowering guidance for the year, talking about engines within that guidance. it's a supply-chain getting better, or is it getting worse? >> i'm strongly of the view it getting better. it's really all about the rate of improvement. in what we hear earlier today with investors is that we didn't have the output that we haven't appeared in the second quarter with our newest generation engine in particular. but we are going in using our flight deck to help our suppliers help us. joint problem-solving, understanding strength of the point of impact. and we saw tremendous results are met in the second quarter. didn't translate into as many deliveries at the airframe customers would have liked, but we saw two thirds of the suppliers that we worked with improve their output to us by newly twofold.

jonathan: so originally the guidance was for 25% improvement for that engine, then in april you are kind of 10, 15. that feels like it is not getting better. >> it is knocking better at the rate we have anticipated but it is getting better if you look at the sequential trends and from an operating perspective that is all over the matters. quarter income a quarter out, are we seeing more and are we seeing more and rbc more productively? we are getting better in that regard. i'm encouraged by just the first few weeks of july. a lot of work not only in the second half but as we think about 25 and 26, when yielding those sorts of results will i think put us all on the ramp. >> so the benefit comes next year. >> some of the actions we took in the second quarter of outlets in the third order and fourth quarter of this year. >> why is it taking so long to

resolve this issue within the supply chain? >> we talked about this every time we are together. i think is important for everyone to remember that we turn the industry down almost to zero during the pandemic and what we're trying to do now is turn it all the way back on. msr. we lost not only people during the pandemic, we lost a tremendous amount of experience. technical people because those roles are filled, but perhaps by a 28-year-old, there's a lot we have to do in terms of not only adding capacity complicate ability to that timeline feel about right u.s. well?

>> we are trying to make progress every week but i think this is a multiyear effort that the industry faces. >> how is your relationship changing with airbus? you are really tight with boeing. tom is now on your board, that signal a change in relationship with airbus? >> i think we have served both of the major air framers well over time. we don't have over two thirds of the departures in the air about a space serving bowling alone not only in terms of the ramp, but next technology as well. we are trying to be as strong and a good partner to the team

as we possibly can be. we want to do the same thing with the folks at boeing, of course. we could do that as long as we invest in technology, use flight deck to deliver safety quality, delivering cost to the requirements, and jointly serve the airlines. >> talking about defense, do you think defense spending is going up? what a trump presidency mean greater defense spending? spending to gdp, how do you see that story progressing and what does it mean ultimately for ge? >> i think on both sides of the atlantic, given the authority thought i speak with, spending will be paced by the threat. in the threat is only increasing. therefore be it in combat aircraft, be it in rotary, the two areas that we serve most directly, we think we will see

looking at over the next five or 10 years sustained growth. >> one final quick question before and forth throwback. was it an easy decision to continue your contract by 100% of the boeing job? >> how about 101%. >> the guys in the studio were talking about this early on. 101%, there you go. larry culp is staying at ge and a fantastic set of numbers delivered earlier on today. looks like the market likes what he hears. jonathan: thanks for that, really enjoyed that conversation. that is the end of that. lisa: he did say it was 102%. it could have been 105%, so we are not sure. annmarie: just a few days ago the united states president was 100% running for reelection and then things change on a dime. jonathan: but i think we know his position as things change currently. we are waiting for his decision.

lisa: we will wait until he gives us his decision but he has to make a decision because the clock is ticking. i'm not going to do it. the week ahead looks a little something like this. president biden returning to the white house today after ending his reelection campaign. they run but hear from alphabet and tesla reporting earnings after the closing bell. tomorrow, benjamin netanyahu giving an address to congress. more earnings from ford and ibm, plus some u.s. bmi. thursday gdp and another round of jobless claims and we round out to be friday with consumer sentiment and pce tomorrow morning. from new york city, for this morning, that does it for us. take you for tuning into bloomberg tv. this was "bloomberg serveillance." ♪

hi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement, i said, "yeah, whatever. there's no way this works like this." and threw it to the side. a couple weeks later, i seen it again after getting not so pleasant news from my physician. i was 424 pounds, and my doctor was recommending weight loss surgery. to avoid the surgery, i had to make a change. so i decided to go with golo and it's changed my life. when i first started golo and taking release, my cravings, they went away. and i was so surprised. you feel that your body is working and functioning the way it should be and you feel energized. golo has improved my life in so many ways. i'm able to stand and actually make dinner. i'm able to clean my house. i'm able to do just simple tasks that a lot of people call simple, but when you're extremely heavy they're not so simple. golo is real and when you take release and follow the plan, it works.

matt: futures lower across the board. i am matt miller. katie: "bloomberg open interest" starts right now. coming up, earnings season kicks into high gear. it has been a mixed bag of results. tesla and alphabet test ev and i demand. matt: