dani: welcome to bloomberg

daybreak: europe. happy friday. i'm dani burger in london. manus cranny is in dubai with the stories that set your agenda. manus: president biden urges on his negotiating team, as the house speaker mccarthy signals a that ceiling deal could be struck this weekend. stock futures point to more gains on wall street. mike, hold, skip? fed officials sound split over policy moves that next month's meeting. plus, g7 leaders are meeting in japan, as they weigh tighter sanctions on russia. sources tell bloomberg, volodymyr zelenskyy will attend. dani, very good morning. it is the worst cocktail to be served on a friday morning. i've now got to contend with the bitterness of the skip. pause, hold?

i put it to you, ms. berger, it muddies the water for everybody to clear the decks and move on from the hiking cycle. dani: i would prefer a mimosa this morning rather than the whole pause, skip debate. it is 5:00 a.m. somewhere, maybe. is it a skip and pause basically the same thing? doesn't a pause imply you will go again later, as does a skip? it is a strange full in this debate. manus: that is just my take. a number of houses saying the fed is done, absolutely done. we need to understand with the long variable lag is. but these equities are punching it out like 1993. dani: or at 9093, 1992, which is the year of my birthday which is this weekend. thank you.

manus: i was learning code, when you are learning to walk. dani: that is perfect. equity market going crazy, continues to gain this morning. everything is that new multi-year, multi week whatever have you gains. nasdaq, dax, nikkei all at at least 52-week highs. john authers has a at peace about the equity market boom. we will talk about that throughout the program. nikkei at its highest since 1990, back at those bubbly peaks in japan. s&p doing really well, but it is all about that concentration risk. it is up higher on very thin breath. manus: bubbalicious peaks. if they don't do a debt ceiling deal, and there is another wrinkle in the paper, it could be different. the bond market last on to the

skip narrative last week. miss logan did nothing for the bond market yesterday. the short end of 10 basis points, we come back ever so slightly this morning. bank of america says the case for the fed to hike further is done. how do you sell a skip? a skip is not a pause. that is the challenge, if they skip, how do they not a pause? but dollar, it is a long continental drift goodbye over the next year. nymex. , has had its best week since -- nymex crude has had its best week since april all on bullish sentiment around the debt ceiling deal may be getting done. as for the gold market, down 2%, we cloth slightly back -- claw slightly back. it is the worst week for the haven since february as this bullish narrative of hope. well hope lives at, i love a bit

of hope. dani: let's get into some of those top stories with reporters from around the world. we will get into those hopes on the debt ceiling negotiation with bill faries. valerie tytel is in the london studio to talk fed with us. stephen engle is in hiroshima as g7 leaders meet. manus: american lawmakers are making progress on debt ceiling talks. speaker mccarthy expects the house to consider a deal next week. let's get more with bill faries. it's interesting, in terms of the coalescing, but there are still objections from both extreme sides in both parties. bill: exactly. you have, almost regardless of what kind of a limited agreement might be reached in the coming days, you are going to have republicans on kevin mccarthy's side who have never in their political careers voted to increase the debt ceiling.

and then you will have progressives on the left in joe biden's party who are going to look very carefully at any of the conditions of this agreement. whether it affects low income people, people getting food aid, or other government support. they have drawn that is a redline. it will be interesting to see how many lawmakers on both sides , the two leaders whose teams are negotiating this agreement, are willing to lose and still have a deal. dani: bill, thank you very much. that's a bill faries. as we are awaiting a last hour deal. fed officials are sounding split over whether to raise rates at their next meeting, or pause or skip their credit tightening campaign. the dallas president said the case for pausing interest rate increases at next month's meeting isn't clear yet. let's bring in valerie tytel. as of today we are not there

yet. that's the word from lorie logan. is that a game changer? >> the market really took it in stride yesterday that a june height could be likely at this point. her comments and the text of her speech were very hawkish. she said things like we haven't made the progress we need to make on inflation. that current data doesn't justify a pause. you consider the jobless claims numbers yesterday, which ticked down both initial and continuing claims, and we're seeing a market going closer and closer to pricing a june height. the probability hit 40% yesterday. two-year yields rose 10 basis points and the dollar strengthened, all signs the u.s. economy is still in a positive direction, and that the fed is going to do more possibly in june to correct it. building narrative is that a skip is not a pause.

i had state street with me a short time ago. what will powell do to the waters today? what line does he need to trade with the market this evening when he speaks? valerie: the comment comes at 4:00 today in london. these are going to be key, after what we heard from lorie logan. from the markets' perspective, if he doesn't sound dovish, the market will take that in stride and start to price in more of a probability of this june hike. he will not to the slew of data we got a few weeks ago saying credit contraction is not as bad as feared. he will not to the strengthening jobs market and payroll number, how the jobless claims have been coming. he will likely give a nod to the strength of the equity market. if he doesn't caveat that my saying something like my daughter is unchanged, or our trajectory is unchanged, the market is going to move to price

in a june hike. manus: thanks so much. let's see what powell has to say to the market later today. the g7 will increase pressure on russia with additional sanctions on goods it uses on the battlefield, according to a senior biden administration official. let's bring in our chief northern asian correspondent stephen engle in hiroshima for us this evening. a lot to digest at this g7, where will the pincer movement come on russia? where is the next point of attack? stephen: acyclic, -- basically there is one to be more coming down the pike. hopefully they will try to enforce the existing sanctions even tighter on russia here at the g7. and essentially close those loopholes janet yellen and others have talked about that russia has perhaps used to evade

the first round of sanctions. that's going to be front and center in a very symbolic city, of course. hiroshima is where that atomic bomb was dropped back in 1945, 78 years ago. they are using that as a symbolic reminder of the perils of even threatening the use of nuclear weapons. robert emmanuelle, the u.s. ambassador to japan, was on bloomberg tv with my colleague, and he said multiple times, vladimir putin's cavalier threats of the potential use of nukes in ukraine. that's why the g7 is using japan as the host, using hiroshima as a symbolic reminder about the perils of potential nuclear war. as we flip the pages well, we're learning through sources that volodymyr zelenskyy will be likely -- it is still not confirmed by the host nation --

will be coming here in person on sunday. after the arab league summit in saudi arabia, you will be on a u.s. military plane to the g7 to address them in person here on sunday. another pointed reminder about the perils of any nuclear threats on the battlefield in ukraine. dani: one way that this g7 has been very different from the g20 is china. china's absence may be prompting a different dialogue. to cheetah -- kishida and biden issuing an statement hours ago saying they will work closer together on china. stephen: we haven't seen the tone shift necessarily, other than what europeans have brought to the table. olaf scholz, the german chancellor has talked about de-risking with china, but not decoupling. united states adopted a similar approach at that meeting between

kishida and biden. they talk about needing a unified voice on the pressures and challenges that china poses, whether it is militarily, or in supply chain. but they also recognized the need to continue to work and cooperate with china. the problem is right now, china is rebuffing all over chores by the white house and others to have meaningful dialogue. you might see the tides well moving towards decoupling, but the g7 doesn't want to cut china off at this point. this comes at a time when xi jinping is hosting his own geopolitical summit in xiyan, western china, hosting a number of central asia leaders, not as a counter to g7 but simply to say we have our dialogue to be held as well, if we are not to be included. china and russia are not in the g7, they are not represented

here. dani: stephen engle in hiroshima. let's get you set up for the trading day. we just talked about the g7, that will run through sunday. 1:30 p.m. u.k. time we get march reading of canadian retail sales. economists see canadian consumers contracting 1.4% on the month. manus: 3:00 p.m. u.k. time, isabel schnabel will get a speech in london. at 4:00 p.m., all eyes and ears on bloomberg for the fed chairman jerome powell, former chair ben bernanke will be attending a monetary research panel in washington. we heard from valerie, how dovish does he tilt? will he intimate skipability? dani: does he endorse the lorie logan view? we will talk about progress on

the debt ceiling. and of a huge push higher we have seen on equities off the back of that. we will talk about highs across the board for this market, next. this is bloomberg. ♪

manus: the s&p 500 it a nine-month high yesterday. stocks climbing on signs that u.s. lawmakers are making progress on debt ceiling talks. and will be able to avert default. frederique carrier's head of investment strategy at rbc wealth management. good to have you with us. we are building this narrative that perhaps but most underpriced risk is that they do get through on the debt ceiling. let's go for the glass half full . in that instance, where would you actively take more risk? frederique: that's interesting. i wouldn't look at it that way. for me, it would be an

opportunity to perhaps de-risk. the rally that has continued in equities that started in mid-march can continue. it has been underpinned by good earnings results. it could be a relief if this debt ceiling issue is resolved. but we note that the leadership of the market is increasingly narrow, with fewer and fewer mega caps leading the charge. we also know that small caps are spiffy was in their absence. that market behavior is suggestive of a market which is topping. lead indicators are flashing red. we expect a recession. our economist puts the possibility at 80% over the next year. and every u.s. recession has been accompanied by a bear market. believing that will be the case,

we would look to de-risk the portfolio. we are neutral to slightly underweight, and be defensive. there are pockets of opportunities. japan is one of them. u.s. biotech is another important call for us. dani: to prepare for something like a recession and be underweight u.s. equities, you might lose your shirt in this. tech stocks back a 52-week high, the s&p 500 plumbing new ties for the year, too. can you make that bet right now because it feels like this fomo-fulled trade would watch out any shorts. frederique: you have to look at performance not over a week or a couple of months, but over a year. that's why it is important to find sectors in which you have very strong conviction, and put your bets there. u.s. biotech, for instance,

there are a number of clinical data points coming up which are not recognized by the market for jobs with unmet needs. and there is a pickup in m&a activity. with these catalysts, this sector can really help performance. as i mentioned, japan is another bet which is important for us. there is a return of inflation above trend growth, wages are growing, there is robust capex, as japan is benefiting from the trend of restoring. -- reshoring. importantly, valuations are attractive. we don't want to be investing money where valuations are discounting the best possible scenario. you mentioned westech, we're concerned there is hype, a lot of hype around ai. we're mindful that some companies will benefit, but not all of them will.

so we want to be cautious and deliver good long-term performance for our clients. manus: that de-risking narrative, some people will see it as a pro-risk if it if you look through the debt ceiling. as you say, prudence is for de-risking, but you also have a strong commodity view as well. as inflation normalizes, and maybe this is a slightly more u.s. and european view rather than a u.k. view, but to the commodity play, do you want to be shorting commodities? frederique: there is a lot of divergence in performance. you have agricultural commodities which have stayed more or less stable. you have industrial commodities which have corrected year to date, though they are above their five-year average. if you have -- if you have gold which has had strong performance. you want a strategy which takes advantage of divergence and take advantage of volatility.

where a client profile allows us to, we like to have a long-shorts strategy for commodities to take advantage of these different dynamics. dani: thanks for joining us this morning. enjoy the rest of your friday. frederique carrier, head of investment strategy at rbc wealth management. we're going to discuss walmart earnings. some concerns about the u.s. consumer seeping into these retail sector results. this is bloomberg. ♪

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manus: let's get across to adrian wong in hong kong with your first word news. adrian: u.k. is committing a billion pounds to boosting its domestic chip industry over the next decade, focusing on

research and design. the investment is a fraction of what other governments have pledged as they look to reduce reliance on asia. the u.s. and eu plan to spend more than $90 billion on the sector. japan inflation has re-accelerated, with cpi excluding fresh fruit hitting 3.4% in the year to asia. underlying prices rose at their fastest pace since 1981. the data is likely to move the boj closer to policy normalization. sam zell has died. he was known for his bets on stressed assets. he built a fortune in real estate but also invested in radio stations, drugstores, parking lots and mattress makers. he also made a losing that that drove the parent of any of the chicago tribune into bankruptcy. zell was 81.

global news powered by more than 2700 journalists and analysts in more than 120 countries. dani: adrian, thank you so much. we had another set of retail earnings are yesterday. it was walmart, before that we had target and home depot. home depot had issues in terms of their profit forecast. but other brands may be doing okay. what has become clear is that maybe the consumer is in pain. we saw at walmart this big switch from discretionary spending, it is more stable type -- staple type items. manus: this comes down to the end of covid stimulus money. when you look at what is being said, north american research says 90% of american consumers are skipping on grocery bills and buying what is absolutely necessary. we could be down to the last hurrah, that is the mood. walmart have raised their forecast on new gains with u.s.

shoppers. it was on e-commerce, which is where they saw the gains. ironically, not for alibaba. it is a just supposed -- juxtaposed position. dani: people are still spending money, but what are they spending on? walmart said the shift to buying things like grocery and health care. the shift in the first quarter was bigger than all of last year. niq says consumers are near a breaking point, and it could be three years before spending power comes back. the confusion is people still have jobs. unemployment not taking higher, jobless claims look solid. manus: there is a reason to be cautious going forward from one or two of the other major retailers. home depot cut its forecast, citing consumer

pullback. and walmart also showing a slight break in the sales. coming up on the show, we will cheer the american lawmakers. is that what we will do? is there a share on capitol hill? will we hear optimistic towns from leader mccarthy? there is a picture of him there. the market is winning for news on the debt ceiling. dani: the market here is that optimistic tone. we're looking at equity futures moving higher, basically everything trading at 52-week highs at the moment. this is bloomberg. ♪

manus: this is "bloomberg daybreak europe". dani: final push, inviting urges on his negotiating team as house bigger with partly -- mccartney signals a deal may be struck this weekend. fed officials sound increasingly split over policy at once meeting, pumping traders to lift bets for a hike reading g7 leaders are meeting in japan as they talk about sanctions on russia volodymyr zelenskyy will attend. we are live in hiroshima. these equity markets on fire. they are doing really well to close out the week. it is japan, the u.s., tech, everything. manus: there is a great deal of concentration risk. $1.7 trillion worth of options will expire. and people are saying this is the tightest range in equities as the 1990's.

in that respect, you may well see a little bit of a break, 3.8% is the range. we are looking at oil having not a bad week as all this leg which about a debt ceiling resolution is coming through, and that's marked a rally. -- that sparked a rally. rates were spiked higher on the week, maybe going for a skip in june skip is not a pause. lori logan does not see the case for a pause at the moment. crude is having its best week since the middle of april. and gold, we are down 2% on the week as the haven demand lips ever so slightly. a skip is not a pause. go figure. dani: again, i kind of feel like they are similar, although i will admit, beat saurus.com put skip in there, and pause wasn't one of the synonyms. when it comes to this equity

market, i already talked about this to death everything is at new highs, we have the dax. one thing i will say may be an extra piece of commentary from barclays is that it is not just the ceiling thing, it is a foam a trade around tech and ai did that is why we are seeing this concentration risk around tech. the other piece of optimism comes from the debt ceiling showdown. u.s. house speaker kevin mccarthy and senate majority are making an for a bipartisan deal to avert a u.s. default. mccarthy says negotiators may reach an agreement in principle as soon as this weekend in order to avoid a historic default, they will have to vote likely by next week. let's get into all of this with carl weinberg. you have been crunching all the numbers, the numbers i see are treasury coffers, 68 billion, the lowest is 20.

just earlier this week, they made a coupon payment of about $50 million. are we just running on fumes? what does this mean? carl: good morning. we are running on fumes, the balances at the treasury this time of the year are usually north of $900 billion. as you pointed out on monday or tuesday, we were down to 68 billion dollars with more cash going out the door. there was more cash coming in the door also, so not just a one-way street. nonetheless, when we do get a deal, which i'm sure that we will just out of stubbornness if nothing else, we are going to see treasury out there building up its cash balances that will mean a lot of borrowing initially in the bill market and we are going to actually see a spike, i think, and short-term interest rates as the treasury comes into the market and decides to replenish its cash balances. manus: good to see you this evening, thank you for staying up so late.

just as you throw that to meet which is pump up the volume, pump up the offers up to one trillion. if they go for the very short end, what is the possibility that they cause a market implosion to the point of where they dislocate an exodus of money market funds? carl: there is always that possibility. of course, we have the federal reserve out there with it job to maintain liquidity in the market. they have tools they could use to help manage short-term interest rates and that kind of a circumstance. yes, we are going to see some upward usher in the bill market. even the fed won't be able to control all of it. so, we should look for that. i don't think that the fed will allow liquidity conditions to become a problem for market operations. dani: can you get into this skip and pause debate? the sorest.com says they are not synonyms, which i don't think should be our source when we are trying to discuss the fed. what do you make of this like this idea that lori logan says

that may be the data will show at point that we just get a meeting? carl: i am sure the data will show that we are going to skip a meeting. i think the fed is very close to looking at at least a momentary week in where -- peak in where it is putting interest rates. we are looking at a target for the fed of inflation of about 2%. if the fed funds rate is somewhere around 5%, that gives us a real short-term interest rate of about 3%, that is just a little bit to the high side. probably where the fed wants it to be in an economy where we think it will continue to grow modestly at full employment, constrained by employment, and without inflation as we move into the period that begins at the end of this year in to 2024. in that kind of setting, the fed should be looking at maintaining its terminal rate slightly above neutral for the moment, and

tweaking it both ways up and down to make sure it does not let the economy overheat but also that it doesn't create a recession. manus: you are painting the goldilocks scenario. rates come down to a slightly narrower bandwidth. a lot of people who join us here do not see that as the scenario to crush inflation, to bring inflation, they have done the nine to five. but five to 2, 2 .5, is a much more brutal exercise do you think they can get from five to two without a brutal slowing down of the economy? and i presume some kind of material rise in unemployment? carl: first of all, at high frequency economics, we are getting tired of waiting for the recession. for a year now, we screamed that it had to end in a recession. usually it does, but this time, for a variety of reasons, it

does not seem to be the case. the economy is clearly slowing and we are expecting slower growth, but that growth rate is still going to remain positive in our forecast. recession this time around looks like it is not going to happen. the consumer is starting off with high cash balances and high real incomes, and they are paddling their way through all this. we will see a slump, perhaps. at the end of this, we will only get back to gdp growth of one or one point 5%, because we are at full employment. growth is constrained by productivity gains and by demographics. we can't see 5% like we would normally see in a recovery you're looking for a slow recovery that with inflation actually coming back down to low target by the time we get into the middle of next year. dani: ai cactus sheet on other thing was is that it is not the banking crisis, it is what the fed has been doing.

this may be a controversial question, and maybe we'll get me in trouble. do we have any evidence that what we have seen in terms of inflation coming back in is actually because of the fed? or is it a natural unwind when you see commodity prices coming down, things that are not in control by the fed? carl: commodity prices coming down have been a big part of the headline inflation story so far. if you take either headline or core cpi numbers and move them forward just on the basis of the seasonals alone, in other words, real changes in prices stabilizing out, you get the fed 3.3% forecast inflation rate for 2023, but you are down to about 2.4% year-over-year by the time you get to december, and below 2% by the time we get to the first quarter. in my opinion, what is happening is that we saw a burst of monetary stimulus because of the obit problems, the covid

lockdowns, and that burst in monetary stimulus led to a burst of growth, but also a one-time burst of races in response to a one-time increase in the money supply, which was almost by one third. once that increase in the money supply gets deflated by higher prices, then we will get back to normal and we will see prices stabilize again. this is not the runaway inflation you will buy persistently loose monetary policy that we saw back in the 1970's. this is just the normal response to a one-time shock to the money supply leading to a one-time adjustment of prices. manus: i would just like to clear off -- you have been waiting for a recession that never happened. do you believe that the banking crisis, which did and was very real, is it a one-off? the reason i ask you is because i am looking at the fed's lending to angst.

the yellow part of the bar chart. bank term funding program is at a record again. the discount window is there, that has collapsed in terms of the discount window. the yellow bars, the bank term lending, $87 billion. that is a record. what does that say to you? carl: i am glad you use the word crisis and then dani didn't. there is not a banking crisis. what did you expect would happen? what did anyone expect would happen when the fed started tightening monetary conditions? did they think that we were just going to sell through this seachange and -- in underlying conditions without some institutions failing? in 1978, when the fed started hiking rates, and the first year before paul booker became chairman, 10 banks fell. in volcker's first year, another 10 banks fell institutions whose

assets are fixed term loan at fixed interest rates are going to see their asset-based decline when interest rates go up. what else did you expect? and some of those institutions were running into capital adequacy, sure, and have to be shut down. sure. we are seeing spotty problems in the banking system as a result of fed policy. this is exactly what fed policy was supposed to do. it was supposed to make things tough in the financial sector so that banks would lend less and consumers would borrow less and businesses would borrow less and a side effect of that would naturally be that consumers will get in trouble and some businesses will get in trouble. goodness gracious, this is what the monetary tightening is all about, we are just looking at it very close. over the lens of history, we will see this is a pretty normal reaction to what a tightening of central-bank policy does. manus: s. in part, not a great number of

the fed have been through the last cycle in banking and we are around to live through it and understand what the station of risk looks and feels like. thank you, carl. has lived through a cycle or two. let's get your business flash. >> disney is closing a luxury hotel in florida amid a high-profile right to the governor ron desantis. the company is also ditching plans to relocate 2000 staff from california to a new $800 million amp is. bloomberg has learned that britain is close to winning a major battery plant for electric vehicles. the indian parent of jaguar land rover is set to be leaning towards choosing it over spain. they would make batteries for the company's planned range of fully electric models. the time reports that the government offered 500 million

pounds to relocate in the u.k.. a group of tiktok creators and users are suing montana after it became the first u.s. state to ban the app. the lawsuit says the ban violates first amended rights to free speech. they included users who earn income from the platform who said they made life decisions based on it. that is your bloomberg business flash. dani: thank you so much, adrian. coming up, japan's inflation quickens yet again. after being put on the boj's outlook as stocks hit new multi-decade highs. this is bloomberg. ♪

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>> japan is what i referred to as a supply chain of a supply chain. there are 19 companies that operate 40 to 75 to 80% of the market share worldwide in their space. you cannot use a semi conductor without a japanese company involved in it if not multiple companies. manus: u.s. investor to japan speaking to bloomberg earlier. -- ambassador to japan. the yen rose slightly after japan's inflation accelerated in april. likely supporting the view that the bank of japan may revise its price outlook. does that mean for monetary policy? let's bring in senior asia stock reporter. good to have you with us. talk to me about the data. this is what the bank of japan wanted delivered, this is inflation. your take on the data?

>> yeah, today's inflation data seems to suggest that japan's inflation is becoming sticky. the overall index as well reacts are related after months of moderation. what was interesting was the -- another type of coin that excludes energy hit the highest level in more than 40 years. that seems to suggest japan's inflation is becoming more broad , not just driven by one-time cost pushing inflation. that is going to increase scrutiny on what the boj governor is going to say in the future. although, the market reaction today seems to be fairly limited. that is mainly because markets at the moment are focusing more

on the fed's policy, with increased talks about possible -- they might not pause after all. dani: it has done nothing to arrest the equity market rally in japan. warren buffett must be pretty pleased at this point. are the main drivers here? hideyuki: exactly. the news that he made investment in five japanese trading houses have been a very big japanese which have risen to the highest level in 30 years. there is also expectations of more corporate reforms, which have been talked about for a long time after the tokyo stock exchange made explicit plans that the low valuation companies need to come up with business improvement plans, investors are

hoping that japanese companies may finally make more efforts to change -- to get serious about boosting capital efficiency. manus: thank you so much for being with us. we will see what the monetary policy response to sticky my who would've thought? coming up, disney is close to the point of where they will shut down a luxury hotel and scrap the plans for a new campus all amid the ongoing spat with fortis governor. details to come on bloomberg. ♪

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dani: disney is closing a luxury hotel at walt disney world in florida. it is also dropping its plans to

relocate 2000 california employees to a new corporate campus it was building in the state. this is happening as disney has been embroiled in a high profile and public fight with republican governor ron desantis. let's bring in john who is up very late in d.c.. just in terms of disney itself, how big of a blow is this for disney's ambitions in florida? john: the stock rose somewhat after this news came out. it seems like this is less about florida itself then part of disney's wider campaign to cut costs, and that includes jobs across the company, which of course extends all over the world. this is, however, it is a loss for florida. manus: good to see you.

thank you for staying up late. i know -- $17 billion over the next 10 years. 13,000 jobs is what was planned for disney into florida. so they have cover here, almost have cover, this political angst. disney did not specifically mentioned the dispute with the governor. is this the cover sheet that they can use that helps them? john: it is very hard to separate disney's business plan going forward from this very public and increasingly acrimonious feud between the company and desantis. as a of course, he is apparently planning to announce that he is running for resident. he now perhaps has a bit of

explaining to do. was this -- he initiated, pretty much, the course. dani: to that point, i am kind of torn in terms of what this actually means for desantis. he has been trying to put up this round of, i am going after these cultural issues. usually presidents come in and say, i am a jobs creator, what has happened in my state. how does this shakeout for the desantis likely presidential campaign? john: last november when he won by a landslide, he was looked upon as the republican champion and seemed invulnerable. however, donald trump who has announced he is running again and sees desantis as a very big

obstacle has spent the last many months trying to peers this armor. even today, trump said that desantis is caught in a mousetrap and has made this one of the issues he is using to attack desantis. desantis, of course, his project, if you will, was to promote a culture war -- culture war issues. now this is an economic issue. it seems that the two have sort of clashed as he is entering the national scene in a very big way. dani: john, thank you so much. please go get some sleep, almost 2:00 a.m.. as john goes and snoozes, the bond yields are coming in. but what we have seen is a selloff in bonds. i am trying to distinguish how much of that is the debt ceiling

optimist of owing back, as you said. the most underpriced trade right now is resolution. manus: we had our guest from high-frequency economics which was carl weinberg saying he had given up on science fiction scenarios. he thinks if the debt ceiling -- the treasury will have to rebuild their coffers by nearly $1 trillion. the question for the curve is, where do they did and sell those bonds across the curve? dani: we are running on fumes, $68 billion left in the treasury's cash balance. lowest since 2021. a $50 billion coupon payment happened this year, too. this is bloomberg. ♪