♪ jon: welcome to bloomberg markets i'm jon erlichman. matt: i'm matt miller. we pierced 4400 on the s&p 500 and we are about 4410 at the moment up .8% after the fed pause yesterday. even with the market pricing in a hike for the next meeting. the 10 year yield down about six basis points at 370 2, 370 three. the bloomberg dollar index fallen to 1221. oil, debt -- wti of above $70 a

barrel at 7046. there have been a couple big themes this year. the tech story we know well. right now microsoft is on pace for a potential record close. a lot of the ai hype playing to microsoft's favor. that stock up another seven dollars in change, to present today. since the lows of last year it is not just tech climbing. lennar getting a further advance today up another 3.5%. pretty strong orders data encouraging investors. not all names are higher. we have seen profit pressure at the grocery giant kroger. that stock is off to the tune of 3%. we have been talking about the big ipo despite big economic headwinds. kava going public, a babe -- cava going public, a big pop for

that stock. matt: let's get back to the fed. former fed vice chair richard clarida says the fed is finally looking to the data to make decisions. he spoke on bloomberg earlier. richard: the fed has inflation coming down more slowly than a lot of folks. the fed also has a smaller rise in unemployment than a lot of people expect. i think that if the data is closer to market expectations versus fed expectations they could be done in july. i think for the first time in a while they are data-dependent. matt: goldman sachs chief economist john nadia says the fed taking a different approach. yesterday he wrote fomc but is up and see a more moderate pace of tightening is appropriate out of funds rate is closer to its likely peak. we think it likely means the fomc envisions hiking every other meeting instead of at consecutive meetings. jon: ok.

let's get more perspective. joining us is the bloomberg opinion columnist to give us more perspective on the market story, also the founder of units and advisors, and asset management firm. economists will weigh in on what the fed may be thinking at what it does with rates from here. what you think? eric: one thing i think we can be confident about is the fed is as serious as a heart attack about getting back to inflation targets. i've been saying that for more than a year and i think their behavior reinforced that. the problem the fed has i think, and i am sympathetic to this, is the data they are relying on has a lag. i don't think we have any reliable way to know where inflation will go. so they have to rely on economic data that is often three to six months old. i think that is often why they appear to be three to six months behind the curve.

what happens next will depend on where inflation goes and how fast. but i do not think they will lead off until no matter what happens to the economy until they get back to something close to 2%. matt: it's funny, mohamed el-erian has come on in the past and said, if they are really looking at the data, if they are truly data dependent, they have to hike at this meeting. now we hear richard clarida say they are finally looking at the data, why they did not hike at this meeting. the smartest people in the room disagree with each other. what data should we be looking at here? what is the fed paying the closest attention to? nir: well, they say they are paying attention to core pce and i think that is fine. as you said, matt, people can disagree about what measure to look at. it seems to me that regardless of what inflation get you look at whether it is cpi, pce, core, headline, you are still looking at a lag in the data.

if you look at more recent data, core pce, housing plays a big part in that. look at more recent market data. rent, or some other data points that might give you something more recent, you are still looking in the rearview mirror. i do not think there is any data point that will tell you what will happen to the core pce in a month, or two, or three. whichever way you cut it, you are sort of behind. it's not only about the data you are looking at. it's also about the goal. commentators disagree about that as well. my reading of the fed is that they want a real positive fed funds rate and we are getting very close to that, if we are not already there, which is why i think you have the pause. but not everyone will agree that is necessarily the goal. i think that is the fed's goal mainly because they are trying to not repeat the mistakes of the 1970's. matt: how about 2%? you have pointed out for a year

they are very serious about getting to their inflation target. 2% is what that is. does that need they actually need is mean they actually need to get to 2.0%, or with 2.5 or 2.7 five be ok? nir: i think that would probably be ok. the question is, why 2%? it's a somewhat arbitrary number. it could be 1, 3. my reading is if you look at the historical data we have on inflation in the u.s., the long-term rate of inflation has remained somewhere between 2%-3%, closer to 2% depending on what you want to do with a huge outlier in the dataset, the late 1970's and early 1980's. based on the historical data we have come to accept 2% as an acceptable rate of inflation. you can argue with that, but i do not think the fed will be dogmatic about that. i think as long as we are approaching 2% and we are getting there, i think that will be good enough for them. jon: the other part of this

story is the s&p 500. you could make the argument the investors are fighting the fed because of the big rally we have seen. except when you look under the hood and everybody talks about this you have seen a massive rally fueled by ai in a basket of stocks. how do uss what is happening in the stock market now? nir: i think you said it perfectly, john. the key insight is there is a huge amount of concentration now in the s&p 500 that we are all looking at the market proxy, i think. the top five names in the s&p account for roughly 24% of the s&p 500 and among them are the big tech names, google, nvidia, microsoft, apple. all of whom are believed to have a big lead in the ai race. right now, ai is all the rage and people are putting their money behind ai. it makes sense to me they would be targeting those companies. but, given those companies dominate the market, you have a market that is going up despite the fact that the vast majority of the market, it seems to me,

has not really gone anywhere this year. that has started to change recently. but by and large, if you look at the year, you see these names carrying the market higher. i do not think it is a reflection of anything other than the ai trade that's my read. i think by a large this market is waiting to see whether we get a recession and how severe that recession is likely to be. it seems to me that there is a trend is a extra medicine amount of uncertainty about whether we get a recession, when it will come, how severe it will be. it is not surprising to me investors are taking a wait and see approach. jon: one of the challenges now is people have a good history on what happens when the fed ultimately starts to lower rates. there is even a pretty good sample size of what happens when there is a fed pause. bloomberg intelligence noting in those cases it was at least three months. i think there are only a couple examples where you can look at a pause that lasted a month and

see what happened to the s&p 500. three months later, one of those incidences we are higher, one we are lower. to your point, i think we have to figure out what -- where the fed is going and what investors want to make. nir: this is where i am dogmatic, john. to me that's not enough data to draw meaningful conclusions. the pressure will be, how many data points do you acquire to draw a conclusion? in this case i do not think we have enough data to have any confidence. i also have an unpopular opinion. when i look at the long-term data, 150 years i think it's reliable. we have data going back even to the early 19th century. i do not necessarily see a clean line between market valuations and interest rates. i mean, you have environments where interest rates are high and valuations are high and vice versa. every mutation you can think of. i think we are flexibly assuming higher interest rates will

resolve lower valuations, but there is no guarantee for sure. in that context i think people can scratch their head less about why they are seeing high valuations alongside rising interest rates, so far at least. matt: i want your take on a couple things jerome powell said yesterday in the press conference. one, the housing market has bottomed. i thought that was interesting. the other thing he said is a cut will not be appropriate until inflation market is coming antonin scalia. he said, we are talking about a couple years out. does that make sense to you that a cut is a couple years out? nir: i wish he would not say those things, you know? i don't think he has any idea where the housing market is going. he does not have any idea about the timing of this. i think the fed would help itself is paola said, look, the reason we are looking at backward-looking data is we have no ability to forecast and we will get the most current data that we can, but ultimately, that is what we have and how we will make decisions. i think those comments are not

helpful. in terms of the timing, the way i thing about this is alternately, -- ultimately, the fed funds rate should be roughly 50 basis points above the run rate of inflation. thinking back to the long-term target, i think they have the ability to lower rates to 2.5%-3%. that's probably the so-called natural rate of interest, if you want. if you accept the 2% as target. now we are at 5%, 5.25%. if you expect core pce around five maybe you get one more race, maybe two. but ultimately, i do not think it is helpful for powell to make those statements. matt: great insight from nir kaissar of bloomberg opinion. live nation stock popped today

after announcing a new pricing structure that is supposed to add transparency. we'll introduce frustration with -- will it reduce frustration with the ticketing monopoly? that's next. this is bloomberg. this is bloomberg. start for free at godaddy.com old school hard work meets bold, new thinking, ♪ to help you see untapped possibilities and relentlessly work with you to make them real. ♪

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jon: this is bloomberg markets. i'm jon erlichman with matt miller. our stock of the hour is live nation the parent company of ticketmaster saying it will show customers the full cost of concert tickets up front after complaints over so-called junk fees that mislead consumers. another player, seatgeek making a similar pledge. executives from the company meeting with the biden administration today. now we are awaiting comments from the president. matt: joining us to preview is

bloomberg's chris palmeri in los angeles. this has been an ongoing debate. the young kids would say ever since the taylor swift fiasco. but really, it's been a problem for decades. certainly since live nation and ticketmaster were allowed to combine. is monopoly power the big problem with ticket prices now? chris: it's part of it. that is what live nation is trying to head off now. some proposals to fix the ticketing business would be to limit the ability to have long-term contracts with stadiums. to give them the pricing -- power to set pricing for fees, things like that. by this gesture, live nation is saying we are addressing this problem. jon: putting all the costs upfront. chris: exactly.

this only applies to live nation. it does not address the fact that artists are charging a lot more money for really good seats. i am paying $400 for madonna, four hundred dollars for bruce springsteen. this is really where the industry figured out, we can fight the scalpers by just charging a lot of money for good seeds. -- seats. this will not change even though the fees will be fully disclosed before you buy them. matt: in terms of the secondary market supply and demand has a lot to do with her. if you got the springsteen tickets for cheaper you may have been able to make a progress -- profit assuming you did not necessarily needed to see the boss. how has that been since the reopening or the end of the pandemic? everybody wants to see a concert. chris: it has been a boom. live nation stock had a little bit of a down year last year and

now it has, ringback -- roaring back despite the effort to limit pricing. it is a booming market now for concerts. people want to get out again. you have to be careful what you wish for. one of the initiatives live nation is putting forward is to limit resale of tickets. we have seen that in a couple cases with pearl jam and the cure. i cannot get tickets to the care. -- the cure. they were just not allowed to be resold. so if you are a fan and you are locked out because you are not allowed to resell, maybe that part of the reform is not the greatest idea. jon: hopefully you can get out to another show. we wait to hear from the biden administration on this. you talked about different solutions. the reality is people are looking for tickets everywhere online. hotels, airlines. i'm curious about whether what

is happening with these concert ticket operators will influence other areas as well. chris: it certainly seems that way. this is one of those rare nonpartisan issues. republicans and democrats both. we will see a push for resort fees in hotels, another thing that drives everybody nuts. airlines again. they have been working on that a while. this is part of a bigger bipartisan push that i think we will continue to hear a lot from. matt: bloomberg's chris mop -- chris palmeri covers the entertainment industry for us out of los angeles. coming up, ford is joining forces with tesla's electric vehicle charging network. art of our interview with the cfo john lawler next. this is bloomberg.

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jon: ford recently joined it tesla's charging network for electric vehicles effectively making tesla's infrastructure u.s. standard. earlier the bloomberg surveillance team spoke with the ford cfo john lawler about he saw the move as beneficial for ford customers. john: we see ourselves as a first mover in that we have three great vehicles on the road today. we are learning a great amount from those customers. we are already working on our second generation electric vehicle. and we have started working on our third generation. we see ourselves in front. when we move to charging, the movement made last week or two weeks go with tesla is great for customers. that's what it is about. it opens up 12,000 additional charging stations for them and allows us to scale that very quickly. it is all about making life easier for the customer.

>> in detroit you are giving it away to tesla. how much did you give away to tesla here with the agreement? john: we don't see ourselves as giving it away to tesla. what we are doing is opening up to tesla network, working with tesla providing that for our customers. i think it is about giving them what they need and the convenience of having more options from a charging standpoint. >> to put a bow on it is tesla the industry chance -- standard for charging now? john: tesla has a very dead charging network and it's good for our customers to be able to participate. coming up on -- >> how much can you raise prices? jon: this year prices are down slightly. i think the path of continuously increasing prices is behind us. we will have to manage that. in certain areas we will be able to price new products where we have strength differentiation. overall, i think the industry is past the large increases we saw the last couple years, largely

during inflation. we need to look up -- look at affordability for the consumer and management. >> do you feel you have to respond to price cuts in the industry more generally? that there is a competitive momentum downward in terms of trying to cater to a consumer that is borrowing at a high rate relative to history? john: you have to look at it by vehicle and segment. where the competition is, where you are at with the strength of your product, the differentiation you can provide. where is the national demand for that product? right now we have a lot of new product on the road especially in the blue business as well as at the pro business. what we see is with the new product and the differentiation and the iconic brands we have we have pricing power and high demand. matt: john lawler the cfo of ford pointing out demand has not subsided yet. we keep waiting for prices to come down. in the used market.

we have seen it a couple times and then we get a head fake back up. in the most recent inflation data you have seen still strong demand for cars. and i guess we will continue to wait for consumers to back down. jon: well, i think it is interesting. john lawler was also commenting at an industry conference where he basically said, consumers also think about what they are spending on a vehicle as a percentage of what they have to spend. so, he said something to the effect of, before the pandemic, about 32% of disposable income was going towards some of the ford blue purchases that had gotten up to around 15%. he seems to be indicating he thinks that could improve, may be getting back towards the 13% level. one would have to assume that better pricing of vehicles for the consumer would be part of that story. matt: and i think that when you

get the next generation of dedicated electric vehicles that ford is building, for example, in tennessee. general motors with its all tm platform, you will see not only better performance in those vehicles, but also lower pricing because production costs will come down. jon: i thought that was a great question that the bloomberg surveillance team was asking about. automatic, are you handing over business to tesla? if you want people to buy those vehicles, matt, you have to build a charging network to offer those opportunities to customers. what tesla learned a decade ago is he better build something, because you cannot rely on what is out there. i think a lot of players for gm have been realizing that as they roll out there ev strategy. matt: elon musk hit it out of the park when he built that charger network. no one else has done anything even close. even groups of carmakers coming together have not been able to achieve that. if you cannot beat them, join them.

with jon erlichman i am matt miller. this is bloomberg.

romaine: taking the bull by the horns. the s&p at its longest rally in a year and a half. romaine bostick here kicking you off to the close. a sixth straight day of gains for the s&p. a streak that has pushed the benchmark back above 4400. back above its key moving averages and now back into overbought territory. as the rally sustainable iago about 80% of the s&p higher on the day. set up the 11 sectors in the green. at least three dozen stocks at