>> i really feel the markets are kind of getting divorced from the fed. >> the issue is defensive policy. >> i think the fed will have to continue to raise rates. the market is not pricing that in. >> there are few historical examples of the fed hiking and pausing and resuming. >> i think the fed has to sleep with one eye open well into the future. >> this is bloomberg surveillance. tom: good morning, it's tuesday on radio and on television, jonathan ferro is on assignment

somewhere warmer and better and prettier and cooler. lisa: how did he get that assignment? tom: anyway, he's on a wonderful assignment. it's an interesting day to say the least. ben ladler will start us off on the equity market. with futures negative, little bit of the pullback, the single best i heard in literature this week -- this weekend, everybody was publishing with stuart kaiser at citigroup yet here we are. that is the feeling of the bulls and the bears. lisa: even though it seems perhaps the phone mode trade feels -- the fomo trade feels frothy, he doesn't see any obstacle for it to be going even higher. are we there yet?

where bears have fully capitulated? that's the key question, have we gotten a bit over the skis with the trade war doesn't have legs that can keep going regardless of what the fed does? tom: it could be something else and that will be our theme this morning. across the data, it's sort of a turning market. we saw the secretary of state in china and that was drama over a long weekend and it seems to be constructive to get to more talks. lisa: although a lot of questions around the substance especially as lawmakers go to detroit to much in ford and gm around supply chains and the idea of not decoupling but making supply chains more resilient. how do you parse that out at a time of incredible competition between the two nations? tom: petrodollars are buying into english football among other things.

the financial tunnel names reporting. abu dhabi is looking at lazard and they walked away from the deal but you wonder if that is the future here of global wall street. lisa: there was a story about this pressure on banks which is basically revenues are going down. there are not the same kind of deals there were pre-pandemic as they were last year. at this point, how do you move forward at a time of such competitive pressure, competition and some of these smaller boutique investment firms looking for perhaps job cuts but also some sort of perhaps cash infusion. tom: it's important the calendar of discussion. i think we are into june, october discussions. it's underscored by the interest of abu dhabi and the adq wealth

fund. that will be what we look for in july. we will do a brief around 400 fed speakers between now and friday. lisa: there are a lot and perhaps listen to what they had to say. u.s. building permits and starts for may are coming up and the philly fed, nonmanufacturing activity and fedex earnings after the bell which will always be interesting.the housing building permits gives you a sense of how much recovery and demand is picking up in this sector. fed speak today includes st. louis fed president jim bullard in barcelona. 1140 5 a.m., the vice chair michael barr and new york fed president john williams is speaking at the governance and culture reform conference of the federal reserve. i'm curious to see what they have to say about banks. tom: sometimes they talk about

banking but things away from monetary policy but i would like to hear john williams of the new york fed reaffirm his belief in a low. the zeitgeist am getting is maybe the lower our start is the higher. lisa: maybe the end rates we will end up with ends up being significantly higher than they have been in the past. it's a key existential question in the market. the german chancellor ola schulz is hosting a chinese official went for u.s. lawmakers go to detroit to talk with ford and general motors ceos about perhaps moving supply chains away from china particularly as it has to do with electric vehicles. how does this tension evolve when you have this -- these diplomats coming out and trying to make peace but the political rhetoric is such you are moving toward a more hawkish kind of feel regardless of what the diplomats say.

tom: the cfo of ford visited with us a few days ago and he said basically, we cannot make enough of the fancy cars. thanks to liz ann saunders for sending in a picture of her antique bronco. she likes the big tires and all that. i'm very jealous to say the least. dow futures are negative and the vix is 14.54 after the state of this bull market. the yield space is really important. going to the 30 year bond, 3.88% , up three basis points and elevation in the 10 year. west texas is $72 so a little bit on oil and the currency

market, i cannot make sense of. euro-dollar is $1.09. for the four day work week, we start strong with been lalder - ben ladler. you say its foundations within the bull market so what makes your stocks higher? >> it's fundamentally driven. u.s. economy will grow 2% this quarter come recession risks will be pushed back and earnings forecasts have doubled in the last three months, absolutely opposite of what the bears looker -- are looking for. 11 straight months of falling in laois and, breakevens are a 2.3% which is exactly were the fed wants them. consumer inflation expectations, the labor numbers friday came out from the university of

michigan survey are good. i think this is opening up. this is giving companies, relieving the pressure on the profit margins,dpi is running four points belowcpi is giving consumers purchasing power back. this is the scenario. we also have this capitulation which has given us this leg up in markets. lisa: have the bears fully capitulated? this has been turbocharged by the short squeeze perhaps. is it over? >> no, i think this is the sweet spot. the long-term investor sentiment is now neutral for the first time in a year-and-a-half area it's a long way off positive. there is some capitulation and you really only seen it happen in the last couple of weeks with

the retail investor sentiment. it's been very recent. this is the sweet spot of people capitulating higher. we are worried it's over baked in overdone but this is not it. lisa: will this rally continue to be fundamentally driven if the fed comes through with two more rate hikes as they promised later this year? >> the markets are fighting the fed. they been doing that all year so is just a symptom of the data dependence. i think the incentives are different. i think the market is more aware of the upside risks and happy to maybe look through maybe one or two more hikes. i think the fed will hang on to the last moment. they don't want the market to loosen financial conditions prematurely and that's where you're getting this conflict.

i think markets are forward-looking and that they know they are closer to the end of this than the beginning and they are looking for the next chapter which is we get this relief from interest rates. we have affirming of growth expectations. tom: push against the bears out there. i know you will not take a shot at mike wilson of morgan stanley. he says we get a more rapid disinflation that brings nominal gdp down and revenue growth down. it's not so much push against that but what is your decades of experience about if you have a disinflationary tendency at the top line of income, do you actually get it diminishment of revenue growth? >> i think that will happen. i probably disagree with the magnitude but there are huge offsets. one is profit margins, you may

get less revenue growth but i think you're getting margin relief today with numbers out of germany this morning, producer prices in germany went from 46% to 1%. you are seeing a mini version of that in the u.s. and that's massively for rapid margins everywhere in the world. that will indicate less revenue growth. the second is it will bring lower inflation and lower for an lower interest rates. i think that gives some further headroom for valuations rise, maybe slightly lester big talk but -- big tech but certain sectors of the market which may be cyclicals in the u.s. or europe and japan with frankly have been the leaders this year. tom: i look at the idea of rotation. i guess there is beginning to be

a broadening in rotation in the market. with the post-pandemic and supply and demand dynamics of the bigger picture, do we not get traditional rotation in the laidler bull market? >> steady as it goes. i'm happy to stay with the defense of growth names primarily big tech and things like health care. we are not out of the woods yet. we still got to get the fed off cause and cutting interest rates. it we might be six months away from that. that made be the real trigger for the next bull market. i think big tech and the defense of growth stock still have further legs but i wouldn't go too far into the rotation because most of the slowdown is still to come. i don't think it's a recession and i think it will be mild and it is ahead of us and not behind us. tom: thank you so much.

a cautious tone to the second leg of the bull market. which shifted here is, is it a bull market or a bear market in its shifted but now what? where is the second leg? that's what we are seeing from the equity bulls out there. lisa: you mentioned mike wilson and he said we've been so wrong when it comes to earnings. that's in terms of the market responsibly redid their numbers and scrutinized this and came to the conclusion that they are still bearish. tom: bring up the full on mike wilson.

lisa: many people will shrug that often say he missed it but there is a question. we just had the longest weekly winning streak for the nasdaq going back to march, 2019. we are looking at questions people have priced in and less returns for the ai promise. tom: i could not read the screen. at the camera was so far away. bramo with the save on the important mike wilson quote. that's a good way to start here. a four day work week, that's a joy. 47 fed's figures today, stay with us, sebastian gage at seven. ♪

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>> my hope and expectation is we will have better communications,

better engagement going forward. that's certainly not going to solve every problem between us, far from it. but it is critical to do what we both agree is necessary and that is responsibly managing the relationship. it's in the interest of the united states to do that in the interest of china to do that and it's in the interest of the world. tom: secretary of state of the united states jumpstarting things in china. i went to shanghai once. we decided to live large we stayed at the peace hotel and i had the immense honor of staying in a room with five or six national rooms there. i was in some british fake tudor room and that's the room henry kissinger was in in 1970 or whatever with nixon. i don't think this was the same but it was pretty cool. lisa: this is drenched in history although he was not

greeted by much of anyone. there wasn't much of a reception for him at the airport except for a couple of red carpets which was a metaphor. was there anything achievable coming out of these talks except for it not escalating. tom: the text -- the secretary of state getting off the plane in beijing, kind of like terry this morning. the basic idea of the shock of the secretary of state of the united states or any country being greeted in the country like he's coming out of reagan, you get to gate from gate 10 to gate three quickly. what was accomplished? >> everyone knows the infamous gate 35x at reagan national airport.

it was the ability both countries to say they are continuing to communicate, that is calculated by both sides is having the effect of diminishing tensions somewhat. i argued before the meeting and would still argue that that's largely illusory. my take is that china sees the united states business community as its friend, geopolitically and will continue to try to push that relationship. china also is pushing the united states to what they call recalibrated -- recalibrating its relationship and asia, to back off and agree that asia should be a chinese leg entirely which is an absurd proposition to the many kind -- countries who are our allies there. thirdly, there is no military to

medication and forth, there is no mention of ukraine or iran. we've got can occasion but we don't have a lot of communication and we certainly don't have anything to show on either side. lisa: this is the political tension now. perhaps it was a win for president biden in terms of not escalating tensions further and creating some sort of open lines of communications. was it a win when it comes to the politics domestically of a nation very much growing hawkish on china and some are calling for some sort of decoupling which this resident has pushback against? >> i agree that normalization of communications is a win for president biden regardless. i think that's very true. at the same time, we don't get much more than that. not much has been gotten. secondly, my contention would be that the united states policy

toward china started to flip in 2016-2017 before trump was president and it is among the most bipartisan, probably the most bipartisan policy we have gotten washington. that will not change either. the vast majority of washington wants communication with china, the vast majority washington also does not want a situation where we are either getting rid of our own geopolitical interests or putting our allies in more peril as a result. he's not doing that right now. lisa: what are the lines from the press conference -- one of the lines stuck out from antony blinken press conference. he says we remains were -- committed to her one china policy. we do not support taiwan's independence. we made it clear we oppose any

unilateral changes in the status quo by either side is that controversial and how is it being spun the day after? >> it shouldn't be controversial. with secretary blinken is doing there is underscoring that the united states policies 1979 in the taiwan relations act remains the policy of the united states government and there has been a lot of concern, a lot of understanding and misunderstanding around that over the past few years that frankly have been aided and abetted by both president trump and president biden in past statements. what blinken is trying to do is put a floor under that by saying our policy is as it was and it continues to be, make no mistake about that. clarity is good. tom: let's link air corporate relationships with china. catherine man is at the bank of

england is one of the great internationally economist. she makes it clear that we have a codependency with china. we need them economically and they need us. she owns the high ground on the transpacific codependency. what is the relationship in these discussions when they observed tim cook living that codependency at apple and bipartisan presidents saying no, we don't want to do that. how does that work? >> the vast majority washington understands the codependency. they frankly don't want to upset it. i find the war of rhetoric here whether it's decoupling or de-risking or anything else to be a little overblown on the street. nobody is talking about removing american business from china.

what china is trying to do simultaneously is try to attract and continue to have american business and investment while making the terms under which non-china investment will exist to be more onerous than it already has been. i don't see the united states is trying to take that away. tom: thank you so much. it's an historic trip of the secretary of state. i look at the place i live in at the bottom are the boxes from everybody and you look at the outside of the boxes. which ones don't save made in china? very few. lisa: we had a nerf gun at home that was also made in china. antony blinken highlighted that

de-risking is really the only logical way to go and decoupling is not possible or plausible given that trade in the past year has been higher than ever before between these two nations. it is not diminishing. that's the reason why i'm curious about the business tensions. they need to stay in china and the political tensions are pushing back. tom: you don't mention military tensions as well. my highlight of the bloomberg convention, my high point was a piercing conversation with a retired admiral mike rogers about the transpacific realities. we have a build out of pacific rim capabilities. lisa: how much is that underpinning the discussion because some of the allies of the u.s. have been you have this kind of tension, mistakes happen and when you don't have military leaders talking with one another and trying to offset some sort of accident, that's when

mistakes can happen that could potentially be catastrophic. tom: i'm looking it dollar weaker. it's a resilient dollar but off the recent peaks and the yen doesn't go through a $1.42. japan is under discussed and very important now. lisa: i'm watching the fact that yields are creeping to the highs. it's an ongoing grind higher into me, that's the collision course with respect to the dynamism in the trade. tom: fed speakers today, coming up, perfect timing, claudia sahm.

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tom: bloomberg surveillance on a tuesday with a four day work week in much of america and we welcome all of you area lisa and i are dealing with a data check that is sort of boring and sort of churning as well. it's sort of their and like lisa said, yields is probably the place to go but what is credit doing? do you have corporate high-yield spreads? lisa: there has been a steady grind lower and people are reassessing whether it's gone too far. i'm looking at high-yield bond spreads and they are narrowest

going back to right before some of the banking concerns started up again. there is something interesting in the data which is there is a pronounced direction lower in stocks for the first time in a while in this comes after eight straight weekly games and the nasdaq. is this a pause? if it's a pause, is there a reassessment going on? how much legs does the bull market have if it's a single development in a cohort of stocks and not necessarily more uniform? tom: i will not show this to you on tv but to lisa's important question on the standard & poor's 500 on a percentage change from where we are now, the center tendency is a 4% pullback and we are nowhere near that right now. there has been a moonshot since last week.

it went from 4100 up to 4500. it's a joy to speak to claudia sahm. she is a former federal reserve economist. when you are that young and you come out of michigan and you are codified with the rule in the economics game, where does the sahm rule come from? is that a paper you did? how did that get invented? >> the reason it exists is it was part of a policy proposal i had to automatically send out stimulus checks during a recession and to calibrate much you send of how often. it really was a sidebar to the policy proposals considered relatively useful to people watching recessions. that was never the point of it.

tom:the sahm rule is now front and center. how many states are in recession based on the claudia sahm rule? >> there are different ways you can calculate at the state level but 10 or less states are in a place where their unemployment rate at the state level has risen more than a half a percentage point. at the national level, we are not calibrated the state level i think it's a good exercise to look under the hood and see how various states are doing in terms of their unemployment and a big one within that group that has a higher increase in unemployment is california. lisa: if you look at these pockets of pain and you check the overall aggregate, doesn't make the overall aggregate look worse or better because some of the increase we have seen in unemployment has been driven by

a few pockets of pain? >> that's the thing to look at in a state like california. there has been specific areas of distress when you think about the tech sector which is important to california's economy. where we see these pockets of stress, do they spread? to they resolve themselves locally? right now, we cannot know that yet. that something to be watching, the spread that could eventually push the whole economy into recession. lisa: we can't necessarily get a recession forget unemployment creeping higher if you have consumer spending where it is. you say it's not a mystery so what is this telling you in terms of how long it can continue? >> it's careful to understand who is measured and how they are put together. something like gdp or personal consumption expenditures we look at, that's reflecting mainly a lot of high income individuals

were spending. you look at something like the on employment rate and everybody counts equally. cats where gdp -- there is this tension between consumer spending but that's in assessing where the data tells more about someone like elon musk than they do a walmart cashier. we have to be careful how the data is constructed. that's why the employment rate which is a more egalitarian measure what's going on, that's a good way to look and that looks strong as well. tom: i'm glad you brought up california. california is enormous. it's the united states, china, japan and the fourth economy would be california taken by itself. i think the financial media and frankly much of economics gets a totally wrong.

there are these dominant states that are florida and california new york and texas clearly. for those states not in recession while others struggle? is there something to size in america that gives us a better stability? >> it's really a mixed bag. we are trying to figure out -- is the weakness contained or has it started spreading? california is the biggest one where the on employment rates have risen. tom: i look at the fed meeting and the shock and all that we had two major economists say why didn't they just raise rates? were you surprised that after the verbiage, they didn't raise rates? >> i was but i will give them credit -- this is the most hawkish pause i could've imagined. they went out and said we will

have two more rate increases likely. that likely means people are putting 50% or greater odds on needing to raise rates. it's not necessarily a done deal. i'm sure there was a robust debate of this meeting about what the policy change should be. wow, the economic projections really nailed it home. that should have been a clear signal. forget about the chance of cutting this year. lisa: what you hear is perhaps people are not pricing in rate cuts. people are fighting the fed and they continue to disbelieve they will raise rates once or twice especially not twice more this year and they are probably done for the cycle. some say is the biggest risk to the melt up they see continuing. what is your probability of the fed going once or twice more based on what you were just saying, that unemployment is probably the best gauge of how strong the economy is and it's

still pretty good? >> that's all the more reason in the fed's eyes to raise rates. inflation has proven sticky. we could raise again in july they said. they have a month of data between now and the july meeting. what will they really learned that they didn't know already? i take them at their word for at least the first increase. this is got to be hanging on a nice edge. otherwise, just raise rates, what are they waiting for? i still think they will keep on holding the rate hike and inflation is just too high for them to be that comfortable to cut. lisa: people are curious to hear what jay pyle has to say in his heading to capitol hill tomorrow and will testify for the first time since the banking crisis arose. how much do you expect him to double down and say you guys are getting it wrong?

we will raise rates further and don't expect us to do nothing. >> reading the monetary policy report goes when he testifies, it has that flavor. there are boxes on how we think about what's happened in the banking sector and they are still isolated and some say it doesn't have anything to do with interest rate policy. you can see in that report emphasizing the same point. doubling down on what he has said and i don't think -- he will not want to go far from the script. they didn't want this to be hawkish. tom: what's our history of guessing or gaining or judging the trend and the second derivative of disinflation? do we get that right ever? >> rarely, if you go with the historical record within a

reasonable amount of time, facing this disinflationary cycle of how to do enough and to do enough -- this is not the paul volcker fed that said we want this and we want it now. there isn't much to compare it to. the fed's forecast especially in the out years is pretty optimistic. yet, they could pull this off. there are still signs of it but i think they will be very cautious in stepping back even as inflation starts to fall. tom: it's really important here and i guess it comes down to the disinflation trend in housing. we get housing data today. this was a wonderful article over the weekend. pantheon was blistering that the housing confidence and housing certitude is raw. they said housing in america, the hope of it is divorced from reality.

have we become too complacent about the ramifications of real estate at these high interest rates, waiting and hoping for disinflation? >> housing is one of the primary sectors that should be working through to get to the real economy. that's one of the most interest rate sensitive sectors. we have seen initially a lot of optimism pulled out and maybe pulling back into the market. the fed cannot move the economy on a dime. there is a lot going on but that's a primary transmission mechanism into the rest of the economy. tom: thank you so much and congratulations on the amount of work we see on thesahm rule out there in the third quarter. almost a third quarter. claudiasahm, i look at the 30 year mortgage and the bottom

line is it's this blather about the stock market and all that but it's really about rent, housing and what you do with your kids, etc. and the answer is the housing market is nuts. that's my scientific survey. lisa: this is a region by region type of market. i keep going back to the fact that no one is paying 7%. they are staying put at 5%. this is the tension underpinning a market that has been resilient and is now turning in the other direction. you look at homebuilder stocks and pricing. tom: the 30 year mortgage is 7.2%. critically, the long-term moving average is demonstrably higher. then late march and early april

and the median average is almost up to a peak level. it's a sustained 7.2% mortgage rate. i see the complete polarity between the places i look and you look which are different. there is nothing for sale where i look. nothing. it's shocking. lisa: every day jonathan says you got some mortgage rate that 3.20 5% mortgage rate, you won the lottery. that's the crux of the situation. tom: in england, they are now talking about a 6%, to your mortgage rate. we are at 5.3%. lisa: housing is not the office space issue.

there was a study done by columbia and in the professors that shows the implied losses for u.s. office buildings were about $500 billion in the digestion these office spaces were about 30% lower than they were before the pandemic. when do we see that come out? tom: a major shout out to cranes. i read every single article about every single piece of real estate. in the workout of it. it will be part of our theme on the back end of this year. futures are -17 and yields are up one point. good morning. ♪ he snores like an angry rhino. you've never heard an angry rhino. baby i hear one every night... every night.

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>> there's been a massive structural shift when it comes to the capital buildup in china. used to be the case that people wanted to invest in china and

manufacturing capacity in china but that foreign direct investment from companies has slowed dramatically and that has not covered up the real thing. tom: a very important book about 10 years ago on the future of the euro. he nailed that at the time. futures are negative. the dollar stable with 7209. housing data is coming out today and may jumpstart things and fed speak as we rationalize what we observed last week. real focus on bitcoin. katie greifeld has been helpful in giving us clarity on that. it's stable at 27,000. this is a joy, the global head of currency at brown brothers harriman. he is very good on the pacific

rim all the way up to japan but with a more global basis as well. when you approach currencies, what is the first pair that gives you information right now? >> thanks for having me. it's always a pleasure to see you each and every time i think dollar euro is the main thing but to me, dollar yen as recently been the real barometer. that's when you see the monetary policy. bank of japan has remained in the dove camp more than anyone expected. the fed continues to tighten and remain hawkish so that pair reflects monetary policy divergence. in a sense, the question is out and whether the ecb is defensive.

it's stark, the difference between the boj and the fed that it tells me the dollar will get stronger. tom: we will talk about the basic thing everybody in radio and tv wants. why should we care about the yen? why should we care about flawed theory out of the bank of japan? >> the bank of japan i think holds a special interest because they have been holding rates artificially low for decades. the fear in the markets is that once they have it and go back to positive rates and yield curve control it will have global implications. it will send shockwaves across the world. i am not as doomsday as that but

i have to acknowledge that it will be in her chattering moment. the markets will survive the markets will pick up the pieces and come back. it will be a seachange in one of the largest central banks in the world. it's been affecting the capital flows. japanese are some of the biggest savers in the world. they are chasing higher yields and that will be a big reversal when rates start rising in japan tom: if and when they blank, they restructure and i will leave it up to you but let's model $1.40 dollar yen and we get a much stronger yen and down to $1.15, what we used to perceive as normal. we get a strong yen so what's the ramification to china flat on its global gdp back? >> china has almost become its own animal. i think the strong yen will

impact the regional exporters. we see china and korea and taiwan at multiyear or multi-decade lows in terms of the yen. if and when that changes, we have capital flows but we also have the trade flow story. japan imports are likely to become less competitive and china may become more of a factor. china turned increasingly inward under president xi's third term and it's hard to figure out how they get the global story right. it's really turning inward and its domestic consumption and you can see that in the regional trade numbers. exports are diving into double digits. i think the world has to

rejigger and try to figure out how to move forward in a different chinese model. lisa: you look at dollar yen to get a signal for the dollar and the signal now is the dollar will get stronger. how much of a pain traders that check of >> dollar yen has been the biggest pain trade and folks are calling for $1.25. that's predicated on the notion the bank of japan was moving a combination. the present japan a -- japanese governor is more hawkish than the last one. it seems to be later rather than sooner that the data in japan is turning and we are seeing weakness in the hard data i think they are shy about pulling

the trigger on a regime change. lisa: does this signify a broader dollar rally that is not exactly what people are position for at a time when they got into -- going into the euro on the promise of more rate hikes from the ecb and the stronger economy on the heels of whatever stringent -- stimulus they are doubling down on? will that be the theme of the second half of this year, reversal of perhaps dollar weakness in the first half going back to dollar strength? >> that's a great point. the consensus trait is that the dollar will weaken in the fed will start hiking and cut rates this year. that's a bit of a pain trade. when all the dust settles, i think the fed will go higher for longer. they have one high-priced in but i sense a lot of analysts say

they won't hike again but just pause but i wholeheartedly disagree. you guys were talking about how resilient the housing market is. the u.s. market remains strong and i think the fed has to go much higher and much longer than expected tying it all together tells me there will be a stronger dollar, stronger than what the market is expecting. the ecb hike last week. the swiss national bank, they expect hiking rates and that's negative for growth. the dollar still stands head and shoulders above everyone else. this is maybe outside your purview but you say the dollar stands head and shoulders above all else. i got completely wrong that

equity return in korea. how can you have international stocks do well with a resilient dollar? >> i'm with you. global growth is slowing. there is no question the ecb and imf and world bank are projecting much lower growth. the equity market saw that the market is forward-looking. i share your puzzlement. it's hard to see how the markets will react. tom: you buy the imf gloom? do you by the three-year global slowdown? >> i think we can talk about help right and wrong the imf has been. in this time, they are right to err on the side of caution.

eventually, it will go into recession. when is anyone's guess but that's a piece of the slower growth. china is growing slowly you already have two quarters of contraction the euro zone. it's hard not to be gloomy. it's not a pandemic but it's a run-of-the-mill recession. beyond that, we will get through this. tom: thank you for the focus on foreign exchange. that was on the edge of cautious. lisa: a lot of people are cautious but everything is ai. tom: the market traders today in the spx is down zero point 4%. stay with us on bloomberg radio and television.

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when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. >> really field the markets are getting divorced from the fed. >> the issue is the lack effective policy. >> i think the fed will have to continue to raise rates or stay higher for longer in the markets are not rising it in. >> there are few historical examples of the fed pausing and hiking and resuming again. >> i think the fed has to sleep with one eye open well into the future. >> this is bloomberg surveillance with tom keene, jonathan ferro lisa abramowicz. tom: good morning, bloomberg

surveillance. thank you for being with us amid a four-day workweek. jonathan ferro is on assignment. is he in the northern or southern hemisphere? lisa: i have to check. tom: he takes people with them just to be sure he gets all that. when an interesting tuesday in the conversation so far has been interesting win thin was interesting on dollar resiliency and he doesn't by the weak dollar. lisa: this would be one of the various pain trays that could emerge in the second half especially with the euro given that it has started to break out. tom: ben laidler got us going but coming up, sebastian page with the definitive book on what you do with allocation and what

do you do with your money. we will do that in a moment. i look at the turn of the news of a clumsy three day weekend and basically, when lisa does her brief, the fed speak begins. lisa: it's important ahead of the all-important meeting of jay powell on capitol hill tomorrow and thursday. the reason why people are bullish now is because they don't believe the fed will raise rates twice more if at all. this is one of the underpinnings of the time when people expect inflation to go lower and for there to be some sort of immaculate disinflation. if the fed goes twice more, can the ai rally continue? many people are saying it's

tough to see that. tom: june 14 out to july 26 captures the six week cadence. i guess the july meeting is important but the next meetings are july 26 to september 20 which seems like forever. lisa: this is a story the caught my eye. dannon yogurt were talking about of they are an ai company because they are using artificial intelligence to study the gut bacteria to craft something that's better yogurt. is everything an ai company? can you basically say we use computer programming to try to understand our inner guts? at what point have we gotten past the peak? tom: i have to admit i'm very happy you brought this up. you know what camp i'm in, it's ridiculous. there will be winners and people

that will move forward. nvidia is a winner but i don't own it. basic idea is that in every vogue, there is that validity. at the same time, john lawler from ford motor said they are in ai company. i get it but i think we've reached the silly season. lisa: to give you a sense of what got the most in terms of traits, investors poured more money into tessa last week than any other stock. -- into tesla last week than any other stock. tom: i don't think they are doing ai trades now but i'm looking at spotify. if you have offspring, they have spotify. i think this is been usually anticipated within the music

business, spotify competing with apple music says they will have a premium tier that will have some form of hi-fi audio. they've been way behind on this and we forget there is something that society uses each and every day with a return back five years. it's 2.4% per year which has not worked out. lisa: you will expect more of this but that's not enough to drive everything higher but stocks are a bit lower as we head into a breather potentially. tom: don't start with the fed speaker. lisa: 8:30 a.m., u.s. building permits and housing starts for the day. and manufacturing activity fedex will be after the bell in terms of earnings may be a bellwether. tom: i strongly agree with this. we have fedex after the bell.

it's as big as apple earnings. that's all you have to know. lisa: the st. louis fed president will speak today and at 11:45 a.m., vice chair michael barr and new york fed president john williams. later in the day, we have the german chancellor olaf scholz speaking with the chinese premier in berlin. definitely differing messages versus some of the rank and file. tom: shanghai banking corporation will cut their gdp work more often -- optimistic 6.3%. sometimes i miss it often, there can be a book of the summer or the year and for whatever reason

, i blow it. i blew it with sebastian page is phenomenal beyond diversification. i give him the hirers regard on this. this is the most adult wall street books since richard bernstein's classic volume on value growth. i cannot say enough about it. every time i look at it come i'm blown away by the acuity. joining us now is the author, sebastian page. i will get right to it and talk about quack remedies. how does that affect asset allocations this year? >> we are going through a regime shift and asset allocation. this is a critical time in cracked -- and capital market history in my mind. after 40 years of declining

rates, we finally made a higher height and rates we wiped out $17 trillion in negative yielding debt. this begs the question -- what do we do with asset palette tatian and tactically i would navigate this regime shift and that's been confusing but also structurally, the 60/40, i think the 60/40 needs to be modernized. of the 40, we should add maybe 15-20% different alternatives and look for equity protection strategies so re-think diversification. this is a critical time for doing this. tom: this is really important. that was a nice 15 year gift and we are back to normal. we cannot go out and find equity. we are not kkr and cannot find private equity. how do our listeners and viewers

participate in the sebastian page 50/15 in alternative? liquid alternatives are interesting if you know how to select them. it matters how you defined liquid interred -- alternatives. investment strategies that focus on relative value that have less of the traditional market exposure are also available in liquid forms. it also calls for rethinking how you navigate markets tactically and how you protect for the downside. the big question for the 60/40 is what is the role of duration of treasuries when we get interest rate shocks. we just had a 500 basis point shock from the fed and we are not getting another one. we've been adding duration back into portfolios. it's a critical question if you look at five or 10 years as to what will be the volatility of interest rates, what will be the volatility of an asian and how

do you position your boat folio -- your portfolio for those types of regimes? is -- it calls for things like real equity asset strategies, stocks we didn't really like for the last 10 years pre-pandemic when inflation was below 2% but energy companies, real estate, investment trusts, metals and mining, precious metals and so on, strategies that have a levered response to inflation shocks. this is part of the new regime for the next 5-10 years. lisa: how much is this regime changing in real time? there was a time when tech stocks were the most interest rate sensitive and yet we have seen yields rise in a tech rally in tandem. is that connection also broken and the diversification in these areas different than it was five months ago? >> in the short run, 6-12

months, we are navigating treacherous waters. the narrative around growth stocks has been driven by different factors. yes, this correlation seemed to have broken a little bit but there is an underlying negative -- narrative of getting close to peak rates in the tech companies have shown they are focused on efficiency and you see positive surprises from cloud revenues and positive surprises on digital advertising and then you hit another kind of regime shift in ai. that has really been part of this story and you covered it at length in your show. ai has been around for a long time. it seems like the large language martyr goes and chat gpt are another regime shift and that's part of the value of growth equation. we went back to neutral in our portfolios and we were long value all of last year and benefited from that and that we

are back to going between growth and value when we don't want to be underweight if the ai bubble if you will is like 1998. we would rather be a neutral now. tom: thank you so much for joining us today from t. rowe price. west texas intermediate is 72.09. 10 year yield is 3.77 percent. the two year yield is four point 7%. standard & poor's 500 up a negative point 2%. lisa: we are taking a look at s&p futures that are 0.3% lower and i wonder if we're looking at something at the beginning or to the point that there is this issue of even if there is a

promise, will there be a and how do you play that at a time of big expectations? tom: my problem with the 60/40 split, i'm hearing people talk about this that there is an alternative investments base which is fine. it's pro but i'm not sure how it gets into someone's 401(k). if you have 13 choices in your 401(k), we know what they are. there is a money market fund and bonds and bond portfolios got slaughtered last year and blue-chip equity and foreign equity and a bunch of marketing concepts. where does alternative fit into that? lisa: it was challenging to get real assets into the portfolio. we know a lot of potential challenges to different assets that perhaps are not as

recognized by people going alternative. tom: this is the shock and we dealt with last week at the fed meeting, it's the idea that the game we were comfortable with is done. lisa: maybe, some people argue against that. tom: there is a group that looks for rapid inflation. we will drive this conversation forward at 8:00 a.m.. the u.s. equity strategist at citigroup will join us. equity markets are down 34,000. spx 44.39. ♪ (sirens) [due at target in 5!] copy that.

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>> i raise u.s. concerns about the p.r.c. provocative actions as well as in the south and east china sees.

about taiwan, i reiterated long-standing u.s. china one policy, that policy has not changed. we do not support taiwan independence and opposed to any unilateral changes by either side. we continue to expect a peaceful resolution of cross differences. tom: secretary of state on taiwan, when you talk about taiwan and you are secretary of state, you will get something wrong on that but the secretary of state after hannah storck visit area. lisa: breaking the tensions after some serious ratcheting up and some say it was the worst time at other -- ever between the two countries. tom: we got some perspective in the recent hour. this is not the first thing when i look at when i come in both the remembyi is often a weaker

chinese yuan. depreciation is where a currency is free and floating. the valuation is where governments really in charge of moving around its currency. i don't know where china fits into that. it's so opaque but i would use the word with china devaluation light. they controlled the yuan to a huge extent. lisa: perhaps they are not necessarily getting involved. they are kind of trying to cut rates around the edges but they are not delivering anything more major to prompt some robust growth to come back and that economy. tom: now we get a brief on china with the managing director of policy research at strategas. i love your note and that you don't mince words. you say china is broken.

it's such an outlandish phrase, what do you mean? >> good morning. we have been investors and thinking about whether or not there would be this big china rebound once it stopped its covid zero policy and started to reopen. we really haven't seen that transpire. we think the chinese dish chinese economy is quite broken at this point and they are struggling a little as they tried to move forward. it plays into the talks with antony blinken and u.s. business leaders as well. lisa: if you are seeing a desperation on the part of china but this recognition of the declines, how can they give assurances to businesses at a time of policy leaders pushing them to the other side to the risk and move supply chains out and they are not necessarily

facing free trade in that nation? >> i think china is trying to do that balance. you have seen there has been this issue with supply chains. you seem increasing rhetoric out -- out of the united states where they put companies to move out of china and moved to other locations and reshore and nearshore. what we have seen is that companies have been moving out of china to some extent. we've seen production that will remain in china but if there is production that would move to other countries, they are starting to move their supply chains out and we think china has been surprised by the rapidity with that has happened so they are trying to do a charm offensive and make sure they are still open for business and meeting with you as business leaders try to convince them to stay in the country. they also recognize there is this trend within the u.s. that the u.s. is pushing this with the west to try to move supply chains out of china and d risk

or d couple depending what country you may be talking to. there is deftly still a concerted effort regardless of whatever conversations antony blinken had over the weekend, there was still be an effort in the united states to try to do areas of tech control. that will continue to be a focus and will only continue to grow over the next few months. you look at what's happening in washington, the republican and democratic side continue to have a push to be tougher on china. that policy will not change any time soon. lisa: it's great to speak with you because you talk with companies in different policymakers and you can find the cross-sections between the two. you said the charm offensive is not to convince -- is to convince u.s. company not to move out of china. is it working? >> to some extent, there is an

effort -- not to buy into a big companies are trying to balance. they understand what is coming on the u.s. side and we have to figure out how they still manage their operations in china and tried to make sure there are guarantees. it there were to be another covid for instance, how do you deal with supply chains shutting down again? that's one of the biggest concerns that has driven production out of china. companies also need to be on the lookout by looking at supply chains and they are seeing what's on the forefront of policymakers minds in the u.s. and european countries. they also have to play that balance of how quickly we potentially move and what do we move and what do we think will be the next step over the next couple of years and how does that impact their bottom line? tom: users are up -15.

i want to turn to the domestic story. i noticed the distraction is there is not much going on in washington. i know i've got to be wrong on that. what are you focused on within our domestic debate as we begin the summer in washington? >> the u.s. has been focused on the debt ceiling for the past couple of months. that was resolved at the beginning of the month so now we are starting to see policymakers turn to other things. one of the biggest things you hear talk about is what they will do about the budget. will republicans try to cut the budget more than it was agreed to during the debt ceiling deal? that will be a big fight and they have quite a bit on their plate going to the second half. we think they will be busy over the next couple of months but particular for the end of the year as is normal in washington. they will be focused on china legislation and to kill her.

they will focus on appropriations and focusing on defense. we also think there is a possibility that we could see a small fiscal stimulus bill for the end of the year. you have the house ways and means committee that did a bill last week really try to talk about increasing the standard deduction for taxpayers and cutting taxes for businesses and restoring expensing for the r&d tax base and going back up to 100% so they are trying to do these things and we think that could show up again at the end of the year. tom: is that to extend the trump tax cuts? >> it is somewhat aligned to that. the deadlines would fall into place when the trump tax cuts expire in 2025. there is this effort in washington to think about looking ahead to the election year next year so they want to think about how the economy is

doing. we think a small stimulus package is more likely if you have the economy slowing to the end of the year. that's where this could play a factor. they are trying to make sure there is some stimulus to make sure the economy is in decent shape as we move into the electoral time. tom: did you see gregvaklliere this morning. he comes back and his entire morning note is on the deficit, the interest buildup we have with higher interest rates. the amount of money we are paying for interest at the government. he's never gloomy but as jenetta lose two, it's sporting six months forward in washington. we thought we would get some sort of fiscal discipline and we talked about how the debt ceiling resolution try to enforce caps on spending.

jeanette is talking about an expansion of fiscal stimulus. at what point in fiscal policy moving in the opposite direction of what people think and continuing to support some of this ongoing prolific spending by american consumers? tom: i've lost scope of the numbers. i cannot hug the numbers. i don't know what to do with them. lisa: it's part of the reason why people don't really get a handle on what the issues really are because the numbers are too big. tom: you cannick -- you cannot even hug the bull market. this is bloomberg, stay with us. ♪ amily. it can happen to the people who serve us and the people who served. the people we work late with and stay out late with. it can even happen to the person in the mirror.

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tom: "surveillance." john keane on assignment -- jonathan ferro on assignment. tom keene and lee several molex here in studio. lisa: we have had eight straight weekly gains on the nasdaq. that is the greatest rally, the longest going back to 2019. we have erased all the losses from 500 interest rate hikes that have been incurred on the equity markets. we have now erased that as we continue to chart forward. to me, those are some of the interesting aspects going forward as we take a bit of a breather. tom: 4440 on spx.

i'm still not used two 400. i believe there was 5000 at some point. i'm kidding. dow is 35,400. as we sort of slide into q3 and how money people have been wrong, and we have to readjust, i really wonder the framework of a second leg of fear of missing out. lisa: i was trying to think this morning, is it foam a -- fo limo versus rates? taking a look at some specific names, it is frankly more

interesting at a time like this. nike shares lower than 2%. this is after a raised concern about inventory problems. this comes after nike has crushed it. they direct to consumer trend has absolutely given them this incredible boost. yet, it is so difficult to understand this picture in the retail economy. tom: before we get to stocks, there are some really interesting stories today. this is the "where in god's name is jonathan ferro" moment in the show. we will be doing this daily. i really blame john for this. i have gotten to watch, and i won't bore you with the details about why it was so interesting, but pearly makes tires, like all the tires for the grand prix. the ceo designate is set to

leave the company. basically, this is where the italian government has stepped in and said to china, you cannot own this company. i'm saying this very loosely and uninformed, so i want to be careful. there are some who are a lot better at this than i am. but this is an interesting china story involving europe. i'm going to read this verbatim. "the secession plan was proposed between china, the company's largest shareholder, and camp and holding. but it will be radically modified." by the italian government." i find that radically fascinating -- i find that fascinating. lisa: i'm also looking away from the italian domestic stories, looking at phillip morris.

kisses been one area that is underplayed, people basically moving away from it due to some of the concerns about esg. some people are now saying that perhaps it is undervalued. alibaba is interesting because we are seeing it sag 2.28 percent. the senior chief executive saying -- he was replaced at the same time a lack of china stocks being down. tom: it is all very confusing. the 10-year total return, we are so use to, in times past, where demo was a certitude stock. now, 5.5% per year on phillip morris in the last 10 years.

right now, speaking of international, iain stealey joins us off the london desk of jp morgan here in studio. it is like a hayley mills movie coming out. remember "the parent trap?" this is the cash trap you are blistering in your note about the cash trap. how grim, how wrong, is it to be in cash right now? iain: i think you have to dig about what happened. cash looks greatest -- looks great today, but will it look good in six months time, nine months time? if the central banks do need to do a bit of fun about term, ultimately, buying fixed income assets, buying core bonds and 4% or 5%, they give you that attractive yield. maybe not quite as much as cash, but you get capital gain over the course of the year.

there is a real benefit of having that. and of course, what we have seen since silicon valley bank, is that correlation has returned, and the good news is that bonds can become the diversifier in your portfolio. we have seen over the past few months, that bonds are performing like they should perform. lisa: our clients growing disenchanted with cash or is the cash trap interesting? iain: i think the clients i speak to our interesting cash because they don't understand what's going on in the bond market. they looking at risk alsip -- risk asset value -- asset valuation. it is just safer to be in cash. but i still think that on a 12 month, 24 month forward-looking basis, bonds will give you a better return than cash. lisa: can you get bonds rallying

and starks rallying at the same time? if you do get some sort of downturn, it is going to be a report for equities at a time when a lot of people are expecting that that actually what actions -- actually will act -- iain: there's a very fine line for it to occur. you would need to have that soft landing. you would need to have central banks turn at exactly the right time, when they don't stifle growth too much and just allow that smooth runway to happen. that feels like a bit of a challenge with what we have been highlighting over the last few weeks. they want to keep going, they want to effectively nail down this inflation problem. the only way i can really see central banks being able to have that smooth runway would be to have inflation coming down of its own accord to the levels they would like it to be. it does feel like a challenge at this minute. tom: gideon rockman eft, short

and sweet. i knew the u.s. had bested over the past 10 years, but gideon absolutely nailed how europe is falling behind. a lot of people in america are curious about the ownership of european blue chips. you guys own the space. should we be in european blue chips or is it just truly american exceptionalism? iain: if you look at the composition of europe, it is definitely not as supportive protect markets. from a bondholder standpoint, i might like to cap on this. but if you look at the returns we have seen more recently, europe is starting to improve. i think the underperformance of europe that we see for a long period of time us starting to come back -- is starting to come back. rates in europe are showing some more confidence around europe. there certainly something to investing in europe. tom: you have your bond hat on,

but this is important. there is dividend strategy and is there a bond equivalent? iain: they are more of a bond proxy. we don't have that tech element within european markets. the yield's that you are getting on european space within stocks is attractive. likewise, for the first time in a number of years, and a couple of decades, really, the yields are on european fixed income are attractive. lisa: i have to say, at this midpoint in this year, i have to look at how people are giving out 4% rates, at a time when they thought they could never get above zero. same thing in the u.s. as we take a look into the second half of this year, after a 500 basis point move from the fed, can we say that the expectations were wrong and that some sort of rapid increase in

rate would cause some sort of credit crisis? iain: it is difficult to say that hasn't happened yet. but definitely, you are completely correct. we have definitely seen more buoyancy in the economic market, consumers healthier than we expected, able to deal with higher rates. you could argue that this depends a lot on the demand we still have on the back of the pandemic. you can argue that we had this huge amount of stimulus from the government side. we had paychecks and furlough schemes over in europe. i think over the coming quarters, we are going to start to see that pain coming through. if you look at some of the comments out of the resolution foundation and the u.k., the bank of england is thinking about one-third of the broader economy, mortgage refinancing is going to occur. this is just happening with lax

and possibly the issue that people had was that those lags are taking longer to play out than people expected. tom: i'm going to go there because it is not a fixed rate, it is a floating rate. the floating rate structure in the united kingdom, what is going to be the damage to the floating rate structure versus the fixed-rate? iain: the good news for the u.k. is that the floating rate is not as bad as it used to be. we have had a number of people turn out in two years or five years. those lagged impacts are starting to come through. but we are starting to see the people who were taking mortgages back in 2021, they are likely to be one-third of mortgage refinancing over the next year or so. we are likely to see it. definitely can argue that the u.s. is in a better place with the 30-year and 15-year mortgages from a couple years

ago. tom: lisa and i would like you to come back again when jonathan is here because then we would be surrounded by british accents. lisa: that was fabulous. [laughter] tom: sometimes, i have no idea what jonathan is talking about. when he starts talking, when he gets going, it is like ted lasso. every fifth word, i cannot understand. iain is like poetry. iain stealey, with jp morgan off the london desk in new york today. yields are elevated. stay with us. s&p, the percent is negative dear .3%. lisa: you know, one thing i was reading about was the submersible summary that is at least off the grid looking for the titanic wreckage and has a crew of five.

i'm just wondering what you make of this, considering the fact that it is not something that we want to relive. it is basically one of the worst crashes out there. people are going down to see it come at potentially getting stuck. tom: everyone of a certain ilk, of a certain generation, is always and forever scarred by the thresher. it was a submarine of the united states navy that simply went down. that was back when technology was a lot less. it was a frightening time for kids, very much in the zeitgeist for weeks and weeks. america was humbled by that technological failure of the u.s. navy and their submarine. it had so much to do with the modernization of our fleet. my only observation is that all of us pray for these five people in a huge search, at a huge risk, in the portal north atlantic.

it appears that this submarine, this submersible, head very, very non-sophisticated technologies involved. that will all come out, i'm sure, in the coming weeks. lisa: racing to find him in the 96 hours of oxygen, i believe, they have. they are all thinking of them. it is definitely something that caught us all in this horrible memory. tom: it is. the coast guard out of boston working tirelessly to find them. stay with us. this is bloomberg "surveillance." ♪

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angst will be forced to issue more debt, extend their balance sheet. they are preparing for that. it is not overly concerning. tom: peter tchir, so sorry i missed him. he is always great. a great summary of lisa: what's going on. lisa:talking about how we don't care about the fed as much, how it is not sucking the oxygen out of the room. tom: i made light of it earlier, but folks, seriously, i think the fed speakers have some validity this time around after the absolute shock of that fed meeting, which we are still within. i think we are still within the shock of that meeting. are we already up to the 20th? lisa: there's a lot to do, not only expanded -- explained by fed chair powell, but other officials as well. tom: we will see how mr. bullard reaffirms the two rate increases

expected as well. i'm going to rip up the scripture. we can do this with a guy who is extremely supple in the financial systems world. that is bloomberg's jan-patrick barnert. he is in frankfurt. one thing to talk about is credit suisse and the mating, and what it is going to cost. bloomberg has been reporting as well that abu dhabi at least had meetings, cups of coffee, you know that good zurich coffee, with was already. -- lazard. boutique firms, always out of paris or zurich, you know the names better than i do, but they are coveted by outsiders, including petrodollars. how pervasive is that tone in jan-patrick barnert's europe? jan-patrick: the landscape here in banking and in general is

different to the u.s. we have the major european banks here all caught up in this deal risking we have seen in the last couple of years. then, you have this kind of sideshow, so to speak, that has evolved with all those boutique firms you have mentioned, who are run by individuals, by people who are keen to take on risks the big banks cannot do. that has been seen here in europe for a while now. i'm pretty sure it is going to continue what we have seen now with ubs and credit suisse, and all of this going down, the ecb saying just yesterday that they will put harsher stress tests, the major appetite for those banks in europe, i don't see that going up, but staying the same or even going down. there will probably be more for those boutique firms and more risky parts of the business to grab market share. tom: they're going to grab market share, but are they going

to do it, and i am simply looking for what bloomberg reports with its incredible banking team, but are they going to do it with foreign ownership, like english football, or will it be understood to be minority ownership? how will that cut with different tranches of minority ownership? jan-patrick: going forward, the question to me is, if you really want to put a stake in a european bank, the lessons learned from my perspective is that you can't be sure anymore that you are being treated with the best outcome when push comes to shove. is there anybody out there in european financials? i'm not so sure. there are obviously people with a good business model, halfway decent balance sheet that can

handle a storm, but can you handle dividends and share gains? for sure. but you don't need majority stakes. lisa: you are at the epicenter of one of the biggest banking stories in history, which is credit suisse becoming part of ubs. we are hearing reasons for why ubs may have wanted this from the swiss government in particular. how much are the liabilities if credit suisse, making it difficult to be the stand-alone entity that people think, and even ubs has said they want to keep gekko -- keep? jan-patrick: that is why the purchase price on shaper -- on paper was so cheap for ubs. nobody really knows what else is there underneath in the books, how outgoing those are going to

perform in the next couple of weeks. negation is a big issue. we see this today. you can only estimate so far what the regulator and other courts, judges put on you. let's not forget ubs has a fair part of that on its own on its balance sheet. so, that is something they figure out now and have to figure out fast. investors don't like uncertainty. the benefit for ubs is it is a complex merger and we have to give them some time to figure out the details and all the stuff. but litigation is something they are going to address rather fast. you don't want to have those headlines. they are never good in any way. we want to assemble the regulators here really fast, make sure the market is bearable, which is in line with the story i have seen today. and then, you have this one topic off the rails. you can focus on the train going forward and focusing on the technical things of the merger.

lisa: how is morale right now at the remaining credit suisse unit, at a time when it is been talked about the need for prudent public culture and basically saying there will be significant job cuts at the unit, at credit suisse, in an op-ed that he published in the past couple of days? jan-patrick: i have spoken to a couple of people. what they are telling me is not super distressing. they know what is coming and there will be a difficult few months with the merger. with the chairman and ceo both being very harsh in terms of what they are saying to employees, their message right now is for the investors. they want to tell investors that there will be no hiccups going forward, no more of the same misjudgment of risk, misjudgment of the balance sheet. they want to reassure investors that this merger is going to be profitable for them at the end of the line. for a moment, they don't really care about the morale.

of course they need the people on board to make this merger worked going forward. but in the meantime, i think the priority is to keep investors on board, make sure shares recover, then we can talk about people who are left over and what to do with them. tom: one final question, and it is one that i would ask of sonali basak, our chief financial correspondent. it is june. i understand you take four weeks off in august, as does everyone else in europe. but what is the rationalization of headcount going to look like among european banks in the fall and even into early next year? is there a foreboding to that? jan-patrick: the headcount of european banks has never gone up in the past decade, and there is good reason for that, and i don't see that changing. most banks, especially the major ones, have cut headcount so far. they are not trying to pad more per year. ai is the big thing in the room.

if they can cut even more, if they use more technology, the big thing is going to be credit suisse. the company had 50,000 employees, 17,000 in the investment bank. they want to do massive cuts. when a ceo says massive, it usually means 50% or more, is my guess. we will see tens of thousands of jobs being lost here again, mainly from credit suisse. but it is also a topic still for the other european banks. nobody is really hiring on a big scale here. tom: jan-patrick barnert, thank you so much. a great summary of european banking. i am fascinated how this works out. i mention this last week. i can't remember if it was on radio or tv, but lisa, i am just so colored by my childhood and understanding of three swiss banks.

i am in shock that there is only one swiss bank. whatever they say about whatever they're going to massage with credit suisse. lisa: i think that is a shock a lot of people are feeling. especially when sergio armani said the combined swiss -- the combined bank of switzerland. this is now the combined bank at a time when competitors are being rolled up into one. tom: right now in the data check, negative dow futures. we are watching bitcoin just under $27,000. an eventful day with bitcoin and binance. we have some economic data coming out. remember, it is tuesday, not monday, so we have economic data on the housing market. oil is $71.68 on american oil. the dollar is fractionally weaker. on rio and television, this is

bloomberg. good morning. ♪

>> i am very concerned we will

see a hard landing. there is nothing to suggest that the laborthere is nothing to sut the labor market is about to collapse. there is a wage price spiral brewing. if people think inflation is sticky you will see wages. lisa:lisa: is fomo fomo running out of steam? jonathan is off on vacation. we are seeing a slight decline in equity. we can't avoid a reset after the we can't avoid a reset after the run up we have seen? tom we have a little bit of a's today but we will have another

equity stress and just a moment but i will look at the marginal shift and maybe it's a shift over time of where you go higher in your spx estimate. so we will go another equity stress and just a moment but i will look at the marginal shift and maybe it's a shift over time of where you go higher in your spx estimate. so we will go higher but it's a year in 2023 higher or in midyear year and twin 2024 twin- 2024. lisa: this is something we heard from mike wilson where he said we do see said we do see declines, whatever happened to that down whatever

happened to that down turn. tom: we call it a cash track. if you are in cash you're not in the game if and when you move higher. there is no question of that as we come up to this midyear 2023. the major thing here is how do you recalibrate if you have been wicked right, how do you recalibrate if you participated in the market. how do you recalibrate if you miss this? lisa: it is we call it a cash t. if you are in cash you're not in the game if and when you move higher. there is no question of that as we come up to this midyear 2023. the major thing here is how do you recalibrate if you have been wicked right, how do you

recalibrate if you participated in the market. how do you recalibrate if you miss this? lisa: it is a tough year. my question is will fedex become an ai company to dramatically transform their company? are we looking at where there is this reality underpinning some hopes and dreams but people are becoming a little bit frenzy in this thirst for some sort of return? tom: stay in our coverage compay transform their company? are we looking at where there is this reality underpinning some hopes and dreams but people are becoming a little bit frenzy in this thirst for some sort of return? tom: stay in our coverage at 4:00 p.m., company to dramaticay transform their company? are we looking at where there is this reality underpinning some hopes and dreams but people are becoming a little bit frenzy in this thirst for some sort of return? tom: stay in our coverage at 4:00 p.m., fedex is an important bellwether for what is going on and what we will see from corporations. company to dramatically transform their company? are we looking at where there is this reality underpinning some hopes and dreams but people are becoming a little bit frenzy in this thirst for some sort of return? tom: stay in our coverage at 4:00 p.m., fedex is an important bellwether for what is going on and what we will see from corporations. we have heard from others, kaiser mentioned the revenue is the major thing. mike wilson saying that the gross will not be there. lisa:lisa: how do we get down ta lower inflationary environment if you don't see pain? those are the questions underpinning a market that is seeing in eight week gain. the losses are not that significant. s&p futures are lower gain.

the losses are not that significant. s&p futures are lower by point 28%, 4441, 4441 and we have retd all the losses since the pandemic. since the fed started raising rates by 500 basis points. tom: we are broadening out. a lot of people published over the long weekend and there is question about it. lisa: i am watching yields, i am watching them creep higher. they had been at the highest level since before the banking concerns in the euro gaining just a touch versus the dollar. we have seen that consistency given the ecb productions. tom: as i said earlier,tom: we . a lot of people published over the long weekend and there is question about it. lisa: i am watching yields, i am watching them creep higher. they had been at the highest level since before the banking concerns in the euro gaining just a touch versus the dollar. we have seen that consistency

given the ecb productions. tom: as i said earlier, with james bullard of st. louis. i don't know what mckee would say to that. is he the outlier? lisa:lisa: there are a number of people on the same pages him. tom: in the equity space, we have focused on you and you want to know equity opinion around equities, bonds. scott t chronert equities, bonds. scott t chronert from citigroup global markets what a strange time, i want you to decide how you address in writing fear. wherewhere is the liquidity stry right now? scott: it's in the performance gains in this moment of large-cap equities and is increasingly positioning data. equities and is increasingly positioning data. we are looking at futures that are bullish as financial crisis. there has been a crowding in effect underway as this nasdaq led rally escaped in.

nasdaq led rally escaped in. tom: on a given day, the bet is negative, the bet is caution, the bet is woe is me were all gonna die. caution, the bet is woe is me were all gonna die. and then you said the bed is actually the people are very bullish. you can have it both ways, which is it? scott: can have it both ways, wh is it? scott: the starting point was the fear that was kicking in last year with peak hawkishness and concerns about recession risks. you witness to this year with concernyou witness to this yearh concern positioning related to this mega cap growth. you witness to this year with concern positioning related to this mega cap growth. which felt the impact of the multiple compressions. we are using the same target from the start of the year. we look bullish with the futures bullish with the futures implied positioning. and now we are looking bears. there has been a pretty good

seesaw atthere has been a prettd seesaw at work to make the point we are making what comes with this price action is an explicit implication of follow-through. for all bal euphoria kicking in, the higher you go now the higher the implicit expectation and that sets a huge bar for the next reporting period. lisa:. lisa: we will have to see a net decline where you see it ending up which is around where we are right now. will that be the catalyst? big tech earnings reports the disappoint? scott: every company in the country better have an ai strategy as they go into q2. the issue will be to what degree does not show up in fundamentals? it wasn't that long ago we were thinking ai was a 2025 event. 30 seeing some of the big30 seeh

names of late. i think what we will run into is a disconnect from how the market is30 seeing some of the big tech names of late. i think what we will run into is a disconnect from how the market is run and where earnings started for the year, we are up to 215 and our call around earnings resilience has been solid here. it's a question to what degree a lot of expectations are being priced into quickly. lisa: you think people who think the fed is going to be the 215 and our call around earnings resilience has been solid here. it's a question to what degree a lot of expectations are being priced into quickly. lisa: you think people who think the fed is going to be the killer of this rally are overstating things? there will be an additional rate hike and stickier inflation that could undermine some of the valuations that have gotten baked that could undermine some of the valuations that have gotten baked into this? do you dismiss them? scott: i think that's part of the equation. we are coming out it we are coming out it fundamentally based. you are still looking at a fed that will need the stronger deceleration to feel comfortable changing tune. here is citibank we have another one or two hikes and of fed curve of a 5% fed funds leveled

by the end of the year. funds leveled by the end of the year. every step we go for nudging of the targets for s&p you have to compare that to the return on cash. it's ancash. it's an interesting trade-off that investors are looking at. there is no doubt in our mind that a higher-than-expected

versus two months ago, the interest rate backdrop, all of this place into an interest-rate tailwind that does keep someone of a lid on where valuations could go. tom: where is the lid on valuations three years out, five years out? you've been doing this long enough to note the percentage of money that is in the game for the financial media long, long term is 36 months. how do you higher-than-expected versus two months ago, the interest rate backdrop, all of this place into an interest-rate tailwind that does keep someone of a lid on where valuations could go. tom: where is the lid on valuations three years out, five years out? you've been doing this long enough to note the percentage of money that is in the game for the financial media long, long term is 36 months. how do you scope 36 months given all the angst that is out there? scott: higher-than-expected versus two months ago, the interest rate backdrop, all of this place into an interest-rate tailwind that does keep someone of a lid on where valuations could go. tom: where is the lid on valuations three years out, five years out? you've been doing this long enough to note the percentage of money that is in the game for the financial media long, long term is 36 months. how do you scope 36 months given all the angst that is out there? scott: the way we have come out of it, a year or so ago we were higher-than-expected versus two months ago, the interest rate backdrop, all of this place into an interest-rate tailwind that does keep someone of a lid on where valuations could go. tom: where is the lid on valuations three years out, five years out? you've been doing this long enough to note the percentage of money that is in the game for the financial media long, long term is 36 months. how do you scope 36 months given all the angst that is out there? scott: the way we have come out of it, a year or so w yg ursk premium willw the surface and this will be a

direct ai and indirect ai influence. the potential for productivity improvement here in the u.s., we think it will get really interesting here. longer-term, we are comfortable the market can hold a higher valuation courtesy of mega cap growth intact but also because the rest of the market will prove out that it is less cyclical than and this will be a direct ai and indirect ai influence. the potential for productivity improvement here in the u.s., we think it will get really interesting here. longer-term, we are comfortable the market can hold a higher valuation courtesy of mega cap growth intact but also because the rest of the market will prove out that it is less cyclical than historically perceived and i think ai in addition and this will be a direct ai and indirect ai influence. the potential for productivity improvement here in the u.s., we think it will get really interesting here. longer-term, we are comfortable the market can hold a higher valuation courtesy of mega cap growth intact but also because the rest of the market will prove out that it is less cyclical than historically perceived and i think ai in addition to other forms of technology that have aided and abetted this and this will be a direct ai and indirect ai influence. the potential for productivity improvement here in the u.s., we think it will get really interesting here. longer-term, we are comfortable the market can hold a higher valuation courtesy of mega cap growth intact but also because the rest of the market will prove out that it is less cyclical than historically perceived and i think ai in addition to other forms of technology that have aided and abetted this and underscoring a higher valuation that many investors have gotten comfortable with. from our with. from our view, this is all timing. we think we have run pretty hard. the set up here as we navigate this recessionthe set up here ae this recession risk in the

second half of this in the second half of this year is higher for longer coming out the other side. tom:tom: scott chronert with citigroup. i think our team did such a good jobchronert with citigroup. i think our team did such a good job of lining up different equity groups. i am fascinated by it. dow futuresdow futures down down

a percentage basis down .25%. lisa: we are seeing some declines we are seeing some declines on a day where we are perhaps

it's an interesting environment given how massive they are what the floor must be like. tom: airlines matter, no one more so than guy who has been stuck in this business. what's going on with boeing? guy: you remember talking to michael o'leary just a few weeks back.

there is a possibility of a bubble forming. is a possibility of a bubble forming. the question is, are airlines over ordering? they are sold out until beyond 2030. tom: what i learned years ago on this, ordering? they are sold out until beyond 2030. tom: what i learned years ago on this, the pricing is absolutely bizarre how much a jet engine costs. how can he cancel an order for 30 a3- a3-20s, can i cancel the in the next few years? guy: how tight is the wording on some of these contracts?

what kind of inflation numbers are they pluggingwhat kind of is are they plugging in? where will inflation be in 10 years time? these are really tricky questions that airlines are flopping with right now. if you look at the indigo order. they will take some of these aircrafts, they will solve them back into the the market. they place a big order and then they pray that someone will need these aircrafts. howhow tightly the languages on contract writing, with the cost

of money. lisa: a lot of people have one question on their minds, how big is the first class and business class versus everything else which is shrinking on a lot of airlines? gu and business class versus everything else which is shrinking on a lot of airlines? guy: i spoke to a lot of airlines over the past few days. first class is becoming less of a thing. it will be business craft and then premium economy. business craft and then premium economy. everyone wants to fly at the front of the plane, is the new thing. lisa: i think a lot of people want to. what kind of epic notice when youyou hear about the airfares f business class and first class? guy: they are talking about upgrading their business class. you have a new airline, ryanair that will be a very big thing as well.

thethe gulf is leading when it comes to first class and business class. they maythe gulf is leading whet comes to first class and business class. they may see some of their first class cabins,the gulf is leadint comes to first class and business class. they may see some of their first class cabins, many airplanes are investing heavily in business class. i'm sure you'll be quite happy to enjoy. tom: you can see it unfold in america. your airbus interview which is very important the air buses 30,000 parts. the air buses 30,000 parts. with the technology right now i see the new work to frankfurt boeing 740 71 of the last ones flying around take out pretty much every day here in new york

and i am fascinated by where the technology in the airplane will be in five years. what's new in paris? guy: we are reaching the limits of current engine technology. that will become morethat will t going forward. the next generation of engines are going to be a completely different architecture. we could be with open technology , with open air flow. it will be much more fuel-efficient. you have to design the aircraft around that. it will be a totally different formit will be a totally differt

form of engine. the question is, what are engine is to lookit will be a totally t form of engine. the question is, what are engine is to look at and then what aircrafts will look like after that and after that we will talk about aircraft technology. technology. were in for really big changes. tom: guy johnson, we look forward to that interview with airbus at the paris air show this morning. everyone that comes over, everyone talks about theeveryone over what flying costs. lisa: that's what airlines have

been responding to. the incredible gains we have seen, that stock is up 42% year to date. delta shares are up 30% year to date. up 42% year to date. delta shares are up 30% year to date. they continued to charge and you haven't seen price pushback. tom: yes they have had a leg up here. up here. off the pandemic low, 22 to 5 0. they haven't gotten back to the trajectory pre-covid. we talked to delta about this, i don't understand how they get back to the profitability that we used to know? i am looking at united airlines. they are making six cents on the dollar. they're like a grocery store.

lisa: this is partly because they lost a lot of people during the pandemic and they are pandeg to pay out. they didn't pay for a long time. now they are using a lot of disposable income to go towards pay raises and other types of maintenance. tom: i i have a family member wo works for one of the airlines. she gets a fly for 10 bucks. why don't we get that kind of a deal? let's go to london for dinner. this is bloomberg surveillance. ♪

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tom: bloomberg surveillance. we welcome all of you you, secry blinken has returned from china

as well, futures are -12. on the bond market we have an elevation and heels. were waiting for economic data. lisa: at the end of last week, we saw an enormous rise of the front and. on the long and we are staying tempered. there has been a shift backthero check. tom: that leaves the housing data and mr. mckee. mike: is disappointing that neither of you have hats on because i would tell you hang onto your hats. building is up 5.2%, this was an

enormous jobs and houses under construction. this was an enormous jobs and houses under construction. overall over one million for housing starts and building permits. for housing starts and building permits. we thought it would be strong but there has to be a reason why it is this strong. why it is this strong. tom: i look at zillow, there is nothing for sale. how messed up zillow, there is nothing for sale. how messed up as our housing economics? mike: it's topsy-turvy because it should be the area hit hardest by fed increases but there is not much for sale because home home prices are rig and it keeps people in place. but analysts say that what happened after the great recession is that everyone started building apartments rather than homes. now people want houses but there aren't enough houses out there. tom: can you think about what

brett dynamics look like or are they two different worlds? mike: there has been a lot of apartment construction, they had lowered prices to attract people during the pandemic. then they jacked those prices up a lot following the pandemic and now things are starting to even out or go down. nownow the inflation data with t prices coming down we will start to see prices go back up again given the timelines in there. the important thing here is, we are seeing an enormous hiring a construction. if you look at the charts and i will show one to lisa during the 9:00 show. because i don't want to upset the people listening on the radio. the construction numbers are

amazing. not only residential construction but also heavy civil construction because the ira is starting to get some of the infrastructure products going. with that kind of strength in hiring that's one more thing jay powell has to keep an eye out on. tom: which fed pal will speak are you looking forward to? mike: actually neither because are not talking about the economy or monetary policy. tom: michael mckee with her economic coverage. lisa: i just want to bring this end, the judge in the case has set a date for the trial august 14. it's going to be about two weeks starting august 14. it is very much front and center aside from the political drama.

my key question, how much have we seen at bottom? tom: mr. trump said he would not participate in the debates. this is a real sign of the end of this terrible pandemic. we all agree, we want to be like peter huber ensconced in new hampshire. he is deutsche's bank economics. i'm going to rip up the script. what were your thoughts with all of your experience of the international monetary fund to see the three year and five year outlook of economic growth from

the institution? is that cautious view valid ? peter: we are still facing a global inflation problem. we had a little taste of that last week from jay powell. i think certainly the u.s., europe, the u.k. especially looking out inflation that is persistently sticky at the core level. we have seen significant changes , it is easy to get inflation down from elevated levels to halfway there. it is the final few miles that are tough. tom: deutsche bank has been

committed to the pacific rim for years. from japan to the deep shelf. do we have a clear picture of asian economics and a clear picture of chinese economics? peter: china is a bit of a puzzle. we had a big bounce as they opened up after covid. then softening significantly, they will need some policy stimulus to get things back to where they want to have them. our team in china's optimistic. they think households will be spending. where u.s. households have spent down their excess savings, chinese households have not. we do expect construction and homebuilding to be an increasing booster growth.

it's a mixed picture. tom: you talk about a boom to growth. the fact that we got the biggest jump in housing starts going back than a year. a lot of people have seen we have seen the bottom of the housing markets, how much could that boost the american economy? peter: homebuilders got a big surprise yesterday. and now with these numbers today, this is a large surprise. that kind of increasing and construction -- increase in construction. the housing market is tight. vacancy rates are very low at this point and you are looking at a residential construction that has come down sharply from the peaks that we saw just after the pandemic we had a big boost.

it came down in the past year, year .5. i think we have another leg down but the correction is already taking place in housing. lisa: what do you think jay powell needs to do on capital hill to convince marcus that he is committed to doing something after the pause? is confusing for market that believes it doesn't have the teeth for two more rate hikes? peter: i was listening to this conundrum, both awkward in hawkish. we came up with the word hawkw ard. it's a positive time when you are significantly raising the forecast and the level and rates we will have to get to to do with the problem.

powell has a tough job. he has a split view on the hill. he is going to have to say we can get inflation down without a major recession coming. if he pulls this off it will be unprecedented for a fed chair. tom: this is an important statement. although surveys and snark is that he is an fed president. he has to quote pull this off". peter: he has to bring inflation down to 2% without pushing unemployment up to 5%. tom: your thoughts? peter: it's never been done for four. every one of the inflation

episodes, every one of those is been accompanied by a recession. this would be unprecedented. powell has some things in his favor. the most important one, thanks to all the hard work voelker and greenspan did get inflation down. inflation expectations are pretty well anchored longer-term. they are not that much above the level we were over the last decade. that makes it possible but it is a mighty difficult task to pull this off. tom: unclear and insane we will not get back to 2%, can our institution make the shift to a higher implied inflation? whatever the number may be? peter: not under powell's

leadership or the current membership. they are absolutely committed to the 2% objective. they don't want to kill fed credibility. powell is a second term chair. he wants to leave with the legacy of being paul volcker ii . he doesn't want to be the one who let things slip on inflation. tom: peter hooper from deutsche bank securities. the call on the recession. futures are up -15, s&p futures are down .33%. lisa: coming up on the open, i will be filling in for jonathan ferro who was on vacation, will

deserved. sonal desai, matt miskin and jimmy chang we will be talking about the market. tom: i'm going to drag it forward to the fedex numbers tonight. i am in the camp that you have to listen to what fedex says. lisa: i would agree, is that an indication when they had been forecasting lower? we saw that they were concerned about people ordering stuff. tom: will we visit as 65 handle on west texas intermediate. you could rounded up to $76.

ust at 7.177. lisa: the judge talking about the august 14 trial date. as michael mckee pointed out, it is a very fast trial for an unprecedented case. tom: i would assume that it has to do with the delicate nature of the evidence as well as getting a move on. s&p futures down .31%, stay with us this is "bloomberg surveillance." ♪

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>> i think that 60/40 needs to be modernized. of the 40 we need to add 15-20% in different alternatives and

look for equity protection strategies. rethink diversification. this is a critical time. tom: a part of the academic debate at this moment. sebastien page from t. rowe price on multi-assets. i can't say enough about his book " beyond diversification." futures -14. lisa abramowicz is getting ready for the next hour of the open. jonathan ferro was on an important assignment right now. we have lots of headlines coming out. you heard about the trump trial, lisa mentioned this, antony

blinken announcing more ukraine aid coming out tomorrow. the 10 year yield is 3.77%. if you are a retail investor looking at a 20 year duration or union bond, you have been slammed over the past 24 months on the total return index. the end of the great bond party. we have meghan swiber from bofa securities inc we got absolutely slammed price down 50%. now what?

meghan: you have yields a relatively attractive levels but it's time to be buying. what history tells us is that you need to wait until the final fed hike of the cycle to feel more confident going long duration. what we see from investors, is the global asset sentiment survey. it has a pretty long history and it tells us the right now, investors have more confidence and long and frustration than they have it any other point in time. tom: the fed is that the two-year space, long-duration is that currently at 10 years or a different maturity? meghan: you can think across the curve, what you see and what we have been guarding investors for

is when you're talking about longer duration you're talking about 10 year, 30 year. versus the front end of the curve which will be pulled higher with the fed delivering more rate hikes. tom: the problem i have with this, everyone likes to talk about the spread market. forget about it, bonds went down 15% as a round number. we have come back to 87, 88, 90. are you as a bond investor investing total return or somewhere out there you get back to what you remember or is this a new level we are dealing with? meghan: the answer that question comes down to the inflation outlook.

if you look at market price the prior segment, the market has a lot of confidence. that inflation will be down to 2% by the end of the year. you are going to be able to see the fed cut alongside that. tom: your research is in issuance. what are cfos going to do in this milleu? they sell a gazillion bonds, what will be see in total with issuance? meghan: on the back of this repositioning that we've seen from investors more broadly, we see continuing issuance. if you look at the feds

facility, you have a lot of cash . but longer durations, 10 years and out? who will the marginal buyers be and that is another risk, that of wanting to be long-duration. tom: the consensus view, you will look out to 10 years which seems like a thousand years away or you will buy it and click the coupon if the price goes down you still have the coupon to help you. the hope and prayer of the market is that price goes up along with that to a significant total return. meghan: again, if the fed is able to see the inflation level the market expects, it would make sense that the fed would get to a more neutral setting.

you will have down where pressured on those yields on the back in. the risky thing for investor is stickier inflation and currently this fed does not have a lot of confidence in their forecast. we don't think they are going to stop tightening until they see core cpi coming closer to .10 percent. year and we have 315, a bit lower than the levels were sitting at and that is due in part to the fact that we will be beyond the fed's final rate hike of the cycle and you are going to have a better look at what the final rates will be. it is looking near term that you will be sitting in this range between 325-375. tom: the answer here, do you

barbell or do you flatter up maturities if you're scared stiff and the stock market? meghan: that's the important point hereto. rates, duration and portfolio is the best risk off asset. if you have pressure on the equity market you're more inclined to see rates be that hedge. a key point is whether we will see this recession that many economists are calling for at the start of the year. but the data has been slowly resilient. the u.s. economy has been much more resilient what the fed were giving it credit for which limits how much you can see the equity market fall. it's great when you see apple computer put out a 30 year piece. what is the plus/minus of

long-term duration of full faith and credit right now? you have to be more fought -- humble about where rates will fall. a big part of that will be to see nominal rates move higher in building buffers when they are cutting. the probability that the fed cuts down is more limited here. you probably have to think -- tom: this is the trap folks. as many of you know, it is on the mat. even with some of the constructive things in europe, the austrian 97 year peace.

it hasn't come up? thus the trap they are talking about on a less inflammatory basis. meghan: near-term you have more potential in the front end, you see the market only placing another 50 basis points. you will see more upward pressure on the front end of the curve. we think investors who have been position for the end of the hiking cycle, you need to be careful here. a good way to hedge this is to push back on the markets. tom: the way to hedge it is to buy nvidia? meghan swiber from bank of america. i can say she did not comment on nvidia. coming up, doug johnson -- guy

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>> we are seeing perhaps a pause to the fomo, the perpetual gains we've seen for the past eight weeks and the nasdaq and the countdown to the open starts now. ♪ >> everything you need to get set for the start of u.s. trading, this is bloomberg, the open. lisa: coming up, investors caught between fomo and fear of an overheated market. jay powell heads to capitol