>> right now, it is all about earnings. i think they will come in fine. >> it is a difficult market. details about being selective. >> we still have a lot of money flowing through the system. >> we are not out of the woods by a longshot. >> we think recession will come. announcer: this is bloomberg surveillance with tom keene, and lisa abramowicz. jonathan: good morning. this is bloomberg surveillance on tv and radio alongside tom keene. i am jonathan ferro.

difficult for the nasdaq in the last 24 hours. difficult drop going back to february. setting this up for next week. not just be federal reserve decision but also around the corner. big tech ramping up. tom: it is interesting to see after spx. and down doing well with the nasdaq pullback. you have to wonder. omg, netflix. you have not noticed my look. jonathan: i did. tom: we will get to barbie. jonathan: is that what we are doing over the weekend? i did not get the memo. is this close to pink? tom: no, it does not work. mohamed el-erian will have one. jonathan: he's wearing a pink

suit? tom: yes, he does not know it yet. i thought it was interesting how the nasdaq gave way later in the afternoon yesterday. jonathan: it started around 8:30 eastern time yesterday morning when jobless claims came in. any talk of a fed pause going into next week was put on ice. tom: do we assume it is a lamp? a given 25 basis points? , then what -- and then what? my idea as we approach summer and if the heat of barbie and oppenheimer -- jonathan: the imax at lincoln center is ridiculous. sold out for weeks. tom: this is the friday where jackson hold is upon us. this is the first day where i am like, we are going to jackson hold in august and maybe this

year, powell will say something. jonathan: mohamed el-erian joining us in 2000 -- two hours time. later, we catch up with the arsenal ceo as well. going into the start of the season in early august. mohamed el-erian is a qpr fan. tom: qpr? qpr is not in the same league as seth bill? jonathan: different league. we have arsenal in north london. tom: my entire knowledge of arsenal is the cigar bar in a hotel. jonathan: do you have tickets for barbie? tom: i don't. i am probably the one man that does not care but i was instructed to not come home unless i do. for those on the radio, this is a king charles suit.

i was told to wear a pink bow tie. jonathan: i don't think you're the only guy to not care. positive by 0.2% on the s&p 500. not just the fed decision next week. wednesday, meta. amazon thursday. apple. a big week for big tech. tom: tom: our first conversation this morning will focus on the global ramifications of big tech. top to brag -- top to bottom, this is an indicator of each company. it is just like big banks. cannot all conflict them together. they are not all like netflix. i focus on apple but that is my bias. jonathan: tesla was the worst since april. aching money is a business. tom: they are making money but -- someone said this brilliantly

yesterday. i am sorry i cannot quote. is streaming a profitable business? jonathan: for netflix, yes. everyone else, it might be a struggle. tom: i have trouble with this. jonathan: we said this about netflix for years and now look at that. tom: and they have improved. i am sort of speechless because our conversation yesterday with carter went global. jonathan: that was very cool. a weekend full of sports. the global cio at allianz joins us. i think we need to start with tech and go from that, particularly on the weakness. do you see earnings validating the big gains in 2023? >> i think we have three things we need to think about and to

the earnings if we want our data on those themes. regulation and megatrend versus bad. on a valuation basis you are at the 10 year high? if you look at trends, you have tech permeating the sector. that is why i call digital darwinism. then you have pc versus ai. then you have cyber. i see a lot of megatrend in cyber. tom: it is wonderful to have you here. virginie masonneuve not only has bulletproof financial credit but a degree of in mandarin. have a global sense like nobody i know. i want to know how europe, and how asia, competes with big tech america? i go in search of apple and

europe or google in europe. i just do not see it. how does europe compete constructively with europe big tech? >> of course, you have semiconductors which are an enabler but in terms of large companies, you have to look more toward asia. what is interesting to me, if you think of china and the rest of the world, u.s. versus china, potentially have a bifurcation of tech standards in the making. that is why tech can have an impact on the rest of the world. a very important question but europe does not have the same contenders. tom: europe does not have the contenders. china has a contender. it is the instability we see there now. many of us cannot make the translation to what you see the mastic league.

tell us what you see with the knowledge and language and culture in china and how this goes back to the united states. >> that is a great question. what you have in china is a transition. part of which i called china phase three. china has such a large economy footprint that it comes with some geopolitical power. phase three is in the past five to seven years. given the training issues we have seen and that china has artificial intelligence advantages, there is bifurcation, digital darwinism, and competitiveness taking place. we could see a lot of inputs around internet companies in china which could be a very large employer. we have a high unemployment rate among young people investing in infotech and knology. -- and technology.

that is the game china is planning. tom: something we are nervous about -- jonathan: something we are nervous about. a couple years ago, people were talking about china becoming uninvestable. what would you say now? >> china has its own dynamics. it is clear it is not the u.s. or europe. but when you have the second largest economy in the world, that is still progressing dramatically, you cannot ignore it. you have to be extremely selective in terms of stocks. over the next five years, i think people will discover a lot of the innovation in very large market caps in the domestic market and you cannot ignore it. you have to be very diligent in your research. jonathan: you are pushing out

five years. let me talk about the next six months. do you see china being a headwind or tailwind for growth over the second half of your echo -- half of this year? >> i think it will be a tailwind. china will grow around 5% or 6% in a world that is decelerating. the question is, how th packages be put in place in europe around jonathan has beent front with observing the french high ground. they have big tech like pe's and have done so well. you have a third rail on this. did you look at french luxury as a sustainable value at those

high pe multiples see? those assumed growth rates and what those companies have done or france and continental europe? >> it is amazing. we go back to branding, innovation, and consumer appeal. the chinese consumer has been a very good clients of a loss of the luxury brands. it all depends on having products people are interested in buying. it is an ongoing game. jonathan: this was fun. thank you. tom: virginie maisonneuve. jonathan: next week, not just the fed but earnings season for big tech. tom: she has lunch with mohamed el-erian. is there a claridge in london? it is like the air comes out the room.

jonathan: have you put your breakfast order in? hundred el-erian is buying this morning. tom: step up. wow. he's catering it in. jonathan: i want to go to the calendar. tuesday, alphabet and microsoft. wednesday, meta. thursday, apple and amazon. tom: what is meta going to say about threats? it is out there. people like me tried it and looked at it. i don't want to do instagram. jonathan: you don't like it so you think it has failed? tom: i don't think it has failed. that is too strong a language. but they have set we do not want news organizations to be a part of threads. jonathan: i spend less time on

twitter now. tom: i totally agree. jonathan: it used to be a conversation but not so much. a lot of people i used to follow used to provide really valuable content and are not posting it either. tom: i am optimistic that he can learn from the woman from msnbc who is coming in. i am optimistic they could get the magic back. jonathan: money talks. it is not a charity. they have to make this work. tom: i will say for 15 seconds, i was phished yesterday. i had an email that looks just like it was from paypal and i called the number. i got the boiler room in where ever and i realized after 20 seconds that this was not good.

shut out to paypal. there was a whole website to send it in and call the bank. jonathan: was it one of those and uranium princes? tom: i don't know which country it was both folks, be careful. jonathan: was it an elaborate scam or did you just have too many martinis ? tom: i have a double show, watching barbie type -- twice. ♪

this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight.

>> in an interconnected world, disruptions in one region can have cascading economic impacts on the opposite side of the globe. given trimmings -- getting true resilience in the u.s. requires resilience among our allies and partners. jonathan: janet yellen, u.s. treasury secretary. we have heard a lot from her as g20 finance ministers met earlier this week. on the s&p 500, positive 0.2% on the day. on the week, up by a little more. in the bond market, the 10-year

yield is 3.8487. almost unchanged. the right kind of downside surprise. amazing to see the resilience. janet yellen talked about the resilience of the labor market here today which has been resilient. -- which has been phenomenal. tom: i agree. this is the issue to think about and to the fed meeting and into the chairman's press conference. he has to do a mandate. the labor realities of this nation is overwhelming him right now. jonathan: surprising for the chairman, is on his speech in the back end of jackson hole, it is interesting timing of the last 12 months. we have visit -- have decent trends returning. ultimately, we have inflation going back to its target. it's hope they get there without doing too much damage to labor market. tom: the bloomberg financial

conditions index addresses up against what chairman powell would like to see at 0.41. the constructive number was higher earlier this morning. a good feeling out there that maybe it is not the pain the fed would like to see. it has been a difficult week in ukraine. one of the great voices is adam posen and olivia blanche are at the peterson institute. it is double-barreled with data science on the universe -- from the university of virginia. she follows on with our tradition to keep jonathan ferro happy. we have to speak to anybody we can who has parchment. if we could get --, we would drive him in. but helena rickover -- but alina

rubekova is here. jonathan: wonderful to have you with us. >> it is an honor. jonathan: for us as well. we are trying to figure out how much russian crew is in the market. how much russian oil is on the market globally compared to where it was before this war? >> about the same. we had oil price caps with -- which has dual objectives. i had to compare it to having cake and eating it too. we achieved the first objective. russian oil is on the market. with revenues, that is pontificated. jonathan: why? why is that such -- much more movements -- why is that much more nuanced and complicated? >> on the russian side, $10 per

barrel per year makes around $20 billion in revenue. it is a $20 billion incentive to circumvent the oil price cap. if we are not doing the same on our side, there are difficulties. if we think about the cap we still have provisions on the g7 shipping and insurance services to russia. their limitations are very small. i can say i have seen the contract and it is below the cap. imagine if we are filing taxes the same way? tom: bouncing off your work at citigroup and russia, you have an clets -- you have encyclopedic knowledge. what would be the difference for the allies and the white house to make more strident and forceful on vladimir putin? >> if we wanted to be really

ambitious, we would go for a round style escrow account where everything has to go through one account. it would still have challenges but would remove complications. that would be easier. failing that, we would have to tighten the regime. we would have to go more seriously and say that you have to keep paperwork. we will do audits. if we find russia is still selling above the cab, we will put a proper fine. tom: i don't know the details but i will assume you summered in odessa as a child. what is your beliefs of the fragility of the -- your belief of the fragility of the black sea with wheat and oil? how fragile is it this weekend? >> it is absolute devastation. 90% of all shipments that went

through this week go to the seas. 90% of ukrainian exports. there is no infrastructure to move elsewhere. this is one of the key ports. it was recently destroyed and flushed out a lot of dirt from the ground and a lot of sewage. it all went into the black sea. it is a devastating situation and it will take years for us to move forward. one year of the war, more than five years of de-mining. tom: i look at the de-mining and they understand this comes from the military. but you do follow the funding of the weapons. we are distracted in america by cluster bombs and therefore. what are you focused on as the next step to provide crane with -- to provide ukraine with

offense? >> the next step is to get our own equipment to assemble this into military production. we recently put out a study where ukrainian ministry disassembled more than 60 items. all types of military equipment that we hope never to be experts in. they found two thirds of the equipment comes from u.s. headquarter companies. russia continues to import. the levels of imports are the same as before the war. how does that happen? we heard chairman yellen talk about on shoring but unfortunately, china uses u.s. equipment and parts, produces them, and ships them to russia. or we have countries like turkiye or uae buying it from the u.s. and shipping to russia.

on the one hand, we are supporting ukraine with everything we have but russia is getting our equipment to use against ukraine. jonathan: chairman yellen, secretary yellen, i confuse that for years. tom: at imposing has never done that in his life. jonathan: elina ribakova from peterson institute. thank you for being with us. what a tricky outcome where the 12 months later. tom: there is a visceral understanding of the territory from those who there like elina ribakova. they have a different focus. you can do fancy academics in classroom in london or washington, but there is no substitute for the visceral understanding of your childhood. jonathan: the threats around the black sea were something you were focused on off the bat. and how great supply will be through the rest of this year. jonathan: the one thing we have

underplayed this week, we have been focused on other issues is a jump. does the price go into a loaf of bread? i am not sure. jonathan: it will hurt. coming up, david rosenberg of rosenberg research. conversation just around the corner. equities on the s&p 500 positive 0.26%. good morning. ♪

if you're trying to get a view of the whole organizational financial health and you're trying to do that through multiple systems, that makes it very, very cumbersome. ♪ it's not just tech, it's not just people. it's how they work together to provide that experience to the customer. as a finance organization that is what you want to do. ♪ bridgett is here. as a finance organization she has no clue that i'm here. she has no clue who's in the helmet. are you ready? -i'm ready! alright.

xfinity rewards creates experiences big and small, and once-in-a-lifetime. i don't want you to move. i'm gonna miss you so much. you realize we'll have internet waiting for us at the new place, right? oh, we know. we just like making a scene. transferring your services has never been easier. get connected on the day of your move with the xfinity app. can i sleep over at your new place? can katie sleep over tonight? sure, honey! this generation is so dramatic! move with the xfinity 10g network.

jonathan: good morning. going into the weekend, your market is up on the weekend session. equity futures look like this, positive by 0.3%. the nasdaq is trying to bounce back, up 0.5%. off the back of the worst day of the year for netflix. the worst day since april on tesla. this is bramo in spirit. in the bond market, two-year yield and 10-year yield, curves shifting following supplies of jobless claims going into the federal reserve next week. anticipating another rate hike of 25 basis points. a one and done, or still more to come?

the idea after a hike next week that they may well be done. your two-year yield is 4.8479. the 10-year yield is 3.847. the euro on the worst week. against the dollar, had a look at 1.12 and did not go up to 1.13, now at 1.11. ben bernanke saying the why the expected rate hike next week will likely be its last. organized by fidelity investments. saying, we will see a very modest increase in unemployment and a slowing of the economy, but i would be surprised to see a deep recession in the next year. tom: whatever you think of him in 2008, he is one of our great monetary historians and understands how this happens and how you come out of it.

we will not go into recession now but we have to say people think we are miles from a mber recession. jonathan: it such an odd cycle. homebuilders have rallied. tom: as a society, we have never been here. bernanke, schwartz and freeman would say we have to go back to early 1920's to get the analog. jonathan: the fed, the bof see and more as well. the boj, according to our reporting, seeing little urgent need to address the side effects of its yield curve control program. the boj makes their decision this time next week. tom: we have looked at the dollar and yen and euro. the first number i looked over off the boj chit chat, strong

euro, week yen. what is important is anywhere near one point 59 or 1.60, further euro strength against yen. jonathan: the dollar is comfortably pushing above 142 right now. china, outlining a series of measures to increase car purchases for new energy vehicles. the main economic planning body setting out 10 steps including lower costs for electric vehicles, charging, and maybe tax breaks. this is incremental stuff. people are waiting for the big move. tom: there are waiting for a grand scheme but there is not a grand scheme. the foreign minister is missing. this is in the zeitgeist this week. a senior officer of the chinese government, where is he? and you have the work with

ambassador burns, a good supporter of bloomberg surveillance. they are saying he is having his email. they are making it up as they go. they try to keep people employed and tapped to to the china brain. unemployment among kids is around 20%. jonathan: what do you make of shadow diplomacy from kissinger? tom: i am hugely biased on this. it is an unfair question. the bias is they created history and to the honor of standing in the hotel room of shanghai where henry kissinger sleep -- secretly slept the night before they went to beijing to create history with nixon. i have sat in the hotel in beijing in the recreation of the chinese government has of the red leather seats where they met. that is ancient history. if i am the biden administration

, i am wondering about the frontrunning of someone always controversial but dr. kissinger at 100 whatever, and the question of how does this relate in the administration? did they know he was going to go? jonathan: i don't know. mohamed el-erian will join us in the next hour. tom: 30 seconds under surveillance. what does barbie do? i think $200 million. jonathan: what did tom cruise get? tom: a little under the weather. $50 million or $60 million. i think barbie will have a lot of buzz. jonathan: i cannot get over how sold oppenheimer as. the only seats i could find work front row. if you ever sit there, wearing your neck is like this, bruno.

tom: inflation in america. the analysis with bob ferro ms. -- years ago. david rosenberg joins us in toronto with rosenberg research. i want you to speak to jerome powell. is the deflationary -- display snaring vector and forced and what be staying with a disinflation into 2024? david: i think with the disinflation trend, it will be the primary trend. we will have a bump in the next month or two because the crv has taken an 8% jump since the end of may for the reason you folks were talking about. the question is how the fed will treat that, and whether it will be temporary or permanent of this run-up we have had across

food prices in the commodity markets. and also what is happening with oil coming off the bottom. if this is happening with an 4.5% to 5% unemployment rate, and we have access in the economy, it is not a problem. but with full employment, the weight has to be on the fence mind. the primary trend is going to be toward disinflation into the next 12 months. the next couple months will challenge that you. tom: army beyond the pan-dem -- are we beyond the pandemic? do you believe in factors? are we beyond pandemic analysis? david: i don't think so. we are still seeing a lot of the after affects. it is one of the reasons why yesterday, no one seemed to care about the conference indicator

decline for the next -- for 15 months in a row. the inverted yield curve has been more than a year. it is deep. the dispersion across all yield curves would tell you the recession should be starting, but we have debate over whether there will be a recession. this is the energizer bunny, the gift that kept on giving, the stimulus checks from biden in march 2021. and excess savings. historically, americans would spend half and save half. but we live in a much more are subsisting society. is the covid effect behind us? the worst of the covid health is behind us but we are living in yolo, you only live once, so

spending has gone up. this may be ending right now but it is one of the reasons why the people calling for recession, yours truly, have been frustrated. because of the impact of the fiscal stimulus was a product of the pandemic. jonathan: what is interesting -- tom: what is interesting is you only live once. david rosenberg is going to see barbie twice this week and. [laughter] lenhard feels that over time we will return to some -- blanxhard feels that over time we will return to some. are we going to be in 2%-ish range or will david rosenberg have to set a legitimate, societal inflation rate? david: i think you are referring

to 2% as being the baseline. what is interesting through the pandemic and distortions around the pandemic, the fed never once has changed its long-run estimate of where the nominal neutral funds rate is. it has been stuck at 2.5%. the work that has been done refers to the real neutral rate. let's assume that we get to the holy grail of 2% inflation. then you have john williams. our work has corroborated his work that we go negative in years ahead. what did covid not change or the policies around covid not change? aging demographics. this remains and has been a deadweight drag. tom: jonathan tells me every day. continue. david: and debt is another consideration. this has been wonderful for

growth stocks and the tech sector. it seems as though nvidia back in may with the truly bombshell earnings report, almost felt like pfizer monday in december 2020. i will not say it is bigger than the internet but it is bigger than 3d printing and will have monumental impacts in the labor market. labor technology, from a labor market perspective, will be a significant disinflationary force like the internet was. not on the same scale, but i does not -- but it does not have to be on the same scale to be a disinflationary force. jonathan: this is sort of out thinking, 10 or 20 years, but what will happen if we start to see this job replacement from this boom? david: it will be a problem because with aging demographics

comes dependency rates which puts pressure on fiscal finances at a time when governments around the world have been on the spending side. some people say the only way out of this is we have to inflate out of the that problem. the problem with inflation and the reason why jerome powell has been fighting inflation with cover from the white house is inflation is a tax on the poor and elderly. people say we have to solve the adult problem -- solving debt problem with inflation but no, because it creates other social problems. we will have to re-create the entire school system. the bottom line is this dirty five letter word called "taxes" will have to go up. that is why i say, why have bond yields not sort? even with what is happening with foodstuffs and energy the past few days, the fed penned the

funds rate from 5.25 to 5.5. why are we at 3.80 on the 10-year yield? the bond market is telling you something which goes back to tom's initial question. it is telling you something about the disinflationary future. in terms of how governments deal with it, this era we are seeing of fiscal rectitude is going to have to go toward fiscal tightening down the road because it is not sustainable. we told everybody what was happening with the stock market and fiscal deficits. everything we are talking about right now, we have to ask the question. the biggest anomaly is not what the stock market is doing but what the bond market is not doing. jonathan: this was fun and thoughtful. thank you. david rosenberg of rosenberg research. enjoy the movies.

barbie twice. wow. tom: yes. jonathan: where official gas is $200 million for the box office? tom: no. seriously, i bill $180 million. jonathan: it has been a while since we have had a good movie weekend. tom: i like the will ferrell part but sasha's trouble. jonathan: who is sasha? tom: sauces in the movie. ♪

this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight. old school wisdom, with a passion for what's possible. that's what you get from the morgan stanley client experience. you get listening more than talking, and a personalized plan

built on insights and innovative technology. you get grit, vision, and the creativity to guide you through a changing world. ♪ was also the first time your profits left you speechless. at the counter or on the go, save 20% with the lowest transaction fees and keep more of what you make. start saving today at godaddy.com >> the good thing for netflix is they have a big production pipeline. if you told me the strike would last one more week, it is a nonevent. if you set it would last six months, it becomes an event for netflix and everywhere else. jonathan: this is tim nollen

following the hollywood strike. netflix with one of its worst years of the day's -- its worst days year-to-date yesterday. going into a massive weekend for fed business. you mentioned numbers around barbie. here are a range of estimates for you. $140 million to $175 million. oppenheimer is projected to get $50 million to $70 million. tom: they are going to show it in imax and adobe set him up five times. it is almost back to pre-pandemic. like a celebration. jonathan: as of this amazing? if you asked me previously when i go back to the movie theater, i with the said no thank you. tom: and you went and saw mission: impossible last week.

jonathan: i did. it was not gray in the box office. tom: i was told if i did not wear a bowtie today, i could not come home. we speak to experts. jessica is with us this morning, senior media entertainment analyst. jessica, you and i in our youth or harkens by our parents back to 1939 and the sea change which was "gone with the wind" and --. is there a change with oppenheimer and barbie? jessica: this will be a big weekend, the first big weekend in a long time. i don't know if barbie will do the numbers you guys just threw out. we are hearing something a little less but we will see. these can be really big for warner bros., discovery and

mattel. and oppenheimer is nbc you -- nbc u. of course, we cannot think about the strike and what will happen. tom: when in doubt, hollywood copies success. if we deem a pink success, how will hollywood leverage this and copy mattel's brilliance? jessica: this was brilliant marketing. they have done such an incredible job between the two companies. barbie is everywhere. i am sure it will drive consumer products as well. there is a lesson to be learned from all of the marketing and how well they have done. there is a huge backlog of films coming what you think would be positive, but you cannot talk about what is going on in movies or television without talking about the strike. if you do not have talent

promoting the movies, i know some people are thinking about moving schedules around. jonathan: isn't that a lot of promo with the talent walks out and goes to the picket line? i wonder how much is just virtue signaling? isn't that promotion in itself? jessica: there are definitely headlines so you may have a point with that. jonathan: i want to talk about streaming and the strike. because of an analyst yesterday would set if it goes on for another six months, that is a problem for netflix and everybody. how much longer do you think this will go on? jessica: none of us know how long the strikes, plural, will go on. it feels like everyone is out at the moment but i would liken this to covid when nobody could produce and we watched everybody run to streaming. there is global production and as far as i know, there will not

be global strikes. this global production and all of us have long lists they want to see and have not seen yet. this is going to be positive for streamers. sadly, it is bad for linear, cable, and broadcast. the talent gets paid more from linear them from streaming. it is ironic. tom: i just had a scary thought. you and patagonia at sun valley. if you were talking to billionaires at sun valley on the hollywood roll up, do you anticipate a lot of mergers? specifically with warner bros. discovery with 57% debt. what do they do with the frenzy to come? jessica: i do think there will be a lot of m&a because there are many midsized players. this is a global scale business

at this point. whether it is warner bros. discovery or not, we will see. they have a lot of data but also a lot of cash. i think they will pay down debt fairly aggressively this year and bring. inflation a lot. the recent bombshell was from sun valley and the allen company conference with bob iger, the cnbc interview where he said he will find a strategic partner for espn and will somehow divest of linear assets. what this means? that is more known but it was interesting. finding a strategic partner for espn could be the first move that causes a ripple effect. tom: we have to have profitability within streaming. do you discern a legitimate, sustainable free cash flow out of whatever the stringer is?

seven dollars or eight dollars a month? is the profitability street embedded in your xl spreadsheets? jessica: unfortunately, with the strikes will do is give everyone a chance to reassess their content. there was a mad rush the last three or four years to spend on content and marketing. this will be pulled back, for sure. is is his will ultimately be more profitable, -- businesses will ultimately be more profitable, but will they replace existing revenue streams? tom: i have 20 seconds. what is your single best bet? i have to pay barbie and oppenheimer for five for the family this year. jessica: i would say warner bros. discovery. tom: are you satisfied with that? jonathan: yes.

just as always making me money. it is so bad, it is good, and will for streamers to cut back on content. tom: i don't know. i don't equate this to cable tv in its infancy because there was persistent belief of cash flow in its utility. coming up with the next "king queens gambit -- "queens gambit" is not what they do. paul sweeney at bloomberg and others are legendary at trying to gauge who will lose the least amount of money. they are all, as a generalization, using money. jonathan: it will force cuts and consolidation. but strikes will not go on indefinitely forever? tom: stripes always get solved is on the technological changes and -- strikes always get solved

based on the technological changes and stuff. but i don't get this. jonathan: aren't these the same conversations we had about netflix three or four years ago? tom: netflix seems to be separate from the debate. i don't have any opinion but i just do not understand. the thing that drives me nuts is in the old ways, you knew where everyone was at every moment. aerosmith is sold out in iowa. it was that scientific. nickelback are from canada. no one will listen to it. loverboy broke out here. ♪ everybody is working for the weekend ♪ it is in the barbie movie. we are streaming. it is a big secret. it is baloney.

who is number one on hulu? i have no idea of hearing and -- i have no idea. jonathan: who cares? tom: that is the point. jonathan: next week, federal reserve decision on wednesday and ecb on thursday. this time next week, the boj. do you see the right story coming again? tom: hockey stick. jonathan: from bloomberg u.k., rent in the united kingdom as 28% higher than before, in london specifically. outside london, a different story. tom: in kensington? jonathan: kensington is very much in london. tom: you lived in nottingham? jonathan: a few places. equities are just about positive on the s&p. ♪

bridgett is here. she has no clue that i'm here. she has no clue who's in the helmet. are you ready? -i'm ready! alright. xfinity rewards creates experiences big and small, it's an amazing thing and once-in-a-lifetime.

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. >> right now, it is about earnings. >> this is an all in situation. >> we have a lot of money flowing through the system. that is a challenge for inflation. >> we are not out of the woods. > we think the recession will come. announcer: this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: you made it to friday, congratulations. good morning. this is "bloomberg surveillance" on tv and radio. alongside tom keene, i'm jonathan ferro. we are up 0.25%.

big tech on deck. big earnings from alphabet, meta, amazon. the bank of england will be in august. before that we get boj, the ecb, and the federal reserve. tom: we are having fun today. there is a lot going on in the end of july. i agree that the central bank derby reshapes to get into autumn. the one key thing they have -- even the bank of japan -- they are massively data dependent. they're working on wait, wait, wait, and see what the data is. we get the world of disinflation. jonathan: it is the mystery. tom: truly. jonathan: then what?

boj, based on our reporting, they will ditch yield curve for how long? that will not happen next week. tom: it is on the others of the world and we are not focused on it. global wall street will tell you this has western ramifications. when boj breaks we see strong yen. this is also in dollar-yen at $1.42. jonathan: the fx market is far less interesting. tom: yes. jonathan: how does that bleed into what is developing in europe and the treasury market? tom: i agree. the japanese bond market is an artificial market.

the question is what do we do as an analog in controlling the bond market? that goes to the debate of jackson hole. what did they do with the balance sheet of the fed? jonathan: a number of years ago we were talking about yield curve control in america. do you remember that? tom: it was not that long ago. that is to the success of the institutions. mohamed el-erian will join us to talk about those institutions. jonathan: giving the federal reserve a victory lap. you are the only one that thinks they deserve a victory lap. tom: it is oppenheimer as well. jonathan: into the equity market on the s&p 500, positive and the

yields are lower. the bond market story yesterday disrupted by the jobless claims data coming in lower-than-expected. this labor market is resilient and you can put that pause on ice. tom: and data dependent into next week. all of a sudden this is the friday where jackson hole is upon us. jonathan: just around the corner. sarah hunt joins us, chief market strategist of alpine woods. sarah: good morning. jonathan: you have got outperformer's on the week against the nasdaq, on the month against the nasdaq. are you looking for more of it? sarah: we were positioned for it originally because we were not as heavy in tech. that is a very difficult position to be in. but if you look at what happened yesterday and you look at what

happened to netflix and tesla the question is going to be around operating margins. tech is seeing margin issues. i do not want to extrapolate into the full of the technology spectrum but the question is, yes, you have a strong labor market. the odds of them doing something in july are 100%. can companies continue to adapt and adjust and keep their earnings where they are? that is the biggest question. the expectation is going higher. tom: we had a huge response. we are trying to get you to come on daily but your people will not let you. [laughter] you absolutely nailed it. netflix is in this crazy streaming business. it is not a tech company. it is a creative -- where is the next barbie kind of thing? tesla is auto but maybe not.

i do not know how people equate them to google, apple, microsoft. the conflation of tech, to me, is borderline juvenile. how do you deal with that? sarah: i think on the earnings you are right, netflix and tesla are very different for a variety of reasons. but they also have a strong first mover advantage, and for tesla, you have elon musk and everything else they can do. with netflix, they have been able to repeat those successes. it is difficult to put a lot of stance in saying they can, with " squid games" every year. where is that margin going to come from? tom: microsoft is worried about "squid games" and we are modeling $117 billion out to

next year. that is not netflix or tesla. jonathan: microsoft's numbers drop on tuesday. amex dropping now. the outlook for eps remains unchanged. card spending, let's talk about this. it is up 20% year to date. the airlines have done well. discretionary spending for 2023 is the theme we have not spent time on. you can learn something from the earnings as they come in. you can learn something about how this market responds to those earnings as they come in. yesterday tremendous numbers and then finished the session lower. amex gets punished. what are you learning from how we are responding? sarah: that started with the big

banks. they came out with great numbers and then they were not higher the way they popped on the original earnings. the question becomes are people reacting to this is as good as it gets? mortgage rates are too high. people do not want to sell their homes so new homes are going gangbusters. what happens when people start to go, ok, i accept those mortgage rates and they sell those homes? is that is good as it gets? did we have the massive spend in 2023 on things like travel and entertainment that people are going to start pulling back if things start to bite? we are not talking about that spending on goods where people are like, i have to have more patio furniture, i need another pool. is this a wave that will receive and if it does, are things as good as it gets for these companies? if oil prices are going up, that is tough for the airlines. there is a lot of different things in play but part of it is

did we crest the wave of spending? jonathan: if you are more enthusiastic about this rally and you missed out in discretionary spending, is this a warning? sarah: i think it is a little bit of a warning of the toppy things becoming less toppy . or you start to see more people spending time looking at the stocks like parker hannifin. you are broadening out from short cyclicals to a longer cycle business and their margins are improving. there are stories underneath the surface that can act very well. how can you cope with the fact that the top is top-heavy? tom: ph, 15%, five year dividend growth in boring, non-sexy

stuff. maybe it is a blend of 17, 18 multiple. . how do you discern parker hannifin as a value? sarah: they have, up from where it was. they do not have any sexy headline businesses but they going to the airline industry and motion control. all things part of the industrial economy and part of the leisure economy. if i am building things for airplanes, that is a longer tail on flight costs. we do not have enough planes in the air. but you get down into these secondary suppliers and i think there is real opportunity. especially companies able to expand margins. tom: flight control, hydraulic, business-class, that is what they do in cleveland. 55,000 employees. these are the kind of stocks that have not participated. when is the when?

16% per year the last decade. jonathan: that is the conversation we are having right now. let's finish on an area that has participated. you know where i am going. [laughter] i finish every conversation like this. tom: predictable. jonathan: energy. sarah: i wanted to change that. we like energy. i look at the lng sphere. i look at those participating in the hydrocarbon space. there was discussion on bloomberg days ago about this. one of the catalyst for oil is you stop releasing it from the spsr. -- spr. when that starts to come off and you do not see a collapse in demand -- that is the other thing. is oil telling you demand is coming down? the issue has been on the supply side.

china is an issue as well. jonathan: do you need most from china? sarah: longer-term i do not think you need it. the general use of hydrocarbons is growing without china. they have been also releasing some of their spr's. i think it would be helpful but i do not think you need it. jonathan: you knew where i was going. sarah hunt of alpine woods. this market lead for a couple of years. tom: it is only up 19% the last decade. jonathan: you know the story. it has been like just the seven stocks. tom: and then you have a giant dividend trading at a multiple of seven. jonathan: welcome to the program. the equity market positive 0.26%

. coming up in 47 minutes, we will catch up with this guy, mohamed el-erian. that will be cool. tom: you think he is coming to see the new york jets, no. we are snoozing away and the phone rings. you are talking to mohamed el-erian. i am in town. we are talking to one of the great executives of one of the great sport successes. he is really getting his elbows out saying, i'm available. jonathan: arsenal have spent a significant amount of money this summer. serious money. tom: i have no idea. jonathan: you know. you read the sports pages. tom: definitely not. [laughter] jonathan: vinai venkatesham coming up as well.

tom: they are like archrivals. jonathan: i am sure he would love -- tom: what is it like compared? jonathan: if i do that, i will offend somebody. tom: we have got to go to the cigar bar. jonathan: we will catch up with amh in d.c. in about five minutes. this is bloomberg. good morning. ♪ ♪ somewhere, anywhere... ♪ ♪ i just want to lie motionless in a chair! ♪ booking.com, booking.yeah ♪ ♪ and she would just walk right past them. she didn't know they were talking to her. i just could not hear. i was hesitant to get the hearing aids because of my short hair. but nobody even sees them. our nearly invisible hearing aids are just one reason

we've been the brand leader for over 75 years. when i finally could hear for the first time, i started crying. i could hear everything. call 1-800-miracle and schedule your free hearing evaluation today.

>> let me be clear, this is not for an exclusive club of countries. it is open, it is inclusive. the united states is working to strengthen, not weaken, our ties with the developing world. jonathan: janet yellen, u.s. treasury secretary on friend-shoring. it is not exclusive. open to everyone. what is it? tom: what is friend-shoring? jonathan: it is you have closer trade ties with allies. another term might be near shoring. we have a close relationship with mexico or canada as opposed to china. you diversify your supply chain by relying on -- tom: i wore my beige suit.

jonathan: i have not said anything. tom: you don't have to say anything. [laughter] jonathan: it is the shoes people cannot see. tom: come on. the thing that is important -- and this goes back to secretary clinton and fair trade -- they are trying to emotionalize the reaffirmation of what regional, block, or fair trade we are going to have. jonathan: decoupling got thrown around. the new word secretary yellen used was diversify after going over to china. ultimately, it comes down to moving your supply chain's out of china.

tom: thank you. we are going to pick up on this in an odd friday. speak with annmarie hordern. we could do a two hour conversation and we are going to cut it down to an our and 15 minutes. on china and our trade strategy and a sleepy july into an even more sleepy august, are republicans and democrats on the same page in terms of the trade strategy? annmarie: if you look at some of the controls that are in place you would think they were on the same page. it does not look like they are getting but of the tariffs.

you look at some of these items that the former administration did, the current administration did, and what they are going to be unveiling, and you think they would be on the same page. of course, we are heading into an election year and the rhetoric is going to ramp up. we had chris christie in the studio this week, former governor of new jersey, he is a candidate on the republican stage. he was saying he would change his tone and come from a place of strength. but what does that mean? everyone knows once you get into the white house you have to navigate this relationship and also make sure you are not just being strategic about it but responsible. the rest of the world wants to see a responsible dialogue between beijing and washington. tom: you have massive credit on continental europe, putin, and this war. to me and the distractions, including the silliness over barbie and oppenheimer, we

almost have a war unraveling this week. the new york times, bloomberg, and the washington post talking about the black sea. what is the navy doing about the tensions in the south of ukraine? annmarie: i think what everyone is trying to do is find a diplomatic way out. russia has complained about the black sea green deal in the past -- grain deal in the past. but they are trying to find a diplomatic way forward. president zelenskyy instructing his top military commanders and navy chief to prepare actions that would allow the deal to continue. you have president erdogan of turkiye, who has been influential in the past to get this deal extended alongside the united nations, said he will

talk to putin. that is where everyone is focused. putin just ripped rush out of this grain deal that was operating somewhat smoothly. russia has attacked ukrainian agricultural infrastructure in the past. but it was really important, especially to the developed world. you talk about what matters when it comes to inflation. food inflation is key to the developing world. not only do you have this grain deal being torn apart but this week india also has announced a major end to a rice export. they are the biggest exporter of this type of rice. all of this could be inflationary to these developing countries. jonathan: let's talk about the secretary of state. not antony blinken, henry kissinger. have you had any response from the white house about the diplomacy that seems to be conducted by the former secretary of state? annmarie: what we have heard

from the state department is they are aware henry kissinger was making this trip to beijing but this was not part of a diplomatic push from the biden administration. he is there in his own capacity as a citizen, which he has done in the past. between tony blinken going a few weeks ago and then you had henry kissinger was there, another former secretary, john kerry, and then henry kissinger. the kissinger meetings are important. he got to sit down with xi jinping who called him an old friend, but even more important he got to sit down with china's defense minister. an individual that snubbed lloyd austin's reach out for a sit down because china wanted to see sanctions lift on this individual and the biden administration would not do.

but they were willing to sit down with henry kissinger as the administration has been trying to get meetings between washington counterpart and beijing counterpart. it is an interesting moment because henry kissinger seems to be navigating these politics in china, but is not doing so officially. jonathan: it is amazing he has access this administration cannot get. go one step further. do we have any insight as to whether his views on that relationship align with the views of the administration of the white house? annmarie: henry kissinger wants to see a china and the u.s. be on more friendly terms. that's obvious. even him taking this trip shows it is obvious. he first made this trip in 1971. we met with the head of china talking about re-engaging between beijing and washington. he wants to see a friendlier path between the u.s. and china. i could not speak to what he

makes now of things like export controls on the tariffs, but he wants to see better communication. so much that at 100 years old he is making this trip to beijing and sitting down with a number of individuals and having the red carpet pulled out by xi jinping. jonathan: incredible stand among to be making trips like that. let's finish with the question tom is asking everyone. do you or don't you have tickets for the movie? annmarie: barbenheimer? i do not have tickets but i plan to see both of them. kai bird wrote the article yesterday and i will see them once i find tickets. tom: did you have the barbie convertible when you were a kid? i can see the whole living room just -- annmarie: that is what it looked like. the entire room was barbie

houses. tom: you do not know the plot. they have got to go to venice beach -- jonathan: do not spoil the movie. tom: let's take it over to surveillance ken. annmarie: is that why you are wearing the bowtie? [laughter] tom: there is jon, bramo, and then stereo typical tom. this is like the barbie movie. jonathan: this is like the barbie movie? tom: we are going to venice beach. annmarie hordern is coming with us. ♪ you're a rock star. you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star. hi, i'm ozwald. hello ozwald. pam, you are a rock- i wasn't going to say it. ♪♪

and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com is it possible to protect my business from cyber threats? it is, with comcast business. helping every connected device stay protected. yours. your employees'. even... susan? -hers, too. safe. secure. and powered by the next generation 10g network.

with comcast business, advanced security isn't just possible. it's happening. get started with fast speeds and advanced security for $39 a month for 12 months with no annual contract. plus ask how to get up to a $500 prepaid card with a qualifying gig bundle.

jonathan: trying to finish on a high note into the weekend. equity futures a little higher. traveling north of 0.24% after a tremendous year so far. down on the session on the nasdaq 100 for a second day. down on the week as well. into the bond market, looking ahead to next week, the federal reserve around the corner. yields were higher yesterday off the back of more brazilian labor market data in america. the two-year 4.84. tom: we will have full coverage

and deep diving into august 3. i am going to levels instead of change analysis. we have to remind ourselves 35,000 down. the nasdaq 100 in the vicinity of 16,000. these are levels six months ago -- spectacular article today -- without any ill will. jonathan: not at all. tom: it is a class act article on how difficult it has been for the strategists. jonathan: she puts together those surveys and a lot of them have had to hike. do you know who has not? we talk about mike wilson. tom: bnp paribas.

jonathan: it is still 3400 for the year end. tom: fitzgerald goes for optimism in getting it right and they are cautious. but i will emphasize this. john authers and the isabel lee article should be level 1 reading. it has six charts without any of the malicious crap you get on the zeitgeist. it is a brilliant tour de force. jonathan: this is a difficult job to make these calls. let's get into the fx market. i want to talk about the euro. the euro on the weekly drop and could be the worst week going back to may. may be breaking through 113 the last week but now holding onto 111.25. going into the federal reserve

decision last week former fed chair, ben bernanke, said in a webinar and talked about the hike being the last. "what we will see is a modest increase in unemployment and a slowing of the economy, but i would be very surprised to see a deep recession in the next year. " these are the hopes and dreams of everyone. tom: pull out the word deep. for those not up to speed there are different levels of recession. not only the early 1980's but deep is the keyword. let's say you get a true recession but it is shallow like i think it was in 2001. i cannot remember exactly, but there is a lot of people like ben bernanke pushing against this. jonathan: the ecb, federal

reserve, boj one week away. these moves in dollar-yen will come out later today. the boj is seeing little need to address the yield curve control. the yen is weaker. that currency pair positive 1.2%. tom: i looked very carefully into the early evening last night of the inflation makeup in japan. there is tokyo inflation, nationwide inflation, x this, x that. they manipulated 3% plus inflation. this is the folly. how do you manage 3% inflation? no one has ever done that before . it is a unique experience. jonathan: it is worthwhile repeating.

the way japan views this inflation compared to the u.k. and the u.s. is so different. they seem to view this, based on their communication, as a generational opportunity to reset inflation. tom: correct. jonathan: that is not the way the rest of the west sees this dynamic. tom: what i am going to go to is what i think is the foundational idea. i have seen it in the zeitgeist on europe. you just look at the glide path of nominal gdp. the japanese are clouded by a terrible nominal gdp. italy is clouded by a terrible nominal gdp. coming out of the pandemic and the biden stimulus america goes the other way with an outstanding relative nominal gdp growth. jonathan: this is the triple header for next week, boj, ecb, federal reserve. you are all over this. barbenheimer.

here is the range of estimates you have given us. the pre-release sales for warner bros. thinking it could bring up to $175 million in. oppenheimer expected to make up to $70 million. tom: oppenheimer is the serious movie. jonathan: is that the official review? tom: they are very different movies but they are not marvel or star wars or the other big events. i can just imagine creative hollywood parked on the edge of the pool, praying in near religious fervor that even with the strike, they come up roses. jonathan: something original. tom: right. jonathan: it feels like it has been a decade of repeats.

tom: they have all of the heavyweights top to bottom. there is the venice beach scene. the bottom line is barbie captures venice. jonathan: tom and ken. are you friends now? tom: bramo is a character in the movie. [laughter] they are going to venice beach to save themselves. jonathan: you watch it this weekend and you let me know. tom: i got the preview. jonathan: i am all for cillian murphy and oppenheimer. but i cannot get tickets for this weekend. tom: i don't. jonathan: you want to talk credit? tom: let's talk credit. jonathan: high yield spreads are so tight. 400 basis points. tom: let's go to a bramo

conversation. jonathan: let's do it right now. junk bond yields incredibly low. tom: winnie cisar joins us now, creditsights. bramo is off in norway with polar bears. i am going to look at the miracle of price, yield down in middle grade credit and high-yield. let's start with the why. why are bonds doing so well that have a higher yield? winnie: i think the high-yield bonds are living in a barbie world. it has been a fantastic set up with investors looking to add yield to portfolios. with the broader macroeconomic backdrop appearing like a softer than expected landing could

materialize, high-yield looks compelling over all, especially compared to things like small-cap equities. tom: you are using them as an alternative. what kind of yield can i gather even with high-yield and middle credit priced to perfection? am i looking at a 4% yield or could i do better? winnie: you could do double that in the double b space. you could get between 7.0% and 7.5%. the single b land people tend to get more worried about, especially in an eroding economic environment. it is doing well from a fundamental perspective and you can get 8% and 9%. from a forward 12 month basis, if you are willing to withstand

volatility because rates volatility is still elevated, forward returns look pretty attractive. jonathan: the fed preaches high for longer. let's talk about when longer will hit. when does it become a problem for these creditors? winnie: we see in the lowest rated segment of the high-yield market and also the lower rated segment of the leverage loan market that there has been significant erosion. we have seen interest coverage levels drop materially, especially for triple-c loans. as we look toward 2025 when the maturity wall starts to build, that is when you start to see more distress come through the market. when we do sensitivity analysis

around the aggregate impact of these higher for longer yields on the market the moves in interest coverage do not look that terrible. it is just that isolated, highly leveraged, not particularly great capital structures to begin with segment. tom: you mentioned the small-cap space. this is outside your remit so if you want to cut me off, you would not be the first. [laughter] i look at the etf high-yield, whatever, and i am looking at the track record that pales in comparison to the seven great tech stocks. retail america is addicted to owning big tech. what is the attraction of your world right now to people addicted to 18%, 19% moves? winnie: good point. one of the things we have been looking at in the high-yield market specifically is figuring

out the investor composition. where are the next investors going to come from? historically, you need to see either retail investors or non-u.s. investors come into the market to push spreads toward cyclical tights. we are not expecting that in the base case. we think with default rising modestly and a relatively strong u.s. dollar compared to the other majors, you have a harder time getting that retail interest or non-u.s. interest into the high-yield market. i think there is the reality that some of the namebrand issuers in the equity market and investment grade corporate market are going to be the ones where you see global and retail interest. jonathan: winnie, thank you. pinpointing 2025 when high interest rates become

problematic. if you are tuning in, welcome to the program. the s&p 500 positive 0.22%. the conversation is going to shift to football later this morning. about 30 minutes from now. tom: have you been to arsenal? jonathan: i have been to a game. tom: how is it different than the endzone of liverpool? is it nuts? jonathan: the atmosphere appears to be better than that at the emirates. tom: this is one of their songs. "we are the arsenal boys, if you are a tottenham fan, surrender or you will die." jonathan: that is not the actual song. there is a better one. tom: that is the one that can go on air? jonathan: "what do we think of tottenham"? that is how it goes.

but you should google that. tom: what is a gooner? jonathan: go to tottenham and you can see what they say. equities right now on the s&p positive 0.2%. tom: these people are nuts. jonathan: the equity market just about positive. from new york, good morning. ♪ ♪♪

at morgan stanley, old school hard work meets bold new thinking. ♪♪ partnering to unlock new ideas, to create new legacies, to transform a company, industry, economy, generation. because grit and vision working in lockstep puts you on the path to your full potential. old school grit. new world ideas. morgan stanley.

>> i think the fed is doing a good job. i think what we are in the middle of is a fed that has slowed to the pace of a rate hike every other meeting. we are expecting it next week. that is in the cards. than the question is what kind of signal do they give us for september and the timing of the

next rate hike is october, november. jonathan: we can bottle that and frame it. i think the fed is doing a good job. tk, you are not alone. tom: i have got company that goes back to arthur behrens. the debate is the correct debate. this is a fed that delayed and, given the natural disaster, tried to apply traditional monetary theory which does not work out of a natural disaster. clearly, they initiated policy late. but the look on from that is on a relative basis how the united states has done. that is where things are calmer. i would not be too forceful here if i was the fed on how brilliant we are. i think it is an interesting six months of mystery ahead. jonathan: i doubt they will be. mohamed el-erian coming up in about 15 minutes. let's turn to the price action.

futures positive on the s&p. in the fx market the dollar-yen rising for four consecutive sessions. today the biggest day since april. a move of 1.2%. the boj is not going to back away from yield curve control anytime soon. the boj meeting next week. tom: we are to dive into this. we are distracted by the silliness of barbie. guess what? there are serious themes ahead and they are by definition complex. joining us out of brown brothers harriman & co. is dr. win thin. i need a clinic right now. we go to robbie feldman at morgan stanley or you about what they have wrought in japan. was it a cultural decision to rip up the textbooks you studied at columbia? was it a cultural decision to

compute inflation into the system? win: thank you for having me. i do not know if it was culture as much as pragmatism. japan has been fighting deflation for decades. i think they are quite gun shy. markets got ahead of themselves about a tweak in yield curve controls or lift off. it is clear from the bank of japan comments they are very concerned. the numbers are starting to turn over not only domestically but globally. they are really reluctant. i think that is the signal. they could surprise us next week . this is not a time for surprises. there is so much more. it is a really crucial quarter for global markets. tom: on an algebraic process there has to be constraints on whatever the variable is,

whatever the process is, whatever the derivative is. to me the constraint is they want to own the bonds but they cannot become the bond market. is the japanese government become the bond market, by the government, for the government, where the algebra does not work anymore? win: anytime a young economist or analyst asked me what is going on, it is hard to explain. the bank of japan owns half of jgb's in the market. it is hard to explain. you do not see that anywhere else. i think the big difference is japan is a nation of savers. it is almost like a domestic bubble experiment that is working. i think they are very worried about how to get out of this. they are stuck in this mode of buying and easing for so long i think they are very scared.

tom: this is precisely the point. they want to do an action to get out and they have this massive constraint that they own the bond market. jonathan: i think the problem you could get is the spillover effects from anything they do, say, to the european bond market and treasuries. what would the dynamic be? what be japanese investors coming back home again? win: there is quite a few channels but the main thing would be if they abandon yield curve control, jgb yield would shoot up. they have been the outliers. every other central bank has hiked aggressively. it is the third biggest economy in the world. to me there is a potential negative spillover to the bond markets. in terms of currency markets, we would see the opposite. see the dollar-yen knee-jerk go

down if there is any removal or accommodation. this is such a crucial time for global markets and japan. i think that caution is what to watch right now. i do not think they will take any drastic action. but they love to surprise us. jonathan: we are going to find out in a week. for many, including myself, i had doubts about the ability to back away from qe in places like italy, spain, portugal, greece. they have taken away the stimulus and not seen big accident develop. do you think japan can take that as an example that you can get that handoff away from central banks and handing it back off? win: japan is such an extreme example but yes, i think they

can manage. i think the best time to have done this was when markets were doing ok in the sense that the bank of japan was a little late. you have probably been covering how others have been backing off the september hike. that is the first time i have heard the hawks back off from this really intense tightening cycle. i think that is because countries like italy and portugal are seeing cracks form in the euro zone. that is helping europe top out in recent days. tom: is the bundesbank the inner core? are they still entrenched in inflation worry? win: absolutely. it is interesting. if anything, the bundesbank has

realized it is not just all about germany. there are other countries that have to be within the ecb. when we first started they were locked into that 1990's mentality. we will know more next week. i think the u.s. dollar -- the fed remains king. the ecb will perhaps blink and then we can get higher on the dollar. jonathan: interesting. win thin of brown brothers harriman & co., thank you. we caught up with eric nelson of wells fargo yesterday who agreed with that last point. say the quote. for the dollar to weaken much more, i think you need to see the u.s. labor market deteriorate rapidly and/or c global prospects improve. tom: i am glad you bring this up.

it strikes me as the same as the disinflation theory. disinflation continues a la rosenberg. disinflation reverses and inflates a la bianco. that is a change away from price change. i do not think it is any different. jonathan: the euro 111.26. the dollar-yen having a look at $1.42 this morning. mohamed el-erian will be joining us briefly. tom: i am intimidated. who is declan rice most like? jonathan: good question. if you asked me -- who did you compare him to? tom: i love watching this grayl ish guy. jonathan: he is a quality

central midfielder. when you get bought for 100 million sterling, that is a significant amount of pressure to perform. he struggled without first season at manchester. tom: for those in the real world,? jack reminds me of the bruins. jonathan: do you know who is the best? tom: i am up at 3:00 a.m. talking about arsenal. jonathan: mohamed, coming up. ♪ the first time you made a sale online with godaddy

was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com

(jennifer) the reason why golo customers have such long term success is because we focus on real foods in the right balance with a partner that always puts you first. so you get the results you want. when i tell people how easy it was for me to lose weight on golo, they don't believe me. they don't believe i can eat real food and lose this much weight. the release supplement makes losing weight easy. release sets you up for successful weight loss because it supports your blood sugar levels between meals so you aren't hungry or fatigued. after i started taking release, the weight just started falling off. since starting golo and taking release, i've gone from a size 12 to a 4. before golo, i was hungry all the time and constantly thinking about food. after taking release, that stopped. with release, i didn't feel that hunger that comes with dieting. which made the golo plan really easy to stick to.

since starting golo and release, i have dropped seven pant sizes and i've kept it off. golo is real, our customers are real, and our success stories are real. why not give it a try?

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. >> we are expecting a rate hike next week. that is in the cards. >> we are seeing the easing trend on inflation and the fed seems comfortable hiking slower. >> i think we will see deflationary pressures. >> the fed in their tightening campaigns were unable to give us a soft landing. >> we are expecting a

comparatively dovish hike next week. announcer: this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning. jonathan ferro, lisa abramowicz, and tom keene on a friday deep into the summer. we welcome all of you on radio and television. the raging debate. mohamed el-erian will join us. we are going to talk about arsenal, we are going to talk about budapest. my head is spinning over entertainment and the major entertainment is that we have no clue where we are in 90 days. jonathan: he does not want to talk about qpr. we want to talk about a triple header from central banks next week. the ecb on thursday, the boj this time next week, the fed kicks it off on wednesday. people saying one and done and the one comes next week. tom: we are going to talk to dr. el-erian.

you mentioned bernanke earlier. the idea of the level of ex post the central banks have. they are waiting to get data clarity. jonathan: you need several data points like the one we got a week ago. you might need more than that before the central bank remains committed to the idea we are headed toward a soft landing. have the chances improved? yeah. but after the mistakes they have made do you think they are going to embrace one data point? tom: no. people go, why is el-erian on? the key is to make a decision with clarity and confidence. a, you cannot do that out of the pandemic because we are making it up as we go. b, we cannot do it because we have a war in ukraine. we have china exiting wicked late from covid. t decisions are out of the

question. jonathan: you and i are making it up as we go. the s&p 500 positive 0.2%. bonds pre-much unchanged. the fx market the euro is a snooze. the biggest loss on the euro against the dollar going back to may. and a bigger move in the dollar-yen positive and pushing 142. tom: you take the dollar out and they look at the triangular urization. you get euro-yen out to 160 and that is the tension that leads to the unexpected. jonathan: should we get to our guest? tom: let's get to our guest. jonathan: mohamed el-erian, good

morning. mohamed: thank you for having me. jonathan: thank you for being with us. triple header next week. what are you focused on? mohamed: all three are going to hike 25 basis points but that is where the commonality will end. i think the fed will come across as dovish. the bank of england will be hawkish. and the ecb will be in the middle. jonathan: the fed one and done or more to come? where are you on that now? mohamed: if i go to your framing , which is to adopt the excessive data dependency -- which is where the fed is today -- and if i stick to the 2% inflation target, they will keep open the possibility of a september hike. if i go to a different framing, which is longer-term framing that looks at how the u.s. economy functions, it should be one and done. the trouble is we have all been

pushed into this very short time framing where it is almost absurd that we talk about data dependency with policies that act with variable lag. but that is where we are. tom: long and variable lag but we are trying to measure some algebraic plug ins that lead to super restrictive. are we super restrictive right now? mohamed: we are restrictive, not super restrictive. but it brings us back to the question that hardly anyone wants to talk about for understandable reasons. what is the right inflation target for the world we're are living in today? for the world, i believe, is a world of deficient aggregate supply. that is where it comes down to do you want to talk about the issue or do you want to push it back as long as you can?

i think central bankers -- because they have been missing the target for so long -- do not want to talk about this. tom: does that mean we cannot aggregate and that each nation has to disaggregate into the haves and have-nots? mohamed: it does not make sense for so many countries to follow the same target. we are different. tom: why are you looking at me? [laughter] mohamed: these countries differ fundamentally. tom: do you see the egyptian humor? jonathan: what have you started now? carry on. tom: i thought beige was slimming. [laughter] mohamed: there is something about your suit that jon wants to pick on. jonathan: i have not said anything all morning. mohamed: that is royalty. tom: thank you. mohamed: you said earlier we are deep into the summer. tom: did you see he made with

the rent increases in london? he had a $34 million pop in his real estate. we are going to stop the show right now. you're doing all of your fancy finance stuff. her majesty the queen showed up to greet you at queens college. what was that like? mohamed: it was incredible. we were honored to have her as our patroness. she was wonderful. jonathan: if you want to experience inflation, go to the u.k. what is it like right now in the u.k.? mohamed: food inflation at 17%. labor pushing back hard. right now, the senior doctors are on strike. we have had a tube strike called off, train strikes, nurses strikes, teacher strikes. you feel the wage resistance and

the government and bank of england torn between, on the one hand, accommodating the price wage spiral -- which they do not want to do -- and understanding the impact of the inflation shock. jonathan: we cannot just have a different target for a different country every year. that will be chaos. but based on the u.k. economy and the way you see the united states, what would those targets look like if you could change them right now? you had all the power and you wrote down those targets. mohamed: no one ever talks about changing the inflation target every year. that would be absurd. you well may not have one. if you look forward the next five or 10 years, when is the right target? i feel like the right target is much newer to 3% than 2%. that may not sound like a big difference but it is over time. jonathan: in the states. what about the u.k.? mohamed: europe is the only one where 2% makes sense. japan, which is interesting and

we do not talk about enough because they have a major exit coming up which they are denying for now. they are also 2%. tom: i am going to keep europe away from it right now. john williams reframes and degrees. others agree. you call higher interest rates to come. will this be above where president williams is? rogoff suggesting it could even be higher. mohamed: it is a fascinating debate if you are an economist. i mentioned larry summers, you mentioned rogoff. active debate among people who come from the same camp. i and more on the it is higher

than in the past. more on the rogoff, larry summers end of the debate. tom: you spent too much time in california and you may understand other factors. this is not some economic surveillance babble. there was a lot of other factors here. one of them is a technological impulse over five, 10 years. to we completely underestimate technology as it overlays on the financial system? mohamed: we could have a five hour discussion. tom: we are doing that. you are here until 11:00. mohamed: think of the technology and innovation. if you think about whatever distribution is thought of in future productivity, some of these innovations in science and ai moved the distribution to the right. that's good. but it fattened the tails. jonathan: i wanted to pick up on

something you said earlier. there is a difference between 2% and 30%. a lot of people listening thinking, what are talking about? wise the difference so large? mohamed: compounding makes a huge difference over time. my big worry is if the fed focuses on 2% in a relatively rapid timeframe, we will end up in recession. you have heard me say this the last year. there is no reason for the economy to fall into recession. the elements of this economy are strong enough to power through this period. the big risk is that we follow the wrong inflation target and tipping this economy into recession. it matters because you have the vulnerable segments of the population that have already seen purchasing power eroded. now you add income insecurity to that. tom: i thought you showed up just to see us. jonathan: what is he here for if not to see us? tom: he is here for the sold-out

jets summer camp. jonathan: i had no idea that was a thing. tom: look at the hat he is going to pick up. that is more than a bucket hat. jonathan: that is more than a bucket hat. tom: that is fancy. i could not afford that. mohamed: xiaomi, tom -- tell me, tom, is this when the jets make it into the playoffs? tom: yes because we underestimated namath. i am pretty constructive. jonathan: you are a jets fan this year? is that on the record? tom: i don't want to go that far. i am a totts fan. mohamed: now i know what i am going to get you. tom: you are killing me. jonathan: are we going to get any merge? -- merch? tom: this is a

once-in-a-lifetime opportunity. jonathan:? the market positive 0.27% on the s&p 500. in the bond market yields unchanged. let's of big moves in the fx market. mohamed el-erian sticking with us for the next 30 minutes. we need to talk about the reaction function. his former colleagues at pimco were talking about tolerating two point something. tom: i would talk about the real and nominal space. a lot of the theory is based off inflation-adjusted dynamics, reaction functions, dare i say, differential equations. corporations do not matter. the public lives in a nominal space, with the british call myspace. -- money space.

jonathan: do they throw sharks still? tom: no. mohamed: where do you end on the ps? is it once and done on the ups? jonathan: are talking about strikes? tom: it is a tough call in america. jonathan: the threat of strikes is not over. tom: they want to make it the euro equivalent and i am not sure it is. jonathan: equities are up. ♪

>> i think we are going to see deflationary pressures. that is going to kick in into the fall. right now, it is all about earnings. if we are going to get some kind of period that is not imminent recession, those laggards have to be bought. jonathan: head of macro strategy. live from new york city, good morning. positive on the session on the s&p one third of 1%. treasuries rallying. yields lower by single basis point. tom: this is a joy as we talked yesterday to daniel ricardo and all that he will do at budapest. we continue the debate on premier league in america.

wrapped around the table are three other people way smarter than me on premier league. [laughter] the sum total of my arsenal knowledges from the glorious neil millington at the hotel where the entire staff -- i walk in with mrs. keene. she has a tottenham hat on. we are treated like royalty. i am going to put the surveillance cork in my mouth. jonathan: i cannot believe we have a tottenham fan sitting opposite the arsenal ceo. big game tomorrow against manchester. let's start with why here? i see a lot of spanish clubs come to the united states. a lot of italians do the preseason here. why is that so important? vinai: thank you for having me today. the u.s. has become our number

one international market. we see that every time we come to the u.s. -- we come every couple of years -- we see popularity growing. we also see it in the numbers. last season with nbc sports we had a record audience for arsenal matches. we see our social media following grow. 20% of all retail business is in the u.s. and replay the mls all-star game, jampacked. jonathan: great to see. lots of money. you are also spending lots of cash. i am sure arsenal fans want us to go straight there. how much of you spent the summer on talent? vinai: the story about the summer starts with looking back at last season. last season we had what we considered to be a successful season. we took the title race right until the last weeks. we finished second rather than the first we were fighting for, but we have one of the youngest squads. this year they will be another

year experienced. we have supplemented that squad with three new signings. the three positions we wanted to strengthen, the three players we wanted, and we were delighted to get them at the start of the window. we have with them here with us in the u.s. it was a significant investment and that investment shows the ambition of our ownership group. they have had an enormous success with the franchise in the u.s. over the last few years winning the super bowl, the stanley cup, and the nba championship. they have a really invested behind the team. we are ready for the fight the season. mohamed: thank you for making last season so interesting until the end and congratulations. let me put you in a tough spot. there are two views as to what model major sports should run. one is the u.k. model where you do not have forced equalization. where you have relegation. one is the u.s. model where you do not have relegation but forced equalization.

if you were to create this from scratch, would you keep the current model that allows a few teams to dominate all the time? or would you go to the u.s. model that allows for far more equalization? vinai: i would keep the model we have. the premier league is the world's biggest league in the world's biggest sport. one of the reasons the premier league is so successful is the broadcast distribution is relatively equal. the top club gets roughly 1.8 times the bottom club. we try to keep the revenue distribution as equal as we can to make sure the league is as competitive as it can be. sometimes you have a period where teams dominate and somewhere it is more competitive. tom: i am for ship field united -- sheffield united.

mohamed: you are seeking all of this u.s. support come to arsenal. i am hearing there is more interest in soccer, as they call it here. tom: yes, they do. mohamed: is this a pole factor -- pull factor or push factor? is that the fans pushing people to talk more about u.k. soccer? vinai: i think it is both. nbc have done a fantastic job for the league both in terms of how they promote the game and how the educated the audience around all things football. we see it in fewer numbers. nbc's viewership numbers last year were 20% higher than the season before. we have our game tomorrow at metlife. it is going to be a sellout. it will be the biggest game from a revenue perspective we have ever played in the u.s. i think it will be metlife's biggest ever soccer game.

the demand is really there and it is growing really quickly. jonathan: got to talk about saudi involvement in the game increasing through the summer. the purchase of newcastle more recently. what does it feel like as the ceo of a football club to be competing with a country? not a single person, but a nation. what does that feel like? do you feel like you are doing that this summer? vinai: the premier league -- one of the reasons the premier league has been so successful is because it is so competitive. newcastle are another team stepping forward in that competition. last season they were in the champion's league. there's always a dynamically changing market. another big change everybody has been talking about has been the number of players that transferred to saudi. another interesting development. it is a little bit too early to know how that will affect the premier league, if at all, and we will be watching with

interest. tom: long ago in my youth i saw the lancers try to make this happen. it was perceived by me and everybody else in america as minor league football. what is the symbolism of messi going to mls? does he take them from minor-league to something different? vinai: the mls has been on a good growth trajectory over the many years. for a set arsenal, we want football, or soccer, to grow in popularity. we want there to be a vibrant, healthy mls. messi is a generational talent. having him in mls playing in miami will have a positive effect. at the same time, the new apple tv deal is coming live. we have seen in the few days we

have been here how much coverage there has been around messi and how many talk about messi. we want that conversation. tom: you think harry king could come to mls? jonathan: i would not ask him directly. i have 45 seconds. the apple deal is huge. for a football player to get a slice of the tv money directly like that, see more of that happening? vinai: i don't know the details of the messi deal. i think messi can have a really significant impact on the game. i'm sure it is overly competitive process to play here. i am sure mls had to work hard to get here. he is driving interest. jonathan: the saudis were one of those trying to drive him over. let's do this again. good luck tomorrow. tom: september 24.

ask him? jonathan: are you trying to get tickets? [laughter] tom: i did not want you to freak out. september 24. [laughter] vinai: now you're talking. jonathan: this was great. thank you and good luck tomorrow. vinai: thank you. jonathan: the s&p 500 just about positive. r.j. gallo of a federated hermes, coming up. tech earnings and a little bit of sport as well this weekend before we get there. ♪ i was told my small business wouldn't qualify for an erc tax refund. you should get a second opinion from innovation refunds at no upfront cost. sometimes you need a second opinion. [coughs] good to go. yeah, i think i'll get a second opinion. all these walls gotta go!

ah ah ah! i'd love a second opinion. no. i'm going to get a second opinion. with innovation refunds, there's no upfront cost to find out. so why not check like i did for my small business? take the first step to see if your small business qualifies for the erc. conventional thinking delivers conventional results. at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. ♪ because investing isn't one size fits all. ♪ allspring. purposefully divergent.

hi, i'm lauren, i lost 67 pounds ♪ in 12 months on golo. golo and the release has been phenomenal in my life. it's all natural. it's not something that gives you the jitters. it makes you go through your days with energy, and you're not tired anymore, and your anxiety, everything is gone. it's definitely worth trying. it is an amazing product.

>> equities on the s&p 500 are positive by 0.4%. a lift of the equity market on the section on the week. that is rare, considering what we have seen this year on the nasdaq 100. going back to february after a week day for netflix. worst every year for them, and tesla were starting since april. also the small caps as well. two-year, 10 year, 30 year, a slice and dice with yields coming again. two or three basis points on the 10 year. just about unchanged at the 210 spread at negative one 01 this morning. we have been in and around that level for the last couple of days.

>> david rosenberg has nailed this. you can misinterpret this all you want, but acted is the market has been pricing out significant inflorescence -- inversions, plural. >> there is a belief that the fed will not be there. >> the ramification is -100 basis points. a percentage point difference in the two-year and the 10 year. it is unexpected, to say the least. we have such a good friday on. a lot of distractions. arsenal football, barbie and all the rest of it. let's look at a sterling conversation on the rate market. we can do that with our guest from the university of cambridge. joining us as well is someone managing real money and strategy. rj gallo, a senior strategist from hermes.

bank of america has a great chart where we continue with disinflation, we go level, or dare i say, we revert at some point to some lesser disinflation. which way do you perceive inflation will move? >> we felt for quite a while that inflation we have been through over the last 12 or 16 months was heavily fueled by post-pandemic distortions, and the fed believed that as well. those were healed. the fed has a good supply chain barometer that went from four standard deviations, tightened or messed up, and is now one standard deviation from the favorable side. that has a lot to do with why we think disinflation we've experienced has taken place. the tougher part will be getting the core numbers lower that will keep the fed relatively pleased. we are optimistic we are in the

right direction. >> this is brilliant. this is why i am thrilled you are here. we say standard deviation, we are talking about a study of the cross moments in the variance of the moment. is our financial system so screwed up now that we can't use a traditional standard deviation analysis? >> i was a our financial session is -- situation is distorted in terms of analysis no longer being what it is, but what we have to acknowledge, and it's wonderful that we have rj there, because he is in those markets, it despite the fixed income -- just think of the journey of the two year between 511 -- nothing is broken. the resilience of the system has been impressive, and it is interesting to get rj's reaction to that. how is it that the system has been able to resist these incredible volatilities and

nothing has broken in the system so far. >> it makes you wonder if the regulatory rework that follows the world financial crisis might have struck a few of the right chords. more capital. more liquidity. certainly, it helps. i would note that back in the spring, we hadn't heard of silicon valley bank. it was not big in the markets in which i traveled, but i certainly heard of them in march. the stress that emerged from the rapid repricing higher in the big duration related losses on the left-hand side of the balance sheet, that puts stress on the banking system. what i think is interesting is how we didn't have unease. you tighten until something is strained or braked -- breaks. what we saw is the fed wanted to keep rates high and they have gone higher, and they layered in various mechanisms working with other banks and regulators in

the united states and abroad to relieve the liquidity challenges that emerge from their drastic tightening on regional bank balance sheets. stress has occurred, but the system is holding up, so i would agree with you that it is a favorable development if you can battle inflation without blowing up your system. >> i think rj, people are less surprised about the banks resilience, and they are more surprised about the nonbank finance a institutions. how is it that the whole sector that got used to flood interest rates, massive predict blue injections of liquidity, how is it that the sector that has a loss of leverage, how is it has it navigated so well to change the liquidity regimes? >> that is an excellent question. perhaps the transparency has helped this is only the second tightening in the federal reserve history. we had the dot plot. it gave us a projection, not a

promise -- the dots moved, but it gave us a projection of where the race would go. that type of indication by those who are making a policy should be heated to at least some degree by those who are making investment decisions, managing risk in the market days. i would think that likely helped to communicate. eventually, the fed abandoned transitory and took rates on a rocket ride, straight up. but they did communicate that fairly clearly once they got away from the transitory fiction. i think that forward-looking transparency helps the highly levered marketplace including non-bank institutions to adjust to a volatile and challenging time. >> i people at home screaming one word. wait. what evidence is there that these high rates, this tightening cycle worldwide, has started to bite? >> it depends on where it is biting. as rj said, it did bite in the

regionals. it hasn't bitten in parts of the economy that you normally expected to bite. but most important, and i think this is where you are going, it has not written in commercial real estate is much as you would expect. weight is what people are saying because these things, we refinance over time. whether it is the commercial real estate market or some other highly levered, the next six to 12 months will be interesting because you have certain activities that are funded in a completely different world that make no sense today. either there will be refinancing because of balance sheet resiliency, or it will be repriced because of what we have seen so far. >> dr. larry and and others talk about a macro economic view. we have to talk about the portfolio and not cling to the client. with that comes down to his

diversification, less diversification, more diversification. is there value in diversification now, or do you want to be focused and take your bets. >> hermes is very much on the active management side of the industry, so we believe in taking our bets, but we do so responsibly. we focus a lot on risk management and looking at the volatility that we model into the portfolio as we consider changing our weight. it is still a risky world. as mohammed just mentioned, this fight is not over yet. the echoes and ramifications of the fed's actions, some of that remains to be seen. i think as commercial real estate repricing sharply lower, we are likely to go through periods that will result in asset loss in the banking system and elsewhere, and hopefully not to the liquidity crisis but to asset evaluation. that is one of the reasons we are still sort of bearish on the

view. right now, the soft landing narrative is really showing that the recession is in the offing. between three or nine or 12 months. as a result, we are up in quality and diversified portfolios, but even though we are, we still have significant weightings and high-yield just below the index. that is part of the diversification and responsible management. you don't bet the ranch on one trade. >> i had a wonderful and lengthy conversation. a generous conversation, and we talked about the tales, and the risks, and the inverse and the rest of it. do we have visibility on what our risk tales are, or is it just a complete mystery, post-pandemic. >> i think we have some visibility but not a lot of visibility. >> this goes back to your phrase, you codified the unknown unknowns. is that where we are? >> we are living in a distribution of outcomes that is

different in two ways. details are much fatter. we are not quite sure which equilibrium we are going to set in. this is why there is a discussion of soft landing and hard landing. look at rj and my friends and colleagues at pimco. this is a very hard market to navigate. you can be tactically confident about your view, and as of right now, as i shared with john, you can be bullish. but secularly and strategically, it is really hard. >> let's go to the imperial college were they do math, unlike at cambridge. kent osmond and all those of their -- over there. does binomial analysis of risk work? >> it does not work because we don't have enough historical observations. this is really hard. that is why we find the marketplace goes back to what is familiar, immediately. that has been the tendency over the last few years. you can't have clarity going forward, so it becomes very

short-term, including the fed. excessive data dependency of the fed is an unwillingness or inability to take a strategic view of the economy. >> let's finish there. i think everyone is feeling the same way. what regime are we in? no one has a clue. the tactical cory presented last week. the soft landing is hard to fight. we get a feeling from everyone we speak to on this program that they believe the sweet spot is for the summer. that confuses me because what is the edge to that? at some point, shouldn't that kick in the uncertainty about that? what's next? >> greed is a powerful factor, and short-term comparisons tend to make you look short-term. most people feel comfortable right now that for the next few weeks -- not months, but weeks. we are in a soft spot. inflation numbers are accommodating. we don't expect any major disruption from the jobs report, and up to jackson hole, people

see clarity. as long as you see this clarity, it will bring more money in. look what is happening to the market today. we are bouncing back. >> equities are bouncing back by .4% on the s&p. >> rj is listening to the queen market. federated hermes. this was great. thank you. >> think you for having me. >> fantastic as always. >> if you're turning into the program, equity market is positive. coming up in the next hour, will catch up with j.p. morgan and pimco. some of your colleagues are there, mohammed, from back in the day. they are going to eight tolerated to point something. does that resonate, that the chairman of the fed tolerates to point something? >> i think that is what he will have to do, and he got that completely right. >> this is in your wheelhouse. there is a new politic of the

ecb. i'm getting a sense that there is a crack in the ancient inflation worry of europe had my readers up on that because how many times have we been wrong on that. >> when you in ecb hawk, you remain uncommitted to what happens after july. i think there is something in that, don't you? the fact that the ecb, that is a hot red if that is a hot, what do the doves ink about this? works we know what they think it >> i wasn't planning on doing this, arsenal, manchester united. but all of a sudden, i get a helicopter off of 30th street for $850 to go out one mile to metlife. >> is the how much it costs? to new jersey? >> it's possible. >> i don't have tickets. >> we don't have movie tickets. >> arsenal will let us in. >> i don't think they can lessen. >> he doesn't control the stadium. >> what does a friendly do?

>> these games. >> does declan show up? are the stars there? >> they show up and they committed. >> they are playing. >> is a friendly meeting that doesn't impact the professional position of the week or something like that. >> every day for me as a friendly. >> are they going to risk injury? no. equities are up. thank you again, mohammed good morning. whole organizational financial health and you're trying to do that through multiple systems, that makes it very, very cumbersome. ♪ it's not just tech, it's not just people. it's how they work together to provide that experience to the customer. as a finance organization that is what you want to do. ♪

>> the last inflation was low, we are out of duties with a trend on inflation in the that is comfortable hiking lower, or being completely done. most people have a recession in the forecast, and a fear that the fed may over tighten. as the recession risk has pushed out and maybe even minimized, people are starting to get a little more getting confident in

that cyclical part of the market. >> stewart was good on the market yesterday. we are continuing this discussion. david beyonca is with us. the dws group. , hohman has agreed to stay with us. he is looking at the helicopter at arsenal and manchester united and saying he can get those tickets and before we go out to the friendly. anthony dominic has died. he is 96 years old. the nancy -- last time i saw anthony was in a coffee line in central park south, and he was wonderful. there was a little girl was six years old. that was the heritage of tony bennett. he was someone who went on in his older age to wonderful paintings and activities around central park, and new york. the last time i saw him was at a party for andy locke. it was five or six years ago pritikin member. here he is, showing up on afternoon of industry bigwigs.

he did not mail it in. i would suggest that tony bennett just simply did not mail it in for his entire life. he is dead at 96. what a life. what an american. right now, we continue with david and mohammed. we are talking bonds read we are going to talk to the challenges of this market. what do you say to people that missed this equity market. >> wait. i just don't have an opportunity to buy. the equity market really has been largely driven by the tech stocks in the digital stocks. there are some good reasons for why that has occurred. but you have to understand, especially when you invest in growth stocks, it is about the future, and taking a view on how demanding the valuations are for what is expected of these companies. we have not seen valuations this demanding since the late 1990's. >> my cardinal rule is equity

strategy, equity thinking, always wrapped around the economics of that. it is wrapped around the bond market that you lived and breathed. at pimco. do you suggest the bond market can lead to a precursor of what we see in equities? >> it tends to be. i am very curious why david has a phrase of weight. what are we waiting for? >> there are a few things that will give us a better opportunity to buy tech stocks. i am of the view that they are probably heading for a very long. of consolidation. so, i think when you look at various asset classes to be an equity investor, you have to know about interest rates. you have to know about the commodities and currencies. a market is most sensitive to what it is most closely related to. the u.s. economy and labor market and inflation, the bond market is focused on that, but the equity market, being

dominate by tech, is thinking about artificial intelligence, innovation, big growth surprises to the upside, and i would just say the equity market is asking a lot of these tech companies to solve the challenges facing us this decade. ask that's fascinating. i love the way you characterize to be an equity investor, you need to have these other markets. that is not the traditional wisdom. the traditional wisdom is that equity investors are bottom-up. they focus on companies. all of these other markets are interesting. once in a while they influence them, but they don't impose themselves. >> on a macro minded investor. >> mohammed is correct. >> there is bottom-up thinking that is crucial for stock selection, but the best stock selections, the dws, we have all been aware that these are powerful macro transits we have faced rated whether globalization, deglobalization,

disinflation, these are things we have been thinking about. that is an important part of a fair pe. especially depending on the valuations ongoing. >> we will start with you. it is so important. retail america is addicted to either the seven stock, massive double-digit return, or a blended 15 or 18 or 19 return. way off of the actuary assumption of 100 years. describe the fear of missing out and how it possibly could burn us down the decades road. >> investors who have owned those great stocks, the seven, 8, 9, 10. whatever list you want to make, there is a lot of common names we list their. they have made a lot of retail investors rates. the ones that work at these companies and have found these companies, it will be hard for them to do well and be shaken out of those positions.

it doesn't mean that others will be joining it because i think the returns from here are meager. >> if you go off of roger's work at yale, and the log extrapolation, i take it from the canal low of 1942, the answer is, why be in bonds if i can be in equities over long-term. i will succeed as well. with the death of markowitz, the nobel laureate, 95 years old, why do i need to do 60/40? >> you need to do 60/40 or diversify your portfolio which i like clarifying because risk management matters. we know the behavioral mistakes that we make it you don't have some inherent risk management in our purple imprint is a fascinating issue. this is about markets or themes? >> you can push back, but it is not usual for us to have two sets of stocks. one that is writing a massive

second wave of ai, and to, these all weather stocks. these immune stocks to the macro economic developments. i'm to give a few names we both know. i understand why the retail investor has been so attracted to that. not only because they have made money, but the theme of investing is very powerful. >> you are really adding a lot to this. one of our great mentors in england is a small school in london. you may have known it. the london school of economics. they codified the importance of profitability. describe how profitability will work out over the next 12 months? >> that is the mother's milk of stocks. groaning -- growing earnings. look at what we are confronting right now. we still expect a small recession, and more importantly, to emphasize this, a very small recovery. a shallow recovery.

we are in an environment where disinflation has been happening with goods, with public companies, the s&p 500. we are seeing follow-up inflation on services and labor. so, i think in the short-term, you have some profit. we have not had earnings growth at the s&p for the past two years. quarterly or sequentially. that will happen this quarter and it will continue to happen for a few quarters, and then we look at the decade. i think it is a more challenging decade for the typical companies in the s&p to grow their profits, and i think we are heading to old norms of interest rates which will challenge the pe. >> one final question for the doctor, and a tour de force. bloomberg reports, and i will get it out john authers and isabel. this is a tour de force. never have we seen a strategist so divided. never have we seen them as a general statement, so wrong. beautifully laid out without any malicious -- no snark, anything like that.

what do you say to our pros watching? our strategist says they look into the crystal ball of the next 12 months #>> i go back to ben bernanke's friend, unusually uncertain. their major secular shifts going on, and it is difficult to get visibility. we go back to what distribution looks like. this is not normal. this is a distribution that has one dominant expected outcome, and thin tails. that is what david and others are navigating, and it is not easy. >> one day at pimco, you and bill gross honored me by coming into the top-secret 10:00 a.m. meeting. what's it like having 20 croissants that meaning -- meeting? >> the great thing about that meeting is that you have lots of really smart people who are in their just to try and get the right answer. this investment committee that continues is a very powerful mechanism for getting the whole

diversity of you from tony to others. ask yes. thank you so much for coming in today. >> thank you for having me. >> david, thank you for closing strong in the sour. >> an extra neri friday. this is what a summer friday okta be. we are forced were pink ties for barbie, and i am surrounded. >> and the shoes. >> the shoes are here. you can come over and look at this. it's a frightening thing as well. i don't know if we get all the radio, this may be too much, but you drive off the garden state parkway. in q2 our team, particular for having us talk to arsenal ownership today as they face manchester united at metlife. futures are up, we are lifting the market off the carnage. the vix is under 14. the david beyonca vix. 13.74. stay with us through the day on radio and television. this is bloomberg.

>> s&p 500 up .5%. if the countdown to the open starts now. >> everything you need to get start for -- get started for the u.s. trading day. this is bloomberg at the open with jonathan ferro. live from new york, counting up earnings as the nasdaq has a big rally. strong u.s. data putting a pause on ice is the doj becomes committed to easy money. we begin with a big issue. the summer sweet spot. >> we are in the sweet spot area >> standards are melting in the hot summer sun.