katie: we are 30 minutes into the trading day on this wednesday, june 12. inflation surprised to the downside for the second straight month. all eyes now on the fed's 2:00 p.m. decision. the big winner is insurance brokers. shares of gallagher surged in the past three years as higher price pressures translate to higher insurance premiums. we will discuss with pat gallagher. an appeals court ruled that a fearless fund was is committed tory towards black women. -- was discriminatory towards black women. we will discuss with arian simone.

looking at markets at the moment, the s&p 500, that stock index is up over 1% at a record high after we learned at 8:30 this morning, more dramatic if you look at the nasdaq 100 up 1.3% at the moment. big tech leading the rally when it comes to today. you look at the 10 year yield, down 13 basis points breaking below 4.3% below estimates. pricing in a full cut from the fed for november but we will hear from the fed today. bloomberg's mike mckee joins us. let's start with the may cpi, flat month over month in may. mike: i feel at the halftime host giving highlights of the first half because we are only

half way through the day and we have to get to the fed decision and jay powell's news conference. started off on a good fit next foot because cpi comes in lower than -- foot because cpi comes in lower. driving down the year-over-year which wasn't expected. the core comes in up just .2 percent wish -- which pushes it down. a good result. what did we see happen? basically, the super core for the month comes in negative for the first time in many months and that is good news for the fed because they have been anticipating that. you can see what we see on our function, you can see the breakdown of what happened. the overall number basically did. what did the undercarriage look

like, the biggest contributor is gasoline, down 3.6%. that is good news. motor vehicle insurance down for the first time since october 2021 following used cars lower -- not used cars but new cars lower .5%. used cars have always been a focus but new cars are twice the weight in cpi. owners equivalent rent is the interesting one to watch. no change from the last two or four months. those who delve deeply into this suggest that it is a rounding number and so we may see housing costs finally start to drop in the second half of the year. katie: really appreciate the breakdown. you have a busy day ahead because we will have full coverage of what the fed decides. let's turn now to the markets and record highs we see in the

stock market because joining us now is larry adam, raymond james chief investment officer. i am looking through your notes and you said it before it these inflation numbers that you still forecast the fed is set to cut rates two to three times this year and that certainly looks more likely now. larry: we have been looking for two to three cuts this year with the fed probably starting in september. it is pretty much what we have been looking for and waiting for this disinflationary trend to continue and you can see it on a broad-based perspective. we have seen it on apparel with oil prices, new cars, airfares. these are things that tend to be more economically sensitive and are starting to come down which leads to my second point and that is that the economy is slowing and we think gdp growth

for the second and third quarter could be around a percent. when the fed sees that i think they will be startled and end up taking on insurance cuts to make sure we don't go into a recession. katie: there was an interesting note from neil duda and he said the fed needs to get on with it and there is a chance monetary policy is really tightening policy by the fed doing nothing. what do you think the risk is that now that we have seem to be on the other is a inflation that it could decelerate much more quickly than anticipated? larry: i actually agree with that comment in the sense that there is a lag to what happens here. a lot of people say the economy is interest-rate sensitive, we disagree. the reason it wasn't so far it was that consumers had the excess savings and now that for the most part that has evaporated, particularly for the

lower end consumer, you are seeing the lower end consumer seeing the struggles, whether delinquencies, starting to give up certain purchases. we see a lot of that data coming through and starting to see businesses starting to offer promotions or incentives to get people back in the stores. this economy is slowing quite a bit and the fed will have a keen focus on that going forward. katie: something to watch as the economic data continues to roll in. let's talk about the market for the s&p 500 at an all-time high. you can see eight out of 11 sectors in the green. interesting comment over at matt havey. he said the cpi numbers the only thing standing in the way is chairman powell. we will hear from chairman powell at 2:00 p.m. today. do you think he will derail what we are seeing building right now? larry: i would expect him to

talk about the fact that we have seen this data start to evolve in a pattern the fed has been looking for. it is important to recognize the fed came out with a forecast in march and we are not too far from what we said it will happen. this of the unemployment rate would go to 4%. you can check that off. they said pce would get down to two point 6% and if you think about, 2.8% in five months to hit it and i think we will get there. and they talked about gdp growth being at 2.1% and after the weak first quarter, that could be the area they tend to focus on more here. i think you will assuage fears that they will not raise interest rates further and likely going to start to cut which will be supportive of the market. i always tell people that i am not as concerned about how many cuts the fed actually does. it is what the impact is on the economy. we have to continue to look at when they do this because if

this economy were to roll over the economy because they waited too long, that would be a problem. katie: how big of a risk is that that it already is a problem? larry: it is starting and we are seeing the early signs for the low end consumer. that is being offset by the higher in -- end consumer spending. it does not take long for an economy to go into a recession. usually there is a quick turnaround from positive growth into negative growth. i think the fed has to keep their pulse on this and they have a lot of staff members watching it. one good thing that has come through covid is we get more real-time economic data than we have ever had and they will keep an eye on all that and not just focus on the statistics which i think could be a little quirky over time. katie: we are going to talk about what the playbook looks like in a scenario such as that one next. sit tight for a couple of minutes and look at what is

moving underneath the markets. kick us off. what is going on with oracle. >> oracle is having an amazing day with ai and a partnership with googling -- google cloud, openai and microsoft. the stock up as much as 10% and giving a boost to the efforts to define itself as one of the competitors in cloud computing. it also had better than expected bookings which is another reason why investors are so excited today. the company is competing with alphabet when it cost to -- comes to class computing but the cloud is a small part of the revenue at the moment but people expecting a 50% boost to the revenue. you can imagine why we are having such a strong reaction

today. the shares are at record high. katie: marcus looking i had to maybe the big boost coming down the pipeline. tell me about a firm. >> the firm is having a two-day winning streak on the news that the app will be available on apple phones and that is giving a big boost and very much needed. the company was down within 30% for the opening. the revenue won't show on their bottom line until fiscal year 2025 but investors are betting on the growth of this company. we are seeing the buy now pay later is seeing pressure and some stocks dropping and stabilizing today but this definitely heightens it. katie: it is hot space getting more competitive. the broadcom earnings seasons

never ends. >> it is about ai and seeing a huge rally come up more than 30% today and it is all about artificial intelligence and demand for next generation chips is expected to boost revenue and we will see the report today and expecting head of consensus reports and putting it on track to raise the full ai target to $11 billion according to city. the stock is doing well this year and already up just based on their reports. it seems like analysts are very bullish. we are yet to see the earnings providing yet a bigger boost. katie: we will see how that chipmaker affairs. thank you as always. the european union set to slap tariffs on a slew of chinese cvs. we will discuss next. this is bloomberg. ♪

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katie: the european union will impose additional tariffs of as much as 48 percent on electric cars shipped from china. the move escalates tensions between the superpowers and adds to the cost of buying an ev. let's bring in cory cantor and analyst covering electrification. taking a page out of the biden administration playbook. what impact could it have on the global tv market? >> you are seeing different regions move for this protectionism.

they vary by model maker so we cannot quantify it just yet but on a broader trajectory, if we are not helping them become more affordable we will be moving away from a net zero goal. we had the new ev outlook and we find in a net zero scenario by 2050, you have to stop selling combustion vehicles by 2038 and so moves like this today make it more challenging to move in that direction. katie: let's talk about that outlook. one of the point you make is that basically when it comes to ev's they were a bright spot when it came to the global climate change fight but turning into a cause for concern. what exactly changed their? >> the only story that changed is that the movement is moving in different places at different ways. in the u.s., 10% of all sales

electric. if you look at china and europe, it will be much higher. in 2027, electric vehicle should make up 60% while passenger sales are 41%. you are seeing automakers move at different speeds and different places and that ties into this whole thing on industrial policy. katie: every come heads of report and you can find it online. let's get back to larry adam of raymond james. before the break we were talking about the risk of what we are seeing come of this cooling down in inflation and rolling into some growth fears. how do you prepare a portfolio for that? what was that playbook look like? larry: we tend to focus on where it business spending is. if you look at our favorite sectors, we like technology, industrials and health care.

the areas we are concerned about our consumer related sectors and then at utilities. katie: utilities is interesting because you think about the i -- ai narrative and it has been investing in chipmakers and that really means nvidia. you have seen a bit of the ai narrative come into the space when it comes to data centers. it does that not hold water with you? larry: utilities are complex. you have an industry that is regulated and you can't lift your prices that much and have an industry that is highly leveraged. it to build out more capacity you have to borrow and build it out. that is not a tomorrow story. that is going to take some time to actually get that capacity up and running. you will probably not be able to lift the revenues to the extent it would justify the big run ups we saw as a late. katie: we heard something

similar yesterday, bullish on tech over all but the data center story it may be overblown. i am curious out fixed income fits into this conversation. now you have bonds that yield something if you take a look at treasuries but there has been hesitance to move out the curve into the longer data debt. with the conversations we are having, does duration look more attractive? there has been a lot of hesitation but yielding north of 5%, you are paid to wait. and now that yields have moved higher, i think as we get closer to the fed starting to cut, we think there will be a systematic amount of cuts taking place in you can move out on the duration front, not only in treasuries but corporate bond space as

well. katie: the corporate bond space, talk to me about what the environment looks like. it feels like we get worried about maturity while approaching and feels like the same thing with the debt ceiling. how are you thinking in this environment where rates are still quite high and corporations having to refinance into that environment. how does that trickle into the corporate bond world? larry: we want to be in higher quality corporate bonds and they have been yielding at several years and is a positive. further out into the high-yield space we would rather take the risk from a portfolio perspective and put it into the equity market because i am fearful you could start to see increasing in defaults coming forth and that would be a negative for that part of the market and consistent with our expectation you will see the economy start to slow and could see defaults ramp up. katie: back to the equity market, what we are talking

about credit quality and refinancing worries, they have been listed as reasons for me not to be too excited about small caps. when it comes to small caps, it feels like they haven't been able to get off the ground and participating in this rally to the same degree that some of the larger cheers have been. what is your feeling when it comes to small caps right now? larry: small caps have lagged quite a bit and trading at a 30% discount to large-cap stocks so it is an attractive entry point. two catalysts that will help small caps rally in outperform is the fact that by the time we get to the fourth quarter, that is when you see small-cap earnings start to outpace large-cap earnings. a lot of investors will say let's wait until the dynamic occurs but we know it doesn't wait for that to happen and starts to price that in six to nine months in. we are in a window of opportunity where that starts to

unfold and anticipate the better earnings environment. when the fed does start to cut rates, historically in the 12 month period of the of the first cut, small caps tend to outperform large caps. the sectors that i like, three of the four we like make up a lot of the bigger weightings within the small caps. katie: so basically you are saying that now is the time to reallocate to small caps if you haven't already? larry: yes, we never say you have to do it today but we always like the transition. now within the next month or two or three, there is a nice window to transition out of some of your larger cap space in the small-cap with the expectation that if we go into the end of this year and next year that small caps begin to be part of the leadership going forward. katie: i hope everyone at home is writing that down.

let's acknowledge the fact that we are having this in mid june and approaching a sleepy summer season. you think about the trajectory towards the end of the year, should we expect any volatility in the couple months ahead? larry: during the summer months, i know that seven out of eight years the summer was a good time to invest in the market and has been up over the last 15 years of 3.7%, which if you annualize that, it is a little over 14%, so good performance. the interesting thing to note that during the summer, you tend to get more volatility where the average decline at some point during the summer is around 7%. we usually rebound from that but my point is, number one, i wouldn't panic and get out of the equity markets and i would probably stay in because you are likely going to get a rebound, especially some of the tailwinds

like the fed cutting rates and earnings result -- re-accelerating at the end of the year. i think interest rates are going to move lower and treasury yields are going to move lower and those are positive catalysts for the equity market for the remainder of this year. i think the bull market we are in, i think it lasts for more than five years. katie: that is a good place to leave it. i really appreciate your time. our thanks to larry adam of raymond james. and coming up next, our social climbers segment. this is bloomberg. ♪

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within -- $2.14 billion in a share sale. donald trump met with several bitcoin miners at mar-a-lago telling attendees he understands crypto. the former has increasingly highlighted bitcoin and other digital assets on the campaign trail in recent weeks. the joey chestnut, considered the michael jordan of eating has been disqualified from nathan's hot dog eating contest. he has been banned over a deal to represent vegan hot dog ran impossible, breaking exclusivity that is been around for years. coming up, we will speak to pat gallagher, ceo and chairman of gallagher. this is bloomberg. ♪

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katie: one big surprise in today cpr report is the first drop in car insurance prices since october of 2021. let's bring back michael mckee what happened and why. michael: you have to go back to the pandemic when we wanted to get out of town and started buying cars like crazy. they weren't making enough cars so the law of supply and demand kicks in and we have a big rise in car prices both new and used prices, this combines the two. you can see the rise from 2020. all of a sudden prices start flattening out. lately they have been going down, that has not been the case for auto insurance. what they have been saying is cars got very expensive and they got more complicated so fixing them costs a lot more money so

insurance prices had been rising up 20% on a year-over-year basis until today. today we got may numbers and as we mentioned for the first time in two years, prices went down. the first time they went below zero since october of 2021. maybe this is a trend, you can see the big drop their. we can hope it doesn't reverse but the damage has been done. the question now is do they realize things are going better in the insurance front. katie: that's a conversation for a different day. mike mckee in washington thank you so much. for a deeper dive into the industry we are joined by the chairman and ceo of gallagher. gallagher is an insurance group you don't take on the underwriting risk and just to

set the scene for us you're one of the industries that's benefited from inflation over the past couple of years. >> i think that's right. but in a good way. when you see cpi up and down data is continuing to show our midmarket clients have been expanding their businesses. and when businesses expand creates more explosion of sales and payrolls and things like that. businesses buy more insurance. so the economy is good it's good to be an insurance broker. we sit between the buyer of insurance and the seller and we help that relationship i making sure what the client is buying fits their needs and is the most competitive pricing they can get. so we are one of the ones trying to mitigate the cost increase while the same time the business is growing. >> to bring this to may of 2024.

inflation in may was completely flat on a monthly basis. given that dynamics of the business should we enter into an economic downturn or continue to see inflation cool to the extent it has been what would that mean for your revenues. pat: the good news is we benefit when there's inflation and when there isn't. when businesses expand, you've got inflation that contained what you've got is your business and ensuring. for people who are doing business and when they can expand their business and not have to deal with the inflationary pressures i underpriced this thing. think about a company that's

going to construction trying to price out cement and at some point they're pricing out cement growing at 5% and other times at seven. interest rates are bouncing around. it gets more difficult for them. so really it's an interesting thing. benefiting from them in the sense prices go up and payrolls go up. but we also benefit for a good solid economy with not a lot of inflation. so we win both ways. katie: it's a fair point. and it definitely hear what you are saying. i'm curious on the impact of premium sprayed i was looking through your latest earnings report that came out in late april and first quarter insurance renewal premiums were about 7%. you compare that to the previous and they were up 8.5%. so little but of a decrease there. if we are entering into more normal environment where the economy is still resilient but inflation is more under control

what sort of rain should we be expecting for premium growth? pat: it depends on a lot of things. in general what we've seen in the fact premium rates decline. job market like the previous commentator it's a supply and demand market. when there's a lot of supply and one of the reasons auto insurance is down is because it brought in more competition. when that happens it does put pressure on those lines. they're selling more product at lower prices. what we say however is in that environment we should be able to expand the number of businesses. so we should be able to mitigate it by selling more insurance to potential buyers. if you take a premium basis in particular, expansion down to five or six it's a bit of a

little we have to climb over. katie: there's levers to pull there. maybe when that goes down you increase in other ways. i want to talk about reinsurance, conversation we had with the ceo of --. insurance for insurance but no matter what you call it it seems like it's becoming a more hot area. i know you made an acquisition in 2021 space on curious what the opportunity looks like right now. pat: you hit right on it. most people never hear about reinsurance. it becomes a bigger topic for things like florida property that's uninsurable. fires on the west are difficult to place. people ask what's happening. but it is insurance for insurance companies. insurance companies accumulated great amount and they do that across a full perspective of

risk and then look at those accumulations and say wait a minute i can take all of this myself so the wind really blows in florida you've committed that risk with no support behind it, it could be devastating for the balance sheet. so what were doing is balancing the balance sheet on the front end. and it becomes a big issue in places like florida when those counties lost determined dismount of money from bad storms and are no longer there to support the primary carers saying i will take that risk. because it has an impact on what those primary carriers can actually do. it's not a very difficult concept to understand. because when you accumulate a lot of risk in the insurance company it makes sense to put that off the back and most people would understand. when it disappears that's a problem. katie: it seems that we are

seeing more and more extreme weather events and to bring that into the reinsurance conversation. when you think about the increased activity and interest in reinsurance is it fair to say the climate and what we are seeing there is one the primary drivers of that interest? pat: absolutely. i grew up in the midwest and we never had tornadoes in the fall. and we never had the kind of combative storm activity that surprising underwriters. underwriting is predicated on looking to the past the price for the future. when all of a sudden the rules of the game change, it's really like being on the playing field and somebody says you can throw forward passes anymore. clearly climate change is having a huge impact globally and we go all the way back to what insurance is. insurance is the oxygen, people

say it's just bad tax. you're knocking it ship a crate, build a house, by a car even an expensive one without insurance. so it's the oxygen of all trade. all of a sudden the rules change , those rules for how those change. it's a hugely important part of the economy and the ability for their businesses. it makes a lot of sense when you all of a sudden see climate change coming in -- people are talking about this is a loud -- thousand year flood. or this is a set of storms the professionals are saying this should be a very active storm season and we know by looking at water temperatures that there could be a lot of energy building which makes for some very difficult storms and yet this industry is taking those risks and doing what it does

which is spreading that around. really proud of what this business does and it never gets that, we spread the risk of a few too many and it works. katie: really enjoyed this conversation prayed hope to speak to you again soon. our big thanks to pat gallagher, let's get a check on these markets about an hour into the u.s. day prayed we will do that with abigail doolittle. abigail: cooler than expected may cpi print. up one and one quarter percent, its best day since day third. out -- the big catch up trade up 3.1%. this is incredible up 3.8% today of more than 5% yesterday. it's market cap is now greater than microsoft and over the last few days of more than 10% really appearing to try break out of that range we've been watching

for. another chart to take over today. not convinced is not a false initial reaction but it's pretty strong. oracle with a nice bid on an ok quarter but also the partnership with google cloud and microsoft and openai. as for today after that cpi print as much as we have the stocks moving the real focus will be the fed. these are the cuts priced in. right -- last year investors thinking the fed was in a cut this year. right now we are down to two times work showing the interest rate probability showing september and december i think i heard swaps talking about a november cut despite the presidential elections. speaking of rates, the markets are doing some of the work for the fed today if the fed wants rates to go lower or maybe this cools it off. take a look at this round-trip for the two year yield. last week on the jobs report underway. let's take a look at what this

is really helping. russell 2000 doing well. the real estate sector is absolutely rallying up 2.3% overall and you can see the stocks, the kbw bank index, the office sector up 1.6%, the best day of the year. katie: a lot of green on that screen. thank you so much. coming up, inclusion goes to court. a fund was rolled discriminatory but the founder of the fund is still fighting. arian simone joins us next. this is bloomberg. ♪

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abigail: you're looking at a live shot of the principal room. coming up at 11:30 a.m., this is bloomberg. katie: time for our daily wall

street week conversation. the fearless fund is a venture capital firm dedicated to funding businesses founded by women of color. federal appeals court ruled recently the firms would discriminate against business owners of other races. joining us as the ceo and founding partner of the fearless fund along with wall street weeks david westin. this ruling just happened. david: we had the ruling on affirmative action there was concern it would apply the private sector and never getting cases like this. thank you for being with us. explain regally what your program is and why the 11th circuit whose majority members said they thought it was likely to a violate the 1866 civil rights act? arian: at the fearless fund we have two organizations. we have our foundation which deploys grants and provides education programs, we also have our fund which is our investment vehicle for venture capital. and right now we went to court

on up a luminary injunction against one of our grant programs designed and catered to black women. we won in the federal district court, the plaintiffs immediately appealed and the appeals court that's the ruling that just came out as of last week. stating that we are basically violating the law. the claim we are violating the law by offering a grant program for black women. katie: before we get into what steps you will take next. put this conversation into context as to your founding mission. what the need is when it comes to funding these businesses that have been founded by women of color? arian: the need is massive. we got into this business because of rachel's disparities that exist. racial disparities that exist. women of color receive only .0 39% of venture capital funds all making up over 20% of the u.s. population. in addition to that women of

color are the most founded entrepreneurial demographic, they are just the least funded. i got into this space for personal reasons. i was a college student and raising capital and i remembered none of the investors looked like me and i said don't worry about it because one day i'll be the business investor you are looking for. so the promise i made to myself, backed by jpmorgan chase, paypal , bank of america, allied bank and a host of others. david: i don't know if you decide to get what you do for the next step but it strikes me there are two or three alternatives. you can appeal to the supreme court, go back down to district court or you could change your program to say although we will promote diversity we are not specifically guinness say it will only be black women. have you decided what you will do? arian: we have not come to a conclusion just yet on next steps, that is still with our legal team.

for us to strategize on so i can disclose that to you but i don't mind coming back to you later. what i can say is we will continue to run our business. this is one of many great programs. we have grant programs that are not race specific as well. so this is one of our programs and we stand by it and we don't believe it is in violation of the civil rights act of 1866. civil rights act were put in place to protect black people as well as provide some level of economic freedom and we stand by that. katie: we will take you up on that offer once you've decided a course of action. it sounds like whichever way you choose it is not over yet. talk to us more about the business as it stands today with this appeals court ruling how is that affecting your day-to-day business? arian: the business is still running. we are stilled point grants, running education programs. the preliminary injunction is to get to one of our many programs.

the case itself they have filed is against multiple businesses that this preliminary injunction is just one of the grant programs. we are still investing capital, we are still meeting with our founders, we are running this business day today. we have had some financial implications, a lot of people dropped out of closing from the fundraising standpoint but as far as the business our portfolio is helping strong the women we are investing in. they are growing by leaps and bounds, of the top quarter of our portfolio is over eight figures year-over-year revenue, aggressive growth so our business as far as portfolio construction is extremely healthy. david: from your point of view, is it possible do you think to accomplish some or all of the aims you have without having the explicit requirement on race because some companies have changed their programs where they still are promoting

diversity but they've taken out the specific requirement. is it possible to get done what you want to get done that way? arian: there's different creative ways -- more than one way to skin a cat as they would say in the old days. but we stand by this. i think that's what's most important. when you see that laws can be flipped on their heads and things can start to unravel you open pandora's box. there is nothing wrong with what we are doing as is because it's meeting the need of a disparity that's beyond appearance prayed so there's nothing wrong with what we are doing and we are also seeing -- signaling the president of the united states to definitely issue an executive action on this case and stand up for diversity, equity and inclusion. katie: what you think the broader ramifications are for other programs that seem to advance minorities. in the wake of this ruling that's affecting your fund? arian: this is why we have to

maintain our stance because we are concerned about the domino chilling effect, the catalytic impact on other programs that are needed in this space, when it comes to lawsuits generally somebody is harmed. there is nobody harmed by us doing this work. they are claiming it's violating his civil rights act. a were put into place to help the progress of minorities. david: really enjoyed -- katie: really enjoyed this conversation, hope to speak to you again soon. who else do we have coming up? david: we reach out, he has a new book out called what went wrong with capitalism and says the government is gotten too big of a role in the private sector which doesn't surprise you. what might surprise you is he says republicans are just as bad, of the reagan cutting back was a myth. he has facts and figures to back it up. >> some zikim meaty conversation

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katie: let's take a look at some stocks hitting highs as the s&p 500 tops 4500. a number of tech stocks hitting

a 52-week high including apple, microsoft and nvidia. apple overtook microsoft and market cap with growing optimism ai will spur a rebound in revenue growth. let's also talk about oracle at the bottom hitting a record high after reporting better-than-expected bookings and announcing partnership deals with google cloud as well as one with microsoft and openai. oracle shares up a most 10% on the day. the s&p 500 is higher more than 1% even more so if you look at the nasdaq 100 with big tech leading the charge. the bulk of news on the cpi front, cpi coming in flat on a monthly basis in may. now coming up, ross gerber joins bloomberg technology next. that does it for bloomberg markets. i'm katie greifeld, and this is bloomberg. ♪

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>> from the heart of where innovation, money and power collide in silicon valley and belong beyond, this is bloomberg technology with caroline hyde and ed ludlow. caroline: i'm caroline hyde at bloomberg world headquarters in new york, we break down oracle's earnings and its push into the cloud computing space. we talk all things elon musk ahead of the vote on his $56 million pay package. plus paramount walks away with the deal -- from a deal with sky dance as it heads back to find a new bidder. that and so much more including record high after record high and a new company back on top. focusing on the extraordinary move by