katie: 30 minutes into the u.s. trading day. here are the top stories. a win for elon musk, investors vote for the $56 billion pay package and the company's move to texas. taking stock of the ed race as kia accelerates the electrification strategy. -- ev race as kia accelerates the electrification strategy. we will get a view from pimco with mike cudzil. welcome to bloomberg markets.

you take a look at markets on this friday morning and at least on the s&p 500, taking a little bit of a breather. we closed at another all-time high yesterday. currently off by .3%. we will see how that changes as the day moves on. in big tech, little green light. the nasdaq 100 currently higher by .1%. it had been hired by a little more a few minutes ago. the bond market rally continues to accelerate. 10 year yields lower by four basis points. we could crack 4.2% in short order. breaking consumer sentiment crossing the terminal, mike mckee has the details. mike: wall street thinks things are going pretty well but not the american people. the university of michigan headlines sentiment index falls to the lowest since last

november, 65 point six, way below the 72 expected. current conditions fall. expectations fall to 67 point six from 68.8. americans did not get the cpi and ppi message come when you're inflation expectations unchanged 3.3%. we have a conversation about this on the terminal. we ask why have americans turned pessimistic in the month of june. katie: you think about the psychology and they could inform their behavior. we had this conversation yesterday. when does bad news become bad news and when should we worry about a growth rollover. does this slightly get us closer? mike: it might get us slightly

closer. what would be good to watch it in next week's retail reports, did americans pull back spending in line with their sentiment. do they feel much more pessimistic about things. this is the preliminary index and we will get an update on the university of michigan sentiment index later in the month. did the american people not since the change in inflation the cpi and ppi reports brought about an will lay it by the end of the month. those will be key questions for the fed. katie: the health of the consumer front and center. thank you so much. don't miss his interview with the cleveland fed president, loretta mester at 1:00 eastern. turning back to the markets, joining us we have emily roland, john hancock co. chief investment strategist. huge week between the fed and

data. has anything changed when it comes to your thesis and approach to the markets right now? emily: it really hasn't. we believe we are in the never ending late cycle environment with the lagged effect of tightening has not seen contraction yet. i am glad you brought up that the bad news is bad news and narrative. on wednesday we got the cpi report and its only missed by .1%. it wasn't that big of a ingles but markets are sensitive to what you have seen. the next ppi report contributed to the disinflation traction but you have initial claims and jumping. i would say that actually ended up being the most important data point of the week. there may have been some one-off

anomalies due to the memorial day holiday's, but we are seeing more signs in the labor market is softening and that was confirmed just a few minutes ago with the university of michigan sentiment report. people are concerned. it is -- katie: it is not often claims overshadow cbi. i will ask the same question that i asked mike mckee, when you get worried when you think about the long lag of monetary policy that the fed went too far and growth will start to turn? emily: what we are watching is the environment where corporate revenue was really great during the height of the pandemic and now it is coming back down to earth and we are seeing companies having a harder time passing prices along. if you look at the guts of the cpi report, the stuff that people want to buy, airfares, discretionary items, those

prices are coming down while the things we need, medical care, shelter, those prices are going up. companies are having a harder time passing along higher prices and in our view that will result in margin compression. you will need to see companies dealing with the fact that their cost of capital is much higher than it was a year or two ago and revenue growth is slow. if you are going to defend the margins, you have to cut costs. the biggest because they have his labor. the biggest drop in an economic cycle is the rate shoots up and that is what we would be watching for as a further sign that we are going to contend with economic contraction. it is tough to see it now with markets hitting new all-time highs every day and things seem fine but we want to repair the roof when the sun is shining. we are looking at the income available in bounce right now as a great way to get paid income and get paid to wait as the

contraction unfolds. repair the roof when the sun is shining, i am going to write that down. emily: that is jfk. katie: good lines there. i want to talk about earnings. i was having this conversation earlier that all that matters right now is earnings. the earnings estimates basically you think about the fed and they will not stand in the way of this rally. when you look at the fundamental earnings picture, what do you see? emily: one thing i would add to that conversation is just how concentrated the earnings growth has been. if you look broadly at the s&p 500 and you take out the tech and communications sector, earnings are negative on a year-over-year basis. we want to look to those areas of the market that have pricing power. great balance sheets, lots of cash, unlimited need to tap markets in order to grow. that is where you want to look

for where earnings growth gets more and more concentrated and the poster child for equality, we continue to embrace that area. it has a lot of love for many investors so trading extensively. we want to look on the value side to where we could find quality at a reasonable price. this is a really important time for active managers who can take advantage of companies that will continue to perform in this environment where margins are contracting. katie: you mentioned when you take out type, things maybe don't look too hot. can't investors afford to be anything but neutral weight or overrate tech right now? emily: we continue to have an overweight there. the challenge will be the valuations. you look at the s&p 500 growth index and it is now trading at a 45% premium to its 20 year average. it is tough to say that tech is not overbought. we want to diversify and look at areas like mid-cap equities

which are trading at the cheapest levels to their large-cap counterparts since the late 1990's and benefiting from on ensuring with an overweight to the industrial sector. we continue to see supply chains coming back to the united states resulting in the manufacturing renaissance we are seeing particularly in the u.s. midwest. we are not overpaying for that and it is about the balance and finding quality but finding it at a reasonable price. katie: i so enjoy this conversation. sit tight. we will come back to you after the break. time now for etf friday. this week we have been looking at new research by bloomberg intelligence about the truly confusing dichotomy of trends in the etf market. what is going on? >> this is a new research from bloomberg intelligence, the ratio of etf's with positive

versus negative returns is at an all-time high over the last 12 months. 94% of etf's have posted a positive return. because the s&p 500 is up nearly 25% over that time period, a record number of funds is actually beating the index. so the funds are up but not outperforming. why is that? it is less an etf story and more about the equity market concentration in big tech. if you don't have nvidia, it is hard to beat the s&p 500 right now. katie: brutal place for those investors. let's talk about something we talk about all the time and that is the fact that you had these new ets coming to market but at the same time you have record fund closers as well. emily: right now it is easier than ever to launch an etf but harder than ever to succeed. i know we talked about this a

lot. after 2019, there were regulations known in the industry as the etf rule that made it easier for as managers to launch new etf's. since then you can see on the chart we have seen nearly a record new listing. in the last 12 months, 600 new ets but 260 ets have closed as the market is getting more competitive. people are essentially launching 12 different ets that all track one single stock levered. it doesn't get enough assets and they have to close it but because it is easy to launch another one, they can try it again. katie: they say etf's are sold not bought. emily: exactly, get your etf in front of a distribution channel, wire house if you don't have a certain number of assets, you

often won't be accepted onto these trading platforms and therefore it is very difficult to gain assets and a track record and you can see a lot of these funds closing because they just can't compete with the big three essentially. katie: great context, a fiercely competitive etf area. the u.s. supreme court threw the federal ban on bump stocks, the attachments that let a semi-automatic rifle fire at speeds rivaling a machine gun. plenty of supreme court decisions coming down this week. we will continue to keep track of that. tesla shareholders back elon musk's pay package and proposal to move the legal home to texas. that conversation coming up next. this is bloomberg. ♪

katie: elon musk has won a victory where the shareholders voted to approve the 56 billion dollar pay package and the move to texas. joining us is david welch, bloomberg's detroit correspondent. in the context of an industry for ev demand not as robust as many had predicted. david: it is not in one of the big questions particularly in the united states is do we have an ev trouble or tesla problem. first quarter registration, retail sales up 9%, tesla tales

have been in decline or going very slowly depending on what period you're looking at. other companies doing well. part of this is this isn't the growth we had 9% at retail in the first quarter is a nice growth. where we saw a big decline was in fleet due to the mess at hertz. they have stale vehicles at tesla, a cyber truck that hasn't taken off, and aggressive competition from mercedes, bmw, ford and general motors that have a new product and pushing it hard and some at pretty attractive prices. when you go from a nearly monopolistic position tesla has had over the past fears too much more competition, they are going to lose market share and they have. when the product hasn't been fresh in a while, that is an

issue for them. one of the reasons you see elon musk leaning on this idea that his company is an ai a company and not a car company and whether or not he can deliver on that is crucial for tesla because he doesn't want to be a car company. they have low stock hopefuls in high capital costs 30 wants to be seen as a tech giant and sees ai as the key and novy has to deliver. katie: a long rocky road. david welch, appreciate that. let's bring in emily roland to the conversation. you think about the year to date performance, we have seen a ton of dispersion in the big tech names. i wonder how you are thinking about that as you think about quality names you want to own right now. emily: we definitely see the magnificent seven break apart here over the course of 2024 and we are looking at this through the lens of quality.

we want to find companies that have a great return on equity, great balance sheets, lots of cash, very low debt burdens. that brings us into classic s&p 500 technology sector as well as communication services. more quality companies across those sectors leading us to an overweight for u.s. equities. you are looking at europe and they have a very small tech sector, 6% and if you like technology and meta-cap tech and follow the earnings, you have to look to the united states. katie: how does that translate into be fixed income areas of the market, specifically corporate credit? emily: it has not kept up with technology stocks this year but the good news is that unlike tech, there has been a ton of value on the fixed income side. we saw the massive backup in yields over the last several years and have created this entry point for fixed income investors and the fact that the

aggregate bond index yielding close to 5%. corporate bonds over 5%. you can get paid income in high quality bonds and get paid to wait, even if we see yields chop as the economic data gives us mixed messages. you look at the income component of bond as being an attractive and important component of returns. everybody loves cash. i get it. you are going to be subject to reinvestment risk as rates come down which is our forecast. those rates are not going to be as attractive on the short end in you want to lean into high-quality bonds with intermediate term duration and get paid to wait. katie: 5% looks good. i definitely hear what you are saying. is it worth bothering with treasuries are is at the corporate market you are seeing those opportunities? emily: we are neutral treasuries but overweight bonds

particularly in the cap sector, the fact that you can get these bonds with very low default risk and get paid at close to 5%, 6% income, investment grade bonds trading at $.90 on the dollar and we are trading at one of the steepest discounts right now since the global financial crisis. we think this is a great time to unlock the value that has been created over the last couple of years in investment grade corporate bonds. katie: i appreciate your time on this friday morning. our thanks to emily roland of john hancock investment. back to the breaking news, the u.s. supreme court throwing out the federal ban on bump stocks, the attachments that let a semi automatic rifle fire at speeds rivaling a machine gun. joining us is our balance of power cohost. it looks like we were talking

about a vote that was largely along ideological lines. joe: 6-3, not a big shock this case. it was put in place by the trump administration. this goes back to the las vegas shooting in 2017. remember the country music festival that was shot down upon by a shooter in the mandalay bay prompting a debate nationwide about new gun controls and what came from that was this ban on bump stocks. we are going back in time and it is considered a big win for the gun industry and for the nra. katie: joe mathieu, more coverage coming up in those hours. looking at that companies making the most social buzz in our social climbers segment, up next. this is bloomberg. ♪

how am i going to find a doctor when i'm hallucinating? what about zocdoc? so many options. yeah, and dr. xichun even takes your sketchy insurance. xi-chun, xi-chun, xi-chun! you've got more options than you know. book now.

katie: time now for social climbers, a look at the stocks making waves on social media. first up, wells fargo fired over a dozen employees last month after investigating that claims that they were faking work. a review found they were simulating keyword activity creating the simulation of active work. wells fargo has required employees to return to the

office two years ago under a flexible hybrid model. a judge looks to be set to reject a $30 million settlement between visa, mastercard and retailers which would have capped fees. the judge suggested she would not sign off on the deal. retailers have long fought against fees for processing hard payments, most of which go to the cars. ai firms, bio's, none have popped quite like cava, soaring 300% any market value over 10 billion dollars, equating to $33 million for each of its 323 restaurants. you can follow all of the latest company buzz on our bloomberg terminal. looking at markets, it has been a long and busy week when it comes to monetary policy and the

economic data front. at least for the s&p 500, we look set to be in the red. this comes after a string of four consecutive record high closes. maybe we are taking a breather. we are not done by watch, -- much, .3%. big tech in the green, currently up .2%. it feels like tech has been the haven in any market environment. that is holding true right now with the nasdaq 100 also higher by .2% and at a record high. taking a look at the bond market, the fierce bond rally continuing. the 10 year yield down another four basis points, looking set to go below 4.20. kia continues the push to electrify their lineup. the chief operating officer

joins us next. this is bloomberg. ♪

katie: we are talking eeev's and hybrids. matt miller, happy friday. matt: i wore my lightning bolt tied. katie: i get it. the conversation has changed rapidly. feels like everyone was over on the demand store. matt: not toyota. hybrids are still a way forward.

for the most part, the industry invested hundreds of billions in electrification. they are not going to make a big turn from that. katie: stephen centre, kia america ceo and executive vp. i'm curious to hear about the ev9, a seven seat suv. what is your outlook? >> we are excited. it has a couple awards. it was the car of the year, ev of the year, north american car of the year. ev's are mainstream cars and

we've proven it. matt: i drive a lot of cars. i anchor a podcast. i test a new car each week. this is easily my favorite ev suv. it is near perfect. if i could, i would put a range extender, a motor somewhere in the front. have you thought about that? seems like that would be an improvement to almost any electric vehicle. steven: the answer is the evolving battery technology and fast charging infrastructure. matt: when? the charging infrastructure is

dismal. where i live in westchester, often time chargers don't work. you have to wait in line. they are not fast. that's not going to be improved in the next years. it will take a long time. even the best of the best is still a problem on a long journey. steven: absolutely. katie was mentioning the solution going forward is probably all of the above. the government has been saying ev only. we have a big line of plug in hybrids. that's the best near-term transition vehicle for consumers. you can get 50 miles of pure electric range, then you have the engine. depends where you are, your needs, charging at home, charging at work, pure ev is

just fine for now. katie: the governmental role. let's talk about the charging infrastructure. january '25, owners will have access to 12,000 superchargers across north america. elon musk fired the entire team. have you been in contact with anyone from tesla to talk about that line of the business? steven: not directly. there's another opportunity. iota. it's a consortium many automakers created to deploy 30,000 ev fast chargers. you will see more of those investments. you shouldn't rely on one supplier for anything. you shouldn't rely on tesla to

be the charging supplier. katie: you have to diversify charging capabilities. makes sense. hybrids. anecdotally i see more hybrids on the road. what do you think the future looks like? evs will be the dominant green car? for something closer to hybrids? steven: it all depends when and where. eventually perhaps 95% of mobility will be electric. depends where. example, there is a cowgirl in wyoming with a diesel truck. she's not the problem. is the 400,000 people on the highway with me when i'm driving to work. in urban areas, you will see evs in the immediate term.

everything should be a hybrid. hybrids operate when you break inertia. as you start to pull away from a light. that's the dirtiest and most fuel consuming portion of your dirty -- of your journey. if everything was hybrid, we would be world ahead. plug-in hybrids, you will reduce co2 further and save fuel. depends where and when. it's not a linear conversion to evs. matt: what's next for this market? the telluride has ruled in terms of design for suv's. i had a sorrento, i thought was a thrilling drive. dynamics were incredible. both you produce in georgia. what's next for the u.s.? steven: we are looking at

different things on the internal combustion side and the ev side. we are working on building out the ev side. we will have seven on the u.s. market by 2027. that's the immediate term. on the internal combustion side, we are refreshing everything. next couple years, the telluride will be replaced. we replaced this portage -- the sportage. that is in georgia. matt: don't replace the sorrento. it's good. what about warranty? you are the only company that offers 10 years, 100,000 miles. isn't that expensive? steven: it is and it isn't. it keeps you honest. if you have that warranty, you

have to engineer things to last long. we are winning a lot of jd power initial quality study awards and longer-term awards as well. it's only expensive if you don't do a good job. katie: curious what your healing from the dealers. what do they want? steven: depends where. they don't want us to abandon internal combustion. some parts of the country are nervous. we are still growing. we are growing on the internal combustion side, we are selling ahead of last year in a market that is flat. depends where you are. we are building out a line of evs and proving volume for internal combustion. we are introducing midcycle refresh for k5, our sports sedan. we have a good lineup.

dealers want more. katie: enjoyed this. thanks to stephen centre of kia. that was interesting. great to see. matt: i love to follow the kia, hyundai genesis story. amazing to see the improvement in quality over the last 10 years. i love the auto industry. i coanchor hot pursuit with anna elliott. katie: don't cut me off. i'm about to promo. subscribe wherever you get your podcasts. matt: today we have the ceo of ford jim farley will join us. katie: imagine you will talk about evs, trucks. matt: and the mustang. katie: thank you so much. coming up the legendary partnership of warren buffett and charlie monger with ronald

olson. this is bloomberg. ♪ when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh you know what's brilliant? boring. think about it. boring is the unsung catalyst for bold. what straps bold to a rocket and hurtles it into space? boring does. boring makes vacations happen, early retirements possible, and startups start up.

because it's smart, dependable, and steady. all words you want from your bank. for nearly 160 years, pnc bank has been brilliantly boring so you can be happily fulfilled... which is pretty un-boring if you think about it. (traffic noises) (♪♪) the road to opportunity. is often the road overlooked. (♪♪)

at enterprise mobility, we guide companies to unique solutions, from our team of mobility experts. because we believe the more ways we all have to move forward. the further we'll all go.

abigail: coming up later today, loretta mester. this is bloomberg. ♪ katie: we are delving into warren buffett and charlie monger. ronald olson spoke with david westin. ronald: neither of them are typical. did they have problems similar? yes.

they have the owners attitude from day one and took a deep interest in any problem. they did their homework. didn't believe in consultants, figuring out compensation for managers with a consultant. the operated independent of wall street. they were different. david: talk about risk. it's at the center of investment decisions. it's part of what a lawyer does. how does warren buffett approach risk? ronald: carefully. often with charlie. they would talk regularly. risk associated with investments

, that was a regular occurrence. each of them approached that differently. different set of priorities, readings, life experiences. warren is gregarious, out front, cuts the deals. charlie is still sitting in his chair. kids say he looks like a book with two legs, reading every day. they had a unique partnership. another reason i don't have a lot of clients. this complete trust. a grounding in midwestern values. i think of that as integrity.

they had fathers they admired who spent a good deal of time in public service, one a congressman, one a federal judge. they grew up in omaha. they lived in understated lifestyle, they both had big developed accounting capabilities. they read all the financials. new them well. they didn't buy companies without an established record of consistent profits for five years or more, a leadership they trusted, that have integrity and had run the company's they were about to acquire. one question warren always asked was, is this person going to love the money more than the business?

because berkshire is about to make them very rich. if they loved the business more, that's who they wanted. it was a combination of risk assessment. as they say, charlie added perspective. he was guiding. great psychologist. new all the biases that exist in judgment. the enthusiasm of the deal was more evident in warren. the confirmation bias was something charlie guarded against. katie: ronald olson speaking with david westin. tonight, former u.s. treasury secretary larry summers. that's at 6 p.m. new york time.

this is bloomberg. ♪ i can't believe you corporate types are still at it. just stop calling each other rock stars. and using workday to put finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models.

oh, that's so rock roll. it is, right. he gets it. yeah. oh, thank you so much i couldn't have done it without you. honestly, i don't do a whole lot here. i'm really just here for the at&t internet, it's super-fast so, any pre-launch concerns? what if nobody buys them? that's mean or, what if everybody buys them? oh, i hadn't thought of that that's probably not gonna happen can we handle that kind of traffic? the network can handle it! i downloaded eight hours of true crime stories just during our last video call i'm learning a lot

katie: over the past 15 years, morningstar tracked 372 allocation multi-asset portfolios and only one has managed to beat s&p in that time. mike is the pimco senior bond portfolio manager. you don't hold the stocks themselves. you do it through derivatives. mike: it's part of our capital efficient suite. exposure to s&p via derivatives.

we take the cash not spent on equities and put it to work in fixed income markets which will purchase securitized products. the goal is to deliver the return of the s&p plus the return of u.s. treasuries overcash overfull market cycles. the benefit of treasuries returning, being able to mimic the s&p. the fund has done what it is meant to do. over market cycles it will continue to out deliver returns. katie: as a manager, it has the s&p exposure through derivatives -- what's the balance between those asset classes? mike: we like fixed income. it's a ballast.

diversifier. negatively correlated asset in times of declining inflation. peel back the lens. fixed income looks attractive from a return perspective and has potential for capital appreciation. the best of both worlds. two dollars of risk for one dollar of money. over time it's more efficient to build a portfolio that can withstand volatility. katie: long-duration fund. i'm excited. everyone this morning has told me it's not time to step out of the yield curve. time to stay short. if you feel excited, maybe you go to the belly. but certainly you don't go along. how do you feel? mike: cash has been king.

5.5%. very attractive. that puts you at reinvestment risk. re-think we are closer to when the fed will lower. sometime this year? maybe twice depending on how the economy turns. we think it's time to extend duration. depending on needs, it will depend how much duration you add. we like the belly. we find that most attractive. you will have the benefits of appreciation while still holding hands with the fed. we find the belly more attractive than the backend of the curve. it offers diversification benefits if we have a

disinflationary environment where yields decline. you get meaningful capital depreciation. last week, we've had a 40 basis point rally that led to a 6% capital appreciation. they have their place. now more than ever, they will have the diversification benefit given what the fed told us that they will respond to bumps in the road and wobbles in the unemployment rate, and that should benefit fixed income and long-duration assets. katie: let's talk about credit risk. i had a conversation this morning. don't even bother with the market. it's worth looking elsewhere. where are you finding opportunities within fixed income? mike: fixed income is

attractive. within we find securitized products attractive. agency mortgage-backed securities. these are assets securitized up the capital structure. in terms of corporate credit, we find securitized products attractive. the spreads on offer are not that attractive. within corporate credit, we like senior financials and utilities. as a generic beta, we would rather express that view in securitized products. we remain more liquid than corporate credit. you can add yield for resilience. i would push back on corporate credit and if you can, diversify. katie: where i was wanting to go. you sound bullish.

for good reason. what don't you like right now? mike: floating rate assets exposed to rollover risk. higher rates in a time where the economy slows. less excited about corporations that have to deal with higher interest rates. still cautious on commercial real estate, the office market. that's a long fuse. plenty of opportunity. being selective and cautious. katie: interesting. floating rate have been the trade. maybe time has run out. appreciate your time. have a great weekend, mike. coming up, carolyn childer joins next. that does it for bloomberg markets. this is bloomberg.

♪

announcer: this is bloomberg technology. caroline: i'm caroline hyde. tim: i'm in for ed. caroline: elon musk coming up. tim: adobe surging. caroline: the g7 in italy as the pope