to 75%. that is the biggest rate of increase in the history of any emerging-market. if that is not proof you are independent and you acted autonomously, it is difficult to find another example like that. all this narrative that the central bank has been political, i think we have to get away from that and expand that we are doing. what we are doing has been very technical. the last decision was unanimous and we have four members on the board that were chosen by the current president. what we need to separate is the political narrative and the technical job we need to do. history will tell and time will tell the job was done the best we could do. katie: jerome powell and central portal -- portugal.

jerome powell sticking to the script the recent data is welcomed but the fed needs confidence to cut. we have more data crossing the terminal now in the form of jolts. let's go to mike mckee. michael: we are looking at a disappointing number, a surprising number for the jolts. a lot of economists thought we would see a decline in job openings. instead is an increase. the april number revised down the 7 million -- 7,919,000. these numbers are delayed by a month. i'm trying to pull of the overall numbers. the other number people care about is the quit rate. a little changed. 2.2%, the seventh month in a row. there was some thought we would see that going down because of fewer job openings and people would get worried.

overall the number tells us the labor market still is a bit tight. i would be curious if jay powell gets asked about it to hear what he thinks. the fed made a big deal out of jolts telling them the labor market was tight. katie: let's get right back to that fed chair jerome powell ecb president christine lagarde in brazil's central bank governors speaking on a panel in portugal. >> it doesn't seem like the president will reappoint you. do you worry about the independence of the central bank ? pres. compos: i was never up for reappointment regardless of who won the election. want to help design the independence law i tried not to have that in the law. and the reason was i did not want the president of the central bank to have anything to

been his need to have any kind of reelection. -- bend his knee to have any kind of reelection. there is a risk premium in the curve. it has been elevated in the last couple of weeks as to when uncertainty of what happens when the next leadership for the next team takes place. in brazil, it is done slowly. the president can change two directors every. with eight directors plus the president. right now we have four directors appointed by the current government. the last decision was unanimous. i think what we did in the last decision proved the group is cohesive in trying to find the technical solution for the country. i understand is a risk premium and some uncertainty. i think the group we have, which is composed of eight directors

plus a governor voted unanimously understanding that was the best for the country at the time. i understand there's a risk premium. with time that risk premium will decrease. >> care concerns in the u.s. about fed independence. if president trump gets elected he's looking at the issue. you have been subject of attacks before. what is your level of concern about that? chair powell: i am not focused on that at all. that is not just a talking point. i really think we keep doing our jobs and the economy with 4% on the claimant and growing it to percent, inflation at 2.6%, let's keep that going and do our jobs. history will judge. if we can keep on that path, that's the only thing of focused on. i think support for the fed's independent is very high -- independence is high on capitol

hill among the leaders and most of the following. i worry about getting the job right. >> you don't with touch politics but president lagarde, he brings into vocus fiscal policies. there are concerns about the deficits in france if the far right should went. there are concerns about the deficit in the united states. i wonder if you have something to say or warn as a relates to making your inflation fight harder. pres. lagarde: fiscal matters are obviously true. it matters in two different ways. it matters from a conjuncture will type away -- conjunctural type away. thank goodness the european authorities agreed on the fiscal -- that will take over.

there is a framework in which members of the european union have to operate and control the direction of the debt and make sure it is sustainable going forward through the efforts they deploy. they have to keep their deficit on watch. with enough flexibility -- that's the second part of fiscal spending i'm concerned about -- with sufficient focus on productivity, on growth, cap investment that will be conducive to both. my hope is that in addition to operating within the european fiscal framework, which has been agreed by all of the european members, in addition countries will look at the structural changes they have to either continue to have in their arsenal of tools but also they will continue to improve going

forward. i will regard that is critically important for productivity purposes. which we are lagging behind and have been for quite some time. we are not so worried about fiscal expectations as roberto was saying a brazil or emerging market economies. we are concerned about the fiscal rules that have to be respected within the european union and the structural reforms conducive hopefully to productivity improvement going forward. that is the only way for europe to actually remain strong and thrive in this changing circumstances. >> i know you're allergic to fiscal policy, chair powell. i have heard you talk about the unsustainable debt burden of the united states. there has been a selloff in treasuries after increasing on's president trump -- odds

president trump will be reelected or there's a sweep of either party. does that make you nervous when it comes to the progress you've had on inflation if we see more expansionary fiscal policy, more deficit -- bigger deficits and bigger debt loads? chair powell: i will give you the traditional answer to some extent, that fiscal policy is a job for elected people. we don't comment on it, and particularly in advance of a presidential election. i'm not, thing on anyone's particular policies -- commenting on anyone's particular policies. the u.s. is running a large deficit with full employment. the level of debt we have is not sustainable. the path is unsustainable. that is not controversial. i would have thought this is something that should be a top level issue. you hear this from a lot of elected officials but it should be a real focus going forward.

how do we get back to a sustainable path? you can't run these deficits in good economic times for very long. i would not say -- i can't speak to the time but in the longer run we will have to do something sooner or later. sooner will be better than later. pres. compos: let's do a basic exercise. if you look at the total debt combined, sovereign debt of u.s., europe and japan, that a 64% of total global debt. in terms of the cost of servicing the debt, it went from 1.2% for the pandemic to around 3.2% now. then you as a 25% of gdp to that, the cost of facing the pandemic. we have a higher debt and a much higher cost of servicing to service the debt. there's an aspect globally that

is the extraction of liquidity and a market that is sometimes not pricing correctly. we have to pay for the costs of the transfer programs we did. we need to pay for the cost of the green transition which is expensive. we have to pay for the cost of the fragmentation. it is costly for companies and government. we need to pay for the low income countries that spent little in the pandemic and now need support. we have to pay for the cost of demographics and the consumption of energy that needs to be paid because of innovation. we have a lot of bills to pay. we have the highest level of debt we had in a long time. sometimes i stop and think it is it is time for us globally to think about the way to get to some kind of stable trajectory

of the debt in the next couple of. it is something we need to do collectively. the global debt is high and it will start taking a lot of liquidity from the markets. the one stubblefield the effects are not the defensive bonds or emerging market economies. the low income company -- countries are feeling this already. i think the market was mispricing a little bit the fact that if you have higher rates for longer the effect from extraction of liquidity the risk is higher than with the market is pricing this. >> i want to ask about china. you have a pretty good view. it's a pretty good trading partner for you. what is going on there? how much has it -- is china's economy slowing? pres. compos: i'm not equipped to tell you what's happening in china. it's important for brazil.

we are big exporters of food items. china is a big trade partner with brazil. and it has been for a while. it's important to understand it's tied to brazil. the one thing looking at from far away is to see the policy china is doing, the focus and the impact the new policy will have for us? because we export mainly food items we don't see it as a big threat. other countries who have a different understanding of what the impact will be. >> there are trade barriers going up. tariffs. in our election we are talking about potentially more tariffs. are you seeing that in terms of growth and inflationary impact? pres. lagarde: we are not seeing more tariffs than what had been

decided eight years ago which was consistently maintained later on in relation to certain products. that for the moment is stable. what is not stable is the number of protective measures. occasionally noncompliance with wto rules, the level of disputes that are brought before the wto which is not in a position to resolve them because they are not equipped with the dispute resolution mechanism and the magistrates have not been appointed to that effect. we've had more than 3000 trade protective measures decided in the last two years. that is like five times what is the normal average of measures decided. that is a concern because trey has been fueling growth. because europe at large is not a small open economy. it is a large open economy and

trade restrictions will affect your more so than other countries that operate without this degree of opening and vulnerability. the second reason i'm concerned is typically trade is conducive to innovation. innovation is necessary for productivity. the combination of reduced trade on growth and the impact of trade on the capacity to innovate and improve productivity is a vulnerability for europe and when we have to address forcefully if we want to win the battle of productivity. it is not independent from inflation. it is one that is clearly a concern on the horizon. >> 10% across-the-board tariffs, inflationary? chair powell: i will not be scoring potential proposals.

it is not our job to do that. almost anything affect the economy trade affect the economy , immigration, energy policy. other agencies do those jobs. we do price. in our political economy we stay out of that. >> it has applications for a price stability surely? and max employment? chair powell: this is exactly what we are not doing, come players on issues like tariffs. it affects literally everything. all these things affect inflation and jobs. there were others in the elected government responsible for trade policy. >> back to your job then. there is a debate among the fed and other central bankers about where policy rates are going. the neutral rate. what the rate should look like

and whether it is different after covid. what do you think? chair powell: can we go back to trade? [laughter] >> please. [laughter] chair powell: i guess i would start by saying the thing we write down as part of our summary of economic projections is it's a longer run concept. it is the rate of interest that would hold the economy at equilibrium when we are at stable prices and maximum employment and no shock sitting the economy. when we are sitting in washington thinking about whether the policy rate is the appropriate rate for this economy right now we are not battling over with the long run star is because it's a different economy. it is recovering from the pandemic. so many forces are pushing it this way and that way and there's not a lot of precedent.

it's a challenging time but the question is an interesting question. are we going to go back to the very low levels of neutral rates we had in the recovery of the global financial crisis or back to that? most people think we will not go back to that, the low rates we saw during the global financial crisis. we don't really know. the neutral rate has moved around by slow-moving, longer run forces. demographics, technology, productivity over time. all those things move it around. it's a great conversation to have but when we look at policy and the border it is how the policy affecting today's economy and are we getting the results we want? by and large we think we are.

we are getting a gradually cooling economy and labor market. progress on inflation. 2% growth. i worry some people think the r-star debate dictates our assessment of how restrictive policy is. it's really not. unless you think the long run rate is the same. >> i think investors are trying to figure out where they will end up in what the policy path looks like when you start cutting rates. it becomes important then. chair powell: i agree, it does. what we discovered -- what will we discover it to be. there is a debate going on. people feel strongly it has not changed and ultimately it is unknowable. it does matter for the longer run in for rates.

it does not matter much for policy decisions today, the ones we are actually making. >> we want to know if there are 10 cuts coming or 15 cuts. do you think it has changed post-covid/ -- post-covid? pres. compos: the r-star story for emerging market countries is a little different. if you had table of countries of latin america, you would find the models internally used by their own central banks, in some cases are higher. in some cases they are going lower. the question is, what is the short-term view and what is the long-term view as chairman jay described? what is the structural reason for the neutral rate in brazil to be so high? 4.5% is high.

a lot of it has structural elements from the past. it has intensified during the pandemic stop you could talk about the amount of subsidized credits. you can talk about this rejection -- trajectory of the debt. when you look to productivity, one thing people talk about is the need for raising money. sometimes the adjustment is done on the revenue side. when you do that on the revenue side, if you look at emerging market countries and even some advanced economies you go back and tax capital more than labor. it is hard to tax labor coming out of the pandemic. this has been happening for a while now. you introduce another element. when you look at the causes of the neutral rate to be so high structurally, that is what we need to work on. brazil has done a lot of reforms. compared to other young

countries -- em countries, brazil did it during the pandemic. when you look at the efficiency of what was done the end result seems to be that the structure rate is due to -- the r-star is to hide. we need to talk about -- is too high. >> key you ever see a world will be get back to near zero interest rates absent a crisis? pres. lagarde: are we heading towards that? in my view it is unlikely. it is not something i would want to pass judgment on. when we start having the conversation that chair powell described perfectly well and i would completely subscribe to, i would be relieved. it means we are getting closer to where we need to be.

it would mean we don't have any shorts suffered by the economy or on the immediate horizon. we had not at that stage and this is not the work we do when we set up policies going forward. >> one thing moving fast and has potential to impact economies is generative ai. we started talking about it a little on stage last year. it was early. things have moved. how are you thinking about any impact on growth or productivity or inflation of what is happening in technology? >> we need another hour because there are so many questions about it. number one, there has to be some regulatory framework in which ai and generative ai and in the hands of a small group of companies is organized in order to protect a number of rights

and protection of citizens. i would start from that which is not what we are at the moment. there are attempts to organize in a bit away as was the case with internet on a global basis the use of generative ai. the question of how much energy is used in order to test largely which models is something that is not often in discussion yet it matters in normal sleep. third, the impact ai will have on growth, on inflation, on productivity is yet to be determined. i think most people would agree it will have an impact throughout the latter of jobs -- ladder of jobs.

in jobs where mechanical developers have not historically affected jobs in particular. it will require a significant amount of training and constant upscaling of people so they can adjust to artificial intelligence, use it and not be victims of it. i would add we at the ecb are using artificial intelligence to try to do it in a safe environment without being a hostage to the companies that would like to have access to the most private of our data. it does require a cautious management and enough control without preventing the innovation and creativity people can apply in the use of these tools. >> use it in models? pres. lagarde: in models. whenever we need a lot of language mining.

whether it is structured or unstructured data we use it. we are constantly pushing the frontiers of that. as i said, cautiously. we need to protect data. we need to make sure there is enough human judgment involved in the process of the use of artificial intelligence so we are not a hostage to the mechanics itself. >> d think fears rendering jobs absolute are legit and is there anything the central bank into? chair powell: title think window. -- i don't think we know. pc this massive investment boom. you see serious people in the private and public sectors. there is a sense of something big coming here. it feels like it will eliminate some jobs and create new jobs. the question is for many people,

will it automate their labor and make them more productive or eliminate their job? i don't think we know that. it is too early to say. there's not a lot of central banks -- a lot central bank can do that. we can supervise the financial institutions to make sure they understand what they are doing with different kinds of technology. like everybody else we are meeting with the experts and asking ourselves the effects on productivity, on inflation, on growth. will it be enormously displacing? if so, of whom? one thought is more people doing white-collar jobs that are writing press releases and things like that. it is something we are investing a lot of time and effort into. we are not using generative ai. we are looking at earlier forms of ai that are in fairly common use and i believe we use some of that. >> what about you, president compos? pres. compos: i think when you

look at the surveys that we have, and we have plenty now on the use of ai companies. what you have in terms of evidence to date is the companies using it to enhance existing labor have had better results thank companies that have replaced labor for ai. it does not mean some jobs will not be replaced by others, as it was said. what we need to understand is what we are seeing basically is an increase in the ability of processing data and storing data. it's basically computer power and the ability to store data. that is very energy consuming. you have a couple of dimensions. privacy. where is the limit? what is the taxonomy of using this once it becomes a global instrument? what is the taxonomy of using

this? you can talk about data centers being placed in countries that have chip energy to produce services for countries that have more extensive energy. once you start crossing the frontier and thinking about how you will do this movement globally, there's a lot of consequences. one of which is unequal growth between the countries that are more on the edge of producing this technology than the countries that are not. the consumption is also going to be an equal. globally, how are we going to connect the dots and create a taxonomy for the development to be sustainable? >> i want to do a quick lightning round of questions. we talked about opportunities. we have talked about economies. what about the biggest risk facing your economies?

i wonder if they are the same or different. chair powell, the biggest risk facing the u.s. right now? chair powell: i traditionally said cyber risks. we know how to deal with credit risk and lots of kinds of risk. market dysfunction and things like that. we have not had a successful attack on a financial entity or bank. today it is just the balance we talked about. getting the balance on monetary policy right during this critical period. that is what i think about any wee hours. pres. lagarde: same thing. >> really? cyber risk? pres. lagarde: yeah. if you ask the financial sector, u.s. banks with which we

interact a lot, sometimes much to their chagrin but eventually to their satisfaction in the long run because we supervise them, but typically that is a risk they flag as one of their top priority risks. i think we need to constantly improve the level of ordination, the first, second, third line of defense and the best way to respond. i'm concerned as a person more than as president of the ecb about the backlash against the fight against climate change. some would argue it has nothing to do with central with central banking but i would contend this is actually not the case. it does have ramification impact that we should be mindful about. it is a risk that is there and that will come to haunt us if we do not do much about it.

>> i thought your organization geopolitical risk. that is there facing europe? >> as defined earlier on? >> we heard a lot about geopolitical risk. >> it is there and on the doorstep of europe. when you look at this horrible war against ukraine it's a major risk which is out there and is hurting those on the ground and the neighboring countries in particular. >> what's your biggest risk? >> if you look at what markets price today they look at this especially for brazil the conclusion would clearly be the main risk is fiscal. but i think that comes and goes and has growth. i think there's one other risk that i see and it's not very

tangible. which is the polarization we have today. if we think about the amount of time we spend on some social issues that are connected to polarization and they are not that meaningful to produce the society, i worry a lot about that. >> we're sitting here on stage and one year from now which we hopefully are, the inflation rate in the u.s. will be? >> mid to low twos. >> we are in mid twos now. >> we have one month at 2.6. and we had a brief visit to the low twos at the end. i mean sustainably and durably underline inflation between two and two and a half. that would be a great outcome. >> headline pce. president lagarde, a one year from now? >> i would say low twos.

2.5 the latest reading. and bumpy on the way ahead but low twos. >> we've been closer to 4% lately so where do you think we are in a year from now? i think the work that's been done is very technical. i'm confident we will continue to be that way and i think when you look at expected inflation today i think it has a disconnect with the current inflation and a disconnect with the fundamentals we have so i'm confident the future inflation will be lower than expected inflation. i think what the markets pricing today is not in sync with the reality. >> what about the unemployment rate. working to go full dot plot here. >> i'd be happy right where it

is right now. plus or minus a couple >> >> of tenths. is that likely? >> i think it's reasonable. >> it's moved up, we touch 3.4. for still a very low level. it's been a long time. the last time we were at four below, i was a teenager. a long time ago. >> also unemployment rate in europe has been healthy. >> historical low and i hope it stays there. >> what's the unemployment rate in brazil. >> 7% now and it's still very low. when you look at the history i think probably will go up a little bit, not too much. i think what we need to look at the participation rate so we just published a study that shows the transfer programs have an impact on participation rate. our participation rate was down and i think it would be very important to understand what's

the dynamics of the participation rate going for there. >> were you a two cut. or one cut. >> no comment. >> thank you very much all of you. [applause] katie: that of course was fed chair jerome powell, ecb president christine lagarde and brazil central bank governor speaking in central portugal. let's digest what we've learned with mike mckee. what were your biggest takeaways? michael: basically it's the inferences that wall street is drawing on. jay powell did talk about disinflation being back on track and that we've made a lot of progress on inflation and that is obviously suggesting to some on the street that the fed is looking more favorably at the

idea of rate cuts, it does not change the timing yet but it continues the narrative. same story with the ecb although yesterday christine lagarde was pretty forward in saying they're knocking to be cutting in july. i don't think the fed is either. the question becomes can you draw that inference that working good maybe cuts in september. possible to leave that open which may be gives people some hope. on the political side everybody's asked about fiscal policy and they all agree fiscal policy in the u.s. and in the euro zone and in brazil is not good. the brazilian central banker said that was his biggest concern. nobody wanted to touch what was good to be done about that. they say that's up to the elected officials and interestingly katie when asked what his biggest worry is, jay powell said cybercrime.

somebody could attack one of the major banks. that was perhaps something that was not expected by people, but that was his worry at the moment. he seems to be relatively happy with the overall u.s. economy. katie: add that to the things they could keep us up at night. mike mckee thank you so much. some more market analysis with welcoming kate. it's great to have you with me. this is a fed that's made it clear they would like to cut rates. it doesn't have the data to do that but would certainly like to. what does an investor do without? >> we all want to see the fed be in a place where we can start easing policy. here's what i will say. we've seen a huge number of changes in terms of expectations and fed rate cuts and all different asset markets over the course of this year.

i think we've all settled on this understanding that half the policy is lower. but the speed of the rate cuts and the magnitude of rate cuts is still very much up in the air and data dependent. that's what you're hearing policy makers talk about on that panel. so much depends on the strength of the labor market. perhaps geopolitical stresses, political decisions, fiscal policy so it's hard to say we miss cutting cycle which we are now expecting will start in september albeit at a slow pace. it's hard for us to say how long it will be and how large it will be. i think investors have to get comfortable with that uncertainty in the near term. katie: what is your macro agnostic play. maybe we have a better understanding of the play around september. if we aren't sure of the magnitude, where do you go in the meantime as you await that clarity? kate: you have to stay in

secular growth stories paid as much as cyber threats keep me up at night as well, it's also a place we've leaned into and it's been an enduring theme for us so i would say on cyber security software it's one of the places that macro agnostic. there are wave after wave of reasons why companies continue to invest and reinvest in their security software. so i see that as being very durable across all parts of the economic and business cycle and were starting to see some significant players emerge that are offering platform solutions to companies and continuing to update their rates in the new world of ai and increased threats and so i would say that's one theme that investor should take note -- take another look at. if they had let it off the radar. katie: interesting to see the reaction in some of these thematic etf's. interesting to see powell highlight that theme. let's talk abut the state of

this rally overall. this hasn't been a low-quality rally by any measure but it's been a very narrow one. in terms of where we go from here can that narrow breath continue or at what point do we see some sort of broadening out. kate: thinking back to the beginning of this year so me strategy send investors kept on saying over and over again this is time to rotate into these other sectors. i kept thinking to myself fundamentals matter in this market at this point in the economic cycle so rotating into underperformers for the sake of rotating into them does not make any sense to me. we really focused on where the quality is, where the earnings growth is and we are continuing to see positive presence in terms of expectations on revenues and on earnings. over the course of 24 and 25. i get it. it's uncomfortable to have these

big names more than 50%. over the course of the first half of 2024. these are companies that are growing their market that are producing a huge amount of free cash flow and you don't want to be contrary and just to be a contrarian. you want to be able to invest in these and recognize that there may be broadening out on specific themes and technology that we can capitalize in the second half but not to abandon these fundamentally strong leaders. katie: i hear what you're saying that there's a fundamental have to back that up. there was a really interesting interview with jp morgan's david kelly who said the only bear market shock would up and. we would really have to see some shock to market sentiment to disrupt the pattern we are seeing in terms of how people are deploying their money, does that hold water with you that if

we were to see some sort of leadership rotation here the only way to turn away from tech would be some sort of shock at this point? kate: i think that's pretty right but i would also suggest a recessionary environment or an environment where growth is moved meaningfully and people are worried about overall economic activity. parts of tech spending are insulated and other areas of capex or investment and expansion are likely to be cut first. at this point it's a business necessity. it is absolutely essential for companies to be making the investment in technology, whether it's in the cyber software we talked about or ai capabilities, in order to stay competitive not just in their industry but in this evolving economy. this is a place where i don't want to sound too optimistic here, but i don't think many

sweet -- c-suite executives will be cutting their exposure to spend when it is essential to stay competitive and keeping businesses profitable. i will tell you there was a survey that comes out and you've seen this probably as well. the second quarter survey is released just over a week ago and effectively it showed most companies are continuing to invest in technology and productivity enhancing software that will improve their business operations. this is skewed towards the large companies that have capital and investment dollars but it is a major focus for the c-suite decision-makers. i have a hard time seeing an environment over the next couple of years where that changes. katie: have to have you back for a fuller conversation. our thanks to kate of black rock. let's get some insight on how the macroeconomic environment is being digested in the c-suite.

kane footwear make sustainably designed shoes with a focus on recovery. great to see you in person. how are you defining recovery footwear? >> i grew up working on my dad store since i was 10 years old selling sneakers and then i played lacrosse at johns hopkins and team usa and have been active my whole life. a solid people are wearing and we wanted to create something better for your feet. katie: how do you actually do that? what puts the recovery in recovery footwear? i think of recovery i think of cushion for example. john: we have a two-piece mold so we are able to weigh the density. we have a firmer base, we secure your heels so there's attributes in the shoe that help you recover after being in cleats or

sneakers, we have great designers and put a functional shoe on people's feet after they perform sports or just being active. katie: they look a lot like crocks. with that he'll you've talked about that helps them stay on your feet, but is that who you are trying to take market share from? john: yeah, i think we created an elevated shoe that athletes, and fl players, nba players are gravitating towards and we saw obviously what was going on and what they were doing and we created a much more thoughtful shoe. katie: in addition to athletes you had them step out in up pair of bubblegum pink revives. i think of justin bieber and crocks, that was a fruitful partnership. how important are these celebrity endorsements to get

eyeballs on the shoe? john: we've never paid up road -- pro athlete or musician to where our shoes. they naturally gravitated to the shoe. we are very proud of that. but it is important obviously to raise brand awareness and we are just fortunate top quarterbacks josh allen, cj stroud, musicians are wearing them in public, i feel like they see the benefits of wearing them. over 21 nfl teams. we are just happy to be on their feet. katie: i have to imagine that the happy phone call to get the josh balance just spotted in a pair of your shoes. you take a look at your business, you only launched in june of 2021 and i think back to how the world fell in june of 2021. i don't know if i would've been the first to launch a new business or talk to us about how

navigating in and out of the pandemic felt for a startup? john: we were fortunate to launch direct to consumer which gave us some time to figure out production, figure out our marketing and route to market and partner with the right retail partners and i think it was an advantage for us to launch d to see and now where fortunate to work with partners like nordstrom's. were launching over the summer at premium locations throughout the u.s.. katie: interesting that migration to physical stores. obviously you have these sneakers, i wouldn't exactly go for a run in them, but have you considered branching out and making a more athletic type of sneaker you could do sports in? john: we are a product first company. a lot of athletes played college

sports, we focus on before and after, working out so that's our core is before and after training. working on some other products but we are in active recovery brand that focuses on before and after training. katie: would you be open to the possibility of a sale? jonathan: we are athletes, we are product focused. we love what we are doing. maybe one day the time is to bring it to a different level internationally, but right now we are focusing on making great products and great designs for future collaborations. maybe in the future, but right now are focusing on growing. katie: looking forward to following the journey. that is john of kane footwear.

katie: it's time for our wall street week conversation and today were focusing on the uptick of outhi attacks -- uptick of houthi attacks in the red sea. david taken away. david: good to have you. we checked in on the supply chain from time to time. we saw reports things are heating up again in the red sea. what's going on over there? >> it's good to see you again, thank you for having me on. things are heating up and they've been heating up for the last couple of months. the attacks have become more persistent, of the danger has gone through some. of test periods of -- some

period of lull has gone up again for your seeing this in some of the activity in the middle east today. you are seeing increased use of unmanned aerial vehicles, drones being used in attacks. that is the state of modern warfare. an increased ew and that also means terrorist groups, smaller rebel groups the traditional attacks would be planned with technology that was more expensive or harder to come by. it can be done utilizing commodity drones and materials so it's making it more dangerous for us and that's increasing pressure on the red sea and increasing pressure on prices.

increasing pressure on other ports and starting to impact our global commodity prices. david: talk about the pressure in the red sea. what effect is it having on shipping and can you quantify how much less shipping is going through and if not, how is it going around. brandon: that core artery of our global shipping backbone accounts for about 30% of our global shipping and commerce. so when you think about the amount it's decreased, it's decreased by almost 80% in terms of total volumes. that means our global shipping capacity has reduced by 20%. that means more of the ships have to go around africa and that means more port of calls in other parts of the world are getting more and more strain. you are seeing significant upticks in singapore in terms of port congestion, you are seeing rates as 60% -- peaks of 60%

higher levels of port congestion in singapore. you are seeing ports like the port of shanghai also dealing with constraint. you are seeing this also with the prices of shipping. so when you look at the rates, global shipping you are seeing a 2.5 to three times spike in global pricing for shipping. when you're looking from asia to europe you're seeing a five x spike in global shipping prices. so your seeing this compound and actually impact core inflation. there are some estimates it's impacting core inflation as much as a half of a percent today. david: there are a lot of reports pre-much every day about some altercation in the south china sea. the south china sea if i'm not

mistaken is even more shipping than the red sea. brandon: absolutely. the red sea is the core artery but the south china sea has two key aspects. one it is a core area for shipping some of the most technologically advanced goods and some of our most in demand goods so consumer electronics which especially as we get into the holidays will start to ramp in terms of demand. consumer electronics are largely coming in from the south china sea. major systems that are necessary for the automotive industry to function like chips and ev's are coming out of the south china sea. as you see the tensions start to heat up, and potential issue start to heat up around taiwan and around china's potential incursion into taiwan, there are growing concerns that a shut off

to that area could cripple the global supply chain. not just increase prices, but literally stop commerce and trade for long periods of time and force us to reform and move supply chains globally. as we've seen as the ports have come off line as though shipping lines of, offline, it is increased strain in those ports in the south china sea. were also seeing malaysia in addition to singapore and china, malaysia taking on higher port congestion. higher volumes of goods sitting and waiting. your seeing large-scale transshipment lines. essentially goods at these ports and us sitting in and holding vessels or in warehouses for longer periods of time.

so overall this is having a much more systemic and much more concerning impact on our global supply chains and our global prices. david: you've identified problems in the red sea and the south china sea is there anything with our allies that we can or should be doing to release that pressure. >> the biggest thing we are doing right now is redesigning our supply chains and we are localizing some of our goods manufacturing. you've seen a huge shift to mexico. you've seen a five x increase in commerce between the united states and mexico and that's because we are essentially de-risking our global supply chain and the modes and methods in which we get goods from these global logistics issues. and so that is one big area is the reform and the redesign of

our supply chain. the second thing is innovation in supply chain. think in the way we create, manufacture or even source raw materials for goods that's another area of the united states is focused on in terms of de-risking the supply chain. >> always really great to have you on. the ceo there. we will hear from ethan, fresh fields head of u.s. corporate m&a asking why there isn't more, day going on. katie: thank you for that looking forward to the interview tomorrow. let's take a quick check of the markets right now. the s&p 500 shaking off earlier losses pretty much unchanged but a little bit higher on the day. the asset class to watch is really the bond market. you can see the 10 year yields down about three basis points. we saw a big back some of that today. the 10 year yield above for 40 though. we have the ceo of aws, he joins

bloomberg technology with caroline hyde and ed ludlow next. that does it for bloomberg markets. this is bloomberg. ♪

>> from the heart of where innovation, money and power collide in silicon valley and beyond, this is bloomberg technology with caroline hyde and ed ludlow. caroline: i'm caroline hyde in new york. ed: i'm ed ludlow in san francisco per this is bloomberg technology. caroline: tesla beats delivery estimates but still a second consecutive drop in quarterly deliveries paid we break down those numbers. >> microsoft a id