>> the growth has definitely turned a little bit the last month, and the key part of that is it has gotten more broad. >> we are not seeing a contraction, but this is what is driving the economy. >> what we are seeing is signs the consumers slowing down. >> when you look at last quarter's gdp, little bit lower, i think we will see more slowing in gdp and overall spending. >> there are key pockets of weakness. this is a lopsided economy. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: live from new york city this morning, good morning. for our audience worldwide, "bloomberg surveillance" begins right now. five-day winning streak on the s&p 500, 35 all-time highs on

the s&p so far in 2024. chairman powell taking center stage in washington, d.c. later on this morning. . day one of his. lisa: two day testimony at a time -- whether they cut or do not cut, how much is that the important message versus the actual beginning in the economy versus ongoing resilience? jonathan: have we been too cued -- it's a doubleheader today. not just the likes of chairman powell, it is secretary ellen on capitol hill as well. annmarie: and she is probably the one who gets more questions. if the questions now are swirling, even from democrats in the party. biden was out yesterday, defiance, digging in his heels.

here a letter to congressional democrats. he got on the phone with donors. that night, he had the congressional black caucus, had a meeting with them. he is showing up a democratic party that, at this point, should be firmly behind him. lisa: we can analyze for the rest of the show. just to put these ideas together, the federal reserve and how it responds to this pressure, peter tchir coming on the show later today, zynga physically winced at the first rate cut, as portrayed as helping the incumbents. how that political risks really calls into question the idea of a september rate cut. jonathan: we can sit on the economy one beat longer. chairman powell said something interesting. because the u.s. economy is strong, we have the ability to take our time and get this then we got jobs data later in the week. we had and ism services perks. i wonder how much time he think they actually have, how strong

he thinks this labor market is. that segment today will probably be the important one. lisa: do you think he will give it? jonathan: he has got to. annmarie: if he says the exact same thing, are the people going to believe him? or is he trying to keep all options on the table? i would love it if he comes out and says the balance is shifting. the issue is he has not wanted to say anything conclusive whatsoever. whether he can help himself is the key question. annmarie: and when it comes to jay powell, it will be highly clinical. representative barr said wants chair powell to rerate the fed will be -- night he is the house financial services committee, he says it will not be perceived as apolitical. it has gotten very tense in terms of whether or not the fed cuts in september. it is becoming more intense on

capitol hill, given the dire straits the president is in. jonathan: let's start with equity futures. on the s&p 500 posited by 0.2%. make it a six, and we will equal the longest daily winning streak of the year so far in the s&p 500 paid in the bond market, just about unchanged on 10's. tons of supply coming out little bit later. lisa: we will have a three year auction later today pay later this week, we have 10 years and 30 years. how much d.c. some of the fears that we saw previously, giving sort of a floor to how much? longer term treasuries can rally? do we see that -- do we see that floor ebb away? jonathan: yields just about unchanged. this is the lineup. we will catch up with george goncalves of mufg. sarah bianchi of evercore as

president joe biden refuses to end his campaign. we begin with our top story, the s&p 500 reaching its 35th record high of the year. george goncalves of mufg says the u.s. market is an especially narrow set of stocks in the equity space. eventually, they will be an exhaustion point that sees assets returned back to earth. good morning. george: good morning. jonathan: you are exciting a difficult second half. what is bringing that about? george: the first half itself has proven to be much softer and weaker. it has been decelerating over the last few weeks and months. i said -- that sets the stage for a challenging summer and fall. think about the set up. we have earnings season ahead of us. we have the doldrums of summer.

then we have jackson hole. in between that time period, there is very low conviction in the market. that is setting up for an environment of the difficulty when we get to the throes of the election, number one. number two, which corporate will be embarking on new r&d projects, capital projects. they borrowed all this money other begin of the year, they have done their hiring -- probably over hired, in my thing -- and now we are in a phase of a pullback of hiring. that can contract growth. jonathan: it sounds -- said the cost of doing nothing is going up. it sounds like you agree. george: i think the fed should be easing. that has been my position, that they should be easing and be preemptive, but they have been dragging their feet because they want the confidence on inflation. they may get that this week, but it will be hard for --

the september cut comes down to 25 basis points or 50. first cuts have been historically large when the fed has actually made a policy mistake, but the potential window when they are making a -- lisa: what does too late mean? what is at stake? what kinds of consequences could there be if they do not cut this month? george: this month will be the path to the july cut. as well -- i was one of the last holdouts of a july cut. and in the may mfp which has been proven to be revised lower. nonetheless, it will take a lot for the fed to set it up for a july cut. it is not impossible, but it will be setting us up for september, which is taking us throughout the whole summer, and this could drag out, and as we are awaiting the uncertainty,

markets do not have to stay at the highs. i know we are running 35, 36 days of all-time highs, but it has been a grind. it has been an unloved, yes, markets keep going higher -- any sort of pullback in equities from now to september, the fed could be much more aggressive. lisa: when you say unloved, there is a real tension, unloved versus euphoria, unloved versus a bubble. which is it, at a time when you have citigroup saying it is time to book profits, you have bank of america talking about the fragility of tech stocks, simply because of the huge swings you are seeing on any kind of day-to-day volatility. how do you understand euphoria with this very uncomfortable rally that you see going on? george: obviously, these concentrated moves and these handful of names have really masked everything, but everyone looks at the indices, not just individual names. the fact that equities are up so massively into the middle of the

year, that gives you that kind of confidence that maybe there are financial conditions easing. but we have not really seen that pickup in retail spending, and we have not seen the translation into broader growth. so it's euphoria -- the question most people ask me is if we see a retracement in tech stocks of 10%, 20%, 30%, will that be much more damaging than the rally itself? so we have had a massive rally with all of these handful of names, the result of conditions easing, or was it to concentrated to not matter? or if they pullback and bring the whole indices down, they will focus on the indices more than the individual names. it is kind of this mixed performance message, but if we were to see those stocks no longer go up and actually pullback, then you could get an environment where people focus on the indices, not the individual names, and say it is just because of these handful of names that they pullback. lisa: basically, if you see a

10% pullback, chair powell has the green light to cut rates? george: he has the green light given the data on the jobs front. it continues to be mixed, gets revised lower, and i think it will get worse until september. i think the hiring plans will stall, and you will get into the tough environment into the election. i do not think this idea that the fed is being political is true. they will do what is right for the economy. if that requires a larger cut to start the process, they will do it. annmarie: but right now, the president is in a vulnerable position. doesn't that make september that much harder for this fed? george: i do not think so. when what is right for the economy is proving they are not driven by political whims. this idea they will have to hold off until after the election, then you are really ensuring --

not a harder landing, but your chances of soft landing really decrease the longer you wait. jonathan: can we get trades from you? bull flattening, wider spreads, credit? george: this is the challenge. we have had the inverted curve for over two years now on the 2's/10's curve. it has been the most difficult tray to maintain, but the curve trade is the right trade. the fed can fix this quickly. they can go much faster than what is priced into the forward curve. so think the curve steepen or is the right trade. as we are waiting in get into this period of realizing earnings will not be that robust and the fed will ultimately be like a bridge loan between now and the next administration, which ever one that is, so if the fed is the bridge loan, they have to cut at least 100, 150, then we will see what sort of policy measures get implemented. jonathan: i am listening to the words you are using. "they could," "they should,"

"they have to." george: the rael will come when we realize the revisions will be more dominant. we get into the september and october time period and realize the economy has decelerated, and they will be completely agnostic to the political backdrop here they will be focused on we do not want this thing to unravel. jonathan: george goncalves, good to see you. looking ahead to chairman powell day one, another name on a long list of names out of joint of this program saying they should, they have to. will they do something soon? lisa: that is the reason why it will be interesting to see whether the balances of risks have shifted more material before fed chair powell. that said, futures markets, certainly does not look like they will. jonathan: let's get you in update on stores elsewhere. with your bloomberg brief is dani burger. dani: united airlines as another of its boeing aircraft have lost a main landing gear wheel when

taking off. no one was injured on the flight, which landed safely. the one is similar to a united flight in march, which triggered a safety review of the carrier. nike is bringing back a retired executive to try to revive its slumping sales. 30 year executive tom petty is returning as nike's vice president. he left the giant in 2020. nike is trying to rebuild relationships with retailers like footlocker. the company's stock climbed 33% this year through monday, with sales continuing to fall. after 134 days of pre-celebrations, the youngest son of asia's richest person is set to tie the knot this week. -- the family had also held a mass wedding for 50

underprivileged couples last week with a musical event with justin bieber as the headliner. sources told bloomberg the guest list includes billy clinton and boris johnson, among the 1200 people expected to attend. jonathan: thank you. up next on the program, the white house comes out swinging. >> so i am telling you he has seen a neurologist three times while he has been in this presidency. that is what i am saying. i am telling you he has seen them three times. that is what i am sharing with you. so every time he has a physical, he has seen a neurologist. that is answering that question. jonathan: kind of. that question up next. live from new york city, good morning. ♪

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jonathan: equity futures on the s&p 500 positive by one quarter of 1%. yields are higher by one basis point. the 10 year, 4.2881. the white house comes out swinging. >> so i am telling you that he has seen a neurologist three times while he has been in this presidency. that is what i am saying. i am telling you he has seen them three times. that is what i am sharing with you. every time he has a physical, he has had to see a neurologist. that is answering that question. guys, guys, guys. hold on a second. there is no reason to go back and forth and be in this aggressive way. every time, i come back and answered the question. i never answered the question incorrectly. jonathan: it's like a candy garden at the white house. my new favorite phrase -- let's take a step back.

the biden administration trying to quell concerns after a neurologist specializing in parkinson's disease visited the white house eight times. sarah bianchi sharing three reasons why she does not think he will back down. it is his decision to make, it would take an extremely strong push from his party, and if he does, the conversation with shift back to the gop. what is your base case? sarah: i am watching to see the meetings on the hill today. they are finally really back and able to have conversations with each other to decide what they think should happen. and i am watching, in particular, the leadership. not only leader schumer on the democratic side and hakeem jeffries, but also pelosi and clyburn, who are very close to biden.

then leads keep an eye on those senators invulnerable races. what are they saying? what is bob casey in pennsylvania saying? those are the stories that will be the strongest. if they unite, and they will have to at this point, then they are going to have a president who is a little more willing to listen to the prospective then he is right now. the second thing i am watching right now is the polls. we have not seen lots of state polls coming up he we will get more this week that will be informative. annmarie: when it comes to the polls, the president yesterday, talked about the fact that the majority of democrats want to see him, but the polls, going back a year now, show that most of these individuals, the american electorate, including democrats, think he is too old. how does he square the circle of the democrats want me there come of all the polls, four months,

have been showing actually, they think he is too old to carry the torch? sarah: i think the point he was making in that context was leadership. the leaders in the party. but your point is right. he has a really big challenge. it is hard to see the path for the president, given that he is down in some of the key states, like your jet, nevada, arizona. almost seem out of reach for him at this point. and michigan, pennsylvania, wisconsin, he would have to have a three for three sweep, and that is difficult, too. the voters happen sending a message, but this president's perspective is he has been counted out before, and he is the best want to take the case to the folks, and whether or not democrats agree with that privately, they are going to have to map white an effort to

change his perspective. -- quite an effort to change his perspective. annmarie: would he immediately go to the vice president? sarah: the president would have to release his delegates, then there would be an open process, in some sense, to figure out who that nominee would be pure that would happen at the convention, and somebody would have to get the majority of the delegates. what people are saying is that process does favor vice president harris. she is more popular to the delegates then she is in the country across the board. there is a lot of women of color in that delicate group, there are a lot of people of choice, so it does favor her, but there is an opportunity for someone else to get in. part of it is how biden would

frame it, if you were to get out of the race. would he and obama and others signal they really want delegates to go and that direction, or what they say, this is a time for our party to decide? those are things i would be watching for to decide how big vice president harris' advantage would be. lisa: there are so many people disenfranchise from the current system, based on the fact a lot of people do not li either option at this current point. do you think it basically undermines joe biden's argument when he basically says get behind me or get out, and there is sort of this feeling that you need to coalesce around him and not speak publicly what you think privately? which has been the reason why there was such an outrage from the debate in the first place. sarah: the president's trying, quite vigorously -- by the way, i am surprised it took him has long as it did to put up the fight we have seen since friday.

that was more than a week after the debate performance. i think, potentially, he could have stemmed a bit more this if he had not going little bit early. that said, his point is quite clear, which he has won the delegates, the overwhelming portion. he has been through that process. so i think he is trying to turn the page on this episode to tell people to move on or to challenge him at the convention. my sense of it is, if you make her through this week, and the conversation actually changes to the republican convention, maybe to nato in the week, then he is going to be in better grandeur those who want him to step aside probably need to put together and organized effort, really starting today and this week, to make that case, because certainly come over the weekend, he has come out swinging, as you

mentioned, calling into morning joe, doing a range of events, and doing what this president does when his back is up against the wall, and that is to fire up a bit and press on. lisa: i am glad you mentioned nato. it feels like lame-duck nato, where you have emmanuel macron meeting with joe biden to talk about policy at a time when neither of them have particular domestic strength. how much confidence can you get from any resolution they come to, given their all facing really big challenges at home? sarah: it is a great points. there are so many elections globally, not just in the united states and france, but across the board. it is always challenging to govern in these kinds of really disruptive periods. that being said, there is a lot of issues on the board for native in and around ukraine, and to the degree that voters think about this, certainly

biden has a different approach to addressing world leaders than we have seen with president trump. he is a bigger believer in multilateral situations. he will try to use this opportunity to remind people why they should want him in charge. again, very difficult to do on foreign policy issues, but you are right, it is a challenging time. it is certainly, when i travel around the world, leaders there are focused on the united states election as well and trying to plan for what their future might look like, no matter what happens in november. jonathan: good to hear from you. sarah bianchi of evercore. we all know where the noise is a let's talk about the quiet now, the vp pick of donald trump. there are a few reasons. the obvious point is he does not want to be in the new cycle now. the less obvious is how what happens with biden dictates or

shapes is vp pick in the coming week, and i think that is the point that maybe needs to be explored a little bit more. annmarie: he insinuated that last night when he called into sean hannity and assess i have to have my vp pick, i have to have it for the convention, i would love to have it for the convention, because it would be exciting, but he said i would love to see what happens with a biden camp but did not elaborate on that. does that potentially mean he needs to pick someone from the african-american community, does he need to pick a woman? jonathan: what are these in -- ♪ we invent them, we design them, we build them. and one day, we have to let them soar. ♪ i'm always coming home ♪

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jonathan: five days of gains on the s&p 500. looks like we might make it day six. positive by 0.2%. on the nasdaq, up by one third of 1%. you all know the number now. already five all-time highs on the s&p 500. lisa: although, the nature of it is shifting a little bit. as much as it is led by the nasdaq, yesterday, we saw outperformance by the russell 2000, and a growing number of strategists are saying maybe things -- things have gotten a little over their skis with technology names care that is the shift i am curious about. jonathan: is that a shift, or have we heard that the whole way up? lisa: we have heard of the whole way up, but we have not necessarily seen it in practice,

and it is coming at a time not necessarily driven by bond yields. essentially, there is not a lot going on. the small business optimism index did come out this morning and came out at its highest level this year. jonathan: let's talk about the two-year. the two year yield inching higher yesterday and again this morning. two dates of this now, by about one basis point. at the front end of the curve at 4.6285. we have to sit on what inspire the bond market rally of last week, and that was weak economic data and how responsive chairman powell will be to that going into the fed decision later this month. lisa: he has a tendency to want to be dovish. does he dig into his dovish soul in deliver a message that would change the script? the problem is the date is what you want it to be and it continues to be that way. we have seen something like 42 straight consecutive months of

job creation, positive job growth. we have seen positive signs in the economy and disinflation, no sign screaming huge issues, at least not most people, taken in aggregate. you can tell your own story, so it will be interesting to see what he emphasizes, because then he will be taking a view a time when a lot of people are arguing on one side or the other, using the exact same data. jonathan: you can see why people are split, though. you can identify rising unemployment, but on historical basis, so markets a we are still very low. is chairman powell in cap one or two? based on recent comments from the fed chairman, it sounds like he is the latter, not the former. lisa: because he has been indicated he wants to cut rates since last year, because they want to get out of this. the issue is an upward trend in unemployment does not usually happen in a linear way. this time would have to be different for it not to. a lot of people have said a lot of things are unique about this

cycle, so this time is different. does he lean into that, and can he remain at gnostic at a time when you have george can call this and other people saying we are on the threshold of a ship, and he could be too late? jonathan: how difficult could it be to make an argument that we are on a plateau on these levels? the euro-dollar, not much to changed. under surveillance this morning, and democratic lawmaker telling president biden to pass the torch. >> i think he should step aside. i think it has become clear he is not the best thing to carry the democratic message. a lot of democrats are saying let's move on. we are not the ones bringing it up. we are not the ones who said anytime, anyplace. and only joe biden was on the stage with donald trump. our constituents are bringing it up, the countries bringing it up. and the white house has a campaign strategy of be quiet, fall in line, it -- simply is not working right now.

jonathan: congressman adam smith of washington coming the latest to go public with a call for the president to end his campaign. the president coming out swinging yesterday. annmarie: on multiple fronts, writing letters, going on tv shows fear the issue you have is representative out of -- adam smith talking about this privately. how many will come out publicly? you have senators meeting today. what will it take? potentially some of those in leadership positions, like a senator schumer, hakeem jeffries, to say the calls are too big and to really bring it to fight and that something has to happen. lisa: as sarah said, though, why did it take so long for him to come out swinging? before come he sat back, and we heard rumors that he has to prove himself for the last four days. does he think interview proved it friday night? these are some of the questions swirling at a time when the jury is still out. annmarie: the campaign probably

thought that, internally, the democratic party would not be airing these grievances out loud, that they would, to representative schmitt's point, just get in line. two, the president was out campaigning, he sat for an interview. i thought that was enough. but clearly, they realized this is not going to quell some of these concerns. jonathan: scripted radio interviews? annmarie: two scripted radio interviews -- i cannot say for sure it was cryptic, but the campaign said he did have notes in front of them, and he was in pennsylvania, where our polls say trump is leading by seven points. biden has to hold the blue wall, or it is a very challenging, pretty much zero pass back into the white house. jonathan: how many people believe that was an off-the-cuff phone interview yesterday on u.s. cable news? lisa: why is it phone? we all ask the same question. what is it about phoning into a television show. annmarie: everyone is asking if

this was impromptu. it likely was not. it is likely the president decided to use the phone when there is a slew of cameras outside his home on pebble beach -- i used to stand in front of one. jonathan: i always thought like trump was an impromptu phone interviewed -- he was watching and decided to call in. with president biden, it felt like there was a script in front of him, and he was reading from it, and he was trying to be fiery, trying to come out swinging. how many people believed that, i do not know. certainly the hosts, based on their reaction to it. lisa: the interesting thing is this is something that has been swirling in the public imagination for a long time. it is just some of the democratic leaders are now saying the quiet part out loud. a lot of this is like you could split hairs, but it is not changing anyone's view, because you have already gotten the impression come over so many months. the jury is already gone for a

lot of people who have been watching. annmarie: biden yesterday, "i'm getting so fresh rated by the elites." this has been showing up for over a year that he is too old, and his own party did not the key would be the man to serve another four years. jonathan: i love this term, "the elites" --if you have been in politics for decades and are a millionaire, aren't you an elite ? we are meant to sit here and believe you're not of the elites, the establishment in washington? lisa: even if you do, three hours later, he is on the phone to those elites, saying thank you for supporting me. jonathan: we will talk to a donor in about an hour from now here let's turn the page to this story. former president donald trump is preparing to announce his running mate, i'm telling fox

news the vice presidential pick will be named in the coming week, possibly at the republican national convention. senator j.d. vance, marco rubio, tim scott, evan or doug haram -- governor doug burgum. it sounds like he does not know who will pick. annmarie: these are the obvious choices, because they are showing up at the rally spare that are other names i think you should throw in. former sec. ben carson, his name has been brought up to me a few times. also, in the washer editorial board continues to bring up his name -- governor of virginia glenn youngkin. this also is a man that could help trump win virginia, and where did trump immediately go after the debate? virginia and stood next to him. jonathan: new leaders look to reaffirm support for ukraine.

this my problems at home, president biden, france's emmanuel macron, and germany's olaf scholz. joining us now, piotr skolimowski. walk us through what is meant to be the priority in washington, d.c. this morning. piotr: so the summit starts today, and obviously it is the 75th anniversary of nato. what the leaders were supposed to come with is the sense of unity, but obviously, what it is going to be is likely different. what we are talking about is, at least for the european leaders, most of them are slightly distracted by the fact that emmanuel macron is just now emerging from the election where, obviously, the far-right was repelled, they came third, but still, it is a deadlock. we do not know what kind of government we will have in france in the end. in germany, olaf scholz, his

party did not do very well in parliamentary elections. so the only leader who is coming there with a sort of mandate and strength is keir starmer, but still, in the u.k., his priorities are social spending, and it is not entirely clear whether and how quickly the u.k. will deliver on the commitments on defense spending. obviously, that is the picture we are seeing from europe. above all this, we also have viktor orban, hungary's prime minister, who just angered the allies and eu leaders by visiting zelenskyy, then going to putin and meeting xi, without consulting anyone in the e.u. he is part of the membership, so that is kind of the picture we

are seeing. above all this, the focus is obviously on the state of the u.s. politics and what happens to joe biden and what happens afterwards. annmarie: i am really glad you brought up viktor orban. we were in kyiv when he visited zelenskyy. he immediately went to moscow, then beijing. how can this nato get anything done to fortify you can when you have the likes of viktor orban basically going against their will and meeting with putin? piotr: it's a very good question. obviously, they will just continue to carry on. the question is how much spending could come, and there's obviously a certain commitment to spend $40 billion, to help ukraine. what has been very difficult -- that is the commitment for the next year. what they have not achieved and what has been the goal of the outgoing nato chief is a goal of a commitment for five years for

400 billion. viktor orban is one of the people who are openly against further a ukraine. he is talking about peace deals. at the same time, you're not seeing full commitment from most of the european leaders to commit for years on military spending to ukraine. he is the most extreme example of where it is going, and obviously, he talks about peach which, at this point, it is difficult to imagine how it is going to happen. so what we are going to get at the end, the question is, as you mentioned, zelenskyy is hoping to get some sort of invitation to join nato. he is not going to get it. what he is going to get is some sort of commitment that it is irreversible, the path towards nato membership is irreversible, but there will be conditions

attached, so we will see how it goes. jonathan: piotr skolimowski, big, big week, just for nato. i think just in sync of bloomberg called it the big boy news conference, and now everyone in the administration is calling it the big boy news conference. annmarie: the idea is potential he will not just take two to four questions. because they have to interpret, will he open it up for journalists to ask more questions, and that could potentially quell concerns. does he perform better this thursday than he did at the debate from the previous debate? jonathan: let's get you an update on other stories elsewhere. with your bloomberg previous dani burger. dani: just wanted to revisit that viktor orban story, the hungarian prime minister shocking his european and western allies, visiting russian president putin and chinese president xi jinping. e.u. leaders have sought to

distance themselves from his shuttle visits, but hungary has taken over the presidency. bp share slumping in london, down four point 3%. the company warned of weaker refining. bp says it will take up to $2 billion in impairments in the second quarter. the figure includes charges elated to scaling back refining operations due to high costs and declining full demand. the fed is considering a rule change that could save billions of dollars in capital for the u.s.'s largest eight eggs, according to a reuters report p the update would impact how the fed calculates an extra layer of capital and -- it imposes on systematically important banks. the deliberations are reportedly still ongoing with no final decisions yet made. jonathan: thank you.

up next on the program, testing u.s. growth. >> may be the u.s. can push that narrative, the physically driven growth narrative if it further, but how far are we going to test it? you only find that point after you cross it. jonathan: that conversation up next. live from new york city, you are watching "bloomberg surveillance." ♪

jonathan: live from new york city, welcome to the program. s&p 500 posited by one quarter of 1%. bonds market, yields drifting higher. under surveillance, testing u.s. growth. >> may be the u.s. can push that fiscally driven growth narrative further, but how far will we test it? you only find that point after

you have crossed it. markets are plotting a long course, a steeper curve but a gradual lysed normal man or that something going to be less so? jonathan: here is the latest. fed chair jay powell giving his semiannual testimony on capitol hill at 10:00 a.m. eastern. kelsey berro of j.p. morgan saying the fed's motivation to cut may need to shift from fine tuning to easing policy to protect a weakening labor market. if core cpi comes in at expectations, we would expect the fed to start signaling september. good morning. i am always happy when people frame things this way, because not all rate cuts are created equally pure what kinds of rate cuts are you expecting, the bearish ones responding to cracks, or the fine-tuning ones? kelsey: i think we are teetering on the edge of those two options. it is a little uncertain where

we are going to land, but for now, we are still talking about rate cuts that are preemptive. at first, when we started the year, rate cuts that were preemptive because -- now, the rate cut narrative is shifting a little bit to we may need to protect the labor market. by getting, that is still a preemptive action to keep the expansion going rather than one where we are worried about an immediate risk of recession. jonathan: we started this program with a quote from chairman powell -- because the u.s. economy is strong and the labor force is strong, we have the ability to take our time and get this right. how much time do you think he actually has to get this right? kelsey: i think he does have some time, and that is because not everything is pointing to things turning very quickly, so even though we have seen this rise in the unemployment rate, even though the breadth of job

growth eyes narrowed fairly significantly, we are still seeing an economy that is operating basically around trying. so you look at the atlanta fed gdp tracker now, it is at 1.5%, and this is generally still an ok environment for most companies that our analysts talk through p when you look at the investment grade, the high-yield universe, growth is around trend right now, what does that mean for your companies? they say that is still a fine environment for us. lisa: which is the reason why some people i saying he should wait. there are still some people expecting no rate cuts this year, because if you look at 35 record highs on the s&p 500, you look at some of these indicators, there is still quite a bit of strength. why do you think the threshold is 0.2% on core cpi are below in the reading thursday, then it is all clear for september? kelsey: that is the framework i

am using for this week and how i think markets will react. right now, you're kind of at a 50-50 on a cut in september, and by the end of the way, it will either be close to 100%, or that will start drifting below 50% again. but i would say that, right now, the data is very clear, and it is sending a green light to the fed that they can adjust policy. let's just take a simple approach to think about the taylor rule p of the taylor rule has two functions. the inflation loss function and the job lost function. right now, inflation is coming down and the unemployment rate is rising. both variables are telling you that it is ok, particularly when policy is restrictive as it is, to start moving the policy rate down. now we are talking about the semantics of exactly when they go, but in terms of is the overall economy appropriate to

start thinking about that reduction, i would say yes. lisa: -- so look at employment, look at inflation, they are giving you the green light. some people will say look at policy, look at this -- look at what is coming down the pipe with tariffs, with immigration. doesn't this raise the risks of re-inflation down the line from in addition to your of becoming less easy? kelsey: i do think, for the short term, i am still more focused on the economic data, and on a day-to-day, you may see the markets react or overreact to the politics, but the market will again refocus, because we know markets cannot focus on more than one thing at a time. that being said, i know we are focused on these huge headline figures for tariffs, 60% tariff

rates, 90% tariff rates, but when i think to the expanse we had with the trade wars with the prior administration, the real impact from tariffs was not the inflation impact, it was the negative growth impact. i think people are maybe a little too focused on the inflation impulse and not focused enough on what this may do for global trade and global sentiment and the negative growth impact associated with it. annmarie: does that mean the fed is right to cut before we potentially see those policy shifts? kelsey: i do not think they will react before any of these policy shifts. again, as it relates to how we are positioning portfolios for the next few months, i am still primarily focused on what is happening in the current data, what is happening in the current economy, what is happening currently to companies. what is key to arbor folios is

not to be too dogmatic, not to be too stuck in one view, to stay nimble, stay tactical, because there has been a lot of opportunities, even in the last week -- i think my colleague was talking about the elections in france. we mentioned we were nibbling at oats -- that was a classic overreaction, a period of time where it was short-lived, the market was focused on it, but then look what happened as the week progressed. we focused on the jobs report, and ultimately, those opportunities to nibble were good ones. -- jonathan: what else have you been doing, what other opportunities have there been over the last month or so? i you responded to the backup in the political situation? kelsey: we did. we certainly looked at the price action.

i vividly remember it last monday, and yields were backing up fairly substantially. we were testing on 50's and tens, getting closer to it, and it was on nothing related to the fundamentals in the u.s. economy. those are the moments when you can really look at yourself and say, ok, when the price action is really being driven by technicals, by factors outside the purview of the u.s. economy, do we have a view on what is coming next? in that case -- jonathan: is that the playbook for the summer for you, if you get backups not on economic data or the federal reserve, that is something you want to buy? kelsey: we have been approaching it that way, and we have to continue to stay nimble. but when you're looking at the risk reward on the labor market, we talked about the risks it could be weakening, if the market is backing up for reasons , that is a buying opportunity. jonathan: phenomenal to get insight into what you have been doing. kelsey berro of jpmorgan.

it is like the political considerations versus the fundamentals, the economic data. at some point, though, those political considerations can become the fundamentals. lisa: but where are the fundamentals? some of these tariffs might have a one time pop in inflation and the price is coming up, but it is not continued inflation, it is depressive to growth because people will buy less. this is the dynamic people are looking at under the hood and saying that's just really take a look at what the ramifications are. jonathan: we will continue this conversation in the second hour of "surveillance." up next, peter tchir, jordan fabian, andrew beck, and wei li. ♪

gotcha. take that.

whoa! bruh! i'm fine. that smack looked bad. not compared to the smack down i'm giving you. you sure you're, ok? you know you're down 200 points, right? lucky, she convinced me to get help. i had a concussion that could've been game over. in actual reality, you've only got one life. don't mess with your melon. if you hit it, get it checked.

>> what is helping to support the market is the majority expectation we will experience a soft landing. >> as you are approaching a soft landing, you have to increase the odds the hard landing is where you end up. >> we have seen headfakes bef ore. >> the fed has to make the policies less restrictive sooner rather than later. >> if they do not cite to respond to what we are seeing in the consumer and the economy broadly, we have a higher risk of the hard landing. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: the second hour of "bloomberg surveillance" begins

right now. continue down to day one of semiannual testimony for chair powell in front of the senate banking committee. ahead of that, some of the commentary from the south side. the cost of doing nothing is going up. citi things the market is getting closer to the danger zone, andrew saying rising on a rising downside risk. lisa: which is what we have heard an increasing number of people saying, they have a green light from an appointment and inflation. here is the question. does he want to walk them in. if he says that and the data does not change and they have to go in september, is that what he wants to do? jonathan: interesting double screen taking place. 10:00 eastern time. the day ahead, at the same time

we will be taking coverage of chairman powell's testimony to the senate, janet yellen, the treasury secretary, goes in front of the house. i imagine one might be about the economy, the other might be about something else. annmarie: she supposed to talk about international finance, so you will hear a lot of people talk about russian frozen assets and -- progress the administration has made. but republicans will ask questions about the president of the united states. she is a serious number of his cabinet. is he fit to serve? that is what the next four hours of washington, d.c. will be about. lisa: it is hard to say whether she will weigh in on that. will she also talk about the deficit, given all these auctions. this is still percolating out there. i am serious, i want to hear what she has to say about financing. jonathan: only you can say that, from the health of the president to the bond issues coming up

later. lisa: is she going to say about the president's health? jonathan: she will be asked. lisa: she will say i have confidence, let's move forward. you can say, how much does it diminish the united states on the world states that we are having these discussions, how much does it challenge the negotiations around ukrainian aid. i would love to hear that. i also would love to hear much does it diminish his ability to get things done with having to do with the deficit. annmarie: she is probably practicing her answers and now, because you will be asked of this over and over today. this is a moment before the publican stick it in front of the campaigns in their districts. jonathan: all roads lead to one thing for bramo -- the deficit in the united states of america. the 10 year, yields higher by a single basis point, 4.29. the fx market, a bit of a snooze. in the equity market, five days of gains pay looking like you might make it six get s&p 500,

equity features positive by one quarter of 1%. coming up, we will catch up with academy's peter tchir as they reach another high. democratic donor trey beck vows to stay in the race. stocks hitting fresh record highs as traders await chair powell's testimony. peter tchir saying we have argued that the fed should make their first cut in july, partly because economic data supports it, but also taking the spotlight off of the head -- off of the fed in the heat of the election. good morning. one reason is about the economy, the second about politics or let's start with a second one. why is it an important consideration? peter: well, i was not with the first one. [laughter] basically, every guest is saying september looks likely, they should do it, they should do it

sooner than later. i completely agree. i'd err they do it in july. if they do it in september, i envision a road where this blows up on social media. if they cut in september, stocks rally, you will see the trump campaign aggressively go after the fed, blame them for playing favorites -- it will not be the case, but reality does not mean anything anymore. it is how these things play out in the social media narrative. you do the first cut in july, you will get some flack, but it is july 31, no one cares, it will quiet down, people move on, and you can set up a september cut much later. maybe you are not specific about that that way, but to me, it makes sense. jonathan: we have seen the dissension between what they will do and what they should do. what do you think they will do? peter: i think they will set us up for september. i am hopeful cpi comes in low enough, maybe it lets them squeeze towards july, but it is already too late for that messaging, so we get that september cut, 25 then, another

25 in november, than 25 in december. lisa: some people would say because the fed has signaled the cut, we have already gotten the financial conditions have given a shot of stimulus to the economy. why is that not the case as we just experienced the 35th record high of this year? peter: i just pulled up the equal weighted s&p, which month today, is down 2.2%. year-to-date, it is up 3.5%. this market has been very narrow rally. it is all about ai, the ai story, so we should not set policy based on the excitement over ai. if ai is real, it may still be over -- undervalued. the russell 2000 still doing poorly. we get caught up on the broad indices. you look below the surface, markets are doing ok. the job data is turning, turning fairly quickly, and with inflation around 2.8% or somewhere in that neighborhood, you do not want a risk of recession. when we were 5%, the fed could

afford a risk of inflation. -- there's no reason to create a recession. all those reasons tell me cut now, even if financial missions look decent. 2's/10's is widening. one thing people will find the second this time is even as the fed cuts, the tens and 30's will focus on the deficit, the supply, and you will see 2's/10's go to zero, maybe on inverted, and you will see the 4.50 range for tens hold. lisa: let's go to the deficit. i am curious how much the politics -- [laughter] you guys are laughing at me. i am serious, because of this is something people talk about. i know you guys are laughing at my obsession. it is important at a time when you have -- how much are you looking at that as something that takes away the opportunity to really buy into weakness?

peter: again, that is why yields will stay somewhat high on the long end. what i tried to bring back his, if you remember august and september last year, where treasuries were stale every single day -- i think we want from our percent to 5% -- maybe we rallied briefly, treasuries would go to sale. our willingness to talk about not paying, you will see episodes of that. it will not be nonstop, it is not consistent, because this deficit will take time, but every year or so, you got that sort of noise. even earlier this year, we want from 3.902 of 4.70. more and more, you will see the brakes to the upsides on yields, because people fixate on the deficit, and neither party will change that. lisa: but you not -- but you do not buy those dips? peter: not until we get into range. i think people are positioned too long. down here at four point 30, i am selling treasuries. maybe they go to 4.20. i think we get back to 4.50 before too long, even with the

fed cutting. whatever the fed is doing at the front end is great, but it is not solve the deficit problem, the long-term debt problems, and overall supply is still real. annmarie: can we go back to the political optics of the september cut? it is not just going to be that the trump campaign would come out and maybe say they are in the tank for president biden. if trump is elected, does this give him the excuse with his own party to go back to the wall street journal report, which is they want to blend the independence of the fed? peter: over the last year or so, there's a lot more from trump and others talking about the independence of the fed. i think if they cut in september, it leaves them much more open to come under a new administration, attacks over there mandate, whether they have to be rule followers, how much less ability they have. i think it is less likely if they do this in july. the data is there for them to think about cutting, and you would argue is this lag effect,

why not get this in a little earlier? i think it is better for the fed's long-term independence to do that sooner rather than later. annmarie: does he need to signal that today? peter: he should be strong that, if we get good enough data, we could cut sooner care that gives -- cpi i think will actually be eight miss, so it lower-than-expected -- i do not know if that is a miss or a win anymore. everyone now knows this lag effect. it is one reason the fed talks about pep. supposedly it would take an act of congress to change that. you look anything like zillow or the thing contemporaneous -- rent has come way down, so it is artificially inflated. those things give him the leeway, between the jobs report, tempo july on the table. jonathan: kelsey berro was with

us and was talking about cutting rates in response to inflation and in response to a much weaker labor market. i said there were bearish rate cuts and bullish rate cut spirit i would like your opinion on that. do bearish rate cuts exist? are there rate cuts bearish for this market? peter: it depends what is relatively priced in. if we have a steep drop in unemployment, then we get a bearish cut, and maybe equities couldn't keep up. as it stands, i think everything will be really positive. we are also trying to watch what triggers this breakout of the russell 2000, the equal weighted -- that still is not clear. it feels to me we have been on this pathway the data is good enough you should see the broader economy doing well, the fed is accommodating enough, you should do that, and though still are not working. jonathan: we all remember november 2016. small caps rallied on the trump

election. the should we have gone to his how relevant that playbook is. is it relevant at all? peter: i am kind of ignoring the election stuff. it is too clear what is going on, what -- will be resenting, and whatever they say they will do, the policies a wind up becoming a much more narrow kid i've been a big fan of mexico, recently. all that is coming back to normal pure whatever you say to get elected and whatever you wind up doing and to be two very different things, so i am paying little attention to any of the rhetoric. i would say come on top of all of it, it feels people are willing to put their own interpretations on it, if you are -- jonathan: so if we get politically induced dislocations in the markets this summer, you are a buyer. peter: yes. jonathan: that is exact a what kelsey berro said. lisa: even though her sense of what to buy was different. that is my question to you. what are you a buyer of? peter: the one thing i would say

maybe slightly different is i do like energy, and when you look at the world right now -- you have putin, dictator, xi, dictator, kim, dictator -- they have to be looking at what is going on here, and they see the leader of the free world, the commander-in-chief internally focused, facing all these questions -- i think the risk someone takes action and try to take a finish of that over the summer is much higher, so i am looking at the potential for geopolitical risk. that is why i want to own commodities ahead of that. almost anything that gets done would affect energy prices in particular. on top of that, not even in that same vein, we are sitting here, all this internal focus, orban traveled to russia, modi met putin, the rest of the world is moving on. jonathan: you are surrendered by generals at academy. what is taking advantage look like? peter: if you watch what is

going on, the last time we did funding for ukraine, how difficult that was to get over the hurdle. you watch what is going on with israel and gaza, a lot of it plays out in social media. we are having a lot of activity in the philippines -- would anyone really care? i think we are already stretched. we are engaged in two wars. neither of those are going smoothly by any stretch of the imagination, so do you push the envelope, do something different? china could do something, north korea has been extremely quiet. do you get weapons sales? something to shake it up. two, they can use misinformation to push against us, and the timeframe is right or that, where we already have enough russians without their miss information. jonathan: good to see you. peter tchir of academy securities let's get you an update with stories elsewhere. with your bloomberg brief is dani burger.

dani: check on bp shares in london, down 4.5% after your warning of weaker oil refining. boeing sees significantly lower refining margins and says it will take up to $2 billion in impairments in the second quarter. the figures include scaling back refining operations in germany. donald trump says he has not decided who will be his vice presidential pick. he was speaking to fox and says he plans to make an announcement in the coming week. the former president said his running mate would be a person who could do a fantastic job as a president as well as someone who would hop you get elected. trump said senator j.d. vance, marco rubio, tim scott, and governor doug burgum were under consideration. the international airport in qatar takes the top spot in the airhelp best airports.

punctual arrivals and departures were present 60% of the score, and randy got the top three were cape town international airport in south africa and chubu centrair international airport in japan. one airport in the u.s. cracked the top 10, and that was intel accident. jonathan: i love this country -- just the airports. lisa: laguardia has gotten a lot better. annmarie: comparatively, but when you stack up to airports around the world, is it that great? also the traffic getting in and out is awful. jonathan: jfk -- how long do we need to wait now, two years to fix day after? lisa: and getting in and out, you are better using public transportation. newark look like a third world country. jonathan: coming up, the president firing back. >> is the president being treated for parkinson's?

no. is he taking medication for parkinson's? no. jonathan: coming out swinging yesterday for a line of the morning so far. there is a lot to unpack, so let's talk about the deficit. does it get better than that? [laughter] lisa: hold on a second grade he was talking about that deficit, which is the reason why he is now buying treasuries when they did. it was actually relevant to the conversation. jonathan: got it. that is not next. this is bloomberg. ♪ we invent them, we design them, we build them. and one day, we have to let them soar. ♪ i'm always coming home ♪

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sandals rhythm and blues caribbean sale is now on. visit sandals.com or call 1-800-sandals. jonathan: stocks on the s&p 500 positive by 0.2% k let's talk about the deficit. yields are higher -- i am going to repeat the all morning -- yield higher by a basis point or two. under surveillance this morning, the white house firing back. >> i can tell you this, just

going back to parkinson's for a little bit, to give you some answers here. how's the president been treated for parkinson's? no. is he being treated for parkinson's? no. is he taking medication for parkinson's? no. those are the things i can give you full-blown answers on, but i will not confirm a specialist, any specialist that comes to the white house. jonathan: president biden vowing to stay in the race, despite mounting concerns over his fitness for a second term. white house visitor logs showing visits in the past year by a neurologist specializing in parkinson's disease. joining us now from washington is bloomberg's jordan fabian. have you ever seen that room as hostile as it was in this administration? jordan: it was one of a handful of moments where things got very heated, and these moments have tended to happen when the press secretary is not forthcoming about something that was plainly obvious to everyone in the room. this was, as you just mentioned,

a neurologist who specializes in parkinson's disease visiting the white house complex eight times. it took the white house until yesterday evening to say why that dock derek kevin kinard was at the white house -- why doctor kevin kinard was at the white house, consulting for military officers, but the stonewalling got the hackles up of the reporters in the room. annmarie: i woke up to the letter from the president's physician in my inbox, and thought why did it take them hours to get out of this? the story has been circling for a few days per why did it take so long, including biting coming out yesterday swinging. why did it take him a week after the debate? jordan: it is puzzling pair there are no real answers to that. this is a press operation throughout biting's presidency that has struggled to get the message out, struggled to get

ahead of stories, to drive the narrative on what they want to talk about versus getting put on their back foot, and that was another example that happened yesterday. the problem for them is the stakes are incredibly high, and any misstep at this moment for biden will get examined 10 times more intensely. they have not adjusted their approach. they only started this full-court press to try to save biden's presidency more than a week after that debate, and that is why they are digging out of such a deep hole. annmarie: jon brought this up earlier, that moment with just in sync about the, quote, big or press conference for what can respect from the president on thursday? jordan: thursday at 5:30 or so, he will appear before the press, and we will have to see whether this qualifies as a sort of -- so-called big boy press conference, as my colleague put it. is he going to stand up there

for an hour, take questions, all comers, or is this going to be a tightly controlled affair, like we have seen throughout this white house? it is emblematic, because a lot of democrats want to see biden put himself in more unscripted settings, speak more off-the-cuff, and we have seen him do a little bit of that -- he has done the interview with george stephanopoulos, he called into morning joe yesterday morning on msnbc, but he has not really let it loose like other presidents i've cover, who have been unafraid to take all questions, all comers, so we will have to see if biden does that thursday. if he does not, there could be more backlash that he could face from his fellow democrats. lisa: that has already been quite a bit of backlash. we have been talking about the democratic elected officials that have come out saying joe biden should step down. why are the progressives one of the wings now coming out with aggressive support for the sitting president? jordan: one thing we have seen is groups that make up biden's

base, labor unions, voters of color, have been some of the most outspoken supporters of joe biden since this debate crisis occurred, and the more vocal segment of the party that have been calling them to step aside are the donors, some of the party consultants, more of the so-called elites that joe biden called out in his interview yesterday morning. i think you are seeing some of those progressive members respond to their constituents, respond to the people who support them, voicing their support in that way, so what you are seeing joe biden do is actually kind of divide his party between black voters, union voters, and the so-called elites. that might help him save his presidency in their short-term, but in the long-term, you are heading into a november election with a divided party against donald trump, who has the republican party in an iron grip. that will probably hurt his chances of winning even further. jonathan: just a thought exercise. if the former president could

move the rnc, the convention in a couple weeks, do you he could push it back? jordan: that is a good point. he has been content to sit back and just let the storm clouds gather around biden. but this is donald trump. he is pretty much a disciplined politician now, but this is a guy who has constantly gotten into his own way throughout his time in politics, and i am sure he is itching to get out there and say things. if you look at his truth social account, he was on sean hannity last night, he has been eating to get out there. he likes the spotlight on him, whether it is good or bad for him. maybe he's consultants want the debate to happen at a later date, but i am sure donald trump wants to get on that stage. jonathan: great to get your views. jordan fabian of bloomberg news for the week ahead for the sitting president and a big we had for the former president. annmarie: it is the rnc, so he has to come out with his vp pick. he said it himself, i would love to do at the rnc.

jonathan: up next on the program, trade that, democratic donor and former managing director of d.e. shaw -- trey beck, democratic donor and former managing director of d.e. shaw. yields are little bit higher on the 10 year by two basis points. the yield 4.2978. ♪

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the moment i met him i knew he was my soulmate. "soulmates." soulmate! [giggles] why do you need me? [laughs sarcastically] but then we switched to t-mobile 5g home internet. and now his attention is spent elsewhere. but i'm thinking of her the whole time. that's so much worse. why is that thing in bed with you? this is where it gets the best signal from the cell tower! i've tried everywhere else in the house! there's always a new excuse. well if we got xfinity you wouldn't have to mess around with the connection. therapy's tough, huh? -mmm. it's like a lot about me. [laughs] a home router should never be a home wrecker. oo this is a good book title.

♪ jonathan: positive by 0.2% on the nasdaq 100, about one third. another all-time high on the s&p 500. to the bond market, two-year, 10 year, 30 year, let's talk about the deficit. $58 billion of three-year notes, and then tomorrow, three $9 billion of 10-year note. the day after, $22 billion of 30 year bonds. i don't need to tell you that. you know these numbers by heart. lisa: some people might say why should we care about these? this is the reason why we've seen this sort of range that the long bond in particular has been trading in. we heard by the tip, by any kind

of selloff and longer-term bonds on political noise. and yet also of by the tip to political noise but never treasuries, he thinks they are going to selloff further, and why? because of the deficit. this is the reason you might see a bigger premium that you otherwise might see. >> there is a tug-of-war right now between political consideration and decelerating canonic data. the fundamentals, so to speak, any political speculation. but at some point the political speculation can become real and actually influence the fundamentals what do you do with these so-called political dislocations in the market? when this could get more and more real at the year progresses and we get closer and closer to november? lisa: kelsey and peter had completely deposed views on how to take advantage of political dislocation. because the view of exactly how this is going to play out in policy or not or whether the economy is going to just overwhelm it or whether it is

going to be basically played out in the international sphere with some sort of geopolitical incident. at this point a fair number of us might also have some difficulties. jonathan: all of us given the way the last week has gone. let's get to the euro, thing seven conclude -- confusing in europe, they always have. we are negative by 0.06%. some stability off the back of the second round of voting in france and a guess we will take that after the mass of the last few weeks. >> and you've seen this play out with respect to the spread between french and german bond yield the question is, has anything been resolved? and the answer is a resounding no. is this just people thinking about the worst case scenario? jonathan: nibbling on oats. i love that. it sounded like breakfast. frank bonds is practiced for

you. united airlines saying one of its boeing jet divorce we'll while taking off yesterday in los angeles. nearly eight of an incident in march that triggered a federal safety review of the carrier. i don't have the answers but i've got a big question. and we will ask beck in about 45 minutes. at what point do we stop talking about boeing and start talking about the airlines? annmarie: obviously it's not good for either of them. it is deja vu, and not the good kind. this happened in march that launched the faa investigation, but is this a boeing issue or a united issue? i think that is what this investigation is going to try to find out. lisa: it is difficult when they do have a disproportionately high number of boeing planes, so there is this throughout the of it. i will say it might be a similar problem plaguing both of them witches there were a lot of employees who retired tired with a lot of institutional knowledge

including a lot of the tech staff, etc. how much was that problem both with boeing and potentially ?united support staff if you lose that expertise in a highly skilled profession and it is hard to hire those people back. jonathan: are the skies too busy as well? annmarie: it's difficult for me to say because i enjoy traveling and if i say the skies are too crowded that means less volume which means much higher prices and that would be a big problem. we don't see planes crashing in the air [knocking sound] so hopefully we can move forward. jonathan: thanks for that, i think we will all touch on wood after that. u.s. consumer borrowing rising and made by the most in three months. $11.4 billion after a revised $6.5 billion gain in april. this all according to federal reserve data. extending the conversation about the labor market which is what is normal and what is

deterioration when you look at stats like that? lisa: does it mean that people don't have the income to support the spending and are therefore borrowing as a result? these are the kinds of indications people are looking at to understand the turn cycle. at what point are we turning into something that is a little bit more malignant than just a welcome softening? annmarie: this is the hard data that has come up in that recent michigan survey when you had people saying that they normally identify stratosphere of the electorate. see this in polls and polls again. inflation, this is what people are ugly with an issue that potentially they are relying on credit cards. jonathan: unemployment is very low still but for a long time those labor market stats at the aggregate level, the headline level have masked what is happening many the surface. lisa: i wonder if you did beneath the sick -- dig beneath the surface whether there is a

disproportionate number of people lower and middle-income families to account for the bigger than expected increase in borrowing. jonathan: we will come back to that story little bit later. i want to turn to this one. president biden is now pledging to stay in the race rushing aside concern from democratic lawmakers and donors. biden saying i don't care with the millionaires think. i want their support for that is not the reason i'm running. trey back saying he would like to see biden drop out. wonderful to catch up with. for people in the audience familiar with you, can you share with us how you supported democratic causes this president in years gone by and what changed for you 230 days ago? >>-a defender of president biden as first of all, his presidency by any objective measure, he has done an extraordinary job. he has passed two infrastructure bills, one of them a bipartisan. prescription drugs, addressing

real issues for americans. and i think on a sort of degree of difficulty adjusted basis if you consider he is facing an incredibly hostile opposition, one that in many cases doesn't even recognize the legitimacy of this clear winning in 2020. those in the conditions in which is operating. i think you could make a case he is the best democratic president of my lifetime in terms of what he has accomplished. i supported him in 2020, i supported him again this cycle. to be clear, however this results, i will or him or whoever the democratic nominee is. and i think that is an important note. i think whatever happens with this inter-family squabble we are going to have to unify around our candidate. what has changed is that the debate confirmed the concerns that i think everybody had, and i think most notably, voters.

i think the biden campaign has very understandably come out and shrewdly attack this as sort of a cabal led by elites or donors, billionaires in that clip you just showed. if i were then, that is what i would say. but what is actually happening is that in a sense, toners and the elected who have come out, and i have talked to them privately share their concerns and would like a change that are not there yet to do it publicly and i understand some of the calculations. i think what is happening people are coming around to exactly the view that voters have been expressing through polls for a year. i think that is what is going on. so i think that what the debate confirmed and for that matter, the radio and he did in the stephanopoulos interview, they have confirmed the degree of impairment from age. seven is true everyone knew that this was an 81-year-old man running for president and that is hard, but what we were hoping for was that he was going to

have the stamina and acuity to do this. and i think what a lot of people like saying now is we need a candidate who can express -- who can make the case with the vigor this moment deserves given the authoritarian threat that we face in front and the administration he would install. annmarie: is the concern with you and the people you are speaking with about biden winning in november or biden's ability to govern for the next four years? >> i think the two are related. historically, biden has represented a vote for safety. in 2020, he was old by the standards of somebody running for president, but he was considered establishments, he was coherent. he was not saying crazy things and threatening authoritarian policies like the alternative, which was donald trump. i think what some voters are struggling with now is they

already know trump is a bad guy. they know he lies, they know he is literally a criminal. he is a convicted criminal. they know he is threatening policy and limitation that they don't agree with, whether it is reproductive rights, firing much of the civil service and installing loyalists using the judiciary to punish people. but they are struggling with this because they now see a less vigorous joe biden, and i don't blame joe biden for this. i believe that the biden campaign had a different candidate and i think what we've seen is significant impairment. i'm not a doctor, but i saw what i saw and others saw what they saw. now we need somebody to make the case during the campaign and then of course, should we win, and i fervently hope we do, we want someone with vigor to do one of the hardest jobs in the

world. i want to make clear, i don't have any substance of concerns about biden's age. you are not electing one person, you are electing a team in my mind. and many people i know understand this. you're talking at an army of bureaucrats high and low, and i know the team that trump is assembling, i know what he assembled previously and what he is talking about doing now is worse and frightening. and i know that biden is surrounded by hyper competent people handling things domestically and abroad. but the way most voters see it as they see two names on the ballot but in this case maybe three or four. annmarie: but didn't his team around him to the american people a disservice by hiding a lot of these issues that they had over the past few months that we sought out in full display for 90 minutes on cnn two thursdays ago? >> a lot of people are making that case.

i don't know what the campaign sees. i don't know what his staff sees on a daily basis. i'm not here to make that sort of allegation of a cover-up. what i will say is we did see what we saw. i think we've seen things previously and people rightly say haven't there been signs of decline or physical impairment, prior to the debate? absolutely. but i think what we were hoping was that those were anomalous. and i think what we saw on the biggest stage, the performance we saw, a confirmed a lot of concerns. lisa: there's also this issue of whether joe biden is currently operating at the same playbook, with the same playbook. in some ways the donald trump is by just simply coming out and being defiant and saying people, get in line. >> on one hand, i do find that dispiriting that he's describing

everyone as either a cabal of elites for acting in bad faith. on the other hand, the positive of that pc is fighting and he is showing the sort of scrappy joe that got him elected. this campaign is clearly mobilized to enlist allies. a lot of those allies are saying look, the labor movement, people of color who are historically critical to his political power are lining up behind him. i think that is a very good political line of attack by them but i don't think it is substantively true. when you have seen is elites from the labor union leaders lining up behind him and by the way, privately, labor union leaders have expressed concerns to me. i could cite any number of polls that show that people of color are deeply concerned about fives age.

something like 64% of all voters would like biden replaced on the ticket, and that includes 55% of black voters, so i think it is substantively not true that the average person of color who is a voter has no concerns at all about biden's age. jonathan: appreciate your input today, we are going to have to do this again soon. detailing the latest on the president and how much things changed for him. that's give you an update on stories elsewhere this morning. yes dani burger. >> nike is bringing back a retired executive to try to revive it slumping sales according to a memo obtained by bloomberg. tom petty is returning as 90 vice president marketplace partners. he left nike in 2020. now the company is trying to rebuild relationship with retailers like footlocker after pulling products from the many stores in favor of its own shops, e-commerce and apps. stockist declined 33% this year

through monday with sales continuing to fall. pershing square usa launched a roadshow for the initial public offering of its shares. the hedge fund management company is expected to list at three dollars per share and it is seeking to raise $25 billion from that offering. that would be the largest of its kind in the u.s. pershing square will apply to list their shares on the new york stock exchange. much of houston remains without power in tropical storm beryl. authorities warned that the blackout could last for days. more than 85% of the city lost power and at least one person was killed after the hurricane made landfall yesterday. most of the outages are in houston and areas to the southeast strong wind and heavy rain knocked out electric lines. the city is now facing a threat of high temperatures. the national weather service posting the heat advisory for the region wednesday. jonathan: thank you. up next, ai can the driver's seat.

>> there's policy that i think shows opportunities for money to work in certain sectors. you got almost a demand for ai, the data center. there's only one country really that can feed this beast in a relative way and that of the united states. jonathan: the latest from blackrock up next.

♪ jonathan: get a check of the market. the scores look like this. equity features positive throughout this morning, up by 0.2 percent as yields are a little bit higher. the 10-year just short of 4.30. ai in the drivers seat. m >> there's policy body but i think there's opportunities for money to work in certain sectors. you've got all this demand for ai, these data centers. there's only one country really

that can feed this beast in a relative way and that of the united states. these companies are backing up this valuation with earnings fraud and we see that continuing. jonathan: the s&p launching its 33rd record high of the year so far as earnings season kicks off this week for banks. tech center report of the end of the month with the ai story very much of the front. in the midyear global outlook, we see the ai theme drive broader equity returns in the first half of the year. we are sticking with our overweight wager. good morning. >> good morning. jonathan: thanks for coming on for afterwards with us. your highest conviction i think of japanese equities. he maintained his overweight on u.s. equities as well. but start of the u.s. before we move over to japan. walk through the u.s. call. what really underpins what the biggest pillar is? >> we can look at the cyclical factors. if we look at the first half of the year, we've had positive

surprises on earnings driven by ai. we had negative surprises on the rates driven by fed pricing. as we look ahead and the second half of the year, maybe we have less negative rises from rate, and positive heading to rate cuts. but less positive surprises are earnest just because the bar has risen. but the bigger picture is something that we lay out the outer. we've got to look beyond the cyclical end in flow and for the focus on the transformations happening around us. so ai is driving that in the transition is covering that as well. when we add up the numbers from this transformation, we are talking about magnitudes comparable to the industrial revolution, comparable to the internet revolution. so we really think that we are moving from the financial economy to the real economy and investing needs to change as well. it doesn't mean given the elevated uncertainty we need to

do risk. in fact, when properly used risk to lean into the transformation, but it does mean we are going to be more selective, and more active. jonathan: you offered some historical examples. sometimes you can identify the mega force with ease. how easy is it to identify the rigors of these mega forces --winners of these forces? the internet was a big deal but sometimes it was difficult to determine who would be the ultimate winners. how easy is it time around? >> it's hard, it's highly uncertain. if we think about the various forces playing out, it actually means that as we look ahead to the jury there is an unprecedentedly wide range of outcomes possible. no longer can we think about investing on a central base case with deviations around it. we need to think about it in terms of scenarios that can be very different from each other, that may have a little overlap with each other.

that is how we kind of think investing in portfolio construction as a whole, but as we think about kind of identifying winners and losers, this is a market that does create more winners and more losers. we need to think about it in stages. phase one of ai is really around ai filled out. this need for energy, competition, arms race for energy and data center buildout. phase two is around really kind of the broader adoption. companies building up their ai capacity. we are seeing health care already doing that. phase one and two can both be inflationary because we are talking about creating demand before the benefit on the supply side and productivity side generally come phase three is on productivity, but that is hugely uncertain and it cannot happen if phase one and two does not happen. swivet have to be inflationary first before i it can be deflationary. >> which of the reason why when you talk about one, high quality bonds, you talk about short

term. before we get to japan, i really want to begin with the idea of ai being a trade that is very hard to distinguish. you have citigroup talking about how some of the ai exposed high flyers are probably over-bought. we've been hearing bubble in certain stocks like nvidia. does the ai trade include some of those names that have already gotten bit up dramatically? >> at the current juncture, yes. our u.s. equity overweight also include the tech sector overweight, telecommunication telecommunication services as well. but we are starting to broaden out our ai play as well. the earnings have been revised and they have been give or take delivery.

but as we think of that kind of the phase two of ai implementation as broader sectors starting to adopt ai and benefit from the gain, we have sectors like financials and health care and industrial is well-positioned for the ai infrastructure buildout. we want to include them in our ai play as well. and if we look at kind of the earnings picture the last earnings season, we had eight out of 11 sectors going there margins which is edible, and looking ahead, tech is still expected to lead, but sectors like energy and health care are also expected to drive earnings growth in the second half of the year. lisa: just a really short bit on japan, i know that is your biggest overweight. i wonder how much of this betting on the bank of japan rate cutting cycle that isn't necessarily a rate hiking cycle -- excuse me, that isn't exactly tightening but is an adjustment to deal with.

>> i will say that our japan call is mostly an micro call at this juncture. the macro story exiting deflationary decades and benefiting kind of from the macro inflation coming back. we've already benefited from that. now we are looking at companies deliveringarngs, expectations for japanese equities to grow earnings by 7%, 8% in the coming 12 months. we think that they can do better. you look at the latest season, and, shareholder reform. that is progressing as expected. the currency we talked about not that long ago is somewhat inconvenient because it is so volatile. in part, it has helped earnings operate for manufacturing part of japanese equity market but more broadly for foreign investors. it has gotten to a point where initially, weaker currency was helpful for japan achieving their inflation targets. now, heading into election

cycles in japan as well both for the party as well as for the country next year, is less helpful. we are not talking about explicit intervention, but maybe encouraging repatriation of foreign ownership. maybe attracting foreign inflows that could help with the currency stabilization. jonathan: lots of tourism. up to percent of 2% at the close today. we are higher this year by 24.25%. lisa: i do wonder how much tourism is giving them economically. i just know from some discussions. jonathan: i'm not sure how happy the japanese are. lisa: have you seen some of the angry messages? please stay out, stop photographing us living our lives. jonathan: congratulations on a new outlook and thank you very much for joining us. the third hour of "bloomberg surveillance" up next.

the moment i met him i knew he was my soulmate. "soulmates." soulmate! [giggles] why do you need me? [laughs sarcastically] but then we switched to t-mobile 5g home internet. and now his attention is spent elsewhere. but i'm thinking of her the whole time. that's so much worse. why is that thing in bed with you?

this is where it gets the best signal from the cell tower! i've tried everywhere else in the house! there's always a new excuse. well if we got xfinity you wouldn't have to mess around with the connection. therapy's tough, huh? -mmm. it's like a lot about me. [laughs] a home router should never be a home wrecker. oo this is a good book title.

♪ >> the growth has definitely turned a little bit the last month and i think the key part of that is it's just got more broad. >> we are not seeing a weakening, a contraction, but this is what drives the economy and we are seeing a deceleration. >> all we are seeing is signs the consumer is slowing down.

>> i think this means we are going to start to see more slowing in gdp and overall spending. >> there are key pockets of weakness. this is a lopsided economy. announcer: this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: the third hour of bloomberg surveillance begins right now with quite the day ahead. in many ways the week begins, and a bit later this morning at 10:00 a.m. eastern time when we hear from chairman powell going in front of the senate banking committee from our financial services committee tomorrow on capitol hill. and then at the same time, two screens up at the same time a little bit later this morning, chairman powell on one. on the other one, secretary yellen testifying to the house. lisa: the two issues, will jay powell set up a september rate cut? that is what a live people are looking for in terms of his rhetoric and the bigger emphasis as for the weakening economic data. and then there's the real question about how politics affects this. he's not going to say that, maybe we are going to hear a

little bit from janet yellen about some of the political ramifications or some of the issues that referred of joe biden with nato and the question around just how strong of a leadership the u.s. can have. annmarie: and of course as well, should probably be asked about the deficit but most entirely she will be asked by the republican side about joe biden's health. this is going to be very political for secretary yellen even though she supposed to be talking about international finance. andrew hallman horse is saying the fed chair politely sent incrementally more dovish after 4.1% last week. is this the moment potentially he takes to really set of september? jonathan: i wonder how he's going to characterize the unemployment rate. will he lean on how much has moved, the fact that it is going to be above potentially where they forecast the debate by year-end, or will he say that on a historical basis it is still very low? we kind of knowing things already about the payrolls number. he basically said to some extent

and i'm paraphrasing here, that he thinks perhaps that is overstating the real strength of the gains we are seeing in the general economy and that we saw that backed up by the number on friday anyway when we saw the revisions to the previous two months. for me, it is less about a headline number and much more about webpage about what is happening with unemployment. annmarie: whether he views this as a window to make an adjustment and by the surrogacy shift in the rhetoric. what he said last week when he was talking about how they have time, does he see that they have less time now at a time where you basically are having a growing number of wall street analysts coming out and saying actually, this negative window that they have to really cut rates before it really becomes a pernicious increase in unemployment? jonathan: you can see the obvious sequence of things right now. you talk about it in july. you go to jackson hole, relay out your plan and deliver in september. do you think you're being too cute about the path here? do they have to lay things out that clearly for everyone and

give you a date notice over the course of two or three months? lisa: no, they don't. but on a political perspective, there is this question that peter was talking about. if they aren't ill cute about this where they can basically forecast it now, does it basically said social media spinning? does this end up jeopardizing credibility of the fed because of the timing if there is some of the market response and people say they are just trying to juice the election? jonathan: let's talk about the markets -- not the juice part, but the broader part of where we are right now. equity futures positive by 0.2%. yields up by two basis point on the 10 year. the euro just a little bit negative here, softer by 1/10 of 1%. i wonder for the audience out there what you think the biggest market move might be. whether it will be the testimony from chairman powell later this week or the news conference with the president. which one will it be? annmarie: i'm obviously looking

at the news conference. this is going to be his moment potentially quell those concerns. he tried to do it yesterday, i don't think it worked and yesterday he really was firing on all cylinders. it was a letter to congressional democrats, an appearance on tv, a phone call with donors, and then an evening zoom with congressional black caucus and still today you have people -- we just heard from a donor who said behind the scenes that number we know of is nine congressional democrats say needs to step aside. the number is obviously much bigger. could thursday really mean the dams are breaking for real? jonathan: we know the mood the president is in, came out swinging yesterday. the party has spoken, the nominee is me. on donors, i don't care what the millionaires think. the mood of the press is really interesting. i think he got an example of that yesterday in the news conference at a think you're going to see another example of and again on thursday. we had a conversation earlier this week about career risk. we have to talk about career

risk of journalists. people who have been in that room every single day very close to this white house to have one on this. i know some people have done a good job, select names in the institution. there are other companies, other institutions that have ignore this for months, and they are the ones really fired up right now because they don't want to be the individual that didn't cover this if things get a whole lot worse. and it is them that i think you're going to see again on thursday. lisa: you have people who feel like they have been betrayed. whether it is a cover-up, this idea that there indication what they should just be quiet about this, it wasn't that serious. when it became very serious. that sense of betrayal you are seeing play out in real time. jonathan: going to see again on thursday. we talk about stocks hitting fresh record highs. holiday air travel surpasses records ahead of chairman powell

testimony later. we begin with at top stories, stocks hitting the 35th record high of the year so far. emily of john hancock saying if the u.s. economy had a relationship status it would be it's complicated. amidst weaker economic ratings we came back to the bad news is good news regime for markets with everything rallying. it has been a good run the bad news is likely to start the mean bad news for markets soon. emily officials right for more. just walk us through that. bad news, good news, we saw it in the market and the price last week. why do you think that is going to change sometime soon? >> you just look at those june business surveys. they show vastly different trends for the u.s. economy. the ism survey on both the manufacturing and services by falling below 50 and meanwhile you have the s&p version that showed that we are in expansionary territory both again on saturation and services. you look at things like the jobs

report that you all have been referencing this morning. 200-6000 new jobs added but underneath this surface, revisions to the tune of 111,000 and and the unemployment rate jumping to about 4.1%. so the economic data right now are about as clear as mud. but we do see a broad decelerating trend happening, something that investors need to be aware of. right now we are celebrating the idea that reviving rate cuts, but at some point the fed is going to be cutting in the labor market is deteriorating. lisa: so what are you selling and what are you buying? is this basically sell the s&p, buy long bonds? >> we continue to see momentum driving markets. we see this combination of quality and momentum really taking center stage. you know ethan overweight

quality, overweight u.s. tech stocks, and that has really been important. i wouldn't say we are overly bearish. i listen to you guys every morning and it just feels like there are very few bowls -- bulls out there. there markets don't really start that way. they usually start with a lot of optimism so you're really not seeing that. there's also a ton of cash on the sidelines right now. money market assets are sitting at $6 trillion. this 2320 $340 in bank accounts. still a lot of dry powder here to keep this market going. we just want to think about participating, but getting a little bit more defensive in addition to those higher quality options we are looking at defensive areas like utility stocks. we want to lean into quality at a reasonable price. looking at the value side for sectors that are trading on sale, areas like health care, u.s. mid-cap equities, industrials which we are seeing is an opportunity here but of course a lot about is on the price on the equity side trading

at 21 times forward earnings. bonds are not sniffing this out yet. sitting at about 4.30 right now. there is a really nice opportunity here to look at getting paid income as we wait for this potential contraction of economic activity to play out. lisa: we've been talking all morning about the push and pull between weakening economic data and the political backdrop with bonds. you think that is a good opportunity to buy long-term bonds at a time when there's a backup and you do have this potential slow down? how much do political concerns weigh in on this whether it is trade policy, the deficit? >> we actually think it is noise on the political side. we tend to underway political analysis and processing decisions. it difficult to do. we found that looking at the economic backdrop, looking at

fundamental trends has been far more relevant to portfolios. to your point as the scene these backup and bond yields reflecting some of this political concern and we ceded globally, we would be looking at those backups opportunistically to start leaning into high-quality bonds and getting paid that income. we do think inflation is decelerating. people obviously find out more this week but we are looking at things like average hourly earnings, car prices falling the shelter component is likely to come down as a healthy market starts to claw a little bit. all of those things mean that inflation which respond's worst enemy is going to start to be our friend here as we approach the back half of this year. annmarie: emily, are you saying it is complicated terms of the u.s. economy not is complicated plus because of the politics surrounding it, you are saying that you just have to look through it? >> not necessarily that you have to look through it but we are at this point right now where economic data is not bad. and certainly it is great in the

u.s. vs. the rest of the world on a relative basis. you look up and click initial claims which to us is one of the best macro indicators. yes, they are perking up and a lot has been made of that, but we are still in this range of 200,000-260,000 everything over the past couple of years here. simply not all that bad. we are still adding jobs, looking at an environment in which some of the surveys tell of that economic expansionary territory, so we just want to be mindful here because there are cracks under the surface if you look really closely at the data and we want to be prepared for an environment where we do see slower economic truth. inflation coming down feels great right now. there's nothing better than waking up to the smell of disinflation -- the smell of disinflation in the morning. but it is not great for corporate revenue. so as we see corporate profits come down amidst that slowing inflation environment, the cost of capital is still elevated right now.

the fed hasn't cut yet. that means there is likely to be margin compression interest companies deal with defending those margins, they want to stay profitable, they have to cut cost. typically the biggest cost most companies have is labor so we are looking at this sequence of events which should ultimately result in the unemployment rate rising and again, that is an environment where you will get paid for owning higher quality bonds. jonathan: we've got to be the fair. emily looking ahead to the smell of disinflation thursday morning. looking for headline cpi at 3.1 percent year-over-year, down from 3.3. lisa: is nothing better than waking up to the smell of disinflation or as you mention, french oats. jonathan: we are a sad bunch, aren't we? lisa: and then we got peter scheer saying i don't even know what reality is anymore. jonathan: so let's talk about the deficit. lisa: you don't have to go there again, i know. but it was relevant at the moment and he actually cares about it. i am curious though just how

much people are looking through some of the noise. we heard that now from two people on the show this morning. this idea that this backup and yield is a buying opportunity to look through everything and look to the idea that you are getting the smell of disinflation. jonathan: is it noise or is it news? let's get you an update on stories elsewhere this morning. dani: donald trump has said that he hasn't decided yet who will be his vice presidential pig. speaking to sean hannity, he plans to make an announcement in the coming week. the former president said his running mate would be a person that can do a fantastic job as president as well as somebody that helps to get elected and there is nothing wrong with that. france and senator j.d. vance, marco rubio, tim scott and north dakota governor doug burgum were all under consideration. the lawyer representing arcadia standard for long has made his final pitch to a jury. he was accused of being behind a scene that artificially jacked up stock prices, eventually

causing wall street extended leave dollars. his lawyer repeatedly said that the case makes no sense and that they experienced a black swan event. the jury verdict will bring an end to a file that has lasted eight weeks and forced maitre d'this is what led to that implosion in a 2021. the international airport in qatar takes the top spot in the survey of the world's best airports. the company creates the ratings partially they find customer feedback, quality of food and shopping options. punctual arrivals and departures represent 60% of each score. rounding out the top three, cape town international airport in south africa and the international airport in japan. just one u.s. airport cracked the top 10, salt lake city international opened in 2020. and that is your brief. jonathan: more from dani in about 30 minutes. politics is the gift that keeps giving. you asked the former president

what he wants to see into running mate, a person that could do a fantastic job as president, somebody that helps you get elected. that's it, that's the only description we got. that's what we are basing all this speculation on. someone that helps you get elected. lisa: right, what is that? that is going to be the key question. at what point is that going to change depending on what happens on the other side? jonathan: that is the key point for the next week or so. up next, the morning calls. summer travel demand continues to skyrocket. that conversation up next. from new york, this is bloomberg. ♪

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positive by 0.2%. yields are higher on bonds by two basis points. time now for some morning calls. piper sandler bringing egg america to neutral. the analyst no longer seeing a reason for the bank to underperform, expecting net interest income to rise to a stronger level. but next up, wolf research downgrading paramount to underperform on the back of this guidance takeover deal. the analyst saying the investment debate is now simplified to whether the media giant can invest operatively in direct to consumer products. and finally, wells fargo raising its price target on airbnb, maintaining underway rating. the firm highlighting near-term momentum for reservations but it is less optimistic about margin pressures into next year. that's not is just about positive 1/10 of 1%. sticking with travel, the tsa screening more than 3 million people sunday. rounding out the july holiday weekend, if the first time that may passengers have been screened in a single day in the

agency's history. eight of the 10th busiest screening days have come this year as travel demand tops pre-pandemic levels. to discuss this in a whole lot more, elaine joins us. let's talk about this. super busy weekend at a time involving a struggling to build planes and united airlines, at least their jets are struggling to hold onto the wheels. i'm just wondering, are things too busy? >> thanks for the question. yeah, we've never seen this kind of travel before. the system has proven that it really is having a hard time handling it, especially when there is this whether any huge delays and so on. it just cascades down through the entire network. and so you are seeing bigger planes in general rather than more service because there's only so much that can be done. you and me and lisa and the team, we always talk about

airline traffic. we don't talk about what is happening at the airports. in the airports are having their own issues with lack of parking, the lack of food options, and lack of seating, especially at some of the older airports where people are asked to come early, and then they have to wait. there's no charging stations in the a lot of older airports, the charging stations in new airports don't work. there's this whole ecosystem that was built around a smaller level of population that travels and now we are seeing so many people travel on a regular basis. to your point, eight of the 10 busiest days have been this year. in most of them have been in the last six weeks. >> do you think this is introducing a problem that would have been the case even pre-pandemic, or do you think it has been exacerbated to a big degree because the personnel just isn't there after a lot of the layoffs in 2020, in 2021

that have left a lot of senior people no longer in the workforce? >> the answer is yes. i think this level of travel was coming anyway because you have the aging population and a lot of people who have more time to travel and are doing so. so you are seeing this huge increase in international travel. younger people got used to traveling with their parents and they want to continue to travel with their own families. so you are seeing a lot of that. but to your point, we were expecting those kind of travel numbers may be a little later in the decade, not so much now. and also, all those people who left, whether they were furloughed or they chose early retirement or they chose other careers in the 2020 and 2021, mid 2022 timeframe, the people who have come into replace them or less experienced.

the faa says we are short about 3000 air traffic controllers congress approved the new budget which allows for the hiring of more. it also allows those who have been air traffic controllers in the military to come into the network without going through the entire faa training academy. so there is a way to increase that. but the busiest airports, the pay scales are still relatively low. so people don't want to do that career. they don't want that job. because they have to live within an hour, an hour and a half of the base. it's very expensive to live in new york area. it's very expensive to live in the chicago area, san francisco. so people don't want those jobs and the result is that we have this limitation on how much capacity can grow which should eventually be good for airlines because they should make more money, but for travelers it means they have to pay more for airline tickets.

annmarie: can we talk about united, the most recent mishap with losing its we'll. you think this was a united issue or a boeing issue? >> i think at issue, i think it is more of a supply-chain issue and i think in this case it was probably a united issue. aircraft maintenance, they have to be double and triple checked before they go back on the line. this is not obviously the first time united has had an issue. i don't want to disparage them because they are a safe airline, i fly them a lot, you guys probably fly than a fair amount being in the new york area. i don't want to say negative things about them, but every airline can be good or bad on any given day. they are just having this issue and for them, this was the 757 i think you're talking about and that is an older plane that has been around for a long time with a good safety record. jonathan: everyone seems to love

-- just to throw that out again. what the love in the airline sector right now? >> delta was the top hit for 2024 so growing under the bus, but i think from a balance sheet perspective, from a traffic perspective, growth, opportunity, the big advantage is only pilots are unionized, everybody else is not union, so they have the ability to make adjustments without going to an entire they process unlike the other airlines. so delta with the top pick for 24. i think it still continues to be. we also have buys on united and alaska air. i talk to you guys a lot in the past. it's one of our favorite names in the mid-cap airline sector. i think this will be our top four or five. jonathan: appreciate it. looking ahead to data reporting later this week.

someone around this table flew data over the weekend and had some problems before. deeply personal. lisa: do somebody want to talk about those problems? annmarie: the tsa screening record. jonathan: i'm very proud to be part of the record. did i get to my destination on time? sure. lisa: did you get back on time? jonathan: delayed about an hour, i think. delayed trying to get transport. (♪♪) (♪♪) sandals rhythm and blues caribbean sale is now on. visit sandals.com

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♪ jonathan: equity futures on the s&p 500 positive 50.1%. elevated across the board on the nasdaq as well by a quarter of 1%. the 35th all-time high of the year at the close yesterday. the fate of today's price action in the hands of one man, chairman powell. yields up by a single basis point on the 10 year. 59, we've talked a lot about the debt issuance coming up a little bit later. $58 billion of three-year notes, and the day after that we get 30. lisa: i'm trying to understand

why we suddenly saw a tick up in yields and the rest go negative considering there isn't really anything out there that i could particularly key in on. we've known about that for a long time. i do wonder when you start to see political risk creep in, the longer duration bond. we heard that also on the flipside from the likes of cassie marrow who said use any of those dips to buy. we see that buying activity today, tomorrow or thursday? jonathan:jonathan: a quick sneak peek at what is happening with the euro. euro-dollar, negative by not even 1/10 of 1%. the white house firing back at reports of president biden's health including a new york times story. finds dr. releasing a statement last night saying the specialist had only conducted routine exams. annmarie: and that the

specialist came and also to treat other members of the white house campus including military members who serve. the issue is why were they so delayed on this? you saw that exchange between some of the journalists and it was only late last evening that the physician came out with a note. all of the seals like the white house is on the back foot. on the back foot trying to shore up donors, get out to congressional democrats, individuals questioning whether this president needs to step five -- step aside, and whether the president was consulted with a parkinson's expert. jonathan: the appetite of what a still to come on thursday, that is the main course. lisa: how much are you going to end up getting a pretty aggressive press quorum when you talk about the relationship to markets. what the playbook is if biden is or isn't the democratic nominee? if there is a shift in the belief that he could actually maintain that, how much does the market-rate change? do we have a sense of that at a

time or maybe it is noise, and so at some point people are going to be making bets on this. jonathan: did we get a taste of this a couple lisa gillen we started to price in a donald trump candidacy? lisa:lisa: what with the trade be at that point? i wonder when people start to actually get their head around this. it is one thing when you say joe biden looks like a weak candidate. that is the trump trade. what happens if there is another stronger competitor with donald trump who would like to see this unfold with joe biden being the candidate? jonathan: we have to get another candidate. if it's, lara's, i wonder how much difference there is between the vp and the president on the same ticket. lisa: i'd like to see some notes on that. jonathan: right then, i think is what lisa is saying. bringing back a veteran executive to try to fix its sales slump. the sportswear giant is trying to rebuild its relationship with retailers like footlocker after plan products in favor of its

own stores and e-commerce operations. annmarie: this is actually really interesting story. a lot of the big brands, nike in particular said we don't need you, footlocker. we don't need you. this question know if we can go direct to the consumer and we don't have to lose profits in the transaction. now they are realizing that didn't work. so they are bringing back to previous executive. i find it quite interesting. how much do they bring those relationships back into the fold to notice those distribution centers are quite important? annmarie: they are bringing back individual in retirement but likely probably has these relationships that they need to really shore up in a quick way. jonathan: a distribution problem or a design problem? fermyon personal perspective on this. annmarie: we know what you buy. jonathan: i know where to get nike from.

i don't think they have a distribution problem. lisa: or a relevancy to the people who buy sneakers which are runners and athletic endeavors. i do wonder how much is this just getting away from some of the bread and butter and counting on air jordans to carry them through and then air jordans lose that luster and suddenly the reselling trait doesn't work in the same kind of way. look, i have a personal relationship with this. jonathan: i know, which is why i am smarting. on the side, lisa trades jordans. lisa: i do not. but at a time it was cool the kids to do that. it is not anymore. jonathan: you can keep it together. edit the latest on nike. all eyes on capitol hill at 10:00 a.m. eastern time. jay powell beginning his congressional testimony in front of the senate banking committee and treasury secretary janet yellen speaking the house financial services on the same day at the same time. this is all ahead of more inflation data including cpi and ppi. waiting patiently holding it together is lauren goodwin of

new york live. to the both of you, thanks for being with us. lauren, what are you expecting to hear from chairman powell in about 90 minutes? >> now a heck of a lot. i think he is going to tow the line, do some basic explaining of where the economy has been, where inflation has been. i don't think we're going to get a clear monetary policy signal from him. however, i do believe even getting a clear signal from the data. we all know that the fed cares about price stability, full employment. what we've been looking for in terms of signaling the next rate cut are things like stable inflation expectations, inflation moving lower, unemployment rate breaking 4%. i think the fed will want to see one more month confirming that turn but i expect september is on the table for the first rate cut. jonathan: lastly chairman powell set the labor market is strong and then give them time. that is a reason to wait. do you share that view, that

analysis? >> the labor market is strong for the reason the fed has the opportunity to wait is because initial conditions in the market have been cheesy. stocks have been well behaved from the credit spreads have been well behaved and the reality for the job market is in nine of the last 10 processions, the economy was adding jobs until we were already there. for the labor market tells us all kinds of things that were the economy has been, not where we are going. i believe that financial condition easiest allows the fed to be patient but he could turn on a dime. annmarie: it's fascinating to me this idea that it seems to be getting clearer and clearer where the economy is going for a growing number of our guests. state, a number of people have said if you look at just the unemployment rate, justin patient, the signals are clear. do you agree? >> i think from the chair's perspective, the growth that an market data that say that they are more confident that they are restrictive.

speaking from 3.5% growth in the back cap of last year, tracking about 1.5, a little over 1.5 for the first half of this year. we are seeing payroll growth slowed. but i think the point of what powell is going to be talking about, for we saw in a central last week within emphasizing all of the dovish points. this is a strong labor market not because hiring a strong but because layoffs and discharges are low. so the question is how long is that going to last? with inflation, i think the message has been clear. we need to see more, better prints. this week's data should show a bit of a rebound. the weakness last month is really all do to airfares as well as motor vehicle insurance. so they need to see rent started to move back down ticket sustainably to 2%. so they are not there yet. that said, unexpected slowing of

the labor market would be a reason to move earlier. our base case remains that december is going to be the first cut. the door is definitely wide open on september. lisa: what would you have to here today and tomorrow to change your call to be september from december? >> what was interesting in what he phrased, how he phrased the recent inflation data last week was that he compared the may-april the first quarter of the year. and he said may was a step in the right direction. april was not as good, but still better than q1. but april was actually worse than the february print. to me, it sounded like ok, the starting point for heavenly good prints we needed to see, april the sort of the starting point. april, may.

it seemed from the way powell phrased it which was a little awkward but deliberate that is starting point with april print. so that to me speaks to people he wants to get a cut on the board soon. it just comes down to whether the inflation data would give it to him and he has a committee that goes along with it. jonathan: do you think the election matters, you think canada matters and that date on the calendar circled in red? >> i think the election matters to the fiscal outlook. arguably, permit deficit standpoint is going to be the same, but when you have extreme differences in terms of policy such as tariffs, inflationary, and that i think that could cause a little bit of caution. because he would veto know how that is going to shake out. you can get a sweet one way or the other in the fiscal outlook a change anymore inflationary

direction. that's another reason to kind of stay the course for now unless were fourth two, don't give up the policy space. you got over 5% yields which nobody thought was possible five years ago. wait as long as you can. obviously you don't want to wait too long. there are those little warning signs. >> but you would want to cut ready for the election which would be september. if april you think maybe as his starting point, why aren't more people talking about july? >> it would be a lot to signal right now and i don't he has a committee that is when to go there just yet. to your point about september, without a strong labor market story, cutting on an inflation story alone, why give the appearance even if there isn't?

certainly the fed is not political. they are going to do what is right for them and what is right for the economy. but at the same time, i think it's going to take a growth story or an unexpected draw down in the labor market. jonathan: one thing we've discussed repeatedly is that not all cuts are created equally. one is a fine-tuning of the back of disinflation with a positive economic backdrop. the other is a labor market that is breaking and something may have to respond to and really put the emphasis on the other cited the dual mandate you said repeatedly that this market can thrive up and until when this labor market starts to crack and the question we financed on this program is how close we are to that danger zone with unemployment through the floor and claims starting to creep a little higher. on a historical basis do you say these are still very low levels or do you look at the rate of change in the time we had that change and start to say we are

getting close to the danger zone? >> for the market signal you look at where we've been most recently. the reality from my perspective that any impending slowdown or even recession is likely to be mild is sort of decide the point when it comes to a market transition. so what we are looking for for market concern about turnaround in the labor market are things like we would need to see 4.3% instead of the 4.1 what we are. again, or jobless claims moving higher considerably. neither of these things have been really moving in that direction so far. so for investors, this is a market that we still see as fairly constructive until the labor market indicators or earnings expectations will be start to turn the corner, we believe the equity market rally can continue to charge higher. lisa: this is sort of the confusion with the way the market has rallied. it has been a member of names that has kind of lead the charge

in a pretty significant way. isn't this market already positioned for some sort of significant slowdown? isn't about the base case of what we are seeing in the russell 2000 and that people wait s&p? >> i'm sympathetic to the position but i challenge that position because we really haven't seen more than a couple of days of pullback over the course of this market. while there is a divergence not just in particular equity names and sectors, but also in the help of the consumer, we are still looking at a corporate environment overall, a consumer environment overall that are relatively healthy. and in order to see a true reset in investor expectations, we typically need to see an equity market revaluation of about 20%. and in the name that haven't been charging higher and higher, we haven't seen a revaluation anywhere near that level. so i anticipate that intent economic activity really shows signs of slowdown, we haven't

seen that reset yet. jonathan: a taste of everything. cpi on thursday, bank earnings just around the corner. thanks are being with us. massive week ahead that kicks off a chairman powell in little bit later this morning testifying in front of the senate banking committee. let's get you an update on stories elsewhere this morning. >> a quick check on bp shares in london falling by four and one third percent. vpcs significantly lower margins and says it will take up to $2 billion in impairment in the second quarter. the figure includes charges related to scaling back refining operations germany due to high content declining fuel demand. pershing square usa has launched a roadshow for the initial public offering of its common shares. the hedge fund management company is expected to listed ipl at $50 per share in seeking to raise $25 from the listing. that could make it the largest

fund of its kind in the u.s. pershing square will apply to list on the new york stock exchange under the symbol psus. aramco is looking to raise at least $3 billion from its first bond sale in three years and according to people familiar with the plan, meetings with fixed income investors are expected to start today. the final size could be larger depending on investor demand, and that is your bloomberg brief. jonathan: thanks for this morning, appreciate it. up next, setting you up for the day ahead. live from new york city. this is bloomberg.

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jonathan: a couple times this morning dani has joined the program and broken down the list of the top airports in the world. where is jfk on that list? >> it's a good question, i can't seem to find it. jonathan: what is the worst airport on the planet? >> it is in tunisia. annmarie: i think to both, the worst. jonathan: is it that bad? annmarie: i don't remember it being that bad. he didn't have a lot of extras. you go to the airport until doha, there's everything. this all of the extras. you fly in, you fly out. that's all you need. equity featured on the s&p 500 positive by 0.1%. opening bell about 41 minutes away. i can see you doing it. yields are higher by a single basis point. focus. counting down to the opening bell, it absolutely stag.

10:00 a.m. eastern time we look at jay powell beginning is today congressional testimony in front of the same time you hear from janet yellen speaking for for the house tomorrow. more fed speak from goolsby on thursday. u.s. cpi plus another round of jobless claims. friday, u.s. ppi plus wells fargo in, taking off big bank earnings. pleased to say it is michael mckee to get us ready for what we are about to hear and about one hour 10 minutes. michael mckee, what are you focused on? >> temple half, that was a bad airport. what if people want directly talk about? >> jfk is 130. jay powell is probably not going to give us a whole lot today. we could say three categories of issues for him. one is monetary policy.

he's going to say the same things that he has said, we are committed to the 2% inflation target, we have more to do and we will think about cutting rates before we get to two but when we feel there is confidence that it is going to continue going down. you probably get a lot on that. and tomorrow maybe more so with the house, there are always some political questions. i'm sure however you wrap them up, it is either do you support joe biden or do you support donald trump? he will say i'm not touching that with a 10 foot pole. lisa: there is this issue that we've been talking about all morning which is with his tone be different this week given the jobs report, given some of the data that indicates that unemployment is rising and

inflation is coming down? >> that's going to be the debate after it's over, how dovish was he? that they have been talking about paying more attention to unemployment than the other half of their mandate in recent weeks over the last couple of meetings, even. so it wouldn't be new news. it's really what the market is looking for is some sort of thing to hang their hat on in terms of when we get a rate cut. and probably he is somewhat constrained by the fact that cpi comes out on thursday when he's done talking, so why go out at the end of the plank and maybe fall off if you don't have to, if there's more data coming? >> representative andy barr set a september rate hike will not be perceived as apolitical. if powell is thinking about potentially there is a cut before the election, doesn't he need to do some work today and tomorrow that he is at least

preparing the political voices in d.c. for that to potentially happen? >> i don't think he needs to do it today or tomorrow. he can make it clear that the fed and do what deals to do when it feels needs to do it, they are not influenced by politics but i think the problem is you can't say anything on capitol hill that doesn't go straight into the newspapers. he doesn't want to do that and let people start speculating because you're going to get a lot of market volatility once the markets start to think it is coming. he does remember spinning a lot of time talking to individual member of congress and if he trusts somebody he trusts somebody could go off the record and he's not going to say we are going to do it but say we are getting closer. lisa: could you give me some insight on this? coming in stronger-than-expected

at the highest level this year, why is this being talked about as sort of highlighting that this is still an economy that has quite a bit of steam behind it to mark >> it depends on who you're talking to. there are people on both sides who say the economy is doing fine and the fed is sort of along with them saying we don't need to move now because we are not in trouble. and then of course, the doom crew has been saying we are about to go into recession six months ago. so he's going to balance those two things, but the narrative, in part because it is a political year is what is wrong? that tends to be the journalist view. you don't get a lot of stories on the front page saying everything is wine and roses. jonathan: 10:00 a.m., what would you be watching, powell or yellen? >> chairman powell because he could have a direct influence. what will be interesting from yellen is talking about with the debt policies going to be.

we have auctions this week and that is going to be important to a sector of the bond market. but the overall impression of the economy and the overall idea of what we do about interest rates will come from jay powell. jonathan: we know what lisa is watching. mike mckee, thank you, sir. coming up tomorrow, brian levitt of invesco. just your final father on the table. germantown later this morning. >> by the date on political noise. which debt? -- dip? what they think is noise and what they don't. >> we did the week ahead but i think you missed the biggest event which is biden and the need for him to perform thursday evening. he needs to be like the biden of early 2022 when he did that record nearly two hour long news conference and took questions from everyone in the room, things he wasn't even prepared for. he cannot just come out and take

two to four questions, that's not going to cut it. jonathan: will this be a news conference on a nato or on the president's health? annmarie: the questions will start with something about nato and the u.s. looking strong and how can we look strong if blood questioning your ability. jonathan: the week ahead. look ahead for that on thursday. all of that still to come this week. kicks off her chairman powell later this morning. then in front of the house tomorrow, then we get cpi data on thursday morning. then on friday we started earnings. we can talk about what is coming from jp morgan. and look ahead to goldman and morgan stanley last week as well. lisa: that might actually potential to be the most market moving event if they signal some sort of weakness, if people basically are looking for that. jonathan: that does it for us. look out for our colleagues at the top of the hour. that program about four minutes away. that does it for us. this was surveillance. this was surveillance.

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>> stocks are set to scale another all-time high. >> bloomberg open interest starts right now. sonali: powell in the spotlight. day one for the fed chair as he testifies before lawmakers who are growing impatient for interest rate cuts. matt: nato leaders gather in washington as