>> right now people do not know her that well. >> i think it will be an open process but i did not see anyone running against her. >> this is not something easily tradable. >> the market does not seem to be interpreting harris as a strong candidate that could challenge trump. >> people underestimate harris at their peril. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: let's try and get your trading week started.

bloomberg surveillance starts right now. a time where for many of you it feels like last week never ended. another weekend in american politics which will never be forgotten. lisa: unprecedented. unprecedented you have the sitting president step aside this close to an election. a little bit more than 100 days left before what we see in november. a key question here, why is this not roiling markets more considering it is unprecedented for a host of reasons? jonathan: the race for the white house resetting now and the list of harris endorsements long and growing with one notable absence. we do not see former president obama's name on that list. annmarie: he came out and gave attribute to president biden but this is how obama does things. this is what happened four years ago where he said he does not want to put his thumb on the scale. this is when the biden camp wanted obama to endorse harris and he waited.

he wants to make sure this is done right and harris fully gets the nomination, gets the delegates, and then he will come out with an endorsement. people close to him say he does want to get behind her but he will wait and maybe view himself as an elder statesman of the party. also nancy pelosi, chuck schumer, hakeem jeffries, when will they endorse harris. yesterday the floodgates open to embrace her. jonathan: that is the first question we have to ask on wall street. does the party get behind harris or do we see a real challenge. the next one, how they differ on policy? isaac boltansky writing "the focus should be on electability rather than policy." electability and not on policy. lisa: i thought that was a really important point. his point is keir starmer is probably -- is that, let harris 's little more progressive than joe biden but biden was little

more progressive than his stated positions. it means there is not much daylight in the policy. the question will be does it galvanize more voters down the ballot and give more voters into the fold. this is the big concern for a lot of people into the election. on a bigger scale level this might explain why there is not a big shift as well as the feeling on the margins trump is still the favorite candidate into this race. annmarie: trump coming out and saying there's not a lot of distance between biden and harris. two things stand out. grassroots momentum overnight. you saw harris bring in $50 million when this came out. endorsements not just from individuals in the party but you see celebrities also throwing their weight behind her. pew research had earlier this year the amount of double haters for trump and biden at an all-time high in this election cycle. she is a new name. even though she is attached

abided she is a new name and she will have a new name if she is the nominee as a vp. jonathan: the enthusiasm is back in the party. if you think energy is the only thing missing, big change. if you thought age was the biggest problem, big change. if you think policy is the issue, how much change is there overnight? lisa: this is the million-dollar question, who she picks as vice president. does she pick someone from a purple or red state to create a feeling she is skating -- he is catering to a broader centrist platform? does she pick someone who use more closely to progressive ideals? you also asked a question in the special you guys did where you said if donald trump had known that joe biden was going to drop out, would he have picked j.d. vance as his running mate? that is going to be an increasing point going forward. annmarie: potentially not.

j.d. vance historically has been very antiabortion. trump does not want to talk about it, did not mention it once in his 93 minute speech. this is something she is going to lead on, especially if she wants to galvanize women. this is something president biden struggles to talk about as a catholic, she has led that charge. her one big vulnerability is immigration. in march 2021 biden said to her i want you to look at the root causes of migration and many would say that is a failure. jonathan: welcome to the program. equity futures on the s&p 500 firmer .4%. there is a lift in the equity market. the bond market looks like this. yields lower about one basis point. lisa, a lot to work through this week. lisa: this week will be divided into three parts. harris is speaking today at 11:30 and kicks off the progress on how this crazy whipsaw of

activity in the democratic party continues to evolve ahead of the august 19 convention. i am also watching on tuesday. big tech kicks off earnings. alphabet reporting after the bell starting to gut check, chip rotation has been happening in the last couple of weeks and how much that has legs versus a revival to big tech. i think jobless claims and continuing claims on thursday might supersede pce on friday because last week what we saw was continuing claims climbing to the highest level back to 2021 in a remarkable rise. those are some of the hallmark moments in addition to the options we will get into. jonathan: politics, data, bond auctions. lisa: it is not important this week relative to all these other things. jonathan: ryanair is down 50% in european trading, and other airline reporting a difficult few to we have seen that on repeat. lisa: talking about having to

lower prices that consumers are a lot more sensitive. they are tempering some of their guidance saying a lot more sensitive. that is the kind of information that might dictate markets because people do not understand the possible policy implications. jonathan: coming up, terry haines of pangea policy as president biden steps aside. lori calvasina as investors rethink the trump trade and kit juckes of socgen. plunging into uncharted territory. president biden abandoning his reelection bid and throwing his support behind harris. the endorsements flooding in for the vice president and so did the donations. act blue calling yesterday the biggest fundraising day of the 2024 cycle. terry haines opengl policy joins us for more. it is about process and what happens next.

to this party get behind one candidate or you see a challenge? terry: i think they get behind one candidate very quickly. they have done huge damage to their brand in the last month and they need to recapture voter trust as well as anything else. it does not do for them to have a big fight, particularly with the sitting vice president and this particular vice president, with her pedigree and her background. i think what you will have is consistent nods to the idea that the delegates need to be comfortable with the choice, but the party itself is coalescing pretty quickly around harris. as was said, the vice presidential nomination process takes up a lot of the oxygen. annmarie: the dnc has said that in due time they will let the american voters know what is going to happen next. do they bring up the virtual rollcall and basically going to august 19 in chicago with the ticket in hand ready to go?

terry: i think that is still very much an open question. it is a very good question. they still have this particular arrow in their quiver. the key reason why biden dropped out is they were facing a delegate revolt. i think the answer to the question of whether they do the virtual nomination depends in large part on the degree of comfort the delegate show. if harris is there by acclamation, then they probably go forward. the vice presidential pick complicates things and there may be a more open process for the vice presidential nomination then you've seen in past years. i think the last time the democrats nominated somebody an open convention for vice president was 1956 when a young senator named john kennedy contested it and lost but used

it as a springboard for his 1960 campaign. annmarie: reports that yesterday kamala harris got on the phone with roy cooper, andy beshear, josh shapiro. when you look at these names what ticket do you think sets her up better to compete with trump fans? terry: they need a geographic balanced ticket and i think they need a swing state governor on the ticket. that strikes me as captain obvious analysis but i think it is. it is absolutely essential. they have shown weakness in the swing states. they need somebody that knows that ground and can center speak and has a background of being successful with centrist voters. that is how you counter today's small trump advantage in the plans they have for j.d. vance. lisa: how to democrats counter the republican accusations that this is not the sort of

democracy they espouse, that there was not a real robust primary boating season and to the extent there was it was basically just undermined in the shortest period of time ahead of an election in history? how do democrats respond? terry: they will not respond, they will turn the page as quickly as possible. the moment before biden dropped out biden was down three to trump in the two day polling averages and those polls are registered voter polls that have bigger margins of error than the three point spread. democrats have been bad mouthing biden's chances for quite a lot of time but they will pivot on a dime, probably have already started to saying we are quite competitive to begin with and what harris brings us is a great boost of energy and money and as far as the candidacy goes,

harris is pretty much plug-and-play. she is really good on the issues the democrats think they can sway, not only excite their base on but sway independent voters and that is the key to the election. jonathan: great to catch up with you again. terry haines of pangea policy with the latest. s&p firmer .4%. let's get you an update on stories elsewhere with dani burger. dani: senator joe manchin is considering a run for president. the west virginia senator is the first to express interest in challenging bp harris for the nomination. he would have to rejoin the democratic party to do so. he left in may to become an independent. is expected to sit down with an interview with fox news later today and before that msnbc's morning joe. check on ryanair shares following this morning by the most in four years. it cut its outlook for ticket prices in this crucial summer travel period. it says fares will be lower in

the second quarter with a more cautious consumer. ryanair saw fares drop 50% in the first quarter and had seen fares flapped immodestly up. delta is apologizing for canceling thousands of flights during the busiest travel weekend of the summer. many of its systems failed following that catastrophic crowdstrike outage on friday. the ceo blames the impact of functions that rely on microsoft windows operating system. making the airline unable to process large volumes of changes to flight personnel. that is your bloomberg brief. jonathan: thank you. up next, rethinking the trump trade. >> the market does not seem to be interpreting harris as a strong candidate that could challenge trump and that is perfectly reflected in her approval rating. jonathan: that conversation just around the corner. live from new york city, good morning. ♪

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jonathan: when futures started trading one thought we all had his let's see where small caps are. let's see where small caps are right now. positive .1%. the outperformance of .7%. the political consideration front and center. lisa: the idea that the rotation trade was the trump trade. the idea that you will have small caps outperform and you will have big tech that could underperform because of increased sanctions and tensions with china. we see a reversal of that? that is one of the key questions of this week. jonathan: rethinking the trump trade. >> the market does not seem to be interpreting harris as a strong candidate that could challenge trump and that is perfectly reflected in her

approval rating. until we get clarity that is the actual choice and potentially there is a chance for harris to resurface her image, that could be something that could cause her odds to go up. if we have learned anything over the last three weeks it is that things could change quickly. jonathan: here is the latest. treasury yields easing as president biden steps aside and endorses, harris. lori calvasina writing "if the change swings momentum back to the democrats it could be fuel for a short-term pullback. if trump expands his lead historical data suggests stocks may avoid the pullback we've been worried about." what changed yesterday afternoon for this market? lori: we said those relationships we have seen all year between trump and betting markets could change. we are in a discovery process this week. i think we have a little bit more certainty yesterday. we look to the futures reaction

last night that was very muted and moving more right now. i think at this point in time we have seen a number of curveballs , number of twists and turns. for me what changed is this race is still an open question. ♪ -- jonathan: you had cautioned not to be too underweight small caps. it is earnings, we hope they improve. it is trump. people think it will be a small cap presidency. how much was it about one versus the other or is it all of the above? lori: i will not sit here and city election does not have some sort of role. if you go back historically, 2016, 2017, there were three big trump trades. one was on him getting elected, one was over corporate tax reform and one was over the trade war.

there is presidents and we did hear investors talk about that, especially non-us investors. over the past week or so, what has been driving the small caps in my conversation is it has been more about the fed and inflation. when we talk to investors about the trump agenda, there been concerns that it could be inflationary, that it could keep interest rates elevated. those are the things that dampen enthusiasm. does it matter? yes. lisa: has the trump trade been a fiction and has it been tied to economic data that is supportive of the fed rate cut and under factors -- and other factors? lori: i would venture to say in financials there is been more of a trump bid because that is been the one sector of been hearing investors say if you want to buy something on a trump win it make sense from a regulatory perspective. if you think about energy, it

has been more complicated and that is the one i was hearing investors question last week because it made sense on a trump 2.0 trade. lisa: you brought two dolls into the office, joe biden and, harris. just joe biden and kamala harris up we hear analyst after analysts saying it does not matter that much. you have two props to take with you on your meetings that have to do with politics and that is the bulk of all of the conversations analysts are having. what are people asking and what are you telling them? lori: the reality is this is a pocket of uncertainty and that is what happens. we tend to see selloffs. we tend to see uptick in volatility. what we are trying to caution people is as many times as we are using words unprecedented, there is a normalcy to all of this. we have talked a lot about the investor reaction to talking about the election is staring at

the sun. i think it has been a very difficult thing for people to talk about. it has been a difficult thing for people to analyze. maybe i have wishful thinking. maybe with things having been so shaken up -- now that we have a vp pick on the republican side and maybe we'll know that on the democratic side, maybe it will be easier to analyze policy. investors, whatever their opinions are, that is what investors of babel to do, focus on policy. annmarie: when it comes to policy ran a playbook for harris during the 2020 nomination process. what differentiates her from joe biden? lori: a lot of investors are doing this. we have a playbook and we had all of those candidates in the democratic primary in 2019. we did not analyze all of them. we looked at warren and sanders and harrison biden. we had two pages worth of issues and we did in norma's amount of

work going through all of their commentary on things like taxes and trade. what we generally found his you had worn and sanders to the left and then biden and harris on the center and harris was somewhere in between. her views have likely evolved so i do not want to make too much of this. in general i was shocked when i looked how many times i saw taxing financial show up for things not necessarily related to financials. will people be digging that stuff up? perhaps. she seemed tougher on energy then biden had and on big tech, and this was in focus for me because all of the kerfuffle last week over what the j.d. vance picked meant, we made notes that it seemed like harris was less onerous to big tech than warren or sanders, maybe in the warren or biden camp. we jotted down we need more investigation. the others were more in the camp of let's break them up. jonathan: this is why the

performance of nasdaq futures is notable. we spent the last week about being short -- and long bitcoin. it feels like they are against big tech if they get a second term. if donald trump gets a second term. to the earnings matter? i want to understand what you're telling clients. google is up 27%. to the earnings matter when the politics begin to dominate? lori: i think the earnings always matter. our number one line, the phrase stuck in my head is proceed with caution. that can be with regards to the broader market but is also when i think about investors who have to make their year, as much as i would like to be a three year to five year person we have a lot of people who need to get their portfolios right between now and the end of the year. when we are thinking about that and we are starting to jump on this rotation trait and say now, i am in the camp that the seeds have been planted, the stage has been set, the pressure is there,

but the earnings matter. i've a chart where we look at the dominance of the magnificent seven versus the rest of the market. it is astronomical last year. the earnings dominance is expected to shrink. the problem is how do you get the rest of the market to catch up to nine of sin seven already how to get the rest of the market to catch up to the top 10 market caps. they seem like they are dissipating. that is what i am struggling with. i want to see which way the earnings go. if these kind of financials and energy can make their case they are ramping up earnings growth despite the macro tailwinds, that supercharges rotation trait. if they fall on the side and the big tech names continue their dominance and things get better i can see investors going back easily. lisa: which brings us to the three pillars of the week. the dominance of politics, this issue of the economy and how much that is not the tailwind

you're talking about. how much of a drawdown based on the extreme positioning could we see in the equity market if we do not see the economy cooperating and does continue to roll over? lori: it depends on what we mean by rollover? is it softening or recession. if we are just getting a softening, that is worth 5% to 10% and closer to 10%. anything more than 10%, that is when we have gone into periods like early 2018 or later 2018 or 2015 or 2016 when recession risks are very real and very raw. do not see us getting there. jonathan: lori calvasina of rbc. on the earnings point, we have to keep going back to it. the airlines a been so disappointed. it started with delta. it is not local, it is international. of the markets grappling with a similar issue. lisa: but trying to message it differently and saying we are coming off a high base.

it does not make sense if you look at how crowded airplanes are which brings us to the idea it must signify a pushback by the consumer. friday we get personal spending as well as pce. we see that reflected in overall numbers at a time where earnings are suggesting it is an issue? jonathan: i know many of you have struggled with airports on the back of the tech outage on friday. michael mckee struggling to get back to the studio. he is not with us. lisa: that is the reason why? jonathan: he said. delayed planes. different airlines. he flew delta and he said delta had specific problems. annmarie: so did i. lisa: microsoft is up after all of that. jonathan: coming up, kit juckes of socgen following biden's decision to step aside. ♪ ndals.com or call 1-800-sandals.

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jonathan: live from new york city this morning, good morning. the equity benchmark on the s&p higher by half of 1%. the nasdaq 100 up 0.8%. freezing cold, ice cold water from the small caps with morgan stanley and mike wilson this morning. what has driven the small-cap rotation? it was the rise of the odds of a trump win, capitalizing the

position towards small caps. i would expect the positioning in small caps, limited fundamental for small-cap outperformance continuing in a durable manner. lisa: in a time when a lot of people are expecting this to continue. if you do seek personal spending go down, the voice of airlines continues to be represented in other earnings, does that turn the tide on a business cycle? jonathan: let's go from the nasdaq, we have talked a lot about this administration, if it gets a second term under donald trump, how much they go after big business, big tech, we have talked about this repeatedly,

they would be the party that might go after some of these big names, how much did yesterday afternoon change that story? lisa: we will see how much, let harris -- kamala harris gains in the polls. we will see if this re-energize is the base when it comes to who is president but also the other representatives in the house, that will make a difference. really important basically in 2016 kamala harris was more friendly to big tech, perhaps that explains some of the outperformance. jonathan: let's get to the bond market, the good news is the quiet period, fed decision next wednesday, in the bond market in and around for 50, 4.51.

let's talk about the tug-of-war within the economic data, retail sales good last week. jobless claims, less good, the wrong time -- kind of upside. lisa: a lot of people are saying this is goldilocks, you get confusion, you go back to what has worked in the past. a lot of people have said jobless claims are the most important. that is possibly the one high-frequency data point that tends to be the most correlated. retail spending is hard to get too much faith in because of what we are hearing from a lot of companies themselves. what are they saying? consumers are pushing back, they are not spending as freely. jonathan: delta, pepsi, others following up. the euro right now not doing much against the dollar.

our top story, president biden abandoning his reelection bid. the vice president was the favorite for the democratic nomination but could face competition from joe manchin, who is considering reportedly rejoining the party to run on the democratic ticket. how much of a challenge are we about to get? lisa: he clearly wants something and feels the name -- need to put his name in there. this is the shortest presidential race we will see in history. if you want something, you have to act quickly. earlier in the day he said joe biden should pass the torch. he said it should go to a new generation. i think that is really where he is. parties are moving right now. he wants more of an open convention. this is his way of trying to sway where the party is right

now. jonathan: if you wanted to make a move and it is difficult, you have gone through the process, he starts from zero. listen to some of these numbers. the donations pouring in for the vice president, democrats raising $15 million yesterday. calling it the biggest fundraising day of the 2024 cycle. harris has access to the $96 million remaining in the biden committees fund. lisa: how is she planning to use that? how to advertise? is she trying to cater to the general election to afford that kind of liberty rather than catering to partisan politics more significantly than the other candidates have. anyone else does face an uphill battle. the key question will be who will be the running mate and how much pressure there will be on

that? >> she has access to more than $90 million on day one. that is huge. she has name idea but she needs to go out there and try to connect with voters as well as introduce her potential running mate to the rest of the nation. 50 million dollars overnight from grassroots? she has re-energize the democrat and the base that biden was struggling to shore up. jonathan: should we go through the list of running mates? josh shapiro of pennsylvania. gretchen whitmer, mark kelly, the wall street journal reporting she had talks with schapiro as well as governor cooper and andy beshear yesterday. that is the list, six or seven names, maybe more elsewhere.

>> she really needs to go for a swing state governor. that would put roy cooper and josh shapiro on the list. this is where trump wants to take the fight. already on twitter from republicans talking about what she said, wanting to be the nominee in 2020 that she would ban fracking. this is important when it comes to pennsylvania. you look at kentucky, this is midwest. could you be someone who takes on vance? jonathan: you call republican vice president sweepstakes, you call it the bachelor, what is this? lisa: how do they distinguish themselves from what we saw from the trump campaign? sort of this tension that i could feel in a lot of the different interviews over the

weekend. on one hand wanting to work quickly and feels like that person has a mandate after the rnc that coordinated -- it is a democratic process at that. those are two competing aspects that we see what we see the bachelor on repeat or something else. >> going to an open convention and making sure there is a real process in place. they should make this like the bachelor. what i think that would infuriate donald trump is the fact that it will be wall to wall coverage on who kamala harris picks. they will go into this convention having a ton of media space. we know what the republican party is looking at. the excitement in terms of where the news flow is coming will be

from the democratic side. jonathan: let's turn to the markets. equity futures on the s&p positive by half of 1%. the dollar a little bit weaker following the announcement. president biden's decision not to stand for reelection hasn't made the outlook any clearer. the reaction is a reflection that the latest development improves the chances. i don't think it is that obvious. are we saying democrats win and needs it is dollar bearish? and if the republicans when it is dollar bullish? >> it's how i see the bit between the election if it came -- became one-sided. donald trump being much more overt in terms of the chinese yen.

i think he could get that and make it happen. otherwise the bigger, longer term picture is whether the u.s. economy is slowing from a really fast rate. you might get another cut and another hike. or whether we are back to 1995 or 2002 and the fed will cut, cut, cut. we don't know the answer to that. neither of them will be putting up taxes and cutting spending unless i missed a scoop badly. in the period between now and the election, there is a sense that trump is putting policies in place that return higher. they are intended to weaken the

dollar in some form. lisa: i appreciate the difficulty in analyzing a black box. how difficult it is to get your hands around it and how everyone wants to look at policy. has there been concrete policy that would really change the directory the dollar would be stronger with trump. kind of a reach back from the last couple of weeks? kit: we look at the economy and we have this run of negative data on the bloomberg price index. that is what is determining it. with the election as well as depends on what kind of congress the president has with him. if you have a free reign it is different, if i'm the one hand

you have a president inclined to increase spending and neither of them could get it done in sort of have control of the whole program. that part of it is still completely uncertain. that is my starting point. we get a reaction but we also have to admit the starting point is the strongest dollar we have seen in years. that is a vulnerability. i'm not thinking could go down a bit or up a bit? i'm looking at euro-dollar still under 1.10. the margin certainly if this becomes a story of policies that are intended to strengthen the dollar, we might get a weaker dollar before the election.

annmarie: not a single republican was able to outline how they would actually weaken it, what could they do that would actually weaken the dollar? kit: could appoint a treasury secretary who would point out the failure to get the yen to strengthen would be the fact that they got no cooperation from the u.s. it is hard to see what you could do to strengthen the euro other than backing to supporting ukraine and so forth. it is not hard to see how you could strengthen the yen. the japanese trying to have a bilateral program to strengthen the yen. this would strengthen the chinese yuan. other currencies would start coming back. that's the piece i could see.

the european side, much less obvious. jonathan: good to hear from you. i know it feels like a lifetime ago. it was literally last week we publish that interview with donald trump. the headline of the last week still in the fx market is the former president believe we have a currency problem. that is why it is less obvious to me what these individuals actually need with foreign exchange. there is a consensus and it is based on policy. democratic win, continuity, weaker dollar, rest of the world improves. if a sitting president turns around and says we have a currency problem, doesn't change the story? lisa: the reason why there is a high degree of uncertainty. maybe people will use that as an excuse to take chips off the table. at the end of the day it doesn't

really change things because the economic policy, the treasury secretary will be what drives that. jonathan: let's give you an update on stories elsewhere, it is dani burger. dani: donald trump has posted shortly after biden's announcement, use the opportunity to go after him calling him unfit to serve. he previewed his strategy against her saying i don't think it will make much difference. i would define her in a very similar manner that i defined biden. china with interest rate cuts overnight. it is hoping to pop up growth. last week's major communist party meeting, lowering their main benchmark lending rates to be less costly to borrow for mortgages and other loan.

piastri won his first f1 race. they came after an awkward back and forth between the team and its drivers. norris obeyed offers and let piastri pass. max verstappen's engineer called his over the air can planes -- complaints childish. jonathan: mclaren sounding like the democratic party over the weekend, step aside, step aside next on the program, passing the torch to kamala harris. vice president harris: donald trump will sell out working families. he has already vowed that he will be a dictator on day one. jonathan: the conversation up next. you are watching "bloomberg surveillance." ♪

jonathan: starting the week in the right way. equity futures positive by 0.5%. under surveillance this morning, passing the torch to kamala harris. vice president harris: if donald trump wins in november he will sellout working families. he has already vowed he will be a dictator on day one. joe biden and i trust women. women trust us to fight for their most fundamental freedoms. jonathan: democratic donation serving -- surging past $50 million. vice president harris moving forward with the endorsement of president biden and the $96

million. the financial boost giving harris the advantage over any potential challengers. bill allison joins us now for more. let's follow the money. you follow the money every single day. how to those numbers stack up with what donald trump has been able to achieve. bill: donald trump has had an amazing run of fundraising since he was indicted in the historic conviction. he raised about $58 million that day alone. he's had a number of people signing up to support his campaign. yuan must has pledged -- elon musk has pledged to put money into his super pac. his campaign started with about 280 $5 million in the bank. annmarie: what does it mean for

kamala harris? she has access to the $96 million in biden's war chest, what kind of new donations could we see? bill: there had been a huge donation jump, it's a pretty good guess that they are going to the presidential ticket or to the dnc that supports her. democratic donors were on the sidelines for most of the month of july. they were talking about holding back $90 million that would go into the main super pac that would support joe biden. democratic donors were very thoughtful -- doubtful that he could finish out another term. we will see a lot more money coming into democratic coffers. annmarie: what if it is a

governor, what does it mean for the money the dnc has built up? bill: you could donate it, they cannot just can't -- take that campaigns money. that is for this particular set of candidates. that money will basically be lost to the party unless whoever's running the campaign were to donate it to the democratic national campaign. i'm sorry. they could give an unlimited amount of money to a political party. all of that could go to the dnc that could be used, it could go to an outside spending group like a super pac. it would not be entirely lost if somebody else were to get the nomination. lisa: we apologize for that

technical difficulty. we are also seeing joe biden spent 93% of his money that he raised in june. how did he spend the money? how will the change in terms of how the money will be spent under presumably kamala harris? bill: this is one of the things that is a little bit lost. democrats have spent $450 million, that includes joe biden and the democratic national committee. that money can't be recouped. in some ways while they have $240 million they started in june or july, obviously they have been spending a lot of that on television. they have to change gears pretty quickly. obviously there will be spots for harris, making the case for

her. i don't know that you necessarily need to be spending a whole lot of money. it is not like you are running a primary in new hampshire or iowa. i think candidates who do want to challenge and dead could certainly raise $10 million pretty quickly. use that to try to influence the delegates and get their message out. lisa: where is the money coming from? how much is coming from big business versus smaller individuals? bill: the party money is largely coming from big donors. as the money shows, that is usually small dollar. there is more grassroots enthusiasm now than there has been.

all of this money is donated by individuals. we just won't know until we see the campaign finance reports that come out on august 20. we will see who is donating to her. jonathan: appreciate the update. bill allison on the latest campaign financing effort. the pressure from biden to drop out from his own party, and what was happening with donors. this was bill's lead paragraph over the weekend before his sunday announcement that he was leaving the presidential race, the campaign ended with 96 million dollars cash on hand after a spending spree last month that depleted about 93% of the money it raised in june. that's how quickly the money was going. lisa: and how it was not being replenished raises this issue of the $50 million brought into the

campaign. in the hours after joe biden stepped aside raise the question of how much was that -- of that was on the sidelines waiting. jonathan: our first question was have we dealt with this? can this party get behind one candidate? people pushing in the direction of new running. annmarie: these are some donors who want to see the open convention and they will go with someone who basically feels like they could throw their name in the ring. joe manchin is an independent. he will have to be welcome back into the party to get the nod to, which doesn't look like it will happen if you want something. jonathan: up next, wei li,

thierry wizeman, this is bloomberg. ♪

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>> she's got problems there, she is very strong on the social issue part. >> already you see endorsements coming in. the money will move immediately to support her. >> like all vice presidents, she pulls pretty close to the president. people will take a fresh look. >> she needs to show she is an individual apart from joe biden.

>> we've never really seen anything like what the democrats are going through. they have a wonderful opportunity to reset this race. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: good morning for our audience worldwide, the second hour of "bloomberg surveillance," with a snapshot of equity futures. s&p 500 up by 0.5%. lisa: and climbing as we go through the morning as people reassess what kamala harris' ent rance to the race means. is this going to be the gridlock people were hoping for? or is this a harris that is more friendly to big tech? jonathan: the democratic party has been a mess for a number of

weeks ever since that debate, could they actually unite and get behind one candidate and move forward? we could then have a real discussion about what the difference is in the policies of harris and trump. annmarie: there is not a lot of distance. we heard from the trump campaign . they will want to paint her and attach her to the incumbent. we have had a groundswell of support for kamala harris overnight. governors, many were saying they could be individuals at the top of the ticket backing her. we are waiting on a few key names. this is the leadership if you will from congress. jonathan mentioned earlier former president barack obama. the clintons mentioned her, obama is waiting. they want this to actually be a process. people are being critical of the democratic party saying this isn't going to be a process if

you will just anoints at the top of the ticket. annmarie: talking about the volatility this would create in market because of how unprecedented this really is. we have seen the opposite this morning. laura did a wonderful job explaining why. this might be more certainty through the past couple of weeks. the person who would follow up is more of a continuation candidate, not necessarily a new candidate. jonathan: we have earnings for you, data, then you have this. all of a sudden you start to watch this and address today from the vice president. annmarie: you are hearing all the other noise. joe biden will speak on wednesday. how much could kamala harris win

the hearts and minds if you want to go to political speak of the electorate now that it is not just an age or name, it is actually a candidate in her own right who has won before but has a bit more experience now. jonathan: equity futures positive by 0.5%. yields a little lower. coming of this hour, we catch up with wei li of blackrock. president biden bows out. jim bianco as traders reevaluate the trump trade. joe biden makes his exit quitting the presidential race and endorsing vice president kamala harris. the election fewer than four months away. josh, great to catch up with you this morning. let's take a step back.

what happened in delaware over the weekend in the hours that led up to that statement from trump on twitter, no oval office address, just a letter, what happened? josh: he was huddling with some of his senior aides, these were people pushing the other way. biden has a very close circle of allies. it looks like they more or less saw the writing on the wall. all sides were that -- signs were that joe biden plan to stay in this race. a real 180. a lot of reporting on the drumbeat leading up to that. the pace and the velocity of the last 24 hours has been remarkable. even after that announcement, we

still haven't heard from joe biden in the flesh. annmarie: why did the nation not see the president of the united states, the sitting president, why did adversaries and allies see the president with remarks explaining why he is stepping down and not seeking reelection? josh: he's doing treatment for covid, i don't know much beyond that. i will have an update as soon as i can. we are watching to see what he will say this weekend. he will run away from biden on certain issues. now we have this juggling act. it will be an interesting one to watch out for. right now at 3:00, yesterday we are want at -- asking what are the rules, the absolute speed harris is consolidating the

force, the notion this will be a condensed primary. with all due respect to senator manchin, it looks like it is harris' to lose. anything could change. it will be full speed ahead it looks like because the campaign has already flipped over. lisa: joe biden's remaining president until the election until handing the presidency over. a lot of people including house speaker johnson has talked about his resignation, what this means for the next few months. how much talk is there about that? has that been fully shut down or is this risk of the legitimacy going forward for the remaining months? josh: some democrats will tell you in an ideal world harris would be the president running for reelection.

practically there is zero pressure right now. this is republicans calling for it. remember, only a couple of weeks ago or even a few days ago for joe biden was that his president the is doing great and he wanted to finish the job. we will be interested. one of the targets this week is learning -- burdened by what has been. does that change what he does? maybe it puts him in a different position. we have been watching for presidential actions on things like the u.s. steel acquisition. if he's not running for reelection, that could change. jonathan: what could be. josh wingrove, thank you sir.

wei li of blackrock joins us now. we have seen the moves, thinking about the banks, energy. thinking less about some of the big tech players. the point you in the team have made in your midyear outlook, it feels to me like stick with what is working. they are powerful and not going away. could we do that this morning? wei: good morning, it has been a very busy few weeks and we are entering the earnings season. it is important, difficult but important to cut through the day to day noise. focusing on the fundamental picture. the fundamental picture remains that the earnings growth remains quite strong. we have seen that pac is still

expected to deliver the ballpark of u.s. market earnings growth. small caps staged a quite an impressive rebound. it has been catalyzed by markets , extrapolating recent trends. inflation is falling. that market is getting excited about rate cuts. taking a step back, cutting through the noise and resisting temptation to extrapolate momentum of a macro development. we are still looking at an environment. in terms of the discount rates we will used to discount future cash flow, we are looking at a rate that is higher. when it comes to earnings, small-cap for over one year, they didn't deliver any earnings. they are expected to recover a little bit.

they are still really lagging on the picture. all of this to say there has been a technical rebound that likely driven by sentiment positioning, we are not chasing that momentum. that rebound is not supported by fundamentals. lisa: i've heard growth, fed, earnings, but no politics. does that basically meet ignore politics and go with those three pillars of what the economic data indicates and what the fed does and what earnings show? wei: i absolutely think politics are important. it is important to cut through the noise and focus on the bigger picture, what we think about the potential scenarios, no matter who gets in the white house, we are still talking about an environment where u.s. code deficit is expected to stay very large at unprecedented

levels. that together has the potential for policy, the potential for immigration. especially in the context of mega forces shaping the environment. they really need to think about positioning for higher rates compared with pre-pandemic levels. we don't think they could go very far because of the underlying inflationary pressure. the portfolio is important even as we think across politics too. annmarie: i look back at the year 2000 when the market sold off some 8% from the time of the election to year end, what happens on november 6, november

7, if there is a potential combat -- contested election. wei: everything right now is highly uncertain and adds to that uncertain. i wouldn't speculate way ahead of time what could happen later this year. i really want to stress the importance of analyzing outcomes along the lines of policy. what does it mean for pistol -- fiscal policy, for the transition? what does it mean for immigration? all of that at this juncture, what we could say with greater certainty is looking through all the scenarios, we are talking about higher inflationary pressure, potentially higher rates, that's what we could position for right now. we are also talking about a

pretty quiet environment. we are entering summer, this type of backdrop potentially could mean exacerbated market moves both on the outside and downs at upside and downside. the potential liquidity driven market volatility is something we need to be position for. we are talking about japan, inflation likely re-accelerating. we are talking about the end of july. there meeting being a live event. a weak yuan is a popular founding currency for the popular trade. we have seen strengthening for three weeks now. we could see some unexplained

moves with the popular trades against the backdrop of liquidity. as we cut through all of this potential triggers for market volatility. we are going through earnings season right now. focus on what is delivering earnings growth. they are expected to do most of the heavy lifting for earnings growth. tech expecting to deliver 18% year-over-year for future earnings growth, only expected to deliver 3%. focus on where the drivers of revenue is. jonathan: we thank you. looking for a quieter summer, i will take that. lisa: when it comes to just the amount of volumes. when i got from her was stop putting a narrative on every market move. cut through the noise, strip out

the noise, longer-term and that is what a lot of traders are trying to do. jonathan: translate, ignore the politics. let's give you an update on stories elsewhere this morning. here is your bloomberg brief. dani: brookshire hathaway has sold off another chunk of byd. it was more than 20% two years ago. that investment has returned a 2000% gain. the less than 5% position of berkshire hathaway it is no longer obligated to disclose sales. deutsche bank is bidding to become one of wall street's main european rivals for serving america's altar rich. it plans to add as many as a dozen senior bankers. israeli prime minister benjamin netanyahu is heading to washington this week. he will meet with joe biden on

tuesday, addressed congress on wednesday and meet kamala harris on thursday. negotiations between israel and hamas are ongoing and comes in the shadow of biden's decision to exit the campaign. jonathan: up next on the program, starting the search for vice president. >> they need a geographic balance ticket and they need a swing state governor on the ticket. that strikes me as captain obvious. jonathan: live from new york city this morning, good morning.

jonathan: the opening about to kick off a brand-new trading week. equity futures going into a positive by 5/10 of 1%. clear outperformance on the

nasdaq, the nasdaq 100 up by 0.8%. starting the search for a vice president. >> they need a geographic balance ticket and quite frankly they need a swing state governor on the ticket. that strikes me as captain obvious. they have shown weakness in the swing states. they need somebody that knows that ground. it has a background of being successful with senators and voters. jonathan: vice president harris speaking to potential candidates to join a new ticket. the wall street journal reporting harris had calls with pennsylvania governor josh shapiro, north carolina governor roy cooper, and kentucky governor andy beshear. the normandy of the decision to step down and the drama that will ensue with the democratic party means all eyes will be on

the process and hunt for the next vp. i want to turn to the process. i want to talk to about what the next month looks like from the dnc in chicago, what does this process look like? henrietta: the process starts with platform committee meetings before them. around july 29 you get the delegates lined up. august 7 and august 9 are critical dates. we kick this off when all of this will be sorted. whether the superdelegates will need to weigh in, the convention itself occurs. donald trump announced his candidate on the rnc.

we will expect a similar flow from the democrats this year. the intrigue around who it might be, which state will get the nod to, which electoral college map is what the democrats will be working on. mark kelly in arizona, speaking with tom keene, a perfect example of someone who could expand the map where biden was losing ground considerably. annmarie: is it your understanding they will hold a virtual rollcall vote? henrietta: that is the plan right now. the virtual component comes from a string of things. all of which are basically expired now including issues with the ohio ballot and the dates have all been moved. even with majority leader schumer saying don't you dare try to pull this, we will take all the time we need to get to

this convention and vote live. the rollcall vote is scheduled to proceed as i am aware. annmarie: let's talk about the vice presidents, josh shapiro, roy cooper, andy beshear, what to those men bring to the ticket? henrietta: knowledge of the states that the democratic party needs the most. there's a lot of merit to consider we may be harping back to a time with name recognition they have on the ground and the key states. it is critical to someone launching their campaign. many. a myself included have been saying the vice president doesn't matter from a geographical standpoint. trump has those states locked up, it shouldn't be much of a concern. for the democrats who have much lower name recognition than even donald trump and all of those

candidates. name recognition will be paramount. that is already higher in those states. for north carolina, those make sense to start with somebody who already has operation on the ground. lisa: people are wondering whether kamala harris is a true continuation candidate. picking up the torch from joe biden or whether her platform will differ somewhat substantially in key areas. how much do you think we will get a sense of this? henrietta: next year we will write a tax bill. we could talk about kamala harris' position on tax, she doesn't have the authority to write the tax bill in the first place. if you are focused on what will the platform be, call up the democratic ways and means committee members and have those

conversations. hopefully they wrote this bill and published it several years ago. that is the platform she will pursue. with regards to climate, ai, emerging tech, i suspect the trade policy will be similar to president biden's. i wonder how many folks would stay on for a second term. a lot of these agencies, the department of commerce for example have built these robust platforms in the last couple of years since the infrastructure bill, inflation reduction act, a lot of work those people still have to do. i suspect there wouldn't be a lot of turnover. jonathan: this was great. the process over the next month and the odds kamala harris could get this done. is the energy coming back to the party?

maybe. you get rid of the ag issue. we are already talking about a continuity candidate, what fundamentally doesn't change beyond the enthusiasm? the foundational feud remains the same. it may tell you trump is the slight favorite. lisa: maybe this causes a split congress more likely necessarily at the top of the ticket. jonathan: jim beyonca up next -- bianco up next, this is bloomberg. ♪ (♪♪) (♪♪)

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jonathan: a sneak peek of the price action, the s&p 500 up i one puff of -- by 0.5%. the small caps underperform. the small caps are performed last week. the nasdaq 100 down by 4%, almost, on the week. the small caps of by 1.7%. we are talking almost six percentage points of outperformance on the small caps last week, so that gap we are closing today is like this big compared to the gap of last week. lisa: and that extent what we

have seen since june 27. but thanks, smaller banks in particular, up more than 10% since that time. they have been the big a performance -- big performers. jonathan: later on -- leave behind the four-day losing streak on the s&p 500 and get to the two-year. 4.5170. more fed speak. the fed speak we have had over the last week was pretty consistent. we are getting closer to a rate cut, but we are not there yet. it is about economic data. retail sales last week better, jobless claims worse. this week, another round of claims. pce friday. lisa: another round of consumers where -- you hear one market to cement

after another coming out and saying we do not want to focus on the noise. how do they strip out the noise, how do they focus on the policy? they say either candidate will cause the officer to be increased, so higher benchmark rates, and faces off of the fundamental economy, which is softening, but not soft, yet. that is what is going to dictate a lot of the trajectory. there are also bond options this week. jonathan: what have we got? lisa: 69 billion dollars of two-year's tomorrow, $75 billion a five year wednesday. the reason people care is, ultimately, fiscal policy cannot change that much that quickly, and a lot of it does matter on the composition of congress. people are looking into this. we heard wei li basically avoid political discussion to say bond option. jonathan: i loved how wei navigated that -- cut to the

noise, repeatedly. the foreign exchange, the euro a little weaker. about 1.0887. dollar-yen down by about 0.4%, in the end's favorite. 1.8680. under surveillance this morning, endorsements pouring in for kamala harris, bill and hillary clinton, elizabeth warren among those endorsing her, but former president barack obama falling short of endorsement, saying he believes democrats will create a process in which an outstanding nominee will emerge. that was notable. annmarie: but he does not want to put his thumb on the scale. he said this about four years ago. i would say he is waiting for the process to play out, then will come out with his full-fledged endorsement. what was interesting was all the governors everyone was talking about could be potential tops of ticket, shapiro, whitmer, they

are all getting out and coming behind kamala harris. so it does not feel like there is the infighting a lot of people thought would happen after joe biden pulled out. lisa: all i can say is currently i am pretty thing michelle obama has a 6% chance of running as a democratic candidate, so anyone saying this is a conspiracy theory to get michelle in, first of all, it is clear she does not want it. second of all, it does not seem like the likely outcome. the idea of a contested delegate kind of grace is one key question of how do you create legitimacy at a time when the candidate was pushed out the closest ever to an election for a sitting president? that is unprecedented. how do you create this feeling and counter criticism this creates a clubby inevitability of her election? jonathan: undermining democracy at the time you are claiming to

be the poster child for it. lisa: some people would argue the polls with want a bigger primary season. 80% of people were hoping joe biden did step down. what is the popular will is a good question. that said -- annmarie: 81 million people voted for her attached to biden as the vp candidate in 2020, and that is what democrats will say. you are voting for a president, and a vice president who could assume that role. jonathan: jamie dimon got mentioned. lisa: how much is this a desire to see him in office, how much of it is name recognition? it was said, because -- jonathan: the names get thrown around all the time. donald trump responding to president biden's exit, posting,

shouldn't the republican party be reimbursed for fraud in that everyone around joe, including the doctors and the fake news media, new he was not capable of running for or being president? three different conversations taking place gave the conversation with publicans want to have, his fitness for office, and, if he can't campaign, can he govern? there is a conversation the public has been happening -- having and the conversation democrats have been having, and it is not about whether he can govern the next foreign half years, it is about whether he can win in november. that is what they are focused on , winning in november. if you look at the letter, the president did not necessarily come out and say my cognitive abilities will allow me to campaign in november and governed for four years. annmarie: republicans are immediately coming out with the pushback, and they will try to paint kamala harris as complicit

in the deterioration of joe biden's health. i go back to the polls, and 55% of americans rate trump's presidency was a success versus 39% think biden's presidency was a success. all they really need to do, the republicans, what you will continue to see them to do -- president trump did this at the rnc -- he kept talking about this current administration. he may have accidentally slipped and said biden's name --he was not supposed to -- but he kept mentioning the current administration. jonathan: with the president's health, we have to ask, where is he? you pushed out the statement yesterday one -- at 1:46 p.m. we don't hear from him. still this morning, no real update. it is very strange to have a decision like this, then have nothing afterwards, whatsoever,

and not hear from the president himself. we understand he got covid and is self-isolating, but he has still got people around him that stayed with him in delaware over the weekend. it is very hard we have not heard from the sitting president in the last 24 hours. lisa: a lot of people are wondering is it simply because he is sick and coughing, is it because he does not really into this and does not want to for his heart into it? there will these arguments, but what i find interesting is which one the republicans will coalesce around, because, frankly, we have heard a lot thrown at theirs, whether it is this idea of disenfranchisement, whether it is this idea of questions around why this has not been revealed earlier, what are they going to coalesce around at a time when they half -- annmarie: there is really no excuse for the president, given the fact he ran an entire campaign from his house in delaware when there was covid and people were locked up here he could have gotton on zoom, he

could have had a camera crew set up in his house, when he was isolating in a different room. there are ways the president of the united states could have presented himself to the american people and give this address over the weekend instead of this letter which, to be honest, when i saw the letter, actually said to people, potentially, was this a hack? jonathan: a bit of news from cbs, senator manchin says he is not going to be the candidate for president. we were talking about whether this party would unite find one candidate, would there be a challenge? manchin's name got mentioned paid according to cbs, i am not running for office. lisa: does this mean he got what he wanted, essentially this quick will window that focused attention on him? what the showed is how few potential candidates there are. jonathan: we need to talk about the market as well, investors rethinking the trump trade, considering whether president biden's exit from the race boosts the odds of a democratic victory. equity markets lifting.

jim bianco joins us now for more. do we need to rethink the so-called trump trade? jim: if you assume there was a trump trade to begin with, you definitely need to rethink that. why do i say that? look what happened the last couple months. donald trump was found guilty. that seems like three cycles ago. we had a debate. we had an assassination attempt. now we have had a withdrawal. if you look at stocks, bonds, it going, you will look at the chart over the last three months, show me where that -- of those events happened, and i cannot find them. i am not sure if, at the top level, there has been a trump trade or, let's call it, and election 2024 trade, or that there will be one as we go forward. if you want to drill down to the industry level or the specific stock level, there is probably some in there, highlighted by trump media being probably the most obvious of those trades. but the reason there isn't a

trump trade, whoever wins, we will still have a deficit, we will still have high government spending, we will still have the same problems we have had now, which, regardless which candidate we get winning in november, and that is what i think we have kind of overstated this trump trade. lisa: have we overstated the potential volatility of some of the unprecedented shifts we are seeing in this election cycle? so many different notes last night i'm of the night before, really highlighting last night how their was expected volatility in the works because of the upending of the race. is that a fallacy? jim: i think what they are sticking is there is a pal trade going on at the same time. you mentioned the dramatic performance of small caps. there is a better argument to be made that is around the potential pivot for the fed to cut rates in september, that that is what drove that trade.

let's not forget, last week, the s&p was down 4%. so there was already volatility building in this market, and this morning, given what we saw the second half of last week, has been very subdued. you would expect it, even without this announcement, based on what happened last week, a bigger move in this market. i do not think there is -- i am talking about the top level. at the market level or the second level you are seeing this play out. and i will mention something henrietta mentioned -- whatever the policy is of trump, of harris, she is the nominee, needs congressmen and senators to agree with it. we are not electing a monarch. we need both of those parties to agree with whatever they want to do, and that is really where the markets are focused. lisa: you mentioned, on the sector level, it could have a bigger impact. this act or level includes one

of the biggest behemoths of astra in the market rally to date, which is big tech, and yasin big tech get a boost in part because there is this leave kamala harris will be more family to big tech, with the policies that she can do more unilaterally than other potential candidates. how much do you view that as having credence and legs? jim: i think there is a little more there, especially if you were to focus on tesla. for whatever reason, tesla seems to be a stock that is kind of like a trump trade stock. the stock was up 45% 11 days after the debate. because elon musk has been so tied with donald trump, he is giving him $45 million a month now for the rest of the election cycle, so that is to help push the magnificent seven stocks higher and some of the other stocks as well, but even if you were to take tesla out, i think there is probably more of a trade there, but even there, i would say it is not as much as

every body thought, but there is more there than there was at the top level. annmarie: could we sit on tesla for a second? isn't this a company that benefits from what the biden-harris administration has done when it comes to tv subsidies? jim: you can argue that, and you can look at the stock price, where it went down for months until june 28, when it went up to that is an argument, a rational argument, but the way the stock is traded -- we are in a meme stock world anyway, so the way this stock trades is it is starting to trade like trump media as a meme stock. it will not always be that way. at minimum, there will be the election, and it will probably end, but right now, it does seem to be trading like that. jonathan: jim bianco there of beyonca research on the latest. -- of bianco research on the latest. let's get the bloomberg brief.

dani: the secret service director is facing new calls to resign. she is said to appear today at a congressional hearing with questions on how the shooter eluded security at the trump rally. the shooting had been dubbed a catastrophic failure for the secret service. the spanish prime minister has been summoned to testify as a witness in a criminal investigation involving his wife . gomez is under investigation for suspicion of influence peddling. the government denies she committed any wrongdoing here the court says the prime minister will have to testify july 30. speaking of tesla, tesla ceo elon musk says the company will have "generally useful humanoid robots" for internal company used to getting next year. musk poster that the ev maker

will hopefully begin production of the robot for other companies in 2026. that is your bloomberg brief. jonathan: thank you. up next, resetting election bets. >> neither of them will be putting up taxes and cutting spending dramatically. there is a sense they are putting policies in place intended to weaken the dollar in some form. jonathan: that conversation up next. ♪

jonathan: let's get to the stock market. equity futures look like this, positive 0.5% to 0.6 percent. yields a little bit lower, down two basis points. what does this political mess -- and we can call it that -- mean for foreign-exchange? the euro-dollar just south of 1.09, 1.08 87. under surveillance of this morning, resetting election bets. >> neither of them is going to

be putting up taxes and cutting spending dramatically, unless i missed the scoop badly. in the period between now and the election, definitely there was the sense trump is putting policies in place, which would tend to be sending the yen higher, for example, under -- and are intended to weaken the dollar. jonathan: foreign-exchange markets digest in president biden's exit from the race. former president trump already telling bloomberg the u.s. has a currency problem. terry joins us for more. this is a quote from deutsche bank --tariffs and their associated stronger invocations for the dollar are significantly more likely to become the dominant outcome. how do we set this up? we do this with kit earlier. are we saying republicans are bullish for the u.s. dollar and democrats our bearish? or is that too simple?

terry: all else equal, that is -- thierry: all else equal, that is the case. you could break it down to immigration and restrictions on immigration. there is a prospect here that a trump administration could potentially remove one million workers from the u.s. workforce. that is the first think you're the second thing is -- that is the first thing. the second thing is tariffs. i've seen some analysis suggests that could boost cbi over 1% after it is implemented. the third thing is the extension of the tax cuts and jobs act of 2017, if passed by congress this would require that congress, the house specifically, our republican pete i think that would happen if trump wins. -- the house, specifically,are

republican. i think that would happen if trump wins. -- i think we are going to be looking at a different path for inflations under republicans rather than democrats, where it republican inflation will be greater than democratic inflation. jonathan: we have had experts, in and say that, all else equal, it will lead to higher yields. are you saying there is a wide range of outcomes depending on what the composition of government looks like, who owns what, what congress looks like, who is in the white house, are they that wide, the outcomes? thierry: to say they are white -- to say they are wide needs that could be a 250 point difference. we are not talking about that difference. we are talking about a 40 basis point yield.

the 10 year settles may be under 445. those are the kinds of differences we have in mind. nonetheless, that will be positive for the dollar. the market will come to understand that, under a republican administration, if you have more inflation, it will mean the fed's policy rates will continue to converge downwards, but not as fast or not to appoint they would converge to under a democratic administration. in other words, the path for interest rates will be more shallow under a republik and administration then a democratic administration. lisa: jon asked earlier about the currency being a problem. do you understand whether it will be strong dollar or weaker dollar to juice exports? thierry: i understand what he has tried to do in the past to weaken the dollar, and he has tried to pressure foreign -- other countries to strengthen their currencies for that is

clearly not what they are doing now. if you look at china, they are on a path to continue to weaken their currency, and they are likely to do more that if trump becomes president, because they will be overly concerned, at that point, at the prospect for tariffs, and they need to boost competitiveness. without create some sort of clash, yes, but the immediate invocation of chinese policy is not going to be to strengthen the yuan in the face of these tariffs, it to weaken the yuan. the chinese are a big economy, what they do to their currency will influence, as they weaken their currency, what happens to other currencies as well. lisa: jon started by talking about this political mess, and i think a lot of people could say that clearly, given the unprecedented nature of how quickly this was decided and how soon before the election. is there anything in this noise,

as so many people have described it, that undermines the idea of american exceptionalism, especially when facing off with the idea of stagflation? thierry: i certainly do not want to handicap this. we have not yet seen how the democratic convention is going to go. before we got to the 1960's, most of these conventions were broken conventions. if you go back to stephenson versus ivan our -- eisenhower, this was a broken convention. there was no candidate who had an outright majority going into the convention. there were pluralities, not majorities. it was a time at the convention when you would find the candidate through brokering, discussion, that the party would pick. in some sense, we are going back to where we were many years ago. and if anything, you could make a case it was more democratic. at least there was discussion. you do not have things like superdelegates, at least on the democratic side k this is neither more or less democratic than we had before. i am a low concerned by the

nature by which the news came out yesterday -- i would attribute that to the fact that the president has covid and probably couldn't do things the way he would normally do otherwise. annmarie: does this make the dnc a market moving event? thierry: it could be a market moving event if it is really disorganized, if we get to the point where there are street protests. it becomes that at that point because a lot of voters, in their confidence to run the country, because they cannot even run the convention, in that sense, could be a market moving event. it could put the weight back onto the prospect that trump comes the president in 2025. 1 -- jonathan: thierry wizman there. a messy process, potentially, for the democrats. lisa: especially given the fact they have to coalesce around somebody and organize a very different looking democratic national convention.

i want to sit for him in on this idea of what happens during the remainder of joe biden's presidency. there is a real question, and people are wondering about what kinds of international incidents there could be if people view the united states as having a weakened hand. there are a lot of issues and notes in response to that. annmarie: he will finish his presidency as a lame-duck. what this administration will try to focus on, he would like to shore up some sort of deal when it comes to gaza that is what he will be focused on. but he will have the meeting with net as a lame-duck president. jonathan: news this morning from senator manchin, speaking to cbs , an american broadcaster in the last hour or so, i will not be a candidate for president. more on that story in a moment. the third hour of "bloomberg surveillance." new york, you are watching "bloomberg surveillance." ♪

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visit sandals.com "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.

>> right now, people do not know her that well. >> i think it will be an open

process, but i do not see who runs against her. >> there are some long-term implications, but near term, this is not something easily treatable. >> the market does not seem to be interpreting harris as a very strong candidate that could challenge trump. >> people underestimate harris at their peril. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: live from new york city this morning, good morning. the third hour of "bloomberg surveillance" begins right now. let's start with the price action. equity futures positive by around 0.6% on the s&p. the opera performance the nasdaq by about one full percentage point. a couple questions we have got to work through. what is the process over the next month look like? also need to work out who will actually be the nominee. we have gotten the big endorsement from the president himself for kamala harris, the vice president. we are waiting to see if we have a challenge elsewhere. the only other piece of

information, i can tell you who will not be paid according to a conversation with cbs, senator joe manchin saying i will not be a candidate for president. lisa: and we heard the collect did -- collective shocked face of people who anticipate this. the question now does he get something for stepping down, and will he endorse kamala harris or donald trump? this big question, for me, is whether this will be a continuation candidate or whether it is truly a new candidate running on different policies. annmarie: she will have to put some distance between her and the president when it comes to issues that are really not resonating with the american people. goldman sachs saying will the odds -- also rolling up, the cash rolling in. about $50 million so far rolling in because she is, in some ways,

a fresh face. she is younger, still attached to biden's policies, but she is a new phase in terms of the democratic ticket, and she will being in an even fresher face when it comes to their vp pick. wall-to-wall coverage will be about the democrats and what their ticket looks like. that may start to infuriate the former president, who loves media coverage. jonathan: how do you put distance between the president and yourself when you are the vice president, and have served under him this long? annmarie: she will start to talk about different issues. jonathan: so a shift in emphasis? annmarie: she is already the one who goes out and talks about women's reproductive rights. she will lean hard into that, especially given the fact this is a weakness on republicans. when you ask voters, most notably a man a lot of polls, who do you trust when it comes to the economy, they say the former president. rep reductive rights, they say democrats -- reproductive rights, they say democrats. lisa: people will try to find any difference. is there this feeling she will

be more friendly to big tech companies, based on when she previously tried to run for president and some of the discussions she had at this time? people are trying to parse out that daylight, however small it may be. jonathan: fundamental view on all of this has not changed. and this is for economics, biden's decision to drop out does not warrant any immediate change, more the -- nor the policies we anticipate democrats pursuing. i understand democrats wake up with the dissent they wanted on sunday. got all of that. i understand maybe they are excited. i think that is captured by the amount of money that has come into the campaign cuba on the policy, the polls, are we really sitting here and saying biden was doing in the polls and really badly in the swing states purely because of how old he was and how low energy he had?

are we really saying it is down to those points and not policy? lisa: how much of this is because people excited kamala harris to be the next candidate -- versus galvanizing to turn out the election. the down ballot, how much this was to shift the odds of a republican sweep, which is something republicans said was more likely for the debate. annmarie: when it comes to energizing the base, she was able to do that overnight, so the propensity of people who were going to vote for a democrat went up overnight, because there was more interest in her. the policy, to your point, there will be a different focus with harris, but the policy does not change. this is what cnn put out. if you ask people who had a better presidency, former president trump or biden, it was 55 percent versus 39%. at the moment, when it comes to immigration and the economy, they trust the former president.

jonathan: about an hour and 25 and its from the opening bell. equity futures get a lift from about 0.6% on the s&p. yields down a little lower on the 10 year, 4.21 74. coming up, we will catch up with ed mills of raymond james as kamala harris becomes a likely democratic residential nominee, david george of baird, and matt raskin of deutsche bank. american politics rocked again as president biden backs out, endorsing vice president harris. rising stars as a potential vp pick include gretchen whitmer, jb pritzker, and josh shapiro. all this as democratic fundraising tops $50 million in just a handful of hours following biden's announcement. bloomberg's jordan fabian joins

us now for more. can they move forward and beat donald trump? jordan: in the roughly 24 hours since kamala harris became the nominee, she has done a lot to galvanize support on the democratic side. she picked up key endorsements, not only from president biden but from congressional leaders, battleground state lawmakers, and we have not seen another candidate rise to the top here. we have a three week sprint until the democratic convention. whoever is going to challenge her, if someone is going to challenge her, they have to act fast. annmarie: why have we yet to hear from the president? jordan: well, he came down with covid last week. i would discount his illness, despite the rosy picture doctors are painting, would have something to do with that. he got dinged over the past few

weeks for sounding sickly in public appearances. i think part of the white house's tech elation is they want to see them as healthy as possible the next time he speaks. lisa: how are his closest allies and handling this, given the fact it has been a huge and sudden shift in tone after many weeks of asserting he was staying in the race? jordan: it is interesting. you see a lot of cabinet members, top congressional leaders, quickly rallied to kamala harris' side, but you also see republicans seize on that and say you guys were painting this rosy picture about the president's mental fitness and health of the last three years, and now you are, on a dime, pivoting to kamala harris, what happened? are you hiding something? so as the party seeks to quickly coalesce around kamala harris, you will have this kind of attack coming from republicans. jonathan: i've got to ask you this.

where is the president and white we have not heard from him in the last 24 hours? who wrote that letter, where did it come from, why have we had no follow-up? is it strange we still have nothing on the schedule this week? jordan: i think the covid is part of that process. we heard from senior officials that he will see israeli prime minister benjamin netanyahu when he comes to town in some capacity, so i would not be surprised if that happens. for such a money mental announcement, you would expected here from the president personally. that letter, crockett by president biden and members of his senior staff, we are told, there is a line that suggests he will speak to this at some later date. perhaps, when he recuperates, he will be able to speak personally about this huge decision. jonathan: we wish him well. jordan fabian of bloomberg down in d.c.

joining us now, ed mills of raymond james. what are you telling clients about what the next couple of weeks looks like in this country? ed: i think we have a lot of unknown unknowns here and a lot of known unknowns. are democrats going to coalesce around, harris? it seems like a yes. we to know what the process looks like. we still have uncertainty over the ballot deadline in ohio. that is before the democratic convention. there are some works in their law that it might be able to get pushed to the convention, but do democrats want to wait that long? we want to see exactly who kamala harris, if she is the nominee, chooses as vice president, and that we want to see how the american people and pulling data react to that. until we have those answers, what we told clients is we are not changing our election odds, we are not calling for a major market correction. we could see a stalling out of the trump trade. we have certainly seen tech as a

source of funds for the trump trade, but do we see a stalling out in the russell 2000, in health care energy, the financial services names that have well since the debate? certainly very possible, but this is still trump's election to lose, and if that trump trade gets put back on, there's a lot of room to run, so it is not as if it is over, it is more a pause, let's reassess, and see how the next couple weeks play out. annmarie: if it is his election to lose, former president trump's, what does he need to do next? the rnc is over, he had his vp pick. at the same time all the momentum is building on the democratic side. ed: i think it is holding the rallies, keeping the momentum coming out of the convention, highlighting he would like to do. i think it was really interesting, over the weekend -- i know clients at raymond james-asking a lot about project 2025 and what a trump policy

agenda would look like. he threw that under the bus over the weekend and is saying that is the extreme part of the republican party, of the far right. he also, obviously, throws the far left under the bus. but understanding for the american people what a trump 2.0 would look like in building that momentum, making sure the swing states, that it looks like he has the lead in, he keeps that lead. you are also seeing, within a couple hours yesterday, one of the trump aligned super pac's coming out and trying to define the opposition, kamala harris, so what kind of narrative do they bring? do they try to say she was trustworthy with her views towards biden it, and does that play out into how voters should perceive her? that would be job number one, two, and three. annmarie: i did hear the former

president talk about project 2025, and he said it is the far right, the extreme, but how can the american people believe in him given the fact that the people behind project 2025 are linked to him and his administration? ed: that is the question of the day, because the question is going to be how much his personnel become policy. our expectations is president trump, if he were to win, the transition would look so much different than it was in 2016, when he did not anticipate to win. that said, a lot of these policy proposals are trying to get a lot of eyes on them, raise money for these think tanks. ultimately, we would expect former president trump we are points a cabinet of rivals, and certainly, there is a transactional nature to former president trump, so we will go back once again to this idea of take trump seriously but do not take it literally. and the literally is those words of it.

certainly, portions of the agenda will absolutely be adopted, but trump, as a transitional individual, is not a copy and paste for the next administration. lisa: over the past 24 hours, how many calls already fielded from clients, and what is the thrust of the topics people want to know about? ed: what we did immediately last night is host a conference call. had almost 500 clients sign up for that at 9:00 at night on a sunday. we pulled them, and overwhelmingly, there was the expectation on the call that kamala harris was going to be the nominee. looking to get a sense of market impact, overwhelmingly, clients still think it is trump's to lose, but people want to know a lot about process, because they have been paying so much attention to this trump trade, how much does that stall out, how much you have to change this? they want to know a lot about

who the vice president might be, someone we have highlighted is going up the list -- i do not know if you will be selected -- mark kelly. i was with a group of people yesterday, nonpolitical, and i gave the list of possible vp picks, and overwhelmingly, everyone was excited about mark kelly, because he was the one known figure to the average person out there, compared to these governors and figures in d.c. we might get excited about some of these governors because they are from a swing state, but their appeal outside the state is a really interesting conversation, and does that give someone like a mark kelly a slightly higher chance? those are the real questions we have been getting. jonathan: let's just finish with this pit i want to talk about what has become a really lazy narrative over the last few weeks. if you listen to the reaction yesterday from certain quarters, it was as if the only thing holding back the president from winning in november was his age

and his lack of energy. i take real issue with that, because two of the top issues -- you serve anyone in the country, what comes up repeatedly as a top two issues, the economy and immigration, and they have been losing issues for the president repeatedly for the last 12 months. i struggle to see how that changes with the vice president taking over the top of the ticket. how does that change it? ed: and this is what you will hear a lot from republicans, that job number one, given to the vice president, was the border, so if that is one of the top two issues, you have the number two person in the administration as her number one job, that is a political liability here. what i told folks at raymond james is, yes, there is a chance and there is significant upside to a kamala harris candidacy, but there's also a chance that a significant downside, and what we have been debating is the trump peak too soon, or is he

still going to build strength? there is a real strip -- chance that, if trump is building strength, this is a massive red wave, that the number of swing states only expand from now, and as much as some people were excited yesterday, they get really nervous in a week or two. that is certainly possible, but people were looking at the fact that president biden was running well below other swing state senate candidates and that needed to be the change and, at the very least, can they try to have a shot on goal in the house of representatives, tried to keep some of the senate seats, so it is not a wipeout in the senate. that could be generationally impactful for any potential future democratic nomination or majority in the senate. that was, first and foremost, the concern. jonathan: that is a really import thing to highlight. thanks for that. ed mills a raymond james care the take away, it re-maintains -- the take away --

a fundamental view remains the same here the distinction ed rew at the end is important. senate races, house races, and the race for the white house. different stories. lisa: if this galvanizes voters, changes the down ballot, changes the house, the senate, potentially. that is why people are looking for shifts. jonathan: let's get you an update on stories elsewhere. here is dani burger. dani: staying with the presidential race, west virginia senator joe manchin announced he will not be running for president. speaking to cbs news, the independent lawmaker walked back an earlier report from his office saying he was seriously considering a run. the former democrat also opted not to back kamala harris for the role. he called for a contested race to choose a new nominee. an investment punisher between ray dalio's --

bridgewater is still grappling with dalios exit from the firm. will dalio use bridgewater intellectual property? dalio signed a noncompete when he left his hedge fund several years ago. a check on verizon shares this morning, down 3.3% in the premarket. second quarter operating revenue fell short of estimates. it saw few people -- fewer people upgrade their wireless equipment. the weak overall growth masks surprising gains in phone customers and broadband internet customers. verizon has been focusing on its fixed internet, which delivers internet over airwaves rather than lines in a home. jonathan: coming up, david george on how the trump trade could impact the sector and why he thinks that bank rally has

gon too far too fast. ♪

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who wants to come see the future?! get your business online in minutes with godaddy airo jonathan: the opening bell one hour and nine minutes away. equity futures, positive on the s&p, up 0.6% k let's get some morning calls. guggenheim sent crowdstrike neutral, the analyst saying the event could negatively impact any new deals as crowdstrike works to rehabilitate it reputation for that stock down again in the premarket almost 5%. up next, j.p. morgan upgrading abercrombie to overweight, saying momentum is building internationally. up to .5% in early trading. goldman downgrading lennar to

neutral. down 1.4% there. let's turn to the financials. analysts recalculating the trump trade, david george writing we believe this replay of the trump trade makes little sense to us this time around. david joins us now for more pay let's get to that last line ky does it make little sense this time, in 2024, compared to 2016? david: good morning. there to see you again. the trump trade in 2016 was really the tax trade, in our opinion. corporate taxes went from 35% to

21%. that is a big delta and a big change. the banking industry was the highest tax group in the s&p 500. there was a tall percent to 13% improvement on the heels of that tax reform in 2016. given the highly functioning economy today, we think it is highly unlikely you will see meaningful tax reduction. that is where the upside in 2016 came from. to set the context, we have been very bullish on regional banks. we have seen a complete u-turn in sentiment over the last couple weeks since that debate, and we really think about things on a risk reward basis. the reward today is not as

compelling as it was a month or two ago. lisa: have you reversed your call to not recommend smaller banks anymore? david: yeah, i forgot is a great way to put it. we are neutral. we have been negative in the past, most recently in 2021. we are not quite at the level we would tell market dispensed a short banks, but there is pretty limited upside from our perspective, and obviously, there has been a lot of movement in the russell 2000. market participants, particularly in the mutual fund community, came into this debate period underweight or underrepresented banks specifically, so there may be a rush to cover financial services, so it is not an overly excessive group today, but the upside is not as attractive as it was. we downgraded several names, two in the last week, and probably eight in the last couple months. jonathan: david george of baird

on the latest on the financials come on the regionals, in the bank rally we have seen and whether it is justified. the important point they are making out baird, the difference between where we are now and where we were back in 2016. lisa: and the fact that, either way, it will be a highly taxed group and a lot of what people said has been fully priced in and then some. jonathan: just more cold water. we had it from mike wilson and david george. up next, matt raskin of deutsche bank and earl davis of bmo. no fed speak. claims thursday, e friday -- pce friday. ♪

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. hi. i'm gina. oo this is a good book title.

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♪ jonathan: it's a busy start once again. i don't remember the last quiet summer. when with the last quiet summer? going all the way back to a decade plus ago. lisa: there's either lack of news or people on vacation with her family. it is people not being in their seats, does that mean lower volume than bigger moves? not necessarily. annmarie: this is the shortest presidential campaign we will have a history of the democratic

side and i'm already starting to on urgently have toontime. jonathan: i don't think we had a news cycle like this since the pandemic, it has been that intense. every futures posited by 0.6%. the nasdaq last week was down 4%. apple and tesla in the next 24 hours also -- alphabet and tesla. a shrug of the shoulders come all the excitement on the political networks, i get it. about the return of these years of the democratic party, maybe. we're not changing our election nods. this doesn't alter our election scenario. a good friend of this program, fundamental view remains the same. lisa: you can see that donald trump has gone down about 3% to 60% chance of winning. it's not a massive move as we take a look at what happens in

november. the key issue is going to be down valid. how much does this remove the de facto mandate that people sort of expected donald trump to get at the election? a lot remains uncertain but that is where the conversation is this morning. jonathan: equities, four they losing streak on the s&p. lots of data to talk about that this week. yields higher through last week. we talked about as a tug-of-war between retail sales, good. jobless claims, less good. lisa: given the fact that there is this issue of how much of the deterioration of the labor market going to be awesome but didn't spending at least on the margins we are here and you -- has been muted by a lot of ceos. this is the one theme from everyone who trying to look past the noise, ignore politics when

you are trying to trade and say regardless of who wins, the glut of supply is pretty dramatic. the fact that we got $70 billion of 5-year note salon wednesday highlights feeling of how do we digest this at a time that whoever wins is going to be dealing with an overhang of fiscal and frankly inflation that might rear its head again. jonathan: euro-dollar, not much price action. the headline of last week for me, away from the politics, it's about the effects market. to hear donald trump speak to bloomberg businessweek and say we got a currency problem and then to hear everyone on wall street turn around and say what are you actually going to be able to do about it? deutsche bank this morning, tariffs and their associated stronger implications for the dollar are significantly more likely to be the dominant market

outcome that policies to pursue a weaker dollar. even if felt from get a second term and believes we have a dollar problem, they are going to policies that lead to a stronger one. lisa: regardless of how you look at it, donald trump presidency all things being equal would be more legionary and would favor a bit of what has happened in the past. this goes to this question, what do you trust? how much do you put faith in some of the policies that donald trump puts out there? you take them at his word in terms of his priorities when his word is somewhat different terms of the market outcome? jonathan: that's the latest on the price outcome. there is none other than this one right here. president biden ending his reelection bid, passing the torch to vice president harris. she's the favorite for the democratic nomination heading to the convention next month we were looking for a challenge.

as things stand, it doesn't look like we are going to get one. annmarie: looks like we are going to go into the convention knowing who is on the ticket. doesn't look like you're going to have this open convention and more chaos in the democratic party. now it is about the vp stakes for her. who is going to be her running mate? andy beshear says he will do everything he can to support harris, and asked if anyone has to reach out to him. he said it is flattering to be part of it. wall street journal said he was one of the individuals she made a phone call to last night. jonathan: this morning. there is a meeting taking place this week. we got the israeli prime minister coming to washington, d.c., he's going to address congress. they will be meeting at some point between him and the president of the united states of the united states and they want to reflect on something set on this program in the last couple of weeks. the rest of the world is

watching the instability in this country. i will paraphrase, but this is basically the essence of it, there could be some individuals, country to take advantage of this. annmarie: they want to explict what is happening in the united states which looks like instability. we've not seen the president of the united states who said he is going to step aside, we've not actually seen him say that the american people, this always in a letter. wall street journal saying have those not very good in terms of the u.s. on the international stage tel aviv was a drone, the israelis struck targets around a port, potentially why we are seeing prices go a little bit higher, but that jill -- geopolitical risk potentially comes back into play. lisa: this is what people have been talking about, why they thought joe biden would wait until after netanyahu came to make the announcement. the fact that he didn't raises more questions about the timing and the process and frankly the appearance as well. jonathan: it felt very abrupt

yesterday afternoon and i think we all got the same question, when are we going to hear from the sitting president? as the already work at the selection risk, the political factors and exchange markets, foreign-exchange markets, equity markets, commodity markets. we've got a ton of data this week. pc coming on friday, jobless claims thursday. mike mckee has managed to make it back to new york which was quite admission, i understand. mike: i probably missed all the calls from harris asking if i was available. but no, i was flying on a certain airline that had a lot of problems jonathan: you can share that, it's in the news. delta canceling a lot of flights. mike: i was 14 hours in the jackson airport. got a flight to salt lake city and spent two days in salt lake city because of nights out of their were canceled. delta employees and the airports

were just marvelous. professional, collected. i don't know how they managed to do that with thousands of people lined up to talk to them. jonathan: anyone who's been to jackson airport, great view out the windows, not much to do. so i'm not sure what you did for 13 hours. go through the data points for this week that were super focused on. mike:mike: the big ones are at the end of the week, one of those where we get second-quarter gdp. a lot of it depends on inventory built and there were some issues with automobiles not selling as much last month. at bottom line is economists are expecting 1.9% but atlanta fed gdp now is 2.7%. that is a pretty big range but it doesn't show the economy is still growing. jobless claims, one thing we forgot last week and it is my fault for forgetting this, hurricane beryl in houston. a lot of people in houston.

texas was the state with the biggest number of jobless claims. so that could in theory go down. economists are expecting it to go down and then we weigh all the concerns about the labor market to friday when we get inflation numbers. we talked about this before, you can pretty much figured them out once you have cpi and ppi. we are expecting drops again. headline 2.4 which has got to be in the range that that is in for to start the process of cutting. so there will be a little bit of talk about july if it comes in that way, unless it comes in much lower and set us up for september. annmarie: you highlight why pce has already been revealed to people because you can calculated to factor with cpi and ppi which is the reason why in some ways i am more interested in consumer spending especially in light of some of the warnings referred from airline, from different food operators.

this idea that there is more sort of concern among consumers and discretion. how much are people expecting that to be reflected in the numbers, flying in the ace of what we got last week? mike: the expectation is we see an increase from 2/10 to 3/10 in the month of june and if that happens, that makes for a much better mulching pad for the third quarter. it looks like consumers are hanging in there. let us is the big thing in retail sales. very strong under the headlines because autosales we knew would be bad. everything else was fairly strong. services spending coming in the same way, the fed has got to be pretty happy. at some point we got to call it a soft landing. jonathan: mike mckee in the room next week. in anticipation of what many people think will be a rate cut in september also struggling with some of those flights.

check out the airlines in the premarket. down across the board once again. even if you push the tech outage friday to one side, this started with delta coming out and saying q2 has been tough, down another 1%. united followed up with the same story and then earlier this morning in europe, almost exactly the same thing in a different market from a different airline, this time it was ryanair. lisa: this is basically a one-two punch. on one hand they are not able to charge customers and endlessly increasing airfare, but also you are seeing expenses increase. think about how expensive it was for the likes of delta and others that had to deal with painful rights. they had to give people refocused flights. they had to talk about perks, potentially even put people up and hotels. this is an expense at the same time that they cannot offset it in the same way they've been

able to in the past. jonathan: ryanair over in europe down by 15%. that is a difficult day for that particular airline. joining us to discuss the week ahead and the federal reserve decisions to be made for the year ahead, matt of deutsche bank alongside earl davis of nemo. -- the mouth -- he said calling? yes. called? no. is that he would characterize this economy? >> i think that is a fair characterization. cooling, yes, but there's a lot of fiscal support underneath. i fully agree with that assessment. annmarie: so how much do you see politics, the noise and the big story right now being the yields are going to remain higher for longer because of the strength, because of some of the inflation that you have talked about extensively? >> i don't see it as noise, i

see it as providing a great opportunity. i spoke to democrats and republicans, still going to have significant fiscal deficit. having said that, you almost get a free option on a steepener with a republican win because of the regulatory thrust that they will bring to the market. bringing in that deregulatory thrust impact small and medium businesses the most in regards to reduction of cost. those costs being put back into business, it is not your microsoft or your amazon, it is small and medium-sized mrs.. that could get an economic thrust to the market, so you need risk premium for that which is why we like the steepener now. we think it is a 'heads i win, tials you lose'steepener.

lisa: do you agree that we are looking at longer-term deficits in this idea that the fed can actually hold rates here or cut them, that that is going to be a steepener regardless of who wins? >> i would tend to agree with that. i think regardless of which party wins, we are looking at big fiscal deficits as far as the eye can see. i do think that as trump election obstacle love, the author of a sweet election also go up and that is a scenario likely to produce the school deficits. that is inflationary. it also increases treasury supply and should boost should trump increase at that channel. at the same time at the fed is moving toward the first rate cat which seems very likely to come in september, we are actually going to get them steepening in the curve that comes from that. both of those big stories at play in markets right now on the election and the fed paving to rate cuts are supportive of steepeners. annmarie: do you think the

market need to take into consideration that would find stepping aside it was more momentum behind harris? >> i do. the developments over the weekend, over the past month are shifting the range of possible outcomes coming out of the election. they are shifting the likelihood of those different outcomes and i think the market to take that into account. as i think you pointed out earlier, the move in predicted election probabilities over the weekend are notable but not that big and i think we've generally seen in rates, at least, a response that is in line with what we'd seen previously as we got big shifts in the odds of trump winning the election. that tends to be higher yields and steeper curves, so i think at those odds are moving around, at the likelihood that the democrats win the presidency increase, albeit modestly, the market should take that into account, it should be reflected

in summit flatter yield curves which is what we seen today. the one thing i would point out is all of the dynamics are talk about as being played with the election, the prospects of more expansionary fiscal policy, the impact that could have on the level of yield and shape of the curve, those impacts on yields and the curve, those things are also heavily driven by the outlook for fed policy. we get important data later this week, a fed meeting next week, the next employment report at the end of next week. i just think those things are potentially going to swamp any effect that you see coming out of shifts in the election odds over the weekend. annmarie: i ask this question last night and i will ask it again. what matters more in august, jackson hole or the dnc? >> i think we are probably going to have good clarity around what will come from the democratic national convention ahead of time in august. i actually think chair powell's

remarks at jackson hole are likely to be more important. the way i see things unfolding from here, next week's meeting the fed is not going to make any changes to the fed fund rate but i do think they will signal that the first cut is coming in september. i think what chair powell is likely to use his remarks at jackson hole to do is frame the cutting cycle and provide some perspective. it will probably help to temper any inclination that markets might have to price in a very aggressive that cutting cycle once they begin to cut in september, so i actually think that framing that we are likely to get from powell at jackson hole is going to be white important. jonathan: just to build on that, do you think the framing that we could get from chairman powell on the issue that matt described, do you think it might be similar to what we've heard from the ecb? >> that is a tough question. the reason why it is because of the fiscal impulse that we are talking about, that actually has

been extremely stimulative after the election. so i do think there will be some pointing toward easing, but they have to be tentative as to the significance of a possible easing cycle. for i think you have to watch out there. having said that, i do think one important thing about august ended about the bond markets in general now, and you can say it is because of summer, there's different reasons, there is a sense of complacency in the bond market. when you look at the volatility index, it doesn't stay below 100 for long. my expectation is that that volatility will increase and will spike, whether it be the dnc, whether it be jackson hole. those are two very real possibilities. also next week's fed meeting, the market only discounting a 2.5% chance of using. we think it is greater than 25% so there's a lot of reasons here to expect the market to not be as complacent for as long. jonathan: interesting.

wonderful to catch up with you. thanks, for week ahead. looking ahead to next week, that'll reserve decision -- federal reserve decision. briefly on jobless claims, given hurricane beryl and what you described as may be some impact on the claims number of last week, how reliable is the incoming labor market data going to be over the next few weeks? >> part of the problem is that july is usually a very bad month for jobless claims accuracy because a lot of manufacturing companies shut down briefly to retool, and that happens on a rolling basis, so the throughout the month you are not really sure whether the jobless are accurate or not. that just builds into the whole situation. but if they go down in part because people went back to work in houston, that will be seen as a relatively good sign. jonathan: i guess the good news for the fed is they are not in the business of forward guidance anymore.

can you imagine if they were? lisa: the good news for them as they are in the quiet period this week as people talk about politics. can you imagine if they had to weigh in on this stuff? jonathan: just don't answer questions. lisa: either way to me it is fascinating to see. basically we are in a black box that is clouded with a cloth over it is tied up in knots. we are talking about the data not being as accurate during this time of year, an election that is haywire and a lot of people really questioning what the policies are going to be that they can analyze. jonathan: do you remember the line from last august, navigating the stars with cloudy skies? i wonder if they borrow that line you just said. you would have to repeat it, though. lisa: a cloth with a bunch of knots tied up all around. rain cloud. >> west virginia senator joe

manchin has told cbs news that he will not be running for president. >> i am not running for office. i cannot believe that there is not going to be a primary process. other countries do it. i don't need that as far as in my life, the attention that people think when u.s. eating up your just looking for attention. why is everyone afraid to speak out? >> previous report that suggested he was considering a run for the democratic nomination. joe manchin also telling msnbc moments ago that he is retiring. delta airlines apologizing for canceling thousands of lights during the busiest travel weekend of the summer as many of the systems failed following the catastrophic crowdstrike outage. delta's ceo blamed the impact on a significant number of functions that rely on microsoft windows operating systems including it crew-tracking tools which rendered the airline unable to process large volumes of changes to flight personnel.

delta is still experiencing flight cancellations today. mike wilson sees the u.s. small-cap rally losing steam. he wrote in his latest note that the recent outperformance is facing technical resistance and lacks fundamental drivers to carry on. more specifically, the russell 2000 is up 6.7% this month compared to 0.8 percent for the s&p driven by softer inflation and the rising odds for another, trump presidency, and that is your brief. jonathan: up next, we will set you up for the week ahead. you are watching bloomberg surveillance. surveillance.

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vice president harris making her first public appearance since being endorsed by president biden. giving remarks at the white house. after that and tesla reporting result after the closing bell. wednesday more reporting from ford and ibm. thursday, u.s. gdp and another round of jobless claims and we round out with pce. it is like last week never ended. july started and then there was no weekend. things have changed a lot. lisa: basically there's just absolute political turmoil. the real question for me this week from the markets perspective as anne-marie will talk about the politics more significantly is how much potentially some of the earnings will take center stage. doesn't provide people for

clarity. annmarie: she's going to be talking with the championship teams of the ncaa but now it is a big moment, the first time she's going to address the public since being endorsed by the president to take on the top of the ticket. what does she say? she came at yesterday and said she wants to make sure that she earns and wins the democratic delegate support and earns that nomination. mm tbd and the president of the united states actually speaks. he drops this letter and we still have not seen or heard from them and we don't have a date yet. jonathan: we are waiting for that date and what that schedule looks like. we've got a lot to work through. we will try to get things started tomorrow morning. blackrock, btig, democratic congressman of massachusetts and jill hall from bank of america. this was "bloomberg surveillance." ♪

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matt: futures are rising on the first day of the trade. 30 minutes until the start of trading. katie: bloomberg "open interest" starts right now. sonali: coming up, election reset. vice president harris begins showing up support for a white house run while trumped makes contingency plans. matt: we will