we'll talk to pimco's head u.s. economist. >>> tesla cuts prices once again as the stock continues to fall and its market share starts to shrink former ford ceo mark fields on whether tesla still thinks it's the ev market benchmark. >>> and ian bremmer, how china is continuing to try to win the world over from saudi arabia, south america and, of course, coming on the heels of macron's visit to beijing >> a lot of chatter about the geopolitical events over the weekend. >>> the dow is doing the best of the three major averages, down only 43 thanks to strength in groups like materials and industrials and energy at the top of the market today. along with financials, which did just go positive the s&p is down 0.60, being weighed down by tech, communication services and consumer discretionary with the nasdaq down about 1% >> getting some fresh research from the new york fed, let's get to steve liesman with that steve? >> carl, good morning. the fed new york survey of consumer expectations showing a surprising increase in

let's bring in pimco's erin browne it's great to have you here.some of the economic slowdown risks are more front and center than they have been some other days, the consumer confidence numbers, u.p.s. results, and some more of these regional fed bank business surveys that really have been rather weak. i guess the big question is, now that we have seen this rotation towards defensive sectors and bond yields come back in, is the market correctly priced for what's to come in the economy? >> i don't think it is keep in mind, the market on a year to date basis is still up 6.25% and stocks are flirting with 4,100 we're not seeing, you know, significant levels of fear and the absolute level of stocks nor in valuations. they're still trading at, you know, 18 1/2 times forward multiples. so still trading, you know, fairly rich. i think that, you know, certainly today is a significant hit on a one-day, you know, lookback basis, but when you take a larger step back and look at where the market's trading today, there's really a lot of complacency that's stil

joining us to discuss is aaron brown -- erin brown over at pimco. two years ago, even a year ago, you looked at the bond market and the yields went up in the stock market went down and vice versa, then we are talking about margins and efficiency for the tech stocks. what is leading the stock market today? what is driving it? >> there's a couple of different factors. when you look at earnings, they have still been fairly robust. certainly we are off the highs that we saw in the post-pandemic period. we saw earnings decline, but still earnings are quite robust. still suggesting there's decent strong demand ahead albeit waning. i also think by and large, equities outside of big disruptions to the market tend to move up. we have seen this sort of grind higher as the markets are really waiting for recession which looks to be on the sort of doorsteps of investors but has not yet hit. sort of in the absence of bad news, the risk is there is very little price then and there's a lot of complacency when you look at equities regarding the outlook ahead. the bo

i spoke to libby cantrell, the head of public policy at pimco, and she explained the implications in the implications of a debt ceiling breach would be catastrophic. we have never seen that though, before, so it is a bit anyone's guess. the federal reserve and some other macro policy folks have sort of estimated what the impact would be including potential large drawdown of the s&p 500, a 30% drawdown according to the federal reserve in a study that they did in 2013 and of course an increase in interest rates but this is all hypothetical. we have not actually seen a breach of the debt ceiling. i think really importantly, we don't think we will see a breach of the debt ceiling. there is no political incentive to actually take the debt ceiling over the deadline and we think that there will be a resolution, albeit probably not until the 11th hour like we have seen with. effo rts efforts in rajasthan and india to make healthcare right highlights the difficulties of healthcare reform in the country. state legislators passed a law requiring all hospitals to provide emergency treatment to e

so it's a little bttle bit stal nonetheless, i'll be looking for that >> did you guys at pimco, richardthink that there is a severe credit tightening happening, that will weigh on the economy, because we just have not heard that, really, from some of the fed officials new york fed president and then this morning, tom barkin of the richmond fed just didn't seem like they're seeing a strong evidence of that yet. >> yeah, so a couple of things on that, sarah first, the fed releases the so-called slew, and that showed before svb and credit suisse that there was some tightening in lending standards that was in play already i do agree with the chair and the fed's statement a month or so ago, that incrementally, we would expect some further tightening in credit conditions. whether or not it's severe, i think it's too soon to tell. i think it moves in the direction of slowing demand, which within reason is what the fed wants. but i would agree that right now, i don't see anything flashing that is a severe crunch >> so, what do you do with the disconnect, between the market and the fed? here we

of pimco research.ause he has echoed what i said earlier with daniel or aesop landing, february the landing, march hard landing. -- arlie with january, soft landing, february mild landing, march, hard landing. tom: -- lisa talked about the new of 5%. that is where we are. cds and money markets are up by 5%. and with the market opened the dow is at 32,000 7 -- 32,000. will we get a 4% yield before you and i go out. jon: can i just jump in tom is joking and the market is not trading today. tom: why are we here? jon: that is a different question entirely. tom: it is not open? i put in a buy order at hershey's. jon: you are buying chocolate? tom: yeah. i ordered hershey's. the american tradition what is great with the kids is they get the jellybeans when they are two or three and they look like chipmunks. or a hamster and then they got out like a gun across the living room carpet and then they are sick for the rest of the day. is it like that in england? jon: yeah. you get candy and all that stuff. we hide

we did get commentary earlier from pimco saying bonds and stocks sinking from different him sheets rightow and only one of them is right. charles schwab managing director liz ann sonders joins us now. you see more volatility and more inflation, you called these markets temperamental. how are you treating? >> you said higher inflation and volatility. i think we will have more inflation volatility, meaning not inflation staying high on some secular level, but more ups and downs and inflation. temperamental is the term i am using to describe the 30 years or so prior to they are great modernization. -- moderation, where we had basically disinflation most of the time, lower interest rates, not as much geopolitical instability. i think we are going back to an apartment more can to when we had more inflation volatility, so shorter cycles and more frequent recessions and more geopolitical instability. i think there are a lot of investors who only have experience in that great moderation era. paul: we have the market pricing in before the end of the year. is that a case of being careful for what

those are some of the observations of pimco's erin brown.servations and other stories you need to know to get your day going in today's edition of "daybreak," at dayb on your terminal. when you are there are, you can customize your settings so you are only getting news on the industries and assets that you care about. this is bloomberg. ♪ shery: we are live at mar-a-lago right now. you are watching former president donald trump walk in for his news conference. he is back from new york. he was arraigned in manhattan on tuesday afternoon following his indictment. we are expecting to hear from him. of course, he has already plead not guilty to 34 felony counts of falsifying business records. this is the alleged criminal scheme to manipulate the 2016 election. we will be watching for what he says to the public. of course he has denied any wrongdoing so far, and he has repeatedly assailed the investigation. you are watching live pictures from mar-a-lago as he has to the podium for a news conference. he is just back from new york, facing 34 fe

joining us now lupin rahman with pemco -- pimco.s of the central bank of the world, jerome powell. how big of an influence is mr. powell right now on bolivia, ghana in the news today and other larger more successful em economies? lupin: the fed cycle is extremely important for major emerging markets, typically in investment grade portion. for the front tier markets that are facing credit stresses, the impact of the fed is relatively smaller than what you would expect. tom: it is smaller than you expected but there is a multidimensional crisis in em now. your study of history at em, how is this distress different from what we have seen back in 1992 and before that? lupin: a take a different view. the crisis is in more developed markets within emerging markets for the first time in a long time. in em you have inflation going down, you have growth. tom: korea got out front with rate increases. lupin: absolutely. the list is endless. they avoid it deeper processions were as we have soft landing versus hard landing debate in developed ma

pimco has done it. it's slowly happening and it's going to get worse. maria: it's not just housing. stephanie pomboy has been predicting. she's expecting this continue from the brokefield situation to other companies. she's talking about a trillion dollars in debt on corporate balance sheet that is has to roll over. it's going to roll over at hutch higher rates. mark: that's a big problem. that's going to hurt margins and hurt cash flow. if we want to know kind of a guesstimate as to what's going to happen in the commercial real estate, you mentioned wework, you look at the performance of those stocks. i'm worried about commercial real estate, i do think the job's market is starting the fray. we've seen the initial jobless claims numbers start to come in well above 200,000 again and when we look at -- we heard about a layoffs so far, but i think that those are just the tip of the iceberg. amazon hired 746,000 and fired 18,000. microsoft laid off 10. google hired 68 and laid off 12. maria: would you sell into any rally, al, what do you want to do in terms of investing? >> i would sel

we heard your guest from pimco talking about higher rates and then a hold and people are are saying that. maybe the fed stops but that they cut so sharply is clearly not the base case of the fed by a longshot and many economists. there is a lot of risk building in the market, kind of a one way train. look at the 2-year note, it was over 5% and change and now its under 4%, the move has been dramatic. kriti: the retreat away from 4% has been crucial but to me, a 10 year getting closer to 3% -- how much longer if this trend continues do we start talking about the 10 year at 2%? >> ido know about that. the fed would have to get a lot lower and inflation would have to really come down more. a lot of people are saying rates are falling like the twos and tens are steepening. they feel at the fed stops, maybe you build up some premium on the long and - end. things would have to get bad and the fed would have to slash more than the market is predicting now. kriti: that's the direction of travel. two years ago or one year ago, the idea of a two-year above 5% was laughed at. in terms of this direct

it's clear when you speak to mohamed el-erian and also people from pimco they put the bank of englandfferent camp to other central banks because they came out front talking about the convocations. although it was tricky for the bank of england, makes or seven months ago, it does in the air on a better footing may be because of the honesty they had with the market. let's look at some of the stocks on the move or european markets overall. if you look at the asset classes, there has been a change in asset classes because of the surprise production cut by opec which took everyone by surprise. came across people did double takes. the whatsapp messages were 100% on fire. if you look at stocks they are unchanged. the ftse 100 is gaining .5%. that is because it is oil rich with bp and shell. though stocks are gaining 4-5% on the back of opec-plus's move. it is giving a natural lift to some of the ftse while the european markets including the ftse. energy is gaining 3.5%. this is why i said stocks on the back foot. most stocks are down but there's a huge energy boost with all of the main playe

pimco might have spoken to her about her possibility of being a free person in a way no one had ever done before. he might have really respected her personhood in a way that is totally unique to her up to that point. so this is the spring of 1779. now if you back up to the fall of 1778 this is when abraham would whole, way out on long island first began the spy ring. he was ferrying the letters with the help of brewster a lieutenant in washington's army. but he also had some help in manhattan. 177078 in november having recruited someone he described of as a faithful friends who would give him weekly reports that were the most reliable news. and how this person was the most high and character of new york city. this very important person. now it's never proved it was robert townsend. with the way woodhull later describes robert when he becomes the full fledged spy junior i think he's talking about the same person. note this time robert is running a store in lower manhattan. he has a partner named open. more interestingly he rents a room from abraham's sister. so woodhull, riding his ho

. >> pimco is out again today, they do a monday piece looking at washington.y again this morning, alan, we do not think this is a repeat of 2011 republicans have a much smaller majority in the house than they did back then. polls show more americans favor a clean raise. does any of thatliate your worries? >> a little bit, but not much. i mean, i -- instead of visions of sugar plums dancing in my head, i'm seeing marjorie taylor greene, matt gaetz and a number of others who by their behavior seem to relish tearing the house down if i believe nobody in the house, almost no one in the house wanted to tear the house down, i feel a lot better about this we've gone to the wire on this a number of times in the past. but not over the cliff this house of representatives sadly, to me, looks different. >> so we know fed chair powell will be asked about it next week and we know he's going to -- what he's going to say about how important it is, but you were inside the fed what does contingency planning look like at treasury and at the federal reserve for a technical defaul

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we'll talk to pimco's head u.s.>>> tesla cuts prices once again as the stock continues to fall and its market share starts to shrink former ford ceo mark fields on whethe

>> pimco has been stubborn linda cantrell saying the political incentives to take it to the breach areceiling increase which was not the case a decade ago. they're not concerned. >> i think someone should tell the republican party that. and they should get it done and try to negotiate later they can talk about all sorts of places to cut spending and covid savings and defense and wherever they want to do it but the debt ceiling playing with the full faith and credit of america the market would not like that, neither would business. >> as david said it is a volatile morning for united after the loss phil lebeau talked to scott kirby later today. the stock close to a one month high hey, phil. >> the reason the shares are moving higher is the outlook q1 was a loss but smaller than expected it's the q2 guidance as well as the outlook going for the full year that's moving the shares higher q2 expecting to learn between $3.50 and $4 a share strong spring bookings no slow down in demand there and the full year eps guides that has not changed, still 10 to $12, even though the street is expectin

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we will catch up with libby cantrell from pimco on the subject. we pulled back on the s&p 500 around 0.7%. crude oil is backing away from 18, 77 .71. euro-dollar is $1.09. lisa: we are getting a bunch of regional banks to today including truest financial. keycorp, fifth third, huntington bancshares and east west bancorp. most of those are in this hour so a tremendous slope. what we have seen is shares have been pummeled today for all the regionals. fifth third is down more than 10-20% in some cases. the bigger result is we have not gotten any big surprises. the kbw regional bank in drakes -- index is not recovered. we are not out of the woods. we don't know. there was a shift but we haven't seen it reflected and we are watching it closely. 10:15 a.m., treasury secretary janet yellen is giving a speech at johns hopkins. james gorman at morgan stanley yesterday talked about the geopolitical risks hanging over their business and how it's the unknown they are watching closely because this could have a kind of seachange feel. when do we start to see it

pimco saying later. are they saying this is secular stagflation? andrew: i have lost them.ical problems with andrew, i was going to the idea guys that the great debate is real gdp, whatever that will be. inflation quickly or not quickly, which is what we're hearing from andrew. that nudges toward secular stagflation. jonathan: the next question is, how quickly do they ease? the federal reserve starts to suggest it in the outlook, the market is easing. that is the new tension. it is not that new, it was the tension we were talking about at the start of the year. the market is coming up toward the fed and after the banking chaos of the last month, it opened back up. the federal reserve is trying to communicate we have got more work to do. we are not going to be cutting this year. this is tension that will resolve with time and data over the coming months. tom: based -- lisa: they seem to be -- tremor, however you phrase it. the bond market seems to be reflecting that, stocks do not. the tension needs to get resolved, because the fed has a much lower threshold for cutting rate