Transcripts For BLOOMBERG Bloomberg 20240704

Surveillance with jonathan ferro, Lisa Abramowicz and annmarie hordern. Jonathan its like the weekend never happened. Monday morning this is what everyone is feeling. Horrendous. Lisa theres no reason to do daylight savings prayed its improvement to be incorrect and does not have any Energy Savings prayed people want the romance of a long winter, summer vacations, long summer evenings and barbecues. Jonathan you knew out of everything this a be the one thing the wind you up. Not markets, not cpi. Lisa dont you feel the same . Jonathan lets get your week started. Good morning, good morning. You futures negative by. 1 on the s p 500 braided good news is good news. How about no news is good news. Last week was a no news week. The absence of blowout numbers last week i think that is where its at. Lisa it should be good news and it was good news for the bond market prayed is a good news for the duration of a stock market rally thats showing some signs of maybe the leadership getting tired and thats what people are focused on. Or is some of the volatility moves weve seen in the likes of nvidia leaning into this feeling that may be the magnificent seven arent so magnificent. Jonathan in the premarket we are positive on friday this stock was all over the place so at one point it was positive. I think we were on a sixday winning streak up by 19 Percentage Points on nvidia. Fridays session was kind of off given this move in the stock. Lisa you at 250 billion dollars of market valuation you lost after this wild ride understandably its up Something Like 87 this year. No one is crying for nvidia but it raises this question about what this volatility means things are topping out. Youve called this many times before but a lot of people are saying that they notice over the weekend. Jonathan we are building on payrolls from friday looking ahead to cpi and retail sales. The reaction from Deutsche Bank remains the same. It was an ambiguous jobs report. Bank of america resilience not reacceleration. We will catch up with be available bit later. When you are looking at what the Biden Administration will be touting, they have their budget report, this is just basically given the fact its on policies the president could easily enact prayed what i found so interesting over the weekend looking at the jobs and waiting for inflation print. President biden was signaling a note to the fed because when he spoke at a Campaign Event friday evening he said i can guarantee it but you bet those rates are coming down more prayed its going to come down. He does not like to assert himself. He says the fed is independent but we saw this with the prior jobs report. Jonathan im not sure the last time the Federal Reserve was referred to as such. The i think spelling trouble for biden. Two things stand out. Americans assessment of the economy better since november. The improvement of bidens handling of the economy flatlining over the same period. Thats not translating into better polling for the president. Lisa the numbers are shocking given the fact his Approval Rating is 36 for his handling of the economy and get a most half of u. S. Voters asked of living comfortably are able to meet expenses with a little bit left over. The inflation shock is ebbing but the inflation shock for his ratings not so much prayed annmarie we see this in polls and also in the michigan survey. Getting an update this week. Americans are starting to feel better about their finances, better about the overall economy but they are not giving the credit to biden. This is the gap he needs to overcome. Jonathan lets start with some price action. Equity futures negative on the s p 500. Equities coming off the back of week losses really muted marginal stuff. Down one quarter of 1 on the s p. 4. 0672 . We have seen the move lower in yields on the twoyear, 10 year. Lisa thats the key question if youll see that continue this week. When you get cpi tomorrow, ppi on thursday as well as retail sales, initial jobless claims prayed on friday we get university of michigan, today the question is how much oil prices will influence ppi and then on the heels of all of that in case you are wondering there are a host of bond auctions at a time where have some of these yields gotten too low. Weve got three or notes being auctioned today. 10 year being auctioned tomorrow. Tons of supplies through the week. Getting you through the estimates of that month over month, compared to the previous month, looking ahead to this weeks inflation data. Terry haines of pangaea policy. Andrew of city on the fence on the feds path forward. A big week ahead for Global Markets going into next weeks fed decision. Investors cpi report and retail sales just a few days later. Writing our call for a march cut and then another in may will probably prove to dovish. And we acknowledge that. The more likely offer, giving its first chance to reduce the federal funds rate. Jeff, great to catch up with you. Is that one inflation print, to inflation print or three . I think you will keep that quite close to his own chest and probably leads to more. Not just to hit expectations but to surprise the downside. Starting the year a bit to dovish and expecting these two, earlier than expected. We will get cuts this year, theres talk of no landing or no cut. Withing the market will stop pricing that out of the very least. Jonathan we will get a new set of outlook in the summary of economic projections. Policymakers putting in where the think fed rates will be. All of that stuff. When you plug in those expectations next week will they look any different to where they were back in december. Geoff its really about the guidance and i think powell with most of the other fomc members what they need to do is not what several ecb hawks are saying which is we need to confirm the Data Confirms we get to 2 for we can cut rates because i think thats the definition of getting behind the curve. You need to get ahead of disinflation so this means from q2 onwards every meeting will be a live meeting. A lot of people perhaps you can take the no rate cut people out of the equation because they started by saying there being a little ridiculous. Moving forward it seems that theres fewer rate cuts being priced in the u. S. Than europe. I dont understand why the euro has remained so resilient. Whats your take . I agree and i think markets whether its a positioning issue when the markets overextended itself in terms of Dollar Holdings that i think there will be a point of reckoning with the ecb acknowledging the european economy faces severe issues with regards to manufacturing. The demand in the euro zone looking at imports for example whether you look at the material side of things, the consumer goods versus manufacturing goods. Double digit contraction. That is extremely worrying and i think the ecb and at the very least needs to acknowledge the euro is totally misaligned with where the economy is now. Im Still Holding onto my view that it some point this year we will get parity in eurodollar prayed there will be that point where theres a total revision of the expectations for rate cuts and if you compare with the fed for example, they may start cutting a bit later but the pace will be one per quarter. We will look at consecutive 25 basis point moves. For the rest of the year. Thats where the gaps are really going to start to open up. To some degree we have started to price this and fixed income. We havent seen it pushed through the fx market in a strong way in a way maybe you would expect. Lisa is asking why hasnt that happen . Geoff i would go back to the dollar positioning view. U. S. Real rates and nominal rates relatively high so for your riskfree assets you own the dollar. If your risk on assets you own u. S. Equities is nothing in between and people are worried about that as a hedge against that over positioning in the u. S. At this point its the wrong asset to own. Maybe its time to start looking at asia again. Lisa we did see the recession that was priced in was priced out coming in at a positive 0. 4 over in japan. Do you think basically this is basically a verdict on negative rate policies that they will successfully be able to exit later this month in march of the time for the bank of japan . March is certainly a live meeting looking at the gdp data they are also looking at the underlying data in terms of wages. They are definitely collecting all the intel from Japanese Companies and seeing upside surprises and they know they need to flip expectations at the very least now. The challenge to the market is repriced for big figures lower. Is there scope for more . The feeling in the market still positioned and see whether the boj can surprise the hawkish side. The bar has been raised for that. I wonder if the challenge for the market is Japanese Equities off the back of what you think might happen on dollaryen. We had a fifth straight day of yen strength indicating 25 were the worst day so far this year. Whats the relationship going to be . So far weve learned we dont need a ton of yen weakness. Then 100 and 110 which means the japanese industry as a whole at those levels they can probably remain profitable. Basically my rule of thumb would be you have a number in mind and because of the internal hedging strategies you have to go below those fair value numbers before the numbers start becoming a headwind to earnings. I would not worry about that at least for the next 20 figures. What will International Investors be willing to pay for as we try to figure out how reactive will they be to seeing a japanese yen appreciate the fashion maybe we should be anticipating . Geoff its about pace as much as levels. If you told the earnings estimates that were going to be at 130 next quarter that stalking a serious adjustment. If its good to be a gradual move convergence to fair value more in line with the implied volatility i think that can be absorbed quite easily. So manage the pace rather than the level. Jonathan a lot of people outside the United States and japan. Japanese equities pulling back a little bit but still up 16 . Lisa what happens if they do exit the negative rate policies prayed on the one hand you think this would draw more capital into japan which might be a positive. Its a real problem if you want to discount. The other aspect is the bank of japan and the Balance Sheet what happens to the etf theyve been purchasing and all of the other types of stimulus . Massive influence not just of the bond market in stocks as well prayed negative by. 16 . Up next, bidens redline for netanyahu. The defense if israel is Still Critical so theres no redline where we will cut off all weapons but there are lines if he crosses, you cannot have 30,000 more palestinians dead. That conversation coming up next. Good morning. Jonathan live from new york city this morning, the morning. A week of losses last week talking about. 2 . Yields basically unchanged on the 10 year 4. 07 . The effects market going absolutely nowhere. Under surveillance this morning, bidens redline for netanyahu. The defense of israel is Still Critical so theres no redline i will cut off all weapons, they dont have the iron dome to protect them. You cannot have 30,000 more palestinians dead. As a consequence of going after them. Theres other ways to deal to get to, to deal with the threat by hamas. President biden warning israel. Cease fire talks with hamas her main deadlocked as they enter the holy month of ramadan. Wonderful to have you with us this monday morning. Im trying to work out this division between these two leaders or if this is just a convenient media narrative given the demented politics in the u. S. Im with the second. A situation where the president is doing his best to straddle and its not in the end its not really pleasing anybody. Secondly i would look at it from the israeli point of view as well, the president s Foreign Policy abroad even with allies is not being greeted as a paragon of strength or consistency going back to the afghanistan withdrawal so there was this fiction being generated in the United States that the United States can have a hand in the israel he response israeli response. What youve got here with the president is a much more political line here than anything else. Annmarie this time last week biden was hopeful we would see a cease fire. How much strain is not having a cease fire going to cause in his Democratic Base . It will cause a continued strain throughout. Since this war is not an end quickly and the problems caused by or not to go away quickly as a result of it there will be continued strain. The president s predictive powers whether it be on cease fires or rate cuts or a lot of other things hasnt been really good recently. A lot of the stuff is aspirational and because it is aspirational and hopeful i think people should not be taking it to the bank. Annmarie we started off talking about bidens poll numbers and today is can have a lot of campaign speak. The polling numbers show people asserting to feel better about their personal finances but they not giving biden the credit. Is the timeline on his side ahead of november . Sure. Biden has got eight more months before the election. The bad news is the rest of us have eight more months before the election. What youve got is a narrative with time to adhere and sink in. I think on balance that is good news. You right in your note it doesnt mean anything when it comes to the budget. Are you prepared to learn anything when he releases this budget . Unprepared to learn what is political priorities are and thats about it. One of the things i said in the note is if you dont believe me the budget does not matter, look at the current roundabout spending bills. What matters is spending bills. The budget is meant to be a broad topline aspirational goal to try and figure out what should be. In the end no one could be able to tell you whats in washington. There are few who can do this. With the relationship is between a Budget Priority and whats happening on the ground with spending. Defense is a perfect example of that. Biden said he wants to increase defense spending 1 . He said something similar last year and congress same thing will happen this year. Its a reason a lot of people not paying attention. They are paying attention to things like the potential tiktok ban that has been proposed. Resonant biden says he will sign it. Bloomberg intelligence thinks the Republican Administration or a Republican Administration would be more likely to ban it than the current one. You agree . I think what matters the most is how the goal gets done. When youve got bipartisan agreement in congress with the 500 vote out of committee and more importantly youve had senate intel chair mark warner whose very respected and nobody is counter manning him on this same tiktok itself is a National Security threat, what youve got here is a world in which something has to be done sooner rather than later. You and i talked about this last year. I think the pressures to do something before the election frankly are going to be overwhelming. Tiktok continues to make this worse on themselves. The former president , he is against this for some reason. Does he have the potential power to blow this up . He has the potential to do it. Today i would say the better half of the argument is National Security issues. The president is not to cover himself in glory on this. Youve got a situation where the interesting part about this is youve got not only the former president involved in this, youve also got Major Republican Party backers like the club for growth involved in some of its major backers involved. Theres a little bit of a feedback loop here. It has the potential to embarrass a lot of people if for some reason republicans in Congress Take the view that they should not be doing something about tiktok. Do you see senator schumer putting it on the floor of the senate . He will probably have to do something. The first thing he will do is and go engage in negotiations , probably appoint senator warner of virginia to do this, to try and find a bipartisan solution. One thing senator warner has said for example is hes all for banning tiktok but focusing on a single app may present some constitutional problems so the question of how this will go over in the senate before putting it on the floor. Its not about tiktok or the election, when are they going to ban daylight savings time . Why have they not take away given the fact everyone hates it. I know my limits and this is one of them. It is inexplicable. I do enjoy the dark. Jonathan terry haines, thank you sir. Lets talk about tiktok just briefly. One is about the control. And ownership of u. S. Data. The second is rotting the minds of american children. There is this i guessed pushback that if we are not solving everything we shouldnt do anything on capitol hill and some pushback i think a lot of people dont share. Annmarie what was astonishing was trump reversal on this. It comes at a time after he met with the club for growth group, a huge donor on the sidelines for trump at the moment. If he gets involved is that why potentially President Trump is saying im not so sure about tiktok. Jonathan weve all forgotten what happened in the summer of 2020, there was a deal struck between bytedance back in the summer of 2020 and then it disappeared. No one talked about in the months afterwards. Biden came in and did not come back up again. Lisa oracle is reporting earnings after the bell. I hadnt even remembered it would look back and said why isnt anyone talking about that. Who pushed back . Whats the anatomy of the failure. You talk about the two things both National Security and the rotting of the minds. If they really have National Security concerns, that something they should emphasize and they can really ignore if thats the main concern. Jonathan thats another reason to be despised by what happens in washington dc. People wanting to cater to the youth vote. It slightly odd president sits down and says if they pass it i will sign it as his campaign gets tiktok ready. I think everyone knows how i feel. Equity futures down by one quarter of 1 . Looking at data out of china and the biggest data point to the week. It might actually be coming in friday in a different country. So this is pickleball . Its basically tennis for babies, but for adults. It should be called wiffle tennis. Pickle yeah, aw whoo these guys are intense. We got nothing to worry about. With e trade from morgan stanley, were ready for whatever gets served up. Dude, you gotta work on your trash talk. Id rather work on saving for retirement. Or college, since you like to get schooled. Thats a pretty good burn, right . Got him. Good game. Thanks for coming to our clinic, first ones free. When i was your age, we never had anything like this. Thanks for coming to our clinic, what . Wifi . Wifi that works all over the house, even the basement. The basement. So i can finally throw that party. And invite shannon barnes. Dream do come true. Xfinity gives you reliable wifi with walltowall coverage on all your devices, even when everyone is online. Maybe well even get married one day. I wonder what i will be doing . Probably still living here with mom and dad. Fast reliable speeds right where you need them. Thats walltowall wifi on the xfinity 10g network. Jonathan pulling back from alltime highs on fridays session starting the week just south of those levels. We are down one quarter of 1 on the nasdaq 100 as well. While session friday for nvidia. Just about positive and the premarket after closing friday down by 5. 5 positive by one full percentage point. Heres the bond market picture for you. Lets sit on the twoyear upper basis point. On a two year yield. Instead of reinforcing the strength of the january data i think the payrolls report introducing a bigger . Over it looking at some enthusiasm to buy bonds again and driving yields lower through the week. The fact of the wage increase was lower than expected. And then you have the likes of rbc saying fading to quote weakness because guess where the rise nonemployment came from. At certain point to are we talking about here trying to look north of two under thousand jobs being created really weak. The debate will continue. Berkeley saying maybe fade some of the move to the bond market. A move lower in yields across the curve. I think about how any people are probably can adjoin that given the fact there is a risk with cpi and quite a bit of strength through not seeing some sort of huge wave of layoffs or any sort of sign of weakness just isnt as hot as it could have been. Jonathan looking at dollaryen, negative on this currency for a fifth straight session. I said before the commercial break the biggest data point of the week perhaps not cpi. Maybe youll find in japan. The Largest Union announcing wage negotiation results as a data point informing central bank decisions, that might be it for the week. Lisa a lot of other unions have already negotiated wage increases going back to 2011 her even more. How much does it push them to raise rates do they push it more positive. The start of a cycle, the first since 07. Another morning of yen strength. Our top stories investors keeping a close eye on data looking for clues on when the fed might start cutting Interest Rates. Following the mixed payrolls report. Federal cpi out tomorrow. Retail sales on thursday. Expecting to hold Interest Rates steady for its fifth consecutive meeting. Next week is all about the outlook. Most of the reading over the weekend suggesting they will be unchanged relative to what we saw in december. It hasnt happened with respect to the feds expectations and the market has come to what the fed has said. He came out and said cpi is now priced as the largest risk event in march. That this will be a fed reserve dependent on the march 12 cpi and if it comes in hotter than expected, expect some more doubts raised about how quickly they can cut rates. Annmarie looking at the gas prices for reason. I have to say that would be incredibly interesting as gasoline prices have been on the side of this administration going in to an election and its been the jewel of lower inflation prints to have that. Sharing some of the estimates. Cpi tomorrow, month over month looking for 0. 3 , in previous months 0. 4. President biden taking on tiktok , a biden saying he will support a quickly moving bipartisan bill to ban the social media bill. It would required bytedance to divested or faceup ban on u. S. App stores. It cites National Security concerns. Tiktok is pushback on those allegations. We all get driven nuts by politicians week after week and this one is a massive contradiction. Saying the president if i pass it ill sign it and of the same time saying i have to campaign. Campaigning on tiktok simultaneously. Annmarie senator warner said he is uncomfortable with that mixed message. Saying it is a mixed message but the president also knows this needs to get through the house, the government is not using it. They feel they need to go out and get that youth vote and help them in but help them in 2020. I want to understand the anatomy of this concern which has been prevalent for a long time. Why does it die and get regurgitated . Everyone should go back to the stories of summer of 2020. September 15 it all started in august of that year. It wasnt just that the deal went to oracle and walmart it was also that there was this specified amount of money you had to give to treasury to get the deal. It was all most likely Commission Fee for President Trump and the white house. I think the number is about 5 billion. It was going to the treasury to help education or Something Like that. What was weird about it is we just moved on. Really quickly stopped talking about it. Annmarie it was held up in courts. The Biden Administration came in saying we will do our own review of it and now its been sitting in review while hardliners in Congress Said they want to pick up a bill that would give the president the Authority Without having to deal with potential legal pushback to actually ban it. Im not sure what i think of the former president Business Model that the white house could just break up companies and charge commissions to American Companies to buy them. It was weird then. Lisa we have to talk about it again. Jonathan cpi rising for the First Time Since august increasing from a year ago. Falling 2. 7 , the longest streak of decline since 2016. The annual National Peoples Congress Comes to a close in beijing. Enda curran joins us now from d. C. It came from this saying it was a target without a plan. A growth target without a plan. Do they have a plan . Enda there is skepticism on whether or not they will get what they want this year. If the inflation is coming in a 3 the objective targets. Over the weekend thats actually being put down to the Lunar New Year holiday because people traveled more, spend more on food, tourism rose by 23 . A bad weather affect and a base affect there as well. If asia is expected to pull out of deflation, as you mentioned its good to be a lot of these key terms, the growth target, the inflation target to keep in the strategy theyve laid out for the economy. There still a lot of pressure and a lot of question marks on whether beijing has plans for the economy this year. There are also questions around what exactly is the state of the chinese economy because we see Consumer Spending picking up when it comes to certain things like restaurants or even travel. And yet its falling the most since 20. The lowest since august and we seen the stockpiles increased dramatically in china. Enda iron ore is a fascinating one to watch. I think it surprise most people last year despite the mood music on chinas economy. We have language over the weekend repeatedly pointing out houses are for living in not for speculating. Going towards the idea of a rapid surge. I think as we are seeing this their significant question marks around where chinas economy will go. They have set a growth target of 5 . They dont have a favorable base affect and the targets theyve set out suggesting increase. Its got a long way to go. I think most people would agree its not where it could be and not where it was back in the decade we just left. We have to keep an eye on the Housing Market and see what they do their when and if they can turn that around. And if that turns around that will drive the rest of the China Economy story. Im struggling with what they said over may xi jinping does not care if he doesnt hit the target and maybe he does not care if there isnt more strength because the goals are elsewhere other than just supporting the economy. Do you agree with that that its essentially no longer a priority to keep the economy warring roaring . Enda you can look at it both ways. They are not advocating the gogo years weve got use of rapid growth in china. They want sustainable growth. Within that they are talking a lot about innovation, technology , highquality growth was one of the phrases that came out. At the same time if they set a growth target of 5 , authorities in beijing will want to come pretty close. Barring some kind of emergency during the pandemic for example. Both can be correct. They have Top Priorities there. Security, technological development, innovation is probably number one on the list but the same time growing the economy and ensuring consumption of wealth is increasing is also important. There is still an expectation the government will come pretty close to the target when its open at the end of the year. The chinese legislator tightening the grip in china for things like does that have an impact on the economy . And outside looking in view people worrying about an economy prosper and thrive when you have this level of doctrinaire control in all aspects of how decisions are made, how companies operate. This is a source of criticism. Youve heard businesspeople people make the point that china flourished when they stepped back in those years and allowed innovation and technology and Homegrown Technology to get off the ground. Now the party is intervening in everything. This goes to the idea chinas economy is outputting National Security front and center. Wanting to get the key parts of the economy interest in place because theyre in a strategic race with the u. S. So of course with criticism of the role they are playing and china pushes back with Strategic National interest. Annmarie theres been no press conference and weve seen them take a tighter grip on the government. What message is this going to send to Foreign Investors . Enda i think the press conference definitely was a negative look for Foreign Investors. But theres no doubt the highlight every year was speaking to reporters not only speaking to the world and add give some clue for what Economic Policy was, nonetheless, one of the few opportunities to question one of the top leaders of china and when they pull back from doing that in the context of everything weve seen over the last few years, seeing those raids on foreign business and ongoing control of the party and business in business and the economy. Given the context of Foreign Investors within china is already so low it certainly doesnt help that. We see with portfolio flows, i think the foreign world remains to be convinced on the chinese economy at the moment. Jonathan thank you sir rates started this by talking out about no news being good news stateside. Looking at the headlines we saw this morning in the policy market. Lisa everyone was looking at stimulus waiting for the bazooka to be coming in. Some additional stimulus around the margins. People are saying show us the money. Jonathan that big red headline across the bloomberg, getting hit hard. The story in china lets schedule an update elsewhere. Lets get to your bloomberg brief. Investors are seeking to raise as much as a quarter of a billion dollars in what would be one of the biggest ipos so far this year. The Company Plans to offer 22 million shares in the ipo price between 31 and 34 each. Read it is seeking a listing on the new york stock tick reffit seeking a listing on the neat reddit seeking a listing on the stock exchange. The boeing could be pushed out to 2027 is the playmaker undergoes criminal reviews. Delta ceo said it expected to receive the aircraft as soon as next year it is now anticipating delays. They have orders for 110 planes and options to purchase 30 more. Oppenheimer picked up a total of seven Academy Awards including best picture and best director for christopher nolan. Barbies eight nominations amounted for one trophy for best song. Disneys poor things winning four awards including best actress lily glad including best actress. Lily gladstone was set to become the first native american women woman to win asked actress for her role in killers of the flower moon. Lisa a movie that could the worlds could potentially deal with the consequences for a long time. Jonathan do you want to review for the weekend . Dune 2 was pretty decent. Annmarie did you finish the first one . Jonathan i got through most of it before walking out of the cinema before it finished. Dune 2 was worth the watch. Up next on the program, the case against data dependency. Do we want to really drive and look in the Rearview Mirror. Of course not. That is the problem with being overly datadependent . Jonathan that conversation coming up next. Get help reaching your goals with j. P. Morgan wealth plan, a digital money coach in the chase mobile® app. Use it to set and track your goals, big and small. And see how changes you make today. Could help put them within reach. From your first big move to retiring poolside and the other goals along the way. Wealth plan can help get you there. J. P. Morgan Wealth Management. You have to make it. And if you want a successful business, all it takes is an idea, and now becomes the future. A future where you grew a dream into a reality. Its waiting for you. Mere minutes away. The future is nothing but power and its all yours. The all new godaddy airo. Get your Business Online in minutes with the power of ai. Jonathan live from new york city. Stocks down lower on the s p 500. A quick snapshot of the bond market unchanged on a 10 year yield. Four point 0788. The case against data dependency. You have excessive data dependency. Two for the fed, it has tools to operate through the lag. Do we want to drive a car looking at the Rearview Mirror with a map that may be completely revised . Of course not. Thats the problem with being overly data dependent. Without that strategic view, that data is taken on a roller coaster. Jonathan heres the latest this morning. Building after the federal february payrolls with more data on deck. Retail sales on thursday. The lower year on year inflation should keep fed officials on track to begin cutting rates in june. A cut in may as possible but only if cpi comes in weaker than expected. Andrew joins us now for more. Good morning. What did you pick up on the line . How dependable is the Economic Data when they say they are dependent on all of it. We are on that roller coaster he is talking about. 275 thousand new jobs. Strong jobs number for the month of february. You look back and you would 167,000 jobs we thought were there that are no longer there. I think thats exactly an example of the problem of tying yourself too closely to the data. What is it about now that inspires confidence but ultimately informs this idea we will roll pretty soon. 275,000 jobs, theres no way you can look at it and say thats not a strong jobs market. It is. The issue is the trends you are seeing and thats what we do as economists is look at the trend and figure out where thats going. Data had been mixed which showed we were going into this transition. 3. 9 Unemployment Rate is low but it is up 0. 4 Percentage Points off the low. When you have this slowing of the job market we have seen historically it is very hard for that not to develop into a more significant slowdown so thats what keeps us thinking this will be confirmed later this year. Lisa what is the feds role in this. Youve been out front saying theres more strength in the first half of the year then people are expecting a noble force the fed to cut more aggressively later in the year. Do you think by not cutting rates they will essentially front Carry Forward some of the weaker growth you expect later . Andrew we are in a scenario we havent experienced in a decade. We have inflation above target and we will have the surge in weakness and then you have to ask the question are you responding to the inflation mandate, responding to the employment mandate . I dont know that there is a right or wrong answer for the fed here. I think theyre seeing enough of those readings. Juergen your compatriot Stuart Kaiser talking about cpi. Some expecting it to be hotter than expected to the fact youve seen gasoline prices increasing pretty significantly. How much do you think that would really color their view . Im interested in those gasoline prices also. Weve seen consumers that are more positive on the economy. Part of that is probably gasoline prices that have come down. On the Inflation Report itself and what it means for the fed . We are projecting 0. 33 on the cpi inflation and thats following 0. 39 month on month core cpi and those are somewhat uncomfortable readings if what you are telling the American Public is we are coming back to 2 inflation because its just not 2 inflation. If you look at core pce inflation that was running above 3 and will keep coming down. That should be running more like 2. 5 . I think that keeps them on track to cut rates but have we really defeated inflation . Annmarie what would you need to see for a cut in may . Andrew one would be this core inflation coming in at 0. 33. Lets say it comes in at 0. 20. We really slowdown on this months print. That would at least put may or solidly on the table. You probably also need some kind of activity data. 2070 50payrolls. Retail sales will be strong this week. Lets a retail sales is weaker. May be a softer Inflation Report. That could become a reality. Jonathan why will rate cuts help pick things up in the face of adverse data . The governor said whats the rush. This any of that resonate with you . Its getting at this notion of where is the neutral rate of interest where we have policy rates relative to interest and i think its just really hard to assess in this environment because we had incredible fiscal stimulus into the economy so it could be Interest Rates have the slowing effect on the economy it was offset by the fiscal effect of stimulus so how do you disentangle those two . We do know clearly with the Housing Market if you raise Interest Rates you slowdown the Housing Market. Thats what i would be really looking forward to in terms of data or a sensitivity to Interest Rates . Lisa theres a question about urgency. If we havent seen the immediate effects, what would it matter if they cut 25 basis points now in versus in june or october . Andrew you want to have a strategy and framework for how you are pursuing these rate cuts or interestrate policy in general. With the economy will respond to , this very little economic activity. Where is the 10 year treasury. Where do individuals borrow for a 30 year mortgage. The corporate sbarro . Thats what youre controlling and thats good to be dependent on markets over time. That is whats filled up by your reaction function by your strategy so this whole discussion do you cut in may or june or july, the timing of that rate cut i think fed officials are right, it does not really matter. Jonathan just got a great question from a bloomberg subscriber on the terminal. Its related to markets but equity markets. Maybe some more speculative like assets elsewhere in the financial market. Is the fed to be concerned about that . Are we at the point where this becomes a Financial Stability concern. Are we near those concerns. Andrew ultimately its overall Financial Conditions of the feed into the economy. When you see various assets, some of the riskier ones at alltime highs there should be an indication a significant loosening of Financial Condition since that. Period we talked about. This is something the fed has partially engineered through their policy so it should be an input. Jonathan stocks have ripped since the end of october and have not stopped ripping. Sort of the key poster child where bitcoin is surging to record highs. At what point does this matter at a time when people are saying this is easing Financial Conditions and pushing the fed away from their target. They dont seem to care . Said last week, they asked the question will they reduce Interest Rates with equities at alltime highs and credit spreads, we will see prayed its good to see you. Andrew going into the data later this week. A couple days later we will get retail sales. Coming up on this program, principal asset management, henrietta of veda partners. Krishna of lafayette joining us with equity futures negative by. 1 on the s p 500. Following last weeks very mild marginal pullback on a weekly basis on the ecb. From new york city this is bloomberg. Youre probably not easily persuaded to switch mobile providers for your business. But what if we told you its possible that comcast business mobile can save you up to 75 a year on your wireless bill versus the big three carriers . You can get two unlimited lines for just 30 each month. All in the most reliable 5g mobile Network Nationwide wireless that works for you. Switch to comcast business mobile and save big with up to 500 off an eligible samsung device with a qualifying tradein. Dont wait call, click or visit an xfinity store. Youll have more of the same, stronger growth, slower inflation. Bad news is probably good news because it will accelerate rate cuts. We are very much in a soft landing. This is bloomberg surveillance with jonathan ferro, Lisa Abramowicz and annmarie hordern. Jonathan live from new york city this morning, good morning for our audience worldwide this is bloomberg surveillance. Your equity market basically unchanged like it was last week, down by a quarter of 1 . A massive week for data, informing Federal Reserve decisions next week. Cpi around the corner. Lisa given the fact that we got a job number that was hotter than expected, the question now is, does this come with inflation or not . Ultimately kaiser saying this will be the key point from the final reserve to will guide the market to. Jonathan the president himself will tell you when the Federal Reserve will react. Sometime soon. Annmarie that little outfit is what the president called the Federal Reserve he bet the cuts will be coming. This could be something that hurts this administration if we see gasoline come in higherthanexpected even going into the summer, pete driving eak driving season. Lisa the fed is going to cut anyway. Jonathan some people thought it was controversial and i thought it was a bit silly. Lisa what is seen driving at, calling them a little outfit . Im not want to seem political. Annmarie we have seen him lean into the Housing Market. He is trying to give rebates to individuals to try to get on the property ladder and cutting those interest fees into that theme. This feeds into the Elizabeth Warren cap of the party. Jonathan from a supplyside, they are unlocking the silos. Lisa youre looking over at me and trying to wind me out. You need to have a market before you can understand what the pricing is and i understand people like myself are not going to sell until they can buy Something Else with the Mortgage Rate that makes sense. Annmarie President Biden wants to get people like you a tax credit for selling your homes. Jonathan you want to sell your house . Equities on the s p 500 negative. 5 percent. Its a small pullback. Can we throw up in video, nvidia up. 02 friday session was odd, closed at 5. 5 . Lisa what i find interesting overnight you look at the gyration in nvidia stock, 300 billion of market cap wiped out and brought back. It raises the question, what is going on here . Does it indicated topping out . Jonathan that has to be the biggest one day cap out for no reason. Lisa and no one seems to care about it all. We are talking big numbers, a third of the s ps performance tied up with nvidias performance. As wyatt won to see oracles earnings, how much money our companies putting into tech investment . Jonathan in with premarket positive at 1. 2 . Coming up this morning, seema shah and krishna hemnami on why the time to buy tbills is now. Cpi, ppi, retail sales all ahead of next weeks feds decision. Equities will likely see volatility ahead of one age followed by renewed rally in the second as rate cuts finally began, smallcap stocks and narrow the valuation gap with large cap. It is good to see you welcome stateside. Lets get into that call, as its still early to buy small caps still . Seema as long as you have a debate going on with rate cuts and timing things will be difficult. Once you get closer you could really see rate cuts in line of sight and is backed up by a solid economy slowing but solid and that should be the green light. Jonathan what are you leaving behind, large cap tech . Seema were not trying to take away from large cap, we are adding to the u. S. At the moment. I think its a rare person to say valuations are expensive for large stack but we are looking at tech over the longterm horizon and if theres any pullback we are not looking to take away. It will create a little more movement in the smallcap space. Lisa taking away from a couple of regions, are you talking about europe . Seema yes. Lisa why . Seema valuations continue to look attractive, thats not a new story. It is a value trap. Fundamentals have to be in line with their valuations and they dont look like they are very promising for this year. There are other parts of the world to reach out to, latin america, india, japan with some ambiguity added to that. Europe is not the area we are fixed on. Lisa i want to ask you about the splintering in the mag seven. Do you agree we can see parity on the euro and not the dollar because theres this dissidents not recognized by markets yet . Seema i think the ecb has to move either way. I think theyre going to cut rates, ideally sometime in line with the fed but if the fed is not moving, the ecb has to go because they have a difficult story ahead of them. It does pull apart the euro in the dollar. I wonder how aggressive the ecb can be. They would like to be more aggressive and they can only be more aggressive at the fed is cutting. Jonathan you think the fed affects the scale of ec because . Lisa we know its typically hawkish. I dont think it drives her decisionmaking but comes into consideration. They will never say that, of course. But at the back of their mind is a play. Jonathan they were talking about parity and lisa mentioned if we get a parity move, how does that influence the inflation story in the euro zone . Seema its really come to help the export side of the economy, the manufacturing side of the economy. For a country like germany which has stagnation written all over it, it could do with any help it can get. The currency, it slightly on the inflation side of bed. Thats probably why the ecb will go longer than they would like to but its not enough to stem and ill think of rates. Lisa weve been trying to digest the moves that apple, tesla and the question of whether that will affect the rest of the complex. How do you stay confident and names that have rallied dramatically and showing signs of exhaustion . Seema we have to look at the earnings story and we look at the longer term the potential. There are risk and those names and you can see that modification coming through but when it comes to technology we look at the longerterm horizon what ai can do and thats a position we are taking. Its uncomfortable and it will be uncomfortable for a couple of months but you take the long game. Lisa howdy price in the china risk . The u. S. Doing whatever it takes to curb chinese tag in the potential tiktok ban. It hasnt been fully priced in not just attack but the multinationals . Seema i dont think that is sufficiently priced and over the last couple of years when we talk about largecap the two things that are concerning his regulation and china. At the moment those things are coinciding. We dont think that is been fairly preston. Its something we are watching carefully if we work to see Significant Movement on that which is changing perspectives, then that is the case for reevaluation but i dont think we there yet. It impacts the earnings story but not sufficiently that over the next 34 year horizon it will take away as much as may be a would convince us to reduce our expectation. Jonathan i just wanted the signal you take from some of these big cap stocks. What is the signal you take . Seema there are specific names in there that we have concerns on the eeev side. We are taking that into consideration on the eeev side. We have more sustained concerns. When the china angle comes in. Jonathan youre in london every day, how different is that in europe compared to the u. S. And china . Seema i think the ev market in london is extraordinarily strong. That demand for ev, the london congestion sound is in the works. Jonathan regionally, it feels very different. The experience stateside is not what we see playing out in europe and china. Lisa yeah, better adoption and the willingness to see use of card. You see that in the rental car experiment people shied away from electric vehicles because they were used to using them. Jonathan its good to see you, seema shah will stick with us. Yahaira President Biden is warning israel that any invasion would cross the road died in an interview with msnbc he criticized the high death toll in gaza. The defense of israel is Still Critical, there is no redline but there are red lines that you cannot have 10,000 more palestinians dead. Yahaira the move adds to its largest Retail Network outside the u. S. This despite slowing iphone sales it will be apples 47th location in the country. Commoners secretary says u. S. Could further tighten control to chinese access to ship technology. Adding the u. S. Will do whatever it takes to keep chinese firms from accessing u. S. Chip information. Her comments, as the Biden Administration wave sanctions on several Chinese Companies to curb developments of semiconductors and that is your bloomberg green. Jonathan up next on the program, washington, dc taking on tiktok. It would lead to a path to banding tiktok. If you dont think the Chinese Communist party can twist the algorithm you dont appreciate the nature of the threat. Jonathan live from new york city this morning, good morning. At Ameriprise Financial our advice is personalized based on your goals, whatever they may be. All that planning has paid off. Looks like you can make this work. We can make this work. And the feeling of confidence that comes from our advice. I can make this work. That seems to be universal. I can make this work. I can make this work. No wonder more than 9 out of 10 clients are likely to recommend us. Because advice worth listening to is advice worth talking about. Ameriprise financial. J. P. Morgan Wealth Management knows its easy to get lost in investment research. Get help with j. P morgan personal advisors. Hey, david ready to get started . Work with advisors who create a plan with you, and help you find the right investments. So great getting to know you, lets take a look at your new investment plan. Ok, great this should have you moving in the right direction. Thanks jen. Get ongoing advice; and manage your investments in the chase mobile app. Jonathan live from new york city, stocks lower by. 5 washington dc taking on tiktok. It would lead to a path to potentially ending tiktok, half of Young America gets their news from tiktok if you dont think the Chinese Communist party could make the news they see reflective of their views i dont think you appreciate the nature of the threat. Its value has an algorithm thats the best in the world and as long as the engineers in china control the algorithm they have access to american data. Jonathan the house said to vote on a bipartisan bill that could cause the Parent Company to divest. If they pass it, i will sign it. We wont get weathered the kids are communist already. Im trying to work out if they pass it or not. If they put this on the floor able pass. This committee is bipartisan. It has glowing marks across the board since a launch. If it comes to the floor of the house of will pass and when it gets to the senate, those two guys are going decide if they take it up or not. They have gone through numerous reiteration, bytedance has known this is coming. They have given you fair warning you should have been acting. My expectation is if it goes to the floor able pass. I think the lobbying for that is where its at. Kellyanne conway is working on behalf of tiktok, calling lawmakers telling them why they should not be fending for those. We have seen trump weigh in on the border agreement. Does that happen with speaker johnson and tiktok . If trump was to derail this package in the house he just needs to call for speaker and let him know the bill should not come for a vote. If it comes to the floor, it means trumps lobbying has not worked. They will bring it to the floor and it will pass but political meddling will keep it from passing, the bill is sound. As it stands it can pass the constitution test. Annmarie to johns point earlier on the hypocrisy in washington, they are using their campaign for outreach . It would not go into effect for six months. They have studies they can conduct and its up to the president for his ultimate decision. This kind of thing could take months to years before it has ramifications. Lisa what proportion of Congress Members currently use tiktok . Most of them, its a Huge Campaign tool. The president just wait and then with his own Tiktok Campaign if you look at the letter all those republicans that are adamantly antibiden have just written him a letter to weeks ago saying how dare you . This is ridiculous. The hypocrisy is all the way around which is why you are in a political universe. Theyre all trying to score points back and forth. Jonathan politicians, hypocrites . Shocking. Lisa theyre saying at least it wont go into effect for six months so we could still advertise. Jonathan we have the National Security risk of evs National Security risk of bytedance. For a long time it was difficult for companies to operate in china. There are certain Tech Companies that were not allowed to be there. What will the tit for tat for china be . We are expecting a rotation of tariffs. If fits tightly with their lidar, acrosstheboard, chinese retaliation is not limited to we are not buying soybeans anymore is applicable to different sanctions regimes kicking out companies in the United States, and china that are u. S. Companies, exhaustive red tape. We saw this during the 2017 terrace. They tend to take it out on the corporations operating inside of china. Lisa whats the byline through trump and biden. The tariffs are higher under biden that they were under trump. You see china and the eu not negotiating with the u. S. Right now and apart because a hypothetical President Trump would create loopholes or exclusions or licenses or oneonone trade deals like we saw with the huawei wherein specific Companies Get a carve out you have these efforts brought in scope. Go look at usdr exclusions. Jonathan how difficult is like going to be for a multinational operating in the United States and china . Seema its clearly can be difficult but we still think for a government said tried to hit its own major industry there is some hesitation that there will be some kind of loopholes. When we think about the election whats going to happen, the rest of the world is going to suffer. It still points out to u. S. Exceptionalism. There will be president s for u. S. Markets and industries at the end of it where europe and china will be the biggest loser. Lisa regardless of the heated rhetoric nothing would get implemented that would start this tit for tat war that could cause major hurdles for Multinational Companies . Seema in terms of the head, who will it greatest to . I dont think it will be the u. S. I think it will only hit particularly negative for china and europe. If youre doing a value trade the u. S. Comes out particularly well. Annmarie what do you think the u. S. Is thinking about expanding, chinese evs cant get into the u. S. But italy is contacting to create a facility. This is not the approach biden was trying to take. Europe has to make his decision do you side with the u. S. Or china . Europe has terrible fundamentals and they need to be landing where there is the best growth and that take precedence. Jonathan can reflect on the good old days of 2020 when we were talking about this exact issue around bytedance and tiktok. It was not microsoft it was oracle and walmart and i dont know what to call it, a kickback feed to the treasury . 5 billion . It was odd but that whole situation with President Trump and tiktok. Do we understand the position with the president and tiktok . Four years ago it was banned tiktok. It was well documented, you dont have to search for it and now that has materially shifted. You had to Pay Attention to the president s verbiage, me and the club for growth are back in love again. His to do with the towel million donation that saved club for growth. We were all watching as Kellyanne Conway move the needle with the president throughout his tenure in the white house. To think she is actively lobbying on behalf of this institution going out to 10 members, thats all it takes to get to sync the bill. If democrats decide they want to pass it, Kellyanne Conway has her work cut out for her. I think it is a hard thing to do which is why essay see if it even comes up. Jonathan just a major shed. Henrietta, it is great to see you. Coming up on this program, one year on from the collapse of svb and that conversation of next. Buy from new york, this is bloomberg. Jonathan coming out the back of a very rare week of losses on the s p. We have seen so many weeks of gains year to date. Equity futures negative by. 15 on the nasdaq 100 softer by 0. 21 . Im sure lots of you would like an nvidia check. Negative by 1 . After wild swings on fridays session. Lisa three hundred billion created and lost, just overnight. Let alone 250 billion laws just on friday. Is this the topping out of stock split of game a hundred million percent this year. Jonathan pretty ridiculous on that name. Yields are higher by two basis points lets call this 4. 5 oh, more than 20 basis points lower than where we were two weeks ago at the close today. And we are looking for the dated to see if it would come from the january, specifically the labor market did not confirm. Lisa it was the revisions down that left the average out of lower pace than if the expectations were met. It was a twopronged women. You had fed chair jay powell not pushing back against the action weve seen in we have seen down side surprises that have come down, looking for goldilocks. Jonathan lets get the high rates or lack thereof in japan. Ultimately, japan is looking at hiking Interest Rate since the first time in 2007. Five consecutive yen, the first time weve seen that since july 2023. I lost count of the amount of reports weve had over the last week. We had sources around the boj suggesting their gaining confidence in the wage data. We had sources saying they were comfortable hiking rates. In some suggestion they would give up your curve control is well. When we get the first feedback from one of the Largest Unions about Wage Negotiations in japan may be that leads to a boj that hikes rates . Lisa the market consensus is they will raise rates, are they going to go to 0, 0. 5 four they continued their bonded etf purchases . The markets are not freaking out. You are not seeing massive disruption, they have an opening do they just drive through it . Jonathan seema shah was with us and she was talking about the ecb and the limits they can produce Interest Rates of the Federal Reserve doesnt do anything. Then you have the relationship between them and the boj. Lisa you dont have the same runaway guilds that could happen if you have the rest of the world hiking rates. Will we look back and say operation ostrich was successful . Jonathan possibly that was a onesided Generation Opportunity to reframe and redo Inflation Expectation in japan. That inflation was a welcome story and everywhere also was not. Its what theyve been looking for for decades and abrasive. Lisa what is the implication for equities which in japan have been running away given the fact it may not be as cheap if you have dollars to go when abide . Jonathan two favorite sectors right now to and discretionary stateside. Two favorite reaches u. S. And japan. Japan after the dollaryen that moved to a dollar 50 and stayed there. Do you need dollar weakness for japanese yen to perform well . Japanese equities carried on ripping. What happens when you start to see yen strength kick in . If you go from 1. 5, 1. 30 will japanese stocks hold up in the face of that . Lisa overnight it wasnt necessarily positive. That will be the key question for that favorite trade. Jonathan under surveillance this morning our top story the fed entering the quiet period with plenty of data to suggest, digest. Cpi, retail sales and jobless claims in the question we asked friday how dependent is this Economic Data . Lisa Mohamed Elerian said they need to roadmap because they get revised downward and they dont have a roadmap. What you do with this data . Your people gaming it out. Cpi will be really important because if you have weakness or strength and you dont have inflation it doesnt matter. Jonathan mohammed said that data point whatever you wanted to mean, it explains a Market Performance we saw on friday. Annmarie it explodes with the administration was saying, this reenforces a soft landing but the president has been touting this manufacturing number, but not in the most recent labor report, down by 4000 reports. Jonathan thus the Economic Data, thats your week ahead to frame it for you. I want to talk about the politics. The latest from the president against the attack on the Southern City of rafah. He previously hope to have a ceasefire by the beginning of ramadan but the holy month started at sundown. They said they have to invade profit because is the last bastion of hamas but it would be a crossing of a redline. Lisa there was a nuanced approach that bided took. He wanted to show a little support for israel and support the palestinians and making sure that message was related to the msnbc in the lab. He said the defense of israel is Still Critical but a redline with palestinian lives i dont want to see another 30,000 palestinians dead. Jonathan was that thrown together on the weekend . Annmarie it was put together because he viewed the stated the union as a kickstart on the campaign trail and there was another part of the interview that goes to this idea of was this thrown together . He received a tremendous amount of pushback on the use of illegal when talking about the alleged immigrant that killed that young girl in georgia when he had that moment where representative Marjorie Taylor greene in the interview he said he regretted it. Jonathan will the far left of the party isolate the rest of the country . Annmarie former President Trumps family is meeting with lincoln rallies family and the left is debating about words and what they would call semantics, while the right is talking about the fact at the end of the day, this person allegedly murdered a citizen. Jonathan yesterday marking the oneyear anniversary since the collapse of Silicon Valley bank leading to the worst month since the pandemic. New York Community banks exposure to commercial real estate sinking at stock. To weigh in over the past 12 months, hermann chan for bloomberg intelligence. Lets talk about the last 12 months before we get into the next 12 months. What if we learn the what if we change . Herman regional banks that have been over reliance or concentration can lead to instability. We saw that with svb and their Interest Rate risk and securities portfolio and we are seeing it in new York Community with concentration risk and multifamily real estate, britt regulated apartment lending. The rest of the regional banks have a more diverse investment. That serves them in operating environments. Lisa where are we on the regulations targeting Smaller Banks that have been highly contentious . Have they moved closer to reality or further away . Herman it depends on which regulation were talking about. The basel three endgame rules of influx given the comment from the federally. We expect the endgame to incorporate the unrealized losses in the securities portfolio within the capital regulations. We are closer to reality. We are still waiting to hear potential roles down the pike including a liquidity potential ratio which would address the outflow issue that svb face after. Lisa there has been reluctance because a lot of transactions have not gone through. Do have a sense how pent up the demand is to consolidate should the Regulatory Environment be more amenable to that type of transaction . Herman one year after svb, an important lesson is scale really matters. You heard that vocally from bnc, banks like u. S. Bank have gained scale in recent years. The industry is really watching what is going to happen with the capital one discovery deal one of the largest deals we seen in the past two years. And if it does get Regulatory Approval it can open up the floodgates for more m a. Annmarie what optimism do you have the deal goes through because the direction of travel in washington is to block these types of deals . Herman you have heard a lot of consternation from the democrats including senator warren in terms of the competition involving credit cards. In our view, our colleagues sees a better opportunity for approval and i would point to the fact that if we are talking about visa and mastercard, they could potentially create a third player in that space which would open up more competition which would be great for the economy. Jonathan hermann chair there for bloomberg intelligence. You think about where we were 12 months ago no landing turned in to hard the here we are 5. 5 , gdp growth is consistent and people are really talking about it anymore. Lisa idiosyncratic and how long can it remain the story when you havent seen that cave you index recover materially . Jonathan can we get through this cycle without credit issues. If last year was a great story, will this year be a year of credit issue . We are willing to look at a single identity. Lisa a lot of people are saying this maturity while isnt coming to the fore yet and with new York Community bank it had issues that have to deal with new york city. I keep going back to howard marks would maturities come due. Will we see those higher rates bite in a material way . Its been a very long and prolapsed. Jonathan can they survive until 2025 . Equity futures negative 5. 2 . Here is your bloomberg read. Yahaira write it and investors are seeking to raise 750 million in what would be the biggest ipos this year. The Company Plans to offer 22 million shares priced between 31 41 each. Credit is seeking a listing on the new york stock exchange. More trouble for boeing, delta expects deliveries of its boeing 737 max aircrafts could be pushed out till 2027. Delta ceo said yesterday it had expected to receive the aircraft next year but is now anticipating delays. The airline has orders for max and plans and options to purchase 30 more. Warren Buffett Berkshire hathaway sold 1 of its stake last quarter the last time they sold the stock the selling persisted for several quarters. Apple has been hit hard by a slew of negative news including 2 billion trust fine and scrapping of a decade long car project. The stock is down 11 this year. Jonathan im next on this program, looking ahead to this weeks big data point. Theyve done a good job in terms of getting to a normalized level of policy. Interest rate cuts are very much in the picture, i think that is quite reasonable. Jonathan that conversation up next, buy from new york city. This is bloomberg. Okay yall we got ten orders coming in. Big orders starting a business is never easy, but starting it eight months pregnant. Thats a different story. I couldnt slow down. We were starting a business from the ground up. People were showing up left and right. And so did our Business Needs the chase ink card made it easy. When you go for Something Big like this, your kids see that. And they believe they can do the same. Earn unlimited 1. 5 cash back on every purchase with the chase ink business unlimited card. Make more of whats yours. Jonathan stock sewers on the s p 500, futures 5. 2 . Yields almost a basis point. Unchanged across the board. Eurodollar going nowhere. If you want some price action go to dollaryen, five days of yen strength with plenty of speculation they will be hiking may be as soon as this month. Looking ahead to this weeks big data point. They are mostly focused around inflation. They think they have done a good job and starting to get to a normalized level of policy and they dont need inflation to be a target to cut Interest Rates they can normalize policy as the economy reaches of better balance. Interest rate cuts are very much in the picture. I think thats quite reasonable. Jonathan i key week of u. S. Data with february cpi report said to determine whether to add to bullish wages. The disinflationary continues will it be the cause for break because . If there was a time to buy tbills until it wasnt last year, is now. Krishna joins us now. Why is it tbills until now . Christmas when everyone was getting excited about rates at 5. 5 we were on the verge of equities doing well. If you boil things down, the u. S. Economy continues to do well, inflation is going down. This set up is perfect. Marcus have discounted that. I think looking for equity markets to do fabulously well from here is pretty small. On the other hand, you get 5. 5 percent return on tbills so you can afford to wait. Jonathan do you think were on the precipice of equity market weakness . Krishna i dont think were on the precipice of economic weakness, may be a slow down but a slowdown that is manageable. The growth rate is quite substantial. These are nominal instruments. I dont think there is a big correction in the offing. A significant rally is not in the offing invested difference. Lisa when do you stop buying tbills agility . Krishna for that, the probability of rate cuts. We are thinking of june but there is a whole lot of space between now and june. We will probably have to work through that period before it becomes a time for getting back into equities in a meaningful way. Lisa dont you have fomo . I wellpoint does that look like a negative more than a positive . Krishna if you look at it from an Equity Investor standpoint as opposed to nvidia perspective. No one wants to look at it this way. The fact of the matter is, equities have done well but away from tech it hasnt done spectacularly well and there is an opportunity in that space if the economy continues to grow. If there is going to be fomo it will be the u. S. Economy remaining at this pace on a sustained basis than what we are thinking today. Lisa tbills until, instead of what . If you like big tech and there is strength of the economy, you want to be exposed to that as well . Krishna i dont think it is saying youre equity exposure should be zero. This is probably not the time to be adding equity exposure is really the point im trying to make. We are in a sideways market for the time being and in that environment, why take the risk when you dont have to . You can get 5. 5 or a little more than that. Jonathan i would not frame u. S. A raging bear. You said the biggest risk was an upside risk to equities. This is a change for you. What is fed policy mean for you and how it informs her for you . Have in a while what the rush, why do anything . If they win the argument on the fomc and the fed does next to nothing this year, what is that mean for stocks, equities . Krishna that is really the question and the answer of tbill until his deal with those kind of fomc members. If we go back to what well there was saying that last year, he was far more rulesbased. What came out in february, january is the u. S. Economy is decelerating. Like every good central banker he wants to keep his options open and that is what they are doing. The likelihood of them not cutting this year is zero. At the same time, the likelihood of them being in a hurry to cut, thousand pretty small as well. Thus the reason why the markets will remain sideways. Jonathan lets make krishna and editor of those speeches. You could revive comments from fed officials, does any of attention at all . Krishna if you look at hawkins testimony of chair powell, it was the same thing he gave at the presser. Nothing has really changed. In the u. S. Economy, nothing has changed. What may have changed slightly as the strengthen the economy of the first two months of the year but the employment report does away with that, ism and other things do away with that as well. As long as i was the case, for us it markets what matters more and how likely are they to raise rates . As long as that is not in the picture, we are all good. Lisa why isnt the dollar stronger . Krishna its not stronger because the likelihood of rates going up is not meaningfully strong. The driver of that if the economy continued on the peso was in january of february i wouldve expected the dollar to strengthen further. Subsequent data is taking way as a oneoff rather than sustained. Jonathan i wonder if we have seen the peak of that story . Growth inflation will improve and places like europe, u. K. Relative to what weve seen in the u. S. . Krishna if you look back at the nominal growth rate which matters more than anything else. It is exceptional. Jonathan without a doubt but have we seen the peak of that story with matters in Foreign Exchange . Krishna the likelihood we will go back and revisit the growth rates that we had in 2021, 2022, i dont think that is in the cards anymore. Jonathan i wonder if thats a better way to think about it in Foreign Exchange. The spread between europe and the United States was wide and it will stay wide but can i get wider . Thats a question were trying to answer . Dont worry krishna, you jump in. Krishna i think expecting europe to keep up the same pace as the u. S. In the current context, that is unlikely. Jonathan can a close the gap . Krishna but that will come from u. S. Deceleration. Jonathan fx doesnt care because you will have to push start rate to Foreign Exchange. Krishna i think European Growth has been ok compared up to where its been in the last 10, 15 years. Lisa basically he doesnt think parity is likely. Jonathan thats what it sounds like. Jonathan chris med, i enjoyed this. Ive enjoyed this bait. Coming up, we will catch up with bank of america and bloombergs ed ludlow. A whole lot to come, from new york city this morning, good morning. When i was your age, we never had anything like this. What . Wifi . Wifi that works all over the house, even the basement. The basement. So i can finally throw that party. And invite shannon barnes. Dream do come true. Xfinity gives you reliable wifi with walltowall coverage on all your devices, even when everyone is online. Maybe well even get married one day. I wonder what i will be doing . Probably still living here with mom and dad. Fast reliable speeds right where you need them. Thats walltowall wifi on the xfinity 10g network. The bar for the fed to cut is long way from the inflation