I am Katie Greifeld in new york. Welcome to bloomberg markets, and it feels like a week is just Getting Started with amazon after the bell tonight and the fan tomorrow. Take a look at how markets are feeling heading into those events. Not too great at the moment. The s p 500 off by 0. 2 . Same thing if you look at the nasdaq, off 0. 2 when it comes to the big tech names. The bond market, we are back in selloff mode with the 10year treasury yield higher by five basis points. We are getting closer to 4. 7 on your 10year treasury yield, and one of the reasons why has to do with numbers we got at 8 30 a. M. Of course, the eci. I can imagine that eci print was good news for the fed. Not good news for the fed. A big drop in Consumer Confidence from a revised 103. 1 down to a 97 for the headline number. The present situation is a big drop from 146. 8 to 142. 9. A drop in expectations to 66. 4 from 74. 0. Of course, we have to check out the jobs, plentiful jobs hard to get situation because that is a good measure of what we might get on friday. More jobs ahead in six months. Employment jobs, plentiful, 40. 2. Jobs hard to get, 14. 9. People are getting to feel a little worse about the economy, not in recession territory yet, but combine it with the big rise in the eci today and the fed has some issues. Katie yeah, it is interesting, taking the Consumer Confidence falling at the same time you have wages or at least eci, a measure of that rising as well. Wrap it all together in terms of what tone we might hear Jerome Powell take tomorrow. Michael Jerome Powell will probably try to say as little as possible. Certainly will have to admit they do not have confidence now and ongoing fallen inflation enough to cut Interest Rates. He will be pushed on the idea of, do you think you need to raise Interest Rates . Given the Consumer Confidence numbers and some of the other numbers we have seen showing a slowdown, he will probably say, no, we dont need to do that, but we need to keep an eye on inflation. And we are not going to make any decisions right now, but stay with us. Katie stay with us. Bloombergs mike mckee, i know you have a busy week ahead of you. Appreciate your time right now. Lets bring the competition to the markets because joining us now, we have elizabeth. I wont ask you about the fed, but i will ask you about amazon of course. We heard from some of its peers last week. You had microsoft and alphabet really with some blockbuster earnings. Not the same for meta, which i am sure we will get to. But for amazon, it feels like the stakes are high when you consider the stocks performance this year. What are your expectations . We forecast growth rates north of 20 for amazon this year. Very impressive for a business of its size, and we dont expect this quarter to deviate too far from that annual growth rate. Of course, amazons Retail Business is the center of gravity in the retail media space. Its growth rates are only second to walmart its growth rates are only second to walmart in that space but walmart is less than a 10th of the size of the amazon ad business so a different comparison there. Amazon has a lot of draws for advertisers. Chief among them, their first Party Consumer data, of which it has a lot. Closed loop attribution is a big deal for advertisers, being more easily able to add exposure to a sale or purchase. All of that plays in amazons favor as far as amazon is concerned as far as advertising is concerned. We have to talk about ai as well and amazons Cloud Business. Those two things are kind of feeding each other. Amazons investments in ai are helping to bolster its Cloud Business, and as amazon brings in more customers in the ai realm, there again it feeds back into its Cloud Business. Katie two things to discuss, the ad business and ai, select start with the ad business. Those two intersect but when it comes to the ad business to me think about what we heard from google and meta. How do your expectations for amazon stack up against what we heard last week . Evelyn we expect amazon to perform in a similar way to google and microsoft. This has been a pretty great quarter for tech overall as you mentioned, and a lot of the same factors that are at play for google and alphabets performance and microsoft and meta as well, which we will get to are at play for amazon as well, like we mentioned ai is a big growth driver here. Also, the Advertising Market is kind of in the middle of a rebound. It is not extreme. Nothing like we saw in 2021 coming back from the pandemic slump, but after the past couple years of protracted economic uncertainty, at least q1 was pretty solid. Advertisers started to open up their pursestrings again so we expect amazon to continue the trend we have seen the past week or so. Katie we keep teasing it so lets just get to meta because it has been amazing to watch the reaction after the blistering rally that meta has staged. That big drawdown we saw, it seems like shareholders really did not like of course the spending and of course the revenue guidance coming in weaker. How did you take that . When you think about how markets reacted, was that an overreaction . Evelyn i dont want to dismiss investorss concerns for sure, but meta had quite a fantastic quarter all things considered. Some of those ai investments that investors are concerned about may take some time to meaningfully contribute to revenue, but meta is wellpositioned to keep its ad business humming in the meantime, in part owing to ai powered tools and Solutions Like advantage plus shopping. Another thing meta has changed over the past couple weeks, it really thrust itself into the space when we talk about what is going on with microsoft and alphabet. Ai powered search is another big theme here. Meta had not been playing heavily in that space until recently when it incorporated its meta ai tool into the search function across its family of apps, instagram, facebook, whatsapp. Fewer than half of facebook users would need to use meta ai at least once a month to be as big as chatgpt per estimates so that is big news for meta, and it could be interesting to watch the next few quarters as the meta competitors kind of catch up and react. Katie when it comes to the ai spend for meta, clearly some skepticism among markets and traders as you can see in the share price. But when it comes to the other big tech we are talking about, has ai actually translated to the bottom line . Is that starting to bear fruit rather than being a margin eater . Evelyn it seems so. I think we are in the very early days. We are still in the early days of the ai boom. But as far as impact on revenue, it will take some time just as for meta, for everyone for ai to really meaningfully contribute to the bottom line. Something that came out of alphabet earnings that was really interesting was the executives comments that compute costs have been reduced significantly. That is an important thing to keep an eye on as costs normalize here. But ai will take some time. We have a lot of Tech Infrastructure that has to adapt, social infrastructures that have to adapt to this new technology. It is not something that will happen over the course of a few quarters. We are already over a year into the ai gold rush, and as the market matures more, it will just take time for people and technology to adapt. Katie katie that is exactly why we heard Mark Zuckerberg asking for patients katie that is exactly why we heard Mark Zuckerberg asking for patience. I want to get your thoughts on what a potential tiktok ban could meet not only for the likes of meta but maybe some other businesses with big ad businesses. I know it is very early days and there is a lot of questions here, but when you think about potential impacts, what do you think . Evelyn if a ban were to materialize, which is still in the air, youtube would likely be one of the main beneficiaries of any ad dollars advertisers had earmarked for tiktok. Instagram reels as well would come into play. Although a lot of the same content that exists on tiktok exists on shorts and reels, one of the biggest factors missing on those is the cultural cachet that tiktok has. That is not something you can necessarily replicate with similar content or tech. There is a question of the tiktok algorithm not being part of any sale. Of course if it goes away entirely, that is another thing. But we expect a lot of the ad dollars to redistribute to other players in the short video space. Not quite all of the tiktok dollars. That said, there is there are still questions about where consumers will go to spend their time. When india banned tiktok, and of activity shifted to instagram. We may see that a lot of activity shifted to instagram and we may see that here or we may not. Katie we will have to keep in touch on that point as that story develops. Good place to leave it here ahead of amazon earnings after the bell. Big thanks to evelyn. Lets take a look now at what is moving underneath the markets with emily sitting to my left. Lets start with eli lilly because we are seeing a big pop higher in the shares. We are seeing that stock higher, biggest gain since august, up 7 based off of an earnings beat that came from soaring demand for eli lillys weight loss drugs. The revenue rose 6 yearoveryear. When you 26 yearoveryear. When you look at the two drugs, the revenue came in beating estimates. The revenue missed estimates for another one of the drugs but still fairly strong at 1. 8 billion. This all resulted in the company raising annual guidance for sales and profit. That stock is up 99 in the last 12 months. Katie there you go. Eli lilly knocking it out of the park. Really fun to watch earnings later this week. But lets go from weight loss drugs to fast food because young china not having a great day. Emily not as good. This is the operator of chain restaurants including pizza hut, kfc, taco bell in china. That stock is down 6 . It was a First Quarter revenue missed at 296 billion is estimates of 300 billion. When you look at the comps for kfc, those were misses. Mike keep suffering might macro story we can learn about consumers in china may be pulling back maybe pulling back on ordering fast food even though it is cheaper than other food alternatives. Katie even still, you look at the shares down 8 on the day. Lets bring it home with paypal because we are really in the thick of earnings season right now. Emily there are so many reports each day. This one was a pretty solid beat for the payment company. Total payment volume beat at 4. 03 billion, up yearoveryear, beating estimates, net revenue also beat. Interesting story out of paypal as they are looking to right size the business. 2024 is a transition year, for paypal the ceo said the ceo said 2024 is a transition year for paypal. They plan to cut 9 of their workforce to really boost profits. That stock is up 10 yeartodate. Katie it feels like we have heard a few Companies Come out and call this a transition year. Emily easy fix. Katie easy fix, definitely a sign of the times. Thank you so much. We want to bring you some breaking news now just crossing the terminal that lvmh is set to weigh options for mark jacobs amid buyer interest so we will continue to follow that story. Once again, breaking news crossing the terminal that lvmh is set to weigh options for its mark jacobs brand, apparently receiving buyer interest there. I developing story we will stay on top of. Coming up, mcdonalds reporting a rare earnings miss. What is behind sagging burger sales . That is next. This is bloomberg. When you own a Small Business every second counts. 120 seconds to add the finishing touches. 900 seconds to arrange the displays. If youre short on time for marketing constant contacts powerful tools can help. You can automate email and sms messages so customers get the right message at the right time. Save Time Marketing with constant contact. Because all it takes is 30 seconds to make someones day. Get started today at constantcontact. Com. Helping the small stand tall. Katie consumers are thinking twice before grabbing a burger and fries. Mcdonalds reporting disappointing firstquarter results thanks to slowing u. S. Growth and the impact of the war in the middle east. Starbucks reports earnings after the bell today, and the coffee chain is vulnerable to slumber u. S. Demand and boycotts related to the war. With us is someone who has a neutral reading on mcdonalds and a buy on starbucks with a 115 price target. Great to have you with us. Lets start with mcdonalds. Comp sales growth coming in slower than expected, 1. 9 . How much of what we learned this morning is a mcdonald specific problem versus just a macroeconomic problem . Yeah. Great. Thanks for having me on. Really good question. Mcdonalds is seeing a slowdown across several of its markets, the u. S. Included, and many Large International markets. They are also seeing a slowdown among the lower income consumer and all income cohorts are visiting less often. What is really interesting here is mcdonalds is calling this out but we are not seeing it at dominos. Dominos said the exact opposite yesterday come and support leg last week yesterday, and chipotle last week said the opposite. Maybe a little more to mcdonalds than it is necessarily across the entire industry but they are seeing a slowdown. It is evident in the numbers we saw this morning. Katie interesting perspective when it comes to the Competitive Landscape of some of their peers who are not having as tough of a time, which raises the question, what does mcdonalds do here . You take a look at it seems like they may be focusing on potentially a nationwide value menu. Hinting at that in a call with investors. Would that be enough . What with the impact be . Peter so i think that is in the playbook, to push harder and harder on value. The Value Proposition or the value messaging really started in the fall last year, like october, and it intensified as we went through the year. And it can have and it kind of continued into 2024 and is more in 2024 than it was in 2023. We think it will continue for the balance of the year as they battled to get traffic back. But the value messaging, it takes several quarters to really start to work so we are probably two quarters in. I think we get another quarter before we start to see any sort of response from the consumer or maybe until we lap it in the fall. I do think we will see any sort of a rebound. In fact, mcdonalds is calling for u. S. Industry traffic to be negative. It was negative in the First Quarter and they expect it to be negative for the full year so they will push hard on value messaging. I dont know that it will turn the tide anytime soon. Katie there is a light at the end of the tunnel but we are not exactly there yet. Maybe getting closer. Mcdonalds is trying to push out into other parts of the day into areas such as breakfast as well. When you are visiting stores and talking to executives, how much do you see that being meaningful . Peter what we heard from our franchisee checkss weekday breakfast and weekday lunch were soft. Those tend to skew more lower income consumers. We also heard the value mix has doubled versus this time last year, so it is about 10 versus 5 . Value is becoming much more aggressive. They will continue to push on that. They will continue to find ways on value. What is really interesting is their Loyalty Program is exploding in growth. Loyalty customers visit three times more often than traditional guests. The more they add to the loyalty, the more rewards customers, the better off they will be. Again, it is insignificant in terms of the overall traffic component. It will take several more quarters, maybe even the year to start to see the traffic turn the other way. Katie before i let you go, i want to look ahead to starbucks, which reports after the bell today. You take a look at what the consensus says maybe u. S. Maybe lower u. S. Traffic. That is the consensus. What is your view . Peter you are right. The expectations for starbucks are extraordinarily low. The stock has been under a lot of pressure as of late. Slightly ahead on samestore sales versus consensus for this quarter. Again, expectations are very low but i will point out that if you look at valuation, it is trading within one turn of its 10 year trough on ebitda and within two or 2. 5 turns of its historical trough on pe. It is trading like it is a broken story. Right now, yes, samestore sales are under a little more pressure than they have been historically. They had to take down guidance in the u. S. China has yet to recover. But to me, it feels like it is very much reflected in the stock price. If we get any indication of a turn in trend here, even minor, i think the stock has a lot more upside than what is being reflected today. Katie starbucks shares currently down about 8. 3 yeartodate. Watch for some fireworks after the close today. Really appreciate your time. That is peter. Still ahead, we will take a look at the Companies Making the most social buzz today in our social climbers segment, up next. This is bloomberg. When you automate sales tax with avalara, you dont have to worry about things like changing tax rates, exemption certificates or filing returns. AvalarAhhh Ahhh Ahhh ahhh katie it is time now for social climbers, a look at the stocks making waves on social media this morning. First up, we have walmart delivering a near death blow to Retail Health care. The big box retailer announcing it will close all of its Health Care Clinics because of rising costs and reimbursement challenges. The decision underscores how hard it is to disrupt the u. S. Health care industry. Next up, a week outlook for the Second Quarter for chegg. Generative ai is disrupting the companys core business. It is downgraded with no stability insight according to jeffries. 3m planning to cut dividends for the first time in six years. You can follow the latest buzz on the bloomberg terminal. Coming up, we will speak with the ceo of landis. Conversation, up next. 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 with xfinity. Hi, im jason and ive lost 202 pounds on golo. So the first time i ever seen a golo advertisement, i said, yeah, whatever. Theres no way this works like this. And threw it to the side. A couple weeks later, i seen it again after getting not so pleasant news from my physician. I was 424 pounds, and my doctor was recommending weight loss surgery. To avoid the surgery, i had to make a change. So i decided to go with golo and its changed my life. When i first started golo and taking release, my cravings, they went away. And i was so surprised. You feel that your body is working and functioning the way it should be and you feel energized. Golo has improved my life in so many ways. Im able to stand and actually make dinner. Im able to clean my house. Im able to do just simple tasks that a lot of people call simple, but when youre extremely heavy theyre not so simple. Golo is real and when you take release and follow the plan, it works. Katie lets now take a look at farming and the challenges facing the agricultural sector. We will do that with abigail doolittle. Abigail lets check in on the bloomberg agricultural index over the last month and a half or so and you can see there is a solid gain, up 5. 4 . If we take a look on the year, a different picture, so those are some of the challenges on the year, some of the spot price is being down. If we turn to some of the stocks associated with agriculture we will see one on the year is up nearly 15 . Scotts on the other hand scotts on the other hand is up, the lawn company. I dont know exactly that is the Agricultural Company we are talking about entirely today. But cnh and fmc down. A little bit of a mixed picture here, but where we have a very clear picture, coco on the year of course, a record rally. You have interviewed people around it. We have seen a big decline. The last few days, the worst decline on record going back to 1960. The last two days, down 27 . Some liquidity causing the traders to exit and cocoa on this is tumbling. Katie thanks to abigail doolittle. Joining us now is the landis chief executive officer. Landis is iowas largest farm cooperative come out with news today you are forming a new company that will seek to bring Digital Solutions to farmers through an open platform. Just walk me through the launch of this platform and how you decided to do this. Well, it really comes back to, how do we really take the established and longstanding history that is agriculture and really move it into the future . Abigail was talking about some of the results for companies we support, there has to be evolution that happens and at a faster pace. Conduit is taking our established business at landus and taken the best of that and moving that over to be part of what we can do with conduit where it is more of an asset but Technology Asset light but technology heavy. Giving our farmers multiple options from the traditional cooperative side as everyone knows and what we do to support those agribusinesses, but also using more of an Asset Technology heavy that includes stateoftheart fintech platform and evolving the ecommerce site of agriculture. Katie so walk me through how this compares to past similar sort of set ups. I know the Farmers Business Network for example struggled a little bit. What sets conduit apart . Matt i think what sets it apart is we have had a live at times whether on the fullservice side or the companies that you cited. What you will see is the cost entry is extremely high at ag retail and serving the farmer. There is a lot of history that goes into whatever farmers do and how they do it, so how we change that is putting the best of both together and using the strength of what landus has done for many years and many mergers that led to the size and scope of landus and taking that across the u. S. With the invention of ecommerce, fintech, changing the asset model to lighten that and be more competitive for the farmers at the farm gate. The difference here is really putting the best of both together and again letting our farmers decide which pieces they want to buy from which side of their business, which is exciting when they get to be back in the center of the discussion and have their voice heard more loudly and clearly across all of agriculture like you talked about in the opening. Katie in addition to farmers, i am curious who else you would welcome into this effort. For example, when it comes to investors, are we talking about big ag giants . Is that a sort of cohort you will be looking to court here . Matt initially committed will be landus having majority ownership and other farmers that want to engage beyond the 5500 farmers that own landus today. Absolutely as we go forward, we recognize there will be needs more than likely to go beyond that, and as long as there is a likeminded investor or other partners that could come along, we are absolutely excited to open that door and create an open platform where everyone can become part of conduit that again believes in the vision of putting the farmer first. Katie ok so we have condiment of course has launched. We will continue to track how that performs. Lets talk about the broader industry. When it comes to farmers and when they are challenged with and what they are investing in, i am wondering how you are seeing the outlook for farmer participation with things such as the carbon markets, for example. Matt as i think about our farmers, there is a lot of challenges. Number one, you can see the price decline for what they are getting paid for soybean, corn, some of the livestock like pork. But when you buy those as a consumer, those dont exactly tie out. Without a doubt, you are seeing a change their. Change there, and another piece is Interest Rates. Conduit will come out with 0 Interest Rates from the start. But the last area, i think there is a bunch of excitement today of hopefully the announcement of the changes to the model and how farmers can participate in that because they have to understand what the consumer wants. Wherever their crops or livestock are going, they have to understand that path to the consumer and be able to meet the needs of the consumer today. And they want to do that. Our farmers are the original conservationists and they want to take those steps, but we have to have a clear path. There is excitement there, but there is also a lot of complicity around understanding the model, what qualifies, what doesnt, and how farmers can monetize the great actions they have been taking and get the connection down to the consumer. There is a lot to unpack when the excitement comes out today. Katie you mentioned corn, soybeans, and given that we are in the thick of spring planting season, i wonder how that is shaping up when it comes to some of the grains, especially with seeing a lot volatility. Matt there is a lot of volatility and some weather challenges particularly across the midwest with the drought. I saw some reports coming in that i think like iowa, illinois seems to be around 10 ahead of planning, which is good to see. We are starting to see some more rainfall, although some storms have come through as well rainfall come, although we saw rainfall come, although some storms have come through as well. The season is starting off well which is good, but we have a way to go to get livestock fed too. Katie definitely exciting news coming out about conduit. Really appreciate your time today. That is matt carstens, the ceo of landus. We are just over one hour into the u. S. Trading day so lets get a check on the markets with abigail doolittle. Abigail so on the day, we are looking at declines, and that is true for the month of april. For the s p 500, a 3 decline, the worst month for the s p 500 going back to september last year when we had the selloff led by some technology names. A culprit is the bloomberg dollar index, up 1. 4 , the best month since january, putting pressure on a lot of risk assets, including crude oil, which is down. The two year yield, pretty incredible, up 39 basis points. You would think that is the biggest backup on a monthly basis for a long time but it is actually just the biggest since february when the two year yield backed up 41 basis points. When you put that together, the two year yield back about 5 . Lets take a closer look at what these declines look like here in the terminal. You can see we have the dow in blue, the s p 500 in white, and the nasdaq all lower on the month, the first down month this year and the worst month since this patch last fall. Investors not liking the higher dollar amount uncertainty around the fed and whether or not they will be cutting the higher dollar and uncertainty around the fed and whether or not they will be cutting. We will be looking to see what happens with the Cloud Business at amazon and ai after the different results or relatively strong results for both microsoft and alphabet on those metrics. And then apple later this week. Up 1. 8 . The question is, will i phone numbers come in better . Expected to decline 11 but it could come in 1 to 3 better. If it happens, maybe we will see the stock continue to come off of its lows. Katie the week is just Getting Started with earnings is still to come. Abigail doolittle, thank you so much. We will take a look at how the u. S. President ial election could affect the fed, coming up. Ken rogoff joins us next. This is bloomberg. traffic noises the road to opportunity. Is often the road overlooked. at enterprise mobility, we guide companies to unique solutions, from our team of mobility experts. Because we believe the more ways we all have to move forward. The further well all go. How am i going to find a doctor when im hallucinating . What about zocdoc . So many options. Yeah, and dr. Xichun even takes your sketchy insurance. Xichun, xichun, xichun youve got more options than you know. Book now. Katie this is abigail this is bloomberg markets. Coming up, christopher joins bloomberg tv at 3 45 p. M. New york time. This is bloomberg. Katie it is time now for our daily wall street week conversation, and today we are taking a look at political pressures facing Central Banks. Joining us now, i am pleased to say we have Kenneth Rogoff, Harvard University professor of economics and share of international comics, along with david westin. David, a timely conversation as the fed kicks off its tuesday meeting its meeting its meeting. David thanks for being with us. You have a paper coauthored talking about longterm low Interest Rates. First, we will have the fed make a shortterm decision presumably this week. How does that fit with longterm Interest Rates . How should the fed take into account what you are saying . Kenneth longterm Interest Rates are higher for as far as the eye can see. That probably means what they think of what is their target is higher than they had been thinking, and some of them still seem to be thinking. It collapsed after the financial crisis and there has been some reversion we have seen in the long rates and i am not sure the fed has entirely figured out some of that will happen with the short rates as well. I think one fed governor said we thought we had two feet on the brakes but we seem to only have one because Interest Rates are not as high as they seem. David how much influence does the Federal Reserve have over longterm Interest Rates . One of the things are to from your paper at least is we have heard of low inflation but it had to do with things like globalization and unions and some of the lack of conflicts. How much influence does the fed have over longterm Interest Rates . Kenneth well, there are two parts to longterm Interest Rates. There is the real Interest Rate, and i think the feds longterm influence is very limited. It follows the flows of international markets, quantitative easing matters because of the treasury issues with because the treasury issues loss of shortterm debt. That lowers longterm Interest Rates, but it is risky because as we have seen when Interest Rates go up, it can cost the u. S. A lot of money. Inflation, of course the feds heart is in the right place, but it is hard to be an island of technocratic tranquility in the middle of a sea turmoil. The fed is independent, but the governors get appointed, the fed chair gets appointed. Over the long run, they can control the feds budget, a lot of perimeters. They dont have to be so crude as i am sure you will asked me about donald trump and some proposals, but in more subtle ways that matter. There was this long period of globalization fiscal prudence, washington consensus, deunionization. I am not praising that but it made it easier for the fed to bring down inflation and maintain decent growth. Are things going into reverse . Fiscal policy has long gone into reverse. A number of other factors. It is going to be harder i think for those reasons. My coauthors all think we will have an average higher inflation. To be clear, i am not saying the fed will not bring inflation down to 2 this time. I think it might, but we will see more upwards spikes like we had over the pandemic on occasion and not so much these long periods of deflation. Katie you are right, we will get to the wall street journal reporting of donald trump and what influence he might have over the fed but lets continue the fight on when it comes to inflation and the decades long shift to lower inflation that Central Banks and the fed had less to do with it than commonly thought. If that is the case, when you think about the inflation we are dealing with now, should that realization if true impact how they are approaching the current inflation that is in the economy . Kenneth well, they did a great job, but they had the wind at their backs. Now they are running into the wind and it is harder. I think here the big issue is not simply the embedded inflation but where is the longterm real Interest Rate going to go . In other words, how high of a fed funds rate do we need to get the right Interest Rate . They have been thinking for a long time half of a percent real Interest Rate. Maybe that is right, but there is little question the long rates have gone up. Even after the fed unwinds its Interest Rate hikes, i think they will stay higher for a very long time. So maybe Interest Rates are not as tight as they think. I am sure that kind of conversation is going through the halls of the Federal Reserve now because they have to be rethinking things. David lets go to the question of the reporting of perhaps what president mike do if he were read President Trump might do if he were reelected. If in fact it was a move by a new Trump Administration to really take away from the independence, how much difference would it make . Because it sounds like using there will be pressure on the fed and other Central Banks no matter what happens. Kenneth yes, i do. So it will not be as crude as the rumors we are hearing about from President Trump. I dont think we will go to the extremes of turkey where president erdogan kept firing his central banker every other year when they tried to raise the Interest Rate. I dont think we will get there. But almost a matter of who is in power, they are looking for ways to loosen monetary policy. I think progressives have ideas for taking away fed independence too. They are not at the tip of the tongue of President Biden or his advisors, but there are ideas floating out there. It will not work very well. I mean it will be obvious that it is not working if you take away fed independence. Investors will get jittery. Inflation applications will go up. The dollar will tank. So happily, for better or worse maybe, markets will throw a pretty cold bucket of water on the president if he tries to do that. I dont think he would go to that extreme, but it is clear he wants to be a disruptor in chief. And it probably irritates him that Jerome Powell gets so much attention at his press conferences. Katie so markets and there would apply the brakes in that scenario, which it is still being reported outcome of the details. So we will not go too far into the hypotheticals. Lets talk more about Interest Rates about real Interest Rates. If you have episodic spikes of inflation, what would real Interest Rates mean for the economy you think about the potential ripple effects . Kenneth i think it really comes in the cost of borrowing for the government or individuals. So, remember, inflation is also driving up tax revenues. It is also driving up wages and salaries. But the real Interest Rates, they are there to stay. They are the wedge between the two. There is this period where you were just a sucker not to borrow as much as possible, whether it was to buy a larger house or fund new government programs, etc. And i think we live in a more normal role now. I am not saying i am telling you what Interest Rates will be the next 20 years, but what i am saying is i think on average they will be a lot higher than they were after the Global Financial crisis. David one last quick one if i could. What does it do to growth if we have longterm Interest Rates . Kenneth well, we had longterm Interest Rates a lot higher for a long time and had better growth than we have now. It sort of depends on what is going on. I think to the extent it is driven by huge government borrowing, private borrowing, it is clearly a negative. You are just paying a risk premium to borrow. To the extent it is driven by ai and productivity and wondrous new technologies that obviously high rates just go handinhand and maybe there are some about. Katie we have to leave it there, but really enjoyed this conversation. Our thanks to Kenneth Rogoff of Harvard University. A great set up. Big questions ahead of tomorrows central bank meeting. David how about microchips . You think we should talk about those . We will go to chris miller. He will be on tomorrow to take us through where we are right now in chip manufacturing. That is tomorrow here. Katie a lot to look forward to. Big thanks to david westin. This is bloomberg. Thanks to avalara, we can calculate sales tax automatically. Avalarahhhhhh what if tax rates change . Ahhhhhh filing sales tax returns . Ahhhhhh business license guidance . Ahhhhhh crossborder sales . Ahhhhhh item classification . Ahhhhhh does it connect with acc. . Ahhhhhh ahhhhhh ahhhhhh katie lets take a look at these markets really at the start of this week it feels like because we have amazon reporting after the bell tonight. That is followed by the fed meeting tomorrow, and then we have apple on thursday. It has been kind of quiet as we await those things. We take a look at how things are looking right now and it does not look too good honestly. The s p 500 down 0. 3 . The same thing if you look at big tech with the nasdaq 100 currently off about 0. 3 , 0. 4 depending on the exact second i look at it. Small moves overall but the direction is lower. We had some really strong showings from microsoft and off about last week. We were talking about the best Weekly Performance for both of those indexes last week of 2024 so maybe a bit of a wait and see mode as we of course count down to some of those big earnings. You take a look at the 10year treasury yield right now currently higher by about five basis points. We did get the eci report that at about 8 30 a. M. This morning and that was a problem for the fed. Coming up, john rogers. He joins bloomberg technology. That does it for bloomberg markets. I am Katie Greifeld, and this is bloomberg. From the heart of where money, power, and innovation collide in the heart of silicon valley, this is bloomberg technology, with Caroline Hyde and ed ludlow. Caroline im Caroline Hyde at bloombergs World Headquarters in new york. Paramount replaces its ceo. Full coverage ahead. Ed we push ahead to results from amazon and pinterest, all reporting after the bell. Caroline and a former finance ceo at cz heads t