This is bloomberg surveillance alongside Lisa Abramowicz and annmarie hordern. The two of the issues under the Global Economy right now, right here in washington, d. C. The sustainability of the deficit in the u. S. And mr. Risch toward industrial policy. Front and center. Every conversation you have read outcome all roads lead back to that. Lisa especially given that it seems to be sovereign debt that is able to issue, not necessarily corporate debt when you talk about geopolitics and china and the u. S. , it will be fascinating to see how that is filled with given china is a member of the imf and is trying to create a Global Coalition. What is a Global Coalition look like in a fractured world . Jonathan it is the United States and japan, the United States and korea, the United States and malaysia. Malaysia stepping into the effects market. Japan and south korea turning to do the same. What you saw with yesterday is interesting. A meeting between secretary on, japanese, and south korea. Foreignexchange is going to become a big issue the next few days. Annmarie they put up his statement, we will continue to consult closely on the market changed its within our existing g20 commitment while acknowledging serious concerns at japan and the republic of korea. It is almost an implication the u. S. Is aware of what japan is doing with and they are not afraid to intervene. The rest of the world is delivered u. S. Exceptionalism. Lisa what can they do . This is the policy response that is uncertain. You have the currency had over the bank of japan saying we are concerned this could have a better in our economy. Janet yellen saying we acknowledge the worry. What are they going to do if it is differentials and growth . Jonathan the answer is nothing. The next question is for how much longer can they take it . Ultimately they will want a. Rate cut from the Federal Reserve. Is not just the equity market that wants to see rate cuts, it is the Global Economy. The policymakers would like to say the same thing. Lisa how much does that going to factor into the feds decisionmaking . What happens if they cannot cut rates because inflation remains too high or the accused of political interference . That we see the dollar breaking things. Annmarie they need to know what is going to happen postelection. We already have this loose fiscal policy. They like to spend more on election years. That means the hangover after november is going to be for the rest of the world. Jonathan what does it feel like to come home . Annmarie it is hot. It is warm in busy. Jonathan equity futures shipping up as follows on the s p, a bit of a bounce. Up nine points of his 500. Posited by. 2 . Yields are lower a single basis point. Prude pulling back by 1 . Back down to 81. 82. If you are worried about higher yield, they have pulled back. Lisa it is a tense pause. I cannot get a lot of signal from this. We got a 20 year auction. Right now very difficult to say there is a calm or innocence of cabazon see. What happens if you do get a surge in prices . You cannot plan for something that has not happened yet. Jonathan we will have to have that discussion. We look at up with tony dwyer we will catch up with tony dwyer. Leland miller of china beige book and Tiffany Wilding of pimco where is the path to 2 is beginning to stall. The s p 500 looking for its first gain in five days as refreezes continued to ease. Tony dwyer singh we expect both the interest backup at eps contribution metrics to improve lid this year following a period of market indigestion. Can we talk about market indigestion . Is that a 5 move lower, 2 move lower a 10 move lower . Tony it depends on what youre looking at. We so focus on isnt the 500 i stopped giving a target because i dont know how to evaluate tense stocks. Can is be 500 go down . It could. The equal weighted s p 500 and the russell 2000, the troops versus the generals have already seen corlett to performance. I dont think youre going to get as much pullback in the Broader Market then you could in the s p 500. Jonathan what are you advocating for . Tony what i missed last year is if you remove the magnificent seven stocks from the s p 500 operating earnings, you would have had a negative earnings year for the mag7 for the s p 500 operating earnings. The same is true for this quarter. It is no suppressing of the market concentration have got. The market indigestion is doing what it is doing now. You pullback, create fear, this be targets come down. People start calling for a correction, peoplethere ratio gets the bullbear ratio gets out. The higher it is now, the more likely they are to be lower later this year because it will have a dampening effect on the economy. The talking of lower rates and looser financial conditions got us into the reef solution, once the opposite happened talking of not lower rates has tightened financial conditions . That sets the stage for a recovery in the second half. Lisa it is getting harder and harder to see what happens best to. Ive chris pappas it the Federal Reserve cannot cut rates in june i am curious what happens if the Federal Reserve cannot cut rates in june. You see the dollar becoming stronger and stronger. Are you worried about something breaking and this becoming less orderly than the immaculate inflation . Tony i am worried about it. You are in delivered system when you look at the debt to gdp. Every area of the universe in finance needs lower rates right now, whether it is m a, wall street with capital markets, the federal government. It is a very tumultuous time. That is what is showing up here. That is why the dollar is rallying. You are under the situation where think about Jerome Powell at the end of the officiated at the end of december last year. The market is looking for seven rate cuts and now saying be not. We are looking at somebody who keeps telling us information that changes its within three months. To make this option we know it Jerome Powell and the fed is going to do i dont think makes a lot of sense. Financial conditions that sets the stage for a lower federated cut environment lower said cut rate environment. Lisa how much is this Federal Reserve leading and not following . How much did they cause the stickiness of the inflation by the less you . Inflation by the end of last year . Is that what were looking at, that essentially theyre going on a deficient shade of the a dovish. Tony they got it right once tightening without creating recession. The immaculate 1995 scenario is with everyone is open for but the fed is managing by talking versus acting. Money markets but still over 5 . Until they actually change i will leave you with this main not. What could lead to a Broader Market recovery versus concentrated market . Two things, number one, you have to have the fed cut rates. Until then that is the indigestion. Number two, you need a broader distribution of her next contribution. You cannot have seven stocks contributing all of the growth on a yearoveryear basis. The good news is both of those are set up as we exit the year. In the fourth quarter, it would be a much more even earnings contribution. They way the fed is talking about rates now creating 10 of financial conditions, that is going to end up as lower rates by the end of the year. Annmarie we would love to get your thoughts on where you see oil as is going in the sense of how difficult it is going to be for the ec that the ecb and the fed to combat. Tony the commodity call is under momentum. As everyone is talking about energy and oil prices, you see it could go over 100 per barrel. Ultimately energy goes to supply and demand. The currency situation we have is because there is no. The problem globally is you need to growth, you need to demand to pick up. I am not a commodity analyst and i dont want to pretend to be. What is it just is when everybody starts to get excited and trade the momentum of a commodity, it typically tends to reverse, especially if the supply and demand dynamics reinforce that. Higher rates are not great for Economic Activity and that is showing up in currency and should show up in commodities. Jonathan wonderful to catch up with you. Tony dwyer, always humble about what he doesnt know. If a key part of the year ahead is what happens to the price of crude, what do we say about the prince of crude . If you want to make a full summer, ask them for their forecast for crude by the end of the year. It is difficult to do and we are saying that is going to be the future of a whole set of decisions by the end of the year. Lisa especially when so much is determined by Something Else you cannot predict which is a crisis in the middle east. Since when have you been able to predict how this is going to transpire . And yet if there is some protracted you could get the closure of the straits of removes closure of the straits and that could lead to a pop in all prices. Annmarie it is a geopolitical risk premium we are buying into when everything was heightened now coming off of the table. What happens when that is back on the table . You have the u. S. The setting with an israeli they are not going to extend some of these contracts. It is not affecting physical supply but you can seize up and corners of the world where supply might be hit and how difficult that is going to be if you have a crisis on top. Jonathan crude is down 81. 79. Here is your bloomberg brief with dani burger. Dani Taiwan Semiconductor any fracturing better than expected outlook and plans to spend as much as 32 billion this year. The upbeat outlook follows the chipmakers first profit increase in a year. Ai demand boosting their growth. It also comes at a time of a chip correction. Maybe this is the thing they didnt thing they needed to direct. The biggest looking to trim headcount as part of its integration with credit suisse. It is more than 100 positions across banking markets and Wealth Management will be cut. Dohas airport has been a named the worlds best airport. It edged out singapores airport. Do they even have a wonderful . Tokyo took the fourth and fifth spots, and hong kong saw a boost moving to 11th place. Jonathan still waiting for jfk to break into the top five. Lisa laguardia is actually beautiful. Jonathan beautiful is not the word i would use for that airport. Annmarie that is not a real waterfall if you ask anyone in the deal ha doha airport. Jonathan next, speaker johnsons moment of truth. I have a job to do and i am to do the job. Regardless of consequences, that is what we are supposed to do. Dave Marjorie Taylor greene brings the motion, she will bring the motion. Jonathan that is coming up next. This is bloomberg. To start a business, you need an idea. Its a pillow with a speaker in it thats right craig. A team thats highly competent. Im just here for the internets. At t its superfast. Reliable. You locked us out . arrggghh ahhhh solutionoriented. [jenna screams] and most importantly. Is the internet out . Dont worry, we have at t internet backup. The next level network. I sold a pillow should i . Normally id hold. But. Taking the gains is smart here, right . Feel more confident with stock ratings from j. P. Morgan analysts in the chase app. When youve got a decision to make. The answer is j. P. Morgan Wealth Management. Johnson planning a series of votes on saturday despite two House Republicans from interest and Raymond James writing this. If House Republicans stick together and add provisions poison to democrats, speaker johnson has been tilted up and but he has about. Ed mills joins us now. How narrow is that path . Ed i think it is okay. Speaker johnson called for degree and aid ukraine aid. What is on the table this weekend is what past the Senate Couple of months ago. They will separately on israel, ukraine, taiwan. There is a fourth bill on tiktok and russiarelated provisions and a Border Security bill. I think the Border Security bill falls off but the others move over to descendant and when the senate comes back, this gets since pretty president , signed into law early may. Annmarie we saw David Cameron go to maralago and now we see, trump sitting down with andrzej duda. How much is the International Community having to put pressure on the former president for him to say yes or no to his heart remembers on whether or not they can vote on these packages . Ed i think his meetings are good to diligence. There is high probability donald trump could be president again this year so if you are a foreign leader and you have any opportunity to meet with the future president , you have that. As it with its two these defense bills, his influence has been shown in the act that the house is not passed his bills yet. Now that we had the attacks from iran against israel, the pressure really is there for congress to act and congress is going to pass what the senate did months ago, send it to bidens desk with additional provisions. Annmarie given we have separate individual bills, when they hook they could be one huge. I would love to ask about tiktok. Does that mean tiktok has a chance to make it through . Ed the time is numbered because this bill, senator cantwell who is the chair on the Senate Commerce committee has come out and endorsed the provision added to the house bill. This house bill is going to pass. It overwhelmingly passed previously so we bills four bills are going to be combined, passed the senate, and sometime next year tiktok is going to have to divest chinese ownership shut down in the u. S. My bet is shut down because im not sure the Chinese Communist is going to allow that investment to take this and that algorithm coming to the u. S. And for us to understand what tiktok is collecting and how tiktok is influencing the conversation in the u. S. The reason we are passing it is National Security concerns. China is not going to want to let us know what theyre doing. Lisa they came out and said theyre not going to allow them to dentist. I think that is why people would agree with you. Can you tell me why this got attached to aid in ukraine . Ed the reason is getting attached to because is the only thing moving. Republicans want to get some victories. This is a political a political offer for them to say it is not just the Senate Passed bill, we got some priorities in there and speaker johnson, when he put something on the floor against china, it is the only bipartisan thing idc bipartisan thing in d. C. That is also in this bill. The house ways and means is passing a bill that would impact the knew an almond retailers trying to remove that. Those are the questions i am getting the most at Raymond James, all of this antichina bills. Lisa this is a way to make everyone feel little better as the past age, get them on the same page which raises the question how much of the democrats going to back johnson publicans fade away . Republicans fade away . Ed if Marjorie Taylor greene except the motion to vacate, there are going to be enough democrats on board to make sure johnson remains speaker. If the reason republicans are going to try to remove speaker johnson is because he brought up the Senate Passed defense bill, their to back them. The reason democrats didnt back mccarthy is his role in rehabilitating trump after dinner we sixth. His role making generally six partisan generally six partisan. Johnson didnt have a similar bad feeling among democrats. Democrats want some level of keeping house in order. Jonathan we are in town for the imf meetings, we are trying to figure out how long is the line and is it filled with people from japan . By day complaining about ethics and be stronger dollar . By the european still complaining . How many complaints is this administration receiving . Ed the complaints may be long but i dont think a lot is going to be done with this. Six months ago i was on with you all the concern has been the strong dollar or higher yields and in the u. S. Was going to cause a lot of albums in the u. S. Problems in the u. S. That was a fusion between the Treasury Department and the Federal Reserve supporting the industrialization. A lot of folks may want a rate cut but there are folks who love getting yield out of their money market account. We talked about a trillion dollars Debt Service Burden but that is a fiscal stimulus to the economy, especially among wealthy individuals. Monday this week they sent 40 of that back to treasury. I dont think a sent out with a thank you note they sent that out with a thank you note. Jonathan very well framed. Ed mills of Raymond James. Our currency is your problem since to be the message. Lisa we understand and acknowledge, what else are they going to do . Nothing. Jonathan the conversation continues. We will catch up with leland miller. This is bloomberg. upbeat music theres more to business than the business youre in. If you use data, thats the privacy business. Manufacturing on demand . Youre talking cloud business. Got a few million hyperconnected customers . Digital experience business. That was fast. Thats where deloitte comes in. 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