♪
CARTELS WE'VE GOT A BROAD STORY READ ECONOMIC FUNDAMENTALS LOOK
GOOD. THE GROWTH STORY IS PRETTY GOOD. INFLATION IS COMING DOWN. >> I THINK IT'S A VERY BALANCED
SORT OF MESSAGE. >> WE ARE SEEING SLOWING GROWTH
BUT NOT SUCH SEVERE SLOWING THAT MONETARY POLICY MAKERS
SEEM LIKE THEY REALLY NEED TO ACT URGENTLY. >> I DON'T THINK THERE'S A LOT
OF CONCERNS ABOUT THE U.S. ECONOMY GOING INTO RECESSION. >> THAT THAT IS TELLING YOU
THEY'RE GOING TO CUT RATES EVEN IF THE LABOR MARKETS CUT DOWN.
THERE IS A SUPPORT NETWORK THAT IS HAPPENING NOW. ANNOUNCER:
THIS IS BLOOMBERG SURVEILLANCE WITH JONATHAN FARROW, WE SEVER,
ANNE-MARIE HARD-EARNED. -- >> THIS IS BLOOMBERG
SURVEILLANCE. JONATHAN IS ALL FOR THE WEEK.
WE HAVE THE LUCKY ONES BECAUSE DANNY BERGER HAS AGREED TO JOIN
US THROUGHOUT THE WEEK. THANK YOU SO MUCH FOR BEING
WITH US. A WEEK OF SO MUCH FED SPEAK. WE HAVE SOME KEY DATA AND THIS
THEY TENSION THAT HAS BEEN CULMINATING THIS WEEK.
OVER THE WEEKEND, A SERIES OF S&P FORECASTS TO THE OUTLOOK
FOR YEARS END. AT A TIME WHEN IT IS REALLY
BEING DRIVEN BY A FEWER AND FEWER GROUP OF STOCKS. WE LOOK AT JULIAN EMANUEL IS
THAT THIS UPGRADE IS BECAUSE OF AI.
I THINK IT INTERESTING TO TURN IT ON ITS HEAD. SHOULD WE BE WORRIED THAT THE
REST OF THIS MARKET ISN'T PLAYING BALL? >> THIS IS SOMETHING THAT IS
MAKING HER REALLY UNEASY. SHE CAN UNDERSTAND THE LOGIC
BUT THIS IS A RECORD DIVERGENCE WITH THE SMALL-CAP STOCKS.
YOU HAVE TO WONDER AT WHAT POINT PEOPLE DON'T PARTICIPATE.
IT JUST RAISES THE QUESTION OF THE VULNERABILITIES. THE FED MAYBE IS GOING TO CUT
THIS YEAR. IF THIS A MARKET THAT IS BROKEN
AND THERE ARE TOO MANY PRICE INSENSITIVE FIRES? -- BUYERS?
LISA: IT RAISES THE QUESTION OF WHAT
COULD POTENTIALLY GO WRONG. WHEN IT COMES TO THE POLITICAL
RISK, IT IS IMPOSSIBLE TO BE ABLE TO REALLY PRICE THAT OUT
AND YET LAST WEEK IT REALLY WAS WHAT HAPPENED IN FRANCE.
HOW MUCH WAS THAT REALLY HANGING OVER THE G7 IN A WAY
THAT A LOT OF PEOPLE DIDN'T EXPECT? >> DOMESTIC POLITICS WAS ALMOST
THE THEME. THEY WERE ABLE TO GET SOME
DELIVERABLES OVER THE FINISH LINE BUT THE ISSUES AT HOME,
THAT IS WHAT WAS STRIKING FOR SOME OF THE LEADERS.
I THINK IT WAS POLITICO THAT HAD THE HEADLINE.
THAT IS EXACTLY WHAT IT FELT LIKE BECAUSE WHAT IS GOING ON
IN FRANCE. PETER CHAIR HAD THIS NOTE
SAYING THAT EUROPE IS MAKING MARKET INTERESTING AGAIN.
HE SAYS OK, THAT AS LONG DOWN THE ROAD BUT THE FACT OF THE
MATTER IS YOU CAN HAVE THE FAR LEFT AND THE FAR RIGHT
POTENTIALLY WIN BIG IN WHAT DOES THAT MEAN FOR THE CENTER
WHEN IT COMES TO FRANCE? >> FRENCH AND GERMAN BONDS, I'M
JUST WONDERING WHEN YOU FORWARDED TO THE U.S.
WHICH IS THE STALWART MARKET THAT EVERYONE SEEMS TO BE
COALESCING AROUND, WHAT ARE SOME OF THE VULNERABILITIES
OVER THE NEXT TWO WEEKS? AS WE TALKED ABOUT FUNDRAISING
AND A WHOLE HOST OF DOMESTIC ISSUES THAT ARE COMING TO THE
FLOOR. LISA: IT IS FULL ON CAMPAIGN MODE. BIDEN WENT IMMEDIATELY FROM
INTERNATIONAL GATHERING TO THIS CAMPAIGN EVENT, STAR-STUDDED
EVENT. HE RAISED SOME $30 MILLION, OF
THE ISSUE OF HIS AGE WAS ON DISPLAY AT THE G7 AS WELL. THAT WAS ON DISPLAY AS WELL IN
LOS ANGELES. THIS IS GOING TO BE SOMETHING
HE NEEDS TO OVERCOME AT THAT DEBATE IN THE NEXT TWO WEEKS. >> UNCLEAR EXACTLY HOW HE'S
GOING TO DO THAT. LET'S GET A SENSE OF THE STATE
OF PLAY AS WE GET THE 29TH RECORD HIGH LAST WEEK ON THE
S&P 500. STARTING ON A SOFTER NOTE.
ALBEIT, THIS IS NOT A SOFTER NOTE.
AS FUTURES JUST A TOUCH AWAY FROM 5500.
EVER COURT TALKING ABOUT 6000, ABOUT 10% UPSIDE FROM WHERE WE
ARE. THE EURO GAINING JUST A TOUCH
AFTER A REALLY PUNISHING SESSION. 10 YEAR YIELDS JUST MARGINALLY
UPWARD BUT STILL SO MUCH LOWER THAN LAST WEEK BEFORE WE GOT A
SLEW OF DATA THAT SPOKE A LOT LOUDER FROM THE FEDERAL RESERVE.
CRUDE BASICALLY HOVERING AROUND THAT $78 MARK.
I WANT TO TAKE A LOOK AT THE WEEK AHEAD.
RETAIL SALES ON TUESDAY, JOBLESS CLAIMS WEDNESDAY AND
THE S&P GLOBAL PMI ON FRIDAY TO GET A SENSE OF HOW MUCH WE
COULD GET SOME SORT OF UPSET. IT IS NOT THE QUIET WEEK.
SUCH A LOUD WEEK. IT IS EVERY SINGLE ONE OF THEM.
WE ARE GOING TO BE COMING OUT AND GIVING THEIR SENSE OF HOW
BIFURCATED THIS FOMC REALLY IS. AT THIS POINT WE ARE LOOKING AT
HERDING CATS. COMING UP, TERRY HAYNES AS
BIDEN AND TRUMP RAN UP THEIR CAMPAIGNS AND KNEELER
RICHARDSON LOOKING AHEAD TO A SLEW OF FED SPEAK THIS WEEK.
STOCKS COMING OFF TWO WEEKS OF GAINS AS INVESTORS -- A CLEAR
PATH OF DISINFLATION, GROWTH AND POLICY SET THAT THEY
CONSTRUCTED OUTLOOK ACROSS MARKETS.
BUT BEYOND YEAR END, MANY UNCERTAINTIES DRIVE A WIDER
THAN NORMAL SKEW, REFLECTING A GREATER RANGE OF POTENTIAL
OUTCOMES OF THE NEXT 12 MONTHS. ANDREW, TALKING ABOUT LOOKING
BEYOND THE END OF THIS YEAR IS LIKE STARING INTO THE SUN OR
BEATING YOUR HEAD WITH SOMETHING OVER AND OVER AGAIN.
WHAT DO YOU MAKE OF THE MOMENT WE ARE IN WHERE YOU HAVE RECORD
HIGHS WITH A SMALLER AND SMALLER COHORT OF COMPANIES
THAT ARE REALLY KEEPING IT ALL GOING. >> LOOK, I THINK YOU FRAMED IT
PERFECTLY. THIS IS A PRETTY UNUSUAL SET UP
AND I THINK IT IS INTERESTING TO KIND OF CLAIM THAT THIS IS A
VERY MACRO DRIVEN MARKET. THERE ARE OBVIOUSLY A LOT OF
REALLY IMPORTANT MACRO STORIES THAT THE PHENOMENON YOU JUST
DESCRIBED IS INHERENTLY MICRO-. IT IS ABOUT A SMALL NUMBER OF
STOCKS HAVING AN OUTSIDE EFFECT ON THE MARKETS AND WE SEE THAT
WITHIN CREDIT MARKETS AS WELL, WHERE YOU SEE VERY LOW LEVELS
OF CORRELATION BETWEEN INDIVIDUAL CREDIT SIMILAR TO
HOW YOU SEE LOW LEVELS OF CORRELATION WITHIN THE EQUITY
MARKET. I THINK IT SPEAKS TO FIRST A
VERY IDIOSYNCRATIC MARKET. SECOND I THINK IT'S IMPORTANT
FOR INVESTORS TO APPRECIATE THAT THIS IS REALLY IMPORTANT
FOR HOW VOLATILITY IS SO LOW. IF YOU THINK ABOUT A LOT OF
DIFFERENT STOCKS RUNNING IN A LOT OF DIFFERENT DIRECTIONS,
THEY HELPED TO STABILIZE THE OVERALL INDEX.
FOR THE MOMENT THAT LACK OF CORRELATION IS A HELPFUL FACTOR
IN HELPING TO KEEP OVERALL MARKETS STABLE, BUT I THINK IT
DOES SUGGEST AN ENVIRONMENT OF MAJOR WINNERS AND LOSERS.
YOU CAN VERY QUICKLY HAVE A LOT MORE VOLATILITY IN THE MARKET. LISA: IT DEPENDS WHERE YOU LOOK.
IF YOU TAKE A LOOK AT THE VIC'S, SURE.
THE MEGA CAPS, THEY ARE SPINNING AROUND, ALBEIT ONE
DIRECTION UP. THIS ISN'T EXACTLY A STAGNANT
MARKET OR SOME KIND OF STUDY KLEIN -- CLIMB UPWARDS.
IS IT THE RISK TO THE OUTLOOK OF NVIDIA AND MICROSOFT?
IT DOESN'T REALLY MATTER ABOUT THE OTHER 493 STOCKS. >> THAT'S EXACTLY THE RIGHT WAY
TO THINK ABOUT. THE AVERAGE OF THE ASSEMBLY OF
A STOCK IS NOT PARTICULARLY LOW AT THIS POINT. THEY HELP DAMPEN EACH OTHER OUT.
IF EVERYBODY IS GOING TO ONE SIDE OR THE OTHER AT THE SAME
TIME I CORRELATION, THE BOX A LOT. IF EVERYBODY IS RUNNING
OPPOSITE DIRECTIONS, THE BOAT IS MORE STABLE.
CERTAINLY THAT MEANS THE EARNINGS OUTLOOK FOR THESE VERY
LARGE COMPANIES HAS BROADER IMPLICATIONS ACROSS MULTIPLE
ASSET CLASSES, CREDIT, EQUITIES. THE OTHER CONCERNING FACTOR IS
THIS VERY ODD DYNAMIC WE HAD LAST WEEK WITH INFLATION AND
THE FED. YOU HAD A VERY GOOD INFLATION
NUMBER, 0.0 MONTH OVER MONTH ON HEADLINE INFLATION, AND THEN
THE FED COMES OUT LATER THAT DAY AND RAISES THE ESTIMATES
FOR COURT INFLATION. I THINK THAT CONFUSES THE
MARKET, QUITE FRANKLY, FED WAS CLEAR IN THE PRESS CONFERENCE
THAT THOSE SUMMARY NUMBERS DIDN'T FULLY REFLECT THE GOOD
CPI DATA THAT THEY JUST HAD, BUT I THINK THAT HAS LEFT THE
MARKET MORE CONCERNED THAT MAYBE THE FED IS MORE
BACKWARD-LOOKING IT NOT INTERPRETING, NOT FULLY
APPRECIATING SOME OF THE RECENT SLOWING OF SOME OF THE DATA.
CERTAINLY FOR CREDIT MARKETS, GOOD IS GOOD.
THE MARKET THIS WEEK ONCE BETTER DATA.
IT WANTS TO BE ASSURED THAT THE ECONOMY REALLY IS STRONG AND I
THINK WEAKER DATA WILL DRIVE MORE YEARS AT THE FED IS KIND
OF LOOKING IN THE REARVIEW MIRROR BASED ON THE SUMMARY OF
ECONOMIC PROJECTIONS LAST WEEK. ANN-MARIE THE FIRST BIT WE GOT
WASN'T EXACTLY ENCOURAGING IN THAT THEY WOULD HAVE CHANGED
THEIR DOTS TODAY. WE HEARD FROM KASHKARI SAYING
THAT HE THINKS ONE CUT IS REASONABLE IF THE END OF THE
YEAR. THAT DOESN'T EXACTLY ARGUE THAT
THEY WOULD HAVE PUT TWO CUTS IN HAVE A HAD THE DATA IN HAND.
SO WHAT DO YOU NEED TO HEAR FROM FED SPEAKERS THIS WEEK TO
MAKE THINGS LESS CAN USING? >> I THINK IT'S LESS WHAT THE
FED SPEAKERS THEMSELVES SAY. I THINK IT WILL COME DOWN TO
THE DATA. WE HAVE RETAIL SALES, INDUSTRIAL PRODUCTION BOTH ON
TUESDAY. MORGAN STANLEY EXPECTING THOSE
NUMBERS TO IMPROVE, TO BOUNCE BACK. I THINK IF THE MARKETS IS
HELPING DAVID BECOME A LITTLE MORE RELAXED.
IT WILL SAY THAT'S FINE, THE ECONOMY IS STILL COMING ALONG,
INFLATION IS COMING DOWN. WE CARE A LITTLE BIT LESS
EXACTLY WHEN THE FED MAKES ITS FIRST CUT OR EXACTLY THE PACE,
BUT I DO THINK THE WAY THAT LAST WEEK PLAYED OUT, IT MAKES
THE MARKET MORE SENSITIVE TO WEAKER DATA PRINT IN A WAY THAT
IS A LITTLE BIT DIFFERENT. THE CAPS ON TIMES WERE GOOD
DATA -- FOUR WEEK DATA HAS BEEN INTERPRETED POSITIVELY.
THERE IS A RISK THAT IS NO LONGER THE CASE, THAT THE
MARKET IS ROOTING FOR BETTER DATA AND WEAKER DATA WILL BE
MORE CHALLENGING. ANN-MARIE WHAT HAS CHANGED?
BAD NEWS NOW BEING BAD NEWS, WHY IS THAT THE CASE THIS TIME? >> I DO THINK SOME OF THE SET
UP FROM THE FED COULD HAVE CHANGED THAT.
I THINK THE FACT THAT YOU SEEN SOME OF THE ECONOMIC DATA HAS
BEEN A LITTLE BIT SOFTER, THE ECONOMIC SURPRISE INDICES ARE
QUITE WEAK. I THINK THE FACT HE STARTED TO
SEE THE UNEMPLOYMENT RATE GO UP A LITTLE BIT.
WE THINK IMMIGRATION IS A REASON FOR THAT SO UNEMPLOYMENT
RATE IS STICKING UP FOR MAYBE BETTER REASON OF THE LABOR
FORCE IS GROWING, BUT I THINK IT IS KIND OF A COMBINATION OF
FACTORS. IN SMALL DOSES, THAT
CORRELATION CAN BE MORE UNCERTAIN.
BUT I THINK WITH THE MARKETS PROBABLY MOST WORRIED ABOUT,
OVER BOTH CYCLES IS A SCENARIO WHERE THE DATA WEAKENING, THE
FED IS SLOW TO REACT OVER MULTIPLE ECONOMIC CYCLES, AND
THAT IS OFTEN THE WORTH OUTCOME FOR MARKETS.
MORGAN STANLEY ARE EXPECTING THE DATA TO BE MOSTLY BETTER SO
BACK AND HELP, BUT I THINK IT'S IMPORTANT TO WATCH AND
INVESTORS SHOULD ALSO BE WATCHING THE CORRELATION
CLOSELY FOR ANY POTENTIAL SHIFT. LISA: THANK YOU SO MUCH.
GLAD YOU MENTIONED THE FED SPEAK THAT WE HEARD LAST WEEK
BECAUSE FRANKLY IT WAS ALL OVER THE PLACE. IT WASN'T EXACTLY ONE
COMMENTARY. IT WAS BASICALLY SOME PEOPLE
SAYING I WANT TO BE HAWKISH, OTHERS SAYING I WOULD HAVE CUT
RATES. ANN-MARIE BUT THEY DO CONTINUE
TO HAVE THIS REFRAIN. WE CAN BE PATIENT, WE NEED TO
WAIT FOR 2%. BUT THEN WE MAKE THIS MISTAKE
BEFORE? WE CAN JUST PAY ATTENTION TO
THE DATA AND NOT THE FED SPEAK, ISN'T THAT THE MISTAKE WE MADE
THE START OF THE YEAR WOULD BE SET THEY ARE GOING TO CUT SIX
TIMES AND THEN KNOW THEY ARE NOT, WE HAVE TO PAY ATTENTION
TO THAT. ARE WE DOING IT AGAIN BUT TO A
LESSER DEGREE? ANN-MARIE KASHKARI WAS ASKED
SPECIFICALLY ABOUT THAT REPORT THAT THAT THE THAT WILL ONLY
CUT RATES ONCE THIS YEAR. I THINK THAT IS A REASONABLE
PREDICTION AND IT LOOKS LIKE DECEMBER. LISA:
AND THAT'S WHAT A LOT OF PEOPLE ARE COALESCING AROUND.
LET'S GET YOU AN UPDATE ON STORIES ELSEWHERE.
HERE IS YOUR BLOOMBERG BRIEF. YAHAIRA:
OIL EDGING HIGHER AFTER MIXED ECONOMIC DATA OUT OF CHINA.
THIS AT THE BIDEN ADMINISTRATION IS REPORTEDLY
READY TO REOPEN THE U.S. STOCKPILE IF PRICES JUMP IN THE
SUMMER MONTHS AHEAD. AND PRESIDENT BIDEN'S CLOSEST
VISOR ON ENERGY TOLD THE FINANCIAL TIMES THE
ADMINISTRATION DO EVERYTHING THEY CAN TO MAKE SURE THE
MARKET IS SUPPLIED WELL ENOUGH TO ENSURE AS LOW PRICES AS
POSSIBLE FOR AMERICAN CONSUMERS, WHICH INCLUDES
RELEASING MORE OIL FROM THE STRATEGIC PETROLEUM RESERVES.
THE U.S. HAS MOPPED UP ALMOST ONE THIRD
OF ALL THE GLOBAL INVESTMENT FLOW SINCE COVID.
ANALYSIS BY THE INTERNATIONAL MONETARY FUND SHOWING THAT THE
U.S.'S SHARE HAS CLIMBED WITH HIGHER INTEREST RATES A MAJOR
DRAW FOR OVERSEAS INVESTORS. THE U.S.
HAS ALSO PULLED IN A FRESH WAVE OF FOREIGN DIRECT INVESTMENT
THERE MAY BE CHALLENGES AHEAD FROM FED RATE POLICY IN THE
PRESIDENTIAL ELECTION WHICH CAN AFFECT THE FISCAL DEFICIT.
IN PIXAR'S INSIDE OUT TO IS HOLLYWOOD'S BEST DEBUT SINCE
HARVEY. THE MOVIE GROSSING 50 MILLION
AT THE BOX OFFICE IN THE U.S. AND CANADA, BESTINGD DUNE PART
II. THE FILM ALSO NOTCHING A RECORD, THE NEARLY $3 MILLION
HAUL GLOBALLY IF THE BIGGEST OPENING WEEKEND IN HISTORY FOR
AN ANIMATED FILM. >> THANK YOU SO MUCH.
IT IS NOSTALGIC, IT SEEMS LIKE. YOU WANT TO SEE IT BUT YOU'VE
NOT BEEN TO A THEATER. CAMPAIGN SEASON KICKING INTO
GEAR. >> THE SUPREME COURT HAS NEVER
BEEN AS OUT OF KILTER AS IT IS TODAY. >> FOUR YEARS AGO OUR BORDER
WAS THERE, INFLATION WAS NOWHERE TO BE SEEN.
WE DIDN'T HAVE INFLATION. THE WORLD WAS AT PEACE AND
AMERICA WAS STRONGER AND MORE RESPECTED THAN EVER BEFORE.
DARK THAT'S COMING UP NEXT. THIS IS BLOOMBERG. LISA:
WE ARE STILL DEBATING INSIDE OUT 2 AND WE ARE GOING TO TAKE
ANNE-MARIE STRAIGHT FROM ITALY TO A MOVIE THEATER.
NOT MUCH MARKET ACTION AFTER A WEEK WHERE WE SAW ABOUT FOUR
STRAIGHT RECORD HIGHS. 29TH OF THE YEAR ON THE S&P
TODAY, DOWN ABOUT 1/10 OF 1%. NOT A LOT OF DRAMA AS WE TAKE A
LOOK AT THE CONCENTRATION HERE. AGAIN, NOT A LOT OF DRAMA.
REALLY FLAT. UNDER SURVEILLANCE THIS
MORNING, CAMPAIGN SEASON KICKING INTO GEAR. FIND:
THE NEXT PRESIDENT IS LIKELY TO HAVE TWO NEW SUPREME COURT
NOMINEES. TWO MORE. HE'S ALREADY APPOINTED TWO THAT
HAVE BEEN VERY NEGATIVE IN TERMS OF INDIVIDUALS.
THE SUPREME COURT HAS NEVER BEEN AS OUT OF KILTER AS IT IS
TODAY. >> FOUR YEARS AGO OUR BORDER
WAS SECURE, INFLATION WAS NOWHERE TO BE SEEN.
WE DIDN'T HAVE INFLATION. THE MOLD WAS AT PEACE AND
AMERICA WAS STRONGER AND MORE RESPECTED THAN EVER BEFORE. >> HERE'S THE LATEST. DONALD
TRUMP AND PRESIDENT BYNUM RAMPING UP CAMPAIGN EFFORTS
OVER THE WEEKEND. AHEAD OF NEXT WEEK'S FIRST
PRESIDENTIAL DEBATE, THAT COMING IS A PURE RESEARCH POLL
SHOWS THAT ONE IN FOUR VOTERS DON'T LIKE EITHER CANDIDATE'S,
SO-CALLED DOUBLE HATERS. JOINING US NOW IS TERRY HAINES
WAS ON TOP OF EVERYTHING. WHERE IS YOUR CENTER OF FOCUS
ON A WEEK WHERE WE HAVE A LOT OF RHETORIC AND FRANKLY, AND A
LOT OF CONCERNS ABOUT VOTER ENTHUSIASM GIVEN THOSE DOUBLE
HATERS? >> OTHER THAN INSIDE OUT TWO, I
THINK WHAT WILL HAPPEN IS YOU ARE GOING TO RAMP UP 27 DEBATE
OVER THE NEXT COUPLE OF TO GET THERE WON'T BE MUCH GOING ON
POLITICS. EVERYBODY WILL WRAP THEMSELVES
INTO A TIZZY ABOUT THIS STUFF, BUT IT ACTUALLY IS
CONSEQUENTIAL IN A LOT OF WAYS BECAUSE AS YOU ARE POINTING OUT
BEFORE AND IT IS ONE OF MY ANALYSIS POINTS AS WELL, BUYING
HAS GOT TO SHOW UP PRETTY MUCH EVERY DAY BETWEEN NOW AND
NOVEMBER THAT HE'S UP TO THE JOB AND THAT HE IS KIND OF THE
SANER, CALMER ALTERNATIVE. THAT IS THE FRAME OF THE
ELECTION TO ME BECAUSE THEN MORE PEOPLE ARE LIKELY TO PULL
THE LEVER FOR BIDEN. IF THEY CAN'T GET THERE, THIS
ELECTION GETS UPENDED. ANNE-MARIE:
HOW DIFFICULT IS THAT WHEN THE FRAME OF DIFFERENCE IS OUT
REPORTING FROM THE G7 OVER THE WEEKEND WAS HOW OTHER
DELEGATIONS FOR KEEPING A CAREFUL EYE ON BIDEN.
THEY SAY HE JUMPED IN ON CONVERSATION ABOUT UKRAINE.
BUT THEN LOOKED A LITTLE BIT TO THE ZONING OUT WHEN THE
CONVERSATION MOVED ON. IF THAT IS ALREADY THE BASE
CASE, HOW MUCH WORK IF THIS ADMINISTRATION NEED TO DO? >> THEY NEED TO DO A LOT OF
WORK TO CONTINUE TO HAVE HIM SHOW THAT HE IS UP TO THE JOB
THEY CAN'T DO IT FOR HIM. A LOT OF THESE CLIPS OVER THE
PAST WEEK OR SO ARE CONCERNING. THEY ARE GOING TO NEED TO
DISSIPATE BAD AND BIDEN IS GOING TO HAVE TO BE ON HIS
TOES, NOT JUST BECAUSE HE'S TALKING TO AN AUDIENCE THAT IS
A HUGE AUDIENCE AROUND THE WORLD, BUT ALSO HE'S ON STAGE
WITH HIS MAJOR COMPETITOR IS GOING TO DO EVERYTHING POSSIBLE
TO TRY TO DISCOMBOBULATED HIM. I THINK HE'S UP TO THE
CHALLENGE, BUT THERE IS A BAR THERE THAT IS NOT INSUBSTANTIAL.
ANN-MARIE YOU STILL THINK FIVE IS GOING TO WIN THIS ELECTION.
YOU DO RIGHT TRUMP HAS HIS OWN ISSUES AS WELL.
WHAT IS GOING TO BE HIS BIGGEST TEST? >> FRANKLY, NOT GOING OFF THE
RAILS AND COMING INTO HOT. THE JOKE AROUND WASHINGTON LAST
WEEK WHILE YOU WERE EATING GELATO WAS TRUMP COMES TO
WASHINGTON AND ALL OF A SUDDEN HE IS SOUNDING REASONABLE IN
MEETINGS WITH BUSINESS LEADERS, HOUSE REPUBLICANS AND WHERE DID
THEY PUT THE OTHER TRUMP GUY? HIS MAJOR PROBLEMS ARE TWOFOLD.
THE REPUBLICAN IS SPLIT, AS YOU CAN SEE FROM THE NIKKI HALEY
VOTE IN THE PRIMARY AND TRUMP HOARDING HALEY, AND THAT HE IS
NOT DOING THAT GREAT WITH INDEPENDENT.
HE NEEDS TO DO BOTH, CONSOLIDATE THE REPUBLICAN
PARTY, APPEAL TO MORE INDEPENDENTS.
HE'S GOING TO HAVE TO CALIBRATE HIMSELF IN THAT WAY AND NOT
WORRY TOO MUCH ABOUT MAKING BIDEN JUMPY OR FEEL WORSE.
ANNE-MARIE: IF IT IS SUNDAY, IT IS TRUMP VP
DAY AND YOU SEE A LOT OF POTENTIAL EXCEPT THE AIRWAVES
YESTERDAY. WHERE DO YOU SEE THE SHORTLIST
RIGHT NOW FOR THE TRUMP CAMP? >> HONESTLY, WHERE IT SHOULD BE.
I HAVE NO PERSONAL IDEA WHAT TRUMP IS THINKING.
WHAT IT SHOULD BE IS NIKKI HALEY BECAUSE SHE IS THE ONLY
ONE THAT UNITES THE PARTY AND BEGINS TO MAKE THAT INDEPENDENT
APPEAL. I KNOW THERE IS SOME DISSENT
ABOUT THAT, BUT POINT OF FACT IS WITHIN THE PARTY AND MOVING
TOWARD LIKELY INDEPENDENT VOTERS, NIKKI HALEY IS THE PICK.
I THINK THERE IS PRECEDENT FOR THAT FRANKLY WITH THE PICK OF
MIKE PENCE IN 2020. NOT THE SAME PERSON BUT IN 2020
WHAT TRUMP UNDERSTOOD HE NEEDED TO DO WAS APPEAL TO TRADITIONAL
CONSERVATIVES WHO WERE SOMEWHAT PUT OFF BY HIS ALL OVER THE MAP
PERFORMANCE, AND MIKE PENCE SUCCEEDED IN THAT.
BOTH IN THE CAMPAIGN AND THE GENERAL ELECTION.
ANYBODY ELSE OTHER THAN NIKKI HALEY I THINK IS SECOND-BEST OR
THIRD BEST AREA NO OFFENSE TO SENATOR COTTON, FOR EXAMPLE, OR
SENATOR SCOTT, BUT THEY ARE GOING TO BE ON THE CAMPAIGN
TRAIL DOING WHAT THEY DO ANYWAY, BEING ATTACK DOGS
ANYWAY. YOU DON'T GET THAT MUCH OUT OF
HAVING COTTON OR SCOTT BE THE VP PICK. >> YOU SAY IT SHOULD BE HALEY,
BUT WHAT IS THE ACTUAL, REALISTIC PROBABILITY OF THAT
HAPPENING? YOU HAVE HER VERY MUCH SO
DISTANCING HERSELF FROM TRUMP, EVEN HER SO-CALLED ENDORSEMENT
WAS BASICALLY A GUESS I WOULD VOTE FOR HIM BECAUSE HE'S THE
REPUBLICAN CANDIDATE. THEY DON'T SEEM LIKE PEOPLE WHO
PARTICULARLY LIKE EACH OTHER OR WOULD BE WILLING TO FOOT THE
TICKET. >> POLITICS IS FULL OF PEOPLE
WHO DON'T LIKE EACH OTHER MAKING COMBINATIONS TOGETHER.
NIKKI HALEY IS PLAYING AN INTERESTING GAME AND TRUMP HAS
BEEN COURTING HER OF THE PAST SEVERAL WEEKS.
THERE IS A SMALL WINDOW BETWEEN THE TIME IN WHICH TRUMP IS
SENTENCED TO NEW YORK AND THE REPUBLICAN CONVENTION STARTS
THAT NIKKI HALEY GETS TO MAKE A DECISION. THE DECISION ESSENTIALLY IS
WHETHER HER POLITICAL FUTURE IS BETTER OFF NOT ONLY IN THE
TENT, BUT IN THE TENT AT THE VICE PRESIDENTIAL NOMINEE, OR
WHETHER HER PREFERENCE IS TO STAY OUT OF IT AND STAY ALOOF
FROM THE GENERAL ELECTION AND TRY TO PICK UP THE PIECES AFTER
SHE WOULD THINK TRUMP LOSES. IT'S GOING TO BE A VERY
INTERESTING NEXT FEW WEEKS. LISA: TERRY HAYNES, THANK YOU SO
MUCH. NEXT COUPLE WEEKS AHEAD OF JUNE
27 DEBATE ON CNN, WHAT ARE YOU LOOKING FOR MOST OF ALL?
ANN-MARIE: I JUST WANT TO SEE HOW THEY ACT.
DOES BIDEN LOOK LIKE HE UP FOR THE JOB?
THIS IS ONE OF THE CONCERNS, AND TO HIS POINT ON TRUMP, HOW
DOES HE TRY TO LOOK LIKE POTENTIALLY HE IS NOT COMING IN
SUPER HOT AND HE LOOKS PRESIDENTIAL? >> IS AN ACTUALLY GOING TO
HAPPEN? >> YES, IT'S HAPPENING. LISA:
THERE WAS A REAL QUESTION ABOUT THAT FOR A WHILE.
A SLEW OF FED SPEAK ON DECK THIS WEEK.
RIGHT NOW, YOU'RE WATCHING BLOOMBERG. HE SAID:
A NEW LEAK AFTER A WEEK OF RECORD HIGHS. GOOD MORNING. WE TOOK A LOOK AT THE NASDAQ UP
BY 3% VERSUS THE S&P'S ALMOST ONE .5% GAIN.
TODAY WE ARE PULLING BACK JUST A TOUCH. NASDAQ STILL UP.
REALLY BEING PUNISHED. THIS IS WHAT WE HAVE BEEN
FOCUSING ON. >> WE HEARD IT FROM ANDREW
SHEETS THAT BAD NEWS IS BAD NEWS AGAIN.
YOU WOULD NOT KNOW THAT FROM LOOKING AT THE INDEX. FINALLY CONCERNED ABOUT SOME
LEVEL OF SLOWDOWN IN THE ECONOMY. LISA:
WE ARE LOOKING AT WHETHER THEY CAN DIVERGE. OR DOES IT HAVE THE POTENTIAL
TO UNDERMINE? IN THE BOND SPACE, WE SAW A
MASSIVE RALLY LAST WEEK, A HUGE SET OF FLOWS INTO U.S. DURATION.
WE ARE TAKING A LITTLE BIT OF THE BACK.
YIELDS HOVERING AROUND THAT MARK. 4.37%. A RIPROARING VALUE.
-- RALLY. A SLEW OF FED SPEAKERS THIS
WEEK. OR IS IT WHAT WE HAVE SEEN IN
THE DATA AND A GROWING CONCERN THAT THIS IS TIPPING OVER? >> I GO BACK TO THIS IDEA. WE DECIDED THIS WAS THE YEAR OF
THE BOND MARKET BUT BECAUSE THEY WERE NOT READY TO CUT, IT
IS WRONG. LISA: HOW DO YOU FIGHT THE FED?
YOU TRANSLATE THIS THROUGH THE CHANNEL THAT HAS BEEN PRETTY
CONSISTENT AND DRAMATIC. WE SEE A CONTINUATION OF THAT. LET'S GET TO THAT.
UNDER SURVEILLANCE, THE FAR RIGHT FRENCH LEADERS SAYING SHE
WILL NOT TRY TO OUST PRESIDENT MACRON.
HIS SPEAKING TO THE FRENCH NEWSPAPER, THE PEN SAYING SHE
IS NOT CALLING FOR INSTITUTIONAL CHAOS AND THAT
THEY WOULD SIMPLY BE COHABITATION. COHABITATION.
WHAT DOES THAT LOOK LIKE? ANNMARIE: SHE SAID SHE WOULD BE
RESPECTFUL OF INSTITUTIONS. SHE HAS BEEN VYING FOR
INFLUENCE FOR DECADES AND IS ON THE CUSP OF GETTING IT.
SHE IS ON THE VERGE OF TELLING EVERYONE TO CALM DOWN. HAVING A FAR RIGHT RHETORIC BUT
ALSO BEING ABLE TO GOVERN WHEN IT COMES TO THE EU. WHAT THIS LOOKS LIKE WILL BE A
DISJOINTED GOVERNMENT AND CAN A LOT ACTUALLY GET DONE IN THAT
PLACE? >> MAYBE THAT IS GOOD NEWS.
MAYBE IT KIND OF LOOKS LIKE AMERICA.
THAT THE WORST IS NOT THAT MUCH BECAUSE OF AN ACTION. LISA: MAYBE AMERICA IS LOOKING A
LITTLE MORE LIKE FRANK. DISAPPOINTING DATA OUT OF CHINA.
THE SLUMP DEEPENING IN MAY. A SLOWER RATE THAN FORECAST.
PICKING UP A BIT MORE THAN EXPECTED. WHAT MORE THEY CAN DO AND
FRANKLY WHAT WILL REVIVE THE SLUMP? >> THE PBOC DID NOT TRIM THEIR
RATE THIS MORNING. THEY HAD AN OPENING FROM THE
ECB CUTTING. THEREFORE THEY WOULD NOT HAVE
TO WORRY ABOUT THE CURRENCY WEAKENING AS MUCH.
MAYBE THIS IS JUST A PBOC WAITING FOR THE FED. ANNMARIE:
OTHER NEWS OUT OF CHINA THAT WE HAVE BEEN LOOKING AT, THEY SAID
THEY WOULD START. IT IS VERY TINY, BUT THIS COULD
BE THE START OF A MORE HEATED TRADE WAR. LISA:
SIMILAR OVERCAPACITY TYPE OF ARGUMENTS. IT IS SORT OF, TWO CONTANGO.
A SLOW FED SPEAK ON TAP THIS WEEK.
THERE ARE SIX MORE SPEAKERS TOMORROW. RICHARDSON OF ADP WRITING THIS,
JOBS ARE NOT EVERYTHING. LABOR MARKET HAS BEEN DECENT
NEWS. WE SEE BIG CHANGES AFOOT. I LOVE THAT YOU CAN DIG BENEATH
THE DATA AT A TIME WHEN IT HAS BEEN SO CONFUSING. CAN YOU GIVE US A LOOK AT WHAT
COULD BE WARPING SOME OF THE LEVELS?
QUESTION IT IS GREAT TO BE WITH YOU ALL TODAY. THIS IS -- EVERY DATA POINT
SEEMS IMPORTANT, BUT IT IS SOMETIMES A CACOPHONY.
WE ARE LOOKING AT WHAT WE THINK IS IMPORTANT IN THE ECONOMY. THAT HAS CHANGED SIGNIFICANTLY. WE HAVE SEEN SHIFTS IN
GEOGRAPHIC. NOT, WE FIND THAT PEOPLE WHO
ACTUALLY GO THE DISTANCE FOR EMPLOYMENT MAKE 16% MORE THAN
PEOPLE ON THEIR OWN TEAMS. THAT IS A HUGE CHANGE AND IT IS
UNDER EXAMINED IN THE MARKET. WE ARE SEEING PAY DISTRIBUTION
CHANGES. IT HAS GROWN BY OUR ESTIMATE
FIVE PERCENTAGE POINTS. WE ARE SEEING OCCUPATIONAL
CHANGES. WHAT SHOULD BE AN END DEMAND
JOB WITH ALL THIS TALK, THERE ARE FEWER SOFTWARE DEVELOPERS
NOW THAN IN 2018. HIRING IS IN FOCUS.
IN LOOK STRONG IN TERMS OF JOBS BUT NOT FOR PAY FOR THESE YOUNG
PEOPLE. THEY ALL FEED INTO THE NARRATIVE AND DISTRIBUTION OF
THE WORKER. >> THAT IS PART OF WHY IT HAS
BEEN CONFUSING. SO WHAT DO WE DO WITH THE DATA?
SHOULD WE IGNORE IT OR DISCOUNT IT? >> WE CANNOT DISCOUNT IT
BECAUSE WE KNOW AN IMPORTANT INSTITUTION IS LOOKING AT AN
IMPORTANT DECISION. THAT ONE MOVE WILL NOT SHAKE
THE ECONOMY. WHETHER YOU LOWER INTEREST RATES BY ONE THIS YEAR OR THREE
FULL NOT CHANGE THE DISTRIBUTION I THINK THAT IS
WHAT WE ARE SEEING IN THE DATA. THIS LOW LEVEL OF WAGE GROWTH
WAS REALLY KEEPING THE ECONOMY ON TRACK AND IS NOT HERE NOW. IT IS EVOLVING AND THAT MEANS
INFLATION MAY GO UP, MAYBE HIGHER FOR LONGER AND THE FED
ALWAYS HAS TO BE WATCHFUL. ANNMARIE:
THE DIRECTOR OF THE SURVEY HAD THIS TO SAY. WERE YOU SAYING THAT THE WAGE
GAINS ARE NOT ON PAR WITH THE INFLATION THAT MIDDLE AND LOWER
INCOME INDIVIDUALS ARE FEELING? ? THEY ARE SEEING ARE PRICE
LEVELS. THEY ARE LOOKING AT THEIR
PAYCHECK BUT ALSO WHAT IS IN THEIR BASKET AT THE GROCERY
STORE. AS LONG AS THERE IS A
DISCONNECT BETWEEN THEIR TAKE-HOME PAY AND HOW MUCH
THEIR BASKET HAS SHRUNK -- IT DOES NOT NECESSARILY TRANSLATE
TO LOWER RETAIL SPENDING. LAST APRIL, RETAIL SPENDING WAS
FLAT. HOW LONG, HOW PERMANENT THEY
ARE, WHETHER THEY AFFECT SPENDING WILL BE IMPORTANT.
WE HAVE SEEN RESILIENCE FROM THE CONSUMER.
THEY HAVE BEEN CARRYING THIS ECONOMY.
IT IS AN INTERESTING SITUATION. WHAT YOU ARE SEEING IS THAT
FIRMS ARE RAISING PRICES. BUT THE PEOPLE WHO ACTUALLY
BENEFITED THE MOST ARE HIGH EARNERS FROM HIGHER WAGE GAINS. YOU HAVE THIS COMBINATION, THIS
COHABITATION. BETWEEN HIGH SPENDING HIGH
EARNERS AND LOW INCOME WORKERS WEARING NOT ABLE TO SPEND AT
THE SAME RATES. LISA:
I KIND OF RAISED ALARM BELLS FOR ME BECAUSE IT IS ATYPICAL.
THEY WERE KIND OF IN THE MIDDLE WHEN IT COMES TO HOW THEY FEEL
RELATIVE TO THE HIGH-END AND LOW-END. IT RAISES THE QUESTION FOR A
LOT OF PEOPLE. ALREADY SEEING A BEGINNING OF A
SHIFT DOWNWARD IN THE LABOR MARKET?
IS THIS A PROBLEM FOR YOU? WHATEVER IT IS, YOU CANNOT
REJECT PEOPLE'S FEELINGS. IT WILL HAVE A SIGNIFICANT
IMPACT ON THE ECONOMY. >> IF YOU ARE SEEING A DIFFUSION OF BAD VIBES THROUGH
THE INCOME DISTRIBUTION, IT DOES NOT SPELL GOOD NEWS FOR
THE ECONOMY. I AM BEING LIKE THE FED.
I'M GOING TO WATCH BEFORE I TAKE ON THAT NEW LEASE IN MY
NEW CAR. LET WAITING AND WATCHING HAS AN
EFFECT ON THE ECONOMY. LISA:
SOME PEOPLE ARE THINKING THAT THIS IS THE BEGINNING OF A REAL
WEAKENING THAT WE WILL SEE IN THE LABOR MARKET. DO YOU SEE THAT AN -- CI?
-- SEE THAT? >> YOU ARE GOING TO HAVE SOME
WEAKNESS HERE AND THERE. THAT DOES NOT MEAN THAT IT IS A
PERSISTENT DIFFUSION. WHAT WE ARE TRYING TO FIGURE
OUT IS WHEN THE FED CAN FEEL COMFORTABLE CUTTING RATES.
THAT DOES NOT MEAN THAT THE ECONOMY IS BAD AND IT DOES NOT
MEAN THAT THEY ARE NECESSARILY GOOD. I THINK THE FED AS A WHOLE
FEELS LIKE THEY ARE MORE RESTRICTIVE THAN THEY WANT TO
BE. >> FEELING BETTER ABOUT THE
SESSION, MAYBE. THE IDEA OF EVERYONE IS FEELING A LOT WORSE, JIM BEYONCA
BASICALLY LOOKED AND SAID THERE HAS BEEN SOMETHING STRANGE
HAPPENING WITH IT. IT HAS REALLY TURNED.
I WONDER IF YOU LOOK AT IT AND SAY THE SAME THING.
MAYBE TRUMP WILL BE ELECTED. IT IS STILL THE INFLUENCE BUT
ON THE OTHERS AS WELL. >> WE KNOW THAT IT HAS HAD A
CHANGE AS WELL. WE HAVE SEEN FOR THE PAST TWO
MONTHS. I WOULD BE HESITANT GIVEN THE CHANGES THAT WE HAVE SEEN TO
PUT TOO MUCH ON THE POLITICAL DIFFERENCES RIGHT NOW, BUT WE
KNOW THAT POLITICS DOES AFFECT THE OPINION AND DOES AFFECT
VIBES LISA: THANK YOU SO MUCH FOR BEING
WITH US, ALWAYS. LET'S GET YOU AN UPDATE ON
STORIES ELSEWHERE. >> THE ISRAELI MILITARY IS
BEGINNING TO INCREASE THE DELIVERY OF AID. IT WILL BE IN EFFECT UNTIL
FURTHER NOTICE. HUMANITARIAN AID HAS FACED
MAJOR DELAYS SINCE THE INVASION OF RUSSIA BEGAN -- RAFAH BEGAN.
BILL GATES SAYING HE IS MONEY TO THROW BILLIONS OF DOLLARS
INTO A NEXT-GENERATION NUCLEAR POWER PLANT PROJECT IN WYOMING.
THE BILLIONAIRE TELLING FACE THE NATION THAT HAS COMPANY
RELIES ON SODIUM RATHER THAN WATER. IT COULD MAKE YOUR ENERGY --
THEY ARE ON TRACK TO START PRODUCING POWER BY 2030.
THE SEASON'S FIRST HEAT WAVE STRETCHING FROM THE GREAT LAKES
TO THE ATLANTIC OCEAN IS SET TO RAISE ELECTRICITY DEMAND AND
SLOW TRANSPORTATION NETWORKS. REACHING 91 FAHRENHEIT ON
TUESDAY AND STEADILY GETTING HOTTER THROUGH THE WEEK. SOME AREAS COULD EXPERIENCE THE
LONGEST HEAT WAY THEY HAVE SEEN IN DECADES. LISA: UP NEXT, IS THIS A LIZ TRUSS
MOMENT? QUEST STRONG COMPARISONS VERSUS THE BUDGET CRISIS, IS ANYONE
PROPOSING FISCAL CONSOLIDATION RIGHT NOW?
IT DOES NOT SOUND LIKE IT. LISA: THAT IS COMING UP NEXT.
YOU ARE WATCHING BLOOMBERG. LISA:
LOOKING AT WHERE MARKETS ARE. IT REALLY CLIMBING TO RECORD
HIGH AFTER RECORD HIGH. ALL TIED TO THE AI TREND.
WHAT WE ARE SEEING NOW, PULLING BACK A TOUCH ON THE S&P.
LOOKING FOR 6000 AND AT YEAR-END.
THE EURO WAVERING AROUND 107. THE CRUDE LEVELS, YOU CAN SEE
IT IS LOWERED BY JUST A TOUCH. WE ARE SEEING INCREASED DEMAND
DUE TO THE HEAT WAVE. ANNMARIE: TALKING TO THE FT, TALKING THAT
THEY WILL STEP IN IF THEY SEE GASOLINE PRICES GOING HIGHER. ELECTION STRATEGIC PETROLEUM
RESERVES AS JONATHAN WOULD SAY. LISA:
IS THIS A LIZ TRUSS MOMENT? >> IT IS NOT REALLY FIT.
FISCAL POLICIES ARE WORRYING. I HAVE HEARD A LOT OF QUESTIONS.
THOSE ARE THE SCENARIOS PEOPLE ARE TALKING ABOUT.
LET'S HAVE A LOOK AT THE POLICIES.
IT DOES NOT SOUND LIKE IT. LISA: SIX WE CLOSE.
THE PEN IS MAKING IT OBVIOUS THAT SHE WILL NOT TRY TO PUSH
OUT. PRESIDENT MACRON'S PARTY -- DO
YOU THINK THAT THE RISK IS SUFFICIENTLY PRICED IN?
THE IDEA THAT THERE COULD BE SOME KIND OF SHIFT AWAY FROM
THE COLLECTIVE REGION BY A MAJOR ECONOMY, ME -- MAINLY
FRANCE? QUEST IT DEPENDS ON WHAT MARKET
YOU LOOK AT. -- >> IT IS DEPENDENT ON WHAT
MARKET YOU LOOK AT. THE EURO'S WEST HAS HAD A
FAIRLY DECENT MOVE. THE BULL MARKET IS BEING A
LITTLE BIT DIFFERENT. YOU HAVE SEEN A LOT OF INTEREST
FROM INVESTORS BUT EVEN THAT, MONDAY, GIVEN THE NEWS OVER THE
WEEKEND, NOT LOOKING TO PUSH MACRON OUT. THE INITIAL QUESTION, IS IT
PRICED IN? NO. ANNMARIE: WE COULD SEE A HUNG PARLIAMENT.
DO GO SIDEWAYS? >> IT IS POSSIBLE.
THAT IS WHY PEOPLE -- THE FACT IS THAT WE HAVE SEEN
COHABITATION BEFORE IN FRANCE. WE HAVE NOT SEEN IT IN THIS SET
UP, WHETHER IT IS THE FAR LEFT OR THE FAR RIGHT BUT THEY BOTH
HAVE FISCAL POLICIES THAT ARE PRETTY EXTREME IN SOME CASES.
WE HAVE BEEN HERE BEFORE. WE HAVE SEEN IT IN ITALY.
IT DOES NOT REALLY EVER PLAY OUT. >> IF THAT IS THE CASE AND IT
IS UNLIKELY TO BE ANYTHING DISASTROUS, LET ME PUT THIS
IDEA TO YOU. THEY ARE SIMPLY TRYING TO TEST
THE ECB. THEY WANT TO SEE IF THEY CAP
SPREADS. IS THAT WHAT IT IS? >> EFC MORE OF A REACTION THAT
YOU HAVE IN THE FX MARKET. PART OF THAT IS THEN PUSHING TO
SEE WHERE IS THE LIMIT? THIS IS A REPRICING AND TO SOME
EXTENT, THEY ARE QUITE COMFORTABLE WITH INVESTORS
REPRICING BECAUSE THAT IS PART OF THE MARKET MECHANISM.
IF IT LOOKS LIKE IT IS GETTING OUT OF CONTROL THAN YOU MIGHT
EXPECT THEM TO STEP IN MY BUT OTHERWISE, I THINK THEY WILL BE
RELUCTANT TO RUSH TO THE RESCUE. >> COULD ECB THEN ACT? >> THAT IS NOT WHAT WE ARE
SEEING AT THE MOMENT. A LOT OF THE OBSERVATIONS
PEOPLE WERE MAKING WAS AROUND THE FACT THAT FRANCE WAS
TRADING THROUGH OTHER COUNTRIES. THAT, IN ITSELF TELLS YOU
SOMETHING. IT TELLS YOU THAT PEOPLE HAVE
REASSESSED HOW THEY ARE PERCEIVING. I DO NOT THINK -- THIS IS FAR
MORE ABOUT THE FISCAL AGENDA AND WHAT WILL BE THE POLICY IN
TERMS OF FISCAL OUTLOOK. LISA:
YOU KIND OF GET THE SENSE THAT MAYBE THE DOLLAR SHOULD BE
STRONGER THAN WHERE IT IS. GIVEN THE UNCERTAINTY AND WHAT WE ARE SEEING, THE IDEA THAT
PEOPLE ARE TAKING WEIGHT LOSS DRUGS AND SPURRING A NEW BOOM,
YOU SHOULD SEE KIND OF A DOLLAR PREEMINENCE.
WHY DO YOU THINK WE ARE NOT SEEING A STRONGER DOLLAR? >> TO SOME EXTENT, YOU CAN SEE
THAT BIAS IN OUR FORECAST. I HAVE NOT CHANGED IT.
I STILL FEEL QUITE COMFORTABLE WITH THAT NUMBER.
IT IS REALLY VERY MUCH A RANGE TRADE. PART OF WHY IS THERE ARE SOME
QUESTIONS. THERE ARE SOME PEOPLE OUT THERE
WHO ARE SAYING WE ARE SEEING SOME CRACKS BEGINNING TO EMERGE.
I DO THINK THE EURO-DOLLAR WOULD BE HIRED.
POLITICAL RISK ON ONE SIDE. THE FACT THAT WE HAVE ALREADY
PRICED IN A GOOD U.S. ECONOMIC OUTLOOK AND THE REST
ON THE ECONOMIC SIDE IS TO THE DOWNSIDE. ANNMARIE:
INVESTORS ARE STILL SPLIT. WHY? >> IS A GOOD QUESTION BECAUSE
TRUMP HIMSELF IS SO AMBIGUOUS. YOU CAN EXPECT THAT SHE WOULD
MAKE A LOT OF NOISE BUT I PERSONALLY QUESTION TO WHAT EXTENT HE COULD FORCE .
THE FLIPSIDE, THERE IS A LOT OF TALK AROUND AMERICA FIRST AND
HOW MUCH MORE AGGRESSIVE TARIFFS COULD BE. YOU CAN SEE HOW ON BOTH SIDES
THERE IS A PUSH AND A POOL. WHERE THEY ARE A LITTLE OVER
WORRIED IS THAT THE LONG-TERM OUTLOOK, FROM THE DOLLAR
PERSPECTIVE, IT IS MUCH LESS OF A CURRENCY STORY. LISA: DOES NOT SEEM LIKE SHE IS
CLIMBING INTO THE DEFICIT CAMP. >> IT IS A MARKET THAT IS
WANTING TO TEST THE ECB. THEY STEPPED IN FOR ITALY'S
ELECTION AND YOU GET TO THIS UNCOMFORTABLE SPACE THAT IF
THEY DO THAT, ARE THEY INTERFERING IN POLITICS? LISA:
IT IS A CHRISTINE LAGARDE MOMENT. A DAY WHERE WE ARE LEADING INTO
A LEAGUE OF'S -- OF FED SPEAK. IT IS FULL ON FED SPEAK WEEK. >> PEOPLE ARE CHASING THE
WINNERS AND CONTINUING TO FEED INTO IT. >> EARNINGS ARE HAPPENING. >> THIS IS A STORY AND THEY ARE
STILL NOT RIDICULOUSLY PRICED. >> IT DOES SEEM LIKE THERE IS A
LITTLE BIT OF CAUTION AROUND HOW MUCH MARKETS COULD BE
PRICED TO PERFECTION. LISA:
CAUTION BUT STILL UPGRADING THE FORECAST. ANNMARIE IS STILL
BACK IN THE HOT SEAT. RIGHT NOW WE ARE COMING INTO A
WEEK AFTER STRAIGHT RECORD HIGHS LED BY A SMALL COHORT OF
STOCKS, COMING INTO A NUMBER OF UPGRADES FROM A LOT OF SHOPS. >> EXACTLY. IT IS INTERESTING BECAUSE THEY
ARE ESSENTIALLY ARGUING THAT THIS IS THE FIRST INNING OF NAI
BOOM, BUT IT ARGUES THAT HE WILL HAVE TO SEE MORE
COOPERATION. IS THAT REALLY THE CASE?
IS THE AI BOOM GOING TO SPREAD? LISA: WHAT COULD SHATTER THE
CONFIDENCE THAT THEY HAD AS WE HEAR FROM DAN IVES.
OR IS THIS SOMETHING THAT WILL BE FRAGILE?
HOW VULNERABLE DO PEOPLE FEEL WHEN YOU ARE IN SOUTHERN ITALY,
EATING GREAT FOOD? ANNMARIE:
WITH PEOPLE RAISING THEIR TARGETS, WHERE ELSE ARE THEY
LEFT TO GO? EUROPE IS KIND OF A MESS RIGHT
NOW. U.K. IS ON FOR AN ELECTION. MAYBE MARINE LE PEN TALKING
ABOUT COHABITATION IS STARTING TO QUELL SOME OF THE FRENCH
MARKETS, BUT THERE IS SERIOUS CONCERN. LISA:
WE HAVE BEEN TALKING ABOUT IT THROUGHOUT THE MORNING. KEEP GOING BECAUSE THIS IS WHAT
IT IS. IT IS A FORMAL TERM IN FRANCE
ABOUT THE PARTY OF THE PRESIDENT AND THE RULING
UNDERBELLY NOT BEING OF THE SAME PARTY. THIS DOES GO TO THE QUESTION OF
AMERICAN EXCEPTIONALISM AND HOW MUCH IS IT THAT THERE IS NO
BETTER PLACE? >> IS EUROPE EXASPERATION LIZZO
HIM -- EUROPE EXASPERATION-ALI SM. AT WHAT POINT ARE WE SAYING IT
IS RESIDING WITHIN THE U.S., IT IS JUST AI? LISA:
IS THAT ENOUGH? THIS MORNING, IT IS NOT QUITE
ENOUGH. YOU DO SEE THE NASDAQ WITH A
LITTLE BIT OF A LIFT. WHEN I SAY A LITTLE BIT, I MEAN
A LITTLE BIT. YOU COULD SEE THE EURO GAINING
JUST A TOUCH. REMEMBER THAT WE WERE WELL
THROUGH 108. THE 10 YEAR YIELDS TAKING BACK SOME OF THE GAINS AND WE SAW A
HUGE RALLY. CRUDE IS LOWER. THIS IS WHAT WE HAVE CONTACT
HEAD OF A SLEW OF FED SPEAK. COMING UP, CITIGROUP'S STUART
KEISER AND WHETHER THE WINNING STREAK CONTINUES. ENDA CURRAN AND KELSEY BARROW
AS KASHKARI URGES PATIENTS ON RATE CUTS.
FUTURES ON PAUSE AS TRADERS KICK OFF A HOLIDAY SHORTENED
WEEK. RAISING EQUITIES FROM OVERWEIGHT TO NEUTRAL.
WRITING THAT AT THIS POINT, IT SEEMS LIMITED TO A SOFT LANDING
SCENARIO. THEY HAVE LESS EXPOSURE TO A
RECESSION. STEWART JOINS US NOW. HAPPY MONDAY.
HOW VULNERABLE IS THIS MARKET, GIVEN HOW NARROW THIS
LEADERSHIP HAS GOTTEN? >> A COUPLE WEEKS AGO, IT FELT
REALLY VULNERABLE. STRONG PAYROLL REPORT AND
FRIENDLY CPI. THE NARROW LEADERSHIP IS AN
ISSUE BECAUSE I THINK THE MARKET HAS TRIED TO BROADEN OUT
THE THEME COUPLE TIMES THIS YEAR AND IT HAS FAILED TO SOME
DEGREE. I THINK THERE IS AN UNDERLYING
RISK. FOLKS HAVE GOTTEN SO BULLISH
THAT THEY HAVE TRIED TO APPLY IT TO OTHER AREAS. WITH NVIDIA, A HUGE BEAST OF
CONSENSUS. THAT EVENTUALLY HAS TO RUN ITS
COURSE AS WELL. LISA:
LORI COMING OUT AND SAYING THIS RECORD DIVERGENCE, PARTICULARLY
THE AI DRIVERS BUT THOSE STAYING UNDERWEIGHT BECAUSE
THERE IS THIS VULNERABILITY. HIGHER FOR LONGER AND SOFT
LANDING. WHAT YOU HAVE TO SEE BEFORE YOU
START BELIEVING AGAIN? STUART:
IT IS UNDERPERFORMED BY SO MUCH. YOU HAVE TO ASSIGN A REASONABLY
HIGH PROBABILITY TO REALLY HAVE THAT STOCK.
IT IS PROBABLY TOO LOW OF A CHANCE. THAT OUTCOME HAS BEEN NARROWING
BECAUSE WE JUST SAW A SLEW OF DATA. CHICAGO PMI. A LOT OF SHOTS ON WEAKENING
GROWTH. >> THAT IS WHAT THEY ARE
TALKING ABOUT. THAT THEY CAN BOTH BE CORRECT. TIER POINT OF THE AI TRADE
WIDENING OUT, THEY BASICALLY SAY THAT FOR EQUITIES TO AVOID
CORRECTION, YOU HAD TO BELIEVE THAT TECH WILL BECOME A MORE
MEANINGFUL DRIVER. WOULD YOU GO AS FAR AS TO SAY
THAT? >> CLEARLY THE AI THEME HAS
BEEN APPLIED AND IT HAS ALMOST BEEN TURNED INTO A MACROS LORI.
YOU ARE GOING TO GET A GDP GROWTH THAT IS HIGHER. THERE ARE SOME BIG ASSUMPTIONS
BEING MADE ABOUT NOT ONLY HOW PROFITABLE THE STOCK COULD BE
BUT WHAT DOES THIS DO TO LONGER TERM TREND OUTLOOK? >> DO YOU BUY THAT? >> WE WILL HAVE TO SEE.
THE CHALLENGE FOR ME ON AI, THERE ARE ALWAYS COMPANIES
WILLING TO GENERATE REVENUE. IT ALLOWS KIND OF A LONGER
RUNWAY GROWTH RELATED TO AI. COMPANIES HAVE BEEN USING FORMS
OF AI FOR A WHILE. THAT ANNOYING CHATBOT IS WHAT
PEOPLE ARE CALLING AI. TO SOME EXTENT, THAT MEANS THAT
WE WILL HAVE TO WAIT A BIT. ANNMARIE:
FOR A WHILE, PEOPLE WERE TALKING ABOUT BROADENING OUT
INTO EUROPE AND NOW YOU ARE SEEING A LOT OF RISK PREMIUM
BEING BUILT IN. >> IT SPIKED MASSIVELY LAST
WEEK. THE U.S. EUROPE TRADE IS TRICKY FROM A
LOT OF DIFFERENT DIRECTIONS. EUROPE TENDS TO BE SMALLER CAP.
YOU HAVE A LOT OF FACTOR RISKS. IF YOU ARE LIVING HERE, THAT IS
SORT OF A SURPRISING CONCLUSION TO DRAW. PARTICULARLY IN EUROPEAN BANKS,
THAT POSITION COMES OUT PRETTY QUICK WITH WHAT IS GOING ON IN
FRANCE AS WELL. FOR EUROPE TO WORK, I THINK THE
U.S. HAS TO BROADEN OUT. ONCE YOU ARE DOING THAT, YOU
MAKE THIS VALUATION DEBATE. IT CAN LEAD YOU DOWN THAT PATH,
BUT I THINK IT A GRADUAL PATH. PEOPLE WILL BE CAUTIOUS ABOUT
FOLLOWING THE BREADCRUMBS. IT DEPENDS ON WHAT HAPPENS IN
FRANCE. THERE ARE REASONABLE CONCERNS. IF YOU ARE GETTING REALLY
CONCERNED, SOME OF THESE LIQUIDITY METRICS KIND OF
DISLOCATE AND YOU HAVE THIS LATENT FISCAL RISK THAN IF IT
BECOMES TRIGGERED IT BECOMES A MAJOR ISSUE AGAIN. FOR NOW, WE WILL STEP BACK AND
LOOK. IN THAT SENSE, IT SEEMS LIKE
TACTICALLY WE HAVE PROBABLY PRICED IN A LITTLE TOO MUCH
RISK. LISA:
DOES THIS BASICALLY SEND MORE DOLLARS BACK TO THE U.S.? >> I WILL NOT MAKE THE CALL,
BUT YOU NEED A SOFT LANDING OUTCOME TO GET THERE. IT DOES REINFORCE THE IDEA THAT
THE U.S. IS KIND OF THE SAFEST PLACE TO
INVEST. IF YOU WANT A RISK THAT LOOKS LIKE EUROPE -- A LOT OF
PEOPLE ARE JUST SAYING THAT I'M GOING TO EXPRESS THOSE RISKS A
LITTLE MORE. >> WHAT YOU THINK ABOUT THE
SIGN THAT LIQUIDITY IS BAD? >> DOES NOT SEEM THAT WAY. THE LAST 10 DAYS, WE WENT FROM
TRADING HIGHER FOR LONGER TO A SOFT LANDING.
IS IT A LACK OF LIQUIDITY OR THAT THE NARRATIVE IS CHANGING
A LOT AND PEOPLE ARE BEING VERY REACTIVE ABOUT THE UNCERTAINTY?
I THINK THE EQUITY MARKETS ARE STILL PRETTY HEALTHY.
IT IS SUMMER AND THINGS HAVE CUT DOWN QUITE A BIT BUT I
THINK THAT IT IS REFLECTED IN THE INSTABILITY OF THE MARKET
THEMSELVES. LISA: I THOUGHT THERE WAS A
FASCINATING STORY OVER THE WEEKEND.
HOW A LOT OF RETAILERS ARE SEEING AN INCREASE IN THE
SHOPPING FOR TIGHT FITTING CLOTHING.
THEY HAVE CHANGE SOME OF THEIR LOOKS. HOW MUCH COULD THAT BE A
BROADENING OUT TREND? AT WHAT POINT DO YOU SEE THAT? >> THE BIGGER DISCUSSION HAS
BEEN THINGS OF THAT NATURE, SO IT IS POSSIBLE THAT YOU MIGHT
HAVE TO BUY MORE CLOTHING. I'M NOT EXACTLY WHAT PEOPLE --
LISA: LOOKING FORWARD TO THE NEXT
TIME. LET’'S GET TO STORIES ELSEWHERE. >> EUROPEAN MARKETS CONTINUING
THEIR STREAK AMONGST VOLATILITY IN FRANCE.
FROM OVERWEIGHT TO NEUTRAL, CITING THE RISK FROM A FAR
RIGHT MAJORITY IN FRIENDS. BUT FRENCH FAR RIGHT LEADER DID
SUE THE MARKETS EARLIER TELLING A NEWSPAPER THAT SHE WILL WORK
WITH CURRENT PRESIDENTS IF HER PARTY WEDNESDAY ELECTIONS.
THE NUMBER OF VOTERS TO SAY THAT THEY DO NOT LIKE EITHER
MAJOR PARTY PRESIDENTIAL CANDIDATE IS AT A HISTORIC HIGH.
THE AMOUNT OF DOUBLE HATERS MAKEUP FOR ONE QUARTER OF THE
ELECTORATE. NEARLY TWICE AS MANY FROM THIS
POINT IN 2020. THE BIGGEST THREAT TO BIDEN AND
TRUMP IS THAT VOTERS WILL STAY HOME OR VOTE FOR AN INDEPENDENT
CANDIDATE LIKE ROBERT F. KENNEDY, JR.. A DENTAL MOVIE
WILL OPEN IN CHINA AND THE U.S. SIMULTANEOUSLY. DISNEY ANNOUNCED THAT DEADPOOL
AND WOLVERINE WILL BE RELEASED IN MAINLAND CHINA WITH MINIMAL
CUTS. PREVIOUS DEADPOOL FILMS SAW
MONTHS LONG-DELAYED RELEASES AS THEY FACED SCRUTINY AND
CENSORSHIP. THAT IS YOU ARE BLOOMBERG BRIEF.
LISA: INFLATION IN THE CROSSHAIRS. >> OVER THE LAST THREE YEARS,
THERE HAS BEEN A SIGNIFICANT INCREASE.
IT IS SOMETHING THAT THE BIDEN ADMINISTRATION ABSOLUTELY WANTS
TO ADDRESS. LISA: THIS IS BLOOMBERG. LISA: COMING INTO A WEEK WITH
INCREDIBLE PRICE ACTION. LASTLY WAS ANYTHING BUT.
WHAT YOU SAW WAS RECORD HIGHS ON THE S&P 500. DOWN LESS THAN A PERCENTAGE
POINT. WHAT YOU CAN SEE IS THE EURO
JUST A TOUCH STRONGER. 10 YEAR YIELDS UP MARGINALLY
BUT NOT SIGNIFICANTLY. INFLATION IN THE CROSSHAIRS. >> FOR ROUGHLY THREE YEARS
THERE HAS BEEN A SIGNIFICANT INCREASE IN THE LEVEL.
IT IS RISING AT A SLOW, CLOSE TO NORMAL RATE.
BUT YES, AMERICANS SEE THAT. IT COMES ON TOP OF CONCERN
ABOUT COST THAT WE ARE MAKING LIFE VERY DIFFICULT.
IT IS SOMETHING THAT THE BIDEN ADMINISTRATION ABSOLUTELY WANTS
TO ADDRESS. LISA: THE ADMINISTRATION READY TO
RESPOND. IN AN INTERVIEW, THE TOP ENERGY
ADVISOR SAYING THAT THE ADMINISTRATION WILL DO
EVERYTHING THAT IT CAN TO BRING DOWN GAS PRICES THIS SUMMER AS
THE ELECTION GROWS CLOSER. JOINING US TO DISCUSS IS WENDY.
DO WE HAVE ANY SENSE FOR THE ADMINISTRATION TO TAKE ACTION? >> GOOD MORNING.
I DO NOT KNOW IF THERE IS A DOLLAR AMOUNT THRESHOLD, BUT
THERE IS A POINT WHERE PEOPLE START HEARING COMPLAINTS WHERE
WE GET REPORTS OF PEOPLE CANCELING SUMMER ROAD TRIPS OR
SOMETHING LIKE THAT, AND THAT IS WHEN THE BIDEN
ADMINISTRATION MIGHT RESPOND BUT THAT ALSO ENGENDERS A LOT
OF REPUBLICAN PUSHBACK THAT WILL SHOW UP IN ADS THAT HE IS
TAPPING A RESERVE THAT IS SUPPOSED TO BE THERE FOR
EMERGING THAT ARE NOT JUST POLITICAL. ANNMARIE: WE DO SEE IN THE POLLS THAT IT
IS WEIGHING ON THE AMERICAN ELECTORATE.
WE HEARD FROM JANET YELLEN OVER THE WEEKEND BUT I'M NOT SURE
THAT IS DOING THE JOB. >> I DO THINK THERE HAS BEEN A
SUBTLE SHIFT THEY ARE BEGINNING TO ACKNOWLEDGE OUT LOUD THAT
PRICES ARE STILL TOO HIGH FOR CONSUMERS BECAUSE WE SEE ON THE
TERMINAL AND PEOPLE THAT FOLLOW THE NEWS CLOSELY WILL SEE THAT
THE RATE OF -- RATE OF INFLATION IS COMING DOWN BUT
MOST VOTERS ONLY KNOW IT FROM THE GAS PUMP AND THE GROCERY
STORE. THEY ARE MUCH HIGHER THAN WHEN
DONALD TRUMP WAS PRESIDENT. A LOT OF PEOPLE SEE THAT AS A
EQUIVALENT TO SHOW THAT HE IS DOING SOMETHING MORE ABOUT IT.
DID YOU HEAR JANET YELLEN SAY THAT PRICES WERE STILL TOO HIGH
FOR CONSUMERS? BIDEN'S STATEMENT CELEBRATING
CPI WAS THE FIRST SENTENCE WAS PRICES ARE STILL TOO HIGH, SO I
THINK THEY ARE BEGINNING TO SHIFT THEIR MESSAGING. ANNMARIE:
WE HAVE STRONG FUNDRAISING NUMBERS FROM THE PRESIDENT OVER
THE WEEKEND. WENDY, HE IS RINGING IN THE
LIKES OF GEORGE CLOONEY, SOME OF THE OLDER STARS. HE IS STRUGGLING WHEN IT COMES
TO THE YOUNGER. >> DE ISRAEL HAMAS WAR IS
REALLY DRAGGING DOWN BIDEN'S POPULARITY WITH YOUNG VOTERS.
THEY ARE VERY UPSET THAT THE U.S. SUPPORTS ISRAEL SO FULLY.
THE EXECUTION OF THEIR CAMPAIGN AGAINST HAMAS AND GAZA -- HE
CAN SHOW THAT HE IS COGENT AND ON TOP OF THINGS BUT HE COMES
OFF AS REALLY OLD AND HE TELLS DAD JOKES AND THE YOUNGER
VOTERS DO NOT FEEL LIKE HE IS ON TOP OF WHAT THEY SEE AS THE
PROBLEMS IN THE WORLD. >> I LOVE A DAD JOKES, BUT IT
IS NOT FOR ME TO DECIDE. IT IS ALSO ABOUT THE
BILLIONAIRE CLASS. THEY HAVE PUBLICLY STARTED TO
BACK TRUMP WHERE THEY HAVE STAYED OUT OF IT BEFORE.
HOW BIG OF A BLOW IS THAT TO BIDEN AND HIS CAMPAIGN?
QUEST DONALD TRUMP IS HAVING TROUBLE RAISING MONEY BECAUSE
HIS BASE ARE NOT THE RICHEST PEOPLE IN THE COUNTRY.
THERE IS A LIMIT TO HOW MUCH THEY CAN CONTRIBUTE. EITHER PAYING FOR LEGAL FEES OR
CAMPAIGN FUNDING, THAT COULD GIVE HIM A REAL BOOST WHILE
BIDEN COULD GET THE ESTABLISHMENT HOLLYWOOD MONEY. ALMOST THE QUID PRO QUO THAT IS
BEING OFFERED IS HE IS BEING VERY STRAIGHTFORWARD ABOUT IT. IF YOU FIND BE, I WILL WORK TO
LOWER TAXES FOR CORPORATIONS AND THE WEALTHIEST AMERICANS.
THAT IS 180 DEGREES THE OPPOSITE OF HAYDN'S MESSAGE. THEY LOOK AT THE BOTTOM LINE,
TRUMP MAY LOOK LIKE A BETTER THAT TO THEM. >> WE HAVE THEN TALKING ABOUT
JANET YELLEN AND MAKING UP THE DIFFERENCE.
DOES THE BUSINESS COMMUNITY NOT CARE OR ARE THEY HESITANT ON
THAT IDEA OF HOW THIS GETS DONE? >> I THINK THAT THE BILLIONAIRE
CLASS FEELS LIKE THEY MAY BE ABLE TO GET THERE WITHIN REASON.
HE HAS TALKED ABOUT 60%, 40%, 100%, HE IS KIND OF ALL OVER
THE MAP ON IT NOW. THERE IS A LOT OF WORK TO BE
DONE TO STILL GET TO THOSE TARIFFS, BUT THE EFFECT WILL BE
HIGHER PRICES FOR CONSUMERS. LISA:
THANK YOU SO MUCH FOR BEING WITH US.
I HAVE TO SAY THIS HAS BEEN ONE OF THE MOST INTERESTING AS X.
WE DO NOT REALLY UNDERSTAND THE FULL EFFECTS. THE POSITIVE EFFECTS OF FISCAL
POLICY DOMINE THE EFFECTS OF RESERVE HIKES.
WE SAW THAT IN TERMS OF THIS INCREDIBLE LINE GOING STRAIGHT
UP WHEN IT COMES TO ECONOMIC GROWTH, DESPITE THE RATE HIKES
THAT WE SAW. DO YOU HAVE ANY SENSE AS TO
WHETHER THERE IS RESTRAINT AND HOW MUCH HAS TO BE UNLEASHED?
ANNMARIE: IT IS AN ELECTION YEAR SO NO.
IT IS JUST GOING TO BE DIFFERENT.
I WAS STRUCK BY THE NUMBERS. TRUMP WAS PROPOSING EXEMPTING
TAXES -- TIPS FROM TAXATION. ON TOP OF THAT FACT THAT PEOPLE
ARE ALSO TALKING ABOUT TARIFFS BEING INFLATIONARY.
WHAT DOES IT MEAN FOR THE FED? IT IS WHY IT IS SO HARD.
IT IS VERY DIFFERENT. >> PART OF THE ISSUE IS THE
TRAJECTORY THAT WE ARE WORRIED ABOUT.
AT THE CURRENT LEVEL, PERHAPS IT IS NOT SO CAN.
MAYBE SOMETIME IN THE FUTURE IT WILL BE A PROBLEM.
MAYBE YOU NEED AN ECONOMIC EVENT.
YOU NEED CANADA TO SAY THIS IS REALLY BAD AND STEP IN OR IS IT
MEDICARE? IT IS NOT ACTION THAT WOULD
HAPPEN NOW. LISA: THE ISSUE IS, IF THERE IS A DOWNTURN, IS IT ENOUGH IF THE
DEFICIT -- THESE ARE SOME OF THE QUESTIONS THAT PEOPLE HAVE
THAT DO NOT HAVE ANSWERS. HE POINTED AT THIS BEFORE.
WHERE ARE THEY GOING TO GO INSTEAD? FRANCE? >> MAYBE WE WANT TO COHABITATE
WITH FRANCE? LISA: DISAPPOINTING DATA OUT OF CHINA.
THE MARKET IS NOT DOING MUCH. STILL YOU SEEING THAT DIVERGENT LISA:
COMING INTO A NEW TRADING WEEK AFTER A SLEW OF RECORD HIGHS.
HARD TO FIND REAL ACTION THIS WEEK AS PEOPLE LOOK AHEAD.
ALSO SOME KEY DATA. THE FACT THAT WE GET RETAIL
SALES TOMORROW IS KEY AT A TIME WHEN PEOPLE ARE TRYING TO
UNDERSTAND WHETHER THE WEAKENING SPEAKS TO SOMETHING
DEEPER OR JUST SIMPLY A NORMALIZATION. EVEN AS THE S&P IS PRETTY MUCH
UNCHANGED, DOWN ALMOST .2%. HOW MUCH ARE WE SEEING THIS
CONTINUE OVER THE WEEKEND? THIS IS NOT GOING TO CHANGE
UNLESS SOME DRAMATIC SHIFT IN THE ECONOMY HAPPENED. >> YOU CAN HAVE A WORLD WHERE
WE ARE GOING TO SIX K BECAUSE OF AI.
BOTH ARE TRUE BECAUSE UNDER THE HOOD, IT IS A RECORD DIVERGENCE.
OR SOMETHING HAS CHANGED BY BAD NEWS IS ONLY BAD NEWS FOR THE
REST OF THE MARKET. LISA: WE SAW A HUGE RALLY AS PEOPLE
TOOK A LOOK AT SOFTENING IN INFLATION DATA. WHAT YOU SAW WITH AUCTIONS,
PEOPLE FLOODED INTO THE BONDS. STILL LOWER ACROSS THE BOARD
FROM LAST WEEK, UP ABOUT THE BASIS POINT COME UP ABOUT THREE
BASIS POINTS. I WONDER WHY THIS IS NOT
BENEFITING THE HUGE RALLY IN THE BOND MARKET.
WHY IS THAT NOT BENEFITING SOME OF THE COMPANIES THAT ARE MORE
LEVERED TO THE POTENTIAL OF HIGHER RATE? >> THEY HAVE A LOT OF
FLOATING-RATE DEBT. YOU NEED TO SEE THE WHITES OF
THEIR EYES BEFORE YOU CAN TRADE THE SMALL CAPS BECAUSE WE ARE
CONCERNED ABOUT FINANCING. IF IT IS JUST ONE CUT MAYBE IT
IS NOT ENOUGH. LISA:
PEOPLE ARE REASSESSING AFTER LAST WEEK.
A STRONGER EURO VERSUS THE DOLLAR. UNDER SURVEILLANCE THIS
MORNING, NEEL KASHKARI SAYING THAT THE CENTRAL BANK IS IN A
GOOD POSITION TO TAKE IT'S TIME BEFORE CUTTING MADE. I WONDER HOW MUCH WE ARE SEEING
THAT OFFICIALS SPEAKING OUT OF ALL SIDES OF THEIR MOUTHS. >> MAYBE THIS IS WHY WE NEED TO
TRADE DATA. IT IS KIND OF NICE TO HEAR.
ANNMARIE: I WAS STRUCK BY WHAT HE SAID IN
THE INTERVIEW ABOUT THE DOLLAR. HE WAS ASKED ABOUT THE G7
COMING OUT AND TAPPING ASSETS. HE SAID THE RESPONSIBILITY LIES
WITH THE U.S. AND UNDERSTANDING PEOPLE WHO
VIEW THE DOLLAR AND HOW THAT IS FOR THEM TO DECIDE. A LOT OF PEOPLE SAY -- LISA:
IT SEEKS TO A BIGGER PLANE ABOUT WHY HE DOES NOT SEE A LIZ
TRUSS MOMENT. FRANKLY, LAST WEEK, WE SAW THAT
WITH A LOT OF QUESTIONS AROUND WHAT WOULD HAPPEN IN FRANCE AND
MORE BROADLY. WANTED TO SHIFT GEARS A LITTLE
BIT. SHARES OF TESLA RISING. GRANTED APPROVAL TO TEST THE
ADVANCED SYSTEM IN SHANGHAI. THE NEXT STEP IN ROLLING OUT
THE FEATURE. IT IS SO INTERESTING BECAUSE IT
COMES AT A TIME WHEN TESLA IS WALKING A TIGHT ROPE. THE U.S. IS BLOCKING OUT EV'S FROM CHINA
AND EUROPE IS RAISING TARIFFS AND RAISES THIS QUESTION OF HOW
HE PLANS TO PLAY THIS. WHAT IS THIS GIVING YOU A SENSE
OF? ANNMARIE:
THEY WANT TO GET THE ROBOTAXI ON THE GROUND AND RUNNING.
REMEMBER THAT TRIP HE MADE OUT OF THE BLUE THAT SUNDAY HE WENT
IMMEDIATELY TO CHINA AND ALL OF A SUDDEN RESOLVE REGULATORY
APPROVAL FOR THIS? NOW THEY ARE HITTING THE GROUND
RUNNING. HE IS ACTUALLY PUTTING THIS TO
TEST. >> IS THIS ALMOST INVETERATE CAMPAIGN TO SAY,
LOOK HOW ADVANCED WE ARE ON EV'S? BUT LOOK AT THIS. WE ARE LETTING ELON MUSK TEST
HIS ROBOTAXIS. I DID WATCH EUROPEAN SOCCER
OVER THE WEEKEND. LITERALLY EVERYWHERE YOU
LOOKED, WHETHER YOU ARE WATCHING GERMANY OR ENGLAND,
YOU SAW THEM PLASTERED OVER EVERYTHING.
CHINA IS REALLY TRYING TO USE RHETORIC TO WIN HEARTS AND
MINDS. LISA:
DOING A JON FERRO IS CALLING IT FOOTBALL BECAUSE HE WOULD NEVER
CALL IT SOCCER. LET'S TALK ABOUT CHINA, GIVEN
THE FACT THAT WE GOT SOME DATA OVER THE WEEKEND.
HOME PRICES AND REAL ESTATE INVESTMENT DECLINES GATHERING
PACE. IN THE CURRENT JOINS US NOW. THERE IS A FEELING THAT WE GOT
A TURN. HOW NEGATIVE WAS THIS
CONSIDERING THAT PRODUCTION REALLY DISAPPOINTED?
WE ARE NOT SEEING A FLOOR IN HOME PRICES IN CHINA. >> NEW INVESTMENT SINCE 2020.
THAT IS DESPITE LAST MONTH. MONEY MADE AVAILABLE ON TOP OF
MEASURES. TRYING TO GET THE HOUSING
MARKET REBOOTED. IT IS ONLY ONE MONTH OF COURSE.
BUT ECONOMISTS SAY IT IS NOT ENOUGH.
THE REST OF THE WORLD HAS BEEN LOOKING AT THE SECTOR.
IT HAS NOT YET TURNED A CORNER. WE DID MENTION MORE DETAILS. SPEAKING TO THIS IDEA OF GROWTH
BACK TO WHERE IT WAS AND TO ILLUSTRATE HOW COMPLEX THINGS
ARE FOR CHINA RIGHT NOW. CUTTING RATES DESPITE THE
GROWTH STORY. YOU CANNOT REALLY MOVE UNTIL
THE FED MAKES A FIRST MOVE. IT IS A PRETTY DOWNBEAT PICTURE.
IT LENDS ITSELF TO MORE SUPPORT, IF NEEDED. LISA:
IT USED TO BE THAT CHINA'S PROBLEMS WHERE THE WORLD'S
PROBLEMS. THIS MEANT A HUGE PROBLEM IN GROWTH.
WE HAVE SEEN THEM MORE IMMUNIZED FROM THE CHINESE.
EUROPE, LESS SO, BUT HOW MUCH DOES IT REALLY MATTER? >> THE GROWTH BATON HAS BEEN
HANDED TO THE U.S. THE U.S. CONSUMER HAS BEEN POWERING
GLOBAL EXPORT OVER THE YEARS. CHINA IS PLAYING A PART.
IT IS STILL SECTOR SPECIFIC. SPENDING IN INFRASTRUCTURE IS
IMPORTANT. LOOKING AT THE PRICES OF IRON
ORE AND THE CONSUMER STORY ON THE GROUND, EVEN THOUGH IT IS
DUE TO THE POTENTIAL, IT IS VERY IMPORTANT FOR THOSE
PRODUCING, SELLING AND SHIPPING TO CHINA.
IT HAS DIMINISHED IN THE OVERALL GROWTH STORY, BUT STILL
IMPORTANT IN THE BIGGER PICTURE, ESPECIALLY WHEN IT
COMES TO TRADE. >> WE HAD THE PBOC TODAY AND
THEY DID NOT TRIM THEIR RATE. THERE ARE CONCERNS THAT WE HAVE
NOT YET THE BOTTOM. >> THE FIRST POINT IS TO THEY
NEED SHORTER-TERM INTEREST RATES?
THAT IS A DOMESTIC CHINA STORY. IT IS ALSO THE EXTERNAL STORY.
IT COMES BACK TO WASHINGTON DC. IT IS A VIEW THAT CHINA DOES
NOT WANT TO CUT RATE. THERE IS A VIEW THAT THEY ARE
WAITING FOR THE FED TO MOVE FIRST. YOU KNOW BETTER THAN I
THAT THEY MAY NOT MOVE, BUT IT IS AN EXAMPLE OF HOW THEY ARE
LOOKING AT THE DOLLAR AND THE FED STORY. ONCE A HOLD OFF AND SEE HOW
THEY CAN BRING DOWN MEETS WHEN THEY CAN. ANNMARIE: PORK IMPORTS GOING INTO CHINA.
HE DID HE THINK THIS IS A FRESH ITERATION OF A TRADE WAR
BETWEEN THE EUROPEAN UNION AND CHINA? >> I THINK THE ECONOMICS AND
THE POLITICS OF IT -- YES, CHINA IS EUROPE'S BIGGEST
EXPORT MARKET FOR PORK, BUT IT IS A FRACTION OF OVERALL TRADE.
THOSE VOLUMES HAVE BEEN IN DECLINE.
IT WILL NOT DO MUCH FOR CHINA'S PORK IMPORT MARKET.
THE ECONOMICS ARE LESS SIGNIFICANT. IT IS SIGNIFICANT. IT IS AN EXAMPLE OF CHINA
SAYING, WE ARE NOT GOING TO TAKE THESE MEASURES LYING DOWN.
WE CAN RESPOND AS WE WANT TO. IT IS IN RESPONSE TO THE EU
PROBE. THE TRICK FOR CHINA IS THAT
THEY HAVE BEEN TRYING TO COURT EUROPE. THEY DO NOT WANT TO BE SEEN AS
OVERLY HARSH ON EUROPE. THEY ARE TRYING TO COURT BOTH
BERLIN AND PARIS. THEY HAVE BEEN PERCEIVED AS
GOING HARSH ON THE U.S.. ESPECIALLY WITH THE BUSINESS
COMMUNITY IN EUROPE. THEY WANT TO BE SEEM TO RESPOND
BUT THEY DO NOT WANT TO BE NECESSARILY ISOLATING THEM OF
FROM EUROPE EITHER. LISA:
THANK YOU SO MUCH FOR GIVING US SOME INSIGHT.
HERE IS YOUR BLOOMBERG GREEN. >> THE HEAT WAVE STRETCHING
FROM THE ATLANTIC OCEAN IS SENT TO RAISE ELECTRICITY DEMAND AND
SLOW TRANSPORTATION NETWORKS. SET TO REACH AND GET HOTTER
THROUGHOUT THE WEEK WITH HUMIDITY MAKING IT FEEL CLOSER
TO 100 DEGREES. CHINA HAS LAUNCHED AN
ANTIDUMPING. IT IS THE LATEST IN ESCALATING
TRADE TENSIONS. CHINA IS THE BIGGEST OVERSEAS
MARKET FOR PORK ALTHOUGH EXPORTS HAVE FALLEN OFF DURING
RECENT YEARS DUE TO LOW PRICES. THE PROBE IS SEEN AS THE
COUNTER TO SIMILAR INVESTIGATION BEING CONDUCTED
BY THE EU, LOOKING AT A RANGE OF INDUSTRIES AND IMPOSING
TARIFFS ON CARS STARTING IN JULY -- STARTING IN JULY.
A SECOND U.S. OPEN TROPHY OVER THE WEEKEND.
IN A FINAL WILD HOUR OF GOLF, MCELROY BOGEYED THREE OF HIS
LAST FOUR HOLES. AN INCREDIBLE BUNKER SHOT ON
THE LAST HOLE, MAKING THE CUT TO TAKE THE TITLE.
THAT IS YOUR BRING BRIEF. LISA:
INVESTORS BRACING FOR A LOUD WEEK OF FED SPEAK. >> I WOULD LIKE TO SEE A FEW
MORE MONTHS OF INFLATION REPORT SIMILAR TO WHAT WE GUY LAST
MONTH. I WOULD LIKE TO SEE THAT CONTINUE. LISA:
THAT IS COMING UP NEXT. THIS IS BLOOMBERG. LISA:
WE HAVE HAD A LOT OF ACTION IN THE MARKETS.
THE S&P WAS UP ONE POINT ASK PERCENT. NASDAQ COMPOSITE WAS UP DOUBLE
THAT, 3.2%. THAT REALLY SPEAKS TO THE
DIVERGENCE THAT WE SEE IN. INVESTORS BRACING FOR A VERY
LOUD WEEK OF FED SPEAK. >> I WOULD LIKE TO SEE MORE
INFLATION REPORTS THAT ARE POSITIVE IN THE SENSE OF WHAT
WE HAD LAST MONTH. I WOULD LIKE TO SEE THAT
CONTINUE. >> IF YOU SAID THERE WOULD BE
ONE CUT, WHICH IS WHAT THE MEDIAN INDICATED, THAT WOULD
LIKELY BE TOWARDS THE END OF THE YEAR. LISA:
ALL SET TO SPEAK TODAY. TOMORROW HE WILL GET DETAILS
SALES AND TOMORROW ANOTHER ROUND OF JOBLESS CLAIMS. FED
SPEAKERS WILL DELIVER SOME UTTERANCES.
THE BELIEVER REMAINS THAT INFLATION AND THEY WERE MARKET
DATABLE SUPPORT RATE CUTS LATER THIS YEAR ENHANCING INCOME
FLOWS. KELCE JOINS US NOW AND THIS HAS
BEEN ONE OF THE ULTIMATE TENSIONS.
AT WHAT POINT DO WE SEE THE SOFT LANDING POSSIBILITY THAT
WE HEAR IS GETTING MORE NARROW AT A TIME WHEN THE DATA SEEMS
TO BE WEAKENING? >> IT IS REALLY GOING THE WAY
THAT THE FED WOULD LIKE IT. INFLATION HAS BEEN IMPROVING
OVER THE LAST TWO REPORTS. THEY WANTED TO FEEL COMFORTABLE.
Q1 WAS THE ABERRATION AND NOT THE START OF A TREND. ON THE LABOR MARKET SOCIETY, IT
WAS PART OF THE DEBATE. BUT TAKE FROM ALL THESE LABOR
MARKET MILLS? YOU HAVE THE MAGNIFICENT
STRENGTH OF PAYROLLS AND THE SNEAKY WEAKNESS. THE REALITY IS PROBABLY
SOMEWHERE IN BETWEEN. WE ARE CIRCLING BACK TO THIS
IDEA AND DOES GOING TO BE ENOUGH FOR THEM TO REDUCE
POLICY RESTRICTION A LITTLE BIT, BUT NOTHING IS FALLING OFF
OF A CLIFF. LISA: THE BIGGEST DEBATE WAS LABOR
MARKET WEAKENING AND WHETHER IT WAS THE START OF SOMETHING MORE
PROTRACTED. WE SAW THE DIFFERENCE BETWEEN
LARGE CAPS AND SMALL CAPS. IT WAS INTERESTING, GIVEN THE
RALLY INTO DURATION, PUTTING ASIDE CREDIT WORTHINESS AND
SOME OF THE REFINANCING THAT WE HAVE ALREADY SEEN DONE.
DOES IT CONCERN YOU THAT ALL THE GOOD IS UP WHEN IT COMES TO
SPREADS AND IF YOU WANT IT, IT IS A DURATION PLAY AT THIS
POINT? >> SPREADS ARE TIGHT.
IT WILL HAVE TO COME FROM SOME OF THE LOWER QUALITY, WHAT IS
KEEPING SOME OF THE YIELDS IN THE INDEX RIGHT NOW.
THE THING I FOUND NOTABLE IS THAT THE CORRELATION BETWEEN
CORRELATION AND RISK IS TURNED THE RIGHT WAY BECAUSE INFLATION
HAS BEEN COMING DOWN, AS ANTICIPATED.
HOW DO WE BUILD PORTFOLIOS? HOW IS IT DIFFERENT THAN THREE
MONTHS AGO? WE UP THE CORPORATE
FUNDAMENTALS WERE STRONG GET THINK THE DIFFERENCE NOW IS
TRYING TO FIND THOSE HEDGES IN THE PORTFOLIO. WE HAVE SEEN MIXED DATA.
HOW DO WE KEEP COLLECTING? WE DO NEED TO FIGURE OUT HOW TO
BUILD YIELD BUT ALSO LOOK AT THE HEDGES.
THE ONE THAT LOOKS MOST ATTRACTIVE TO US RIGHT NOW
WOULD BE YIELD CURVE STEEPENERS. AT THE LABOR MARKET IS
WEAKENING UNEXPECTEDLY IN THAT HOUSEHOLD SURVEY, IT IS THE
START OF SOMETHING MORE MATERIAL. ON THE OTHER HAND, THE RISK IS
ELECTION. >> IS THIS A STEEPENER TO YOUR
POINT ABOUT WHAT THE ECONOMY IS DOING? WHERE IS THAT HAPPENING? >> NORMALIZATION NEEDS TO COME
FROM THE FRONT AND. THAT IS WHERE YOU WILL GET IT.
ONE OF MY LONG-STANDING BELIEFS HAS BEEN THAT THE YIELD CURVE
WILL BE INVERTED FOR LONGER THAN ANYONE EXPECTS.
IT HAS BEEN ABOUT 21 MONTHS TO TWO YEARS FOR THE CURVE HAS
BEEN INVERTED. TO ME, I THINK THAT YIELD CURVE
INVERSION AND PROBABLY PERSIST UNTIL THE FED IS CUTTING IN
EARNEST. ANNMARIE: WHEN YOU SAY RISK, WHAT IS THE
BIGGEST RISK? >> IT IS DIFFICULT TO HANDICAP
RIGHT NOW. THAT IS WHY WE CALL IT A RISK.
THERE IS THE STIMULUS PART OF IT , THE CONCERN THAT THERE
WILL BE LESS FOCUS ON MANAGING THE DEFICIT, BUT I THINK THAT
THE TARIFFS SIDE AND HOW WE APPROACH FOREIGN POLICY IS ALSO
AN IMPORTANT RISK. I LOOK BACK AT WHEN TRUMP WAS
PRESIDENT AND WHAT HAPPENED THE LAST TIME WE HAD THIS WAR?
IT REALLY WAS NOT INFLATION THAT WAS DAMAGED BY THE TARIFFS.
IT WAS GLOBAL MANUFACTURING SENTIMENT AND THE GROWTH
IMPULSE , SO I THINK WE NEED TO BE AWARE THAT IT IS NOT A
ONE-SIDED STORY. I DO NOT THINK IT IS ALL ABOUT
THE RISK OF HIGHER INFLATION. THERE IS ALSO RISK ON THE
GROWTH SIDE. ANNMARIE:
IS THERE ANY DAYLIGHT BETWEEN BIDEN AND TRUMP? >> THIS IS WHEN IT GETS TRICKY.
WHEN WE WERE BUILDING OUR SCENARIOS, YOU CANNOT JUST HAVE
TRUMP AND BIDEN. YOU NEED THE HOUSE AND SENATE
SCENARIOS. THAT IS REALLY KEY RIGHT NOW.
BUT THEN YOU'RE DEFICIT FORECAST, CONSIDER THE TARIFFS
AND THE TAX CUTS. WILL THEY BE SUNSETTED?
WILL THEY BE EXTENDED OR WILL THEY DOWN IN THE SENSE THAT IT
WILL ACTUALLY BE STIMULATORY? THERE IS A HURDLE FOR
ADDITIONAL FISCAL IMPULSE BEYOND WHAT WAS ALREADY VENTING.
LISA: BEFORE NOVEMBER, WE HAVE TO GET
THROUGH THIS WEEK. FRIDAY WE GET THE LATEST
MANUFACTURING DATA. WHAT IS GOING TO BE MOST
IMPORTANT TO UNDERSTAND SO THAT WE ARE STILL ON TRACK? >> I'M GOING TO SAY SOMETHING
THAT IS NONE OF THE THINGS THAT YOU LISTED.
I REMEMBER THE LAST TIME THAT WE WERE ON.
THEY WERE TALKING ABOUT HOW THE SOFT DATA IS TALKING ABOUT THE
ECONOMY BEING TERRIBLE. IT IS ULTIMATELY WHAT IS MOST
IMPORTANT FOR THE FED. AGAIN, WE SAW THAT SMALL TICK
UP IN CLAIMS. I DO NOT THINK IT MEANS MUCH ANYMORE.
WE WANT TO WATCH IT EVERY SINGLE WEEK.
IT CAN REFLECT A TURNING POINT, MAYBE NOT THIS WEEK, BUT THAT
IS WHAT YOU WANT TO WATCH. LISA: HOW MANY WEEKS BEFORE IT IS A
TREND? WHEN DO YOU SEE THAT IT IS
SOMETHING MORE CONCERNING? >> I LOOK AT THE NONSEASONALLY
ADJUSTED DATA AND I LOOK AT THE PATH RELATIVE TO THE RECENT
YEARS BECAUSE THERE IS A TREND. WHAT I NEED TO SEE IS THAT THE
CLAIMS NUMBERS ARE RUNNING OFF COURSE RELATIVE TO THE PATH, THE SEASONAL PATH PROCLAIMS.
MORE THAN ONE WEEK, A NUMBER OF WEEKS WHERE IT IS CLEAR THAT WE
ARE RUNNING OUT, RUNNING OFF THE PATH OF THE SEASONALS. LISA:
THE PLAYBOOK, WHEN YOU SEE THAT MOVING OUT OF RISKY CREDIT? >> THE FED HAS BEEN CLEAR THAT
THEY WILL SHIFT IF THE MARKET WEAKENS.
HE HAS BEEN VERY CLEAR THAT THE FRAMEWORK IS HOLD OR CUT.
WHAT BRINGS FORWARD CUTS TO BE MORE URGENT? DIANE SIDE -- DOWNSIDE RISK TO
THE MARKET. THAT IS WHAT WILL GET THE FED
TO MOVE. LISA: ALWAYS A PLEASURE HAVING YOU
HERE. IT RAISES THE QUESTION. THE FED PLATE.
IS THAT WHAT PEOPLE ARE BETTING ON WITH A WHIFF OF WEAKER
EMPLOYMENT DATA? >> DO YOU NEED TO GET OUT OF
RISKY? THE CORRECT ANSWER IS, NO, YOU
DO NOT. IT MEANS THAT THE FED IS MORE
LIKELY TO TAKE ACTION AND THE FED PUT COMES BACK AND THEY CAN
CONTINUE TO GRIND HIGHER. ANNMARIE:
IT FEELS LIKE WITH THE JOBS MARKET, IF THEY SEE ONE BAD
REPORT, WE COULD SEE A SHIFT IN THE FED. LISA:
ESPECIALLY SINCE WE WERE TALKING ABOUT HOW JAY POWELL
NOTED THAT THE PAYROLLS REPORT OVERSTATED THE LABOR MARKET. COMING UP, TALKING WITH LINDSAY
WAGNER. -- TALKING WITH LINDSAY.
YOU ARE SEEING MARKETS TREADING WATER AFTER A LEAK OF RECORD
GAME. THIS IS BLOOMBERG. ♪ >> WE'VE GOT A BROAD STORY
WHERE THE ECONOMIC FUNDAMENTALS LOOK GOOD AND INFLATION IS
COMING DOWN. >> I THINK WHAT THE FED SIGNALS
WAS A BALANCED MESSAGE. >> WE ARE SEEING SLOWING GROWTH
BUT NOT SUCH SEVERE SLOWING BUT MONETARY POLICY MAKERS SEEM
LIKE THEY NEED TO ACT. >> THERE IS NOT A LOT OF
CONCERNS ABOUT THE U.S. ECONOMY GOING INTO RECESSION. >> THAT'S TELLING YOU THEY WILL
CUT RATES EVEN IF THE LABOR MARKET STAYS TIGHT.
THEY WILL JUST CUT A LOT MORE. THERE IS A SUPPORT NETWORK
HAPPENING THERE. >> THIS IS BLOOMBERG
SURVEILLANCE WITH JONATHAN FERRO, LISA ABRAMOWICZ AND
ANNMARIE HORDERN. ♪ LISA: A KEY WEEK OF ECONOMIC
DATA KICKING UP TOMORROW WITH RETAIL SALES.
TODAY WE ARE LEFT TRYING TO UNDERSTAND THE NARROWNESS OF
THE RALLY WE SAW OVER THE PAST FEW MONTHS AND HOW IT IS
GETTING NARROWER AND NARROWER. GOOD MORNING. ANNE-MARIE IS BACK IN HER SEAT
AFTER HER TOUR OF SOUTHERN ITALY.
SHE WAS EXCITED TO BE BACK. DANI BURGER IS HERE AS WELL.
JONATHAN FERRO IS NOT HERE. HE IS ON HIS TOUR OF DUTY
SOMEWHERE BEAUTIFUL WITH GREAT FOOD. WE ARE LOOKING AT A MARKET
RIGHT NOW THAT IS BASICALLY TRYING TO FIND DIRECTION AFTER
-- I CAN'T EMPHASIZE HOW NARROW THE RANGE IS AND HOW DOMINATING
THIS ENTIRE RALLY HAS BEEN JUST FROM AN INCREDIBLE RIPROARING
JUMP IN AI. ANNMARIE: IT'S INTERESTING HOW SHADES OF
THIS AI HAVE CHANGED. DANI: IT'S AI PLUS EVERYTHING.
AI WOULD BE AND CONSUMERS DUCK-SOO EVERYTHING COULD RALLY
OFF THE BOARD. IT'S A CHANGE BACK TO MAYBE
ADJUST IS NVIDIA BEING THE WINNER OR MAYBE BROADCOM GETS A
SLICE OF THE PIE BUT THE FLAVOR HAS CHANGED. LISA:
VULNERABLE TO WHAT'S? IS IT POLITICS OR DOES IT
MATTER WHAT FED POLICY IS TO NVIDIA?
THEY DON'T NEED TO BORROW MONEY. THEY'VE GOT A CASH BALANCE AND
T-BILLS THAT WILL ONLY DO BETTER IF THE FED REMAINS ON
HOLD. LET'S REMIND EVERYBODY THAT YOU
WERE IN SOUTHERN ITALY AND ENJOYING YOURSELF AREA YOU DID
BREAK A LOT OF NEWS AND IT WAS DURING A PIVOTAL TIME OF
POLITICAL DEVELOPMENTS AND POLITICAL RISK COMING TO THE
FORE. HOW MUCH DO YOU HEAR ABOUT THIS
AS SOMETHING THAT PEOPLE THOUGHT OF AS THE BEGINNING OF
A NUMBER OF POLITICAL SURPRISES? ANNMARIE:
DOMESTIC POLITICS LOOMED LARGE OVER BASICALLY EVERYONE THERE
BUT GIORGIA MELONI, THE HOST AND IT WAS HER SHOW.
BUT CONCERNS ABOUT FRANCE ARE STARTING TO QUELL THE MARKET
BECAUSE MARIA LE PEN IS TALKING ABOUT SHE'S NOT HERE TO RUIN
INSTITUTIONS, WE CAN COHABITATE WITH EMMANUEL MACRON BUT YOU
LOOK AT POTENTIALLY THAT ONCE THE RISK IS OVER IN EUROPE WE
GET MORE DIRECTION WHERE THEY WILL BE, THEN IT BECOMES THE
UNITED STATES. LOOKING BACK OF THE DATA WE GOT
FRIDAY FROM THE CONSUMER SENTIMENT AND IT FEELS LIKE WE
ARE SEEING THAT HALLOWEEN OUT OF THE MIDDLE CLASS.
THIS ECONOMIC STORY THAT BIDEN POTENTIALLY NEEDS TO COME OUT
AND TRY TO SELL THE DATA TO THE AMERICAN PEOPLE.
CONSUMER PRICES, THEY ARE NOT FEELING IT. LISA:
YOU POINTED OUT THE UNIVERSITY OF MICHIGAN SENTIMENT SURVEY.
IT'S THE FACT THAT THE MIDDLE INCOME CONSUMERS ARE DEALING
THE SAME AS THE LOWER INCOME CONSUMERS AND HOW UNUSUAL THIS
IS. USUALLY, THE MIDDLE FEELS THE
MIDDLE AND YOU HAVE THE HIGH END AND LOW AND HOW MUCH DOES
THAT SPEAK TO RETAIL SALES COMING OUT TOMORROW? DANI: AT SOME POINT, YOUR FEELINGS
REFLECT ON MUCH YOU SPENT. JIMBIANCO SAYS THE CHANGE WE
ARE SEEING OUR MIDDLE-CLASS DEMOCRATS TO BELIEVE TRUMP WILL
BE THE NEXT PRESIDENT SO THEIR PERCEPTION OF THE ECONOMY AND
HOW THEY -- THEIR FUTURE STANDINGS WILL SHAKE OUT,
THAT'S WHAT WE ARE SEEING IN THE NEW SURVEY.
THAT DOESN'T POINT TO GREAT NEWS FOR BIDEN EITHER.
EITHER PEOPLE ARE UNHAPPY OR THEY SAY THAT TRUMP WILL RENT
FOR -- WILL WIN. LISA: IF YOU HAVE CHIPS, YOU ARE
HAPPY AND THAT'S DRIVING THE MARKET UP. THE S&P IS DOING NOTHING BUT
ATTACHED LOWER WHILE YOU HAVE THE NASDAQ UP. THE EURO GETTING A BIT AGAINST
THE DOLLAR AFTER A DIFFICULT WEEK LAST WEEK.
THERE IS A SHIFT TO SOME FAR RIGHT TYPES OF CANDIDATES
PARTICULARLY IN RANTS WHERE THEY HAD A SNAP ELECTION.
IT'S UP ABOUT THREE BASIS POINTS RIGHT NOW.
GREW OIL IS BOUNCING AROUND. IT WAS LOWER AND NOW IT'S UP
0.3%. WATCH THIS SPACE AHEAD OF THAT
VERY HOT SNAP IN TERMS OF ELECTRICITY USAGE.
COMING UP, GOLDMAN SACHS ON A PATH FOR A SEPTEMBER FED RATE
CUT, TECH DOMINANCE IN EQUITIES AND STEPHEN MAJOR OF HSBC ON
THE GLOBAL MACRO OUTLOOK AND WHY HE SEES A RIPROARING RALLY
AHEAD FOR U.S. TREASURIES. A BUSY WEEK OF FED SPEAK AS
PEOPLE LOOK FOR BEYOND THE DOT PLOT. LINDSAY JOINS US NOW. I'M. HIS IS THIS INDEPENDENT FROM THE
FED? >> WE LEARNED A LOT LAST WEEK
AREA HEARD FOR A COUPLE OF MONTHS NOW THAT THE FED NEEDS
TO FEEL CONFIDENT AND INFLATION IS MOVING IN THE RIGHT
DIRECTION AND IF THEY BECOME NOT COMPETENT AND LABOR MARKET,
THEY COULD GO AHEAD AND CUT. WHAT WE LEARNED LAST WEEK IS IF
YOU TEAR APART THE HEADLINE WHICH IS THE MEDIAN DOT WENT
FROM3 TO 1 SO WHERE PEOPLE ARE HANGING OUT, THAT WAS -- THAT
MADE THE MATH SHIFT DOWN ON AVERAGE TO 1.
THERE ARE A LOT OF WAYS WE COULD GET TO TWO CUTS THIS YEAR.
THAT WOULD PROBABLY BE SEPTEMBER AND DECEMBER. LISA:
YOU TALK ABOUT THE IMPORTANCE OF LISTENING TO FED SPEAK AND
WE HAVE PLENTY THIS WEEK. IT'S PRETTY MUCH EVERY DAY
WHERE YOU GET 1-3 FED SPEAKERS. WHO DO YOU THINK IS MOST
IMPORTANT APPLIED FROM JET -- ASIDE FROM JAY POWELL HIMSELF? >> HE'S PROBABLY MOST IMPORTANT
BUT IT'S NOT HIS SOUL DECISION. IT WILL BE IMPORTANT TO HEAR
THE DIFFERENCE OUT THERE BUT MORE IMPORTANT IS WHAT
CONTINUES TO HAPPEN WITH THE DATA. WE HAD THREE REALLY HOT INFLATION POINTS AND THEN WE
HAD MORE AND THIS PAST ONE WAS COOL.
IT WAS REALLY COLD IN MANY WAYS DESPITE THE HEAT WAVE WE ARE
ABOUT TO EMBARK UPON. WE NEED TO SEE THE DATA
CONTINUE TO GO IN THAT DIRECTION IN THE BAY THING THAT
DIDN'T MOVE IN THE CPI THAT WASN'T IS OER. VERY STICK D -- VERY STICKY
PART OF CPI CAN IS USUALLY A YEAR OR SO OF A LAG.
THAT COULD BE HAPPENING ANYTIME NOW.
WE'VE GOT THREE PRINTS BEFORE SEPTEMBER AND THERE IS A CASE
THAT THE FED GOES IN SEPTEMBER. WE ARE TALKING ABOUT MAYBE 25
OR 50. RISK ASSETS ARE JUST CRUISING
THROUGH THIS WHOLE THING. THEY IGNORE THE VOLATILITY.
THAT SEEMS TO BE A BIT STRANGE. WHEN WE LOOK AT WHERE
VALUATIONS ARE, WE ARE FINDINGS REDS LIKE EVERYBODY ELSE,
VALUATIONS ARE ON THE TIGHT END OF THE RANGE.
EVERYTHING NEEDS TO GO PERFECTLY FOR THAT TO CONTINUE
TO MAKE SENSE AREA LAST WEEK, WE HAD A TON OF NEWS BUT WE GOT
THE SNAP ELECTION IN FRANCE AND WE'VE SEEN A TON OF VOLATILITY
AND KINDNESS IN RATES. THAT NEEDS TO BE A HEADS UP TO
EVERYBODY IN THE U.S.. YOU ARE BUYING ASSETS RIGHT NOW
AT THE TIGHTEST SPREADS THEY BEEN IN A DECADE.
THERE IS LIKELY TO BE VOLATILITY AROUND OUR OWN
ELECTION AS WELL. IT WOULD BE NAÏVE TO THINK WE
DON'T SEE SOME OF THAT YEARS OF WE ARE LOOKING FOR POCKETS OF
VALUE IF THEY EMERGE THROUGH THE VOLATILITY BUT WE DON'T
BELIEVE FRANCE IS A CONTAGION BUT THE ISSUE SHOULD BE A
CONTAGION -- SHOULD BE CONTAGIOUS. DANI:
REMARKABLE TO SEE THE VIX DIP BELOW 12 AT THE STRENGTHEN
VALUATIONS HAVE BEEN THOSE BIG AI PLAYS.
IT'S BEEN NVIDIA AND THE REST OF THE MARKET EQUAL WEIGHT FELT
LAST WEEK WHICH WAS A RECORD DIVERGENCE.
WHY WOULD THAT BE THE CASE IF WE ARE GOING TO GET A CUT IN
SEPTEMBER? WHY IS THAT THE CASE OF THINGS
ARE SLOWING AND NOT SLOW SO SHOULDN'T THE MARKET BE PLAYING
ALONG? >> THE REST OF THE MARKET IS
TRYING TO FIGURE OUT IF THIS IS ROBUST GROWTH THAT WE KEEP
COMING UP WITH EXPLANATIONS. IS IT AI EVERYTHING?
IS IT THE LABOR MARKET IS MORE PRODUCTIVE?
WE HAVE THIS IMMIGRATION NUMBER THAT IS ENHANCED.
COST AILEY LOOKING FOR WAYS TO JUSTIFY WOULD'S GOING ON WITH
STOCKS. THERE IS A LOOK THROUGH TO
EVERYTHING. PUT BAD NEWS ON THE SIDE AND
KEEP BUYING. WE ARE SAYING TAKE A MOMENT AND
THIS THING HAPPENING IN FRANCE IS IMPORTANT FOR REMEMBERING
AND VALUATIONS ARE REALLY IMPORTANT.
YOUR ENTRY POINT COUNTS AND WE FEEL LIKE THERE COULD BE SOME
OPPORTUNITY TO HAVE A BETTER ENTRY POINT IN FIXED INCOME
DESPITE THE FACT THAT YIELDS ARE HIGH.
THE BIG TAKEAWAY LAST WEEK AS YOU DON'T WANT TO BE
UNDERWEIGHT BONDS. ON THE BACK OF VOLATILITY LAST
WEEK, LOOK AT WHAT DID WELL. ANNMARIE:
YOU SAY LOOK AT THE VOLATILITY IT'S PART BUT IS IT OVERDONE?
YOU LOOK AT THE POLLING IT LOOKS LIKE WE WILL GET A HUNG
PARLIAMENT IN U.K.? >> I DON'T THINK IT'S OVERDONE.
FRANCE WAS TRADING VERY TIGHT IF YOU LOOK AT COMPARISON TO
GERMANY AND WE ARE NOW AT A LEVEL OF SPREAD BETWEEN THE TWO
THAT MAKES MORE SENSE. IT'S VERY DIFFERENT ECONOMIC
OUTCOMES FORECAST THAT WE HAVE. WE'VE GOTTEN TO SOMETHING THAT
MAKES A LITTLE MORE SENSE. IT'S NOT AN EGREGIOUS MOVE,
IT'S NOT A MASSIVE MOVE BUT BACK TO THE TIGHT SPREADS IN
THE PRICE PER -- OR PERFECTION ACROSS THE GLOBE.
IMPORTANT TO REMEMBER SOMETHING LIKE THIS THAT A RIPPLE IN THE
WATER COULD MOVE THINGS IN THERE IS AN ASYMMETRY WHEN YOU
ARE BUYING AT THE TIGHTEST LEVELS. LISA:
LOOKING FOR BETTER IS CODE FOR WE EXPECT TO SELLOFF AREA THIS
IS ANOTHER WAY OF SAYING WE ARE LOOKING FOR DECLINES IN
VALUATIONS BECAUSE IT LOOKS TOO PERFECT FOR US.
WHAT IS SO VULNERABLE RIGHT NOW? >> WE DIDN'T TALKING ABOUT THE
IMPACT OF HIGHER FOR LONGER. WHEN YOU HAVE THE HIGHER COST
OF CAPITAL, YOU WILL SEE CERTAIN CAPITAL STRUCTURES THAT
DON'T WORK IN ATWOOD BEGIN TO SEE ALL THE TELL HE RIPPLE
THROUGH THE MARKET, IT IS THOSE CAPITAL STRUCTURES THAT WILL BE
IN THE MOST PAIN. THAT WILL PROBABLY LEAD TO SOME
OPPORTUNITY ELSEWHERE. FOR US, IT'S NOT SEE SOMETHING
THAT'S DISTRESSED, IT'S IF THINGS START TO TRADE IN
SYMPATHY AND WIDEN, THAT'S WHERE WE WANT TO STEP IN FOR
THINGS WE BELIEVE IN HIM A FUNDAMENTAL PERSPECTIVE. LISA:
YOU SAID YOU DON'T WANT TO BE UNDERWEIGHT BONDS AND THIS IS
DURATION. YOU DON'T SEE THAT RISK DESPITE
SOME OF THE POLITICS OF THE MOMENT IN BENCHMARK U.S.
RATES A TIME WHERE POLITICAL RISK IS JUST A EUROPEAN EFFECT. >> WE THINK BONDS WILL DO WOULD
BONDS ARE SUPPOSED TO DO. WHAT IS REALLY THE ROLE OF
BONDS IN A PORTFOLIO AND DO YOU NEED THEM?
IF STOCKS TAKE OFF, I'D RATHER JUST BE IN EQUITIES. PEOPLE WANT TO BE NVIDIA BUT
THEY DON'T WANT TO TALK ABOUT THE TWO YEAR. YOU WANT TO HAVE BONDS IN HER
PORTFOLIO BECAUSE THEY PROTECT YOU.
WHEN YOU LOOK AT WHAT HAPPENED IN FRANCE, LOOK AT HOW MUCH
GERMANY RALLY. GET A BALLAST IN YOUR PORTFOLIO
OF SAFE HAVEN ALL THE ASSETS AND THEY WILL BENEFIT YOU AND
IF YOU SEE SOME INEFFICIENCIES BEGIN TO ARRIVE TO IN THE
SPREAD MARKETS, WE WANT TO STEP IN THEIR. LISA:
THANK YOU SO MUCH FOR BEING HERE AND GREAT TO SEE YOU.
LET'S GET YOU AN UPDATE ON STORIES ELSEWHERE.
HERE IS YOUR BLOOMBERG BRIEF. >> EUROPEAN MARKETS ARE EDGING
HIGHER DESPITE CONTINUING POLITICAL VOLATILITY IN FRANCE.
THE CITIGROUP STRATEGIST DOWNGRADED THE REGION FROM
OVERWEIGHT TO NEUTRAL CITING THE RISK FOR POTENTIAL FAR
RIGHT MAJORITY IN FRANCE IN THE UPCOMING PARLIAMENTARY
ELECTIONS. THE FRENCH FAR RIGHT LEADER
MARINE LE PEN TOLD A FRENCH NEWSPAPER SHE WILL WORK WITH
THE CURRENT PRESIDENT IF HER PARTY WINS THE ELECTION.
SHE IS NOT CALLING FOR INSTITUTIONAL CHAOS.
BILL GATES SAYS HE'S LOOKING TO THROW BILLIONS OF DOLLARS INTO
A NEXT GENERATION CLEAR POWER PLANT PROJECT IN WYOMING TO
MEET GROWING ELECTRICITY NEEDS. HE SAID HIS ENERGY COMPANY
RELIES ON POOLING RATHER THAN WATER WHICH IS BELIEVED TO BE
BOTH SIMPLIFYING THE PROCESS WELL ALSO BEING SAFER.
IT CAN MAKE NUCLEAR ENERGY A SOURCE OF LOW-COST ELECTRICITY. HE SAID TERRA POWER PLANT IS ON
TRACK TO PRODUCE POWER BY 2030. PIXAR'S INSIDE OUT2 IS
HOLLYWOOD'S BEST DEBUT SINCE BARBIE.
MOVIE GROWTH 55 MILLION OF THE BOX OFFICE IN THE U.S.
AND CANADA BESTING DUNE PART TWO IS A MOVIE WITH THE BIGGEST
OPENING WEEKEND OF THE YEAR. THE FILM ALSO NOTCHED A RECORD
INSIDE OUT2 HALL GLOBALLY IS THE BIGGEST OPENING WEEKEND IN
HISTORY FOR AN ANIMATED FILM. THAT'S YOUR BLOOMBERG BRIEF.
LISA: THANK YOU SO MUCH. WE HAVE TO GET ANNMARIE TO A
MOVIE THEATER. UP NEXT, THE MORNING CALLS
COMING UP, THIS IS BLOOMBERG. ♪ ♪ LISA: COMING INTO A WEEK
DOMINATED BY RETAIL SALES, JOBLESS CLAIMS AND WHAT WE GET
FROM THE S&P GLOBAL FRIDAY WHICH IS MANUFACTURING AND
SERVICES ACT OF ANY DATA. NOT A LOT GOING ON RIGHT NOW,
THE S&P 500 HAS CROSSED THE 5500 MARK. THE NASDAQ IS AGAIN AN
OUTPERFORMER EVEN AS SMALL CAPS UNDERPERFORM.
LET'S TAKE A LOOK AT MORNING CALLS.
GOLDMAN SACHS UPGRADED TOLL BROTHERS TO NEUTRAL.
THERE IS A PRICE TARGET OF 124 DOLLARS AND ANALYST EXPECTING
HIGHER REVENUES AND OUTPERFORMANCE IN NEW HOME
SALES. NEXT UP, BANK OF AMERICA RAISING ITS PRICE TARGET FOR
MICRON. THE FIRM EXPECTING THE CHIPMAKER TO BENEFIT FROM
INCREASED REQUIREMENTS TO SUPPORT ARTIFICIAL INTELLIGENCE
AND PERSONAL COMPUTERS AND SMARTPHONES. BEST BUY WAS UPGRADED WITH THE
NEW PRICE TARGET. ANALYST EXPECTING ELECTRONICS
CYCLE HELP BY INNOVATIONS IN AI. SAM STOVALL IS ALSO LOOKING
CLOSER AT THE TECH TRADE SAYING THIS -- SAM JOINS US NOW AND I HAVE TO
SAY, THIS IS THE QUOTE OF THE MORNING TO ME GIVEN THE FACT
THAT THIS IS THE ULTIMATE EXISTENTIAL QUESTION.
IS THIS U.S. STOCK MARKET INCREDIBLY
VULNERABLY BECAUSE OF THE DOMINANCE OF THE BIG TECH NAMES
OR IS IT INCREDIBLY RESILIENT BECAUSE OF THEM.
WHAT DO YOU THINK? >> GOOD MORNING, I THINK IT IS
RESILIENT HOWEVER, I BELIEVE WE ARE HEADED FOR A SECOND DECLINE
IT THIS YEAR. BASED ON MY HISTORICAL WORK,
EVERYONE OF THOSE TOP 15 FIRST QUARTERS ENDED UP WITH A GAIN
FOR THE ENTIRE YEAR EVEN THOUGH MANY OF THEM WENT THROUGH
DECLINES OF 5% OR MORE AND THE AVERAGE ANNUAL INCREASES
EXCEEDED 20%. WHEN I LOOK TO THE S&P 500, I
SEE IT TRADING AT A 32% PREMIUM TO ITS AVERAGE 20 YEAR PE.
I LOOK AT TECH AT A 68% PREMIUM AND I LOOK AT TECH AT A 21%
PREMIUM ON A RELATIVE PE BASIS. I WONDER IF WE'VE GONE TOO FAR
TOO FAST AND NEED TO RESET THE DIALS IN ORDER TO MAINTAIN THIS
LONGER-TERM UPWARD TRAJECTORY. LISA:
YOU THINK TECH WILL PULL BACK A BIT AS THE REST OF THE INDEX
MAY BE HOVERS WHERE IT IS NOW AND THAT WILL DRIVE THE INDEX
LEVELS 5% LOWER? >> I'M SAYING IT'S GOING TO
DECLINE BY AT LEAST 5%. WE WILL PROBABLY EXPERIENCE A
MILD CORRECTION. THE 4800 LEVEL ON THE S&P IS
NOT OUT OF THE QUESTION. IF WE START TO SEE PEOPLE TAKE
PROFITS IN TECH, IT'S NOT KNOWING TO BE JUST TECH ALONE.
TECH AND CONSUMER COMMUNICATION SERVICES ARE THE ONLY TWO
SECTORS THAT ARE OUTPERFORMING THE S&P 500 SINCE WE HAD ABOUT
68% OF THE S&P 1500 INDUSTRIES TRADING ABOVE BOTH THEIR 50 AND
200 DAY MOVING AVERAGES. TODAY THAT NUMBER IS DOWN TO
38%. WHILE MARKET HAS BEEN
HIGHER AND RAISED BY TECH BUT ALSO COMMUNICATION SERVICES.
DANI: IT'S BEEN A LONG TIME SINCE
WE'VE SEEN A DECLINE IN THE U.S. STOCK MARKET. BANK OF AMERICA CALLED AT THE
PAVLOVIAN URGE TO BUY. WHAT NEEDS TO CHANGE?
VALUATIONS OF NOT SPOOKED INVESTORS OF WHAT CHANGE ALLOWS
THAT SELLOFF TO HAPPEN? >> WE DID EXPERIENCE A 5.5%
DECLINE FROM MARCH 28 THROUGH MARCH 9 TEEN AND WE LOST
EVERYTHING BY MID MAY WHICH IS NOT SURPRISING BECAUSE OF THE
64 DECLINES OF 5-10% SINCE WORLD WAR II.
IT TOOK US ONLY 1.5 MONTHS TO GET BACK TO EVEN SO THAT'S WHY
I TYPICALLY SAY YOU ARE BETTER OFF NOT ALLOWING YOUR EMOTIONS
TO DRIVE YOUR POET FOLIO DECISIONS.
-- YOUR PORTFOLIO DECISIONS. THE 10 YEAR YIELD CREPT HIGHER
CAUSING INVESTORS TO WORRY ABOUT WHERE WOULD END UP AREA
THEY ALSO WORRIED ABOUT THE FED NOT LIKELY TO CUT INTEREST
RATES THREE TIMES AS THE MARCH DOT PLOTS OF INDICATED.
MOST RECENTLY, EXPECTATIONS WERE FOR 2 YET I FOUND THAT
INVESTOR A BEWLEY AND'S WAS HELPED BY -- EBULLIENCE WAS
HELPED BY THE DOTS. HOW LONG WILL THE FED MAINTAIN
HIGHER FOR LONGER AND DOES IT INCREASE THE RISK OF RACE ASIAN
-- OF RECESSION. DANI: WHAT ARE YOU EXPECTING THIS
WEEK FROM ALL THE FED SPEAK? WILL THEY BE MORE DOVISH GIVEN
THE FACT THAT THE DATA POTENTIALLY MAY MEAN THEY WILL
CUT BEFORE DECEMBER? >> NEEL KASHKARI'S COMMENTS ARE
WHAT HE'S BEEN SAYING FOR A WHILE WHICH IS MORE OF A
HAWKISH TONE. OTHER COMMENTARY COULD TAKE THE
OTHER SIDE AS WELL BECAUSE THE FED WANTS TO REMIND US THEY ARE
DATA-DEPENDENT. AT THE SAME TIME, THEY WANT TO
LET US KNOW THEY ARE INDEPENDENT OF POLITICAL
PRESSURES. EVERY ELECTION YEAR SINCE 1992
EXCEPT 2012 HAD THE FED EITHER RAISE OR LOWER INTEREST RATES
IN THAT ELECTION YEAR. MANY TIMES IT OCCURRED IN
SEPTEMBER. I DON'T THINK THE FED WOULD BE
AVERSE TO CUTTING RATES IF THEY FELT THE DATA SUPPORTED IT.
DANI: UTILITY -- YOU STILL THINK ANNMARIE:
SEPTEMBER REMAINS IN PLAY? >> WHEN I LOOK TO THE CMA
FORECAST MODEL, I SEE WE ARE LOOKING AT
838 PERCENT INDICATING WE WILL PROBABLY STAY AT THAT CURRENT
LEVEL. OBVIOUSLY, 62 PERCENT ARE IMPLYING THAT WE WILL PROBABLY
SEE A CUT IN SEPTEMBER OF EITHER 25 OR 50 BASIS POINTS. THAT MOVES UP TO 80% FOR THE
JULY PERIOD AND EVEN HIGHER FOR DECEMBER.
I WOULD TEND TO SAY THAT THE CHANCES ARE INCREASING THAT WE
END UP SEEING A CUT SOMETIME THIS YEAR WITH POSSIBLY TWO ON
THE TABLE. LISA: LAST WEEK WE SAW A MASSIVE
RALLY IN U.S. GOVERNMENT DEBT. IT WAS A 20 ONE BASIS POINT
DECLINE IN 10 YEAR YIELDS TO END OF THE WEEK IT WHY IS THAT
NOT IGNITING A RALLY? I'M THINKING OF SMALL CAPS IN
PARTICULAR. >> THE REASON -- ONE REASON WHY
THE YIELDS HAVE BEEN COMING DOWN IS BECAUSE THE PRICES HAVE
BEEN GOING UP BECAUSE INTEREST RATES LOOK MORE ATTRACTIVE HERE
IN THE U.S. THAN OVERSEAS. THAT'S ATTRACTING FOREIGN
INVESTORS. WE CERTAINLY ARE LOOKING AT
SMALL CAPS NOW TRADING AT A 31% DISCOUNT ON A RELATIVE PE BASIS
AT 25% DISCOUNT. I THINK IT'S BECAUSE INVESTORS
WANT TO WAIT UNTIL THE FED ACTUALLY CUTS RATES BECAUSE OF
THE POTENTIAL OF A RISING RISK OF RECESSION SINCE THE SMALLER
AND MID-CAP FIRMS ARE THE ONES THAT WILL TAKE IT ON THE CHIN
MORE SO THAN LARGE-CAP SHOULD WE END UP HAVING SOMETHING
DEEPER THAN SIMPLY A SOFT LANDING.
I THINK INVESTORS ARE PLAYING IT CLOSE TO THE VEST AND
FOCUSING ALMOST EXCLUSIVELY ON THE LARGER CAP GROWTH UNIVERSE.
LISA: SAM STOVE ALL, THANK YOU SO
MUCH. IT SEEMS THE UNCERTAINTY ON THE
MACRO FRONT HAS LEFT PEOPLE SAYING THE ONLY CERTAINTY I
HAVE IS THAT PEOPLE WILL KEEP BUYING NVIDIA. DANI:
I THINK IT'S A GOOD QUESTION. WE ARE OPEN K TO SAY THE ANIMAL
SPIRITS WILL BE WOKEN UP TO SAY? WHY CAN'T WE SAY THERE WILL BE
CUTS AND WEAKENED BY SMALL CAPS? IT SEEMS ODD TO ME THAT THIS IS
THE ONE PLACE WE ARE SAYING WE NEED TO WAIT. LISA:
ESPECIALLY IN A TIME WHEN PEOPLE SAY IF YOU GET THIS
ADOPTION, IT SHOULD AND OF IT PRODUCTIVITY ACROSS THE BOARD.
MAYBE NOT YET. COMING UP NEXT, BUSY WE GO FED
SPEAK AND KEY ECONOMIC DATA. WE ARE LOOKING AHEAD TO IT ALL
WITH STEPHEN MAJOR AND EY. RETAIL SALES TOMORROW WE WILL
TALK ABOUT THAT COMING UP IN TERMS OF UNDERSTANDING HOW MUCH
AMMUNITION SOME OF THESE CONSUMERS STILL HAVE. LISA:
HEADING INTO A WEEK OF ECONOMIC DATA LED TOMORROW BY RETAIL
SALES . WE ARE GETTING SOME COMING OUT
HEADING INTO THE S&P FUTURES AROUND THE 5500 LEVEL AND NOT
DOING MUCH. NASDAQ FUTURES HAVE SOME MODEST
GAINS, THE RUSSELL UNDERPERFORMING YET AGAIN AS IS
BEEN THE THEME WITH A RECORD DIVERGENCE, DOWN ABOUT 0.3%.
WE ARE SEEING A U.S. ECONOMY THAT HAS BEEN GENERALLY
TRENDING LOWER BUT NOT WEEK. CAN WE GET THAT AGAIN WITH
EMPIRE MANUFACTURING? IN THE BOND MARKET, YOU CAN SEE
YIELDS A LITTLE BIT HIGHER, GRINDING HIGHER AS THE SESSION
ROSE. THE TWO YEAR YIELD IS 4.73% AND
THE 30 GILT YIELD IS AT 4.40. AT WHAT POINT WILL PEOPLE STILL
LOOK AT BONDS IS A HAVEN TRADE? LAST WEEK, IT'S VERY MUCH THE
PLACE WHERE PEOPLE GO FOR SAFETY. LINDSEY ROSNER SET A MOMENTS
AGO THAT'S THE TRADE SHE LIKES. DANI:
IT'S GOOD TO LIKE YOU AS BONDS AGAIN. THE SELLOFF LAST WEEK MEANS
THAT THE FRENCH PULLBACK FROM THE U.S. REPO MARKET.
WE SAW A DEARTH OF LIQUIDITY LAST WEEK AND THAT'S WAY BONDS
MOVES -- MOVED AS MUCH AS THEY DID.
IT'S JUST ANOTHER ROUNDABOUT WAY OF SAYING FRENCH POLITICS
AFFECTED THE U.S. BOND MARKET. LISA:
WE WILL LOOK AT THAT AFFECTING THE CURRENCY AS WELL.
THE EURO IS TRYING TO RETRENCH A LITTLE BIT AFTER LAST WEEK
REAL DAMAGE DONE TO ITS VALUATION IN TERMS OF WEAKENING
VERSUS THE DOLLAR. SOME FIRMING UP TODAY BUT FRONT
AND FOCUS AREA GOLDMAN SACHS AND EVERCORE BOOSTING THEIR
YEAR AND FORECAST FOR BONDS. JULIAN EMANUEL AT EVERCORE
SAYING 6000 FROM 47 POINT 50 AND RECEIVES ACROSS THE BOARD
WERE PEOPLE SAY JUST BECAUSE IT'S A THIN RALLY DEPENDENT ON
A FEW NAMES DOESN'T MEAN IT WILL STOP. ANNMARIE:
THEY THINK IT WILL CONTINUE. THE GOLDMAN SACHS CALL STATED
SOME OTHER PROJECTIONS. IT LOOKS LIKE THEY HAVE A
NUMBER SCENARIOS WHERE FOR GOLDMAN SACHS, THE INITIAL ALL
IS THE BASE CASE. DANI: I'M SURPRISED WE ARE NOT
HEARING MORE OF THE DAVID EINHORN ARGUMENT THAT SOMETHING
IS BROKEN AND THESE COMPANIES KEEP GETTING BIGGER BECAUSE
THERE'S TOO MANY INSENSITIVE BUYERS.
THEY SAY IS THE RETAIL BUYERS AND HEDGE FUNDS JUST BIONTECH
AND THAT SOMETHING IS FUNDAMENTALLY DIFFERENT THIS
TIME. FUNDAMENTALLY OK COMPANIES THIS
TIME MIGHT NOT CATCH UP BECAUSE THE BUYING BASE DOESN'T EXIST
ANYMORE. LISA: IT ALSO DOESN'T HAVE THE SAME
BASE THE ACTUAL BUSINESSES HAVE IN THE SAME WAY GOOGLE AND
MICROSOFT ARE THE MAIN BUYERS OF NVIDIA CHIPS. TECHNOLOGICAL SHIFTS WILL BE ON
THE DOCKET AS THE CAMPAIGNING SEASON HEATS UP WITH A BIDEN
CAMPAIGN RAISING RE-MILLION DOLLARS AFTER A STAR-STUDDED
FUNDRAISER IN LOS ANGELES OVER THE WEEKEND.
HE ALSO KICKED OFF A $50 MILLION AD CAMPAIGN AHEAD OF
THE DEBATE WITH DONALD TRUMP ON JUNE 27.
TRUMP IS SCHEDULED TO MEET WITH SPEAKER JOHNSON AT MAR-A-LAGO
LATER TODAY. ANNMARIE, FRESH OFF YOUR TOUR
OF EUROPE HEADING INTO THIS DEBATE, WHAT ARE YOU WATCHING
IN TERMS OF TACTICS AND TRYING TO GET SOME OF THE DOUBLE
HATERS BACK? ANNMARIE: ONE IN FOUR VOTERS SAY THEY
DON'T LIKE EITHER CANDIDATE AND THEY ARE TRYING TO WIN THEM
OVER. THIS $50 MILLION AD BLITZ FROM
THE BIDEN CAMPAIGN IS CALLED CHARACTER MATTERS. TRUMP AND BIDEN ON THE DEBATE
STAGE BOTH WANT TO BASICALLY DEFINE THE TERMS OF THIS
ELECTION AND TRY TO GET ONE OF THOSE FOR TO COME OVER TO THEIR
SIDE. LISA: THAT'S THE BIG CHALLENGE RIGHT
NOW AND WHAT'S THE POTENTIAL POLITICAL RISK?
IT DIDN'T MATTER AND FRANCE. HOW MUCH ARE PEOPLE GAMING THIS
OUT AND HOW MUCH ARE THEY TRADING ON IT?
MY SENSE IS NOT THAT MUCH YET. DANI:
THE ONLY PLACE I'VE SEEN IT IS THE VIX.
THERE IS A SLIGHT KINK AROUND WHERE THE ELECTION IS BUT
PERHAPS THE ONLY REASON THAT'S THE CASE IS BECAUSE WE KNOW WHO
THE CANDIDATES WILL BE SO WE PRICED IT IN EARLIER.
OTHERWISE, WE DON'T SEE IT AND IT'S NOT JUST FRANCE.
WE LEARNED THE LESSON WITH MEXICO AND INDIA AND AGAIN OVER
-- AND AGAIN, WE ARE NOT PREPARED FOR ELECTIONS. LISA:
WE GET A LOT OF FED SPEAK THIS WEEK WITH COMMENTS COMING FROM
THREE TODAY AND SIX MORE TOMORROW.
WE WILL ALSO GET RETAIL SALES DATA.
MICHAEL MCKEE IS WITH US NOW. IT WAS THE QUIET TIME AND NOW
IS THE LOUD TIME FOR THE FEDERAL RESERVE.
WHAT ARE YOU WATCHING TO INDICATE WHERE THE BULK OF THE
FOMC IS AT A TIME OF INCREDIBLE DIVERSIONS? MIKE:
I DON'T KNOW THAT WE GET A COMPLETE VIEW OF THAT BECAUSE
THEY WILL BE DATA-DEPENDENT UNTIL THE NEXT MEETING WHICH IS
NOT UNTIL JULY 31. WE GOT EMPIRE MANUFACTURING
TODAY WHICH IS DOWN TO -6 BUT IT WAS NEGATIVE 15.60 THAT
STILL POSITIVE. NEW ORDERS WERE BETTER.
WE GET THIS MIXED MESSAGE FROM ALL OF THESE DATA POINTS.
IT'S HARD TO KNOW WHAT THE FED WILL DO. WE HAVE A LOT OF ECONOMIC
INDICATORS. IT'S RETAIL SALES THE MATTER
THIS WEEK BECAUSE IT WILL GIVE THE FED AN IDEA WHERE CONSUMERS
ARE AND WHETHER THE ECONOMY IS WEAKENING.
THE ATLANTA FED GDP NOW DOESN'T SHOW SIGNS OF WEAKENING.
WE WILL GO THROUGH THIS ON A REGULAR BASIS FOR THE NEXT
MONTH AND A HALF WHILE WE WAIT FOR THE NEXT FED MEETING. DANI: IS THERE ANY EXPECTATION THAT
RETAIL SALES MIGHT FILTER THROUGH? MIKE:
MOST ECONOMISTS DON'T THINK SO. WE HAD A DECLINE IN THE CORE
RETAIL SALES LAST MONTH AND NOW THE FORECAST IS A GOES UP BY
0.4% IN THE HEADLINE GOES UP AS WELL. THIS IS EVEN WITH GASOLINE
PRICES GOING DOWN BECAUSE RETAIL SALES ARE IN DOLLARS,
THAT'S A HILL TO CLIMB THAT ECONOMISTS THINK THEY WILL DO
IT. WE'VE SEEN REPORTS FROM THE VARIOUS CREDIT CARD BANKS THAT
CONSUMER SPENDING HAS BEEN HOLDING UP. ANNMARIE:
EVEN IF WE GET A WEAK RETAIL SALES PRINT, THAT WILL NOT BE
ENOUGH TO MOVE THE FED, IS IT? MIKE:
NOP, THE FED WILL LOOK AT THEM FLIGHT -- INFLATION INDICATORS
AND LOOK AT THE EMPLOYMENT INDICATORS. WE'VE ALREADY GOT BOND MARKET
AND WAS COMPLAINING ABOUT THE FACT THEY HAVE TO WORK ON JULY
5 BECAUSE IT WILL BE THE JOBS REPORT BUT THAT WILL BE AN
IMPORTANT ONE BECAUSE IT WILL SET THE TONE FOR WHAT HAPPENS
JULY 31 THAT SETS US UP FOR WHETHER OR NOT YOU GET A
SEPTEMBER MOVE. LISA: THANK YOU SO MUCH.
STAY CLOSE, I'M SURE WE WILL SPEAK PLENTY THIS WEEK AMID THE
DATA AND FED SPEAK. WE WANT TO DIVE INTO WHAT TO
EXPECT FOR THE REMAINDER OF THE YEAR AND WELDER -- AND WHETHER
THE BALANCE OF RISK AS SHIFTED AS WE SEE A DISINFLATIONARY
TILT TO MORE DATA IN THE UNITED STATES.
STEPHEN MAJOR JOINS US NOW AS WELL AS LYDIA BASUR. IN TERMS OF WHAT DO YOU MAKE OF
THE RALLY IN BONDS OVER THE LAST COUPLE OF WEEKS IN
PARTICULAR AND WHAT THIS SIGNALS ABOUT WHERE THE BALANCE
OF RISK IS AT A TIME WHEN THE FED KIND OF HAD A HAWKISH TILT
LAST WEEK? >> WE'VE SEEN A SOFTENING AND
ECONOMIC DATA. I THINK THE NARRATIVE HAS BEEN
SHIFTING TOWARD THE ECONOMY SLOWING MORE THAN WHAT WAS
ANTICIPATED EARLIER THIS YEAR WHEN INFLATION WAS ON THE
UPRISE. IN TERMS OF THE ECONOMY, WE ARE
SEEING A GRADUAL SLOWDOWN IN ECONOMIC ACTIVITY, THE FED LAST
WEEK WAS SOMEWHAT MORE HAWKISH THAN EXPECTED.
COMING OUT OF THIS MEETING, THERE IS A SENSE THAT THEY HAVE
LOST SOME CONVICTION THAT INFLATION IS MOVING BACK
SUSTAINABLY TOWARD THE 2% TARGET.
WHEN WE LOOK AT THE NEXT COUPLE OF MONTHS AND THE COMING DATA
YOU WERE DISCUSSING, IT WILL BE ABOUT REBUILDING THAT
CONFIDENCE AND SAYING IT'S LESS THAN SUBQUESTION ALL -- LESS
THAN SEQUENTIAL INFLATION. LISA: WHAT DID YOU MAKE OF LESS WE
CONSIDER WHEN YOU SAW A LOCUST TILT TO THE FED AND YOU
RECONFIRMED IN YOUR OUTLOOK A BELIEF IN A RIPROARING RALLY IN
U.S. GOVERNMENT BONDS THAT COULD POTENTIALLY TAKE THE 10 YEAR
YIELD TO 3.5%? >> I'M GLAD WE KEPT THE BULLISH
CONVICTION. THE NEWS FLOW COMING THROUGH ON
THE BACK OF THESE ELECTIONS YOU WERE TALKING ABOUT IN THE
PRELUDE TO THIS INTERVIEW, I THINK IT OVERWHELMS THE IMPACT
OF THE CPI AND PAYROLL RELEASES AND THE FED SPEAK.
I THINK IT WAS YOURSELF FOR WHAT DANI SPOKE ABOUT WAS CHAOS
AND YOU MENTIONED FRANCE AND MEXICO.
THERE IS A LOT OF COMMONALITY HERE.
THESE ARE SPREAD MARKETS THAT HAVE A LOT OF NONRESIDENT
BUYERS BEHIND THEM AND THEY DON'T RESPOND WELL TO
VOLATILITY SHOCKS. IN THIS CASE, YOU HAD ELECTION
RESULTS DUE TO THE FISCAL CHALLENGES AND FOCUS.
BONDS ARE NOT LIKE THAT. IF YOU ARE GOING TO FLAME TO
QUALITY AND GLOBALLY, IT'S KNOCKING ON.
I THINK YOU GOT THIS GOING ON BEFORE THESE CARRY TRADE'S. IT'S A BIT OF A BOLD SHOCK. DANI:
WHAT HAPPENS WHEN THAT MEETS U.S. POLITICAL INSTABILITY? WILL THERE BE CONFUSION ABOUT
THE RESULTS ON THE POLICY, WHERE DOES THAT MONEY GO? >> AT THE START OF THE YEAR,
EVERYONE WAS FOCUSED ON HOW MANY ELECTIONS THERE WILL BE
THIS YEAR. IT'S TAKEN TO THE HALFWAY POINT
THE INDIAN RESULT WAS NOT A BIG SHOCK IN A WAY AND IT'S A GREAT
DOMESTIC MARKET. MEXICO AND FRANCE ARE MORE
INTERNATIONAL. I THINK EVERYONE WATCHING THE
SHOW KNOWS THERE IS A LOT THERE AND THEY KNOW WHAT THE POLICIES
ARE OF THE PRESUMED CANDIDATES. IT'S NOT LIKE THERE'S A BIG
UNKNOWN OUT THERE. IT SEEMS THAT PART OF THE
REASON THE DATA IS COOLING IS BECAUSE THE FISCAL IMPULSE IS
NOT BEGINNING TO FADE. ALL OF IT SHOULD JUST RECOGNIZE
THAT WHOEVER THE PRESIDENT IS NEXT YEAR WILL HAVE THE
TROUBLES OF EIGHT YEARS AGO. WHOEVER'S THERE WILL SOMEHOW BE
RESTRICTED IN WHAT CAN BE DONE IN TERMS OF THE FUTURE.
I DON'T THINK THE U.S. IS IN THAT BAD SHAPE FISCALLY.
I'M TALKING ABOUT RELATIVE TO OTHER COUNTRIES AND CONSIDERING
THE ACID-BASE. THE GROWTH OF GDP HAS REALLY
HELPED. OF COURSE, IF THE ECONOMY IS
COOLING, THEN YOU HAVE MORE CHALLENGES.
I DON'T THINK THE U.S. TREASURY MARKETS TO BE SO
WORRIED ABOUT THE DEBT. DANI: WHAT ABOUT FROM ECONOMISTS
POINT OF VIEW? IT DOESN'T MATTER WHO'S IN AND
YOU KNOW WHAT THAT FISCAL SITUATION IS.
DO WE NEED TO START WORRYING ABOUT THE DEFICIT? >> WE ALL CAN AGREE THAT THE
FISCAL POLICY IS ON THE TABLE. WE ARE LOOKING AT INTEREST
PAYMENTS ON THE DEBT, 3% OF GDP IS DOUBLE THE PRE-PANDEMIC RATE.
I DON'T THINK THIS IS THREATENING THE OUTLOOK IN THE
SHORT RUN BUT IT DOES POSE AN ECONOMIC CHALLENGE IN THE LONG
RUN AND PUSHING INTEREST RATES HIGHER AND INFLATION CAN WEIGH
ON GROWTH AND IT ALSO MEANS THERE IS MORE FOR SPACE IN A
DOWNTURN. ANNMARIE: WHEN YOU SAY THE U.S.
DOESN'T LOOK SO BAD, IS THAT BECAUSE RELATIVE TO WHAT IS
GOING ON IN THE REST OF THE WORLD OR IS IT BECAUSE YOU
ACTUALLY THINK THE U.S. IS OK WHEN IT COMES TO ITS
FISCAL TRAJECTORY? >> IT'S A COMPILE ASIAN ABODE. I DON'T KNOW ABOUT THIS SAYING
BUT IS THE LEAST DIRTY SHIRT. I LOOK THROUGH MY WARDROBE AND
TRYING TO FIND THE CLEANEST AND BRIGHTEST WHITE SHIRT TO WEAR.
IT'S A BIT LIKE THAT. THE U.S.
DEBT STUCK AS A PERCENTAGE OF GDP IN PUBLIC AND PRIVATE
SECTOR SINCE THE 2008 FINANCIAL CRISIS, IT'S GONE UP BUT IT
HASN'T GONE UP AS MUCH AS SOME OTHER COUNTRIES AND IT'S ALSO
BEEN HELPED IN THE U.S. BY THE FACT THAT THE HOUSEHOLD
IS INVOLVED. ON A RELATIVE BASIS, IT LOOKS
NOT SO BAD AND ON HISTORICAL BASIS, IT'S OH K.
ALSO THE FACT THAT IS THE STRENGTH OF THE GDP AND THE TAX
TAKE. LOOKING FORWARD, U.S. HAS INCREDIBLE TAXING ABILITY.
AS WE KNOW, IT'S A QUESTION OF WHO WINS. ANNMARIE:
AND IT'S A QUESTION OF POLICY. THERE IS A NEW REPORT TALKING
ABOUT IT TRUMP'S PROPOSAL TO TIP S FROM TAXATION, IT COULD
BE $200 BILLION ADDED TO THE NATIONAL DEFICIT? ARE YOU EXPECTING THERE WILL BE
A LOT MORE DEBT ADDED TO THE U.S.? >> THAT'S A BIG NUMBER YOU PUT
OUT THERE. THERE WILL ALSO BE MONEY COMING
IN ON THE OTHERS. THERE IS MONEY FROM TARIFFS FOR
EXAMPLE. WE JUST DON'T KNOW WHAT THE
OUTCOME WILL BE AND IT DEPENDS WHETHER WE HAVE A SWEEP OR NOT.
I THINK THE FISCAL OUTLOOK WILL DEPEND ON WHETHER EITHER
CANDIDATE ENDS WITH A SWEEP. IT'S TRICKY. IN TERMS OF PROBABILITIES, AT
THE MOMENT, YOU WOULDN'T GO DOWN A BASELINE OR BASE CASE OF
THERE BEING FISCAL IRRESPONSIBILITY.
I THINK THAT IS A RISK BUT IT'S NOT THE BASELINE. AT THE MOMENT, I LOOK AT U.S.
TREASURIES AND I THINK THEY ARE PRICED APPROPRIATELY GIVEN
WHERE THE POLICY RATE IS. IF THE POLICY RATE STARTS
COMING DOWN, IT WILL CHANGE FAST. BOND YIELDS DON'T GO UP
BECAUSE OF A LOT OF SUPPLY IT SEEMS SOME PEOPLE WANT TO
INJECT ADDITIONAL TERM PREMIUMS BECAUSE OF THE SUPPLY.
I THINK IT'S ALREADY THERE. DANI: DO YOU AGREE? >> LOOKING AT THE ELECTION AND
THE IMPLICATIONS OF THE CONNIE, THERE IS A LOT OF UNCERTAINTY
SURROUNDING THE POSTELECTION LANDSCAPE. WHEN THE ECONOMY CAME BACK, WE WERE FOCUSED ON FISCAL POLICY
AND THE JOBS ACT IN PARTICULAR AND THE EXPIRATION OF THE TAX CUTS WILL BE AN IMPORTANT ISSUE
AND WILL WE FALL OFF A MINI CLIFF?
THERE'S ALSO IT'S HAPPENING ON THE TRADE FRONT WITH THE
POTENTIAL FOR ESCALATION IN TERRACE. WE ARE ALREADY IN AN
ENVIRONMENT WHERE INFLATION IS STILL ELEVATED SO SEEING MORE
INFLATIONARY IMPULSE AND POTENTIALLY SOME HINDRANCE TO
GROWTH WOULDN'T NECESSARILY BE DESIRABLE.
THAT'S ESPECIALLY OF THE FED EMBARKS ON EASING CYCLE. LISA: BOTH OF YOU ARE TALKING ABOUT
YIELDS GOING LOWER IN THE FACE OF DISINFLATION AS WELL AS THE
U.S. BEING A HAVEN FOR A LOT OF DOLLARS.
AT WHAT POINT DO LOWER YIELDS BOOST THE ECONOMY, BOOST THE
ECONOMIC ACTIVITY IN THE UNITED STATES AND HAVE A FOR SELF
REINFORCING CYCLE WHICH INDICATES WEAKNESS THAT WOULD
BE NEGATIVE FOR THE GROWTH PROSPECTS? >> WHEN WE LOOK AT THE ECONOMY
TODAY, WE ARE LOOKING AT A SLOW DOWN UNDERWAY.
WE SEEN SALARIES BALANCING THE LABOR MARKET AND SOME SOFTENING
IN INDICATORS. WE'RE LOOKING AT CONSUMERS
BEING MORE CAUTIOUS WITH SPENDING AND INVESTMENT
SOFTENING AND CONVEYING MORE CONCERNED WITH THEIR SPEND
DURING -- THE SPENDING AND HIRING. IN THIS ECONOMIC ENVIRONMENT
WITH SIGNS OF SOFTENING IN THE LABOR MARKET, WE EXPECT TO SEE
THE RECALIBRATION MONETARY POLICY HAPPENING TOWARD
SEPTEMBER. RATES WILL START TO GRADUALLY
MOVE LOWER AND AWAY FROM THAT RESTRICTED POLICY.
BY SEEING THOSE RATES MOVING LOWER, WE SHOULD ENSURE THAT
THE ECONOMY DOESN'T SLOW DOWN MATERIALLY.
WE EXPECT TO SEE GROWTH FALLING BELOW TRENDS IN THE COMING
QUARTERS BUT NOT EXPECTING TO SEE A RETRENCHMENT IN ECONOMIC
ACTIVITY IN THE FACT THAT THE FED WILL EMBARK ON A TIGHTENING
CYCLE SHOULD ALLOW FOR THAT CYCLE TO CONTINUE INTO 2025.
LISA: SOME PEOPLE WOULD SAY THIS ECONOMY HAS BEEN LESS SENSITIVE
TO RATE HIKES. WHY WOULD THEY BE SO SENSITIVE
TO RATE CUTS? >> THAT'S A FAIR POINT.
YOU HAVE TO BE CAREFUL WITH THIS ONE.
I THINK PEOPLE ARE EXPECTING VERY MODEST RATE CUTS.
THAT'S ALL CONDITIONED BY WHAT THE FED HAS JUST TOLD US TO AND
DOT PLOT. I FIND A BIT OF AN ECHO CHAMBER
AROUND THE MAINSTREAM FORECAST. THEY ARE ALWAYS ONE STANDARD
DEVIATION FROM THE FED AND IT STRIKES ME THAT IT'S PROBABLY
TRUE THAT THE ECONOMY IS NOT THAT SENSITIVE TO RATE CUTS.
WHEN THE RATE CUTS,, I THINK THEY WILL BE MORE THAN WHAT THE
MARKET IS PRICING IN. CUTTING 25 BASIS POINTS WILL DO
ANYTHING SO WHEN THE ECONOMY IS REALLY COOLING AND IF
UNEMPLOYMENT IS GOING UP AT A FASTER RATE THAN THE FED
FORECAST, THAT COULD BE A SCENARIO TO THINK ABOUT.
THEN RATES WILL BE CUT QUITE FAST. IT'S NOT JUST ABOUT THE
U.S. CYCLICAL ECONOMIC DATA. IT'S ABOUT THE STRUCTURAL
FACTORS, THE HUGE STOCK OF DEBT AND ABOUT WHAT'S HAPPENING IN
CHINA AND EUROPE AND ULTIMATELY, U.S.
RATES WILL GET KNOCKED DOWN BUT -- LIKE EVERYTHING ELSE. LISA:
BOTH OF YOU, THANK YOU SO MUCH ON A WEEK WHERE AND WE WILL
TALK A LOT ABOUT THE FED AND RATES.
LET'S GET YOU AN UPDATE ON OTHER STORIES. >> PRESIDENT JOE BIDEN WILL
HOST THE NATO SECRETARY STOLTENBERG IN THE OVAL OFFICE
AFTER G7 LEADERS AGREED TO TAP FROZEN RUSSIAN ASSETS TO HELP
AID UKRAINE. OVER THE WEEKEND, THE UKRAINIAN
PRESIDENT FAILED TO BROADEN GLOBAL SUPPORT AT A SUMMIT IN
SWITZERLAND WITH BRICKS COUNTRIES.
THEY ALL DECLINED TO SIGN A FINAL DOCUMENT OF SUPPORT.
THE NUMBER OF AMERICANS WHO SAY THEY DON'T LIKE EITHER MAJOR
PARTY PRESIDENTIAL CANDIDATE IS AT AN HISTORIC HIGH.
THE AMOUNT OF DOUBLE HATERS AS THEY ARE CALLED MAKEUP ONE
QUARTER OF THE ELECTORATE. THAT'S NEARLY TWICE AS MANY AS
AT THIS POINT BACK IN 2020. DOUBLE HATERS WERE A KEY FACTOR
IN DONALD TRUMP'S UPSET WIN IN 2016 WHEN THEY BROKE FOR THE
REPUBLICAN CANDIDATE OVER DEMOCRAT HILLARY CLINTON.
THE BIGGEST THREAT TO BIDEN AND TRUMP IS THAT VOTERS WILL STAY
HOME OR VOTE FOR AN INDEPENDENT CANDIDATE LIKE ROBERT F.
KENNEDY, JR.. FOR THE FIRST TIME EVER, A DEADPOOL MOVIE
WILL OPEN IN BOTH CHINA AND THE U.S. SIMULTANEOUSLY.
DISNEY ANNOUNCED THAT DEADPOOL AND WOLVERINE WILL BE RELEASED
ON JULY 26 AND MAINLAND CHINA WITH MINIMAL CUTS.
PREVIOUS DEAD BALL -- DEADPOOL FILMS ON NO RELEASE OR MONTH
LONG DELAYS AS THE R-RATED MOVIE FACES SCRUTINY AND
CENSORSHIP FROM CHINA'S FILM BUREAU.
THAT'S YOUR BLOOMBERG BREAK. JONATHAN:
UP NEXT, SETTING YOU UP FOR THE DAY AHEAD, YOU ARE WATCHING
BLOOMBERG. ♪ LISA:
TAKING A LOOK AT WHERE MARKETS ARE AS WE ARE ABOUT 35 MINUTES
AWAY FROM THE OPEN. IT'S NOT DOING ALL THAT MUCH.
COUNTING DOWN TO THE OPENING BELL, HERE IS A TRADING DIARY
FOR THE WEEK AHEAD. FED SPEAK TODAY AND RETAIL
SALES TOMORROW AND A HOST OF FED SPEAK WEDNESDAY WITH U.K.
CPI AND ANOTHER ROUND OF JOB CLAIMS THURSDAY AND FRIDAY,
GLOBAL PMI DATA. IT HAD A SIGNIFICANT IMPACT ON THE MARKET SO PEOPLE WHO SAY
ISM THINK AGAIN. FOR FINAL THOUGHTS, YOU WERE
KEY ON COHABITATION BUT THERE ARE OTHER THINGS YOU ARE
LOOKING AHEAD TO OTHER THAN FRENCH POLITICS.
WHAT ARE YOU FOCUSED ON? ANNMARIE:
WE ARE LOOKING AT POLITICS STATESIDE AS WELL. THE G7 WAS CLOUDED BY DOMESTIC
POLITICS AND BIDEN COMES BACK AND HAS OF ALL ON CAMPAIGN AND
WENT TO A CAMPAIGN IN L.A.. IT'S HOW THEY WANT TO FRAME
THIS ELECTION AND WHO COMES UP BETTER DOING IT.
INTERESTED TO SEE WHAT RETAIL SAYS TOMORROW.
WHERE IS THE CONSUMER NOW? AFTER THE REPORT READY WHEN YOU
SEE THE MIDDLE CLASS SAYING THEY FEEL MORE LIKE THE LOWER
INCOME CLASS STRUCTURE, THAT'S A PROBLEM FOR THIS CAMPAIGN.
LISA: THERE IS ALSO THE ISSUE IF THERE IS WEAKNESS, WHAT CAN
HAPPEN IN RESPONSE TO IT IN TERMS OF FISCAL IN PAUL'S GIVEN
THE FACT THAT THERE IS QUITE A BIT OF DEBT. WE'VE HAD A WHOLE HOST OF
POTENTIAL IMPORTANT ASPECTS THIS WEEK. DANI:
I THINK IT'S HOW THE FED SPEAKERS REACT TO THE DATA WE
GOT. THE REACTIONS SO FAR HAS NOT
BEEN THAT GREAT. THEY DON'T SOUND LIKE PEOPLE
WHO WOULD HAVE CHANGE THEIR. LOT.
WE WILL GET THE DATA AND THE LOUD PERIOD BUT TO THEY CHANGE
THEIR TOWN? STEPHEN MAJOR SAID THERE IS
MORE THAN THIS MARKET THANKS. COMING UP NEXT MORE GUESTS AND
ALL TALKING ABOUT THE KEY QUESTION -- IF THE FED CUTS
WILL THEY CUT A LOT AND HOW FLAT ON THEIR BACK ARE
CONSUMERS?