Nvidia's Rally | Bloomberg Surveillance 05/30/23

>> MY PROBLEM IS EVERYTHING ELSE. THE AVERAGE STOCK YOUR TO DATE IS DOWN. >> THE TECH NAMES ARE DRIVING THE GAINS. >> THE BEAR MARKET IS CONTINUING. >> I THINK THE FED HAS MORE WORK AHEAD OF IT. >> I THINK THIS IS THE CALM BEFORE THE STORM. >> THIS IS BLOOMBERG SURVEILLANCE WITH TOM KEENE, JONATHAN FERRO AND LISA ABRAMOWICZ. JONATHAN: YOU KNOW THE PEOPLE WHO TAKE THE LONG WEEKEND AND HAVE AN EXTRA DAY OFF, BRAMO. SHE IS STRETCHING OUT THE LONG WEEKEND. TOM: SHE'S UP IN THE ADIRONDACKS. IT'S TERRIBLE. IT'S LIKE FOURTH OR FIFTH LAKE. JONATHAN: I'M NOT SURE WHAT THAT WAS. TOM: CANOEING. JONATHAN: OH, I SEE. TOM: SHE IS UP THERE FLYFISHING. SHE HOLDS IT LIKE THIS. JONATHAN: STABILITY. I'M SURE YOU HAVE DONE THAT MANY TIMES. SHE WILL BE BACK FOR PAYROLLS FRIDAY, WE HOPE. IN NEW YORK CITY THIS MORNING, GOOD MORNING, GOOD MORNING. EQUITY FUTURES ARE BETTER THAN GOOD NOW, UP BY 0.6% ON THE S&P 500. YOU GOT TO GET THAT DEBT DEAL THROUGH CONGRESS. LET'S GET TO NVIDIA, UP BY MORE THAN 3% IN THE PREMARKET. THIS CLOSE TO A $1 TRILLION MARKET CAP. TOM: IT'S NOT A PARLOR GAME TO ME. THERE IS LEGITIMACY HERE. THESE ARE BENCHMARKS THAT MATTER. THEY MATTER ON HOW THEY DID IT. APPLE DID IT DIFFERENTLY AND MICROSOFT DID IT DIFFERENTLY BUT I LOOK AT THE NUMBER OF EMPLOYEES. OVER $200,000 -- OVER 200,000 EMPLOYEES BUT NVIDIA IS MUCH LESS. JONATHAN: THE MAGIC NUMBER THIS MORNING IS 404.86 FOR THAT $1 TRILLION LINE IN THE SAND. BIG GAINS IN THE EQUITY MARKET OF THE BACK OF SEVERAL NAMES. NVIDIA IS CLOSE TO $1 TRILLION MARKET CAP AND LOOKING AT THE NASDAQ 100 UP 5% IN TWO DAYS. THAT INDEX IS UP MORE THAN 30% YEAR TO DATE. THIS WAS MEANT TO BE THE YEAR OF SMALL RETURNS. TOM: I THINK THAT'S RIGHT. YOU LOOK AT THE WEI FUNCTION A YOU CAN LOOK AT THE ONE YEAR CURRENT RETURN. LET'S LOOK AT THE STANDARD & POOR'S 500. THIS IS OFF THE BEAR MARKET LOW OF OCTOBER, UP 17%. THE BEARS ARE STILL RATIONALIZING THE MOVE BUT PEOPLE DON'T REALIZE WE ARE UP 25% FROM THE BEGINNING OF THE PANDEMIC, NOT THE PANDEMIC LOW BUT IF YOU MADE THE WRONG DECISIONS AND YOU BOUGHT THE DAY OF THE PANDEMIC BEFORE WENT DOWN, YOU ARE UP A NICE RETURN. IF YOU STUCK WITH IT. JONATHAN: YEAR TO DATE, THE S&P 500 IS NEGATIVE BY A THIRD OF 1%. TOM: UNBELIEVABLE. JONATHAN: THAT OUTPERFORMANCE FROM THE MARKET CAP S&P 500, DEUTSCHE BANK DOING WORK ON THIS INTO THE WEEKEND. WHY THIS OUTPERFORMANCE? TOM: YOU CAN TAKE WHATEVER INDEX AND SAY OK 25% IS MADE UP OF X NUMBER OF NAMES BUT IT'S UP THIS IT'S 45 OR 50% OF THE NAMES. JONATHAN: DO YOU WANT TO TALK POLITICS? TOM: THEY HAVE TO FIGURE OUT THE PATH FORWARD. JONATHAN: THIS IS WHAT PRESIDENT BIDEN SAID. THEY GET EVERYTHING THEY WANTED. KEVIN MCCARTHY SAID SOMETHING SIMILAR. YOU'VE GOT TO GET SOME PUSHBACK ON CAPITOL HILL OVER THE NEXT COUPLE OF DAYS. PERHAPS WE GET A VOTE BY WEDNESDAY. THIS IS WHAT THE SPEAKER PROMISED. TOM: FOR OUR INTERNATIONAL AUDIENCE, WE WILL TALK PROCESS WITH OTHERS. WHAT'S IMPORTANT IS THERE HAS BEEN AMERICAN PROCESS TO LEGISLATION WHICH IS NOT TO GET IN FRONT OF CABLE TV CAMERAS AND SAY THIS IS WHAT WE BELIEVE. THAT IS OVER RIGHT NOW. THAT ENDED OVER THE WEEKEND. NOW WE HAVE ACTUAL STEP-BY-STEP PROCESS TO GET TO A SUCCESSFUL OUTCOME. JONATHAN: WE WILL TALK ABOUT THAT THIS MORNING BUT LET'S GO THROUGH THE PRICE ACTION. EQUITY FUTURES ARE POSITIVE NICELY, YIELDS ON THE 10 YEAR COMING BACK IN. ON THE TWO-YEAR, 11 DAYS OF HIGH YIELDS THROUGH THE CLOSE OF FRIDAY. TWO YEAR YIELDS COMING BACK DOWN BUT AROUND 450 THIS MORNING. TOM: I WOULD LOOK AT THE VANILLA SPREAD ON THE 10 YEAR. THIS IS NOT A SMALL MATTER ANYMORE. WILL WE TEST A GREAT INVERSION WE SAW A NUMBER OF WEEKS AGO? JONATHAN: BRIAN LEVITT JOINS US NOW. SOME PEOPLE HAVE THE CONFIDENCE TO STICK WITH IT. BRIAN LEVITT IS ONE OF THEM. YOU SAY I WOULD VIEW ANY NEAR-TERM CHALLENGES AS A BUYING OPPORTUNITY. WHY ARE YOU STILL SO CONSTRUCTIVE ON THE EQUITY MARKET? >> IF YOU LOOK AT U.S. HISTORY ANYTIME INFLATION HAS PICKED HER COME DOWN WHEN THE FED HAS DONE TIGHTENING, YOU HAVE DONE WELL AS AN INVESTOR OVER THE NEXT COUPLE OF YEARS. WHEN I SAY NEAR-TERM CHALLENGES, WE KNOW WE STILL HAVE TO SEE THE POLICY TIGHTENING IN THE ECONOMY WILL STILL MODERATE OR WE CAN FROM HERE. HISTORY IS ON OUR SIDE. WE CAN LOOK BEYOND A HANDFUL OF WEEKS ARE A HANDFUL OF MONTHS. MARKETS TEND TO DO WELL IN THE AFTERNOON MATH OF TIGHTENING CYCLES. TOM: YOU GUYS ARE ON THE BUY SIDE. YOU ARE SPEAKING TO PEOPLE PITCHING EQUITY AND BOND IDEAS. IF WE HAVE STICKY INFLATION, WHAT DOES THAT DO TO REVENUES OF COMPANIES? THEY DO BETTER, DON'T THEY? >> THEY DO BETTER BUT WHEN WE SAY INFLATION, WE DON'T MEAN THAT INFLATION WILL SIT AT THESE LEVELS. THEY ARE GOING TO COME DOWN BUT LIKELY BE HIGHER. INFLATION WILL LIKELY BE HIGHER THAN IT WAS IN THE LAST CYCLE BUT YOU ARE RIGHT, THAT IS SUPPORTIVE FOR CORPORATE EARNINGS. THE CHALLENGE WE HAVE IS HOW MUCH TIGHTER WILL THE FED GO? WHAT TYPE OF ECONOMIC RESPONSE WILL WE HAVE? WE STILL HAVE -- HAVEN'T SEEN ALL OF THAT. THERE ARE CHALLENGES HERE AND WE WOULD STILL FAVOR MORE QUALITY INVESTMENTS RATHER THAN THINKING ABOUT WHAT THE BEGINNING OF THE NEW CYCLE LOOKS LIKE. AGAIN, INVESTORS, I WOULD CAUTION THEM ON BEING TOO DEFENSIVE HERE. EVEN IF YOU HAVE SOME RETRACEMENT IN THE NEXT FEW WEEKS FOR A FEW MONTHS, ASK YOURSELF IF THINGS WILL BE BETTER OVER THE NEXT COUPLE OF YEARS AND WILL INFLATION BE BACK TO A MORE REASONABLE LEVEL AND WILL THE FED BE ON THE OTHER SIDE OF THIS AND WILL THE ECONOMY RECOVER AND I THINK THE ANSWER TO THOSE QUESTIONS ARE YES WHICH MEANS WE DON'T WANT TO BE TOO DEFENSIVE. TOM: U.S. THOMISTIC QUALITY VERSUS INTERNATIONAL QUALITY, WHICH WAY DO YOU TILT? >> I THINK WE NEED TO INCREASE OUR EXPOSURE TO INTERNATIONAL QUALITY. THE U.S. DOES WELL IN THE MORE CHALLENGING ECONOMIC ENVIRONMENTS THAT COULD BE AHEAD OF US. IF YOU ARE THINKING AHEAD TO THE NEXT STAGE OF THIS, THE END OF TIGHTENING, THAT MEANS THE INTEREST RATE DIFFERENTIAL BETWEEN THE U.S. AND EUROPE WILL NARROW THAT TENDS TO MEAN THE END OF STRONG DOLLAR ENVIRONMENT WHICH WE'VE HAD FOR QUITE SOME TIME. MOST INVESTORS ARE LIGHT ON INTERNATIONAL, BUILDING POSITIONS MAY BE 20% INTERNATIONAL EQUITY EXPOSURE AND THAT MAKES SENSE PARTICULAR EVALUATIONS AND THE CATALYST OF WHAT COULD FINALLY BE A PEAK DOLLAR. JONATHAN: DO YOU ANTICIPATE THE CHANGE IN EQUITY MARKET LEADERSHIP? >> THAT WILL CHANGE WHEN WE GET TO THE OTHER SIDE OF THE ECONOMIC DOWNTURN, AT LEAST IN THE MIDDLE POINT. THAT'S WHEN YOU START TO SEE MORE VALUE AND MORE CYCLICAL MARKETS WITH SMALLER CAP PARTICIPATING. IN THE NEAR TERM, ITS QUALITY, ITS GROWTH AND WE ARE SEEING THAT IN THE MARKET ACTIVITY. THE SHIFT COMES TYPICALLY IN THE MIDPOINT OF THE ECONOMIC DOWNTURN IN THE MARKET GETTING AHEAD OF WHAT WILL BE THE NEW CYCLE. I DON'T THINK WE ARE THERE YET. JONATHAN: WHAT DO YOU SAY TO PEOPLE WHO HAVE BEEN IN THIS MARKET WHO ARE HEARING PEOPLE COMPLAIN ABOUT NARROW BREADTH IN THE EQUITY MARKET AND THE OUTPERFORMANCE OF MEGA CAP NAMES ? WHAT IS YOUR MESSAGE TO THEM THIS MORNING? >> THIS IS PLAYING OUT AS WE THINK MARKET CYCLES TENDS TO PLAY OUT. IN THE BEGINNING OF THE YEAR, THE MARKET THOUGHT WE WERE GETTING A SOFT LANDING. USE OF VALUE WITH SMALL CAPS AND EMERGING MARKETS DOING WELL. THAT WAS OCTOBER THROUGH PROBABLY THE END OF FEBRUARY. WHEN INFLATION REMAINED STICKY IN THE FED KEPT RAISING RATES AND THERE WERE CONCERNS OF A RECESSION, THAT'S WHEN WE SHIFTED BACK TOWARD A MORE DEFENSIVE POSTURE OF QUALITY AND LARGER CAP ACTIVITY. THESE MARKETS ARE PLAYING OUT AS YOU WOULD EXPECT GIVEN WHAT THE TRAJECTORY OF THE ECONOMY IS LIKE AREA YOU WILL SEE BROADER PARTICIPATION IN THESE MARKETS ON THE OTHER CITED OF THIS. WE ARE NOT THERE YET BUT YOU WILL SEE A SHIFT TOWARDS INVESTORS FAVORING THOSE NAMES THAT WILL DO WELL IN CYCLICAL ECONOMIC RECOVERY. JONATHAN: ONE OF THEM DOING WELL IS NVIDIA, WE'VE GOT TO DO WELL. I'M NOT SURE HONEY PEOPLE SAW THIS COMING. IT'S UP MORE THAN 100%. IN THE PREMARKET, UP BY 3.5% A YEAR TO DATE, THE NASDAQ 100 UP 30% YEAR TO DATE, PHENOMENAL RUN. 403 .29. A LINE IN THE SAND FOR A $1 TRILLION MARKET CAP. IT'S JUST SHORT OF $1 TRILLION AT THE MOMENT. TOM: I MENTIONED THIS LAST WEEK -- JONATHAN: WHAT ARE YOU TRYING TO TYPE? I'M NOT A MIND READER. TOM: THEIR EIBITA MODEL IS $.50 ON THE DOLLAR. THESE GUYS ARE PROFITABLE. JONATHAN: SOME GOOD LANGUAGE OVER THE WEEKEND. THEY ARE FEEDING THE FRENZY. THIS IS GOING TO BE A GOOD WEEK. JENNY NORMAN COMING UP ON THE DEBT CEILING. LISA: KEEPING YOU UP-TO-DATE WITH NEWS FROM AROUND THE WORLD WITH THE FIRST WORDS -- WHITE HOUSE AND REPUBLICAN CONGRESSIONAL LEADERS ARE GEARING UP LOBBYING CAMPAIGNS TO WIN APPROVAL OF A DEAL TO AVERT U.S. DEFAULT. PRESIDENT BIDEN AND REPUBLICAN HOUSE SPEAKER KEVIN MCCARTHY EXPRESSED CONFIDENCE THEY WOULD MUSTER THE NECESSARY VOTES. BILL WILL SUSPEND THE DEBT CEILING UNTIL JANUARY 1, 2025 IN EXCHANGE FOR THE SUSPENSION DEMOCRATS AGREE TO CAP FEDERAL SPENDING FOR THE NEXT TWO YEARS. IN SPAIN, THE PRIME MINISTER IS TRYING TO HOLD ONTO POWER AFTER A CRUSHING DEFEAT IN SUNDAY'S REGIONAL ELECTIONS. HE SURPRISED HIS ADVERSARIES MONDAY BY DISSOLVING PARLIAMENT AND TRIGGERING A SNAP GENERAL ELECTION. WITHIN HOURS OF LEARNING THE EXTENSIVE'S LOSSES, SPANISH PEOPLE WILL HAVE LESS THAN TWO MUST PREPARE FOR A CAMPAIGN. WHEN JAMIE DIMON TAKES CENTER STAGE AT THE J.P. MORGAN CHINA SUMMIT WEDNESDAY, HE WILL ADDRESS A LANDSCAPE THE LOOKS DIFFERENT FROM HIS VISIT TWO YEARS AGO. LAST TIME, THE U.S. BANK AND ITS WALL STREET PEERS WERE GEARING UP TO CASH IN ON CHINA'S OPENING OF AT $60 TRILLION FINANCIAL SECTOR. U.S.-CHINA TENSIONS ARE HIGH IN THE CHINESE ECONOMY IS SLUGGISH AND BEIJING IS CRACKING DOWN ON FOREIGN BUSINESSES. ELON MUSK'S PRIVATE JET HAS LEARNED -- LANDED IN BEIJING WITH HIS FIRST VISIT IN THREE YEARS. THE TEST LEAD CHIEF IS EXPECTED TO MEET WITH SENIOR CHINESE OFFICIALS INCLUDING THE PREMIER AS WELL AS A VISIT TO THE CHEST -- THE TESLA FACTORY. THEY ARE NEARING THE FINAL STAGE BEFORE STARTING PRODUCTION AND REVAMPED MODEL THREE. GLOBAL NEWS POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES, >> I THINK THIS AGREEMENT FRAMES ALL OF THAT. IT DOESN'T GET EVERYTHING EVERYBODY WANTED. I THINK IT'S A VERY POSITIVE BILL. PEOPLE CAN LOOK AND PASS THIS IN THE HOUSE AND SENATE TOGETHER. >> WE'VE AVERTED THE WORST POSSIBLE CRISIS, HE DEFAULT FOR THE FIRST TIME IN OUR NATIONS HISTORY. I STRONGLY URGE BOTH CHAMBERS TO PASS THAT AGREEMENT. LET'S KEEP MOVING FORWARD IN MEETING OUR OBLIGATIONS AND BUILDING THE STRONGEST ECONOMY IN THE HISTORY OF THE WORLD. JONATHAN: THE PRESIDENT OF THE UNITED STATES AND SPEAKER MCCARTHY, THE HARD WORK STARTS NOW. GETTING THIS AGREEMENT THROUGH CONGRESS AND SPEAKER MCCARTHY'S CLAIMING 95% OF HIS PARTY IS EXCITED BY THE DEAL. NOT SO MUCH EXCITED BUT LOOKING FORWARD TO NOT TALKING ABOUT THIS ANYMORE. THE EQUITY MARKET IS POSITIVE RIGHT NOW. THE NVIDIA STOCK IS JUST ON FIRE. IN THE BOND MARKET, THERE IS A RALLY FOR TREASURIES AND YIELDS ARE LOWER ON THE 10 YEAR, DOWN BY ABOUT SEVEN BASIS POINTS. WE ARE DOWN ABOUT FIVE BASIS POINTS ON THE TWO-YEAR. FROM CITIBANK, 200,000 NEW JOBS ON PAYROLLS FRIDAY. ZERO POINT 4% MONTH ON MONTH CORE CPI READING ON JUNE 13 WOULD CEMENT THE HIKE ON JUNE 14. THAT'S THE CITIBANK VIEW. TOM: JEROME POWELL NOT DECLARE VICTORY BECAUSE HE'S LOOKING ACROSS THE ATLANTIC AT 9% RETAIL STORE INFLATION IN THE U.K.. THE STICKINESS IS OUT THERE. THEY WILL JUST MOVE FORWARD WITH THEIR STRATEGY, THAT'S ALL THERE IS TO IT. JONATHAN: THE DOLLAR STRENGTH IS OUT THERE AS WELL. IT'S AT $1.06. THAT'S GOING INTO PAYROLLS AND A COUPLE OF DAYS TIME. TOM: THE DOLLAR-YEN HASN'T MOVED BUT IT'S REALLY WEAKER EURO. SOME DIFFERENT TAKES AND WHAT'S GOING ON IN WASHINGTON. WE WILL HAVE MORE ON THE POLITICS IN THE PROCESS BUT RIGHT NOW, I WOULD LOOK WE WOULD LOOK AT THE DEBT PROCESS AWAY FROM PEOPLE STANDING IN FRONT OF TV CAMERAS TALKING OUT OF A BOOK. GINNY NORMAN JOINS US. PROFESSOR NORMAN, EXPLAIN FOR INTERNATIONAL AUDIENCE THIS UNUSUAL CIVICS PROCESS IN AMERICA. THIS DEBATE IS NOT OVER, IS IT? >> IT DEFINITELY IS NOT. IF ANYTHING, IS GETTING TO THE HARD PART NOW. WE HAVE THIS FRAMEWORK VIEW BETWEEN JOE BIDEN AND KEVIN MCCARTHY BUT NOW IT NEEDS TO GET THROUGH TWO HOUSES OF CONGRESS BOTH OF WHICH ARE CLOSELY DIVIDED. WE HAVE MCCARTHY IN THE HOUSE SAYING OVER 95% OF HIS CAUCUSES SUPPORTING THIS. I THINK THAT'S ASPIRATIONAL AT THE MOMENT. IT WILL BE TOUGH TO GET THIS THROUGH THE HOUSE AND THEN THROUGH THE SENATE AS WELL BEFORE IT FINALLY GETS TO JOE BIDEN FOR A SIGNATURE. STILL A LONG WAY TO GO AND STILL A LOT OF POLITICS IN BETWEEN. TOM: I WENT BACK AND LOOKED AT THADDEUS STEVENS IN THE DANIEL DAY LEWIS-SALLY FIELD MOVIE LINCOLN JAWBONING ONE OF HIS FELLOW COLLEAGUES ABOUT CHANGING HIS VOTE ON THE EMANCIPATION PROCLAMATION. ARE THE REPUBLICANS IN THE HOUSE GOING TO BE JAWBONING LIKE DADDY'S STEVENS IN THE MOVIE? >> BIDS POSSIBLE, I THINK WE WILL SEE ALL KINDS OF THEATRICS IN THE NEXT COUPLE OF DAYS. I THINK WE KNOW FOR SURE THAT MANY OF THE FREEDOM CAUCUS WILL NOT SUPPORT THIS BILL. WE SEEM THAT VOCALLY ALREADY. I THINK WE WILL SEE A TEST THIS AFTERNOON WITH THE RULES COMMITTEE DECIDING WHAT KIND OF SHAPE ABOUT HER DISCUSSION WILL TAKE. THEY WILL BE REPUBLICANS THAT WILL BE OPEN TO SUPPORTING THIS. DEMOCRATS ARE PROBABLY SPLIT DOWN THE MIDDLE OF MANY IN THE CAUCUS WILL NOT GO ALONG WITH THIS. THE MORE MODERATE SIDE OF DEMOCRATS MIGHT BE ABLE TO GET THIS OVER THE LINE. TOM: SHOULD WE EXPECT AMENDMENTS IN THE HOUSE AND THEN IT GOES TO THE SENATE, CAN THERE BE AMENDMENTS IN THE SENATE AS WELL? >> WE HAVE HEARD THREATS OF AMENDMENTS FROM BOTH SIDES. IT COULD STYMIE THE PROCESS BUT ALSO BRING IT DOWN SO WE GET TO THE X DATE. THAT'S PART OF IT. I THINK CHUCK SCHUMER WILL TRY TO GET IT THROUGH QUICKLY. MITCH MCCONNELL SO FAR HAS BEEN LEANING HIS WEIGHT INTO IT. WE'VE HEARD OTHER CENTER SAY THEY ARE NOT GOING FOR THIS OTHERS MIGHT USE THIS TO TRY TO GET SOME OF THEIR OWN PIECES AS WELL. JONATHAN: WHAT IS THE SOURCE OF DEEP UNHAPPINESS IN EITHER PARTY? >> THIS BILL IS SUCH A TEST FOR THE CENTER. IT'S A PRETTY STRAIGHTFORWARD BILL BUT WHAT IT DOES IS DOESN'T GO FAR ENOUGH REPUBLICANS WANTED TO SEE DEEPER CUTS FOR A LONGER TIME. IT GOES A LITTLE TOO FAR FOR PROGRESSIVE DEMOCRATS WHO DIDN'T WANT TO SEE ANY KIND OF CHANGE WERE WORK WITH PERMITS FOR FOOD STAMPS AND THESE KIND OF THINGS. THE DIDN'T WANT TO SEE ANY CLAWING BACK FROM BUDGETARY DECISIONS. IN THE BIG SCHEME OF THINGS, IT DOESN'T CHANGE THINGS MASSIVELY IN TERMS OF WHAT WE WOULD EXPECT FOR A SPENDING BILL LATER THIS YEAR ANYWAY. I THINK BIDEN THINKS THIS IS PRETTY MUCH A GOOD DEAL FOR DEMOCRATS AND LONG-TERM AND FOR MCCARTHY, HE COULD GET THROUGH THIS AS WELL BUT FOR A CENTRIST MODERATE IT WORKS BUT FOR EITHER PARTY EXTREMES, IT GOES TOO FAR OR NOT FAR ENOUGH. JONATHAN: WHERE DOES THAT LEAVE THE FUTURE OF SPEAKER MCCARTHY? >> WE HAVEN'T HEARD STRONG THREATS TO MCCARTHY YET FROM THE GOP. I THINK THERE ARE SOME DEMOCRATS WHO WOULD BE SYMPATHETIC TO HIM THROUGH THE PROCESS BUT HASN'T COME UP AS MUCH AS ONE MIGHT THINK. MY GUESS IS BEHIND CLOSED DOORS, THERE IS MURMURING BUT IT DOESN'T SEEM THEY ARE LOOKING TO PUSH THAT BUTTON YET. HE WILL BE UNDER SCRUTINY THIS WEEK ON THESE VOTES. TOM: YOU ARE ACCLAIMED ON THE MEASUREMENT OF POLITICS AND TERRORISM. IF WE FLATLINE THE PENTAGON OR DEEP IT LOW SINGLE DIGITS WITH SPENDING GROWTH, CAN THEY PROJECT WORLDWIDE TO DEFEND US FROM TERRORISM? >> ONE OF THE KEY THINGS IN THE BILL THAT MILITARY SPENDING WILL CONTINUE TO INCREASE SLIGHTLY. BIDEN AGREED WITH THAT AS WELL AS REPUBLICANS AND THAT'S ONE THING THAT WILL KEEP MEMBERS OF THE PARTIES ON BOARD. IF YOU DON'T WANT TO SEE A GAP IN SECURITY PREPAREDNESS FOR TERRORISM OR ANYTHING ELSE THAT'S GOING ON NOW. I THINK THAT'S KEY AND THE OTHER THING IS THE CLOSER WE GET TO THE X DATE, IT CUTS THE ABILITY TO PAY SERVICE MEMBERS TO FUND THE MILITARY MAKES THE U.S. MORE VULNERABLE. JONATHAN: TREASURY CASH BALANCE 39 BILLION DOLLARS, WE ARE GETTING CLOSE. JULIE, THANK YOU. WALL STREET IS MOVING ON. THIS IS WHAT GOLDMAN SACHS HAS TO SAY -- THEY CALL IT A MAJOR REDUCTION IN UNCERTAINTY, MINOR REDUCTION IN SPENDING. THE SAID THE SPENDING DEAL SHOULD GO FROM 0.1% OF TESTED 0.2% OF SPENDING. TOM: WE WILL HAVE MORE COMMENTS ON THIS. IT'S A HEADWIND. MAYBE IT'S A LIGHT BREEZE. I WILL WAIT FOR THE CONGRESSIONAL BUDGET OFFICE. THIS IS THE ANALYST OF OUR FISCAL POLICY. IT IS NOT POLITICAL. JONATHAN: WE WILL TALK LESS ABOUT DEBT CEILING DRAMA AND WE BARELY TALKED ABOUT THE BANKING SITUATION AND THEN WE CAN FOCUS ON THE DATA AGAIN. PAYROLLS ON FRIDAY WERE LOOKING FOR SOMETHING AROUND $200,000. THE ESTIMATE IS 190,000 LOOKING FOR EMPLOYMENT TO TAKE A LITTLE BIT HIGHER. GIVEN WHERE THE FEDERAL RESERVE PROJECTIONS ARE FOR YEAR END, THERE IS A BELIEF FROM SOME INCLUDING FROM CITIBANK THIS FEDERAL RESERVE WILL DO MORE WHEN THEY MEET IN THE MIDDLE OF NEXT MONTH. TOM: THE SIMPLISTIC VIEW IS IF THE FED DOES MORE, THAT'S BAD FOR THE MARKET. JONATHAN: BEFORE WE GET TO POLICY COMEY GOT TO START WITH THE DATA. WE WILL DO THAT DANCE THAT YOU LOVE. TOM: I CAN'T STAND THAT. I'M LOOKING FOR A RECESSION, IS IT OUT THERE? DID YOU SEE IT? JONATHAN: THERE IS ONLY ONE STOCK TO WATCH AND HERE IT IS, NVIDIA ABSOLUTELY FLYING YEAR TO DATE. UP ANOTHER THREE OR 4%. IT'S JUST SHORT OF THE $1 TRILLION LINE IN THE SAND. TYPICALLY, I DON'T CARE ABOUT THIS STUFF, I DON'T PAY MUCH ATTENTION TO IT. NOT ROUND NUMBERS NOT REALLY MY THING BUT THIS IS PHENOMENAL BECAUSE WE'VE ADDED SO MUCH WEIGHT TO THIS NAME WE ARE TALKING ABOUT HUNDREDS OF BILLIONS OF DOLLARS. TOM: THIS IS NOT APPLE AND NOT AMAZON, 26 THOUSAND EMPLOYEES, THIS IS A TINY COMPANY. IT'S APPLES IN OUR INCHES. THEY GO 30 TIMES EARNINGS AND NVIDIA IS 55. JONATHAN: 403.75 AND PEOPLE DESCRIBED IT AS A GOLD RUSH PROVIDING SHAREHOLDERS WITH THE BENEFIT. THE CEO SPOKE OVER THE WEEKEND. IT'S WHAT'S REAL AND WHAT'S FEEDING THE FRENZY. HE SAID THEY ARE AT A TIPPING POINT AND HE SAID THIS WOULD BE A NEW DISH A NEW AGE OF COMPUTING. IT'S JUST PILE ON. TOM: I'M WAITING TO HEAR COMMENTS FROM THE BIGGER COMPANIES THAT HAVE TO BUY THESE EXPENSIVE CHIPS FROM NVIDIA. WHAT I'M HEARING, THEY ARE LOOKING AT MARGINS COMING ON HERE. YOU GET SIGNIFICANT INCREASE IN MARGINS OUT THREE OR FIVE YEARS, OR WE MODELING THAT IN NOW? JONATHAN: WE WILL TAKE YOU FROM THAT NAME TO THE INDEX LEVEL. THE S&P 500 AND NASDAQ FUTURES ARE ALL UP QUITE NICELY THIS MORNING TO KICKOFF THE TRADING WEEK. THERE IS AGAIN, MONSTER OUTPERFORMANCE ON THE NASDAQ 100 WHICH IS UP MORE THAN 1% THIS MORNING. IT'S UP BY MORE THAN 30. WE WILL ADD MORE WEIGHT TO THAT RALLY IN THE BOND MARKET, HELPING THINGS OUT WITH YIELDS LOWER. WE WERE DOWN ABOUT FIVE BASIS POINTS AT THE FRONT END. WE ARE DOWN SEVEN BASIS POINTS ON THE 10 YEAR TO ABOUT 372 SO YOU GET MORE INVERSION. THAT'S WHAT YOU BEEN LOOKING AT OVER THE LAST SEVERAL WEEKS. TOM: A FULL PERCENTAGE POINT DIFFERENCE IN YIELD. WE ARE NOT THERE YET BUT IT'S SOMETHING WORTH WATCHING. WE WILL PAUSE BECAUSE THE FIRST TIME I SAW JONATHAN FERRO WAS ON THE FRONT LAWN IN FRANKFURT FREEZING. HE WAS AT THE ECB BUILDING AND I WILL SET THIS UP. HE LIVES 25 YEARS OF THE ECB. WE HAVE THE OPTIMIST ON EUROPE JOINS US NOW WITH THE IMPORTANT NOTE ON THE 25 YEARS OF THE ECB. WHAT HAS BEEN THE BIGGEST SURPRISE FOR YOU IN THIS NASCENT INSTITUTION GETTING OUT TO 25 YEARS? FROM JOYCE AND BERG TO LAGARDE, WHAT SURPRISED YOU? >> THAT'S A GOOD QUESTION. I THINK IS THE COMBINED PICTURE OF AGILITY. YOU NEVER KNOW WHAT COMES YOUR WAY AND AS WE KNOW, ECB WAS NOT A PERFECT INSTITUTION. THE ECONOMIC PILLARS WANT IN A CENTRAL BANK WERE NOT PERFECT. THEY HAD TO ADJUST WITH POLICIES AND VALUATIONS AND IT DID. TOM: ONE OF THE BIG QUESTIONS IS THE NEW EUROPE. IS IT A MORE VITAL EURO WITH OPTIMISM OR IS THERE STILL A EURO SCLEROSIS OUT THERE? >> THAT WOULDN'T BE MY DESCRIPTION. EUROPE IS DONE VERY WELL AND HAVE HAD HICCUPS HERE AND THERE. THE KEY POINT FROM THE PRESENT SITUATION THAT COMPARED TO AMERICA, EUROPE WAS HIT BY A MASSIVE TRADE LOSS WHILE THE U.S. HAS GAINED A LITTLE BIT IN TERMS OF TRADE AND MUCH MORE POWERFUL STIMULUS THAT HAS BEEN GOING ON. THE SHOCKS THAT COME INTO EUROPE NOW IS VERY DIFFERENT. IF I HAVE A CONCERN NOW, IT IS THAT THE ECB IS REACTING IN POLICY TERMS SO SIMILAR TO THE FED EVENT OF THE SHOCKS ARE DIFFERENT. JONATHAN: WHAT DO YOU THINK THE POLICY RESPONSE LOOKS LIKE? >> IT'S A TOUGH ONE. IT'S EASIER TO TALK ABOUT IT THAN TO DO IT. IT IS A SUPPLY SHOCK IN EUROPE AND THEREFORE YOU SHOULD DO AS LITTLE AS POSSIBLE. IT WAS SO BIG AND SO MANY UNCERTAINTIES TO THE RELATIVE PRICE CHANGES BETWEEN SERVICES AND ALL THE REST OF IT SO THAT THEY HAVE TO. MAYBE THEY WERE RIGHT TO HAVE MOVED FASTER. I THINK THEY SHOULD'VE STOPPED EARLIER. THEY SHOULD ABUSE THEIR GREAT STANDING AND GREAT COMMUNICATION SKILLS TO EXPLAIN THEY WOULD NOT INCREASE EXPECTATIONS. I THINK THE RISK IS THAT YOU'RE ARE PAYING A PRICE DOWN THE LINE FOR THE POLICY. JONATHAN: IS THAT A BIT OF SARCASM IN COMEDIC ASIAN SKILLS? >> I DIDN'T MEAN IT THAT WAY. -- COMMUNICATION SKILLS. THERE ARE SO MANY PEOPLE SPEAKING AT THE ECB THAT'S NATURAL WHEN IS SO MANY PEOPLE INVOLVED IN POLICYMAKING. I MEANT IT POSITIVELY. IF YOU LOOK ACROSS THE STATEMENTS AT THE PRESS CONFERENCE, I WOULD LIKE A MORE INTELLECTUAL CONVERSATION WITH JOURNALISTS AT THE PRESS CONFERENCES. I THINK THIS IS A VERY GOOD COMMUNICATION OF HOW THEIR REACTION FUNCTION IS. I DON'T AGREE WITH THESE DETAILS BUT I UNDERSTAND THAT'S WITH THE COMMUNICATION NEEDS TO BE. JONATHAN: THERE SEEMS TO BE A TAKE AWAY FROM MANY PEOPLE THAT CHINA IS SLOWING DOWN AND NOT PICKING UP RELATIVE TO EXPECTATIONS. FOR THAT REASON, EUROPE WILL FACE HEADWINDS. YOU SO THAT EURO BREECH $1.06 BRIEFLY. IS THE WEAKNESS EMERGING FROM YOUR PERSPECTIVE? >> I AM AMAZED HAS SIMILAR THE FORECAST ARE FROM THE IMF TO THE ECB AND EVERYONE ELSE. WHEN YOU TALK TO THE FORECASTERS AND ASKED THEM HELP THE RISK PROFILE IS, IT'S STUNNING HOW EASY IT IS FOR EVERYONE TO AGREE ON THE DOWNSIDE RISK AND THEY HAVE A HARD TIME THINKING ABOUT THE UPSIDE RISK. THE DOWNSIDE RISK IS CLEAR AND I AM PRETTY SURE I WOULD PUT IN A DECISION LATER THIS YEAR. THERE IS A HUGE MONETARY TIGHTENING. THE BEGINNING OF THE FIRST QUARTER, YOU SAW THE EXTENT OF THIS. SEE IT WITH CHINA AND GERMANY BEAT OUT A RECESSION. IT'S DIFFICULT TO IMAGINE THAT WE DON'T SKIRT BELOW ZERO. TOM: WHAT IS THE RESPONSIVENESS OF THE FINANCIAL SYSTEM OF EUROPE TO HIGHER INTEREST RATES? EUROPE IS A REAL AUTHORITY TO IT. THEY ARE RAISING RATES AND WE ARE GOING UP 25 OR 50. TO DIFFUSE THE MONETARY POLICY THROUGH 17 OR WHATEVER NATIONS, HOW RESPONSIVE IS IT TO HIGHER RATES? IS IT LIKE AMERICA OR IS IT UNIQUE? >> IT'S YEAH -- IT'S NOT UNIQUE. I SEEN CLIENTS FOR THE LAST COUPLE OF WEEKS, GIVEN WHAT WE'VE SEEN IN AMERICA, WHAT IS THE OUTLOOK FOR THE FINANCIAL SYSTEM IN EUROPE? IF YOU HAD TOLD ME AT ANY TIME IN THE LAST FEW YEARS THAT WE WERE GOING TO GET THE BIGGEST REAL INCOME SHOCK TO THE ECONOMY WE HAVE SEEN IN DECADES IN THE BIGGEST TECHNIQUE TECH -- TIGHTENING OF MONETARY CONDITIONS AT THE SAME TIME, WHAT WOULD YOU THINK? IT WOULD BE FOOLISH NOT TO THINK THEY WOULD BE PROBLEMS HERE AND THERE. THAT'S THE FIRST STATEMENT I WOULD MAKE. THE OTHER IS THAT IT IS IMPRESSIVE HOW STRONG THE BIGGER PART OF THE FINANCIAL SYSTEM IS, PARTICULAR THE BANKS BY THE ECB. I CERTAINLY SEE NO REASON TO DOUBT WHAT VIRTUALLY ALL THE BANK ANALYSTS OUT THERE AND THE ECB SAY, THAT THOSE BIG BANKS ARE SOLID AND GOOD. I'M NOT WORRIED ABOUT SYSTEMIC ISSUES BUT I WOULDN'T BE SURPRISED IF SHOW SOMETHING ON THE FRINGES THE NEXT FEW YEARS. JONATHAN: THEY ARE LOOKING FOR ESSENTIALLY A SMALL RECESSION BY THE END OF THE YEAR. THERE IS AN IDEA WE HAVE THIS AGGRESSIVE TIGHTENING FROM THE ECB IN THE LACK OF DAMAGE WE HAVE SEEN RELATIVE TO EXPECTATIONS. YOU STARTED THE CONVERSATION BY REFLECTING ON THE FIRST ECB PRESIDENT. WITH THE EXCEPTION OF ERIC, THEY BEEN CONSTRUCTIVE ON THE EXPERIMENT. PEOPLE ARE SURPRISED THEY ARE STILL GOING. IT'S PRETTY IMPRESSIVE. TOM: MARTIN FELDSTEIN OF HARVARD WAS ARTICULATE ABOUT THE CORE OF EUROPE AND THEIR DOMINANCE IN THE TEST WITH ITALY A DECADE AGO. IT'S NOT AS HOMOGENOUS AS AMERICA. JONATHAN: YOU TALKED ABOUT THE DIFFUSION OF MONETARY POLICY. THE BIG PUBLIC MARKET IN THE UNITED STATES. IT'S ALL ABOUT THE BANKING CHANNELS. WE QUALIFY FOR THE CHAMPIONSHIP OVER THE WEEKEND. NEXT HOUR, WE HAVE A DEBT DEAL DOWN IN WASHINGTON, D.C. AND IF IT PASSES, YOU COULD GET $1 TRILLION OF PEOPLE ISSUANCE BEFORE YEAR END. WE WILL TALK ABOUT THAT COMING UP AROUND THE CORNER. THIS IS BLOOMBERG. ♪ LISA: KEEPING YOU UP-TO-DATE WITH NEWS FROM AROUND THE WORLD WITH THE FIRST WORD, RUSSIA SAID IT SENT -- SAID IT SHOT DOWN EIGHT DRONES AIMED AT MOSCOW. THE KREMLIN HAS INTENSIFIED ITS BOMBING CAMPAIGN AHEAD OF A LONG-AWAITED UKRAINIAN COUNTEROFFENSIVE TO RETAKE OCCUPIED TERRITORY IN THE COUNTRIES SOUTH AND EAST. UKRAINE HAS ACCUMULATED BILLIONS OF DOLLARS OF WEAPONS FROM ITS U.S. AND EUROPEAN ALLIES. TURKISH PRESIDENT ERDOGAN IS PROMISING 18 WITH INTERNATIONAL CREDIBILITY. NEW CABINET IS EXPECTED TO BE NAMED THIS WEEK AFTER TURKEY'S LONGEST-SERVING LEADER EXTENDED HIS ROLE BY ANOTHER FIVE YEARS. BLOOMBERG HAS LEARNED THE MOST SIGNIFICANT POTENTIAL APPOINTMENT WOULD BE A MARKET FRIENDLY FORMER FINANCE MINISTER . DEUTSCHE BANK SAYS ITS HIRING SPREE IN MERGERS AND ACQUISITIONS WILL BOOST ITS RANKS. THEY SAID IT WILL TAKE BACK MARKET SHARE FROM ITS MARKET RIVALS. IT HAS SIGNED ON M&A VETERANS FROM OTHER COMPANIES OVER THE PAST COUPLE OF MONTHS AND PLANS TO HIRE MORE. GLOBAL NEWS POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES, THIS IS BLOOMBERG. ♪ >> THIS IS THE NEW COMPUTER INDUSTRY. SOFTWARE IS NO LONGER PROGRAMMED JUST BY COMPUTER ENGINEERS. SOFTWARE IS PROGRAMMED BY COMPUTER ENGINEERS WORKING WITH AI SUPERCOMPUTERS. PLEASE AI SUPERCOMPUTERS ARE A NEW TYPE OF FACTORY, 15,000 STARTUP COMPANIES IN THE WORLD BUILT ON NVIDIA TODAY, 40,000 LARGE COMPANIES AROUND THE WORLD ARE USING ACCELERATING COMPUTING. WE HAVE NOW REACHED THE TIPPING POINT OF A NEW COMPUTING ERA. JONATHAN: FEEDING THE AI FRENZY, THE CEO AND COFOUNDER OF NVIDIA. THAT STOCK IS JUST LIGHTING UP BIG TIME YEAR TO DATE ON THE S&P 500. THE BIGGEST GAINER ON THE YEAR SO FAR. WE'VE GOT GAINS OF MORE THAN 100% SO LET'S SEE WHAT HAPPENS IN THE SECOND HALF. RALLYING MORE THAN 3%. THE MOVES RIGHT THERE HELPING OUT THE S&P 500 AND THE NASDAQ IN A BIGGER WAY. THE S&P 500 IS POSITIVE BY 0.6%. THE DEBT DEAL IN WASHINGTON, D.C. MEAN -- MEANS YIELDS ARE LOWER THIS MORNING. 190,000 IS THE ESTIMATE FOR JOBS FRIDAY GOING BACK TO SPRING LAST YEAR ON THE DAY OF THE RELEASE OF PAYROLLS. IT'S BEATING EXPECTATIONS EVERY SINGLE TIME. LET'S SEE WHAT HAPPENS FRIDAY. TOM: PAYROLLS IS EARLY NEXT MONTH. -- THIS MONTH. IT'S IMPORTANT. IF WE SUSTAIN OVER 200,000, WHO JONATHAN: MAYBE THAT WILL GET IT DONE AND MAYBE YOU GET THREE OR 4% ON CPI. TOM: IT WILL BE A FOUR DAY WEEK AND WE WILL BE PART OF THAT WITH FUTURES UP 24 RIGHT NOW. WE THOUGHT WE WOULD DIVE INTO THIS A LITTLE DEEPER. WHEN YOU DOEE ELECTRICAL ENGINEERING, IT STARTS OUT WITH A STONE BRIDGE AND YOU AND THEN YOU CROSS TO DIFFERENTIAL EQUATIONS IN HEAVEN FORBID WE GET MAXWELL AND MAGNUS IS RIGHT. -- THIS IS A KID OUT OF TAIWAN OFF THE BOAT, ONEIDA, KENTUCKY, HE IS A TEXTBOOK IMMIGRANT AND HE PARACHUTES INTO CORVALLIS IN OREGON STATE AND MAGIC HAPPENS. WHEN DID THE MAGIC AT NVIDIA HAPPENED? >> THIS HAS BEEN GOING ON I THINK FOR THE LAST 25 YEARS. IN TERMS OF FOCUSING ON AMID SEGMENTS AND EXPANDING THIS COMPUTING -- IT'S SO INNOVATIVE IN TERMS OF DISRUPTING THE EXISTING FRAMEWORK ROUND LEVERAGED CPUS AND A NEW STYLE OF COMPUTING AND THAT IS WHERE EVERYONE HAS BEEN CAUGHT OFF GUARD. CLEARLY, THE INNOVATION IS THERE AND THAT'S WHY EVERYONE IS EXCITED. TOM: TAKE US TO THE HERE AND PRESENT REALITY FOR NVIDIA. CAN THEY SUSTAIN THE GROWTH NOW OF A 55 MULTIPLE STOCK? >> IT'S A LITTLE HARD IN TERMS OF LOOKING AT IT BEYOND 2023 BECAUSE RIGHT NOW, WE HAVE EASIER COMPS AND WE ARE JUST PAST THIS PHASE. THIS HAPPENS TO BE A SHALLOW INVENTORY CORRECTION AND WHAT EVERYONE IS EXPECTING IS FOR THE MARKET TO REALLY DO WELL IN TERMS OF THE DEMAND-SIDE TO HOLD OUT FOR THE NEXT THREE QUARTERS. I DON'T KNOW IF THAT WILL BE THE CASE GIVEN HOW MUCH UNCERTAINTY WE HAVE. ONE THING WE KNOW IS THERE IS THIS SINGULAR SHIFT FROM CPUS TO GPU'S AND WHAT THEY ARE SELLING IS ALMOST 200,000 FOR US A BOX THAT USUALLY COSTS 10,000. LOOK AT THE INCREASE THEY BEEN ABLE TO GENERATE FROM THIS DEVICE THEY HAVE CREATED. THAT IS QUITE POWERFUL. WHEN YOU SEE A COMPANY RAISING EXPECTATIONS LIKE THIS THAT IS POSITIVE FOR THE GROSS MARGIN I THINK THAT'S WHAT YOU ARE SEEING IN THE RESULTS NOW. JONATHAN: THAT'S THE MARKET ACTION THIS MORNING. I WONDER HOW MANY PEOPLE KNOW WHAT THEIR NEW PRODUCT TO DO. CAN YOU TELL US WHAT THIS NEW PRODUCT LINE APPEARS TO BE? >> THE BIGGEST USE CASE IS AROUND TRAINING THESE LARGE LANGUAGE MODELS. THE NEED FOR THIS IS A LOT OF COMPUTATIONAL POWER AND A GPU CAN DO IT IN A SHORT TIME COMPARED TO THE TRADITIONAL CPUS EVEN IF YOU STACK A LOT OF THEM. ONE THING THEY HAVE PROVEN IS NOT ONLY IS IT AN INNOVATIVE WAY, IT'S THE ONLY WAY YOU CAN TRAIN THIS LANGUAGE MODEL. THINK OF OUR COMPUTATIONAL REQUIREMENTS ACROSS INVESTMENT. YOU NEED THIS TYPE OF TECHNOLOGY TO ENHANCE THE PRODUCTIVITY AND THAT'S SOMETHING THAT WILL DRIVE A MASSIVE CYCLE. THAT'S WHAT EVERYONE IS EXCITED BECAUSE THE EXISTING MARKET NEEDS TO REFRESH TO THE NEW WAY OF COMPUTING. THAT'S A LARGE MARKET WHEN YOU THINK OF SEMICONDUCTORS AS A $600 BILLION MARKET. JONATHAN: DO THEY HAVE COMPETITION? >> THAT WOULD BE INTEL TO ONE EXTENT. THEY ARE SO FAR BEHIND ESPECIALLY INTEL IN TERMS OF FOCUSING ON GPU'S AND THAT'S WHERE THEY MISSED THE BOAT FOR AT LEAST FIVE YEARS. THEY DIDN'T THINK THIS MARKET WAS BIG ENOUGH. THEY CAN STILL CATCH UP. THERE WERE SOME RUMORS THAT NVIDIA PARTNERING WITH INTEL. THAT'S A BOUNDARY PLAY. I'M TALKING ABOUT THE 200,000 COMPONENT THAT NVIDIA IS SELLING. TOM: WHAT DOES NVIDIA MEAN FOR PROCTOR AND GAMBLE? FROM MINNESOTA MINING AND MANUFACTURING, FOR FORD MOTOR? >> THESE COMPANIES SPEND BILLIONS OF DOLLARS ON THEIR I.T. OVER TIME IF YOU THINK ABOUT THEIR DATA CENTER FOOTPRINT, THAT WILL COMPLETELY GO AWAY. IT WILL BE ON CLOUD AND LANGUAGE MODELS USE THE BASIC CLOUD CAPACITY BUT YOU WILL RUN YOUR AI IN THE CLOUD. THAT'S WHERE NVIDIA HAS POSITIONED ITSELF REALLY WELL AND HAS PARTNERED WITH THE LIKES OF MICROSOFT. I DON'T THINK ALL THE HYPER SCALARS ARE ON BOARD BUT FOR TRADITIONAL ENTERPRISE, THEY DON'T NEED TO SPEND ON I.T. ANYMORE ESPECIALLY ON THE INFRASTRUCTURE SIDE. JONATHAN: WHEN WE TALKED OVER THE WEEKEND, WHEN YOU USE THE HYPERBOLIC LANGUAGE, THERE ARE SOME PEOPLE WHO DON'T HAVE THE SPECIALIZED KNOWLEDGE TO UNDERSTAND WHERE THIS IS GOING AND IT'S A MARKET OF FAITH FOR MANY PEOPLE. YOU JUST SEE THE MOMENTUM AND THINK YOU WANT TO BE PART OF THIS. CAN YOU DRAW A DISTINCTION BETWEEN WHAT IS REAL AND WHAT MIGHT BE BS? >> I LOOK AT THE PEOPLE WHO WILL DETERMINE THE FATE OF THIS MARKET. THEY ARE QUITE CONCENTRATED. I MENTIONED ABOUT HYPER SCALERWS LIKE APPLE ON THE SMARTPHONE SIDE. THAT WILL HAVE A BIG INFLUENCE IN TERMS OF THE SIZE OF THE OPPORTUNITY FOR SOMEONE LIKE NVIDIA. IF THEY DO EVERYTHING IN-HOUSE, NVIDIA HAS THE TECHNOLOGY AND THE MONOPOLY BUT IT'S GOING OUTSIDE TO MAKE ITS CHIPS. IF APPLE DOES THAT, THEY MAY NOT HAVE THE TECHNOLOGY BUT IT GOT EIGHT OR 10 PLAYERS THAT WILL DETERMINE THE SIZE OF THE OPPORTUNITY AND HOW THIS SHAKES OUT. THAT'S WHERE I THINK YOU HAVE TO WATCH OUT FOR WHAT THEY DO AND SAY AND ONLY TIME WILL TELL WHAT THE HYPER SCALERS WILL DO. I CANNOT IMAGINE THEM PAYING $2 BILLION TO NVIDIA EVERY YEAR. IT'S TOO MUCH CAPEX. JONATHAN: EXCITED FOR YOUR COVERAGE ON THIS STORY. NVIDIA UP BY MORE THAN 3% IN THE PREMARKET. TOM: AT LEAST I TOOK THE CLASS IN ELECTRICAL ENGINEERING. THESE GUYS ARE SMART. I CANNOT PARSE SUCCESS THREE YEARS OUT WITH THE STORY YOU TALKED ABOUT THIS WEEKEND. THAT'S WHY WE NEED TO TALK TO THESE EXPERTS. JONATHAN: COMING UP, SOMEONE REALLY SMART FROM ALPHA SIMPLEX, HER VIEWS ON THE BOND MARKET LEANING THE OTHER WAY WITH TREASURIES AFTER THE MOVE YOU SEEN TO SEE IF THAT PAID OFF. FROM NEW YORK CITY THIS MORNING, GOOD MORNING AND WELCOME BACK. >> MY PROBLEM IS EVERYTHING ELSE. THE AVERAGE STOCK YOUR TODAY IS DOWN. >> THE BEAR MARKET IS CONTINUING. >> THE FED HAS MORE WORK AHEAD OF IT. >> THIS IS KIND OF THE CALM BEFORE THE STORM, SO TO SPEAK. ANNOUNCER: THIS IS "BLOOMBERG SURVEILLANCE." JONATHAN: A SPECIAL THANK YOU FOR SPONSORING THE PROGRAM OVER THE WEEKEND. THAT WAS VERY COOL. TOM: A RESPONSE TO THE FRIDAY SHOW. WE SHOULD DO THAT MORE OFTEN. JONATHAN: LET'S NOT. TOM: IT WAS A THANK YOU. I HAD PEOPLE ON SATURDAY GOING BACK AND FORTH WITH ME ON THE PLACES ON LONG ISLAND FOR YOU CAN GET A DECENT LOBSTER ROLL. JONATHAN: THE WHOLE FAMILY ATE. TOM: WE HAD TO DO A REMORTGAGE ON THE HOUSE. JONATHAN: WELCOME BACK TO YOU ALL. GOOD MORNING, GOOD MORNING. I AM JONATHAN FERRO. DID YOU LAY OUT ON THE TERRACE AND DO ANYTHING? TOM: YANKEES-PADRES. WENT TO THE GAME. GREAT SEATS. I HAVE NEVER SEEN A GUY HIT A BASEBALL BAT LIKE A GOLF CLUB. GARRETT COLE SHOULD FOR THE YANKEES AND HUGH DARWISH AND HAD A LOBSTER ROLL. JONATHAN: YOU HAVE TO GO IN-PERSON. YOU HAVE TO. YOU DO NOT APPRECIATE THE POWER OF SOME OF THESE PLAYERS. THAT IS THE THING I MISSED. WHEN YOU SEE AARON JUDGE IN-PERSON, THIS TOWERING FIGURE, IT IS PRETTY IMPRESSIVE. TOM: I DID THE CHARITY THING YEARS AGO WITH ONE OF THE SECOND STRINGERS FOR THE BOSTON RED SOX. AND HE WAS GINORMOUS. HE WAS HUGE. JONATHAN: WHEN YOU SEE THAT THROW GOING TO THIRD BASE FROM THE FAR CORNER, IT'S AMAZING. LIKE A BULLET. TOM: THEY CAN DO IT LIKE A BULLET. THE SHOULDERS THEY HAVE. THE ABILITY TO DO THAT DEEP IN RIGHT FIELD, TWO OUTS LATE IN THE GAME AND YOU HAVE TO THROW TO THIRD BASE. JONATHAN: SO YANKEES AND THE RED SOX? TOM: WE ARE TALKING ABOUT THE RED SOX. THEY ARE IN A TOUGH DIVISION. WE TALKED TO JULIE NORMAN ABOUT THE ORIOLES. THE SURPRISE OF THE YEAR. THE RED SOX, AFTER A QUIET WINTER -- IT IS MAY. USUALLY THEY HAVE WRAPPED UP AND GONE HOME, IT'S OVER. THEY ARE IN THE GAME, SORT OF. THE PADRES ARE A CHALLENGE. JONATHAN: WE WILL TRY TO DO SOME FORMULA ONE LATER. LET'S GET TO NVIDIA. UP BY ALMOST 4% IN THE PREMARKET. A LIFT ON THE S&P 500 BY .6%. WE TALKED ABOUT THIS NARROW DOMINANCE FOR A HANDFUL OF NAMES IN THE EQUITY MARKET. IT CONTINUES. TOM: NO QUESTION ABOUT THAT. FUTURES UP .23%. THIS IS THE DYNAMIC AND THE POLITICS. 79 BASIS POINTS OF INVERSION. A SUBSTANTIAL CHANGE IN THE INVERSION OF THE CURVE. JONATHAN: LET'S TALK MORE ABOUT THE TREASURY MARKETS. WHAT WE HAVE SEEN IN THE PREVIOUS 11 DAYS IS YIELD TIRE. WE HAVE PRICED OUT A LOT OF CUTS AND PRICING IN HIGHS AGAIN. CITI STILL COMMITTED TO THAT CALL. BANK OF AMERICA, MIKE EXPECTS A HOLD IN JUNE. ULTIMATELY HE CALLS IT A CLOSE CALL. HE SAYS INFLATION IS TOO STICKY FOR THE FED TO STICK WITH -- TOM: AT THE MEETING, COMPLICATED VERSUS THE BLAH, BLAH, BLAH. A PAUSE AND A SKIP. IT IS WHERE WE ARE AND THE ANSWER IS STICKY. LONDON, INFLATION AND FOOD WAS FRIGHTENING. JONATHAN: WE HAVE PAYROLLS ON FRIDAY. CPI DATA ON JUNE 13. IF YOU BELONG ONE THING RIGHT NOW IT WOULD PROBABLY BE NVIDIA. SHORT OVER THE LAST TWO WEEKS, SOME THINK IT WOULD HAVE BEEN THE TREASURY MARKET. KATY KAMINSKI WAS SURE THAT TREASURY MARKET AT ALPHASYMPLEX GROUP. WALK US THROUGH THE THINKING AND WHETHER THAT TRAIT IS STILL VERY MUCH ON. KATY: LET'S THINK ABOUT WHERE WE ARE IN THE CYCLE AND WAS HAPPENING IN TERMS OF LONG-TERM CASH FLOW. PEOPLE MAY BE UNDERESTIMATING THE EFFECT OF HIGHER RATES ON LONG-TERM CASH FLOWS BECAUSE THEY ARE USED TO THINGS GOING BACK TO NORMAL. WHAT WE HAVE SEEN IS THE MOMENTUM IN FIXED INCOME MARKETS IS SHORT IS SHORTS. -- IS SHORT. THE EQUITY MARKETS AS THINGS ARE OK. IF THAT'S THE CASE, THE CURVE IS GOING TO HAVE TO STEEPEN. PARTICULARLY THE LONG END OF THE CURVE. TOM: HOW DO YOU THINK THE EQUITY MARKET ON A TREND-BASED BASIS WITH THE BOND MARKET? HOW YOU TAKE TREND-BASED ANALYSIS OF THE 10-YEAR YIELD AND FOLDED OVER THE TREND-BASED ANALYSIS OF THE NASDAQ? KATY: THAT'S A GOOD QUESTION. WHAT HAS HAPPENED TO US ON THE BACK MEDICAL OR TECHNICAL SIDE AS WE HAVE SEEN SOME VERY STRONG THINGS. STRONG EQUITY MOMENTUM THIS YEAR. WE HAVE SEEN CONTINUED SUPPORT OF THE SHORT TRADE IN FIXED INCOME. MOST PEOPLE HAVE GONE BACK TO BEING BULLISH ON BONDS THIS YEAR. WHAT IS HAPPENING IS EASY SEE CORRELATIONS SHIFT IN MARCH. NEW THINGS ARE EMERGING BUT THE CORRELATION BETWEEN STOCKS AND BONDS, SHOULD WE GO BACK TO IN, RISING RATES OR A PAUSE NARRATIVE IS POSITIVE ON SHORT BONDS AND MORE NEUTRAL ON EQUITIES. YOU HAVE TO THINK ABOUT THE CORRELATIONS AS WELL AS THE SIGNALS. TOM: ALSO WITH TREND FOLLOWING. CAN YOU CALL A BEAR MARKET LOW IN OCTOBER? WE ARE NOW UP X% ON SPX. I GET THE CORRELATION STUDY BUT ACTUAL TREND-BASED ANALYSIS, DID WE ESTABLISH ABLE MARKET IN OCTOBER? KATY: I ALWAYS SAY WE DON'T PICK THE PALMS WE DON'T TAKE THE -- PICK THE TOP SPOT WE LOOK FOR CONFIRMATION. WE HAVE SEEN A MASSIVE TURNAROUND IN OCTOBER. THAT HAPPENED ACROSS MULTIPLE ASSET CLASSES. IT SORT OF PEAKED IN MARCH. WE SAW SOME WEAKNESS RELATED TO THE BANKING SECTOR. WE HAVE SEEN A PRETTY STRONG CONSOLIDATION PERIOD SINCE OCTOBER. I WAITING FOR THAT TO SHIFT AND THE NEW TREND MAY BE LONG EQUITY. TOM: THIS IS A WHEELHOUSE. THE BOTTOM LINE IS THE GREAT LUIS AMATO WOULD SAY YOU HAVE CONSOLIDATION AND DISTRIBUTION AND THEN WHAT? WHAT IS THE "THEN WHAT" FOR YOU IN THE EQUITY MARKET? WHAT IS THE SIGNAL TO BUY MORE NVIDIA? KATY: I'M MORE CONCERNED ABOUT THE EQUITY MARKET BECAUSE IT HAS SUCH A STRONG RUN. FORD TO KEEP GOING POSSIBLY -- FOR IT TO KEEP GOING I'M INTERESTED IN A BREAKOUT IN FIXED INCOME GOING THE OTHER DIRECTION. STOCKS HAVE COME UP SO MUCH. THAT SUGGESTS THE EQUITY MARKET THINKS IT'S OPTIMISTIC AND THANKS STICKY INFLATION -- LONG-TERM CASH IS AT RISK. FOR EQUITIES IT IS LOOKING PRETTY POSITIVE. PEOPLE ARE THINKING WE WILL TOLERATE SOME MODERATE INFLATION. THE PROBLEM IS WHEN PEOPLE REALIZE, WAIT A MINUTE, LOOK AT THESE INFLATION NUMBERS COMING BACK UP INSTEAD OF GOING DOWN. IN THE U.K. IT'S A PERFECT EXAMPLE. JONATHAN: WE ARE TRYING TO FIGURE OUT IF THE HIGH-YIELD YOU PREDICT WILL BE A CHALLENGE OR NOT TO THE NARROW LEADERSHIP IN THE EQUITY MARKET WHICH HAS BEEN DOMINATED FROM BIG CAP GROWTH. IS THAT A CHALLENGE WERE NOT? KATY: DEFINITELY. GROWTH HAS STRUGGLED A LOT. THE MOST IMPACTED SECTOR DURING LAST YEAR. NOW THAT WE HAVE A LITTLE BIT OF A SLOWING INTEREST RATES THEY SEEM TO HAVE REACHED BACK. IF WE DO SEE LONGER-TERM CATH FLOW -- CAST FULL AGO UP, IT HAS TWO BE THE MOST VULNERABLE. JONATHAN: THE NASDAQ IS UP MORE THAN 30%. TAKE THE NASDAQ, WHICH HAD ONE OF ITS PIGGLY WEEKLY GAINS OF THE YEAR SO FAR LAST WEEK ON THE NASDAQ 100 DESPITE THE MOVE WE HAVE SEEN IN THE TREASURY MARKET. WHAT EXPLAINS THAT? KATY: I THINK WE ARE ONLY REVERTING BACK TO RECENT HIGHS AND YIELDS. I'M LOOKING FOR A BREAKOUT. WE HAVE SEEN A LITTLE BIT OF MOVEMENT IN FIXED INCOME AND RELATIVE TO WHERE WE WERE EARLIER THIS YEAR. THAT IS WHY WE HAVE SEEN A RESURGENCE. I'M THINKING ABOUT THE MORE EXTREME SCENARIO AS OPPOSED TO THE SMALL ADJUSTMENT BACK TOWARDS THE HIGH. THE 10-YEAR WENT TO 4% EARLIER THIS YEAR. WE ARE NOT BACK AT THAT LEVEL YET SO I'M WATCHING FOR THAT MORE THAN THE TEXT RESURGENCE AFTER STRONG TIGHTENING OF RATES WHICH WE SAW LAST YEAR. TOM: COMMODITIES. HELP ME HERE. THE COMMODITY TREND IS LOWER. COPPER IS OFF AT CLIFF. I GET THE FUNDAMENTAL CHAT. WHAT DOES TREND FOLLOWING FLUKE LIKE IN LONG TRENDING COMMODITIES? KATY: THAT'S A GOOD QUESTION. COMMODITIES HAVE BEEN DECOUPLED FROM EQUITY MARKETS. PARTICULARLY IN THE BASE METALS AND ENERGY. ONE THING I'VE BEEN WATCHING IS THE ENERGY TRADE. WE HAVE SEEN A MASSIVE DOWNWARD TREND. THERE IS ALL SORTS OF QUESTIONS FROM INVESTORS. WHAT ARE WE GOING TO SEE THE MOVE UP AGAIN? IT DOES NOT LOOK LIKE THAT WILL HAPPEN SOON. IT IS SOMETHING THAT HAS BEEN AT A DOWNWARD TREND FOR A VERY LONG TIME. IF WE SEE SOME SORT OF MOVEMENT, THERE COULD BE SOMETHING THERE BUT YOU ARE CORRECT. COMMODITIES HAVE BEEN TRADING RECESSIONARY. EQUITIES ARE TRADING OPTIMISTIC. TREASURIES ALSO SOMEWHAT OPTIMISTIC IN TERMS OF WHERE YIELDS ARE. JONATHAN: THIS WAS GREAT. JUST TO CLARIFY YOUR THOUGHTS ON A BIT. KATY KAMINSKI OF ALPHASYMPLEX. SHORT TREASURIES. THAT WOULD WORK, WOULDN'T? SHORT TREASURIES RIGHT NOW, TK, FROM KATY KAMINSKI AT ALPHASYMPLEX. TOM: WHERE ALPHASYMPLEX COMES FROM IS TREND FOLLOWING. THIS IS JOHN HENRY OF THE BOSTON RED SOX AND OTHERS AGES AGO TRYING TO FIGURE OUT SET UPS TO GET ON TREND. WHEN YOU GET ON TREND? WHEN YOU GO LONG OR SHORT? WHEN DO YOU GET OUT? IF YOU GO TO CASH, WHAT DO YOU DO NEXT? IT'S A REAL STUDY. LITERALLY A COTTAGE INDUSTRY WITHIN THE INVESTMENT FIELD. IT IS NOT SOMETHING THE CFA PROGRAM I'M A PART OF FOLLOWS CLOSELY. FOR ALL OF US, JOHN HENRY POUNDING OUT SPARK STATION. SUN SPARKS STATIONS. ONE DAY SHOWED UP IN THE BLOOMBERG. OH, ADX DMI ON THE BLOOMBERG. I WAS DOING MY OWN KATY BALLET. JONATHAN: IF YOU'RE IN CASH WITH 5% RETURNS, HOW DO YOU GET BACK OUT OF IT? OR DO YOU JUST STICK WITH IT? TOM: GETTING OUT OF INVESTMENT INTO CASH IS EASY COMPARED TO IMING CASH THAT I AM IN CASH, WHAT DO I NEXT? JONATHAN: YOU SEE GAINS IN THE EQUITY MARKET AND SUDDENLY 5% IS NOT LOOKING AS GOOD AS IT DID AT THE START OF THE YEAR. THE LATEST FROM WASHINGTON, D.C. WITH AMH DOWN AT THE NATION'S CAPITAL UP NEXT. LISA: KEEPING YOU UP-TO-DATE WITH NEWSOM AROUND THE WORLD, I'M LISA MATEO. THE WHITE HOUSE AND REPUBLICAN CONGRESSIONAL LEADERS ARE GEARING UP LOBBYING CAMPAIGNS TO WIN APPROVAL OF A DEAL TO AVERT A U.S. DEFAULT. BOTH PRESIDENT BIDEN AND KEVIN MCCARTHY EXPRESSED CONFIDENCE THEY WOULD MUSTER THE VOTES. IT WILL SUSPEND THE DEBT CEILING UNTIL JANUARY 1, 2025. IN EXCHANGE FOR REPUBLICAN VOTES, DEMOCRATS AGREED TO CAP FEDERAL SPENDING FOR TWO YEARS. ELON MUSK'S PRIVATE JET HAS LANDED IN BEIJING AND HIS FIRST VISIT TO CHINA IN THREE YEARS. SOURCES TELL BLOOMBERG THE TESLA CHIEF IS AFFECTED TO MEET WITH SENIOR CHINESE OFFICIALS, INCLUDING PREMIER LEE CHANG. THE EV MAKER IS NEARING THE FINAL STAGES BEFORE STARTING TRIAL PRODUCTION OF ITS REVAMPED MODEL 3. MORE THAN 30 NATO SOLDIERS HAVE BEEN INJURED ALONG WITH AT LEAST 50 LOCALS IN NORTHERN KOSOVO AS SERB PROTESTERS CAST -- CLASHED WITH POLICE AND PEACEKEEPERS. THEY WANT TO BLOCK MAYORS FROM REACHING THEIR OFFICES. THE WORST FLAREUP OF VIOLENCE IN YEARS THREATENS AN EU BROKERED PLAN TO NORMALIZE TIES BETWEEN KOSOVO AND SERBIA. NVIDIA IS SET TO BECOME THE FIRST CHIPMAKER TO ACHIEVE A $1 TRILLION MARKET CAPITALIZATION. THE REVENUE FORECAST UNDERLINED THE ENORMOUS GROWTH POTENTIAL FROM ARTIFICIAL INTELLIGENCE. NVIDIA IS POISED TO BE ONE OF FIVE U.S. COMPANIES WAS SUCH A CAPITALIZATION, JOINING ALPHABET, AMAZON, APPLE AND MICROSOFT. ONLY NINE COMPANY'S GLOBALLY HAVE EVER ACHIEVED THIS LEVEL. GLOBAL NEWS POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. >> I THINK THIS AGREEMENT FRAMES -- IT DOES NOT GET EVERY THING EVERYBODY WANTED BUT THAT IS IN GOVERNMENT. THAT IS WHERE WE END UP. AT THE END OF THE DATE PEOPLE CAN PASS THIS IN THE HOUSE AND SENATE TOGETHER. >> IT PREVENTS THE WORST POSSIBLE CRISIS, DEFAULT, FOR THE FIRST TIME IN THE NATION'S HISTORY. I URGE BOTH CHAMBERS TO PASS THE AGREEMENT. LET'S KEEP GOING FORWARD ON MEETING OUR OBLIGATIONS AND BUILDING THE STRONGEST ECONOMY IN THE HISTORY OF THE WORLD. JONATHAN: THE BIG PUSH BEGINS NOW TO GET THE BILL DISAGREEMENT PASSED BETWEEN HOUSE SPEAKER MCCARTHY AND THE PRESIDENT OF THE UNITED STATES. I THINK ON WALL STREET, MOVING UP OR TRYING TO AND LEAVING THIS ONE BEHIND. GOLDMAN SACHS REFLECTED A COUPLE OF TIMES THAT WE CAN DO THAT AGAIN. THEY CALLED IT A MAJOR REDUCTION IN UNCERTAINTY. A MINOR REDUCTION IN SPENDING. THAT IS THE TAKEAWAY. THE SPENDING VIEW REDUCES -- DEAL REDUCES .1% OR .2% GDP. TOM: SPEAKER MCCARTHY WAS TALKING AT NIGHT. THERE WAS THE CONGRESSMAN FROM THE CAROLINAS PATRICK MCHENRY WITHOUT HIS BOWTIE ON. I THOUGHT THAT WAS BAD FORM. YOU HAVE TO BE RESPLENDENT. JONATHAN: WHAT IS THE SIGNAL FROM THAT? TOM: THEY ARE EXHAUSTED. LET'S MOVE ON NOW AND GET SOME IMPORTANT PERSPECTIVE HERE. ANNMARIE HORDERN THE BLOOMBERG CIVICS LESSON CORRESPONDENT IN WASHINGTON. BEST PARAGRAPH I SAW ON HOW SILLY THE POWER GAME IS WAS IN THE WASHINGTON POST. I WILL STEAL THIS FROM JIM GARRITY WRITING IT UP YESTERDAY, MAYBE THE DAY BEFORE. IN THE END, NEITHER SIDE HAD THE LEVERAGE IT WANTED OTHERS TO BELIEVE IT DID. REPUBLICANS STILL CONTROL ONLY ONE CHAMBER BY A NARROW MAJORITY. IF THEY WANT DEEPER CUTS THE FEDERAL SPENDING, THEY NEED TO WIN A SENATE MAJORITY AND THE PRESIDENCY. CAN YOU TAKE THIS OUT TO THE ELECTION OF 2024? THAT IS REALLY WHERE THIS IS GOING TO GET DECIDED. ANNMARIE: I THINK SPEAKER MCCARTHY IS TRYING TO MAKE THAT POINT. WE ARE IN A DIVIDED GOVERNMENT. WE ONLY HOLD THE POWER IN THE HOUSE AND IF MEMBERS OF HIS -- LIKE THE CONSERVATOR GROUP ESPECIALLY ON THE HARD RIGHT, TO SOME ARE TO VOTE NO AGAINST THIS AGREEMENT HE STRUCK WITH THE PRESIDENT OVER THE WEEKEND, WHAT THEY WILL SAY IS WE HAVE A DIVIDED GOVERNMENT. THE DEMOCRATS HOLD THE SENATE. THE DEMOCRATS HOLD THE WHITE HOUSE AND WE STILL WERE ABLE TO ENACT SOME SPENDING CUTS. IF WE WANT MORE, WE NEED TO WIN MORE SEATS. THAT GOES FOR THE DEMOCRATIC SIDE AS WELL. THE REASON WHY SPEAKER MCCARTHY AND PRESIDENT BIDEN BOTH KEEP COMING OUT AND SAYING NOT EVERYONE IS GOING TO BE HAPPY, BECAUSE THEY HAVE ISSUES ON THE FRINGES OF BOTH THE PARTIES WHEN IT COMES TO THIS AGREEMENT. TOM: YOU HAVE SEEN "LINCOLN." DANIEL DAY-LEWIS. TOMMY LEE JONES IS DOING HIS THAT HE IS STEPHEN'S IMITATION. IN THE 19TH CENTURY IT WAS ABOUT AMENDMENTS. ARE WE GOING TO SEE AN AMENDMENTS FRENZY IN THE NEXT 72 HOURS? ANNMARIE: POTENTIALLY. IT WILL BE STRIKING THE DEAL AND PASSING IT ARE VERY DIFFERENT PROCESSES. STRIKING THE DEAL WAS VERY SMALL GROUP OF PEOPLE. IN THE END IT CAME DOWN TO A 90 MINUTE PHONE CALL WHEN IT WAS FINALLY DONE BETWEEN THE PRESIDENT AND SPEAKER MCCARTHY. GETTING IT THROUGH THE HOUSE AND THE SENATE IS GOING TO BE CHALLENGING IN SOME PARTS OF THE PROCESS. TODAY ALREADY ONE POTENTIAL CHALLENGE IS THE RULES COMMITTEE. YOU HAVE SOME REPUBLICANS THAT ARE VERY CONSERVATIVE THAT MAY VOTE NO TO EVEN GET THE BILL ON THE FLOOR. THAT COULD BE THE FIRST TAKE UP. BY AND LARGE, MANY SEE THIS PASSING TO THE HOUSE AND THEN POTENTIALLY THE SENATE IS WHERE YOU CAN HAV AN IMMENSE THROWN AT IT AND MAKE THE PROCESS SO MUCH LONGER. THE RISK IS THIS COMES UP AGAINST THE JEW FIV -- JUNE 5 DEADLINE. THIS IS A HARD STOP DEADLINE. THAT IS WHERE THE CONCERN IS. YOU HEARD SENATOR LINDSEY GRAHAM SPEAKING TO SHANNON BREMEN ON FOX NEWS. HE WAS VERY UPSET ABOUT THE DEFENSE SPENDING. DEFENSE SPENDING LOOKS LIKE IT WILL INCREASE ABOUT 3%. WHAT HE SAYS IS THAT IS NOTHING WHEN YOU LOOK AT WHERE WE ARE WITH INFLATION NUMBERS. HE DOES NOT THINK IT IS ENOUGH FOR THE U.S. MILITARY. YOU WILL HAVE INDIVIDUALS WANT TO COME OUT IN THE SENATE. YOU CAN HAVE THEM FILIBUSTER. THIS IS WHERE POTENTIALLY YOU CAN SEE A VERY LONG, DRAWNOUT, CUMBERSOME PROCESS. EVERYONE I'M SPEAKING TO, THE ANALYSTS WE ARE READING, IT LOOKS LIKE THIS IS GOING TO PASS. JONATHAN: YOU MENTIONED ONE NAME. WHAT ARE THE OTHER NAMES YOU LOOKING FOR THIS WEEK? ANNMARIE: WE HAVE TO START WITH A HOUSE. LOOKING AT THE LIKES OF CHIP ROY, A TEXAS REPUBLICAN. TODAY AT 3:00 YOU WILL HAVE THE RULES COMMITTEE. DO THEY GIVE THE GO-AHEAD FOR THIS TO GET ON THE FLOOR? SPEAKER MCCARTHY IS HALTING IN-PERSON MEETING WITH THE ENTIRE CONFERENCE. THAT IS WHERE HE'S GOING TO REALLY HEAR THOSE THAT ARE BEGRUDGINGLY VOTE FOR THIS AND CONVINCE OTHERS TO GET THIS OVER THE FINISH LINE. ON THE PROGRESSIVE SIDE IT IS THE PROGRESSIVE CAUCUS LIKE CAMILLA JIVE HELP -- JIAPEL. WHERE DOES SHE TAKE HER PROGRESSIVE PARTY? WE KNOW THE PRESIDENT AND HIS MAIN SURROGATES ARE CALLING THESE INDIVIDUALS. I THINK BY YESTERDAY MORNING AT LEAST 60 HOUSE LAWMAKERS. THE WHITE HOUSE HAD ALREADY CALLED HIM. BOTH SIDES ARE REALLY TRYING TO BACK CHANNEL INTO THE HOUSE. ON THE SENATE SIDE, I WOULD SAY LINDSEY GRAHAM IS ONE TO LOOK OUT FOR. MIKE LEE SAID EARLY ON HE WOULD MAKE THE PROCESS VERY DIFFICULT IF THERE WAS NOT STEEP SPENDING CUTS. THESE ARE THE INDIVIDUALS TO KEEP AND I OUT FOR. -- AN EYE OUT FOR. JONATHAN: THE RACE TO BE THE PRESIDENT. BIPARTISAN DEALS ARE PROBABLY GOOD FOR THE SITTING PRESIDENT GOING INTO THAT CAMPAIGN. THEY ARE BAD FOR THE SPEAKER'S FUTURE IN THE HOUSE. WHAT DID THE REPUBLICAN CANDIDATES FOR THE PRESIDENCY THINK ABOUT THIS DEAL ANNOUNCED OVER THE WEEKEND? ANNMARIE: IT WAS VERY CLEAR THAT GOVERNOR RON DESANTIS THINKS WE ARE NEARING BANKRUPTCY AND THE DEAL DOES NOT HELP THAT. HE WAS ON FOX AND FRIENDS IN THE MORNING KIND OF BASHING THIS AGREEMENT. WE HAVE YET TO HEAR FROM THE FORMER PRESIDENT TRUMP, WHO MADE THAT STATEMENT WHO SAID THAT THE REPUBLICANS SHOULD GET DEEP SPENDING CUTS OR DEFAULT. HE'S BEEN SPEAKING WITH SPEAKER MCCARTHY. THERE WAS A NEW YORK TIMES ARTICLE THAT SAID THE PRESIDENT SAW THE NEW YORK TIMES OR PORTABLE HE WAS GOLFING AND WAS BRANDISHING HE HAS SPEAKER MCCARTHY ON HIS PHONE AND HAD A CHAT WITH HIM. WE HAVE. NOT HEARD FROM HIM YET POTENTIALLY -- THERE'S A LOT OF TALK OF WHETHER OR NOT BECAUSE THIS IS NOT THE DEEP SPENDING CUTS MANY ON THE FAR RIGHT FLANK WANTED, DOES THIS MEAN HE COULD BE OUSTED? HE WAS ABLE TO GET THE PRESIDENT TO THE NEGOTIATING TABLE. THE WHITE HOUSE THOUGHT THEY COULD JUST HAVE A CLEAN DEBT CEILING INCREASE. WHAT MCCARTHY WAS ABLE TO DO WAS KEEP HIS PARTY TOGETHER. THE WALL STREET JOURNAL TALKS ABOUT THIS. THE UNITY HE WAS ABLE TO HAVE WAS THE LEVERAGE HE WAS ABLE TO USE TO BRING BIDEN TO THE TABLE. EVEN THOUGH MANY DON'T LIKE THE BILL, THEY SEE HE WAS A SUCCESSFUL SPEAKER IN THIS ARENA. TOM: AMH WITH THE UPDATE AND THE PUSH FORWARD. ANNMARIE, THANK YOU. WALL STREET JUST WANTS TO MOVE ON WITH THIS. LET'S GET IT DONE AND JUST MOVE ON. TOM: WITH RESPECT TO THIS WE ARE SO IN THE MODERN AGE DRIVEN BY CABLE-TV. THIS SHOW, THAT SHOW. ANNMARIE IS LIVING AT EVERY MOMENT IN WASHINGTON. KEVIN HER BID, THERE -- HEAVEN FOR BID, THERE IS A PROCESS FOR INTERNATIONAL AUDIENCES. THERE'S A BALLET HERE THAT IS IN PLACE. WE HAVE TO GO THROUGH IT. DOWN THE ROAD IS THE SENATE AFTER THE HOUSE AND THE POTENTIAL OF A FILIBUSTER, WHICH IS ITS OWN CONVERSATION. JONATHAN: AND THEY HAVE TO GET MOVING. WE TALKED ABOUT THE TREASURY CASH BALANCE. THAT NUMBER HAS COME IN FROM NORTH OF $140 BILLION A FEW WEEKS BACK. TOM: THE EQUITY MARKET BANNER WILL LOOK GREAT. JUNE IS BUSTING OUT ALL OVER. WITH THE JOBS REPORT AS WELL. IT WAS A COLD SPRING AND IT'S BEEN BEAUTIFUL IN THE YORK THE LAST COUPLE OF DAYS. JONATHAN: EVERYONE JUST WALKING AROUND SNEEZING. WIPING THEIR NOSES. THE DOGS, TOO. THEY HAVE HAYFEVER. ED AL-HUSSAINY OF COLUMBIATHREADNEEDLE. THE DOGS ARE SNEEZING. JONATHAN: EQUITIES ON THE S&P 500 POSITED BY .5%. ONE NAME IN MIND, NVIDIA. UP BY CLOSE TO 4% AND REALLY CLOSE TO THIS $1 TRILLION LINE IN THE SAND. LOOK HOW CLOSE WE ARE GETTING. $404.86 IS THE MAGIC NUMBER. WE ARE BASICALLY THERE. A $1 TRILLION MARKET CAP FOR THIS NAME. TOM: INSTITUTIONAL APPROACH. CAN YOU HOLD IT OR BUY IT WITH A THREE OR FIVE CHECKING YOUR HOLD? -- FIVE-YOUR HOLD? -- FIVE-YEAR HOLD? THE CEO WAS ARTICULATE ABOUT THE DREAM. JONATHAN: I WAS ASKED THE SAME QUESTION A FEW WEEKS AGO WHEN IT WAS UP 19%. NOW IT IS UP MORE THAN 100%. LET'S KEEP GOING. THIS IS WHAT FUTURES LOOK LIKE. A LIFT. NASDAQ UP BY MORE THAN 1%. YEAR-TO-DATE OF MORE THAN 30%. LOOKING AT SOME MORE WEIGHT TO THE RALLY. IN THE BOND MARKET THE MOVE HIGHER. GOT TO KEEP COMING BACK TO THIS. THE SHIFT WE HAVE SEEN IN YIELDS HAS NOT HURT THE EQUITIES MARKET. TWO-YEAR RETRACING OVER THE PREVIOUS 11 DAYS. DOWN BY ABOUT FOUR OR FIVE BASIS POINTS. 10'S DOWN TO ABOUT 372. THE CUTS TO SPENDING NOT THAT BIG. TO HIT THE GROWTH NOT THAT MUCH. TOM: WE ARE CLEARING OUT THE RUMORS AND SPECULATIONS. JONATHAN: WE ARE TALKING ABOUT BASIS POINT TYPE STUFF FOR CUTS TO SPENDING. WE BROKE 107 EARLIER TODAY ON THE EURO. THE STORY OF THE MOMENT OVER THE LAST SEVERAL WEEKS, HIGH YIELDS, DOLLAR STRENGTH KICKING BACK IN. THE U.S. EQUITY MARKET AN EXCEPTIONAL PERFORMANCE FROM A COUPLE NAMED. TOM: ARGENTINA IN THE NEWS. 20.39. FOR THE WEST THAT WOULD BE A GOOD THING. EX-MERRILL LYNCH. CLEARLY HE IS SOMEONE THE WESTERN BANKS WOULD BE HAPPY WITH. JONATHAN: ARE WE HAPPY WITH ONE MAN IN CHARGE OF THE CENTRAL BANK POLICY? THAT WOULD BE FUN. TOM: RIGHT NOW WE WILL TAKE THE SHOW TO SMART, SMART, SMART. ED AL-HUSSAINY JOINS US FROM COLUMBIA THREADNEEDLE. COLGATE CRICKET FROM A LONG TIME AGO. WHAT IS THE BIGGEST STEREOTYPE OF BOND MARKET EQUITY LINKAGE THAT IS WRONG? CORRELATIONS, LINKAGES, THAT IS FLAT OUT WRONG? ED: IF YOU LOOK AT THE LAST 18 MONTHS, THE BIG SHIFT HAS BEEN EQUITIES AND BONDS BECOMING POSITIVELY CORRELATED. PORTFOLIO CONSTRUCTION IS DIFFICULT. IT IS DIFFICULT TO HEDGE DRAWDOWN RISK WITH TREASURIES AND HIGH QUALITY BONDS. THAT RELATIONSHIP IS STARTING TO BREAK DOWN AND WE ARE RETURNING TO A PRE-COVID ENVIRONMENT WHERE BONDS WERE IN FACT EXCELLENT HEDGES AGAINST RISK. THAT IS THE CHANGE WE ARE GOING THROUGH AT THE MOMENT. TOM: WE JUST SPOKE WITH KATI E SIMPLEX, NO ONE IS LOOKING FOR HIGHER YIELDS. ED: THERE IS ROOM FOR INFLATION SURPRISE TO THE UPSIDE. THAT WOULD BE THE CATALYST FOR SOMETHING LIKE THAT. IN MY MIND PRICING IS PRETTY DECENT. WE HAVE REPRICED TERMINAL RATES FOR THE FEDERAL LITTLE BIT. WE HAVE GIVEN THEM MORE ROOM TO STAY ON HOLD FOR THE SECOND HALF OF THE YEAR. I THINK THAT IS THE RIGHT PLACE FOR US TO BE. IF YOU LOOK AT REAL RATES, THINGS LIKE FIVE-YEAR REAL YIELDS CLOSE TO 180, THAT IS PER RESTRICTIVE POLICY. THAT BUYS THE FED ROOM TO TRANSITION TO A PAUSE. JONATHAN: LET'S TALK ABOUT THE AGREEMENT OVER THE WEEKEND. DOES THAT CHANGE THE CHARACTER OF GROWTH? ED: I THINK IT IS QUITE LIMITED. PARTICULARLY WHEN WE LOOK AT THIS SET UP VERSUS 2011 WHEN THE ECONOMY WAS DEPRESSED AND THE FISCAL SHOCK WAS MORE NEGATIVE AND HAD MUCH HIGHER MULTIPLIERS INTO THE GROWTH STORY. THAT WAS CLOSE TO .7% OR .8% OF GDP FOR SEVERAL YEARS. WE ARE LOOKING AT .1% OF GDP NOW. IT IS A ROUNDING ERROR IN THIS ENVIRONMENT. JONATHAN: IT WILL LEAD TO MORE T-BILL SUPPLY IF WE PASS THIS. I'M SURE YOU HAVE SEEN SOME OF THE TAKEAWAYS. IT WILL CAUSE CHAOS TO THE MARKETS. LET'S GO THROUGH THINGS. HOW DOES THIS WORK FROM TREASURY ISSUING T-BILLS TO IT LEADING TO THE SYSTEM? ED: THEY WILL BE A FAIR AMOUNT OF DEMAND FROM MONEY MARKET FUNDS. MONEY MARKET FUNDS HAVE BEEN ON THE SIDELINES. THERE MIGHT BE SOME DRAWDOWN IN REPO AND RESERVES ON THE BALANCE SHEET. THAT IS THE PROCESS WE HAVE BEEN IN SINCE QUANTITATIVE TIGHTENING STARTED. THAT MIGHT ACCELERATE THE PROCESS SLIGHTLY. THIS IS REALLY A MATTER FOR THE FRONT END CASH MANAGEMENT PART OF THE TREASURY MARKET. WHEN YOU LOOK FURTHER OUT, THE MAJORITY INVESTORS ARE TRADING IN CREDIT OR TREASURIES. THIS SHOULD NOT BE A SIGNIFICANT EVENT. JONATHAN: IT COMES AT A TENT TIME OR THE HANGOVER FROM A TENT TIME AND THE BANKING SYSTEM. DOES IT EXACERBATE ANY OF THE TENSION AT ALL? ED: IT COULD. BY AND LARGE, BANK DEPOSITS HAVE BEEN LEADING OUT OF THE SYSTEM FOR SOME TIME. THAT PROCESS WILL ACCELERATE. THEY HAVE BEEN IN COMPETITION WITH MONEY MARKET FUNDS. YOU WILL HEAR PEOPLE TALK ABOUT THINGS LIKE THE DEPOSIT BETA, IN ESSENCE BANKS UNDER PRESSURE TO RAISE THE INTEREST RATE ON DEPOSITS FASTER THAN THEY HAVE BEEN PRE-SVB SHOCK. DOES THIS CHANGE THE EQUATION? NOW. NOT -- NO, NOT REALLY. TOM: DAMIEN IS NOT GOING TO BE WITH US. WE ARE THRILLED YOU ARE HERE TO TALK ABOUT THE OPPORTUNITIES IN EM YOU ARE HERE TO TALK ABOUT THE OPPORTUNITIES IN. ED AL-HUSSAINY SPENT FEBRUARY AND THE BAHAMAS WITH MOODY'S. TOUGH GIG. IN FEBRUARY YOU DID LATIN AMERICA, CHILE. NO ONE IS TALKING ABOUT THE ARGENTINIAN MASS AND THE IMF WORKOUT, THE SWAP AGREEMENT WITH CHINA. YOU ARE THE ADULT IN THE ROOM. IS THERE AN OPPORTUNITY IN TURKEY, ARGENTINA, AND THE OTHER IDIOSYNCRATIC STORIES OF THE MOMENT? ED: THERE IS A LONG TAIL OF IDIOSYNCRATIC STORIES IN YEMEN. IT'S PRICE FOR A RESTRUCTURING. HARD CURRENCY EM DEBT, WE HAVE BONDS IN PAKISTAN, SRI LANKA, GHANA AND SO ON, EGYPT, THAT ARE PRICED 20 CENTS TO $.40 ON THE DOLLAR. THE OUTCOMES LOOK QUITE ATTRACTIVE. ARGENTINA AND TURKEY, BOY, THE POLICY MIX IN THOSE ECONOMIES IS SO DIFFICULT TO SOLVE. THEY HAVE BEEN STRUGGLING WITH IT FOR DECADES AT THIS POINT. IT IS DIFFICULT TO BE SUPER OPTIMISTIC. IT IS DIFFICULT TO SEE AN EXIT, A WAY OUT OF THE WAY YOU HAVE WITH OTHER EM'S. TOM: WHAT DOES THE DOLLAR DO HERE? FULL DIDN'T OF BOND ANALYSIS HERE? IF YOU HAVE A WEAK DOLLAR IN EQUITIES, DOES THAT HELP? ED: THE WEAK DOLLAR WOULD START TO COINCIDE WITH THE FED STARTING TO BE PRICED FOR AN EASING CYCLE FOR THE ECONOMY. PARTICULARLY WITH LABOR MARKET WEAKNESS STARTING TO LEAD THE STORY. IS THAT ON THE HORIZON AT THE MOMENT? NOT REALLY, IF I THINK ABOUT THE NEXT THREE TO SIX MONTHS. THE DOLLAR IS LARGELY ARRANGEMENT-BOUND. -- RANGE-BOUND. TOM: CAN WE GET FIXED INCOME BACK? NVIDIA AT THE MOMENT, THE $404. 70, BRIEFLY THROUGH THE LINE IN THE SAND. FOR MOST OF THIS YEAR WE HAVE TALKED ABOUT CASH NO LONGER BEING TRASH. YIELDS AT 5%. ARE WE GETTING TO A MOMENT WITH THE GAINS ARE SO LARGE IN THE EQUITY MARKET IN SOME PLACES SOME PEOPLE ARE COMING TO YOU AND SAYING, ABOUT THAT, I WOULD LIKE TO GO SOMEWHERE ELSE? ED: I THINK GREED IS A POWERFUL OPERATOR WHEN IT COMES TO RISK. IT DOESN'T MATTER IF IT IS EQUITY OR CREDIT RISK. AND IT IS IN PLAY. THE ONE THING I POINT TO IS TO A LARGE EXTENT REAL RATES AND INTEREST RATE VOLATILITY WAS A NEGATIVE DRAG FACTOR FOR BOTH EQUITIES AND CREDIT RISKS LAST YEAR. THAT IS STARTING TO GO TO THE BACKGROUND. WE ARE SEEING THE CONVERSATION ABOUT CORRELATIONS. THE INCREASE IN REAL RATES HAS NOT DAMAGED THINGS LIKE EQUITIES, PARTICULARLY TECH STOCKS THAT MUCH. THAT SIGNALS A REGIME SHIFT. IT IS CONSISTENT WITH THE FED NEARING THE END. TOM: YOU HAVE THE SCISSORS CLIPPING COUPONS OR ACTUALLY MANAGE FOR A RETURN? ED: YOU CAN MANAGE FOR A RETURN. BOND PRICES PLUS THE YIELD, VERY ATTRACTIVE. TOM: HOW MUCH TOTAL RETURN FOR THE COUPON? ED: IF WE ARE TALKING ABOUT -- TOM: STAY WITH ME HERE. ED: WE ARE FINDING VERY ATTRACTIVE VALUE IN SHORT DURATION INVESTMENT GRADE DEBT. EVEN IN HIGHER-QUALITY, HIGH-YIELD DEBT IN THE EM, THE EXCESSES WELL IN RETURN OF COUPON. TOM: THE INTERNAL MEDICINE FOR PRIMARY CARE CONVICTION IN THE BAHAMAS. JONATHAN: WAS THAT WERE ED WAS? TOM: GO DOWN AND ANALYZE THE BAHAMAS IN FEBRUARY. WHAT CAN YOU SAY? JONATHAN: THANK YOU, SIR. GOOD TO SEE YOU. ED AL-HUSSAINY OF COLUMBIA THREADNEEDLE ON THE COMPETITION BETWEEN BONDS AND EQUITIES. THERE IS ONE WINNER AT THE MOMENT, NVIDIA. UP BY 320% IN THE PREMARKET. -- 3.8% IN THE PREMARKET. TOM: AND DRAGGING THE NASDAQ WITH IT. I WANT TO MAKE THIS CLEAR. WHY IS THAT SO VALUABLE? WE DO ECONOMICS AND INVESTMENT AND HE BLENDS THEM IN. INTO WHAT'S ACTUALLY GOING ON WITH MONEY. THERE ARE NOT THAT MANY THEY CAN DO THAT. MICHAEL DARDEN IS ANOTHER EXAMPLE. JONATHAN: PORTFOLIO MANAGER AT MORGAN STANLEY DID INTERVIEW WITH BLOOMBERG IN THE WEEKEND. WHAT HAPPENS IF YOU GET TO SEPTEMBER, OCTOBER, THE FALL AND YOU HAVE THESE GAINS ON THE SCREEN AND YOU DIDN'T ANTICIPATE IT? TOM: WE CALL THAT WINDOWDRESSING. JONATHAN: IT IS STILL ONLY MAY. LET'S SEE HOW THIS GOES. COMING UP, LOOKING FORWARD TO WITH GREG VALLIERE. TOM: EVER BEEN TO THE BAHAMAS? JONATHAN: I'VE NEVER BEEN. IF HE COMES BACK TOMORROW, MIGHT TURN UP FOR PAYROLLS. WE WILL SEE. FROM NEW YORK, THIS IS BLOOMBERG. LISA: KEEPING YOU UP-TO-DATE WITH NEWS AROUND THE WORLD, I'M LISA MATEO. RUSSIA DOWNED EIGHT DRONES AIMED AT MOSCOW EARLY TODAY, THE BIGGEST ATTACK ON THE CAPITAL SINCE THE START OF THE WAR WITH UKRAINE. THE KREMLIN INTENSIFIED HIS BOMBING CAMPAIGN AHEAD OF A LONG-AWAITED UKRAINIAN COUNTEROFFENSIVE TO RETAKE OCCUPIED TERRITORY IN THE COUNTRY'S SOUTH AND EAST. UKRAINE HAS ACCUMULATED BILLIONS OF DOLLARS OF WEAPONS FROM HIS U.S. AND EUROPEAN ALLIES FOR THE MILITARY ASSAULT. IN SPAIN, THE PRIME MINISTER IS TRYING TO HOLD ONTO POWER AFTER A CRUSHING DEFEAT IN SUNDAY'S REGIONAL ELECTIONS. SANCHEZ SUPERVISE HIS -- HE TRIGGERED A SNAP GENERAL ELECTION WITHIN HOURS OF LEARNING THE FULL EXTENT OF HIS LOSSES. THEY HAVE TOO MUCH TO PREPARE FOR THE CAMPAIGN AND THE JULY 23 ELECTION WHICH HAS BEEN EXPECTED IN DECEMBER. WHEN JAMIE DIMON TAKES CENTER STAGE AT THE CHINA SUMMIT ON WEDNESDAY HE WILL FACE OF BUSINESS LANDSCAPE THE LOOKS VASTLY DIFFERENT FROM A VISIT FOUR YEARS AGO. IN 2019, THE LAST TIME THE FLAK SHED AND IT WAS HELD IN PERSON, THE U.S. BANK AND ITS PEERS WERE GEARING UP TO CASH IN ON CHINA'S OPENING OF ITS $60 TRILLION FINANCIAL SECTOR. TODAY, TENSIONS ARE HIGH. THE CHINESE ECONOMY IS SLUGGISH AND BEIJING IS CRACKING DOWN ON FOREIGN BUSINESSES. DEUTSCHE BANK SAYS HIS HIRING SPREE IN MERGERS AND ACQUISITIONS WILL HELP IT BOOST RANKS AND TAKE BACK SOME MARKET SHARE FROM ITS WALL STREET RIVALS. THE GERMAN GIANT HAS SIGNED ON M&A VETERANS FROM PEERS, INCLUDING BANK OF AMERICA, CREDIT SUISSE, LAZARD AND CITIGROUP OVER THE PAST SEVERAL MONTHS AND PLANS TO HIRE MORE. GLOBAL NEWS POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I >> THIS IS THE NEW COMPUTER INDUSTRY. SOFTWARE IS NO LONGER PROGRAMMED JUST BY COMPUTER ENGINEERS. SOFTWARE IS PROGRAMMED BY COMPUTER ENGINEERS WORKING WITH AI SUPERCOMPUTERS. THESE SUPERCOMPUTERS ARE A NEW TYPE OF FACTORY. 15,000 STARTUP COMPANIES IN THE WORLD BUILT ON NVIDIA TODAY AND 40,000 LARGE COMPANIES AND ENTERPRISES AROUND THE WORLD ARE USING ACCELERATED COMPUTING. WE HAVE REACHED THE TIPPING POINT OF A NEW COMPUTING ERA. JONATHAN: EVERY TIME THIS GUY SPEAKS WE HAVE TENS OF BILLIONS OF DOLLARS TO THE MARKET CAP OF NVIDIA. THAT WAS THE CEO AND COFOUNDER OF NVIDIA. THE WINNER OF THE S&P 500 TODAY. UP MORE THAN 100%. $404.30 IN THE PREMARKET. I WILL SAY THIS AGAIN. WELCOME TO THE PROGRAM. $404386 -- $404 .86 IS THE LINE IN THE SAND. TOM: FOR GLOBAL WALL STREET WE WILL DIVE INTO THIS. ALEC WEB LUMI AWAY LAST WEEK -- ALEX WEBB BLEW ME AWAY LAST WEEK WITH THE DISCUSSION OF NVIDIA IN ENGLISH. WE DEMANDED HE SHOW UP TUESDAY TO GET US STARTED IN THE MORNING. ALEX WEBB JOINS US NOW FROM LONDON. YOU HAVE THE SINGLE BEST STORY ON THIS PHENOMENON I HAVE SEEN. YOU HAVE FIVE CHARTS AND WITHOUT QUESTION THE CHART THAT MATTERS IS THE PLACE OF NVIDIA AND NO BONTA -- NOVANTA. EXPENSIVE MAJOR SEMICONDUCTOR CHIPS OR WHATEVER. THEY ARE OUTRAGEOUSLY. THE PDE RATIO IS INSANE. -- P/E RATIO IS INSANE. WHAT IS THE RISK THEY LOSE THEIR PREMIUM UNIT GROWTH? ALEX: THAT WAS WHAT WAS SUPER INTERESTING ABOUT THE PRESENTATION IN TAIWAN. HE WAS MAKING A VERY COMPELLING CASE FOR THIS HAVING ISSUE USUALLY LUCRATIVE LONG TALE. THE CLOUD OPERATOR SAY WE NEED YOUR GEAR IN ORDER TO RUN THE PROCESSORS IN THE CLOUD AND ULTIMATELY RUNNING THE PROCESSES THAT FUEL THE AI REVOLUTION. HE SAYS THE APPLICATIONS FOR THIS ARE MASSIVE AND WE ARE THE FIRST -- WE HAVE THE FIRST BITE OF THE APPLE. THERE ARE A FEW OTHERS. NVIDIA HAS BEEN THE FIRST MOVER. THEY HAVE THEIR TEETH AND DEEPLY WITH THOSE CLOUD OPERATORS. THAT MEANS ESSENTIALLY OUR GEAR PLAYS BEST WITH OUR GEAR. THEREFORE YOU NEED TO KEEP BUYING FORON US -- FROM US. ITS TRADING AT 52 TIMES ITS FORWARD EARNINGS. THAT HAS COME DOWN. IT'S BEEN REVISED WITH EXPECTATIONS UPWARDS. THE SEMICONDUCTOR INDEX, THE AVERAGES ABOUT 25 TIMES FORWARD EARNINGS. TOM: LOOK AT THIS AND I GO FOUR PEOPLE DOWN TO ADVANCED MICRO DEVICES. YOU LOOK AT NVIDIA AS A DUOPOLY OR TRIOPOLGY, FOR ELECTRIC VEHICLES WHERE THEY CAN BE SEVEN PLAYERS TWO YEARS OUT? ALEX: IT'S A LITTLE BIT MORE COMPLEX THAN THAT. WE SEE A LOT OF THE BIG TECH COMPANIES, GOOGLE, APPLE, AMAZONS DEVELOPING THEIR CUSTOM SILICON, THEIR OWN CUSTOM CHIPS THAT ARE ULTIMATELY MANUFACTURED IN THE SAME FABS AS NVIDIA MADE LARGELY IN TAIWAN. THOSE OF THE GUYS WHO LOOKED MOST LIKELY TO CAP SHOUT -- CATCH UP WHEN IT COMES TO AI STUFF. THEY HAVE A PARALLEL PROCESSING. CLEVER ATTACK THAT WILL FUEL EVERYTHING -- CLEVER TECH THAT WILL FUEL EVERYTHING AI CAN DO. MICROSOFT, GOOGLE, AMAZON ARE BUYING FROM NVIDIA RIGHT NOW. THE QUESTION IS WHETHER THEY CAN DO SOMETHING THAT CAN DO THIS STUFF AS WELL AS NVIDIA CAN. THAT LOOKS LIKE THE BIG INTERNAL THREAT. JONATHAN: THE TIMELINE. THAT IS WHERE I WANT TO GO. HOW QUICKLY CAN YOU BE KNOCKED OFF THE TOP OF THE PILE? HOW QUICKLY IS THIS THING MOVING? ALEX: ASK INTEL. IT WAS THREE YEARS AGO THAT NVIDIA NOT INTEL OFFICE THE WORLD'S BIGGEST CHIPMAKER -- KNOCKED INTEL OFF AS THE WORLD'S BIGGEST CHIPMAKER. NOW NVIDIA IS ABOUT EIGHT TIMES BIGGER THAN INTEL BY MARKET CAPITALIZATION. INNOVATION CYCLES, THREE TO FIVE YEARS, IT IS NOT SOME THE YOU CAN TURN ON A DIME. NVIDIA WAS COMING AFTER INTEL FOR QUITE SOME TIME AND INTEL DOES NOT COMPETE IN THE SAME SPACE. THE BIGGER QUESTION IS WHETHER, EVEN IF SOMEONE CAN CATCH UP WITH NVIDIA, CAN THEY GET THE MANUFACTURING CAPACITY FROM TSMC? NVIDIA SAYS WE NEED THIS MANY WAFERS THIS YEAR. TSMC, PLEASE DO THAT FOR US. IF YOU'RE A SMALLER PLAYER, DOES TSMC HAVE THE SPACE FOR YOU? THE ANSWER MAYBE YES, PARTICULARLY AT THE BLEEDING EDGE OF THE STUFF. WE HAVE INTEL COMING IN AS A FOUNDRY. THEY MAKE SEMICONDUCTORS FOR OTHER PEOPLE. MAYBE THIS CAPACITY IS GETTING THERE. RIGHT NOW IT LOOKS LIKE NVIDIA HAS A LOCK ON IT. JONATHAN: THIS COMES DOWN TO CAPACITY OF TAIWAN SEMI? ALEX: IT LOOKS LIKE THAT IN THE NEAR TERM. THE THING WE SAW IS THERE IS ONE COMPANY IN THE WORLD AND EUROPE THAT MAKES THE MACHINES THAT CAN MAKE THESE SEMICONDUCTORS. TSMC GOT SO MUCH OF THE EARLY SUPPLY OF THOSE MACHINES. THEY ARE THE ONES THEY CAN MAKE THIS STUFF FOR NOW. THE OTHER TWO COMPANIES IN THE SPACE, SAMSUNG AND INCREASINGLY INTEL ARE GETTING MORE OF THOSE MACHINES. THAT MEANS IN A FEW YEARS TIME THERE WILL BE A LOT MORE CAPACITY OUT THERE. THE QUESTION IS WHO WILL BE WHO VERY IT UP -- HOOVERING IT UP? THEY HAVE TO RUN THESE CHIPMAKING FACTORIES AT REALLY HIGH CAPACITY TO JUSTIFY THE SPEND. THESE MACHINES ARE INSANELY EXPENSIVE. THERE'S A LOT OF CAPACITY COMING ONLINE. IS NVIDIA THE ONE USING IT ALL? CAN THE SHORT TERM, MAYBE. IN A YEAR OR TWO IT WILL LOOK DIFFERENT. TOM: I'M LOOKING FOR THE MINI NVIDIA. I'M NOT ASKING YOU TO TELL ME THEY WILL MAKE A TON OF MONEY. IF I LOOK AT ENTEGRIS OR IPG PHOTONICS, IS THERE A MINI NVIDIA IN YOUR HEAD? ALEX: THERE'S A GREAT PIECE I WILL POINT PEOPLE TO WORDS FROM MY COLLEAGUE AT BLOOMBERG INTELLIGENCE. HE HIGHLIGHTS A FEW OF THE NETWORK PLAYERS. I'M GOING TO BE HONEST, I CAN'T MEMBER THE EXACT NAMES. IT IS NOT NECESSARILY OBVIOUS PLAYERS. THERE'S A COMPANY CALLED GRAPHCORE THAT HAS RAISED A LOT OF VENTURE CAPITAL. THEY WERE SPECIALLY -- SPECIALIZING IN AI CHIPS. THAT WAS LOOKING WITH THE PLAYER THAT WOULD BE ABLE TO COME IN AND CHALLENGE THE LIKES OF NVIDIA. MAYBE THEIR IP GETS BOUGHT UP AND THEY CREATE A VIABLE CHALLENGER TO NVIDIA. TOM: APPLE COMPUTER REALLY BUTTRESSED UP AGAINST THE $175-100 $80. WHAT IS THE VIEW FORWARD ON APPLE Q 2 CALENDAR AND INTO THE HOLIDAY BACK-TO-SCHOOL SEASON? ALEX: THE THING WE HAVE SEEN IS THERE WILL BE A LOT OF CHAT IN THE NEXT FEW WEEKS ABOUT WHAT APPLE DOES IN AUGMENTED REALITY. THAT WILL GET A LOT OF HEADLINES. IT WILL NOT DRIVE MEANINGFUL SALES ANYTIME SOON. THE REPORTING FROM OUR CALLING SUGGESTS THIS WILL BE A WRAP UP COMPARABLE TO THE APPLE WATCH. QUITE A BIG, COMPELLING PRODUCT BUT IT TOOK ALMOST A DECADE TO GET THERE. IT IS REALLY THE STICKINESS OF APPLE. THEY HAVE BUILT SO MANY PRODUCTS AND SERVICES ON TOP OF THE IPHONE. MOST CRUCIALLY THEY TIE PEOPLE TO THEIR IPHONES. IRRESPECTIVE OF IF IT'S AN UPGRADE, PEOPLE STILL UPGRADE. THAT IS WHY THE STOCK IS SO BID UP. THERE'S A MASSIVE ABOUT A CONVICTION BEHIND THEIR ABILITY TO CONVINCE PEOPLE TO REFRESH. JONATHAN: I HAVE NOTICED RECENTLY THE BATTERY LIFE. IT HAS AGGRESSIVELY COME DOWN. TOM: I HAVE WONDERFUL BATTERY LIFE IN MY IPHONE. THE NUMBER ONE REASON TO UPGRADE IS THE BATTERY LIFE CHANGES YOUR DAY-TO-DAY USE OF THE PHONE. TOM: TIM IS IN THERE MANIPULATING THE BATTERY LEVELS. TOM: IT'S ALL ABOUT THE CHIPS AND THEY KEEP GETTING BETTER AND BETTER. JONATHAN: IT'S IMPRESSIVE. ALEX WEBB, THANK YOU, SIR. WHAT A RUN IN THAT NAME. UP BY MORE THAN 4% IN THE PREMARKET HEADING TOWARDS A $1 TRILLION MARKET CAP. $405. >> WE THINK WHERE WE ARE IS THE INDEX IS TELLING YOU THINGS ARE ROSY AND FINE AND THE BREATH IS TELLING YOU OTHERWISE. >> LOOKING AT THE HEADLINE INDEX IN GENERAL LIES NEED THE HEADLINE INDEX. >> I THINK ECONOMIC WEAKNESS, MILD RECESSION IS IN FRONT OF US. >> RECESSIONS ARE NOT BAD THINGS, THEY REORDER CAPITAL. >> WE HAVE A PAUSE IN JUNE BUT I WOULD NOT TAKE THE PAUSE TO MEAN THE FED IS DONE. ANNOUNCER: THIS IS "BLOOMBERG SURVEILLANCE" WITH TOM KEENE, AND LISA ABRAMOWICZ. TOM: GOOD MORNING. JONATHAN FERRO, TOM KEENE, LISA ABRAMOWICZ. JOHN AND I ARE LOOKING AT REALLY EXCITING MARKETS AND I THINK YOU HAVE BEEN RIGHT, I THINK YOU HAVE BEEN RIGHT TO OVERPLAY IT. NVIDIA IN A FREE MARKET OF $1 TRILLION HAS GOT TO GET YOUR ATTENTION. 46,000 EMPLOYEES. JONATHAN: PHENOMENAL. GAINS AT MORE THAN 100% YEAR TO DATE ON THAT STOCK. IT HAS CONTRIBUTED DECENT GAINS IN THE HEADLINE LEVEL. THE INJECT LEVEL ON THE NASDAQ 100 UP BY MORE THAN 30%. YEAR-TO-DATE, THIS MORNING, UP BY MORE THAN ONE. THE RALLY CONTINUES. TOM: THE RALLY CONTINUES IN THE BEAR MARKET. I WAS SURPRISED OVER THE WEEKEND, THE BEAR MARKET GLOOM WAS NOT AS REAFFIRMING OR CAPITULATION, WHATEVER YOU WANT TO CALL IT, BUT FUTURES UP 25. LET'S GET RIGHT INTO THIS, NASDAQ 100 WITH THE NVIDIA TRAIL UP 1.4%. JONATHAN: FUTURES UP DEBT DEAL, YIELDS ARE LOWER, A DEBT DEAL THAT MOST PEOPLE ASSUME DOES NOT REALLY CUT SPENDING BY VERY MUCH IF AT ALL. HERE WE GO, DOWN NINE BASIS POINTS ON A 10 YEAR, 317. ON A TWO YEAR, A BIG MOVE HIGHER OVER THE LAST COUPLE WEEKS. WE ARE BACK TO 450 YIELDS LOWER AT THE FRONT END BY SIX BASIS POINTS AND YOU CAN REFOCUS THE MIND, GET BACK TO PAYROLLS FRIDAY, GET BACK TO CPI ON JUNE 13. AND GET TO THE FED ON JUNE 14. JUNE IS AROUND THE CORNER. TOM: EARLY UNEMPLOYMENT ROUTE PORT, I WOULD GET BACK TO WHAT ABOUT CDS? IF WE GET SOME FORM OF YIELD ADJUSTMENT, YIELDS STASIS STICKING INFLATION, THE 30 YEAR MORTGAGE RATE WE HAVE NOT TALKED ABOUT YET IS A FIRST THING I LOOKED AT THIS MORNING, 7.17%. IT IS UP NICELY. JONATHAN: LET'S PUT THESE DIFFERENT ISSUES TOGETHER. A DEBT CEILING DEAL, POTENTIALLY PASSING CONGRESS THIS WEEK, AND IF IT DOES, YOU GET HUNDREDS OF BILLIONS OF DOLLARS OF ISSUANCE COMING TO THE MARKET. DOES THAT COMPETE WITH WHAT THE BANKS ARE TRYING TO ACHIEVE, WHICH IS ATTRACT AND RETAIN, DEPOSITS? WE WILL SEE HOW THAT PLAYS OUT. AT COLUMBIA THREAD NEEDLE SAYING HE DID NOT THINK IT WOULD BE A BIG DEAL. WE WILL SEE HOW IT PLAYS OUT. TOM: CURRENCY MARKET, LET'S DO THAT BRIEFLY BEFORE WE GET TO THAT. EURO-DOLLAR, 1.744. WE SAW THAT BREAKING DOWN THROUGH 107. IT IS A FREE FALL TO 105. WE HAD THE 1.06 HANDLE BRIEFLY. JONATHAN: THE LOWEST SESSION. 1.0 744 IS WHERE WE ARE AT THE MOMENT. A TOUCH OF DOLLAR WEAKNESS. REVERSING THE TREND WITH YIELDS NOT UP AT DOWN. YOU TOOK US TO THE ROAD. TOM: GOOD MORNING, UNITED KINGDOM. I LOVE IN ENGLAND HOW YOU GET RELEGATED AND YOU GO DOWN AND AS MUCH YOU GO UP AND THEY ARE KICKING PENALTY KICKS AT WIMBLEY AND THEY SAY SHUT UP AND WATCH THIS. ONE OF THE ANNOUNCER SAYS THIS PENALTY CASE FOR $170 BILLION. JONATHAN: SERIOUS TV MONEY. SERIOUS MONEY FOR GETTING PROMOTED FROM THE CHIP EGYPT TO THE PREMIER LEAGUE. WHAT WE ARE LOOKING AT IS LOOTING TOWN AND CONGRATULATIONS TO THEM. UTTERLY UNPREPARED TO HOST PREMIER LEAGUE FOOTBALL WITH A STADIUM THAT SEATS ABOUT 10,000 AND ENTRANCE TO THE EXTENT THAT LOOK SIDE WALKING INTO SOMEBODY'S HOUSE. TOM: SO TRANSLATE THIS FOR MERE MORTALS IN AMERICA LIKE ME. THE HATTERS OF LUTON TOWN WILL HAVE LIVERPOOL SHOW UP? JONATHAN: MOST WILL WALK THROUGH THERE. TOM: ON RADIO, IT IS A SIMPLE BRICK VOTING WITH A BLUE STAND AND BICYCLE IN FRONT. THIS IS MORE BASIC THAN RICHMOND. JONATHAN: HOW COOL IS THIS THOUGH? HOW COOL IS THIS? TOM: THIS IS SO MUCH BETTER THAN AMERICA. JONATHAN: JONATHAN: THIS IS SO COOL. TOM: I'M SORRY. I REALLY LOVE IT. ONE MORE COMMENT BEFORE WE GET OUR FOOTBALL EXPERT LEAGUE, THE BASIC IDEA IS ALL OF THE PEOPLE THAT WENT UP LAST YEAR'S THREE, RIGHT? JONATHAN: THEY ALL STAYED UP. TOM: AND THAT'S RARE. JONATHAN: SOUTHHAMPTON LEADS AND THEN TOM LESTER WHICH IS SHOCKING CONSIDERING WHEN THE LEAGUE BACK IN 2016 RELEGATED THE CHAMP INTO. TOM: BASEBALL WOULD BE BETTER FOR THIS, NO QUESTION ABOUT IT. WE NEED TO SPEAK TO A NECK PUT ON THIS AND MICROSTRATEGY AT STATE STREET, LEE FARRIS JOINS US THIS MORNING. ARE YOU GOING TO GO TO SEE LUTON OR WHATEVER IT IS AT THE HATTERS WHEN LIVERPOOL STOPS BY? LEE: I WOULD LOVE TO, YEAH. IT WOULD BE FANTASTIC TO WATCH A PREMIER LEAGUE GAME. WHETHER I'D BE ABLE TO GET A TICKET I'M NOT SURE. AS JONATHAN SAID, THERE ARE NOT MANY TICKETS AVAILABLE. IT WOULD BE TOUGH TO GET ONE OF THOSE. TOM: WE WILL SEE THE TICKET WITH INFLATION. WHEN YOU ARE LIVING WITH YOUR FAMILIES, THE INFLATION IN THE UNITED KINGDOM IS OF AN ABSOLUTELY DIFFERENT CHARACTER. WE ARE TALKING ABOUT STICKY INFLATION IN AMERICA. HOW STICKY IS 9% FOOD INFLATION IN THE UNITED KINGDOM? LEE: I THINK THE FOOD INFLATION IS HIGHER THAN THAT. IT IS 19% FOOD INFLATION. OVERALL INFLATION IS COMING DOWN BUT STILL IN THE EIGHTS. IT IS REMARKABLE GIVEN HOW THE CONSUMER IN THE U.K. IS STRUGGLING AND HOW REAL INCOMES ARE FALLING OR MORTGAGE RATES HAVE GONE THROUGH THE ROOF, WHICH IS VERY DIFFERENT FROM WHAT WE SEE. NEW MORTGAGES ARE HIGHER BUT NONEXISTING BECAUSE WE ARE FAIRLY FIT IN THE U.K.. PEOPLE'S EXISTING MORTGAGE PAYMENTS YET INFLATION HAS PROVEN REMARKABLY STICKY. THIS IS SUCH A DIFFICULT POSITION FOR THE BANK OF ENGLAND. IT WAS INTERESTING LAST WEEK WE GOT THE STRONG INFLATION WITH PRICES HIGH BY THE BANK OF ENGLAND BUT STERLING DID NOT GO UP. STERLING WENT ON LAST WEEK ON THE BACK OF THAT BECAUSE NOW THE MARKET IS FOCUSED ON OK WE HAVE TO HIKE THE NUMBER OF TIMES TO SECURE INFLATION BUT WHAT WILL THAT DUE TO THE ECONOMY OVER THE MEDIUM TERM? THE ANSWER IS IT IS NOT GOING TO BE PRETTY. JONATHAN: IT SOUNDS A BIT LIKE SEPTEMBER, THE REPLAY OF SOME OF THAT, SOME OF THAT LINK. WHAT HAS BEEN AMAZING JUST SITTING HERE THE LAST COUPLE WEEKS SPEAKING TO PEOPLE LIKE YOU, PEOPLE MINDING THE MARKET, IT IS FEELING THE TIDE START TO TURN OR THIS ENTHUSIASM FOR THE REST OF THE WORLD, FOR EUROPE BREAKING DOWN, WITH A COUPLE DATA POINTS OUT OF CHINA, THE REALITY CHECK IN THE EUROZONE, GERMANY HEADING INTO A POTENTIAL RECESSION. AT THE SAME TIME, YOU HAVE THIS MONSTER OUTPERFORMANCE ON THE MARKET CAP WAITED S&P 500, THE NASDAQ, RELATIVE TO WHAT IS DEVELOPING IN CHINA OR OVERSEAS AND ELSEWHERE. I'M WONDERING, AND TOM AND I HAVE BEEN TALKING ABOUT THIS INTO THE WEEKEND AND OUT OF IT, WHETHER WE FACE ANOTHER PERIOD OF U.S. EQUITY MARKET EXCEPTIONALISM BECAUSE OF THIS AI THING. LEE: I THINK BECAUSE OF THE AI AND ALSO BECAUSE OF THE RELATIVE STRENGTH OF THE ECONOMY, I HAVE BEEN ON AND TALKED ABOUT THIS BEFORE, U.S. IS IN A DIFFERENT PLACE THAN THE REST OF THE WORLD. MORTGAGE HAS BEEN 30 YEAR FIXED AND WILL DO THAT. THE CONSUMER IS JUST HURTING. WE HAVE A STRONG LABOR MARKET, STILL HAVE EXCESS SAVINGS FROM THE PANDEMIC, YES IT IS LIMITED TO THE HIGHER SPENDING, THEY ARE SPENDING IT, BUT WE HAVE THIS STRAINED ECONOMY WHERE YOU LOOK AT THE REST OF THE WORLD AND WORRIED ABOUT THE CONSUMER BECAUSE MORTGAGE RATES HAVE GONE UP. BANK OF CANADA STOCKS, BANK OF ENGLAND, THEY HAVE GOT TO CARRY ON DESPITE THE FACT IT WILL PROBABLY MEAN A DEEP RECESSION IN 2024. THE U.S. IS IN A DIFFERENT PLACE AND YOU HAVE THE AI ELEMENT AND ALSO GOT THE UNDERLYING ECONOMY, WHICH IS A DIFFERENT PLACE FROM THE REST OF THE WORLD BECAUSE THE STRUCTURE OF OUR LENDING MARKET. JONATHAN: YOU SOUND ALMOST CONSTRUCTIVE THE U.S. EQUITY MARKET. IS THAT RIGHT? LEE: IT'S A RELATIVE STORY. I'M NOT SURE I'M CONSTRUCTIVE ON THE EQUITY MARKET IN ABSOLUTE TERMS BUT RELATIVE, YOU'VE GOT TO LOOK AT THE U.S. AND SAY THE ECONOMY IS IN A DIFFERENT PLACE FROM THE REST OF THE WORLD. WE ARE STILL PRICING THE FED CUTTING BEFORE ANYONE ELSE AND I DO NOT UNDERSTAND. WE HAVE TAKEN OUT A LOT OF CUTS, RIGHTLY SO. WE HAVE A CUP BY JANUARY AND NOBODY ELSE HAS ONE THAT EARLY. WHY DO WE HAVE AN EARLIER CUT IN THE U.S. WHEN THE ECONOMY IS HOLDING UP SO MUCH BETTER THAN ELSEWHERE? AND INFLATION IS STILL STICKING, WHY ARE WE GOING TO BE CUTTING ANYWHERE ELSE THAT IS FLIRTING WITH RECESSION, IN RECESSION, EDGE OF RECESSION JONATHAN: JUST LISTENING TO YOU, THERE ARE THE KIND OF USE THAT WE WANTED TO PUSH THROUGH THE MARKET, DEVELOPING DOLLAR STRENGTH. LOOKING AT THE DIFFERENTIAL POTENTIALLY CLOSING, HOW WOULD YOU PLAY THAT? LEE: I HAVE BEEN BULLISH ON THE DOLLAR FOR A WHILE, IT IS BACKED WELL, I HAVE 140 ON DOLLAR YEN, THAT IS PROBABLY COMING TO THE END OF HIS STORY. WHEN YOU LOOK AT EURO-DOLLAR, CABLE, THE DOLLAR AGAINST THE COMMODITY CURRENCIES, I THINK THIS IS FURTHER TO GO. YOU MENTIONED THE DOLLAR WILL BE A GREAT SELL IN TERMS OF VALUES, GROWN, ETC.. WHAT WE ARE SEEING IS INSTITUTIONAL INVESTORS ARE BUYING DOLLARS AND THE FIRST TIME WE'VE SEEN THAT SINCE MARCH. THEY HAVE BEEN STRONG DOLLAR SELLERS AND THEY FLIPPED AROUND, BUYING AGAIN, LOOKING AT THIS YOU THIS EXCEPTIONALISM STORY. I THINK THAT MOMENTUM AND RELATIVE RATE PRICING CAN CARRY THE DOLLAR THROUGH PROBABLY DURING Q3 WE WILL SEE MORE DOLLAR GAINS TO ABRUPT AROUND 3% FROM THE LOWS OF ASK WHY. I THINK THERE'S ANOTHER 5% TO GO. JONATHAN: WE HAVE DOLLAR INDEX SHORT OF 1.0 FOUR, EURO-DOLLAR BREAKING AT 107 EARLIER, 107 -- 1.0 743. WHAT TO WE NEED TO WATCH OUT FOR ? LEE: I THINK WE WILL SEE 1.05 BEFORE WE SEE 1.1. STERLING I THINK WE SEE 1.2 ZERO BEFORE WE SEE 1.25 AND THEN WE WILL GET BACK TO 115 -- 1.15 OVER THE COURSE OF THE YEAR. I AM LOOKING AT THIS, THE EMPHASIS NOW, WE SEE THE DOLLAR-YEN MOVES AND I THINK THE EMPHASIS WILL BE DOLLAR AGAINST EUROPE. TOM: I THINK THIS IS TOO IMPORTANT. YOU TWO ARE SERIOUSLY KNOWLEDGEABLE ABOUT THIS. THE NEW COACH AT CHELSEA, ARE YOU KIDDING ME? JONATHAN: YOU HAVE A 1.15 CALL? TOM: IF STERLING CONVERTS IT WILL BE GREAT. THE BOTTOM LINE IS THE GUY SUPPOSED TO GO TO THE TOPS AND HE WENT TO CHELSEA. WHAT IS THAT ABOUT? JONATHAN: SEE WHAT DAN LEAVY IS UP TO, I HAVE NO IDEA. TOM: GET ON A PLANE AND FIGURE OUT WHAT IS GOING ON. JONATHAN: JUST MAKING SOME MONSTER CALLS THERE. TOM: 1.15, THAT'S A CALL. WE'VE GOT A GET LEE BACK ON HERE AND I WANT TO TALK TO HIM ABOUT BREXIT. JONATHAN: YOU WANT TO TALK ABOUT EXIT? WHY -- BREXIT? WHY? TOM: I THINK THAT'S A SUCCESS OF FAILURE AND I'M LOOKING AT THE STICKINESS OF INFLATION IN THE UNITED KINGDOM AND THAT IS KILLING PEOPLE. JONATHAN: GOING BACK TO 2016 WHERE LESTER WON THE LEAGUE AND SEVEN YEARS LATER, RELEGATED. TOM: MY FRIEND JOHN SAID THEY ARE DESTINED. JONATHAN: IT IS SAD. OUR NEXT GUEST IS JOINING US ON THIS DEAD DEAL IN WASHINGTON DC, GREG VALLIERE, NVIDIA SESSION HIGHS. WITH A $1 TRILLION PLUS VALUATION. >> KEEPING YOU UP-TO-DATE WITH NEWS FROM AROUND THE WORLD WITH THE FIRST WORD, I'M LISA MATEO. THE WHITE HOUSE AND REPUBLICAN CONGRESSIONAL LEADERS ARE GEARING UP LOBBYING CAMPAIGNS TO WIN APPROVAL OF A DEAL TO AVERT A U.S. DEFAULT. BOTH PRESIDENT BIDEN AND REPUBLICAN HOUSE SPEAKER KEVIN MCCARTHY EXPRESSED CONFIDENCE THEY WOULD MUSTER THE NECESSARY VOTES. THE BILL WILL SUSPECT THE DEBT CEILING -- SUSPEND THE DEBT CEILING UNTIL JANUARY 1, 2025 ANY -- 25. EMMA CUTS AGREED TO CAP FEDERAL SPANNING FOR THE NEXT TWO YEARS. OR THAN 30 NATO SOLDIERS HAVE BEEN INJURED ALONG WITH 15 LOCALS IN KOSOVO AS PROTESTERS CLASH WITH POLICE AND THEN WITH NATO PEACEKEEPERS. THE DEMONSTRATORS WERE SEEKING TO BLOCK NEWLY ELECTED ETHIC ALBANIAN MAYORS FROM REACHING THEIR OFFICES. THE WORST FLAREUP IN VIOLENCE IN YEARS THREATENS AN EU-BROKERED PLAN TO NORMALIZE TIES BETWEEN KOSOVO AND SERBIA. ELON MUSK'S PRIVATE JET LANDED IN BEIJING AND THE FIRST VISIT TO CHINA IN THREE YEARS. THE TESLA CHIEF MET WITH FOREIGN MINISTER KIM YANG AND SAID THE COMPANY IS WILLING TO KEEP EXPANDING IN THE COUNTRY. SOURCES TELL BLOOMBERG HE IS ALSO EXPECTED TO MEET WITH PREMIER LI QIANG AND VISIT TESLA'S SHANGHAI FACTORY. GLOBAL NEWS, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. . I'M LISA MATEO AND THIS IS BLOOMBERG. ♪ >> I'M DEFINITELY HARD AND YOU SAW BOTH PARTIES ON PROGRAM EXPRESSING CONFIDENCE THEY WILL BE ABLE TO RAISE THE DEBT CEILING. THE FISCAL DECISIONS OF COURSE ARE BETWEEN CONGRESS AND THE PRESIDENT AND HOWEVER THEY SORT IT OUT IS GOOD BY US, BUT IF YOU DID NOT DO THAT, THE CONSEQUENCES FOR THE NATURAL SYSTEM AND FOR THE BROADER ECONOMY WOULD BE EXTREMELY NEGATIVE. JONATHAN: I KNEW FACE AT THE FEDERAL RESERVE, WELL KNOWN TO US ALL, A GOOD FRIEND TO THIS PROGRAM OVER THE YEARS. THE CHICAGO FED PRESIDENT SPEAKING ON CPS OVER THE WEEKEND AND ONE INDIVIDUAL ON THE FOMC, THE COMMITTEE ON THE FEDERAL RESERVE, LEADING TO A POTENTIAL PAUSE AT THE JUNE MEETING. BEFORE WE GET TO THE MEETING, WE NEED TO DEAL WITH PAYROLLS REPORT FRIDAY AND THE INFLATION REPORT. CPI, THE DAY BEFORE THE FED MEETS, BEAR IN MIND BLACKOUT PERIOD, THE QUIET PERIOD FOR FED SPEAK STARTS THIS WEEKEND. SO THIS IS THE FINAL STRETCH OF FED SPEAK SO FAR. I THINK A LOT OF PEOPLE SHARE THAT VIEW. TOM: RAMEAU IS NOT HERE. JONATHAN: I'M ALWAYS SUSPECT OF THE PERSON THAT TAKES A DAY OFF, BECAUSE IN THE DAY AFTER A LONG WEEKEND. ALWAYS SUSPICIOUS. OF THAT ABRAMOWITZ. YOU EXTEND THE WEEKEND, WHAT WERE YOU UP TO? TOM: I HAD FUN THIS WEEKEND. I HAD THREE SAILORS SHOW UP WITH THE UNITED STATES NAVY. JONATHAN: THREE SAILORS? TOM: THEY WERE SUBMARINERS. THEY WERE FAMILY MEMBERS, WISEGUY. JONATHAN: I'VE GOT NO IDEA. WHO STARTS A CONVERSATION WITH THREE SAILORS? TOM: THEY ARE IN THEIR FANCY UNIFORMS, ONE IS TOURING OREGON, AND NEW SUBMARINE, COSTS A GAJILLION DOLLARS. OUR FAMILY IS ON THE MOUNT PILL YOUR, AN OLDER SUBMARINE. THESE GUYS GO OUT, YOU DON'T KNOW WHERE THEY GO, AND THEY ARE OUT UNDERWATER FOR MONTHS AND MONTHS. JONATHAN: DID YOU THANK YOU FOR THEIR SERVICE? TOM: I SERVE THEM A CASE OF [INDISCERNIBLE] JONATHAN: AS YOU SHOULD. TOM: THIS TIES DIRECTLY INTO OUR SAILORS AND OFFICERS, THEY ARE ON AIRCRAFT CARRIERS, SUBMARINES, AND EVERYTHING ELSE MILITARY IN THIS BUDGET DEBATE. GREG, YOU ABSOLUTELY NAILED IT THIS MORNING BY GETTING BEYOND THE CABLE TV IDIOCY TO THE SENATE'S OUTRAGE OVER THE DEFENSE OF OUR NATION. WHAT WILL YOU SEE -- WHAT ARE WE GOING TO SEE NOT IN T DAYS -- TWO DAYS BUT FIVE TO SIX DAYS ON THE SENATORS WORRIED ABOUT THE PENTAGON? GREG: IT WILL BE A BIG DEAL. LINDSEY GRAHAM, A FAMOUS HAWK, BLEW A GASKET ON I THINK BOX ON SUNDAY BECAUSE OF THE DEFENSE SPENDING IN THIS BILL WILL BE LOWER THAN THE RATE OF INFLATION. FOR A COUNTRY THAT DOES NOT SPEND AS MUCH AS PEOPLE THINK WE DO OF OUR GDP ON DEFENSE, THIS REALLY ANGERS A LOT OF REPUBLICANS. TOM: IT ANGERS REPUBLICANS BUT I WILL SUGGEST DEMOCRATS WILL SHOW UP AS WELL. GREG: YEP. TOM: THIS IS CRITICAL. IS IT A BIPARTISAN VERY OF OUR OFFICERS AND SAILORS, OUR INVENTORY MEN, ADDRESSED? IS IT BIPARTISAN IN ANGER HERE? GREG: IT IS, BUT WE CANNOT DEFAULT. I THINK PEOPLE REALIZE THAT A DEFAULT WOULD BE EVEN WORSE AND, DURING THE COURSE OF THIS YEAR, I THINK THERE WILL BE SUPPLEMENTAL FUNDING FOR THE PENTAGON. THERE ARE WAYS YOU CAN STILL GET MONEY FROM THE GOVERNMENT, AND I THINK YOU WILL SEE MORE SPENDING DURING THE YEAR. THERE'S A LOT OF COMPLAINTS NOW. JUST TO BRING IT TO TONIGHT, THERE IS A BIG VOTE IN THE HOUSE RULES COMMITTEE. I THINK EVAN MCCARTHY WILL PREVAIL, BUT I THINK THIS THING DRAGS ON BECAUSE OF LINDSEY GRAHAM AND OTHERS INTO NEXT WEEK. THEN IT PROBABLY GETS UP UNTIL JUNE 5. JONATHAN: THAT IS WHAT I WOULD ASK, DO WE HAVE THE WEEK? GREG: THAT'S A GOOD QUESTION. HERE'S WHAT I WOULD SAY, IF WE HIT THE DEADLINE, THE TREASURY CAN SELL BONDS OUT OF THE HIGHWAY TRUST FUND, TREASURY CAN SELL BONDS OUT OF THE SUB SECURITY TRUST FUND AND PAY THEM BACK A WEEK OR TWO LATER. SO I THINK IT IS HIGHLY UNLIKELY WE WOULD SEE A DEFAULT. I WOULD ADD, IF THERE LOOKED LIKE IT WOULD BE A DEFAULT, I THINK THE MARKETS WOULD GET SO JITTERY IT WOULD FINALLY SEND A MESSAGE TO WASHINGTON. JONATHAN: WE ASK RIDICULOUS QUESTIONS AND POLITICS LIKE WHO WINS, WHO WON AFTER THE WEEKEND, BUT WHO DO YOU THINK IS DOING A BETTER JOB OF PRESENTING WHAT THEY GOT OUT OF NEGOTIATIONS? IS IT THE PRESIDENT OR SPEAKER MCCARTHY? TOM: I THINK THE PRESIDENT HAS ALWAYS BEEN UNDERESTIMATED -- GREG: I THINK THE PRESIDENT HAS ALWAYS BEEN UNDERESTIMATED AS A NEGOTIATOR AND DID A GOOD JOB. THIS PRIZE IS KEVIN MCCARTHY. I THINK HE WAS HELD IN LOW REGARD UNTIL MONTHS AGO. HE BECAME HOUSE SPEAKER. HE GOT SOMETHING DONE AND THEY DID NOT GET ALL THEY WANTED THEIR IT IN FACT, IN THE FINAL DEAL, A LOT OF WHAT THEY WANTED WHITTLED DOWN, ESPECIALLY ON THE TOTAL SPENDING CUTS. BUT I GIVE BOTH CREDIT. I THINK KEVIN MCCARTHY IS NOW A SERIOUS PLAYER. TOM: THE SENATOR FROM WEST VIRGINIA GOT A PIPELINE MOVING SOUTH FROM HARRIS, HARRIS WEST VIRGINIA, SOUTH ACROSS THE BORDER, MAYBE HARRIS ACROSS THE BORDER . CAN YOU GIVE OUT PIPELINES? THERE IS A PIPELINE FOR JOE MANCHIN. CAN YOU GIVE CONSERVATIVE REPUBLICANS A PIPELINE? GREG: YOU CAN GIVE PEOPLE ANYTHING. THIS WAS AUDACIOUS, AND THAT IS TYPICAL OF JOE MANCHIN. HE GETS WHAT HE WANTS BECAUSE HE STILL IS WHISPERING HE MAY RUN FOR PRESIDENT. SO EVERYBODY HAS TO PLACATE HIM. JONATHAN: WHAT ABOUT THE 10, 12, 14 PEOPLE BLOCKING SPEAKER MCCARTHY'S EFFORTS? CAN HE GIVE THEM A BONE THAT IS HIGHWAY-LIKE OR PIPELINE-LIKE? GREG: SURE. I THINK THERE ARE PEOPLE -- I'M SURE THERE WILL BE PEOPLE THAT HAVE POST OFFICE IS NAMED AFTER THEM. THERE ARE DEALS TO GET THIS TO VOTE FOR THEM LATER IN THE DAY. JONATHAN: WHAT YOU MAKE OF WHAT THE REPUBLICAN CANDIDATES FOR THE PRESIDENCY HAVE TO SAY ABOUT THE DEAL STRUCK? GREG: DESANTIS WAS DRIVE -- WAS STRIFE AND SAID IT IS A TERRIBLE DEAL AND WE ARE HEADED TO FINANCIAL RUIN. IT WAS A STRONG STATEMENT. DESANTIS IS IN A POSITION WHERE HE HAS TO THROW BONDS BECAUSE HE IS SO FAR BEHIND THAT I'M NOT SURE HE CAN CATCH UP. JONATHAN: JUST A FINAL WORD ON THE DEFENSE SPENDING IN AMERICA. IT'S NOT FOR ME TO SAY WITH A LEVEL SHOULD BE. CAN YOU GO THROUGH THE NUMBERS FOR US? AND REALLY PAINT A PICTURE OF HOW MUCH A PERCENTAGE OF OVERALL SPENDING DEFENSE SPENDING IS AN GET TO THE HEART OF THE ISSUE. IF YOU WANT TO DO SOMETHING ABOUT THE DEFICIT IN THIS COUNTRY, DON'T THEY HAVE TO RETHINK WHAT IS HAPPENED WITH DEFENSE? GREG: I WOULD SAY NO, WE ARE NOT SPENDING ENOUGH ON DEFENSE. A PERCENTAGE OF GDP, WE ARE SPENDING LESS THAN 3%. WE COMPLAIN ALL THE TIME ABOUT CANADA, NOT SPENDING 3% ON GDP. A LOT OF THE OTHER COUNTRIES ARE NOT AS WELL. I THINK AS THE WALL STREE JOURNAL CONSISTENTLY POINTS OUT, WE ARE NOT SPENDING ENOUGH ON DEFENSE BY ANY HISTORICAL YARDSTICK. JONATHAN: IF THAT IS THE CASE, WHERE DOES THAT LEAVE NEGOTIATIONS OVER EVER CUTTING SPENDING AND DOING SOMETHING ABOUT THE DEFICIT? GREG: YOU'VE GOT A TALK ABOUT REVENUES AT SOME POINT. AT SOME POINT WE HAVE TO AT LEAST LOOK AT TAXES. I'M NOT SAYING WE NEED A BIG HUGE ONE BUT FEARLESS FORECAST, THE NEXT BIG FISCAL STORY IS THE EXPIRATION OF THE DONALD TRUMP TAX CUTS IN A COUPLE YEARS. THAT WILL MAKE THIS FIGHT WE JUST WENT THROUGH LOOK LIKE A PICNIC. JONATHAN: LOOKING FORWARD TO THAT AT AGF INVESTORS. YOU CAN SEE WHERE THIS IS GOING? TOM: PETER COY, WONDERFUL AT THE "NEW YORK TIMES," ABSOLUTELY NAILED THAT IN HIS ESSAY ON SUNDAY AND MONDAY AFTER THE STEEL. HE SAID WE ARE ALL TALKING ABOUT SPENDING, WHEN DO WE TALK ABOUT REVENUES? YOU JUST HEARD THAT. JONATHAN: AND YOU SAW IN THESE NEGOTIATIONS THAT WAS A NONSTARTER, A REDLINE, FOR SPEAKER MCCARTHY. TOM: YES, IT WAS. I HOPE EVERYONE IN WASHINGTON GOT THEIR TRADES IN ON THE NASDAQ THIS WEEKEND. ARE THEY STILL ALLOWED TO TRADE? JONATHAN: NVIDIA 4.07. TOM: I JUST DID A QUICK SCAN OF INDUSTRIALS, THE DOW IS NOT THERE, IT IS FLAT TO READ ON THE SCREEN. THIS IS A TECH RALLY, TECH RELIEF RALLY, EVEN WITH SPX UP, NASDAQ UP 1.5%. JONATHAN: IT IS A MONSTER RALLY. TO COVER THAT, VICTORIA FERNANDES WILL BE JOINING US FROM CROSS MARK. ANDREW SIMMON FROM MORGAN STANLEY, CATCHING UP WITH THEM IN 30 MINUTES TIME. TOM: YOU HAVE TO REFRAME HERE, IF YOU ARE IN THE GAME, DO YOU LOAD IT UP AND CRITICALLY AND WE WILL TALK ABOUT PEOPLE COMFORTABLY IN CASH. JONATHAN: COMFORTABLY IN CASH GETTING 5%. TOM: STOP ME. I WAS BLOWN APART ON THAT -- JONATHAN: ON THAT DEAL. TOM: THE GUY SAYS DO YOU HAVE NVIDIA IN THE TRIPLE CASH AND I SAID NO. JONATHAN: THIS 5% CASH DOWN, LOOKING GOOD ON THAT. IT IS SUCKED AWAY. IT GETS SLAPPED AROUND. LESSIG EQUITY MARKET STUFF. TOM: "BLOOMBERG SURVEILLANCE," FOUR-DAY WORKWEEK, IT IS TUESDAY, NOT MONDAY. FEELS LIKE A MONDAY. WE HAVE BEEN LOOKING AT THE FESTIVITIES IN WASHINGTON AND CERTAINLY WITH THE CONTINUING ADVANCE IN NVIDIA. YOU SEE IT WITH THE NASDAQ, UP A SOLID 1.4% FRIDAY -- FRIDAY'S GOOD MOVE. SPX UP 24 POINTS AS WELL, UP .6%. THE VIX IS 17.14 AND WILL BE INTERESTING TO SEE HOW THAT FOLDS OUT. RIGHT NOW, WE WILL GO TO THE ECONOMIC DATA, EXCEPT THERE IS NOT ANY. I, KEY JOINS US AS WE STAGGER INTO THE WEEK. WE HAVE JOBS DAY FRIDAY BUT FIRST WE HAVE TO LOOK AT HOUSING DATA. THE FIRST THING I LOOKED AT WAS THE 30 YEAR MORTGAGE. DOES THE FED CARE WE ARE AT 7.17%, THE MOVING AVERAGE OF A 30 OR MORTGAGE IS RIGHT BACK UP WHERE IT WAS BEFORE? MICHAEL: I DON'T THINK THEY ARE LOOKING AT THE SPECIFIC NUMBER BUT ARE INTERESTED IN SLOWING DOWN THE ECONOMY. THE SLOWDOWN IN HOUSING IS A GOOD THING ABOUT THE PROBLEM FOR THE FED OF COURSE IS, WITH NOTHING FOR SALE AT THIS POINT, BECAUSE NO WE WANTS TO TRADE IN THEIR LOWERING MORTGAGE AND PRICES GO UP ON HOUSING. WE HAD SEEN AND HOPE FOR A DIP IN THE HOUSING COMPONENT IN THE INFLATION NUMBERS BUT THIS MAY WIPE SOME OF IT OUT DOWN THE ROAD. A LOT OF WHAT PEOPLE ARE TALKING ABOUT TODAY IS WHAT WILL HAPPEN TO THE ECONOMY FROM THIS DEBT DEAL. WE ARE WAITING FOR THE CBO SCORE. TOM: THAT'S EXACTLY WHAT I'M WAITING FOR. MICHAEL: I'VE BEEN READING THROUGH THE RESOURCE -- RESEARCH AND THE CONSENSUS IS YOU WON'T EVEN NOTICE IT. IT WILL BE LIKE .1% A YEAR FROM NOW. THAT WILL BE THE PROBLEM. THIS IS ALL AGAINST THE CBO BASELINE. IT IS NOT LIKE AN ACTUAL HERE'S WHAT WE ARE SPENDING AND WE WILL CUT IT BY THIS MUCH. IT IS WHAT THEY THOUGHT WOULD HAPPEN PRIOR TO THIS DEAL. SO IT IS NOT A REALLY BIG DEAL OVERALL IN TERMS OF THE ECONOMY. WITH THE ONE EXCEPTION OF THE LAW CODIFIES THE IDEA THAT SUSPENSION OF STUDENT DEBT PAYMENTS ENDS AT THE END OF AUGUST. THOSE PEOPLE PROBABLY HAVE A HIGHER MARGINAL PROPENSITY TO CONSUME, SO THE MONEY THEY WERE SAVING/SPENDING, THEY WILL NOT BE SPENDING. THAT COULD HAVE AN IMPACT NOT ONLY FOR JP MORGAN SUGGESTING IT COULD BE CONCENTRATED IN A SHORT PERIOD OF TIME, IT COULD BEAT WHEN HE FIVE BASIS POINTS FOR A QUARTER IF PEOPLE STOP SPENDING ON OTHER GOODS. TOM: THERE IS A JUDICIAL IN STUDENT LOANS AS WELL. YOU AND I FOLLOW CBO WITH A TREMENDOUS RESPECT. WHEN WILL THEY WEIGH IN WITH AN ANALYSIS BROUGHT THIS WEEKEND? MICHAEL: THEY WILL NEED TO GET IT IN THE NEXT 24 TO 40 HOURS. TOM: THAT QUICK? MICHAEL: THEY NEED TO HAVE IT BEFORE THE VOTES IN CONGRESS. I WOULD EXPECT SOMETHING FAIRLY QUICK. AND IF THE GUY SITTING ON THE COMPUTER AT ONE OF THE WALL STREET BANKS COMES UP WITH A MODEL, THEY COME UP WITH A MODEL AS WELL. TOM: ARE YOU MODELING -- YOU ARE NOT IN THE ECONOMIC GAME LIKE STEVE STANLEY IS WHAT ARE YOU MODELING THE 200,000 STATISTIC FOR NONFARM PAYROLLS FRIDAY? EARLY REPORT? MICHAEL: IT SEEMS POSSIBLE, BECAUSE WE HAVE BEEN SURPRISED BY JOBS TO THE UPSIDE THROUGHOUT THIS WHOLE PROCESS. PEOPLE KEEP PUSHING IN THE BLOOMBERG SURVEY FOR LOWER NUMBERS. IT DOES NOT HAPPEN. INTERESTINGLY ENOUGH, BART SANDY FROM MOODY'S SUGGESTS THE BUDGET DEAL COULD MEAN WE HAVE 120,000 FEWER JOBS CREATED OVER THE NEXT YEAR, WHICH IS SOMETHING YOU'RE BARELY NOT REALLY GONNA SEE IN THE DATA THAT MUCH. THE NUMBER OF JOBS CREATED HAS TO COME DOWN, OR THE FED IS NOT GETTING WHAT IT'S ONCE -- IT WANTS. TOM: MICHAEL MCKEE HERE WITH US. IN THE TIME WE ARE RESETTING INTO JUNE, THE FINAL MONTH OF THE FIRST HALF OF THE YEAR, WHAT A WONDERFUL TIME TO CATCH UP WITH STEPHEN STANLEY, A CHIEF ECONOMIST OF U.S. CAPITAL MARKETS OPERATION. I HAVE TO GO TO THE HOUSING DATA THIS MORNING AND IT FINALLY, WITH A WONDERFUL INDEX, BACK TO NEGATIVE STATISTICS YEAR-OVER-YEAR. MIGHT JUST MENTIONED THE HOUSING ECONOMY IS COMPLETELY MESSED UP WITH MORTGAGES AND THAT. CAN YOU PREDICT THE HOUSING ECONOMY OR DO YOU JUST GIVE UP? STEPHEN: I THINK THERE ARE A COUPLE THINGS WE CAN START WITH. IN THE LONG-TERM WE KNOW THE MARKET HAS BEEN UNDERSUPPLIED FOR A LONG TIME, THAT WAS EXACERBATED FOR A TIME DURING THE PANDEMIC. I THINK WE HAVE HAD A SHARP CYCLICAL DROP IN DEMAND AS MORTGAGE RATES ROSE. BUT I THINK ONCE THINGS NORMALIZE, WE WILL GET BACK TO A PERIOD WHERE SUPPLY IS TIGHT. SO I THINK THERE IS A STRONG UNDERLYING BID FOR HOUSING. I THINK THE OTHER THING IS, AS MIKE SUGGESTED, BECAUSE THERE IS A LOT LESS EXISTING HOME SUPPLY ON THE MARKET, THIS SHARE OF NEW HOME SALES, PERCENTAGE OF HOME SALES, IS INCREASED. THAT IS A GOOD THING BECAUSE WHAT WE ARE WORKING THROUGH NOW IS EXCESS OF NEW-HOME INVENTORIES, BUILDERS HAD GOTTEN BASICALLY GOTTEN OUT OVER THEIR SKIS A BIT WHEN DEMAND PULLED BACK, AND NOW THEY ARE TRYING TO WORK DOWN INVENTORIES AND HAVE BEEN ABLE TO DO SO FASTER BECAUSE THERE IS LESS COMPETITION. TOM: WHAT DO YOU LEARN FROM RENT STUDIES AS YOU LOOK AT HOMEOWNERSHIP FOR WHAT IT MEANS FOR THE WHOLE? STEPHEN: YEAH, SO I THINK WE GONNA GO -- WE KINDA GO BACK AND FORTH ON THIS WHERE THE OVERARCHING GOAL IS FOR EVERYBODY TO OWN A HOUSE. CERTAINLY HAVE GOTTEN OURSELVES INTO TROUBLE GETTING TOO ENTHUSIASTIC ABOUT THAT. I THINK MORTGAGE RATES AT THESE LEVELS OBVIOUSLY CHANGE THE EQUATION A BIT. I WILL SAY THAT MIKE BEFORE BROUGHT UP THE WHOLE SHELTER COST PIECE OF THE CPI AND MY BIG TAKE THERE IS THE MOVEMENT THERE TEND TO BE MORE GRADUAL THAN I THINK PEOPLE ARE BRACING FOR. I THINK THERE IS A SENSE OF, AS SOON WE PEAK AND START TO TURN DOWN, WE WILL BE THREE TO FOUR MONTHS AND OPEN TERRITORY ON THIS. IF YOU LOOK AT THE DATA FOR THE HOUSING BOOM AND BUST, 15 YEARS AGO, IT TOOK ABOUT 2.5 YEARS TO GO FROM PEAK TO TROUGH ON THE SHELTER COST, CPI, AND THE TROUGH WAS BASICALLY FLAT. NOW IT IS A POINT TIME WHERE HOUSING PRICES REFLECT. TOM: WE HAVE COMING UP AT 9:00, CASE-SHILLER, THE SURVEYS OF NEGATIVE STATISTICS. MICHAEL: AS STEVE SAID, THAT TAKES A LONG TIME TO GET INTO THE CPI DATA. HOWEVER, ONE THING ECONOMISTS ARE GOOD AT IS FORECASTING CPI AND, GIVEN THAT, AT THIS POINT, IS IT REALLY GOING TO BE AS BIG A DEAL ON JUNE 13, THE DAY BEFORE THE FED DECISION IN TERMS OF THEM MAKING A DECISION, OR DO THEY HAVE A GOOD HANDLE ON IT? IF SO, WHAT DOES THAT TELL YOU ABOUT WHAT THEY MIGHT DO? STEPHEN: FOR CPI, A SURPRISE IS KIND OF A BIG DEAL. IF YOU GET .1 HIGHER THAN PEOPLE EXPECT, PARTICULARLY I HAVE NOT DONE MY FORECAST, I DON'T KNOW WHAT THE CONSISTENT -- CONSENSUS WILL BE BUT LET'S ASSUME IT WILL BE .3, USUALLY WHAT THE CONSENSUS IS. IF THE NUMBER COMES OUT AT .4 OR .5, I THINK IT RAISES EYEBROWS. I THINK WHAT YOU ARE SEEING FROM FED OFFICIALS -- HEARING FROM WHAT FED OFFICIALS ARE IN LINE WITH WHAT THE DATA ARE SHOWING, THEY ARE STARTING TO GET FRUSTRATED THAT THEY ARE NOT MAKING ANY PROGRESS AT ALL. YOU LOOK AT CORE CPI HAS BEEN .4 HIGHER FOR 53 MONTHS, SO TO YOUR POINT ABOUT EMPLOYMENT, SAME THING ON PRICES. HOPES RINGS INTERNAL AND ECONOMISTS FORECAST .3 AND NEVER SEEM TO GET IT. I THINK THEY'RE FEELING IS WE ARE NOT SEEING IMPROVEMENT IN THAT PIECE THEY HAVE HIGHLIGHTED, THE CORE SERVICES X HOUSING NUMBER. UNTIL WE SEE SUSTAINED IMPROVEMENT, I THINK THEY WILL BE ON EDGE. MICHAEL: I WANT TO CHANGE THE SUBJECT BACK TO THE DEBT DEAL. YOU REALLY FOLLOW THE TREASURY MARKET CLOSELY. THERE IS A THEORY NOW THAT TREASURY HAVING SPENT EVERYTHING THEY HAVE AT THE BANK ALMOST WILL REBUILD THEIR ACCOUNTS QUICKLY. THE LATEST BORROWING NEEDS SAID THEY HOPE TO BE AT 500 MILLION BY THE END OF JUNE. IF THEY DO THAT, IS IT GOING TO CAUSE A MASSIVE LIQUIDITY DRAIN LIKE SOME ARE PREDICTING? STEPHEN: THERE WILL DEFTLY BE A HUGE RAMP-UP IN TREASURY ISSUANCE. I WOULD SAY IT IS NOT GOING TO BE AS BIG A DEAL AS IT COULD BE BECAUSE THERE IS STILL A TREMENDOUS AMOUNT OF EXCESS LIQUIDITY SLOSHING AROUND IN THE SYSTEM. THE FED HAS DONE QT BUT THERE IS STILL TRILLIONS OF EXCESS RESERVES AND LIQUIDITY I SHOULD SAY IN THE SYSTEM SO THAT WILL HELP ABSORB THE SUPPLY BUT YES, WE WILL GET THE SUPPLY COMING HOT AND HEAVY OVER THE NEXT MONTH OR SO. TOM: IS THERE AN ANALOG TO WHERE WE ARE RIGHT NOW WITH THESE HISTORIC MOMENTS, 94, OBVIOUSLY THE BUBBLE AND ALL OF THAT BUT IN YOUR MIND, ALL YOU HAVE DONE WITH THE ROYAL BANK OF SCOTLAND, IS THERE ANY ANALOG WHERE WE ARE RIGHT NOW EXITING THE PANDEMIC? STEPHEN: I THINK THE ECONOMY IS IN A WEIRD SPOT. YOU ARE A YEAR OR TWO YEARS OUT OF A RECESSION. AND MOST OF THE BUSINESS CYCLES IN THE LAST 30 YEARS HAVE BEEN QUITE LONG. YET THE FED HAS HAD TO RAMP-UP RATES QUICKLY AND THE CONSENSUS HAS BEEN FOR OVER A YEAR IT SEEMS THE ECONOMY IS THREE-MONTH AWAY FROM RECESSION. SO I THINK THERE IS A PRESUMPTION THAT THE CYCLE WILL BE SURE. WE WILL SEE WHETHER THAT PLAYS OUT BECAUSE YOU DO NOT HAVE THE CYCLICAL OR THE IMBALANCES, STRUCTURAL IMBALANCES IN THE ECONOMY THAT DEVELOP OVER A LONG CYCLE. WHAT YOU DO HAVE, WHICH WE HAVE NOT HAD IN A LONG TIME, HIS TIGHT MONETARY POLICY. TOM: [INDISCERNIBLE] CAN YOU IMAGINE STEPHEN STANLEY AT THE PRESS CONFERENCE? THEY WOULD JUST IGNORE HIM. MICHAEL: THAT'S AN INTERESTING IDEA. [LAUGHTER] WHAT IS IT YOU WANT TO KNOW FROM THE FED THAT YOU DON'T KNOW, GIVEN HOW MUCH ALL OF THEM TALK? STEPHEN: I THINK THERE IS ALL OF THIS QUESTION ABOUT PAUSE VERSUS SKIP, AND I THINK THE ISSUE IN MY MIND IS WHAT EXACTLY ARE THEY HOPING TO SEE? WE HAVE THE QUARTERLY FORECAST, SO I GUESS WE COULD USE THAT AS A BASELINE, BUT AS I SAID BEFORE, IN MY MIND, WHEN I SEE THIS FORECAST AND SEE WHAT IS REALLY HAPPENING, THEY ARE EXPECTING A MUCH BIGGER BACKUP AND THE UNEMPLOYED RATE. WE HAVE NONE OF THAT AND ARE EXPECTING INFLATION TO COME DOWN RAPIDLY, WE ARE NOT SEEING THAT IN THE CORE NUMBERS. TOM: WE ARE RUNNING OUT OF TIME HERE. WHEN DID NONFARM PAYROLLS BREAK? MICHAEL: I THINK IT WILL BE A WHILE. -- STEPHEN: I THINK IT WILL BE A WHILE. I THINK THERE IS PENT-UP DEMAND. TOM: STEPHEN STANLEY WITH US. FROM SANTANDER. THAT SO IMPORTANT. FOR HIM TO SAY THE GLOOM AND YOU KNOW THIS BETTER THAN ME, WE HAVE PEOPLE LOOKING TO COME DOWN TO UNDER 100,000, EVEN PEOPLE WHO BOLDLY SAID WE WOULD SEE NEGATIVE NONFARM PAYROLL STATISTIC. MICHAEL: IF YOU WANT TO GET TO THE FEDS ON IMPLEMENT RATE AT THE END OF THE YEAR, YOU NEED MANY MONTHS OF NEGATIVE EMPLOYMENT STATISTICS, BUT THEY WILL CHANGE THEIR FORECAST. TOM: THE IMPORTANCE IS I'M SORRY, JUNE 1 IS COMING UP, JUNE 2 JOBS DAY WITH ALL THE WORK OF MICHAEL MCKEE ON THE EDGE OF GETTING TOWARDS THE END OF THE YEAR. FUTURES ON A CALL, UP 25, UP .6%, NASDAQ UP 1.4%. STAY WITH US, THIS IS BLOOMBERG. MORNING. ♪ >> KEEPING YOU UP-TO-DATE WITH NEWS FROM AROUND THE WORLD, WITH THE FIRST WORD, I AM LISA MATEO. RUSSIA SENT A DRONES AIMED AT MOSCOW EARLIER TODAY, THE BIG ITS ATTACK ON THE CAPITOL SINCE THE WAR ON THE START OF UKRAINE -- SINCE THE WORN UKRAINE START. THEY ARE LAUNCHING A COUNTEROFFENSIVE IN THE SOUTH AND EAST. UKRAINE ACCUMULATED BILLIONS OF DOLLARS OF WEAPONS FROM ITS U.S. AND EUROPEAN ALLIES FOR THAT MILITARY ASSAULT AREA THE EUROPEAN UNION STRIPPED OUT EXPLICIT REFERENCES TO CHINA AS A NON-MARKETING ECONOMY. IT'S JOINT TRADE STRATEGY WITH THE U.S.. EU NATIONS AGREED TO A WATERED-DOWN TEXT OF JOINT CONCLUSIONS FROM A MEETING OF EU AND U.S. TRADE AND TALK KNOLOGY COUNCIL IN SWEDEN THAT BEGINS TODAY. THE NEWEST VERSION OBTAINED BY BLOOMBERG ALSO SOFTENS EARLIER LANGUAGE ON APPROACHES FOR SCREENING OUTBOUND INVESTMENTS. NVIDIA IS SAID TO BECOME THE FIRST CHIPMAKER TO ACHIEVE A $1 TRILLION MARKET CAPITALIZATION. THE COMPANY'S REVENUE FORECAST UNDERLINED THE ENORMOUS GROWTH 10 FROM ARTIFICIAL INTELLIGENCE. NVIDIA IS POISED TO BE ONE OF FIVE U.S. COMPANIES WITH SUCH A CAPITALIZATION JOINING ALPHABETS, AMAZON, APPLE, AND MICROSOFT. ONLY NINE COMPANIES GLOBALLY HAVE EVER ACHIEVED THIS LEVEL. CANARY WHARF HAS BECOME THE LATEST SYMBOL OF THE GLOBAL REAL ESTATE DOWNTURN. THE DEBT HAS BEEN DOWNGRADED AND PREDICTED A CHALLENGING FUNDING ENVIRONMENT FOR AT LEAST THE NEXT YEAR. THE EAST LONDON FINANCIAL DISTRICT, HOME TO THE SKYSCRAPERS OF HSBC AND BARCLAYS, SAYS A MAY NEED TO RELY ON ASSET SALES TO REPAY BORROWING OR INJECT FRESH CAPITAL INTO BUSINESS. CANARY WHARF HAS MORE THAN ONE POINT $7 BILLION OF DEBT COMING DUE IN 2024 AND 2025. GLOBAL NEWS, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. I'M LISA MATEO. THIS IS BLOOMBERG. >> IF INFLATION STAYS STICKY OR IT COMES DOWN BECAUSE WE ENTER A NONTRIVIAL RECESSION, IT IS EQUITIES THAT I THINK ARE A SCARY PLACE. THEY ARE NOT PRICED CONSISTENTLY FOR BONDS. WE WILL FIND OUT WHO IS RIGHT IN THE NEXT YEAR. TOM: CLIFF OF A QR SPEAKING WITH DAVID RUBENSTEIN. YOU CAN WATCH THE FULL CONVERSATION WITH MR. ASNESS WITH DAVID RUBENSTEIN TONIGHT AT 9:00 P.M.. I CANNOT SAY ENOUGH ABOUT THIS, FOLKS. CLIFF IS ONE OF THE EARLY GRADUATES OF A HUGE DOUBLE DEGREE PROGRAM AT UNIVERSITY OF PENNSYLVANIA IN COMPUTER SCIENCE AND ONE OF THE SHARPEST GUYS OUT THERE, WHETHER YOU AGREE OR DISAGREE WITH HIM READ SERIOUS CONVERSATION. THAT IS WHAT WE LIKE TO DO WITH DAMIAN SASSOWER OUR ALWAYS INTERESTING WHATEVER MORE SO FOR THE IDIOSYNCRATIC NOT BECOMING IDIOSYNCRATIC. YOU CAN SEE SUDDENLY THINGS CHANGE IN THE EMERGING MARKETS. HE IS CHIEF EMERGING-MARKET STRATEGIST FOR BLOOMBERG. I DO NOT KNOW WHERE TO BEGIN. THERE ARE SOME ANY STORIES TO GO ON. LET'S START WITH TURKEY, WITH AN ELECTION, WE PRINTER 20 AND OUT AS 10,000, 20 LIRE PER DOLLAR, IT IS CONVEX LOG, THERE IS MOMENTUM TO IT, WHAT DOES ERDOGAN AND OTHERS TO -- DO TO STAUNCH THE MOVE? DAMIAN: SOME SACK WAS ONCE THE DEPUTY EM UNDER ERDOGAN IN 2013 BUT WAS REPLACED BY ERDOGAN'S US THE MALL. IT IS NICE TO SEE SOME CONTINUITY RETURNING HOPEFULLY TO THE CENTRAL BANK OF TURKEY BUT I THINK IF YOU LOOK -- LISTEN TO PEOPLE LIKE MORGAN STANLEY, THEY CALL FOR DOLLAR LIRE AT 20 AND SOME ON THE ORDER OF 25. MORE AHEAD FOR THE LIRE. I CAN REMEMBER THE DAYS WHEN WE WERE TALKING ABOUT SIX TO SEVEN HANDLE AND WE ARE OVER 20 HANDLE. TOM: BUT THIS IS NOT A BANANA REPUBLIC. I DON'T MEAN TO MAKE A JOKE BUT THIS IS NOT A STEVE HANKEY DOWN AT JOHN HAVE PINS COUNTRY. THIS IS TURKEY, A NATO NATION. HOW DOES THE POLITICS FULL BEEN TO THE PRICING AND SWEAT OF YOUR EM DEAD PRICE DOWN YIELD UP? DAMIAN: CERTAINLY INVESTORS ARE REALLY INVESTED IN TURKEY. IT IS DOWN 85% IN THE LAST DECADE SO NOT IN A POSITION TO SPEAK UP. I THINK WHAT IS INTERESTING IS YOU HAVE TO THINK ABOUT THE FACT NET RESERVES ARE NEGATIVE. THEY HAVE FORMALLY ANNOUNCED THEY HAVE NO FX RESERVED LEFT TO PROTECT THE CURRENCY YET THEY HAVE SUCH CONTROL OVER IT. LET'S BE REAL. ERDOGAN AND BASICALLY THE POLICYMAKERS HAVE COMPLETE CONTROL OVER THE LIRE AND PEOPLE CANNOT MOVE THEIR MONEY INTO AND OUT OF TURKEY WITHOUT -- WITH ANY REGULARITY SO IT IS NOT A SPECULATORS MARKET. I THINK YOU HAVE TO LOOK AT WHAT MIGHT COME NEXT. YOU MIGHT SEE RATE HIKES INTO THE FRAY, BUT WILL IT BE ENOUGH TO PROTECT THE ECONOMY AND DEFEND THE CURRENCY? PROBABLY. TOM: LIKE THEY DID IN CONSTANTINOPLE YEARS AGO. GO TO THE BLUE DOLLAR, A CHEAP CHART, A BLACK MARKET IN ARGENTINA. I KNOW IT IS A DISCRETE STORY, THE IMF GIVING A TON OF MONEY. THEY FAILED. THE BLUE DOLLAR PESO, THE PESO IS TO $38 AND THE BLACK MARKET PESO IS FOR 99 THE PRINT 500 TODAY I PRESUME. DAMIAN: THE REAL STORY IN ARGENTINA IS CHINA. BECAUSE THEY HAVE NOT RENEGOTIATED THE $44 BILLION IMF LINE, THEY ARE NOW TURNING TO CHINA, ONE OSIRIS, THE ADMINISTRATION IS TURNING TO CHINA TO INCREASE THAT BECAUSE THEY CANNOT PAY THEIR EMPLOYEES OR PEOPLE. TOM: WHAT'S THE COLLATERAL OR PROMISES, VISIBLE OR LESS VISIBLE, THEY ARE WILLING TO MAKE? DAMIAN: IT WILL BE THERE -- THEIR AGRICULTURAL'S. WITH ALL THE DROUGHTS, I DON'T EVEN THINK BEIJING WILL AGREE TO IT. I THINK THAT TAKES US FULL CIRCLE. INTO THIS YEAR AND THE BETTER PART OF THE FIRST FOUR MONTHS OF THIS YEAR, IT IS ABOUT CHINA'S EMERGENCE FROM COVID AND RECOVERY. NOW THAT IS FREE MUCH OFF THE TABLE AND YOU SEE IN CHINA DOLL YOU ON AT 7.08. YOU SEE CHINA YIELDS AT NEAR HISTORICAL LOWS OR AT LEAST CERTAINLY FIVE TO SIX -- AND THAT TELLS YOU EVERYTHING YOU NEED TO KNOW ABOUT GROWTH GLOBALLY. LOOK AT THE EQUITY, JAPAN, THE COSBY, OBVIOUSLY THE NDX AND NASDAQ UP HUGE. THEY ARE TELLING YOU A DIFFERENT STORY HERE READ WE ALWAYS HEAR YOU GUYS TALK ABOUT IT IS A FEW -- IT IS THE NVIDIA'S OF THE WORLD MOVING, THE NASDAQ, IT IS THE SAME THING AND SOUTH KOREA. SAMSUNG MOVING THE MARKET FOR MUCH 90%. TOM: LET'S DOVETAIL THIS. THIS IS IMPORTANT. AT THE IMF, A BOMBSHELL WAS A FIVE-YEAR VIEW OF GLOBAL SLOWDOWN. WHETHER YOU BELIEVE IN THAT OR NOT, IT IS A PRODUCTION AND WE WILL SEE IT OUT THERE. THE SOLUTION GLOBALLY IS TO GO TO QUALITY. WHERE IS QUALITY IN EM? DAMIAN: WE WILL HAVE MORE CONFIDENCE THIS WEEK AFTER WE HIT THE MINUTES OUT OF MEXICO. IF YOU LOOK AT CURRENCIES, THE MOSTLY GOOD WAY TO PLAY THE MARKETS, ON ONE HAND YOU HAVE MEXICO HUNGARY, THE COLUMBIA UP NEAR DOUBLE DIGITS, AND YOU HAVE SOUTH AFRICA DOWN 13% TO 40% THIS YEAR AND ALSO CONSIDERED A PROCYCLICAL ECONOMY BUT IT IS A MANUFACTURING COMMODITY EXPORTER, TALKING SOUTH AFRICA. IN THE SERVICES-LED REBOUND, WHICH IS WHAT WE SEE GLOBALLY, THE TECH LAG REBOUND IF YOU WILL, IT WILL BE A CYCLICAL COSBY, THEN THE NIKKEI WILL NOT BE SOUTH AFRICA. THAT IS WHAT WE SEE IN THE CURRENCY MARKETS. TOM: THIS IS MY LIFE. QANTAS IN MY EAR SAYING ASK HIM ABOUT NVIDIA. [LAUGHTER] DAMIAN SASSOWER, ONLY I CAN DO THIS. TELL ME ABOUT TAIWAN DOLLAR'S OF NVIDIA. THIS IS WHAT THE STUFF IS MADE. GIVE US THE TAIWAN DOLLAR VIEW . DAMIAN: I HAVE SAID THIS UNTIL I'M BLUE IN THE FACE, TAIWAN DOLLAR IS A GREAT FUNDING CURRENCY, A CURRENCY TO ENSURE HIGH YIELD. TOM: YOU SELL TAIWAN AND BY WHAT? DAMIAN: MEXICO, BRAZIL, THEN YOU CLICK THE RATE DIFFERENTIAL. THAT HAS BEEN THE PLAY. TAIWAN IS FLAT UP SLIGHTLY ON THE YEAR, HELPING PRETTY WELL. AGAIN IT IS PROBABLY IN LARGE PART DUE TO A TAIWAN SEMICONDUCTOR AND THE FACT YOU SEE EQUITY INFLOWS INTO TAIWAN, WHICH IS SUPPORTING THE CURRENCY ON WHOLE BUT IF WE DO SEE A FLIGHT TO QUALITY MOVE, IT WILL BE IN A UNWIND OF THESE TRADES IN THE TAIWAN DOLLAR WILL BE A LEADER. THE JAPANESE YEN WILL BE A LEADER. THESE ARE THE FUNDING CURRENCIES AND EMERGING MARKETS FOR THE PAST SIX MONTHS. ALL OF THAT GOES AWAY. TOM: I CAN DO THIS ON THE BLOOMBERG'S SERVICE, TAIWAN DOLLAR LAWYER -- DOLLARD DOWN TO 32. DAMIAN: YOU ARE LOOKING AT AT THE OTHER WAY, IT IS DOLLAR TAIWAN. DOWN TO 30 WOULD BE STRONGER TAIWAN DOLLAR IN RISK OFF SCENARIO. TOM: WHAT DOES JAPAN DO? THEY ARE NOT EM. DAMIAN: THEY WOULD PROBABLY COME DOWN AS WELL. THESE ARE FUNDED CURRENCIES AND IF WE SEE THIS WASHOUT, THOSE ARE THE TWO CURRENCIES THAT WILL DEFTLY OUTPERFORM. THERE EQUITY MARKETS ARE ALREADY DOING THAT SO IT IS UNBELIEVABLE IF YOU LOOK AT IT FROM AN INVESTOR STANDPOINT. IF THE MARK -- THE MARKETS ARE TELLING YOU TWO DIFFERENT THINGS. TOM: I LOOK AT SEE NY AND SOME PEOPLE LOOK AT CNH. THE FACT IS IT IS NOT JUST BACKED UP WEAKER YOU ON, IT IS THE WAY IT IS DONE IT. IS IT MANAGED? DAMIAN: IT IS. WHAT WILL BE INTERESTING AND WHAT THE MARKETS ARE AFRAID OF IS BEIJING IS ALLOWING IT TO DEPRECIATE IT. BECAUSE IT WANTS TO WASHOUT THE SPECULATIVE SHORTS. I THINK THE FEAR IS THEY MIGHT IT LET GO TO 7.1. AT THAT POINT, THERE'S A LOT OF DEMAND FOR YOU ON, THE DOLLAR EXPORTERS IN CHINA. WHAT WILL BE INTERESTING AS LET'S SEE IF THE SPECULATORS GET WASHED OUT. TOM: THEY CAN CONTROL IT THAT MUCH. DAMIAN: IT TRADES WITHIN A RANGE, IT HAS BEEN A STABLE CURRENCY. THE CHINA/YUAN IS A GOOD PERFORMER. TOM: WHAT IS YOUR SINGLE BEST EM OPPORTUNITY THIS MORNING? DAMIAN: I THINK WE GOT A LOOK AT THE MINUTES IN MEXICO. WE SAW CENTRAL BANK MINUTES OUT OF FILE YESTERDAY AND -- OUT OF CHI LAY -- CHILE. THE CHILEAN PESO IS ONE OF THE CURRENCIES UP. I THINK YOU COULD SEE GOOD DEALS THERE. I LIKE THE CHILEAN PESO. TOM: THIS IS THE DIFFERENCE, I'M WATCHING PADRES GO DOWN THE DRAIN AND DAMIAN SASSOWER OUR IS READING --DAMIAN SASSOWER IS READING CHILEAN PESO. THANK YOU SO MUCH. REALLY IMPORTANT WORK THERE. IT'S AN EXTERNAL TIME I THINK JOHN DID A GREAT JOB OF REALLY FEATURING NVIDIA. IT IS LIKE A $1 TRILLION COMPANY, 26,000 EMPLOYEES VERSUS A 200-7000 EMPLOYEES, IT'S AN EXTRA IN A STORY. WE WILL DRIVE THIS CONVERSATION FORWARD WITH THE LEADERSHIP OF "BLOOMBERG TECHNOLOGY". LOOK FOR THAT THROUGH THE DAY AND FRANKLY WE WILL GO INTO THE ASIAN MORNING. TONIGHT AT 11:30, EAST COAST TIME, A FOLLOW UP INTERVIEW FROM WHAT WE DID A COUPLE WEEKS AGO BUT IT IS IMPORTANT. THIS IS WITH STEPHEN ENGLE WITH JAMIE DIMON, LOOK FOR THAT TONIGHT FROM SHANGHAI. YOU CAN SEE THAT 11:00 A.M. NEW YORK TIME. I WILL LET YOU FIGURE OUT THE TIMES. DAMIEN KNOWS THE TIME ZONES AND I DON'T REALLY KNOW THEM. TONIGHT, JAMIE DIMON THIS IS BLOOMBERG.

Channel: Bloomberg Television

Views: 31,615

Keywords: Jon Ferro, Lisa Abramowicz, Tom Keene

Id: NgWJ-QualBE

Length: 147min 20sec (8840 seconds)

Published: Tue May 30 2023