>> look at the broader picture. the broader trends are moving down. >> most people are not

anticipating a re-acceleration in inflation. >> i'm just happy tightening is over. >> the economy is on a cooling path but it is a gradual path. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: the most important hour of this morning begins right now. good morning, good morning. your equity market on the s&p 500 positive one third of 1%. 30 minutes away from ppi, jobless claims, and retail sales. lisa: will it change anything? ultimately i want to see if the market cares. how much people start to realize there's something greater under the hood then we are pricing in. jonathan: they can have a

conversation about a balance sheet doing something about qt. the risk event for a lot of economists is whether those three cuts implied by the median dot drops down to two. which would track the market in the direction the market did not want to go. lisa: and if jay powell does not sound as rosy about everything, it may be is concerned financial conditions have eased, people say the root -- the reason equity markets do not care is the fed does not want to cut and the fed will cut and it will keep this party going. annmarie: what happens if jay powell goes not just 322 but he has to push it back in the timeline. what does that mean for november? jonathan: let set up the next 60 minutes. will be talking about tesla as well. yesterday it was a lot lower. there was a downgrade from an

analyst at wells fargo. off the back of this story that ultimately there is no growth. a growth company with no growth. how do you value that company? lisa: a lot lower than you did yesterday or the year before. this is been kicked out of the magnificent seven this year and last year and now we are looking at a question of is this a pause or is this a shift where people have to assess the profitability of the electric vehicle transition. jonathan: no growth this year. negative volume growth next year. annmarie: the issue is the broader ev market. then you look at china where tesla wants to be selling. they sell a model price for less than $10,000. how you compete with that? jonathan: the market has been

going towards hybrids. pure ev struggling. is this where the market will be for the next several years? this is consensus now. this is the market. is that where it will be the next couple of years? lisa: a lot of people say it is delayed, not deferred. the idea we will get there eventually. i have never known how you price tesla. is it a tech company? there are questions how you can effectuate the ai dream through the car if people are not buying the car. this is a key question going forward i will not weigh in on. jonathan: then you have the cult of elon musk for the premium. lisa: and they can send your hate mail to my inbox. i read all of it. jonathan: you like to suffer. tesla slightly negative.

coming up later, colin langton of wells fargo. in the bond market, the 10 year yield unchanged. 4.1919. coming up we will catch up with anastasia amoroso about why she thinks markets are in a sweet spot. michael sheppard on bidens pushback come and jay bryson of wells fargo. we begin with our top story. stocks pausing ahead of the final inflation report. anastasia amoroso saying "since january we have seen economic data well above expectations. mainly jobs at inflation data, supporting the view the economy could be experiencing an acceleration. despite the fears of overheating we have seen data start to cool from the start of the year, indicating the economy may be operating in a sweet spot." anastasia joins us for more.

is this why you are still constructive on this equity market? anastasia: the sweet spot is exactly how i characterize these markets. when you have good economic data the markets tear that because good economic data is good for profit margins. one of the things we have seen this year as the economy is stable and accelerating, we've also seen the earnings growth expectations are also stable. that is why i think the markets have been able to push back the rate cuts and still move higher. on the flipside, if we get bad economic data, the consensus will jump in and say that means the fed has to cut rates. whether it is economic growth, whether it is rate cuts. that is why the market is in a sweet spot. jonathan: equities keep on ripping. can you talk about the part of the stock market you still like. is it big tech or are you elsewhere? anastasia: i like some of the big leaders and before the

segment we were talking about how tesla is out of the magnificent seven. you like parts of the magnificent seven related to artificial intelligence and are delivering on that. the other interesting story is there is a broadening out happening in the market and i like the cyclical strength. one thing that stands out is industrials. under the surface you are seeing a lot of firming in the manufacturing space. you saw a big uptick in new orders from ism manufacturing. when i look at the global manufacturing index it is back above 50. it is the strongest level we have seen in a year and a half. it is china, it is india, it is brazil. that is why it have been strong year to date. when you look at hedge fund flows they are going into industrials. i like sticking with ai. i do think it is time to add

some cyclicality to the market. jonathan: when i go home i will look up google searches of sweet spot and goldilocks and see how much it has surged. along we stay in this everything is awesome, ignore everything, it is all good? anastasia: if the fed starts to push back on rate cuts and it looks like we will not be getting rate cuts this year that is when you start to worry. the last time i joined you in december i talked about the size of the debt pile. whether it is the u.s. government debt or corporate debt. it is fine if it has to be refinanced at lower interest rates as the year progresses. if it still has to be refinanced at 5.5% as the year progresses, i think the debt burden starts to build. i do not think we get to that. i think the fed does cut before that. that would be the pivot point. lisa: which is the reason why i think a lot of people are saying

we can worry about it later. when you talk to investors around the world and travel in the u.s., are people concerned about downside risk or are they concerned to mandy xu's point of not getting the upside risk that could be where volatility is headed? anastasia: there are two ways i have to answer the question. i was at a presentation in california and i did a survey of the room. most people were bullish and most people agreed with the bullish consensus and the question i posed, consensus for analyst is 5000. that is the target for the end of the year. the survey of the room is more constructive. on the flipside, we do quite a bit of structured investments for our clients and a lot of our structured investment advisors are asking for additional protection on some of the structured investments they are doing, meaning there as think not just for a 10% downside but something more than that.

it depends on how you have participated or not in the market the last year. if you were sitting in cash you are probably playing catch-up now. if you did well in the tech trade you might be looking to de-risk some of that by adding additional buffers. jonathan: we have seen -- lisa: we have seen the nasdaq 100 underperform some of the equal weight. do you buy this idea we have gotten frothy, we like to trade long-term but we could pull back. that is what we've been hearing from every analyst. is that where you are? anastasia: i have to agree with the consensus. if you look at every single technical indicator we have seen some overstretched positioning, some overstretched momentum. you'll probably have a catalyst in's -- a catalyst to consolidate some of that. if you look at the ai trait launcher this is a multiyear opportunity, close to a $1

trillion adjustable market that i think most analysts are still mildly conservative. i'm using nvidia as an example. the reason why nvidia has been able to top estimates is because analysts are only penciling in what they can see from that couple of quarters but they are not modeling in the troop $1 trillion cap into 2026. as that comes into view and analysts and companies deliver at the analyst reset expectations, that is what gives you the upside. i would say keep if you look at some of the price targets for tech stocks today, maybe they are more modest, but that is not a ceiling. that is just a starting point. annmarie: in your latest note you look at the election and you say the market is pricing in a winner. who and why? anastasia: it is clear from market data that the market is pricing a republican win. if you look at the predicted odds, the former president trump

does appear to be in the lead. since october 2023 you have seen various types of republican baskets from various banks outperform by a wide margin the democratic baskets or the republican underperformers. i think part of it has to do with the election odds. i also think the composition of the baskets are more cyclical for the republican basket. you look at things like financials, industrials, energy and materials. it does have a high correlation with the s&p. if you look at hedge fund positioning in the republican basket you are seeing longs added to the republican longs in the opposite to the democratic basket. jonathan: do you think that is correlation or causation? anastasia: a little bit of both. the primary reason for why the republican basket is outperforming is because of that cyclical incentive.

that is more of a correlation. there is a part of the investment community that is positioning for election outcomes. what a great way to position if that is the outcome you're trying to position for which is the cyclicality of the portfolio which is right with the momentum of the economy and the market, and it has the potential to benefit from a republican win. the democratic baskets are pretty concentrated and there is a lot of evs in there and a lot of clean energy. is it because of the odds of president biden not being reelected? or is it fundamentals. jonathan: fantastic as always. anastasia amoroso of i capital. just got a note from citi. this is what he has to say of retail sales. if the control group is expected to increase after decline in january and does not come a

second consecutive decline would raise recession concerns. have not heard much of that at all. lisa: this is the question. if we start to see people stop buying, it goes against what we are hearing from companies. that could be a real problem on the downside. jonathan: the data is 17 minutes away. let's get you an update on stories elsewhere this morning. here is your bloomberg brief. >> they built aims at forcing a sale of tiktok is moving forward. the house passed the tiptop divestment bill by a vote of 352-65. it moves to the senate where its prospects are less clear. chuck schumer has only said he will review the bill and rand paul and other republicans have come out against it. investors anticipate the highly anticipated reddit ipo. bloomberg news has learned reddit is telling potential

investors it expects revenue to grow by 20% versus the previous year. the company's revenue come in at just over $800 million. disney is making a push to find a successor to bob iger. the board is focusing on the leaders of four different divisions as disney is embroiled in a bitter proxy fight with billionaire activist investor nelson peltz. bob iger's contract runs through the end of 2026. no decision on his his cancer -- no decision on his successor is expected this year. ubs price target down. three reasons. revision driven by slower demand in western countries. intense competition in china. very limited units in 2025 pushing meaningful volume to start in 2026. that stock is down 1.5%. up next, biden backing u.s.

steel. >> we know we have to reassure and we have to be self's of -- we know we have to reshore and we have to be self-sufficient. we need to be able to do things here first. jonathan: that conversation is up next. ♪ j.p. morgan wealth management knows it's easy to get lost in investment research.

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jonathan: equity futures up one third of 1%. yields unchanged. the data 12 minutes away. biden backing u.s. steel. >> this is the one of the most bipartisan things on trade. they understand how important manufacturing is for the united states of america, and if you look at the challenges we had during the pandemic if you cannot get basic things -- every

industry struggled because they cannot get parts from other parts of the world. we know we have to reshore and we have to be self-sufficient. we have to be resilient. that does not mean we cannot have partners but we need to be able to do things here first. jonathan: president biden releasing a statement opposing the potential takeover of u.s. steel by a japanese firm. biden saying it is important we maintain strong american steel companies powered by american steelworkers. i told the steelworkers i have their backs and i meant it. u.s. steel has been an iconic american company for more than a century and it is iconic -- it is vital for it to remain an american company domestically owned and operated. biden's announcement coming as the campaign for union and blue colors vote for his reelection bid. national security dominating foreign policy in washington.

tiktok yesterday. u.s. steel this morning. where is this effort going into november? michael: it is a great question. we are seeing various threads come together. we heard the u.s. steel ceo talking about the importance of supply lines and supply chains. when it comes to ep's and tiktok's where we saw the big vote in the house yesterday come the question concerning data. all of these roads point back to china. the underlying tensions between the world's largest and second largest economies remain in the u.s. is concerned about making sure americans data and privacy and national security are protected and supply chains are too. jonathan: if everything is a national security risk are we diminishing the meaning of nationals early? michael: at a time we are also seeing russia making gains on the battlefield in ukraine and this battle to win the hearts

and minds of the global south, everything acquires an additional level of importance. people are much more fundamentally aware of how all of these things fit together, especially after the pandemic when we saw supply chains pinched and the effects felt at home. it may not look like a national security question in the traditional military defense sphere, yet there is an economic security question that is just as important and hits home pretty directly when things go sour. annmarie: japan was worried when the u.s. paused lng export approvals and now japan is concerned because of u.s. steel. is this administration putting election politics over its allies? michael: i am glad you asked that. as you know in a few weeks the japanese prime minister will be finishing -- will be visiting washington and this will be an awkward moment for him with the

president because obviously nippon steel is an important manufacturer back home for japan. they are buying an iconic american firm. i am glad you are able to show that for viewers. there was so much to unpack what biden was saying. he is addressing u.s. steel status. even in a nonelection year this would be a tough year to get through. he said he would block it immediately. i think it would be tough for biden to do in an off year. he was born in pennsylvania. he has ties to this area. u.s. steel is from pittsburgh. at the election year and it becomes harder, especially as trump and biden are vying for the vote and trying to win in the swing states and trying to win not just in pennsylvania but michigan and was -- and

wisconsin. annmarie: can he win without the blue wall? michael: the democrats maintain they of several paths to victory. it will be difficult. it would require him to win the other four swing states including arizona, georgia, north carolina. this would be a much tougher road to hoe for him if he does not prevail in these three places. in 2016 trump swept them and in 2020 biden turned around and swept those three. jonathan: a busy time in washington, d.c. lisa, you are the first to identify everything seems to be a national security risk. lisa: i am looking up people who are specialists in national security i want to talk to them about how this is unprecedented or not? jonathan: are they hiring? [laughter] lisa: everything is about national security. does it lose meaning if it is

being used for everything and if it is being conflated with trying to keep business at home and trying to cater to certain union interests. annmarie: everything is national security until it is not. look at what happened with lng permits. they decided to lean into climate and not national security. national security is useful for trying to shore up the supply chains, which nippon steel only has about 5% of its production in china, not sure what the national security concern is exactly, election politics play out. jonathan: what is the election in november? what day? annmarie: it is the fifth. jonathan: the sixth is when everything is no longer national security risk. lisa: there are questions. if the facts are conflated with other things does it money the conversation? jonathan: michael mckee wants to talk about the risk to national

security of retail sales. michael: i am shocked politics is going on in washington, d.c. [laughter] politics does play into the retail sales and ppi numbers because it is all about the economy. i don't know there is a national security interest in any of these data but the potential for gdp -- we look at defense spending. we are looking at a strong rebound in ppi. weather affects in january. the ppi is expected to stay about unchanged, but it will be interesting to see the categories that move because some of this feeds into pc which the fed cares about. jonathan: which pieces of ppi are important for pce? michael: portfolio management. we have talked about how much that has added to pce inflation and also insurance. that has come up politically in

washington. the cost of auto insurance, life insurance, everything has come up very fast and people are wondering what is going on with the insurance companies. lisa: our lives are just worth more. jonathan: well said. it is not about being ripped off. we are just more valuable. lisa: 100%. michael: start talking about your premium? jonathan: up next, who are you? ppi, retail sales up next. jay bryson of wells fargo up next. where is bramo? lisa: she is coming back. [laughter] ♪ just start with a domain, a few clicks, and you're in business. make now the future at godaddy.com/airo

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it's t-mobile. it started when we got him under a new plan. but then they unexpectedly unraveled their "price lock" guarantee. which has made him, a bit... unruly. you called yourself the "un-carrier". you sing about "price lock" on those commercials. "the price lock, the price lock..." so, if you could change the price, change the name! it's not a lock, i know a lock. so how can we undo the damage? we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. okay, that's uncalled for.

jonathan: the biggest economic data of the week going into the federal reserve decision. equity futures positive one third of 1%. retail sales, jobless claims, ppi data coming right up with michael mckee. two year, 10 year, 30 year. the 10 year just short of 4.20. with economic data here is michael mckee. michael: retail sales a little lighter than anticipated. they were down .8% last month.

the expectation was for a .8% increase. did not get that. autos did rebound in the month of february. a lot of what happened to retail sales in january was weather related. we may be seeing some rebound here. retail sales control group is flat after declining in january. not as good as people thought. ppi comes in. the headline is up .6%. that is double what it was last month. double what was expected. that will not be good news for the federal reserve the idea they want continued good news on inflation. the core rate is up .4% every .6% rise the prior month. year over year goes from a .9%

increase to a 1.6% increase, a large move. the cordial stop move. -- the core does not move. the regular core with food and energy taken out from 2%. we have issues there. if you want to have something good to look at take a look at jobless claims. they faulted 209,000. last week 217,000 revised to 210,000 and continuing claims fall a lot from the initial report last week. the initial report was overstated. we are at 1,811,000. last week's revised down to 1,794,000. the narrative that it is getting harder to find a job seems to have gone away along with the narrative that inflation will get to 2% quickly. jonathan: as we like to say,

that is the right kind of downside surprised. something for everyone in this state -- in this data. still positive on the s&p. up a similar amount on the nasdaq. in the bond market, one-way traffic. yields up all week. thursday yields up another three basis points to 4.66. we are getting closer. we started the week at about 4.48. yields up all week off the back of upside surprises. there is foreign-exchange. euro weaker. let's go through the data. ppi come upside surprise, jobless claims, downside surprised. retail sales softer. there is something for everyone. lisa: something for everyone but

the narrative is clearer. inflation is not going down as quickly as people thought. that is going into fed futures where you now have a 60% chance of a rate cut for the june meeting. the labor market is not weakening as much as people thought and inflation is not going down that pairs with the anecdotal data. jonathan: ellen zentner of morgan stanley said it would take three participants to change from three cuts to two and for the median dot to move to two cuts in 2024, underscoring the risk of fewer rather than greater cuts in 2024. that is the concluding point. lisa: there is no way the fed can say we have got more comfort from these numbers and we are getting closer to our 2% goal? how can they message this in anyway way if they message the opposite? that could cause a real reaction. jonathan: most people we spoke

to when we asked about the summer economic projections, are they going to change from december, the answer is no. is there a chance they change from december? michael: we heard some of them talking in between the meetings about the possibility they might not cut rates this year. raphael bostic and neel kashkari talked about that. it is possible they could move their dots. we assume their dots were in the two cut range before. if they look at this data and think this will persist and you have to take it apart to know whether it will persist, the portfolio management thing we care about for the pce looks like it was up just .2% after 5.9% in january. it was not the stockmarkets fault. this time insurance, health and medical insurance up 1.4% after falling 1.1%. this is probably a catch-up to

the turn of the year when insurance raise their rates so we are seeing a little bit there. those two areas are things that will be something the fed is watching. lisa: what we are seeing an initial jobless and continuing claims, people can get a job and are not getting laid off. it does not seem like that is an issue. on the ppi side can we say the narrative is we are seeing good three inflation in a way of a lot of people do not want to see? michael: that is a good way to put it. you did not say in a way people do not expect. it was expected we would see goods deflation slow and end because trees do not grow to the sky or fault to the ground the same way. it looks like maybe that is where we are. in terms of jobs, what you would expect from jobs is people spend money because they have employment. it does not look all that bad

here. we saw just a .6% rise in retail sales overall. a lot of that was held down by gasoline prices. gasoline prices were up only .9%. that was not what people expected. clothing store sales fell .5%. department store sales fell .2%. motor vehicles were up 1.6%. electronics and appliance stores up 1.5%. some categories did fine, some not so good. the food services and drinking places were up just .4%. it does show people are still going out. jonathan: that is the tk indicator. we have traditionally always looked at that. that is retail sales. jobless claims, big downside surprised.

209,000, the previous week revised to 210,000. the estimate was 218,000. the decline expected to go higher. that did not happen. ppi hotter than expected. ultimately the trend this week on inflation come upside surprise come upside surprise. what you have seen in the bond market, four days of yields climbing. we can look at the two year yield. yields up went 5%. -- yields up .5%. in foreign-exchange the euro a little weaker and the dollar stronger. in equities the s&p 500 positive .2%. rather like what we saw on cpi, the initial move faded after a few minutes. i say when the data comes out let's see if it sticks.

a lot of the bad stuff has not stuck at all. lisa: what is the bad stuff? higher inflation or retail sales people are hooking into and said maybe there is week this? people see the narrative they want to believe and the problem is we have not gotten conclusive data to confirm a lasting trend. it is hard to ignore the upside surprise to inflation. jonathan: jay bryson joins us for more. cpi upside surprise, ppi upside surprise. going into next week what changes if any would you expect from the outlook from the federal reserve? jay: in terms of the macro economic projections of the fed i am not expecting a lot. you were noting earlier in terms of the dots, it only takes two members to switch from three rate cuts to two. the median could change next week. if there is an upside risk, it would be to higher inflation.

may the median dots shifting up as well. i would not expect huge changes from the statement next week or from what chair powell says in his press conference relative to what they have been saying recently? lisa: have you changed your view about how sticky inflation is and how long it will remain high in the face of a labor market that does not show signs of cracking? jay: we have pushed back -- we initially thought the first rate cut would come in may. that is off the table at this point. we have pushed that to june. i think the risk to our forecast would be skewed towards later. the probability of july is higher than may. in general we have not changed our views that much. in terms of the labor market, we saw initial jobless claims today. i would not make a lot of one week's data.

what we are seeing in terms of the labor market is the quits rates is coming down quickly. job openings is also coming down as well. the unemployment rate is starting to move higher. obviously it is at a low level still. we are seeing some softening in the labor markets. not like it is falling apart. that should continue to bring the employment cost index lower. lisa: how long will we remain in this limbo. people saying the sky is falling, inflation is re-accelerating, and other people say cut it out, it is on a downward trend, you are being overdramatic. how long before we have a conclusive decision on those narratives? jay: i wish i could answer that question. we will be in this choppiness for a while. we will have to live with that. what you need to do is step back and you need to say we all look at this data and what does it

mean for the fed. the fed does not know either. it is ticking these data in its entirety as they come in and making decisions as we go forward. we will be in this choppiness for a while. lisa: as we take a look at the way the market is responding, we see stocks shrugging off everything. we see bonds reacting. what is the threshold for financial conditions and the easing of financial conditions to create a problem for the federal reserve? jay: if we continue to trend in this direction, stock prices going higher, if we see bond spreads coming in and financial conditions and that juices the economy even more, that would be somewhat of a problem for the fed in terms of its easing path going forward. they are not targeting stocks prices. what they are looking at is the effects of these financial

conditions on the overall markets or the overall economy in general. people make a big deal out of stock prices. it does have a wealth effect on people but those effects tend to be pretty small. the point is you need to have a lot of financial conditions loosening for it to really start to have an effect on the fit decisions going forward. i do not think we are quite at that point. annmarie: jay powell continue says at some point this year we will be cutting. does that change to later this year? does the timeline just get pushed back? jay: i think it does. the inflation rate is trending lower. it is not coming down as much as people would like it to be but what is happening is the inflation rate continues to come down in the fed remaining on hold, the real fed funds rate is passively going higher and that is acting as a passive tightening on the overall economy. in some sense they need to be cutting rates.

maybe not in may or june or july, but they need to be cutting rates later this year or you will have a passive tightening of monetary policy which could potentially slow things a lot more than people are expecting now. jonathan: appreciate your views this morning. jay bryson of wells fargo. it is part of the job if you're in that seat. you have to make a call on when the fed will cut. june feels meaningless to me. the correct answer has been later. much later than you thought. it was march and then it was may and then it was june. if you're looking to gain confidence from every single data point into a fed decision, how can you argue they have gained any based on what they have seen over the last two months? i would argue they have lost some where they should have. lisa: i am getting some messages who say retail sales show weakness. the issue is it has not been conclusive.

if they are looking for confidence, and when we have talked to feels confident about anything. we are in this morass of confusion as we emerge from the post-pandemic reality into something else. we do not know with the something else is in either today. cap and you say with definitive assurance we are on the right path? jonathan: retail sales cream weakness. jobless claims scream strength and ppi says sticky. i want to get you an update on stories elsewhere. here is your bloomberg brief. yahaira: space x is said to take another step forward in its starship program. the launch for the third major test flight opened at 8:00. the target for lift off is aiming for 9:25 eastern. starship is the largest and most powerful rocket ever developed and has the ultimate goal of taking us to mars. the last two tests ended in explosions with this launch hoping to approach orbit.

janet yellen says it is unlikely market interest rates will return to pre-pandemic levels. the covid pandemic triggered a wave of inflation and higher yields. the 10 year yield averaged 2.39%. last october it spiked above 5% after the fed raised rates aggressively to combat inflation. rents in manhattan rose during a busy february, with median rent coming in at just over $4200. that is up 3.3% from a year ago. overall the number of new leases signed in february in manhattan were up 8% from last year. rents typically drop during the winter months but apartment prices are not letting up. that is your bloomberg brief. jonathan: up next, tesla, the growth company with no growth. a fantastic note in the last 24 hours from colin langan is this stock tries to bounce back

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jonathan: stocks on the s&p 500 still doing ok of the back of another upside surprise. ppi up another two -- up another two basis points on the 10 year. under surveillance, the growth company with no growth. >> tesla is currently between two major growth waves. we are making sure our next growth wave is executed as well as possible. jonathan: tesla under pressure as a growing number of firms sound the alarm on demand. wells fargo analyst colin langan cutting the stock to underweight , writing "we expect volumes flat in 2024, down in 2025 in

the wake of cuts, lower lease residuals, disgruntled customers come in the possible loss of luxury band premium." they growth company with no growth. how do you value a growth company with no growth? colin: we usually use a dcf. you have to look at the long-term. we look at a traditional dcf valuation, looking at the long-term valuation, and we also try to normalize what we are pricing in. even on the pricing target i fill -- i still think we are pricing in 10 million vehicles in 15 years. still a big number from where we are. jonathan: growth the year after? colin: i have a little over 10% in year after when model two hits and there's is probably a risk to that. we will see with the potential model two is. we are using unboxed production so there is high execution risk to bring that to market. lisa: is this a tesla problem or

an electric vehicle market problem tesla is catching up to? colin: what i am talking about is more of a tesla problem. i am pretty cautious on all of the tent -- on all of the auto industry. you're talking about a product that is old. we are seeing customers not interested in it. why we drove the downgrade is the impact of the price cuts is having a smaller impact on volume. first have to second half of volume went up 3%. the pricing cuts are painful. it costs almost 7000 in growth premium. as you mentioned in the intro you have risk to the brand, risk to residual values and that will cost disgruntled comps tumors when your vehicle is worth last. there's a lot of pain to do the price cuts, a lot of profit losses, and we are not seeing the volume. that is why we will have to make a trade-off and capitulate we

cannot grow deliveries with price cuts. lisa: using the discussion point around the fact that china is driving the weakness in tesla might be overstated, there there might be more in play domestically for the company? colin: we are seeing weakness around the world. u.s. come ever since q2 it has peaked and softened. that is with all of the price cuts. we have seen weakness. the product is seven years old now for the model three. in china they are flat, but they are flat in a market that has been growing so they are losing market share. longer-term the threat from chinese be companies israel. -- for china companies is real. they are formidable threat on the global stage. annmarie: you think the price cuts were a mistake? colin: hindsight is 2020 but i kind of do.

if you're covering the auto industry for almost 20 years there are not many places you make money. you make money in luxury and full-size pickups. historically it is probably almost all of the global profit full. one of my concerns is as we wait for these years, you get model two. we are forgetting the prior launches were in the luxury market where there is more room to make margin. now we are launching into a compact suv. compact vehicles are notoriously limited profit. a lot of people think of them as starter vehicles. very narrow margin starting point. when you revolutionize unboxed productions they need that savings to get there. the other risk with unboxed is the savings will only be there if you sell in volume. if the vehicle is not very successful in terms of volumes you're not get any of the cost

savings you get on labor and depreciation. jonathan: you do not like the detroit three. adam jonas at morgan stanley is more constructive. higher for longer internal combustion engine -- we believe the narrative is changing on a global autos. why you see it differently? colin: i think what people are missing is ev's. even though they are softening we are seeing consumers not interested in them. they still need to sell these vehicles. even if a republican or trump wins it will take him time to change the current rules and the rules are aggressive. we are at least stock through 2026 targets which for the troy three you need 10%. you'll have to sell more of those. i think people are getting numb to the fact pricing has been strong. pricing could come down. that will be a pain through the year. jonathan: gm conflict the switch

and become toyota overnight. is that too difficult? colin: it is difficult and that is one of the concerns i have for gm as they say they're going all in on ev's. ford and stellantis have developed hybrids so they can ramp those strategies. jonathan: this was great. fantastic to catch up. colin langan of wells fargo. the growth company with no growth. lisa: which is the reason it got booted out of the magnificent seven. i want to note quickly, i was going through some of the retail sales data in this is a component of the auto sales and some of the issues. people are being much more careful with how they by and what they buy and how much they spend. jonathan: you can see where the growth is. this is not my opinion, is just where we are now. the sweet spot are hybrids. toyota stocks flying.

that is where the market is. lisa: and the company is able to track the reality of demand will be more successful. is it a tell on how you can get ahead of where consumers will be versus where the market will be? jonathan: the market is shrugging off the numbers we got moments away. -- moments ago. on the s&p 500 positive. ppi higher-than-expected. tomorrow john stoltzfus, sarah hunt, and ian lyngen of bmo capital markets. ♪

dani: from new york city for viewers worldwide, i am dani burger in for jonathan ferro. another round of choose your own and venture data with large-cap stocks holding onto their gains. the countdown to the open starts now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. dani: