>> central-bank policy in regard to the fed is very, very binary. >> they need inflation to come

back down to 2%. we need to be confident that things are going in the right direction. >> they are trying to tell us that we are on a path to get to rate cuts now. inflation has come down enough that they think they will be cutting interest rates. >> we could still get three rate cuts despite the inflation data. >> they are trying to play the waiting game. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: bloomberg surveillance begins now. live from new york city, good morning,. equities tried to bounce back at .40% on the s&p 500. nothing stable the last 24 hours after a tragic bridge collapse in baltimore. it shows how fragile global supply chains are and inflation is going into pca friday morning. lisa: we thought supply chain shocks were behind us or at

least subsided, and this raises questions of how vulnerable the global economy is to one artery that is not that significant on a global scale been disrupted. a lot of people gaming out that it would not necessarily be massive. a disproportionate effect on specific industries, pointing to coal. jonathan: this is going to take time to figure out the disruptions and time to clean up. and it will take time to rebuild and a heck of money, as well. annmarie: bloomberg economics was talking about if this is not quick, potentially it will have an inflationary impact on the end of the year inflation numbers. time to rebuild means it will take a ton of money. we will get an update from governor wes moore of maryland, intentionally before, and he will talk about what is happening in terms of the cleaning up of what is going on, getting that ship out of the way and opening up the channel. jonathan: we had a conversation with citi yesterday, and a

quote you shared yesterday that the period of deflationary goods we have been in, we are probably coming out of that now. how much of a challenge would that be to lose some of the heavy lifting? andrew's point is that for services to do that, it will require an economic dance over, which is the base case on the fomc at the moment. lisa: it is what bruce castor been referred to, when he talked about how the service side of inflation has remained sticky and expects it to remain so. a lot of the disinflation we have seen has come from the good sector, and we have seen that this might not be significant on the overall number, but what we are looking at now is a situation where commodities are coming back up, goods and prices are coming back up, it is a new era where people will see challenges on inflation. jonathan: without a doubt. pc data is a few days away, and

then we will hear from chairman powell after that. the price action this morning, equities of .3% on the s&p. the bond market, yields down by a single basis point, 4.2179. lisa calls is boring, maybe people say it is just stable. lisa: if it was just stable, why the dramatic selloff in things like nvidia last night in the last half hour of trading? it doesn't feel there is a ballast of calm, as much as elective conviction. it is a different moment that is fraught for the potential for news to disrupt things. jonathan: we will ask that question to keith lerner in a moment. we will catch up with a former fed vice chair, rich clarida, and the vw north america ceo on the company's ev strategy, 40 minutes away. stocks are missed as investors

await the inflation gauge friday. the equity market has been resilient since the rebound off the lows last october, strong price momentum like we have seen over the past five months tends to occur in the midst of bull markets, we still expect to see normal pullbacks along the way, but we suggest investors stay with the primary market trend, which is up and look to pullbacks as opportunities, says keith lerner. he joins us now for more. five months of gains is what we are on track for. three weeks of losses in that time, and two came last month. why do you believe this can continue? keith: great to be with you. as you have said, it has been and asked ordinary five months. just looking back at the starting point, we have seen five months of gains of more than 20%. the only game has been more than 3%. we have only seen this happen 10 times since 1950.

average gains have been a double digits. to be fair, that is only 10 times so that is just a starting point. the market on the short-term basis is stretched, but when you see strong momentum, like we saw late last year, like we saw breaking out of the two year range in january and now this, those tend to have been in a bull market and the surprised tension is to the upside. historically, you have only had three years since 1980 where you have not seen a 5% pullback, but you stick with the primary trend and you look at the pullbacks as opportunities. jonathan: this hasn't just been contained to the u.s. we have seen it in europe and japan. are you more confident in the story at home or abroad? keith: we have been team usa for several years. as you pointed out, we see germany, spain, italy, japan, which was, you know, coming out

a lot this morning. so, i think we are seeing a broadening of the market, but we still like the u.s. for several reasons. one, economic trends, and the u.s. is still powering up with revisions and the earning trends are stronger in the u.s. relative to international markets, as well. and the relative price momentum is better. for us to get more positive international, we would like to see earning trends flipped, and normally, international markets to better the dollar weakens and coming out of a major low or major high out of a recession. we are watching. they are cheap, and we think they are for a reason, but we are being patient. lisa: the u.s. bias being equity focused. we were talking earlier about pimco quoting in a financial times article talking about how he likes longer duration bonds overseas. not in the u.s. because that strength is also

coming with perhaps a stickier inflation going forward. do you agree? keith: we are more focused on the u.s. in some ways, as you invest overseas, there is also that currency component. you get the big kicker in the equity market and the fixed income market with overseas currencies rallying with the u.s. dollar weakening. the u.s. dollar is in a choppy range and maybe the fed being so much slower, we will keep that u.s. dollar so much supported, so we would prefer to just stick with high-quality u.s. bonds and most liquid bonds, and we are still even, even though they are in trading range, we still have the highest carrier coupon in terms of treasuries that we have seen in 15 years or so, so we would like to keep it simple and stick with the u.s. lisa: if inflation remained sticky for longer, if the fed is unable to cut rates, that really does create a real problem in

question and just how much the fed has tobacco markets. is that something -- fed has the back of markets. inflation and strength has been so consistent. keith: it is a delicate balance. our motto most of this year's we would prefer a less rate cuts and a stronger economy to a weaker economy that needs more rate cuts. the environment that would be most problematic would be stacked inflation. i think if the markets shifted from basically where we have been all year long, three rate cuts to know rate cuts, that would be problematic from a valuation standpoint. why are they the not cutting inflation? that also means earnings are likely moving higher, as well. it is not just straightforward that they don't cut rates in the markets selloff, they should stay strong. the only thing that caps the

upside, and leads to a check at some point in the market. jonathan: i have no idea what happens in the future, but i would like to stay in the past. we have priced out a load of cuts the last three months or so and valuations have not come down. i and wondering if whether it actually is? keith: there was an extreme a close relationship for a while, work expectations for the fed to cut rates came down in the market was moving up. that became unhinged earlier this year. the reason why that is is because if you look at gdp estimates on bloomberg, you can see the revision trends to the u.s. continue to move up, and you are also seen forward earnings estimates for the s&p make a record high week after week after week, so i think the market can still do fine, as long as earnings estimates and gdp revisions stay strong that will bolster the need for cuts. i think the market is also getting used to higher rates, and if you look back

historically, we did a study late last year. the average cash rate for the last 40 or 50 years has been 5%. the average 10-year around 5%, and equity market has been finding that environment, double digits in general -- fine in that environment, double digits in general. in some ways, we have moved back to a normal environment on interest rates. stocks can do well in a nominal environment where inflation is a little higher and interest rates are back to a more normal state. jonathan: do you believe that this is a return to the normal? keith: it is a new normal. it is not been the state and we have been in since the financial crisis going back to the 1970's, but we are creating a normal. what was more abnormal was the last decade and maybe somewhere in between those two different phases. i do think economic growth is going to be a little higher on

the post financial crisis and inflation stays somewhat higher, as well. but i also think valuations for the market, they are elevated by any method. it is not an apples to apples comparison. in 1990, the technology sector was about 5% or 6% of the s&p. today it is 30%. those sectors tend to have higher multiples, as well. so history is not always in i. as comparison. lisa: i would like to circle back to something we've talked about the last weeks that came into focus yesterday. even though we seem addicted to our phones, we are living in a physical world with the nuts and bolts and have not seen the same investment. how much are you trying to ride the industrialization wave or the re-industrialization wave that we keep hearing about that has been part of the commodity story that we see playing out? keith: it is a good point. we have been looking at tech, financials, and our work is more

favorable towards some of them. in the industrial sector, it is at an all-time high and made it alongside technology early on. if you look at the infrastructure bills, a lot of that money is getting narrow. if you think about the next 5, 10, even longer, i think the industrialization has long legs to go, and that will be seen in the market. jonathan: keith lerner of truest, thank you, on the growth policy mix, the optimal mix of the monument, the equity market rally could continue perhaps to the end of the year. equities right now positive by 0.38%. lisa: coming off a couple of basis point's. let's get you some stories, the search-and-rescue operation after the collapse of the scott francis cambridge is -- collapse of a bridge is continuing. the area remains closed off to

traffic, cutting off a major artery around the city. the chinese president has told a group of american business leaders in beijing he would like u.s. companies to invest in china, putting aside differences and "minor issues." business leaders, including blackstone, spoke to him for more than 90 minutes. xi acknowledged issues with the domestic economy and said it has not yet peaked. robinhood is rolling out a credit card as it looks to further push into the consumer market. the robinhood gold card will be offered to members of the companies' subscription-based gold suite. they will not have to pay foreign transaction fees and will receive 3% cash back on all purchases. that is your bloomberg brief. jonathan: i think the goal is for all of our viewers to hold their assets and robinhood. a pretty good goal, isn't it? lisa: i would like to see that

everybody would like to be a credit card company, whether it is the airlines were robinhood. even at the time of potential pushback in the antitrust market. but number two, how much is this card going to help fuel for zero days to expiration market that people say is fueling volatility in markets? jonathan: you say this is an additional line of credit to buy stocks was to mark lisa: i -- to buy stocks? lisa: i am just saying, cash back? jonathan: exactly where the money should be recycled. lisa: rather than the physical world? jonathan: no idea. next, baltimore's bridge collapsed straining supply chains. >> it is a large port with a lot of flow, so it will have an impact. we will have to divert parts to other parts elsewhere in the country, and it will probably lengthen the supply chain of it. jonathan: that conversation, next. live from new york city, this is bloomberg. ♪

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jonathan: live from new york city, one hour and 30 minutes away from the cash open in new york. yields down one single basis point, 4.2179 and joe biden made good news fast, we are down 0.7% for the price of four drill accrued at the pump this summer -- four dollar crude at the pump this summer. the bridge collapse is straining supply chains. >> it is a large port with a lot of flow through it. we will have to understand what that means for us specifically. we will work on workarounds and we will have to divert parts of the parts along the east coast or elsewhere in the country. and it will probably lengthen the supply chain of it. jonathan: here's the latest, the

port in baltimore is closed indefinitely, threatening to interrupt 5 million tons of coal. it handles the nation's largest value, and they say the situation will "create disruptions in global trade, some that will be felt in the u.s. market given the importance of the baltimore port when it comes to importing cars and consumer goods." john is with us around the table. good morning. i am sure you have been super busy. it is something we have not done nearly enough, really explore how big the ships are. i know this is something you would like to. speak to we are talking about something that is almost 1000 feet long. when you hear things that it is traveling close to 10 miles-per-hour, it doesn't sound fast and you think you should be able to slow it down. can you give us a better framework on the forces involved? john: absolutely. these are huge structures.

tens of thousands of tons of travel, and the momentum for these structures to stop could take like 10, 15 minutes. so when people see the ship hitting the bridge, they would've had to stop minutes before, and it is not really easy to stop at a moments notice like with our car, for example. the other thing is when this happened, a lot of the procedures were followed the right way. the ship tried to slow down the momentum, it tried to route away, but it is more of the timing. the timing was really bad when this happened. if it had happened a few minutes later or before, this would not have happened. jonathan: as an observer, looking in, when you see the lights come back on, come off, and black smoke comes out of the bay, what do you think was going on at that point? john: people are trying to figure out the situation.

they see lights blinking, things are not responding as they should, probably the emergency system did not work and was malfunctioning. i am sure that there was a lot of attending to the solid situation, and they did the right thing. they called the authority. you have to stop the cars, so they did what they should have done, exactly with what the situation was, but there is not really an easy solution. a lot of ships get under these conditions, but you never hear about them because it is not under a bridge and in an area that affects anything. so it is not unheard of, but it is the timing. lisa: we talk about risk controls, some postulated that this is a result of dirty fuel. does that ring true? is there a theory that you see of something that is more common for some of these malfunctions in the past that could be at the heart? john: contaminated fuel could be

the reason. it is something you hear in the shipping industry. i am pretty sure that there is an easy way to find out, test the fuel. i am pretty sure that the investigators will do that, but, yes, that could be one reason. lisa: people have been talking about that even a 10% increase in capacity inflow to new jersey, new york, virginia ports will cause the same kind of backlogs we saw during the pandemic. how concerned are you about that? that that additional traffic will cause ships to have to wait out to get unloaded and to get dock orders -- workers to get it all done? john: the good news is that we are not in a peek christmas period, right now is slow for consumer goods, so that is a positive. you are right. while 10% doesn't sound like a big number, if the ports of new jersey down to charleston, savannah, are already close to

capacity, that can create a situation. that is something that you cannot dodge or measure. . probably the west coast, derailing to the east coast, that pushes prices, and that is something that will be felt on the consumer side, but in terms of size, we are not talking about anything giant. this comes on top of what is happening in the swiss canal, so this is not an isolated incident. by itself, it is not a big deal, but with the swiss canal, it is all converging, and other canals, where you don't have enough water for the ships in transit, at least not at the rate they are used to. annmarie: you hear a ton of protectionist policies coming from biden and trump ahead of november, but you don't hearing about shipbuilding. the u.s. does not make ships anymore. john: they do, but it is three times more expensive. i think it is a cost issue. you cannot compete in the

shipping industry in the u.s. so that has been going for decades to the u.s., and everybody will try to look at that, industry wherever you are, but i think that this ship was maintained well. it is not really something that i think was faulty. annmarie: given your experience, what do you think the timeline is for the cleanup and rebuild? john: if you go back to 20 30 years ago, it could take seven years to rebuild the bridge. i am not an expert, but that is something to think about. it could take months. everybody can see the structure and inc. about -- i think about what is in the water and how you will build the barges to take all the steel out of the

water, and then the containers from the ship and the cars in the water, so it will be longer than people think. jonathan: you have been an investor for 20 plus years. where will the liability set? howare you thinking about that ? the president has talked about using federal funds, but when you think about who was responsible, where would the insurance be? john: well, if you take the whole cost of this, it is running into billions. for whoever was responsible on the ship inside. obviously, i think it is a much more complicated situation than just a shipping accident because it is very rare that the shipping accident affects the structure that is standing there. so if two ships collide, it is simple. it is not simple, but it is easier to understand where the liability stands. here, you have a sitting

structure. i think a lot of the responsibility is on the ship inside but also on the commercial side. jonathan: i would love to do it again sometime soon because this is going to be the issue that lingers for a long time as the cleanup effort continues. lisa: as jon said, it is not an isolated incident where we are seeing other shipping disruptions. how is it going to be felt? jonathan: coming up, do not miss the former fed vice chair, rich clarida. he said last year that the fed would accept to point something on inflation -- two point something on inflation. are they willing to accept just that? ♪

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jonathan: 60 minutes or from the opening bell. equities positive by .3% this morning, the s&p up by .3%, earlier, the russell was up by .70%, now up by about .50%. the two-year around 4.60. on the 30-year, 4.3875. if you would like volatility, look to japan. 151.27 was the session high. that was after verbal

intervention from japanese authorities overnight. a slightly stronger japanese yen. lisa: i love that you just said slightly. we are talking about a fading move after japanese official said, please stop. we are going to intervene and do something. people said, nope, not going to do it because the bank of japan has shown their cards, and they are dovish. jonathan: show me the something, and make sure that i am aware that that directive high rates is credible because based on what we had last week, you know the bigger priority. the ultimate priority is that i have got this opportunity to reset inflation expectations higher and we do not want to undo that. we would like to take negative rates away and go back to zero, but we cannot undo what has taken decades to build, and priorities are something else. lisa: i am wondering if japanese finance ministers are getting on the same page as anchored japan

members because at the same time, we heard this from the bank of japan member coming out and saying that the central bank must proceed slowly and steadily. they are not singing the same him that the finance department is --hymn that the finance department is. jonathan: under surveillance this morning, fallout from the bridge collapsed continue straight six workers are presumed dead, but they are resuming recovery missions. cargo has been diverted along the west coast. lawmakers are pushing for an aid package to rebuild the bridge as president biden calls on congress to approve federal funding. which begs the question, how quickly will that take? annmarie: one, you have officials on recess, and then there will be an immense amount of pressure to secure funding to rebuild and help this court. kailey wrote to me that what governor wes moore is talking

about is he is speaking with the state to make sure that they are able to get the funding and support maryland workers that rely on this. for support -- this dock for support, and if it is going to be closed, you have an issue for the local economy. jonathan: we will hear more from kailey leinz through the morning. the ftc has been investigating tiktok after an alleged data security issue. they could bring a lawsuit against them in partnership with the doj. they accused tiktok of deceiving users by denying that chinese authorities have access to user data. they are having discussions about several penalties, on cases unrelated to the bill that is now stalled in the senate. i imagine that the senate and senators will begin to lean on what comes out of this sometime soon. lisa: basically, national security was doing a lot of the heavy lifting, and now it is

doing the entirety of it. is this the avenue that will be the quickest way to get there, given how many we have talked about when getting through a sale or some kind of divestiture? jonathan: the focus was on apple and what is happening with alphabet and other tech companies, but what will happen with the bytedance and tiktok in europe? lisa: and how worried are they about the data breaches potentially and how much will the u.s. get on the same page with there are other differences having to deal with antitrust issues that europe has raised about the u.s.? annmarie: senators may rely on the ftc, this originated from senator warner and rubio in 20, writing a letter to the ftc telling them to look into this and now it has come full circle. jonathan: let's turn to the fed speak, continue with the governor set to deliver remarks on the economy in new york. their remarks come after the

feds inflation gauge is due out at 8:30 eastern on friday. bloomberg economics expected to rise the most since september, banking the fed's patience on rate cuts. we are here with the former fed vice chair rich clarida. i have been singing your praises last week because i was thinking about the second outlook from pimco when you wrote down that the fed will except to point something -- two point something. can you explain what you saw and if it is coming around? rich: i think it has played out. i think chair powell and the committee deserves large credit, inflation got up, and are the two's, and argue then was two point something would be the point at which the powell fed would pivot towards easing. i think they think they are done and they are signaling that they are going to be cutting, starting this year. it is important to remember that the goal is to get to do

percent, but they will start cutting before 2% based on their view that national conditions are tight. that has played out how it has gone. jonathan: can you help explain the difference between what you see and others see when they start to see things like a higher tolerance for inflation? what's the difference? rich: i don't think there is the tolerance. opportunistic inflation is something that the greenspan fed did 30 plus years ago. as you tighten policy, you get inflation close to where you would like it, but for the last month, just wait until the next session to get it done, and the rate cuts will start for you get to the long goal of 2%, and at some point, there will be a downturn. the tricky thing is the fed looks to avoid the downturn in the first place, which means that there are communication challenges ahead. lisa: let's start on the first

issue, something that andrew holland horse talked about earlier this week that essential you cannot get down to 2% without a recession. do you agree? rich: historically, that is what you would say but progress has been good. governor waller was a huge fan. chris has made the point that you can get back to 2% without a lot of unemployment and vacancies and cuts. i do not want to say you cannot get there, but it could be a heavy lift. lisa: the other part of what you said is important. the fed does not seem to want the weakness and said they would cut rates in response to a weakening labor market. what does this mean for the longer-term inflation rate? does it mean that to .7 -- two point something is the floor and we could see a ballasted volatility in inflation and the upcoming years? rich: i think that is a worst case. the progress on disinflation is remarkable, but inflation is still above where they would like it to be and there is

evidence that it may be more sticky and stubborn then folks were thinking. i will let the data speak for itself and i hope the powell fed is data dependent. i think they need to be open to the possibility that inflation is sticky, and i think that changes their communication on the right path. jonathan: can you help the consistency we struggled with last week? we caught up with jp morgan, and he explained the following, when the fed is asked if we are sufficiently restrictive, chairman powell will point to the labor market and then simultaneously embrace and confirm that the improvement came from the supply side. how can you point to the labor market as a sign that it is restrictive and acknowledged that improvements come from the supply side? can you say those two at once? rich: i think you can, wage inflation has stepped down to around 4%, but that is still a little bit hot compared to where

they would like to get, but the chair is right. there has been labor supply productivity, and i actually think that if i could, i think a little bit more of a disconnect is on financial conditions itself. if you just look merrily at the fed rate, it is about inflation, but very few people, including banks, if you look at mortgage rates, if you look at other things, they have come down and credit spreads are tight. financial conditions indexes are easing, so he got that question last week about financial conditions and he says we think they are tight. they are certainly easier than they were in november. jonathan: what you think he is pointing to when he says we think they are tight? rich: absolute borrowing costs. if you would like to get a card out or mortgage rates. traditionally, the cost of

borrowing are elevated, but, obviously, other indicators are moving in the other direction. it is probably a mixed picture. lisa: do you think it is clear that it is sufficiently restrictive rate currently at the federal reserve? rich: that would be my base case, but there is a risk that it isn't. importantly, the focus is reassuring. we would like to know what will happen, but there is a risk management case here where it may not be restrictive enough. i think the fed's view is that if inflation is stickier or more stubborn than they would like, they will keep rates at the front longer or reduce the pace of rate cuts. i don't think the fed is thinking about hiking anymore right now. i think they think they are done. lisa: if the fed really is data dependent, but i don't think you are passing doubt that they look at data, but what data matters most if what we are looking at right now is inflation data that

is coming in hotter and goods disinflation that seems to have ended? rich: certainly, the january-february data, if the pce comes in, there is some evidence, and i think the chair is correct, seasonality is tricky. recent years, most of the bad news in inflation has been the first quarter, so i don't think we want to remove that possibility. i just think that the sticky inflation scenario is maybe not a baseline but a realistic case. and i think investors and people looking at the economy need to start thinking about it. jonathan: how do you perceive the balance of risk of cutting too soon or too long? what is the biggest risk for you? rich: i am no longer there, so it probably doesn't matter, but given that the last three years, inflation has overshot the target, i was a charter member, so it is looking better now than it did a year ago, but i think there is path dependence and

monetary policy. the risk management i would be doing if i were there would say that we would like to avoid -- we would like to avoid having inflation shoot up again and having the credibility challenged. i would be leaning more in a hawkish mode than just hugging the baseline right now. lisa: to put a bow on that point, if you think about how much more investors have to consider the idea of sticky inflation, could you give us a sense of how much the possibility has increased in your view in the past month or two based on the loosening of financial conditions? frankly, the fed's response to it? rich: it has increased. we got five out of six months of partially good inflation data, and in some ways, compared to where we were in january, the

fed said after the december meeting, they priced in six or seven cuts, and on that end, i don't think there is too much of a disconnect. our kids understand that they think they are done in the margin they will play with is when to collect and how much to cut, but i don't think there that much of a disconnect. jonathan: could we do the show again in newport beach, california, in june? rich: it is above my pay grade. i will treat you to a burger. four you should treat me. jonathan: i think we treated each other. it was like we exchanged cards or something. rich, good to see you. the former fed vice chair, rich clarida. equities on the s&p are positive by .40%. lisa: that's get an update on stories elsewhere, six people are presumed dead after the collapse of rachfal scott key

bridge in baltimore. president biden -- of francis scott key bridge in baltimore. president biden said he would like the government to pay for the rebuild. >> this is not just impacting maryland. this is impacting that auto dealer in kentucky and michigan, so it is imperative that we get the bridge built and that we get the port of baltimore back up and running. it is not just about supporting maryland. this is how we support america. lisa: grant could hit $100 a barrel this year. -- brent could hit $100 a barrel this year. the bank says the price oil could get above $90 this month. russia said it was based on expectations of global demand growth. trump media and technology is continuing to surge, ending the day 16% higher after getting as

high as 59%. the 60% stake may be worth more than $6 billion best on sec filings but trump cannot sell it immediately due to a six-month agreement, which raises questions about whether this is actually wealth, paper wealth, or whether he can cash out and what it means? all i know is that that stock is incredibly expensive. jonathan: and very risky, as well. i think the real date on the calendar is maybe not the end of the six-months. but maybe just wait for it to be tax-free? lisa: the tax mitigation policy is what you find interesting. jonathan: that is the last remaining attractive thing about working in washington. lisa: this is your pitch to people, this is what executives should do it? annmarie: he would cash out that

money to become president. lisa: what about serving the great country? jonathan: how many people want to do that now given what is happening in washington? think about the message coming from people who have less the last week. they talked about messaging bills, how they are sick of it. go back and listen to what mike gallagher had to say. that is a sad indictment of how people feel about serving in washington at the moment. lisa: i would like to get back to an era, not necessarily the high level, but rank and file where it is something of an honor and that is what we hope for. jonathan: here, here. next, ev makers facing demand pressures. >> in terms of ev's the growth is in the market. perhaps the consumer moving into the ev's is at a slow pace and what some had dreamed about, but the growth and interest is there. jonathan: that conversation, next. ♪

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jonathan: the opening bell 42 minutes away, the s&p positive through most of the morning by about 130% to .40%. under surveillance, ev makers facing demand pressures. jeremie: in terms of ev's, the market. perhaps with the consumer moving into the ev's at a slower pace than what some had dreamed about. but the growth is there. the interest is there. acceleration is growing, and once people have driven ev's, they are loyal, so i think we will be seeing a steady growth in the market. jonathan: growing ev demand concerns are forcing automakers to scale back production with some pivoting to hybrid vehicles.in china, shares of byd falling, after they missed estimates of

eight aggressive price cuts. volkswagen expects to fall behind in china -- "we are deliberately prepared to give up our culture in order to find a sound compromise between margins in volume." for more, pablo di si, the ceo of volkswagen north america. good to see you. thank you. i know it is an important couple of days in new york city for you and the team. i would like to reflect on what happened in baltimore, important hub for automakers. can walk us through through disruptions for you and the team? pablo: first of all, our heart goes to the families. it is quite unfortunate for everyone looking at this. on the business point of view, we are on the other side of the sea level, so when the ships coming to baltimore, we will not be affected by this event. obviously, there will be some disruption because of the trucks, but not on supplies. jonathan: supplies have been the

problem -- have not been the problem, it has been demand. can you walk us through whether you are going to lean into the hybrids and the demand for it in america? pablo: let me talk about the industry. demand is very strong as an industry. the north american market, canada, u.s. and mexico, grew 8% february year to date versus last year, and we have grown 21%, so we are tripling our growth in the market. a percent is a strong number, -- 8% is a strong number, and the data for march is still strong. the ev has flattened, the curve is around 7.5% of the total industry, but we still have 12% of ourselves are in the electric vehicle space. so we still have higher growth than the average market. lisa: do you expect to ramp it up more slowly and maybe put a greater emphasis on hybrids?

we kind of see the scenes for that right now because you have a couple of months or years to get that up and running. pablo: our factory is highly localized in the u.s., and we are combustion engines and electric vehicles, and we are the only foreign automaker that gives credit to the consumer, which means that we are incentivizing individuals. going forward, i think the pace of growth will be slower but there will still ev ev be growth in the space -- but they will still be growth in the ev space. i think hybrids are still a good choice for consumers. lisa: how important was that subsidy, not only to build a factory, but in terms of your decision of the choice to sell? pablo: i think it is a great division for the u.s. because it is transforming the national face of the u.s., so you see all

these new factories being built in the u.s. and the next three or four years, so the benefit is not only for us but the consumer. the fact that we are localizing and bringing all the jobs of volkswagen and also the suppliers and creating an ecosystem that provides more jobs and helps the consumer get more. annmarie: if trump gets into office, he can rewrite the treasury last, could make the subsidy impossible to get. how do we think about that impact when all this money has been put toward the ev market? pablo: we have a long-term vision of the topics. we know that we remain committed to the ev strategy and that it will affect the consumer. is it possible that the rule will change? it is, but he will need a vast majority in the congress and senate to change the laws. and when you look at where all the factors have been built,

they are not built on state ground. they are being built all over the u.s.. in the interest of jobs, and growth in technology, i think it would be wise to maintain this automation. jonathan: do think it would be wise to wait until after the election to make decisions about your manufacturing footprint in the country? pablo: i don't think so. i will give you an example. we decided to localize way before the inflation reduction act, which goes back to your question, so we believe so much in the transition to electric vehicles and a localizing our footprint in the u.s., that we made these issues before and after they were going to continue to work with us. jonathan: the last year or so by this white house has a push to support union workers. he mentioned chattanooga. the plant will vote on whether the workers join the uaw. what could they do to your space? pablo: first of all, we respect

the freedom of our workers to choose how they are represented. having said that, we are constantly talking to our workers on how to improve their working conditions, the salaries, and the benefits. we will ask them how they -- it will be up to them how they will be represented in the future, so we will respect that. jonathan: and the cost space, do you assume it will increase off the back of that? pablo: i am not sure, we have a really competitive space with wages at $23 an hour, comparable to michigan, with a lower cost of living, so we will see. jonathan: thank you. appreciate your time. the vw north america ceo. tomorrow, this is what the program looks like as we catch up with the kia ceo. dhl supply chain ceo oscar de bok will join us, and tiffany

building of pimco. lisa: especially at a time of so much change, and we are hearing that consistency is all that matters, and then going forward, they can adapt to any possible shift, as long as there is consistency. jonathan: the opening bell 35 minutes away. positive by almost .5%. from new york city, this is bloomberg surveillance. ♪ >> welcome back to the miami open update, daniel medvedev and koepfer have reached the open finals. from there, there was one way traffic, not only to the german at the baseline, but medvedev is looking good on his favorite

surface. tennis channel's daily live coverage starts at 11:00 a.m.

manus: a very good morning. this bliss? night continues. up 5% on an fda approval. countdown to the open kicks in now. >> everything you need to get sent for the start of u.s. trading. this is bloomberg the open with jonathan ferro. manus: coming up in the show