>> the fed really doesn't have much of a case to cut rates. >> if you are the federal reserve, why would you think about cutting interest rates when the economy continues to be really solid? >> this is a fed that cares less about getting to two and cares more about preserving. >> they can sit tight for a while. >> the idea of cutting when we are where we are from an economic perspective doesn't make a ton of sense right now. >> bloomberg surveillance with jonathan ferro, lisa abramowicz, and annmarie hordern. jon: good morning, good morning. this is bloomberg surveillance. equity markets positive .3% on the s&p 500.

absolutely whipsawed by economic data over the last couple of days. manufacturing causing the pain on monday. then we have a band-aid from the services data on wednesday and we barely got a day of gains off the back of that. lisa: i don't want to say this, but are we starting to see bad news be good news once again for markets? we saw the weakness in services and suddenly everyone got excited again because the prices paid component came in at the lowest going back to march 2022. jon: can i say sort of kinda? didn't spell out in a way that had conviction that bad news is good news, so i'm not sure people knew what to do with that in the stock market. they knew what to do and bonds. they got there. i think that a lot of people are confused what to do with it when it comes to stocks. lisa: people are saying the one thing that can keep this rally going is the possibility of more rate cuts. that can be positive. on the flipside, if you get true

weakness in services come that challenges this incredible rally that we've seen in the economic activity of this country and the idea that everything can keep going gangbusters for the foreseeable future. jon: it is a week full of jobs data. openings coming down a little bit. big upside surprise on the adp report. the planned appetizer for payrolls friday. later on, jobless claims on deck. lisa: friday, everyone will be looking at what the labor market says in terms of the health of the u.s. economy. we had 200,000 was the estimate for the survey on monday and it keeps taking higher. north of 200,000. powell wanted to emphasize the moment, the risk to the upside and downside and how he sees this as a dual mandate. jon: the b-word, bump, your favorite word. is it too soon that the recent readings represent more than a bump? too soon? lisa: he says it's too soon to

say and at the same time seems to want to cut rates saying there's plenty of time before june. we're looking at a market that is pricing in more than a 50% chance of a june rate cut, so this is a market that has come full circle and thinks that the fed will have the opportunity to cut rates. going back to where we began, what is kind of good for markets but kind of bad, when is it bad enough to get inflation down but not bad enough to challenge the incredible rally we've seen in the underlying economy? that is the needle that we have to threadgiven the high valuations. jon: we have a great guest to answer some of those questions. equity futures on the s&p 500 are posited by one third percent. yesterday and the commodity market brent crude, $89.99, very close to 90. unchanged this morning at $85 90 cents. in the bond market, adding another basis point. lisa: where it has come from is

interesting. a number of strategists talking about how we've had two thirds volatile again that we've seen in yields has been real yields. this has been a shift in expectations for how little the fed can cut rates this year. that is affecting equity valuations and is potentially why on the margins bad news economically, on the margins, might not be terrible news for on the margins part of the equity news. jon: coming up through the next 60 minutes, oppenheimer as fed chair jay powell holds the line. janet yellen heads to china. and the israeli economy minister on an intense call expected between president biden and prime minister netanyahu. read chair jay powell sticking to the script as investors shift attention to payrolls tomorrow. raising the price target to $5,500. for us, the big surprise this year has not been the resilience of the economy but the substantial capitulation among

the bears and the bearish community. jon, good morning to you. you're saying that the start of the year has been a short squeeze? john: in part a short squeeze. the jobs market is showing that there is resiliency. the consumer has slowed, but the consumer is still relatively resilient.we think the sustainability of resilience is the new operative phrase. it was an operative word last year, resilience, but now you have to add sustainability of resilience. jon: you were bullish, but that was independent of a view on the federal reserve. you said all along that the federal reserve may not cut that much, if at all, in 2024. that hasn't changed? john: it hasn't. when the fed gets to cutting it may not be cutting because we are in a recession or the fed fears we could move into one. it has the job done and it might

be considering that it has 2% in sight, on the horizon, or that we have arrived at. i can't tell, but we have been big fans of the fed for years. i have been in the business for 40 years and i learned early on -- voelker was the head of the fed in his second term. i learned fast that if you don't get attuned to what the fed is doing -- and sin bernankec the fed has been so communicative. it has been helpful to say the least. lisa: the bears have been humiliated. there is the question of how do you get more bullish when everyone seems to be coming to your side? don't throw the babies out with the bathwater and if you see babies who have been thrown out, cuddle them and bring them back in. is there bathwater being thrown out? we aren't seeing pullbacks. john: the pullbacks are small. the other day, the dow was down.

people were going like it was plunging. compared to what? it's ridiculous. the s&p is down 1/10 of 1% and people are burying the bull market. i think where we are now is a process. it's a transition. transition has been given a bad meaning from when the fed was behind the curve. transitions can be relatively long. inflation is an insidious thing that takes time to get rid of when it arrives in an economy. it becomes embedded quickly and it takes a while to get it out. we think they are working on it. powell is committed for his legacy. he doesn't want to be remembered as arthur burns. he doesn't want to be remembered as a paul volcker. he wants to be jerome powell who got it once he got away from being behind the curve. so far, so good is what we think. lisa: a theoretical idea.

what if on friday we get a huge number? is that a better risk for the equity markets. or a weak number that justified rate cuts? what would be a better number? john: that is hard to tell. it depends on what kool-aid they are drinking on the trading floor around the country that day. [laughter] when you look yesterday when powell initially had spoken the market went down. this isn't so bad. you get that. it's not so much roll with the punches as you have to have context. annmarie: perfect. john: compared to what? i can't think of a jazz musician, who it was, but compared to what was a great tune 20 years to 30 years ago when i was still a young man. jon: let's talk about where the bar is at. the bar is higher now than at

the start of the year. we are thinking about upside surprises potential for positive surprises. going through the quarterly gains that we've seen in japan, up by something like 21%, europe up 12%, the u.s. up 10%, is this upside surprise abroad? john: there is an appetite for abroad. the problem with abroad is that for u.s. investors it is translating your returns. the nikkei is up 20%, but if you compare it in dollars, it is only up 11% or 10%. when the u.s. investors jump in, that is when all of a sudden you ignite the global markets. that has been missing for almost a decade in international markets. it is a structural problem that they don't have technology and technology is your driver at this point in a meaningful way. annmarie: you want to keep meaningful exposure to

international markets. where exactly? john: meaningful exposure, you want to be hedge your equity bets in with some kind of a hedge. use an etf. there are at least one or two providers that offer a hedge to the currency. somebody needs to come up with one for mexico. it would probably be a good idea in an election year. related to the international, the problem for the international markets is structural. when you look at europe, europe is such a different business culture. they all meet across the board when it is related to interest rates or social programs, or whatever it is. it is highly complex. here we have our own complexity, but that's a story for another moment. when we look at it, you need exposure but your overweight is the u.s.

they have plenty of international exposure with the s&p 500. lisa: for someone who is incredibly sanguine about the idea of higher rates for a longer period of time, based on your decades of experience in the market, wind does real yields concern you? we are at the highest of the year and this has been the crux of where we have seen the yield lift that we've seen so far this year. john: the end of free money we see is a good thing. we were in free money when the fed had the zero to 0.25. this morning about 4.3%. i would say we would get problematic at 6%. we hit mere 5% and it upset the market, it got indigestion, but people said 5% on a 10 year bond? they bought them. lisa: you say if 10 year

treasury yields climbed past 5.5% as long as it didn't hit 6% of market would be fine? john: it could be. there would be indigestion, mind you, but the reality is that for almost 15 years, for most of that period, we had bond issuers getting free money most of the time from the financial crisis, the pandemic, post-pandemic, all of this different stuff. now, bond issuers have to pay for the privilege of borrowing money. you lend money, depositing a cd or buying a treasury, what have you, it is nice to get something in return in terms of yield other than your principal back at the end of the period if everything works out. that creates a healthy market in terms of all types of investors when it comes to -- i think that the biggest complaint about the weight regime of this federal reserve comes from the high

leverage players and rightfully so. they made billions and trillions and aggregate making bets that today would cost them much more if the bets went wrong. even if they go right it hurts. on bloomberg news a few months ago there were renowned short-sellers who closed operations. they were kind enough to admit it. this is a healthy thing. my first mortgage was 10%. my boss' first mortgage was 16%. his boss was 22%. i run into people with 18%. we've made money in real estate. jon: and your house was three times salary. it is 10 times now. lisa: i knew you were heading there. john: when the fed begins cutting at some point, when it arrives at its target, the residential real estate code

probably get a little -- could get indigestion because so much would be put on the market. jon: you think rate cuts lead to more supply and rates drop? john: i do. when you get rate cuts people will find i can get something. they can get 4.5 may be. there were mortgages -- i remember people getting mortgages of 1.78%, running down the street screaming "look what i got." jon: they are still running down the street. john: that is what you have in the liquid real estate market. the other thing with all of this is one of the elements that keeps inflation stickier is that it takes longer for competition to reemerge when you come out of inflation. when you go into inflation those who get hit by the input costs hesitate to pass it on to their customers. once the press announces that it's happening and the fed says that there is inflation everyone

accepts higher prices initially. when the fed starts having success, what happens is everybody is reluctant to start competing. and they kind of match each other's prices. it isn't collusion, they just say the environment. and then somebody says, what i and losing per unit price i might make back in volume. it happened in the 1960's, it happened later on in the 1980's and 1990's. it is that competition, especially with technology where it is today i think is around the corner but not quite a minute. jon: we could do this all morning with you. price target 5500 year end on the s&p 500. elsewhere, here is your bloomberg brief. >> the carlyle group ceo harvey schwartz was awarded a 187 million dollars pay package in his first year running the

private equity firm. most of that was that invest over several years based on how well the shares perform and how long he stays at the company. a cash bonus of $6 million, double the size of his target. paramount global is getting closer to its merge with skydance media. sherry redstone's shareholder has reached a tentative agreement to share her steak according to people familiar with the talks. shares of paramount have been under pressure for years, reflecting the company's loss of tv viewers and efforts to develop a streaming service. the media company had a market value of nearly 9.2 billion dollars at the close of trading yesterday. kiss is selling its song catalog and name and image and likeness to pop house entertainment group . pop house is paying more than 300 million dollars for the deal. the company plans to make a biopic about the group and they

live music show featuring avatars of the legendary band members. pop house has made a live show featuring the avatars of abba. that show makes more than $1 million a week in london. that is your bloomberg brief. jon: 10% mortgage, 200 k apartment, two-bed with a roof garden in manhattan. let's never talk about mortgages together again. two beds with a roof garden? that is like $5 million in new york for that now. next, janet yellen taking on china. >> we agreed it is important to both of us that we don't want to decouple our economies. we want to continue and we think we both benefit from trade and investment, but that it needs to be on a level playing field. jon: that conversation is next. live from new york city this

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come on. that is not apples to apples. equity futures on the s&p posited by .3%, bond yields a little higher. under "surveillance" janet yellen taking on china. sec yellen: we agreed it is important to both of us that we do not want to decouple our economies. we want to continue and we think that we both benefit from trade and investment that it needs to be on a level playing field. we went for too long with too little communication and misunderstandings developed. jon: jennet yellen -- janet yellen landing in china. the five-day trip marking her second trip in nine months.

the trade and investment relationship remains under strain, particularly on tech-related issues. the intense geopolitical rivalry and domestic politics limit the room for active cooperation. michael, what is at the top of the agenda for janet yellen on this trip? michael: for the u.s. side it is the issue of excess capacity or really china's aggressive focus on promoting advanced manufacturing. particularly if some of the same sectors that the biden administration is focused on like a liquor vehicles and solar energy. that is the top of the u.s. agenda. it is also a macro issue for global growth and one reason why it is janet yellen delivering the message and not necessarily u.s. trade officials. that is the top of the priority list for the u.s. annmarie: when i was -- lisa: when i was listening, i kept thinking, how big is the distinction between decoupling and enforcing a level playing field? michael: for treasury secretary

yellen there is a big distinction. i think as a trained economist that she believes that trade is good. that she wants to deliver a message that the u.s. doesn't seek to decouple. that is kind of a controversial view in the u.s. and i think that to some extent even within the biden administration. generally speaking she is trying to say we want to have trade, but we need to address what on the u.s. side is considered distortions coming from china's manufacturing sector error. lisa: a lot of focus has been on green energy and supplies to push forward the platform. how much is the biden's administration's hands tied? they're looking forward to shift towards technologies that require metals and technologies dominated by china? michael: it is a difficult balancing act, and it somewhat

depends on the sector. something like solar, china's cost advantages are so extreme at this point that it's difficult to meaningfully decouple from china or take really aggressive actions in the solar sector. something like electric vehicles is more nuanced, but that's the balance that they have to face. it is one reason why janet yellen is there instead of slapping additional tariffs on these items. the solution for both sides should be to work on some kind of accommodations. annmarie: she alluded to tariffs saying that i wouldn't want to rule out other possible ways to protect them -- talking about clean energy. where is that tariff review? michael: that is a good question. there is a tariff review that has been underway. we have heard numerous times that it would be, for example, at the end of last year. i think that it's frankly

unlikely that we will see any really aggressive moves, certainly to lower tariffs. it is possible that we will see moves to increase some of those tariffs. perhaps we would lower them on consumer items that are strategic coming from china, but i think tariffs will remain part of the toolkit, especially on an area like electric vehicles when you see the export surge showing up in europe and not the u.s. u.s. officials will want to keep it that way. jon: we have yellen in china. from politico, blinken making a return to china shortly. lloyd austin having a call with his chinese counterpart soon. this is building up. annmarie: this started in november when president biden met with xi jinping in california agreeing that they would ramp up and have communication between both countries continuing. it isn't just the u.s. that wants to keep a lid on the

relationship, especially in an election year, but xi jinping. he wants to make sure that the economy is open for business. jon: they have been reviewing tariffs for ages. i remember a few years ago on the table, left there. lisa: in davos one of the most interesting thing was between the trump and biden international policy. it hasn't changed. jon: the tariffs are still there. lisa: and they are only likely to get more stringent. jon: the s&p 500 positive by .3% . the israeli economy minister, that conversation is next from new york city. this is bloomberg. ♪ t pilates exist in harlem? so i started my own studio. getting a brick—and—mortar in new york is not easy. chase ink has supported us from studio 1 to studio 3.

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jon: equity futures on the s&p 500 are positive by .3%. the equity market attempted to mute marginal gains in the equity session and equity futures up 4/10 of 1%. a big reversal in the bond market yesterday. for 20 on the 10 year. kicking off q2, and then the reversal started with the services print yesterday followed by chairman powell. yields lower off the back of those two points. lisa: at first glance people said that maybe this is a different fed chair, jay powell.

then they analyzed his comments and said that the reason data didn't materially change the overall picture is it is too soon to say of the recent readings represent more than about, this is still a chair that wants to cut. jon: in terms of commodities briefly, i want to talk about this. crude right now is very close to 90. $89.99 yesterday and then backing away. how should we interpret the move in bonds, fixed income, yields getting close to 4.40. what does that mean for stocks? lisa: a lot of demand and that is good for growth, or that potentially inflationary pressures are coming back in a way that could be punitive to the consumer buying power? in general to a federal reserve that has to keep rates higher, this is maybe why we saw some confused stock action yesterday. people couldn't figure out, good news bad news, bad news good

news, maybe a little bit of both. annmarie: they said to reporters on the call there is concern about fuels going up and what does that mean for input costs? jon: gold all-time high in the last one he four hours backing away a little bit. prices, there has been quite a squeeze over the last week. a little softer on the session. under surveillance, fed chair jay powell on target waiting for more data but expecting that it will lead to rate cuts this year. jay powell also commenting on the labor supply ahead of payrolls tomorrow saying that the fed is not an immigration policy maker, but adding extra workers will help the tight labor market and the economy short labor and probably still is. raising controversial questions about the labor market. how responsible they are for it. and how responsible a very leaky southern border is for what we've seen. annmarie: we have seen this discussed by many economists

saying that the immigration has been the reason why we've seen employment tick up so significantly and why inflation hasn't gone higher and wages are not climbing at a faster pace. the ongoing question, the fact that he has to address it puts him in a situation where he has to be nonpolitical. that will be the knife edge that he has to walk. jon: the latest on apple looking for the next big device after scrapping plans to enter the electric vehicle market. reporting that engineers are exploring a possible mobile robot which would follow people around their homes.the company is working on a tabletop home device with a display they look for new sources of revenue and it may take years for mixed reality headsets to become a major moneymaker. do you want to be followed around your home by a robot? annmarie: i was thinking, i can't imagine a farro bot, reading over his shoulder. jon: if it does it for me i am

on board. annmarie: they have a robot cleaner. lisa: i pictured someone going around saying, do you want to do that? is that a good decision, lisa? i can imagine a neurotirot following me around. there is companionship for older people and that has been a source for robotic technologies that is interesting because of the loneliness crisis. not to take it too serious, but ways that it could be deployed in a useful way. jon: president biden is expected to speak with benjamin netanyahu by phone later today according to u.s. officials. the conversation coming after biden condemned strikes on aid workers in gaza this week. domestically netanyahu is facing another challenge, benny gantz is calling for early elections in september. the israeli minister of economy and minister joins me around the table. a really important subject. let's get to a couple of issues. some of the commentary from the

president of the united states, some language that he's used regarding israeli sanctions, israel hasn't done enough to protect aid workers. israel hasn't done enough to protect civilians. we heard from the president of the united states there are other ways to deal with the trauma caused by hamas in early october. has he shared alternatives with the israeli government? nir: first, i wanted to share condolences with the aid workers who were killed and it is unfortunate. i don't know if people know but over 30 israeli soldiers were killed from friendly fire. three of the hostages that escaped thomas were killed by israeli troops. there is, unfortunately, sometimes friendly fire and people get killed. this is the cost of war. we have to realize that the people who intentionally kill people are those hamas jihadists on october 7. they entered israel, killed and raped women. i have a picture with your permission of some of the girls

who were kidnapped. you can see their picture before and after in captivity. half a year they are sitting there under the ground raped. we have heard that some of them have been raped for the last half a year. this is crazy. it's just crazy that the hamas people and their jihadi strategy is to kill and wipe out all israelis. this is what we are dealing with. we cannot leave them the way they are. similar to the way that nazis were eliminated in the second world war we cannot leave one fourth of the nazis in rafah. we have to eliminate them off of the face of the earth. we are united, all israelis are united in completing that war and eliminating, soft of the face of the earth. jon: we talked about the tragedy that evolved in october and the tragic events that evolved in

the months that have gone by with the civilian death toll in gaza continuing to build. i will repeat the statement from the president. he said there are other ways to deal with the trauma caused by hamas.they were meant to share alternatives with the israeli government. have they done so? nir: remember how we dealt with nazi germany. i remember in dresden it was totally different. in all wars, including american wars in iraq and other places eliminating isis, hundreds of thousands of people were killed. in syria, over half a million civilians were killed and over 5 million fled away. if you look at the way that we work, we have no quarrel with the civilians, but we will finish the job eliminating, soft the face of the earth. lisa: who will lead the effort to do so? opposition leader benny gantz part of the war cabinet says that he thinks elections should be held early in september

instead of 2026 because netanyahu has lost a lot of support among a lot of the rank and file in israel. do you think that's a good idea? is that what is needed to gain legitimacy? nir: we will stay a democracy. people have their own opinions of when and why, but we are all united, including benny gantz, that we have to finish hamas. this is the focus of what we are discussing. i want to share another point that is important. who is funding thomas and hezbollah -- funding hamas, hezbollah, and isis? iran on one side, and qatar, our funding jihad all over the world. qatar, many don't know this, but they are a wolf in sheep's clothes. the heads of hamas are at their place in qatar and they are funding trillions of dollars terror all over the world.

they are behind this and we must wake up and understand that it isn't just the challenge of hamas and hezbollah against israel, it is against the whole world. lisa: are you saying that as long as qatar acts as a mediator to peace talks it won't happen because you don't trust them? nir: i don't trust them. i trust of the egyptians. qatar is giving safe haven to hamas leaders and funding trillions of dollars buying their ideology in the united states and buying their way in all over the world. they are a wolf in sheep's clothing and we have to realize that them, together with the wrong, are a big threat. not just israel, but the alignment with the emergence, with the saudis, and the modern arab states. they are a to peace in the world. annmarie: benny gantz is calling for fresh elections. there is a growing threat within the israeli population that they don't want to see netanyahu

leading the government. you say that qatar is the big problem. for years, netanyahu tolerated millions of dollars going from qatar to gaza. to her point, does netanyahu step aside? should there be early elections? nir: when you talk about qatar, this is one thing we learned on october 7. there is no gray anymore. the world has to realize are you the good guys or are you evil? annmarie: was it a mistake to allow qatar -- nir: i think qatar fooled israel. they are nice guys who buy their way in, but they are evil funding evil and a source of problems in the world. we have to realize that. october 7 is a wake-up call. we thought that we could get away with a small army. we thought that the jihadists will never do what they've done. there are lots of things to learn from what happened in october 7. one of them is the threat that

qatar poses to the world, to buy their way in and influence the world towards jihad. people get mixed up to who is evil. annmarie: you think egypt should fill the gap and act as peace keeping troops? there and willing to do that until there's a plan for a two state solution. nir: israel wants peace with modern arab people that seek peace like the emirates. we have had peace with jordan for 25 years in 40 years with egypt. on the other hand, you have jihadists who don't want to live side-by-side to israel. they want to eliminate us off the map. they are against jews. the jihadi approach, sharia law, they want to change the world to become only muslim. what you see on october 7, if we don't win it will happen all

over the world. the modern arab states are aligned with the united states and israel against evil. this is what we have to remember. qatar is on the wrong side of the alignment. jon: some specifics on rafah. killing civilians -- eating civilians out of rafah, how long will that take -- getting civilians out of rafah, how long will that take? nir: one thing is for sure. the world won't be over until we eradicate all of hamas. they are sitting in rafah, one for the from us. we won't leave them the way that they are. at the end of the war the world will understand we will fight evil until they surrender. after the war we would like to see friendly people manage and help. jon: the world is trying to understand what cost will come. nir: as minimal as we can.

we have no quarrel with the civilians. we will do our best. jon: you're willing to wait a number of weeks to make sure that happens? nir: the weight won't help us. the challenge that we have, we have to finish the war. there is consensus in israel that we have to find those 144 hostages who are right now in the tunnels for half a year being raped, being -- that they are going through. i met the families of the hostages. they cannot sleep at night. they can't. imagine if your family is there. you know they are being tortured and raped on a daily basis. in israel we understand that time is not on our side and we have to finish the job. get them as fast as we can and move on with life. jon: we appreciate your time. the israeli minister of the economy near -- the

economy, nir barkat. yahaira: more tech layoffs at the amazon cloud division. amazon web services is cutting hundreds of jobs that will affect sales and marketing employees. plus, the team developing the technology used at physical stores after sales growth slowed to a record low last year's corporate customers cut back on spending. disney shareholders shot down activist investor nelson peltz' effort to win seats on the companies boards voting to reelect all 12 of the company-backed board members, including bob iger. this capping the most expensive corporate proxy fights in history. peltz's fund management holds a $3.5 billion stake in disney and has been trying to get seats on the board to address lagging shareholder returns in what it sees as inadequate government. elon musk says that he is boosting pay for ai engineers as the company deals with a talent

war. elon musk posting on x that openai has been "aggressively recruiting tesla engineers with massive compensation offers and have unfortunately been successful in a few cases." elon musk saying the talent war for ai engineers is the craziest he's ever seen. the tech billionaire is pursuing ai projects through tesla and his x started. jon: chair powell's wait and see approach. >> we don't expect it will be appropriate to lower our policy rate until we have greater confidence that inflation is moving steadily towards 2%. jon: that conversation is next. live from new york city, this is bloomberg. ♪

do you want to close out? should i? normally i'd hold. but... taking the gains is smart here, right? feel more confident with stock ratings from j.p. morgan analysts in the chase app. when you've got a decision to make... the answer is j.p. morgan wealth management. jon: equity futures on the s&p 500 are positive by .3%.

a small bounce from yesterday's session, yields higher by a single basis point. 4.3613 on the 10-year. chair powell's weight hand see approach. >> this recent data however doesn't material change -- materially change the overall picture of stronger growth and a stronger rebalancing labor market and inflation moving down towards 2% on a sometimes bumpy path. we don't expect that it will be appropriate to lower our policy rate until we have greater confidence that inflation is moving sustainably down towards 2%. jon: fed chair jay powell signaling patients as the central bank awaits more data. jobless claims setting the stage for tomorrow's main event, the payroll event. "the jobs report will hold the most sway, particularly as the labor market looks to be gaining momentum once again." another solid pace of hiring looking to rise payrolls. the bloomberg survey

calling for slightly lower print of 213. we are going to now for more. jennifer, that's get into the labor market data on friday. are you expecting that come with hotter inflation, hotter wage growth? jennifer: thank you for having me on. that will probably be the most critical piece of data we will be looking for in that report the average hourly wages. especially last friday with the wages and salaries, the personal spending report that was up .8% which was a shocker to yours truly. we will see how that pans out with the earnings numbers and the jobs report. obviously, if looking for something with a bit of a hotter number, that is going to put more fed dovish into play. lisa: do you put more weight on the 10% figure for job switchers and the adp report or ism services coming in weaker than expected with the idea of prices paid falling to the lowest since

march of 2020? what is the better read of the tone we should take from the economic data? jennifer: i would say the ism services numbers. we know that when you leave a job for another one you generally get higher pay. that plays into it. plus, the jobs data is a bit late. the services ism figure was more interesting. overall, we still have some inflationary pressures brewing out there. most recently with potential supply issues given the baltimore bridge collapsed and the taiwan earthquake. and of course all of the wars in the middle east and haiti. all of this is playing up to potential supply pressures, building up a little bit at least, maybe not what we saw in 2020, but more doubt into when the fed will actually move and how often they will move. lisa: we will hear from the fed

today. what you hope to hear from these folks? jennifer: in my perfect world we would want more clarity, but i think that they will do as fed chair powell did last week. perhaps the more interesting ones we've already heard from was bostick saying that he sees one more rate cut, not coming until the fourth quarter. i was a bit relieved when i heard fed chair powell say yesterday that they will probably find it appropriate to cut rates sometimes this -- sometime this year. what i said was, at least he said this year and had some kind of a time frame. i don't think that we will hear too much of a differing opinion from all of the different members that you ran off. to preach patients and the need for greater confidence. annmarie: we get jobs on friday,

cpa next week -- cpi next week. what is more important in the data that you're monitoring to forecast when you think the fed will come into that first cut? jennifer: i think that it will be coming down to inflation. the totality of the data are very important, but at the end of the day it's going to be coming down to inflation. the core measures, the services measures, and especially from the cpi core deflator, which is what the fed is most watching. i think overall what we are expecting is inflation will be coming down at a slow, steady pace. as long as it is heading in that right direction it will give the fed comfort to move, what we believe will be in july, but that will depend on the data. everything will depend on the calendar. annmarie: if inflation is something you are keen at looking at, what about the uptick in commodity prices and what that means for producer prices?

jennifer: obviously, there will be offered pressure, but it depends on how much staying power it will have. we know that there is so much volatility in the commodities market. it will depend on how much it will stick, how much it will stay up there for. we know it won't be a straight line down, it will be a bumpy path, which i think is another descriptor word that the fed chair used recently. as long as the direction is right, we know that there will be ups and downs. not getting too excited about the january/february strong cpi numbers and not strong with the moderate inflation numbers, but we need to see a few more months of data before we become more confident in the trend. jon: what would it take for him to stop calling them bumps in the road? jennifer: probably would have to see steadier or lower inflation in all of the different indicators. all of the different factors, it isn't going to make his job much

easier at all. as long as the trend is there that is when he will stop calling it bumps along the way. jon: jennifer lee, thank you. going into a big data point tomorrow morning. payrolls friday is around the corner. 213 is the estimate. lisa: i'm struck by the adp job switchers number. people question how much that is actually going to be a significant thing. if you look at a 10% wage again for people who decide to change jobs, this is probably the higher paid component and raises the question about the labor shortages and where they are shifting now that certain pockets are being filled with people immigrating to the country and other areas not so much. jon: i thought you were going to say it raises questions about all of us changing jobs. lisa: that is where your mind is at? jon: no, i thought that is where your mind was traveling. 10% bumps? annmarie: the rate and the

jolt, the middle-aged people realize stick with my job, i don't need to change anymore, i am over my midlife crisis. jon: are we throwing cold water on everything? annmarie: no. jon: every economist that comes out is pouring freezing cold water over every data point that doesn't align with the federal reserve's thinking. lisa: as far as his predictive power and what it won't take for them to be bumps in the road -- they aren't going to be bumps in the road. you asked a great question about the idea of commodities. how is that going to play into it if is not coming from just supply shocks but so much demand and the coming globally. jon: wait three months, then wait another three months. lisa: which is why the payrolls numbers interesting to me. we waited three months and the number has gone up from where we expected. now we are looking at wages.

now we are looking at the potential for a new source of labor coming into the market. the goalposts are shifting. it's going to be interesting to me. how much do the goalposts shift if we get another hot number? jon: jobless claims 8:30 eastern time. the second hour bloomberg surveillance the lineup looks like this. if we can bring up the market board, i will give you a snapshot of things this morning. futures on the s&p 500 are posited by .3%. yields are little higher once again by a single basis point. 4.3593, quite a ride in yesterday's session. let's call it a dovish chairman powell if you want to. yields backing away from the highs of the session and the commodity market, brent crude, very close, very close to $90 in yesterday's session. $89.99, the height of the

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>> the u.s. economy is doing relatively better than a lot of our trading partners. >> we are looking for signs that the economy is cracking and it's not there yet. >> we've got to get a new set of indicators as we look at markets. >> the fact is the economy is in good shape. >> we are the fastest kid on the block in this country. where else will you put your money? this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: live from new york

city this morning, good morning, good morning. for our audience worldwide, the second hour bloomberg surveillance begins right now for our audience worldwide, the second hour bloomberg surveillance begins right now. 0.3%. lots of data and fed speak this week. jobless claims are at 8:30 a.m. eastern time tomorrow with payrolls. lisa: how many data points do you need to know before we see something that's more inflationary pressure? we don't know where the goalposts are or when they will be moved and i think that's what people are looking for. also, the little nuggets underneath. jonathan: that's a great conversation to start q2. phenomenal yesterday on fixed income. the economy is solid. inflation continues to be stick in the labor market is so rocksolid and financial concessions are the easiest since the fed started i king. why would you cut interest rates against that backdrop? annmarie: the economy is able to withstand higher interest rates.

that's why you hear the likes of raphael bostic saying it will only be one and i think it should be pushed to the back end of the year. jonathan: you can see why the equity market is at all-time highs. there is the asymmetric stance of chairman powell. the reaction function remains asymmetric in the fed will cut in response to weakness but will not turn hawkish of activity remain strong. that's an important shift over the last few months. lisa: financial conditions have been turbocharge. have we entered a new regime where inflation is naturally higher? we will speak with bill dudley and talks to the fact that maybe it is substantially higher and if that's the case, does the symmetry have to shift at the federal reserve because they haven't dealt with this question. if you are dealing with more inflation than pre-pandemic, does the risk become more material that if they don't keep -- keep rates high long enough,

what are the burdens? jonathan: let's get to the dovish spread. what idea dovish fed chair? long-term neutral is close to 4%. i think the federal reserve doesn't know so it doesn't want to engage in the debate just yet. it has left that long. there and believe that there may be for a number of months. lisa: it raises a really important debate. mohamed el-erian has been out front on this. does this federal reserve need to have a driving thesis do not let the economy get away from it? do they have the luxury of waiting until they see what the actual new landscape is? some say they are doing great job and the jury is still out with other people and that's what is with sewing markets. jonathan: a new equilibrium with

5% interest rates but you wouldn't see any damage of equity markets is an opinion. you might see some indigestion but the damage won't be done until we hit six. what you make of that? lisa: the problem with that thesis is it makes perfect sense. you think about the groups in the particular segments of the economy that are more vulnerable to higher rates, you start thinking if we have prices that are at levels that we enjoyed during the financial crisis entering low rates, it's going to get hairy for a lot of people net will start to drag on consumption. jonathan: don't you think we are conditioned by our upbringing? for a lot of people, they haven't seen this cycle. people are talking about 10% interest rates and 15% mortgages. the biases that we can live with this and everyone has to wait for the crisis. lisa: the discussion you had

about highs -- about house prices. it's the key question. people can live with it but is there no hangover on asset price inflation from zero rates? is there no kind of reconciling of price levels with a new rate regime that does not allow the same kind of prices so easily with free money? jonathan: i think the john stolfuss conversation revealed a generational divide between the boomers and the millennials. the boomers are saying we had 15% mortgages. the millennials said you could buy $200,000 apartment in manhattan with a roof terrace and two-bedrooms. i will take your 10% mortgage if i could have the price you paid for your apartment. lisa: how far do we have to wash out some of the higher valuations in order to make peace with rates at these levels? jonathan: and make peace with the boomers. lisa: that's getting personal. jonathan: equity futures in the

s&p 500 are positive 0.3%. your equity market is elevated and trying to bounce in the bond market has yields higher up by a single basis point. mega forces at play in the stock market. brent is close to $90 per barrel and the way the u.s. market is not been friendly to bonds. stocks are snapping a two-day leasing's chair powell sticks to the script. blackrock remains bullish writing this -- he joins us now for more. i want your views on chairman powell yesterday, giving the

economic it we've seen so far. would you describe the data points as bumps in the road? >> this is a long road. i look at the first stretch of that road and i think it's a bump. we over the next few months. the fed is data dependent and not forward-looking so they will be lured into stemming inflation. that's why we are constructive on risk for now. i think that will be the story. this is a fed that set themselves up in december to cut at some point this year. i think the bar to do that is pretty high. we can debate whether this is the right stance but it is a stand so as a result, we will cut the narrative for them that these are bumps and they will be in a position to cut. i think that's the story for the next few months and that's why

risk assets will continue to perform. jonathan: the story we've had the last few days is how to interpret the moves in bonds and the moves in commodities with regard to equities. how do you interpret those moves? >> the first point to make his we very much believe we are in a new regime so we are pro-risk right now. there is room to continue with room to run. it's very different environment. we are going back to the immaculate disinflation before the pandemic. it's not happening and when you look at the bond volatility we are seeing, that continues and that was the clearly the case. even this week, i think it's the biggest evidence we have this is not back to the old regime. i think we are saying a lot of volatility, it takes a little bit of data to come in for a significant reaction. low and behold, we are at the same point like a week ago

before the pce in terms of expectations. the long-term rates are still at the higher level so it speaks to the environment where we can see the fed start to cut but at the same time, don't expect them to follow suit and move down. i think we can very much see a that that starts to cut rates with only a couple and then we will have rates that are stable longer-term or go higher from here. lisa: that's the reason why you been focusing on the short end of the yield curve. we had john stolfuss on early this morning and he said stocks will continue to rally as long as 10 year treasury yields didn't reach 6%. do you agree that if we had 10 year treasury yields north of 10%, -- north of 5% that that would not be a problem for equity valuations? >> no, i wish that was the case but i find it hard to relax about this. if we were of the view that we

are going to six in short order over the next year, it's difficult to see equities sell through this. you go back to october of 2023, we went north of 5% and that was a different narrative. over the course of 10 years, we might be set to a higher environment and realize we can live with that but i think the journey there will be one work equities will feel more than bumpy. lisa: when people talk about a new regime, they talk about their investments in the energy sector and commodities in general. they say any ai adoption has to come with hardened infrastructure investments that have not then fully accounted for. how much is blackrock adhering to that and overweighting a host of commodities? >> there is a massive

restructuring of the economy that is happening. we think ai is one big piece of it but we see five big mega forces. demographics will lead to big changes in developed economies, the rewiring of geopolitics means we have a different organization globally that requires adjustment, infrastructure. we have the transition and we think finance will change as well so big trends. all of them require adjustment and the adjustment i think has to involve significant investment. if you only take the energy transition, that by itself is an investment but ai is interacting with that. i think infrastructure is a huge part of the story of the year to come. even if you don't have very bullish growth expectations we still need a lot of investment. that will support commodities.

it's hard to draw a link to this need for investment and what it will mean for commodities. i think it's a more complex story. there is ultimately, we will draw on commodities as we deliver on investment. annmarie: you mentioned the changing geopolitical map. the secretary of the treasury is in china and talking about how they don't want to decouple from china which is about diversifying. do you buy that and how would that change your thesis? >> i think decoupling, even if that was the objective is not realistic. we are intertwined in fundamental ways globally. fully decoupling would not be on the table. i don't see necessarily a lot of information in a comment like this. it's kind of a strawman that's not achievable. there is a trend and we are fragmenting. there is a dispensation that is happening.

the question is, how will that affect us in the meantime? aside from the politics, i think investors are investors in companies globally are adjusting and making plans that account for the fact that the world would be more fragmented and that's one of the big mega forces that is happening. it's affecting decisions even as we speak. jonathan: do i want to have a bias toward small caps away from multinational big caps? >> you could eventually see that logic playing out. for now, we still think from a technical basis that you would need to have more conviction on a growth spurt that is lasting more than a few months. you can broaden your views on small caps. small about near term growth but if you think on a tenure basis, i can see a story where you see more localized companies, smaller caps being beneficiaries

of this mega force. jonathan: you are one of the best, thank you. equities right now are positive zero point 3% on the s&p 500. here is your bloomberg brief. >> paramount global is getting closer to a deal to merge with david ellison sky dance media. the controlling shareholder has reached a tentative agreement to sell a stake going to people familiar with the talks. shares of paramount have been under pressure for years reflecting the companies loss of traditional tv viewers and costly efforts to develop streaming service. the media company had a market value of nearly $9.2 billion at yesterday's close. tsmc has resumed operations one day after taiwan suffered it's worth -- it's worst earthquake in 29 years. the critical chipmaking equipment was unharmed and it

brought about 80% of its machinery back online within 10 hours of the earthquake hitting the region. a small number of tools at the facility were damaged. tsmc says it is deploying resources to ensure a full recovery. it is the leading producer of advanced chips for both apple and nvidia. if running 26.2 miles wasn't hard enough, new york transportation officials want runners to pay bridge tolls as well. that's according to the new york times. the mta is demanding roughly $750,000 in lost toll revenue stemming from the closure of the verrazano narrows bridge where the annual new york city marathon takes place. the organization that runs the marathon has yet to agree to that deal. that's your bloomberg brief. jonathan: thank you. do you want to weigh in? lisa: i think it would be an active part of the relay, just put the money in. annmarie: the mta said taxpayers cannot be expect to subsidize a wealthy taxpayer organization but how much money does the

marathon make for the city. jonathan: it's ridiculous. lisa: i think it could be an active part of exercising. it could be an active exercise for the arm. jonathan: it's ridiculous. up next, treasury secretary janet yellen touching down in china. >> we have agreed that it's important to both of us that we don't want to decouple our economies. we want to continue where we both benefit from trade and investment but that it needs to be on a level playing field. jonathan: that conversation is next, live from new york, good morning. ♪

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are positive by 0.3% with yields higher bicycle basis point. all eyes are on crew the last couple of days, settling down at 85.39. treasury secretary janet yellen is touching down in china. >> we've agreed that it's important to both of us that we don't want to decouple our economies. we want to continue where we think we both benefit from trade and investment but that it needs to be on a level playing field. we waited for too long with too little communication and misunderstandings develop. jonathan: janet yellen landing in china in the last hour.it's her second trip to the country nine months as chinese leaders are pouring money into manufacturing, focusing a new interest is like electric vehicles, batteries and renewable energy. joining us now is isaacbotansky.

we've had too little communication and misunderstandings develop? where are the misunderstandings currently? >> just about everywhere i would argue. with all do respect to secretary yellen, i would describe her comments thus far as announcing -verb salad. it's sort of a rehashing of all the same commentary we've heard from years regarding competition and decoupling which i agree with your previous guest in and of itself is a strawman argument. i think we've got to look past this and say the goal here for the biden administration is the same goal we've seen for his entire term which is to keep geopolitical tensions with china range bound. they do not want to see a flareup in those tensions running into november. i think that's ultimately the goal and all we should expect from these talks and future talks that we will see over the next few months. lisa: annmarie: we have seen her shift more toward leaning

international security than economics. i don't know if this is her towing the company line. is china getting a different janet yellen on this trip in that sense? >> sure, we can agree she is pushing back on china's incredible unprecedented [no audio] jonathan: i think we lost the connection. we will do our best to reconnect. i agree with isaac, we've had -- we've heard these lines from the administration before. we were talking earlier about -- with the national economic council director. the tariffs are still on. now we are waiting for additional tariffs on ev's after what we heard from the administration a number of weeks ago and we are still waiting. annmarie: potentially waiting in the wings in the commerce department will look into the conductivity of these ev's. they said national security is doing a lot of lifting when it

comes to potentially is a politically fraught moment for this administration ahead of an election which is making sure they shore up those union jobs. the administration wants to keep a lid on this relationship. jonathan: we shook up the screen and isaac is moving again. you froze for a moment so let's continue. we've been talking about the potential to put tariffs on ev's, chinese ev's. how close are we to a decision on that? >> i think as an investment community, we need to understand there will be immense pressure to not put overly onerous tariffs on any of these ev's this year. i think there will be a slow build later this year, expect there to be more chatter around natural movement on the imposition but it's a 20 25 story. no matter the outcome of the election come i think we start to see some of the china hawkishness that has come to define both parties moving from rhetoric to reality no matter who wins.

right now, we've got to keep in mind the biden administration's number one goal from a geopolitical perspective is to do no harm with china as it is trying to figure out what's next in the middle east in particular. lisa: how much is this due to the u.s. reliance on china for commodities in particular? >> that's why there saying there is an impossibility decoupling. it's give -- given the broader economy and especially our needs on the commodity said when we think about our goals for clean energy and green energy which in -- will not slow down anytime soon. we've got to look at this is not just a singular issue but a game of 3d chess where the biden administration truly wants it to remain range bound regarding the geopolitical tensions. there are meaningful ways to retaliation that hurt us in

avenues and areas we are not fully prepared for. that's what happens in these retaliatory spirals as we learned during the trump administration. annmarie: if rhetoric turns into action, where do we stand in terms of tiktok being banned or divested? >> this is one of the topics du jour on capitol hill. it's interesting in so much as i would say there is broad bipartisan support to ban the app tiktok. there is just no agreement how to do it. it's similar to the federal budget which we can talk about as well. on tiktok, there was a house bill that passed and i think it will be slow walked in the senate but i don't think democrats truly want to ban tiktok right before the november election. i think they will slow walk the bill and it will be a risky thing after the election. we are looking for the lame-duck for that to be included in a china bill or an annual defense bill. i think it will get quite the next few months but it will pop

up again around the election and after the election. jonathan: we need a few hours to talk about the deficit but i want to understand that the tiktok episode was instructive for the former president's views on china and how he will deal over certain issues. what did you glean from that over how he may govern next time around? >> one of the things that many of us forgot regarding tiktok and president trump's disdain and original stance on tiktok, that was just part of his china strategy to the extent that there was a broader strategy. the pushback on tiktok was not about tiktok for president trump. perhaps it was for his national security folks and others around him but for him, it was part of the china retaliatory spiral i talked about. i think you saw a quick and sudden shift for a number of reasons. he said it was the market share and competitive dynamics with facebook but i don't believe that is much as other dynamics

that are in play. on this one, it's a reminder that a president trump wins again, we've got to rethink how everything will be done. in part because it will not be like last time. he will enter this time different with different folks around him and different agendas at play. that's one of the reasons we've been focused on what he will do with tariffs and a second administration. jonathan: thank you very much. volume two of we get one might not look like volume one which is something we've got to talk about over the next few months. coming up, crude close to 90, gold close to all-time highs. that's up next. ♪ so this is pickleball? it's basically tennis for babies, but for adults.

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jonathan: stocks right now about one third of 1% on the s&p. the nasdaq up 0.4. ethics interesting, going into the close even with a reprieve in the bond market backing away from the highs of the year. back down to 43670 three this morning. yields inching just a little bit higher. struggling to interpret the link between bonds and equities because it's evolved so much over the past five months. lisa: this is been the biggest narrative shift of 2024 which is that higher bond yields are a good thing for equities as long as they come at the same kind of

growth that can turbocharger earnings. that's the? now is what is that line in the sand. wendy bond yields become a problem for stocks if higher isn't necessarily bad, it's just too what. jonathan: indigestion may be, six is the problem. lisa: then we heard that's who's good to be a problem way before that. here is the question. can we get to a new regime with the price levels that we've applied from the zero rate time. is that something we can do without some greater levels of indigestion. jonathan: beating up central banks is us -- but sometimes they. get it right. the swiss national bank may be got this one right. inflation this morning coming in softer than expected. you get a much weaker swiss franc off the back of that because there is a belief they will go again and maybe they will go again. lisa: do you think they do this? they figured maybe we could kick it down a little bit.

this is a positive for them and a whole list of reasons. is this the line of travel for the ecb as well. i think about swiss national bank and the ecb, they might have the luxury to cut more rates aggressively than in the u.s.. how far can they diverge from the u.s. is the question. can the continuing deep rate cutting cycle if the fed does not engage one themselves. >> i think the s&p less dependent on what's happening in america. does the ecb need the federal reserve to give them cover because based on the way things look now growth is not great in europe. inflation is coming down. why are they cutting interest rates already? how much coverage they need that june meeting. lisa: the chief strategist said the ecb can move before the fed however if the divergence last for too long and the fed doesn't get up with cutting rates that becomes a problem. the cycle and the deep and how long it goes for. jonathan: under surveillance

this morning another day, another sort of fed speakers. all on tap following chair powell's message but recent inflation did not materially change the overall picture. just how much distance is there between those characters on the screen. lisa: when you put them together they sound very familiar and close. i think it's a good kind of child lullaby we can create with this. >> falling asleep? we start talking about the rhyme and the rollout. i'm curious to hear whether neel kashkari, i also want to know how many of them see the luxury of being able to cover any material change in the data. is there a new threshold where suddenly they start to get concerned. jonathan: we will see if that changes per the treasury secretary suggesting the u.s. retains options to protect industrial sectors against china following what she describes as overcapacity from the massive

state investments in areas including clean energy. yellen arrives in china for a second visit in nine months. i wonder what is the object move is the talk start to build between the nations over again. annmarie: to keep the relationship on guard. when you don't communicate their mistakes that happen. they want to keep lines of commute occasion open. but we cannot exaggerate enough how important this is. as they are trying to bring in more foreign direct investment. what's interesting of what she had to say was they retain the right to go further to protect u.s. industry. that just has this whole debate in washington, what more will this administration do. jonathan: byd planning to launch its first electrified pickup truck later this year. taking a vehicle to the global market. they dominate china but the company's been pushing into other markets. pickups as you all know are very

popular. i have no idea how popular this will be put if you are in detroit and worried there's already massive barriers to entry to bring in a truck from abroad into the united states. can byd circumvent that by going through mexico establishing some kind of presence in the united states because that could be a major threat. >> is it also to tesla. this is a reaction to the cyber truck. byd has a 33% share in china. tesla, of the new share of the numbers is low double digits. now they have something that can rival tesla when it comes to these bigger vehicles. entry into the night states is more than 25%. jonathan: can we get the picture back up? are these official colors. is this like camouflage. annmarie: it looks like the fire emojis. jonathan: i'm trying to work out of this is the camouflage or a real color. sometimes those new cars get

driven around just a test drive them. >> i think that maybe this caters to what they think american tastes are. >> maybe not, let's turn to this. brent coming within a penny of $90 a barrel on the heels of opec reaffirming supply cuts and amid rising geopolitical tensions and increasing demand. javier let's talk about what's happened to crude. i want you to help me understand how much appetite is left in saudi to keep those barrels of oil off the market. >> at least another three months from saudi arabia. oil as close as they come to $100 and they are pushing for it. i've argued opec will have to trade a bit of pain in terms of lower prices, perhaps 75 or $80 and production starting in this quarter but opec use the

opposite and they seem to be really wanting to tighten the market towards $100. lisa: they want to tighten the market over $100 a barrel. is this political or do they want to issue some new securities and cash in the higher rate. >> they want the oil. they see it as business, perhaps also good politics for them. let's not kid ourselves i think they would prefer donald trump in the white house to joe biden but this is about business, the saudi's really need the money. also they see $90 oil is very significant from what used to be. they look at the community of inflation around the world and say my barrel of oil doesn't buy me much goods today compared to five or 10 years ago. i need to adjust prices for that inflation. >> this is fascinating especially at a time u.s. oil production really overwhelmed

any supply cuts we saw out of opec-plus and created lower prices. are we inferring here based on pricing where it is that u.s. oil production cannot offset some of the cuts that we are likely to see ongoing with the opec-plus members? javier: it's clear american oil production will increase at the lower rate it did last year. it's surprising in terms of production. what is surprising many on the market and i've been saying the demand side is fine for the last 18 months is oil consumption continues to be quite healthy going into the new year until 2024 we are now seeing more people revising the numbers higher, of the market was around 1.2 million more on consumption growth. now the consensus moving, some people even higher than that. so the demand is there. american oil production goes

rogue this year. we will need a bit of extra production from opec into the second year if we want prices to come down. if opec keeps the production as it is now then we will move our prices higher towards that 90 to $100 range. annmarie: if you are amos hochstein and jim to the saudi's, do you think there's a chance they say we are going to tap the spr or you can release more oil. what do you think the saudi's would want to see? javier: probably the american officials would say you need to do what is right for the country and do what is right for our country and we do not want to see prices getting too close to $100 in a scenario where we also need inflation to come down so the fed can help the economy. what the reaction of the saudi's will be, i don't know. this could be pressure from other members of opec in

particular thinking of the united arab emirates to avoid overheating. also opec's interest to release production and not to effectively subsidize future growth of american production. annmarie: given we've seen an uptick in the geopolitical risk in the oil market how vulnerable are iranian barrels of oil right now? javier: they will be vulnerable if the u.s. decided to really enforce those sensors they have on the country but what we've seen over the last 18 months, there is very little appetite for the u.s. to really enforce or perhaps china can bypass it completely. whatever it is the reason we are seeing iranian oil production remains quite robust. particularly in china. jonathan: i wonder what you make of what's happened recently. the breakout in crude, you're

seeing it elsewhere as well. silver over the last few days, the last week gold as well all-time highs. how would you frame things for us at the moment? javier: don't forget about spanish olive oil in particular. a number of these have gone up and i think it's interesting to see the strength and global consumption of commodities in the major fighting against climate change. particularly oil. a number of those remain week. gas prices have come down in europe. electricity prices have come down in europe. you look at agricultural commodities especially coco and chocolate and a tele-, we get worried about high cocoa prices. you look at a number of agricultural qualities, we come, rice coming down. it's a mixed bag but what's important is to focus on the

fundamentals of particular commodities. commodities where there is a cartel force like oil or potentially supply shortages in the future. and probably they will remain high for the foreseeable future. jonathan: lisa has an interesting story about spanish olive oil pretending to be italian. lisa: it's completely the opposite. they put the names on it and then it spanish olive oil because people would prefer to buy italian. they've done a better job with marketing. annmarie: it's taste. lisa: i've gone to an olive oil tasting experience with spanish olive oil. jonathan: what was it like? was javier hosting? i know you have to go, thank you sir have a blast. thank you very much. it's been quite a break out of the last week or so.

particular precious metals. lisa: with olive oil it had to do with drugs and weather issues in europe. with respect to chocolate it also has to do with weather issues and by the way mattel it does not count as chocolate. jonathan: i saw you shrugged. we are on the same page. lisa: i think there is a question and it was a good one, there is a theme here that we can pull together in terms of demand. annmarie: there is that demand there. the question is will the saudi's, in this summer and actually aid to the market at a time when it's going to be incredibly political for them to release the barrels. >> aid the market, not the white house prayed that's a clear distinction. what would they need to see to give them reason to give aid to the market. what are they looking for, what kind of disruption would be a disruption to far? lisa: i think to javier's point what they would have to see is if prices go above $100 a barrel

that would be a moment potentially for this to happen. jonathan: very close to 90. let's get you an update, here's a bloomberg brief. >> carlyle group harvey schwartz was awarded 180 $7 million pay package in his first year running the private equity firm. most of that was about $180 million of stock which vests over several years and based on how shares perform and how long he stays at the firm. he received a cash bonus of $6 million which was double the size of his target. google is considering charging users for new premium features powered by ai. the financial times reporting the potential move which would be the first time google puts any of its core products bind a pay wall. engineers are developing the technology to roll out the service but executives have not decided whether to launch it. google's flagship search engine

will remain free. broadband kiss is selling its song catalog as well as its name, image and likeness. sources say pop houses paying more than $300 million for the deal. the company plans to make a biopic about the group as well as a live music show featuring avatars of the band's legendary members. they already have a live production featuring avatars of swedish pop group abba, that show makes more than $1 million a week in london. that's bloomberg brief. >> up next, the feds waiting game. >> if you're the federal reserve, why would you even think about fighting interest rates when the economy continues to be really solid. we are looking for signs of those. they are just not there yet. >> we catch up with terry wiseman of mcquarrie on the program. ♪

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jonathan: stocks on the s&p 500 shaping up as follows. equity futures positive by one third of 1%. and your posting base case job market weakens looking for 150 friday. fed cuts 125 basis points this year. almost twice the cuts priced by the market. he's looking for weakness in this economy. >>'s that can be a good thing for stocks. if the fed is cutting for that reason of weakness that could be a real problem on the margins and then you'll have people saying it's a fed put. if your head is spinning, welcome, have some coffee. jonathan: under surveillance this morning, it's the feds waiting game. >> if you are the federal reserve why would you even think about cutting interest rates as

the economy continues to be really solid. there, was to sit on their hands and really not do anything until they have to. until one of those indicators starts and we are looking for signs of those indicators and they are just not there yet. >> treasury yields pulling away from four-month highs after jay powell reinforced the central banks wait and see approach. terry wiseman writing the u.s. data has not been friendly to bondholders as of late. questioning the project -- prospect of a fed rate cut in june and the fomc would follow through on its three rate cuts. we haven't been too smart -- too surprised. terry is with us now. let's get into the bond market. we seen this come through we've been looking for the rally at the front end. how have you been sort of interpreting the moves we've seen across the curve? >> a relative view of yields across the -- across it because what drives perceptions in the narrative right now is u.s. exceptionalism.

how well we been doing in terms of the rest of the world. i'm mindful of the fact if you look at the last two weeks or so u.s. bond yields in the 10-year space have gone up by about 20 basis points those lows we saw a few weeks ago. maybe immediately after jay powell's press conference but yields of gone up by only 10 basis points or so. that points to the idea when i say the data has not been friendly to bondholders it hasn't been friendly to u.s. bondholders. that's been strong in the u.s.. that's the narrative now. it's keeping the dollar fairly strong as well. >> you push it through foreign exchange, 108 on euro-dollar. maybe closer to 106 perhaps. why has the euro and other currencies held up. >> may be because the dollar is already too strong. that could be a case made for that. every time the euro drops there

is a bid. that's what's keeping the in place. that should not dispel for the last three months, we have seen in the markets stronger u.s. economy for the rest of the world and had anticipated that going into the beginning of this year. with the beginning of this year the narrative was about a slowing u.s. consumer. the exhaustion of the pandemic era savings. that hasn't really manifested in a slower consumer yet. continuing disappointment in china. continuing in europe as well. the narrative can continue to stay with us for a few more months i believe. if that happens, we might see the euro, back down again. lisa: there's a real disagreement right now on whether were entering a new normal with a much higher benchmark rate or whether we are going back to something that was more normal pre-pandemic. we had bill dudley coming up he think the market is right. and the terminal rate will probably be around 375.

do you think we are entering a time where rates just have to be a whole lot higher for a long time in the united states. >> this speaks to the issue pertaining to the last mile of the fight against inflation and whether we get 2%. i don't think it will be easy. there are forces out there that are structural in favor of lower inflation. one of them happens to be the overhang manufacturing capacity. rents in the u.s. are like this. but on the other hand you have these medium-term and long-term structural issues, geopolitics in the upper pressure it's causing. global warming and the prospect it will cause upward pressure on the agricultural prices. all these problems we are seeing in shipping in the panama canal and the red sea now with the northeast corridor and the bridge collapsed. those things are medium-term structural and baby has to do with the outdated and this of

infrastructure in the united states. those will keep inflation potentially high. where we balance out is difficult to say but one can easily read enough supply-side constraints out there to suggest that last mile will be tough. >> understanding the relationship between stocks and bonds recently at what point bond yields become a problem for the easing of financial conditions we've seen throughout financial markets but particularly stock prices near all-time highs. is there a level or at some point will people say higher yields are going to become restrictive over time, what we look for to understand real trajectory. >> it's not the level of yields that matters as how fast they get to wherever they are going. all of a sudden we had a massive positive inflation shock in the u.s. and we felt that the fed was no longer going to ease and as a result of that the yield curve, the inversion went away

and he went back to a normal way with yields going up of course would hurt the stock market. multiples would be compressed as a result of that. the reason it hasn't happened despite fairly high 10 year yields relative to where they were pre-pandemic it's because the market still expect inflation to come down in the fed to achieve its target and we effectively get a goldilocks economy. the market doesn't want to see the extremes. it does not want to see high yield on the back of too much inflation or too low yields on the back of a presumptive deflation that will take place because of the recession. >> are you convinced the chairman is committed to 2% inflation. >> yes but keep in mind on march 20 during his press conference he did not say he was committed to it in the short term. he said he wants to see that target happen over extended periods. i don't never the exact phrase he used. what he meant to say was let's not worry too much about these

bumps along the road. we are still going to ease. that was predicated on the view that the target is not a short term target it will be a long-term target. >> i think it's around six months. i think there was enough studies coming out of the regional feds that suggested we get to 2% inflation on core pce around the middle of this year. on a trailing 12 month basis. i think if the fed sticks to that they would want to see that happen by june or july which you won't see until. >> is it a rolling six months. is it something they are shooting for six months out. >> it conceivably can become rolling. when you are on the road in the hot weather and you see that barrage of water out there and you get closer to it it disappears further back along the road. we could see a situation like

that. here what we are talking about is not so much the data but the outlook. as long as those things determine inflation still pointing downward the market will not worry but if we get a delay that seems inflationary like a supply shock than the market will give up on that prospect and eventually get to 2%. i think the bigger threats out there, from the supply-side of the economy. the global supply-side not so much the demand side. jonathan: awesome to catch up with you. weighing in on the situation with the federal reserve and what it means for foreign exchange and beyond. fantastic lineup for you. former new york fed president bill dudley, becky franco it's and bloomberg's ed ludlow. going towards the opening bell, 94 minutes away. equity futures positive one third of 1%. this is bloomberg. ♪

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