>> 30 minutes into the trading day. we are on record watch. stocks set to end on a four week old gains as nvidia earnings come out next week. a front row seat to boeing, the beleaguered airplane maker searching for a new ceo. chocolate's smelt up we talked to douglas lamont about the bitter trends in cocoa prices.

good morning. i'm scarlet fu. we have a stocks little changed at the moment holding near record highs and for the week they are set for the longest streak of weekly gain since february. this week was eventful and that we got inflation data that reignited hopes that the federal reserve will cut rates although the federal reserve has been careful to point out they are willing to be patient and want to make sure the data confirms disinflation is intact. you have investors looking ahead to nvidia results next week that will answer the question whether the hype in a height companies is justified. we had the 10 year yield barely moving higher, 4.4% at the moment. fed speak will help determine what happens next in the bond market. overseas, new data out of china

showing industrial outlet rising faster than expected. beijing has a package to prop up housing markets. in the koran joins us now -- enda curran joins us now. enda: we saw at sales slump and slowed the most since 2020 two. and weakness across the property sector has prices for april following the most month on month in a decade. industrial side of the economy doing well, speaking to the idea that china's export and trade side of things in overall

economy would feed itself and the global suspicions and political tensions that china is exporting overcapacity to prop up the rest of the economy and perhaps that's why steps are being taken to rebalance some of that to push back some of those criticisms. scarlet: for years china has been on the issue to rebalance its economy away from export investments and more towards domestic demand. where does the property market and sector fit into that effort? enda: property activity it makes up between 20% to 25% of the economic activity. a lot of outsiders have been watching and waiting for when china would make real steps to revive the property sector which has been in a slump for years. it looks like we are getting policy measures, those announcements announce easing mortgage rules, bringing down down claimants required -- the amount of down payments

required, and then state owned entities going out to buy unsold homes and recycle them back into the economy. it remains to see how they will play out but they do speak to the most aggressive steps being taken by them so far and that hint at a sense of urgency. they are playing for geopolitical because china could turn around and say we are putting money on the table and taking steps to stoke demand and buying goods that we make ourselves as well. scarlet: thank you for summarizing that going on in china. consider the market implications with sophie lund-yates. it is good speak with you. when you take stock of the data in china and the measures china is taking to address the property crisis, how does that filter down to how you look at the global equity markets? sophie: absolutely. there is no getting away from

this. more broadly the economic pain in china has huge ramifications around the world, particularly looking at some of the big banks and huge exposure to that real estate market in china. we are not necessarily seen all of the pain but more broadly when we are talking about this kind of subject matter, it says for me as a prudent reminder to make sure your portfolio is in a position to weather ups and downs in different regions. there are so many unknowns and we are becoming so accustomed to heightened levels of geopolitical and economic uncertainty that the more important thing to looking at -- to look at is make sure you are broadly spread and in a positions to stomach those ups and downs.

i'm talking about diversification. scarlet: i'm glad to bring up the levitical -- geopolitical concerns and protecting. do that through spreading assets over different classes? how do you think about diversifying against geopolitical surprises? sophie: one of the fundamental ways to look at this is making sure that you are not overly exposed compared to others but also when we are in a situation and another unprecedented series of events and what we do and my team is stripping back to basics and going back to those sectors and looking at what the world can't live without and whether or not there is huge uncertainty or not. that can be things from telecommunications sector, great names in europe, banking, we need to put dinner on the table

and stripping it back and looking at it that way. and looking at the fundamental analysis. and can they stomach ups and downs if the market catches a case of nervousness. scarlet: let's shift gears to macro because we are awaiting fed speakers in a couple of minutes and what they say will likely move markets. it seems like fed officials have gotten on the same page when it comes to the products that -- prospect of rate cuts. they are willing to be patient and want to see more before they announced that they are ready to do anything. how much of that is priced in and how much are investors hoping that something will move i september? sophie: i think they are very much expecting that in september the cut to happen. we know that is we look at the

inflation data that most recently came in. i don't think it is in necessarily a given about being the september rate cut. i think we could actually see this pushed out towards the end of the year if not early next year. there are dates to consider with political, including the election and we know the fed has to remain a political. -- apolitical. we are getting there but we are not there yet. scarlet: may be one think that perhaps might give the fed and jay powell some pause is the fact that stocks are rallying so

much, record highs early this week, the revival of the meme stocks craze. the 13fs show that some have added positions to gain stock in amc. what do you make of this because we know it doesn't reflect fundamentals? is this a reflection of loose financial conditions? sophie: in some regards, yes i think that is one avenue for it. it is certainly not something that we would be supportive of and we are very much married to this idea that investment decisions need to be based on fundamentals and as much as there is a lot of argument particularly around the amc story that potentially there can be more of a recovery than the market has given credit for. i think we have shot way past fair value. it just makes me worried. i would love to think of a better word for that but i am

still just inherently concerned about all of this. scarlet: a.m. she shares right now up slightly 3.5% while gamestop extending its declines. i want to wrap up earnings because we are at the -- amc shares right now up slightly 3.5% while gamestop extending its declines. i want to earnings. what are you inspecting in terms of the trickle-down effect to the rest of the sector into global markets? sophie: we have seen has been leading the charge of the s&p 500. we have also seen more recently the rally is broadening out. that doesn't mean i think this will be the end it the semiconductor or tech rally broadly but we are seeing a broadening out of that rally. so under performers, and that to

me makes it slightly safer and healthier market when it is not reliant on one side or the other. we will see potentially some tempering but the broadening of the market is positive. i think we could see that go a little further. scarlet: the broadening not just across sectors but across asset classes and geographies. i really appreciate you joining us. sophie lund-yates joining us this morning. let's take up -- a look at what names are moving markets. you have been on these forever. let's go straight to the meme stocks. >> gamestop down. it was up more than 270% at one point on tuesday afternoon. this is coming after preliminary

results falling short of the analysts assessments and the big news was the announcement that they are going to go to market potentially with an aftermarket offering and could sell an additional 45 million shares. not only would that dilute meme stock but also provide fuel for short-sellers to take on new positions or wait for liquidity to hit the market. we have already seen 40.5 million shares traded, so very liquid and volatile. scarlet: was that a coincidence raising money by selling shares? >> amc did it and for an equity stop -- swap. gamestop has no equity and we are seeing capitalizing on again while it is giving back a good chunk of the gains this week and it was trading at $11 back in april. so 22 is a nice place to sell. scarlet: amc moving in the

different direction. >> it is still giving back, up 5%. the big thing is a meme stock and undermine -- underlying issues we talked to strategists. where these things go on in -- any given day is like roulette. scarlet: let's move on to read it. it finally -- reddit. they are going to have everything they do going to an ai partner. >> it is interesting because it mirrors what they already have in place with another large technology company. not only will and openai be getting access to the boards and underlying data but also implementing some ai technology so the whole pitch when they went with the ipo, now up 100%,

was that we will be an ai company and a key player and this does validate that. scarlet: they are delivering on what they say they're going to do. applied materials a big name in chips. >> outlook met expectations and you're not seeing much reaction from shares. not a big swing. in the last 12 months the stock was up 70%. all eyes will be on nvidia wednesday. keeping a close eye on what is going on with chipmakers and with that can show. solid outlook with that is why you are seeing shares flat. scarlet: thank you so much with the stocks we are watching right now. we will look ahead to boeing's annual shareholders meeting with sheila kahyaoglu the defense and airlines analyst. this is bloomberg. ♪

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idris elba works here? mm-hmm. ya, he's super nice. scarlet: boeing kicks off the annual meeting next hour. executives wrestling with a growing image crisis related to safety protocols. the company on the hunt for a new ceo who may face what some are calling mission impossible. sheila kahyaoglu is and airlines analyst and joins us now. she has a 270 dollar price target. this is the shareholders meeting and typically they are sleepy but there is a long to do list to tackle in the meeting. is it going to be contentious? sheila: it is as contentious as it gets. it is were shareholders to voice you and often times they don't do. they have been doing it at boeing.

the board doesn't necessarily have to approve what shareholders say. what is important is that the shareholders voice and the new ceo search and anything that takes the seat has either nothing to lose or something to prove because they are clearly not going to have a financial windfall. scarlet: that brings me to something you told bloomberg reporters and i will quote you in talking about a prospective boeing ceo, they could potentially lose their legacy and also make no money at the same time. why would anyone want to take that job? is it obvious at this point that boeing needs to go outside the company for the next leader? sheila: i think it does. we have heard some names thrown out there and some folks at spacex that have worked on efficiencies. but someone has to move swiftly and that has to be some sort of

boeing relationship, whether they are on the board. with saw that with calhoun. scarlet: it did not work out so well. sheila: it did not. the former qualcomm ceo is running the surge and he could even be a contender. there is a 30 year insider, stephanie pope, who knows where all the bodies are buried and she has a engineering background and that is preferred. and the third is shanahan who has 30 years at boeing supply chain operations and is now the spirit ceo and was part of the trump administration with various defense secretary roles. scarlet: what we are saying about steve mollenkopf that he could be a contender, he was a former qualcomm ceo. this would be eight dick cheney situation where he is looking for the vice -- this would be a dick cheney moment where he is looking for the vice presidency. with this get support? sheila: you need somebody to rub and lives -- someone to

revolutionize boeing and somebody who is good with the workforce and has 20% to 30% of union negotiations as well. you really need somebody that is all in an good with regulators which steve has proven himself. clearly we don't cover qualcomm and never did but he has a good pass with regulatory relationships, activists, a takeover. he has done that very well but doesn't have what it takes to be on the factory floor. boeing needs new leadership and maybe not this time around are we going to get a complete outsider because we have to move quickly because we are only producing less than 20 max's. it is not a great situation for the u.s. consumer. scarlet: they are one of two major airplane manufacturers and they have to deliver on those prospects. you mentioned the prospect of someone from spirit error being a candidate.

i have questions about the spirit aerospace acquisition because it will be more like a reacquisition. it used to be part of boeing before it was spun off. spirits financials are not in good shape, they bring to $44 million of free cash flow in the first quarter and under scrutiny from federal regulators. will there be a drag on boeing's financials once it is reabsorbed? sheila: they have a facility in wichita and make business jets and the spirit makes aircraft so they are comparable folks and you often don't hear about the site across the street. one of the reasons long-term that boeing has to buy spirit back is to invest in the infrastructure, whether that is it could be up to one point $5 billion or to build a new field plant. the main concern right now is what spirit has been delivering is not up to par and that has to

be improved short term. long-term i think spirit needs an overall -- overhaul of its facilities and boeing we need to fund that. scarlet: it needs a large-scale reinvestment and a makeover here. spirit also is a supplier for airbus. won't that be an issue down the road? sheila: that has been what is holding up the deal. pat shanahan took over october 3 or so and by february we were supposed to have a deal with airbus assets being sold off. airbus assets are losing quite a decent amount of money and we think it is almost a six dollar hit to shares, the air pet -- airbus assets as a loss. airbus might not want an in-house center but what benefit is it to help out boeing, their major competitor? that is holding up the transaction. scarlet: if you have a buy rating with the $270 price target. what would you have to see for you to downgrade the stock? sheila: probably a rule of the

production certificate. we have not heard the take any drastic steps. the audit has been drastic in some people's view but the real pull of the certificate would be a nuclear situation. scarlet: sheila kahyaoglu, thank you for joining us. the shareholders meeting starting at the top of the next hour. still ahead, looking at the company is making the most buzz, social climbers is up next. this is bloomberg. ♪ so, what are you thinking? i'm thinking...

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boring is the unsung catalyst for bold. what straps bold to a rocket and hurtles it into space? boring does. boring makes vacations happen, early retirements possible, and startups start up. because it's smart, dependable, and steady. all words you want from your bank. for nearly 160 years, pnc bank has been brilliantly boring so you can be happily fulfilled... which is pretty un-boring if you think about it. scarlet: time and offer social climbers, the stocks making waves on social media this morning. t2 announcing it will postpone the highly anticipated grand auto six -- grand theft auto six, not to be released in 2025. cracker barrel burning investors

risk lowering profit estimates and cutting its dividend because of slowing demand. eatery said it wants to focus on growing the business. and robinhood reaping the benefits of meme stock mania, the company getting double upgraded at bank of america. the analysts say recent surges in retail engagement, stocks like gamestop and amc surge and falter and now in other directions. you can follow the latest company buzz on your bloomberg terminal. at the end of the week, we are looking at a market that is a market that is flat. the s&p 500, up little, .1%. 10 year yield moving very little. no economic data due out but fed speak coming up. the leading economic indicators did drop .6% for the month of april, slightly more than anticipated, which was for a

drop of .3%. as you can see, not much impact on the markets either equities or fixed income. coming up, cocoa prices still bananas. what are they to do. we asked douglas lamont, the ceo of tony's chocolonely. this is bloomberg. ♪

scarlet: coco prices rising. prices down from the april peak but still up 70% this year so let's digest what this means for the industry. douglas lamont, tony's chocolonley ceo, private chocolate company. douglas: pleasure. scarlet: cocoa prices. must be top of mind.

a bold call recently. the world could run out of chocolate inventory down the road. near-term, prices have more room higher. what are you hearing? douglas: crop prices have gone up. last year was a poor crop, down 30% this year. issues are accentuated by the long-term issues, productivity, disease management, paying workers a living wage. we made a commitment to ending exploitation in the industry. these are things we've been warning about a long time. it's a challenge. i hope the short-term crisis is

a wake-up call to make sure we support farmers, invest in productivity over the long-term. with climate and variability and risks increasing, if we don't do that, those effects could come home. it would be a stark reality for the industry. scarlet: your company is 19 years old, founded by three journalists investigating forced labor on cocoa plantations, also addressing child labor. how are your farmers addressing climate change, scarcity of fertilizer, bad weather, the outbreak of plant diseases? douglas: they need support. this is millions of small farmers with small plots. it's not just about paying a living income. it's also programs around productivity and disease

management to make sure yields increase and also 1.5 million children in child labor conditions because farms cannot afford to pay for labor to prune their trees. that's a problem. we cannot expect farmers to do it alone. it needs to be a partnership. the industry norm needs to change quickly. our model is working, that is why we came into existence. child labor rates are dramatically reduced when it is done in combination with our work. scarlet: maybe this will be a wake-up call to the industry. big manufacturers are looking at the futures and taking steps to offset that by reducing the size of their offerings. what are you doing? douglas: there's a reality

prices in the market have to go up. this has been a rapid shock. we haven't made decisions but we are looking at how we manage this as the future start to hit our pricing. as the pricing hopefully moderates down the line, the industry makes the commitment and doesn't just pocket the difference to make even more profits and continue to not invest in the farmer. even though these prices are crazy, the biggest issue is,, that is not feeding through to the farmer. the regulations are on a massive lag. with yields down 30%, they are not receiving the market uplift. this is not boom time for the farmers. a lot of speculators in the middle are making money. scarlet: you have not raised prices yet. you are watching the situation.

are you hedging against the increase in prices? douglas: like everybody, there is raw purchasing we do. there is a lag effect in terms of how that feeds through to consumer prices. that delays the issue rather than solve the issue. ultimately you are buying on a rolling basis. these prices are coming down the line. you won't see the increase reflect the issues, varying from 12 months ago. the prices for cocoa and this massive spike since january are not reflected in the market yet but they will be in six months. scarlet: it's also the price of dairy and sugar. tony's in the u.s., you have grown fairly quickly. since 2020, you have a presence in whole foods, target, rei.

as an ethical chocolatier, how do you think about partnering? douglas: we just secured a national listing in walmart in the last couple weeks. ethically sourced, living income paid chocolate, widely available as possible is the right thing to do. our primary objective is to end exploitation in africa and the cocoa industry. putting more beans back to west africa is the way we solve that issue. it's about distribution. in order to raise awareness of the issues, in the u.s., not many consumers are aware of children are working illegally on farms in west africa, because once you know, you cannot not know. we need a great brand.

scarlet: once you know, you can't unknow. what advice have you received about building the company into a global consumer brand? douglas: it's a new partnership. it was very helpful to get perspective on the retail landscape in the u.s. and how we build the brand at the right pace in the right way. we've had limited interaction with howard schultz. the reason we took an investment in him was because of his experience. that's going to be valuable for us. scarlet: any plans to add ingredients to chocolate to address the high prices, maybe adding nuts, less actual

chocolate, expanding to other kinds of candy? douglas: not short-term. we have fantastic recipes. making sure you make a commitment to your product is the right way to do it. as a brand, as we grow, we are introducing new products. the combo effect, we now have snacking products we just launched in the u.s., i think you will see more from us on that front, driven by strong consumer demand for our brand and the ethics behind it. scarlet: appreciate your joining us, douglas lamont. tony's chocolonley. let's get you a checkup. looks like we've moved to the upside. abigail: intraday overnight chart s&p evening futures may look dramatic if you take into account we are up. these are tiny moves.

similar yesterday. ultimately s&p fell slightly on the day, early in the day. volume i suspect is lower than expected. different story on the week. s&p up for a fourth week in a row. something would really have to change today for that to be disrupted. the 10 year helping out stocks. investors cheering that slightly cooler than expected cpi plus a fed that seems unlikely to hike this year. the bloomberg dollar falling with yields. silver hitting its highest level since 2013, above three dollars per ounce. the bloomberg industrial metal index up 3.3% on the week. the s&p gains, reason to think it may not continue. 2024 has largely been this

range. right now we are slightly outside. yesterday was the high point. unless the s&p goes sharply higher, this is starting to round down out of overbought. we may go back down into the range as investors sort out the factors. let's look underneath the surface. big movement on the day including meme stocks. gamestop, premarket higher. announced premarket downside, selling 45 million shares. along with amc. scarlet: gamestop now down for a third straight day. thank you. coming up, blackrock's rick rieder says the best way to temper inflation is to not raise rates. highlights next. this is bloomberg. ♪

abigail: coming up, u.s. secretary of homeland security alejandro mayorkas. scarlet: the latest inflation print. david spoke with rick rieder about what he thinks the fed will do. rick: the worst fears were related. it wasn't that far from expectations. markets parse a couple hundreds of basis points to determine if it is better or worse. some things were encouraging. transportation services down. rent coming down a bit. it was on expectation. there was fear.

three months in a row of high numbers. maybe we are moving to a more stable environment. by the way it was contiguous to retail sales softer. some of what you seen play out, definitely consumer pullback. ppi not being that bad. some stability. gosh. softness, a fed already raised the bar of hiking rates. now you start to think, can you get a cut done this year? that emboldened the thesis. david: we have the tendency to look at a number. there are things under that. goods versus services. different trend on inflation. from the fed's point of view, do they need both to come down? rick: remarkable. we are moving to a service oriented economy.

goods prices have come down. it's allowing for disposable income to go into services, that is buoying prices ironically. i've said this. tennis shoes, 20 years ago. if you go to a tennis match, it's double what it used to be. autos. for the fed, you want the average. inflation down to 2%. the mandate is price stability. if you are running 2.5%, core pce's 2.8%. we think it will be stable. good economy, nominal gdp, inflation, real gdp of 2%, nominal gdp of 4.5 to 5%, pretty good. people get horrified. as long as you are stable, employing people, growing the

workforce and moderating the gross side, it's pretty good. david: some people have been surprised the economy is not reacting faster two 500. some of that is you can term out the debt. recently, a difference for households, they own their mortgage which a long-term, and the shorter-term thing, credit cards and autos. rick: i'm not sure raising rates brings down inflation. if you cut rates, you bring down inflation. why? exactly your point. interest expense eclipsed mortgage payments. lower income, higher percentage up net worth is in debt, credit cards, student loans, auto finance, etc. you raised the rate and that has created the impact. the other side, you have an economy, because of this

transfer from the public sector, the government to the private sector, people that are middle to higher income are now getting a benefit from interest rates. that's flowing into, those of the people that spend in aggregate on services. it's ironic that no one has ever seen this in history. they transfer money to the government to the private sector. private sector now is a creditor versus a debtor. look at restaurants. high-end restaurants, killing it. low-end restaurants having a tough time. really big deal last quarter. the other side, small business is getting hurt, local banks are getting hurt. that's why they need to bring the rate down. look at companies today. normally when you raise the interest rate, companies pullback. they turn their debt out.

we went through a transfer from the government to the private sector, we kept rates down for so long. 70% turned their debt out when it was under 1%. they have no maturity wall. the interest rate, you raise it. it doesn't matter for companies. companies are sitting on cash so they are getting the benefit of higher rates. i think the fed can get the rate down. even if you got it to 4.5%, still restricted relative to 2.8% core pce. it's not clear to me the basis points don't inflect inflation. it's maybe helping keep inflation high. we've never seen this in history. david: you think it is possible cutting may deter inflation? rick: correct. there has been an aging of the population we've never seen before and a wealth creation at the higher end.

if you break down the demographic today, there's incredible growth of the savings and the spending from older people of 55 and above. fascinating. if you keep the real rate high, huge benefit to those. they are spending. why is inflation i? health insurance, why is inflation high in the services? they are sticky. unresponsive rates. people, older people, middle to high income are spending and keeping that service level inflation at high levels. scarlet: rick rieder of blackrock, cio of global fixed income, along with david westin. tune in tonight at 6 p.m. new york time. this is bloomberg. ♪

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scarlet: emily, this is no ordinary japan stock etf. >> it has a twist. currency hedged etf. wisdom tree, dx j. it's 18 years old. it uses options to hedge out yen volatility. if you want to invest in japanese stocks but you think the yen will weaken against the dollar, you would go into this. it has seen flows back in the prior decade. it is starting to come back and hit a record high in may. it is poised for its best year of enclosed since 2015, $1.3 billion. scarlet: these are themes in

place for a while. what do we know about how investors use it? emily: a story a -- astoria does a 50-50 split between the hedged option and the unhedged option from blackrock in case the yen has weakened so much. he's hedging the hedged. the inflows relative to what we saw in the prior decade are still pretty low. this is a macro story going on for a while. investors are hesitant to buy any international equity. they cannot bet against the mega cap u.s. tech play even though japan stocks have been rallying a long time now. up 50% over the last 12 months. people are still hesitant.

scarlet: you could make the argument japanese stocks are cheap compared to u.s. stocks. the end story is something that will not change on a dime, even with an intervention. emily: if you are an investor who believes the fed will hold for longer, that would bode for a stronger dollar against the yen. if you think the u.s. economy will turn along, dxj has a lot of exporters. toyota, mitsubishi. if the u.s. continues to be strong, that would bode well for companies like that. scarlet: is this the only game in town? emily: hewj is the blackrock currency hedged japan etf. dxj has more exporters according to john davey. scarlet: he likes the idea the american consumer will keep

buying toyota hybrids? emily: yes. scarlet: thanks. dxj, hedged currency. investors are snapping that up. stocks hitting highs, 52 weeks, applied materials. despite the maker giving a less than impressive outlook, that has been priced. 3m also, that stock up marginally. walmart extending its advance after announcing another quarter of sales growth as wealthy shoppers look for bargains. the equity market overall, little changed a modest advances. the s&p adding .1%. fourth straight week of gains. we closed at record highs on wednesday. that is intact.

quick programming note, monday, ed ludlow at the dell world conference in las vegas where he will be joined by the biggest names in tech. that does it for bloomberg markets. this is bloomberg. ♪

announcer: this is bloomberg technology. caroline: caroline hyde. ed: ed ludlow in san francisco. caroline: full market coverage. applied materials failed to impress investors.