>> the fed will likely move once , maybe twice this year. obviously it has to be later in the year. >> i think they go at least once , i think two is a good baseline, i think there is an option for three. >> they are still focused on eventual policy easing. >> they will move if the data warrants it. >> they will take out insurance cuts which will elongate the recovery and that will set up the bull market to last for years. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern.

lisa: heading into a week of important inflation data and two of us are live in d.c., one of us is in paris, and dani burger is a new york. welcome to "bloomberg surveillance." more on why we are all over the place in just a moment. important week kicks off on wednesday with data releases that make solidify a narrative that has been flipping and flopping. why wednesday is going to be so important? dani: wednesday will be so important because this market has decided that with the week data coming from the consumer, the week data coming from jobs moving in the wrong direction, if inflation does not also soften maybe we'll start talking about stagflation. lisa: that is part of the fear. we are in washington, d.c. let's get to the why. and reorder, you have important -- anne-marie, you have important interview with janet

yellen coming up at a time when industrialization and the china u.s. relationship is what every ceo and politician is focused on. what will be your focus? annmarie: we are sitting down and she will be in virginia talking about money flying out the door in washington talking about inflation reduction act, talking about broadband, bringing it to rural americans. at the same time we look ahead to tomorrow. the president will announce tariffs going up, the walls going up when it comes to those imports from chinese goods when it is batteries, electric vehicles, solar. we have remember, a lot of this is symbolic. some of these materials are not even in the united states right now. lisa: it also raises the question about what it will do for inflation or the economic trajectory given the fact a lot of people thought this would be something that could put a damper on certain activity. inflation, i know your focus on

electric vehicle policy very much has peoples attention but inflation is in the forefront of people's minds. annmarie: look at consumer sentiment friday. it was a huge push lower. if you look at what individuals in america are thinking about and what inflation will be come in their mind they are starting to think and it will be higher. it is the psychological effect. even though you have the biden administration talking about the inflation reduction act, american rescue money going out the door, they want to build up the capacity, they are talking about how they will talk tough on china. at the same time poll after poll shows it is inflation americans are most concerned about. lisa: we have amh talking to janet yellen. jonathan ferro is in paris and he will be speaking with david solomon of goldman sachs. i am here to worry about the deficit. coming up, janet yellen. emmanuel macron with john

micklethwait, our executive in charge of bloomberg news. and david solomon with jonathan ferro coming up from paris. a question about how some of these executives deal with some of the crosswinds we have seen get more significantly fraught. what we are seeing in markets is the longest streak of gains on the s&p back to early february. right now we are starting to continue it. up .1% on the s&p. some people were saying this is the beginning of a correction. a little bit of dollar strength all over the place with a bit of yen strength overnight given the fact that japanese authorities did not buy back as many bonds as many people were expecting. a downward trajectory for 10 year yields. only lower 13 or 14 basis points where they work at the end of april. interesting trajectory given how much people have pushed back

rate hike expectations. crude higher but lower last week. coming up, and important week given the fact we are looking at what happens on wednesday with a pair of data releases. retail sales as well as consumer cpi, which together will give you a sense of whether this is stagflation, whether this is goldilocks, or whether this is a no landing. today we have new york fed data coming out about forward-looking inflation expectations. tomorrow we get ppi. chair powell will be speaking as well as lisa cook. we will also be getting home depot earnings. on thursday we get walmart earnings as well as a host of fed speak. coming up we have cameron dawson of new age wealth and u.s. growth in the consumer very much and focus. terry haines of pangea policy, and john ryding on the fed outlook with ppi and cpi on

deck. the s&p 500 looking to build on three weeks of gains as investors prepare for a busy week of data. cameron dawson of new age saying "this market continues to be all about growth. as long as gdp and earnings growth are not revised lower this market has been able to shake off a tighter fit until high rates, maybe until now." i would like to get your take on how important wednesday will be to understand whether we are in no landing, goldilocks, or the dreaded stagflation. cameron: i think retail sales will be the most in focus, meeting are we still in a world where this market is able to shake off bad news and consider it good news because the fed can bail you out. economic surprises have plunged over the last couple of weeks and are now in negative territory, the most negative they have been since 2022. in 2020 two we were cutting

estimates for gdp rapidly, which was leading to this week's selloff within equity markets -- which was leading to this weak selloff within equity markets. can we still be in a world where economic surprises are week and equity markets move higher? we are not sure which is why we watch gdp estimates and earnings growth estimate so closely. lisa: this raises the question about how close we are to the stagflation, something where we could see inflation expectations stay higher or yields remain sticky. fed expectations pushed out to september, but more bad news priced into equity markets looking for reasons to rebound. cameron: if you are looking for the stag start with pmi. that is where we saw most services and manufacturing. we saw employment turned down, the outlook turned down from and prices jumped up materially. if that is the picture of the rest of the economy, that is

where you start to see sticky inflation. you are not getting the growth to offset it. the thing with equities that is important to remember is equities like the inflation, meaning it gives them pricing power. if all of the asset classes would tolerate that environment, it would be brought equities. it raises the question of what does the fed doing that scenario if you have sticky inflation but growth is not holding up? annmarie: how concerned are you about the consumer sentiment data last week, the lowest in six months? cameron: consumer sentiment has been one of those where it is watch what they do, not what they say. consumers have been able to spend even though they have been reporting a sour outlook about what they are thinking about the economy and their forward outlook for incomes and overall financial situations. are we at the point where consumer sentiment is picking up on moderating real wage growth? that is important because we

have seen wages moderate and inflation is staying sticky. real wage growth has been recovering for much of the past year and is starting to stagnate. that is one of the reasons consumer sentiment turned so much lower last month is consumers are feeling the pinch from inflation and starting to lose purchasing power in their feeling sour about it. annmarie: what kind of equities you want to be exposed to if that is the environment we are preparing for? cameron: we still like large-cap high-quality equities because you get the combination of a few things. you get good balance sheets, which means they are able to deal with higher for longer better. and the smaller cap areas of the world you have balance sheet that have more floating-rate debt which means the balance sheet can get pinched if the fed is not cutting interest rates. in the large-cap quality part of the world you also have pricing power and good return on invested capital. what we look at is across sectors we are looking for the

highest quality names at the top of each sector that have the ability to navigate this environment, even if it means a more challenging the one than we have been in over the last year. lisa: we are setting up the week very well in we are focused on what happens wednesday with economic data. we are in washington, d.c.. dani is a new york. what we are dealing with with jonathan in paris is global ceos trying to act as ambassadors for united states at a times of uncertain foreign-policy. how are you watching some of the tariffs that will come out that are hewing or to the industrialization side? cameron: we have to see the counter of it. on the one hand we have tariffs which could disrupt supply chains. we also have huge fiscal spending. you mentioned broadband. we are seeing spending flowing down to industrial names. back to pmi, we've seen a huge

surge in manufacturing and construction. it is not showing up in pmi and broadly being enjoyed by the broad manufacturing sector. what we think is you continue to have this push and pull between tariffs and fiscal spending which creates uncertainty and disruption but good company should be able to navigate that. lisa: which raises the question on the others. i am actually here to worry about the deficit. you have a lot of people getting together from the congressional budget office, from wall street to wonder how much we have to pay her about an unprecedented debt load in this country and how much it will start to bite on interest rates. we heard last week that the deficit people are just wrong and they have been for the past 30 years. are you among the deficit people that are watching this trickle into some of the pricing in the next couple of months? cameron: it is one of those

things that it is not a problem until it is and we would look at the bond market to price and some of that stress or uncertainty because we saw that in a very short window last year when treasury increased coupon issuance and we saw treasury yields in the 10 year selloff rapidly. when we think about going into the election, the biggest take away is neither party is talking about austerity, which means this is different from times of high deficits like coming out of the great financial crisis where in 2010 you had the tea party and you had the budget control act which whiz -- which was from an austerity pushed by voters. it does not seem to be a priority for voters which is why we think we will not hear much from either party. this means get used to higher coupon issuance and higher deficits because it does not seem like either party wants to push austerity. lisa: will be talking about that throughout the day and throughout the year.

cameron dawson of new age wealth, thank you for being with us. that is what we heard from donald trump in terms about exactly an austerity pushed. annmarie: it will not be an austerity push regardless of who is in power. next year, this is what david malpass told me, this perfect storm. another debt ceiling fight, the fiscal spending fights, but also the tax -- the trump era tax cuts will expire. what does that mean for the deficit? lisa: probably we will get more tax cuts based on the renick we heard overnight. here is your bloomberg brief. yahaira: amazon, pfizer, microsoft, and morgan stanley are among the company is poised to boost their presence in france. emmanuel mack ron will host 180 ceos and executives for the choose france summit. the event now in its seventh year is part of the push by the

government to attract foreign companies and make it a financial hub for the post-brexit european union. donald trump pledge to double down on tax cuts if he wins a second term as president. speaking at a rally in new jersey trump said "instead of abided tax hike i will give you a trump middle-class upper tax, lower-class, business class, big tax cut." president biden has called for tax hikes on businesses and the richest americans. campus protests over the war in gaza are colliding with college graduation season. paris seinfeld was the commencement speaker at duke university, or about 30 students walked out chanting free palestine and waving flags. seinfeld did not address the protests. protesters also showed up at the uc berkeley commencement saturday by the school says the protesters left voluntarily.

more schools have threatened protesters with arrests or expulsion if they did not clear out pro-palestinian encampments ahead of graduation ceremonies. that is your bloomberg brief. lisa:, antony blinken issuing a strong warning to israel. >> israel is on the trajectory to inherit an insurgency, and if it leaves, a vacuum filled by chaos, anarchy, and probably refilled by hamas. lisa: that conversation is coming up next. you are watching "bloomberg surveillance." ♪

lisa: tony blinken over the weekend doing the rounds on a number of different shows issuing a strong warning to israel. >> israel is on the trajectory to inherit an insurgency with many armed hamas left or if it leaves, a vacuum filled by chaos and anarchy and probably refilled by hamas. we have talking to them about a better way of getting an enduring result in gaza itself and more broadly in the region. lisa: u.s. concerns growing as israel increases its gaza offensive. u.s. secretary of state antony blinken warning of a postwar gaza still armed with hamas militants, adding israel has not

presented plans for the enclaves future. terry haines of pangea policy joining us for more. we did see antony blinken making the rounds, talking about how there is a question on whether there been humanitarian violations, but they continue to have the full support for israel. is there anything conflicted about the message from the biden administration? terry: the message from the abided administration is nothing but conflicted. secretary blinken, what he had to say in your bumper he could have said and probably did say six months ago. they certainly need an exit plan. united states is being coy about what the better way is. beyond that, every participant in the region will want to know two things. what is the plan? is it these of all? will united states stick to it. 20 years ago george w. bush issued a bunch of guarantees in that region that were

systematically stripped away by the obama administration and not followed up on by the biden administration. not saying that to make a partisan point, i am singing to say the united states needs to get in there and stick in there and needs to move things forward, not just with israel but with the region. annmarie: how much of this is because of growing domestic pressure on the biden administration? terry: some of it certainly. i love percentages but i would be fully on this one. it is bullish to say there are no politics involved. at the same time you have a situation where there are too many cooks in the kitchen. the president looks muddled at a time when the united states needs clarity. annmarie: we are moving closer to the election. domestic pressure when it comes to what is happening in gaza.

also tomorrow the president is set to unveil sweeping terrified on a number of ev's, solar batteries. you say all of this is noise? terry: for a couple of reasons. tariffs already exist. cranking out tariffs is not the biggest news in the world. secondly, what markets may miss is you have a situation where it is not just about tariff policy, not just about ships, not about a few things the administration and congress are doing to try to meet chinese competition. what we are sliding into now is a situation where either administration, either the biden administration or the trump administration will deal much more forth lately with the defense industrial base going forward. that is a signal out of the tariffs decision to put the markets may miss. lisa: this raises the question of how much more capacity united states has to do this given the

fact that some people are worried about the deficit and you have this concern about the increased size of options. is there is a sense there is a capacity in the budget to increase spending on defense, increase spending on the chips act and things of that nature? terry: the politics are not coherent. you have two political parties. one that denies the deficit a problem, one that wants to pretend they are dealing with a deficit problem by cutting 1% out of 30% discretionary spending. neither party is serious. what you will get as your previous guest talked about is you will get deficits into the far future. neither biden nor trump will be able to fix this, unless you get a situation where there is an already republican sweep in washington which is at best a 30% possibility, it is not my base case. what you get is a situation that

is pre-much like the status quo. people not care about deficits but they will throw as much incentive as they possibly can at building the defense industrial base even more. annmarie: this is going to be pivotal next year because there is the debt ceiling fight and the potential extension of the trump tax cuts. trump says he is extending all of them. the biden administration is interested in extending them for some but they want to raise the corporate tax rate. you have a base case of what will get through congress in terms of the extension of those tax cuts? terry: the base case will be a lot closer to the biden case than the trump case. everyone remembers and 2016 that trump's election was greeted with euphoria, which was not exactly a base case with a lot of analysts. it was not trump, it was trump plus a republican congress because they knew the path of the 2017 tax bill would be a lot smoother. that will not happen. that is not the base case.

the base case is biden still squeaks through. even if trump wins you will end up with a split congress. those speed bumps to do something like trump wants about the 2017 tax law will not exist. annmarie: what kind of corporate tax rate do you think we could see? i am shocked some republicans are saying we do not want to lower it to 21%, we think it should be higher. terry: my gut is you look at something like 23%, 25%. corporate's are not only a small part of this, but corporate believes they can deal with a small uptick in corporate rates. it is the personal rates that are the big problem, that are the big deal. when i was doing this in a previous life the question i asked by economists is how low can you get the personal tax rates and increase the deficit

by how much it was basically you can get it to 20% if you increase the deficit $1.5 trillion over 10 years, which sounds like a lot but it is not in washington terms. that became the bogey. one year out that happened. i would look at a small uptick in corporate. at the same time, i would look come in a democrat split washington i would look for more taxes on the wealthy. lisa: in this whack-a-mole washington, what is the number one question your clients are asking you into the election? terry: it is what the effect on the economy will be. very simply. lisa: basically you look at them with a blank face because it is unclear what effect it will have on the economy. terry: it will have a mitigating impact, but will it be large? i don't know. the move towards a more defense industrial base incentive from

washington will cause more roiling than is now anticipated. lisa: terry haines of pangea policy joining us now in washington, d.c.. coming up, bloomberg's michael sheppard on the race to fund ship production and higher tariffs in china. do not miss our conversation, and reordered with janet yellen -- annmarie hordern coming up with janet yellen. annmarie: cocky about some of the themes terry just mentioned -- talking about some of the themes terry just mentioned. lisa: from washington, d.c., from new york, from paris, this is bloomberg surveillance. ♪

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lisa: this is "bloomberg surveillance" into a fourth week of gains. we are in washington, d.c.. jon ferro will be with us today or tomorrow. he'll will be interviewing david solomon later this morning. later this morning speaking with janet yellen. markets trying to rally yet again after three straight weeks of gains. as deck futureyou can see it coo take over.

you can see it there in the bond market. this will be the most interesting place you have seen. really got a two of water with some of this goldilocks type of environment. potentially, inflation expectations creep higher. raising the prospect of stagflation or yields that can stay a bit higher for longer. annmarie: this is what david was talking about yesterday. a different vision of how the treasury secretary and the white house view of where this is going. people are starting to view inflation as a problem. people are worrying about the labor market but inflation is top of mind. lisa: a lot of this was

predicated on the idea that les would be cutting rate. a question of whether that is true. a little bit of strength. what is more interesting is what is happening in japan. yields at the longer in rising to the highest back to 2011. what else can they do to offset this idea that the u.s. has been in an exceptional place. annmarie: when you talk about the yen, it is the weakest and they continue to prop it up, but it is not working. it is a great question of what can they do? lisa: unless it is not

exceptional enough. we will talk about the potential cracks under the surface. preparing for a busy week. jobless claims on thursday. more interested in walmart than home depot. may much to me that we get the one-two punch. does it come in hotter than expected? it kind of threatens this disinflationary narrative. do we see retail sales come in, since it is getting harder for consumers? annmarie: showing .4% increase. if it is hotter, how much my challenging will that be? does it become zero? has it happened before the u.s.

election? lisa: retail sales -- what are they telling you? annmarie: we are still struggling with this. lisa: some companies are still struggling with this. very curious about the reaction. how are we going to deal with the fact that growth might be slowing and inflation is not coming down as much as people would like? a surprise shakeup in leadership. that america putin appointing someone. he will take over as secretary of the security council as vladimir putin looks to grow the war machine against ukraine. a stalwart supporter of what we

saw in ukraine, given the incursion. annmarie: this has to go down to the idea that this will be a long and protracted war. there has been frustration but now they are moving him to a top position. we still do not know where he is going. he said he would go somewhere, but this is a long time i am putin ally. it is interesting to see that they are pushing him to another position. review not know if he is being ostracized or if it would be something closer.

lisa: how much can we understand about the incursion in ukraine? we heard from some others. we have a sense of that is what people will be parsing through? annmarie: you saw what happened and how he took it on. there have been issues within the military russian apparatus but this is vladimir putin. he loves keeping everybody on edge and he does, like a large shakeup. lisa: the u.s. and european union -- this is the first wave and expected amount set aside for the industry. the white house is expected to unveil tariffs including chinese electric vehicles.

we have been talking all morning about the electric vehicle tariffs. we have not talked about the increased spending on defense and industrialization. how much is increased chip spending almost a part of that? >> chips are essential to everything, but especially in the military area these days. from the legacy chips that go to powers some of the more sophisticated weapons being deployed on the battlefield to some of the more advanced technology like ai and all of that is really sensitive and part of the defense, intelligence and technology-based at the administration is trying to build up as well, in tandem with the chips and science act. lisa: outsourcing was welcome in terms of getting things cheaper.

we have seen the shift going back a number of years where we have removed this technology from china. how much -- can we measure any efficiency or potential added benefits from every country going it alone? is it a lot of waste and throw money at something that worked efficiently before? >> that is a great question because you are getting to the heart of what comes from all of this spending? we are not going to know for a decade or perhaps longer than that. it takes so long to build one of those and get it under production. you have to see what the market actually bears. the trend with the push in ai and advanced technologies indicates that we need many more chips than what we can make right now. the china question does loom

over investments and chips as well. it is overshadowing the u.s. thinking on preparedness. right now the u.s. does not make any u.s. chips. they want 20% of those chips and it will be a big leap. it will depend on the ability of companies through facilities being built now. annmarie: is the chip and science act in jeopardy, if trump wins? >> that is a good question. many of the grants have at least been parceled out on paper to

companies like intel. the companies have to go through this phase of due diligence. they have to meet milestones and promises to get the next round of actual funding in their bank account. it will take some time. whether the administration continues with the same vigor in that direction is a great question. annmarie: a number of these goods are coming from china. i have questions about ev's. it is going up. what is noise and what is meal? >> i think it is noise and real. exactly. it is symbolic. we do not see any chinese i --

db. going to a dealership to pick up your branded vehicle. the government in beijing is making a big push to invest in the industry. the administration is concerned that it will lead to a flood of imports and disadvantage american makers. there are questions that they keep bringing up. they are concerned about where it goes. lisa: the heavy lifting that national security has done. we are talking about tariffs and increasing barriers for vehicles coming into the u.s. from china. this is a unit of the automotive company in china. electric vehicles coming to the

u.s. and basically, people loved it. people cannot get enough of it. what gives? >> people are drawn to the technology. during the interview, the executives seemed unfazed by the prospect of these tariffs. short-term noise or looking elsewhere, outside the u.s. lisa: it raises the question again about paris. jonathan ferro will be speaking with david solomon. that is when after that travel from xi jinping. thank you so much for being with us. let's get an update on stories elsewhere. here is your bloomberg brief. >> u.s. officials intend to

highlight concerns over artificial intelligence when they meet tomorrow in geneva. it will jumpstart talks agreed to last year to address security and safety concerns. pushing ahead with plans to make an suv similar to the model y. the company is approaching full capacity and is working on increasing output to satisfy demand. the company plans to begin making and selling the new model as early as next year. kingdom of the planet of the apes took in $56.5 million. it was more than the up to 50 million dollars projected. it marks their first release of the film in theaters this year. other pix are -- other pictures

include deadpool, wolverine and the wanted to. -- moana 2. lisa: this is the issue. the playbook is to make movies that are made previously and make them again. annmarie: what is old is new again. lisa: annmarie is henan offer an important interview. do not miss that. i'm so excited to hear about it. are you going to be in a field or something? annmarie: we will be in virginia. the entire week will be field -- filled with secretaries going

out for ribbing cuttings. they want to see that money being put to work. lisa: it sounds like it is infrastructure week in washington dc -- washington dc. >> they are looking for a meaningful reprieve, but unfortunately, i think they will have to continue to wait for sometime longer. lisa: you are watching bloomberg surveillance. ♪ at enterprise mobility, our experts always see another road. because with the right mobility solutions, the path to success is shorter than you think. (♪♪)

lisa: this is bloomberg surveillance. the stubborn last mile for inflation. >> the fed and investors are looking for meaningful and reprieve, but i think they will have to continue to wait for sometime longer. it remains stubbornly elevated

through the end of the year. keeping the fed on hold. lisa: ms is looking ahead to a slew of economic data. as inflation approaches to percent, they should dial back restraint. they would probably keep policy at a certain degree. there is the recession scenario but this is probably a 2025 story, if it happens. dani burger has been patiently waiting and listening. dani: i and joined by john. let's start with wednesday.

higher than expected data. does that continue this week? >> that is one of those things that you will have to find out. my own view is what we referred to as seasonality, which has made gdp quarter to quarter pa weaker and the inflation data higher. i do think there is a good chance that we will see a number that is neither fish nor fowl. it would be a little bit cooler than the first quarter, but not cool enough to be at 2%. for me, when it comes to the fed , they have not really laid out their methodology for beginning to lower rates because if we get

rate cuts in 2024, we saw one or two this year, but it would be a different kind than the fed has done in the past. dani: what is the difference? >> it is massive. real interest rates adjust for inflation. when the fed started hiking rates, they were essentially at zero. real interest rates were negative. if inflation continues to decline and they leave the rates unchanged, real interest rates will rise and they will be tightening policy. but they would be tightening policy as they had science to percent. what the fed risks doing is

undershooting. the problem is the markets. so when you talk about rate cuts , the market priced in three to four more than they already had priced in. there is room for an important speech to the layout this next set of policy. right now, their hands are tied because they underestimated the inflation problem. dani: as we say on the show, there is a difference of what the fed should do and what it will do. is there not a risk when the market to overshoot?

>> i think what you are referring to is using financial conditions. if you have gone back and said in early 2022 that the fed will raise rate, where is the equity market going to be? i do not think anyone would have had it close to where it is right now. the fed will be concerned. the rate cutting intention is misperceived. it is very difficult. when they start talking about the long run interest rate, they either get minute of it and say, i do not know where it is where they adjust to our markets are

currently price. dani: 2% is what the fed has painted it at. you would need to ceci aaron has damage, so it is not worth getting back down to target. is he right? >> i have great respect for him. i actually respect him. but i think he is wrong on this one. you can have disinflation without destroying the economy, and it is absolutely worth squeezing inflation out for the last mile. it does not have to be a quick disinflation. it comes back to the fed saying, this is how we see monetary policy working.

this is how we are going to do it. >> some say it turns into cracks that turns into something worse. starbucks and mcdonald's and consumers are starting to get worried. how much do you take of that when we are going to be getting some of that retail data coming in from walmart and home depot? >> we will get the details support -- report on wednesday. that will be a pretty important release, but the consumer has seen their savings rate fall. down to 3.2%, that is actually relatively low. they also still have a massive amount of wealth. relatively in charge of territory.

two point $5 trillion of savings accumulated during the pandemic. aside from that we have not had wealth in relation to income at this higher level. it is hard to go back. you are relying on models that have not experienced where the data currently is. it is not about a consumer. it is about whether the companies make money, they hire people and invest. then they hire people and they spend that wage income. for us, taking the recession out of the case was not about the consumer. it was about companies who have not seen that squeeze in profits.

there was this immaculate disinflation and we have not seen the economy pushed into even a sharp slowdown. dani: perhaps just a touch of heresy, but thank you. that is all the time we have. the idea that he was talking about is fascinating that fannie to be making clear that this is not a typical rate cutting cycle. lisa: insurance cuts, something like cosmetic cuts. in wonderful interview. coming up, we have truly. lynn martin and james of marlborough investment.

from new york and paris, you are watching bloomberg surveillance. ♪ so, what are you thinking? i'm thinking... (speaking to self) about our honeymoon. what about africa? safari? hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment... ...on a ranch ...in montana ...with horses let's take a look at those scenarios. j.p. morgan wealth management has advisors in chase branches and tools, like wealth plan to keep you on track.

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>> the fed will move once, maybe twice. >> i think two is a good baseline and i think there is an option for three. >> there is still focus on eventual policies. >> there needs to be a shock in much weaker data. >> it will set up the bull

market for years to come. lisa: heading into an important week for inflation. good morning. this is bloomberg surveillance. anne-marie is off to do that interview with janet yellen and jonathan ferro is in paris. have a massive week coming up with key inflation data. also, fed chair jay powell will be speaking but wednesday is the key day were we get a one-two punch on the latest meeting on how fast prices are raising. the excitation is that inflation will remain, but retail sales should stick in there. we will have a host of earnings,

including from walmart. we get a sense of initial jobless claims that came in higher than previous expectations. suddenly having something that we are actually focused on. how much of a noisy report was that? adding to gains, which has been the longest increase going back to the beginning of february. climbing as the session grows older. the dollar strengthening a touch. really curious overnight with the japanese strengthening on the heels of government officials not buying back as many bonds as expected. this goes to the reaction function. how does the federal reserve deal with the idea that inflation remains stickier than many hoped for.

a lot of geopolitical concerns and noise about how opec-plus will be responding. we are scattered around the world today. we have jonathan ferro in paris to do key interviews, including david solomon. we also have janet yellen coming up with annmarie hordern and emmanuel macron. the president of fans being lobbied by everyone far and wide, whether it is bank executives -- we will have that sit down with our own head of bloomberg news. coming up this hour, we will be speaking on investments. but dani burger is in new york and i'm wondering how important it is to get a sense of the latest inflation read. we have gone from the landing to goldilocks, to talking about

stagflation or landing. what is the point and why is it so pivotal? dani: it could flip-flop again depending on how well they do in their earnings. this is from the karmic that made sense intellectually but still shocked me. of the moves, half of them have come from cpi because we have not been set up for the idea that inflation will be higher. we got a few more and we said it was a quarter. can we say that when we have had the entire first quarter? wednesday will go a long way to show that. lisa: this is something else that we have been talking about given the fact that they have been coming out over the last couple of days, talking about how it will be sticky.

it will be lagging behind some of these indicators like sentiment. how much is the federal reserve willing to look past in order to get a sense of whether they need to prioritize growth or infighting inflation. we have more on that, coming up. stocks coming off three weeks of gains. we will be speaking on the potential for a trading. it is not like many people have full free time anyways. a look at ppi and cpi. let's begin with our top stories. writing this. we are in an interesting transition period as the labor market continues to evolve from pvc white-hot to vet hi.

can we get a sense of why we are having such a difficult time reading this when it is clear that consumers are running out of savings, pushing back more against higher prices, being more selective. it is something that shows slowing. how much are they slowing down? >> you always have to analyze. you should not be dependent upon whether the fed has to keep rates high throughout the year were cut three or four times. i think the reason is so many of the economic models are maybe overly fixated on financial conditions. when they tighten so much, a lot of the probabilities that they

are spinning out, when the consumer was still in good shape and the market was white-hot. we had a situation more recently and many came out to say there is no chance that the fed cuts at all this year. we have been steadily transitioning from this white-hot labor market. whether you look at initial claims that have come up, there is progress, but core inflation has been very sticky, which means the fed is going to be very impatient. lisa: this is the question. can they be patient when it might be a lagging indicator? they point to what we have seen traditionally. it does not have this gradual progression, but it is a sharp

decline in the ability to get jobs. >> great point and great question. saying it is different is dangerous, but the past we have gotten is different than previous cyclical downturns. we have been steadily transitioning. when you think about what it would take to drive meaningful enough surge in employment, it would take profitability dropping dramatically. there are some ratios out there. but corporate profit margins have expanded again back to record highs. there are other contributors and it is difficult to find one of those subsectors of growth that could roll over enough to cause

that sudden surge. our whole point this cycle is that it will be the mirror image of the cycle. the fed will be very patient. we do not see data to indicate that they will cut four to five times. lisa: it is really well how you framed that. this has been the conundrum on main street, the on wall street, things look great. companies have been able to deal with lower consumer spending and can actually get away with it because people have enough money and jobs. at what point is there a flashing red signal that you have to take from small caps? they try to recover, got beaten-down. there is a question here. how much of a probability the price into a hard landing? >> you can never exclude it

completely. somewhere between 1% and 2% gdp contraction. i'm glad you brought it up because the consumer is in a weaker position in a year ago when there was far more savings. it was between white-hot and red. savings rates have run down, so there is less shock absorption capability. where the fed has to cut 200 basis points in response, at this stage, the only thing that would cause that is some kind of shock. you think of some kind of treasury accident. maybe geopolitical or another situation, but there is nothing here that says, they are going to have to cut spending by 5% or, we look at business fixed

investment. you have this massive ai move and suddenly they will cut by 15%. very unlikely. let's call it 10% or lower at this point. lisa: you have been pretty positive on stocks. given the fact that the fed is likely to cut. you did just add a trade, the consolidation of small and regional banks. why is now the time to think about that, given all the questions that are allowed? >> a lot of people forget that we have close to 10,000. you have this megatrend of takes , but within that, there have been times of consolidation and

massive consolidation and what we are seeing today is solving for consistent returns with low duration and low volatility is that because of the regulatory pressure and because operating costs have gotten more expensive, we expect a bump in consolidation. to the point where you can squeeze out operating efficiencies. that is a neutral expression. there are smaller banks than we expected. we take it out to neutralize. if there is a shock that he talked about, the downside is very limited. the next 18 months, regardless of political outcomes, we expect

consolidation to continue. lisa: usaf saying if donald trump is elected, you think that could increase acquisitions across the board? >> if you look around the, they have been pushing back very hard, as you know. the strategy is to price in when historically has only been 510. if there is some kind of transition, perhaps they are less aggressive on that front. lisa: thank you so much for being with us, as always. let's couldn't update on stories elsewhere. >> u.s. secretary of state antony blinken issuing a warning saying israel risks fueling the insurgency.

he cautions that there will still be thousands of armed militants in the area. the israeli military estimates that over the past week, 300,000 people have fled, president biden is set to announce heavy tariffs on electric vehicles this week. a source says they will triple from 30% to over 100%. it will include other key exports. biden and his staff have spent recent weeks finalizing the measures but the plan is largely symbolic as china does not rely on u.s. consumers for the targeted sectors. amazon, pfizer, microsoft and morgan stanley are among those poised to boost. hosting 180 ceos and executives.

flagship event now in its seventh year is part of a push to attract foreign companies and make friends a financial hub. that is your bloomberg brief. lisa: i one is trying to figure it out. biden clamping down on electric nichols. president biden: we're are in a stronger position. lisa: that is coming up next. this is bloomberg. ♪

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lisa: the fourth straight week of gains as people push back their expectation. also dealing with a potential weakening. this is bloomberg surveillance. you can see yields lower by about two basis points. two year yields and 10 year yields down since the end of the week of april 19 with a question of how much more can they fall, given that inflation has not

come in. consumer price inflation, given the fact that the fed is very focused on this metric. under surveillance this morning, biden clamping down on electric vehicles. president biden: they are not competing. they are cheating. i want fair competition with china, not conflict. we are in a stronger position right now because we are investing in american workers again. lisa: president biden sending levees over 100%. mario parker joining us now. what do we know?

>> there will be plans sometime down the road. we know some of them will be quadrupled or doubled even. the president will be targeting as well. largely, a lot of this is symbolic. we know the climate towards china from both parties. the other part is practical to head off some of these imports as biden tries to build out the domestic vehicle lisa:. how much meat is there behind this? you could go after places like mexico, in terms of production that might be going into other vehicle manufacturers. how widespread is the net? >> it is pretty widespread.

it is targeted towards china. former president trump trying to square in on saturday saying china could essentially go around some of these tariffs, build some of these products in mexico and my coat tails of the trade agreement. it is unclear whether that would be possible. lisa: is there any pushback about greater industrialization and moving away from any kind of trade ties, even if they are happening? is there a sense that there is no voice pushing back against that? >> there are voices who are dependent on that succumb through. this hope -- hyper polarized d.c., the consensus that you do

see is just a stance towards china. you cannot get a bipartisan agreement on anything until it comes to the geopolitical issues in china. lisa: also in terms of allies. if you are focused on beefing up the industrial sector, how much is that alienating friends saying, our door is open and our things are on now. >> you see night pressure. you are hearing rhetoric from donald trump on more aggressive pressure that he put on european allies, should he win a second term. biden, his catchphrase is, we want competition with china worldwide, but we do not want to decouple.

a lot of the allies are still reliant on china as well. lisa: a financial times coming out saying there is a number one issue dampening prospects for biden if he does not come down sooner. some of these laws that are going up, how much will that have on inflation? >> that is a criticism law towards donald trump's plan around what donald trump calls a collar around the country. they are saying his stance will go a little too far and add to fed -- further fuel inflation. the biden stance is that it will not hurt american consumers. lisa: this is a difficult circle to put a peg into.

are there independent analyses that you are trusting? what is your star right now, given that everyone will use it to say it is a complicated time or it is unclear what the right answers are. >> some of the investment banks have some of the more sober views. we have not seen a lot in terms of inflationary pressure but this is the consensus so far. there are not a lot of chinese ev's here. that is still political speak, but in terms of how much this will affect timing, they have been largely shut out from the market in china. lisa: there are potential carveouts in the u.s.. it is something that they want to ensure, given that industry

members have lobbied and said, we need those part. it is something part of the green agenda. we have a sense of how important they are so the clean energy plan? >> his landmark legislation, you see some of the participants saying, some of these components we need in order to enact legislation, we actually do need some kind of thing to work around to allow china to import. lisa: we have a sense of how much that would unwind? >> sounds like all of it. donald trump is not a big fan of green energy. he was wailing about windfarms.

he feels against solar. he is a more traditional, carbon-based president, should he win a second term. lisa: mario parker, thank you for being with us. you do not want to miss this. coming up to talk about all things initial public offerings and potentially nonstop trading for stocks in something that everyone has been looking forward to. it could be trading as well. right now you are seeing that left potentially a straight -- a straight week of holds. ♪ ered. so we don't have to worry. empower. what's next.

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lisa: good morning and welcome back. emily has a wonderful interview coming up. jonathan is in paris and will be interviewing david solomon from goldman sachs. another potential day of gains. the longest advance going back to february as people read -- reset their expectations that bring forward some of the rate cuts that have been previously pushed off the table. we have focused very much on what is going on in the tech sector.

the u.s. and its allies have been pumping money in a competition with china. what we are looking at next is the iphone and what they are doing with their chip supply but how they are going to incorporate artificial intelligence more closely with their phones, given the fact that has been the next wave of innovation. the next operating system is said to include chatgpt. alex webb joining us for more. that is where i wanted to begin. what exactly does this mean? >> if this thing goes through, apple should be able to compete more readily with google's system. google is at the bleeding edge when it comes to official intelligence.

if everybody is going to be looking for ai capabilities on their smartphone, they need to have some sort of offering. it looks like that will come from chatgpt. lisa: it raises a question about who has the data, how much this is going to be an intricate relationship between the two at a time when microsoft already has a key investment in openai. can you help me? >> you have openai which is in line with microsoft. amazon has a growing relationship with anthropic ai. apple is a little bit out of the picture here. but they have been trying to do so far is to do it on the device. what happens with openai with

chatgpt is that you pose a question and it sends it to the cloud. the cloud does all the thinking and issues a response. analysis of today's news as a sonic. but they are more likely to do is to get the real functionality of setting a timer, what is the weather like in new york? they should be able to do more of that on the device. interested to see how that pans out. they cost something like $.12 for every 12,000 words that it has to process. that is not nothing. that is why we have not seen these chatbots coming into everyone's virtual assistant yet. lisa: we have seen apple shares down 5% versus 10% gain from microsoft. almost 21% year to date.

there is a question about how big of a shift this will be with artificial intelligence and our phones. does it really transform our lives in this meaningful way? some say it is a material shift that will cause people to upgrade and by phones. is it really a game changer? >> theory may not be where it is making a difference. it is other parts of your life, when you're writing a letter or putting together a cv. you might get it to plan your evening for you. we will notice that it is well embedded in our lives. it will be a steady evolution to that point. you have seen a few small ai powered devices and they have not been terribly well received by viewers. a lot of people saying, i can do this with a smart phone already.

they are already there, it is just a question of how deeply in graded -- into they are. lisa: how much is the set up, the developers conference that a lot of people are watching for, in terms of a new innovation being announced? >> this is what they are looking for. it is where they unveiled what will be in the next operating system for a phone and seeing how far they have come will be really important, not just for users but for the stock. lisa: thank you so much, as always. the financial times surveying participants around-the-clock trading. a set up by the ventures fund is

seeking approval to lash the first around-the-clock exchange. let's head to new york where dani burger is joined by the stock exchange president to talk about why we all need 24/7 training in our lives. dani: that's right because we want to wrangle the kids and have the ability to trade while we do so. thank you for joining us. some might have opinions on this but the survey that you have gone so far, i know you are still in the middle of it, but what have you heard? >> there are a lot of things to consider, mainly on the infrastructure side, which is not really a surprise. it is why we sought feedback before something like this was introduced by the community. we wanted to understand all the pieces of the ecosystem. the feedback so far has not really surprised us. there are a lot of parts to the value chain to consider.

we would need to talk to our regulators about it, not just us. they would need to consider that with regulators to the end that they would remain open for that 24 hours trading. dani: that does a peer to be demand. you have a decent idea of whether it is coming from? the type of person that wants to be trading 24/7? >> i do not know that it is 24 hours a day. i think what has darted or triggered most of the demand has been the rise of the etf's. if you look at the basket, particularly the international etf's, they are not just securities listed on domestic exchange. from a risk management standpoint, it would make sense that you would want to manage your risk in the underlying basket when those domestic

markets are open. dani: when it comes to ipo's, you and many other people were excited that it would be a big year. many hopes have been dashed. are you still hopeful for this year? >> i absolutely am. i am optimistic even the amount of oc that have been raised so far. 14 billion has been raised in the u.s. market through last friday. we had about 25 ipos on the new york stock exchange. two times the amount of proceeds raised year to date versus last year and three times versus 2022. the markets are definitely opening up and what i am excited about is the companies that we have welcomed have not just gotten large deals done. many times they have up sized their deals and priced at the

high-end or at the range. and then they are seeing the 20% pop. it has been a really exciting q2 . in exciting time where we are seeing two a week. dani: a lot of fanfare around it, but a company like reddit is a quality company. investors feel safe with it. >> you have seem some more growth oriented companies, but as you mentioned, there has been a path to profitability. it is why those companies that either are profitable or have a path to profitability are getting rewarded. biking is the largest ipo of the year, a household name. i had so many people saying, i

cannot believe this is public already given so many have enjoyed their cruises or whatever the case may be. use great companies and emerging companies who ipo across -- a couple weeks ago. dani: there is still 3.3 trillion dollars of money tied up that has not gone public. there is this impetus to stay quiet for longer. are you concerned that as they stay quiet for longer that they have found a norm that we used to see that is not going to get back to that? >> i'm not concerned because there is no match in the capital markets in terms of an efficient of capital and attaining that capital that you really need to scale your business, not just from that perspective but also rewarding employees, democratizing investment, m&a is a big reason i share some of these companies going.

they believe there is a different m&a currency that you get with becoming a public company versus staying private. i continue to be incredibly optimistic, however, if people are going to be more thoughtful about when they go public, i do not think you will see a rush to the public markets like you saw in 2021 for quite some time. importantly, i think we are out of the 2022, 2023 close icm markets. it feels like we have the capacity to have a pretty normal year. just over 14 billion to date. in an average year you raised about 45 billion in the public markets. we are not too far off. based on what we are seeing in the pipeline, this could be a close to normal year. dani: how much depends on the fed cutting?

>> i do not think it depends on the fed cutting. people are used to the concept that there is uncertainty in the markets. the big concern was hard landing versus soft landing. i think people feel pretty good about the economy. i do not know if it matters if the fed cuts once or at all. he will probably see a little bit of a closure of the markets around election time. dani: fair enough. going back to why the market remains strong despite the liquidity and investor base. there was a report that the fashion company is wanting to list in london because of the regulatory environment. is that going to change with

them cracking down in china? >> i cannot speak to that. i hope that they are able to enter the u.s. markets, but it will be up to regulators to determine how. dani: we will have to leave it there. great to see you there. with that, i will send it back to you. lisa: talking about all things ipos and whether they get off the ground. coming out and making this point that i think is important. with the cpi in focus, if we get an increase, it will be considered a beat. you will probably see a rally. that is the view led by max over at hsbc. let's get an update on stories elsewhere.

>> russian president vladimir putin making a surprise change to his defense and security team. replacing his defense minister. one of his closest allies may reflect frustration at the failure to defeat ukraine in a war that was supposed to last for days but is now in its third year. campus protests are colliding with college graduation season. comedian jerry seinfeld was the commencement speaker at duke university where 30 students walked out, chanting free palestine and waving flags when he was introduced. he did not address the protests. demonstrators also showed up at uc berkeley come up at the university said the protesters left voluntarily and no one was arrested.

students have been threatened with arrest or expulsion if they do not clear out ahead of commencement ceremonies. and facing protests in germany, where they are trying to stop an expansion of tesla. at least 16 people were arrested following actions of following into -- breaking into a airfield and blocking a road by the factory. lisa: thank you so much. up next, the u.s. risk of stagflation. >> if the definition is elevated inflation in an era of slower growth, that is possible. lisa: that is coming up next. we are seeing markets continuing with hsbc saying that they expect to dip to be behind us. this is bloomberg. ♪

lisa: mickey response will be how does a market react? expected to have av acceleration . however not accelerating more than people -- more than people previously expected. what we hear, more might be in store. carrying on and building on the gains. people are assessing the straight weeks of gains that we are coming off of. down about two basis points. people are pushing back the expectation of a fed rate cut to september but not necessarily taking them off the table.

>> if the definition is elevated , it is very possible. if you want a definition of stagflation with contracting growth, that is an extreme definition and i do not think we need to go there just yet. lisa: that was something that jay powell laughed at when he spoke about it at the conference. holding steady head of economic data. saying the cpi print is a big one but it will be broad growth and labor stats that will have a more fundamental and lasting impact on where markets had next. nobody wants it to continue, even if jay powell says he does not see it. congratulations on your new post , coming from aberdeen.

i'm curious why you think the longer-term growth trajectory will matter more than inflation at a time when they said they intend to bring inflation back to 2%. >> good to be back. thank you very much. all of the models tell you that there is some linkage between growth, relative to potential, what that means for the labor market. looking at inflation and jobs today is telling you a little bit more about what was happening in the economy yesterday. when we see the real-time stats that try to show us where the economy is growing that should have some single value for where the key metric jobs will be in the future. you cannot disentangle the two. unless you get an utter

breakdown of the phillips curve type situation and stagflation was the description used to describe that situation in the 1970's. there are a lot of macro environments that are good for equities. lisa: it raises this question. we have talked about industrial policy. as well as tariffs and blocking off traditional trade routes. could not create a more inflationary pressure than the labor market dynamic would otherwise suggest? >> yes. the historical analog for that trade policy very much goes back to tariffs that created significant problems many years ago. deglobalization, many people would suggest that is a secularity -- secular

inflationary force because it is the flipside of the global push to outsource manufacturing and it has seen the price of these manufactured goods declining pretty steadily. so absolutely, industrial policy will play a part. the extent of it is relevant. is it an inflationary process or do we see a step change in the price level that would be different from the point of view that we experienced in the economy but also what it would mean for monetary policy? lisa: how are you functioning in terms of a sticky inflation? they are clearly cooling some of their spending.

>> it will not surprise you too much to hear that i am on the slightly miserable side. i still believe that we are in an endless cycle dynamic. i'm not a fan of the word sticky. there is a difference between the speed in which this inflationary pressures feedthrough into various aspects of the basket and genuinely sticky inflation. it is a word that was more applied to prices. prices and wages tend to be sticky. inflation will tend to zero. one of the reasons we have not seen a rapid disinflation is because economies have held up better than many thought that they would. we have seen a global supply shop. as and when we see the economy slowing more broadly and we see more significant softening of

the market, that is when we will see the more cyclical disinflationary pressure. i still think we are in a world where duration is attractive and the tightening of that will be quite difficult. we are happy to lean into the market as we look further into the future and expect it to hit more significantly. lisa: imf in the dce hosting a panel and this has raised a lot of questions about the potential for rates to go up higher than you would expect, based on inflation and ratesetting. do you buy into the idea that we are going to see some sort of bond market disruption that does not seem to be ending anytime soon? >> it is one of those concerns

that is out there but the problem is that politicians to a significant degree have learned and given comfort, which is not necessarily something that they should rely on in the future. they have grown their balance sheets significantly in recent years. it has allowed governments to run much higher than we would expect, given this stage of the cycle. if he pushed too far from you can reach that tipping point where things start to look messy very quickly. japan has apparently been on the precipice of that situation for years and have not quite we that tipping point. it does concern me that there is bipartisan support for having no real fiscal discipline whatsoever, but i suspect that

the economic forces and pressures will ultimately tell and that means that yes, we are likely to see supply as a constant, but as they become less attractive, that should improve the demand picture. lisa: thank you so much. as we look forward to a question of what will win out, retail sales or cpi? it is expected to come in at a time where the fed is looking to bring -- coming up, peter shares how he likes his exceptionalism exceptional. talking about economic reports as well as the fiscal deficit. from washington dc, from new york, from paris, this is bloomberg. ♪

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>> the consumer clearly is slowing, but i do not think they are collapsing. >> you should see some rebalancing in consumer

spending. >> a lot of people talk that the consumer is going to slow. the consumers going to keep spending. >> there is low unemployment, and there is still spending a power pay what is bad about the consumer it is is still bifurcated. >> clearly, you will see those pick up. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. lisa: from washington, d.c. for our audience worldwide, good morning. this is "bloomberg surveillance ." i'm lisa abramowicz. annmarie off to interview janet yellen. i am here to moderate a panel on the fiscal debt, because i care about bond options. we are paring for what could potentially be a fourth straight week of gains, coming off three straight weeks of gains. it is just monday, and it is for their trading, but you can see gains continue as people at -- a

federal reserve looking to potentially cut rates sooner than people potentially thought in the face of growth that seems to be growing and it consumer that showed real questions in terms of consumer sentiment at the end of last week. s&p futures up a quarter of -- one quarter of 1%. yields marginally lower but coming back from earlier, where you could see more significant decline. this is the push-pull in markets right now. dani burger in new york -- really, this is one of the key questions. how does the fed respond given the fact that we are seeing slowing growth, a consumer clearly running out of power? yet at the same time, inflation has been sticky with things like rents and car insurance really hanging in there, people saying lagging behind some of the more current indicators. dani: things like rent and housing have been lagging behind a year-and-a-half. when will this finally catch up? but the reaction function is so important, but because --

because powell himself lay such a high bar. he laid out a scenario of inflation still above what they want, not seeming to come down, and he said, if that all happens, it means we are less likely to cut. he could have said, it means you're going to hike, but he did not, which brings us to the idea, is this a powell play? is the bar really that hard to hike again? lisa: i love the fact that the pulpit is on the table again. we are coming up for a week that is really landmarked by wednesday. we get retail sales as well as cpi coming at the expectation of a month over month read of 0.4 percent. to give you perspective, you could see a 4.5 percent annualized pace of cpi in the first three months of this year versus 3.3% of an annualized increase in the fourth quarter. that is the acceleration that has people concerned.

meanwhile, a host of fed speakers. tomorrow, jay powell. kashkari and bowman wednesday. which bring us to the question, and you have been good on this, how much is the consumer pushing back on pricing or absorbing them? because they are still able to borrow at a time when card spending, where if you look at bank of america, you are seeing people still spend, even on the lower tiers of income bracket. dani: not even just cards, but by now, pay later, people using that has swelled, which tends to be the lower income brackets, by have this nagging feeling. what happens if retail sales data comes in strong but we hear from walmart and home depot, and they tell us what everyone did earlier, couple weeks ago, that the consumer is weak? it feels like we keep getting this conflicting data, and what happens, if at the end of this week, we say we still do not understand where the consumer is? lisa: i have a feeling that is probably a base case. [laughter]

what we have seen so far is include something pretty typical during changes in cycle, where people do not understand exactly where things are headed next, and that noise can be a signal in and of itself. here's what we have are you coming up today. peter tchir of them -- of academy securities on what he says could be a bumpy landing. apollo's torsten slok. and expectations the fed will not cut this year. what i want to let you know for the rest of the day, 10:00 a.m., we are kicking off and and cripple line of coverage, with annmarie interviewing janet yellen, treasury secretary, as we expect electric vehicle announcement from the fighting administration potentially tomorrow. we will hear from the president of france, emmanuel macron. don micklethwait of bloomberg will interview him. then david solomon, goldman sachs' chair and ceo in france with our own jonathan ferro later on this morning. there is this question of u.s.

executives as the new ambassadors to the world as they get out and try to navigate some interesting geopolitical crosswinds. the s&p 500 looking to build on three weeks of gains as investors prepare for a busy week of data. peter tchir writing we are near the end of the lower yields -- fed put rally. last week, we argued the mark might gap from no lending to some form of on be landing. peter joins us now. it feels like we are in some sort of precipice of narrative shift. is that how you see it? peter: yeah. we clung to this american exceptionalism too long. the data started turning a couple months ago. yet all you heard was american exceptionalism, american exceptionalism, american exceptionalism. i think that narrative has changed, and we will wake up and realize things are not as good

as we thought they were, and that is where we are at now, and fridays consumer confidence was a shock to everyone who thought things were still rosy. lisa: this is the reason why some people are looking at this idea of maybe not goldilocks but atlanta, which will bring the prospect of fed cuts back to the table. why do you see something more pernicious than that, that this weakness is more entrenched? peter: we have all been asking for the last year and half, one does the consumer slow down? one does credit card debt, stopping spending? we are seeing some of that. what i found striking about consumer confidence friday is the university of michigan, published by both democrats and those affiliated with the republican party, and the democrat party site went down precipitously as well, down below 90. there is this party, as we are heading towards the election, people seem depressed on both sides, they are very worried. we will get a lot of information

about sales. the thing is equities have already had this fed put rally, so we have priced in a lot of that put narrative. we will not get that many cuts, even if they cut. lisa: we were speaking to cameron dawson of new age earlier, and she said she is more interested in retail sales than the cpr prince, may be because of what you are talking about. would you agree with that? peter: i think there is a decent chance cpi will come in lower than expected, all the way the calculations are done. we will probably get a brief rally in stocks and bonds on that. but it comes down to what is going down in retail, with consumption, what will happen with trade tariffs. if we put more tariffs on china, how will they respond? i think we just started this trade war, and it is accelerating. we will see more and more margin pressure as chinese brands try to compete both in china and across the globe, not necessarily the u.s. that is where there is margin pressure and there will be competition with these chinese

brands not yet priced in at all. tariffs announced this week will make that more clear to people that we got to be aware of this, and it is changing how the world global economy is changing. lisa: i want to get to that in one second. this has been your thesis for a long time, which is basically this is a glut of goods, and the chinese government will try to flood the rest of the world with things they are overproducing, because they structurally have to. they are economy relies on it. it is kind of the new housing market. before we get there, i want to have you respond, because you seem in direct opposition to what hsbc's max kettner is saying. he says many major indices reproach they year-to-day highs, talking again goldilocks. that some of these pressures you are talking about will keep the fed cutting on some sort of trajectory that will allow things to keep chugging along. why do you think that will end at a time when earnings have come in stronger than people

expected and companies are displaying a good deal of pricing power and have been able to shrug off some of the geopolitical headwinds? peter: one big thing helping the stock market are those huge, record buybacks. we have seen record buybacks that have been supporting stocks. in the past week, you saw little bit of weakness, then he was overcome during the course of the day with what looked a lot like corporate buying. that has been supported. i think the valuation pressures are real. how much has ai driven us, where are we headed on ai, are we getting the benefit? all of those are playing out. we get nvidia earnings next week. valuations are creeping back hi, setting up people for disappointment, that is why we drop this five to -- 5% to 10%. i think we get there in the next few weeks or months as of this realization sets in. there is still too much hopium out there. lisa: what is the catalyst? a more material -- in the

consumer? is the consumer not as significant as people thought? or is this going to come from the geopolitics of the moment of more tariffs, of widening pressures, of this question of whether companies can sell in china at a time when the gates are going up in the u.s.? peter: my base case is this economic weakness has been helping yields lower care that has been helping stocks. we will hit a point in the coming days or weeks where we see more economic weakness and people realize a b this is not so good for the future of the market. then you have the geopolitical risk, they made by china theory, the tariffs. all of those things are almost "freebies" if you're going to be short or underweight this market. any of those alone could knock this market down, and you potentially have multiple of those occurring. if you want to be underweight, to benefit from that. i still like yields. i think yields go lower, but stocks will give this narrative

of lower yields is good for stocks and say yields are going lower because this economy is shaky and maybe jobs are not anywhere close to as stated. lisa: how much do you see a potential rally in government debt, given some of the hangovers with inflation, given the fact we are seeing tariffs be put in place, and given the fact the deficit, which some people worry about, some people shrug off, is continuing to climb? peter: at the front end, we should get to two cuts this year, maybe three cuts. i do not think we could get any better than that. in tens, we could go down to maybe 430. but as you say, you have all these other issues. over the past couple weeks, i am increasingly looking at the commodity market and getting more and more worried inflation will creep up to the commodity market. that was off my radar 2, 3 weeks ago. as you look through the data, a lot of the ism, pmi, all prices paid were much higher while the rest of the data was weaker.

i do not want to say stagflation. i do nothing that is not realistic -- i do not think that is realistic. lisa: which commodity? oil prices are not been shooting higher? peter: cvoppoer -- copper's up significantly, gold. oil has been fairly stable. it has been kind of calm. it has not really retreated, even as you have seen the middle east care that is still susceptible for a shock. but copper's been one of the big keys i've been looking at. lisa: with a 5% to 10% kind in equities, are you a buyer? is this a buy the dip moment? peter: i thick it is a good opportunity. i am not completely bearish on the global economy. i like chinese stocks better than that -- than i like the nasdaq. some of these low valuation,

high-tech companies can rebound. we have even seen where some -- the russell 2000 has been doing better. if we get that pullback, that is where i want to invest. i am waiting for a pullback to get really committed. lisa: peter tchir of academy securities, thank you. really wonderful insights pay let's get you an update on stories elsewhere this morning. here is your bloomberg brief with yahaira jacquez. yahaira: president biden is set to announce heavy new tariffs on electric vehicles this week. tariffs will quadruple from under 30% to over 100% and will include other key exports, including batteries, solar cells, steel, and aluminum. biden and his staff have spent weeks finalizing the measures, but the plan is seen as largely symbolic as china does not rely on u.s. consumers for the targeted sectors. donald trump pledged to double down on tax cuts if he wins a second term as president.

speaking at a rally in new jersey, he said, "instead of a biden tax hike, i will give you a trump little class, middle class, upper class tax cut." and disney's "kindgom of the planet of the apes" topped the domestic box office this weekend. that topped the $50 million projected. this marks disney's first release of a film in theaters this year. that's your bloomberg brief. lisa? lisa: what's old is new again. up next, the morning calls. plus, look at pharmaceuticals and a possible short squeeze forcing some traders to bailout. this is bloomberg. ♪

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lisa: welcome back. this is "bloomberg surveillance" on a week of inflation and retail sales. a number of guests this morning have said retail sales more important potentially than even cpi. we could see a lift continue in the equity market after three straight weeks of gains. 52 57. 10-year gilts lower by about one basis point. what we're looking at in foreign-exchange is fascinating. you are seeing more volatility in foreign exchange of developed markets. g7 currencies -- all eyes very much on the japanese yen, the dollar bouncing back versus the young, the young weakening again after a surprise announcement overnight that they were not

going -- japanese authorities were not going to buy back as many bonds as people were previously expecting, giving a lift to the long end of the yield curve in terms of yields higher, the highest level going back to 2011. a brief sense of strengthening in the end. then that reverses as well as people push back and say how much is this really signal and how much is this noise? time for the morning calls. jeffrey's keeping a buy on nvidia, boosting price target to 780 did dollars -- $780. next up, bnp paribas upgrading cisco to a neutral, the bank seeing limited downsides for the network equipment maker. bnp the last negative rating on the stock. jpmorgan upgrading novavax to underweight, the analyst citing an agreement to license a combined covid-19 and flu shot. a 99% surge putting pressure on

short-sellers, but the stock is far from its peak during the height of the pandemic. bloomberg's sam fazeli joining us for this story and more. before we go anywhere, is covid-19 and an rsv vaccine and all these vaccines, are they still considered any kind of benefit to these stocks, or are they hangovers from an era we are pretty much through? sam: if you look at it, the enthusiasm by which people were greeting vaccine news, this is a special case, novavax -- about in general, it has receded a little bit. you have vaccines making a huge difference, a significant difference, but the reality is expectations became so high during the pandemic that, of course, now the reality is hitting, and we are getting a little bit of what we call vaccine fatigue, unfortunately, washing into other vaccines that are absolutely necessary, such as measles, etc. so i think some of that has a,

for sure. lisa: just to zoom out, because we were talking about a 99% gain in these shares, potentially pushing away the doubters and haters, there is a question of how much we have seen incredible swings, incredible volatility, incredibly big bets in the biotech sphere, not like what we have seen going back several years in the face of ozempic, which is weight loss drugs, as well as new potential mrna or potential cancer vaccines as well. can you put this in perspective, how volatile this has been? sam: the sector has been pretty volatile, including not -- including large pharma. if you look at share price moves after the first quarter, which my colleague john murphy and i talk about as how could the interesting as you go into it, because it is only four or five weeks after they just reported 4q. it turns out this was quite an

interesting and exciting period for the large pharmas and the biotechs. we had one of the big drops friday in metro gen x, which ended up having a problem with one of its trials, but that is to be expected. these companies are highly reliant on the outcome of one drug or another. in the larger space, obesity still rules, but if you look at large pharma, the majority beat in the first quarter. and some -- most of them raised guidance, and some still have room to grow. whether that resulted in a short squeeze or not, you have been talking about that, but in reality, the sector did very exciting moves during the first quarter, which is not normally expected. lisa: is it because we are just taking more drugs, or is it because of innovation? sam: i would love it to be just because of the innovation, but

frankly, good innovation, better drugs lead to more uptake. as long as the system can pay for it and people can pay for it. everyone looks at drug such as ozempic as obesity or weight loss drugs, which is not the case. if you look at the variety of clinical benefits they are giving you, cardiovascular, sleep apnea, renal benefits, these are significant, to the point that even cms has talked about potentially paying for them for medicare patients, based on those outcomes, not weight loss. lisa: i feel like this year has been bifurcated between the ai hopes and dreams and the idea we were all be skinny and healthier -- have we really reached some kind of seachange when it comes to health care terms in terms of making us all thin and wonderful and also this idea that we may be able to cure cancer with a vaccine? do we have a sense that has been a seachange in the medical field, a breakthrough that has led to a new pace of innovation

that exceeds what we have seen in the past? sam: i will dissect your question into two. definitely seeing a new pace of innovation. the results of technology, ai and health care, are significantly overlapping, and that is helping faster drug development, better supply chain management. that is a theme we will be following quite closely. the reality is the understanding of biology has evolved. let's not forget, biology has had millions, billions of years to evolve, and we are only into understanding it or about 100 years, so there's much more to understand. whenever we feel like we have reached that stage of, oh, yeah, we've got it, you have to assume that is wrong, and it will throw another curve ball you some other way. lisa: there has been this question about distribution of some of these pharmaceuticals. increasingly, it is online. we have seen a number of the big pharmacy providers -- i am

thinking walmart, some of the other drugstores -- closing down their health care offerings, finding them losing money and moving away from that. how have you heard about that spoken about by some of these pharmaceutical companies, large pharma in particular, in terms of hopes they could have more ready distribution through some of those outlets? sam: the issue that some of the pharmacy chains have was more to do with offering health care services. maybe mental health care services or other versions of meant -- or other versions of health care services, rather than drug distribution, at the point where individuals get access through a retail supplier, for instance. that, i don't think, has anything major to do with what the pharma companies are doing, which is trying to cut out the middleman. that is not necessarily pharmacies, that is more the benefit managers, etc. they want to shortcut -- short-circuit that system where

a lot of the costs we talk about, in terms of pharmaceutical, get sucked into, and it is not very visible. they think it is the pharma companies who are raking in the cash, which they are, but there is a lot of money lost in the system to people who probably do not need to be there. lisa: bloomberg's sam fazeli, thank you so much. what we have right now in markets, the rally does continue. to give you perspective on how far we have come, over the past three weeks, in those three weeks of gains, we have seen about a 5% gain on the s&p 500. we have seen a 7% gain in the nasdaq. we have seen a 13 basis point fall in 10 year yields and two year yields. coming up next, torsten slok of apollo looking ahead to a busy week of data. ♪

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and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. lisa: a light day in terms of economic data but that is just the beginning. we get ppi tomorrow, cpi and retail sales on wednesday. you can see that lift continuing after three straight weeks of gains. you can see nasdaq futures up about a quarter of a percent after a 7% rally over the past three weeks in big tech stocks. the russell climbing as people price out the potential for a september rate cut. those chances around 50% currently. in the bond space, you can see very much influencing small-cap stocks.

yields lower. 10 year yields, 4.48%. two year yields, 4.84% just after touching 5%. as we parse through the push pull of disinflation, a fed that is patient and the potential for the debt overhang and sales of u.s. government treasuries to potentially weigh on valuations. you can see the dollar reasserting itself a bit but it has been trading sideways. the euro at 1.0797. the action overnight was with the japanese yen but that has also retraced as we get back to the weakening trend we have seen. a busy week of data ahead. let's head over to new york where dani burger is joined by michael mckee. dani: you have said so much so mike, we have to talk about

whether or not we're going to get another flip-flop. let's start with cpi wednesday. economists think it'll be less than last month. michael: less the highlight of the week and unfortunately for the fed, jay powell speaking before cpi comes out but we are going to take our direction from what happens with cpi and after four months of having inflation go the wrong way, we are now going to have it in theory, starting to go back the right way but not a whole lot. at least in the right direction. i don't think it changes the fed a whole lot but you were talking about volatility. dani: if there is one thing we know for sure, it is that there will be volatility. lisa and i were talking about this idea that rental inflation, housing inflation, people have said it is going to show up in this report. is the lack of finally going to show up -- is the lag finally going to show up? michael: i'm not putting a prediction on that. the fed is hoping so.

they don't have any explain nation for why it wouldn't. -- explanation for why it wouldn't. some on pennsylvania avenue point out the europeans don't put housing into their cpi. if you took housing out of the u.s. one, we are both at 2.4%, a lot better than what we are showing now. dani: set us up for retail figures. what are we looking to get? michael: you tell me. we had a big month last month we are not expected to see month, only a 10% gain after only 1.1% the month before. this is where the numbers get distorted month-to-month because of easter. easter moves around a lot, end of april this year. that pushes some spending into april that might have taken place in may that won't show up. it is hard to know exactly how it is going to come out but we

look at the control numbers, which don't show a very good performance for retail sales but american consumers are surprised. dani: savings rates, something like 3%, complicated by the fact that we get more real-time data with walmart, home depot. how much do economists look at that and feed it into the overall picture? if retail comes a strong and the company's essay the consumer is concerned and we don't have pricing power, what sort of picture does that leave? michael: you have to separate out the results from the forecasts which is what you do on wall street. the results don't mean as much because that was three months ago, but the forecasts do get incorporated into people's views of what we might see in retail sales. if the retailers are saying we don't expect sales to be good, then you are on watch for that to be a problem. the fed is doing the same thing. they are always talking to ceos in their districts.

they will have a pretty good idea of what the company's think -- what the companies think is coming. dani: tell us why we should care about any fed speak this week when they've all been saying nearly the exact same thing. michael: truth be told, i can't tell you a lot is going to be that important. jay powell will be important because he is always important, but he is not likely to say anything new, particularly because he does not have the cpi numbers. the rest of them will line up and sing the same song and it'll just be a matter of degree. mickey bulman, rafael bostic saying one cut. you have others saying we can cut a couple times this year but really, no one is talking about when that is going to happen. no one really knows. it's not going to change a whole lot. dani: it certainly feels like no man's land. thank you so much. lisa, i love the only thing we know for certain this week is that there will be volatility. lisa: that seems to be the

feeling more broadly. right now, with us here in d.c., we have torsten slok, chief economist for apollo, here for the same event i'm here for. i want to start with a question we've been asking all morning. which is more important, inflation data or retail sales? torsten: if you look at the mandate, inflation at 2% and full employment, inflation is more important and particularly because the last three months, we have seen the annualized change go up by 8%. we have seen the cow inflation go up by 4%. the momentum has been moving in the wrong direction. what is really important about wednesday's number is whether that momentum continues or whether we will see as mike and dani were talking about, a move to lower inflation. lisa: a lot of people including austan goolsbee have said it is

a lacking indicator and that growth is being challenged. torsten: the problem is that the momentum in inflation has not been going down for the last several months and if momentum has been building to the upside, we need to see that momentum break from the fed perspective. there is an argument about on the one hand, maybe in areas of occupancy rates, looking a bit better and on the other hand, -- is now rising at 7% of the annual rate and that means we are seeing momentum building in prices. different parts of the scale are weighing but we don't know what the inflation data will do. it has been coming down a lot slower. combined with auto insurance and everything that is going on in the subcomponents, continuing to put upward pressure on inflation. lisa: you still see no rate cuts this year. torsten: also beginning to talk about no rate cuts this year. it is becoming more and more difficult. if you put together a spreadsheet, the growth rate we

have seen for the last 30 years, you will still have inflation by -- around 3% by the end of the year. you need a dramatic slowdown in inflation for the rest of the year to get it down to 2% by the end of the year. the upward pressure is just really strong. lisa: we heard from jay powell a couple days ago, a real indication he wants to cut rates. he is concerned about the strength of the economy. there is clear deterioration. it seems like the bias has been more on strength. what makes you think that is going to change, given the fact that we do see real pressure coming through with initial jobless claims, with consumer confidence, the fact that people are definitely feeling something that is coming through in the numbers? torsten: that is why it is important, not that inflation is the only indicator. retail sales do play a role. if you look at the bank of america data, both debit cards and data -- and credit cards,

income distribution, there was a fairly significant bump higher in spending for both low income and high income groups in the month of april. there are number of indicators pointing in different directions. we do see dylan quincy rates go up, particularly for low income households, auto loans and credit cards. the bottom line is still that let's see where the data gets us because the latest on payrolls was a little bit weaker. there were two reasons why. the conclusion still is, this economy is not falling apart. it is still a fairly solid growth rate we see. lisa: we've been talking about the flip-flopping narrative. we had no lending -- no landing. then we got to goldilocks and that seemed to be where everyone was at for a couple of weeks and now people are talking about the potential for a hard landing due to economic weakness. it sounds like you don't disagree, it is just later than people expect and it is not soon enough to keep the fed from

holding rates where they are. is that correct? torsten: i think that is correct. the tailwinds that are still behind us, we have a very strong tailwind that comes from easy financial -- easing initial conditions. on top of that, we also have a tailwind from fiscal spending, strong spending in the pipeline from the chip sector, the infrastructure act. -- the chips act, the infrastructure act. very different from what is going on in europe but those things are likely to continue to give us a fairly robust data for the next several months and most likely all the way through the end of this year. lisa: commentary went out that seemed to agree with what we heard from peter scheer of academy securities earlier my same the next 500 points for the s&p 500 will be down, talking about a 10% correction. why do you disagree that there is enough ammunition for things to kind of hang in an even creep higher?

even as people do wake up to real risks that we are seeing with respect to spending? torsten: this is a really important question. the risk of higher for longer, on its own it means higher debt servicing for companies. stocks going down and credit spreads widening. the economy is good meaning earnings are good, so as a result, we should expect stocks to go up, so there is a tug-of-war between rates higher for longer hurting when debt servicing costs are having a negative impact but if that is happening because the economy is good, i would expect the economy to do just fine for the next several quarters as a result of the tailwind of the stock market going up, easing financial conditions, tight credit spreads and fiscal policy providing a tailwind. lisa: does that mean there is going to be a bigger downside? torsten: i do think we will set ourselves up for turning 25. the fact that we have the link with the rates going up on

credit cards and auto loans, even an economy where everyone has a job, the fact that you have highly leveraged companies in capital, enterprise software, experiencing a lot of problems, that these problems are still here even in a good economy, that tells you once people do begin to lose their jobs, once the economy does begin to slow down, you already have a lot of distress, a lot of office problems. imagine what the problems will look like if you finally get the unpleasant rate to move higher. the sensitivity next year is that we might get a risk of a harder landing. that is not the theme for the next several quarters. lisa: we why you keep mentioning the fiscal overhang and how much that is going to be funding things. we are going to be speaking on a panel, talking about the fiscal debt and how much that is going to be a problem at a time where -- came on and said the oil deficit we've been ignoring for the past several years, people have been wrong and wrong. torsten: the papers that look at financial crises and debt

crises, if you eventually keep on growing your debt levels up and they just keep rising in this epo focus is that we will go from 100% of gdp debt levels to 200%, also, it does try to stress the system more in terms of three things, what is happening in treasury auctions, what is happening to ratings and what is happening to the premium. that is why financial markets should be watching auctions, we should be watching what is happening from the rating agencies, whether we will get a downgrade from the u.s.. that is really important. the third thing is the term premium, which you can find on your bloomberg screen has been trending higher the last six to nine months. the stressors are beginning to emerge. most auctions are going fine but investors should be keeping an eye on this. lisa: you have some incredible statistics in terms of the amount of debt that is going to mature by the government.

$8.9 trillion over the next year. you talk about an average 12% of government spending is currently composed, comprised of debt servicing payments. we are talking about a lot of people who are still dismissing this in terms of a major risk. what do you think could be the catalyst? at what point do you say you can dismiss it until you can't? is the election something you're watching? torsten: if you think about this from a corporate perspective, when debt levels go up, for a long time it does not matter until it certainly does -- until it suddenly does. the rollover of existing debt is around $9 trillion. the budget deficit is around $1 trillion for the next many years. by the way, the fed is still doing qt, which adds millions of dollars which brings you more than tension and others need to refinance in the next 12 months. that's roughly a third of gdp. if we continue to see more spending and budget deficits,

then i think that investors need to watch very carefully what is going on with auctions, what is going on with rating entities. are they downgrading the u.s.? what is going on with the term premium. that is where the stressors will first begin to show up. lisa: torsten slok of apollo, thank you so much for joining us. very enjoyable to hear your point of view. let's get you an update on stories elsewhere. here is your bloomberg brief with yahaira. yahaira: apple's closing on a deal to use openai and chatgpt on the iphone. it would be part of a flurry of new ai features that apple is planning to announce next month. the tech giant also held talks with alphabet about the company's gemini chatbot. those discussions are ongoing but have not led to an agreement. tesla is facing further protests at its factory in germany, where

activists are trying to stop an expansion that would require clearing part of a surrounding forest. police say at least 16 people were arrested on friday following actions including breaking into an airfield, damaging new tesla vehicles and blocking a road by the factory. campus protests over the war in gaza are colliding with college graduation season. jerry seinfeld was the commencement speaker this weekend at duke university, where about 30 students walked out, chanting free palestine and waving flags when he was introduced. he did not address the protests. harvard has signaled administrators are losing patience with protesters who have set up tents at harvard yard, where a commencement ceremony with more than 30,000 people is scheduled for may 23. that is your bloomberg brief. lisa: thank you so much. up next,, bill wang facing life behind bars. >> we are very disappointed at the situation.

we are taking it very seriously and we are reviewing the different relationships as well as the family office relationships, reviewing the risk management processes. lisa: that's coming up next. you are watching bloomberg. ♪ (♪♪) (♪♪) what took you so long? i'm sorry, there was a long line at the thai place. you get the sauce i like? of course! you're the man! i wish. the future isn't scary. not investing in it is. nasdaq-100 innovators. one etf. before investing, carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com

lisa: about 41 minutes until the start of the trading day. we can see that stocks want to rally after three straight weeks of gains, up a quarter of a percent of the -- on the s&p. yields lower, a bit more so. down almost three basis points. looking ahead to jay powell tomorrow, and then of course to ppi tomorrow as well as cpi and retail sales. under surveillance, archegos founder bill wang facing life

behind bars. >> we are taking it very seriously. we are reviewing the different relationships as well as the family office relationships and reviewing the risk-management processes as well to get the lessons learned now to make sure it does not happen again. lisa: opening statements in bill wang's criminal trial starting in new york today. he is facing fraud and market manipulation charges. he'll be tried along with former archegos cfo patrick callaghan. sonali basak joining dani burger in new york with the latest. dani: we've got you before you have to head out to the new york courthouse. we have to get a refresher on what these trials, what the charges actually are. sonali: the trial of archegos is surrounded by what the u.s. has brought forward as a racketeering conspiracy, wired -- wire fraud, securities fraud.

when we think about this trial in particular, a lot of these counts, each of them could be 20 years in prison, potentially life. we don't typically see that but it will be a contentious trial as we believe it. we have seen the defense come forward, starting to fight a lot of these charges. what exactly is the prosecution trying to show here? this idea that bill wong and his deputies have looked to defraud market participants by manipulating and affecting securities prices through amassing swaps in those positions. large stakes in companies like bio -- like viacomcbs. layer also trying to say that they convinced counterparties to trade with them and provide them credit based on misleading information. we may hear a lot from counterparties throughout this trial. dani: hearing you talk about

this, this is a complicated topic as many white-collar trials tend to be. what does the jury look like? are they the types of people who are set up for this sort of thing, even the language set the prosecution is going to you use -- going to use? sonali: there were people in the selection process who are very familiar with archegos. one private equity executive even said that a friend had lost money in the course of what happened. the final jury, you do have some people with exposure to the financial system. you have a software engineer from bank of america. that you have others like a former train inspector for the new york department of transit. a former clerk on the new york stock exchange. quite a colorful jury, with some exposure to finance. even the judge said that for them, this will be a finance 101 course as they learn about this market. dani: probably better than you could get in any classroom.

you mentioned what the prosecution is likely to say. what is the defense likely to say? sonali: one important thing is that did they break the rules? if you read the initial indictment, it is interesting because you do have an acknowledgment in the beginning that this is an opaque market where there were not rules around the disclosure around some of these products. that is one thing. another element here, one thing i think a lot of people in the market are curious about is credit suisse's role, the different banks' roles. some of credit suisse's own credit practices may have been flawed from the beginning and may be a point of contention between the defense and the prosecution. throughout the course of what we will see here, two of his other employees at archegos have already pled guilty and are expected to be testifying during some course of the trial. as far as today goes, you have

opening arguments but you may see witnesses being brought forward from the beginning, including someone who had worked at ubs, who was of the other end of the calls for archegos. we will get into it pretty quickly here. dani: before you came on, we were listening to ralph hammer speaking in 2021 and he was the ceo of ubs, and how things have changed. three years on, has anything changed on wall street to prevent something like this from happening? sonali: i would say marginally. you did see the sec come forward with new rules around swaps. have they gone far enough? a lot of those rules were tied to the initial dodd-frank post 2008 regulation that was implemented to kind of late. that is being addressed, it has been to some degree. remember, they had so many conversations inside of regulators about whether this

would require more disclosure from family office vehicles. that, we have not seen happen. will this trial inspire that conversation to begin? that's a major question this etf c has looked at, and so have -- the ctfc have looked at and so have other regulators. dani: thank you for joining us. sonali is going to head down to the new york courthouse. a busy day on bloomberg tv. lisa: hopefully with a sweater on. thank you so much. coming up later today, do not miss this. annmarie hordern sitting down with treasury secretary janet yellen as we prepared to hear from the biden administration on tariffs on electric vehicles coming from china. just -- bloomberg's editor-in-chief interviewing french president emmanuel macron, and our own jonathan ferro is speaking to goldman sachs ceo david solomon for a

rare interview as he sits down in france to try and get an upper hand as potentially paris lobbies to be the next london and the next financial capital of europe. coming up tomorrow on surveillance, ryan leavitt of invesco, jenny johnson, gary cohn, and chris marangi. we do see a lift to markets. people want to feel good in the push poll of ping-pong and narratives, whether we get the emphasis on retail sales or cpi, that all comes up on wednesday, with jay powell in the next tomorrow, speaking on a panel. this was bloomberg surveillance from washington, d.c. have a good day. ♪

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matt: i am matt miller, back at bloomberg headquarters. the countdown to the open starts now. investors breaking for a critical stretch of economic data. president biden wanting to quadruple tariffs. and meme stock mania continues. we begin with the big issue come the countdown to cpi. >>