♪ >> the inflation is not coming down as fact is expected. >> inflation is stalled at a level that is uncomfortable for the fed. >> they are going to want to be more patient, inflation is going to be top of mind. >> i think the clear part of the new narrative is high for long. the question is where does that take us? >> the fed is going to start to cut and you're going to have a massive rally. announcer: this is bloomberg surveillance donovan ferro, lisa abramowicz and annmarie hordern. jonathan: this is a proper monday morning. what time did you go to bed saturday? >> around 1:30. jonathan: that sounds like a

3:30 voice. live from new york city, good morning. but it your week started. equity futures posited by 0.1%. what a week ahead we've got for you. wednesday, decision day. apple earnings on thursday, payrolls on friday. if you want a sneak peek, the estimate, 250 k. payrolls has been absolutely dominated by a series of upside surprises. this morning dominated by one chart, the dollar-yen. could we talk about the range we've seen on dollar-yen today? this is not a monthly range, we've been through 160 already in the last 12 hours. we started the month focused on 152. they've been the ministry of finance in japan, no comment.

that's what we heard from the ministry of finance, no comment. annmarie: no comment for now. people are saying was it the fact that there is a public holiday in japan, low liquidity? but i love the fact that they come out and the top currency official says no comment for now. will begin a comment? do they intervene? jonathan: if you want to make a statement, it is a great time to do it. low liquidity, national holiday, it makes a whole lot of sense. will a dog chasing airborne frisbee? it appears to be trying to push the dollar-yen in the absence of official intervention and is still unclear whether we've had so-called intervention. really putting forward the statement of the morning, we actually need to see to put a durable floor or a durable ceiling on top of dollar-yen. more aggressive policy action from both the ministry of

finance, concerted and repeated intervention and the boj signaling a willingness to normalize policy further are necessary to stabilize the currency and cleaver signs a stronger across the water economy as well as signed the treasury yields have peaked will be needed before a sustainably and rally could actually get going. that is the push this morning. that currency pair has been an absolute mess so far in april. coming up the sour, fantastic lineup to get through. the yen bounces off a 34 year low and wells fargo looking ahead to the fed. u.s. stocks coming off of the strongest week of gains so far this year thanks to a big boost from big tech. lori writing this, we still believe our target of 5300 is a reasonable expectation. the key thing we learn from our survey is that even the higher rates are a headwind, there is a

confidence in the stockpicking community that this challenge can be managed. lori joins us around the table. fantastic to see you. i want to start with this. we went through some of the big names in big tech over the last week and started with nvidia two fridays ago. we had a 10% move on absolutely nothing. tesla last wednesday moving 10% on a $500 billion market cap. meta-, another move. and then we had alphabet with a move 10% on friday on a $2.1 trillion market cap. the big question, is 10% the new 1%, and what is the message you take away from that? >> i will go back to my small cap days if i can. this is has small caps have always treated. some of the price reactions have gotten a bit worse, but i think in small caps this is just something that was a normal reaction to earnings for a long

time, so it doesn't throw me quite as much as it might some other folks. jonathan: what should we take away from the fact that uber-capped stocks are behaving like small caps? >> bloomberg does some great work just forecasting where the earnings are expected to go based on bottom-up consensus forecast. you see a decelerating growth rate. coming offer of 35% in 2023, that is forecast to drop to about 15% or so in 2025. that will basically come in line with the rest of the market. if there's one thing i've learned over the course of my career, when you have these powerful momentum stocks and growth rates to celebrate, growth investors get exd and that is what i feel like you are seeing in the stock price reaction. jonathan:jonathan: it raises big questions going into numbers from apple and amazon. amazon earnings coming tomorrow, apple on thursday. what do you sense has been rewarded really well this

earnings season, what is getting punished? >> if you look at the russell 1000, and we have to look that big, beats are not getting. they are not performing as well as they typically do. i think what i've noticed as we are going through commentary, we don't get through everything, but what i feel like i'm seeing is just kind of an intolerance for the "we need to be patient" conversation. i sort of felt like there was a shift last week, midweek were companies that were saying we are getting the benefit of these things now, we are benefiting from the ramp that is going to continue in the coming years, investors were ok with that. but this wait and see, we've got to celebrated earnings growth at 27 times multiple on those biggest tech stocks. investors don't have a lot of patience for that right now. annmarie: if there time for a pullback now? >> a lot of that has happened as

we had some volatility in the bigger names. i'm not looking for any kind of massive pullback in those names or in the markets. we thought the pullback would be worth about 5%-10%. i don't think we are quite done yet. if you look at cftc data on positioning, nasdaq futures, s&p futures, we haven't even begun the correction. we've done some damage but we still got probably a couple more weeks of damage to do. annmarie: so if you look at the peter cheer note he talks about how these big companies are trading like little companies. if there's not a pullback right now, how do you see this rotation? >> i think the financials have come from so far reasonably well. i personally read a lot of industrials and materials. i'm not really seeing anything demand problems. i think it is not so much a particular sector, it is looking for industries, for companies within the value cyclical cohort of the market. second the energy, materials,

industrials. jonathan: latest note dropping from them, the stock to outperform. apple has -- amid a psycho and fears they are structurally impaired. i'm going to ask you specifically about apple and maybe some of the forces associated with that moment. particularly china, the strength of the u.s. dollar a factor as well. and many times of those two things come up so far? >> i'm noticing and more with the tech companies. a lot of stuff in the other part of the market to hear from but so far it seems mostly to be a tech company phenomenon. i will say it is maybe a little hard to say because we've had a lot of initial so far but at least when i read last week, europe, china, things seem a lot

more balance. if you look last year, it was all china is not coming through as well as we anticipated. and i wouldn't say i'm seeing a lot of jumping up and down into celebrating on china, but it seems more balance. jonathan: what is unique about china to them? >> i'm not sure i have a great answer to that question, to be honest. when you are encountering difficulty in the post-pandemic world, there was so much excitement a year ago that we were finally getting that recovery and that normalization. and that normalization just hasn't been as clean as a lot of companies would have anticipated. there's just not a lot of visibility on when that was going to turn around. annmarie: i think back to what mohamed el-erian recently told us about how a lot of people miss what ceos were saying and they bought into this transitory leash and. but ceos were saying we still feel inflation coming down the pipeline. what you gather about where

inflation is right now? >> back in the last reporting season, calendar one q, calendars -- companies were raising the red flags, complaining about cost, margin pressures. i'm not sensing quite as much of that now. it doesn't sound good, some companies are complaining a lot about inflation, some people are talking about moderating but it is still very early. jonathan: going to be fantastic to run through some of the top stories. 10 the conversation with lori, not a single mention of the federal reserve going into that decision on wednesday which i guess is a good thing because we've actually been talking about nothing but the federal reserve over the last month or so. let's turn to price action and start with equities. equity futures on the s&p 500 positive hereby 0.1%. that move has been fading through this morning. in the bond market, yields lower by three or four basis points a 10 year. 4.6239. the euro a little bit firmer,

dollar-yen turning around big time. that currency pair positive by 2/10 of 1%. here is your bloomberg brief with dani burger. annmarie: elon musk's quick visit to china has paid off almost immediately. tesla will be partnering with baidu to support self-driving function. i spoke to peter gardner earlier this morning who told me that must's visit was an acknowledgment that he needs to change the market narrative, but intimately. tesla still will be a top player in china's ev market. phillips shares soaring, up 46%. the company reached a lower-than-expected settlement on u.s. claims over faulty sleep apnea devices. the deal they reached the authorities was for $1.1 billion. that compares what analysts were expecting of $4.5 billion. the expectation is also that

this will draw a line under u.s. claims but phillips for their part are still conducting toxicology tests related to the devices. the redstone family and david ellison are trying to appease angry paramount investors. sources tell us that the redstone family which controls a majority of shares and ellison of sky dance are both making appeals and can -- and allison is offering to buy a block of paramount shares at a premium. his bid described as the " best and final offer" as board members remain undecided about a sky dance takeover. bob bakish could be ousted as soon as today by a management community. jonathan: appreciate the update. that story has been a mess. look out for updates on that. got updates on this and re-add. secretary blinken has been speaking, saying the israel cease-fire proposal, he calls it extraordinarily generous. the only thing standing between a cease-fire in gaza. that is the latest from secretary blinken this morning.

much more headlines throughout today. up next, the 2024 presidential race ramping up. >> the 2024 election is in full swing and yes, age is an issue. i'm a grown man. i'm running against a six-year-old. jonathan: that conversation just around the corner. from the beautiful new york, good morning.

♪ jonathan: equity futures on the s&p posited by 0.1%. last week, the biggest weekly gain of the year so far. just remember that follow the biggest weekly loss on the s&p 500 of the year so far. in april we are still down about 3%. bond market yields are lower by three or four basis points. two big events outside of earnings, federal reserve wednesday, payrolls report on friday. the 2024 presidential race ramping up. president biden: the 2024 election is in full swing and yes, age is an issue. i'm a grown man running against a six-year-old. [laughter] [applause] but i feel great. i really feel great. i'm campaigning all over the country. pennsylvania, georgia, north

carolina. i've always done well in the original 13 colonies. jonathan: just a few things to say. i know the president likes ice cream. if you want vanilla and you get vanilla, you can't complain after that. if you get a vanilla comedian to the so-called grilling, you get a vanilla grilling. i was surprised. i like the guy, what is the surprise? he delivered vanilla. annmarie: he had some funny moments but at the end he almost endorsed the president, talked about his grandfather who voted for joe biden and explain this whole story said he thinks he is a decent man and that is not really the job of the comedian the comedian is there to both the administration and the journalists, and maybe he was just too friendly. jonathan: shane gillis, can we get a proper roasting from shane? annmarie: that would be pretty funny. jonathan: that would be better than good. new polling in three swing states showing president biden

with a single digit lead in michigan. former president trump with a slim lead in pennsylvania and wisconsin. terry haynes writing biden is still likely to be reelected by the skin of his teeth. polls are leveling out, trump is still weak and rfk's balloon is slowly running out of air. you've maintained this view for quite a while. what is it that you see in error future that ultimately ends at this destination? >> fundamentally, it is that trump has kind of topped out and biden has got a floor with some room to run and room to grow, and that is fundamental. ever since mid-january, trump has been off the week. what you've got is you've got -- awfully weak. you've got splits of 20-40% of the party regulars not voting for him, independents not breaking his way. he needs independents to be more for him then not in order to

win. right now that is not happening. you combine that with an electorate that really hungers for a credible, serious third party candidate. for a while it looked like he would either half of kennedy or no labels kennedy or both in those shoes. no labels drop down for lack of ability to convince anyone and bob kennedy i'm sorry to say has made his candidacy into a neat one, and far less serious. what you've got here is a situation where biden i think is going to have a superior organization, superior get out the vote and six months from now, i think that is what you see is the skin of the teeth win. jonathan: you know that she could for amateur political pundits like me. you banged the table and you say it is all going to be about turnout. you just say that on repeat to sound smart. can you tell us about turnout,

the potential for people just not to turn up given how disappointed they are with two candidates in front of them? >> i think there's possibility for that. it is all about turnout, of course, but at the same time, folks tend to overestimate how much turnout goes up or down. the famous obama search in 2008 turned out to be something like 1.7% of the electorate. it seemed much bigger than that even on the ground at the time. but what you've got here is a situation where you got a couple of candidates that aren't actually exciting people, generally speaking. there was one joke factory that called it a gesture to earth day by recycling presidential candidates, but that is going to get replaced i think by a surge by some on the right, the trump loyalists who haven't increased their numbers since 2020, but

are still quite passionate, but you are going to have the social issue democrats particularly in swing states and that is exactly what biden is counting on. the third thing they are counting on his obama's former campaign manager saying what is driving third-party numbers through the floor in the next six months, and they will try to achieve that by making -- into a nut. lori: as you think about the polling data and biden's low approval numbers, is there anything they can turn those around? in markets we are watching inflation, foreign policy. do any of those things matter for biden at this point? >> good morning, lori. the way i would look at it is biden's numbers on favorability and all the rest are pretty much going to be what they are. i take issue with a lot of where the white house has been on a number of these issues. saying that you are going to deal with inflation and then

having people still dealing with high prices and unsatisfied is not exactly a smart political strategy, among other things. but what i tend to look for is not so much whether or not his numbers on a per ability, i typically, anything else go. another amateur table pounder is always a choice. whether you are choosing for somebody or against somebody, biden's gambit is going to be that he's going to make it not so much about him, he's going to have a record, but he's going to make it about the other guy. what you saw at the correspondents dinner, you are going to be treated to six months more of that as part of that strategy. wanting less of the trump circus is part of the biden campaign strategy. i think it actually helps him. lori: as we think about the intersection of politics and markets, when you are thinking about policy from these two

candidates, what are the one or two things were saying if trump wins or biden wins, investors should really be expecting to happen in terms phrase they can make? >> i'm not going to recommend specific traits but what i will say is you've got a situation where trump is going to be stronger on traditional industries and sectors. defense, fossil fuels, things like that, generally speaking. they will be a lighter hand regulatory, none of this foolishness coming out of the ftc, trying to have the antitrust cases against luxury handbag makers and the like. that will cheer markets. what will worry markets about trump is the kind of stuff that is coming out of hyperventilating staff these days trying to meddle in the fed independence. anything that metals with the fundamentals of markets, and

that includes the fed's ability to do its job, is going to be a negative for markets. that is happening now a little bit but markets will very much need to look out for that should trump the president. annmarie: i want to go back to the cbs news poll. biden and trump can't. what levers can biden pull before the election to help these three states sure up support, michigan, pennsylvania, and wisconsin? >> let me speak to pennsylvania specifically because i know the most about any granular sense. biden thinks he's going to pennsylvania, that is not true. there's philadelphia, then there is the vast rest of the state. the rest of the state, speaking broadly, is read. they don't like him, they don't understand what he's doing. what they understand is that prices are up in core industries including energy industries that are under attack.

biden needs to do more than get into pittsburgh and talk to the steelworkers for 15 minutes. he needs to go 15 miles south to canonsburg which is the world capital of fracking and talk to people in washington county, greene county, fayette county about why he's trying to do what he is trying to do for them. it can't just be about the groups of traditional democratic politics, the groups in which you get turnout. it has got to be about more than that. the more he tries to connect with real citizens who might be skeptical about him, the better he will do. jonathan: i've got 10 seconds. should that dinner with the last dinner? >> it should have been the last dinner about 10 or 15 years ago. look at jerry seinfeld's great quote about the death of comedy and you see everything you need to see in that dinner. jonathan: it died on saturday night. you sound like the new york

times. they had a brutal review. i think it was that bad until the very end. i'm not sure i'm interested in which way he thinks we should vote. but anyway, japan financial authorities did intervene in the fx market. that is the report coming from sources according to dow jones today. the official on the record point of view from the ministry of finance is, no comment. the dollar again with a big swing. back down to 155.85. we will catch up with mark mccormick coming up next. from new york, this is

her uncle's unhappy. i'm sensing an underlying issue. it's t-mobile. it started when we tried to get him under a new plan. but they they unexpectedly unraveled their “price lock” guarantee. which has made him, a bit... unruly.

you called yourself the “un-carrier”. you sing about “price lock” on those commercials. “the price lock, the price lock...” so, if you could change the price, change the name! it's not a lock, i know a lock. so how can we undo the damage? we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. okay, that's uncalled for.

jonathan: welcome to the program, sneak peak of summer little bit later today, wishing you all the best for the week ahead. it's going to be a warm one here in new york. equity futures posited by 0.1%. really strong week of gains in the equity market last week, strongest we've had so far in 2024. the bond market, to year and 10 year, let's focus on the 10 year. five weeks of the 10 year yield climbing higher. down four basis points. last week briefly, 400 97, just in and around 5% of the last few weeks or so. if you turn to foreign exchange, the only thing we are talking

about today is what is happening with dollar-yen, so overnight late last night we broke through 160. the higher the session, below are the session and the price right now, 155.83. the official line so far is no comment at the moment. this is coming from dow jones just moments ago. financial authorities did intervene overnight. there was a public holiday, low liquidity. the perfect time in either direction. so what we saw was dollar-yen gap higher and then ultimately, authorities coming in pushing this one back down again. big week ahead for this foreign exchange market with the federal reserve on deck on wednesday and payrolls on friday. the latest fed decision in news conference from jay powell coming on wednesday. a string of hotter than expected inflation prints.

bloomberg survey, the median estimate $250,000. that does not scream recession. the previous month doesn't scream recession, either. we are looking for 250 in the number on friday. lori, let's talk about the federal reserve. we haven't mentioned it yet. wednesday what are you looking for? lori: i feel like the equity community has already gotten into its head. -- into a tent that cuts aren't going to happen this year. i've been hearing this since february. i have a hard time sitting here with 100 66 companies coming out saying equity investors are going to be focused on the press conference i know we always have a lot of drama, but to me it is a little bit of the b-plot this week. i will be listening to see if there is anything the market takes out of it because i do think that would be for the disruptive to equity investors but it is not something we anticipate. jonathan: tomorrow, amazon.

thursday, apple. the day one, payroll. then you've got monetary policy which you think is sort of like the b-list this week. what is the number one for you? lori: the earnings themselves. as long as we got a reasonably strong economy, i think the market can handle the fed staying steady. admittedly when i look at my valuation work there is some downside potential if we don't get any cuts this year. we have a whole big model that looks at inflation, we look at it against earnings, there could be some downside. that doesn't feel good but it is not exactly a disaster. jonathan: tesla rallying pretty high. ceo elon musk you might have noticed over the weekend making a surprise trip to china. bloomberg reporting the eb maker with part -- will partner with baidu for mapping and navigation, support. driving in the country.

the technology does not like the cart autonomous but the software is sold for $99 per month. that stock is up by 8.5, 8.6% this morning. annmarie: at surprise visit being called a homerun but he also seemed to pass this key data security that they would need from beijing. it just goes to show how important china is for him on must. he was supposed to have a sit down in india. that got pushed aside and get his first trip after a bit of struggle is immediately to china. jonathan: a little bit later this morning, look out for that. the yen bouncing off its weakest level and 34 years. dollar-yen falling before rallying back due to a local public holiday. mike mccormick funds us right now to comment officially on the situation. what happened overnight? >> i think it's pretty clear if

you think of the sequence. we had some inflation data and then basically boj that was standing pat, saying we are not doing anything. the boj is very good at telling us what they did historically but not what they will do in the future. dollar-yen moves rapidly higher after those events. the boj and ministry of finance seem to not have the same opinion and it looks as if overnight the japanese official have intervened to try to strengthen the yen. jonathan: we first complaint from the ministry of finance, next to nothing from bank of japan. we have to deal with the question, is it a problem or not? >> i think part of it is the problem is that it is speculative and doesn't have someone of a negative impact? there's always winners and losers, so if you think about it

from one perspective, the boj are helping tourism, helping profit margins. you can see exporters accumulating larger surpluses. but at the same time if you look at the correlation to whether or not the politicians are actually doing their jobs properly, there is a very strong correlation with the disapproval rating vs. the move in the dollar-yen. this is a big pain point for consumers. also if you look in oil, we were back to where we were in a 2007, 2008. there is a massive consumer shock here. the ministry of finance is more focused on the broad-based movement and whether or not it has dislodged itself from fundamentals and the boj is sticking to the party line that this is not something they want to control, they basically control interest rates and monetary policy and that is basically a function for the ministry of finance. jonathan: it's been described as

a dog chasing an airborne frisbee, looking at the direction of travel over the last month or so. i want to know whether you believe we baxley put a sustainable ceiling in this currency pair and they want your opinion on this who said basically what we would need to achieve his more aggressive policy action from both the ministry of finance and the boj, and the boj would need to signal a willingness to normalize policy even further which so far they've been reluctant to do so. so do you think we've established a pretty durable, solid, resilient ceiling of dollar-yen above 160? >> i think we have in part on the fact that what intervention does is it doesn't change the trend, a change of psychology. typically we could see at least two weeks of this intervention working. i would say what we need on the others as we do need to see the trajectory of the dollar change, the fundamentals in u.s. change. i don't think that is going to change in favor of the stronger again in the short-term but the

boj does have an impact and if we go back to every major central bank when they started normalizing policy over the last couple years, everyone chronically underestimated with the terminal rate was. part of it is price discovery, we are in a new world. central banks, the forecasts have not been able to articulate exactly where they think the terminal rate should be, so the market has basically been forced to kind of go through this process of figuring it their trial and error. basically what we should think about is that the boj and the japan policy rate, the natural policy rate is much higher than what is being priced in the markets. i would argue it is much higher than that, probably above one. i think at some point whether or not it is because of the currency or whether or not the level was price in the market and where inflation is a bit more sticky in japan, if you

look at some of the stuff that has dropped out of the inflation basket in tokyo and some of the other indicators, they are more temporary, related to fiscal stimulus that has come through in subsidies. but the level of inflation in japan is generally pretty high. i would argue that the boj is going to be forced to tighten more aggressively than what is priced in the market. that will help stabilize the yen, but for the process to turn lower you just need a much more dovish fed which looks increasingly unlikely for the remainder of this year. annmarie: that's what i wanted to ask, if the short-term is not going anywhere, won't the financial chiefs and the currency chiefs just be dealing with this episode again? >> if you think about what drives dollar yen, i think there's two factors right now that we can see in some of the models. it is hedge funds because there is a trade in it and it is japanese institutional investors. a big piece of it is the market

wants to see institutional investors kind of front run movement in the policy. and i would argue that they are lagging indicators. pension funds, insurance policies, even corporations. these are some of the institutions from the wrong side of this trade. a lot of these places were probably thinking between 140, 145. in a lot of these institutions were probably essentially short dollars, long yen and basically the move was just too much, too fast. but i think in terms of the movements over the longer-term, the pension fund rebalancing, the insurance companies, all these institutions that are really running low, these are the ones that will start to repatriate that capital. yes, you need some movements coming from the fed and the u.s. curve, but at the same time if you have boj tightening policy a little more aggressively, we will see the repatriation over

time, which is our expectation. but that is not going to be the short-term trade, that is a process of how they look at investment. jonathan: if you're just joining us, big moves overnight in the fx market. we broke through 160 late last night on dollar-yen. this market has been bullying the japanese yen, pushing it ever higher over the last month or so. some big numbers taken out, numbers we haven't seen since the 1990's. japanese yen kicking and some strength big time in the last few hours or so and a lot of suspicion that the ministry of finance has intervened in this market. the official comment from them so far is no comment. financial authorities have intervened in the fx market. i want to wrap things up more broadly. this came from aaron robinson who said free m, the combination of weaker currencies and stronger commodity prices as creating a major dilemma that

could put rate cuts on hold indefinitely. how do you think this story at the moment, pair what is happening with the u.s. dollar with what is happening with commodities, how does it shape central bank decisions worldwide? >> it's absolutely critical. there is a way to think about it. if you have strong growth and strong growth is leading to central-bank changes, that has one-way of affecting the market. if it is strong growth and generally-contained inflation, that is bearish for the dollar. especially in the context that they have really high level of interest rates. what we've seen recently is how it changes the market. policy shocks driven by inflation is what causes rate differentials to matter a lot. so i think you can see this last week, thank you been to these are surprised markets by hiking rates. we are now dealing with a policy trade-off for g10 and emerging-market central banks in the fed is basically priced to

the point where they can cut once or not con at all or depending on who wins the election, whether or not they actually have to hike next year. policy shocks are usually risk off, good for the dollar. there is some cushion for the commodity exporters like brazil and some of the other countries, but it is very small and it is going to be marginal in terms of the context of whether or not these policy shocks driven by u.s. inflation, which is starting to accelerate relative to other currencies, is more bullish for the dollar. that is going to forced central bank to have the ability to cut to change their perspective and that changing of perspective is what tighten financial conditions and it is what changes the growth outlook for the next six to 12 months which can be mutually reinforcing it negative for risk and strong for the dollar. jonathan: fantastic to get your view on events overnight. rate cuts, a luxury that many central banks do not have right now. let's get you up to speed on stories elsewhere. annmarie: chinese president xi

will visit the european union for the first time in five years. next week he is going to visit france as well as hungary. there are visible tensions right now between europe and china for things like trade and spying allegations, but perhaps top of those tensions as beijing support for russia's invasion of ukraine. beijing is pushing to repair relations with the e.u. while leaders have become more assertive in responding to china's trade policies. senators are dismissing mike johnson's call to send the national guard to college campuses. johnson visited columbia university last week and condemned pro-palestinian protest and said that it would be appropriate for the national guard if demonstrations were not contained. both republican and democratic senators have dismissed the idea j.d. vance of ohio said maybe just call the police while tim kaine of virginia called it a very, very bad idea.

apple yet again facing antitrust headwinds in europe. this time it of the ipad that is going to be added to a list of products that fall under the digital market act. now apple has six months to comply with a whole set of new obligations and prohibitions. things like allowing ipad users to download apps outside of the apple store. it is a loss for apple but it underscores the willingness of e.u. officials to go after big tech already having taken aim at microsoft, meta, apple soft -- apple, amazon and bytedance. jonathan: up next, the fed changing tone. >> it is both a story about the economy holding a very well with high interest rate as well as an lesion being persistent in the case for fed easing is pretty small. jonathan: the federal reserve decision, today's away. that conversation up next. that conversation up next. of

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jonathan: equities posited by 0.2%. a lift again adding some weight to the rally from last week. yields are lower. under surveillance this morning, the fed's changing tone. >> it is both a story about the economy holding up very well the pie interest rates as well as an nation being persistent. the case for fed easing is pretty small anytime soon. we will see where we are six months from now but certainly the fed is going to have to change its tune about its view that there is a fair amount of easing coming down the road. jonathan: sticky inflation data reinforcing the higher for longer narrative at the fed kicks off a meeting tomorrow. stubborn inflation and resilient economic activity through the first few months of the year have left little reason to ease policy in the near term. we currently expect the fomc to

first cut the target rate by 25 basis points at a september meeting. before we get into the fed call, i want to talk about the data from last week. for all the talk of u.s. exceptionalism over the rest of the world, have exceptional was the first quarter in u.s. growth? >> welcome of the u.s. clearly grew faster than the rest of the world in the first quarter. we grew 1.6% annualized. i would say it was actually stronger than that. a lot of that was from inventories and imports and imports show that domestic demand is actually pretty strong here. but if you look around the rest -- rest of the world, maybe you are eking out positive with rates in the e.u., may be a positive growth rate in the united kingdom, but in general the u.s. is outpacing its major trading proctors -- partners. jonathan: how commendable was that with the rest of the data we had for the first quarter? >> it comes down to inventory.

a fairly large inventory drag. if you look at net exports, that was close to a half percent as well. if you dig down a little bit further, consumer spending grew 2.5%, a solid growth rate. if you look at the underlying core of the u.s. economy right now, growth in those main drivers of of gdp growth is pretty strong. jonathan: let's dig into your fed call. we had a lot of characters around this table who said september is not will bill because it is too close to the election. why are you running with september? >> the risk to that view of september will probably scoot to the backside. toward the end of the year. i certainly acknowledge that. but between now and then you will get three more payroll prints as well.

could they cut rates in september? if things are slowing down enough, yes. does the election just freeze september? no, the fed would prefer not to be moving, but if you do see a significant deceleration in the economy, if you do see the three-month annualized rate of inflation coming back down to 2%, you could potentially see a rate cut in september. lori: one question for you is what really gives you the confidence that the inflation data is going to cooperate by september to give the fed permission to go ahead and cut? and number two, when thinking about the potential for the hike conversation to come back in, how bad with the inflation data have to be for that conversation to pick back up in markets again? >> i'll take the second question first. i think what you would need to see for rate hikes to come back on the table, you would need to see a continued string of 0.3-0.4 in terms of the month over month change in the core

pce. that would show you that inflation is just not coming back down to the target that the fed is looking for. i think that is what you kind of need. what are we looking for going forward? the data would show this, that if you look at housing prices, housing prices continue to decelerate at least in terms of what you are actually seeing out there in the real market, we think that will come down. the labor market is also getting into better balance in terms of supply and band. the rate is back below where it was before the pandemic. the vacancy rate is also coming back down to where it was before the pandemic. as the labor market gets into better balance, that should slow the rate of wage growth and then that brings back down the super of inflation. so that is kind of what we are looking for in terms of that easing later this year. annmarie: you say the election doesn't make september unmanageable, but what about november?

could they, two days after the election come out and do something in november? >> again, that is kind of tricky. if they are on pause in september they are going to get a lot of pushback from one side. if two days after the election they are cutting rates, they are going to get a lot of pushback saying these guys just held rates in september to help one side. the election does complicate things for them but if you go back and you look at in other election years, they have moved before on the eve of and election. it doesn't rule it out. it complicates what they are trying to do but it doesn't necessarily rule out a rate move in september. jonathan: just on the politics, a report last week that the former president and the team around him reportedly considering how to be a little bit more assertive around central bank decisions. i wonder what your response to

that actually was. do you know how that would work in practice? >> i guess i don't fully understand the question, but what you were alluding to is i think there will potentially be more political pressure on the fed if the former is reelected. when you put some political fashion on the breadth of -- fed before, you can imagine that going forward as well. jonathan: you answer the question in the spirit in which it was intended. appreciated following that wall street journal report just last week. what did you make of that? annmarie: a note over the weekend saying forget about it because when it comes to the central bank, the fed, monetary policy is congress's job to mandate and to give that to the central bank to look at the dual mandate has nothing to do with the president. but of course, when you look at who is potentially going to be around the president, you could have some sort of initiatives that would potentially make it a

path forward. they want a weaker dollar in terms of exports, but nothing at least that terry haynes says congress will be able to do to give that authority to the president. jonathan: i'm guessing he knew exactly what i meant. annmarie mentioned earlier should the fed be guided by the economic data or guided by the communication we're getting from corporate america? can we finish on this quote from walmart? we are now seeing prices in line with where they were 12 months ago. i haven't been able to say that for a few years now. we've heard echoes of that coming out of the company. annmarie: i just feel like the inflation commentary is a little hot and when it was in the last season are not even halfway through this yet. i do feel like it is just a more mixed, more nuanced conversation. companies last quarter seemed to really do a good job keeping expectations in line and talking things down.

i'm not noticing that this time around and we've actually seen the bottom of consensus has moved up, so we will see if that continues but i feel like they've done a good job planting down expectations. jonathan: big story later this week, amazon coming up tomorrow. apple on thursday. let's set up the second hour of bloomberg. we will catch up with --, the latest with tesla. looking ahead to earnings this week including amazon tomorrow and we will catch up with franklin templeton. equity figures posited by 0.2% on the s&p. live from new york city, this is bloomberg.

♪ >> vstoxx are starting to -- the stocks are starting to get a little slushy. >> i think the valuations are fair as we go through the rest of the year, we need to continue to deliver. >> the risk for equities is less about earnings and more about valuations. >> we see more value, being able to find opportunities in the u.s. >> they of good news priced into big tech companies. this is a chance to show me what the rest of 2024 will look like and then we go from there. >> this is "bloomberg surveillance."

jonathan: two more trading days before we kick off may. absolutely bruising. we kick off last week, the biggest week of gains on the s&p 500 of the year so far, and i remember the big headline from the week before. we have been absolutely everywhere, and we will be everywhere this week as well. we have earnings data at a big federal reserve decision -- and a big federal reserve decision. wednesday, federal reserve rate decision. amazon tomorrow. apple earnings on thursday. down most of this year. big trouble in china. friday, the payrolls report. 250,000. this morning before we get to all of those events, we need to talk about not the equity market, not the bond market, but foreign-exchange. dollar-yen overnight all over the place. so let me give you the range.

high of the session, 160.17. low of the session, 154.54. current price, 155. this is the official line, no comment. that is the official line. japan's financial authorities intervened in the fx market so we had a public holiday, low liquidity. yen has been bullied all month. it looks like the ministry of finance stepped in. if you went over the price action in equities market, we are up by 0.2% on the s&p 500. in the event of a left. in the bond market, yields are lower -- a little bit of a left, and in the bond market, yields -- a little bit of a lift, and in the bond market, yields are lower. coming up this hour, we will catch up with jay pelosky on why the dollar could be right for a selloff -- ripe for a selloff,

tom forte on why this will be a sure and shallow rate cut cycle. we begin about a fed decision, jampacked data, and a u.s. jobs report to wash it all down. jay pelosky writing this, we remain constructive on the fundamentals for the u.s. and global economy. we are developing a line of thinking on the dollar that suggests it could be ripe for a momentum selloff. jay is with us and joins us around the table. jay: good morning. jonathan: let's start there. that sounds like peak u.s. exceptionalism. is that what it is? jay: that is kind of what it is. you read about the wrecking ball of the dollar and how strong the dollar has been and yet the reality is that over the last six months the dollar is actually down 1%. you look over the last year, the dollar is up less than 4%. so the dollar-yen is a one-off

situation, the extreme because it is the most extreme interest-rate differential. interest rates in japan, virtually zero. interest rates in the u.s., 5%. that is where people will play the game. the rest of the world is nowhere near as extreme as that. our view is the rest of the world is starting to recover. the u.s. already had its peak exceptionalism. it was last year. this year going forward, the rest of the world recovers. china is growing at 5%. europe is actually escaping recession. japan is doing well. and therefore we think like big tech, there was that momentum run. they all ran, the magnificent seven, and then they roll over very hard and very fast. nvidia down 20% in less than a month, the poster child for ai. for us, the dollar is ripe for the selloff. you have the longest speculative position, five years, in the dollar. biggest long position in five years.

you have the ecb getting ready to cut rates, the fed not ready to cut rates, and what we are looking for is kind of the catalyst, right? what will be the tell, the signal? we are setting the story up with the comment we wrote on friday. the tell could be the ecb cuts and instead of the euro falling, and rallies. that suggests -- falling, it rallies, and that suggests growth. therefore, the dollar could fall off hard. instead of talking about 106 to the dollar in dxy, it could break more and therefore break 100. that could be significant for us because we are long emerging markets and commodities. a weak dollar is very supportive of both of those assets. jonathan: lots to unpack. let's start with europe. i am seeing echoes of that, particularly jp morgan. we continue to see an improved relative risk-reward for equities versus the u.s.

would look to have as the next step and upgrade of the eurozone versus the u.s. to an outright overweight, so people are starting to pay attention to this theme. what is it we learn from the downdraft of the last month on how well priced the negativity already is? jay: certainly when we think about that, we look to china, and china has been the epicenter. we talked about it on this show before. pro tip, when you hear on investable, you go along -- not investable, you go long. we talked about that through things like k web and elsewhere. when you think about europe, what is interesting to us is people always make this mistake. they focus on gdp and not earnings. stocks move off of earnings, not gdp. if they moved off gdp, china would be the best performing market in the world because it has been the fastest growing economy, and that has absolutely not been the case.

in europe, companies have been doing well. a big part of europe's equity market actually generates its revenue and profits from outside of europe. to us, the opportunity is in europe. we are long there. european banks, you and i have gone back years, but they have been massive outperformer is here. massive outperformers. you have to recognize that. japan, china, emerging markets, to us, there is a lot of opportunity in the world. annmarie: you say go long in china, but how long? jay: china has the best risk-reward of any markets out there. the negativity is priced in, none of the upside is priced in. k web is the perfect example. 10 times the united states, growing 15%, the stocks are trading at a 40% discount to the u.s. equivalents. caitlin could double from 26 -- k web could double from 26, 28

to 50 whatever and then double again to over 100. the 2021 high was $102. it is at $28. as i said, it could double and double again so the upside is dramatic. jonathan: u.s. firms having trouble in china like tesla and apple. your original take on what is happening for chinese firms in china, you are basically saying they have the whole market to dominate themselves. is that starting to work? jay: you remember it better than i do. that is my life story and you remember it better than me. thank you very much. but yes, absolutely right. we call it the two tech stack divide. basically, the u.s. and china are walling off their tech stacks from each other and that is a negative for chinese stocks because they will not be able to participate here. they have not yet caught onto

the reality that that means china companies will dominate that e-commerce market we just talked about, which is growing, it is twice as big as the united states. it will only be available to chinese companies. and apple is the u.s. poster child of what that means for u.s. companies because apple is very dependent on china. jonathan: positive for chinese firms, negative for u.s. firms? jay: yes. china, the biggest growth story in the world and the biggest and fastest growing region in the world, which is southeast asia, which china is moving to dominate economically. u.s. companies will have much less of an area of opportunity. jonathan: the commodities, we need to talk about that. it is not the diamonds. the new diamonds, what does that tell me about the future in this trade of copper and how you want to get exposed into this? jay: we have been long copper, very bullish. bullish commodities.

we have double overweight commodities on our multi-asset flagship portfolio, and we play it through the copper etf. it has been a monster and is breaking out, and i think it will continue to do well because, look, another theme we are starting to develop, there is so much going on. so rich in opportunity to talk about things in investment age. right? one of the ages is ai. you look at the spending of alphabet and microsoft last week in the $45 billion each on ai. the other is on the home infrastructure in clean energy and renewable electric vehicles, and that is copper, and that is commodities. to us, that investment age we see rolling out really supports our multi-year positive view. we have a view that 2023 to 2027 is going to be a blue sky global macro period. this investment buildout we are

hearing from companies is really going to underpin that and support that so that makes us more bullish and makes us want to be long. the pick and shovel of ai, which we talked about. and long commodities, physical commodities. so it is really semis and copper. jonathan: i want to talk about the actual picks and shovels, the last 15 years in metals and mining, which you know well, but it is worth going over again. china is booming to everyone digs a hole and keeps digging holes. we see that repeatedly, and then comes the best. we have had big deals. everything starts to move south, and it becomes really reluctant to invest. i remember the former ceo would come on the program and say, now is the time for value over volume. these guys have not been building the mines. they have been reluctant to for

a long time but we will be back into the stage where they do that or will they be reluctant? jay: there is some of that and you are seeing consolidation first, and the winners will make the decisions on where to build the hole, dig the hole. to us, it is a supply and demand. you are touching on the supply side. supply is constrained because there has not been investment in mining in a decade. these are not projects you turn on. you don't turn them on in a week. years. it takes years from planning to implementation to providing supply. so that is the supply side. and then you have the demand side where copper demand and demand for other metals and minerals is growing in part because we are reshaping the entire energy system of the globe. and so these two things together we think are massive. you have had interesting checkouts. you talk about the shakeout in

the mining. on the other side, on the renewable side with ev's. you touched on tesla. the solar companies, the wind companies. we are in that space because our other model is eight the magic model so future tech and climate are the two big drivers. that climate segment has been really, really tough the last couple years in part because of the interest rate, infrastructure, etc. that could pick up significantly at a time when supply is constrained, and we know what happens. what brings the two together? price. price. and so for us, we think that 10,000 on copper is not the end of the story. jonathan: jay will be sticking with us through the next hour or so. let's give an update on stories elsewhere with dani burger. dani: u.s. secretary of state antony blinken arrived in saudi arabia this morning, his first

stop on another round of visits in the middle east. the u.s. is expected to push for a truce in gaza in exchange for the release of hostages. an israeli official says if a deal is reached, it will hold off the invasion of rafah. is expected to meet with representatives of other countries while in saudi arabia and then go to israel and jordan. apple facing more antitrust headwinds in europe. now the ipad has been added to a list of products that have fallen under the eu digital market act meaning apple has six months to comply with a full set of new obligations and prohibitions like allowing ipad users to download apps outside of the apple store. it is a clear loss for apple but also underscores the willingness of eu officials to go after big tech. i was told earlier this morning is not clear the sector can outperform now with the growing scrutiny. it has been a tough go for mckenzie employees after the firm cut hundreds of jobs and thousands more at the

performance needs improvement, but at an event in april, bob said now is a turn the page moment. according to sources, the event was held in copenhagen. the best part was probably the musical soundtrack that included songs by eminem and bob marley. i am not sure what is more motivational than tubthumping. jonathan: we needed that. a potential game changer for tesla, that conversation around the corner. that stock higher by almost 10% in the free market. from new york this morning, good morning. ♪

jonathan: this is what it is all about, a week full of fed risks. lisa back with us tomorrow morning. equity futures posited by 0.1% on the s&p 500. you like that. you cannot speak. jay: [laughter] jonathan: under surveillance this morning, a potential game changer for tesla. >> i think long-term, china, to pursue natural brands. apple and nike are feeling that. tesla ultimately will feel that as well. i don't think tesla will be a top three or potentially even a top four brand in the future in

china. for now, musk is playing the game in the short run and let's see how things develop. jonathan: shares of tesla driving higher as elon musk's surprise visit to china appears to pay off. tesla will partner with the company for mapping and navigation functions. tesla also passing a key data security and privacy requirement, which could have the company tickets offered to cars in the chinese market. appreciate our guest jumping in front of a camera for us to break this down. how big of a deal do you think this could be? >> a watershed moment. this is three years in the making tesla is trying, and this unlocks a golden opportunity not just for tesla in china but globally, it is a game changer in my opinion. jonathan: that is what i wanted your view on. china is one thing. what about the united states?

dan: it is important because is is -- because it is also a shot across the bow. it shows what is happening in china. from a miles run perspective, from a data perspective, china is the golden goose. so this is the mysteriously advanced -- and musk knew that. that is why he did this trip, a surprise one. a surprise in a good way to investors, long time in the making. it is a trophy case moment for elon musk to come back from beijing. jay: jay pelosky here, really enjoy your work. when you say game changer, global game changer, what exactly do you mean? does this mean the robo taxi is coming sooner? does this accelerate the process? what is the game changing nature of this particular move? dan: that is a great question. autonomous fsd, when you talk

about the golden vision, it cannot happen without china. so this is the missing piece in the puzzle. the fact that they got this clearance from beijing, that is why it is important in terms of longer-term what tesla can achieve not just in china but globally when it comes to fsd, and i think this is just a start. this is a win for the chinese company as well. it is not just talk, but walking the walk. i think it is a historical moment for tesla in its fsd efforts. jay: if i can follow up on that, we have a thesis at dpw advisory -- tpw advisory where china and the u.s. are isolating their tech stacks and that creates a lot of opportunity within china tech. i am wondering how you think about that. you said this obviously benefits

the chinese company as well. what about china tech versus u.s. tech? dan: right now, u.s. tech is ahead of china tech. when we talk about ai, tesla is trying to thread the needle, take that technology to be able to use that globally, and i think it comes to there are only two companies in terms of china-u.s.. it is cook and coopertino for one. this is a huge win for elon musk to come in, come out with fsd approval. jonathan: apple, china not a top to smartphone player. the point jay is making is the chinese market will be dominated by chinese brands. why is he wrong? dan: because you have the best part of the world, consumers --

because you make the best products in the world, consumers will buy them. i think we will start to see that thursday in the report. betting against apple in china has been the wrong move. 220 million iphones there. that growth opportunity will be on the rise. jonathan: the wrong move but the chart has been paid this year. we are down 12% year-to-date, and china has been a feature of that. this came out from bernstein this morning, that apple has derated significantly. fears that apple's china business is structurally impaired. what are you looking for? dan: near-term, that has been the right move in terms of the shorts, but it is like betting against brunson in one game. it might be a good move for one

game, but long-term, it is not. it is about option when that growth is go into september, what we are seeing in china, and this sets up for ai, and that is what i believe will be the massive drum roll of the coming months. jay: dan, it is jay again. what about the case for ai opportunity in china? do you look at any of the chinese companies that you want to pair almost like a global pair trade? you have apple, tesla, those are the two u.s. companies that have opportunity in china. what about on the chinese side? dan: alibaba. in my opinion, that is the play in china from a cloud perspective. everything they are doing, similar almost to a microsoft, google, amazon. what they are doing on the cloud, that is in my opinion probably the best china cloud when we look at beijing. jonathan: dan, love it. we will catch up later this week

with the earnings report on thursday. here is the argument you are making, chinese market dominated by chinese firms. the argument dan is making is u.s. companies make the best technology and consumers will buy it. why is he wrong? jay: i think china is trying to catch up. he is not wrong today. the issue is we are price for that. talk about alibaba, which trades at eight times earnings. eight. apple after the trading does not close to -- does not trade close to eight times. it will go up that curve because there is a national policy for chinese companies to be dominant players in this space. and he has been right about apple being able to thread the needle in china. i think that area or opportunity is getting narrower and narrower. when china feels like it does not need apple to thread that needle, apple will not be able to thread that needle.

for now, i am buying the cheap alibaba play, where it has dramatic upside, and thinking that over time it will dominate more and more of that chinese market. jonathan: jay pelosky of tpw sticking with us. coming up big tech earnings continue this week for two companies with very different fortunes so far this week. tom forte joins us next to preview apple and amazon. in the bond market, your 10 year yield at 4.62. for the dollar-yen

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jonathan: two days left of the month of april with equity so far this month this -- this morning up a quarter of 1% on the s&p 500. we are heading for the worst month for the s&p 500 since september. it's been a choppy month but it's been a very aggressive rally. we are down this month by something like 3% and last was big week of gains, the biggest of the year so far is chipping away at the losses for april. let's do some work in the bond market on the two-year, the 10 year. the 10 year around 460 after breaking through 470 last week.

we've added a lot of weight to the yield over the last few weeks. still up by more than 40 basis points on the 10 year and up by something like 30 or 35 basis points through the month so far. that's meant a strong year so far. that's down to the japanese yen which is crushing, dollar-yen through one dollar safety sensor earlier. there was some intervention we will talk about that in a moment. a key week ahead for the u.s. economy in the fed will keep rates on hold wednesday with all eyes on fed chair jay powell news conference. when the fed might cover rate cuts. the jobs report comes out this week with the protection of 250,000. how good does the fed feel? we work to money issues and have not talked about the federal reserve. what does that tell you? >> it tells me it's not that

important. the fed is in the rearview mirror and we are focused on other things whether they cut in september or november or december is not important. we are willing to trade rate cuts for earnings growth. that's the trade we are making. earnings growth is accelerating and stocks will be perfectly fine as long as that continues. jonathan: was last week evidence of that? >> yes, indeed. we've raised -- rates are at six-month highs and stocks empowered ahead. we've had a pullback in april but that's perfectly natural and healthy. it's a feature to have a pullback every once in a while. jonathan: there is a focus on small caps and the moves on mega caps stocks in america reflect that. is 10 percent the new 1% for mega cap tech? let's go through the swings. we started with nvidia two

fridays ago i nothing, 10% move lower and then last week, we get tesla numbers come out 10% with a $500 billion growth. google, 10% move on friday, what's that about? >> i think people have the same kind of technical levels there watching in the market is increasingly controlled by algorithmic trading. it's just an air pocket, there is no other side anymore, everybody hits everything at the same time and that's why you have the momentum trade and people are still confused about where we are going with the economy and the fed, etc.. is very much a trend following market. when that momentum and's and everybody says we are out of here. to us that's great and healthy and we don't want things to go to this guy because they never go to the sky. we like pullbacks.

as long-term investors, we think the opportunity is in things like some of these tech names particularly the semis. our view is the ai ages real. it's creating an investment age. the things i took away from last week was that google and microsoft both said they were going to spend 45 billion dollars or more on ai. that's two companies and that's $90 billion. to us, the semis are a no-brainer for buy and hold and go through these many blips, not a problem. jonathan: also picks and shovels. let's talk about air pockets in foreign exchange. we are talking about levels and effects we haven't seen since the early 1990's. the yen weakening overnight and then rebounding strongly. what happened? the dow jones reported the financial authorities intervened to support japan's currency.

the country's top currency official said he had no comment. what's the signal you take from this move? >> it's not important. the real story -- i will toss it back to you. what do you think fair value is on the yen? jonathan: no idea. >> under 100. that's what foreign-exchange strategists say when you ask about fair value and what's the real effective exchange rate and what should be, they say under 100. the dollar-yen is at an extreme position. it represents the widest spread in the interest rate world were japanese rates are close to zero in u.s. rates are at 5%. this view should not be taken as a signal as to where the dollar is or is going. it's a false signal because it reflects the unique characteristics of the japanese

-u.s. relationship on the rates side. it does not translate into the rest of the world. i think this is setting up something we are starting to pay attention to, the potential for the dollar to roll over. there is almost a momentum affect like what we see with tech stocks. jonathan: you mentioned the euro earlier so why is it may be going to be a better example of that? >> in part, people talk about it should be at parity. it's not at parity and this is after you had germany suppose it economic engine of europe really struggling. europe is interesting because the growth is in the periphery, not in the core. the growth is in spain, portugal, greece and italy. you would be really concerned about the rate spread between the italian bonds in the german bonds. nobody talks about that anymore because everyone is doing fine.

yet the euro doesn't want to go to parity. the euro is fine at $1.06. to us, that suggests the bad news in the past that we are moving out of the recession and germany's picking up and as china continues to improve, the rest of the world improves. europe will improve its well -- as well in the trade side like the united states, they have full employment. full employment means consumption and consumption means the economy will not go into a big decline. the euro is likely not going into a big decline. the set up is that the ecb will cut rates in june and most people would say that should be euro negative because it will widen the rate differential. our view is it could be euro positive because it suggests the central bank is now underwriting the growth recovery. if that's the case, we will look for the dollar to really take a bit of a tumble, maybe more than

a little bit if that ends up being the case. that's what we're watching now. jonathan: $1.07 on the euro. we will get cpi out of germany in 30 minutes time. amazon is due tomorrow and apple will follow thursday. amazon stock is up this year on the back of strong growth for web services and its prime membership. there is a buy rating on the stock at $2.18. let's talk about the numbers and last week and how it might affect things. is the bar a little bit higher for amazon tomorrow? >> the strength in the computing results for microsoft from google has been more optimistic at aws. you are seeing a lot of

enterprise interest in artificial intelligence. this has been the positive. global microeconomic we think -- weakness has been negative so last year, use some of the slowest growth you've ever seen from aws. google's comments, microsoft comments on cloud computing revenue, i would be more optimistic than i was last week. jonathan: what tell you they were just getting a bigger slice of the pie and taking it from amazon? maybe the pie was getting bigger? >> for microsoft, i think they are taking share from amazon. part of what you are seeing is that enterprise interest in artificial intelligence is starting to have a positive impact on cloud computing revenue but i think microsoft is taking share from amazon which is a big challenge for amazon. jonathan: let's talk about another challenge which is e-commerce for amazon. what is going on with things like prime? they typically sign-up to prime and they hope they can forget about it for the rest of the year if they pay annually.

every single week, there is a new charge for an extra something that i used to get for free before. what is happening with amazon? >> i spin that positively. when andy jackson took over from jeff bezos in july, 21, he started implementing his vision for amazon. his vision as the creator of -- of aws is amazon the services company. what you are seeing is amazon is more interested in selling services to enterprises via the cloud. higher margin revenue can have a positive impact on multiples and the stock but as prime members, i've been a prime member since the late 90's, you are seeing an incremental cost which is more expensive to be a prime member. they've rolled out advertising now and if you don't want to see the ads come you have to pay in incremental increase but is part

of amazon is a higher-margin services company which should be good for the stock but may not be good for prime members. jonathan: the vision going forward, will we have another conversation about spinning it off? >> only if they have two. when you compare and contrast antitrust lawsuits for big tech, the big news for amazon investors as we believe the parts for amazon in the event they were forced to divest aws will indicate where the stock is trading. the good news is if they have two, it could be a good news for investors. jonathan: let's reflect on last week briefly. i'm obsessed with the direction of meta-even with big moves off the back of the spend. underlying numbers were really decent and the spend is really solid and you saw that at google and youtube. what is those trends and is it durable for the year ahead?

>> the goodness for advertisers in general is that it's an election year so they should have an increase in ad spend because it's a presidential election year. the other good news is you are starting to see the signs of the digital advertising improving and suggesting the economy is holding up that are than expected. that's good news for digital advertising companies. jonathan: we appreciate the update, thank you. looking forward to the numbers tomorrow. looking ahead to amazon tomorrow and apple thursday. here is your bloomberg brief. dani: a paramount takeover deal is hanging in the balance. sources have told bloomberg that the redstone family which controls a majority of shares and david ellison of sky dancer boat making concessions and appeals to the companies other investors. ellison is offering to buy a block of paramount shares at a premium. his bid is described as the best and final offer. the board remains undecided about the sky dance takeover.

the cfo could be ousted as soon as today by management committee. the bidding war continues. lax on his maiden nude offer for a song fun for $1.6 billion surpassing arrival fund bid. if successful, means blackstone will gain access rate to a catalog of artist including shakira and the red hot chili peppers. the board supports the new offer in the company's been trying to turn music into something like a mainstream asset class but higher rates have been slicing into valuations. major league baseball plans to address issues with its uniform after complaints about changes they made this spring. he has fan reports the mlb will return to larger lettering on the back of jerseys. they will address the nike jersey propensity to collect sweat. in a memo, the players association said nike was innovating something that didn't need to be innovated but the

players left to wait until the start of next year's season for the new kids. that's your bloomberg brief. jonathan: thank you. nike not in a good spot now. up next, a second shot in fixed income. >> only three months ago, investors got into the fixed income rally. maybe they missed all of it. now they have a second chance. jonathan: franklin templeton joining is next on the program capping you dance with federal reserve decision on wednesday in a payrolls report friday. live from new york, this is bloomberg. ♪

jonathan: equities on the s&p 500 are higher, positive by a quarter of 1%. it will be a very -- a very busy week with yields lower by four

basis points. a second chance in fixed income. >> at some point, the market will recognize that you can't keep rates up forever in the fed will start to cut and you will have a massive rally. only three months ago, we were answering questions from investors that if they mix the fixed income rally. now they are getting a second chance. jonathan: treasury yields are holding steady at of wednesday's fed decision. traders are pushing rate cuts on sticky inflation data and resilient u.s. economy. franklin templeton expects cuts to start in september at the earliest. let's start the journey with wednesday. it's great to catch up with you as always, what are you looking

for from chairman pal in a press conference? >> i think it will be the usual. unfortunately, chairman powell has a difficult time sticking with a hawkish tone. i wouldn't be surprised to be turned a little bit dovish. maybe they will cut sooner but this is a pretty robust economy. we are looking at a strong labor market, decent wage growth, decent productivity gains in the underlying gdp data last week was pretty darn strong. inflation is sticky, there is very little room for the fed to be particularly dovish or quick in terms of rate cuts. jonathan: they thought they were on a journey directly toward 2% and maybe cutting interest rates in the market thought it was. they could -- they talked about

cutting interest rates as soon as march but are these bumps in the road? have they changed course? >> if they are bumps on the road, it's a pretty bumpy road and it's a long one. i don't think these are just bumps in the road. what you are seeing is genuine stickiness in inflation and it's coming from a lot of misreading of what went on in the post-covidperio where everyone assumedd sleep for an extended time. there was so much fiscal expansion during that period and we can sit -- and we continue to see the impact today. it will be a long time before we see inflation going back to 2%. >> we were talking earlier before we went live about what one should own bonds or by bonds. we are very underweight treasuries. you talked about strong growth and that's the reason why we are

underweight. strong growth is not really constructive or treasuries. what would be the case if you could make the case for buying bonds at these levels? what level would you suggest people should get long bonds? >> it's fair what you are saying. on the other hand, i would say that most institutional investors and retail investors are massively underweight bonds. i'm not suggesting going massively long. we were short and we went neutral over the last several months. i would say that that range on talking about in anticipation of a rate cutting cycle will be shallow and i don't anticipate this will be the rally to end all rallies. at some point, i see diversifying fixed income which plays a diversification role in portfolios. i think that's really the case to be made.

when i talk about it being shallow, the reason is over the longer-term, it is inevitable almost that we see treasuries moving systematically higher for a while. we might see them come down and don't expect them to rally down to 2%. i don't expect the fed cuts to take us to 2%. certainly treasuries will not rally anywhere close to what we've seen in the last 15 years. but then we will start seeing what comes from the fiscal pressures which will go on for several years i would anticipate. it's a short cutting cycle and i think that's important to think that. >> i would agree with that. what about credit versus treasuries. can you touch on the fiscal pressure? you are correct that people are very much underestimating the power of the fiscal side of things because we been used to monetary policy driving everything since the great financial crisis. help me understand the view

between credit in the u.s. or globally versus treasuries in this idea of fiscal. how much of a window do we have between a rally in bonds between the fiscal test before the fiscal pressure manifests? >> on credit, the reality is, credit yields will still give you seven point 5% until you can find pockets of value there. it's somewhat attractive. and spread terms, we are looking at tight spreads. the case can be made reasonably and i'm sure you would make this that we are looking at corporate's in better financial hey -- health and they have been historically. i think credit deftly has a space in this despite how tight it is from an all in perspective, there is room for some credit and portfolios. the second point you are making which is when does the fiscal

acts fall? we have begun to see it periodically when the market focuses on the fact that we are looking at 6% of gdp plus deficits in forward-looking. this is probably conservative in the event we have a split congress at the end of the next set of elections. doesn't matter who wins as long as you have a split congress, you're unlikely to see much fiscal consolidation. that i think is important fact but i don't think it happens not necessarily this year. we will see fiscal spending, that's a given but i think you will continue to see that. when they drop that ask, we will see more of a buyer's strike and as we see long and yields move higher and higher, i think the u.s. will be forced to do a certain amount of fiscal consolidation. until we see that, i don't see

that consolidation happening and treasury yields absolutely can go higher than 5% in that scenario. jonathan: is that a challenge to treasuries as they diversified? you think about where the deficit is now and typically that's when you buy treasuries. will that be a challenge to them? >> i think there is a challenge to that. right now, the growth of the economy is something that we all have to be really grateful for. right now, they're not that many silver bullets, certainly not on fiscal and very few on the monetary side. the fact that they are continuing to grow is the one somewhat saving grace here. the fact that it continues to grow also indicates very clearly that fiscal and monetary policy are tight. jonathan: thank you, big questions for the news conference for chairman powell later this week. what do you make of that point? >> that was a well reasoned argument about how to think

about things, not black-and-white but nuanced. jonathan: does that concern you? >> fiscal's been opposed to the economy and a real supportive health with the u.s. exceptionalism. going forward, i think it becomes a challenge particularly on the fixed income side. those are some of the things that strike us. the imf meetings last week, we touched on them a couple of weeks ago. 82% of those surveyed expect a stronger dollar. fiscal pressures, the u.s. buyer's strike, it could really get going on itself a little bit where the dollar goes the other way. it's set up to do that based on the fact that speculators have the biggest net long position in the last five years. there is something to that i think. jonathan: as treasuries as a diversifier, can you walk us through what you're diversifier is? what works?

>> the diversifier right now been commodities. they had a negative correlation with the s&p 500. they sailed through this many correction. our benchmark is goldman sachs commodity. 50, 40, 10. we have an overweight in equities and overweight in commodities and underweight and treasuries because we are progrowth. being progrowth, we don't see the case for treasuries. we want to hedge that risk exposure. jonathan: this was awesome, let's do it again soon. >> hopefully, you'll be able to speak next time. jonathan: p jeloski, coming up next, alpine saks. a big week ahead, from new york, this is bloomberg. ♪

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>> inflation is not coming down as fast as we expected. >> inflation has stopped going down. it is stalled at a level that is uncomfortable for the fed. >> they are going to want to be more patient. inflation will be top of mind.

>> the clear narrative is higher for longer. >> you cannot keep rates up here forever. the fed start to cut, and you will have a massive rally. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: fantastic start of the week so far. the third hour of "bloomberg surveillance" continues this morning. jay pelosky talking about u.s. exceptionalism. we reflect it on megacap behavior in small caps. a monster week ahead for you. it looks something like this. tomorrow, after the closing bell, numbers from amazon. wednesday, you will hear from chairman powell in a news conference at 2:30 eastern time. the fed decision in the middle of this week. thursday, apple, very challenged stocks. challenge in china care then onto friday, the payrolls.

the bond market into all of that, the two-year, 10 year, 30 year looks like the following. very close to 5% on the two-year, four .97%. up more than 30 on the month so far. 10 year down five basis points on the session come up by 40 something in april at the moment. 4.6156 on the u.s. 10 year. coming up, we will catch up with sarah hunt of alpine woods, following best week of gains or far in the s&p 500. we will speak with stephanie roth of wolfe research. and bloomberg's ed ludlow previewing amazon and apple earnings. stocks rallying on earnings optimism ahead of the fed's two day meeting. sarah hunt of alpine saying there are plenty unknowns -- the market may end up more dependent on earnings than usual. if earnings can live up to or exceed expectations, that may not be a bad thing. sarah joins us now.

you say earnings seasons saved are just two names last week. is that it? sarah: it is more of the theme. the two names are the moans -- are the ones that most encapsulate the theme of ai. they need to show there is big growth there, profitability there, and they needed to show there is more investment there. you can even add meta to that. even though there was some disappointment on the capex that was not ai related, the fact they are talking about spending so much money there is really important. had that not occurred, this is what the market was hanging on. you had a huge rally from september of last year and a huge rally in the first quarter. if he did not see that come through, -- if you did not see that come through, there will be more volatility. jonathan: meta spends a lot, and the stock. punished. amazon and microsoft is something similar and got rewarded. sarah: the big question is what meta is spending on.

the ai spent was not the problem, it was going back to the meta labs and how much spending is there and the discipline meta got when the stock at a real problem and said we will focus our spending in these ways and stop spending so much in what is more speculative but what is the future, i think that is creeping back in. and where the stock was. jonathan: mike wilson of morgan stanley was with us last week and was keen to point out which is the data is one thing. how the stock response is more important. what did you take from these big double-digit moves on uber cap big names. 10% on either direction. is 10% the new 1% for some of these tech firms? are you anticipating more of the same this week? sarah: i think there are some one-off reasons why those stocks moved so much. part of that was the texarkana moved so much in april. i think it was a huge relief,

because the concern was, if this does not go the way it is supposed to, these stocks are expensive, and can there earnings grow into their multiples? there's a lot of conversation about multiples. even those stocks with a surprise on the upside, why are they not higher? that is a lot of where you were. in particular, it was relief and this is great, because you are seeing growth, and growth is important for these stocks. annmarie: you say earnings season has been saved. what are you anticipating now? sarah: for apple, there are more one-off issues. you have the china issue. longer-term, i do not think there is a problem for apple, but shorter term, there is a reason it has not performed as well as others. let's see if aws can grow as much as you saw the cloud grow for microsoft. and amd, we want to see what the semi conductors say. i think those two giant

bellwethers, if it had gone poorly, it would have been a problem. saved forever, i do not know, but certainly, the beginning of april was not pretty, and we saw that reverse a little bit last week. jonathan: what is your read so far on the international cyclical story and the challenge from places like china? particularly for a multinational based in the united states that has to have that stronger dollar translated back in from that foreign currency? sarah: it certainly depends on the company and on the country. you have been talking all morning about the japan versus u.s. currency. has been a lot of other less severe movements and other currencies, and i think that we are still trying to grapple with how we came out of this pandemic, right? there is still not the normal playbook of x happens, y happens, recession happens -- that has not been what occurs. we are still trying to find out exactly what that means. jonathan: i think you're onto something really important.

when we come out of gf see, we are always looking for the federal reserve to hike interest rates. we have a lack of understanding about the current cycle, so we anticipate back to the previous one. we had false storm after false storm. then you had to wait another 12 months to get another one after that. do you thing that is what is going on now, lack of appreciation for every are currently, so we gravitate to what it used to like 32020? sarah: this is the whole question of where interest rates are going to go? are we going to pre-financial crisis, or are we normalizing and will go to low interest rates post financial crisis? if you think we are normalizing to pre-financial crisis levels, 5% is not insane. it was the speed people concerned about, and rightly so. there are still questions about commercial real estate. there are plenty of unknowns and questions that you can get worried about. the truth of the matter about 5% on the 10 year at 4.6 seven is

not insane. if we think about normalizing the idea we will cut all the way back to 2% or so much lower number, you have to wonder whether or not you cut back -- you cut back to some point but not more post financial crisis than pre-financial crisis. annmarie: you mention we are not out of the pandemic area. when you know we will be ahead of it? sarah: that is an outstanding question for which i do not have an answer. i think you start to see things react more like you expected them -- like the playbooks start to work again, and the things that are normally correlated correlate again, because we have such a hard correlations and so many things -- all these things move together when they usually do not, positive or negative. when you start to see some of those historical relationships and interest rates at a more historical level, those rignet, you can finally start looking at that. but what will that look like for commercial real estate, office? i do not know, because we are working three days in the office

and two days at home. there are some things that will stay. jonathan: and just for the record, we are working five and very happy about it. let's talk about sectors. we start with this big hope about a rotation. a lot of that in the month of march. then it has faded and faded so rapidly, hardly any guest brings that up on this program anymore. where are we now with that question? sarah: you have to have some sort of balance, because last year, it was all about big tech, and that is all that worked. this year, it is more about other things are working as well. but when big tech reasserts itself, people start to go right back into it. balance sheets are going to matter. sectors matter, but balance sheets will matter. utilities are the hot sector because of the fact that data centers and ai need so much electricity there will be ways this broadens out, but in terms of a wholesale shift away from technology, it is difficult for me to see why that would be sustainable, because the cash

generation is so insanely huge, and that is really important, and the growth is still there. it is about broadening and adding to as opposed to switching from. jonathan: banks have had a pretty decent run. if i think about what has performed well relative to how much talked about, this is hardly talked about -- the fact we have jpmorgan up 14%, goldman up double digits, citi up 20. even deutsche bank up 24%. what is supporting some of those banks at the moment? sarah: i think some of it was a catch up trade. these stocks have been absolutely brutalized. even though things were going ok, the idea was, if we are going to cut right -- cut rates, it will be better for banks. that story started to fade, and the bank started to perform not well. european banks have been under scrutiny for a long time, so it is a little bit of a non-spec. if europe is going to be ok, than the banking sector will be ok, and these stocks are really cheap. in the u.s., they are less extensive, but you have consolidation, so the bigger

bangs are doing better but the smaller, regional banks are still struggling. it is sort of the story in megacap's not just in tech across the sectors. jonathan: sarah hunt going to be sticking with us for the hour. i mentioned this earlier this morning. it interests me. we do not expect eurozone to directionally decouple from the u.s., but it is interesting that the s&p was down 5% to 6% in contrast to the euro stoxx the down only 3%. we continue to see an improved relative risk reward for european equities even in the event of further market weakness, and we look to an upgrade of the eurozone inset event outright overweight. those comments echoed by jay pelosky of tbw in the last hour as well. -- of tpw in the last hour as

well. let's give you an update. with your bloomberg brief, here is dani burger. dani: u.s. secretary of state antony blinken has arrived in saudi arabia, the first stop in another visit to the middle east. the u.s. is inspected to push for a truce in gaza in exchange for a release of hostages. if a deal has -- is reached, israel agreed to hold off on an invasion of rafah. blinken is expected to visit with representatives in riyadh before heading to israel and jordan. president xi jinping will visit france and hungary as well as serbia. there are heightened tensions with the e.u., from trade to spying allegations. e.u. members have also knocked beijing for supporting russia's invasion of ukraine. china is pushing to repair relations with the e.u. spotify's ceo is cashing in on

big gains from the stock rebound. he -- spotify is on the back of its biggest gain of almost two years. it swung to profit in the first quarter. michael dell, jeff bezos, mark zuckerberg, all of them have cut stakes in the companies they founded over the past few months. that is your brief. jonathan: thank you very much. more from dani burger in about 30 minutes. equities doing ok, up one quarter of 1%. some big moves in the japanese yen overnight. up next on the program, regulators take another bite out of apple. >> it is easy for europe to do a lot of regulation, where in the u.s. the technology sector plays a crucial role. i think the tide is turning a little bit here. jonathan: mandeep singh of "bloomberg intelligence"

weighing in on this story. that conversation on the other side. live from new york city this morning, good morning. ♪

jonathan: equities on the s&p 500 doing ok. starting on the s&p, positive by one quarter of 1%. a little bit of a lift following a big week of gains last week, the biggest weekly gain on the s&p 500, so far. we'll hear lots of that, less about that it followed the biggest loss in the year so far. and the worst month going although back to september. this rally has been a riproaring one since the end of october. yields lower by four basis points on the 10 year, 4.61 97. the big story in foreign exchange is this 1 -- if you're just tuning in care welcome. this move in the japanese yen is

the one we are talking about. through 1.60 for the first time since the early 1990's. all the way back down to as low as 154.54. at the moment, about 156. plenty of speculation about "ye n-tervention." japanese authorities saying no comment. the dow jones as they have. japan's official -- japan's authorities intervened last night. so that is where we are. a stronger japanese yen after a much weaker one. and regulators taking another bite out of apple. >> it is easier for europe to do a lot of regulation, where, in the u.s., the technology sector plays a crucial role for economic growth. i think u.s. technology companies will continue to thrive, it is just a different environment. a lot of scrutiny going forward,

and i am not so sure the technology megacap will continue to be an outperforming force in the market. jonathan: here is the latest. e.u. regulators giving apple six months to ensure the ipad ecosystem complies with its new digital markets act. bernstein recommending investors "buy the fear," with china concerns which they say are overdone. the stock up 2.52%. mandeep singh of "bloomberg intelligence" joins us around the table. what are you looking for from this big giant thursday? mandeep: to me, apple is always about the iphone shipments and the services revenue more and more, given that is a high margin revenue stream. in this case, everyone seems to think apple, china issues are overdone. to me, what really stands out is how well wally has -- how well huawei has done in terms of developing an alternative. as long as there is no alternative to the phone, we

could argue it is a very sticky product, but now there is an option in china, and i thing that is what stands out. jonathan: can we get to that word, "overdone"? overdone because it is not as bad as everyone things or because it is so well priced this year? mandeep: the 20% revenue stream you have, you have to model how much are they going to lose that share over the next two to three years? previously, people were modeling may be they will lose 1% of share. now we are talking the revenue disappearing over five years. that is a totally different assumption. if that plays out, clearly, that is not affected in the stock. sarah: when you say disappearing over the next five years, are you talking about the market moving so far away from apple that they are not selling as much in china at all? mandeep: yeah, and they obviously have to shift their supply chain for a that is the cost side. in terms of the revenue hit, now we are talking about tangible

competition that could actually take share. previously, that was not the case. i am not even bringing in the ai aspect. it is just the fact they have a domestic phone that is comparable in terms of features. that is a big deal. annmarie: how much of this is driven by policy coming from beijing versus actually demand in china? mandeep: again, i think it is hard to separate the two, simply because there is an outsized influence in terms of what goes on with the people's preferences in the region and how the government does have an influence. clearly, whatever the government date in preventing government employees from accessing the iphone did have a bearing in terms of that early step. now we are seeing that trickle down to the consumers. as long as they can provide all the features and the experience on the phone everyone is looking for, people will migrate, because that is coming from the government.

and they provide the infrastructure, the towers and everything, and they can make sure the domestic bones function better. sarah: so that could be a bigger problem than i think anyone is really anticipating. i also wonder, from the consumer standpoint, if you're going to see that much switching, just because of the brand consciousness, and what kind of analysis is going on in china about how huawei's position, because there is a luxury aspect to apple, so the idea it could go away completely -- i understand the functionality of it was less practical, but it is a little bit a lot to think that could just go away again entirely, given the brand aspect of apple and what that stands for. mandeep: you are right. there is a luxury aspect. people in china still buy the louis vuitton bags come up with all the preferences they have. there is that aspect. in terms of the phone, it is about the features and the data. the biggest lock-in apple had was it was hard to move the data

out of the iowa's ecosystem. if people are switching, moving to huawei phones, maybe that problem is solved. that is where the stickiness certainly gets questionable. jonathan: that is what i want to get into. can you talk to us about how that stickiness has been reduced in china, because they way they regulate the ecosystem and what china is allowed to do is so different compared to the u.s. and europe. can you go through the differences? mandeep: what we are seeing with a digital markets act is an example, where they are saying the gatekeeper companies shouldn't have an undue advantage with their default apps, should not just lock in their customers by virtue of holding all their data and letting -- not letting that data with out of the ecosystem -- jonathan: and that is already the case in china? mandeep: that is already the case in china. they have basically made sure app stores comply with their set of rules. and if you have to operate there, you have to let all these things happen. jonathan: what argument will have -- will apple have as the e.u. try to do the same thing? mandeep: they are complying, it

is just apple's pitch has always been, when you come to the apple marketplace, you get access to the most consumers. so if you are a company, a new app developer who wants maximum access, then you have to come to the apple app store, as opposed to going to an alternative app store. even if it charges less. you will not get those 500 million plus users you will get in the apple app store. annmarie: will the data risk security arguments work? mandeep: i think that is what will slow this down. even if you have an alternative app store, the fact that you downloaded an app will expose your operating system and data, why would you do that as a consumer? that is a powerful argument. for the companies offering the alternative app stores have to make sure that they -- they kind of ring that offering that consumers are convinced, so if it is the likes of netflix or amazon offering that alternative app store, then maybe it is a

powerful argument to say this is safe enough for me to download an app and keep using that app store, because i can save on that commission. sarah: i think this is going to end up being one of those things where experience is going to teach us what is going to happen, because it sounds like there's a lot of possibilities and there are a lot of reasons why you could say, yes, that works. it reminds me of economics in general, where here is a bunch of data sets, and we will ignore all the other stuff, and see how that plays out. but it sound like there is more threat there than the market places appreciating. mandeep: in the payments aspect of the fact that they will have a lot more alternative forms of payments -- everybody come as a developer, will try to save on that 3% payment cost, if you can try to get it lower, because apple has to allow alternative payment systems now. that is an easy substitution developers will look to make. jonathan: two more mag 7 names to come this week, the final mag 7 name at the end of may, i think on the 22nd, from nvidia.

what is the big takeaway so far? we have heard from meta, microsoft. mandeep: capex is going up, and it will go towards buying nvidia's chips. clearly, there is that insatiable demand. everyone called out the supply constraints. even microsoft said there are supply constraints. if a company with that sort of budget is saying that is supply country, that tells you something. jonathan: do you think the buffer in nvidia has gone higher? mandeep: it has, and it is reflected in the run up in stock last week. the next two quarters looks good for nvidia in terms of the demand. it is always about tougher comps. what you do after you are past these comps? it is a tougher bar. jonathan: are they just in the business of beat and raise, beat and raise. mandeep singh of "bloomberg intelligence." you will see plenty more of

mandeep this week. apple on thursday. may kicks off in two days. towards the end of may, we will hear from nvidia. this just in from goldman sachs -- fairview for friday, payrolls, 275,000 the estimate. the median is 250 thousand. much more still to come. we will catch up with stephanie roth of wolfe research. live from new york, good morning. ♪

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jonathan: 60 minutes away from the opening bell and equity futures are positive by 0.2%. the nasdaq is doing ok as well. small caps a been up and down and all around. the russell is just about positive by a quarter of 1%. egg moves in the bond market, up by more than 30 basis points on the front end of the curve. we're down by three on the session. we talked lots about payrolls and we will do more of that but the median estimate is 250,000 which is still pretty punchy considering everyone was looking

for a recession at the start of the year and looking for rate cuts to start by march. that didn't happen. in foreign exchange, big moves coming into the mode -- into the month word about one dollar 52 cents and you at $1.60 overnight. a big move lower, negative by 1.2% on the session so that's a stronger japanese yen and plenty of speculation and whether there was or wasn't intervention based on the ministry of finance which has control over the situation. i do not put any emphasis on the word control. they said no comment and dow jones said there was intervention based on their sources overnight. it sustainable? that's your judgment call. a paramount takeover deal is hanging in the balance, the ceo could be replaced as soon as today is the redstone family and independent film producer david ellison appealed to other investors. ellison is proposing to buy a

block of shares at a premium and the redstone's agreed to let nonvoting shareholders approve any transaction. sky dance bid is considered the best and final offer. talk about a mess, this stock is up by 5% in the premarket. annmarie: ellison is larry ellison son and it looks like potentially this deal could go through. the market is -- it's interesting the market is rising. the office of the ceo unit come all the divisions are running the company. jonathan: it's been a push back around this story as well. we will catch up in about 15 minutes time. elon musk securing a crucial partnership during a surprise visit this morning.

they are supporting self-driving and the partnership is helping tesla to clear to key hurdles in the biggest automobile market and passing a requirement in the stock is up by more than 12% in the premarket. sarah huntsman has been with us and will be with us for the next 30 minutes. we had this discussion earlier and the point was made about chinese trends dominating the market. tesla is a company we are talking about, up this morning. where you see the ability of u.s. firms competing in the chinese market effectively? how difficult will that be? sarah: i think it's quite difficult but i think with just what this demonstrates is 11 muska has an opportunity to say i want to do this because we've seen the clashes that it meant going on between the u.s. and china and is trying to put a foot on both sides and say have

got this technology and he had the premium brand in china and then the ev's and china started to get less expensive. this is a way to say i will change up this math for myself. jonathan: do you think there are some ceos that are better at this than others? sarah: you would hope for apple because they make so much product but what elon musk is doing is quite smart. he's saying i can bring it is functionality you don't have and use chinese technology to do it. i think that is -- he is a constant salesman as been able to explain to people that i can do this even with what's going on with the numbers. a lot of people were short tesla and a lot of people were worried about tesla and what he's done is he's thrown more information at you and said this will be great let's hope the numbers can

prove it out. jonathan: squeeze in the premarket, up by double digits. investors are looking ahead to a busy week. jay powell is expected to hold steady. u.s. data continues to run hot and we will run down payrolls friday. looking ahead to big events around the table. let's start with payrolls and skip the fed. 250 is an estimate so are you looking for a punchy number? >> we are but we are looking for a number which is arguably more important. a supply-side story. jonathan: how much weakening are begetting? >> if you look at the cbo numbers where they were a year ago, it's about 2 million more people per year than they previously expected. this is why we are talking about 200 50 type numbers and we are not that scared.

sarah: we are looking for higher inflation and people are spending money but are the wages going up because we've got an influx of people? that's where it's a tough thing from an economic standpoint because wages cannot move up as fast if i plenty of labor supply. people are getting hired but are they dealing with the fact that goods have gone up in terms of pricing in the levels haven't come down? >> when you look at the start of the pandemic, you look at prices of most goods, core inflation, they are in line with wages. 's consumers can generally for but they are paying but they don't feel great about it which is white consumer spending is held up well. if that wasn't the case, you would've seen a demand destruction type of scenario. we seen a resilient consumer because they been able to afford it on average. they just don't feel great about it. looking ahead, we should seek --

now we are seeing core inflation running at something like 3%. not like what we saw but the consumer is still in pretty good shape. that was one of the bigger expectations friday. sarah: the savings rate has come down and credit card balances are going up. people can afford it but are they putting themselves in a financial position that's more precarious during the pandemic? are we going back to a point where it's expensive? you're caring a credit card balance in your ping 22%. >> the consumers pretty steady compared to a growth perspective in the last cycle. credit card balances have risen slightly higher than average but not that materially. it's not really being driven by credit, it's a combination of we still have excess cash which there's been a lot of revisions and excess cash is still kind of they are. not all income growth is strong because we have strong employment growth.

the consumer is able to spend because of things that are a combination of income growth, some excess cash so it's been an environment that's not driven by leverage. annmarie: we saw the percentage of people who had to get a second or third job to support the spending. do you expect more people are doing that? >> there is probably an element of that but i think it's more driven by domestic labor force growth from a combination of these people. from immigration, as of 20 basis points to consumer spending over the past year. that's decent but it's not monumental. jonathan: take me to wednesday. let's push the data through wednesday moved talking about how confident chairman powell has been the last four months. he has clearly lost some confidence. how much confidence should he take by the story you are telling in the labor market? >> i think he believes it deep

down but i don't think he can rely on all the data. he was one of the last speakers to say we've kind of lost confidence in by march, we are not feeling great about the data. you will start to see the inflation data start to soften in the next couple of months and there might be some restoration of the confidence. he will not be able to communicate that. sarah: isn't it better for him that there is growth that's coming through this that he's not in a position where the inflation is high and growth is slowing at the same time that the stagflation story is still around? it looks like we have good growth and we are handling the higher rates. that seems to be with the stock market is reflecting and with the economy is reflecting. what are you looking for in the next couple of points on data points to see which way we are going to think the fed will be the most focused on? >> that's one of the most important questions asked of jay

powell. are you concerned about groping to strong and putting a wrench in your inflation story? i think he will say we still have the supply side but we have to keep an eye on it. our base cases you will start to see core inflation run at about 2% month on month -- .2% month on month. july is probably looking tougher. they will probably still be able to cut this year. it's -- you will need to get that inflation coming down closer to the 2%. our base cases you've seen a lot of seasonality in the data before. we genuinely agree with the fed and they've been talking about seasonality. it goes the other way in q2 and the rest of the year. jonathan: are we putting off rate cuts for the right reasons or the wrong reasons? >> it still looks like the right reasons. sarah: with the earnings coming

through, that's another reason people can be comfortable with it. when you start to see the wrong reasons, that will be a bigger issue. jonathan: some people thought we had stagflation in the data last week. >> kits definitely not stagflation. we missed on the headline number of gdp data. when you look at the details, it was driven by trade and inventory which are volatile and imports were up strong but that's not the sign of a stagflationary economy. if you strip out trade, inventories and government, your to messick demand was growing 3.1%. that's not a stagflationary environment. jonathan: stephanie, good to see you. remind me of the number friday? >> 270. jonathan: impressive. let's get an update on stories elsewhere this morning. dani: senators are dismissing house speaker mike johnson's

call to send the national guard to college campuses. he visited columbia last week and there were pro-palestinian protest and he said there would be an appropriate role for the national guard of demonstrations were not contained. republican and democratic senators dismiss the idea. in ohio, they said maybe call the police well tim kaine of virginia called it a bad idea. u.s. junk bonds finally eat devgan's last to get the suffering three consecutive weeks of losses. corporate earnings were strong to prop up the market and mike scott says the market is overlooking unsustainably overleveraged business models. he spoke with me earlier. >> has rates start to percolate their way through the economy and through the refinancing channel and businesses, this becomes more cyclical issue. that's not the case today but we could very much build a more negative full year rate cycle

picking up from 2025. annmarie: you can watch the brief every weekday morning at 5:00 a.m. german bonds a retaining their levels. the euro is holding onto gains before the data and the easy present has reiterated she won't recommit to any rate papillion the summer. bond yields are up at current levels. data is due tomorrow. that's your bloomberg brief. jonathan: great work as always. we will see you tomorrow morning. the ecb meeting next is june 6 and we are looking for the first interest rate cut. after that it's no man's land. up next, amazon and apple on deck. >> apple and china has been the wrong move. it's 220 million eyes if not upgrading. that growth opportunity will be on the horizon. jonathan: we will catch up with ed ludlow. light from new york, this is bloomberg. ♪

jonathan: monday morning, good morning to you and we are about 45 minutes away from the opening bell in new york city, kicking off a brand-new trading week with futures positive by a third of 1%. about a quarter of 1% higher in the s&p 500. amazon and apple are on deck. >> apple and china has been the wrong move. in our opinion, it's 220 million iphones there and 30 million up -- upgrade into place years. thursday it's about apple showing that growth as you go into the june core of september, what we see in china is the turnaround in this sets up for ai from cupertino. jonathan: amazon earnings are due tomorrow and apple thursday following strong numbers from

apple and alphabet. stocks a record of their best week of gains this year and sending a clear message to investors that ai spending is paying off. ed ludlow joins us now to look ahead to technology. dominating the story this morning, it's not amazon or apple but it's tesla up in the premarket by close to 13% following the surprise visit to china from elon musk. what was your reaction to that? ed: it's a crucial step in the plan that elon musk outlines for the self-driving autonomous feature. there are some ceos that do china well and some that don't. elon musk is always had a relationship with china as it goods -- a good base starting line which has become complicated in recent years but the premier who we met with sunday was one of the leading officials when tesla wanted to set up shanghai in the first place. his ability to go there and

unlock that key step as a preliminary approval, it serves them in the short term because they can unlock revenue software is at a higher margin. it's a competitive market for driverless systems technology but long-term, it feeds into what is now the sole thesis for many witches robotaxi and economy. jonathan: who has the ip here? when we talk about a partnership, the u.s. firm or an international firm going into china pushed into a partnership often would be asking questions about the western firms sacrifice. who has the ip here? ed: that's the key question. this is the big takeaway. it's a partnership with baidu according to bloomberg reporting for income mapping and navigation. it's specific to that market and the reason that's interesting is tesla has used baidu in china since 2020.

it's localized. you have eight onboard cameras and the algorithm or artificial intelligence that powers that is trained on that is trained on the camera data but a combination with the mac you are navigating against. in this instance, baidu has become an even deeper stakeholder in tesla's future in that market. i think you'll see that the baiduadr's are up in premarket as well. annmarie: where is this data get stored? ed: this is the other key development overnight that there are many hurdles that tesla would have to pass. one of them is getting the regulators greenlight on their data practices. i mention the elon musk success in china and his relationship with the country's government but actually, the data issue is still sensitive. for example, tesla's cannot be in pro -- in close proximity to chinese military facilities because of the cameras around the car in the concern they are capturing data.

the approval of tesla overnight is that regulators buy the idea that the consumer and i guess another entity that has the power to can switch off the car's ability to gather data if they feel that's what they want to do. that was the key concern. you if you are wondering when tesla's going to do this, the baidu relationship is interesting. the data approval is probably the big -- bigger milestone in this instance. sarah: does this put them on top of everyone else on in the ev space in china or is anyone working in a similar set of abilities to do this? is this a way to jump over the competition to reap the benefits of that? ed: excellent question. as with the ev market more broadly, the market for advanced driver assistance is more developed and there is more choice. there are many more players. the market is heavy there.

in north america, you look at general motors and ford which has its own issues with regulators this morning. they are offering more limited versions of the driver assistance tool. it's more saturated and it goes back to the idea of why baidu is on the mapping side? there are -- there were 20 potential partners in china that tesla could have gone to so they are the existing relationship but it's competitive and there is no guarantee they will suddenly start selling these out $8,000 packages. in the same way they've been able to capture it in the u.s.. sarah: did they lock up baidu to only work with tesla and not other players or did they say we will take the biggest player and we will put it together with tesla and we will then become a juggernaut and to bed for the rest of you? ed: good question. i'm good but i'm not that good. i don't know the exclusivity of

the relationship. one thing i would flag is that think of this in the bigger picture. tesla knows it has to gather lots of miles to train it's more promising euronet. there was a very top-secret small batch of future generations of the underlying large language model that they hope will power robotaxi. tesla has 1.7 million vehicles sold in china so there are miles driven on this -- under this arrangement whether they add value to the longer-term goal. jonathan: self-driving spooks regulators stateside. this is from moments ago. the u.s. is probing crashes using ford's system. how difficult and complex are things for some of the u.s. manufacturers trying to ultimately deal with the same technology and rolled more quickly? ed: this relates to ford's

bluecruze.it's a more limited advanced driver assistance tool. ford and general motors have been much more careful not to market it as true autonomy but regulators still take a close look. think of all the people driving every day in america. in ford's case, we are talking about 20 or so situations that occurred that were accidents. that's how high the bar is. how many people drive every day and afford and that leads to serious looks by the regulators? it's very tough and ford has some other problems in its structure and its transition to ev jonathan: at the same time. perhaps handling it better than others. next week, we will catch up but amazon and apple on thursday. ed: the bar is high for amazon now with a lot of pressure. what we learned from google and

microsoft, the number two and three in the market is not just that there is some growth being due stout from ai but spending broadly on cloud is good. if you take the microsoft example, 31% of line grow than azure. they gave us a tangible within that 31 specifically from ai. that also means you have 24% growth coming from spending on cloud. amazon is the clear market leader and whether they give is the same as important. then you will learn whether or not they are holding market share in those names. that's been the big story for them. ai is now showing up in the financials which is good. on apple, we know it's a china iphone story. jonathan: daytime, thank you. -- big time, thank you. equities right now are positive by a third of 1%.

this is the week at headed u.s. markets in fact global markets. . we are looking at amazon and apple. the cherry on top as payrolls and sara hunt is with us for the last 50 minutes or so. if you took your pic now, what would you take? >> the earnings. jonathan: why so important. >> the market is starting to game the fed decision. somebody made a point earlier that we are already possibly even thinking about no cuts at all at least quietly. jonathan: are we done with that story? sarah: i think the data has been mixed enough that anybody can pick and choose the right data. earnings are earnings and cash is cash. that is what people are looking at to say you've had these big valuation moves in these big multiple moves. am i keeping up with that on the

earnings and that cash generation? i think that's critical at of companies can continue to do that, there is less vulnerability. jonathan: it's been great to catch up. a big week ahead going into the opening bell about 35 minutes away. equity futures are higher by 0.3%. we are adding some weight to the gains last week in the bond market, yields have been steady. down by about three basis points for the month of april. tomorrow, bramo will be back. this is the lineup. anne-marie's voice will make a comeback. have a fantastic week ahead. this was bloomberg surveillance. ♪

and they're all coming? those who are still with us, yes. grandpa! what's this? your wings. light 'em up! gentlemen, it's a beautiful... ...day to fly.

manus: good morning, we are counting you down to the start of the trade and it's a game changer moment for tesla. have you got moments of deep regret? countdown to the open kicks in now. ♪ manus: coming up on the show, futures are edging higher. earnings season ramps up and amazon and apple are on deck and investors look at the fed for another payrolls report. we begin with the big issue. elon musk driving to china. >> is a watershed moment.