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Speaker 2: At what point does it either lean into banking crisis,
Speaker 2: credit contraction, some sort of significant lag versus this feeling,
Speaker 2: Perhaps we need to revisit the belief in that dreaded
Speaker 2: six handle are potentially much more restrictive rates something to
Speaker 2: worry about.
Speaker 1: And if you want to worry, you can look at
Speaker 1: a bull market effort. Right now, we're seeing many houses
Speaker 1: just higher at the Morgan Stanley shop.
Speaker 3: They are not.
Speaker 1: Michael Wilson's CIO, chief US equity strategist at Morgan Stanley.
Speaker 1: And one of your themes, Mike Wilson is there's a
Speaker 1: complete misguess on the interstate game. As addressed by the
Speaker 1: Fed today and followed by your Ellen Zettner Wayley, there
Speaker 1: are black Rock says persistent inflation.
Speaker 3: Is that a core reason for your caution in the
Speaker 3: equity market, No, it's actually not.
Speaker 4: Tom.
Speaker 5: In fact, our views and inflation is going to come down,
Speaker 5: and while that potentially is very good for bonds, it's
Speaker 5: not going to be it for stocks because that's where
Speaker 5: the earnings power has been coming from. Right This is
Speaker 5: really our Boombus thesis. The reason we were so bullish
Speaker 5: in twenty twenty and twenty twenty one is because we
Speaker 5: expected inflation to drive a profits boom, and now when
Speaker 5: inflation comes down, you're going to have a profits recession.
Speaker 5: So that's really where we're differentiated from an equity standpoint.
Speaker 5: You know, Ellen, as you know, he's looking for a
Speaker 5: pause today too. She's not looking for you know, any
Speaker 5: more hikes really the rest of this year, but a
Speaker 5: very slow path in terms of cutting next year.
Speaker 2: We look we already looking at going forward in terms
Speaker 2: of client responses, how they push back against the parishness
Speaker 2: that you've been expressing.
Speaker 5: Yeah, look, I mean it's we're in a weird situation
Speaker 5: now because I feel like on the fundamental side, our
Speaker 5: earnings call has been spot on. So a year ago,
Speaker 5: just to kind of remind listeners, you know, we were
Speaker 5: calling for an earnings recession and we were somewhat dismissed,
Speaker 5: but of course now we're in one. And the only
Speaker 5: difference now is that we're just saying it's going to persist,
Speaker 5: whereas I think most people the pushback is, no, the
Speaker 5: earnings recession is over and we're going to see a
Speaker 5: reacceleration and growth in the second half of the year,
Speaker 5: and that's what the consensus is forecasting.
Speaker 6: So that's what the pushback is.
Speaker 2: So in other words, you're saying that you got it
Speaker 2: right if you strip out some of the big tech names,
Speaker 2: and that there was an earnings recession that played out
Speaker 2: in lower valuations of some of these shares, and you're
Speaker 2: saying it's going to continue. Not necessarily talking about the
Speaker 2: headline level of the S and P as much as
Speaker 2: these particular stocks fighting against the idea of a broadening
Speaker 2: out of the AI rally.
Speaker 7: Is that correct?
Speaker 5: Well, actually, the technology stacks had the biggest earnings recession.
Speaker 5: I mean, you know, you look at the communication services
Speaker 5: and some of the technology stocks they had, they were
Speaker 5: their earnings were down significantly in the fourth quarter. That's
Speaker 5: why they sold off so sharply in the fourth quarter.
Speaker 5: So they had an earning's recession last year. And the
Speaker 5: presumption is is that's over and now that's going to reaccelerate.
Speaker 5: And that's where we disagree. We think that including tech,
Speaker 5: not just tech, but overall, the earnings recession is going
Speaker 5: to persist into the second half of year. It's going
Speaker 5: to get worse before it actually improved next year.
Speaker 1: If we get a center economy or ed Heiman moving
Speaker 1: down to three percent dare I say under three percent inflation?
Speaker 1: David Rosenberg up in Toronto clearly in that camp as well.
Speaker 1: I'm thinking of the partial differentials on the income statement
Speaker 1: to get to the Wilson earnings call, to get the
Speaker 1: thirty nine hundred or whatever on SPX, and to me,
Speaker 1: it's all at the revenue line, and that is the
Speaker 1: core of your call with your security analysts, that revenue
Speaker 1: growth will disappoint.
Speaker 6: That's exactly right.
Speaker 5: So last year, the earnings recession I just referred to
Speaker 5: was all a cost issue, right, These big tech companies
Speaker 5: over invested thinking the pandemic boom was going to continue
Speaker 5: at the same pace. Of course it did not, and
Speaker 5: that was a problem for discretionary consumer discretionary as well
Speaker 5: as some of the financial companies, et cetera. Companies that overinvested.
Speaker 5: Now what we're going to see is the top line disappointment. Okay,
Speaker 5: maybe it's not a recession, but like Ellen's forecast is
Speaker 5: zero percent GDP growth. Effectively, that's going to feel like
Speaker 5: a recession because you're pricing is going to evaporate and
Speaker 5: we're seeing that now and good So there's this big
Speaker 5: economy between goods inflation and services inflation. I mean, goods
Speaker 5: inflation is back to the two percent level. In fact,
Speaker 5: it's probably going to go deflationary for a lot of businesses.
Speaker 5: That's your revenue growth disappointing.
Speaker 1: How do you allocate your do you participate in the
Speaker 1: market or is cash very.
Speaker 3: Comfortable place to be both. So you know, and let's
Speaker 3: see that's strategy.
Speaker 5: Yeah, on one hand. On the other hand, right, so
Speaker 5: I take my economist, but I mean, in all seriousness,
Speaker 5: I mean cash offers you a great risk adjusted return.
Speaker 5: We're overweight cash, Okay, it's nothing wrong with that. But
Speaker 5: we still are fully invested in equities too. We're just
Speaker 5: underweight our normal allocation and we've been that way for
Speaker 5: the last eighteen twenty four months.
Speaker 1: I think this is misunderstood, Lisa. I think people look
Speaker 1: at will something go get out of the market, and
Speaker 1: this is hugely important.
Speaker 2: Yeah, every time it comes on, he says, I'm fully invested.
Speaker 2: It's not a matter of just simply hiding under a mattress.
Speaker 2: My question is what happens if there's a recession and
Speaker 2: nobody cares. What happens if there's an earnings decline and
Speaker 2: people shrug it off and say, well, look to the
Speaker 2: future and there's going to be this incredible American exceptionalism
Speaker 2: and where else are you going to put your money?
Speaker 5: Well, this is our story for twenty four and twenty five, right.
Speaker 5: This is why we're in a different difficult situation right now,
Speaker 5: where we see the near term risk reward as lousy.
Speaker 5: But if we look out twenty four to twenty five,
Speaker 5: and this is what people are getting excited about, capital
Speaker 5: expenditure boom for things like reshoring, green energy, traditional energy,
Speaker 5: retrofitting buildings, etc. And now of course AI, so this
Speaker 5: is exciting. The problem is is it's a cost first
Speaker 5: and then it's a productivity benefit.
Speaker 2: What people are looking past it. I mean, this is
Speaker 2: sort of the frustration when people say that there's a
Speaker 2: divergence between bond markets and stock markets. They say, well,
Speaker 2: the bond market's looking at the now it says, look
Speaker 2: very good, and stock markets are looking to twenty four
Speaker 2: to twenty five. What's to make them look at now right?
Speaker 2: What's the catalyst to bring them down at a time
Speaker 2: when people can look past near term pain and see
Speaker 2: what you're seeing?
Speaker 5: Well, typically it's price. Okay, So we were very disciplined
Speaker 5: on price, you know. You know, we always get kind
Speaker 5: of categorized as a perma bear. But I remember, you know,
Speaker 5: calling the low in October, we call the low in
Speaker 5: March of twenty twenty because of price, you know, so
Speaker 5: we're very disciplined. Most people are not disciplined because of
Speaker 5: FOMO and that's just the nature of markets. Markets are
Speaker 5: momentum driven. It feels better when they're going up. It
Speaker 5: feels better to buy things when they're going up, and
Speaker 5: that's where we are now. So the risk reward in
Speaker 5: the short term is lousy. So I think it's going
Speaker 5: to be price Lisa, which will change people's minds. Now,
Speaker 5: we could be wrong, maybe we don't get a fatter
Speaker 5: pitch that we're hoping for, but we're also not worried
Speaker 5: it's going to run away from us, and we can
Speaker 5: buy the stock market kind of right here, probably twelve
Speaker 5: months from now.
Speaker 3: What's the market bet right now?
Speaker 1: Because I see a lot of indicators that say people
Speaker 1: are comfortable with Mike Wilson's calls. They're really a fight
Speaker 1: of this bull market and they're cautious. What is the
Speaker 1: bet that Morgan Stanley sees by the investment in public
Speaker 1: by the hedge funds, by long only by side institutions.
Speaker 5: Well, I mean, I think our once again our view
Speaker 5: is that we're we're I'm in.
Speaker 6: A position of luxury.
Speaker 5: I don't have to put capital to work every day
Speaker 5: for MUNTHI performance. We have asset allocation, which is kind
Speaker 5: of measured on a longer term basis. So I have
Speaker 5: the luxury of time, right, So our asset owner clients
Speaker 5: had that advantage, and that's what we try to take
Speaker 5: advantage of. Folks who don't have the advantage of time
Speaker 5: have to kind of participate at the worst possible moment,
Speaker 5: and that, by the way, it also includes at the lows.
Speaker 4: Right.
Speaker 5: So the opportunity that was created in March of twenty
Speaker 5: twenty is because people were being forced to divest and
Speaker 5: we were happy to pick up those shares at cheap prices.
Speaker 2: What do you think is the most overpriced aspect of
Speaker 2: the S ANDP right now?
Speaker 5: Well, I think this is an interesting question because most
Speaker 5: people assume it's only ten stocks. That's actually not true.
Speaker 5: The media in multiple for the S and P five
Speaker 5: hundred today is the same as the market capvoid in multiple.
Speaker 5: It's close to nineteen times eighteen and a half nineteen times,
Speaker 5: so it's a very broad over evaluation. Now we say
Speaker 5: the sectors that are cheap, okay, the only ones that
Speaker 5: are pearing cheap now are energy and financials. The question there,
Speaker 5: of course is what are the orangin going to do?
Speaker 5: You know, because there are cyclical businesses well.
Speaker 3: Focus on energy. There you got twenty seconds of energy.
Speaker 3: There is that the place to.
Speaker 5: Be well, I think energy at the stock level, there's
Speaker 5: there's definitely opportunities and in financials too, right so like
Speaker 5: the regional banking crisis created opportunity and individual financial services stocks.
Speaker 5: And I think that's what we're trying to do now,
Speaker 5: We're trying to find these one off opportunities as opposed
Speaker 5: to worry about the stock market overall.
Speaker 3: Mike Wilson, thank you so much.
Speaker 1: With Morgan Stanley here, what they called thirty nine hundred
Speaker 1: is where you are, not you want to make.
Speaker 3: Some news here hundred year and yes, sir, we're still there. Okay,
Speaker 3: I'm gonna let us know if we'll change in the
Speaker 3: first car. That's Michae Wilson.
Speaker 1: I'm Morgan Stanley here. Now we take a bigger, broader
Speaker 1: picture with Bruce Kasman of Chiefs of Economists and a
Speaker 1: head of Global economic research at JP Morgan and we
Speaker 1: do this with Columbia heritage of in the modern day,
Speaker 1: Jeffrey Sachs, Richard Clarita, and of course the foundational efforts
Speaker 1: of Robert Mundel Doctor Casman. I want to cut to
Speaker 1: the Chase here and talk of Jerome Powell, central Banker
Speaker 1: to the world. Your focus is on continental Europe.
Speaker 6: What is drama for Europe.
Speaker 1: Today and the decision making of Jerome Powell and the FED.
Speaker 8: So, as you've already mentioned, it looks like the FED
Speaker 8: is going to pause. The ECB is also meeting this
Speaker 8: week and is likely to tighten and also single that
Speaker 8: they have more work to do. I think one of
Speaker 8: the big issues as we look at transmission here is
Speaker 8: about synchronization. There's obviously a lot of concern about a
Speaker 8: US recession. We don't think the US is falling into
Speaker 8: recession right now, but Europe is showing very strong divergence
Speaker 8: in performance. The service sector is doing well, the manufacturing
Speaker 8: sector is doing poorly. It has the same issues around
Speaker 8: bank credit tightening is the US. How the European economy
Speaker 8: plays out here is going to be a very important
Speaker 8: factor in determining both the overall global picture and certainly
Speaker 8: have some impact on the US as we go through
Speaker 8: the rest of the year.
Speaker 1: You and I Bruce have read Duley Garber, folkerts Landau
Speaker 1: and all the different macroeconomics coming out of David fulkerts
Speaker 1: Lando's work, and one of his great comments is there
Speaker 1: will be fiscal stimulus in Europe that will come to
Speaker 1: the rescue of Europe. It's a different fiscal calculation than
Speaker 1: Jerome Powell has. How does that play into what Europe
Speaker 1: will do off of this meeting today?
Speaker 8: So, I mean, the simple point here is I think
Speaker 8: there's more work to do for the ECB. Personally, I
Speaker 8: think the FED will ultimately have more work to do here.
Speaker 8: It's taking a pause, but I don't think it's going
Speaker 8: to get inflation under control. And I think one of
Speaker 8: the things that people who are looking for an immediate
Speaker 8: recession are missing is that while Monte policy is tightened,
Speaker 8: a lot of fiscal policies moving in the other direction.
Speaker 8: That's there in Europe, the Recovery Fund, as well as
Speaker 8: some of the emergency measures around last year's crisis as
Speaker 8: a factor. In the US, look at what's happening on
Speaker 8: defense spending, look at what's happening in government hiring, state
Speaker 8: local spending is high. This is a very different picture
Speaker 8: than we've seen over the last two cycles. Were early
Speaker 8: in the cycle, fiscal policy in the and Western Europe.
Speaker 2: Titan materially Bruce, this is really interesting the idea that
Speaker 2: fiscal stimulus, on one hand, will force central bankers around
Speaker 2: the world to tighten much more than people currently expect.
Speaker 2: Is that what's going on? Do you think that people
Speaker 2: are misguided and thinking that the FED is done pretty
Speaker 2: much around here and is going to hold rates where
Speaker 2: they are because of the fiscal impulse.
Speaker 8: I don't want to put too much weight on the stimulus.
Speaker 8: I think it's one factor among two or three which
Speaker 8: is promoting resiliency here. And I do think the most
Speaker 8: important factor in terms of what's going to drive more
Speaker 8: central bank tightening as we get it is the persistence
Speaker 8: of inflation, the underlying shift that's taken place in the
Speaker 8: inflation process, how that's plagued through in a world in
Speaker 8: which we still have damage done to labor supply and
Speaker 8: tight labor markets. That's the ultimate problem. And just from
Speaker 8: the point of view of the FED today, it's reasonable
Speaker 8: to take a pause. But what a pause is doing here.
Speaker 8: It's promoting risk, appetite and financial markets, which is undermining
Speaker 8: monetary transmission. And it is I think signaling to the
Speaker 8: market that the FED is gradualist on lowering inflation. And
Speaker 8: that works against the idea that there's some inflation that's
Speaker 8: becoming embedded in expectations and wage and price setting. This
Speaker 8: is the problem the FED has today, and that's one
Speaker 8: of the reasons why they're going to signal to us
Speaker 8: that they're not done. But it's going to be hard
Speaker 8: to find that balance.
Speaker 3: Here.
Speaker 2: I'm going to say something kind of sacrilegious. Let's say
Speaker 2: it's actually worse for risk markets right now if the
Speaker 2: FED doesn't hike further and keeps rates where they are
Speaker 2: for a very long time. Isn't that worse than potentially
Speaker 2: breaking something and then having to come in with rate
Speaker 2: cuts and sort of doing a full reversal, the sort
Speaker 2: of slow bleed, this sort of boiling of the frog
Speaker 2: that a lot of people are anticipating.
Speaker 8: Ultimately it might be, but right now, I think if
Speaker 8: there's anything we should appreciate as economists and more generally,
Speaker 8: is that it's a lot it's very difficult to actually
Speaker 8: forecast exactly where we're going to be in six to
Speaker 8: nine months. There is a risk the economy is going
Speaker 8: to slide into the session. The fact that the FED
Speaker 8: is pausing, the fact that the FED is telling us
Speaker 8: it's going to be gradualist on inflation in terms of
Speaker 8: bringing it down is a constructive signal that promotes resiliency.
Speaker 8: I think there is, on my mind, a likely scenario
Speaker 8: where inflation doesn't come all the way down and the
Speaker 8: bed has to come back, But there is still some
Speaker 8: possibility that we have a soft landing. So I think
Speaker 8: for the near term it is certainly a reasonable thing
Speaker 8: for the FED to do, and it is certainly going
Speaker 8: to promote resilience in the economy. I do think more
Speaker 8: likely than not, it's not going to prove successful, and
Speaker 8: I think, as you say, we're going to pay a
Speaker 8: price for that.
Speaker 2: When you talk about the potential for inflation to come
Speaker 2: back or not come down all the way to where
Speaker 2: they'd like, is that driven by wages and some sort
Speaker 2: of wage price spiral that people are underappreciating.
Speaker 8: I think it's a bit of a mistake to put
Speaker 8: it on tight labor markets, to focus particularly on what
Speaker 8: we call a Phillips curve relationship. I think what you've
Speaker 8: had happen here is two things. One is we've damaged
Speaker 8: supply in a way that it's not fully recovering, and
Speaker 8: particularly in the US and Western Europe, it's about labor
Speaker 8: markets in that regard. But I think the bigger issue
Speaker 8: here right now is that we've started to embed psychology
Speaker 8: in which wage and price gains are linked, which wasn't
Speaker 8: the case over the last thirty years. Interesting, and I
Speaker 8: think in order to bring down inflation you need to
Speaker 8: compress pricing power on the corporate sector side. Unfortunately, when
Speaker 8: you do that, that does hit labor markets. But it's
Speaker 8: a pricing power story. It's changing the behavior of businesses,
Speaker 8: removing that price pressure that's coming through the system, which
Speaker 8: is something which is a break from what we've seen
Speaker 8: over the last three decades.
Speaker 3: Bruce, it's JP Morgan's fault.
Speaker 1: I'm going to go to Richard Clara, the former vice chair,
Speaker 1: and of course all his work in Columbia and in
Speaker 1: an essay and the Economist. I'm going to say a
Speaker 1: month and a half ago, he really made a case
Speaker 1: that we're not going back to two percent, and this
Speaker 1: is a fad that has to find two point x percent.
Speaker 1: Whatever the number is going to be your Michael, change
Speaker 1: the debate single handedly. We're gonna blame Feroli by coming
Speaker 1: up with a potential GDP statistic that was well under
Speaker 1: two percent as well.
Speaker 3: Do we have to adjust that.
Speaker 1: Now, after all of this this imputed inflation into the system,
Speaker 1: what the Biden stimulus is wrought? Do you have to
Speaker 1: adjust the Ferole potential GDP up which makes it more
Speaker 1: comfortable to get to a clarity statistic.
Speaker 8: So we've been running with a potential growth rate for
Speaker 8: the US of about one and a half really, as
Speaker 8: you as you're mentioning for almost a decade now, and
Speaker 8: I think you're raising a very important point, which is
Speaker 8: there's a lot of stuff going on here that could
Speaker 8: have an influence on potential growth going forward, and specifically
Speaker 8: productivity growth, which is a key to the to the
Speaker 8: inflation outlook. I'm agnostic here. There's a lot of cross currents.
Speaker 8: I haven't seen anything that convinces me we're either materially
Speaker 8: raising or materially depressing a potential growth. I think we've
Speaker 8: done damage to supply and that we now have probably
Speaker 8: two and a half percentage points less of people in
Speaker 8: the workforce than we had on the pre pandemic path
Speaker 8: we were on. That's the immediate problem and how that
Speaker 8: is interacting with underlying inflation psychology. If we get better
Speaker 8: for the potential, that'll help us. If we get worse.
Speaker 8: That'll make the trade off worse. I'm agnostic on how
Speaker 8: that's going to play out, at least at this moment.
Speaker 1: I look, Verus, you know, let's bring it back to
Speaker 1: the festivities today at two pm. I hate the skip
Speaker 1: in the pause chat John bust My chops on it
Speaker 1: non stop, Bruce Chasmin. Are we just debating an asymmetric
Speaker 1: or symmetric outcome here? I'm clearly in the camp that
Speaker 1: it can be an asymmetric decision, are you well?
Speaker 8: First of all, it's a divided decision. Keep in mind
Speaker 8: that probably close to half of this committee would vote
Speaker 8: for a rate hike, so it's going to be a
Speaker 8: pretty contentious debate. I also think it's hard to talk
Speaker 8: about a skip. It's possible, but it's not our view.
Speaker 8: I think the FED has six weeks to the next meeting.
Speaker 8: It is actually trying to take stock of what actually
Speaker 8: is happening in terms of banking sector stress, monetary transmission.
Speaker 8: It's going to take more time to see that. But
Speaker 8: at the same time, I think they have to tell
Speaker 8: us that they have not declared victory on getting inflation down,
Speaker 8: that there is pressure for them to move more, and
Speaker 8: that the likely scenario, and I think it'll be in
Speaker 8: the statement, It'll be in the dots where we'll see
Speaker 8: an extra rate hike being pushed in, and it'll certainly
Speaker 8: be in more detail and more color in Pala's press
Speaker 8: conference that they're more likely than not to continue raising
Speaker 8: raids sometime later this year.
Speaker 9: Bruce, do you think no cava equities of rallying.
Speaker 8: I don't think the FED is very sensitive to equities rallying,
Speaker 8: But I do think the broadest picture here is that
Speaker 8: financial markets are showing very little stress. They've improved, risk
Speaker 8: appetite has increased, credit conditions have improved in the last
Speaker 8: two or three months, and is a significant offset to
Speaker 8: the tightening that's going on in bank credit. And I
Speaker 8: think that does matter to the FED, and they're trying
Speaker 8: to manage that in a way that they don't unl
Speaker 8: leash unwanted exuberant here that they're going to have to
Speaker 8: deal with later on down the road.
Speaker 9: Interesting, Bruce wanted for to get your perspectives looking for
Speaker 9: a divided pause. A little bit later on this afternoon,
Speaker 9: Bruce Camsman and JP Morgan whe us around a table
Speaker 9: Anastagia Amaroso chief and messment strategist over I Capital Anastagia.
Speaker 10: Good to see you.
Speaker 9: I remember you sitting around this table with Tom and
Speaker 9: I maybe several months ago, I think early April. I
Speaker 9: think it was good Friday, payrolls Friday, good memory, and
Speaker 9: you made the call that we would break out to
Speaker 9: the upside on the S and P five hundred. Do
Speaker 9: you forget everything had a really tight trading range up
Speaker 9: until that point. We've broken out. Everyone's on board with
Speaker 9: that move. Now seemingly, or at least slowly, they're capitulating.
Speaker 9: Where are you now, Do you have this view that
Speaker 9: we brought it out or do you want to de
Speaker 9: risk and take some of those profits.
Speaker 11: I do think we're brought now, John, and I think
Speaker 11: we have been doing that for the last couple of weeks.
Speaker 11: And you know the reason for that is, Tom, you
Speaker 11: were just talking about, is this US economy has been
Speaker 11: so much more resilient that anybody has expected, and so
Speaker 11: as a result, we've gone through the earnings down great cycle,
Speaker 11: and if you look at the earnings revision ratio, it
Speaker 11: is actually now positive for the last few weeks or
Speaker 11: for the last month or so, and so that instills
Speaker 11: a lot more confidence in the EPs part of this equation,
Speaker 11: and then you know at the same time the FED,
Speaker 11: whether it's a skip, whether it's a pause. The reality
Speaker 11: is they're not going to go seventy five basis points
Speaker 11: for consecutive more meetings, so we're done with that, so
Speaker 11: we can have some stability and valuations as well. So
Speaker 11: that's why I think this rally does broaden out.
Speaker 1: The simple question is is Apple under owned? But far
Speaker 1: more than that is your take at the institutional money.
Speaker 1: Typical fundamental buy hold for three year money has missed
Speaker 1: this market move, and there's a general statement under.
Speaker 11: Owned, massively under owned. Tom and a lot of investors
Speaker 11: found themselves in chasing mode. And first it's kind of
Speaker 11: the high velocity money, the systematic traders, the hedge funds,
Speaker 11: and guess what they all piled into this market and
Speaker 11: that's what propped it up higher. But then you look
Speaker 11: at the bond and cash flows and what they have
Speaker 11: done versus the equity outflows. There's a massive amount of
Speaker 11: capital that could potentially pivot here. And I think this
Speaker 11: capital is going to be looking at valuations and say, well,
Speaker 11: technology has had its run by the way, I still
Speaker 11: want to be a tech investor. I just want to
Speaker 11: be a little bit prudent about taking some tactical trade,
Speaker 11: you know, tactical trades off. But the money is going
Speaker 11: to look at valuations and say X technology. The multiple
Speaker 11: on the SMPS actually in line with its ten year average.
Speaker 11: So that's why John, I also think this rotation can
Speaker 11: broaden out. And I also want to bring China into
Speaker 11: the equation as well, because as pessimistic as everyone is
Speaker 11: on China, the great news there is China CPI inflation
Speaker 11: is zero. You know, policy rates are higher, there's room
Speaker 11: to cut rates, there's room to stimulate in China. In
Speaker 11: the last few weeks we've really seen the willingness of
Speaker 11: the policymakers to step up the stimulus at least for now.
Speaker 11: Talk but I think measures as well.
Speaker 2: Given that backdrop, if the FED does have a skip,
Speaker 2: hawkish whatever you want to call it, well that unleash
Speaker 2: unwarranted exuberance in risk assets in the US.
Speaker 11: I mean it already has right sort of pre traded
Speaker 11: the pause, the skip, and you know, I think this
Speaker 11: exuberance is somewhat warranted. And by the way, if you
Speaker 11: go back in history and if you look at rate hikes,
Speaker 11: you know, the FED hikes rates, but it doesn't cause
Speaker 11: an imminent recession. There's typically a period of time before
Speaker 11: their session on sets and there is this exuberance face.
Speaker 11: I think some call it euphoria, or the market rallies
Speaker 11: for the twelve months after the Fed actually ends its
Speaker 11: hiking cycle. But the reason it rallies, Lisa, the reason
Speaker 11: I say it's warrant is because the economy is still
Speaker 11: hanging in there and the earnings still hang in there.
Speaker 11: So I think this exuberance might be justified.
Speaker 2: What's the tipping point? Let's say the FED does hold
Speaker 2: rates here for a long period of time. When does
Speaker 2: a tipping point come when perhaps the pain starts to
Speaker 2: get felt, when perhaps this exuberance starts to wear out.
Speaker 11: I think the Fed we'd need to go higher, and
Speaker 11: potentially much higher, to really crack this economy. And you know,
Speaker 11: I say that because if you look at this economy
Speaker 11: with five percent rates, yes, we're feeling strains here and there,
Speaker 11: and there's pockets of dislocation that are to come. By
Speaker 11: by and large, this economy is doing just fine with
Speaker 11: five percent rates, So I think you need to raise
Speaker 11: rates to a much more restrictive level for something to
Speaker 11: really crack that would cause the crack in the unemployment rate.
Speaker 1: Within your macro view, does a sixty forty allocation work?
Speaker 1: I can't make the math work in my head. Are
Speaker 1: you a sixty forty type or do you have to
Speaker 1: go to a different mix.
Speaker 11: Well, this year, anybody who's declared sixty forty to be
Speaker 11: dead obviously has been wrong. Sixty forty is one of
Speaker 11: the top performing things out Yeah, exactly. But if you
Speaker 11: look tom over the last three year, five year, ten
Speaker 11: or fifteen year period, and if we expand beyond the
Speaker 11: sixty forty, and if I brought that out to private
Speaker 11: market strategies like growth equity, like venture capital, like private equity,
Speaker 11: buy out, like private credit, all of those things have
Speaker 11: actually outperformed the sixty. So we want to look beyond
Speaker 11: the sixty forty and then it's not just something that
Speaker 11: worked last year. I think that's something that works for
Speaker 11: the next several years.
Speaker 9: Just to build on something you said about the labor
Speaker 9: market and how far fed funds would need to go,
Speaker 9: where does that leave the bond market? Never mind equities,
Speaker 9: let's put stocks to one side. What does that leave
Speaker 9: fixed income? Try to rease what does a ten year
Speaker 9: look like over the next twelve months.
Speaker 11: Yeah, I mean, I think the ten year is supported
Speaker 11: around these current levels because you know, if the FED
Speaker 11: needs to go much higher, the front end of the
Speaker 11: curve rises, but the back end really doesn't because it's
Speaker 11: a function of the forward growth expectations. But if the
Speaker 11: FED continues to high grades, that means the recession probabilities
Speaker 11: likely rise. So I actually think the ten year offers
Speaker 11: decent value around these current levels. And also if we
Speaker 11: are wanting to prepare for a twenty twenty four recession,
Speaker 11: that's what you buy. You buy the ten year, you
Speaker 11: buy the thirty year, And I think that's a great
Speaker 11: balance to maybe some of the cyclical stuff into portfolio.
Speaker 9: You think we're in that point now to make that
Speaker 9: move currently, I think you can.
Speaker 11: You know, I don't think you have to imminently hedge
Speaker 11: a recession, but I think if you're buying some tenure
Speaker 11: treasuries into your portfolio, I think they can provide some
Speaker 11: stable value because again, the growth expectations are not likely
Speaker 11: to speke materially higher, inflation expectations are not likely to
Speaker 11: move materially higher. So I think that's going to keep
Speaker 11: the tenure anchored.
Speaker 9: Anastasia awesome coal on the equity market for the US
Speaker 9: so far, thank you, and at stage Amoso there the
Speaker 9: last drill.
Speaker 10: And I talk about Disney quickly, please talk about this.
Speaker 3: So Schoemaker's like is on the edge of the seats
Speaker 3: is little mermaidery.
Speaker 9: When companies start throwing out dates like twenty thirty, twenty
Speaker 9: thirty one, drug usc it's amazing. The third installment of
Speaker 9: Avatar is going to come out December twenty twenty five
Speaker 9: instead of December twenty twenty four. Here we got tom
Speaker 9: The two other avat Pass sequel was pushed back by
Speaker 9: three years. They'll come out in twenty twenty nine and
Speaker 9: twenty thirty one. Doesn't that feel like a lifetime away?
Speaker 9: Twenty thirty one. Aren't we all going to be flying?
Speaker 12: Then?
Speaker 10: Exactly?
Speaker 2: What in augmented reality? Although did you see the Way
Speaker 2: of Water? I mean it was pretty technologically amazing. It
Speaker 2: was very cool, right, so imagine that they have to
Speaker 2: then add on to that.
Speaker 9: But yeah, it seems like Avengers Movies the layed a
Speaker 9: year to May of twenty six from May and May
Speaker 9: of twenty seven. Star Wars pushback a year twenty twenty six.
Speaker 9: It's all getting pushed back at what's Bob I ger
Speaker 9: up to for at Disney. Can you imagine being in
Speaker 9: the theater business and you hear this in the last
Speaker 9: twenty four as you want those movies like now.
Speaker 3: Well this is is it the writer's strike?
Speaker 1: No, it's got to be something bigger, like budgeting or
Speaker 1: just the complexity.
Speaker 2: How much is content no longer king and you don't
Speaker 2: necessarily have the same kind of budget and throw at
Speaker 2: it the same kind of way.
Speaker 3: Michael Schumacher saying, did I sign up for this?
Speaker 1: Michael Schumacher joins us in our global head of macro
Speaker 1: Strategy at Wells Fargo.
Speaker 3: We're not going to look for a little Mermaid review
Speaker 3: from him. Michael.
Speaker 1: I want to talk about the challenge of Jerome Powell
Speaker 1: and the way I do it is what Michael Rosenberg
Speaker 1: invented with his team at Bloomberg, which is the Bloomberg
Speaker 1: Financial Conditions Index.
Speaker 3: It is eleven ratios.
Speaker 1: It is so wonderfully complex and it shows an accommodation.
Speaker 3: I'm not going to go to the math now, folks, but.
Speaker 1: All you got to know is a positive number is accommodative.
Speaker 3: And a negative is a tilt towards restriction.
Speaker 1: Is the stock market hindering Jerome Powell's choice set, his
Speaker 1: degrees of freedom, have we become accommodative? Is seen by
Speaker 1: the BFCI at I think it's a point zero seven
Speaker 1: nine that he has fewer choices that he can make,
Speaker 1: fewer options that he can make today.
Speaker 13: Sure, it's a tightening cycle. I mean, these conditions are
Speaker 13: supposed to tighten. And you look at the stock market
Speaker 13: up what thirteen percent really since March.
Speaker 3: Granted, I know regional banks, et.
Speaker 13: Cetera bad news, but still equities have ripped, corporate credits
Speaker 13: doing really well. This flies the face of banking credit
Speaker 13: conditions tightening. That doesn't really seem to add up. So
Speaker 13: I think Jerome Powell, you're right, Tom, he's got less flexibility. Yes,
Speaker 13: he somehow has to convey to the market this is bad.
Speaker 13: But how does he do that?
Speaker 3: Tough? The only way he can do it.
Speaker 1: Mike Schumacher, based on Myriada history, is to delay, pretended,
Speaker 1: and delay. So we're going to go through today. He's
Speaker 1: going to read all sorts of statements. They're going to
Speaker 1: be you know, the answers are going to be written
Speaker 1: out in advance. Is this a meeting in preparation for
Speaker 1: July hoping the facts change for Jerome Powell.
Speaker 13: Well, they could change the one big thing between now
Speaker 13: and the July meeting. Granted, the economic data flow pretty light,
Speaker 13: but you think about regional bank earnings, they start to
Speaker 13: report the regionals. This is I think July nineteenth is
Speaker 13: the first big day and the next FED meetings of
Speaker 13: twenty sixth, So it's possible you get lots of noise,
Speaker 13: let's say, in the week or so the ahead of
Speaker 13: the July meeting. But that seems like a long time away.
Speaker 13: I mean, heck of Disney is delaying Star Wars three years.
Speaker 13: Maybe the fat can look out six seven weeks into
Speaker 13: the future like.
Speaker 2: A stretch, especially because perhaps their budget is a little
Speaker 2: bit less than the Avatar sequels. I am curious, Mike,
Speaker 2: how much we have a little?
Speaker 14: Just a little.
Speaker 2: We've priced out rate cuts. That's what we've been doing
Speaker 2: over the past couple of months, since the rate cuts
Speaker 2: priced in during the banking crisis that happened for a
Speaker 2: half a second in March. I'm now wondering, do you
Speaker 2: expect the market to start pricing in materially higher rates,
Speaker 2: as one person after another on surveillance this morning have
Speaker 2: come out and said there is more work to do
Speaker 2: and the dynamism of this economy is not going to
Speaker 2: crack under five percent rates.
Speaker 3: We think lie.
Speaker 13: So it's really been interesting. You make a great point
Speaker 13: when you look at the degree to which rate cuts
Speaker 13: have been priced out for twenty twenty three. It's amazing.
Speaker 13: So early May there was something like ninety basis points
Speaker 13: and cuts priced for this year. Now it's fifteen or twenty,
Speaker 13: give or take. If I look at twenty twenty four,
Speaker 13: it's about one hundred and thirty basis points and cuts.
Speaker 13: We think that number goes down. Does it go to zero, No,
Speaker 13: maybe it goes to one hundred something like that. So
Speaker 13: a decent amount of rate cutting taken out, would I
Speaker 13: continue to be surprised? Is why the markets are pricing
Speaker 13: so much easing by the Fed relative to other central banks.
Speaker 13: And we're talking again about next year, or you can
Speaker 13: even look at it this year. The relative policy pads.
Speaker 13: Why is the ECB price to hike fifty five basis
Speaker 13: points between now and September and the FED is priced
Speaker 13: for twenty and why does the market price the FED
Speaker 13: to be effectively unchanged at the end of the year
Speaker 13: when other central banks are priced to be much higher.
Speaker 13: That makes very little sense to us. We think the
Speaker 13: market's got that wrong.
Speaker 2: Well, perhaps they've got that wrong, but based on what
Speaker 2: people are expecting from the Fed, they're only going to
Speaker 2: confirm that if they're going to skip now, I mean,
Speaker 2: will that necessarily feed into some of the optimism and
Speaker 2: as we were hearing earlier from Bruce Casmen, the exuberance
Speaker 2: in risk markets.
Speaker 13: Yeah, the action today, Lisa, I would say, is going
Speaker 13: to be all in the press conference and not in
Speaker 13: the statement. If you look at really the period of
Speaker 13: the last year, So go through the last eight FED
Speaker 13: meetings very very consistently. Whatever the market does from what
Speaker 13: we would call the statement period, so call it two
Speaker 13: o'clock to two twenty five or what have you, it
Speaker 13: goes into a u turn. Once Chairman politics to Mike,
Speaker 13: so he walks back some of the policy moves, tries
Speaker 13: to explain a bit, tries to amplify, maybe, talks about
Speaker 13: the link whatever it might be. The hoops, we got
Speaker 13: that a bit wrong. Let's go the other way. We're confused.
Speaker 13: So I think you'll get more of that today, So
Speaker 13: look at the press conference and focus less on a statement.
Speaker 9: That's my recommendation and looking forward to it. Great recommendation
Speaker 9: as well. Mike Schumacher of wels FAG Mike, thank you
Speaker 9: for that.
Speaker 1: Let's get to a three trillion dollar question. We do
Speaker 1: that with Tom for the expert at Senior Research Analysis
Speaker 1: at DA Davidson. He got an ATARI place that years
Speaker 1: ago and now he's turned it into a Mac pro
Speaker 1: and a study of Apple Apple Apple, Tom, we need
Speaker 1: an update here on the vector of Apple up forty
Speaker 1: x percent off the January beginning of the year. There's
Speaker 1: a persistency to the trend. What's your target as a
Speaker 1: trend continues, do they blow through a three trillion dollar valuation?
Speaker 15: Yeah, so maybe the word of the day is pop. Yes,
Speaker 15: So I think Apple shares are going to take a
Speaker 15: pause here. I think the good news from the new
Speaker 15: product launch, the Vision Pro, which is the most significant
Speaker 15: new product launch since the iPhone in two thousand and seven,
Speaker 15: is priced into the stock. The stock's trading in a
Speaker 15: premium on an enterprise valued EBITDA basis, on a PE basis,
Speaker 15: and on a sales EBITDA basis. So I think the
Speaker 15: good news is priced into the stock. I'm looking for
Speaker 15: shares to take a breather.
Speaker 1: The core unit thing is the iPhone. I believe there's
Speaker 1: a new iPhone language coming out, maybe a new iPhone chip.
Speaker 1: Can they keep innovating the iPhone to keep the unit
Speaker 1: sale persistency going?
Speaker 15: The answer is yes, But on a near term basis,
Speaker 15: what does success look like for Apple? And it looks
Speaker 15: like low single digit sales growth, definitely not double digit
Speaker 15: sales growth. So you have a stock trading in a
Speaker 15: premium multiple relative to its history. The iPhone's doing amazingly
Speaker 15: well in a challenging macroeconomic environment, taking advantage of the networks,
Speaker 15: leveraging their five G networks of Verizon and such, and
Speaker 15: helping consumers buy the phones, subsidizing them, Apple offering buy now,
Speaker 15: pay later, all these different things. So yes, iPhone can
Speaker 15: carry the day. But again, I think a lot of
Speaker 15: this good news is already priced.
Speaker 16: Into the side.
Speaker 2: Tom Well, Apple use artificial intelligence and chat GPT type
Speaker 2: of technology to make serri better and to make it
Speaker 2: a more sort of intertwined aspect of the iPhone.
Speaker 15: The answer is yes, And I think that when we
Speaker 15: started the discussion of artificial intelligence. So I've published twenty
Speaker 15: five papers on the convergence of tech and retail. One
Speaker 15: a couple of years back was on the power of
Speaker 15: artificial intelligence. Apple, I think appropriately discussed that it was
Speaker 15: a horizontal technology, not a vertical one, and makes all
Speaker 15: of its products better.
Speaker 16: Hopefully it'll make sery better.
Speaker 2: We're also talking about augmented reality, and you talked about
Speaker 2: the vision pro, the thirty five one hundred dollar goggles
Speaker 2: that people can put on and experience a new and
Speaker 2: improved world.
Speaker 7: What is the future of this?
Speaker 2: Is this the future of computing? Everyone talks about how
Speaker 2: this is revolutionizing things in a way that the iPhone did,
Speaker 2: but we're not really understanding the implications. Can you give
Speaker 2: us the sort of market case who wins and who loses?
Speaker 15: So I'd like to think about it in the view
Speaker 15: of the metaverse, and our view is the metaverse will
Speaker 15: be a thing, not the thing. So ten years from now,
Speaker 15: consumers will be accessing the Internet in many different ways.
Speaker 15: They could have implanted chips, which is something Elon Musk
Speaker 15: is working on. ARVR will be one of many ways
Speaker 15: that consumers will access the Internet.
Speaker 16: But we don't think it will be the dominant way.
Speaker 15: I do think the winner on the thirty four to
Speaker 15: ninety nine vision pro is Meta Platforms, which is offering
Speaker 15: a device for four ninety nine. So to the extent
Speaker 15: that Apple gets people excited about ARVR, I think Meta
Speaker 15: platform stands the benefit with a much lower price point item.
Speaker 2: We had on Abby Joseph Cohen from Columbia University, formerly
Speaker 2: a partner of gomet SAX yesterday and she said she's
Speaker 2: been talking to computer scientists and her sense is that
Speaker 2: perhaps people are overly optimistic about the future of artificial
Speaker 2: intelligence and what some of these chat GPT technologies can
Speaker 2: actually achieve reliably. Do you agree with that? Do you
Speaker 2: feel like it's been sort of overplayed at least to
Speaker 2: this point.
Speaker 15: So my concern about it is, you know, as a
Speaker 15: consumer who grew up with skynet, But my primary concern
Speaker 15: is what happens to all the displaced workers if we
Speaker 15: truly become a fully automated or much more automated society.
Speaker 15: So what's going to happen to the economy if twenty
Speaker 15: five percent of the workforce is displaced by automation. So, yes,
Speaker 15: I think that there's way too much hype on what
Speaker 15: it can mean. I simply think of, you know, machine
Speaker 15: learning as the ability to cipher what is a cat,
Speaker 15: what is a dog? Things of that nature. I think
Speaker 15: the uh, you know, chat for customer service is flawed.
Speaker 15: It may always be flawed. A chat for search has
Speaker 15: elements that are flawed.
Speaker 16: It may always be flawed.
Speaker 15: So I think artificial intelligence is a very important technology responsibly,
Speaker 15: but I think there's going to be a lot of challenges,
Speaker 15: including an increase in automation and the displaced workforce.
Speaker 9: Thirty four ninety nine makes it sound cheap. Thirty four
Speaker 9: nine three and a half thousand dollars, Tom, how are
Speaker 9: people going to pay for this?
Speaker 16: Three point five large? How about that? John?
Speaker 15: So basically, if you look backwards, we could see why
Speaker 15: Apple's done the credit card, buy now, pay later, things
Speaker 15: of that nature. I'm of the belief in the future
Speaker 15: Apple offer will offer you a pure subscription for two
Speaker 15: hundred fifty dollars a month.
Speaker 16: You get Apple. What does that mean?
Speaker 15: You might get a vision pro headset, you might get
Speaker 15: the latest iPhone.
Speaker 16: And then if you're paying two fifty.
Speaker 15: A month or whatever it is monthly, you may not
Speaker 15: think about the two grand you're paying for the iPhone,
Speaker 15: the three point five K, you're paying for the Vision pro.
Speaker 15: So Apple as a monthly bill, it'll be a big bill.
Speaker 15: But then I think it'll be easier for them to
Speaker 15: sell some of these higher price products.
Speaker 9: Tell I got to squeeze it in that's been developing
Speaker 9: with the handset already. What does that mean for the
Speaker 9: valuation of the Case company as you start to get
Speaker 9: more recur and revenue in that fashion.
Speaker 16: Well, and that's higher multiple.
Speaker 15: So the beauty of Tim Cook's leadership has been the
Speaker 15: higher multiple he's achieved by adding services to a strong
Speaker 15: base of hardware. The question is will they be able
Speaker 15: to compliment future hardware and services offerings to massively increase
Speaker 15: the sales base and then on a higher multiple, increase
Speaker 15: the stock.
Speaker 16: And right now we're taking away and see attitude.
Speaker 9: Being guy some Thank you some for f I Davidson
Speaker 9: at the end there.
Speaker 1: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and
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Speaker 1: It starts right now.
Speaker 7: Boom from the Bloomberg Interactive Brokers Studios. This is Bloomberg
Speaker 7: Daybreak or Wednesday, June fourteenth. Coming up today.
Speaker 17: Former President Trump calls it a day that will go
Speaker 17: down in infamy after pleading not guilty to federal charges.
Speaker 7: All eyes are on the Fed as the Central Bank
Speaker 7: prepares to issue its latest policy decision.
Speaker 17: Shell gets a boost, the oil giant upsits dividend and
Speaker 17: pivots back to fossil fuels, and more.
Speaker 7: Legal trouble hits Microsoft's bid, poor activision blizzard.
Speaker 4: Russian President Putin admits shortcomings fighting Ukraine's counter defensive, plus
Speaker 4: a federal judge he consider as a takeover a New
Speaker 4: York's Bikers Island.
Speaker 18: I'm Michael dar John stash Eron's Worth, the Yankees meet
Speaker 18: the Mets, a new coach for the Rangers, and the
Speaker 18: Vegas Golden Knights have won this Family Cup.
Speaker 12: That's all straight ahead on Bloomberg day Break, the Business
Speaker 12: news you need to starn your day in just one
Speaker 12: fifteen minute podcast each morning on Apples, Spotify, the Bloomberg Business.
Speaker 6: App, and everywhere you get your podcasts.
Speaker 7: Good morning, I'm Nathan Hager and I'm Amy Morris. Here
Speaker 7: are the stories we're following today.
Speaker 17: We begin with the major story in politics this morning,
Speaker 17: the arraignment of former President Donald Trump. The Republican front runner,
Speaker 17: pleaded not guilty to thirty seven federal counts accusing him
Speaker 17: of willfully retaining top secret documents. After court, he flew
Speaker 17: from Miami to Bedminster, New Jersey, where he told supporters
Speaker 17: he had every right to keep those records.
Speaker 19: Threatening me with four hundred years in prison for possessing
Speaker 19: my own presidential papers, which just about every other president
Speaker 19: has done, is one of the most outrageous and vicious
Speaker 19: legal theories ever put forward in an American court of law.
Speaker 17: The former president spoke at a fundraiser that was planned
Speaker 17: before the indictment.
Speaker 7: And it was a historic day, making Trump the first
Speaker 7: ex president to face federal charges. It all started at
Speaker 7: a courthouse in Miami. That's where we find Bloomberg's at
Speaker 7: Kaylee Lines.
Speaker 20: There were hundreds of pro Trump supporters that were at
Speaker 20: the courthouse. Police that I spoke with indicated that there
Speaker 20: had been no violent incidents that they were aware of,
Speaker 20: and President Trump, after leaving the courthouse, went to a
Speaker 20: popular Cuban restaurant here in Miami, Cafe Verside, to speak
Speaker 20: with some of the reporters. As for where the legal
Speaker 20: proceedings go from here, this case will move from Miami
Speaker 20: to West Palm Beach, Florida, where Judge Eileen Cannon, a
Speaker 20: Trump appointee, will be overseeing it. It then becomes a
Speaker 20: question of the timeline. President Trump has a reputation for
Speaker 20: dragging legal proceedings out for quite some time, so we
Speaker 20: could see this fight going well up to the November
Speaker 20: twenty twenty four election or perhaps even beyond it. In Miami,
Speaker 20: Kaylee Lines Bloomberg.
Speaker 6: Names Okay Kaylee, thank you know.
Speaker 17: Legal analysts say drawing out the case could have benefits
Speaker 17: for the former president. We caught up with Palm Beach
Speaker 17: County State Attorney Dave Ehrenberg.
Speaker 21: The one advantage for Trump is that it gives him
Speaker 21: a chance to delay matters further.
Speaker 22: You can challenge the ruling down here, but he's not.
Speaker 7: Going to succeed.
Speaker 6: But in a way, he wins by losing, because by
Speaker 6: losing in court, he's going to have those delays that
Speaker 6: he loves because it can push this case beyond the
Speaker 6: twenty twenty four election.
Speaker 17: Palm Beach State Attorney Dave Ahrenberg spoke with Joe Matthew
Speaker 17: on Bloomberg's Sound On. You can catch the program at
Speaker 17: one pm Eastern on Bloomberg Radio or listen on demand
Speaker 17: wherever you get your podcasts.
Speaker 7: We'll have more on Donald Trump's case in just a
Speaker 7: few minutes. But now it's turned to Wall Street traders
Speaker 7: looking to today's policy decision from the Federal Reserve. The
Speaker 7: majority of economists expect the Fed to pause and not
Speaker 7: raise rates for the first time since March of last year.
Speaker 7: Let's get those details from Bloomberg's Michael McKee.
Speaker 23: Fed officials went into their two day meeting divided over
Speaker 23: whether inflation remains so stubborn that additional rate increases are necessary.
Speaker 23: Tuesday's benign CPI report likely tips the balance of the
Speaker 23: argument to those who would put a further move on hold.
Speaker 23: The central Bank has raised the nation's benchmark borrowing rate
Speaker 23: by more than five percentage points and inflation is coming down.
Speaker 23: While investors have priced out a rate move for this meeting,
Speaker 23: July and future meetings remain on the table, at least
Speaker 23: for now, markets will price those odds after today a
Speaker 23: new forecast from Fed officials and a new dot plot
Speaker 23: outlining their rate views, coupled with what Fed chair j
Speaker 23: Powell says about the outlook. Michael McKee Bloomberg Daybreak.
Speaker 17: Okay, Mike, thanks to join us for live coverage of
Speaker 17: the FED decision on a special edition of Bloomberg Surveillance.
Speaker 17: It starts at one thirty pm Eastern on Bloomberg Radio
Speaker 17: and Television. Plus stay tuned for another reading on inflation.
Speaker 17: We get that latest Street on US producer prices at
Speaker 17: eight thirty this morning.
Speaker 7: And turning overseas, the economy is also in focus in
Speaker 7: the UK today. Growth in Britain bounced back in April.
Speaker 7: Bloombergs up Uwan Pots joins us from London. With the details.
Speaker 7: Good morning Ewan, Good morning Amy and Nathan. A strong
Speaker 7: start to the second quarter for the UK economy. GDP
Speaker 7: grew by zero point two percent in April, following a
Speaker 7: negative reading in the previous month. The positive data, in
Speaker 7: line with estimates, means the British economy dodges the risk
Speaker 7: of recession. But after hot employment numbers this week, traders
Speaker 7: have been ramping up bets at the Bank of England
Speaker 7: will be forced to continue hiking rates throughout the summer.
Speaker 10: In London, I'm you in pot'spoon bag day break.
Speaker 6: Okay you and thanks. Let's stay in Europe, where big
Speaker 6: oil is making news. This morning.
Speaker 17: Shell says it will increase its dividend by fifteen percent.
Speaker 17: It's also pivoting back to oil and gas. It's part
Speaker 17: of Shell's pivot to expand the most profitable parts of
Speaker 17: its business, even if they are carbon intensive.
Speaker 7: And oil demand is set to slow dramatically. That's the
Speaker 7: word from the International Energy Agency. The IEA says consumption
Speaker 7: in twenty twenty four will grow at half the rate
Speaker 7: scene in the prior two years. The agency says high
Speaker 7: prices and Russia's invasion of Ukraine will speed up the
Speaker 7: transition away from far feels.
Speaker 6: Okay, Amy. Thanks.
Speaker 17: Back here in the US, Microsoft is in the spotlight.
Speaker 17: The company's acquisition of Activision Blizzard has been temporarily blocked
Speaker 17: by a federal judge, and we get the story from
Speaker 17: Bloomberg's John Tucker.
Speaker 22: The judge issued a temporary restraining order to maintain what
Speaker 22: he called the status quo while the Federal Trade Commission
Speaker 22: challenges the deal. The FTC itself filed an emergency motion
Speaker 22: to halt the merger on Monday. This ruling holds the
Speaker 22: two companies apart until five days after the court rules
Speaker 22: on a more permanent pause in the deal, and evidentiary
Speaker 22: hearing of the longer term in junction is set to
Speaker 22: be held in San Francisco later this month. US authorities
Speaker 22: are not the only ones who've challenged the deal. UK
Speaker 22: competition regulators also vetoed the merger. John Tucker Bloomberg Daybreak.
Speaker 17: Time now to take a look at some of the
Speaker 17: other stories making news in New York and around the world.
Speaker 17: For that, we're joined by Bloomberg's Michael Barr. Good morning, Michael,
Speaker 17: Good morning, Nathan. President Vladimir Putin acknowledged that Russian forces
Speaker 17: fighting in Ukraine lacks efficient advanced weapons. Despite a trip
Speaker 17: of arms output, Kieves forces pressed the counter offensive. However,
Speaker 17: regional authorities say Russian forces fired cruise missiles at the
Speaker 17: southern Ukrainian city of Odessa overnight, killing three people. Meanwhile,
Speaker 17: President Biden met yesterday with the NATO Secretary General Yen
Speaker 17: Stoltenberg in the Oval Office. President Biden said that the
Speaker 17: US remains committed to supporting Ukraine and defending NATO territory. Stoltenberg,
Speaker 17: in knowledge the latest US military a to Ukraine three
Speaker 17: hundred and twenty five million dollars, thank you.
Speaker 24: For your leadership, for your strong personal commitment to the
Speaker 24: Transatlantic Bond, to Europe and North American standing together. And
Speaker 24: then may also thank the US Congress and the people
Speaker 24: of America for the strong support to Ukraine.
Speaker 4: Monday's scheduled meeting with Stoltenberg was postponed to Tuesday because
Speaker 4: the President had to get treatment for a root canal.
Speaker 4: A federal judge is once again weighing a takeover of
Speaker 4: New York City's t troubled Rikers Island Jail Complex. Judge
Speaker 4: Laura Taylor described her faith in its leadership as shaken
Speaker 4: following recent reports of violence, grewsome injuries, and a lack
Speaker 4: of cooperation that has thwarted court oversight. Travelers are catching
Speaker 4: a break as US airfares and rental car prices have fallen.
Speaker 4: Bloomberg's at Maxter reports.
Speaker 25: There is a white hot demand for travel, and travelers
Speaker 25: saw the lowest prices for airline tickets and rental cars
Speaker 25: since March of twenty twenty one. Prices in May fell
Speaker 25: thirteen percent year over year. Prices for rental cars and
Speaker 25: trucks sank twelve percent, the most since May of twenty twenty,
Speaker 25: when the pandemic drastically curtailed travel. United CEO Scott Kirby
Speaker 25: says flight costs are now comparable to what consumers paid
Speaker 25: a decade ago. He says, we're just coming back to
Speaker 25: normalcy in pricing. In San Francisco, I'm at Baxter Bloomberg
Speaker 25: daybreak House.
Speaker 4: Republicans passed legislation to preemptively block future attempts to restrict
Speaker 4: gas stoves after overcoming a revolt by the party's conservative members.
Speaker 4: The bill would prohibit the independent Consumer Product Safety Commission
Speaker 4: from using federal funds to ban the appliances as hazardous products.
Speaker 4: Global News twenty four hours a day, powered by more
Speaker 4: than twenty seven hundred journalists, nanalysts, and over one hundred
Speaker 4: twenty countries. I'm Michael Barren. This is Bloomberg Nathan.
Speaker 6: Thanks Michael.
Speaker 17: Time out for the Bloomberg Sports Update FRONTI by Trice
Speaker 17: Date Outy.
Speaker 6: Here's John Stanshauer.
Speaker 18: All right, Nathan Wild started the Subway series. The second
Speaker 18: batter was John Carlos Stanton his twenty fourth home run
Speaker 18: at City Field. That's ten more than any other opposing player.
Speaker 18: Luis Severino's second pitch was a Brandon Nimo homer. Sever
Speaker 18: Reno gave up two runs in the first and name
Speaker 18: two more in the second, an other than the third,
Speaker 18: but the Yankees with five runs in the fourth off
Speaker 18: Max schurz Or, who got booed by the Cityfield crowd
Speaker 18: when he was taken out. The Yanks sent the Mets
Speaker 18: to their ninth loss in the last ten games, seven
Speaker 18: to six. Vicky bullpen has been a strength all season.
Speaker 18: Six Yankee relievers team for four plus scoreless innings of releave.
Speaker 18: Tonight it's Garrett Cole against Justin Verlander. They don't really
Speaker 18: need a reason to have a party in Las Vegas,
Speaker 18: but they got one.
Speaker 14: First Stanley Cup championship in Golden Knight's history comes in
Speaker 14: their sixth season. The Silver State is home to their
Speaker 14: greatest silver trophy at all of sports.
Speaker 18: JK GK the call Game five and a Cup Final,
Speaker 18: a blowout win for Vegas nine to three over Florida.
Speaker 18: Though the game was only two to one midway through
Speaker 18: the second period, the next thing you knew, it was
Speaker 18: seven to one. Hat trick for Vegas captain Mark Stone.
Speaker 18: Jonathan marsh So won the Consul Mike Trophy and playoff
Speaker 18: MVP and the surprising run by the Panthers as the
Speaker 18: eighth seed comes to an end. They had to play
Speaker 18: without their best player, the injured Matthew could Chuck. Meanwhile,
Speaker 18: the Rangers have their new coach, fifty eight year old
Speaker 18: Peter Loveolet, continuing his tour of the Metropolitan Division. The
Speaker 18: Rangers will be the fifth team in the division that
Speaker 18: he's coached, most recently with Washington. Lovey Let briefly played
Speaker 18: for the Rangers in the late nineteen eighties. He's the
Speaker 18: eighth winningest coach in NHL history. John Stashiewer, Bloomberg Sports.
Speaker 26: From coast to coast, from New York to San Francisco,
Speaker 26: Boston to Washington, DC, nationwide on SYRIASXAM, the Bloomberg Business
Speaker 26: app in Bloomberg dot Com. This is Bloomberg Daybreak. Good morning.
Speaker 26: I'm Nathan Hager.
Speaker 17: He is calling it a day that will go down
Speaker 17: in infamy, but rather than a sneak attack, former President
Speaker 17: Donald Trump is going after the Justice Department head on,
Speaker 17: hinting at his defense after pleading not guilty yesterday to
Speaker 17: federal charges over his handling of classified documents at mar Lago.
Speaker 6: For more, we are joined live this morning.
Speaker 17: By Greg Valiere, the chief US policy strategist at AGF Investments.
Speaker 6: Greg. Good morning.
Speaker 17: It's not every day that you see a defendant in
Speaker 17: a criminal trial of speaking out as forcefully as former
Speaker 17: President Trump did last night at Bedminster.
Speaker 6: But of course this is no ordinary criminal defendant.
Speaker 21: Yeah, good morning, Nathan. I make two quick points. Initially,
Speaker 21: first of all, good editorial lead editorial in this morning's
Speaker 21: Wall Street Journal talking about how Trump is his own
Speaker 21: worst enemy, saying and doing reckless things that come back
Speaker 21: to bite him. And then I think you've got to
Speaker 21: say I watched the whole talk he gave last night
Speaker 21: from Dedminster. He didn't say anything new. I mean, it's
Speaker 21: the same old stuff, like my detractors are deranged.
Speaker 12: There on and on and on.
Speaker 21: All of these words that he uses against his detractors,
Speaker 21: I think have lost a lot of their potency.
Speaker 17: But some of the words that he also used sounded
Speaker 17: like he was reading directly from the Presidential Records Act,
Speaker 17: which says you allude to he's talked about before. That
Speaker 17: would potentially be his defense if he does go to
Speaker 17: trial here. What does that say about how the former
Speaker 17: president is going to be pursuing this and the potential
Speaker 17: political impact.
Speaker 21: Yeah, very very aggressively, but at the same time, not
Speaker 21: in any great rush. I think he'd loved to see
Speaker 21: this coincide with the election campaign of next year. Even
Speaker 21: though people like Bill Barr, the former Attorney General, has
Speaker 21: said that this is outrageous. Even Nikki Haley said that
Speaker 21: it endangers national security. Trump's conviction in Florida is not certain.
Speaker 21: I mean, you've got a state where it's going to
Speaker 21: be difficult to get a jury where everybody agrees that
Speaker 21: Trump did something wrong.
Speaker 17: Does this put an onus on the Justice Department or
Speaker 17: even President Biden to put out more of a public
Speaker 17: response since the former president is coming out so publicly
Speaker 17: like this, that's.
Speaker 21: A really interesting angle, Nathan. All of a sudden, there's
Speaker 21: focus on why the Biden Whitehouse has been so passive
Speaker 21: instructing Democrats not to go after Trump, not inciting him,
Speaker 21: not leading to suspicion that there's a collusion between the
Speaker 21: White House and the Justice Department. But there are a
Speaker 21: lot of Democrats in this town who I think will
Speaker 21: very soon begin to really rip into tru for what
Speaker 21: he's done.
Speaker 17: Interesting, are you thinking of any names in particular? I
Speaker 17: wouldn't think that President Biden would be coming out, at
Speaker 17: least in the short term, more forcefully than he has.
Speaker 21: Yeah, I don't see Joe Biden. Actually, Jill Biden last
Speaker 21: night had a fairly critical comment about Trump. But I
Speaker 21: do think there will be other Democrats, Democrats would like
Speaker 21: to run for president in four years who start to
Speaker 21: talk pretty aggressively.
Speaker 17: Okay, what about the former president's primary opponents who started
Speaker 17: to see a little bit of a shift for them
Speaker 17: as well, particularly Nikki Haley and Tim Scott, both out
Speaker 17: of South Carolina, getting a little bit more forceful in
Speaker 17: their rhetoric.
Speaker 6: Do you see that continuing?
Speaker 21: But maybe I think a lot of these politicians will
Speaker 21: carefully read the polls, and the poll show, at least initially,
Speaker 21: the American public, not just Republicans, feel that this is
Speaker 21: a political you know, they're ganging up on Donald Trump.
Speaker 21: I think the key politician to watch, obviously is Ron Desantus.
Speaker 21: If Desantas starts to move away, and their signs that
Speaker 21: he might, that would be significant.
Speaker 17: Now it goes back to the point I guess that
Speaker 17: you were making earlier about the former president's words sort
Speaker 17: of losing their luster a little bit as he continues
Speaker 17: to hammer out a lot of the same forceful points
Speaker 17: he has before. How do you see the long term
Speaker 17: effects of this case playing out as it does get
Speaker 17: closer to a November twenty twenty four election, and potentially
Speaker 17: the case bleeding even after election day.
Speaker 21: Yeah, you got to sustain the momentum. How many times
Speaker 21: can you call someone a deranged lunatic before it starts
Speaker 21: to lose its impact? And I do think that while
Speaker 21: Trump will maintain his base, there's no question in my
Speaker 21: mind on that. I just don't see Donald Trump having
Speaker 21: enough support among moderates to win in a general election.
Speaker 17: Does this case sustain itself even with some of the
Speaker 17: other legal pressure that the former president is facing in
Speaker 17: potential further charges not just from this Special Council, but
Speaker 17: from Georgia as well.
Speaker 21: A good point. There are still two huge cases to go.
Speaker 21: I think Georgia may be in the news by later
Speaker 21: in the summer. It looks like that case will be brought,
Speaker 21: And of course the big one of all is January sixth.
Speaker 21: And I do think that Trump is quite vulnerable because
Speaker 21: of an extensive record that shows that he encouraged the
Speaker 21: riots and did nothing to stop them.
Speaker 17: This is Bloomberg Daybreak Today, your morning brief on the
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