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00:00> > WE DEFINITELY SEE MORE LINGERING INFLATION. > > THAT REACTION FUNCTION IS TILTED TOWARDS THE WEAKNESS OF THE LABOR MARKET RATHER THAN UPSIDE RISKS. > > I DO NOT THINK THE FED SET US UP FOR A 50. > > THE INFLATION BACKDROP IS PREMATURE TO START CUTTING AGGRESSIVELY. > > WE HAVE A LOT OF ADDITIONAL INFLATION FROM TARIFFS IN FRONT OF US. > > THIS IS BLOOMBERG SURVEILLANCE WITH JONATHAN FERRO, LISA ABRAMOWICZ AND ANNMARIE HORDERN. LISA: GOOD MORNING FOR OUR AUDIENCE WORLDWIDE, BLOOMBERG SURVEILLANCE STARTS RIGHT NOW. COMING IN THURSDAY IS CPI DAY. INVESTORS READY FOR A SOFT INFLATION PRINT AS THREE DAYS OF GAINS SEND EQUITIES FOR HIGHS. PRESIDENT TRUMP IS PUSHING FOR THE FED TO GO BAG. LISA: WE HAVE LOWERED -- THE BAR SO MUCH THAT PEOPLE ARE LOOKING FOR CPI THAT IS GOING TO GO ABOVE THE 2%, OR 3% POSSIBLY INCREASING ON AN ANNUALIZED BASIS AND YET PEOPLE ARE TALKING ABOUT IT IS COOLING DOWN. IT HIGHLIGHTS HOW EVERYONE IS FOCUSING ON THE LABOR MARKET AND LOOKING THROUGH INFLATION WHICH RAISES THE QUESTION, WHAT WOULD IT TAKE TO GET THE MARKET'S ATTENTION. JONATHAN: MUTED TARIFF PASSED THROUGH SO FAR AND DOES NOT OPEN THE DOOR FOR THE FED TO BE MORE AGGRESSIVE? ANNMARIE: IT SOUNDS LIKE IT ESPECIALLY WHEN JAY POWELL SET AT JACKSON HOLD THAT IT WILL BE ONE TIME PRICE ADJUSTMENTS BUT NOT AT THE SAME TIME, WHICH MEANS THAT WE CAN LOOK THROUGH ANY SORT OF HOT CPI PRINT. ON THE HEELS OF THE PPI THE PRESIDENT OF THE UNITED STATES IS CALLING FOR 50 WITHOUT SAYING 50. HE SAID NO INFLATION, AND TOO LATE, A.K.A. JAY POWELL MUST LOWER THE RATE BAG. JONATHAN: 50, AND THEN AGAIN AND AGAIN AND MAY BE WELL INTO 2020 SIX. WITH COMMENTS LIKE THIS. JAMES FRAZER SAYING "OUR CLIENT BASE IS STARTING TO ACT WITH CONFIDENCE." PUT THAT TOGETHER WITH THE LANGUAGE FROM DAVID SOLOMON WHO DOES NOT LOOK AT THIS MARKET OR SEE ANY RESTRICTIVENESS WHATSOEVER. LISA: WHEN YOU LOOK AT THE PROFITABILITY OF THE COMPANIES, THE FACT THAT THEY HAVE INCREASED OUR PROJECTIONS INTO DOUBLE-DIGIT LEVELS AND THE FACT THAT JIM FROM APOLLO SAYS INFLATIONARY PRESSURE COMING BACK. YOU PUT THIS TOGETHER AND YOU ASKED THE QUESTION, IS THE FED CUTTING TO SPUR SOME SORT OF RE-ACCELERATION OR CUTTING INTO A REACCELERATION THAT WOULD ALLOW FOR INFLATION TO BE STICKIER. IT IS QUIET BUT WE ARE NOT EXPRESSING THOSE CONCERNS. ANNMARIE: JANE FRASER SAID THAT THEY ARE ACTING WITH CONFIDENCE AND THEY ARE TALKING ABOUT THE CLOUD EVAPORATING IN TERMS OF POLICY UNCERTAINTY. REPORTS ARE ON THE FRONT PUT BECAUSE I HAVE POLICY CLARITY WHEN IT COMES TO TAX AND TARIFFS ESPECIALLY DEREGULATION. JONATHAN: THE DATA AT 8:30 EASTERN TIME AND FUTURES AHEAD BY .10%. WE WILL CUT -- WE WILL CATCH UP WITH STEVE FROM FEDERATED. WE WILL TALK WITH KKR AND JOE DAVIS COUNTING US DOWN TO CPI DATA. WE BEGIN WITH STOCKS SITTING AT RECORD HIGHS. "WHERE EVERYONE IS LOOKING FOR A MINI RECESSION, WE THINK IT ALREADY HAPPENED. DATA IN THE REARVIEW MIRROR IS PRIMARILY HOW THE FED VIEWS THE WORLD AND WILL LEAVE THEM TO A CUT NEXT WEEK." GOOD MORNING, DO YOU BELIEVE THE WORST IS BEHIND US? STEVEN: I THINK IT IS. I THINK THE DATA WE HAVE BEEN GAINING -- GETTING IS NEW INFORMATION ABOUT OLD NEWS. WE KNOW THE EARLIER PART OF THIS YEAR WAS WEAKER. THE IMMEDIATE AFTERMATH OF LIBERATION DAY. WE HAD A NEGATIVE GP JUST -- GDP PRINT AND ONCE WE BREAK DOWN THE NUMBERS WE WILL SHOW A STRING OF NEGATIVE TOP MONKS -- MONTHS. WE ALSO KNOW THAT THAT IS REVERSING AND CONFIDENCE HAS REBOUNDED AND WE SEE THAT THE MARKET IS ACTING WITH AN EARLY CYCLE IN THE FED IS LOOKING IN THE REARVIEW MIRROR AND THAT WILL LEAD THEM TO CUT. WE THINK THEY WILL DO THE RIGHT THING FOR THE WRONG REASON. WE NEED THEM TO CUT BECAUSE THERE ARE PARTS OF THE ECONOMY THAT HAS BEEN IN RECESSION WITH HOUSING AND LOW IN MEDICAL -- MIDDLE AMERICAN CONSUMERS. IT IS BOTH TRUANT AT THE SAME TIME IN OUR VIEW THAT THE ECONOMY IS SET TO RE-ACCELERATE, AND ALSO TRUE THAT IT IS APPROPRIATE TO CUT. AND WE SET ALL ALONG THAT SIX CUTS BETWEEN NOW AND THE END OF NEXT YEAR IS NOT ONLY WHAT IS APPROPRIATE BUT WHAT IS LIKELY. JONATHAN: THE FEDERAL RESERVE WILL CUT INTEREST RATES AND AS YOU LOOK FOR A PICK UP, WHERE WOULD YOU PLACE YOUR BETS IN THE MARKET? STEVE: I THINK YOU GOT A PREVIEW. WE ARE SEEING EARLY CYCLICAL START TO PERFORM, WHETHER IT IS THE HOME BUILDERS AND THE BANKS, AND SOME OF THE SHIPPING COMPANIES OR THE CONSUMER PLAY. AGAIN, IF YOU ARE A CONSUMER THAT HAS DEBT, YOU HAVE BEEN UNDER PRESSURE FOR HIGH RATES FOR TWO OR THREE YEARS. YOU GET A LITTLE BIT OF RELIEF AND THAT WILL HELP. IT IS ALSO SMALL CAPS. YOU SAW THEM OUTPERFORMED BY 6.5% WHICH IS THE NEXUS BETWEEN RATE SENSITIVITY AND CYCLICALITY, AND WE THINK THE ECONOMY WILL TURN UP AND RATES WILL COME DOWN. ANNMARIE: YOU SAID WE GOT A PREVIEW IN THE FORM OF GOLD REACHING ALL-TIME HIGHS AND IT RAISES THE QUESTION HAS THE U.S. ACCEPTED A 3% INFLATION TARGET BY CUTTING RATES INTO WHAT SEEMS LIKE A PERSISTENTLY ELEVATED INFLATION BACKDROP WITH A LOT OF CONCERNS WITHOUT IT REMAINING IN PLACE FOR THE NEXT COUPLE OF MONTHS? STEVE: I DO NOT THINK SO. HEADLINE INFLATION NUMBERS ARE BETWEEN 2.5 AND 3.5%. THIS IS A DIFFERENCE BETWEEN LOOKING THROUGH THE WINDSHIELD AND THE CRACKS REARVIEW MIRROR THAT THE FED HAS GOTTEN ITSELF CAUGHT IN TWO. IF YOU LOOK AT THE WINDSHIELD THIS IS WHAT YOU SEE. YOU SEE AN ECONOMY THAT IT IS AT BEST 35,000 JOBS ON AVERAGE. THAT IS NOT A RECIPE FOR WAGE INFLATION. SERVICES ARE 60% OF CPI. YOU HAVE HOME PRICES NEGATIVE FOUR MONTHS IN A ROW NATIONALLY. THAT IS NOT COMMON. AGAIN, THAT IS ONE THIRD OF CPI. I GET IT. THE INFLATION RATE OVER THE LAST 12 MONTHS IS BETWEEN 2.5 AND 3%. OUR JOB AS PROFESSIONAL INVESTORS OR MARKET FORECASTERS OR ECONOMISTS AND POLICYMAKERS IS TO LOOK AT WHERE THAT IS GOING. IF HOME PRICES ARE COMING DOWN AND WAGE INFLATION OR THE INGREDIENTS ARE NOT THERE, THEN AT SOME POINT YOU HAVE TO MAKE THE CALL THAT INFLATION IS HEADING LOWER. IF YOU WAIT FOR IT TO GET TO TWO BEFORE REMOVING RESTRICTED POLICY, YOU WILL FIND YOURSELF BEHIND THE CURVE AND A DEEPER SLOW THAN YOU WOULD HAVE TO HAVE. WE ARE NOT TALKING ABOUT EASY POLICY BUT GOING FROM 200 BASIS POINTS OF RESTRICTED POLICY DOWN TO SOMETHING CLOSER TO NEUTRAL. THAT IS NOT EXPECTING A 3% INFLATION TARGET. LISA: WE COULD SEE STOCKS AND BONDS RALLY AT THE SAME TIME AND LONG BONDS RALLY IF THE FED IS TRYING TO NOT BE BEHIND THE CURVE AS MUCH AS THEY ALREADY BE. IS THAT WHAT YOU ARE SAYING? WE COULD SEE ANOTHER GOLDILOCKS SCENARIO IN THE NEXT 12 MONTHS? STEVE: THAT ENVIRONMENT IS MORE BULLISH FOR STOCKS AND BONDS. WHAT IS MOST LIKELY TO HAPPEN IS TWO YEAR YIELDS WILL COME DOWN WHERE THE FEDERAL FUNDS RATE IS HEADED AND WE THINK THAT IS 3%. IF YOU WANT TO ARGUE FOR 3.5 OR 3.25, BUT SOMEWHERE NEAR NEUTRAL. THE TWO-YEAR-OLD -- THE TWO YEAR YIELD HAS SOME DOWNSIDE. THE 10 YEAR, THAT IS WHERE IT BELONGS. UP TO PERCENT INFLATION RATE AND 3% FEDERAL FUNDS RATE. THAT IS ABOUT RIGHT. THE LONG END OF THE CURVE HAS DONE MOST OF ITS RALLYING. WHAT WE THINK YOU WILL SEE IS SHORT BONDS AND SLOW RALLY WITH EQUITIES CONTINUING TO RALLY. IN THE LONG END HAS LESS OPPORTUNITY. ANNMARIE: WE HEARD TO JANE FRASER TODAY AND TALKING ABOUT THE FACT THAT CLIENTS HAVE CONFIDENCE BECAUSE THERE IS MORE CLARITY IN WASHINGTON. WHEN IT COMES TO TARIFFS, THAT IS BEING DEBATED. WHAT IF IEEPA YET STRUCK DOWN? WILL THAT UPPER END HOW YOU FEEL? STEVE: OUR VIEW IS THAT IT WILL PROBABLY NOT GET STRUCK DOWN BECAUSE THE ADMINISTRATION HAS MADE SUCH A CASE ABOUT THE NATIONAL SECURITY IMPLICATIONS. THAT IS OUR BASIS. IF IT WERE STRUCK DOWN, I THINK THE MOST APPARENT NEGATIVE IMPACT WOULD BE ON THE LONG END OF THE BOND COURT -- BOND CURVE. WHETHER OR NOT YOU LIKE TARIFFS THAT IS UP TO YOU. WHAT IS CLEAR IS THAT THE TARIFF REVENUE IS THE OFFSET TO THE ONE BIG BEAUTIFUL BILL IN TERMS OF REVENUE. IF ALL OF A SUDDEN $4 TRILLION OF REVENUE FOR 10 YEARS GOES AWAY THAT WILL PUSH LONG BOND RATES UP. IT DOES NOT MATTER HOW WE GOT HERE. FROM A BOND MARKET PERSPECTIVE TARIFFS WOULD BE A NEGATIVE ON THE LONG END OF THE CURVE. REMEMBER, THERE ARE OTHER REMEDIES. I EXPECT WHAT YOU WOULD SEE IF IEEPA WAS STRUCK DOWN IS THAT THE ADMINISTRATION WOULD PREVENT THE OTHER AUTHORITIES TO AT LEAST IMPLEMENT A 10 OR 15% ACROSS THE BOARD TARIFF AND THEN MOVE INTO SECTORIAL TARIFFS. I THINK IF WHAT YOU ARE WAITING FOR IS THAT TARIFFS ARE GOING AWAY, I DO NOT THINK THAT WILL HAPPEN. THIS IS A CORE TENANT FOR THE ADMINISTRATION AND IT MIGHT BE MESSIER, BUT THEY ARE GOING TO BE IN PLACE. THE LEVEL IS THE MARKET -- IS WHAT THE MARKET IS MOST INTERESTED IN. THAT HAS BEEN ESTABLISHED AT 15% OR BEEN RE-CREATED AT CLOSE TO 15%. IS THERE UNCERTAINTY, SURE. IS THERE THE KIND OF UNCERTAINTY THAT EXISTED IN APRIL. BECAUSE THE ECONOMY TO FREEZE? I THINK THAT IS BEHIND US. ANNMARIE: YOU NOTE THAT THERE IS THE WORLD CUP AND THE 250TH ANNIVERSARY, WHAT KIND OF ECONOMIC IMPACT DO YOU SEE FROM THOSE DOSE -- TWO EVENTS. STEVE: I THINK THERE IS A LOT OF ECONOMIC IMPACT. MONETARY EASING STARTS NEXT WEEK AND WE ARE TALKING -- NOT TALKING ABOUT 25 OR 50. WHAT WE ARE TALKING ABOUT FIVE OR SIX CUTS OVER THE NEXT 18 MONTHS AND THAT IS THE BIGGER QUESTION. IT IS SOMEWHERE IN THAT RANGE UNLESS WE GET SURPRISED BY THE DATA. AT LEAST IT IS LESS RESTRICTIVE GROWTH. AND THEN YOU HAVE THE STIMULUS OF THE ONE BIG BEAUTIFUL BILL IN JANUARY AND WE HAVE NOT CHANGED WITHHOLDING TABLES WHICH MEANS THAT YOU ARE LOOKING AT BIGGER THAN EXPECTED TAX RETURN SEASONS. BACK TO SCHOOL HAS BEEN GOOD IN TERMS OF SPENDING. THE CONSUMER IS HOLDING BUT THERE IS MORE STIMULUS TO COME IN TERMS OF TAX RETURNS AND THEN YOU HAVE MAJOR ECONOMIC EVENTS AND IT DOES LEAD TO TOURIST AND INFRASTRUCTURE. CAN YOU QUANTIFY IT AT THIS POINT? IT IS PROBABLY PREMATURE. IF YOU LOOK AT THE TOTALITY OF MONETARY POLICY THAT IS LESS RESTRICTIVE AND TAX RELIEF ON CORPORATE'S AND INDIVIDUALS AND SOME OF THESE ECONOMIC CATALYST THAT CAN START TO KICK IN, YOU GET A PICTURE OF A 26 -- A 2026 LOOKING MORE ROBUST FOR THE UNITED STATES. JONATHAN: WE APPRECIATE THE UPDATE. CONSTRUCTIVE ON THIS EQUITY MARKET. CUTTING INTEREST RATES INTO A PICKUP OF ECONOMIC GROWTH. LISA: ONE THAT IS WARRANTED AND THIS IS THE THING THAT HE HAS HIGHLIGHTED. THIS IS A MULTI-CYLINDER ECONOMY THAT IS COMPLICATED AND WHAT ASPECTS THAT THE FED CAN AFFECT IS THE ONE THEY NEED TO. JONATHAN: STOCKS ARE POSITIVE BY CLOSE TO 0.2% ON THE S & P 500. WITH AN UPDATE ON STORIES ELSEWHERE WITH THE BLOOMBERG BRIEF HERE IS VONNIE QUINN. VONNIE: A SEARCH IS UNDERWAY OF -- FOR THE KILLER OF CHARLIE KIRK. HE WAS SHOT AS HE WAS SPEAKING TO AN OUTDOOR CROWD AT A UTAH UNIVERSITY. THE 31-YEAR-OLD WAS A CLOSE ALLY OF PRESIDENT TRUMP WHO POSTED ABOUT THE INCIDENT ON SOCIAL MEDIA AND ORDERED AMERICAN FLAGS TO BE LOWERED TO HALF-STAFF UNTIL SUNDAY. THE TRUMP ADMINISTRATION IS APPEALING THE RULING BLOCKING THE PRESIDENT FROM BLOCKING -- FROM FIRING LISA COOK. THE APPEALS COURT SAID THAT THE PRESIDENT DID NOT HAVE CAUSE A FIRE HER UNDER THE FEDERAL RESERVE ACT. ANY RULING BY TRUMP WOULD LIKELY BE CHALLENGED QUICKLY AT THE SUPREME COURT. HUNDREDS OF SOUTH KOREAN WORKERS TO DETAINED IN A GEORGIA RAID WILL FLY HOME THIS AFTERNOON AFTER THE TWO COUNTRIES' TOP DIPLOMATS AGREED TO RESOLVE THE DISPUTE. PRESIDENT DONALD TRUMP AGREED TO SOUTH KOREAN DEMANDS THAT THE WORKERS WOULD NOT BE HANDCUFFS. THE U.S. WOULD ALSO CONSIDER A NEW VISA CATEGORY TO PREVENT FUTURE PROBLEMS. AND THAT IS YOUR BLOOMBERG BRIEF. JONATHAN: THANK YOU AND WE APPRECIATE IT. UP NEXT ON THE PROGRAM, A MAN HUNTS UNDERWAY. > > I AM FILLED WITH GRIEF AND ANGER AT THE HEINOUS ASSASSINATION OF CHARLIE KIRK. MY ADMINISTRATION WILL FIND EACH AND EVERY ONE OF THOSE WHO CONTRIBUTED TO THIS ATROCITY, AND DO OTHER POLITICAL VIOLENCE. JONATHAN: WE WILL HAVE THE LATEST WITH TYLER KENDALL. FROM NEW YORK CITY, GOOD MORNING. ♪ JONATHAN: A BUSY MORNING COMING UP IN THE FINANCIAL MARKETS STARTING THIS AT 8:50 EASTERN TIME AND THEN LATER AT EIGHT: 30 EASTERN TIME, TWO POINTS OF DATA. JOBLESS CLAIMS AND USCP I. THE MAIN EVENT LATER THIS MORNING. SCORES LOOK LIKE THIS WITH EQUITIES AT ALL-TIME HIGHS. THE THREE DAY WINNING STREAK WITH EQUITIES FIRM OR BY 0.2%. IN THE BOND MARKET YIELDS UNCHANGED AT 3.50 FOUR. LET US GO DOWN TO WASHINGTON AND UNDER SURVEILLANCE A MANHUNT UNDERWAY. > > I AM FILLED WITH GRIEF AND ANGER AT THE HEINOUS ASSASSINATION OF CHARLIE KIRK. MY ADMINISTRATION WILL FIND EACH AND EVERY ONE OF THOSE WHO CONTRIBUTED TO THIS ATROCITY, AND TO OTHER POLITICAL VIOLENCE. IT IS LONG PAST TIME FOR ALL AMERICANS IN THE MEDIA TO CONFRONT THE FACT THAT VIOLENCE AND MURDER ARE THE TRAGIC CONSEQUENCE OF DEMONIZING THOSE WITH WHOM YOU DISAGREE. JONATHAN: HERE IS THE LATEST. AUTHORITIES EXPANDING THEIR SEARCH FOR THE KILLER OF CONSERVATIVE ACTIVIST CHARLIE KIRK. THE LATEST FROM THE NATION'S CAPITAL AND HERE IS TYLER KENDALL. TYLER: GOOD MORNING. THE SUSPECT IS STILL AT LARGE AND WE KNOW THAT THE FBI IS WORKING CLOSELY WITH STATE AND LOCAL LAW ENFORCEMENT ON THE INVESTIGATION. AROUND 12:20 P.M. MOUNTAIN TIME, A SINGLE SHOT WAS FIRED FROM A BUILDING ABOUT 200 YARDS AWAY FROM KIRK WAS ADDRESSING THIS CROWD AT UTAH VALLEY UNIVERSITY. OFFICIALS SAY THE SHOT APPEARS TO HAVE COME FROM A ROOFTOP. CLOSED-CIRCUIT SURVEILLANCE FOOTAGE SHOWS A PERSON DRESSED IN DARK CLOTHING ON THE ROOFTOP AND THAT PERSON IS BELIEVED TO BE THE SUSPECT. NO OTHER DETAILS HAVE BEEN RELEASED INCLUDING WHAT WEAPON HAD BEEN USED OR WHETHER OR NOT IT WAS RECOVERED. UTAH OFFICIALS SAID THEY TOOK TWO PEOPLE INTO CUSTODY BUT AFTER QUESTIONING THEY WERE RELEASED. 3000 PEOPLE WERE IN ATTENDANCE AT THIS EVENT ALONG WITH SIX LOCAL POLICE OFFICERS AND KIRK'S OWN SECURITY DETAIL. THE GOVERNOR SAID THIS WAS A TARGETED ATTACK AND CALLED IT A POLITICAL ASSASSINATION. KIRK IS A VERY PROMINENT OF CONSERVATIVE ACTIVIST AND A CLOSE ALLY OF PRESIDENT TRUMP. HE WAS ONE OF THE FIRST TO CONFIRM THAT KIRK HAD BEEN KILLED. THE PRESIDENT HAS ORDERED FLAGS TO HALF-STAFF ACROSS THE COUNTRY UNTIL AT LEAST THIS WEEKEND. JONATHAN: TYLER KENDALL IN WASHINGTON, D.C.. I THINK WE WERE GRIPPED BY THESE DEVELOPMENTS AND UTTERLY HEARTBREAKING. LISA: IT IS DEVASTATING ESPECIALLY FOR A DEMOCRACY WHEN PEOPLE HARKEN BACK TO THE WORDS ATTRIBUTED TO VOLTAIRE. REGARDLESS ABOUT WHAT YOU THINK ABOUT A PERSON'S BELIEF, I DEFEND TO MY DEATH THE RIGHT TO SAY IT AND WHY HAVE WE GOTTEN AWAY FROM THAT TYPE OF RHETORIC AND DEBATE. THE POLITICAL VIOLENCE IS DEEPLY UPSETTING FOR US. ANNMARIE: THIS IS THE SECOND SUMMER OF THIS. AND WHAT WE SHOULD BE SEEING IS WHAT WE ARE SEEING, BOTH SIDES CONDEMNING THIS AND IT NEEDS TO BE CONDEMNED TO THE SHARPEST DEGREE. AND THERE NEEDS TO BE A SHIFT IN THIS COUNTRY FOR POLITICAL DISCOURSE. JONATHAN: THERE IS A MANHUNT AND THE WET -- UNDERWAY AND ANY DEVELOPMENTS WE WILL SHARE WITH YOU. LET US GIVE YOU THE LATEST ELSEWHERE IN WASHINGTON, D.C. WITH TOBY MARKET -- TOBIN MARQUEZ. I WANT TO TALK ABOUT TRADE IF WE CAN MOVE ON FROM SUCH A DELICATE SUBJECT. SHIPPING HAS BEEN A MASSIVE FOCUS AND NOW THERE ARE SOME SIGNS THAT MEXICO IS FALLING INTO LINE. WHAT DO YOU MAKE OF THE LATEST? TOBIN: THERE HAS BEEN TALK ABOUT MEXICO IMPOSING TARIFFS ON CHINA AS A WAY OF SECURING MORE FAVORABLE TERROR TREATMENT FROM THE U.S. GOING BACK TO BEFORE LIBERATION DAY. THERE WAS TALK ABOUT THAT STRATEGY AND MEXICO'S POSSIBLE EFFORTS TO COOPERATE. THUS FAR IT HAS BEEN IN MATERIAL BUT THAT MAKES SENSE THAT THAT IS SOMETHING THAT THEY ARE LOOKING AT AND THERE ARE REASONS FOR THEM TO BE INTERESTED IN THAT DOMESTICALLY AND ON THE EUROPEAN SIDE. THEY HAVE THEIR OWN CONCERNS EVEN SEPARATE FROM THEIR EFFORTS TO APPEASE THE U.S.. I THINK THE DEVELOPMENTS ARE ENCOURAGING ABOUT THE LONG-TERM FUTURE ABOUT RENEGOTIATION LOOKS LIKE. ANNMARIE: WHERE IS CANADA IN ALL OF THIS? WE SAW MEXICO TAKING ACTION AND THE TREASURY SECRETARY SAID HE WOULD WELCOME CANADA TAKING SUIT. TOBIN: THERE HAS BEEN LESS CONCERNED AND LESS FOCUS ON THE CANADIAN SIDE BECAUSE IT IS LESS OF A STORY. MEXICO IS A NEAR SHORING AND CHINESE FBI DOES -- DESTINATION AND ONE OF THE MAJOR NARRATIVES IN RESPONSE TO THE IMPOSITION OF THE ORIGINAL TARIFFS ON CHINA DURING TRUMP 1.0. THAT HAS BEEN AN AREA OF GREATER FOCUS BUT TO YOUR POINT THE ADMINISTRATION INDICATED THAT WE WOULD HAVE -- WE WOULD LIKE TO SEE REACTION FROM THE CANADIANS. IT HAS BEEN A LITTLE MORE FRAUGHT IN GENERAL WITH THEIR RETALIATION AGAINST U.S. METALS TARIFFS THIS SPRING. BUT I THINK IF IT IS ON THE TABLE FOR MEXICO, IT WILL BE ON THE TABLE FOR CANADA. ANNMARIE: IF MEXICO IS APPEASING THE WHITE HOUSE, WHAT WILL THEY GET BACK BECAUSE OF IT. TOBIN: THERE IS STILL HOPE THAT THEY WILL GET SOME RELIEF FROM THE METALS TARIFFS AND THERE IS TALK FOR MONTHS ABOUT THE POSSIBILITY OF SUCH -- OF GETTING A QUOTA SYSTEM IN PLACE FOR STEEL AS OPPOSED TO THE CURRENT TARIFFS. WE ARE NET EXPORTERS OF STEEL TO MEXICO SO THERE IS REASONS TO BE HOPEFUL ALTHOUGH IT HAS NOT COME THROUGH YET. AND THEY ARE LOOKING JUST TO HAVE USMCA PRESERVED GOING FORWARD AS A CONCEPT. WE HAVE SEEN SOME COMMITMENT FROM THE WHITE HOUSE TO THE NOTION THAT USMCA SHOULD BE SEEN AS A REGIONAL COMPETITIVE STRATEGY AND THIS IS SOMETHING THAT WE ARE INVESTED IN. THIS SHOWS THE APPRECIATION OF THE IMPORTANCE OF THOSE SUPPLY CHAIN ACROSS NORTH AMERICA EVEN AS THE U.S. TARIFF POSTURE KEEP SHIFTING. THEY DO STILL NEED TO APPEASE THE U.S. FOR THE SAKE OF GETTING THE USMCA RENEGOTIATION AND A GOOD PLACE, EVEN IF THEY ARE NOT GETTING MASSIVE AND IMMEDIATE RELIEF. LISA: DO YOU GET THE SENSE THAT THERE HAS BEEN A RETHINK OF TARIFFS ON A GLOBAL STAGE, I AM LOOKING AT THE PLANS TO RAISE TARIFFS BY 50% ON CHINESE CARS, STEALS AND TEXTILES TO GET BETTER TREATMENT FROM THE U.S., AND THEN IT SHOWS IT WILL RAISE 3.8 BILLION DOLLARS FOR THE MEXICAN GOVERNMENT. HOW MUCH OF THE REVENUE SIDE OF THINGS IS PLAYING MORE INTO THE DISCUSSION WHEN THEY TALK ABOUT POTENTIAL TARIFFS IN RESPONSE TO THE U.S. AND TO MAYBE PLACATE THE U.S. AND MAY TO COUNTER? TOBIN: FOR MOST OTHER COUNTRIES THE TARIFFS WILL NOT REACH THE LEVEL THAT THEY MAKE THE REVENUE A LINCHPIN OF THEIR FISCAL SITUATIONS. WE ARE SEEING FISCAL PRESSURES ACROSS DEVELOPED AND DEVELOPING ECONOMIES LOCALLY. ANY LITTLE BIT OF REVENUE WILL BE SEEN AS HELPFUL FOR A LOT OF COUNTRIES. IN THE FIRST INSTANCE THEY ARE LOOKING ON THE ONE HAND MOLLIFYING THE U.S. AND THEN PLAYING WHACK-A-MOLE WITH GLOBAL TRADE FLOWS. IF YOU ARE PUSHING CHEAP CHINESE EXPORTS OUT OF THE U.S. THAT CREATES MORE OVERCAPACITY PROBLEMS ON GLOBAL MARKETS WHICH HAS BEEN DRIVING A LOT OF THE CONVERSATION. ANNMARIE: DO YOU THINK THAT IEEPA WILL WITHSTAND THE SUPREME COURT OR STRIKE IT DOWN? TOBIN: MY THOUGHT IS THAT IT WILL REVERSE THE LOWER COURT HEARINGS AND THEY STRIKE IT DOWN. I THINK THE CONSENSUS SEEMS TO BE FORMING IN THE 60 TO 65% RANGE. AND I THINK THAT THIS COURT WILL BE PRETTY APPREHENSIVE CERTAINLY ABOUT SECOND GUESSING WHAT CONSTITUTES AN EMERGENCY. MAYBE THEY WILL DISTINGUISH BETWEEN THE RECIPROCAL TARIFFS AND THE FENTANYL TRACKING TARIFFS WHICH WILL PUT THEM INTO THE BUSINESS OF WHAT IS AND IS NOT AN EMERGENCY, BUT THEY WILL BE NERVOUS ABOUT UPENDING THE REGIME BUILT UP UNDER IEEPA AND THROWING THEMSELVES IN THE MIDDLE OF THE POLITICAL PROCESS. IT IS A CLOSE ENOUGH CALLED THAT INVESTORS NEED TO PLAN FOR BOTH POSSIBILITIES. AND, IF THEY DO GET STRUCK DOWN, I DO NOT THINK IT IS A HUGE DISASTER. IT IS A ONE-TIME COST TO REFUND THE TARIFFS. GOING FORWARD, THEY WILL RE-CREATE SOMETHING VERY SIMILAR IN THE LONG-TERM FINANCES WILL NOT BE CHANGED. JONATHAN: WE APPRECIATE IT. WE HAVE RUN OUT OF TIME TO FOLLOW UP ON SOMETHING HE IS CALLING FOR THE NEXT YEAR WHICH IS THE MOST UNAPPRECIATED THING, THE STIMULUS THAT THE TAX BILL OFFERS THE ECONOMY. JONATHAN: A LOT OF PEOPLE ARE TALK -- LISA: THIS IS A REASON WHY PEOPLE THINK THE FED CAN CUT RATES EVEN WITH A REACCELERATION. JONATHAN: UP NEXT WE WILL CATCH UP WITH KKR AND WHAT THE ORACLE SEARCH MEANS AND THEN WE WILL TOUCH BASE WITH THE HIGHER MORNING MOVEMENT -- MORE -- MORNING MOVERS. FROM NEW YORK, THIS IS BLOOMBERG. ♪ JONATHAN: LIVE FROM NEW YORK CITY, WELCOME TO THE PROGRAM. THREE DAYS OF GAINS ON THE S & P 500. 5.2% ON THE S & P. -- UP BY 20% ON THE S & P. TWO-YEAR, 10-YEAR, 30-YEAR A TINY BIT LOWER AT THIS END OF THE CURVE. JUST NORTH OF 4%. THAT'S CROSS ASSET PRICE ACTION. LET'S GET SOME MORNING MOVERS. YAHAIRA: ORACLE SHARES ARE STILL CLIMBING TODAY, UP OVER 1% AFTER THEY HAD THEIR BEST DAY YESTERDAY SINCE 1992. 36%. ONE INVOLVES A DEAL WITH OPENAI THAT COULD BE WORTH UP TO $300 BILLION OVER FIVE YEARS. THAT MAJOR RALLY YESTERDAY ALSO DELIVERED THE BIGGEST ONE-DAY WEALTH JUMP EVER, BRIEFLY MAKING CO-FOUNDER LARRY ELLISON THE RICHEST MAN IN THE WORLD. WE STICK WITH TACK AND MOVE ON TO ALIBABA. RISING NEARLY 3% AFTER THE COMPANY UNVEILED PLANS TO RAISE JUST OVER $3 BILLION TO FUND IS A IKE DISHES -- IT'S A I AMBITIONS -- ITS AI AMBITIONS TO INVEST HEAVILY BECAUSE BABA SAID IT WOULD SPEND MORE THAN $50 BILLION OVER THE NEXT THREE YEARS ON AI INFRASTRUCTURE SER. KLARNA RAISED .7 BILLION. TODAY IT IS GIVING UP SOME OF THE GAINS, DOWN TWO .3%. JONATHAN: THANK YOU FOR THE UPDATE. ON THE RADAR, A MANHUNT UNDERWAY. PLEASE SEARCHING FOR THE SHOOTER RESPONSIBLE FOR KILLING CONSERVATIVE ACTIVIST CHARLIE KIRK YESTERDAY. A PERSON OF INTEREST WAS TAKEN INTO CUSTODY BUT LATER RELEASED. MEXICO PLANNING TO IMPOSE TARIFFS ON AS MUCH AS 50% ON CARS AND OTHER PRODUCTS MADE BY CHINA AND OTHER ASIAN COUNTRIES AHEAD OF EXPECTED TALKS OF A NORTH AMERICAN FREE TRADE AGREEMENT. PRESIDENT TRUMP KEEPING UP THE PRESSURE ON FED GOVERNOR LISA COOK. LISA: IT SEEMS LIKE A TWO-PRONGED EFFORT TO TRY TO PACK THE FOMC, IF YOU WANT TO USE SUPREME COURT LANGUAGE WHICH I KNOW YOU DESPISE. THE LIKELIHOOD WE COULD SEE A PERSON COME ON THE BOARD, STEPHEN MIRAN, THE SAME TIME LISA COULD BE TAKEN OFF THE BOARD OF GOVERNORS. IT'S A PERFECT STORM TO TALK ABOUT A BIGGER RATE CUT. ANNMARIE: THIS IS GOING RIGHT TO THE SUPREME COURT WHEN IT COMES TO LISA COOK. IF WHAT WE SEE WITH THE JUDGE'S ORDER, THE PRESIDENT WILL GO TO THE SUPREME COURT AND THEY CAN SAY THE FEDERAL COURT IS TAKING TOO LONG AND THEN WITH THE SUPREME COURT TO HEAR THIS SOONER. THE RULING WILL NOT BE THE LAST SAY ON THE MATTER. IT IS WHETHER OR NOT SHE WILL SHOW UP NEXT WEEK. RIGHT NOW, SHE WILL BE THERE AT THE FOMC. STEVE MIRAN, IF HE GETS HIS VOTE, HE WILL ALSO BE THERE. JONATHAN: WHEN PEOPLE TALK ABOUT THE FOMC, IT'S RIDICULOUS. A MAJORITY OF WHAT? WHO IS DOING THE PRESIDENT'S BIDDING, GOVERNOR WALLER? GOVERNOR BOWMAN? LISA: IT IS A BRANCH OF THE GOVERNMENT AND COMPARING IT TO THE FMC WHICH HAS A DUAL MANDATE AND THAT IS THE GUIDING LIGHT. THERE'S A QUESTION HERE. YOU HAVE THE CONSTITUTION AS THE GUIDING LIGHT BUT YOU HAVE INFLATION AND PRICE STABILITY VERSUS THE EMPLOYMENT PICTURE WHICH IS YOUR GUIDING LIGHT. THAT SHOULD BE OBJECTIVE. IT BECOMES A CONTROVERSIAL FEELING, YET WE HEAR IT ALL THE TIME AND I PARROTED IT. JONATHAN: 8:30 EASTERN TIME. FORECLOSURES HIGHER IN THE PREMARKET AFTER GAINING THE MOST SINCE 1992 ON AGGRESSIVE OUTLOOK. WILDEMAR SZLEZAK FROM DIGITAL INFRASTRUCTURE THAT KKR. "WE ARE LIVING TO THE LARGEST BUILD OUT SINCE THE INTERSTATE HIGHWAY TR SYSTEM. " GOOD MORNING, SIR. LET'S TALK ABOUT THESE DEMAND NUMBERS. THE DEMAND IS REAL BUT WE ARE TALKING ABOUT A MISALLOCATION OF RESOURCES. WHERE YOU STAND ON THAT? WILDEMAR: IT IS THE RIGHT QUESTION ASK. WE DON'T SEE IT. IF YOU LOOK AT THE FUNDAMENTAL SPEND RELATIVE TO ANY OTHER INDICATORS FOR A BUBBLE, OFTEN COMPARISONS ARE DRAWN TO THE DOT-COM BUBBLE AND THE OTHER HOUSING BUBBLE BUT IT DOES NOT APPEAR SO. ALL THAT COMPUTE THAT IS ULTIMATELY BEING PROCURED IS GETTING CONSUMED AND DEPLOYED. THE QUESTION YOU ARE LEADING INTO IS, IS THERE A BUSINESS CASE FOR AI TO BE MADE? I THINK THERE ARE A LOT OF GREAT DATA POINTS THAT WOULD SUGGEST ADOPTION IS INCREASING, USE CASES ARE INCREASING, AND THERE'S A TREMENDOUS AMOUNT ACROSS SOCIETY GENERALLY SPEAKING. THERE IS NOT THE KILLER APP THAT WOULD SUGGEST THE ROI MAY BE JUSTIFIABLE. JONATHAN: I THINK FOR MANY PEOPLE THE BUST IN THE BOOM THAT FOLLOWED AFTERWARDS, IT TOOK A LONG TIME TO FIND OUT WHO THE WINNERS WERE. YOU HAD TO HAVE EVERYONE THROWING MONEY AT THE WALL TO SEE WHAT STICKS. THERE ARE RISKS INVOLVED IN THAT. HOW DO YOU NAVIGATE THOSE RISKS AT THE MOMENT? WILDEMAR: ANOTHER EXCELLENT QUESTION WHICH I WOULD EXPECT FROM YOU GUYS. OUR PROJECT KKR HAS BEEN -- APPROACH AT KKR HAS BEEN DISCIPLINED. WE ARE ONE OF THE LEADERS IN DIGITAL INFRASTRUCTURE AND IN THE POWER ECOSYSTEM. ABOUT $65 BILLION OF CAPITAL WE HAVE INVESTED IN THAT OVER THE LAST TWO YEARS. WE TALKED ABOUT THIS ON YOUR PREVIOUS SHOW. IT IS NOW APPLICABLE. DATA CENTERS ARE NO LONGER BY THE RACKS. IT'S ABOUT WATSON MEGAWATTS AND FACTORIES -- WATTS AND MEGAWATTS AND FACTORIES. WE HAVE BEEN FOCUSING CORE PLUS MARKETS FOR OUR COMPUTE. THIS IS WHERE DATA IS BEING GENERATED AND PROCESSED BY USERS. WE FOCUS ON HIGH QUALITY CUSTOMERS. WE DON'T CHASE FIELD ON SPECULATIVE BUSINESS MODELS -- YIELD ON SPECULATIVE BUSINESS MODELS. TODAY IS CLOUD, TOMORROW IS AI. WE ULTIMATELY ARE NOT MAKING BETS ON FIELD OF DREAMS SITES. WE ARE TRYING TO FOCUS ON THINGS THAT IF THERE IS A CONTRACT, A HIGH-QUALITY COUNTERPARTY, WE START DEPLOYING CAPITAL AGAINST THAT. MAYBE THAT SEEMS LOGICAL BUT I'M NOT SURE IT IS UNIVERSALLY ADOPTED AND WE DIFFERENTIATE OURSELVES IN THAT APPROACH. LISA: ONE OF THE FEARS IS THE IDEA THAT EVERYONE GETS INCREDIBLY LEVERAGED TO A COUPLE OF KEY NAMES AND MAKE REALLY BIG BETS FOR A LONG-TERM DEVELOPMENT WHEN WE DON'T HAVE A GREAT DEAL OF VISIBILITY AND HOW THIS WILL BE ADAPTED, HOW IT WILL BE TRANSFORMING THE ECONOMY AND THE WAY WE LIVE OUR EVERYDAY LIVES. HOW DO YOU HEDGE CONCENTRATION RISK AT A TIME WHEN WHAT YOU OFFER US THE BALANCE SHEET TO DEPLOY TO THESE BIG BLUE-CHIP PLAYERS? WILDEMAR: YOU ARE RIGHT. IT'S ALMOST A BARBELL STRATEGY. IF YOU LOOK AT THE MARKET IN THE HAVES AND HAVE-NOTS, IT'S THE BEEN THE BARBELL. THE MAG 7 HAVE SUCH AN INCREDIBLE DRIVER OF THE GROWTH. 30% OF THE U.S. SPEND ON AI IS DRIVEN BY THOSE THREE NAMES. $700 BILLION CAPEX, 35% YEAR-OVER-YEAR. $700 BILLION IS THE ENTIRE SPEND FOR THE FIBER BUILD UP IN THE 1990'S. WE ARE NOW SPENDING THAT ON AN ANNUAL BASIS, WHICH IS INCREDIBLE TO THINK ABOUT THAT. IF YOU LOOK AT THE MAG7, PRISTINE BALANCE SHEETS. INCREDIBLY FREE CASH FLOW GENERATORS. WE ARE LOOKING AT TRADING MULTIPLES AND P/E RATIOS OF SPEND, BUT THEY ARE NOT OVERSPENDING RELATIVE TO THEIR FREE CASH FLOW GENERATING FROM THEIR EXISTING CORE BUSINESSES OR THE CONVERGENCE OF AI INTEGRATED INTO THEIR EXISTING BUSINESS MODELS. THE CUSTOMER CONCENTRATION IS WITH THE HIGHEST QUALITY NAMES YOU WOULD PROBABLY WANT TO DO IF YOU'RE INVESTING IN INFRASTRUCTURE. LISA: WHERE IS THE CONCENTRATION INVESTMENT WHEN IT COMES TO DATA CENTERS VERSUS ENERGY PRODUCTION? PEOPLE ARE BUILDING DATA CENTERS AS QUICKLY AS THEY CAN WITH A QUESTION AROUND DEEPSEEK AND WHETHER WE CAN DO THIS MORE EFFICIENTLY WITH SMALLER DATA CENTERS AND LESS ENERGY. WE DON'T HAVE THE ENERGY TO ACTUALLY FEEL THIS DATA CENTERS. WHERE YOU STACK UP ON THE DISSIDENTS BETWEEN THE DEVELOPMENT OF THOSE TWO? WILDEMAR: IT IS SUCH A WONDERFUL TIME TO DO WHAT WE ARE DOING. AN INFRASTRUCTURE INVESTORS WOULD NOT THINK ABOUT BEING SUCH A GROWTH INDUSTRY. IT'S INCREDIBLE. WE HAVE HAD STAGNATED DEMAND GROWTH IN THE U.S. AND THE POWER INDUSTRY FOR THE PAST 20 YEARS. THAT IS NOT BAD IN -- NOW AT A MASSIVE INFLECTION POINT. 10% OF GLOBAL POWER IN THE NEXT 10 YEARS. THAT'S EQUIVALENT TO INDIA BY 2030. IF DATA CENTERS WERE A COUNTRY, IT WOULD BE THE THIRD AFTER CHINA AND THE U.S.. POWER CONSUMPTION IS INCREASING. YOU DO HAVE PROFICIENCY WHICH IS DRIVEN BY CHIP MANUFACTURING, BY ALGORITHMS. THAT IS DRIVING THE COST OF THE DELIVERY TO COMPUTE. JUSTIN 18 MONTHS, YOU THINK ABOUT -- JUST IN 18 MONTHS, YOU THINK ABOUT THE TOKENS, IT IS CALORIES FOR AI. TOKEN PRICE HAS DECREASED 280X IN THE LAST 18 MONTHS, WHICH MEANS ADOPTION IS INCREASING. USAGE HAS INCREASED 4500%. I THINK MOST OF THE CAPITAL TODAY IS BEING SPENT ON DATA CENTERS AND INCREASED CAPEX BEING PUT INTO THE GRID AND POWER GENERATION. WE ARE SEEING THE TREND LINE CONVERGING. IN TERMS OF GROWTH ON AN ADJUSTED BASIS IT HAS BEEN THOSE TWO THAT ARE PROBABLY THE BIGGEST DRIVERS OF THE CAPEX. ANNMARIE: IS THE REGULATION AND GETTING RID OF RED TAPE COMES WHEN YOU HAVE TO MAKE THESE AI DATA CENTERS ACTUALLY KEEPING UP WITH THE CAPEX SPENDING? WILDEMAR: IT'S INTERESTING. FROM A POLICY PERSPECTIVE THERE ARE TWO DUELING FACTORS ON A COLLISION COURSE. ONE IS WIN THE AI RACE GLOBALLY AND THE SECOND IS PROTECT THE -- IN THE U.S. WE HAVE SEEN ABOUT 25% INCREASE IN POWER PRICES. THERE ARE A COUPLE OF THINGS HAPPENING, INCLUDING ELIMINATION OF SOME OF THE RED TAPE AND STREAMLINING OF APPROVALS. THOSE ARE GREAT THINGS BY THE ADMINISTRATION TO HELP ENABLE THE BUILDOUT OF INFRASTRUCTURE. YOU CAN'T JUST TURN POWER ON OVERNIGHT. IT'S A FOUR OR FIVE YEAR CYCLE TO BUILD THE INFRASTRUCTURE. THAT IS A GREAT STEP TOWARDS THAT. EVEN CUTTING THROUGH THE RED TAPE, THAT IS HELPING SOLVE THINGS FIVE YEARS FROM NOW. WE HAVE A GAP IN THE NEXT 24 TO 36 MONTHS. WE CAN OPTIMIZE THE GRID. THERE IS INVESTMENTS, SUPERCONDUCTING CABLES WHICH MINIMIZE THE LOSS. THERE ARE INNOVATIVE SOLUTIONS LIKE THE ONE WE DEPLOYED IN TEXAS WERE YOU COLOCATED DATA CENTER WITH A POWER PLANT. YOU CAN AUGMENT AND DRAW ELECTRONS FROM THE POWER PLANT. YOU HAVE A WAY TO SUPPORT THE GRID IN CASES OF EMERGENCY. INNOVATIVE SOLUTIONS LIKE THAT WILL HELP BRIDGE US INTO THE NEXT PHASE WHEN WE SEE THIS MASSIVE DEVELOPMENT CYCLE OF MOST LIKELY NATURAL GAS POWER PLANTS. AT SOME POINT WE WILL TALK ABOUT NUCLEAR. NUCLEAR WILL BE 5, 10 YEARS FROM NOW. THAT IS THE LONG GAME FROM A CARBON DEFICIENCY AND GENERAL EFFICIENCY OF POWER GENERATION. LISA: WALL STREET IS SCARED OF THIS. THEY ARE SAYING MAYBE IT HAS GOTTEN OVER ITS SKIS. SILICON VALLEY, ABJECT EUPHORIA. CAN YOU BRIDGE THE GAP THAT EVERYONE IS TRYING TO POKE HOLES IN NEW YORK AND IN SAN FRANCISCO PEOPLE ARE JUST RUNNING AROUND SAYING WE CAN'T INVEST ENOUGH? WILDEMAR: I DO SPEND TIME ON THE WEST COAST QUITE FREQUENTLY. IT'S INCREDIBLY ENERGIZING WHEN I AM THERE AND COMING BACK YOU HAVE THIS WET BLANKET PUT ON YOU BECAUSE OF ALL THE SKEPTICISM. I THINK THERE IS A BRIDGE. THERE IS A BRIDGE AN UNDERSTANDING OF THE TECHNOLOGY MINDSET OF MOVE FAST AND BREAK THINGS HAS TO COME IN SOMEHOW BE BRIDGED IN TERMS OF BUILDING OF THIS INFRASTRUCTURE, WHICH IS A VERY DIFFERENT INVESTMENT CYCLE, VERY DIFFERENT RISK CYCLE AND DIFFERENT COST OF CAPITAL CYCLE. I DO THINK WE ARE HELPING BRIDGE THAT GAP AND SAYING THIS IS EXCITING BUT YOU HAVE TO CAPITALIZE THIS IN AN EFFICIENT WAY. IN THE QUANTUM OF DOLLARS WE ARE TALKING, GIVE REQUIRES DIFFERENT INNOVATIVE COME ACCRETIVE AND HOLISTIC SOLUTIONS TO BUILD OUT THE INFRASTRUCTURE. ORACLE'S EARNINGS WERE TERRIFIC. YOU HAVE A HALF A TRILLION DOLLARS A BACKLOG. THE NUMBERS ARE STARTING TO SEEM SILLY. MOVING FROM BILLIONS TO TRILLIONS. THAT AMOUNT OF INFRASTRUCTURE WILL REQUIRE MANY GIGAWATTS OF POWER AND OF COMPUTE. YOU SEE POWER COMPANIES MOVE UP. YOU SEE THE CHIP MANUFACTURERS MOVE UP. DATA CENTERS MOVE UP. WE ARE STILL IN EARLY INNINGS OF THE INVESTMENT CYCLE TAKING PLACE. JONATHAN: YOU'LL HAVE TO FORGIVE SKEPTICISM AROUND THE TABLE. COME BACK SOON. WILDEMAR SZLEZAK OF KKR. STORIES ELSEWHERE THIS MORNING WITH THE BLOOMBERG BRIEF. LET'S CROSS OVER TO VONNIE QUINN. VONNIE: THE EUBOEA CEO SAYS GLOBAL TARIFFS REMAINS UNCLEAR. HE TOLD BLOOMBERG, "IN THE U.S., WE BELIEVE GROWTH WILL BE THERE BUT THE INFLATION QUESTION AND HOW IT PLAYS OUT INTO THE CENTRAL BANK POLICIES REMAIN OPEN." U.K. PERIMETER KEIR STARMER HAS REMOVED PETER MANDELSON AS BRITAIN'S AMBASSADOR TO THE UNITED STATES AFTER NEW REVELATIONS ABOUT HIS TIES TO DISGRACED FINANCIER JEFFREY EPSTEIN. HE REFERRED TO EPSTEIN AS HIS BEST PAL IN A BOOK ATTRIBUTES TO THE CONVICTED SEX TRAFFICKER. BLOOMBERG REPORTED MENDELSON TOLD EPSTEIN, "I THINK THE WORLD OF YOU" AFTER HIS ARREST. TRICOLOR FILED TO LIQUIDATE IN BANKRUPTCY. THE COMPANY DID NOT GIVE A REASON FOR THE CLASS WITH THE CHAPTER SEVEN EDITION CLAIMED LIABILITIES BETWEEN BILLION AND 0 BILLION IN ASSETS IN THE SAME RANGE. JONATHAN: THANK YOU. MORE FROM VONNIE IN ABOUT 30 MINUTES. COUNTING DOWN TO CPI. > > HERE WE ARE OVER FOUR YEARS INTO INFLATION DATA ABOVE THE FED'S TARGET FOR A LONG TIME. BUSINESS IS GETTING USED TO INFLATION BEING HIGHER. CONSUMERS MIGHT BE GETTING TO INFLATION -- GETTING USED TO INFLATION BEING HIGHER. OF NEXT, JOE DAVIS. -- UP NEXT, JOE DAVIS. GOOD MORNING. ♪ JONATHAN: EQUITIES AT ALL-TIME HIGHS ON THE S & P 500, RECORD HIGHS ON THE NASDAQ 100. EQUITIES UP THIS MORNING BY .2% ON THE S & P. SIMILAR MOVE ON THE NASDAQ THIS MORNING. COUNTING DOWN TO CPI. > > WE HAVE A LOT OF ADDITIONAL INFLATION FROM TARIFFS IN FRONT OF US. HERE WE ARE FOUR YEARS INTO INFLATION BEING ABOVE THE FED'S TARGET FOR A LONG TIME. BUSINESS IS GETTING USED TO INFLATION BEING HIGHER. CONSUMERS MIGHT BE USED TO GET INFLATION GETTING HIGHER. IT WOULD BE PREMATURE TO CUT 75 BASIS POINTS AND EVEN 50 BASIS POINTS. I DON'T KNOW THAT THE BALANCE IS BETWEEN SLOW GROWTH AND INFLATION. JONATHAN: INVESTORS ARE WAITING ON THE CPI PRINT AT DRAKE COOLER THAN EXPECTED READ ON PRODUCER PRICES. JOE DAVIS AT VANGUARD WRITING, "CONSUMER PRICES ARE LIKELY TO ABSORB TEAR PRESSURE MORE SLOWLY THAN INITIALLY EXPECTED WITH INFLATION PEAKING IN 2026 AND LARGELY SUBSIDING WITHIN MONTHS, NOT YEARS." JOE, GOOD MORNING. FRAME THAT A LITTLE BIT MORE AND GIVE HIS DETAIL. WHY IS THE RUNWAY GOING TO BE LONGER AND SET OF THE PASS-THROUGH THAT SOME PEOPLE IMAGINED? JOE: JUST THE TARIFF RATES HAVE BEEN DELAYED. THE EFFECTS ARE NOT DEAD, JUST DELAYED. THEY ARE PASSING THROUGH THE SYSTEM NOW. EVEN THE QUESTIONS WITH THE FEDERAL RESERVE IS GOING TO DO, WE ARE IN AN UNUSUAL TERRITORY WHERE WE ARE LIKELY GOING TO HAVE INFLATION YEAR-OVER-YEAR RISING YET THE FED VERY LIKELY EASING THIS MONTH. THAT IS THE CROSSCURRENTS WE WILL BE TALKING ABOUT. JONATHAN: YOU THINK THE FEDERAL RESERVE AND THE WAY CHAIRMAN POWELL SET THINGS UP IN JACKSON HOLE, THEY ARE PREPARED TO IGNORE THOSE PRINTS DOWN THE ROAD? JOE: I THINK FOR A TIME. WE ARE AT STALL SPEED IN THE LABOR MARKET. WE DON'T HAVE A RECESSION BUT YOU HAVE HIRINGS THAT HAVE FLATLINED. THAT'S A LEGACY OF POLICY UNCERTAINTY DRIVEN BY THE TARIFFS. WE WERE HEAD SCRATCHING WHY WE WERE NOT SEEING MORE OF A LABOR MARKET SLOWDOWN. CLEARLY, WE ARE NOT HEAD SCRATCHING ANYMORE AND NEITHER IS THE MARKET. THIS IS A RUN RISK MANAGEMENT. I THINK THEY WILL LEAN DOVISH AND ASSUME THE TARIFFS ARE MORE OF A ONE-OFF PRICE INCREASE AND THE LONGER TERM TREND. LISA: YOU THINK THAT IS MAYBE INCORRECT LONGER TERM WITH RESPECT TO INFLATION, IS 3% THE NEW 2% WHEN IT COMES TO THE FED? YOU MARKET PARTICIPANTS HAVE TO THINK OF THINGS THAT WAY -- DO MARKET PARTICIPANTS HAVE TO THINK OF THINGS THAT WAY? JOE: WE ARE NOT IN THAT TERRITORY YET. WHAT IS MORE CONCERNING IS IF WE HAVE THE LABOR MARKET NOT FLATLINING FROM HERE BUT NOT DOWN TURNING. HIRING AND FIRINGS DON'T CONTINUE TO WORSEN. IF THEY WERE THEN VERY AGGRESSIVE IN EASING 50 BASIS POINTS AT A MEETING AND ANOTHER 50 BASIS POINTS, THAT WOULD CONCERN ME. I THINK WE WOULD SEE A MODEST VISUAL REELECTION IN THE FED WILL HAVE TO BE ATTENDED TO THAT. CLARITY ON THE TARIFFS AND HOW MUCH IS BEING PASSED THROUGH WILL BE A FACTOR ALONG WITH THE LABOR MARKET. LISA: HOW MUCH DO YOU FEEL LIKE THE UPPER INCOME COHORT OF CONSUMERS HAS BEEN POWERING THE SPENDING AND THE INFLATION AND CAN CONTINUE TO EVEN WITH A RECESSION AMONG LOWER INCOME INDIVIDUALS WHEN IT COMES TO A LOSS OF JOBS, WHEN IT COMES TO INFLATIONARY IMPACTS, ETC., IN A WAY TO ALLOW THINGS NOT TO FEEL GREAT FOR INFLATION TO REMAIN PERSISTENT BUT NOT EXACTLY TERRIBLE? THAT IS THAT A MAKE THAT MORAN'S FED RATE CUTS BUT DOES NOT NECESSARY STATE -- DOES NOT NECESSITATE A RECESSION. JOE: YOU HAVE THE UPPER INCOME HOUSEHOLDS AND BUSINESSES IN THE LARGE CAP SPACE POWERING GROWTH. WE HAVE SEEN IT BEFORE BUT IT IS ACTUALLY PRETTY STRONG GIVEN WITH THE EQUITY MARKETS AND FINANCIAL MARKETS ARE DOING. IT IS TOUGH TO SEE THAT STALLING IN THE NEAR TERM. AGAIN, WE WILL HAVE THESE CROSSCURRENTS. YOU LOOK AT OTHER MEASURES, A, WHY IS THE FEDERAL RESERVE EASING? IN THE BALANCE THE FEDERAL RESERVE WILL LOOK AT THE LABOR MARKET FOR NOW BUT THEY HAVE TO KEEP ONE EYE ON INFLATION, WHERE IT MAY BE SIX MONTHS FROM NOW. ANNMARIE: WE HAD A CONVERSATION ABOUT THE BUILDOUT OF DATA CENTERS BECAUSE OF AI. HOW DOES THE FED GRAPPLE WITH THAT? JOE: THEY HAVE TO START TALKING RESPECTFULLY ABOUT PRODUCTIVITY AND THE ODDS OF THE TREND IN GROWTH AND WITH THAT INFLATION IN THE NEXT THREE OR FOUR YEARS. WE HAVE DONE WORK ON THIS, AS YOU WELL KNOW. IT IS EYE-OPENING. THE PROSPECTS OF THE FEDERAL RESERVE CONSENSUS FORECAST FOR ECONOMIC GROWTH FOR THE NEXT THREE TO FIVE YEARS IS VERY LOW. IT'S BEEN AN EYE-OPENING INSIGHT FROM US, FROM THE DATA-DRIVEN FRAMEWORK. THE FED HAS TO TALK IN A JACKSON HOLE SETTING HOW MUCH PRODUCTIVITY COULD BE LIFTING KNOWING THIS IS A SCENARIO THAT MAY NOT OCCUR. THE FEDERAL RESERVE STARTED TALKING ABOUT THIS IN THE MID-1990'S AND I THINK WE WILL START ENTERING THAT TERRITORY OF HOW STRONG COULD IT BE AND COULD WE HAVE GROWTH WITHOUT HIGH INFLATION OR EASING INFLATION PRESSURES. THAT IS THE WORLD WHO MIGHT START ENTERING. JONATHAN: THOUGHTFUL STUFF, JOE. JOE DAVIS OF VANGUARD. CPI PRINT LATER THIS MORNING. LOOKING AHEAD TO NEXT WEEK, THE GDP FORECAST. 1.6% IS FOR 2026. 2027, 1 20%. THIS SPEAK -- 1.8%. LISA: IT'S NOT EXACTLY SOME SORT OF RUNAWAY, INCREDIBLE EXPANSION. HE'S PROTECTING -- PROJECTING 3.1% INFLATION BY THE END OF THE YEAR. THE HOLY GRAIL KEYS BEING PLACED ON THE BIG TECH PLAYERS AND THIS INCREDIBLE SURGE IN PRODUCTIVITY. ANNMARIE: GOING INTO NEXT YEAR THERE WILL BE ECONOMIC BOOMS AROUND THE WORLD CUP. POTENTIALLY WE HAVE A FEDERAL RESERVE THAT IS UNDERPRICING A NUMBER OF EVENTS GOING INTO 2026. JONATHAN: STOCKS ARE POSITIVE. RECORD HIGHS YESTERDAY. OF NEXT, WE CATCH UP WITH EVAN BROWN, ASHLEY DAVIS, THOMAS MICHAUD, AND ADITYA BHAVE OF BANK OF AMERICA. ♪ > > WE DEFINITELY SEE MORE LINGERING INFLATION. > > THE REACTION FUNCTION IS MORE TILTED TOWARD THE WEAKNESS IN THE LABOR MARKET AS OPPOSED TO THE POTENTIAL UPSIDE RISK OF INFLATION. > > I DON'T THINK THE FED SET US UP FOR 50. > > PREMATURE TO START CUTTING AGGRESSIVELY AT THIS POINT. > > WE HAVE A LOT OF ADDITIONAL INFLATION FROM TARIFFS IN FRONT OF US. > > THIS IS "BLOOMBERG SURVEILLANCE" WITH JONATHAN FERRO, LISA ABRAMOWICZ AND ANNMARIE HORDERN. JONATHAN: LIVE FROM NEW YORK CITY, GOOD MORNING. FOR THE AUDIENCE WORLDWIDE, THE SECOND HOUR OF "BLOOMBERG SURVEILLANCE" STARTS NOW. ALL-TIME HIGHS ON THE S & P AND NASDAQ GOING INTO THURSDAY. ON THE S & P 500, UP BY .2 %. THE BOND MARKET UNCHANGED, THE CALM BEFORE THE CPI. AS FOR CPI, INFLATION DATA 19 MINUTES AWAY. SANDWICHED BETWEEN AN ECB DECISION AND THE LAGARDE NEWS CONFERENCE. LISA: HOW MUCH DOES CPI MATTER? PEOPLE USED TO SAY INFLATION WAS THE MOST IMPORTANT GAUGE IF THEY COULD CUT RATES. NOW THEY ARE SAYING IF IT COMES IN AT 3.1% YEAR-OVER-YEAR, WHICH IS WHAT IS EXPECTED, NOT A BIG DEAL. IT IS A ONE-TIME PRICE SHOCK AND THE FED WILL LOOK THROUGH IN FAVOR OF PLACING EMPHASIS ON THE LABOR MARKET THAT IS NOT VERY STRONG. JONATHAN: NEXT WEEK IS A THREE-PART STORAY. A LOT OF PEOPLE THINK IT WILL CUT RATES. CPI MATTERS FOR THE FORECAST AND FOR THE GUIDANCE YOU GET IN THE NEWS CONFERENCE. DOES IT OPEN THE DOOR TO BE MORE AGGRESSIVE ABOUT WITH THE CHAIRMAN CAN OFFER ABOUT WHAT THEY DO NEXT? ARE THEY STILL WORRIED? CAN HE FORM A CONSENSUS AROUND THE INFLATION STORY? I THINK THERE WILL BE MORE DIFFICULT. LISA: HOW MUCH WILL THE MARKET CARE? HE'S A LAME-DUCK FED CHAIR. THIS REALLY RAISES THE QUESTION OF HOW MUCH HE CAN GIVE GUIDANCE, ESPECIALLY GIVEN HIS FLIPPING AND FLOPPING WHEN IT COMES TO THE PREVIOUS DISCUSSIONS OF WHERE EMPHASIS IS PLACED. UNEMPLOYMENT ARE THE HEADLINE NUMBERS FIGURE. ANNMARIE: IT IS BAKED IN NEXT WEEK. POTENTIALLY SOME CONSIDER THEY WOULD GO MAYBE 50. GOVERNOR WALLER WOULD NEED TO SEE HOW BAD IT IS IN TERMS OF WEAKENING OF THE LATEST LABOR MARKET REPORT. THE REAL DEBATE BETWEEN THIS YEAR AND NEXT YEAR'S FIVE CUTS OR SIX CUTS. FOUR, OR DO THEY HAVE TO GO FIGURE? WE WILL HAVE A DIFFERENT FED NEXT YEAR AND A DIFFERENT MANTRA. IT WILL NOT BE THE POWELL FED. IT WILL BE COMPLETELY DIFFERENT. JONATHAN: YOU MENTIONED STEVE AT FEDERATED. THERE'S A THEORY OUT THERE THAT THE WORST OF THE DATA IS ACTUALLY BEHIND US. WHAT WE WILL SEE IN THE MONTHS TO COME IS AN IMPROVEMENT. A. RE-, IF YOU WILL THAT IS WHY THEY ARE SO BULLISH -- A RE-ACCELERATION, IF YOU WILL. YOU LOOK TO A BETTER 2026. LISA: I CAN GET BEHIND THAT BECAUSE EVERY DAY WE HAVE AN ANNOUNCEMENTS FROM THE TECH NAMES ABOUT INVESTMENT. THE FED CHAIR IS NOW MARK ZUCKERBERG, NOT JAY POWELL. IT IS WHAT PEOPLE CAN GET BEHIND RATHER THAN THE INTANGIBLE WHAT IS GOING ON THAT PEOPLE ARE LOOKING AT IN THE ECONOMY. ANNMARIE: NOT EVERYTHING IS ROSY. WE DON'T THINK WE WILL HAVE A RECESSION. WE ARE ACTING WITH CONFIDENCE BECAUSE NOW THEY HAVE CLARITY OUT OF WASHINGTON. TAXES, TARIFFS AND DEREGULATION. JONATHAN: MARK ZUCKERBERG WORKS FOR ME. BASED ON SOME OF THE CONTRACTS WE HAVE SEEN, ABSOLUTELY. LISA: YOU ARE LOOKING FOR A 00 MILLION -- THAT'S A PROBLEM FOR INFLATION. WE MIGHT GET IT SOMEWHERE ABOUT 3%. JONATHAN: I'M NOT SURE MARK WOULD BE ON BOARD. LISA: JUST YOUR PERSONAL FED CHAIR. JONATHAN: COMING UP, EVAN BROWN, ASHLEY DAVIS ON THE POLITICAL ASSASSINATION OF CHARLIE KIRK IS THAT ROCKS UNITED STATES, AND ADITYA BHAVE WITH AN UPDATE CALL ON FED RATE CUTS. STOCKS HITTING ANOTHER RECORD HIGH AS WE AWAIT THE INFLATION READ. JOE DAVIS --EVAN BROWN WRITING, "THE FED IS HIGHLY LIKELY TO CUT RATES IN SEPTEMBER, LEADING MORE AGAINST DOWNSIDE RISK TO EMPLOYMENT THAT UPSIDE RISK ON INFLATION." WALK US THROUGH HOW YOU THINK PEOPLE SHOULD SET UP GOING INTO THIS PRINT THIS MORNING AND INTO NEXT WEEK AND BEYOND. EVAN: IN GENERAL, THE WAY THE MARKET HAS BEEN GOING IS HOW YOU PROBABLY WANT TO BE POSITIONED. OVERWEIGHT EQUITIES. HAVE A NEUTRAL TO SLIGHTLY OVERWEIGHT POSITION IN BONDS IN THE FRONT END FOR INSURANCE. WE ARE STILL SEEING A WEAKENING IN THE LABOR MARKET. THE FED IS FOCUSED ON THE DOWNSIDE RISK TO EMPLOYMENT. YOU HAVE THAT SUPPORT THERE IN CASE THINGS GO WRONG AND BAD NEWS TURNS AND THE BAD NEWS FOR THE EQUITY MARKET. JONATHAN: A LOT OF PEOPLE IN MARKETS ARE INTERESTED IN CHANGE. IS THE CHANGE POSITIVE OR NEGATIVE? EVEN IF THE NUMBERS ARE NOT GREAT. EVAN: WE ARE LOOKING AT THE SECOND DERIVATIVE. ARE THINGS GETTING LESS BAD? I THINK IN THE LABOR MARKET THIS IS A KEY QUESTION. WE HAVE SEEN SOME SOFTNESS BUT YOU CAN MAKE THE ARGUMENT THAT THE PEAK SOFTNESS HAPPENED JUST AFTER LIBERATION DAY. JUNE MAYBE THE LOW POINT FOR EMPLOYMENT. NOW THERE IS MORE CONFIDENCE, MORE CLARITY ON WHAT IS HAPPENING ON THE POLICY SIDE THAT YOU WILL SEE SOME PICK UP. YOU SEE THE JOBLESS CLAIMS REMAIN LOW. A LOT OF OTHER INDICATORS WE TRACK INCLUDING CORPORATE COMMENTARY THAT'S BEEN A LOT MORE UPBEAT. THERE IS THIS DETERIORATION IN THE DATA THAT WE HAVE NOT SEEN YET BUT MIGHT. OR, IF WE CAN INFLECT HIGHER HERE. LISA: IF THE VENT IT IS BEHIND US OR IMPROVING FROM HERE, DID STOCKS EVER PRICE IN THE BED AT -- THE BAD DATA? EVAN: STOCKS ARE LOOKING PAST-- LISA: THE PAST, PRESENT, AND FUTURE. EVAN: WE TALKED ABOUT THIS, THE APPARENT DISCONNECT BETWEEN THE BOND MARKET AND THE STOCK MARKET. THE STOCK MARKET WAS TO LOOK PAST THE WEAKNESS IN THE DATA AND THE BOND MARKET HAS BEEN PRICING IN A WEAKER SCENARIO. THAT HAS ONLY GOTTEN MORE EXTREME, THE DISCONNECT WITH STOCKS GOING HIGHER AND BONDS RALLYING IN RESPONSE TO THE WEAKER LABOR MARKET. I THINK THAT IS THE RIGHT PLAY. THAT MAKES SENSE. ONE OF THE REASONS IS THAT IT IS NOT JUST THE BOND MARKET PRICING IN A WEAKER DATA RIGHT NOW. THEY ARE ALSO PRICING IN A STRUCTURALLY MORE DOVISH FED WHEN WE GET THE NEW FED CHAIR APPOINTMENT. WHEN THERE IS POTENTIALLY A NEW ADDITIONAL GOVERNOR WHO JOINS WHO IS MORE DOVISH IN NATURE THAN WHAT WE ARE SEEING WITH THE POWELL FED. IF YOU REALLY GET THAT REBOUND INACTIVITY AND INFLATION GETS STICKIER FOR LONGER, IS THE FED NECESSARILY GOING TO RESPOND WITH LESS DOVISH WERE MORE HAWKISH POLICY? I'M NOT SURE THEY WILL. THEY ARE WILLING TO LET THE ECONOMY RUN HARDER FOR LONGER. THE EQUITY MARKET LIKE THAT. LISA: I WONDER HOW MUCH THE EQUITY AND BOND MARKETS ARE TIED TOGETHER AT ALL. I'M THINKING ABOUT ORACLE AND 80 HAVE A 34 PERCENT RALLY IN ONE DAY, ADDING $200 BILLION OF MARKET CAP. THAT'S ALMOST TWO DISNEY'S IN ONE DAY ONE COMPANY ON THE HEELS OF WHAT SEEMS TO BE AN INVESTMENT CYCLE THAT HAS LEGS. IS THE PAIN TRADE STILL HIGHER REGARDLESS OF WHAT HAPPENS TO THE UNDERLYING ECONOMY? EVAN: I THINK THE PAIN TRADE IS STILL HIGHER. WE TRACK A BROAD AMOUNT OF MEASURES OF SENTIMENT AND POSITIONING. EVEN AS THE MARKET HAS CONTINUED TO GO HIGHER, SOME MEASURES LIKE AI HAVE BEEN COMING DOWN. THERE IS THE POSITIVE SENTIMENT BEING OUTWEIGHED WITH MORE PEOPLE ACTUALLY THINKING STOCKS WILL GO DOWN. THERE IS STILL THIS UNDERLYING SKEPTICISM WHICH WE DON'T NORMALLY SEE. PEOPLE GET MORE OPTIMISTIC WHEN THE MARKET GOES UP. WE ARE SEEING MORE CONCERN, MORE CONVERSATION OF IS THIS A BUBBLE AND WHATNOT AND PARING BACK. I DON'T WANT TO JUMP IN AT THESE VALUATIONS. THAT'S THE RECIPE FOR A PAIN TRADE. ANNMARIE: WHAT DO PEOPLE DO IN TERMS OF THE HEDGE? EVAN: THE NATURAL HEDGE ON THE GROWTH SIDE IS BONDS. CRITICALLY MORE TOWARDS THE FRONT END. THE LONG BOND IS KINDA BROKEN, NOT JUST IN THE U.S. BUT GLOBALLY GIVEN FISCAL DEFICITS AND CONCERNS ABOUT -- IT IS HARD FOR POLITICIANS TO DO FISCAL CONSOLIDATION. WE SEE THAT IN THE U.K., JAPAN, AND FRANCE CERTAINLY. IN THE U.S. AS WELL. ON THE FRONT OF THE BOND MARKET THAT IS A KEY HEDGE. GOLD HAS JUST BEEN A REALLY IMPORTANT HEDGE ON THE IDEA THAT YOU HAVE GOT THE FISCAL CONCERNS. YOU HAVE GOT CONCERNS ABOUT A FED THAT MIGHT BE A LITTLE MORE POLITICIZED AND THE IDEA THAT THINGS RUN HOTTER IN THE FED IS NOT QUITE RESPONDING, AT SOME POINT THAT MY START WEIGHING ON THE EQUITY MARKET. IN MY FOURTH UPWARD PRESSURE ON LONG-TERM BOND YIELDS AS WELL. GOLD IS PLAYING A CRITICAL ROLE. ANNMARIE: DO YOU MEAN WHAT IS GOING ON WITH GOVERNOR COOK AND STEVE MIRAN? DOES IN MARKET HAVE AT LEAST THAT LEVEL OF TRANSPARENCY WITH WHAT IS HAPPENING WITH INDIVIDUALS ON THE FOMC? EVAN: WE HAVE WHAT WE HAVE SEEN SO FAR WHICH IN ITSELF IS NOT OVERLY ALARMING IN TERMS OF THE FED INDEPENDENCE. WE KNOW THAT LISA COOK IS GENERALLY DOVISH AND STEVE MIRAN WILL BE VERY DOVISH BUT WE WILL GET A CUT NEXT WEEK. THAT IS THE CASE. THE RISK, WHICH A NUMBER OF STEPS NEED TO HAPPENED TO GET US THERE, IS IF YOU GET A SITUATION WHERE THE FEBRUARY GOVERNORS WHICH HAS LEANED MORE TRUMP APPOINTED STARTS, YOU KNOW, BEING INFLUENCED IN TERMS OF THE CERTIFICATION AND RENEWAL OF RESERVE BANK PRESIDENTS BECAUSE THOSE ARE THE ONES -- THERE ARE FIVE OF THOSE VOTING ON THE 12 PERSON FOMC -- WE TO BE LEANING MORE IN THE HAWKISH OR LESS DOVISH DIRECTION. I DON'T THINK THAT IS BASE CASE AT ALL. WE CAN TRUST THAT CHRIS WALLER AND BOWMAN ARE GOING TO BE FOCUSED ON MAINTAINING FED INDEPENDENCE. THAT IS THE RISK WHERE YOU GET MORE CONCERN ABOUT THAT SCENARIO. JONATHAN: EVAN BROWN OF UBS, GOOD TO SEE YOU. THERE IS ON THE DOLLAR AND LIFE A LITTLE BIT OF GOLD AND HE'S NOT ALONE BASED ON THE PERFORMANCE THIS YEAR. LISA: THE FED BEING DOVISH IN SPITE OF SOME OF THAT INFLATIONARY PRESSURE LEADING TO MAY A DEPRECIATION OF THE DOLLAR. THE STOCKS TO THE MOON STORY ISN'T OVER AND THAT IS WHAT WE KEEP HEARING. THE WET BLANKET OF NEW YORK CITY AND SKEPTICISM GIVES PEOPLE MORE CONFIDENCE IN THAT. THAT IS WHAT WE KEEP HEARING THIS MORNING. JONATHAN: WHY DID YOU THROW NEW YORK CITY INTO THIS? LISA: WILDEMAR SZLEZAK. HE GOES TO SAN FRANCISCO AND IT IS SQUARING THE CIRCLE AND WE ARE LIVING IN THE WET BLANKET. JONATHAN: IT IS RIGHT TO BE SKEPTICAL OF THESE THINGS. LISA: 100%. THAT IS WHY EVAN IS TALKING ABOUT THE PAIN TRADE BEING HIGHER. HOW MUCH ARE IMAGINING A WORLD WHERE A ROBOT IS TELLING US WHAT TO DO? I'M GOING TO BE VERY NICE TO THAT ROBOT SO WHEN I AM LESSER THEY TREAT ME NICER. "YOU ARE GREAT. WHAT WOULD YOU LIKE?" JONATHAN: LET'S GET YOUR BLOOMBERG BRIEF WITH VONNIE QUINN. VONNIE: A SEARCH IS UNDERWAY FOR THE KILLER CONSERVATIVE ACTIVIST CHARLIE KIRK. KIRK IS THE FOUNDER OF TURNING POINT USA AND WAS SHOT AS HE WAS SPEAKING TO AN OUTDOOR CROWD AT UTAH VALLEY UNIVERSITY. HE WAS A CLOSE ALLY OF PRESIDENT TRUMP, WHO POSTED ABOUT THE INCIDENT ON SOCIAL MEDIA AND WOODED AMERICAN FLAGS TO BE LOWERED TO HALF STAFF ON SUNDAY. PRESIDENT TRUMP'S PICK FOR A FEDERAL RESERVE GOVERNOR IS FACING HIS FINAL HURDLE. THE FINAL VOTE COULD COME AS SOON AS MONDAY. THE MOVE SETS MIRAN TO BE SEATED BEFORE NEXT WEEK'S FOMC MEETING POTENTIALLY. OPEC-PLUS IS BOOSTING OUTLOOK AND REVIVING PRODUCTION ACCORDING TO THE IEA AS RECORD OIL SUPPLIES ARE PROJECTED FOR NEXT YEAR AND MAYBE EVEN LOOKING BIGGER. THE IEA ANTICIPATES A MASSIVE GLOBAL SURPLUS OF ROUGHLY 4 MILLION BARRELS A DAY IN THE FIRST HALF OF 2026, WAS APPLIED EXCEEDING DEMAND SUBSTANTIALLY. THAT IS YOUR BLOOMBERG LEAF. -- WITH SUPPLY EXCEEDING DEMAND SUBSTANTIALLY. THAT IS YOUR BLOOMBERG BRIEF. > > I FILLED WITH GRIEF AND ANGER AT THE HEINOUS ASSASSINATION OF CHARLIE KIRK. MY ADMINISTRATION WILL FIND EACH AND EVERY ONE OF THOSE WHO CONTRIBUTED TO THIS ATROCITY AND OTHER POLITICAL VIOLENCE. JONATHAN: WE WILL CATCH UP WITH THE FORMER WHITE HOUSE OFFICIAL ASHLEY DAVIS. ♪ JONATHAN: IT IS THE LAST BIG CLIMB BEFORE THE FEDERAL RESERVE MEETING NEXT WEEK. CPI LATER THIS MORNING. JOBLESS CLAIMS, TOO. A VIEW FROM THE ECB. FRANKFURT, GERMANY. WE WILL HAVE A NEWS CONFERENCE WITH THE ECB PRESIDENT CHRISTINE LAGARDE 8:45 EASTERN TIME. THAT IS THE SCHEDULE FOR TODAY IN FINANCIAL MARKETS. EQUITY FUTURES ON THE S & P 500 ADDING TO YESTERDAY'S RECORD HIGH. SIMILAR MOVE ON THE NASDAQ 100. UNDER SURVEILLANCE, POLITICAL VIOLENCE RATTLES THE U.S.. > > I AM FILLED WITH GRIEF AND ANGER AT THE HEINOUS ASSASSINATION OF CHARLIE KIRK. MY ADMINISTRATION WILL FIND EACH AND EVERY ONE OF THOSE WHO CONTRIBUTED TO THIS ATROCITY AND DO OTHER POLITICAL VIOLENCE. IT IS LONG PAST TIME FOR ALL AMERICANS IN THE MEDIA TO CONFRONT THE FACT THAT VIOLENCE AND MURDER ARE THE TRAGIC CONSEQUENCE OF DEMONIZING THOSE WITH WHOM YOU DISAGREE. JONATHAN: INVESTIGATORS EXPANDING THEIR SEARCH FOR THE KILLER OF CONSERVATIVE ACTIVIST CHARLIE KIRK. HERE IS TYLER KENDALL. SHOCKING NEWS YESTERDAY EVENING. TYLER: ABSOLUTELY SHOCKING. THE SHOOTER IS STILL AT LARGE. THE FBI IS WORKING CLOSELY WITH STATE AND LOCAL LAW ENFORCEMENT ON THE INVESTIGATION AFTER OFFICIALS SAID AROUND 12:20 P.M. MOUNTAIN TIME, A SINGLE SHOT WAS FIRED FROM THE BUILDING ABOUT 200 YARDS AWAY FROM WHERE CHARLIE KIRK WAS ADDRESSING THE CROWD. OFFICIALS BELIEVE THE SHOT WAS FIRED FROM THE ROOFTOP OF THE BUILDING. THERE WAS CLOSED-CIRCUIT SURVEILLANCE FOOTAGE THAT WAS RELEASED THAT SHOWS A FIGURE IN DARK CLOTHING BELIEVED TO BE THE SUSPECT. WE HAVE NOT GOTTEN ADDITIONAL DETAILS INCLUDING WHAT POTENTIAL WEAPON WAS USED AND WHETHER OR NOT IT WAS RECOVERED. OFFICIALS SAID THEY TOOK TWO PEOPLE INTO CUSTODY YESTERDAY BUT RELEASED THEM AFTER QUESTIONING. MORE THAN 3000 PEOPLE AT THIS EVENT AT UTAH VALLEY UNIVERSITY, ALONGSIDE SIX LOCAL POLICE OFFICERS AND KIRK'S PERSONAL SECURITY THAT WERE ON THE SCENE. WE HEARD FROM THE UTAH GOVERNOR SPENCER COX WHO DESCRIBED THIS AS A TARGETED AND POLITICAL ASSASSINATION. KURT WAS A PROMINENT -- KIRK WAS A PROMINENT ACTIVIST AND A STAUNCH ALLY OF PRESIDENT TRUMP. THE PRESIDENT WAS ONE OF THE FIRST TO CONFIRM HE HAD DIED. IT COMES AGAINST A BROAD OBJECTIVE OF HEIGHTENED FOCUS IN WASHINGTON WHEN IT COMES TO THE RISE IN POLITICAL VIOLENCE. WE HAD HOUSE SPEAKER MIKE JOHNSON LESS WEAK POINT TO A 55% SPIKE IN THREATS CALLED IN AGAINST MEMBERS OF CONGRESS IN JUST THE LAST YEAR ALONE. AT THE WHITE HOUSE PRESIDENT TRUMP HAS ORDERED FLAGS TO HAVE STAFF ACROSS THE COUNTRY THROUGH THE WEEKEND. JONATHAN: TYLER KENDALL IN WASHINGTON, D.C. JOINING US NOW IS ASHLEY DAVIS. TALKING TO THE PROGRAM. A DARK MOMENT FOR THE COUNTRY. A LOT OF PEOPLE HAVE DESCRIBED IT THAT WAY. HOW CAN LAW ENFORCEMENT MAKE THE DARK MOMENT? ASHLEY: IT'S A SAD DAY IN THE COUNTRY AND THE ANNIVERSARY OF SEPTEMBER 11, 24 YEARS. TWO DIFFERENT SATURDAYS TODAY. THE ISSUE WITH CHARLIE THAT'S A LITTLE DIFFERENT FOR MOST WHITE HOUSE IS IS THAT THIS IS A PERSONAL FRIEND TO THIS ADMINISTRATION AND FAMILY. BOTH SONS OF THE PRESIDENT HAVE BEEN FRIENDS WITH HIM FOR YEARS. A LOT OF THE WHITE HOUSE STAFF AS WELL AS STAFF IN THE VARIOUS AGENCIES, AND SENATORS AND HOUSE MEMBERS ON THE HILL. THIS IS PRETTY PERSONAL, WHICH IS DIFFERENT. FROM WHAT I HAVE BEEN TOLD, THIS IS BRINGING BACK TONS OF MEMORIES, ALMOST THE SAME TYPE OF SET UP FOR WHEN PRESIDENT -- THE ASSASSINATION WAS TEMPTED ON HIS LIFE. IT IS BRINGING BACK BAD MEMORIES THE WHITE HOUSE AND WHITE HOUSE STAFF. IT IS A LITTLE DIFFERENT OF A SITUATION. THERE HAS BEEN POLITICAL VIOLENCE THAT HAS SPIKED. I DON'T JUST BLAME IT ON THIS BUT THE FACT THAT WE HAVE THE 24 HOUR NEWS CYCLE. WE HAVE ALL THE SOCIAL MEDIA AND ALL THIS ACCESS TO INFORMATION THAT CAN BE VERY POLARIZING. THE ALGORITHMS, YOU KNOW, IF YOU BELIEVE ONE WAY THE ALGORITHMS WILL CHASE YOU THAT WAY AND VICE VERSA ON THE OTHER SIDE. MY DAD SAID TO ME THIS IS MY SON'S DAY LIKE JFK. JUST ONE JFK WAS ASSASSINATED. IT STARTED WITH STEVE SCALISE. OBVIOUSLY, BRETT KAVANAUGH HAD AN ATTEMPT ON HIS LIFE. GABBY GIFFORDS. THE HORRIBLE MURDERS IN MINNESOTA. NANCY PELOSI'S HUSBAND. IT GOES ON AND ON. I DON'T KNOW THE ANSWER TO IT. HOW DO WE STOP IT? WE DON'T KNOW, EXCEPT FOR TRYING TO BRING THE RHETORIC DOWN. ANNMARIE: WHAT KIND OF ACTION DO YOU THINK WE COULD SEE ALMOST A MEDIALLY WHEN IT COMES TO THE HOMELAND SECURITY OR LAW ENFORCEMENT IN THIS COUNTRY? ASHLEY: I THINK THERE'S GOING TO BE A HEIGHTENED ALERT WITH HOMELAND SECURITY. THE REAL PROBLEM IS WHEN YOU HAVE A SITUATION LIKE HE DID YESTERDAY WITH 3000 PEOPLE IN THE OPEN AIR AREAS, HOW DO YOU CONTROL THAT? CHARLIE KIRK DOES NOT HAVE THE ABILITY TO BRING A SECRET SERVICE LEVEL OF SECURITY. ON YOUR SHOW PLENTY OF TIMES AFTER THE PRESIDENT'S ASSASSINATION I WAS TOUGH ON WHAT HAPPENED AND THE SECRET SERVICE NOT DOING THEIR JOB. BUT CHARLIE KIRK AND OTHER POLITICIANS DON'T HAVE THAT LEVEL OF SECURITY. IT IS GOING TO BE -- CHARLIE HAD I THINK EIGHT SECURITY OF HIS OWN. THE LOCAL PEOPLE HAVE BEEN -- WERE WORKING WITH HIS SECURITY IN REGARDS TO TRYING TO MAKE SURE SOMETHING LIKE THIS DOES NOT HAPPEN. I DON'T KNOW HOW YOU SECURE PLACES LIKE THIS UNLESS THE DEATH THREATS TO YOU ARE SO SIGNIFICANT THAT YOU JUST TRY TO DO THINGS INSIDE, WHICH IS A SAD DAY FOR OUR COUNTRY IF THAT IS WHAT WE HAVE TO DO. ANNMARIE: UNDERSTANDING WASHINGTON, D.C., COULD THIS BE A MOMENT FOR CHANGE, FOR SEISMIC SHIFT IN RHETORIC AND HOW POLITICIANS AND CITIZENS SPEAK TO EACH OTHER? ASHLEY: I HOPE SO. I THOUGHT SO AFTER THE PRESIDENT'S ASSASSINATION ATTEMPT. THAT LASTED MAYBE A WEEK. YOU SAW IT HAPPEN POTENTIALLY ON THE HOUSE FLOOR YESTERDAY WITH REPUBLICANS AND DEMOCRATS FIGHTING OVER A MOMENT OF SILENCE REQUESTED FOR CHARLIE ON THE HOUSE FLOOR. HOPEFULLY PEOPLE REFLECT ON THAT TODAY. I THOUGHT SPEAKER JOHNSON GAVE A GOOD ANSWER TO WHAT HAPPENED ON THE HOUSE FLOOR YESTERDAY. EVERYONE WAS IN RAW EMOTION. HOPEFULLY EVERYONE TAKES A STEP BACK TODAY AND COMES BACK WITH BETTER BEHAVIOR ON BOTH SIDES OF THE AISLE. ANNMARIE: OTHER ISSUES WASHINGTON IS DEALING WITH IS WHAT IS GOING ON GEOPOLITICALLY. I AM FOCUSED ON WHAT IS HAPPENING IN TERMS OF BELARUS AND RUSSIA AND POLAND SAYING THEY ARE GOING TO BE CONCERNED WITH WHAT IS GOING ON WITH RUSSIAN DRONES. DO YOU HAVE INSIGHT ON HOW THE ADMINISTRATION COULD RESPOND TO WHAT WE SAW THIS WEEK? ASHLEY: TWO THINGS. I HAVE SPENT A LOT OF TIME IN THAT AREA OF THE WORLD HELPING WITH THE OPPOSITION CANDIDATES AGAINST LUKASHENKO AND BELARUS. -- IN BELARUS. WHAT STARTS TOMORROW IS IMPORTANT. THERE WILL BE MILITARY TRAINING AND BELARUS WITH RUSSIA AND LUKASHENKO'S MILITARY. THAT IS RIGHT UP AGAINST POLAND. THERE WILL BE A HEIGHTENED ALERT. I WAS LOOKING AT HOW NATO HAS BEEN REACTING. THE FACT THAT THEY ARE IMPLEMENTING ARTICLE FOUR INSTEAD OF ARTICLE FIVE IN REGARDS TO THESE DRONES IN ARTICLE FIVE MEANS IT WOULD BE MORE POTENTIAL MILITARY RESPONSE, NATO IS REVIEWING WHAT HAPPENED WITH THE DRONES. IT LETS DOWN A LOT OF THAT TENSION. IT IS SOMETHING SIGNIFICANT AND YOU SAW THE PRESIDENT'S RESPONSE YESTERDAY. YOU HAVE THE PRESIDENT GETTING A TON OF PRESSURE FROM SENATE REPUBLICANS AND DEMOCRATS ON THE HILL TO PASS 500% TARIFFS ON RUSSIA. I THINK THE TIME IS RUNNING OUT IN REGARDS TO CONGRESS WAITING AND GIVING THE PRESIDENT THE ABILITY TO NEGOTIATE THIS BUT WE WILL SEE. JONATHAN: ASHLEY, THANKS FOR MAKING TIME FOR US THIS MORNING. ASHLEY DAVIS ON THE LATEST IN WASHINGTON, D.C. AND BEYOND. THE POLISH ARE REALLY RATTLED BY THE PAST FEW DAYS. ANNMARIE: THEY ARE RATTLED AND THEY ARE NEGOTIATING WITH NATO TO TRY TO FIGURE OUT WHAT THE RESPONSE SHOULD BE TO HER POINT ARTICLE FOUR. NOT ARTICLE FIVE BUT A STRONG MOMENT. JONATHAN: STOCKS POSITIVE THIS MORNING BY .2%. UP NEXT, TOM MICHAUD ON THE OUTLOOK FOR FINANCIALS. YAHAIRA HAS YOUR MORNING MOVERS. A NEW NAME ON WALL STREET IS LOSING STEAM. ♪ JONATHAN: CPI 60 MINUTES AWAY. THE OPENING BELL IS TWO HOURS AWAY. TEACHERS POSITIVE BY .2%. THREE DAYS OF GAINS ON THE S & P, SIX ON THE NASDAQ 100. RECORD HIGHS ON THE S & P AND THE NASDAQ 100. IN THE BOND MARKET, TWO-YEAR, 10-YEAR, 30-YEAR BOND YIELDS CLOSE TO THE LOWS FOR THE YEAR. GOT ABOUT 40 BASIS POINTS SINCE EARLY AUGUST, JUST BEFORE WE GOT THAT WEEK PAYROLLS REPORT -- WEAK PAYROLLS REPORT AND THAT SET US UP FOR RATE CUTS FOR SEPTEMBER AND BEYOND. ON THE 10-YEAR, JUST NORTH OF 4%. THAT IS THE PRICE ACTION IN STOCKS AND BONDS. LET'S GET YOUR MORNING MOVERS. YAHAIRA: IT IS A PRETTY QUIET DAY HEADING INTO THAT CPI PRINT. WORTH NOTING ORACLE SHARES ARE HIGHER, NEARLY 2% HERE IN THE PREMARKET AFTER THAT 36% SURGE YESTERDAY, MARKING ITS BEST DAY SINCE 1982. IT WAS ALSO A BIG DAY FOR CO-FOUNDER LARRY ELLISON. WITH ORACLE'S RALLY GIVING HIM THE BIGGEST ONE-DAY WEALTH JUMP EVER RECORDED. MAKING ELLISON BRIEFLY THE WORLD'S RICHEST MAN YESTERDAY FOR A FEW HOURS, TOPPING ELON MUSK. NEXT UP WE HAVE KLARNA SHARES LOWER BY 2%. THEY HAD A STRONG DEBUT YESTERDAY, SURGING 15% AFTER RAISING .37 BILLION. EVEN THOUGH WE ARE SEEING THE IPO MARKET WARM-UP, KLARNA IS A 20-YEAR-OLD COMPANY UNDERSCORING THE IDEA OF HOW COMPANIES ARE STAYING PRIVATE FOR LONGER. WE END ON OPEN-DOOR TECHNOLOGIES. THE ONLINE REAL ESTATE FIRM IS SURGING IN THE PREMARKET AFTER SOME BIG MOVES AT THE TOP. IT HAS A NEW CEO WHO WAS FORMERLY AT SHOPIFY. THE FOUNDER IS BACK AS CHAIRMAN. INVESTORS ARE LIKING THE SHAKEUP AFTER SOME DRAMA LAST MONTH WHEN THE CEO WAS FORCED TO RESIGN AFTER SOME PRESSURE FROM INVESTORS. JONATHAN: MORE FROM YAHAIRA IN THE NEXT HOUR. A MANHUNT IS UNDERWAY AFTER THE ASSASSINATION OF CONSERVATIVE ACTIVIST CHARLIE KIRK. PRESIDENT TRUMP CALLING THE LATEST ACTIVE POLITICAL VIOLENCE A DARK MOMENT FOR AMERICA. A FULL SENATE VOTE ON THE CONFIRMATION OF PRESIDENT TRUMP'S FED PIT COULD COME ON MONDAY. SETTING UP STEPHEN MIRAN TO BE ON THE BOARD OF GOVERNORS NEXT WEEK. LISA: THIS IS A KEY QUESTION IF HE IS ON THE BOARD OF GOVERNORS NEXT WEEK GIVEN THE FACT THAT TERM EXPIRES OR WILL EXPIRE SHOULD HE BE CONFIRMED EARLY NEXT YEAR. IS HE REPRESENTATIVE WHAT THE NEXT FED LEADERSHIP LOOKS LIKE OR A PLACEHOLDER TO RATTLED FEATHERS ON THE BOARD OF GOVERNORS? I THINK PEOPLE WILL BE ASKING THIS QUESTION NEXT WEEK. JONATHAN: THIS IS FROM THE WALL STREET JOURNAL. THE FED CHAIR RACE GETS A DARK HORSE. DID ANY OTHER TIMES THIS WOULD NOT BE A DARK HORSE. CHRISTOPHER WALLER WARNED THAT PRIVATE SECTOR HIRING WAS AT NEAR STALL SPEED AND A COLLEAGUE JOKED YOU ARE A BETTER ECONOMIST THAN THAT. CHRIS HAS BEEN PROVED RIGHT. LISA: HE IS A GOOD ECONOMIST OR HE WOULD HAVE THE MARKET CREDIBILITY BEHIND HIM AS WELL. HOW MUCH ARE SOME OF THE ADMINISTRATION OFFICIALS LOOKING FOR THE NEXT FED THINKING OF SCOTT BESSENT IN PARTICULAR LOOKING AT SOMEONE WITH THE CREDIBILITY WHO ARE SKEWED TO CUTTING RATES FURTHER? ANNMARIE: THE TREASURY SECRETARY IS HAVING INTERVIEWS AND NEEDS TO GET THE TOP THREE TO THE PRESIDENT. THE TOP THREE SOUND LIKE WHAT YOU ALL HAVE BEEN TALKING ABOUT. GOVERNOR WALLER IS ONE OF THEM. ALSO THE KEVINS. GOVERNOR WALLER HAS BEEN ABSOLUTELY VINDICATED. WHAT JAY POWELL SAID AT THE LAST FOMC MEETING VERSUS WHAT HE SAID FOUR WEEKS LATER AT JACKSON HOLE WAS COMPLETELY DIFFERENT. IT WAS LIKE CHRIS WALLER ACTUALLY WROTE THAT SPEECH FOR HIM. JONATHAN: HOW THINK THE KEVINS FEEL ABOUT BEING CALLED THE KEVINS? I IMAGINE WALSH IS OFFENDED BY THAT. LISA: KEVIN HASSETT IS OK WITH IT? JONATHAN:JONATHAN: HE SHOULD BE HAPPY HE'S IN THE RUNNING. LISA: I DON'T KNOW. YOU ALWAYS WANT TO BE AN INDIVIDUAL AND RECOGNIZED FOR WHO YOU ARE AS A HUMAN BEING. KEVINS, -- JONATHAN: PLUS WALLER. KATHY HOUCK STOPPING SHORT OF ENDORSEMENT FOR NEW YORK CITY MAYOR CALENDAR DATE MAMDANI. SHE SAID SHE WOULD WORK WITH HIM DESPITE THEIR PHILOSOPHICAL DIFFERENCES. > > I DON'T WANT TO RAISE INCOME TAXES ON HIGH NET WORTH PEOPLE. I'M A STAUNCH CAPITALIST. I NEED TO KNOW THAT PEOPLE CAN HAVE A CERTAIN PHILOSOPHY, BUT YOU HAVE TO GOVERN IN REALITY. THE REALITY IS THIS IS THE FINANCIAL CENTER OF THE WORLD. JONATHAN: I DON'T WANT TO RAISE INCOME TAXES ON HIGH NET WORTH PEOPLE. THE BIG HEADLINE IN THAT INTERVIEW. LISA: HOW MUCH WILL SHE STYMIE ANY GOALS IF MAMDANI WINS THE MAYORAL RACE? THE STATE HAS THE POWER OVER THE PERSON TERMS OF TAXES AND HOW MUCH YOU CAN RAISE THEM. A QUESTION OF HOW YOU PARSE THE FACT THAT THE ISSUES BEING RAISED ARE RELEVANT AND IMPORTANT. IT IS THE METHODS OF HOW YOU GO ABOUT IT THERE REALLY ARE THE CONTROVERSIAL ONES AND THAT SEEMS TO BE THAN NEIL SHE WAS TRYING TO THREAT. ANNMARIE: WE HAVE HEARD FROM HER BEFORE IN THE PAST. I CAN'T LOSE ANY MORE PEOPLE TO PALM BEACH, TALKING ABOUT THE FACT THAT TAXES CANNOT GO UP TO NEW YORK AND YOU THINK YOU CAN ATTRACT HIGH NET WORTH INDIVIDUALS AND TALENT. AT SOME POINT THEY ARE JUST GOING TO LEAVE. JONATHAN: IT IS THE FINANCIAL CAPITAL OF THE WORLD. LET'S STAY ON THE FINANCIALS. JANE FRASER TELLING BLOOMBERG SHE SEES A PICKUP IN ACTIVITY WITH NO U.S. RECESSION ON THE HORIZON. > > I STILL SEE STRONG PIPELINES, HIGH LEVEL OF ENGAGEMENT FROM CLIENTS. I SEE A SENSE OF URGENCY AS WELL ACTIVE IN THE CAPITAL MARKET ARENA AND FINANCING, MUCH MORE ACTIVE IN INVESTING, LESS SITTING ON THE SIDELINES. M & A IS BEING ACTIVITY. JONATHAN: LET'S TURN TO TOM MICHAUD. WELCOME TO THE PROGRAM. LET'S JUST TALK ABOUT WHAT DAY IT IS. YOU WERE HEADQUARTERED IN THE WORLD TRADE CENTER. YOU ARE 50 THAT DAY. I WANT TO THINK ABOUT WHAT THE DAY STILL MEANS TO YOU TODAY AND HOW WE ENSURE THIS GENERATION NOW COMING ON THE WALL STREET WHO WERE NOT ALIVE THAT DAY, HAD NOT BEEN BORN, AND HOW THEY DON'T FORGET EITHER. TOM: DIRECT. -- CORRECT. YES, IT'S IMPORTANT TO NOT FORGET. WE SAID THAT DAY WE WERE NEVER GOING TO FORGET. THERE HAVE BEEN A LOT OF BIG PIECES TO WET NEVER FORGET MEANS. IT MEANS DIFFERENT THINGS TO DIFFERENT PEOPLE. ONE OF THE THINGS WE'RE DOING IS MAKING SURE THAT 9/11 IS NOT DEFINED JUST BY THE PEOPLE WHO FLEW AIRPLANES INTO OUR BUILDING. INSTEAD, I'M WORKING WITH A GROUP THAT KBW HELPED FOUND TO THINK ABOUT THE RESILIENCE AND THE GOODWILL AND REBUILD AND HONOR THE VICTIMS OF THAT ATTACK WITH THAT SPIRIT. WE WORKED WITH CONGRESS AND IN 2009 WE GOT CONGRESS TO PASS A LAW MAKING 9/11 A NATIONAL DAY OF SERVICE. WE THINK TODAY THEY WILL BE 33 MILLION AMERICANS WHO PARTICIPATE IN THE DAY OF SERVICE TO REMEMBER THE VICTIMS OF 9/11 AND REMEMBER THE RESILIENCE AND THE GOODWILL THAT IT TOOK TO REBUILD. THERE IS ONE SERVICE PROJECT IN PARTICULAR WE SUPPORT. WE WILL BE IN 24 CITIES IN AMERICA TODAY. WE WILL PACK CLOSE TO 9 MILLION MEALS FOR THOSE THAT ARE FOOD INSECURE. WE HAVE OVER 800 CORPORATE CUSTOMERS -- CORPORATE PARTNERS IN THIS. NEXT YEAR THE AIM IS TO TRY TO DOUBLE THAT FOR THE 25TH RECOGNITION AND ANNIVERSARY OF 9/11 TO CONTINUE TO TALK ABOUT WHAT IT TOOK FOR AMERICA TO REBUILD AFTER THE ATTACKS. YOU DON'T END UP WITH 9/11 BEING TWO PARAGRAPHS IN A HISTORY BOOK. WE WILL NOT LET THAT HAPPEN. JONATHAN: I THINK WE ARE ALREADY BEHIND YOU AND THANK YOU FOR BEING WITH US TODAY TO TALK ABOUT IT. WE NEED TO TALK ABOUT THE BROADER BUSINESS WORLD AND WHAT IS HAPPENING WITH BANKING ACTIVITY. THINGS ARE BOUNCING BACK. YOU CAN SEE IT INHERENT IN THE WORDS OF JANE FRASER OF CITI. ARE YOU HEARING THAT? TOM: THE FACT IS HEADWINDS ARE NOW TAILWINDS. I'M ABOUT AS OPTIMISTIC ON THE FUNDAMENTALS OF THE BANKING SECTOR AND FINANCIAL SERVICES IN GENERAL AS I HAVE BEEN IN SEVERAL YEARS. THERE IS REVENUE GROWTH, PER GROWTH. LOOKING AT 10% THIS YEAR AND NEXT. THE ECONOMY IS OK ENOUGH. THAT IS VERY BULLISH. THEN THERE IS THE OTHER STUFF. RATHER THAN REGULATORY ATTENTION SLOWING DOWN FINANCIAL SERVICES, IT IS RESETTING TO WHERE IT TYPICALLY IS WHICH IS ONE THAT IS MORE SUPPORTIVE OF GROWTH. THE CONSOLIDATION IS GOING TO RESTART THE INDUSTRY. THE OTHER THINGS I HEARD YOU TALKING ABOUT HOW THE MARKET IS AT AN ALL-TIME HIGH. SIX STRAIGHT DAYS ON THE NASDAQ OF RECORDS. YOU DON'T HAVE THE DOWNSIDE RISK IN THE VALUATION FOR THE FINANCIALS. WHILE THE STOCKS HAVE DONE WELL, THEY ARE WELL FAR AWAY FROM THEIR HISTORIC NORMS. THERE'S A LOT OF VALUATION UPSIDE IN THE FINANCIALS. IN MY EXPERIENCE WHEN EARNINGS ESTIMATES ARE GOING UP, PROFITABILITY IS IMPROVING, THE STOCKS TEND TO DO WELL. LISA: THERE'S A LOT TO UNPACK THEIR. THE IDEA OF MERGERS AND ACQUISITIONS. WE HAVE SEEN IS ANNOUNCED IN RECENT DAYS. WHERE ARE WE IN THE PROCESS? HOW MORE OF THAT DO YOU SEE IN THE NEXT SIX MONTHS? TOM: WE ARE APPROACHING THE END GAME. THERE ARE 140 BANKS IN AMERICA NORTH OF 0 BILLION IN ASSETS. 96% BELOW 0 BILLION OUR COMMUNITY BANKS. 96% OF ANY NUMBER IS ALL MOST ALL OF IT. THEY ARE VERY FEW BANKS ABOUT 0 BILLION. THE BIGGER BANKS ARE THINKING ABOUT WITH THE ENDGAME IS GOING TO LOOK LIKE AND BEING VERY STRATEGIC AND THINKING ABOUT THESE ACQUISITIONS. IN THE PREVIOUS ADMINISTRATION IT HAD AN ANTI-M & A BIAS. IT WOULD NOT EVEN GIVE AN ANSWER TO BANK MERGER APPLICATIONS UNLESS THEY WERE FORCED TO. NOW THE ADMINISTRATION HAS COME BACK TO WHAT HISTORICALLY -- THAT IS ALL THE INDUSTRY NEEDED TO RESTART THE CONSOLIDATION WAVE AND IT IS UNDERWAY NOW. LISA: WHAT DOES IT LOOK LIKE IN THE END? THE MEGAS IN THE MEDIA MEGAS AND EVERYONE ELSE? TOM: REMEMBER THE NONBANKS. YOU WERE TALKING ABOUT KLARNA. FINANCIAL BANKS USED TO BE HALF OF THE WAITING FINANCIALS. NOW THEY ARE A QUARTER OF IT. WE THINK ARIES WILL GET ADDED TO THE S & P 500 NEXT. THAT'S AN $80 BILLION MARKET CAP COMPANY. THANKS ARE A SMALLER PIECE OF THE FINANCIAL SERVICES INDUSTRY. THEY ARE COMPETING WITH KLARNA. OTHERWISE THE INDUSTRY WILL EVOLVE WITH FOUR BIG BANKS AND A LOT OF OTHERS THAT ARE MUCH SMALLER. THE BEST THING TO DO FOR THE ECONOMY AND OUR OPINION IS TO ALLOW THESE REGIONAL CHAMPIONS TO GET THE SCALE TO COMPETE WITH THE BIG FOUR BANKS AND THEY COMPETE WITH NONBANKS AND I THINK OUR ECONOMY AND MAIN STREET AMERICA WILL BE BETTER SERVED IF THAT HAPPENS. LISA: YOU ARE OPTIMISTIC ABOUT BANK STOCKS RIGHT NOW. TOM: LET ME TALK ABOUT THE ONE THING THAT CAN STOP IT. THE ONE THING THAT CAN STOP IT IS CREDIT QUALITY. THE PAST WEEK WAS THE BARCLAYS CONFERENCE IN NEW YORK AND THE LAST BIG CHANNEL CHECK WE GET FOR THE QUARTER. EVERYBODY IS SAYING THE SAME THING. CREDIT QUALITY REMAINS PRISTINE. THERE'S A MOMENT WHEN CREDIT COSTS GO UP. THE SURPRISE IS FOR HOW LONG IS BEEN ESSENTIALLY ZERO. AS LONG AS WE HAVE A SOLID ENOUGH ECONOMY THE BULL STORY IS VERY MUCH INTACT. USUALLY IF WE GET A CREDIT CYCLE INVESTORS TEND TO SELL BANK STOCKS FIRST AND ASK QUESTIONS LATER. WE DON'T SEE A CREDIT CYCLE ON THE HORIZON IN THE BANKING SECTOR. OUR VIEW IS THAT THAT IS WHAT IS NECESSARY. 1.9% GDP GROWTH IS GOOD ENOUGH TO GET THE FUNDAMENTAL STORY AND PLAY. THE BANKS ARE TALKING ABOUT ACCELERATING LOAN GROWTH WHICH IS A POSITIVE PART OF THE STORY. JONATHAN: THIS IS MY FAVORITE STAT OF YOURS. REMIND US OF THE TOP 10 MORTGAGE PROVIDERS IN THIS COUNTRY NOW AND HOW MANY BANKS ARE IN THE TOP 10 COMPARED TO A DECADE AGO. TOM: PRE-FINANCIAL CRISIS, EIGHT OF THE 10 MORTGAGE ORIGINATORS WERE BANKS. TODAY, THREE OF THE TOP 10 ARE BANKS. THE QUESTION ALONG THAT LINE IS, DID BANKS FORGET HOW TO MAKE MORTGAGES? THEY WERE ALL PRIMARILY FOUND IT TO MAKE MORTGAGES. THAT IS REGULATION. THE RESPONSE TO EVERY CRISIS IS REGULATE THE BANKS, WHICH TIED THEIR HANDS, WHICH IS WHY THE NONBANKS HAVE SO MUCH MARKET SHARE. THE RIGHT THING TO DO IS TO TAKE THE FOOT OFF THE BANKS, LET THEM COMPETE WITH THE NONBANKS, AND I THINK YOU CAN DO IT WITHOUT PUTTING TOO MUCH RISK IN THE SYSTEM. THE RISK HAS GONE ELSEWHERE AND GONE OUTSIDE THE SUPERVISORY UMBRELLA. WHEN WE GET THE NEXT CYCLE WE WILL FIND OUT IF WE WERE BETTER OFF. JONATHAN: TOM MICHAUD, THANK YOU FOR BEING HERE. TOM MICHAUD OF KBW. LET'S GET AN UPDATE WITH YOUR BLOOMBERG BRIEF. HERE IS VONNIE QUINN. VONNIE: BOEING HAS REACHED A TENTATIVE AGREEMENT WAS STRIKING HOURLY WORKERS AT A ST. LOUIS AREA FACTORY. THE COMPANY SAYS THE CONTRACT OFFERS EXPANDED WAGES BY AN AVERAGE OF ABOUT 45% AND PROVIDES A 24% AVERAGE GUARANTEED WAGE INCREASE. WORKERS WILL RECEIVE A $4000 BONUS. UNION REPRESENTATIVES ARE SET TO VOTE ON THE CONTRACT ON FRIDAY. MEXICO WAS PLANNING TO OPPOSE AS MUCH AS -- IMPOSE A 50% TARIFF ON CHINESE PRODUCTS. THE MOVE COMES AS PRESIDENT CLAUDIA SHEINBAUM PREPARES FOR TALKS OVER NORTH AMERICA'S FREE-TRADE DEAL. SUE FOLEY IS VENTURING INTO ASIA -- CHIPOTLE IS VENTURING INTO ASIA WITH SOUTH KOREA AND SINGAPORE NEXT YEAR. THE CEO EXPECTS THE INTERNATIONAL MARKETS TO BE THE NEXT LAYER OF GROWTH BEYOND NORTH AMERICA. THAT IS YOUR BLOOMBERG BRIEF. JONATHAN: APPRECIATE IT. UP NEXT, DON'T FEAR THE PAUSE. FEAR THE CUTS. > > THEY HAVE TO DO A PREEMPTIVE INSURANCE RATE CUT. THEY DON'T KNOW THE TRAJECTORY OF WHAT THE IMPACT OF THE LABOR MARKET SOFTNESS IS GOING TO BE ON CONSUMPTION. JONATHAN: THAT CONVERSATION OF NEXT WITH ADITYA BHAVE FROM BANK OF AMERICA SECURITIES. YOU ARE WATCHING BLOOMBERG TV. ♪ JONATHAN: THE ECONOMIC DATA ABOUT 42 MINUTES AWAY. STOCKS DOING OK. ON THE NASDAQ, UP BY ONE THIRD OF PERCENT. UNDER SURVEILLANCE, DON'T FEAR THE PAUSE, FEAR THE CUTS. > > FEAR THE CUTS. WHEN THE FED STARTS TO CUT RATES, A LOT DEPENDS ON WHY THEY ARE CUTTING RATES. THEY HAVE TO DO A PREEMPTIVE INSURANCE RATE CUT. THEY DON'T KNOW THE TRAJECTORY OF THE IMPACT OF THE LABOR MARKET SOFTNESS IS GOING TO BE ON THE CONSUMPTION. THAT IS THE LINKAGE THEY ARE TRYING TO GIVE THE MARKET SOME SENSE OF RELIEF AND COMFORT. JONATHAN: INVESTORS PREPARING FOR THE LAST MAJOR READ ON INFLATION BEFORE THE FED'S RATE DECISION NEXT WEEK. ADITYA BHAVE SAYING THERE IS NOW CLEAR EVIDENCE OF DETERIORATION IN LABOR DEMAND AND WE ARE CHANGING OUR FED CALLED THE SHOW 225 BASIS POINT CUTS THIS YEAR IN SEPTEMBER -- TWO 20 FIVE BASIS POINT CUTS THIS YEAR IN SEPTEMBER AND DECEMBER. JONATHAN: YOU WERE LOOKING FOR NO CUTS IN 2025. YOU SAID THERE HAD BEEN A STEP DOWN AND PAYROLLS GROWTH BUT MEASURES HAVE STAYED STABLE. WHAT HAS CHANGED? ADITYA: BOTH THE REACTION FUNCTION EXPRESSED BY CHAIR POWELL WHICH WAS MORE DOVISH THAN EXPECTED AND SOME SIGNS OF WEAKER LABOR DATA. PAYROLLS HAVE WEAKENED MORE THAN WE EXPECTED. THE UNAPPOINTED RATE MOVED UP AND THAT WAS SORT OF EXPECTED. THAT HAS TICKED DOWN A BIT. IN THE CONTEXT OF CHAIR POWELL TALKING ABOUT THE TRADE-OFF BETWEEN CONCERNS ABOUT HIGHER INFLATION AND CONCERNS ABOUT A WEAKENING LABOR MARKET AND IT DOES LOOK LIKE THE FED WILL CUT. WE THINK THEY WILL HAVE TO BE QUITE CAUTIOUS IN CUTTING. TWO CUTS IN THE CYCLE UNDER CHAIR POWELL IN SEPTEMBER AND DECEMBER. JONATHAN: THE LABOR MARKET SEEMS TO HAVE CHANGED AS WELL. HE APPEARED TO ANCHOR HIS VIEW ON THE LABOR MARKET AROUND THE UNEMPLOYMENT RATE. NOW THAT HAS SHIFTED TO PAYROLLS GROWTH. DOES THAT STACK UP FOR YOU? ADITYA: IT IS HARD TO SAY WHAT IS BEHIND HIS THINKING. WE ARE PROBABLY MORE CONCERNED ABOUT LABOR SUPPLY OR WE THINK A LARGER SHARE OF THE SHOCK WE ARE SEEING IN THE LABOR MARKET IS THE SUPPLY STORY THAN THE DEMAND STORY THAT PERHAPS THE FED IS CONSIDERING. LISA: DID REVISIONS CHANGE THE VIEW? THERE IS THAT MUCH LESS MOMENTUM WHEN WE SAW A NEGATIVE PAYROLLS PRINT IN JUNE FOR THE FIRST TIME SINCE DECEMBER OF 2020? ADITYA: THAT IS ONE WAY TO THINK ABOUT IT. THE OTHER WAY IS WE GREW 2.7% IN TERMS OF PRIVATE DOMESTIC DEMAND AND THAT -- AND IN THAT PERIOD.WHAT IS THAT TELL YOU ABOUT PRODUCTIVITY AND THE BREAKEVEN? BREAKEVEN JOB GROWTH WAS LOWER AND PRODUCTIVITY IS REALLY SURGING. LISA: THIS IS WHY PEOPLE ARE SAYING MAYBE THE WEAKNESS IS BEHIND US. MAYBE THE WEEK DATA ALREADY OCCURRED AND WE ARE HEADING INTO SOME SORT OF REACCELERATION. DO YOU THINK OF THE FED CUTS INTO THAT IT BECOMES A LIABILITY FROM AN INFLATION PERSPECTIVE OR DO YOU THINK THIS IS A NEW PARADIGM WITH THE PRODUCTIVITY OVERLAY THAT WE ARE NOT COUNTING ENOUGH? ADITYA: WE HAVE BEEN CONCERNED ABOUT INFLATION FOR A WHILE. NOT NECESSARILY CHANGES TO TRADE POLICY BUT UNDERLYING INFLATION. WE THINK THAT HAS BEEN STUCK AROUND 2.5% FOR A LONG TIME NOW AND THE FED IS NOT WILLING TO CONCEDE THIS. IF X OF THE TARIFF IMPACT WAS HEADING BACK TO 2%, I JUST DON'T SEE IT. LIKE YOU SAID, CUTTING INTO A POTENTIAL REACCELERATION IN THE ECONOMY, WHICH WE ARE SEEING IN OUR CONSUMER SPENDING DATA, THE BSE CARD DATA, EVERYTHING AGGREGATING AN ITEMIZED, WE ARE SEEING A PICKUP, A REACCELERATION. IF YOU CUT INTO THAT, I THINK THAT CREATES UPSIDE RISK TO INFLATION. ANNMARIE: IS THAT WHY WE WOULD NOT SEE 50 BASIS POINTS NEXT WEEK AFTER THE LABOR REPORT? ADITYA: IT'S UNUSUAL FOR THE FED TO BE CUTTING WITH 3% INFLATION. EVEN 25, NEVER MIND 50. JONATHAN: THE INFLATION REPORT, THE CHAIRMAN SAID A ONE OFF BUT NOT ALL AT ONCE. I THINK THAT IS REALLY INTERESTING FROM THIS FED CHAIR. NOT ONLY IS HE TELLING US HE IS WILLING TO CUT RATES AT 3%, HE'S WILLING TO CUT RATES AGAIN EVEN IF INFLATION PRINTS, AND HOTTER IN THE NEXT SEVERAL MONTHS. IF THE FEDERAL RESERVE CONTINUES TO DISMISS HOT PRINTS AND KEEPS CUTTING? ADITYA: WE ARE THINKING OF IT AS A PLATEAU MORE THAN MOUNTAIN. THERE'S A BIG OPEN QUESTION AROUND THAT. INSTEAD OF GETTING THE BIG SPIKE AND THEN COMING BACK DOWN THE TARGET, WE THINK YOU GO UP INTO THE LOW THREES. WE ARE ALMOST THERE ALREADY. YOU STAY THERE FOR MAYBE A YEAR. THE QUESTION IS, WHAT IS THE PART BACK DOWN LOOK LIKE? WE HAVE THE CORE PCE NEXT YEAR AT AROUND 2.6%. THAT WOULD BE WITH A LOT OF THE TARIFF EFFECTS ALREADY ROLLING OFF. IS THAT ACCEPTABLE FOR THE FED? IF IT IS ACCEPTABLE FOR THE FED, IF THEY ARE RAISING ITS INFLATION TARGET, THERE'S NOTHING WRONG WITH THAT WITH 2.5, 3% ON A MACRO PERSPECTIVE BUT IT MEANS A HIGHER NEUTRAL RATE. THE NEUTRAL POLICY RATE IS A FUNCTION OF YOUR INFLATION TARGET. THEN POLICY BECOMES EVEN MORE ACCOMMODATIVE THAN EVERYTHING ELSE BEING EQUAL. LISA: WE HAVE NOT HAD A 2% INFLATION RATE GOING BACK MORE THAN FOUR YEARS. IT RAISES THE QUESTION WHETHER THE MARKET DOESN'T SEEM ALARMED BY THIS AND YOU ARE SEEING BREAKEVEN RATES CONTINUING TO BE PRETTY QUIET AND STILL AROUND THAT 2% LEVEL. ADITYA: SINCE THE FIRST QUARTER OF 2021 WE HAVE NEVER HAD CORE PCE INFLATION ON A QUARTERLY ANNUALIZED BASIS SUB TWO OR EVEN -- OR EVEN ONE QUARTER. WE'VE ONLY BEEN BELOW 2.5% A COUPLE OF TIMES. WE ARE BASICALLY STUCK AT 2.5%. I DON'T SEE HOW YOU CAN LOOK AT IT ANY OTHER WAY. JONATHAN: APPRECIATE YOUR TAKE. ADITYA BHAVE, RAISING BIG QUESTIONS AROUND WHAT WE MIGHT SEE FROM THE FEDERAL RESERVE IN SEPTEMBER AND BEYOND. THE BEYOND IS THE MORE INTERESTING PIECE OF THIS. 25 BASIS POINTS. I HAVE NO IDEA. THE GUIDANCE IS THE INTERESTING PIECE OF IT ALL. LISA: IF THE INFLATION RATE IS 2.5 PERCENT OR EVEN 3% FOR 10 YEARS, IF YOU LOOK AT AND SAY FIVE YEARS FROM NOW IF THE LABOR MARKET IS INTACT, WHAT ARE WE TALKING ABOUT IN TERMS OF THE TARGET? ANNMARIE: MOHAMED EL-ERIAN HAS BEEN TALKING ABOUT THIS FOR MONTHS. THEY ARE NOT TARGETING 2% ANYMORE. THEY ARE EXCEPTING IT WILL BE A 2% TO THREE PERCENT INFLATION RATE. JONATHAN: TALKING ABOUT IT FOR YEARS. IF HE SENT AN INFLATION TARGET NOW, IT WOULD BE 3%. THEY HAVE BEEN PLAYING THE GAME AS IF IT WAS AT 3% TARGET. LISA: WE WILL SEE THEIR REACTION TO TODAY'S CPI. JONATHAN: COMING UP, GREG BOUTLE , TIFFANY WILDING AND DAVID KELLY. ♪ > > WE DEFINITELY SEEM MORE LINGERING INFLATION. > > THAT REACTION FUNCTION [INDISCERNIBLE] AS OPPOSED TO POTENTIAL UPSIDE RISKS FROM INFLATION. > > I DON'T THINK THE FED SET US UP FOR 50. > > IT WOULD BE PREMATURE TO START CUTTING AGGRESSIVELY AT THIS POINT. > > STILL HAVE A LOT OF ADDITIONAL INFLATION FROM TARIFFS IN FRONT OF US. > > THIS IS "BLOOMBERG SURVEILLANCE." JONATHAN: THE MAIN EVENT, 30 MINUTES AWAY. GOING INTO IT YOUR SCORES LOOK LIKE THIS. LIVE FROM NEW YORK CITY THIS MORNING, GOOD MORNING, GOOD MORNING. POSITIVE ON THE S & P THIS MORNING . LIKEWISE ON THE NASDAQ. IN THE BOND MARKET, WELL BEHAVED OVER THE LAST FEW WEEKS THROUGH SEPTEMBER AND AUGUST. BOND YIELDS BACK DOWN TO ABOUT 3.55%. UP BY A SINGLE BASIS POINT THIS MORNING. THE DATA DROPS IN ABOUT 29 MINUTES NOW. CPI JUST AROUND THE CORNER TOGETHER WITH U.S. JOBLESS CLAIMS. LISA: THE LABOR MARKET HAS TAKEN ALL OF THE OXYGEN OUT OF THE AIR. THE CPI PRINT, PEOPLE ARE GOING TO BE TALKING ABOUT THE HEADLINE NUMBER. WE ARE GOING TO BE LOOKING UNDER THE HOOD. IT MATTERS WHERE INFLATION CAME FROM. OUR PEOPLE PAYING UP FOR THEIR HOTEL ROOMS WHEN THEY GO ON VACATION OR FROM THE BASIC STAPLES THAT COULD POTENTIALLY BE TIED TO TARIFFS OR OTHER SUPPLY DISRUPTIONS? THAT IS GOING TO MATTER TO GIVE A SENSE OF WHETHER THIS IS DISCRETIONARY OR COMING FROM ANOTHER LOCATION. JONATHAN: THIS MARKET HAS MOVED ON SO QUICKLY FROM INFLATION PRINTS IN AMERICA. IF YOU TOLD ME IN APRIL YOU'RE GOING TO GET INFLATION IN SEPTEMBER AND NOBODY IS GOING TO CARE, THEY'RE GOING TO FOCUS ON THE LABOR MARKET, I WOULD BE LIKE, WHAT ARE YOU TALKING ABOUT? APRIL 2 JUST HAPPENED. LISA: IT SEEMED LIKE TEAM TRANSITORY GOT BACK TOGETHER. IT IS THIS IDEA THAT INFLATION IS NO LONGER A CONCERN. I PERSONALLY AM CONCERNED ABOUT VACATION PLANNING, AS WELL AS EATING OUT. THAT HAS BECOME EXPENSIVE. THESE ARE THE ASPECTS OF LIFE PEOPLE CARE ABOUT. THE INFLATION THAT DOES AFFECT THE WAY PEOPLE THINK ABOUT THEIR SPENDING POWER, THEIR INCOME. I THINK IT DOES MATTER TO UNDERSTAND WHETHER THE STAGFLATION WAS AN OVERSTATEMENT OR A DYNAMIC AT PLAY. JONATHAN: CHAIRMAN POWELL AT JACKSON HOLE TALKING ABOUT A ONE INFLATION STOCK, BUT NOT ALL AT ONCE. MAYBE WE WILL GET A FEW MORE INFLATION REPORTS THAT COME IN. HE IS SETTING UP THIS FEDERAL RESERVE TO LOOK THROUGH IT. ANNMARIE: YOU CAN SHRUG IT OFF AND IGNORE THE CPI PRINTS IF THEY ARE HOT. WE ALREADY KNOW IT DOES SEEM LIKE THEY ARE ANCHORING TOWARD THE WEAKNESS IN THE LABOR MARKET. WE HAVE BEEN TALKING ABOUT HOW GOVERNOR WALLER HAS BEEN AHEAD OF THE CURVE WHEN IT COMES TO THIS FEDERAL RESERVE, AND BASICALLY THE ONE THAT SEEMS LIKE HE WROTE JAY POWELL'S SPEECH AT JACKSON HOLE. IT IS ALSO VINDICATION POTENTIALLY FOR THIS WHITE HOUSE. YESTERDAY AFTER THE PPI WAS A DOWNSIDE SURPRISE MANY ARE SAYING YOU ARE NOT SEEING THE EXCESSIVE PRESSURE ON PRICES FROM TARIFFS SOMEWHERE EXPECTING. THIS WHITE HOUSE IS FEELING VINDICATED AND ASKING THEM TO GO BIGGER. JONATHAN: TWO DATA POINTS 27 MINUTES AWAY. INFLATION DATA AND JOBLESS CLAIMS. COMING UP, GREG POODLE AS STOCKS TRADED ALL-TIME HIGHS. WE WILL SPEAK TO POOJA KUMRA WITH AN ECB RATE DECISION AROUND THE CORNER. AND TIFFANY WILDING AS WE BREAK DOWN THE LATEST INFLATION READING. WE BEGIN WITH STOCKS EDGING HIGHER AS TRADERS AWAIT A KEY CPI REPORT. GREG BOUTLE WRITING, RISK OF A SHALLOW CORRECTION POST THE FOMC DECISION COULD SET UP A Q3 EARNINGS SEASON RALLY. GREG JOINS US FOR MORE. GOOD. THIS IS WHAT A LOT OF PEOPLE ARE ABOUT. THINGS START TO PICK UP FROM HERE. WE HEARD FROM STEVE CHEVRON. WE HAVE HEARD FROM MIKE WILSON OF MORGAN STANLEY. YOU COULD HAVE SOME KIND OF ECONOMIC ACCELERATION INTO 2026. ARE YOU THAT BULLISH? GREG: I DON'T NECESSARILY DISAGREE WITH THAT. ONE OF THE THINGS WE HAVE TO THINK ABOUT IS THAT EQUITIES ARE A NOMINAL ASSET. WE THINK ABOUT EARNINGS GROWTH IT IS IN NOMINAL TERMS. IF YOU HAVE THE FED WILLING TO RUN THE ECONOMY HOTTER THAT CAN BE BULLISH FOR EARNINGS. JONATHAN: HOW HOT ARE THEY GOING TO RUN THINGS NEXT YEAR? ARE THEY GOING TO STOP AT THREE? DO YOU THINK THEY STOP AT 3% IN THE FEDERAL RESERVE? GREG: THAT REMAINS TO BE SEEN. THE MARKET IS GOING TO TRADE OFF THE NARRATIVE THAT WE HAVE A DOVISH FED THAT IS WILLING TO RUN IT HOT INTO THE BACK END OF THIS YEAR. LISA: YOU MENTIONED A RECESSION. COULD THAT HAPPEN? GREG: WE MENTIONED THE IDEA OF A SHALLOW PULLBACK. WE ARE TALKING ABOUT IS, WHEN WE LOOK AT THIS YEAR IT REMINDS ME A LOT OF 2019. 2019 WAS A BULLISH YEAR FOR EQUITIES AND A BIG PART OF THAT WAS THE FEDS CUTTING CYCLE IN JULY. NEW LOOK AT THE PRICE ACTION IT WAS VERY WELL-PRICED GOING INTO THE EVENT AND THE SOFTEST PATCH WE HAD THAT YEAR WAS IMMEDIATELY AFTER THE FED STARTED CUTTING RATES. IT WAS A BY THE RUMORS, SELL THE FACT TYPE OF MOVE. WE THINK THERE IS A RISK THAT THE SEPTEMBER RATE CUT IS WELL PRICED AND NOW. THE FED CAN DELIVER THAT AND THE MARKET CAN TAKE A BREATHER. LISA: WHICH IS THE IDEA OF, FEEL THE CUT BECAUSE THIS IS PRICED IN. IT RAISES THE QUESTION OF WHICH STOCKS HAVE GOTTEN THE GREATEST BENEFIT FROM THE IDEA OF AN EASING FED. YOU BELIEVE THE CYCLICALS CAN REALLY BE THE LEADERS GOING FORWARD IF THERE IS A RATE CUTTING CYCLE IN THE FACE OF THE LABOR MARKET THAT DEFINITELY HAS SLOWED DOWN REGARDLESS OF WHAT YOU THINK IN TERMS OF THE LONG-TERM IMPLICATIONS? GREG: THAT IS OUR VIEW, THAT THERE CAN BE A ROTATION. WE HAVE TO LOOK AT CYCLICALS. YOU CAN THINK OF MID-CAPS, CYCLICAL PART OF THE MARKET, BUT THEY HAVE MASSIVELY OUTPERFORMED THINGS LIKE THE INDUSTRIALS OVER THE PAST SIX WEEKS OR SO. WE THINK THERE COULD BE A CATCH-UP TRADE IN SOME OF THE INDUSTRIAL CYCLICALS. SOME OF THESE BENEFICIARIES FROM SOME OF THE CAPEX MEASURES IN THE ONE BIG, BEAUTIFUL BILL. IT'S WORTH LOOKING AT THE ISM READINGS WE HAVE SEEN THIS MONTH. THE NEW ORDERS SPECIFICALLY PICKING UP THERE. IF YOU HAVE A FED THAT IS WILLING TO RUN THINGS HOTTER AND YOU HAVE NEW ORDERS PICK UP WE THINK THE INDUSTRIAL CYCLICAL PARTS OF THE MARKET THAT DO TRADE AT LESS INFLATION IS INTERESTING. ANNMARIE: DOES IT WORRY YOU THAT MANUFACTURING JOBS HAVE BEEN COMING IN SOFT? GREG: IT IS CAUSE FOR CONCERN, AND THE DATA IS HARD TO READ AT THE MOMENT. THERE HAVE BEEN A LOT OF REVISIONS DEPENDING ON WHICH DATA YOU LOOK AT. THEY ARE PULLING IN DIFFERENT DIRECTIONS. THAT IS WHY IT IS A DIFFICULT KIND OF MARKET FOR THE DATA TO TRY AND NAVIGATE. IT LOOKS INCREASINGLY LIKE THE FED IS WILLING TO CUT OR DO A SERIES OF CUTS, WHICH I THINK FOR US PUTS THE RISK-REWARD ON THE IDEA THIS COULD BE A SOFT BATCH THAT RE-ACCELERATES INTO NEXT YEAR. ANNMARIE: I NOTICED YOU PUT A PROBABILITY ON A 25 OR 50. THE ADMINISTRATION IS PUSHING FOR THIS 50 BASIS POINT. WHAT KIND OF CPI PRINT COULD WE SEE TODAY? HOW SOFT COULD IT BE TODAY THAT YOU WOULD CHANGE YOUR PROBABILITY? GREG: THAT IS MORE WHAT THE MARKET IS IMPLYING. IF YOU LOOK AT WHAT IS IMPLIED FOR THE SEPTEMBER CUT, IT LOOKS EXACTLY LIKE WHAT WE SAW IN 2019 GOING INTO THAT CAP. THE MARKET IS PRICING THIS BASE CASE THAT YOU GET 25, AND IT IS MORE OF A TALE THAT YOU COULD GET 50. OUR VIEW IS WE WILL GET 25. I THINK THERE IS MAY BE ROOM FOR DISAPPOINTMENT. IT IS NOT PARTICULARLY VERY BEARISH, BUT MORE THIS IDEA THAT WE HAVE REALLY KIND OF AUTHOR RUMOR, SELL THE FACT, AND WE CAN DRIFT INTO WHAT IS A SEASONALLY SOFT BATCH. JONATHAN: WHAT IF WE GET A SOFT PRINT BASED ON THE ODDS YOU GET? SHOULDN'T THAT SET US UP FOR A MOVE ON WEAKER INFLATION PRINT THAN A LARGER ONE? GREG: ONE OF THE THINGS WE HAVE BEEN TALKING ABOUT FROM A VOLATILITY PERSPECTIVE IS, EVEN IF WE THINK PROBABILISTICALLY WE ARE MORE LIKELY TO GET A SHALLOW CORRECTION, THE TAIL RISK FOR THE MARKET IS FATTER ON THE UPSIDE. WE THINK ABOUT THE OPTIONS MARKET THE PART OF THE SURFACE WE THINK IS MOST UNDERPRICED IS THE RIGHT TO TAIL. IF WE HAVE A BIG AND VOLATILE MOVE THAT IS MORE LIKELY TO BE ON THE UPSIDE. HE MENTIONED THINGS LIKE THE RUSSELL THAT HAVE OUTPERFORMED A LOT. THERE IS STILL A SHORT INTEREST IN THE FUTURES THERE. IF THE MARKET READ THAT AS 50 BASIS POINT CUTS, THAT IS WHERE THE RISK IS. JONATHAN: I'M SURPRISED BY THAT GIVEN THE EXPERIENCE OF APRIL, MAY, AND BEYOND. HAVE WE BEEN CONDITIONED THAT UPSIDE RISK IS A MASSIVE FACTOR IN 2025? GREG: PART OF THAT IS HOW THE MARKET TRADES. YOU CAN SEE THE MARKET TRENDING UP 25 PIPS A DAY AND YOU COULD GET QUITE A BIG MOVE, BUT HE COMES ACROSS A LESS VOLATILE BACKDROP WHEN YOU SEE THE MARKET SELLOFF. IT TENDS TO BE MORE VOLATILE, UP TWO, DOWN TWO. WEIGH THE OPTIONS SURFACE IS LOOKING AT THE MOMENT THE DOWNSIDE IS VERY ELEVATED RELATIVE TO THE UPSIDE. I THINK IF YOU ARE INTERESTED IN PLAYING THE IDEA THAT ANGST GET MORE DISLOCATED ON THE UPSIDE AND THE FED RUNS THINGS TOO HOT, THE UPSIDE IS THE WAY TO PLAY. JONATHAN: IT IS GOOD TO SEE. GREG BOUTLE OF BNP PARIBAS. LISA: THE IDEA OF THE PAIN TRADE BEING TO THE UPSIDE MORE TO THE DOWNSIDE, WE KEEP HEARING THIS. WITH THE IDEA THAT PEOPLE ARE PERSISTENTLY PESSIMISTIC ON WALL STREET. IT FEELS LIKE SINCE 2008 EVERYONE IS LOOKING FOR THE NEXT BIG SHORT. PEOPLE ARE THINKING MAYBE THIS IS IT, YET HERE WE ARE. JONATHAN: BASED ON THE PRICE ACTION I WOULD HAVE THOUGHT THE FORMAL WAS REAL. MISSED OUT ON THAT RALLY. DO YOU MISS OUT ON THE UPSIDE IF EVERYONE IS TALKING ABOUT UPSIDE RISK? LISA: YOU CAN MAKE THAT ARGUMENT. IF EVERYONE IS PREPARED TO MISS THAT RALLY YOU WONDER HOW THINGS ARE PRICED. IT HIGHLIGHTS HOW DIFFICULT IT HAS BEEN TO PRICE IN THE RESILIENCE AND CREATIVITY OF CORPORATE EXECUTIVES IN ORDER TO DEAL WITH THE POTENTIAL INCOMING DATA, THE RESILIENCE OF CONSUMERS, AND HOW POWERFUL THE AI STORY HAS BEEN IN THE INVESTMENT CYCLE. JONATHAN: SUPERPOWERFUL BASED ON A MOVE FROM ORACLE. WITH AN UPDATE ON STORES WORLDWIDE, HERE IS VONNIE QUINN. VONNIE: A SEARCH IS UNDERWAY FOR THE KILLER OF CONSERVATIVE ACTIVIST CHARLIE KIRK. KIRK IS THE FOUNDER OF TURNING POINT USA. HE WAS SHOT AS HE WAS SPEAKING TO A CROWD AT UTAH VALLEY UNIVERSITY. THE 30 ONE-YEAR-OLD WAS A CLOSE ALLY OF DONALD TRUMP, WHO POSTED ABOUT THE INCIDENT ON SOCIAL MEDIA AND ORDERED AMERICAN FLAGS TO BE LOWERED TO HALF STAFF UNTIL SUNDAY. U.K. PRIME MINISTER KEIR STARMER HAS REMOVED PETER MENDELSON AS BRITAIN'S AMBASSADOR TO THE UNITED STATES AFTER NEW REVELATIONS ABOUT MENDELSSOHN'S TIES TO JEFFREY EPSTEIN. MENDELSON REFERRING TO ABSTAIN AS HIS ASKED PAL IN A BOOK OF TRIBUTES TO THE CONVICTED SEX TRAFFIC OR. BLOOMBERG ALSO REPORTED THAT MENDELSON TOLD EPSTEIN "I THINK THE WORLD OF YOU." AFTER EPSTEIN'S ARREST. FORMER VICE PRESIDENT, HARRISON SAYS IT WAS RECKLESS TO LET PRESIDENT BIDEN WIFE DECIDE WHETHER HE SHOULD HAVE SAW THE ELECTION AT AGE 80. IN HER FORTHCOMING MEMOIR HARRIS SAYS THE STAKES WERE TOO HIGH AND THE DECISION SHOULD NOT HAVE BEEN LEFT TO AN INDIVIDUAL'S EGO. HARRIS'S BOOK IS SET TO BE RELEASED ON SEPTEMBER 23. THAT IS YOUR BLOOMBERG BRIEF. JONATHAN: UP NEXT, POOJA KUMRA WITH AN ECB RATE DECISION COMING UP NEXT. FROM NEW YORK CITY THIS MORNING, GOOD MORNING. ♪ > > WE ARE LIKELY GOING TO HAVE INFLATION YEAR-OVER-YEAR RISING, YET YOU ARE GOING TO HAVE A FED EASING THIS MONTH. THAT IS THE CROSSCURRENTS WE ARE GOING TO BE TALKING ABOUT. IT COMES DOWN TO THE LABOR MARKET. DO NOT HAVE A RECESSION, BUT THE FACT IS YOU HAVE HIRINGS THAT HAVE JUST FLATLINED. JONATHAN: THE RANGE OF VIEWS ON THIS ECONOMY, SO WIDE. THAT WAS JOE DAVIS, THE ECONOMIST AT VANGUARD, TALKING UP THE LABOR MARKET BEING AT STALL SPEED, ON THE PRECIPICE OF RECESSION IF YOU LISTEN TO NEIL DUTTA. THEN OTHERS LOOKING FOR A RE-ACCELERATION. I CALL COMING ALMOST EXCLUSIVELY FROM THE EQUITY MARKET ROLES, BUT STILL, SUPER WIDE RANGE. LISA: IT IS ALSO COMING FROM PEOPLE WHO ARE SEEING MERGERS AND ACQUISITIONS. WERE LOOKING AT THE INDUSTRIAL SECTORS. IT IS ALMOST AS THOUGH YOU LOOK AT HOUSING AND CERTAIN POCKETS OF CONSUMERS AND SAY THIS DOES LOOK GOOD. -- DOES NOT LOOK GOOD. THEN YOU LOOK AT OTHER POCKETS OF THE ECONOMY AND YOU SAY, SOMETHING IS HAPPENING HERE. THOSE ARE IN CONFLICT. JONATHAN: JUST GOT AN ECB RATE DECISION. UNCHANGED, AS EXPECTED. THE PRICE ACTION GOING INTO IT. JOBLESS CLAIMS AND CPI, LOOK LIKE THIS. WE ARE FORMER BY -- FIRMER BY .2% ON THE S & P. IN THE BOND MARKET, YIELDS HIGHER ACROSS THE CURVE STATESIDE. IN THE FX MARKET, YOUR MARK -- EURO-DOLLAR UNMOVED OFF THE BACK OF THIS. LET'S HEAD OVER TO FRANKFURT, GERMANY AND GET YOU A BREAKDOWN OF THIS DECISION. LIZZY BURDEN JOINS US NOW FOR MORE. GOOD MORNING. LIZZIE: THIS HOLD WAS VERY MUCH EXPECTED BY ECONOMISTS, BY MARKETS AS WELL. THE QUESTION IS WHETHER THE ECB IS DONE WITH CUTTING AS ECONOMISTS EXPECT, OR WHETHER THERE IS ANOTHER INSURANCE CUT IN THE ECB'S BACK POCKET, AS MARKETS HAD EXPECTED. WE ARE LOOKING AT THE FORECASTS AND WAITING FOR THE LONGER-TERM FORECAST, BUT THIS IS CRUCIAL, BECAUSE IT IS THE FIRST BATCH OF FORECASTERS FOR THAT EU TRADE DEAL. 15% TARIFFS ARE HIGHER THAN HAD BEEN IN THE BASELINE SCENARIO, BUT NOT AS BAD AS THIS SEVERE SCENARIO. THEY SAY THAT THEY SEE 2025 INFLATION AT 2.1%. IN THE PREVIOUS FORECAST THEY HAD SEEN 2%. WHAT WE ARE INTERESTED IN HERE IS THE NUMBER FOR 2027. THEY SEE GDP GROWTH AT 1.3% IN THAT YEAR. PREVIOUSLY THEY HAD SEEN IN .3%, SO EXACTLY THE SAME. THEY ARE RAISING THE INFLATION FORECAST FOR 2020 5, 2026, AND CUTTING UP FOR 2027. THAT IS WHAT I WAS LOOKING FOR HERE, BECAUSE PERHAPS YOU COULD TAKE THAT AS THE ECB SAYING, MISSION ACCOMPLISHED, NO MORE CUTS HERE. CRUCIALLY WE NEED TO SEE HOW HAWKISH LAGARDE IS AT THE PRESS CONFERENCE. IN PREVIOUS RECENT PRESS CONFERENCES IT HAS BEEN NOTED THAT LAGARDE HAS BEEN MORE HAWKISH THAN THE REST OF THE GOVERNING COUNCIL, OR AT LEAST WHAT IS ON PAPER HERE. MAYBE THERE IS DISPARITY THERE. DOES SHE EMPHASIZE THE UNCERTAINTY THAT THIS TRADE DEAL IT ALLEVIATES, OR DOES SHE EMPHASIZE THAT 15% IS ABOVE THE BASE CASE? I WILL BE LISTENING TO THAT. THERE IS ALSO THE QUESTION OF FRENCH POLITICS, BECAUSE ONCE UPON A TIME ADAM LAGARDE WAS THE FRENCH FINANCE MINISTER. WILL SHE SAY THAT THE ECB WOULD INTERVENE IF THE SPREAD WERE TO WIDEN? HIGHLY UNLIKELY. I DON'T THINK SHE WILL WANT TO WADE INTO DOMESTIC FRENCH POLITICS. BUT LOOKING AT THE EURO REACTION HERE, THERE IS ABSOLUTELY NONE. LIKELY, IT MAY BE THAT THAT CPI PRINT COMING IN JUST A FEW MINUTES TIME DOES MORE FOR THE EURO THAN WHAT WAS HAPPENING IN FRANKFURT. JONATHAN: WE ARE NOT HERE TO CLOSE SPREADS. LIZZY BURDEN WITH THE LATEST IN FRANKFURT, GERMANY. SOME VERY MILD, MARGINAL MOVEMENT ON EURO-DOLLAR. NEGATIVE ON THE SESSION BY ABOUT .2%. NO PREDETERMINED PATH AT THE ECB. DETERMINED TO STABILIZE INFLATION AROUND 2%. LISA: IT SEEMS LIKE BASED UPON THE PROJECTIONS NOT MISSION ACCOMPLISHED, BUT IT MAY TAKE SOME IDEA OF RATE HIKE OFF THE TABLE FOR NEXT YEAR. WHICH SOME PEOPLE WERE SPECULATING WITH THE ECB. THIS IDEA THAT THEY INCREASE THE INFLATION EXPECTATIONS FOR NEXT YEAR, BUT DECREASE THEM FOR THE FOLLOWING ONE REALLY HIGHLIGHTS WHERE THEY SEE THINGS GOING AND HOW THEY SEE THIS AS A ONE TIME DROP. JONATHAN: LET'S GET OVER TO POOJA KUMRA. THE ECB NOT COMMITTING TO A PARTICULAR. THIS WAS WIDELY EXPECTED. THEY ARE FORECASTING INFLATION TO STABILIZE AROUND 2% IN 2026. YOU LOOK AT THINGS, COULD THAT STORY BE DISRUPTED BY THE TRADE VARIATIONS WE HAVE SEEN ALREADY SO FAR THIS YEAR? POOJA: YEAH. WHEN IT COMES TO FORECAST, EVERYTHING SEEMS WHAT WE HAD EXPECTED. SO FAR FROM ECB PERSPECTIVE THEY ARE BASICALLY -- IT IS NO LONGER ABOUT TINKERING THE POLICY FOR THE DISINFLATION PROCESS IN EUROPE AREA. IT IS ABOUT THE UNCERTAINTIES. WHEN IT COMES TO TARIFFS SO FAR EUROPE HAS ACTUALLY DONE A PRETTY GOOD JOB. WE ARE NOT SEEING THE DESTRUCTION IN TERMS OF [INDISCERNIBLE] IN THAT DOMESTIC RESILIENCE ACTUALLY CONTINUE WHEN THE GLOBAL RESILIENCE IS BEING A LITTLE MORE SHAKY RIGHT NOW. I THINK THAT IS WHERE THE ECB NEEDS TO ADDRESS WHETHER THEY ARE DONE OR THERE IS MORE TO GO BECAUSE OF THE GLOBAL UNCERTAINTY. AND IF THE DOMESTIC CONSUMPTION CAN BE AS STRONG AS WHAT THEY ARE EXPECTING GOING FORWARD. JONATHAN: THERE WAS A VERY SIMPLE STORY BEING TOLD AFTER APRIL 2. THE MASSIVE TARIFFS WE SOFTEN THE PRESIDENT. PARTICULARLY ON CHINA. THAT CHINA WOULD DO LITTLE TO ADDRESS ITS OVERCAPACITY. BECAUSE THE WALLS WERE GOING UP IN AMERICA EUROPE WOULD HAVE TO EAT IT AND THIS WAS A DISINFLATION OR A SHOCK FOR THE EUROPEANS WHEN PEOPLE THOUGHT IT MIGHT BE AN INFLATIONARY SHOCK FOR THE U.S. ECONOMY. IS THAT NO LONGER THE CASE? POOJA: I THINK IT IS DEFINITELY THE CASE AND SOMETHING THAT EVEN THE ECB MINUTES FROM JULY HAVE POINTED OUT WE ARE ALREADY SEEING SIGNS OF GOOD DUMPING IN EUROPE ALONG WITH, YOU KNOW, LOW OIL PRICES, HIGHER UST. BASICALLY GIVING YOU THE KIND OF INFLATION FORECAST THE ECB IS LOOKING AT RIGHT NOW. BUT AT THIS STAGE THEY ARE LOOKING AT -- ADDED AS A ONE-TIME SHOCK. THEY ARE NOT GOING TO BE VERY REACTIVE JUST BECAUSE EVEN THOUGH WE ARE THE MIDDLE RANGE OF THE TREND THEY DON'T WANT TO REMOVE ALL THE CAPACITY OF EASING JUST BECAUSE OF, YOU KNOW, SUDDEN JUMPS IN THE SYSTEM. BUT THIS IS ONE OF THE RISKS THAT IS BEING HIGHLIGHTED. LISA: HOW MUCH DOES THIS ACT AS A DETRIMENT TO GROWTH? I SAY THIS AT A TIME WHERE THE ECONOMIC GROWTH FORECAST IN EUROPE ARE SOME 1.2% FOR THIS YEAR. THAT IS HIGHER THAN EXPECTED AND NEXT YEAR COMING IN AT ABOUT 1% BELOW WHAT PREVIOUSLY WAS EXPECTED. HOW MUCH IS THIS NO LONGER A TAILWIND THAT THE ECB COULD POTENTIALLY CONSIDER EASING, EVEN IF THEY ARE NOT GOING TO NECESSARILY HIKE? POOJA: I MEAN, THERE IS ALWAYS A RISK, BUT ONE THING THAT HAS CHANGED IN THE NARRATIVE FROM THE 2018 STORY THAT WE HAVE LIVED WITH TARIFFS IN CHINA IS THAT GERMANY'S RIGHT TO SPEND. THEY ARE NOT HOLDING THEMSELVES BACK, AND THAT IS VISIBLE IN THE PMI'S SERVICES. THE ECB WANTS TO BE PATIENT FOR THE NEXT COUPLE OF MONTHS IS HOW THIS DEFENDS, AND INFRASTRUCTURE SPENDING PLACE UP. WE NOTE THAT INFRASTRUCTURE SPENDING HAS A GREAT MULTIPLIER FOR GROWTH, UNLIKE A CONSUMPTION-DRIVEN EXPENDITURE. THAT IS WHERE THEY ARE UP IN THE SYSTEM THAT WE SHOULD NOT [INDISCERNIBLE] AND I THINK THAT IS WHAT THE ECB WANTS TO DWELL ON. IF THEY CAN BUY ANOTHER 4, 5 MONTHS, BUT AFTER THAT THEY DO NOT SEE GERMAN GROWTH PICKING UP, I THINK THE CASE FOR EASING IS THERE. LISA: THIS IS A FORGETTABLE DECISION. WE WILL SEE WHAT HAPPENS IN THE NEWS CONFERENCE, BUT RIGHT NOW THIS IS PRETTY MUCH EXACTLY IN LINE. HOW JEALOUS IS THE BANK OF ENGLAND AND FED THAT THIS IS SOMETHING THAT CAN FADE INTO THE BACKGROUND AND BE A NONEVENT? POOJA: SORRY, I LISA: DID NOT CATCH YOU. HOW UNIQUE IS THIS POSITION OF THE ECB WHERE THEY ARE IN A NONCONTROVERSIAL DECISION VERSUS THE FEDERAL RESERVE NEXT WEEK GRAPPLING WITH INFLATION AND SLOWING GROWTH WHILE ALSO THE BANK OF ENGLAND DEALING WITH DEFICIT AND OVERHANG THERE? POOJA: DEFINITELY. THE ECB HAS GOT IT EASY. THE FED WHEN IT COMES TO THE LABOR MARKET, THEY ARE GETTING SIGNS. THEY HAVE A DUAL MANDATE. THEY KNOW HOW TO GO WITH POLICY FORWARD, BUT I THINK FOR THE BOE IT IS TRICKY WHEN INFLATION IS SO STICKY AND EVEN GROWTH IS ONE OF THE BEST-PERFORMING G4 ECONOMIES RIGHT NOW. I THINK FOR THE BANK OF ENGLAND IT IS MORE OF A PAINFUL DECISION THAT, HOW LONG CAN THEY BE RESTRICTIVE? WHICH IS SOMETHING, YOU KNOW, WHEN TROUBLE COMES TO AN ECONOMY A COMES QUICKLY. EVEN CENTRAL BANKS ARE RIGHT NOW A BIT SCARED OF, BECAUSE EVERYONE WANTS A SOFT LANDING, RIGHT? THE ECB DID MANAGE TO CREATE A. WELL DONE, THEM. JONATHAN: POOJA KUMRA REACTING TO THE ECB DECISION MOMENTS AGO. LET'S GO THROUGH THE FORECAST. THIS IS INFLATION EXCLUDING ENERGY AND FOOD. EXPECT AN AVERAGE OF TWO .4% IN 2025. ONE .9% IN 2026. IF THAT IS MISSION ACCOMPLISHED ALLOW ME TO SHARE THEIR OUTLOOK FOR GROWTH. THE ECONOMY IS PROJECTED TO GROW BY ONE POINT 2% IN 2025. THE GROWTH PROJECTION FOR 2026 IS SLIGHTLY LOWER AT 1%. THE PROJECTION FOR 2027 IS 1.3%. IF THAT IS MISSION ACCOMPLISHED, 2% INFLATION AND A ONE HANDLE ON GROWTH, THEN EUROPE HAS A LOT TO DO. LISA: THIS HIGHLIGHTS HOW THE ECB IS A SINGLE-MANDATE BANK. IT IS INFLATION AND IT MIGHT BE MISSION ACCOMPLISHED ON THAT LEVEL. IT HAS NOT CHANGED THE TRAJECTORY FOR THE CONTINENT, WHICH IS WHY SO MANY PEOPLE ARE SAYING, YOU CAN INCREASE YOUR EXPOSURE TO EUROPE, BUT ALL IN? JONATHAN: WHAT HAPPENED TO ALL OF THAT EXCITEMENT ABOUT GERMAN STIMULUS? AND WE ARE LOOKING AT ONE HANDLES ON GDP FOR GROWTH? LISA: WHAT WOULD IT LOOK LIKE WITHOUT THAT? THIS IS WHY PEOPLE ARE NOT THAT WORRIED ABOUT ABSORBING THAT THAT, GIVEN HOW LITTLE THERE HAS BEEN SOLD SO FAR AND HOW MUCH THERE IS TO DO. JONATHAN: I IMAGINE THE ECB PRESIDENT IS GOING TO STRESS THE RISKS AROUND THAT OUTLOOK FROM THE ECB. IF YOU ARE NOT PRE-COMMITTING TO A PATH I DON'T THINK YOU ARE CELEBRATING EITHER. EVEN THE RISKS AROUND THE TRADE STORY, PARTICULARLY WHAT IT COULD MEAN FOR THE CONTINENT, I DON'T THINK THAT THIS INFLATIONARY RISK FROM CHINESE CAPACITY HAS GONE AWAY. THAT COULD BE SOMETHING THEY HAVE TO CONFRONT. LISA: IS THE EMPHASIS ON THIS INFLATIONARY IMPACT FROM CHINA OR THE INFLATIONARY IMPACT FROM TARIFFS? THAT WILL DETERMINE WHERE THE RISKS ARE. IS IT TO A POTENTIAL HIKE OR CUT? SHOULD THERE BE DISINFLATION AND GROWTH AT THIS PACE? JONATHAN: LOOK WHAT WE ARE HEARING FROM MEXICO. MEXICO LOOKING TO PUT THE WALLS UP TO CHINESE IMPORTS. TO PLEASE THE UNITED STATES AND ULTIMATELY COME TO A DEAL WITH THEM NEXT YEAR. ANNMARIE: ESPECIALLY WHEN IT COMES TO THINGS LIKE AUTOS. CHINA FLOODING MEXICO THE WAY IT HAS BEEN FLOODING EUROPE. IT HAS BEEN SURPASSING SOME OF THESE COMPANIES LIKE TESLA WHEN IT COMES TO GROWTH IN EUROPE BECAUSE THEY ARE SO CHEAP. JONATHAN: WE WILL GET TO THE INFLATION STORY IN A MOMENT. TIFFANY WILDING OF PIMCO JOINS US. DAVID KELLY OF JP MORGAN ASSET MANAGEMENT. THE INFLATION DATA, JUST MINUTES AWAY. ♪ JONATHAN: INFLATION DATA JUST AROUND THE CORNER. YOUR SCORES GOING INTO IT LOOK LIKE THIS. POSITIVE BY .2% ON THE S & P. BY .3% ON THE NASDAQ. ON THE RUSSELL, UP BY .3%. THE SMALL CAPS, VERY SENSITIVE TO WHAT HAPPENS HERE AT THE FRONT END OF THE CURVE. YOUR TWO YEAR BOND YIELDS SO FAR THIS MORNING AT 3.55 19%. YIELDS HIGHER BY ABOUT A BASIS POINT. WITH YOUR INFLATION DATA, LET'S CROSS OVER TO MIKE MCKEE. MIKE: WE HAVE A HARDER THAN EXPECTED READING AS CPR ON A MONTH OVER MONTH BASIS RISES .4%. .3% IS EXPECTED FOR THE CORE. THE YEAR-OVER-YEAR RATE GOES TO 2.9%. AND THE CORE RATE GOES TO 3.1%. STAYS AT 3.1%, WE SHOULD SAY. THE OTHER NUMBER OUT JUST NOW, INITIAL JOBLESS CLAIMS. BIG JUMP THERE. 263 THOUSAND LAST WEEK. I DON'T HAVE THE PREVIOUS REVISED NUMBER, BUT THE UNREVISED NUMBER WAS 237 THOUSAND. A SIGNIFICANT MOVEMENT THERE. IN TERMS OF CONTINUING CLAIMS, 1,190,000. THAT IS A DROP, BUT REMEMBER THOSE ARE A WEEK HIND, SO THEY ARE REFLECTING LOWER RATES OF UNEMPLOYMENT INSURANCE FILINGS FOR THE PREVIOUS WEEK. IN TERMS OF WHAT WE GOT HERE, INDEX FOR ENERGY WAS UP .7%. THERE HAD BEEN CONCERNS ABOUT THE FACT THAT AI POWER PLANTS ARE RAISING PRICES TO TRY TO PAY FOR ALL OF THE POWER THAT THE AI PEOPLE NEED. FOOD INCREASED HALF A PERCENT. THAT'S GOING TO BE A POLITICAL PROBLEM FOR THE PRESIDENT. FOOD AT HOME, UP .6%. AIRLINE FARES, USED CARS, TRUCKS, APPAREL, NEW VEHICLES ALL ROWS. I WILL GET YOU THOSE FIGURES IN JUST A MOMENT, BUT THE INDEX OVERALL FOR SERVICES IS SOMETHING THAT WE ARE CONCERNED ABOUT, AND SERVICES, LESS ENERGY, THE CORE SERVICES RATE WAS UP .3%. THAT IS A LITTLE BIT A BIT -- OBEY DECLINE FROM LAST MONTH, WHICH SCARED OVERALL ECONOMISTS. BUT STILL, THIS NUMBER IS NOTHING TO WRITE HOME FOR THE FED. PUBLIC NOT ENOUGH TO PERSUADE THEM TO DO 50 BASIS POINTS OR DISSUADE THEM FROM 25, BUT IT IS STILL A HIGHER NUMBER THAN FORECAST. JONATHAN: I WILL GET TO THE MARKETS. STAY CLOSE. WE HAVE A BIT OF TENSION HERE. SMALL UPSIDE SURPRISE ON HEADLINE CPI, BUT UPSIDE SURPRISE ON JOBLESS CLAIMS. WHAT WINS OUT? YOU DECIDE. I DON'T HAVE A VIEW, BUT THE CHAIRMAN DOES. THE CHAIRMAN HAS TOLD YOU THAT THE LABOR MARKET IS THE THING HE IS FOCUSED ON RIGHT NOW. PUSH THAT VIEW THROUGH THE BOND MARKET AND WE ARE TRADING ON CLAIMS. YIELDS ARE DOWN AT THE FRONT END OF THE CURVE. THE DOLLAR IS WEAKER. EURO-DOLLAR, BACK THROUGH 1.17. LISA: IF YOU TAKE A LOOK AT THE FOUR-WEEK MOVING AVERAGE OF INITIAL JOBLESS CLAIMS THEY CAME IN AT THE HIGHEST PACE GOING BACK TO JUNE, BUT THE FASTEST PACE OF INCREASE IN THAT METRIC GOING BACK TO DECEMBER 2020. TO THE EXTENT THAT WE SAW DOWNWARD REVISIONS THE LABOR MARKET VERY MUCH FRONT AND CENTER FOR THE MARKET. WHAT I WOULD SUGGEST IS THIS IS A MARKET THAT IS GAMING OUT A LONGER-TERM WEAKNESS IN THE LABOR MARKET THAT SUPPRESSES YIELDS ACROSS THE CURVE. THIS IS NOT JUST THE FRONT END. I THINK THAT IS TELLING YOU SOMETHING. JONATHAN: MIKE MCKEE, YOU GOT A SECOND LOOK. WHAT DID YOU SEE? MIKE: WE'RE LOOKING AT NEW CAR PRICES UP BY 6% -- NO, THAT IS USED CAR PRICES. CAR PRICES UP BY .7%. SO, A BIG RISE IN NEW CAR PRICES, BUT AN EVEN BIGGER RISE IN USED CAR PRICES. THAT HAS BEEN IN THE WHOLESALE DATA FOR A WHILE. APPAREL PRICES WERE FLAT AFTER FALLING LAST MONTH, SO MAYBE A LITTLE BIT OF THE TARIFF IMPACT IS HITTING THERE. REMEMBER YESTERDAY, RETAIL AND WHOLESALE MARGINS COMPRESSED, SUGGESTING THAT SOME OF THAT IS BEING ABSORBED BY MIDDLE PEOPLE. GASOLINE PRICES WERE DOWN 6.6% ON A YEAR-OVER-YEAR BASIS, DOWN .7% IN TERMS OF -- DOWN 1.7% IN TERMS OF THE MONTH OVER MONTH NUMBERS, AND THAT DID NOT KEEP US FROM GETTING -- GETTING A MUCH HIGHER RATE OF INFLATION FOR THE HEADLINE. JONATHAN: APPRECIATE THE UPDATE. JOINING US NOW IS TIFFANY WILDING OF PIMCO. WELCOME TO THE PROGRAM. IS THERE A STAGFLATIONARY MIX COMING HERE ON THE DATA THAT YOU SEE? TIFFANY: YEAH, SO I THINK WE ARE GETTING WHAT WE EXPECTED ON INFLATION. WE ARE GETTING SOME PASTOR OF TARIFFS. LOOKS LIKE IT IS PREDOMINANTLY THE FIRMING CATEGORIES ARE IN GOODS. AND OTHERWISE THINGS LOOK A LITTLE BIT BETTER. I THINK THE MORE CONCERNING NEWS FROM THE DATA THIS MORNING IS JUMP IN CLAIMS. IT HAS BEEN RELATIVELY CONTAINED, DESPITE THE LABOR MARKET, YOU KNOW, LEE SLOWING TO A HALT OVER THE LAST YEAR. AND NOW THE JUMP TODAY LOOKS A LITTLE MORE CONCERNING, LIKE, WE ARE MOVING OUT OF A PERIOD OF VERY LITTLE ACTIVITY OR VERY LITTLE HIRING OR FIRING TO POTENTIALLY SOME MORE SEPARATIONS. THAT IS GOING TO BE SUPER CONCERNING, I THINK, FOR THE FEDERAL RESERVE. I AGREE WITH MIKE MCKEE. OVERALL THE DATA CONFIRMS A 25 BASIS POINT CUT. THERE IS PROBABLY GOING TO BE DISCUSSION AROUND 50, ALTHOUGH THAT IS NOT OUR BASE CASE. I THINK THERE IS REASONS IF YOU CONTINUE TO SEE THIS KIND OF MOMENTUM ON THE LABOR MARKET TO GET SEVERAL MORE CUTS IN THE BACK HALF OF THE YEAR. LISA: WHAT A FIND INTERESTING ABOUT THE MARKET REACTION IS THAT THEY ARE PICKING UP ON THIS IDEA THAT CLAIMS CAME IN WITH THE WRONG KIND OF UPSIDE SURPRISE AND THAT THE TRAILING AVERAGE IS PICKING UP AT A REMARKABLE AND ALARMING SPEED. BUT LONGER-TERM WE ARE SEEING THE 10-YEAR YIELD BREAK BELOW 4% FOR THE FIRST TIME THIS YEAR. WE ARE LOOKING AT A 10 YEAR THAT IS ALSO RESPONDING. YOU CHANGING YOUR LONGER-TERM TRAJECTORY FOR U.S. GROWTH PROSPECTS ON THE HEELS OF SOME OF THESE LABOR MARKET REVISIONS AND THE NEGATIVITY WE ARE SEEING FROM THE CLAIMS? TIFFANY: I THINK THAT JUST THE FACT THAT THE U.S. TREASURY MARKET CONTINUES TO BE A HEDGE FOR MACROECONOMIC RISKS, FOR RISKIER ASSET VOLATILITY, YOU KNOW, I THINK IS WHY YOU ARE SEEING MOVEMENTS IN THE LONGER END OF THE INTEREST RATE CURVE. WHEN WE LOOK AT VALUATIONS WE THINK KIND OF INTERMEDIATE SECOND YOUR LOOKS ATTRACTIVE HERE. DOES STILL PROVIDE RISK AGAINST DOWNSIDE PROTECTION. YOU KNOW, AND IT IS SOMETHING WE HAVE BEEN VERY FOCUSED ON. IT IS NOT SURPRISING NECESSARILY TO ME THAT YOU ARE SEEING IT IN LONGER-DATED INTEREST RATES. OVERALL ON THE ECONOMY SIDE WE ARE REALLY INTEREST -- ENTERING THIS PERIOD OF POTENTIAL WEAKNESS. WE WILL SEE SOME FISCAL SUPPORTS UNTIL THE BEGINNING OF 2026. YOU KNOW, CALL ED FEBRUARY, MARCH, WHEN CONSUMERS ARE STARTING TO GET REALLY BIG REFUNDS FROM RETROACTIVE TAX CUTS. UNTIL THEN WE ARE IN THIS PERIOD OF WEAKNESS. TO US THE QUESTION IS, SOME OF THE SMALLER AND MIDSIZE BUSINESSES THAT ARE HAVING TO SHOULDER THE EFFECTS OF TARIFFS, MAYBE THEY ARE NOT GETTING AS MUCH BENEFIT FROM THE ONE BIG, BEAUTIFUL BILL TAX CUTS. CAN THEY HOLD ON WITHOUT FIRING PEOPLE? IT SEEMS LIKE MAYBE THERE IS MORE CONCERN AROUND THAT AS WE ARE WATCHING THE DATA. JONATHAN: TIFFANY WILDING OF PIMCO. GREAT TO CATCH UP WITH YOU. I KNOW YOU HAVE TO CATCH UP WITH CLIENTS TOO. THANK YOU FOR YOUR TIME THIS MONEY. THIS BOND MARKET IS QUESTIONABLE FOR EQUITIES. WE'LL SEE IF THIS MOVE STICKS, BUT AT THE FRONT END OF THE CURVE WE ARE DOWN SIX BASIS POINTS. THIS IS LARGELY BECAUSE OF THE WAY THE FED RESERVE CHAIR SET THINGS UP COMING INTO SEPTEMBER. HE TOLD US YOU COULD HAVE A ONE OFF FACT -- ONE-OFF EFFECT ON INFLATION AND THE NEIGHBOR MARKET DATA WAS CONCERNING HIM. JUST WHY WE ARE SEEING YIELDS DOWN. THERE IS MORE EMPHASIS ON WHAT WE ARE SEEING ON CLAIMS. LISA: IT SEEMS THAT THE IDEA THAT YOU ARE SEEING A PICKOFF -- PICKUP IN LAYOFFS RAISES THE QUESTION TO HOW COMPANIES ARE REACTING TO HIGHER INPUT COSTS. I WAS LOOKING AT SPECIFICS IN THE CPI PRINT. AIRLINE FARES UP ON A MONTHLY BASIS. IT TALKS ABOUT THE CASE SHAPED ECONOMY AND HOW THE FED IS TRYING TO CATER TO PEOPLE WHO CANNOT AFFORD TO PAY THAT. THOSE WHO CAN, OR. JONATHAN: DAVID KELLY STANDING BY. I JUST WANT YOUR FIRST REACTION, PLEASE. DAVID: I THINK BOTH WITH REGARD TO THE CPI AND CLAIMS EVERYONE SHOULD SHORT OF -- SHOULD SORT OF TAKE A DEEP BREATH AND NOT OVERREACT. ON CLAIMS A KEY THING TO THINK ABOUT IS LAST WEEK WAS A WEEK THAT CONTAINED A MONDAY BANK HOLIDAY. LABOR DAY. THE UNEMPLOYMENT CLAIMS DATA ARE NOTORIOUSLY BAD IN A WEEK THAT CONTAINS A PUBLIC HOLIDAY. THEY HAVE NEVER FIGURED OUT HOW TO SEASONALLY ADJUST THAT PROPERLY. I THINK THAT WAS AN OVERSHOOT ON CLAIMS AND I WOULD NOT BE SURPRISED TO SEE THAT NUMBER COME DOWN NEXT WEEK. IT STILL FITS INTO A MOSAIC. I THINK THE ECONOMY IS GRADUALLY GRINDING TO A. I THINK THAT OVERSTATES THE DETERIORATION IN THE LABOR MARKET. SIMILARLY ON INFLATION, THESE NUMBERS ARE VERY CLOSE TO IN-LINE WITH WHAT WE THOUGHT THE BIG SURPRISES WERE. PROBABLY AN INCREASE IN MOTOR VEHICLE REPAIR COSTS. 2% MONTH OVER MONTH. AS LISA WAS SAYING, A FIVE POINT 9% INCREASE IN AIRLINE FARES. THEY FELL SHARPLY OVER THE SUMMER AS AIRLINE TRAVEL IS DOWN. NOW IT IS PICKING UP AGAIN IN THIS CASE SHAPED ECONOMY. OVERALL THE ECONOMY IS STILL MOVING FORWARD SLOWLY. INFLATION IS GRADUALLY GOING UP. THAT IS WHAT WE THOUGHT TARIFFS WERE GOING TO DO. IT IS GOING TO SLOW GROWTH -- SLOW GROWTH AND ADD TO INFLATION. JONATHAN: LET'S STAY IN THE LABOR MARKET THIS MORNING. THAT SEEMS TO BE WHAT THE MARKET IS MOVING ON. YOU THINK THE CLAIMS DATA MAY BE OVERSTATED. YOU THINK THE STEP DOWN IN PAYROLLS GROWTH UNDERSTATES THE WEAKNESS TOO? DAVID: WE SAW THE BIG DOWNWARD REVISION EARLIER THIS WEEK. THAT WAS NOT ANY SURPRISE. NO, THERE IS WEAKNESS. THE THING IS, AS JAY POWELL HAS POINTED OUT, THIS IS A CURIOUS LABOR MARKET BECAUSE WE ARE HAVING A HUGE REDUCTION IN LABOR SUPPLY AT THE SAME TIME. THIS DOES NOT SPEAK OF SIGNIFICANT LABOR MARKET WEAKNESS. IT IS STILL A TIGHT MARKET. IT IS STILL HARD TO FIND GOOD PEOPLE, BUT I DO THINK IT REFLECTS THE FACT THAT BUSINESSES DON'T WANT TO HIGHER. I DON'T THINK THERE IS A HUGE ONGOING JUMP IN LAYOFFS, THAT IT IS GETTING HARDER TO FIND A JOB BECAUSE BUSINESSES ARE FROZEN BECAUSE THEY DON'T KNOW WHAT THE PLAYING FIELD IS GOING TO BE WITH REGARD TO TARIFFS GOING FORWARD. THAT IS THE BIGGEST THING PEOPLE ARE IGNORING HERE. JONATHAN: A LOT OF PEOPLE ARE HOPING THINGS PICKUP IN 2026 AND THE GROWTH STORY GETS BETTER, FUELED BY THE RATE CUTS WE ARE ABOUT TO SAY. SPEAKING OF THINGS WE UNDERAPPRECIATED, SOMETHING YOU HAVE BEEN TALKING ABOUT FOR A WHILE, THIS TAX BILL. STIMULATORY EFFECT IT MIGHT HAVE IN 2026. COULD YOU OUTLINE THAT FOR US THIS MORNING? DAVID: REALLY IMPORTANT. ALL OF THESE NEW TAX CUTS THIS WHOLE TAX BREAK, ALL OF THEM WERE MADE RETROACTIVE TO JANUARY 1, 2025. BUT THE IRS HAS NOT CHANGED WITHHOLDING SCHEDULES. THERE IS GOING TO BE A FULL YEAR'S WORTH OF REFUNDS ON ALL OF THOSE TAX CUTS IN THE FIRST WEEK OF 2026. FIRST FEW MONTHS OF 2026. THAT IS THE EQUIVALENT OF BIG STIMULUS CHECKS. LAST YEAR THE AVERAGE REFUND WAS ABOUT $3200. THIS NEXT YEAR WE THINK IT IS GOING TO BE OVER $4000 WITH 70% OF HOUSEHOLDS RECEIVING THAT. THAT IS LIKE ONE BIG STIMULUS CHECK PUT INTO THE ECONOMY EARLY NEXT YEAR. IF WE CAN GET TO THE FIRST QUARTER WITHOUT SLIPPING INTO RECESSION THERE WILL BE SOME STIMULUS THERE. BUT I THINK BETWEEN NOW AND THEN THE ECONOMY IS GOING TO BE SLOWING IN THE FOURTH QUARTER. JONATHAN: DAVID KELLY OF J.P. MORGAN ASSET MANAGEMENT. THE DATA COMING IN HOTTER THAN EXPECTED ON CPI. THE CLAIMS NUMBERS NOT PRETTY. DAVID THINKS THAT OVERSTATES THE WEAKNESS IN THIS LABOR MARKET AND AT THE MOMENT -- AT THE MOMENT THIS BOND MARKET IS TRADING ON IT. WE ARE DOWN ABOUT SIX BASIS POINTS ON TWOS. YOU'RE DOWN FOUR INTENDS. WHAT DOES THAT DATA MEAN FOR THE EQUITY MARKET? EQUITY FUTURES POSITIVE BY ABOUT .1%. NEXT AN ECB PRESIDENT TAKING OVER THE NEWS CONFERENCE IN FRANKFURT, GERMANY. FROM NEW YORK CITY, YOU ARE TV. ♪ JONATHAN: LIVE FROM NEW YORK CITY, WELCOME BACK TO THE PROGRAM. WE WANT TO PAUSE FOR A MOMENT OF SILENCE BEING HELD THROUGHOUT THE CITY OF NEW YORK IN REMEMBRANCE OF THE SEPTEMBER 11 TERROR ATTACKS. AT THIS TIME 24 YEARS AGO HIJACKED AMERICAN AIRLINES FLIGHT 11 STRUCK THE NORTH TOWER OF THE WORLD TRADE CENTER. [BELL] ♪ JONATHAN: WE WILL BRING YOU THE NEXT

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Bloomberg Surveillance 9/11/2025

Jonathan Ferro, Lisa Abramowicz and Annmarie Hordern speak daily with leaders and decision makers from Wall Street to Washington and beyond. No other program better positions investors and executives for the trading day. (Source: Bloomberg)

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