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>> THE MARKET ONCE TO SEE THE ECONOMY IS COMING BACK INTO BALANCE. >> THE ECONOMY IS MODERATING, BUT VERY SLOWLY. >> THERE IS A RISK THE ECONOMY WORSENS MORE BECAUSE OF THE SELF REFLECTIVE INTERDEPENDENCE BETWEEN THE FED AND FINANCIAL MARKETS. >> HIGHER FOR LUNG EARNINGS ALLOWS MARKETS TO STAY HERE EVEN THOUGH WE ARE GOING TO GET HIGHER FOR LONGER RATES. >> A REAL PUSH AND PULL IN STOCKS OVER THE NEXT FEW MONTHS. >> THIS IS "BLOOMBERG SURVEILLANCE." >> GOOD MORNING. ARE WE THERE YET? THIS IS "BLOOMBERG SURVEILLANCE." ARE WE THERE YET? I'M NOT TALKING ABOUT THE END OF THE WEEK ALTHOUGH YOU CAN INTERPRET IT HOWEVER YOU LIKE. I'M TALKING ABOUT THIS ELUSIVE RATE CUTTING CYCLE THAT SENSIBLY WE'RE SUPPOSED TO BE KICKING OFF, STARTING IN EUROPE, THEN GOES NOWHERE? THERE ARE SOME QUESTIONS OF HOW SLOW CAN WE GO? THE SWISS NATIONAL BANK TRIES TO GET IT UNDERWAY AND THE NORWEGIAN CENTRAL BANK SAYS, I DON'T KNOW. ANNMARIE: THE S&P WOULD DIFFER FROM WE ARE NOT THERE YET. THE STRONG DOLLAR B DAMNED. THE CUTTING CYCLE IS ONLY STARTING FOR THOSE WHO HAVE THE CHUTZPAH TO HAVE THEIR CURRENCY WEEKEND. EVERYONE ELSE NEEDS TO WAIT FROM THE FED. A LOT OF FED SPEAK SAYING IT COULD TAKE QUARTERS BEFORE HE IS CONFIDENT THAT THE DATA. >> THAN A WIDGEON CENTRAL BANK ARE ALSO TALKING ABOUT THAT. JJON WOULD SAY, WHERE YOU TALK ABOUT THAT? IT IS ABOUT THE FEDERAL RESERVE. THERE IS THIS IDEA PERCOLATING UNDER THE SURFACE WHICH IS POLITICAL RISK IS MAKING IT A WHOLE LOT HARDER FOR SOME OF THE CENTRAL BANKS TO GO AT A TIME WHERE DEFICITS AND PHYSICAL SPENDING ARE OFFSETTING TO SUCH A GREAT DEGREE SOME OF THE AUDITORY RESTRICTIONS. >> THE LATEST CEDIA REPORTS, SOUNDING THE ALARM ONCE AGAIN ABOUT THE DEFICITS, ABOUT 400 BILLION HIGHER FOR THIS YEAR THAN THEY WERE PROJECTING IN FEBRUARY. HE IS SAYING THIS IS THE BIGGEST COMPLAINT HE GETS WHAT HE TALKS TO CLIENTS BECAUSE THEIR CONCERN IS DEFICITS FUEL INFLATION. HE SAID CAN YOU IMAGINE THIS YEAR WE HAD THIS UPTICK IN THIS DEFICIT, UPTICK IN SPENDING WHEN WE HAVE GREAT GROWTH AND NO PANDEMIC? WHAT WOULD IT LOOK LIKE IF WE WERE IN A DOWNTURN? >> THIS IS WHY PEOPLE ARE CONCERNED ABOUT THE FISCAL RESPONSE TO THAT. PEOPLE OF BEEN TALKING ABOUT THIS FOR QUITE A WHILE AND SUDDENLY THE FRENCH ISSUE THAT CAME UP SEEMS TO REALLY BE BRINGING IT MORE TO THE FORE AND THIS IS ONE OF THE TENSIONS WE SEE THROUGHOUT THE NEXT COUPLE OF WEEKS. HAVE WE PRICED IN TOO MUCH POLITICAL RISK? DO WE GO INTO FRENCH ASSETS, WHICH A NUMBER OF GUESTS BASICALLY ARE GOING TO SAY? OR IS IT, WAIT A SECOND, THIS IS A PLAYBOOK FOR WHAT COULD PLAY OUT OTHER PLACES? >> GET THE CITY VIEW THAT IS WE ARE GOING TO DOWNGRADE THOSE ASSETS BUT ALSO OTHERS ARE SAYING NOW IS THE TIME TO GET IN BECAUSE PEOPLE THINK IT IS WAY OVERBLOWN. IF WE GET A HUNG PARLIAMENT, BASICALLY WILL BE STATUS QUO FOR A WHILE. MAYBE PEOPLE WANT TO WAIT TO SEE WHAT THE POLITICS WILL DICTATE BUT OTHERS ARE SAYING NOW IS THE TIME TO BUY. >> I DIDN'T INTERESTING CONVERSATION YESTERDAY FROM SOMEONE WHO SAID BASICALLY EVERY LEADER ONCE TO AVOID A LIZ TRUSS MOMENT. BECAUSE OF THAT REASON, THEY ARE LIKELY TO BE MORE MODERATE. LE PEN IS LIKELY TO BE MORE MODERATE WHEN SHE COMES INTO OFFICE BECAUSE SHE DOES A POLITICIAN'S CAREER COULD BE SHORT-LIVED IF THE BOND. >> VIGILANTES COME OUT FOR THEM. >> LOOK AT WHAT LIZ TRUSS HAS DONE. DVD. THERE IS AN ISSUE ABOUT WHETHER ANY OF THIS MATTERS IF A CHIPMAKER GOING TO KEEP ON CHIP MAKING AN NVIDIA CAN KEEP ON CREATING RECORD HIGHS. BECOMING THE BIGGEST, MOST HIGHLY VALUED NAME IN THIS NATION. DANI, I DON'T TO SAY I'M HEARING MORE BUBBLE TALK BECAUSE THAT SEEMS HISTRIONIC, BUT MORE PEOPLE ARE STARTING TO QUESTION IT. >> IT IS UNCOMFORTABLE. WHEN YOU'VE HAD AN S&P RALLY IN THE MAJORITY OF THE MARKET HAS BEEN DOWN, THAT IS ONLY HAPPEN FOUR TIMES SINCE 1990. THE SUPERLATIVES COMING OUT MAKE IT UNCOMFORTABLE. YOU NEED TO LOOK AT CISCO IF YOU WANT A LONGER EXAMPLE OF WHERE GOES WRONG OR EVEN INTEL. AI PLANS ARE NOT PANNING OUT. IF YOU GET THIS A LITTLE WRONG, THE MARKET WILL PUNISH YOU. >> YOU ABOUT IT IS UNCOMFORTABLE. BARCLAYS TALKING ABOUT RELUCTANT LONGS. IT DOESN'T COMFORTABLE TO BE LONG. >> A STORY SAYING BASICALLY THE LAST TIME A BIG PROVIDER OF COMPUTING INFRASTRUCTURE WAS THE MOST VALUABLE COMPANY WAS MARCH 2000, PRETTY UNCOMFORTABLE YEAR, AND THAT WAS CISCO AT THE HITE OF THE DOT-COM BUBBLE. ARE WE HEADED FOR 32 IN TERMS OF RECORD HIGHS THIS YEAR ON THE S&P, TRY TO GET THAT BOB UP -- BUMP UP. TO THINK PEOPLE WERE OVERLY BULLISH, WE ARE PAST THAT. THERE WOULD BE TALKING ABOUT THE CLIENTS BY YEAR END OF THEIR TARGET FOR THE S&P IS 5500. EURO WEAKENING A TOUCH. 10-YEAR GILTS UP MARGINALLY. -- 10 YEAR YIELDS UP MARGINALLY. CRUDE UP MARGINALLY WITH A REAL QUESTION HEADING INTO THE BUSIEST TRAVEL JULY 4 EVER AND WHAT THAT MEANS FOR CRUDE INTO THE DRIVING SEASON. COMING UP, JONATHAN STUBBS. AND RYAN PETERSON ON THE LATEST DISRUPTIONS IN THE RED SEA AND POSSIBLE THE JUST SIX CHALLENGES COMING UP. WE BEGIN WITH OUR TOP STORY, BIG TECH YET AGAIN DRIVING U.S. STOCKS TO TWO DAYS OF GAINS. JONATHAN STUBBS WRITING "DESPITE THE RECENT DOMINANCE OF U.S. MEGA CAPS STOCKS, EUROPEAN EQUITIES HAVE OUTPERFORMED U.S. EQUITIES ON A MEDIAN BASIS SO FAR THIS YEAR." JONATHAN, I WANT TO START WITH THE IDEA DESPITE SOME OF THE EXPECTATION THAT U.S. EXCEPTIONALISM CAN CONTINUE, YOU AND OTHERS ARE SAYING THIS DIP IS VIABLE IN EUROPE ON THE HEELS OF SOME FRENCH TURMOIL. WHAT GIVES YOU THE CONFIDENCE? >> ON THE U.S. VERSUS YOU UP, U.S. EQUITIES HAVE OUTPERFORMED EUROPE ON A MARKET CAP-WEIGHTED BASIS. BUT WHEN YOU BREAK DOWN THE LARGE, MIDDLE TO SMALL-CAP INDICES ON IMMEDIATE RETURN BASIS, EUROPE HAS OUTPERFORMED THE U.S. SIGNIFICANTLY AND LARGE CAPS, MID-CAPS, SMALL CAPS. WHAT IS DRIVING THAT IS THE DISTORTION YOU HAVE TALKED ABOUT FROM NVIDIA. THE CASE FOR EUROPE STILL SEEMS ONE WHERE YOU DON'T HAVE TO HAVE ANYTHING BUT MODEST EXPECTATIONS TO GET A REASONABLE OUTCOME IN 12 MONTHS TIME. IF YOU SEE A MODEST REWRITING BACK TOWARD LONG-RANUN AVERAGE, AFTER LENGTHY STAGNATION, MODEST IMPROVEMENT IN EARNINGS GROWTH SINGLE-DIGIT EARNINGS GROWTH, GOOD A REASONABLE CASE IN 10 MONTHS TIME. THAT IS THE ATTRACTION IN YOUR POST OF THE HURDLE IS SO LOW. WHEN YOU CAN GO IN WITH MODEST EXPECTATIONS AND HAVE A REASONABLE OUTLOOK 12 MONTHS LATER. >> THERE IS THE ISSUE OF POLITICAL RISK. I'M LOOKING AT THE SPREAD BETWEEN FRENCH AND DETERMINE -- AND GERMAN 10 YEAR BONDS. GOING BACK TO 2012, THE HIDE OF THE DEBT CRISIS. REAL CONCERNS, FRENCH BOND OPTION, CONCERNS THERE. THERE IS AN OVERLYING FEAR OF SOME OF THE DEFICITS THAT HAVE INCURRED POST-PANDEMIC AND WHAT THAT MEANS FOR JUST HOW MUCH MORE MONEY AND PHYSICAL RESPONSE ANY KIND OF WEAKNESS. WHAT IS THAT NOT WORRY YOU? >> IT DOES WORRY ME A LOT. I START EVERY MEETING WITH INVESTORS IN THE U.S. AND EUROPE AND OTHER PARTS OF THE WORLD WITH A RESUME WE'VE BEEN WRITING FOR 2, 3 YEARS NOW. THE PRIMARY PILLAR OF THAT IS WHAT WE SEE IS DISRUPTION GLOBALLY, EMBEDDED, EXTENDING A STRUCTURAL AND DISRUPTION FROM POLITICAL AND GEOPOLITICAL RISKS. THAT IS AT THE CENTER OF EVERYTHING WE SEE IN MARKETS. FROM A EUROPEAN, FRENCH PERSPECTIVE, WE HAVE SEEN A FLAREUP IN LOCAL RISK WHICH IS ALSO SIGNIFICANT. FROM AN EQUITY MARKET PERSPECTIVE, INTERESTING TO SEE THE FRIDGE EQUITY MARKET NOW CARRIES -- FRENCH EQUITY MARKET NOW CARRIES 7%. IN PREVIOUS MACRO CRISIS IN THE LAST 15 MARKETS, THE SOVEREIGN DEBT CRISIS, COVID, THAT FREE CASH FLOW YIELD PEAKED 8%. LOOK AT THE INSURANCE SECTOR, 6% DIVIDEND YIELD. THAT IS REFLECTING SOME PREVIOUS MACRO CRISIS. ONE OF THE POINTS IS THERE'S A LOT OF BAD NEWS ALREADY PRICED IN. FOR THE PRICE ACTION FROM HERE TO BE SIGNIFICANTLY NEGATIVE, WE NEED TO SEE A NEW MACRO SHOCK COMPARED TO WHAT WE HAVE ALREADY AND PLAY IN FRONT OF US. WE THINK THAT IS UNLIKELY TO PLAY OUT. WE SEE THIS AS AN OPPORTUNITY. 12 MONTHS TIME COME REASONABLE CASE FOR FRENCH EQUITIES WITH DOUBLE-DIGIT RETURNS. WE PREFER IT IN SPAIN BECAUSE IT IS CHEAPER. LESS POLITICAL RISK. BUT EUROPE LOOKS PRETTY WELL-PLACED WITH LOW EXPECTATIONS, LOW HURDLES TO REASONABLE RETURNS. >> THAT IS QUITE BULLISH ON THE FRENCH MARKETS. VISIT YOUR UNDERSTANDING YOU THINK POLITICALLY THERE COULD BE A HUNG PARLIAMENT THAT IS BASICALLY STATUS QUO? >> SOMETIMES POLITICAL PARALYSIS, WHICH AT THIS POINT ARE LIKELY OUTCOME WITH MACRON AS PRESIDENT BUT VERY LITTLE CONTROL AND THE HOUSE, THAT PARALYSIS HISTORICALLY, AGAIN, DOES NOT TEND TO LEAD AUTOMATICALLY TO A NEGATIVE MACRO OUTCOME. WE THINK THE DAMAGE CAN BE DONE ECONOMICALLY FROM WHAT WILL PLAY OUT IN FRONT OF US THE NEXT FEW WEEKS IN FRANCE POLITICALLY, QUITE LIMITED AND DOES NOT CHANGE THE IMPROVEMENT STORY WE EXPECT. MODEST RECOVERY FROM 18 MONTHS, TWO YEARS OF STAGNATION IN FRANCE AND THE REST OF EUROPE. POLITICS CARRIES RISKS. WE HAVE TO ENGAGE WITH IT FOR SURE. BUT I DON'T THINK IT DERAILS THE MODEST IMPROVEMENT PATH AND THAT IS ALL EUROPEAN EQUITIES NEED TO GIVE THEM A CHANCE OF DELIVERING THESE REASONABLE RETURNS FOR INVESTORS OVER THE NEXT 12 MONTHS. THE EMS HAS HIGHER HURDLES TO PERFORM GIVEN THE 21 TIMES MULTIPLE. THE U.S. LOOKS STRETCH. WE THINK THAT IS HARDER TO ACHIEVE ON A 12 MONTH BASIS. >> I WANT TO TAKE THE OTHER SIDE OF THIS TRADE BECAUSE A LOT OF INVESTORS HAVE SAID BECAUSE OF THE POLITICAL INSTABILITY OF EUROPE THAT IT STRENGTHENS AMERICAN EXCEPTIONALISM. ARE WE TOO SANGUINE ON AMERICAN EQUITY? NVIDIA? BEING A HAVEN RIGHT NOW? >> WHAT DO WE HAVE AS THE PILLARS OF INVESTMENTS OF TOOLKITS? WE HAVE VALUATION, TECHNICALS, FUNDAMENTALS. VALUATION, WHETHER IT IS NVIDIA OR THE MAC SEVEN GROUP, TECHNOLOGY GROUP, THE U.S. MARKET ITSELF -- WE'RE NOT NECESSARILY AT PEAK BUBBLE LEVELS BUT A WHIFF OF BUBBLE ABOUT IT. TECHNICALS BRIEFLY, LOOK AT NASDAQ RSI, BUT 80, THE HIGHEST LEVEL IT HAS BEEN IN OVER FIVE YEARS. IT WAS AT 30 IN APRIL. WE GOT THIS TRADING TECHNICAL BICYCLE IN APRIL BEFORE WE HAD THIS. PERHAPS WE SHOULD RESPECT THE TECHNICALS AS WELL. WE'RE NOT PRICING MUCH FOR RISK. PRETTY FULL VALUATION. TECHNICALS AT RISK. WE ARE NOT PRICING RISK TO THE MARKET MORE PARTICULAR STOCKS, SO I THINK THIS IS A TIME WE LIKE TO GET CONSOLIDATION. WE HAVE TO TRY AND PROTECT WHAT WE HAVE. WE WOULD BE LOOKING TO RUN BROADER EXPOSURE AND SOME PROTECTION STRATEGIES AT THIS POINT. >> JUST TO PUT A BOW ON THAT, IS NVIDIA A REASON NOT TO BUY THE U.S.? >> WELL, THE INCREDIBLE THING I THINK ABOUT U.S. EQUITY MARKET SINCE 2007 IS IT HAS RECEIVED $30 TRILLION OF POLICY SUPPORT VIA CENTRAL BANK BALANCE SHEET EXPANSION AND GOVERNMENT DEBT. THE U.S. EQUITY MARKET HAS INCREASED BY $30 TRILLION COME THE SAME NUMBER. THE U.S. HAS LED THE WAY OVER THE LAST YEARS PROVIDING SUPPORT INTO THE MARKET AND IS EXPECTED TO DO SO THE NEXT FIVE YEARS. THE GOVERNMENT DEBT IN THE U.S. IS RUNNING $2.5 TRILLION UP EVERY YEAR. ANOTHER $10 TRILLION TO $15 TRILLION OF SUPPORT COMING THROUGH THAT CHANNEL. I THINK IT IS HARD TO BET AGAINST THE WAS LONGER-TERM BUT OVER THE NEXT 12 MONTHS, I CAN SEE WHY INVESTORS SHOULD LOOK TO HAVE A MORE BALANCED PORTFOLIO BETWEEN U.S. AND NORTH U.S. EQUITY MARKETS. THAT IS WHAT WE ARE SEEING WHEN YOU STRIP OUT THE NVIDIA AND MAX 7 MARKET. THE EXCEPTIONAL PERFORMANCE WE ARE SEEING AT THE TOP END OF THE MARKET CAP SKILL IN THE U.S. >> JONATHAN STUBBS, THANK YOU FOR BEING WITH HIS WAS THE -- BEING WITH US. LET'S GET YOU AN UPDATE ON STORIES ELSEWHERE. >> U.S. INTELLIGENCE AGENCIES SAY CHINA'S LEADERS HAVE NO CLEAR PREFERENCE BETWEEN PRESIDENT JOE BIDEN OR FORMER PRESIDENT DONALD TRUMP IN THE UPCOMING ELECTION AND SAY TIES WILL CONTINUE TO DETERIORATE NO MATTER WHO WINS. THAT'S ING TO U.S. OFFICIALS WHO ASKED NOT BE IDENTIFIED. CHINESE OFFICIALS GUESS SECOND TRUMP ADMINISTRATION COULD MEAN UNPREDICTABLE POLICYMAKING INTO ANTI-CHINA MEASURES. PRES. BIDEN: LOOK TO STRENGTHEN PARTNERSHIPS TO PUSH BACK AGAINST CHINESE INFLUENCE IN THE REGION. SWISS NATIONAL BANK CUT INTEREST RATES AT A SECOND STRAIGHT MEETING AS IT BATTLES LOW-INFLATION AND A STRENGTHENING FRANK. OFFICIALS IN ZURICH REDUCING THE BENCHMARK RATE BY 25 BASIS POINTS. IT NOW STANDS AT 1.25%. THE MOVE HIGHLIGHTING DIVERGENCE AMONG MAJOR CENTRAL BANKS WITH THE FEDERAL RESERVE PARING BACK RATE CUT EXCITATIONS AND THE EUROPEAN CENTRAL BANK SHOWING RELUCTANCE TO MOVE. A RECORD NEARLY 71 MILLION AMERICANS ARE EXPECTED TO TRAVEL OVER THE INDEPENDENCE DAY HOLIDAY ING TO AAA. ABOUT 60 MILLION ARE EXPECTED TO DRIVE 50 MILES BETWEEN JUNE 2 -- JUNE 29 AND JULY 7, AN INCREASE OF NEARLY 5% FROM YEAR AGO. NEARLY 6 MILLION ARE EXPECTED TO FLY DURING THAT TIME, UP ALMOST 7% FROM LAST YEAR. THAT IS YOUR BLOOMBERG BRIEF. >> BASICALLY, A LOT OF TRAFFIC AND LONG TSA LINES. BOWEN'S MOMENT OF RECKONING. >> MUCH HAS BEEN SAID ABOUT BOEING'S CULTURE. OUR CULTURE IS FAR FROM PERFECT THAT WE ARE TAKING ACTION AND WE ARE MAKING PROGRESS. >> THIS IS "BLOOMBERG." ♪ >> LOOK AND BACK. THIS IS "BLOOMBERG SURVEILLANCE." WE LOOK AT FUTURES POISED UP. I'VE GOT TO SAY, TUESDAY WE GOT ANOTHER RECORD HIGH BUT IT FELT LIKE IT WAS A CHEAT. KIND OF LIMPING ACROSS THE LINE WITH NVIDIA BASICALLY PULLING EVERYONE ALONG WITH THAT. DOES THAT COUNT? >> A DOESN'T SEEM LIKE A PARTICULARLY BULLISH BULLISH MARKET. WE KINDA BY NVIDIA A LITTLE BIT. I'M WORRIED ABOUT THE ROBOTS. IF THIS IS A MARKET THAT IS JUST BUILDS ON MOMENTUM STRATEGIES, IS THAT A HOUSE OF CARDS READY TO FALL IF IT IS JUST THE COMPUTER TRADERS WHO ARE FUELING THIS RALLY AHEAD THAT ARE FICKLE AND CAN REVERT QUICKLY? >> MAYBE THE BOTS KNOW SOMETHING WE DON'T. A LITTLE BIT OF RETRACEMENT AFTER YIELDS OF DECLINES WE SAW LAST WEEK AS PEOPLE REASSESS JUST HOW MUCH AND HOW QUICKLY WE ARE TO GET DOWN TO REGULAR OR A FED TARGET FOR INFLATION. THIS MORNING, BOEING'S MOMENT OF RECKONING. >> MUCH HAS BEEN SAID ABOUT BOEING'S CULTURE. WE HAVE HEARD THOSE CONCERNS LAB AND CLEAR. HOW CULTURE IS FAR FROM PERFECT, BUT WE ARE TAKING ACTION AND WE ARE MAKING PROGRESS. WE UNDERSTAND THE GRAVITY AND WE ARE CAN -- MOVING FORWARD WITH TRANSPARENCY AND ACCOUNTABILITY. >> FAMILIES OF THE VICTIMS OF TWO BOEING 737 MAX CRASHES ASKING THE JUSTICE DEPARTMENT DEFINED BOEING ALMOST $25 MILLION, CALLING IT "THE DEADLIEST CORPORATE CRIME IN U.S. HISTORY." IT COMES AFTER THE COMPANY CEO CALHOUN FACED GRILLING FROM YOUR SENATORS OVER BOEING'S SAFETY CULTURE. SHEILA, BEFORE WE GET INTO THE BOEING ISSUES, WE JUST TALKED ABOUT HOW THERE'S GOING TO BE RECORD AMOUNT OF TRAVEL COMING UP JULY 4 WEEKEND. ARE YOU CONCERNED ABOUT THE SAFETY OF SOME OF THESE PLANES THAT ARE OLDER, THAT ARE BEING USED AS ALL OF THESE QUESTIONS SWIRL ON CAPITOL HILL? WE WONDER ABOUT AIR TRAFFIC CONTROLLERS BEING UP TO SPEED AND SOME OF THE LONG-TERM SCARS OF THE PANDEMIC EURO? >> I'M NOT CONCERNED. AIRCRAFT ARE SO SAY. I'M STILL CONCERNED ABOUT FLYING OLDER AIRCRAFT LONGER. WE ARE SEEING DELAYS WITH THE MAX AND 77 FROM BOEING. I'M NOT WORRIED ABOUT SAFETY OVERALL, I'M JUST WORRIED ABOUT AIRCRAFT STAYING IN THE FLEET LONGER AND THAT IS BEEN OUR CALL . >> IT SEEMS LIKE IT WILL BE ONGOING, ESPECIALLY AS DAVE CALHOUN DID NOT REALLY POINT TO A ROAD FORWARD. THERE IS A DISCOVERY PROCESS. HOWEVER MONTHS LATER RATHER THAN SAY, HEY, THIS IS OUR PLAN FOR HOW WE ARE GOING TO EVOLVE OUT OF THIS. DO YOU THINK IT IS FEASIBLE FOR THIS GOVERNMENT TO FIND GOING $25 BILLION GIVEN THAT THE NATION NEEDS THIS COMPANY TO REVIVE AND CAN'T PUNISH AT THAT HARSHLY IF IT THREATENS FISCAL SUSTAINABILITY? >> BOEING NEEDS CAPITAL TO SURVIVE TO BEGIN WITH, WORKING CAPITAL TO SUPPORT ITS EMPLOYEES. EACH 787 HAS TWO POINT FINALLY PARTS. YEP TO SUPPORT A WHOLE SUPPLY CHAIN. TO FINE AND $25 BILLION DOES NOT REALLY MAKE SENSE. IT IMPLIES THIS FINE COULD BE ABOUT $1 BILLION. ALASKA WAS SMALLER AND THAT THERE WAS NO FATAL INCIDENT INVOLVED. WE CAN'T FINE BOEING BECAUSE THEY ARE ALREADY IN TROUBLE THEMSELVES. THAT IS EXASPERATED AND THE FACT THAT CAN'T FIND A NEW CEO. IT IS BEEN ABOUT THREE MONTHS SINCE DAVE CALHOUN SAID HE IS STEPPING DOWN AND WE DON'T HAVE ANY SUCCESSOR. >> WHAT YOU MAKE OF THE CEO SEARCH? WHERE DO YOU THINK THEY'RE GOING TO LOOK? IT SEEMS LIKE THE PEOPLE THEY'RE TRYING TO TAP ARE NOT INTERESTED IN THE JOB. >> I THINK THERE IS A SEARCH FIRM OUT SO IT IS OFFICIAL. WE BROUGHT IT DOWN TO TWO CAN A -- CANDIDATES WHO ARE BOTH INTERNALLY INVOLVED. SOMEBODY INTERNAL OR HAS TOUCHED BOEING AND SOMEONE NEEDS TO BECOME INVOLVED BECAUSE AN OUTSIDER CAN'T FIX IT RIGHT AWAY. THEN YOU HAVE THE NEXT SUCCESSOR COME IN THREE YEARS AFTER THE INTERIM PERIOD. >> WHEN DAVE CALHOUN WAS TALKING TO LAWMAKERS, HE WAS ASKED, HAVE YOU SPOKEN TO THESE WHISTLEBLOWERS? WHICH IS WHY WE KNOW SO MUCH INFORMATION OF THE CHAOS HAPPENING IN THE COMPANY. HE SAID, NO, BUT MAYBE IT IS A GOOD IDEA. DO YOU THINK AS A DEAL WITH ALL THESE ISSUES THAT THEY ARE LEAVING NO ROCK UNTURNED? IT FEELS LIKE THEY ALMOST ARE. >> I FOUND THE TESTIMONY DISPIRITING. IT IS A BROKEN CULTURE AND BEATING DOWN ON IT WON'T HELP. I DO SEE HIS POINT HE CAN NECESSARILY SPEAK TO EVERYONE OF HIS EMPLOYEES, BUT I THINK THAT WAS AN ONGOING THEME THAT THERE NEEDS TO BE SOME ELEMENT OF PERSONAL TOUCH WITH THE EMPLOYEE BASE. WHETHER IT IS MONTHLY MEETINGS OR EATING WHISTLEBLOWERS ONE-OFF -- MEETING WHISTLEBLOWERS ONE-OFF. WE GET THAT AT JEFFERIES. I THINK THAT PERSICO INDICATION WITH EMPLOYEES BUILDS A GREAT CULTURE. I AM NOT THE CEO OF BOEING, BUT I THINK SOME OF THE COMMONS WERE HELPFUL BUT ALSO IMPOSSIBLE WHEN YOU HAVE SUCH A BIG EMPLOYEE BASE, SUPPLIER BASE, A MUSTER -- CUSTOMER BASE YOU ARE FACING. >> DO YOU SEE A CLEAR PATH FORWARD WHEN IT IS DAY AFTER DAY OF ISSUE OF OLD PARTS, SOMETHING GOING TO MISS? DAVE CALHOUN DOESN'T SEEM TO BE COMMUNICATING WHAT IT IS. IS THERE A CLEAR WAY TO FIX THIS? >> LESS BUREAUCRACY AS WELL. I DON'T KNOW MORE PAPERWORK WOULD NECESSARILY HELP. I THINK SOME OF IT COULD BE THAT PERSONALIZATION, WHERE PEOPLE FEEL RESPONSIBLE, WHERE THEY ARE INVESTED IN THE STOCK. THEY HAVE SHARES. WE WILL SEE WHAT HAPPENS WITH THE UNION AGREEMENT. 20% TO 30% OF EMPLOYEES ARE UP FOR CONTRACT NEGOTIATION IN SEPTEMBER. MAYBE THE BEST WAYS TO MOTIVATE PEOPLE WITH FUNDS FORWARD AND INVESTING IN THEIR BUSINESS. THAT WAS ONE OF THE RECURRING THEMES, POST-PANDEMIC, LABOR FORCE IS MUCH YOUNGER. TO HAVE THEM NOT HAVE THAT REWORK ELEMENT, MAYBE INCENTIVIZE THEM TO STAY A YEAR, THREE YEARS, FIVE YEARS. >> WHAT DEGREE IS IT TOO LATE THAT TALENT HAS FLED BOEING EN MASS? YOU DON'T HAVE THE PEOPLE YOU ONCE DID. YOU DON'T HAVE THOSE VETERANS WHO HAVE BEEN AROUND REALLY ADDRESS SOME OF THE ISSUES. >> THE SUPPLY CHAIN IS STILL STRUGGLING. WE ARE HEARING THAT ACROSS THE SUPPLY CHAIN. I WAS DOWN TO SEE ANOTHER AIRCRAFT MANUFACTURER, GENERAL DYNAMICS, SO I DO THINK IT IS NOT IMPOSSIBLE TO HAVE THE AEROSPACE MANUFACTURING SUPPLY CHAIN WORK. OTHER COMPANIES SEEM TO BE DOING IT. BOEING IS ON A LARGER SCALE, BUT THERE ARE CULTURAL INCENTIVES YOU CAN PUT IN PLACE TO FIX THIS. >> BEFORE YOU GO, I'M CURIOUS ABOUT THE TRAVEL SEASON AND WHETHER IT WILL GET MORE MISERABLE AND WHETHER PEOPLE ARE JUST GOING TO STAY HOME MORE. ARE WE SEEING A TURN IN THE CYCLE FOR FLYING AS PEOPLE GET 50 BY SOME OF THE LINES, IF YOU DON'T HAVE PREAPPROVAL, OR OTHER THINGS OF THAT NATURE? >> WHAT IS GOING TO INCENTIVIZE PEOPLE, AND PORCELAIN FOR THE AIRLINES, A LOT OF AIRLINES ARE POURING LOWER PRICING INTO THE LATIN AMERICAN, MAMMY, CARIBBEAN MARKETS. ALTHOUGH CAPACITY IS UP, PRICING IS DOWN. ELLIOT PUT A 2 BILLION-DOLLAR STAKE INTO SOUTHWEST. WE DON'T THINK THAT IS THE RIGHT MOVE. I THINK PEOPLE ARE GOING TO KEEP TRAVELING, ESPECIALLY WITH THESE LOW FARES. >> TO THE CARIBBEAN AND SOUTH AMERICA, ESPECIALLY IF THEY HAVE PREAPPROVAL TSA. >> COMING, RYAN PETERSON OF FLEX PORT WILL BE A FASCINATING INTERVIEW TO ME JUST BECAUSE WE'RE TALKING ABOUT LOGISTICS OF THE ONGOING TENSIONS. WE'RE STILL TALKING ABOUT THE RED SEA DISRUPTIONS AND WHAT THAT COULD POTENTIALLY MEAN. >> IT HAS BEEN A CONCERN FOR BUSINESSES WHO HAVE HAD TO FIND EVERETT ROUTES, ESPECIALLY TO EUROPE. THIS HAS BEEN AN ENTIRE STORY IN EUROPE AND THE BOE HAS SAID THIS COULD BE AND IS INFLATIONARY. INTERESTING TO SEE WHERE HE SEES THIS GOING. >> PROLONGED AGAIN AND AGAIN IN TERMS OF WHEN PEOPLE SEE POTENTIAL RESOLUTION. WE ARE HEADED FOR ANOTHER GAINS, POSSIBLY, 32ND RECORD HIGH ON THE S&P FOR 2024, BUILDING ON THOSE. BOND YIELDS UP MARGINALLY ABOUT THREE BASIS POINTS. THIS IS "BLOOMBERG." LISA: COMING INTO POTENTIALLY A 32ND RECORD HIGH DAY FOR THE YEAR ON THE S&P 500 AS WE LOOK AT WE COULD DRIVE US HIGHER GIVEN WHAT HAS BASICALLY BEEN THE ENGINE BEHIND ALL OF THIS, NVIDIA AND A COUPLE OF OTHER BIG TECH SPOTS. S&P AT ABOUT .40 PERCENT, NASDAQ OUTPERFORMING AGAIN, UP ALMOST .70% AND THE RUSSELL 2000 LAGGING BEHIND, UP ABOUT .30%, RAISING THE KEY QUESTION, CAN IT CONTINUE, EVEN WITHOUT BROADER PARTICIPATION? TALK ABOUT ROBOTS, ALGORITHMS, AND WHAT KIND OF BUBBLE FEELING THERE IS, I CAN TO CISCO IN 2000. THAT IS THE ANXIETY UNDERPINNING THE TRADES. DANI: IT IS BECAUSE IT ISN'T THAT NVIDIA IS ON A GOOD COMPANY TO RALLY. THEY OFFER GOOD CONTRIBUTION AS A WHOLE, BUT HOW HAVE WE OVERDONE IT? NOT NECESSARILY IS NVIDIA GOING TO CRASH BUT HOW MUCH DO VALUATIONS NEED TO COME DOWN BY TO BE MORE IN LINE WITH REALITY AND WHAT DOES THAT DO TO SENTIMENT? LISA: WHAT IS REALITY? EXISTENTIAL, BUT THERE IS THE QUESTION OF WHAT IS IT WHEN PEOPLE TALK ABOUT POLITICAL RISK AND BOND YIELDS BEING A PROBLEM. BOND YIELDS COMING UP A COUPLE OF BASIS POINTS. BUT MARGINALLY SO, AND AFTER A PRETTY BIG RALLY, 10 YEAR YIELD, 4.25% AND THE TWO-YEAR DOWN FROM A HIGH OF 5%, 4.73%, POLITICAL RISK AND THEN A BOND SALE IN FRANCE THAT WAS FINE. THAT RAISES THE ISSUE OF PEOPLE CAN JOB OWN ALL THEY WOULD LIKE SAYING IT WILL BE A HUGE PROBLEM AND EVERYBODY WILL BE NEW THE -- WILL BE THE NEW BOND VIGILANTE OF 2004 BUT YET -- ANNMARIE: IT WAS SOLID DEMAND, THE FIRST ACTION WE SAW SINCE EMMANUEL MACRON CALLED THAT SNAP ELECTION. IN REALITY, PEOPLE ARE STARTING TO SAY MAYBE IT WILL NOT BE AS BAD. LIONEL CALLED IT TRIPLE COHABITATION IN HIS OPINION PIECE AND THAT IS WHAT WE POTENTIALLY WILL SEE WITH THE FRENCH GOVERNMENT. LISA: WHAT IS THE OBSESSION WITH COHABITATION? ANNMARIE: THAT IS THE NEW MODEL. LISA: YOU HEARD IT FIRST. WHEN YOU LOOK AT WHAT IS GOING ON, WINDOW 7.28, UNDER SURVEILLANCE, COUNTING DOWN TO THE BANK OF ENGLAND RATE DECISION. THE CENTRAL BANK EXPECTED TO KEEP RATES ON HOLD AS THE U.K. PREPARES FOR A GENERAL ELECTION ON JULY 4, WHICH IS WHY WE BEGAN WITH THE IDEA, ARE WE THERE YET? THE RATE CUTTING CYCLE THAT WAS SUPPOSED TO BE. HOW FAR ARE WE DELAYED? ARE WE ON CENTRAL-BANK LAND? DANI: PROBABLY MORE NORWEGIAN CENTRAL-BANK LAND, BUT THIS CUTTING CYCLE IS COMING HEAD-TO-HEAD WITH THE POLITICAL CYCLE AND THE BOE IS AN EXPLICIT EXAMPLE OF WHERE THEY HAVE COME TOGETHER. THE BOE WILL NOT SAY ANYTHING BECAUSE THEY ARE IN A BLACKOUT PERIOD UNTIL ELECTIONS IN THE U.K. THEY WILL NOT DELIVER A CUT UNTIL THEY CAN TALK TO THE MARKET. POLITICS, WHETHER CENTRAL BANKS WOULD LIKE TO SAY IT OR NOT, IS INTERFERING WITH THEIR DECISIONS. ANNMARIE: AND THE ELECTIONS ARE CALLED ON THE SAME DAY AS THE APRIL CPI PRINT, SO WE HAVE NOT EVEN SEEN HOW THAT HAS BEEN INDICATIVE ON WHERE THEY FEEL INFLATION IS GOING. IS IT TOO HOT AFTER THOSE LAST TWO PRINTS? POLITICS IS GETTING IN THE WAY TO UNDERSTAND THE THINKING. LISA: WE GET PLENTY OF FED SPEAK, SO MAYBE WE GET A BETTER UNDERSTANDING OF WHAT PEOPLE THINK IN THE U.S. FED SPEAK AT 8:30 EASTERN ON THE WAY AND INITIAL JOBLESS CLAIMS AND HOUSING STARTS. HERE IS THE FED SPEAK, ALL COMING OUT AT DIFFERENT TIMES TO GET THERE LATEST ITERATION. THERE IS A QUESTION OF HOW MUCH CLARITY WE COULD GET AT A TIME WHEN THEY DON'T HAVE THAT MUCH CLARITY. SO FAR, WE'VE GOTTEN QUITE A BIT OF PUSHBACK. YOU TALK ABOUT POSSIBLY WAITING LONGER. HASN'T THAT BEEN THE THEME? DANI: I WOULD SAY THAT HE'S IN OUT LIGHTER -- HE IS AN OUTLIER. EITHER HE IS TOTALLY OFF BASE OR WE HAVE A NEW HAWK IN TOWN. PEOPLE SAY WE NEED TO SEE MORE PROGRESS, DESPITE THE FACT THAT I WILL SAID WE HAD NOT INCORPORATED THE DOTS YET, AND THEN THEY SAID, WELL, THERE STALE. I'M NOT SO SURE THEY ARE STALE GIVEN WHAT WE HAVE HEARD. LISA: MAYBE THE DOTS IS SOMETHING THAT ROBOTS CAN HANDLE. THE REPORT FROM CITIGROUP SAID AN ADDITIONAL 12% OF ROLES COULD BE AUGMENTED BY AI, CITING THAT AI MAY NOT LEAD TO A DROP IN HEADCOUNT AS THE NEED TO HIRE MORE AI MANAGERS AND COMPLIANCE OFFICERS GROSS TO MAKE SURE THERE IS NOT BACON ON YOUR M YOUC TAKE AWAY WHEN CHILDRENFLURRY. ANNMARIE: -- TAKE AWAY YOUR MC FLURRY. WE HAVE HEARD THIS. ANNMARIE: WE HAVE HEARD THE SHIFTING OF WHERE THE JOBS GO OR SHORTENING THE WEEKS FOR HUMANS, AND THAT IS WHAT JAMIE DIMON TALKED ABOUT. THAT MAY MEAN WORKERS MAY HAVE A 3.5 DAY WORKWEEK INSTEAD OF A FIVE OR SEVEN DAY. DANI: THAT SOUNDS LOVELY. ROBOTS CAN COME FOR MY JOB. WHO GETS THE SHORT END? IT IS THE ANALYST, STAYING UP HOWEVER LATE IN PUTTING TOGETHER POWER POINTS. IT PROBABLY IS A GOOD THING BECAUSE CULTURE HAS BEEN AN ISSUE FOR A WHILE, BUT IF THEY ARE HIRED INTO THAT NEW ENTRY CLASS, THIS IS THE PIPELINE FOR FINANCE. YOU EITHER MOVE UP, GO TO HEDGE FUND, PRIVATE EQUITY, BUT WHAT HAPPENS IF THE WHOLE SWATH OF PEOPLE ARE NOT THERE? ANNMARIE: ROBOT MANAGERS. LISA: WHAT HAPPENS TO ALL THE PEOPLE ENTER INTO THE WORKFORCE? HOW DO THEY GET THE EXPERIENCE IF IT IS HIGH SKILLED PEOPLE WHO HAVE THE CONSOLIDATION OF WORK? I DON'T BELIEVE IN THE 3.5 DAY WORKWEEK. WE CAN TALK ABOUT THIS ALL DAY, BUT WE DO WANT TO TURN TO SHIPPING. THE SINKING OF A SHIP IN THE RED SEA BY YEMEN WHO THE MILITANTS, UNDERSCORE PROBLEMS THAT SHIPPING COMPANIES HAVE NAVIGATING THE REGION. EVAN BROWN IS THE ASSET MANAGEMER AT UBS. WE DON'T TALK ABOUT THIS ENOUGH. THEY SUGGEST THAT SOME SUPPLY CHAIN ISSUES HAVE BEEN RESOLVED POST-PANDEMIC. HOW MUCH OF A NOT BEEN RESOLVED DUE TO THE CONFLICTS WE HAVE SEEN, PARTICULARLY IN THE RED SEA? >> GREAT TO BE HERE. IT SEEM LIKE WE GOT THINGS RESULT IN 2023, BUT EVER SINCE HOUTHIS DISRUPTED SHIPPING THROUGH THE RED SEA, IT HAS LINKEDIN THE TIME TO DELIVER CARGO, -- LINKED IN THE TIME TO DELIVER CARGO. RIGHT NOW, IF YOU WOULD LIKE TO SHIPPING CONTAINER FROM CHINA TO THE U.K. WHERE I NOW, IT COSTS $10,000 UNLESS YOU HAVE A CONTRACT. BY THE WAY, MOST OF THE CONTRACTS SIGNED AT LOWERED PRICES ARE NOT BEING HONORED AND ARE ADDING EXTRA CHARGES TO THEM, SO WE ARE RIGHT BACK TO WHERE WE ALMOST WERE IN THE PEAK COVERT SITUATION. LISA: THAT IS PROFOUND, WE ARE ALMOST WERE WE WERE IN PEAK COVID. ARE YOU SAYING THAT WE HAVE NOT SEEN THE BULK OF PRICE INCREASES ON GOODS TIED TO SUPPLY CHAIN DISRUPTIONS AKIN TO WHAT WE SAW BACK THEN BECAUSE PEOPLE HAVE NOT INTERNALIZED SOME OF THE DELAYS? RYAN: I'M NOT MAKING A PREDICTION ABOUT THE FUTURE, AND DURING COVID, WE GOT WHERE WE ARE NOW AND WE KEPT GOING AND GOING. RIGHT NOW, THERE ARE A LOT OF EXTRA SHIPS, THE CONTAINER SIDE ORDERED A TON OF WORK CONTAINER SHIP OF THE 30% INCREASE IN THE SHIPPING CAPACITY FOR THE WORLD, AND THAT WILL COME ONLINE THROUGHOUT THE BALANCE OF THIS YEAR AND INTO 2026. BECAUSE THERE'S SO MUCH MORE SUPPLY, PEOPLE FEEL THAT ONCE WE GET THROUGH THE CURRENT DEMAND SURGE, THEN THERE WILL BE ENOUGH SUPPLY AND PRICES WILL COME BACK DOWN. WE ARE IN THE EARLY DAYS OF COVID, $10,000 CONTAINERS IS SOMETHING WE NEVER SAW UNTIL COVID SINCE THE INVENTION OF THE CONTAINER. ANNMARIE: HOW CONCERNED IS THE SHOULD WORLD WITH THE RED SEA RIGHT NOW? RYAN: IT IS ON EVERYBODY'S MIND. IT IS CAUSING DELAYS, GETTING CARGO DELIVERED, AND IN ADDITION, THAT MEANS YOU LOSE SALES. YOU LOSE HOLIDAY SEASON, PLANNING, AND NOT JUST CHRISTMAS, BUT WE HAVE MOTHER'S DAY AND IF YOU'RE CARGO DOESN'T ARRIVE ON TIME, YOU MAY NOT SELL IT. YOU HAVE CUSTOMERS WAITING FOR AN ORDER AND YOU MAY LOSE IT TO SOMEBODY ELSE WHO DID A BETTER JOB PLANNING OR UNDERSTOOD BETTER, AND THIS IS WHAT TECHNOLOGY HAS GIVEN PEOPLE VISIBILITY. ANNMARIE: WHEN YOU SEE A MORNING LIKE TODAY AND A COOL CARRIER SUNK -- COAL CARRIER SUNK IN THE RED SEA AND RATES GO HIGHER, CAN YOU PREDICT HOW MUCH HIGHER THEY WILL GO? RYAN: I CANNOT. IF YOU COULD, YOU PROBABLY WORK ON WALL STREET ON HEDGE FUND DOING SOMETHING ELSE. WE TRY TO BE READY WITH WHATEVER THE WORLD THROWS AT US. IT IS CRAZY TO SEE THE VIDEO OF THAT SHOULD GETTING SUNK. MOST OF THE CONTAINER SHIPS ARE NOT BRAVING THE RED SEA AS THAT SHIFTED, SO WE HAVE A LITTLE MORE PREDICTABILITY ABOUT WHAT WILL HAPPEN, BUT IT IS HARD TO KNOW. YOU ARE TALKING DEMAND AND SUPPLY, AND A LOT OF FACTORS ARE POOLING DEMAND FORWARD, PEOPLE BUYING MORE STUFF NOW TO GET IT IN BEFORE TARIFFS HEADS, A POTENTIAL STRIKE ON THE EAST COAST IN THE U.S. AND COMPANIES ARE TRYING TO GET CARGO IN BEFORE THAT HITS. AND IF PRICES ARE GOING UP, YOU SHOULD TRY TO SHIP AS SOON AS YOU CAN, AND THAT CAUSES PRICES TO GO UP, SO COMPOUND FACTORS MAKE PREDICTION HARD. DANI: WE ARE NEARING SOME OF THE LEVELS WE SAW DURING COVID, WHAT SCARS DO WE STILL HAVE FROM THAT TIME? IS THERE ANYTHING THAT SHIPPERS AND IMPORTERS HAVE LEARNED THAT CHANGE THIS TIME AROUND IN A TIME OF TENSION? RYAN: DURING COVID, IT WAS UNPRECEDENTED AND NEVER HAPPENED FOR. PEOPLE WERE NOT PREPARED. WHEN THE PRICE WENT WAY UP, AND CARRIER SAID I'M NOT HONORING THE CONTRACT AND YOU HAVE TO PAY A HIGHER PRICE, PEOPLE GOT EMOTIONAL AND UPSET. NOW THEY JUST REMEMBER, THAT IS HOW THIS WORKS. A LOT OF OCEAN CARRIERS SIGNED LONG-TERM DEALS, 23 YEARS AT A PRICE SOMEWHERE -- TWO TO THREE YEARS AT A PRICE SOMEWHERE AROUND 5000, AND THEY HAD TO AGREE TO PAY FOR TWO TO FIVE YEARS, AND ALMOST EVERY COMPANY CAME BACK AND SAID WE WANT TO PAY AT THE LOWER MARKET PRICE. THE CARRIERS REMEMBER THAT, AND OCEAN CARRIERS SAID YOU WERE NOT WILLING TO PAY ABOVE MARKET PRICE, SO NOW YOU HAVE TO PAY AT THE MARKET PRICE AND I WILL NOT GIVE YOU A DISCOUNT. AND I THINK THAT IS FAIR. DANI: SO SOME OF THAT IS ONGOING FROM COVID, BUT YOU TALK ABOUT OTHER DISRUPTIONS THAT SHIPPERS ARE TRYING TO GET AHEAD OF, AND I KNOW YOU ARE LIKELY TO TELL US YOU ARE NOT IN THE BUSINESS OF MAKING PREDICTIONS, BUT I WOULD LIKE YOU TO TRY, SHOULD WE GET CONTINUED RED SEA ATTACKS AND LABOR DISRUPTIONS, HOW BAD COULD IT GET? RYAN: YEAH, THE ONE THAT COULD GET REALLY BAD IS THE ILA, THE UNION THAT OPERATES THE PORTS ON THE EAST COAST OF THE U.S., THEIR CONTRACT ENDS SEPTEMBER 21, SO IF THEY WERE NOT TO STRIKE A DEAL, AND A COUPLE OF WEEKS AGO, THEY CALLED OFF NEGOTIATIONS TO LEARN MORE ABOUT THE AUTUMN'S ASIAN OF PORT AUTOMATIC PORT CARRIERS, THEY DO NOT WANT THAT, IF YOU COULD NOT SUPPORT THE CARRIER THROUGH THE EAST COAST, IT WOULD CREATE ENOUGH CHAOS. AND IT IS NOT JUST THE EAST COAST BUT THE FGULF CLOSE THAT THEY OPERATE ON, AND YOU CANNOT JUST REROUTE A SHIP FROM THE EAST COAST TO THE WEST COAST. THEY WILL NOT UNLOAD A SHIP ON THE WEST COAST THAT WAS SUPPOSED TO GO TO THE EAST COAST OUT OF SOLIDARITY. SO THAT IS PROBABLY THE BIG OUTLIER, WORST CASE SCENARIO. SEPTEMBER 31 IS 30 DAYS BEFORE THE ELECTION OR SOMETHING, SO, HOPEFULLY, THE BIDEN ADMINISTRATION WOULD AT LEAST WANT TO HOLD OFF UNTIL AFTER THE ELECTION. IT SEEMS LIKE IT COULD BE A REAL PROBLEM. THE OTHER THINGS, TARIFFS, WE'VE SEEN THAT BEFORE. IT MAY REDUCE DEMAND. I'M NOT SURE IT WOULD BE BAD FOR THE PRICE OF SHIPPING, IT WOULD PROBABLY HELP COMPANIES THAT ARE MOVING GOODS, ESPECIALLY IF THEY'RE NOT HIT BY THE TARIFFS. LISA: BRIAN PETERSON, THANK YOU SO MUCH. -- RYAN PETERSON, THANK YOU SOME MUCH. WE WILL HAVE THAT CONVERSATION ABOUT INFLATION AND WHY IT MAY REMAIN STICKY. THAT'S A CRUCIAL PART OF THE STORY. LET'S GET YOU AN UPDATE ON YOUR BLOOMBERG BRIEF. >> CHINA IS LOOSENING ITS GROUP ON THE YUAN, SETTING ITS DAILY REFERENCE RATES AT ITS WEAKEST SINCE NOVEMBER AS LENDING RATES ARE HELD STEADY. IT COMES AS THE DOLLAR WAS CLOSER TO THIS YEAR'S PEAK WITH TRADERS BETTING ON HIGHER FOR LONGER RATES IN THE U.S., THE BANK OF CHINA'S GOVERNOR SAID THERE IS MORE ROOM TO EASE POLICY AS POLICIES. TO CUT RATES THIS YEAR. A TENSE WEEK BETWEEN ANGELA NETANYAHU AND THE WHITE HOUSE. HE RELEASED A VIDEO CRITICIZING THE U.S. FOR WITHHOLDING DELIVERIES OF WEAPONS AND AMMUNITION. THE WHITE HOUSE REPORTEDLY CANCELED A MEETING WITH ISRAEL SCHEDULED FOR TODAY WHERE THEY WERE MEANT TO DISCUSS IRAN. THE U.S. AMBASSADOR TO ISRAEL TOLD NETANYAHU THAT THE WEAPONS ARE IN THE PROCESS OF BEING DELIVERED TO ISRAEL. AND A CYBERATTACK SHUT DOWN THOUSANDS OF DEALERSHIPS ACROSS THE U.S. OVER THE JUNETEENTH HOLIDAY, TARGETING TDK GLOBAL, A PROVIDER THAT MANY DEALERS RELY ON FOR ALMOST ALL BUSINESS. THE OUTAGE LEFT SOME DEALERS UNABLE TO FUNCTION AT ALL AND SOME HAD TO SWITCH TO PAPER FOR ROUTINE SERVICES LIKE OIL CHANGES. THE FIRM SAYS THAT SOME CDK FUNCTIONS WERE RESTORED BUT THE SERVICE IS STILL NOT FULLY OPERATIONAL. THAT IS YOUR BLOOMBERG BRIEF. LISA: NEXT, DECISION DAY FOR THE BANK OF ENGLAND. >> INFLATION IS LIKELY TO PICK BACK UP, AND, THEREFORE, IT IS UNLIKELY TO GO ON A BIG CUTTING CYCLE. LISA: THAT IS COMING UP NEXT. THIS IS BLOOMBERG. ♪ LISA: ARE WE THERE YET WHEN IT COMES TO THE RATE CUTTING CYCLE? I SURVEILLANCE THIS MORNING, DECISION DATE FOR THE BANK OF ENGLAND. >> WHAT YOU HAVE IS TEMPORARY INFLATION LOOKS IN-LINE WITH THE TARGET, BUT IT IS HEAVILY INFLUENCED BY GOODS AND DEFLATION. THAT IS LIKELY TO PERSIST INTO THE END OF THE YEAR, SO THE BANK HAS TO SAY THAT INFLATION IS LIKELY TO GET BACKED UP AND, THEREFORE, IT IS UNLIKELY TO GO ON A CUTTING CYCLE. LISA: THE BANK OF ENGLAND RATE DECISION DUET 7:00 A.M. EASTERN STICKY SERVICES INFLATION IN THE UPCOMING U.K. ELECTION LIKELY TO KEEP THE BANK ON HOLD, EVEN THOUGH CPI FELL TO THE 2% TARGET FOR THE FIRST TIME IN THREE YEARS. IN A PAPER FOR THE BROOKINGS INSTITUTION, A PROFESSOR AT THE COLUMBIA BUSINESS SCHOOL WRITING THAT THREE TRENDS WILL MAKE IT HARDER FOR CENTRAL BANKS ACROSS THE WORLD TO KEEP INFLATION LOW AND STEADY, DEGLOBALIZATION, FISCAL PRESSURES AND RISING LONG RUN INTEREST RATES. I'M SO GLAD THAT PIERRE YARED JOINS US NOW. THIS WILL LOOK LIKE A DIFFERENT INFLATION CYCLE THAN THE PAST. HOW PHYSICAL IS IT THAT WHAT WE ARE SEEING WITH RATES -- HOW FEASIBLE IS IT THAT WHAT WE ARE SEEING NOW WITH RATES AS TEMPORARY AND WE COULD SEE THAT INFLATION RETESTS WITH RECENT HIGHS? PIERRE: OUR VIEW IS THAT EVEN THOUGH INCLUSION WILL COME DOWN THE CYCLE, IT IS LIKELY TO BE HIGHER ON AVERAGE AND MUCH MORE VOLATILE. LISA: HOW MUCH HIGHER AND HOW MUCH MORE VOLATILE AT A TIME WHEN PEOPLE WONDER IF OUR STORIES THE RIGHT WAY TO THINK ABOUT IT OR IF A COMPLETELY DIFFERENT INFLATION CYCLE IS A BETTER WAY TO THINK ABOUT IT? PIERRE: I WOULD SAY IT IS A COMBINATION OF R-STAR, MEANING THE REAL INTEREST RATE, AND IN TERMS OF EXPECTATIONS AND VOLATILITY, AND WE SEE THAT GETTING BAKED INTO LONGER-TERM RATES, EVEN AS SHORT-TERM RATES COME DOWN. DANI: THIS IS NOT SOMETHING FED SPEAKERS ARE TALKING ABOUT. THE LANGUAGES, LET'S WAIT AND SEE BUT WHAT WOULD IT SOUND LIKE TO HAVE FED SPEAKERS ACKNOWLEDGE THIS AND HOW SHOULD THEY BE TALKING AND THINKING ABOUT THE PROBLEM? PIERRE: I THINK WHAT FED SPEAKERS NEED TO DO WAS TO DOUBLE DOWN ON THEIR COMMITMENT TO INFLATION STABILITY AND TARGETING INFLATION. WE ARE TALKING ABOUT THE DIFFICULTY OF THE JOB OF NOT JUST THE FED BUT CENTRAL BANKS BROADLY ACROSS THE WORLD IN DEALING WITH THE PRESSURES. THEY HAVE HAD A TAILWIND THAT HAS MADE THEIR JOBS EASIER, AND IN THE NEXT FIVE TO 10 YEARS, WE SEE A LOT OF HEADWINDS THAT WILL MAKE THEIR JOB HARDER AND SOME CENTRAL BANKS WILL DO IT BETTER THAN OTHERS. DANI: WHAT IS THE ANECDOTE TO THAT? BECAUSE YOU COULD HAVE QUICKDRAW REACTIONS ARE SOMEBODY HIKES AND THEN YOU CUT BECAUSE OF THE VOLATILITY, SO WHAT IS THE RIGHT FRAMEWORK AND REACTION? PIERRE: THAT IS A VERY GOOD QUESTION. WE DO NOT WANT TO BE IN A WORLD WHERE INTEREST RATES ARE ALSO VOLATILE BECAUSE CENTRAL BANKS BECOME TRIGGER-HAPPY. WHAT WE WOULD LIKE TO SEE IS STABILITY AND GOOD COMMUNICATION. THE FED IS ENGAGING IN ANOTHER STRATEGIC REVIEW, AND I RECOMMENDATION IS TO DOUBLE DOWN ON THE IMPORTANCE OF MAINTAINING STABLE INFLATION AND TO CLARIFY WHAT THE MANDATE ALSO IS, WHICH IS THAT IT IS A LEVEL OF EMPLOYMENT CONSISTENT WITH INFLATION STABILITY. ANNMARIE: ABOUT A MONTH AGO, THEY SAID THAT THE FED SHOULD LAY GROUNDWORK FOR HIKES IN 2025. YOU AGREE? PIERRE: I THINK WE DO NOT KNOW WHAT WILL HAPPEN IN 2025. THERE ARE A LOT OF SHOTS TO THE ECONOMY. I BELIEVE THE FLED -- SAID SHOULD REMAIN FLEXIBLE AND IT SHOULD MAKE IT CLEAR THAT IT COULD CUT OR HIKE, AND THAT DEPENDS ON THE DATA THAT IT SEES. ANNMARIE: WHEN YOU SAY 2025 IS UNPREDICTABLE, IS THAT BECAUSE OF POLITICS? PIERRE: IN PART BECAUSE OF POLITICS, AND BECAUSE OF THE REASONS WE SAW INFLATION CHANGES WAS BECAUSE OF THE SUPPLY CHAIN, WHICH HE TALKED ABOUT PREVIOUSLY, AS WELL AS OTHER ISSUES INVOLVING TRADE POLICY, WHICH CAN ALSO LEAD TO SPIKES IN INFLATION. LISA: HARVARD PROFESSOR WAS SINGING YOUR PRAISES, SAYING THAT YOU WERE THE PRIMARY AUTHOR ON THE STUDY THAT I BELIEVE IS GOING TO BE HEAVILY DISCUSSED AT JACKSON HOLE IN AUGUST AT A TIME WHEN CENTRAL BANKERS ARE TRYING TO COMMUNICATE WELL BUT THEY DON'T KNOW WHAT THEY ARE TRYING TO COMMUNICATE BECAUSE THEY ARE NOT SURE OF THE PARAMETERS. WHAT YOU EXPECT SOME DISCUSSIONS TO LOOK LIKE AT A TIME WHEN THERE IS GREAT UNCERTAINTY? YOU CAN SEE IT IN ALL OF THE ITERATIONS FROM THE FEDERAL RESERVE, TRYING TO PROVIDE GUIDANCE, BUT IT IS BECOMING KIND OF NOISE. PIERRE: THAT IS A REALLY GOOD QUESTION TO THINK ABOUT ABOUT HOW THE FED COMMUNICATES. MY VIEW IS THAT THEY SHOULD BE COMMUNICATING THAT THEY ARE WATCHING ALL THE POSSIBLE DIFFERENT SHOCKS THAT COULD OCCUR, NOT JUST DOMESTICALLY, BUT INTERNATIONALLY, AND THEY SHOULD BE READY TO REACT IF THERE ARE PRESSURES. LISA: BUT WHAT KIND OF REACTION? HOW MUCH DO THEY HAVE TO START TALKING ABOUT REACTION FUNCTION AND WHAT IT LOOKS LIKE IN TERMS OF SCENARIO ANALYSIS, MORE SO THAN SAY WE WILL CUT ONCE OR TWICE OR JUST BE DATA-DEPENDENT, WHICH COULD MEAN ANYTHING DEPENDING ON WHO YOU ARE? PIERRE: I THINK THE FUNCTIONAL APPROACH IS THE RIGHT WAY TO GO. I PREFERENCE IS TO HAVE A SCENARIO VIEW, WHERE IF THIS HAPPENS, THIS IS WHAT WE DO. THAT IS MY PREFERRED APPROACH. DANI: I WOULD LIKE TO TAKE THAT IDEA OF THE VOLATILITY OF INFLATION AND HOW YOU PRICE IT IN AND WITH THAT DOES TO LONG-TERM YIELDS. WHEN YOU LOOK AT THE ECONOMIC IMPACT OF AN UNCERTAIN MARKET, HOW DOES THAT PLAY OUT? FOR TYPE DO THINGS LOOK WITH THE FACTOR OF KNOWINGNESS AND VOLATILITY OF INFLATION? PIERRE: IT SHOULD SHOW UP IN THE LEVELS AND UNCERTAINTY, AND BOTH OF THOSE COULD SHOW UP IN RISK PREMIUMS. LONG-TERM, YOU SEE HIGHER BORROWING COSTS FOR CORPORATE'S AND GIVEN THE CBA REPORT FROM YESTERDAY, HIGHER COSTS FOR GOVERNMENTS. THERE IS A LOT OF UNCERTAINTY THAT COMES FROM THAT. ANNMARIE: WHEN YOU LOOK AT THE HIGHER WIRING COSTS AND THE U.S. DEFICIT, THIS IS A TIME WHEN WE ARE HAVING ECONOMIC GROWTH, WHERE WE ARE NOT IN THE PANDEMIC. WHAT WOULD THIS LOOK LIKE IF WE ACTUALLY NEEDED THE FISCAL IMPULSE TO SOLVE SOMETHING LIKE A RECESSION? PIERRE: MY CONCERN WHEN IT COMES TO THE FISCAL TRAJECTORY IS THE PROBLEM THAT COULD ARISE IF A GOVERNMENT AND PERHAPS THE U.S. GOVERNMENT, DOESN'T FEEL IT HAS THE FISCAL SPACE TO REACT TO AN EMERGENCY SITUATION. LISA: THANK YOU FOR BEING WITH US, AND TO YOUR POINTS, THAT CBO REPORT CAME OUT TUESDAY, SHOWING THAT DEBT WOULD EQUAL ABOUT 122% OF THE U.S.' ECONOMIC OUT BUT BY 2034 AND THAT SURPASSES THE HIGH SET IN THE AFTERMATH OF WORLD WAR II. ANNMARIE: AND FROM FEBRUARY TO NOW, THE UPGRADED $400 BILLION ADDED TO THIS. A LOT HAS TO DO WITH FED SPENDING AND ALSO BIDEN'S PATH FOR STUDENT LOANS. A LOT IS ADDED, AND NEXT YEAR, REGARDLESS OF WHO WILL BE PRESIDENT, THERE WILL BE MORE ADDED TO THE FISCAL DEBT. DANI: IT IS A GOOD POINT ON WHAT HAPPENS WHEN THERE IS A DOWNTURN, NOT JUST BECAUSE YOU DON'T HAVE THE FISCAL FIREPOWER, BUT YOU HAVE MORE WHEN YOU PAY WITH UNEMPLOYMENT BENEFITS, SO WHAT DOES THAT DO TO DEFICIT SPENDING? SURE, RATES ARE COMING DOWN, BUT OTHER ISSUES ARISE. LISA: ALL I CAN SAY IS THAT STEVE EISMAN SUCCESSFULLY GOT INTO MY HEAD WHEN I HEAR HIM SAYING, WHY ARE YOU WORRIED SO MUCH AND THE U.S. HAS BEEN GROWING FASTER THAN EVERYBODY ELSE. WE ARE FOUR MINUTES AWAY FROM THE BANK OF ENGLAND DECISION WHERE THEY ARE TRYING TO THREAD A DIFFERENT NEEDLE. COMING UP, EVAN BROWN OF UBS, JONATHAN MILLER, ED MILLS, AND TERRY WISEMAN -- THIERRY WIZMAN. THIS IS BLOOMBERG. >> THE ECONOMY SEEMS TO BE DOING WELL, THE DATA, WHILE NEXT, SEEMS TO BE SHOWING STRONG ENOUGH. >> I THINK THE BULL TREND CONTINUES AND WE MAKE A DEPOSIT THE EARLY SUMMER MONTHS. >> CLEARLY, THERE IS REAL CONCENTRATION RISKS. >> WE HAVE TO REALIZE WHAT EXTREME OPTIMISM IS BUILT IN TO THE ECONOMIC OUTLOOK THAT MARKET C. >> WE ARE BEGINNING TO SEE A SERIES OF POTTER DATA PRINCE AND THAT WOULD CAUSE THE MARKET TO HAVE CONCERN -- SERIES OF HOTTER DATA PRINCE, AND THAT WOULD CAUSE THE MARKET TO HAVE CONCERN. >> THIS IS "BLOOMBERG SURVEILLANCE" WITH JONATHAN FERRO, LISA ABRAMOWICZ, AND ANNMARIE HORDERN. LISA: THIS IS "BLOOMBERG SURVEILLANCE," JONATHAN FERRO WILL BE BACK NEXT WEEK. WE ARE LOOKING AT A RATE CUTTING CYCLE DELAYED, IF NOT DEFERRED. WE TALK ABOUT THE BANK OF ENGLAND JUST NOW DECIDED, NOT UNEXPECTEDLY, TO HOLD RATES WHERE THEY WERE AT 5.25%, HAMMERING HOME THE POINT WE TALK ABOUT, WHICH IS WE KEEP THINKING THIS WILL GET STARTED AND THE SWISS NATIONAL BANK IS SAYING LET'S GO, AND OTHERS ARE JUST NOT SURE. DANI: SOME OF THE CONFUSION IS FROM THE LANGUAGE FROM ACTUAL CENTRAL BANKERS. WE WILL NOT HEAR FROM THE BOE TODAY, BUT THEY NOTE UPSIDE NEWS ON SERVICE INFLATION, BUT IN THE SAME BREATH, THEY SAY THEY DOWNPLAYED THE THREAT FROM SERVICES CPI AND THE WAGE HIKES, SO EVEN THEY CANNOT GET IT TOGETHER AND DON'T HAVE A CLEAR MESSAGE AND THAT MAKES US WONDER, WHEN IS THE CUTTING CYCLE BEGINNING? LISA: AND ANDREW BAILEY SAID THEY NEED TO BE SURE IF INFLATION WILL STAY LOW. WE WILL GET TO AS A BURDEN IN A MOMENT TO BREAK DOWN -- TO LIZZIE TO BREAK DOWN THE HEADLINES, WHEN IT CAME IN AS A SPLIT VOTE, WHICH IS WHAT PEOPLE PROBABLY LOOK FOR, BUT THIS COMES AT A TIME, AND THIS IS THE KEY ISSUE THAT THE BANK OF ENGLAND GRAPPLES WITH, WE ARE STARING INTO THE SUN WHEN IT COMES TO GEOPOLITICAL RISK AND THAT INTERNAL POLITICAL RISK. CENTRAL BANKERS WOULD LIKE TO SAY IT DOESN'T MATTER, BUT IT IS HARD TO SAY THAT WHEN ULTIMATELY WHO GETS ELECTED HAS A BIG INFLUENCE ON THE FISCAL OVERHANG AND WITH THE DEFICIT LOOKS LIKE. ANNMARIE: ABSOLUTELY, AND THEY ARE SAYING THAT THE TIMING OF THE U.K. ELECTION ON JULY 4 DID NOT INTERFERE WITH THEIR DECISION TODAY. THEY SAID IT WASN'T RELEVANT. I THINK THAT IS HARD TO BELIEVE BECAUSE TO SAY THAT THAT POLITICAL ELECTION IS NOT GOING TO TAKE UP SPACE IN THE DEBATE AND DONE THE TRAJECTORY OF THE COUNTRY FEELS FRAUGHT AND DIFFICULT, BUT IT IS THE SAME DEBATE IN THE U.S., WITH SOME SAYING WE POTENTIALLY WILL GET A RATE CUT A DAY AFTER THE ELECTION. LISA: WHICH GOES INTO WITH THE UNKNOWN CZAR. WE ARE LOOKING AT MARKETS THAT WERE EXPECTING THE DECISION, AND WE ARE LOOKING THAT THE POUND IS A LITTLE WEAKER, S&P FUTURES UP .40% IN THE EURO AROUND THE SAME WERE IT WAS BEFORE, 107.28 -- 1.0728 AND CRUDE MARGINALLY HIGHER AS WE HEAD INTO DRIVING SEASON. COMING UP, EVAN BROWN OF UBS ON THE BANK OF ENGLAND DECISION AND WHY HE MAY LIKE ENGLAND AND THE EUROPEAN UNION MORE THAN THE U.S. ED MILLS WITH RAYMOND JAMES, AND JONATHAN MILLER WITH MILLER SAMUEL ON THE STATE OF THE U.S. HOUSING MARKET. WE HAVE BEEN PARSING THROUGH THE HEADLINES. WITH THE BANK OF ENGLAND, WHAT STOOD OUT? LIZZIE: WELL, IT IS INTERESTING AS ANNMARIE COMMENTED THAT THEY FELT THE NEED TO SAY THIS HAD NOTHING TO DO WITH POLITICS. WE HAVE NOT HEARD ANY SPEAKERS FROM THE MONETARY POLICY COMMITTEE SINCE THE SNAP ELECTION WAS CALLED AND YOU CAN IMAGINE THE OPTICS OF CUTTING FOR THE FIRST TIME SINCE THE ELECTION CAMPAIGN. IT WOULD LOOK LIKE THE OLD LADY WAS GIVING HER TO SUNAK A HELPING HAND. WHETHER IT WOULD WORK OR NOT IS ANOTHER QUESTION, BUT I WOULD LOOK BACK AT HISTORY. IN 2019 DURING THE CAMPAIGN, YOU HAD TWO OF THE MONETARY POLICY DEVOTED TO CUT REGARDLESS OF THE CAMPAIGN, AND THERE IS THE ARGUMENT THAT OPTING NOT TO CUT WOULD BE A DECISION, BUT LET'S PUT OTHER FACTORS IN PLAY. WE HAVE THAT SERVICES INFLATION READING COMING IN UNEXPECTEDLY HOT, AND THERE IS A VISION ON THE COMMITTEE ON HOW TO INTERPRET THAT. YOU HAD SOME MEMBERS ACTUALLY SEEING A RISK FROM SECOND-ROUND EFFECTS FROM SERVICES INFLATION AND OTHERS PLAY DOWN THE THREAT FROM SERVICES CPI, SO THAT'S INTERESTING. AND THE FINAL THING, YOU HAVE THE SAME SPLIT AS LAST TIME, 7-2, THE TWO DISSENTERS. BUT I'M LOOKING AHEAD TO THE NEXT MEETING, THE DEPUTY GOVERNOR VOTED TODAY FOR THE LAST TIME AND NEXT TIME, HE WILL BE REPLACED BY SOMEONE WHO IS THOUGHT TO BE MORE HAWKISH. SO DID WE GET A DIFFERENT DYNAMIC ON THE MPC? DANI: THIS MARKET IS INTERPRETING IT IS A FISH. I'M NOT SURE HOW SINCE WE GOT ONLY A FEW STATEMENTS AND SOME CONTRADICTORY. TRADERS ARE ADDING ON TO THE RATE CUT BETS, PRICING UNDER 50 BASIS POINTS OF CUTS THIS YEAR, BUT WE ARE A LONG WAY AWAY FROM THE ANDREW BAILEY OF THE START OF THE YEAR, WHO SAID WE ARE TURNING A CORNER BUT IT NEVER CAME. WHEN YOU TALK ABOUT 7-2, HOW FAR AWAY DOES IT SEEM THAT THEY ARE WILLING TO CUT? LIZZY: YOU SAY 7-2, BUT DON'T THINK OF THE MEMBERS AS INDIVIDUALS BECAUSE YOU HAVE THAT BIG BLOCK OF INTERNAL MEMBERS WHO MOVE AS A PACK, SO WAIT FOR THE LIKES OF THE GOVERNOR HIMSELF TO GO FOR A CUT, AND IT COULD BE MORE RAPID THAN AT THE MOMENT BUT TRADERS OFF THE BACK OF THE SERVICES PRINT YESTERDAY PARED THEIR BETS ON AUGUST CUT, SO IT IS INTERESTING THAT NOW HAVING SEEN THE DECISION AND THE GUIDANCE AROUND IT, AS YOU SAY, LOOKING A BIT MORE DOVISH. LISA: THANK YOU. GREAT WORK. WE WILL CATCH UP WITH YOU AS WE PARSE THROUGH THIS BECAUSE IT MATTERS. THE BANK OF ENGLAND IS DEALING WITH A LOT OF ISSUES THAT THE FED IS AND OTHER CENTRAL BANKS AND IT RAISES THE QUESTION OF HOW MUCH DO THEY HAVE TO BASICALLY SAY WE WILL NOT LET POLITICS AFFECT US? BECAUSE THEY HAVE TO FACTOR THAT IN, AND HOW MUCH ARE WE LOOKING AT A SPLIT DECISION WITH THE CONFUSING RESULT IN MARKETS. EVAN BROWN JOINS US NOW. WHAT DO YOU MAKE MORE BROADLY ON THE TENSIONS RIGHT NOW AMONG CENTRAL BANKS? EVAN: A LOT OF TENSIONS, SERVICES WITH THE U.K. THE U.S. REMAIN STICKY, BUT YOU ARE ALSO SEEING EMPLOYMENT IS WEAK. IN THE END, IT WILL COME DOWN TO CONCERNS ABOUT THE LABOR MARKET AND THEY WILL SEE THAT IS FIRST AND INFLATION WERE IS A LAGGING INDICATOR, SO THEY WILL HOLD OFF A LITTLE BIT, SAY WITH THE FED. BUT, ULTIMATELY, THEIR NEXT UP MAY HAPPEN IN AUGUST OR NOVEMBER AND I THINK THE GLOBAL MARKETS, THAT DOESN'T MATTER THAT MUCH BUT AT LEAST WE KNOW THAT WE ARE HEADING IN THE RIGHT DIRECTION ON THE INFLATION AND I THINK THAT IS A DECENT ENVIRONMENT GOING FORWARD. LISA: THE RATE CUTTING CYCLE STRIKES ME AS AN OLD CAR THAT HAS BEEN LEFT OUT FOR TOO LONG, AND IT NEVER QUITE GETS THERE AS QUICKLY AS YOU WOULD LIKE. HOW CAN YOU BE BULLISH ON ASSETS IN EUROPE AFTER A LOT SAID THAT THE ARGUMENT WOULD BE A RATE CUTTING CYCLE THAT WOULD BE MORE AGGRESSIVE IN THE U.S. AND NOW PEOPLE ARE QUESTIONING IF THAT IS THE CASE, GIVEN THE CHALLENGES YOU ARE TALKING ABOUT? EVAN: OUR OPTIMISM ON EUROPE IS LESS BASED ON THE RATE CUTTING CYCLE. I THINK THAT IS A POSITIVE, BUT IT IS MORE OF THE ORGANIC THINGS HAPPENING IN EUROPE. YOU DO HAVE REAL INCOMES IMPROVING, GOLD AND MANUFACTURING PICKING UP, AND THE RATE CUTS ARE THE ICING ON THE CAKE. I THINK THAT IS STILL THE CASE. WE HAVE POLITICAL NOISE, AND MICRON -- EMMANUEL MACRON CALLING FOR AN ELECTION WAS NOT ON MY BINGO CARD AHEAD OF THE EU ELECTIONS, BUT I THINK THE MACRO FUNDAMENTALS WENT OUT AND WERE POSITIVE. DANI: YOU CALLED IT ELECTION WAYS, ARE THE POLITICS JUST NOISE AT THIS POINT? EVAN: WHEN WE TAKE A STEP BACK AND WORK BACKWARD, WHAT ARE WE REALLY WORRIED ABOUT WHEN WE LOOK AT THESE MORE EXTREME PARTIES TAKING HOLD? THIS IS NOT 2011 OR 2012. WHATEVER THE OUTCOME IS, FRANCE IS NOT LEAVING THE EURO ZONE. THAT IS NOT HAPPENING UNDER ANY SCENARIO. THERE MIGHT BE MORE FISCAL SPENDING AND THAT MAY CREATE ISSUES FOR BUSINESS CONFIDENCE, BUT IT DOESN'T STOP THE UNDERLYING PICTURE OF IMPROVING THE ECONOMY. I THINK THE FRENCH PEOPLE AND BUSINESSES ARE MORE WORRIED ABOUT THEIR STAR PLAYER BEING INJURED THAT THEY ARE -- AS WE ALL ARE -- THEN THEY ARE ABOUT THE ELECTION AND IN TERMS OF WHAT IT MEANS FOR THE ECONOMY ITSELF AND CONFIDENCE. ANNMARIE: CAN YOU LOOK AT THE NOISE THE SAME WAY YOU ARE IN EUROPE AS IN THE U.S.? EVAN: THE U.S. ELECTION IS VERY TRICKY, AND AS ASSET MANAGERS, WE HAVE TO THINK OF IT IN TERMS OF RISK MANAGEMENT AS OPPOSED TO TRYING TO PITCH FOR A DIFFERENT OUTCOME. I DON’'T KNOW THAT THE ELECTION IS GOING TO HAVE A MEANINGFUL IMPACT ON THE FED'S DECISION-MAKING. THERE IS A LOT OF DATA BETWEEN NOW AND SEPTEMBER, IF WE SEE THE MARKET CONTINUE TO COOL, THEY WILL GO IN SEPTEMBER, AND THE ELECTION WILL NOT STOP THAT. I THINK AFTER THAT, SEEING WHAT THE FISCAL SITUATION IS AND WHERE TARIFFS ARE, THEN THEY WILL HAVE TO TAKE A STEP BACK AND MAYBE IT MEANS THAT THEY DON'T CUT AS MUCH AS THEY ORIGINALLY PLANNED, INDEPENDENT OF THE ELECTION. ANNMARIE: IF YOU DON'T POSITION FOR THE HORSERACE, HOW DO YOU HEDGE FOR ALL THE RISKS YOU ARE CONCERNED ABOUT? EVAN: I THINK THE DOLLAR IT HAS BEEN REMAINS THE BEST RISK HEDGE FOR A LOT OF SCENARIOS, AND IF YOU THINK OF A BROAD EQUITY BOND PORTFOLIO, THOSE MOMENTS WHERE YOU GET AN INFLATION SURPRISE OR CONCERNS ABOUT YIELDS RISING TOO MUCH IN THE U.S., WE ARE NOW CONCERNED ABOUT TRUMP, TARIFFS, BROADER POLITICAL UNCERTAINTY. THE DOLLAR HAS ALWAYS BEEN THE MOST DEPENDABLE HEDGE, AND YOU WOULD JUST LIKE THAT OVERLY WHETHER YOU ARE TRADING FX OR A U.S.-BASED INVESTOR HEDGING YOUR INTERNATIONAL EXPOSURE. DANI: WHEN WE TALK ABOUT THE HUGE EXPANSION OVER THE NEXT 10 YEARS, MORE THAN HAD BEEN ASSUMED YESTERDAY, THERE IS THE IDEA THAT ESSENTIALLY IT MEANS DURATION BECOMES LESS ATTRACTIVE AND YIELDS HAVE TO GO UP TO ABSORB THE SUPPLY, BUT IT IS ALSO A TIME WHERE THERE IS DEMAND FOR DURATION BECAUSE WE SEE THE ECONOMY WEAKENING. HOW DO YOU SEE THESE TWO OPPOSING FORCES? EVAN: YOU CAN COUNT ME AMONG ONE OF THE PEOPLE MORE RELAXED ABOUT THE FISCAL DEFICIT. NOBODY FEELS GREAT ABOUT THE TRAJECTORY WE ARE ON, BUT WHEN IT COMES TO MARKETS, IN Q3 WHEN YIELDS WERE SURGING AND EVERYONE WAS WORRIED ABOUT THE FISCAL SITUATION, AUCTIONS AND EVERYTHING, ALL IT TOOK WAS A HINT OF A SLOWDOWN IN INFLATION AND GROWTH, AND ALL OF A SUDDEN, BONDS ARE RALLYING LIKE CRAZY, SO AS MUCH AS WE TALK ABOUT SUPPLY, AND IT MATTERS, THERE IS STILL SO MUCH DEMAND FOR U.S. DURATION AND IT IS STILL THE SAFE HAVEN ASSET FOR THE GLOBAL ECONOMY AND GLOBAL MARKETS, AND THAT IS WHAT PEOPLE WILL COME BACK TO. WE ARE THE RESERVE CURRENCY OF THE WORLD AND THERE ARE NOT MANY ALTERNATIVES THAT ARE ATTRACTIVE. I THINK ABOUT THE FISCAL DEFICIT. I AM AWARE THAT IT IS UNSUSTAINABLE, BUT IN TERMS OF THINKING THAT BONDS WILL SELLOFF LIKE CRAZY, I'M NOT ON THAT BAND. LISA: I LOVE IT, AS PEOPLE TALKING ABOUT I'M NOT THAT CONCERNED, I CARE, EVERYBODY CARES, BUT IT HASN'T PROVEN TO BE THAT MUCH OF AN ISSUE. YOU TALK RELATIVE EXPECTATIONS, AND YOU TALK OUTPERFORMANCE IN EUROPE BECAUSE EXPECTATIONS ARE LOWER. ONE OF THE REASONS WHY SOME ARE MORE POSITIVE ON EUROPE THAN THE U.S. IS BECAUSE NVIDIA. THERE SEEMS TO BE RUNAWAY TRENDS THAT ARE MAKING HIM NERVOUS. DO YOU AGREE THAT NVIDIA KIND OF MAKES THE U.S. LESS APPEALING GIVEN WHERE VALUATIONS HAVE GOTTEN? EVAN: I WOULD NOT SAY I LIKE EUROPE MORE THAN THE U.S., I WOULD SAY THAT I LIKE THEM BOTH. YOU CANNOT STAND IN THE WAY THAT FREIGHT TRAIN. YOU CANNOT DO IT. IT IS A MAJOR STRUCTURAL THEME, AI, THESE COMPANIES, THE EARNINGS POWER, THE POTENTIAL, NOBODY REALLY KNOWS HOW TRANSFORMATIVE THE TECHNOLOGY WILL BE, AND I'M NOT SMART ENOUGH TO PERFECTLY TIME WHEN A CERTAIN MEGA CAP COMPANY ABSOLUTELY HATES IS POINT WHERE THAT IS TOO MUCH AND IT NEEDS TO CORRECT, SO I THINK YOU HAVE TO OWN U.S. EQUITIES AND THAT THEY MET. U.S. EQUITIES JUST BROADENS YOU OUT, AND IT IS PLAYING ANOTHER THEME WHICH IS A BROADER IMPROVEMENT BUT LET'S KEEP THINGS IN PERSPECTIVE. WE HAVE THE MAGNIFICENT SEVEN IN MARKET CAP, LARGER THAN MSCI EUROPE AND JAPAN COMBINED. THAT JUST TELLS YOU THE SCALE OF THESE COMPANIES AND THE POWER OF THESE COMPANIES. I'M NOT TRYING TO FADE THAT. THAT IS NOT SOMETHING -- THAT IS SOMETHING I RESPECT AS OPPOSED TO TRYING TO STAND IN THE WAY. LISA: YOU ARE PAINTING A PORTRAIT OF SOMEBODY STANDING IN FRONT OF A COUPLE OF TEXTS, AND IT CREATES THIS EXISTENTIAL QUESTION. EVAN BROWN OF UBS, WE APPRECIATE YOUR TIME. IT'S GET YOU AN UPDATE ON OTHER STORIES WITH YOUR BLUEBIRD BRIEF. >> THE BRITISH NAVY SAID A GREEK OWNED COOL SHIP WAS DESTROYED BY AN UNMANNED VESSEL IN THE RED SEA, THE LATEST SIGN THAT HOUTHIS MILITANTS ARE SHOWING NO SIGNS OF SLOWING ATTACKS ON INTERNATIONAL SHIPPING VESSELS. IT SENT INSURANCE COSTS TO NEARLY DOUBLE THE PRIOR RATES. FAMILIES OF THE VICTIMS OF TWO FATAL 737 MAX CRASHES ARE ASKING THE JUSTICE DEPARTMENT TO FINE BOWIE NEARLY $25 MILLION, SAYING THAT THE COMPANY COMMITTED "THE DEADLIEST CORPORATE CRIME IN U.S. HISTORY." 15 VICTIMS FAMILIES SUGGESTED THAT 14 TO $22 BILLION OF THE TOTAL AMOUNT COULD BE SUSPENDED OF BOEING PUTS THE FUNDS TO AN INDEPENDENT MONITOR AND IMPROVEMENTS TO THE SAFETY PROGRAM. THIS COMES ONE DAY AFTER DAVE CALHOUN-BASED PUBLIC GRILLING BY U.S. SENATORS, AND MORE THAN HALF OF ALL BANKING JOBS ARE LIKELY TO BE DISPLACED BY AI, ING TO RESEARCH FROM CITI , SAYING 12% OF ROLES COULD BE AUGMENTED BY THE TECHNOLOGY, ADDING THAT AI MAY NOT LEAD TO A DROP IN HEADCOUNT AS THE NEED TO HIRE MORE COMPLIANCE OFFICERS AND AI MANAGERS GROWS. LISA: EVAN, ARE YOU BEING REPLACED BY AI? EVAN: HOPEFULLY NOT. UNLESS YOU WILL HAVE NAI PERSON TALKING -- AI PEOPLE TALKING TO YOU, I THINK THEY WILL STILL NEED ME TO INTERPRET WHAT IS GOING ON WHILE THE MACHINES ARE UNDER CONTROL. LISA: UNDER REPAIR. EVAN BROWN, THANK YOU, UNDER SURVEILLANCE, SETTING THE DEBATE STAGE. >> IT IS REALLY POPULISM WITHOUT ANY ANCHOR TO PRINCIPLES. I'M A BIG BELIEVER THAT YOU WOULD LIKE YOUR PARTY PLEDGING FIDELITY TO A SET OF PRINCIPLES AND POLICIES VERSUS A PERSON, AND I DON'T THINK A PERSONALITY TYPE POLITICS IS DURABLE. LISA: THAT IS COMING UP NEXT. THIS IS BLOOMBERG. LISA: A LITTLE BIT MORE THAN ONE HOUR -- TWO HOURS UNTIL THE OPENING TRADE. WE DID GET THE BANK OF ENGLAND RATE DECISION THAT WAS WIDELY EXPECTED, 7-2 TO KEEP RATES ON HOLD AT 5.25%. MARKETS LITTLE CHANGED IN THE U.S., UP .40% ON THE S&P. YIELDS AT 4.24 IN THE U.S. OVER IN ENGLAND, THIS IS TREATED AS A DOVISH INTERPRETATION AS THE BANK OF ENGLAND HINTS AT THE POTENTIAL READINESS TO CUT LATER THIS YEAR. OR ON THAT THROUGHOUT THE DAY. UNDER SURVEILLANCE THIS MORNING, A FOCUS ON THE U.S. SETTING THE DEBATE STAGE. PAUL: I THINK TRUMP HAS TAKEN OVER THE REPUBLICAN PARTY, IT IS A POPULISM WITHOUT ANCHORS TO PRINCIPLES. I'M A BIG BELIEVER THAT YOU WOULD LIKE YOUR PARTY PLEDGING FIDELITY TO A SET OF PRINCIPLES AND POLICIES THAT SOLVES PROBLEMS VERSUS A PERSON, AND I DON'T THINK A PERSONALITY TYPE POLITICS IS DURABLE, SO I DO THINK AT THE END OF THE DAY, OUR PARTY, LIKE IN THE PAST, WILL HAVE A BIG DISCUSSION ABOUT WHAT WE STAND FOR, WHAT ARE OUR IDEAS AND PRINCIPLES? AND WHO ARE THE BEST PEOPLE CAPABLE OF CARRYING THEM FORWARD? LISA: THE FIRST DEBATE BETWEEN PRESIDENT BIDEN AND FORMER PRESIDENT TRUMP IS A WEEK AWAY AS PEOPLE SPECULATE ON WHO TRUMP WILL ANNOUNCE AS HIS RUNNING MATE. WRITING THIS, WE HAVE SEEN DETAILS ON THE FUTURE PATH OF TAX POLICY, IMMIGRATION, AND RESPONSE TO DELIVER -- GEOPOLITICAL EVENTS THAT WE ARE WATCHING FOR 2025 POLICY OUTCOMES, AND ED MILLS JOINS US NOW. THAT IS WHAT I WOULD LIKE TO TALK ABOUT MORE THAN THE PARLOR GAME OF WHO MIGHT DO WHAT AHEAD OF THE DEBATE TO PREPARE. WHEN IT COMES TO POLICY, WE TALKED ABOUT THE BANK OF ENGLAND AND THE FACT THAT THEY DID NOT CUT RATES BUT THEY FELT THE NEED TO SAY, WE DO NOT WANT TO TAKE POLITICS INTO CONSIDERATION. HOW MUCH ARE YOUR CLIENTS TAKING POLITICS INTO CONSIDERATION WITH RESPECT TO DEFICITS AND WHAT THAT MEANS FOR THE RATE PATH GOING FORWARD? ED: THIS IS A HUGE ISSUE BECAUSE THERE ARE A LOT OF KNEE-JERK REACTIONS TO WHO MIGHT BE BETTER FOR CERTAIN POLICIES, BUT ONE THING WE HAVE HIGHLIGHTED ARE THESE TWIN FISCAL CLIFF THAT START AS SOON AS JANUARY 1 NEXT YEAR WITH THE RETURN OF THE DEBT LIMIT AND THEN THE EXPIRATION OF $4.6 TRILLION WORTH OF TAXES ON DECEMBER 31. I CERTAINLY THINK THE MARKET WOULD HAVE A REACTION THAT IF A TRUMP VICTORY WERE TO OCCUR, IT IS MORE LIKELY THOSE TAXES GET EXTENDED, BUT WHEN WE TALK ABOUT THE BANK OF ENGLAND, ONE QUESTION I GET A LOT IS DOES THE U.S. HAVE A LIZ TRUSS MOMENT? WERE THERE IS A DESIRE TO DO THESE THINGS BUT IS THERE THE ABILITY IF THERE IS THE MOVEMENT AND TREASURIES? A GROWING QUESTION AND GETTING HIS WHO IS MORE INFLATIONARY? WHEN WE LOOK AT SOME OF THE TRUMP POLICIES ON TAXES, TARIFFS, IMMIGRATION, AND CONTINUATION OF THE FISCAL UNDER BIDEN, ARE WE GOING TO SEE A SECOND WAVE OR WILL THERE BE A DEBATE ABOUT IT? DOES THAT STOP THE FED FROM CUTTING, AND IS IT HIGHER FOR LONGER THERE? THESE WILL BE HUGE DEBATES THIS YEAR AND NEXT YEAR. ANNMARIE: THE PRESIDENT OF THE UNITED STATES IS NOT A KING AND WILL HAVE TO DEAL WITH CONGRESS, WHOEVER IT IS. IT LOOKS LIKE WE COULD HAVE A DIVIDED GOVERNMENT. WHAT DOES THAT MEAN FOR THE RATE OF INFLATION? ED: I THINK THAT IS PROBABLY WHERE WE GET THE LEAST AMOUNT OF POLICY CHANGES, BUT ONE THING WE HAVE HIGHLIGHTED IS THAT OF PREPARATION FOR A POTENTIAL SWEEP IS WHAT THE CLIENTS NEED TO DO, SO IF I TOLD YOU ONE THING THE DAY AFTER THE ELECTION, YOU MIGHT KNOW THE REST OF THE STORY. IF YOU WOKE UP THE DAY AFTER THE ELECTION AND I TOLD YOU, KRATZ MAINTAIN CONTROL OF THE SENATE, THAT IS PROBABLY A DEMOCRATIC SWEEP BECAUSE ESPECIALLY WITH THE TIEBREAKER, THE DEMOCRATS HAVE PROBABLY TAKEN OVER THE HOUSE. IF I TOLD YOU THE DAY AFTER ELECTION THAT REPUBLICANS DEFIED ODDS AND KEPT THE HOUSE OF REPRESENTATIVES, THAT IS PROBABLY A REPUBLICAN SWEEP, 40% ODDS, SO THOSE TWO TOGETHER IS A TWO THIRDS PROBABILITY, SO PREPARING FOR THE SWEEP AND RECONCILIATION MAY BE CHANGES TO THE FILIBUSTER ARE THE MOST PRUDENT THING YOU COULD BE DOING RIGHT NOW AS YOU THINK ABOUT THE ELECTION AND THE IMPACT ON THE MARKET. ANNMARIE: FOX NEWS HAD A NATIONAL SURVEY OUT FOR THE FIRST TIME EVER AND BIDEN IS SEEN BEATING TRUMP HEAD-TO-HEAD SINCE OCTOBER. WHAT DO YOU THINK THE BIDEN ADMINISTRATION NEEDS TO DO TO MAINTAIN A POLLING NUMBER LIKE THAT, ESPECIALLY AS THEY PREPARE FOR HIM TO TAKE THE DEBATE STAGE NEXT WEEK? ED: I THINK WHAT THE BIDEN CAMPAIGN WOULD SAY IS WHAT JOE BIDEN HAS SAID FOR YEARS, DO NOT COMPARE ME TO THE ALMIGHTY, COMPARE ME TO THE ALTERNATIVE. AS WE LOOK TO THE DEBATE NEXT WEEK WITH THE BIDEN CAMPAIGN, THEY WOULD LIKE TO MAKE THIS A REFERENDUM ABOUT DONALD TRUMP. IF THIS IS A REFERENDUM ON JOE BIDEN, HE IS UNDERWATER AND FAVORABILITY RATINGS, ONLY 25% OF THE COUNTRY BELIEVES WE ARE ON THE RIGHT TRACK, LASHING WARNING SIGNS FOR AN INCUMBENT SEEKING REELECTION, SO THE MORE THAT THEY CAN MOVE IT OVER TO THE REFERENDUM, AND THEN, SECONDLY, MAKE SURE THAT HYDEN CAN WIN IN THE SWEEPSTAKES OF WISCONSIN, MICHIGAN AND PENNSYLVANIA BECAUSE BIDEN CAN LOSE GEORGIA, NEVADA, AND ARIZONA AND STILL HAVE 270 ELECTORAL COLLEGE VOTES, SO IT IS THE FOCUS ON THE BLUE WALL BUT ALSO MAKE SURE THAT THIS IS A SHIFT OVER TO DONALD TRUMP. LISA: ED MILLS, OF RAYMOND JAMES, THANK YOU. THIS WILL BE ONE OF THE KEY ISSUES, HOW THIS PLAYS OUT. TO THIS POINT, EVEN IF YOU KNOW WHO WILL BE THE CANDIDATE AND WHO WILL WIN, HOW DO YOU UNDERSTAND THE POLICY TRAJECTORY FROM THAT? DANI: WE ARE IN A VICIOUS CYCLE WHERE YOU HAVE A REPUBLICAN PRESIDENT WHO CUTS TAXES, AND THEN A DEMOCRAT ONE LEAVES THOSE CUTS IN PLACE, AND THEN IT IS A CYCLE THAT KEEPS GOING ON AND ON. THE QUESTION IS, WHAT STOPS IT? IS IT A LIZ TRUSS MOMENT? IS IT AN ECONOMIC DOWNTURN? DISTANCING LIKE THE MOMENT OF RECKONING IS ON ITS WAY. ANNMARIE: IT IS ALL A SMALL SLIVER OF THE PIE, UNTIL THEY DECIDE TO DEAL WITH ENTITLEMENTS, THE FISCAL TRAJECTORY WILL BE WHERE WE ARE NOW, WHICH SOME SAY IS A DANGEROUS PATH FORWARD. LISA: STEVE EISMAN IS COMING ON NEXT WEEK. A LOT OF PEOPLE AGREE WITH HIM AND THEY ARE HOPING FOR THIS LIZ TRUSS MOMENT TO INJECT DISCIPLINE, AND A LOT OF BOND INVESTORS ARE SAYING, IT IS MY JOB BECAUSE IT HASN'T WORKED. COMING UP, WE LOOK AT U.S. HOUSING WITH JONATHAN MILLER OF MILLER SAMUEL, AND WE ARE LISA: ABOUT TWO HOURS TO THE OPEN OF THE TRADING DAY AS WE LOOK AT MARKETS TO HAVE A 30-SECOND RECORD HIGH IN THE UNITED STATES. WE ARE ALMOST AT 5600. WHEN YOU THINK ABOUT WHERE WE WERE AT THE BEGINNING OF THE YEAR, ANYONE WHO SAID 5600 WOULD HAVE BEEN LEFT OUT OF SCHOOL. LOTS OF PEOPLE CONVALESCING AROUND HIM. NVIDIA SHOULD BE ITS OWN INDEX, UP .6%. THE RUSSELL 2000, GUESS WHAT, IS UNDERPERFORMING YET AGAIN DA. GROWTH PROBLEMATIC, THAT IS NOT GOOD EVEN IF YIELDS ARE LOWER. IN THE YIELD SPACE, THIS IS WHAT I'M WATCHING. BASICALLY COMING OFF SOME OF THE EARLIER HIGHS AFTER THE BANK OF ENGLAND DECISION. THEY WANT TO CUT RATES, EVERYONE WANTS TO CUT RATES, DANI. 2-YEAR YIELD'S UP JUST ABOUT A BASIS POINT AT 4.72. HOW LONG CAN IT BE BEFORE THIS IS LIKE LUCY WITH THE FOOTBALL, THE RATE HIKE THAT WASN'T, THE EXPECTATION THAT EVERYONE HAS BEEN STRINGING ALONG WITH ALL THE CENTRAL BANKS FROM MONTH TO MONTH. DANI: CENTRAL BANKS SPECIFICALLY IN THE U.S. ARE NOT HELPING. WE NEED MORE DATA. HOW MANY OF THESE CENTRAL BANKS WILL BE WILLING TO CUT WHEN THE FED IS NOT DOING IT? THE ECB WENT AHEAD WITH IT, SNB HAS GONE AHEAD WITH IT TWICE. BUT THERE ARE CONSEQUENCES. THE SWISSIE IS DOWN THIS MORNING. WE CAN KINDLY AND IT WILL NOT BE HORRIBLE OR DO YOU HAVE TO SAY WE HAVE TO WAIT FOR THE FED? LISA: THE SWISSIE, THEY WERE EXCITED TO SEE A WEAKER CURRENCY. LET'S SEE HOW LONG THAT WORKS. YOU CAN SEE THE EURO SOFTENING A TOUCH VERSUS THE DOLLAR. POTENTIALLY LESS VOLATILE THAN LAST WEEK ONE POLITICAL RISK GOT REINJECTED. PEOPLE TAKE A LOOK AT THE IDEA OF THE DOLLAR STILL REMAINING PREEMINENT DESPITE PROMISES ON RATE CUTS THAT SEEM TO BE DELAYED. UNDER SURVEILLANCE THIS MORNING, THE BANK OF ENGLAND KEEPING RATES ON HOLD, HITTING POLICY MAKERS BE CLOSE TO BACKING INTEREST RATE CUTS. THIS WAS THE MOST INTERESTING ASPECT OF THIS. DESPITE THE STICKINESS IN INFLATION, THEY ARE STILL READY TO GO. ANNMARIE: THIS REALLY WAS DOVISH WHEN IT CAME OUT DAVID NO ONE THOUGHT THEY WERE GOING TO MAKE A MOVE TODAY ESPECIALLY GIVEN IN A WEEK AND A HALF TIME WE WILL HAVE A FRESH U.K. ELECTION. WHAT YOU SEE IS TRADERS PILING IN, THE BETS FOR AUGUST ARE STARTING TO RAMP UP. POTENTIALLY BEFORE THE SUMMER IS OVER, WE WILL SEE THIS CUT FROM THE BOE. LISA: MEANWHILE, DOES IT EVEN MATTER? DANI, FRAMING IT, THE AI RALLY POWERING ON LED BY NVIDIA. CLINCHING THE TITLE OF THE WORLD'S MOST VALUABLE COMPANY AFTER OVERTAKING MICROSOFT AND APPLE. SHARES RISING IN PREMARKET TRADING. BLINK AN EYE AND YOU GET ANOTHER $100 BILLION. WHO IS GOING TO STAND IN THE WAY OF THIS FREIGHT TRAIN? DANNY, AT A CERTAIN POINT, HOW MUCH DOES THIS DIVERGE COMPLETELY FROM THE U.S. MARKET, FROM ALL RATE CUTTING DISCUSSIONS? DANI: IT IS NOT THE U.S. MARKET, IT IS LITERALLY NVIDIA DIVERGING FROM EVERYTHING. THE ONLY PROBLEM IS IF YOU HAVE OTHER COMPANIES LOOKING AT THIS AND SAY THAT THEY HAVE TO BECOME AN AI COMPANY. YOU SEE THIS WITH DELL. NOT SPECIFICALLY FOR DELL, BUT IF YOU HAVE ALL OF THESE COMPANIES SPENDING A HUGE AMOUNT OF MONEY ON LITERALLY THE SAME THING, THEY MIGHT DISCOVER THEY DON'T HAVE THE MOAT THAT THEY HAVE AROUND THEIR CORE BUSINESSES AS THEY DO WITH AI IF THEY ARE ALL DOING THE SAME THING. ANNMARIE: HE WRITES, THE PARTY IS JUST GETTING STARTED. IT IS NOT :00 P.M. -- 9:00 P.M. GOING UNTIL 4:00 A.M. WITH THE REST OF THE TECHS STARTING. THE QUESTION IS WHAT HAPPENS WHEN THE COPS COME TO THE PARTY? LISA: AGAIN, WE GO BACK TO SOME OF THE PARALLELS. THE WALL STREET JOURNAL PUTTING THIS OUT YESTERDAY, WAS TELLING. THE LAST TIME WE SAW THIS OPERA PERFORMANCE, COMPUTER INFRASTRUCTURE COMPANY TAKING THE HELM LIKE WITH CISCO IN MARCH OF 2000, WE KNOW WHAT HAPPENED. PRESS U.S. DATA COMING OUT, JOBLESS CLAIMS, HOUSING STARTS, AND BUILDING PERMITS. THIS COMES AFTER U.S. MORTGAGE RATES FELL BELOW 7% FOR THE FIRST TIME SINCE MARCH. THE MARKET JONATHAN MILLER WRITING THIS. MANY WOULD-BE BUYERS HAVE BEEN WAITING TO AND A YEARS TO SEE EASING RATES. THIS TO ME IS ONE OF THE MOST INTERESTING QUESTIONS. THERE IS THIS BELIEF THAT WHEN YOU CUT RATES, YOU CAN DO SO IN A WAY THAT WILL NOT REIGNITE ANIMAL SPIRITS. ONLY 25 BASIS POINTS ON A RATE CUT REIGNITING INTEREST IN THE HOUSING MARKET. HOW DOES THAT FACTOR INTO PRICING, THIS IDEA THAT WE CAN GET A SOFT LANDING WITH RATE CUTS GIVEN THE BACKDROP WE HAVE NOW? JONATHAN: OUTSIDE TO RESPOND THROUGH THE 25 BASIS POINT CUT, MODEST CUT OF SOME SORT, YOU HAVE TO THINK OF THE LAST TWO AND A HALF YEARS HAS BEEN THIS ERA OF PENT-UP DEMAND. SUDDENLY THE LEGS ARE CUT OUT FROM UNDER THE HOUSING MARKET AND PEOPLE THAT WERE IN THE PROCESS OF THINKING ABOUT IT WERE STOPPED IN THEIR TRACKS. THE PROBLEM WITH THE WAITING PART IS THAT WHEN YOU HAVE, IF YOU HAVE A RATE CUT AND SURGE IN ACTIVITY, YOU'LL SEE PRICES RISE AGAIN E. THE REASON WE HAVE AT SUCH PRICE GROWTH, INVENTORY HAS BEEN LACKING. WE ARE SEEING INVENTORY COME IN, BUT WE HAVE NOT SEEN THE SAME AMOUNT OF DEMAND RESPOND TO IT BECAUSE OF RATES. WHEN YOU SEE RATES CUT, AND THE SHORT RUN, YOU WILL SEE A SURGEON DEMAND. THAT WILL KEEP PRICES ELEVATED WHICH HAS BROKEN ALL THE RULES OF ECONOMICS WHERE WE ARE TALKING ABOUT RECORD PRICES AND MORTGAGE RATES ARE MORE THAN DOUBLE WHERE THEY WERE. LISA: THERE WAS A THEORY THAT WHEN THE FED CUTS RATES, THAT