Surveillance. Jonathan good morning, good morning. This is bloomberg surveillance. Posited by 0. 2 on the s p. Chairman powell would like a little bit more data. Going into the Federal Reserve meeting last next week, will he have sufficient evidence to change his view on the economy . Lisa people are really looking at this as being one of the most important in the last couple of years which is what we hear every single time, this time or option more often. The idea here is if you see another hotter than expected cpi print, you will start to reprice the Federal Reserve so they cannot cut rates until well after june. The question is exactly the same. The question on wall street has not changed. While the upside surprise a oneoff or not . We dont expect the report to provide clear and of evidence of disinflation to boost the fed confidence to cut Interest Rates. This is about how we set up that meeting going into next week. What i extrapolated yesterday was actually how they view inflation averaging the rest of the year. When we sit and talk at stabilization of inflation, the fed is going to get closer to 3 , the white house is actually more pessimistic than even our own economist we surveyed. Jonathan can we talk about the boj as well . I feel like we are going to be doing this every single day going into the bank of japan according to people familiar with the matter it could come as soon as next week. The first Interest Rate hike since 2007 and going back to what you set over the last 24 hours, it will come down to what those negotiations look like on friday. Lisa i thought this latest piece of reporting was pushing back a little bit and that the outcome was too close to call. Markets saying that this is a done deal. Do they have a path to walk through and how much the bank of japan depends in some ways on the cpi print and what that means for the Federal Reserve. Jonathan we could get the first hike from the boj since 2007 i want to talk about tiktok as well. This is the number two republican on whether this bill is going to pass on wednesday. Yes, it will. Some opposition from dollar trump, it does not look like that is going to shake votes. Looks like it is going to sail through the house as it sailed through that committee and then it is set up for the senate. Schumer put it on the senate floor. Biden says if it passes Congress Even though his campaign is currently using it, he will sign this bill. And then it is off to the races. And a lot of people are talking about the fact that they dont actually see a ban, they just see someone else taking it over and potentially that would mean a safer tiktok in the eyes of regulators and officials. Lisa so here is what former President Trump had to say. Frankly there are a lot of people at tiktok that love it. A lot of young kids will go crazy without it. There is a lot of good and a lot of bad but the thing i dont like is that without tiktok you make facebook bigger and i consider facebook to be an enemy of the people along with a lot of the media. So that is his view. Jonathan some people might share that view. Lets park tiktok and the former president and approach the story like this. Any other story, if we conclude that it poses a National Security risk and there are politicians down in washington that are unwilling to take people from National Security risk, we would all be saying what on earth are they doing . So i think we should all be saying that regardless. They have all concluded that this could pose a National Security risk. The sitting president is campaigning on it and there are people in washington can do during not to pass a bill that would protect you from the. That is kind of bizarre to me. Lisa if you wonder why washington, d. C. Has lost some credibility, show us all the evidence and then do something about it. It is not, take a laissezfaire attitude. Annmarie all they need to do is look at what happened yesterday in terms of intel hearing is for ray talking yet again about a National Security threat and also the global report on national threats, and they mentioned tiktok specifically. Playing politics of the United States midterm elections. If you are an elected official and you read this report through and through, theres obvious concerns. Some of this has to do with money and Campaign Donations and on the left it has to do with taking sure you are reaching that youth vote. Jonathan without a doubt, that is why people cannot stand what happens in the nations capital. Lisa pleasing kids and getting money. Jonathan youre facing a National Security risk and you are worried about what the kids might say. Are you serious . Lisa are you actually surprised . You actually feigning surprise right now . Jonathan im not, but if you are wondering why people get frustrated with politicians, wonder no more. Annmarie hes obviously having a grueling week yet again, if this is not banned any u. S. Company takes it over, the 150 million users it has in being the number one new source for jens the gen z may still exist. Im not sure what this means for some Republican Voters but washington may actually act this week. Steve scalise says it has the votes. Jonathan thats two minutes to many of tiktok. Positive by 0. 2 . A morning full of inflation conversation. Yields lower by a single basis point. Coming up this hour, brian levitt of invesco awaiting the latest cpi print. Tensions between President Biden and his Prime MinisterBenjamin Netanyahu ramp up and the impact of housing at labor on todays inflation data. We begin with our top story, brian levitt looking for disinflationary trends to stick, saying this. It would be a meaningful deterioration of Economic Growth that we are not forecasting. In celebration acceleration of inflation would not be at the top of my list for 2024. Good to see you and lets start with the date of the drops at 8 30 eastern time. What are you into the team looking for . When i said inflation is moving up a little bit when you look at the momentum, the good news is that is really not coming from the consumer, it is really not coming from wages. You are seeing it more on the import side which of course is what is happening commodities space. Im not extrapolating that to be heading back to where we were, this is extremely problematic. Seems like every cycle we go through including 2007, lets remember that, there is another head fake on inflation. Ultimately the effects of policy tightening start to hit. Jonathan the obsession today is about shaping the Federal Reserve decision of tomorrow. You dont seem to be dependent at all on homely times they cut this year. Im not overly concerned about the number of cuts. There recent nuance with regard to market leadership but my northstar has been the last 50 on set the markets to well after the peak of laois and, after the peak of tightening. Theres a nuance around how many cuts you are going to get when the market initially priced in six cuts which was sort of strange in hindsight. Huge smallcap rally, huge midcap rally. Now that you are backing some of that out, the market became a little bit more concentrated. Ultimately after what we went through im just happy to tightening is over and over the next year we are going to normalize the bell curve. Lisa even the people who sort of sound bearish are actually bullish. It sort of depends on your timeframe. People to see a shortterm selloff see that as a reason to buy. You might not be fomo anymore but if there is a 10 pullback you are all in. This year is likely to be no different. They dont emerge out of nowhere. They are almost always the result of policy uncertainty. If you get a couple of unexpectedly strong inflation numbers, that will be a catalyst for some type of pullback. Remember, we had an incredible start to the year and say should expect some of that, but ultimately you have to ask yourself are we on a path toward policy normalization following 520 five basis points of Interest Rate increases . Ultimately that is where we are headed in that is a positive. Lisa the key risk event really is the cpi print, talking about this acrosstheboard retracement. Where do you think gets most punished if we get a hotter than expected cpi print today . You are going to see some pain in the bond market, some pain in small caps, midcaps. Really more of that cyclical trade, we are finally coming out of this covid environment, we are finally going to be able to lower rates, finally able to normalize the yield curve. I think investors will not shift back but remain in the highest quality names if that is the case. Jonathan havent heard that word covid for a long time. Finally making our way out of that fireman. You think we are stuck in it . Not from the since we are all living in our basement anymore and it is nice to be here on set with all of you after so many years, but when i mean the covid environment, it has been such a strange for years. Your knee recently got inflation is because we put so much money in peoples pockets. Businesses have cut workers and tory at the worst time. And you have to raise Interest Rates, get a growth scare because every time the fed raises rates, getting scare. The markets fall 25 and now we are coming out of that environment and is a soft landing, is it the heartland . Until we know what that landing looks like, until we normalize the yield curve, that is still moving our way out of this bizarre environment. Annmarie but people no longer have that money in their pocket from the government and we havent seen the supply chain bottlenecks themselves, so what is left . Not a lot. What has really been driving the Consumer Price index shelter. Shelter the way it is calculated comes in with a lag. The owners equivalent brand that nobody actually pays continues to drive this. So you see this in every cycle that it lags. The fed says they are going to be datadependent but we should be looking out the future. Jonathan sounds like you got some questions about the data they are dependent on. Ultimately we are going to have a twohanded yearoveryear on cpi. The core personal Consumption Expenditure yearoveryear is already there so i think inflation is a story of the past. You may have some pickups here in the short term that could create some nearterm volatility been over the next year or two im sticking with peak inflation, pete tightening, peak rates as being very good for us. Jonathan i know who else has got some questions. Lisa i love this. Data dependency and the date it is unclear and messy and i dont the trusted. What do you do with that . I was reading report after report saying that people are not responding to the surveys for Unemployment Rate and for jobs. Youre not getting responses so you are extrapolating out into a void. Jonathan how dependent are you on the Economic Data given how perhaps direct questions about how dependable it actually is . We look at leading indicators so you dont want to be too focused on things like lag. You focus on the leading indicators were we continue police to believe in the data, real data points. What it has been suggesting is a Global Economy that is low trend. Market sentiment has been suggesting maybe things pick up a little bit here, but i would still call it a below trend environment that the fed is likely going to ease into. Jonathan brian levitt sticking with us, selfdescribed fomo guy with us for another segment. Heres an update on stories elsewhere. Bank of america disclosed pay raises of more than 10 for two of its highest ranking executives, even as its ceos compensation was cut for 2023. The ceos total pay climbed 14 to 12 million last year while the head of the Global Markets division saw a rise of 11 to 21 million. Meanwhile, moynahans pay was cut to 29 million in 2023. A bill that would force the sale of tiktok is gaining steam in the house. The legislation would block app stores and Internet Service providers from offering the video sharing app unless its chinese owner sells it within six months. Fbi director Christopher Wray told a Senate Intelligence committee there are significant National Security concerns associated with tiktok. The bill comes up for a vote in the house tomorrow. The rally issuing little signs of slowing. Futures slowing as shipments from the ivory coast came in far below last years level. Futures rising as much as 4 , erasing losses from the previous two sessions and pointing to a tighter global market. The risk of lower output from the smaller midcrop harvest has added steam to the rally which has seen the price of cocoa jump that almost 60 this year. That is your bloomberg brief. Jonathan thank you. Up next, division among allies. Im telling you that we are not getting off the gas. Im telling you that we have to take care of our future and eliminating the terrorist army, that is a prerequisite for victory. Jonathan live from new york city this morning, good morning. J. P. Morgan Wealth Management knows its easy to get lost in investment research. Get help with j. P morgan personal advisors. Hey, david ready to get started . Work with advisors who create a plan with you, and help you find the right investments. So great getting to know you, lets take a look at your new investment plan. Ok, great this should have you moving in the right direction. Thanks jen. Get ongoing advice; and manage your investments in the chase mobile app. How am i going to find a doctor when im hallucinating . What about zocdoc . So many options. Yeah, and dr. Xichun even takes your sketchy insurance. Xichun, xichun, xichun youve got more options than you know. Book now. Are everywhere you turn. But at t. Rowe price, were letting curiosity light the way. Asking Smart Questions about opportunities like advances in healthcare. And how these innovations will create a healthier world tomorrow. Better questions. Better outcomes. Jonathan two hours away from the cpi report, equity futures positive by 0. 2 . 10 year yield a little bit lower. 4. 09 . Division among allies. Im telling you that we are not getting off the gas. Im telling you that we have to take care of israels security and our future and that requires eliminating the terrorist army. That is a prerequisite for victory. Victory will come sooner the more united we are, at least not giving the appearance of division. Jonathan tensions rising between President Biden and Benjamin Netanyahu amid the rising civilian death all in gaza. Netanyahu not expected to change courses President Biden calls a planned attack redline. President bidens comments are the clearest reflection today of a growing divide between the u. S. And israel, at least biden painted into a corner if israel moves forward with operations. John, i want to talk about that redline and they want to talk about the policy potential behind the threat. What happens if netanyahu does cross that line that the president has set . I think what you get is a mostly symbolic highprofile offensive arm that the u. S. Is sending over to israel. Biden was very explicit when talking about the redline that he would not be cutting things like the iron dome, that he believed israel still had a right to defend itself, but the situation reflects because of his own domestic political concerns. This is a really difficult balancing act for President Biden to cite israel has a right to defend itself and that israel cannot trigger a humanitarian crisis in gaza. Lisa lisa a sizable majority of his voters oppose weapons shipments to israel. When he spoke and gave an interview, could you see the white house saying we prefer things like the iron dome to protect israeli civilians, but we might ratchet back some of the offensive weapons we give to israel . It is that might ratchet back issue that i think is the biggest question because theres a lot of americans who want israel to continue to push the offensive and win this war. And a lot of those americans are going to be voting for joe biden in november. I dont think there was a ton of room for the u. S. Here to condition aid. You may see some effort to do so assuming this operation goes ahead, and we assume the operation will go ahead, but israel is doing this with or without biden. It doesnt seem like the pressure the United States is putting on them is making any difference whatsoever. So it shows the limits of even the United Statespower and influence. Annmarie just a few hours ago the first ship has set to go to this port they are building for aid. Will that dissuade biden voters . Its a step in the right direction. I think that really, building port and getting more aid to the country is going to be a significantly smaller piece than the images of the offensive in rafah assuming it goes ahead and that is really what is getting biden right now. Youve got a massive humanitarian crisis in gaza. Aid is not going to help. Weve got orphan children and images of families across American Social media and that is really the political vulnerability that is going to hurt biden here. The aid is only a tiny push in the other direction. Annmarie i want to shift gears a little bit. This is definitely going to be a massive issue for President Biden. Another massive issue are going to be some of the trade policies that we have going into the election. We heard from former President Trump yesterday that he said im a big believer in tariffs and if he does impose 60 tariffs on chinese goods and they retaliate by doing the same, he doesnt car