Lisa heading into a week of important inflation data and two of us are live in d. C. , one of us is in paris, and dani burger is a new york. Welcome to bloomberg surveillance. More on why we are all over the place in just a moment. Important week kicks off on wednesday with data releases that make solidify a narrative that has been flipping and flopping. Why wednesday is going to be so important . Dani wednesday will be so important because this market has decided that with the week data coming from the consumer, the week data coming from jobs moving in the wrong direction, if inflation does not also soften maybe well Start Talking about stagflation. Lisa that is part of the fear. We are in washington, d. C. Lets get to the why. And reorder, you have important annemarie, you have important interview with janet yellen coming up at a time when industrialization and the china u. S. Relationship is what every ceo and politician is focused on. What will be your focus . Annmarie we are sitting down and she will be in virginia talking about money flying out the door in washington talking about inflation reduction act, talking about broadband, bringing it to rural americans. At the same time we look ahead to tomorrow. The president will announce tariffs going up, the walls going up when it comes to those imports from chinese goods when it is batteries, electric vehicles, solar. We have remember, a lot of this is symbolic. Some of these materials are not even in the United States right now. Lisa it also raises the question about what it will do for inflation or the economic trajectory given the fact a lot of people thought this would be something that could put a damper on certain activity. Inflation, i know your focus on electric vehicle policy very much has peoples attention but inflation is in the forefront of peoples minds. Annmarie look at Consumer Sentiment friday. It was a huge push lower. If you look at what individuals in america are thinking about and what inflation will be come in their mind they are starting to think and it will be higher. It is the psychological effect. Even though you have the Biden Administration talking about the inflation reduction act, American Rescue money going out the door, they want to build up the capacity, they are talking about how they will talk tough on china. At the same time poll after poll shows it is inflation americans are most concerned about. Lisa we have amh talking to janet yellen. Jonathan ferro is in paris and he will be speaking with David Solomon of Goldman Sachs. I am here to worry about the deficit. Coming up, janet yellen. Emmanuel macron with john micklethwait, our executive in charge of bloomberg news. And David Solomon with Jonathan Ferro coming up from paris. A question about how some of these executives deal with some of the crosswinds we have seen get more significantly fraught. What we are seeing in markets is the longest streak of gains on the s p back to early february. Right now we are starting to continue it. Up. 1 on the s p. Some people were saying this is the beginning of a correction. A little bit of Dollar Strength all over the place with a bit of yen strength overnight given the fact that japanese authorities did not buy back as many bonds as many people were expecting. A downward trajectory for 10 year yields. Only lower 13 or 14 basis points where they work at the end of april. Interesting trajectory given how much people have pushed back rate hike expectations. Crude higher but lower last week. Coming up, and important week given the fact we are looking at what happens on wednesday with a pair of data releases. Retail sales as well as consumer cpi, which together will give you a sense of whether this is stagflation, whether this is goldilocks, or whether this is a no landing. Today we have new york fed data coming out about forwardlooking Inflation Expectations. Tomorrow we get ppi. Chair powell will be speaking as well as lisa cook. We will also be getting home depot earnings. On thursday we get walmart earnings as well as a host of fed speak. Coming up we have Cameron Dawson of new age wealth and u. S. Growth in the consumer very much and focus. Terry haines of pangea policy, and john ryding on the fed outlook with ppi and cpi on deck. The s p 500 looking to build on three weeks of gains as investors prepare for a busy week of data. Cameron dawson of new age saying this market continues to be all about growth. As long as gdp and Earnings Growth are not revised lower this market has been able to shake off a tighter fit until high rates, maybe until now. I would like to get your take on how important wednesday will be to understand whether we are in no landing, goldilocks, or the dreaded stagflation. Cameron i think retail sales will be the most in focus, meeting are we still in a world where this market is able to shake off bad news and consider it good news because the fed can bail you out. Economic surprises have plunged over the last couple of weeks and are now in negative territory, the most negative they have been since 2022. In 2020 two we were cutting estimates for gdp rapidly, which was leading to this weeks selloff within equity markets which was leading to this weak selloff within equity markets. Can we still be in a world where economic surprises are week and equity markets move higher . We are not sure which is why we watch gdp estimates and Earnings Growth estimate so closely. Lisa this raises the question about how close we are to the stagflation, something where we could see Inflation Expectations stay higher or yields remain sticky. Fed expectations pushed out to september, but more bad news priced into equity markets looking for reasons to rebound. Cameron if you are looking for the stag start with pmi. That is where we saw most services and manufacturing. We saw employment turned down, the outlook turned down from and prices jumped up materially. If that is the picture of the rest of the economy, that is where you start to see sticky inflation. You are not getting the growth to offset it. The thing with equities that is important to remember is equities like the inflation, meaning it gives them Pricing Power. If all of the Asset Classes would tolerate that environment, it would be brought equities. It raises the question of what does the fed doing that scenario if you have sticky inflation but growth is not holding up . Annmarie how concerned are you about the Consumer Sentiment data last week, the lowest in six months . Cameron Consumer Sentiment has been one of those where it is watch what they do, not what they say. Consumers have been able to spend even though they have been reporting a sour outlook about what they are thinking about the economy and their forward outlook for incomes and overall financial situations. Are we at the point where Consumer Sentiment is picking up on moderating real wage growth . That is important because we have seen wages moderate and inflation is staying sticky. Real wage growth has been recovering for much of the past year and is starting to stagnate. That is one of the reasons Consumer Sentiment turned so much lower last month is consumers are feeling the pinch from inflation and starting to lose purchasing power in their feeling sour about it. Annmarie what kind of equities you want to be exposed to if that is the environment we are preparing for . Cameron we still like largecap highquality equities because you get the combination of a few things. You get good Balance Sheets, which means they are able to deal with higher for longer better. And the smaller cap areas of the world you have Balance Sheet that have more floatingrate debt which means the Balance Sheet can get pinched if the fed is not cutting Interest Rates. In the largecap quality part of the world you also have Pricing Power and good return on invested capital. What we look at is across sectors we are looking for the highest quality names at the top of each sector that have the ability to navigate this environment, even if it means a more challenging the one than we have been in over the last year. Lisa we are setting up the week very well in we are focused on what happens wednesday with Economic Data. We are in washington, d. C. Dani is a new york. What we are dealing with with jonathan in paris is global ceos trying to act as ambassadors for United States at a times of uncertain foreignpolicy. How are you watching some of the tariffs that will come out that are hewing or to the industrialization side . Cameron we have to see the counter of it. On the one hand we have tariffs which could disrupt supply chains. We also have huge fiscal spending. You mentioned broadband. We are seeing spending flowing down to industrial names. Back to pmi, weve seen a huge surge in manufacturing and construction. It is not showing up in pmi and broadly being enjoyed by the broad manufacturing sector. What we think is you continue to have this push and pull between tariffs and fiscal spending which creates uncertainty and disruption but good company should be able to navigate that. Lisa which raises the question on the others. I am actually here to worry about the deficit. You have a lot of people getting together from the congressional budget office, from wall street to wonder how much we have to pay her about an unprecedented debt load in this country and how much it will start to bite on Interest Rates. We heard last week that the deficit people are just wrong and they have been for the past 30 years. Are you among the deficit people that are watching this trickle into some of the pricing in the next couple of months . Cameron it is one of those things that it is not a problem until it is and we would look at the bond market to price and some of that stress or uncertainty because we saw that in a very short window last year when treasury increased coupon issuance and we saw treasury yields in the 10 year selloff rapidly. When we think about going into the election, the biggest take away is Neither Party is talking about austerity, which means this is different from times of high deficits like coming out of the great financial crisis where in 2010 you had the tea party and you had the budget control act which whiz which was from an austerity pushed by voters. It does not seem to be a priority for voters which is why we think we will not hear much from either party. This means get used to higher coupon issuance and higher deficits because it does not seem like either party wants to push austerity. Lisa will be talking about that throughout the day and throughout the year. Cameron dawson of new age wealth, thank you for being with us. That is what we heard from donald trump in terms about exactly an austerity pushed. Annmarie it will not be an austerity push regardless of who is in power. Next year, this is what David Malpass told me, this perfect storm. Another debt ceiling fight, the fiscal spending fights, but also the tax the trump era tax cuts will expire. What does that mean for the deficit . Lisa probably we will get more tax cuts based on the renick we heard overnight. Here is your bloomberg brief. Yahaira amazon, pfizer, microsoft, and Morgan Stanley are among the company is poised to boost their presence in france. Emmanuel mack ron will host 180 ceos and executives for the choose france summit. The event now in its seventh year is part of the push by the government to attract Foreign Companies and make it a Financial Hub for the postbrexit European Union. Donald trump pledge to double down on tax cuts if he wins a second term as president. Speaking at a rally in new jersey trump said instead of abided tax hike i will give you a trump middleclass upper tax, lowerclass, business class, big tax cut. President biden has called for tax hikes on businesses and the richest americans. Campus protests over the war in gaza are colliding with College Graduation season. Paris seinfeld was the Commencement Speaker at Duke University, or about 30 students walked out chanting free palestine and waving flags. Seinfeld did not address the protests. Protesters also showed up at the uc berkeley commencement saturday by the school says the protesters left voluntarily. More schools have threatened protesters with arrests or expulsion if they did not clear out propalestinian encampments ahead of graduation ceremonies. That is your bloomberg brief. Lisa , Antony Blinken issuing a strong warning to israel. Israel is on the trajectory to inherit an insurgency, and if it leaves, a vacuum filled by chaos, anarchy, and probably refilled by hamas. Lisa that conversation is coming up next. You are watching bloomberg surveillance. Lisa tony blinken over the weekend doing the rounds on a number of different shows issuing a strong warning to israel. Israel is on the trajectory to inherit an insurgency with many armed hamas left or if it leaves, a vacuum filled by chaos and anarchy and probably refilled by hamas. We have talking to them about a better way of getting an enduring result in gaza itself and more broadly in the region. Lisa u. S. Concerns growing as israel increases its gaza offensive. U. S. Secretary of state Antony Blinken warning of a postwar gaza still armed with hamas militants, adding israel has not presented plans for the enclaves future. Terry haines of pangea policy joining us for more. We did see Antony Blinken making the rounds, talking about how there is a question on whether there been humanitarian violations, but they continue to have the full support for israel. Is there anything conflicted about the message from the Biden Administration . Terry the message from the abided administration is nothing but conflicted. Secretary blinken, what he had to say in your bumper he could have said and probably did say six months ago. They certainly need an exit plan. United states is being coy about what the better way is. Beyond that, every participant in the region will want to know two things. What is the plan . Is it these of all . Will United States stick to it. 20 years ago george w. Bush issued a bunch of guarantees in that region that were systematically stripped away by the Obama Administration and not followed up on by the Biden Administration. Not saying that to make a partisan point, i am singing to say the United States needs to get in there and stick in there and needs to move things forward, not just with israel but with the region. Annmarie how much of this is because of growing domestic pressure on the Biden Administration . Terry some of it certainly. I love percentages but i would be fully on this one. It is bullish to say there are no politics involved. At the same time you have a situation where there are too many cooks in the kitchen. The president looks muddled at a time when the United States needs clarity. Annmarie we are moving closer to the election. Domestic pressure when it comes to what is happening in gaza. Also tomorrow the president is set to unveil sweeping terrified on a number of evs, solar batteries. You say all of this is noise . Terry for a couple of reasons. Tariffs already exist. Cranking out tariffs is not the biggest news in the world. Secondly, what markets may miss is you have a situation where it is not just about tariff policy, not just about ships, not about a few things the administration and congress are doing to try to meet chinese competition. What we are sliding into now is a situation where either administration, either the Biden Administration or the Trump Administration will deal much more forth lately with the Defense Industrial base going forward. That is a signal out of the tariffs decision to put the markets may miss. Lisa this raises the question of how much more capacity United States has to do this given the fact that some people are worried about the deficit and you have this concern about the increased size of options. Is there is a sense there is a capacity in the budget to increase spending on defense, increase spending on the chips act and things of that nature . Terry the politics are not coherent. You have two political parties. One that denies the deficit a problem, one that wants to pretend they are dealing with a deficit problem by cutting 1 out of 30 discretionary spending. Neither party is serious. What you will get as your previous guest talked about is you will get deficits into the far future. Neither biden nor trump will be able to fix this, unless you get a situation where there is an already republican sweep in washington which is at best a 30 possibility, it is not my base case. What you get is a situation that is premuch like the status quo. People not care about deficits but they will throw as much incentive as they possibly can at building the Defense Industrial base even more. Annmarie this is going to be pivotal next year because there is the debt ceiling fight and the potent