Jonathan lets get you to the weekend. Live from new york city, good morning, good morning from our audience worldwide, we are closing out the week and heading towards the weekend, looking for four weeks of gains on the s p 500 with a sprinkle of fed speak. Kashkari, daily, and for the really committed, sunday at chairman powell commencement speech. Lisa im sure everyone around this table is very committed and some are double dipping this week. Yesterday, fed speak was kind of the same, higher for longer to gain confidence. I want to bring you to raphael bostic. If things dont go that way, im not locked into policy but if they go that way, he could see a cut by the end of the year. Annmarie i love how that is the most dovish thing you can get, but this week has shown us that there is a difference between relief and surprise. The data that we got was relieved. Surprised was the First Quarter. This week was relief, the market maybe starts to see buying and it backs off with fed speakers who dont change their tune. Jonathan same thing, here are the lyrics to the song that we all know, takes longer to gain confidence. Barkan, i think it will take more time. Williams, i dont expect to get a greater confidence in the near term. What does greater time mean . A couple of prints . Three months, five months . Dani you need to see a trend and the data is not linear at this moment. Its about seeing the trend and this is the problem with the data. To some degree the measures are outdated, accounting for a monolithic economy. We have talked about this how many times . The recovery is k shaped. Its hard to grapple with the data and we are seeing that with the fed. The data does not show us accurately what is happening. Jonathan data out of china overnight, let me go through it for you. Consumer spending is slower since 2020 two. Industrial output, thats the upside surprise with the politics coming from the nec director. China getting the same vocabulary it has before, growth at the expense of others by investing in significant dust real overcapacity. Annmarie and this is what janet yellen said to me earlier this week and we hear this from the europeans as well, concern over the Manufacturing Base in china and the overcapacity they are dumping on markets. China tilting more towards manufacturing and becoming more vulnerable to tariffs, like the ones that we saw earlier this week. Dani i cant help but wonder if that is why the chinese response was so mild. We all knew that tariffs were coming from the u. S. , china had such a long time to prepare, days of they could have hit the switch and unleashed tariffs and they didnt and i cant help but wonder if it is because of this data. Jonathan here are the scores for you this friday morning, s p futures on the 500 are unchanged, going nowhere, your 10year yield is 400 3866 with a foreignexchange dollar showing strength against the weaker euro. Ecb has more on the mixed move, 43 other eurodollar. Coming up, we check in on the ny melon on why you should remain overweight as china takes measures to prop up the economy and access managers on the independence of the ecb. Top story, stocks and bonds giving up post cpi gains. They want to stress that Global Investors remain overweight on u. S. Assets, irrespective of the fed or macro concentration risks that need to be considered with anticipated just diversification being a feature in the second half of the year. Jeff, why wait until the second half of the year . Only a few months away to start considering that . Jeff markets are waiting on confirmation that we will get policy diversions and other policy banks can go different ways and they need to know where the fed is as well as they are looking for them easing in september, later than where we work compared to six months ago, with shell shocks elsewhere. In addition, right now china is coming through less on the tariffs side and today the focus wasnt even on the data, its about the suppose it rescue of the Property Center that really opens up asia particular. If you asked me where clients are least allocated based on relative data in the benchmark, asia is where it is and maybe there is an opening for flow to redirect. Jonathan do you think that we might be seeing u. S. Exceptionalism playing out fully . Peak u. S. Dollar, behind us . Geoff going through it one by one, dollaryen is where the biggest Downside Risk is. That is as much a japan story as it is a dollar story. We think that dollar is going to be far more resilient, capable probably of somewhere in between. Equities, can be see earnings pick up in asia driven by better reflation . China has no global commodity reflation as well, benefiting america, flowing into equities and also into fx as well. Earnings, carried. Pick your sector asset carefully for diversification from u. S. Assets. Dani john hinted at this earlier, the idea of the dollar ceiling, essentially they said yesterday that what happens in july, its too soon to say, ecb policy makers are talking about the idea of one cut or they hang around. What does it do to the dollar . A lot of that strength was predicated on a pausing fed with a cutting cycle for the rest of the world. Geoff and if you look at the reaction function this week, they are far more reactive to whatever happens to the fed rather than the ecb. Conversely, i would say the market needs a euro ecb shot right now so i dont think they can afford to wait. Not until more data points come through. At some point will need consecutive cuts. Im looking for them to start in june, pretty much confirmed, july needed as well, far more to the extent that the eurodollar starts reacting to downside euro data and a dovish ecb. Thats not happening right now and its too asymmetric. Annmarie the yen is in focus this week as g7 finance ministers meet in italy. Are you expecting more language when it comes to foreignexchange . Geoff yes, but it will be behind the scenes with greater expression of concern that some currency misalignment, without pointing fingers fingers, can be distorted. Going back to central bank diversions, look at when sweden cut rates, there were sizing issues with the fed as an inhibiting factor. Eurozone is swedens largest trading partner. Indonesia, there were expectations on the failed and in america, so from the Japanese Point of view, if your policy is tightening out of your own needs, there is not much we can do. A bit your own way pointing anchors out of toe go. Jonathan i wonder why secretary ellen care so much and i think about managing currency risk abroad. Is that something that we need to be focused on . Geoff 100 . We are saying to Global Investors are overweight treasuries right now but crossborder flow into duration is lackluster at best. Positive, but not as strong as domestic and its not just japan. Add in all the other Asian Central banks worried about the importing of inflation. If they need to start to liquidate reserves as a buffer, those reserves in treasuries, do you want, with the fed want that to be happening is they manage their own policy as well . They have had to slow qt, for example, so this is really setting things up in the rest of the world will wait for u. S. Elections and to see what the fiscal plan is before making a firmer decision but this will be a medium to longer term theme. Fiscal, Everyone Needs to look at fiscal tightening. The u. K. Will need to do better as well, you know, when the next government comes in. Global funding for sovereign debt is the big question. Jonathan are we seeing any signs of that . Geoff the pickup in gold irrespective of u. S. Real rates, that correlation is a sign that people want to diversify and want protection not just against the u. S. But global fiscal pressures, that is why the highlight on fiscal tightening has to continue globally and we are waiting to see where the u. S. Leads. Maybe the rest of the world will follow . Oddly enough, im less worried about the eurozone and southern countries because of the joint issuance framework, those debt issues are probably another two or three years away, but in the u. S. And u. K. There are other areas with high levels of gdp that they need to look at and Global Investors are watching carefully. Dani to that point, china sold a record amount of u. S. Treasuries across the globe. Building so that private foreign buyers are bigger holders of treasuries. What does it mean for bond market volatility . Central banks are not trading in and out. What does it mean for the biggest base to be investors instead . Geoff this is something that madame yellen will want to discuss with her japanese counterpart. How are they executing . Slow declines, given the size of treasury auctions, they are absorbedable. We saw this in the early days of pandemic before the fed put in the facilities rather than encourage faced force selling. If there is a lot coming in like the clips were, market estimates of 20, 30 billion in a day, that kind of size on a regular basis will be difficult for the u. S. To handle and it should not be the market base Case Scenario but we need to consider these things with the treasury market, going back to the point if you want to be longterm investors where for the state sake of stability, are we hearing that on both sides . Probably not enough. Dani his restraint even enough . Talking about the potential for them to continue, fed had to slow qt because of that. Is there an element where they need to stop continue the project of qt if Central Banks continue selling like they have . Geoff they will be looking at treasury carefully but heres where the u. S. Gets a free pass compared to the rest of the world, productivity, another way to grow out of debt where the tech scene is just so far ahead of everyone else right now. Looking at the growth breakdown of the oecd, so much dependence on Public Sector investment rather than private sector contributions where in the u. S. You have got both sides of it. Even though we are worried about u. S. Fiscal, the markets are going to be willing to extend confidence in innovation for a long time to, and that is something im not russian and right now. Jonathan jeff, you are one of the best, breaking things down. Bramo wishes she was here in didnt start the weekend early, that was great stuff. Cutting that minimum down payment ratio to 15 for first time buyers, 25 percent for second homes with a previous ratio at 20 to 30 , beijing telling local governments that they can acquire homes at reasonable prices and turn them into affordable housing. Dani that project will take a long time, right . If that is what you are doing. At the same time, this is going to put so much strength stress on the banks, compressing compared to mortgages with 13 of that csi. This is a big sector for china that they are putting under shirt. Annmarie but they have to solve the property market, it has been an absolute pressure on china in terms of recovery and growth, today with a host of individuals from state, local, top officials, banks, discussing what to do and it comes to the property sector. Why the urgency right now . They realize they have no choice. Jonathan if you are just joining us, welcome to the program. S p futures are negative by almost 1 . Updating your stories elf elsewhere, here is bloomberg brief. A social media platforms announcing a partnership with openai and Chatgpt Software for reddit users to access chatbot feud feature letting openai to play display reddit content and data access to train systems. The financial terms of the deal were not disclosed. The sports streaming bundle between disney, fox, and warner bros. Discovery has a name, musports with no launch date announced. Its set to combine espn plus and sports programming from all three programming companies linear networks. And we had the lowest round in tga championship history after the first day of the gulf second major of the year. Three shots clear of the field at the top of the leaderboard. Top of the fifth for Scottie Scheffler. That is your bloomberg brief. Jonathan thank you. Fantastic weekend of sport coming up. Its the final big weekend for the premier league. Up next, the chinese playbook under pressure. There are signs that china is exporting its way to her to recovery, using the same book to him growth at the expense of others by investing in significant industrial overcapacity. Jonathan heading down to washington, d. C. , next, good morning. Jonathan welcome to the program. Dani burger is in the hot seat this morning, bramo taking a long weekend. Negative by 0. 0 5 this weekend. On the 10 year, 4003866. Under surveillance this morning, the chinese playbook is under pressure. A strong u. S. Recovery is underway, powered by domestic consumption and investment. There are signs that china is exporting its way to recovery. China is using the same playbook it has before to power its growth at the expense of others by investing in significant industrial overcapacity and flooding Global Markets with artificially cheap exports. Jonathan new data out of china showing industrial output rising faster than expected with beijing unveiling a rescue package for propping up the property market, encouraging local governments to buy unsold homes for affordable housing. Lets talk about the plan. What is the plan and how big a difference will it make . Its their most urgent step by authorities yet and what the world has been waiting for, when will china take a turn on the Housing Market . They have a series of steps making it easier to get mortgages, bringing down down payment rates. For instance, on the other hand they are going to give about 40, 40 one billion u. S. Dollars to state owned mves to go out and mop up unsold homes to try to convert them into housing. So it is a sweet of steps to intervene in the Housing Market. Whether or not the actions will necessarily work or how long they take to work, the point is it speaks to its most material step by authorities to try to turn around the Housing Market with data overnight simply showing that house prices continue to fall, the steepest in a decade, speaking to a new urgency that the authorities are trying to turn around housing. Remember, that sector is probably 25 of the overall economy. Dani this is been a problem for years. Why this urgency now . Its clearly a drag on the economy, trade export propping it up, speaking to a two speed economy because Consumer Spending slowed in april 2 its slowest pace since 2022 in the whole time of covid zero and every thing else. So, clearly the housing sector is a drag on the economy, a drag for the authorities, they recognize that and are trying to turn it around. Of course it helps them, politically, remember the u. S. And other countries have said china needs to slow domestic demand if they are going to mop up the stuff they are making it home, but you cant have domestic amanda doing well if youre Housing Market is in a funk. Annmarie paul donovan overnight saying that if growth targets meet production without domestic production, they become more vulnerable in a climate of rising nationalism. He is saying that whether or not these accusations are correct, the fact is the prejudice of politics is increasing around the world. Do you think that if China Remains on this track, we will see more tariffs from the u. S. And europe . Its not a good look for the rest of the world of china is going gangbusters on exports and trade industrial is doing well at a time when other industrial sectors, like in germany, they are suffering hard, but china isnt taking the necessary or painful steps to get their own consumer up by borrowing spending and getting a consumption up for things that are revved up. It will be a topic in the global forums around the world and it wont be just the u. S. , as we have similar concerns being raised by other key industrial nations with certain optics and all of this. On the one hand, china is trying to rev up its own domestic economy and intervene in the Housing Market that has been in the doldrums for years. On the other hand, they can use this like they did before to say that we are taking steps here and putting money on the table to turn around households and consumers. Dani but if that comes to fruition, if we see more tariffs coming from europe, if the rest of the world looks at but china is doing and gets concerned, what is the impact to china if we are talking about a two speed recovery led by industrials, how vulnerable is it . China is clearly vulnerable to ongoing trade restrictions, export controls, investment restrictions, tariffs and the like, but overall you have to say that the economy and the chinese trade industrial sector has shifted what has been thrown out so far reasonably well or better than expected. The industrial export side of things was recovering even under existing tariffs. There is definitely a channel for china to navigate trade tensions. The question becomes how much harder and complicated will that the more that these tariffs and restrictions get bound up in chinese goods . There will be a lot of interest in focus right now in how york responds with new Clean Energy Products like these, the tariffs and restrictions they might respond with on chinese goods. Here to now, china has been navigating this ok, but the question then becomes what else is coming down the pipe and how long can they withhold against it . Jonathan europe, thats the next big stop, i remember this phrase, who will wait on the other capacity and how do you make the chinese weight their own overcapacity . What are you expecting them to do . If you look at the chinese reels chinese retail assets, currencies in particular were down sharply. China itself cannot purchase the cars it is producing, europe is the open market for with mixed signals coming from the industry, from car markers carmakers. The european story remains an open book in terms of how it plays out, it isnt unified like the u. S. , but right here now you have to say is the best market china has. Jonathan thank you, sir, down and washington, d. C. On the trade front, this is it. Europe, front and center. Annmarie they are behind the u. S. And you see the chinese making inroads and jonathan, we have an talking a lot about this, lisa always questioning, what do european auto Officials Say in public as opposed to behindthescenes . The bmw chairman says we should not hit ourselves by doing this. They want access to the chinese market, but how act