This is bloomberg surveillance. Alltime highs in the s p 500 with the three day winning streak, 20 fourth record close so far for 2024 and the main event is coming right up, 2 trillion market cap. There is only one name, nvidia. Lisa the most important Macro Economic event, one of the most important events on the calendar thats where we are at with one name, one company can dictate the Macro Economic backdrop for an entire market and thats today. Jonathan raising the bar once again going into the numbers later this afternoon. Barclays raising their price target, expecting a beat and a raise. Annmarie its not about if they beat expectations but its by how much. The bar continues to increase for nvidia that they need to clear. To avoid a selloff, they have to be estimates by 15 . Jonathan its about target or tarjee. Lisa its the upper crust of that kind of store which maybe they want to get away from. Jonathan up 2. 5 in the premarket. We will get Price Reductions on 5000 goods. I imagine they will give us more detail on that later this morning. We know consumers are feeling pressure. Just last week, walmart executives receiving customers trade into walmart. Last week was macys as well. Customers will continue to be discerning and thats the theme across retail. Lisa we have profound uncertainty with the consumer, slowing but not slow, softening but not soft. More discerning but still spending dramatically and thats the key question how much is this a statement of why these companies are shifting their product mix rather than projecting weakness in their earnings . Annmarie Mohamed Elerian came out with a piece talking about the risks with the fed being datadependent and one is the concern of the data dependent fed coming at the risk of a number of Companies Expressing concern about weakening consumer demand. That is particularly the case for those serving a lower income household where pandemic savings have been depleted. Jonathan the little later this morning, we hear from target and after the close this afternoon, we hear from nvidia. We will also hear from fed speak as well. Also we get the fomc minutes later today. The standout for me for the comments in the last 24 hours, the fact that the last Inflation Report was graded and only gave it a c . This market got carried away with it. Lisa its passing but not great. He said they need to see several more months of good data. That can give them the confidence. This was the theme for all the fed speakers. None of them are comfortable talking about rate cuts in the near future with the idea that maybe we are talking about only one this year. I wonder how much the market will come around to this. Annmarie c is a grade that would be unacceptable to my parents, far from failing but not stellar. What is the confidence they need to find by . Some say three months. This poses us this pushes us well past the election. Jonathan governor waller and others seem comfortable with where policy is right now so will they cut but they definitely wont raise rates. It will cost the economy to go off a cliff . Would they respond to weaker data . Are they expecting it to fall of a cliff . No. Later this hour, we expect the first basis point rate cut in july. Thats just around the corner. What do we need to see between now and july to get that first cut . Lisa how much do governor wallers comments change things being that theyve set the bar higher and given the fact were just not seeing it in the data . We dont have the luxury of three months of data before july in order to get that confidence. What kind of weakness would we have to see . Jonathan the big theme this morning so lets turn to the price action on the s p 500. We are negative by only 0. 1 and yields are higher in the bond market by a couple of basis points. Looking at foreignexchange, Christine Lagarde saying this about inflation we are confident we have inflation under control but thats not what you will hear from the bank of england after the print we got early as morning and not what you hear from fomc officials either. The ecb seems to be in a unique spot at the moment where they are able to commit to their next move. They commit to the idea theyve got inflation and price pressure under control. Lisa germanys been basically in recession and youve seen pockets of weakness. That is either a luxury or not but they are catering to that and at summer obvious area to cater to than in the United States. The u. K. Is in its own world and the economy is not great but it can but inflation is not coming down nearly enough. Europe seems like less of a mystery with the weakness offsetting the inflationary pressure. Jonathan in the u. K. , one dollar . 32 on sterling. If you are looking for a cut in june, london is shifting to later this summer or perhaps august. Think about the growth policy mix in europe. It was absolutely dreadful in the last 12 months. You talked about recession in certain countries and that was at a time when the ecb had to remain committed to higher Interest Rates. Now you could make the argument that the weakness is behind us and they will start cutting Interest Rates to a recovery in the euro zone while which is why some people are you looking at nonu. S. Equities. Lisa theyve been talking bout that all year and its work. It you look at the stocks 500, its outperform the s p 500 by a wide margin. Europe is talking about industrial policy more than the u. S. Jonathan lets talk about industrial policy and the prospect of tariffs on the european automakers. That was the standout overnight. A little bit of a teaser of chinas reaction potentially to tariffs that might come through from europe. Annmarie thats what it was, a teaser because the China Chamber of commerce went to the European Union and went on twitter and says it was informed about this potential move of tariffs by insiders. This would affect u. S. And european auto companies. Those goods going into china, china signaling its ready to unleash these tariffs as high as 25 . This sets the stage for not just titfortat washingtonbeijing but titfortat beijingbrussels. Jonathan i wonder what mercedesbenz is saying on the record and behind closed doors of this happens . Lisa shares are declining right now but who has the bigger leverage . Who is importing more cars . That raises the rate the concern of retaliation given what the imports are from china now into europe. Annmarie the bmw chairman recently said we do not want to shoot ourselves in the foot with these kind of tariffs, warning the European Union. What do they say publicly because they want the access to Chinese Markets and what do they say behind the scenes . Jonathan they want to maintain access to whats happening in china. Can they achieve that . Can you continue to sit on the fence and entertain Chinese Markets at the same time as maintaining a presence in places like europe . I think it will be tougher companies to do. They will have to pick a side in the years to come. Jonathan olaf scholz said you automakers have to deal with weakness when we put up those walls. I dont understand how this will happen if they dont, what is that mean if china is overproducing so many electric vehicles at cheaper rates. What does that mean for the auto sector longterm . Jonathan lets get you some stories elsewhere. Dani u. K. Inflation came in hotter than expected in part due to continued price pressures at restaurants and pubs. It was 2. 3 which is the smallest increase since 2021 but thats the upper end of where the forecasts were at. Andrew bailey said he expected a drop in the inflation prices. The less investors push back now less than two are to cut surprised into the boe. Tiktok is told employees it plans to lay off staff in its marketing and operations teams this week. The exact number of job cuts is not clear but unlike other tech giants, tiktok rarely conducts largescale layouts but at this moment, tiktok is battling with an uncertain future facing the law that will ban the app in a year unless it divests from its parent company. Barclays is latest wall street firm to consider asking its workers to get back to the office. Some managers of already started warning employees to prepare for five days per week in the office. The decision comes after a series of requirements are set to take effect in coming weeks which includes requiring brokerages to list home offices and regulatory records. Jonathan thank you. Im not the only one who read that story and thought that there are people at banks not in the office five days a week . Lisa i think there are certain places where thats their one selling point. How many people are surprised by this . Really . They have to go to the office . Annmarie i like that because they are doing that for a finra rule change. Jonathan i thought everyone was back in the office. Annmarie you hated being at home. Jonathan i couldnt stand it. Up next, biden closing in on the swing states. Folks, the threat that trump poses is greater in the second term than the first. I talk about them differently now because now the gloves are off. Jonathan the gloves are off, that is next from new york citys morning, good morning. Do you want to close out . Should i . Normally id hold. But. Taking the gains is smart here, right . Feel more confident with stock ratings from j. P. Morgan analysts in the chase app. When youve got a decision to make. The answer is j. P. Morgan Wealth Management. Jonathan equities on the s p 500 at another alltime high close yesterday. They are now down by 0. 1 . Biden closing in on the swing states. Folks, the fact that trump poses a threat in the second term. The fact that he lost in 2020, something snapped. The whole world is laughing at him. He is a fool. He is not a smart man and he never was. I talk about them differently now because now the gloves are off. Jonathan here is the latest, former president Donald Trumps leading lead in swing states is taking a small tip. Biden is leading by no more than two Percentage Points in michigan and pennsylvania. Jennifer joins us now for more. Going into november, what are the policy options the white house has left . I think they just did one this past week in announcing the release of oil reserves. They will have to try to find some way of affecting those prices that people are feeling when they go to the gas station and paper food and they are looking at the Mortgage Rates right now. The fed is not very helpful so this administration will have to do things that allow for the Family Moving forward in the economy and folks to feel more is in their pocket. Right now, compared to three years ago, everything just cost more. Annmarie the white house may deal with student debt. Does that resonate with the electorate . It depends who is affected. Sometimes, it sort of alienates those who dont go to college. We forget there is a huge segment of the population of people who dont go on to further education post high school. Those bluecollar workers or Small Businesses, entrepreneurs sometimes, those folks are not affected by that. Sometimes there is a disconnect between those who feel like they are paying for those student payoffs and those who are actually receiving them. Annmarie looking at michigan, pennsylvania and wisconsin, is very tight. How critical are these three states to joe biden . Can he win without holding the blue wall . Thats an excellent point. Thats exactly what he has to do. His pathway to a second term is through the states of pennsylvania, wisconsin, michigan. And he needs to bite off one of the sun belt states. Its the reverse for donald trump. As we look at the polls, his best route is probably through nevada, arizona and georgia and getting one of the steel belt states. This is where their focus will be. We are 166 days away from the election. We know it will tighten and it will tighten further once folks really start focusing when kids go back to school in september. Lisa people have been talking about not voting at all because of the same race being reenacted. Will they stay home and some of those swing states . Yes, once you do the cross tabs, you will find demographics , you will find swing voters sometimes are those who are willing to swing, progressives, young people, these are folks or not necessarily go to to vote for trump they may stay home. They may have their vote suppressed. That really matters when you are in a state like michigan and the 20,000 voters you were trying for dont show up. The fundamentals of this election are still true and we see this in the polling. It comes down to the issues of inflation and immigration, crime. On the others, abortion and the democracy chaos issue on the democratic side. Lisa is there anything the Biden Administration can do around inflation when it might be decelerating but the inflation is baked in . Will it change before the election . Some suggested maybe be about messaging and having a better message and looking forward to the future. I think youve hit on the question and thats the question the Biden Campaign are wrestling with constantly. They probably will up to election day especially if our economic circumstances and the way people are feeling the economy stays the same. Jonathan i want to talk about Financial Regulation. The head of the fbi seat is stepping down. The fdic and the bank lobby has won out over capital requirements. What you think the future of Financial Regulation will be regardless of who wins the white house in november . Mr. Bloomberg has announced he will resign but he will step down only when his seat is filled by a confirmed new director. I think we may have a little more time with him. Of course, the bank lobby to your point, there is a real push to get a proposal. The fdic would like to make some minor changes on the basel three issue. But the fed seems to be a little more open to preproposal. You will see Congress Push on this issue. There have been some interesting hearings were youve seen some bipartisan concern with the proposal and the request for reproposal. I think this will continue to play out over the rest of the year. Lisa do you think we will see anything substantial when it comes to this ahead of the election . If i had to armchair and look at this issue as the likelihood of the time we have in washington, i think its unlikely. I think its very possible that we see reproposal. I know many folks downtown and those on the hill are constantly working to see that happen. Annmarie i know you focus on policy and one of the biggest policy fights will be taxes in terms of the financial umbrella. What are you expecting in terms of the extension of the trump youre a tax cuts . At what level do you think they get extended . No matter who is president next year, you are right, there are number of provisions in 2025 that are expiring. Its going to look very different depending on the makeup of congress and the presidency. So much is riding on this election as it relates to taxes. If you have a Trump Presidency with a majority in the house for republicans and the senate, you can have a much larger reconciliation package on taxes, something similar to 2017. If it is a biden presidency and you have a split congress, it will have to be negotiated package. You have a number of different provisions from salt to the individual tax rates and child tax credits. Those will all be part of the negotiation. It will have to be a bipartisan package. Lisa we are about eight minutes away from the spec did release of target earnings. This comes at a time when it will be key to see what kind of messaging they can do to make people feel better about the fact that things are more expensive than they were three years ago. The white house said monday that they want grocery chains to lower prices and target have lowered prices and say they are delivering. Is this what will win when it comes to messaging . Thats a great question. I think we saw this in the state of the union, the idea of shrink inflation and forcing the issue onto corporations come onto those who deliver services, onto those who deliver goods. I dont see that that is where americans are focusing their concern. I do know as far as institutions go, Grocery Stores are pretty high and the support of the american people. Institutions in washington, much lower. I think that might be a difficult one for the american people. Jonathan thank you for your input this morning. This is still the number one issue going into november, isnt it . Annmarie looking at the poll results and you asked respondents, name transit three things about the economy want, prices of goods is a concern. The Biden Administration talk to a bunch of target executives and others. They are cutting prices because they see they had to further business. Potentially, you are seeing weakness in the consumer and the white house is trying to act like target is cutting prices because of the outreach from the west wing. Thats not factual. Jonathan lets talk about walmart. Walmart is getting business because of a trade down. Trade down from home . Its a trade down from target. Thats why the target numbers are so important. Lisa they might push back against tarjee because they just want to be target. I wonder if the people trading down or going for more expensive stores. People are looking to be costconscious and they want to compete. You are raising skepticism that maybe this wasnt because of the white house meetings. You can make your own conclusion that this is what they are doing. Jonathan i dont think its because of the white house meetings. The stock is down about 0. 4 in the premarket. Look out for David Malpass, the former World Bank President and annmarie called caught up with him last week. Thank out think how busy things will be for the next administration. Spending bills will likely be extended long enough to kick the can into next year and tax rates will rise at the end of 2025 and was congress and the president can agree to extend the provisions in the 20 tax cuts and job act. We will pick up on that conversation later this morning. Coming up shortly, we will talk about the c