Bloomberg surveillance. Manus is in the hot seat. We have cpi, ppi coming up next on the late. Because Bank Earnings we have Bank Earnings. Manus when the call ended at this morning to join surveillance, what a moment. No guidance is going to be revised higher because we are in a higher for longer weight. But going to jamie dimon says come he is not completely sure. 70 to 80 chance the market thinks there is a soft landing and i think the odds are lower. What is the rhetoric and guidance . Lisa that is what people are going to be watching for. We are expected to get jp morgan, wells fargo come at it click get citigroup. Markets are fascinating because we are looking at a situation where bonds are stuck in everything are still kind of really reeling. It raises a question, is this a market that can withstand peoples where they are withstand yields where they are . Annmarie and you siemens coming out about this no landing scenario. The reason earnings is so important is because of the data we have already gotten. This is the last leg of data to her stand we are. I go back to what Mohamed Elerian told us. Looking at aggregate data is backward, they were not looking at burning calls and what ceos were saying in terms of the inflation outlook. Lisa i am struck by the fact that we are seeing a rally but it is with a specific and not russell 2000. It is far behind where it was before the cpi print. It was magnificent seven ring back, amazon joining the fab five. How much is this going back to what people know and havens delivering outside scans . Manus you have a barbell approach to risk. One site is cash in terms of the allocation. It is about for the resilience is even in the ace of higher problem longer higher for longer. The market is stuck around this 5 , potentially no consent all. You have solid Balance Sheets and that is what gives the resilience to magnetek. Lisa which is the reason by people are used to buyers about the price action. Is this the broadening out concept people have been talking about where are we looking at the mag7 and fab five . Lets look at the scores before we get to the commodity space because i want to dig into what is happening. You are seeing a decline on s p futures. The euro continuing to decline, 1. 066. The ecb seems most certainly ready to cut rates in june. The 10 year yield dipping a little bit after crossing straight through 4. 55. Gold hitting a new alltime high, a lot of people talking about the unrest in the middle east and how this is a result of that. Annmarie you are seeing a lot of geopolitical disk across the commodity space and this is israel as israel is bracing for this attack. News talked about an imminent attack, there is something tangible that happened. The u. S. Government to the u. S. Embassy in israel is telling the personnel and their families dont leave major areas like tel aviv or jerusalem. When you see signals from the u. S. Government or israel in terms of airspace and embassies, that is what we could be on the brink of this response. Manus the important thing is to define what is the scale of the response and this is not necessarily reflected in the oil prices. The moment you have any oil market that reflects a couple of bucks of geopolitical risk, because there is no escalation within the persian gulf, midstream, downstream, and upstream, the tension is under the red sea and not the persian gulf. If there is a major escalation in the persian gulf, you are looking at potentially a 40 spike in oil. That is a 30 possibility of that event risk. That is not punitive coming through right now. Lisa if that does happen, that will cause serious waves. Coming up, Jonathan Stubbs of berenberg as stocks reset after hot cbi. Ed mills of Raymond James on a takeover of u. S. Steel. Gerard cassidy as we kick off the earnings season u. S. Stocks and treasuries looking to regain a bit of the losses as investors pushback rate bets once again. Jonathan stubbs saying this. Equity markets tracked expectations closely but equities have continued to rally as expectations have moderated. Some fed members are suggesting just one bridgehead later this year. Jonathan joins us now. Before we get into the will they or wont they debate, i want to make sense over the price action. Stocks have prevented entirely magnificent seven with the rest of the complex left behind. Jonathan a lot of complicated dynamics. The mag7 has been really strong in editorship role in the u. S. But you look to japan or europe and value strategies have leading. Growth in tech has been the dominant force in the u. S. , but you have done a bit of running value. We have mixed signals coming from markets. The gap between equity markets and rate cut expectations. The market is beating to multiple drums and that makes it difficult for investors to know how to position realtime. Manus the divergence was very pressing between the tonality of Christian Lagarde and her ability and desire to get on and cut rates. Look at the bond market. These are more confident. What does that divergence to do to europe . Jonathan it is one of these contrasts we are seeing. Policy level come inflation level, you take a step that can say this is what i call a very visible hand of the u. S. Government. If you look at investment added to government, running at 12 year on year. That is twice as high as the highest level we have seen the last 20 years. U. S. Government debt is being added it within dollars almost every day. U. S. Economy has been so robust and why u. S. Rates will be higher for longer. Europe doesnt have such influence so we are seeing that cap emerge. In terms of what it means for equity markets, we are getting signals u. S. Equities and german equities. Investors should not be choosing the market at this and that is consistent across our signals. We think we are set free consult in phase a consolidation phase. We have to digest risks, some local and some geopolitical. Manus the past number of months, if you talk about a pause, what invokes a significant pause . Is it a drawdown of more than 2 , 5 . Are you stenovec and saying theres not going to be a correction . What is it that invokes it . We are down to one cut by some of the major houses or does u. S. Exceptionalism mean equities can trade with impunity . Jonathan it is a very good point. Goldilocks trade was based on u. S. Avoiding recession, soft landing, that seems likely but still risks there. Part of that was how this support from moderating inflation and significant rate cuts. It seems that is unlikely. Markets have turned a blind eye to that and evaluations we are seeing, we have only been higher than that in 20 years. Liquidity field. You can argue we have some version of that because we have some liquidity crowding into u. S. Equity and tech and credit. We have these powerful liquidity dynamics. As we go forward, it is important for investors to pursue active hedging strategies. We have a high rate of Asset Allocation hedge. We raised a month ago on the energy sector. It has Balance Sheets and by back support and free hedging into geopolitics and the tech sector. We are looking at active hedging strategies. We have to change how we approach equity markets at these levels. Lisa what kind of drawdown of your looking for that would make it attractive . A 2 drawdown . That would seem out of the norm as of late. Jonathan to genuinely trigger signals that take on risk signals, we are looking at a doubledigit drawdown for this equities for u. S. Equities. That is the magnitude we need in these markets. Whether they are valuation based or earnings argent driven. We need a doubledigit drawdown to see some signaling supportive of taking on risk. To get that, we need help from a risk being activated at this point. You mentioned active risks in faries parts of the world, including the middle east, these are risks investors have to take on board right now. As you say, we have not seen much of a drawdown in u. S. Or europe remarkably over this six month rally period. It has led to risk adjusted return in europe showing manager minute we have the highest adjusted returns in the last 20 years, another signal telling us to be more cautious at this point. Actively hedge, dont disengage with equities but make sure you are protected. Manus thank you lisa thank you so much. Lets get you updates. Kkr is taking a cue from Brookshire Hathaway by taking a bid on resulting dividends. The ecochief executive officer tells me the Company Expects to see 309 of dividends by 2026 with plans to double that by 2028. Berkshire hathaway is an apt analogy in that we looked at a lot of business models. There are a lot of powerful messages in what Berkshire Hathaway has built. The power of compounding and the power of Smart Capital allocation within your business. Lisa the Biden Administration is ramping up its economic stance towards china. The Commerce Department adding six new Chinese Companies to blacklist. That brings the total number of firms blacklisted by biden to 319, the most of any u. S. Administration. Topping the 306 by donald trump. Amazon hitting his first record since two by 2021. The Online Retail is the last of u. S. Tech firms to reach an alltime high in a rebound from the postpandemic selloff. Amazon has slashed costs and restructured its business to streamline operations. It helped to boost profits and win over shareholders. Bid for u. S. Steel is under scrutiny. This deal gives me great concern about the threats to those jobs. Lisa that is next. You are watching bloomberg surveillance. 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. Lisa trying to finish the week with quietness after a volatile couple of days. We are seeing the stock market retrace some of the gains is so yesterday as we see the bond market trying to gain a little bit of momentum after a brutal selloff. Some really bad options. This is bloomberg surveillance. Jonathan ferro is off today, manus cranny is with us. We are looking at a market under agent factor under a trifecta of influences. Yep Economic Data and geopolitics. Nippons bid for u. S. Steel is under critical under scrutiny. We are pressing on trade enforcement and fundamentally what this means to american workers. Our principal concern are the steelworker jobs. This deal gives me concern about the threat to those jobs. Lisa shareholders of u. S. Steel voting on the porch and but in dollars sale to on steel. The vote coming as the department of justice opens an antitrust probe into the bid. Ed mills writing, investor expectation is the shareholders will vote to the deal. President biden has committed to being the most prounion president in the history of the u. S. If united steelworkers support it, it gets done. If they oppose it, it does not. Is this saga there to come to a close today when shareholders vote on this . Again steelworkers that oppose this and joe biden backs off . Ed if you have the steelworkers support this, this is something that might need to go for approval. One of the first lessons i learned in d. C. Is when you are explaining, you are losing. It is a narrow window to get the support of the steelworkers but also not to have other republicans, especially the nominee for the presidency, to still blast the Biden Administration. The two senators you highlighted are two of the most vulnerable senators this fall representing ohio and pennsylvania. If they lose, the republicans have a majority in the senate. If joe biden loses pennsylvania, he is not reelected. There is a political story here. What we are seeing and in d. C. , what peoples are telling me, the former chief of staff telling people to chill. That might be a signal we have to work out the politics but there is this continued insistence by a number of people that u. S. Steel needs to remain a u. S. Thomas dowd company and that is what i really highlight how important it is for the workers to come on board and to get labor commitments before this deal would politically be able to close. Annmarie it seems they have to run not clock. The other ohio senator, j. D. Vance, also potential vp pick for donald trump, is writing this letter about u. S. Steel and concerned about the companys misleading shareholders in a proxy statement. You see this on both sides of the aisle. If you look at the future, doing deals in the u. S. , how difficult is it going to be whether or not it is fighting or trump exterior biden or trump next year . Ed we have populism in our politics and when we have that and the equality that exists and the technological changes, that usually sees an increase in antitrust scrutiny. I think that continues regardless of who is president. Some of the personnel will change, the incentives will change. The nipponu. S. Steel deal is unique in the fact that this is an economic name. This brings about some economic anxieties that have existed within the midwest for years. There is the trade fight we have with china but before the trade fight with china in the 1980s and 1990s, those trade fights were with japan. It comes at a politically different difficult time where this might be the wrong company at the wrong time. We have to see if that works out. It is unfortunate for them to have this two days after the japanese Prime Minister had a white house state dinner and was before congress. It is more about the unique aspects of this deal for this company. It is in the broader antitrust environment that exists here. Annmarie we have a number of developments regarding the middle east about how the u. S. Embassy is telling personnel to travel outside this is like tel aviv or jerusalem. We heard from the Chinese Foreign ministry there was a call between secretary blinken and his counterpart regarding the middle east. There are a lot of concerns there is going to be this retaliation from iran. What is the u. S. Response going to be to that . Ed since october 7, the Biden Administration has been trying to contain the conflict between israel and hamas. This is the biggest challenge since october 7, especially after the Israeli Attack on the syrian consulate in iran. Iran is going to want to have a response. What that response is is going to be a question of does it just respond to that previous attack or is it a precursor for a blotting out for a broadening out of this context . In d. C. , what we are looking at is how much that impacts Energy Prices and inflation. How much does the broadening out make it even more difficult for biden to discuss how he has led the geopolitical side of this job . The more there is geopolitical risk, the more there is inflation, the harder that is politically for biden, the more there is inflation and geopolitical risk, the harder for this market to grind higher. This is an international and domestic story, but also in d. C. And market story. Manus how important is it that the escalation is in the form of proxies in these or hezbollah who the houthis or hezbollah. We have the ehrman guard sing it wont block the straight. There is an Inflection Point on oil and Energy Prices. What is the tolerable acceptable response for the u. S. In terms of the proxies . Ed i would think from any investor perspective an investor perspective, if it is a response to the proxies, that would be viewed as arguably the best case scenario. We are already seeing the proxies of hezbollah and houthis already engaged in the region. How much of it is diving up of iran to remind the world is to have the power and they need to have a direct response to the attack . That would be viewed from the market as the least disruptive. If you see something directly from iran, that is where we have the biggest question marks for this market and the fact it could be broadening out. You hit on the exact issue we have been debating. Lisa ed mills, thank you so much for joining us. As you debate this, you see oil prices up 1. 1 . Just crossing the 90 threshold. I am struck by the idea that this is going to be escalation regardless. If iran directs houthis to attack israel, it solidifies the connection. Annmarie there will be a response. When is the question. The Iranian Foreign minister told his german counterpart it will be appropriate. I dont think iran wants to start a war but when their consulate is attacked, they know they have to respond. Lisa titfortat without creating mobile confrontation. Coming up, earnings from j. P. Morgan at wells fargo. You see markets taking a dip after yesterdays reprieve led by the magnificent seven. The road to opportunity. Is often the road overlooked. At enterprise mobility, we guide companies to unique solutions, from our team of mobility experts. Because we believe the more ways we all have to move forward the further we all go. Her uncles unhappy. Im sensing an we alunderlying issue. Rward its tmobile. It started when we tried to get him under a new plan. But they they unexpectedly unraveled their price lock guarantee. Which has made him, a bit. Unruly. You called yourself the uncarrier. You sing about price lock on those commercials. the price lock, the price lock. so, if you could change the price, change the name its not a lock, i know a lock. So how can we undo the damage . We could all unsubscribe and switch to xfinity. Their connection is unreal. And we could all unexperience this whole session. Lifes daily battles are not meant to be fought alone. Were not powerless. So long as we dont lose sight of whats important. Dont be afraid to seize that moment to talk to your friends. Cloud, you okay . Because checking in on a friend can create a safe space. The first step on our new journey. You coming . Reach out to a friend about their mental health. Seize the awkward. Its totally worth it. Lisa this is bloomberg surveillance with trump and farrell, visit from wits, and annmarie hordern. Jonathan is out. The stock market reprieve in the stock market was led by the tech stocks. 5235 on the s p. If we talked about that at the end of last year, people would say you are crazy. How long can the magnificent seven really keep generating the gains at a time when it turns t