>> our policy rate is likely at its peak for this tightening cycle. it will likely be dialing back at some point this year. >> i think the market is taking it as a signal they will tolerate slightly higher inflation for longer. >> they have to tolerate a little higher inflation in the near term. >> i think this is a fed that really wants the soft landing to continue. >> he said over and over again it depends on the data. >> this is bloomberg surveillance with jonathan farrow, alisa brahma once and and reorder in. jonathan: good morning.

for our audience worldwide this is bloomberg surveillance. your equity market s&p 500 record highs at the close. up one third of 1%. the biggest take away of the last 24 hours following chairman tells news conference, stronger inflation won't stop rate cuts. lisa: this is a federal reserve that wants to cut rates in the hotter than expected inflation data has not stirred them from that path and that's the message the market is hearing loud and clear. >> equity markets all-time highs of the close on the s&p 500. gold through 2200 for the first time ever. what you think gold is picking up on following yesterday? lisa: either an inflation hedge or it's been a steady march higher and this raises the question the end of tightening monetary policy, means that real

assets have more value again given interest-bearing assets won't be as interest-bearing going forward. jonathan: lisa we had some questions for the federal reserve chairman as -- has he gained or lost confidence following the prince of the last few weeks. the answer was basically neither. he referred to them as pumps. basically looking through the recent inflation data as pumps in the road and said almost explicitly the story has not changed. >> ultimately it's a federal reserve that has some changes. he said a lot of words but didn't really have a different message and did not have a story to tell other than we are making progress we will be patient and if it takes time to get down to 2% we are ok with that. this is really the ultimate sort of turbocharger to stocks. this is a federal reserve that will prioritize the soft landing over inflation data that is bumpy causing some odd to in

other corners. jonathan: this is just one example of accepting slightly higher inflation. if you go through the forecast, slightly less fast pick upgrade to inflation. they can make the argument on this but if you repeat that in june bill of got much bigger questions about their commitment to getting back down to 2%. i think they can have a one-off excuse this time around. i don't think you can prepare that in quite the same way in a few months time. >> which is a reason there are no rate cut people out there saying they want to cut rates but they will not be given the privilege to do so. this is a question of when to the data points, more than the noise. right now it seems that the fed is dismissing them as noise. the market maybe not. they are taking the message of the fed is not meant take it seriously. this is the reason why data dependency is difficult. how many data points do you need to be dependent on those status. jonathan: surprise 25 basis

point cut much weaker swiss franc overnight. dollars swiss pushing 19 on the screen. by about 0.8%. i know i refer to them, the likes the smb, what other central banks are doing. >> they are trying to get ahead of any move from the federal reserve and ecb because they want a weaker currency. they want a weaker swiss franc and to me this raises the question will the second half of 2024 be the race to cut essentially how do you cut first and get ahead of the other so you can carry the benefits of being a market leader and frankly edify an economy that otherwise could be set by a fears of a hard landing. jonathan: equity futures positive by 0.3%. the equity market doing better than ok. yields down again by another basis point. and the euro against the dollar

1.0 917. the fed fuel stocks all-time highs. the biden administration relaxes evening rules making some room. we have j.p. morgan on the fed's path forward and if the call for three cuts was shifting to two or even fewer. the fed fueling global stocks to all-time highs. jay powell & co. sticking to three cuts for the year despite a string of hotter than expected inflation prince. some all caps posting with gold running about 2200 for the first time ever. chris, let's get to it. gold, what is that break off in gold all about going through 2200 for the first time ever? >> when you look back at the sequence of events the last several weeks let's first go back to january february where you had the decisive move in gold through 2100 and we found really notable these last two

weeks as bond yields pushback higher and they go from four to about 435. gold did not flinch. it was a very orderly pause, the title is gold new. gold knew we would be getting a dovish fed yesterday. i think certainly the response speaks to that here. i think the backdrop remains polish in metals, bullish and materials and we see that with the expansion of new highs in things like copper, the material stocks. etc.. >> watch what they do and not what they say. when you look at what they are doing. is that a fed signaling they will tolerate high inflation. >> i think when you look at the tone of really global bond markets over the last couple of months, i think the bond market is set on the idea almost regardless of where some of the new term inflation data comes out. these are central bank that will

cut. we see the moving swiss overnight. the swiss bond market has been telegraphing this for weeks. i think when you look at things like you take 10 year deals, german tends are still. so the global picture for bonds i think supports the idea that almost irrespective of where the future inflation data comes in. you will get the central banks cutting the share. lisa: the idea of why there's so much demand. is this a trade on the idea that maybe inflation will run hotter and this is a good hedge against that. or is this a trade that the fed and the rest of the central banking complex cutting rates will support growth as some of the demand for the assets? >> i think it's more of latter. use this term fiscal dominance to describe why we think gold is in this market implies the central bank have to ease given the position these sovereigns

are in across the world. anytime you see gold breakout your mind does begin to wonder. is there something sinister or ominous on the horizon. i think gold was trying to communicate there is something nasty out there. we would also see it in credit conditions deteriorating which we have not seen yet. yesterday was one of the best new high ratings in months and months and months. i think gold is more about the position central banks therein relative to where their physical counterparts are as opposed to some of the ominous message about economic growth down the line. >> given that it's understandable why there's so much money just flooding into the trades that have done the best so far this year. at what point do we have to worry about the fact we have an economy being turbocharged by fiscal money and a federal reserve and other central banks poised to ease monetary conditions from the tightest

levels in decades at a time when we are not seeing those real signs of weakness that could curtail any upside surprise. >> we always talk about or make light of everyone has this fancy liquidity model. the only one they need is the price of gold or bitcoin. that tells you everything you need to know about the liquidity market that we continue to deal in here. which is a little bit ironic which despite this ripping move higher in gold, the paper market , the flows have basically not adjusted into the gld are very mild. certainly compared to where we seem gold at the pass. i don't think sentiment is that huge threat yet. your question looms to a larger -- longer-term idea of at some point this growth ultimately begin to slow. if that is the case we will see it in a change in equity market

leadership. i would expect things like industrials to deteriorate, there's not it's on of evidence of that yet. so for lack of a better term we seem to be in the sweet spot where you have bond yields that likely don't run away from us, and i think gold, copper and discretionary end industrials all reflect that. jonathan: usual suspects the top of the pile. energy actually lagged. are you seeing signals? chris: there's a couple of important things going on. you mentioned energy and materials, i would not call them leadership but they are not going down. when your laggards are going up in price it describes a pretty full -- there's a lot of participation. we are still sitting here 3.5 months into the year and 80 plus percent of the s&p, so it's still pretty broadly most any

metric now. something we like to do in our work is look at what the consensus perceives to be the weakest group and then simply ask is it behaving as if it's the weakest group. from our conversations, the consensus believes commercial real estate and regional banks will be the source of any new stress or trouble. when you look at the charts they are just not that bad. bank stocks are pretty well bid. the reits thankfully -- frankly trade pretty well. along the idea that we will not get bond yields running away from here. our thinking, our approach would have to change with 10 year yields above 450. lisa: are you a screaming bowl, chris? chris: we have been bullish and i remain bullish. the changes to that if there's a problem brewing out there if there is something sinister it is too early to know.

we would see it in really degradation or deterioration to the leadership fabric of the market. that's largely been intact for the last year. i focus on things like is discretionary still outperforming staples. our industrial setting the leadership tone of this market. so long as those boxes are checked we are in the status quo environment. you always have to be on guard for things that could change the viewer except that. maybe it's oil to 90. but neither our base case. >> for so many that was just a green light to buy equities. gold rallying. everything rallying against the u.s. dollar in foreign exchange as well. a snapshot of some of the feedback we've got on the speed -- sale side. recent inflation data just a bump. fed still on track for a june rate cut. rate cuts are coming even if inflation will growth run smoother than expected.

looking at how the recent data hasn't changed it at all. chairman powell said a few times in a news conference the story hasn't changed. lisa: at what point do inflation concerns become a threat again or does the market by into the idea that growth is not going to cause inflation to materially increase, that it is compatible to see inflation, down even with strong growth that could be a seller rate -- re-accelerate. jonathan: the conversation we need to have later this morning and throughout today. equity futures positive by one third of 1%. here is your bloomberg brief. >> the swiss national bank cutting its key interest rate by 25 basis points acting months ahead of the fed and ecb. officials lowering the rate to 1.5%. some were betting on a cut but most economists predicted the rate would stay unchanged until

at least june. the frank tumbling after the decision falling 1% against the euro to its weakest level since july of 2023. job cuts are coming at barclays. the u.k. bank is preparing to cut several -- several hundred jobs. the move comes as a year-long effort to trim costs and within the unit. astera labs marking the best gains for a u.s. ipo since 20. shares rose more than 70%. give me company a market value and adding momentum to the ai stock frenzy. the listing is the fourth largest in the u.s. this year according to data filed by bloomberg. that's your bloomberg brief. >> relaxing the rules for ev's. >> the consumer pushing in a direction. as we look in the near term, we see hybrids continue to gain in

popularity. i think we will see markets head towards hybrids. jonathan: the latest on policy and the nations capital up next from new york city. good morning. ♪

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>> the rally continues. another third of 1% on the s&p 500 following an all-time high at the close yesterday. recalling the rally at the bond market. we are lower again and yield down on us five basis points. under surveillance this morning, relaxing the rules for ev's. >> it's a major part of the economy, it's a larger portion of the base when you get into the secondary market it's twice that so if you were trying to drive and support an economy this is where you would start.

as we look at this in the near term we will see higher rates continuing to gain in popularity. i think we will see markets head towards hybrids. >> the biden administration easing plans regulations on the auto sector making room for hybrids and the push for more electric vehicles. the new rule giving automakers more time to comply with stricter 2030 after warning from industry and labor leaders. this feels like a win for the traditional automakers who many are considering leaning into hybrids a little bit more in the next few years and perhaps over the not too distant future as well. craig: it's a sort of bowing to reality, the biden administration seeing the challenges they are having sort of getting the electric vehicle sales going. we look out eight years from now it's hard to believe that we

will get to these numbers that are sort of implied by these rules. if we look back eight years ago i would've called you crazy to say the model why was going to be one of the best-selling vehicles in the world and so this is an industry that has been changing really quickly much as we have seen this real substantial slowdown lately in terms of momentum for ev's i do think we will see both more of hybridizing, may be in the pastoral would've been combustion cars and still some continued effort again. the consumer interested in going fully electric as well. >> there is this question of whether it signifying some sort of shift in the administration stance. not necessarily trying to support electric vehicles per se but overall targeting emissions with a greater acceptance of whatever means they used to get there. is that an accurate reflection

of how the administration seems to be slightly altering its tone. >> i think that's right and i do think this was a rulemaking process that was pretty tense where you had some pushback on the part of several automakers, toyota and stellantis. which are big employers in the u.s.. you also had real concerns raised on the part of you nodded idle -- united auto workers union. that was a key constituency for president biden. he did not want to be sort of giving fodder for pushback against his reelection prospects. this idea he wasn't looking out for the interests of the u.s. auto worker and so the uaw has a very interesting sort of history of being a group that is very invested in the environmental movement and yet they are concerned about the threat this poses to folks who work at engine and transmission

combustion assembly lines across the u.s.. we talk a lot about the idea electric vehicles have fewer moving parts, less things to put together. a huge part of what is potentially disruptive here is some of these less paid attention to factories but do some of the power in terms of the vehicles together. lisa: we are hearing a lot of the rhetoric of how the auto industry is just purely driven towards the election. along with the proposals whether it is some of the changes to this administration's approach or whether it's strums talk about maybe 100% tariffs on chinese made vehicles coming in from mexico. is this just talk to get ahead of the election. >> it was interesting to hear some of this rhetoric out of trump because the numbers he's

throwing around have been all over the place in terms of what he's going to do. but i think generally we are going to hear more and more of this rhetoric about the threat biden's efforts to electrify the industry poses. there is a validity to this idea it will be a disruptive force so even as workers maybe are willing to hear biden say he's looking out for them, there is a real concern about just how much there is a sort of willingness to change because this is an industry where a lot of the folks who have worked on these assembly lines in these factories have done so for decades. if you are going to fundamentally change this industry, that's requiring a leap of faith. you are seeing trump sort of cds on that willingness to second-guess what biden's talking about and yet this is something biden can talk -- .2

as an achievement in terms of what give the ira has accomplished. >> i'm thinking of detroit this morning. they've got clarity on policy now, they can really start to plan. mary was starting to consider going back to hybrids. something there were reluctant to do. what you think the next move is from some of these automakers? >> i think it's going to be the case the generally combustion only is just not going to cut it anymore. in order to come anywhere close to where these rules or requiring, you need to at least partially electrify virtually anything. whether that means slowing down some of the fully electric move i think we are seeing that in terms of getting cold feet about how ready the consumer is to go fully electric.

you can offer conventional hybrids that don't even have a plug and you don't have to worry about bringing the consumer along even to whether or not they install a plug-in in their garage. even just going in the direction of partially electrifying combustion engines will go a long way to reducing the emissions of the fleet and getting the consumer used to this idea there are reasons this can if you get a little bit of extra own fall off the line, that may sort of open the eyes of the consumer of maybe this isn't so bad after all. >> i tried to get some detail. i wonder if you know where this is going, how easy is this to transition to start making hybrids. >> i listen to your interview a few weeks back and she was a little bit cagey about this. it is not going to be sort of

snap your fingers and this shift over to hybrids. this will be something that will play out probably going to take gm a good year and a half before we start to see some of this decision that we've made in the last few months to really sort of come to fruition for us to see this end product of more hybrids available your dealership. >> it's a noticeable shift, thank you. the latest from the epa. the administration attempting to speak out of both sides of their mouth i guest because on the one hand you want to speak to climate activists we are going hard and going to be tough. auto workers in detroit to say they are not going as hard we can do other things as well. >> which means are we looking at a policy shifting or looking at rhetoric that shifted ahead of the election. if we hear what crag is talking about. the fact these rules were

altered based on the feedback from the auto manufacturers in the united states. it feels like this is a slight shift. it's less on electric vehicle subsidies in the same way. to me had there will be history books written about whether this indicates the end of an era with some of the dreams of that. jonathan: it's not about what you are i think. ultimately this is where the market is paid the market has spoken and they've had to listen otherwise you will get automakers in detroit in a big mess. equity futures positive by one third of 1%. this is bloomberg. ♪ (grunting) at morgan stanley, old school hard work meets bold new thinking.

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jonathan: what a move yesterday on the equity market. chairman powell, equity futures now adding some more weight on the nasdaq up by 0.7. some all caps outperforming. biggest day of gains in about a month. up again by 0.6%. let's turn to fixed income. down another four basis points now. lisa that's quite a turnaround over the last four days. lisa: traders are pricing in a chance of a june rate cut. that's up from a day before the press conference.

basically saying we are going to cut rates so stop it with thinking this was somehow changed all picture. the market got the message loud and clear and it's off to the races. jonathan: dovish hits after hawkish knocks. lisa: it's a lineup which is essentially what we saw. jonathan: this is a different fed chair than what we saw in august. completely different. lisa: i was thinking about this raid there was a question of are we looking at a time where you have fiscal stimulus coming in still full force and then you've got monetary stimulus on the edges starting to come back. what happens in the fight between these two? they are in sync. it's a green light to stocks and for risk assets. is there a consequence or is this just a golden era of incredible growth in stimulus. jonathan: there were many other consequences as well. let's turn to foreign exchange

and look at what's happening in the moment. a surprise move from switzerland. the swiss national bank cutting rates. what do you have, a weaker swiss franc. out by about 0.7%. i think about 90 minutes away we will hear from the boe. what interests me about the bank of england is there are a couple of members who will end up saying i think we should hike interest rates. i wonder if the recent data clips the words of the hawks at the bank of england. lisa: do we end up with a unanimous vote at least that the goal is down, because that was sort of one of the tensions of the bank of england. they are looking at a different growth backdrop in a different kind of dominance of the currency. for the bank of england it's this delegate dance especially as they deal with the deficit and growth bring jonathan: flock of doves which is what it feels like the last day or so.

under surveillance, fed chair jay powell staying on message for stocks and bonds insisting tolerance for inflation has not shifted. >> what it means is we've seen in coming as i pointed out in my opening remarks we didn't mark up our growth forecast. the economy is performing well. the inflation data came in higher as a separate matter and that caused people to bring up their inflation. nonetheless we continue to make good progress on bringing inflation down. jonathan: i think those comments are so important. there was a clear and we thought obvious contradiction of the forecast of 2024 and it goes of the summary of economic projections. growth comes up by quite a lot. unemployment comes down. cpi revised higher by just a little bit and then you basically sing the median. is

unchanged even though growth will be stronger and inflation will be higher. it raised the question for both of us are they willing to tolerate higher inflation. what gives. then you get that response there and he refers to inflation. it was a little bit higher as a separate matter, distinct from what's happening with economic growth. they made that point repeatedly, stronger growth is not something we are concerned about at the federal reserve and we heard the same message of the end of january. lisa: i shrugged it off as maybe he's just trying to him and haw given the fact it's not some sort of cohesive message from fed members. it's each one of them coming up with their own guidelines. rick reeder of black rock had an interesting point which is inflation has not been a function of fed policy on the way up or down. and this is independent and some of the interest-rate sensitive areas of the market aren't fueling the inflation. so the fed is kind of impotent

and what they are trying to do is gauge how not to become part of the problem as some of these other areas right size. has the fed lost control over the inflation narrative entirely which is the reason why stock markets are moving. >> rick's colleague joined the program. he was fantastic. can you give us evidence of how we are sufficiently restrictive. he'll point to the labor market. you ask about the loosening we've seen there. they will point to the supply side of the labor market. they won't even mention what's happening with demand because it's not about interest rates, it's about immigration which is what we heard repeatedly from economist on wall street. >> it so difficult to come up with something cohesive and understandable to say. we find ourselves of the policy interest-rate structure than some ways is inefficient slowing some segment of the economy quite a bit with high rates

while appearing quite ineffective in reducing activity or price gates and many of the service sectors of the economy. if the fed is ineffective, are we basically saying we don't want to slow things materially on the others and then what's can offset the other part. is it going to be immigration, supply-side responses saying over to you government. jonathan: i finished the news conference i think we both said the equity market bowls would just like to hear that news conference off and on. maybe just wants to replay the whole thing. which is replay the news conference for 60 minutes back-to-back for the next three hours. we are knocking to do that we will talk about apple. the department of justice is set to sue apple as soon as today for alleged antitrust violations. bloomberg reporting the doj will accuse the world's second most valuable tech company of blocking rivals from accessing hardware and software features on the iphone. this would be in addition to the

biden administration's other antitrust suits, the doj has a lawsuit against alphabet accusing google of monopolization and the ftc is pursuing action against meta and amazon as well. they are not in a good spot. -7% year-to-date. >> which is interesting given they are quite keen on the antitrust efforts. people looking for some sort of different antitrust approach with a change in administration, this case was opening 2019 under the former president trump. we are looking at either candidate continuing this antitrust type of action which is compelling to me given a lot of people are saying it seemed polarizing. jonathan: going into the selection later this year prayed let's turn to foreign policy. jake sullivan making a surprise trip to ukraine. looking to assure allies eight will be delivered for the country's defense against russia. sullivan saying you'll get a

strong bipartisan vote in the house. i don't think we need to speak about a plan b. speaker johnson is refused act on an aid package passed by the senate to include support for ukraine, israel and taiwan. just as leaders start to regroup in europe and talk about what to do next, let's get to that. can you explain how much distance is there between macron and everyone else? leslie: there is a divide and macron is pushing forward, setting france out as a leader with the possibility of western troops in ukraine is not unthinkable at this meeting doubling down on how does europe work together to increase basically it's rearmament and how does it find itself. that's the big question here. i think as you suggested that france is distinct in its views from germany, the u.k. and even from the u.s..

but there are others in europe, those closer to russia who share this view and interestingly some leading commentators, fareed dzhokhar you came out with an op-ed saying similar saying the worst thing would be for prudent to win in western troops of some form on the ground should not be unthinkable. there is momentum in the backdrop to all of this is of course that ongoing fear that america will not deliver the amount of money necessary to really continue to sustain that support for ukraine even under bidens leadership and something that could change quite dramatically or trump to be elected. i do think what we are hearing now is that supplemental bill that the speaker of the house will allow that to go forward and there will be funding but that's not reassurance for very long that it will be enough and

they need to step up. lisa: on that existential concept, how much discussion is there of the ways to finance this akin to what emmanuel macron was talking about because this is really the key struggle. how do you pay for supporting ukraine by europe also investing in some of the military strength and the half the former president trump is asking for and frankly they feel like they will need especially without necessarily in the u.s.. leslie: there's an urgent question about how europe contributes to defending ukraine and getting those armaments there and how they pay for that. then there was a longer-term question which speaks to the pressure from the former president but quite frankly from multiple u.s. presidents and one that we've sustained regardless of whose elected. but on the question of bonds, that will be controversial.

it strikes me as unlikely to move forward. there's the broader question of using russia's central bank frozen assets. that i think is getting a lot of traction but this question of financing, the support for armaments is critical at a time when european economies are of course not strong on the whole. so this meeting today is very important and once again macron is an outlier and setting forth a bold vision that many people are concerned about. >>, talk with us frozen assets. is it very specific obstacle a legal issue, a specific country that's doing so. where is the holdup coming from? leslie: many see this as breaking a fundamental norm, a shift in opinion, of the debate has been going on for a long time. the opinion has shifted in favor and there is a question of

exactly what are those assets used to finance and that's a line many people draw in different places. some don't think it should be used to finance the direct purchase of armaments. some have wanted to focus primarily on the day after on ukrainian reconstruction but of course that day after you only get there by changing the balance of power on the ground getting to some sort of peace so there's once again a question of urgency but there is a legal and normative position that divides many people across europe and in the united states. jonathan: leslie, thank you. it's difficult a lot of this money in those assets are in some european countries. what you have is how do you confiscate assets from a country you are not in direct conflict with and that's the conversation we been having for quite a while. lisa: how do you move forward in

the marketplace that you're a sort of loyal steward of the money you've been given to hold custody of it's a difficult moment and this is something we keep talking about which is how do countries lose the ability to act with impunity. how long can their historical power get them through an era where they are changing the rules in real time. jonathan: equity futures on the s&p 500 positive by 0.3%. your bloomberg brief. yahaira: the u.s. is pushing for an immediate cease-fire in gaza tied to the release of hostages held by hamas. antony blinken says the u.s. is circulating a draft resolution at the un security council calling for a temporary pause in the war. this marking a change. until now the u.s. use its veto power to block calls for a cease

fire. reddit will begin trading today. the price of the top of the expected range. the offering values the him was $6.5 billion. chairs -- shares will trade on the new york stock exchange under rddt. we will have an interview with their ceo live 11:45 eastern. l.a. dodgers firing the interpreter for superstar player show hey otani. the players longtime friend and interpreter racked up debts to a southern california bookmaking operation which is under federal scrutiny. questions were raised after at least $4.5 million in wire transfers were sent from the baseballs -- baseball players bacon count to a bookmaker. otani -- bank account to a bookmaker. jonathan: that story is nuts.

lisa: he allowed for a 4.5 million dollars transfer of funds. the dodgers organization doesn't matter. jonathan: it's like small change. up next on this program, the fed staying on message. >> the underlying story hasn't changed. we didn't buy into our good the inflation numbers were in the second half. we are not completely put off by the bad inflation reads in january february. jonathan: this is bloomberg. ♪

jonathan: record high at the

close yesterday. good morning to all and welcome to the program. yields are little bit lower again down another four basis points. euro not doing much. under surveillance this morning the fed staying on message. >> our basic message is the underlying story has not changed. we did not completely buy into out quickly inflation numbers were in the second half of next year. we were not put off by january february. we still think monetary policy is tight. we will get inflation down and so we still think we will cut rates this year. >> the post fed rally continues after the central bank reiterated its outlook for rate cuts this year. this is a fed that wants to cut rate -- cut rates. there is still time before the june meeting for the data to fall into place although the narrative has been challenged.

the chairman says he's committed to getting inflation back down to 2%. to those projections look at their committed to getting back down to 2%. >> he's more committed to getting the u.s. economy moving forward. he's indicated they're happy to tolerate a little bit higher inflation and making sure we do keep the soft landing in place. that seems to be his main goal. i haven't heard anything different. jonathan: if that's the big take away despite the fact the data has changed somewhat what is that tell you they should do in markets right now. iain: it tells me that people want to be invested, that stock markets are going to do with their doing over the last few hours and ultimately investing in the fixed on marketable also makes sense. lisa: is it here's the fork and you can eat your cake as well. how long does it go on before there's consequence on the others. whatever the case may be because of a certain point you have to look at does this allow

inflation to run hotter and maybe make longer-term bond the opposition for longer-term bonds less attractive. iain: they do believe they've got inflation coming down under control. maybe the last couple of months they are willing to look through that and see the downward trajectory is still there. i think they genuinely believe they are in restrictive territory and they don't think they are taking themselves in the easy territory. they're just taking a foot off the accelerator to allow the economy to continue to grow. i think the first few rate cuts we see are going to be driven by inflation. if we see a really serious rate cutting cycle through other cycles it's can it be a deterioration of growth and we are not seeing that. we will have a few rate cuts unless things get a lot worse. lisa: two markets agree that they are in restrictive territory. iain: there are also those financial conditions are expecting the fed to be easing

off a bit. there is still a lot of cuts priced into the system which is what the market likes. lisa: at what point does it stop or do you just pile in. i joked about this, why don't you just lever up and pile into risk. you're getting a green light not only from the fed but also fiscal governments. iain: i do still think we've had a lot of tightening and i don't think the lags have been as quick as previous cycles. i think there are concerns that those will come down the road at some point so i don't think you want to be indiscriminate. you want to make sure you're in the right but it does feel like the central banks are willing to continue this rally for the time being. jonathan: are we pretending they have control over something they don't have control over? is that one big game we are all playing. the federal reserve is sufficiently restrictive. but when we look at the labor market we speak to economists as

to what's happening with the labor market they point to the supply side is the reason to why things have cooled down a little bit. what do you think the fed has control over when they sit here and pretend we are sufficiently restrictive. iain: definitely supply-side has driven growth. inflation is coming down. we look at the employment picture it went from a very hot periods, it was cooling down. slowing rates, a reduction, reduction in openings. things are heading in that direction. i think the central banks are looking at it and it's happening to growth. we can maintain this if we are sort of cute around how we deal with this and some rate cuts will help that. >> june is a call for you if the data falls into place. can you ask plane with that actually looks like, is it 2.5%. i don't even know anymore?

what is it? iain: you have to see them on a monthly basis. if we start seeing a whole list of .4 it's going to call that into question but i also think in a mindset jay powell wants to raise policy seems determined. jonathan: steve said the same thing. this is a chairman that wants to cut interest rates. if i look across the curve right now i can see why maybe wind by the front-end treasuries. looking for rate cuts. i'm wondering if they're willing to tolerate higher tall -- inflation howdy things operate. iain: you do see the curb steep and up a bit. maybe that's the five-year part of the curve. i think that's what happens. we've still got the inverted yield curve. we should reverse that at some point.

so for me i don't think you'll see a big sale from the back end. i do think this huge demand for bonds and i think they look attractive in real terms. but again, this is more of the carry environment because i think we will go back to where we were at the beginning of the year. i think we see seven cuts unless we see deterioration and data. when you look at the dots, the mean just moves a little bit higher. there are overdubs out there calling for four more cuts. they seem to be taking a cue from the data and coalescing around the central. >> how much is this part of the bid behind gold. the idea that that's more of a safe haven at this point the longer-term bonds when you're not sure about what can bring inflation back down to 2%. and people are looking for some sort of ballast at a time when inflation is still a risk. iain: there's a few reasons why

gold is doing well. there are people saying policies can be easing going to real assets. i don't think it's showing you people are particularly concerned around gold has often been seen as that safe haven asset but if you look at the rest of the financial conditions in the stock market, will i don't think gold is really shown that. i think it's more inflation. jonathan: i'm not sure what signal i should take from the fact you are here and not there. iain: the most interesting thing for me will be whether we get some of those moves down. both saying the market will take that as a dovish tilt. we get the expectations of wage data at the same time. the movement in the u.k. is also

quite supportive this year may be different from what we are seeing over here interesting to see how the bank of england is reading that. jonathan: i appreciate the dissent. i agree with kike when he talks about this. lisa: i appreciate iain steele he had a constructive way of saying -- answering what you said what's the take that you are here and not there. jonathan: this was great, rate to see you. thank you so much. the second hour bloomberg surveillance. jennifer of invesco. sebastian page of t. rowe price and cameron pickering -- callum pickering. alternate highs and then some, this is bloomberg. ♪

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>> i think this is a signal in the market is taking it as that that they will tolerate slightly higher inflation for longer. >> they have to tolerate higher in the near term but they had -- i don't think they are giving up on that goal. >> this is a fed that wants that soft landing to continue. >> this is bloomberg surveillance.

with jonathan farrow, lisa brummel and in reordering. jonathan: the signal this market stocks was by everything, live from new york city this morning, good morning for our audience worldwide this is bloomberg surveillance, of the second hour begins right now. posited by one third of 1%. reported a few times on the program. ian steely j.p. morgan, this chairman wants to cut rates. lisa: that's the caveat we learned yesterday. people are saying it's off to the races. on the one hand you see strength and they want to have the monetary conditions, what's the holdup? jonathan: i want to go all boy back several months. we both are looking at each other like what she's talking about. after what i heard yesterday, the fed puts back. he said repeatedly and he talked

about in january, that's implicit. in both the forecasted news conference yesterday. they are telling you of growth weekends we are ready to go. regardless of whether inflation is. lisa: i want to issue a mea culpa. i turn to you and said this is a totally different regime, inflation is focused. you were correct and i was vastly wrong. to me this has been a big surprise. everyone was expecting all that pain we heard from fed chair jay powell will come into the market. it never has and they are done. jonathan: that voelker impression, that eight minute address. here we are a few years later. i remember a number of years ago with the objective to extend the cycle. that's what i heard yesterday even though i didn't actually hear him say it. the objective is to extend the

cycle. he does not want a recession. lisa: i keep going back to this note on blackrock where rick was talking about along with the inflationary pressures are not in control of the fed. the fed is concerned about sentiment and concern about things getting out of their control at a time where you look at service inflation, insurance, medical cost, none of this stems from interest rate policy. what is going to control those things? is it just supply-side responses and the fed saying we are done because those are out of our control. jonathan: concerns from holding too long seem to be trumping concerns of cutting too soon. greenlighted the news conference , that's what happened yesterday. we are positive by one third of 1% on the s&p 500. it's not just stocks. down for basis points on the 10 year. down.

monday north of 470. at the front end of the curve. here we are on thursday south of 460. big turnaround. lisa: 70% chance of a fed rate cut in june because the data will not cooperate enough to go ahead. jonathan: we will try to challenge that consensus with richard bernstein and why he thinks the fed may go the whole year without cutting grade biden doubles down in america first and kallum pickering ahead of the bank of england rate decision. chair powell stays the course boosting bets the fed will cut rates in june. richard not expecting any reductions this year even suggesting there's a chance of a hike. richard i'm pleased to say is with us around the table. let's start with that press conference braidwood you make of that yesterday? richard: i have the view of

viewing him as a bartender still pouring drinks. we haven't heard last call yet and as you said that's causing speculative assets to go up and that's a natural reaction that should go on when the fed is going to provide a lot of liquidity in an already liquid environment. my confusion is that there is everything is going up. it seems to me we should be seeing the cyclical pro inflation side doing much better and i'm not sure that's happening grade i think there's a sliver in which a speculative further in the market, anything like that i think that's kind of the warning sign out there. the more economically sensitive stuff should be there. lisa: fabulous five you wanted to get apple and tesla. i'm curious about why that speculative if the earnings are there and that's the

justification that everyone comes on the show gives. richard: there's always this notion we have to worry some of these are bad companies. they are not bad companies. the question is are the unique companies. i don't think they are. just for the s&p 500 we have 150 companies growing 25% or more. only three of the magnificent seven pass that screen. so there is clearly a lot of choice out there. why would anyone focus on the magnificent seven. history says you start getting this broadening that the market starts broadening, that's happening in fits and starts. lisa: the theory we hear is of the federal cut rates that would allow the broadening out, it would allow some of the other 490 five stocks to really gain some momentum because those of the most affected by high interest rates.

why do you disagree? iain: i don't disagree. -- richard: i don't disagree. why would the fed want to spur speculative asset to the stock market and financial markets? because ultimately bubbles were very speculative periods of that are inherently inflation. they are inherently inflationary . you allocate capital for things you don't need and you don't allocate for things you don't need. ultimately you spur inflation. i don't think the fed has thought that one through. jonathan: how do you identify that in stocks at the moment. richard: if you look at just stocks, if you look to my gives and seven effect growing earnings to 5% or more. i would argue that's euphoria. the profit cycle wasn't slowing in the united states.

today the profit cycle is accelerating. i was in the stock market. lisa: when you talk but how they are fueling a bubble or speculative fervor, there is a question of whether their policy matters at all with respect to inflation. this idea at spurring the specular bubble is not fed policy at all. it's something else maybe fiscal and the fed is trying to respond to what they can control, a commercial real estate, some of these other aspects. which i felt the bite of it. richard: the keyword that i think is important is the word respond. a lot of investors believe the fed is a leading indicator, the fed is a lagging indicator. maybe with the voelker fed but every fed has been a lagging indicator. they look at inflation lagging indicators and they respond to lagging indicators. that's the thing i'm i think present the opportunity right now is that you've got leading

indicators that they're starting to get stronger. we saw building permits the other day. but the fed is still reacting to the lagging indicators. i think that presents a tremendous opportunity because it says we are likely to have more rather than less and the fed is going, that's to me says you will see more growth and calls for cyclicals. jonathan: this is just a tactical call. this is a long-term call, change of regime. can you explain that. richard: you got the second backdrop of globalization contract. i think that's the long-term, i know about ai. i think contracting globalization because the united states is in the unfortunate position of a massive trade deficit is globalization contract. that's a really bad combination. it means the united states will have to rebuild capital stock.

people call this re-shoring, near shoring. there are so many words for this. it's all the same theme. we've rebuild the united states capital stock. jonathan: what do you think will work this time but didn't work last time in the previous decade. richard: i think small-cap stocks. the area i think people are paying any attention to on small and mid-cap industrial stocks. they've outperformed the s&p 500 over the last decade. small mid-cap industrials have which i think is the beginning sign of this d globalization rebuilding the stock. >> do push back against those who say they are better equipped to actually handle the volatility in inflation in the global backdrop. richard: i find the love of large companies interesting. when i started my career, senior

analyst baltimore companies. in the late 70's and early 80's there was a massive small-cap rally and small caps were considered sexy so senior analyst followed small-cap companies, of the big companies that were boring were followed by junior analysts. as you go through the 80's and into the 90's the banking cycle certs picking up you find that starch switching. so many you have everyone loving large caps sink small caps and no place to be. every week on 180 degrees. i think it's an amazing thing to see when i think of the opportunities, the way described to them are they really seven growth stories in the entire world. of course not, there has to be a lot more. that's where the opportunity is. jonathan: what if there's only seven growth stories people care about. money's gone passive, the way b investors changed in the winners just keep on winning. how do you change that.

richard: my point is everything in life is centered, everything we do is centered on value. if i try to sell you a volkswagen for a bentley price you would not buy it. we all understand value. for some reason there's stockmarket time where people say it does not matter. i think this results in atreides opportunity for value given nobody cares about it anymore. jonathan: richard there of rp advisors. looking at stocks at the moment. every futures positive, schedule an on stories elsewhere. here's your bloomberg brief. yahaira: the bank of england is expected to keep rates on hold giving more time for inflationary pressures to cool before cutting rates, the governor open the door for cuts this year at the last meeting. maintaining a big timeline with investors betting the first cut will arrive in august. the decision is due at 8:00 a.m. eastern. new zealand's economy unexpectedly contracted in the

final quarter of 2023. pushing the country into recession. they've been expecting 0.1 percent but instead gdp fell for the second straight quarter. high interest rates have dampened consumer spending and investment with the reserve bank keeping rates on hold since may and last month signaling the intent to lower rates until 20 25 amid record immigration and stubborn inflation. a $14 billion deal signed with airbus two by 33 wide-body jets as it looks to streamline its fleet ahead of the merger. south korea's biggest carrier preferring the airbus model to that of bowing which had typically been the carrier's top aircraft supplier. jonathan: up next on this program, biden doubling down on america first. >> i want to build a future in america. my predecessor elected to build in china and other countries. jonathan: live from new york,

good morning. ♪

jonathan: stocks on the s&p rallying once again this morning. welcome to the show. equity futures up on the s&p. under surveillance this morning, biden doubling down on america first. >> we will enable>> advanced manufacturing here in america after years. i'm determined to turn things around and invest in america and all americans. that's what we are doing. my predecessor one of the future to be built in china, not america. jonathan: president biden visiting a campus in the swing state of arizona after awarding

intel billions. jennifer at invesco joins us for more. i was listening to those common -- comments. if you change president biden and put in president trump don't they just sound like each other? isn't that the same language? jennifer: this was a very bipartisan bill, the chips act was passed in 2022. we saw a lot of support on both sides for this movement to bring advanced manufacturing to the united states. this wasn't just spurred from the need for global competition, but also we saw from the pandemic, that was very real. and we saw the constituents of the senators and these congressmen across the nation affected by that. that's the main reason why.

>> the president was in arizona. i wonder how quickly see those results from these kind of handouts for state money, a federal money to companies like intel. how quickly do you see the benefits of that. >> we've seen money being given to intel. they announced a buyer to the chips built in the past that they would be creating a facility in ohio, but we will be seeing grants and loans in the next several weeks. we -- i think this will have an impact in the minds of those communities who will be affected and start to see some of those jobs come in. this takes a long time to create. these manufacturing facilities could take a year, two years and not only that with the workforce. in this bill, grants to develop some of that workforce and

education where those facilities will be located. lisa: what's the timeframe for this bill and the money in it being doled out. people talked about fiscal stimulus running out. is it, or is it ongoing? jennifer: that's can take a long time to get out. it's a little late. . we are starting to get that money out the door and it's going to take even longer for these facilities to be built and start running but it was already in the hearings leading up to the markup of the bill out of both houses it was sort of being told this would probably be an eight to 10 year project. lisa: what's behind it. we heard from pat that he needs more in order to compete with some of the semiconductor giants in the world.

is there room on this front given some of the deficit and the increase we've seen benchmark rates? jennifer: the question will be the next allocation. the commerce secretary has already signaled that, telegraphing to congress will likely need more investment here. it's not so much the money, it is the dedication from the u.s. government to these companies and show where there -- we are supportive of you. it will take some regulatory initiatives to ease some of the environmental issues to even build these facilities. there is a lot that goes into this behind-the-scenes. some of the red tape. it's important to share that sign of solidarity. jonathan: the policy looks

similar, the language sounds the same. who's connecting with voters base, whose messages more effective. even though those messages are quite similar. jennifer: there is a populism streak running through american politics in both sides are trying to latch on to it. i think as it relates to infrastructure, you had the previous administration talking about infrastructure through the entire first term and it finally got done in the biden administration first term. those were talks in congress that were happening very long time. every week it felt like it was infrastructure week. some of these issues are by nature bipartisan. and i think we will see the push and pull if some of that populism streak running through this election this year. jonathan: it was basically every

week was infrastructure week. it felt that way because it was. lisa: exactly. we mentioned that frequently. jonathan: that language, i want to build a future america. my predecessors camilla the future be built in china and other countries. biden is trying to out trump trump himself going into november. lisa: which is the reason why look at what both of them are going to do. that to me is a huge take away at a time where this is having real impact in specific states and for companies. jonathan: politicians, ceos, investors understand the national security risk for semiconductors but they don't seem to understand the u.s. national secured a risk of being dependent on the rest of the world for virtually everything. how big of a change are you expecting to see? richard: this is not a change that's going to occur before the

next commercial break. it's good to be something that's a 20 year story. -- going to be a 20 year story. the rebuilding of the american -- we have been dependent on the rest of the world and that is fine as long as globalization is expanding it didn't matter we had a trade deficit. now it's retracting. the u.s. economy in a very precarious position. and i think we have to come to the realization we are last among major economies. despite everything were talking about we are last. we are last among major economies in shipping. these are real issues as globalization contracts. whether it's trump or biden, either way i think that theme of rebuilding american capital stock will be the theme of investing. >> which area looks most right

for opportunity based on that given the fact we've seen some stops and starts. we talked about vehicles, the ideas central planning doesn't always work that well. richard: i think everybody knows california has the propositional law that by 2030, 2035 all vehicle sold in california have to be electric vehicles. the reality is the electric grid can support that. so it's a better investment team to invest and let your vehicle companies or to invest in the industrial companies who will build out california's electric grid. we are betting on the industrial companies building the electric grid. if the infrastructure you need to think about electric vehicles. without that, who cares. jonathan: who is can a pay for that? richard: that's an interesting question. we are so debt laden, you pay

for all this. this will of course get people riled up. juergen have to raise taxes, and you're going to have to redirect spending. it's good to be a whole different story. democrats will have to give up on the notion of let's spend for the two-year election cycle. republicans left to give up on the laffer curve because it's proved not to work in an open economy. tax missives have simulated other countries, think of apple, they get corporate tax cuts and build plants in china. i think you will have to see a complete reorientation of both parties economic policies. jonathan: only got 60 seconds left. richard, plenty of work and how quickly will seal his political changes. how quickly is that can happen? lisa: will you get that to

happen given every election cycle is a race to the bottom in terms of who can cut taxes and give out more incentives to people. jonathan: richard this was great. equities now up. coming up next, sebastian page of t. rowe price on the foam of, that is not my quote. he owns it. we will be talking about next. ♪

>> euphoric. seriously. >> there's a gym. are you thinking about it? jonathan ferro will go on the crews. you said you were considering it. >> not. >> you said considering it. >> i cannot come up with a number. they can work on that one. equities on the s&p positive

five thirds of a percent. people will clip that. >> they will cut off the first part. >> if i ever speak favorably about cruises you know someone has paid me. three basis points on the two-year. the rally continues. down four basis points on the tenure. surprise rate cut from the swiss. the swiss national bank down 25 basis points, feeling a weaker swiss franc. that's the first one. bank of 30 minutes -- of england in 30 minutes. >> this is the first rate cut. there's a race to cut. you get the sense that it's beneficial to be on the front end of that.

the swiss national bank was concerned about the currency that's too strong. >> you can still make a good living. and be seen with the swiss national bank president earns? upwards of one million swiss. i think the governors get a couple hundred thousand. granted you get money in the private sector nectar that. ecb, different pay structure. you get more as the natural -- national central bank governor of italy rather than ecb president. >> are you thinking of that? >> to serve as a bank president? i'm thinking about going on a crews. 880,000 swiss francs. >> you're going to run the swiss national bank. >> i don't think anyone wants me running that.

i don't think they want me running anything. the fed keeping rates on hold for a fifth straight meeting, staring down a fifth straight week of harder than expected -- hotter than expected inflation prints. >> the inflation data came in higher. that's a separate matter. the caused people to write up their inflation. we continue to have been good progress. >> inflation came up as a separate matter distinct almost divorced from growth being better-than-expected. it's that message we keep hearing from this fed chair. >> which speaks to this point we have been talking about this morning, which is is the inflation we are seeing even under the purview of the fed? to interest rates matter?

if so, what is their compass for moving away from restrictive rates? >> no moves from the fed. we had a move from the bank of japan. the governor of the bank of japan morning waiting to hike would raise upside inflation risks, saying the possibility would have strengthened for a rapid and large-scale rate hikes after the end of large-scale using. what do you make of that? >> operation try to strengthen the yen. trying to say this is not the most of us thing -- this is not the most dovish thing ever. there was other rhetoric out of the ether about further rate

hikes. this is what we expected. we saw the yen weaken. if that was the objective, can we judge how successful they have been? >> the success for them is that jay powell is dovish. that gave them an out to continued with a muddied but otherwise dovish message and not see a massive devaluation with respect to the yen. >> well framed. because the dollar going into that conference was strong. apple slightly lower with the justice department poised to announce a lawsuit accusing it of breaking antitrust laws by blocking competitors from accessing features of its iphone. the doj already suing google and ftc pursuing cases against meta and amazon. let's throw up year to date

where apple is in 2024. never mind the mac seven. let's talk about the mag one. apple is down 7% year to date and it's got almost nothing to do with this. where will growth come from this year to fuel the upgrade cycle? >> this antitrust suits been going out since 2017. on every side they are getting challenged. everything we saw with respect to partnering with gemini, with google, is they are coming out with a smart phone that uses artificial intelligence and need to get ahead of that after the failed venture into the car. this will be a fascinating development for one of the world's biggest companies. >> apple a little bit softer, down about 1%. a quote from our next guest.

sebastian page of t. rowe price. do you have fomo on momo because yolo? i'm not trying to tell you to load up on assets like that but a fully invested and balanced approach with discipline rebalancing with the tilt toward value seems warranted. what was that? do you want to explain. >> i wrote that just for you because i know you like acronyms. my update revealed i spent last week on a crews with my family. >> we will talk about that. you said you were enthusiastically neutral. does that still your approach to markets now? >> we are still neutral. the momentum situation is interesting. we just concluded a study of momentum. if you naively by the top-performing stocks every month and look at the

performance of that kind of strategy, it's at an all-time high. so momentum, based on the data i have, which goes back to the 1990's and further, it has never worked this well. this is worrisome. but the conclusion of our analysis is that when momentum spikes like that it's not necessarily a bad thing for market. that's counterintuitive but what we are finding. >> so stick with it is the message. >> it's not a systemic risk. the winners themselves when momentum is high can continue to do well. the big mayor markets -- the big bear markets we had, especially the last three, occurred when momentum was really low going into it. the performance of that naive trend following. so i was surprised by that. if you look at all the times when momentum was in the top quintile, the average return for

stocks systemically is 14%. the average return for the high momentum stocks is also solid. here's the caveat. there's a fat tail. this is what happened in 2000. momentum was superhigh and you had the mother of all momentum crashes. so you have to manage the risk. >> do you have a fear of missing out on momentum because you only dished do not have a fear of missing out on momentum because you only live once. why not just be neutral -- why not just be aggressively overweight? >> love that question. [laughter] [laughter] [laughter] [laughter] [laughter] >> we looked at the momentum spikes historically and studied them and look at what happened after. there's a difference on whether the mendham is driven by momentum in underlying

fundamentals or whether it's a "junk rally." if you look at the quality factor and see if a behaves similarly to the momentum factor then you can be reassured don't fear the momo. fundamentals have had really good momentum, sustaining price momentum in some of the large caps, so it's not a junk rally situation. the big moments blowup of 2000, non-earners were spiking and quality was not in favor. that's the warning sign you want to look for. going back to the last three bear markets, momentum can weaken quite a bit and go to the bottom quintile before a market crash. so look for when it gets junk year. when fundamentals are not sustaining it anymore. it can actually soften before the market crash. >> why wouldn't you say this is

not euphoria? why wouldn't you say this is not a bubble, not speculative, excessive momo and the other things you said? why not say this is the reality? because it's supported by the fundamentals, which is the case so many people make? >> another thing to -- another way to look at that question is to look at the price-earnings ratio of the high momentum stocks and divide that by the ratio of the market. now you are looking at the relative valuation of the high momentum basket. it is elevated but not crazy hi. you are miles and miles away from prior bubbles. again, fundamental, sustaining the momentum. i think we are maybe a mile from the cliff, now the meter or foot -- not a meter or foot, so

there's time to see if this will unfold and continue to be sustained. that's the question. >> that is the question i wanted to ask you. what would make you enthusiastically bullish? you offered three things to focus on, earnings, consumer, and money. how are things developing? >> the blob of money is still there. let's start with that one. your show on bank of america was excellent. they have 37 million consumers. they look at the checking accounts. they mention to 40% higher balances of ross income -- higher balances across income quintiles. so the blob of money is alive and well. earnings are going up. and the direction of fed policy is down. valuations are elevated. we have had a massive rally. what would make us more bullish?

it would be a market pullback all else being equal, a spike in the vix. seeing the vix at 25, 30 would be a moment to get more aggressive, lean into risk assets at cheaper prices. >> does the fed not matter? >> the fed matters because everyone is obsessed with the fed. but in terms of inflation, we've had a supply affect that's been maybe even more important than the fed. i think the fed will also matter if they get more hawkish. my view is there's upside risks to inflation. our ceo asked me to his office to talk about my market views. i sent him an email with one chart. i said i think this is the most important charting capital markets. it's a chart of the one year breakeven inflation implied by the markets.

it was 2% in january. it's at 4.1% today. >> how much of the money will go into cruise line tickets that are floating cities on the ocean? >> your turn for the review. >> i will give you a one-word review. tolerable. >> ringing endorsement. >> the family loved it. it's not as crowded as you think. >> because it is so big. >> it's so big and everybody goes to the same place, the pool, and then you have different places to go to hide. you also go on islands, which is fun. i took my son on a hike on saint maarten. that was fantastic. >> sounds lovely, the island piece of it. would you go again? >> not too often. >> i think that's a no. tolerated it. >> it is for the kids. >> like disneyland. >> you tolerate it. >> you feel like you don't have

to entertain them too much. >> you would do the same thing? >> i don't know that i would do the same thing. >> the truth is it's a democracy in my family and i got on voted to go on that. >> fantastic to see you. sebastian page of t. rowe price. an update on stories elsewhere. here is your bloomberg brief. >> the swiss national bank cut its key interest rate by 25 basis points months ahead of the fed and ecb. officials lowering their benchmark rate to 1.5%. some were betting on a cut but most economists predicted the rate would stay unchanged until june. the franc tumbling after the decision to its weakest level against the euro since july 2023. read it will make its stock

market debut today. it priced its ipo at $34 a share. the offering values the company at almost $6.5 billion. shares will trade under the ticker rddt. bloomberg technology will have an interview with the ceo. micron technology is surging in the premarket after it gave a surprisingly strong revenue forecast. the outlook underscoring soaring demand for the hardware used to power artificial intelligence. the largest maker of computer memory chips in the u.s. says third quarter revenue will be up to $6.8 billion, topping $6 million expected by analysts. >> thank you. the fed is known. the boe is on deck. >> the plan to bring inflation down is working. we need to stick to it and see it through.

as inflation gets closer to its target, that opens the door for the bank of england consider -- to consider bringing down interest rates. >> that decision 15 minutes away.

>> of 0.4% on the s&p -- up 0.4% on the s&p. the fed is done. the bank of england on deck. >> we are firmly on track to bring inflation down to target. this is the lowest headline rate for 2.5 years.

this shows the plan to bring inflation down is working. we need to stick to it and see it through. as inflation gets closer to its target, that opens the door for the bank of england to consider bringing down rates. >> just about 10 minutes away from the rate decision, expected to keep rates on hold as u.k. inflation falls to the lowest level since 2021. there's a chance policymakers give a nod to current market expectations for a cut in june, which they can submit inmate. callum joins us. there were two policymakers who did this last time. where are they now? >> if we were to lose one, that would be a dovish single. the other thing to work out -- to watch out for, we already

have one policymaker wanting to cut, so if we had two, that would be a dovish single -- dovish signal. these are the kind of signals beyond the forward guidance or any adjustments to the economic forecast that the bank -- where the market should be looking. >> of those dissenters, who goes into that meeting going -- that meeting feeling more empowered? >> the one who is most hawkish will make the argument that we are not quite at 2% and the economy seems to be strengthening. monetary policy. that will be the argument. i think we will probably get holds and cuts from everyone else. the general view is we have done

a good job. the markets are a little unhappy. there is some question around credibility. but you lean back and say we had a massive shock, increased interest rates by more than five basis points, and not much happened. we had a stagnation. we do not had -- not have any rise in unemployment. this is pretty much a job well done so let's take a foot off the brake. i think the bank of england will be eager to validate market expectations for a cut in june. so we will be confirming what we already know, which is the central bank thinks it's done its job. >> how much is the bank of england getting some signal from the federal reserve, having a bit of a green light to have a

dovish message, because the fed took the pedal off the accelerator there? >> the fed is the most important central bank in the world. it is the conductor of the global economic orchestra. what the fed says matters for everyone. but when it comes to the bank of england and the ecb, i think markets put too much of a focus and emphasis on this idea that it's about following the fed. the u.k. and u.s. have different economic dynamics at the moment. the u.k. has had two years of stagnation. we had a major supply-side shock. the make of england has aggressively raised rates. now the economy looks like it's recovering at the start of the year as inflation is coming down so they will be eager to help that recovering along by taking its foot off the brake. the fed is looking at an economy which for two years has been --

where inflation may be turning sticky around 2.5%. the fed's argument is do we need to cut? to what extent should we be helping the economy, which is showing no trouble yet whatsoever? when you rationalize the economies in these ways, there's a reason why both central banks will be approaching their relative inflation problems in a similar way. it just happens to be that it will wind up with cuts from both central banks. >> there's a question of does the fed rate policy and the bank of england policy really affect inflation or have a lot of the inflation features been from elsewhere, supply-side, demand-side, pandemic related distortions that are unrelated and unaffected by central bank rates? >> if we abstracted from the big shots of covid, the gas shock,

we would have had central banks gradually raising rates over this period. just to reflect that we solved a lot of the problems. neutral rates have gone up. so part of what we have seen as an accelerated process towards normalization. what inflation have come down? i don't think it would have. what we would have seen is a bigger reaction in wages and price setting. the second round effects would have been stronger. so central banks neutralized interest rates and got into tight territory. the effect of that has been to keep inflation expectations under control so once the first wave of this supply shock is faded it does not turn into a demand-side inflationary problem. the central bank is doing a fairly good job. just how much unemployment would

we have had to tolerate to prevent what's been the biggest supply shock for the u.k. more than 40 years? i think it's a preferential outcome to do this. internally, the bank of england will be with the same way. >> that is a chapter we are still in the middle of writing. callum pickering. >> people are looking for dissent. that's one of the unique features we get of the bank of england. >> we enjoy that. >> love that. we need to dissent more. >> with each other. >> i don't know. >> next, guests. plenty of dissent in the third hour of surveillance. ♪

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>> our policy rate is likely at its peak. it will be appropriate to begin dialing back at some point. >> i think this is a signal