Bloomberg Surveillance 4/30/2026

IT'S ABOUT THE TECH SECTOR WITHIN THE EQUITY MARKET. WE MIGHT BE OVERBOUGHT HERE. YOU HAVE STRONG EARNINGS FUNDAMENTALS UNDERPINNING THINGS. EVERYONE IS LOOKING TO MAKE SURE THIS GROWTH IS AS STRONG AS IT HAS BEEN. THIS IS BLOOMBERG SURVEILLANCE WITH JONATHAN FERRO, LISA ABRAMOWICZ AND ANNMARIE HORDERN. JONATHAN: LIVE FROM NEW YORK CITY THIS MORNING, GOOD MORNING. FOR OUR AUDIENCE WORLDWIDE, BLOOMBERG SURVEILLANCE STARTS RIGHT NOW. COMING INTO THURSDAY, THE VISION GROWS. THE FED, AS FAILURE TO FIND DIPLOMATIC SOLUTION -- META SLIDES AND ALPHABET CLIMES. LISA: 720 5 BILLION DOLLARS IS HOW MUCH THE FOUR HYPERSCALERS -- $725 BILLION IS HOW MUCH THE FOUR HYPERSCALERS ANNOUNCED. HOW MUCH IS THIS JUSTIFIED? THAT'S WHEN THE SPLINTERING COMES INTO PLAY. FOR ALVA, THEY ARE CRUSHING IT IN TERMS OF THE ACCELERATION -- ALPHABET, THEY ARE CRUSHING IT IN TERMS OF THE ACCELERATION OF REVENUES. FOR META, THEY ARE SAYING TRUST US. NOT EXACTLY FLYING IN MARKETS RIGHT NOW. JONATHAN: THIS FROM AXIOS THIS MORNING. FOR ONCE, THE AXIAL STORY IS NOT BULLISH. PRESIDENT TRUMP IS SLATED TO RECEIVE BRIEFING ON POTENTIAL MILITARY ACTION IN IRAN. BRENT THIS MORNING AROUND 116. ANNMARIE: WE NEED TO UNDERSTAND WHAT OPTIONS ARE GOING TO BE PRESENTED TO THE PRESIDENT. THE PRESIDENT IS WILLING TO KEEP THE BLOCKADE, HAVE THIS IMPASSE, NO NEED TO ESCALATE OR DE-ESCALATE. IF LEVERAGE IS WHAT THE IRANIANS HOLD IN THE STRAIT OF HORMUZ POTENTIALLY, THAT'S WHAT THE PRESIDENT COULD DECIDE WHEN IT COMES TO AN ESCALATION. MAYBE NOT STRIKING TARGETS IN IRAN BUT MAYBE THE NAVY HAS TO COME THROUGH AND START ESCORTING TANKERS THROUGH. CAN THEY LIVE WITH THESE OIL PRICES? LOOK AT WHERE GASOLINE IS IN CALIFORNIA, NORTH OF SIX DOLLARS GALLON. JONATHAN: COULD WE GET SOOTHING WORDS? MAYBE. BEAR IN MIND THIS. APRIL 17, THE PRESIDENT SAID THE STRAIT OF HORMUZ IS REOPENING AND IT DID NOT. EVER SINCE THEN, WE HAVE NOT HAD DOWN DAY FOR CRUDE. LISA: VERBAL INTERVENTION DOES NOT HOLD THE SAME KIND OF PUNCH. RIGHT NOW, THIS IS COMING AT TIME FOR ECONOMIES ARE NOT YET BREAKING. YOU HAVE FISCAL AND CORPORATE STIMULUS. THE OIL PRICES ARE GOING HIGHER AND SUDDENLY, WE ARE TALKING ABOUT NEW KIND OF TIGHTENING OF FINANCIAL CONDITIONS. 40% CHANCE OF RATE HIKE BY NEXT MARCH BY THE FEDERAL RESERVE. ALL OF THIS COMES TOGETHER WITH THE REAL TENSION, HOW LONG CAN THE ASSETS KEEP RALLYING? JONATHAN: COUNTRY TO COUNTRY, STARTING WITH THE U.S., NEAR THE HIGHS OF THE YEAR ON THE 10 YEAR YIELD. IN GERMANY, BACK TO THE 2011 HIGHS. IN THE U.K., NUMBERS WE HAVE NOT SEEN SINCE 2008. IN JAPAN, THE 1990'S. LISA: WE ARE ABOUT 2.5% IN JAPAN. COUPLE OF YEARS AGO, WE WERE AT ZERO. THE IDEA OF 2.5% IN JAPAN IS LIKE 10% IN OTHER PLACES. DOES THIS RESET EXPECTATIONS? GO BACK TO WHAT IS THE EXIT STRATEGY IF WE HAVE HIGHER OIL PRICES BUT WE DON'T HAVE AN ECONOMY THAT IS TORPEDOING. IF ANYTHING, GOVERNMENTS ARE SAYING WE WILL SUPPORT YOU, CONSUMER BECAUSE POLITICALLY, IT WILL BE DISASTROUS FOR US NOT TO DO THIS. THAT'S WHY YOU'RE GETTING REAL HESITANCE FROM BUYERS ON THE LONG END. JONATHAN: THE FINANCE INDUSTRY THREATENING TO INTERVENE. 930 TIME -- 9:30 EASTERN TIME, WE WILL HAVE THE NEWS CONFERENCE. AFTER THAT, WE WILL CATCH UP WITH KEVIN HASSETT, FOLLOWING QUITE THE ANNOUNCEMENT FROM THE CHAIR OF THE FED RESERVE. HE IS STEPPING ASIDE FOR KEVIN WARSH BUT HE'S STICKING AROUND AND STAYING ON THE BOARD. HE WANTS TO SEE THE PROCESS CONCLUDED WITH FULL TRANSPARENCY, THE PROCESS OF LEGAL CHALLENGES. HE SAID THERE HAS BEEN AN ATTACK ON THE INSTITUTION OF THE FEDERAL RESERVE. I'M SURE THERE WILL BE HARSH WORDS. WE HEARD FROM SCOTT BESSENT YESTERDAY, TALKING ABOUT HOW THIS WAS AN INSULT WITH RESPECT TO HIS STAYING ON. REAL QUESTION ABOUT WHAT THE ADMINISTRATION'S RESPONSE IS GOING TO BE. ANNMARIE: JAY POWELL YESTERDAY SAID HE WILL KEEP LOW PROFILE. AT SAME TIME, HE HAD THE STATURE AS FED CHAIR. HOW DO YOU KEEP LOW PROFILE? WE HEARD BRIEF TRUTH FROM THE PRESIDENT WHEN HE SAID HE WANTS TO STAY AT THE FED BECAUSE HE CAN'T GET JOB ANYWHERE ELSE. JONATHAN: THOUGHT THAT WAS LIGHTWEIGHT TRUTH, COMPARED TO WHAT WAS EXPECTING TO SEE AFTER THE ANNOUNCEMENT, IT WAS NOT MUCH AT ALL. YIELDS ARE LOWER THIS MORNING BY THREE BASIS POINTS. AT THIS HOUR, WE WILL CATCH UP WITH JULIAN EMANUEL. VICTORIA COATES AND NEIL DUTTA. WE BEGIN WITH STOCKS WAVERING AFTER CRUDE SURGED AND MIXED TECH EARNINGS -- THE BASE CASE REMAINS THE TECH LEAD BULL TO 7750. THE INDEPENDENCE OF STOCKS AND THE ECONOMY FROM MALIGN TRIPLE DIGIT OIL WILL NOT BE SUSTAINABLE. ARE WE REACHING TIPPING POINT? >> WHAT YOU PUT UP IS KIND OF CONTRADICTORY STATEMENT. WE THINK THE BULL IS PREDICATED ON EARNINGS, WHICH HAVE BEEN OFF THE CHARTS. ABSOLUTELY OFF THE CHARTS. BUT YOU ARE AT THIS POINT WHERE THE MALIGN EFFECTS OF OIL WILL NOT BE IGNORED IF THIS GOES ON MUCH LONGER. JONATHAN: LET'S GO TO THE LAST 24 HOURS, WHAT'S MORE CONSEQUENTIAL? THE MOVING CRUDE, THE EARNINGS WE GOT OR THE FEDERAL RESERVE? JULIAN: YES. JONATHAN: YOU CAN'T PICK ONE? JULIAN: WOULD HAVE TO SAY THE EARNINGS. IF YOU LOOK AT MULTI-DECADE CHART, EARNINGS AND STOCK PRICES HAVE VERY CLOSE CORRELATION. AND IT IS NO SURPRISE, IF YOU THINK BACK 30 DAYS AGO, WHERE WE WERE IN THE DEPTHS, DESPAIR, YET YOU ARE STILL IN AN ENVIRONMENT WHERE THE MARKET HAS RIPPED HIGHER. AS CRUDE HAS RIPPED HIGHER, AS YIELDS AS YOU POINTED OUT, HAVE RIPPED HIGHER, WHY? BECAUSE EARNINGS ARE RIPPING HIGHER. JONATHAN: YIELDS ARE BACK TO WHERE THEY WERE AND THROUGH THOSE LEVELS AT SOME CASES AT THE END OF MARCH. -- IN SOME CASES AT THE END OF MARCH. ALL OF THOSE STORIES HAVE GONE BACK TO THE END OF MARCH WITH THE EXCEPTION OF EQUITIES, WHICH HAVE MOVED OVER 13% FROM THE LOWS OF MARCH. JULIAN: IN THE MEDIUM-TERM, IT CANNOT BE. IN THE NEAR TERM, IT IS, AGAIN, BECAUSE GOING BACK TO THE CALL WE MADE AT THE END OF LAST MONTH, WE SAID THE HEDGING WE HAD SEEN IN THE MARKETS WAS UNLIKE ANYTHING WE HAD SEEN OVER THE LAST 30 PLUS YEARS OF DOING THIS. AND SO, ALMOST BY DEFAULT, UNLESS THE WORLD WAS ENDING IN THAT MOMENT, YOU WERE GOING TO GET THAT DEGREE OF RALLY WHICH YOU GOT, WHICH BY LOT OF MEASURES, WAS AS STRONG AS WHAT STARTED THIS GENERATIONAL BULL MARKET IN AUGUST OF 1982. BUT AGAIN, JUST GOING BACK TO WHERE THE SITUATION IS, THERE IS AN OPTIONALITY COMPONENT HERE TO AT SOME POINT, TRIPLE DIGIT OIL IS GOING TO CAUSE THE ECONOMY TO SLOW AND IT IS GOING TO CAUSE EARNINGS TO SLOW WITH IT. OUR WORK HAS SAID THE FOUR MONTH WINDOW IS REALLY THE TIME LOOKING AT SPIKES WHERE THAT COMES INTO PLAY. WE ARE GETTING CLOSE. LISA: EXCEPT FOR TECH, EXCEPT FOR AI SPENDING. THAT WOULD BE THE ONE THING THAT KEEPS GOING. WE CAN ALL RELY ON OUR CHATBOTS. I'M CURIOUS AT WHAT POINT IS THIS PLAN UNSUSTAINABLE, IF IT'S JUST FOR HIGHER COMMODITY COSTS TO WHAT THEY ARE TRYING TO BUILD? JULIAN: THAT IS CHALLENGE, DISAGGREGATING. ONE OF THE COMPANIES THAT REPORTED LAST NIGHT IS SOFTER BECAUSE YOU CAN'T DISAGGREGATE WHAT IS HIGHER INPUT COSTS AND WHAT IS ORGANICALLY HIGHER CAPEX INTENTIONS. AND THAT IS AN ISSUE. BUT LOOK, AGAIN, ALL OF THIS IS PREDICATED ON THE FACT THAT YOU CAN HAVE CONTINUATION OF THIS BUILDOUT, PROVIDED TWO THINGS. NUMBER ONE, THE CONDITIONS IN THE ECONOMY AND THE CREDIT MARKETS REMAIN BENIGN, WHICH THEY CLEARLY ARE, DESPITE TRIPLE DIGIT OIL RIGHT NOW. AND THAT THERE IS AN EVENTUAL PAYBACK WINDOW FOR THE AI BUILDOUT. THE EVIDENCE IS THERE IS ADOPTION GOING ON. THE EVIDENCE IS IT IS DRIVING REVENUES AND IT IS SAVING COSTS. IS IT AS FAST AS THE MARKET WOULD HAVE EXPECTED IT TO BE? NO. BUT, BECAUSE THE ECONOMY IS AS BENIGN AS IT IS AWAY FROM OIL, THERE IS PATIENCE. LISA: I'M CURIOUS ABOUT, AT WHAT POINT YOU HIT TIPPING POINT, IN TERMS OF YOU HAVE CAPEX THAT KEEPS INCREASING BECAUSE IT FEELS EXISTENTIAL AND INDEPENDENT. YOU HAVE YIELDS GOING UP BECAUSE PEOPLE CAN KEEP SPENDING, WHICH ALLOWS INFLATION TO KEEP GOING THROUGH THE SYSTEM. YOU HAVE RESILIENCE TO KEEP THE YIELDS HIGH. AT WHAT POINT DO THE YIELDS BECOME THE BREAKER TO THIS ENTIRE CYCLE? JULIAN: THAT'S WHY THIS IS CHALLENGING ENVIRONMENT. WE’'VE SEEN OVER THE LAST SEVERAL MONTHS, YIELDS ARE MOVING HIGHER, IN LOCKSTEP WITH THE PRICE OF CRUDE OIL. THAT POINTS TO THE FACT THAT THIS -- THERE IS TIME OPTIONALITY TO ALL OF THIS. MY ANSWER TO THAT WOULD BE, UNTIL THE ECONOMY SHOWS SIGNS OF CRACKING, THIS IS SUSTAINABLE. THERE ARE NO SIGNS OF CRACKING RIGHT NOW. COUPLE OF MONTHS AGO, WE HAD CREDIT ANGST, ALL SWEPT ASIDE. IT WAS AN ISSUE THAT WE KNOW NOW HAS BEEN CONTAINED. BUT, ESSENTIALLY, WHAT YOU ARE LOOKING FOR IS SIGNS OF STRESS AND THERE AREN'T ANY AT THE MOMENT. ANNMARIE: HOW MANY MONTHS CAN WE LIVE WITH TRIPLE DIGIT CRUDE? JULIAN: THE FOURTH MONTH IS WHERE THINGS GET DICEY. IT'S ALSO THE AMPLITUDE. IN OUR MIND, IF YOU BREAK THE PRIOR MARCH AT THE BEGINNING OF THE CYCLE HIGH, AROUND 120 ON WTI IN MATERIAL WAY, THAT WILL ACCELERATE THE TIMELINE. BUT OTHERWISE, WE ARE LOOKING AT INDEPENDENCE DAY. JULY 4 IS LINE IN THE SAND. ANNMARIE: IT'S $99 IN THE FUTURES CURVE FOR JULY. JULIAN: YOU'RE ESSENTIALLY -- WHICH IS WHY IT IS INCUMBENT FOR THE PRICES TO FIND WAY, WHATEVER THAT WAY IS, TO MODERATE BETWEEN NOW AND THEN. JONATHAN: JULIAN, IT IS GOOD TO SEE. YOU WILL STICK WITH US TO BREAK DOWN THESE TECH EARNINGS LITTLE MORE. UP JUST ABOUT TO .5 PERCENT -- 2.5% ON THE S&P 500. PRESIDENT TRUMP DEFENDING THE BLOCKADE ON IRANIAN IMPORTANCE, SAYING IT IS MORE EFFECTIVE THAN BOMBING THE COUNTRY. AXIOS REPORTING THE PRESIDENT WILL RECEIVE NEW BRIEFING ON THE SITUATION TODAY. MAG SEVEN EARNINGS IN FULL SWING. SHARES OF ALPHABET ARE RISING AFTER THE TECH GIANT REPORTED SOLID GROWTH. AMAZON ALSO LEADING ON KEY METRICS. META IS DOWN AFTER ISSUING CAPEX FORECAST THAT WAS -- THAN EXPECTED. THE LANGUAGE SUGGESTING THE FED WILL RESUME RATE CUTS. STEPHEN MIRAN PREFERRING RATE CUT THIS TIME. JONATHAN: MORE VONNIE QUINN LATER THIS HOUR. WRAPPING UP MONSTER DAY OF TECH EARNINGS. THE THREE CRITICAL DATA CENTER BUSINESSES, THE HYPERSCALER BUSINESSES EXCEEDED EXPECTATIONS. THEY ARE ALL STILL ACCELERATING. META IS NOT IN THE TOP 10 IN TERMS OF ITS FRONTIER MODEL. JONATHAN: WE WILL TALK MORE ABOUT THAT IN MINUTE. STEFAN SLOWINSKI JOINS US FROM BNP PARIBAS. LIVE FROM NEW YORK, GOOD MORNING. ♪ JONATHAN: COMING UP LITTLE BIT LATER, TWO CENTRAL BANK DECISIONS. WE WILL HEAR FROM THE BANK OF: 15. THE ECB. ECONOMIC DATA AT EIGHT: 30 EASTERN, JOBLESS CLAIMS AND MORE. AFTER THE CLOSE THE OTHER BIG TECH TITAN, APPLE, REPORTING AFTER THE CLOSE LATER. IT TALK HOW MUCH IS IT BACKWARD LOOKING DATA FOR APPLE MATTER AND HOW MUCH WOULD BE THE SHOW OF WHO TAKES OVER? IS THERE GOING TO BE SOME PLAN THAT WILL BE ANNOUNCED TO TALK ABOUT HOW THEY WILL BRING AI INTO THE IPHONE? JONATHAN: ARE THEY DOING THAT BECAUSE THERE ARE MORE THINGS TO BUY OR THINGS TO BUY GOT MORE EXPENSIVE? LISA: WE HAD THE STONE FROM MICROSOFT AND THE PLAN PARTLY BECAUSE THE COST IS GOING UP. WE HEARD THIS FROM EVERYONE. AT WHAT POINT ARE THEY GETTING MORE FOR THEIR INCREASED COSTS OR HAVING TO PAY MORE? AI AT WHAT COST? JONATHAN: POSITIVE LITTLE MORE THAN .1%. UNDER SURVEILLANCE RAMPING UP MONSTER DAY FOR TECH EARNINGS. THE HYPERSCALER BUSINESSES EXCEEDED EXPECTATIONS. THEY ARE ACCELERATING. MEDA IS NOT EVEN IN THE TOP 10. IN FRONT OF ITS FRONT TIER MODEL. THEY WILL EXPECT THEM TO CALM DOWN ON THE CAP XOR ALLOW MARGINS NOT TO BE DEGRADED. JONATHAN: BIG TECH EARNINGS KICKING OFF WITH ALPHABET SURGI NG WHILE MEDA'S FORECAST IS FUELING INVESTOR DOUBTS. JOINING US IS STEFAN SLOWINSKI BNP PARIBAS. WANT TO TALK ABOUT MEDA EXCLUSIVELY FIRST OFF. THEY HAVE RAISED THEIR THAT LISA AND WERE TALKING ABOUT. ARE THEY DOING THAT BECAUSE THEY ARE MORE THINGS TO BUY WERE THE THINGS TO BUY GOT MORE EXPENSIVE? THINK IT'S INFLATION. THEY TALKED ABOUT THE COMPONENT PRICE INFLATION. MICROSOFT TALKING ABOUT CLOSE TO $200 BILLION OF CAPEX THIS YEAR. $25 BILLION OF THAT IS COMING FROM THE COMPONENT PRICE INFLATION. THAT IS ONE OF THE FLIES IN THE OINTMENT TODAY. THOSE WERE FOUR GREAT SETS OF NUMBERS. ALSO, MARGINS EXPANDING FOR ALL FOUR BY 125 BASIS POINTS ON AVERAGE. CAPEX KEEPS GOING UP AND INCREASINGLY, THAT'S BEING DRIVEN BY INFLATION. JONATHAN: SOME COMPANIES ARE BEING PUNISHED FOR IT AND OTHERS AREN'T. META IS. DO YOU THINK THAT IS SOMETHING THEY CONTINUE TO STOMACH? STEFAN: WHAT YOU SEE FROM GOOGLE AND AMAZON'S THEY ARE CHIP COMPANIES NOW. ONE OF THE BIG TRADES OVER THE PAST THREE YEARS HAS BEEN HARDWARE OVER SOFTWARE. WHEN YOU LOOK AT AMAZON AND GOOGLE AND THE PROPRIETARY SEMI CONDUCTORS, THEY WILL BE INCREASINGLY SELLING THOSE TWO ENTERPRISES AND THE THIRD PARTIES. MICROSOFT AND META ARE BEHIND ON THEIR PROPRIETARY'S. THEY HAVE TO STOMACH THOSE COSTS MORE THAN THE OTHER TWO. LISA: HOW MUCH DO WE SEE THE MARKET SAYING WE WILL GO WITH THE PROMISES OF AMAZON AND ALPHABET? THEY ARE DIRECT COMPETITORS WITH MICROSOFT IN PARTICULAR. IS MICROSOFT TRULY FALLING BEHIND? STEFAN: WHEN YOU LOOK AT THE RESULTS LAST NIGHT FOR MICROSOFT, AMAZON AND GOOGLE, THE BIG HYPERSCALERS, THEY DID SEE GROWTH ACCELERATE IN THE QUARTER. INTERESTINGLY, WHEN YOU LOOK AT THE QUARTER, GOOGLE HAD THE MOST INCREMENTAL REVENUE, EVEN MORE THAN AMAZON. THEY ARE NECK AND NECK WITH THE BIG TWO. NOT ONLY ARE ALL THREE OF THEM BENEFITING FROM ENTERPRISE CLOUD DEMAND BUT THEIR CORE BUSINESSES ARE BENEFITING AS WELL. SO, GOOGLE SEARCH, GOING FROM 17% TO 19% GROWTH, IT WAS 10% YEAR AGO. MICROSOFT, THE BIG CONCERN WAS MICROSOFT 365 COMMERCIALS THAT WILL BE DISRUPTED BY ANTHROPIC PUT GROWTH ACCELERATED TO 15%. WE ARE SEEING COPILOT DEMAND FINALLY BOOM. AND EVEN AMAZON'S CORE BUSINESS IS DOING DOUBLE DIGIT GROWTH. THAT'S REASSURING FOR ALL OF THEM THAT THEY ARE MONETIZING AI. IN THEIR CORE BUSINESSES. THE OTHER THING THAT IS POSITIVE IS IT'S NOT JUST RENTING OUT GPU INFRASTRUCTURE FOR MODELING COMPANIES. WE ARE SEEING IT BROAD AND OUT TO OTHER PRODUCTS, ESPECIALLY SOFTWARE PRODUCTS. DATABASES, DATA PLATFORMS. THAT IS IMPORTANT BECAUSE THOSE ARE HIGHER BUSINESSES. THAT'S WHAT DROVE HIGH MARGINS IN CLOUD 1.0. THE COMPANIES ARE INCREASINGLY SAYING THEY ARE SEEING SIGNS. LISA: HOW LONG BEFORE CAPEX BECOMES NICE TO HAVE VERSUS NEED TO HAVE? STEFAN: RIGHT NOW, IT IS STILL NEED TO HAVE. WE WERE AT $725 BILLION BETWEEN THE BIG FOUR AND CAPEX. WE WILL BLOW THROUGH TRILLION PROBABLY NEXT YEAR. THANKFULLY, WE ARE SEEING THE USES INCREASE. THANKFULLY, WE ARE SEEING THE MONETIZATION. AS WE ARE SEEING IT, WITH MICROSOFT AND CERTAINLY META, IF YOU DON'T HAVE CLEAR PATH TO MONETIZING THAT CAPEX BY MULTIPLE ROUTES, VIA NEW AI BUSINESSES AND YOUR CORE BUSINESS, MAY BE VIA HARDWARE AND OTHER CAPABILITIES, THE MARKETS WILL INCREASINGLY SCRUTINIZE THE CAPEX. EVEN IF THE CORE BUSINESS IS DOING VERY WELL. JONATHAN: META IS DOWN CLOSE TO 9%. THE STORY OF ALPHABET, THE TURNAROUND THERE IN THE LAST 12 MONTHS, ABSOLUTELY PHENOMENAL. MEANINGFUL ACCELERATION OF GROWTH, CRUSHING ESTIMATES. CAPEX, 180 $5 BILLION FOR THIS YEAR. THAT'S DOUBLE LAST YEAR. IMAGINE ME SAYING TO YOU LAST YEAR WHEN PEOPLE THOUGHT THEY WERE IN AN EXISTENTIAL MOMENT THAT THEY WOULD COME OUT WITH NUMBERS LIKE THIS 12 MONTHS LATER. LISA: THEY ARE BEATING CHAD GPT -- CHATGPT ON SEARCH. THE EARNINGS PER SHARE WAS $5.11 VERSUS THE ESTIMATE OF $2.62. JONATHAN: JULIAN IS STILL WITH US. LET'S GO THROUGH SOME OF THESE NUMBERS. THINGS IMPROVED REALLY QUICKLY. ARE WE BEGINNING TO EXPOSE THE WINNERS AND LOSERS OF THE SECTOR? JULIAN: THINK THERE'S TWO LESSONS HERE. NUMBER ONE, WE HAVE TO ADJUST OUR THINKING. IT USED TO BE THAT BILLIONS IMPRESSED US. NOW, IT'S TRILLIONS. BECAUSE CUMULATIVELY, WE EXPECT THE NUMBER TO BE .1 TRILLION IN 2027. AND THE OTHER THING IS THAT THE LAWS OF SIZE ARE JUST SO EVIDENT. BECAUSE IF YOU HEARD YOUR LAST GUEST, BASICALLY, THE SPOILS ARE CROONING TO THE COMPANIES THAT NOW DO OTHER THINGS, WELL AWAY FROM THEIR ORIGINAL MANDATES, SO THAT THEY ARE IN TOTAL ENCLOSED ECOSYSTEMS OF AI. AND YOU ONLY DO THAT WITH SIZE THAT IS EVOCATIVE OF CONCEPT OF TRILLIONS. LISA: ARE ANY OF THESE GOING TO BECOME THE NEXT AOL? WILL ANY OF THEM BECOME RENDERED OBSOLETE? JULIAN: IT WILL HAPPEN AT SOME POINT. BUT FRANKLY, WOULD PREFER THAT DOES NOT HAPPEN. AS VERY YOUNG TRADER, WAS SITTING IN THE PROPRIETARY TRADING ROOM WHEN THE AOL-TIME WARNER MERGER WAS ANNOUNCED IN THE BEGINNING OF 2000 AND ALL OF THE GRAY-HAIRED VETERANS LOOKED AT EACH OTHER AND SAID UI H-OH, THINK THIS IS OVER NOW. AND THAT WAS THE TOP OF THE Y2K BUBBLE. LISA: YOU GAVE US THE SENSE IT FEELS LIKE 1999. ARE WE IN FEBRUARY, DECEMBER, DECEMBER 31? WHERE ARE WE IN 1999? JONATHAN: BE PRECISE. JULIAN: HAD NUMBER OF CLIENTS EMAILING ME, ASKING ME TO PICK DAY. IT GOES BACK TO THE ECONOMY'S STRENGTH, WHICH IS INEXTRICABLY LINKED TO THE AMOUNT OF STRESS THAT'S GOING TO BE CAUSED BY THE ELEVATED OIL PRICE. THE FED HIKED 175 BASIS POINTS TO STOP THE BUBBLE, WHICH THEY DID ULTIMATELY IN Y2K. THE QUESTION IS, IS OIL GOING TO HAVE THE SAME INFLUENCE? DON'T CARE WHAT THE IMPLIED PROBABILITIES ARE, THE FED IS NOT HIKING THIS YEAR. THAT'S -- AGAIN, WE SAID THAT NUMBER OF WEEKS AGO. WE WILL SAY THAT NOW. THEY MAY NOT CUT. AND FRANKLY, AT THIS POINT, YOU WOULD RATHER NOT SEE THEM CUT. BECAUSE IF YOU'RE GOING TO GET CUT RIGHT NOW, IT'S BECAUSE THE ECONOMY IS WEAKENING. THE POINT HERE IS THAT WE ARE IN TIME WHERE IF OIL IS THE HANDICAPPING FEATURE, YOU COULD HAVE SUDDEN ROLLOVER. BUT AGAIN, WE ARE NOT THERE. JONATHAN: GOOD TO SEE YOU. THANKS FOR JOINING US THIS MORNING. WHAT 24 HOURS IN FINANCIAL MARKETS. WE ARE WAITING FOR STATEMENT FROM THE SUPREME LEADER, SOMEONE WE HAVE NOT SEEN OR HEARD MUCH FROM OVER THE LAST TWO MONTHS. WE WILL GET THOSE STATEMENTS AND THE HEADLINES AND BRING IT TO YOU. UP NEXT, VICTORIA COATES. JONATHAN: Q1 FELT LIKE LIFETIME, APRIL, BLINK AND YOU MISS IT. UP ON THE S&P 500 HIGH BY MORE THAN 9%. THE BIGGEST MONTH OF GAIN GOING BACK TO NOVEMBER 2020. WE SAW SOME BIG MONTHLY GAINS. UP BY 2/10. THE NASDAQ UP BY 0.3 PERCENT. THE S&P IS TOTALLY UNCHANGED. YESTERDAY IN THE FACE OF THESE MOVES IN THE COMMODITY MARKET, WHICH IS CRAZY. EIGHT DAYS OF GAINS FOR BRENT INTO TODAY, WE WILL SEE IF WE CAN MAKE IT NINE DAYS. OVER THOSE EIGHT DAYS, HIGHER BY 30%. LISA: YOU SEEN BITE IN CERTAIN AREAS. AT THE SAME TIME, THE TECHNOLOGY TRADE HAS OVERWHELMED SOME OIL CONCERNS. SEMIS THE BEST MONTH SINCE 2000. WHEN JULIAN EMANUEL WAS TALKING ABOUT WAS THE KEY POINT, WE WILL HIT BREAKING POINT. WHEN YOU START SEEING PRICES TO STAY AT THESE LEVELS FOR EVEN JUST COUPLE MORE WEEKS, WE MIGHT HIT THAT POINT. JONATHAN: CLOSER BUT NOT THERE YET. PULLING BACK ON CRUDE. THE BOND MARKET, WE HAVE SEEN SOME PRETTY INTERESTING MOVES. TENS AND 30'S, THE HIGHEST CLOSING YESTERDAY'S SESSION PULLING BACK FROM THOSE LEVELS. 4.97 ON 30'S. THE 10 YEAR IT NOW DOWN TO FOUR POINT 3947. ANNMARIE: WE HIT 5% ON THE 30-YEARS GLOBAL BOND YIELDS CREPT HIGHER IN THE FACE OF THE OIL PRICE SHOCK AND POTENTIALLY CENTRAL BANKS LED BY THE FEDERAL RESERVE NOT THINKING OF RATE CUTS ANYMORE AND FRANKLY SEEING POTENTIAL CHANCE OF RATE HIKE EVEN THOUGH JULIAN EMANUEL SAID THAT THERE'S NO CHANCE. WE ARE GETTING THE SENSE THAT WE DON'T NEED TO MOVE TO NEUTRAL POSITION. NONETHELESS IT'S QUAGMIRE FOR CENTRAL BANKS IT IS BEING REFLECTED AMONG THE BOND TRADERS. JONATHAN: OBVIOUS HEADWINDS FOR MARKETS, BUT THE EARNINGS STORY HAS BEEN SO POWERFUL AND CERTAIN PARTS OF THE STOCK MARKET OF AMERICA. THIS ONE JUST DROPPED. CATERPILLAR, 5.54. THE ESTIMATE, 4.6 THREE. LISA: THE INDUSTRIAL RENAISSANCE, YOU NEED EQUIPMENT TO BUILD STUFF AND EVERYONE IS BUILDING STUFF. FORD BEAT EXPECTATIONS. PEOPLE ARE BUYING CARS. EVERY CYLINDER OF THE ECONOMY WAS SET TO OUTPERFORM AND SUDDENLY YOU'RE SEEING EARNINGS, THREW IN BOLD WAY. YOU'RE TALKING ABOUT HOW THE EARNINGS CAME IN BETTER THAN EXPECTED. MACHINERY POWER AND REVENUE CAME IN AT 16.5 BILLION DOLLARS, MORE THAN BILLION MORE THAN EXPECTED TO GIVE YOU SENSE OF WHERE SOME OF THE GAINS ARE COMING FROM. JONATHAN: JUST AWAY FROM CATERPILLAR AND THE EARNINGS STORY MENTIONED THAT WE WERE WAITING FOR STATEMENT FROM THE SUPREME LEADER OF IRAN. ANNMARIE: HE SAYS THAT THERE'S NEW CHAPTER IN THE GULF WHEN IT COMES TO THE STRAIT OF HORMUZ. THAT NEW CHAPTER IS THAT THE IRANIANS HAVE FULL CONTROL OVER IT. THEY ARE CHARGING TOLLS AND THEY ARE GOING AFTER WESTERN VESSELS. STILL WAITING TO HEAR MORE. HE SAYS HE IS GIVING THE STATEMENT ON PERSIAN GULF DAY, WHICH THEY DO EVERY YEAR. PERSIAN GULF DAY IS TO COMMEMORATE THE IRANIANS PUSHING OUT THE PORTUGUESE IN THE 1600S FROM THE STRAIT OF HORMUZ. JONATHAN: WE WILL COME BACK TO THAT STORY WHEN WE HAVE MORE. LOTS OF SINGLE NAMES AND MORNING MOVERS FOR YOU. YAHAIRA: WE START WITH BIG TECH, OF COURSE. IT CAME DOWN TO WHO IS SEEING THE PAYOFF FROM AI. ALPHABET CLEARLY IS. SHARES UP SIX POINT 7% AFTER CLEAR BEAT DUE TO CLOUD GROWTH ACCELERATING. WAS ON SHARES ARE ALSO UP AFTER AWS POSTED ITS FASTEST GROWTH IN YEARS, HELPING INVESTORS LOOK PAST HAVE YOUR SPENDING. WE GET TO THE LAGGARDS. MICROSOFT IS DOWN 1.5% AFTER AZURE FAILED TO IMPRESS INVESTORS STACKED UP AGAINST GOOGLE AND AWS. AT META, YOU'RE SEEING REVOLT FROM INVESTORS DUE TO HIGHER SPENDING. THOSE SHARES ARE DOWN 8.7%. TURNING TO QUALCOMM, THE SHARES ARE SOARING 12% IN THE PREMARKET AFTER THE CEO TEASED IT THAT THEY WILL BE SHIPPING CUSTOM AI CHIPS TO AN UNDISCLOSED HYPERSCALER LATER THIS YEAR, SIGN THAT THEY ARE GETTING INTO THE RED HOT AI DATA CENTER MARKET HELPING INVESTORS LOOK PAST THE SOFTER OUTLOOK DUE TO HIGHER MEMORY COSTS. INTEL SHARES ARE UP 3% IN THE PREMARKET AFTER 12% SURGE YESTERDAY THAT BROUGHT THE STOCK TO RECORD HIGH. SEEMINGLY INSPIRED PRESIDENT TRUMP TO TELL THE GOVERNMENT'S STAKE IN THAT COMPANY. POSTING ON TRUTH SOCIAL THAT HE IS VERY PROUD FOR MAKING THAT INVESTMENT AND MAKING THE U.S. OVER $30 BILLION IN THE LAST 90 DAYS BECAUSE OF THIS RALLY. JONATHAN: THANK YOU VERY MUCH. CRUDE HOVERING NEAR ALL-TIME HIGHS. THE U.S. IS CONSIDERING NEW MILITARY OPTIONS IN IRAN. AXIOS REPORTING THAT THE PRESIDENT WILL RECEIVE BRIEFING FROM THE CENTCOM COMMANDER AFTER REJECTING TEHRAN'S LATEST DEAL. OPPOSING PLAN BY ANTHROPIC TO EXPAND ACCESS TO ITS MYTHOS MODEL. OFFICIALS ARE CONCERNED THAT THE COMPANY LACKS THE COMPUTING POWER TO GUARANTEE SECURITY. THE TRUMP ADMINISTRATION BLASTING JAY POWELL'S DECISION TO STAY ON AT THE FED AFTER HIS TERM AS CHAIR IS COMPLETE. IT'S HIGHLY UNUSUAL WHAT CHAIR POWELL DID. THIS IS VIOLATION OF ALL FEDERAL RESERVE. AND IT'S AN INSULT TO KEVIN WARSH, MICKEY BOWMAN, AND CHRIS WALLER TO THINK THAT THESE OTHER REPUBLICAN NOMINEES DO NOT CARE ABOUT THE INSTITUTION OF THE FED. JONATHAN: THE PRESIDENT WRITING ON TRUTH SOCIAL, POWELL WANTS TO STAY AT THE FED BECAUSE HE CAN'T GET JOB ANYWHERE ELSE. LISA: GUESS WHO ELSE IS REPUBLICAN NOMINEE. JAY POWELL. HE WAS NOMINATED BY PRESIDENT TRUMP. IN FAIRNESS, OK. ON THE OTHER HAND THAT PRESIDENT TRUMP DIDN'T COME OUT MORE SEVERELY AGAINST JAY POWELL WAS INTERESTING. WAS EXPECTING LAWSUITS, STANDOFF, POTENTIALLY SOMETHING FURTHER. MAYBE PEOPLE ARE SAYING THAT THIS WILL GIVE KEVIN WARSH REPRIEVE IN TERMS OF HIS NEXT STEPS. JONATHAN: WE HAVE THE WHOLE MORNING TO GO THROUGH THIS. THINK WE ALL HAVE THOUGHTS ON WHAT HAPPENED IN THE LAST 24 HOURS. LET'S GET TO CRUDE HOVERING NEAR FOUR-YEAR HIGHS WITH PRESIDENT TRUMP REPORTEDLY GEARING UP FOR MILITARY BRIEFING ON IRAN THAT COULD OPEN THE DOOR TO FRESH ESCALATIONS. JONATHAN, WHAT WE KNOW SO FAR THIS MORNING? AS WE KNOW, THE PRESIDENT IS SUPPOSED TO RECEIVE BRIEFING TODAY FROM THE CENTCOM COMMANDERS. THE JOINT CHIEFS OF STAFF GENERAL IS ALSO SUPPOSED TO BE THERE. HE IS GOING TO GET RANGE OF OPTIONS ACCORDING TO AXIOS FROM BOMBING, FROM MORE DIRECT ACTION TO TRY TO TAKE CONTROL OF THE STRAIT OF HORMUZ, TO POTENTIALLY SENDING IN SPECIAL FORCES TO GRAB THE ENRICHED URANIUM THAT IRAN HAS. AT THE SAME TIME, THE PRESIDENT YESTERDAY TOLD AXIOS THAT HE SAW THE BLOCKADE AS SOMEWHAT MORE EFFECTIVE THAN THE MILITARY ACTION THAT HE HAS TAKEN. HE'S LAYING OUT RANGE OF OPTIONS AND YOU NEVER KNOW WHAT THE PRESIDENT IS WILLING TO DO AND WHAT HE IS DOING TO BUILD LEVERAGE IN POTENTIAL NEGOTIATIONS. JONATHAN: I'M NOT SURE THAT THE HEADLINES CROSSING WILL HAVE THE DIPLOMATIC EFFORT. THE HEADLINES FROM IRAN'S SUPREME LEADER FROM IRANIAN STATE TV THAT IRAN WILL DISMANTLE U.S. EXPLOITATION OF HORMUZ. THAT NEW MANAGEMENT OF HORMUZ WILL BENEFIT THE REGION. I'M NOT SURE IF GULF PARTNERS IN THE REGION RIGHT NOW WOULD SEE IT IN THE SAME WAY? ANNMARIE: THIS IS NOT ACCEPTABLE TO THE UAE OR SAUDI ARABIA OR ANY OF THE GULF PARTNERS THAT USE THE STRAIT OF HORMUZ AND SOME OF THEM ARE RIGHT THERE, LIKE OMAN, IN THE BODY OF WATER. BUT THIS IS IRAN'S ONE PIECE OF LEVERAGE. BUT JONATHAN IS TALKING ABOUT IN THE AXIOS REPORT IS IF THE PRESIDENT WANTS TO POTENTIALLY USE MILITARY ASSETS, IT MIGHT BE THE STRAIT OF HORMUZ. MAYBE THAT MEANS NAVAL ESCORTS LIKE WE SAW IN THE 1980'S. IT'S UNCLEAR, BUT THIS IS THE PIECE OF LEVERAGE THAT STARTING TO HIT THE OIL MARKET. JONATHAN: THE HERITAGE FOUNDATION WRITING THAT WE WILL HAVE TIPPING POINT IN THE COMING WEEKS WHERE IRAN CANNOT SUSTAIN ITSELF ANYMORE AND THAT IS WHEN THE PRESIDENT WILL HAVE THE MOST LEVERAGE. VICTORIA, WELCOME TO THE PROGRAM. THIS IS HIGH-STAKES BLINKING CONTEST. WHICH IS BETTER POSITIONED TO WAIT IT OUT? VICTORIA: FOR THE REASONS YOU HAVE BEEN DISCUSSING COME OF THE UNITED STATES IS THE BEST POSITIONED TO WAIT THIS OUT. WE HAVE TO LOOK AT WHAT IS HAPPENING TO THE IRANIAN ECONOMY. WE HAD SOME REALLY IMPORTANT REPORTING YESTERDAY ON THE FIRST METRICS THAT WE'VE GOTTEN OUT. BEAR IN MIND THAT THEY HAVEN'T HAD STOCK MARKET FOR MORE THAN TWO MONTHS. IT HAS BEEN SHUT DOWN. NOBODY KNOWS WHAT THEY'RE EQUITIES ARE WORTH, IF ANYTHING. THEIR CURRENCY IS DOWN. OVER THE LAST 10 YEARS IT IS DOWN 98%. YOU JUST HAVE LACK OF VALUE IN THAT COUNTRY THAT IS CATASTROPHIC. SEC. BESSENT WAS TALKING ABOUT THIS YESTERDAY. THE ECONOMIC FURY, THE ECONOMIC FRONT OF THIS WAR IS WHAT IS CAUSING THE DEVASTATING CONSEQUENCES TO IRAN. THEY CANNOT GO ON THAT MUCH LONGER. WE ARE NOT HAPPY ABOUT OUR OIL PRICES, KNOW. THINK JULIAN WAS CORRECT. THIS IS PUTTING LOT OF PRESSURE ON WHAT SHOULD BE SUCCESSFUL TIME FOR THE ECONOMY. AT THE SAME TIME, IT IS APPLES AND ORANGES WHAT IS HAPPENING IN THE UNITED STATES AND IRAN AND THEY HAVE TO BLINK. ANNMARIE: NO DOUBT THE IRANIAN ECONOMY IS IN DIRE STRAITS RIGHT NOW, BUT HOW LONG CAN THIS ADMINISTRATION DEAL WITH 07 AND GOING NORTH WHEN IT COMES TO WTI? VICTORIA: THIS IS OBVIOUSLY SOMETHING THEY WILL HAVE TO BRING DOWN AND THINK THAT IS WHY THE PRESIDENT IS GETTING THAT BRIEFING TODAY. THERE ARE RANGE OF OPTIONS ON THE TABLE. GENERAL KANE IS SOMEONE WITH WHOM THE PRESIDENT HAS CONFIDENCE AND HAS PERFORMED EXTRAORDINARILY WELL OVER THE COURSE OF THE LAST YEAR AND FEW MONTHS, BUT VERY MUCH OVER THE LAST TWO MONTHS. SO, THEY CAN LOOK AT THE KIND OF MILITARY ACTION THAT WOULD FORCE AN OPENING OF THE STRAIT. MIGHT FAVOR THAT PERSONALLY. WOULD WANT TO SEE THE DETAILS. WE HAVE OPTIONS IN TERMS OF SPECIAL OPERATORS TRAINED TO DEAL WITH NUCLEAR MATERIAL SO YOU ARE GETTING SPECIAL OPERATOR IN NUCLEAR SCIENTIST THAT'S QUITE COMBINATION. THINK WE ARE THE ONLY ONES WHO HAVE THAT. THEY COULD GO AFTER THE HIGHLY ENRICHED URANIUM. YOU ALSO HAVE THE INFRASTRUCTURE TARGETS THAT THE PRESIDENT HAS BEEN TALKING ABOUT FOR THE LAST WEEK OR SO THAT WOULD HAVE THAT KIND OF FINAL, CRIPPLING EFFECT ON THE IRANIAN ECONOMY. ANNMARIE: WOULD IT COMES TO OPENING THE STRAIT OF HORMUZ THE AXIOS REPORT SAYS THAT SUCH AN OPERATION COULD INCLUDE GROUND FORCES. ONE SOURCE SAID. WHAT WOULD THAT LOOK LIKE? VICTORIA: WENT TO SEE THE OPTIONS HERE. THERE ARE LOT OF REASONS WE SHOULDN'T BE SEEING THEM, BUT AT THE SAME TIME YOU CAN PUT PEOPLE ON THE IRANIAN SIDE OF THE STRAIT TO PREVENT THEM FROM USING SHIPS AND VESSELS AGAINST ANY MARITIME TRAFFIC COMING THROUGH THE STRAIT. YOU CAN ALSO PUT IN SOME DE -MINING EFFORTS TO GET RID OF THE MINES THEY HAVE THEORETICALLY PUT IN THERE. YOU CAN USE NAVY ASSETS TO ESCORT SHIPS THROUGH AND PREVENT IRANIANS FROM ATTACKING THEM. TALK YESTERDAY WE GOT SIGNS U.S. SPECIAL COMMAND PREPARED PLAN FOR SHORT POWERFUL WAVE OF STRIKES ON IRAN. DO HAVE SENSE ON WHAT THIS WOULD BE FOCUSED ON? VICTORIA: THINK IN THAT CASE WE ARE LOOKING AT INFRASTRUCTURE TARGETS. BRIDGES, POWER PLANTS, THAT KIND OF FACILITY. THINK THAT THIS IS GOING TO BE WHAT WOULD REALLY SHUT IRAN DOWN WE ARE SEEING REPORTS OF BIG INDUSTRIES STARTING TO CLOSE. WE HAVE -- THEY HAVE LOST AS MANY AS ONE MILLION JOBS. CRUSHING AMOUNT. THIS IS MAY BE 10 MILLION TO 12 MILLION MORE JOBS THAT WOULD BE AT RISK IF THE PRESIDENT TOOK THIS ACTION. THAT IS 50% OF THEIR WORKFORCE. ESSENTIALLY, 50% UNEMPLOYMENT HAPPENS OVERNIGHT TO IRAN. YOU WONDER HOW THE COUNTRY CAN CONTINUE FUNCTIONING AFTER THAT. JONATHAN: ALWAYS GOOD TO HEAR FROM YOU. VICTORIA COAT FROM THEES HERITAGE FOUNDATION. LISA: WHEN IRAN IS TALKING ABOUT NEW MANAGEMENT, WONDER IF THEY WILL PUT UP SIGN, UNDER NEW MANAGEMENT, COME THROUGH THE STRAIT OF HORMUZ TODAY. JONATHAN: DON'T KNOW IF THAT WOULD ENCOURAGE PEOPLE TO GO THROUGH. ANNMARIE: THE TREASURY DEPARTMENT PUT OUT AN ADVISORY THIS WEEK, NOT JUST TO AMERICANS BUT IMPORTANTLY THE FOREIGN BUYERS, THAT IF YOU PAY THE TOLL YOU WILL HAVE THE CONSEQUENCES OF U.S. SANCTIONS. JONATHAN: STORIES WORLDWIDE, LET'S GO TO VONNIE QUINN. VONNIE: SHARES OF QUALCOMM HIGHER, BOARDING GROWTH IN THE DATA CENTER MARKET AND PREDICTING THAT THE CHINA PHONE INDUSTRY WOULD BOUNCE BACK. QUALCOMM SHARING TOP HYPERSCALERS ON TRACK TO USE ITS COMPONENTS LATER THIS YEAR. ANTHROPIC IS WEIGHING FRESH FUNDING ROUND THAT WOULD VALUE THE COMPANY AT MORE THAN 900 BILLION DOLLARS. SOURCES TELL US THAT BLOOMBERG THAT IF SUCCESSFUL THE AI DEVELOPER COULD SURPASS ITS LONGTIME RIVAL, OPENAI, AS THE WORLD'S MOST VALUABLE AI START UP. SAUDI ARABIA IS ENDING ITS FINANCIAL SUPPORT FOR LIV GOLF AFTER THE SEASON. THE LEAGUE HAS BEEN ENGAGING WITH INVESTMENT BANKS TO SECURE NEW LONG-TERM FINANCIAL PARTNERS. THE UPSTART LEAGUE HAS AN ANNOUNCEMENT TO DETAIL NEXT STEPS. JONATHAN: QUITE AN UPDATE FOR THE GOLFING WORLD FOR SURE. NEXT, POWELL IS STICKING AROUND. AFTER MY TERM AS CHAIR ENDS MAY 15, WILL CONTINUE TO SERVE AS GOVERNOR FOR PERIOD OF TIME TO BE DETERMINED. PLAN TO KEEP LOW PROFILE AS GOVERNOR. JONATHAN: YOU KNOW THE WOLF OF RESEARCH -- WOLF OF WALL STREET. LISA: LEONARDO COMES OUT, I'M NOT GOING, AND EVERYONE CHEERS. BUT THERE WAS NO CHEERING. ANNMARIE: YOU'RE GOING TO KEEP LOW PROFILE. JONATHAN: HAD LATE NIGHT. DRINKS AT THE TABLE YESTERDAY WITH TK. NEIL DUTTA JOINS US NEXT. YOU ARE WATCHING BLOOMBERG TV. JONATHAN: EQUITY FUTURES ARE HIGHER BY 0.2% ON THE S&P. SIMILAR MOVE ON THE NASDAQ 100. UNDER SURVEILLANCE THIS MORNING, HE'S NOT LEAVING. AFTER MY TERM AS CHAIR ENDS ON MAY 15, WILL CONTINUE TO SERVE AS GOVERNOR. PLAN TO KEEP LOW PROFILE AS GOVERNOR. HAVE LONG PLANNED TO BE RETIRING. THE THINGS THAT HAVE HAPPENED IN THE LAST THREE MONTHS HAVE LEFT ME NO CHOICE BUT TO STAY AND SEE THEM THROUGH UNTIL AT LEAST THAT LONG. JONATHAN: THE PRESIDENT BLASTED JAY POWELL'S DECISION. HE SAID HE ONLY WANTS TO STAY AT THE FED BECAUSE HE CAN'T GET JOB ANYWHERE ELSE. NEIL DUTTA SAID -- NEIL DUTTA JOINS US NOW. HOW CONSEQUENTIAL DO YOU THINK THAT DECISION MIGHT TURN OUT TO BE? NEIL: THINK IT'S CONSEQUENTIAL. IT'S NOT SOMETHING THAT HAPPENS OFTEN. IT HASN'T HAPPENED IN OUR LIFETIME. YOU HAVE TO GO BACK LONG WAY. BUT LOOK, NOTHING ABOUT THIS PROCESS, SINCE IT STARTED, WHEN WE'VE HAD FED CHAIR CELEBRITY APPRENTICE EDITION HAS BEEN NORMAL. WHY SHOULD POWELL ABIDE BY NORMS WHEN, YOU KNOW, 1600 PENNSYLVANIA AVE ISN'T? JONATHAN: -- NEIL: THEY ARE ALL BIG BOYS AND GIRLS CLUB THEY CAN FEND FOR THEMSELVES. THEY HAVE DONE THAT. THEY HAVE SHOWN THEMSELVES TO BE INDEPENDENT AND CHANGING THEIR VIEWS IN THE FACE OF ECONOMIC DATA. LISA: DO YOU GET THE SENSE PRESIDENT TRUMP IS ALMOST CONCILIATORY AND THAT MOVING FORWARD, THIS CAN BE FOOTNOTE AND NOT NECESSARILY CENTER STAGE IN POLICYMAKING? NEIL: THE BEST WAY FOR THE PRESIDENT TO GET WHAT HE WANTS IS TO NOT COMMENT ON THE PERSONNEL WITHIN THE FED. THINK RIGHT NOW, IF -- WE WILL SEE WHAT HAPPENS WITH THE LISA COOK INVESTIGATION. POWELL IS WAITING FOR SOME CLARITY ON THAT BEFORE HE MAKES HIS NEXT MOVE IS MY SENSE. MY ADVICE FOR PRESIDENT TRUMP WOULD BE DON'T TAKE THE BAIT. IF WE TRIED TO LISA COOK -- IF HE TRIED TO LISA COOK JEROME POWELL, DON'T THINK IT WOULD GO WELL FOR THE ADMINISTRATION BUT MORE IMPORTANTLY THE FINANCIAL MARKETS. LISA: THERE WERE PEOPLE WHO VOTED TO KEEP THE RHETORIC THE SAME. THERE WERE THREE PEOPLE WHO VOTED TO MOVE TO MORE BALANCED, SYMMETRICAL RISK. THERE WAS ONE PERSON, STEPHEN MIRAN, WHO VOTED TO CUT RATES BY QUARTER OF PERCENT. DO YOU THINK IT IS MISTAKE TO MOVE TO MORE SYMMETRIC LANGUAGE FOR THE NEXT MOVE COULD BE HIKE OR CUT? NEIL: THINK IT WOULD BE MISTAKE. THINK IT WOULD RELATIVELY BE SMALL MISTAKE IN THE FACE OF THE DATA THAT WE HAVE SEEN. IT'S HARD TO ARGUE AGAINST THE IDEA OF LOWERING THE BAR. INFLATION HAS BEEN STRENGTHENING. THERE IS REASONS TO EXPECT ADDITIONAL PASS-THROUGHS OF HIGHER PRICES INTO CORE INFLATION. THE ECONOMY IS BRUCE BUT NOT YET REALLY BATTERED. THIS IS RESILIENT ECONOMY -- BRUISED BUT NOT REALLY BATTERED. THIS IS RESILIENT ECONOMY. DON'T KNOW IF -- LISA: DON'T KNOW IF THIS IS NEIL DUTTA. MAYBE THIS IS HOLOGRAM. JONATHAN: THIS FEELS LIKE CHANGE. IS THAT FAIR? NEIL: WHEN THE DATA CHANGES, YOU HAVE TO CHANGE YOUR VIEW OR YOU LOSE CLIENTS BECAUSE NO ONE WANTS TO LISTEN TO YOU. YOU HAVE TO ADJUST WITH THE TIMES. THINK YOU'VE SEEN THAT. I'M NOT THE ONLY ONE. YOU KNOW WHO THE OTHER PERSON IS, CHRISTOPHER WALLER HAS CHANGED HIS VIEWS. HE'S BEEN LITTLE MORE, GUESS YOU CAN SAY SANGUINE. IT DOESN'T MEAN THAT THERE ARE NOT RISKS OUT THERE. CONTINUE TO SEE THEM. FOR RIGHT NOW, YOU HAVE TO TIP YOUR HAT TO THE ECONOMY AND SAY THINGS ARE STABLE. WE WILL SEE WHERE WE STAND AT THE END OF THE YEAR. WE WILL HAVE FISCAL POLICY TRANSITIONING FROM TAILWIND TO HEADWIND. THE FED IS ON HOLD. LABOR MARKET CONDITIONS, PARTICULARLY WAGES ARE PROBABLY COOLING SOMEWHERE. AND RIGHT NOW, WE ARE KIND OF IN THE THROES OF THIS SPECTACULAR AI KIND OF CAPEX BOOM. WE SEE WHAT THE RISKS ARE. PARTICULARLY OVERSEAS. BUT RIGHT NOW, THINK IF YOU ARE FED WATCHER, YOU HAVE TO JUST WATCH AND WAIT. ANNMARIE: JULIAN EMANUEL SAID WE ONLY HAVE TWO MORE MONTHS WHERE THIS ECONOMY CAN SUSTAIN TRIPLE DIGIT CRUDE. IF YOU LOOK AT THE FUTURES MARKET, IT'S AT 00. WHERE DO YOU SEE BREAKING POINT? NEIL: THINK THE IMPORTANT THING IS THE BRICK IS LINEAR IN NATURE. OVER TIME, AS PEOPLE FEEL HIGHER GASOLINE PRICES, INCOME GROWTH GOING INTO THIS WAS NOT IN GREAT SHAPE TO BEGIN WITH. THINK GRAVITY WILL PREVAIL AND PULL DOWN REAL CONSUMER SPENDING THAT IS STILL VERY MUCH FORECAST, NOT PRESENT DAY REALITY. GIVEN WHERE INFLATION IS, THE ECONOMY BREAKING HAS TO BE PRESENT-DAY REALITY. THAT TO ME IS THE PRIMARY TENSION RIGHT NOW. THE FED DOES NOT REALLY HAVE YOUR BACK IF YOU ARE AN EQUITY MARKET INVESTOR. THE FED IS BASICALLY WAITING FOR THE UNEMPLOYMENT RATE TO RISE BEFORE DOING ANYTHING. SO, THAT'S KIND OF WHERE WE ARE RIGHT NOW. BUT, WE KIND OF NEED TO SEE IT BEFORE THEY MOVE. JONATHAN: DATA-DEPENDENT NEIL DUTTA. GOOD TO SEE YOU. TO HIS POINT, GOVERNOR WALLER HAS CHANGED HIS VIEWS SOMEWHAT. SECRETARY BESSENT SEEMS TO HAVE CHANGED HIS VIEW AS WELL, SAYING HE'S MORE UNDERSTANDING OF THE FEDERAL RESERVE IF THEY KEEP INTEREST RATES ON HOLD FOR NOW. LISA: WE WERE TALKING ABOUT RATE CUTS TO START THE YEAR AND NOW HE'S SAYING IT DOES NOT SEEM THAT LIKELY. IT FEELS LIKE PEOPLE HAVE BEEN SURPRISED BY THE STRENGTH IN THE ECONOMY. AT WHAT POINT DOES THE CORPORATE SPENDING FROM THE BIG HYPERSCALERS TRIUMPH OVER THE WEAKNESS WE'VE BEEN GETTING BECAUSE OIL PRICES ARE THIS HIGH? JONATHAN: MOST PEOPLE WOULD AGREE THAT THE BAR FOR HIKING IS STILL HIGH BUT COULD GO LITTLE LOWER. LISA: IT'S BEING PRICED INTO THE MARKET. THERE IS 40% CHANCE OF RATE HIKE COMING UP THROUGH MARCH OF NEXT YEAR. WILL THEY DO IT? JULIAN EMANUEL SAYS NO WAY. ANNMARIE: AT THE SAME TIME, OIL PRICES KEEP GOING UP. GASOLINE PRICES ARE GOING UP. WHAT DID KEVIN WARSH SAY AT THE START OF HIS HEARING? INFLATION IS CHOICE. IF IT'S CHOICE, HE WILL BE AT THE HEAD OF THE FED THAT WILL ESSENTIALLY WORK TO BRING THE INFLATION DOWN. JONATHAN: EQUITIES ARE UP ON THE S&P BY 2/10 OF 1%, STARING DOWN ONE OF THE BIGGEST MONTHLY GAINS WE HAVE SEEN ON THE S&P 500 SINCE 2020. HIGHER BY CLOSE TO 10%. LISA: YOU GET SOME MODEL PERFORMANCE BASED ON PLANS. CATERPILLAR CAME OUT. DO THINK IT IS IMPORTANT TO REITERATE WHAT WE JUST HEARD. YOU TALKED ABOUT THE HEADLINES, THE IDEA OF THE BEAT, EARNINGS-PER-SHARE. THEY ARE MACHINERY POWERED ENERGY REVENUE IS 16.5 BILLION DOLLARS. THIS IS TIED UP TO THE WILL OF ENERGY STRUCTURE AND AI. -- BUILD OF ENERGY STRUCTURE AND AI. JONATHAN: ON THE BRINK OF INTERVENTION, REAL THREATS COMING. WE WILL SPEND SOME TIME ON THAT IN THE NEXT HOUR. UP NEXT, CLAYTON SINGLE, MIKE WILSON AND MIKE ROSE GRAM. OUR POLICY STANCE IS IN GOOD PLACE FOR US TO WAIT AND SEE. DON'T SEE ANY NEED FOR THE FED TO CHANGE ITS FAISAL REACTING MEANINGFUL WAYS. THE MARKET TOOK THE EASING BIAS OUT. ANY CHANGES IN RATES THIS YEAR, CUTS OR HIKES. ANNOUNCER: THIS IS BLOOMBERG SURVEILLANCE WITH THE JONATHAN FERRO, LISA ABRAMOWICZ, AND ANNMARIE HORDERN. JONATHAN: LIVE FROM NEW YORK CITY, GOOD MORNING, GOOD MORNING. FOR OUR AUDIENCE WORLDWIDE THE SECOND HOUR OF BLOOMBERG SURVEILLANCE STARTS NOW. EQUITY FUTURES 2/10 OF 1% ON THE S&P 500 ON THE FINAL TRENDING DAY OF APRIL LOOKING FOR GAIN OF MORE THAN 9%. THE NASDAQ 100 UP BY .2%. IN THE COMMODITY MARKET, STRESS BUILDING FOR EIGHT CONSECUTIVE DAYS COMING INTO THURSDAY. 30% MOVE OVER THAT PERIOD ON BRENT CRUDE, QUICK PULLING BACK BY CLOSE TO TWO PERCENT. WTI AT 106. CENTRAL MAKE DECISIONS GALORE IN THE NEXT 60 MINUTES. THE BANK OF ENGLAND DECISION DROPPING. INTEREST RATES UNCHANGED. THE ECB AT 8:15 EASTERN. LATER, ECONOMIC DATA. APPLE AFTER THE CLOSE. LISA: OIL IS DOING HEAVY LIFTING IN THE WRONG DIRECTION FOR CENTRAL BANKS. ANDREW BAILEY OF THE BANK OF ENGLAND SAID THERE IS RISK OF MATERIAL SECOND-ROUND EFFECTS. THIS IS THE FEAR PERCOLATING THROUGH MARKETS AND ALL THE PEOPLE WHO BELIEVED THE FED PREVIOUSLY CUT RATES SIGNIFICANTLY ARE COMING AROUND TO THE IDEA THAT MAYBE NOT BECAUSE WE ARE DEALING WITH AN ECONOMY THAT CAN HANDLE OIL PRICES WHERE THEY ARE AND YOU COULD POTENTIALLY SEE THE TRICKLE THROUGH IN PLACES LIKE CAPEX SPENDING WITH META THAT HAS TO GO UP BECAUSE OF HOW HIGH COMMODITY PRICES ARE. JONATHAN: HIKES AT THE BANK OF ENGLAND AND ECB. PRICED OUT EASING AT THE FEDERAL RESERVE. THE BOND MARKET RESPONDED ACCORDINGLY. LISA: YIELDS AT THE HIGHEST LEVELS IN JAPAN PAST THE LATE 1990'S. EUROPE, THE HIGHEST LEVELS GOING BACK TO 2011. 2008 FOR GILTS. WHEN DOES THAT TORPEDOING GROWTH, CAPITAL MARKETS ACTIVITY? NOT YET. THAT IS WHERE SECOND ROUND EFFECTS COULD COME INTO PLAY IF THE TIGHTENING DOES NOT WORK AS PEOPLE EXPECT. JONATHAN: THE LATEST REPORTING FROM AXIOS SUGGESTING THAT THE PRESIDENT IS SLATED TO RECEIVE BRIEFING ON NEW PLANS FOR HIGH STRESS POTENTIAL MILITARY ACTION IN IRAN. ANNMARIE: WHAT IS INTERESTING ABOUT THE REPORT IS ONE OPTION WOULD BE TO TRY TO OPEN THE STRAIT OF HORMUZ IN MILITARY FASHION. THAT WOULD REQUIRE, WHEN INDIVIDUALS ADD TO AXIOS'S, BOOTS ON THE GROUND. WE HEARD FROM THE SUPREME LEADER OF IRAN, AN INDIVIDUAL WE HAVEN'T SEEN BUT HAVE SEEN FEW STATEMENTS FROM. NEW CHAPTER IN THE STRAIT OF HORMUZ IS BEING WRITTEN TALKING ABOUT HOW IT IS UNDER NEW MANAGEMENT WHEN IT COMES TO THE STRAIT OF HORMUZ. THAT IS THE TOLLS AND THAT THEY HAVE COMPLETE CONTROL. JONATHAN: THE BANK OF ENGLAND DECISION FOR YOU. IN MOMENT WE WILL CATCH UP WITH CHARM MOST OF OUR IMANI. CLAYTON SEIGLE AS CRUDE CLIMBS THROUGH 120 AT ONE POINT. THE FORMER BOSTON FED PRESIDENT ERIC ROSENGREN WITH CHAIRMAN POWELL PLANNING TO STAY ON AT THE FOMC. THE BANK OF ENGLAND DECISION. LIZZY BURDEN HAS HEADLINES. LIZZY: THE BANK OF ENGLAND HAS HELD RATES AT 3.75%. THE COMMENTARY AROUND THE DECISION IS IN FOCUS. 8-1 WAS THE VOTE SPLIT. THE CHIEF ECONOMIST OF THE BANK OF ENGLAND VOTING, DISSENTING TO HIKE RATES NOW. HE'S WORRIED ABOUT THE SECOND ROUND EFFECTS AND LOT OF EMPHASIS ON THE SECOND ROUND EFFECTS AND THESE NEW SCENARIOS THAT THE BANK OF ENGLAND PUT OUT. THIS IS THE FIRST SET OF FORECASTS THAT WE'VE HAD, THE FIRST COMPLETE SET OF FORECASTS SINCE THE START OF THE IRAN WAR. INDEED, IF WE GO INTO WHAT THEY SAY, IN ALL SCENARIOS RATES WOULD BE GOING UP. THE BANK OF ENGLAND HAS MAINTAINED ITS GUIDANCE THAT IT STANDS READY TO ACT AS NEEDED. THAT IS WHAT THEY SAID AT THE MARCH MEETING WHEN THERE WAS NO PRESS CONFERENCE BUT IT SET OFF MASSIVE MARKET REACTION THAT THE GOVERNOR HAD TO WALK BACK. THIS TIME THEY HAVE SCRAPPED THE CENTRAL FORECAST IN FAVOR OF THESE THREE SCENARIOS. NO SECOND ROUND EFFECTS IN SCENARIO SOME IN THEY BEAT MATERIAL. YOU HAVE MEMBERS OF THE COMMITTEE PUTTING DIFFERENT EMPHASIS ON THESE SCENARIOS. IF YOU LOOK AT IT, IN CPI WOULD PEAK AT SIX POINT 2% IN THE FIRST QUARTER OF 2027 WITH UNEMPLOYMENT AT 5.7 PERCENT. RATES RISING IN ALL THREE SCENARIOS. DIFFERENT MEMBERS OF THE MONETARY POLICY COMMITTEE EMPHASIZING WHICH IS MOST LIKELY. BUT FOR THE DISSENTER COME HE SAYS THAT THE RISK OF SECOND ROUND EFFECTS ARE SKEWED TO THE UPSIDE AND THAT IS WHAT MATTERS HERE WHEN YOU'RE LISTENING TO HIM. LOOK AT THE MARKET REACTION. INTERESTING TO SEE THAT GILT YIELDS ON THE 10-YEAR HAVE FALLEN. 5.01 PERCENT. COMPARE THAT TO BEFORE. WE HAD HIGHER GUILT RATES, YIELDS. WE WERE IN JITTERY MARKET ANYWAY. YOU WILL NOTE THE REACTION TO THE MARCH DECISION. FACTORING THE ENERGY PRICE SHOCK, FACTORING IN THE POLITICAL RISKS IN THE U.K. JONATHAN: ARE WE ON THE EDGE OF POLICY MISTAKE IN EUROPE? WE WILL HEAR MORE FROM THE ECB LATER THIS MORNING. THE MARKET IS PRICING IN HIKES FOR THE YEAR HEAD ABOVE THE BANK OF ENGLAND AND ECB APPEARED TO SOME EXTENT, THE WORDS OF THE CHIEF ECONOMIST OF THE BANK OF ENGLAND, SOME OF THE MARKET PRICING. LISA: SAYING THEY SHOULD HIKE NOW. IN SCENARIO IT WAS FORCEFUL ACTION WARRANTED IN TERMS OF TIGHTENING. THAT WOULD COME WITH AN INFLATION RATE ABOVE 6%. JONATHAN: STOCKS ARE LOOKING FOR SOME DIRECTION AS BIG TECH PLANS ANOTHER MASSIVE AI SPEND IN THE FACE OF WHAT COULD BE TIGHTNESS ON CENTRAL BANKS WORLDWIDE. JOINING US IS SHARMIN MOSSAVAR-RAHMANI HEAD OF THE INVESTMENT STRATEGY GROUP AT GOLDMAN SACHS. IT'S GOOD TO SEE YOU. OUR CENTRAL BANKS ABOUT TO BECOME HEADWIND TO THIS EQUITY MARKET RALLY? SHARMIN: WE HAD GOOD EXHIBIT ON ONE OF OUR CLIENT CALLS. IF YOU LOOK AT THE 21 PAST STRIKES AT THE U.S. HAS HAD ON THE MIDDLE EAST OR NORTH AFRICA COME UP TO EIGHT WEEKS AFTER THE INITIAL STRIKE THE EQUITY MARKETS HAVE BEEN UP ON AVERAGE 4%. THAT'S EXACTLY WHERE WE ARE. EVERYONE IS SAYING THE EQUITY MARKET IS GOING AHEAD, HOW CAN THEY IGNORE THE PRICE OF OIL, WTI OR BRENT, WHAT IS GOING ON? GROWTH IS STILL ROBUST. WE WILL GET Q1 NUMBERS BUT NO ONE IS THINKING WE ARE IN RECESSION, THAT RECESSION IS IMMINENT. IF YOU LOOK AT THE EARNINGS THEY HAVE BEEN INCREDIBLE, SUBSTANTIALLY GREATER THAN CONSENSUS. THIS IS PRETTY SIGNIFICANT IN TERMS OF EXCEEDING EXPECTATIONS. IT'S NOT LIKE WE EXCEEDED EARNINGS BY 2%, 5%. IT IS DOUBLE-DIGIT. IF YOU LOOK AT THE NUMBER OF QUARTERS WHERE WE EXCEEDED EXPECTATIONS, CONSECUTIVE QUARTERS, IT'S INCREDIBLE. WHEN PEOPLE TALK ABOUT THE IMPACT OF THE WAR, WE HAVE SAID THE U.S. ECONOMY IS UNBELIEVABLY RESILIENT. PEOPLE CONTINUE TO UNDERESTIMATE THAT. DON'T THINK ANYONE KNOWS EXACTLY HOW LONG THIS WILL LAST. IF IT LASTS LOT LONGER AND OIL PRICES STAY AT THESE LEVELS, THAN THE ECONOMY WILL BE WEAKER. THE IDEA THAT PEOPLE CAN RAISE RATES IN THE FACE OF THE WEAKENING ECONOMY, ESPECIALLY IN THE U.S. WITH DUAL MANDATE, THINK WE NEED TO FACTOR IN LOT OF UNCERTAINTY. LISA: YOU THINK THAT THERE IS LACK OF LOGIC WHEN PEOPLE SAY, OIL PRICES ARE AT THIS LEVEL AND YOU STILL SEE THAT ROBUST GROWTH IN THE ECONOMY? THAT MEANS THAT THE INFLATIONARY IMPACTS CAN GET PAST THROUGH MORE DIRECTLY AND EASILY BECAUSE OF THE CAPEX SPEND AND HOW WELL THESE COMPANIES ARE DOING. DO YOU SEE THAT AS LOGICAL CONNECTION OR THAT IT HASN'T BEEN LONG ENOUGH WITH OIL PRICES AT THIS LEVEL? SHARMIN: TWO POINTS. IT HASN'T BEEN LONG ENOUGH. THAT'S NUMBER ONE. IF OIL PRICES ARE HERE WE WILL EVENTUALLY GET TO NEGATIVE NUMBERS IN THE EQUITY MARKET, BUT NOW WE ARE UP FOUR PERCENT, 5% IS TOTALLY IN LINE WITH HISTORY. FOR MORE PERSPECTIVE, ONE OF THE PILLARS OF OUR INVESTMENT PHILOSOPHY IS HISTORY AS USEFUL GUIDE. WE HAVE THAT AS THE BACKDROP WE NEED TO FOLLOW. THE OTHER THING THAT PEOPLE NEED TO THINK ABOUT IS THE ENERGY INTENSITY IN TERMS OF USAGE OF OIL. IT'S LOT DIFFERENT THAN THE EARLY 1980'S. WHEN WE HAVE THE ARAB OIL EMBARGO AND THE IRAN-IRAQ WAR, THE IRANIAN REVOLUTION, PRICES SKYROCKETED, BUT AT THAT TIME THE ENERGY CONSUMPTION IN THE U.S. IN TERMS OF BARRELS PER CAPITA PER YEAR WERE SUBSTANTIALLY HIGHER. IT WAS AROUND 30 BARRELS YEAR. THAT NUMBER IS DOWN TO 23 OR 24 NOW. THERE IS THE VIEW THAT ENERGY, CRUDE OIL, WON'T IMPACT US MUCH. IT WILL. FERTILIZERS, WE HEAR ABOUT THESE THINGS, BUT IT HAS TO LAST FOR WHILE. LISA: IT DOES IMPACT COMPONENTS AND WE SAW THIS WITH HYPERSCALERS. META. THEY INCREASED THEIR CAPEX BECAUSE OF HIGHER COMPONENT COSTS AND MAYBE BECAUSE OF TRANSPORTATION ISSUES PEOPLE ARE EXPERIENCING. AT WHAT POINT DOES NOT BECOME STICKING POINT NOT FOR THE BIGGEST TECH COMPANIES BUT TECH COMPANIES FACING AN EXISTENTIAL THREAT AND HAVING TO PLAY THAT MUCH -- PAY THAT MUCH MORE TO PLAY BALL? SHARMIN: THERE IS QUESTION ABOUT THE RETURNS TO CAPEX FOR AI COMPANIES. THE HYPERSCALERS HAVE SO MUCH CASH FLOW FROM OTHER FACTORS THAT THEY CAN DO WELL. IF YOU LOOK AT THEIR EARNINGS, WHETHER IT IS THE LATEST REPORTS OR LAST YEAR'S, THEY ARE PHENOMENAL. THE REST OF THE ECONOMY IS DOING QUITE WELL AND PEOPLE UNDERESTIMATE THE RESILIENCE. IF YOU THINK ABOUT OIL PRODUCTION, THE U.S. PRODUCES DOUBLE THE LEVEL OF SAUDI ARABIA. NATURAL GAS, THE U.S. HAS BECOME THE LARGEST EXPORTER OF NATURAL GAS IN 10 YEARS. FAR EXCEEDING QATAR. AS WE THINK ABOUT THESE FACTORS, PEOPLE NEED TO THINK THAT THE SHOCK IS NOT AS GREAT. AT THE END OF THE DAY, BOTH SIDES WANT TO END THE WAR. WHAT IS RESPECTABLE OFFER AND FOR BOTH SIDES? THINK THE MARKET IS SAYING WE WILL GET THERE. THERE WILL BE FITS AND STARTS, ESCALATION AND DE-ESCALATION, AND WE WILL HAVE TO GO THROUGH THAT WHICH IS WHY WE RECOMMEND OUR CLIENTS STAY INVESTED AND DON'T TRY TO TIME THE MARKET. NO ONE CAN DO THAT CONSISTENTLY WELL. ANNMARIE: WE ARE NOW EIGHT TO NINE WEEKS INTO THE WAR. HOW MUCH LONGER WITH THESE ELEVATED PRICES DO YOU THINK THAT THE ECONOMY CAN WITHSTAND? JULIAN EMANUEL SAYS JULY AND THINGS MAY BREAK DOWN. YOU HAVE DATE YOU ARE LOOKING AT? SHARMIN: NOT REALLY. NO ONE REALLY KNOWS. THE PROBABILITIES, IT'S NOT OBVIOUS HOW LONG THIS WILL LAST. WE KNOW THAT BOTH SIDES DON'T WANT IT TO LAST JULY AND AUGUST. ANNMARIE: NOT THE CONFLICT. HOW LONG THE ECONOMY CAN WITHSTAND DIGIT CRUDE. SHARMIN: WE HAVE BEEN HERE BEFORE AND PRICES LASTED FOR WHILE. DON'T THINK THE ECONOMY IS GOING TO BREAK. WE INITIALLY EXPECTED GDP TO BE AROUND 2.3 WHEN WE STARTED, TWO POINT 4%. NOT BECAUSE OF THE WAR AND OIL PRICES. WE HAVE LOWERED IT TO 2.1 PERCENT. BUT WE HAVE VERY LOW PROBABILITY OF RECESSION EVEN AT THESE LEVELS OF PRICES WERE TO STAY HERE. THINK IS IT JULY? IF YOU BELIEVE THE RESILIENCE OF THE ECONOMY AND ADJUSTMENTS -- AND WE ARE TALKING ABOUT THE U.S. WITH AMPLE CRUDE AND NATURAL GAS. IT'S THE REST OF THE WORLD. THE U.S. IS BIG IMPORTER AND LESS OF AN EXPORTER -- NOT IN TERMS OF HYDROCARBONS, BUT IN AGGREGATE THE DAMAGE TO THE ECONOMY WILL BE LESS THEN, FOR EXAMPLE, TO EUROPE OR CHINA. LISA: DO YOU THINK WERE MOVING INTO PHASE FOR THE OFFSET THE EQUITY RISK IS INCREASINGLY GOLD, COMMODITIES, AND NOT DEVELOPED MARKET BONDS WHICH ARE INCREASINGLY SUBJECT TO POTENTIAL SPENDING ISSUES, DEFICIT ISSUES, AND THE NATURAL INFLATION IN THE SYSTEM? SHARMIN: THAT'S GOOD QUESTION. OUR CLIENTS ARE ASKING HOW THEY CAN HEDGE AGAINST THE RISK OF WAR. WE TELL CLIENTS THAT AT THE END OF THE DAY THE BEST HEDGE AGAINST INFLATION HAS HISTORICALLY BEEN U.S. EQUITIES AND AGGREGATE. IN FACT, THAT IS WHY WE SAY TO STAY INVESTED. GOLD IS NOT GOOD INFLATION HEDGE AND NOT GOOD DEFLATION HEDGE. THE IDEA THAT GOLD IS SOMETHING THAT YOU NEED TO HAVE IN YOUR PORTFOLIO WAS SOMETHING WE DISAGREE WITH. WE DON'T BELIEVE IT'S PART OF OUR CLIENTS' STRATEGIC ASSET ALLOCATION. TACTICALLY WE'VE SAID THAT WHEN YOU SEE THESE KINDS OF PRICE INCREASE IS DRIVEN BY CENTRAL BANKS, ESPECIALLY INITIALLY BY CHINA AND COUNTRIES LIKE TURKEY AND POLAND, CLIENTS SHOULDN'T BE CAUGHT UP IN THE EUPHORIA AND MOMENTUM OF GOLD. OBVIOUSLY, WE'VE SEEN PRETTY SIGNIFICANT DECLINE FROM PEAK LEVELS. JONATHAN: GREAT TO CATCH UP WITH YOU. THANK YOU, SHARMIN MOSSAVAR-RAHMANI. EQUITY FUTURES POSITED BY .3% ON THE S&P 500, BOUNCE BACK. THE BANK OF ENGLAND DECISION FALLING SHORT OF SOME OF THE HAWKISH EXPECTATIONS. VERY HAWKISH PRICING IN THIS MARKET AHEAD OF THIS DECISION. 8-1 BOAT FALLING SHORT OF THAT. THE ONE VOTE IS THE ENDORSEMENT THE MARKET WAS LOOKING FOR THAT THE CENTRAL BANK MAY BE GETTING CLOSER TO HIKING INTEREST RATES, BUT THAT'S WHAT WE'VE GOT. LISA: THE 8-1 DECISION HIGHLIGHTS HOW DIFFICULT THIS IS FOR ENGLAND. THEY ARE TALKING ABOUT NORTH OF 6% INFLATION. BY .7% UNEMPLOYMENT IS UNCOMFORTABLE. JONATHAN: SOME OF THE HAWKS IN HOLDING PATTERN. LET'S GET AN UPDATE ON STORIES WORLDWIDE WITH YOUR BLOOMBERG BRIEF. VONNI PRESIDENT TRUMPE DEFENDING THE U.S. BLOCKADE OF IRANIAN PORTS: SAYING THAT IT IS MORE EFFECTIVE THAN BOMBING THE COUNTRY. REJECTING THE LATEST IRANIAN PROPOSAL TO OPEN THE STRAIT OF HORMUZ AND LIFT THE BLOCKADE. CONCERNS OVER IRAN'S NUCLEAR PROGRAM ARE DRESSED. AXIOS REPORTING THAT THE PRESIDENT WILL RECEIVE NEW BRIEFING ON THE SITUATION TODAY. IN HIS FINAL MEETING AS FED CHAIR JEROME POWELL ANNOUNCED THAT HE WILL REMAIN ON AS GOVERNOR AFTER HIS TERM ENDS NEXT MONTH. SAYING HE FELT HE HAD NO CHOICE BUT TO STAY AMID SERIES OF LEGAL ATTACKS. I'M STAYING BECAUSE OF THE ACTIONS THAT HAVE BEEN TAKEN. LONG PLANNED IT TO BE BE RETIRING. AND THE THINGS THAT HAVE BEEN HAPPENING IN THE LAST THREE MONTHS THINK HAVE LEFT ME NO CHOICE BUT TO SEE THEM THROUGH AT LEAST THAT LONG. IN ADDITION, DON'T SEE HOW THIS WILL INTERFERE. VONNIE: THE PRESIDENT LAMBASTING POWELL'S DECISION, SAYING POWELL WANTS TO STAY AT THE FED BECAUSE HE CAN'T GET JOB ANYWHERE ELSE." PERSHING SQUARE DOWN 18% IN ITS MARKET DEBUT, FALLING SHORT OF THE $25 BILLION IT HAD ORIGINALLY SOUGHT TO BRING IN. AND THAT IS YOUR "BLOOMBERG BRIEF." JONATHAN: THANK YOU VERY MUCH. MORE FROM VONNIE LATER THIS HOUR TO GET UP NEXT ON THE PROGRAM, CURBING THE CRUDE SEARCH. NOBODY LIKES HIGH PRICES IN THE SHORT-TERM, BUT THEY UNDERSTAND INCREASED AMERICAN ENERGY EXPORTS, INCREASED POLICY, LEAN IN FOR MORE ENERGY PRODUCTION. THAT'S WHAT PRESIDENT TRUMP IS ALL ABOUT. JONATHAN: UP NEXT, WE CATCH UP WITH CLAYTON SEIGLE OF CSIS. LIVE FROM NEW YORK CITY THIS MORNING, GOOD MORNING. ♪ JONATHAN: LITTLE BIT OF TURNAROUND CROSS AS THAT. LET'S START WITH EQUITIES, POSITIVE BY .3% ON THE NASDAQ, UP BY 0.4%. LET'S TURN TO COMMODITIES, TURNAROUND DEBT, EIGHT-DAY STREET, HIGHER OIL PRICES BROKEN THIS MORNING, THE LONGEST SINCE MAY 2022. 15, EVEN WITH THE THREAT OF REACTION IN THE MIDDLE EAST, GIVEN REPORTING FROM AXIOS. YIELDS DRUGS, OPENING UP FOR YIELDS TO PULL BACK, AND THEN THIS MOVE IN DOLLAR YEN, LET'S PULL UP THE CHART. BRUTAL START. IN THE YEN'S FAVOR, THE JAPANESE FINANCE MINISTER WITH NEW HEADLINES THIS MORNING. THIS IS YOUR FINAL WARNING. GET READY, BECAUSE -- LISA: YEAH. STAY CLOSE TO YOUR PHONE, BECAUSE WE MIGHT TAKE ACTION AT ANY TIME. JONATHAN: THAT IS NOT BETRAYED YOU WANT TO BE ON THE OTHER SIDE OF. DOLLAR-YEN 1.57. UNDER SURVEILLANCE THIS MORNING, CURBING THE CRUDE SEARCH. SEC. WRIGHT: THE CLINICAL OUTCOME HERE AS WE END THE ABILITY FOR IRAN TO HAVE NUCLEAR WEAPON COULD WE ARE GOING THROUGH PERIOD OF DISCOMFORT TO SOLVE 47-EURO CRISIS. NOBODY LIKES HIGH PRICES IN THE SHORT-TERM, BUT THEY UNDERSTAND INCREASED AMERICAN ENERGY EXPORTS, INCREASED ENERGY ADDITION POLICY, LEAN INTO MORE ENERGY PRODUCTION. THAT'S WHAT PRESIDENT TRUMP IS ALL ABOUT. JONATHAN: THE LATEST THIS MORNING, CRUDE HARBORING THE FOUR-YEAR HIGH, AXIOS REPORTING PRESIDENT DONALD TRUMP IS PREPARING FOR BRIEFING WITH THE HEAD OF U.S. CENTRAL COMMANDER LATER TODAY. CLAY THE -- CLAYTON SEIGLE OF CSIS WRITING "GLOBAL BALANCES ARE HEADING FOR ONE BILLION BARREL SHORTFALL, WITH FUEL PRICES INCREASINGLY LIKELY TO HAVE CORPORATE EARNINGS, CONSUMER WALLETS, AND GDP GROWTH." CLAYTON JOINS US NOW. HOW MUCH STORAGE DO YOU BELIEVE IRAN HAS LEFT? CLAYTON: HEY, GOOD MORNING, YOU KNOW, IT PROBABLY HAS SEVERAL WEEKS OF STORAGE LEFT, BUT THINK THE MARKETS AND OBSERVERS MAY BE OVER INDEXING HOW MUCH PRESSURE POTENTIAL SHUT OF PRODUCTION IS GOING TO PLAY IN TEHRAN. THEY HAD TO TEAR BACK PRODUCTION AND SHUT IN WELLS IN PREVIOUS EPISODES, WHEN SANCTIONS WERE REALLY HITTING HARD. THEY HAVE THE ABILITY TO SCALE BACK UP AFTER THAT. THINK THAT IS KIND OF THE STORY DUES WERE THAT'S MAKING ITS WAY THROUGH MARKETS THAT WILL RESULT IN SOME SORT OF WAY. IT MIGHT BE EXAGGERATED, BUT WE COULD LOOK AT THE EFFECTIVENESS OF THE BLOCKADE IN KEEPING THE BALLASTS BEING TINKERING, THE EMPTY TINKERS FROM GETTING INTO THE GULF, IN ORDER TO SERVE AS FLOATING STORAGE. ALL OF THESE THINGS GO TOGETHER AS STORAGE CAPACITY. ANNMARIE: IF THEY ARE USING THESE EMPTY VESSELS TO STORE SOME OF THESE BARRELS, WHEN THEY HIT 10 CUP, WHAT HAPPENS NEXT? CLAYTON: SO, IF THEY CANNOT GET ANY MORE EMPTY TINKERS IN, IN ORDER TO KEEP LOADING AT PLACES LIKE KHARG ISLAND, THEY WILL HAVE TO ORGANIZE PROGRAM OF TURNING DOWN PRODUCTION IN THE FIELD. THAT'S WHAT THE OTHER GULF, ARAVA PRODUCERS HAVE BEEN FACED WITH, SO SAUDI ARABIA, UAE, IRAQ, KUWAIT, THEY'VE ALL HAD TO TURN DOWN PRODUCTION, BECAUSE THERE'S NO WHERE TO PHYSICALLY PUT THE OIL AT THE EARLIER PRODUCTION LIMITS, BECAUSE IT IS JUST NOT GETTING OUT OF THE GULF. SO, OF COURSE, IRAN IS IN THE SAME BOAT AS THE REST OF THEM, BUT THE QUESTION IS, CAN PRODUCTION DOWNTURN BE ORGANIZED BY THE ENGINEERS, BY THE GEOLOGISTS, TO AVOID ANY LASTING DAMAGE? THINK THE ANSWER IS PROBABLY YES, BECAUSE THEY HAVE THE EXPERIENCE, THE TRACK RECORD OF DOING THAT IN THE PAST. THE SECOND QUESTION IS, YOU KNOW, TO THE DECISION-MAKERS, THE POWERS THAT BE IN TEHRAN, DO THEY REALLY CARE THAT MUCH? THESE ARE PEOPLE THAT WENT AGAINST THEIR OWN POPULATION WITH VERY SEVERE CRACKDOWN RECENTLY. SO I'M NOT SURE THEY WILL BE MOTIVATED NECESSARILY BY THE LONG TERM VISION FOR IRAN'S INDUSTRY. ANNMARIE: WE SEEN IRAN DEAL WITH THAT IN THE PAST. WHAT ABOUT GOLF PARTNERS DEALING WITH POTENTIAL SHUT WELLS? CLAYTON: WE HAD 13 MILLION BARRELS PER DAY OF OIL PRODUCTION DOWNTURN DURING THIS CRISIS, ALL BECAUSE THE STRAIT REMAINS CLOSED. WHEN WAS LOOKING AT THE BLOCKADE PROPOSAL MONTH OR SO AGO, THINK THE IDEA WAS IT COULD BE FORCE FOR GOOD TO TEMPORARILY LEVEL THE PLAYING FIELD AND SEND MESSAGE TO TEHRAN, LOOK, IF EVERYONE ELSE IS VITAL ENERGY EXPORTS CANNOT GET TO MARKET, YOU WILL HAVE HARD TIME GETTING YOURS OUT, TOO. BUT THEN IMMEDIATELY USE THAT OPENING TO RESUME DIPLOMATIC NEGOTIATIONS AND FIND AN ACCEPTABLE OFFER INTO THIS CRISIS SO THAT EXPORTS CAN RESUME AND THE GLOBAL ECONOMY CAN REBOUNDING BE PROTECTED. IF BUT THE TRUMP ADMINISTRATION HAS HANDLED IT LITTLE BIT DIFFERENTLY. THEY ANNOUNCED AT THE SAME TIME OF THE BLOCKADE BEING IMPOSED EARLIER THIS MONTH THAT IT WILL STAY IN FORCE UNTIL FINAL AGREEMENT IS REACHED. SO THAT IS NOT TEMPORARY BRIDGE, THAT IS KIND OF KEEPING THE CHOKEHOLD ON TEHRAN UNLESS AND UNTIL WE HAVE FINAL SETTLEMENT. VONNIE: CLAYTON, WHAT DOES -- LISA: CLAYTON, WHAT IS MUTUALLY ACCEPTABLE AGREEMENT LOOK LIKE? THAT REMOVES THE RISK FOR TEHRAN TO DO THIS AGAIN? CLAYTON: THINK THAT KEY POINT IS BOTH SIDES WILL HAVE TO QUIET DOWN -- CLIMB DOWN FROM MAXIMUM POSITIONS. IT CANNOT BE THAT TEHRAN HAS CHOKEHOLD OVER THE WORLD ECONOMY GOING FORWARD. EXPORTERS AND CUSTOMERS NOT WANT TO HEAR ABOUT PERMANENT TOLLING ARRANGEMENT. THINK THEY SHOULD MAKE COMPROMISES ON THAT FRONT. FOR HERE IN WASHINGTON, TO TRY TO ARCHITECT DEAL RELATED TO URANIUM ENRICHMENT THAT IS EVEN STRONGER THAN THE PREVIOUS ARRANGEMENT, THE SO-CALLED JCPOA THAT WAS NEGOTIATED UNDER THE OBAMA YEARS, THAT THEY HIGH HURDLE. SO IF BOTH SIDES CAN JUST GET THERE MUST HAS OUT OF THE DIPLOMATIC AGREEMENT INSTEAD OF THE NICE TO HAVES, THINK THERE'S ROOM FOR PROGRESS. JONATHAN: CLAYTON, APPRECIATE YOUR TIME, CLAYTON SEIGLE OF CSIS IN WASHINGTON, D.C. IT'S DIFFICULT TO PLEASE EVERYBODY. IT'S NOT JUST THE U.S. AND IRAN, ITS NATIONS ACROSS THE GULF AS WELL. LISA: EVEN IF YOU GET TO PLACE WHERE SUDDENLY YOU GET THROUGH THE STRAIT OF HORMUZ, WHAT SORT OF PREMIUM GETS BAKED INTO OIL PRICES? YOU WILL GET LOT OF THESE PIPELINES THAT ARE BEING DIVERTED IN OTHER DIRECTIONS FROM THE OTHER GULF REGIONS JUST AS QUICKLY. ANNMARIE: OUR SHIPPING COMPANIES GOING TO HAVE THE CONFIDENCE TO GO TO THE STRAIT OF HORMUZ, EVEN IF THE UNITED STATES SAYS IT IS SAFE AND OPEN? IT TOOK ABOUT SIX MONTHS FOR THE RED SEA TO GET BACK TO NORMAL CADENCE, AND THAT WAS BACK WHEN THE HOUTHIS, THIS WAS ON TOTALLY DIFFERENT LEVEL, WHEN IT COMES TO THE IRGC ON SPEED BUT -- SPEEDBOATS. JONATHAN: REMEMBER TWO WEEKS AGO, TWO FRIDAYS AGO, THE STRAIT OF REOPENING. LISA: PEOPLE ARE RESILIENT. THERE ARE GOOGLE REVIEWS FOR THE STRAIT OF HORMUZ, AND IT HAS ONE STAR. JONATHAN: HOW CAN IT HAVE ONE STAR? LISA: IT CANNOT BE LOWER THAN THAT. TUESDAY CLOSE, WEDNESDAY CLOSED, ETC., AND NOW IMAGINE IT HAS BIG BANNER OVER IT. JONATHAN: YET IT IS REALLY SERIOUS. EXACTLY. AND YOU HAVE COUNTRIES LIKE ASIA GETTING CRUSHED BY THIS. NOT JUST SUPPLY STORY, AS WE SAID COULD, IT'S SHORTAGE STORY. LISA: WE SEE THIS IN THE ECONOMY, YOUR OF UNDERPERFORMING TODAY, AND WE SEE THAT CONSISTENTLY AS RESULT OF THIS. JONATHAN: CENTRAL BANKS AT LEAST DISCUSSING THE POTENTIAL FOR RATE HIKES WHICH SEEMS CRAZY. LISA: MANDATE, NOT DUAL MANDATE, AND IS THAT GOING TO CHANGE? JONATHAN: AND THE ECONOMY IS NOT THAT CONFIDENT. THAT'S MY STRUGGLE. MIKE WILSON OF MORGAN STANLEY UP NEXT. ♪ JONATHAN: THE BANK DECISION JUST BEHIND US, THE ECB DECISION AHEAD OF US. 30 MINUTES LATER, NEWS CONFERENCE WITH CHRISTINE LAGARDE. WE WILL TAKE SOME OF THAT HERE ON BLOOMBERG TV. AFTER THAT, WE WOULD GET SOME ECONOMIC DATA. JOBLESS CLAIMS COMING AT 8:30 EASTERN TIME. AFTER THE CLOSE, WE GET NUMBERS FROM APPLE TO WRAP UP BIG WEEK FOR TECH RESULTS. S&P FUTURES, 0.4% ON -- NICELY UP ON THE NASDAQ AT 0.6%. ADDING TO AN IMPRESSIVE MONTH OF GAINS. MORE THAN 14%, WHICH WOULD BE THE BIGGEST MONTHLY GAIN GOING BACK TO APRIL 2020 WHEN WE SAW SOME BIG GAINS BACK THEN. LISA: IF YOU TAKE LOOK AT SOME OF THE PERFORMANCE OVER THE PAST MONTH, APRIL IS POISED TO BE THE BEST MONTH FOR THE NASDAQ 100 SINCE 2020. THE S&P TECH SECTOR IS POISED FOR THE BEST MONTH SINCE 2002. IF YOU LOOK AT SEMIS, YOU HAVE TO GO BACK FURTHER. ENERGY STOCKS THE WORST PERFORMERS. DON'T UNDERSTAND THIS. JONATHAN: CHEVRON HAS DONE NOTHING FOR TWO MONTHS. LISA: THEY'VE ACTUALLY LOST. WHAT ARE WE LOOKING AT HERE? JONATHAN: CRAZY, ISN'T IT? EVEN WITH THESE MOVES IN CRUDE, PULLING BACK TO 113. WE HAD AN EIGHT DAY RUN OF HIGHER CRUDE PRICES ON BRENT, UP OVER 30%. DECLINING THIS MORNING ON WTI. WE ARE DOWN 2% TO 3%. THAT IS UNLOCKING THIS MOVE IN THE BOND MARKET. TENS AND 30'S CLOSED AT THE HIGHS OF THE YEAR, DOWN FOUR BASIS POINTS ON TENS, FIVE ON TWOS. LISA: AT WHAT POINT DOES THIS START TO BITE AT THE ENTHUSIASM AND MARKETS? FEEL LIKE DEBBIE DOWNER BECAUSE WHEN MENTION IT TO ANALYSTS, THEY SAY WE ARE MANAGING JUST FINE AND IT IS NOT GOING TO STAY HERE. BUT RIGHT NOW, IT FEELS LIKE WE ARE CREEPING HIGHER IN THE MARKETS. AT SOME POINT, WINDOWS THAT START TO PUT CRAMP IN SOME OF THE EQUITY MARKETS? JONATHAN: JUST CHORUS IN THE CONTROL ROOM. JUST THIS MORNING. LISA: NORMALLY AM REALLY OPTIMISTIC. JONATHAN: ON DAILY BASIS. IT IS OVERWHELMING. LISA: YOU SHOULD LISTEN TO MY CONVERSATIONS AT HOME. JONATHAN: IMAGINE. WHAT WAS IT LIKE LAST NIGHT AT THE DINNER TABLE? LISA: HUMAN VERSUS AI. ANNMARIE: THE TERMINATOR HAPPENING AT OUR HOUSE. JONATHAN: IT GETS BETTER THROUGH THE DAY AND DECLINES AGAIN AT NIGHT? IS THAT HOW THINGS WORK? AS WE COUNT YOU DOWN TO THE OPEN, TWO HOURS FROM THE CASH OPEN. LET'S GET YOU SOME MORNING MOVERS. YAHAIRA: WE ARE GETTING WAVE OF EARNINGS. WE START WITH STAR NET -- STANDOUTS IN THE PHARMACEUTICALS SECTOR. ELI LILLY SAYING ITS LATEST PILL IS OFF TO GREAT START. MERCK ALSO, IT WAS BEAT DUE TO STRONG DEMAND FOR ITS NEWER DRUGS AS ITS OLDER DRUGS FACE EXPIRING PATENTS. MOVING ONTO ROYAL CARIBBEAN, THOSE SHARES RAISING 7% IN THE PREMARKET. INVECTIVE -- INVESTORS LOOKING PAST WEAKER GUIDANCE DUE TO HIGHER FUEL COSTS TIED TO THE WAR. THEY ARE CLINGING ONTO THIS, ROYAL SAYING AFTER DIP IN MARCH AND APRIL BOOKINGS HAVE RECOVERED AND ARE EVEN RUNNING AHEAD OF LAST YEAR. AND WE END ON CATERPILLAR. THOSE SHARES ALSO RISING IN THE PREMARKET, UP NEARLY 5% AFTER MASSIVE BEAT AS THIS LEGACY INDUSTRIAL NAME BECOMES PART OF THE AI BUILDOUT. CATERPILLAR SEEING HUGE DEMAND FOR ITS GENERATORS AND GAS TURBINES, PART OF THE AI DATA CENTER BUILDOUT. JONATHAN: THAT STOCK HIGHER BY 5%. ALPHABET SURGING AS DEMAND FUELS CLOUD COMPUTING BOOM. MEHTA LAGGING BEHIND AFTER MASSIVE BUDGET HIKE WAYS ON THE STOCK. THE FOUR COMPANIES INCLUDING AMAZON AND MICROSOFT ARE EXPECTED TO SPEND MORE THAN $725 MILLION IN 2026. THE U.S. IS WEIGHING NEW MILITARY OPTIONS IN IRAN. AXIOS REPORTING THE PRESIDENT WILL RECEIVE BREAKING FROM THE CENTCOM COMMANDER LATER TODAY AFTER REJECTING TEHRAN'S LATEST DEAL. FINALLY, THE PRESENT BLESSING JAY POWELL'S DECISION TO REMAIN WITH THE FED -- THE PRESIDENT BLASTING JAY POWELL'S DECISION TO REMAIN WITH THE FED. LISA: WE HAVE TALKED ABOUT HOW THAT IS REALLY TAME. WE ARE TALKING ABOUT POTENTIAL WAR IN THE COURT SYSTEM. DOES THIS MATTER? ULTIMATELY, WHAT IS THE BEST STRATEGY FOR EVERYONE? MOVING FORWARD WHAT DOES IT MEAN TO TAKE LOW PROFILE AND MOVE ON? JONATHAN: THINK THAT IS THE BEST STRATEGY. LISA: THINK LOT OF PEOPLE WOULD SUGGEST THAT, BUT WHAT IS HE WAITING FOR? AND WHEN CAN WE MOVE PAST IT? ANNMARIE: IT COULD BE THE FED INSPECTOR GENERAL REPORT. IT COULD BE WHAT IS GOING ON WITH THE SUPREME COURT. THINK NEIL DONNA HIT THE NAIL IN THE HEAD WHEN HE SAID THE WHITE HOUSE HAS NOT PROCESSED THIS NORMALLY, SO WHY SHOULD POWELL BE EXPECTED TO HANDLE THIS PROCESS NORMALLY? IT IS INTERESTING, POWELL IS DOVE. DON'T THINK HE IS HAWK. MAYBE THE WHITE HOUSE IS LIKE, WHATEVER. JONATHAN: MULTI-DECADE LOWS WHEN INFLATION WAS MULTI-DECADE HIGHS, IT IS HARD TO CALL IT HAWKISH. LISA: IT IS INTERESTING HOW THIS UNDERMINES THE REPUBLICAN NOMINEES TO THE FED. GUESS WHAT? JAY POWELL IS REPUBLICAN NOMINEE. IN FACT, IT IS PRESIDENT TRUMP'S OWN NOMINEE. BY THE WAY, KEVIN WARSH IS NOT HAWK. ANNMARIE: WAS HOPING FOR THAT FOLLOW-UP QUESTION. SIR, ISN'T JAY POWELL'S THE PRESIDENT'S OWN NOMINEE? JONATHAN: YOU WATCH THE INTERVIEW THAT HAD TAKEN PLACE. DID YOU EXPECT FOLLOW-UP? ANNMARIE: IT WAS AN EASY FOLLOW-UP. JUST WANTED THE PRESIDENT TO SAY IT. JONATHAN: WE WILL CATCH UP WITH THE NSC DIRECTOR LATER. KEVIN HASSETT JOINING US. LET'S TALK ABOUT TECH. FOUR OF THE MAG SEVEN BEATING EXPECTATIONS AND PLANNING MORE THAN $700 BILLION AI SPEND. MIKE WILSON WRITING, FACTOR WORK SHOWS THE MARKET IS BROADLY REWARDING HIGHER CAPITAL SPENDING AS CYCLICAL AND STRUCTURAL FORCES ENCOURAGE." MIKE JOINS US FOR MORE. CAN YOU BUILD ON THAT MORE BECAUSE WE GOT SOME PUSHBACK FROM THE LIKES OF META. HOW UNIVERSAL IS THAT TAKE? MIKE: THIS HAS BEEN THE CALL WE HAVE HAD FOR QUITE WHILE. THIS IS PART OF THE REBALANCING THESIS. THE GOOD NEWS IS THE MARKET IS REWARDING MORE CAPEX, NOT JUST WITH HYPERSCALERS, BUT MORE BROADLY. THINK THIS IS AN INTERESTING QUESTION TO THINK ABOUT. FOUR WEEKS AGO, WE DID STEP IN AGGRESSIVELY ON THE HYPERSCALERS. WE THOUGHT THEY SOLD OFF WAY TOO MUCH AND PEOPLE WERE PUNISHING THOSE STOCKS IN WAY THEY GOT VERY CHEAP. NOW THEY HAVE RALLIED QUITE BIT. IF YOU LOOK AT THE OTHER STOCKS THAT BENEFIT FROM CAPEX, THEY ARE ALSO WORKING. SOME OF THE INDUSTRIAL NAMES, SOME OF THE PARTS IN THE ECONOMY THAT WILL SEE THIS. THAT IS THE BIG BEAUTIFUL BILL. MORE INVESTMENT, LESS CONSUMPTION TO GET HIGHER PRODUCTIVITY. THIS IS BROADER THESIS THAN JUST CAPEX. IT IS IMPORTANT COMPANIES CONTINUE TO ALLOCATE CAPITAL IN WAY THAT LEADS TO PRODUCTIVITY HIGHER PRODUCTIVITY. JONATHAN: WE HAVE ALL BEEN FOLLOWING YOUR RESEARCH. HOW INSULATED ARE WE IN THIS EQUITY MARKET FROM WHAT IS HAPPENING ELSEWHERE? MIKE: IT COMES DOWN TO EARNINGS. IF CUMMINGS ARE GROWING EARNINGS 15%, 20% AND THE EXPECTATION IS 25%, THEY WILL NOT BE LAYING PEOPLE OFF OR RESTRICTING THEMSELVES ON CAPITAL SPENDING OR DOING THINGS TO MAKE THEIR BUSINESSES GROW. ONE OTHER THEME WE HAVE BEEN TALKING ABOUT FOR YEARS IS THIS INFLATIONARY REGIME. IF YOU ARE IN AN INFLATIONARY REGIME AND THE FED NOW HAS REAL RATES CLOSE TO 2%, WHICH IS KIND OF RESTRICTIVE IN SOME WAYS, WE'VE GOT TO FIND WAY TO GROW ORGANICALLY. THIS IS REAL CHANGE OVER THE PAST 15 YEARS, THINKING ABOUT FINANCIAL REPRESSION, BUYING BACK STOCK, BORROWING AT NEGATIVE RATES. COMPANIES HAVE TO INVEST REAL CAPITAL, TAKE REAL RISKS TO GENERATE REAL RETURN. DO YOU WANT TO BET ON COMPANIES THAT ARE HIGH-QUALITY, THAT HAVE DONE THAT IN THE PAST, THAT HAVE GENERATED HIGH-RETURNS. LISA: THIS IS SUPPORTING BROADENING OUT TRADE GIVEN IT IS THE BIGGEST COMPANIES AND THEY HAVE BEEN THE HYPERSCALERS THAT HAVE THE ABILITY TO INVEST. BUT THE CONSUMER ON THE MARGINS, HATE SAYING THIS, BUT IS BEING MORE CHOICEFUL, PICKIER BECAUSE THEY DON'T HAVE MORE DISCRETIONARY SPENDING. MIKE: THAT'S RIGHT. CONSUMER NAMES HAVE NOT PERFORMED WELL IN THE LAST MONTH OR SO. EVERYBODY SAYS THE MARKET IS IGNORING THESE HIGH OIL PRICES. DON'T THINK SO. YOU LOOK AT THE CONSUMER RETAIL NAMES, THE AIRLINE STOCKS, THINGS TIED TO HIGHER PRICES HAVE UNDERPERFORMED. THE MARKET HAS MOVED AWAY FOR AREAS THAT ARE MORE INSULATED. WE STILL THINK THE BROADENING STORY IS HAPPENING AND THE REASON WE ARE SAYING THAT IS BECAUSE THE EARNINGS STORY IS TELLING US THAT. EARNINGS GROWTH FOR THE MEDIAN STOCK IN THE RUSSELL 3000 IS WELL INTO THE DOUBLE DIGITS. THAT IS THE FIRST TIME WE HAVE SEEN THAT SINCE 2021. THAT IS WHY WE HAD THE BROADENING CALL FOR THIS YEAR. THAT TO ME IS THE OPPORTUNITY NOW. EVERYONE IS CRAMMED BACK INTO THE SAME NAMES, SAYING IT IS ONLY HANDFUL OF STOCKS. NO, THERE'S NUMBER OF COMPANIES AND BUSINESSES DOING QUITE WELL IN THIS ENVIRONMENT. LISA: WHEN WITH THE BOND YIELD BACKDROPS ARE TO WHERE YOU GIVEN THAT WE HAVE SEEN THE LONG END OF THE YIELD CURVE CREEP HIGHER? MIKE: RIGHT HERE. 440, WE HAVE REJECTED THAT FEW TIMES IN THE LAST FEW MONTHS. WE HAVE SEEN THE FED AND TREASURY INTERVENE IN BOTH CASES. JAY POWELL WITH LITTLE BIT OF DOVISH RHETORIC ON THE 30TH, THE TREASURY DOING BIGGER BUYBACKS. WE HAVE WRITTEN ABOUT THIS EXTENSIVELY. WHAT AM WATCHING IS TWO THINGS. 4.50 ON THE 10 YEAR. WE ARE NOT QUITE THERE. BUT ALSO VOLATILITY. THE MOVE INDEX WAS AROUND 1.15 BACK AT THE END OF MARCH. THEN SURE ENOUGH, THE TREASURY AND FED STEPPED IN AND NOW IT IS DOWN TO 70. THAT IS COOL. I'M WATCHING BOND VOLATILITY. IF AM LOOKING AT RATES AT 4.50, WE COULD HAVE DECENT CORRECTION OF FOUR JONATHAN: PERCENT, 5%. WE ARE LOOKING AT CORPORATE CREDIT THIS MORNING. META KICKING OFF SIX PART SALE FOLLOWING EARNINGS. LISA: THIS IS TO BE EXPECTED, CONSIDERING THE FACT THEY ARE HIKING THE COSTS. WILL DEBT INVESTORS LIKE THE FACT THAT SPENDING WILL BE GOING INTO NOT JUST MORE CAPACITY BUT HIGHER PRICES BECAUSE COMMODITY COSTS ARE INCREASING? ARE PEOPLE GETTING THE BANG FOR THE BUCK? JONATHAN: YOU TALKED LOT ABOUT EARNINGS, LET'S START WITH THE PRICE IN THE MULTIPLE. WHAT IS THE MULTIPLE THESE COMPANIES DESERVE NOW, GIVEN HOW DIFFERENT THEY ARE THIS MORNING TO HOW THEY WERE 10 YEARS AGO? MIKE: THEY ARE SPENDING MORE MONEY COMING TO YOUR POINT. SO, THE MULTIPLE HAS COME DOWN. ONE OF THE CALLS WE HAD THIS YEAR WHICH KIND OF GOT LOST IN THE SHUFFLE, EVERYONE WAS SAYING, CAN'T BELIEVE THE STOCK MARKET IS ONLY DOWN 6% OR 7%. THIS IS RIDICULOUS. THE MARKET IS WRONG. FIRST OF ALL, THE MARKET IS NEVER WRONG, YOU ARE WRONG. THE PE MULTIPLE WAS DOWN 18%. THINK ABOUT THAT, THAT IS AS BAD AS LAST YEAR GOING INTO LIBERATION DAY. THAT IS TYPICALLY IN RECESSION. AND EARNINGS WERE 15% YEAR-OVER-YEAR. WE THINK THE MARKET FOOLED LOT OF FOLKS. IT HAD ITS CORRECTION UNDER THE SURFACE. IT DID LOT OF GOOD WORK, AND THAT IS WHY WE GOT MORE AGGRESSIVE TOWARDS THE END OF MARCH. DIDN'T EXPECT US TO RALLY LIKE THIS. I'M NOT TAKING CREDIT FOR THAT. BUT THE ENTRY POINT WAS PRETTY EASY TO SEE IN LATE MARCH. JONATHAN: CAN WE FINISH ON ENERGY? WE MENTIONED THAT CHEVRON AND EXXON HAVE DONE NOTHING SINCE THE END OF FEBRUARY, PRETTY MUCH FLAT. WHAT IS THE STORY AND WHAT WOULD YOU DO WITH THAT SECTOR AT THE MOMENT? MIKE: CHANGE YOUR START DATE. SINCE JANUARY 1, THEY ARE UP HUGE. ONCE AGAIN, EQUITY MARKET IS REALLY SMART, SO THE OIL STOCKS STARTED WORKING THE DAY WITH -- THE DAY WE DID THE VENEZUELA EXTRACTION OF MADURO. THEY HAD MASSIVE MOVE, 30 PERCENT RELATIVE OUTPERFORMANCE, AND THAT WAS THE DAY THEY ATTACKED IRAN. IT IS ONE OF THE REASONS WE GOT BULLISH ON THE MARKET. THE MARKET IS TELLING US THAT OIL PRICES ARE GOING TO BE LOWER IN THE FUTURE. THE SPREAD BETWEEN BRENT AND WTI WERE ABOUT THAT. THEN THE RELATIVE UNDERPERFORMANCE OF ENERGY STOCKS. THAT IS LEADING INDICATOR. AM SO CONFIDENT ABOUT IT. IF ENERGY STOCKS ARE OUTPERFORMING, WOULD GET WORRIED THAT MAYBE OIL PRICES WILL BE HIGHER IN THE SECOND HALF. HAVE AN EASY JOB, LET THE MARKET TELL ME WHAT IS GOING TO HAPPEN. JONATHAN: DO YOU FEEL LIKE YOU ARE IN THE GROOVE? MIKE: SOMETIMES. FEEL LIKE AM IN THE GROOVE. AM SURE THAT WILL CHANGE AGAIN. IT IS LIKE GOLF GAME. JONATHAN: WAS GOING TO SAY, IT FEELS LIKE SPORTS. WHEN THINGS ARE GOING WELL, YOU SEE THE BALL LITTLE SHARPER. LISA: YOU WAKE UP AND YOU HAVE THAT COORDINATION. THEN THERE ARE DAYS WHERE YOU WALK INTO WALL. GET IT. THERE ARE DAYS WHERE THINGS ARE LUCID. THE IDEA THAT THE MARKET IS SMART AT SAUCING SOMETHING OUT, THINK IT IS TELLING THAT OIL STOCKS ARE DOWN. WHAT THAT TELLS YOU GOING FORWARD ABOUT HOW LONG THIS IS GOING TO LAST. WHEN IS THAT GOING TO PICK IT? JONATHAN: GREAT CALLS RECENTLY. MIKE WILSON OF MORGAN STANLEY. LET'S GET YOU AN UPDATE ON STORIES WORLDWIDE THIS MORNING WITH YOUR BLOOMBERG BRIEF. VONNIE: THE LONGEST PARTIAL GOVERNMENT SHUTDOWN IN HISTORY AS STEP CLOSER TO COMING TO AN END. THE HOUSE HAS APPROVED THE FIRST PART OF TWO-PART PLAN TO REOPEN THE DEPARTMENT OF HOMELAND SECURITY. SPEAKER MIKE JOHNSON IS NOW EYEING SEPARATE BILL THAT WILL FINANCE THE PARTS OF THE DEPARTMENT OUTSIDE I.C.E. AND BORDER PATROL THROUGH SEPTEMBER 30. SHARES OF FORD LOWER IN PREMARKET TRADING, AS THE CFO TELLS ROMAINE BOSTICK THAT RISING COMMODITY COSTS WILL WEIGH ON EARNINGS. THE FORMER CURVES ARE STILL HOLDING AT THIS MIDDLE EAST SITUATION IS GOING TO BE ON THE SHORT-LIVED SIDE. AS RESULT AT THIS POINT IN TIME, WE ARE BELIEVING THERE IS GOING TO BE SOME RECOVERY AS WE START TO EXIT Q3, AS WE GET THROUGH Q3 AND Q4. VONNIE: FORD ALSO BOOSTING ITS FOUR-YEAR PROFIT OUTLOOK DRIVEN BY HIGH DEMAND FOR PICKUPS AND SUVS. AMAZON IS CONSIDERING REBOOT OF "THE APPRENTICE" WITH DONALD TRUMP JUNIOR AS HOST. THE WALL STREET JOURNAL REPORTING DISCUSSIONS ARE IN THE EARLY STAGES AND AMAZON HAS NOT YET APPROACHED THE TRUMP FAMILY. THAT IS YOUR BLOOMBERG BRIEF. JONATHAN: INTERESTING GIVEN THE FAMILY HAS NOT BEEN APPROACHED. ANNMARIE: BUT IT SOUNDS FUNNY. WOULD YOU WATCH? JONATHAN: THINK WILL TUNE IN. YOU KNOW MY TASTE IN TV WHEN NOT WORKING. LISA: IT IS CURRENTLY HAPPENING AT THE FEDERAL RESERVE. IT IS STILL ONGOING. SO, WHATEVER. JONATHAN: WOULD YOU WATCH? JONATHAN: LISA: THINK THIS IS MARKETING PLAY. GOOD JOB. ANNMARIE: TRUMP RECENTLY WENT DOWN MEMORY LANE AND TRUTHED OUT HIS HIGH RATINGS OF "THE APPRENTICE." THINK HE WOULD ENCOURAGE JUNIOR TO DO THIS. JONATHAN: UP NEXT, AND INSULT OF THE FEDERAL RESERVE. IT IS VIOLATION OF ALL FEDERAL RESERVE NORMS AND AN INSULT TO KEVIN WARSH. JONATHAN: WE WILL CATCH UP WITH THE FORMER FED PRESIDENT ERIC ROSENGREN. LIVE FROM NEW YORK CITY, YOU ARE WATCHING BLOOMBERG TV. ♪ JONATHAN: OVERNIGHT, THINGS WERE NOT LOOKING GREAT. WE HAD CRUDE PUSHING 20. AND THE TECH STORY WAS MIXED. IT WAS PRETTY MIXED WITH THE LIKES OF META GETTING PLUNGED PRETTY HARD. SINCE THEN, THINGS HAVE RECOVERED SOMEWHAT. THE NASDAQ HIGHER BY 0.5%. IN THE COMMODITY MARKET, DESPITE SOME, LET'S JUST SAY, NOT ENCOURAGING HEADLINES COMING FROM THE MIDDLE EAST, POINTING LOWER, NOT HIGHER, FOLLOWING EIGHT CONSECUTIVE GAINS OF BRENT CRUDE, AND WHEN YOU TAKE THAT PICTURE AND PLUG IT IN, FOLDED OVER TO WHAT IS HAPPENING RIGHT NOW IN THE BOND MARKET, YIELDS DOWN LOWER, NOT HIGHER, DOWN FIVE OR SIX BASIS POINTS IN THE FRONT END OF THE CURVE. LISA: WONDER IF THERE IS REGIONAL BIAS. IT SEEMS LIKE THE TRADING IS OPEN IN ASIA AND EUROPE, WHICH SEEMS MUCH MORE EFFECTIVE. PEOPLE APPEAR MUCH WORSE, THEN PEOPLE COME ON AS THINGS ARE GREAT, CAPEX IS BOOMING, AI IS GOING TO SAVE THE WORLD, THEN THEY COME ON LOOK AT ALL THE BRIGHT SIDES. JONATHAN: COMING FROM THE BIGGEST COMPANIES ON THE PLANET. LISA: YOU HAVE CORPORATE STIMULUS INSTEAD OF FISCAL STIMULUS. JONATHAN: YIELDS ARE DOWN. UNDER "SURVEILLANCE THIS MORNING, AN INSULT TO THE FEDERAL RESERVE. SEC. BESSENT: IT IS HIGHLY UNUSUAL WHAT CHAIR POWELL DID. THIS IS VIOLATION OF NORMS AND AN INSULT TO KEVIN WARSH, BOWMAN, AND CHRIS WELLER TO THINK THAT THESE OTHER REPUBLICAN NOMINEES DO NOT CARE ABOUT THE INSTITUTION OF THE FED AND THAT HE ALONE CAN, YOU KNOW, MAINTAIN THE INTEGRITY OF THE FED. JONATHAN: PRESIDENT TRUMP CRITICIZING JEROME POWELL'S DECISION TO REMAIN AT THE FED, SAYING "BECAUSE HE CAN'T GET JOB ANYWHERE ELSE." ERIC ROSENGREN WRITES POWELL "VIEWS THE LEGAL ACTIONS AGAINST THEMSELVES AND OTHERS ARE INTENDED TO INFLUENCE THE VOTE ON MONETARY POLICY." ERIC JOINS US NOW. DO YOU BELIEVE THIS IS AN INSULT TO OTHER MEMBERS OF THE FEDERAL RESERVE? ERIC: DO NOT. THINK IT IS REFLECTION OF THE LEGAL ATTACK ON BOTH THE CHAIR AND ONE OF THE OTHER GOVERNORS, AND AS RESULT, IT WAS INTENDED, TO INFLUENCE MONETARY POLICY AND HE IS STANDING UP TO THE INSTITUTION. SO THINK IT IS PROBABLY NOT WHAT HE WANTED TO DO. MY SENSE IS HE DID WANT TO RETIRE. I'M SURE HIS FAMILY WOULD LIKE TO SEE HIM AGAIN. HE'S BEEN WORKING PRETTY HARD FOR EIGHT YEARS. BUT THINK HE'S DOING IT FOR THE INSTITUTION. JONATHAN: WITH THAT IN MIND, WHAT KIND OF INSTITUTION DO YOU THINK KEVIN WARSH IS INHERITING HERE? ERIC: THINK, FROM THE NEW CHAIR'S PERSPECTIVE, IT IS CHALLENGING ENVIRONMENT. FIRST OF ALL, WE HAD BAD INFLATION OR SHOCK WITH THE WAR IN RAN, AND WE ARE ABOUT TO GET CORE INFLATION, WHICH EXPECT TO BE UP FAIR BIT. IT'S GOING TO BE UP OVER 3% FOR CORE PCE INFLATION. THAT IS VERY HIGH, RELATIVE TO THE 2% INFLATION TARGET. SO NEW CHAIR WHO MAY HAVE BEEN HOPING TO LOWER RATES THINK IS GOING TO FACE COMMITTEE THAT CLEARLY IS NOT AS INTERESTED IN LOWERING RATES AT THIS TIME BECAUSE OF THE INFLATIONARY SHOCK THAT WE'VE HAD AND THE FACT THAT THE FED MISSED HIS INFLATION TARGET FOR THE LAST FIVE YEARS. SO THINK THERE ARE NUMBER OF MEMBERS THAT ARE QUITE CONCERNED ABOUT WHAT HAS BEEN HAPPENING WITH INFLATION. THERE WERE THREE DESCENTS -- DISSENTS OF THE PRESIDENT FOR THE LANGUAGE THAT IS USED AS BIAS. THERE WAS ONE GOVERNOR, GOVERNOR MIRAN, WHO WOULD HAVE PREFERRED TO EASE, BUT HE HAS WANTED TO EASE IT EVERY SINGLE MEETING, SO THINK IT IS VERY SPLIT COMMITTEE, AND THINK THAT IS CHALLENGING, BECAUSE KEVIN WARSH NEEDS TO GET MAJORITY TO GET WHATEVER POLICY HE WANTS THROUGH. THINK THERE'S AN UNUSUAL LEVEL OF DISSENT AT THIS TIME. LISA: WERE YOU SURPRISED THREE MEMBERS DISSENTED IN ORDER TO MOVE TO ANOTHER LANGUAGE, RATE HIKE OR RATE CUT AT ANOTHER MEETING IN THE FUTURE, OR ARE YOU SURPRISED MORE DID NOT GET ON BOARD WITH SIMILAR TYPE OF MOVE? ERIC: LOT OF PEOPLE DON'T VIEW DISSENTS AS BEING USED ON LEAVING LANGUAGE UNCHANGED. THE LANGUAGE THAT THEY FOUND ACCEPTABLE SIX WEEKS AGO, YOU HAVE TO THINK THERE'S PRETTY SIGNIFICANT CHANGE TO DISSENT OVER NOT CHANGING THE LANGUAGE. THAT BEING SAID, THE THREE DISSENTS AGAINST THE LANGUAGE, THINK OF ALL HIGHLIGHTED THEIR SPEECHES, THEIR CONCERNS ARE INFLATION, AND THINK IT IS SIGNIFICANT THAT CHAIR POWELL'S LAST MEETING AS CHAIR, AND AS RESULT, THINK THEY ARE SIGNALING TO THE INCOMING CHAIR THAT, AS VOTING MEMBERS, THEY ARE GOING TO BE RESISTANT TO POLICY THAT TRIES TO, IN THEIR VIEW, EASE IN WAY THAT IS NOT CONSISTENT WITH HOW THE ECONOMIC OUTCOMES HAVE BEEN COMING DOWN. LISA: WHAT IS LOW PROFILE GOVERNOR POWELL LOOK LIKE TO YOU? ERIC: THINK HE COMMENTS ON DATA AND KEEPS HIS VIEWS LARGELY TO HIMSELF, BUT HE IS STILL VOTING MEMBER. HIS VOTE IS GOING TO BE RECORDED. THINK HE'S GOING TO VOTE THE WAY HE SHOULD -- HE THINKS HE SHOULD VOTE,. OBVIOUSLY IT'S GOING TO BE AWKWARD FOR KEVIN WARSH IF HE STARTS DISSENTING IN LONG WITH NUMBER OF OTHER -- ALONG WITH NUMBER OF OTHER MEMBERS. THINK IT IS CHALLENGING. BUT DON'T THINK IT IS SOMETHING THAT IS THAT DIFFICULT TO MANAGE, IF HE HAS CLEAR UNDERSTANDING WHERE THE CONSENSUS ON THE COMMITTEE IS. MEAN, HE LEAVES THE COMMITTEE, BUT HE HAS TO CONVINCE PEOPLE THAT HIS VIEWS ARE THE APPROPRIATE ONES. JONATHAN: ERIC, THINK THAT IS THE APPROPRIATE ONE, CAN YOU KEEP LOW PROFILE IF YOU ARE WILLING TO DISSENT WITH THE CHAIR? ERIC: THINK HE'S HOPING HE DOES NOT HAVE TO DISSENT. IF THE RECOMMENDATIONS ARE CONSISTENT WITH THE POLICIES THAT THE FRAMEWORK DOCUMENT AND THE COMMITTEE HAS LONG HAD. BUT THINK, FOR EXAMPLE, THERE WAS -- DON'T EXPECT THIS, BUT IF THERE WAS AT THE FIRST MEETING, YOU KNOW, MOVE TO DRAMATICALLY EASE, THINK THEY WOULD BE LOT OF PEOPLE OPPOSED TO THAT, AND THERE MAY NOT BE THE VOTES, INCLUDING WITH FORMER CHAIR POWELL AT THAT POINT. BUT DON'T EXPECT KEVIN TO DO SOMETHING THAT DRAMATIC, AND THINK HE CAN COUNT THE VOTES, AND THINK, MORE THAN LIKELY, WE WILL SEE THAT FORMER CHAIR POWELL AND NEW CHAIR END UP VOTING TOGETHER IN MOST INSTANCES IS NOT ALL INSTANCES. JONATHAN: WE WILL SEE IF THAT IS THE CASE. ERIC, THANK YOU, SIR. FORMER BOSTON FED PRESIDENT ERIC ROSENGREN ON THE FUTURE OF LOW PROFILE GOVERNOR POWELL. LISA:LISA: WHICH HOPEFULLY MEANS JAY POWELL THAT DOES NOT HAVE TO DISSENT. THAT WOULD BE VERY DIFFICULT. THAT WOULD BE CONSIDERED HIGHLY HIGH-PROFILE COME IN SIGNIFICANT WAY. WE TALKED ABOUT THIS YESTERDAY, AT WHAT POINT DOES JAY POWELL STICKING AROUND GIVE KEVIN WARSH SOME COVER IN SOME WAYS, SOME CREDIBILITY? JONATHAN: AT LEAST FOR NOW. UP NEXT, WE CATCH UP WITH JP MORGAN ASSET MANAGEMENT, POOJA OF TD SECURITIES, AND JONATHAN PINGEL OF UBS. ♪ IT'S ALL ABOUT THE TECH SECTOR WITHIN THE EQUITY MARKET. YOU HAVE VERY STRONG EARNINGS FUNDAMENTALS UNDERPINNING THINGS. EVERYONE IS WORKING TO MAKE SURE THIS GROWTH IS AS STRONG AS IT HAS BEEN. THIS IS "BLOOMBERG SURVEILLANCE" WITH JONATHAN FERRO, LISA ABRAMOWICZ, AND ANNMARIE HORDERN. JONATHAN: LIVE FROM NEW YORK CITY THIS MORNING, GOOD MORNING. GOOD MORNING FOR OUR AUDIENCE WORLDWIDE. THE THIRD HOUR OF BLOOMBERG SURVEILLANCE STARTS NOW. EQUITY FUTURES ADDING TO GAINS, UP BY 0.4% ON THE S&P. LIKEWISE ON THE NASDAQ. TURNAROUND IN THE COMMODITY MARKET. CRUDE TRIMMING SOME OF THIS WEEK'S GAME. WE ARE DOWN BY 2% ON WTO. BRENT CRUDE DOWN BY 3.4 PERCENT. AN ECB RATE DECISION, SOME 15 MINUTES AWAY. ECONOMIC JOBLESS CLAIMS AT 8:30 EASTERN TIME. LISA: WE WILL SEE THE DIVISION BETWEEN EUROPE AND THE U.S. AND THE DATA COMING OUT AS WELL AS THE RHETORIC FROM THE CENTRAL BANKS. RIGHT NOW, WE HAVE EUROPEAN CENTRAL BANKS FACING OFF WITH MUCH MORE OF CHALLENGE TO MANDATE THAT IS SINGULAR. IT ISN'T DUAL MANDATE LIKE IN THE UNITED STATES. THEY ARE SEEING WEAKNESS COME THROUGH THEIR ECONOMY, BUT INFLATION IS HIGHER AS RESULT OF OIL PRICES. CAN THEY HIKE INTO SITUATION LIKE THIS GIVEN THE FACT THEIR ONE MANDATE IS INFLATION, BUT IF THEY HAD DUAL MANDATE, THERE WOULD BE SOMETHING DIFFERENT? JONATHAN: YOU WANT TO ANCHOR INFLATION EXPECTATIONS BUT YOU DON'T WANT TO HIKE INTEREST RATES. GET THE SENSE FROM THESE CENTRAL BANKS. THAT IS THE SITUATION, THAT IS THE TENSION. LISA: CERTAIN POINT IF YOU SEE YOUR ECONOMY DETERIORATING AND UNEMPLOYED MCNAUGHT, HOW DO YOU RESPOND? RIGHT NOW, THE BANK OF ENGLAND VOTED 8-1 TO HOLD RATES, BUT THEY MAY BE HIKING MATERIALLY. AM LOOKING FOR THE COLOR OF CHRISTINE LAGARDE'S SCARF TO GIVE INDICATION. THINK WE NEED TO START THAT. JONATHAN: TYPICALLY WOULD NOT TRY TO MISLEAD THE AUDIENCE AND SAY WATCH THE NEWS CONFERENCE, IT WILL BE REALLY INTERESTING. THE ECB IS NEVER REALLY VERY INTERESTING, PARTICULARLY THE NEWS CONFERENCE UNDER LAGARDE. THIS ONE COULD BE SLIGHTLY DIFFERENT WITH THE CHALLENGES THEY FACE IN THE MIDDLE EAST. LISA: HOW DOES SHE MESSAGE THIS GIVEN THAT SHE HAS TO SIGNAL DESIRE TO ANCHOR EXPECTATIONS? BUT YIELDS ARE SO HIGH, AND THE DATA COMING IN WEAKER THAN EXPECTED. IN LINE BUT LITTLE HIGHER IN SOME PLACES. IT GIVES SENSE OF THEIR CONUNDRUM. ANNMARIE: EUROPE IS STRUGGLING. THEY ARE STRUGGLING WITH JET FUEL. PETROL PRICES ARE GOING UP. THEY ARE MORE RELIANT ON ALL THESE IMPORTS FROM THE MIDDLE EAST. WE HAVE SPOKE TO THE U.S. ENERGY SECRETARY THIS WEEK WHO IS IN CROATIA. THEY ARE DUBBING THEM TRUMP PEACE PIPELINES, BUT WHAT THEY ARE TALKING ABOUT IS MORE LNG GOING TO EUROPE. SECOND STOCK AFTER RUSSIA'S INVASION OF UKRAINE. JONATHAN: THAT IS THE SCHEDULE FOR THIS HOUR. 8:15, WE GET AN ECB RATE DECISION. WE WILL CATCH UP WITH THIS GUY. AND IN PERSON CONVERSATION ABOUT THE FEDERAL RESERVE AND THE ECONOMIC BACKDROP. KEVIN HASSETT, AND EC DIRECTOR, AND EXTENDED EDITION OF "BLOOMBERG SURVEILLANCE." LISA: WITH GAS PRICES NEAR THE HIGHEST LEVELS THEY HAVE BEEN GOING BACK NUMBER OF YEARS, AND THIS FEAR THAT MAYBE THIS WILL IMPEDE CONSUMER SPENDING, HOW DOES HE DOVETAIL BOTH AN ARGUMENT FOR FEDERAL RESERVE THAT WILL CUT RATES WITH AN ECONOMY THAT IS STRONG AND DELIVERING ABOVE AVERAGE GDP GROWTH? IT IS AN UNCOMFORTABLE MESSAGE TO DELIVER. JONATHAN: LOOKING FORWARD TO THAT CONVERSATION. THIS HOUR, WE WILL CATCH UP WITH MAURA PANDIT, POOJA KUMRA, AND JONATHAN PINGLE, BREAKING ON THE LATEST ROUND OF ECONOMIC DATA. WE BEGIN WITH STOCKS EDGING HIGHER ON OIL PRICES. OIL AT 10 TO $ 120 FOR SIX MONTHS COULD HAVE 4% TO 6% HIT TO EPS BUT THAT WAS TO LEAVE US WITH DOUBLE DIGIT GROWTH. IT IS GOOD TO SEE YOU. WHERE'S THE EARNINGS GROWTH COMING FROM? MEE IF THERE IS WAR, NO ONE HAS TOLD EARNINGS. EVEN WITH SOME OF THE EXPECTATIONS YOU JUST HIGHLIGHTED FROM OUR VARIOUS ANALYSTS ACROSS J.P. MORGAN, THE RANGE IS STILL GOING TO POTENTIALLY DOUBLE DIGIT GROWTH. YOU STARTED OFF THE YEAR WITH EXPECTATIONS FOR 15% YEAR-OVER-YEAR GROWTH. THAT HAS GONE UP TO ALMOST 18%, 19%. SO, YOU HAVE CONTINUED TO SEE THOSE UPWARD REVISIONS. SOME OF THAT IS ENERGY, LOT OF THAT IS TECH STILL BEING VERY RESILIENT AROUND THAT STORY. WE HAVE LOT OF BUFFER WHEN IT COMES TO PROFITS. THINK THAT IS WHY IS YIELDS RISE YOU ARE NOT NECESSARILY SEEING STOCKS REACT. JONATHAN: WITH COUPLE OF STUCK FIRMS, DOES IT LOOK IMPRESSIVE? MEERA: IT LOOKS SLIGHTLY LESS IMPRESSIVE. BUT THE EARNINGS STORY IS GETTING CONTRACTED. IT IS STILL BROADENED OUT OVERALL. IF YOU LOOK AT THE OVERALL MAG SEVEN, THAT IN ITSELF IS CONCENTRATED STORY. YOU TAKE ONE OF THOSE MAG 7 COMPANIES OUT FOR THIS QUARTER AND THAT 22% GROWTH RATE FALLS TO ABOUT 6.5%, WHICH IS NOT GREAT NEWS WHEN WE THINK ABOUT THE DIVERSITY OF EARNINGS GROWTH WITHIN THE MAG 7. BUT IF YOU LOOK AT THE S&P 493, YOU ARE STILL SEEING DOUBLE DIGITS. YOU STRIP OUT ANY OTHER SEMI FAFROM 493, YOU'RE STILL AROUND THE DOUBLE DIGIT MARK. YOU ARE SEEING OTHER SECTORS PARTICIPATING. LOT OF THEM STILL LINKED TO AI, BUT AT LEAST IT IS NOT ONE OR TWO COMPANIES, IT IS PERMEATING THROUGH THE SYSTEM. LISA: IS THIS BACKWARD LOOKING? IS IT IGNORING THE OIL PRICES WE SEE NOW SHOULD THEY PERSIST FOR ANOTHER COUPLE MONTHS? MEERA: THOSE ESTIMATES WE CITED ARE ASSUMING THAT OIL PRICES STAY AT THESE ELEVATED LEVELS FOR FOUR TO SIX MONTHS. IT DOES ASSUME MORE EXTREME SCENARIO. EVEN IF WE ADD FEW PERCENTAGE POINTS TO THAT, THE BUFFER IS SO STRONG AND THIS SECULAR GROWTH AROUND AI IS SO STRONG AND BROADENING OUT THAT IT WILL TAKE MORE OF SHOCK. WHAT HAS BEEN INTERESTING IS THIS ROLLING FOUR TO SIX TIMELINE WHERE IT SEEMS IF WE GET TO MID APRIL AND THE STRAIT OF HORMUZ IS STILL CLOSED, WE ARE GOING TO BE IN BIG TROUBLE. THAT TIMELINE KEEPS GETTING PUSHED OUT. CLEARLY THE MARKETS, EARNINGS OVERALL ARE MORE RESILIENT TO OIL SHOCKS THAN WE ORIGINALLY EXPECTED. LISA: WHAT OTHER SHOCK DO YOU NEED? YOU HAVE YOUR INFLATION CHART, YOUR GEOPOLITICAL CRISIS, NOW YOU HAVE POTENTIAL RATE STOCK. COULD SOME OF THE MOVES WE ARE SEEING IN THE BOND MARKET SERVE AS TRIGGER TO CHANGE THIS PICTURE? MEERA: IF WE SEE RATES MOVE HIGHER, AND IF THAT IS BECAUSE OF SOME CHANGES AROUND FED EXPECTATIONS, THAT IS TYPICALLY WHAT WE DO SEE IN THE MARKET. IF HIKE DOES BECOME VERY REAL PROBABILITY THEN THAT IS GOING TO BE TROUBLING SIGNAL FOR THE MARKETS, NOT JUST WHERE YIELDS ARE BUT WHERE THAT SIGNAL IS ABOUT MONETARY POLICY. BUT STILL BELIEVE THAT FROM FED PERSPECTIVE, THE NEXT MOVE IS LIKELY TO BE CUT THAN HIKE. WE ARE IN VERY DIFFERENT SITUATION THEN WE WERE IN 2022. OBVIOUSLY THE STARTING POINT FOR INFLATION AND THE DIRECTION OF TRAVEL IS DIFFERENT THAN IT WAS IN TERMS OF INTENSITY BACK THEN. BUT YOU ALSO HAVE CONSUMER THAT IS LOT WEAKER. EXCESS SAVINGS HAS DRIED UP. THE SAVINGS RATE ITSELF IS DEPRESSED. YOU HAVE LABOR MARKET NOT PARTICULARLY STRONG, WAGE GROWTH THAT IS MODERATED. IF YOU LOOK AT EXPECTATIONS AROUND INFLATION, THE FEAR IS DOES THE HEADLINE FEED INTO THESE EXPECTATION MEASURES? YOU LOOK AT FIVE-YEAR FORWARDS, BREAKEVENS, THEY INCREASE 15, 20 BASIS POINTS SINCE THE WAR BREAK OUT. -- BROKE OUT. THINK ULTIMATELY WHAT WILL HAPPEN OVERSEAS IF WE THINK ABOUT EUROPE IS THE HIGHER HEADLINE INFLATION BECAUSE PEOPLE ARE SPENDING MORE ON GAS AND FOOD.IT STARTS TO FEED INTO COURT AND THAT KEEPS LID ON CORE BECAUSE PEOPLE ARE COMING FROM OTHER AREAS. ANNMARIE: YOU SAID IT COULD BE GROUND FOR PERCENT THIS SUMMER, INFLATION. HOW COULD THEY CUT IN THAT ENVIRONMENT? MEERA: DON'T THINK THE CUT IS ON THE TABLE FOR THIS YEAR. MAYBE AT BEST DECEMBER, DEPENDING ON HOW THINGS PLAY OUT, MAYBE PUSHED OUT TO 2027. BUT IF YOU THINK OF HOW WE GET BACK TO THE UPPER TWOS, WE HAVE COUPLE OF DIFFERENT FACTORS. WE HAVE BIT OF THE FLIPSIDE OF ENERGY PRICES THAT WE DO THINK WILL SUBSIDE. MAYBE NOT ALL THE WAY DOWN TO WHERE WE STARTED THE YEAR, BUT MAKE SOME PROGRESS. WE ARE SEEING THE TARIFFS WILL LIKELY START TO SEE BIT OF THAT TRAINING OUT FURTHER ON THE FLIPSIDE. WE HAD LESS IMMIGRATION, CELESTE DEMAND TO THE OVERALL ECONOMY. YOU CONTINUE TO SEE RENT SOFTEN. WE COULD BE IN POSITION WHERE THE INFLATION RATE STARTS TO COME BACK TO THE 2% RANGE. WHICH MEANS THE FED STILL HAS TO WAIT AND SEE. BUT IT PUTS THEM IN BETTER POSITION BY THE END OF THE YEAR TO THINK OF CUTS FOR NEXT YEAR. JONATHAN: WE SPOKE TO THE FORMER FED PRESIDENT OF JAY POWELL STAYING ON. WHAT IS KEVIN WARSH INHERITING WHEN HE TAKES OVER IN JUNE? MEERA: WHEN YOU HAVE CHAIR POWELL STAYING ON, HE EMPHASIZED THE POINT ABOUT THE LEGAL ACTIONS AGAINST THE FED AND WANTING TO MAINTAIN THE SANCTITY OF THAT INSTITUTION. THINK THE ROLE HE WILL PLAY ON DAY TO DAY BASIS IS MOVING FROM HIGH SCHOOL PRINCIPAL TO YOUR GUIDANCE COUNSELOR HERE, TO TRY TO BUILD SOME CONSENSUS AND REALLY TRY TO PROTECT THE INSTITUTION. BUT DO THINK THE CONSENSUS BUILDING IS AN IMPORTANT ASPECT OF THE FED, BUT MAYBE WE HAD LITTLE TOO MUCH CONSENSUS BUILDING IN THE EARLIER PART OF THIS DECADE THAT COULD HELP PREVENT POLICY HAD THERE BEEN MORE DEBATE. THINK THE DEBATE ELEMENT THAT WARSH WILL INFUSE WILL BE GOOD THING. JONATHAN: GREAT SUMMARY. WELCOME IT. WE COMPLAINED ABOUT IT FOR AGES, THE GROUPTHINK AT THE FEDERAL RESERVE, THE LACK OF GROUPTHINK IN THE LAST 24 HOURS IS PRETTY WELCOME. LISA: THIS IS WHAT KEVIN WARSH SAID HE WANTED. CAN WE GIVE VICTORY LAP TO MEERA FOR THE GUIDANCE COUNSELOR? THAT IS AN ANALOGY THAT HAS SO MANY WONDERFUL WAYS TO PLAY IT. JONATHAN: WE NEED TO SPEND MORE TIME IN THAT OFFICE OF THE FEDERAL RESERVE. YOU DON'T WANT TO ANSWER RIGHT NOW? WHO WOULD SPEND MORE TIME IN THE OFFICE OF THE GUIDANCE COUNSELOR? THE FOMC MEMBERS. EXACTLY. LET'S GET AN UPDATE ON STORIES WITH YOUR BLOOMBERG BRIEF. VONNIE QUINN HAS MORE. VONNIE: STELLANTIS SHARES SLIDING IS VECTOR'S -- INVESTORS LOOK PAST PROFIT, QUESTIONING THE SUSTAINABILITY OF TURNAROUND. DESPITE IMPROVED SALES, ANALYSTS WARNED THAT THE NUMBERS WERE PADDED BY PRICE CUTS AND TARIFF REFUND. THE U.S. WAR IN IRAN HAS CAUSED $25 BILLION SO FAR, ACCORDING TO SENIOR PENTAGON OFFICIAL. THE COST INCLUDES OPERATION EPIC FURY, WITH MOST OF IT GOING TO MUNITIONS AS WELL AS OPERATIONS, MAINTENANCE, AND REPLACEMENT. THE WHITE HOUSE EXPRESSING OPPOSITION TO PLAN BY ANTHROPIC TO EXPAND AS SIZE TO ITS MYTHOS AI MODEL TO ABOUT 70 COMPANIES AND ORGANIZATIONS. SOURCES TELLING US THAT BLOOMBERG OFFICIALS ARE CONCERNED THE COMPANY LACKS THE COMPUTE POWER TO GUARANTEE SECURITY. THAT IS YOUR BLOOMBERG BRIEF. JONATHAN: MORE FROM BONNIE LATER. COMING UP, THE MORNING CALLS. PLUS THE LATEST DECISION FROM THE ECB. WE WILL BREAK IT DOWN WITH OLIVER CROOK. WE WILL CATCH UP WITH POOJA KUMRA IN JUST MOMENT. FROM NEW YORK CITY THIS MORNING, GOOD MORNING. JONATHAN: UP BY 0.5% ON THE S&P, THEY NASDAQ HIGHER BY 0.6%. J.P. MORGAN DOWNGRADING META. THAT NAME IS DOWN BY 9% PURE AND TD COWEN RAISING HIS PRICE TARGET ON ALPHABET TO 450 DOLLARS, SEEING AN INFLECTION POINT IN ITS MONSTER CLUB RESULTS. THAT STOCK IS UP 8%. AND BANK OF AMERICA RAISING ITS PRICE TARGET ON AMAZON. THE STOCK IS UP BY 3.5%. LISA: AMAZON IS THE BIGGEST WINNER THIS YEAR, UP 14% AS IT TURNS TO MORE CHIP MANUFACTURING AND BUILDING OUT SOME OF ITS CLOUD. LAST EARNINGS SEASON, WE WERE SKEPTICAL OF AMAZON BECAUSE THEY WERE ANNOUNCING CAPEX SPENDING PEOPLE WERE SAYING THEY ARE NEVER GOING TO CATCH UP. THE CATCHING -- THEY ARE CATCHING UP FAST AND BE REWARDED FOR IT. JONATHAN: THIS IS INSULATING THE EQUITY MARKET FROM TRAUMA ELSEWHERE. ANOTHER CENTRAL-BANK DECISION, THIS TIME FROM THE ECB, KEEPING INTEREST RATES UNCHANGED BUT SOME HEADLINES TO WORK THROUGH SO LET'S HEAD TO FRANKFURT AND CATCH UP WITH ALL THE CROOK -- OLLIE CROOK. WE ARE GETTING THE RATE DECISION FROM THE EUROPEAN CENTRAL BANK. THIS WAS NEVER REGARDED AS LIVE MEETING FOR THE EUROPEAN CENTRAL BANK BUT WHAT WE ARE GETTING FROM THE STATEMENT IS DOWNSIDE RISKS TO GROWTH HAVE INTENSIFIED. UPSIDE RISKS HAVE INTENSIFIED AND THEY ARE NOT COMMITTING TO ANY PARTICULAR RATE PATH. THAT IS THE ECB USING CAUTIOUS LANGUAGE HAD MEETING WHERE IT IS HARD TO PREDICT WHERE INFLATION IS GOING FOR THE ECB. WHAT THEY HAVE DONE IS THEY HAVE SAID WE ARE LOOKING AT THREE BASIC SCENARIOS, THE GOOD, BAD, AND UGLY AND LAST WEEK WE HEARD FROM CHRISTINE LAGARDE THAT THE SITUATION IN TERMS OF INFLATION IS BETWEEN GOOD AND BAD. FROM DATA WE HAVE SEEN OVER THE LAST COUPLE HOURS, WE HAVE GDP DATA OUT OF THE EURO ZONE. NUMBER OF COUNTRIES -- JUST LOOK AT WHAT HAPPENED IN FRANCE. IT WAS SUPPOSED TO GROW BY ABOUT 20 BASIS POINTS. THAT CAME IN FLAT. WE GOT 2.5 PERCENT. THAT IS THE KIND OF DYNAMIC WITHIN THESE EUROPEAN ECONOMIES THAT THE ECB IS GOING TO BE CAUTIOUS ABOUT AND WE SHOULD SAY WE ARE COMING AT THIS BASICALLY IN REAL TIME. WE WOKE UP THIS MORNING ON THE DAY OF THE RATE DECISION WITH BRENT AT 26 BARREL SO WE WILL WANT CLOSELY LATER. SUSPECT CHRISTINE LAGARDE KNOWS WHERE THE QUESTIONS WILL BE. DOUBT SHE HAS ALL THE ANSWERS. JONATHAN: OVER IN FRANKFURT, HE WILL GET IN THE NEWS CONFERENCE FOR YOU STARTING IN JUST UNDER 30 MINUTES. THIS IS THE CENTRAL BANK DYNAMIC YOU CANNOT OFFER MUCH GUIDANCE. YOU HAVE TO TAKE MEETING BY MEETING APPROACH BECAUSE YOU HAVE NO IDEA WHAT IS GOING TO HAPPEN IN THE MIDDLE EAST AND HOW EMBEDDED PRICE INCREASES MIGHT BECOME MORE HOW TO RESPOND WHEN THIS HAPPENS. UPSIDE RISK TO INFLATION, DOWNSIDE RISK TO GROWTH, AND BOTH SIDES HAVE INTENSIFIED. LISA: THIS MORNING WE GOT GDP DATA COMING OUT OF EUROPE WEAKER THAN EXPECTED AND WE HAD CPI AT THREE PERCENT YEAR-OVER-YEAR, INCREASING GIVEN THE ENERGY SHOCK THAT YOU ARE EXPERIENCING SO HOW MUCH DID YOU HAVE SOME SENSE OF WHAT INSTRUMENTS THEY ARE PLANNING TO USE? THEY SAY THEY STAND BY READY TO ADJUST ALL INSTRUMENTS. WHERE ARE THEY GOING TO ADJUST LANGUAGE TO REFLECT WEAKNESS THAT COULD ARISE? JONATHAN: LET'S GET TO THIS CONVERSATION WITH POOJA KUMRA. THE ECB BELIEVES THEY ARE WELL-POSITIONED TO NAVIGATE THE UNCERTAINTY. DO YOU THINK THEY ARE? POOJA: DO NOT THINK ANY CENTRAL BANK IS RIGHT NOW. ECB DID GIVE US SCENARIOS AND HOW THEY ARE SUPPOSED TO REACT AND WE ARE CLOSER TO THAT WORST SCENARIO WHICH MEANS THERE ARE SECOND-ROUND IMPACTS BUT AT THIS STAGE THE MARKET IS SO DELICATE THAT EVEN IF THE ECB WANTS TO HIKE RATES BELOW 25 BASIS POINTS MARKETS MOVE 100 BASIS POINTS SO HOW THEY COMMUNICATE WILL BE TOUGH THIS TIME. JONATHAN: YOU CAN SEE CONSUMER EXPECTATIONS OVER THE SHORT TERM HAVE RISEN. THE ECB IS ACKNOWLEDGING THAT. TO ANCHOR INFLATION AT 2% OVER THE MEDIUM-TERM, DO YOU THINK THAT WILL REQUIRE INTEREST RATE HIKES? POOJA: SO AS WE SAID THE ECB IS WORKING ON MODEL AND WHAT THEY TOLD US IN TERMS OF SURVEYS, WHICH IS THE INFLATION SURVEYS, THEY ARE NOT GIVING US INDICATORS THAT THEY MIGHT BE SECOND-ROUND IMPACTS THAT THEY CANNOT ACTUALLY SHY AWAY FROM. THINK FOR ME IT IS STILL THEY WOULD TRY TO MAKE -- THEY NEED MORE DATA. THEY DO NOT HAVE MUCH IN TERMS OF ONE DATA PRICE. THINK THAT WILL BE THE LANGUAGE BUT FOR US IT IS CLEAR FROM WHATEVER WE HAVE HEARD FROM THE ECB SO FAR IS THAT INFLATION IS STILL PRIMARY. THEY ARE READY TO ACTUALLY KEEP GROWTH SECONDARY. THEY ALL SUFFERED IN 2022 SO THEY DO NOT WANT TO TAKE THE RISK. LISA: ARE YOU SURPRISED LONG-TERM YIELDS KEEP GOING HIGHER EVEN AMID CONCERNS ABOUT SUPPRESSION TO GROWTH? POOJA: DEFINITELY IT IS SOMETHING THAT WE ARE CLOSELY WATCHING AND THINK THAT IS WHY IF YOU SEE AFTER THE MARCH CENTRAL-BANK MEETINGS MOST OF THE CENTRAL BANKS TRIED TO TAKE STEP BACK AND TO ACTUALLY -- THE MARKET BIT. IF YOU PUT THE RATES CHART, THEY ARE MOVING WITH 100% CORRELATION NOW AND THAT IS KEY. IF YOU DRAW OIL PRICES IT IS HARD TO PUT THAT LID ON THE RATES UNLESS WE GET SOMETHING MORE DECISIVE FROM CENTRAL BANKS. THAT THEY ARE ABLE TO SAY THIS IS JUST SUPPLY SHOCK AND THE PRESCRIPTION IS NOT JUST TO HIKE RATES, NOT DEMAND DRIVEN RIGHT NOW. LISA: WE ARE SEEING BIT INTO BONDS AND PRICES GO UP AND YIELDS GO IN AFTER RISING TO SOME OF THE HIGHEST LEVELS WE HAVE SEEN BACK TO 2011. IS THIS ENOUGH COMING FROM THE ECB? JUST THE SUGGESTION OF THE DUAL RISKS COMING UP EVEN WITHOUT MOVING? IS THIS ENOUGH FOR THEM TO MAINTAIN THAT OPTIONALITY? POOJA: DO NOT THINK THAT WILL BE THE CASE. THINK AS FAR AS WE KNOW LAGARDE IS CONCERNED AND WILL SAY THEY ARE WAITING FOR DATA POINTS BUT FOR ME THE KEY RISK IS THAT WE HAVE LOTS OF DATA POINTS COMING INTO THE MEETING, WHICH IS ONE MORE CONSUMER SURVEY, ONE MORE CPI REPORT AND THIS IS THE TIME THAT HAWKS HAVE BECOME SO EVEN IF TODAY'S CONFERENCE IS CAP MORE NEUTRAL AND DATA DEPENDENT WE WILL BE CONSCIOUS AS TO HOW DIFFERENT PARTS OF THE CENTRAL BANK COME IN NEXT WEEK GIVEN THAT WE KNOW THAT THIS IS NOT ENDING ANYTIME SOON. ANNMARIE: WHAT CAN WE LEARN FROM THE ECB AND HOW THEY DEALT WITH THE OTHER ENERGY SHOCK WITH RUSSIA'S INVASION OF UKRAINE? POOJA: AT THAT STAGE, WHAT WE LEARN FROM THAT TIME IS THAT WE MANAGED TO ANCHOR INFLATION PRIMARILY BECAUSE DEMAND SHOCK WAS NOT THE CASE IN EUROPE SO THEY HAVE JUST HAD TO TACKLE THE SUPPLY PART OF IT. THINK THE SITUATION IS THE SAME BUT -- WHEN IT COMES TO EUROPE RIGHT NOW. WE DID HAVE JUMP IN FISCAL SPENDING BUT WE CAN SEE DEMAND HAS NOT MOVED SO IN EUROPE THE LOWER GROWTH -- THE LOW PRODUCTIVITY POTENTIAL AS COMPARED TO THE U.S. AND U.K. DOES SUGGEST THE SPIRAL EFFECT IS NOT GOING TO BE THERE IN EUROPE BUT WE ALSO KNOW THE ECB IS FOCUSED ON INFLATION RIGHT NOW SO THEY WILL BE POSSIBLY THE FIRST TO ACT WHAT THEY MIGHT HAVE TO REVERSE IT BECAUSE THE REAL ECONOMY IS NOT EXACTLY THE SAME AS COMPARED TO 2022. JONATHAN: THANKS FOR THE REACTION TO THE ECB DECISION. YIELDS ARE LOWER TODAY WORLDWIDE, NOT JUST THE U.S. BUT EUROPE AS WELL. CRUDE IS HELPING ENCOURAGE THAT MOVE, PULLING BACK FROM ALL-TIME HIGHS WE HIT EARLY THIS MORNING. IT IS ALWAYS RELATIVE TO EXPECTATIONS AND DIFFICULT TO OUT HAWK PRETTY HAWKISH PRICING FOR THE ECB COMING INTO THESE DECISIONS. LISA: BUY THE RUMOR AND SELL THE NEWS. AT WHAT POINT ARE WE TALKING ABOUT THAT TYPE OF REACTION? IT IS NOTABLE THAT THIS IS ENOUGH TO CALM MARKET EXPECTATIONS. YOU CAN SAY WE ARE GETTING NO SIGNAL BECAUSE IT IS DRIVEN BY OIL PRICES BUT ULTIMATELY THEY HAVE LOST CONTROL AND THEY ARE SAYING AS WE HAVE LOST CONTROL OVER THE SITUATION WE ARE GOING TO STEP BACK AND RIGHT NOW YOU ARE NOT SEEING INFLATION EXPECTATIONS RUN AWAY OVER THE LONG-TERM. FOR NOW. AT WHAT POINT DOES THAT CHANGE GIVEN IN SOME PLACES THE STRENGTH IN THE ECONOMY IS ENOUGH TO KEEP INFLATIONARY PRESSURE? JONATHAN: FIRSTLY WANT TO ANCHOR INFLATION EXPECTATIONS BUT YOU CAN SENSE RELUCTANCE TO ACTUALLY HIKE INTEREST RATES. AS FOR THE OTHER HEADLINES, WE HAVE TO GET TO THIS FROM META. META IS SPENDING LOT OF MONEY. SIX PART BOND OFFERING FROM META WE KNOW WHAT THEY ARE LOOKING TO RAISE, AS MUCH AS 25 BILLION DOLLARS FROM THAT BOND SALE APPEAR THEY ARE NOT ALONE. LISA: THIS IS WHY PEOPLE HAVE SAID YOU CAN THROW ANYTHING AT THIS MARKET AND IT WILL TAKE IT. I'M LOOKING AN INVESTMENT GRADE BOND SPREADS OVER RATES THE PEOPLE DEMAND TO OWN INVESTMENT GRADE DEBT. IT IS 80 BASIS POINTS, LESS THAN 1%. IT HAS GONE DOWN EVEN WITH THAT SALES NOT ONLY FROM CORPORATE'S WOULD ALSO FROM GOVERNMENTS AND EVEN AMID CONCERNS WITH RESPECT TO OIL PRICES SO YOU LOOK AT THIS AND START WONDERING WILL THERE BE PUSHBACK BY INVESTORS? CAPEX PLANS ARE FILLING HOLES MADE BY INFLATION AND POTENTIALLY CONCERNS ABOUT WHAT THE JONATHAN: MODEL LOOKS LIKE GOING FORWARD. WHICH MARKET IN WHICH INVESTORS? IN THE BOND MARKET, WE HAVE SEEN DEMAND FOR DEBT OFFERINGS FROM BIG COMPANIES. THE EQUITY MARKET IS NOT IMPRESSED THIS MORNING, META DOWN CLOSE TO 9%. LISA: NOT NECESSARILY IMPRESSED THAT THEY ARE INCREASING CAPEX WITHOUT PLAN OF HOW TO USE IT. DOES THIS CONTINUE TO BE REPEAT OF WHAT WE SAW LAST YEAR WHILE ALPHABET CONTINUES TO DO WELL? ANNMARIE: GEOPOLITICS REALLY HITTING META ON TWO FRONTS. THEIR SUBSCRIBER GROWTH HAS BEEN HIT BY WHAT IS GOING ON WHEN IT COMES TO RUSSIA AND IRAN SO TOUGH SPOT. JONATHAN: ECONOMIC DATA DROPS IN ABOUT FIVE MINUTES. THE NEWS CONFERENCE WITH CHRISTINE LAGARDE COMING UP IN ABOUT 20 MINUTES. ONE HOUR FROM NOW, KEVIN HASSETT JOINING US ON AN EXTENDED EDITION OF BLOOMBERG SURVEILLANCE TO ACCOMMODATE THAT CONVERSATION FOLLOWING QUITE THE ANNOUNCEMENT FROM CHAIRMAN POWELL YESTERDAY IN THE NEWS CONFERENCE. THE CHAIRMAN IS HEADING TO THE EXIT AS CHAIRMAN. HE IS STICKING AROUND AS GOVERNOR PEER AND CONTROVERSIAL MOVE FROM THE FED CHAIR. WE WILL GET REACTION FROM THE WHITE HOUSE LATER THIS MORNING. NEXT, DATA AND REACTION WITH JONATHAN PINGLE OF UBS. JONATHAN: ECONOMIC DATA JUST SECONDS AWAY. 60 MINUTES AWAY FROM THE OPENING BELL. EQUITY FUTURES NEAR SESSION HIGHS. UP BY .6% ON THE S&P. ON THE NASDAQ UP BY .8%. CRUDE PULLING BACK BY 3% ON BRENT. YIELDS DOWN BY FIVE BASIS POINTS ON TWOS. ALL OF THAT JUST ON THE MARGIN HELPING TO SUPPORT RISK APPETITE WHEN THINGS WERE GETTING SHAKY EARLIER ON THIS MORNING. ECONOMIC DATA CROSSING THE BLOOMBERG. LET'S BREAK IT DOWN. GOOD MORNING, MIKE. MIKE: IT IS DROPPING IN FITS AND STARTS BUT WE HAVE LOT OF NUMBERS. LET'S START WITH THE INFLATION OUTLOOK. THE INFLATION SIDE OF THE FED'S MANDATE IS THE PCE PRICE INDEX FOR THE MONTH OF MARCH. UP .7%. THAT IS ALMOST DOUBLE THE .4% THE MONTH BEFORE AND IT IS WHAT WAS EXPECTED. THE CORE ON MONTH OVER MONTH BASIS UP .3%, AS EXPECTED DOWN LITTLE BIT. BUT THAT PUTS OUR NUMBERS EXACTLY WHERE JAY POWELL SAID THEY WOULD BE. THE INDEX FOR PRICES YEAR-OVER-YEAR, 3.5% AND FOR THE CORE, 3.2%. SIGNIFICANTLY FAR AWAY FROM THE FED'S 2% TARGET. AS PART OF THAT REPORT WE ALSO GET INCOME AND SPENDING. IN COMES UP .6%. WILL GET THE BREAKDOWN WEATHER COMES FROM FOR YOU LATER. PERSONAL SPENDING UP .9%, AS EXPECTED. CONSUMERS HANGING IN THERE. ALL OF THIS FEEDS INTO THE GDP REPORT. GDP FOR THE FIRST QUARTER. THIS IS THE FIRST REPORT FOR THE FIRST QUARTER, UP 2%. IT WAS .5% GAIN IN THE FOURTH QUARTER OF LAST YEAR. THE 2% COMES IN LOWER THAN THE 2.3% THAT HAD BEEN EXPECTED. PERSONAL CONSUMPTION STRONGER. 1.4 PERCENT WAS EXPECTED. THE EMPLOYMENT COST INDEX IS LITTLE STRONGER. UP .9% COMPARED TO .7% PRIOR QUARTER AND .8% FOR THE EXPECTATION. WE WILL GET BREAKDOWN ON THAT IN JUST SECOND. WHETHER THAT IS WAGES OR BENEFITS AND INSURANCE. WE WILL GO TO THE EMPLOYMENT SIDE OF THE FED'S MANDATE. 189,000 IS THE JOBLESS CLAIMS NUMBER. SORT OF RIDICULOUSLY LOW HERE. 215,000 WAS THE BEFORE THE PRIOR WEEK. ON CONTINUING BASIS 1,785,000. DOWN FROM 1,000,808 -- ONE MILLION 808,000. WE WILL SEE WHAT THE MARKETS THINK OF ALL OF THIS. JONATHAN: YOU TAKE SOME TIME. EQUITY FUTURES NEAR SESSION HIGHS. STILL POSITIVE 5.5%. YIELDS GIVE UP SOME OF THE MOVE THIS MORNING. DOWN BY FIVE TO SIX BASIS POINTS AT THE FRONT END OF THE CURVE. LET'S BREAK THIS UP AND START WITH THE LABOR MARKET DATA. THE ARGUMENT WE HAVE HEARD REPEATEDLY ABOUT WHY YOU WON'T SEE PRICE PRESSURE TAKEOFF IN THIS ECONOMY IS THAT THE LABOR MARKET IS NOT STRONG ENOUGH. THAT IS THE CONSENSUS VIEW ON WALL STREET. DOES THE DATA STAND UP TO THAT ARGUMENT WELL THIS MORNING OR NOT? LISA: THE ECI HIM IN HOTTER THAN EXPECTED. INITIAL JOBLESS CLAIMS CAME IN AT THE LOWEST LEVEL GOING BACK TO THE LATE 60'S. I'M GOING TO DOUBLE CHECK THAT BUT THIS IS HOW LOW THE LEVELS ARE THAT WE ARE SEEING IN TERMS OF INITIAL JOBLESS CLAIMS. IF YOU ARE LOOKING AT THE FACT THAT THE LABOR MARKET DATA IS COMING IN HOTTER THAN EXPECTED AND JOBLESS CLAIMS CAME IN -- TO QUOTE MICHAEL MCKEE, RIDICULOUSLY LOW RATE -- THIS DOES SUGGEST THE HEAT NELA RICHARDSON WAS TALKING ABOUT. THIS IS MARKET THAT IS RE-ACCELERATING ON THE HEELS OF THIS. JONATHAN: LET'S GET TO JONATHAN PINGLE. GOOD MORNING. GOT AN EMAIL THIS WEEK AND IT SAID, LOVE THE SHOW, BUT WAS LIKE, HERE WE GO. THEN IT SAID, THURSDAY MORNINGS, EIGHT: 30 EVERY SINGLE TIME CRINGE, BECAUSE YOU GET EXCITED ABOUT HOW LOW JOBLESS CLAIMS ARE. THEY'RE ALL THESE QUESTIONS ABOUT HOW VALID THAT DATA WAS. IS THAT THE REAL DEAL? DOES THAT TELL YOU MUCH ABOUT THIS LABOR MARKET AND WHAT IS HAPPENING IN THIS ECONOMY? JONATHAN YEAH. I'M NOT SURE WHAT THE RETORT TO THAT IS. JONATHAN: HAS SOMETHING CHANGED WITH EMPLOYMENT INSURANCE THAT MAKES IT DIFFICULT TO GET READ ON WHETHER THE MARKET IS WEAK OR NOT? JONATHAN IT IS ALWAYS ONE SIDE OF THE EQUATION. IF YOU THINK ABOUT, IF YOU SMOOTHED THROUGH SOME OF THE WEEK TO WEEK VOLATILITY, INITIAL CLAIMS ARE LOW. THEY'RE RUNNING ABOUT 205. GOING TO GUESS THAT IS THE FOUR-WEEK MOVING AVERAGE. BUT THAT IS BASICALLY BOUNCING AROUND SINCE JANUARY. AND IF YOU THINK ABOUT IT WE HAVE HAD BASICALLY PRETTY STABLE LOW-LEVEL LAYOFFS. THIS IS NOT THAT MUCH DIFFERENT THAN 2018, 20 19 LAYOFFS. THE QUESTION FOR THE FED IS HIRING HAS COME WAY DOWN. IF YOU THINK ABOUT CONTINUING CLAIMS COMING IN THAT IS SIGN THAT HIRING IS FINE AND WE ARE STILL TREADING WATER THERE AS WELL. BUT THINK LOOKING AT THIS MORNING'S DATA AND THINKING ABOUT YESTERDAY, THINKING ABOUT THE OVERNIGHT NEWS ABOUT CAPEX, THAT REALLY IS WHAT THE BIG DRIVER IS RIGHT NOW. AS MUCH AS CONSUMPTION CAME IN AT 1.6%, THAT HAS SLOWED. IF YOU LOOK AT THE LAST FEW QUARTERS OF REAL SPENDING THAT HAS COOLED. REAL DISPOSABLE INCOME HAS COME IN. EVEN WITH THE CCI READING WE ARE GOING TO HAVE YEAR-OVER-YEAR GAINS OF NOMINAL WAGE GROWTH. OVERALL THAT IS STILL STORY OF, WE HAVE SEEN THE SLOWDOWN IN THE LABOR MARKET. IT SPILLED OVER TO LOWER INCOME GROWTH, BUT THE CAPEX IS STRONG. JONATHAN IT IS INCREDIBLE, THE STIMULUS PROGRAM COMING FROM THESE FOUR TECH COMPANIES OVERNIGHT. LISA: WE KEEP SAYING IT IS THESE COMPANIES. THIS PAINTS DIFFERENT PICTURE. THE FACT THAT PERSONAL INCOME CAME IN AT .6% VERSUS .3% AND WAS REVISED UP FOR THE PRIOR MONTH. SAME THING GOES FOR PERSONAL SPENDING. IT WAS REVISED UP. EVERY SINGLE INDICATOR HERE WITH THE ONE EXCEPTION OF GDP, COMING IN BETTER THAN EXPECTED AT TIME WHEN IT IS NOT JUST THE HYPERSCALERS. WHAT IS BEHIND IT AND HOW RESILIENT CANNOT BE IN THE FACE OF CONSUMER SHOCK? JONATHAN THE BAR FOR HIKING GOT LOWER. THAT IS THE BASE CASE FOR THE YEAR AHEAD. YOU THINK WE ARE STILL UNDER APPRECIATING THE POTENTIAL FOR BROAD-BASED PRICE PRESSURE IN THIS ECONOMY AND THE ABILITY OF THIS LABOR MARKET TO SUPPORT IT? JONATHAN THINK THE ECONOMISTS LIKE ME MIGHT BE, BUT THE MARKET LOOKS LIKE IT IS PRETTY READY TO PRICE IN HIKES. WHEN WE SAW THE INITIAL REACTION TO THE OIL PRICE SHOCK IN MARCH, THE MARKET WAS QUICK TO PRICE IN NEAR TERM HIKES, WHICH WOULD BE REMARKABLY FAST PIVOT FOR THE FED. YESTERDAY IF YOU THINK ABOUT THE INFORMATION WE GOT, NINE FOMC PARTICIPANTS VOTED FOR AN EASING BIAS, ONE VOTED FOR ACTUALLY EASING. EVEN THOUGH THEY KNEW CORE INFLATION WAS 3.2% AND THERE IS AN UPSIDE RISK FROM ENERGY. SO, THAT WAS THE COMMITTEE. THE MARKET STILL LOOKED AT THAT AND SAID, WE HAVE TO PRICE IN MORE HIKES. NOW WE'VE GOT REALLY FLAT FORWARD CURVE FOR FED FUNDS FUTURES. THE MARKET IS KIND OF GETTING THERE ALREADY. STILL HAVE CUTS IN THE FORECAST. IT IS LIKE THE ECONOMIST LIKE ME THAT ARE STILL SAYING, WELL, WE THINK INFLATION IS GOING TO BE FINE IN THE END. JONATHAN MIKE MCKEE HAS MORE DATA FOR US. MIKE: WE ARE LOOKING AT THE GDP, WHICH CAME IN AS SURPRISE. THE FORECAST WAS FOR 2.3. RIGHT NOW IT LOOKS LIKE WHAT IT IS IS INVENTORIES AND NET EXPORTS. INVENTORIES FELL BY $7.5 BILLION INSTEAD OF ADDING. THEY ARE DOWN AND TRADE WAS DOWN SIGNIFICANTLY. THANKS TO BIG DROP IN BIG INCREASE IN IMPORTS WHICH SUBTRACTS. WE DID GET REBOUND IN GOVERNMENT SPENDING FROM THE BACK OF THE GOVERNMENT SHUTDOWN IN THE FOURTH QUARTER. NON-DEFENSE GOVERNMENT SPENDING WAS UP WHEN HE 3%. AT THE NUMBERS THAT REALLY MATTER, PERSONAL CONSUMPTION, 1.6%, THE LOWEST SINCE THE FIRST QUARTER OF LAST TO. BUSINESS NONRESIDENTIAL FOR INVESTMENT COME UP 10.4%. OF THAT EQUIPMENT WAS 17 .2% HIGHER AND INTELLECTUAL PROPERTY THEIR TEAM PERCENT HIGHER. SO, REALLY SIGNIFICANT INCREASE IN BUSINESS SPENDING OFFSET SOME OF THE CONSUMER WEEK IS. LOOKING AT THE EMPLOYMENT COST INDEX, IT IS BOTH WAGES AND SALARIES AND BENEFITS. WAGES AND SALARIES UP .8 PERCENT, WHICH IS HIGHER THAN THE .7% WE SAW IN THE FOURTH QUARTER. BENEFITS UP ON .2%, AND THAT IS THE STRONGEST IN SOME TIME. LAST QUARTER WAS .8%. STILL LOOKING AT THE REST OF THE NUMBERS, BUT CAN CONFIRM THAT WHAT LISA TOLD YOU WAS CORRECT. IT WAS SEPTEMBER 1969 THAT WE LAST SAW JOBLESS CLAIMS THIS LOW. YOUR EXPLANATION IS AS GOOD AS MINE. GUESS COMPANIES JUST SITTING ON THEIR HANDS AT THE MOMENT. JONATHAN MIKE MCKEE, THANK YOU, SIR. THEN, VERY DIFFERENT POPULATION SIZE AS WELL. THAT IS AN INCREDIBLY IMPRESSIVE NUMBER. IN SOME PARTS OF THIS ECONOMY WE HAVE GOT THEM CONDITIONS OFF THE BACK OF SOME OF THAT CAPEX. LISA: WE HAVE HAD BOOM CONDITIONS, AND WOULD ARGUE, AND THAT IS SAVING THIS ECONOMY. THE INTERESTING ASPECT IS, IS THIS JUST LOW HIGHER, LOW FIRE SITUATION OR ARE WE BREAKING OUT RIGHT NOW? THINK THAT IS WHAT NELA RICHARDSON WAS SIGNALING. ARE WE GOING TO HEAR ECONOMISTS LIKE JONATHAN PINGLE DISCUSS ABOUT PRODUCTIVITY AND HOW YOU ARE STARTING TO SEE THAT WORK THROUGH IN THIS BENEFICIAL NIRVANA RATHER THAN COMPUTERS TAKING OVER THE WORD? JONATHAN SLOW AND STABLE? ARE THINGS BREAKING OUT TO THE UPSIDE? JONATHAN THE CAPEX LOOKS STRONG. MIKE WAS TALKING ABOUT IN TERMS OF THE GDP REPORT, SPENDING RISE. CONSUMPTION COMPARES TO WE WERE RUNNING OVER 3% ANNUALIZED THROUGH 2023 AND 2024. WE REALLY HAVE REORIENTED THIS ECONOMY TOWARD VERY STRONG, WHICH JUST BY COMPOSITION IS GOING TO BOOST PRODUCTIVITY GROWTH. JONATHAN JONATHAN PINGLE OF UBS. THEY ARE THE CONDITIONS THAT ARE UNIQUE TO AMERICA RIGHT NOW THAT THE EUROPEANS DO NOT HAVE GOING INTO THIS CUT -- THIS NEWS CONFERENCE WITH CHRISTINE LAGARDE. LISA: IF YOU TAKE LOOK AT THE U.S. ECONOMIC SURPRISE INDEX VERSUS THE EUROPEAN ECONOMIC SURPRISE INDEX, THEY HAVE DIVERTED AND IT IS SHOCKING. IT IS WHAT CHRISTINE LAGARDE HAS TO ADDRESS. AND THE REASON THIS MARKET FEELS IMPERILED WHEN YOU GO OVER TO EUROPE. JONATHAN THE DATA IN EUROPE, NOT SO GOOD. UPSIDE RISK TO INFLATION AND THOSE RISKS HAVE INTENSIFIED. THAT NEWS CONFERENCE JUST AROUND THE CORNER. IT'S GET YOU AN UPDATE ON NEWS WORLDWIDE. VONNIE QUINN HAS MORE. AVANI: PCE AND INFLATION DATA COMING IN IN LINE WITH EXPECTATIONS. NEARLY DOUBLE THE RATE OF THE PREVIOUS MONTH. CORE PCE COMING IN AT 1.3%. FIRST QUARTER GDP UP TO PERCENT. THAT WAS JUST UNDERESTIMATES BUT BIG RISE FROM THE PREVIOUS QUARTER. INITIAL JOBLESS CLAIMS COMING IN HISTORICALLY LOW. 189,000. IT IS GOOD SIGN FOR THE LABOR MARKET. PAIR OF RATE DECISIONS THIS MORNING. THE BANK OF ENGLAND AND THE ECB HOLDING RATES STEADY. ECB OFFICIALS SIGNALING THEY NEED MORE TIME TO WEIGH THE ECONOMIC IMPACT OF THE IVANKA MORE. BANK OF ENGLAND SIGNALING IT COULD RAISE RATES IF ENERGY DISRUPTIONS CONTINUE. ANOTHER CHECK ON TECH EARNINGS. SHARES OF QUALCOMM HIGHER IN TRADING AS THE CHIPMAKER REPORTING GROWTH IN THE DATA CENTER MARKET AND REPORTING THAT THE CHINA PHONE INDUSTRY WOULD BOUNCE BACK. ALSO SHARING THAT ATOP HYPERSCALER IS ON TRACK TO START USING QUALCOMM COMPONENTS LATER THIS YEAR. THAT IS YOUR BLOOMBERG BRIEF. JONATHAN: UP NEXT, THE ECB PRESIDENT, CHRISTINE LAGARDE. HER NEWS CONFERENCE, FOLLOWING THE LATEST DECISION FROM THE ECB. WE WILL CATCH UP WITH THE ECONOMIC COUNCIL DIRECTOR KEVIN HASSETT. FROM NEW YORK CITY, YOU ARE WATCHING BLOOMBERG TV. ♪ THE ADMINISTRATION IS ENCOURAGING MORE CAPEX AND THE MARKET IS REPORTING MORE CAPEX. MORE INVESTMENT AND LESS CONSUMPTION TO GET HIGHER PRODUCTIVITY. IT IS IMPORTANT TO CONTINUE TO ALLOCATE CAPITAL IN WAY THAT LEADS TO HIGHER PRODUCTIVITY. JONATHAN: CAPEX BOOM IN THE DATA. YOU SEE IT IN PRICE ACTION, TOO, NEAR SESSION HIGHS ON THE S&P 500. LET'S GET YOU SOME SINGLE NAMES AND MORNING MOVERS. THE OPENING BELL ABOUT 44 MINUTES AWAY. YAHAIRA: WE START WITH FORD SHARES FALLING FOUR POINT 5% IN THE PREMARKET AT THE CARMAKER SAYS THAT RISING COMMODITY COSTS TIED TO THE WAR ARE EXPECTED TO HIT PROFITS BY ABOUT $2 BILLION. THAT OVERSHADOWS RAISE AT THE CARMAKER BUT EVEN THAT HAS ANALYSTS SKEPTICAL. THEY SAY THAT WAS HELD BY ONE TARIFF BENEFIT. TURNING TO CATERPILLAR, THOUGH SHARES ARE UP 6.5 PERCENT AFTER MASSIVE -- KNOWN FOR BULLDOZERS BECOMES PART OF THE AI REVOLUTION. IT IS SEEING MASSIVE DEMAND FOR ITS TURBINES AND GENERATORS, ALL USE TO POWER AI DATA CENTERS. WE END ON ROYAL CARIBBEAN SHARES RISING NEARLY 7% IN THE PREMARKET EVEN AS GUIDANCE FELL SHORT DUE TO RISING FUEL COSTS AND INVESTORS CLING ONTO THIS, AFTER DIP IN MARCH AND APRIL THEY HAVE RECOVERED AND ARE RUNNING AHEAD OF LAST YEAR. JONATHAN: THANKS FOR THE UPDATE. PLENTY OF STOCK MOVERS, SOME BIG STORIES IN MOMENT. THE ECB CONFERENCE KICKING OFF WITH CHRISTINE LAGARDE IN SECOND. WE WILL HEAD OVER THERE IN MINUTE. THE OUTLOOK FOR POLICY IS CHANGING EVEN AT THE FEDERAL RESERVE. BNP PARIBAS MOMENTS AGO EXPECTS THE FED TO STAY ON HOLD, STILL THE SAME HEADLINE FOR MORGAN STANLEY OVERNIGHT. LISA: WE STARTED THE ARE EXPECTING THE ECB TO HIKE RATES BECAUSE OF THE OIL SHOCK. IT IS FLIPPING. IS THE RHETORIC DIFFERENT FROM THE CENTRAL BANK OF EUROPE? WE NEED TO TALK ABOUT TWO THINGS. ON THE ONE SIDE WE NEED TO TALK ABOUT RATE PRICING. THE PRICING IN THE MARKET ALREADY. THIS MARKET WAS PRICED AGGRESSIVELY FOR RATE HIKES THROUGH THE YEAR FOR THE ECB AND THE BANK OF ENGLAND. DIFFICULT TO MEET THOSE EXPECTATIONS AT TODAY'S MEETING. IN ISOLATION YOU HAVE CENTRAL BANKS FAR MORE OPEN TO RAISING INTEREST RATES NOW ACROSS THE FEDERAL RESERVE, THE BANK OF ENGLAND, AND THE EUROPEAN CENTRAL BANK COMPARED TO WHERE THEY WERE SEVERAL MONTHS AGO. WE ARE ALSO GETTING SIGNS OF INTERVENTION WHICH WE NEED TO TALK ABOUT AT THE BANK OF JAPAN. THIS HEADLINES CROSSING MOMENTS AGO THAT JAPAN CONDUCTED YEN- BUYING OPERATION. YOU WILL SEE THE HEADLINES FROM THE FINANCE MINISTRY THREATENING TO MAKE SUCH MOVE. FINAL WARNING TO THE FX MARKET. CONFIRMATION JUST MOMENTS AGO THAT JAPAN DID CONDUCT YEN BUYING OPERATION. LISA: THIS AFTER THE YEN REACHED ITS WEAKEST POINT VERSUS THE DOLLAR GOING BACK TO LATE LAST YEAR AND COMES AMID MOUNTING PRESSURE ON HOW THEY WILL SUPPORT THE ECONOMY GIVEN THE PRESSURES OF HIGHER OIL PRICES AND INFLATION AND ALSO POTENTIALLY WEAKER GROWTH. JONATHAN: WELCOME TO THE PROGRAM. THE OPENING BELL IS SECONDS AWAY. THIS IS AN EXTENDED EDITION OF "BLOOMBERG SURVEILLANCE." EQUITY FUTURES FIRM ARE ON THE S&P 500 BY .5%. ON THE NASDAQ HIGHER .7. ENCOURAGED BY THIS MOVE IN CRUDE. CRUDE, BRENT ON THE WTI BACKING AWAY FROM ALL-TIME HIGHS. CHECK OUT WHAT THIS DOES TO THE BOND MARKET. IT HELPS TO UNLOCK THIS MOVE IN FIXED INCOME. YIELDS LOWER ACROSS THE CURVE. TENS DOWNS BY FIVE. LISA: THIS AFTER WE SAW THE HIGHEST LEVELS, PARTICULARLY AT THE 30 YEAR YIELD WE HAVE SEEN IN LONG TIME AT THE 5% LEVEL. AT WHAT POINT DOES THAT ACT AS CONSTRAINT? ON ONE HAND YOU COULD SAY OIL PRICES ACT AS CONSTRAINT. ON THE OTHER HAND WE SEE BETTER THAN EXPECTED U.S. ECONOMIC DATA AND IT POINTS THE RESILIENCE AND THE UNDERLYING ECONOMY THAT CAN ALLOW INFLATION TO PERSIST. AT WHAT POINT DOES THE FED GET MORE HAWKISH? JONATHAN: U.S. ECONOMIC GROWTH ACCELERATING AT THE START OF THE YEAR FUELED BY SOLID BUSINESS AND CONSUMER DEMAND, INSULATING THIS ECONOMY FROM HEIGHTENED GEOPOLITICAL RISK AS THE FED REMAINS ON THE SIDELINES. JOINING US IS THE NATIONAL ECONOMIC COUNCIL DIRECTOR KEVIN HASSETT. WELCOME BACK TO THE PROGRAM. ALWAYS GOOD TO CATCH UP. WE NEED TO FOLLOW ON FROM THE FEDERAL RESERVE AND THE CONFERENCE FROM CHAIRMAN POWELL YESTERDAY. STEPPING ASIDE AS FED CHAIR BUT STAYING ON AS GOVERNOR. WAS ANYONE AT THE ADMINISTRATION GIVEN HEADS UP BEFORE YOU HEARD THAT ANNOUNCEMENT? DIRECTOR HASSETT: COMMUNICATION WITH THE ADMINISTRATION AND THE FEDERAL RESERVE ARE STILL OPEN. CAN SAY I'M AM DISAPPOINTED IN WHAT SAID WILL STAY OUT OF IT AS WE AWAIT KEVIN WARSH CONFIRMATION. THINK WHEN KEVIN GETS IN THERE IT'LL BE THE SEACHANGE AT THE FED WE ARE ALL LOOKING FORWARD TO. DANI: IN THE MEANTIME -- JONATHAN: IN THE MEANTIME THE PRESIDENT HAS ARTICULATED HIS DISAPPOINTMENT. PREVIOUSLY THE PRESIDENT SUGGESTED THAT IF HE STAYED ON BEYOND HIS TIME HE WOULD FIRE HIM. AS THE PRESIDENT ENTERTAINING CERTAIN OPTIONS TO INTERVENE? DIR. HASSETT: IN THE END OUR HOPE IS THAT CHAIRMAN POWELL UNDERSTANDS THE JUSTICE DEPARTMENT HAS STOOD DOWN, THEY HAVE JUST ASKED THE INSPECTOR GENERAL AT THE FED TO LOOK INTO THIS, WHICH IS SOMETHING THE INSPECTOR GENERAL IS PROBABLY DOING ANYWAY. THINK IT IS TIME TO DE-ESCALATE AND MOVE ON. JONATHAN: YOU THINK THE PRESIDENT HAS OFFICIALLY DE-ESCALATED TO ALLOW HIM TO MOVE ON? DIR. HASSETT: HE DOES NOT THINK SO. THINK IN THE END HE WILL STUDY THE MATTER AND WE HOPE HE COMES AROUND. JONATHAN: THE TREASURY SECRETARY SAYS THAT IS AN INSULT TO THE BOARD, PEOPLE YOU AND KNOW FAIRLY WELL. DO YOU BELIEVE IT IS AN INSULT AND DOESN'T COMPLICATE THE WAY THIS PARTICULAR INSTITUTION WILL OPERATE IN THE MONTHS TO COME? DIR. HASSETT: DON'T WANT TO GET INTO THE WHITE HOUSE ARGUING WITH THE FED RIGHT NOW WHILE WE ARE AWAITING KEVIN WARSH CONFIRMATION WHICH LOOKS LIKE IT IS LOCK TO ME. THE BOTTOM LINE IS KEVIN WARSH WILL GO INTO THERE, HE WILL BE FRESH LEADERSHIP AND WE EXPECT THAT WILL HELP EVERYBODY SEE HOW IMPORTANT THE INDEPENDENCE OF THE FED IS. AS LOGICAL MATTER, IF YOU JUST SAY WE WOULD LIKE THE IG TO LOOK INTO SOMETHING, THE IG IS THE FEDERAL RESERVE'S INSPECTOR GENERAL AND IS COMPLETELY RESPECTFUL OF THE INDEPENDENCE OF THE FED AND THE BEST WAY TO SO IT IS NOT PARTISAN ORGANIZATION IS TO MOVE ON. JONATHAN: THERE'S BEEN AN AGGRESSIVE PUSH TO REDUCE INTEREST RATES. AT THE SAME TIME THE FEDERAL RESERVE IS SHIFTING TO ARTICULATE MORE SYMMETRICAL REACTION FUNCTION. SUPPORTING THAT IS THE ECONOMIC DATA FROM EARLIER ON THIS MORNING. DO YOU THINK THERE IS SPACE TO WAIT TO SEE, TO WORK OUT HOW THINGS TURN OUT BEFORE REDUCING -- BEFORE THINKING ABOUT REDUCING INTEREST RATES? DIR. HASSETT: LET'S TALK ABOUT THE ECONOMIC DATA. THE 2% NUMBER -- USED TO BE THE CAPITAL SPENDING GUY AT THE FED WHEN WAS YOUNG ECONOMIST. THE THING THAT YOU HIGHLIGHTED, THE CAPITAL SPENDING BOOM. ONE OF THE THINGS THAT TRIED TO DOWN FROM REALLY HIGH NUMBER WAS THE QUALITY OF THE IMPORTS HAS SKYROCKETED. ALMOST HALF OF THE IMPORTS WERE CAPITAL GOODS COMING INTO BUILD FACTORIES IN THE U.S.. IN THE PAST HOUR IMPORTS ARE THINGS LIKE CONSUMER GOODS THAT ARE PERISHABLE. THE BOTTOM LINE IS IT STRONG DATA. INITIAL CLAIMS LOWEST SINCE THE 1960'S. GOVERNMENT EMPLOYMENT THE LOWEST SINCE THE SECOND WORLD WAR. ALL OF THESE POSITIVE MOVEMENTS IN TERMS OF FISCAL RESPONSIBILITY. WE HAVE THIS TEMPORARY DISRUPTION WITH ENERGY MARKETS WHICH IS VERY SERIOUS. ENERGY PRICES ARE HIGH, GASOLINE PRICES ARE HIGH. MY READ OF THE ACADEMIC LITERATURE OF WHAT YOU DO IS NOT THAT YOU RAISE RATES INTO IT, ESPECIALLY GIVEN HOW THINK WE ARE HIGHLY CONFIDENT THIS WILL BE TEMPORARY DISRUPTION. FUTURES MARKETS AGREE WITH THAT. IT WOULD BE POLICY ERROR FOR THE ECB OR THE FED TO HIKE RATES INTO TEMPORARY SPIKE IN ENERGY PRICES. THEIR OWN ECONOMIC STUDIES SUGGEST THIS IS TRUE. WHAT THEY WANT TO DO IS MAKE SURE FUTURE INFLATION GOES BACK TOWARDS THE TARGET. FUTURE INFLATION IS NOT TOPLINE INFLATION BUT CORE INFLATION AND CORE INFLATION AT THE LAST CPI NUMBER WAS FINE. PCE HAS CREPT UP LITTLE BIT. THE TOP LINE IS THE THING SOMEONE COULD OVERREACT TO. LISA: IT MIGHT NOT BE APPROPRIATE TO HAVE RATE HIKE, BUT DO YOU AGREE WITH YOUR COLLEAGUE SCOTT BESSENT WHO CAME OUT AND SAID IT MIGHT BE APPROPRIATE TO STAY ON HOLD FOR WHILE AS THIS DOES PROGRESS AND WORKS ITSELF OUT? DIR. HASSETT: AM HIGHLY CONFIDENT THE PRODUCTIVITY BOOM IS GOING TO KEEP CORE PRICES UNDER CONTROL AND MY OLD FRIEND ALAN GREENSPAN IN THE 1990'S SAW THAT BECAUSE OF THE COMPUTER REVOLUTION WE COULD HAVE HIGH GROWTH AND IT WAS NOT PHILLIPS CURVE KIND OF THING YOU NEEDED TO RESPONDED TO AS HE LET US HAVE FOUR OR FIVE OF THE BEST ECONOMIC YEARS WE HAVE SEEN IN MY LIFETIME. WE HAD THAT OPPORTUNITY AND IT WOULD BE SHAME IF WE SQUANDERED IT. LISA: YOU THINK IT IS APPROPRIATE TO CUT RATES DESPITE INCREASING CONCERN FROM SOME OF THE FED MEMBERS WE ARE ENTERING AN INFLATIONARY MOMENT? DO YOU THINK IT IS APPROPRIATE TO GO TO GET MORE SYMMETRIC TYPE APPROACH? DIR. HASSETT: THEY'VE BEEN SAYING WE ARE LEANING TOWARDS CUTTING AND THERE WAS SOME DISPUTE ABOUT WHAT WILL HAPPEN AT THE NEXT MEETING. THINK GETTING INTEREST RATES DOWN COULD SUPERCHARGE THE ECONOMY FROM WHERE WE ARE BUT NOT BE SUPER INFLATIONARY. YOU SAW THAT THE WEAK SPOT IN THE GDP REPORT WAS INVESTMENT. RESIDENTIAL INVESTMENT IS THE MOST INTEREST SENSITIVE THING THERE IS AN FED POLICY HAS CHANCE OF MOVING THE YIELD CURVE IN WAY THAT COULD HELP HOMEBUYERS. ONE OF THE THINGS REMEMBER FROM THE 1990'S IS WHEN WE WANT TO HAVE LOW INFLATION AND HIGH GROWTH, ONE OF THE THINGS THAT HAPPENS IS YOU GET LOT OF CONSTRUCTION, RESIDENTIAL CONSTRUCTION. RESIDENTIAL CONSTRUCTION HAS POSITIVE EFFECT ON GDP BECAUSE YOU HAVE AN EMPTY HOUSE THAT HAS TO GET FILLED WITH WASHER AND DRIER IN TV AND FURNITURE AND EVERYTHING ELSE AND THAT IS MUCH DIFFERENT WHEN YOU HAVE AN OLD HOUSE WHERE YOU ARE MOVING FROM ONE OLD HOUSE TO ANOTHER. NEW CONSTRUCTION COULD LIFT LIST OF 4% AND 5% GROWTH AND IT IS BEING HELD BACK BY INTEREST RATES. LISA: WHAT IS THE PATHWAY TO GET THERE GIVEN THE FACT THAT THE LONGER TERM YIELD CURVE IS SEEING THE HIGHEST RATES IT HAS THIS CYCLE. LOT OF PEOPLE IN THE MARKET THINK IF THE INTEREST RATE WERE CUT AT THE FRONT END THAT WOULD ONLY EXACERBATE THE CREE PYRE IN YIELDS AT THE LONG END. DO YOU SEE THAT? -- THAT WOULD ONLY EXACERBATE THE CREEP HIGHER IN THE YIELDS AT THE LONG AND. HOW DO YOU SEE THAT? DIR. HASSETT: THINK LITTLE BIT OF MOVEMENT -- KEVIN WARSH HAS DESCRIBED HOW WE CAN DO THAT AND PLAY WITH THE BALANCE SHEET AT THE SAME TIME AND MOVE IN DIRECTION THAT HELPS AMERICA'S HOMEOWNERS. THINK IF WE COULD GET THAT LAST LITTLE BIT OF THE ECONOMY GOING ON ALL CYLINDERS THAT WE WOULD REALLY BE BACK VERY CLOSE TO TALK ABOUT THE GOLDEN DAYS. ANNMARIE: WE HAVE TRIPLE DIGIT CREW THIS MORNING, WTI MUCH HIGHER. WHAT YOU ARE SEEING ACROSS AMERICA, THEY HAVE BREACHED SIX DOLLARS GALLON IN CALIFORNIA. KNOW THE WHITE HOUSE HAS SOME MEASURES, THEY HAVE EXTENDED THE JONES ACT WAIVER. WHAT ELSE ARE YOU THINKING ABOUT? DIR. HASSETT: WE HAVE ALREADY DONE BUNCH OF THINGS, INCLUDING OPENING UP THE OFFSHORE DRILLING IN CALIFORNIA THAT WAS SHUT DOWN BY THE STATE. THAT IS ALIVE AND PUMPING OUT BARRELS. THE BOTTOM LINE IS WE ARE VERY CONVINCED THIS IS SUICIDAL IRANIAN REGIME THAT WAS SET ON BIG DISRUPTIVE THINGS IN THE REGION THAT WOULD BE PERHAPS PERMANENTLY HARMFUL AND WHEN WE HAD THEM SIGNAL IN THEIR NEGOTIATIONS THEY WERE JUST ABOUT READY TO HAVE 11 NUCLEAR BOMBS THE PRESIDENT DECIDED TO TAKE ACTION TO DEFEND THE ENTIRE EARTH. RIGHT NOW THE THING LOOK AT IN TERMS OF THE ECONOMIC EFFECTS OF THE WAR IS HOW DIFFICULT IT IS FOR THE IRANIANS RIGHT NOW, AS OF THE GOVERNMENT DOES NOT CARE ABOUT THEM AT ALL. THEY ARE HAVING HYPERINFLATION, THEY ARE RUNNING OUT OF FOOD, THEY DO NOT HAVE ANY DISTILLED PRODUCTS TO DRIVE AROUND IN THEIR CARS, THEY ARE SHUTTING DOWN BUSINESSES. IT IS TIME FOR THAT GOVERNMENT TO SEE THAT THEY SHOULD NOT ASPIRE TO HAVE NUCLEAR WEAPON IF THEY JUST GIVE THAT UP WE CAN GO BACK TO HAVING NORMAL RELATIONS WITH THEM. ANNMARIE: WHAT COULD THIS GOVERNMENT DO TO SHIELD AMERICANS FROM HIGHER GASOLINE PRICES? ARE THINGS LIKE AN EXPORT BAN ON THE TABLE? DIR. HASSETT: WHAT WE HAVE DONE, WE HAVE DONE THE JONES ACT, WE'VE OPENED UP DRILLING IN CALIFORNIA. WE HAVE PURSUED CHANGE IN THE ETHANOL STANDARDS SO ETHANOL CAN BE USED MORE IN THE SUMMER. WE HAVE TAKEN EVERY SINGLE STEP THAT WE CAN. WE UNDERSTAND THAT IT WOULD'VE BEEN LOT WORSE IF WE HAD NOT DONE THAT BUT THE FACT IS OUR EXPECTATION IS THINGS WILL GET BETTER VERY QUICKLY IF WE CAN JUST GET THE IRANIANS TO FINISH THE NEGOTIATIONS AND REALIZE IT IS IN THE INTEREST OF THEIR OWN PEOPLE TO STOP THINGS THAT COULD TURN INTO SERIOUS HUNGER EVENTS AND SO ON. JONATHAN: UNFORTUNATELY THEY HAVE TRACK RECORD OF DOING LOT OF THINGS NOT IN THE INTEREST OF THEIR OWN PEOPLE. THERE SEEMS TO BE PREFERENCE TO MAINTAIN THE BLOCKADE AND PUT THE SQUEEZE ON THEM. HOW CLOSE ARE WE TO THEM BREACHING STORAGE CAPACITY? WE HAVE DECENT GAUGE ON WHERE THINGS ARE AT INSIDE THE COUNTRY? DIR. HASSETT: IT IS WELL TO WELL THING BUT THE BASIC IDEA IS IF YOU SHUT DOWN WELL THAN THE PRESSURE CAN BUILD AND THE OIL CAN SCORE IT EVERYWHERE AND THEN WHEN YOU OPEN THE WELL UP AGAIN YOU GET LOT LESS OIL OUT OF THE WELL. THAT IS THE THEORY OF WHAT COULD HAPPEN. IT IS POSSIBLE BECAUSE THEY ARE RUNNING OUT OF STORAGE. ONE THING CAN SAY IS THEIR PRODUCTION WENT FROM 5 MILLION BARRELS DAY TO ONE MILLION BARRELS DAY BECAUSE OF PRESIDENT TRUMP'S POLICIES IN THE PREVIOUS TERM WHEN HE REALLY PUT TOUGH SANCTIONS ON IRAN TO STOP THE NUCLEAR PROGRAM. AFTER JOE BIDEN CAME IN HE JUST STOPS THE SANCTIONS AND THE ENERGY PRODUCTION WENT BACK UP TO 5 BILLION BARRELS DAY OVER COUPLE OF YEARS. THE IRANIANS -- IT TOOK THEM COUPLE OF YEARS TO GET THINGS FIXED WITH NEW WELLS. WE HAVE AN EXPERIENCE OF THEM BEING SHUT ALMOST DOWN TO NOTHING AND THEN GETTING BACK UP. JONATHAN: ARE PARTNERS STEPPING UP TO HELP? WE ARE JUST TEARING FROM THE PRESIDENT ON SOCIAL MEDIA SO I'M SURE THIS IS THE FIRST YOU'RE HEARING FROM IT, "THE CHANCELLOR OF GERMANY SHOULD SPEND MORE TIME ON ENDING THE WAR WITH RUSSIA AND UKRAINE AND FIXING HIS BROKEN COUNTRY, ESPECIALLY IMMIGRATION AND ENERGY COME IN LESS TIME INTERFERING WITH THOSE GETTING RID OF THE IRANIAN NUCLEAR THREAT, THEREBY MAKING THE WORLD INCLUDING GERMANY SAFER PLACE." BELIEVE THE GERMAN CHANCELLOR SUGGESTED THE PRESIDENT IS BEING HUMILIATED BY THE IRANIANS. WHAT IS THE RELATIONSHIP LIKE WITH OUR EUROPEAN PARTNERS? DIR. HASSETT: THINK THE EUROPEAN PARTNERS ARE FEELING STRESSED BECAUSE THEY ARE VERY UNWISE ENERGY POLICIES HAVE EXPOSE THEM MUCH MORE TO ENERGY SHOPS FROM THE MIDDLE EAST. IT LOOKS LIKE THE GERMAN CHANCELLOR IS LOSING HIS COOL. WOULD SUGGEST HE TAKE DEEP BREATH AND RECOGNIZE THE BEST WAY FOR EUROPE TO GET THIS ECONOMY BACK ON TRACK IS TO HELP US RESOLVE THIS PROBLEM AND ALSO EXAMINE THEIR OWN POLICIES, WHICH ARE SO ANTI-FREE MARKET THEIR ECONOMIES ARE HAPPY WHEN THEY GET 1% GROWTH. THINK GERMANY IS GREAT COUNTRY. LIVED THERE FOR TIME. THERE IS LOT OF POTENTIAL FOR THAT COUNTRY. THEY SURE AREN'T ACHIEVING IT RIGHT NOW AND IT IS NOT JUST BECAUSE OF OIL. JONATHAN: WE APPRECIATE YOUR TIME. THANK YOU VERY MUCH AS ALWAYS. KEVIN HASSETT THERE ON THE ECONOMY AND THE SITUATION OF THE FEDERAL RESERVE. NOTE ON THE FEDERAL RESERVE. RESISTING THE TEMPTATION TO TURN UP THE HEAT AND HAVE BACK-AND-FORTH WITH JAY POWELL. THEY CLEARLY WANT TO OPEN THE DOOR FOR HIM TO HEAD TO THE EXIT. LISA: THEY ALSO WANT CLEAN CONFIRMATION OF KEVIN WARSH TO GET HIM IN BEFORE ANYTHING ELSE. RIGHT NOW THE WHITE HOUSE IS PUTTING CLAMP ON ANY KIND OF TIT FOR TAT BETWEEN THEM AND JEROME POWELL, HOPEFULLY IT WILL RESOLVE ITSELF IN THE INTERMEDIARY. THAT IS THE TIMEFRAME. THEY WANT THE CONFIRMATION FIRST AND THEN MAYBE THE GLOVES COME OFF. JONATHAN: AN INTERESTING NOTE ON THE DIFFERENCE BETWEEN EUROPE AND THE UNITED STATES. OF COURSE THEY FEEL THE SQUEEZE IN EUROPE. THEY HAVE GDP RUNNING CLOSE TO ZERO AND IT COULD BE ZERO IF THIS CONTINUES. IS HE THE TENSION IN THE ECB NEWS CONFERENCE. THERE IS BOOM AND THIS ECONOMY STATE WISED THAT OTHERS DO NOT HAVE. LISA: IF YOU THINK ABOUT EUROPE VERSUS THE U.S. AND THIS IS THE REASON YOU ARE SEEING BETTER ECONOMIC PERFORMANCE AND SURPRISES IN THE U.S., NOT ONLY DOES IT HAVE BOOM OF TECHNOLOGY, IT IS ALSO AN OIL PRODUCER AND ALSO NET OIL EXPORTER. EUROPE HAS NEITHER. HOW DO YOU THEN GET YOURSELF ABOVE THIS? THIS IS WHAT WE HEARD CHRISTINE LAGARDE DEALING WITH AND THIS IS THE REASON YOU ARE SEEING THE ECONOMIC DATA DIVERGE. ANNMARIE: EUROPE IS STRUGGLING WHICH IS THE REASON THE PRESIDENT WANTS EUROPE TO STEP UP WHEN IT COMES TO TRYING TO REOPEN THE STRAIT OF HORMUZ. THE WALL STREET JOURNAL WAS TALKING ABOUT HOW DIPLOMATIC CABLE WAS SENT FROM THE STATE DEPARTMENT TO EMBASSIES TELLING THEIR OFFICIALS TO PRESS THESE FOREIGN GOVERNMENTS TO HELP THEM TO TRY TO REOPEN THE STRAIT OF HORMUZ. WE ARE NET ENERGY EXPORTERS. WE WILL FILL SOME OF IT BUT WE ARE MUCH MORE INSULATED. EUROPE IS NOT. JONATHAN: FUN MORNING. I'M NOT SUGGESTING WE DO THIS EVERY MORNING. ONE MORE DAY TO GO. KEEP IT TOGETHER. LISA: AM. JONATHAN: