Markets in Record Territory After CPI; Putin-Xi Signal Stronger Ties

Bloomberg Audio Studios, podcasts, radio news. Good morning, I'm Nathan Hager and I'm Karen Moscow. Here are the stories we're following today.

Karen, the markets begin this Thursday. In record territory. The S and P five hundred closed above fifty three hundred for the first time, and the Dow is less than one hundred points from the forty thousand plateau. The Catalyst a report showing inflation slowed that reinforced bets. The Federal Reserve will cut rates as early as September. Luka Paulini, chief strategistic Pictet Asset Management, says stocks may be overvalued.

We see value now, for example, in bones because you have a peak in US growth inflation. Yeah, stick keep a probably trending down. The Fed is cut in rates, so we see value bones, and if you look at equities, to be honest, the value is more in Europe and Japan.

Pigtet Asset Management's Luca Paulini notes the SMP five hundreds at its twenty third record of the year.

Now more on that market moving CPI report. Nathan A measure of underlying inflation cooled in April for the first time in six months will the figures may offer the Fed some hope that inflation is resuming its downward trend. Officials like Minneapolis Fed President Neil cash Curry want to see additional readings to start cutting interest rates.

How much downward pressure is monetary policy putting on the economy, that's an unknown. We don't know for sure, and that tells me we probably need to sit here for a while longer until we figure out where underlying inflation is headed before we jump to any conclusions.

Minneapolis Fed President Neil cash Curry, who does not vote on policy this year, says he's keeping a close eye on the housing market and its role in inflation.

Now, one other note about that CPI report care the Labor Department inadvertently published critical data thirty minutes early. While there were no obvious signs the early publication moved markets, the episode is likely to prompt a close look at the dissemine of data that has implications for global asset prices and Fed policy.

Well, Nathan, we now turned to politics and a crucial meeting between two world leaders Chinese President she and Vladimir Putin meeting earlier in Beijing, and as the war with Ukraine enters its third year. Xi Jinping signals to putin ties between the two nations remained strong. We get more from a bloombergs er Bekachun Wilkins in Hong Kong.

Well, there's certainly one another's most important allies when it comes to this bigger geopolitical agenda of building the so called multipolar world, pushing back on what they say as sort of the US hegemony. But of course since Ladimir Putin's invasion of Ukraine, there has been a deeper, much deeper imbalance in that relationship. Russia has needed China economically far more than it has ever done in the past.

And Bloomberger Bekachun Wilkins, reporting from Hong Kong, China Central Television, says she said his nation was quote ready to work with Russia as a good neighbor, friend and partner with mutual trust.

Well as for domestic politics, Karen, the debates are set between President Biden and former President Donald Trump, even before they are officially their party's nominees. The two front runners have agreed to face off twice, first on CNN June twenty seventh, then on ABC September tenth. Bloomberg Politics contributor Rick Davis says President Biden will need to come prepared.

Donald Trump is a disruptive guy. He knows how to take control of these situations. He's got enough capacity to really be a disruptive force and something like a debate and General Joe Biden, I mean, come on, I mean, he's a dignified guy who tries to play by the rules, even if there are no rules to be played by.

The Republican strategist Rick Davis says the president will have to throw out the traditional rule book. Both campaigns rejected the rules and schedule of the non partisan Commission on Presidential Debates, which has handled these events since nineteen eighty eight.

In the meantime, Nathan Trump will be in a courtroom as his hush money trial continues in New York. The prosecution's star and witness will once again be grilled by Trump's defense team, and we get the latest from Bloomberg Law host Jun Grosso In New York.

Michael Cohen will be back on the witness stand today for more cross examination by Trump's attorney, who will continue to attack his credibility. Cohen is the prosecution's final witness. Trial is not in session tomorrow because Trump is attending his son's high school graduation. The defense has not yet said whether they'll put on a case or whether Trump will take the witness stand in his own defense. In New York, June Grosso Bloomberg Radio.

Okay, June, thank you. Back to markets now. We're watching shares of Chubb. They're up nine and a half percent in early trading thanks to an investment by Warren Buffett Moore from Bloomberg.

Stug Krisner Berkshire unveiled a stake in insurer Chubb. It's valued at six point seven billion dollars. Berkshire made the disclosure in the filing on Wednesday. Now, the conglomerate has been building this stake in Chubb since twenty twenty three, but it hadn't been previously reported since the SEC allowed

All right, Doug, thank you. Chares A Cisco also on the rise. They're of four and a half percent. The company gave a solid sales and profit forecast for the current quarter. And let's say that indicates customers are beginning to invest in their computer networks again.

Well us for the meme stocks that have been rallying this week, Karen, that looks like it could be fizzling. Let's get an update now from Bloomberg's John Tucker.

John, and if in gamestaff felt nineteen percent yesterday, AMC sent twenty percent after that movie theater chain took advantage of the stock rally to reduce its dat a slide, erasing roughly three billion dollar dollars in market value. Between the two. The stocks at more than doubled over the first two days of the week. AMC and game Stop are among the top ten securities bought by retail investors earlier this week, with fifty one million and sixteen million

All right, John, thanks, and it's time now for a look at some of the other stories making news in New York and around the world. And for that we're joined by Bloomberg's Michael Barr. Michael, good Morning, Good morning.

Karen Slovaki Is populist Prime Minister Robert Fico was shot multiple times and severely wounded after a political event and hand LoVa. After the attempted assassination, doctors fought for his life for several hours on the fifty nine year old pro Russian Slovaki Is Defense Minister Robert Kellanak says that there's no doubt that this was a politically politically motivated situation behind the shooting.

We're just talking about the level of them, Chrissy, both capability to understand each other, to accept the other opinion, and not only one is that good one.

The deputy Prime Minister said he believes Fico will survive. The Supreme Court has ordered Louisiana to hold this year's election using a House map that includes a second, mostly black district. The ruling puts on hold a lower courts ruling that found the map to be illegal gerrymandering. Loyola Law professor and former federal prosecutor Lorie Levinson, this.

Is a much disputed ruling because, in fact down below there are questions about whether race should be used in redistricting and whether in the long run, this might protect some Republican districts. As it is set forth now, many people see this as a victory for Democrats, who will be able to likely pick up another seat in Louisiana.

Former federal prosecutor Lorie Levinson says the justices were acting on emergency appeals by state Republican officials and black voters. Texas officials say a barge hit a bridge in Galveston, Texas, spilling fuel oil into the water and shutting down the only road connecting Galveston and Pelican Island. Galveston County Judge Mark Henry.

The fuel oil seeping into the Inner Coastal Waterway calls him to shut down the Inner Coastal Waterway, so we want to get that cleaned up and get that navigable watering back open as quick as can.

Last year, the Federal Highway Administration's National Bridge Inventory rated the Pelican Island Causeway Bridge poor. The Biden Administration is initiating policies that it says will help foster a deeper domestic supply chain for a solar panel. It comes after please from the US manufacturers confronting a surge of terror free imports. The measures announced early today include expanding tariffs, tax policy guidance, and promises of heightened vigilance for signs

All right, Michael Barr, thank you time now for the Bloomberg Scores update with John Stashauer and John Good morning.

Good morning, Karen. Safe to say the slow start to Aaron Judges season is over. Last two weeks, He's raised his average seventy seven points. In Minnesota. Judge had three doubles after a first inning homer that traveled four hundred and sixty seven feet. Yankees bind Marcus Stroman made a ten of the last thirteen that shut out the Twins four to nothing. The Mets have lost five and six, all three so far this week with the Phillies, who are in MLB Best thirty one and thirteen. The Phils

I think this is a golf course that allows you to play with freedom. It's a big golf course. The carridors are wide, not too dissimilar to last week at quil Hollow, so you can open your shoulders up a little bit off the tee and then you know, try to take your chances from there.

Rory won that tournament last Sunday, and Charlotte also won the team event the week before. Bloomberg Radio live PGA coverage today starting at four John Stash. They were Bloomberg Sports can here get Nathan.

Coast to coast on Bloomberg Radio nationwide on Sirius XM and around the world on Bloomberg dot Com and the Bloomberg Business app. This is Bloomberg Daybreak.

Good morning, I'm Nathan Hager. Wall Street heads into this Thursday with stocks in record territory once again, with the S and P five hundred now above the fifty three hundred level for the first time. Cooler than expected April inflation data are firming up a lot of bets that the Fed could start cutting interest rates maybe late in the next quarter. It's bringing Sema Shaw for some market analysis now. Seema's the chief global strategist at Principal Asset Management. Seema,

Good morning. No. We have been risk on since January. We've maintained that even if you had a bit of a pullback in April, and the reason is that although the market has been pushing back, pushing out the expectations for rate cuts, I think the fundamentals, even if you were not to get rate cuts this year, the fundamentals for the economy are still so strong and that certainly implies that AND's growth is going to remain pretty solid and that should continue to mean that stocks are going

Well, I wonder how you interpret this inflation data. Is it the start of a new trend, is it more of a bump in the road.

What do you think?

So?

I think it's difficult at this point to make any kind of conclusions from single data points. I mean, what we're looking at is as we look through the remainder of twenty twenty four and into twenty five, we do expect to see a down shift in economic growth. But that's important though. I'm using them a downshift because we are not expecting recession. I wouldn't even really put it

Late in twenty twenty four, the market starting to price in September. Is that kind of where you are?

It is?

So, actually, after the April sort of the previous CPI pro we came into the year. I should say expecting three cuts, one in June, September, and then December. And then after the run of three Hottan expected inflation numbers, we did shift the forecast to one cut in September and one in December. I didn't have much conviction, to be honest, about four or five weeks ago in that forecast.

So you don't have any concern then that the stocks might be overvalued at the levels that they're at right now. Where do you see valuations at this point?

I mean it depends how you're looking. So if you look across the world, then yes, US valuations are definitely the most stretched. But we are still expecting decent earnings growth. Now, are we going to see this kind of run that we saw in the first two months of the year.

Can earnings continue to do well even in a kind of a slowing earnings growth pattern if we continue to see a slow down in consumers.

So consumer spending has been extraordinarily strong over the last couple of years, and you are starting to see some strains emerging. That's mainly in the lower income consumer side. So we do think that you're going to see at growth remaining positive. You could see a bit of a slow down, I guess, But that means I mean guess that relates directly to the idea that you're not going to see the exty market gains of twenty twenty three

About thirty seconds left. Where is your best opportunity right now?

So look, there's a couple, but I think within exuity, we still think that the US is looking decent. We continue to light the large cap space, but actually more and more so, international equities are looking good. We look across to Europe and the UK at least for six months period with rake cups on the horizon quite clearly, and so economic upside surprises translating through to earning surprises. I think there's actually opportunities over there now as well.

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