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Good morning, I'm Nathan Hager and I'm Karen Moscow. Here are the stories we're following today.
Karen, we begin with some key primary results across the country. First stop is New York, with results from the most expensive congressional primary in US history. Let's get the latest with Bloomberg's John Tucker.
In New York, John Nathan, Westchester County's top elected official, Pro Israel centrist George Latimer defeated incumbent Jamal Bowman, a member of the so called squad at Progressive Democrats on Capitol Hill. Latimer's win is a boost of more moderate Democrats. His victory speech was an appeal for unity.
We have to look at the arguments of the far right and the far left and say you cannot destroy this country with your rhetoric and your arguments.
One of the top issues was the war in Gaza. Bowman hammered it home and his session speech, we.
Will never stand for the bombing and killing of babies in Gaza.
The closely watched campaign devolved into bittery infighting, but symbolized larger divisions within the party nationally, a riff that some Democrats Worr he could damage President Biden's reelection and spending in the race clocked in in and eye popping twenty three million dollars. With seventy one percent of the votes counted, Latimer was ahead fifty five point eight percent to forty
four point three percent. His victory in the heavily democratic sixteenth District all but insures will win the general election in New York. I'm John Tucker, Bloomberg.
Radio, All right, John, Thanks well. Besides New York, three other states held congressional primaries, and Republican candidates back by Donald Trump came up short in two of them. In South Carolina's third and district, Sherry Biggs defeated Mark Burns in a runoff election fifty one percent to forty nine percent.
Biggs is a political.
Newcomer who was backed by South Carolina's governor, Henry McMaster. Burns is a black pastor who supported Trump for nearly a decade, though the former president did not campaign for him.
In Utah, hearen the race for Mitt Romney's open Senate seat goes to Congressman John Curtis. He won with fifty point seven percent, defeating a Trump endorsed Mayor Trent Staggs and two other Trump supporting candidates. And in Colorado, Congresswoman Lauren Bobert won her bid for reelection after switching districts to run for retiring Ken Buck's open house seat. Bobert defeated several lesser known candidates with forty three point three percent of the vote.
Well, Nathan, as we continue to assess the primary results, we are now just one day away from the first presidential debate between Joe Biden and Donald Trump. The ninety minute debate will include no audience and the candidate's microphones will be turned off when it's not their turn to speak.
Bloomberry. David Gurra is covering debate for US in Atlanta.
It'll be strange it hearkens back to the debate in nineteen sixty and Mark Thompson, who runs CNN now, has been very clear about that he wants to return to the sort of Kennedy Nixon style intimate debate on a stage without the presence of an audience. And we're going to have the moderators of the debate, Dana Bash and Jake Tapper, with the ability to mute the candidates while each other is speaking. It'll be very interesting to see how each feeds off that lack of audience, if that
makes sense. We know of Donald Trump, the former president, and how he loves to speak to big crowds, how that animates him. This will be an entirely different thing to be in this studio, in a room with just the moderators and his opponent, with the President, Joe Biden.
Bloomberg's David Gerrol will be part of our special coverage of the CNN presidential debate. It all begins tomorrow night at eight pm Wall Street Time with this special edition of Balance of Power with Joe, Matthew and Kayley Lines in Washington. Listen to the debate on Bloomberg Radio or watch it on Bloomberg Television.
Now Karen to the latest on the war in the Middle East. Defense Secretary Lloyd Austin is warning that a clash between Israel and Hesbelah could set off a new war. Bloomberg Zed Baxter has the story.
Austin, standing beside Israeli Foreign Minister Jov Golan sent out the message to the globe generally and Israel specifically. This is Israeli Prime Minister Benjamin that Yahoo pulls troops to the north near has Bela.
Another war between Israel and Hisbela could easily become a regional war with terrible consequences for the Middle East.
Austin's message to has belaws that has provocations threatened to drag the Israeli and Lebanese people into a war they do not want. Ad Baxter, Bloomberg Radio.
Right and thanks.
We turned to the markets now in nearly seven percent rally and Nvidia shares HOWP tech stocks bounce back yesterday. The Nasdaq rose one point two percent and NASDAK futures are higher once again this morning. So Rebecca Patterson, former chief investment officer at Bridgewater Associate, says there could be some headwinds for investors.
I do think as we get closer to the election, as we're higher for longer on fed funds for longer, that equity gains could be more limited. From here. We've had a huge run up already, notwithstanding the couple days pullback we got, so I'm not looking to reduce equities or get out of equities in the short term.
And former Bridgewater CIO or Rebecca Patterson notes the S and P five hundred is up almost fifteen percent this year.
And helping give a boost to the markets this morning is FedEx Karen. Those shares are higher by nearly thirteen percent. In early trading, the company delivered a profit forecast above Wall Street's expectations. More from Bloomberg's Doug Prisner.
It comes after a slew of cost cutting measures aimed at increasing margins and coping with sluggish demand. FedEx is expecting two point two billion dollars of permanent cost savings in the fiscal year. The company also hinted at a possible divestiture of its freight business FedEx it's assessing the unit's place in the company's portfolio, and on top of that, FedEx is expecting to buy back two and a half billion dollars worth of common stock in fiscal twenty twenty five.
The company is also forecasting capital spending of five point two billion. This will include fleet and facility modernization and automation. In New York, I'm Doug Prisner, Bloomberg Radio.
All Right, Doug banks Well. Fedech's shares are not the only ones on the move this morning. Rivian a surging more than thirty seven percent. The ev maker is getting a much needed cash in fusion through a new partnership with Volkswagen. BW will make an initial billion dollar investment in Rivian and up to four billion dollars more over time.
The Surprise TIAT provides Rivian with a financial lifeline after it has struggled to ramp up production and deliveries of its electric pickup and sub models.
And Karen Disney maybe giving an even faster pass to visitors at Walt Disney World. Disney's Florida theme parks will now let park goers reserve a space in shorter lines for rides up to a week in advance. Right now, visitors can only book a day ahead on the Genie Plus reservation system. The new system will be called Lightning Lane Multipass. Guests at Disney hotels will be able to make seven day reservations fro up to three rides. Other guests will get to book three days ahead. Price is
very depending on the park and time of day. The three day multi pass will start at fifteen dollars. The most popular rides can start at ten bucks. The changes take effect July twenty.
Fourth, and my another note here, Nathan Bloomberg Business Week is out with a new monthly magazine that's redesigned from the ground up. Check out the cover story on Bloomberg dot com and the Bloomberg Terminal, featuring an interview with Bernard Arnault, the head of LVMH and.
One of the richest people on Earth.
The new magazine puts an emphasis on original photography and includes new story formats to give you context, analysis and perspectives that provide new ways.
To think about the world. Check it all out the.
New Bloomberg BusinessWeek at Bloomberg dot com. And it's time now for a look at some of the other stories making news in New York and around the world. From that, we're joined by Bloomberg So Michael Barr, Michael, good Morning, Good.
Morning, Karen wall Street journal reporter Evan Gerskovich went on trial behind closed doors in the Russian EuroCity of Caterinberg, fifteen months after his arrest on espionage charges that he his employer and the US government vehemently denied. The thirty two year old journalist appeared in the court in a glass defendant's cage with his head shaved. Griskevich is the first Western journalist arrested on espionage charges in the post's
Soviet Russia. The State Department has declared him wrongfully detained. Wiki Leak's founder, Julian Assage, is on a plane heading to his home country of Australia. Massage was sentenced time served all in Britain as part of a plea agreement with the US Justice Department that secures his freedom. The plea was entered in the US court in Saipan. The judge pronounced him a freeman after imposing the sentence. Lawyer Jennifer Robinson has been representing as Sage in Australia and the UK.
Julane has suffered for more than fourteen years because of the risk of extradition to the United States. It's one hundred and seventy five years in prison for publishing evidence of war crimes, human rights abuse, and US wrongdoing around the world.
In a no holds Barred report, the National Transportation Safety Board called out a rail giant, Norfolk Southern, and the handling of last year's train to railmen in East Palestine, Ohio. Norfolk Southern was criticized on everything from the faulty wheel that led to the trains going off the tracks to the company's lack of cooperation during the investigation. NTSB chair Jennifer.
Hammedy Norfolk Southern tried to submit their investigation their own investigation under the guise of a party submission, not once, not twice, not three times, but four times.
The NTSB's Jennifer Hammedy also pointed out it was unnecessary for Norfolk Southern to recommend firefighters perform a vent and burn, which potentially cause further health hazards. President Joe Biden will issue a proclamation giving back clemency the US service members convicted of charges under a Cold War era purge of gay and lesbian people, reversing a decades long policy of discrimination that forced and estimated one hundred thousand people from
the military. Global News twenty four hours a day and whenever you want it with Bloomberg News Now. I'm Michael barn This is Bloomberg.
Cart Jerry, Michael, thank you time for the Bloomberg Sports Update with John stash Hour.
John, Good morning, Good morning Caroon. On the eve of the NBA Draft, It begins tonight in Brooklyn. A big trade. It was between the Knicks and the Nets. The Knicks had accumulated a boatload of draft picks, and most of those picks are now moving burrows Is. The Nets get the Knicks first rounder tonight and future first rounders in twenty twenty seven, twenty nine, and thirty one in exchange.
The Nets traded to the Knicks. They're best player at Michael Bridges, so the Knicks have now yet another former Villanova stars. Bridges will be reunited with his college teammates Jalen Brunson, Josh Hart, and Dante Devencenzo. Atlanta has the first pick tonight, then Washington and both may take French teenager Zachary Reezushia and seven footer Alex Starr a top most mock draft boards. Another French teenager, Victor Wembinyama, was taken first a year ago. While the Knicks and Nets
made the trade. The Mets played the Yankees and Mark Biento's came up fourth inning, heaving already homered.
Once is cracked in the air on a line toward right center, it is.
Off the top of the loaf.
Thank god.
Fientos hits an absolute laser to right center and hit the top of the wall and pumped into the Yankee bullpen, his second home run of the night on WCBS.
Both Viento's homers came up Garrett Cole, who also served up homers by Harrison Vader and Brandon Nimo. The Mets built up a big lead and then held on after an Aaron Judge grand slam in the eighth inning. They beat the Yankees nine to seven. The Mets have won ten of their last twelve, and half those wins they've scored nine or more runs. Yanks have lost seven of nine. In six of the seven they've given up at least seven run series In tonight at City Field, seventh raight
win for Cleveland ten six in Baltimore. Guardians of the best record in Baseball. John Stashedwer, Bloomberg Sports, Karen.
Eathan 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 on Nathan Hager. We want to turn down to a conversation from the Bloomberg invest Conference in New York. Cliff Astez, founder managing principal and chief investment officer at AQR Capital Management, spoke to Bloomberg Shanali Bassek in a wide ranging conversation touching on active and passive investing and the rise of meme stocks. They began by talking about the efficiency of the market today. Let's listen.
In efficient is this idea that prices are accurately reflecting fundamentals. This can get really geeky on how to define that, but let's just be colloquial. I do have a view. It's not a short term view. It's not a market call that again, markets are never perfectly efficient. But over my career, which is annoyingly about thirty two years now, I guess the opposite would be even more annoying, but
it's a long time. I'm a little obsessed these days with those internet memes of when they show you like an actor like Ed Asner in Mary Tyler Moore was ten years younger than me when he did the World's Very Upsetting. But over my career, I actually think markets have gotten somewhat less efficient, meaning prices are a little bit more disconnected from reality.
It ebbs and.
Flows, It's never the same at each point in time. But I find that an odd view because one tends to think as technology in particular advances that things should march towards better, with better I think being efficiency in this case, and I actually, I actually think maybe I'm biased by having a front row seat, but I think over the last thirty so years, i'd say the market is somewhat less efficient than when I started.
So why do you say that is what is causing it to be that way?
It's well, first I start out by just observing a few facts, and I do, and I am of course biased by what I've lived through, but I love the genus presentation. The dot com bubble stuff was bringing, you know, PTSD like memories for me. We try to very formally measure how disconnected from reality or not, or how or how reasonable our stock prices, in particular, not the price of the whole market, but within the stock market, are
you know, cheap versus expensive stocks? You could define that very narrowly in a quant sense, in terms of just multiples. You could define it more broadly in terms of a gram and DoD sense.
Yeah you want to pay.
A little multiple, but what's the quality of the stock, what's the risk of the stock. But either way, measured very formally, the dot com bubble saw by far the largest disparity between cheap and expensive we had ever seen in about fifty years of data.
We survived that. It was a little ugly for a while, but we actually thrive through it.
If you take the whole round trip, But when you almost die in the first half, you tend to remember that. If you had asked me in say two thousand and two, when all of that excess was pretty much worked off, are you going to see something more extreme than that in your career. I think I'm smart enough even back then to never say never. We don't live in a business where any of us should say never. It's a dangerous word, but I think I would have said, it's highly unlikely.
That was the craziest thing we had seen in fifty years.
I would have said, well, in twenty years, people like me will still be around. I hope who with some memory. It's not one hundred years where everyone is forgotten. And then pre COVID it was close. And then after COVID hitting, we saw things measured very similarly price price multiples or even price multiple scale by.
Quality to go to level well beyond the.
Tech bubble and lasting about doubly as long as the tech bubble if you ever have the misfortune to have an investment that ever goes down for any amount of time, you will learn something that they don't teach you in a PhD program. Severity is bad, but duration is underrated when it comes to pain. Three years of pain, even if it's cumulatively not worse than a year and a
half of pain, is a ton worse. The first year, you go back to your clients and go, we think we're right, look what's going on here.
They go, okay, okay.
The second year they're like, that's the same thing you said a year ago, and you go, yeah, but it's still going on and we're still going to be right. The third year, I mean, your mom's still invested, but it's getting tougher.
So duration counts. So we've seen both the severity and the duration of those.
So I start out just observing facts and then trying to feel and why. Admittedly, this is a lot of op ed. This is very hard to prove. And I love to you know, I'm a card carrying quant I love to, you know, produce tables. I can show you these spreads, But why, and I tend to have I think it's a multitude of things. I think the number one thing is probably the thing we all love to blame,
the Internet and social media. I think a lot of people naturally assume such a thing would bring us information so quickly and so ubiquitously knowing everything that prices would be very efficient. But that's never been the hard part. When I started in this industry, we got earnings and within twenty minutes they're missing twenty minutes, and a nanosecond matters to an HFT, it doesn't matter to almost every
other investor. We didn't really materially get more. And I do think that level of information overload gives people a lot of illusion of control. You know, I don't want to go into this deeply because I know you'd like to get me going on this, but I think the Meme stock examples, I don't think they're a norm by any means, but I think they're the ultimate example of a little bit of information making you think you really know something very deeply, and I think that gets into market prices.
I'll be careful to keep this a little rained in, but on the meme stock.
Issue, I knew i'd get that started.
How much are the retail traders that are bidding up prices of stocks like game stock, contributing to this idea that markets are less efficient.
To you, I think they are very small part in dollars. They maybe post their children in some sense for the effect the whole idea that this disconnect in prices can come in a world where we have all the information at our fingertips. I think we're all raised at some point we've all read about the quote wisdom of crowds. The way you know, if you take a crowd that on average people have fifty one percent information, but you
poll them. You hope many of us here are old enough to remember Regis Philbin and you know who wants to be a millionaire. The absolute best lifeline was always pull the crowd right, because because if they asked the question, you know, what does it say in the back of a quarter, eighty five percent of the people don't know, but they're evenly split, and the fifteen percent.
Of do not all go one way.
But there was always a little unspoken footnote to the wisdom of crowds. To have a wise crowd, it's got to be fairly independent. If everyone got to talk about the quarter, not look at a quarter, that's cheating, but talk about it. The people who are wrong convinced the people who are right, and whatnot. A crowd where everyone is coordinated and not independent has the risk of becoming a dangerous mob.
And I don't know about you, guys, but.
I can't think of anything better at turning a wise, independent crowd into a dangerous mob than the Internet and social media. So I do think they're kind of the poster child. I don't think economically they are they are that.
Important they you know.
I don't want to disparage either side of it, but it's nine dollars in terms of you know, in video laughs at that on a daily basis. The entire memestock phenomenon is like a little part of the day of Nvidia. But I think it is a poster child for the concept I'm talking about. There are other candidates. People talk about the role of passive. That's really complicated. I'm not one who just looks at passive and goes that that's causing all kinds of havoc.
What is causing? Okay, I'll disappoint you here, people.
I don't think we really quite know yet. First of all, here are the things we know about passive. Not everyone can be passive. The whole world breaks down. Even back when I was a PhD student, So this is the early nineties, a kind of stant This is what happens when PhD students in finance get drunk late at night.
They sit around going, what if everybody tried to be passed?
And that's a black hole, that's a singularity in finance. Nobody's looking at individual stocks, and that just can't work.
Passive as a free rider is a free rider.
On active managers making sure prices are somewhat reasonable. But the question of how many people can be passive, nobody really knows.
You think it's contributing to an efficiency, and is efficiency, frankly another way of saying wild swings in markets.
I think I would guess yes, but I think it's pretty small versus the social media, the illusion of control of the data overload things I'm talking about.
It's not clear theoretically. If you imagine you had.
A world we had a certain amount of passive and active, and suddenly a lot of active move to passive.
Whether active is now easier.
Or harder, whether it's more or less efficient, depends on who moved. Let me be really obnoxious and go. There were sharks and minnows. There were people who were good at it and people who were bad. If all the men move, markets get really efficient. Because sharks are trading with sharks, they all are pretty good at valuing these things, and the sharks don't.
Make a lot of money. We don't really know who moved.
I tend my reasoning here is really just correlation, not causation. This has occurred at the same time that massive price disparities.
Have grown and lasted longer.
So as a pure guess, I would have to go, it's probably contributed something.
It's very hard to assign.
Another one is you know, I'm probably the billions person to mention this, but over the same period, we've had ten years prior to a couple of years ago of ultra low nominal and real interest rates. I am not a person who thinks that means growth stocks should go to the moon. I've written papers on the math of that's kind of wrong. They're not actually that much longer duration.
But the market disagrees with me. The market things with interest rates fall, growth stocks should go to the moon, and so ultra low interest rates have probably contributed to a fair amount of that also, so I think it's a witch's brew. But if I had to put the three, I think maybe I'm just an old man ranting at TikTok. But I think the feeling that you own all the information and are on a level playing field, and therefore you can own two stocks and be very confident about it is probably.
My number one thing to point at.
So let's step back for a minute. Because you were concerned about the efficiency of markets here and reasked, has the market gone awry? Has something about the market broken?
To you?
Broken such an ugly word. These are points on a spectrum. For me, broken is very I'm going to define that as are we in a bubble or the opposite of a bubble and irrational depression where people won't pay any fair amount for stronger companies or whatnot. A bubble is when wet the companies people like and they're willing to pay giantly excessive amounts. So let's say bubble and broken are equivalent. I use the word bubble.
I think less than a lot in the industry.
I once wrote a sarcastic piece really doesn't narrow it down amongst the pieces I've written but making fun of the term bubble that on the extended use of the word Wall Street people who a lot of people will see bubbles everywhere, and they translated a little too weakly as a bubble means a stock. I kind of don't like. No,
that's not a bubble. A bubble, to me is a vastly diversified set of things that I cannot come up with any reasonable assumptions that could possibly make these valuations work. I have seen two in my career that I think we identified before the fact, and one I was a passive watcher of the dot com bubble, which again the PTSD from the earlier presentation.
And then really nineteen and twenty when stocks surpassed, I would use the word bubble for that.
Man.
This is Bloomberg day Break Today, your morning brief on the stories making news from Wall Street to Washington and beyond.
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