Traders Watch for Weakening Signs amid Market Highs
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This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7 a.m. Eastern on Apple CarPlay or Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Bob Michael at J.P. Morgan. We're going to try to get him in here. You have an outlook out there, and I see an outlook of price up, yield down. Is that the outlook at J.P. Morgan? Yeah.

Yes, it is. We're off to a fantastic start for the third quarter. Probably not a repeat of the second quarter with all the volatility. Right. But some expectation of the Fed bringing rates down by the end of the year. In the bond world, is there fear of missing out? Is there FOMO among bond buyers?

We're starting to feel that now. There are more and more conversations with clients who are in cash looking for an opportunity to get into the bond market and trying to figure out where in the bond market to go. There's still a ton of money in money market funds and in cash accounts, deposit accounts, checking accounts, savings accounts. The last time we looked, it was over $21 trillion, which was a new high.

Bob, we saw earlier in the year a move of capital out of the U.S. into other markets, notably the European equity markets, and they're outperforming the U.S. equity markets. Have we seen that in a fixed income world as well?

We actually haven't. There's been a lot of discussion about it, a lot of conversation. There was a bit of a pause in the end of April, start of May, where foreign investors who had typically put money to work in the U.S. bond market just stopped investing.

And then it started up again. And we've seen no selling of U.S. fixed income assets and reallocation overseas. What we have seen is rethinking whether they want the dollar exposure to go along with that. Most now are taking some dollar exposure, but hedging some back to their base currency. Bloomberg Dollar Index, you bring it up, the Bloomberg Dollar Index is down almost 10% this year. We don't see that very often, do we? What do you make of it?

For us, it's a reflection of an overcrowded, overbought trade where coming into this year, everyone wondered, how is the dollar up there so high? What's keeping it up there? And it kept going. And then there was a catalyst and a reason to diversify out of dollars. We think actually there's another 5% move in the dollar index lower. I modeled it today.

I did not use Fibonacci's, which I really don't believe in, and I came with a further decline of BBDXY of 6.3%, total 14, 15% down. And that takes it back to that range that we're at. You're in meetings with lots of foreigners using J.P. Morgan for wisdom on American full faith and credit.

Do you see any tendency that they want to walk away at the margin of a belief to own and at the margin buy, acquire our bills, notes, and bonds? None whatsoever. There is no concern about the full faith and credit of the U.S. Treasury. There was a bit of a pause on the amount of supply. Would it be too much?

But there was a lot of conversation about looking for an alternate. Do we have to have everything in dollar assets? Isn't there something else that could act as a calm in the storm to treasuries and dollars? I think that's why you've seen gold, and we should see continued support of gold. We should also pay attention to what's going on in Central Portugal this week, where the ECB has some... I'm surprised you're not there. Exactly.

Do you know what? I wish I was there. I wouldn't be surprised if Bruce is there. But it's an opportunity for them to try to establish more of a leadership role here.

When you were studying Greek and Latin at Penn, I'm sure you looked at the x-axis probably in all three languages. But the answer is, okay, they want to buy U.S., but they adjusted their maturity perspective because of all the fun and games we're going through.

By and large, the investors we deal with, where we've seen a lot of flows from wealth management channels and total return investors, has always been the intermediate part of the curve. The long end of the curve is really owned by pension funds and insurance companies, and they're far more strategic in where and how they invest, and they have certain trigger levels depending on their estimate of liabilities. I would say they've been pretty steady investors.

In the current environment, it feels like there's no sponsorship for the long end of the curve. You usually get that when you have the Fed bringing down rates. Let's not forget, when we get to the point in the cycle, hopefully years from now when the Fed is hiking rates, then curve flatteners will be in vogue again, and then there will be buying at the long end. Paul, can I help this morning? Please. Price up, yield down. Pretium octum.

- Proventus diminutum. - Oh my goodness. - Latin. - Okay. - That's what Michael, he goes out on the floor when the world's blown up, starts talking Latin at JP Morgan. - I'm a big fan of Vatican II, which did away with Latin. - Was that Google Translate? - Google Translate. - And I'm sure I butchered him. - Exactly. Bob, how much credit risk do we take here? I think, I'm not hearing anybody talk about recession, so shouldn't I be taking some credit risk here? - Absolutely.

You get concerned about credit risk when you think you're headed into recession. It makes sense. Recession, by definition, is lower corporate profitability. The most levered companies have to go some sort of restructuring. Defaults go up. You get widespread de-risking because everyone's concerned where the defaults could occur. We've been trained every other time there's a backup in credit spreads,

you buy it if there's no recession. And we saw that earlier when credit spreads got to about 450 on high yield, and then suddenly there was a break in tariffs and probabilities of recession went down, and suddenly here we are through 300 basis points on high yield. All right, you're CIO and head of global fixed income currency and commodities group. So I'm gonna ask you about commodities. Gold, higher, what are we doing with gold here? Why are we all not owning gold?

Well, actually, we think you should. We think of all the options for an alternate safe haven, a counterbalance to risk. Treasuries are out there. High quality bonds are out there. Investors are adding those. Gold is another one of those generally accepted vehicles. We expect to see more buying. I mean, it's just amazing what's going on. Is that just...

Chinese banks and Chinese consumers buying it? Or is there something else going on with gold? No, it's...

Developed market central banks have been adding to their gold reserves. Its wealth management platforms have been talking to clients about holding some gold. It's not only a safe haven, it's also a reasonably good hedge against inflation. And just in case we get into next year and suddenly all the liquidity in the system gets ignited and inflation rears its ugly head again and stays,

And gold will be a pretty good hedge. Bob, I'm doing, I mean, this is the way we roll with Bob Michael at J.P. Morgan. Good morning on your commute across the nation. Good morning, 92.9 FM in Boston. I did a log linear regression of the Bloomberg corporate total return index, get a little more yield.

And I went back 30 years, and it's stunning, the recovery off the gloom of a couple years ago in price. I mean, you guys nailed it. Do you envision in your head that with price and making the coupon, we will get back on trend of a wonderful linear trend from about 2003 straight up, that we'll get price up back on trend that we knew before the debacle?

It feels like we're, first of all, in an interest rate environment that will have yield to it. We're not going back to 0% interest rates. I don't know if the Fed brings rates down to 3%, maybe 3.5%, but somewhere in the threes puts Treasury close to 4% and puts credit close to 5%, which is kind of where we are. That's a pretty good level to be a holder of high-quality corporations.

- Where's job in Manhattan? Internship with Bob Michael at JPMorgan. It's like, you're working six days a week. - They love it. - Do you just throw Fibozzi at them? Because none of these kids remember like a normal yield market. - So we now call them analysts. We don't call them interns. They're summer analysts. - Jamie approved that? - And then they come.

They come prepared far more than I ever remember. - Isn't it frightening? - They come with a level of knowledge of markets and how the financial system works that probably took me five years to get there. - The great Al Hunt used to lecture at your Pennsylvania, and Al told me once, he said, "Tom, you're in the classroom, "and every single person there is smarter "than Al Hunt was at 30 or 35."

Yeah, and you know what? There's a lot of truth to that. They just know it. Bob, what's up for them? Analysts. Exactly, not interns. Make a note, Eric. They're called analysts now here. Some are analysts. Noted, thank you. Okay, noted. What is our Federal Reserve thinking these days, Bob? I mean, they could probably just give themselves a nice pat on the back and say, we've engineered a nice soft landing. We've weathered some of the uncertainty from tariffs. Inflation seems okay. The economy, okay, it's slowing, but it's still there.

Did they get to know anything? They're thinking, how fast can I get out of here and go to the beach? I promise I'll come back after Labor Day. That gives me a couple weeks to look at the data, see how the US economy survived this summer. We'll have more clarity on the one big beautiful bill. We'll have clarity on tariffs, hopefully. We'll start to gauge the impact to the labor market and to prices.

Then we can make a decision whether we can and should bring rates down in September or whether we stay on track for December. Let's go back to your outlook. What is the insight? I think of Jamie's great annual letter, which I really advocate, folks, is a long read, and there's four, five, six themes. What's a theme secondary within your mid-year outlook that deserves note?

I think within that is a view that we're heading into an environment that's more normal, that existed pre-great financial crisis, when there is a demand for capital

because there's a productive use for capital and there will be a cost for that capital and it won't be zero. Does that mean the Fed funds rate belongs about where that first dot was that the Fed put out in 2012, 4.25%? Maybe, could be, get ready for that. Get ready for markets where you could see a surge in inflation. The Fed may have to go to 6% and they may have to, you know,

apply a little stimulus and go down to 3%. I think that's the market we're headed for, and I think that's an exciting market. Bob, do we ever have to worry about

deficits and national debt. I'm looking at the negotiations going on down in Washington right now. We're all seeing, you know, talking about two, three, four trillion dollars of deficits coming out of this budget plan. Do we ever have to worry about that? I mean, you're the front lines of the fixed income markets. How do you think about that? We should. And I think we all have a sense of righteous indignation because we

Every month we go home and rebalance our checkbook and pay bills. And it seems like our government doesn't have to. But the reality is we're watching deficits go up globally. We're now seeing Europe starting to borrow and spend. And it seems to be the generally accepted principle that.

government should be allowed to borrow and spend and you appoint central bankers which will help underwrite that borrowing and spending. Bob Michael, generous time with you. Thank you so much. Mr. Michael is with J.P. Morgan. Get their outlook from...

the analysts at J.P. Morgan. For enterprise organizations, managing all your food needs is a tall order. But with EasyCater, you get a single workplace food vendor with the tools and resources to make it easy, giving teams across your organization an easy way to order from a huge variety of restaurants, all on one platform, all while consolidating your corporate food spend so you can control costs, streamlining billing and payment and simplifying reporting.

EasyCater, your business tool for food. To learn more, visit EasyCater.com slash podcast. Join us in Atlanta or via live stream on August 12th for Bloomberg's Business Value of AI event and networking reception. This event will gather business and technology executives to share their experiences and provide insight into how to best use data to optimize the customer experience.

You'll also learn how companies have successfully implemented AI agents that have led to improved productivity and profitability. This program is proudly sponsored by IBM. Register at BloombergLive.com slash AI slash Atlanta. You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10 a.m. Eastern. Listen on CarPlay and Android Auto with the Bloomberg Businesses.

Work Business app or watch us live on YouTube. Kim Dawson joins now from New Edge. How does a weaker dollar fold into earnings reports of our companies? Well, it is a tailwind. A weaker dollar is typically a tailwind for multinational U.S. companies, but there's a catch there. Usually a weaker dollar is associated with

better performance of non-U.S. stocks. So when we're thinking about building portfolios and asset allocations, what we talk about is that you have to see a weaker dollar to justify those non-U.S. stock allocations, which have done rather well this year. Is Apple Computer hedged? Like, do they have a hedging strategy on weak dollar? Or has it been so long since we did that, nobody knows how to hedge anymore?

I'm sure that they have some hedging strategies somewhere. And this can cause, depending on where people have their manufacturing production, it can cause headwinds. But what companies will typically do is they will report organic growth, which excludes the impacts of FX. So analysts have that great ability to look through any kind of FX headwinds.

That move we saw into non-US equities earlier this year, principally into European equities, you have European indexes outperforming US S&P 500. Is that a short-term trade or is that something longer, do you think?

Well, the beginning of that trade was mostly a re-rating, meaning that you were trading at such a huge discount to the US. You were going into the year, US trading at 22 times, Europe trading closer to 12 times. So some of the easy part of that move is over. But what's been really interesting is that we've actually been seeing more earnings revisions higher for European companies, which suggests that maybe there's a little bit of life there. If Paul Stern asks a question, I'm going to be rude and butt in.

Is the bottom line of market going up because everybody's reframing earnings higher? Is that really what's going on, Kim? 100% yes. Markets do not like when you are cutting GDP and earnings estimates. So if we think about how markets have been sideways and choppy for really the last nine months or so, that has been concomitant with this decline in GDP and EPS. But both of those have started to stabilize. The question is, do they go up?

much from here and I'm not quite sure about that. I'm just looking at a note from Torsten Sack from Apollo. The lower dollar, Tom?

More international travelers coming in to the U.S. Air Force. Oh, yeah. Well, please, let's stop the show for a moment. Yes, exactly. 118 euro. How does that trip to Rome look? Okay, I booked my Italian trip maybe six months ago with a much stronger dollar. So maybe I'm getting a little bit of an arbitrage here. You're going to top tick the Bulgari martini at 42 bucks. I know, exactly right. So, Cam, what do we do here with earnings coming up? We're going to have earnings starting in a couple of weeks. We just flipped the calendar to July, which makes you think about earnings.

What do you think we're going to see in this earnings cycle? I think that investors are conditioned to expect beats in optimism because we went into the first quarter expecting 7% growth and we got 12. This quarter, the street is expecting 4% growth. So there's an expectation. Really? The numbers are 4%? I didn't know that. The number's 4%. Now, there is a tougher comp, which just means that the second quarter growth from 2024 was higher than what we had in the first quarter. Here, here, Brent. Shoot, he's coming on. Barry Riddle's coming on. Is it a melt-up?

Is that what we're in? Even if it's a grind higher a little bit every day? It's hard to frame a upward move in the market as a risk, but we would typically say a melt-up is a risk because typically what comes after melt-ups is melt-downs. But we would know that you still have positioning that is underway or light this market, which suggests that

people still have to chase in. So if you have beats in the earnings season in the second quarter, we think that that suggests that we pressed to continued highs. Retail's all in. What are institutions doing? Are they playing catch up with retail? Wait, did they window dress yesterday? Talk a lot of phrase. You're too young, can't even remember window dressing. Did they window dress yesterday? I'd like to window dress on Fifth Avenue. But yes, I do. I've seen you outside Prada. Yeah.

I do think that that is one of the dynamics that is happening is that institutions have largely sat on the sidelines of this rally. And so they're having to chase markets in order to get fully invested. Retail, very different. They are all back in. If you look at something like the FINRA margin loan balances. FINRA margin loan balances. A really great way to capture how much leverage. Thank you. If you couldn't hear him, he'd call me a nerd.

That it's a great way to capture how how optimistic individual investors are. One more. What are you doing the bond market here? Yields are coming down here. I got my two years at 3.69%. With the dollar with the dollar weakness there's a dampening gold up $50, $53. Yeah amazing. So what do we do in the bond market here? We do think that we're in this range of yields between 4.8%

and effectively 4%, which means when you're at the bottom in the range, which we think we're getting close to, that's the time to be patient in adding to bond portfolios. Whereas when you're in the top end of the range, that's when we'd like to be more acquisitive. - Kim Dawson, thank you so much. - This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at 7:00 a.m. Eastern. - On Apple CarPlay and Android Auto with the Bloomberg Business App. - You can also listen live on Amazon Alexa from our flagship New York station.

Just say, Alexa, play Bloomberg 1130. George Kankalvis joins us right now, head of U.S. Macro Strategy, MUFJ. Okay, it's not a distraction. It's like bigger than the equity market. We got all these distractions. Here's the bottom line. Yields come in. Paul mentioned the 10-year yield under 4.20%. I have a real yield in range now, but right at the bottom with a 1.8910 handle on a 10-year range.

real yield i got gold up i got curve flattening is that the direction here sort of a disinflationary price up yield down malaise in the bond market i think it's a number of things going on right and good to be back with you guys good morning everyone um so the back end of the curve was under a lot of pressure around supply concerns about around the fiscal outlook which i think are still valid concerns

But we had last week some news on the bank regulation around the SLR. And there's hope that there's going to be a marginal buyer of treasuries now going forward coming from the banking community. So that's that. So I think it's not just fundamental. I think there's a supply-demand kind of shift taking place, that there's going to be more buyers of treasuries. Paul, SLR is single-lens reflex. Okay. George, how's our Fed thinking about this economy these days? How do you think?

I mean, you could argue, okay, the economy's slowing, but nobody talks about recession anymore. Inflation, we haven't really seen it spike with the tariffs. Maybe that's going to come in the future. I don't know. But we haven't really seen it. It seems like it's pretty darn good right now.

I mean, good is probably a little bit stronger words than I would use. I think we're mixed, and I think that's sowing confusion across all policymakers. And if you start from the DC perspective, they're viewing rates are a constraint for the economy, a constraint for the government. Rates are too high. We're hearing that, obviously, ad nauseum. Meanwhile, there's a bifurcation of the economy. There's been the have and have-nots, which we've all talked about in many different ways.

And the consumer is now starting to act tapped out. What we got in Q1 GDP in terms of personal consumption, what we got in the May spending numbers last Friday, it really shows the consumer is decelerating. So I think that we're at this kind of cusp where the Fed doesn't make a move soon, that we could slow down further.

What's a 10% decline in the U.S. dollar tell you? I mean, we've been asking, or I've been asking FX professionals for years, is there ever a bear case for the U.S. dollar? And now I'm seeing this year, it's kind of been really underperforming. Oh, totally. Well, I mean, the combination of the disruptive sort of tactics out of D.C.,

But again, this forward expectation of lower rates, I mean the whole rate curve has come down, right? So that's number one. And the Fed has not even delivered on cuts. So imagine when the Fed does deliver on cuts. So the market, the dollar actually I think is the best forward indicator now. It's really picking up on that. But in the micro, what Chicago would call the price theory of Paul's good question,

The ambiguity is right now it's price up, yield down. What are the actions that will break that the other way? OMG, weak dollar, price down, yield up. I think that really comes down to, that's why I started my answer with the supply-demand equation. I mean, if the U.S. bond market is becoming more domestic over time, U.S. banking system becomes a bigger buyer of treasuries over time, there's a limit to how high rates can go.

what are we thinking here about the treasury market here i mean with a 10-year at you know again as tom mentioned 419. it's been trucking yeah i mean slowly but surely what do you think this we end the year with with the 10-year i have the 10-year around four percent at the end of the year okay so we're a little bit ahead of schedule in my in my book uh and i'm also pretty dovish i mean i have the fed cutting a lot more than what the market has and versus most of my peers

To me, the sweet spot is 3%. 3%? Wow. On overall rates for Fed funds. The Fed gets raised down to 3%. They don't have to go further than that. The curve stays steep.

And the 10-year probably stalls out around 4%. So if we can get short-term rates down to 3%, the two-year note somewhere around 3.25%, and the 10-year at 4%, and bank deregulation, the banks can make money on this trade. You're with MUFG, a venerable Japanese firm. Simple as I can, I'm seeing all sorts of new handles in dollar. I've got a 142 yen trade.

What does your shop say about yen appreciation? How do they envision that from 142? I think there's scope of going under 140, sure. I mean, like Bank of Japan is still committed to trying to normalize rates there, and they're going against the grain versus all the other central banks, right?

So we'll see how far they can actually raise rates. That's a whole other side topic. But the Fed is more inclined to cut rates than Bank of Japan is to raise. It's really a dollar story more so than the yen. It's more a dollar story than a yen or renminbi. It's more a euro story asking for someone going to Rome. That's right. Yeah, I mean, look, there's a lot of expectations that Europe is finally getting its act together, turning things around. Germany's loosening up the purse strings.

This is new. I mean, Europe doesn't have a kind of killer app like we do in terms of AI or technological innovation, but they're willing now to start to spend, especially on military. So they're going to get a growth boost, and that's going to be a Europe story. The killer app in America is the Costco app. Lisa uses it.

George Ginkovic, thank you so much. With MUFG. For enterprise organizations, managing all your food needs is a tall order. But with EasyCater, you get a single workplace food vendor with the tools and resources to make it easy. Giving teams across your organization an easy way to order from a huge variety of restaurants, all on one platform. All while consolidating your corporate food spend so you can control costs. Streamlining billing and payment and simplifying reporting.

Easy Cater, your business tool for food. To learn more, visit easycater.com slash podcast. Join us in Atlanta or via live stream on August 12th for Bloomberg's Business Value of AI event and networking reception. This event will gather business and technology executives to share their experiences and provide insight into how to best use data to optimize the customer experience.

You'll also learn how companies have successfully implemented AI agents that have led to improved productivity and profitability. This program is proudly sponsored by IBM. Register at BloombergLive.com slash AI slash Atlanta.

This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at 7 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal. This is a joy and an honor. First heard Michael Lasser years ago at Lehman and then Sterling work at Barclays and now at UBS. Equity research, but that doesn't describe his excellence in

in big box. This is the conversation of the day for those of you that go Walmart's at 38 times earnings. Michael Lasser, welcome to the show. Can you explain a PE multiple of 38 if they're doing single digit revenue growth and I mean mid single digit to be kind and they're popping three cents on the bottom line? How does Walmart garner a 38 multiple?

Well, good morning and thank you so much for having me. It is a phenomenal question and one that is heavily debated in the market. The investment case right now on Walmart is that it's really transforming its business. And so the valuation reflects what's possible with Walmart over the next few years. Three things to keep in mind. Number one, Walmart accounts for about 20% to zero of

the United States grocery market. So one out of every five grocery sales take place at Walmart. That provides a very predictable, consistent stream of revenue, as well as a lot of customers, more than 100 million visits per week. Number two, it is deploying automation, like robots and conveyor belts, such that Walmart right now,

employees about 2 million workers globally, 1.4 million workers in the United States. It believes it can grow its top line 4% or better in perpetuity without having to add a net additional worker moving forward. And then finally,

It is using all the traffic and other advantages of its model to now monetize those elements of its model in ways that it had not done before. Things like advertising, third-party marketing.

place fees, membership fee income. Those are all really high margin and juicing its profitability. So your point is a good one that it's a business that's been around for a long time. It is large in scale, growing at a moderate pace, but it is transforming in a way that its growth, especially on the bottom line, should accelerate. And that's why it's trading at the multiple that it is. Paul shops her daily. Paul makes that daily.

Michael, talk to us about the fulfillment business for them. What is that and how is that going to be a driver for them?

Yeah, thank you so much for that question. The fulfillment business is literally taking the product from point A to point B, whether Walmart is doing it for itself by fulfilling online orders for someone who is shopping through its first-party business or filling orders for third-party marketplace sellers, much like

Other online only retailers are predominantly online retailers do. So it had been a little slower getting into this game, but it is rapidly increasing in scale, scope and capability, which makes it a much more valuable counterparty for all these third party sellers. And that's.

In a nutshell, what the third-party fulfillment business is. The heart of the matter is I got single-digit pop. You mentioned they'd like to get to 5% sales top line. Fine. They're trading like a MAG-7 stock. Are they the MAG-8?

You know, without a doubt that this is a name that you should own. We think about, we've coined a new moniker within retail that we affectionately refer to as the cow retailers. Costco, O'Reilly, and Walmart. These are three dominant players within unique niches of retail that have...

that are best in class operators with unique network effects that we think can compound and drive returns for shareholders for the foreseeable future. And so we would advocate that Walmart is a must-own within the retail sector for sure. Michael, what are Walmart and the other retailers you cover telling you about the consumer these days?

What we're hearing about the state of the consumer is that, by and large, trends are steady. The consumers being choiceful, shopping around events like holidays. One can imagine this week that trends will be pretty good as consumers want to get out and celebrate the 4th of July.

But in between these periods of advance or sales, the consumer's retrenching a bit. What will be important from here, and I'm sure where your interest is, what happens as the consumer sees more price increases in reaction to all the tariffs? And that's going to be more evident as we move into the second half of the year.

A lot of the tariff-related merchandise tends to be more seasonal in nature, things like Halloween costumes or toys or decorations. So right now it's a bit too soon to tell how the consumer is going to react. Michael, the only reason you had you on, Lisa demanded you come on. Is it value proposition Costco is twice as profitable as Walmart, but its P.E. is pushing 60? Do you want to buy a marginal share of Costco or Walmart this morning?

If we had to rank just those three players, we'd put Walmart, O'Reilly, Costco in that order. Your point is a fair one that there's a lot of good news priced into Costco, but you should not discount Costco in any way. It's a really remarkable business that's operated so well. Michael, got to get you in the studio. Michael Lesser, UBS there on Big Box. That was brilliant, brilliant.

This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at 7 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say, Alexa, play Bloomberg 1130. With our newspapers, Lisa Mateo.

Okay, I want to start with a story in The Athletic because they're reporting that Major League Baseball, ESPN, are talking again, if you remember. Yeah, they ended their broadcast rights deal after the 2025 season. That's what they said, and it was early. They were supposed to end in 2028. ESPN felt they were paying too much. They're paying about $550 million.

So if something is not, if an agreement is not reached by October, then they can kind of look elsewhere for different places. But they have a couple front runners. You have NBC, Apple, Fox, too. They already have broadcasting rights with Apple and Roku for some games. But the pressure's on. I mean, you have the All-Star, you know, break in a few weeks. You have those games coming up. So it's an interesting game. I think in Major League Baseball, you need ESPN. Yes. I mean, you just need the whole ESPN thing.

a juggernaut behind you i think even though it's a regional sport you still need the espn right and that's the problem like you know those local rights situations like that's their biggest issue well the regional sports networks which were the lifeblood for most baseball franchises that model's gone south big time so you can no longer depend upon that revenue so again if you're major league baseball on these teams you need the espn i think there's too many games it's just in the modern day that's the single distinction of baseball yeah it is that's

That's okay. And I'll have to see next. And they're a little long, too. Okay, we're going to stick with baseball because tonight the Washington Nationals will debut their first jersey patch sponsor. They're taking on the Detroit Tigers. And who's the sponsor? And the sponsor is AARP. Boom. There you go. Yes, it is. American Association of Retired. I thought I was going for Ben's Chili Bowl. No. AARP. But they're D.C.-based. I remember when I got my first AARP magazine in the mail. I know. I got the membership card. Do you? I know.

Yeah.

I get discounts on hotels and all kinds of stuff. You do. I'm telling you. If you do AARP in Costco, do they give you stuff at Costco? There's no discount for AARP members there. I checked. But if you are an AARP member, you know what you can get? You can get special perks at the park. Yes. You can get early ballpark access. You can get reserved parking seat upgrades. There might have even an AARP night held at the

Am I missing something here? I have nothing with AARP in my life. Really? You're still working stiff. No. I just don't qualify. I'm too young. Yeah, of course. Exactly.

- All right. - But it's a big deal because they were like one of the holdouts, like they didn't have that jersey sponsor. So that's why this is a big deal. - Can I interrupt newspapers? - Please. - The president is speaking. We're gonna bring you much of that as we can. This came out as a headline. Trump asked about deporting Elon Musk. - Oh boy. - Says he'll have to take a look. Okay, we can move on. Next. - I think that might become a newspaper segment pretty soon. Okay, the last one.

Starbucks has some big competition in New York. It opened yesterday. It is China-based coffee chain Luckin Coffee. They opened their first location at 6th Avenue and it was packed.

People were there getting the coffee. You know why? It's $1.99. Ah, I see. It's a cheaper cup of coffee. They say it's good. They did this heavy Instagram promotion. But the big thing is that it surpassed Starbucks in China for being the biggest coffee retailer. So it's a big thing. They have 24,000 stores globally. Yes, yes, yes. And they're looking to expand, and they picked New York City as the first place.

location and why not we're like coffee central sure we love our coffee here in new york city all right but price matters price matters a dollar ninety nine i mean what's a black one five dollars

Lisa Mateo, the newspapers. Thank you so much. This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, 7 to 10 a.m. Eastern, on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal. ♪

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