>> the fed is telling us inflation is still a problem. it will be less rate cuts. >> the fed is looking for

progress on inflation. >> moving away from a fed cut in june. the market is not pricing in a cut in july. >> taking no action now is the best course of action for them to take instead of making a mistake. >> they want to give the market what it wants. the risk is overdoing it to the downside. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. >> nothing comes close. nothing will be this. adp due shortly. we can see what the number will be. >> which is the reason -- >> we heard that from others. deeply unreliable. we will explain why. flexed what is it about -- >> what is it about pouring cold water over information? this morning, adp not a reliable indicator.

>> when we get the data, everyone explains why it does not matter and why their theses still stand. you have an ultra data-dependent federal reserve and then everyone discounts the data. what are we hinging our ideas on? >> the fed uses adp data for their own statistics so in that sense it is interesting. >> important to look at the services and employment subcomponent coming out later. i think we need to get into payrolls friday more. they are looking for a below consensus 150,000 job growth friday. citi believes the emphasis has shifted away from inflation and towards payrolls. >> they have been expecting weakness for a while and pointed to the fact that loretta mester, who has been of the more hawkish ilk, still supporting 75 basis

points of rate cuts. it seems as though there's a cadre of people, including most in the fomc, that believe we will see weakness and believe we are starting to see signs of it in certain corners, which puts rates at the lowest levels . i'm struck by how much disagreement is on the decision that on the basic structure of where we are -- this agreement there is on the basic structure of where we are. it's a confusing moment where people are not getting a handle on any kind of consensus. >> it makes it hard for consensus. you brought up a great point. what is deterioration in the payrolls market? if it's a two handle, how can they say that's deterioration and give them an impetus to cut rates? >> looks rocksolid to me. hard to disagree with that.

sometimes the news is that there is not any. on the fomc, that's what strikes me so far. there's been no change for three months even though they have seen this swing develop in the market. they have barely moved. the way i responded listening to mary daly yesterday -- i have repeated this -- but i was thinking, listening to mary daly talk about three cuts in 2024, super dovish. three months ago, i would be saying, how are we going to close that spread without causing all this damage in the market? stocks still just off all time highs. >> i want to offer an apology because i have gotten messages from people saying it's you that is wrong in terms of the my goodness, they need to cut seven times. the fed stayed the same and they have been right and the market has moved toward him. they change with the data. of course, now we are undermining.

the market report will be one data point we will be watching. >> every single data point is just called an aberration or bump in the road if it does not suit the trend. i take issue with that. >> i would agree with that. i also think some of the manufacturing resurgence we are seeing has to get their attention. we were expecting manufacturing to remain suppressed and services to meet it. we have not necessarily cnet to the same degree. we have manufacturing picking up and services inflation sticky. that creates a hairier situation. >> equity futures trying to recover. brent crude and wti starting to move higher. 1% on wti. on brent crude, $89.82 this morning. crude higher by 1 full percentage point. >> this is on the heels of not

just the geopolitical risk in the market but opec-plus not adding any more supply. they went a step further. those cheaters, come in line with what you agreed you would cut. we will have peak demand in the summer. are they going to have to come in and help support this market? >> yields pushing it higher as well. the 10 year getting closer to 4.40%. closing out q 1, 4 .20%. very close to 4.4%. we will catch up with steve of citigroup. former house eric cantor on the u.s. deficit and the brilliant mandeep singh after an earthquake strikes taiwan. we begin with our top story. the record highs taking a breather as rate cut expectations fade. steven wieting saying this. the combination of lower policy

interest rates, inflation slowing, uninterrupted growth and rising profits is as close to an ideal setting for financial markets. steve joins us for more. let me go through that again. lower policy rates, slowing inflation, on a -- inflation, uninterrupted economic growth and rising corporate profits is ideal. is that what's going on? >> yes. that's what we want everyone to bear in mind. we have had this strong run with low volatility. we have checked the boxes on that whole list. naturally there's some more doubt. we can zoom out a little bit, but it's a little bit more natural now for us to develop doubts about this path. >> how does that doubt get

expressed in your view if you think that ultimately we do see a strong backdrop and ultimately this perfect landing, this disinflation nirvana, will continue? >> i think the rates market, having a bit of a backup here, we think that long-term treasuries, again, very efficiently priced in fed rate cuts. they are pricing in almost seven rate cuts this year. now they are going all the way. in reality, the federal reserve has clarified with its forecast in its history that it does not need a collapsing economy to move back from highly restrictive monetary policy to a move -- to a more neutral setting. the market has to digest this. the fact that we have had predictably higher inflation for the first two months of the year

and it was no reaction to this, now we have strong data, and we take a little bit of wind out of the sails of the bond market. the speeds through to the equity market. it would not surprise me if the equity market feels it more. at citi global wealth, we have moved toward areas like health care that are not as reliant on interest rates to power valuations higher. we have gone into cyclical industries. so good backdrop. we could have been more bullish. we are tempering that here and holding back. >> i love your take on what we have been hearing all morning, which is different views on where we will settle in terms of the post-pandemic norm. i want your view about whether you view that disagreement as healthy and encouraging or view

or whether it keeps you up at night. what if we are in a highly inflationary environment where rates will not come down all that much versus going back to what we were used to before 2019? >> there was a highly inflationary environment where we had a truly overheating economy where the labor demand exceeds supply. we will find a way to have a recession. i don't think that's going to be the case. when you shifted to a bullish posture on the outlook for financial markets and see the consensus that believed we had to have an economic downturn, then you start to say, well, the problem is a bullish consensus. now we are hearing some disagreement and these troubles arise that people are thinking, i think it's helpful, again, to take out a little bit of the froth. the reality is to get a

continuation of this kind of rally would take even more positive surprises. it would take a longer drop in inflation and a stronger rebound in growth and profits. we have a good picture but we don't get to 24% in six months . >> you talk about the possibility of a near-term cpi surprise. they could be a pullback of what we are seeing in the market. how concerned are you about the uptick in commodities influencing a surprise in cpi that we do see a really acceleration? >> i think headline inflation had a nice assist. these are familiar ranges. they won't give us any near-term help on headline cpi.

measured inflation, where the inputs for that are coming down sharply, that will give us a measure of core disinflation, but that's going to be, now that everyone's worried about inflation again, that will give us a little bit of calm on inflation. what is critical is the employment pace. just zoom out. i will use rounded numbers. if you go back to 2021, we had almost 7 million job games. we slowed to 5 million. last year, 3 million. that slowing i don't think. what we have seen with job openings at high levels, down 3.4 million. if you think about monetary policy, with the fed funds rate at 5.5% and the job market

slowing, where will it be six-month from now? it's slower than it has been. these quarterly distortions, employment and inflation data, some of it, biased by difficulty with seasonals. what we saw and production and demand data biased down. this could be more favorable midyear. if we get more restraint on the employment front, we will calm down the bond market. that creates worries in the stock market. >> interesting. i know we have some technical connections. we will work on your shot. don't go anywhere. steven wieting of citi. looking for jobs data. the adp report. 150,000 is the estimate. the previous number, 140,000. the estimate in our survey is 214,000. here is your bloomberg brief .

>> taiwan has been hit by the strongest earthquake in 25 years. at least nine people have been killed and more than 900 injured during the 7.4 magnitude quake on the east of the island. rescue workers are scrambling to find 56 people who remain trapped after the earthquake leveled dozens of buildings. intel shares are falling in premarket trading after it reported losses at its factory network, same losses have deepened and the business may not reach a breakeven point for several years. a new division at the company dubbed intel foundry recorded an operating loss of $7 million in 2023, more than the $5.2 billion it posted the previous year. sales fell short at the unit with $18.9 billion recorded in 2023 down from $27.5 billion the previous year. women's college basketball has a new tv ratings record.

monday's highly anticipated rematch between the lsu tigers and iowa hawkeyes drew over 12 million viewers. that makes of the most watched college basket ballgame in the history of the network. it tops the viewers for last year's nba finals and baseballs world series. caitlin clark lead the way for the hawkeyes with a dominating 41 point performance on the way to an iowa win. that's your bloomberg brief. >> next, adp payrolls data ahead of friday's management. >> we are probably going to see a slower growth rate in the job market. we are in a soft landing but the overall trend is going in the right direction. that's the strongest argument for buying extended duration. >> the data up next. ♪

harlem has everything. but i couldn't find pilates anywhere. so i started my own studio. and with the right help, i can make this place i love even better. earn up to 5% cash back on business essentials with the chase ink business cash card. make more of what's yours.

14,000 more than economists were anticipating. given what we saw with the number changing people's views of friday's total whether we will see that happen again and we will get upward revisions.

>> the estimate has been creeping higher. do you think that is waking everyone up to a bigger number? >> you put that together with jolts. that's probably we do get the ism services numbers. that will be important for their jobs index. we could see this revised up. we have been running a number of months in a row with numbers coming in higher than the forecasts. >> welcome to existential wednesday where we start to question what the data means and whether it's relevant. people say, yeah, this is the reason you can discount it. what do you make of these people saying the adp is missing and noisy and never predictive? you could say that about jolts and yet quietly under the surface people are starting to trade with the expectation of

more strength ahead. >> they are putting it together the same way the economists in the fed are. make a decision based -- don't make a decision based on any one number but when everything is coming into the same area, is the wisdom of crowds, i guess, crowds of data as opposed to people or the old 50 million flies cannot be wrong. >> to people say the data is less correct than he used to be because of a lack of responses, transformed demographics? i don't mean to get abstract but i have gotten many notes challenging the accuracy all -- accuracy of all the data we are supposedly dependent on. >> it is true and there's a problem with the response rates we are getting for a lot of the data points. people don't like filling out surveys. it's the same problem they have with the political polls. the statistical agencies are

doing their best to adjust for that and they are coming up with new ways of getting data. some of the data, like the cpi, they are using private sector data for some of that. they will be doing more of that as this goes on because the government does not have the money to do a complete rewrite of its surveys. >> do you expect anything from jay powell different today given we had an upside surprise in adp? there are smaller data points he could talk to that we did not have friday. >> they are in the labor area and he has not been concerned about the labor market. he's been talking about a stronger labor market is one of the reasons why the fed might stay on hold longer so this reinforces his message. the only thing he's said about the labor market is, if it collapses, we would consider cutting, but that does not appear to be likely at this point. >> mike mckee breaking down the economic data. yields creeping higher on the

long end and front end of the curve. work your way further out along the curve, a 10 year maturity just short of 4.40%, yields higher by three or four basis points. the 30 year up by three or four basis points. steven wieting of citi still with us. let's talk about the jobs data we got and the data we got earlier this week. this is bringing up the right question. what data should we be dependent on and should not be? how much weight would you put on manufacturing? >> i think it's been useful data. we have been looking at a manufacturing sector that's been going for a correction, that's been depressed relative to demand. it's been in recession for the last year and a half around the world. that's not terribly relevant to the u.s.. it's quite relevant to germany, to china. there are other things going on

in those places as well, but coming out of that, it's hopeful for the longevity of the expansion. now, again, what happens in services or what's going to happen in employment will matter for us, for monetary policy. we did 184,000 jobs every month this year. that would be wonderful. we would probably get a two rate cut year. that would be great news and it would be on the way to being a sustainable labor market. it's a lot closer than where it has been the last couple years. >> it sounds like you take some real signal from the payrolls report we will get friday. which aspect is it? is it the headline number or are you looking at wages? >> it's all of these things. it's getting an impression from the data we talked about and it's putting together over multiple months.

the revisions are relevant for how we look at the data compared to the headline numbers. the compensation data is interesting. are there any big shifts? are we doing it the strength of hiring or on i.t. services? you will see different compensation numbers. the employment cost index, again a sort of same-store sales measure of employment pressures, has come down even without a collapse in the labor market, and with a minuscule rise in the unemployment rate. we have seen compensation pressures moderate. we could stay on that track and have monetary policy moderate. then we will be in a great place for making this a long expansion. that's what will help financial markets. >> constructive. great to hear from you.

steve wieting of citi on this equity market. allow us to set the stage. the economic data came out. the adp report. big upside surprise. 184,000. the estimate was 150,000. the median in our survey, as we have said, is a moving target, but that's been going higher. from about 200,000 to 214,000 now. the previous number 275,000. it's shaping up to be a really interesting session. brent crude getting closer and closer to $90. it's up about .9% on the session, $89.70. that move in crude in comparison. it may be in relation to what's developing in the bond market. you'll tire by four or five basis points. the 10 year getting closer to

four point 40% as crude gets closer to $90. >> the 10-year climbing higher. is it the data or what people are putting together, some sentiment and questions around what the thesis is? our people trading on adp or something else? >> it's adp for five minutes and then something else. can i say all of the above? all of the above. next, eric cantor on the u.s. deficit and a lot more. it's shaping up to be an interesting q2. you're watching bloomberg surveillance. ♪

>> 60 minutes away from the opening bell, equity futures pulling back just a touch. we had the adp jobs report out. no idea what that's worth for friday. upside surprise. friday, payrolls, the estimate 214,000. equities pulling back. yields breaking out. the 10 year higher by closer to five basis points, getting closer to 4.40%. we ended q1 at 4.20%. we are talking about a close to 20 basis point move in three sessions. >> it comes as all the data, and

you can challenge each point, but they are coming to the conclusion that the economy is robust. mike mckee pointed to one adp report data point about job changers seeing their wages increased by 7% or more. that's giving people pause. there's a stickiness and demand for workers that's persistent in an economy not flowing as much as expected. >> it appears to be at the epicenter of what we are seeing develop. crude getting closer to 90. $89.71. we heard from opec-plus and they seem happy with how things are developing. >> steady as it goes. they will continue to ratchet back supply and go after the cheaters and try to get them in line to make sure they are hitting the correct quotas. today was about supply when it comes to the oil market. you heard that from ed morse and and rita send -- and amrita

sen. >> ken griffin joining a chorus of ceos expressing concern about the u.s. deficit, writing we must stop borrowing at the expense of future generations. his comments coming on the heels of larry franks, writing -- larry fink's, writing there's a bad scenario where the american economy starts looking like japan's in the 1990's. debt is on track to be 116% of gdp by 2034, higher than world war ii. eric cantor join -- joins us. we are all trying to figure out how close we are to a point where he leader in america comes out -- where a leader in america comes out with a set of policies. >> it is reminiscent of the discussion that we had even when i was on the hill. if we look back 10 years ago, we were screaming the same thing,

that we have reached a point of unsustainable debt levels and have to do something about it. i agree with what ken griffin and larry fink said. i think the discussion around the debt and deficit is a little bit too simplistic because, yes, it is ok to have some level of debt and deficit. i think most people in their lives have it and i think the government is the same. the trouble you get into is when you start growing that deficit and the debt more quickly than the economy. and there is no agreement on what to do about this. if the parties would step back and focus on growing the economy, the decisions to correct the situation would be easier. the political cost a little less if people could focus on how we are growing the economy instead of the policy that's underway. >> isn't that the argument that the former administration made? that we can have more debt but

we will do it because we are progrowth? >> you have to address both. there's no question that it is the demographics in our country and the health care costs in the increase of those turbocharged now with higher interest rates. that's where there is this trifecta of a toxic mix we have got that is threatening the future. and i don't know if we are going to see the two candidates for president, the incumbent and donald trump, ever propose a fix to this, but i think we know how to do it. we talked about how to do it when i was there. >> you have from the policy perspective, when you were in congress, and now from the wall street perspective when deciding how to invest and where to allocate. how convinced are you that this time is different, that the bond market will wake up to the risks that you see from the fiscal side? >> on the dealmaking side, we are seeing clients who reacted over the last couple of years to

this volatility in uncertainty around interest rates. interest rates, when you are in the dealmaking business, our impactful. so i do think at some point the market will reject this continued incurrence of debt. we are spending $700 billion more of money than we have every single year at some point. i go back to the fact that we are the fastest kid on the block. where else will you put your money? and whether we are seeing signs of that now in diversification i'm not sure. when i look at it, and you look at the adp report out today. we will get the jobs report this week. where else is there this innovation and dynamism? we are on a roll in this country where you have more small business startups than ever before. that's a signal that people are optimistic about america. >> if the market was to force

washington's hand, because you know they will not be the ones to come up with a plan for the deficit, are the right people in place? you had a great relationship in 2011 with former vice president biden then. are the right people in place to come to the crisis? >> i think the situation will demand that people step up and come up with a solution. if you want to fix the problem and send the signal to markets that the country and investors -- is on the right path, it's a simple notion, but it's difficult politically. you take the steps to change the health care entitlement, the medicare program, from a defined benefits system to a defined contribution. it all plays some of the risk. that's tough politically. but if there were a crisis and the markets rejected what was going on in washington, you could take steps to go in and

tweak the age of return meant -- of retirement. you could means test. there are things they could bias a decade plus in terms of the viability of programs. >> that does not win elections. former president donald trump is talking about 10% tariffs and 60% blanket tariffs on china. do you think he would actually do that given the fact that this could mean higher inflation, especially on everyday americans? >> it goes back to that admonition someone gave him back in 2016. don't take him literally, taken figuratively. who knows? who knows what we can expect? i think the unpredictability is what he likes and there's no question his message is we have been taken advantage of by others, particularly china, and we need to step up and gain some

leverage when we try to negotiate some resolution. there are troubling signs coming out of china. separate and apart from the national security concerns around sensitive industries. because you think about what's going on with ev's and the fact that the chinese government is aware they have to do something to take care of their domestic economy, so they are ramping up production in the manufacturing sector. they will have so much access that now they are already looking like they are dumping those into europe. the ev situation is concerning. our oems are here equally as concerned that that may happen. >> how much are we avoiding cross-border deals because of these questions and concerns? >> it's interesting because of so much of the sectors that investors will look to, we are shining in the u.s.. there's a lot of european,

asian, middle east investors looking to allocate their capital here, but of course there are political ramifications to money's coming in. we have seen that when it comes to countries not aligned with us, whether it's china or someone else just not on the favored list. you have to go through the hoops. i think the real concern that i continue to hear from clients and others is the fact that we have a situation with our antitrust regulators that is not just applicable to cross-border deals but to every deal. i think what lena kohn and jonathan kanter have done at ftc and doj has been such a stretch in terms of interpreting the law and the any trust law and they have done a disservice to our country, to investors, and frankly damaging the competitiveness of america as a destination for capital. >> but that is the world we live in now. we were talking to brian moynihan on the trading floor of

bank of america. he was talking about the amount of deals being held back by the prospect of them not being able to pass, not being able to go through, and no one wanted to be on the wrong side of that, being left hung out to dry without any idea whether the deal will close. are you seeing the same thing? >> i do think, and i would say to the decision-makers that, if we are going forward, if there's going to be a deal to work, we have to make sure we allocate the necessary time, resources and commitment to get through that. but think about it. if we would like to be the location in the world where capital flows to its most efficient use, where it gets the most dynamic economy, velocity of capital, we should not have to do this. and unfortunately there's just an overwhelming ideology that's infecting the policy and current administration writing that.

you look and say where else is it any better? >> is that ideology infecting both parties? because right on cue, a deal crosses the terminal, we announce it, shock, not surprised at all. what is surprising are the amount of republicans that agree with her. do we actually have a business friendly party in washington anymore? does one exist? >> i'm a limited government, pro-free market pro-national security conservative republican, but i agree with your sentiment that donald trump has changed the nature of the republican party. we are i believe now perceived as the working-class party and the democratic party has done more to ingratiate itself with "the elite" and the very far left on the ideological spectrum and somehow the extremes are

meeting. i worry about this because this extreme push in terms of government role in the economy has happened with the support of both parties. you look at the ira bill. certainly that was the democratic party but if you look at the chips bill, look at that what that did. that was industrial policy focused on a particular industry that people in my party decided was a good thing for national security so let's let the government go all in. that's not the sort of outlook that you see. so you are right. there's a shift towards labor. labor is in the polling at an all-time high and terms of favorability. and in both parties you have seen it. how in the world can a white house go enjoying the picket lines? that's what president biden did. but soda donald trump, so did several republican senators join the picket lines in detroit. >> j.d. vance, evp shortlist candidate, said he thinks lena

kohn's may be the only effective person in the biden administration. are you getting the same sort of doj, same ftc? >> that's the real question, as to whether we will see the extremity. i do not buy that because i still think there's a dna -- >> but you are a product of that extremity. you lost your seat because of that and that populist wave that you are the beginning of. >> but remember where the anger was. the anger really was against the so-called establishment. it was not necessarily towards -- it was towards everything. we thought, and probably a sign overweight to the import of profligate spending in washington. it's more about the establishment, the system, etc. i don't necessarily think people are going to the polls in november based on antitrust regulation. i really don't. so i think that where you are

going to have manifest in a next republican administration is more the dna that is more balanced and not so punitive on corporate's. >> people might not be going to the polls but you have to plan a business around it. we keep getting people saying it's like staring at the sun. how do you plan for something that feels like it is shifting and you don't know how? is there anyway you are planning with the business and the dealmaking to get ahead of whatever kind of push we will get in november? >> i just think we have got to be very mindful in 2025. there will be the super bowl of fiscal policy debate because you have expiration of the trump tax cuts. and some would say not all of them. everything will be on the table. and just to extend the lower to $400,000 and under income

bracket, this a $3.2 trillion issue. you talk about the debt. fiscal year 2023, we were at $791 billion of interest costs, and we are going up. everything will be on the table. ira, the subsidies. if there's any anticipation and advice i would give for those who have been on the uptake in terms of these subsidies with the ira, especially as it relates to ev's and renewables, we need to take a look and see whether those will continue because they will be on the table too. i believe my party will first up look at some of those subsidies and get rid of them. >> final question, trying to work this out. in 2016, we had a candidate. if you could divorce the person from the policy, the policy was pro-business, low taxes, confrontation with china. i was thinking, is the trump template from volume one applicable to volume two?

do you think it is? >> i do. i don't think he has changed much in terms of his career trajectory. he has always been anti-china. he's always trying to go and gain leverage in negotiations. i also think that he is focused on a growing economy. at the end of the day, with all the noise you see from j.d. vance coming together with elizabeth warren, the trump administration will be pro-business because he will want to see a growing economy. >> let's do it again soon. eric cantor. an update on stories elsewhere with your bloomberg brief. >> endeavor group, the controlling investor in wwe and ultimate fighting championship, has agreed to be joined -- to be acquired by silverlake. it follows through on plans announced in october. endeavor said it was evaluating

strategic options out of frustration with the company's declining stock price. disney holds its annual shareholder meeting today and bloomberg can report the company is poised to win enough shareholder votes to defeat a challenge against its board mounted by an activist investor. elon musk saying that while he does not own any disney shares today, he would definitely buy if he was elected to the board. president biden and former president trump both added to their delegate counts last night. four more states held primaries tuesday and the present of nominees easily won in new york, connecticut, rhode island and wisconsin. trump picked up 78% to 84% of the republican votes while biden took 83% to 91.5 percent on the democratic side. that's your bloomberg brief. >> next, a wake-up call for chipmakers. >> what's interesting, it's a big wake-up call for us, which

is we over rely on taiwan. the situation has been worse -- situation could have been worse. that next. this is bloomberg. ♪ [falcon screech] [ominous background sounds] hyah! sheriff! the adversaries are back! [gasps] not again. sheriff, i got this. protecting your business from cyber attacks can be unrelenting. [triumphant adventure music plays] today's adversaries move fast. crowdstrike moves faster. crowdstrike. we stop breaches. were you worried the wedding would be too much? nahhhh...

(inner monologue) another destination wedding?? why can't they use my backyard!! with empower, we get all of our financial questions answered. so we don't have to worry. empower. what's next.

jon: we are counting you down to the opening bell. equity futures negative by .2%, yields higher by four basis points, closer to four .40%. brent crude higher by about .75%, $89.60. it's a wake-up call for chipmakers. what's interesting here, it's another big wake-up call for us, which is we over rely on taiwan, and the situation could have been worse and we could have lost capacity. we would be back into a nafta

kind of situation, struggling to find ships. jon: hundreds are injured and at least nine dead after taiwan's strongest earthquake in nine years. they are moving some staff out of facilities and assessing the impact. taiwan is the source of approximately 90% of the world's highest and chips. mandeep singh joins us now for more. down 1.6%. everyone is trying to figure out what damage has been done. what damage has been done so far? mandeep: it's a tragic event and clearly we don't know the extent of the shutdowns or if there have been any leakages, gases. there's a lot that goes in the manufacturing semis and it's a complicated set up so we don't know the extent of the damage but we know there's clearly been some loss of lives and i think

when it comes to factories i would imagine there is a temporary sort of, you know, shutdown and we will find out exactly how much impact it will have on the production. annmarie: what could the impact be? what would that materially mean? mandeep: so think of some of these manufacturing notes are like 3, 5 nanometers. that requires a lot of talented people to show up at these factories as well as in terms of the set up. we are talking about really complicated things in terms of how, as i said, there's a lot of gases that goes in the manufacturing these semiconductors. and i think clearly there will be a level of disruption but the leading notes is where the focus is because that's what these companies rely on at the end of the day. they are the primary factory for manufacturing the leading node chips. lisa: the parallel with what's

going on with one manufacturing company and intel reporting losses at their foundry highlights how difficult it is, the barrier to entry to diversify some of the output of these chips. can you give us a sense of why it's been so difficult to move production to places like japan, like the u.s., to insulate from potential supply shocks? mandeep: i think intel said they will lose about $7 billion in foundry operations, so that goes to show they are investing a lot of capex up front to bring the leading node manufacturing in the u.s., but what it requires is not only the set up with the machines but also the components and all the parts that goes in the manufacturing semis and the talent. one of the reasons it's been so hard to relocate the supply chains out of taiwan is because you don't have the availability of talent elsewhere and that i think is intel's challenges well. they go to tsmc to manufacture

their latest 2, 3 nanometer chips. that just tells you that despite investing so much they are still relying on tsmc. jon: you could write a book on this and books have been written about this. if you wanted to pick the worst places to build these things, that's where they are. we will get into why they are there another day. how long does it take to build replacements for them and not just the physical plant but to attract the talent as well? mandeep: i think it requires a lot of training. some of what intel is pitching to all the governments is we are not only setting of fabs but training people. that training would require a few months or years, for that matter, to train people in terms of how to use this equipment. so clearly i think tsmc and samsung, the other fab makers, are also opening these plants. they have plans to do manufacturing in the u.s. but they will run into the same sort of issues. at the end of the day, you need to train people, and that

requires time. there's no immediate capex you can use to train people. lisa: is there effectively no substitute? steve wieting as of now -- mandeep: as of now, looking 12 months out, there's not. if something happens things will go to a standstill. three years from now, five years from now, intel gave a forecast where they expect foundry gross margins to be 40%. that's a dream scenario. right now they are bleeding money. it's negative gross margins. it goes to show there's a lot of hope in terms of what can be accomplished but a lot needs to be executed upon. jon: mandeep singh of bloomberg intelligence. tomorrow, this is what the lineup looks like. we will catch up with the israeli economy minister. blackrock and becky of manpowergroup on a big week for labor market data.

the adp jobs report came in at 184,000, the estimate 150,000. lisa: the fact that job change or wages surged 10% in that survey has the attention of many people in the market. one person said maybe this suggests more heat under the surface and people had previously expected. jon: 10 a.m. eastern, the ism services read. q2 starting with a bang after what we saw with the ism manufacturing monday. is to chairman powell this afternoon. tomorrow, jobless claims and play a role -- and payrolls friday. about 44 minutes away from the opening. bond yields higher by five basis points. your 10 year 4.39%. crude. $90 on brent. this was bloomberg surveillance. ♪

so, what are you thinking? i'm thinking... (speaking to self) about our honeymoon. what about africa? safari? hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment... ...on a ranch ...in montana ...with horses let's take a look at those scenarios. j.p. morgan wealth management has advisors in chase branches and tools, like wealth plan to keep you on track. when you're planning for it all... the answer is j.p. morgan wealth management. not all caitlin clarks are the same. caitlin clark. city planner. the answer is

just like not all internet providers are the same. don't settle. you want fast. get fast. you want reliable. get reliable. you want powerful. get powerful. get real deal speed, reliability and power with xfinity. she shoots from here? that's kinda my thing.

>> i'm manus cranny in for jonathan ferro. tech under pressure. goldman-sachs prime brokerage seeing some heavy surety. we'll dig deeper. countdown to "the open" is right now. manus: coming up, surging bond