♪ >> welcome to "bloomberg markets," i'm sonali basak. and u.s. payrolls rise by the most in nearly a year the fed gets more evidence that a delay in rate cuts still be warranted. let's get a check. we do see a relief rally. the s&p 500 now up on the day. you have it up about 1.3%. nasdaq 100 tech heavy. the dow jones industrial average and russell 2000 also feeling some love. i should say in the season

mostly ending the week still in the red. yields, we have seen a move in the bond market after sell-off this time. 471 on the two-year yield. higher than where we are. highest since september. the 10-year yield at 436. five basis points higher. and very interesting moves in terms of bids in the bond market. i want to talk here about day movers on the equity side. johnson and johnson agreed to acquire shock wave medical for $13 billion as part of its expansion to treat heart disease. and tesla is slashing prices in a bid to clear its biggest ever stockpile. model y's are discounted by $5,000.

that's a report that elon musk is denying. tesla down 2.4%. back to the u.s. labor market. fewer than the fed's consensus. that's three cuts this year. >> if this fed is continuously overly data dependent, then maybe we don't get cuts but i'm hoping that it will see through the backward looking data and look forward. and we will end up looking with two cuts this year. then it may not start as early as a lot of people thought initially. sonali: let's discuss this with pimlico chief economist tiffany wilding. we have a slew of federal reserve speakers. remember lori logan saying much too soon to think about rate cuts and michelle bowman, similar vibe here. it's still not time yet for rate cuts. when you look at these voices

from the fed really kind of cautioning the market here, how do you read into that? >> yeah. so i think that the data that we've seen around the turn of the year, not only the payroll report today which was obviously a strong, a blowout report but just overall, the data has shown a u.s. economy that's not only resilient but is growing at an extremely strong pace. we look at final demand growth at 3 p.m. -- 3% for three consecutive quarters now and that's something that we've seen outside of the pandemic-related surge since 2024. so when you're getting that kind of growth, then usually what happens is is that you have an economy, especially when employment is low, you have an economy that's running hot. and you have inflation that's staying stickier.

and that's the risk here. of course the wrinkle with in all of this is we've had a ton of immigration in the united states. it's difficult to measure on a real-time basis, but that's impacting both labor supply and labor demand. so that's kind of moderating some of the inflationary effects here but the bottom line is that growth is strong and inflation looks sticky and there's -- why rush, to put it in the words of governor waller. the fed can wait, i think. sonali: you've given me a great secret. it's denut day on jobs day. with that sugar rush, what are you seeing in the jobs data that many investors aren't looking through? tiffany: if you look at so-called cyclical sectors, so things that are outside of education, health care, and government, which have been incredibly strong sectors, those

are the ones that were slowing in terms of payroll gains, but even now, those look like they're reaccelerating. so i think that's something that, again, a reaccelerating labor market here is not something that we think the fed would make the fed more confident in terms of their inflation mandate to cut. nevertheless, i have to say on balance, it does seem like that chair powell is pretty convicted that there's going to be a cut at some point this year. there's almost unanimity as of margin that they were going to get a cut in by the end of the year. they're still planning on doing that. there's potentially still a window to do that mid year if they want to. but after that, the base effects on inflation get more challenging in the second half of this year and again, the economy is so strong that we would argue you still need restrictive rates here. sonali: i really want to talk to you about the upcoming inflation data as well because if you

looked at wages this week, yes. there are a lot of questions here about what it means to have wages accelerate agent the pace they are and how much wiggle room there is for wages to move higher up. and all the other inflationary forces there may be out there. how are you thinking about the risk of reacceleration here? tiffany: yeah. when we look across the inflation data, what we do is we try to calculate a so-called underlying trend without additional easing in the labor market, where will inflation be and when we do that, core pce inflation, cpi at three to three and a half to us seems like where the runway is. it's not two which this fed's target. so there's also a really key question here which is that our fed officials are ok with

letting that run somewhat above for a little while. and so i think some of the comments that we got from chair powell would suggest that yeah, they are. he mentioned inflation expectations are what they're targeting here and that means that realize inflation t ok if it runs a little bit above for a while. and that can give them window to maybe caught couple of times this this year if they want even if inflation is a bit of a starring. sonali: what do you think about that? do you think the real rate is higher than is currently expected and what does that mean for long rates? tiffany: well, you know, i think when we look at financial conditions more broadly, it's both changes in financial conditions that matter as well as levels, at least historically. and i think that the impact from the change in financial conditions in 2022 and in 2023 to really get policy and restrictive territory, the economic effects of that are

largely behind us. we're seeing cyclical sectors, broader capx durable goods purchases, they reaccelerate somewhat here. and then in terms of levels, over time as you get higher rates that the people are paying because they have to refinance whatever debt they have, that will be a bigger drag but just the u.s. economy is not that rate sensitive because the large stock of low rate long duration debt that we have. overall, that's to say that maybe financial conditions aren't as restrictive here. we do think they probably are restrictive but again, things do look like they're accelerating in a cyclical sectors. sonali: the new york area felt its strongest earthquake in 120 years. air traffic has resumed at j.f.k. newark airports after a ground stop.

from what i understand, in addition to that 4.8 magnitude trembler here, you have aftershocks. >> well, there's a callout to be watchful if there are any aftershocks. mayor adam said and the governor of new jersey said we can go about our day but there's a risk of aftershocks and we should take precaution. sonali: so not yet? >> right. sonali: what are we seeing in the aftermath? >> not that much damage. there was a gas leak in rockland county that turned out to be a leak in an individual's home that was resolved. there was a lot of like you mentioned, j.f.k. and newark had ground stops but they're back up. there was some, you know, cell phone delays but everything seems to be coming back and i think the main concern is just to make sure that no aftershocks take on any damage. sonali: it's interesting when

you think about the united states, you don't i think the about it happening. how prepared is new york city for events like this? >> the mayor said in a press conference that they have, you know, all hands on deck and they're doing everything they can to prepare for this and governor hochul had a press conference where she spoke about that. sonali: thank you so much for your time following what is going on. crews operator viking files for an ipo. we'll discuss that next. stick with us first talk of the hour. this is bloomberg.

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markets" and i'm sonali basak. it's time for the of the hour. viking filed for an ipo as the travel industry continues to rebound from a pandemic slump. and amy orr is all over it. you look at viking and during the ipo kind of bounceback that we're seeing here, what does viking really mean for the reopening of the ipo market? >> it's great to have something that is non-tech because we haven't had great luck with non-tech companies. as their labs -- have been performing very well. it's a historic high as ipo price, the fact that we have bright spring at the beginning of the year and they haven't been like performing that particularly well was kind of slightly worried. it's nice have non-tech companies to test the market and see whether investors are receptive to those. sonali: markets being tested. a number of companies filing

here. tell us about second pipeline. >> we don't want them to cross the line to actually launch it and to successfully price well and trade well. everything is doing good after this first quarter. so people sentiments are high given it and investors feel like they can make money from the ipo. sonali: how much of this is the ipo pipeline coming back? versus how much of this is just trying to front run the election and get out the door quickly before any potential volatility? amy: there is a bit of that but at the end of the day, these companies like rubric, they have been waiting since 2020 and 2021. even like viking. during the pandemic, it wasn't great for their business. but now, their revenue has jumped back.

so revenue for viking jumped 48% over the last year. so it really shows that there is a pandemic kind of recovery story to be told. but definitely second quarter is a great timing because there isn't much going on politically. but then third quarter-wise like when things like goes closer to the presidential election and also like not only presidential election but also rate cuts. so there are a lot more macro economics in political issues that might introduce volatility to the market. and so people may be aware of that but how much will it affect individual i.p.o.'s? that's up for debate. sonali: we'll have you back very soon. thank you. next, we're going to talk about a favorite topic of mine, hedge funds. some of them are bouncing back. this is bloomberg.

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♪ sonali: this is "bloomberg markets" and i'm sonali basak. and it's time now for the wall street beat. stock picking hedge funds are back for the first time in two years. and so are multi-strategy managers. so much them are having better times now. schoenfield had the best and in the front world, q.r. fund called double-digit return so far this year. and we're going to get a gauge of the whole industry with alanna weinstein and finds talent in the hedge fund place. really curious about what you're hearing now that we have all the numbers in for the first quarter on what's working. >> let's do a what's hot rick tor scale about that -- richter scale about that. multi-managers continue to be an area of desire and focus, particularly, of course, goes

without saying the large established managers like citadel and point 72. those guys are either closed or being extremely deliberate about how they take in capital. so you mentioned schoenfeld, i was pleased to see them leading the pack this year. because the last two years were tough and i think that's the result of the guys who were accepting capital because on the back of poor long-short equity performance in 21 and 22, capital flow would be an understatement. so they had a challenge in absorbing that much capital and in hiring truly great talent in a very short time to deploy it. long-short equities is doing phenomenally well in precisely the funds that had a tough time in 2021 and 2022.

so hot, but i think be careful you don't get burnt because as we saw, those funds tend to employ a go big or go home strategy when it comes to concentration, sub sector tilts and it will be interesting to see when the tide turns which it will and we've seen stocks turn before fundamentals do and, you know, they'll need to be able to respond to that so they don't get caught sideways the way that they did then. so proceed with caution on that. sonali: yeah. really curious about that. because how long does a fund have to really be performing well before it could start to attract top talent again? how well do these strategies have to do before they invoke for people to flock to those managers? ilana: what talent wants is consistency of returns. it's not a win big-lose big but rather a fund that can really

put up the goods year in and year out. and there are very few funds that have been able to do that and i want really goes to building an ecosystem that makes the people that they hire. so this is a really important point, better by virtue of sitting on the platform. so, it's investment in systems, risk, technology and continually evolving that. it's looking at who their top analysts in p.m.'s are and looking that to incorporate making people better and moving them along the appearance curve such that they are the best experience of themselves. they're taking a good hard look on the how they're winning, not resting on your laurels and incorporating those lessons in terms of making the firm better. sonali, it's everything. every aspect of what they do.

sonali: so, you're talking about a lot of investment funds have to make and of course you are your people. you know that in this world how competitive is it out there? people are starting to bounce back. how easy it is to bring people on or hard, rather? ilana: i think it comes back to two questions that talent asks. the smartest people in the industry -- when we say talent, i want to be really clear. it's often used with people. there aren't that many truly talented people. that's been true always. and i think the best people in this industry ask themselves two questions when they're making a move. the first and it may surprise you i'm not even going to mention compensation here. the first is will i be better by virtual of making this -- virtue of making this move developmentally? and the second question is is there more opportunity at this place that i'm going to relative

to where i'm at? or is it easier path in order for he to achieve what i want, i.e., not much of a headwind? because at the end of the day, compensation, the guarantee is a year or two and then you're out and then you're on your own so to speak and you need to put up the goods. and the question becomes are you really set up for success? how do you develop? and what are the resources the firm has to get you there? sonali: one big controversial question is pester fees. it's been more of a question for investors and with or without them, how do the top talents really view that? if you don't have them, is it worth going over? ilana: they're a double edged sword. part of the net performance that took in so much capital and grew so quickly is they hired all these people that raises their expenses which also raises the bar for what the return has to be, right?

so if you can't perform or it's not a sustainable eke and talent recognizes that. pass-through fees help but there are more and more funds that have a pass-through structure. what they're looking for is sustainability. and that this is a place that will consistently win. and also, really prioritizes development from within. it is really compelling that citadel can say that two thirds of its p.m.'s started as analysts or associates. ok? what that means first they are manufacturing their own alpha makers. and that's how you get out of this merry-go-round of everyone hiring from everyone else because you're developing people from within and when someone leaves, you have someone sitting there that you know what they're capable of. sonali: what are you watching as we enter the second quarter? books are closed on q-1.

what's next? ilana: in addition to multi-manager performance, i am so excited about credit. i continue to think it's an incredible growth story. i was -- i knew there was enormous activity last year but it may surprise you to learn 150 billion dollars went into credit alone and there were 20% more funds in this strategy in 2023 versus 2022 and the market is increasing. sonali: it's an interesting time fixed income. ilana weinstein, we thank you. leaving you with a check on the markets here before we let you go. we have a 1.3% move in the s&p 500. 1.6 in the nasdaq 100. both indices still down on the week. the two-year yield still getting a little bit of a lift here,

above 470 on the day. we are sitting at the highest level since november. busy week with inflation data. for today, that does it for "bloomberg markets." have a great weekend. this is bloomberg.

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>> from the world of politics to the world of business, this is "bloomberg balance of power."