♪ >> most forecast suggest at the end of this year, we will be better than we were projected to be before the pandemic. >> we basically rebooted the economy, turned it off and shut it back on, and it is coming with a lot of messy friction. >> we are seeing a demand shock the likes of which we have not seen since world war ii. >> the last thing in the world i really care about is that wages are going to explode. they are not. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: it is payrolls friday. from new york city, for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. equity futures up 0.2% on the s&p 500. the payrolls report 90 minutes

away. the estimate well known at this point, one million. tom: of course, michael mckee speaking with the president of the minneapolis fed. you have secretary walsh later on the morning on one of your other properties. i'm really interested in the market reaction and the de- linkage we see between boom commodities, the stock prices yesterday, and the oddities of the bond market. it is a true decoupling to me. jonathan: energy equities up, bank equities rallying. we have seen the story in the commodity market. all-time highs on copper, big moves on crude. yields on the 10 year, 1.57%. the curve flatter, not steeper. tom: liz ann sonders moments ago on twitter makes it clear it is across everything in debt. she notes the 30 year mortgage, 2.96%. i didn't know that. you wonder why there's a housing boom.

that's one reason. jonathan: at the moment, we need to talk about a $120 billion qb program month after month -- qe program month after month. lisa: here's the question. does any payrolls number actually matter if it doesn't signal a change in said stance? ultimately, -- in fed stance? ultimately, that is the question. how will they interpret this number? jonathan: we get that jobs report in 90 minutes. we are up 10 on the s&p 500. we advance through 4200, up 0.25%. i will do it for you, tom. go to cash. [laughter] tom: what are we down, 1% from record highs? jonathan: we are not far off all-time highs on spx. in the commodity market, crew just off a $65 handle, up a little more than 0.1%. record highs and copper, in iron ore -- in copper, in iron ore.

lisa: the idea that you really can't keep up with supplies quick enough. at what point does this change how much people are going to look to supply these industries? at 8:00 a.m., the payrolls report. we have a massive jobs deficit to overcome. the idea that 37% of leisure workers still have to come back into the workforce to get to where we were pre-pandemic, just to put into perspective these monster numbers trying to make of a monster gap. at 11:30, president biden will be speaking about the jobs report. key question, how much he addresses the claim that companies cannot hire workers fast enough. that perhaps the stimulus he injected into the economy has helped keep people out of the labor force. how will he address that as he tries to get forward some of the infrastructure spending? at 12: 30 p.m., treasury secretary janet yellen, who i am

sure has learned her lesson and will not talk about interest rates in any capacity, will join jen psaki at the white house press briefing. interesting to see how she frames up these payroll numbers we are expecting with the need for further spending. how she talks about inflation, wage pressure, because ultimately, these are the issues defend is looking at. jonathan: they are looking to control the narrative, for sure. before we get there, what a lineup through this morning we will catch up with neel kashkari a little later this morning. servetus riemannian of bank of america -- 70 to subramanian -- servetus subramanian -- savita subramanian, ellen z entner. yields south of 1.60%. your equity market still doing ok and commodities.

it's just been wild. we've seen massive moves in bank equities as well on the s&p 500. yields have been stable, if not lower. curve has been flatter and steeper. tom: before we get to bonds, s&p year-to-date up 12%. dow up 13%. i think that is a double digit market. jonathan: energy equities up almost 40% year to date. wow. priya misra joins us now, td securities global head of rates strategy. he heard a bit of the conversation there. we all want to get back to normal. the question is just the same. why aren't yields higher? priya: there's just one answer, it is the fed. it is the fact that we are getting all of this very strong

data, but you can't extrapolate. we were expecting this boost in economic data, but the fact is that the fed doesn't believe, or doesn't know how substantially long will it last, which is why i think the fed is telling us we are still very far away from our goal. if the fed continues to buy one hon to $20 billion every month, they are containing the entire yield curve. i think if you decompose 10 year treasuries, it is real rates that have declined. i think that is what is telling you the rates market has heard the fed. but now it is all going to be about the data after this reopening related boost. so what does it mean to labor? the data is important, but it is really the data in august when we can say the reopening is behind us. tom: i think you've got one of the toughest jobs on wall street right now. if i look at full faith in

credit worldwide, but let's focus on the united states, we might identify a decoupling. does it go back to the complete mystery months from now within the isl and framework, the classic keynesian framework, which we don't know real economy and we can't price it? priya: at some point the fed is going to take a step back. they've told us there signal well in advance. it doesn't give me a lot of comfort because the market will react when that signal comes in. as we have to find out the market clearing price of interest rates, of every risk asset, i think that is when the tension will come in. the market liquidity is not the way it was in 2013 and we had the taper tantrum. deficits are very high-end it is going to stay high next year as well.

tom: as priya talks like a grizzled pro come up we talked about -- pro, we talk about the yield, and it is nuts. lisa: people are expecting a taper tantrum, like you say. how do you prepare for it when the fed is saying, how significant could a taper be? bond needs to be pretty set. could we get a hawkish surprise at the august symposium in jackson hole like some people are expecting? how violent could this move be? priya: i hope the fed has learned from 2013, so the pre-messaged. they say is going to be a really gradual taper. if they are able to message that

the exit will be gradual, there's a lot of steps to do before they can hike, i think they can prevent as violent a repricing. i think it is going to depend how the market is at that point. we have a lot of supply. as the market has to take down auction after auction, i think real rates are going to start to head higher. so if at the end of jackson hole, with rates higher, with some repricing done, you don't need as much of that move to find that marginal buyer of treasuries. jonathan: what is the balance of risk around this payrolls report at 8:30? is there some asymmetric risk there? do surprise with downside surprise more than upside surprise? priya: i think the market is expecting a good number. if you get a week number, particularly if it shows the recovery is not inclusive, it is going to push the exit even further out in the markets mind. i think everyone is looking for a good number, so we will get a

bigger number in risk assets. jonathan: priya, thank you. the head of rates strategy over at td securities. right now, your 10 year, 1.57%. your two-year, 57 basis points. tom: we are jumping back and forth, the current yield versus adjustment of place -- versus inflation adjusted yield. all parts are a mystery right now. jonathan: let's focus on the nominal right now. my question for the last several weeks, several months, how big is the data need to be to get that two-year to respond? that is what steve englander is saying. think you need something over 2 million to get the fed to recalibrate expectations. for all the talk of a credit ability test -- a credibility test, that is where it will show up. tom: these people don't want to talk about string theory, about moving averages. they don't get out front of

where chairman powell is in his really serious with possibilities. jonathan: we only had one payrolls report. of course, we had a lot more data than that. lisa: what priya said is really telling come of that bad news is good news. that is what we may see if there is a disappointment. bond yields come down, price up, equity assets rally because the faith in the fed gets reopened. it raises the question that the fed is really worried about, and raises questions about how much more froth we build into markets. jonathan: where i have a little more uncertainty is around the equity piece. the financials, the energy players, if you put some doubt into how big the demand was right now, i'm not sure how that would be supportive of what has rallied this week so far going into that number. lisa: but you could get a rally in big tech, and some of the other laggards that made up the bulk of the gains we have seen over the past three years.

jonathan: we seen a bigger waiting on the s&p overall. coming up at 8:00 a.m. eastern time, servetus a riemannian -- eastern time, savita subramanian. alongside tom and lisa abramowicz, i'm jonathan -- alongside tom keene and lisa abramowicz, i'm jonathan ferro. this is bloomberg. ♪ ritika: but the first word news, i'm ritika gupta. economists expect a sign today that fewer business restrictions are bringing more americans back to work. the april jobs report is out at 8:30 a.m. new york time. it is likely to show that the economy added about one million jobs last month. in a report from the fed warns that investors are gorging on risk, and that could lead to stretched valuations and vulnerabilities in the financials stump.

fed governor -- financial system. fed governor lael brainard says the archegos capital implosion says more disclosure is needed. a petition demanding that the tokyo olympics be canceled gained support in japan. the government today extended the state of emergency to control the spread of the coronavirus. prime minister yoshihide suga has been determined to press ahead with the games. polls show most in japan want them canceled or delayed. imports jumped on surging commodity prices. exports grew 30% in dollar terms from your ago, and imports were up 43%. shares of adidas are rising. the german sports shoe company raised its sales forecast due to a rebounding china and online sales. it predict second go to revenue growth will hit 50% -- it predicts second-quarter revenue growth will hit 50%.

global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

pres. biden: every single thing, from the deck of an aircraft

carrier to a new building, is going to be built by an american company, american workers, american supply chain, so that we invest american tax dollars in american workers. jonathan: the president of the united states. sometimes in washington, it is far more interesting looking at the similarities between the two parties than the differences. buy america is where there is some real crossover. from new york city this morning, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. live on tv and radio, going into a payroll report one hour and 12 minutes away. up 10 on the s&p, 0.25%. yields unchanged at 1.57%. euro-dollar just a little stronger at $1.2074. wti north by a little more than

0.1%. the payrolls report, american workers, american workers. how many times have we seen that in a press release from this administration? tom: let's go there now. with it, leading the zeitgeist this morning, american unemployed. mario parker joins come our white house reporter. i get american workers. is the progressive element of the party on board that we need to jump start american workers? mario: yes, absolutely. in fact, the progressive part of the party is keeping the fire under president biden to rework some of the social safety net as part of his legislation. he's got the infrastructure, the traditional bridges, roads, etc. but they are also making the case that people are infrastructure as well. that is causing a little bit of tension, of course, with the republicans, who would like it

to just be traditional. tom: this is the nuance. it is not just the republican tension. it is the moderate democratic party tension. there is a conflation since bill clinton of is it welfare or is it social aid. but we've almost at a democratic party talking out of both sides of their mouth. mario: that is what makes it very tough for president biden. not only does he have to contend with republican opposition, but he's got to keep his caucus together. he was barely able to do that with the relief package earlier this year. these infrastructure bills are going to be a tougher lift for him. we are seeing tension with senator manchin, other moderate democrats as well. mario: how important -- lisa: how important is today's employment number going to be for president biden in terms of how he gets them on board? mario: it is fascinating. we are expecting unemployment to

fall, something a president would usually want to come out and tou. but if you -- and tout. but if you tout that too much, it dampens the argument for why you need for trillion dollars in additional spending. so he's got this delicate dance that is really rare because he's got to tout the number and say he's made progress, but at the same time, make a compelling case for the american people as to why there need to be improvements as well. lisa: there have been a lot of rumors about him possibly replacing some of the top members of the federal reserve at a time when the fed seems to be adopting policies that absolutely support his efforts to continue to spend. can you talk a little bit about what the thinking is in washington as to why biden would inject a changing of the guards into markets right now? mario: as you alluded to earlier this week, senior advisor jared bernstein kind of demo word -- kind of demurred on the question as to whether biden would support jay powell for another

term. the biden administration saying that they want federal reserve board seats. they want other places that the government to be more reflective of the country. they want to put an emphasis on diversity. that has been the primary argument as to the fed board appointments or any other administration appointments. jonathan: -- tom: do your colleagues in washington expect many states or a few states join montana and south carolina in saying enough to this government aid keeping people off the payroll? what is that trend as we go into the weekend? mario: that is something that is causing concern for the biden adminstration. we saw something similar when he was vice president under the obama administration. so that is something of concern to the biden adminstration as well. lisa: right now, when we talk about the agenda, we have been talking also about china and how

joe biden is taking a similar tactic to former president trump when it comes to the restrictions on that nation. can you talk about any further actions you are expecting in upcoming months that could potentially either build on what president trump did, or perhaps take a slightly different tone? mario: that is a really good point. that is exactly where we see some similarities between the current president and the former president, his hard-line stance. of course, we broke the story yesterday that president biden is going to keep in place some of the trade restrictions with china as well. his speech yesterday in louisiana, he made the case that this infrastructure package is necessary in order to compete with china. i think he used the phrase "china is eating our lunch." these are some of the signals president trump used as well to stoke american competitiveness and take a hard line against china. jonathan: mario, always great to

catch up with you. have a good weekend. mario parker, our bloomberg white house reporter. just going through some of the similarities between the two parties right now, china being one. buy america connected to that. where the differences are on the labor market gets a little bit more compelling. some tension between the governors, republican governors of south carolina, of montana, on the additional unemployment benefits they are pretty forcefully saying is holding back the labor market from recovering, as we work our way through this boom. tom: this goes back to something that had tons of mail on over tons of years, and that is you can't have the same unemployment benefit for brooklyn, new york that you have for brooklyn, tennessee. the standards of living are just different. i've never heard a good explanation of how you solve that. i don't think it is surprising it is montana and south carolina, and off the top of my head, 20 other states where that is a lot of money. that benefit is a lot of money giving the average labor --

money given the average labor salary. jonathan: that was some of the complaints in the package. the problem is, once you start doing that, you really start to affect the pace of the rollout. tom: is it a big weekly supplement in queens, new york? jonathan: clearly not, compared to some other states. for neel kashkari, do you know what he is going to say? because i've heard him say it before. he would say if you want the workers, pay them more. they will come. tom: but he's got to be careful what he says with our michael mckee after secretary yellen set up a clinic on what not to say. jonathan: i'm not sure mr. kashkari has ever held back. do you expect them to hold back a little bit later? lisa: no, i don't. it is very hard to come to a conclusion about what influenced this extra stimulus payment actually has because frankly, when you talk to economists, it is a mystery. the frictions are incredibly complicated, getting workers

back on board. it is difficult to make some broad-based conclusions. jonathan: coming up, ellen zentner, morgan stanley chief u.s. economist. for our audience worldwide on this payrolls friday come on tv and radio, this is bloomberg. ♪

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♪ jonathan: the payrolls report 60 minutes away. going into it at 7:30 eastern, here's the price action. we advanced by 0.2%. on the nasdaq, about 0.25%. on the russell, 0.5%. switch up the board. it's got to be banks for me, not energy. the banks over the last week up by more than 4%, and this has happened as the curve has got flatter, not steeper. yields have come lower, not higher. your twos-tens over the last week is narrower by about five basis points to about 1.41%. get to this as well.

yields have been lower, not higher. the curve flatter, not steeper. even as we have seen continuation of the commodity rally, copper up by 33.39 percent year to date. that is not the lme price which has got to a new all-time high this morning. croup up by 33.49% to $64.77 -- crude up by 33.49% to 64.77. tom: we put up lme. someone messed up. jonathan: tom has a very different approach than maybe i do. [laughter] just want to make sure that is on the record. tom: the rate of change here is extraordinary and commodities. it is a story buried by the jobs

news today. jonathan: i think it is part of the reflation story, but to see nominal yields and inflation expectations breakout is real yields drop lower and we have not seen the corresponding rally in big tech, romaine is going to touch on that any moment. big tech has really struggled. i would have excepted more support from real yield for other parts of the equity market. lisa: if it -- it is difficult to correlate for me a more hawkish fed. jonathan: maybe it is more qe. maybe it is that. lisa: perhaps. jonathan: do you like the line from governor brainerd? you might have a disruption in the force. tom: the most philosophical jobs data. [laughter] jonathan: some big moves to talk about. here's remain for more debt here's romain -- here's romaine

for more. romaine: draftkings earnings crossing the wire. it was actually pretty good. they did raise their revenue forecast for the year, with the low end of that forecast pretty much right around consensus estimates. the shares flat in the premarket. the biggest decliner in premarket is appian, disappointing across the board. shares down 16% premarket. the biggest gain or premarket -- biggest gainer premarket, roku. they knocked it out of the park. the company reporting gap net income well above most wall street estimates. we know every company has to do with competition, but when you wake up one day and find out your competition's walmart, you get a little skittish. walmart is buying a small competitor that is a telehealth provider, so i'll mark pushing deeper into the health space.

we know amazon has also done that. we see an interesting reaction here in the shares of teladoc, good rx, and others. curevac and a lot of the vaccine stocks getting a bit of a boost. this is following angela merkel and a few other countries pushing back on the white house's attempt to put this waiver out there for covid-19 patent protections. finally, square shares up 2%. they reported earnings last night. cash app, that is really what it is about. going is also what it is about, really driving that company right now. tom: we will look at equities this afternoon after all of this economics this morning. ellen zentner joins us right now , with what she knows from her econometrics at chicago, is that it is about physics in the. that has been true back to the 19th century. we see the inertial force of moving back from a 14%

unemployment rate back to maybe 6%. what is the inertial force right now of this trend in unemployment? how strong is the oomph to get back to, say, 4% unemployment? ellen: if we find out later this morning that we move into this realm of one million plus jobs each month, at least for a time, we will continue to drive the unemployment rate lower and it will continue to be one of the fastest market recoveries we have seen. what is interesting is what happens with the labor force participation rate. you can get that rate lower very quickly if a lot of people have dropped out of the labor market altogether. it has to do with how we calculate unemployment. what we want to see is the unemployment rate continue to come down, but not necessarily so quickly because we are bringing a lot of people back into the labor force. i think that is the important underlying detail that we will be looking for in each monthly

report. jonathan: how much patience do you think we need to work through these distortions? when you get a clear picture of what is happening in this labor market? ellen: i think we are going to have to wait until probably the fall. that doesn't mean that the fed is not going to see some further progress toward that substantial progress they are looking for. certainly if by the time of the fomc meeting, they have whittled away half of those jobs or brought back half of those jobs lost because we are getting in the one million plus jobs range per month, certainly that is much further along in terms of the progress they want to see. but i want to see the extended unemployment benefits expire at the end of september. i want to see that workers weariness of going back to work because of health concerns continues to wane. those have to be out of the picture, and then we can get an underlying sense of what the crosscurrents are that may still be lingering, whatever might

hold us back from gaining that full employment. jonathan: i want to talk about that moment because i think that is really interesting. the execution risk around the demand picture at the moment. the estimate is massive. demand is huge in this country. do you think there could be a problem meeting it with labor supply, given what we are hearing out of montana and south carolina, the pmi's come the labor shortage? is there a risk that could show up in the data? ellen: it is showing up in some of the business surveys, where labor cost indices are going through the roof. part of that is that mismatch when you have the economy that is opening up more slowly then demand is coming back. that mismatch can create those price pressures. the real question is going to be are those temporary, so as we bring more labor back, do those cost pressures come off, or do they linger longer? i believe some of those labor costs are more sticky. the fed right now is assigning

an assumption that that is 100% transient. it will take some time for them to realize that a lot of that might be sustained, and i do think it doesn't necessarily mean margin pressure for companies. i think this is one of the first times in a long time that there will be pricing power for them to pass that on into final goods prices. households have a lot of cash. they are very price tolerant right now. lisa: what is the fed getting wrong in respect to saying this is transient relevant sticky -- transient rather than sticky? ellen: it is not really their reaction function they are getting wrong. you don't want to start tightening up monetary policy and then find out later, when you try to battle low-inflation for so long, that you jumped the gun. these very well could be transient pressures. i think what we are looking for that may differ from the fed is that this is a very rapid recovery with a lot of fiscal and monetary stimulus behind it.

that can create these inflationary pressures that look more cyclical, and we think we are much later in the cycle in terms of the way this economy is behaving then the economy just entering expansion. so you do get cyclically sensitive inflation more quickly , and those are the more sustained parts. tom: you absolutely nailed the heating above the economy and the mystery of where we are q3 and q4. george sarah vallas -- at deutsche bank come the international fx strategist, pointing out the lack of tapering and enormous fiscal policy. as we go into this jobs report, how alone is chairman powell? how alone is congress internationally? ellen: i do think it is a little odd to see other central banks moving towards the tapering or moving into tapering.

some of this is that the fed framework is designed to be extremely lagged in the business cycle. that said, i do think we are going to be talking tapering. i know chair powell is still straight arming that discussion, but you've got other fomc participants starting to say should be talking about tapering soon, and tapering is not about tightening monetary policy. it is about taking your foot off of the accelerator. so i think this jobs report is just the start of a string that is going to be strong, and as we march toward that summer meeting of the fomc, they will be opening these doors and taking baby steps towards having those balance sheet tapering discussions. they need to start tapering well before they start raising interest rates, so i do think that discussion is coming. jonathan: always great to catch up. good to be with you on this payrolls friday. can we just pick up on your final point there? i think it is important. i spoke to stuart kaiser

recently about that. portfolio managers can't just say six month from now is going to be transitory. they have to trade the data as it comes in. he says they need and want an inflation hedge right now, and understanding how a portfolio manager looks at it and how i policymaker looks at it is really key to understanding how the market is going to react. they are two different conversations. tom: taking that over to the physics of the pendulum is a distinction between tightening, which is the gloom fear, versus deceleration of the benefits that they have done. why can't they decelerate and get back to normality? there's a camp that says they are not going to do it, and a camp that says it could work. jonathan: we had this conversation eight years ago. tapering isn't tightening. that is going to be the conversation later this summer. lisa: but i think priya misra put it well. if the fed doesn't signify they are thinking about at at this point -- about it at this

point, everyone will try to exit all at once. that is the calculus. jonathan: let's take a couple of months off. i will see you later in the summer. that seems to be when the conversation will change. tom: what a shock, jon taking a holiday. jonathan: we will have near kashkari -- have neel kashkari of the many applets that. you've had more vacation -- of the minneapolis fed. you had more vacation than me this year. lisa away all next week. what is that about? lisa: can you believe i am getting time off? jonathan: basically a retirement. [laughter] this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. president biden stunned european allies and the drug making industry with his support for waiving patent protection for coronavirus vaccines, a reversal of long-standing u.s. policy that it's companies' intellect ual property is sacrosanct. but there are signs that the

president is interested in a more modest compromise. germany has said it opposes a waiver. a warning from the fed. it says the rising appetite for risk is stretching valuations and creating vulnerabilities in the u.s. financial system. the central banks as prices could be vulnerable to significant declines if that appetite falls. fed governor lael brainard also cited the implosion of archegos capital and called for more hedge fund disclosures. british prime minister boris johnson has dealt a major blow to his chief political rival. johnson's ruling conservative party won a crushing victory in the palm entry dixit -- in the parliamentary district of hertfordshire. the loss is likely to intensify presser on -- intensify pressure on labour leader keir starmer. copperhead a high on the london metal exchange. copper -- copper hit a high on the london metal exchange.

copper is considered a bellwether metal. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

♪ >> we would have to have some severe disappointment in terms

of the outcome, so case in point would be a return of covid in some way. we are not forecasting that at the moment. we don't see the evidence for that. it would have to be something that would cause that negative shock. jonathan: that was the bank of england governor speaking to francine lacqua on what it would take for qe to extend beyond this year into 2022 at the bank of england. good morning on this payrolls friday. alongside tom keene and lisa abramowicz, i'm jonathan ferro. equity futures up 10 on the s&p. we advanced 0.25%. yields unchanged, 1.5647%. in the fx market, euro-dollar, $1.2072. crude down about 0.25%. the numbers, you are familiar with them now. the median estimate on payrolls is a nice, round number, one

million. tom: about five times what a good month was long ago and far away. really looking forward to where we are here in 40 minutes. yesterday we announced the death of david swenson of yale university. he changed how all of us think about what do you do with a portfolio, what do you do in balance between sectors, this odd thing called factor investing, all devolving down to growth in value. dave wilson drives forward the conversation this morning. there's value and there's growth. dave: that's right. either you buy the stocks that are relatively cheap, or you b uy the companies with the fastest growth. we have seen a real reversal in the past eight months or so in terms of investor preference. it has gone more towards value, away from growth, after years in which the fastest growing companies were all the rage. what is interesting, true

wealth's chief market strategist is on board with the idea of focusing on value rather than gross, but he points out that it really comes down to two industry groups dictating this balance, finance when it comes to value stocks and technology when it comes to growth stocks. tom: so are you saying the value of today is different than the value of 20 years ago, and the growth of today is different than the growth of 20 years ago? dave: you would really have to go back to make those comparisons. it is clear, though, that these two areas have become increasingly dominant. when you look at technology within the russell 1000 growth index, it is more than 40% of the value of that gauge. finance also the biggest component of the russell 1000 value index. a little bit more modest at 20%, but if you switch to the s&p 500

pure value index, a gauge that really focuses on the companies in the s&p 500 with strongest value characteristics, you are talking about a number that is above 40%, so it is clear those new areas have increasingly become the focus. tom: you are on the equities side of things at bloomberg news. you have never seen a jobs report like. absolutely expert and airy. your thoughts, please -- absolutely extraordinary. your thoughts, please. dave: it really comes down to whether it moves the needle. tom: does it move the market? i've got to find an entry point, david. dave: you keep looking. about 40 minutes from now or so, we will have a better idea if now is the time. jonathan: dave, we've got to leave it there, as you to carry on your argument. dave wilson alongside tom keene. if we can pick up and talk about the financial stability report out of the federal reserve yesterday, this comment from governor brainerd.

"the archegos event demonstrates the limited visibility into hedge fund exposures, and available levels of hedge fund leverage might not capture risk." one point is this idea that risk appetite could be in charge of vulnerable price action and all of the above. the federal reserve is really shaping risk appetite at the moment, too. there's tons of pushback and a ton of snark, but i think there are legitimate concerns about exec a with the fed was trying to say and who they were trying to talk to when this came out. lisa: there's concern that policymakers are conflating hedge funds and family offices at a time when regulations are very different. this report came under a lot of criticism not just for that, but also for stating the obvious, that if you have risk appetite increase and you have really high valuations that could eventually become a problem. what goes up may have to come down at some point.

there were some really salient points in here, in particular about how very high levels of debt paired with high asset price valuations could be a toxic mix if there is some sort of deflation or some sort of withdrawal of stimulus. this to me as a real concern. in other words, what are the consequences of companies taking the q from the federal reserve -- taking the cue from the federal reserve and looking better for now, as long as stimulus is ongoing? there's a great twitter handy, bond vigilantes. they say april saw zero high defaults for the first time in two years, at the same time it was the fifth biggest month for high-yield issuance and history. of course, the majority of that going to refinancing. bank of america's take, reading upgrades are setting long time records. there's more to come. tom: lisa is way out fronttom: on this, the move of some of

those spread markets. i think it really underscores how absolutely the times are in the titanic debate we are having on "bloomberg surveillance" between the bulls and the bears. it is the oddest of times. jonathan: the one key input, if you were to pick one for risk appetite for the summer, i think this echoes the words of leon cooperman earlier this week. forgive me if i get this wrong. it's the federal reserve and the balance sheet. so if risk appetite is shaped by what the fed does with its balance sheet, it is kind of bizarre they were talking about risk appetite being elevated that leads to this vulnerability if it's risk appetite is being shaped by the federal reserve. lisa: basically it is using the passive voice when they are the active player, ignoring that factor. there's a question, when you talk about the corporate default rate, have these defaults been taken off the table, or have they just been postponed? in other words, will we allow some of these zombie five companies to default at some

cash these zombie -- these zombiified companies to default? this is a major fed policy going forward. jonathan: kit juckes captured this nicely. "the fed is, to all intents and purposes, warning about irrational exuberance in the equity market while keeping rates at historic lows in the middle of a once-in-a-lifetime economic boom." the take of kit juckes over at socgen. tom: i am looking at the real yield. you're getting ready for your show, the real zombie, this afternoon. jonathan: is that the rebrand? tom: it is a rebrand. there's no textbook i have that mentions a real yield of -0.89%. jonathan: i feel like a zombie by the time we get to this afternoon on a payrolls friday. coming up, savita subramanian of bank of america. the price target at bank of

america gets your attention. the s&p 500 through 4200. maybe you should keep waiting, tom. euro-dollar, one dollar $2067. your payrolls -- euro-dollar, $1.2067. your payrolls number 30 minutes away. this is bloomberg. ♪

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♪ >> the data is important, but it is really the data not right now. it is going to be the data in august, september, when we can say the reopening is behind us. >> our forecast suggests at the end of this year, we will be better than we were projected to be before the pandemic. >> we should all recognize that the economy right now is experiencing a demand shocks the likes of which we have not seen since world war ii. >> a lot of people left the labor force, and the question is, will they start to come back in? >> the last thing in the world i really care about is that wages are going to explode. they are not.