caroline: from bloomberg world headquarters and -- in new york and from right here in london, i'm caroline hyde. job: stocks sold, s&p done the most that we have seen since april 1. the question is --"what'd you miss?" caroline: stocks finishing around session lows, and of course, inflation, sticker shock.

investors new pricing would -- prices were rising. used cars, airfares seeing gains. prices moving higher as the economy at last sought to reopen, but tomorrow, disney reports earnings. before we get into all of that, let's start the inflation reports. digging into all the intricacies and the used car market caught your attention. joe: all these years, i've been trying to tell romaine inflation was not a myth. maybe he believes me today. on a sequential basis, pretty big. biggest since -- what? 1982 on a month over month basis? and a big move on car and truck rentals. a lot of these related to reopening's but definitely

hotter than expected. romaine: and the fact that they are related to reopening, related to the idea this could be transitory. joe: everyone watching that used car number, the thing that surprises me -- maybe it shouldn't, but it did -- is that the end of last year, we were talking about used cars. we were like, ok, they jumped because -- i don't know -- everyone moved to the suburbs and so forth. you expect that you get that spike and supply and demand start to balance this out, but it really seemed to be kicking into overdrive. what is causing that to continue to rise month after month? >> i figure you have a fleet of 100 used cars you had a year ago and you were cashing in today. it is a confluence of crazy events right now. you have a semiconductor shortage hurting production of new cars, of course, so people who want a car, maybe they cannot find what they want in the new car market, and rises

are rising in the new car market. that always has a direct impact on the used car market because they do compete with each other. people will find cars one or two years out of lease -- people will find used cars one or two out of lease and by that instead of new cars. rental car companies cannot get the you -- cannot get the cars they want because they cars -- the cars they fire are the ones with production that has been hit most by the semiconductor shortage. everyone is just buying cars right now, and in april, there was a 52% rise in wholesale prices. even the old rental cars being dumped at auction, that is up 32%, so you have this massive rise with new world one/3 of the cpi increase. romaine: we know the demand is

there. talk about the supply side of the equation. if any of these companies are willing or even capable of ramping up their own production. >> at the moment, they are not. they are trying to get every semiconductor chip they can and dedicating those to the plants that make the most profitable vehicles. that means pickup trucks, suv's, vehicles, the stuff that commands the most margin. the chevy equinox, bread-and-butter vehicle for a lot of families call so -- for families and also for rental companies like avis and hertz. once they are there, they can get those out and shipped to quickly, but they just don't have the semiconductor's to boost production right now. it is not a matter of running more over time. joe: great stuff.

our to bloomberg's david welch. i'm glad you mentioned that rental car aspect. this might be my favorite story of the year. i've decided. caroline: wow, high praise. joe: yeah, i know. catherine doherty is with us. the reddit or's -- the redditers and robinhooders were buying this last spring. everyone was saying they did not know what they were doing. a year later, they are entirely vindicated. catherine: that's right. 99% of the time in a bankruptcy case, i would say the shareholders are getting nothing out of reorganize companies. this is a different scenario where not only are they getting something, it is actually much larger than what anyone could have ever predicted. it has to do with a number of confluent events.

david was talking about the rebounds and also the prices that are increasing for used cars, so these shareholders were buying into the company, and they always said, we're in the money, and there were others that if you look at the bankruptcy plan for pointing out, you are actually slated to get zero. you are slated to come out of this with absolutely nothing. a bidding war between some of wall street's biggest investment firms pushed up the price and it actually came down to which of these two groups -- there were two competing proposals -- would give more value to shareholders. today, we saw the outcome from that. the company has chosen a group that includes night had capital, and that has won out and will give shareholders what is being valued at almost eight dollars a share, and that is significantly higher than zero.

romaine: incredible. katherine: everything going up, up, up. caroline: eight dollars a share. they are not trading at eight bucks right now, but they surged 50% on the day. where was all the buy-in in generally last year? >> if you look at the actual proposal and go through the terms, the reason that is not trading quite as high as there is a combination of cash and warrants that investors can get, and some are looking at the warrant part of this plan as being potentially dilutive, meaning it will not actually be eight dollars per share. it could be lower. i think that his wife is its pricing in lower than what you are seeing for what people are projecting. eight dollars is really the high end of the range, but still, if

you look at where this stock has traded in the last year, you can see that there's a lot of enthusiasm for the name. caroline: as there was back then. great analysis. coming up, more on that search in cpi, soaking -- stoking inflation concerns. this is bloomberg. ♪

caroline: disney set to report earnings tomorrow after the bell . some are viewing it as kind of a

barometer. disney's business model was a prime example of what was worst hit by the pandemic -- movies, cruises, theme parks, sports all shut down. >> the tourism industry in central florida is what makes up the bulk of the business, so it is and absolute -- it really is a tragedy for thousands of workers and thousands of floridians that are in desperate need of help and unable to find work. caroline: but it was not all bad for the company at least. disney+ took off as people stayed home. >> 95% of the population in 12 of our top global markets engage with our content over the past year alone. caroline: what has been a long year for the company cutting thousands of retail jobs to a

major retail reorganization. vaccinations are helping to ease concerns about the pandemic. >> we are thrilled with the response we are seeing from guest in terms of future reservations and intent to come back to parks. caroline: this pent-up demand being seen not only a disney but across the landscape. >> there are places certainly around the u.s. that are virtually sold out at this point. caroline: disney is set to report earnings, and the result will be a glimpse into a slowly reopening economy. joe: obviously, lodging and travel a core part of disney's business. we did see prices rise across the country. still not back to precrisis levels in some of these areas -- lodging, airfare, apparel -- but

moving up pretty rapidly with that reopening. joining us with more insight, bloomberg's senior economic economist. cpi obviously came in harder than expected, but it really did seem to be driven by a handful of reopening categories. even the car category we talked about in that last segment -- what does that tell you about how to think about if this will be something sustained? what kind of a one-off price increase with this return to normal? >> the size of the surprise today does not really mean that it will not be transitory. we do think that it will be transitory. it may last through the summer. it may last well into next year, but at the end of the day, it will still be transitory. it is driven by a demand pull

and supply push. as you said, it is concentrated in certain categories. 60% of the moves in the cpi index came from just five isolated categories such as auto prices, auto rentals, and some recovery in the services sector, so i think that will be transitory. romaine: if you are a glass half-full kind of person, you can look at some of the inflationary data points and see that a lot of that is tied to consumer spending. that seems to be relatively healthy. a retail sales report is coming up i believe on friday. is there a sense that as long as the consumer is driving some of these inflationary trends, that that in an of itself is still healthy?

>> well, it is healthy, and it is interesting you mentioned the retail sales report. we may see some downward surprise, since we have had a lot of surprises over the last week. i think it could be a reflection of some rotation of economies into services spending, so i would not necessarily look at the retail sales report as the best piece of news if the surprise is to the downside. i think what is really important to watch right now is how services are recovering. at a lot of different services, things like recreation and the disney parks and things like that that are reopening, i think consumers will spend a lot in the services-driven economy, and that is what really matters.

that is what will drive growth into the summer and into the second half of the year. caroline: how long is transitory? >> in terms of the base, we will seek moderation in 2022. the higher we go in terms of inflation this year, the lower we will get to next year, so i think, you know, at least another several months, but we will get a clearer read when we start getting a better sense of the labor market. right now, the labor market is disrupted by up mentored unemployment services, school closures, and so on. romaine: we will catch up with

you soon, i'm sure. still ahead, we talk about how the latest economic data, including that inflation data, make reflect what is going on at the white house. the chief economic advisor to the vice president talks about what is going on and how they will react to it. that's coming up next. this is bloomberg. ♪

joe: a surge in inflation seen by some as a political threat to president joe biden's plans for new federal spending programs. the news comes on the heels of friday's disappointing jobs report. joining us now, the financial advisor to the vice president

and former chief advisor at lackrock. we could sit here and talk about transitory and say this is related to reopening. nonetheless, people are noticing that the pricing for a lot of things has gone up. there is this something you are thinking about politically when making the case over the coming months about a brand-new investment program needing to win votes with a narrow margin in both houses of congress? how does that play with messaging to politicians? >> we are staying focused on the economics and the overall strategy. the president and vice president have talked about there being two major prongs of our economic strategy. first, around rescue, around recognizing the whole we were in by virtue of the pandemic, and the american rescue plan focused squarely at that -- getting shots in arms, getting relief into the hands of families and businesses, but we are now looking to washington -- we are now looking to, here in washington, that next stage.

that is, economically, an entirely different problem we are looking to resolve. that is a multi-decade, multiyear investment, and our infrastructure is designed to allow the economy to grow faster, designed to allow that growth to be more inclusive, designed to take on the challenges of climate change. that is a long-term plan help -- helping to build back better. romaine: i'm wondering about the conversations you are having their in the executive building about the pace of economic growth and the idea that by adding these programs, you create intentionally maybe a little too much stimulus, even if it is not called stimulus. there's the idea you are throwing logs onto the fire, and this seems to be what people are concerned about. >> again, i would resist that

characterization. take the american jobs plan, for instance. that is a multiyear investment that is intended to over the next eight to 10 years transform our transportation infrastructure, our energy infrastructure, our broadband capacity, and it will be paid for in full through a set of tax changes on the business and corporate side over the next 15 years. again, the right frame of mind is not stimulus. it is not about responding to the immediate moment. it is about investing in the economy after decades of underinvestment. making the economy more productive, more inclusive, over the next decade and beyond. caroline: i hear you on the inclusion part of it. but the fact that inflationary pressures drive out the cost of food, the cost of gas, the cost of things that the lower income can least afford price pressure

on -- how do you square that? how do you ensure you are not hurting people you are trying to help? >> again, i would busiest that characterization. when we look at the inflation trends today, what we see is evidence of an economy that is rapidly normalizing coming out of the pandemic and a reflection of having gotten a lot of shots in arms and allowing behavior, allowing social life, allowing travel to begin to get back to normal, under the hood of this inflation trend. we have said for some time we expect to see transitory inflation, in particular around areas of the economy that were especially hard-hit by the

pandemic, and i think in large part, that is what this is. a reflection of the fact that people feel more comfortable getting back into the economy, getting back into travel, getting back into moving again, and that is what we think was ultimately responsible. joe: there is clearly some tension about if the ui expansion is contributing to a labor supply shortage. record job openings, pace of drug creation more than expected. i don't think the data is a slamdunk, but there does seem to be some ambiguity. with the white house be open to legislation that would allow job takers to take with them a bonus as part of their future ui? >> am not going to get out in front of the legislative process. when we look at the data, we agree with you. it is not obvious that ui, with the data we have in hand, is having this effect. that said, we recognize this is a moment when the economy is changing very rapidly. this is the historic moment. this is the unprecedented moment. this is a moment where the

economy is changing day-to-day. we are very much vigilant around this, paying attention to conditions on the ground day today, given how rapidly things are changing because we recognize the data we have in hand, while not conclusive, is a snapshot of an economy that does not exist anymore, in some ways. caroline: "doesn't exist we want to thank you very much. chief financial advisor to vice president harris. thank you. stay well. joe, i'm sure you are watching not only after that important conversation some of the inflationary pressures we see, ppi out tomorrow, but probably doge coin. joe: i'm watching the entire portfolio of dog-based meme

coins. we will see if they pare back. caroline: romaine is silent on these things. romaine: "bloomberg technology" is up next. have a great evening, everyone. ♪

>> from the heart of where innovation, money, and power combine, in silicon valley and beyond, this is "bloomberg technology" with emily chang.