♪ >> there are structural changes going on in the economy. it becomes very difficult for economists to forecast with any degree of accuracy. >> no, we are not done with the adjustment to a shock. big shock down, big shock up. >> the equity market is telling you there are inflation fears all over the place for investors. >> we should be careful about jumping to conclusions. >> the fed says we should not worry about it. this is a new paradigm. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone.

a simulcast, bloomberg radio, bloomberg television, on a friday. thank you for being. . with us this morning in 30 minutes -- thank you for being with us this morning. in 30 minutes, we look at the american economy, all of the nitty-gritty detail of jobs numbers. jonathan: there is still a boom in this economy. there's tons of demand, evidenced by the cpi print we had recently and a payrolls report this time last friday. there's a ton of distortion in the miss kaz -- in the midst as well. tom: to me, it is about the partition of retail sales over to the pandemic driven online sales. in the coming months, does online sustain the growth they have seen? jonathan: look for the data coming from michelle meyer and the team over at bank of america. tom: michelle just went,

yahoo! steve sayed of at master ash steve set of -- steve sadove at mastercard really talking about interesting card data as well. we would do the data in a minute. both of us are watching the function, gdbr10, the 10 getting near zero. jonathan: that is your generic 10 year yield, inching near zero. we have been much lower than that. that's why for many people come the ecb meeting on june 16 it's a whole lot more interesting. if yields carry on climbing on the periphery, they have or had a really mice -- carry on climbing, on the periphery in italy, they've had a really nice move. tom: the first time i ever saw ferro on tv, he was in some cafe

and frank for doing a remote on ecb -- cafe in frankfurt doing a remote on ecb. jonathan: i think they care about the direction of travel. they don't want to see a bond market with yields going through 1%, and then we keep moving. they want to introduce some stability into the bond market. they clearly want higher interest rates. tom: they want a positive yield, right? jonathan: let's go back seven years, when president draghi first took rates to negative territory that -- that summer of 2014. for subsequent years and months, president draghi would talk about rates needing to be lower now, higher in the future. i've repeated that line many times because they have gone lower. they've gone even lower. they never came higher again. that has been an issue. tom: just now, we begin to see that.

maybe that is the song for june as well. let's do the data right now. green on the screen. three days of carnage. jon and i disagree on this. would everybody calm down? jon seeing a little but of damage. the fix from a 27 level comes in -- the vix from a 27 level comes into 23.8. jonathan: yields come at a couple of basis points. your high yesterday of 1.70%. we are at 1.46 isn't this time last friday after payrolls -- 1.46 percent this time last friday after payrolls. we've had some moves in this treasury market. we haven't gone to the highs of march, 1.74%, sure. but we've had some vicious moves up and down over the last week. tom: you are overselling it. there's no drama. lisa would say the pendulum of drama is not there. jonathan: i think we had some big data, a lot of misses to the

upside on inflation, to the downside on payrolls, and it has been volatile for treasuries this week. tom: i notice it is a better statistic right now, but i looked at turkish lira out to new weakness, and i really wonder if that was off of the challenges of israel and the palestinians. right now, lira 8.43, but i had an 850 statistic -- and h .50 statistic hours ago -- an 8.50 statistic hours ago. jonathan: jimmy lai, the hong kong activist, they are freezing his assets citing a new security law. tom: what does it mean for hong kong american domiciled, british domiciled banks? i don't get the d-link a jet that -- the de-linkage.

i don't buy that. jonathan: i think they will be voting at some point, and we are already seeing the data behind some of that. tom: we will have coverage on that, and look for our team out of hong kong with further coverage into their weekend and of course on their monday. look for that sunday evening in new york. right now, patrick armstrong joins, plurimi wealth chief investment officer. how brave are you in a friday in may? patrick: i'm relatively brave. i think you want to be positioned in equities trading below market multiples. some of the equities benefiting from the shortages that are creating the spikes we are seeing right now, so commodity producers, chip manufacturers. you can get a lot of stocks at

low multiples with growth. tom: there's 12 stocks trading under market multiples. i'm getting. [laughter] but where do you find the? -- find them? patrick: my portfolio right now is trading at 12 times earnings. tom: that's phenomenal. how do you do that? patrick: moderna. moderna is pricing at a times earnings -- at age times earnings -- at eight times earnings. everyone is saying moderna will vaccinate everyone, and then they will not have any avenue. i don't think it makes any sense . you can find companies, moderna, biontech, both trading single digits. in iron ore maker in australia. again, seven times earnings. these are things that are cyclical. but if you expect the economy to keep moving forward, you shouldn't mind cyclicality. if you can get them at single

digit pes, for me i am very happy with that. jonathan: you like the commodity producers, not to come out of the buyers. the chipmakers, not the chip users. the sox index is down about 12.5% from the highs of early april. what do you make of that? where do you find a chipmaker you want to be present in? patrick: i like a diversified exposure, so i likely asml, tokyo electron, sky works. i just think you have companies clamoring for chips. they can't get a hold of them. you are going to have strong revenue growth, strong margins. it will be expanding. the shortages, it is going to turn into hoarding. it is just human nature. they are not just going to buy

what they need. they are going to hoard them. that is going to lead to another wave of buying. i think this is extended for a little longer than we expect because no buyer once to be in a position where they can't manufacture their goods because they can't get chips. that is going to lead to more demand then you would expect. see it similarly with gasoline demand in the united states. jonathan: is it opening up demand from the chipmakers down to the smartphone makers? patrick: i think the chipmakers is where you want to be playing it. i think tech sold off because of higher inflation leading to higher interest rates, and tech is higher multiples. the chipmakers i don't think go into that. within tech, you want to be looking for some of the lower multiple stocks that help pricing power. i think the whole suite of chips makes sense to me at this point. jonathan: always smart. we didn't talk about europe this time. we need to do that next time.

patrick armstrong, plurimi wealth chief investment officer. to sum that up, buy the chipmakers, not the chip buyers, and the commodity producers, not the commodity buyers. tom: it takes courage because the other stuff is so popular. tempting is the right word. it is a really large conundrum. futures up 28. the s&p is nicely above 4000. jonathan: up zero point 7%, up 28 points. we are doing ok. tom: are we range bound, though? that is a philosophical discussion into the summer. lisa is down, down, down. what about range, range, range? jonathan: it is really hard to make the argument that the circular of schooling -- the

sick killer upswing -- the cyclical upswing in this market. we have seen some volatile moves in the market. where basic a back to where we started, in and around 1.62% on tens. tom: i was talking about should i go to lunch in soho. i think i should come downtown today. jonathan: i will beat you downtown, but i don't finish until 1:30. tom: seriously, shape up "the real yield" today. what is the theme? jonathan: the volatility in the data, and a question i have been exploring with various bond market managers, is whether this bond market has become less sensitive to the incoming data because the incoming data has been coming -- incoming data is becoming so bold how -- becoming so volatile. tom: what is this graphic? jonathan: that is a "bloomberg real yield" promotion.

1:00 new york, six :00 london, 1:00 a.m. in hong kong. [laughter] from new york city this morning, good morning. heard on radio, seen on tv, this is "bloomberg surveillance." ♪ ritika: with the first word news, i'm ritika gupta. the fighting between israel and the palestinians has taken a new turn. israeli ground forces are now firing artillery at targets on the gaza strip. meanwhile, hamas militants are still firing rockets into israel. more than 100 palestinians and seven israelis have been killed. republican senators say they are encouraged about the chance for a deal on infrastructure after meeting with president biden. one of the six republicans who went to the white hose called the disc up -- the white house, shelley moore capito, called the

discussions perry productive. hong kong -- discussions very productive. hong kong is freezing the assets of jimmy lai. it is the first time authorities have used the power of seizure granted by new security laws. lai and two of his former associates are scheduled to go on trial. singapore is returning to lockdown-like conditions at last impose virago -- imposed a year ago. singapore has been one of the most successful places in the world at coven containment -- at covid containment. 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. ♪

>> i was on the worry side about inflation, and it has all moved much faster, much sooner than i

the former treasury secretary larry summers nervous. you can watch the entire interview tonight at six clock p.m. on -- at 6:00 p.m. on "wall street week" with david westin. alongside tom keene, i'm jonathan ferro. lisa is back on monday. 12 minutes away from a retail sales print in america, which michael mckee will swing by and bring you some information on. your equity market up 27 on the s&p. on the nasdaq, the nasdaq 100 advancing 1.07%. do you want to put the dow, tom? tom: no, i don't need to do it right now. jonathan: that was just for you. you can pay me later that. on the bond market, yields coming in to 1.6369% on tens.

treasury firmer, tom. tom: very interesting. we have talked to some good economists about retail and what it means for the national gdp. how about retail for retail's sake? you do that with dana kelsey, kelsey advisory group, and joseph feldman joins us right now. i want to talk about the spirit and retail. i want you to pollute forward to home depot next week. hermes of france ready to put a gajillion dollars into a double storefront, and right across the street, manolo blanc is building another fortress. people are building into this recovery, aren't they? joseph: it seems that way, and the consumers are certainly building, too. we should get good numbers out of home depot and lowe's.

the consumer is definitely armed with cash. there's been stimulus payments, tax refunds coming out. everyone is filling a little better about the covid situation right now. it seems like there's been this pent-up demand for a while that has been starting to unleash itself, and we are seeing spending at retail. tom: how do you drill into the micro of this, mcdonald's or amazon raising wages? is all of retail going to have to lift up the wage? what does that do to margins? joseph: we are seeing wage pressure and freight pressure that all of the retail's been calling out. that is baked into the numbers, baked into the stock prices. i think a lot of us have been expect and this now, wage increases going forward. jonathan: is this due to a worker shortage? are some of these companies doing it because they think it is the right thing, or because they have no choice?

joseph: i think it is a little of both, to be perfectly honest. i think you are seeing it is more competitive out there. we are hearing more pressure on the restaurants high than the retail side in terms of getting labor back into the labor force, as people are still may be benefiting from some of the stimulus they have been provided. but it does seem like there is still a very tight job market, and people are out there, and if they want a job they can seem to be finding one. i do think we are going to see that pic up and normalize through the rest of the year, where we will see retailers start to be in better shape from a labor perspective. but a lot of them have learned how to operate more efficiently over the past year and a half, so we may not go back to full strength at all of the different retailers out there. jonathan: when you think about that labor market tightness, are there various places across the country where that tightness is more acute? joseph: that is absolutely the

truth. it depends on the markets. as one of the retailers i was speaking to the other day put it, it is a very big difference that the stimulus checks you might be getting in montana or wyoming versus queens, new york, and the impetus to get back into the labor force be different for people in different parts of the country. so we will have to see how that plays out. i would think that by the end of the summer, it feels like we are going to start getting back into a more normalized situation with retailers and the restaurants and lodging groups that are able to fulfill their needs with the. labor force. -- with the labor force. tom: we are buying from walmart, buying from amazon, buying things we never thought we would buy. jon ferro is buying bu shels of shortbread cookies from walmart. jonathan: i haven't had those for a long time. [laughter] tom: they are a british stable. jon has a few before every show.

and i can buy them from walmart. is that the new world, that we can just buy everything from these big-box retailers? joseph: it seems to be the case. the world has certainly shrunk over the last couple of decades, and we are able to buy and get access to lots of really great quality products. i think one of the strengths of the big-box walmarts, targets, amazons, coscos, they have been able -- costcos, they have been able to provide that to the consumer. jonathan: on a serious point, i'm with matt miller. matt miller said that if you don't do one day delivery, i'm not the pitting anymore. i feel that way in a big way, particularly over the last 12 months. when this first started, i remember struggling to get a delivery slot with amazon. i think that was true for so many people in new york city.

but once they started coming through, i don't think i have done a full food shop at a grocery store for a full week of eating for about 9, 10 months. i think it has been that long. i am just wondering how sticky some of this behavior actually is. joseph: i do think a lot of this will hold. i understand, as the recovery happens, people want to get back out, and they are going to start going to ball games restaurants and dining out, but there will be some element of people that are still going to keep a lot of these behaviors. as you said, shopping for groceries on lined -- groceries online, having them delivered. the pendulum will still be tilted towards eating at home more than pre-pandemic, which bodes well for walmart and target and the grocers and anyone that is really good at doing it online and being able to deliver it to you more efficiently. jonathan: joe, thank you. joe feldman, thank you very much. all my grocery shopping now,

very much online, almost exclusively. tom: i'm the same with my vermouth order. jonathan: yes, i'm very family arejonathan:. -- jonathan: yes, i am very familiar. did they tighten that up? tom: they tightened it up to one hour. [laughter] jonathan: are they giving you anything for this particular plug? do you get a bottle of wine from kby? tom: a bottle of champagne, that's what it is. we've got to do retail sales, i'm sorry. everyone is worn out from the data. jonathan: it's five minutes away , and then reaction from the federal reserve. loretta mester, the federal reserve bank of cleveland president, sitting down with michael mckee for a conversation just moments after we get retail sales in america. going into it, up 28 on the s&p. we advanced 0.7%.

yields come in to basis points to 1.63 69%. the dollar is weaker going into this one. wti, $64.43. on radio, on tv, this is bloomberg. ♪

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jonathan: looking for retail sales data in the united states. alongside tom keene, i am jonathan ferro. equity futures up 27 on the s&p. we advance .7%. with your data, here is michael mckee. michael: retail sales. we are waiting for that to drop. i will give you the import price numbers. import pricing on a month or per month basis up 1.2%, the forecast was for seven -- was 4.7%. -- was for .7%. we are getting inflation pressure overseas. we do import a lot of stuff. the numbers have not come in from the commerce department. here we go. april retail sales were flat.

no change in april retail sales. march was revised to a 10 point test -- to a 10.7% gain. we do not see any real benefit continuing from the stimulus. the thing to remember is this is a month over month percentage change. we could still have elevated sales on a dollar basis, but not major change in how much we have. let me take a look and see. motor vehicles up 2.9%. furniture was down, which is a bit of a surprise given the home sales we have had. electronics and parts, 1.2%. building materials down .4%. what we have been looking at is the food and drinking establishment as states reopen. they are up 3% on the month. we did get some business out of them. non-store retailers, the internet shopping we have been

doing, maybe we're not doing that so much anymore. down .6%. a big increase in sales during the month of march. stimulus checks came in. now we are looking at not a lot of change since then. still spending, so we are flat on the month of april. jonathan: we pulled back just a little bit on the s&p 500. firmer on the day, but we are now up .5%. yields come in about two basis points, a little more than that on the 10 year at 1.63. on 30's, 1.36. another downside surprise. payrolls and now retail sales. the control group is not a pretty read. this is another miss for the economists. michael: the retail control group is down. that does not give you a lot of

confidence about the speed, the ongoing acceleration of the economy. tom: mike doing a great job in boston. i would point out the revised month over month came out 10.7%. i am sorry. i have to revise away the retail gloom as we get better data. michael mckee, what a joy. i love what you did with neel kashkari in the last days. now you have the lovely mathematician from cleveland loretta mester. michael: yes we do. we would like to welcome the cleveland fed bank president loretta mester. thank you for joining us on this beautiful morning in boston. looks like the narrative the american people will be recovering more quickly than everybody anticipated might not be correct. they are still spending money but not at an increasing pace. pres. mester: i think this is

probably what we should expect. we have pent-up demand coming back. vaccinations have been distributed more widely. that is strong demand. we also have supply issues affecting the economy and the interplay between demand and supply is what we are seeing in some of the data, whether it be today's retail sales report for the labor market report. the volatility month-to-month is something we should expect. i think what's happening is we do see the recovery continuing. it is just we will have the month-to-month changes depending on which factors are more dominant to the supply side or the demand side. the bottom line is we are at the beginning of this vaccination widely distributed part of the recovery and you have to wait and be a little bit patient and let the recovery continue. we just -- michael: we just got

the cdc advice people do not have to wear masks anymore. people in boston are still wearing masks. they are in new york. do you think reluctance to go out and spend will fade rapidly? pres. mester: it is hard to see how rapidly. i'm still wearing masks when i go outside. i think it is a good sign we are getting to the other side of this. i think the vaccinations still have further way to go. i think we need to distribute them more evenly across the country. as that continues come as we can relax mask wearing for those who have been vaccinated, all of that is to get to some sense of normal. i think people feel more comfortable re-engaging. i am feeling more comfortable re-engaging and i'm represent of others. we have intellectualized the

fact that we have got vaccinated and we are protected. we will be more able and willing to reengage. i think we will see that over the rest of the year. michael: this is where i put in my plug to visit you in cleveland and do the next interview there. neither you or i have had a chance to dig into the retail sales numbers, but the interesting thing about retail sales is there reported in dollar terms. one would've thought there would be a big impact from the april cpi numbers. what was your reaction to that in the idea that maybe inflation is accelerating more quickly than the fed anticipated? pres. mester: again i think we are seeing the clash between demand, a surgeon demand, and some of the supply issues -- a surge in demand and some of the supply issues we are seeing. the year-over-year numbers are incorporating low inflation readings we had last year.

as those come out, we will see mathematically inflation going up. no doubt we are seeing supply constraints in particular areas. you are mentioning lumber earlier. there were commodity prices and energy prices. we are seeing those in the inflation data. i think the question for monetary policy is that going to fate over the rest of the year as supply comes back on and some of the stimulus checks people have are used up? i think we will see that play out. my baseline scenario for inflation is we will have inflation this year above 2%. as some of those constraints on supply ease i think we will see inflation go back down and we will monitor that as we go forward. i am focused on inflation expectations because i think that is where you begin to see

as those go up, and they are going up a little bit now, we will have to see whether longer run executions are going up. that is 18 to me in terms of -- that is a key to me in terms of where inflation is likely to go over the longer run. michael: wall street's favorite drinking game is the word transitory with fed officials. how do you define transitory? when would you know whether you are right or wrong about your inflation forecast? pres. mester: transitory is a word meant to can play -- met to convey whether those are supply issues that will fade over time or whether it really is in these underlying inflation measures. so far we do not see much impact on measures like the cleveland fed cpi and other measures that try to look at what the trend in inflation is. the key to that is this real inflation expectation.

it will depend on how long it takes for supply conditions to ease and get back to normal. that will take some time. it will depend on what commodities are looking at. it will depend on what part of the economy we are looking at your we all about the chip shortage. when we talk to our contacts in the auto industry, many of them are saying it will be six months to nine months. -- six months to nine months for that to get back to normal. transitory gives the impression of over and done quickly. that is not what we will see. some of those will last longer. whether that gets embedded into underlying inflation rates, which is what the fed looks at, that is a different story. in that sense i think a lot of the supply conditions pushing up inflation now will abate over time. michael: there will definitely be a staring contest between the federal reserve and the people in trading desks on wall street

as we get this economic data. are you going to be able to resist pressure from the markets if they see concern about inflation and start raising rates? i'm sure you will tell me yes you can but traders also remember december of 2018. pres. mester: we have been very clear in telling everyone our strategy and the fact we want to see it in the data. we want to not just base our policy actions on what we project will be happening but also seeing it in the data. that is a good strategy for times like this where you have demand and supply factors clashing and coming together. i think will be looking at outcomes, our forward guidance tells the markets and the public what we are looking at. we want to see inflation go up

and we want to see it on track to go above 2%. that is what we will be looking at on the inflation side. we want to get back to maximum employment. we still are, in spite of the pretty good labor market data we have gotten over the last several months -- last month a little bit of disappointment in that report -- we are still making progress on the labor market side. supply issues are affecting those numbers. we have to continue on the path we are on until we get more people back into the labor market and more progress towards our goals. i think we are seeing this play out in labor markets and product markets. the fed will be focused on outcomes to recalibrate our policy appropriately to outcomes. michael: what you're saying about the employment report, do

you have a read on what happened? do you think the enhanced unemployment benefits play a major role, as a lot of politicians think? pres. mester: i think a lot of things going on in the labor market still reflect on ease we were talking about earlier in terms of re-engaging, and i also believe, and we hear this all the time, childcare school reopening is affecting the labor market. people are making decisions based on those things. the fact that they have the unemployment benefits gives them the financial wherewithal to be making those decisions. in the past, they might not of been able to make the decisions they would like to make. they did not have the wherewithal. in that sense it is interacting. the main drivers are these other considerations in terms of the virus and schools. that is why i think we will see some of that downward pressure on labor supply over time.

as schools reopen, as people get more comfortable with the vaccinations being widely distributed, i think people will feel more comfortable coming back into the labor market. we will be watching for that. i will be watching for that as we go through the rest of the year. michael: a number of people, including your former colleague bill dudley, the former president of the new york fed, have been speculating the economy could rebound more quickly and more strongly than people anticipated, and by the time you get to looking at actual realized data you will of past maximum employment and the inflation danger will rise. then you will have to raise rates farther and faster than you thought. what is your view on that? pres. mester: we are going to be watching how the economy and the recovery evolve over the year as we get more data in. we are guided by our dual

mandate. there is uncertainty around the outlook, there is risk around the outlook. things could pick up faster than we anticipated, things could go slower. we are prepared for that. i think we are a good place with our policy and we will adjust it as appropriate depending on how the actual recovery progresses. that is why this is not the time to be adjusting anything like policy. it is a time for watchful waiting, seeing how the recovery evolve, seeing how some of the supply constraints dissipate or not, seeing what happens on the labor side, and keeping focused on our dual mandate goals. i understand where bill is coming from. what i would say in response is we are well-positioned now for upside and downside risk and we will have to be patient where we are now and wait a little bit

longer in looking at the data to see where the recovery is going. i have a positive outlook. i think the outlook is bright. i just think we need to let it continue on a little bit longer because opening up the economy after such a deep shock downward is proving to be -- there are some stumbles along the way. i think we should have expected that and that is what we are seeing in the data right now. michael: let me ask you one last question. do you think it is a foregone conclusion that when you finally talk about tapering, you will get a taper tantrum? the markets will try to reprice immediately and we will have a market disruption? pres. mester: that would not be a good outcome. i think we will -- i think we have been very clear that we will be communicating well in advance what our policy stance

is and where it is going. my hope is we will be articulate enough and explain enough that we will avoid the worst in terms of the financial markets. volatility in financial markets is what financial markets are. we just want to make sure we are communicating as best we can our rationale and our approach to policy, and we will have to wait and see how well we do that. michael: the reddit mester, press -- loretta mester, president of the federal reserve bank in cleveland. thank you for joining us on bloomberg television cured jonathan: michael mckee with president mester. looking at the market, up about .5%. down a little bit off of the back of the retail sales but steady following the report you made the right point. the previous month was a monster. tom: the previous month was a

monster. a short note where he writes the control group statistic dampens the calculation for gdp. jonathan: that was your call. ian says here is the math and the math starts out a little bit shaky, but he does emphasize the boom economy on that revision is extraordinary. jonathan: this was fun. coming up on "the open," greg peters. tom: he is not good enough for the real yield? jonathan: he is busy. greg peters coming up on the open in about 20 minutes. tom: very good. jonathan: you enjoy your long weekend. enjoy your monday off. tom: do not give me the happy talk. jonathan: i will see you later. tom: i hope lisa comes back. jonathan: otherwise i will be on my own. tom: have fun.

my next guest is very valuable. there on -- there are economists who come on and they warble, there are very few who actually have a bloomberg function. claudia sahm is one of our great thinkers and she railed the recession mathematics a number of years ago at the fed. there is a sahm rule which shows their horrific recession of this pandemic, and out we came to a better america. gloria sam has said wait a minute, the inequality -- claudia sahm has said wait a minute, the equality is tangible. claudia, we will get to the inequality. three americas. any leak boom, walmart -- mcdonald's -- then there is the rest of america. how do we pull them into the dialogue? claudia: this is the right

question to be asking because we have not done a good job, policymakers, getting a recovery for everyone. up to this point we've seen a lot of messaging, a lot of actions by congress with the rescue plan, the fed with their new framework to say we will fight for those people to get everybody back, particularly those from meinhard ties groups. -- particularly those from minority groups. we see the other groups, the elite and large corporations making a lot of noise they need to be taken care of and not those at the bottom. tom: within the three americas there is the idea of we give back, we will be fully employed, 4% unemployment rate, whatever the number is. that math does not compute if we have so many people left aside because of technology, because of education in the last 20 or 30 years, what is the program to actually pull them from a modern welfare state, however you want to call it, to an actual

productivity for america? claudia: our people are our most valuable asset. the think we should be investing in. and our infrastructure. physical infrastructure invest in our people. you have two proposals going to congress that are so informed. there's so much we can do with investing in people and families in the next generation and our physical infrastructure. there's of the kind of things we need to do now. we need to fight the recession but it is not good enough to get back to pre-covid. pre-covid there were a lot of problems and our productivity is a country has slowed down. we were all suffering and some were suffering more. we can fix that with good policy and a push from markets. the private sector has a big role to play, also. michael: the complexity of productivity, and i tried to talk -- and i tried on a friday not to talk about productivity,

on productivity it is about the strange m.i.t. solo word technology. are we less productive because we are overwhelmed by -- not the negative, but the realities of our modern technology? claudia: i do not want to paint that dark of a picture. i will say productivity is the sum of what we do not know. it is very hard to measure. it is hard to say where we are at and why it has slowed down. we do know education, helping workers have stable lives, economic security, job ladders, even if we cannot see it in the gdp data, that israel. that -- that is real. that matters to people. technology has always been with us. automation has always been with us. that is done excuse to throw in the towel.

tom: you are a republican worst nightmare. they do not want to talk to you. are the people in the republican party sync with their leaders? do you by what is percolating president biden can get societal report of republicans even if he does not get the leadership support? claudia: i talked to republican voters every day, that would be my parents. i grew up in indiana. i am not a political person. i think we need to have an economy that works for everyone. that is what everybody wants. there are big debates about how to do it best. this is one where the politics that are just crushing congress and the ministration and have for decades, this is a real disservice to the american people. i try to stay in my lane on the economics and not the politics.

it is hard to watch. tom: it is a surveillance exclusive. claudia sahm speaks to members of the gop. an extraordinary moment. i want to go back to the university of michigan where you took your phd. it has been one of the hotbeds of inflation research. what is your observation on the fear, the angst, the pendulum of inflation? claudia: i feel like we all have to take a deep breath. there has been way too much attention to the last set of data points, whether it is jobs are inflation or retail sales. we have a $21 trillion economy, we have tried to push it intentionally to get people back to work and back on track. this is exactly what we said was going to happen. you cannot get all excited about numbers that come in bigger than we thought. the entire last year, remember

last year they were always worse than we expected. we are living context. it is scary, it is uncertain. i look at the consumer expectations numbers. people do not like inflation. this is true. they will tolerate it to a moderate level as long as wages are rising. what is really hard is not to have a job. we have to keep it in balance. tom: i am running out of time. very quickly, is the argument with corporations they have to pay $16 or $17 an hour going to overwhelm the deep south that wants to pay seven dollars an hour? claudia: there'll be a lot of adjustments in the labor market coming out of this. we are a dynamic economy. it is so different across the country. right now there is a lot of talk. these are business decisions. is is not something we can fine

tune in washington, d.c. tom: claudia sahm, thank you so very much. next week we have housing. i want to focus on that. that has been on fire. thanks to mitchell rochelle for joining yesterday. the data has been turning all morning. soggy retail sales. futures up 25. the vix in 1.66. 21.48. what is important is the weekend news flow. we will do that for bloomberg worldwide. we start strong this morning. this is our conversation on the day on what is going on in israel. david westin on balance of power in conversation with the ambassador who has an extremely nuanced perspective on the domestic politics of israel and the labonte from turkey to egypt

-- the levant from turkey to egypt. i believe a property of jon ferro is coming up. paul sweeney and i will join you on radio. good morning. ♪

>> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. ♪

jonathan: from new york city for our audience worldwide, good morning. the countdown to the open starts right now. from a beautiful new york with equities up .6% on the s&p 500, we begin with the big issue. struggling to gauge the incoming data. >> three opening trade is accelerating. >> fears have dissipated. >> you are at post-pandemic. >> removing the masks is symptomatic of that. >> we are transitioning from a spring bloom to a summer boom. >> there are some nuances. >> we have pent-up demand. >> meaningful concern about inflation. >> huge anxiety about inflation. >>