>> in the equity markets there is more optimism around the fed being able to rein in inflation. >> they want to ca deceleration in inflation, not so much a deceleration -- >> there doesn't seem to be any relief around the corner. >> there is a belief at the end of the year the markets will balance. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. on radio, on television, it is

jobs day. the usual great guests will join us. jeff rosenberg, the former governor of the fed, and we have 5, 6, 7% inflation. jonathan: in europe and in the united states. the range is super wired from zero all the way to 700k. the number drops in 30 minutes. tom: can we say that this job today can adapt or just fed policy? jonathan: i'm not there. jonathan:for the 50 basis point move in early may this needs to tell the fed not to rather than tell them they should. 50 basis points, the whole of wall street is behind that view. tom: i say, lisa, that the political backdrop of this jobs report is seen in a gallon of gas, but now percolating into all of the inflation of america. it is a different labor economy. lisa: the conversation is about

the hot labor market, the good news that we are hearing out of the economic data. and then the sentiment of consumers is low and lower because of gas prices and inflation. how do you respond to that when it is not crimping consumer demand enough to be a self-fulfilling cycle? tom: apple computer, 178 and at the end of the quarter 178. i guess it was a boring quarter. let's get to our esteemed guest . what an odd quarter for equities. jonathan: ending with a massive month of gains, including apple. the nasdaq 500, up.30 minutes away from your payroll support. 98 .82 on wti. tom: we will be joined with

perspective on the greater economy and the labor economy, but first we need to look at the six dollars per gallon of gas in mammoth mountain, california. it is cheaper and other places but it is front and center for president biden. joining us is a gentleman who is extremely qualified under energy security. a senior advisor for energy security at the department of state who joins us today. the thing, amos, every time whip inflation now. every president has a different task, like jerry ford, to with inflation now. your reading of history is the same as mine. this is a tough task. what is the first order of business for joe biden? >> good morning and thank you for having me on the show. as you said before, energy security is a critical issue, and the president took strong steps yesterday to address the fallout in the energy market as

a direct result of the ukraine war and invasion, unjust evasion and brutal war that putin is ranging in ukraine. that has consequences at home with the rising cost of energy and oil, which translates, as you said, into the rising cost of gasoline for americans. president biden took a strong step yesterday announcing the largest spr release, a million barrels a day for six months. that, we have already seen prices come down as a result of that announcement. that will have a major impact in the oil markets and energy markets writ large. tom: what is important, this filters down into every product, including a slice of pizza. it is up come up, up. jonathan: you're very delicate

about a slice of pizza in new york. tom: i think it is as important as a gallon of gas. jonathan: it is important. you called on congress to make companies pay fees on wells with leases they haven't used in years and acres of land they are hoarding without producing. they keep talking about 9000 leases. i don't think that if you had written this he would have wrote that. if i asked you the following question, i want a direct answer to a direct question, of those 9000 leases how many are on productive land? amos: i will answer a direct answer, but let me say on the slice of pizza price that i agree prices are going up everywhere. part of that is as a result of the skyrocketing energy prices. we are not a farm to table economy. we are a farm to truck to table, so everything that we consume has resulted in a gallon of gasoline or a gallon of diesel,

trucks coming, crisscrossing the country for delivery, whether it is the ingredients for pizza or other commodities. this is a direct result, and that is why it is not just the gallon of gasoline. this is a real economic issue that we need to address. and as the result of a foreign war that we have to be cognizant of. as far as the leases, these are on public lands. your point is right. some of these leases are on nonproductive acreage. then the companies who are holding these leases for several years sometimes and are not doing any seismic, not doing the kind of work they needs to be done on that acreage because they think that it is nonproductive, then you have two choices. you can return the lease or give it up, or you can simply pay higher fees because you want to hold onto that piece a little longer so that you can develop it later.

i would have written that. jonathan: they may want to sit on it and develop a later. you know how this works. the way that this is being framed by the administration is that these land leases are being courted that are sitting on productive land now being produced because these companies are greedy. i will read the line from the president. companies have an obligation that goes beyond the shareholders to their company. no company should take advantage to enrich themselves at the risk of american families. they are hoarding those leases. i will finish and then you can go and i will give you all the time you need. what evidence is there that they are holding leases because they are being greedy to profit from what is happening in ukraine? amos: let's disaggregate. there are number of issues. the president actually recognized the oil companies that are responding to this

price environment, that are responding to this world supply shortage we are in, and have announced extraordinary increases in capex and reinvestment in the united states in bringing on additional production. he has recognized them and said that that is progress and he praised them for doing that, but there are other companies, and you know that, that are saying i have the ability to increase production when prices were at $120, 130 dollars a week ago and say they aren't going to do it. he said even at $200 or $300 a barrel i won't increase production because of a variety of reasons. some of them are saying that the funds that back to me, my shareholders, the holders of my debt, are saying don't do that. give us dividends during this time. there is no well that is not profitable at $120, $130.

if you are making a decision that prolongs above $85, which we have been in for a few months, that you cannot make more investment to bring up production, i think the president's 100% right to call them out, especially when other companies are seeing this is the exact kind of environment we are going to increase production. the president announced we will release one billion barrels a day to increase the liquidity in the energy market make sure there's enough oil on the market to support the u.s. economy as well as the global economy. number two, he said that we will replenish the reserve at a time when we finish dispersing and releasing the oil and when prices come down. we will sell the oil now at high prices and buy it back later. that gives incentive to the oil companies to say that i know that even though the u.s. is going to release these reserves i will have a buyer in the u.s.

government later on. it continues that incentive to increase production. i think that this is what we needed. we needed to put something into the system where we can bridge. the oil companies have said, look at x ron, chevron, conoco, they said we are going to increase a million barrels a day this year. that means it is only going to come on in the middle of the third quarter to the end of the year. we have a gap from now until that time. with the president yesterday -- did yesterday is that the u.s. government is going to fill that gap between now and then. at that same million barrels of production that we are going to get at the end of the year and put that out now so that we are not replacing the private sector, we are incentivizing it and letting the american consumer benefit from lower prices between now and then. jonathan: goldman sachs disagree. the u.s. policy use of an spr

release and financial deal with iran, price volatility, and growing risk of a recession next year is exacerbating uncertainty paste by -- faced by producers. the reason that i bring the stuff up is because i want to avoid this really simplistic conversation that something untoward is happening in the oil patch, when you know what happens in the oil industry is incredibly complex. you have said something else over the last few years, the last 12 months. this was november 17. president biden urge the ftc commission chair to investigate oil and gas companies retail prices blaming industry leaders that gas prices continue to soar. it has become a talking point that oil makers are hoarding these leases even though you admit we don't know what is on that acreage. then there is the other talking point that somehow these companies are price gouging. in the president's words, taking advantage of a pandemic or putin

to enrich themselves at american families. what evidence is there? what companies are price gouging right now? if you can identify and name them, what are you doing about it? amos: first, as we said yesterday, i don't believe, to mr. curry's comments, i and my colleagues have been in close contact with the energy industry and most companies have said that they believe what we did yesterday was exactly the right thing to do and that they feel that it has an incentive because it is four to six months before their production comes online. we will spend the next couple of years replenishing the reserves, that means that they are incentivized to keep spending the capex that they have announced to increase production will stop with respect to goldman sachs, i take a lot of issue with other things that he said. jonathan: i have no doubt that

you do. another question, who would make a decision like this to boost capex on front month brent futures? who would do that? you know with the rest of the curve looks like. why would you make it based on where the front month is? amos: they are making that decision. they have announced that they are, several of the majors come the largest holders in the permian and others in the shale basins, have said they are going to increase capex. exxon said 25%. they're going to increase production. the total u.s. production will grow by 10%, by that 900,000 to one million barrels. these things don't happen overnight. you know that the decision to spend billions of dollars to ring up production doesn't mean that production comes up the next day. i want to address what you said because i think the president was clear. we are not taking a broad swipe at the industry.

he said he wanted to acknowledge the fact that part of the industry has done exactly what it needs to do and it incentivized them to bring about more production. other companies, and we can't ignore this, the quote that he used in his speech is even at $200 a barrel i will not increase production because of so-called fiscal discipline. i am not making that up. i've never seen that. jonathan: to be fair to you, that was a comment on this network. i heard it, talked about it, repeated it, something i've said before. with the wall street journal reported in the last few weeks, the administration is trying to make the call to the saudis trying to arrange a call with the crown prince and they won't take the call. i spoke to a member of opec, and you can respond that in a moment, this week and it was embarrassing for them that they had a meeting this month that

lasted for 13 minutes. it was one minute shorter. i wonder if it is more embarrassing for us that they're laughing in our faces and doing this. you speak to the saudis, talk to me about it. a, is that false? did the administration try to arrange a call with prince mohammad bin salman and the president of the united states? b, why are meetings lasting for 13 minutes if we are in a massive energy crisis? amos: one, there was a call that would be between the president and king salman. i have seen reports of saudis snubbing the u.s. i think that there is an interest in certain quarters to bring about this kind of narrative that is completely false. i have been to saudi arabia on a number of occasions in the last couple of months and i was told with the saudis told me on the

front page of a u.s. newspaper three hours before the meeting started. i showed the saudis the headline so we could jointly comment on the hyperbole of the press. i don't think there is any relationship between the united states and saudis strategic. there are issues we need to work on together. there are complexities in the relationship we are working on. we have a lot of issues that are of common interest, fighting terrorism that saudi has had to suffer through the last couple of weeks specifically. we have a lot of strategic interests elsewhere in the region and as well on energy. i tell you, we are having very good discussions. the press in reality are -- of the press and reality are far apart. on opec, i was asked before the opec meeting if we had a message to opec. my answer was, we have no message for opec. they know the industry, the market, supply and demand.

i must have a difference of opinion. we believe, not just believe, but i can see the physical evidence that the market is short about 2 million barrels a day if not more from russian supplies into the global market. that is clear to me. we can see that. obviously, perhaps some in opec don't see the shortage of supply, but i can understand that it is a complex issue with them with the opec versus opec-plus. i think they're going to have to take some time. perhaps, if you're not going to discuss the issues very seriously, perhaps 11 minutes or 12 minutes is all you need. at the end of the day, they have done what they needed to do and have increase production and announced they will continue increases of production. we don't think that's right. the president is not asking others to do the work we should do. the president took action on behalf of the american government of releasing one million barrels a day.

i believe we will have additional capacity coming online from our allies. the president coordinated this release, as he has all other measures against president boudin, without ash president putin -- president putin, with our allies. we discussed it this week. i've had discussions with my counterparts. there is a meeting that is going on right now of the iea, international energy agency, to look at additional releases from the international market. we won't just have oil coming on the market in the united states, the oil coming online into the market in asia and europe over the next several months. jonathan: you have given us tons of time and that is valuable to me. thank you very much. tom, it is a complex, nuanced conversation. tom: it is complex, but every single oil pro really pushes

back against the idea that it is easy to boost production. there are huge reality constraints within the middle west of this nation on labor, concrete, steel pipe, and the tangible stuff you actually have to do. jonathan: the payroll report is 12 minutes away. tom: first, ubs, their senior equity strategist. off the jobs report is a reality of an inflation study. what do equities do within higher inflation? >> i think the equity markets will be a topic going forward from here. everyone is watching the inflation numbers. we are expecting inflation to peak in the next month or so. then we are looking for some moderation for april most of a lot of this will depend on where

commodity prices go, but we are watching with the fed will do now. we are looking for 50 basis points in may as well as june, and then a return to 25 basis points cadence. lisa: we just heard from the state department talking about oil prices and how that is feeding into consumer spending power. how does that play out in the expected earnings reports in the next few weeks? how much deterioration do you expect in the margins? nadia: that is something that we are watching closely. we have seen the resiliency of markets the last couple of earnings seasons. the company has been able to pass along those costs. we think that is going to very. in the last -- to vary. in the last few weeks we have seen strong demand despite higher oil prices and we have heard similar tones from luxury

companies. we heard from a luxury wholesaler, there may be some shifting of sentiment but this might also be further indications that consumers are shifting from goods to services. there are mixed signals and we will be watching closely earnings season to reconcile differences and to see where markets are going to go. lisa: do you think that stocks have gotten too concerned about rate hikes or are not concerned enough as a lot of people talk about dissidence between bonds and stocks and what they are pricing in in terms of fed action? nadia: we have seen the valuation multiple for equities come down from 29.5 times back in november to 19.5 times today. we think that's fair. we are seeing the reactions that the market has had the fair in terms of the price in. in terms of the bond market the 210 spread inverted yesterday. we think that is somewhat of a

false signal. we know that inverted yield curves tend to proceed recessions, in the last eight to recessions, but it is not great at predicting the timing. usually about 15 months. we think that the power of the curve in this cycle is not as good. it is more important to look at the 10 year, three months, which is a better indicator that we are watching very closely. jonathan: thank you. nadia lovell. the bond market yields are higher on tens by six basis points, just short of 214. tom: .93 onto two tends this morning. this is a joy because it is a symbol of the end of this pandemic. the university of chicago booth school celebrating the opening of their london platform built during the pandemic with the

leadership of randall crosby, a former fed governor and professor at booth. randy, it is the sign of a pandemic opening. we spoke with the white house, the state department on energy. how much of a mystery is the second quarter is about a booming nominal gdp and booming american economy? >> i think that you really nailed it. the key issue is how much demand will be driving price pressures? we have the ones from the pandemic and with the war in ukraine and sanctions, that is only increasing the tightness. that is exactly the issues that the fed is going to be facing. tom: what they face is the idea of going from 14.5 percent gdp to 5% or 6%. i don't want to do your job

getting nominal back to 4% or 5%, good luck with that. how does the fed's job change given real economic growth and inflation? it is different, isn't it? randy: the biggest challenge that they've had in decades. we were at 40 year highs and inflation. the economy is still going pretty strong. because of the pent-up demand from the lock downs and pandemic, but they need to raise rates, and they are going to be raising rates. the concern is if they wait too long and have to move higher quicker than they otherwise would like, which could potentially slow things down the second half of the year or next year, it is a pretty tough trade-off. lisa: which would you prefer? if we had the choice of allowing inflation to run hotter or a bigger risk of recession, which side would you err on?

randy: hopefully inflation they can do that in a gentle way with the consequences of some of the shocks in the real economy. we saw what happened in the late 1970's. we don't want to have to raise rates at double-digit levels to try to bring in inflation because inflation expectations have gotten out of control. they haven't so far. one reason the yield curve is so flat is the 10 year is signaling that we don't have that much of an expectation of high inflation. the same thing with the treasury tiffs. that is quite fragile and could move up quickly. the fed needs to act sooner to make it less likely they have a recession. lisa: we are less than five minutes from the payroll figure for march. are there numbers that could get the fed's attention and cause them to move even faster? what numbers would move the dial? randy: one of the things we are

looking at our wages. i don't think this will be enough to move the dial. we will be looking at labor force per dissipation and employment population ratio, which has been moving back up after falling during the pandemic. we're getting people back into the labor market. some of the savings are starting to come down. we sent out checks to an enormous number of people. they're starting to spend that. some of those people are going to come back into the labor market. tom: you are going to be teaching this at a london booth, or booth london, i can't remember the branding title. is any what you did at the fed in the textbooks people use? we seem to be in such an original place this jobs day. randy: a little bit of it is. some of what we had from the past and responding to the financial crisis and what the

fed did and central banks response to the pandemic. some of that is in there. this challenge has such strong growth and high inflation. we haven't seen that in a while. it is fun to talk about some of the experiences from the time of the fed and truly engage with students. lisa: what would you do move you were looking at the balance sheet? how does it play? randy: i think that is something that where they are going to do is run that in the background, much like they did previously. they want to make the interest rate policy the main tool that people focus on and gradually reduce the balance sheet. i don't think that they will do anything shocking. first because of all of the uncertainty in the market. a lot of disruption, and a lot of potential disruption on the markets, so the fed does not want to pull out too much

liquidity too quickly. tom: the guy goes to london for a cup of coffee and he is quoting lme. jonathan: how long have you been there now? how long have you been in london now? randy: oh. i was in london for 2.5 years, and now back in chicago for the official opening. i am back in chicago for a bit. jonathan: thank you. randy kroszner. two minutes away from payroll. to get us set up and go through the market, features positive about .5%. the nasdaq around 0.5% as we kick off q2, leaving q1 behind. the first loss on the s&p 500 going back two years. the month of march with a decent month of gains on the s&p even with this in the bond market. yields higher by five basis points on the 10-year to 239. last month was huge, of 90 basis points on the month, 160 basis

points quarter. this morning yields are pushing higher on the two-year. just short of 240 will stopped to 38. tom: anyone speaking with certitude out to 90 days is dreaming. all i can say is that it is absolutely original that we have 6% or 7% nominal gdp in america. no one knows where we are heading. we can guess, but we don't know where we are going. jonathan: people are feeling the 7% inflation number. the story in europe is driven by energy prices. before we switch our attention to the u.s. exclusively, in europe they have cti of 7.5%. lisa: it is unheard of after they had a big rally to try to get inflation up to 2%. that got blown past. it has become a a global phenomenon that feeds on itself and how much can the consumer take? jonathan: the jobs numbers 22 seconds away. the range is wide.

anywhere from zero at pantheon to 700,000. the median is 490,000. futures up .5%. on the nasdaq up .5%. with your jobs report, here is mike mckee. michael: good morning from washington. the numbers not quite as good as anticipated but still strong. 441 -- 431,000 jobs restored. we are still in the restoration period of during the month of march. the unemployment rate drops further than we had anticipated, 3.6%. the labor market remain strong in the u.s.. the payroll revision, 95,000. add 95 to the 431,000 and you end up with over 500,000 over the last two months, which is

very strong numbers. the only thing we are not clear on is how that will affect the fed. with unemployment at 3.6%, average hourly earnings go up 5.6% on a year-over-year basis. that is more than anticipated on the back of a .4% rise just as forecast by economists in the month of march. the labor force participation rate goes up to 62.4. that is what was anticipated. more people looking for work, more people getting jobs and more people getting more money those jobs. it is a good news story for the labor force but may be a bad news view on inflation. jonathan: yields up a little bit more. in the equity market, we stay elevated, up .5% on the s&p and on the nasdaq .4% higher, up eight basis points on the 10

year. the difference between two and 10, less than half a basis point. we should just call it zero. tom: here is the number you have to focus on with the 95,000 revision. i believe the math is 526,000 with the constructive revision and that speaks to 3.6% unemployment rate. the numbers speak for themselves. jonathan: michael mckee, speak to that. michael: the fed is expecting 3.5% once we get there. it kicks up to 3.6% before eventually settling at 4% but it will be a long time before we get there. look at the numbers behind the unemployment rate. the number of people in the labor force increases by

418,000, the biggest in two months. a lot more people looking for work. employment rises 736,000 in the household survey, not the establishment survey. unemployment falls 318,000. more people finding jobs. that is why the unemployment rate falls. we used to call that good news. everybody keep an eye on the overall wages. taking a quick look at some of the jobs we got, leisure and hospitality, 112,000. food services intriguing places, 61,000. business services 102,000 and retail 49,000. we heard stories about factories not being able to keep up with orders because they cannot get enough people. they added 38,000 jobs in march. broad-based gain, not as large as we had been seeing, but more

categories with large increases in march. jonathan: tremendous jobs report. a slight miss on the headline number but look through the rest of the report, unemployment down to 3.6%. wages higher, 5.6% year on year. i mentioned when we kick out the interview with separate -- i imagine when we kick off interview with secretary walsh we will see a happy man. tom: 6'8" percent was the best pre-pandemic, we are back to 6.9%. secretary walsh will focus on a not fully employed america but certainly the trend is rebrand. our friend on job day, jeffrey rosenberg joins us. jeff rosenberg, we went curve inversion, now negative one basis point. let's go back to carnegie mellon and talk to be about the nuances

in disaggregation of curve inversion. there is zero, there is little bit inverted. maybe there is more inversion. what is that nuance within this economy? jeffrey: this report is reaffirming what the markets were expecting in the trend you were talking about in terms of the bond market of yield curve inversion. no surprises in this report. the headline number miss is minor. it is the strength of the labor markets that is being seen again, and that is the challenge for the fed. markets are seeing more curve flattening. it is much more about, this is good news, but it is too much good news. this is an economy that is overheating. the fed has to accelerate lots of expectations. talk about a historic bond market and financial market losses in the first quarter.

this is the markets readjusting to a much faster pace of fed normalization and today's report will only reaffirm that view. lisa: is this good or bad news when it comes to investing? jeffrey: for investing i think it is a reaffirmation of our expectations. not good news or bad news but this is what we expect, and what we expect is this is a difficult environment for investing because of the challenges of the dual aspects we are about to go into. we talk about the may fomc and market surprising in a move towards a 50 basis point hiking cycle. this is a dramatic turn about. that is why you have such a negative price-performance across fixed income because we are waking up with the idea this is a fed that will get in front

of the curve and a very accelerated pace of tightening. that is a challenging environment for investing as we just saw in the first quarter. when we get to the backside of it and higher rates of real interest rates eventually and higher levels of yield, this will be an attractive environment. the transition from a difficult environment for investors. lisa: you think it is a lock we will have a 1% increase in the fed funds rate by june? jeffrey: i would not say it is a lock. it is about 90% priced in terms of the market. you cannot say it is a lock because things could happen on the geopolitical side that we are all focused on. if that were to take a more dramatic turn that you saw on terms of risk off environment, confidence shock stop the shop can be important. -- confidence shock. the shock can be important.

very accommodative markets. markets get far ahead of where the fed wanted to go. i would not say it is a lock, but given the fundamentals of the economy, what we see out of the labor market report, the odds are high we will have 50's back to back in the may and june report. tom: the answer is the bloomberg u.s. total return aggregate index is not a bear market but -8% is -8%. are we in a bear market or is that what waits us in the bond market q2? jeffrey: the good news on the fixed income market -- the good news is we very quickly repriced the expectations and term premium and inflation expectations. the repricing is the painful part. that is -8%.

fixed income, the key to returns is the level of income. while you have such negative returns is you are starting at very low levels. as we fast-forward and you get higher levels of income, it gives you a lot more cushion to subsequent increases in interest rates at the pate -- and the pace of negative returns much harder to repeat. tom: do you shift from full faith to credit? do you go to loans? what you do within a strategy of down 6% or 7%? jeffrey: a couple of things. in terms of the directional part of our strategy, the front end of shorter maturities certainly looks much more attractive coming out of this environment. the curve flattening you talked about.

that is about restoring the cushion to fixed income investing in where you see that the strongest across the fixed income landscape? that is an aspect of our investing we think is an opportunity going forward with their is more cushion from further increase in interest rates. our toolkit is the directional view that i described but also looking at things that take out direction and look at the cross-section of investing. what you are seeing is a lot more opportunities to invest in dispersion, both reinvesting on the equity side and the fixed income side. from there you are seeing more alpha opportunities. it is a shift in your portfolio, where are you getting returns from? a little less on directionality. directionality is impossible to forecast, but the dispersion in the cross-section has increased the opportunity. jonathan: jeffrey rosenberg.

great to get you to react to what looks like a really strong payrolls report. a small downside surprising the headline number. that is not the story. this is solid across the board. 3.6 unemployment. wages higher 5.62%. in the bond market come up nine basis points on two. we have an inverted yield curve. coming up a conversation with rick rieder of blackrock, anastasia amoroso, and mike collins. in later from the white house, secretary walsh. tom: we will open up the conversation. let's go back to mike mckee where he gets a moment to look at the data. what is the distinction at 8:41? michael: what good piece of news for the federal reserve's they had put in this new framework to try to bring down unemployment for minority groups and they

were concerned about having to abandon that to fight inflation. the employment rate for black americans's nap capital 6.2%. it was just in the fives before the pandemic started. there was a drop of 6.6%. for asian, 2.8. whites come in at 3.2%. for hispanics 4.2%. everything dropping on that side and it looks much better for the fed in terms of having to retreat from running the economy hot. tom: thank you so much. a headline coming out. capital group of los angeles is truly one of the great activist managers. they activated last week and the report is they are seen as a seller of that enormous block of barclays shares. it is important for our global wall street audience to identify

that with the capital group of los angeles. gina martin adams joins us, chief equity strategist for tina strategy at bloomberg intelligence. march in like a lion, out like a tina. is that all that happened? gina: that is certainly part of the story. early march we got oversold on the equity market. we were pricing in some degree of stagflation emerging, pricing in some degree of unemployment rate increase later this year. pricing in seven to eight hikes by the federal reserve and very high oil prices. some of the release of oil prices moving lower has created optimism in the equity market we are not going to experience some sort of stagflationary malaise emerging in the market. we are still somewhat weak. stocks are down on the quarter, still in a struggle with rates and the inversion of the yield

curve is still a topic of conversation. margin still struggling to provide momentum to the market. some of the issues we started watching are still there. tom: what is the level of guessing? i walked out on the floor come everybody is dressed in black like it is off tuesday. what is the trouble -- what is the struggle to guess margins? gina: analysts have had a difficult time struggling with margins in the last six months. they have modified their forward forecast and companies come in and beat that forecast and then we modify it again and companies beat, so it is a lot of give and take on the margin line. what we are seeing in the aggregate is a lot of stabilization has emerged in margins, and that may be one of the hated reasons the equity market is starting to celebrate a little bit, or at least release some of the anxiety that emerged in february and march.

that said it is very sector specific. you have some sectors like consumer discretionary, industrial, really experiencing downward pressure on margins still come and the wage numbers we got this morning are only going to confirm that. tom: i have been doing that for 4000 years into this day when somebody says consumer discretionary, i have to think hard, what is that exactly. lisa: in some ways, the fed does not want to see profit margins pulled in. i was listening to fed officials and they were saying that. it is concerning to them if they can see the ongoing ability of companies to pass along the price increases to consumers. what is the risk that good news with earnings power leads to bad news long-term because the fed will be more aggressive? gina: it is a matter of the degree to which companies are able to pass along price increases.

the data picture would suggest ppi is hotter than cpi, margins expectation stop increasing six month ago. to the g3 -- to the degree the fed does want to a slowdown in price pressures and pushback we are seeing that emerging corporate earnings. it is a dance because how much do you compress margins for corporate earnings where they start cutting headcount is a big question. that is what the market is struggling with. yes some margin rationalization make some sense, but you can only go so far before you have a real impact on the economy. march is a reading indicator of weakness or strength in the economy, because let's not forget who hires the labor. that is the company themselves. lisa: right now we are looking at an inverted two 10 yield curve. everyone will be talking about a recession.

and you're talking about a resilience in profit margins. how quickly could that shift if there is something restart see companies cutting employees. how much is that realistic versus the pipedream of the reality of corporate america? gina: it is pretty unrealistic right now. companies are telling us they cannot get enough labor to demand conditions. industry by industry -- as a general rule companies are increasing wages because there's not enough labor to fulfill demand conditions. one thing you also watch is topline growth. revenue growth for the s&p 500 is still running at a double-digit pace. there are still tremendous about of volume sales. i think we will see a slowdown in housing, slow down and some of the rate sensitive sectors. we are a far cry from companies starting to lay off workers. for that you need to see much greater margin constraints

emerge or topline growth slowdown. tom: thank you so much. bloomberg intelligence. i do not envy the work they have an earnings season. jonathan ferro mentioned we begin in mid april with j.p. morgan. i want to go back to michael mckee. gina martin adams just mentioned the housing economy. a lot of buzz on the higher mortgage rates. does chairman powell care about a fully employed america in higher mortgage rates? michael: he is looking for higher mortgage rates because he would like to slow the housing market down. housing is been shooting more to inflation that almost everything. we are seeing month over month, .4% gains. interestingly enough, one of the things constraining builders has been labor. they found 38,000 employees for the construction industry.

the interesting number in terms of categories of people who got jobs, an increase of 18,000 in real estate. it looks like maybe one of those peak things where everybody comes into the market just as the market tops out. we will have to see. jonathan: -- tom: what will you be looking for an april? we have important economic data beat for the may meeting. do you look at housing data? michael: we look at housing sales data and prices to see if prices are still rising at the same rate. the fed has pushed mortgage rates above 4% and we are seeing strong growth. that should start to slow. there are anticipations of that. we will see if that comes through before the next fed meeting. we do not get another employment report before the next fed meeting.

the april employment report comes two days after the meeting. tom: to me this is so important and i cannot gauge it. i look at home prices and my jaw drops. i do not feel the same way about the stock market, but i look at the housing market and eyesight you have got to be kidding me. lisa: that goes to what saw in the housing market in 2006. that is beating a trend. a multifaceted aspect of this inflation -- how long can this persist? tom: right now we finished strong with ira jersey, chief u.s. interest rate strategist at bloomberg intelligence.

it was such a joy to have dominique alstom on with his new opportunity. a great capture to bring in the guy you work with that credit suisse. what i got from dominic is it is a change landscape. once yields get underway, is there an inertia force where they keep going higher? ira: i do not think they will continue to keep going higher forever, but the same time we put out a report last week where we noted we could be in for a very significant seachange where this forty-year downtrend in yields is probably over. that does not mean we will regress and have a 1970's style selloff necessarily because the fed is going to be aggressive enough we will have inflation expectations not go up much more. we could have much more persistent 2.5% as opposed to 10-year gilts rallying every year for the better part of 10 years. lisa: everyone will be talking

about the yield curve. the gap between the 10 year treasury yields and the two year yield we have been talking about. it is inverted and inverting further as we talk. the clear direction seems to be what everybody is worried about. do you by the fed's argument that this yield curve does not really matter, and if you look at others in terms of the short-term debt market, it is looking much more constructive? ira: talk. the clear direction seems to be what everybody is worried about. here's the thing. when the fed says in the next 12 months are we going to have a recession, even the 210 curve does not tell you that. it is more 12 to 18 months out. we have a slowing economy if not a recession? the answer is yes. it does not work every time but it has worked five of the last makes. the front end curve will invert and it will be flat a year from now. it is all consistent. the federal reserve hikes as the market is currently priced,

seven or eight times, and nine times over the last 12 months, we will have a completely pancake flat curve. the market is pricing for the two-10 curve to be inverted by about seven basis points this time next year. five or six times that has read to a recession in the not distant future. it is not imminent, but late 2023 i think will probably see a pretty substantial slow down, if not an outright recession. lisa: we were talking about whether the hawks have out ha wked themselves when you look at how much the two year yield has climbed. you think the argument is they need to go further based on the momentum in the numbers? ira: it depends where the data is next three to six months. keep in mind even though we have relatively strong jobs data, that certainly will make the momentum of inflation a little bit stronger than we thought a

couple of months ago. the service sector coming back will be a big art of that. we were not worried about inflation until we started to see services prices going up and a large part of that is wage gains in those sectors. this report confirms wage gains are still pretty robust and that means you can have 2.5% to 3% inflation more consistently than we did the last decade. tom: lisa abramowicz and tom keene, we welcome all of you. we mop up the hour with ira jersey on fixed income and michael mckee look forward to may 4 and june 15, the fed meetings. i look at what the bond market says. it says big jumps and big uncertainty. how did the fed react to 10 basis point moves, eight basis point moves, and full faith and credit debt? michael: if somebody promises to sell a bond or repo a bond and

it gets delivered, the fed will not worry about at. they will only worry about it if there is a problem with the system itself. at this point the fed is expecting to see rates go up. there will be a lot of volatility as people try to combine the numbers with what they think the fed is going to do. you can see that today because now people were started to think the fed will have to move even faster because this report is really strong. the fed cannot do anything about that but they are not going to worry about it unless there is a systemic problem, as there was last march or march 2020. tom: does the fed care about nominal gdp or are they still wedded to 20 to 30 years of inflation adjusted gdp analysis? michael: they will look the inflation-adjusted gdp analysis. there are people who think the fed should start looking at

nominal gdp and try to control interest rates by using that instead of the fed funds rate or the target range. at this point that has not gotten any traction among the fed. lisa: going forward, where he looking at in terms of data that will be instructive as to the fed path. it is baked in and we will wait and see after the additional data point moves? ira: certainly a 50 basis point move in may or june i think is likely. ultimately the second half of the year is going to be much more constructive because we did not see significant interest rate hikes. we have not seen what is going to happen with the housing market. will we see a significant slowing in-home sales and a deceleration in home prices? right now we have to consider if the fed is going to hike another 150 basis waits before they consider if they will slow down.

then by the third or fourth quarter we will have more data. it is all the data you think about. the payrolls report, the pci ncp -- the pci report will be of strong interest to markets. the market is still pricing for inflation to be much lower next year than this year but it will not be a 3%, where we were pricing two months ago. we are now thinking inflation will be well above 3% at the end of the year that you keep the federal reserve relatively hawkish. lisa: how concerned are you about liquidity in the bond market as the balance sheet comes into play? ira: very. our team has spent a lot of work on this and liquidity is poor. balance sheets cannot absorb all the selling pressure as we get these selloffs which is one of the reasons you are seeing these 10 basis point moves whereas before there might've been a four to five basis point move.

that is something we think will continue or maybe accelerate when the fed starts to reduce its balance sheet and there'll be a lot more treasuries available to investors. tom: that is exactly right want to go in the next conversation. this is a gift to have michael mckee with us and ira jersey of bloomberg intelligence. we did not get to it, but what ira jersey just mentioned about the balance sheet and amex of the ecb and -- the balance sheet dynamics of the ecb and fed. the balance sheet dynamics have to be front and center. lisa: we have any template for what that looks like? aggressive rate hiking on the one hand in addition to reducing balance sheets, and by the way that is what is happening around the world. it is not just the fed but also the ecb. dueling action with different economic backdrops. i'm trying to square what jean talking bout with the strength in corporate america and the pessimism in bond markets.

tom: my measurement after the historic 90 days we have had, i want to say thank you to our team who killed on getting us voices and guest to make this historic time seem somewhat sane is the uncertainty is off the chart. i was uncertain on january 1, the ides of march. i am uncertain going forward. i do not know what to think. lisa: people are talking about regime change in terms of inflation, rates, geopolitics. tom: our regime change as we will have a conversation with the secretary of labor, martin walsh. look for that on bloomberg radio and bloomberg television. jonathan: what a jobs report. from york city this morning, good morning. with equity futures a little bit firmer to cookoff -- to kickoff you do.

-- to kickoff q2. the countdown to the open starts right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. jonathan: live from new york, we begin with the big issue. the fed under pressure. >> how high does the fed have to hike? >> cpi headline inflation. >> the fed will try to be data-dependent. >> the market from a pricing standpoint -- >> suggest there is a 50 basis point hike on the horizon. >> they will do 50 basis points. >> inflation will be insane for march. >> the fed is keen on transporting the rate hikes. >> the fed is