>> said officials are trying to achieve the best version of something that looks like a soft landing that they can. tom: for the most part -- >> for the most part, the market is priced in for a 50 basis point rate hike. >> what is happening is very much driven -- >> we are still in that knee-jerk reaction. rates are going higher. growth is slowing down. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. jonathan ferro, lisa abramowicz, and tom keene.

it is technology earnings day, the beginning of the onslaught. a wonderful guest coming up on innovation and the rewarding of technology. microsoft will state. jonathan: we will hear from alphabet, amazon, and apple through the week as well. those names making up 40% of the nasdaq 100. they are big animals and this is a big week for that particular index. it is down hard on the month, down much more so on the year. tom: we will do what we have always done, we just take a bigger, broader picture. patrick armstrong to join us on the bigger view of technology. from where you sit and with your london heritage, how alone is america with big tech? jonathan: i think they speak for themselves. think of the big tech names. that was the story in the last 10 years. that's why there was a u.s. bias when it came to equity exposure, because that's where those names were. this year, that is where the

weakness has been, not the strength. tom: with everything going on in the central bank derby, we have not discussed europe limiting the companies as we saw last week. how big a constraint is that on europe? joe: easier to reg -- jonathan: easier to regulate them when they are not in europe. my attention when it comes to europe shifts toward the central bank, with euro-dollar trending with a 1.06 handle. some people think they may hike later this summer, with inflation where it is an the euro trading where it is right now. tom: euro, 1.0676. the dollar right now buttressed up against 1.02. it does come down to all that we covered, economics, finance, and investment, and rebounds on washington as well. you wonder how this boom they are having in big tech will be greeted in washington. lisa: a lot of democrats pushing

back on the idea of elon musk taking over twitter. on a larger scale in washington, i think more interesting possibly protect is what -- possibly for tech is what the fed decides to do. have weak priced in tighter policy with a $215 billion hole in tech evaluations that were erased in april? have we priced it all in, or is there more to go? tom: bonds are giving me no love at all. five basis points on the 10 year right now, in from the 2.80 percent level. our bonds giving a signal? jonathan: i think a bit of a growth scare in the last 24 hours, but it has been brief, so i thing we got to see how things work out in china. that is how we started the week, with yields lower. yields lower again today by four basis points to 2.77%, but crude is higher and we got a different stance from the policy maker in china today, pledging to stabilize the economy, whatever

that means, through policy. crude just short of $100 a barrel. yields come in ahead of next week. it is the quiet period for the fed. no more fed speak this week. the only real data point for the federal reserve is the employment cost index which comes out on friday. beyond that, full steam ahead to may 4. tom: corn still above eight dollars a bushel after coming up near $8.19. thise -- this ends our farm journal coverage. doing us is patrick armstrong, plurimi wealth cio. would everybody stop and look at these technology juggernauts? how do we value them, and what do they really mean to our greater economic system? how do you frame microsoft? patrick: the juggernauts you can value with traditional approaches. i think they are reasonable

investments if you look at free cash flow generation, earnings generation, even a little bit at dividends on the mega cap companies now. all of the traditional approaches to value companies work for them because earnings are producing revenues and cash flow. where i don't think a traditional approach works is the tail end of the nasdaq, the big innovative companies that have no earnings and no real path to profitability in my opinion. those are the ones that, when interest rates were zero, negative real yields on treasuries, you could hope that with an infinite timeframe they would flow their way and do something that makes sense on an infinite multiple. with a higher interest rate environment with the fed hiking, you have real opportunity costs now, so isaac those kind of names are going to come under pressure and stay under pressure , whereas i think the big cap tech trading in the mid 20's, that is not nonsensical. that is a fair valuation for companies that have dominant

market positions and have pricing power and are buying back shares and delivering real earnings growth every year. jonathan: on big cap tech in america, have we under made -- have we underestimated the cyclical story embedded in them? i am singing of netflix last week. -- i am thinking of netflix last week. patrick: there is a cyclical element. alphabet makes its money by advertising, so it is a beneficiary of a stronger backdrop where restaurants, where travel companies when they advertise, youtube videos, all of those things. it is an advertising company essentially. apple is a cyclical company, but it has really turned its business model into much more of a stable where people just upgrade their phones on the two or three year cycle, and they've got their contracts where they get their cloud services. so there is a cyclical element

to them, but there's a lot of noncyclical steady earnings and cash flow that come with them as well. lisa: is it fair to look at these big tech companies as a monolith? i know you distant wish between the nonprofitable any profitable ones, but even the profitable ones, do they have enough distinction to be good and bad investments at the same time? patrick: i think there is some differentiation. you could just call them all faang's a few years ago when they moved up and down. i don't own facebook, which would be the cheapest of them, because it has got not necessarily a flawed business model, but a big part of its business is maybe in structural decline as demographics change and the older users are not being replaced by younger users who are attracted to what meta offers. so you can look at them in aggregate, but there is very different business cases for them now as well. tom: i did not do facebook.

i'm with you on that. granted, amazon has a huge additive here at $1.6 million, but these big names are something like 2.0 4 billion -- 2.0 4 million employees, which is absolutely stunning. are they carrying their weight in terms of social message? are they carrying their weight like ford motor and gm in 1947? patrick: that is a great question. i was actually staggered when i saw how many employees amazon added in the last quarter. i don't have the number off the top of my head, but it just shocked me how many people i hired in the previous three months. so they are big contributors to the economy. they do have a lot of employees. those employees are getting wages. the ones who have been there a long time are moving into mid-level management and getting the stock options, which have turned out to be incredibly

attractive ways to retain and motivate staff as well. jonathan: valero reported earlier on, of 34%. some big energy winners. i thing a lot of people are asking the same question who have been exposed to that story over the last 12 months. fantastic returns. at what point do they step away and start to realize some of those gains? patrick: the last three days have been pretty hard with what has happened to china. you have seen real rotation out of the materials and energy companies only cyclical risks. -- the cyclical risks coming from a china slowdown and slowing demand. i would view this is a great entry point. the cash flow these companies are producing, if oil prices stay anywhere near where they are now, the companies are ridiculously cheap read futures curves and steep backwardation, were oil falls to six dollars a barrel, the companies are still

-- to $60 a barrel, the oil companies are still cheap. i think you will have much stickier oil prices than what the futures curve implies. jonathan: patrick armstrong, plurimi wealth there. just creeping in over the last couple days. lisa: i find this fascinating, especially because most analysts expect oil prices to go back up once the spr, the strategic petroleum reserve releases, and up not having as much of an influence over the market. so why is this not being priced into at least wheelchairs, given that this almost seems like consensus right now? jonathan: morgan stanley, we talked about them the last couple of days. their price target was one told her $30 that's was $130. lisa: when it comes to the conflict in ukraine, that is not slowing down and we are not seeing any resolution in the near-term. tom: can we talk about the

employee count? verizon is not a faang stocks. we did not do this last week because of the ted hennig news flow we have been faced -- the titanic news flow we have been facing. verizon, $20 an hour, which pencils out to a run rate of $41,600 a year. that is just a stunning statement. jonathan: that $40,000 does not go as far as it used to. tom: no question about that. jonathan: especially given the price pressure over the last 12 months. tom: but it shows how far behind any people are from what microsoft, amazon, and verizon are facing. jonathan: and they are trying to catch up in a big way. i'm sure that is what some fed doves are praying for. tom: praying for it, you. lisa: are there fed doves? jonathan: where are rates right now, and where is inflation? lisa: fairpoint. jonathan: they can bark all they want. this is the most dovish central

bank we have seen in history, bar none. futures -0.3% on the s&p. this is bloomberg. ritika: keeping you up to date with news from around the world, with the first word, i'm ritika gupta. elon musk's 21 billion dollar mystery. where will he get the cash to buy twitter? musk has agreed to blighted -- to buy the platform. he's worked out how the financing will work, but he's been short on details on how he will cover the $21 billion equity portion he has personally guaranteed. he could sell some of his tesla stock. russian minister sergei lavrov warns there is a serious danger of new gear conflict over ukraine. lavrov told russian to be the risk cannot be underestimated. he signaled that the kremlin is willing to talk to the u.s. to try to resolve the confrontation. the biden administration wants to widen access to pfizer's promising covid therapy bills. starting this week, tens of

thousands of pharmacies will be able to order the pill, and the administration will launch more sites where people can be tested, examined, and get pills in just one stop. the pill must be taken within five days of the onset of symptoms. the world's second largest container line expects a strong ocean shipping market to continue after a strong january to march period. shipping is thriving as supply chain issues throttle but keep capacity flowing. 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. ♪ ♪

>> if you can let it ride with elon musk, why not? he's not laid out his plans except for his views on free speech. so we don't know what he's going to do on the cost structure. we don't know if he's going to bring it in and run the company. betting on elon musk has been a good bet for everyone, so why not continue with that bet? jonathan: the words of michael nathanson of moffat me fincen. from the -- of moffat nathanson. from new york city this morning, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. futures down 0.4%. a big day for tech earnings. warner bros. discovery ported earnings a little bit earlier. on the earnings call, "we will not overspend to drive subscriber growth. we could launch an advertising only service outside of the united states." tom: with the stock price, i

would suggest on their synergy the word is we will speed up. i think they will move absolute light speed. they really don't have a choice. we have a choice, which is to talk foreign exchange. that always leads us to the competencies jordan rochester, nomura international. about three tottenham wins ago, jordan time on -- jordan came on and said euro weaker. what is the point for euro weakness where not so much the politics and jawboning clicks in, but the financial system starts to feel the stress? are we there at 1.05, or is it a true parity call? jordan: that is a good question. that was something i was talking about this morning. the levers we get to our close to breaking the 2020 low when we had covid first hit. so this is quite a monumental level. things were really bad and 2020 and this is now saying it is

pretty close to the same level. i think we are going to break that today, tomorrow, this week at least. in terms of the euro-dollar move, it has been driven by this risk off we are seeing in markets and growth shock has been priced in from the lockdowns in china, but we have the 2016-2017 period when we started pricing in the potential for a le pen presidency. we had dollar strength as well. when you break that level, there is not really much stopping you going all the way to parity. if you do a long-term chart doing really far, euro-dollar has been much weaker than it is today, back in the 1970's and 1980's. so where do we get to after that? you had the sort of 96 to 98 levels in the 2000-2002 period around the dotcom bubble.

so it is not a golden rule that it bounces back. it is not a golden rule that parity is some line that euro-dollar can't cross. if we see this continued risk off, this growth slowdown becoming a growth recession, and policymakers in europe, the u.s., and china not react to that because of inflation, the knees -- the knees levels in euro-dollar can be changed. s&p potential for lower is now building. jonathan: we have broke 1.27 today. there is a central bank that is hiking interest rates. the ecb any people think is about to hike interest rates. i am trying to work out, our ecb rate hikes euro positive or negative with this backdrop? jordan: i think euro positive, but they are not doing compared to the fed -- doing enough

compared to the fed. we've got 75 basis points. there is such a big difference of the fed cycle versus the easy be. -- versus the ecb. the market is more convinced that growth in the u.s. will be more sustained than europe because europe is much more exposed to this natural gas and energy crisis from ukraine and russia. europe is also way more exposed to china and 3% of german gdp is just exports to china alone. that is why the story from the right angle is easy be are going to raise rates. it is much more than what economists thought three month ago. therefore, euro is not left on its own -- not enough on its own. lisa: this has been an increasing argument as people have been moving away from central bank policy and more

into currency plays being a pure growth story. jordan: indeed. i think we are looking at central banks in such a different way. before the supply set of the global economy, all of the european economies that entered the euro, the eu over time in the to thousands, we've had a massive increase in supply over the past two decades, from economies joining global trade blocks, and at the same time, center banks have low inflation, so the main thing that determines what central banks did was growth because growth does drive inflation when it is demand-side lead. what is happening now is such a supply chain stock that you are having this inflation come through, and i think it is the case that the ecb is looking to raise rates in the slowdown. it all says to me from a growth angle, the ecb is probably not right to hike it, but from the inflation angle, they really are. we are also seeing core

inflation picking up much more than what economists thought a few months ago, and the data i am looking at, the last pillar of the doves on the ecb counsel is about to fall, wages. we are already getting compensation for the employee. there are some signs that labor costs will go up as well, and negotiated wages is the last pillar of all of those. i think they are going to go higher in the next year as well. it is a growth slowdown, but as volker had to do with as well, the ecb has been dealing with higher inflation as well. jonathan: can we squeeze in some football? your next two games at villanova , are you getting sucked into this? jordan: i hope we win those games. we need to. they've had such a bad run as manager that if they lose one more, it is the same sort. i think he's probably going to survive this, so the main thing

is. tom: -- jonathan: this is what you call how to lose an audience in america. you start talking about things that nobody understands. jordan, thank you, as always. jordan rochester of nomura. tom: i think it would be the best thing for really struggling american sports, including the national hockey league across all of north america. it is just a wonderful clearing of the mind. jonathan: very cruel to the clubs that get sucked down. they can follow the way down and keep falling. tom:tom: i think there is an intensity that we don't have here. the only thing helping us in red sox nation are the baltimore orioles and the kansas city royals. the red sox are basically the

last place team now. lisa: the mets. tom: they should be relegated. jonathan: futures are down 0.4%. the opening bell about an hour away. from new york, this is bloomberg. ♪

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jonathan: live from new york city, this is "bloomberg surveillance" on tv and radio. on the s&p, on the nasdaq, going into an important day for the likes of alphabet and microsoft, reporting after the close. with some economic data in america, here's mike mckee. michael: general goods orders for the month rise zero -- durable goods orders for the month rise 0.8%, not bad. ex-transportation, up 1.1%. it looks like the overall transportation numbers were down a little bit, but that is heavily influenced by boeing. capital goods orders, nondefense ex-aircraft, up 1%. breaks a string of negative months. last month, down -0.2%.

it is double what was expected. the analysts thought we would get a 0.5% increase. the fed is trying to gauge consumer demand, and this is an early indicator of where we might be with that. you noticed yesterday whirlpool in their earnings came out and said consumer demand is waning even though people are still buying more appliances than they did before the pandemic began. i just want to to check that here. consumer new orders for appliances and components up 3.9% in march. so still some strength out there , and that suggests there is still some strength in the economy for the fed. tom: do you know q2 gdp right now? any sense of where we are, or is it too early? michael: it is too early to get a read on gdp, but on thursday we get gdp for the first quarter. it is going to be with a 1%

handle. tom: really? powell will have a below 2% in the march gdp? michael: and how nervous are the market's going to be about that? jonathan: mike mckee, thank you, buddy. equities still down 0.3%. tom: durable goods, you take a three month moving average and move on. michael mckee will do that through the morning. this is a great joy right now. michael mayo joins us. to say he is senior equity analyst at wells fargo barely describes his contribution to bank and financial security analysis. long ago and far away, i met him when he was at credit suisse on one of his journeys. that was fractious, to say the least. he joins us this morning with perspective on citigroup and the jane fraser challenge. let's look at the ratios, and they are a little bit apples to oranges here, but i've got a citigroup price-to-book of 0.55 off of bloomberg. jp morgan shining bright at

1.44. mike mayo, i'm sorry, credit suisse, and i get it, it is a different calculation, is 0.40. fortress fraser is pretty much on the cusp of being a credit suisse. mike: well, there is a chance to do something about it today. today is citigroup's annual shareholder meeting. i have my one share of stock which allows me to ask questions at the annual meeting. unfortunately, there are some issues with this meeting. first of all, it is a virtual meeting, which they have said they did for "the convenience of shareholders." how is it convenient when shareholders cannot attend in person? then there's the formal proposals. proposal number one, the election of the board. i am saying fire city groups board. at least fire the 11 of 15 members who were in place four years ago when, at the same meeting, citigroup said the

restructuring is done. now today, under the new ceo, citi is spending over 10 billion dollars to restructure again. just fire the board. this is it. tom: let's be constructive here. you want to throw peter blair henry on the street. he's been a good guest, of course. his contribution to new york university and all. besides that, he was a good basketball player. what makes up a good board for jane fraser? what do the new members have to look like? michael: each individual person may be fine in their own right, but collectively, they have failed to get the job done. you need some new, fresh perspectives. you need people with finance experience, especially technology experience, governance, and we need people who are going to be shareholders' advocate because it citigroup, for the last five

years, 10 years, 50 years, has had worst in class efficiency, returns, and stock market performance. and as you well know, we have talked about this a lot on this show, citigroup has not been looking after the interest of shareholders. they have been protecting management, employees. might be a great place to be a customer, but when it comes to shareholders, they are getting the bad end of the stick. lisa: can you be more specific about what you hope they would do? is it shrink in terms of the footprint in investment technology, or is it something more intangible? michael: the good news is the new ceo jane fraser has the potential to be the ultimate change agent, so citigroup is selling their consumer operations in asia. they look to sell their consumer business in mexico. i have been calling for that for a decade. they are focused on gaining share. they are and 100 countries.

they are looking at gaining share in banking and capital markets. that is a great goal. they are more focused on that now, but restructuring that stops at the management level is a restructuring that does not go far enough. when it comes to citigroup, we are talking to yet another ceo with yet another restructuring plan. at one point you have to say who is overseeing the overseers, and to that end, we need fresh blood on the board. it will be interesting to see if any of the directors get 90% approval. the 11 directors who were there four years ago when they said everything is hunky-dory, will they get less approval rate than the four that have been new since then? lisa: so who is the winner of the bank earnings season so far? michael: i will tell you, i cannot believe bank of america

is performing as well as they are. here is another example where i thought the ceo should be fired about a decade ago, brian moynihan, and now he is on top. this is a 10, 15, and 30 year story. there's been 10 years of retooling with technology that allows them to improve their profit margin, 15 years of de-risking since the global financial crisis. tom: come on, mike. you are killing me. i said this on air the other day. you've got to give moynahan a little bit of credit beside he had great boxes at fenway park. the bottom line is what he was handed from ken lewis was absolutely a shambles, wasn't it? michael: yeah, but if you put me back in 2012, 2013, i would still say he should have been fired or not gotten the chairmanship. i don't think he was ready to be ceo. but he has grown into the

position. tom: what is your single buy right now? michael: bank of america, bank of america, bank of america. i cannot believe that all of these interest rate hikes that benefit bank of america more than any other bank that this stock is down so much year to date. tom: how is he doing on digital? jamie dimon is writing 44 pages on the annual report. jamie dimon is giving us one paragraph that seven people have sanitized. how is he doing on digital? michael: brian moynihan does not talk the talk, but he walks the walk. i would rather that over the alternative. digital banking, bank of america is one of the digital banking leaders. you can talk about neo-banks, talk about fintech, talk about big tech come up up -- dig tech, but bank of america is building deeper digital relationships in addition to acquiring new customers. jonathan: if you were wrong about moynahan back in the day,

why do you think you are not wrong about citi now and won't be in 10 years? michael: i feel good about jane fraser redirecting citi and putting them on a better long-term path. i just don't feel good enough that they are looking out for shareholders enough. i would like to see managers at citigroup put more skin in the game, buy more citigroup stock. let's see the board put pressure on management. by the way, proposal number two today reconfirms their auditor, kpmg. kpmg has been in place for 53 years, yet the new regulatory consent order says they have internal deficiencies. proposal number two, vote no. proposal number three, they have a special comp plan, a transformational vote plan. so vote no today on proposal one, or puzzle to, and proposal three come of the compensation. i just want to see someone

overseeing the overseers. i need someone to protect my interest, my shared stock. tom: do you think mike mayo got a fruitcake from citigroup one christmas and it didn't work out? jonathan: i'm not sure he even got that. mike, thank you. that one stock does entitle you to a question, sir. we appreciate it. you mentioned jamie dimon. i think one of the greatest bond ticks, rumor when -- were number when jamie dimon committed the market and bought jp morgan stock, and basically on the day it was at the bottom? tom: i think it is the story we mentioned with diane swonk the other day in chicago, sort of put out there by others, what he did, and mr. harrison was there at the bank, and who is this jamie dimon guy? what is he going to do for us?

as you say, he built it up. what is important is he has had to reset about four times. that is tough to do. jonathan: it has been about 15 minutes and we have not and should twitter. dan ives coming up on twitter on "the open" on bloomberg tv. on the nasdaq, we are down 0.6%. you like the final word? tom: no, i just think you ought to mention meta. jonathan: meta out after the close tomorrow. i can hardly wait. after the close today we hear from microsoft and alphabet. tom: is your 9:00 hour going to be twitter free? jonathan: until 9:30, and then at the opening bell we will get our teeth into it. lisa: you think you are not going to mention it until 9:30? i will take the under on that. jonathan: someone else might. that is a technicality. [laughter] someone else might. from new york, this is bloomberg.

ritika: keeping you up to date with news from around the world, with the first word, i'm ritika gupta. it will be one of the biggest leveraged buyout deals in history. elon musk clinched the deal to buy twitter for about $44 billion. taking the company private is just the first of what is likely to be numerous changes. musk has advocated for removing constraints on speech and has cast doubt on the advertising model that accounts for the bulk of twitters revenue. beijing has begun mass coronavirus testing as part of an unprecedented scheme to squash omicron's spread before it spirals out of control in the capital. nearly 50 million will undergo three rounds of covid testing through the weekend. president biden may add a global food aid request to the military aid package he is sending to congress. the war has disrupted exports from russia and ukraine and there is growing support for providing as much is $5 billion in aid. united parcel service posted

first order profit that beat estimates. price hikes and efficiency gains hoped offset higher costs and a slowdown in package deliveries. ups plans to double share buybacks this year and reaffirmed its outlook for the full year. apartment rents in manhattan skyrocketed the first three months of the year, according to data from street easy. prime sections of the borough sans increase of 25% or more. residents who left manhattan during the pandemic are returning, while others are searching for new apartment. it gives landlords the leverage to jack up prices. 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.

>> the fact that china is slowing down may give energy prices a pause, and that may help the inflation story a

little bit. it may give the fed some room to not go as far as they want to go, or that they keep saying they are going to go. jonathan: sarah -- tom: sarah hunt, portfolio manager at alpine woods. futures at -24, dow futures down , a little bit of weight versus this morning, but all in all constructive over the last 24 hours. jon and i are watching one to ¥7.30 as well. right now a joy for lisa and myself. javier blas, "the world for sale" profoundly prescient before the surge of oil. we all know the traders having a field day as well. i've got to go to what is ingrained in my youth, which is in the first and profoundly the second opec shock. everybody had to go out and buy

what we call a diesel rabbit in america, which was a 1974 vw golf. diesel is through the roof. the diesel now is not the diesel of the 1970's, is it? javier: no, you are absolute right, particularly on the east coast, and particularly new york harbor, the global pricing point for diesel. tom: diesel is priced out of new york harbor? javier: yes, and you can go on the nymex, now owned by cme, and go with a long or short position in diesel in the new york harbor, and that market is extremely tight get inventories on the east coast for diesel are the lowest and 26 years, and that is where we are seeing a blowup on spreads of what i call biblical proportions. tom: when i get a map out of europe and the war of ukraine or

northern europe, continental europe as well, that is all about diesel at the heart of their business, the heart of their transactions in trucking and the rest, is that correct? javier: that is correct. diesel is the warhorse of the global economy. we won trucks -- we run trucks on diesel, farming runs on diesel. farmers will face the highest prices they have ever paid for diesel now that they are hitting america. tom: i can see you as a kid tooling around in a diesel mercedes. lisa: well, you would probably be the only one. i do wonder, given the tightness you are seeing in the diesel market and frankly in crude more generally, why have we seen that translate into price declines? we know that china is slowing down and locking down, but that has been a reality for a while. is that enough to keep prices where they are? javier: i think the chinese

story is the main reason prices have been lower than many traders were expecting. they were expecting $120 by now. the chinese drop in demand has been a big surprise for many. let's not forget crude oil from the strategic petroleum reserve hitting the united states, and the international energy agency reserves heading many markets like japan, that is adding pressure to crude prices. but you cannot resolve the problem of products, and particularly the middle of the barrel, the diesel market and the jet fuel market, where we are very tight right now. lisa: what do you see in conversations between the united states and saudi arabia? is this more behind the scenes? javier: there is certainly conversations behind the scenes, but so far those conversations are not really working. in the past come of the united states would have already got saudi arabia to increase

production and send a signal to the market that they were going to cap the upside. at this point saudi arabia is very comfortable where it is. the average price year to date is about $100. saudi arabia on average is going to produce the most oil it has ever pumped at around 10.7 million barrels a day. saudi arabia is going to make money this year in nominal terms then it has ever made selling oil. lisa: how much have you seen some of the production come back online, some of the big oil and smaller oil players, the shale players, start to reinvest in a way you had not seen a month ago? javier: we are seeing an increase in u.s. production, a bit of an increase in drilling activity, but the big problem everyone is complaining about in the shale patch is they need and power, they need steel, they need a number of services, and everyone is facing huge inflation on services. we hear over the last 10 days for the service companies, they

are basically sold out for the rest of the year, so you cannot get a lot of production increase when the service companies that help the oil companies increase production are actively sold out for the year. tom: i'm taking this off of a website. i'm going to go with it. italy, $9.08 a gallon. finland, $9.20 a gallon. hong kong, $10 90 since i gallon. are you observing demand destruction? javier: i pay almost eight dollars a gallon when i was filling my car up on saturday in london. tom: you're the only one in maker with a hummer h2, but continue. javier: yes, we are continuing to see demand destruction in certain countries. but in other areas of the economy, the appetite for trouble -- for travel is very strong. that is an indication that the demand is still there and people are willing to pay the price because they want to travel. tom: are we going to see demand

instruction in the airlines? the ceo of united set on the show maybe not. javier: i think on airlines, probably it is going to take a lot longer because there's appetite for travel on low hall travel, things we have not done in a long time. i would expect we see more demand destruction because people now have more flux a book commuting. you don't need to come to the office -- more flexible commuting. you don't need to come to the office everyday. tom: i don't. lisa, did you tell me that? lisa: i did not. i think you need to get oil higher in terms of all of the road trips. i've got to say, it is a fascinating moment given what we are seeing in the oil market, given the whipsaw action in how much the peripheral story of china is coming very much to the forefront has such a huge impact on oil prices. tom: we got people down at $80 a barrel, but i would suggest a consensus opinion are

people really thinking about this, like javier blas, at $120 which i have not mentally framed. lisa: amrita sen pointed out that the lack of liquidity, the fact that people are not able to maybe post margin in the same ways because of the increased marginal requirements post-lme, is fascinating to me and how that could shift in a couple of months. tom: can i show you some organic revenue breakout? wendy nicholson is a jewel. she is at citigroup and owns the high ground on packaged goods. pepsi, the makeup of their organic revenue growth, price 10%, unit volume only 3%. i would not have guessed that. lisa: we are seeing that with ups as well. this speaks to that pricing power. they are passing along prices to consumers. consumers are paying. what does that say for the fed? tom: what does that say for the third and fourth quarter of this

year? we will see. futures -21, dow futures negative 189. one of my favorite people, i was talking about him last night, blinder of princeton. 12:00 noon, the former federal reserve vice chairman. ♪

jonathon: live from eric city

this morning, good morning. coming up this afternoon, a big day for big tech. the countdown to the open starts right now. announcer: everything you need to get set for the start of u.s. trading. this is bloomberg "the open" with jonathan ferro. live from new york city, we begin with the big issue. >> big tech earning kicking off. >>it's not a great backdrop right now. >> a terminus backup and yields. >> all the overhang with what's happening in china. >> it has become very tough right now. >> you have certainly seen the market take out pretty significantly companies like facebook or netflix. >> in terms of negatives, it is meta and facebook. >> you