>> the fed is pretty much setting the tone. >> the fed is trying to do something that they have never done before. >> we have to get past, not only the tightening of central banks but the impact on growth on the others. >> they can continue to do really well, i think. jonathan: good morning. this is surveillance live. futures are up by 10%. tom: there will be some other data but it is the macro data that we are looking at.

used car is is getting a lot of press right now. the dynamics of this odd market, but what is important is not three days trend. i am focused to be of meetings out. this data this morning matters to jay powell. lisa: the fed will probably be more patient. if it is every other component that we are seeing, that might

be a bigger problem. jonathan: it is about. lisa: that seems to be where they are trying to transition. it really translates more into a growth scare. earnings have been painted as bad. jonathan: looks like they are stuck between a rock and a hard place. tom: if we get back to 5% inflation, do you take a victory lap?

jonathan: i would say no. teachers look like this on the s&p. we are staying on top of this move for you. six basis points to 293. the high have the week is 320. a little more than 20%. lisa: the yield move, i wonder if we are looking at the transition. we expect to get 8.1%. a decline in the much weeding. what is ok when it comes to the

plate rate? how much are people actually earning and able to spend? that might give you an answer. right now, they are able to spend much less because wages are not keeping pace and this matters. less long than if this were driven by wages going up. we are asking these questions about the dynamic. how much this is telling a story. i had of that key number and deliberations, that will give a sense of where the demand is coming from. we are looking at a lot of the pandemic darlings that have gotten hammered. it is a different story. one of the ideas of electric

vehicles, almost 80% this year. is this the bubble bursting? jonathan: i'm glad you brought up disney. you know the chatter is that maybe they come back to the company, given the difficulties they have been having. tom: corporations are adapting to this. my theme of my experience, and given inflation. jonathan: down 16%. joining us now, amy, what is

something you have done some work on? there is much less to hedge. >> there certainly is. underperformance has been dramatic. people you do not see that. why is that? you see that in the growth and de-risking. we usually use that as an indicator. unfortunately, the indicator has not been that helpful, as of late.

tom: brilliant dynamics there. have we taken the speculation out of the system so much that we could see a jump condition once things straightened out? >> that is an interesting question. we have seen a lot come out of the market. i think about the retail and high momentum names. a lot of that has gone away. we look at how much. it still not to the degree that we saw during the pandemic. we are at such high levels, so it has been difficult for a lot of people to play into these options.

lisa: have a basically been scared out of the water? thanks a little bit. from the last 10 years, that positive momentum always begets positive momentum. we are in a new regime of momentum. once you see year option premium going from $100 and zero dollars, you feel that quite viscerally. interestingly, it is not like we are seeing retail investors buying any of those options. lisa: are you surprised that there has not been more fallout from these bubbles bursting within certain sectors?

>> one question that i get is, is it time to sell volatility? does it make sense yet? there is a bifurcation. these are all negative cash flow . it is extremely highly leveraged. even down 80%, there are a tail risks. they are also the cohort of positive income and low leverage. those valuations start to speak to you. jonathan: we have to leave it there. talking at this idea that we have broken into a higher volatility regime. overnight into this morning, he

talked about the fed tightening, expecting decelerating earnings growth. there is a price target of 3900. flat market from here out today. in between, expecting an overshoot to the downside. i think we are all set up for this idea that the fed goes 50 again and reassesses. nothing about this will be simple. i think that is still the case as we work our way through and have had this mechanical peak. tom: we are all focused on economic dynamics. frankly, including the pandemic, as well. the chairman is probably focused

on the derby tomorrow in london. we could get there just in time for the derby. jonathan: is lisa coming? tom: i do not know. lisa: i have been trying to. is this really where we are going? i really want to see tom keene's wikipedia searches in the break. tom: if i call olivia newton john, that might have some sway. jonathan: futures are up. inflation data and america. -- aiden america -- in america.

>> price. that is unlikely to be enough to keep the fed from raising rates. the u.s. has approved an emergency spending a bill for ukraine. it pays for new weapons and provides economic and humanitarian assistance is larger. the bill heads over to the senate where approval is likely next week. likely the first black woman on the federal board of governance. 51-50 vote for her. etc. rating a push beyond

cigarettes. the company agreed to buy smokeless tobacco in a transaction that represented almost 40%. philip morris generated -- the japanese forecasting a lower profit outlook, citing an unprecedented rising cost. it is offsetting the benefits of a depreciating yen. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

>> some but there are things that we can do and address. that starts with the federal reserve. jonathan: addressing higher prices in america. the president will speak again today. from new york city this morning futures are higher by more than 1%. yields are lower again. up by 3.6%. gasoline, four dollars 40 cents.

diesel is $5.55. tom: think about what he has been doing on nigerian fuel. they said they were going to stop flying domestically, and now the state will support that. jonathan: it is not about the prices on the screen but the prices that people actually pay to use energy. tom: you can go back to the 1960's with our washington correspondent. she remembers lbj coming out with -- they had to do it two years later with an exorbitant 5% inflation. what is the track record the

white house has to go after this inflation? >> you guys have the same music taste. what the white house is worried about is jimmy carter. they are worried about joe biden and the democrats in general, unable to keep control, just because of inflation. it is suspected to come down. if you look at goldman sachs, in november, there will be 7% inflation. that is something that will haunt this administration. tom: there had to be a radical

change. how do they respond today? >> these are numbers that wall street will talk about, but in washington, the main issues they are talking about is what we have today? fresh record. you are going and filling up your truck. they will come out with another inflation speech, blaming the war in russia, the fact that they account for outside perspective. you look at wheat and how they can do more to keep a robust, domestically focused produce in this country. how do you alleviate some of these concerns? they will continuously hammer them on not bringing prices down.

he told us that this was going to be temporary. lisa: you mentioned the price hike. we want to delivery on whether or not they will force russia to default on their debt. what are the pros and cons? how much to be playing into the inflation story? >> there are two different views of thought. if you allow russia to pay these debts, they are bringing their own income. it is less income that they can use towards funding this war. there is the thought that if you force russia into default, that just means russia economically

crumbles even faster and could potentially bring this more to a close sooner. that is the economics of it. it might be difficult for the treasury administration to go ahead and say, we will have this exemption to pay off debt. you can see how there are two different schools of thought. jonathan: it is so important. nobody wants to do that. they put out a plan and you know this plan. urge car sharing. avoid business travel. it would be political suicide for the president to endorse

some of this. you asked about it in a news conference the other day. >> that is the direction of travel. gasoline is too high. we are already seeing in the marketplace, demand destruction. he said that he understands already that americans are making this decision every day. when there were higher prices, this is something that they discussed. tom klein continue. i am sorry. >> it will not impact by november. that is creating a greener implication.

tom: it captured perfectly the idiocy of 1974. it was so preposterous. just consider. >> this will potentially happen. they are about to do a massive band -- ban on oil. going into europe, this is not an issue right now because it is sunny outside, but it will be an issue this winter. jonathan: they do not want to go

there, and you know why. they do not want to go there. the economic data in america. it is an hour away. this is bloomberg surveillance. this is bloomberg. ♪

♪ jonathan: live from new york, this is "bloomberg surveillance ." we have the words of morgan stanley on the program a little earlier. let's go there again. he has a target of 3900 for q2. it is basically where we are now. basically, an overshoot to the downside. the perspective is tightening to slowing growth. as we start to think about slowing growth and less so about inflation given we may see a peak develop in the u.s., it is interesting what is happening in the bond market. the higher the week, 320 -- the high of the week, 320.

jp morgan looking for a front and move. lastly, we saw 285. right now, 2.5858, down a couple of basis points. when we go through this later, we will go through the headline, year-over-year, month over month. it will be less so about a peak and more about whether we stabilize and how the fed needs to take this ultimately. meantime, for nomura, they think about it like this, two big issues, ukraine-russia, and china. a move to parity in the next two months. right now, 10556. tom: and i do agree that is the key data point across the bloomberg screen. right now, we will look at the stock market. futures up 45 forget is at the bottom of the market? -- futures

up 45. is it the bottom of the market? jonathan: a new higher volatility regime to try to get your hands around. let's get you some single names, some movers this morning. romaine: if you are talking but i rebound, you have to talk about how much conviction is behind the rebound. the philadelphia semiconductor index yesterday seemed to be a barometer. that includes nvidia. the rally appears to be continuing here. nvidia up 2% but we were talking about this a lot yesterday on the close about aggregate volume was a little higher. some of the single cell volume was anemic. meaningfully higher 3% to 5% on the day. keep your eyes on that deeper into the day and week. a peak of the inflation data in one hours time. really starting to weigh on

sentiment with oil-based shares down. platform growth not there. trading volume in terms of actual dollar value is not there. this is a company that lives and dies off of trading and if more people are not on the platform, that is a problem. they talked about trying to diversify but that looks like a longer-term project. that cracked you up, doesn't it? tom: come on. i am doing the percent change here. i am sure you got it memorized. down to 78% as well forget what is next with this disaster? romaine: what the company says is next is expansion into india and more importantly trying to diversify. tom: but seriously, this is blowing up this morning. how do these clowns get to friday? how do they get to? friday romaine: i don't know the answer to that but i will tell you you have a company here now that of course was built off the

euphoria we saw in this market. there was a lot of retail traders that tried to diversify moving more to the institutional side. that showed up in the numbers but not enough to compensate what they had before and that will be the big story going forward, whether they survive past friday or not, i believe that up to experts. when you guys are keeping your eyes on the cpi report coming out and about one hour time here. really talking about keeping eyes on discretionary names that you think about. when bees came out with earnings and they were bad. the margins really contracting here. they blame labor costs and food costs. tjx could be a canary in the coal mine because it affects the consumers that have been squeezed by this was a no matter what the fed does and what that number shows, a lot of the damage has been done. probably one of the biggest discretionary names out there, disney. look at those earnings. tom: after the close, look for that. right now, this is really

important. when it is 20 below zero like it has been at columbia university, we are joined now by a senior interest rate strategist. i will cut right to the chase forget i love your note about there is no alternative and everybody slow down the foundations are intact. dollars intact. treasury markets intact so we can calm down and say there is no alternative stay in the markets, right? >> that is right. when it comes to treasuries, the notion that we will move into the secular bear market requires us to unwind a lot of secular factors in place over the past 40 years. i am not confident enough at this stage to see that likely to happen. lisa: what do you make of the recent rally in bonds? edward: i think bonds are now relatively fair to cheap when you look at valuations. if you look at the 10-year note, investment grade bonds, cheap enough relative to high-yield. these are very attractive

valuations we have not seen in a number of years. so to continue selling bonds into this environment really requires conviction that the fed will be unable to bring inflation down over the medium-term. we don't have that conviction forget i think it makes sense for bonds to start to stabilize forget of course, where they will be at the end of the year is a huge range. but from a valuation perspective, i think we are in a good place at the moment. lisa: how has the range shifted as we see market shift from a rate concern to a growth concern? edward: i think if you look at the longer end of the curve, there is likely to be downward pressure on it as the fed continues to hike into what the market has priced for it into the end of the year. again, we will see what surprises we have on the inflation and growth front, but at the moment, it looks like we are on the cusp of both starting to decelerate. how quickly that happens is open to debate, but the direction of travel in the second half of the year will likely be lower for

both, and i think that is important for the long end of the treasury curve. tom: you have a completely different look then amy who was on with us one hour or so ago, but it does dovetail into the measurement of speculation. we pounded the speculation out of the market -- have we pounded the speculation out of the market? edward: my gut sense is not yet. tom: how do you determine that? what cristobal do you use to determine that? edward: it is a psychological phenomenon. it is difficult to look at the market metrics and be certain, whether it is brexit or price action on any given day or week. you really need to see a combination of price action and narrative change. we have not seen that narrative change yet. you need to see more panic, particularly in the riskier parts, more leveraged parts of the risk space. we have not seen that washout yet. lisa: what about within the

credit sphere? we have not seen the washout there. edward: credit has been very interesting. if you look at the behavior of credit spreads so far year to date, credit has definitely widened. i think a bulk of it reflects the fact that interest rate volatility has gone up forget much less of the whitening concerns about growth, credit worthiness, liquidity, leverage in the credit space. so i think we are still to see that leg of the unwind happen, particularly in spaces like leveraged loans or high-yield. in fact, if you look at the performance year to date, investment grade has underperformed high-yield because it is exposed to interest-rate duration and interest rate sensitivity. that story has to shift in order for the markets to reflect a slowdown in growth. lisa: to put all of this together, i get the sense you are hiding out in longer dated treasuries, that that seems to

be your favorite bet right now. am i correct? edward: did i give it away? yes. lisa: you are adding to your portfolio and you have been the past couple weeks. edward: that's right. we have been incrementally adding to duration as the long end of the treasury curve has steepened, and we are opportunistic about what is happening in the credit space. if you look at investment grade credit in particular, it looks cheap at the front end of the curve. jonathan: wonderful to catch up and have you in the studio. we get inflation in 41 or 51 minutes to be precise in america and then another critical one on june 10, july 15, august 10. you have a fed meeting on june 15, july 27, and then you wait until september. this sets us up for the end of august. if they go 50 in june and again

in july, every fed speaker so far or a lot of them at least have been talking about the idea that we do this and reassess. the assessment would come at the end of summer. three prints today, june, july, and another one in august. tom: each of those calendar dates meets behavioral forget where will the war in ukraine be along that continuum? and critically more important to me, where the lockdown be in china at jackson hole? jonathan: and we have to wait? maybe you have to wait until further out to the end of the year to find out the answer to those questions. tom: the elephant in the room to me and particularly the china watchers is the national party congress where president xi has to be codified again for another bout of xi china. i believe that is in november. jonathan: at least not until fall later in the year. lisa: in the meantime, there are

some clues and we got that from the inflation data overnight from china that came out and showed he came in higher and hotter than expected but for the wrong reasons. food prices rising. things that people cannot get because of the lockdown. people going out and spending falling off of the cliffs so you have deflation there. this shows more of a picture and we might be looking at the granularity here. jonathan: just one request from an audience number. can you make tk stop singing please? can we achieve that this morning? i think a rendition of "let's get physical" is disturbing people. tom: me as well. it is like tying a ribbon. you hated the song from when you first heard it. that was a few years ago. iranian hostages. jimmy carter before he put the sweater on. jonathan: down on the 10 year. 2.93. tom: like donny osmond. jonathan: this is bloomberg.

♪ ritika: keeping you up-to-date with news around the world. the consumer price index is expected to show inflation has slowed down to 8.1% year-over-year forget some of that decrease may be due to a drop in gas prices. that comes out at 8:30 a.m. new york time. meanwhile, inflation in china rose faster than expected last month. it went up 8% in april from a year earlier. meanwhile, consumer growth accelerated 2.1%. european central bank president christine lagarde is joining a growing crowd of policymakers. a rate hike may happen weeks after bond buying happens. the u.k. and eu are at it again.

liz trust says the european union's latest trading arrangements will not work. she signaled the u.k. would take unilateral steps if a union agreement cannot be negotiated. prices are surging in some corners of the diamond market. about 20%. the u.s. imposed sanctions on one of the world's largest diamond miners. meanwhile, south africa's mining giant is not able to make up that difference. the diamonds are the type that would end up around a ring. i ritika gupta. amthis is bloomberg. ♪

>> i don't look out at the next month or two in terms of the eye of the storm.

i look at fundamentally where the names the next 12, 18 months, and that is the key right now in terms of this handholding time for investors. jonathan: it has been a tough moment. that is for sure. we managing director of wedbush securities. we are 32 minutes away from cpi in america. the nasdaq 100 up by 1.42%. yields heading south. they are not heading higher. euro-dollar, talked a lot about the cost of things at the pump. diesel, cast prices, record highs. 10404 on wti, up by 3.4%. mohamed el-erian writes in that some of us still like thai yellow ribbon. what is that song? tom: are you serious?

jonathan: never heard of it. give us a flavor of it, just a little bit. tom: hostages in iran. very seriously, all across america, people thai yellow ribbons across trees for support. jonathan: i've got that bit. i did not know this on. tom: around the old oak tree. jonathan: nice. what is next? [laughter] tom: i don't know. mohamed el-erian was just like this. can we move on? jonathan: of course. tom: here to save the show, someone else who does not know tony orlando. kriti gupta with us. kriti: at least i have an excuse. i am young and inexperienced in music. the cost at the pump, how much the consumer's facing right now. let's talk about how much corporate america is facing right now. the forward operating margin

looked a lot like the s&p 500 chart before the massive selloff we have seen. essentially, the story here is a lot of these companies have been able to pass on costs to their consumers and therefore are able to expand on their margins. margins hovering at a historical high going back 20 years to 2005. if you zoom in very close, you will see your to date the markets have started to slump. if you were to overlay the s&p 500 to this chart, it would look very similar until recently when you have the massive selloff to get the question here is, are stocks trading in on the margins right now or are they trading on valuations? i would argue based on this chart they are trading more closely on valuations. tom: thank you greatly appreciate it. now for a different conversation on disney, entertainment, and the "bob's burgers" movie, which is the next big thing to be launched by disney. michael joins us.

be blunt, nobody is talking about the "bob's burgers" movie. they are talking about the fractured management of disney. what happens here? what does she and the board do with the management of disney? michael: good morning, tom. i think given more time, bob capek's contract has another 10 months on it. he has a three year deal. i think he has done a great job on getting through that. but they are wondering about their streaming strategy and i think they give a little more time to see if they are executing against that strategy. it is tbd at this point forget it really is. jonathan: what questions do you have about the streaming strategy at this point? michael: here is the big question.

they had investor day in 2019, the original investor day when they rolled out the strategy of a super fast disney+ service targeted to pixar, lucasfilm, marvel. that was bob iger. 18 months later, the heart of the pandemic in 2020, they raised their targets massively because they outperformed those targets and also broadened out does the -- disney+. i wonder if the broader strategy was the right strategy. probably a higher price point. i wonder if they have the right strategy. were they misled by the pandemic and strength of the first year? i thought they had a bigger business here. it is a big question. i would like to hear them answer questions about whether or not they have the right strategy.

have they gone to broad -- too broad? can they rein it in and be the business but not the business they thought they would be? lisa: how low is the bar right now considering their shares are set for the biggest decline since 1995? michael: the bar is low, but the issue is the concern on the back row. they will stage a better come back. i would say it would take years for parks to recover but they have recovered. what people are concerned about is, are we at a point with the parks now rolling over again? not in good shape because of corn cutting. to me, the macro and the netflix selloff -- i understand the netflix selloff. the macro could move disney here. jonathan: on the social issues,

never getting them at the moment, and whether it is crucial to the bottom line. they have this mess down in florida. they are very cozy with china, the chinese communist party. your views on when this stuff starts to matter. michael: what is interesting on the china front, there has been the park in china, shanghai. the promise that china would open up its arms to china, that has not happened. the question on florida is one that is more in our view that they have not really addressed it. they are losing their special protection. i suspect it is worse for the state of florida than for disney

because i think the state would have to pick up or the counties would have to pick up the protection. will there be a cohort of visitors at the parks who will be offended by disney's stance or decide not to go? historically, that has not been the case. i tend to discount all the political news but i think it damages the brand image of disney and investing in public eyes. they have made a number of missteps that were self-inflicted. it brings doubt about how good the direction of the company is with the missteps. jonathan: and how bad is the leadership, which takes us to the beginning. thank you there. the drama continues. michael nathanson, good to catch up, a friend of this program. tom: i looked at the 20 year

trend and you are almost on the collapse of a disney price. a once-in-a-lifetime buy? i don't know. it is fluid to say the least. jonathan: that is a diplomatic way of putting it. 35 minutes away from inflation data in america. this is bloomberg. ♪

>> i just have a hard time being too optimistic about the inflation outlook. >> the reality is that growth may slow much faster than folks believe. >> it has been brutal for both equity and debt. >> i would not be in high yield at this stage of the game. >> we are seeing some form of capitulation out there. >> this is "bloomberg surveillance." tom: good morning everyone. on radio, on television, on this hour of inflation, a critical report in 30 minutes with