>> we came into this year and that is what you are seeing. >> that was a big change from six months ago. >> the fed may be overdoing it. >> we have a lot of uncertainty as to what the path of the inflation will be. >> we are hoping there will not be crashes but hard landings are

inevitable. >> this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz stared tom: good morning, everyone. bloomberg radio, bloomberg television worldwide. perfect weather here on our final day at these meetings at the world economic forum. lisa: it is very much the nature of conversation, talking about the war in ukraine. serious reports from companies that have projected down where their sales, whether video, exporting goods, all these different companies. tom: the next two days from switzerland, we will be in london tomorrow with a market centric analysis. what we are doing is looking at

the calendar. do we have a holiday on monday? lisa: we do have a holiday. tom: mi off? lisa: most people in europe are off. possibly that is why markets are so calm today. it is a noticeable shift. tom: what is so important is we are so upside down, we do not realize it is the end of may, we are one month away from midyear, we have the jobs report coming up next week. we will get a look at the pmi numbers that jon ferro thinks are so important and we will get a first assessment. lisa: we already got an assessment. this week, data that was disappointing and a green light for people to ratchet back expectations for the fed and the longer-term.

i wonder whether people are overly complacent and overly perhaps confident that the fed could orchestrate something gentle, which seems to be a growing consensus. tom: looking at the data, that is how desperate we are, looking for a tea leaf. lisa: we will be looking at u.s. jobless claims at 8:30. i am focused on the jobless claims, i know many others in the market are, trying to get a sense of how we gauge the labor market, how much momentum there is. we have seen a slight pickup because we have seen that pug claims are near record low -- we have seen claims near record lows. earlier this week on tuesday, we got new home sales that came in

absolutely terribly below all estimates. that indicated to a lot of people slowing in the market, which is on the heels of a 5% mortgage rate. at 1:00 p.m., i am doing this for you, tom, i want to know about the japanese investors. tom: are you kidding me? lisa: it is always dramatic. it always goes wrong. tom: i did not know this. lisa: there is not as much liquidity. tom: i am taking notes. this will be an interesting set of hours before we go to london. wrapped around this are the two panels i have done at the world economic forum. they have done a great job of finding experts synthesizing the

tensions of their narrow fields. sir lawrence friedman is with me this morning. we talk to the finance minister of malaysia about the unique challenges there. synthesizing all this at any given bank are people like marvin love, a macro strategist and he is the one reading and listening to what the experts here are saying to come up with a market. how has it changed your market view given the crises of this may? marvin: we have had a lot to deal with and a lot to understand. i think we have been in the camp that the tightening we have seen in financial conditions and synthesizing this different inflation ramp was going to evolve the way it has. we are starting to see the

substitution and a pullback in spending. having said that, the inflation story and to me more important the job story is still in flux. we can consolidate around things are evolving the way we think they will evolve, but until we get a better sense on inflation and jobs, we will be fragile. lisa: which is why i wonder about the complacency in markets. do you think this sort of narrative which has gained increasing clout on wall street has gotten ahead of itself? marvin: it is not as if we have rallied a lot of stocks. it is not as if risk assets every captured half of the loss. it is not euphoria. the fact we can pin to a transmission mechanism

potentially working in terms of slowing the economy is a reason to take a pause. whether you believe or not that the rate hike process will end in july after the next 50 basis points is premature in my mind. there is a lot of wood to chop between now and the fall. how much of this inflation discussion that is starting to spread will actually pull back as the consumer pulls back. lisa: how boring is the market until friday when we get the jobs report? marvin: we do not have a lot of data. the jobs numbers are the most important in the tier 1 data. we are all tired, we can take this as a moment to consolidate. the choppy days based on an earnings release will still keep the market jumping, if you will. that volatility can spike.

40 is off the cards until we get a better sense of what we are seeing and if it is a sustainable trend. tom: state street has been a leader in analyzing and questioning traditional asset allocation. the classic is 60% equities, 40% bonds. it has been ugly for the industry. is the 60%-40% certitude dad? ritika: i do not think so -- is the 60%-40% certitude dead? marvin: i don't think so. the allocation tables have pulled back on the equity allocation component. where it goes is the question. something lisa will love is when we look at the facility, to

trillion dollars, people are retrenching. tom: i think we have some technical difficulties on the 47 connections we have in switzerland, boston and new york. marvin loh, thank you for joining us. this is critical. you have the equity downturn, the bond downturn, you are better at this than i am. ig is down 12%. if you have the portfolio because you read a book, you have been hammered. lisa: people are starting to come back. we saw one of the biggest rallies and credit because people were thinking perhaps we were seeing capitulation by the fed already. the tightening of financial conditions have achieved enough for them. tom: is that a good thing when bond prices go up? the kind of conversation at 2:00

a.m. at your last corporate party of the evening. let's go there, lisa. is that a good thing is bond prices go up and yields go down or does that mean gloom because the world is coming to an end? lisa: there are two ways to thread the needle. people want conditions to remain tight because if they do not, the fed will be more aggressive. it cannot really move too much. you cannot see too much of a rally in risk assets because the fed would be too aggressive. but if you get stability to give people a sense we are not heading toward a hard landing and we will be in a low-inflation regime after perhaps 2024. your eyes are glazing over i am sure. [laughter] tom: let's go to a banker at bank of america, bank of america was the most visible bank at

davos at this meeting. they said we will be here and be visible, which i give them credit for. he is not playing the parlor game. he is trying to run a bank. lisa: he is looking at the consumer, which looked strong and that is a blessing and a curse. tom: why? why is it a curse that the consumer is doing better? lisa: because then the fed has to go harder to unravel this economic momentum. how do you deal with the labor market this type? how do you deal with consumers that keep spending? that there is no obvious way to slow inflation if you tighten things up? these are the dilemma that people are looking at. tom: this looks forward to the study this weekend and into the analysis next week, i am with loh, it is about jobs. you have to watch the job

dynamics to figure out the rate dynamics. lisa: even brian moynihan at bank of america said what he is watching his jobs. i am guessing he is good. just a hunch. tom: do you think his job is secure? dollar giving away a little bit. euro, 1.0718. stay with us on an eventful thursday. this is bloomberg. ♪ ritika: keeping you up-to-date with news from around the world, i am ritika gupta. the federal reserve thought aggressively raising rates would leave them with more flexibility if needed. fed officials agreed they needed to raise rates. the massacre at a texas school

has invited discussion to red flag laws as a compromise between the democrats and republicans. those laws allow police are family members to allow a court to temporarily remove firearms or keep them from being purchased by someone considered a danger. and the u.k., prime minister boris johnson's government will lay out a plan to help those struggling in britain with the cost of living. a comprehensive response. it will be partly funded by windfall tax from the profits of oil and gas companies. norway has been on top of the covid resilience ranking for a third month. a 91% vaccination rate in adults have helped the norwegians' fatality rate low. the u.k. is in 40th place while the u.s. is in 31st.

russia finished in last. a conservative stance when it comes to building iphones. assembling roughly 220 million of the devices in 2022. the mobile phone industry has gotten off to a difficult start to the year. 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. i am ritika gupta. this is bloomberg. ♪ ♪ ♪ the lower your drag coefficient, the more efficient you become. such amazingly perfect shapes run throughout the natural world. and can now be found in the automotive one.

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>> i think as long as we stand a course on tightening, the dollar

will do fine. if the fed blinks because of financial panic, which there is a high probability of toward the second half of the year, the dollar will come under pressure. tom: scott with guggenheim was with us yesterday. he led with crypto. he made worldwide headlines looking for a move from 30,000 down to 8000 and some reminded me with love notes. i got the hate mail yesterday to remind everyone that mr. minerd was down to 400,000. he did not say up to 400,000, but he look for some form of recovery. lisa: he said it broke through at a certain level he thought would be a buy point and then look at the fundamentals, where

is the buy here? tom: i got 32 love notes so we thank you for the repeat performance. it is happy valley, in the united states of america and seeing the horrific news, analysis of the tragedy in texas. we go to washington and annmarie hordern. i am going to use first names. beto speaking to the governor. there seems to be a modest outrage in texas over texas politics. how will that play out in the coming days? annmarie: that was a feisty exchange, beto wants to replace governor abbott. it will be a tricky situation in texas. there is an nra convention f aour-hour drive from where this -- an nra convention a four-hour

drive from where this massacre occurred. you are hearing about teachers, children, parents, it is incredibly devastating. in washington, it all comes to the politics. the president spoke about this tragedy. he will be making his way with the first lady to texas and he said he is sick and tired of it and wants change and the place where they are now are these red flag laws as a potential starting point for legislation. tom: someone at the nra will stand up and say, five shot remington .22s to squirrel shot in the woods so we need to leave guns alone. what will washington do with five magazines of 30 rounds of assault rifle ammunition? annmarie: at the moment, tom, nothing. there has not been a ban on

assault weapons since it expired in 2004. it depends on who you ask in washington what the strategy should be going forward. there is wide support in the public making sure there a stronger legislation for background checks but when you talk republicans, they say a lot of it has to do with mental health issues. democrats and the president say we should not be giving ar-15's and assault weapons to 18-year-olds. they should not be able to purchase them. there is legislation they have worked hard to try to pass on a bipartisan line but it was blocked by republicans after sandy hook. there is potential for red flag laws to be expanded. 19 states ndc have endured parents, an officer can go to a court and say this individual is

not stable enough to own a gun or we need to take the gun away. lisa: how much -- left to deal with this issue versus some of the economic challenges that are dominating the polls? annmarie: there is a lot of outrage in america that there was another mass shooting at this one was in elementary school. legislatures have to respond to that. they are getting phone calls, there is a lot of outrage in davos but there is a lot of outrage you can see on social media. they will discuss this, the house majority leader said, when they come back they will discuss the red flag law proposal. you have the senate breaking for recess. when it comes to the economic issues, this is something the republicans will want to pivot

going into the midterms because the democrats are going to want to use this tragedy to try to turn that into action. they will also want to use the overturning of roe v. wade, which you might be getting in june. they will want to use that to galvanize democrats to come out and vote but the economic issues are where the republicans will really lean into. lisa: when this biden going to texas? annmarie: we do not know the exact dates but he said he will go there with the first lady at some point. today is thursday, so it does seem like a weekend trip. this is for him to show his support. for president biden, losing a child is something deeply personal. he lost his son beau in his adult life and he lost a baby daughter when she was really young. this is something deeply

personal to the president. first lady said of course we are going there. tom: annmarie hordern in washington. thank you so much. what is so important is to get away from the horrific headlines that we see and take a random x number of days and figure out how fast we get to the sum of individual shootings that sum up to these horrific shootings and it is shocking. i am alluding to what beto o'rourke said, how quickly we get to further horror that is never publicized. lisa: how it is different from the columbine shootings because this is an event that has been repeated. there is a lot of talk and outrage and nothing ever gets done. tom: i will leave that to david westin and balance of power, but can i ask a dumb question?

why is this so rare in europe? granted, they have shootings in europe, versus the repetitive nature of america? that is an incredibly important question. lisa: i look forward to seeing what joe mathieu and david westin have to say about this. the focus in europe has been the horrors and the atrocities in ukraine and how that dovetails into a new democratic unity. that i think its a notable theme at a time when there is a lot on the plate. this is a different kind of threat to europe. tom: it is interesting to see on the panels i have had of the world economic forum how people immediately link the war in ukraine to food inflation we are seeing in the u.s. some countries are fairly successful like malaysia but some countries having a tough go of it with the lift in wheat and lift in rice. the euro, 1.07.

this is bloomberg. ♪

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tom: good morning, everyone. from the world economic forum,

meetings in davos, switzerland. lisa abramowicz and tom keene. jon ferro is on assignment. do we see him on monday? lisa: tuesday. we are off on monday, we just went over that. it is a holiday. tom: we will have jon ferro with us on tuesday. that is a beautiful thing. we will talk about the equity market. if you are in any form of equity investments, what we will do is, right now in new york, a look at the markets with kailey leinz. kailey: futures have been fluctuating between losses. nasdaq futures are lagging behind due to a few individual names appeared in the bond market, 10 year yield, to basis points lower.

the russian ruble catches my eye after the russian central bank cut rates for the third time in just over a month from 13% to 11%. trying to rein in the strength of the ruble that has gone from strength to strength during the course of the war in ukraine. the ruble right around 62.74. as far a few of the individuals i was talking about creating a drag on the broader market, apple is one. down 1.4%. they will keep production flat this year for iphones, they are dealing with supply-side challenges. a chip maker also dealing with supply issues stemming from covid-19. snowflake, the cloud software company giving a different

-- disappointing sales forecast. twitter, elon musk, $33.5 billion worth of equity financing for the twitter deal. shares are up 5.5%. tom: interesting. kailey leinz, thank you. mr. musk, a source of conversation in davos. stephen auth, decades of experience, a chief investment officer of equities, he understands how to participate in the equity market in a difficult moment. i want you to discern having cash and having a little cash, 4%, 7%, dare i say 10% of a portfolio, versus the emotion of being all in cash during a crisis. stephen: you have a really good

crystal ball, tom. in this environment, i challenge anyone to have a perfect one. this is one of the more unusual environments were even we, a base case, there are probably two base cases and you have been talking about them all week. will we be in a recession or a rocky landing? maybe a soft landing, but i think soft landing is off the table. rocky landing or crash landing. you want to stay diversified. we are holding cash instead of bonds and aggressive growth stocks as an offset. we are definitely long. broadly participate in the economy. this is an environment where people talked about in the past, economic slowdowns and earnings recessions. this time around we might be

looking at an economic recession but in earning slow down. lisa: we will get into that in a minute, but i want to hone in on something you said that is important. you set a soft landing is off the table, it will be rocky. has it already been priced in or do we have more to go? stephen: we are lurching toward pricing in. if you fully price in a rocky landing, a fair valuation with probably a 3% 10 year yield which is where we think we will be semi-permanently for the next several years, inflation does not go away. you put that altogether, you are probably looking at a fair value on the s&p between 3400 and 3800. it is more about the stoxx underneath that. we think we are closing in on somewhere near a near-term

bottom. we are getting ready to be a little more aggressive. tom: i am sorry, folks, worldwide, we can say that stephen auth has taken the kool-aid. i am sorry, lisa, he has the energy going. lisa: he has a depressing, gloomy view of the world. tom: this is not appropriate, steve. lisa: [laughter] it is not just about where we are, it is about how bad the recession will be. i do wonder, whether we are looking at possibly, yes, a hard landing, but that means a softer recession that gives people conviction in the short term. is that twisted or does that sound right? stephen: a hard landing is hard to get because the banking

system is way too strong. you will not have a banking crisis because it. we have so my job openings. instead of seeing layoffs, we are seeing slowdowns and hirings. we have a lot of slowdowns to go before we get job openings to be anywhere near job applicants. there is a lot of room for steam to come out of the economy before we get big cutbacks. even the consumer has positive cash. the idea of them actually stopping buying and causing recession seems unlikely. we are into the rocky landing camp more so than a recession. tom: can we get the nominal gdp call wrong? if we have at inflation size and a real gdp, actual growth size, can we get a better nominal gdp? stephen: i would not call it

gloom, tom. that is where we are. we cut our gdp forecast, we cut our forecast for next year for real gdp to 1.6. a rocky landing. nominal gdp, we have it seven and five the next two years and that is probably conservative. that gives the fed a lot of credit getting inflation down to 3% or 4%. if you have companies that broadly participate in the overall economy, telecom, utility, they will grow their revenue based on a nominal basis and they can have some margin compression but it is really hard to get an earnings decrease off of that. tom: ok, folks. it is thursday in may, you have blown up your portfolio.

stephen auth, explain the dividend growth rep, you buy a 4%, 5%, 6% dividend and that is not dividend growth. stephen: you really have to be -- i do not want to advertise my own products, tom -- lisa: god for bid. [laughter] stephen: i am thinking dividend growth products because some can be death traps and the high yield is indicating it is unsafe. if you are in dividend investing, you have to spend your time focusing on the company's future and tenant continue to hold and expand that dividend payment and that is easier said than done. you want to focus on that. you cannot just buy a yield and assume that his contract appeared some yields are indicators about things to come. lisa: how do you deal with the

likes of some of the biggest, most successful companies have come out and downgraded their forecast for the year not because of an issue of demand but supply? they are having disruptions and have to deal with supply chain issues they are not prepared for. we have seen shares plummet after some of these forecasts. wind you know to shift and be a buyer? stephen: we are digging and pretty hard to these earnings announcements. our read on that going through it carefully is the real problem is the state home traits. nvidia is almost 50% exposed to gaming chips, etc. things are really coming off the boil. apple, you could argue supply chain issues, perhaps.

on nvidia, i take exception with you on that one. the problem with the state home stocks people over extrapolate just how far they can grow. unfortunately they placed the multiple on that that does not make any sense. with the fed raising rates, you have that working against you, you have the economy lurching back toward normal, it will not be good for the nvidias of the world. tom: stephen auth, you can take exception with lisa anytime you want to. lisa: [laughter] tom: i just got an email from al from new jersey who said why are you looking at your cell phone? we go to camera, we go to wide to see the hills. lisa is sitting here being lisa, an adult, i am just checking on

the red sox. lisa: i thought you were scheduling a haircut. tom: i also note the yankees are playing .705 ball. i am not coming home until the yankees play some .600 . lisa: i am with you being a mets fan. [laughter] tom: coming up, much watch, listen, 115 a barrel oil. this is bloomberg. ritika: keeping you up-to-date with news from around the world. i am ritika gupta. a warning against isolating china. a series of summits that excluded beijing. if u.s.-china relations continue on this path, it would lead to a

further splitting of supply chain's. brazil's president said he and president biden will have their first one-on-one meeting next month. he said he would try to reset the relationship with the u.s. at that meeting next month in los angeles. he is coming to the u.s. for a regional summit. texas companies will have to take a bow of neutrality. otherwise they run the risk of losing business. aimed at protecting the gun industry from discrimination, similar to laws to protect people from racism or other forms of prejudice. the central bank -- ruble has moved from 14% to 11%. despite sweeping sanctions, the ruble has soared to the highest

level since 2018. responding to a tight labor market and the spread of unionized nation efforts, the company is raising raises. the stock will be bumped to at least $22. 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. i am ritika gupta. this is bloomberg. ♪ zero-commission trades for online u.s. stocks and etfs.

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>> the reality of the supply chain situation is every company, every electronics company has to redesigned for resiliency with products, redundancy, different designs, security. it will take another year or two. tom: chuck robbins always in the

front row for tar heels basketball, a mathematician at the university of north carolina. chuck robbins had some math about what was eight parts to 4 million parts. lisa: how much they have to rearrange and fortify. he is also trying to figure out how much inefficiency is built-in as a prerequisite of being just-in-time. he was also talking about scope and scale. tom: he said some of his supply issues are solved by moving on private jets, from point a to point b. lisa: it shows where we are that that is more efficient. tom: maybe chuck robbins can

borrow elon musk's fleet of jets. alex webb, can you give me an update? i am lost in switzerland. alex: elon will no longer be on a margin loan from tesla. that means he will have to pony up more in equity. it stands at about $33 billion. he has $7 billion or so in commitments from private equity firms. there have been whispers he my tried every negotiate even though he is tied to this deal and has a big breakup fee if he does not make that happen. social media stocks are down so he might try to renegotiate. lisa: shares are up in premarket trading but they are well below the 54.20 mark.

why are people so still so skeptical? alex: elon has said multiple times himself that he might not be able to do this deal. loads of questions about bots. matt did a piece said this is a red herring. he said he wants to do the deal in some form. if he did not want to do the deal at all, he would not be rearranging his financing options. tom: alex, everyone i spoke to thought $54 is a gift, take the money and run. where does take the money and run end? $50? $40? alex: it could go a lot further south. if you look at the evaluation multiples of the projections,

free deal, trading at about 50 times earnings. there were expectations built into where the earnings would grow. the idea that even if elon had a special sauce that could turbocharge them, it would bring them in line with where market expectations were. it is a lot more mature and a lot bigger. you could rely on anywhere of the 50 times multiple. twitter is a smaller company, that gives it headroom, but it has far fewer users. you could go quite low. it depends on what the current management thinks in terms of what they think they can do. lisa: days of our musk, always an interesting saga. how much is this a sideshow to what we see going on with apple and some other big tech companies that are ratcheting back their production forecasts and targets because they just

cannot get the parts? alex: twitter is a small company. twitter's revenue is not the same as british telecom. apple is down now but a multi trillion dollar company. the small problems apple might have around the edges, they will cause fluctuations in earnings. it is meaningful if you take it in isolation but the big picture, it is probably not enough to cause big problems. tom: alex webb, you are such a pro. the tragic shootings in texas, alex, you are an expert at this. given the little bit i have read, should social media and facebook try to limit these troubled people out on social media gaining support from other troubled people? alex: the effect of social media

has really been the way you might have people with extreme thoughts in isolation and a bunch of different locations, now those people can find common ground without being unified geographically and that creates an issue. does that solve the gun issue? no. the idea is to do with social media and people being dragged to the extremes, yes, that is an issue. but if they did not have guns it would not be an issue at all. i do not want to get too political. there are things social media platforms to do to ensure people do not go toward the fringes but they have not on the whole done it but it takes resources that they have no incentive to dedicate. tom: alex webb, thank you so much for that perspective from london. we will be in london tomorrow, migrating back tuesday.

lisa: yes, tuesday. monday, you have off. tom: i am never off. lisa: you will be working on your car. it is also the issue you talked about. what is the role of social media? the town hall? people talk about what they believe. how much does free-speech really mean? that was the political backdrop. it is buyer's remorse. days of our musk saying that is a high price and i wanted to get a back down and nobody is giving me the financing i like and it is also bringing down tesla. tom: there are moving parts in the twitter and the tesla story but this is more common than you would believe. the first quote at $54, everyone that is an adult in the industry

tells me that is an extremely rich number. lisa: that is why the board said sure. great. now the issue is getting it done. from a regulatory standpoint, is he buying and selling? tom: are we doing the real yield in london tomorrow for jon ferro? lisa: are we doing our scheduling here? tom: we have not talked enough about the real yield and we will do it right now. what is the significance of the five-year inflation-adjusted yield? lisa: it was negative 0.2%. i am excited. there is a lot of risk appetite out there. tom: he fell off a stool at the piano bar when lisa

abramowicz went into bond chat. ♪

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>> we came into this year saying there's going to be a slow down, and that is what you are seeing. >> we are bearish now, and that is a big change from six months ago. >> the fed may be overdoing it