>> clear thinking the fed will be too gentle with the economy. >> basically a soft landing. >> there's a lot of room for

steam to come out of the economy before you start getting big cutbacks. >> inflation is high but this is the first time in a couple of years where there are no restrictions. >> until we get a better sense on inflation, we will be fragile. >> this is "bloomberg surveillance." tom: good morning. from our studios in london, jonathan ferro not with us and recovering from a full english breakfast. we expect to see him on tuesday as well. we are wrapping up the week, to get to the june midyear outlook to get to the jobs report. we go back to america with chairman powell, the american labor economy. lisa: low we got yesterday -- from what we got yesterday the labor market is still incredibly strong. it's a great thing if people can get jobs but it creates another problem for the fed trying to thread a needle that is hard to threat. tom: i will steal from mohamed el-erian.

key decisions matter. how do you make a key decision? the road not taken. mohamed el-erian doing his robert frost imitation. the key decisions are impossible given the uncertainty. lisa: that's the reason i find it fascinating that jay powell did capture as much attention when he said this is not going to be nuanced. we will not look at the specific drivers of inflation. we will go at it because we need price stability. is it a good thing or bad thing you are seeing an easing of financial conditions this weekend people expect less from the fed? tom: for those of you in radio, for me to turn to lisa -- exit stage left. if i freeze in this position can we still do the show? i don't know. my back -- we are getting there. lisa: let me tell you what is going on. tom: particularly in the next

week. lisa: the fed is understated this week. we get u.s. personal income and spending. i go back to brian moynihan of bank of america saying consumers were spending 10% more in the first two weeks of may then in the same period last year. 1% of real spending more. how much do we see that play out at a time when you continue to see consumers have plenty of cash in their coffers? university of michigan sentiment survey coming in, remaining the lowest since 2011. people are saying lots of things but they are still going out and buying. "bloomberg surveillance" from london. we are having tea and speaking with mohamed el-erian coming up, the longtime member of pimco, longtime thinker who has incredible views on everything.

jordan rochester will give us his sense on the dollar and christian malek of j.p. morgan securities. tom: interview of the day. lisa: you have gasoline prices rising tremendously, energy prices causing a consumption crisis in the u.k., and how do we offset at a time of escalating conflict in ukraine driven by russia. tom: jordan rochester will join us. that's about dollar dynamics. christian malek will join us from the 100-page opus from j.p. morgan. one of our great contributors to bloomberg, the german from the university of cambridge and queens college and all his work on the game theory of the global system, mohamed el-erian this morning. i loved your note because it is front and center right now.

the dollar matters and a dollar too strong gets the way of a recovery. are yet the point where it's a problem? momahed: first, welcome to the u.k. had things for bringing us the weather. it is wonderful to have you here. we are near the point where the dollar is too strong for the rest of the world. not for the u.s., but the rest of the world. it is this phenomenon i call little fires everywhere. whether it is food prices for oil prices soar strong dollar, that contributes to the little prices everywhere -- little fires everywhere. the answer is in the hand of the other countries, not the u.s. there is not much the u.s. can do but there are things other countries can do. tom: at the panel yesterday in davos, sir lawrence friedman.

in the most quiet moment in that too short an hour he link dollar dynamics into the food crisis and the memory of tunisia, the arab spring. focused on egypt, when you look at the fragility of egypt and the memory of the arab spring, what is the model to help begin to solve the crisis? momahed: it's a big issue. the imf months ago said a cost-of-living crisis in the west is the risk of famine and commodity importing developing countries. that is proof of fragile economies. egypt, turkey, the decision is how much you subsidize have much you pass on to the consumer? food is a particularly delicate issue. most countries will end up subsidizing.

you are likely to get a repeat of 2011. however, and this is important, you have to worry about the finances. it's a difficult environment for developing countries, tom. lisa: before we move on to what is going on in rates and move ahead in this economy, what do you think in terms of offsetting the costs? something like the windfall tax announced in the united kingdom? momahed: i have been arguing for a while the right thing to do is to impose a windfall tax. to use the proceeds to protect the most vulnerable segments of the population. that is what the u.k. did yesterday. is the windfall tax perfect? of course not. there are no perfect solutions in this world anymore. it is by far superior to every other second-best solution. i think of more countries look

at this as a temporary measure to protect the most vulnerable segments of the population. lisa: is it just going to be the oil and gas companies or are they looking at copper and all the other commodities in addition to food producers? momahed: i suspect they will focus on oil and gas. going further than that it gets really tricky very quickly. i suspect it will be focused on oil and gas. lisa: moving forward we were talking in davos about the banner headline about the ukrainian work, russia's war in ukraine. under the surface it was all about china and the fact that any prolonged shutdown could torpedo global momentum. how closely are you watching that? if we get the lockdowns continuing until year-end does that mean we'll be close to a global recession? momahed: i'm watching it very closely.

what happens in china impacts both global aggregate demand and aggregate supply. we forget china is a major consumer of products also made elsewhere. we saw with the retail numbers looked like. pretty horrible. we are reminded how important china is in the supply chain. i look at this carefully. the concern we have is the three major areas of the global economy are slowing at the same time. there is no compensating locomotive anywhere in the global economy right now. we have to be careful we don't get this self seating process. -- self-seeding process. the marketplace has embraced a pause in september. be careful. the only reason the fed will pause his demand has come down really fast. that will not be good for risk

assets. tom: i want to go back to the only game in town. why is this guy so visible? what is so special about el-er n an? he has articulated game theory. one of the nuances of the only game in town is separating chairman powell's desirable from chairman powell's feasible. what is the feasible set right now for the american central bank? momahed: i think at best the feasible set is a soft dish landing -- softish landing. time has passed try soft landing. we could have done it but it imply the fed moving nine months ago. it should have and didn't. instead of tightening into a growing and dynamic economy, it

is tightening to a slowing economy. it is difficult to get a soft landing. the best you can hope for is a softish landing. the probability is not as high as i would like it to be. the fed will have to decide between two policy mistakes. hit the brakes too hard and risk of recession, or tap the brakes, including in september and risk having inflation into 2023. tom: stan fischer is the great northstar, an extraordinary statement about the gentleman in 1998. we have a conceit now our currencies are more floating. can the release valve for chairman powell has he approaches the feasible be dollar dynamics because we have a more open currency system? momahed: it is not open enough

for that. the solution to all our issues is a surge of productivity. if we get significant productivity growth, we can reconcile all sorts of difficult trade-offs. the key issue is whether we get a surge in productivity. you can get that with other things happening underneath. it would be wonderful to have labor participation go up, especially among women. it would be wonderful to have supply chains improving. is all that going to happen in the short term? very unlikely unfortunately. lisa: you are talking about how a softish landing is looking like the most best outcome. do you think the reason data we have seen and the assumption in markets that momentum is waiting, do you think that got ahead of itself?

that there has already been a slowing that will make it easier for the fed? momahed: the marketplace is going through a process. we had eight weeks of successive declines and clearly there are people who are finding bargains. there are single name bargains. the factory had the largest inflow into the equity market globally for the last 10 weeks is significant. we are seeing the balance. you're having a technical reaction after eight straight weeks. that we understand. what i don't understand is the notion that suddenly the fed will be able to hike prices and take it easy. that celie reason that happens, demand collapses. equities will not do well. you saw it happens when target announced they were being

impacted on the cost and revenue side. the last thing equity markets need right now is worries about earnings. tom: mohamed el-erian with the idea of technological process moving us forward. he's at the university of cambridge. from our studios in london, futures up 30. vix, 27.20. ♪

♪♪ this... is the planning effect. this is how it feels to know you have a wealth plan that covers everything that's important to you. this is what it's like to have a dedicated fidelity advisor looking at your full financial picture. making sure you have the right balance of risk and reward. and helping you plan for future generations. this is "the planning effect" from fidelity.

>> rather than using its power to reinforce and revitalize the agreements and principles, these situations that enabled success, beijing is undermining them. under president xi, the ruling chinese common's party has become aggressive at home and more aggressive abroad. tom: on a may afternoon, the

secretary of state with a strategic statement by the biden administration on china. why the anticipated. it will be digested in beijing. the immovable force on the calendar have a chinese meeting in later autumn. jack fitzpatrick in washington. lisa and i are out of touch with the agony across america today and it centers on the national rifle association. the history of the nra is young boys out in the woods with a single shot remington shooting squirrels. the modern reality is quite different. what will the reality be if the nra meeting -- at the nra beating in texas? jack: it will be interesting to watch exactly what the reality is, because the shooting in

uvalde has required a response from across the aisle. you will see former president trump speak at the nra event. texas governor greg abbott, according to the dallas morning news, is supposed to pull out in-person but give a video address. a bit of a half measure in terms of exactly what his involvement would be. at the same time you are seeing an attempt on capitol hill to legislate in response to this. john cornyn from texas has been deputized to be the lead from senate republicans to do something, but it's a very narrow scope they are talking about. there a necessity for action and careful rhetoric but you're going to see still a strong connection between republicans and the nra.

tom: in the time we have here i want to address the gentleman from houston. john cornyn grew up partly in tokyo. he's an internationalist by american standards. uva law school. he's been with the tradition year he and now the esteemed senator from texas. how does he speak to the strident republicans against anything to do with gun legislation? jack: i think in this case he would probably point out to them that there is republican support for something very narrow along the lines of incentivizing states to put in there on red flag laws. maybe not even a federal red flag law. if you are talking to real second minute advocates, you are still negotiating something that is so narrowly focused that this is not something you would call an attack on the gun lobby or

the gun industry. i don't think this is something that will entirely alienate him from that part of the conservative america. lisa: is there anyone left in washington -- i believe congress is gone for 10 days. they are dealing with what is going on in ukraine and china and the issues we have seen their, and now the tragedy in texas. jack: there was discussion about some members staying in washington to keep talking about this gun bill. a lot of the time when there is negotiation they are not holding for votes they have each other on speed dial. there is activity. i'm not entirely sure if some members are going to stay to have some meetings. they are going into recess and they will not be real legislative activity. it's not an ideal time probably for them to mostly leave washington. at the same time they can do

work and are respected to continue to try to negotiate something narrow on guns. lisa: they will go home and talk to their constituents. in a restaurant were cafe people will come up to them. are they talking about taxes? is there a groundswell of support or is it inflation and gas prices so high? jack: the gun issue has gotten enough of a response so that is clearly a priority. you will see president biden go to uvalde on sunday. it is in the news cycle enough so that i don't think it's entirely washed over by all the other issues. for a lot of these issues, especially the democrats want to bring up things like inflation or the overriding concern, i don't know exactly how long the pressure to act on a gun bill will last.

it is there right now. tom: what is in assault rifle used for, jack? do use it for pheasant hunting or squirrel hunting? maybe it is in your home and you never take it out. it's an ar 15. i don't recall this in my youth. jack: that gets at what you alluded to earlier about the evolution of the nra. i can't tell you from personal experience what do use an ar 15 for but i can tell you it's a bit more of a cultural issue than just hunting. it was 2016 when ted cruz bribed bacon by putting it around the muzzle of an ar 15 has a campaign stunt. that make it a little more toward it then shooting pheasant. tom: i like a folding with breakfast. jack, brilliant as always in

washington. texas and the former president. how hard is it to be in switzerland and the united kingdom and they have of societal tragedies looking back at the united states? lisa: it's an anachronism. it is such an aberration. i was reading about how when the developed world united states is an aberration. there are other nations with the same level of gun violence but they are in the developing world. how do you parse out the gap? what is going on in the united states? jack: as we have talked to people in new york, the balanced debate here away from the stridency that jack fitzpatrick mentioned, the campaign stuff, they do get really hot. you really wonder if the -- at the end of the day what is the first step forward?

the incremental step the senator from kentucky wants to try to agree on what the senator from manhattan and brooklyn. lisa: putting politics aside, no one wants to see kids killed or gunned down in a classroom. it is just a pathway to get there but it's been a question for so long. tom: data check. next week the american jobs report. the ecb meeting? it is out there. it is out there somewhere. futures up 7. dow futures up 3. vix, 27.24. lisa: he did not want to be with this because we would humiliate him. tom: i had fish and chips last night. he emailed me. he cannot have mashed potatoes.

it is un-united kingdomy. ♪

tom: "bloomberg surveillance" from spectacular studios.

if you are ever in london, the best set of stairs in all of london. queen victoria street. go around the corner about one full english breakfast. there is a roman museum. the museum is fantastic. did you see that? a caterpillar bulldozer. he's outback digging up the london -- this was 10 years ago. found roman ruins. this stairs down to the roman ruins is sobering about the length of soil across the centuries of london. there is your history lesson this morning. romaine bostick is on what? futures up 15. vix, 27.21. thank you so much for the advice. lose the full english. romaine bostick in new york. romaine: markets continue to oscillate around.

it's about a lot of the retailer stocks and consumer spending and how it is holding up. sales growth was up pretty good here that there was concern about margins. they are continuing to compress. the story for a lot of retailers, even the ones that are supposed to be recession proof. costco shares down about 1%. big lots, though shares down 20%. comp sales are down 14%. a surprise loss for the quarter. it's about margins. it's also about inventory, jumping 50% in the last quarter. gap inventory levels of 34% year-over-year. now concern about companies posting high levels are in a position to start discounting in an environment where they're being squeezed.

gap shares down 18%. an ugly report. it did not provide clarity to what the path forward is to reverse the trend. a bright spot is alta beauty. everyone is buying beauty products, going up and down the roman steps. shares up about 8%. they are seeing no shock to consumer spending. tom: romaine, 52 bottles on the bathroom sink. i have no idea although ulta beauty is making a hand over fist. romaine: they convince people always need more to look well. they are great marketers. keep an eye on the software stocks today. you are keen on that. a miss big time on the backlog growth.

topline growth is still pretty good. investors really punish companies if they don't post phenomenal growth they are used to. a bright spot is marvell technology up about 4% on the day. tom: romaine bostick, thank you so much. first time back to london since the pandemic. in every case triangulates. what do you do -- what you do in the 40 change market is look at the currency pair, two different currencies. pros use the bloomberg to triangulate. a look at euro-dollar. dollar-yen. they bring it around to euro-yen as well. jordan rochester is joining us. great to catch up with you this morning. is it time to make big figure bets?

jordan: absolutely. tom: you wake up after your full english -- jordan: we had 4% in the dollar in the past few weeks. it's a very volatile environment. lisa: you look at all the calls for parity that have gone the way of the english breakfast for someone like stephen major. 107 and seems to have gotten a foothold. jordan: one of the biggest flaws are the big parity figures. you look at euro today, the big 4% rally higher. what is strange is the chinese room then be is weaker -- ri nminbi is weaker. i'm surprised by the u.s. rate pricing softening. that allowed the weaker dollar. we probably had too much dollar

weakness how we could see the euro go down lower next week. lisa: that is your call, right? europe does not look cheap even though it has been cheaper than it has been in years. what is the level you are targeting giving the resilience we have seen over the past few trading sessions? jordan: if you use valuation models, you have two ways of giving it. consumer prices or by producer prices. most of the time producer prices are the things you trade on an exchange. consumer prices in europe is nearly 40% higher, worse than the 1970's. not the same for the u.s.. that has devalued the value of the euro. 109 is where i'm getting my fair value for the euro. i think given the trade deficit collapsing, china is under pressure, the food crisis and energy crisis, euro is still possible in the month ahead. tom: mohamed el-erian, georffry

yu saying we need to learn lessons from the plaza court. consensus says no, this time is different. should we worry about a dollar so strong for em we have to adjust the dollar? jordan: do you think policymakers can work together to achieve that? everyone is facing inflation right now. you have the plaza accord, i imagine it could work. all the other partners would also be wondering about em as well. for china and the u.s. to correlate on currency manipulation after the years of the u.s. saying china manipulate currency, seems like a big stretch of the imagination. i could see it on the eu-u.s. level. lisa: what is the main driver in currency volatility? has it been central banks and differentials were economic outlook? jordan: both.

in terms of what has been driving the market, driving the market and central banks, we have seen a food crisis, and energy crisis. that translates the central banks overreacting thinking this is a growth stock. but i think that's wrong. lisa: trying to talk down the clock. >> sorry for interrupting. i did hear jordan discuss the dollar. i believe you will be buying pipe today. jordan: we had a cheeky conversation about the dollar and he was right and i was wrong. lisa: what was it? jordan: in terms of my thesis, the trade ban has collapsed but mark is looking at the dollar. i got that wrong. mark: we have traded the stagflation theme much quicker. do we have another week or two

of that theme? jordan: most people are on holiday with the queen's jubilee. we have european inflation next week. mark: i will be having a pint by then. lisa: and some vindaloo to go with it. tom: ferro's idea. pull the old fart offstage. mark: mi doing a great job? tom: i have to get something out of this conversation. which beer will you quaff? mark: an ale in london. i will rely on jordan's guidance. jordan: i am more of a camden guy. camden ipa. lisa: i appreciate the bet you guys had. you will go into different

things. tom: those of you going what in gods's name is this about, this is the fund and spirit of wall street, was a think is perceived in the media wrong. everyone is like jordan was wrong, shoot him. no. people get it wrong all the time. i get it wrong. was he like way wrong, wicked wrong? mark: if you're not getting it wrong, you not saying interesting things. jordan: people learn from those lessons. tom: do you think i look good at a podium? mark: mi allowed to say no comment? i don't want to live live on the air -- lie live on the air. lisa: calm is moving the podium back and forth. jordan, there is a question of whether basically this goes to a timing issue.

what is the correct timing now for currency bets? one week that seems to have backfired for you this time? jordan: 4% in two weeks. next week we have half the u.k. on holiday. i'm worried the euro goes higher next week. tom: one of my best conversations and davos was -- mark, you are truly an expert. when china opens up in the lockdown is over, how to the currencies react to a china boom? mark: i think it will be massive for the region but the question is when. we can see there is a massive regional divide and hesitation. tom: is he with us the next break? mark: i just crashed temporarily. tom: good. mark: i'm not working here. tom: could you imagine what a

full english pizza looks like? jordan rochester, thank you. i think mark cudmore thank you. this is what the pros look like on the tournament. a pro dialogue of what's going on. we devolve down to dow jones futures up 3. this is bloomberg. good morning. ♪ ritika: giving him up-to-date with news from around the world, i am ritika gupta. pulling no punches when bloomberg best about the negotiation with vladimir putin. the british prime minister responded, "how can you deal with a crocodile when it's eating your left leg?" the russian owner of the super yacht linked to billionaire --

has lost an appeal to keep the u.s. from seizing it. the court of appeal in fiji has dismissed it. the countries have been going after the yacht because the russian tycoon has been put on a sanctions list. profit said chinese industrial firms declined last month. they fell 8.5% in april from your earlier. it's a heartening development for the federal reserve but maybe not for american workers. companies are more cautious after handing out hefty salary increases over the last year. economists expect annual wage growth to be 2.2% compared to 2.5% in april. texas governor greg abbott has dropped plans to address the national rifle association's annual meeting in person today.

they are meeting just days after the school massacre in uvalde, texas. abbaott will be -- abbott will be in uvalde and will send a tape speech. 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 am ritika gupta. this is bloomberg. ♪

another crazy day? of course it is—you're a cio in 2022. so what's on the agenda? morning security briefing—make that two. share that link. send that contract. see what's trending. check the traffic on your network, in real time, with the next generation in global secure networking from comcast business. lunch? -sure. you've got time. onboard 37 new people, with 74 new devices. does anybody have any questions? and just as many questions. shut down a storm of ddos attacks. protect headquarters and the cloud. with all your data on the nation's largest ip network. whoa, that is big. ok. coffee time. double shot. deal with a potential breach. deal with your calendar. deal with your fantasy lineup.

and then... that's it? we feeling good? looks like we're feeling good. bring on today with comcast business. powering possibilities™.

>> you have to acknowledge oil and gas are continuing to grow sharply. inflation is high but this is the first time in a couple of years where there are no restrictions. people are going to be driving and flying as well. tom: why do people watch "bloomberg surveillance?" for mark cudmore.

thank you for that appearance moments ago. they watch for world-class coverage. the jewel of london. brilliant of the microeconomics of energy. it will go to the jewel of new york, ritika gupta -- kriti g upta. kriti: i used to work for mark cudmore. we will talk about a gallon of gas. when looking at is the amount of work in minutes at a u.s. federal minimum wage it takes to pay for a gallon of gas. 40 minutes. you have to work for 40 minutes to get one gallon of gas. what you need to know here is the line just goes upwards and upwards. you have not seen that kind of acceleration since 2008. tom: help me. this is the single best chart kriti has ever done.

you're comparing for people who spend a lot of money on food and a lot of money on hydrocarbons. kriti: this is important talking about the lower income part of the community, those hit hardest by inflation. here the theme. if you're a wealthy consumer, you are insulated to some extent from the inflationary pressures. on the other side of the spectrum you are not. think about the people who have to go get groceries and fill up the tank and now it is getting harder. tom: we moved to will kennedy, executive editor for energy and commodities. christian malek coming up in the next hour. 100 pages from jp morgan on the price of brent going up because of the lack of economic -- microeconomic -- is it supply or demand taking off? will: it's a bit of both.

we are getting into the end of the season. by mario day driving season. people flying. we have strong demand. supply just cannot really respond. there is very little spare oil supply capacity in the world. opec is reluctant to use it. a lot of people are reluctant to buy russian crude. the big problem in the north american market is the lack of refining capacity. that is why you are seeing gasoline prices, diesel prices rise to records even though oil is a long way off the record. lisa: what does a windfall tax or subsidized efforts do to that demand? how does that affect the situation and the quicksand of higher prices? will:will: a lot of governments around the world, the u.k. and people cutting gasoline taxes.

other european countries subsidizing natural gas demand. when you subsidize something make it cheaper. you are adding fuel to the flames. the measures help people but they don't solve the problem. we have a very tight energy market globally. people are talking about subsidizing consumption. it is strange politicians are not talking more about how to reduce consumption and make things more efficient. yes, there are dangers in these measures. lisa: are you think finance is renewable energy sources? coming from davos for everyone was talking in a theoretical wake, are we seeing it on the ground accelerate in the wake of these price increases? will: to appoint. a lot of these technologies, the economics make a lot of sense. there were real problems to accelerate things. supply chains have hit the solar

industry. a lot of materials are going to evs that are hard to find. it is hard for carmakers to build things people want to buy. you need a lot of permissions in europe to build solar and wind farms. it takes years. tom: paul abramowitz get a daily lecture on ferro on hydrocarbons in london. he's always quoting this lme thing versus what we do in chicago. was his name? i want to talk about rachel grant. you go to the bloomberg can look at oil. here is rachel graham out of moscow, out of commodities. she has five charts on this

disaster we are in right now. tell us about those five charts. tell us about those five charts. will:

t'was a difficult year, and yet a prosperous one for those dreadful capulets. something must be done. my son romeo has sought counsel with some strategic advisors. they suggest that we marry our fortunes with...the capulets. blasphemy! our two households combined in a merger? forgive me, lord montague, the integration would be a... a... nightmare. fear not. these advisors are ey. they managed one of the largest mergers in history, creating billions in value. billions? they've divined a strategy to help us reach new frontiers and leverage our synergies. aren't they just accountants? not at all. they helped nearly 16,000 companies integrate their workforce and operations last year alone. plus, they have experts in global trade. this merger shall be a boon for our spice business.

and set a course for growth. here, here! friars, send word at once. yes, m'lord. xfinity mobile runs on america's most reliable 5g network, but for up to half the price of verizon so you have more money for more stuff. this phone? fewer groceries. this phone? more groceries! this phone? fewer concert tickets. this phone? more concert tickets.

and not just for my shows. switch to xfinity mobile for half the price of verizon. new and existing customers get amazing value with our everyday pricing. switch today.