>> i think the fed is very aware that the u.s. economy is already showing signs of easing and we are seeing cracks in the armor. >> companies can pass cost through but as we reach higher and higher price levels, that becomes more difficult. >> there is a frustration from where policy is headed. >> tightening will get us down

to 4%. getting down to 3% will engineer a recession. >> i don't think they can raise as much as markets have priced in. >> this is bloomberg surveillance. jonathan: live from new york city for audience worldwide, good morning, this is bloomberg surveillance on tv and radio. futures are just about positive. tom: new month, same problems. it's a turn to the market. the major call is what happens not this june but what happens in july and august? jonathan: how do we reset in september? september 21 is the date when the fed it's around table and hikes egg yen? what's the story there?

tom: the data will be there and by that time, corporations will really begin to adjust the cards dealt to them and i'm not protecting -- projecting a massive cost-cutting but it's gotta be in their minds to speed up their rationalization of 2023. these corporations are struggling to get any visibility on the future. lisa: i'm sitting here thinking about this headline that the s&p global is spending 2022 guidance on macro economic conditions and they say they have no clue and their jobs to rate companies. they have no guidance so what does that tell us? how does the fed arrange on this. it's whatever way they decide to shift that determines the path of the market where everyone sees a whole flow of mush.

jonathan: corporations and leaders are struggling to recalibrate their company to have the appropriate level of capacity to meet that demand and we have seen that repeatedly over the last few weeks, mistake after mistake coming to the surface. lisa: i think this is important and that's the reason, how many job openings are there and when do companies pull back on their employment because they don't want to be overly employed at a time when there is such fluctuation. jonathan: elon musk has a plan. anyone wishes to do remote work has to do a minimum 40 hours a week according to elon musk. tom: this is a tinderbox. i don't know which way it cuts.

senior officers will run it -- will be running out of patience. jonathan: this time last year, get back to the office by labor day. in september, it's back to work stuff what happened? tom: it didn't happen. it -- i don't know what your story tells us. jonathan: phone in from your trading floor and tell us about your story. futures are slightly positive but flat through the month of may. on the 10 year, 286.22. lisa: $15 billion of treasuries

will be auctioned off june 15. a lot of people are expecting this to have a big influence on markets. at 10 a.m., the bank of canada has been a precursor to move as well as other banks around the world. this comes on the heels of record cpi seen all over the world. do they get more aggressive and state more aggressive and indicate they will remains of going forward and what does that mean for the fed and the ecb as the hawks start to get louder. today we hear a flu -- a slew of fed speech including john williams 11:30 a.m. and jim bullard at 1 p.m. in the former new york fed president bill dudley joining us on bloomberg television in 45 minutes. you talked about the jewel

status. how much does it start to come down? we have nearly two job openings for unemployed americans so how does this trickle into a labor market that by all accounts is overheated and isn't really adding that much better. that is a big concern. jonathan: it's a perfect picture the fed is trying to paint. you've got to bring down job openings and bring down the heat from the economy without seeing unemployment go much higher. that's a tough job to execute. lisa: we will hear from bill dudley how to be realistic and what that might look like. jonathan: looking forward to that. a big squeeze last week and you called a low conviction rally. how did you see investors using that rally to reposition and reinvest to the downside? >> and that is how we termed it.

during the rally, we saw investors adding a hedge. it's considerable across the board. people were trying to reset hedges. it was a very low volume rally so there wasn't a whole on the options are cash market. either folks were out of the office or they were using this as an opportunity to reset their protection. jonathan: what does that mean for the nasdaq move you have been waiting for over the last couple of months? >> you've really hurt sentiment over the course of the last three months and it will take a preponderance of data to get people more engaged in the market. we think it's positive for our inflation outlook which calls for a pretty significant decline in inflation over the summer. inflation breakevens art lower

so this is incrementally positive. it's a critical issue and for investors, we haven't reached that critical mass and people are focused on recession risks if the fed needs to aggressively tighten. i think the market will be pretty cautious. lisa: i heard a sigh as you spoke i'm wondering how difficult it is to be a bull? >> it's not easy but more guidance will make it easier for all of us. we view this as a three-step process. we are in step two which is essentially accumulating enough data and evidence that you could be confident that inflation is underway. when sentiment is negative, you are overcoming the animal spirits aspect of this. it's been difficult but we are trying to stay close to home and focus on the fundamental data. we think the data is moving in our direction albeit slowly.

lisa: you mentioned global so let's go there. sip and desk suspending guidance in 2022, they just gave guidance on may 3 which indicates that in the span of a month, things change so rapidly they withdrew. what to that mean in terms of how to interpret data that is dated by the time it comes out? >> i think that same thing happened elsewhere. honestly, the confidence intervals around these forecasts are incredibly high. i think you need to track the high-frequency data as much as you can. to us, it has identified the signs you are tracking and focus on the data in that way. from an inflation perspective, it gets back to wages. it's looking at core services

and keeping a close eye on what that is. we think that is one of the key signposts that matters. if you identify if you sign post you are comfortable with that will determine the outcome and follow those as closely as you can and not listen to the radio too much. tom: be careful what you say there. did he say that? it's not my fault. i want to talk about the easy move on pandemic inflation from 8% down to whatever. how do equities respond when we get to 5% inflation? >> the process will be very positive for equity markets. the big question is what then. it's not -- it's the rate of decline and what level it settles at most up we think it will get back into the 2-3% range of core inflation. if we get into the 4-5 range and

it looks to be stalling out, that is why a negative outcome for equity markets. the debate is the rate of decline and what we settle at step in either case, i think there is a tradable window there. if you think we will settle it in the wind was shorter, then you need to approach it. i think you can run more risk if we run into three or 4%. tom: it was stuart kaiser on bloomberg radio. jonathan: great to catch up, buddy. there is the potential for a stop start from his federal reserve if they have to pause in september, ultimately, we settle down. tom: mr. kaiser said core versus

topline inflation. the core is six issue right now which is way too high. what if it gets to 4? jonathan: june 10 is when we get that read of cpi. there are only four estimates and so far. still and eight handle and morgan stanley has a pretty punchy estimate step we will get into that in a moment and futures are positive by 8/of 1%10. from new york city this morning, good morning. this is bloomberg. ritika: keeping up-to-date with news from around the world. treasury secretary janet yellen says she got it wrong last year on laois and. she made the announcement in an interview with cnn.

she predicted lester that elevated in asian would not pose a continuing problem and now she says she did not understand the circumstances. the fed is about to employ higher interest rates. it's 8.9 trillion balance sheets, they don't know how that will be? the u.s. is ramping up military support to ukraine. president biden says he will give the ukrainian an advance rocket system that will allow them more precision attacking russian targets. they will allow ukraine to hit targets 50 miles away but ukraine promised not to attack targets in russia. shanghai reported his fewest coronavirus cases in months as residents celebrated an end to mandatory isolation.

there is a peak of 27,000 per day in april. there was a police rate at cws group. -- read. it had to do with allegations that cws made unsupported claims about investments. global news, 24 hours a day and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

>> we have unique economic strength which position as well to focus on this challenge which is bringing prices down. the federal reserve plays a primary role in that.

the fiscal policy and economic choices we make with numbers an important role as well. jonathan: the director of the national economic council on the moment we are in right now. futures on the s&p 500 are posited by 0.13%. yields are higher by about three basis points. no drama here, the euro dollar is $1.07 .14. some drama for next week, june 9 with the ecb decision around the corner. tom: part of it is commodity-based. there were fireworks yesterday and it's elevated from where we were a number of weeks ago. newcastle coal in australia is not often new highs but breaking higher again. jonathan: we were whipsawed by that report yesterday.

they ultimately go into some kind of production deal. tom: i think it's noise and there is opec noise. i think we need team surveillance in vienna again step to me, we are sustaining nicely above $100 per barrel. jonathan: the average price of gas is the big factor. tom: ann- marie hordern joins us now. moments ago, and $800 billion infrastructure story in china. it's $120 billion u.s. where is the fiscal impulse of

this white house? one thing they can do is heated up more into the election, can they? >> congress would have to help them act and so far, the administration is not been able to get every single member of their own party on board. i'm talking about the revisions they want to do which was the bill back better proposal potentially before the midterm election. you could see movement on prescription drugs and some climate provisions. the big package you were talking about this time last year, that's not happening before november. tom: the senators from west virginia and alabama, is there power diminished going into this june? >> potentially, they have more power in these final months they will likely wield this power that they potentially may not after the midterm elections.

if republicans can snag some more seats. their position has a tremendous amount of power because it's the 11th hour for this administration to get anything done. they can only get done if they have every single democrat on board. jonathan: we had a report from nbc news yesterday that the pressroom was frustrated by those around joe biden. there is an op-ed piece in the wall street journal on inflation. a mea culpa from his treasury secretary over inflation. what has transpired over the last few days? >> brian dietz reiterated the message that that was a fed problem. we know that white house aides have told us they are making this concerted effort in june to

refocus and talk about the economy. this is the number one issue that he's starting to -- it's starting to hit him very badly in the polls. the earlier poll this month is nine out of 10 do not agree with how the administration is handling the economy and the biggest issue of course is inflation and consumer prices. talking about the nbc poll, every day, i checked gasoline prices and read about it step it doesn't matter what the administration puts out in the near times in wall street journal, if you have a car or walking on the street in america, you have a gas station that's advertising every single day. lisa: let's end with the report in the wall street journal for the potential of russia being

relieved of production targets. saudi arabia says maybe we will kick up production substantially because russia decreasing its presence on the world oil stage. how much does this have to do with the trip of president biden to the middle east? >> saudi and russia are definitely working together. you have sergei lavrov in riyadh today which speaks volumes about where the kingdom and russia view its relationship. if this is true and the plus part of opec-plus starts to diminish, i'm not sure so much of this is the saudi trying to make sure they are falling in line to what the united states and other consumers wanted to step other say how can you have this partnership with russia? if they don't have the oil and

cannot export it and reach their production limit him a what does the new deal become? it's inevitable they will have to step in. jonathan: thank you down in d.c. a big turnaround in the oil market yesterday. crude is $119 .90 eight cents. tom: it's very volatile and you follow it technically and the rest of it as well but i would look at the blended indices. i think you mentioned copper yesterday. i'm watching copper more than anything. jonathan: i give you credit bringing of china time and time again. tom: this is a huge deal as shanghai comes out of lockdown. we learned from leland miller that is one big mystery. nobody really knows and i think

people understand i'm a pacific rim optimist. they will come out of it and you will see a boom. jonathan: i can't get any clarity on what's going on. tom: i will defer to international relations experts on that. i listen to the council of foreign relations. jonathan: a turnaround in the oil market as we think of the chinese demand clicking back in and the chance for opec to do something they haven't done in a while, having a meeting longer than 15 minutes. we are unchanged euro-dollar. from new york, this is bloomberg. ♪ inside, outside, big or small, angi helps you find the right so for whatever you need done.

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♪ jonathan: after all the choppiness we have seen over the last weeks, this is muted. futures positive by a 10th of a percent. story for the equity market,

last week, big move higher by more than 6.5%. a low conviction rally, pointing out how investors use that rally to add protection. citi doesn't that we have seen a bottom, they don't think we have seen a high and treasury yields. let's focus on the 2-year, coming in last month at about 15 basis points. focusing on the federal reserve and also the ecb. deutsche bank talking about the potential for a 50 basis poi nt hike later in q3. tom: they do that, what happens the morning after? jonathan: they get back to zero on the depo rate potentially. we have been in negative territory since 2014. tom: i think it will relieve

uncertainty. jonathan: it will be good if the economic data goes down? the ecb doesn't have the economy that the u.s. has. does not have the strength in the labor market that the u.s. economy does. it's a very different scenario. tom: i am just try to get a road trip to vienna. jonathan: vienna on thursday. you don't want to do the jubilee? tom: that is coming up in a meeting this afternoon. me and the summa be in london tomorrow. jon will be on the extended super bank holiday. jonathan: can i get to the commodity markets? wti close to 120 yesterday. a report came out that opec-plus could drop the plus, be negative russia, and have some kind of production deal.

that is the speculation from that report. crude positive by .9%. for many of you, you don't see that price, you see the price of gas. that is pushing for dollars $.70. that is the problem. tom: we are elevated, to say the least. many people say higher through june. jonathan: is that your version of fed minutes? good morning, lisa. lisa: i love standing over here listening to you guys trying to figure out the road schedule. i will be happy to remain silent. i'm looking at the partition between services in the tech world versus hardware. services continues to be robust, demand is there despite concerns about supply chain disruptions. salesforce came out after the

bill yesterday, increased their projected earnings. amazon and alphabet, they are also big web service, cloud service providers. those shares getting ahead of the market. amazon up a percent. you were talking earlier about tesla. i was also looking at tesla shares after elon musk said if you don't come to the main office 40 hours a week, find another job. those shares are down .6%. how much of an aberration is it for one of the representatives of the younger crowd, the more millennial crowd coming out and saying this? that was my take away from this. typically it is the younger set who are more amenable to staying and working from home. how much does this go against that image that elon musk has been putting out there? tom: it will be an hr football

for the next 12 months. the death rate from covid today, under 300. that is a positive sign. tom: what does -- lisa: what does elon musk do that is not an hr football? jonathan: i think it is the millennials that get too much flak. gen z not only doesn't want to come into the office, they don't want to work. lisa: you are worried about the cat mafia, worry about the gen z. what it really represents to me is that it cannot be bifurcated between young and old about whether to come back to the office. it is specific to different cultures. that seems to be one take away. hp came out better than expected. those shares popping.

demand is robust, which is interesting. supply chain disruptions have been interesting. hewlett-packard enterprises reporting after the bill. those shares gaining with the anticipation that they will provide good numbers. tom: this is not a small matter. there is a guy in connecticut that runs a small shop who says cash is trash. debbie cunningham has been doing this forever. she is the absolute dean of global liquidity markets. you go after mr. dalio and you say cash is an asset. discuss why cash is not trash. debbie: first of all, i want to know how i can get in on the trip to vienna. include me in those emails.

as far as the cash markets, as you mentioned, we have been in a zero yield environment for the better part of 14 years. not a healthy market. 70% is not healthy but seven basis points is not healthy. we are now getting back to the point where we have an inflationary environment above the bare minimum, 1.25, 2%. in that environment we need short-term yields above that, and we are getting to that result. as such your cash is now a valuable investment that no longer is just there earning safety and a minimal return. it is not only earning safety but also earning a viable return above where the inflationary rate is. we are getting there, not there yet. certainly above the zero bound

when we have been locked for a long period of time david tom: there is a generalization, they invented the money market fund. some would quibble with that but they have been owning the high ground on short term paper. should we fear these initial rate rises from any major central bank? debbie: i do think the ecb has some unique issues going on with it. certainly brexit was a factor that led into some of the shortcomings of both the u.k. economy, as well as the european economy in broad terms. that is a factor that still has to be dealt with in a way that we are not subjected to, here in the u.s. having said that, when you look at those economies, yes, they are not as vibrant, fulsome, from a labor perspective, does

not have the same strength that we have, and as such are more challenges. yet, they should not be in a negative interest rate environment. they should be at a point when there are cash earnings there. the economy for the most part are not in any kind of danger of going into any kind of recession . not a large growth environment, but when you are looking at study and sure, you may see some setbacks as you go from minus five to zero to plus one. but that is part of what needs to happen in order to get out of , i think, part of the malaise in addition to brexit has been the negative rate environment. lisa: i am wondering if you are actually seeing investors respond to this idea that cash is not trash, that it is a viable asset class with real

yield. is that something that you are seeing create a shift away from riskier assets into cash for the asset value? debbie: yes, out of riskier assets, absolutely. also out of bent deposit assets. those don't follow the natural market rates, those are administered rates. it is certainly something that is a welcome alternative for investors that do not want to take on a lot of risk, want to maintain a lot of liquidity, keep their powder dry, yet, still earn a return in terms of keeping their cash invested. jonathan: looking forward to your appearance in vienna. thanks. yields up by three basis points this morning. let's call it 2.60. lisa: if investors start to put their money into cash, does that

indicate they are betting that inflation will come down? on a real basis they are still not getting yield. is cash preferable to bonds that are yielding more, preferable to assets? it is a tricky moment which is why cash is polarizing for the likes of ray dalio and deborah cunningham. jonathan: where else do you put it? markets are getting absolutely hammered, and they have been over the last few months. lisa: this is one reason people keep going into commodities. people say it is surprising commodity prices are not higher given that has been the main inflation had for so many investors. jonathan: pushing hard this morning. 115.80 on wti. tom: you look at the per referral distillates as well,

like diesel, and the answer is we begin in june with a serious hydrocarbon angst. jonathan: maybe some downside surprises in the data david lisa talked about that yesterday. it is starting to build. for some who believe this fed takes a pause, they take every downside surprise and they say this validates my position. if the fed keeps pushing forward, that is where the pain will be later this year. bill dudley, the former new york fed president coming up shortly. ritika: keeping you up to date with news from around the world, let's get to first word news. i'm ritika gupta. ukraine will get advanced rocket systems and other systems from the u.s. president biden made the announcement in the new york times. the rockets will allow ukraine to hit targets up to 50 miles away.

in the u.k., consumers are being urged to brace for inflation getting worse before it gets better. they retail consortium says fresh food prices are rising at their fastest pace in a decade. it rose 4.5% in the year that ended in may. tens of thousands of lab testing booths are being set up across china's largest and most vital economic cities. the goal is to have 115 minutes away. shares of salesforce are rising after raising their sales forecast, showing that demand for business software is holding up. so far, the demand environment remains strong. the richest person in the world doesn't seem to think much about working from home. elon musk sent an email to the executives at tesla saying

remote work is no longer acceptable. he says anyone wishing to do remote work must be in the office for a minimum of 40 hours a week or leave tesla. 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.

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>> the economy is already slowing. 50 basis points may not be doable if we move into the fourth quarter or later into the third quarter. they can resort to balance sheet reduction at a faster pace which will provide upward pressure to the longer and, or at least provide a floor to longer rates. jonathan: this is bloomberg surveillance. tom kene, jonathan ferro, lisa abramowicz. futures positive on the 2/10.

2.87.85. bill dudley on with this this morning. the fed is mild inflation forecast and need explaining. tom: it is a brilliant note. william dudley is the former president of the new york fed. we are thrilled that he could join us this morning. buried in your essay on inflation is a single sentence on what it means for the labor market. april of 2020, 14 .7% unemployment rate. 4% at the beginning of the year, now down to 3.6%. i need you to explain to our listeners and viewers why it is the fed's job to move the unemployment rate, as you state, about 4%. bill: the labor market is the tightest it has been, and you

see that in the ratio of unfilled jobs compared to unemployed. 1.9-1. we have a labor market that is unprecedentedly tight. the fed needs to loosen that up where wage pressures mow accumulate, and that will keep inflation above the 2% objective. the problem is it has been difficult to push the unemployment rate up meaningfully without precipitating a hard landing. that is what the fed will try to do, but extremely difficult to do. if you look at their last summary of economic junctions, disinflation occurred almost immaculately. the fed did not tighten much, but inflation came back to the 2% target, which begs the question, what caused inflation to come down? the way you get inflation

down is to get more slack from the employment market. jonathan: core pce year and for the fed 22, 4 .1%, 23, 2 .6. many have been asking the same question. you know the question, is this about a pause in september? how you interpreting some of that conversation? bill: i wouldn't put too much stock on it. the fed is convinced they need to go to something close to neutral, expeditiously is the way they put it. the notion that at some point they will take a pause and look around, of course that will happen at some point. but that will be driven by the economic data. i think the economy will have enough moments in -- momentum so the fed will keep going into the fall. the market is price to peak in the federal funds rate at 3%. i think we will get there easily and the fed will have to push beyond that. lisa: what kind of unemployment

rate are you looking for to indicate a loosening in the tight labor market? bill: the fed's own forecast is for percent, so you need to get unemployment up to at least 4%. the fact that we have so many unfilled jobs suggest that maybe unemployment with 2% consistent with inflation is even higher than 4%. that is the problem, it is difficult to do that without precipitating a recession. lisa: did you take anything from the fact that president biden met with chair powell yesterday, the focus on the fed being the main driver with inflation and what happens going forward, and the politicization of the federal reserve? bill: i think he was ashley not politicizing the federal reserve. their job is to control inflation and will not challenge the fed to do that. in some ways he is putting the burned out on the federal

reserve, not the administration. i don't think it changes what the federal reserve will do, or what the biden administration will do. tom: we had a one-off medical event, pandemic of our lifetime that got us out to 14.7% unemployment. can we cut any central bank slack and have them extend out the x assess and take longer to get this done to repair off of this medical event? bill: if you take longer, their risk will be that inflation stays higher. that will start to be embedded into higher inflation expectations. the good news for the fed right now is they are highly credible. market participants expect the fed will do the job and get inflation down. longer-term horizons are still well anchored. if the fed dawdled, the expectation is that the fed will be less anchored, having

difficulty bringing inflation down. jonathan: do you think this inflation will end up with a four handle and not a three? bill: the fed has things under control. the bad news is people are understanding how difficult the job is. jonathan: what do you make of the idea that they can target job openings? bill: i think their story is quite optimistic, that they can tighten monetary policy sufficiently to reduce the demand for labor without actually pushing up the on employment rate. this is the tightest labor market i think we have ever had. it seems to me that if the labor market is tighter than ever before, that makes the job more difficult, not easier. jonathan: the former new york fed president. a really interesting piece on the fed's inflation forecast available on bloomberg.com and

the bloomberg terminal. to bring job openings down, to take out demand from a hot labor market, rebalance supply and demand and not see on employment go higher, that is the dream. will it be real? lisa: here are some of the issues right now. the uncertainties are so monumental, not only with the economic trajectory, but the data itself. we saw last year the revisions to the labor market data came in much harder than we expected by the end of the year. all of a sudden the summer months did not look like a softening, like we were seeing a deceleration in how hot the labor market was. much can you look at these job openings as concrete? perhaps people are just listing 15 job openings because they are not getting enough applicants. so many interpretations of this which is why you have five economists in a room, six different opinions on the way

things are going. jonathan: this is from delta. they see second-quarter revenue fully restored to 2019 levels. on second quarter capacity, which is what gets my attention. 83% versus the second quarter of 2019. they had seen those levels up to about 84%. we are all living that, if you are traveling. tom: i look at two prices, the trip to paris, and also new york to lax. $808 on delta, economy. never seen that. jonathan: so expensive at the moment. tom: $808, economy. jonathan: the airlines are doing well, aren't they? >> welcome back to another

special roland garros update. quarterfinal action for the men and women. rafaela doll won his battle of the legends, beating novak djokovic. the victory was the spaniard's 29th over the serb, and leaves nadal one win away from a record 22nd grand slam title. he will face/is very rev. cocoa gobble make her debut in the semis at a majors after she beat sloan stevens. after taking the opener, the teenager closed it out in just over one hour and a half. don't forget tennis channel's daily covered from roland garros it's the air at 5:00 eastern.