>> we have not seen the recession manifest in the macro data yet, so we still think there's a path for the economy to have a soft rather than a hard landing. >> these energy costs, falling income, we will be in a recession within the next six months. >> we have a labor market that is unprecedentedly tight. the fed needs to open that up or else -- will it commit late. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning everyone. on radio, on television, we welcome you to america in new york on a day of job claims and onto the jobs report. we are data dependent. jonathan: and we are looking for more data later this morning, the adp report about 15 minutes away. onto jobless claims at 8:30 eastern come onto tomorrow morning, it: 30 eastern, with a

payrolls report and an unemployment rate predicted by many to come down to 3.5%. tom: the trend of that to 3.5% is away from what the fed really wants. many people talking about a need for a 4% unemployment rate. most americans don't agree with that. jonathan: you have seen how this market is digesting the economic data. you get a strong data point, the ism manufacturing. you get treasuries lower, yields higher. this fed has more to do. tom: we've got to go to hydrocarbons, particularly with christyan malek joining us in the last hour from jp morgan. dimon says it is a hurricane out there, and the hurricane starts with $113 brent crude. jonathan: this white house has been in the middle of that hurricane for the whole year so far. the hurricane for them is inflation. higher crude prices, higher gas prices. the report from the team at bloomberg suggesting the white house, the president of the united states could be meeting with the crown prince mohammad bin salman in riyadh, saudi

arabia. i think that is a really important development in the last 24 hours. tom: what is so interesting here is the unequal application of 8% inflation across society. it is not fair, is it? lisa: no, it hits the lowest income the hardest. how does the fed deal with that, also when the on employment rate rises? this has been a conundrum for a long time, and this is a socially conscious fed that is a lot less socially conscious out a time when inflation is the main issue. how much are they going to basically put you wants aside put new wants aside -- put nuance aside at they say this is their first and foremost issue?

know credit if it hit her over the head. an update on credit versus full faith and credit. lisa: there's actually been a rally, and this goes to the whole feeling that you're going to get not necessarily a soft landing, but a better feeling. you saw that in risk assets. it is such a nice feeling. jonathan: a nice move, wasn't it? [laughter] lisa: it was such a lovely move. there's this issue megan greene was talking about, that the fed has taken lessons from previous history and basically will just raise rates to neutral and then wait. drew matus of metlife sent me a message saying when you miss the bus, you don't jump on a moving one. basically, they got it too late and now they are trying to figure out how to catch up, and they have to really thread a needle that is already pretty narrow. how do they move forward? tom: he got a check, a large devaluation in the british pound since the beginning of the queens r -- the queen's reig n. jonathan: a nice move in this equity market again. lisa keeps saying that every morning, nice move. lisa: honestly, can we set the record straight? jonathan: please do. lisa: you were the one that said nice move, and i laughed and said nice, so nice, now it is my commentary?

jonathan: i thought you thought it was a nice move, no? you did not think it was? tom: the show has come to a complete halt. [laughter] jonathan: did you not think it was a nice move? tom: let's save the show right now. give me some jubilee action. they are doing a fly over here. they are landing at heathrow, coming in with british air right now. of course, the royal family and their royal offspring on the balcony. jonathan: i believe we are going to have a flyover of 70 odd aircraft for every year of the queen on the throne. tom: charlotte, louis, they are styling. jonathan: packed outside of buckingham palace. tom: jubilee coverage here with prince charles, the duchess of cambridge. this is the wave i'm going with. it has been working all morning. jonathan: the royal wave. you have been practicing that. people often reach out to me and talk about how much preparation do you have to do, and i will say we do a lot of reading. i know what you were doing this morning in the mirror.

just that. [laughter] tom: this is really working on radio, but i was going to go with the queen mother look. jonathan: the italian influence in my family is something else. that's how i grew up. [laughter] tom: would you like to add any more to the jubilee? we will continue here with the pageantry. we thank queen victoria street for their services this morning in covering a moment for queen elizabeth ii. brian nick is like, when do i get some airtime? joining us now, chief investment strategist at nuveen. in equities, people are trying to guess a bottom. in the bond market, how do you guess a bottom which leads to price up, you'll down -- price up, yields down? brian: what we need to see is the data coming in that is strong, but not too strong. numbers we get that show the economy is slowing, but not cratering into recession, just

sort of normalizing, that of that is taking pressure off the fed, taking upward pressure off the 10 year, and that is the release point for relieving on the equity markets, credit markets, and we know what happens to fed funds futures as well. we start to see a downward move there, maybe some of those 50 basis point hikes from later this year getting priced out, looking more like 25 or even a pause, and that is the release valve on the pressure that i think is what is going to mark the top for the 10 year on the bottom for the s&p 500. we may have already seen it, but the more data we get from the ism and the jolts data yesterday, the more work the fed is going to need to thing about doing. jonathan: i look at the economic data at the moment and there seems to be something for everyone. mention the ism manufacturing, the job openings. others point to the regional fed prints and say things are not as strong as they seem. how do you put together that contradictory economic data we are getting in america? brian: we have a conflict

between the soft survey data right now and the hard data. people are -- i always believe the hard data, but i think job security is really the name of the game here. it is not just the job market, the un-implement rate, the job openings. most people who want to be working are working and probably have gotten a bit of a pay bump, but are paying higher prices at the pump, higher rents. what gives them the confidence to continue spending on every thing else and keeping the economy moving? very few layoffs and involuntarily separations still ongoing. if we see destruction in job openings, but not an actual job creation, i think the consumers carry us through because if you are relatively covered of you will be able to stay in your job, even if you are not able to easily find anyone, you're probably going to keep saving and continue to keep this economy moving. lisa: from a market perspective,

is this a good or bad thing that the consumer so has a lot of cash ready to go? brian: it is definitely a mixed bag, but a good thing now that the fed is deliberately raising rates quite quickly towards some semblance of neutral. we would much rather consumers have cash on the sidelines, but that is not true across the board. if we look at the lower end of the wage scale, wage growth has been typically better in these types of jobs, but the accumulate savings has probably been spent much more quickly and we are seeing people dip into borrowing and are medically lower their savings rate, so it's a mixed bag across the spectrum, and this is one reason why we prefer to be in the with economy versus other places where food and energy prices bite a lot more, you have not seen the wage increases to match the price increases, so in europe they have not had high wage growth. they had this in kind of inflation we have. that means the consumer has already come out of this a bit weaker than ours in the u.s. jonathan: j.p. morgan said

yesterday despite the steep selloff, we believe markets will recover your to date losses and result in a broadly unchanged year. what has to go right for that to happen, and is that sums and you can get behind? brian: i really want to believe that view. we are down 13% or 14%. to see that rally over the balance of the year on the s&p would be wonderful. i think it probably needs to happen here that you get some sort of threading the needle from the fed. probably 50 basis point hikes over the summer and decelerating to 25 or nothing by the end of the year, and not having that happen in the context of a dramatic weakening in the economy. so continue to fall in job openings, continued job creation , job security for people who have rising wages and falling gasoline prices would be nice, but it does not seem at that is going to happen in a dramatic way anytime soon. i think that is what gets us to the confidence, when we get to that september hinge point that

the fed can tickets for off the brake a little bit. we've already seen the credit markets are behaving better. we think that might be sort of a half measure for investors who want to get a little risk on but don't want to take the full risk of being exposed to another equity downdraft. credit markets are police paying you a coupon. jonathan: brian nick with an elegant way of saying no. it is going to be very difficult. that was view. i like that. was that for me? tom: it was. jonathan: i like that. going to do that for the next few days. that works out, tom. tom: an important note here. foreign-exchange tells you so much. sterling to dollar, we all know there has been a devaluation of pound sterling down to 1.26 over the span of the queen's coronation. from 12.24 down to 1.20, what does that say about the

strengths of the swiss franc? jonathan: it says a lot about it. i thought it was beautiful. wait for the excess -- for the fx analysis. you want to wave us out? tom: boy george is doing the clapping with the mother, the duchess of cambridge. jonathan: too close to the communist party. tom: that's more like this. lisa: elbow, elbow, wrist, wrist. let your pearls. tom: when we go to shanghai for the party congress, three of us on the balcony of the peace hotel, we will be doing this. jonathan: i am fairly confident that is not happening. ritika: keeping you up to date with news from around the world, with the first word, i'm ritika gupta. the price of oil is falling today following a pair of reports according to "the financial times." saudi arabia is repairing to pump more crude due to

increasing sanctions. and while, president biden is likely to visit saudi arabia this month. that could lead to an increase in saudi oil production. soaring gas prices are hurting politically. sheryl sandberg helped turn facebook into a multibillion-dollar advertising powerhouse. sandberg is stepping down as chief operating officer of meta platforms after 14 years. she's the heil program -- she stood is the highest profile face of the company to mark zuckerberg. russia says it is ready to settle claims on bonds that were judged to have breached their terms after missing $1.9 million in interest payments. it is an attempt to avoid an insurance payout but in julie worth billions of dollars. the credit derivatives determinations committee set failure to pay occurred on credit default new data suggests u.s. housing supply hit a turning point last month,

according to realtor.com. home listings increase for the first time in three years. the number of active listings rose 8%. still, listings remain more than 2% below their level two years ago. 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 area -- this is bloomberg. >> runaway inflation at the gas pump and the grocery counter has meant the lead indicator for recession of the last six recessions in the united states, if the united states is not currently in recession, these food costs, these energy costs, falling income, we will be in a recession within the next six months. jonathan: this crude market and a whole lot more in this economy. equity futures are positive by

0.4%. about a minute away from adp data. crude, $114.59, down about 0.6%. we want to go through things piece by piece. we had a report from "the ft," suggesting the saudis may be ready to boost more. moments ago, this headline. opec+ to discuss adding 600,000 barrels a day to the oil market in july, according to delegates. this proposal against a scheduled 430,000 a day increase. tom: i blend in again to bloomberg commodity index, which is up nicely this morning. not quite to the middle of april new highs, but those indices blended oil and away from oil are pushing up to record highs. jonathan: clearly this market

wants to see more from this cartel. we are down 0.6 percent or 0.7%. it is a downside surprise, 128,000. the previous number, 247,000. setting us up kind of for payrolls tomorrow morning. the previous number, 428 thousand. that is the downside surprise on the adp report. lisa: do we care? does anybody care? honestly, adp data has been incredibly volatile. people tend to not really trade off of it, which is the reason why it is very hard to read. are people going to try to make something of this? sure, because they are looking for data and saying they are data dependent, but honestly, what correlation has there ever been between 80 p.m. jobs? that's between adp and jobs -- between adp and jobs? jonathan: i think most would probably agree with what you just said. if we get a downside surprise tomorrow, is that indication of weakness or just the fact that

labor market gains are going to mature anyway? should we be more focused on what happens with on the lemon and wages? tom: what i will look at is unit labor costs. i know it is dated, q1 then all that. i will look at unit labor costs to see how they adjust. lisa: a terminal user did right in saying we care about adp, so i stand corrected. i found a person who cares about adp. i see you. jonathan: i'm surprised you found one. by all means, right in. i would okta find more than one. equity futures up 0.5%. just checking off the back of some decent data, yields on the tenure right now up about 0.5% on the tenure to 2.91%. tom: as you prepare for the real yield, so one thing it was far

more important than "bloomberg surveillance." but the real yield with a 0.2 6%, that is certainly not going in a gloom direction. that is firmed up, is how i would put it. jonathan: one thing was the consensus view, don't fight the fed. we all thought the federal reserve would become an after inflation, hammering inflation and driving real yields higher in a much more material way. i have to say, it kind of stalled out recently. what are we now, positive 25 basis points? maybe not at the levels people expected. tom: we will have to see. what we have tried to do is inform you about the commodity prices you are living. outfront first was francisco blanch. i remember the day a number of quarters ago where he shocked the world over $100 a barrel. he has provided real intellectual leadership on trying to figure out where the next gallon of gas is going to be priced. thank you for joining this morning. i want to go to the heart of your note.

you've got a bias upward in price, and you are looking at the price responsiveness, the price elasticity of demand. are we going to see demand destruction as oil moves up, or is it inelastic? francisco: high prices always fix high prices, so we are certainly going to see some demand destruction. one of the challenges, you may renumber this when we were talking about these issues, is that as prices go up, governments tend to use fuel subsidies as a tool to keep people happy. so we are seeing a curtailment across much of europe. we have also seen some u.s. states doing the same thing. mexico, many emerging markets. as prices go up, governments stride to reduce that elasticity, and therefore you end up getting more on the wholesale market, which is kind of what we have seen so far.

the other big issue obviously is that we have, as i like to say, the mother russia of all supply shocks. it is just a very big supply shock. tom: brian moynihan in davos was exceptionally positive on the resiliency of the american consumer. do you care about the price elasticity and demand destruction as gasoline goes to seven dollars a gallon? francisco: i do care, but if you look across the world, and this is probably one of our most popular, the energy share of gdp , across the world it is actually quite high, almost back to the iranian revolution levels for the entire planet, in terms of what we spend on energy, divided by the price and nominal gdp. but in the u.s., the twist is that you have not had the global gas and power crisis we have seen in europe, that we have seen in asia, so the u.s. is

enduring natural record highs on gas prices. at the end of the day the u.s. is not facing the sing kind of energy prices in aggregate that the rest of the world is suffering from, so isaac the u.s. is a lot less exposed, plus also remember the dollar is very strong, so that means america has been insulated also more than other countries that are facing this incredibly strong dollar and strong commodity prices. which in my mind also shields the u.s. from the vagaries of energy prices. so i think we are going to see recessions, but the question is where and when, and the u.s. is probably at the bottom of the list in terms of the countries that will be impacted by this skyrocketing energy prices. lisa: there's a lot to unpack there.

i want to first to get your sense of how close we are to a full-blown 1980's style oil crisis. francisco: we are not that far. i think we have seen global gas and power prices already in the past 12 months that started with thermal coal in china. remember, the most extensive energy commodity has really been thermal coal and natural gas. we are at 400 barrels a ton of thermal coal, twice the level of what we saw in the financial crisis in 2008, when oil went to $147 a barrel. $400 a ton, about $100 per barrel of oil equivalent. so $115 ain't expensive when coal is at the same level. we have seen nearly $500 a barrel of natural gas prices, so that is what the real issue is. oil is yet not in crisis.

it could go into crisis, and i think that is the real problem here with the way sanctions may be implemented. how much russian spy to be in of the losing, and how can that impact the supply and demand imbalances here? jonathan: i would love some real-time analysis on the headlines we are getting from opec+, indicating that could be discussing an additional 600,000 barrels a day against the scheduled 430,000. also some medication they might decide today on july and august hikes. i will tell you what the market is doing off of this. it is a racing losses. crew down 0.6%. the bdi back to one hunter $14 50 since. what is your read on this kind of headlines? francisco: my read is that opec+ does not want to be blamed for oil prices skyrocketing on the back of the european sanctions, so they are trying to increase production and mitigate the upward price pressures, but remember, when his biggest

challenges in this market is that it does not have this capacity. it is also the second largest refined controlling exporter, and 40% of the diesel that goes into the contract, the most important diesel contract in the world, is actually russia. so you're taking a lot of supply out of a very tight market, and unfortunately when you do not have the refining capacity available, there's not that much they can do. they can try to keep a lid on crude oil, but that is not necessarily going to help the price of gasoline. jonathan: just a final word from you on the topic, opec can't do anything seemingly to influence the price of things according to what you just said because of refining capacity. where does it leave the administration in the united states as the president gears up

for a meeting with the crown prince? what can the president do here in america? francisco: i think what we have seen, release a little bit of spr. the spr has barrels available which are being released to the market. i think the challenge honestly is that we are tight on every front. i think perhaps we should be thinking about rationing measures. maybe stop subsidizing fuels, but more importantly, thing about limiting speed on highways. jonathan: using that is where this could go and -- you think that is where this could go in this country? francisco: maybe not in the u.s., but certainly other parts of the world i think are going to have to end up seeing some demand rationing. i think so. i think we are going into demand rationing on the back of these

measures. jonathan: a longer conversation needs to be had. tom, can you imagine that happening here? tom: i cannot imagine it happening here. we underestimate how sophisticated, dense, and huge the u.s. economy is. to the beginning of the conversation, when francis go blanche talks about the government support for their people on hydrocarbons or wheat, that is the tip price. there's a moment where the price of oil precludes that government support. that is the political tension. jonathan: can you imagine the polls if that took place? lisa: no, although we are seeing that in nigeria. they halted certain airlines in order to avoid having even higher fuel surcharges. jonathan: jobless claims in america up next. this is bloomberg. ♪

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jonathan: equity future shaping up as follows. positive .4% on the s&p. the nasdaq up .5%.

the adp report out moments ago with the downside surprised. unit labor costs come in punchy. the previous read 11.6%. claims with the right kind of downside surprised. 200,000. as i say, that is the right kind of downside surprised on jobless claims. they start to kick a little bit higher over last few weeks. yields in about one basis point. tom: a new look on unit labor costs, from 11.6% unit labor costs out to 12.6%. that is going in the wrong inflation way. i am sorry. there is going to be a lot of data. it is really important. jonathan: you look at the data nuc easy claims going lower, you

see the inflationary component to the story. i know it is the first quarter. it speaks to what we are talking about. the fed has work to do. lisa: there is no sign of a job market that is loosening up materially. the fact we are seeing continuing claims dropped to the lowest back to 1969, you could say because people are not eligible for unemployment benefits. you can also say people are not getting laid off. they're getting reemployed. how much does that factor into what we've heard from the federal reserve? tom: you go back to 1969? lisa: continuing claims are the lowest since 1969. i am putting this into perspective in terms of a historical pattern. jonathan: that sounded like a yes or no question. lisa: i appreciate that. jonathan: tom looked like he cannot hear us. tom: i was asking about the

queens bag, it goes back to 1969. i was not asking about claims. steven ricchiuto right now. let's get it out of the way. the recession call. where is it? steven: we have a hard landing call. we are down 1.5%, negative gdp in the first quarter. we think second-quarter gdp is below 1.75%. we think gdp everywhere is below the cbo estimate. that is a growth recession. is it possible we get another quarter of negative gdp? the ask. we will not have a recession. there are not fundamental imbalances to give us a classical recession. tom: are we at a point where the fed should just raise rates? just come out and get it done now so we can move on, or do

they stay on a meeting schedule? steven: they will stay on a meeting schedule. forward rates have moved dramatically. forward rates will reverse some of the titans and start to unfold -- some of the tightening and start to unfold back where they were. james bullard keeps pushing the envelope to the end of the year. the market is getting as close to 3% by the end of the year. that is discounted into the marketplace. you are seeing a ubiquitous impact in terms of the interest-rate sensitive sectors. you are seeing it in autos and housing. getting back to lisa's question, when you look back at question -- when you look back at history you see smooth patterns, but when you live through them they are much more discontinuous. further into the summer you will see the distant ticket -- the discontinuous drop from the key motive effective the rate hikes.

lisa: so far, if we are seeing what the fed is going to do priced into the market, is it working? we have any evidence it is working? steven: you have to slow the demand-side to slow the market environment. payroll is at best a coincident indicator. to the extent you are taking aggregate demand down, you will have several quarters of below trend gdp. that will have an impact on the labor market, it will just not have an impact on the labor market as quickly as markets would like. when you look at what is happening in terms of the market betting the fed was reaching inflation point, that was too premature. they took out some of the rate hikes for the end of the year as a result of that speculation and i think that speculation will be reversed and more rate hikes will be discounted as we go forward in the next couple of months. lisa: there is a lot to unpack.

i am looking at the idea of a fed pause when we have to wait for the data to show and we are getting some sort of slow down to inflation. there is not the political will for the federal reserve to be patient. how much more aggressive delay have to be given it will take time for there to be any affect for what we are doing? steven: this becomes an interesting thing you look at the time it takes. we are very inpatient when you consider the fact we have a fiscal tightening, a currency tightening, a monetary policy tightening, and we are already seeing abroad affect on interest-rate sensitive sectors. we are only six months in. that is a shorter lag the normally occurs. over the next couple of months you will see that momentum of the drag increase. that is will be necessary to take the labor market down to take the inflationary pressures off the equation.

inflation will not come down quickly and this goes back to tom's point about the nonfarm payroll numbers. there will be a one time permanent upward adjustment in prices at one time permanent upward adjustment in cost. the question is are those upward adjustments in prices going to be validated by an adjustment in wages? my answer is no because the federal reserve will crushed economic demand and because they will do that wages do not catch up to where prices have gone and houses will be less well-off coming out of this than going into this and that means the economy will be that much weaker coming out of this. tom: you and i have seen opec and then there was opec 2 and then there was 1986. events take over. can we see the same kind of shift where opec says enough? steven: i think you can. every boom in oil prices is

followed by a boston oil prices. it is a function of the market momentum. it is a function of the political environment, it is a function of the efficiencies created in a system to deal with the higher prices and this will eventually happen. whether it happens in 2022 or 2023, i'm not sure, but it will happen. tom: the steven ricchiuto family had a vw diesel. everyone sent their thermostats at 45 degrees at night, and then opec blew it up. lisa: wear a sweater. what is the price point for gasoline before we start to get some sort of sense of consumer spending? steven: i think you are already starting to see it. the number of the reports we are seeing in terms of walmart and target suggested it. the previous beige book said a

few retailers were strong to notice consumers were pushing back on prices. this time half of the districts reported the districts were pushing back on the pricing power and reshuffling what they bought to deal with the pricing environment. you are already starting to have the impact. it is not in the macro numbers. it shows up in the company dated before the monthly macro numbers. go through the tech companies. we just had hp last night. there are a lot of companies that have been doing this. what surprises me is the bottom up street analysts have not cut their earnings estimates. our earnings tracker last month was positive .2%, which means nobody did anything. everybody is holding their numbers the same and i think given the macro story they will have to take the numbers down. jonathan: such a good point to finish on. steven ricchiuto.

capital economics coming out with a note. "the adp report points to a dramatic slowdown in private payroll employment gains inmate, but given the survey surprisingly poor correlation with nonfarm payrolls, we continue to expect the later will show a 300,000 when the report is released tomorrow." tom: in lisa's defense, can we stop emphasizing it? i believe michael mckee would tell me the math does not work. jonathan: lisa? lisa: we talk about data dependency. can we start stripping out certain data points and say they are irrelevant. thank you for that edification. jonathan: you want any more time? we can say it is relatively speaking less important than the numbers we get tomorrow. i will be diplomatic for once. out of opec, that meeting has started and they are looking at

maybe increasing things by 600,000 barrels a day instead of the scheduled 430,000 according to delegates. they might decide on july output and on august hikes as well. some of the latest from delegates speaking to our team. that is the latest from opec. jonathan: what did francisco blanche jessee of bank of america? this is so important to keep going over at. you have an oil analyst saying it does not matter what opec does if they boost output by 400,000. ultimately this is about refining capacity and through summer the price at the pump for the consumer is going to be problematic. lisa: you had another oil analyst saying they are using the barrels they have, but that

just means there'll be fewer reserves for later because there is not the investment. that is the main issue that will keep driving a tight oil market. tom: the queen. got to go. the queen and the duke of can't. jonathan: -- the duke of kent. jonathan: that works. tom: i look like i'm 86 years old. jonathan: you look good on the balcony. i will put the jacket back on and go over to the open. that studio is a little fuller than this one. i will catch up with emily roland, tony dwyer, and chris harvey as we count you down to the opening bell. from new york, this is bloomberg. ritika: the price of oil is lower today after reports in the financial times saudi arabia is ready to increase production if

russia has to cut back substantially. president biden is likely to visit saudi arabia this month and will almost inevitably meet the defective ruler the crown prince, who he had shunned so far. that may pave the way for an oil production boost. in ukraine the central bank has more than double interest rates in an attempt to stem inflation. that is the highest in almost seven years. it was the first rate hike in four months. inflation fell to 17% in may. the u.s. supreme court is facing a historic case backlog. the court is due to issue 33 opinions in the final month of its current terms. that is the most in more than 70 years. among those are rulings that could effectively outlaw abortions in two dozen states and put more handguns on the streets. the man who shot and wounded president reagan in 1981 will be unconditionally released june

15. john hinckley has been living in virginia under a number of restrictions since 2016. a judge says he is no longer a danger to himself and others. he shot the president and three others outside a washington hotel. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

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>> when there is optimism, when there is greed, when there is risk tolerance, that is a very difficult climate for the value investor to find bargains. now the prospect of returns of many asset classes are higher than they were a little while ago, and a much better climate for the bargain hunter. tom: howard marks of oak street capital. a piercing interview with lisa. what dazzled me is when he

talked about the hurdle rate for the metropolitan museum of art in says it was 5%, may be in the new regime they can take out 7% a year. lisa: more than 7% because if you take a look at high-yield bonds, the average yields are 7% or even higher. does it matter? a bigger question is does it matter if you can get more yields in an environment where inflation is that much higher? the take is basically the same. tom: howard marks of oaktree. we will move onto to an incredibly important essay by barry ritholtz, host of masters of business. we are thrilled he could pull away from the watching of the jubilee coverage in london. i thought your note was spectacular about recessions state-by-state. you have the courage to go granular and do a lot more analysis than the chief

punditry. does mississippi have a recession or does montana have a recession? barry: not only do they not have a recession, but they are expanding by the most they have expanded in quite a while. if you look at the philadelphia federal reserve index of state coincident indicators across all 50 states, every state in the union is expanding. you have all 50 states who not only are not in a recession but are seeing their economies grow. if you look at the history of recessions going back 30 or 40 years, long before a recession starts you start to see that number grow from 50 states to 45, 35 states. you do not have a recession start with all 50 states in an expansion, including 20 20's

pandemic. the economy slowed in a number of locations before that pandemic began. tom: what is the history of pundits getting wrong how corporations adapt in inflation. the collective memory of our viewers on inflation is about 5% understanding what real inflation is. the fact is corporations adapt. barry: this is a classic example of george soros's idea of reflexivity. when something happens that is a challenge to corporate america or the markets for the economy, events subsequently adapted to that. management changes, the federal government will respond. this is part of the reason why projecting out, forget even two years, six months or 12 months. challenging because it is all but impossible to tell what is going to happen during the

intervening weeks and months that are going to change the trajectory of the economy or change the trajectory of the stock market. it is impossible to tell from a standing point, call it the three body problem in astrophysics, there are too many variables to figure out what is going to happen down the road. lisa: given that corporate executives have change their projections or withdrawn forecast, you took a -- you look at s&p global yesterday, how well can companies adapt or is this a new environment of dis-adaptation because there is a big unknown? barry: i love the irony of the company in charge of guessing what future credit and earnings was going to look like has no forward recognition. the reality is they never do. we are normally more comfortable pretending. that is the whole trope about

uncertainty. the future is always uncertain. we could lie to ourselves most of the time. we see two things with corporate america. the lack of disability -- the lack of visibility, like there is ever visibility, but i also noticed an uptick in insiders buying their own stock. that is a welcome sign. it does not mean we are at a bottom. we see insiders start buying, it tends to suggest the world is not coming to an end. tom: barry ritholtz, thank you very much. state-by-state analysis of recession. jobs tomorrow. the stir bait -- the survey is still at 3.5% unemployment rate. lisa: it will keep going down. there are companies looking to hire. an analyst came out with the

next one nation of how adp can be useful. he dug into small businesses and talked about the second month of declines in terms of jobs added. the way he interpreted this is these companies are having a tough time competing with newly elevated wage bar set by its competitors. how much will this become a theme? smaller businesses having a harder time managing that kind of wage increase. tom: i get the idea, $22 an hour, whatever the wage war is, but what do small businesses do a mile or 10 miles from the amazon warehouse? lisa: there is a question of how much we get a redistribution of market share, even more to the bigger companies. how much our company is going to say it we cannot hire people at these cost, we will have to figure out a way to make do, and at what point does that slow the labor progress? tom: lisa abramowicz and tom

keene. we continue our coverage tomorrow. jobs day. also we dip into the service at st. paul's cathedral for the queen's jubilee. lisa: how will you prepare for that? tom: i will read my christopher wray and architecture. lisa: do you have a hat? you should wear a hat. tomorrow's jobless report is one of the key reports will be getting. i am looking at those jobs numbers for some sense of what the fed can cling to for that patients so many people think can happen as we get to neutral. tom: this is an interesting market. we will continue on radio and television. thomas petrie, one of the most knowledgeable on american oil at the 12:00 hour. stay with us. this is bloomberg. >> welcome back to another special update for bloomberg tv

and radio from tennis careful data from tennis channel. the women semifinals are set. she extended her win streak to an incredible 33 win streak. the polar star on her way to the semis for the second time in her career. the russian describe the victory as a dream come true after closing out the hard-fought win in the second set after two hours on the court. you can watch all of the action from paris live on tennis channel. coverage continues thursday at 6:00 eastern. ♪

jonathan: good morning, good morning. your opening bell just moments away. the countdown starts right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro.

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