>> no matter how you slice it, i think you are seeing a tight labor market. >> we are still seeing record demand for labor and the supply side is falling well short. >> wage pressures will accumulate. >> the more of these numbers that we get that show the economy is slowing but not cratering will be taking pressure off of the fed.

>> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. jon: live from new york city, good morning, good morning. this is bloomberg surveillance on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. it is payrolls friday. jamie dimon says that hurricane is coming. elon musk has a super bad feeling. tom: he does it his own way, but this is the beginning of what we will see, which is 2% here, 4% they are rationalization. it is not the rationalization, it is the rapidity of it. we are talking may and june what we would normally be talking about in september. we are speeding up the path. jon: you said it repeatedly the last few weeks, this is what could be in. looking at job cuts of 10%, a hiring pause.

you say this will not just be tesla? tom: they will look at demand. this is what corporations do. a real controversial view on the game the fed plays to the end of the year based on demand. corporations are not different than jerome powell. they will adjust a la musk in his own clumsy way. they will adjust now. lisa: there is the elon musk aspect. who does this? what co comes out and says i have a really bad feeling, it's super bad, i might have to cut 10%? it leaves me wanting more specifics. you are getting those specifics from other companies, whether it is hewlett-packard reducing their earnings forecast, microsoft. there are real headwinds, but they are not coming. there is no real reason for that super bad feeling it. jon: not a press release.

do you find that strange? lisa: i find it weird. especially after him saying if you don't want to work in the office don't come in. is this his way of getting attrition? is this his way of getting attrition -- remains to be seen. jon: resilience. you mentioned microsoft. pre-announcing, what did the stock to, finished positive. brainerd pushing back against the fed pause, positive. two weeks of gains facing down a lot of bad stuff but still doing ok. tom: a week ago, totally agree. was brilliant on my property at 9:00 a.m. laughing in the face of the market down 2% on

microsoft. he said they are killing it. jon: we will talk about payrolls in a moment. we will get to your payrolls report as we look ahead. a preview for a couple of hours time. the nasdaq down .5%. we are up on the week for second week of gains. yields are higher on the week on the session up by a basis point. lisa: i think the stability we are seeing in yields has been one of the underpinnings of this resilience. the feeling that either way weakness will cause the fed to pause and to much strength would give to the earnings. so either way it is a positive. how long will that continue? we shall see. it is the most important data point of the day come the may u.s. jobs report. i am watching under the radar not only wage growth, but participation. how much is participation coming back? we saw it near post-pandemic levels and then it fell off.

how many people are going to eventually come back to the market after leaving after the pandemic or how many are permanently sidelines for lack of skills, retirement, illness, whatever explanation you may have? after that the u.s. labor secretary marty walsh is joining jonathan ferro and nine: 30 am it's interesting to see how he spends this and what he emphasizes. right now you have a president who is trying to get less momentum in the inflation story which means a higher unemployment rate will stop how do you spin that as a labor secretary? president biden will be speaking from the rehobeth beach convention. services data, how much do we see the momentum in this area continuing? if you look under the hood you can see that hard durable aspects are actually decelerating and growth in terms of sales. services and inflation are still

very hot. so is employment. how much can that continue? jon: if the president is at the beach can we assume that this payrolls report is ok? it won't look great if they are not great and he is at the beach. lisa: if he is at the convention center may be he is trying to drum up services at the delaware beach. you are correct. what will it signal? at the same time how does he spin this? if it is good will he have to talk about inflation? tell the fed, do your job? at what point is it a good report for him? jon: the chief international strategist at deutsche bank. financial conditions over the last year are tighter. looser over the last few weeks. are they tight enough? alan: i don't think so. if you take the combination of her s&p's are trading, the 10 year yield, credit spreads, it is hard to see inflation being

guided down to 2% in a timeline that is acceptable from the fed standpoint. almost certainly you will need more tightening of financial conditions. tom: you go back to history and talk about arthur burns when he pushed one way and volker going to the other side of things. parse the difference of burns and volker and what it means for powell. alan: what you're seeing from powell and the federal reserve err on the side of burns letting inflation getting out of control. there were warning signs last year that inflation was on the rise and team transitory didn't believe that. now you've had a shift from november of last year. i think that it will be extremely difficult for the federal reserve to err on the easy side. to make the same mistake twice would damage credibility. tom: do they have the ability or skill set to guess the middle

point between burns and volker? alan: not easily. that is almost no fault of the fed. where is the middle point? as lisa said, you're trying to guide unemployment up. normally if you guide unemployment up by more than 5% over 12 months you head into a recession. almost certainly they do have two drive unemployment up by more than .5%. lisa: you ask a good question. is the current 10 year yield and equity market prices consistent with sufficient demand recession to see core inflation heading back 2% on a timetable comfortable for the fed? what is the timetable that you think will be comfortable for the fed? alan: it seems that the fed is comfortable with the idea that the trend is their friend and they're headed to a number with a two handled by the end of 2023.

by the end of 2024, with additional growth suppression, you will be very close to target. i think that is the kind of timetable that is acceptable from a policy standpoint. in terms of the way they will be looking at the data, it is month-to-month. if we can stop printing core cpi's at 2% on a more consistent basis come that shifts at a big way and tells the fed they are more in target. lisa: does the target change if inflation is coming from supply chain disruptions and if that lasts longer like we heard from larry fink of blackrock yesterday? alan: they will need a lot of help on the supply side. what is interesting, if you look at the latest pmi data, supply deliveries data on a delivery basis, not just in the u.s.. if you look at some of the commodity prices and some of the most esoteric stuff that people don't focus on as much like fertilizers, lithium, a host of

different commodity prices are seeing somewhat softer prices over the last month or two. there is a little bit of promise and help, i just don't think it's going to be enough. jon: any dollar weakness? if it emerges do you want to fade it? alan: no. at least versus the euro we have made a return. insomuch that there is a lot of focus on the ecb. there is more talk the ecb does 50 basis points in september and the possibility the fed does 25. that is a natural handing over the baton away from the focus on the federal reserve. i think it will provide some serious support from the euro. versus the yen it is a different story. if the yen strengthens and the 10 year yield goes up then the yen will weaken over time. jon: looking ahead to payrolls at 8:30 a.m. eastern.

the highs from socgen, four 40. goldman at 225. the earnings surprise, muska speaks up and we are supposed to question it? lisa: i would say is he giving us some earnings revision? it sounds like he is giving us a comment that was sent out to others at the company in an email as reported by reuters saying may be this super bad feeling will lead to a 10% job cut. it is great to have communication but it seems like this is muddying the waters more than it is adding light. jon: t.k.? tom: i think the unemployment rate is critical. they are praying for level unemployment rate or they would kill for a tick up in unemployment to calm the waters and set up their story to that fed meeting, whether good or not.

clearly survey says they won't get that. jon: the fed or tesla? tom: i am talking about the fed. jon, i wore my jubilee tie. this is the tie i would wear to the epson derby. -- darby. on radio it looks great. jon: i love you. you are not following the conversation with lisa and i at all, are you? tom: meghan just entered st. paul, what do you want? it's friday. >> keeping you up-to-date with news from around the world. tesla ceo elon musk has reportedly told executives that the electric car maker needs to cut staff by 10% according to reuters. muska sent out and email entitled pause all hiring

worldwide. he wrote that he had a super bad feeling about the economy, a 10% cut could mean a loss of almost 10,000 jobs. president biden is pleading with congress to toughen gun laws following a number of mass killings in an evening address from the white house. the president called for a ban on assault weapons and high-capacity magazines. he acknowledged that lawmakers are unlikely to ban the weapon so he called for raising the age to buy them from 18 to 21. russian forces hold the initiative in ukraine after 100 days since vladimir putin launched the invasion. the russians have gained momentum in their push to capture the donbass region. they say that the original russian plan failed, but moscow has changed goals and has focused on the donbass region. and a 6th street weekly advance. a highly anticipated opec-plus meeting delivered only a modest increase in production at bill to increase concerns over a

widening supply deficit. there was speculation the saudi's were going to pump significantly more as part of a reset worth relations with the u.s. a blunder caused a flash crash in european stocks last month. the trader in the city treaty union added an extra zero to a trade early in european market hours. this is bloomberg. ♪ got the next generation in global secure networking from comcast business. with fully integrated security solutions all in one place. so you're covered. on-premise and in the cloud. you can run things the way you want —your team, ours or a mix of both. with the nation's largest ip network. from the most innovative company. bring on today with comcast business. powering possibilities.™

>> if by september the monthly reads on inflation provide compelling evidence, then inflation is moving down and the pace of rate increases with slow. if inflation fails to moderate then a faster pay rate increase it could be necessary. jon: they just don't know.

the cleveland fed president echoing what we have heard from so many fed officials will stop from new york city, good morning. futures negative on the s&p. on the nasdaq 100, down .7 percent. yields higher on the week, i have to say look out the bond market. german 10-year gilts, climbing again by three basis points. the height of the session pushing 128. tom: the first thing that i look that when i came in, the one anomaly on the bloomberg launchpad is euro-yen. relative euro strength as seen by the german bunds. euro-yen is out to a resistance level of stronger euro into weaker again with you near 1.3 zero. it is a note into the decisions of the ecb on strong euro. jon: we are making new multiyear highs in the bond market daily on the 10 year bond yield. june 9 for the ecb next

thursday. tom: it might be the day for christine lagarde, but the date here for ukraine and russia is 100 days. maria, who has done a phenomenal job of traipsing europe for the first 100 days of war, cut to the chase given our timeframe. what do the next 100 days look like for ukraine? what do the next 100 days look like for mr. putin? maria: tom, it is hard to tell because the nature of the work -- nature of the war has turned out to be unpredictable. the first week the ukrainians were successful in repealing the russians. the narrative and momentum has really shifted and it has shifted in russia's favor. president zelenskyy updated some of the numbers and said when you look at the ukrainian map russia controls 20% of ukraine's territory.

it is not just 20%, it is the geography and nature of the territories. they control access to the sea and industrial hubs. for ukraine the war is changing in nature, but it's not necessarily in their favor. i would point to the words of the nato secretary-general saying at this point the longer that it goes on the more unpredictable it will become in nature. lisa: when you look at the impact of the war, a lot of people are looking at record high inflation reads through europe, how much has that changed sentiment in terms of the approach that people would like to see from european governments? maria: that is a big question in europe. i've put this question repeated the two every leader that i came across on monday, tuesday, from the baltics to the french president to the belgian president. to me what is difficult is that right now when you ask them what does victory mean they don't give you a clear answer. when you ask them, what is the threshold of pain you are

willing to tolerate, they are not willing to give you a number. i was very surprised by the belgian prime minister who told me we have done a lot, it's time to take a breather. if you put that question to someone from poland or latvia, they would tell you we haven't done enough and we need to be tougher. that is the issue for europe. how much tolerate, how much pain they're willing to take, but also what does victory mean. to me it's not clear what the consensus is at this point. lisa: this bleeds over into the u.s. picture. we will hear the messaging after the jobs report. how much is a good report good news for the president versus a sign that inflation will be the main issue going forward and it is not going to abate all that quickly? maria: -- >> the biden administration has relied on the jobs reports to make the case to the american people that they are doing what they need to do with the economy. yes, inflation is bad but we

have jobs under control and employment is really low. isn't this great? use a biden do an expectation reset in an op-ed in the wall street journal saying that it could be a positive thing for the economy if we don't see these record busting jobs numbers like we have in some of the previous months. he made the argument that it shows we are successfully moving onto the next stage of recovery and setting re-expectations on exactly what these numbers are going to mean and what success is going to look like for the white house. tom: in the heat of domestic politics and given the next 100 days for ukraine, has congress moved on? emily: yes and no. congress did approve $40 billion for the white house to spend how they feel they need to and ukraine. that is a signal that the white house requests and what congress allocated is that lawmakers in

washington are preparing for a very long battle. they wanted to give biden the resources so he is not going to have to come back to them every couple of weeks asking for additional funding. i think for now, in terms of congress, the focus has shifted to other measures like gun violence. i think for the white house, this is something they are focused on. you saw biden's other op-ed talking about sending longer-range missiles and different types of artillery and weapons to ukraine. it shows the white house, this is one of numerous issues. there's also a really big question about what happens if and when the white house needs to come back to congress for additional funding? you see concerns raised by republicans, now from democrats saying that we want to support ukraine but we need oversight on where all of this money that we are giving you is going. i think that will be a question that the biden administration will need to answer before they come back and asked congress for additional funds. jon: thank you. t.k., a lot has happened this

week in washington. some reports around the president meeting with the crown prince mohammed bin salman around energy. opec made a move. what difference did it make? not a big one. tom: this is important. the asymmetry, and you've got to believe that if the president visits riyadh you will see a return visit to washington by the royal family of saudi arabia. i'm not sure who will show up, but you've got to believe that there is asymmetry being established. jon: i wanted to bring up the goldman research, because they are nailing the point that you've been making on china when it comes to the commodity market. they said we believe that this opec ramp-up remains insufficient to balance the global oil market which is shifting to a deficit following china's demand recovery. we reiterate our second-half 125 brent price forecast.

tom: i think that the people watching and listening feel the same way anecdotally. really, this summer of america is one of demand is still there, and then you overlay, i believe, i'm sorry, china is opening up. jon: demand keeps coming up, keeps coming up. lisa: the fact that we got from opec-plus no recognition that a number of their participants are not producing, not meeting their targets. they increased their targets, but they increased them for, example, russia and other nations that are cutting. how much this this ad 12 market? how much recognition is this? how much is this to balance the supply imbalance? jon: two hours from the payroll report. 320,000 is the estimate, looking for a little deceleration. this is bloomberg. ♪

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>> live from new york city. good morning to you. this market is facedown.

according to the fed, -- pushing back on the idea of a september pause. job cuts may be coming to tesla. still, positive coming into friday. futures are down to 31%. next up for this market is payrolls. there hundred 20 k is the estimate. going into it, this is what the bond market looks like. 17 or 18 basis points. notch of stateside but on the other side of the atlantic. america, 291. this is what the commodity market looks like. they're not interested in what opec-plus did yesterday. they are still looking for 125 on brent brent on the year right now is up.

tom: i'm gonna look at 120 is a really emotional level people watching. to really break through 120 10 sustain above 120 would be a game changer. jonathan: 150, 91 is where we are. thank you. tom: are you done? jonathan: i am. tom: julia coronado, president and founder of macropolicy. you have a teeter todd -- teeter totter between goods and services. how will goods and services teeter totter this morning? julia: there is a little bit of an irony that we expect in the pattern of job gains.

we expect goods producing -- good producing sectors to remain hot. there is still too much of a catching up they have to do in terms of manufacturing option. even the housing demand is starting to weaken and consumers are shifting away from goods. there are still plenty of rehiring and hiring backup that the good producing sector has to do. meanwhile, the delivery and the selling of goods is where we expect some weakness. we heard that in earnings reports. of course, leisure and hospitality has been moderating in terms of hiring. consumers are still going out and traveling in full force right now. it is just now that they have largely come heated that plan

and do not need to keep rehiring at this soaring above trend pace. that is where we expect the biggest slowdown, in the service sector, to fight the few -- despite the fact that consumers are shifting back to services. tom: go back to where you absolutely nailed the slow in the american economy. let me ask dumb question 101 for the day, are you able to see a recession coming? julia: the odds of a recession have risen. oil prices, that is a pure hit to consumer purchasing power. typically, in the last cycle without revolution, we have seen an offset from increased drilling activity and jobs. the energy belt would do really well when energy prices were high, even though it tax consumers more broadly.

we are seeing less of that. because of some of the esg and the shift away from capital. we are seeing less of a drilling response that we have seen in the prior decade. therefore, higher prices and less stimulated activity means more of a hit to the economy. i think the contrast between now and last cycle u.s. economy was vulnerable and cap being knocked down. they were in a steady deleveraging. consumers are not taking on that much debt. there has been a little bit of pickup and credit card borrowing. consumers have not looked at that type of power boom. household debt actually looks reasonable and consumers have

been cautious and are cash rich, there is a bit more resiliency when it comes to underpinning the u.s. consumer to weather some of this stress, it is stress. some consumers will feel it more than others. it is deftly a risk. that said, i think we have a shot at weathering this. some of that will depend on how these inflationary forces play out, to be start to see some of these supply chain issues provide some relief for things like cars and other goods being shipped? or does the fed have to put the adult to the metal and taking us into -- put the pedal to the metal and take us into restricted territory? >> there will not obey and create real pressure on the inflationary front, can we avoid hard landing?

julia: i think it is clear we have ended a new world of frictions is not good to abate. we need to think about levels versus changes. inflation is continuous price increases. our shipping cost will be continuous increasing or have we just shifted to a world where goods are now more expensive? we do not expect goods to become less expensive or shipping prices to go back down to where they were. do they just stay high and stop rising further? that is one of the questions. for me, i think we can agree that goods will state more expensive. do we sell -- see some improvement in the margins? that level off those price increases that means inflation goes down.

we have seen that in a number of key goods categories. used cars have stopped inflating, televisions, electronics have's dock returning to their normal pattern, despite the fact that they import postings and shipping costs are high. lisa: you're making a strong argument for a soft landing, we have had guests after guests sang the feds productions of a soft landing, and unemployment rate that does not rise about 4% , fantasyland. others say it is fanciful. other people are coming out and having similar things to say, why do you think this is realistic? julia: because we have an economy that has been hit by some extraordinary shocks. we have given that economy a tremendous amount of resources to absorb that blow.

we are seeing companies be resilient, some better than others in the season, we are starting to see more winners and losers. companies are paid to make money and stay profitable and sell goods and services they are working really hard to adapt to this, i think that is the avenue or we could see a soft landing, we did not come into this shock laden with a lot of imbalances. consumers are in good shape, they were very cautious and sensible going into this. their balance sheets look really good and healthy. these are things we did not have in the last recovery.

we have a strong foundation. yes the shocks are coming one after the other, we have a low unemployment rate, lots of jobs and strong household balance sheets. high credit quality. it will hurt, i'm not saying that a soft landing is a foregone conclusion, it is not. it is very uncertain territory. what you just highlighted, there is a wide range of views, all of them are perfectly reasonable, there so much uncertainty, but there is a doom loop of tracing those through. we have to remember, the economy tends to be more resilient than we give it credit for. consumers, businesses tend to adapt and adjust to these conditions i see a decent stop at a soft landing, rather than a

foregone conclusion. tom: three things, point by point about how resilient it might be. it is unbelievable to think we have jobs for every -- we have unemployment down to three per 5%. every time, you mentioned consumer survey, consumers tell us how to feel, has it ever been like this? tom: 10% is spread out across a hundred percent. it is hugely uneven right now. she was really talking about the fed and the hope of the fed. she made clear that many things could upset the card on the way to some form of neutrality, i don't think we know where that is.

jonathan: an aspiration, not a forecast. lisa: a lot of people agree. indicators like sentiment are signed to show pain. at what point does it catch up? jonathan: futures are down. job support, coming up in about an hour at 50 minutes time. this is bloomberg. ♪ >> keeping you up-to-date with first word. the smallest gain in jobs since april of 2021. the median estimate in a bloomberg survey says jobs were added in may. the report also showing an average earnings growth. reporter says that elon musk wants to pause hiring at tesla

and cut almost 10,000 jobs. he has a bad feeling about the economy. another ceo expects inflation to be elevated for years. global supply chains. the fed does not have the tools on its own to fix this to my problems. in turkey, annual inflation, the highest going back to 1988. energy prices jump. turkish inflation has been in double-digit for much of the past five years. kim jong-un has congratulated queen elizabeth the second on her anniversary of the throne. it was a north korean leaders first message in a while. apple will improve working

conditions at their retail stores in response to efforts to unionize. they agree to make ours more flexible in the coming months. employees will not be forced to work more than five days in a row. global news, 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. i am kriti gupta. this is bloomberg. ♪

>> china is coming out of lockdowns right now. they are stimulating. on top of that, a very strong travel season. people have not gone on holiday for two and a half years. you can see bookings throughout. if you put altogether, this market will get higher. tom: looking for 125 on brent.

good morning to you. equity futures are negative on snp. over the last 20 minutes, lower. snp, half down a. down by more than 4%. they are looking to pause all hiring worldwide and catch up by 10%. the street, soft deliveries. the elephant in the room remains the radio silence on the twitter deal. one was the last time we talked about that? tom: in my board by it? i think people can tell i am. home here, why this is guy have a different playbook with the sec than any other chief executive officer in the land?

jonathan: -- tom: it is great, but do it by a traditional way with all shareholders at the same time. jonathan: communication and getting back to the office a little bit early this week. lisa: he has the twitter deal had has not mentioned, supply constraints you have in china. what is he doing right now? does seat just want to talk about his super bad feeling, get some therapy? what is his motivation? tom: wait to be sensitive, lisa. delete notes out of washington, -- brilliant notes out of washington -- joins us now.

a cardigan sweater, my father was the only one who turned the thermostat to 40 degrees. this president does not work cardigan, he wears aviator glasses, drives a corvette at 20 miles per gallon. does president biden have the culture to do the jimmy carter redux? >> biden with a blazer and aviators has learned that people get reelected with those small cars. nobody wants to live that way in america today. also, we are looking at prices right now but not shortage. this is a different world, a world apart from where we are. tom: can we get to shortage? >> sure. we are looking at some possibilities. these things are possible with

these interruptions. jonathan: let's talk about policy. what can this administration actually do? >> a strategic reserve. they are taking on everything they can in the way of messaging, especially -- what tom mentioned. this point, they're looking to blame deflection. you have a correlation between approval ratings and basis points. this is the time to come up with an excellent nation. lisa: we saw from out book -- opec-plus, is that in all of branch or is that little different? >> there are still some interest baked into this. there may be some signs of an emerging thought in washington.

i think we are headed towards a mojo summit. ahead of that, we had some recognition from the white house. specifically calling out the crown prince as part of sealing the deal on that. i think in terms of whether we get to a pivot, let's eat where it goes before we decide that the white house has abandoned them. lisa: there is always a question of their credibility. this point, they are talking about increasing production targets and an inability to increase output. how much of a credibly issued does this become? how can we gain the extra barrels that they are putting on the market? >> the 2.7 million barrel deficit. you're getting a lot of phantom barrels. without the number going up on the spreadsheet, it cannot go up in the tank. it also means that some of what

your promised still ends up with an empty tank. bottom line, room to the upside. this point, if russia is being shifted out of the market by sanctions to grading the energy, that is the goal of leaders. one of the biggest parts is being cut, slowly. tom: what is your sustainable guess porkbarrel? -- sustainable guess per barrel? is it the new $60 a barrel $100 a barrel? >> report metric of $30 a barrel. on the other hand, the last 10 may 08 -- may also be a poor metric.

the question is, where does it come from? it is not delivering as much as it used to. the problem with the bill price will probably register higher than the one we saw in the last decade. jonathan: awesome to catch up with you. kevin there bringing up the latest crude output. 11.9. it has picked up. it has picked up in a big way over the last 12 months. tom: we have had a number of guests say yes. i would say they have been most articulate. there will be a price or production clicks in. jonathan: what is more likely to happen? tom: jets is different.

america's desire to drive is proven. lisa: great question. i think it is unclear at this point. there has been a discipline. they do not want to invest in new ones. they do not want a repeat of that. what happens? how then do you see the demand. tom: i thought kevin was brilliant there. you and i have children, we will be playing detention -- detection mode. lisa: what are you detecting? tom: it is symmetric. it works. lisa: thank you. tom: are you with us? jonathan: wondering where you are taking this. [laughter] jonathan: futures are down.

this is bloomberg. ♪

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>> does not matter how you slice it, i think there is a tight labor market. >> record demand from labor and the supply side is falling short. >>