>> no matter how you slice it, i think you are seeing a very tight labor market. >> we are still seeing record demand for labor, and the supply-siders falling short. >> the fed needs to lighten up. >> i do not see an -- unemployment taking up significantly. >> the more numbers we show the economy is slowing but not cratering, that will take pressure off the fed. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning. jonathan ferro, lisa abramowicz, and tom keene. a job stay here in america. is it target, flat on its back america, or as an american airlines to the moon? jonathan: there is a data point for everyone. the airlines telling a story about a consumer that is very resilient in the face of higher

prices, a company bearing -- being very disciplined. i could put it to scott kirby. he says something a year and a half ago i couldn't believe -- that business travel would come back and come back quickly. he was dead on. tom: the interviews we have had with airlines guys with guy johnson -- there has been underestimatoin of the business spirit out there. will we see that in today's jobs report? jonathan: are we underestimating the resiliency and strength of this economy? if we are, what does that mean about the work the fed needs to do to take demand out of it to get inflation back down? tom: inflation the story front and center, certainly for the president, speaking later today, and for the secretary of labor, speaking with jon. lisa: how will they try to position this with the desire for the federal reserve to act, where the only thing they can do is suppress the demand and, in

essence, cause unemployment to go up? how does he spin this, and what are the asymmetries of risk? tom: elon musk elbowing his way into our jobs report. we have to go hard scott rodino. twitter out with headlines on mr. musk. jonathan: the waiting period for the transaction has expired to the twitter deal is subject to remain in closing conditions. whatever that means. i think dan ives called it the elephant in the room. it has been radio silence on this story for a number of weeks. tom: maybe mr. musk will go back to 1976 and go look at heart scott regina for the playbook. let's do our own twitter moment with the data check date i will go to year-young, which shows weak yen, part of global tension of a potentially boom china.

jonathan: i am looking at a boom yield. up about a basis point. 10-year in america up 30 basis points in germany on a week or year. this line from city. here is the quote. the labor market will likely need to loosen, probably -- possibly through a recession. that is the view from citi. tom: and that is the cold porridge that deutsche bank talked about out there somewhere. before we go to import economics before the jobs report, nadia lovell on the physics, the math of this stock market. ubs global wealth management. there is american airlines booming. how do you treat, sector to sector -- how do you treat sector to sector analysis given the uncertainties of the american recovery? nadia: i think what you are seeing is continued evidence of

the shift in confidence away from goods to services. this is one of the reasons why we have a lease referred on the consumer sentiment in the market, because we think the shift is happening faster than expected. it has implications for inventory, which has locations for margins and discounts going forward. also, these sectors are still seeing cost pressures. it is becoming more difficult to pass along that third and fourth pricing increase to the consumer, so this is why we think there is some risk to the downside earnings expectations with consumer discretionary in the market. jonathan: with that in mind, looking at the retailers, they have been punished year to date. look at the airlines, a resilient consumer, disciplined on capacity. relative outperformance. in absolute terms, the stock is down by a couple percentage points. do i just avoid the whole thing,

that? -- then? nadia: i do not think so. on industrials, we are neutral. but we think there are pockets of recovery an opportunity. americans want to get out this summer and travel. but also recurrent -- a return of his this travel. we are starting to see that happen. there are areas of opportunity within the airline segment of industrials. lisa: on a broader level, what will drive the index higher, giving you are seeing downgrades to your earnings estimates, and that will likely continue? nadia: what will drive this index higher -- as we broke down our earnings expectations for 2023 down to 4%, but what could drive this market higher, if we see mediation and inflationary pressure happening faster than expected, if we get to pce closer to 2% by the end of the

year, a resolution in the war in ukraine could help that. also, a gradual phasing out of china policy could help that in terms of limiting disruption to the supply chains. we would not want china to open the floodgates right away just of the implications of demand of the commodity pockets already seeing elevated prices. we would not want to see a spike in commodity prices. lisa: we have been talking about elon musk and this proclamation he had to executives at tesla about cutting 10% of staff because of a super bad feeling. aside from elon muskism, how much does this were present a feeling more broadly not just coming from supply chain disruptions but a sense that things are getting worse and that, as you say, it is getting harder to pass along price increases, and a lot of these companies will have to bring in some of their staffing ambitions? nadia: we do not have a super bad feeling, because we do not

think a recession is eminent. we do not see one on the horizon in the next 12 months. however, we expect a slow down in the economy, and we think that is needed. particularly the labor market side, we need to see the labor market cool off so the fed can manage this economy and avoid a recession and not have a wage spiral cycle. that is also why we brought down earning expectations because of potential softness in corporate activity, which has implications for pmi's going forward, so closely linked to earnings expectations and overall s&p performance. jonathan: what is your overall price target for the s&p? nadia: we are looking for 4300. we are not calling for any new highs. tom: is she saying we can take off the next nine months? jonathan: i am not sure that is what she is a.

[laughter] nadia: no, there is still a lot to do under the hood, tom. tom: listen to her. jonathan: "get active" is what i keep hearing. the reason i ask that, because i knew the answer and wanted to ask another question -- is the reason it is 4300 this idea that, if we go about that, it is seen as an unwarranted easing of financial conditions? nadia: no, no. our expectations are really driven by earnings. at the end of the day, the market follows earnings. we had taken down earnings expectations. we have also seeing the valuations have come in far enough, and even if we go above 4300, the fed will see concern if you approach 5000 again. we do not think that is likely given the fact economic activity is slowing. jonathan: thank you, as always. 4300 the price target year end.

a lot of work to do beneath the surface. not the first time we have heard that. tom: there we are. we will see what the data is. we also will see what the revenue dynamics of the companies are, given robust nominal gdp. it will decline, but to where? on twitter -- this is not a -- peter rodino talked about how this is merger enforcement competition. what happens this friday after the jobs report? what do the attorneys for mr. musk tell him? jonathan: clearly the strategy is keep flying by the rules. keep him out with disclosures. where we end up -- is this deal getting done -- done? lisa: probably not.

people do not think so, given a discount of $14 and $.15 baked into there versus the price elon musk put out there. whether it gets done or not, how much carnage has already been done to twitter, given departures, morale hit, the fact there is such great uncertainty as to the trajectory of the company? jonathan: tesla down four or five percentage points. you have one of the biggest auto manufacturers by market cap on the planet coming out with a super bad feeling, they want upon hiring, maybe even cut workforce by 10%. any other manufacturer -- let's say dragon, daimler, renault --any other manufacturer comes out and says that, there is a story about a macroeconomic story. for some reason, tesla says that -- tom: maybe not chairman gensler. i do not get it. you are 100% correct. he plays by a different

rulebook. it is simple. they allowed him. jonathan: and we respond to in a different way. tom: we are the media. we are the authorities to say you have to play by the same rulebook as everyone else. jonathan: futures down.7 on the s&p. nasdaq down 1%. jobs report 90 minutes away. you know the numbers. if you do not, 318,000 the median estimate on our bloomberg survey. mike mckee with a big number in about 18 minutes. ritika: keeping you up-to-date with news from around the world. with the first word, i am ritika gupta. less than 20 minutes away from today's u.s. unemployment report. likely to show the smallest gain in job since april of 2021. the median estimate says 318,000 jobs were added in the bloomberg survey. the report may also show a downshift an average hourly earnings growth.

ceo of tesla elon musk reportedly says he has to cut staff by 10%. the report says musk wrote he had a "super bad" feeling about the economy. a 10% cut at tesla would mean a loss of around 10,000 jobs paid according to the u.k. defense ministry, russian forces now hold the initiative in ukraine 100 days in. british officials say the russians have gained momentum in their push to capture the donbass region p they say the original russian path failed but russia has changed its goals. president biden is pleading with congress to toughen gun laws following a number of mass killings. the president calls for a ban on high-capacity magazines and assault weapons. he called for raising the age to buy them from 18 to 21.

--the developer of a lung cancer drug expected to launch next year. earnings points shares more than doubled. global news 24 hours a day on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪ girls... the chess club has gained an edge on our bake sales. we need more ways of connecting with customers, fast. i know some consultants with great ideas. can they help us improve our digital experience? absolutely. they've invested over $2 billion in tech like robotics and ai. that could really help us manage inventory. and boost our sales. and save us a ton of dough. who are these people? ey, of course. who else? as long as i can keep working from home. we all know nobody makes ginger snaps like i do. your ginger snaps are safe.

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>> the fed will just go straight to neutral care than they will wait and see. they do not want to cause a recession. that is why they're going to neutral. that is just taking their foot off the gas pedal. once they get out of neutral and have to get a significant tightening, i think they will be more cautious. jonathan: from new york city, we are 12 minutes away from your

jobs report. equities lower by 0.6% on the s&p. nasdaq down a little more than 1%. the entire i almost a basis point. crude, $1.1711. you know the estimate well. close to 320. tom: we see that in 12 minutes. i will be looking at the usual data, the strength of the economy. lisa looking at participation. right now, participating with us randall kroszner, former fed president with the chicago booth school, doing good work for chicago, from finance to economics. thank you so much for joining today. i want to talk about this jobs report. the inflation is clear and what it means for a new middle class. research shows a shrinking of the middle class to the success of prosperity in america. how flat on their back on this jobs report is the american middle class? randall: there are a lot of

opportunities for jobs right now. there are something like two job openings for every unemployed worker. that is really quite extraordinary. there are a lot of opportunities out there. is everything equally spread, for sure not, but there are a lot of opportunities. tom: but 300,000 payroll is not fully employed care that is a real jobs inflation number. and i do not need a single point estimate. i know that is not your game. but you -- do you assume we go back to 270,000 non-farm payrolls? randall: remember, you are under 4%. you have not had that many periods of sustained under 4% unemployment. one of the issues you raised is about people who are outside of the job market, who are not

counted as unemployed, that labor force participation ratio. that has not gone as high as it was pre-pandemic. a lot of that now is older workers, who had come back in, but for a variety of reasons, including health reasons, are wary of getting back in the market. lisa: how do you look at the noise we see in the data? there is a narrative -- how do you look through it and get a leading indicator that gives some sense of where the jobs number will go in june, july? randy: certainly, where there is a lot of volatility and turning points in the economy, people can pick out different data and develop different narratives. that just comes when things are a bit volatile. in this jobs report, we will be looking at both unemployment rate and certainly the number of jobs created, looking across the different sectors, looking at labor force participation, and also seeing what will happen to

wages. that is a real wildcard and something the fed focuses on a lot. lisa: when we look at the participation rate, what are you expecting in terms of people coming back? you are saying there are a lot of people who cannot come back in for health reasons, skills reasons. what does that mean for the tightness? randy: the labor market is pretty darn tight. there are two job opportunities for every unemployed person. that is awfully high. and so there are a lot of opportunities, but there is a lot of tightness that is there. but also you, there is a bit of a mismatch. sometimes, job openings are there, but you do not have skilled people in the right location. tom: let's channel the magnificent alan meltzer. we are in the middle of jackson hole planning. alan also once took me to task on the tundra of jackson hole by saying we need to sum,

aggregate, go macro. in this jobs economy, should we sum everybody together, or do you partition out parts of the american labor economy? randy: certainly from the fed's point of view, they have to look at the big macro picture. but i was just discussing with lisa, to try to look at what will happen, you need to pare it into different pieces, to see what is happening in hospitality and leisure, other sectors, to see whether this is really a supply constraint or a demand constraint. lisa: what does it matter if jay powell comes out and says nuance does not matter? even if it is supply-side driven, could this be something they let slide given the fact the only tool they have is to dampen demand, and they cannot allow inflation to remain at the level it is? randy: yes, regardless whether it is supply or demand, it is supply and demand coming together, and the fed owns it.

if inflation is high, people turn to the fed and say what is going on, you have to do something about it? jay cannot simply say that is not my fault, i cannot produce more chips, that is not a good explanation. you can kind of get away with it two or three months and say it is transitory, but after it has persisted for a year, they have to worry about inflation expectations, regardless what the source of the increase in reported inflation is. jonathan: you have potential to call this a wage crisis spiral. are you there? randy: i think we are not there yet. we are certainly seeing elevated wage increases, but we are not seeing that they have not come on average, exceeded inflation. inflation, depending on your favorite measure, so are between a percent or 9%. and wage growth has been more in the 4% to 6% range, again depending on your favorite measure. but that is pretty significant

growth compared to where we were before. the real worry is, as inflation comes down, not anywhere close to the 2% target soon, but are you going to continue to see wage demand in the 5% or so range if inflation is 4%? that can be tougher, and that is when you start to see a real change in the labor market. if real wages are going up significantly where people are demanding high wage increases and demand is falling off, that is when you can get into a little bit of trouble. jonathan: if i am a policymaker, my favorite measure is the lower one. you know how it works. randy kroszner will stick with us for reaction to the payroll report. tom: melzer and i would argue about this. i do not know how you aggregate this american economy in a

modern economy. working with kroszner in chicago was gary becker -- they said we are different. we can improve care that is a part of america improving every week, and that is a part left behind. i do not know how you aggregate that. jonathan: left behind and squeezed here that predates the pandemic as well. it has been a big issue. looking ahead to payrolls, here is your estimate, 340,000. is there a goldilocks number for this market? a miss to the downside? lisa: is it the headline number that will be the goldilocks number, or is it something underneath? perhaps it has something to do with wages coming in or not increasing as quickly, or the participation rate. give us a number, and you will get 5 different views on what that means for the market. jonathan: mike mckee will give a number. the nasdaq down one percentage point. the estimate at 320,000, the previous number 328,000.

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jonathan: the jobs report in america 10 minutes away. futures -.7% on the s&p.

the nasdaq down one full percentage point. with derrick johnson come here is michael mckee -- with your jobs report, here is michael mckee. igo: 390,000 jobs restored. it dropped to 3 -- michael: 390,000 jobs restored. down from last month. last month, 420 8000 and 406,000 for private peer manufacturing payrolls -- 428,000 and 406,004 private. it looks like the economy may be slowing down just a bit. the unemployment rate stays at 3.6%. we had anticipated it would drop to 3.5. that may be because the labor participation rate didn't move all that much.

it did move up from the expectations. average earnings coming and weaker than anticipated, .3% higher for the month. 5.2% on a year over year basis, down from 5.5%. in this upside down world we have seen, this is good news for the fed, numbers weaker than expected but still strong. it shows signs of a decelerating economy and inflation pressures without suggesting it is falling off of a cliff. jonathan: inches recovered, negative .5% -- futures recovered, negative .5%. further along the curve come up by three or four basis points. no major changes off the back of this one.

tom: i am going to do some math with the revision up in the last 60 days, we created an average of 413,000 jobs per month. it is a job information machine. jonathan: 1% macro calling it goldilocks-ish. does that resonate with you? michael: -- one's calling it goldilocks-ish. does that resonate with you? michael: maybe we are seeing transmission more quickly into the economy. that would be good news overall for the fed. the biggest change we have seen in terms of the employment data seems to be in leisure and

hospitality, up by 84,000 for the month. we are getting into the summer season when there would be more people going into the leisure business. we see some amusement parks open up and there will be seasonal questions about that. professional business services are number two, higher, suggesting companies taking on part-time workers or contract workers to see how it goes and if they need to continue. transportation and warehousing adding 47,000 jobs. that is the category we have just begun to watch because of its shift from buying in person to buying online. construction, 36,000, the construction still thrown in the month of that may we are seeing signs that might be a starting

to roll over. it paints a picture more that the economy is growing but not falling off of a cliff. jonathan: you have an upside surprise on a headline number. you go through this, the unplanned rate is 3.6%. he didn't see an upside price in wages but it has ticked higher in the participation rate. when i spoke to someone at morgan stanley, she said participation rate. it is not a massive move or dramatics, but if you were sitting here and you would like to see supply-side story without inflation experienced being exacerbated by a much tighter later -- labor market. tom: eagle from 292 to 29510 year yield, on your way back to

the 3% number. -- you go from a 2.92, a 2.95 for a 10 year yield, on your way back to the 3% number. tom: i want to talk about what the fed does around the table with this report. it do they value an analysis of the inflation-adjusted wage? the real matter? randall: it does if they are looking where expectations are and what is happening in the labor market and they at ingesting and placing from our real floating? they are not. conflict is not higher -- inflation is much higher. as you were saying, the fed will take this as this is what we

were anticipating and we are not seeing an explosion and a collapse of the economy either. the unemployment rate of 3.6% is still an extremely strong number, very rare the s economy has sustained an unplanned rate below 4%. i think it is very much consistent with the fed's forecast and there is nothing that is going to stop them from continuing this march of a 50 point basis increase. my former colleague from graduate school said they will be merging through at least september and the rate increases. lisa: does this give credence to the idea they can go 50 basis points three euro and follow it with another 50 basis point rate hike even though some were talking about a pause?

randall: they always say it is data dependent. but you get reports like this and it will give the fed the confidence they are doing the right thing and is to have an impact on inflation and hopefully once they get to the 2.5 to 3% range will have more of an impact. inflation expectations have not gotten out of control. the intermediate long-term expectations not much out of the range. this is why the fed has to act now. is why they were out there saying we are going to be tough on inflation because they have an opportunity to raise the rates where the unemployment rate is low without efficient getting out of control. as long as they state well anchored they can move into percent or so and hopefully will

start to see some of the inflation come down and then they will be sitting pretty because they won't have to raise rates. the double-digit rates were rate were before when it was high. jonathan: thank you. the fat has more work to do you destroy for us, equities down by 6% on the s&p. yields high by five basis points. we will get a ton of input on the fixed income with rick rieder. and subadra rajappa. tom: the real yield, a 0.28% elevated. joining us is jeffrey rosenberg, and the perfect time to talk to you. i want to know how the bond

market responds to one of the themes we see in this job report that we are going to move from 8% to 5% inflation or 4% inflation and then there is a massive then what? how do you position in bonds given a move in inflation and presumably in yield? jeffrey: a week from now we will have that conversation with more information. the inflationary data we got today was a little bit of avoiding the worst case scenario. to get a little improvement on the labor participation rate. for the inflation story, the biggest important number we get out of the payroll report. there is the average hourly earnings as well and that avoided a negative disappointment in terms of best rent.

i think the market this morning is maybe reacting on the headline. there is a big drag on that headline from retail. if you discount that, this is a little stronger report and that is what we are seeing in terms of the market. you take a step back, 390,000 is still a very strong and too strong labor market. we need to see that slow. that is in the expectations and you are getting maybe a little disappointment in terms of slowing. i wouldn't read too much into it near the jury is still out in terms of the inflationary trajectory. we are projecting it and we have expectations we will see it decline but you can't get the fed out of the business of focusing on the number one priority, which is getting inflation down, until you see definitively that show up.

until that happens, it is going to be a tough time to be thinking about bonds in the portfolio as an equity hedge. it bonds as a stable source of income and preservation of principal because they have to adjust. there has been a lot of adjustment. the pain of the first quarter unlikely to be repeated but to early on this report to say it is all clear. lisa: you are seeing a lift to yields and you are seeing stocks get hit a little more perhaps because it is too hot for the fed, i wonder how much this continues to be faith based in terms of picker data and narrative, confirm it and move on. how much of that is what you are seeing now? jeffrey: we will all have various interpretations on the data and so will the fed.

eventually the data will show up and it is not just one or two from which we extrapolate. we have to be a little bit patient to see that trajectory play out. the market may not be patient. one comment from bostick and everyone says, it's ok, they are going to pause. and then brainard tries to put that back in the bottle. we have to focus not on being yanked around by various comments but understand that the priority here is inflation and that means a consecutive set of leash and prints monthly. we have to follow this into the summer and fall until we can definitively claim that the faith-based projections and expectations are being realized. tom: it is a chart we have tattooed to our brains and certainly you do with your work

at carnegie mellon, the inflation-adjusted 10 year yield, we are nowhere near cap to normal. what is your measurement of normal given these uncertain times that the real yield has to get back to? jeffrey: it is great question because it is kind of the north star in thinking about fed policy. the fed wants to get back to neutral. what is neutral? it is a lot closer to zero, probably between 0% and a half percent but you have to get an increase in nominal yields and a decrease in inflation. if inflation doesn't do its part to increase, then you need more increases in nominal yields. when people think about the 3% the fed will quickly get to by the end of this year or early part of next year, the presumption is the inflation is

going to decline and do its part and that is going to bring real yields back to something closer to normal. if we don't get that contribution from inflation, you will need to see more on the nominal rate hikes to get closer to neutral. there are two points to the nominal forecast embedded in bonds and a big part of that is a steady decline in the inflation rate. lisa: in two hours the president will talk about how the strength of this economy -- this labor market is one of the strongest in history. how do you look at that and confirm the bearish tilt to the market look into a recession and a slowdown and an increase in the unemployment rate? jeffrey: it is about setting expectations. some of the things we have seen from the administration is trying to get out ahead of labor market slowdowns but also slow

down here is a good thing and that is a little bit tricky of a message to say because it has been about the great jobs numbers. now they have to give it to talk about the sustainability of the economy and that too much of it is a bad thing because of the impact on inflation. it seeing the steady decline in payroll figures is something we should look forward to and would be a good outcome. it is turning the narrative and what the market is looking for as well. that is where the bad news is good news in some sense is in the market expectation. tom: it is a jobs report that still roils the markets. i will call the vix at a stick. dow jones industrial average down to 15 -- 215 points.

we were talking about 3% 10 year yields are you are almost there at two point 97% with a six basis private move. oil moving nicely. dollars stronger. i want to point on a global basis on this friday, the dollar-yen fully buttress up. lisa: is the dollar strength highlighting the fear that the u.s. will be able to move well ahead of other central banks? it is notable when you look at the bond space that you are seeing the longer and selloff more, that perhaps the fed will look to some guidance from the fact that wages have not increased more and say we can hold off and allow inflation to pick up more on the back and. that is the subtle message. tom: she does spoke with elon

musk. we are now going to speak with gina martin adams. that is a joke, folks. how do you write x witty with the by part of a booming airline -- how do you write equity with the looming airline and other sectors how do you address that monday morning? gina: i think what you want to focus on is a few things. first, the reaction to the employment report is the most important thing to watch. we are clearly in a market that is being led around by the bond market. valuations have been responsible for the entire s&p 500 correction so far. it tells you a lot about what is driving the equity market trends. you allude to airlines versus retail. it is normal at this stage as rates start to rise for the consumer to transition to spend more on services and less on

goods. the goods companies are under greater pressure because that is where they are operating. as long as the consumer is still spending more on services and service company is experiencing an acceleration in revenue growth, that does help to shelter from what is a difficult environment right now. lisa: you say it is the bond market leading around equities, and that has been an air to out there and dominating a lot of the discussion. it was pointed out that the fundamentals have also driven the narrative in terms of tech these underperforming in earnings growth stan truly year-over-year. how much is this -- growth substantially year-over-year. how much of this is the story? gina: i talk about the bond

market driving the equity market. on the earnings, you have had negative numbers and that has created further downdraft in the equity markets. so what is the cause of the selloff? it is most certainly rates. if you look at long-duration versus short duration, a massive diversion in equity performance. the economic situation is driving a question into the earnings outlook, most in the margin lines. tech has been under pressure and we are underestimating. there is no evidence earnings are contracting and that is an important point to make. until it get some negative and contraction in earnings, the market weakness will probably still be that is happening with rates. maybe we transition to a point

where growth is a problem but we are not there yet. tom: gina, i talk about it, but you are the pro who has done this, anticipate and guesstimate how rapidly corporations will cut expenses. what about this cycle, this time, will they be out front and cut costs quickly? gina: they will if and when it is necessary. it has just not become necessary yet for most industries. it will be on the goods focused industry, most likely the retail space. maybe some durable goods in the industrial space, or see it in some financials might see cost cutting and then i would look for tech as well. generally companies are quick to cut costs when necessary in anticipation of margin weakness. what we are seeing in the equity market is down and operating

margins are still rising year-over-year as soon the third quarter and going into the fourth quarter. if we see downward revision in operating margins start to really pick away at the forecast and if we start to see the forecast for operating margins moving to negative territory, then you will start to seek companies and announce more cost-cutting but you have to think about what creates margin pressure. two things have created margin pressure so far this year. the first is china. the second is russia-ukraine. if we have a reopening and some resolution in supply chain, that can help. russia having ukraine is creating a lot of turmoil. you could see a diversions in pressures emerge as china reopens but the war on ukraine is in going.

gina martin adams, thank you for your insight. moving to the bond market and that brings us to ira jersey. that means people see a more hawkish tone for the fed where they have to act but not enough to stave off or inflation in the long-term. is this noise or do you think the market response after parsing the data is important? ira: i do think it is important and the fact that we are underperforming and yields are a bit higher giving a relatively modest beat, we would expect somewhere in 845 basis points in a 10 year po -- 10 year. when i look at aggregate leifer income, the number of people employed, wage gains and hours

worked, we are still growing at over 9% year on year and that means you are going to have a sustainable input push to inflation. that is one of the reasons you have this reasonably decent selloff. tom: this is important and this is why it is a joy to have ira jersey. we have all this bowtied wall street angst andr the fact isa income is growinggon, right? -- growing, right? ira: people are focusing on wage gains slowing a bit that will keep the fed from raising but when you take the entire mosaic into account as to what is going on in the labor market and the fact that you had leisure and hospitality gains continue to ramp up. you had a 12% increase and my

associate noted a 12% increase in wages just in leisure and hospitality, because people are going out again and things are reopening and there are very tightly were markets for the less skilled worker in those sectors and that will push wages up and mean that spending in a lot of sectors will remain ok. regardless of what equity and bond markets are doing in terms of correlations and they have been highly correlated over the last month or so, you are looking at a good economy right now. because of that, you are going to see a hike. tom: do you have a tip .4 bond instability as nominal gdp comes down? it is coming down but do you have a number on nominal gdp

where it thinks, not to be lisa-like, where things fall apart? ira: not so much. on june 15, we get the first bounce that run off the fed's portfolio -- first bonds that run off the fed's portfolio. it is not the real story but a nominal growth story but you have a market that might not be able to withstand some of the runoff we will have your you are going to see significantly higher volatility in rate markets. thick about how many 10 basis point moves we have seen this year -- think about how many 10 basis point moves we have seen this year. tom: lisa, may we remind the animal spirit as published is 6%

up q1. lisa: this is a strong economy. i am sitting here wracking my brain trying to dovetail the idea of the depression people feel in the sense there will be a downturn with the incredible momentum and that is the incredible argument i see on twitter and elsewhere among economists. how can you beat talking about recession and a fed torpedoing given the fact that this is an incredibly strong economy. do you get the sense this is still likely that there will have to be a measure taken by the fed to create more weakness that people are expecting, or do you think perhaps the pessimism has gone too far? ira: i do think the fed has to push us into recession. the only way for us to get a significant slowdown in inflation is to produce demand. a lot of what is going on in the economy right now and one of the

reasons for some of the higher prices started with supply chains. we all know the narrative, but it is that the federal reserve has to push us into a recession, at least in terms of real growth. like tom was implying before and i agree, we need to get nominal growth down. it doesn't mean we have to have a deep recession but we have have growth slowing on a real basis in order to get nominal growth much lower and for inflation to come down to more reasonable levels. it is going to take years. we are still going to have three plus inflation through 2023 and that is not an environment where the fed will cut. tom: ira jersey, thank you so much. i can't wait for michael dara to publish -- darda to publish.

i understand you have to get in a plane and sit in atlanta for the weekend because of thunderstorms, but the answer is it is a boom economy and as he said, the excess gets extended out far more than the tantrums of the media. lisa: i like your hand motions. it works great on radio. what ira said was weakened have it on a nominal level but on a real level we would have declined. people are spending more money because they have or money. when you see inflation, people are earning more and things cost more than there is more money in the system. at what point does growth slow substantially enough to stop the pace of price increases? that is a hard message to create an world that does not deal with the nuance very well. tom: the vix, 25.64.

we are on a 3% watch on a 10 year yield. that is something that marty walsh wants -- is that something marty walsh wants to talk about? i don't think so but i think jon ferro will get that in. this is bloomberg. ♪ annmarie: -- jonathan: the countdown to the open starts right now. announcer: everything you need to get set for the start of u.s. trading, this is bloomberg, the open, with jonathan ferro.