mark: welcome to the bnn bloomberg audience. i'm mark i'm done with first word news. speaking from delaware, president biden was asked whether he will be visiting saudi arabia, despite having vowed to make the country a "pariah." pres. biden: there is a possibility i would be going to meet with the israelis and the arab countries at the time, including saudi arabia being

included if i did go. but i have no direct plans at the moment. mark: also this morning, the president discussed the state of the u.s. economy following a better-than-expected may jobs report, even as he acknowledged it is likely to be overshadowed by record high inflation that is causing pain for americans. israel is accusing iran of deceiving the international community about its atomic activities. the prime minister raised the concerns today as the head of the yuan nuclear watchdog paid a brief visit to israel. israel as opposed to any return of the 2015 nuclear agreement between. tehran and world powers. . the united states and its allies say iran has failed to answer questions from inspectors about the -- about potential undeclared nuclear activities. former white house adviser peter navarro has been indicted by a federal grand jury on two counts of contempt of congress and is in custody.

the charges stem from his failure to comply with a subpoena issued by the house select committee, investigating the january 6, 2021 breach of the u.s. capitol. navarro refused to appear for a deposition and refused to produce documents to the panel looking into the capital riot -- capitol riot. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. >> welcome to "bloomberg markets." romaine: we are going to check on the markets right now. a down day here, despite the rally we saw yesterday. we continue to see this whipsaw back and forth as people try to assess not only the economic tea leaves but a lot of the commentary that we continue to

hear out of so many executives, whether it is jamie dimon at jp morgan, or a goldman sachs and now elon musk at tesla. the s&p 500 down 1.5%. crude oil setting up for what will be a weekly gain. a massive move in the two year yield, higher by 18 basis points. a shortened holiday week here in the united states. the vix elevated on this day, right back to 25. jon: if we take a closer look at stocks, those same themes at work. when it comes to the market, because of that rally in oil prices, you have names like chevron trading higher within the dow. good conversation with the ceo on bloomberg television today. higher oil prices are things that airlines are grappling with. yes, their demand story, and we saw that from american airlines looks good. they are dealing with cost realities such as higher jet fuel. romaine was talking about the reality of tesla's road ahead

and the comments reported from elon musk on staffing going forward. to your point, it has been a week where we have had more and more business leaders sharing concerns about the outlook for the economy. romaine: we hear those comments and you look at the economic data. some of it lines up and some of it does not. a lot of questions about where we go next. we heard earlier on bloomberg television from black rock's rick rieger who laid out this report about the effects on the fed. >> this will do nothing to deter the fed from where they are going. but i think we are now going to make the turn. i think the next three or four months, you see these numbers decline, i could see a negative print over the next three or four months. and that is the thing i am keyed into. i think that is what markets will react to and try to interpret how deep the fed is going to go. romaine: talking about those u.s. payrolls numbers we got earlier this morning in the u.s.. 390,000 jobs added, continuing

on a strong trend we have seen in the market. and folks think it may be long in the tooth. diane swonk is joining us to talk about this, chief economist at grant thornton. let's talk -- let's start there. when you look at the payroll data, line that up with the previous months. you see a trend that maybe he continue to go higher, or do you think we may be our setting up the potential for contractions somewhere soon down the line? diane: i think we are going to see a contraction down the line. i think the fed has been clear about what it is coalescing around a soft dish landing. and a soft ink -- soft dish landing includes a higher rate of what they called in natural unemployment rate, closer to 4% to 5%, as opposed to 3.6%. i think that is really important to keep in mind. in today's data, even though we saw the wage numbers looked like they cooled, underlying that,

nonsupervisory workers after use -- losing ground, regained ground. and those wages accelerated. i think it is important to understand the cost of what the labor market needs for firms. we had 1.3 6 million people out sick. that is 42% higher than the average of the 2010, due to the second omicron wave. the peak was debt -- was back in january. that along with high quit rates is what is undermining productivity growth and causing a lot of cost push inflation from the labor market. that is why the fed looks at the situation, all those factors, and says the labor market is unsustainably hot, and that the unemployment rate is unsustainably low. jon: just building on that, it does seem like the fed is willing to make that trade-off to deal with unemployment in the -- in an attempt to deal with the inflation realities. diane: exactly.

they -- it really has been amazing to see how much they have coalesced around this idea that the current full rate, or natural rate of unemployment is higher than what it was at the end of the last expansion, which means it is higher than it is today. they talked about it in the 4% to 5% range. he saw that from governor waller. you have seen it from german powell himself. that is where they were coming out of the great recession, and they were wrong. now they think it is higher. that is an interesting way to couch what a softish landing is. that is what i took from that one speech. softish is kind of hardish. a move up in the unemployment rate is equivalent to a recession. i think you have the fed basically, their biggest fear is repeating the mistakes of the 1970's and having a more entrenched longer-term inflation. in the best way to do that is to deal with some unemployment

today. . they hope it to be mild increase in the on employment rate and not something that is worse. when you're dealing with a balance sheet, and we'll talk about rate hikes, people have to remember the balance sheet has a lever. it is something new. it is full of unintended consequences. i think that is something important to remember. romaine: that is a great point. as we focus specifically on the employment data in and of itself, maybe you can talk more about some of the wage gains we have seen, and how that might be affected by the commentary we are getting out of the chief executives out there, that they are either paring back jobs or at least putting a freeze on hiring. diane: certainly we have not seen it in the unemployment claims yet. the fed has argued when you have job demand so stunningly high, it really is, 11.4 million job openings at the end of april, off from an upwardly revised 11.8 million, really stunning.

1.9 job openings per worker out there. i think what is important is even though you are hearing layoffs out there, what you are going to see as we get into the latter part of the year is the margin squeeze israel. that is what inflation is about. we started to see that already with the large retail big-box encounters. i think that is important. more importantly, we saw the retail losses in this month report heavily in the big-box discounters. they held onto their holiday staff and did not really prepare for the pivot from home goods and goods into services. they did not have enough luggage. they also are being hit i low-wage households being extraordinarily squeezed. we have seen a really -- a real shtick sharp drop in the savings rate. it now looks like it has whittled down to 1.7 trillion. that is still a lot, but almost

all of the losses in the savings that we amassed are in low and middle income households who are using that money to deal with the inflation. another interesting issue in today's report was multiple job holders actually dropped by quite a bit. their lowest level since november. normally i would say hallelujah. one wage is enough to keep you on the job and make your ends meet. what i think it is more reflective of an something we saw in the beige book is higher prices at the gas pump are making it harder for people to get jobs like ub but alsoer, the commute cost. -- like uber. but also, the commute cost. jon: always good to get your insight, something a lot to consider. diane swonk of grant thornton joining us on the jobs story. saying -- staying with that, i mentioned tesla. elon musk has told employees he plans to cut 10% of jobs would

apply to salary workers. joining us now to talk about the labor pressure on companies is mandeep singh. it has felt like this one to punch for equity investors today. the idea that you have a good jobs report but it is a reminder of what the fed is going to do. in one of the most well-known names in the world shares some comments, or at least the comments come out, which are worrisome to those who are wondering what is good to happen going forward. what was your reaction? mandeep: to me, this is as good of a profit warning coming from a big name like tesla. as your previous guest was mentioning, there is margin pressure across the board. costs are going up. if your top line is decelerating, every company will see margin pressure. and probably -- the reason i say that is we talk about the pull forward for e-commerce and other sectors. maybe the pull forward has happened across the board.

the magnitude of it is to be asked or changed. but i think that is where top line deceleration couples with rising cost will drive a lot more companies to follow the same in terms of what tesla is doing. romaine: you start to the -- start to see this. i don't know if it was last week or the week before, but we heard from sequoia capital, a big, venture capital firm, getting its portfolio companies on zoom and saying look, if you are not cutting costs, you need to put a plan in place or have one ready to go within the next 30 days. i'm curious, when you look at these private companies and the valuations they have, some of the cash burn they have here, do you think we will see a more mass type of layoff in that space, something more than a 10% here, 5% there? mandeep: you have to look at it from a sector perspective. . there are certain sectors, and i

hate to call out crypto here, but i think that is more vulnerable. because you don't have a business model. you are not generating any cash flows. and that is their investors who have a lot of money, and either want to take chips off the table or we think about the funding grounds that they were ready to have in those markets. i think so far, it has held up pretty well, if you think about the business cycle. that is the area that i'm watching out for in terms of one will that break. because typically, advertising in semis go down earlier in the business cycle. it has happened with advertising, with snapchat. we have not seen that with semis. i think there will be more to follow once we see more cracks in sectors like semis. romaine: always wonderful to catch up with you. mandeep singh over at bloomberg

intelligence, a closer look at some of the job cuts, hiring freezes we have seen out there. a lot going on in the labor market. we do want to turn back later here to the markets, and stock splits. remember those? they are back in a big way. tom ford is senior research analyst, who will be joining us in a second to talk about the biggest stock of amazon. that occurs at the end of the day today. that is coming up next. this is bloomberg. ♪

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romaine: this is "bloomberg markets." i am romaine bostick alongside jon erlichman. . taking a look at amazon shares. $3000, 400 in change. that is all going to change after the end of today. it is going to be about 20-1 smaller than that. it does not change the value of big stocks like here, one of the last of the few big tech companies to move down the ladder off of that four digit club, leaving alphabet behind. to talk more here about what is going on, and i guess why investors care so much about this, tom forte, senior research analyst joining us now. he has a five rating on amazon. -- a buy rating on amazon. at the end of the day, you are not changing the pie, you are

just cutting it up into slightly different slices. i am curious as to why we start to see these moves higher in these stocks on the back of the stock splits. what really changes psychologically for investors when a stock like amazon goes from $2400 to $100 and something. tom: basically when i think of 20-1 stock splits for amazon, i think they are taking a page from apple's playbook. lowering the share price, the perception or the psychology to a retail investor is that they are getting to buy shares of amazon for preview -- or previously apple at a lower cost. i like your comparison. you are essentially slicing the pie into more slices. i think there is this perception, especially by retail investors, that this gives them the opportunity to buy high quality companies at a cheaper share price.

jon: for anyone who becomes one of those new buyers, what amazon are they buying? i ask that because today, we have covered dave clark, long time invested -- consecutive who announced he will be leaving in a week where we saw another technology company announcement. both of these companies at a point in the cycle or there will be work to do in the months ahead. what are you watching closely with the story of amazon? tom: two points i would make. one, we are working on one -- on our 23rd white paper on the convergence of the technology and retail sectors. what we are trying to determine, is given the prolonged pullback you have seen in technology stocks, are we going to witness a brain drain? the first good example in my mind is when the chief financial officer of paypal left for walmart. you pointed out, you have sheryl sandberg announcing her department from facebook yesterday. now dave clark from amazon.

in amazon's case, i am not ready to call it a brain drain. it is something we are monitoring. the investors of who is buying amazon today is buying an amazing cloud computing business, a very strong and fast growing advertising business, and to be honest, a mature, retail e-commerce effort. they be in this case, dave clark's departure will give the opportunity to pick his person to run what is now a mature and slow-growing business for amazon. romaine: you mentioned those different units. i think i know what the answer to my next question is going to be. do you give any credence to the speculation out there and the hope for a certain cohort of investors that maybe this company needs to be split apart? may be splitting off these units and create more value, to put some space between that retail division and more profitable cloud computing divisions? tom: when i think about a sum of parts analysis for amazon, which is what you are talking about,

are there cloud computing businesses that are quite valuable? there are third -- they are a third-party retail business, when other people are selling on an amazon platform and amazon collects a commission, also quite valuable. how do you value the 44% of units sold by amazon essentially at breakeven? i understand the desire to separate the cloud computing business from a slower growing e-commerce. but i am not sure the sum of parts works when you think about the e-commerce apps and the low profits that that -- that that business generates. jon: it is always good to get your perspective. thanks very much. a lot to watch without official splitting of amazon stock later today. tom forte of d.a. davidson joining us. coming up, we dig into the latest housing report here in canada. what shows prices lighting and obviously, a signal of some of the things we are also watching in the u.s. more next. this is bloomberg.

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jon: this is "bloomberg markets." i am jon erlichman along with romaine bostick. time for "what it's worth." it has been a week where it has been a focus on interest rates, particularly in canada, where the bank of canada has raised rates by another half-point. cut is the average selling price for a home in toronto, almost $1.2 million. it is worth pointing out that over the last three months, we have started to see price erosion because of higher rates which are impacting the mortgage market. on average, a home price in toronto is up over the last year. . they have come down 9%. you can find plenty of pockets in the toronto area where prices have taken a bigger hit because of these higher rate concerns. romaine: you are starting to see similar things play out in the u.s. of course, at 5% plus on a

traditional 30 year fixed rate mortgage here in the united states. you go back where most people, anyone with a halfway decent credit, was able to get one under 3% just a year ago. that is a huge jump. it adds a significant amount of the monthly cost that you will pay. that has been potentially tamping down prices. you are starting to see inventory go up for the first time in quite some time. it will take a while for these mortgage rates to feed into that broader housing data. most of the people we talked to on the u.s. side say that this could now finally be, if not the bubble bursting, certainly some moderation in the housing market. jon: it is a good point, because when we look at the weakness we have seen in technology stocks, the low rate environment favored a lot of buying. you see a lot over the last couple of years, variable mortgage adoption in canada. for some people, why not? rates are low. these price declines we are seeing are coming off what felt like frothy level, not unlike

what we have seen in the growth parts of the stock market. romaine: yeah. then you talk about the idea of how cash buyers have been a big presence here, and how that splits. not only changes the psychology for sellers, it changes it for buyers too. jon: absolutely. we will continue to watch the housing story and the market story on this friday. for romaine bostick, i am jon erlichman. this is bloomberg. ♪

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mark: keeping you up-to-date with news from around the world, here is the first word. i'm mark crumpton. u.s. employers hired at a robust clip in may, while wage gains held firm. that suggests the economy continues to power forward as the federal reserve raises interest rates at a steep pace to tame red-hot inflation. u.s. labor secretary marty walsh spoke with bloomberg television this morning. >>