>> this is still a very, very strong -- and too strong --labor market. >> we do expect a slowdown in the economy. i think that is needed. >> there is nothing that will stop them from continuing this march of 50 basis point increases. >> they really cannot right now suggest they will slow. they really need a clear and -- clear sign. >> this is "bloomberg

surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: live from new york city for our audience worldwide, good morning. this is "bloomberg surveillance" on tv and radio. equity futures up percent on the s&p. what a week we have got coming up. tom: two weeks in, we have the fed meeting as well. but ecb front and center. what is interesting, after a job stay, the monday after a sort of clunky -- the headline today's the jump condition in copper, optimism of china reopening. jonathan: we push onto cpi friday. -- the summer of volker, no fun until the fed is done. tom: it will be data-dependent. with an 8.3% statistic, what if we overshoot that, come in underneath?

research shows us it is an ambivalence. it is like we just have to wait. you think -- jonathan: we start to see price targets come in. we will check in with lori calvasina in a couple minutes. lisa: pretty much across the board, perhaps we have come across people pessimism. the idea of my ozone of morgan stanley saying we will probably start to see company start to remove some of the fuzzy forecast and downgrade even further what their profits are likely to be, and that will lead to the next leg lower, but this is not a a wholesale freak out we saw a couple weeks ago. jonathan: do you want good news? quiet period for the fed started. lisa: does it really matter? i do wonder. i was driving this weekend and saw it cost about $100 to fill

up your gas tank, somewhere between $70 to $100 to fill up, and this will have a material effect regardless of what the fed does. inflation has a real downward shift growth even without the fed, so how much does fed speak really make a difference? tom: this is not a small point. the second derivative of a gallon of gas is what we call convex, which means it has an accelerative force higher. jonathan: and jpmorgan talking about six dollars and average the summer. you want to talk british politics? tom: so much for the jubilee afterglow. he is not going to get tossed out today, right? jonathan: the letters go in from comes -- from conservative mps. once you reach a certain threshold, it triggers a confidence vote. most people assume that prime minister can win that vote later this afternoon.

even if he does, he is under pressure to make a move in a big way. tom: in what way? in america, any republican or democrat is going to have 50% of their party that things they are doing a lousy job. we do not have confidence votes. what is the so what there? jonathan: that is a difference between the parliamentary system and the presidential system in america. in the u.k., you are elected by your party to be the leader. it is up to the conservative mps. they have a their voice pretty loud over the last few weeks. those letters are part of that story. to compare the two systems -- let's not do that. tom: is this like the seating arrangement for the house guard? jonathan: no, i think it is about the so-called partygate. you are the one who want to talk about it, not me. tom: it is not the seating arrangement as a pulse? jonathan: -- i knew this would

not be value add, so why bother? tom: we are on the edge of downton abbey, is what i know. what is sterling at? jonathan: maybe we can make sense of this whole thing. yields higher by two or three basis points. in the commodity market, up 8/10 of 1%. lisa: today is a pretty quiet day when you look at the events ahead of what we expect later this week with respect to the ecb as well as the latest inflation data. i find it interesting congress will be returning after their prolonged memorial day recess. a lot on their plates, especially with some of those shootings that have been reported over the weekend and the issues and pressures around gun-control laws. i am focused on gas. how do they respond to the idea we are seeing gas prices, on average, reach upwards of $4.80 in the united states? at what point can they engage in additional actions as the white

house has said we do not have that may more options? we also have u.k. promised her boris phase seeing a confidence vote. i will not try to adsense to this. i think we had got enough of trying to that. jon can add this as well as lizzy burden of bloomberg news. and today, the apple worldwide developers conference this is interesting, especially after apple has been down more than 70% year to date. what can they do in terms of new technology, getting people excited about a new ipad or other additional parts of their business to drive sales going forward? how much can they really regain with innovation? jonathan: let's get to lori calvasina, head of u.s. equity strategy at rbc markets. a bit of a trim to your price target. 4700 from 4860.

walk me through your thinking. lori: we all have the question -- are we headed into a recession or not? we had 11 different molecules -- models we looked at. the assumption is that we will see a material and economic growth that skirts the recession. we updated gdp models. we added in an evaluation test, which is really responsible to a lot of the downgrade in the forecast. in general, we are taking the optimistic take that the fed will be able to pull this off. but we think bond yields have taken a bite out of some of the return to the market. we talked about that in april. that continues to be the case today. and peak bearishness coming on -- that is something else we are modeling in. we basically look at the recovery off of the low we had may 19 and factor in the pivotal recovery we see. it is about 25%-type returns. the net bearishness also tends

to give a springboard. while we are factoring in this economic factoring down, we want to take account of the fact that sentiment has probably hit peak bearishness as well. tom: i want an individual southside report -- i will not ask about amazon. but ron jonesy at citigroup publishes about amazon. ebita growth from pandemic is 43 billion out to a present 47 billion out to a window 104 billion. i believe that is growth. you are pounding the table that growth does better as value fades. discuss that. lori: i think we need to take the economic environment we think we are in and apply it is sector and style positioning. typically, when you exit a hot economy to a cool economy, one that is from above average to below average in terms of the trend itself, you typically see

value and you typically see growth apple form in that cooler economy. we think that is a risk but not our base case. when we look at growth versus value, we find basically the relative valuation is starting to look reasonable or slightly attractive again. if you look at the long-term growth expectation between value and growth, it had been sliding, so growth was coming down relative to value. that tends to drive the relative pe multiple. but we are seeing relative stability. in other words, investors have not given up on the idea growth is better than value on the growth front, and that should give some support to pe multiples. lisa: what will drive the s&p? what will the leadership be to get it to 4700, your new target? lori: we like technology. i want to stress we are being particular and -- on -- we like the classic tech sector,

where valuations have gone from ridiculously overvalued to slightly attractive to neutral, depending what day we update the model. it is one of the biggest forces of net income in the s&p as well as market cap, so we think that helped stabilize the market. if we have a peak in bond yield, the call our rate strategy team is making, that should help the rate set their stabilize in terms of performance. value side, look at financials. a much better valuation case than in energy and materials. earnings revisions are positive. we really think, as the markets transition away from the recession fear narrative towards the slower growth narrative, that can breathe life in. jonathan: wonderful to get your thoughts as you cut the price target just a bit. lori calvasina there of rbc area some people still bullish. jpmorgan one of them. morgan stanley pretty bearish.

mike wilson coming into this week saying we could go down to 3400. he said that before. your market rally a few weeks ago can continue for a few more weeks until the fed makes it crystal clear they remain hawkish in earnings revision forward. he is looking for that 3400 number by mid-to-late august. tom: get out the calendar. ecb fed is definitive in june. but i love the idea -- and you have been good on this or that calendar has sped up, where we are doing media reviews the first week of june, second week of june. i like what oldman said, in that there is a narrow what if -- what goldman said, and that there is a narrow what if path. there is a narrow path of how we thread the needle through 2022. jonathan: narrow landing strip for a soft landing over at goldman. that is the hope.

tom: to me, the uncertainties are so great, and i will look at the bloomberg, look up a terminal. i see a jump condition in copper. jonathan: equities picking up by more than 1% on the s&p 500, yields a little bit higher. looking ahead to this week, cpi on friday. ecb decision this thursday. very interesting week ahead. this is bloomberg. ritika: keeping you up-to-date with news from around the world with the first word. in the u.k., rebel members of parliament from prime minister boris johnson's conservative party forced a confidence vote today. that follows a series of scandals. opponents will need a majority of 359 conservative lawmakers to force johnson from office. uncertainty over his future comes as britain faces soaring energy bills and the highest inflation in four decades. saudi arabia signaling confidence and demand for oil. the kingdom raised prices more

than expect it for asian customers. oil has rallied almost six to present this year. life in beijing taking another step towards returning to normal. the city is rolling back coronavirus restrictions after declaring the latest outbreak was under control. public transport will resume in most parts of the city. restaurants will resume dine in service. movie theaters will reopen with limited capacity. north korea has set a record for the most rocket launches in a single year under conjunction -- kim jong-un. it has launched 31 missile so far in 2022. usa today say talks on limited gun-control measures are moving forward slowly, but a deal is far from assured. republican pat toomey says he feels the senate is closer than

it has ever been since he has been in office. democrat chris murphy says one focus is identifying 18 to 21-year-olds who could be a danger and prevent them from acquiring guns. 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. ♪

>> the price of gasoline is not set a dial in the oil office -- oval office. when an oil company is deciding hour-by-hour how much the charger for a gallon of gas,

they are not calling the administration to ask what to do . they are doing it based on that goal of maximizing profits. jonathan: that is a view of pete buttigieg. equity market shaping about follows -- positive more than 1% on the nasdaq 100. it is a nice move. the fx market --bank of america looking for two half-point ecb hikes in 2022. 250 basis point hikes. expectation for the be sky high thursday and beyond. tom: let's stop the show. this is really important. what will we see in frankfurt thursday? we do not cover this like the fed, but is it a normal thing where they will come out with some kind of announcement and it will be a normal press conference or will it be a snooze fest or is it all hell breaks loose like at the bank of england? jonathan: -- just setting us up

for what they are about to do later this summer. the hawks are pushing for 50 basis point moves. make think they go there. an overwhelming consensus is 45 this summer and you get back to zero quickly. lisa: people agree the ecb is far behind the curve but not as far as the federal reserve. i cannot imagine raising two 50 basis points. hard to see that. tom: -- jonathan: it has not hiked since forever. they were negative since 2014. we need to talk about washington. i am trying to reconcile what they are sitting on the international stage with what is happening at home. they are reassessing their view because of domestic pressure. perfect example is china. , secretary gina raimondo said steel and aluminum, we have

decided to protect american workers. the president is looking at that. same weekend, this from the state department. the circuitry of state said china continues its genocide and oppression of predominantly muslim uighurs. that is a super uncomfortable position for the white house, to talk about removing some tariffs and, at the same time, talk about a country conduct in genocide. tom: and the oddity for our international audience -- this is flat out the only bipartisan agreement in washington here that is really what is going on. jonathan: without a doubt, on china and having an aggressive stance towards china. pulling back tariffs -- interested to see how that develops. lisa: politically, it is a bipartisan issue. if you look at the business side and that people are complaining about inflation, perhaps it is more nuanced.

we have companies taking a softer tone with china, continuing to expand within china, not withdrawing as quickly of people would expect, and you have people worried about the price of goods. you put these things together and suddenly they are between a rock and a hard place. jonathan: this conversation makes the u.k. picture feel pretty tame. tom: it is pretty tame is the way to put it. she has packed all her hats away after the jubilee for 72 hour straits. lizzy burden joins us from 10 downing street on the johnson follies. the distinction i see is simple. this is from the telegraph -- it may be from the times. theresa may had an actual cadre, a clique against her. this seems to be very disparate across the conservative party. lizzy: and that is what is scary for the conservatives. they do not actually know how

far above the 54 threshold of letters took to the chairman of the 1922 committee to trigger this vote. it could be much higher, and there could be a much bigger level of discord within the party. that is what will be measured today, although it is a secret ballot. we will get the vote between 6:00 and 8:00 p.m. today. it does not automatically mean johnson will go. you have to have the 180 votes to oust him. theresa may lasted. margaret thatcher lasted. but in both cases, it weakened their authority, and they both eventually had to go. it could be that is reunites the party. what he could do is call a quick general election, that is when the markets will care. lisa: are there any policy implications to the point you are making of when markets will actually care -- what is the policy ramifications of a win or loss of the confidence vote? lizzy: this underscores how

badly conservatives have handled the cost of living crisis. that is what the markets care about. the markets care that bank of england is having to step in again and again the second half of this year, when it was expected to pause the hiking cycle. but because richi sunak, the chancellor, did not gain control of inflation in march, that is why he is no longer seen as a prime rider to replace johnson, if he goes. jonathan: looking ahead to a vote a little bit later this afternoon. as lizzy pointed out, at the moment, this will not be on the radar this market until and if there is an election that changes the fiscal future of the u.k. lisa: right now, it is very much the bank of england next week and what is going on with the euro region and inflation. right now, this is not on the radar because the reality what people are paying as much more present. in that case, the united states

as well. that is why we talk the blurring of lines of policy and popularity. all of a sudden, inflation takes center stage. how much does that overwhelm and upset some of the talking points of both parties? jonathan: sometimes, you do not care about politics, you just care about the bill at the end of the month. some people are just thinking i want my bill to be lower. tom: we do not do calculus on monday, but it is real simple. there is acceleration in the price trends of inflation right now. that is really important math. what that means is the rapidity of the rate of change in to june is breathtaking. cpi -- can you imagine if we do italy or germany and surprise to the upside? jonathan: nomura is 8.5%, morgan stanley at 8.5%. hsbc at 8.4%. there are some names out there north of 8.3%.

8.4%, .5%. lisa: in the composition of the inflation has been shifting. this has been an underplayed reality we saw come out with retailer earnings. they cannot adjust weekly enough to what people are buying and when. you can see certain discretionary items around the margins being cut back on, because consumers have so many fixed costs and still want to get out post-covid. complicated picture for these corporations. jonathan: awesome lineup this week. bruce kasman will join us shortly. futures nicely positive about 1% on the s&p, nasdaq up by 1.4. yield higher a couple basis points. 120 on wti, 119.64. heard on radio, seen on tv. for our audience worldwide, this is bloomberg. ♪

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jonathan: the good news is bad news. that was friday, was in it? the good news in the payroll support is seen as bad news in the market.

yesterday, into the weekend -- on friday. give me a moment. i will make up. good news is bad news. we have raised the weekly game. we start things in the right way. into the bond market, this was the connection. by almost 20 basis points, yields higher again this morning. when will the fed be done? i had to stop in my tracks. he said that friday's payroll support --

tom: do not wear me out. the start of modern economics. he said, i have to paraphrase it. it is out of control. >> there is a difference and a slowdown. the partition between the two is fuzzy. where is the line? jonathan: it came really close to that. up a couple tenths of 1% on the

eurodollar. a couple calls going through this summer. four of 50 basis point hikes. it has been in negative territory since 2014. tom: it is a big call. what is the consensus here? 25? we will have to see. we are thrilled to bring you the chief economist and head of economic research. kasman and team have been writing the start -- riding the storm out. it is not a hurricane. brief us on what is ahead.

>> what we have is a powerful tension with the health of both households being quite remarkable right now. i think what we will see is growth on the softer side. we do not see a near-term recession. we see a global economy and u.s. slowing. tom: think of are all of your research. >> the manufacturing sector is going to see some softening as to what is going on with china. there is every reason to think that higher energy crisis will hurt things like the energy sector.

we have seen that. we have been through a really good run on the back of inventory dynamics. our point is, there is no real reason to be worried about a recession. the other thing is, part of the slowing is high inflation. it is starting to change the inflation process, which, over time is not good for the sustainability. i'm not trying to underplay the dynamics. i think he would have to get hit by much bigger shocks anytime in the next few months. lisa: the good news is bad news that we experienced on friday. it highlights how much the fed has to do. there is nothing to stop the fed.

>> i think that is true. i think the fed is committed to 250. there is a good chance that they will slow the pace down, but i do not think what you see in market pricing will be consistent with the fan getting control on inflation. ultimately, the fed will have to do more, but i do not think they are ready or signaling that they are ready to do that in the near term. they do not want to create a recession right now. this is going to take time before we get to the point where the fed really has to hurt us. lisa: there seems to be a distinction drawn. is there some sort of clear-cut distinction? are we parsing words around the same issue? >> i think there is a huge difference between a slowdown

and a recession. recessions are where corporate's are pulling back. there are a number of different ways that the economy can slow. i do not think it is likely that we will see a break that we have seen that is notable. tom: i know you hang on every word that daniel silver rights. this is a really important concept. the new economy is skewing the highly job growth. >> as the pandemic got hit and we saw dislocations in the economy, what we were seeing were not tied to the tightness of the labor market.

they were unusually skewed towards skilled job sectors, and i think we are seeing it more consistent, wage pressures building and building in particular in sectors of the economy that are highly. the labor market tightness, the salience of inflation is starting to affect the price setting process. it is ultimately going to be a serious problem. lisa: what happens me start to see people eating into their savings like we have? >> the wage bill and ours together have been growing at a 9% base. we have been getting that. we are going to see slowing in wage income as the economy is

slowing. i think the u.s. household sector has every ability to absorb and drag some higher inflation. the question is whether they will be willing to do so. tom: bruce, you are going to hate me. when you go to the golden -- the oval office, how does the president take in your economic data? when you have to do a briefing, how does he take in the economic data? >> i think he takes it in and he has his own views. i remember that the leadership of the firm was much more clear-cut about understanding financial conditions and how they would impact the macro economy. that is something that we may not fully appreciate. that is one of the issues that we have to face right now is tightening. as we give our advice, as we see

it, we see the economy slowing. we think the economy will avoid recession through the rest of this year. tom: can we get you engineered to do weather reports? jonathan: bruce, we are going to catch up. my favorite tweet this morning, the hurricane has been downgraded to a light, summer breeze. not sure this is intentional or not over the weekend. dialed back a bit. tom: i missed that. jonathan: risky at times, but we may yet land softly. tom: i missed that. that is the tweet of the weekend.

lisa: it is also the difference between saying that you are preparing for something and looking prudent. i wonder how much this is keyed in, talking about a super bad feeling or some of the other ceo's with their concerns. basically saying, what are we doing here? jonathan: what to be learned about elon musk and tesla? lisa: he said the salaried workers will remain. what is he doing? >> i have no idea. he is a brilliant guy with an incredible mind, but i got the most ridiculous message from a bloomberg scope -- subscriber when i was covering this story. when we were talking about super bad, a lot of people were thinking, i remember that movie.

remember the fake name? what is june 3? to think that is where we are right now. that is the conversation. >> it is popular culture. we are all confused. >> futures are up. this is bloomberg. >> keeping you up-to-date with news around the world. prime minister boris johnson is fighting for his job. members of his party are forcing a vote after a series of scandals. he says the vote gives the party a chance to end weeks of speculation. the u.s. may allow more sanctioned oil from iran.

the u.s. may turn a blind eye, if it helps to lower gasoline prices. president biden's comments say that it may make sense to lift tariffs to help ease inflation. bicycles could be exempted from trade duties. chinese regulators are prepared to wrap up their investigation of a company. military reenactors, veterans and tourists gathered on omaha beach to mark the anniversary of the d-day landing. forces invaded in 1944 and ousted the german occupied quarters. and for love that fought that

day, now in their 90's, will attend ceremonies throughout the day. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

>> inflation expectations have not gotten out of control. expectations are superhigh, but long-term expectations are not much out of the range than they were for the last decade. jonathan: another 50 basis points coming up. that was the professor -- professor of economics. i am jonathan farrell. it is a bounce from friday.

up by 1.5. yields a little higher. adding to last week. again this morning. >> absolutely. i think we need to gauge the drawdown. the nasdaq is still behind here, but the drawdown for the last couple of weeks has significantly improved. jonathan: is it a bear market? they say given the reduced positioning and cautious outlook , we noticed that they are pro-risk. they think it can be more durable. tom: it has been wrapped around the history of the historical silliness to that history matters.

we are thrilled to let you know that the professor survived the jubilee. 75 years ago, -- taylor swift is a big story with her appearance in new york university. in a more serious time, george marshall got up at harvard and talked about the marshall plan. if we are going to save ukraine now or after the war, what is the marshall plan looking like? >> good to be with you. when secretary marshall made that famous speech at the commencement 70 years ago, yesterday, he saw international engagement as essential to prevent a return to the extremism and nationalism that

led to world war ii. those forces have returned in europe. i think marshall, where he alive today would be alarmed and wondering how america's leaders had allowed the country to the years so dangerously close to a political abyss that he and others did so much to steer clear of. it is more than just providing the money. it was a message and the message was that america's long-term interest were served by fighting extremism. >> let's go to the immediacy of watching the lower right screen. how do you respond to the idea that this is just about vladimir putin?

>> i do not he moves the needle, whenever he threatens to escalate, which is exactly what he did yesterday. that, in response to the american and u.k. decision to provide long-range artillery that is capable of hitting russian soil from ukraine. he stirs the pot when he does that. that is not why he is doing it. i think he has recognized the same thing that vladimir is a lenski has recognized. they are in for a -- vladimir zielinski has realized. neither side seems to be interested at all in a cease-fire, let alone a

diplomatic settlement to the fighting. lisa: the damage is escalating. there is an idea that russia is saying, we will allow some of this to export. we are -- 98% of the grain is imported. if you relieve some of the sanctions -- the western nations said, no chance. how do you deal with a nation willing to hold the world's food supply hostage. >> we will see how long they can stick with that position. just like the west, u.s., germany and france have to worry about internal divisions and how their interactions play, internationally. putin got hammered pretty good by african leaders, late last

week, for holding up the grain shipments. it is not clear that he can sustain that for a long period of time himself. he is also focused on the court of international opinion. not a lot of countries have lined up behind the european democracies. he knows that and i think that is part of his calculus also, with respect to the grain shipments. jonathan: later, the epicenter of a lot of these conversations is inflation and prices. is the administration willing to address what is happening at home? we are seeing that in china with the secretary having a conversation about removing some tariffs.

we are having an open conversation about the president visiting the crown prince. what we are not seeing is on russia. we are not seeing it there at all. lisa: this is definitely an issue, but even more in europe, where prices are sending inflation skyrocketing. how much do people push back and have more allowances for russia's behavior? this goes to something far beyond simply rhetoric. it is an existential threat to what it means to be a nation. tom: it is a nice separation. that is important to washington and everybody. we live in a nominal inflation space. he had paying for food and energy. what is being touched on -- some 6.2%, down to a reading of 5.9%.

that would be the hope out there right now. do not get me going. >> the front line of the newspaper -- they will be responding to the month on month figure. that has been the indicator that a lot of people are focused on in this market. >> there are different ways to do it. you just -- guess what, we all live nominally. >> we had the ecb on thursday. this coming friday, equity futures up by 1%. yields are higher by a couple of basis points. this is bloomberg. ♪

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plexus -- >> we need to see it slow. >> we expect a slowdown. that is what is needed and that is what the fed is wanting. >> i