>> the jury is still out in

terms of the inflationary trajectory. >> we have to get past a surge of demand for services. >> inflation expectations have not gotten out of control and this is why the fed needs to act now. >> it seems like the fed is comfortable with the idea that the trend is different. >> our expectation is really driven by earnings. at the end of the day, the market follows earnings. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning everyone. on radio, on television, a monday after the jobs report and more even for than i expected. coming up, must listen for global wall street, the past a higher yield. jonathan: higher yields through next year as well. talking up a yield north of 3% not just this year, but next year as well in the first half of 2023. try to reconcile that with the view over at deutsche bank.

they are looking for a severe drop off in economic growth. tom: all sorts of different opinions reframed as we go to the midyear review. certainly equity markets like they see. people can give you a level, but you need a timeline as well, and the morgan stanley timeline is out there somewhere. that is the economist linda ronstadt out there somewhere. jonathan: michael williamson has been pretty clear, 3400 on the s&p. that is the downside he is looking for by mid to late august. tom: ok, that is the gloom view, but there is some optimism as we mentioned in the last hour. i'm going to go with what goldman sachs wrote about over the weekend, which is this narrow path that chairman powell is trying to walk down. jonathan: it's why lori calvasina things we can get to 3700. not everyone is gloomy on the sell side, let's be clear about that. you've got morgan stanley on one side, jp morgan on the other. rbc is in that direction as well. things are finally balanced. tom: inflation report, but let's

talk about inflation where the great partition is. ugly topline number, and would be a core number that gives the optimists some help. lisa: some help in terms of what the fed will do. what does it do to earnings? we are talking about the ranges come of the shades of optimism out there. i don't want to cast a pall over them. i am not trying to edify my reputation as being a perennial pessimist. but perhaps people were overplaying the recession risk. this was not riproaring optimism of a new look o growth. the conversation is around how much of a slowdown we have actually priced in. how much have we already priced in with the fed has to do, and how much can the u.s. consumer continue to sustain a recovery and some sort of momentum despite the pressures you are talking about? tom: our conversation on yields is so important. i want to get through this at light speed. we've got to cover it. all of a sudden the jubilee is over come of prime minister is

under threat, but he's really not under threat, right? jonathan: he faces a vote of no-confidence. i simply a load of conservative mps have written in letters. they have reached a certain threshold area it triggers a vote. even the prime minister gets away from that vote. you won't get away unscathed because the pressure is building for him to step down, bottom line. i cannot wait. it is up there alongside the ecb and cpi. tom: got a check. let me go to the 10 year yield, 2.96%. jonathan: 3.20 sent thought -- 3.20% the high of the year in early may. up 20 points on the week last week. at the same time, equity breaking down into the close on friday. is that good news/bad news dynamic. all that the payrolls report was pretty nuanced. we had the participation recline higher, the un-limit rate to stabilize. but we ran away with the headline number. this upside surprise and the conclusion for summative people, every time you see that, this

fed has more to do. this market has to go lower. that is the view of some. tom: brent crude, $119.82. copper up nicely today. i'm going to frame out the mass and then jon is going to pick it up. vishy triupattur joins us of morgan stanley. you end up at a terminal rate for the 10 year yield. where is your guesstimate of the 10 year yield terminal rate? guest: it is hard to say terminal rate. i would say looking ahead, second quarter next year, we expect tenure rate to be at 3.5%. we expect when the fed is done, it will be in the 3% to 3.25% range. they will stop hiking, which would put them above what we could consider to be generally neutral. jonathan: 2022, 20 203, which

high wooded fallen? i think most people would think yields would be much lower. what is the morgan stanley view? why do you have this view we can almost stabilize around 3% as the fed ultimately attacks growth and tries to bring it lower? vishwanath: i have some sympathy with that view. i think the key thing to keep in mind is while risks have gone up, our economist models show that the recession risks have gone up just from a few weeks ago, 15% to now something like 35%. but a u.s. recession is still not our base case. that is the first important thing to note, that u.s. recession is not our base case, and we are suggesting that between now and the end of the year, we would be pretty much

range bound. so 3.15% is not a tremendously far from this range. so especially with that, our base case remains not one of a recession, and the fed keeps going on some points about the neutral rate. lisa: some people would say that a higher long-term interest rate call pairs well with this idea that the fed is not going to be over real aggressive, that they will allow inflation to remain well above that 2% target for way longer than a lot of people expect. do you agree? vishwanath: we think the fed, including 2023, we don't expect that they will come back to the 2% level of core pce levels. we expect that inflation will remain above that level through

2023. lisa: what does that mean for credit, given the fact that we saw a rates move for the first part of the year, and now we are looking at something that is looking more nudge he in the credit space -- more nudgy in the credit space? where do you fall? vishwanath: we think your to date to maybe a few weeks ago, it was mainly a duration driven negative total returns. we think a lot of that, we would be careful at this point and move up in the quality spectrum within the high-yield space to move towards bb -- towards bb's. basically, the notion is that credit does not have a fundamental problem other than the tail part of the credit spectrum, so credit has a valuation problem that we think

compels us to move higher in the quality spectrum. jonathan: it sounds like you are also a little worried about credit risk, relatively speaking, to where you were at the start of the year. vishwanath: correct. absently. we thought we would take default risk over inflation risk. we have taken that off now and we think this is the time to move higher in the quality spectrum. jonathan: but ultimately you don't thing we should be worried about a default cycle could not been a big way? vishwanath: exactly. at least in the next 12 months, that is simply not in our expectation. jonathan: thank you, as always. lisa, to your point, spreads are not indicating anything terrible. i'm not saying that as a predictive story in any way, shape or form, but around 400 basis points, it is not the end of 2018 yet, is it? lisa: if you want to go

something that will inevitably exasperate you, the good news of those credit spreads remaining in check is bad news for stocks in some people's eyes because what it means is that the fed is not going to be concerned about tightening credit conditions because companies are not seeing financing frees up, so when the fed put can do play usually is when that starts to get triggered and we are seeing no signs of material stress at least broadly speaking on some of the ccc's and lower rated incomes. we are seeing a bit more of a disruption. jonathan: we touched on the last decade in reverse. i spent time as part of the last decade going over to europe and sitting down with central bankers. i asked them every time we had a bit of a selloff, are we seeing unwarranted tightening in financial conditions? that was just a question to sever the policy maker to say whether they one to push back against what we have been seeing in the italian debt market because ultimately they always wanted easier financial conditions, and now you have to reverse engineer the questions. are we seeing an unwarranted easing of financial conditions

that this fed would not be pleased about? tom: i just think there's a lot of angst out here sitting around data dependency. what i love about vishy's stance is we are 19 basis points away from where he think he is going to be a zillion years from now. jonathan: first half 2023. tom: we are really on a dynamic basis, we are almost there. jonathan: but if you ask people next year if we will see the door two story, we are still at 3% on the u.s. 10 year? tom: that is the debate. i give you an lisa great credit for this. we don't talk enough about bond-bear market of bond down, yield up. jonathan: lisa writes about it often. lisa: i think the issue is that you are seeing bonds with immaterial drawdown and investment-grade credit more than government bonds.

but what are people going to do with that? have you seen the mass outflows of force selling, or is this basically pain people have been expecting for a long time and a retracement of what we have seen during dependent. jonathan: the easy asked during the pandemic -- during the pandemic? jonathan: for our audience worldwide, this is "bloomberg surveillance." ritika: keeping you up to date with news from around the world, with the first word, i'm ritika gupta. saudi arabia signaling confidence and demand for oil. the kingdom has raised prices more than excited for asian customers. oil has rallied almost 60% this year. rebounding demand co. it sounded -- demand coincided with a rebounding market after ukraine. members of prime minister boris johnson's conservative party have forced a confidence vote today that follows a series of scandals. opponents will need a majority of lawmakers to force johnson from office.

uncertainty over his future comes as britain has faced soaring energy bills and the highest inflation in four decades. beijing is taking another step towards returning to normal. the city is rolling back coronavirus restrictions after the clearing the latest outbreak was under control. public transport will resume in most parts of the city. restaurants will resume dine in service and movie theaters will reopen with limited capacity. north korea has set a record for the most rocket launches in a single year under kim jong-un. eight short range ballistic muscles were fired on sunday. north korea has launched 31 muscles so far in 2022. there is speculation that kim a be preparing for his first test of a nuclear device since 2017. starbucks is looking only at external candidates for its next ceo, according to the interim chief executive howard schultz. he tells "the wall street journal" the chain needs to add new talent and skills to its leadership ranks. he says he is not a candidate

for the full-time job. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

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>> steel and aluminum, we've decided to keep some of those tariffs because we need to protect american workers and our steel industry. that is a matter of national security. there are other products, household goods, bicycles, etc.,

and it may makes sense. jonathan: gina raimondo, the commerce secretary. maybe backing away from some of the tariffs on china, given the pressure domestically when it comes to inflation. from new york city this morning, good morning to you all. your equity market sub as follows this monday morning. don't by 1.13% on the s&p. on the gnostic 100, 2.9589%. crude keeps coming -- on the s&p 500, -- on the nasdaq 100. 2.9589% on the 10 year. crude keeps coming close to $120 . tom: will kennedy this morning. what is different about $120 this time around versus the last time we went up to $120? will: the one big difference i

think is the lack of refining capacity in the world. that means the prices of gasoline, diesel, jet fuel around the world, which is how people experience we'll prices, is rising much faster. we are seeing new records for gasoline pump prices and diesel prices across america. there are 10 states where people are paying more than five dollars a gallon for gasoline. that is the big difference. for consumers it does not deal like 100 when he dollars. it feels like something -- like $120. feel slick something much worse. tom: is there an american or global policy prescription to improve distillate refining capacity? will: no, i don't think there is in the short term. we have the ceo of chevron last week tell us he does not think a new oil refinery will be built in the u.s. ever. there are some things to

increase productivity, but any new refining capacity is going to come in asia. so we are going to be increasingly reliant on india and china to process the world's fuels, but increasing the capacity takes a lot of investment and a lot of time, so there are no easy solutions here , short of some degree of demand destruction. lisa: given the fact that we are heading into driving season with as prices in the united states near $45 on average across the nation, how high are projecting it could go out before you start to get some sort of demand destruction. will: i don't thick we know for sure. one interesting thing is there have not been an awful lot of signs of it yet, which tells you people are absorbing it into their budgets, but that could change quickly. i do think there are reasons to worry. prices are accelerating at a quicker rate, and as we go through the driving season when demand typically peaks, that is

going to coincide with the fact that china is coming back from some of the worst lockdowns it has seen. one of the reasons the prices of oil have been relatively subdued as we have lost one million barrels a day of demand from china because of the lockdown in china and elsewhere. if shanghai is really coming back, the oil market over the summer could get very hot indeed, and in that situation, prices could continue to accelerate. at what point the consumer breaks and changes their behavior radically, i don't think anyone knows in this economy, but we may be about to find out. lisa: i've been surprised how little he windfall tax has been discussed outside of written. is this going to be the template for nations as they try to offset some of the increased costs for members of their community while also not allowing big oil to give the appearance of largess? will: it is interesting.

we have a slightly unusual in europe, to have a mature oil and gas industry which is there to be taxed. we have seen other windfall taxes in european countries on utilities. in spain, for example, they have profits of electricity companies , and that might be something we see elsewhere, but of course, it is difficult for governments because on the other hand they are thinking about investment in new energy and how to make sure that people are investing in renewables or even possibly fossil fuel energy, and taxing their profits is probably not the best way to encourage that even though it is perhaps even politically justified in the current environment. tom: in your reporting, and this goes to jet fuel and all the talk about climate and this idea of flight shame, which i guess is rather large in sweden among other places, what is the trend

on that into the summer and frankly into the autumn season? are we feeling more guilty about traveling? will: i don't think the ordinary consumer, the ordinary vacationer, this is the first summer in three years where people will be able to travel freely. if we look at europe, the aviation industry is struggling to cope with the story here with delays and lines at airports because people are trying to grab every available seat on an airplane and security can't really cope. so there doesn't seem any flight shame whatsoever. i think in business travel it might be a little bit different. there are reports of companies setting targets for people to travel less, asking people to travel less so they can meet their carbon commitments. but the millions of flights people take on holidays, i don't think there are any signs of that slowing down at all.

jonathan: why is the flight shame always driven by the people who fly so much, and often privately? tom: i don't get it. are you going to stay out of it? tom: i am going to stay out of it. i look at new york-l.a. and new york-paris as two popular metrics. new york-paris, sort of a more recent flight in the coming weeks. two seats, business class, $5,000. then it was $9,000. then it was $13,400. right now we are topping $21,000. two seats, business class, not in october, and december. jonathan: two industry groups connected to each other and they have both been really disciplined on capacity. we have seen the same thing happen in the oil patch. we have seen the same thing happen with the airlines. they just won't old around capacity. they are being upfront about it. lisa: honestly, how much is this the ability to build out capacity at a time where they

can't hire enough people? you're seeing this with pilots, seeing this with flight attendants, and the oil patch is seeing the same story. you can't hire the people to do the work to create the production. it is not so simple for them to simply turn a switch. jonathan: let's rephrase that. they are not willing to pay up to get the people because there's always a price. with pilots that is about training. for other parts of this story is about training too, but let's face it, this is about not paying up at the price that would be required to build at the capacity in this economy. lisa: without a doubt, especially as pricing power continues to gain. people will start to question that. jonathan: are we playing the summer? everyone i know is flying this summer. come on. we don't flight shame anyone. it is ridiculous. futures up 42. this is bloomberg. ♪ [laughter] [applause] -- ♪

jonathan: quiet, calm start to the week. the ecb on thursday, and inflation report on friday. price action shaping up as follows on the s&p come on the nasdaq, on the s&p 500, positive a little more than 1%.

on the nasdaq 100, up by 1.5%. yields up three basis points. having another look at $120 on wti, then backing away. tom: also want to note yen. as a pack story for a lot of us, but we could japanese yen is tangible. a bit confirmed was swiss franc, but i would really watch weaker yen this morning. right now what we are going to try to do is go to 10 downing street, whereafter the jubilee, they've broken out of the bars and there's a little bit of protesting going on. what is important here to watch, it is 2:00 p.m. there, 1:00 p.m. where boris johnson is four hours away from a protest vote, right? lizzy: that's exact lay right. you can hear the protesters that are very loud. oris johnson faces a vote of no-confidence tonight between

6:00 and 8:00 p.m. london time, because 54 of his mps have written to the chairman of a key committee to say they have lost confidence in the prime minister, but it is not an automatic trigger that means he will go. it is getting even louder. remember, his predecessor theresa may won the confidence vote and lasted another six months, and margaret thatcher as well lasted another day, so we will have to reach 180 votes for johnson to be ousted. tom: thank you so much. stay with bloomberg through the day and into the new york evening as well as the prime minister responds to this vote. i must admit, and the british press it is very clear he should survive this vote, but it is a huge mystery what that outcome will be. what is a huge mystery for you is the effect of these oil prices, these gasoline prices on the american consumer. kathleen bostjancic joins us

now, the chief of macroeconomics at oxford. how fragile is the american consumer? kathleen: good morning. happy to be with you. the consumer is quite with billion. remarkably, we could see real consumer spending growth close to 5% in the current quarter despite higher inflation, higher gasoline rental prices, and higher interest rates. and even with sentiment sagging. if you look at university of michigan, it is rock-bottom. consumer confidence as reported by the conference board is a little bit better because three of the five questions are about the labor market, and that is key for the consumer. the labor market is still quite strong, and that yields a lot of income, keeps consumer spending, and they have a strong balance

sheet. we estimate they have tapped into about 120 billion dollars of the $2.5 billion pandemic related savings, so that keeps them on good footing for now. going forward, the momentum probably eases as we get to the end of this year into next year. lisa: let's talk about the momentum baiting because we know the jobs data we get our lagging indicators. we hear about companies on the margins cutting back because they overstaffed in certain areas due to the mix of spending during the pandemic. will that lead to a negative jobs print in the next few months? kathy: it is a great question. the headlines are really starting to pick up. but what we see is that initial jobless claims are still really low, hovering around 200,000, and continuing claims are also near historic lows, so what it shows is that even if he parlayed off and if they have the right skill set, should be able to get a job rather quickly. we all know the job openings are

unemployed, which we watch closely, chairman powell talked about as being uncomfortably high, still two jobs available for every one person unemployed. so we are not too alarmed. we are not anticipating a negative print on payrolls, but it will ease and slow as we go to the second half of the year. lisa: a lot of people are looking at the inflation rate ticking up slightly as possibly indicating a bit of slack in the labor market. basically, people coming back into the market that could potentially loosen some of the tightness we have been seeing. do you think that we are going to see a continuation of this as people realize they have to finance the higher inflation and frankly, they see the job openings now available? kathy: we are seeing particularly the prime aged workers, 25 to 54, that has recovered really quite nicely, and it is really the 55 and older category lagging behind. most of them, because they went

into pre-retirement, but we know inflation is picking up. it's got to be pinching them a bit, and the equity market is not as bright as it was. not a bear market. he think that encourages people to come back to the labor force as well. jonathan: when you hear people say things like monetary policy operates with long invariable legs, is that true? kathy: to some degree there is still some lag, but to your point, it is not as long as we once thought because it is really financial conditions that affect the economy. so things you were talking about earlier this morning, corporate bond spreads, equity prices, the yield curve, those type of things happen and have a very quick impact. right now with the markets settling down and being ok, it

seems like actually financial conditions may be have not tightened as much is the fed would desire. jonathan: given where financial conditions are right now, do you think that is sufficient to slow down this economy sufficiently to bring inflation down? kathy: we talk about the consumer. the only thing that seems to hold the consumer back is supply chain constraints. sales fall 12%, but that is because there weren't enough autos, not because there was not demand. unafraid the fed is going to have to do more, and i think we scale back in july and september, but we will see. it is really going to depend on these demand numbers and the strength of the labor market. tom: when you partition the domestic economy and trade like domestic final sales versus export and import dynamics, how by part are those two ideas?

how separate is america's resiliency from trade dynamics? kathy: right now domestic demand still remains quite strong. the trade sector is quite variable in the sense that it has been a big drag up until the most recent monthly data. so it can fluctuate quarter to quarter and kind of play havoc forecasting gdp, but overall, domestic demand is strong. we have seen external demand weaker and obviously, lots of challenges, particularly in europe. lisa: we are talking a lot about inflation. i saw the gas price and how much higher it was, and frankly how much it fluctuated from gas station to gas station which was sort of shocking given that this used to be something where there is only a penny of difference. is there a threshold at which this becomes something much more material for the american

economy? kathy: it is certainly a large drag. earlier in the year we did some analysis, and with the increases in gasoline and oil prices, you are seeing well over one percentage point drag on consumer spending, so that is quite interesting. consumer spending would be even stronger if we did not have this drag. but it is always hard to say what they didn't point is. certainly would to get to -- certainly want to get to five dollars on average nationally, that is a startling number frankly. we are probably going to see that during the summer, but there is so much pent-up demand, i think the consumer is going to drive right through it. as we go into the new year and people have released their demand to travel, different story. is that pricing power going to still be there for energy companies and other businesses? jonathan: kathy, thank you. the consumer is going to drive right through it and then maybe things get a little bit trickier

further down the road. the fed is independent. that is my . i'm just going to say the fed is independent. you've heard that a lot, haven't you, over the last few weeks? lisa: you raised a great point. how much is this talking out of both sides of your mouth if you say they complete really real -- if you so you can completely rely on the fed to handle inflation come up they are independent, but we need them to do something? jonathan: the covid hit a massive problem, but i just went to reaffirm the fed is independent and they got a job to do, and we believe in them. lisa: in all honesty, i feel kinda bad for trying to dovetail this message because right now the administration does not have many tools to deal with inflation. you could make an argument about the american rescue plan, about build back better, but whether it should have been bigger or smaller for the people who think it is contribute and a lot to inflation. how you message going forward is a lot trickier when you're dealing with supply chain disruptions, dealing with a war in ukraine by russia, dealing

with all of these different factors. jonathan: spent the weekend trying to figure out what secure yellen felt about this. lisa: it was reported that she was hoping it would be more around 1.3 trillion dollars, not $1.9 trillion because she was concerned about inflationary pressures. then she came out and said that is not true, i've always supported this, i think it is a great thing. it really presents a hairy united message from the administration. jonathan: messy over the weekend for the former fed chair. messy. and unfortunate as well. tom: it is unfortunate. the big difference here which we really haven't touched on today is iconic yellen is the word slack. her ability to frame how we pick up the slack in the job economy, we have succeeded at that. whoever you want to give credit to, doesn't matter. but the now what, given what appears to be a pretty much fully employed america, to me

that is the major distinction. jonathan: i just want to say the fed is independent. futures up or than 1% on the s&p. honestly, in case you didn't know. that is all. just want to reaffirm that by getting the chairman to sit next to me in front of the press, and i will tell you this guy is independent. tom: do we have to stay late for the awards vote? jonathan: no you don't. go home. futures up on the s&p. we count you down to the opening bell in the next hour on tv. -- on bloomberg tv. ritika: keeping you up to date with news from around the world, with the first word, i'm ritika gupta. in the u.k., prime minister boris johnson is fighting for his job. members of his conservative party have a confidence vote later today after a series of scandals. he wrote to tori lawmakers, saying the vote gives the chance to end weeks of speculation. in any report, they say there

are some signs of softening in the labor market. at the same time, sequential core inflation appears to be slowing. they say that reduces the risk the fed will have to tighten monetary policy to force a recession. india looking to double down on russian oil imports. state and refiners are eager to buy more heavily discounted supplies from rosneft. international players have been turning down dealings with moscow over its invasion in ukraine. shares of dede soaring in premarket trade. the report says that dede will face a relatively large fine. jetblue has approved its offer for spirit airlines. on friday, spirit shareholders will vote on whether to except a lower offer from frontier airlines.

global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

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>> we have 11 different models we look out. but the fundamental assumption is the idea that we will see immaterial slowdown in economic growth, but skirt the recession. we are taking the optimistic case that the fed will be able to pull this off. tom: lori calvasina of rbc capital markets. like many others, tweaking, making adjustments here in the volatile, the toxic through that is out there in the equity market. what are you looking for in equities? lisa: right now, the second

quarter earnings. how much they are going to be revisions downward to the earnings rejections. -- the earnings projections. we've already had the right volatility and this question of the repricing there. now it comes really down to profits. tom: helane becker joins us now. this could be a three hour conversation on air travel as we come out of the pandemic. let me get out of the way. spirit, frontier, and jetblue. to borrow a phrase from cfa level four, is this dinosaurs mating? is this much ado about next to nothing? helane: well, we will see what happens. it is certainly not a done deal in any case because they need regulatory approval and the regulatory hurdles in the current administration are pretty high, so there is no guarantee either deal gets done. obviously spirit thinks they have a better proposal and really are taking to task the spirit airlines board of directors and management team. tom: just to get this out of the

way because lisa has 47 other questions that really matter, how does spirit, frontier, jetblue spirit, whatever the name is going to be, how do they compete with the juggernauts like united, delta, and american air? helane: it is a good question, and i think that is why they need to merge. i think any airline currently not named american, delta, or united is having issues retaining people. one of the biggest issues is retaining pilots. 10,000 pilots retired in 2020 and 2021, and in order to fly the 2019 schedule, they need to hire that many plus the growth they were anticipating. they need to figure another 20%. so this year alone, the industry needs to hire some thing like 12,000 pilots. we just don't turn out that many , and the whole idea i think

behind either merger is really about giving employees, and especially pilots, more opportunity to fly, more opportunity to make captain which is where you maximize your income over the life of your career, and i think that is really what we are arguing about here. i think that is why jetblue is being so aggressive. lisa: attracting employees is basically the same as having to pay them more. not the same, but it is part and parcel of the same story. given the fact that airlines are having to pay their workers more , they are also saying much higher costs when it comes to fuel. how much pricing power did they continue to have as consumers get crimped in other areas as well? helane: that is a great question. the summer is sold out. everyone who is planning to go away in june, july, and august probably bought their tickets in april or may, and certainly

airlines themselves have been sounding the alarm on higher ticket prices. there are also flight cancellations. it is really kind of a disastrous summer, i think. i think we are setting up for a really difficult summer from the perspective of operations. but i think we are worried about september and what happens in the fall because to your point, i heard you say that gasoline prices are five dollars a gallon , and we are certainly seeing it cost more and more to philip cars, especially for those who drive, and airlines have no choice as labor costs go up and fuel costs go up, airport fees are going up, they have huge inflationary pressures and they need to raise ticket prices, and at some point the consumer is going to say ok, we did our travel and we are done. we cannot fly again. lisa: to that point, how much does business take over given the fact that you are seeing more conferences and people are realizing that that face time is

really important? helane: that is our, i don't want to say strategy, but that is what we are thinking about after labor day. we are thinking that leisure travel, which is up about 35% or 40% from 2019 levels, starts to flatten out until the holidays, and then business travel, which is increasing with more conferences, definitely more in person, there has been so much turnover at companies that you don't know who your clients are anymore, so you have to get out and meet and greet, so we are hoping that business travel definitely comes back, and then international is the other big one. we think international is down about 50%, 60% still, especially asia-pacific, which we think will be another couple of years before it comes back because of the uncertainty with covid. but north atlantic is going to be good this summer even within

the u.s. still requiring testing. tom: we experienced this in real time. francine lacqua had the gulf stream, so lisa and i were flying the airlines helane becker talks about. why are we the only ones with a test to get back into the country? when does that go away? helane: no kidding. i think it is ridiculous because you can fly to toronto or tijuana or -- well, mexico city might not be practical. tom: lisa is going to tijuana. helane: you do that and then you drive across the land border and you don't have to test. so how insane is that, that you cannot fly into the united states without having a predeparture test? it is just ridiculous. i have been wrong on this so far. i thought it would go away in march and it didn't. i thought by may 1 for sure it would go away. no, it is still with us.

so maybe i am done predicting when it is going away and just kind of thinking at some point, the u.s. has to examine what it is doing and remove that predeparture testing. tom: thank you so much. greatly appreciate it. i was shocked how hard it was to get a simple antigen test in london because all of the places have shut down. lisa: that is a great point. i found one early before we left, and it was definitely a bit of a scramble. it seems almost arbitrary where you end up having to test and where you don't have to test. how much what it actually open the window to more people coming in or reduce some of the frictions versus, remember when we used to talk about the comfort that consumers would feel knowing that everybody had tested negative? tom: we have to blow up the show. we have to completely blow up "bloomberg surveillance" this morning in our last three minutes. elon musk reiterates request to twitter for more information on

spam. spam has done a really good job on twitter. they do better on instagram. but what is really important is plain spam does better than spam with pineapple. lisa: aside from your culinary preferences for spam, i'm looking at twitter shares that are dropping pretty significantly on this headline, down about 5% just ahead of the open, now down below $38 a share . basically, isn't this just telling us the deal is off in any way, shape or form? for $54.20, where are we? lisa: i've got -- tom: i've got -6% right now on twitter. jon ferro, the open. he's blowing up the show as we speak. stay with us on this eventful monday. this is bloomberg. ♪ inside, outside, big or small, angi helps you find the right so for whatever you need done.

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jonathan: a big week ahead, ecb thursday and inflation report friday. from new york city, good morning. the countdown to the open starts now. >> everything you need to get set for the start of u.s. trading, this is bloomberg: the open with jonathan ferro. ♪ jonathan: