>> this may be the first quarter we start to see a noticeable hit to profit margins. >> it is a risk-off compression of earnings expectation for this year is perhaps too rosy. >> we have is the consumer has repositioned very quickly. >> households are going to have a harder time and we are going to see pulling back. >> of these companies are doing is acknowledging there is weakness ahead. >> this is "bloomberg surveillance." jonathan: home or downgrade to global growth. from new york city, good

morning, good morning. this is "bloomberg surveillance." alongside tom keene and lisa abramowicz, i'm jonathan ferro. tk, the oecd joining the world bank to look ahead to the next year or two. tom: it's like doubt 10,000 is how i would put it. global growth of 3% is down 10,000. feels different from 3% wto, sub-3%. oecd comes in at a solid 3%. jonathan: i will move past this because we are friends. it didn't take him long, did it? let's get back on the rails. tk, pushing $134-yen. tom: things are not unraveling. i don't want to be inflammatory, but the market is absolutely fascinating. vincent reinhart would say, level doesn't matter, it is the rate of change and the rate of

change of the rate of change, the second derivative. they are in play now. german 10-year and japan, we could spend the whole show on japan. jonathan: let's start there. lisa, the japanese government on market did not trade once in yesterday's session. today yields higher in the u.s., higher in germany. what are they doing in japan? nothing at all. they are increasingly isolated. it is in the fx market and everyone else is pushing against it. lisa: that is going to tweak me, because it is not a market. there is nothing markety about this. it is controlled by the bank of japan. the pressure reliever is coming from the currency pairs we are seeing having a dramatic ramification here. at what point does japan care? japan is still trying to frame this as a good thing. that their exports are going to be more available to the world.

that possibly they could get tourism. really? that is a tension they are going to have to address. jonathan: what will they tolerate? what are we looking at in europe, in the u.s.? eight handles? lisa: talking about europe, the gdp estimates came out this morning higher than people had previously expected for this year. this gives the ecb more leeway to raise rates, people are speculating, because growth is hanging in there more than people have expected. all of this pointing to rate hikes in the developed markets. the likes we have not seen for decades. japan, moving in the opposite direction. jonathan: grossed estimates do not get me excited, tom. usually they are 5, 6 months late. when it comes to the oecd, they are looking at 1.6% growth next year.

they are looking at 4.6% inflation. that is not the scenario of this ecb. tom: two observations. one is the 2023 estimates, in many cases there is a guess, than a lower gas the year following. i need to go back to japan. i think it is so important, and the massive distinction is, this is not your father's japanese analysis. have -- we have morgan stanley coming up. they have robbie feltman in tokyo, and he would point out this is a japan that is now a heavy importer of goods and raw materials. that was not the case when they were moving toyotas out the door. jonathan: let's get to a print futures down about .4% on the s&p on the nasdaq we are lower by about .3%. getting comfortable in and around 3% over the past couple of days. looking accrued, 121, and look

out five dollars a gallon. the average gas price in the u.s. -- in the united states, we are getting closer and closer to that. lisa: that is going to be a key issue as we head into the midterms. president biden is heading to the americas. venezuela and nicaragua all were not invited, creating some issues with mexico's leadership. interesting how people could talk about near shoring at a time where there is this concern about supply chain disruptions. today bloomberg's tech summit is taking place in san francisco. interesting to hear what we could hear from the ceos of uber, expedia, as well as mastercard. looking to how we can engage the consumer slowdown in appetite. today russian foreign minister sergei lavrov is heading over to turkey to talk about unblocking the black sea for grain shipments out of ukraine. how much is this real talk?

we have heard skepticism from kyiv about how much could get achieved, but this is key in terms of the world's food supply, so a lot of people are watching this. jonathan: thank you. i want to turn out to brian weinstein at morgan stanley. the fed may keep hiking in clips of 50 basis points until something breaks. can we talk about that something breaking and have a look at what is happening in japan? brian: sure. first of all, the fed has to keep hiking 50 basis points until there is some semblance of a demand slowdown, because that's all they've got, right? they cannot help the supply side. you said before about markets, we have seen a couple teeter. pan not trading is probably an extreme example. we saw the high yields 50 basis points higher, then 50 basis points title. there is a lot of uncertainty out there. it is going to keep going until

there is an accident somewhere. lisa: james -- tom: james gorman doesn't want you to talk about second-order derivatives, but where is the rate of change right now that interest you most? brian: i think we are getting back to looking at interest rates again. 10 year notes have an uneasy truce at this 3% number, but it is clear we are not going to rally. you're not going to wake up with a 2.25%. are we going to have this market move to an uncomfortable level where investors will choose income over capital appreciation? we had a few moments of it at 3.20% and i think we're going to test higher levels again. lisa: higher levels again, why? which investors are stepping back? which investors are not coming back to treasury yields? brian: i think there is two things. the fed played this game a get with the pause. i think this was to calm markets temporarily. i don't think we can predict a

pause based on what we are seeing in labor markets, growth, and inflation. the first thing is that we do not see investors flocking to fixed income, and there is a lot more coming. obviously qt as part of that. i think that is the first thing. the second part is unease with inflation and growth. we are not going to see the turnaround as quickly as people want to in order to flock to safety. i just don't think a be percent 10 year note with a percent inflation is enough to change the dynamic of this market. lisa: can we talk about the anatomy of a market accident? it looks like in this world? is it credit waste, given you have deutsche bank saying they are going to see some increase in defaults next couple of years, or is it somewhere else? brian: i think we understand the default rate will go up. i think maybe it is liquidity-based. people expect infinite liquidity, but what you are seeing is less stuff trading.

again, japan trading zero 10 year notes is a bit of an and all of -- an anomaly. i think all it needs to be is we wake up one day and the jgb is at 35, and that could unhinge the right market, which could cause liquidity people to pull back. i don't think we are talking about some esoteric crisis, it is just could simply be that price discovery moves quickly and surprises people on the wrong side. jonathan: i know a lot of people on fixed income that are dying for the return of price discovery. ryan, thank you. brian weinstein at morgan stanley investment management. he said, look at -- looking for pockets of leverage. where is leverage? corporate balance sheets are pretty strong, the fundamentals. can we talk about a firm? a firm and some of these loans they have made not going as well as some people might have hoped

for? they have got 12.7 million customers. extended loans in the first three months of 2022. stock is down over 80% this year. the team here at bloomberg pointing out that some of these loan packages, the value of them is going in the wrong direction. lisa: this is the classic by now, pay later, and people are not paying later, and that seems to be the warning coming from the securitizations, these loans to consumers that have been packaged and sold to investors. people analyzing the credit quality of the securitization are seeing a deterioration, which is leading to concerns about the consumer balance sheet. when do they start pushing back? under the base cost of everything they are buying and packed they will spend? jonathan: i'm going to catch up with julie. later this morning, who was also on board with this story, that this could become a problem in a much bigger way. he was a problem for credit suisse.

the sixth profit warning. we have to go there. the sixth profit warning in seven quarters. the team at bloomberg reporting job cuts could be coming. a change in the last 12 months. tom: you are killing me. jonathan: fighting for talent, and now reports of more job cuts to come at a company really struggling to provide a guide for the path forward. tom: a $42 omelette. jonathan: and a strong drink. tom: this has been a train wreck for 30 years. i don't want to go into it other than mr. got steam has a lot of courage to make tough, tough decisions. this is a key phrase. culturally, they don't want to make them. this is about culture and nationhood, not finance. jonathan: when does the patients of david haro and others run out with this name? lisa: my next question is i want

to read tom's contract about when he will talk about certain things, what he is eating, and where he has to be. [laughter] jonathan: it is not about the blue m&ms. this is all about a drink. tom: i like how brian at morgan stanley, he mentioned 3% as a rounding handle. jonathan: you were going to keep bringing that up? tom: i want to look seriously. jonathan: is lisa serious? [laughter] tom: the credit card report from the fed yesterday was stunning. jonathan: let's pick up on that in a minute. from new york city, this is bloomberg. ♪ >> keeping you up-to-date with news from around the world, i'm leigh-ann gerrans. credit suisse has issued a sixth profit warning in seven quarters and expects last of the group lied level -- level and investment bank and investment bank in the second quarter.

bloomberg has learned that credit suisse is considering job cuts. part of a renewed push to cut costs. in the u.k. bloomberg understands force johnson will go ahead with legislation to override parts of the brexit deal. that risks inflaming tensions with members of his own conservative party and the european union. prime minister's government has been pushing to rewrite the northern island -- the northern ireland protocols. angela merkel warns that isolating russia is not possible long-term in her return to the public arena. merkel said that vladimir putin made a big mistake by invading ukraine, but she said there is a danger of putin forming an alliance with china if he does get foxed in. in san francisco as events have voted to recall district attorney jessup again. putin tried to reform the criminal justice system but critics accused him of in too

soft on crime. about 60% of those voting say ousting him. he will be replaced by an interim district attorney chosen by the mayor. 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. ♪

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>> bringing inflation down should be our number one priority. and president biden in an op-ed in recent remarks has indicated it is our top priority. jonathan: janet yellen in the crosshairs, under the spotlight through all of this over the last couple of weeks from new york city this morning, good morning to you all. futures negative 20. yields higher by three basis points on a 10 year, 3.003 percent. on a wti call right now, wti up 1.4%. i'm looking at the average gas price inching closer and closer to five dollars. tom: we have yet moving near

134. rent crude, 122 moments ago. he finally had a break of a trend here on turkish lira. i get it, it is idiosyncratic, but you have to watch it, particularly with the geopolitics of the black say. we are going to do more data checks today. there are some really interesting nuance is going on. right now we are going to do politics, because the politics folds into the economy, because we have been told the elections of the america are about the economy. it is the economy, stupid. maybe not. emily wilkins joins us with a brief on the first tuesday of june. second tuesday of june. emily, i'm going to chop -- cut to the chase. defund the police did not work out. what is next for the liberals of this nation who were crushed last night? emily: they have to figure out a new message of moving forward, because between the los angeles

mayoral race in the san francisco attorney general, the message was clear last night. voters are responding to the high levels of crime we are seeing in a lot of cities and rejecting progressive policies that are saying go tougher on police and easier on criminals. he saw president biden onto this after eric adams won the new york mayoral race, saying he did not support defunding the police, he wanted to support the police, and democrats are trying to figure out measures where they can both hold the police accountable while not necessarily defunding them. be able to say, we are giving police departments more money, we are giving officers more support, but setting limits on things like no-knock warrants. tom: bring it back to washington. senators from west virginia and arizona, they are not liberal. where is the new definition of the middle ground for the democratic party given what we see? is the middle ground speaker pelosi?

emily: i think i would even say it is probably a little bit more to the right speaker pelosi. she likes to pride herself in being a progressive. the leaders tries to stay on message and she is aware of what the mood in the country is. she is aware that president biden's approval ratings are low, that republicans have a huge like up in the midterms. there is an awareness that voters, their appetite right now is not for more progressive candidates. at the same point in some of these primaries, because of the voters who come out and vote tend to be more toward the left and right of the respective parties on the whole, you are seeing some progressive candidates go ahead and win over more moderate candidates across the country. i think a lot of this is going to come down to what district they run in. last night we saw some republicans who have bucked trump's light to victory in states like new jersey that tend to be more purple, but in states like mississippi we saw members

who took very similar votes, see very strong challenges in their primaries. it seems to boil down to where exactly in the country you are running as far as what your policies need to be and how aligned republicans need to be behind the president. lisa: i just hear tom's voice in my head saying it's the economy, stupid. it is $4.92 on average for a gallon of gasoline, and this is something that talking points cannot get around. what is the cohesive plan for democrats to address this? it seems like there is not a feeling inside. emily: you are absolutely right. for primaries it is a unique dynamic, but when it comes to the general it is going to be about that inflation, how about those gas prices, about how much a gallon of gas is. democrats really try to get the focus off of inflation. you heard secretary janet yellen say yesterday, pointing out inflation is also happening in other developed countries

throughout the world. you heard democrats talk about trying to lower prices on various things. i think you are going to be hearing more of that as we potentially see progress being made on legislation that passed about u.s. competitiveness with china. that is the bill that has the $52 billion for semiconductors in it. it is something lawmakers from both sides of the r working on negotiating, and something that leaders have identified easing some supply chains, helping get prices back down. to a certain extent a lot of what is going on with inflation, you cannot control it from washington, d.c.. you can't control it from the white house. to a certain extent democrats know they are in trouble come november. jonathan: you can try and control the message. is there a question mark on secretary yellin's future at the moment? emily: we haven't been hearing too much of that in washington.

i think there are a number of other things to focus on. certainly she was not the only one to incorrectly call that inflation transitory. i think there is a since she was able to kind of stick to the messaging, stick to the talking points yesterday, when she spoke with lawmakers on capitol hill. at this point i think there are more pressing issues in d.c., rather than the future and fate of secretary yellin. she had a lot of goodwill going into the role, a lot of expertise, a lot of support, and i think she has maintained that, even as she admitted she was wrong about inflation. jonathan: emily wilkins, thank you. i promised some bramhall coverage -- abramowitz coverage. it is going higher. lisa: yesterday talking about how consumer credit has risen again in april after a surge in the prior month. why? this is my question. how much are we seeing consumers

confident about their future, versus not caring? they can get credit and prices don't matter? which side of the coin as we talk about the strength of the consumer? on the other you do see banks wanting to extend credit, because they need to make those loans. they are incentivized lenders at a time when consumers need to spend. it is not a clear picture to me. jonathan: tom, what do you make of it? tom: i think things have tightened up because of the core costs across the american deciles. the lower deciles or flat out doing better, there is no question about that. the great middle class is looking at the monthly bills in a nominal space, they are looking at nominal mortgage, nominal rent, nominal gas, nominal auto, all of that, and it is killing them and they have hit the charge cards to boot. jonathan: lower and middle income getting pushed by gas nearing five dollars a gallon.

it's nothing. except it is. it is a whole lot if you budget for something and then increases by a huge amount. futures down by 19 points on the s&p. we are down by about .5%. this is bloomberg. ♪

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jonathan: live from new york city this morning, good morning to you all. here is the price action. we are negative point 5% on the s&p. a whole host of cuts to the global growth outlook. yesterday the oecd just about holding onto a 3% handle for global growth over the next year or so. we will talk about that in a moment. the bond market story looks like this. to use, tens, and 30's lower yesterday. a question about whether there is a disinflationary element. maybe we can touch on that later. yields higher again this morning, though, up by three basis points. we won't spend too much time on this. i want to turn to foreign exchange. the ecb today meeting starts later. we will hear from them tomorrow. expect it to lay the groundwork

for a hike in the may meeting, and may be the one after that, the one after that, and the one after that. the euro-dollar stronger here. that is where you get some strength in the fx market, because elsewhere there is real dollar strength, particularly against the japanese yen. dollar-yen staring down 134 and levels we have not seen since the end of february 2000 two. that currency pair positive one full percentage point as much of the rest of the world starts to think about hiking interest rates following the fed, doing what e.m. has been doing for a lot longer. the boj is looking increasingly isolated. tom: the summation of our guest is a 135 level is a rounding convenience statistic where mary things start unraveling from mr. kuroda and the japanese financial system. maybe picking off dollar-yen, but the rate of change is enough to get laurence boone going. jonathan: what do you think they

do in response? do they let go of a cap on a jgb? tom: i will defer to the late and fabulous martin feldstein, who was dismayed at the cultural slow-motion exercise when they cleared the banking system. why would this be any different? they have to clear out the zombies, they have to be efficient. i'm going to say this until i am blue in the face. this is not your father's yen a story. they have a trade deficit. they are getting crushed by import dynamics. jonathan: as lisa has said, i don't think we can even call some of the same market. dollar-yen right now, 1.93. jonathan: she is chief economist at oecd, laurence boone joins us now on a trip around the world. i'm going to be selfish and go to the growth recession you called for in the united states, where you have an ugly statistic, then the next year it

gets uglier for the united states. take that out to a global economy and the benchmark you and i studied in school of the percent global growth as being lousy. is our global economy heading or in a growth recession? laurence: hi, tom, and thanks for inviting me. the global economy is paying a hefty price for the war that russia is leading into ukraine. yes, this is pushing down growth quite a lot, to 3%, as you say, which is one of the low rates we have seen. it is pushing inflation even higher. we are getting close to 9%, so a little more than 6% if we are excluding turkey in the oecd economies. tom: do you describe -- do you ascribe to the idea that the only way to break this given the war and rest is tight monetary

policy? is that the only way you get this done? laurence: so, i think we have a little more messaging than this in there. as far as monetary policy is concerned, we still have healthy growth, employment, and high inflation. what we are saying is we move some monetary policy accommodation. it cannot address supply shock, it will signal they will target this, and in those countries where there is obvious excess demand, yes, monetary policy should be tighter. lisa: what is the main swing factor that led to the downgrade and could potentially lead to more downgrades ahead? laurence: the main factor is really integration into ukraine. -- rush's aggression into ukraine.

we already had inflation going up because of the pandemic and the issue with china and their policy, so that was already affecting us. now, there are disruptions to cereals, energy coming out of the world. it is obviously raising inflation. this higher inflation is undermining consumer confidence, and therefore consumption. one of the things we say, if you allow me a sentence, it has the burden of inflation. the cost of the war should be fairly shared between employers and employees, wages and profits, so as to avoid a wage-price spiral. lisa: this is one of the reasons you accuse the united kingdom of having taxes too high and they had to cut them in order to give people more buying power. much does there have to be in some ways fiscal expansion, despite the idea people are pointing to some of the fiscal

expenditures as being the cause of inflation? laurence: reasons why the u.k. has lower growth than other economies next year, one is the higher inflation. the other is tighter and faster monetary policy tightening. and also fiscal consolidation. what we are recommending to the u.k. is actually to consider the pace at which fiscal consolidation is taking place. if it goes too slow, as fast as we are describing. tom: the oec is part of the alphabet soup of the oecd. are the people that actually prosecuted the marshall plan, how do you respond when we hear so many people in a flippant way say, what we need is a new marshall plan, on ukraine and the rest as well? how do you feel we will affect a

modern marshall plan? laurence: i think there are two things. one is what is happening in ukraine, where, as we can see, everything is being destroyed, all of the infrastructure, and so a large part of the infrastructure and the capacities, the predictive capacity of the economy. this will need to be revealed. the marshall plan, good and in hand, as you well know, money on the one side, but also reforms, policy reform, on the other hand to ensure the money is there. that is one thing. the other thing up -- i think people have in mind immediately, that we have in mind at least, is globally to avoid a food crisis. for this we are saying a couple of things. one is, ensure the transport and logistics of the cereals around

the world so it reaches middle east and africa, where it is most needed. where it could cause social and political unrest. for this we might need more foreign aid, which in a sense as part of what we think of as a marshall plan. jonathan: you have a host of policy prescriptions, and i want to finish on the u.k., because you do offer advice to the u.k. . a much more pronounced way than the united states or europe. can you run us through what you think this government should do right now? laurence: i can try. what makes the u.k. different from other g-7 economies, as i was saying, higher inflation, faster tightening of monetary policy, but also faster fiscal consolidation.

then the disruption to the manufacturing and supply chain between china and some of the distribution. there are two things which i think stand out. one is to carefully weigh what is happening with fiscal policy and make sure that not only the most vulnerable, but the working class, the most vulnerable, is being sheltered from the cost of war. and the rising global prices affecting everyone, as we know. the second thing we are saying is trait has to resume faster in the u.k. tom: lauren -- jonathan: laurence boone, thank you very much from the oecd. looking for 134 right now in dollar-yen. tom: these are the rates of change we are seeing today. it can be idiosyncratic. dollar-yen is not idiosyncratic. i get the domestic focus, as you mentioned, with the fiction of

their managing of the yield. at some point that is going to break. i don't want to presume to know which level, that it is much more geopolitics. it is an important nation. what it means for australia, up through the pacific rim, what it means for china is front and center. jonathan: lisa, they are getting squeezed. lisa: the media seems to be reaching peak inflation hysteria at the very moment early indications suggest inflation is not necessarily exponentially increasing. that said, it is the squeeze we are talking about. i think that is what we are focused on. how is this going to affect what we are going to see ahead of time? this is distracting me. i was thinking to myself, what does that mean? peak inflation hysteria? jonathan: there are some great minds in economics, but when they become political hacks, it is the value in some of that coverage anymore? did he forecast where inflation

would be? did he call it hysteria last year? come on. lisa: this goes to your point about what hyperinflation is. i don't think it is fair to say any time are talking about inflation we are talking about hyperinflation, which you stated that is not what we are talking about. it is not the unmoored kind of inflation. it is an inflation that squeezes the lower class and changes the view for an economy that has become accustomed to a low interest rate. jonathan: what a surprise the front page of the newspapers upset someone because it it -- it goes against their politics? ask anyone in america how they are doing in the low income groups and if it is hysteria. it is a ridiculous statement to make. equity futures down .4%. dollar-yen pushing 134. from new york, this is bloomberg. ♪ leigh-ann: keeping you

up-to-date with news from around the world, i'm leigh-ann gerrans. the oecd says the world will pay a hefty price for the war in ukraine. the organization/it's outlook for global growth from 4.5% to 3%, and doubled its inflation forecast to nearly 9% for its member countries. credit suisse is considering a round of job cuts after warning of a second quarter loss. bloomberg has learned the cuts would be spread across divisions, including investment banking and wealth management. it was credit suisse's sixth warning in seven quarters. in laa billionaire will take on a veteran politician in the race for mayor. russo won 41% of the vote in yesterday's primary. both are democrats, although caruso is a former republican who did not switch parties until a january -- until january.

last year the european hedge fund made 14%, boosting returns for the year to 110 percent, combined with a 54% increase last year the fund is now above the level set in 2015. that marks a full recovery and allows it to change incentive fees. global news -- 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. i'm leigh-ann gerrans. this is bloomberg. ♪

>> what the fed has to worry about is domestically-generated inflation is so high. from that perspective what they need to do is slow the economy, and they need to gently raise unemployment. but we know what a double-edged sword that is. jonathan: david page there. from new york city this morning, good morning to you. futures down .4% on the s&p. the nasdaq down by .3%. yields higher to 3.01%. in the fx market, euro-dollar, 1.078. i know that has you excited. tom: two housekeeping notes. on david page being on yesterday about english football, david blanchflower of dartmouth scheduled to be with us today. on cardiff and gareth. jonathan: and the labor market and the fed? tom: we will do that as well. jonathan: maybe up top. 1.34 handle on dollar-yen. i want to get to credit suisse. allow me a couple of minutes.

just a couple of minutes. [laughter] yesterday we put out a story with an interview with a guy called david miller. he is over at credit suisse. this is his quote. i have been using the first five months of this year running around seeing class. 24 hours later the headline from credit suisse, it is another cut the profit outlook for this name. tom: it has been a process. for those that do not keep up, this is not a five-year deal, this is a 10, 15, 20 year cultural phenomenon. want to go to what you and lisa were arguing about with professor krugman. this is inflation. this folds into the founder of pangaea policy, who gets it. what you do is set up a moving average wrapped around the culture of whatever this series is. here is the math. the moving average of a gallon of gas is the monthly bill

people face. you bring this down to the rent, to a gallon of gas, to paying the bills on whatever the day of the month is. brent crude 30 day moving average, $113. it was $110 in april. we have breached through to a new monthly high on the cost of oil. terry haines, how does that play for republicans moving to november? terry: politically it is very good news for republicans and bad news for democrats. i think that is obvious. off that what you have is secretary yellen saying yesterday that congress could do a lot, kind of passing the buck there. similar to the way president biden passed the buck to chair powell last week. what you have got is an administration that wants everybody else to do the work,

is not stepping up to provide a swedish solution. so, the politics is not going to move. tom: you are reading my mind, terry haines. my question is where the energies are for the biden administration? we are very czar-like when we are in these crises. where is the energies are? tom: the energies are -- czar is going home at 5:30 on friday. i have a simple test for whether there is a crisis in washington, and it is whether people stay the weekend to work. i have been through a few where we worked for 40 days straight, like usa patriot and all the rest. when you have a situation where everybody from the president down is essentially checking out for the weekend, what you have is washington telling you that things are, you know, going to

operate as normal. lisa: this is really important. you basically saying jennifer granholm is not taking this seriously enough in this administration is being caught staring into the headlights and not prepared to understand the scope of what these gas prices and this inflationary outlook really means? terry: i'm sure secretary granholm is taking this seriously. i'm sure many in the administration understand very well what the issues are what the economic stakes are, what the political stakes are. all i'm suggesting is that it is easy to tell whether people are concerned about a problem versus whether they are interested in solving it. right now i see a washington that is not interested in solving any of this stuff. lisa: washington being the democrats and republicans? did the democrats have a plan? terry: i don't see the republicans as having a plan either, but, you know, i look at

things going back to, say, theodore roosevelt's bully pulpit. i do not see an ability or a desire, frankly, from anybody. the president's democrat, the democrats are normally -- are nominally in charge, so this falls on them. either try to solve problems in a bipartisan way, really reaching across the aisle, really being aggressive, energetic. or on the other hand, politically democrats are trying to put the republicans on the back foot. i don't see either of those happening. jonathan: we have heard that the president is frustrated with the approach, the messaging, what they have allowed him to do, what they have stopped him from doing. haven't we heard about personnel changes? terry: it's interesting, isn't it? i will tell you my own view on this, which is a little bit of

observation, a little bit of understanding, and a little bit of -- a whole lot of experience, frankly. it is very simply that what you have is the president made his deal with the progressive wing of his party at the very beginning of this. it is now not going so well. the advisers that brought him to this juncture and that he let bring to this juncture, frankly, are people that are more interested in continuing their relationship with the progressive wing of the party than they are about getting the president to be more centrist, reaching across the aisle. one thing i saw this week that was very interesting -- and there are a lot of elections this weekend want not -- is -- i am on your air all the time talking about two factions, not political parties in washington. what you saw this weekend is kind of the strike back of the centrists. people that want commonsense

solutions, people that want problems to be solved, whether that are politicians that advanced in primaries yesterday, frankly someone like matthew mcconaughey. tom: he was the democrats' new mayor daley of chicago? who is going to pick up the trash? terry: one of the biggest problems for the democratic party is there is a very short bench, and there is not an obvious solution to that. in chicago 40 years ago the ship righted pretty quickly after jane byrne went off the rails and we went back to richie daley and the more daley-like model. that has gone off the rails again in chicago. it has been righted to some extent in new york. it is clearly off the rails in san francisco and los angeles. but there are not obvious solutions to that. you've got a lot of centrists

that a lot of insurgents are trying to, you know, trying to push back on all of that. jonathan: there is a lot of work to do, and so little time. terry haines, thank you, of pangaea policy. from new york city, this is bloomberg. ♪

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>> this may be the first quarter we start to see a noticeable hit to profit margins. >> margin is a risk-off compression, and earnings expectation for this year is perhaps too rosy. >> we have here is the consumers repositioned quickly. >> lower income households are going to have a hard time and we