>> 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

are going to see some pulling back. >> these companies are doing is acknowledging there is weakness ahead. >> this is "bloomberg surveillance." jonathan: live from new york city, for our audience worldwide, good morning, good morning. this is "bloomberg surveillance." alongside tom keene and lisa abramowicz, i'm jonathan ferro. tk, the week begins tomorrow. tom: the week begins tomorrow, then the cpi friday as well. what you have is dynamics setting it up. you have a lot of movement in the tea leaves across the bloomberg terminal. thomas ago, in weaker. jonathan: dollar-yen, 134. and a boj increasingly isolated. this cycle is different than the last one. the ecb set out the last one. it will not be sitting out this one. can the boj do the same thing? tom: it is not in isolation, but the german 10 year, i'm absolutely fascinated how the

various blocks at ecb has lagarde speaks, what did they do with the acceleration of a higher german nominal yield? jonathan: lisa, the growth outlook is not getting better. you heard from the world bank yesterday, we heard from the oecd about 30 minutes ago. lisa: which is one reason why people think the oecd will get some relief to raise rates. however there was that economic growth picture out of the euro region for the first quarter, and it was better than expected. so, fuzzy data. how much are we looking at the fed and ecb hiking until something breaks, as brian weinstein was saying? jonathan: what does it take to break something in the european economy? italy has got to be the one to watch. the italian 10 year, can they take a whole rate hiking cycle from this ecb? have you seen some of the numbers out there? anywhere from 150 basis points,

200 basis points plus. lisa: are you surprised we have not seen anything break in that market already? remember when people were saying it is unlikely we would see a move away from negative yielding because it was normalcy? we have shifted so dramatically, and things have not necessarily completely broken. how surprising is that? tamia me it comes as a probably depends on how much economic momentum there is. jonathan: if you had asked me two years ago can the ecb hike interest rates in the next cycle, i imagine there won't be able to this time either. this story has changed really quickly.

tom: this is a huge complexity going on. all of it centered around massive uncertainty on the war, and frankly on food prices. wheat, corn today elevated for the first time in ages. wheat with a bit as well. what is important here is not to be inflammatory about the observation of yen or what is going on with the german 10 year . just to say, these are instabilities. to begin a team as we go to anastasia here, it is overcome by events in july. i think that is a new theme for me. jonathan: let swept through the price action. about .4% on the s&p. the nasdaq down .25 percent. yields up just a bit higher. 3% on a u.s. 10 year. crude at -- u.s. crude at 120 dollars, and goldman-s has more to come. lisa: how much will that bleed into the picture, particularly in the united states? the week doesn't start tomorrow and friday with that cpi report. tomorrow president biden is heading to the summit of the americas. cuba, nicaragua not invited. the issue for me is how much we can talk about your-shoring, bringing manufacturing production in asia closer to home in order to get ahead of

some of the distractions -- disruptions we have been seeing. today's summit is taking place in san francisco. we have the ceo's of uber, expedia, mastercard. tom is watching this very closely. he wants to know what to do with his triple-leveraged cash fund. today sergei lavrov is heading to turkey for talks on unblocking u.k.'s grain exports. this is key in the black sea, where about 90% of all grain from ukraine typically has been exported. it has been blocked by russia. people have been accusing russia of holding this area hostage. how much are they really going to come to the table to negotiate given the fact that vladimir putin has said u.s. has to remove sanctions before they are willing to unblock some of these passages? tom: what is great about this, and not to be inflammatory. it is inflammatory wednesday,

but if lavrov shows up at 17 lerer to the dollar, does he leave when it is 18? lisa: that is a good question, jon. jonathan: you were going to pump out to me? thank you. did you see the comments from chancellor mocha -- chancellor merkel on russia? tom: she is worried about isolating putin. that is a theme we have been hearing out of the european capitals. we headed for macron too. tom: i think -- this was general hodges. they were dead on. there is an actual war going on, jon. i have said this in phone calls, in meetings. you get this conversation where it is almost like, pretend war. it is not. jonathan: it is real. tom: it is real folks. jonathan: it has kinda fallen off the front page, in a way. tom: it is really bad. you get to our esteemed guest. jonathan: who is not going to

talk about dollar-lira. anastasia amoroso of icapital joins us now. you are looking for a softish landing. let's talk about the ish. anastasia: i think there is a few things i look at the give me hope we may actually have a wider path to a soft landing. the first one is the growth numbers. even with the oecd downgrading growth today it is still a positive number. if you look at the u.s. we are expecting 2.6% this year, 2% next year. this has not fallen off the cliff. yes, we are squarely in a slowdown part of this, but this does not yet have to be a recession. the second thing, and i have not been able to say we have peak inflation and this is it, but now i feel there is more evidence building that maybe we are starting to see peak inflation. wicked used car prices. they are starting to decline. look at the businesses'

intentions to raise prices. they cannot do it anymore. if you look at businesses' intentions to raise wages, they are pausing as well. there is starting to be a preponderance of evidence that maybe inflation is easing. this is commodities notwithstanding, but the other inflationary pressures seem to be easing. the third thing that really gives me some confidence that we can engineer a soft landing is, the fed is starting to sound a little bit more balanced. yes they need to fight inflation, but may it doesn't have to only be by raising rates well into tightening territory. maybe they can pause and let the high prices naturally bring down demand. i think if they back away just in time, we might end up with a 94 scenario. -- 1994 scenario. lisa: everyone wants to game out where we are heading right now. what does that mean for what you are buying? you have to come up with a thesis before we have the dots of how the data is going to come

in. how risk-on are you? anastasia: it is about the balance of risks. a month or so ago it seems like we have priced in a lot. equity markets were pricing in at 57% probability of recession, and now we have retraced some of that. i think we are trapped in a range. i always thought that 3900 for this economic environment could be the level of support. we seem to have bounced off that level, but at the same time how much are you going to pay for $235 of earnings? 16.5 times as fair, maybe 17.5 times, but how much more do you push that? i think we are trapped in a range for now, but still there is some investment opportunities to look at. i have liked technology, but one of the calls i have now is on financials. tom: part of this is the overarching theme, and that goes back to expect the unexpected.

i'm talking about overcome by events july. there is a mix of dynamics on the screen that are clearly out of sorts. what is the thing you're looking at for july the could be the unexpected? anastasia: i think the big -- well, i don't know if it is unexpected, but maybe he could still surprise us -- is a commodity shock. even though i'm seeing the supply chain bottlenecks easing, the commodity shortages are not going away. tom: i'm going to stop the show. you more than anyone we know have a visceral understanding of the coast of the black sea. you own the high ground on this. how do you respond to the idea that odessa could be shut down? anastasia: this has a big implication for the commodity market, and as i mentioned, the world is short of everything. the world is short of wheat, grains, oil, and natural gas. to the extent you close out that

corridor, to the extent tensions escalate and you can't get product out of that region, that is really, really tough. i think that is what people, perhaps, don't fully appreciate. commodity prices are up a lot this year. i think a lot of investors say, how much more do you chase that? what people probably underappreciated is we have a structural deficit of many of these commodities. this is not just a tactical trade for this year but longer-lasting. jonathan: such a good point. anastasia amoroso pair of icapital. tom, i think something that wasn't clear a year ago is quickly becoming so. that is jp morgan in europe, when he talked about the lack of spare capacity in opec at the start of the year. that felt out of consensus. it is quickly becoming consensus. tom: on a microeconomic basis jp morgan has a lot of great work. marita send has been great. we don't understand that when is

a normal hydrocarbon market the supply and demand is wicked tight. that is cfa talk. jonathan: wicked tight. cfa boston, tom. without a doubt, 121 brent. crude higher by .9%. from new york -- they are doing better, tom. tom: they could not do worse. [laughter] jonathan: this is bloomberg. ♪ leigh-ann: keeping up-to-date with news from around the world with the first word news, i'm leigh-ann gerrans. more problems for credit suisse. the lender has issued a sixth profit morning in seven quarters and expects a loss at the groupwide level and investment bank in the second quarter. bloomberg has learned credit suisse is considering job cuts. here in the u.k. bloomberg understands boris johnson will go ahead with legislation to override parts of the brexit deal.

that risks inflaming tensions with members of his conservative party and the european union. the prime minister's government has been pushing to rewrite a northern ireland protocol that keeps the region in the eu's single market. the oecd says the world will pay a hefty price for the poor in ukraine. the organization slashed its outlook for global growth this year from 4.5% to 3%, and doubled its inflation forecast to nearly 9% for its 38-member countries. in san francisco residents voted to recall district attorney chesa boudin. boudin tried to reform the criminal justice system, but critics accused him of being soft on crime. he will be replaced by an interim district attorney chosen by the mayor, london bridge. the son of the founder of walmart is leading a group that has agreed to by the national football league's denver

broncos. esp and reports that the walton group offered almost 4.7 billion dollars. that would be the highest amount ever paid for a u.s. professional sports team. 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. ♪

>> there is no question we have huge inflation pressures, that inflation is our top economic problem at this point, and that it is critical we address it. so, i do expect inflation to remain high, although i very

much hope it will be coming down now. jonathan: what did paul krugman say? inflation hysteria it is the media. that was secretary ellen there. from new york city, good morning. futures negative on the s&p. on the nasdaq, down .1%. yields higher through 3% on the u.s. 10 year. tom, crude up by about 1%. tom: jon, i think we have to go back to first principles on friday, which is hugely important, look at cpi and say the top line is grim, from a .3% down to a .2%. there is a demonstrable ebbing in core cpi. jonathan: month over month without a doubt for wall street that is going to be the focus. as you have said a million times, you cannot eat or drink

core cpi. and you cannot travel on it. tom: let's get to a question that came up over dinner couple of nights ago. we can do this with emily wilkins in washington. emily, taxes are very state to state. why are we waiting in taking a tax holiday? emily: in a couple of states they are debating this in terms of taking a tax holiday from potential gas prices, but at the federal level the main concern from speaker pelosi has been if they were to take a holiday it doesn't necessarily mean these oil and gas companies are going to pass the profits down to the consumers. there is additional concern that these taxes are used to help fund highways. we just passed that major infrastructure bill. they want to make sure there is funding there. tom: dumb question of the morning goes to you, emily. did the democrats support -- and, frankly, the republicans -- did they support our president traveling to riyadh?

anastasia: there is some debate about -- emily: there is some debate about what biden should be doing, how he should being engaging with the government there. it is one of these things where the realpolitik is dominating the moment, the fact that everyone knows gas prices are a high concern, trying to figure out what they can do. you have seen the biden administration try to tap into the strategic reserve. you have seen democrats rail against various companies. you have seen measures try to be moved, and yet you have not seen much of a change in that price. i think there is a reality here that this is a global issue, and that writing will need to have global interactions to address it. lisa: is inflation really the center of gravity already in washington, d.c.? we know it is outside of washington, d.c. when you drive around, but it feels very disparate in terms of the messages we are getting from president biden, who is currently heading to los angeles for a summit of north american

partners. emily: i think that is because the white house has sent so many messages to explain inflation. they have tried to blame it on putin, they have tried to blame it on major corporations, they have tried to blame it on the pandemic. i'm not saying there is not truth in pieces of that, but as far as one consistent message, we have seen that more from republicans, who have been blaming biden. in d.c. one thing lawmakers like to say is they can walk and chew gum. there are multiple things going on that are dividing everyone's attention. certainly begun debate is front and center in congress this week. he mentioned that biden is looking at this conference of the americas. that is certainly another thing on his plate as well. there is inflation to do it, there is pricing, there is hope they can wind up passing something to reconciliation. just a lot that is happening right now, and not one straight focus here in d.c. tom: for our international

audience -- and, folks, we haven't done this too much international, because the gun debate is 24/7. what is the distinction right now of the "dun debate" miss wilkins -- "dun debate," ms. wilkins? emily: core nine is really the linchpin on this, because we know there are many republicans will be perfectly fine keeping the status quo as is. corning is from texas. he is trying to get something through. tom: what are they going to do to stop the text number of people who will be killed between -- the x number of people who will be killed between now and monday morning? is there anything in the legislation to give hope to that concept? emily: the one thing they seem to be pushing now are these red flag laws, this removal of guns from those who have been deemed

dangerous to themselves or others. at this point that doesn't even seem to be a federal law in the works. it seems the federal government is going to encourage states to take up laws through a grant program. we have seen more than a dozen states take up these laws already, including places like florida, some of these red states. at this point that seems to be as much as they want to do in terms of gun control. we are expecting to see more on mental health, some more on school safety, but at this point it is still a very, very difficult issue, even given how heartbreaking and tragic some of the recent mass shootings have been. jonathan: emily wilkins, thank you. lisa, he hope we can achieve something on the policy front. going into the midterms it feels like we probably won't. lisa: i see no policy prescription right now on the table. there is a blame game, a massive blame came with people saying it is somebody else's fault. on all sides. perhaps republicans are getting more traction because it is a

cleaner message. that is what you are getting. the aunt that, what are we looking for in terms of a democrat or public and win and what the policy implications will be a checkup that also not clear to me. jonathan: let's start with the equity market. we are down about .3% on the s&p. on the nasdaq, down about .1%. no real drama in the equity market this money. in the bond market to some degree. in foreign-exchange, i know at the moment it is the first thing you look at. it is dollar-yen. through 134 briefly this morning. tom: ausley-yan is frankly just as important. but i also looked at a lot of other pairs, and the blended indices. the bloomberg dollar index, the fact is they really haven't broken out to new dollar strength. that is a raging debate among pros. jonathan: looking forward to a

conversation with bob miller of black rock. lisa, we have a lot to talk about in this bond market. lisa: yet, although stasis right now. are people believing the fed is going to move just enough is basically the idea of a soft landing now becoming more on the page? how much is peak recession fears a little bit past us? jonathan: futures negative .25% on the s&p. on the conversation, i could run with that. that we have seen this mechanical peak. which is the point paul krugman was trying to make earlier. lisa: inflation, still the main problem facing the u.s. economy. janet yellen's words, not my. jonathan: no doubt. from new york, this is bloomberg. ♪

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jonathan: no drama this morning, at least so far. equity futures all of the laws on the s&p. the oecd cutting their outlook to 3% for global growth. that is confirming what we have

heard from other places including the world bank yesterday looking for 2.9%. easy to spot the difference here. which one is the odd one out? looking at the u.s. 10 year, the german 10-year, japanese 10-year. yields higher in germany. almost totally unchanged in japan. why? the boj is trying to cap it th ere. if they cap bond yields at 25 basis points, while the latter two central banks make a continued move through the rest of the year, this is what happens in the fx markets. the japanese yen has to take all the pain. dollar-yen breaking out again. tom: a lot of dynamics there that we will be looking at. coverage of the ecb tomorrow.

all of a sudden, and ever huger deal. jonathan: basically said, are you serious? i cannot believe that they are not hiking tomorrow. laying the groundwork for future meetings? let's go. lisa: why not just raise 25 basis points. if you are going to talk about doing something, what is holding them back? you point out it was the peripheral yield market, concerned about disrupting italy, spain, portugal, greece. how much can they continue to do this? at some point they have to rock the boat to get tightening to get the inflation that is required. jonathan: key difference, the labor market in the u.s., stronger than the labor market in europe, maybe allow them to go a little bit harder in the states. lisa: but they have to do something, so when does

handholding become counterproductive? what is supportive of the italian, greek, spanish bond markets? you nailed on that the next day. jonathan: hours later. let's make a quick interview with someone that we like so they are kind to us. that is your cross asset price action. let's get some single names with romaine. >> all eyes focused on consumer spending. we did get campbell's soup earnings earlier. they were pretty good on the overall numbers but an interesting mix. total sales up between 7% and 9% but you saw a decline in the volume. they made up for that with a roughly 10% increase in prices,

so a company showing some pricing power, also making clear that on the volume days, things have tamped down. also in the consumer space, a firm is down in the premarket. we know that they were battered because of apple into that by now, pay later space. a wonderful story today about some of the securitizations that affirm has issued, and the prices of those have started to fall. any new issuance from this company, they have to offer more yield. this is a big concern. the business model for affirm is different from the other companies to finance themselves through debt or customer deposits. the stock is already down 70% from its all-time high.

smart sheet also coming out with earnings, beating out on the top line numbers but a deceleration in growth. down 6%. intel's management met yesterday, and citi says that the mood was rather dour. docusign is reaffirming their partnership with microsoft, giving them a little bit of a lift. up 5% on the day. the pandemic is sort of over, but novavax getting its vaccine out. they still need fda approval, but shares up 10%. tom: thank you. this is the conversation today. if you have opened up the proverbial envelope and looked at your bond portfolio, price down, yield up. bob miller at blackrock, decades

of experience looking at that. he is younger than me. he was with the davidson wildcats getting things done. what do you do to clawback the 2025? what is the attitude you take when you are down 10%, 16%, four years coupon, and i have to clawback three years? what is the strategy? bob: great question. the interesting thing is there is some value starting to be created in the u.s. fixed income market. let's just stay there for the time being. wider spreads recently. some of the products recently, even high-yield, bbb ig stuff started to look reasonable.

spreads snapped and aggressively in the last couple of weeks. at these forward rates in treasuries, we think rates go up bit higher, specifically in the term structure. but we are starting to get to levels where you can build a portfolio that probably earns 3%, maybe even 5% in certain scenarios, over the next couple of years. tom: can you extend duration? that seemed to be the biggest risk right now. bob: that is a tricky one. the consensus view is, yes, and for the reason that i agree with, treasuries now have some portfolio hedge properties, which they didn't have a year or two years ago because the yield levels were so low. in an absolute crisis,

treasuries will rally a lot from these valuations, but i am in the camp that thinks that there are a number of longer-term, more secular perhaps influences that will likely work to push the term structure of rates higher over the next couple of years. two of the three g3 central banks abandoning qe, the fed starting to allow runoff. things like europe pursuing energy, security independence will require a tremendous amount of investment, borrowing. if the world becomes motivated to pursue net zero, that will require a massive capex program around the world over a couple of decades that will lead to a higher term structure of rates. they are not near-term catalysts at all, but the term structure, -- we could have a steeper curve

for the same level of inflation and growth over the next couple of years. lisa: earlier this year, people look every morning at the fed funds futures, how much rate for there was in the market. now people are looking at economic indicators, and it is less about the fed parlor game, more about the fundamentals, whether the u.s. economy is accelerating or experiencing certain stagflationary dynamics. what do you look at every morning when you come out with a near-term and midterm view of those yields? bob: the tricky thing is financial conditions in the u.s. have tightened a lot. the magnitude of tightening from very accommodative levels is sizable on an historic basis. it is possible the financial conditions have tightened enough

to allow the fed to achieve its target with respect to inflation. the challenge is you have to deliver the forwards to deliver that tightening, or has to come to other channels that are less favorable. the forwards are priced very specifically for three 50's, 225's over the next two meetings. we are also price for a .75 terminal rate a year from now. that is sufficient but you have to deliver that to get there. vol in the u.s. has started to come down, and that is probably a durable trend. it will not collapse, but realized and implied volatility has started to come down. when we were talking before the show, we said we had settled into a bit of fatigue with the fed and the forwards seem pretty well priced with what we know today. lisa: we should just air --

jonathan: we should just air what lisa says in the commercial break. thank you so much, bob miller. something he said stayed with me over the weekend. just off of the back of the payrolls report, that is the last strong one. perhaps a negative print is coming in the future. that was the take from rick rieder. tom: i have tremendous respect for people in bonds and equity. there was way more discussion of the bond/bear market at the end of vulgar than there is now. there is like this -- this is going to go away now. sharpe ratios that are not measurable. i'm sorry, double-digit losses in bonds with coupons at 4%, and

we are not talking about. that sentiment that it will just go away, that extend to a lot of things. most of the guests still thinks the fed backs away by the end of the year. is she still hoping? make this one work. futures down .2%. this is bloomberg. leigh-ann: keeping you up-to-date with news from around the world, let's get to first word news. credit suisse is considering a round of job cuts. the cuts would be spread across divisions including investment banking and wealth management. it was credit suisse's six profit morning in the last couple of quarters. a billionaire developer will take on a politician in the race

for mayor david rick caruso will face karen bass in november. caruso won 47% of the votes yesterday while bass 138%. caruso is a former republican who did not switch parties until january. western digital announced a tragic review that could result in the separation of its two businesses. the announcement came after weeks of talks with investors and shareholders. western digital is one of the largest makers of a type of chip called flash memory. shares of novavax are soaring in premarket trading. the company's coronavirus vaccine has won approval from the food and drug administration advisory panel. they say there is good chance for gaining emergency use authorization. do you know what the most expensive city to live in as an ex-pat? for the second year in a row, hong kong.

higher prices and a stronger currency cap the city on top. geneva, london, tokyo also round out the top five. 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 leigh-ann gerrans. this is bloomberg. ♪

>> when oil prices move away from where they have been for a while, when they get salient in household decisions, when they really get your attention, that is when it matters what economic activity. we are long past that point david it is the number one concern among households. it has to be crimping household spending. jonathan: the chief economist at dreyfus and mellon. tom keene, lisa abramowicz,

jonathan ferro. on the nasdaq, down .1%. yields higher by three or four basis points. 3.01%. wti with a 120 handle. more than 1% on the session. year to date, more than 60%. citigroup making some adjustments coming into the week. they raised our second quarter brent crude forecast to 113. fourth-quarter forecast by $12, 85. compare that 85 at citi tumor goldman are at, that is a widespread. tom: this is the privilege we have, working with bloomberg hydrocarbons coverage but also digging deep into the analysis of global thinkers.

looking at the global macro moment of this commodity boom. head of commodities at citigroup, has a bit of an outlier call. ed morse, and we get back to oil fundamentals at your call of $90 a barrel? what breaks the ascent of oil? ed: the catalyst is supply and demand. we have to get through the next few weeks to see if there is a driving season over the summer. underlying the differences of you is what we think is raising prices now. what we think are raising prices now are the dislocations that have occurred as a result of companies and countries refusing to take on russian oil. there is no easy substitute. we are not in a one oil pricing system.

we have to remember that while wti may be at 120, brent at 120 something, this is trading lower than that. we have to ask why we have these higher prices. tom: we are planning a trip to abu dhabi. of course, we will have in a wheel summit there. we will have on stage you and other worthys. the distinction is that hydrocarbon investment will or will not come on. if we get higher oil prices, are you more optimistic than others that investment will materialize? ed: for starters, i don't think there is that problem. we have more than enough investment in hydrocarbons. we have a problem in the

hydrocarbon world that the u.s. has lost a lot of oil production. the u.s. was producing 13 million barrels a day in march of 2020. it went down to 10.2 million. now at 11.9. it is well below where it was if we did not have that drop in drilling. we would be at 14.5 million barrels a day. we have more than enough spending into oil and gas development. it has shifted a little bit. but if we look at the next few years and compare expectations of demand and supply, we think the market is oversupplied. lisa: have you seen signs that demand is cooling, perhaps we may not see the driving season that people are expecting? ed: we are trying to observe that, we decided to look at not only the four-week average for this time of year for gasoline

and diesel demand. we looked back and saw it was the lowest it's been in five years, other than 2020, when demand collapsed completely. we have gone 10 years back to find a time when demand is as low as it is. we had to go back to 2012. if you think the weekly data has a semblance of reality to it, gasoline demand down year on year, diesel demand down year on year, and the lowest in a decade. that is a sign that the price of oil has had an impact. lisa: why did you end up shifting your expectations, forecast higher if you still hold that conviction that we may not see the driving season that a lot of people are saying that we will? ed: we rose prices higher mark to market. second quarter results that are

marketing higher than when we were at. we try to figure out what was happening. what was happening is companies and countries were not accepting russian crude. they could not find a substitute so they had to rely on the light sweet crude in the world which is not the same. they bid it up from the country that has the most of it, the u.s. u.s. exports have been booming. combined exports of petroleum products in the past weeks have been at the 10.5 million barrel a day range. that makes the u.s. the largest liquids provider in the world. that is up by a couple million barrels a day from where we were. when companies had to look away from russia for diesel, they went to the u.s.. when companies had to look for crude oil, they came to the u.s. our inventories came down,

giving a misleading impression that the whole world was going down in inventory the way that the u.s. was. jonathan: how sustainable do you think that is politically? i don't think those numbers are that well known outside of conversations like this one. ed: i agree with you. if it became political, people would be talking about stopping the export, just like they did stopping the exports of natural gas. jonathan: thank you as always. refreshing to have someone say we are marking to market. that is what we had to do. looking at the spread for q4, that is where the difference is between citi and goldman. citi, 85, goldman, 130. tom: i really cannot say enough about, in their lengthy report,

and they lay out a theory underlined by supply and demand. at the heart of the matter is supply and demand of oil. jonathan: what did you make of those crude export product numbers? tom: talking about the success of the american energy project. i was with spencer abraham the day that the energy policy of america went down in flames. we have a huge export market, particularly of distillates. jonathan: how politicized does that get? the nasdaq down one quarter of 1%. tom: where will we be in six months? jonathan: six dollars gas, according to some. this is bloomberg.

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>> i think the fed has a lot of catch-up to play.