>> the folks who get paid to do this have never gotten a recession forecast correct.

>> we are seeing the largest amount of financial tightening in decades. >> the fed has discovered they can control interest rates, they seem to like to do that. >> they are going for a soft landing, it is going to be almost impossible for them to pull it off. lisa: the many shades of the r word. tom, the r word about jay powell, we can move past. we hear from him at 10:00 a.m. today. tom: economists look at this, totally different. martin feldstein would say, this is all wrong. it is way more nuanced.

to get to recession is a much more nuanced, complicated exercise than just blathering about the r word. lisa: if i use your phrase, where are people getting it wrong? where are people underestimating some dynamic trajectory for the economy? tom: export import dynamics are underestimated. the nuances between those two get to 0% dark negative gdp. the other issue, time and time again, how every recession has a different character. that is underplayed. lisa: does the fed have to cause a recession in order to get inflation down? is it a self-fulfilling prophecy that the more strength there is in the economy, the further the fed has to go? kailey: it was a question posed to jerome powell on senate -- capitol hill yesterday. he does -- the question is

whether or not the market believed him. john all today was talking about , you do not know when a recession is, but you know what when you see it -- you know it when you see it. lisa: you were talking about this earlier, tom, the u.s. recession may hinge entirely on china, and if they have a reopening, whether that economy starts to revive. let's talk about the keene activism and how much that hinges on the supply chain and what happens in asia. tom: i do not know how to weight that. the core theory we see across equities, bonds, currencies, commodities, is demand will come on specifically from the pacific

rim. that is the theory we heard from amrita sen, china is important to the american recession discussion. lisa: we are seeing a kenne constructive nests in markets. how constructive is the nasdaq the way perhaps trying to find a bottom after a massive bear market, up .9%? s&p futures up .7%. the dollar, all over the place. it is got a strength versus the euro, the euro declining 105. yields lower, this i find fascinating at a time when so many are expecting the to come out and aggressive. we are seeing a rally into bonds, perhaps saying the market is going to weaken before the

fed has to go. tom: has there been much curve steepening? the answer is no. atlanta gdp is 0%. i think it is hugely fluid right now. lisa: looking at crude with a little bit, but it is early. it is early to use the r word, jeff, what is your view as far as whether we have gotten overblown with the calls for the r word? >> it is overblown to some extent. that is in mind, the s&p, the nasdaq, that is not the entire u.s. economy. i do not think it would reflect what mainstream fields as well. on that side, on the supply chain element in china, we are

hearing macau locking down a part of their can see knows -- casinos. if this spread across the bay area again, i would continue to be relatively cautious on that contribution. the u.s. on the domestic side is holding well. >> i mentioned the john authers column earlier, he cited something from pimco where they said there is a risk we run into a anti-goldilocks economy that will be too hot in terms of inflation and to golden terms of -- too cold. geoffrey: stagflation argument, how you get inflation under control, especially with the supply side issues beyond central banks and policy control.

as much as central banks can touch on interminable -- incredible raining on-demand, you want to make sure the cost-of-living crisis, their consumption does not fall off a cliff. lisa: you started by saying the recession is overblown. where is it overblown in markets right now? geoffrey: if you look at where market pricing is, it depends on the u.s., eurozone, we saw the -- in immediate reaction with bond markets. in the u.k., chidi pay -- gdp contractions the whole year, next year. individual country level basis, look at the idiosyncrasies. with the u.s. and china, china can simulate back to -- why

isn't china doing anything back on the monetary and fiscal side? they are still very tight. tom: i want you to way in the oddity of the bank of japan experiment and what it means for finance. let's start with the power they have. did they have the power to continue yield curve control, or do they fall to a market pushing against them? geoffrey: yes, they do have the power to continue yield curve control. any -- to shorten the data market across the boj has lost money. that will be the case. at what cost to the underlying japanese economy? you cannot buy a meal with a ¥500 coin now. tom: how important is the shift

in their flows of trade, and the idea the stereotype is toyota's abroad, and the reality is there is a change in import dynamics, there flow dynamics. how critical is that multi-decade shift? geoffrey: it is very critical. does japan want to rebalance if there is a plan to increase demand? there will be no less yen to recycle. going back to governor kuroda, if he bit the bullet and identified inflation, he is saying, wrong kinds of inflation, do not want to push it out. find out you are wrong when you are too late. tom: the two decimal points on yen, where does kuroda break? geoffrey: i will be cautious in my language by saying, we are

500 yen -- with eight 500 yen coin -- with a 500 yen coin, you can barely buy a bowl of ramen. tom: you are skirting general counsel debate. lisa, this is a huge deal. when you go out there as an investment house, particularly the japanese investment houses, and start pontificating about yen 140 or yen 150, there are internal pressures on that. lisa: especially at a time where they have to import so many goods. this is not the japanese economy they saw 20 years ago. what are they going to do in terms of allowing this to happen without giving traders a payday? without saying, you were right. how do they say face because they want to do it on their own terms? tom: it goes back to

rationalizing banking japan, it took forever to get to that rationalization. off the top of my head, it took 12 years. it was difficult, to say the least. we have worked into a spacious market, 20 minutes away from claims. lisa: 20 minutes away from claims, less than two hours away from fed chair jay powell not saying anything. it is a countdown to july 27. that is what i am looking at, especially with uncertainty about oil prices. i'm looking forward to hearing about the commentary coming up from that perspective. tom: the survey of claims, to 29, better statistic, 227. that is the economy jay powell was looking -- talking about. lisa: the question is, how long,

and wind do we see the unemployment rate ticking higher, and at what point? tom: s&p global pmi, but tomorrow, be with us on a friday. for the university of michigan statistic, 10:00 a.m. tomorrow. stay with us. claims in 19 minutes. futures up 22. dow futures up 118. vix 29. this is bloomberg. ♪ ritika: fed chair powell back on capitol hill today for the second of two days of testimony. yesterday, he made his most explicit acknowledgment that raising interest rates could lead to a recession. he told lawmakers that a recession as possible and a soft landing is challenging.

he said the other risk is high inflation gets entrenched in the u.s. economy. in china, the president reaffirmed a growth target is out of reach. it was the first reference to the target since a meeting in april. china expecting to miss its gdp goal of around 5.5%. russia used new rules to pay its latest slate of bond coupons in rubles. neither of the bonds had terms allowed for settlements in that currency. moscow has days remaining before getting its first foreign default in a century. russia has billions of dollars it could use to pay, but is using other avenues to track cash. a deadly earthquake hit afghanistan. 1000 people were killed, hundreds injured. the taliban has urged international eight injured sees

-- agencies -- international aid agencies to help. global news 24 hours a day, on air and on "bloomberg quicktake." powered by more than 2,700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪ >> i think you could say figuratively and lingered ugly, they are out of gas. you cannot -- the way the gas taxes leveraged in the u.s., it is not at the top level. priority one is to make sure we unleash america's potential, as far as the ability to produce more oil and gas. tom: the republican from virginia, eric cantor. speaking to bloomberg in london. right now, i am going to focus on energy. that is a point at the moment, futures up 23. vix, 29.11.

brent crude, down to $112 per barrel. west texas media, 110. you read the washington post, lukewarm on the microeconomics price. of an $.18 tax on a gallon of gas. what is the plan to get oil back to $80 a barrel? >> good morning. thank you for having me. since the late fall, when putin had his troops around ukraine and the invasion followed by his -- global sanctions, the price

of gasoline at the pump for americans has gone up about two dollars, diesel, more than that. what we are looking at is this historic increase in price as a result, not of normal economic times, but under a time of war, at a time where -- of global security and stability -- instability that is affecting the market. as a result, as we go into the driving season this summer, the president wants to give a break to american families during these three months of the summer. that is why he has asked congress to suspend the $.18 gas tax. he has called on governors to do that the same. if governors match that, we are talking about $.50 a gallon less. i want to answer your question directly. we have done everything we can to encourage the industry to increase production, which they

are going to do this year. we are going to get that record oil production by the end of this year or next year's first quarter. we released -- the president has ordered one million barrels a day from the strategic oil reserve. tom: here is the problem. i know you are sitting in the oval office with a bloomberg terminal to you as you talk to the president, you can bring up log west texas intermediate quarterly. anybody can do this. baloney. it is about not in my backyard, how is a centrist democrat going to explain to left democrats that they need to come up with a knot in to advocate greater distant be lit -- greater capacities in america? amos: people focus on oil

production, but the reality is, that is not the issue alone. during the pandemic, we lost a remarkable amount of refining capacity in the united states. those refineries went out, some are gone and are not coming back. one of them has turned into a terminal. the others are there, we can invest before we start talking about building new refineries. we can ring back -- bring back the old ones that are still there. what the president has asked, the industry to come to washington and meet with secretary granholm and bring ideas. as he said in his letter, he has taken extraordinary measures last several months, both in energy and beyond. he is willing to take those measures again. we are asking the industry to come and give us their ideas. what do you need from the federal government, from us, to

work with you to increase the refining capacity in distillates to get gasoline produced and get gasoline and diesel to the right places around the country? tom: what amos is talking about, what are we going to do to politically shift the distillate debate? lisa: this idea to the response of the letter to the president from exxon, from phillips 66, other companies, the current administration has had obstructionist policies when it comes to oil and gas industries, and they have not been very clear. what is your response when they have been increasing production and invested more than they brought in during the heart of the pandemic? amos: that is difficult to hear. people say we are standing in the way of increasing production. look at the increase in production under the biden

administration. it is hard to argue we have done anything to stand in the way of increased production. there has been a rise in oil production, we know by the end of the year, beginning of next, we are going to hit record production. on average, the oil production has been higher than the one under our present -- predecessor. lisa: have you met with the ceos of the big oil companies to talk about this, to talk about how things can be clear for them to produce more? amos: i have. lisa: you have? amos: go ahead. lisa: there are schedule changes in terms of mort specific policies that you will put out there that you think will allow them to refine more or create more production in the near-term. amos: i think -- my point is, they have the tools they need. when i meet with the oil company executives and ceos, and i have

asked them over the last several months, what do you need from us? beyond what we have talked about, what do you need? they do not need anything. there are labor shortages, there are spare parts and so on. but they do not need policy changes from the u.s. administration. they have what they need. when comes to the federal end, they have more than what they need. as we know, federal lands were leases are are less than 10% of the overall production. the companies do not need anything. what they do need is bankers in new york and their funders, and investors to say, use the profits under these record prices the last several months and invest them back end of production. invest them back into refineries. invest them into equipment. kailey: it is not about the

availability of the crude, it is about the ability to turn that into product and refine it. refining capacity is a critical issue. when you speak to an oil executive, they say, why would i invest in a new refinery, when it is known there is an intention to get to net zero a few decades from now? they want to pivot to clean energy, so what is your messaging to ceos when you are asking them to pump more, and knowing eventually, you want to wean off of fossil fuels? amos: two points, one, you are 100% right. it is about refining. as i said before, we lost a lot of refining the last several years, specifically during the pandemic. you raise a fair question, why do you make those investments? that is what we have to talk about. we need to make sure we have enough oil and gas in the economy now the next several years to meet the demand that we have in the economy. we are not shying away from our

climate goals, they are aggressive and we want to accelerate. we want to see -- accelerate the movement to electric vehicles. the goal of 2030, 50% of new car sales, 2035. you have several american companies and global car company saying that by 2035, 100% of their vehicles will be electric. that is new car sales. we will have a tail on that as the rest of the industry catches up. the argument that we do not want to invest in refining or invest in oil production now, because of these policies, i do not know that really follows through. and meets the fact. we know we have the demand. i think we would like to work together with the industry, tell us what you need. tell us how you plan to use your record profits investing back into the industry, into production, into refining, so

americans can pay a little less at the pump and have the product they need during this time. lisa: we have a little time left. has there been any discussion about reducing demand or possibly putting out some sort of guideline to pull back, in terms of how much people use? in terms of the gas space in germany? amos: on natural gas, europe and the united states are vastly different. our price here is about six dollars, there is is about $40 on natural gas. we have provided record investment through infrastructure legislation that passed into mass transit and into rail. these are the things to convert people from if we had a better rail and mass transit system that was efficient and fast. people would move from using vehicles to moving mass transit

-- using mass transit. we would like to put the investments to work, that is what president biden has been offering all along. how can we move people away from driving their cars to mass transit and rail? how do we move from gasoline cars to electric eagles, which will reduce the demand for gasoline? we have to be realistic, we need to have supply today as we get to the better future. tom: thank you for the brief. futures up 23. dow futures up 115. lisa, i look at west texas intermediate with dr. hochstein. 163 on oil, a long way from the comfort we had on the barrel. lisa: there is not a lot of comfort from the transition we are seeing right now. that transition with more people

buying electric vehicles, this is the tension underpinning the conversations we have had in davos. how do you invest in these refineries and other things if you know that in 20 years, people are going to try to phase them out? tom: we are going to have to see. my debate is on distillates, i get the constructive story on production and the price out of that. to me, it is distillates in america and worldwide. it is about the baytown refinery of exxon, and -- then it is about anything. futures, up 20. four minutes away from claims, four minutes away from michael mckee. this is bloomberg. good morning. ♪

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tom: "bloomberg surveillance." the chairman of the federal reserve yesterday said it is a strong economy, and a strong economy starts and ends with the dynamics of our labor economy. we migrate there right now with michael mckee, as he and i await for claims data. michael: one and know something

weird? this is the third week in a row where the initial print has come in at 229,000. last month, it was revised up higher. the expectation was for 226, but we have entered a period of stasis with jobless claims. they are at the same level. a lot of people have been wondering, are they the canary in the coal mine and raising recession concerns? you would expect that. if you look back in history at recessions, jobless claims do rise going into recessions. they rise at other times and do not predict recessions, but they do rise into recessions. if we are flat at this point, it does not look like anything is imminent, which is what jay powell said yesterday. tom: claims are symmetric. you have been a genius on the schulz survey. if you were sitting with chairman powell, what would you say about these other surveys? do they show his strong economy?

schulz and the others you lean on? michael: they show a strong labor economy. the jolts suggested there are a lot of job openings that are unfilled, and if you lose a job, you could probably easily find another. there is a composition effect there, but there is so many open jobs. do company start paring back on their hiring plans, and stop posting job openings because they think there is going to be a recession? it is hard with jolts to know, because those are delayed by two months. tom: delayed is a revision we got on the key, almost fell off his chair. 231,000, the shock from 229 to 231. lisa: shocking numbers. a little weaker, we are getting a little bit of a reaction in markets if you want to -- the cfa talk i learned from you,

tom. we are looking at a little bit of a retracement of the gains from earlier, the nasdaq, futures up .6 percent. s&p up .4%. the two-year getting a bid under 3%. how much are these numbers going to reflect the true softening we are seeing in markets with job openings being taken off the market, and things people say are the stealth softening of the u.s. labor market? tom: how important do you as a five-year look forward for five years out, the 510 inflation expect patients at the university of michigan tomorrow? michael: it is going to be very important. because it will inform their expectations, that is what drives the fed. that is why we went to 75. tom: citibank with an important call for a much higher rate and

terminal value, all the other mathematical mumbo-jumbo. 10:00 a.m. tomorrow morning, i think we all agree, inflation expectations are important. they have spiked up. are we unanchored in our expectations? michael: critically important, i think that was the last data point that the fed could point to and say there was some notion that we were not on a more inflationary journey. that university of michigan tenure expectation list above 3%, we will see where it comes in tomorrow. that increases the concern that there really is an embedded sentence to this inflation. we sought in the labor market, where we have wage growth, different measures, chair powell was talking about that yesterday. you have price growth that is 6% plus, depending on the measures

you look at. i think there is a notion of a wage price spiral. i think what we are seeing at the university of michigan is confirming that. like mike the key saying, it is not the expectations are correct, but it tells you something about how inflation is becoming a structural factor in the economy. lisa: as people get used to that, how much is the labor market shifting already? we are not necessarily seeing claims go up, but it is not significant. how much are we seeing job listings being taken down or not field -- filled? andrew: as an economist, you are looking at the level of activity and strength. you are also looking at the direction of travel, and where you want to get rice's the direction of travel. we know a light -- a lot of things are strong. the labor market continues to be strong, lots of job openings,

relatively few unemployed individuals. that leading edge of the direction of travel, the weekly jobless claims data is giving me more of a real-time signal of the labor market. job openings, lag couple of months. if you look at those initial claims, the levels, still very low. hard to think that it is a difficult time to find a job in most sectors, because the vacancies are so high. it is not so much a concern about the labor market being strong today. i am watching the claims, i think what we are seeing now is seasonal noise, nothing to get too concerned about. it is the case if you bring economists like me back on the show two months from now and we see the initial jobless claims that if continue to trend up. we will have a more pessimistic view. lisa: looking internationally and the ramifications from some

of the global downdraft, there has been a stronger dollar. in addition to jobless claims, we got the current account balance out for the united states, we have a record trade deficit once again. as the strong dollar allows the u.s. to import more goods, how does this factor into your view on the gdp level, considering the prowess of the dollar and the ongoing disinflationary object of that, but not the money coming back into the u.s. economy? andrew: the trade value has been swinging around widely, which has been a combination of the post-covid reopening phase of the economy as trade has gotten fully restarted, as the economy has reopened. globally. then, this pattern of, well, you had renewed waves of covid which are disrupting goods. then, you have supply chain issues on top of that. i have been careful in terms of interpreting it in a lighter

term trend, where the economy is going. i look at the effect of the stronger dollar, one thing that may be surprising to me and how this played out, like tom was saying, we have revised up our terminal fed funds policy forecast to above 4%. getting there in the first quarter of 2023. we are getting raised to quite high levels in the u.s., that is not their view anymore, the market has been pricing something not too far off from that. when we were at higher yield levels. the dollar has strengthened, but if you had told me six months ago, we are going to think that that funds affected are getting above 3.5 percent, where is the u.s. dollar? i would've thought stronger than now. relative to that counterfactual, maybe not a slowing factor for the economy. >> when powell is set --

testified yesterday and elizabeth warren asked if a rate hike would stall prices at the pump, the answer was no, the fed isn't equipped to deal with the supply-side challenges. what is your consonants if the can get demand down enough to the extent it will offset persistent, tight supply? andrew: an important question, how difficult this moment is for monetary policy and foreign policy makers. when there is a supplied -- supply-side constraints, the only thing you can do is stamp demand. i am confident that the fed will be able to slow demand sufficiently to bring demand down. the issue is, how much slowing is that going to be? how much weakness in the labor

market, if you look at the fed's summary of economic projection, they have the unemployment rate that moves up by a few tenths of a percentage point. if you keep interest rates higher, tightening financial conditions, it will slow down the economy. the real issue is not whether they can slow it down, can they slow it down and be a relative to moderate slow down? tom: andrew holland horst. thank you. lisa: the edge of oil -- outlier came to deutsche bank. we are discussing this, as well as a host of other market issues. samir, we are speaking with her on the open. we are watching, i think it is important. maria tadeo sitting down with the president of with the una a

-- lithuania as we look forward to tension continuing to arise in europe. tom: west on a road in belarus to: and god -- in russia. it is hypersensitive to all russians, and mr. putin with the saint burgers berg -- st. petersburg heritage. these are attributes for russia. lisa: how do we deal with the situation, where any escalation draws in nato? where is that line for russia? are there getting -- are they getting bolder as they make their weight into the eastern part of ukraine? the tragedies continue. with fighting, that we are seeing. we hope there is some resolution. tom: there is fierce fighting in

the eastern ukraine. lisa: we are seeing the rally stage touch with the s&p up port 4% -- .4%. yields still lower, heading south of 3% on that to year yield. this is bloomberg. ♪ ritika: both republicans and democrats in congress signaling there is little support for president bidens call to suspend the federal gasoline tax. the president blames much of the increase on russia's invasion of ukraine. germany triggered a second stage of its natural gas emergency plan, as russia cuts back supplies. that has european gas prices rising. portland will tighten monitoring of the gas market -- berlin will

tighten monitoring of the gas market. u.s. -- save healing maxwell -- sega ghislaine maxwell. a federal judge will sentence maxwell next week. bloomberg has learned tesla is set to ramp up output at its factory in shanghai. the goal is to double its original target to one million cars a year. hoping to find the next steph curry in the annual nba draft. teams are looking at africa, where the nba started a league and a new generation of stars. london has the top pick in this year's draft.

global news 24 hours a day, on air and on "bloomberg quicktake." powered by more than 2,700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

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tom: good morning. maria tadeo in brussels, now as the baltic states consider ukraine as they consider russia, a conversation with a president of lithuania. maria: let's go straight with the president of lithuania. from day one, you said russia is a threat to european security. ukraine has to win. we need to see nato troops deployed in big numbers on the eastern flank, i want to ask you about a delicate situation for you as i appreciate you taking the time today.

when you look at the map, it is between lithuania, poland, but it belongs to the russian federation and the russian federation accuses your country of blocking transport from the russian federation to: a grad -- to the city. are you concerned? >> manipulation, disinformation, fretting, it comes very often. you've got use to have this dangerous neighbor. this is nothing special. i want to say that, the issue we are talking, this is not bilateral issue between lithuania and russia. i would like to remind you that in march, the european council decided on the fourth package of sanctions, which include

federalist naturals, iron, steel, and luxury goods. lithuania just implementing those sanctions, according to the rules and prescriptions of european condition. behind the situation, we have to apply those sanctions. this creates some tension between lithuania and russia, but they think russia is acting disproportionately. they are trying to use this opportunity to blow the propaganda bubble. maria: when you say it is a propaganda bubble, what specifically? they say you are -- what is the propaganda putin is trying to put out? a belligerent action.

pres. nauseda: if we are talking about non-sanctioned goods, we are talking about passengers. they see movement between the territory of russian mainland and the region through the territory of lithuania. now, we are talking about this concrete group and we need precise setting of physical features and figure out how we can apply this full package of sanctions, and we are waiting for european commission's explanation. maria: ever since the war started, is putting on your mind, the idea that lithuania, this is an existential threat potentially to you? pres. nauseda: we are concentrated on our economic

progress, prosperity of our people. we do not have the time to think of -- all the time about vladimir putin. we understand the situation in the east, part of europe, is dangerous. we strongly condemn this war against ukraine. we are keen supporter of ukraine, trying to help them by all means, military means, economically, humanitarian means, and of course, political. this is the reason why lithuania has enthusiastic support of candidate -- granting candidate status to ukraine, i hope very much, i am looking forward, it will happen this evening. maria: you have said ukraine has to win because it is the right thing, but if it it's defeated by russia, the repercussions of that could be a norm is for

your. what do you mean, and what does victory of ukraine need for you? pres. nauseda: the victory of ukraine means the victory of historic truth. they are fighting for their freedom, for their right of the people of the country to decide about the future, about their destiny. nobody else, especially external forces, can decide what ukraine have to do and where they should go. ukraine is, i am fully convinced, ukraine is european nation. they prove every day by fighting against the aggressor that they defend european values, they defend democratic values. they are fighting not only for their freedom, they are fighting

for our freedom, for the freedom of european union, too. maria: next week, there is a nato meeting. you said we need more troops here, the eastern flank needs to be a priority. this is not just about china, russia is an equal threat. what are you going to tell the president of the united states? pres. nauseda: this is important to hear. what is happening in the eastern flank of nato. we see the security issue is becoming more and more important , the threats are becoming fast. maria: is it an economic war? pres. nauseda: i do not want to talk about the theoretical, but we have to spend much more attention to the security of the eastern flank in order to make factors as much -- as much

effective as possible. this is very important not to throw our willingness in case of aggression. but, to show we are ready to increasing number of troops, to increase the military in our country, and switch to the current air policing regime to air defense regime. i am looking forward that conclusion text of nato, it will be suitable to operate, to work with the leading country of our esp troops in lithuania, namely germany. i find the community, the german chancellor, olaf scholz. according to this communicator, germany is committed can -- committed to sending additional troops to scale up military

presence in lithuania. this is important to scale up the military presence of other countries in baltic countries. maria: thank you for your time. we appreciate you. you mentioned, peace is not going to work with russia. tom: thank you, maria taddeo and a conversation i never framed in my lifetime. i never thought we would hear that kind of tone, those statements from a number of the baltic states. balance of power drives forward. the conversation on the virginia state. this is bloomberg. good morning. ♪

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joe: from new york city for our >> from new york city for our audience worldwide, i am lisa abramowicz. 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. lisa: we begin with the big issue, forecasting the fed's next move. >> i don't think there was really anything new in chair

'