♪ >> the fed keeps going 75 basis points for an indefinite period, we will have a recession soon. >> the fed may need to slow down its rate hikes sooner then

later. >> it's not yet time for the fed to say they've accomplished their mission. >> what we want here is monetary and financial conditions to tighten. >> we are not looking for an imminent recession, we are looking for a notable slowdown. >> this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. tom: good morning, everyone. jonathan ferro, lisa abramowicz and tom keene today from washington. we welcome all of you worldwide. in this hour, we will speak to members of the white house staff. but in this hour also, we will digest a change in the united kingdom. jon, truly an historic day for your united kingdom. jonathan: 30 minutes ago, boris johnson standing outside number 10 downing street approached the podium, straight out the gate announced his resignation. what we did not hear, the timetable for the leadership transition. we may get that next week. tom: it's a world of disarray,

we make jokes about it. what is the next process within the parliamentary system? jonathan: ultimately, the conservatives, and pete's have got to work out who they are going to put forward to the conservative membership, to make a decision who's going to be the next leader. you're going to go 3.1, 7.2, you get a vote from the conservative membership. we have a prime minister to leave that party with a majority in the house of commons. that's when the pressure will build to announce an election. a few steps before we get there, tom. tom: we are going to get to a data check and a good conversation with patrick armstrong. the backdrop of this that we will hear from the white house in the next hour is inflation. it's nothing like what boris johnson sees in his united kingdom. jonathan: similar headline numbers, but ultimately -- why is it different for this president? he faces midterms at the end of the year for his party, who are going to, at this point, if the

numbers stay where they are, they are going to be in a little bit of trouble. do they have to at least give up some of their foreign policy goals to achieve something domestically. number one for me -- tom: i don't understand how they achieve something domestically. jonathan: number one for me is china. this is a government that has accused the communist party of genocide. there has been reports over the last several months this president, this administration is considering removing some of those chinese tariffs. how do you make that palatable at home when you are accusing these very same people of genocide? this is a report that potentially you remove some of the tariffs on goods, some, and then you double down on the effort elsewhere. we need to work out the nuances, whether they are going to do anything. how many things have you heard in the newspaper, the washington post, the new york times, here at bloomberg, little things

getting floated here and there, a rebate cut, perhaps asking the saudis to do something to cut output, removing chinese tariffs and all of the above? piece after piece. but how many things have you seen that have actually been -- tom: these are what we call travelers. they are boosting like fireworks on the fourth of july. those are trial balloons, trial by theory and practice, its original right now. that comes back to jobs day, which we will see tomorrow. claims coming up in this hour with the michael mckee. that is the one trial balloon for every politician going back to gladstone in the united kingdom and lincoln in the united states, it's about jobs, and it's a fully employed america. jonathan: look at that number, 2 68 is the estimate, nonfarm payrolls.

with those kind of numbers in this labor market, for that reason, this federal reserve is meant to stick with it, stick with it for quite a while. tom: citigroup led by going [indiscernible] is that a frontloading 75? jonathan: perhaps he gradually comes back to say 50, then 25. there are banks that still believe they can get fed funds to four. tom: we are going to dive into some of the details. for me, it's further inversion. the quite headline is an equity market that is on bid, it's a quiet on bid. that's why anthony dreyer was fascinating talking about you've got to find where you step in to a summer rally. jonathan: we've had three days of gains, this will be day four. these are small moves in the

context of what we have seen so far this year. bpi july 13, then onto earnings season. jp morgan kicking things off unofficially. the earnings will be the difference between what we get in the back half of this year, morelos is still to come, or resilient earnings -- more losses still to come, or resilient earnings. with jp morgan bullish. you've got morgan stanley much less so. tom: helping us out this morning, patrick armstrong joins us, the chief investment officer. patrick, we have seen a political crisis this morning. can you help me with how you adapt and adjust to the bet in stocks and bonds in the united kingdom? patrick: i think it's almost a nonevent in the big picture because of what's happening today in the united kingdom, it's driven by global events. and domestic policy is almost impotent, given the backdrop of what we are facing globally. i don't think there's any

populist place that can get floating a big regime change, basically. we are going to get a new conservative leader who is probably a little more strategic, less tactical, that will focus on some of the longer-term issues that need addressing. but i don't think anything changes wholesale, other than we get a bit of a steadier and one who is a little less blundering. i think boris johnson would have been a very good prime minister in a lot of circumstances but he's faced an incredibly challenging time as well. jonathan: as we work our way through summer in washington, i want you to take me out to winter in europe, if you can. can you give us an idea of what we should be anticipating with this economy this coming winter? patrick: it's going to come down to russian gas supplies and if there are any. it's a very steep manufacturing recession in germany if russian gas does not get into europe and if there's prices like the electricity forwards are in europe. you are intercession right now

in europe and i don't think that changes anytime soon. winter is when things are going to be worse. it's very difficult to imagine a scenario where you do get, energy electricity back on very quickly. tom: this is so, so important. i want to bring you into this as well. how do you have a recession policy in any area, let's pick on christine lagarde's europe, if you are a fragmentation study? it's nonsensical? . jonathan: you've touched on the heart of the problem. if we are in recession in europe right now and it could get worse later this year, how is the ecb going to hike interest rates into that story? patrick: i think they have to get to zero as quickly as they can and then they are sitting on their hands. i don't think going back to negative interest rates will get the european economy out of the recession they are in any way. but just getting towards zero and then the hiking cycle lagarde of the two in her last meetings, it's not going to happen, if i'm right.

that's going to lead to job losses as well as of germany. tom: the president, through the cacophony, can you acquire shares today? can you be optimistic about buying quality blue-chip stocks? patrick: i think you can. because my view is that the fed blinks, the u.s. might not be in a recession, it may be on the cusp of a recession. as the fed sees its interest rate hikes pushing the u.s. into recession, i don't think powell has any intention to create a big jump in job losses that would basically get rid of the inflation is worried about. i think as long as inflation is plateauing, which i think it is, i do think the fed can ease off on things and not get anywhere near levels that -- is that. job growth is slowing. demand led inflation is slowing. inflation persisting significantly above the fed targets is where i think we are going to get.

i think that's a bullish thing for markets. i actually think china is going to have a really strong second half. at some point, there will declare victory uncovered, this 0 -- on covid, this zero covid policy, they are going to have to say we don't need this anymore. that's something people are not ready for right now. those are both positives. you combine that with very negative investor sentiment and you can see a sustainable rally from those three things. jonathan: i want to pick up on two of them. one is china. i've got no idea what the chinese communist party are going to. you've got to put money to work. on the federal reserve, you said the fed will blink. can you give me a deeper understanding of what will the trigger be, what will be the trigger for this fact that you think will blink? patrick: i think it will be an acknowledgment of the economic realities that the country is facing. as job growth slows, you've got unemployment at 3.6%, wage growth at 5.2%, it's hard to

imagine a significant recession because 70% of u.s. economies consumption and americans are fully employed, they are getting pay rises. if that does start to weaken, i think the fed, as long as inflation has plateaued and comes down a couple months in a row, still incredibly elevated levels, i think they start to slow, saying our policies are already starting to take effect. and they kind of think in a global context as well that if europe gets to zero and is not hike, the relative hiking they are due is still creating a very strong dollar, which is going to reduce inflation for them as well. jonathan: patrick, good to catch up. patrick armstrong of paris me wealth. -- plurimi wealth. how many times have you brought that up now, china? tom: i believe in this, i believe in a pacific rim recovery. jay polaski who appears on your 9:00 property, he doesn't appear with me, because he loves to appear with you, i don't know

what that's about. for radio, for television worldwide, it's a summer book reading, folks, summer book reading for you on john hayes. that's my book of the summer. jonathan: coming up, heather boucher. in the next couple of hours on "bloomberg surveillance." ♪ >> keeping you up to date with news from around the world with the first word. it's official, boris johnson has now resigned but the british prime minister is not going away yet. in a speech outside number 10 downing street, johnson said he would stay on as a caretaker leader into a new prime minster is in place. a timetable for the process will be announced next week. johnson said he spent the last few days arguing unsuccessfully that it would be wrong to have a change of government. fbi director christopher wray as escalating a dispute between the u.s. and china over hacking.

wray warned western companies that china aims to ransack their intellectual property so it can eventually dominate key industries. he told an event in london that chinese spies are snooping on everything from fortune hundred companies to test a forecast indicates that last month, u.s. employers added diffuse jobs and more than a but economists say the slowdown is not concerning, at least not yet. to jobs report comes out frederick. it's expected to show the unemployment rate remaining at a historically low-level and another month of solid wage growth. the u.s. and its allies are exploring ways to limit russian oil revenues without hurting their own economies. they are going to try to cap the price between $40 and about $60 a barrel. global news 24 hours a day, on-air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. ♪ i am ritika gupta. this is bloomberg. ♪

♪ >> this prime minister who thinks he's the president has caused untold damage. the brexit situation but doing brinksmanship with the eu over northern ireland was huge.

it undermines trust, it undermines certainty for investment, it shows how damaging brexit is. jonathan:jonathan: that was adam posen, the peterson institute president. an hour ago, we heard from the british prime minister, boris johnson, prime minister no more. in our future, a new prime minister. we don't know the timeline for this leadership handover, if you want to call it that. the prime minister suggested in the last 45 minutes we will find out next week. tom: he said we will find out next week, we got to get to the weekend. they don't do sunday talk shows in london. how do you get to next week? what are they going to talk about? how do you get to next week? i don't see it. jonathan: we've got to game out for the next prime minister is, when, if we get an election this year, next year, no idea when. tom: this is a really serious moment for this nation. jonathan: serious moment for

this nation. for the rest of the world, do they bat an eyelid. tom: its theater. jonathan: when it comes to the hierarchy of issues, this does not future. tom: we do this with two guests from the white house. annmarie hordern is with us. you are in washington. for those of you on radio, one of the truly great visitors of washington, the hotel overlooking lafayette park, the white house and onto the washington monument, the jefferson memorial. lizzy burden is solely and singularly in a somber 10 downing street. what is next for prime minister johnson? lizzy: he said he's going to stay on as a caretaker. there will be a leadership contest later in the year and the timetable is going to be set up for that next week.

you are asking whether boris johnson could even survive as a caretaker. let me read you a tweet from dominic cummings, has former aide. . he said we are in for a nightmare if he's allowed to squat and number 10. he says he blames everyone else, sets up a betrayal story future telegraph columns and former jobs. the pressure will really be on boris johnson. there were many people who would have preferred his deputy p.m., dominic raab, to have taken over as caretaker. tom: how will the labour party respond? lizzy: they could call a vote of no-confidence in parliament. but of course, it would take the conservatives to get on board with it, to have the numbers to oust johnson that way.

the conservative mp's will be hoping that enough of them can get behind a new leader. even if they pick a new leader by october, that person will only have 14 months before a general election to get a new gender together. they are going to have a difficult time as well. jonathan: wonderful to catch up with you outside number 10 downing street. lizzy burden. annmarie, how many times have you seen this movie now and the united kingdom? is this a sequel? annmarie: this is a sequel. when i moved to the u.k., the big thing was the scottish referendum, then of course it was cameron's referendum, brexit, and now this. and even the context in 2016 for who's going to be the prime minister was really combative. as you say, it's a different situation, the conservatism of the party, not much exactly changes, but who's going to leave that?

it's anybody's guess. jonathan: there's going to be a leadership contest, potentially an election, i have no idea when. there will be an election later this year, a series of elections right here in this country. what does this white house need to? what can they do? perhaps that's the most important question ahead of midterms. annmarie: they need to bring inflation down and that's difficult. they are putting all this pressure on the fed to do it. what they do have in their favor and they like to tout is strong growth, low unemployment. all of that potentially could start to diminish and inflation can still be high. gasoline and food prices. tom: i will dollar be a question, particularly with two guests coming up from the white house. described in the white house the advisory around the president and then the experts that he has on economics or energy or on other matters of public policy. is it such chaos that they cannot be heard?

annmarie: what you have is a very tightknit group close to the president, obviously has chief of staff, ron klain, brian deese, who you will be catching up with, looking forward to that conversation. you have the experts like treasury secretary janet yellen, who we've written how she's been almost ostracized and almost comes in -- only comes in when she's invited. jonathan: can we sit on that for a moment? you have got one of the most remarkable labor market economists on the plan, who has taken a job she was resisting. she takes that position and is not part of the conversation in a big way in the white house? annmarie: that is the reporting, yes. she does not have, like, the political acumen that you would normally get from a treasury secretary. she's not going to walk out of the department and into the west wing and demand a meeting with the president.

she's going to wait until she's asked to give her opinion and they don't always ask for her opinion. jonathan: who did they think they were hiring? annmarie: well, that's exactly the greatest question, because you can see in her public display, she's still very much a fed chair almost. she's not a political creature of washington, she's an intellectual and she is a fed chair. tom: what is the power of the progressives are now? certainly, they had a very strong 100 days with the president, even taking it further than that. . is there a nuance there and recalibration? the liberals that they speak to the president, what's the new calibration? annmarie: depends on the issues. when you look at things like energy, the progressives are not winning. this administration and democrats need more fossil fuels on the market. they need to bring gasoline prices down because the most vulnerable are suffering. you look at an issue like roe v. wade, the progressives say this white house is not doing enough. the president said he would back

a filibuster. you had liberals and some democrats saying you could do more, allow abortions on federal land. of course, they will not do that. jonathan: annmarie hordern, thank you. what can they do? i think that's the more important question when it comes to inflation. tom: they can look at the calendar, that's the number one thing they can do. the calendar is moving very fast for president biden. jonathan: coming up, heather boucher of the council of economic advisors and brian deese of the national economic council, the director will be joining us in the next hour. we will catch up with both of them. with tom keene, i'm jonathan ferro. lisa abramowicz enjoying her vacation. she will be back next week. if you just positive. this is bloomberg. ♪

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♪ jonathan: live from washington, d.c. this morning. moments away from economic data in the united states of america, jobless claims right around the corner, then onto tomorrow with payrolls friday. looking for 260,000 jobs in america for the month of june. let's get straight to. good morning. >> first breaking date is trade,

the trade balance comes in in may at -$85 billion. that is a little bit worse in terms of gdp. now, the jobless claims numbers, 235,000 elastic, that's just a touch -- the last week, that's just a touch up from the 231,000 initially reported the week before. it is continuing the trend higher. that is going to be a bit of a worry for the administration and for the federal reserve, because the jobless claims numbers are sort of the canary in the coal mine. we don't see recession unless jobless claims rises significantly. and so, they are not rising significantly but they are rising and that's been a trend for a couple of months now. jonathan: typically, when they start to do that and do that excessively, it is too late, it is too late and the canary is long gone. can you tell me what this fed

will actually be responding to? >> well, they are just going to put it all together. it's not going to be anyone indicator. we get jobs tomorrow. we will see where we are with participation and unemployment. they don't follow the cpa for their mandate, but they will take a lot of information about where inflation is going. to have got to figure it all out. as you say, once the data starts showing we have a problem, it's too late. they've got to see what it's trying to tell them about what's going to. the hard thing about jobless claims in this situation is that they have been so low for so long in a way that we had not seen before, except for the spike during the pandemic, that it isn't clear exactly what the signal is, what would be a normal level for this time. tom: michael mckee, standing here in washington from the economic policy institute, to say the brookings institution, or over something like heritage, more conservative, can those

three think tanks say it's a fully employed america? >> i think there's no question it's a fully employed america. we are still looking for 11 million jobs, according to the report yesterday. the ism services number was interesting because it was in negative territory, 47, which should suggest contraction. the problem was that they cannot find the workers. it's not that they don't want to add, is that there are not people to work at this point. we don't really know where the natural rate of unemployment is. the fed thinks it's in the low 4's, so they are sort of aiming for that as perhaps where they end up as they continue tightening. we will have to wait to see when unemployment starts to go up to see if they change their minds or put any more precise prediction on. jonathan: looking forward to your coverage of payrolls friday tomorrow morning, 8:30 eastern time. that clashes with the tennis, i think. doesn't rafa play?

tom: who? jonathan: i'm going to pretend that didn't happen. on the s&p 500, we are positive. he knows who rafa. on the back of today, we could have day four. this is the bounce back we've gotten treasuries, approaching 3%. that curve still inverted. tom: there is a trend as well. oil, $99.59 i think is front and center as we speak to the white house and a mom. we welcome all of you in washington today, jon ferro and tom keene, lisa abramowicz is off. we drive forward the conversation on a fully employed america and the mystery of these times and labor, stephanie harrington, brookings institution, it went down one hallway, you had a shingles in ben bernanke and a shingles that

fit yellen as well. what was it like for you to wander in our daily basis and have a cup of coffee with them? >> i'd had the opportunity to work with both of them when i worked at the federal reserve. and then, to see them in this context was really a treat. i once was at a talk where bernanke, once said i announced him, introduced him at the conference and he said stephanie used to work for me and now i work for stephanie, so. tom: the claim of secretary yellen is this word slack, the inefficiencies in the american economy. many in society, including those that support president biden, would say that is still slack in our labor economy. is there? >> i think by some measures, there is some slack. in particular,, the labor force participation rate is still a bit low relative to where we would think, even given the fact that the trend in participation is going down. but unfortunately, now, the fed

also has to worry about inflation, so they can't make the labor market perfect at this point. jonathan: we were talking about getting back to where we were, getting back the employment to population ratio back to where we were. inflation has interrupted that ultimate objective. what has happened, do you think? there was a while, i was part of the conversation, is that the excess benefits we are sending to people that are keeping them out of the labor force? what do you think it is. mike mckee talking about the ism services yesterday. without a demand problem, we still have a supply problem. where are they? >> one of the things is that when the pandemic hit, a lot of people were forced to leave the force and then they made decisions that are keeping them out now. they go back to school, take care of their children, elderly parents. these decisions are sticky.

even though may there are more opportunities in the labor force now, people have just change their behavior in a way that is causing them not to look for employment now. it may be overtime, you know, if employment continues to expand, unemployment rate stays low, some of these people will be brought back into the labor force, but that would just take time. jonathan: how high does the price need to go to change that behavior? i'm not talking about information, i'm talking about wages. how high does that number knew to go? >> i think no one knows the number. but it's clear that workers in the united states are underpaid. they haven't had, you know, wage gains in real terms for decades. we are making out for some lost time now but it's clear we have not made up enough. tom: i got a ways to go here. i'm going to go to paul romer at nyu. executives now are salary and bonus and you would say over 15 years, they know they don't get that bonus if labor gets that

pay raise. as bullard would say, are we in a regime change not in labor and finally lower deciles can begin to catch up? >> that's certainly what it seems like in the wake of the pandemic. one of the big questions is whether that will persist as the economy slows. tom: but the basic observation, and we get tons of mail on this on the time, we cannot hire name the job, shortstops for the washington nationals, whatever. if that's the case, just pay them more. if you pay them more, do they show up? >> workers show up if you pay them more. and i agree. i think you have identified a big puzzle. it's often in surveys of businesses they say they cannot hire workers and then, you know, when the question comes to have you raised wages, they say no. what do they expect? tom: to me, it's generationally bizarre. jonathan: with this in mind,

what do you make of what the federal reserve is trying to achieve? >> they are trying to achieve something very difficult. it's not impossible. clearly, they need to slow the economy in order to bring down inflation. part of the problem is that a lot of the, you know, causes of inflation right now are on the supply side. the fed's tools are not really good for lowering oil prices or food prices, you know. all they can do try to slow demand. i think they will be difficult for them to do but it's certainly not impossible. jonathan: just bringing up their forecast for unemployment the bloomberg terminal, 3.7% for 2022, 2023, goes up to 3.9%, and then 4.1%. is that overly optimistic, some might say fanciful? what do you call it. >> i think they would have to be very lucky to achieve that. the truth is at times when the

fed has really wanted to bring down inflation, they have ended up causing a recession. and i don't expect if we do, you know, go that route, i don't expect it to be very deep. we are not looking at the volcker recession of the early 1980's or the great recession. i think it will be hard for them to substantially slow the economy. typically, when the unemployment rate rises like that, you are in a recession. tom: want to get a quote on the 10 year yield. we wander that. does someone fancy like you look at jobless claims? >> i think the jobless claims are not that helpful, i think. part of it is that a lot of the flow early on comes from firms stopping to hire. the first thing we are going to see if the labor market is cool, firms are going to reduce their hiring. jonathan: job openings. >> job openings should go down and we know the fed is counting on that. eventually, firms do start to laugh workers and the claims

numbers will go up. you know, we've seen a little bit of an increase, but i don't put too much weight on that. jonathan: 235, a bit of perspective, 235 historically,, tom not even population adjusted. tom: you adjust for population. what's your favorite chart for right now? what's the chart that tells the best story? >> i have to side with yelling and say i really like the quits. i think the quits rate says something about how confident workers are feeling in the economy. the quits rate is high. and in may, the latest data we have, it kind of went sideways. the confidence right now is still there. jonathan: they feel good about quitting their jobs. but ultimately, they are not happy about the economy. can you reconcile? tom: i go to a decile analysis. we should extend the show. each deciles different. jonathan: stephanie harrington, thank you. thank you very much. coming up, we will catch up with

heather boushey and then brian deese in the next hour. tom: it's a white house with tension right now. jonathan: i love the tension. coming up very shortly, heather boushey and brian deese from this administration. from washington, d.c., good morning. ♪ >> keeping you up to date with news from around the world, i am ritika gupta. boris johnson bowed to the inevitable today. he resigned as british prime minister after a succession of scandals and the rebellion of his own cabinet. johnson plans to stay on in a caretaker role until his conservative party picks a new leader. the timetable for that will come out next week. in china, the ministry of finance is considering whether to allow an unprecedented acceleration of infrastructure funding. it would be aimed at shoring up china's beleaguered economy. local governments would be allowed to sell 220 billion dollars of special bonds in the second half of the year. the bonds would be brought

forward from next year. a key commodities gauge has plummeted since reaching an all-time higher month ago. the bloomberg commodities spot index has lost more than 20% after setting the market june. prices for everything from gasoline to wheat is slumping on concerns that a stagnating economy will hurt demand. its the first indicator of just how much cash is flowing to the major oil companies due to the rising cost of gasoline. shell says they're storing margins for fuel production may have added more than $1 billion to the earnings of its refined business last quarter. oil prices have jumped 30% this year. and samsung electronics reporting a better-than-expected 21% jump in revenue that helped drive a rally in asian stocks today. samsung is south korea's largest company and it is also seen as a bellwether for electronic demand. global news 24 hours a day, on-air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ready to go up to. -- i am ritika gupta.

this is bloomberg. ♪ >> we simply have a very strong unemployment situation, a very strong labor market that's continuing to feel consumer spending, keeping the economy moving forward. real constraints out there on the supply side, of the see elevated inflation, but it is a more nuanced picture. jonathan: jared bernstein there, the white house council of economic advisers weighing in on the situation in the united states. tom making academia jokes, is that right, academic jokes? tom: yeah, we were talking about an academic institution far

south of manhattan. i never get below 59th street so i haven't been down there. it's where the more leftist universities are. jonathan: is that right? i'm going to get a quick check of the market. equity futures look like this on the s&p 500. we've had three days of gains on the s&p, can we make it four? market open about 45 minutes away. tom: we welcome all of you with two conversations from the white house as jon ferro and i visit washington. heather boushey with us right now. she's a member of the council of economic advisors. that does not. describe how important her position is. her book, "unbound" stopped economic traffic and number of years ago looking at the situation. she has an economic pedigree very different from most, including working at the university of how browner and bernstein, the new school of social research in washington. how are you treated by the fancy

academics from fancy schools that wouldn't know the new school of social research if it hit them over the head? heather: in economic circles, i think what matters is, you know, how we talk about the economy. i think i have not experienced discrimination based on my pedigree. tom: we are not going to talk about jobless claims, that's inappropriate right now. we can talk about the state of inequality in this nation. when you speak to the president, when you advise others in the white house, what is the character of our labor inequality right now? heather: one of the things we have seen since the president took office is in large part due to policies like the american rescue plan, making sure that we wrap our hands around the pandemic and got the job market back in motion. we have actually seen that this has been good for addressing inequality over the past, you know, over the past year, year and a half. what remains to be seen is whether or not we can continue those trends.

the president is focused first and foremost on getting people back to work. for the vast majority of americans, the vast majority of their income comes from their job. people have jobs, especially jobs where wages are rising, that is important. tom: so important. we are so jaded in our bloomberg world, if you are popping 200,000 or 300,000 jobs a month nonfarm payrolls for any president, that's a success. jonathan: the difference between wall street and main street is the diction to trading of headline numbers. i'm not talking about the disparity bonita those numbers -- beneath those numbers. the labor market estate. do characterize those two things quite the same way? heather: i think what we are looking at and certainly what the national economic council is looking at more generally -- certainly the council of economic advisors is looking at more generally, where do people have jobs, what his family security? consumer spending is 70% of gdp.

so making sure that we're attending to that basic fundamental fact. you know, the president has set it so many times now that his goal is to build an economy from the bottom up and middle out. that's a promise he has made to the american people and one that he is working each and every day to keep. jonathan: this is a difficult question to answer but i imagine you've done some research on this. when you look at incomes right now, particularly for lower income americans, what proportion of the are they spending on energy? how bad is it out there for the? heather: certainly. the high prices in energy and also food affect lower income families more so than higher income families because a big portion of their income is also money they have to spend. if you have to put gas in your car in order to get to your job, that's not something that you have a choice over. so, this is one of the reasons why the president has prioritized doing everything he can to get inflation down and to doing everything he can to get get prices down -- gas prices down, noting that we are here because we have been recovering

from a global pandemic that has led to supply-chain charges around the world. this inflation is global. you add to that the war in ukraine that proven is waging, all of these things are making a harder for especially moderate and low income americans. jonathan: what they can do is a question we have been asking all morning. what can you do? what can you do to actually offset any of this pain for americans are now? we've talked about the trial balloons floating outside the white house almost on a weekly basis. we've heard about a fuel rebate, removal of chinese tariffs. proposals that are not being executed on, at least i have not seen them. what can you do? heather: the president has been very clear in focusing on what he has control over. one of the things that he did early on that i think has been incredibly important is releasing oil from the strategic petroleum reserve, so working with our allies around the world, making sure that oil was available in this time of need when we do have these supply-side shortages. the president is also, over the

past couple weeks, been working with refiners. we know one of the challenges is that many refineries, to many shut down over the pandemic, capacity has been constrained. the president is working and has asked his energy secretary to work with suppliers, to see what they can do to get things flowing again. but also noting that because of high oil prices, because of high gas prices, these folks are making a lot of money so they have resources to make those investments. tom: down the hall from your office in the white house is a political, raging battle over how to take pennsylvania at the midterms, in 2024. all of that is about the rage of the middle class, either republican or democrat, over the inequalities which have written about in your acclaimed book, "about." how do we address in this nation the idea that technology benefits the haves, technology may be benefits of society, but technology burdens and lowers

the outcome standard of living for the great middle-class? how do we make technology a friend of people that want to vote democrat? heather: well, a number of the things that the president has focused on our about that. maybe your viewers don't quite see the connection. . let me outline it for them. one of them is early on, the president put out on all of government ever around market structure and competition. let's make sure that markets are fair and they deliver for the american people, including -- tom: this is important. there is a huge body of people of all political persuasions who feel it is rage, it is rigged here lafayette square, it is rigged and in a northwest district of washington as well. how do we regain the trust of the middle class that institutions can lead to a better life? heather: you do it by delivering. you think of some of the things the president has delivered on just in recent months, making sure that prices on ocean shipping are fair.

so many of the things that we buy come on a ship that comes from overseas. but that process has been circumscribed by a small number of firms. the president i using his tools to say let's make sure those prices that people are paying are fair. tom: is he blocked by republicans? heather: the executive branch does have a lot of power when it comes to enforcing antitrust laws. the president has made clear that that price fairness is the number one goal. that feeds to the whole economy. he's also prioritized making sure that if you are a worker in a market where there are few employers for your services, that those markets can be more fair, more open. i think that's one of the ways that you can see the role of technology in the kinds of algorithms that decide who's hired, who's fired, what pay is, these are the issues that the president is bringing to the fore. the other issue is allowing workers to join unions. that's one of the ways that we

address inequality, that we think about the economy can deliver for working people and how it can be fair and build that trust through democratic institutions on the ground. jonathan: i keep hearing that word fair. we have had this conversation before. it sometimes makes it sound like something nefarious is happening. the president over the weekend said this, my message to the company is running gas stations and setting prices at the pump is simple, this is a time of war and global peril, bring down the price to reject the cost you are paying for the product and do it now. jeff bezos came out and tweeted the following, i'm sure you've read it, inflation is far too important a problem for the white house to keep making statements like this. it's either misdirection or a deep misunderstanding of basic market dynamics. i want to talk about the form. where is that messaging coming from? heather: the president has made clear that is number one goal is delivering for the american people. we are in a time of crisis, we are in a time of war where the president and our allies, we are

supporting the ukrainian people. congress has engaged in this effort, both sides of the aisle, to say this is an important priority. one of the consequences is this high price of oil because of global trends. tom: you didn't answer his important question. everyone in the nation wants to know the answer to the question he has asked you. who is advising the president on shockingly naïve price theory over a gallon of gas? heather: the president is not shockingly naïve. we are in this moment of global crisis in terms of energy. he is using the tools at his disposal to make sure that the prices people pay at the pump are fair. in oil prices, the prices can rise very quickly. it can take a long time for prices to come back down. he's a saint that faster, you have the capacity to do so, you are making profit. he's using the tools at his disposal given this very

challenging situation. jonathan: central planning now? are we going to decide what's fair, what's not fair, go on twitter, say bring your prices down? is that markets are not markets, capitalism more central planning? where is this white house going? heather: one of the things that president has prioritized is understanding the way concentration across the markets affect emergent people, is affecting markets. we know this is econ 101. you know when there's monopolies that there is more price setting power. that's one of the things we know. jonathan: heather boushey on econ 101. fantastic to catch up with you, as always. brian deese coming up very shortly in the. next hour from washington. this bloomberg. >> welcome back to another special update from tennis channel. the second men's semifinal is set at wimbledon after wednesday's quarterfinals in london. rafael nadal plays through the pain barrier to reach the final

four for the 30th time at the majors. the spaniard received treatment for an abdominal injury and the second set but went on to take out taylor fritz in the fifth set breaker. nadal remarkably extending his went stricture 19-0 and is two wins away from completing the roland garros wimbledon double for the first time in his career. he will be facing the curio -- facing nick arias for a spot in the final. victory against nadal would put him in his first grand slam championship match. but he trails the two time champ 6-3 heading into friday's blockbuster. ♪

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♪ vo: music can help you express how you're feeling. when you can't find the language, find the lyrics.

♪ >> this is an extended addition of "bloomberg surveillance." with tom keene, jonathan ferro and lisa abramowicz.