>> the fed is thinking about inflation. they are thinking about a pre- march 8 world. what is the market to in response to that? >> the biggest source of error is for the fed to worry about what is happening to a couple of bad banks. >> i think we are in this environment for some time. >> this is bloomberg surveillance with john team, jonathan arrow and lisa abramowicz. tom: good morning, everyone. a monday before a jobs report, a monday about equities, bonds, currencies and oil. opec with a bit of a surprise. lisa: a sudden surprise move out of their meeting today talking

about possibly cutting production by one million barrels or more. in response to a lack of demand, clearly they have a price point that is very different from joe biden's. tom: 69 on west texas intermediate. edward morris of citigroup says there can be a price overshoot right now. lisa: here's the question --how much does this reduce the narrative we heard about disinflation driven in part by the commodities sector in the face of slower growth? how much can they unilaterally change that narrative at a time when this administration is basically said in the u.s. we can no longer refill our spr in response to prices that are probably potentially going to overshoot to the upside? tom: he was previously booked

and now he has something to really talk about. over the weekend, your bond observation? lisa: there still is a big divide between the bulls and the bears. the opec-plus narrative changed the game just a touch and you are seeing a selloff the treasuries, people reimagining what it means for the fed. if you end up with a stickier, commodity-driven story, how much can they push back against rate hikes? tom: there you go. you nailed it. you follow the parlor game. are we still talking about cutting interest rates? i thought guest after guest after guest last week said maybe not. lisa: maybe not, but it is still priced into the market. there is a rate that is priced in by january which still implies quite a few rate cuts. this is the problem. if you have sticky inflation and growth flowing, how does the fed response to that when you know

job cuts tend to percolate and have longer-lasting consequences? tom: australia grand prix about 1:00. three red flags. ferro was destroyed come appeared ghastly is thrown out of the next race. tom: that's the reason he is not here today. onto a data check, lisa is going to save us with a really monday brief. red and green on the screen. shows you that equity market, will that extend? we will do that in a moment. the bond market, police and i are both in agreement, to yield important. -- two-year yield important. oil front and center, brent crude 83.90. in a currency market, watching the euro-yen something of interest. we need a monday pre-jobs brief.

lisa: it really highlights how unique what we heard yesterday in terms of the opec-plus cut really is because it was before the meeting that we hear opec-plus is holding point hearing virtually. for them to make the move early without having casted, without having anyone expected really is what you are seeing any market today. tom: this is a chart lisa selected that the shows the resistance. i did some fancy math and i don't get a break until $90 per barrel. lisa: what about weakening demand if prices are elevated, as we saw last summer? perhaps we get a sense of what the fed's response might be.

this is the veil issue. how does the fed respond to something that is transitory? people are starting to see some easing on that front and then building on the manufacturing side. members actually -- the manufacturing recession is expected to get deeper. do we start to see some recovery around the edges? this is the problem with rolling recessions in different asset classes. if you get the manufacturing sector starting to recover, how does that make stickier inflation if you don't see the all-around klein altogether? tom: to me, this theory of recession, half the country is in recession. i just don't get the aggregate analysis of the. anecdotally, i talk to people

who are middle professional income and they are really struggling. they are not off on some fancy holidays with pack airplanes. lisa: inflation is a tax on the people who have the least disposable income to spend. tom: the head of u.s. equity strategy, over the weekend saying that the stock market is healing. we are all healing. how injured were we in how we healing? >> what happened is a shock with those companies in particular, there are a lot of people who knew those companies quite well prior to the most recent version of the tech bubble.

it was this unanticipated event and you had a lot of investors doing work, and what we know is that several indicators were already recovering. now, the brunt of the pain was obviously taken in the banks. but we saw over the past weeks is that the banks and small caps performance really stabilized. that's important because the banks of the problem child this crisis. if you look back 2002, the nasdaq 100 really started to stabilize and that is very different from of the banks to after the different bankruptcies and collapses. i think the market is telling you that investors are starting to exhale a bit even if they are not reading the yet.

tom: if i take three groups of mid-caps-small caps, i've got everybody else and i've got the trap of banks. where do i put new money today? do i by the banks as a value proposition, or are they trapped? >> i think time is going to tell. if you talk to gerard, there is some value being created, but we are trying to see the dust settle. if you look at small caps, banks are not the only things that were cheap. energy is very cheap. consumer discretionary was something else that really jumped out at us in recent months as being very undervalued in the small caps space, so it might be more of the time to be a stock ticker and small-cap as opposed to buying the index but i do think there is buying to be had especially if gdp data then

used to forecast a recovery in 2024. lisa: after some other banks really ran into trouble, and a lot of people said this is a game changer, quite significantly. is the news that we got over the weekend similar? >> it's interesting, i was thinking about that this morning in regards the lesion narrative. i think that they are sort of upsetting forces with one another in terms of the nation debate right now. we obviously saw interest rate expectations ratchet down. now you might see those coming back up probably not the same degree, but if you put those aside, i'm not sure there has been a lot of change in terms of other issues right now on the nation debate. we know the services sector is weakening. we know that cfos from the duke survey last week are talking about prices and wage growth both coming down this year and

next year. the optimism is really waning. at the like the sources of inflation are generally on the mend. now we've got these two other big issues offsetting each other. i'm not sure i would call each of them a game changer. tom: at the beginning of the second quarter, is your 12 month lift and equities? >> we've still got our year-end target, still 4100. we feel like that is a nice case and here we have this work, we suggested there could be some upset. to really get down with that, you have to assume that there is a recession that leads into 2024 and i don't a case has been made for that yet. tom: thank you so much. lisa, we've got to do the levels on equity here. 4100 as lori talks about. i can't believe i'm saying this,

the dow is halfway to 34,000. i did not expect that. nasdaq, well over 13,000. that is how you end able market. is it an official bull market? lisa: it was certainly when it came to the tech stocks although a lot of people are sticking with the narrative over the weekend basically saying that there is more to fall with tech, tech should not act as a stable or something that is somehow a stock. we see little evidence that a market has begun. just giving you a sense of where he is at. he also talked about the idea that perhaps were buying tech because they thought that the expansion in the fed balance sheet was somehow stimulative for risk assets. a dynamic we don't ultimately believed to be the case. tom: i love that, literally

wrote the textbook. his october low, i was surprised by this. spx, not apple, not the rest, only up 13.9%. that is not a market yet. lisa: and check out medic, that is a bull market. and how long can they keep running? tom: the rolling plague here at bloomberg surveillance, i'm getting over it. we are protecting bramo, she is in a hermetically sealed capsule this morning. stay with us. good morning, this is bloomberg. ♪ >> keeping you up-to-date with news from around the world. the price of oil jumped today after opec-plus announced case of rice production cut of more than one million barrels per day. the coalition abandon previous assurances that it would hold my study. saudi arabia led the cartel by its own reduction.

the white house called the cut back ill advised. cutting the workforce by up to 30% after completing the takeover of credit suisse. that is according to a swiss newspaper. the paper said as many as 11,000 ways will be laid off in switzerland and another 25,000 wide. meanwhile, swiss prosecutors are gathering evidence is the possible terminal investigation into the deal. the u.s. and japan have begun naval exercises off the coast of the peninsula, sure to anger north korea. the anti-submarine and rescue maneuvers started today including vessels from a u.s. aircraft carrier group. donald trump's lawyer says he will plead not guilty when he appears in court in manhattan on tuesday. the former president will also look to have the case dismissed. he was indicted on thursday but the exact charges remain sealed. a grand jury was investigating

his role in hush money payments made to porn star stormy daniels. and endeavor is near a deal to buy world wrestling entertainment. bloomberg has learned the transaction would have enterprise value of about $9 billion. endeavor has been pursuing wwe for the past few months and wants to combine the wrestling league with his ultimate fighting championship. i'm lisa mateo and this is bloomberg. get your projects done right. inside, outside, big or small, angi helps you find the right so for whatever you need done. with angi, you can connect with and see ratings and reviews. just search or scroll to see upf on hundreds of projects. and when you book and pay throug you're covered by our happiness it's easy to make your home an a check out angi.com today. angi... and done.

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♪ >> he's gearing up for a battle.

this is something that obviously we believe is a political persecution and i think people on both sides of the aisle believe that and it is a can abuse of power. he is a tough guy, as you know, someone who is going to be ready for this fight. this is just the beginning. tom: lawyer up. that is of course what mr. trump did early in 2023. lloyd former president, he is legit brooklyn prosecutor, has handle all sorts of celebrities, maybe one most accessible of the alex rodriguez on certain matters. but this is the hardness prosecutor that the former president has been looking for. lisa: the issue here is what does this do in terms of changing the race for the republicans, on a policy front, and how disruptive is this? new york city are gearing up for

potential disruptions but also on a larger scale when it comes to bringing the president back in front and center. tom: we're going to avoid the frenzy of the next 48 hours or what we believe the next 48 hours. the former president private airplane is an florida in the early morning light of florida, maybe waiting to transport him today up to new york, we will see how that goes. we are not going to follow the plane all the way and do all the rest of that so much of the rest of the media is going to do. but what we are going to do is get perspective. terry haynes is the founder of pangea policy. i want to get right to this. we will do the data check at the end. i was thunderstruck over the weekend at what we heard from greg early, which is the tentativeness of everyone on all sides of this indictment debate

over the future path for the prosecutors. i've never witnessed such an uncertain legal process. is that true? >> well, what we've got here is a situation where i think there is a weak case to be made, and they are going to turn it up as they possibly can to try to get something going. there is a lot of analysis here that goes through pe arl-clutching but also provide a little perspective, as you suggest. the idea that a new york city developer might be involved in payments is shocking and we should all be amazed at that. by and large, but you've got here is you've got people saying that this process is flawed and in overreach. that frankly has little to do

with the amount of support that trump gets within the republican party or outside of it. it has everything to do with folks attacking the political motivation, which 60% cs political motivation for your recent polls, and 67% think his payment was a personal expense. tom: help me here, and i want to be as apolitical as we can. james rubin old in the washington post hearkened back to 1920 and warren harding. he was going to be on mount rushmore but that didn't work out. warren harding presidency. i mentioned wilbur mills. i think it was on friday. what changed? what changed from 192010 1974 to 2023? >> what changed and changed back

is two things, really. the willingness of the media to sensationalize things which waxes and wanes over the decade, different media and all the rest, and secondly, frankly have savvy the average american is about politics. and they are a good deal more savvy than most polling indicates. you've got this big split where for media, present company excepted, what we've got here is a situation where there is a huge amount of pearl-clutching were at the same time, the country has seen eight or nine years of the trump show and frankly they are tired of that probably benefits people outside of the trump orbit. lisa: so let's move on from it because we've been looking right now at the story of plus coming out with a surprise cut of one million or more barrels of oil this raises the question of what

the administration is to at a time when they should be refilling your said that they would be read petroleum reserve. what is the policy response from washington to this? >> the policy response is awfully outdated. the response was awfully sniffy, but without substance. the risk that the president runs is getting overwhelmed by that. you got a situation where you've got a ukrainian stalemate, no path out of that. you've got the afghanistan withdrawal. you've got the saudi's and others being responsible for some increase in oil prices. that hits us at a weak moment as you rightly point out. you've got the looming iranian-north korea difficulties, and you've got china front and you got china

front-end center. on top of that now, you've got a reinvigorated wish and risk led by gasoline prices. that is a pretty toxics of chemicals. >> do you feel like the sense in washington was that this was lewdly motivated hit any legally vulnerable moment with respect to getting oil prices higher? >> absolutely. the focus on the saudi's to the exclusion of the rest of the middle east presents two kinds of problems. one is how that runs into opec-plus and gasoline. the other half of this is less appreciated, which is that other countries around the middle east feel like the united states focused on saudi which denigrates them and makes broader, good relations in the

middle east more difficult rather than less difficult if you combine that with the arab world. you can combine that with the critique of israel. what you see is an administration that is dictating terms when they are in no position to dictate. tom: thank you so much. we got lucky, we booked ed morris just a couple days ago, he brought us in opec-plus announcement. lisa: so we can blame him? tom: i don't know about bad, but it makes for good theater. lisa: i really like what halima croft had to say. she said the fed is not the only central banker in town and monetary policy is not the only policy being tweaked here on all sides. there's also oil policy as a huge geopolitical tool.

tom: what she said it was great, this is as much about the saudis and that they have new friends, clearly alluding to the visit with china. of course, the long-term trend with russia as well. it will be great to talk to him about that. lisa: to be coming after the more than 5% decline last quarter, we are starting a new quarter with a new narrative on the margins. it really raises a question about how much people have to rip up the script and how much they have to stick with what they know. tom: but the heart of the matter , lots of economic data through to the jobs report on friday. we will go beneath the data as we always do with a great lineup, but i love your idea of -- is this a continuation of the shock and surprise of order, or is it a new narrative?

i'm clearly in the camp it is a new narrative. we see met with deposit flows. lisa:lisa: i think it is fair to say it is a new narrative because if you blinked, they will be another new narrative down the pike. but there is a feeling that this opec-plus decision was actually quite significant in that it indicated a willingness to really take action. tom: lots going on, a must-listen for wall street, this is "bloomberg surveillance."

♪ tom: lisa abramowicz and tom keene, good morning to all of you. jonathan ferro on assignment after a late night australian grand prix. we are getting a market check, we are so fired up we misted the last time around. red and green, the screen right now. 20,000, showing the enthusiasm. it is not really a drama number. lisa: it is not the level, it is the direction. people are starting on the margins to rethink a rate cut cycle that they were priced in previously because of potentially higher oil for longer. tom: i'm sorry, the 10 year real yield gets my attention as we can press down. it is sort of a grind, not very romantic.

1.19 percent gets my attention. then i go over with oil making a splash today, no pun intended. that would be stunning if europe breaks out stronger versus a surprisingly we yen -- weak yen. lisa: i got that, he wanted to get to the mets and how they won. tom: i watched the mets of the first time since 1986 and this japanese guy, he is phenomenal. he was almost in tears when he came off the mound. lisa: congratulations on not watching the mets from 1986 until now. tom: dan kelly is like way, you are a red sox fan, why are you watching the mets? it was fun, they were very good. lisa: that happens every couple of decades. it is really going to be interesting to see. i just want to go back for a second because we see more than

a 5% pop in crude and at one point, more than 8%. this comes after a quarter of losses at the fed is trying to figure out how to handle this david kelly of jp morgan on the disinflationary camp talking about possibly upcoming data continuing to show moderation, inflation. maybe just enough to keep the fed from titan on may 3. slow growth and moderate inflation looks very likely as those fed easing and lower long-term interest rates. the disinflation can't, do oil prices change that? tom: time will tell. i think it is the magnitude of the price move. i need 90 to get excited, if you will. some huge leadership on the case to get to $100 per barrel and make sure it is there this morning.

what we can do in april is get a brief into the second quarter. we do that with david kelly. good morning. i want to cut to the rewrite of your outlook for the year. everyone is doing this now. jon ferro, look for an out march 31. for you, it is a stunning statement. you are looking for negative job growth. some form of negative non-fund payrolls. how does that change our world? >> the federal reserve's themselves as far as i can tell because if you actually look at the forecast in the middle march and make some reasonable assumptions about growth, the unemployment forecast suggests a negative perils, perhaps losing 300,000, 400,000 jobs between march and the end of the year. i think it is likely. it is kind of like a really sunny day and you look at the weather forecast and there is this bad weather coming.

see this coming because we've got individual tax refunds, all of that, plus the credit tightening that is going to be particularly affecting the small business sector and that is going to slow the economy. higher oil prices push up the headline cpi number, but they are fundamentally disinflationary. they take money out of the hands of lower to middle income consumers and they will just spend less on other things. if i were in the federal reserve's position, i would not look at higher oil prices as a reason to get tighter. tom: mike wilson over at morgan stanley is an equity guy who is all economics this weekend. mike wilson says m2 growth is the lowest in 60 years, at least 60 years. the biden stimulus, you got this

massive shrinking down. the bottom line, how'd you for this new restriction into your equity market analysis? >> over those 60 years, that tells you something and after that, it doesn't tell you anything. tom: but it has cratered. >> well yes, as rates have gone up and people get better rates on other instruments outside of m2. but overall, the narrative -- the point is we are on the edge of something, not the edge of a cliff, the edge of a swamp. we are going to slowly slide into something pretty weak here, inflation is going to grind bloomberg, and we need to let this unfold. lisa: patience is something this market has none of. it won't be brought out

necessarily in the data. if the fed does not cut rates as much of the market is currently pricing, what is the outlook for risk assets? >> it is pay me now, pay me later. if the fed does not cut assets, we will have a more significant problem going into next year. there is going to be no fiscal stimulus into 2025 at the earliest and this economy is going to be gasping for air in 2024 because it is not going to have enough demand. the economy is going to be slowing and the fed is going to have to cut rates. if they decide to cover it a little earlier, that will ease the amount that they have to cut rates, but they don't have to cut them. tom: within negative, nonfarm payrolls? they are going to be under extraordinary political pressure. lisa: there's also going to be extraordinary weakness and this

has really been the distinction for 11 strategists talking about the potential for rate cuts. not necessarily being stimulative. coming off the heels of a great deal of weakness, you talk about lower long-term yield. how continue treasury yields go in a scenario where this is a swamp? >> i think there is a limit. i don't think we are talking about one handle. you can get 2.5, 3.5. at some stage in 2024. i hope the federal reserve is not going to resume the pattern of trying to get down to negative real rates. it doesn't work. they are going to get back down to a more normal level for the long run, assuming load missionary in the long run. lisa: so how do you really get enthusiastic about any risk assets when people are overly optimistic that they can kind of chug along, that we are not going to get negative payroll prints? >> they may be overly optimistic

on the real economy, swamp, u.s. companies make profits and swamps because they like it when it is a little bit soft, they can always argue with workers. they can find ways of cutting costs, they can restore margins. i think profitability will rise again. low rates underpin all the financial assets. but overall, low rates is really the key. tom: obviously negative payrolls april of 2020, march of 2020 in the pandemic shock. you have to go back to 2010 the last time the mets won, september of 2010 become of the last negative statistic on payrolls. lisa: but going back to 1986 they won the championship. >> you keep on saying that, i think they beat the red sox that

year. tom: oil can boyd put that orb in. it has never come down. it went over everett, massachusetts, last seen northeast -- >> stop it, this is painful. lisa: let's go back to the bread and butter as you talk about. it is odd to come out with a negative prognostication for the economy, but would be really constructive on risk assets to basically say this all paves the way for a pretty good return. >> but you could have said that at the start of this year also and we actually had a pretty good first quarter. bonds of about 3%. this is sort of the start of a new quarter for us. the second quarter guide to the market is a big production. when we look what happened in the first quarter, you could easily have that narrative, that market go down, but it didn't. i think people look at that and

they realize if inflation comes down, the uncertainty caused by some spiral of inflation is going away, and that is the single most important factor for financial markets. tom: where are you on cash right now? i got humbled last quarter. >> it is not a great long-term investment. when you get to peak cash rates, it is good, but you got to reinvest it. even though the cash deals are enticing, remember you will have to reinvested. tom: what you just heard is religioned, it is gospel. it is not getting out anywhere. it is wildly symmetric to me. which is brutal. david, thank you so much, really appreciate that. mohamed el-erian watching in england, he is very impressed. he is looking at the importance of the oil decision, looking at

the multi-credentialed analysis of oil that we will get from ed morris in a moment. also noticing that could icing the at a win for the mets -- lisa: i do wonder how many other looks forward get completely revised on the heels of what happened during the first few months of this year. honestly, this has been a tremendous roller coaster. we are poised for another one with a lot of disparate views. the take away, people are not shifting. they are hunkering down in their belief and saying either that the weather is going change and you guys are not buying enough canned goods, or you guys are not smelling the roses because the sun is still out. tom: still -10% one year trailing. dow jones, -4% one year trailing. nasdaq 100, -14% even with that bank up first quarter.

-- bangup first quarter. the healing quarter. a bull market victory. lisa: which is the reason why some people think that tech keeps rallying because it lost so much and now it is the year of efficiency with all of the job cuts and other people saying not so quickly, we haven't had a recession yet we don't know. tom: the conversation on the day from the news out of the middle east. ed morris on a path to $100 per barrel. stay with us. worldwide, this is "bloomberg surveillance." lisa m: keeping you up-to-date with newsom around the world, a surprising move from opec-plus as the coalition makes and oil production cut or than one million barrels per day. oil futures sore following the new inflation risk. saudi arabia lead by pledging its own 500,000 barrel per day supply reduction.

the white house and the cutbacks were ill-advised. former arkansas governor hi hut -- asa hutchinson is entering the race to the republican nomination for president. she has been critical of former president trump. he told abc that people want leaders who appealed to the best of america and not simply appealing to the worst instincts. in finland, the prime minister has lost to a pro-business opposition group in close parliamentary elections. the social democrats finished in place with the center-right national coalition declaring victory. that puts them on track to become prime minister. he is overseeing the finance, interior and ultra portfolios in two governments. record deliveries in the first quarter. still, the number fell short of the pace needed to meet elon musk's goal of 50% annual growth. the electric vehicle maker delivered almost four to 3000 cars accurate cut prices -- 423,000. ls isu the new champion of

women's college basketball. lsu's angel reset 15 points, 10 rebounds and was named the most outstanding player. it was her fourth national title, she won three others at baylor. this is bloomberg. ♪

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♪ >> when i see a supply shock like this, is going to destroy the world and that is going to feed into recession. i think in a way it is going to impact the yields with what immediately happens the demand

as a result of rising prices. tom: the news of the day. if you are just waking up across the nation, opec and saudi arabia whether leadership changed the dialogue right now, west texas up to 80, brent crude up to 84. a shock and a surprise as well. red and green on the screen right now, equities really not reacting lower off that. even bitcoin up 300. lisa, what is your data observation this morning? lisa: just the fact that you are seeing a lifting fields. the idea that perhaps this will pressure the fed to go further. david kelly saying the opposite, that it could potentially make them less restrictive because he believed higher oil prices inherently are disinflationary. tom: what we understand right

now is each and every strategist and economist on oil if and read wonderful on the microeconomic seven. francisco blanche at bank of america with a really holistic job. jeff curry over at goldman sachs. but there is no one, and i mean no one like edward morris who has combined academics with the global politics of hydrocarbons. you divide into weston suez canal and east of suez canal. i want you to talk about the power of this coalition around saudi arabia with the strata vermouth and onto the straight of singapore. what power do they hold? >> the power that they hold is the ability to cut and add on to the market and that is pretty incredible because as a group, they have shown capacity that is well over $2 million per day and

they are coming off revenue generation. tom: i literally have on my coffee table at home another firm's analysis to over $100 per barrel which centers on em recovery and china recovery. you were brilliant and calling for lower quay acid brent crude prices. do you need to reverse this morning and to begin to consider $100 per barrel oil? >> we are considering higher prices than we otherwise had and yes, there is a scenario, but i don't think we are anywhere near that yet. to get to $100 oil you need to have significantly more uncertainty based on that market. that is to say, we would come from a disruption to supply and

we would have no sense because of the domestic situation. we have what we consider to be an effort to prevent the repeat of 2008-2009 when we had oil prices collapsing. about a year and a half, and given the uncertainties in the market. we don't have quite that level of uncertainty. i believe strongly that the increase in prices that we've already had is going to place u.s. production on a higher path growth than we otherwise might have had. and looking at everything overnight, we think we are going

to have a fairly balanced market. in market plus or -100,000 barrels per day. no big inventory build, no inventory draw. and on the demand picture that you are looking at, i have to say we flatly disagree. we think we are in a time of year seeing demand's last hurrah but we are seeing it to be short. it basically makes up for the loss of demand decline in china a year ago, and we don't think after this increase in demand for china we are going to see chinese demand rationing at much further. and yes, there is growth, but that is going to be in the 3000-4000 dollars they range. lisa: can you frame out how much of a surprise this cut was? it comes a time and some people are speculating that it was politically motivated to send a message to washington possibly boost oil prices, meaning more cuts down the road if it doesn't work. >> i think it was definitely

designed to boost oil prices. companies were just looking at $60 oil straight on and seeing the rally based on a whole angus that should be temporary, not permanent. yes, they want higher oil prices. the countries that we are looking at, particularly saudi arabia, they are more comfortable with oil. certainly with the $80 base, not bad with the $90 base. i don't think we are staring in the face of 100 and we are certainly flirting with a market which see more demand in spring and summer. i think the price is going to cap that demand. we were looking at around $1.4 million, $1.5 million. that is a higher level than

that. there is some political factor involved. this goes against that and i think it is the defense. they want the higher oil prices, they need it in order to revamp in their economies as rapidly as also, but they had no better interest than $100 --. they want to prevent the drop of $100 that we saw or a drop of more than 50% in today's market that they saw in 2008. lisa: just based on what you're saying, if they want higher prices, and perhaps $80 is the floor, then what is to stop opec-plus from cutting further and further, even as the economy slows? >> there are a couple things. one is that the economy has been slow a lot faster than they are now slowly, and they don't want

that to happen. they understand chinese growth is not exploding the way people thought it was. you look at the numbers, it was one million barrels per day. but that always happens. nothing of this particular rebounding china that would get reinforced. they are really concerned about dropping oil prices. i think they had a terrible judgment on that. i think they will find out that judgment was terrible because this is not 2008, 2 thousand nine in multiple ways. tom: do you give an ok score to the biden administration? everybody has beaten up on our president's energy policy. are you piling on? >> yes, certainly at the beginning of the administration there was virtually nobody in the administration that came out of the markets anywhere in the

world. they were all people coming from academia, people coming from very strong pro-environmental, anti-fossil fuel bias, and they didn't really understand markets. they were forced to understand markets and gained a lot better understanding of market. we've just seen the reopening on federal lands. this legislation is going to assure that. they don't want to see high gasoline prices. the way to do that is by having the usb. and now, the world's largest growth exporter. in were demand has already softened tremendously. demand down well over $1 million per day. the economy, not in bad shape. we are seeing transformation at home where we've become kind of a political supplier in saudi arabia is very sensitive.

tom: thanks so much for joining us. that combination of the persian gulf countries here. it is not just about saudi arabia. to me, i believe dr. morse reaffirmed that it will not be chinese demand, pacific command to the rescue. he basically reaffirmed his successful call of last year. lisa: i think a lot of people one -- are getting on board because there is not the same kind of driver at a time when on when it is still pretty high for younger people and a lot of the consumption is domestically focused. tom: schoening 19.62. we are looking at brent crude, 84.21. stay with us. lights out the last time he was on. ♪

>> the fed is thinking about a pre-march 8 world. >> the thing is for the fed to worry about what is happening to a couple of bad banks. >> i think we are in this environment for some time.

>> this is bloomberg surveillance with tom keene, jonathan ferro and lisa bromley. tom: welcome everyone. we will have jobs report on friday. we had a staggered event early in the second quarter with a announcement from opec class. higher oil prices. lisa: are higher oil prices inflationary or deflationary? a lot of people say disinflationary. tom: the elasticity and response to this in supply and demand, i always find it interesting. he would suggest china and the

specific rim -- pacific rim. triple cash worked out last year. lisa: it quickly came to, is oil going to be some of the swing factor that we see in the next few months? tom: we have to look back at what we did not do last quarter. dan ives was on, on friday. you were begging him during the break, would you give us a price change? he had the audacity. he did not say china is going to boom, but he said china is there to be construct.

>> and your household is buying a series of airpods again and again. here is the rub with tech. does it continue to get a boost from rates going lower? does it get a valuation boost or is this going to be something that suffers? tom: everybody out. jon ferro is on the roadshow today. he is in like three cities. he is in denver for lunch or something. we have a very important test coming up. bad green on the screen. we begin the second quarter with a resiliency that stunned a lot of the crew over the last 90 days. four .10%.

we are not there. the 10 year yield --the real yield comes in on a 10 year inflation adjusted yield. i would also note, and accommodative condition index. almost $85 a barrel, rounded up. lisa: it :00 a.m. is a key moment. meeting virtually, perhaps we will get a signal of what went into production. there was a fantastic note over the weekend, signaling that saudi arabia will seek micro-selloffs and that jay powell is not the only central banker that matters. they have different targets. they want prices higher.

tom: he said it was a lesson for not only the saudi's. i want to emphasize that this is not just saudi arabia. what else do you have? lisa: jim will be speaking. this will be interesting because what is the reaction function that people are expecting to cut rates in the face of deceleration? they have insight. how much is credit going to tighten? what is the implication? we will get all of those fabulous questions and more. today we get some data. we have seen a recession in manufacturing. does it deepen?

again, these rolling recessions. but different sectors have had very different economic cycles. we have seen that coming out of the pandemic. how does that affect the view on inflation? tom: that is nuanced, to say the least. a global day. i will make it clear that all of that is important. get that guy back on the show. you are looking at our research for general equilibrium. how out of whack are we right now?

>> thank you for the contour. we have been out of whack for quite some time. ego right back to the housing bubble in japan. very reminiscent of what we are seeing over the past couple of decades. long story short, that resulted in the banking crisis and a ballooning of debt. weevil monteverdi are now and we are going to number of crises. we have to remember is almost 1.5 times the size. we are facing a difficult cycle. when it is there in the background, it will always come

back to bite us, but it has been frustrating to have these struggles. markets getting to where you could define them. we have not been there for a long time. tom: it is so good on economics. this is talking about how out of kilter we are. we are in the astonishing switchback of 202010 at 2023. it is increasing so fast. the debt to gdp ratio fell by almost 7%. that is a stunning outcome. trillion dollar rebalancing. what timeframe do you have to $8 trillion rebalancing out of the

pandemic? >> it is a decades long process. in looking at how we got to where we currently are. if teen years ago, we had a pandemic a couple years ago and he's push us offkilter. the key thing for me is, can the federal reserve move into a bait cutting period? that's be enough of a cushion to get back on train, to avoid any back down to zero. it will not be necessary to go to zero. that will be huge. if we can get there, we would have returned to some semblance of stability.

lisa: how has your view changed for the second quarter versus where it was a few months ago? >> one of the things that we knew is that lending standards have tightened considerably. the whole story really emphasized the point that things are going to be really tough, going forward, when it comes to ability to get credit. look at how that correlates and it only one way. with conviction, the rate will rise and it will rise fast and furious. the economy is going to go into a recession. we have seen this panning out over the course.

the tightening, never gets it wrong. it pushes the economy into a recession. tom: thank you so much. really brilliant in linking all of this together. they absolutely nailed 9% and 10% employment in the last site. they led the charge. lisa: lending standards never get it wrong and that is what he was saying. it is the reason why may 8 is the date that everybody is waiting for to understand how it is tied together. tom: nominal gdp is a very bright light and can be good for operation. it reminds me of the true investment value of the group.

i think he was one hundred three or 104. he would say the bright lights of inflation. that is maybe why they got it so wrong that inflation helped out corporations. >> you are right -- lisa: you are right that it can boost the bottom line until. this is the concern. that is hundreds of thousands of people who will be losing their jobs. there will be less conviction. that is the concern, that layoffs can lead to layoffs. tom: first business day of a second quarter. this is bloomberg surveillance. >> keeping you up-to-date with news from around the world. i am lisa mateo. the price of oil jumped after opec less announced a surprise cut of one million barrels per

day. they said they would hold supplies study. value abm led the cartel by pledging its own reduction. the white house calls the cutback ill-advised. that and a teammate conglomerate has agreed to combine with world wrestling entertainment. they will form a new company. endeavor has been pursuing wwe for the past few months and they want to combine the wrestling league with their fighting championship. ups will cut its workforce after completing the takeover of credit suisse. the paper said as many as 11,000 employees will be laid off in switzerland and another 25,000 worldwide. swiss prosecutors are gathering evidence as part of a criminal investigation into that deal. the u.s., south korea and japan

have begun naval exercises. it is a move that is certain to anger north korea. the rescue maneuvers started today and include vessels from a u.s. aircraft carrier group. donald trump's lawyer says he will plead not guilty. the former will also look to have the case dismissed. the exact charges remain sealed. a jury was investigating his role in hushed money payments made to stormy daniels. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

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>> i have made a decision to run for president of the united states. i hear people talk about the leadership of our country and i am convinced that people want leaders that appealed to the best of america and not simply appeal to our worst instincts. tom: he is the 46th governor of the state of arkansas. asa hutchinson then, a republican from arkansas jumping into the ring. we will digress. we are watching brent crude rounded up. $85 a barrel. first we are going to go to our chief night and corresponded.

be the biography, he is everything the former president cannot stand about the republican party. how far apart is hutchinson and trump? >> they have a fire. the governor did support shown previously when he was running for president. he became critical of him when january 6 happened and now he is saying that this indictment is a distraction. he is not just a candidate. but it is a distraction. hutchinson saying to abc news over the weekend that is pulling out maybe 1%. this is becoming a lot and it will become a much wider race.

>> i saw over the weekend that the former president has been up holes. lexi has fantastic polling numbers and donation numbers. more than $4 million and his campaign says he was able to bring it in the indictment was announced. 25% was brand-new. he is using it for his campaign. this is the notice his campaign sent to us. there was a poll over the weekend that shows a plurality of americans that the former president should have been indicted. but a similar number also think that this is political. that is what republicans at-large will be leaning into. every time i hear it, other than a continuation of the trump show with people split on both sides of the debate, what have we learned?

is there anything or is this a continuation of the reality television show of his presidency? >> this morning, i think it was called a circus. there will be no policy implications except for the fact that it will be very difficult for leaders to not be asked about this instead of policy questions. that is how i view it. >> there are a couple major things going on, not least of which journalistic freedom of britain russia. the administration's response to what we saw from opec less, basically thumbing their nose at the administration saying, we do not care if they are lower. do they have any ammunition left or even engage at any level? >> they do, but it will be difficult. they have depleted it so much as

they wanted to get gasoline prices down. we saw a spike in prices and this was the biggest response, making sure that they can tap the spr. they want to replenish it. they are going towards a level of prices that if it were going to be maintained, they could step into do that but what you have now is a difficult position. at some point, this is going to hit gasoline prices, and that will impact inflation. quest to be that it is off the table to replenish the spr. >> you cannot replenish if you are also tapping it. it is one way or the other. you're either going to tap a and let whale out or replenish it. it's tom: amateur.

even you with all your reporting, amateur. ed morse is just scathing about the lack of market knowledge of the biden administration. are they just a bunch of academics? does anybody understand that there is in ask on brent? >> they do not think that is fair. biden has a number of people around him. they think the past year or two in unprecedented times in the oil market, and when you are looking at what is going on today, this is because of opec-plus's move. they want higher prices, but this is a country dealing with the collapse of credit suisse, which they had a huge stake in.

tom: lisa abramowicz is going to lead a discussion. >> we heard about this conversation saying this is really serious. you cannot take journalists off the street. now there is earning of people being stripped of their visas to keep them in russia. what is the administration able to do to get the wall street reporter back to loosen ties at a time when they are hardening, going back to the cold war. >> the editor-in-chief side there are still so many questions that we have. he has not had access to his lawyer, so he is an american citizen. that is why the phone call was

so rare. we do not see the secretary picking up the phone and speaking to his counterpart because of this were happening. clearly, this is key for the administration. we do not know exactly what is going on behind the scene, but it is very serious that they want this individual back. if you negotiate and pony up some kind of sweetener to get back prisoners, there is an incentive to take more prisoners. people are talking about this because they think it is a concern that russia will go after their --they will find reasons to go after more journalists, that they can get their hands on anyone u.s. would been important and critical. tom: thank you very much. looking towards tomorrow, we saw

earlier, the former president's private jet. we want to see what his travel plans are. because it trump forced one. lisa: you sent him off to four different places in the past few hours. you also say detroit? tom: he has it ahead. she does a roadshow across america. lisa: it's wishes. right now, but i am seeing in the market is people perhaps not getting histrionic, but a framing, a new worry out there. we cannot say that it is suddenly changing the narrative, but it is casting a pall across

this disinflationary hope that people are having. tom: i spent a good part of the morning looking at the mexican peso. i'm not used to this number. we have seen a stronger mexican peso. some of this oil influence. we will have to see what canada is doing, and swing forward. maybe you need to find a trend. katie is a chief research strategist and we've really enjoyed talking to her. must watch and must listen. this is bloomberg surveillance.

tom klein jonathan ferro is on assignment here this morning. let's look at the second quarter of this year. let's -- 28 --let's get to it. lisa: everyone has been bullish on big oil. a lot of people thought this would be the key inflation hedge.

we ic shares higher on this hope that opec-plus could cut production and support oil prices over the longer-term. we will see how it plays out. we are also watching tessa. announcing -- tesla. after they cut their prices by as much as 20%, they sold a lot more and delivered a lot more. the shares are lower. some saying they did not reach the prognostications about how much would be put out there.

continued production of deliveries will keep the price going. what does it mean for respect to margins and in terms of the overall outlook? tom: a price cut is not a free lunch or an immediate path to success. lisa: if you reduce them a little bit -- tom: some of them were from huge , lower-priced players. we'll competition coming in.

lisa: you're also talking about china. we can go further. i can keep going, if you want to. tom: -- lisa: it is not the main story of the day. tom: we will have to leave it there. they really stay on trend and trend dynamics. why is this important? sometimes a trend is your friend. but in the last 90 days, the trend has not been your friend. the word i use is soup. chief strategist, katie.

why was the last 90 days so challenging for those who want to get on a trend? >> we have had one of the biggest trend environments in years. it was shorting bonds with long commodities. a lot of these trends are focused on the rising rates narrative and policy. we are talking more about consolidation and how much inflation tolerance will be the new trend. tom: what is the identifiable that that you can make. --bet that you can make? >> if we see it stabilizing and we are seeing back a little bit and of inflation tolerance.

we will see signs that this has to give somewhere. long-term bonds could still be a short signal and you could also see commodities coming back later in the year as well. lisa: this is an important point. there is greater reluctance to avoid cutting rates. how much do you see that resurgent expectation, as a result? >> for us what is interesting are the signals and equities have stayed somewhat positive. you have also seen short signals hanging around, even though they definitely took a hit. short bonds come along equities with a little bit of skepticism, but also the potential for commodities and resurgent, depending on how equities do. commodities have been taking a

backseat compared to equities. there is a good example of a change in direction. lisa: i'm wondering how much of a game changer. >> i think it is more like a catalyst. we saw a bottoming of oil prices and we saw as inflation tolerance becomes the narrative, there are some tailwinds for energy prices, but you also see the fact that as things look at her, there will be better demand. you are seeing the cuts as something that has accelerated a move recently. tom: a lot of the fancy stuff that you live on, 30 to 40 years

ago, how do you know when to get out of an equity trend? if i throw around phrases like the rest of the mumbo-jumbo. they go down to the charles river in front of the institute of technology and sing kumbaya. great. how do i know when to get out of apple? >> that is the million dollar question. we try to see some confirmatory evidence that a trend is breaking down. as volatility spikes, ec that people are uncertain about where things are going, so it is a function of how things have moved, which determines how much of the trend is actually profitable or useful.

tom: where is the value now? is the nasdaq 100 storytelling right now? >> we are seeing positive signals, so in some sense, it is a suggestion that they are seeing stabilization. the outlook is optimistic but a little bit cautious. lisa: i heard a bird in my head, and i'm going to ignore it. just kidding. we are encroaching on the second quarter. a lot of flipping and flopping with their efforts. what has changed for you, this quarter from last quarter? >> what changed for me is that we saw a potential bottom and the bear market trend. the fact that we saw the ramifications of what happened

last year and that the narrative is changing, that the new narrative is about how much inflation we will tolerate is what has changed for me this year. tom: really brilliant. you know folks. anybody watching the show day after day, my deepest sympathies, for a start. but these people on trend. i much more comfortable with the trend base. this is important. if i bring up the bond index, as -- it has an equity characteristic about it. it was like 10 days later that bond prices lifted up and now it is a huge what if? it is technically elegant.

in other ways, i am a little nervous here, but she says bonds are correlated with the lift. lisa: they could give you a look forward at the equities that we are looking at but now they are trading in tandem. some people would say that credit is performed pretty much bang on with equities. perhaps it is because corporate balance sheets have been so much better. do not have maturities coming anytime soon. how do you follow a trend when the trend is jumping all over the place? tom: you have 20% or whatever and you bring it over to the land of lisa. do not call me on that. i am doing this in real time. we are up in price.

is that able market in bonds? lisa: this is what some people i saying. you have seen days of steady gains. you are seeing markets starting to open up but the primary market is still pretty rusty. you should be focused on apple every day and give a sense of where it is. there is a big question facing us. can we see big tech reassert its leadership the way it did over the first quarter? was it a departure from the new trend? it is -- tom: the other issue is, i'm sorry. deposit flow analysis seemed to evaporate over the weekend. lisa: the fact that we have

gotten three straight weekends without a bank failure is a trend. but there is not unbridled optimism. we heard from a number of guests that the fact that you are going to get this restraint and credit is an issue. to me, this is when we see the true ramifications of that. tom: we will have to see. i want to make a program note. bloomberg surveillance is out on youtube. it is like my project for 2023. bramo on youtube. the bramo channel. this is bloomberg. >> and i will be her first subscriber. keeping you up-to-date with the first word. i am lisa mateo. a surprising move from

opec-plus. oil futures soared following the new inflation risk. saudi arabia led the cartel by pledging its own supply reduction. white house said the cutbacks were ill-advised. a chinese spy balloon reportedly gathered intelligence from several latte sites. the intelligence that was collected was mostly from electronic signals rather than images. the u.s. sought the -- shot the balloon down. the debris is still being analyzed. former arkansas governor asa hutchinson is entering the race for president. he told abc that people want leaders that appeal to the best of america and not simply to the worst instincts. mcdonald's is temporarily closing its offices this week as it prepares for corporate

layoffs. the company told u.s. employees and some international staff to work from home through wednesday. the cuts are part of a restructuring plan. in sports, a new champion of college basketball. lsu's -- lsu was -- it was the coach's fourth title. kaitlin clark had 30 points. 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 lisa mateo and this is bloomberg. ♪ ♪♪ ♪when the day that lies ahead of me♪ ♪♪ ♪seems impossible to face♪

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>> is another bank going to? probably not at this point. will there be another hemorrhage? probably night -- probably not.

the flow, away from the those yielding bank deposits to high-yielding alternatives will continue. it will continue to pressure banks. tom: jim beyonca joining us in the studio. i will not mince words. i put out a banner. elon musk something jim beyonca. jim beyonca -- jim bianco has had more impact on twitter than anybody else, putting out short, threads that are bought provoking. lisa: did you see that elon musk removed new york times' blue

check over the weekend? i do not have any more knowledge about it, but how do you generate income at a time when you depend on the gym -- jim biancos? tom: i have not even looked at the premarket. you can do this on the bloomberg terminal. frc --it looks like a turning. still substantially down. a regular chart and it is flatlining. maybe that is what american --maybe that is what they are doing. lisa: does not just harden the lines? are we changing the narrative or are we building?

tom: a lot of people, including david kelly looking for real restriction. lisa: a lot of people are looking for that. tom: there is a crisis with the swiss people and their banks. spc ubs. this was 30 to 40 years ago. it is a history that patrick barnett knows. he has been giving us guidance here. this is not a shock to me. give us an update on the outrage of the swiss people. can the swiss people tell the elites what to do? >> that is a question that we had that goes in that direction, where you had them looking into

if there was any wrongdoing on the side of managers or whatever. it tells you that there is a lot of focus on that deal. i'm not so sure, aside from the fact that they appreciate that there was no breakdown in the system but they are on board with the merger going forward. that leads to the deal with margin of error. tom: the crisis with the depression, fdr took over and literally, that evening, he and herbert hoover put their desks together to begin to solve america's depression problem. what are credit suisse and officers doing? are they putting their desks together in one office? are they on speaking terms? what are they doing in zurich?

>> that it is not like this is an equal merger. ubs is in the driver's seat. they are responsible to make this merger work, so i guess they will tell employees and managers what is next and what to do. he knew what enemies on the others, so you have to work together and figure out a common ground. we are in the same boat and we need to make this work in whatever way. they all need to find some common ground. it is not an easy one, but i think it is possible. lisa: i was looking at that. about 30% of the workforce. how does this entity retain the

talent that they could be acquiring from credit suisse, as they announce a round of cuts and they have that imbalance? >> that will be a very narrow path. if you have talent, you want to talk to them and see how we can keep you on board and fit you into the bigger picture. but overall, it is a difficult thing to keep everybody happy. there is a lot of risk involved. a lot of people want to have a say in it. there is not much time. earnings later this month, so they had to come up with some ideas pretty fast. lisa: how much --this investigation, we do not really

understand, in terms of what they are looking at. >> there is a lot of money that the government put them. the government orchestrated this deal, so they are kind of responsible for it to work. this was kind of --he wanted someone who could make it work. if this thing goes wrong in whatever way -- this is the stuff that brings governments down. they want to make it work. tom: you yelled the emotion that i have seen. i do not mean to cast suspicion on anybody. you said, it is the keeping of everyone happy. since when are we supposed to quote unquote keep everyone happy? how did we get here? >> that is very difficult.

if you put it like that, i would say it is impossible that everybody is really happy. but it is. i believe that if there are sensible people at work on both sides, the public can appreciate the effort that is being done. if everybody tones down their own personal interests for the greater good, the situation is now solved and hopefully for the better. but in the end, it is people and emotions are high as always. i'm pretty sure this is not going to be the last monday that we are talking about this. lisa: how much are you hearing about that kind of activity?

>> not too much. looking at -- it could end up being a blueprint europe as well. this is a domestic one, but still, every bank is looking and thinking, if this is going to be successful, this has the potential to change the banking landscape for good. he would probably see more mergers and consolidation. tom: here with his banking knowledge, working for many european banks before working on media coverage at bloomberg news. i do not know what to make of this, other than i take -- i take major issue with trying to keep everyone happy. this started in 2008, 2009 as

well. everybody is happy is baloney. lisa: how do you keep the good and get rid of the bad? how do you keep the functioning of the bank without completely hammering morel on all sides -- morale on all sides? tom: the deal to unseat jp morgan as top latin american wealth manager. you do not think for steinman is going to respond to that? jamie dimon is going to get on the phone and call up david kelly and all the wealth managers. get on the airplane and go to south america. that is what is going to happen. lisa: and why would they not go? it is all moving so quick. tom: it is amazing. they will probably live on the airplanes and never go home. latin american wealth manager. stay with us.

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>> the fed's process of raising rates so aggressively is having an effect on the real economy. >> as long as capital markets

are able to keep the money flows coming we will not have the crushing effect on the u.s. economy. >> you have some evidence of slowing in the economy. >> if the economy does take a dive they will have to respond to it. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. lisa: good morning. this is bloomberg surveillance. jon ferro is off today. i think we have to focus on oil and question whether this really does change the narrative in a meaningful way into this new quarter. tom: we have a solid 85 print on brent crude. the narrative into the morning is a lift up. it still comes with all of the persian gulfness of this opec-plus announcement, it still comes back to the demand guesstimate we all have.

lisa:'s oil prices going higher disinflationary or inflationary? do we end up with riahd cutting production and the opec-plus complex by more than one million. will that cause prices to go higher in the face of demand that is continuing to be sustained because we have not seen a massive drop off yet? tom: ed morse divides it between west of suez and east of suez. this announcement in america, we are like what does it mean for a gallon of gas? this announcement east of suez is a huge deal. lisa: opec-plus is having the meeting right now. the fact that they announce this before the meeting is telling. at this moment, when you talk about is demand going to decline in tandem with a decline in oil

production, that is also the tension underpinning a lot of calls, people who believe the consumer has the sustained to keep spending and offset any decline you are seeing with respect to rent date -- with respect to lending and other issues and those who say the world has changed. tom: the world has changed. are they in vienna for this meeting? lisa: it is remote. tom: we have to go to vienna someday. lisa: that is real reason you wanted. tom: it seems like vienna is fun. why don't we ever go to vienna? we will do a road trip. tony rodriguez is coming. lisa, help me. he is running up spreads. the banking crisis and the sigh of relief, have high yields bettered as price up yields down

as compared to full faith and credit? lisa: you have seen credit spread retracement. you've seen spreads go from 5.2% over benchmark rates to 4.5%. still not retracing all of the gains or at least the higher spreads and lower price, not retracing all of the price losses. does this matter? there is a difference between market pricing and the ability to get credit and people are not selling junk bonds in the market right now. it is not an open capital market. a little bit around the edges but not the same degree. tom: let's do a data check. what do you see. the jobs day on friday with economic data this week. i do not have much of a data check. brent crude was at 84, now $85. lisa: i think you are seeing nasdaq near session lows, down

.7%. it is very difficult to say anything based on a moments pricing, especially in this market. to me the corollary between suddenly yields higher, tech lower continues this relationship that has been called into question by a lot of fundamental investors. does the fact that we could see higher yields threaten tech or lower yields, does that act as a support of big tech at a time when valuations have shifted away from fed policy? tom: i look at dollar euro, i look at euro-dollar, i look at dollar-yen, you triangulate the euro-yen and i come out strong euro in week yen -- strong euro and weak yen. there are so may things within a band or you not broken out strong. lisa: how do you follow a trend in a trendless market? tom: that is very existential of

you. lisa: this is a very existential market. how do you fall ill -- how do you follow a trendless market? we have not got any clarity and that continues the soup of is an opec cut in production going to lead to lower oil prices? what you could get is further demand destruction. tom: let's dive into it with someone rewriting history, tony rodriguez's head of fixed income strategy at nuveen and joins us. i want to chill right into your wheelhouse. to meet one of the hallmarks of march was united health care bond issuance. it was hugely oversubscribed. investment-grade corporate bonds go down in price, up in yield, the so-called spread widens out, and then what? what is that then what for comfortable investment-grade

bonds over the next 90 days? tony: good morning, good to be with you. you bring up a good point that what we have seen with this widening of spreads we saw over the first quarter is the appetite for high quality attractive yielding debt is still quite high in the marketplace. supply has been limited, particular in the high-yield market, but even in the investment-grade market. supply is down from last year, yet demand for high income earning assets when the markets are clearly volatile and many view it as relatively risky, the investment-grade high-quality yield available as attractive -- is really attractive to investors today. tom: united health care, 11.2% is there weight of debt. apple loaded with debt.

5.1% of debt. that is the idiocy of these hugely profitable companies. lisa: they want to take out debt and solidify rates where they are or do they want to wait for a better entry point? is your sense companies -- want to immunize borrowing costs even at higher rates? tony: we think there will be reasonable demand. while we expect rates to decline somewhat we are not expecting a dramatic move. not waiting for dramatically lower levels. when liquidity is available and what companies have learned is to take advantage of that and we think demand will be relatively healthy throughout april and we are expecting supply to recover given that march saw a suppression given all of the noise and uncertainty around the financial sector and broader implications. lisa: you think right now credit

spreads are pricing in the potential weakness that will come later this year? tony: we are expecting to see widening between the next two quarters because we are expecting to see economic weakness into the second half of the year. our view is we could read straight -- retrace to some of the wide suite saw in september. you saw the investment marketed that. we have now recovered because the most severe stresses from the financial sector have bond rated quite a bit and we think we will see noise over the next couple of quarters. there could be better entry points and largely we think investors are being well compensated in a high great base or in the high-quality segments of the low investment-grade. tom: now it is time for the dumb surveillance question of the day, it is a special feature we have which i always lead. do bond markets have bayer and

bull markets? can i say on price we have had a bear market in bonds and the price will go up, the yield will go down, and so that is able market in bonds. you guys think that way? tony: certainly they do have bull and bear markets. our view is we'll be seeing a range bound market. we'll be seeing a rally. there could be retracement. we are thinking a fairly range bound and rate smart kid could see lower yield. we will call that a mini bull market. tom: do you see that reach by nuveen? tony rodriguez, thank you so much. did you see how he did that? could you see liz ann sonders saying it is a bull stock mini?

lisa: is a model. that is what we are -- it is a muddle. how do you characterize something that will not be dreadful? it will not be amazing, but it will muddle through with this idea of income at the time it is available. tom: the bramo cam has caught some of your gloom this morning, but what is your level of gloom after the 90 day surreal -- let's agree the first quarter was surreal. did we think credit suisse was not going to be around on april 3? lisa: i'm not sure where credit suisse neatly falls into the narrative. it was not necessarily a deposit mismatch. i do not know what to make of the first quarter. i am not sure. i feel as if we are on a tipping point and everyone keep saying the economic data is not reflecting the changes made on the margins in terms of confidence and some of the

weakness. on the flipside people say things are coming out good. you take a look at the surprise index in the economic surprises have been to the upside. i do not know what to make of it. nobody else does, which is a reason there has been this muddle and lack of conviction. tom: we will be smarter friday at 8:30. i will go on jon ferro. jon ferro will be i over this. i is a menu factoring, prices paid -- ism manufacturing. the first good look at the april data. that on the way to the jobs report on friday. in the 8:00 hour, coming up, michael mckee in conversation with the controversial james bullard of the st. louis fed. we will do that in 15 minutes. must watch and must listen for

global wall street. this is bloomberg. good morning. lisa m.: with the first word i am lisa mateo. the price of oil jumped after opec-plus announced a surprise production cut of more than one million barrels a day. the coalition abandon previous assurances it would hold supply steady. saudi arabia led the cartel by pledging its own reduction. the white house calls the cut back ill advised. entertainment conglomerate and dem are has agreed to by world wrestling entertainment added deal worth about $93 billion. the company will be led by endeavor ceo re: manuel. -- ari emmanual. ubs will cut its staff 30% after taking over credit suisse. 11,000 will be laid off in

switzerland and 25,000 worldwide. meanwhile swiss prosecutors are gathering evidence into a criminal investigation into the deal. donald trump's lawyer says he will plead not guilty when he appears in manhattan on tuesday. the former president will also look to have the case dismissed. he was indicted but the charges remain sealed. a grand jury was investigating his role in hush money payments made to stormy daniels. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo and this is bloomberg. ♪

>> we are considering higher prices than we otherwise had. i did not that we are anywhere near $100 oil. to get there we would have to have significantly more oil taken out of the market. tom: edward morse absolutely brilliant this morning from citigroup. he was prescheduled. thanks to our team to getting in front of that huge opec-plus announcement. we have to summarize this. jon ferro on assignment. lisa abramowicz, israel simple. ed morse is not looking for $100 a barrel because the demand is not there like demand optimists would suggest. lisa: there are two aspects of this. demand destruction, which we saw last summer when oil prices,

high, and a declining economic backdrop. people will disagree over both features and you can see that in the notes this morning. tom: what we do in surveillance is try to get in front of a story in front of a story and give you some depth on it. we do it with $85 brent crude. west texas intermediate, $69 a barrel for a cup of coffee, now 80.30 two on american west texas intermediate. as we talked to ed morse about west and east of the suez we can look back. 40 years ago you had to read daniel yergin, "the prize," and you had to read robert lacey in his iconic one volume the kingdom on saudi arabia. all that has been done better by ellen wald in her definitive one volume "saudi, inc."

she joins us on short notice this morning. you talk in your book about an arabian dog. is this opec-plus announcement a new arabian on? ellen: it very well might be. we are seeing an unprecedented level of cooperation. i think i wrote last night that opec-plus is now functioning like a well oiled machine, which we definitely had not seen before. these voluntary cuts were put together quickly. just last week we had a bs say we are sticking with our plans for production quotas for the next six months. this is what we are sticking with. you see the gyrations in the market are financial issues and not something a supply de-risk could impact. now there is a complete reversal. there is some kind of

geopolitical posturing going on, without a doubt, especially given the comments from russia. tom: in the construct of morning television and radio, you and i will do this in 45 seconds, but there are almost tribal rivalries around the persian gulf, whether it is cutter, saudi arabia, they ran alone, the five united arab emirates as well. are they on the same page or do they argue unless they bring out an open -- and opec-plus announcement? ellen: there are always arguments going on. we are seeing the gulf on the same page. it would be interesting to see where i rock is following. it seems like iraq does want to produce and sell more oil. it will be interesting to see if iraq does cut its production or

if it continues to sell despite the opec-plus agreement. lisa: what price to saudi arabia one for oil? tom: great question. ellen: that is a great question. most people think they want $80 or slightly above. if it gets to $90 or above $90 they start getting jittery about demand. if it is too high for china they will buy more iranian oil. lisa: how much do you view this as them trying to boost oil prices or getting ahead of declining demand which there already hearing from voices in beijing? ellen: i think they're very concerned about the potential for recession. think back to 2008. this was the touch point they are going off of. they do not want to see a huge

drop in follow-up in the market or want to get out ahead of it. i'm asking you of this place apart in attempts to head that off. lisa: how do you mitigate the implication that this is thumbing the nose at washington, d.c., which is trying to go on the other side and lower energy prices? ellen: i am not sure you can mitigate that statement because i am sure that is a big part of this. there have definitely been rising tensions with united states. saudi arabia has a good point. its biggest customer is asia, it is not the u.s.. in terms of the big customer -- u.s., if you want to lower energy prices, you produce more oil. tom: eight ways to go here. this is where ed morse was, east of the suez.

is there one price for oil or have we finally got to the point there are two or three different oil prices. ellen: there are two or three or five or six or seven if you want to parse it out. why we see the benchmark numbers, there are always prices in saudi arabia for long-term contracts with china and certain prices. they sell a different prices in europe and differed prices in the united states and that is part of their calculus. lisa: how much do you view this as running out of capacity to produce or try to limit how much opec-plus produces now to save it for later? ellen: i have seen that point raised a bunch of times. i do not see that is a big factor for saudi arabia. they have capacity. they are coming online with more capacity. some capacity is spoken for with

these new deals in china where they will be supplying another 600,000 barrels of oil a day to joint ventures they have in china. i do not think they are concerned about capacity. i think they're concerned about prices. there mayor pete -- there may be other opec-plus countries concerned about capacities. tom: ellen wald, thank you so much. i learned a lot. lisa: also this idea the u.s. does not have the same clout with saudi arabia they once did because they are not the major consumer. tom: i go to bloomberg businessweek article. i am fighting the plague john gave me. i go to the bloomberg business week cover of 70 boats off of singapore. i've never heard someone say --

it is not that the u.s. is alone , it is just its own discrete story versus coming out of the persian gulf, going around india, and going all the way across whatever that ocean is -- is that the indian ocean? lisa: you are doing great. tom: and find a place between indonesia and singapore to go up to china and japan. not a small issue. lisa: ellen wald said if you want to get a sense of china's growth trajectory, take a look at what saudi arabia does. how much does that signal the tea leaves they've gotten from china is growth is not sustainable, and that speaks to a lot of people have been talking about with growth that is going to be disappointing for china versus where perhaps people thought a year ago. tom: on the first day of the second quarter, let's start with oil.

wti 83.0. brent crude, a 6% move. it is not a big deal. i need 90 or 91 before i get technical, but that is a lift. lisa: that is what was giving sentiment to markets. nasdaq futures at new session lows. yields down .8%. we will continue to push this conversation forward on the open. kathy jones will be joining us. chris harvey of wells fargo to bring the conversation. tom: interesting to see what chris harvey has to say. lisa: it has been a tough one to get right and we will be catching up with him shortly. tom: on radio and television, stay with us. this is bloomberg.

tom: bloomberg surveillance. we welcome global wall street and the rest of you on radio and television. the first working day of the second quarter of 2023. it has been extraordinary so far this year. feels like the whole year was in three months with the banking crisis and such. we move forward and we move forward in economics, finance, investing. with jobs day coming up on friday, ism statistics today. all of that coming to federal reserve policy and what is so important to understand, this is

how at the arch of st. louis on the mississippi river. it is important when you are a st. louis cardinal. adam wainwright of the st. louis cardinal sang the star-spangled banner on opening day for the cardinals, which clearly sets us up for next year on opening day, michael mckee. we expect james bullard of the st. louis fed to sing opening day for the cardinals. michael: i suppose i could make that my first question to jim bullard. he is the president of the st. louis fed and he joins us now. good morning. tom wants to know if you will sing the national anthem. pres. bullard: i have no plans to do that. michael: as roseann roseannadana used to say on saturday night live, it is always something. everyone waking up to headlines

that say maybe we go to $100. as a fed official, when you see that, how are you reacting? pres. bullard: on the financial stress this is opposed to dodd-frank world and i think the reaction to the banking problems were swift and was appropriate. both year in the u.s. and overseas, so i think the idea there are macro credential tools you can use in that situation to calm things down, that seems to have worked so far. you never know if there are further things happening. if there are we can react with macro tools again. on the policy -- the monetary policy side we can still proceed to fight inflation and get inflation down during 2023 and 2024 back to target. i think this idea you can walk

and chew gum at the same time, he of the macro credential for financial stress and you have monetary policy to fight inflation. we can do both, as long as the financial stress doesn't turn into something much larger. so far so good, but -- michael: just $100 oil complicate your job? pres. bullard: the oil price is always important. i would have expected somewhat higher oil prices anyway with china coming back sooner than expected during the first half of 2023. with europe skirting recession. and a strong data in the u.s.. all of those are bullish factors for the oil market. this was a surprise decision. whether we'll have a lasting impact is an open question.

michael: you had moved of your estimate of where the fed funds rate needed to be to break down inflation, around 5.6%. does this change that calculation and can you explain why you think we need to go that high to hit the terminal rate? pres. bullard: i think we will -- i think we need to get over 5%. the committee says the median person on the committee seems a little over 5%. i think inflation will be stickier and would look mostly at the core measures of inflation -- not come down at all, still 4.6. we're still talking about double are inflation target on that basis and oil prices fluctuate.

it is hard to track exactly. some of that my feet into inflation and make our job more difficult. michael: just north of us in illinois at mcdonald's has told its corporate officials to stay home because they will start notifying people they are being laid off. how concerned are you with all of these headlines about layoffs coming in that you may go too far? pres. bullard: the labor market is superstrong. many more job openings than there are unemployed workers. if a worker does get disrupted today, they should -- let's hope and pray for them they will be able to get a new job. it is still a very robust labor market with three play percent unemployment, the kansas city fed labor market conditions allow a superhigh level.

jobs report is looking very strong in 2023. you're not seeing much ebbing in the labor market. i think there are structural issues were labor supply is running under labor demand and could take a while to settle. michael: what are you expecting for friday? pres. bullard: i don't have a number. anecdotal information seems to indicate the firms are still scrambling for workers. they are doing similar things that might be strategies, they are substituting capital for labor. that makes a lot of sense in this situation. i just think on the whole they still need workers. michael: if they still need workers and supply running below demand, that has to complicate the idea of monetary policy. it is not what is supposed to

happen when you're raising rates as much as you have. pres. bullard: that is true, although i am not as oriented towards the phillips curve as many. i think the way i would state it is the strong labor market gives us and leg to fight inflation -- is a good time to fight inflation and try to get inflation back to target. even workers that get disrupted will hopefully be able to find a new job and a better job in this situation. michael: there are critics around the country and capitol hill that say workers are finally getting their fair share. wages are going up. there comes the fed who wants to squash them down and cut wage increases to bring down inflation. what do you say to those people? pres. bullard: what are they talking about? real wages have gone down for most people so inflation is hurting them.

inflation is hurting the average worker. michael: you don't think the fed has a perception problem with america? pres. bullard: i would like to get rid of inflation so people can get a better labor market outcome and be able to afford the goods they have to purchase. i think there has been a lot of confusion around this issue. it is true that some workers in some categories got more than increase in wages. for many workers that has not been the case, they have been valued behind in real whether. michael: markets have been struggling to figure out what is going to happen going forward with the oil price headlines. going into this weekend, they were pricing four rate cuts over the coming year stop why are you

in wall street so far apart in what will happen? pres. bullard: they should listen to me. i put 80% probability financial stress will decline and then make that your baseline forecast. that is your low growth and growth. continue to produce 80% visibility. -- the other branch where financial stress gets worse, then we will have to bring up more macro credential tools and it will be a stressful situation at all bets are off in that situation. the problem with wall street is they have too much probability on that branch and not enough on another verse -- michael: go back to the banks.

the staff of the market committee presented on the idea of mismatch of balance sheets. you were aware this could be a problem. is there something the fed should do or should have done to keep the bank situation from developing as it has? pres. bullard: i cannot talk about what was presented at the fomc meeting. i will neither confirm nor deny that. my own staff here is certainly well aware issues with banks would talk to bankers. we know there are issues about some deposits running off to nonbank -- the banks we talked

to have some securities holdings that have lost value as interest rates have gone up. that is also manageable for nearly all institutions. they are running businesses and they have challenges but they are also competitive and they have figured out ways to manage the situation -- most banks say loan demand is strong and they have incentives to make loans at higher interest rates if they can in order to offset some of the older folks they have the right lower interest rates. michael: we have to send it back to tom but given how tom introduced us, you've predictions for interest rates growth, gdp. cardinals prediction? pres. bullard: i am sure it will be a great year for the cardinals. i am sure they will win the division and do very well. another victory yesterday. michael: tom keene, we send it

back to you in new york. given the fact that james bullard is so optimistic about the cardinals we will look at that is a good sign for the economy. tom: and we like the pitchers clock as well. james bullard of the fed. an update on the blackstone real estate income trust and they are talking about the liquidity, the redemptions, that were seen. this trust was up 8% last year. even with withdrawal requests, there is rent stability with the blackstone real estate trust. stay with us. this is bloomberg. lisa m.: a surprising move from opec-plus as the coalition mix and oil production cut of more than one million barrels a day.

saudi arabia led the cartel by pledging itself only 500,000 barrels a date supply reduction. the white house is the cutbacks were ill advised. the chinese spy balloon that floated over the u.s. in february reportedly gathered intelligence from several military sites. according to nbc news the intelligence that was collected. the u.s. shot the balloon down in south carolina. the debris that was recovered is still being analyzed. life storage operates more than 1100 sales storage properties. sales storage real estate benefited during the pandemic because people wanted more space while working from home. demand and pricing power have begun to soften. bed, bath & beyond has begun a three week countdown to possible bankruptcy. the home goods retailers trying to get another $300 million from equity markets that have largely

turned against it. shares plunged 50% after the company raised $360 million from a hedge fund. entertainment conglomerate endeavor has agreed to by world wrestling federation and addict real -- in a deal worth $9.3 billion. endeavor wants to combine the wrestling league with its ultimate fighting championship. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo. this is bloomberg. ♪

>> we think credit conditions will tighten. it is difficult to gauge. if that does tighten it means more likely than we are

anticipating. this looks a lot like the early 1990's. we always thought it happens in the second half of the year and have not change that view. it is consistent with what we are seeing. tom: just brilliant on friday with the chief u.s. economist and deutsche bank's and arguably for me, the call of 2022 that came out and said recession, but they were heated when they had the courage to make that early call it would be delayed. deutsche bank looks sharp in saying we're not there yet to some form of economic slow down. we welcome all of you. jon ferro on an assignment. lisa abramowicz getting ready for the 9:00 hour. red and green on the screen. nasdaq pulls back a little bit. the vic's 19.64. two yield gets out.

up to 4.2%. getting in front of key ism data. that will be the first good data of the month. i never follow it but jon ferro tells me it is a big deal. right now the big deal is just speak with john ryding, chief economic advisor at brean capital and has any number of ways to go. i want to talk with james bullard of st. louis. you've been in the camp looking for some form of not sustained inflation but the inflation worry will not go away. bullard making clear we are putting too much focus on the banking crisis and not enough on monetary policy. do you agree? john: i do agree. it is important to realize the u.s. is a very strong capital market and banking system and it is a very different situation

from 2007, 2008, and the financial crisis that took down bear stearns, lehman brothers, aig, it is a very different world. i think there is too much focus on that. the responses have been swift, strong. we can argue with the origins of this is. we do know that in effect there is an implicit guarantee of all deposits regardless of deposit insurance. there are reforms that need to be considered later but that was a powell promise at the last fomc press conference. tom: we will live up the script with john ryding who lived to the bear stearns crisis. one of the great themes right now is james dimon standing in front of bear stearns headquarters that come onto a stay. his hindsight is he made a massive mistake.

. are we repeating the foibles of bear stearns and lehman brothers or have we learned our occasions over the 50 years? john: there is no doubt about it that the higher capital levels and stress tests have done a lot to strengthen the underlying banking system, but you have to have significant questions about how that was implemented by supervisors. if you look the case of silicon valley bank, they had over $15 billion of losses. it does not get run for the statement, it does not get scored against their character. they had almost all of their capital was the saved main 20 this is -- of their bosses. you can only hold something to maturity if you have the funding to hold things to security. that is where there is a similarity to 2008.

in many ways what happened was so much faster. we know how to fix -- deposit insurance fixes bank runs, and we have had that. we have had stabilization in the situation. the banking industry looks very different in terms of sizes to maturity and losses on overall capital. going to get back to regular switch. -- the phenomenal essay alluding to the dilution or the imagery that nominal gdp gives us. you've written about this for years. the idea of we have an odd nominal gdp because inflation is set high.

we have a certain form of restriction, and the constant phrase are we super restrictive right now? all of the dynamics that are going on, does jay powell have a restriction he did not expect? john: let's start with one definition of restrictive which is to we have restrictive monetary policy? i do not think the fed is seeking that sufficiently restrictive level policy. jim bullard likely correctly pointed out the underlying inflation rate is in the four -- the policy rate adjusted for relation only barely turned positive for there is a question of how much does credit tightening have an impact and does that substitute for additional rate hikes? jim also said loan demand has

been strong. we have to see how that plays out. u.s. could see these twin markets and say of the housing system has issues the satilla capital market. there was the capital episode in 1998 where the lenders froze up. there were big banks and so slow banks the big banks will get bigger as they did out of last financial crisis there is also the capital market -- if credit becomes a constraining issue. it has not been up until this point a major concern. tom: we do not have to turn this into a history lesson. a great essay over at the death star, theory. we do not need to go back to

1910 or 1920 theory. what we have is a body of people who have never lived in a normalized interest rate environment. i want you to speak your audience on radio and television that have never lived -- that is with the yield curve should look? we will get out of the oddity of normal rate environment. john: it is funny referring to that because that came out of a conversation i had with steve and we were talking about excel before it became popularized. this concept of a natural rate of interest. the fed has argued the national rage of interest has been made very low. if you look now in the markets, the markets are saying real interest rates will be positive at a significant level for the next decade. we got as high as 1.7%, that is

a bit high, we are around 1.25 last week -- if you got inflation to a quarter of 1% you have to get inflation -- where does that long-term rate of interest belong? tom: where does it belong? we will run out of time. we will talk to olivier blanche chart at the imf meetings in 10 days. with that said, where is your new 2% level? does it have to be elevated higher? john: i think the fed has to raise its long-term neutral rate from .5% to something more like 1% or 1.25%. i would say as a long-term interest rate allowing for inflation, probably should be thinking 4%.

tom: you are 4%? john: and probably for the fund rate going forward. this idea that 2.5% is the long run rate of interest is an outdated concept. tom: john ryding with us today. a spirited conversation. just a window into the fun we will have over the next two weeks. our conversations at the meetings at the national monetary fund. worldwide. the team is working on that spirited conversation. it is just a two week window you have. john ryding is from breen capital. this morning at 10:30, amrita sen on the opec-plus announcement, the dynamics you saw. thanks to our team working all day sunday and into today to work on the opec-plus story. red and green on the screen.

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>> from new york city from our -- for our viewers worldwide. the nasdaq down about .7% ahead of the open. the countdown to the open starts right now. >> everything you need to get set for the start of u.s. trading, this is "bloomberg the open", with jonathan ferro. lisa: coming up, opec surprise production the cut fueling, inflation concerns sending treasuryies