>> convenience never reverts itself the form of convenience has shifted 2000, 2010 a lot of convenience was driven by more stores now it's stores in addition to digital. there is nothing closer than the phone in your hand. >> i think inflation is continuing to melt. >> it may not be as big of a problem as we get into a recession. i think the recession pulled do the job. >> if something bigger breaks and super -- inflation supersedes recession. >> it will come in the second work on we are facing higher growth expectations. >> this is a special addition of

bloomberg surveillance. jonathan: what are we doing here? tom: lisa is wearing the easter bunny outfit. jonathan: live from new york, good morning. counting you down to the payrolls report 90 minutes away on the estimate it was about 240, down to about 230 over the last couple of days. tom: this is one of those jobs reports were things have changed dramatically in one day things have changed dramatically across four or five days. it's a different jobs report than what we were thinking about on monday. and it's all about what ellen synder is going to talk about jonathan: if you look at to the ism's, manufacturing services, look at the adp report, claims yesterday the wrong kind of upside surprise. starting to leak just a little bit higher. tom: stephen stanley really i

thought was quite good about the nuances of claims were they made adjustments and it was worse but he's unsure how certain it was. he needs to see more data and dare i say some modeling aptitude 40. i believe goldman sachs is there. jonathan: i'd go back a year i had to go all the way back to the march or delivered in early april for the last time we had a downsides of rise on the payroll. it's been upside surprise for the better part of 12 months. tom: what were going to do we have wonderful guests to give you perspective. we will frame out the job stay but the entirety of it for america and frankly linking it into the worldwide view as well. if we are talking to the managing director yesterday global gdp.

let me review that, that made headlines yesterday before we get to the data and it's simple. i've never seen this the imf went from 3.8% as a five-year view down to 3% growth over five years, per year over year -- five years. jonathan: growing since the 90's? tom: 33 years. someone courageous even the way it's getting around. jonathan: and china the reopening is not going to bail us out. tom: it's went to shift in the last days. we went from five or 6% to, we are not sure. jonathan: we are going to compare and contrast. jim bullard said seemingly suggesting we have seen the worst of it in the banking sector. he went on to say this and i found this peculiar it's a good moment to continue the fight against inflation and tried to

get on the disinflationary path on the same day we heard that from jim bullard at the st. louis that we heard this. tom he said quite simply the credit crunch has started. and i said yesterday, i said to you believe the last hike was the final hike of this hiking cycle? he said yes he thinks the fed is done. tom: we are not going to do fancy charts today. recessions come quickly. they are not a gradual chart it goes straight down and that's may be where we are right now. jonathan: let's give you a snapshot on the market. equity features not doing much. negative by a 10th of 1%. equity features are trading cash bonds, treasuries, they open at about 56 minutes. tom: bitcoin. jonathan: 24/7 all the time. tom: it's a religious experience

in its on just under 28,000. jonathan: thanks for that. your estimate today, the payrolls report comes out in about 90 minutes from now we are looking for something in and around 230,000 according to our survey. let's start there and welcome to the program wonderful to do this with you what are you in the team looking for in about an hour and 30 minutes? >> we are looking for an strong report. slightly ticking higher. we are very concerned about the hard landing but later this year we don't think the report is going to show it because all the high-frequency data is still drunk -- strong. i think the market reaction will be highly asymmetric. if we get a slight mess i think the market reacts a lot more than essentially a stronger board. jonathan: we will discount

anything that says the economy is ok and embrace anything that says the economy isn't doing well? >> i think so. the data we are looking at this responding to a policy six months ago and not responding to the banking crisis. so i would argue the data is lagged. the market is at the end of the cycle, when does this bed start to cut rates? what were getting is highly lagged data. i think the market is going to be sensitive to any weakness right now. it's probably telling you that it was already slowly going into the banking crisis. it's going to react a lot more we saw that this week. i think we saw significant reactions. we are not looking for that outside surprise but if we do get that, and we could get that in wages. extremely volatile on a month-to-month basis. we got slight mess on wages in

the two-year 30 basis points on that date and today is also sort of short day. we could get a pretty big reaction. tom: i will give them credit but they mentioned that jerome powell looks at the short-term space away from the two's. 18 months from now. explain to our audience with the german is looking at their looking at 90 day full faith and credit paper and then the guesstimate of the market out one year and a half. jonathan: >> is the market pricing? that would be a sign that policy is restricted. the market expects the economic outlook is going to worsen. that signal has been embodied for a while meaning front and rates are going to be extremely

hide the fed is going to have to cut rates. i think it's pricing the first basis points there was a time this week that was a bit priced for june and july i would say i disagree of a bit with how quickly these cuts have been priced but if you look at the total amount we are not pricing in that much in cuts the fed rents fates needs to be to send -- 275. we get the procession. tom: so to speculate what does td securities recommend? are you buying 30 year coupon bonds are you working in the short-term space? where is the place to guesstimate on the bet? >> we've been locked in. it's more risk to report it should have been to rather than tens. but if the data is ok i think the market composed of the timing of the first cut so might

be safer to be five-year for tenure. that's a pretty high conviction view that we are heading into a recession like the second. i would rather be a little bit in the cove. it's a great trend right now if you are buying 5% bills. but what are you doing six month from now when the fed starts to cut rates? when i think about reinvestment risk i think the very front end it's a great short-term liquidity but it's not for the next two years i would say the five or 10 year. i would say long five is also attractive. you are not positioning for when the fed starts to cut rates you are trying to hedge risk assets. whenever these are to cut we can debate that. i think they want to cut much more because they want to be in accommodative territory. we know 3% is high fed fund so i think they have to go much below that. jonathan: some people think we

start at three. is the communication we have support from the federal reserve , i found some of this slightly confusing. the continued appropriate micro-potential policy can contain financial stress. while appropriate monetary policy can continue to put pressure on inflation isn't that contradicted by the fact that they told us any the last month that financial strength -- stress as a substitute for rate hikes? >> i think how is that manifesting itself? if it is tightening financial conditions and lending standards i absolutely think it's a substitute for rate hikes if it is just liquidity concerns in the banks need liquidity, at that point the fed can try to disentangle financial crisis management for monetary policy. i think right now we don't know about our view is that this liquidity banking crisis is morphing into a capital crisis.

it's not something we see right away but tightening lending standards, the margins are going to be under pressure. if it slows down at precisely the same time the saving buffer because down that's going to be what supercharges the weakness. i think the fed needs monetary policy to try to separate the two it's dangerous. we need to see actual data the one big difference in think we all have to get used to the fed reaction function is going to be a lot more react because of inflation. i think we will have to see it in the data, the jobs data for the fed to save we need to use monetary policy. i think right now we are not there which is why i think that curve that you're going to ask me about i think it's hard for it to keep seeping until the fed says were going to use monetary policy they're going to need to see the unemployment rate north of 4% we are very far from that

for them to say we are sort of done were getting to ease. john cowan is going to stick with us the market view at the moment which is pricing in the bond market and the view of some fed officials tom: it's all coming at us lightning speed and she said the capitol issue moving forward -- from liquidity issue. a single sentence on commercial real estate. jonathan: i keep going back to the calendar. payroll in about one hour 20 minutes. then onto april cpi. in two next week some bank release. that's up next and a little bit later we catch up with -- and

find tom: tiger woods tees up at 4:52 p.m.. jonathan: he's doing better than well. tom: 30's on the 15th at the 16 this is tigers day. jonathan: are we doing masters coverage today? tom: can you see two of us at the monsters? jonathan: we should make it happen next or. tom: we could do the outdoor report with the little outward thinking. it's green. >> keeping you up-to-date with news from around the world with first word, i'm lisa mateo. secretary of state antony blinken said china wants to have it both ways when it comes to the war in ukraine in an interview with the european news network lincoln said china is

trying to advance a cease-fire proposal while also backing russian president a lot of important he added china should be urging russia to accept sovereignty and get back the territory that was seized by force. israel strikes back after a barrage of rockets launched. it bombed hamas sites causing property damage but no injuries according to officials. israel targeted underground tunnels insights use for weapons production. global news 24 hours a day. powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo and this is bloomberg. ♪

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>> next week bloomberg surveillance is live from d.c. these meetings even with the

banking crisis in place are really important. >> economic outlook and more. you could have a global recession. >> live coverage starts april 11. your bloomberg business authority. >> i think inflation might not be as big of a problem if we get into a recession. i think the recession will do the job. that was not the plan of the fed. but that's something they should have seen. i think it was a failure and the fed needs to own and change. jonathan: the professor of finance at the university of chicago absolutely fantastic yesterday. he had this to say in the last two years the fed has filled twice. it feel to see inflation coming

it feel to see the banking crisis coming. really brutal stuff. tom: it is. our nation needs a trustworthy fed to combat inflation. this is a trust question that is out there. single oliver at buckeye featured a couple of years ago. capitalism for the people. that's what he is screaming about. this idea that they have to get capitalism and fed policy it's more number for the people and the storm because of the last five or six days is really the first, i would call it direct emotion that jerome powell has to face. jonathan: i imagine mohamed is going to have some things to say about this. joining us in about 40 minutes time. about an hour 12 minutes from now we will have the payroll work. just a series of data suffer this week the estimate has come

down just a little bit, tom. tom: it's come down to 230 as we heard from. what it does is add to each and every data point you see i'm going to go back to the 16 foot -- 16,000 foot view of global slowdown. every to leave this week is indicating an american slowdown. gdp is solid at 3%. jonathan: let's start there with the bond market. you made a wonderful call in the last 12 months you were talking -15, -16. only a number of weeks ago we got -110. >> i prefer duration risk because here's the problem the slowdown we are seeing that is a consequence of rate hikes. slowdowns never happen gradually

there's going to be a really sharp deceleration the fed is going to have to respond and you know the curve typically moves hundred, 200 basis points so we have statement of little bit we can actually expect we are still looking for a strong report but if the economy is deep it it is declining in lending standards. creating the curve i think five and 10 are a better place to park your money then trading the curve because i think it's went to be asymmetric. rates can fall more, how much more to the race? it can flatten back to the lows if it is ok. we can go back to where we were earlier or we can steepen if the fed is about to start to cut rates. i think it's very tricky on the curve i would not really but a lot of chips on the curve here.

jonathan: the federal reserve is all about this year for the market they are going to be proactive in pricing a lot of this upfront. you said something about the fed being reactive. for the market this is the leave, the economy is going to turn over. focus on the bad stuff. for the fed it feels like it's going to be the other way around that raises the question for me how much wider the spread is. priya: that's a great point i think the market is used to to a primitive fed. remember 2008 we really have to go back to the 80's when the fed was torn between its two and we will face that later this year. inflation is extremely sticky. wages are still high so it's hard to see if it's going to come done significantly as the unemployment rate rises. the fed is going to be torn and we think they will be extremely reactive.

your point about market pricing i think at the front end it would have to respond to what the fed does. i think the front end, one year, two year will have to put it. i think the market pricing will increase in the long and because the more reactive the fed is the more they have to cut and the market is not pricing that many cuts. but 200 basis points of cuts if the fed starts to cut eight i suspect they are cutting a lot more because at that point we are not just a shallow recession we are talking about a deep recession and they will have to cut down to 1%, 2%. tom: i would suggest that we are not paying attention to the real guild. it's from 1.65, 1.70 down to 1%. we have come in very tightly on inflation to 1.04% what is the signal or the ramifications if the 10 year year -- yield falls? priya: i think that's telling

you the market expects that things are going to slowdown. i would say in of 1% is a good level but i think recession the local market system with zero and negative. this tells me where rates are tells me that the market, no market is seeing a hard landing scenario. if the market starts to get more convinced that we are heading into a hard landing, into a procession much more than the fed forecasted i think those real rates are going to go closer to zero because remember how does the fed stimulate the economy? retaken the real rate. close to zero which is where we have been at in previous recessions. i think there is a lot of room for the rates to come down but do you own and real rates for long and. it's better -- and find tom: let's expand that i don't want

you to play economist or i want you to play your expertise. you say you don't see a recession coming. how do you dovetail that with what a team of phd's at the imf suggests for the economic data of the recent days? priya: so the economic data is weakening for sure. we were running at a very red hot economic growth based all of 2022 early this year so things are going to slowdown i think it's the trajectory of the slowdown. what worries me is when we head into a recession, it's a very nonlinear weakening of the economy very hard to focus. does that happen right now or later this year? things slow down when the savings buffer runs out that the banks start to tighten lending standards more that's when it has into recession territory. the economy is slowing but is it a recession today? think not. we don't know and nor does the fed.

the market is going to run ahead with this narrative of a recession and if the fed says not so fast, i think that is in some markets i would argue risk assets are not pricing a hard landing at all. i'm more nervous about where risk assets are rather than read because there is some weakening their that the fed is not responding. rates are low because economy is slowing. that's not good news. jonathan: well said. great to get your thoughts as always. tom, what's more important to you? the fed making the move? or the wife? --why? tom: they are going to be ex post, ex post. there is to spot that they are going to be up in front of this. it is grossly unfair to any central bank. they're going to wait for the data and it goes fast. it's not about the fed meeting. jonathan: we talked about this a

million times if you get the immaculate disinflation, fantastic read that can reduce rates because of that that's not what we are talking about here we are talking about disinflation priebus. which she alluded to there is strength to get a better understanding. tom: a study of long and variable lacks is very much warranted but this is a fed that's going to wait for the data and i'm sort of looking out to the late july meeting. we have to get there. jonathan: he says this will take the other side there's more risk. tom: why do i know that? i thought he was talking about tiger woods. jonathan: no. you are focused on the masters are you? i focus on augusta i think it's like therapy. ♪ to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com

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jonathan: make a coffee, stay in the bed, it's gonna be a snooze until 8:30 eastern. equity futures right now on the s&p 500 negative not even .1%. equity futures trading and cash equities closed for good friday. cash bonds and treasuries opening in 30 minutes time going into the open, 3d to is where the to your closed yesterday. tom: it was tested earlier today, a shockingly low level. jonathan: back in the threes. bob michele of jp morgan things

the whole curve, 3.0%. tom: that's stunning. that goes to what we're talking about has this 10 year real yield which i don't think it is talked about enough is coming down, showing that not a ways but the economic recent. jonathan: just the return back to the calendar. we talked about this 8:30, 60 minutes from now and we will get the payrolls report in america. april 12, cpi report. for those of you interested in bank earnings, first republic, they are scheduled to report on the 13th and 14th you will hear from jp morgan's a lot of bank next week too. the estimate, 230,000 and a wrap of morgan stanley calling for something run 240 k and we expect net new job creation to decelerate from the february pace as labor market indicators have started to show signs of easing and effects of seasonal factors normalize. tom: it's an important

conversation is helen on the high ground of the analysis of consumer falling that into our economic growth over the years, the tours of duty she had she now holds court in morgan stanley. let's go back to question asked 10 years ago, how's the american consumer fitting into the suppose it economics right now? >> i think a lot of it has to be driven by the consumer. 70% of the economy will dictate gdp so we frontloaded a lot of economic activity into january and february because of the work weather. we had large stimulus programs end in march, you take a hit on government transfers to households. you have slowing job gains and negative disposable income into the second quarter and consumer spending and gdp will be negative in the second quarter. even though we are not calling for recession, coming in with negative gdp will keep the recession fears alive. tom: do you model a negative

payrolls statistic as david kelly talks about it at jp morgan? ellen: we have payrolls slowing sharply in the months ahead. by the end of the year we are down to four -- 40,000. 200,000 is one standard deviation. if you cut out the covid period, that blue to one million but before covid, it was about 200,000. at 40,000, it could be well negative or it could be quite strong but we have been expecting this really market step down a job gains that never seem to come. every month we would get a big report and shatter our expectation by a month of the slow down and very close to the table saying when do we admit we are wrong and will knock at the slowdown? this is the first time that the payroll report, i think the market is looking for a one handle on this number, and it is

the first time it feels like this could be the start of that more notable slowdown in job gains. that is what we really need. we've got a take pressure off of the labor market and wages. we gotta have more slack in the economy. jonathan: the language at the end, that is what we really need, that's what we've been talking about for a year. job openings, for a long time everyone said that is the target and objective, get it lower and it happened this week and all of a sudden it is bad. has the story changed? ellen: be careful what you wish for. the drop in job openings we sought in august and thought this is beginning and then it flattened and kind of increased again and now we have big drop again. the chief economist that i hobnob with in that environment indeed, linkedin, they have been putting out reports for some time showing job openings have been dropping. indeed cause them phantom

openings. it had not been showing up in the official data. now that it shows up in the data, the question is always oh my gosh, now we will have a big slowdown in jobs. you can imagine right now the market on pins and needles, investors varied, nerves are stretched thin after the bank pressures emerged so you are looking at the negative side of things. have we gone too far? are we going to run off the cliff with jobs and maybe in a month or two we are already negative job gains. jonathan: we have had a year of upside surprises on payrolls. i was going back to the data, i think it was the march report on april was the last time we had a downside surprised to the payrolls were or. ellen: yeah. jonathan: the reason people believe we could have a down size this week is because we've had a series of downside surprises. what can you read into what we saw in the manufacturing and ism services earlier on? ellen: the ism is a diffusion index so it is not quantity measure. all we can glean from the employment indices there is the

labor market in those sectors was weaker than the prior month so we are forecasting weaker services, jobs, then the prior month for instance. so that is in line but the ism diffusion index does not necessarily tell you what the quantity of jobs is, just tells you you are probably right that we created last essay service sector jobs than the prior month. but you had upward revisions in initial jobless claims and before the revisions yesterday we had jobless claims that were about flat with the survey weak in the prior month and now they are up 30 -- $30,000 compared to the prior month. it has been a string of downside surprises which has set the tone for the report today. tom: how do you write your weekend note into monday off of what the imf said yesterday? i was thunderstruck in a five-year, 3% issuance or lower global growth. to me and my textbooks, that is

a global recession. does morgan stanley model something so grim? ellen: there are quite a few -- grim yes, we are above 2.5% which is sort of the threshold that say oecd puts out that says -- tom: global gdp about 2.5%? ellen: we have global gdp about 2.5%, not much better than the imf. tom: this is a new era. jonathan: but in the u.s., we are -- ellen: in the u.s. we are forecasting .3% on the q4 or q3 basis. tom: give me a three-month, six-month, payrolls, off gdp. ellen: looking at a three-month moving average by the middle of the year so we get out of these early in the year reads, you are talking about less than break even on payrolls, 90,000. you should see the unemployment rate -- tom: let me make this clear, from yesterday morning in the

speech of the managing director, this is a massive global and domestic reset. this is not a normal good friday jobs report. jonathan: not at all. to ellen's point, there is a belief that maybe this is the month after saying that for about a year, perhaps this is the month we see the weakness. when we get to may 3 or rather when the federal reserve gets to may 3, do you think they will have sufficient information about the banking shock to make a decision one way or the other? if they are unsure, is the play to hike or way. ellen: i think financial stability will win out. i do not think this close to wherever neutral maybe that you will quibble over 25 basis points. i think you can double down on your message that we've got rates into sufficiently restrictive territory so we are owing to hold them there for some time and we are vigilant in our battle against inflation. still the market disconnect, is the market expectancy cuts before the end of the year? in the fed says we will not cut

until 2024. it will be the tug-of-war. maybe we have one more battle between that and the don't fight the fed and the data is either going to prove the fed will need to reduce rates for the end of the year or not. i think we are little ways off from determining that. jonathan: long and variable lags, we've asked this a few times, what are the lags of a banking shock in the nature of the banking shock we had over the last month? ellen: you can see in the weekly data we are back in a period of relative stability but you can see obverse liquidity was needed and is still needed. for parts of the banking sector. but you stabilize that what you are still going to have slower loan growth so to give context, loan growth was about 10% in the first quarter, strong loan growth. if it slows to 2% by the end of the year, which i think is a good assumption, then it took down our growth forecast another 10th this year so now we are at .4 for this year -- we were at .4 and that we are .3.

i think what surprises people is how long these credit shocks take to go through the economy. this is not a credit crunch. we have not cut off the flow of credit to the economy yet. that is a credit crunch. a credit shock, the impulse moves to the economy. you can see it in the third quarter, the largest cumulative impacts come in the fourth quarter this year, fourth quarter next year. -- first quarter next year. you are putting a lot of weight on the year when we are barely above water. tom: iconic in when i used to go to china a few times a year. he would get off the plane in hong kong, co-down and there was a morgan stanley billboard had to greeting you, greeting you to hong kong. can you run that billboard now? can you tell mr. corbin he can run a billboard effectively or is the u.s. disparate from china , morgan stanley cannot make that cap from business? ellen: we are going through global shifts and we have had

this conversation, this narrative with china looking at how we can massage our trade with china, how we can make it more fair. i think it became more difficult when it played out on the public stage in the last six to eight years. but these conversations and shifts are ongoing. with our strategist, put out great research calling this the multi-polar world and it means you can still do very strong business in china. from a manufacturing standpoint, the trade ties need to shift. jonathan: this was wonderful. thanks for being with us in person. ellen zentner of morgan stanley. what you hear so far? it's only soft landing, hard landing, cuts in between. tom: it's so important here. equities, but equities, bonds, currencies, are we modeling in sub 100,000 run rate on nonfarm payrolls?

i would respectfully suggest we are. jonathan: i would suggest this bond market is anticipating real weakness and no real signs of the index level on the s&p 500. still stuck in the range of 30 to 4200. tom: it's stunning. there have been nice charts comparing equities, spx versus whatever bond flavor you want. jonathan: for once a mooted price action. equity futures not doing much into the print at 830 eastern time -- 8:30 eastern time we will have the payrolls report. in about 30 minutes we catch up with the former fed governor, looking forward to that conversation. before that, mohamed el-erian joining us in about 20 minutes. looking for that as well. equity futures essentially unchanged and your payrolls report around the corner. the estimate 230,000. >> keeping you up-to-date with news from around the world with the first word, i'm lisa mateo. russia make with the ukraine great deal if obstacles in the

way of russian grain and fertilizer exports are not resolved in 60 days. that is according to russian foreign minister sergei lavrov who spoke in turkey today. despite his comment, russia's forecast to be the world's largest wheat exporter in the 2022-2023 season and as export prices have become the to factual -- de facto global benchmark. time one officials expect a visit from kevin mccarthy. him met the taiwan president earlier this week in los angeles. stressing the importance of the relationship between the two sides, economic freedom, peace, and stability in the region. location was apparently chosen to avoid a repeat of tensions in august when nancy pelosi became the first sitting house speaker in 25 years to visit taiwan. it may not feel like it but when you are grocery shopping but global food costs are falling. a united nations index of food costs lifted for -- went to a

12 straight months. still up 40% from two years ago and officials say there is little indication the decline is feeding through the store shelves. samsung is cutting its memory chip production after reporting its slimmest profits since the 2000 nine financial crisis. operating profit missed estimates falling more than 95% to $450 million for the three months ending in march. sales dropped 19%. global news powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo and this is bloomberg. ♪

>> i'm afraid about the market because, if you have a credit slowdown and economic slowdown that falls from a, you are going to have the earnings slowdown

and revenue slowdown effectively at operating slowdown jonathan: jonathan: in the corporate world. that was terry wiseman, the global interest rates and currency strategist. is it really a credit crunch? someone from morgan stanley says that is not what we got. going into the number for payrolls drops in about 44 minutes, 8:30 eastern. counting down to that data at 8:30, and expecting a number of 230,000 to be the number we see later this morning. she says the payrolls print as well as jobless claims and jobs data released earlier in the week likely convince policymakers rates are closed to a fish -- sufficiently restrictive level. bloomberg economics expect the fed will hike by another 20 five basis points to 5.25% at the may meeting and hold rates there for the rest of the year. hold not cut. tom: and along with courageous leadership it seems leadership

-- and along with caray -- anna wong with courageous leadership, it seems. joining us now. that is where i am. it is lift, pause, pause, pause. what is the effect on the effect on our viewers on pause, pause, pause, or four of them into the end of the year. anna: so we looked at the transmission of monetary policy to financial conditions and it is now significantly shorter than what traditional models will tell you. i think once the fed paused, immediately the national markets would be rallying and our models seized financial conditions -- sees financial conditions loosening and shifting back to neutral by mid year this year. tom: i have to go to your academic work catcher cargo. i was thunderstruck yesterday at

a 3% global growth statistic from a managing director of the imf. you had the honor of studying with robin rajan at chicago. what does a 3% global growth statistic mean for america? anna: so the transmission from global economies to the u.s. economy actually print merrily operates not through the trade channel. u.s. has a small export manufacturing base so it is not like we are going to benefit from this and also in terms of oils impact. when global growth is strong or weak, it is strong -- if it is strong, u.s. exports in terms of trade stock but i don't think that is what we are seeing. i think the shock facing the global economy primarily stems from what the federal reserve will do. if the fed does pause midyear, i think it will the overall that

the stimulative effect will be stronger than whatever spillover is coming from abroad. tom: this is the dynamics and i do not know how to get to the gloom of the managing director over this jobs report. i'm hearing from dr. wong that the global gdp ballet is separate from the american labor economy. we are going to learn about that. jonathan: the financial shock is so different than what others have experienced. that's the major difference in the u.s. right now and when you talk about financial conditions, i believe you mentioned equities and risk assets would rally. i wondered, should we care about that? what matters more, tracking things like stocks or lending standards in the loan officer opinion survey we get in the next month or so? anna: yes, so in the chicago financial conditions index, which is our preferred index, they go into risk assets versus

credit channels. the lending survey results shows credit has been tightening long before the collapse of svb, and that channel of monetary policy transmission takes somewhat longer than risk assets. risk assets will rally immediately when the fed pauses, but the correct china will continue to see tightening even after the fed pauses. i think in terms of the effects on fed policies on the real economy, the credit channel, indeed it has a tighter linkage. jonathan: what you said is important, that trend predates the banking stress of the last month or so. with that in mind, when would you expect the banking stress to go through the credit channel and the economic data on our screens, payroll, cpi, how long does that take? anna: i think our model shows the transmission effective credit channels takes about maybe three to six months.

and in terms of whether the credit channel is tightening, the variables we look at is spreads of corporate borrowing rates from treasury yields and also vix and all that seems to suggest to us the banking shot is transitory. we estimate only substitutes for about 25 to 50 basis point rate hikes for this year. i think the slowdown this year primarily is due to cumulative effect of fed tightening rather than the marginal effect of the banking crisis. jonathan: you think the banking shock will be transitory. can you tell me precisely what you mean? are you suggesting any time you get lending standards that is what is transitory, or the hit to date is transitory? what do you mean? anna: what i mean is imagine a week or two ago when the credit spreads widening by at one point

over 80 basis points. that hit is very substantial, would be very substantial to the real economy where that spread to continue to widen at that level. back in the gse, credit spreads were over 156 and stay widened for over a quarter and that is the effect of a very strong adverse shock to the economy. we are already seeing the spread widening coming back down closer to the levels before the collapse of svb. that is what i meant by transitory. to have a real, durable impact on the economy in terms of how it translates to economic models, you really have to have that spreads widening and stay high for long time. tom: model for me just something like anna wong 101. at what unemployment rate does

chairman powell and the fed, do they change their dialogue? we will get an unemployed rate today, john knows what the survey is idle ever look at the data. is it a 4% omg the world changes? do you have an unemployment rate that is critical for the chairman of the fed? anna: yeah, so the fed forecast the unemployment rate would reach 4.5% by the end of this year so anything higher than that, suppose the economy reached 4.5% midyear rather than end of the year, that would change the fed calculus. if that is the case then i would see the possibility of cuts and the second half of this year but i think right now the on and point rate is on track to be undershooting 4.5% rather than overshooting. so maybe everything will change in an hour, but as of now, i think the tendency is for people to have to downwardly revise the unappointed rate for the end year. jonathan: interesting.

this was a clinic, truly, thank you. tom: you showed a completely not media savvy and now she has the whole idea of teasing forward into the next hour. [laughter] anna wong, market pro. jonathan: the whole narrative changes at 830 eastern time -- 8:30 eastern time. tom: you mentioned the length of the year and we are really going with banking crisis and all of that where every day there is a surprise where i go, wait, where have i seen this before? and what will be today's surprise? jonathan: i'm not sure it matters how strong the data point will be at 8:30. i don't think it will change the story for a lot of people. if it is super strong today i think people will be willing to ignore it. if it is super weak, i think we can confirm the price and the prices are we going to have a serious hit off the back and the 12 months time from the federal reserve? how much strong data do you need for how long to change the

story? tom: the picture here, 40,000, under 100,000, 70,000, 40,000, i don't think anybody is into their market including equity market. what is the biggest struggle on a good friday? jobs report? when you grew up in england, did you know what sanko was? jonathan: are you suggesting an italian household that we had that? tom: marmite is bad enough but that is gourmet compared. jonathan: you can smash -- smell the freshly roasted coffee beans growing up. tom: i'm wicked jealous. it's like you and me at that fancy hotel. jonathan: we miss to that. you know who made it down? mama did. tom: was he there -- mohammed did. tom: he was there. jonathan: mohamed el-erian here in new york city of next counting it down to the payrolls report. the estimate and the blue brick survey, 230,000, the data just

around the corner.

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>> i think inflation is continuing to melt which will allow the fed to ease. >> inflation might not be as big of a problem if we get into the

session. i think the recession will do the job. >> if something bigger breaks and a crisis supersedes inflation for the short-term, that could lead them to cut. >> the trouble will come in the second half when we then are actually facing much higher growth expectations. >> this is a special edition a bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. jonathan: lead payroll reports 30 minutes away. live from new york city, good morning for our audience this is bloomberg surveillance on tv and radio alongside tom keene. i'm jonathan ferro joined together by mohamed el-erian in the studio in new york city, joining into the jobs report, features take a leg lower, i would not read too much into it. we are down .2% on the s&p and the estimate is 200 30,000, the meat of the estimate of bloomberg survey. we had upside surprise after upside surprise for the best part of 12 months with the jobs report. does that change today? tom: is this the day it tips?

i would link it with the domestic economy are international economy as we had krista lena yesterday and dr. al arian today and how america and this jobs report folds into a pretty grim imf global growth. jonathan: the rules of combat, you cannot mention qps. are we on the same page? tom: i've been briefed on this. mohammed travels with an entourage of i think seven people and one of them whispered in my ear, whatever you do, don't say preston for that. jonathan: we won't talk about your beloved football club, we promise. mohamed: i just wonder what happened to the other six people i'm traveling with, i have not seen them in my life. tom: they are there. [laughter] how can the fed be different with a pitch clock?

in baseball, the pitch clock works from what i see. mohamed: that would be better. tom: but we needed at the press conference a clock going. mohamed: i think they controlled it pretty well. that is not what they need, they need other things. jonathan: let's talk about what they will get. 230,000 is the estimate. a series of misses so far. can you read something into that for this? mohamed: certainly the market has, not only has it revised consensus forecast but the numbers below to 30. that is consistent with what we have seen, and i find it fascinating we have question marks not only about the job report but it comes at a time where it is a 50-50 situation as to what does the fed do next. this report will be more consequential in a way others have been. jonathan: this is a risk management -- risk management job for the fed. the decision they've gotta make may 3 is a difficult one as you pointed out. do you think the bias is to hike or pause because the market is

very different. quite clearly the market will discount resilience. when the fed sits around the table on may 3, give it did -- given the limited information, is it to hike or hold? dr. el-erian: let's assume we don't know what the number says and we would hike. the two reasons is one, credibility, and two, they are worried about repeating the mistake. they are dealing with the trilemma, a finance total -- financial instability is what they have to worry about. i think what's important is the financial contagion risk is lower today. unfortunately we are dealing with the economic contagion. jonathan: jim yesterday said you can deal with the two separately. i found it confusing because at the same time they are is one as a substitute for the other. can you make sense of it? dr. el-erian: i can. he is rightly referring to the separation principle, which is you use monetary policy and

interest rate policy for inflation and use other tools, which they have a lot of as we have seen, for financial stability. there are clearly interactions but i think it is correct to start with a presumption of separation of policy tools. otherwise, if you use one policy tool for multiple objectives, you end up in the model middle. tom: the overlay years is critical and you have tangible experience on this as deputy director imf in the early 1990's. krista lena corgi ava dropped a bombshell yesterday with a five-year 3% growth model for the imf. how does that affect america? to have that grimness which we have not seen since the early 1990's, to have that grimness, how does that affect people watching and listening? dr. el-erian: so let's add two more data points p last week the world bank came out with a study that showed potential growth was coming down. so it is not just actual growth, it is potential and that is also

bad news. that's also as the other the data which is certainly for this year as the managing director said china and india is half the global growth. so there's massive dispersion within a number that itself is too low. how does that affect the u.s.? in multiple ways. the u.s. needs and economy to grow, not as much as other countries but it means more likelihood of that crises. the u.s. has an interest in economic and geo-political interest in that crises and it makes policy coordination where the u.s. plays a key role much more important. tom: your father was ambassador of egypt to france. mr. macron's in france and let's bring this back to this morning's jobs report. this cap between the united states and china is tangible. how does that affect the spirit of the american economy seen by this jobs report? dr. el-erian: first, that

cap is not only tangible, it is long-lasting and will not go away. a reflex national security considerations, reflects uneven adherence to international standards, so this thing is not going to go away. what it means is fragmented globalization. the u.s. has to think differently, multinationals have to think differently about how they deal with globalization, but we are in a better place than many other countries. in a much better place. tom: right. this is where i wanted to go. i will be with the doctor on a panel a week from today on the imf with others. this is critical. we have the advantage of a technology overlay. how does that change the action of the chairman of the federal reserve to know that he has the trump card, no pun intended, he has the trump card of american technological excellence. dr. el-erian: it will not change anything in the short-term but it does change in the long term. don't just have that from card,

we also have an incredibly diverse economy, we are much more energy-independent than most other countries, and we have incredible entrepreneurship's. we have to navigate three major transformations over the medium term. does not impact the fed today but will later on. one is the green energy transition which is critical. two is the digital transition, critical. then three is the supply chain transition, critical. tom: what is critical to me is all that matters is if you see 110,000 print on the jobs are, all the stuff at 60,000 feet drifts away. jonathan: can we pick up 1.3, the supply chain shift? the peterson institute early this week said it was maybe a fallacy to believe bringing supply chain's home increases resilience of the supply chain. i think we know that based on what happened with economies over economic history. do think that's also a bit of a fallacy? dr. el-erian: no.

it depends on what you think the supply chain's most sensitive to. if it is most sensitive to geopolitical shock, then bringing it closer increases your resilience. if you think of it as being subject to other risks, then adam has a point. i think the focus right now is on national security, on geopolitical issues. that is what is driving the government-led fragmentation mobilization. also the private-sector fragmentation of the globalization when companies want to have more sources of supply. jonathan: it was only five minutes ago we were talking about the secular component and inflation story. that all went away after the banking crisis but there is still something we need to focus on, don't we face higher inflation rates because of everything we describe? dr. el-erian: absolutely. one of my biggest frustrations has been excessive data dependence. not data dependence, excessive data dependence. you've got to be anchored by

some strategic view of the economy and this fed unfortunately has not embraced a strategic view of the l.a. when it has comes from the new monetary framework which is built for the world of yesterday, the world of efficient aggregate demand. today in the next few years we know it is aggregate supply and that has a bias to it and makes the fed's job harder. jonathan: do you think they have acknowledge that? dr. el-erian: i think they are excessively data-dependent. they are standing behind data dependency because they do not want to be held accountable for yet another mistake. jonathan: how can we hold them accountable? the man you know well from the chicago school said this to us yesterday, and the last two years, the fed failed twice, failed to see inflation coming, to see the banking crisis coming , he really believes there's an institutional problem at the federal reserve. do you believe it is a leadership issue or something wrong with that institution? dr. el-erian: they have two

structural deficiencies and i've talked about this because it's been failures of analysis. a policymaking, communications, and forecasts. that is significant. failure number one is accountability. you have accountability and as up or's -- the professor said, they have not owned their mistakes. the ecb has, the bank of england has come of fed has not. so no accountability just important because you learn from mistakes. all you have is drudge and its accountability and they don't have that either. the first issue they need is accountability which they don't have. it is some level between congress which focuses on general things and the internal side which does not own the mistake. you can fix that. the other one they have is lack of diversity. unlike bank of england, they do not have external members, unlike the ecb they don't have a wide range of national governors

who constructed in a different way so they get stuck on some narrative, transitory inflation, which they don't change. tom: we've got a really pay attention to the report. jonathan: this is precisely what was talked about yesterday, the groupthink at the federal reserve. tom: i say it with respect to the institutions, there is a whole history of this but i think the groupthink is profound and i love what the bank of england does. they have catherine over there. and imposing was there. jonathan: they dissent. why won't people the fed dissent? tom: we got through that without mentioning q p. jonathan: that means we get bonus with mohammed who will stick with us. payrolls are poor eight emits away an estimate 230 k and a little later we will catch up with the administration. looking forward to the conversation with a calmer secretary later in the next hour. ♪

>> keeping you up-to-date from news from around the world with the first word, i am lisa mateo. antony blinken says china wants to have it both ways when it comes to the war in ukraine. in an interview with the european news network euro news, he said china is trying to advance a cease-fire proposal while also backing russian vladimir putin. he added china should be focused on urging russia to respect ukraine sovereignty and give back the territory it seized by force. israel strikes back after the most sustained barrage of rockets launched from lebanon and gaza in 17 years. israeli jets bombed hamas sites in the gaza strip early friday causing property damage but no injuries according to hamas officials. israel targeted underground tunnels and sites use for weapons production. in tennessee, republican lawmakers expelled too -- two democratic colleagues in retaliation for their participation in a gun reform protest in the house for last

week. justin jones of nashville and justin peterson of memphis were stripped of their seats in the first part is an expulsion in the body's history. the democratic lawmakers have addressed hundreds of people, demonstrating in the wake of a shooting at a national -- nashville christian school. tesla is slashing the prices of all of its vehicles in the u.s.. it is an effort to shore up weakening demand for its electric vehicles. as elon musk faust, to chase volume over process -- profit margins. global news, powered by more than 2700 journalists and analysts in over 120 countries. . i'm lisa mateo and this is bloomberg. ♪

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>> if you look at the silly can valley bank, i don't think they have assets to justify higher deposits. that's the conundrum. if it was solved simply by increasing rates, it would be easy but they cannot afford to. jonathan: you say this banking system does not work with rates at 4% plus? >> yes. jonathan: what a fantastic conversation with the professor of finance at the university of chicago booth school of business. you can find that in full on bloomberg.com and bloomberg terminal. we are counting you down to the payrolls report. welcome to the program. that drops in about 13 minutes time. the estimate 250,000 is coming a

bit through the week off the back of a series of downside surprises. economic data misses through the week. the ism business any factoring survey, whether the adp report, the wrong upside surprise on jobless claims. spooking a few people. a rally in the bond market, the two year yield started close to 41%. it's ending the week close to 380 depending on what we get in about 12 minutes. tom: i'm watching the 10 year real yield, the inflation-adjusted yield has come in and i'm waiting for a .99 statistic which means -- which isn't a big deal but. said earlier the distance to that is your real yield and we not there yet. jonathan: equity futures down .2%. tom: we are so privileged on our job report and our team showing up on radio and television. we have sterling guests with us. joining us on set is mohamed el-erian of the university of

cambridge among other buildings in joining us with great ability from the university of chicago booth school has always as a former federal reserve governor, randall croson her. i want to go financial economics, you on the high ground, what is the measurement of uncertainty we have, not so much on this jobs report but where we are right now in studying the american economy? dr. el-erian: that's a very important point -- randall: that's a very important point. one issue people have been debating is inflation dynamics and job market dynamics, is there something different then the way people traditionally thought about it in the fed has been at this a while and interest rates have gone up a lot of course another universe she -- university of chicago economist are great when an said the long invariable lag live the monetary policy but it is a long slog, more than a year the fed has been tightening. we have not seen the labor

market crack. that is what people are looking forward today. are we seeing signs of the labor market cracking? right -- tom: right. randall: when it comes maybe it'll become a lot more rapidly. tom: a lot more rapidly. just the blunt instrument, when it slows down, recessions happen rapidly. is that your take? when they go they really go? randall: i think our models often say things move smoothly and gradually but i think it is often the case labor market could move rapidly. that is one of the things the fed worries about and of course economists and business people worry about that could what seems to be an extremely robust jobs market move rapidly into one that is not so robust. dr. el-erian: given the long invariable lags point you just made, are we excessively data dependent? do we get whipsawed all the

time? when i look at what happens to the two years in the last 30 days, it is 150 basis points wing and makes even cash management really hard. causes all sorts of issues. at what point can we step back from every data point and take a longer term view rather than get ripsaw like we have been? randall: i think that would be super great but i think part of the reason is this uncertainty about the underlying model. when people sort of not only the fed but the markets have kind of the same broad model of how market works and inflation dynamics then you do not get these web saws. now, because of so much uncertainty about what the underlying model is, you get strong reports, the interest rates go up and you get slightly weaker reports in the interest rates go down a bit. then you have the tumbled in the

background. i think that made things even more fragile. dr. el-erian: there's a lot of criticism about forward policy guidance and the study showed volatility included the press conference. it's three times as high as it has been in the past and the message tends to be inconsistent with the message of the statement issue just before the press conference. are you surprised by the outcome of the result? randall: i don't know about the particulars during the press conference but jonathan and i talked about this a month ago. [laughter] i think the fed's message is quite consistent and clear. ever since the markets did not believe jay powell, the beginning of july a year ago, that they made inflation the number one priority and will keep at it until inflation comes down, you get the traditional speech and make it shorter come eight minutes, and he said the same thing eight times which is what i said and i think they

have kept at it. the data have come in in different ways so they cannot tell you exactly 25 basis points, 50 basis points, 75 at a overall message has been fairly consistent. jonathan: you know i will take the other side of this so i will jump in. mohammed, that is the establishment view of the federal reserve and chairman, and there are many watching this program he just listened to that and think what is randy talking about? consistent, i heard the speech already jackson hole, wyoming, eight minutes long, got it, great. then there was a conversation in december where we seemed to back away from it and then started talking about disinflation. the disinflationary process has started at a time where economic data was super robust. do think the fed beat is consistent as randy is suggesting? dr. el-erian: i would love to agree with randy, my friend, but the answer is no. we have inconsistency. disinflation was mentioned over

10 times february 1. once you mention that word over 10 times, you send a signal in the markets moved in a major way. so randy, i would love to agree with you because i think this volatility is making things and is unnecessary but it is not because the message has been consistent, it is because the message has been inconsistent. randy: but inflation started to come down so i talked about disinflation. that is what the data are saying so i don't see any inconsistency with saying that. jonathan: do you want to jump in? dr. el-erian: no, i thing i will leave it at you. jonathan: we will continue this conversation i know you will join us after the payrolls report. we will do that in about six minutes time. tom: if he stays around. [laughter] jonathan: we did this last time. tom: this is a debate. jonathan: randy put out his point. the fed change because the data changed and you don't share that view. dr. el-erian: i think you cannot

over be -- be overly data dependent. many examples are there where that caused problems. you have to have a view of where you are going, your destination. tom: this is critical. we talked about chicago economics and the privilege of talking to michael spence, studying under johnny hicks. that's go from john hicks to michael spence to mohamed el-erian. is any of that theory along the way apt now? the textbook back, i don't know if they use it at cambridge, is this in any of the text book? dr. el-erian: the most important insight comes from my expense which is the importance of signaling and what happens when you get asymmetrical simulant -- signaling. don't underestimate the role the fed plays. we all embrace the fed and political independence because it anchors the system. if it no longer anchors the system then you get financial

accidents and economic accidents and the rest of the world, to quote an article by edward boost, started hating the fed because they see it as a sort -- a source of instability. tom: we have to get to this important jobs report but, dr. el-erian, if it's an asymmetrical theory, where does a pause fit in? where does a pause tilt? dr. el-erian: that is really difficult. if they did not have a great ability problem, the pause fits in well but they are dealing with a credibility problem so that is why they have not changed their narrative. jonathan: a great message i think mohammed will agree with and maybe not randy, the fed has been consistent lately, consistently wrong. that's the message i just got on the bloomberg. tom: i'm not that harsh. jonathan: the payrolls report is four minutes away. ♪

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jonathan: the payrolls report, seconds away, the number, the estimate, 200 30,000. michael mckee will break this down. equity futures negative a little more than .1%. i will not share the whisper number with you because people might confuse that with the actual number has not come out yet. in the bond market into a, 383 on a two year yield. that yield is lower on the week off the back of weaker economic data. with the jobs report around the table, michael mckee, a couple seconds late. michael: maybe the computers are thinking it is good friday and they are taking a little time to get this done. we have the number now and the

economists win, 236,000 is the total for the month of march. 230,000 was the estimate and it was 311,000 last month on an unrevised basis. we are waiting for the revision number to drop. private payrolls 189 down from 265 so there is a significant government component to this and we will have to check out what that is. manufacturing payrolls fall by 1000. they were down 4000 in february. unemployment rate ticks down to 3.5% from 3.6% and that will be also an interesting discovery. and we are looking average hourly earnings coming in at .3%, a tick up from last month but right as expected and it was the year over your number at 4.2%, down from 4.6%. that is sort of a base effect change so i do not know how much credence the fed will put in in

terms of an inflation signal but it is good news and average weekly hours come in at 34.4%, down from 34.5%. labor force participation rate is 62.6 from six to 2.5, and that gives us a clue as to why the unplanned rate went down. i will take a look at the rest of the numbers will john lead you through the markets and i'm sure the market reaction. jonathan: there is. tom was right to ask what is the whisper number because when we talk about 236 k, relative to 230, that is relative to what economists were looking for in market participants who put a bid into the two year yield, the two-year through most of this week off of the back of weaker data we are looking for a weaker print. without a printed doubt about that yields are up by 11 basis points on the two-year so closer to 395 wanted to year and i will say this, worth noting things are pretty quiet on good friday. read into these moves but -- what you will.

that's the move the bond market, equity futures turning higher by 10% on s&p 500 with that front end of the car gets my attention, up 11 basis points on the two-year. based on the data we had so far this week, in line is a b. tom: absolutely in-line line is a beat. you see the correlations even with attending year -- with the 10 year real yields moving higher. the granularity mike mckee has as he digs into pages and pages of data, the underemployment rate which is not on but it gives us a better statistic than last month and that is not what we're supposed to see as we heard anna wong say, this is a chairman that once a four point x percent and the micro data does not show that. jonathan: do you have a second look? michael: leisure and hospitality leading the way, 72,000 lower than the average of 95,000 over the last six months. food and drinking up 50,000.

they are still trying to fill the jobs they lost when the pandemic broke out. leisure and hospitality still 2.2% below its pre-pandemic level. government employment we mentioned increased by 40 set -- 47,000. according to bls, that's about in line with average. here's an interesting thing, there was an article ahead of the jobs report that suggested we would see a decline in temporary services, employment and professional and business services, and that would be a sign the economy is cooling off but instead they go up by 39,000 so there is not a canary in that coal mine. health care always a big category, adds 34,000 jobs. that is down from where they were if you want to look at some sort of canary there. transportation and warehousing has been an interesting one because it went up so much during the years we were seeing everybody go to internet shopping. now changed very little, about 10,000 couriers and messengers,

7000 jobs. those are the jobs the people deliver all those packages to you. so it looks like this is sort of a status quo report. retail jobs were down by 15,000. but not a significant drop given the situation and that may be the seasonal effect. this looks much like a status quo, not a lot happened during the month that changed employer views. we did see in the beige book and minutes that people were telling fed officials that they were holding onto workers for right now until they got a better gauge of what was happening in the overall economy. jonathan: 236 is the number, 230 is the consistent estimate. your take on this one? dr. el-erian: two comments in terms of implications, one, for the fed, this increases the probability they will go 25 basis points in early may.

of course the cpi number will be important, but given this, this does not justify a pause given how they are thinking. second, it is good to see good economic news in terms of high labor force participation, and terms of the unemployment rate coming down, also good news for the s&p for stocks. which tells you that we are making this transition where the stock market was with interest rate risk to one where it is credit risk. this number suggests he should be less concerned about credit risk. tom: randall croson are with us now. when i look at the state of what dr. el-erian says about clearly optimistic data, i want you to speak to the optimistic market economists and say this is more -- there is more going on than traditional economic analysis, that this is an america resilient. how do you see that at booth

school? randy: this is something we talked about before and it is called immaculate disinflation that somehow because inflation is gradually coming down that we can do this without the labor market cracking, without really feeling much pain. i think that is a little too positive. i think people would be concerned to say we will just be able to make it all work very easily. one thing that was at least heartening in the report is that the changes in wages seem to be roughly where -- exactly on where the forecast was so that is down a bit for more things had been so we are seeing recently bus labor market but not as much wage pressure. i very much agree with mohammed. i think the fed -- i would say the fed has been clear and it makes it easy to say that unless

something wild happens in the next few weeks, they will go 25 basis points and then it is likely that they may pause and that will relate how the inflation report comes out. but they are getting into the fives and that is something we have talked about for many months, i think that is where the fed was going and i think they made it fairly clear that is where they were going and are probably going to pause at 5% and 5.5%. tom: i look at the one million jobs for revisions of the last 90 days. the three-month moving average is 355,000. that is a booming job economy under any theory. how distant is jerome powell from his higher unemployment that he desires? randy: so as i said, the fed is not going to quit until the labor market quits. the labor market has not yet because i think the view is still it will be difficult to

bring inflation down on a consistent and permanent way until you see more weakness in the job market. fortunately we do not see wages -- wage growth excel a-rating but it has not come down nearly as much as -- tom: this is just extraordinary. are we back to a bullard 7% in the last four minutes? jonathan: no. [laughter] tom: i'm looking at 355,000 jobs per month. michael: here's the interesting thing that happened, the household survey, the labor force group room in the fed is exciting more into the labor force and maybe that is bringing down the jolts and jobs numbers and, of those into the labor force, more people got jobs, 577,000, while unemployment fell for -- fell by 90,000. it was a did -- it was a big dichotomy between the surveys for a couple months and it looks like household is now catching up. jonathan: we have not had a downside to price on payrolls

report in 12 months. randall kroszner , thank you. star house standing by, senior economist of wells fargo. what stands out for you? sarah: i think overall there's a lot for the fed to like in here and that we are seeing signs of the labor market cooling down but in an orderly way and we are seeing balance creep into the jobs market so whether we are looking at demand indicators we have gotten over the course of the week but also i think one encouraging aspect here is you did see the labor force participation rate to come for a fourth consecutive month. that is really how the fed would like to bring a labor market back into balance. their tools work more on demand and seen the supply side is encouraging for that prospect of a soft landing in terms of average hourly earnings cooling but because businesses have more workers available to them and you can continue to hire had a decent pace. jonathan: is there any

disconnect whatsoever between what we are witnessing this morning in this report and what we have seen so far over the last week? sarah: i think, overall, payrolls remain buoyant compared to the other labor market data we have seen that i think pretty consistently shown the labor market is clearly softening. you see that whether we look at some of the job postings stated we saw earlier this week with the jolts report and private sector, indeed postings. i think on employment insurance claims showed that the trend over the past year is flat but we have seen a move higher so that is the flipside of business is looking for new workers is how much they are hanging onto existing workers. to some extent i think the payrolls numbers remain surprisingly high against some measures including the pmi's but i think it shows that, overall, the labor market remains pretty strong. tom: let's dovetail your work with dr. el-erian spirit i will ask you a mohamad question, that

is what it is you ask a fancy cambridge question. what is a t decision in front of chairman powell as we look not only to may but the summer meetings of the fed? what is the this way or that way decision that chairman powell will have to make? sarah: i think it's very much dependent on do we continue to see the worst part of the stress and the banking system over where they can vocus on inflation and the jobs market but i think it also really comes down to inflation, the pressures we are seeing. we think the fed is still on track to hike again in may and in large part because we just don't think we are seeing a convincing downward trend in inflation quite yet. i do nothing they will get enough -- get enough data even with the march cpi report, it will be pointing to a pretty strong trend. i think there is much focus on that and probably for allows -- and allows for a hike in may.

the cumulative lags, you are seeing broader softening in the economy whether the a jobs market, whether it is the activity gauges like the pmi's, so i think that gives them -- get them pretty close to the point where they go on hold and wait to see how the medicine tastes. dr. el-erian: second we have to focuses on the services sector because that is the one area that may result in much more sticky inflation than anyone would like. how much should we take out of this number compared to the ism? in particular, how would that reconcile with the big difference whether market sees rates ending up this year and what the fed has told us about where rates are going to end up? sarah: so i think you are spot on in terms of the service sector really holds the key in terms of how fast inflation comes down and whether the fed is able to pull off this soft landing. i think there's a lot of disinflationary forces coming through the goods side of the

economy given the spending patterns we've seen and how much prices ran up. but it is that services side and i think what we seen in terms of hiring numbers, leisure and hospitality, the fact that you are still seeing strong gains in the goods and services shows that despite the step down in the ism services we saw earlier, that side of the economy continues to be moving along. i think that will be really important in terms of how the market prices in and what the fed does play out because that is the last vestige of inflation the fed needs to figure out. dr. el-erian: let me put you on the spot if i may, let's fast-forward to december, who do you think will end up being right, the market or the fed? sarah: so we lean more toward the market at this point. we are spiking the fed to begin cutting in december as we see the economy slipping into recession the second half of this year. and the unemployed rate rising to about 4.5%.

we think in the face of that clearly weakening and economic activity and inflation pressures continuing to subside that at that point the fed does go ahead and begin to ease a little bit but this is not a recession that would take the fed back onto zero. we think this is moving towards a neutral policy rather than outright restrictive. tom: we have to reset buck and i just point out, his mohamad auditioning for our jobs? jonathan: have you not seen on the 9:00. he comes on the open and does all the time and i'm like will you stop asking better questions than me. dr. el-erian: [laughter] jonathan: sarah house, think you. just a reset on tv and radio if you are tuning in, welcome to the program. it is good friday and the equity market will not open and 9:30 like it normally does but we have payroll data. 230 think -- 236,000 was the number and the estimate was 230,000. we have not had a downside surprise since the march report last year which we got early

april. we thought we might get a downside surprise this morning because we've had a series of downside surprises. to tom's point on the whisper number, which you are only half joking about, the whisper number was for a much softer number and what we mean by that? basically people -- market participants looked at the data saw it was weak, put a rally into the front end of the curve, yields lower on the two-year, and maybe i think in-line this morning is an upside surprise relative to what we have seen this week. so yields at the front and up a little bit. i will say this about the market reaction. it is good friday. there aren't many people around doing the stuff. tom: it is good friday right now. we will digress. we have a wonderful effort for another 15 minutes with mike mckee digging into the data as well and dr. el-erian with us. i want to pause for the public service of mohamed el-erian. there's a photo on his twitter feed. on radio it is simple, it is the students of queens college

cambridge where the official dog of the university of cambridge is. i want to pause and this is on good friday. you studied at cambridge years ago and they -- the problem is john fisher had your job a few years ago when he ran into an altercation with henry viii. you've got to be careful in cambridge when you are there. it is an emotional place. what is then your experience dealing with students? what has been the biggest surprise of your day job? dr. el-erian: for those of you who do not know english history as well as tom does, john fisher, who was the president, got beheaded by henry viii. it has been an amazing experience and i cannot tell you how exciting it is to see them embrace the opportunities that they are giving and you see transformation in front of your eyes. i experienced it and i see it repeated over and over again and

it happens especially to people who come from more difficult backgrounds and who recognize this is life changing, not just for them but for subsequent generations. tom: tell me about the elites you're living with. friendly we are every day maybe not i cambridge but we are in an elite world. what is your optimism seeing this jobs report of an america that is essentially flat on its back? half of america is struggling just to get by. dr. el-erian: i think we have an inequality problem i call it the trifecta, income, wealth, and particular opportunity. i think a lot has to be done to try to level the playing field on opportunity. having said that, this is not an economy on its knees. this is an economy that is incredible he robust and only gets down to its knees if there is further policy stakes. i am quite encouraged by how well the u.s. economy has been doing given what else has been going on in the world. michael: i just won a point out

because we are talking about inequality, this is a really good report for minorities. the un-implement rate for blacks or african-americans drops from 5.7% to 5%, 8.7% and asian on a plummet drops 5.6% and hispanic drops by .7% to 4.6%. this is only conjecture but it seems like when you have this kind of continuing improvement into the labor market it is getting to the people who are last hired to the people at the lower end of the socioeconomic scale who do not get the jobs back right away and it seems to me broadly. jonathan: this is the question people ask, to mike's point, the labor market looks ok in this labor market report. some might disagree based on other figures we've had but let's go with this, why does the fed want to ruin it? that is the question you often hear, why did they want to get unemployment higher? i think a lot of people outside of wall street and federal

reserve institution due to -- do not understand. dr. el-erian: the charitable interpretation is because they are not getting enough help on the supply side. if we did more to enhance labor force participation they would not have to do so much on the demand side. the less charitable is they started relate and because they started very late, they are having a lot of hikes in a short amount of time, which then creates more damage to the real economy then you would have had otherwise have you started on time. i think there's a general agreement they started late, probably a year late. michael: the fed's argument, and i will take the randy krasner side, they think they can tighten the way they are tightening because there were so many job openings left over after the pandemic. people are filling those holes rather than on a planet rising to we saw yesterday the jobless claims numbers, which when they changed the seasonally adjusted

factors, it went up by about 30,000 but they are still low and not showing signs of breaking out. there seems to be also because it was so hard to find workers, a labor hoarding thing going on where companies are reluctant to let people go. so the fed's may gambling at this point that they can get away with this. tom: i will take the elizabeth warren side, we created one million jobs in 90 days and you gave stunning diversity statistics of the minorities of america prospering. is this maybe the best jobs report i've ever seen? one million jobs in 90 days in different minority unemployment that i never imagined or had my head? jonathan: just wait. just wait based on the time we have had 12 months zero to five potentially in the coming meeting may 3 they go beyond five. on top of that, the banking stress the next -- an extra layer, there's a big group of individuals on wall street, market participants looking at

this data point and saying ok, wait for a couple months because it will get worse. is that your take? dr. el-erian: that is the fear. i worry about it every day. my question for you, if i add up all of the numbers, hispanic on employment, black unemployment, asian unappointed, that means white on the planet must have spiked higher in very big way. michael: i can check that out quickly. white on employment has been very low. at this point, white unemployment is unchanged. dr. el-erian: so that does not add up. if everything else goes down and white is unchanged? michael: you can come with me to the bureau of labor statistics and talk to them. tom: i want to celebrate michael mckee's work talking to the federal reserve bank in boston, the federal reserve bank of st.

louis and i wanted go back to something, this is so important because it is what surveillance doesn't what mckee lives every day. mom larry and on the side is a singer. here's one of his key song from hamilton years ago and the layer ask are important and we really write to the idea of what the fed will do. talk less, smile more, don't let them know what you are against or what you are for, you can't be serious, you want to get ahead, pool's who run their mouth soft wind up dead. you wrote about this. dr. el-erian: i did not quite right that whole thing. i just want to join you because you are amazing. i always listen to you and i end up having because of you many other insights and the way you interview there'll officials and questions at f1 tsipras conference are refreshing. tom: are they talking too much?

dr. el-erian: absolutely they are talking too much. just talk to former fed officials and see how they feel. michael: the follow to that, that they would give you, you go back to the days were nobody spoke and -- dr. el-erian: but that is a false choice, talk less does not mean don't talk. [laughter] michael: as the president of a college, when you have a faculty meeting, can you tell the faculty to shut up and not speak? that is kind of the problem. they have 19 people at the moment on the committee and they are all going to want their chance to say what they think. michael: if knowing -- dr. el-erian: if knowing know -- knowing what we know today would you keep it? michael: i said no not because the dots could not be helpful but because they are not. wall street does not read them has 19 different dots based on the forecasts people make, they read it as this is our plan going forward. dr. el-erian: so judge, i rest

my case. tom: does the bank of england need dots, doesn't talk so much, does it talk to michael mckee like this? jonathan: can i have my single just for a moment, michael mckee, you are amazing. [laughter] it's just my turn. do think the bank of england does this better than the federal reserve, don't you? why, what do they do differently? dr. el-erian: i think they are less political, they are honest, they say things that are maybe unpleasant but need to be said. the governor said inflation would go to 13% if we are not careful. he warned against wage price spiral. the inflation report was the first to acknowledge they made a mistake on transportation. they hiked first. if you look at what they do. then they published charts and they are honest. michael: the fed does publish fan charts. dr. el-erian: but the dots, no one looks at them exactly because if you put something else, no one else looks at it. so i do think there's a lot to learn from best practice central banking around the world and that we have to have an open

mind and we must not get stuck in this lack of diversity because it ends up hurting the american people. jonathan: if i could give you one thing now, would you take the cbi next week or bank earnings? dr. el-erian: if i'm worried about the economy, i would think the bank earnings -- take the bank earnings but more details about bank deposits, i think people don't understand what happens to a banking system when money flows out not just in large banks but multi sector. it is significantly different in terms of who gets hurt, small and medium term industries. they are major job creators. jonathan: would you like to stay for an extra hour and we can do this for another 60 minutes? dr. el-erian: no, i think i managed the hour but thank you for having me. [laughter] jonathan: thank you. this was great. auntie was well, mike. coming up shortly, ubs after the payroll report comes in firmer than expected, 236 thousand beating the estimate of 230,000.

futures are positive and bond yields higher. one hour to go. this is bloomberg. ♪

♪ >> there's an awful lot of bearish sentiment out there. >> sentiment and investors

behaving as if there is an edge in equity markets -- hedge in equity markets. >> to get inflation from the levels they are out toward a 2% have will -- 2% path will take a recession in the economy. >> this is a special edition of bloomberg surveillance. jon: live from new york city this morning. good morning. i'm jonathan ferro. equity futures right now on the s&p 500 .2%. the payroll report with yields higher by a police -- eight basis points. the survey shows 230,000. here is mike mckee to break it down.

mike: it is better than the whisper number that wall street anticipated. we saw the prior month's revised down. and it has been -- revise below 500,000. unemployment drops down to 3.5%. a lot more people getting jobs the participation rate is over 60%. leisure and hospitality gain 72,000 and government 47,000. those are the biggest categories. goods producing jobs for the first time in many months lost 7000 jobs while services added. it's a pattern we know has been happening. construction jobs fell by about 9000 in real estate as well that

is one sector that is turning. an analyst said we are at 3.2% for the first quarter as a seasonally adjusted average in the fed's range for where they think the hourly wage number should be to have a sustainable inflation rate. it is come way down it was 4.9%. wages are coming down and that is another good news point for the fed. jon: that is payrolls let's shift to the calendar next week april 12 that inflation report. i will go through the headline numbers. a sneak peek. month over month headline 0.2.

year-over-year we are expecting inflation to come down from 6% to 5.2%. but from core to go from 5.5% to 5.6% is important. how sticky is the inflation story? mike: it is very sticky. and other economists think we will get down to 3.5% by the end of the year counting on seeing the realist rate -- real estate numbers drop. and we will need a lower sustainable number going forward. we will watch the core. and housing numbers the fed chairman talks about. >> he said the fed cleared to hike. do you agree with that? mike: yes. there forecast and consensus is

that they will go to 5.1%. if you think that's where you needed to go then you will go there and then that will hold it i think. >> are there people at the fed that agree with mohammed area that there are steps in between. mike: yes they talk about it. and the fact is we all look back and wonder why they did not stop quantitative easing earlier than they did. one of the reasons is because of the bank question of bank assets. they wanted to give them time to reset. no one to help thanks reset and i have heard they were talking

about the mismatched in the banks since early of less help. jon: i think it's a problem and something we need to address but when you go through economic protections -- it doesn't sound like groupthink. when you look at the range of expectations. mike: no, it is not. they will tell you nobody really knows what will happen. it is a confusing time for the economy that they cannot put their finger on where things will be. there's a wide dispersion for 2024 and 2025. normally you get the dispersion out in two years and we have not had that yet. jon: 2024 just eight months away but this year feels like a decade those in it? >> mike has a real job at you

and i don't. this is exhausting. jon: we see the u.s. equity strategist it is wonderful to catch up with you. you have 36 minutes to digest the numbers. what do you make of them? >> i think the term so far this year may be the resiliency. not only the economic data but how strong the job market has been to give the consumer confidence to spend. but also in the stock market despite the volatility we see in the banking sector, but we see signs of cracking in the leading indicators and real-time data. whether you look at the numbers this week or the uptick in jobless claims. those crack's start to turn into craters. you have a market at the high end of the six-month range. we think the market remains durable as if there --

particularly if there is bad news that takes hold. next week we will get the kickoff of the earnings season and we will watch that closely. >> i want to dovetail the economics at the moment. you did wonderful work in equities. i want to center around those joining us on mondays adam two. it was front and center with what we are thinking right now. and the professor will be joining us. he is centered on the illusion of inflation and nominal gdp. there is an unspoken surprised forcing us to look at s&p 4100 that we will see better nominal gdp and revenues and that will make the greatness of earnings shortfalls less. >> no, i do not think so. i think you will see softness to the top line of revenues.

and companies are struggling to continue to pass on price increases to their customers. we expect margins can -- squeeze this year. but i think the consensus inspected the trough the first half of the year and an inflection for the second half of the year. we think there continues to be a risk to the southbound side as the economy slows and if inflation doesn't get under control. that puts pressure on earnings in the back half of the year. >> when you speak to your securities analyst sector by sector and industry by industry will we see more federal expresses with strategic restructuring? >> i think so. you see a lot of companies tightening their belts and focusing on the efficiency. and i think that will separate some of these where companies are hoping to withstand a

downturn. as we get toward 2024 we will see more cost control. you want to focus on those companies that may be looking to whether an economic downturn. jon: is meta-one of those companies? -- is meta one of those companies? with the conditions we are about to approach. a lot of us think the conditions will get weaker. year-to-date leadership has come from tech but where do you think the leadership comes from? >> we think the leadership will come from the more defensive side of the market. we increase our defense exposure even though we have global equities in favor of corporate bonds. we have not gone full throttle on the defensive side.

we do maintain cyclical exposure through industrials. we've had strong performance year to date to benefit from that strong balance sheet within the sector, but the reality is, this is out of a 40% premium. the highest we've seen in about 15 years. there is the perception that tech is defensive but as they have a strong balance sheet the customers may not have the cash that they do. that will impact them as well as i.t. budgets. it is actually semiconductors that has had the best rally in tech. jon: a pleasure as always. from ubs close wealth management. we had a print of 236,000 and the expectation was 230,000 four jobless claims.

we speak with the u.s. secretary and before that rob will join us shortly. and tiffany with bitcoin -- pimco. tom: we got into this april and after the seismic jobs report what is next? i'm looking at the fortune 500 which is a more accurate index than the dow jones industrial average. interviewer 3800 -- we will not go any higher. 4000 and the resiliency of that -- no one is modeling that that we will go further. jon: the range of 38,000 to 42,000. tom: who is modeling the rates up to 4600. jon: would you like to share be additional programming notice. tom: 4:50 p.m. tiger woods will launch today.

cold weather scheduled. jon: you will be billed for this. tom: i could have a green jacket on. jon: from new york city on this payroll friday. this is bloomberg. ♪ now keeping you up-to-date with news from around the world. here is the first word. i lisa mateo. israel strikes back with the most sustainable barrage of rockets in 17 years. israeli jets bombed the gaza strip early friday causing property jane lynch -- property damage but no deaths. secretary of state antony blinken says china wants to have it both ways when it comes to the war in crane. in an -- in ukraine. lincoln said china is trying to advance a cease fire proposal while backing rusher pleasant it -- russia president vladimir putin.

it was to get back to the territory seized by force. in tennessee republican lawmakers expelled two democratic colleagues in retaliation in their participation of a gun reform protest last week. justin jones of nashville and justin pearson of memphis were stripped of their seat in the first partisan expulsion in the body's history. democratic lawmakers have addressed hundreds of people demonstrated in the wake of the shooting in nashville christian school. the placement -- replacement will be chosen later this year. global news 24-hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. lisa mateo, this is bloomberg. ♪

♪ >> for the fed this increases the probability they will go 25 basis points in early may. the cpi numbers will be important been given this, this does not justify a pause. jon: that was mohammed on with us about 46 minutes ago. the job numbers look like 36,000 and the expectation was 230,000. -- looked like 236000 and the expectation was 230,000.

jobs came in aggressively. claims started to break out. for that reason, you asked the question this morning what is the whispered number? and it is what the market thinks will happen here. it is a surprise from the data we have over the weekend. tom: i have a whole at home loaded with many textbooks and where we are right now is not different from 1948. this is absolutely --dr. laron alluded to that. it is absolutely original coming out of the pandemic where we are. i am sorry, it is a mystery to everyone. jon: we have notes from deutsche bank. he says gains look heavily concentrated in leisure and health. and also construction and manufacturing have a cyclical softening.

we argue the data sends a message of labor market resilience. i think that speaks to what mohammed was saying earlier he mentioned the clear for lift off may 3. tom: you mention this key data. this is the jobs report over the next fed meeting. they did not get to look at the -- april 1 look in may. when i think about it they may be briefed on that. i wonder if they get a sneak peek. jon: i think there is a risk that we move away from banking stress a little too quickly. tom: we have to do another hour we have to go past 10:00 a.m. to talk about banking stress. jon: we can do that on monday or we could do it now with robin cheap adventist -- chief investment strategist. it is great to have you on the program and great to see you. let's start with payrolls and the market with what we saw 50 minutes ago. give us your thoughts. >> this is a great number

there's a lot of numbers touching on this. this is been a red-hot economy creating so many jobs and upward wage sure that is giving the fed pause. we see moderation in the pace of job growth. and as one of your guests pointed out that is what we wanted to see that people are now fearing it as well if we will dive into a recession. with what you said about travel and leisure there are too many areas in the economy that are to firm in my mind to derail the expansion. that will be an open question for a few months areas we could be in another month of misses as the fed pauses and skips a meeting. they have not planned on how that moves this year anyhow. you think they would be more patient and it should be a tremendous market. tom: you speak to the people on radio and television trying to get into april and the summer. the rationalization is that they can buy a new higher coupon and

weight even if rice goes down in yield -- and yield goes up. is data pgim core idea that the coupon is now good enough that i can take a bigger participation? >> is not a belief or mystery it is a fact. we we were in an environment from 2012 through 2020 with an average 2% 10 year treasury, the goalposts for kicking the field goal was about that wide. and over a ten-year period you could do it. you had a lot of opportunities but now we adjust it. things have changed. the goalposts worldwide for equities in the yield environment. now the goalposts for equities are tight. growth is slow and real yields are higher. as you're pointing out, when you have a big fact coupon when you are in it were the long run you

go into high-yield or diversified fixed income or even the first handful of years in the corporate bond arc at your odds of success are good. tom: when i look at the total return index we have a nice recover we talk about chart formations in the equity market. in the bond market, are you seeing a chart formation where you see price of yield down? >> -- price up yield down? >> i think we will see yields high. we see the second quarter of that and i am willing to dive into the payroll numbers if you want to split hairs, but you have to see a progression of months. you cannot jump on a single data point. basically, the long and of the yield curve has been very stable , especially on long spread product where there's been an inverse correlation between spreads and yields.

treasury yields go down and spreads widening with a long-term general fixed income yield. and yield fluctuation is steep at the front in the of the curve. we see a 200 basis point range in your expectations of where the fed funds rate will be 6-12 months from now. but on the back end of the curve it is range bound. the whole market -- the bull market we started six month ago will be rates high and range bound. people are in their money by clipping the total return and looking for opportunities in the market. jon: where does it leave the credit call now for you and the team? what have you and the team been doing over the past month? >> i think could there be an economic sudden stops or troubles for credit? could you finally have a recession? you could, but looking from the

bottom up there are way too many credits. where the outlook is stable and the spreads look attractive relative to the underlying risk. in a 12-24 month basis you will see strong returns from high-yield, high currency, emerging markets, or intermediate investment grade corporate. it will be a noisy six months to wait and see exactly how much slowdown you get. slowdowns could be good for spread product. jon: thank you robert tipp taking a more constructive you and pushing on the timeline. tom: and in another world it goes to neil darter and other macro optimists that are out there. it is easy to be gloomy now even the uncertainty. and i mean almost a regulatory uncertainty. i'm making jokes and talking about the whispering number but

when we look at this this is serious stuff. and this once again confounds the chairman of the federal reserve. and people worry we will all die with another rate cut. says who? jon: it is so easy to be gloomy right now because unemployment is at 3.5%. it can only go higher from these levels after 12 months of tightening and you put the banking stress on top of that. tom: i want to squeeze this in with anastacia coming up the levels of equity market coming and now our guest today alluded to that. 4141 spx. rounded up 43,000 on the dow. and the nasdaq is an act of god it is 13,184. when you penciled out your march outlook december 31 you never

would have been looking for that. how is that tour going? jon: for goodness sake, will the end go towards december, november, october time. we have had three different narratives in three different months. soft landing, hard landing, and so on. tom: you see less volatility in april. and then it will be put unquote normal. i see no indication that i will need proof. we have a opening -- well for gina raimondo. have you ever been to rhode island? jon: yes, of course. tom: yes, it is lovely. the governor is from newport. behind bars. save 20% with the lowest transaction fees and keep more of what you make. start saving today at godaddy.com

jon: live on tv and radio from new york city. good morning. this is bloomberg surveillance a special edition on a market holiday. we got payroll minutes about an hour ago. tom: it is not our normal great coffee. jon: 230 k is the estimate and 236 k is the number we got. we have market action in the bond market and you look at treasuries the twos, tins, and

30's, the two year yield higher by few basis. but some may ask why? it was in line with the survey. what the market was looking for was something weaker off of the bank. this move speaks to that. tom: we recalibrate from monday. and how do we recalibrate also of the weekend notes after the word recession? i have no idea how you write about it after the jobs report. jon: can you go back to the phrase of the banking shock. it is only about a month old. and we have a cumulative tightening over the last 12 -- 12 months on top of that. 0-5 in a little more than a year is what people expect. throw on top of that a little bit of banking stress which

could lead to tighter banking standards -- lending standards. and the problem you have with that and many others will as well is that we been saying that for the best part of 12 months. tom: but we did not have a banking overlay. in the fact on radio i have my finger out level and every other bank kb w x is trending down. the earnings reports are critical. jon: i am with you. and jp morgan on friday to said it is too soon to know what the banking stress will do. tom: we will get more on that. jon: directionally you can make a call that magnitude to what extent you cannot make a call yet. tom: i'm recording futures on the market opening it should be recording futures here. jon: there is no market are opening you know that. tom: here we are for a second time.

anastasia amoroso chief investment strategist joining us. what is magnificent about her notes is there is always a phrase where you stop and say how did you get in front of that? anastasia you absolutely nailed it pre-trading the recession. that is what we are doing right now. we are pretraining the recession. >> that is right, that is what the whole week has been about. we started the week with a soft landing and then we had a question in the middle of the week is bad really bad? and then the headlines yesterday work there we are we are hard landing the recession and it is doing exactly that we are trading saying it is imminent. and what the report today confirms is a positive surprise that we needed. the recession is not imminent. and as long as unemployment rate is at 3.5 percent and consumers are getting 4.2% more year-over-year in their wages there is no imminent recession.

and you said this earlier there is so much gloom out there whether you look at market consensus or the move of what is priced in at the front end of the curve. what economist are calling for is 0% us -- consumption. the economy is slowing but it is not cratering. therefore i would not retrade a recession. tom: there's a report that talks about the gloom of equities and lack of participation in equities. how does this stop market -- stock market live the way that it is. how does the market lift if everybody is so cautious on equities? >> i think people may have to go into chasing mode. i think that is what has propelled the rally so far your today. everybody came into the year so gloomy. when i look at the positioning today it is gloomy.

you like at a systematic trade and the net long exposures for the s&p 500 are at the bottom levels and the same for tech. there has been underway technology for example. all the global investors are greatly underweight which means if we manage -- you mentioned the levels, if we managed to hang around the current levels and move a little higher, a lot of people will find themselves having to buy and being forced to buy. the question becomes what is the fundamental reason for them to buy? i think it will be the first quarter earnings season. people came into the year expecting 0% gdp growth that it looks like we are getting 1.7 percent in the first quarter. earnings estimates have already drastically been marked down. i think the earnings season may be the positive surprise that people are not expecting. jon: it is the number one

question we have the range of 3200 and 4200 for the better part of this year. using we are breaking out of that from the upside not from the downside >>? i think we may break above 4200. and i say that because the economy is not cratering and it is surprising to the upside. click it china you see a rebound in the first quarter and in the second quarter consensus is looking at over 7% gdp growth. we may have stronger economic data in the second quarter. you put it altogether and i think that is the market that could continue to break out to the upside in the near-term. at some point the concerns about the recession will have to surface. and for the meantime, markets are looking for a fed pause. if the fed pauses historically, the markets have rallied strongly in the next three months, six months, and 12 months. that is why the tightening phase

is over. which produces the worst returns outside of the recession. and after that it could be good for market returns. jon: let's go to the leadership expectation and where to units affected to come from in the market? >> i am sticking with the nasdaq trade. the reason for that is if you think about what was the sector that was hit the most as the fed hiked rates from 0% upward. it was the technology sector. if the reset has been done and we will not have the same headwind in multiples that will be a meaningful thing for tech. but you cannot just invest in something that gives you multiples. we invest in something -- you invest in something because u.s.-backed growth to come out of the sector. that is where i it's to see growth and even though we have a slowdown in consumer but what is

not slowing down is the race toward artificial intelligence and more cloud computing. the race that requires a whole lot of semiconductors. that is light, when you look at the growth prospects for -- that is why, when you look at the gross -- growth prospect the s&p should outperform based on earnings expectations. jon: anastasia, thank you. anastasia amoroso with icapital . if you're just tuning in welcome to the program. live on tv radio from new york. a special program to cover the jobs numbers to 36 thousand and the estimate was 230,000. -- 230 6000 and that estimate was 230,000. -- 236,000 and the estimate was

230000 and. . -- this year has been nuts. we mentioned this earlier. thank you for watching the program. of pimco research. i believe he has watched it because he has echoed what i said earlier with daniel or aesop landing, february the landing, march hard landing. -- arlie with january, soft landing, february mild landing, march, hard landing. tom: -- lisa talked about the new of 5%. that is where we are. cds and money markets are up by 5%. and with the market opened the dow is at 32,000 7 -- 32,000.

will we get a 4% yield before you and i go out. jon: can i just jump in tom is joking and the market is not trading today. tom: why are we here? jon: that is a different question entirely. tom: it is not open? i put in a buy order at hershey's. jon: you are buying chocolate? tom: yeah. i ordered hershey's. the american tradition what is great with the kids is they get the jellybeans when they are two or three and they look like chipmunks. or a hamster and then they got out like a gun across the living room carpet and then they are sick for the rest of the day. is it like that in england? jon: yeah. you get candy and all that stuff. we hide easter eggs in the backyard and why are we doing this? tom: because it is a tradition

we are talking about it is good friday. jon: happy easter thank you for being with us. welcome tom. data is to 36 --236000. and jobs were lower than expected. and manufacturing and service is not great at all. all of a sudden it is ok nothing to see here payrolls are good. tom: the imf is taking global growth which includes the american economy down 21% a five-year view from 3.8 percent down to 3% clearly the rhetoric from dr. was then lower number. that is the overlay of the global caution with the data we saw this week in the jobs report. and it is to wait another 30 days. jon: what happened to the global

enthusiasm of 60 days ago china is reopening and europe is doing great and international wage is where you wanted to be. do you remember that 60 days ago? tom: yes and there is a school of thought that europe is passing america right now in terms of wages growth and health in the economy. jon: we will be joined by the congress secretary in a moment and we look forward to that conversation. i can talk about the bond market with a two-year higher by 30 basis point. -- 13 basis points. off of the back of a better-than-expected jobs data report this morning. from new york, good morning. ♪ >> now keeping you up-to-date with news from around the world. here is the first word. i lisa mateo. russia may quit the ukraine grain deal if it goes in the direction of grain and fertilizer exports and the

issues are not resolved in 60 days. the minister spoke in turkey today. russia is forecast to be the world's largest wheat exporter in the 2022 and 23 season. taiwan says they still expect a visit from kevin mccarthy. he met taiwan president earlier this week in los angeles. dressing the importance of the relationship between the two sides to economic freedom, peace, and stability in the region. the location was chosen to avoid a repeat of the tensions seen in august when nancy pelosi visited taiwan. tesla is slashing the prices of all of the vehicles in the u.s.. it is to shore up weakening demand for that electric vehicles as elon musk valves to chase volume over process -- profit margins. they have been trend from 1002

$5,000. -- they have been trimmed from $1000 to $5,000. and toyota has a pledge to become carbon mutual -- neutral by 2050. the new ceos stopped short of giving concrete steps of how the company will match its ev rivals abroad. global news 24-hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. lisa mateo. this is bloomberg. ♪

>> we are seeing a crack in leading indicators. and you see the uptake in the

terms of jobless claims. the crack's start to turn into craters. jon: it was wonderful to catch-up with the leader at ubs. thank you for choosing us on wii bar tv and radio. -- bloomberg tv and radio. we have the jobless claims of 236,000 and we were looking for 230,000. tom: average payrolls 345,000. in any time pre-pandemic that is a sterling 90 days. jon: the last time we had a downside on payrolls was march of last year. tom: a major shout out to the optimists that are out there right now. we have a strong in to our morning run. stay with us on radio and television we will get market

economic analysis and we will meet with the secretary of congress and a few moment. and we speak with tiffany at pimco. we are thrilled she could join us. what was a distinctive feature for you with the jobs report. >> i think the payroll number on the surface was very strong. as you mentioned the three month moving average was well above what we need to sustain the level of unemployment rate but if you look at the wage numbers, i thought that was interesting. on the three month over three month basis that average hourly earnings is decelerating. we were at six and now we are at three which is closer to the fed's targets. and even though we are talking about recession and things like that, at least the payroll report was consistent with the soft landing view that the fed has. tom: the soft landing view means that there is no fear of a 25 basis point list.

if they lift 25 basis points who is damaged? >> from an economist perspective 25 basis points is not a lot. it is all about the five percentage points that increased over the course of the last year. and ultimately, we talked a lot about the long and variable lag. that in our view is impacting the economy. and the banking stress that we have seen is symptomatic of the fact that policy conditions are type. -- tight. labor market does tend to lag you see labor growth decelerating first we believe that is happening and will continue to happen. eventually labor markets will decelerate as well. jon: is there a point on the calendar where you would be comfortable saying that is about the time we are we would have credit tightening off of the

back of the banking stress we had last month. we will be find that out? >> we are starting to see higher frequency data that lending growth is slowing and deposits are moving out of the midsize and smaller banks. overall the cost of capital for midsize and smaller banks as for everyone else is going up. that will make loans less attractive for them to make. but when you take a step back and have done an analysis looking over 14 develop markets for the past 70 years there are tightening cycles. what is suggest is after central banks hike interest rates a few quarters after that you see more material deceleration in the outlook of growth. that is lighting up with what we -- lining up with what we are seeing. and we could see more deterioration. jon: it is wonderful to get your view tiffany in on a holiday. from pimco. tom: all of our guests.

jon: 230,000 was the estimate but the numbers came in at 236,000. tom: we speak with the governor of rome -- rhode island. and secretary of congress. gina raimondo. she joins us now with the experience of the collapse of the company in rhode island. i lived it with you. you lived it in real time with your father there is a lot of awful lot of america feeling they are living this experience right now. how does the administration speak to those that are not prospering? >> good morning, good to see you. first of all, the administration is speaking directly to the -- those people because the administration is obsessed with bringing more manufacturing to america i was with the president

last week in hickory town north carolina. a town like we are talking about and i was there with the expansion of two american companies making fiber-optic cable because of the initiatives to provide every american with rod band -- broadband. they are calling on manufacturers to make more in america and it is working and reflecting in the jobs numbers. you see record low like unemployment and record low unemployment among people who have been left behind. and the best news for me, is a higher percentage of people working in the workforce any time in decades. we are going to middle america and going to folks like my dad who were left behind in the collapse of manufacturing. we are getting back to work. jon: that is a message to america what is the message to europeans? >> work with us.

i am headed to europe at the end of next month. we need to work together. and i think it is whether the ira or the chips initiative there are opportunities for european companies. and opportunities for us to work together to meet the moment with climate change and our global competition with china. jon: perhaps i should have been more precise european companies will invest in the united states but when you have to say about european government of what is happening at the moment? >> it is the same message. there was initial concern about the ira particular that we are in constant contact with our european colleagues. i have met with numbers of them and germany, the eu, and the past couple months. i think they are understanding there are opportunities for them. and by the way, we all need to do more to combat climate change.

initial hurt feelings may be but there is a lot of good work to do together. jon: let's talk about what is happening with supply chain. adam posted the -- institute says the idea of making everything -- is the fallacy of selfish -- self-sufficiency has been repeated. how would you respond to that? >> key is right. nobody thinks we should be making everything we need in america. -- he is right. nobody thinks we should be me -- making everything we need in america. nobody thinks we should be self-sufficient. but the fact we buy 90% of our leading edge chips from taiwan is unsustainable and quite frankly almost dangerous. no one would say we need to make enough chips in america for all that we consume, that would be silly, but we do need to have more resiliency. tom: madam secretary i spoke

with the managing director and he could have easily been a 100 10% conversation on china. you are gifted and you have elizabeth's economy advising you. our grossly -- arguably our best young china expert in america. what is the doctor advising you on about improved china u.s. relationships. >> i am smiling because he is about to get on a plane and head to china. tom: [laughter] >> what we are doing is pursuing the policy of protecting and promoting. first and foremost, we have to protect the united states of america and our national security. we are doing that with gusto with our export controls and guarding our leading edge kit -- technology. where it makes sense, we need to promote and help american businesses and export making sure china provides for a level

playing field. that is the administration strategy. you are correct that i am extremely likely to have liz that she is here. jon: there is no level playing field there is a lap of -- lack of recep or dos city -- reciprocation. -- >> there is a law called the restrict act. senator mark warner of virginia is looking at it. and he is excellent and sensible. i do not think we should get into a witchhunt sort of environment where we go after individual companies by name one at a time. i do think, and this law provides, more tools for the congress department for constant surveillance ability to investigate and perhaps regulate.

jon: this is a conversation we will continue to have. madam secretary this is fantastic. thank you. at morgan stanley, old school hard work meets bold, new thinking, ♪ to help you see untapped possibilities and relentlessly work with you to make them real. ♪

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