>> what the payrolls report really confirms is a positive concern we needed. the recession is not imminent. >> this has been a red hot economy that was given a fed pause. >> for the fed, this increases the probability they will go 25 basis. points in early. may >> unless something wild happens, they will go -- basis points in early may. >> unless something wild happens they will go 25 basis points. jonathan: from new york city, for our audience worldwide, good morning, good morning. this is "bloomberg surveillance, on tv and radio. equity features just about positive on the s&p after the payrolls report keeps the door

open for a rate hike. for we get to cpi and bank earnings later this week, can we stop with the quote of -- start with the quote of emmanuel macron. that these words left his mouth in an interview. here is the quote, the great risk europe faces is that "it gets caught up in a crisis that are not ours that prevents us from building strategic autonomy." he said things like they should draw a line, suggested a laundering -- line drawn between what they want to do and what the united states would like to see them do. tom: it is a geopolitical issue. ambassador hoss was directly involved in the troubles and multiple geopolitical tensions.

to your point on mr. micron, everything i learned last week is china is front and center, particularly imf week where we see micron will be a part of that. -- macron will be a part that. jonathan: how do you think the europeans would respond if a u.s. president said exactly the same thing that macron set about europe, ukraine and russia? tom: there has always been this tension between us and france, but it has certainly heightened in the last couple of weeks. ms. vander line went along with macron and she has vetted among other things to be the head of nato. jonathan: we need to talk about

the data. cbi on wednesday, payrolls on friday. heroes leaving the door open to go another 25 -- payrolls leaving the door open to go another 25 basis points. tom: i thought the mood was captured from some of our viewers that we are just smack in the middle of nowhere. it was mentioned twice and you look at the technicals and the fundamentals and bring over the economic data, it is nowhere is where we are. jonathan: the march employment report keeps the fed hiking 25 basis points. cpi on wednesday, bank earnings later this week. it starts with jp morgan coming up later on friday. here is a snapshot of the market . equity features on the s&p 500 positive by not even 1/10 of 1%.

yields were higher off the back of the payrolls report. the 10 year is down a single basis point on a 10 year yield and on a two-year, down fout. tom: that would be like a 3.81 is maybe the tension you need to see in terms of economic slowdown and a raging debate in the research over the weekend, are we in a recession? we have heard that for months but the adjustment of what kind of recession it will be and maybe that will be over the next 10 days. jonathan: can into our chief strategist. is it your view that the move and the payrolls report leaves the door open for the fed two again in early may. tony: great to be with you again. i think it could be, the market

has tried to guess the way the fed funds futures is incredible. it gives them the ability if they want to to raise. again, if you look at the lending data that came out friday, which over a two week basis was the worst in history. it is incredible how quickly the lending market is shutting down and we are rid about whether the fed is going to raise rates 25 basis needs. -- basis points. jonathan: on friday we will get data that we never used to look at. we would be talking about payrolls as more important. is the data on bank lending important as the payrolls? tony: and the payroll data on friday. i would love to get you a firm opinion. weekly data showed you had a tight labor market, flat to tight and that that revised out.

now the initial unemployment claims trending higher based upon the revision. i am careful to look at the government data in the fed is making a policy on data it knows to be revised. when you look back historically and people look back and they say how could the fed have done that way back then and look at what the data look like. and the answer is the data didn't look like that when they made the decision. it got highly revised. you can play the silliness, formulas, algorithms, the bottom line is, do you have access to money? do you have access for money to go out and spend? banks aren't money to lend because the yield curve is still inverted. tom: your claim is who participated in the bull market

by saying i am going to wait for a recession. now it is here and you are cautious. are the big tech stocks defensive stocks? tony: i think they are defensive until they are not, as we found out in 2022. i am known historically as being bullish all the time because typically money is flowing. when money is not flowing, i am a bear. we have been on the defensive path because when you shutdown the availability in money, it is hard for people to spend. and there are only ways to get money, you can earn it, get it from a bank and take it out of the markets. the markets have been week so that is not getting you extra money. but we found out friday is that lending is not happening and in addition, you are at full employment. we are a year and change into this. now is not the time to get

bearish. i want to attack the low as it comes with the recession versus play for it. tom: friday we looked at bank flows and loans and there seems to two schools of thought. one is a substantial real estate bank crisis is here and the other is no, it's not come it is decidedly not like it was 16 years ago. which one is it oh wise one? tony: you don't have to guess. you're getting almost 5% on a three-month and six-month u.s. treasury bill. you are right, we are in the middle of tactical nowhere land. fundamentally we are slowing down. the only time you can prove you are in a recession is after it already started. until then, you cannot disprove soft ending scenario. so i am leaning toward is going to become a bigger issue than people give it credit or and

maybe a deeper recession than people if it credit for. you have had the fed raise rates, and as you know, when jerome powell talked about channeling his inner paul volcker, you knew he was going to invert the curve. he has done it in an historic way. when volker did it, you were in an unleveraged system but now we are in a generally leveraged system. that two week data on lending didn't happen for weeks ago, it happened over the last two weeks. you don't have to try to bet on the downside and run for the hills. the time to get cautious was over a year ago. now is the time to look for opportunity as it presents itself but you can't do it unless i understand and believe we are going into a recession, which we look at the inversion of the yield curve, leading indicators, lending standards

are the senior loan officer survey from the fed, anytime they have been anywhere near the current levels you have gone into recession. jonathan: we think about depth, duration, diffusion. you made a comment on depth and the severity of a recession that a lot of people say will be shallow. what makes you think maybe it will be deeper than some people think? tony: because if the fed stays higher for longer, i think the loft -- soft landing is the worst case scenario because it keeps the yield curve inverted and disincentivize lending. most mortgages are somewhere below 3.5%. many are below 3%. that means you have to take the 10 year bond yield down below 1.5% for most people to refinance their debt. the depth and severity will be determined i how quickly the fed begins to cut rates.

a month ago i said i continued to believe the fed raised basis points too much. a month ago that looked silly until the to you goes from 5.04 23.93. jonathan: 3.60 last week. tony: that is more than 100 basis points. jonathan: as always, thank you. the turner and the two-year -- the turnaround of the two-euro, we had 3.60 at one point, and the high was 4.13% on the two-year. we talked about how this is screaming recession. tom: it is screaming every week. i agree the two-year yield is definitely the thing to watch here. all you do is look at it and it

is something we have never seen. we are showing march and february this year and we haven't open out of this. the thing that nobody is framing is the lower rates. the 10 year yield, 2.99%. who is talking about that? i think we should go to hong kong because on sunday you can watch four soccer games at the same time jonathan: -- same time. jonathan: you can do that here. features unchanged on the s&p 500. welcome back. this is bloomberg. ♪ lisa: with the worst -- the first word i'm lisa mateo.

taiwan is seeing military drills around the island and have seen it before. they tell bloomberg they are on par with the reaction last year when house speaker nancy pelosi visited. china began the drills after the time when these president met with kevin mccarthy in california last week. russia reportedly will pay bonuses to troops able to damage or destroy tanks that nato countries where -- are giving to ukraine. the new york times cited recently leaked intelligence documents and part of measures to boost flagging morale amongst troops. central banks may be close to peak are done with raising interest rates. according to a gauge cap played by bloomberg, o rates will be 6% -- the rates will be 6%. the national health service in the u.k. mourns there will be unparalleled levels of

disruption when junior doctors walk off the job this week. that would be about half the medical workforce. trade unions have been demanding higher pay to compensate for inflation. in sports, john rahm of spain came back to win the masters. it is his second victory in the four major tournaments. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

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>> i believe in a one china policy that i would be willing to fight for taiwan, because taiwan is a democracy and we have stood with them. i would up your game and if you don't up your game, you are going to have a war. i would be open to using u.s. forces to defend taiwan because it is in our national interest security to do it. jonathan: from new york city, good morning. he made his views clear on the matter. the french president taking a different approach, speaking to politico last week and saying this, the great risk europe faces is that it gets caught up in crisis that are not ours and prevents us from building

strategic autonomy. a lot of pushback against that quote over the last 24 hours. tom: a lot of pushback and it is everywhere as well. i am looking and larry is francine, -- and where is francine lacqua when we need her? the answer is, these are immense challenges. you mentioned the political at the top of the hour and we will address this and what is really valuable is we do this with isaac: tan skate, the director of policy -- isaac will tan ski -- isaac bultanski. they talked about deep division and social unrest and maybe that describes america and maybe even china.

what does this mean fort washington? isaac: there are a lot of folks wicking up and surprised by the commentary. as we continue to digest this, one of the things that will be highlighted by traditional washington is no matter what country you are in, all politics are global. it makes sense for president macron, as he is fighting battles at home given the unrest there, to maintain it we continue to see the world split. it makes sense for him to continue saying we should de-risk the relationship with china rather than further decoupling because he can maintain that optionality and sell it back. tom: i don't know what the imf optionality is in the meetings here die really don't.

-- in the meetings. i really don't. jonathan: with the french president and leader of the chinese communist party is remarkable in the comments from europe and the french leader. i find it staggering there is a big reason. it is a not my opinion on what he should or shouldn't say but i see -- don't see how he can reconcile it if the u.s. president said the same thing about the situation in europe. go back to the editorial from the wall street journal. heat weakens the deterrence against chinese aggression towards taiwan. -- he weakens the deterrence against aggression towards taiwan. how can you make the argument the united states should have a role to play in what is taking place in ukraine and at the very same time so you don't want to be on the same page with the united dates when it comes to

taiwan? tom: this goes back to degaulle and the tension between the united states and france. the answer is, i wonder what tim cook thinks of that video or dialogue we are having with isaac boltansky. jonathan: this president joe biden has done a good job of keeping them on the same page. isaac: the he has prided himself on multilateralism and responding to china and global needs. this will be particularly concerning for this white house, even more so than previous white houses because that is something president biden has highlighted as a departure from his predecessor. ultimately, this will be something that hurts the u.s. and european alliance and

something that have a longer tail to it than some of the normal political flareups because the imagery is surprising. that is something all of us are digesting and it is a bigger question in terms of as we move to this bipolar world, where does everyone stand? we have hawkishness in d.c. as shown by the clip that opened this up but you are not seeing that in other european capitals, is out degrees. jonathan: talked about the tension in the last six months between europe and the night is states and europe and china and that was around the inflation reduction act. has that been addressed and how has it been addressed? isaac: we are too busy fighting with ourselves to get ready for the fight with other global partners and competitors. there is a fair amount of infighting over the specific regulations regarding in

particular electric vehicles and sourcing of materials around that. he saw senator joe manchin who was the key vote to their pushing for more stringent sourcing materials and requirements from the treasury department. he has not gotten what he wanted their. i can tell you from making the rounds on this issue, there are many folks in d.c. that care about the international locations. the focus is trying to get it on the regulatory side to appease everyone from joe manchin to senator elizabeth warren. tom: you were in the zeitgeist this weekend of america talking about manufacturing america. you had intel going into new albany, ohio. you have a visceral feel for this. do you buy the idea that ohio will become a new manufacturing for america and that america get its act back together? isaac: i will say this much --

we campaign in rhetoric and govern in prose and there has been an enormous amount of money thrown at the manufacturing sector from the chips act and the infrastructure side. what i have noticed is there are some chokepoints for those moneys getting from your federal lawmakers now into the local community. those chokepoints are local government, state governments, local building laws, all of these things pile up. i am optimistic and you have to be, and why wouldn't you want to be, especially within money -- with the money we spent to spur manufacturing especially in semiconductors. a lot of that money seeps out and is struggling to get into the shovel ready project. jonathan: great to catch up. that is isaac boltansky.

you and i had to the imf meetings later this week and has to be a key feature of the conversation in washington. tom: my visit made it clear to me there is no other topic than china, but the overlay of china is on the still stunning economic growth. this is the backdrop of china we will see because china is not helping as much as we thought. five-year forward, 3% or less economic growth. the maximum any textbook is mobile gdp at 3% is a recession. jonathan: you have seen the china call, is china up this year in 2023. tom: then what? jonathan: just the cannibal -- the mechanical story of the improving gdp and then you get the headwinds. tom: we are not going to take

our eyes off anchor earnings. jonathan: on friday, jp morgan, first republic will start thursday. that will be april 24 to get first republic earnings, i believe. tom: i was cooking easter dinner. jonathan: what did you make? tom: you go to the frozen foods, the swanson stuff. jonathan: sounds awesome. futures unchanged on the s&p 500. from new york, this is bloomberg. ♪

jonathan: equity is just about unchanged on the s&p 500. here is a snapshot of the price action, starting with the s&p. nasdaq down .1%. after a year-long stretch of upside surprises on payrolls, they continued on friday. softer than expected data dominated last week and friday things turn around. yields were higher, the two-year down for basis points, 3.93. the 10-year was down to 3.37. jonathan: it will be interesting to see if the 30 year bankrate mortgage comes in as we have

seen. on may 3, june 14, july 26, we have any clue where we will be september 20? the answer is no. jonathan: can you get me to may 3 first? tom: let's remind ourselves the last 90 days we created a million jobs and to get from there to their and guess the x axis is impossible. jonathan: let's take a look at euro-dollar reedley. -- briefly. 1.09. the ecb, do they go another 50 and then are they done? you mentioned jobs and the prospect of a negative's payroll

. we have been talking about this for months and we see continued resiliency. tom: was always billion see on friday and we need to recalibrate. lindsey piegza joins us now. how did you recalibrate of the jobs report? lindsey: the biggest take away was that the labor market remains solid, allowing the fed to keep its i on the proverbial inflation call -- it's eye in the proverbial inflation call. keeping an additional rate hike on the table as we look to beyond the may 3 meeting. tom: i want to go to the process to get to negative nonfarm payrolls. how into a slowdown presumed do

you get to substantially declining non-form payrolls? lindsey: we need to see is the fed is watching the unemployment rate because right now with the downward take saw on friday, this does not suggest we are anywhere near the upward trajectory in terms of the jobless rate that it has been looking for in order to signal the spiral has been stunted. wages are still very robust and still within the range of 46% as we have been for two years. businesses are still desperate for workers. with so i millions of workers on the sidelines hesitant to come back and millions upon millions of job vacancies. from a macroeconomic perspective, there simply is still a very clear indication the labor market is tight. tom: so nominal gdp and earnings

season, i want you to suggest where nominal gdp will sit. will you set nominal gdp at a higher level? lindsey: not necessarily, because we have already seen underlying weakness on the part of the consumer. we saw that clear resilience in january. by february, the consumer was pulling back. data is splitting the difference. while q1 is likely to remain in positive territory, not robust levels at as the fed continues to tighten, that is where we start to worry about the negative print, the first indication of the downward trajectory into negative growth. like most economists, we have push that out for an additional three or six months depending on the ongoing resilience from the consumer. jonathan: that has been destroyed story for the last 12 months. we talk about the data

dependency at the federal reserve. over the last month we are wondering if it has shifted what data it depends on. can you talk to me about this new data is? some thought it was about cpi and gdp in now it is about something else. lindsey: the fed is focusing on wage growth, one of the key components they looked at in the employment report because from the fed's perspective, the primary concern is the wage price spiral whereby wages rise as employees demand higher compensation to then go out into the marketplace and pay higher prices in it retail and services. but the businesses really pressure from employees to continue to raise wages and then ways -- raise prices in the market. this is the primary focus. i don't think their attention

has shifted in any way from inflation, but we are starting to look at something for metrics. the employment report friday, i do think somewhat was a bit uneven. the next key report the committee will be focusing on will be the cpi and ppi report later this week and that will set the tone for whether or not the level of disinflation has gained momentum, giving them confidence that can back off from a higher rate environment. jonathan: wen yu here this -- when you hear this, is set more important than labor market? lindsey: it is a different focus. the fed is looking at some different data that will not deter or detract from the focus of reinstating price stability. that is the primary goal. chairman powell has said the economy doesn't work for anyone without price stability. they are aware of the market

volatility that we are seeing but they have different policies and metrics to put in place to help stabilize markets while at the same time they continue to focus on reinstating price stability. tom: help us get out of this glorious week we will have in washington and the stunning statement by the managing director that we will see a five-year, 3% global gdp. china participates, india, maybe select others participate, singapore, i will choose. what does that mean for the united states, sub 2% gdp for 60 months? lindsey: i think that is not unreasonable. the bigger question is what is the long run potential for the u.s. economy and i would argue it is sub 2%. even if we do see the u.s. economy show ongoing resilience, pushing out the downturn or the recessionary call towards the second half of this year, even

after we emerge from that weakness, what is the upside potential? it doesn't appear to be overly robust growth and that will be more difficult position for the fed trying to reengage and get the economy back to a long-term trajectory upward potential. they will be limited in their tools. tom: this is so important. what you just said is outrageous and i would say when the first places i heard it was from the great michael for rowley at j.p. morgan -- michael forelli at j.p. morgan. the piegza-feroli economy. this is stunning what you and michael are talking about a run rate of under 2%. can you tell me that is politically acceptable? lindsey: absolutely not. i think as the economy remains

under pressure, there will be a lot of pressure on fiscal policy to step in and supplement that growth. the more we see from the fiscal side, the more difficult it will be for the monetary side to achieve policy goals. as week move into this election, it will be increasingly politically unfavorable if the fed has to force the american economy to take its medicine in order to get price stability back in place. the economy doesn't work for anyone longer-term if we allow inflation to become entrenched. the near term view for officials in washington may have alternative incentives to continue to provide artificial support. tom: and she come with us to washington? jonathan: if she wants to come on rotor with you and i, but we can ask. thank you. lindsey: thank you for having

me. jonathan: only dwyer at the top of the hour talking about the importance of the bank ending -- tony dwyer at the top of the hour talking about the importance of the banks. and lindsay sank look at the bank rates and they have the option on may 3 and after that. tom: keep want to know where i am on this. here is where i am. the economy, the state we are in is innocent until proven guilty. the fact is, the boom crew has had to delay and delay a very constructive theory and they take it out and take it out and take it out. we saw that on friday as well. for some reason, the consumer is resilient. that is the silence overhanging the cautious you. jonathan: and the marketing of the bond market, that this will

be a disinflationary bust. i would say this about the bond market, take the range of last week from 3.64 the low on a two year to 4.13% at the high on a two-year. that is a monster range on the week. 3.64, weaker than expected data, and then the two year yield on friday adjusting of the back of a resilient labor market, of ton of volatility in bonds. tom: that is the uncertainty within the system and i will go back to first principles. the church service on sunday was emotional. the guy got up in front of a packed church and said we haven't done this in four years and it really hit me. we are coming out of the pandemic and now beginning to do things we used to think about in 2018 and 2019, and where are we

coming out of the pandemic? maybe we are not as far out of the pandemic economically as we like to think we are. jonathan: we have returned to the theme post-pandemic of buying tech. today, a monster move. dan ives is going to join us. sprinkle in a little bit of tesla as well. tom: they are doing the new thing in shanghai. what is fascinating is the price cuts of tesla. to do it once was ok, but twice? jonathan: three times. tom: i didn't know that. jonathan: that conversation is coming up. lisa: with the first word, i'm lisa mateo. a u.s. navy destroyer past waters claimed by beijing to conduct "freedom of navigation operations." the guided missile destroyer

stayed within 12 nautical miles. it comes as the u.s. is set to begin military drills with the philippines. the biden administration weighing its options after a federal judge in texas suspended approval of a drug used in medication abortions. the health and human services secretary said the administration is file an appeal. democratic lawmakers has urged the white house to ignore the judge's ruling. in tennessee, local leaders will decide whether to reinstate two democratic black lawmakers expelled from the state legislature. each said they would accept. they were expelled after taking part of a gun protest on the house floor. a tough start of the year for computer makers. apple plunged.

it is searched by pandemic era remote work that has evaporated. a new report lasts away the failed cryptocurrency ftx was managed and said they lacked fundamental financial controls and they joked about losing track of millions of dollars in assets. now it blames incompetence and greed on the part of sam bankman-fried and top executives. -- global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo. this is bloomberg. ♪

and it's easier than ever to■ get your projects done right. inside, outside, big or small, angi helps you find the right so for whatever you need done. with angi, you can connect with and see ratings and reviews. just search or scroll to see upf on hundreds of projects. and when you book and pay throug you're covered by our happiness it's easy to make your home an a check out angi.com today. angi... and done. >> nobody thinks we should be making everything we need in america. it is saying we should be self-sufficient. it is a global economy and want to continue to trade. in the case of semiconductors, which are essential to our national security, the fact that we buy 90% plus of our chips

from taiwan is also unsustainable and frankly almost dangerous. jonathan: the commerce secretary joined us friday after the payrolls report. coming out of touch stronger than expected. we had the opportunity to catch up with people from this administration. in terms of the communication, what an effective communicator the commerce secretary is turning out to be. tom: can you grope in road island politics, that is what you become. emphasizing fear that every single american has an it is hardwired in her. her father got canned in his early 50's at a watch company. if you have wondered down to new point to have a beverage of your choice, you drive through what was that. she lived through that and was

in her politics from day one. jonathan: a key feature was increasing investment in the united states. we get the headline from tesla building a large new battery factory in shanghai. this is why the push is for that company. tom: it is for non-mosque. usually for dan ives, we go to things larger cap and more stable, but today we don't. on tesla, jonathan wants to talk about shanghai and mr. musk. i get the novelty of a price cut and then if second price cut, and then a third one. is elon musk committing brand destruction? dan: right now they are being aggressive on price cuts because competition is increasing. i think it is sacrificing

margins for volume. tom: i looked at the masters, which is basically a mercedes-benz commercial wondering around the golf course and mercedes was blogging there electric vehicle -- was flogging there electric vehicle. is that car going to compete with elon? dan: i think what happened with restated and a lot of other european players, detroit, gm and ford, competition has increased. that is why tesla and musk are being aggressive on price cuts. this is the ev arms race laying out. the price cuts are necessary for the long-term game -- gain. jonathan: as you look at things,

some of the big car manufacturers on this massive investment cycle to shift towards ev, hootie think is most vulnerable? dan: i think right now the one that has the most to gain his gm. the team has done a great job, especially on the battery side. investors are focused on the profits and with the margin is an they are competing. that will be the uphill battle. i believe gm will ultimately be successful. there will be many winners with the green title wave plan out. jonathan: talk about the multiples and how we should think about them? dan: key earnings will be a key theme.

going into the 2024 numbers where growth in software and cybersecurity will grow from 18% to 25%. multiples are starting to reflect growth elevated relative to a non-growth environment and that is why tech gets the green light to win these names. tom: john and i are on the phone all weekend, watching liverpool edit done against arsenal and going can fourth on questions. let's say they are making $.20 on the dollar down the income statement. ford motor is doing half as much, $.10 on the dollar. does tesla migrate from $.20 on the dollar to $.10 on the dollar and as they do it do they i great from a tech darling to a boring auto company? dan: i believe there is a line

in the sand in terms of price cuts. they have the scale no one else has from capacity and a battery perspective and that has flexed their muscles in terms of what you saw with the china news over the weekend. they have ultimately a multiple race behind them and they continue to be the clear leader and they have the margaret -- margin leverage. tom: they moving to shanghai because they will not get as much heat from the chinese government as they would if they do it in arizona or north carolina? dan: they are starting to build in the u.s. but i don't really see a change dramatically near-term despite what we see from the 202 area code.

i think that is something investors understand will be a balance. tom: to 0-2 think is washington. -- 202 i think is the area code in washington. jonathan: thanks for translating. do you see risk on the horizon with regards to china and taiwan and the investments u.s.-based companies are making in the mainland at the moment. dan: there is clearly a broader risk. if you look from an investor perspective is contained. you look at names like apple and tesla and look at what the stocks are doing. investors are looking through the risk, although obviously it is something on the horizon that will ultimately be reflected in

these stocks. jonathan: wonderful to get your view on things. tech will start later on. i heard someone say early on the apple has had a tough year. apple year-to-date up 20% -- 27%. tom: is like the birds in central park. there is a cycle. every x number of years apple has to go out of business and that is all there is to it. jonathan: based on pc demand slumping. haven't we known that for a while that pc demand sucks? tom: someday it will end. the bottom line is, it is as simple as this.

we have been waiting for apple to stumble since nixon was president, richard nixon. jonathan: at simplification i didn't need it. tom: everybody has been waiting for apple to die. you have to be kidding me. what will the cash build be this quarter? jonathan: this was from that apple personal computer shipments declined by 40.5%. make of that what you will. tom: there is the orange colored mac. tom: those were cool.

this is important. this is important in earnings season. we are in this land of nowhere and we are going to get clarity on those. jonathan: we have had a shock to the baking system and what happens to lending now and loan growth in the american economy? never mind the resilience of the friday payrolls report but it is how the banking stress bleeds out to the economy in the year ahead. tom: who have to seek -- we will have to see. does this i have the gulfstream? jonathan: bramo is taking off a few days and we will miss her and we already miss her this morning. ♪

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>> the payroll report confirms it is a positive surprise, we needed. a recession is not a minute. >> this is been a red-hot economy. >> further fed, this increases the probability they will go 25 basis points. >>, something wild happens in the next few weeks, they will go 25 basis points. >> this is bloomberg surveillance. jonathan: let us get back to work, good morning.

this is bloomberg surveillance on tv and radio. equity futures about positive on the s&p 500, off the back of a better-than-expected payroll. the number 236, the expectation to 30. that is the expectation of economists, market participants are looking for something softer after a string of data misses. tom: what i found interesting this morning -- and we will do this in the data check -- toward 4% on the two year yield. after a weekend of turning and a lot of research, a lot of people thinking about calibrating may 3 yields gave way. i did not expect that with 394 on the two year yield. jonathan: around friday seems to be this leaves the door open for the federal reserve to hike may 3. others taking a different

opinion. there was one last week who said he believes the last hike we got from the federal reserve was the final hike of this cycle in his headline reads as follows. the credit crunch has started. that is his view. tom: everybody writing about the churn, we mentioned in the last hour as well, lori calvin sena joined us and she talks about a little north of neutral. it is this ambivalence that tells me we need massive data dependency. jonathan: speaking of data, april 12 cpi is coming up on wednesday. you need to talk about the banks, as well. that is the big development of the last month or so. let us get a snapshot of the price action.

equity futures unchanged on the s&p 500, going nowhere. tom: is the market open? jonathan: it will be later. 9:30 come up with that in the diary. 38 on the two-year, back down by four or five basis points. the two-year 394. the range on the two-year last week, not the 4% in the three 60's, really wide. with this is the head of microstrategy at academy securities. when did you make of the payroll support on friday? peter: there were mixed parts of the data. we have more data coming out. i think they should have stopped. i think that is a bigger concern. but they seem intent on driving rates higher. so they will use that. tom: there is a look to neutral,

there are fears that lead to nowhere. you call it the comfort zone, defined the comfort zone. peter: we are waiting to see how the economic data plays out. it's been turning back down after a strong strain. we get to the earnings, that is what will drive it. the biggest thing i am looking for is to see how the market responds to week earnings. do we get a huge bounce? if we are not respond well, i think that we had lower. tom: is it 10 stocks, seven stocks, 20 stocks, or cannot broaden out? peter: market will take cues from the 10 to 20 stocks we've been looking at for a while. you can hide out and well in the stocks that have underperformed. i am looking at the rest of 2000 .

usually of the russell 2000 is doing well, high yield struggling tends to be a correlation. tom: does he know lisa is not here? jonathan: he is doing it to fill in. talk to us about bank lending data, how important is it going to be for the market going forward? peter: some people take the fact that banks are boring less from the emergency civilities is a good sign. a big plum and blue -- plummet in bank lending as a whole. we saw the 10th straight week of deposit outflows. my concern is we have shifted from a credit risk concern to my bank is only paying .2% or .4%, i can get 4% relatively easy. you see the drain on the banking system continue, that will affect lending.

this is a slow burn. jonathan: why do you believe that is a signal of what to come and not a reflection of the last month? peter: i view these things as cycles. you go into panic mode, then you take it back. maybe we have too much money sitting in bank deposits, what do we do with it? that is may be a multi-month process for a love corporations to go through had -- through. that is a slower process, but that is what we moved into. tom: more than anyone on a wall street, you have a military vision, a set of people completely tied into geopolitics which is what we are hearing about every day. is what he wrote about that would be out there somewhere, does your board think it is now

and how does that play in? peter: we have 19 retired generals and admirals who serve as the intelligence group. we see the world as the most dangerous it has been in a long time. russia ukraine, we are seeing tensions pick up in the middle east, we do not like the fact that chinese seem to be getting saudi to embrace china more. i am getting nervous a lot of investors pay lip service to geopolitical risk then push it off, this is five years away, 10 years away. i am an american company, how does this impact me? i think we are being too complacent. tom: look at the russell 2000, which 2002 i want on? gold with the speculation of the russell 2000? peter: i watch gold, i china to get too involved in gold.

-- i try not to get too involved in gold. if i get positive, that is where i jump in. jonathan: you mentioned maybe people are underestimating or under appreciating what is developing on the geopolitical front. what should people be doing? they see the news, military exercises from china around taiwan. what are they meant to do? peter: lighting up on the tech companies, they will be the most effective if anything happens. if there is a further element of fear, you are supposed to be looking at countries who ultimately have to shift production two. tom: are you telling me to sell apple and go along with olivia? -- go long bolivia? jonathan: let me phrase in another way. are you lighting up on companies

that have direct exposure to china, the mainland? tech firms in that sense? chipmakers in the crosshairs? peter: that is part of it. it is driven by the fact people expect lower rates and the fed to juice up the stocks like it did in 2020. i do not think that will play at the same way. we will get earnings and fear coming out of the companies. jonathan: when you say get along with latin american stories, is that an fx trade, a bond trade, and equity trade? peter: a little bit of each. he will have closer relationships. you want to be building and accumulating that position. mexico has its own set of dangerous. at some point, the cartel will either have to get pushed back and have a real development or that will be a problem. there is no easy answer. tom: the geopolitical tensions

whether it is across this board or that voter -- across this border or that border or removed, doesn't wall street find comfort in the equities? peter: i think they are going to do that, i think they will add more into fixed income, not necessarily growth stocks. i believe there is hope there will we normalize with china. reopening. it is treated highly well, likes that. yet we had a steady trend away from china and with taiwan, the one thing that is accelerating his people reconsidering how they think about southeast asia as a whole. if you were not going to produce in china, you are likely to produce in vietnam or somewhere there. openings are thinking of moving away because it is clear china has the ability to flex their might.

they've developed a blue water navy. brown water navy is what they used to have, a coastal navy. they can project their power further into the blue water navy. he got to be aware of their ability to blockade the region and do things like that. i bought it this day and age when there are alternatives -- why bother this day and age when there are alternatives? jonathan: i will keep returning to it for you. inflation data in america, then later on in the week financial earnings begin. jp morgan on friday. tom: someone emailed me and i feel strongly about this, we adore attending the imf and world bank meetings, but we will not do just international relations in washington. we will continue to cover economic and financial and investment stories and try to

balance it out among the news flow on inflation. jonathan: and regulatory failures of the last 12 months. tom: the banking system -- where are we on wednesday and the banking system? i did not know where we were friday afternoon. jonathan: you've got to get used to getting that release. we pay attention to stuff we use to not pay attention to. equity futures on the s&p 500 unchanged. this is bloomberg. ♪ >> keeping you up-to-date with news from around the world. taiwan says it has seen chinese military drills around the island like this before. the foreign minister tells bloomberg the maneuvers are on par with the reaction last year. house speaker nancy pelosi visited and china began the drills after taiwan's president met with house speaker kevin

mccarthy in california last week. the commander of ukraine's ground forces says his troops are holding on in the face of a russian offensive. the city has been under siege for months. the ukrainian commander because the situation difficult, but under control. russia is using aircraft air and artillery strikes. most global central banks may be either close to the peak or already done with raising interest rates. according to a gauge calculated by bloomberg economics, the global rates will be 6% in the third quarter. by the end of next year, that it seemed to drop to 4.9%. in u.k., the national health service warms there will be unparalleled levels of disruption when junior doctors walk off the job for days this week. hospitals face almost 100 hours without as little as half the nhs medical workforce. trade unions and the u.k. have been demanding higher pay to compensate for inflation. in sports, spain comes from

behind to win the masters golf tournament. the final score was four shots ahead of the leader of the first three rounds. it is his second victory in one of golf's four major tournaments. global news powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

>> i sign off on all foreign military sales, including weapons to taiwan. i promise you, madam president, we will deliver those weapons. jonathan: the tension between the united states and china and the issues around taiwan continue to simmer. that was the chairman of the u.s. house of representatives committees on foreign affairs. equity futures unchanged. yields are lower in the bond market, 10-year down a single basis point. the two year yield is down. 394. tom: the resiliency of oil, brent crude 86, it shows the

power of saudi arabia that may be was displayed in the last 10 days. jonathan: let us talk about saudi arabia and china. china program conversation between saudi arabia and iran over the last week. china with a closer relationship to russia over issues with ukraine over the last nine to 12 months. tom: we have our own domestic proclivities, opec-plus came around the trunk news and all that. best trump news and all that. i would suggest the many international issues we are underplaying and we are guilty of that. jonathan: let us introduce the french president into the conversation, separating himself, more daylight between the u.s. approach to china and what he would like to see from the europeans. tom: my legacy on china is friends early and often a long time ago.

not just the french area in shanghai, it is commercialized but beautifully restored. france has an original relationship with china, it's been different than britain, then the united states. let us jump to this and the domestic ramifications we see around your investment and economics. gregory has been a huge support, does washington care about what european leaders do when they migrate to china? gregory: absolutely. i think the chinese story continues to be the most trouble someone globally for the u.s. right now. right up there with ukraine. in washington, there is a tremendous antipathy toward china for the way they handled covid, the way they spy on everybody. the animosity is palpable.

tom: we heard this from a number of guests area -- guests. but do we have the power to project to the philippines and beyond the pacific rim? greg: we do, and i think we have the power to spend a heck of a lot more on defense. i think that is the peer investment story that the defense budget is going to get another enormous increase. maybe a haircut for ukraine, that is to be debated with kevin mccarthy. defense spending will be the big player, because of china. jonathan: you mentioned the speaker of the house. they agree on issues around china, mostly. some separation. but his talk about real division, the debt ceiling. for the market, the landing point later this summer, wherever the date might be, might not pay attention to it.

do we need to pay attention now to what is developing? greg: if you look at what has happened the last few weeks in the house, it has been shocking. no progress by the republicans on any legislation. immigration, crime, whatever. no hearings on hunter biden or anything like that. there's been comments from kevin mccarthy the new york times picked up last week, very harsh toward his republican colleagues. saying they are incompetent, they have not gotten anything done. republicans have not taken that well, unsurprisingly. there's a growing feeling there is no rush at all to move on the debt ceiling. a default is still on the table. jonathan: a default, sit on that for the moment. what do you think that will look like? greg: we will wake up some morning in the u.s. and say we cannot make our payments, maybe there will be an emergency move

by the federal reserve. you cannot move that out. the implications around the world would be astonishing to see the u.s. not make these payments. what surprises me is how sanguine the financial markets are thinking it's the little boy who cried wolf. we have to worry about it. the fact mccarthy cannot get along with his members makes this a greater threat. tom: i have audible to a spectacular saturday night live skit, it was president trump attending the last supper. we do not need to go into the details. whatever anybody's politics, it was well done. except it is not funny. explain to us the power mr. has over the republican party. we are making jokes, except it is extraordinary the moment we are living. greg: it is remarkable. you look at the fact trump has a lead of 25, 30 points over any

republican, including desantis. he has got a lot more indictments to come. i think georgia comes by early may, other indictments as well. yet his popularity within the party continues to be astonishing. tom: i was thunderstruck by linkages to the united kingdom, here is mr. trump over the governor of florida. i did not realize the lead labor has over the prime minister and united kingdom. the equivalencies are tangible. jonathan: the breakout over the last 12, 18 months has been remarkable. let us stay on the u.s. briefly. the former president is incredibly popular with the base. we know based on the poles he has a big lead over the governor of florida. when you conduct the polls for the head-to-head presidential race, he fresher in a the

governor of florida does not. is this the guy democrats want to race against in the next election? greg: the democrats are feeling pretty good. the major reason is abortion. the vote in wisconsin last week, polls show the average american feels republicans are too strident on the issue. republicans are going to have to moderate on this or they will get a major push back in the next campaign. jonathan: the middle ground, the center of the country. where do you see the republican party making an argument for the center ground in this country? greg: they are not. that is an albatross. look at tennessee and the abortion issue, you see the country is feeling republicans have gone too far. jonathan: thank you. not a judgment on the policy, the politics. a judgment on how he thinks it

will turn 90 presidential race. tom: the gaps are tangible. the polarization is tangible and they have a domestic tinge. it is not just international economics, it's the response of the u.s. is the dominant funder of imf and world bank. can i just say, the first international anecdote i got a million years ago, when we did not know what we were doing, was from a 15-year-old kid in vietnam. i'm making a joke about bolivia, butch cassidy got off the train in the classic 1969 movie. he emails in and says look at bolivia 2028. let us bring it up. on the radio, the bolivia 4.5% of march of 2028, 80 to 50 year

in recent 2023 down 51%. this is the international economics that we do not talk about. thank you for shouting this out to us on twitter, you made us smarter. jonathan: the global debt market has been hammered. tom: he never talks about it, he is too worried about who's going to win the masters. . call. -- very cool. the british open is not like that. jonathan: it is emotional. ♪

jonathan: counting down to the opening bell after a long weekend, about two hours away. equity futures look like this. s&p turning lower by a little more than a 10th of 1%, nasdaq 100 down half of 1%. last week about flat, even in the face of expected data throughout the week. on friday, payrolls with little upside surprise. just north of 230. the two year yield is all over the place. lows in the three 60's, right now 3.9 three, yield level by five basis points. let us consider this. markets are rapidly switching between narratives, first the

fed was going to cut rates due to financial instability. now bank deposits have stabilized. markets were looking for job loss to signal the company entering a recession, but the report was solid. it could shift the narrative back to inflation that is too high, may be pricing out some of the cuts. he is looking for more hikes, may 3 is the next one. let us finish on foreign exchange. may 3 federal reserve, may 4 the ecb. the euro just south of 109. tom: we analyze monetary policy as discrete, we had a guest earlier mention -- this is a huge theme of imf interviews -- of dovetailing fiscal policy or what they call fiscal space. they never talk about monetary space. but fiscal space is one of the options.

what fiscal space does europe have? what optionality do the good people, the fractious people of europe have? i am not an optimist about that. jonathan: this is the store would been told the last 12 months, monetary policy was constrained by higher inflation and could not respond to economic shocks. we heard the same about fiscal policy after the stimulus to the pandemic. then a couple of weeks data points then we get cuts from the federal reserve and you see it priced into the bond market. we will hear from john williams, one of the speakers you want to pay attention to. expecting another 25 basis point hike at the fed's main meeting before holding prices steady the rest of the year. with sticky inflation, a strong labor market, and a resilient consumer, we do not expect the fed to pivot quickly.

race for more volatility in rates and the curve. we are playing the game again. the market is priced for a lot of cuts. tom: what is important is the heritage of derivatives, they slice and dice different dynamics. what is the dynamic of service sector inflation you see right now? >> that is a good question, the tug-of-war is between the services side of inflation, higher rent, at least in the first half, which will dictate the thinking on cpi. this week's report in cpi will be interesting, because we might see signs of cooling in the housing market, which is what we are looking to see. that is more of a second-half story than a first-half story. people have jobs, you have a strong jobs report.

as long as people are employed, you are going to see more spending and services. tom: you go birds on us, you have the crosby channeling and say turn, turn, turn. is that what we are doing, going birds and every season turn, turn, turn? subadra: the big question coming in for us is when is the turn going to be? was it october of last year when 10 year yields peaked at 4.25%, or will we see another high in yields before we see a steady decline? our view has been that yields peaked in the fourth quarter of last year, then gradually declined during the course of the year. accurately pinpointing where it is on inflation will be extraordinary and environment like this. you are looking at a variety of factors.

the push and pull between higher energy prices, sometimes it is certain sectors of the open services side of the economy that are pushing higher. rent will remain high for the first half of the year. really, causing -- calling the turn is going to be difficult. it looks like yields seem to have peaked. it looks like we have one more hike in the cards. why? because of the fact the employment picture is still strong. the labor market and consumers are resilient. it has to come from tightening credit conditions, which is what you are starting to see in the banking sector. jonathan: how important was the data on friday that alluded to that? subadra: it was very important, in my view. we've been tracking the fed data

as well as the h.8 dated to see with the take-up has been as well as with the deposits have been from smaller banks. a couple of weeks back, we had the dallas fed president talk about credit conditions broadly tightening for small and medium-sized banks, almost seizing. you see the tremendous amount of deposit from smaller banks, guess what? smaller in medium banks are going to tighten credit conditions. that is where you are seeing a credit crunch. it is not in the top 10 banks, it is in the small to medium-sized banks where you are seeing the tightening of credit conditions. jonathan: i've had mixed responses. on friday, what do you consider to be the important data point? the data you alluded to moments

ago or the payroll support the came earlier in the morning? subadra: i think both, that is what makes the whole equation confusing. they are trying to waive financial stability concerns over inflation and employment being quite strong and inflation will continue to rise. that is the balancing act the fed has to play meeting after meeting. i think they are going to focus on getting rates to a certain level then key policies stable while they assess financial stability concerns. tom: across the ark, will foreigners continue to bid for bills, notes and bonds? subadra: absolutely. but get all of the cash going out of the smaller regions into the larger banks, going all in

to money market funds. why? cash is king, that is where you want to keep your money if you do not know how things will pan out. this is typical of end of cycle dynamics you have seen in almost every fed cycle, it tends to be very volatile. we do not know how things will pan out. in that environment, it will make sense to put your money in cash. this time, you are getting a pretty decent return. so you are seeing the rush to put money into money market funds, you are seeing demands from foreign investors for short-term investments. returns are pretty good by being in the front of the energy curve. tom: i look at the treasury curve. give me the mystery of curve dissing version. that is the one thing not in the

literature right now. a vision of, where is the curve inversion going to be in six months or a year? i am not hearing about this. subadra: we noticed that typically, when the curve inverts -- about six month after that is when the fed policy starts to pivot. i think we've probably seen peak conversion, we have seen a dramatic rise in the steepening of the yield curve. that tends to be a leading indicator of the risk of a recession. peak conversion looks like it is behind us. if policy is on a pivot, you are starting to see the signs of a switch in the policy from hiking to perhaps more easing posture,

if you will. jonathan: wonderful to get your view, thank you for being with us. pushing back a little bit against the cuts that are priced. tom: absolutely. 40, 50 basis points of inversion , 80 out through 100. we come back to 50, the number of right now is 58 basis points. is anybody modeling 48 or 38 or 28? i do not think this is talked about enough. the basic vanilla curve, 90% of our audience on radio and tv do not look at it. for pros, this is oxygen. nobody is modeling this inversion. jonathan: think about how much the story has changed and how quickly, and how many times the story has changed in just three months. citi published about it this

morning, people tuning into this program on a daily basis. in january, they heard soft landing. february, no landing. march, hard landing. globally here in april? -- what will they here in april-- hear in april? tom: linking all of this blather to the fiscal response we should see if we get slower gdp, do they have room to move fiscally? i am not sure anybody does. jonathan: what would you like them to do? tom: they cannot do anymore, they out of option in the fiscal space. if we slow down, what is that then what? that will be the theme starting tomorrow in washington. tom: -- jonathan: we need to catch up with michael nathanson. how did you watch the masters?

espn? tom: on espn, i cannot sit there commercials anymore. when we have commercials, they should see me drinking tanning. -- drinking tang. i think the commercial thing is 15 seconds or less. jonathan: how would that work for radio? tom: i do not know, we think scott for figuring that out. jonathan: from new york, this is bloomberg. ♪ lisa: keeping you up-to-date from news from around the world with the first word. a u.s. navy destroyer passed through waters claimed by beijing to conduct quote freedom of navigation operations. it sailed within 12 nautical miles from where china has its

largest outpost on artificial islands in the south china sea. it comes as the u.s. is set to begin military drills with the philippines. the biden administration is weighing its options after a federal judge in texas suspended approval of a drug used in medication abortions. health and human services secretary tells cnn the administration has already filed an appeal. democratic lawmakers urged the white house to ignore the judge's ruling. the new head of the bank of japan says he agrees with the prime minister that there is no need to revise an agreement on inflation now. he spoke after a meeting with him, the agreement between the government and central bank says the boj will try to hit the inflation target as early as possible. comments suggest easy policy will continue. china is further locking in its place at the top of the global energy storage supply chain. tesla plans to build a new battery player in shanghai.

they will manufacture and make a pact large-scale energy storage unit, tesla already has an assembly plan for ev's in shanghai. a tough start of the year for personal computer makers, apple pc shipments plunged more than 40% in the first quarter. lenovo and dell reported declines of more than 30%. the demand surge has evaporated. global news powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

>> more than a year the fed has been tightening and we have not seen the labor market quit because i think the view is going to be difficult to bring inflation down in a consistent and affirmative way hollande place more weakness in the job market.

jonathan: the former fed governor weighing in the following the payroll support on friday, a little better than anticipated, offering a lift in bond market deals -- yields. yields are lower, equity futures on the s&p 500 down 2/10 of 1% on a 10 year yield, down a couple of basis points. cash open about one hour and 44 minutes away. tom: it was not a long weekend, you and i were here. we could not get a car to get home. we were here friday and you and i put in an arduous friday. it was not a long weekend. jonathan: it was a long weekend for many. tom: not us. jonathan: he seems very upset about that. i'm sure many of you over the weekend enjoyed golf, congratulations to the winner, a fantastic final-round. first u.s. masters title.

the final plat aired on cbs yet come over the course of the four-day tournament, espn, espn plus, paramount plus, cbs and the masters website. networks split the coverage between traditional cable and streaming platforms. the masters at augustine national and television contracts, operate on a one-year basis, is incredibly original concept that they have. this is the theme you and i have talked about with sport for a while, where to find it. you go on hulu and there are five different places to go, paramount, peacock. i am not talking golf, i am talking about the premier league. tom: let us bring in our guest, talking as we look at the hogan bridge and nelson bridge, if it is the masters, we are talking to michael nathanson slowly.

it is completely original come every other sports event is crazy. formula one, pga tournament. in the masters, they talk like this. how do we get here? michael: it is a tradition like no other. that is what it is. we got here because the world stopped working together in media 10 years ago and everyone has gone their own way. it is a shame, there was a common good known as u.s. paid tv that is now fractured and impossible to put back together. for consumers like us, the experiences worse. you spend half your time trying to figure out where the content is, can you get it on your smart tv, does the tv work? tom: how does -- how have you changed your view of how this ends? when you and craig moffett are

three guys having breakfast, how does this change over time? michael: that is a great question. we have this view that there are some companies that are keeping most of their rights in the ecosystem. look at turner, owned by warner bros.. fox, disney, espn. they tried to keep their content in the garden. we have others that are cheating, paramount plus owned by cbs or peacock by nbc are cheating because they are taking their best content and making it over the top into streaming. apple and amazon. our view is you need someone to kick out the cheaters from the bundle. you can make a smaller bundle of the guys who have their rights together that are not over the top. you need to re-create the world

of people whose content is stitched together and found in one place. one bundle is what has to happen. jonathan: who will lead that effort? michael: that is the problem, we've been urging to companies. one is youtube to be owned by google, because they do not have a horse in the race. creating the world of cheaters and on cheaters. then there is disney, which owns hulu live and espn, they are my next great hope. hulu live, a streaming tv bundle , it starts to be more aggressive. jonathan: have they consolidated ownership of hulu yet? michael: that is coming next year, next january. you have to wait for that to happen. as consumers, that is the main problem.

you are leaking rights all over the place at the highest points. it has become a terrible product and it is too expensive. that is why cutting is accelerating. that is the stuff that we stare at every quarter, how bad it is getting. comcast is looking at it, that is terrible for the people with life paid tv as a business. jonathan: -- i have eight waist tom: i have eight ways to go. jonathan: getting a skype call. tom: when was the last time that you used skype? tom: i do not use skype, i do not use zoom. jonathan: that was the skype music. tom: do we still have michael? there he is. very quickly, bob iger has fired everybody but craig moffett, he

is on a tear. moffat is next, does apple merge -- what is the sweat factor right now? does apple merge with disney before iger fires the rest of them? michael: that is a good question. i cannot see apple with disney in this department of justice, apple does not want the theme parks. at some part, the markets will get frustrated with disney. look at disney, it is a leisure company. you look at where leisure companies trade, higher than media. someone will pressure disney and say you should spin off your media networks, they are not worth much anymore, and focus on theme parks and hotels. maybe not under bob, but the next year or so with stocks not moving, it will get more active than we have seen before. tom: one of our teammates, amy,

we had to medicate her this morning because her husband would not tell her what does the world cost. she is going down there with five or six people, including her beloved son-in-law. what does a family pay at disney world and what is that for mr. iger? michael: if you told me when the pandemic started that disney's parks would be ahead of 2019's profits in 2022, i would say no way. the rebound in disney's profit margins are insane. the margins are higher in 22 then they were in 2019. it is everywhere. there's been a massive rise of people with willingness to pay for travel. tom: i noticed. michael: i think last year was 30%, there was not price taking as much as people went for this

day cannot the hamburger. -- the steak and not the hamburger. i have not been there in a couple of years paying. jonathan: there we go. [laughter] michael: but i got all kinds of swag to prove it, here is a disney investors work area -- investors park. tom: this is corruption at the highest level. michael: consumers are willing to pay and disney's operations have benefited from the shift. look at disney as more than a media company. tom: they are spending $1400 a day on tickets, how much of that drops tiger-- to iger? michael: about 40% drop-down. from the bottom come every

dollar that came back to disney, that is how it comes back. tom: just get the tank out. jonathan: michael, thank you. tom: i have never been. jonathan: we did disneyland paris maybe 25 years ago, maybe 30 years ago. did not work out. tom: charlie pellett just did it , just to disneyland paris. the marriage survived. jonathan: what a legend he is, world-class sports broadcaster. tom: what is so great about him is he did it every day with style, there is never a variance. jonathan: just beautiful. tom: we will be back. ♪

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>> this payroll report was very consistent with the soft landing view the fed has. >> that is also bad news. >> there is continued severe risk as the economy slows. >> the fed isn't going to quit until the labor market quits. >> at some point the concerns

about recession will have to surface. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. thank you for joining us in new york on radio and television 40's in washington and the overview of a trip to the imf spring meetings is economic slowdown. jonathan: that's the view from others over the last few months. if you can take a view from the bond market right now if in all the volatility after friday there are people who believe the door is still wide open for the fed to go again on may 3 as payroll surprised to the upside. tom: mike done her sideways but the idea of then what not enough is being studied and written about a pause order i say even a

pause pause pause we are not there yet that is not in the literature right now. another 4% last week tom, the equity market 3800 for months now how do we break out of that range? john levels as we start this monday this international relations week s&p 4100. what is the gloom call? 3500? jonathan: 32, 34. tom: what is the bull market call? we are above it. jonathan: it's too gloomy. tom: there is nobody on that trade. i go there and there is no appetite jonathan: cpi wednesday is really the next stop. thank.

tom: let's pause for 15 on friday the known world was not watching what was released by the bank so we are just now getting that into the monday morning there could be any number of nuances but the fact is think crisis is not over. jonathan: u.s. bank lending you've got to work out whether that's just the reflection or a signal of what's to come some people believe it's a signal of what's to come. tom: i'm going to pull an audible here there is to fuse off of that think report and the depths of friday and one view is it's really bad. i think morgan stanley was featured on that over the weekend. the other view is, yeah, it's bad but it's not too thousand 8, 2 thousand 9, 2010 bed. those are the two schools of

thought. jonathan: certainly that period wasn't extreme. they happen slowly all the time this is a process. we've had 12 months of timing from the federal reserve we've gone from zero we go north of five in early may. that's a very short amount of time with rates that much, tom, and i think we are only starting to see the consequences. it is not idiosyncratic for many people. something to keep an eye on. tom: i'm going to go something that peter didn't want to go on and that was gold at 2000. it's a tinge that's out there late last week with gold lifting above 2000. jonathan: should we finish on the equity market, just negative about a quarter of 1% on the snp. we talked about what is coming later this week, cbi on wednesday and then bank earnings as well.

just a couple of basis points. tom: and the financial conditions showing accommodation over the last couple of days. certainly moving away from the more restrictive town of the last 10 days. head of fixed income strategy chief investment office what did you rewrite this we can, matt? >> what did i rewrite this quest good -- this weekend? tom: with the bank of america view? >> nothing was rewritten, we don't think. we have been in the same place we have been. we have been calling for a tighter fit. the conditions will surprise you. you never know what it's going to break if something broke. the idea that you can get 500 plus points that fund type also

the quantitative tightening on top of that. you're going to get over session, you're not going to get a soft landing so we are still in that camp. tom: i think this is under discussed, folks. is it an equity bull market? talking about october being a stock market and up we go in the bond market you don't talk about price up yield down so much and yet i see the bloomberg aggregate total earned index up some 8% off the low and up a stunning 19%. are you enjoying a bond bull market? >> enjoying? hard to say we are enjoying things at the moment. the last time we talked to several months back people talked about high cash balances we were facing the other way

fully invested at the moment remember the conversation we had moving out on the curb you had your dollars allocated a little bit longer and that sort of played out here hard to say we are enjoying this it's certainly interesting bond markets have performed a lot better but the stock market is taking lower rates as a benefit. it's using that to discount earnings at a lower rate so equities are staying flat the crystal treating with interest rate with the stock market is not discounting lower earning yet it's still been a very strong and positive correlation between rates and stocks. while that might feel good near-term that stocks are doing ok and bonds are doing great

that's not a healthy long-term phenomenon it doesn't create a diverse like portfolio so it might feel good near-term when things are both moving up a longer-term it's still a little bit of a concern. jonathan: do you think the incoming information validate what we sing in the market? >> validates what we are seeing in the market? again anything is possible. if you look back to the last plus tightening cycles, we have never seen this much tightening without a procession. we had a couple of soft landings. that was 300 basis point tightening. when you include quantitative, that level of -- it would be historically unprecedented.

remember back in january the fed is going to talk about around 5% and end up cutting back at the end of the year. we are right back to the january levels of what the market had been saying the whole time, that you're not going to be able to get 5% which we sort of round trip here. it was a good place to get long durations so we crystal balanced , natural equities. jonathan: another has changed is not how much the fed will hike its how much they will cut the extent to which they can start a cycle and peer things back to maybe three. maybe two. no. can go site? what limitations do you think they can experience? >> i like what the program you said it's a process, this is a

process. a lot of people are trying to get ahead of the process. longer-term perspective, the market is fairly clear for over a year or two now that when the fed starts cutting it's probably beyond magnitude of about 2% rate cut. probably to the 3% over two years. that's probably a good odds on deck. it is still very much up for debate and the fed doesn't network the market doesn't now it's one the cutting actually it's going to start acting this year but we need to see the play out more in the inflation data. it's very possible it does delay a credit crunch is very's but that is not a foregone conclusion yet. the cuts are coming back at the end of the year versus it's going to be 2024 and again that

shift could markedly shift. we are still slightly cautious here and we are very much neutral at the moment but they will start cutting. it will happen probably in the next 6-9 months most likely the six-month range once they start cutting again it might a more neutral is probably around the 3% level. jonathan: three and not zero. >> what dollars jonathan: the potential for the fed to pull back and pull back to what? tom: to what is the whole thing hair. this goes to the idea of portfolio construction. we have a somewhat equity bull market. this is not normal. i think we all get that and you say what breaks. there's a real value to these

total return indexes. the investment-grade, the high-heeled, -- hi yield. and the answer is i think it's a bull market. jonathan: how many people -- we are taking comfort from the idea they might cut. we are not taking discomfort from the why behind 20 might cut and that's the important point here. at some point you start trading the why. tom: i heard in several reticence there. how many people participated from october? the influx it was just stunning and that's why. jonathan: futures on the snp, ignoring that. >> keeping you up-to-date with news from around the world with first word, i'm lisa mateo.

taiwan said it has seen chinese military drills before foreign minister tells bloomberg the maneuvers are on par with the reaction last year when house speaker nancy pelosi decided. china began the drills after the prime minister met with kevin mccarthy last week. emmanuel macron wants europe to develop strategic out of that would avoid the risk of turning eu countries into vessels in the event of a global crisis such as a u.s. china confrontation. micron made it clear france's approach -- holding on to the city in the face of a russian offensive the city has been under siege for months the ukrainian commander calls the situation difficult but under control. he said russia is using aircraft

and artillery strikes. the biden administration is weighing options after a federal judge in texas suspended approval of a drug used tell cnn the administration has already filed an appeal. democratic lawmakers urged the white house to ignore the ruling. 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. ♪ rnessidata-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all. allspring. purposefully divergent.

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>> my concern is that we shifted from a credit risk concern to while my bank is only paying a certain percent i and get 3, 3 .5%. i think you see the drain on the banking system continue. this is a slow burn i think and it's going to be a big headwind for the economy. jonathan: wonderful to catch up earlier this morning. going into cpi on wednesday. bank earnings just around the corner. good morning to you equity features look a little something like this trending lower over the last 40 minutes or so. down one third of 1%. big defense of this morning down about two basis points 337 on a

two-year front end of the curve. last -- loss of interest. tom: a little tension as well. the vix 19.71. it would show maybe a little bit of nervousness off the jobs report and may be how we recalibrate but peter's wonderful visit with us which i really learned a lot, the geopolitics here can't be ignored. that is our theme here. jonathan: couldn't agree more the military drills around taiwan by china, what we heard from the french president has approach to china, let's of daylight in fact. tom: let me give you a balanced view here starting tomorrow in washington the usual victims lined up john, this is really the first meetings post-pandemic and the overlay here i'm not really sure where we will be

wednesday, or we will be wednesday. jonathan: never mind wednesday, thursday they are offering a five-year view. tom: there is a lot of talk of camera that was private but it's normal that they do a five-year what's not normal is a frame at on some 3% and i believe you have to go back already three years to get to that level of caution. that to me is the overview we got here. we will get you complete coverage in particular the banks on friday and we begin our banking coverage for this week. securities, i'm going to cut to the chase everybody follows jp morgan i know you are the only one that actually read dimon's letter but they are down 25 but a lot of the larger regionals and super regionals are down 45%, 50% from the peak. how do they recover?

they are not jp morgan. they are not bank of america how do these super regionals actually recover? >> good morning, tom. i think there's a couple of things going on. obviously the deposit movement we have seen. you look at the data from the fed that has slowed i think that's a one key piece. the other piece, what is the economy doing right now and are we heading into, you know, a slowdown or a recession? thanks don't usually perform all into that. banks are built for a recession. they risk manageable. we do think there is going to be opportunities for investors and a lot of these stocks will recover when we get to the other side of these economic uncertainties. it's really simple that you had a big selloff in the this uncertainty.

tom: in times long ago some people same the smaller tanks have fled the great zombie roll up. do you just assume that come point they're going to have to merge? they're going to have to combine? >> there will be mergers but if you listen to regulators and politicians they don't want to see all the smaller banks go away. they are after -- over 50% of commercial lending and just having banks and communities. tom: i've got to interrupt here because you are so knowledgeable on this. how many smaller banks are there , you know, roughly? >> 4000? you know, 5000. many thousands. tom: if there are 3000 am i going to miss the thousand that merge? >> again i think it's a function , you have to go community by community.

i do think a lot of these banks play an important part across america so if you need local lending, you know, some of these small banks are a key provider of that. they are important to the economy overall that's the main message here you need to have a message that works in need to have the deposits that are stable. on the other site, i think people understand that these banks play a part in economic growth. you do have to maintain some semblance of a banking system. there will be consolidation it's been happening i think there should be more i also think there should be very large banks . we were talking about things we never talked about before western alliance. we talked about that lots over the last month. all of a sudden names like

schwab started popping up and started trading really weak. what was the story about? >> very simplistically, they have a balance sheet or over 60% of the asset base was fixed to securities. his interest rates have higher and on the liability side with the customers do, and this was expected when rates move higher their brokerage customers remove the money out of the cash and they move it into a money market. the deposits in the brokerage account declined by about 30% over the last year. what happens is you lose a low-cost fund and you have to move in and for over 4% or a cd that is really expensive so that hurts net interest margin. that's been happening at a rapid pace. not unexpected but that's really been driving a lot of

uncertainty in terms of what the profile really is. jonathan: as you look across the banks that fall under your coverage, who are the earnings winners? going into reporting season? >> is going to be a tough earnings season overall. we like the banks that are more exposed to trading with resilience in the quarter goldman sachs over 40% of the revenue so i think we will have a better relative quarter then some of the others so that's kind of one thing. and then there are smaller companies when you look at two. steeple financial is a stock that would really like trading the single digits on a pd basis but they have grown earnings by 100% over the past five years. you really have to be selective here because financials are going to have a bumpy road when you have the volatility we have you don't get belt -- back to

normal quickly. there will be select opportunities. select with businesses that can take market share and that perform by trading. jonathan: wonderful to catch up with you. let's do this again in a week or so. some of the names that are caught up in this over the last few weeks. tom: what i wanted to flush out there, focusing on three banks. over towards times square it's like apple, apple, google, tesla, data and facebook or whatever is going to be called this week. devon as a truly an expert and it doesn't matter what it is it's a 23% haircut to jp morgan on the price to book. i don't understand how regulators apply a complete process to all the banks when they seem to be partitioned into

four or five or six big ones, maybe i'm wrong here the super regionals and then everybody else, the 4000 banks that he was talking about. jonathan: he mentioned altman so that's next. tuesday, and on friday you get jp morgan in the next hour, michael cushman, sector fifth, lori calvo sena --calvasina all coming up. ♪ rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror. i'm also mr. leg day...1989! anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations. i go through a lot of pants. before investing carefully read and consider fund investment objectives, risks, charges, expenses

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tom: what we do is do audibles at burke surveillance. facts change, we change. radio and television, we are preparing for monday and travel to washington in the meetings of the international monetary fund. lisa abramowicz is in close conversation with mr. moll from a few days ago. he drops a selective set of bombshells now, i would doing economic slowdown. it's real simple, i'm going through the headlines, they are

nuanced as you would expect. global growth slowing to 2% this year. he says the 2023 gp is expanding in america versus the previous 2.1%. on a more philosophical basis he states that the peace dividend of the 1990's has been used up. the extraordinary economic information from the two institutions we are receiving and we are getting lucky as we were previously booked. right now, stephen joins the chief economists there. just a perfect time to add you on. we can how do guesstimates of 3% gdp, but i'm calling that out of the textbooks and global recession. are we heading for global recession, even with buoyant

china and india growth? >> we will discover the industrialized economies are suffering to a great degree. even though there is an opening up of china there will be some rebound, number one economic activity. the greater grip the chinese communist party has over the economy will limit the ability to surprise to the upside nba continuous headwind for the global -- economic environment. tom: is the central banker to the world more restrictive than we think? the may 3 press conference, because jerome powell face a forward restriction not priced in the markets? steven: that's the big question. i think what you are really getting at here is what is the right at four monetary policy at this juncture? the market seems to believe they will continue to raise rates one more time and

that will break something and wind up with something even bigger than what we have already broken, creating an environment where they will be forced to cut interest rates later this year and a prudent path for monetary policy and the debate out of these fomc minutes will lay the groundwork for the likeliness of a pause where they hold open the door for additional rate hikes down the road. tom: this is right where we want to go, it came up a few days ago. are we asymmetric in our view given the action and tangible action by a central bank? i would say the reigning school of thought is echoed by matt lisanti. your next base symmetrically has to be a cut if you pause. you don't agree? steven: i don't agree at all. you have to let the dust settle. the details from the labor market report from last friday

with inflation numbers this week in the retail sales numbers at the end of the week are going to unfold, telling you that there is more resilience than you thought in the economy. it will be a second-half recession but not all recessions are related. some are very shallow, some are deep. i think most people in this market right now only remember deep recessions. they don't really remember shallow recessions. even in 2020 it was very, very shallow. there was a bit of a systemic credit crunch and that. more so than this apartment with video syncretic risk. that's the key difference. tom: i've been lectured by stabilizers. into recession, stabilizer, one of them is fiscal space. do we have the space to commit physical oomph in a slowdown? steven: the question is where are we going in a recession?

if we get back to four points in -- 4.5 percent jobless claims, that's a balanced labor market environment. how much extra do we need in the environment? 5.5%, 6%, then we could need something but i don't see that coming through. the labor market is tight enough. all the people that enter the labor force, the bulk of them got jobs. that's why the unemployment rate drifted lower, not upwards. tom: this goes back to what i mentioned at the top of the show. the fact is that with revisions that will change again we have generated one million jobs in 90 days. that's like economy to perfection. yet we are talking about negative payroll out there somewhere. talking about wages out there somewhere. maybe some inflation in them. and right now it sort of kind of but no maybe.

what's the timeline here for the kind of labor data that forces the central bank to adjust? to me it's completely ambiguous right now. tom: it is and i think it is -- steven: it isn't i think it's later rather than sooner. if you want a good real-time sense of what's happening, follow the unemployment claims. a lot of people tried to make a lot of hay out of the numbers from last week with the reality is you have to get into that 350 timeframe before you see a deterioration in claims and we are nowhere near that. tom: bringing this up now on the terminal, and if i could type correctly that would help, i and jc for. there it is. the four-week moving average of the claims on statistics with 237 right now. i didn't realize it was a high.

when was the last time we were at three something? the answer is it was a long time ago. steven: we clearly saw that during the covid recession but beyond that there was a 128 month expansion. getting into those kinds of claims numbers outside the covid recession, you are going back 12, 15 years. steven: -- tom: my textbooks say you don't go back to a 14 year labor economy unless you have a huge 7374 recession. steven: those claims are just getting you to that type of unemployment statistics. to get to the 5.5% number yeah, you will need something more than what they talked about in terms of growth numbers for this year and last year. i think that the market is discounting that but the reality is that what we are seeing is

that's not coming to fruition. even the retail sales numbers, people have week headline numbers. unit automobile sales held nicely with pricing holding up. it's hard to see that we will get that 0.5% decline for the people in retail sales. tom: i was just looking it up, 300,000 pro pandemic, september 2014. that is how far we are from caution. i noticed used cars were resilient as well. what's the micro data that you need to inform the audience of right now, the acclaimed data coming away from used cars? steven: we are the driving factor. the fact that used car prices are holding up well is one of the great indicators that show

you the households still have the income to drive the economy, one of the reasons why i think the market is too presumptuous to the degree of economic slack that they are discounting. jonathan: -- tom: others at renaissance would say that with rising income and even tepid disinflation, suddenly real income, inflation-adjusted income isn't gloomy. it maintains some form of constructive tone. is that the model? steven: without a doubt. looking at the household valance sheet income, we are still of the belief that there is a substantial amount of firepower left in the consumer and that the additional firepower will keep the economy more resilient, an argument for the reserve to keep rates higher for longer

rather than picketing as anticipated. tom: well than what is your gdp number four, then? 12 months at the world bank, bear stearns, just to cite one. steven: the hours laid out by the reserve is that we will be in the shallow singles this year , probably in the decimal point fourth quarters with one .1% in 2024. it's a weakness in the near term compared to the official institutions but we don't have much of a rebound in 2024 in that i think is a difference. tom: well then let me finish with what i heard from the managing director last week. you and i know how difficult it is to look out at this for five

months. the five-year deal from 1990, 3% sustained five-year gdp, real gdp. does that get it done for the world? steven: against the demographics? probably yes. a lot of the reason you have this right outlook is the demographic situation. the aging of the global population in the industrialized world. the aging of the population in china in particular, we are again men retire at 55 and women retire at 50. you have a rapidly aging population and as populations age you tend to see them oh -- reduce the overall growth. jonathan: stephen -- tom: stephen, very informative, greatly appreciated. part of this is to look at the demographic. i really wanted to look it up

for you. there we are. italy, birth rates. you have to go back to 1861, 1861, that was when great-grandfather pharaoh's parents moved to the fields of italy and worked their way up to coventry in england. this is something. italy recorded births 2020 two down from the previous year, 14th consecutive all. lowest number of births in italy since the country's unification of 1861. extraordinary. coming up next, interviews and preparations for the meetings in washington. stay with us, this is "bloomberg surveillance p >> keeping you up to date with news from around the world, i'm lisa mateo. nicknames in municipal bonds, calling it it's.

john miller is retiring. the retirement was announced in tandem with a separate release, saying that he had settled litigation from preston hollow community capital. they alleged that miller had tried to blackball him by threatening and intimidating broker-dealers. tennessee, local dealers deciding this week whether to reinstate two black democratic lawmakers expelled from the republican-controlled legislature with each saying they would accept the legislators expelled after taking part in a gun-control protest on the house or. in the u.k. the national health service warns of unparalleled levels of disruption when junior doctors walk off the job for four days this week. without as little as half of the nhs medical workforce. trade unions have been demanding higher pay to compensate for inflation and china is further locking in its base as the top of the global energy store

supply chain with tesla planning to build a battery supply plant in shanghai to manufacture their large-scale energy storage unit. they already have an assembly plant in shanghai. a top start to the year -- tough start for computer makers. apple pc shipment plunging when there was a reported decline of 30% driven by pandemic era remote work and evaporating. global news powered by 2700 journalists and analysts in over 100 20 countries. i'm lisa mateo. this is bloomberg.

>> one of my biggest frustrations has been excessive data dependence.

excessive data dependence. you have to be anchored by a strategic view of the economy and this fed unfortunately hasn't embraced that view. the only time they have is when it comes from the new monthly framework. tom: mohamed el-erian generous to be here with us on jobs day. holding court at queens college. every second here with this incredibly important guest is important, so we will get right to it with the gentleman from king's college. adam joins us now from columbia university. this barely describes his contribution to the discussion we are having on what the world looks like in one year, two years, three years. what's the difference between king's college and queens college? they fight each other? [laughter] >> walls and rowing competitions. >> are they far apart from each other? >> they back onto each

other. >> we should get you both on. next kudos to him for doing that job. tom: he was very emotional about it, actually. i mentioned it to him and he said that what was so urgent and he didn't expect this were the superbright kids from these really difficult backgrounds that have to make this huge jump to the highfalutin culture of cambridge. adam: can be difficult. tom: intimidating. right now we are intimidating ourselves, with great respect adam posen, who i thought had a great essay on globalization. in the financial times where he writes often on the state of where we are in this new higher inflation. at the beginning of your essay, you spoke about trying to have a pain-free crisis. i spoke to a leading government official in 2008 about this,

where we tried to let the zombies out without having moral hazard. trying to be pain-free in the crises. how do we get out of that difficult price -- crisis? adam: what i'm kind of focused on there is this question of the double whammy of this sudden unexpected surgeon inflation and the increase in interest rates, what it does to the balance of the biggest market that really matters, the fixed income market. there is a huge shift underway. part of it is simply a loss to the accounts of the fixed income investors but part of it is a transfer where if we have an unanticipated shot to the price level it shifts the balance between the creditors and debtors. we have seen a swing in the debt to gdp ratio that we haven't seen before. 20% shift over 18 months to two

years. tom: you and your wonderful essay parsing the haves and have-nots. cynics would say that with huge surge in interest rate everyone else is crushed. is it that? adam: not in the data so far. the people on the line in the fixed income market have the top end. the entire struggle if you like between taxpayers on one end and bondholders on the other plays out in the top 20% to 30% of distribution. the question i ask at the end that we all have to focus on is what happens to the folk who basically live paycheck-to-paycheck. it's a flow economy, not a stock economy. what we have seen across the world is falling real wages and we need to focus on that long-term effect of this sudden unanticipated inflation.

tom: that was a huge study, back before that beverage, is it a slog? as the managing director talked about? sub 3%? is it a slog for the next five years with permanent week -- weakness? adam: it depends on where you look in the economy. in the emerging market it's a slog scenario. that recovery was tamer. but in the united states we are dealing with a strange situation of a buoyant labor market but with falling real wages for much of the time. month after month. it's a it's a strange reallocation of priorities and a rebalancing between employers and workers.

tom: it's incredible common ground coming from the school down the river, m.i.t., where they look at the future and they say what will growth be? olivia suggests a lower permanent star. maybe there are some with him. ken rogoff is much more suspect of that high permanence. where do you fit into that debate? adam: i think that the decisions right now are relatively straightforward. tom: richard agrees with you. richard clarida, former vice chairman, singh you got to go to point at sex. adam: i don't see it. the final squeeze down, there will be massive disproportionate. getting down to the 4% to 2%,

that's the point, right, you have to think hard about all the trade-offs at that level and we are somewhere away from that and i think that europe as well, that's going to be a tough choice. tom: in everyone's life, there's a moment that crystallizes everything. all of this economic babble, what does it mean for investment? forget about transitory now. are we going to get to a new permanence in a lower rate regime? adam: i think the tendency is to go back there. i don't think we are going to stay at the current interest rates. are we going back to the negative rate? that's off the table now i think. so the balance shifts into a world where you have to pay for money but you are not paying hard if you are in the privileged group. in the low income world, it's

tougher there. tom: welcome to all of you, particularly you from bloomberg radio. adam will be in washington tomorrow. everyone waking up this monday morning, italy. italy has had a debt improvement that is absolutely superb. explain why it is a mystery. a font of optimism where you -- italy is in much more trouble than the recent numbers on jet -- debt to gdp. tom: this is what -- adam: this is what we have been begging for for years, juice the european economy. we saw a 7% dip in the ratio but it takes us out of that territory where we constantly worry about italian spreads. we have bats in the ecb with long-term questions around whether you can sustain it if

the inflation comes down and that is where the demographic is. we shouldn't overdo that biographic. tom: come on, makes for good tv. adam: the crucial factor with italy isn't the quantity of labor it's the capital of labor. investment in the university system, which is incredibly dilapidated at this point. rebounding public expected sure is hard to do from the old to the young. you do that, you don't have to worry much about the demographic side. that's the key driver, right? it's about the politics in you see how hard it is in france. something akin to the uprising after moving the retirement age. figuring out the good politics of mobilizing an aging population to maximize the polity of labor, that is where i think the smart politics needs to be. tom: you've got to come back,

we've got to do like an hour long discussion or something. adam, leading off intellectually for all of these meetings, the first post-pandemic imf meetings we have had with a phenomenal essay. i will get it out to you here. others as well, i pointed out, adam pozen of the peterson institute has a really important foreign policy essay and there will be more in the coming days. here is the plan. the answer is we will be in washington tomorrow to begin our coverage. balanced coverage of this critical imf world bank meeting with stunning headlines from david who joins us on thursday but we will also be looking at the economics of finance and investment and onto the tickle bank earnings of fortress diamond on friday.

futures, 24. deteriorating a two year yield. stay with us. this is "bloomberg surveillance." ♪ when i was his age,

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jonathan: good morning, good morning. equity futures down .6%. the countdown to the open starts now. ♪ >> everything you need to get set for the start of u.s. trading, this is "bloomberg the open" with jonathan ferro. jonathan: live from new york. coming up, the jobs report opening the door to another rate hike.