♪ >> i wouldn't read a huge amount into this report in terms of giving the all clear. >> when you look at the data, we have to realize they are backward looking. >> we think now would be a good time to pause and reassess. >> i think they will hike at the may meeting and then take their pause and i think you have recession coming later this year. >> we are still a long way from 2% at this point. >> this is bloomberg surveillance live from the imf spring meetings in washington, d.c.. jonathan: live from the nation's

capital for our audience worldwide, good morning, this is bloomberg surveillance on tv and radio a long time -- alongside tom keene and lisa abramowicz. the conversation will continue through the next several hours here in d.c. at the imf. we need to talk about the gloom that's taking place behind us over the last couple of days and the fact that it has not been captured by u.s. officials either by the treasury secretary or fed officials. tom: it's a change thursday because we got through 8:30 a.m. yesterday and moved on from the fixation of the inflation report. it's much more in focus this morning with the conversation about debt and china in the shocking cautious view the imf has, five years forward. jonathan: retail sales are coming up tomorrow morning and u.s. jobless claims little bit

later. last week, they were starting to rake out a little bit. payrolls were decent but everything before payrolls not so good. lisa: jobless claims today have had more importance to than they have. last week we saw a take up work -- upward. it was a material shift and a changes the tone of perhaps we are seeing the softening we've been waiting for. jonathan: it's awkward at the moment in washington, d.c.. you've got the federal reserve staff suggesting there is recession coming on one hand and fed officials are ignoring the fact that that might because by the tightening they are engineering. tom: craig torres of bloomberg has had some experience. he is adamant there is a divide between phd, we don't hear from them and people like the president.

there is a real division within the fed. lisa: yesterday we got the meeting minutes. tom: tell me. lisa: this was fascinating. jonathan: he hasn't read them. lisa: i will give you the headline -- they see a mild recession now for the latter half of this year and it's not because things are drew to sure rating -- are deteriorating more broadly, it's the banking issues but they say everything is fine that we are moving forward. then everyone else is coming out and saying we think we can engineer a soft landing. a soft landing is off the table if you read the minutes. tom: that was done two or three weeks ago. the tightening is ancient news in the world we are living in. jonathan: i still don't think they can gauge how much we will see in credit standards off of the shock of the last month and that makes it difficult to have any kind of forecast.

let's talk about the next five weeks. lisa: we have no clue and that's what they keep saying, that there is some sort of tightening but the scope of it, they just don't know with rid -- with respect to bank stress. and we got the cpi report yesterday any other time, people would be saying we are going to 6.5%. now they are done. maybe they won't hike. tom: it really pushes against the general consensus. jonathan: another read on claims a little bit later this morning. here's a snapshot of the price action. s&p futures are just about positive. in the bond market, not much going on here. lisa: 8:30 a.m., we get march

producer price data so a look at the potential inflationary pressures for factories but jobless claims have been boring and now they're not. we saw them flatlining sub 200,000 but over the past few sessions, you seen a to cut upward. how high will they go? do people trade off of this? tom: it's called a hockey stick. the new york islanders defeating the montréal canadiens to reach the playoffs last night. lisa: the bank of governor canada will be speaking. we also have david malpass of the world bank as well as the imf first deputy managing director. i want to ask whether she still sees the potential long rate projection for developed market central banks going back.

is it still a possibility given the reluctance to do real damage to an economy at a time when inflation is still sticky. at 1 p.m., the u.s. is selling 18 billion dollars in u.s. bonds and that's where the question gets imbued by some sort of market sense of what they see the long run rate being. tom: do they do the auction in front of the treasury department? jonathan: maybe they started taking bids for bonds. tom: sold american. jonathan: we will cover that live. maybe that is how it works. the head of maps growth strategy from mizzou america joins us now. the imf has talked about the idea that maybe we can go back to pre-pandemic levels of

neutral interest rates. do you see it that way? >> yeah, basically. there are many reasons why people have argued we could be in a new equilibrium, maybe changing the relationship from inflation growth going forward. there is no strong evidence that is the case and i would argue your best bet is we will return to some of those pre-pandemic levels. essentially, the fed has the view that the news will rate is down, but that's kind of where i would put it. absolutely. tom: you have coined the phrase super restrictive. there's been so many events since we last spoke. do we continue super restrictive and is it within the understanding of central bankers? >> central banks are so kind of

fighting inflation with a backward looking approach. there is a focus on the latest data which is very backward looking by its nature and they are a little obsessed about expectations. inflation expectations have been anchored. if you are going to look forward, you will naturally agree that things look super restrictive but the obvious point you been talking about with credit tightening we are about to see, there's been no evidence for a long time in the states that when you get the tightening of credit standards coming out of the surveys that it doesn't translate, it's a much weaker low growth. you are already seeing that the last couple of weeks. things are slowing down and have dropped out right. especially in the smaller banks. super restrictive because you've got a credit crunch coming. you had just you add the credit crunch to the labor market.

it hasn't really started to materially weaken. it's definitely slowing down. the demand for labor you see in the jobs survey has come down a lot. they kind of downplayed that. if that continues, unemployment will rise a lot this year in the second half and it will go up by much more than i think the fed expects in the idea of a mild recession, good luck. if you get a mild recession that would be great but the nature is it will be a much harder landing. lisa: what would make you rethink your assessment especially at its when many people disagree with you including larry fink who said he sees inflation staying around 4% for years. >> one has to distinguish the stickiness of inflation with what might happen to the really connie. it's perfectly reasonable for some people to argue that we may

have to tolerate higher inflation for longer as the economy weakens because of some of the drivers of inflation. we have always argued that inflation is more complicated this time around because of the supply-side factors. people still have a lot of money in their bank from the previous fiscal stimulus and that gives them a little more access to inflation that wouldn't be there. stickiness of inflation is not say -- is not the same as saying things will slow down. it's easy for the fed to focus on inflation when unemployment is down at 3.5% but that will not be the case when unemployment -- and unemployment rises. they may have to tolerate that higher inflation. they will have to say inflation will come down and we are optimistic we've got to bail out the economy and the banking

crisis, they may have solved the issue immediately of banks going out of business but they haven't solved just solve the issue of bank capital getting written down because of bad loans. that will be an ongoing problem for the financial system. lisa: what you are saying in some circles is considered incredibly avenue on guard if not perverse because it goes against what the fed wants us to believe which is they will get back down to 2%. are you saying it's ok for this federal reserve to tolerate a 4% or 3.5% inflation rate if it avoid some of the deepest pain? >> yeah, it's a question of patients. everything is transitory up to a point. you get back to the idea that you are more patient around bringing inflation down but the counterpart as you will drive unemployment up to 7%. our projection was unemployment could be 7% next year and that's outrageous.

to allow that to happen because you're not willing to tolerate inflation at 3-4% for longer would not be the right kind of pause especially if there is collateral damage being done to the banks which are the hearts of the economy to some extent in the medium-term. one of the issues with covid was economic starring. if you take out the supply-side come you end up with a much worse inflation trade of down the road. you don't want to scar the economy which will have a much longer term effect for productivity and good inflation growth trade-off. jonathan: we've got to leave it there but thank you. did you hear the fed wasn't wrong in 2021, we just work

patient enough? lisa: everything is transitory if you wait long enough, like earth. jonathan: some really interesting calls out there at the moment including this one -- cable against the u.s. dollar $1.30. tom: these are bold moves with the huge run-up. jonathan: more to come from washington, d.c., this is bloomberg. lisa: keeping up-to-date with news from around the world. policymakers at the federal reserve are shrugging off the staff warning of a possible recession. they are betting they need to do a little more to curb inflation and the minutes of march minutes of march will extend its recent interest rate hikes next month. the british economy took a bigger them expected hit. installed in february but a stronger january reading of the

gdp reduces the risk of recession this year. the uk's on track for an extended time of stagflation. exports in china on especially rose in march, jumped to 4.8%. demand from europe and most asian countries improved but that boosted the economy outlook and indicates global growth may be better than expected. a federal appeals court will allow limited access to the abortion pill. a three judge panel partly granted the biden administration's request to put a hold on a texas court ruling that overturned fda approval of the medication. it also allows restrictions on abortion that were lifted since 2016. this is bloomberg. ♪

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significant than the one ever future decisions. and it will then be key to stay the course for as long as necessary. to put it differently, the sprint is over, giving way to a more long distance run. jonathan: the ecb starting to sound more like the federal reserve. in washington, d.c. morning at the imf global headquarters for their spring meetings over the next couple of days. equity futures are positive by zero .1% on the s&p 500 and a bit of a lift in the bond market. there are a couple of calls out there at the moment and goldman says this --

basically, the dot plot one more hike. the data is not strong enough at goldman sachs to sit there and say we will go again. lisa: this is the conviction trade right now. then they will potentially cut rates later this year pretty aggressively and that's what everybody coalesces around. is the data really that soft? people are not that convinced quite yet. tom: it's asymmetric. what kind of pause is this? if you pause, does that assume you cut after that or if you pause, do you go both ways? you can go both ways and they

are possibly setting that up. jonathan: we can go three ways. mohamed el-erian wrote about it next couple of days. he said you can pause and you can hold through to year end which is implied in the dot plot, you can pause and then you can do nothing which is what the market believes or you can pause and the risk is here but you can pause and start hiking again and that could be problematic. tom: to me, it's the access, is not a pause of one meeting. no one is pricing in where we are in september if we have a stasis in central bank policy. jonathan: it wasn't so long ago we were talked about 50 basis point interest rate hikes that got in the way because we had a banking shock over the last month. does that come back on the table

? they are pushing this idea that the fallout for the banking shock will be limited and means the fed has to go further than the fed is implying now. lisa: the quiet part is how important is it to get back to 2% inflation? that's the crucial issue. people say the fed should cut rates and be less restrictive, those people tend to believe it's ok if we are patient possibly for 10 years in terms of what it is in terms of getting inflation back down to 2%. jonathan: we talked with wells fargo a number of months ago. we are in the four or 5% window now so what is the next push? tom: when we turn, what are we turning back to? we will turn to the shock yesterday for the commodity

market. it wasn't in oil and it wasn't in copper, in china, they showed up bang up retail china earnings which falls into optimism on the price of brent crude. joining us as the cofounder of research. thank you so much for joining us this morning. if this shows us a boon china retail, do you bring that over to $100 brent crude? >> they are not directly connected but definitely, i just got back from asia and there is no recessionary talk over there because china is reopening. it's reopening in different stages. they are making western traders understand that but not every sector is booming.

restaurants are falling and cars and airlines are very strong and now you are actually seeing the housing market turned the corner which is huge. that's probably going to take until the end of the year to fully recover but the chinese recovery is good. we saw the numbers come out from march, 12.3 million barrels of crude oil back to one of the highest levels they have imported. there is some very strong demand. tom: lvmh shows a boom japan, is it a pacific rim boom or discrete to a covid recovery in china? >> it is specific to china in the sense that that's the last country to come out of covid but i don't think we should underestimate the multiplier effect china has. you have seen chinese tourists all over asia and a lot of airlines have reinstated a lot

of the roots because they were dependent on china. i think that's what you were seat with tourism around the region. not everything is rosy, manufacturing is weak because the u.s. and europe have a de- stocking phase that's back in force. lisa: the reason we are talking about this is not only this is a big question geopolitically but it also feeds into inflation. the cpi report we got yesterday was weaker than expected. because of what we saw an island -- in oil and energy prices over the last month, they had ticked up material higher on the heels of this story. how much higher could they go in the next month or two on the heels of this china recovery? >> i think this is such an important question.

our colleagues and advisors think we will get a 25 basis point hike in may. maybe we get a pause after that but i think the reality is, commodity prices given the opec-plus cuts with the chinese reopening will mean potentially much tighter markets and the second half of the year as long as there is a mild recession in the west which is not our expectation. if that's the case, i think the market is so optimistic thinking the fed will cut rates that oil prices will go above $100 in the second half of the year and that has huge and occasions for what the fed has to do. there will be a time lag so they may not have to do anything this year, only the back half of this year into next year. there will be pressures. that's not the only driver of inflation. other sectors have an important role to play, particular he housing but we cannot ignore that oil prices have started to

go higher. i will not say they will continue to rise given the macro fears. you get a lot of volatility and there will deftly be some downside but looking forward in the second half of the year, hard for me to see oil prices not getting above $100. jonathan: always great to get your perspective on the crude market. crude is trading in the low 80's, getting close to 90. it's softer on the session by about a third of 1%. tom: all of a sudden this morning for the first time, we are looking at 90 is. jonathan: she mentions china which has fallen off the radar. now it seems to have faded from the conversation, why is that? lisa: partly because it wasn't as robust as people thought it would be. it wasn't as much travel were spending but do the numbers.

does that question how much this has been an entirely domestic story and how much the spending is reaching so the other economies including china and types of travel? tom: we don't have time for it now but the luxury review is a global study, not just about china but japan numbers yesterday were outrageously up three or 4%. jonathan: lvmh a record high. coming up, the global economics at global economics. also we will catch up with the imf. ♪ >> [speaking foreign language] ♪ that's what you get from the morgan stanley client experience. you get listening more than talking, and a personalized plan built on insights and innovative technology.

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jonathan: live from the nation's capital this morning, good morning from the imf world bank headquarters. the conversation continues in washington, d.c.. let's start with the price action. equity futures on the s&p 500 are positive by almost 0.1%. the nasdaq is up 0.2%. this is what the bond market looks like -- still around 4% on the two year.

the range last week was wide. there was weaker than expected data. the 10 year is at 3.42. let's finish with foreign exchange, euro dollar against the u.s. dollar, $1.10. positive 0.2 percent. a stronger euro is in the mix over the last couple of weeks. tom: this is the back story now. the bottom line is there is this beginning of a significant dollar weakness. it's the idea of euro at one dollar 10 or $1.15. you will not be able to died --

by the tots. jonathan: are we buying a futbol team now? tom: if you want it. jonathan: let's talk about the airlines briefly. american airlines out with some numbers that didn't impress investors yesterday and delta this morning seeing -- saying they see $2.25 in the estimate was much less. the stock is up by about 1.2%. lisa: popping after their keeping their full-year adjusted games. delta has continued to see very strong revenues and very strong passengers -- passenger volumes but coming off a little bit. first quarter revenues is about $10.4 billion. the margins are better and this has been the story we have

continued to see with airlines. sometimes you find the service might not be the same and you can pay more but they are potentially getting more into the profits area. jonathan: are we talking about delta in particular? lisa: no, there are always small cutbacks in service. their margins are small discomforts. tom: i was on a flight recently at delta and there was a fistfight in economy because they wouldn't take the charge card for the beverage of your choice. they are milking everything they can. jonathan: i'm guessing you were sitting in row 42. lisa: they have no -- new rules where they don't -- won't serve

certain drinks because of behavior like that. jonathan: i thought you were going to say because of people like tom. tom: i don't think it's a problem. jonathan: an extended version of bloomberg surveillance this morning so we will go through to about 9:56 a.m. david malpass is coming up then the i am up and than the european commission and the university of chicago booth school. tom: leading us right now is the chief global economist and formerly working with the bank of england. the governor of the bank of england is looking to declare victory. can europe declare victory if many are modeling stronger sterling and stronger euro? >> no, i don't think so given

that inflation from the bank of england perspective is still far too high. the headline is coming down but the court not really and they cannot declare victory until that's under control. what's happening is where as recession was focused more on europe given the energy crisis, now we are shifting to a different set of risks around banks and credit which will affect the economies more broadly. it's all coming into the mix in terms of recession in the u.s. was not about good news on the european economy but bad news on the u.s. tom: britain seems to be off the radar and the president was in ireland yesterday with the prime minister. all that is fine and there's a very em focus here and a banking crisis focus and china and the u.s. from where you are, has brexit been successful? >> goodness, i don't think we

can say that at this stage. exports are really not faring well. the difficulty with any analysis of brexit is is so much has come along in the meantime in terms of the energy crisis and banking turmoil so it's hard to know where we stand. it is certainly causing has problems, not least in terms of labor supply and labor availability which is still a major issue in the u.k. and one thing that is driving up wage growth for the bank of england. lisa: we got some data this morning about gdp in the united kingdom and we got a sense of strong stagflation. the u.k. was underperforming other g7 nations. what is that timing and how soon will other nations join or will it be about the u.k. emerging from this into something perhaps better? >> the february gdp data

surprised on the upside was not as bad as we expected. we anticipated a contraction and an outlooks like q1, the u.k. economy will have grown which is something of a relief. that said, i think things are going to get worse. u.k. will head into a recession probably from the second quarter as credit tightens. unfortunately, other economies will join in this issue of tightening credit conditions which is broad-based. the sun down in lending will be much more pronounced in europe than the u.s. i think it's going to spread and we will see the effect of monetary policy pushing economies into hopefully relatively modest recession as the year goes on. lisa: will that be enough to bring inflation down given that some people argue that a lending reduction and credit crunch is not enough to create price stability? >> it's really hard to say.

our assumption is that yes it will. we have seen some encouraging signs in the latest cpi released like rental inflation starting to come off at last. then there is a real risk. we are still in the midst of a lot of strike action protest in the u.k. to try to push wages up and deal with the cost-of-living crisis which will only extend the period of high core inflation. it's a very difficult position and it's difficult to judge how quickly inflation will come down and we had been disappointed the inflationary pressures have not fed through sooner but that shortages seem to be a thing of the past and with recession taking hold, it's likely that inflation will come down much further. tom: if inflation comes down, what does real growth do? does it come down as well?

>> probably, we expect most economies to head into recession so that will probably be the case that things will fall into negative territory. if we can get core inflation down, then monetary policy should turn relatively quickly. we expect before the end of the year, not too far into next year as far as the u.k. and i will offer some real respite in terms of real growth when monetary policy tightens. jonathan: thank you for your perspective. let's talk about these numbers which are phenomenal. luxury goods units are fashion and leather goods. 18% in the first quarter.

it's almost double what analysts were looking for. on the way into the imf, we shared a right and thomas talk about the growth in japan but let's talk about these numbers that are stunning. japan rising 34% on our cannick basis. -- on an organic basis. those numbers are pretty phenomenal. tom: we talk about two americas and maybe we talk about two globes. there is an aspirational striving global audience that's looking at this stuff. i was at the gucci in venice years ago and there was a guy next to me at the counter holding two phones and showing product to people in china. more importantly, guy at the other counter doing the same thing. this is the global aspirational reach of these products. lisa: you think it's the

wealthier individuals have more to spend? tom: i disagree with that. i think it's also some form of middle-class reaching up and this time. the media is full of this gloom in the tangible hardships that are out there, but there is an aspirational middle-class coming out of covid behaving like we've never seen. lisa: how much is us waiting for this to stop? it's existential thursday so. i wonder if we will end up with people continuing to spend. people have gotten accustomed to spending and we saw that with delta and bookings are incredibly strong and the second quarter looks great. are we seeing that trend and it's not just the wealthiest. jonathan: until the labor market

breaks. this is what you are speaking to, the resilience of the u.s. labor market over the next 12 months. it was the smallest upside surprise but we have not had a downside surprised on payrolls going back to the march report last year delivered in early april and this is what they have been talking about for months. the same thing over and over again, that it will break. this is why jobless claims become so important because last week, which is started to see a breakout. tom: no question about it. we formed one million jobs in the lex -- in the last 90 days. that's just terrible. jonathan: coming up, tobias adrian. tom: we did go to the university of godot. lisa: keeping you up-to-date

with nusra around the world with the first word. fed officials feel they need to do a little more to tame inflation and are leaning toward another interest rate hike next month. that's according to minutes from the march meeting. this despite forecast from fed staff advisers that there will be a mild recession later this year. another missile launch from north korea, a suspected intercontinental ballistic missile was fired toward waters of japan's northern island. that prompted a brief morning from residents to take shelter. south korea says it's possible north korea may have tested a new type of solid fuel missile. there is a report on the alleged leaker of those u.s. intelligence secrets. according to the washington post, it's a young gun enthusiast who worked in a military base and share the classified documents with the group on discord. he was known as og ñ group he spent some time inside a secure facility and they say he's

cooperating with authorities. there is an arbitration agreement from ukraine to russia and it has to do with the russian seizure of ukraine natural gas seizure which russian and -- russia annexed. no conversation -- no confirmation from the hague. -- shares of lvmh soared today. it saw strong growth in asia as chinese shoppers bounce back from strict covid lockdowns. it is seeing a slowdown in the u.s. global news, powered by more than 2400 journalists in more than 127 countries. this is bloomberg. ♪

>> our forecast is better than the forecast. last year, we were the fastest

growing economy in the g7. we are confident about the u.k.'s medium-term prospects but we don't pretend we are not going through a difficult time like everyone with high inflation which we have to bring down. jonathan: another country affected by the imf, jeremy hunt and you can catch that interview on bloomberg.com and the bloomberg terminal. u.k. gdp this morning is not fantastic, stagnating this year and not changed on the back of strikes and hoping that things improve from here on out. tom: how can elected officials agree over a five-year global growth of 3%? he would be out of his job. jonathan: it's politics. tom: it's un-american and un-british to follow the imf line on where gdp is going. jonathan: i think it's political

suicide to commit to gloom and our future. tom: what do you think, lisa? lisa: i think it's about politics. jonathan: i will tell you what's can happen in the next 12 months and you will not like it. can you imagine? tom: we will have to see. let's speak to the most important person at the imf. this gentleman when he speaks in this moment of post-pandemic, the room is silent. he is in charge of the green book and all around financial stability here and has enjoyed a recent american banking crisis. you people put out phd fancy spider charts which show the different factors that are up challenge right now. which spider chart in which factor in that chart matters right now? >> what we have seen in the last

month is that banking stocks have sold off quite a bit, in particular in the u.s. and europe but america more broadly has been fairly stable. financial conditions have tightened to some extent but it's really in the banking sector where we have seen most of the tightening. that could have consequences down the line for macro activity. tom: let's go to your work at m.i.t. with olivia or -- with olivier len chart. -- blanchard. talk about the hard-core pragmatic realities of hard-core economics. does theory matter right now? >> absolutely, we published a paper earlier this week that looks at our side and in our assessment which is aligned with what the american prices are is that interest rates will come

down in the medium-term. at the moment, they are elevated and central banks want to fight inflation and have to keep monetary policy type but we expect interest rates to come back down which we estimate to be similar to pre-covid. jonathan: have we seen evidence the banking system cannot handle interest rates close to 5% at the federal reserve? >> the trend in the banks and non-banking system, we have seen turbulence in banks and non-bank financial institutions. there is always a distribution of how much exposure there is to interest rate risk and's -- and some of the weaker players have been on -- under incredible stress. there are so many possibilities that will be triggered at some point. lisa: jonathan: there were clearly some badly managed institutions but one fed official says he does not think it was because the federal reserve went from 0-5 and 12

months. do you share that assessment? >> i don't think it's the -- it's necessarily the speed at play here but i think the rise in interest rates has been putting pressure on institutions that is unrealized losses which are in public domain and have made headlines around the events over the past month. lisa: do you think the stress shows it is not worth it to necessarily raise rates further from here and because that more systemic stress in order to more rapidly get inflation back down? >> the first goal for central banks is to bring inflation back to target, no question about that. both the u.s. policy makers and the swiers have been successful in deploying other tools to ensure financial stability. they have taken aggressive actions in terms of lending to

contain any fallout. that allows monetary policy to continue to tighten to fight inflation. inflation is a big problem and it has to come back to target. lisa: we talk about trying to separate financial stability from monetary policy to fight inflation. things are getting fuzzy because you have fed officials pulling back rate hikes. do you think a credit crunch is disinflationary? >> there is certainly going to be an impact from a higher cost of capital of banks on their bank lending behavior. we have numbers in thegfsr estimated to be three or four or 5% in the u.s. in a similar magnitude in europe. there will be an impact from bank lending on real output. that will feedback into monetary policy positions, absolutely. lisa: do you think developed

market should not raise rates further and they should just tolerate inflation being higher for perhaps a bit longer with faith that it will get back to where was pre-pandemic? >> we don't have a definite answer yet. it depends on releases around inflation where there could be upside surprises to inflation that may need further tightening of monetary policy. our policy going forward is dependent on data and particular how core inflation moves. jonathan: let's talk about the data that might influence that. have you seen evidence that credit and bank lending is contracting in america? >> absolutely. we have seen data releases that have shown a certain amount of tightening in credit. it's in the writing statements and the overall standards. lisa: jonathan: than what was

the treasury secretary talking about earlier this week? >> i would distinguish a baseline in this scenario and the treasury secretary was talking about the baseline. when you look at markets, it's coming back fairly quickly. jonathan: you are being kind because i think she said she saw no evidence of things contracting. >> there is certainly evidence in the data of some contraction in lending and some tightening of standards. jonathan: what a situation between the imf and they are all looking at the same data and the politicians and the treasury secretary. lisa: we dismiss that is politics but i would love your answer on this. what are the policy implications of the politics of not reflecting pain that is likely to occur when you get the policy prescription you think is necessary to bring down inflation? >> monetary policy is being

tightened and that is partially transmitted through bank lending. it's a classic bank channel and to get inflation down, of course, economic activity has to come down to some degree. tom: if china is reticent to join the west in restructuring debt, does that change your financial stability? >> many countries are in that restructuring phase and they have many plans that are important like you mentioned one of them. for those countries, it is first order to get the debt restructured. for the moment, the countries that are impacted are smaller countries so relative to global collect capital markets, i think it will not lead to broader

contagion. jonathan: thanks for waking up early. lisa: jonathan: this is tom: tom: two hours early. they open the doors here at 8:30 a.m. jonathan: is that right? thank you very much. tom: also you get a two hour lunch. i'm 19 street, there is a big, beautiful marble sculpture that says be kind. jonathan: are we being kind? tom: no, the imf. we don't have to be kind but the imf always are. jonathan: coming up, you mentioned debt restructuring and david malpass of the world bank is coming up. that's a big topic for him. also a discussion with the imf and the guest formally associated with the indian national bank. equity futures are positive by almost zero point 1%.

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>> i would not read a huge amount into this report in terms of giving the all clear. >> they are backward looking. >> we think now would be a good time to cause -- pause and reassess. >> and then take their paws and i think you have recession coming later this year. >> we are a long way from 2% at this point. >> live from the spring meetings

in washington, d.c. with tom keene, jonathan ferro and lisa abramowicz. >> live from the nation's capital for audience worldwide, good morning, good morning. from imf global hq in washington, alongside tom keene and lisa abramowicz equity futures on the s&p 500 positive by around a 10th of 1%. we need to talk about a little division in washington between the imf in certain select politicians. secretary yellen was in washington doing a news conference suggesting she see no evidence of bank lending contracting in the united states. we caught up with the imf official in the last 10 months -- 10 minutes prayed let's transition to the u.k. and talk about projections. a gloomy outlook for the global economy including the united kingdom. the chancellor entitled to the views. coming out and saying i disagree

with the view from the imf. >> let's say there's 6, 7 or eight narratives. the polarity of narratives is simple. some enthusiasm about a consumer, continued growth globally and completely on the others is the imf. suggesting diminished inflation and diminished gdp on a global basis. jonathan: is this the daylight contrast between politics and economics? lisa: are we talking shades of restriction or an inability to telegraph what is required to get inflation under control. if that was the case, how much does this reflect an unwillingness on the part of policy makers do what is necessary to bring inflation under control. here's where the patients and

transitory question lies in. can we tolerate 4% inflation for three years if we believe we will get down to 2% and we also save jobs. >> this is the political overlay of macroeconomics. and the massive overlay here in every article and every discussion is the fragmentation the managing director speaks about which is the united states and china. we are talking to tobias and he made it clear he's not can essay the word china. they are hypersensitive to not drawing themselves into this debate even though the managing director is constructive about a recent visit to china. we -- this is way too early morning american tv for this but go to zambia and that workout with the west, the paris club, the london club. a level was said this morning.

it's him was like there needs to be a beijing club because china is so involved. >> they've been very bold about criticizing united kingdom repeatedly and did so under the prime minister trust. under they afraid of? afraid of not saying what's the defining moment in the global economy. >> there is a clear academic construct right now that china is being overt in their criticism and how do we respond to that is a huge part of debate. lisa: i would argue this becomes fraught because the imf includes china as one of the members. and yes, china is a big lender globally both on its own as well as the imf a big contributor to some of the budget. it becomes a frank discussion. >> david coming up later. he's been outspoken on the issue. we will catch up as well.

some of the economic data. some of the great interviews we have lined up through this morning. let's start with the price action. the s&p 500 just about positive by 1/10 of 1%. yields on the tenure higher by three basis points. let's just call it 342. the fx market reclaiming 1/10 -- 110 on euro-dollar. that was the day of the ecb and the day before that monster payrolls report which engineered a snapback in the u.s. dollar. you've seen the euro on the comeback. the dollar on a comedown. lisa: is this dollar weakness or euro strength? people continue to debate this and i wonder how much lvmh feeds into that. we get the economic data. u.s. jobless claims as well as producer price data. jobless claims information is getting more information as we

see a slight uptick in people filing for benefits after losing their jobs. we are also following imf meetings. the bank of canada manager -- governor. also on bloomberg television we've been talking about our discussion with david malpass as well as gita, especially after they made this call. inflation and rates going back to pre-pandemic. how long will it take may be the key question. u.s. selling $18 billion of 30 year bonds. at what point are people going to price in that inflation is going to remain hot for a long time because no policymaker will ever have the conviction because the pay required to bring in from -- this lower in a structurally different economy. jonathan: credit conditions have

tightened significantly for small businesses following the svb failure. account for almost 50% of total employment in the u.s. economy. that's the latest from torsten. >> when the data dependency continues to -- continues to weaken that's when things move quickly. everyone of these meetings says we are seeing an accelerant of presence data which changes the confidence in that data dependence. >> the chief investment officer for well fed investment management. starting with the bank earnings which are starting tomorrow morning. what you looking for from the c-suite. from corporate guidance. >> good morning everyone. it's a fascinating discussion. i think you will see some pressure and conservativeness out of the bank earnings tomorrow. what's interesting is if you look at the loan data from last week as we get high-frequency

loan data. that was the weakest loan data or most contraction for any single week since 2010. going back to the conversation. are things weakening or slowing down. financial conditions and lending tightened before loans do. you'll see loans. on the banks and earnings what's important here is if you think about the normal sequence it's a liquidity event into a profitability event which could then lead into a credit event. that's how history has always taught us it plays out. tom: i cannot say enough about that analysis in particular the profitability part and that falls in to your research note on small caps. does wells fargo abandon small caps here because of the present fragility? you have to certainly look at

them in an unfavorable way and that's where we've been positioned for some time. small caps have had a full round trip this year. from january 1 to early february , they gave it all back from early february to late march basically. certainly the earnings will be challenge there a small businesses after pull on the reins and just can't get access to credit at the levels they need or used to and the credit they can get they will pay higher for. if you look at small caps from a technical standpoint they are stuck below the 200 day moving average. the reality is if this rally we've seen is durable and sustainable, small caps should be participating if not outright leading. the reality is they are just not. >> basically you're saying you don't see this equity rally as sustainable, is that correct? >> we would fade it here. i think the last time i was on the show we were about 4150,

continue to be cautious here. just not getting paid to take risk on the equity risk premium at this level. the reality is that day will come. it's just not here yet in our opinion. earnings have to come down our opinion. >> at what point will the earnings we are seeing from delta and lvmh give you confidence people are spending money and have it to spend and some of these companies are able to capitalize even bigger margins? >> that is the interesting point because i think what you will see in this total quarterly earnings. we know they're going to contract. they will come in better than that. it will still be the secondary quarter in a row where all the pressures are marginally. companies aren't able to raise prices at the level they were able to in 2022 and 2021 to sustain that so as cost

pressures remain high yet you can increase prices, all of that go straight to the margin line and we think it will accelerate some of the pressure as we go into this year. jonathan: this was great. that's on deck tomorrow morning. for all this, if you listen to the program over the last 70 minutes would you have guessed unemployment was a 3.5%. >> basically for all the gloom there's a lot of positivity the bulls will look around and say why are you ignoring that? >> you mentioned earlier, go to core data and that is inflation comes in and does not impinge on a little bit of wage growth. maybe not a lot but really comes flatline or improved given disinflation. that goes into consumption as well. jonathan: that's what the bulls would love. tom: or does it just take you

away from the convenient gloom everyone is feeling. lisa: it is not convenient. it's painful. before we go to some sort of therapy session there's what we get when it comes to -- i do wonder if looking forward that's going to allow the disinflation that we need. this goes back to should be tolerate a higher inflation rate in the united states. >> i noticed that. >> you know who's playing here this morning. nickelback is here. lisa: are you making that up? jonathan: are you starting to believe the stories? [laughter] >> never believe these stories. mike wilson, the cio at morgan stanley joining us in about an hour from now. much more from the imf world headquarters here in washington.

david at world bank. >> i believed it for a second. keeping up with newsom around the world with the first word. the white house is rejecting an outlook for the economy i federal reserve staff. fed minutes published on wednesday say the staff sees a mild recession starting later this year. one white house spokeswoman says the data does not indicate that. pointing out recent numbers on jobs and consumer spending. a bigger hit from all this public sector strikes. a stronger january reading of the gdp reduces the risk of recession this year. the u.k. is on track for an extended period of stagnation. china supports unexpectedly rose in march. they rose from a year earlier. demand from europe and most asian countries improved. that boosts the economy's outlook and indicates global

growth may be better than expected. a federal appeals court will allow limited access to the abortion pill. a three-judge panel partly granted the request to put on hold a texas court ruling overturned fda approval of the medication. it allowed restrictions on abortion that were lifted since 2016 to be reinstated. global news powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo and this is bloomberg. ♪

>> looking ahead there are good reasons to think policy may have to tighten more to bring inflation down. there are good reasons to think the economy may continue to slow

even without additional policy adjustments. jonathan: that was the san francisco fed president. some crack's and the enthusiasm over hiking too much later on this year. implied in those projections is one more hike. if we get more incoming information on the banking stress. allow me to share with you the price action. equity futures positive by little more than 1/10 of 1%. yields leading a little bit more. up a couple of basis points. >> i will be like the pros look at euro-yen to triangulate dollar euro over the yen. technical change if you would but there we are. to save every second here at these meetings of the world bank and international monetary fund an annual visit with david.

and instead of talking world bank affairs and the strums of the war in ukraine we will harken back to the moment of 07 and 08. more than anyone in this building, he lived front and center at bear stearns previous financial collapse. david, thank you so much for being with us. i'm not can ask you an easy question what does it allude 2008 now. the stresses you see right now in the huge tensions in the united states. does it lead to that -- that word suddenly things can change as it did in 08. >> there were -- there was a maturity mismatch going on and may be from the same causes. interest rates were being raised very slowly and so that built up

a giant mismatch which some companies were funding with repos funding treasuries. treasury bonds and so that way it harkens to now we have a u.s. banking system, some banks are funding treasury bonds with deposits. a big difference now is the biggest duration mismatch is the federal reserve itself and funds with users overnight borrowing to fund giant bond portfolio some $9 trillion the european central bank. i think the dominant feature now is the asset allocation that came out of that. if you have giant buyers of long maturity of duration and an central banks buying giant duration. it distorted markets and we are now in the workout phase. a normalization of interest

rates. it means adding pressure on asset prices. that's showing up with the expectation that there'll be weak growth for a while. pressure on people in developing countries throughout the world and that pressure is getting intense. >> framed the distinction between the rural bank, a week growth and that at the monetary fund. both of you to editorialize have been grim, what's the level of grimm in the forecast. >> hours are a little weaker than the imf's. they often do one in purchasing power and parity. there's not that much difference. we use market-based exchange rates were ours is two and i think there's would work out to 2.4. with her weak forecasts for 2023 and that's showing up in the u.s..

maybe in the u.s. mild recession. >> what's great about this is they use a slide rule. jonathan: so this is growth. let's talk about debt if we can. this is something you've been outspoken about. the world's biggest creditor, i understand there's big conversations prayed what's the conversation now and if you can tell me whether you are satisfied with it. >> the debt has grown up over the years. the composition of the debt is different from in the old days. that used to be u.s. banks that were lending to foreign countries. we have china and the euro bond market lending to developing countries. there was extensive talk. that the debt roundtable. china came in at the level of the pboc governor and the minister of finance. they participate in the

discussion and there were some agreements. there was agreements that needed to be more timeliness of the launching into a restructuring process. there needed to be data sharing. can we get the data earlier. that hasn't been the tradition that that's going to be. also a working group which is important in the technicalities of burden sharing. how do you have equal birding -- burden sharing. so that they all participate in the restructuring process in the data. this is important to the people in developing countries because they are paying these large not low interest rate coming from market radar above market rate and it means it's draining the countries of what they need for nutrition, for health and education, for climate adaptation. >> do you need to see more? >> this weekend it was mentioned

yesterday there were big meetings so we had the g20 meeting with the g7 meeting of finance ministers, the development committee, the governors of the world bank and expressed strong support for world bank leadership. there were and there was discussion of the specific countries that needed to get action on debt relief. zambia was here. ida panel earlier with the zambian finance minister. they are burdened by high levels of debt so the proof is in the pudding. the details is zambia going to get an mou. china needs to be willing to sign off on this structure of the restructuring. >> one question has been transparency and a lack of understanding of how much data china has extended to other

developing nations. did you walk away with a greater sense of how much debt they currently have tied to the developing world. >> we know quite a bit about it but not the full extent and there were yesterday and specific discussion of this. some people say swap lines is wide china central bank should be out of the restructuring and some say it should be included in the restructuring. there was talk about what to do. as these restructurings drag on. the interest on the interest goes up and up. can you agree in advance on how to handle that. there was a proposal made that -- proposals across the board on how to handle this. i think there's more work to be done but there is a technical workshop that's going to be set

up to bring people up to speed on how you connect that within a debt restructuring. >> everything we've just discussed over the last few minutes as the number one issue you're handing to your successor. >> debt transparency is a giant issue. there was a call yesterday for them to release the contracts that had nondisclosure clauses. that's a specific thing that we will -- that will outlast me. i hope this does. china has written into the contracts nondisclosure clauses. that was specifically discussed. i think what i'm handing over to my successor is a world bank that's in a good shape that was the main thing from yesterday's meanings. but also in a developing world of its under this giant pressure

from too much debt but also not enough growth coming out of the advanced economies. >> great to catch up as always. the president of the world bank. >> i think these are challenging issues. we spent the entire time on the debt restructuring. this is what you are in. we have to go to break. [laughter] jonathan: david knows that he's just not done. coming up from the imf later. good morning. jp morgan coming up next. ♪

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>> good morning to you all from the imf global headquarters. counting you down to the opening. the market action looking like this on the s&p 500. equity futures starting positive by 1/10 of 1%. just a little bit of a lift in the equity market. the next stop, jobless claims in about an hour from now. retail sales and a ton of banking. a lot of the banks for you tomorrow. getting to all of that. looking like this on the two-year the moment.

yields in america higher by a single basis point. the 342. again no trauma there. for once a pretty muted price action with the exception of the move. want to finish on foreign exchange. euro-dollar back at 110. positive 2/10 of 1%. that's only a slightly stronger euro in the mix. >> there's equities, bonds, currencies and commodities. weighting changes in the name of to change and foreign-exchange than pretty quiet. maybe this is a wake-up through the summer of finally giving away and the dollar involved -- with all the dynamics going on. >> it's interesting yesterday the price action on the back of cpi we saw yields drop aggressively and then come back. we saw the dollar weaken aggressively.

that's been the story this morning with the euro-dollar. lisa: is this dollar weakness or euro strength. are we getting some sort of resounding sense europe is in a better position or is this really a feeling the u.s. is done with rate hikes or perhaps one more and we will be cutting into the end of the year. >> i support the study of an asymmetry like that. when you triangulate that with another pair, so the pro case is euro-dollar, dollar-yen and then take out the dollar and that will be something. jonathan: listening to the bank of france governor, the enthusiasm keeps hiking. i still don't believe this market still does not believe in this idea there is a second sequence to this. this is what he talked about in that block to start the year. there's a second piece of this. the waiting and the market doesn't see it that way.

speak to people in financial markets. they see this is part of the same story. the federal reserve and ecb do not see that all in any way, shape or form. >> this is the unknown and a lot of people yesterday came out including jeff rosenberg and said we are fine with what the market is selling. we think they are ahead of themselves. you pointed this out before that where you hold it becomes a lot more restrictive as the economy slows. we talk about the slowing economy. you are not seeing it when it comes to customer spending. lvmh shares a little changed ahead of the market open after rising to a record. i want to give you a sense of just how much the chinese consumer is driving action this is to me amazing. sales rose 18% which was twice the gain analysts were expecting so how much is this people coming in and having a lot of

money to fly around and buy luxury goods. delta out this morning. they missed on the first quarter. they expect the second to be much above expectations. those shares up and this is what i find interesting. the revenue per passenger is going up and exceeded expectations. >> i am not surprised. this is basically margins increasing despite the discussion about contracting margins. >> i look at the ratio of business class to economy. sometimes now it's seven to one and critically that ratio is within the economy going up to stupid levels. >> the new 300. -- jonathan: that is so expensive. a lot of these are packing out business cabin as well. they are expanding and dropping the first class. >> i've noticed. >> i'm sure you have. >> the other airlines are also

popping in sympathy. american airlines less than united which i think is interesting. united and delta shifting away from american. >> it's that time of the morning where i say subscribe. sign up at bloomberg.com. >> the enthusiasm is shocking. i love your work. the surveillance newsletter. we are going to change the name of that. >> how do you do it every day. how do you grind this out every day? >> there is a team first of all of people. >> ghost writing. have you got ghost writers? is that what you're suggesting? >> usually when we come in and i know you guys do the same thing there is a theme you believe in down every day.

you should see where it goes and then figure it out. >> it's you writing it. that is just not true. this information. tom: lisa abramowicz, oh my word. we will continue. kelsey is with you very patiently. a change of what they are doing here. >> this is the view from kelsey. whether the fed policy of the rate hike is mostly irrelevant to us the u.s. economy is showing signs of weakening growth and disinflation and is vulnerable to shocks after more than a year of aggressive policy tightening. we continue to have a love of treasury yields. >> global wall street leaned forward now because when the facts changed, she changed great she works at fixed income jp morgan asset management. what an abrupt move here.

the benchmark on the 10 year yield. can it go three or two point ask. >> our bias is for treasury yields to move lower. were expecting for the two-year and 10-year treasury yield to move towards 3%. that implies the yield curve will on invert and is actually going to start steepening. so the things we are watching right now that are leading us to that conclusion and increasing our confidence around this. you've been mentioning do we have to wait till the senior loan officer survey, that's all the way in may. we are seeing data that's showing credit conditions are tightening. i give you a few examples. that came out on monday. it has a subcomponent about availability of loans. that's the lowest level since 2012. the american bakers association also has a credit conditions index the lowest since covid and even lower than the gfci.

we are seeing it really across the board, the credit condition tightening is occurring. >> if i'm going to speculate in the land, what duration do i want to buy to go price up, yields down. what's the most effective duration. >> when we are thinking about the view that the yield curve is going to steepen as well as yields are going to fall that would imply you want to have some of your duration in the front end of the curve. on the other hand we do think there is merit in locking in longer-term yields here as well. this has been a historic repricing in bonds and you haven't yet missed the moment to lock those rates in even though we have seen a rally so far this year. so that's really what we are looking at. we feel right now we are in this

in between time. it's this before when the fed stops hiking rates and before the fed starts cutting and in that time you have the soft landing camp, the hard landing camp and of the recession camp claiming they are right. in reality what happens is on the path to a recession we go through what looks like a soft landing so there's been a bit of an improvement in liquidity and sentiment more recently. we wouldn't get complacent about that. we think it's temporary in the next thing we are focused on his bank earnings as well as the debt ceiling. >> it's a transitory soft landing. perhaps we will see a transitory type of inflation that will move to something that's lower. how long do we wait with inflation well above the fed's target before it's no longer transitory and we are looking at

three and a half percent inflation it's basically the new normal for years on out. >> we do have to acknowledge that year-over-year inflation is still high and that's of course a reflection of what's happened over the last 12 months. when we look into the cpi report we see a number of indicators that suggest that inflation should be coming down that there is more disinflation in the pipeline. on the flipside, supplier deliveries within the ism or at the lowest level since 2009. if you are at home, that supply deliveries to cpi you'll see there's a tight fit and it suggests there's more disinflation in the pipeline. when i showed that the people the pushback is what about wages. on the wage side, average hourly earnings declined to the lowest level, 3.2%. that's a level the fed would

consider sustainable when they look at it. that gets you to a 3.5% sustainable wage growth. we are trending in that direction fast. the fed is going to have to be patient on this one and they haven't had the luxury of time on their side. we think there's a fair bit of disinflation in the pipeline. the recession is what will get inflation back down to their target. we see there is quite a lot already there in the wings. jonathan: this was great. kelsey of jp morgan asset management. did you notice that? tom: we talk to these people all the time. it's hard to keep score. lisa: was that artwork his? >> takes it into jp morgan. lisa: i'm so confused. tom: it is very cool.

these are some seismic shifts from these major banks. tom: two things going on here. surveillance correction. i thought nickelback was playing. i confuse them with jerome and the dot plots. walking by new the 50 yard line. i said come on up and talk to us. i didn't >> -- >> what's the genre? tom: blues. come on. >> j and the dot sounds like a good band. >> the former first epi-managing director of the imf will be joining us shortly. this is bloomberg. ♪ >> tom keene, i cannot even.

jerome and the dot plots. keeping you up today with the first word. fed officials feel they need to do more to shame -- tame inflation. that's according to minutes from their march meeting. this is despite forecast from staff advisers that there will be a mild recession later this year. another missile launch from north korea was fired towards waters off japan's northern ireland -- island. that prompted a brief warning for residents to take shelter. south korea says it's possible north korea may have tested a new type of solid fuel. a report on alleged leaker of those u.s. intelligence secrets heard according to the washington post. and share the classified documents with a group on. an online platform used by gamers. he told the group he spent some time inside a secure facility. the court says it's cooperating

with authorities. fellow democrats want senator dianne feinstein to resign. the 89-year-old has been absent for about two months with a case of shingles. one representative said it's obvious she can no longer fulfill her duties. another democratic congressman said it was a dereliction of duty for feinstein to stay on. she's asked to be temporarily replaced in the judiciary committee. global news powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo, this is bloomberg. ♪ you can't buy great conversations, or excuses to unplug. you can't buy possibilities, and you can't buy moments that matter. but you can invest in them. at t. rowe price we believe your investments

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>> what we shouldn't be doing is saying we've got such a problem with financial stability we have to incense name off a decision

on monetary policy issues without inflation target. because of conditions for financial stability. >> andrew bailey, of the bank of england governor here the imf global headquarters. i have to say that's the view the bank of england. you should be specific about that. that's the view of the bank of england. it's a different kind of shock here. a completely different one which is why the fed has acknowledged to some extent the shock we've seen over the last month won't be a substitute for rate hikes. we just don't know how much it will. >> wrapping into the original politics is the fact that their core inflation is not our core inflation. we are doing better here in terms of getting rid of this. different story. doing this for the imf communities bringing in someone qualified with the perspective.

the academics in his stanford at johns hopkins, john joins us the former first epi-managing director the imf. all sorts of heritage. i have asked the first question given the times will you return to the imf, the world bank or other august institutions? >> they've got plenty of very capable folks here. what are the states of the institution in handling this crisis somewhat different, so different from what you lived. >> absolutely. we didn't have to operate in the sense of the spirit of great power and competition instead there was a sense of cooperation , of the g20 was formed instantly. the's leaders process was created in the wake of the global financial crisis. if you remember the april 2009

g20 summit added $1 trillion of resources to the imf. so there was real agreement on cooperative action. that still has to be foraged both here at the imf and the world bank and more broadly. >> one of your most historic speeches is you spoke of course to the large china adjacent to vietnam, how things have changed when you are on the watch purred what was your interpretation of what washington has to do, what beijing has to do to get everyone on a more constructive page. >> one of the implications of the situation you heard a few minutes ago from david malpass, the president of the world bank that we have seen coming this crisis, this debt crisis

especially of emerging and developing countries, there needs to be a new cooperation to deal with that successfully because the pre-existing arrangement simply does not work. you heard about this debt roundtable that happened for the first time yesterday is an attempt to create a new form for cooperation not just china but also to private -- the private sector is felt left out of negotiations around the process when they're being brought in for the first time. so there's a lot to do and there is hope that this new format will produce some progress. >> how much is the large elton road initiative using lending to the developing world is basically foreign policy effort in trying to shore up support. how much is that shaking the foundation of the imf in this joint collegial effort to try

and support nations for the goodness of the world. >> the balance has changed. there's been a lot of bilateral venting often in the past that have always had some kind of a policy focus to it. it's not just for the goodness of the world that these loans are made. so what's happened here of course is the size of china's involvement has become very large. economic -- if there's got to be a solution and now the crisis is coming upon us, of solution is needed. everyone is going to have to get compromised and the private sector has to be involved in a more direct way. >> they see rates going back to where they were pre-pandemic. eventually we get inflation back where used to be. a lot of people pushback including blackrock, larry fink saying inflation at 4% for a long time.

where do you stand on this as a former banker and one of the leaders of the imf. >> one of the secrets of economics is economists have only a weak grasp on the process of price formation. we've seen over the past decade central bank's ability to finally control inflation is much less direct than had been thought or hoped. so did we see this coming the big surgeon inflation? most people did not. can we feel confident what happens with inflation in the next year or two, i think we need to watch carefully and i suspect and hope -- count me and inflation optimist. i think it's an approve less sticky. >> the monetary policy not having as much of an impact. larry fink saying he sees the work from home dynamic is changing the inflation debate.

the work from home doesn't work and productivity is dropping off. do you agree? >> we will see. all i can say is i find working from home pretty good. and among other things especially dealing with international discussions, it's so easy to connect internationally in a way at a distance that could have been done before. i don't think that's bad for productivity. >> if i can jump in we are up against the clock. it was a line in there. acknowledging how long -- it's the projections that underpin them. two or three of the issues that stand out, one is this transition to new sources of energy and the other is deglobalization. there are many people watching this who believe there is a secular component to this story. any appreciation for that kind of thing which i think lisa was

trying to get into. >> the last when five years in the united states inflation is generally been with only two years exception at or below the fed's target. the notion that this is inherently inflationary economy is not obvious to me. right now we have people who have bet their personal finances on the maintenance of low inflation. as lot of support for policies that will keep inflation low because if we do not, if we fail at that, if interest rates stay high, we have not just a physical problem. >> i want to ask you is former vice chair of jp morgan if he is on target to do five days of work here, forget about that. do we lose a 2% line. john of stanford's abdomen there's efficacy to keeping those rules-based structures lower and lower. do we have to reset 2% to a higher level.

>> >> it's not obvious what would be gained at this moment that we are changing our definition of where this lies in we will decide that actually a higher fever temperature. >> just powers through there. >> thank you for this. just wonderful. with a different view on things. we will catch up tomorrow. he has a different view on the situation. >> everyone's publishing their thoughts as we go into these meetings. the dean of columbia economics is a former vice chairman recent even suggested not that there would be a policy to move away from 2% but maybe the end result would be higher than a 2%. >> there is this idea that some people that believe --

i might be speaking for myself. there are some out there who might believe the fed may want to go in this direction but now is not the time. lisa: there is a tension between being aggressive to bring inflation down sooner and having the patience to wait knowing that if inflation ends up at 3% it's not the end of the world. we can live with that because the temperature at 99 isn't really the temperature. >> i got an email, who's playing for drum for -- j and the dot plots. he is scary go to the drums. >> it's like a mick fleetwood thing. >> he's the singer. going to be the singer and guitarist. so you want -- >> goolsby plays drums like a democrat, that's all there me --

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♪ >> that warns about inflation? they have a whole host of other problems to contend with.

>> the federal reserve says we are not done hiking. we have more work to do. >> i don't think we should feel comfortable at the worst is passed us. >> it is particularly heightened uncertainty around the outlook >> this is "bloomberg surveillance" live from the meetings in washington, d.c. with tom keene, jonathan ferro and lisa abramowicz. jonathan: live from the nation's capital for audience worldwide, good morning, good morning to you. and a couple of minutes time, catch up at international monetary fund. the meetings continue down here in washington, d.c. slightly positive, just turning over in the last couple of minutes. we are negative on the s&p 500. a ton of fantastic guests lined up. tom: data front and center, filson will be on here in

moments, but the answer here is a renewed importance. mickey understands this, i don't. there were adjustments made last week and we need to see those adjustments continue the trend to potentially higher joblessness. jonathan: there's is a difference between levels and change. the levels are still historically exceptional, exceptionally low. but that change, we could get that snapping back again. tom: the point is that the pros are looking not at the 225 level, they need to see stress 100,000 up. we are a long way from that. but it is the vector. jonathan: the fed likes to talk about the totality of the data, so let's talk about the totality of the data. if you took payrolls out, the

data last week, miss, miss, miss, weak, weak. that doesn't look good. lisa: that gay people confidence that the fed was going to cap and all of a sudden, we are heading right back to zero. seriously, people were talking suddenly in a completely different light. that is the reason that these whipsaws, the most deep and liquid market out there. have we truly reset? are some of the pressures truly disinflationary enough to remove inflation from the picture? jonathan: you got some doubts about that. lisa: i think there is an increasing breach between people who believe the fed has to go further and those who think asian hold. that unspoken reality is more comfortable with inflation remaining higher for longer and those who what -- want to see it come down more rapidly. tom: we've heard this from a

number of our guests this morning. you can take a statistics and make whatever you want from them, but i think a lot of americans right now would say you know what, there was that moment, that glimmer of substantial, nominal wage growth. it is vapored in the last three months. jonathan: we will be with you in the next couple of hours continuing to cover some of the things. the international monetary fund joining us in the next 10 minutes. the european commission. raghuram rajan. tom: it does dovetail completely into the equity markets. why don't you bring our esteemed guest for thursday adjustment? jonathan: mike wilson, the chief equity strategist over at morgan stanley joins us now. wonderful to have you on the program. it's talk about what we are going to hear tomorrow. is this the one where they have

to tame guidance because of what we have seen develop over the last month? >> look, i think this earnings season will bring one it has been bringing the whole time. we are going to see earnings come down again for the second quarter. we are going to jump over the slower bar that has come down. that is s&p overall. the banks are going to be a greater center of attention for obvious reasons, and the more important commentary, what are they doing with lending standards? how are they thinking about creation? those stocks have been hit pretty hard. our focus now as equity strategists, what is the impact going to be? that part of the market is going out. small-cap stocks, anything that

needs capital on a regular basis is being punished. but the s&p 500, hanging around as people rotate other areas. if we're going to have a sharp contraction and a credit crunch, it is going to hit a broader group of stocks. the focus for me is going to the how does a trade on creation? tom: mike wilson, you partitioned to changing the weight of equities. if there became advocacy to go to all cash, or mostly cash? how do you split two? >> the first of all, we would never recommend to individual investors for asset-owners on hundred percent cash. that is not strategy for anybody because you could be wrong and your assumptions and nobody can predict the future, but more importantly, that is not the environment we envision for the next several years. as you guys know, after we get

through the slowdown we are going through and the recession and the economy, there's going to be another boom to look forward to. i think people are kind of an agreement, and they are looking forward saying i don't want to miss the next upturn. we are millington this some that more than other people because we think the pullback will be more significant. but we don't go 100% cash. we have a high percentage of cash right now. lisa: given the fact that you have seen such resilience even in the face of what you said already, relatively weak earnings. have you revised upward your target for the s&p when the 200 barricades that is not really a play anymore? >> the way we look at the world and the markets, son of a 12 month view, and then we have a

short-term, tactical view. on the year-end target prices, we think those are still accurate. 3900 is the base case for year end. those are in place. those have not changed. the tactical trading path we've gotten wrong this year is the timing of it. we don't think the path is necessarily wrong. we put those targets at the trough for the cycle in may of last year. that is not changed. the price, time, it is hard enough to get one right. to get both right is tricky. but it doesn't change air view that that low end of the range we think still goes through kind of the low 3000, ultimately. lisa: how difficult has it made your job to see the volatility in the rates market persist to the same degree over the past few months?

>> the rates market, i think moved away from the equity market in that the faking stress is going to lead to a credit crunch and probably a situation where the fed is cutting rates there is a recession. and the equity market is not priced at all. you do place or bets. we are in the earnings recession camp. whether we have an economic recession or not, it isn't as important at the earnings recession. we are highly confident that is going to happen. the earnings situation is way worse than what the consensus thanks which is what min pin saying all along. the banking stress only makes us more confident. tom: to get specific here, if there are seven stocks that i the stock market right now, i'm assuming i'm not buying more of those right now given the mike wilson view, but do you sell it and do something else?

do you put in a plan to protect the downside? what do you do if you got gains in big tech? >> first of all, those seven stocks are not all tech companies, but they are sick companies in the sense that they are all tied to economic outcome. that is where we would differ for most people would say look, these are high-quality businesses. they are very tied to the economic outcome and the earnings situation we see in the customers and their situation. it is still different than last year. you just want to make sure you don't have too much exposure to any particular areas of the market that we are envisioning. and once again, not having a concentrated position on something that are probably extended. for people with tax consequences which is a large part of your

listening audience, i would say maybe you don't sell because if you believe in the intermediate-term view -- the most important message, just remember that the waiters of the last cycle are typically not the winners of the next cycle. these are very large companies, so you do need to be selective and say there are seven or eight year. i probably should take about two that make it, but not all seven are going to make it. lisa: just quickly, i'm wondering how you incorporate some of these more official projections in what you do. >> i don't want to sound as if we ignore it, we can't rely on other people today are forecasting for us. to be honest, i think that is part of the issue we have in not just fixed income markets, but equity markets. we moved to a world where the dispersion of working is very narrow.

and this is why when the data comes in that is not in line with the type forecast, the volatility moves can be greater. we have our own forecast, we are confident, as confident as we can be in the fortune-telling business that we are in. but we have to do it that way. jonathan: that was perfect, just perfect answer. just around the corner. mike wilson, do you care that imf forecasts? lisa: look, i think it is important to understand the divergence between wall street and some of the policymakers and how that can affect projections. jonathan: yes, that's good. the deputy managing director joining us next. opening futures on the s&p 500, unchanged. this is bloomberg. lisa mateo: keeping you

up-to-date with news from around the world, the white house is rejecting outlook for the economy by federal reserve staff. fed minutes says the stats sees a mild recession, but a white house spokeswoman said the data does not indicate that, pointing out recent numbers on jobs and consumer spending. last week's production cuts will lead to a hefty oil shortfall. that will grow at the year progresses. that is according to data from the cartel. a new report says world markets may be under-supplied by about 2 million barrels per day in the fourth quarter. in china, exports unexpectedly rose in march. they jumped 14.8% in u.s. dollar terms from a year earlier. demand from europe and most asian countries improve. that boost the economy outlook and indicates global growth may be better than expected. a federal appeals court will allow limited access to the abortion pill. a three-judge panel partly

granted the biden administration request to put on hold a texas court ruling that overturned fda approval for the medication. on the other hand, it allowed abortion restrictions lifted since 2015 to be reinstated. delta airlines is expecting to be wall street estimates. the carrier sees steady bookings heading into the summer travel season. delta also reiterated its full-year forecast of 50%-20% revenue growth over 2022. global news powered by more than 2700 journalists and analysts and more than one under 20 countries. i'm lisa mateo and this is bloomberg.

♪ >> and imagine -- has tightened to some extent but it is really the banking sector on the tightening. that could have consequences

down the line. central banks have to fight to keep monetary policy tight, but over time, they do experience interest rates coming back down, which we estimate to be similar moving forward. jonathan: that's the call from the national monetary fund. that the imf director of monetary and capital markets. live from washington, d.c. this morning, we are counting down to the opening bell. equity futures on the s&p 500 shaping up as follows. not even 1/10 of 1% on the s&p 500, smallest of lists this morning. yields bleeding just a little bit higher on the 10 year, the news this morning, the euro-dollar declining 110 against the u.s. dollar. we are positive by two tencent 1%. tom: and if we get the reach, that is something we are not expecting. it is percolating among strategists, but i don't think

it is another zeitgeist. >> of half a year so far in early february, the day before that blood jobs report. tom: one million u.s. jobs. global economy. jonathan: 3.5% unemployment. tom: right now, the annual visit as we do at the spring meetings, the first deadening managing director of the international monetary fund. what she has done is drive forward discussion of crisis and monetary policy and how we are going to extract ourselves from this mess. thank you so much for joining this morning. you mentioned buried in your wonderful essay the scary idea that inflation becomes unanchored. is inflation unanchored at this point? >> no, not at this point. if you look at the data is

squarely anchored in the u.s., europe, and several other countries. that is not a concern right now. tom: the concern right now, it is your fault, we all know that. but the imf five-year forecast of that we have 3% or even lower , set, bid lower means a disinflation. it means a lower rate. if we have an unanchored or an anchored disinflation, is that lead to financial stability within your forecast? >> inflation expectation is the anchored, there are multiple problems associated with. firstly, interest rates go up. policy rates have to raise much faster to bring inflation down. and that can generate much greater financial stress than we have seen with consequences not just for the country where the tightening is happening but a large economy would spill over to the rest of the world. that can be very consequential. one of the downside scenarios we

have in our economic outlook, which is if interest rates have to go up much faster and you have much more tightening, you could end up with global growth going as low as 1%, which would be very bad. >> what is the nominal gdp separation of the imf five-year forecast? is it for a dropping inflation, a lower inflation, and with it, lower real gdp? or is there a truly subdued nominal gdp? >> our expectation is that inflation will be conquered over time. it is not going to happen immediately. but if you go into 2024, you will see inflation around the world getting much closer to central bank talk. real growth is going to slow also because we don't have china growing at a very high rate. for the global economy as a whole, you don't have very large agency growth. so that is generating the weakness in real growth.

also because we have aging demographics. unless we can find a way to raise productivity. tom: lisa: how controversial as your call been that inflation is going to get back down close to where it was by pre-pandemic by 2024? >> if you look at market expectations in the u.s., you will see an even more rapid fall in inflation that is expected. we are actually on the side of being a little more cautious about how long is going to take to bring asian down. but we think the policy has had some very substantial increase in interest rates. we are seeing now that shows up in terms of high-frequency data, and we think that will bring down inflation, but it will take time. lisa: you think the balance of risk has shifted since silicon valley bank and some of the other banking institutions? that huge drop-off that we've seen, but the balance of risks has shifted to perhaps have

monetary officials be a little less aggressive when it comes to rate hikes, to err on the side of pausing or even cutting. >> as always, central banks need to take into account have economic conditions look. with the financial stress you had a tightening of conditions, bank lending standards have tightened. smaller bank credit has weakened, and that will slow the economy down to some extent, which is why central banks may have to do less. but again, we are still waiting for more data to show exactly how much of an effect that has had. jonathan: there's a bit of tension between what the imf has communicated and with politicians have responded with. gensler home tells me disagrees with your forecast. he said he sees evidence of bank lending detracting in america. secretary yellen said she didn't see evidence of that. how do you explain the light

between what your institution is saying, what politicians are saying back? >> firstly, if you look at the numbers, we are not that far apart. in the place of the u.k., i think what jerry hunt recognizes that we've actually had a substantial upgrade for u.k. for this year. it's just that we haven't gone as high as may be some of the others. we naturally seen things turn out better than expected in the u.k. in the case of credit conditions, i think the difference is that they were pointing to all of credit supply, not just the large banks. so in the smaller banks, you see certainly credit supply is slowing. the large banks, credit is holding up. so you don't believe this to -- jonathan: so you don't believe the treasury secretary is misleading us? >> especially if you look at large banks, you are seeing fred holding up which is an accurate

representation again of the data at this point. lisa: i -- tom: i look at where we are and i wonder of the textbooks and the theory that is out there. it seems like everybody is making it up as they go. the day to day grind of putting together the blue book, the real economic outlook, how much are you relying on traditional economics vs. knowing it is a whole new world after all? >> i think there are parts that are new and there are parts that are and and status same. re-using a combination of models but also through beyond -- tom: is ours a valid model right now? trumpeting the dynamics of r-star, is it useful? is there and atticus seated traditional john williams economics? >> i think it is very useful input in thinking about how to fashion monetary policy and also fiscal policy.

that cannot be the only thing one is focused on. i think that is what the pandemic taught us. lisa: a lot of people say that this group of meetings is somewhat different in nature than previous one life we are on the precipice of turning back to what we came from or something new. i would you characterize it in terms of how these meetings are different? >> this meeting is different to the extent that i think we are in this period where, after all the monetary policy tightening that has happened, we're seeing the effectiveness. so i think this is the lag and we're seeing it play out now. there are concerns about how this can play out but as of now, financial policy tools have worked well in being able to calm markets, but there are risks that are out there. the second aspect, we are looking at a period where growth was not going to go back to what it used to be, but more 3%.

last year, we had many vulnerable economies around the world with many high-level that they could be in debt distress. i think we all have to for earth recognize that the way the economy did better than expected last year, they should much stronger resilience. we still have tight labor markets, consumption spending is still holding up. that said, the values are squarely --. jonathan: thank you, as always. good to catch up and to see you in person. there is billion of the u.s. labor market is specific, has been a standout. tom: without question. and then you say these weakening claims are front and center. jonathan: jobless claims of next from washington. this is bloomberg. this is bloomberg. (♪♪) this electric feels different...

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jonathan: jobless claims data in america about 20 seconds away, good morning and welcome to the program. more economic data around the corner, mike mckee will break it down. equity futures are shaping up, positive way a little more than a 10th of 1%. 10 year yield this morning 3.4186. let us get some of the data come over to mike mckee. mike: we seem to be seeing the same pattern in jobless claims that we saw before last week

with unemployment claims, first-time claims up 239,000, last week it was initially reported as 228,000. it is unrevised. basically, we are seeing claims -- remember last week, the labor department adjusted seasonal adjustment factors to get pandemic distortions out, that pushed us up by 48,000. if we are staying at the same level, we are not seeing a major increase in claims. that tells the same story, the labor market is doing ok. continuing claims fall. stability in the labor market from claims. the other number this morning is ppi, this is good news on the fed front for those who think the fed is getting something done. the headline number comes down

5/10 of a percent, down 1/10 the prior month. it was expected to come in flat. that puts the year-over-year number at 2.7%, down from 4.6%. the core rate, just subtracting food and energy, down 1/10. food, energy and trade services up just a 10th of a percent. the core year-over-year is 3.4%, including trade is 3.6%. the year-over-year headline number revised up to 4.9%, so an even bigger job to 2.7%. this has got to be good news for the fed.

it does suggest inflation is going in the right direction. jonathan: we will run through the data and push it through the equity market and bond market. a couple of ingredients. jobless claims are higher, you put those ingredients together and get the smallest of its in the bond market. yields come back down a little bit by a basis point or two on a two-year to 394. yields were higher still, just a touch higher by single basis points. we take back some of the inversion, that spread -53 and up a couple of basis points. you want to check out the equity market, equity futures smallest off the back of this. let us call it a quarter of 1%. tom: the movement is fed friendly and speaks to disinflation. i have to go back to you, how much information does the fed need?

i am seeing the zeitgeist framing wage growth as a generalization has been cut in half. ppi is a generalization, etc.. is that enough to make them change, as we heard from goldman sachs this morning? mike: the fed is going to want to have several months of this kind of data, it is going in the right direction and playing out as they anticipated the cpi yesterday with the big drop in rent. we will see them get down to the threes perhaps by the end of the year, which is where they anticipated being. maybe even a little more so, two thirds of the decline in the index attributed to a drop in goods prices, which we knew had been happening. the index for final demand services fell 3/10 of a percent, services the area that the fed is the most worried about.

the question is, does it continue and does it stabilize wages? jonathan: let us return to the markets, equity futures on the s&p 500 higher than expected jobless claims, positive 2/10 of 1%. i talked about the small move at the front of the yield curve. the move continues to stick, so in the last 60 seconds or so, the previous intraday high of the year, which is where we are right now. moments ago, 11043. that is the strongest euro against the dollar. tom: you are looking at that, i was triangulating the yen. we are not where euro is stronger through yen, which is 147, ¥148 per euro. jonathan: lisa, breathe in some

life to that story. lisa: this is about dollar weakness, not euro strength. you look at the bloomberg dollar index, you see it close to the weakest level. if you could see it, it goes back to april of 2022, so this is a dollar weakness type of story. tom: joining us is vincent reinhart, head of research for alan greenspan. director of adverbs at the federal reserve. thanks for joining us, there is the word out there, suddenly. when you get slowdowns, they usually happen suddenly. are we at the beginning or the middle of suddenly for the fed? vincent: we are tuning the quarter -- corner toward

suddenly and we are not sure what is at the other end. the plain fact is, the business cycle is uneven, regular. quite dynamically driven. when the unemployment rate starts to rise, it keeps rising. you do not see it at first, then it happens all at once. that is how you can have the federal reserve staff forecasting a mild recession, even as we are getting data like mike just reported. the economy still has some momentum. tom: 21 years ago writing about great inflation, we had a sudden pandemic driven great inflation. can you state that the great inflation of the last two or three years is over? vincent: i got the headline you

kept repeating, inflation is halved. i keep having to remember where it started, 9%. we cannot declare victory yet. the great inflation is not over until the fed says it is, because they do not need to raise rates anymore. once we got a run in which inflation is close to goal and people do not care much about inflation, then it is behind us. lisa: let's talk about what threshold it will be ok for inflation to fall down two. are we seeing greater acceptance and background discussions of a 3% inflation rate rather than a 2% target? vincent: that is the real risk that the fed declares victory too early, because it is harder to do otherwise. chair powell says 2% is the goal , i am inclined to believe him. that is his definition of price

stability. it will get harder from here is the unemployment rate starts to rise, as inflation is no longer a material threats economic expansion in people's well-being. you raise the issue, what happened to the 3, 4 months when we get another string of good readings and readings on unemployment? the fed may declare victory. the problem is not that 2% is immutable, they did not have a great discussion of defining price stability at 2%. having drawn the line in the sand, you lose credibility if you do not act as important. lisa: we are at the imf and washington, d.c.. there is a belief that inflation

will naturally gravitate back to the pre-pandemic levels and monetary policy will return to similar types of rates. do you disagree? do you think there is a structural component inflation that is underappreciated in estimates and baked into the market? vincent: there are a couple of things going on. the imf and a lot of analysts think we will go back to the new normal or old new normal. i'm running out of adjectives. rates will be low. that is possible. but look. for most of history, rates were higher. said driven, lower for longer episode suppressed nominal interest rates and kept the real federal funds rate negative. we have broken out of that. not obvious we can get back to it. jonathan: it is wonderful to

have your perspective in that view, pushing back against the views of the international monetary fund. this is their view. to that point, it was the last 10 years, the last decade. that was the new normal, so to speak. vince is suggesting we go back. tom: it was the research capability they put together, it was first rate. they are making forecasts at the imf, but institutions have to live it and they are not there yet, looking out to 25 or dare i say 24, they are not there yet. what we have is jobless claims higher-than-expected, 239,000. factory gate inflation. ppi following in march since the

start of the pandemic, that is the lead paragraph this morning. lisa: that is the yield for the market reaction, you have this tepid pop in equities. it is not overwhelmingly excited. we are seeing weakness in the economy. is this enough disinflation? we knew that there would be disinflation, but where does it go? jonathan: does europe have a coherent view on china? coming up next, a conversation with paolo gentiloni. lisa: keeping you up-to-date with news from around the world, fed officials feel they need to do more to tame inflation and are leaning toward another interest rate hike next month, according to minutes from the march meeting.

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normalization of interest rates. that means pressure on asset prices. jonathan: that was david malpass, president of the world bank joining us. from washington this morning, good morning to you. counting down to the opening bell, about 44 minutes from now. about 16 minutes ago, we had economic data out of the united states, jobless claims higher-than-expected. ppi coming in softer than expected, that his breathing life into the equity market and taking life away from the u.s. dollar. breaking down to 110 43, new intraday high. the euro stronger -- weaker by one third of 1%. tom: you've been talking about a weaker u.s. dollar in where we will be years from now. more importantly is that majors

-- is the outrageous demand of the surveillance team that we focus on what matters right now. i think it is wonderful that ted lasso has taken an italian play to bring a new character in. the tensions that i saw -- jonathan: i do not think he wants to talk about it this morning. tom: it shows the tension. jonathan: good reason for that, paolo gentiloni joins us now. let us start with this question. does europe have a coherent approach to china, and if you do, what is it? comm. gentiloni: it is evolved, the attitude since 3, 4 years.

our attitude until three or four years ago was the attitude of we have important trade relations and whatever they are, we will strengthen the trade relations. now, i think we are very clearly on the perspective to rebalance the trade relations to also leave behind something we had an hoping the trade relation would be equal treatment, a level playing field, which was not completely the case. we are still cooperating economically, but we have also a

geopolitical perspective, which is quite different from china and it is the perspective of our partners and the u.s. and west. jonathan: i wonder if your different is -- if your different his view of the -- i wonder if your view is different than that of the french president. he is talking about china following with the u.s. does, do you agree? comm. gentiloni: i agree we should avoid this kind of crisis. if this crisis occurs, we know which side we are in. tom: i look at italy and i have to bring this up, and american football -- i'm going to change gears on what is unspoken. the stunning statistics and the former prime minister can speak to this, a birth rating italy

post-pandemic that takes you back to 1861. the demographic driving forces that we face at the meetings are enormous. are we de-peopling the western world? comm. gentiloni: i think we run a risk, i think this risk is particularly clear in europe. especially in eastern europe. but indeed also in my country and other european countries. how do we face the challenge. i think we should continuously look to our perspective in not only a horizontal way -- a mean europe and its big eastern neighbor, europe and russia.

we need a vertical way, knowing that europe, the mediterranean, the arab world, africa -- this block will have 2.5 billion people. we need cooperation, legal migration. this is joined with internal policies that are increasing. this is the solution. tom: the european experiment forward -- percolating out there is optimism of a better nominal gdp for europe. do we still have euro sclerosis or the risk of it, or have you broken free of that with a new relationship with china? comm. gentiloni: we love living

in europe. i think it -- we are proud of our values, our culture. but we should not think our self and the world to europe as what a beautiful place with good values, wonderful culture, etc. europe is also the place where innovation happens. tom: are you seeing a new nominal gdp in europe? have you broken free from the eurosclerosis theme? comm. gentiloni: there is a chance to do so, because i think, for the first time the european union is thinking itself as an actor on the global

race to innovation, to clean technology. what we call strategic autonomy, he is something completely new for you. our idea of the european economy wasn't till three or four years ago, the idea of an economic single market based on competition and open trade. now, the european union, with plans of strategic autonomy, is the european union fighting for innovation. lisa: how much is that vision at odds with the vision the u.s. has of a cohesive trade relationship with china and across the atlantic? comm. gentiloni: i think we

should be recognizing the fact that we will have a sort of race to clean technology. jonathan: of race with the u.s.? comm. gentiloni: among the economic mobile player. comm. gentiloni: the problem is to avoid the race for subsidies and the risk is -- this undermine the relation with our partners. i am optimistic from this point of view, because the americans, canada, other countries, with japan, we cooperate very well. everyone recognize europe has the duty to provide security to its own supply chains of the future.

i think this is clear for all of our partners. the problem is how we participate for clean technology without transforming it in a subsidies war with tension among partners and without transforming this in everett action of global trade. a difficult balance to find. if we do not find it, if we do not have global trade for an economic block like the eu, it is a big problem. jonathan: commissioner, thank you. tom is making things happen in europe, still difficult. ask about trying to change the retirement age. tom: the challenges in france speak about what would happen further if they push it country to country. jonathan: next is the founder of bianco research, positive by

4/10 of 1%. this is bloomberg. ♪

four fed worries about inflation. nominal gdp growth is weak we had there are a host of other problems to contend week. >> i do not agree will be