>> a fun word to describe this is this lowflation. >> the fed will have to keep interest rates higher for longer in order to get inflation back to the 2% target. >> before the end of this year, we will be at a level that's pretty consistent with long-term in elation. this is bloomberg surveillance with tom keene, jonathan ferro

and lisa abramowicz. live from new york city for our audience worldwide, good morning, this is bloomberg surveillance on tv and radio. we start this morning with breaking news, president biden launching his reelection campaign. the president making his announcement for a second term. he said let's finish the job in the biden team releasing a highly produced three minute long video. here's a quote from the president this morning -- kriti: tom: elections are domestic but it alludes to one of the foundational parts of any president's term which is the surprise of foreign affairs. it means more freedom more or less freedom and it speaks to his foreign trade with the war in ukraine.

jonathan: he wants to give americans a fair shot. the republican party wants to cut government spending and curb abortion rights and you get the feeling early on this will be a key feature of this campaign. lisa: it has been working well in terms of getting turnout and the galvanizing interest. i have to say how different this was than three or four years go. people didn't really pay attention on till he was the most plausible candidate to go against former president trump . there is nobody was viable whose contending against him, already oldest person elected to be u.s. president and he is the main standardbearer for the democratic party. tom: there are two elections here, there is the primary battle in the primary and will

any democrat standup running against an 82-year-old president. i don't see evidence of that at this time and we will talk to anne-marie later in the hour. i really wonder how the democrats coalesce around him given so many of the primaries would be more to the left of joe biden. jonathan: he is 80 and is already the oldest u.s. president and he would be 86 at the end of his second term. we talked about the latest poll from nbc news. 70% of all americans including 51% of democrats don't want biden to run for president in 2024. that's the elephant in the room. tom: i have the clearest memories of a sunday evening when lyndon baines johnson said i will not run in that stunned the nation. this is completely different and as you say, there is a huge

doubt about the age and also the age of mr. trump is an issue. jonathan: nearly half of the respondents in the poll cited his age is a major reason for that. if you just tuning in, we've been talking about this for a number of weeks now, as expected, the present launching his reelection bid, making a formal announcement for a second term. there is a quotation we've heard a few times. let's finish the job. that's what he says. let's finish the job, your thoughts and your reaction to this one? >> first of all, many people don't like the way he has handled the job so far so to continue a policy that voters are not crazy about is risky. by having this, you avoid any chance of having anything spontaneous that would perhaps come back against him. i think that was a safe move to

unveil it in this format. tom: those of us of a certain vintage so the deterioration of ronald reagan into a second term against george bush senior. explain to me to wear and tear on joe biden and where you perceive he will be physically and linked to the job on a summer day in 2026. >> it's a terribly stressful job as you know. the fact that he could still be present at the age of 86 is mind-boggling. it's worth noting that donald trump turns 77 later this spring. it's not as if it's just one old candidate its two old candidates. tom: the tradition is to move up vice president surround based on the moment. if he's running, he has to redo with kamala harris of california

or someone new. what are your thoughts on that? >> it has to be harris, i can't see anyone new and i would be shocked of that happen. two of the biggest constituencies for the president is african-americans and women. he's not going to fire an african-american woman. jonathan: bo is going to run the campaign and how much difference between this campaign and the first one? >> i noted with some interest that the woman who will be heading the campaign is hispanic. if you look at the weakest area of the democrats coalition right now, it's hispanic voters. that could be a pretty shrewd move. jonathan: in the last campaign, the president basically ran a campaign that was a referendum on donald trump, the former president. will he have the same luxury this time around? >> maybe not, he's got to deal with the problem, it's an economy that's starting to soft

and as you guys have been reporting. it's an economy in which inflation has not been subdued. those are huge issues that he has to deal with. lisa: as we take a look and start the ramp up of the election cycle, what does it say that we have two people who are established political figures who are highly polarizing and they are not popular in terms of people wanting them to run again. what does that say about the state of politics in the united states now? >> i jokingly said the frontrunner is none of the above. it is a real problem to see that. i think there is room for a couple of new faces. there are rumors this morning about tucker carlsen which is far-fetched. the governor of virginia is not totally closed the door. he is in taiwan this week and has been getting a lot of campaign contributions and there almost has to be some new face over the next few months. lisa: let's go there, some of

the shakeup we've seen at fox news and tucker carlsen out, we've seen on both sides of the aisle, a lot of castigation's around highly polarizing rhetoric is no coming into fire in the legal space. how does that shift the nature of this election? >> if there was no trump come i think tucker carlsen would be one of the front runners but if there is a trump and i think you will continue to get most of the republican base but you wonder with him that maybe he peter and his polls over the last two or three months. i would just reiterate that i think there has to be room for at least another freshfaced or two. jonathan: what would those faces look like and wherewith they come from and who would they be? >> maybe nikki haley's campaign catches fire or maybe tim scott of south carolina. there are some people in the republican party but for the democrats, robert f. kennedy, jr. and marianne williamson are not serious challengers. i cannot see anyone serious like

gretchen weber coming into challenge biden. i think he has a clear path. tom: the heart of the matter here is this centrist democrat. he was born the day the russians went after german eastern front 1942. the heart of the matter is the liberals have to show up for a blue-collar guy from scranton. that's the image but this time around, will the liberals show up? >> i think that's a very valid issue. the young people are upset over biden's decision to open up alaska to oil drilling. i think that could be a big problem for him. hispanic voters are wavering as well. the traditional democrats, the traditional liberal block is showing some cracks. jonathan: a final word on the florida governor, it feels to me that people are running him before he has even announced.

what is your reaction? >> i think it's way too early to write him off. he has a ton of money in the base likes him. he may have to become a little more likable. he may have to work on his rough edges but there is a long way to go and is too soon to say he's out of the picture. jonathan: we are working on that. [laughter] lisa: his likability? jonathan: it's a lifelong pursuit. to be like. president biden launching his reelection bid in the president making a formal announcement for a second term. we've mentioned that a few times a let's finish the job from the president of the united states. he is 80 years old and he would finish his term at 86 years old. tom: the thing that's important here for international audience which is important is the single -- single statistic. 560 days to the election. there is no other country on the

planet. every opinion i've seen, it's a grind. you witness the video today and not a public announcement. is he up for the grind? that will be the key issue in the immediate weeks. jonathan: and marie will be with us in 20 minutes time but let's catch up with the price action. negative on the s&p 500 and the stock of the morning so far has to be first republic, negative 20%. we will do a full recap of the earnings coming up but we've got to start here, this stock is down 20. lisa: and taking down some of the other regional banks with it given that it came out very surprising with expectations and previously were not previously understood with respect to outflows. what is the path forward for profitability let alone survival? tom: the chart is not good.

this is not another day of down three bucks or whatever. the print this morning is not what people expected. it's really important where this stock is. jonathan: much lower than expected and on the earnings call, they didn't take questions. investor did not like that at all. i think it was about 15 minutes long and that's not what you want to see when many people want big answers to tough questions. tom: we don't want to incite things but the silence on this matter is important. jonathan: down 20% in the premarket on that stock. we will catch up on first republic a mocha dish in a moment. the latest news this morning, president biden launching his reelection bid. ♪ lisa: keeping you up-to-date with news from around the world with the first word.

as you been hearing, president biden is asking voters to let him finish his job. the president has formally announced he would seek reelection next year. he said there was still work to do to get americans a fair shot. the president criticized what he called extremist in the republican party to curb spending and curb abortion rights. first republic reignited investor concerns about prospects for its business. customer deposits plummeted 41% in the first three months of the year. figures underscore first republic is still contending with the impact of the banking crisis last month. kevin mccarthy is refusing request from fellow republicans to change is 1.5 trillion dollar debt ceiling proposal. the bill will be sent to the floor for a vote this week under a rule that does not allow amendments. if as few as five republicans

opposed the measure, it would be defeated. in sudan, the two sides battling for control of the north african nation have agreed to a cease-fire. the sudanese army and the rival support forces are backing a 72 hour humanitarian truce. the army says it was brought about by u.s. and saudi minute -- mediation. pepsi is forecasting estimates that beat estimates. they posted first-quarter sales and profits that was better than expected. global news powered by more than 2700 journalists and analysts in over 120 countries, this is bloomberg. ♪

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>> i'm expecting them to pretty much chugged along and review their strategic up and over the coming months. but the first step is this workforce reduction at 20-25% and i would say it's a first round. i think we could see additional rightsizing of their expenses. jonathan: speaking on the close after first republic's earnings were were reported yesterday. for the stock, down about 20% on first republic in the premarket with deposits really not great

in the first quarter. these are the numbers we expected. analyst were looking at 137 billion dollars in deposits were down 41% this is after some of the biggest lenders in the country got together and deposited $30 billion. the good news is that deposits since quarter and have stabilized but it will spark some big changes at this company. tom: i take issue with the way this was reported yesterday. you did it correctly and many others didn't. it wasn't the net number, it was the number before they were saved by the big banks and i believe that was near $100 billion. lisa: it was also what they had to pay to keep those deposits stable. are they stable at this moment? lisa: they didn't take any questions and they were not open up to that question but we saw the deposit beta really became a

problem for the profitability. it came in much lower in terms of profitability. tom: in the savings and loan scandal in the early 1980's, we didn't hold prep for -- press conferences like this when the bank said they would not answer questions. this is unthinkable. jonathan: this happened at the very end of the first quarter. we've got to see where the -- what the second quarter will look like. net interest margins, and profitability has been hit at some of these banks and that will ultimately mean something going forward from here and it will shake confidence in this country in a material way. the equity market is broadly down about half of 1%. the latest news comes from washington, d.c., the president launching his reelection bid and making a or announcement for a second term. we will catch up with anne-marie in about 10 minutes.

tom: christopher marinek joins us. you and i do the same thing, we get the bank index of 22 banks and it's simple, they are price back to 1998. how many others are there like frc? do you look at them as a discrete disaster or is there enough of them out there to affect something like the 22 banks in the kbw index? >> i think first republic stands on its own. it's a once opportunity and unfortunately it was hit by friendly fire and they have really struggled for the quarter with deposits worse than we thought. i think the conference call to not go well in the markets did not like the lack of questions. tom: the answer is combinations.

the basic thing we've had is 4000 banks. when do we start to see the mergers that have to come? >> for first republic, it could happen soon. they either need to shrink the balance sheet or find a buyer. they will have to raise capital either way so if they sell the company, that avoids that but they will have to take action as soon as today. i'm not sure they can wait a whole lot longer. lisa: who would want to buy them when they can get deposits another way and are taking on the liabilities? >> there could be the attitude that you want the wealth management business and the clients they have even though they lost advisors toward the end of march and here in april. trying to get that business would be attractive to a goldman sachs or morgan stanley for a jp morgan. you would have to have regulatory relief to get that done from an asset perspective but it's not impossible. i think the wealth management business would be the ticket

that would be most attractive. lisa: when i came in, all the regional banks are being punished as well. it's even those that have reported earnings and came in better than people peered whether it was western alliance or zions or any of the others. they are still lower so what does that tell you about what is going on there but also the sentiments? >> thanks her levers vehicles and work off of trust. the confidence and trust has slipped with first republic and i think we have to get through this air pocket today this week. most of these companies are very strong on capital and have liquidity. they simply have question mar givenk the deposit run that happened in march. wes is not completely healed yet. i think the bank has to consider raising capital to show that they can. that's ultimately where this goes. maybe we are six or eight weeks away from that but i think that's the answer to the

problem. jonathan: this happened at the very end of the first quarter in the month of march and i'm trying to work out what that might mean for profits going forward from here. what do you think that will look like? >> for first republic, it's a breakeven at best because if you reset their funding costs in the second quarter, it takes away a lot of probability. we also think they have to strengthen the balance sheet. you need to sell securities and sell loans and that hurts the balance sheet. you will have to sell those assets at a loss of that puts pressure on the revenue line. there is a case for the company to breakeven. it's just a challenge to execute and i think the thing we worry about is this is a company that a growth oriented company and not one of extra profitability. they haven't had a quarter above 1% since 2016. it's not in their dna and it's a

very hard pivot for them to do. jonathan: does that mean they need new leadership? >> i'm not sure about the leadership. i think is the change in mindset. i think they can do this if they change from a growth company to a profit company and make that immediate. i don't think it's impossible but it's a mindset change and that would be relatively big in their history. jonathan: it's a change forced on them. tom: i'm thinking of the charles dickens novel, banks were not growth vehicles. jonathan: i'm not sure the regulators want banks to be growth vehicles anyway. tom: get out the surveillance cork, we need to protect the innocent here. what i would say is the zombies are getting rolled up and how many first republic's are out there is an important question. jonathan: i've heard people refer to this as a zombie. thank you, christopher.

the stock is down this morning in the premarket by a little more than 20%. we will hear from pac west later today and then we will talk about some of the big tech names after the close. google and microsoft today and i think we are from meta-and onto amazon later this week and next week, apple in early may. lisa: the threshold will be high for them given much chat gpt is significant for the gains in the s&p 500 hundred. i wonder how microsoft will deal with that. we will all bing with our chat gpt search engine so how do we get a sparring of microsoft and google? jonathan: who can say ai the most on the earnings call? tom: it's a surveillance cork tuesday.

we've got a sprightly nominal gdp of something like 5-6 or 7%. that will boost revenues maybe give us earnings stability. jonathan: the president releasing a three-minute highly produced video that ran about -- that was lost about 25 minutes ago. we will catch up with amh next. your equity market is negative 0.5% on the s&p 500. this program goes to washington, d.c., the nation's capital up next. ♪

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jonathan: live from new york city, welcome to the program. on the s&p 500, negative zero .5% with some earnings disappointments out there that we will recap in a moment. the nasdaq is down by 0.4% and the russell is getting hammered this morning. with the bond market, treasuries on the two-year down about three basis points and just about north of 4% in the story yesterday was one rita manufacturing this company, softer -- in this country,

softer than expected. the 10 year yield is 3.43. 30 minutes ago in washington, d.c., the president of the united states releasing a three minute long highly produced video, the president watching his reelection bid. >> let's finish this job, i know we can. this is the united states of america. there is nothing we cannot do. jonathan: president biden making a formal announcement for a second term. joining us now in washington, d.c. is anne-marie. walk us through this one, this is been expected for a long time? annmarie: widely expected but the president is laying down the groundwork, saying officially i will be running for 2024 and starts to put a damper on some of the whispers that people were asking within the democratic party. is he too old, should we look for someone new? the president says i want to finish this job and that's how he ends this video he released today and this gives him a moment where he will be having

events and can meet with donors and start to put his campaign team together. they released a statement looking at who will be on the national campaign team and who will lead him into 2024. what this looks like is a biden/trump rematch if you look at who is winning right now in the republican race. tom: what's important to me is he has to meet with donors but does he want to meet with the left or the huge part of the democratic party to the left of joe biden? annmarie: this is a president who will want to meet with everyone as he goes into 2024. he needs every single democrat left or right to vote for him in the next general election. what you saw in 2020 is this is a president who had to really lean into some progressive values and items on the left they really want to see through. there are things like climate change. these are things that was able

to get youth voters out with student debt relief which is a talking point the president will need to have. lisa: do we have a sense of how important it is for president biden to get reelected and see the economy continue at pace? maybe the economic growth cannot face some of the vast consequences people have been talking about for him to get reelected? annmarie: the economy will be a huge issue going into 2024. while the president announces his race, we heard from the rnc -- they say biden is so out of touch that after this current crisis, he thinks he deserves another four years and they talked about inflation will continue to skyrocket. you can already see the republicans are trying to make the economy the front and center issue but that is easy for them. at the moment, a huge issue that republicans are struggling to have a singular united message

on and the democrats are trying to harp on that, abortion. jonathan: this pull from nbc news, 70% of all americans including 51% of democrats don't want biden to run for president in 2024. the reason is nearly half of them cited his age is a major reason. what is his message to those people that ultimately, even within his own party, didn't want him to run? annmarie: biden continues to say that you all doubted me in the past and you were all wrong and i plan to prove you wrong. he constantly says that when you ask them questions about his age or any other issues about whether he is able to continue on and take on a second term. in that poll, i think it was clear that most americans don't want to see another biden/trump rematch.

they want fresh faces all around. the sample sizing of that hole was quite tiny but what you see in these polls is that they are looking over all when you look at moderates and independents in the country, they want new faces. but when you look at hard-core on either side, they are happy to go with their current leaders of the party. for the democrats, it's more that they just don't have a working bench right now, one that could take over the mantle and win in 2024 so they want to stick with joe biden. they counted him out in the last primary and then he was able to rise to the top. for the republicans, the situation is different. trump has a major role in the party, 30% but is he able to win a general election if he becomes the candidate. he proved in the last cycle he was unable to do so. jonathan: thank you for the wrap

up in washington, d.c. on the back of the president making an announcement this morning. we've got tons of news on the earnings front. let's start with ups. they came out moments ago this hour say that annual sales will come in at the low end of its guidance on the back of slowing u.s. retail sales and slowing demand for package deliveries. they are down 5.6% in the pre-market. tom: that's a huge indicator for me. the basic theme this morning with the earnings coming across from working americans and away from the banks is guidance lower. jonathan: job cuts as well, 3m, 6000 jobs to go. lisa: similar to what we saw at ups coming in and the later expectation of what people expect out there.

these are the bellwether nuts and bolts of the economy. how much do we see an ongoing softening. fedex shares also falling in premarket trading based on the fact that ups sees fewer package volumes especially coming from asia and not necessarily seeing the same kind of profitability. a bellwether company at a time of uncertainty. tom:3m with a completely unacceptable return over the last 10 years. joining is now is jeffrey yu. if we are seeing earnings that would suggest guidance is tepid, are you modeling recession around your arched strategy into this year and next year? >> yes, mild one for the u.s. on a global basis, they are not using recession as a base case. china is reopening slower than expected.

sentiment is pretty robust out there. it's the age-old story that the u.s. is setting the pace for the rest of the world. jonathan: within the equity market in the united states, tech is outperforming but europe is outperforming the united states. can you make sense of those two things? >> i think tech outperforming could be a forward expectation. if we go back to last month, the best days of tech were when the fed cuts as early as june reprised in. it's about the relationship between financial conditions and tech. what's surprising about europe is that european households have done surprisingly well. it's coming through germany and you get a tailwind from chinese industrial demand. europe is a bit more optimistic but we worry about the u.s. side of things as well. lisa: maybe china is not

accelerating as much as people thought and that's priced in and you start to see that on the margins? maybe it's the ups news or we see in oil demand? >> the national bureau of statistics says to heirs of chinese growth is based on consumption. if that can translate into investment demand for a third of the economy which is growing, it will pick up some slack and conditions can stabilize as well. china will be looking at the u.s. if they look globally. jonathan: a final question from us, what is your favorite idea for your team? >> we are looking at euro-yen heading into this week.

valuations, europe hasn't turned the corner. maybe we will get some earnings report when the earning that is when they worry about earnings translation. over all, look at europe and look at relative value. those of the trades we are looking at. jonathan: thank you as always. wrapping things up in the market, we are down by zero .5% on the s&p 500 and we need to talk about earnings. welcome to the program, ups out with earnings and guidance a little bit early this morning saying that annual sales will come in at the low end of its guidance as u.s. retail sales slow and that stock is down by 5.6% and moments ago, more job cuts but not from tech, from 3m. tom: ups is a bellwether like fedex so i would not conflate

them together. 3m has been a management train wreck for well over 10 years. it reminds me of campbell's soup where it's an iconic product that can't get out of its way. i don't know for its 42 or 47 restructurings over a decade but this is another 6000 jobs as they try to find out the minneapolis mining and manufacturing future. jonathan: otherwise known as 3m. that's the latest from 3m and ups. after the close, we will talk about google and microsoft then wednesday, meta, thursday amazon and onto next week with apple around the corner. lisa: this is after they fueled most of what we saw in the s&p 500. when is the bar said so high for a year that has to be so high. the economy looks like it's showing cracks and that's what we are seeing in these earnings whether it's ups or 3m.

it's not just reporting labor in a pandemic, it's a different nature of job cutting. given this drumbeat, how does big tech come in here and show they can still grow. ? jonathan: they say they are facing more weakness in 3m through the second quarter. tom: the guidance is like this morning and you see 10-20 company so what's is the next if the look? jonathan: we had to talk about ubs in switzerland next. in the next hour, we will catch up with the general motors cfo with tons to talk about, your equity market -0.5%, the 10 year is 3.54. the president officially launching his reelection bid. lisa: keeping you up-to-date with news from around the world with the first words --

joe biden has made it official, he is running for reelection next year. the president made his long-awaited announcement in a video today, asking voters to let him finish this job. he will face a republican field dominated by his predecessor. economic uncertainty will cloud his case for a second term. china's presidents efforts to portray his country as a peacemaker in ukraine have been undermined. beijing is trying to distinguish -- extinguish a fire storm caused by its ambassador to france who question the independence of the former soviet state. the president said that was a personal point of view and reaffirmed respect for the sovereignty of countries that were once part of the soviet union. the british government is set to unveil new legislation that could lead to a crackdown on silicon valley. big tech firms such as google and meta platforms face more oversight and fines of up to 10% of global sales with practices

that hurt consumers. the legislation would create a digital markets unit in the u.k. antitrust regulator. ups is out with a full year outlook that was weaker than expected. the package delivery service says that volume in the u.s. was lower than expected due to a slowdown and retail sales. ups also says it faced demand weakness in asia. global news powered by more than 2700 journalists and analysts in over 120 countries, this is bloomberg. ♪

♪ ♪ the biggest ideas inspire new ones.

30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪ ♪ >> at times of distress in the market, the first quarter was

very challenging and we saw clients looking at ubs as a safe haven. the influence was coming from all regions and from different sources. in that sense, we are pleased particularly after the announcement of the transaction of the acquisition of credit suisse. it's a sign of confidence. jonathan: the ubs ceo speaking with bloomberg. they reported the weakest quarterly profit in more than three years with the stock softer this morning. the broader market is negative zero .5% on the s&p 500 it we are a little bit lighter with tons of earnings out there. the guidance at the low end of its previous range which is disappointing investors this morning. 3m with job cuts, 6002 go. that's improving investor appetite for the stock, up

slightly and after the close later, it's on to tech in a big way. tom: i want to partitioned this. i brought up an optimistic screen about the present earnings. then you bring up guidance screen and it's completely the opposite. there is a real partition to this. jonathan: the federal reserve is not providing much guidance and it's difficult for the c-suite to do this as well. it's interesting how they played down some of the inflows into the bank. they play down the idea that it came from credit suisse, played up the idea that came from elsewhere. what's interesting about this and all of us have had this conversation, so many credit suisse clients also had a relationship with ubs. somehow, they managed that

relationship becomes a combined entity. it will be interesting so when we think about who wins, who will be the winner here? tom: it better be the domestic people of switzerland because i thought that was usually choreographed. every drop of the headline was massaged around their present strategy. they brought in oliver wyman driving that ship with his work with governor carney. this is a high level consultant merger to appeal to the swiss people. jonathan: a lot of new money from rich clients. there tom: is one headline that sticks out to me. manus cranny yesterday, over his left shoulder credit suisse and over his right shoulder ubs and today, only the union bank of switzerland.

there was that single headline which strategically is what everybody wanted to know and it was simple, the combination was the equivalent of 7-10 years of gathering of asset. did that surprise you to see how much they brought in and got a seven-year jump on getting bigger? >> thanks for taking the headline because it defines the current undervaluation of the equity of ubs right now. you look at the 30 day chart on ubs. therein lies the point, this market has yet to see the real material improvement that they can deliver. 28 billion dollars came in and $70 billion came in after the deal had closed. to your point, in the united states of america, the americans brought an $8 billion of the new money. you had a banking crisis.

you had your own crisis and the american clients ponied up for the net new money. you should have been able to drive the wheelbarrow past. that didn't materially happened thus far. in the interview, he said it goes to show there is no competition on the street and this concentration risk argument is perhaps a little bit overplayed. they had guardrails up. trying to push them on what would be a matter of success. this feels like they've done it before. lisa: there is this idea of the flows not coming necessarily from credit suisse and that is a good thing. when is that a bad thing?

the fact that if clients have their money in ubs and it is suisse, they will want to diversify their potential risk and diversified their money managers. >> absolutely, that's the reason -- thank you -- that's the reason why i take a four hour train journey to frankfurt. deutsche bank tank by 50 d 8%. there was carnage on the street. i want to give you a little bit of math. buffers matter. they paid 3.3 billion dollars for $50 billion of equity. that's $63 billion where you can boot losses and write down assets and losses and write down assets and tank a few businesses, then you've got $5 billion of your own and 9 billion from the state. it's a long way before you encroach into a negative number

where the deal does not stack up. buffers matter. they are writing the story as we speak. you stack up those numbers and you begin to understand just how much they have got on site before they really take any pain. when it comes to downsizing the bank in switzerland, the experts are telling me how to run a bank and renegotiate the contract of engagement. that was the only sense of the frustration. lisa: it was a great interview and congratulations. there was a sense of trying to expedite at least the closure of the transaction. do we have a sense of how much they would like to expedite the actual integration of credit suisse in light of these concerns, in light of the investor worries? >> he just would not be drawn.

kelleher set a low bar to do the deal and pushback on that. off camera he said normally, you go dancing with a potential partner for two months. this was done in the space of 2-5 days depending on the reporting. i think it's posthaste. it's almost post-the real understanding will come later. they brought it back to 25% of the size of the original institution. there is a demographic in switzerland and people are getting older and natural attrition will be part of the narrative they give us in terms of downsizing the swiss unit in switzerland. i've been with armani for nine years, this is not a ceo who delis around. he decides, executes and delivers. capital is the king and he would not be drawn when the buyback is

bad. jonathan: you know him better than anyone else, fantastic to hear that exchange between the two of you. world-class reporting from manus cranny. sergioarmati trying to in the -- integrate an absolute monster. tom: they brought ubs into sbc but they've done this ballet before. manus had my head spinning with the math. they've done this before, they have the government behind them to get this done correctly and i go back to what we are missing in london and new york and hong kong which is this it is a domestic roll up area you talk

about the great zombie roll up but maybe this is the greatest of the year. jonathan: he frame this as a relationship in the nonmanagement at ubs said this happen quickly. they didn't have time to think about it. their friends in the banking world have been playing matchmaker for 5-10 years on this deal. it's not like it came out all of a sudden. i'm not talking about any of my friends, just friendship in general. lisa: this is the issue, the math didn't make sense for a lot of people. tom: he had a parsnip and coriander soup priced at $25. jonathan: in the next hour, we will talk about earnings that of

come through in the last hour plus our top story this morning, president biden launching his reelection bid. down to d.c. in just a moment. ♪

>> everything rolls back to the fed and their super aggressive policy last year. >> the fed conviction about giving -- getting inflation down to 2% is clear. >> i described this as slow-flation and inflation will be more stubborn than you might have liked. >> the fed will have to keep inflation -- -- hikes higher for longer to get inflation down.

>> we will be at a level that's consistent with long-term inflation expectations that the fed wants people to have. >> this is bloomberg surveillance. jonathan: if you want today quite morning, you are not getting one, live from new york city this morning, good morning. this is bloomberg surveillance on tv and radio. tuning into an equity market down by 0.4%. lots of earnings to talk about. the top story 60 minutes ago, we've been waiting for this one for a long time, literally since before christmas when the claim was that the white house after the holidays you might get announcement and here we are at the end of april with this announcement, president biden launching his reelection bid in the president making a formal announcement in it he minute long highly produced video 60 minutes ago for a second term. tom: it's here but your point is

well taken as it took a while but the pros we talked to said no, this is about the right time. i think there was a let's go attitude and the washington people are saying no, that's where we are. we will be at the white house correspondents dinner this weekend and it will be a president running for reelection. jonathan: that phrase was addressed -- let's finish the job. are people happy with the job he's been doing? lisa: 70% of people do not want to see him run again in something like 60% do not want to see former president trump run again so this is a highly unpopular pairing that looks like the most likely heading into election season with a lot of issues on the table. where is younger other leadership and what will it look like in the times of heated

polarization? tom: we need to go back to the research of many to bring it back to england. i realized i knew nothing about william gladstone about three weeks ago -- three years ago and i read more on the great british politician. the last time he was prime minister was 82 years old in 1892. so there is a precedent here. jonathan: at the end of his second term, joe biden will be 86. the nbc news poll shows how unpopular this run might be. 70% of all americans including 51% of democrats don't want president biden to run for president in 2024 and nearly half of those respondents cited his age is a major reason. we will talk about this in a moment but we need to discuss earnings this morning. we heard from united parcel service about 60 minutes ago, coming out and saying annual

sales would come in at the low end of their guidance and then we heard from three m saying they will have to cut jobs by 6000. ups is negative almost 5% and 3m is posited by 1.4% and an update from mike donald's moments ago. -- from mcdonald's moments ago. lisa: the estimate was up so it was a big beat in this follows on from pepsico early this morning also beating. it seems the most industrial facing companies are facing some headwinds right now. whether it's 3m or this idea of ups and fedex. if you are going to eat something, particularly on the lower end, consumers are willing to accept price increases and we see that it mcdonald's and we saw that a coca-cola and pepsi. this is the diversions that

makes it difficult to come up with a clean narrative about this market. jonathan: welcome to the program, negative zero .5% on the s&p 500. some softer manufacturing numbers which speaks to the stuff we are disgusting -- are discussing. euro-dollar negative is about 0.2%. lisa: today we get housing data for february as well as new-home home sales for march. in addition to u.s. conference board consumer confidence, we get richmond fed manufacturing that might be the most interesting case for the disappointments we've seen recently. earnings continue today. i am focusing on the small regional banks. pac west after the bell at 4:20 p.m. following first republic yesterday. we are now worried about the

regionals again which is the theme, that the feelings of confidence that we stabilized are taking a real test after some of the results we've gotten recently. we also get earnings from the tech giants including alphabet and microsoft in addition to texas instruments after the bell. that's driving the game so far this year with alphabet up more than 20% and microsoft up almost 20%. tom: will they give us guidance? mcdonald's did not give us guidance forward. you've got to watch commercial real estate. you look at individual properties with huge haircuts on sale. jonathan: mohamed el-erian talked about last week, saying you cannot call it a credit crunch. tom: i strongly agree. jonathan: he thinks it will hit pockets of the economy and bigger ways than others and

perhaps commercial real estate is a feature of that. tom: that goes to the political tension here with the president's announcement of reelection. the two candidates got to segment parts of america to win. jonathan: the president making a formal announcement for a second term saying let's finish the job so let's catch up with anne-marie. the question we are facing is whether we have more freedom or less freedom. i know what i want the answer to be in this is not the time to be complacent and that's why i'm running for look -- for reelection. your thoughts on washington this morning? annmarie: this was highly expected and we knew the announcement could come as soon as today. this is bidens anniversary of announcing his first campaign when he ran in 2020. this has nostalgia to it but this sets up that biden can get

a team around him outside the white house to focus just on his reelection. he has every day jobs that the leader of the free world has to get to and this gives them a chance to make sure he can talk to donors and their set to be a donor conference likely on friday. this sets him up going into next year and it now means that there is a lid on whether biden will run or not even though everyone has said he's running. biden even told the weatherman on monday. now he finally has this highly produced video and now the game starts with coalescing the team around him. tom: it ends up in the suburbs

as a generalization. how does joe biden win again in the suburbs? annmarie: i think he will use a similar playbook for 2020 which is the concern about the former president donald trump. he's just going to be with independence and especially women. a portionhow they will message . you had the head of the eye -- rnc saying we have a messaging problem when it comes to abortion because they don't have a unified message. that will be one key issue the president will want to talk about when he goes into next year and tries to get the suburban boat especially suburban women and women in general. the other issue will be the economy. joe biden will have to defend his record while running this campaign. the economy could be challenging because we've seen inflation and

this is where the republicans want to take the debate in the rnc said joe biden was to finish the job but what does that job mean, sky high inflation? that's how they will frame his reelection. lisa: how much of the reelection campaign is hinged on the former president trump actually running? president biden seems like probably the most likely person who could beat him. annmarie: when you look at some of the polls, looks like there could be another republican candidate who could beat biden. earlier polls that that person could be governor ron desantis. joe biden still beats trump. this is almost a rematch of 2020. even though the sample size of the nbc poll is tiny, it doesn't look like america wants a rematch of 2020. we have president biden today formally announcing for 2024 so

he is obviously going to be the nominee for the democrats. if the -- on the republican side, if the former president trump who was winning in these polls and there is an interesting article this morning in the new york times about the big donor for governor desantis who is on a world tour right now in japan. it says he is concerned about some issues regarding the six-week abortion bent and the comments of desantis saying the russian invasion of ukraine is a territorial dispute. the possibility of him beating trump in the primary is actually fading away. jonathan: he is declaring the end of a campaign that was never announced, very interesting. the president making a formal announcement to run for a second term. it's super early days.

people are already running away with the idea that with it will be a remake of what we saw last time. tom: no question about it, but i'm on the fence about it. there are so many financial narratives and markets tragedy -- strategy narratives. i can make sense of it. jonathan: even if it is a rematch, it's incredibly early days so it's hard to make the case that it will be a replay of the same campaign. last campaign was about a referendum of a sitting president and now president biden has to defend himself and cannot just hide away and make it about the other guy. lisa: it's also the unspoken truth that both parties are so splintered and they are not clear how to bring unity to either side. jonathan: canoes right now or 0.4% on the s&p 500.

president biden launching his reelection bid. we will talk about that on top of a ton of earnings this afternoon and you will hear from google and microsoft after the close. lisa: keeping you up-to-date with news from around the world with the first words -- president biden is asking voters to let him finish this job. the president has formally announced he will seek reelection next year and a video released today. he says there is to work to do to give americans a fair shot.he criticized republican party want to cut government spending and curb abortion rights. shares of regional bank first republic plunged in premarket trading. the bank's quarterly results reignited investor concerns about prospects for its business. customer deposits plummeted 41% in the first three months of the year. figures underscored that first republic is still contending

with the impact of last month regional banking crisis. house speaker kevin mccarthy is refusing requests from fellow republicans to changes $1.5 trillion debt ceiling proposal. the bill will be sent to the floor for a vote this week under a rule that does not allow amendments. if as few as five republicans oppose the measure, it would be defeated. general motors posted first-quarter profit that beat estimates. it also raised its full-year earnings and cash flow guidance. there stronger results with sales in the u.s. despite higher interest rates and inflation. global news powered by more than 2700 journalists and analysts in over 120 countries, this is bloomberg. ♪

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>> i think tech outperforming could be a forward expectation. in the last month, it was the best days of tech. the cuts were priced and so that relationship between financial conditions and tech emma we need to look at as well. jonathan: tech is answer the closing bell with google and microsoft later and tomorrow, meta-, facebook and on thursday, amazon and then we hear from apple next week. a beat and a raise for general

motors and we will catch up with the gm cfo later. lisa: it shows the bifurcation of the haves and the have-nots. who has the pricing power, who has the dominance, the products that people want and who will emerge the winner in the electric vehicle space. a chinese company said only 10 will emerge as winners. tom: general motors has been in the low end of that brain so it's a nice lift area they have pretty good earnings and the guidance is a little moldy on mcdonald's and others but they have to come out and ups said we will continue to do share buybacks along the way. jonathan: price cuts at has look, how are you reacting to

price cuts at tesla? tom: isev valid? david rosenberg channeling jonathan ferro this morning. here's is his tweet -- you mentioned that the core is distorted by a bang of january. jonathan: much warmer than anticipated. europe escape winter into the new year. tom: also the biden stimulus was still there and it has drifted away quickly. jonathan: resilience of the consumer is what we see but now we are starting to see some cracks. you wake up this morning and the s&p 500 is negative zero point 4% with yields lower by five

basis points. we can talk about the market through this morning and we returned to the announcement from the president in the last hour, he wants to finally get the job done. the president making a formal announcement to run for a second term. tom: it's there and i think the covers we had this morning has been great. what does he do in the next week? 560 days to the election so how do you jumpstart this? run another video? i'm curious. jonathan: do some interviews, that would be nice. tom: he did a video, i wonder where we go from here. futures are negative 22%. a little bit of lift in the tape and sarah hunt is leaning forward and the equity market on this. she participates in the market will others are of fear.

with guidance out there on earnings, are you afraid of what's to come? >> i'm not sure is afraid is the word i would use. i am definitely cautious given the fact the equity market is at the top of its range and it got to the 3200 level and that -- and then back down a little bit. most of the earnings estimates are weighted heavily toward the back half of the year. if you listen to people's guidance in q1, we want to hear about all of it, not just what happened but what we are expecting. ups coming in with layer package volume on the margin, i think the news is more cautious for the uptick at the end of the year. had we pushed out a slow, shallow recession into next year, will we not get the pickup in the back half of the year we're looking for? earnings estimates are not reflecting the fact that we are slowing down as much as we are. jonathan: you indicated that it

looks pretty calm last week so far, this well trading range. does that mask something more sinister the neat the surface? >> you look at the top 10 stocks that have been like 80% performance of the s&p 500 so for and the nasdaq is top-heavy and the stocks have done well, the rest of the s&p is up maybe 1% in q1 so there is definitely a divergence in the action stocks in the big stocks that were sold heavily last year were reinvested in this year heavily. there are big swings in the big stocks and the question will be what are the doing with their cap x? that will be a big part of the story for earnings for everybody besides the big tech guys. and what's happening because of these regional banks? is credit really going to be much tighter? anecdotally, they say it's harder people to get loans and

things like that. that's the slope moving lag that is starting to catch up. i think that's a little bit of a worry in terms of the expectation earnings will not be down but up slightly and a lot of that is weighted to the back half of the year. lisa: when does that divergence become a con versions? we seen strength in gm saying they are expecting profits to increase above people's expectations and demand in north america still strong and they drive most of their revenue from the american market. that means that things are going well in the united states versus they have pricing power and manage their inventory well? >> you also look at sectors like the airline sector because everyone wants to travel but other sectors are not performing as well and whether the rest of the automobile game can work as well as gm and that lurks behind us. and people get credit?

for the people who don't need credit to buy a car can do so but that's becoming a russian for others as you look at financers who say this will be different and we will pull back on credit. that's part of the issue right now. lisa: people are talking about big tech after the bill as the bellwether for the season, do you would read? >> i think this goes back to the fact that we have -- bifurcated is too simple. there are so many different actions weighing on the different sectors that it's almost like you had a slow rolling recession in different parts of the economy since last year. it's not like everything's going up or down at once. you got different moving parts and some are doing better than expected and some are not. some when they do well, this stocks don't reflected. it's been a very challenging time because even if you are right theoretically, doesn't mean the market will react the way you thought.

that's part of why it's been such a challenge the last year and this year as well. jonathan: exxon is friday and it's one of your favorite sectors so let's talk about energy. what are you looking for this week? >> you seen oil prices come up and that will help it that is recent. what was the average oil price in the first quarter so what will the margins do? halliburton had great numbers. tom: use the cash, exxon, gm and the rest, when we wheeled -- when will we get courage to deploy cash to shareholders? >> if you are exxon, where will you get the courage from? you are being told by the world that eventually no one will want gas. how much more will i invest so that is part of the issue. there are supply constraints because people have not been investing.

is it all about share buybacks and camp -- and dividend growth? >> i think you need to do both and you telegraph that those cash flows are not temporary and they are more permanent but the problem for the oil companies is you are being told by governments that we want to get out of the oil industry so how do i justify investing a lot of money? they are doing in some cases. you will see better numbers on the oil service side because you seen investment start to pick up but the problem for some of those guys is the cyclicality. gm has a great year this year but if i increase my dividend, do i cut my dividend and investors don't like that. jonathan: this has been great, thank you. exxon reporting later this week, from new york, this is bloomberg. ♪

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jonathan: live from new york equities sound a little bit. -0.4% on the nasdaq 100 down 0.3% that afternoon coming up for the nasdaq 100 a little bit later google and microsoft reporting after the close. i'm going to run through the bond market yesterday softer than expected that brought down gilts on a two-year still just about a two-year.

tom: the real yield is coming and again the trend there changed with the economic data yesterday. jonathan: down five basis points pushing through to next week federal reserve made ecb may 4 going to get all the euro just about holding on one tent on the euro-dollar lease that -2/10 of 1% there. lisa: and of course the key moment that senior loan officer survey everyone has been waiting for all of this time we got a ton of these earnings that are fascinating. ups said annual sales would come in below the lower end of the guidance as expected by analysts. slowing demand for u.s. retail they cited slowing demand over in china. interesting to note those shares

were up about 13% year to date outperformer so far in 2023 but let's see how long that lasts. we have been talking about 3m big tech planning 6000 job cuts the shares rising by 1.7% but what does it say about how the nature of job cuts are changing at a time when the way to boost income is simply to increase efficiency in underway i'm also looking at the banking sector it was really unimpressive to put it mildly those shoes lower rent 21% and the other regionals falling. 3.7% loss ahead of the open 3.5% loss now that is what it was earlier western alliance reported earnings down 2.5% with first republic and i want to say just to finish up on general

motors those shares popping by 3.2%. shares coming at a higher and we will be speaking when the cfo paul jacobson coming up in 15 minutes it will be fascinating to see what he has to say at a time of so much change in the industry and also potential crocks in credit emerging from this strength. jonathan: price cuts at tesla. tom: first question. david welch bloomberg detroit if you don't ask him about tesla never going to speak to you again. lisa: what are we? chopped liver? jonathan: that's like the fourth time in a year or something like that. tom: this goes all through next week it goes well into apple you know the fed meeting and then apple, mayport so it's an earnings derby here right now we are thrilled to bring amanda

with this. really interesting view of the credit market i look at the turmoil out there in equities and i want you to bring it right away over to the bond market are you clipping coupons? do you have this season -- scissors out or can you actually manage and do execute total return in bonds this year? >> we absolutely see a really attractive opportunity in fixed income. lisa suggested there is a bifurcation between the haves and the have-nots and that's absolutely something we are focusing on one of the really interesting points is adjusting to this higher cost of capital environment so from our perspective the disruption in the regional banking system the pullback in credit that we expect is going to have different implications for

different parts of corporate credit. we have seen a doubling of interest costs in four quarters so that's really something that i think we are paying a lot of attention to for asset allocators you actually are getting paid a lot more for that risk you are picking up around 200 basis points there is a real relative value that you have to manage their but that's really what we are watching going forward i think the two things that are really important even a period of just below trend growth and a higher cost of capital environment and in the second thing is unlike the period of the past two decades we are seeing some differences in the way the stress is manifesting. for example we are seeing the loan default rate surpassed the bond default rate. we think that will continue we think there will be differentiation between sectors as even some of these corporate

companies and sectors have to refinance into a higher cost of capital environment so while we absolutely see in opportunity in fixed income it's important to tread carefully we are paying a lot of attention to sector allocations. ironically as you all know high-heeled has actually or performed so for all of the concern about down sector growth we have not seen that manifest. jonathan: have you ever seen a high-heeled bond because they always just refinance when they come to refinance next time around where is that big maturity wall so to speak? where is it? >> it's 2025 high-yield companies don't typically let their bonds mature they address them 12 months or even before unlike ig birth sometimes they are replaced.

they are replaced or refinance with short windows. we are seeing the activity cap i wouldn't say it's been exceptionally active but we are definitely past the lull of march. i think it's a trend that will continue corporate's will have to start to address that in 2024 and it's not really are to me given some of the overhangs on growth what will be better about the market in the second half of the year versus now? lisa: what's the bigger risk right now? or that the economy deteriorates that yields go in so all of a sudden this looks like high-yield truly and it's not really a good environment with respect to the corporate bottom line. >> we talked about this a couple weeks ago where we saw two different paths both of which were warranting the first is you have a procession you have the fed cut rates because the

downturn in growth is so bad. for you have on the secondhand may be the bank contraction and lending isn't so bad growth is below trend but not recessionary and recession is still elevated in that instance you have corporate suggesting to a higher cost of capital environment. i think they manifest in different ways we know the high-yield market is more sensitive to downside risk to growth i think the recessionary outcome would warrant a more pronounced repricing in spreads it's challenging to navigate. lisa: on one hand you are going named by name but there has to be a scale so how are you divvying up the risks at a time you also need to rent not only -- >> we are you leaning into high-quality high-heeled. we are looking to deploy capital tactically it's really a lot of

attention to sector allocations idiosyncratic stories, very mindful in -- uptick but we do absolutely see an opportunity with yield or they are you have to stay invested in you do need to lean into those exposures but it warrants a lot of caution. jonathan: let's get to the topic that everyone loves to hate to talk about the debt ceiling does that apply to credit? is it something i need to talk about? or do i need to avoid it? >> we saw that high-yield spreads widened around 40% so the 500 ranged of course we had an equity market decline over a few weeks of 17% during the same timeframe we also had the european debt crisis in the background so it's hard to disentangle the 2011 experienced but it something that weighs on risk sentiment for sure. tom: we started this it

villanova a million years ago is there in efficacy to studying false swaps? they don't have the liquidity you are you stupid is there a value? is that a valid study? >> it's an incredibly technical market. the whitening we have seen in the u.s. sovereign it's moved from an extremely low level of 15 basis points. i don't -- i wouldn't necessarily take it is the major read. the dislocation in the carver notable. i think as we get closer to when the x state will be that the market will pay even more attention to this. it matters for risk appetite which matters for credit and equities but it also matters for sectors. there are certain sectors, certain companies that have a large portion of revenue and earnings tied to government spending. so if we see cuts to

discretionary nondefense spending you would think maybe it would be we can. i think until we get some clarity on how the forward looks it would be difficult to get super constructive on it it's not her to us that this will be an easier process versus 2011. jonathan: why is that? >> i think there is a certain amount of uncertainty. it's not clear where the party lines stand on terms of where the obvious cuts for spending decreases are. jonathan: i don't know about you but for us whenever we try to have this conversation is kind of push back. it's happening, it's out there. what about you when you speak to clients? >> for the immediate portion of march a lot of the focus was on the banking sector and rightly so. i think now that we've kind of moved past the immediacy of that market participants are looking around what else is on the horizon?

i think it's difficult to have a game plan when we don't know when the x date will be so we are waiting for the tax receipts to see if it is june or july, later in the summer? i would expect folks to focus on it a bit more. jonathan: amanda, this was great. that's becoming a bigger story slowly. and then it will be all that once at some point in the summer. lisa: if you look at tbl -- people yields. just to give you a sense of some concern. jonathan: equity features right now -0.5% on the s&p up next week will catch up with general motors cfo. that conversation next. >> keeping you up-to-date with news from around the world with first word, i'm lisa mateo.

president biden has made it official he is running for reelection next year. he made the long-awaited announcement in a video yesterday. he will face a field prop -- dominated by his predecessor. china's president xi jinping efforts to portray his country as a peacemaker have been undermined beijing is trying to distinguish -- extinguish a fire storm caused by the ambassador to france. question the independence of the former soviet states echoing vladimir putin's views. beijing said that was a personal point of view and reaffirmed respect for sovereignty of countries part of the soviet union. the british government is set to unveil a new legislation that could lead to a crackdown on silicon valley big tech firms such as google and meta pop forms face more oversight and fines for practices that hurt consumers the legislation would create a digital market unit in

the cape antitrust regulator. horizon reported first-quarter profit and broadband sub -- subscriber gains. larger than expected loss of mobile phone customers. could be a turning point for verizon's consumer business it struggled the last two years and fallen behind at&t and t-mobile in wireless growth. job cuts are on the way at 3m the minnesota-based manufacturer plans to eliminate 6000 jobs as part of the wider restructuring. cuts are expected to save $900 million. 3m posted quarterly earnings sales fell less than expected. i'm lisa mateo and this is bloomberg. ♪

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>> if you look at market pricing it's essentially a probability

you of the world so the fed cutting 25, 50 basis points before the end of the year there is a much higher probability it's went to cut 100 basis points if there's an accident or because zero if inflation is sticky. it's a weighted average of that. jonathan:. to put it simply he's not the only one saying that we have also heard. thus the thing for later on the theme right now earnings let's talk about the market more broadly on the s&p 500. -0.5% ups, a little bit earlier on this morning missing with some expectations. annual sales coming in at the low end of guidance as sales slow. 3m doing a little bit better off the back of job cuts 6000 jobs to go over three and potentially so that's the latest news for

them and a little bit later after the close we will hear from microsoft, we will hear from google the bright spot is will came from gm general motors gm this morning the stock is up a little more than 3%. tom: as they transition from fuel to ev which is the focus of the industry i know jon and lisa have a few questions on tesla. paul jacobson joins as chief financial officer at general motors, paul, you drive the hummer ev it cost senate $85,000 it's may be 195,000 or whatever it is the answer is you boosted the range on a 9000 pound vehicle. does america want that? is there real demonstrable evidence that brought america wants to drive ev? >> well, good morning, tom and lisa and jon.

thanks so much for having me. thanks to the gm team for an excellent quarter. when we are looking at ev's we have really strong demand for everything that we have produced so far and when you look at the order backlogs and the ramp-up of cell capacity we for good about our ability to ratchet up production to meet demand but consumers are speaking with their commitments to us and we feel good about the products in the vehicles that we are producing, the hummer ev is a great vehicle engineered by our team and customers can get a fast enough. tom: i look at this, paul, and it is unit and price. mr. ask is playing with price on a weekly basis at tesla. i was talking to david welch in detroit how did you adapt to tesla's price strategy? is it something you react to? is it something you ignore? >> so we've actually been very

consistent with our pricing on our ev's and that's really a function of demand that we've seen for them there's been a lot of industry noise around pricing all across the world and it's something that we've been very consistent with with our strategy and it's when that consumers are responding to. over the long-term, we've got a competitor the that is posting really strong margins we need to make sure we lower our costs especially our structural costs we announced a $2 billion program today we are talking about being at the high end of the range in 2023 getting about $1 billion out this year with the other billion to follow next year and it's the first step in the process to make sure we are competitive for the next generation. lisa: does cutting costs mean layoffs? >> we are actually not doing any layoffs. we had a voluntary severance

program. we had 5000 of our colleagues opt to retire or move on and that alone is going to save us about $1 billion and that something we think we can manage through and hit our goals on the $2 billion program. lisa: you reported full-year expectation exceeded what people anticipated. how much is hinged on north america and not china? how much is this independent and u.s. focused? >> the bulk of our business is obviously in our north america segment we had a strong quarter there. pricing is still up this we see wholesale prices lapping. demand still remains strong volumes were up about 4%. our inventories were flat and i think the team is doing a good job of managing through that we've planned for the year and we alluded to this in our

guidance at the beginning of the year that we work assuming a 15 million unit market. and that we came in slightly above that but we've got some cushion built-in in case we see demand start to fall off in our at our first-quartern yo outperformance and the confidence of the cost reduction plan we felt comfortable raising the guide. china, obviously, very competitive. they are still coming out of covid and we see demand recovering but it's also a completely competitive market. the team has done a great job. we have been able to maintain profitability. we think second-quarter is going to be challenging. lisa: given how exposed you are to the u.s. market what is your concern level in terms of tightening credit? we talk about restricting credit on the margins, in particular when it comes to lending how aware are you of that? >> we haven't seen that

affecting our consumers endeavor customers. we have captive financing through gm financial. credit statistics, we look at them every weekend they're still quite strong we see a little bit of normalization but really back to pre-covid levels but nothing we have seen that gives this any area of concern right now for our consumers. tom: you got a familiarity with operant, alabama. there is 62 public charging stations but only six are free ev charging stations. does general motors have to provide leadership and set up a grid of electric charging stations across america? >> so this is an area we got out to an early start as we search a buildup the network it's an important piece of ev adoption. we committed about $750 million

to a multipronged charging strategy. a partnership with part -- pilot flying j to help increase the charging system but we partner with our dealers in local computed these to locate charges for those families that may not have in their home. really, we feel like we need to provide solutions for everyone across the board paid charging is something that i found is far more economical than filling up your car with gas so it something that ultimately we are committed to. tom: would do you do in the dividend? i've got a gross yield of 1% i'm not even sure what dividend growth is described the five-year dividend growth for general motors. >> we look at our dividend as an important part of our allocation. the first one is investing in the business we have a lot of capital that we are investing

for the transformation. 11-13,000,000,000 dollars this year alone. we are still generating free cash and that's a testament to both the team as well as the demand for product across the board. we purchased about $365 million of stock while early retiring debt. so taking care of the balance sheet being privy with our capital across the board. we also are actively using shared purchases as a chill to return capital to shareholders. jonathan: see how comfortable cfos are everything is calmer. tom: his voice changed. paul jacobson, think you very much. general motors cfo the stock is up this morning by something like 3%. tom: i've got a pleased to go here. how many people know that

general motors is 71% debt? i don't think we know that it's not an equity juggernaut it's run by debt and they have to manage it and that's what mr. jacobson does. lisa: they are working at a time when there is so incredible demand for expensive vehicles by wealthy individuals who can pay with cash and that has been the divergence. how do you cater to those individuals went on the credit side you are seeing signs of tightening? jonathan: if the individuals can afford it why are we still subsidizing it? lisa: a lot of people are wondering that. how do you accelerate the move to ev at a time when government isn't -- this is one of the big conundrums. tom: you go 355 miles in the ev that paul and lisa have and then you have to recharge it. where is the recharging station? lisa: a lot of people have them in their homes now.

it's a tough thing to park the hummer. jonathan: you think?

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>> we really don't know how deep the vent economic correction we will have.

>> we believe we are still in a bear market, unmixed market. >> the big question here is what is global growth going to do? >> we think the second quarter we will see some negative readings. >> have we pushed out a slow shallow recession or will we not get pickup we are looking for? >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz area tom: good morning everyone on radio, television, and exceptionally busy tuesday. the sales side speaks and, jon, they speak. jonathan: citi had a good under review in march. the price targets of 11 in the premarket trading in and around 12 the news from first republic after the close not great at all if you look at deposits they

plunge 41% in the first quarter 104.5 billion this is the number analysts were looking for, 137. if you want a glimmer of hope the good news is deposit stabilized from the end of the first quarter to where we are right now but ultimately if you do in earnings call and you don't take questions after the match that they just had -- march they just had investors won't be too happy and i think we are seeing that reflected in the stocks. tom: to the other smaller banks, not the regionals, not the super regionals but buffeted the commercial real estate, fitted different challenges. i think there's been not a lack of transparent latency -- transparency that there is opaque in step. lisa: first republic kind of was the shock where you saw it was even worse than people expected

and they don't have answers to a lot of the very difficult questions that people would have otherwise asked. what other conclusion could you possibly draw this raises an issue of ok what about every else were earnings really as rocksolid as they seem to represent by the lack of any further decline sort of like what we saw a first republic but today we are seeing it unfold. tom: people do that with economic data today particularly on housing. i'm looking at spx and you know -21, -22 and then they come back and they are off of weak guidance and constructive reports as well. jonathan: the price action has been constructive particularly on the nasdaq and you're going to get the earnings from the handful of names starting after the close today with google and microsoft. first amazon, next week, apple. the start of banks then you moved to to quickly. tom: we will focus on that this

morning we have a wonderful guest with us, it's going to be important neuberger berman is when to focus today on the 4:00 p.m. earnings. thursday on the 4:00 p.m. earnings, tomorrow every said there will be shifting from financial media over to manchester city. jonathan: are you saying won't be watching? tom: he won't be watching earnings tomorrow how big again is that tomorrow? jonathan: we call this a six pointer. >> it's huge. my dad was teaching at the language school of economics and he brought me along and i'm super excited about going today. we will have several screens going and one will have the match on. jonathan: i had to say to tom on friday when they were throwing the game away is that you need to understand the phrase

bottling it. it's tough to leave the whole year from the front. it's been remarkable we will know tomorrow. we'll know tomorrow. jonathan: top of the league arsenal. the facedown tomorrow so you will be watching meta earnings i'm sure you will be looking at google and microsoft later. something like 70 to 80% so far in 2023 are you expecting the numbers to validate the moves? >> i think the two stories this afternoon will be a little bit different. the large enterprise companies have all kind of looked at their cloud spend and decided to rationalize a little bit on microsoft it's going to be turning the long-term story around open ai and 49% investment there we have done the math on some of that the

maximum easy, the ai market will be over a $1 trillion market by 2030 and microsoft magnificently position their and can add at least maybe 20% to their topline over the next 5-6 years. think microsoft is going to be, you're going to look through the valley to the next peak so to speak. sort of ignore the shorter term and focus on the longer-term opportunity. with google, they haven't provided the sizzle that microsoft has as it relates to open ai so i think we are looking for a lot of clarity around the longer-term strategy. position there is well. unlike microsoft, were going to be thinking through efficiency and optimization as it relates to their cost structure. they sell it to vastly different variations. the point i make more generally about technology that may sometimes gets lost by and large

the resiliency you see in earnings out of the index so to speak is because the businesses have magnificent income flexibility the challenge with the financial companies is they don't have income statement flexibility. paper tied by the balance sheets. i am quite optimistic that the very large index contributors will deliver earnings that are high-quality and they are protecting, they are protecting cash flows this year. the market shifted from revenue to what matters which is cash in the bank. lisa: which they have magnificently displayed. will open ai be the new blockchain have they already fully priced in chat gpt and senior stocks sword? >> we haven't in microsoft or google because google sews it 10 times the enterprise this not a valuation that suggests a lot of

good news is priced in. i like the analogy to blockchain we think the efficiency opportunity for people that adopt ai is to >> on the margin line relative to the blockchain. 200 basis points include efficiency for companies. we think open ai is probably 500 basis points. think through the efficiency of that and think through the productivity. tom: i want to focus on the courage of a few things. don't 24% last year in one portfolio. maybe that was a little worse than others because you had tech i want to talk about the street focus if these stocks are too big, too dominant and people are diversifying away in general are people where they should own or of big tech? >> it's a big question we have.

the growth strategy a lot was done 24% last year we felt great relative to the large-cap growth i think approved out the high-quality defense of how we perceive with growth. i think i give you the analogy with microsoft. here's a company that can add you know to $30 billion to the revenues over the next five years and they are running at $200 billion of revenue today. i don't know many companies that can operate at that scale with that type of opportunity in a think when you think through google the challenge there is going to be it's a little bit of an innovator's dilemma in they understand the threat that ai provides to their core search business which is kind of a 92% monopoly business while capturing the opportunity of ai? not different to how netflix attacked themselves as they went

from physical to live re-of content to digital. and you got to factor in valuation. in this environment i think you have a quality cap you have to own income statement flexibility. you have to be mindful of the balance sheet and you have to have businesses where if the tide was to go out you feel really good about the next we have been position and you find that today in the large companies that are going to be massive beneficiaries of all the computer spend is going to take place with ai. amazon, google, microsoft and good positions. these folks on the largest computers in the world and they are going to rent them out to everyone else and everyone else is going to enjoy a 500 basis point margin improvement over time and that's going to be very good for the economy. it's going to come with a lot of

headwind, no doubt. a lot of regulatory scrutiny for sure but it's massive. jonathan: i didn't care ms up in quality that's what we are talking about. whenever you not there? >> we are not there necessarily with that specific wonderful high end retailer my wife's there in spades. we were recently in europe and there is a currency had -- currency overcharge so to speak. they bought a remarkable company that they have difficult out which of the five favorite kid are going to run the show but i think this morning from pepsi and mcdonald's you saw what quality and innovation and convenience and value delivered. tom: only chose considered way. lisa: for both, >> to all of

them. >>is just quality. >> it's a function of consumerism. lisa: fairpoint. tom: work acclaimed on whole foods amazon, whole foods is going to go to low-price, lower prices, is it going to work? >> don't know if they're going to do that precisely. they have made wholesome food affordable for all of america. what gets lost with amazon if they have relationships with 3000 local producers. that's way up from one whole foods was a standalone company and if you were a prime member you were getting value. >> when i went to whole foods to get dinner i could have bought the ms scarf. >> it's not perfectly cheat but

it hasn't come down. jonathan: cap 15 seconds. >> you pay for quality. i haven't yet been to emirate. my guess is the seating is a little comfortable. jonathan: i think of fenway and boston and the romance of it. i wish they kept them. tom: maybe charles can talk to mr. leavy. jonathan: parachute him in. i'm not sure spears equality. thank you, sir. futures -0.5%. this is bloomberg. ♪ >> keeping you up-to-date with news from around the world with first word, i'm lisa mateo in the news this morning president biden asking voters to let him finish this job. the president has formally announced he would seek reelection next year in a video

released today he said there is no more work to do to give americans a fair shot. the president is criticized what he called extremism in the republican party who want to curb abortion-rights and cut spending. house speaker kevin mccarthy refusing request from former republicans to changes $1.5 trillion debt ceiling proposal. the bill will be sent to the floor for a vote this week on a roll that does not allow meant amendments. five republicans oppose the measure it will be defeated. the world's biggest provider of fracking services that the outlook for oil drilling is bright as the opposite of its rivals. i'm lisa mateo and this is bloomberg.

>> i still like the tech sector because certainly the understanding that there's more inventory to be working off the question is can they have these results in markets because of that? we would rather ride that out and say these companies have long-term growth, good positions in the industry strong balance sheets even if we do have a deep recession. jonathan: looking ahead to deep tech -- big tech. looking ahead to google, microsoft later this evening after the closing bell then onto meta tomorrow onto thursday to amazon and next week on may 4

apple earnings just around the earnings. -0.4% on the s&p 500 i said once and i'm repeating a promo there hasn't been a shocker get so maybe as lisa indicated maybe the shocker came after the close from somewhere that it should have been expected to come from. first republic is down by 22% in the premarket deposits. plunging 41% in the first quarter and so much of that coming in the month of march to see analysts looking for a number close to 140 and lisa getting a number close to 100 billion in deposits. that's a major disappointment for this bank. lisa: that's putting it mildly. the fact they didn't take any questions in the press conference at a time when people are wondering about the future of this make whether it's viable even as a standalone entity tells you volumes how much does this really speak to the fundamental challenge for regional bank it has not fully

been priced and that's what a lot of people think this idea they are going to have to pay up for deposits. they don't have the cheap deposits they are going to have to withdraw some lawns and by the way earnings are not going to be particularly positive. tom: the woods index here the kx index you mentioned the regionals lisa. the super regionals, there is regionals, there is a small banks across this nation and then there's marketing plans. i don't bunch first republic with any of those other banks. it was a marketing concept run awry when interest rates went up i just hope they are not original. lisa: there's an issue with idiosyncratic risk in the management teams of some of these banks and there's this issue of free money is over deposits that were cheaper no longer so all of a sudden you have to figure out a new value proposition for firms that benefited during an era where that was just a given that could cheap finance. tom: new proposition cut costs.

as we leaned forward to charles cantor and do better with rbc capital markets know he's a software equity analyst, forget about it. expert on microsoft here we go on the big stock you don't own. 26% per year total return over the last 10 years the free cash flow blowout pre-pandemic is absolutely stunning i mean the cash flow growth out five years to a model 2020 or is off the chart is the story priced into the stock now or will that be constructive surprises forward? >> thanks so much for having me. i think the big story around microsoft if you put the year to macro side is really ai as we outlined, we really think the opportunity with generative ai

for microsoft is a call option on the stock. it is not priced in today. really that's the next leg of growth and i do not think that's priced in think about all the different ways throughout microsoft that can benefit from generative ai with their agreement from pope and ai being competitively with the microsoft 365 sweet and integration of copilot through the security be it -- i think there's so many ways microsoft can benefit. tom: i want to go to that 38 billion dollars pre-pandemic and they went to $73 billion that's the existing company with 200,000 employees explain how ai is different than other new things come with bright shiny new concept and that it's a call option on microsoft that has

real durability. >> i mean this is a technological change in my lifetime going back to the internet, going back to mobility, the cloud and now ai i know we've been talking about ai for so long but chat gpt was the watershed comment that gets ai widespread throughout the ecosystem this is like when netscape for the internet came out. and that is where we really think this has so much potential not just for revenue but to your point on the bottom line for free cash flow for microsoft that we can see that number continue to move up and because of microsoft first mover advantage because of how far ahead of others open ai is and because of how quickly other company has generative ai strategies we believe microsoft will be in outside beneficiary of that if you look throughout the entire portfolio all the growth rates will be significantly different. everyone will be talking about

growth rates and it's realistic to me that that's going to decelerate to probably 20% growth over the coming quarters but once you start layering the benefits from generative ai because this is so much more resource intensive not to mention you will probably have a trillion dollar economy built on open ai with the iphone and a chilean dollar economy here in the u.s. i think is the number goes back above 30% growth. lisa: how much smaller can some of these big tech companies be on some of the efficiencies everyone keeps talking about? >> i think that's a great question i would say number one for microsoft i think in contrast to a lot of the other big tech they didn't over higher at the same rate i know they have some of that was illuminated former employees some of that was actual cost savings of reallocating of employees but i would say microsoft maybe had more responsible hiring practices and other big companies had weaker

risks. they were very high in terms of the cost savings from generative ai think it's a big open ended question. maybe we can talk about innovation but there is also -- it makes developers more effective it makes marketers more effective, salespeople more effective and i wouldn't be surprised if we could see a company be able to get away with significantly lower head done i'm talking double digit. as a result of really embracing and leveraging generative ai on the backend. that's may be more of a three-year story than a year term one but absolutely every company i talked to is trying to use generative ai for greater operational efficiency and then i think the terminal margins across enterprise really across big tech has to be higher long-term because of this. lisa: who's going to win the generative ai game? will it be microsoft or google? >> it's early to talk but i

think microsoft has such a huge lead from their early investment of open ai from the fact that open ai is an arms length transaction. you look at the advantages you have including bard and claude and any others that have been out there i think microsoft has a huge advantage. jonathan: great to get your perspective. tk, you know the history of this it's been amazing to see what microsoft has become over the last 20 years. tom: my brother has a hard drive sun microsystems 40 years ago nailed to a wall of his house. this is what he said the other day, chat gpt and ai is game changing but nothing i 30 years. he is in the trenches of this writing code. i was stunned when i heard that. lisa: i was looking at a study

that showed the top professions to be replaced by chet gpt and open ai and i think journalist was number 45 so i think 700 is it to myself ok that's good. i've got a couple more years. tom: cantor is talking a 500 be pickup in margin. but my brother is saying electrical engineering is it's the grind of coding is where you will see the efficiencies not like was it going to do with journalists support english football players. jonathan: learning about the difference between you and your brother. every day, tom. i've never seen this before. tom: the difference between me and my brother, straight a's. [laughter] jonathan: coming up in the next hour.

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>> bloomberg surveillance good morning everyone. preparing for the next event for our into these tech earnings i thought it was great to have richie from capital markets and from all the stocks. lisa: this idea that there's going to be a change in technology that's going to generate massive growth than investment and efficiency. or the broader open ai infrastructure this doesn't really pair with this sort of moody, gloomy feel of any economy destined for recession.

those ideas, sort of a preeminence of certain technologies with underlying here of the softening of the consumer. tom: david rosenberg had a tweet as we go to our next wonderful guest here, the quality of our economics in the first quarter and what it means. chief u.s. economist, a lot of people are including mr. rosenberg are talking about how january was being up and we are into our economics lowdown. we hear that within the guidance of corporate earnings. are we into our slowdown? >> we are still in a slower growth environment and i say that only because remember that outside of the pandemic boom or post-pandemic them, our potential growth rate is around one point 75 -- 1.75 the

consumer still has so much momentum behind it. you look at the fact that, yes, the wealth drawdown, the saving strut on continues but i think if we seen anything deposit levels broadly are still relatively high and that means with jobs still broadly plentiful outside of tech i want to be clear there were distressing layoff announcement what we are looking at the most closely but right now it's way too soon to call for a recession. tom: if i get a growth rate i want to give you the growth week if it's under 2% if we have a 1% or 1.4% all bundled in growth rate isn't that a position for a lot of americans? >> it doesn't feel good. one of the big conversations we are having is the fact we're seeing sluggish growth rates but still really significant and

robust job ads. most of those new jobs are going to still be sort of lower surface productivity victor jobs. that's what makes it feel like such a grind. this is really the difference between sluggish growth. we had plenty of periods, remember 2015, 16. we didn't have a growth recession. you get periosd of sluggish growth that don't check all the markets of -- boxes of recession. i think you bring up a really important point about the poor things we are getting from companies earnings, estimates going forward or still flat. they have come down a lot but the forward 12 month is still at flat. that's not a recessionary outlook and recessions earnings generally fall 10% at least.

lisa: everyone talking about this bifurcation were splintering in terms of different sectors. this is an 18 wheeler and the fed is just pumping the brinks onto of the wheels and everything else keeps grinding along one it comes to growth numbers overall a real transition moment for this economy or it sort of accelerates the gap between the haves and the have-nots whether it's individuals or companies those that are going to get subsumed or no out of business. >> i think we are already there. i think if you look at the share capital going to labor it's actually already increased we've already seen globalization wipe that out significantly and we bounced pretty significantly i think when you look at the market rallied we have seen it's

so narrow and so narrowly focused on these large cab tech companies it makes the pressure on the earnings this coming week. acute and i think be on that look at the whole issue that the fed is having with inflation. the wages that the historically sort of commoditized service industry is able to garner is really rising. it's not necessarily good for profits going forward i think we have to acknowledge that may be we have to stretch the rubber band of any quality so much. i don't think that's all bad. tom: your question was broken. let's go back a few years dow jones industrial average the electric corporation a company called eastman kodak company union carbo and others goodyear tire mean and think what you

brilliantly asked about the superiority of technology is just american corporate history. lisa: i would agree and pair that with the rightsizing mood balances created over this time. lower wage workers getting more power in a sense that the power is shifting back to labor to demand more for their services. we got the results from pepsico and coca-cola and mcdonald's and we can see that actually they are still able to pass along the price increases to consumers. how much is this a story that runs out of time and how much is this possible because of that power of labor, basic stickiness to the ability to pay more. >> i think at onto that the fact that when we look at these companies the big tech companies right now, they are growing by expanding into each other's lanes. for the first time in a long while you know they are very mature companies and unlike

before when it was only focused on growth i think now they are having to kind of cannibalize each other as they grew to your point, the data point this week that i think is garnering so much attention for me as initial claims we've seen the tech layoffs let's see how it expands to a broader economy because right now i hear companies we are still working to retain labor. tom: are there any more -- more than any other chief u.s. economist i now how does the dollar fit into the dynamic to 2024, weak dollar, strong dollar, do we underestimate strong dollar movement? >> i think a lot of people are watching closely to see if it weakens further from here. so if you look at a long run view it's relatively strong. i think that the humdrum around the dollar's weaker status is

getting a lot of attention. to me that's one of the unspoken background stories of the strategic chess match which is going on right now globally. tom: what is your rate for gdp? 12 months out, i think it's something our audience with all the narratives lisa talked about, we relieve us scale. what is your statistic for real gdp? >> 1% growth over entirety of 2023. i think we hit -05% in the third quarter, -1.5% in the first quarter and we ounce from there. it is a recession but i think it is more mild. lisa: when you talk about some of the other companies do you think we will get oligarchies in every industry? >> i think you can argue we are

already there. it is something america does well is destroy our oligarchs. i remember 15 years ago we talked about walmart and how every single earning cycle they just got bigger and bigger and bigger. then amazon came along. it's rife with companies that really expand and blow our minds with innovation than 20 years later they toppled by the next new thing. are these the companies that are able to innovate and say -- stay ahead of that? they are three companies they are just trading -- there ratios are too high right now. lisa: i've been a little bit all over the place today. i've been interested in a number of different themes. we keep going back to the one underpinning so much which is inflation and we kind of hinted at it with respect to labor's power. when we emerge from this, will it be to a higher inflationary regime based on that shift back to labor?

>> i'm going to add more nuance in saint i think we end the year with inflation that's uncomfortably high around 4% but i do think, of course, we will face periods of lower inflation. i think the 25 year low inflation, oh volatility inflation episode is over. going forward, we are in a period of higher volatility inflation. less ability to control inflation through globalization, and i think it means it implies more volatile cycles. tom: thank you so much. lisa has the president was re-announcing his reelection, pepsi-cola was going how dare he do that? how came pepsi the moment president biden talked about reelection. forget about hope percent organic revenue, frito-lay this is potato chips i think? lisa: thank you. fully aware. tom: there's a statement it's

all about pricing power. lisa: they can raise prices, we talked yesterday about shrink flechette --flation where is the weakness if you can see prayed -- pepsi with their pricing power, coca-cola, mcdonald's. charles cantor talking about quality and there is quality there for the consumer but to me, how long can they continue to do this? tom: that's the question and the optimists would state microsoft, pepsi, they can continue to do it. what's fascinating here and this goes back to people alluding to the nifty of the 60's. to your point on monopoly which is a different concept those two ideas lead to concentration and i wonder if the theme a year from now or two years from now is just going to be asked concentrates in -- concentration

of successful companies. lisa: laura is saying we are already there. when do we see the others taken out of business we are starting to see the effect that bed, bath & beyond is closing all of their stores the fact that david's bridal will close all of their stores if they don't find a buyer this isn't just a restructuring and repackaging. this is a change. tom: credit suisse is closing all over that may not be accurate but there. what a fascinating time. henrietta treyz next. futures -17 this is bloomberg surveillance. >> keeping you up-to-date with news from around the world with first word, i'm lisa mateo. joe biden has made it official he's running for reelection next year. the president made his

announcement and a video today asking voters to let him finish this job. he will face a republican field dominated by his predecessor. economic uncertainty will cloud its case for a second term. the british government is set to unveil new legislation that could lead to a cracked on silicon valley. big tech firms face more oversight and fines of up to 10% of global sales for practices that hurt consumers. the legislation would create a digital markets unit. jeff bloom reported first-quarter operating revenues that meant estimates. jetblue says in the second quarter it expects revenue growth to continue. general electric posted first-quarter sales profit that cash flow was better than expected. the company says the arrow guidance things to space demand.

before separating energy related businesses in 2024. global news 24 hours a day. powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo and this is bloomberg. ♪

>> it's a terribly stressful job as you know and the fat he could

still be president at the age of 86 timmy is mind boggling. it's worth noting that donald trump turns at 77 later this spring so it's not as it's one old canada, it's too old candidates. tom: really -- the answer is he puts out a brilliant short note. for caulk or 5:00 a.m. our and there is other notes like it but he just brings in the business and finance sector into the beltway like nobody. lisa: right now that's going to be needed more than ever during a time of such uncertainty with the economy. all of the strength in the economy and then we got this data point about philadelphia fed manufacturing activity for the month of april. it came way below expectations. so this speaks to the other side of the story and this really

speaks to the politics of the moment and how do you get reelected in an economy that's not going gangbusters? tom: jonathan knows the market moved here real yield doesn't move much but to year yield, 4.03% we get a two-year under 4% again and then swinging back may be giving earnings guidance as well to that kind of slowdown. lisa: you wonder how much volume is and how jittery people are for philadelphia fed manufacturing activity. tom: we will have that through the morning. leading the way with mortgage rates. director of economic policy research, far more political economic policy as well. when an election starts 560 days out, henrietta, what's the gridlike -- gridlock look like?

>> the new gridlock is basically we get this debt ceiling passed us hopefully in the next month or two and then we move pretty much exclusively to china. there will be a focus on china -- trying to craft a bipartisan bill. and i suspect they will be jawboning on what could come on the china front. restrictions heading into seven, that's where we will be. tom: that will be the legislative debate does china fold into election results? i've always heard that domestic issues are far more important in an election dash. does china play into that? >> i think so. nearly 80% of the u.s. population believes china is something of an enemy to the united states. it's a very popular bogeyman. the question, what's

unemployment, if it's still 3.5 or even percent region's not going to be that striking topic like it has been in response. if inflation has come down and it is not in the eight, nine 10% range. domestic economic policy data will have like a cooler temperature it will be big enough to acquire headlines every single day so you can haven't opening for china to be a conversation. lisa: a lot of shift when it comes to economics and geopolitics and not a lot of shift when it comes to the most likely matchup for the election it is president biden he is in the running. and former president trump. this is the likely matchup what does that say to you that it's the two known entities going at it again. >> it's really interesting. i'm fine -- trying to find a great way to say this. we are looking for some sort of

nuance or page to share with clients and help them have a little bit of extra juice going into any kind of big event like this. we have a pretty solid run rate to work with. democrats won the midterm elections in 2018 by an overwhelming majority. democrats won the 2020 general election picking up verizon and nevada. even georgia. when the special elections in georgia twice and 2022 ran in a superhigh inflationary environment coming up in our race democrats had no business winning at the minority party lost so it's difficult to find a rationale for not knowing the outcome of the 2024 presidential election. we have seen despite four times now and each one ends the same way so it's difficult to find a way to explain or convince anybody, including my own brain of how you lisa: can see republicans win. lisa:how much is this democrats

winning and republicans losing? >> i would definitely look at the key states it doesn't matter what the national data is it's really about key states and the electoral college. look at arizona, pennsylvania. joe biden is ahead by one point, four points. that's the outcome of the cycle. you might have some scenarios where certain states are going more aggressively for trump but mostly is going to be a national referendum in key state against the republican caucus and their policies. tom: i brought up twice today a question of progresses or liberals within the democratic party. there is this idea republican in name only. it is joe biden a democrat in name only? >> i think if you were to pull a bernie sanders or some of his

supporters they would say things along those lines. it's difficult to look at the track record and see a $1.9 trillion cares act packed. the chips act was bipartisan and the inflation reduction act. there is establishment, democratic in name only like chips but there are progressive items green energy tax credits that are expensive. which had a lot of progressive for jeff's of -- items in there. tom: henrietta treyz director of economic policy in veda partners there we have to run because the news flow today is just extraordinary. basic you did such a good job on the earnings. am i right? donald's thumb up, ups them down. lisa: it's that finery in terms of industry as well if it's physical stuff it's harder that's what we are finding.

shares are up a little bit but they are cutting 6000 jobs. if it stuff that you buy to eat or drink or go out and do whether it's airlines, that's doing well and this is how long can we continue in this motley progression? tom: we are trying to continue to the surveillance map for arsenal tomorrow and i don't know if frc is going to participate. it is plunging, folks. i really use that word but on intraday chart we are at 12 and we are at 11.88. suddenly, and i do it with respect to all the challenges they are facing we don't want to be inflammatory the sell side is falling. citigroup adjusting everyone seems to be adjusting. how do they get to 4:00 this afternoon? lisa: it several question and

people are wondering who's going to come in and be the white knight when a lot of people don't want to buy it. pac west which is going to report earnings today those shares lower 6% in premarket trading so you can see this knock on effective weak links. and how much you get declines there. the fundamental story is it might not be a wholesale credit collapse this is a fundamentally challenged business model where free money is not free and those deposits cost a lot more potentially even more then if you were a big bank. tom: there's other banks the same size that are doing relatively fine. may a changed environment. in commercial real estate and that but to me and i don't know what is it pacific what? western alliance? lisa: yeah western alliance, pac west. tom: they are different than these other banks is what i

would respectfully suggest. lisa: they are idiosyncratic stories within the economic sector. the bigger picture is something has to give. you have to see someone's pulled back so, yes, perhaps not armageddon. these are not necessarily representative but there is a broader story here. tom: the bid popped up 11.86 on the frc so i think that's a story truly to watch. how do executives react? we didn't hear from them yesterday on the conference call. even as soon as this morning. lisa: i'm guessing they are on the phone right now. one 800, jamie finding out anyone? anyone? tom: anyone going to pick up the phone this time? extraordinary day and it gives you a flavor of through the week. after that fed meeting.

microsoft this afternoon, this is bloomberg surveillance. ♪

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