>> people talking about a slowdown in the economy, the s&p. sits at. 4100 -- the s&p sits at 4100. >> broadly speaking, businesses are anticipating a slowdown in the economy. >> lead indicators pointing to slowdown/wild recession. >> i think the data are going to have the fed hiking further. jonathan: live from new york city this morning good morning,

, good morning. this is "bloomberg surveillance, live on tv and radio. your equity market on the s&p 500 -.3%, a big turnaround yesterday. soft ends around the call for amazon. we need to push to the and payrolls next week. a big week around the corner. tom: i am going to center on monday, may 1. a lot of people publishing now about next week, may 3 and apple may 4 and dare i say the full moon on may 5. jonathan: and the ecb is somewhere. what happened to the month of april? tom: it was cold here. i know he waved in italy.

the point is, the weather here has been chilly. there was a chill put on the verbiage at 4 p.m. jonathan: the stock initially rallied by 10% and rolled over soft guidance around the cloud. hits and misses in tech. microsoft great, what is amazon? lisa: with respect to the numbers, good but with guidance, maybe. when you get a 14 percentage point swing after reporting earnings up, at one point down 2% come home to we clean from the sentiment from the uncertainty of what's going to drive growth going forward? visit cloud or greater margins. tom: addicted to a double digit

cloud growth. according to the best on the world they make it having -- ebbing of the cloud is where you get your 14%. lisa: goes to the larger story yesterday that businesses are spending as much and we saw that in q1 gdp. including on technology and cloud infrastructure. we didn't see the same with microsoft is this broader? jonathan: going into q2, how much do we have in this economy? overwhelming this is the consensus, bank of america expects momentum to continue to slow. we continue to anticipate a recession of the second half good morgan stanley, expect to see significant slowing.

that is the consensus amongst economists on wall street. tom: i want to get the dates right. fomc shifted from a may 3 meeting where we have a good grasp of what is going on to a complete debate and ministry over june 14 and on through the summer. it is fascinating. jonathan: from citi after the fed hiking in june, and andrew hound horse saying the fed will have to keep on hiking and revising -- and andrew hound horse -- holland horse -- yields back in, the 10 year

3.47%. tom: there is news in japan we will cover it later. a demonstrably eager yen against the euro -- weaker yen against the euro. jonathan: there will be a big policy review at the boj. lisa: is this doug goetsch -- dovish or hawkish? we will talk about it. exxon, this might give us a better sense of whether we are accelerating or slowing down east on what they say and oil demand in the big question of china. how strong is that growth? this is the big data point. it is not personal income, spending, pce deflator, the employment cost index that comes out every quarter and expected to re-accelerate.

this might push the fed's hand and why this could be the most market moving figure we see. at 11:00 a.m. the fed will release supposedly this review of what happened with silicon valley bank and the oversight. michael barr, leading this. it was due by may 1. how long -- how much does this change things. we saw pricing of regional banks and no rebound but do we get a better sense of whether there are other shoes to drop and how much the fed has a handle on this? jonathan: a comment on the regulatory failures across the board for several banks. in forward to that report from michael barr. joining us is philip orlando from federated. how much momentum is in this economy from q1 into q2 and the rest of the year?

philip: not much. a look at the gdp print at 1.1%. we were at 1.3% and that was a tough number. and regardless, our view is first quarter gdp will be the high watermark for the year. we expected negative gdp prince in the third and fourth quarter this year -- prints in the third and fourth quarter of this year. our view is economic momentum will be downshifting over the course of the next year or so. tom: you have the art of many maze -- arcs of many mays. philip: you've had a six-month rally that has taken the market of 20% from mid-october lows

last year into 4200 level we have seen recently. looking out over the next couple of quarters, you have inflation that is still sticky and questioned about how persistent and how hawkish the federal reserve is going to be. earnings are decelerating, questioned about recession and the impact of banks tightening the lending standards and reducing loan volumes. you have the whole debt ceiling issue that will probably come to fruition in the third quarter. for all those reasons, our guests is the market will grind lower over the next six months. tom: been laid learn -- ben laidler on his answer is it is valid and he speaks of the mystery of the summer doldrums. lisa: re-think has been a mystery. one of the big mysteries is what

playbook do we whip out? when you talk about downshifting in q3 and q4, is this a recessionary playbook? philip: our view is that we don't know. we will be data-dependent. the title of my presentation for this year has been recession watch for 2023. we are watching the data as closely as anyone. we have negative gdp prints in the third and fourth quarter of this year. i've seen some with negative prints into the next year. somewhere in the winter months we will be coming to the razor edge on whether it slides over the edge into a recession. jonathan: no the market is not the economy. which pockets of stock you want to be in? philip: if we are right this 20% six-month rally reverses over the course of the next six months, the answer, we have the

nfl draft going on and we want to keep the defense on the field right now. we like cash, treasuries and defensive equities. large and small cap value stocks and international stocks have low pe and high dividend yields. our mantra here is let's hunker down and preserve capital until we've got some clarity on some of these issues we talked about over the next couple of quarters. jonathan: i can get you to bite on the rally on the homebuilders on the s&p? philip: homebuilders have looked impressive over the last couple of months during we have been in a housing recession for the last seven or eight quarters. there is still tremendous pent-up demand and the homebuilders have done better over the last couple of months. how sustainable is that the economy goes into recession we will have to see. jonathan: something's got to give. philip orlando of federated.

talking at recession risk but likes vcs and homebuilders. can you reconcile those two things -- -- likes what he sees in homebuilders. can you reconcile those two things? zinc momentum from q1 to q2 -- losing momentum from q1 to q2. tom: do you have him? wide he -- why won't he get up early? jonathan: watch the game? tom: watched the highlights. jonathan: compressive in the second half. created some opportunities. tom: love relegation.

-- i love relegation. jonathan: would you like to see? tom: kansas city royals and oakland a's. the new york mets would not be relegated. lisa: may be, depending on the year. jonathan: the jets. tom: the jets in baseball would be relegated. jonathan: i think you know i met football. aaron rodgers, any comment? tom: it is fun. the jets have been an embarrassment for so long but it will be fun, exciting. jonathan: are there one of the favorites for the super bowl? tom: i don't have the knowledge base to go there. i looked at formula one. jonathan: do you want to squeeze in another sport, ask about -- basketball? >> heat the sports talk going.

-- keep the sports talk going. house speaker kevin mccarthy stepped up his demands for president in democrats to avoid a debt ceiling crisis. carthy told bloomberg tv they should embrace the plan house republicans passed that includes spending cuts. he said he is going to make a deal. speaker mccarthy: with a compromise, we can get something going. i said mr. president, why don't we sit down and work through it? there are two things i won't do, i will not raise taxes and will not pass a clean debt ceiling but we can talk about everything else. lisa: the bank of japan has scrapped its guidance on future interest rate levels at its first meeting under the new governor. at the same time it is keeping its main stimulus measures unchanged in pursuit of stronger inflation. that keeps the boj in a very

different place than other central banks who are fighting rising hikes. russia launched a wave of attacks the capital city of kyiv was hit, the first time it has been struck in a month. also in five other regions, 12 people were killed. ukraine shut down 12 missiles and two drones. amazon jolted investors with talk of a slowdown in cloud growth. his 60% gain in revenue in the first quarter, the slowest growth rate since amazon began breaking out unit sales. amazon is the largest seller of competing power. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo. this is bloomberg. ♪

>> one of the things i have learned about amazon and it has been documented, it is such a cellular organization. they have ways of reevaluating themselves in ways that are not widely appreciated. i have confidence they can find ways to grow in ways we don't expect. jonathan: jonathan: -- jonathan: love to catch up with brian. the fact that it e-commerce company that has become, we have seen it become so dominated in

ways we didn't expect. tom: it speaks to the vision we had -- they had and the method to cut costs along the way is the customers use the product more and more. lisa: thomas does it cap its growth? how many retail companies -- how much does it cap its growth? are there many retail companies saying emma going to use the cloud service and does that give amazon a leg up -- saying they are going to use the cloud services and does that give amazon a leg up? tom: what are the advantages of gray hair and our next guest probably avoided this, we were all deluded by page three of the report that started every year with free cash flow analysis and everything was fine and tom keene and a lot of other people

were wrong, wrong, wrong. jonathan: they missed a massive growth opportunity and a rather large way. chevron, first quarter adjusted, 3.55. the estimate is $3.38. the breakdown come upstream $5.16 billion. the estimate five point one. downstream, $1.8 billion. i wonder if that number will get the attention of this white house later. lisa: the input cost and earnings were not as great as what they sold which is potentially a problem the white house. jonathan: cash flow up. $9 billion. we will look for number. exxon later. chevron about unchanged. tom: looking at west texas intermediate, a multiweek.

this is a great pleasure. stefan slowinski joins us now. all of you with kids at home opening college acceptance letters and saying, should we do major, major, minor. pennsylvania invented the triple major and he has three degrees out of one institution. congratulations on software. i love what you say about amazon, which is they are just beginning to climb the hill of cash flow recovery. how do they get back to a free cash flow that was covid like? stefan: thanks for having me on the program. last year they had $12 billion of free cash outflow and there are three things driving that,

when is weak profits. we are starting to see improvement in operating profit but it is slow. inflation headwinds should ease and supply chain had woods -- headwinds should ease. and working capital movement, the last two years they had $20 billion of working capital outflow. we should see that improve this year as the supply chain challenges should be easy which should help working capital flow. we haven't seen it yet. in q1 it missed big time with -$8 billion. the third thing is capex, spiked to $60 billion last year. they did see -- say last night we should see a decline but some savings being put back into ai and that is another capex driver to come for the future. tom: this has important and

immediate questions. what kind of amazon did jeff bezos leave jassy and the rest of them? do you blame jeff bezos for what they have been through the last 12 months? stefan: since the committee was founded, they have always made big bets and some have paid off and some haven't. amazon web services is one of the big bets that did pay off. if we go back 12 to 15 months they made a bet that the omicron variant would trigger another covid induced demand cycle in 2022 and that didn't play out. they found themselves caught off sides. i think maybe the market is underestimating that. at the beginning of last year, amazon made strategic decisions about how to run a business in the future. i think they are making efforts to get this business overall to sustainable profitability even through a cycle, whether we go

through a recession or inflation. it is taking time to see that come through and that is the frustrating thing for investors is the market seems to be added itself, a bit too ahead of itself and despite all of the literally dozens of headlines in the last 12 months around cutting down divisions and costs and exiting leases, we are seeing consumer business at essentially zero. lisa: you are generous thing the market is headed itself. others would say it is crazy and irrational when you see $200 billion swings in stock valuations in hours based on a couple of phrases or words and not forward looking projections. what do you draw from that level of volatility we are seeing in the tech shares example five by amazon in particular? stefan: that is a question around the broader market. big tech always seems to take a lot of box -- tick a lot of

boxes with challenges in the service sector or some company struggling with growth and others able to power through. we saw microsoft power through some demand concerns with price increases. we saw google power through with strong search and results from snap and pinterest make those results more attractive. you have nervous investors. people looking at some of these evaluations on some big tech names and these are positions that are the biggest in their portfolios and they are nervous. when we do see any sort of negativity, we get quick drawdowns but people not wanting to get off the bus. if these are the only games in town and the ai theme continues to run, they don't want to miss it and you can be hurt by underperformance by being underweight a few of these big names. jonathan: thank you for weighing

in. so many moves we have seen, m eta up and some are thrilled with it so far. tom: they will reaffirm some sort of immediate bull market that becomes a bear market trend again. it is almost like a cacophony, an oscillation we are under and we are being that. jonathan: never mind the fear of missing out. you missed out. the year-to-date has been phenomenal. tom: you made back half your bear market and the nasdaq you are there. jonathan: can i return back to chevron? tom: please. jonathan: $1.8 billion during the period from the fleet of refineries, exceeding expectations. a fivefold increase from the

first quarter of 2022. i know stock is only up .3% but the refining number is phenomenal. lisa: especially at a time when it has been a key attention point around getting gasoline, let alone oil prices where they are and were suppressed. if you have a lack of refineries, it is a closed market. if you are in it, you can get those profits but washington, d.c. will be the question. jonathan: wants to build a refinery right now? lisa: one. tom: -- lisa: no one. tom: not in my back yard. jonathan: exxon later this hour. this is bloomberg. ♪

jonathan: live from new york city, good morning. your equity market a little softer, lighter, lower, down -0.3%. what was that face? tom: we had sanka when we were kids. jonathan: -0% -- -0.3% on the nasdaq. in the bond market and then

earnings from exxon. the two year, would you believe for the month of april, the two-year, if i told you was basically unchanged, the yield up by a couple basis points the month so far. the low in a proquest 3.64. -- the low in april was 3.64. tom: is to be the difference between the treasury and the three year and massive inversion of near 170 basis points. back 30 years, that has never happened. the skyhigh elevated short-term rates and the bid on paper and lower yields father out is the only story i can glean here. jonathan: i promised you exxon numbers and then i'll return to fx. first quarter adjusted 2.83, the

estimate $2.63. -0.6% on exxon in the premarket and they say they are on track to buy back up to $17.5 billion of stock. lisa: they also say their total revenue in the first quarter and other revenue was 86.6 billion dollars, the estimate was for $84.6 billion. a significant beat. we talk about cap x, they expect capital spending cheers and how much is this -- how much of this is we will invest more and do more and cross off those particular issues and continue to make bank? jonathan: bit of a struggle year-to-date relative to the boom in tact. -- in tech.

tom: free cash flow on exxon, call it $40 billion, less than double apple's $100 billion. that is how puny they are to apple at $100 billion plus. jonathan: to sit on foreign exchange, the high of the year, 1.110. the dollar making a little bit of a comeback. here is the goldman sachs view, they write the following, the euro is trading closed to the second time for the year and the upside is cap because the space for divergence is fairly imitated, underlying economic conditions are not all that different, it should be noted that the euro is certainly holding up its end of the equation rather well, while

there are more? 's -- question marks on the dollar. tom: all the focus is on euro and we see so much about europe and he knew pacific rim. you centered out euro and japan and less obscured euro china. which is more intelligent way to look at this? kamakshya: they are both picking up important aspects. you talked about how the two-year rate for the year, when you look at the broad dollar, it has been flat for the month of april. that is there are big differences going on underneath the hood, the fact that euro has had solid reasons why it is trading as strongly as it is.

nominal gdp in europe has been pretty good. you had weakness in north asia, including the yen, given the dovish meeting today. it includes the korean juan as well. -- korean wan as well. the twist underneath the dollar which has happened in euro asia. tom: the core issue is china growth. some of the goldman sachs view and the durability of 5% or darius a 6% china gdp and what does that do to their renminbi policy? kamakshya: the easy part is done. we had the stellar rebound from the covid shutdowns in the first quarter that were stronger than many people expected.

from here it would not be surprising if you saw a slower pace if we went back to something like trend and the remaining parts of reopening that are left, like international travel, as that picks up, it will not be remember the positive and it will boost the sector in china. it is a better tailwind. i think the growth tailwind to the cny is done and part of the reason why given the low inflation, punitive negative carry, the chinese currency can continue to be a funding trade on the short side of a lot of carry trades. lisa: many thought it was the sun and europe was further away. so that reflected in the performances of some companies.

how long can that keep bolstering the euro versus the dollar, based on the fact that it seems to be waning a bit? kamakshya: it is waiting a bit. if you think about the factors that have been supporting the euro, the high inflation, growth side, banking issues that have been plaguing the u.s. to some extent, all of those have been supporting the euro and some can extend a little further. the market is priced for the ecb to hike were substantially than the fed. i think they are coming closer to the point where europe also has inflation relief moment and a good way or some of the support for the euro to be somewhat diminished. we haven't quite seen any of the stresses you traditionally see in europe when you have tightening like spreads and so on.

it makes sense with the euro has done given the news we have had but i think there are limits to the divergence with the u.s.. lisa: next week that divergence be on cold as we see the fed and the ecb meet. it strikes me that both regions are heading into a stagflationary environment. we might be having downward trajectory with inflation but growth is coming in and inflation is still too high. what is the playback for the central banks given that backdrop? kamakshya: i think the playbook is not that different across different central banks. there is a difference in timing about when they move. you have seen in this month, whether the bank in sweden or the bank of japan today, we have seen somewhat more dovish on entry -- commentary from the central banks. it looks like disinflation is

progressing slowly and the central banks want to step down the pace of tightening that they have been delivering. i think you will hear something similar from the fed next week. i think the ecb might take a month longer before they get to that point and that is the near term divergence and what we have to be careful about ultimately we don't think the central banks or the macquarie economies -- macro economies are in different races. jonathan: thank you for your time. kamakshya trivedi of goldman sachs. here is the word from socgen, bad is widely expected to deliver its last rate hike i delivering a 50 basis point hike next week i'm a taking us one step closer to the end. but here is the important but, data dependence implies greater vigilance and more volatility in global rates. buckle up is the word coming out

of socgen. tom: into my weekend reading, these are not apples and apples. the inflation character across all of continental europe and the united kingdom is totally different than the united states. i don't think the dialogue in washington is remotely the same. jonathan: what is most pronounced? philip: the confidence in the united -- tom: confidence in united states that we can get down to 3% less. jonathan: is the labor market pushing back against that new? lisa: that has been the key distinction in europe we see a lot of the strikes and protests with respect to labor trying to get more benefits, higher wages. is it so different in the u.s.? how much is it different?

don't we see the employment cost indexes going up? jonathan: don't you think the people are just exhausted by some of these conversations? lisa: yes. jonathan: there is a feeling that are almost done but they almost want them to be done. lisa: ray talking about yourself? -- are you talking about yourself? jonathan: and everyone i'm talking to. tom: if you want to sell in may, most people are enjoying this market so there is nothing to sell in may. jonathan: i don't know how many enjoy the run-up of meta. lisa: are you not entertained? i feel like the market is coming to us and saying it again and again. it is not fun and it is sticky

and back and forth. and you're saying, do you sell in may and then go away? what is the playback are we heading into? are we heading into some sort of recession, stagflation? what you do with that as a traitor? -- trader? tom: you look at the lisa abramowicz newsletter. jonathan: is the on view has some real momentum. the only thing in this program that has given our performance this morning. 11:00 a.m. eastern, michael barr's report on the collapse of svb. that will be a key one. equity features negative 0.4%. it from new york, this is bloomberg. lisa: with news from around the world, with the first word i'm

lisa mateo. speaker kevin mccarthy putting pressure on president biden and democrats to embrace his plan that was passed on the house floor to avoid a debt limit crisis. in an interview with bloomberg tv, he said the president is putting the economy at risk by voiding -- by avoiding negotiation. in china, the communist party bureau said the economic recovery needs continued fiscal and monetary support and also warned that domestic demand is insufficient. . prime minister rishi sunak about stress government will scrap laws from in the eu. that could arrange brexit supporters and they will review and get rid of the laws by the end of the year and the government suggest it will scrap just a fraction of them by the deadline. shares of intel are rising and

the embattled chipmaker has come as a recovery in the second half of the year, prompting investors to look past the disappointing current quarter and intel said it is returning to full capacity. global news, powered by within 27 hundred journalists and analysts in over 120 countries, i'm lisa mateo, and this is bloomberg. ♪

this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight.

>> fed took rates from zero to 4.75% in 12 months. there are consequences.

it is not to silicon valley bank and signature and we get up and dust ourselves off and ride off into the sunset. there are more consequences. might it be another financial institution? it may be but i think it will be a mild recession. jonathan: the beginning of a process up from bob doll. equity features -0.4% in the s&p 500. the bond market with yields lower by four or five basis points, a 10 year, 3.4730. tom: a simple headline, breaking news and may be to getting ahead of labor day, cut about 10% of the workforce, usually it is a constructive 3% or 2%.

10% is not for percent. jonathan: what they are's -- is not 4%. jonathan: it is what has been happening with m&a activity. slower m&a resulting in significantly lower revenue. lisa: this is what we have seen consistently and raises the issue of how important it is for banks to be large and have lots of different segments to offset each other. they expect m&a volume two go down but have big investment revenues and consumer banking revenues and that offsets it. this is the larger question of how big does a bank need to be to be successful at a time when politicians are warming up this long after the crisis. jonathan: i would suggest a downside surprise. asset management revenue, and estimate of $2.62.

tom: this is 3400 employees, a small shop, maybe like the beleaguered first republic. i believe lazard is advising on some of the banking dramas we see. we get lucky on the news from lazard, mayra rodriguez valladares joins us now. we will see the larger banks mimic what we saw from lazard? mayra: you have some laughs at the globally systemically important banks. you have a slowdown in mergers and acquisitions, all of the big banks show that in their earnings in the last couple of weeks.

you have had a large consulting firms, tech firms laying off people. labor market is still tight but you are seeing softening and that will definitely impact banks of every size i am afraid. tom: i remember this clear as a bell, ef hutton, when things get tough, combinations are in order. we learned that from andrew mellon a few years ago. can you could if the challenges that lazard speaks of this morning that we will see constructive combinations over the next 24 months? mayra: i think you are going to have layoffs and it will have to be done very carefully. unfortunately, what we have seen is there are a lot of high earners being laid off and that will impact states and will obviously impact the broader economy. i am hoping we are done with the banking turmoil soon. i think first republic is being worked on right now and that was

the bank that has suffered the greatest amount in terms of loss of deposits. i am hoping we are coming to the end of this. the large banks and the independent investment banks like lazard are still being affected by what is happening in the broader economy. lisa: is there an irony to all this that however many years after the great financial crisis the biggest banks are viewed as the best and have the most favorite in washington, d.c. right now when it comes to looking like stallworth's through turmoil? mayra: there is a bit of irony but we have to remember is not that they are big, yes, that helps but what really helps these institutions is that they are so incredibly diverse. they have retail banking, commercial banking, asset management, custody, broker dealers, and that is what is

hoping jp morgan, citibank, wells fargo. -- helping jp morgan, citibank, wells fargo. silicon valley, signature, first republic hurt and it shouldn't be that they are just large but what we need to be looking at is how diverse are they? that is what is going to help them get through storm. lisa: we have talked about the and tom says it how people are verse to the crisis -- are adverse to the crisis. it seems like there is a slow rolling problem in regional banks and will it go away overnight? i was struck by the increase in the bargaining on the discount from the emergency lending program that they just started. is this slow-moving kerfuffle

continuing to accelerate under the hood taking out the biggest problem children? mayra: it is significant, serious banking turmoil. there is no way it of denying that and it has to do with regional banks that forgot the basics of banking which is to always be identifying and measuring your interest rate risk and you liquidity risk and every single bank regulator has it on their websites that it is essential for all risk managers to always be monitoring interest rate risk. i realize for anyone who has just come on board to wall street or the city of london in the last few years, they have never seen an interest rate rise, i get that. but it is banking 101 come interest rates go up and they do come down and if you can't manage that, you shouldn't be in banking. jonathan: i am not sure it is the junior analysts in london or

wall street that need to be told that, maybe it is the supervisor. the supervisory failure overall has been phenomenal. when we get the report from barr later, what are you expecting? mayra: i am not going to be surprised you are going to find out there were lots of supervisors who did no this was going on -- who did know this was going on. they are not allowed to talk to the media and there were many of them who have known. the question is, what happened at the very top? we did have a couple years before the current administration where it was very much a hands off these banks. the tone at the top was very different from what we have now. unfortunately, this has all caught up and it is a real problem.

you need to empower middle level and other bank examiners to do their job. the problem is if the tone at the top is hands off, that filters down. jonathan: it goes back to the chairman all over again. thank you for being us -- for being with us. i have to say this, i understand why people don't like the word crisis. i understand that it is not 2008 and i understand there is a duty to not stoke fear. i get all of that. but when you get the failure of svb, signature, credit suisse, idiosyncratic, idiosyncratic, idiosyncratic. tom: until -- jonathan: that seems to be the consensus view and i'm not here to interrogate that. i want to understand how many banks need to fail before you

would sit down and say it is not idiosyncratic, that there is a broader issue at play that lead to broader problems in the future. lisa: the issue is how do you draw the distinction between perhaps not wholesale cascade of failures but perhaps the slow grind of one baked being acquired by another in a first merger, lending coming in, something that could -- grind of one bank being acquired by another in the first merger, lending coming in, and a longer drag that is hard to extrapolate out. tom: you may see potential coming from idiosyncratic to mainstream. this is going back to frank ramsey, the unknown unknown is what is out there and you get a respect for that after you screw this up incalculable times like i have. jonathan: stability, that doesn't mean the story is over.

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>> people talking about a slowdown in the economy. it is at 4100. >> i think we have to hit a point where tech cannot do the heavy lifting for the entire economy. >> all of it pointing to a slow down and mild recession. i do not see how we escape it. >> this is bloomberg

surveillance with tom keene, jonathan ferro, and lisa byrd on of its -- lisa. jonathan: good morning i am jonathan ferro. the euro market and it continues into next week with apple on deck later next week. the fed reserve is next wednesday and been the ecb after that. and after the close we hear from apple. tom: i take the point it is a busy week but it is a busy week after the exhaustion of april. do we get clarity in may? can we provide an overall theme that was missing this month. it cannot get worse, can it? jonathan: there was one report that we spend the entire month talking about witches the survey released in may. and it presents some of the

ideas that come from it in the news conference. we go back to the original question in march and keep returning to it, to what extent will this be a substitute for rate hikes? will they have an answer next week i doubt it. this may take weeks, months, it may quarters. lisa: i can feel the frustration when you say we will be asking the same questions and have no answers. i keep going back to this asking this as well. is this the economy that called wolf? how many people will say it's going to be a recession and bad and then it's good. and people are prepared when it sours but it will eventually sour. jonathan: we've lost momentum in the u.s. economy. tom: yes, i think we confirmed yesterday. you see a little bit of

stagflation out there in the research were or. we did -- report. we did not get the enthusiasms that we expected. jonathan: a loss of momentum going into april. there are pockets of tension with the idea we have a 70% rally from the june lows on the s&p 500 does not scream recession for me. does it for you? lisa: it screams rebound. with the data, getting clarity it is difficult. people are looking to get clarity of what is going on in the regional banks. everyone is keying in on the first quarter reports of deposits coming in later than expected. for me, it is the drip of what is happening with deposits inflow into banks. tom: this is what we do at bloomberg surveillance, on the n.y.c. be report, they had a

close of 6.19 and bowman 6.15 it comes down to six point 17. -- 6.17. tom: the frc is a bank that is still looking for a solution. we spoke with a guest earlier this week and they said three options are on the table; sell assets, raise capital, or fail. on the first two we have not heard much at all all week. lisa: probably because there is a massive tension the government does not want to bailout jp morgan with deposits sitting in the bank. but without support there will be no sale because people need to have a guarantee of loan losses. tom: matt levine did a great job summarizing this for bloomberg opinion, my focus into the

weekend is not on james dimon and the rest of the cohorts, it is out of the government. the government has to blink and physically blinked at some point and i do not see that yet. jonathan: they've been very very quiet. he will get a report on the s&p 500 will get an update on that later. the price action negative 4% as we crawl toward the weekend. i look forward to closing this one out this week so far. lisa: [laughter] you really feel it. jonathan: i'm going to spend the whole morning about that it is the whole thing about morning tv and radio you have to be happy. no, not today. lisa: [laughter] crushing it. jonathan: the euro is at 1.0984. what is that? tom: this is my morning tv smile.

i'm radio it is -- jonathan: you're gritting your teeth. anything you want to do you can. whatever it is. lisa: i hope you all have a great week. we got an earnings throughout the week we got an exit on -- exxon and chevron. the focus may be more on exxon rather than chevron. exxon up owing 5%. chevron releasing profits which will raise eyebrows in washington dc. we get personal -- pce deflator, and sentiment survey. i am watching the cost index that comes out in 30 minutes time. are we seeing rillettes celebration in wages? what does that do for the fed? -- are we seeing re-acceleration in wages? what does that do for the fed?

and can bw regional bank index. what went wrong with svb bank. jonathan: that was way too upbeat. keep gritting your teeth. and we have seema shah joining us this morning principal asset management she is a chief global strategist. wishing you never woke up this morning. thank you for joining us. you look at the situation -- and say inflation is a problem. but i'm looking that claims have ticked higher. where does the recession chat come from? >> the problem is we have been talking about a recession for ages and ages. people are getting tired of the discussions area if you look around -- discussions. if you look around the economy today, things are ok. there is a slowdown but generally things look ok. the labor market is underpinning

everything. the labor market is typically the last one to fall it is the most lagging indicator but it is the most important. we can be watching the lending survey it will be very important. there is a close correlation between lending data -- and if you contract you see job losses increase. it does look very likely given the amount of tightening with the fed you see year-to-date. lisa: bring it forward. let's get it over with. it seems like the impatient is embedded with the bearishness we see. what is the worst or risk as set inflation or stagflation? seema: stagflation. some idea and the next 6-8 months the idea is that the fed will start cutting rate.

there is an assumption that rates will come down. there is little dispersion in those expectations. inflation, if it were to reignite, that takes away everything underpinning the market today. lisa: if we get this print showing the unemployment loss read accelerate, what does it mean in terms of what you just said? seema: it means the fed's job is not done. we are getting toward the end of the tightening cycle. and everyone believes there will be a rate hike in may but no one is talking about beyond may. they are not talking about they could pause and return to the market in september with a rate hike if things do not go as planned. they have said they are data-dependent and need to watch and see what the tightening will be. if you do not see wage growth coming down and it plateaus at a 4.5% level well. them from taking a rate hike? that is not a baseline

expectation so i would put a meaningful chance on that probability in the market. jonathan: you are from london can you tell me so far this week with the conversations you have had the differences you experience with the conversations here in the u.s. versus london. are they different? seema: they are different because the u.k. is talking about the debt limit. i find that for international investors generally. we go through this every few years and it passes ok. in the u.s. there is more concern. almost every conversation of had it has come up significantly. jonathan: who has it right? seema: can i say international? jonathan: yes. seema: this administration is so belligerent, and i think the volatility is very disruptive when the market is already vulnerable to this disruption. i should not have said that but i do not take it back. that is what is disruptive.

i think things will eventually get past this. jonathan: i am not here to correct you either. we talk about politics in the future. we could do a weekly segment. couldn't we? we should ask with the people in london think about the situation over here. there is a different view on other things. lisa: that was great. can i save a truth? this is what i tell clients. jonathan: it's interesting. what you think about the u.s. aced investor and why they are more of says with that here? maybe i am using abscessed -- why they are more obsessed here? i am using the word of says loosely. seema: i can roy about the u.k. then my u.s. colleagues. tom: can we have you here every day? daniel emailed me and said

president biden is not belligerent. lisa: [laughter] jonathan: don't even worry about it. seema shah joining us. thank you for being here. we cannot say that, but our guests can. and marie will join us from washington she cannot give us an opinion. but we also look forward to the conversation with sebastian page. good morning mr. president if you are watching. the s&p 500 down .4%. if you were watching that was seema shah. lisa: [laughter] >> keeping you up-to-date with news from around the world with the first word in lisa mateo. mccarthy is trying to avoid a

debt ceiling crisis. he told bloomberg tv that they should embrace the bill that the house republicans passed. he said the senate has done nothing and the president is ignoring the problem. russia launched a wave of missile attacks across the country of ukraine. the capital city was hit for the first time in more than a month. at least 12 people were killed. ukraine said it shot down 11 missiles and to drones. the bank of japan scrapped its guidance on levels on its first meeting. at the same time it is keeping its stimulus measures unchanged. that keeps the boj in a different place than other central banks who are fighting rising hikes. exxon mobil posted the strongest ever start to the year it more than doubled in net income. that is the highest first quarter profit in exxons 140 year history.

and chevron also posted better than expected results. investors are watching to see if oil super majors can withstand buybacks and dividends despite slumping prices. and the talk of a slowdown in cloud computing growth. with amazon. they saw a 16% gain of revenue in the first quarter. that is the slowest growth rate since amazon began writing out of unit sales. it is the largest seller of renting computer power and software services. global news 24-hours a day on air and on bloomberg originals, powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo. this is bloomberg. ♪

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>> you know what happens with a compromise? we can get something together. that is when i sat down with the president in february. i said why don't we sit down and worked through it? there are two things i will not do, i will not raise taxes and i will not pass a clean -- the debt ceiling. but we can discuss. lisa: kevin mccarthy speaking on this. fantastic exchanges yesterday. he can watch that in full on bloomberg.com and the bloomberg terminal if you are a subscriber. we close out the earnings of the week with the equity our kit --

equity market. positive off of the bank with earnings like meta and microsoft. earnings are -.4%. we go into the federal reserve 3.48 on the two year yield. big raises once again. 3.64 at the low-end. close to 4.30 on the high end. stabilizing over the past week around 4%. but all over the place. tom: when i looked at the two year yield, that is the first thing i looked at, the end of april into may, i'm looking at euro end and the asian drama. i go where liz and saunders is with charles schwab. and the short term paper versus the 10-year note. it is an inversion.

what with the extrapolation of that be? would it be 110 or 120 basis points? we have a 10 year inversion. jonathan: you have all these kicks on the front end of the curve. lisa: the biggest kink of the three-month yield was the highest relative to the one-month yield going back to 2001. and the thought was that it would bump up against the debt ceiling debate. that is why you see a higher premium on this. tom: can i say we have more response to seema's interview than anyone else's. we would love to have her back. washington is preparing for a hotter season if you get out the calendar that can mean one

thing. this weekend we will be honored to attend the meeting with ann marie. there is a pomp and circumstance to it. there are different parties in that but the reality is, the president is greeted by the press. they are greeting him after the oddity of alexion announcement on video. how will the president be graded this saturday night? >> you have been to these of course. i think you are more of the social correspondent for bloomberg television. the president will obviously get a grilling from the comedian that will be there as he did last year. and presidents before him will have. but what the press is looking for how the president asked -- acts and what his speech entails. he is not just the u.s. president but a candidate for 2024.

it is a different view that everyone will be watching him this weekend. tom: what is the lands for the president in may how does he advocate for his presidency without being overt and running? >> he will act as the commander in chief. he has a big battle ahead of him. with my conversation with kevin mccarthy he is not backing down. he wants to find a compromise with the president but the white house is saying they want to separate anything that has to do with budget and spending cuts with a clean debt ceiling bill. kevin mccarthy says that will not happen that is one of his two demands. and the president will be out on this foreign policy talking point. he will be at the g7 meeting and he is going to australia for a quiet. -- for a quad meeting. he can show that the u.s. is leaving in places like china. these could be big moments for

the president. in these places he will act as president but he will be on display as the candidate for the 2024 election. lisa: we have people in the beltway and analysts saying whether this republican agreement makes it harder or easier to come to a compromise. what is your sense? >> republicans will tell you they are the only ones that have done something. this is what kevin mccarthy's view is -- point is. they said they actually passed a debt ceiling bill that has spending cuts in it. for them, it is their opening to get in the door. the issue i think many people are looking at and i pressed mccarthy on this, there was a rope work where he said to his members, the freedom caucus members, that they will not get rid of the red meat of this till when it comes to compromises. punch bowl reporting that there were no concessions made.

and speaker mccarthy saying he will not raise taxes and not pass a clean debt ceiling bill. everything else is up for negotiation. he is urging the president to get in the room with a speaker. if there was to be a commonsense compromise can kevin mccarthy get republicans behind that? it may have to be passed in a bipartisan fashion. lisa: one of our guest said that everybody outside of u.s. does not care and has moved on from this. let's move on as we deal with other issues. there is a shift in the tone in the u.s. when it comes to china. you have jake sullivan saying the u.s. wants to the risk not decouple from china. and katherine tai calls it an economic misalignment and it needs to be right sized. is there a significance to this change in tone? >> over the past few weeks we see the u.s. wants to set up a

pathway to engage with china. there's a number of big issues they need to deal with with china when it comes to climate change, making sure militaries are talking to each other, when it comes to trying to get the president of china to properly engage when it comes to a peace agreement or cease-fire, that is going on in ukraine, making sure he is not sending lethal weapons that could be material used by the military. the united states obviously wants this engagement. and there is concern that the u.s. is losing the global south and the president of china is picking that up. there's a lot of hot rhetoric and they are trying to bring the temperature down. jonathan: the report from the vice chair supervision on the failure of svb how important will that be for you and your team later? >> it is incredibly important but we are trying to figure out what the u.s. government will do when it comes to first republic.

it will be postmortem of svb and at the same time you have a house going after the san francisco fed. they have subpoena power in this committee and they want to hear from mary daly. on top of that, we are waiting to see what will happen with first republic. there is a report that there could be a private-sector deal. a month ago i've reported that jamie dimon set with secretary yellen and we see a repeat of that? it is an interesting time for this were to come out. and we wait for the future of what happens with first republic. jonathan: we have a chat with joe matthews later on at sound on. that will be an important conversation with william isaac. lisa: writers reporting that the fbi see and others are getting together with the private --fdic and others are getting

together to discuss private deals. and the real question, it does not seem like it is going well. -- it does not seem like it is going well but the real question is is there some kind of guarantee back in this? jonathan: i hate to be one to mention it by name because there have been so many failures all over the place. that mary daly we have not heard much from the san francisco president at all. or the chairman. tom: i think everyone knows i am a huge fan of mary daly that i have been thunderstorms by the silence. jonathan: silence from the regulator and first republic themselves for the week so far. the equity market a little bit softer.

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jonathan: welcome to the program. this is "bloomberg surveillance." equity market negative of s&p. amazon getting a lot of attention for good reason. it was flying after the close yesterday when it reported results and offered esophagitis around what momentum looked like for q1 to q2 -- guidance around what momentum looked like for q1 to q2. that might weigh on the nasdaq. on the bond market, we look like this. to down five basis points on the 10 year.

very down two basis points on two year yield. going into the federal reserve next week looking for a 25 basis point hike and then what? maybe then this. morgan stanley looking for the fed to communicate with they call a conditional pause. the conversation in the conference -- news conference. i pause which is conditional. oncoming information which may lead to hikes or cuts. is that of a committed pause into year end. because of what the data looks like. lisa: he is loving it. jonathan: the problem is and this is a big issue with the federal reserve. they have explained what they would like to do positive projections. do you trust them? that is the issue is that people believe what inflation looks like it has a three handle they're going to back away maybe move away from the effort. lisa: i think people are getting

fed dashboard because they are i think people are getting bored. what god is can i give? -- what guidance can they give? jonathan: we sit around and say that is it, that is the future it is decided. that is not how this works. it is a process. it is going to take weeks, months. lisa: i know. jonathan: let see the credit crunch now. lisa: the does not happen, people say it is over so let's abide. you are seeing in buying and selling, amazon shares. it is not that the action is incredible. it is down 3.2%. it is why it is down and how big this week has been. within 14 percentage points up and then down after people found out momentum has slipped in the

second quarter. the question around cloud computing and how much aws is losing share or not at least getting as much as some of the other cloud competitors. pinterest interesting to watch and the bigger story with pictures and snap is how much meta is consolidating the market share with ad revenue and stand out rather than being riding the microwave. pinterest falling 14% after talking about a week forecast. snap missing expectations with revenue and seeing that to continue going forward. interesting whether this diverges only widens as people really look to advertise on the most dominant places. intel -- this is about a lobar clearing it and just saying things might look ok and all of a sudden their shares are up 6.3%. there shares were down almost 50% last year. off of a low base but they are seeing potential signs they can

see free cash flow that gets positive in second half of the year. jonathan: i love how silicon valley bank executives talk about issues. this is how snap described the advertising backdrop, continued disruption in demand for advertising. what is a continued disruption in demand? why can you not say the market is softer? why does everything have to be disrupted? tom: they took a quarter -- they took a course at a fancy school. there were told on disruption but they never read the book. lisa: it implies it will come back. disrupted not necessarily stalled out. that is the distinction. i could argue is it is disrupted because meta is grabbing the market share? it is a conditional decline. jonathan: a conditional pause. tom: if that the study a

disruption you you do it at the college. jurrien timmer joins us with exquisite technical analysis on where we are. i'm going to cut to the chase. with your first five charts you say we have been in a 10 months no man land. when do we know escaping up or down our 10 months no man land? jurrien: we know how the cycle began and we want to know how it will end. will it end with the fed raising rates one more time next week and then pausing? i do think it's likely a scenario because we know the fed raises rates to more or less at or above inflation rate. the core pce at 4.6 per zoomlion its way down and the fed is now near 5%. the tips even 2.5%.

by that measure the fed is well above the neutral rate. i think for the fed it is mostly a question of how quickly do they go back to neutral which will be around 3%. my guess is not very. the other question is about the earnings front. the market is pricing in a modest contraction earnings so there is your modest mild recession scenario, which i do think is likely the second half of the year. but the market is capable of looking through that as it always does. on that -- by that measure, we can see a 40% expansion in the multiple at some point. the expansion at the bottom in october was 15 so that gives you 221 times next year's earnings. that gets you back to the new high. that is the glass half-full scenario where the market deals with the fed, deals with a

modest slow down or contraction in earnings, and and a recovery. the big question is how good are those earnings forecasts, we know because this is numbers -- we know consensus numbers tend to be optimistic. the numbers this quarter have been ok. that becomes the main question. if you look at internals, s&p 500 equal weighted index has gone nowhere in 10 months. the small caps are at the lows. micro-caps at new lows. the mega caps are at recovery highs. the market has been all over the place. these trading ranges now 10 months old and back in 2015 it was from august 14 to operate -- the boy 16 -- two february 16. if i trading ranges all we get after all this craziness the last three years, the bubbles because of financials and a massive rate reset and i would take that as a one.

the earnings -- the market can look past and earnings valley but cannot look past earnings. jonathan: lost a case or not unusual. we have seen them through history. japan is an example of that. you're being banks did nothing for 10 years -- european banks did nothing for 10 years. do you see the potential for a loss a decade in equity market returns at the index level in this country? jurrien: in 2000s, 1970's, 1930's and 1940's, i called them secular bear markets and they tend to last 18 years, produce 18 percent rate of growth and tantalize 14 years and produce basically zero growth or negative real growth. one of the big questions is how has he secular bull market i think started in 2009 has it ended? it would be a shorter

than usual one although the berm from 1921-1929 was short and powerful. we look at valuations and you look at new inflation rate, assuming it is going to be above the fez target zone a look at -- the fed target zone a look at interest rates secular lows, that would argue for a more modest valuation regime which would go in line with a secular bear market. to call it another lost decade, i'm not prepared to go there yet. that does come down to financial engineering and converting earnings and to share buybacks. that has been a powerful engine as well as m&a. go back to the end of the financial crisis and look at the supply and demand of shares by corporis themselves, ipos and secondaries 2.5 trillion a supply, m&a and buybacks,

retirement of shares from corporis, are about eight times as high. it's been a massive imbalance of the supply of chairs and demand for shares, not counting and investors. and that engine keeps going and i think the bull market stays alive. if a higher rate or tighter fed regime slows down that train, there is reason to think that could be otherwise. lisa: 60/40 portfolio going to work in a higher inflation environment with slower growth? jurrien: i have look at this going back 150 years and when the inflation rate trends or sustained above these historical average, 3%, the 60/40 does not work. the 40 is then the positive and correlated to the 60. the question is we were at about 2% regime. we are now at 2.5% on the 10

year. it comes down to the inflation situation remain structural or transitory. i just did a deep dive on the 1940's. i read the history of the federal reserve they had 20% inflation in 1946 and 1947 when price control was lifted and at the same time the monetary growth started to reverse. it was transitory back then. the post-covid pent-up demand versus the post ford there are similarities. tom: eisenhower true deflation in the d2 think issue two 2%, 3%. do you protect a follow-up on disinflation? jurrien: numbers have rolled over. which is what they did in the second half of the 1940's after expanding rapidly from 1942-1946

per hand once price control lifted yet a one time price shock. hopefully this was a one-time price shock and if so, the inflation average go back to the historical average and then 60/40 continues to work. the 40 this year is doing what it is supposed to be doing. jonathan: this was a clinic. thank you. it is good to see you in new york. open market -0.3% on the s&p 500. 8:30 a.m. nela richardson reacting to this morning's economic data. lisa: keeping you up-to-date with news around the world. with the first word, i am lisa mateo. speaker kevin mccarthy is putting the pressure on president biden and democrats to embrace his plan that was passed on the house floor to avoid a debt limit crisis. in an interview he said the

president is putting the economy at risk by avoiding and negotiation. biden opposes the measure because it includes sweeping spending cuts in order to raise the debt ceiling. in china the communist party said the country's economic recovery needs continue to need monetary support and want domestic demand is insufficient. he is the top decision-making body led by president xi jinping. it is another sign of improving relations between the u.k. and e.u. after years of ammonium over brexit. the chancellor, jeremy hunt is planning to attend an upcoming meeting of european finance ministers. a surprise loss in the first quarter and warned layoffs on the way. the asset manager says it will cut about 10% of its workforce as of the end of 2022 it had more than 3400 employees. the firm blames it performs on slow m&a activity.

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because investing isn't one size fits all. allspring. purposefully divergent. >> free cash flow a problem for amazon the past couple of years. last year they had $12 billion of free cash outflow and there are three things driving that. weak profits and so we are

starting to see some improvement coming through but it is very slow. inflation headwind should ease. jonathan: the global software analysts earlier on this morning following numbers out of amazon to wrap up big tech for the week and push ahead to apple next week. amazon came out with what looked like decent numbers. the stock rallied after the close yesterday and all of a sudden rolled over as they signaled a loss of momentum coming into q2 may be a softer april for the cloud business. amazon down about 2.4%. the last of the big tech players to report this week. the guidance is not great. if you can call but we heard yesterday guidance. tom: not caution but he pulled back 12%, -2% and feldman had

the tinge in his note as well. it was about the cardboard box as we get at door but it was about a general statement of having the growth rate on cloud. jonathan: a softer april may be continuing into may, june. tom: what is the longer term view is may be where we want to be on this. see a technology analyst for bloomberg intelligence on the cloud. what is the number one thing people get wrong about the cloud? we all say the cloud. it we get wrong? -- what we get wrong? >> is a simple way of saying that is the for all the way of how everything is going to rent later on. are you investing in that right now or are you going to wait? we talked about growth rates. owing to the corner they said it would do 14% and then next

quarter consensus figures were 12%. they did 60% and guided to 11% and that is what caused a mess -- they did 16% and guided to 11% and that is what caused a mess. your cost structure becomes variable compared to a fixed cost structure as an enterprise. that is a big driver. jonathan: talk more about that. are you saying companies do not have much clarity about the future of way they use to? >> the amazon business, yes. we did not have that much clarity over the next six months. i have a good clarity for the next five years. i have no problem sticking my neck out and saying this business over the next 5-6 years will double from where it is today. i am confident in that statement because majority of tech spending still resides on large companies and data centers. that's where the big movement is.

you cannot run generative ai on odor infrastructure. lisa: what about the specific sectors? i think about microsoft delivering better-than-expected cloud projections as well as what we saw from google. alphabet saw profits for the first time. how much is this an amazon specific story versus a broader six-month store? anurag: amazon has over 40% market share. no one else comes close to it. microsoft and google are far behind. they have been closing the gap and for microsoft have been closing the gap from the legacy businesses, companies that have been around for a well -- for a wild. there moving their own to the cloud is what driving their business. amazon has not been losing market share for the past five years. lisa: we looked at the next six months the idea of companies not investing as much in their

infrastructure, how broad is that go? anurag: it affects the entire software scheme. entire hardware area because what is happening right now is people are saying i cannot spent at the same rate i was the last five years. tom: i want to look at cloudflare. matthew prince made something we never talk about. they are getting hammered this morning. what is the symbol from the companies around these big names? anurag: somebody like a snowflake, data dog, all these companies that bounced back very strongly in the last two days. if amazon reported before microsoft, things would not have sounded that badly. the expectations rose high after microsoft. tom: we have the three and five year wisdom here. are you saying cloud the carnage

this morning is a massive overweight? anurag: what is your time horizon? if it is the next six months like most investment firms, then you have to report back. if you have a three or five year horizon you should not be looking at it. jonathan: can we finish on a topic we touched on earlier? how did the guy who decided to sell books online eat ibm's lunch? anurag: one the most phenomenal stories i would urge all of you to read. he basically said i want a computer with finite competing power. said i need more and more capacity so we're going to have a large computer where most of the world would do their computing services, there are no companies that generate their own electricity. company should not be running their own data centers. jonathan: what was it about amazon that led to the moment? what was it the nature of the business that led to the moment in a way they did not happening

in companies like ibm the same way? anurag: the the skill they want it was not available with the older tools. the needed to do it is the house. they said we would just build it in house and we will use open source software degraded. jonathan: amazing how this story happened. tom: the definitive book on this is brett stone -- brad a stone out of the west coast. jonathan: does the cloud business exist at ibm? the answer is kind of but what is happening with it? anurag: they wanted to compete head-on with the likes of amazon and microsoft but must they figured out it is not going to work. i think the ceo did a good job acquiring red hag. less pepsico, their been

investing in technology for 20 plus years. they have a massive premise for print. they need to move to the cloud the strategy is going to be i'm going to keep some workload on the cloud, keep some in house. the hybrid cloud strategy where you can have an infrastructure that can work on any cloud on the background but obligations can run -- applications can run seamlessly in both places. jonathan: you do not think it is over? anurag: not a close to it. we just saw the biggest growth driver in technology that is all ai enabled applications. they run at a speed you cannot think of. you need processing power on the cloud to run that. the current footprint is less than 25% penetrated in the cloud. we have a long way to go. jonathan: you sound incredibly bullish. to go back to have an understanding of the best five

years, six months are you saying the cyclical headwind their effect cloud headwinds in this company, ignore them? anurag: not for the six months. i think they in get tough. my view on cloud is negative going into this already seizing. i was proving wrong by microsoft but last night. this thing is going to continue to have massive pressures because companies are not spending on cloud. jonathan: just amazing. tom: you have to come back and talk to us about ai there is a huge debate about ai. jonathan: this was fantastic. thank you. tom: can i get tearful here? where in the end of april. we are so lucky to go from your end -- jurrien timmer to anurag.

sumi shaw to jurrien timmer. a president biden's pleasure and so we can get good emails. jonathan: sebastian page coming up. it was a bit more on amazon push ahead to apple and two bank decisions, federal reserve on wednesday. the ecb may 4. payrolls friday. just around the corner. i do not know what happened to the month of april. may just a few days away. equity market negative zero .4% on the s&p 500. yields come in three or four basis points on the 10 year. sub 3.5. fs market, euro a break of .1. from new york, this is

bloomberg. ♪

>> my head is spinning. it is a tough environment. the markets are never clear. >> i'm disappointing full year estimates for the s&p 500 are not going up after all of this

good news. >> the economy is proving resilient. >> is hard to say the economy is not still expanding. >> if you look around the economy today it looked fairly strong. there is a slowdown happening but things look ok. >> this is "bloomberg surveillance." tom: good morning, everyone. it is the end of april. were going to go into may and figure out if we buy or sell in may. were going to do it with an environment of slower american inflation. moments ago the massive dichotomy between europe and us, german inflation number. we are hearing from -- i'm looking at the numbers going i'm sorry it has to be something about the conversation of may. jonathan: it is a downside surprise relative to expectations. it is a problem.

it is a seven handle. going to the ecb next week, socgen say 50 basis points from your -- european central bank. tom: with all the distractions of april including first public bank around now 6.19 the last print. we take and i are off -- we have taken our eye off of the inflation. jonathan: we become obsessed with growth discussion. the idea that maybe we have lost some momentum from q1 and q2. i got the sum of the banks. citi saying they think in june we're going to get upgrades to the forecast from the federal reserve on the growth. everything else i have read says anything but. bank of america expect momentum in the economy to slow in q2. bmp anticipate recession in second half of 2023. morgan stanley expect to see

slowing in q2. amazon q1 to q2 looking for the slow down. tom: you noted with the coloring of the earnings. give me your view on the fed. i moved beyond may 3. we will do a special program on may 3 but the reality is i'm out to june 14 right now. lisa: i'm out beyond that. it means that we are not focusing on inflation, i think that is the right question. is whatever we are seeing is the economy enough to bring down inflation? it is still the idea of immaculate disinflation relating around the scenes as people see stronger than a minute performance and ongoing the clients which is logical year-over-year in inflation -- declines which is logical year-over-year inflation. what is the fed do of growth is still slowing? tom: 4.07 on the two year yield. the answer is the yield gyration off of a week activity to a higher yield structure.

jonathan: unemployment 3.5% in united states of america. we want to date on the calendar laissez end of august. chairman powell sitting there and it's going to do a speech and we get the opportunity to compare and contrast the speech would deliver then with speech delivered 12 months prior. where he talked about paying -- the paint will have to go through. i wonder where the unemployment is thomas later reflected on the pain is going to cause. how much pain were the be -- will they be between now and august when he delivers his next speech? lisa: with initial jobless claims not that much. you're not going to creep up in a meaningful way which raises this question, is it enough to get to where they want to go? if not seen the pain, do we get a painless disinflation or is this going to require something more? jonathan: if inflation comes down from we go back to the question of the last 12 months,

what is the price we have to pay for it? in gdp, unemployment. tom: i will go with that theme that i am thunderstruck by european inflation. i get inflation here is going to come down and there is good reading for the weekend. down to what, 3% or 4% inflation is not acceptable in most of the textbooks i've read. jonathan: i'm am shocked have gone as far as they have been at the ecb. couple of years ago we would have a conversation about getting it above 0 and here we are about to go through four. tom: they are going up and inflation rate seems to be sustained. 4.06% on the two year yield. jonathan: -.4% on the s&p 500. on the bond market, yields down

for basis points. as a break of 350. 348 on the 10 year. the two-year, north of 4% again after the moves yesterday. i think jobless claims hoping to move that went along more. the underlined gdp read, consumption still strong. that is one of you. there is another view that things are starting to fade quickly elsewhere. two year 4.06%. tom: the cliché is sell in may and go away. that the play in the market 24/7. global multi-asset head for the bottom workshop. good morning. i want to go to one of your subheads we talk about zombie fear that is out there. i would suggest the great zombie roll up is a constructive exercise when rates come up, things happen with companies you get combinations that can be a

benefit. sebastien: i'm glad you bring this up. i biggest special topic to him allocation committee every month and the zombies and i was inspired by you because i know you talk about the great zombie rollup. there is this scary chart going around on social media that shows 20 or even 24% of all companies in the russell 3000 do not generate enough net revenues to cover their interest rate payments, their debt payments. that is a scary chart because it shows an all-time high so people are talking of the zombie a -- zombie apocalypse. i decided to dig into this for my committee and there is massive caveats to add to this. i notice grumpiness on the show this morning. i want to put the caveats out there for the zombies.

most of them are micro caps. really important, the revenue generated might be lower than a debt payments but there are at least three reasons why zombies still be good company. the sales might be going fast so they make up for it over time. think of a company growing market share. they might have innovation in the pipeline, some of those are biotech companies, many future cash flows can jump quickly. they might have cash reserves. here's what we did. we looked at probability of default, balance sheet, sales, the ultimate z-score. adjusted for market cap, we went from 24% zombies the world falling apart to 8.8% closer to historical bottom then closer to

historical top. i thought i would bring this up since there was governance today. lisa: i think it is relief for all of our grumpiness. it is been a long couple of months. i do not think it is just as. it is what we hear reflected by everyone. you talk about how it is hard to be a bear given the gyrations yet you continue to be somewhat bearish. how much are you considering growth continuing to remain steady, not the kind that much, inflation remaining study? -- inflation remaining study? sebastien: i think it is a scenario. it is not a let's go on to cash type of strategy. do not do that anyway. we are actually adding risk back to the portfolio by overweighting policy small caps and high yields. from a risk posture, it is

boring for television, but it makes sense to be neutral remain total risk posture. i think stocks are expensive and you. your show all of the time. all the traditional indicators flashing red. leading indicators, red. pmi down 17 points, flashing red. yield curve massively invited, flashing red. cut is tightening, longer volume down 18%, flashing red. the bearish narrative is compelling. the only think i did was say and why it is not a time to panic and why i think your question is a good one is that -- this is a cycle where we are unwinding massive covid distortions. liquidity is coming out, lti flashing red. pmi's are coming down but they are all coming down from a massive post-covid pop. we are looking at year-over-year. i'm telling at my team stop

looking at year-over-year data. you the zoom out and relies all these economic indicators went way up and then they are coming down. it is a normalization and it is a different playbook. jonathan: what are we normalizing to come up pre-pandemic trendline? what is it? sebastien: i do not think we normalizing back to pre-pandemic if you think of the, it is worrisome liquidity is coming out. it is worrisome we have to wait for the lag effects of 475 basis points of fed hikes but we have 5 trillion extra deposits in the banking system versus 2019. the normalization i do not think it is going back to zero rates and the same environment. we have a higher inflation volatility. we do have higher rates, ultimately higher real rates.

it is a regime shift. from 40 years of declining rates to finally a higher high rates mean a different not just tactical, but strategic long-term portfolio construction playbook. jonathan: can we come to the investment committee meeting? that would be great. tom: it is fun. i had the honor of doing it with different firms. they own some serious analysis. jonathan: can we make that happen? lisa: i think he is gone. jonathan: how rude. did they cut his microphone or is he going to go on? isn't that a no? lisa: i do not know. jonathan: i am kind of offended. lisa: i do not think he is shutting hem out. maybe we are to grumpy this morning. jonathan: i'm going to say they cut his microphone. lisa: come back anytime. jonathan: that he just drop they

had set and walk away? ♪ lisa: keeping up-to-date with news from around the world with the first ward. house speaker kevin mccarthy's wrapped up its demand for president biden and democrats to avoid a debt ceiling crisis. mccarthy told bloomberg they should embrace the plan that house republicans passed. he said he is willing to make a deal. >> you know what happens with a compromise? we get something together. i said mr. president, why don't we sit down and work through it? there are two things i will not do, i will not raise taxes and we will not pass a clean debt ceiling. we can talk about everything else. lisa: the president has rejected an idea of a debt limit bill that cuts spending. russia launches a wave of

attacks across ukraine. the capitol sadie was hit the first time it is been struck in more than a month. explosions were also heard in five other regions. ukraine says and shut down 11 cruise missiles and two drones. exxon mobil posted strongest start to a year. net income more than doubled from a year earlier to $11.4 billion. that is the highest first-quarter profit in history. chevron posted better-than-expected results, profits from oil refining sword. investors watching to see if the super majors can sustain massive share buybacks and dividends despite slumping energy prices. i am lisa mateo. this is bloomberg. ♪

>> the economy is still proving resilient despite the fed engaged in a an aggressive upward pathway to tame inflation. businesses are anticipating a slowdown in the economy. anticipating a recession to come in second half of the year responded across the first three months of the year. jonathan: so trying to track down sebastian page. when i get out of him, i will let you know the answer. mike mckee ready to break that down with you. here's a snapshot of things at the moment.

going to the weekend with the week so far through thursday, giving you an equity market pretty much flat on the s&p 500. a quarter of the index reporting across three names. you know the three names. at microsoft, meta, amazon. looks like amazon is going to join the likes of meta but either soft or guidance around the month of april and going forward through two queue. the stock negative almost 3% now which is amazing now which is amazing considering where it was around 4 p.m. yesterday. tom: i'm looking at the first republic as well. it may be a bit off of the surveillance radar but should not be. are we waiting for a friday announcement? don't you make these announcements at 5 p.m. friday? jonathan: a weekend shocker? tom: -- jonathan: we know what the options are. tom: we finish strong here.

you have mohamed el-erian join you? jonathan: we do. tom: on the microeconomics of audio and your shock it is near $69 a barrel on west texas intermediate. 75 .06 on american oil right now. what is equilibrium dynamics of oil look like and can acknowledge oil to a $69 handle? amrita: if you get a few poor macroeconomic data points it starts to spoof the market a lot, do not rule anything out. what is fascinating is crude prices have been the most correlated with -- you should have a look at the chart. bond volatility has spiked this week and that has been one of the big sellers of wife crude has sold out huge amounts. -- of why crude is sold out of

huge amounts. for joyce sox, fundamentals tightening quicker than we have expected. the market is not paying any attention to it. it does not believe it. tom: this is a critical observation. the market is tightening up. why is it price going to more people suggested it should go higher? amrita: for me, big chunk of what has been going on in the day today trading is just the fact people, do not have enough capital. we have seen a lot of funds take a big hit this year when we had a prices dip, prince went down to $70 in early march -- brent went down to $70 in early march because of micro fears then it came back up.

the rally back up was quick and a lot of them ended up buying at the highs. they're still down a lot on the year. it is not necessarily about fundamentals. it is a lack of capital. we do not have enough liquidity and that is why the cta moves are basically aggravating the day-to-day price volatility. lisa: exxon and chevron just crushed it. they deliver profits we have not seen since oil was more than a hundred 45 dollars a barrel according to kevin crowley. what do you make of that? the profitability despite the decline we have seen in crude. amrita: a big chunk of their profitability came from refining margins, products have been very strong, assigned the demand despite all of the fed tightening continues to hold up well. this was last year. we have seen refining margins come off of this year as expected because we are adding

net 1.5 billion dollars per day of refining capacity. the downstream sector has really helped energy majors across the board and that is something we are not going to see that this year because of margins. but i am still expecting decent results from the majors of even through 2023. lisa: how challenging is that politically when you have oil prices starting to creep up in the united states and you have this urgency, suppose she people try to combat inflation to keep prices low? how problematic is it the margins are getting fatter for some of the refiners? amrita: right now, prices are low where we are wti brent gasoline prices, i do not think energy should be talked about when we talk about inflation. going to the summer of our expectations are correct and crude prices go up and gasoline

prices go up we can talk about it but we still are going to be quite lower year on year to probably the back half of the year. i know there's a lot of focus still on inflation and rightly so because inflation remains relatively high but it is not been oil that has been the driver, a piece of the last few months. jonathan: amrita sen thank you. 79 on the brink. the beauty i it looks like this. -- wti looks like this. 0.8% this morning. in seven minutes, economic data in america, employment cost index, pce. mike mckee around the table. kriti: it is going to be fun. jonathan: for some people. how the federal reserve look at the data going into next week? michael: we already seen enough inflation data that suggests inflation is still a problem. it is not going down enough.

we are not seeing a lot of strength out of consumers. can raise their 25 basis points and then the question is do they want to hold and maybe there's a little bit in here about whether they want to hold of consumer spending numbers are bad or income numbers are week. but they're probably on track. it is what happens next that matters. tom: pce deflator, the ssme nominal gdp of five percent as well. it is unacceptable to the fed. how do you envision the pap papm 4.1 percent pce deflator year-over-year down to 3%? kriti: it is not a mystery but we do not have a good timeline of it. where's expecting pce and cpi to go down because were expecting

rinse the pullback and that should slow down the overall level of inflation and have an impact on the core. it is a question of when they start to hit. that's what the fed's conic going to get to 3%. lisa: business investment was because harold -- was curtailed. kriti: there's a shortage of supply and demand continue strong but demanded falloff. we saw in the latter months of the first quarter. we get a better picture of march today. that is the case we have a chicken and egg. as a business falling off because consumers are pulling back or consumers pulling back or consumers blame back because businesses falling off? jonathan: mike breaking down the number in five minutes time. michael barr break down the failure of svb and maybe highlight some of the regulatory

federals of the federal reserve. in the next hour a fantastic lineup for you in the open. mohamed el-erian, lizzie rosener, michael norton, and bhatia on the latest numbers from amazon. tom: it is going to be interesting to see. the economic data we have underplayed it with a huge news flew we got. i got 90 points. -- i have nine data points. jonathan: that is a lot. let see what we got for you in the store for the u.s. up next. ♪

tom: futures -13. the vix not giving me much. looking at two year yield keep score 4.07%. as a look at economic data we spend big globe on down to the pce core deflator year-over-year. michael mckee. michael: it sounds like the wild world of sports here. comes in hotter than anticipated. 1.2% for the first quarter. the expectation was for 1.1%.

the prior release was 1%. we are seeing a rise in and -- and the employment cost index. wages of 1.2 percent. and if it cost of 1.2% on the year-over-year basis. compensation for civilian workers up 4.8 percent and wages up 5%. we are getting some benefits to americans. personal income which is important to a lot of people and we have not gotten updated numbers yet. the internet being slow today. but we do know personal income was up .3%. the headline number for the month of march. we will see when i can get this thing to work what we get from the overall numbers. tom: we are computer oddities which we get here as well. explain why unemployment because index is important. michael: it accounts for the

fact that people change jobs and stay in the same jobs. it is not just average hourly earnings. it is more comprehensive in the overall conversation numbers. the problem you have it is only quarterly. you still watch the other numbers but the fed does like to see this. income of three -- .2%. personal spending flat on the month. it was not negative. there were some thought it might be given we have seen declines in overall months of february and january. personal spending only up .1%. the month before in march. real personal spending flat as well. i just fori just for inflation t nothing, no change. -- i just for inflation and you got nothing, no change. that was down .2%. the pce deflator the fed

year-over-year process at -- core is up 0.3 percent and the deflator of 4.6% on a year-over-year basis. -- the same as the prior month but a big drop in year-over-year number from 5% to 4.2%. we are seeing some improvement in the headline number but we are still waiting. lisa: the revisions we are getting our upward revisions almost across the board with the exception of personal spending which makes sense giving the concerns in february around everything. i'm surprised there's not a more of a reaction on the bond market. were not seeing more movement on two year yield that are flat. but what i am struck by, this seems to paint a picture of inflation not coming down nearly as quickly as people expected. is there anything to challenge that assumption? michael: nothing so far.

what we're seeing in the bond market people figured out what the fed is going to do. they got other things they are watching in the banking issues, etc. there's not a lot of new information that will change people's minds. where were up 1.2% in unemployment index. the forecast was 1.1 percent. nothing tells you we are seeing a huge inflation problems. wages still going up but not a huge problem. tom: mike mckee thank you on this data. michigan data at 10:00 as well. the literature sent a start us off with a wonderful purview -- nela richardson to sare is off the wonderful purview. a look at this and i'm sorry, i have shifted from a analysis to a fed meeting in june. i did not see inflation coming down on the statistics. do you?

nela: we have seen a little bit a deceleration in payroll wages and i think that is important to keep an eye on because we know inflation has more started as a supply shock reaction and now it is in the service sector. that is what we are watching in overall compensation. we are seeing some deceleration. we did not quite see deceleration in the report but we are sitting in payroll data. we have 25 million workers we are keeping track of. after a three-month plateau in march we saw deceleration. when be released next week we are looking to see if the deceleration in wage growth continues. lisa: what is the pace of the deceleration? does it feel like it is accelerating or take lower because year-over-year comps are difficult? nela: were able to do year-over-year comps because we can match individual workers who stay on the job and

individual workers who leave their job. the composition affects are in the adp payroll and data we provide and that gives us a clear lens on what is going on with pay. we are seeing we saw a decline last month that was significant if you look at the past year. wages peaked in may of last year. leisure and hospitality peak in june. leisure and hospitality are low wage pay overall have been driving these gains and we are finally saying a notable decline, but that being said, full context, it is still much higher than before the pandemic in pay growth. lisa: are you getting these since the shift in labor markets are moving quickly and people appreciate in how much things are loosening up and the jobs are getting eliminated? nela: i know that is what the headline said.

i've seen five or six headlines this morning before my morning coffee but when you look at that proxy of layoffs well in line with where we were before the pandemic and will be talk to firms, even smaller firms that should be more vulnerable to the interest rate hikes we have seen so far, they are still trying to hire, they are still trying to find people. i regard labor market as a strength of the economy. it is a mechanism in which you bring down inflation by keeping people employed supporting the spending we saw in first quarter. tom: i'm going to ask, across the american desk aisles of howard compensated, how correlated are we in our monthly dynamics of nadp paycheck or is there huge -- an adp paycheck or

is there huge discreteness in the desk i'll? -- the desk i'll? nela: were racing to highest and fastest wage growth is in the lowest desk side. it is what took off after the pandemic because those were the jobs, the consumer facing, lower paid jobs that were decimated by the pandemic. then companies scramble to get workers back. though scales were -- could move throughout the economy, going to restaurants, and two warehouses. there was a scramble to get these workers back. the scramble was matched by really high wage growth. you're not seen that at the top end. one of the industries we have seen the most of the vacant deceleration is in information services -- decent deceleration is in information services. it grew during the pandemic economy and who seeing softness

now and that softness is reflected in pay. tom: i think you april into may of the theme we are -- the thinking april until late may as it is highway wage types see the agony. you wonder what the upper desk aisles dynamic is going to be at the end of the summer? lisa: white collar layoff recession kind of field rather than what is normally felt initially. this speaks to what you are seeing in the fundamentals. you said the labor economy is still strong even though you are seeing deceleration. and if you keep people employed, the key spending and consumer spending keep the economy chugging along from a given that what we just got, is there a chance of recession on the horizon this year or is it off of the table as far as you are concerned? nela: nothing is off the table. there is a chance of recession

and we will have to find watch -- watch the incoming data. there is also a chance we skim through it and we did not receive a recession. i think we have been sleep the past 10 years of economic expansion before the pandemic. recessions generally happen every three to four years, they come and go but what tense the stake is slow -- we do not want to have discussion area analysis is an economy that is stuck in a plateau or very slow growth when inflation is still uncomfortably high. tom: thanks so much. as a look at the economic data and i want to emphasize the important of michigan data here at the 10:00 a.m. hour, i'm really interested in five-10 year inflation as well.

i want to get out front of our next conversation because you and i talked about this. i do not think it is been something in the national zeitgeist yet. one headline from bloomberg. new york still has the priciest rents for jersey city to the west is closing in. it is the rent dynamic, residential and commercial, and the commercial restructuring dynamic and i wonder if that is the great unspoken for the rest of the year. lisa: can you convert office-based to a residential? -- office space to residential? is this a specific idiosyncratic moment based on the work from home trends? rely to have a fantastic conversation coming up with bob sulentic on this.

tom: i am looking and doing the math on the bloomberg, you have 42,000, $43,000 of average rent in new york every year divided by three, you got to have hundred $30,000 income on the median rent in manhattan. that is the residential side, let alone the commercial side. many of you on global wall street, a composition of the day coming up. roberts -- bobsledding joins us. vick -- we give you a first public brief next. this is bloomberg. lisa: keeping you up-to-date with news around the world. with the first word, i am lisa mateo. speaker kevin mccarthy putting pressure on president biden and democrats to embrace his plan that was passed on the house floor in order to avoid a debt limit crisis. in interview he said the

president is playing the economy at risk by avoiding any negotiations. biden opposes the measure because it includes sweeping spending cuts and order to debt ceiling. president biden and congressional democrats plan to attack republicans proposals to slash social security and medicare. they see it as a key white issue in the 20's 24 election campaign . the message could win over seniors working-class voters independence and suburban women. mercedes-benz says it order backlog will support sales in coming months despite the subdued global economy. luxury carmaker sees the man in -- sees the man in europe falling -- that event in europe falling. >> in the u.s. it is good and solid. we could to the demand in coming up and coming back up again in china. lisa: mercedes focusing on selling more of his higher end cars to boost is profits margin.

deutsche bank agreed to buy british boutique new miss as an all cash deal that could reshape investment in the city of london. the deal values at $512 million, 72% premium to thursday's close. the transaction will give deutsche bank when the biggest teams of bankers in london. global news powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo. this is bloomberg. ♪ this is ge vernova, helping generate and move the energy that our world needs. ♪ welcome to a new era of energy.

>> stagflation is the worst case coming down. consensus forecast and their social discretion in expectations.

inflation were to reignite and move up that takes away everything which is underpinning the market today. tom: she must shawl with a huge response today on her thousand the market -- sheema shah with a huge response today on her thoughts on the market. she made a splash and so much of it was backed up by the informed view on the market. lisa: the difficulty in give me on economy defied all projections of collapse over the past year. tom: this conversation is important. with us and this is important, bob sulentic. what you need to know is if you are a computer guy out of iowa and you get a job in taxes and real estate, over number of years and maybe it compares you

to the great financial crisis in 2007-2009, bob symantec has been on the watch at cbre through two crises and he joins us in our studio. thank you so much for joining bloomberg. you more than anyone i know push is a stereotype of real estate and trust. omg, we are all going to die. the stock is cratered. but you have a 12% total return. cbre is the outlier. what is your best practice removed from the volatility train wreck of rates? bob: we are very diversified. where diversified across asset type, service type, geography, and client type. we are substantial across all four dimensions. as things ebb and flow, we can

push resources into the areas that are favored as we have done over the last few years by pushing resources in multifamily, pushing resources into warehouses and outsourcing project management. tom: nick bloom leading academics on work from home out of stanford. we know all that. that part of cbre that is in the cliché of midtown manhattan, it is empty. is that going to get to you? -- is that going to continue? bob: it is a legitimate backing off of office space that will be used but there are important trends contrary. companies in general, certainly in new york, leaders wanting to get the people back in. what you get your people back into the office -- the way you get your people back into the

office issue great great environment in the office space. what you see in new york for the past several courses even though office leasing is down, we are running a had a pre-pandemic levels as it relates to high-priced office because people want to be in the best building. tom: cbre takes over the lincoln tunnel. lisa: this is the issue though you have that office space that is not retrograde, is retrofitted for the fancy experience. what habits of that? are there no man lands -- what happens to that? are there no man lands of office space no one wants? bob: but we are faced with as an industry is there going to be adequate to office buildings and has not been figured out yet what is going to happen. there is talk about can you convert to multifamily residential's. some of them you can. the ones that are able to do

that are the older, smaller buildings. that was put in the 1970's and 1980's with large floor place and a small amount of elevators relative to floor place etc. is not practical to convert them into residential's. lisa: there's a larger question. it seems asit seems as though to be rightsizing with housing prices never made resilient made with commercial rents state relative elevated. which are going to give, evaluations fall in property or rents fall? bob: you're talking multifamily? i do not think rents is going to fall a lot. even though you have interest rate issues, dimissed --

demand supply is real. he still have slight less than average historical vacancy rates and multifamily residential's. and those high interest rates are causing single-family homes to be more expensive which is pushing people into multifamily rental properties. i did not think you see a big decline in rental rates at all. tom: i can go to miami. i can go to europe and talk about what you are doing in los angeles or southern economies. let's go to the pacific rim in china. cbre has a prism on an -- on asia like no one. you buy the idea the west can continue to work with china and see stability and the property market which is the mother of all volatile markets? bob: i was in asia, in hong kong there weeks ago.

like so many things, the news, the sensationalism around political challenges. the reality is we are doing a lot of business in china and our business in china is growing and there are a lot of business being done between the u.s. and china. there is clinical risk -- there is political risk but those are the largest cities in the world and one of the things that is happening as it relates to commercial real estate is intermediation, which we've have had here in western europe and in parts of asia forever, but not so much in china is becoming more prominent there. we expect to grow our business substantially. lisa: before we let you go, i want to get your view on what the pricing impact is going to be of the regional banks with big portfolios of loans that back commercial real estate. what is the likelihood of poor sales that bring down prices in

near term? bob: there'll forced sales but here something they dismissed. if you let commercial banks assets across the united states, less than 1.5% is in office buildings loans. there is pressure now with less capital available, less debt available being backfilled by other sources of capital, private sources of capital, debt funds, etc. funds, etc. it's going to be down pressure. it is going to be trouble for commercial bank industry. lisa: what about other sectors in real estate? are there other areas more exposed in concentration other banks? bob: fundamentals are good. talk about -- to give you

industrial, 3.5% vacant. institutional quality multifamily less than 5% vacant. the total rent on the way up -- the retail rent on their way up. hotels doing nice. fundamental in things other than office are good right now. i'm sure both of you had experience trying to get into restaurants right now. tom: oh, no. i do not have a life. lisa has a life. bob: headlines are partially accurate but not holistically accurate. tom: he just shows up at any restaurant across the country. did you get the check? bob: as long as it is fast food. tom: bob sulentic, thank you so much. lisa, april gone. lisa: not much clear. we do not leave april with more clarity for may other than it

does not look as bad as a lot of people were expecting. tom: week next week which will extraordinary. apple has a mystery after what we saw this week in big tech. we will have special coverage. the team is putting together a very interesting show on that as well. usually the federal reserve quietly led by the bank of canada announcements will not be quiet. at 1 p.m. this afternoon are david westin in conversation with prime minister of canada justin trudeau on the future of the toronto maple leafs. stay with us on the radio and television. this is bloomberg. futures negative nine. ♪

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jonathan: live from new york city, good morning, good morning, your equity markets slightly softer. the countdown to the open starts now. ♪ >> everything you need to get set for the start of u.s. trading. this is bloomberg the open with jonathan ferro. ♪ jonathan: live from new york, the latest data coming up locking in one more rate hike likely with first republic looking for a solution and spea