>> welcome to bloomberg markets. i'm matt miller. let's check out the price action today. you see a drop in the s&p 500 only 0.2% as investors buy bonds. pushing the 10-year down to 3.3880. imax crude is down at $71.47

after it fell last week to $63 a barrel. let's get a closer look at what is going on in terms of the economy with katie greifeld. katie: we have two important pieces of data, ppi on the weekly claims data. we will focus on the latter. initial jobless claims -- this is a weekly data series -- was way above expectations. that was at 264,000 and the median estimate was 245,000. that is the biggest jump for initial jobless claims since october 2021. the fed has been clear that part of their fight against inflation is taking the edge off the labor market. those bars have been marching downward and that is not great news for the fed.

to see this jump is not great for the american worker, but great news for the fed. matt: maybe. we are going to focus in on this with our guest. i want to get to what diane swonk told our fed team. she spoke last week about the fed's fight against inflation. diane: there is no roadmap for where we are at. they are combating inflation. it is not 1994 where they preempted inflation and thought they could find tune the economy. i think that is about threshold for a soft landing. but i also think it is important that even though we are combating inflation, it is not the same as the 1970's and 1960's. although they want to avert the mistakes of that era. this fed has put in economic projections. enough of an increase in the jobless rate is enough to derail inflation. matt: this highlights the issue. the fed thinks that if it gets

unemployment to rise they can push us into recession and that will bring inflation down. we have initial jobless claims rising. that means people must be accepting lower wages, right? not so if you listen to danny blanchflower. i think this is fascinating because my whole life i have thought the supply and demand in the labor market determines the price that workers are willing to accept. but you say those are not correlated. danny: you're right. you are right. that is exactly true. the problem is there is no relationship since 2008 whatsoever between wage growth and the on a planet right. you are right, supply and demand does impact this thing. but since 2008 the unemployment rate itself understates how much slack there is. that explains for 2010 to 2020.

wages did not rise. what you need to do is get a good measure of supply. the story you just said. what we need to look at in the u.s. is the unemployment rate and the underemployment rate. those have not been reverted. they tell you that slack in the labor market is much bigger than measured by the unemployment rate. that is, in a sense, what is going on. the prospect of wage rises was for the birds because they were slack in the labor market. if you look at the non-employment rate, that is 3.5 percentage points below what it was in 2000. no other country in the world is that true. in the u.k., it is above. greece and spain is about the same. there is lots of slack in the labor market despite the fact the claims everyone talks about. their problem is the unemployment rate is irrelevant as a measure of labor market

slack. i spent my career working on the relationship between wages and up limit, and currently, there is not one. you are right to say there is a relationship between demand and supply. it is just the potential supply of workers is much bigger than measured by the unemployment rate and those that are out of the labor force is pushing down on wages. you are right, but do not focus only on the on the planet right. matt:matt: this brings up an important question or answers a question we have been asking. can we have recession with unemployment at 3.5%? what i hear you saying is, yes, we can. that number, much like the vix, is not telling us what it is supposed to. danny: absolutely. we expect to see that number probably rise. but what diane swonk was saying about inflation is completely right. there is no roadmap when you

have this breakdown. lies the thing broken? before 2008 all the things are fine. but the fed is now guessing and the danger is if you are a long way from full employment -- which you thought you were at and you are a ways from it -- you will see inactivity rising and you will see a rise in jobless claims, which is what we have seen. you will probably see rapidly declining inflation and that is what you saw today with producer prices. i like people to have in their heads if you think the best analogy for today was august 2008 when inflation was 5.5 percentage points, a year later in august of 2009 it was -2. the question is, what is coming? katie: what is coming. if we think back to than and then deflation coming a year or two later, do you see a similar

scenario playing out now? danny: there is a good analogy to that. today we have a decision from the bank of england which is bizarre. based upon the forecast they made -- they made the forecast today saying we were raising rates. we are going to have no growth in the british economy for three years. i was on that committee. i used to do that. our job is to get inflation to 2% in 18 months to two years. the forecast today says, actually, inflation is going to be 1% with a prospect for 30% in the forecast of deflation. the forecast they produced today says they should be cutting rates because it is below the target with a considerable prospect of deflation. there is the complete incoherence. and the incoherence in the

united states -- i was looking at cme's fed watch and the markets are pricing in nine rate cut by september 2024. the answer is the markets think like me. they think bad things are going to come and whatever the fed says about a soft landing -- the big deal is that that expected rate cut itself is counter what the fed is doing. that is giving the economy stimulus because the markets have got it right. they're pricing in rate cuts and if the fed does not do it, that will be market reaction. but the markets already are pricing in cuts and that is stimulus. katie: what is the catalyst for those rate cuts? you say september 2023 is when you start to see some of the pricing show up. danny: yep. katie: bad things have to happen for that to happen. what kind of bad things? danny: you just reported this morning -- i was listening to

you five minutes ago reporting that rise in jobless claims. i was looking at the data file from the bls. you start to see the impact being on marginal workers. we started to see that impact the less educated, and i suspect what we are going to see is more evidence of slowing in the goods sector. we have seen it already. people are not buying fridges and cars because of the cost of finance. the big thing to having your in your head is they take 18 months to feed in. we have not felt the impact yet. anybody who says, oh, the fed needs to watch the inflation rate tomorrow does not know what they are talking about. the job of a policymaker is to say we are looking at the forward mirror. our measures take 18 months to have an impact and this huge set of rate rises -- of the other

thing is the financial markets. it has probably been the equivalent of rate rises of 150 basis points. so, the other one is what is the bad news? imagine another bank comes. imagine we see bad sales. i imagine the fed is sitting on the cost of a dilemma -- cusp of a dilemma and, fingers crossed, we do not get bad data, which i think we are going to get. matt: they need to maybe stop being backwards data dependent. danny: look forward. matt: we are going to keep you with us. he mentioned he was on the monetary policy committee at the bank of england after he finished his research at cambridge. we are going to talk to you about that when we come back. we are going to talk about the bank of england raising rates. we got into it a little bit. and we talk about what is going on in the broader economy in europe. some people still consider the u.k. part of europe, at least in

a non-eu way. all of that and more next with danny blanchflower from dartmouth. this is bloomberg. ♪ the first time your sales reached 100k with godaddy was also the first time your profits left you speechless. at the counter or on the go, save 20% with the lowest transaction fees and keep more of what you make. start saving today at godaddy.com - [mo] if you're thinking about going back to school, and keep more othis is for you. ♪ - i ended up spending less money my entire time at snhu than i did in just one year at my other university.

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>> i want to be clear. we are going to respond to the evidence as it comes in. we have not given direction one way or the other and that is deliberate. we will now be shaped by the evidence. matt: this is bloomberg markets. i'm matt miller. that was the governor of the bank of england today. the central bank is the latest to hike rates again, but also signaling the possibility of a pause. let's get to katie greifeld. katie: the latest central bank to hike rates.

we got the fed last week hiking again, signaling a pause. jerome powell would not say the word but almost got there. the fed in white. the upper bound at 5.25%. then you have the bank of england in yellow, looking at 4.5%. leaving the door open to the possibility that they could keep going. matt, after you bring this chart back several years, you can see all of us started below zero. now we are looking at this dynamic. the fed at the top. whether that leadership baton is handed over to the bank of england remains to be seen. matt: back with us to talk more is danny blanchflower, professor of economics at dartmouth college. formerly a member of the boe's monetary policy committee. it is interesting. katie and i were talking with ed from isi yesterday and he said not only have you got the fed raising rates here putting

weight on financial conditions, but banks around the world are raising rates and that puts more weight on these variable lags. how do you expect this to turn out? are we going to pause at the same time? danny: probably. i mean, what is really interesting -- you are right. around the world you have seen people pretty much moving together. and on committees you have seen very much unanimity. andy and i wrote something for the imf. a column thinking about that consensus. going back to diane swonk's comment, there is no time period in the last 50 years where it is so unclear where to go and what is coming. historic data seems to tell you much of nothing. now we have every single member, a unanimous decision at the fed, but not today at the bank of england. i thought it was very telling.

people moving together but if you look at the two dissenters today, they got it right. they say we have not much clue what is coming, but in their view, they said, lags mean sizable impacts of past rate increases are still to come through. that implies the current setting of the bank rate would reduce inflation to well below the target in the medium-term. as the policy-setting is becoming restrictive around the world, this would bring forward the point at which rate increases would need to be reversed. for the first time we have actually heard my view enumerated and articulated by two members of the mpc, which are saying, watch out, folks. surprises are coming. but nobody has a clue. we have never seen anything like this. think about when you had big bank collapses. when did we see them?

1929, 2007, and today. the president when the bank collapsed was the crash of 1929 and 2008. how do you know what is coming? how do you plot forecasts? i thought it was bizarre the governor of the bank of england say, we are going to wait with the data is. that's ridiculous. how can they do anything about that? they need to be looking forward, thinking about what the impacts of these things are going to be. that was completely bizarre what he said. you are going to respond to data from tomorrow? that makes no sense. i thought it was appalling. katie: we are running against the clock but looking forward. the central banks have pretty much been moving in lockstep. maybe we see them break apart. could we enter into a situation where you have the fed on one hand cutting rates whereas the bank of england, for example, needs to be hiking or is on hold? danny: yes, but i will go with

needs to be. i do not ticket needs to be but it seems that inflation in the u.s. has come down faster. micah surprising in cuts sooner. the u.k. has a major issue in the sense it cannot deal with things as quickly as the u.s. because it has this word we cannot mention, which is brexit. right? that is a british problem. why are rates in the u.k. double brexit? that's a major issue which the bank of england cannot fix. but i think you will see the fed ahead of the game being forced by the markets into cutting. remember, if the market thinks there is going to be a cut and there is one, there is no reaction. if the fed does not do it, there is a market reaction. that is what's coming and they need to get real with the markets. if you do not, the credibility of the fed is in big trouble. matt: danny blanchflower, thank you. danny: of course.

matt: unfortunately, we have got to go. love to spend time with you and i appreciate you joining us. i'm matt miller along with katie greifeld. this is bloomberg. ♪

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matt: this is bloomberg markets. i'm matt miller. time for wall street beat. jp morgan has played a central role in responding to the bank industry's worst turmoil in a decade. we spoke to the ceo jamie dimon in paris about the current uncertainty in the sector. jamie: it is potentially catastrophic. hopefully, it will not happen. the banking crisis, i believe, will soar its way through and it will not be like 2008, 2009. hopefully it is getting near the tail end. >> but if you are janet yellen,

what would you do differently? >> i don't know. i think we need to finish the bank crisis. we have had uncertain policy on mergers, the first horizon deal. we have to assume there will be more. whatever the fdic, occ, federal reserve, whatever they need to do to make it better, they should do. be thoughtful, be forward-looking. do not be surprised constantly. some of these things we have known about for quite a while. we have handled three. signature, svb, but the regional banks, who i have been speaking to everyday, are quite strong. they are worried but the financial results are good. they are going to be ok next quarter. they are earning money. good clientele, very diversified. and they are quite strong. francine: are you asking for a comprehensive solution? if you are asking janet yellen

to get the job done, what does that look like? jimmy: not a solution. princi: why not? -- >> not a solution. >> why not? >> do we need them to look at short-sellers and banks? >> my folks would tell me that is not the problem. if you analyze stocks and short sales, it is not that big a deal. they may be wrong. some people are unscrupulous and use other means to go short. if you look at the detail, the sec has the capability to look at what people are doing, by name, in options, derivatives, short sales. if summit is doing anything wrong or people going short and making a tweet about a bank, they should go after them. they should be punished to the fullest extent of the law. we have no evidence of it, but my experience has been do not assume too much. francine: do you think things will change?

is this a catalyst? jaime: i think it will get worse for banks. francine: what you mean by worse? jaime: more regulations and rules and requirements. i hope they do it thoughtfully. we love the community banks and regional banks. we are the biggest banks to those folks. but if you overdo certain rules and relations, some of these banks tell me they have more compliant and loan officers. you're making it harder for them to do business. there are hundreds of rules in place. if you are going to change liquidity, maybe not capital. if you change capital, not liquidity. maybe you should do something with the deposit insurance. they should sit down and have a thoughtful conversation about what those things are and what we want the outcome to be. if you look at the present outcome, a lot of things are leaving banks, and they should. if that is what they want, so be it, but that should be done with forethought. not because you are putting rules and regulations in place and you do not know the consequences. matt: that was jp morgan's chairman and ceo jamie dimon.

joining us for more on those comments and the regional bank situation is bloomberg wall street reporter sonali basak. great to have you back from the conference. i have been talking about carol massar and she is so interested in the private capital solutions that we are hearing about. today, blackstone is a big story on the terminal. how are they playing into the regional bank crisis? sonali: not surprising to hear blackstone step up and say they want to play a role, be an intermediary, offloading these loans into the broader institutional markets. you have got to see it to believe it. we have seen over the last couple of months blackstone, apollo, and other investment firms circling around the regional banking system trying to find a way in and limited deals being done. you have seen that when they

tried to buy assets. now when you look at those processes it is highly scrutinized. on the one hand, jp morgan buying first republic. the idea was the least cost to the fdic fund. at the same time, there is pushback from the republican side of the boardmember's at the fdic that say, listen, these goods are not competitive. if private capital is not allowed in, we cannot get more competitive. there needs to be some mechanism for that to happen. matt: it seems like, on the one hand, the fed's monetary policy is pushing a lot more lending into the shadow banking system. on the other hand regulators are not enthusiastic about letting them in. sonali: even if you are going to own a bank -- which most do not want to do -- even to buy a bank you need a certain asset size. you need to get big quickly and there are regulations that would allow that to happen. right now, that scale is

impossible. but it is happening in other forms. we saw in the mortgage market. let's see what else takes place. matt: jamie dimon said 200,000 stress test. the last 100,000 pages were not useful. hi, i'm lauren, i lost 67 pounds in 12 months on golo. golo and the release has been phenomenal in my life.

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>> welcome to the bnn, bloomberg and bloomberg audience. i'm john hyland. the u.k. has provided ukraine with storm shadow cruise missiles to use against russian troops. no words on how many will be sent but the storm shadow has a range of 155 miles. the longest range missiles allies have given ukraine so far. the white house is keeping relations with china from getting worse. jake sullivan sat down with china's top diplomat in substantive and constructive meetings. the talks set the stage for a call between president biden and president xi jinping. china has been snubbing the request for high-level meetings for weeks. expected surge in migration at the border with mexico is setting off alarm bells. el paso, texas has declared a state of emergency as hundreds are sleeping on sidewalks.

leaders in new york city and chicago are seeing people camped out in bus terminal simply stations. the u.s. is losing the power to expel migrants using title 42, which expires tonight. 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 am john hyland and this is bloomberg. jon: i'm jon erlichman. matt: and i matt miller. we do have the s&p off about one third of 1%. 4122 right now. the yield on the 10-year is down to 3.3824.

crude is still around $72 a barrel after a dropped last week to $63. it is really holding. jon: a lot of notable movers, especially when it comes to long-term. the streaming story has gotten so much attention. disney shares under pressure to the tune of 9%. the disney plus story still plenty of losses. they have reduced but when subscriber numbers are: off, investors are wondering -- cooling off, investors are wondering. alphabet after that fresh push on ai, investors seem on board. shares are up 4.5%. on the broader economy we continue to watch the health of the regional bank stocks. we have been watching pacwest all session. bloomberg had done that

reporting on possible talks with investors that may have impacted the deposit picture. shares are down 20%. to get a sense on the health of the consumer, sotos suggesting the consumer electronics market is coming off as well when it comes to their outlook and shares are down 24%. matt: shocking drop in that stock. to lose a quarter -- i think they beat earnings estimates yesterday, but it is the outlook that is the concern. as investors digest all of these earnings reports in the economic data, u.s. treasury secretary janet yellen continues to hammer home the severity of a potential u.s. default. sec. yellen: default is unthinkable. america should never default. it would be tremendously economically and financially damaging.

jon: let's get more insight with sonal desai. we have a lot to talk about on the economic front. but when you have laced in the debt ceiling headwinds, how are you navigating through this? sonal: the debt ceiling, to me, is something which markets have not focused on so far. surprisingly enough. they are not very focused because the assumption is that even if you get what you would call technical default, you know, delay in repayments, there is still belief that the u.s. will honor its debts. that sets us up for a surprise in the event that it is more severe than previous negotiations which, frankly, have typically just served to highlight how dysfunctional the political system is rather than having significant longer-term

consequences on markets. matt: how difficult is this dislocation in fixed income markets? jamie dimon called it out today in his interview with francine lacqua. he said you have some t-bill maturities with the three handle and some with five maturing right next to each other. sonal: i think people are trying to hone in on the precise t-bills which could be caught. there will be certain funds, money market funds, or short duration funds that, if they have exposure, this could create issues for those. but if you are thinking about the broader peace of fixed income -- piece of fixed income markets, these precise maturities are unlikely in and of themselves to create massive dislocation. it is dislocation in certain maturities and the u.s. debt stock is huge. i'm not trying to say that the

debt ceiling issue is not an issue. i'm just saying the market is not overly focused on it even now, in part because it is assumed that over the course of a couple of maturities this will get sorted out. jon: looking at the market positioning right now and going back to the path ahead for the fed, for those who seem to be in the camp that we will see rate cuts at some point in the not too distant future, how do you think that will play out? sonal: in relation to the debt ceiling? i will say it is a separate issue to some extent. but we are not actually calling for a rate cuts. i tend to think there is that old market adage which as you do not fight the fed. that appears to only work if the fed is easing. however, if the fed is

tightening, the market is prepared to fight the fed. i believe the fed is right on this one. i do not agree with the market pricing or rate cuts. i think you would need a very severe downturn in the economy to justify the rate cuts the market is currently pricing, which 75 basis points by the end of this year. if you had that severe downturn, the other piece which does not work is where the risk markets are. if i look at credit spreads, they are not consistent with having that downturn. i have to question what markets are really positioning for over here. matt: even at their own sep, the fed expects -- has forecast -- 4.5% unemployment by the end of the year. we talked with danny blanchflower earlier about how meaningless the unemployment number may be as a statistic. nonetheless, in order to get there, mike mckee says we have to lose between 100,000 and

200,000 jobs a month, and that does not look like it is going to happen. what did they do? do they have to re-forecast unemployment? do they have to renew their strategy? sonal: i think the sep's get renewed every quarter. i will not call it progress but i do not see moves toward that increase and the unemployed it rate, i think it is more knowledge, or rather, more information which points to relative resilience in the u.s. labor market. i did see -- i can see you have the jobless claims over there. i would caution that just the state of massachusetts has had almost 24,000 or 23,000 jumped in jobless claims in the last couple of weeks. that has not yet been validated. this is a single data point.

it is a big jump, but i think we do need to wait for some validation from local data, state-level data, which is not yet come. matt: great to get your take. thank you for your time. sonal desai, cio at franklin templeton. by the way, friday, tomorrow, bloomberg is going to interview janet yellen from the g7 meeting in japan. that is one that you do not want to miss. i believe that will be in the extremely early hours. 3:30 a.m. new york time. maybe set your dvr or, if you are a lunatic, wake up that early. coming up, peloton recalling millions of bikes sold the last five years. this all happening again. the details, next. this is bloomberg. ♪

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jon: this is bloomberg markets. i'm jon erlichman with matt miller. time for the stock of the hour. shares of peloton under pressure after the company said it will recall nearly 2.2 million exercise bikes. the fourth time peloton has disclosed a product defect in recent years. it comes after the company said last week its current quarter map would be among the most challenging. a lot on peloton's plate right now. matt: this is a problem that we have seen before where the company has to recall some of the devices it has. it may have to play around with pricing as well after the incredible jump we had in demand during lockdown. that has obviously dropped off as more and more people can go

running and cycling outside. mark gurman covers peloton and joins us now from los angeles. thank you for spending time with us. what is your take on what this company has to do? they are still the market leader in the cycling segment, right? mark: i think peloton my want to consider building a roller coaster because that is what it has been like for them the last several quarters. things seem to have tapered down. there were many layoffs, thousands, price adjustments, a new subscription-based strategy. things seemed to be going a positive direction and in got this news last week peloton disclosed an issue with its $1000 original bike. today, they are announcing a formal recall and asking users to stop using the bikes. clearly, they are not in a good position right now. i guess the bright side is that most people are probably looking at the bike plus anyway.

these are the bikes not impacted. but there are a lot of people who clearly have this original bike. these bikes started on sale about eight or nine years ago. there is 2.2 million to 2.4 million units on the market in north america. clearly, a lot of people looking for that in-home fix. jon: we will see if there are any coaster talks between disney and peloton. in all seriousness, on the marketing front, because you report extensively on that, they were really looking to turbocharge the message. does that get complicated by a development like this? mark: certainly from a marketing and pr perspective. this does complicate things. the good news for peloton's they have been looking to push more toward their mobile app. the idea where you can use peloton with non-fitness equipment and using it through the app and subscribing through the iphone or android or tv app or tablet app.

and this idea of taking your iphone or android phone to a gym and connecting that to gym equipment and using the peloton platform, following their classes, and developing recurring revenue that weight. but still, the underlying problem is that, for the fourth time in as many years, you have another hardware defect for peloton. they had to recall the pedals on some of their bites. the treadmill situation was awful for the company. they had to recall both treadmills. the cheaper treadmill there were concerns about the screen falling off in use and hitting the user while running. and the bigger treadmill falling under and potentially dying. this is not as dire but another black spot for the company. jon: appreciate it. mark gurman covers apple and peloton for bloomberg. another stock we are watching his robinhood, which has been moving higher.

analysts see a path to profitability as they launch round-the-clock trading on weekdays. katie greifeld has been digging into the story. speaking of marketing messages, if they are looking to get that excitement bump that helped robinhood a couple of years ago, around-the-clock trading gets people's attention. katie: exactly. this company is trying to capture the magic that it saw in the days of 2021. they really want you to focus on everything they have coming down the pipe. but to go through the numbers, they did surprise on revenue. there was a little bit of bad news in terms of their monthly active users. that metric disappointing. and they are still posting a loss per share. but in terms of the new offerings -- robinhood wants you to focus on -- they plan to launch toward to launch toward you for our trading on weekdays. and this one is interesting. they applied for a futures commission license in march. they are hoping to launch that

by the end of 2023. we will see how that goes, but again, this company is trying to boost engagement. bloomberg intelligence said these leaner costs and the new offerings adds credibility to its path or planned path. matt: looks like robinhood is also investigating -- under investigation by regulators about its employees using, i guess, whatsapp or similar communication platforms. we know that wall street banks have been hit hard by these rules and regulations. tell us about the story of west coast hood. katie: i believe the language was off channel can occasions. matt: interesting. katie: good news and bad news. this in a filing saying regulators -- and they are cooperating -- are looking into the firm's compliance with record-keeping and off channel can occasions.

they also said the sec is looking into whether the brokerages following rules when it comes to reporting trades related to securities lending, share trading. robinhood, in addition to engagement, has regulatory problems. matt: i date myself. when i think of robinhood i think of the paul tudor jones -- katie: we have this conversation this morning. matt: the charity where you see never gretz and einhorn playing poker. katie: you do not think of the man in the hat stealing from the rich? matt: nottingham forest? mott first thought is of mike anova gretz just of like robinhood, but that is old people like me. the kids think about the trading platform. katie greifeld, thank you. the streaming model has been appended by the recent downturn in disney. more on the challenges for streaming and the house of mouse, next. this is bloomberg.

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matt: this is bloomberg markets. i'm matt miller with jon erlichman. disney stock sitting near a session low right now. this after posting a drop in subscribers to its mainstreaming service, disney plus. jessica reeve cohen is senior analyst for bank of america and joins us to give us her take on what is going on at the house of mouse. i guess it is the subscriber drop that is the problem for investors. but isn't streaming a loss leader? what is your take on this business? jessica: the decline was mostly from india where the average revenue per user per month is $.50 to $.60. that is not meaningful. there was a slight drop in subs

in the u.s. because they had a 38% price increase. they did not really market the service this quarter because there was not a lot of new content. actually, i think focusing on subs is not the right thing to do. we can talk about dcc also but part of the reason for the share decline is that disney is such a big company and there are so many moving pieces. you see some real secular issues in the linear tv universe. parts that did well globally but tough comps in the u.s., particularly with the 50th anniversary of walt disney world and the anniversary of that. that's tough. overall, i think -- they are going into a tougher quarter because there is a lot of marketing. there is a lot of moving pieces. matt: what can be done here?

what should new ceo, returning ceo, do about this? is bob iger in a position to make a change that investors will appreciate? jessica: there is so much going on in that regard. if you look past the current quarter, the third fiscal quarter, what the company is doing is they are setting themselves up for future growth. what we saw and what they said in the quarter, we are seeing restructuring costs. but you can see where the revenue drivers is coming from. on the revenue side, they increased their subscript in price in the u.s. 38% in early december. and they set on the call yesterday there will be another price increase here at the end of this year. let's assume it is december. what that will do is drive the revenue per sub per user per month on subscriptions up.

but for cost-conscious consumers, it will drive them to the advertising tier and the revenue is higher on the ad tier . that helps the revenue. and they are going to introduce advertising in europe and other parts of the world later this year. that opens up the addressable market because it will be a lower-priced service. you just have to put up with three or four minutes of ads. on the cost side they are doing a lot. you can see already they have gone through the second wave, there is one more coming, and the $5.5 billion in targeted costs they hope to exceed that. that is the first time they have said that. content they are taking a $1.5 billion to $1.8 billion breakdown. it sets the content-based lower.

it will be lower cost per show or per project. they are also taking out the content cost. driving revenue, cutting costs on the platforms. there is the path to profitability. jon: helpful context. thank you, jessica. senior analyst for bank of america securities on the disney story today. matt, it was interesting. they announced they would put hulu and disney plus into a single app. but before yesterday people were wondering what, given the cost focusing right now, what they sell out of that big steak they have got in hulu? is bob iger done with the wheeling and dealing as they focus on the bottom line? matt: i think it is a fascinating story and i'm hoping to see some changes in terms of the streaming, the espn plus streaming. for me as a non-cable subscriber, i do not get the big games. i just get to see division iii

junior varsity field hockey on streaming. i would like to see football and march madness. for jon erlichman, i'm matt miller. this is bloomberg. ♪ when i was his age, we had to be inside to watch live sports. but with xfinity, we get the fastest mobile service and can stream down the street

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romaine: a step in the right direction. economic data pointing to softness that may be signaling that the next signal from the fed will be unofficial pause in rate tightening. romaine bostick kicking you off to the close this thursday afternoon. a lower open for the s&p 500, dragged down by disney, microsoft, and exxon. the s&p not far off from the lows of the day. we are looking at a bit of a breakdown here. the s&p erasing all of the gains from last week. no i