>> with monetary policy were acting with a lag, we have more shoes to drop their more banks to fail. ask what i am more skeptical about is the planning inflation. >> it is far too aggressive. >> for all the central banks, from five to two, that is where the real challenge lies. >> we are looking at slowing inflation, a slowing economy into recession. >> this is bloomberg surveillance with jonathan ferro and lisa abramowicz. >> i came back to talk about this debt ceiling. it is so exciting. >> you did not come back to that. >> i came back for that. good morning. for our audience worldwide, this is bloomberg surveillance on tv and radio alongside tom keene

and lisa abramowicz, i am jonathan ferro. >> zero point 4% on the s&p 500. a meeting between the president and the house speaker. delayed. we were told it will continue speaking. that is pushback. >> that is politics. a meeting between yellen and horton in japan. may be some substance, but the debt ceiling is pretty much exhausted. what i am focused on is a problem that won't go away. mr. diamond mentioned this. the bank charts are really not good out of friday. >> the problem that won't go away and a lot of people feel the same ways about the debt ceiling conversation by will go with you. crushed yesterday. here's the quote. headlines increased customer fears and the safety of deposits. we understand deposits fell 9.5% in the subsequent days. the days after news report suggested they were in talks with investors. >> this is a conundrum underneath the regional banking crisis kerfuffle.

if you look at western alliance, they said they increase deposits. so is this a pack west problem or is this something broader. it just seems to feed into the narrative that these banks cannot catch a break. >> these technical patterns are not as ugly, but there is a blended index of bank stocks. it is not good on a friday. >> in the premarket, 471. back to that name in the program. here's what we look like in friday. welcome to the program. the equity market is positive by 0.4%. the yield is higher by three basis points. 10-year, and yesterday was very close to that. >> she spent her entire time on euro. >> 10911 on the euro. >> he's making that up. just in case you're wondering, everyone's favorite gauge of the university of michigan survey, it comes out.

i'm not interested in the headline number. i more interested in the inspected inflation rates. there is longer-term inflation expectation, and this is normalizing higher inflation is something we have to talk about. >> 100% debt on. five to 10 year inflation expectations, and this is what is anchored. you are 100% correct on this. >> a lot of people are not concerned about inflation. the fed speakers are concerned about it and we will hear from the fed president. she is not going to talk about oversight, but that is what i want to hear about. there'll be a commencement address at usc. 7:45 a.m., eastern time, we get james bullard. we have heard from others talking about the need to combat inflation. those g7 finance minister meetings continue over in japan. we are going to hear from emory, but to me, how much is the focus for these financial stability? that chart we were talking about

the regional banking index, it is the lowest since november 2020. >> amh coming up. we are looking forward to it. just to confirm against the euro, in the last hour. 10899 is the loaf the session. we are joined by chris, the co-cio of funds. great to catch up with you. people are frustrated with the debt ceiling debate and it's only getting started. can you ignore it? >> you can ignore it for the next two weeks. hopefully not three weeks. it will be in the news. something we have to pay attention to, but we don't have to act on it. one of the hardest things to do is sit on your hands. that may be a prescription. the bedrock is full of corporate demands is the riskless asset, and that is the asset that may be at risk. what do you do? it's hard to manage around that. doing more of the same, looking for companies with good balance sheets. they will wake up off the creek

-- cliff and they will be just fine. >> you are with us the other day. we didn't have time to get to this, but let's go to you. you love value and fundamental analysis, and particularly, you love a three year time frame. can you buy the banks here? >> we've never been big fans of the banks for a number of reasons. we think they are largely commodified businesses. short and long. they tend to be black boxes, and every so often they will be more so than the decade before. it leads to mechanics. i think the bigger issue with the banks is not so much getting depositors comfortable that there one is safe, but they will have to raise the money to keep the deposits. that will score these the margins and earnings. that is a harder problem to solve with treasuries where they are. >> they are punching above their weight in terms of how much they lend to the consumer and corporations in the united states. it is a reason why people up and

moving away from u.s. equities and knowing international area at how much are you following that and look more international , in particular those with china's recovery. >> that's a year to date fertile pace for ideas, and the rest the world is lagging for much of the last several years, and there are some relative bargains there, and one could argue that they are less exposed to the dynamics we have in the u.s. whether it is the debt ceiling crisis or the upcoming election. we are always looking or non-us ideas. we tend to look globally, so we are not looking for european companies. we are looking for industries we like, whether it is distilled spirits or media or industry or agriculture. >> distilled spirits. that is independent from the credit cycle. >> it is friday. >> you go to distilled spirits. i'm curious what your biggest change over the past month will be, given the turmoil and the

increasing rhetoric of the debt ceiling. especially how much you're worried about it. what are you insulated from >> we just came from the earnings season, and my view is mostly confirmed, which is the economy is slowing but not falling off a cliff area like the economic cliff or the ceiling cliff, and, we are going into a recession, but it will be manageable. companies are taking action were seen more cost action. that was a theme of the work quarter earnings calls. we are trying to protect margins. absent a significant tightening of credit which made our may not happen with the debt ceiling, that issue, we think we will be ok this year. >> in this distilled spirit, it's a company that owns the feeder red you've got a 15% dividend growth. is that why you're looking at distilled spirits? enough the cash flow that they actually have dividend growth, and all of that off of beefeater

and beefeater 24? >> something like that. they are obviously very long-lasting brands. they will last well will beyond the debt crisis and many others. there is global growth. some of it is from china, and some of it as other areas of the world, but they generally have pricing power durability and that is what we like. >> wonderful to get your view. going into the weekend, talking about distilled spirits. >> it was great there, on a friday going into saturday and brunch, you know there are mimosas that are great with champagne. attaining mimosa can be good. >> us the worst thing i've ever heard. disgusting. it will explode if you try that. next this is serious stuff or luxury, and what were talking about is durability brands and the fear. some of the years we are going to recalibrate on this weekend, including the debt ceiling. people are looking for stability of cash flow and products of stability. that is where they talk about

these brands. they just seem to interpret we make jokes but they are amazing. what was the champagne you recommend? >> moms. >> that might be an improvement. >> the proportions are important. it's a splash of tanning. >> this is a breakfast show. come on. >> that's what tang is for. they stay started. >> keep going. one federal reserve official has this to say. should inflation remain high and tight, monetary policy tightening will likely be approved it to attain a sufficiently restrictive start to monetary policy. the governor will be talking about this a little bit later. >> this is one of the biggest issues that people have been talking about. why are they cutting when it seems to be off the table. that officials are pushing back. what can they say. marcus don't care. they are pricing in more, so how do you translate the rhetoric

into market asset other than they've lost credibility in a way that really has insight. >> the observation was mike mckee one minute out of the earnings. he set up a vector that was disinflation. but bowman's college -- it is barely disinflation. it is just sort of kind of barely. >> we say it is heading in the right direction. ask kenny fold these claims into this? >> we did this yesterday. we saw the markets move. we didn't see that. >> that is my first day off of the year. >> i'm glad you had a nice day off. >> we can talk about this. >> let's do it. flush it out. >> you think we'll get into talk about it? your objectives? >> it is a fantastic atmosphere. actually rocking. access the stadium. xo's battle in great to be there. terrible score line. >> is it a true -- this is the

worst game ever. i feel free. >> seriously, is it equivalent to the derby in london. >> it is so much better. london is nowhere near how special it is. >> the history of the club and the tension in the atmosphere. >> i've been to a lot of east london stadiums and they are like libraries because the real fans price out of the game, it is paying a hundred pounds plus. >> the organization of fans in the land, where the hard-core fans sit, and what they will do, you have to be there. i didn't, for some people did. >> what are these questions? i will ask a question. >> hold on. here's a question you can answer. what is this like. what do people eat? >> i do eat. >> this doesn't surprise me. >> i won't ask this.

>> third spear and cigarette. nonstop. there are lot of cigarettes redone score line. >> i miss that. i was watching 11. >> i was watching seville. >> i was half asleep for yesterday afternoon. we have a return next week which is the best. >> you have to scored three goals. they score nobles. you score 30. >> ok. but thank you. good to make happen. put it on the amex. academy security will join us in the next hour. if you're listening, we didn't put that on the amex. >> we did. equity futures on the equity. from new york, this is bloomberg. >> gotta love friday's. keeping you up-to-date around the world with the first word. i'm lisa mateo. president biden and kevin

mccarthy postpone their meeting on the debt limit set for the day. it delayed signals that progress had been made between staffers aimed at averting a catastrophic default. mccarthy says the president will meet with him and other leaders next week. house republicans passed a border security package. it would ensure fewer thinkers -- people could claim asylum and a lot of migrants in detention facilities. there is no chance of passing in the democratic-controlled senate. the bill passage came on the same day that border restrictions ended, ensuring an increase in migrant rivals. twitter appears to be getting a new chief executive. there are multiple reports that they are hiring global partnerships. linda? reno joined the company in 2011 after two decades at 2 -- turner broadcasting. musk will become the chief technologist. the founder of the softbank

group is now personally on the hook for about five point $2 billion on side deals he set off at the company. that is after softbank's vision fund anchor. they ended with a record $32 billion loss. the world's largest technology investor was battered by losses on unlisted startups in his portfolio. global news, powered by 2700 journalists and analysts and over 120 countries. i am lisa mateo. this is bloomberg.

>> the only good outcome is one in which congress acts with global markets and american households. businesses need to see that we have congress that is committed to paying the bills. if congress fails to do that, it will in pair our credit rating. we will the fault on some application. that is something we have not done since 1789. we shouldn't start now. >> a fantastic conversation between janet yellen and the u.s. is very secretary, speaking at the g7 meeting. going into what we thought was a

meeting, later on today. between speaker mccarthy and the president of the night states, and we find out that meeting has been delayed. >> the way it is being spun is positive for talks. the theory is that negotiators are making some progress. we don't want to torpedo that with rhetoric. that is why people say that is a good thing. >> someone involved has a funeral to attend. these people are human and they have things to do. >> who is that? >> i don't who it was, but i believe in the reporting someone has a funeral to attend, but the answer is, over the weekend, what will change by tuesday? nothing. it gets you closer to the x state and all of that, but we still see it. >> there is a conclusion that this gets worse before it gets better. it needs to get worse before it gets all that framing is low but different. >> we need to get worse where? >> in the market. what do you do if you can't get

edge, and if every single time you treated this it's gotten large. >> too many americans, japan is to you, and part of it is on the west coast overlooking korea and russia. that is where anne-marie is. she is the finance minister correspondent after her most interesting interview with a secretary of treasury. 76 years old and bulletproof economic academics as well. what i really heard today, she is going to stay the course and serve out her term. is that true? >> that is true. she said this and confirm that with me today. i asked her about the tongue-in-cheek question at the end if she would consider another four years of president biden were to win because obviously, he has relaunched his next bid for the white house in 2024, and she left, but she enjoys doing the work and she will continue to see up the term. obviously, her work, whether in

washington or in japan is the debt ceiling on the sidelines. this is what her peers are very concerned with. the risks to the global economy. they are emanating from the united states. >> you know that each white house has a process of of debate and dialogue. where does secretary alan it into the dialogue of the 1600 pennsylvania avenue? >> when it comes to the debt ceiling, treasury secretary updates us on the x state he said in my conversation that as we get closer to june 1 or as early as june first as she's outlined, that will potentially see the treasury run out since january. she will update congress with a more precise timeframe, so her team will be communicating all of this towards the white house, and then, we have a little bit

of what happens if there were to be a default. the treasury secretary was at the fed in 2020 oh -- 2011 when they went through the scenarios. what the treasury is doing, and it's under the assumption, and i've read this transcript. it was under her assumption that the treasury was servicing debt first. she is not yet spoken about this with the president. it will be politically fraught if there is no deal and they need to decide to pay bondholders or pay recipients of social security. >> meanwhile, has to get worse before it gets better. people have to care more before they can resolve anything in washington dc, but at the g7 finance minister meetings, how much do they care. how much is the focus versus that in the markets, which is we've seen this movie before and it gets resolved. >> >> there is a lot of concern among other finance ministers

and we've heard from the german finance minister. we hope that washington makes a mature decision. they are on the image of their seat, waiting to see how this plays out. there is concern. when you think about the makeup of this congress, only about 33% -- and be seated analysis of this. 30% of lawmakers were here in 2011. they witness that pain in the market. not a ton -- a lot of these are fresh. kevin mccarthy has a difficult line to walk rate i think any people are viewing the negotiations stopped today. they were postponed. they see that as a progress because that means on the staff level, they're working on a number of items before they want to sit down with the principles, but next week will be incredibly busy, and for the treasury secretary, she will be meeting with bank executives. she has been speaking to business leaders, but she is not spoken to bank executives since

january and she wants to learn from them and she wants to put pressure on them to start calling other members of congress because for her, she does not speak out loud the contingency plans. she says there is no good deal unless congress listed at ceiling. >> just quickly, these ideas about the banking sector, not just with getting more excited about the ball ceiling, but the regional banking crisis. how much is the u.s. on a back relative to where it has been in the past, the g7 meetings? >> the u.s. wants to lead, especially at the g7. they want to leave when it comes to china. the g7 meeting is the prep work as well. they will also be attending with president biden in hiroshima, and one thing they want to work on is the economic coercion. there is work inked on an outbound investment rather as an executive order, but this

administration, the way they confront china, they want to do this with a multilateral approach. it is difficult to corral all the troops when you come here, they're are asking a question. when is the u.s. quinn to raise the debt ceiling and how do we know the treasuries that are the underlying bedrock of the financial system are going to be paid and secured. it does put them in a precarious place. >> wonderful conversation. fantastic job. thank you for joining us. amory there. out of the g7 meeting, over in japan, i think lisa, you are right to lead on this question. to some extent, it has undermined u.s. leadership at this level, especially when the united states sees to be -- seems to be a source of risk on several fronts. the debt ceiling debate, the regional banking crisis, and a lot of people would prefer we didn't use that word. you don't want to stew, but on two fronts, there are two right there, >> and that is why investors are being moved out of the u.s.. >> on much is this a source of

unease that they may not be as reliable. how much is this an excuse they are using at a time of fractured international relations in tension with tutor or relationships. the u.s.. >> i think each nation has a battle. you are coming out of the pandemic with the challenges. the united kingdom has been bizarre. the number of people. >> it is better as well. it france -- look at mccrone and the protests in the street. >> brutal. >> with china's calculus. this is a bizarre time, and to have a highly repeatable -- how many times as world war ii gone through this ballet. off the top my head, 14 times. >> 70. >> are you serious? i don't doubt it. >> i think when lisa says him number, she is serious bread when you say, it's not. >> pauli said that. >> i am riveted by that.

and he said no. with the stuff at the end of the annual. >> they wanted to be the dean on the report. they want to be the dean of the g7 because it is the longest term. >> you know what? can you imagine being a leader on the stage, you should be the dean and everyone laughs? >> what is going on? >> the longest-serving leader prayed i should be the dean. >> well, where's the dean right now? is he watching me? >> who is taking them white russian market is racist. >> that's why you have to ask. >> as an elite question. >> who is racist?

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>> let's keep to the we can. good morning. welcome to the program. the equity market is positive on the s&p 500. positive by 0.4%. on the wii, lower, trying to take a bite out of that on the s&p, the nasdaq yesterday, some impact with isolated trauma. it did not bleed through to the rest of the market. looking elsewhere, 10-year, looking a little bit like this in the treasury market. the two-year is in 390 on the two-year. the 10 year is 341. it is higher on two or three basis points bread no drama. really the takeaway is zahra heading in the right direction for the federal reserve claims are breaking up.

inflation moving in the right direction, and you can try conclusion that they aren't thrown out. but others, bowman is out there talking about the potential of going again. we will get to that in a moment. a break of 109 on the euro against the dollar a little bit earlier. right now, 109 12. barely above the level of that. totally unchanged. but we have broken down a little bit with the euro story. the dollar making a comeback. >> it is interesting. i've got to be honest. that is the one pocket of interest because every thing else is range. this is basically desperate >> is a mishmash. >> is been tough read let's get to this quote. we're going to weigh in on all of this. here's the quote. recently released data should read worse the bias to stay on hold with the fomc. the forward-looking indicators show that the road recession is already paid while the fed can't contemplate rate cuts. the market can anticipate deming

-- occurring later in the air. >> will be interesting to see, and you see what mike mckee mention. there are dots moving around on june 14, and the fed just doesn't go away as weak go there. >> you have the dot plot. >> i wish we could illuminate that read >> what is this -- disco? >> who knows where this will land. kelce will bear with us. a portfolio manager at j.p. morgan asset managers reaping jamie dimon yesterday as he spoke to francine lacqua. i look at the bond market, and what i would say is equities in exchange for commodities. but bonds always send a message. what is the message being sent by fixed income right now? >> i think the message being sent is there a slower growth and slower inflation ahead. we continue to look at the yield curve and the signal that is being given. it has a short rate at 5%, and

you have the 10 year at three point or percent. it is saying that things are going to slow down, so historically is a three-month build rate versus the 18 month or build rate. that is about 200 basis points inverted at this point. it is the most inverted back to the 90's. historically, when that starts to get inverted, it is 12 months to a recession. that inverted in november of 2022. that puts you at about q4. for the recession. >> you've got first rate at september. >> september. you have any idea or is it too early to make a call? >> we don't necessarily think they're going back zero lower bound, but we are positioned on long-duration which means we have not dealt that the fed will be more aggressive than what is already priced into the market. you've probably heard the expression that the fed take stairs up and an elevator down. i like to think about that like

chutes and ladders. if you've ever played that game. essentially, what we expect is when the fed cuts, they are going to cut aggressively. it is not because of the inflation story that we already see the inflation trends. the disinflationary trends fairly well. we expect to see them over the course of the year, but what has to happen for them to cut rates is to start to see cracks in the labor market. so you mentioned continuing claims. that is really -- i think it is showing an important trend. if you look at continuing claims, year-over-year, it is up 25%. that is never happening outside of a recession. that will go back all the way to the 1960's. >> is this really the question? this is what the fed has been looking for. maybe it is above, but it's low relative to history. his coming off a historically relevant base. how much is is a crack, or is

this an acceleration of the banking crisis. is this real estate or private equity? >> what were trying to do is were trying to build a ledger, and there are things on both sides of the ledger at their thing saying the expansion can continue, and i think the biggest thing is the data in the labor market. we are growing jobs. 200,000. that is well above the breakeven rate, and as a result, it is still falling, but the number of things on the other cited of the ledger that are suggesting that we should be slowing is just building and building and building now. it is really allowing us to increase our confidence that as bond managers, what we want to be doing is staying on duration, adding curves to our portfolios on opportunities for the curve may tactically flatten, and staying up in quality in terms of our credit quality bias. >> this is something we saw with the fund flows. global fund flows with seven weeks of influence.

really on market debt. equity flows were interesting. they were outflows of the u.s.. there were inflows for the rest of the world. do you agree with this assessment that is a weak spot? it is more appealing read >> i think the stories are not the same. especially on the central bank site, you have europe, and inflation is not showing any improvements. the u.k. is not showing any means in terms of inflation. they are a little bit behind in terms of the monetary policy cycle. but i would point to something more global which is the commodity market. we were looking at the gold ratio yesterday. that is actually back down to where it was two years ago. i think the commodity market is telling you that there is a bit more stress globally. those investors are saying there is much demand for all of this industrial product. >> that tells you more about growth. is that what you are seeing? >> yes. >> rate cuts price at the front

and. where does the debt ceiling fit? we talk about curves, how much of that at the front end of the curve is driven by this mess in washington? >> definitely, there is a distortion in the market as a result of the debt ceiling. you have 5 trillion or 6 trillion in assets in money market funds, they are moving around to adjust for this potential stress, this is what chair yellen is putting on june 1. in our minds, ultimately, this is another stressor at a point where the system is fragile, we are thinking about on intensity -- unintended consequences, and there is a risk that people don't understand is going on in the background. the treasury market is the background -- backbone of the financial system. it is not just that we talk about this is yields are going up or down it is collateral.

it is a safe haven across the world, and if you have a bill that is going to mature, there is a lot of question about how things are going to work, and you mentioned europe bloomberg, you are talking about the war rooms. that is what everyone is looking at now. >> sitting -- take us inside of your war room. what might that they look like? don't give us a probability that we would see that, but tell us what that they might look like red i own an at risk maturity. whatever that might be. that day comes and we go through. what happens. what does that look like? >> i think the money market funds are preparing for this, and that is why you are seeing a distortion in money markets. the investors that are needing to adjust are already making adjustments, but i think, the broader sentiment is that if we

passed the date and did not have the money we needed to continue to pay bills, it would be a fairly stressful situation for the broader markets. i think credit would be widening and equity would be falling. >> treasury rallying? >> that would be similar to extremes to 2011. >> that's right want to go. the u.s. act get indexed these to go up 12% in price to get back to where it was before all of this storm and thunder. great. how does it take time to yield up for the bond of the last two years? >> the good news is there are already some of those. >> they do that, but is it quarters or are you looking out years for price recovery? >> we looked at how bonds perform. and bonds outperform cash. so we are looking at a situation where this is the time to get

invested. this is the time to lock in yields, and benefit once the fed starts hiking. >> by duration what we believe is the last height, that is the call. >> wonderful to get your view on things. cassie from asset management. i hate to disappoint you, but this is just getting started. we are in the foothills of this. one round of conversations, and the next meeting is delayed. this is just getting going. >> you get the process parade we mentioned this briefly. not enough, we will mention it more in june, but there is a time on a given monday where they will tell the clowns by thursday or friday, your constituents aren't going to get social security. a whole dialogue change. right there. it changes prayed all the politics drift away. your consist of its aren't not getting a check deposited from social security or other institutions. a whole dialogue change. >> that is a subtext.

either not paying or making good on the faith and credit or social security tracks. which will they go to? that will be a political angle, but not the financial angle. they will make good on the full faith and credit. they will not necessarily make that. >> i have been dying to get back because i want to talk about the shock of the united kingdom positive gdp, but the answer is there are always surprises out there. do your point, there will be surprising is that ceilings spread >> i am surprised by shoots and letters print is that we called it? it was snake. it's tough for kids. >> we -- were you scared for kids. >> it's a childhood game. there are shoots and slides. >> what's great about this is i've heard for really do this. early wants to this. >> you can't slide down on a snake did it doesn't make any

sense. that's not physically --. >> it doesn't make sense. >> you know it is great about this? diamond meant parcheesi yesterday. he was talking about his annual letter and he said he was looking at global risks and our western alliance, he brought a parcheesi. ask i am scarred by those games, having play the hours upon hours during the pandemic on rainy days with the kids, trying to keep them offscreen time, and here you go. >> how does it normally go down? >> i hate this ideals. write a book on the side. >> how long would it last? waxing to go on for a long time. max never --. >> pro tip. never owned the green. in summing avenue will kill you. pro tip. >> thank you. coming up next, jp securities it your equity market is positive. 0.4%. good morning. >> keep you up-to-date with news from around the world.

first word. i am lisa mateo. president joe biden house speaker kevin mccarthy continue to hammer out deals on the debt ceiling after meeting between the two leaders and other congressional members set for today was read scheduled to next week. sources tell unburnt that the moment is a sign that staff talks are showing a sign of progress. they are trying to avoid a default on payments. finance from the rich economies are set to propose a partnership on supply chains. bloomberg has learned it will be open to other nations and will require them to have minimum standards on human standards and environmental policies. the finance ministers and central bank chiefs are meeting in japan. donald trump is appealing the verdict of a new york jury. it found him liable for sexual abuse and affirmation. they claimed that the former president raped her, and then defamed her by calling her a liar. trump lawyer says that the jury should not have been allowed to hear the so-called access hollywood tape. more bankers left in the wake of

a for sale. the latest departure involves bankers moving. among them, steve galler, the head of investor making, with signs of expanding in the u.s.. global news, powered by 2700 journalists and 120 countries. i'm lisa mateo. this is bloomberg. this is bloomberg.

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and grow. constant contact. helping the small stand tall. at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all. allspring. purposefully divergent. >> we need to finish the bank crisis. we have uncertain policy on mergers. this horizon deal. we have to assume more, so whatever you have to exceed. the federal reserve, whatever you need to do to make it better, you should do that.

you thought it would be forward-looking, but do not be surprise constantly because some of these things have been known about for quite some time. >> really nice exchange with jp morgan's chairman. together with francine lacqua over in paris france. a fantastic exchange. on the bloomberg terminal to watch in full. live from new york, welcome to the program. on tv and radio, this is bloomberg surveillance. the equity market is positive. just off session highs. equity markets are positive by 0.4% on the s&p. still higher two or three basis points on the 10 year, but earlier on, we saw the euro at 109. very brief. next we had at one away. i can confirm that. the low of the session is 108. that is unchanged. >> i want to reveal the two-year yield. then, down to 386, or three point 90 on the two-year yield,

that goes to jp morgan, moments ago. this mobile slowdown and oil coming in with copper as something worth mentioning prayed >> and jobless claims are trying to break out. historically, you can say that these lab -- levels are not a big deal, but the direction of travel and change, we put that was cpi, that has contributed to a move lower in the last 48 hours. >> jamie dimon was the most important interview of yesterday, but i will suggest that for those of you in the weekend on banks, devon ryan is the most for an interview of the day. citizens company, and west coast is very good at banking and technology. i want to take a broader view. lisa and john want to go narrow. it would be simple, but we look at the future of the world, and what i see is a struggle for scale. i don't know how smaller banks get margin efficiency. forget about the econo babble.

is this a battle for scale in the next two or three years to provide shareholder return? >> good morning. i think you are right. scale in banking has been important for the last decade. is becoming more important, and you've seen consolidation, and their ours thousands upon thousands of banks, but there are over 4000 banks today, so there needs to be more consolidation, and the recent developments first horizon, illuminated for the consolidation phase, but it's more challenging. >> absolutely, is a key point, but i think the key here is let's not forget what is driving this action. we are in a negative feedback loop their positives, uninsured deposits, and that is key that the industry figures that out because we have seen a decline in share prices driving positive movement, even when there is not anything dramatically changing

fundamentally. axis is important. it didn't come up with is diamond, but everyone of a certain vintage has tattooed to their brain etf hutton. it went down in flames because they couldn't find scale, and they missed technological investments, and one day the already just stop, and i wonder if we go from 4000 banks 3000 thanks, will that be enough to keep scale so people keep investing. >> this is something we are seeing try to be parsed out. the pnc with the banks of the world, with the smaller cohorts, jamie dimon did explain that shortselling was a problem, and they should investigate the short-sellers to some degree. do you agree? >> i think selling come whether it is shortselling or not, the industry is mired by a lot of uncertainty. banks are supposed to be boring, and a lot of investors invest in them because there is a slow and steady return, so whether it is a sellers short, the industry

has effectively been attacked, and there is a solution. as you mentioned, we need to get the uninsured deposit issue ring fence, and there is a solution to do that. potentially banning the shorts is something that could relieve near-term pressure, but there are other provisions. it would allow shortselling to be more transparent, so that is something that could be proposed here and push forward, relatively quickly. that is kind of not getting at the root of the problem eight -- problem. it is really uninsured deposits, they need to find a solution for that, and there are solutions available to congress into regulars. >> that even as we put that on the table, it doesn't seem like this is a crisis of confidence to get your money back this does seem like there has been some sort of assurance that it's backstopping, where people are looking at something bigger going on, and to this idea, there is perhaps a place where

it will shrink, and private equity will take a bigger role as they try to push to have some sort of loss sharing for the government be more involved in some of the sales area >> well, there is a complicated situation, but the loss sharing in the government, stepping in, that is a temporary solution. we need to find a solution that puts the banks on a healthy ground. they are key to the economy. it makes up over 50% of commercial loans, residential loans. 80% of the loans. so, i think having a broad and healthy banking system that is not consolidated for companies is really a goal for regulators and legislators. they care about that, but to the point, which is an uninsured deposit, of course, there is

some you'll seeking behavior, and their credit concerns, but that is a healthy concerned. that is not the key driver of the recent turmoil. it is much more the uninsured piece which is driving the stock prices down, that is the negative feedback loop. >> taking a step back, there is a theory that the banking system issues we've seen are one reason the u.s. is less attractive as an investment proposition, we are going elsewhere. do you think there is validity to that? that the banking fissures are actually weakening the u.s. international profile? >> i disagree with that. this is the u.s. system, and it's the deepest capital market in the world. companies and individuals continue to come here and put capital on our system, so i don't see that changing, near-term, this is a hiccup, and as i mentioned, there are solutions that have existed before programs were put in place to fix some of these

issues that were re-arising now. but also, we are in a slowing economy. there is a slowing economy in the u.s. and in the international realm, and financially, the backdrop generally are not the first place to allocate capital, and i think that is playing into the stress come but it is not a key thing. the key thing is around uninsured deposits. >> let me jump in a few times. is that the problem? they've got more than 70% of deposits insured. is that the problem at pack west? >> i think the answer is yes. justin that we've already seen the money move. once you are in the headlines, the negative feedback loop starts, so even though the fundamental story really isn't changing, and is not a new update from month month, these stocks have already moved and you've already seen a deposit

movement and they are already in the way it investors continue to push on those names, so what we've seen in recent failures is there is no relief. they are wiped out. so until equity holders have a way to push back or there is a bounce back in stock prices, the vulnerable names continue to get push. you need to address the root issue. we need to take some of these names out of the headlines, and we don't go to the next bank or the one after that. that is key. certain banks have already had so many headline pressures that there is a challenging moment, but we cannot go down the line, and that is addressed from some of these issues that can be addressed. >> thank you for that. thank you very much. certainly, that is the origin of these issues. the stress of the last couple of on's with this conversation. whether that shifted and morphe into something else. >> profitability among those things which doesn't get help. that is a scale issue, but it's

also an issue of rapidly rising rates and a whole bunch of assets that were priced out at a different rate with real interest margins. >> just in the last 12 hours, there was a debt ceiling touched on that, but there is a point where you look at this moonshot, and the short-term yield, and what does this do to the average bank which market removes from this. it is jumbo mortgages for watertube percent. you can overcome events. that is part of the dynamic of the last month or so. without a doubt. exciting shortselling and always becomes a bogeyman. it is such a situation. >> is such a distraction. ask what you think that trading debt is after that? hold on. >> credit. we back it up by thinking this is not the major issue. not right now. >> fairness, that is for management for some institutions. >> of you will be institutionally interesting to see. >> it never works out. it's a short seller. >> always interesting in the corner. >> that's true.

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>> with monetary policy acting with a lag, we have to assume there are more shoes to drop the more banks to fail. what i am more skeptical about is the price is far too aggressive. >> all the central banks from five to two is where the real challenge lies. >> i think we are going to be looking at slowing inflation, slowdown in the economy, and most likely a recession. >> this is berg surveillance with tom dean, jonathan ferro and lisa abramowicz. >> solution. you pay congress and t-bills.

it's that easy. >> they would love that. and then let's see if they deal with things and get paid on time. >> suddenly, you are getting a positive thing. >> only if the government pays. there is an incentive. >> i mention this in the last hour. this is critical. they will say you are in the x district of ohio. your constituents are not going to get sukkot -- social security. >> instantly. >> from new york city this morning, good morning. welcome to the program on tv and radio. this is bloomberg surveillance pray the equity market is positive on the s&p 500 by zero 4%. in the foothills of a big debate, there was meant to be a meeting between the speaker of the house and the president of the united states. that meeting has been pushed back, we are told, informed, that the staff level talks are going. there are ongoing complexities, but i think the wider part, turn into this, with the agf investment, it is just what it is. there's do agreement, they have

to wait for a catalyst, and that comes from the calendar. they have to take closer to june. >> whatever it is. towards the xa. >> might be june 1. who knows we are going to see at scenario alice's that will be pointless. let's see if this is different. >> that's what everyone says. >> how much ink will be wasted over the next couple of weeks on scenario analysis with a bunch of things they don't materialize? >> are you trying to get me not to show up work? this is what everyone is dealing with which is why you are not seeing the premium built into equities because why waste time? why waste the paycheck on the prices that you are going to resolve at the last minute #why make me part of your theater? ask this is the 16 level. the xp x. 43,000 on the dow. the nasdaq 100 is an act of god 13,000, but equity is like a rock, given this scenario of uncertainty. >> nothing is happened. basically, it is a tightly defined trading range.

3800 or 4200 on the s&p 500 prayed i will go one step further. look at the two-year yield. next the two-year yield has not done much either. >> there is been a collar. i look at the chart, and it's 380 and there's 37370. may be, that gets you outside of the zone. pricing up, but were not in the zone. >> is not a comfortable stasis. this is not a relaxing time for investors. this is what i've noticed. people are not saying they are happy with their investments. they are sitting on their hands awaiting for a catalyst, that makes me think we are in for some extreme motions, or else, we will disrupt the year. we are playing the chicken with the s&p 500. it is ridiculous, but were doing it again. on the s&p, we are positive zero point oh percent on the s&p. >> we are waiting to play chutes and ladders if there is some sort of catalyst. we get the university of michigan sentiment survey, and i'm looking at this headline. possibly, we are going to get a

longer-term projection, given the fact that the last time, they went up for five to 10 years. this is interesting to me. people are getting interested, and that is concerning. perhaps, we get a sense of how concerning that is. we get the fed speaker and fed president who will be speaking at usc. i am interested to see if they will address that oversight. with silicon valley, that's what everyone wants to know. at 745, we have philip jefferson and james fuller giving something particularly a limiting because they are in the same uncertain place we all are, and this weekend, with the g7 finance minister, we continue through tomorrow. it's a big question about what is happening with the debt ceiling, and the regional banking situation and how much pain we are seeing there is going to raise issues for global financial stability and how much janet yellen has speak to that.

>> we are around a table with a macro strategy at gary's. good morning. let's start with this. who is more complacent smart this market or politicians? >> i think the politicians in washington. they are trying to figure out whether we get a soft landing, if this works out, do we have a bunch of problems, or not? and that is the potential for a large gap in either direction. i think people have lost focus. there plenty of other things we should be focusing on other than the debt ceiling that is just a time sink at this. >> we have copper rolling over at the bloomberg commodity index. there's good mathematics, and it's not a pretty chart. you have your firm -- it has a wonderful study on going. what do you see? is it a slowdown? ask i think china is having some troubles, but beyond that, we are sticking to the across the globe companies more than they've ever done, and it's something we're hearing from people who are losing contracts and being nominated for a

chinese currency. i think that is an ongoing play. china is still struggling, but it will be our expenses well. next with military exposure, can you invest in taiwan even with the united states committing to three or four bases in the philippines. is it on investable? >> i think the firm is pretty strong. presumably, they will not invade china anytime soon. the defense of taiwan is strong it they've learned a bunch of lessons from russia. but there is an erosion of confidence in how we will deal with taiwan over time. i think you have to be careful. >> a lot of people are cautious. we are seeing a volatility combat. people getting a sense that they are waiting for ghetto. waiting for a catalyst print waiting for a sense of which direction we will it? what are you looking for to prevent that catalyst. >> i think people have latched onto the ai story, that is what they gravitate to. there is definitely some run room there. to me, the catalyst is what happens with banking.

do we see a slowdown? when we look at this report, which we've never paid much attention to, -- we do now. next but really, the important thing is is a demand-side issue. there is a lack of demand for loans. is not just deposit spread we are seeing the economy slowdown, and jobs data, a lot of that is still in bits and pieces. we see it take and unemployment claims, but how much good is that when everything is about a way off. it is playing into the economy, and i am looking for confirmation to that, or somehow, we've avoided the problem. ask what is the problem? things are slowing down by design. this is a difficulty where people are saying that is happening area and it's a good thing. we are seeing a rise in on maclean's. that is what the fed wanted. we are seeing deceleration, and guess what, we are more operable because margins are increasing. what is the negative? >> i think is already a negative read one of the things as we are

addressing the supply chain shop -- shock, and that is addressing a supply chain shop, so we are doing the wrong things, and i think you're forgetting about the lack read it takes months and months from the person he gets let go by the time they get their severance package and all these things at the economy, and i think the rate hikes from last november have not hit the economy. people are rolling over in their car loans. everyone is looking at releasing a car after the yield. they are shocked by the spread they didn't have to deal with that a year ago with that a year ago through lease wasn't coming due the lag is something we've all forgotten about in the real-time economy. >> one of our quiet charts of the week. i was thunderstruck at how they were elevated to >> it's a process. we are waiting for this event. room. it's a process. >> you can put this together. we have excessive monetary easing for so long for and extend it. of time. weibel jan the time we needed it, and the federal reserve had to plate catch up.

i hate the language, but what's frontloading or loading? there late. we are trying to work out the pace as a market participant, but is there more to come? >> there is more to come. i completely agree. they are very late which is ironic, even as we discussed rate hikes. there is a large-scale asset january 2022, so they missed a lot on that, and if i look at the thinking crisis or whatever you want to call it, it is simple. basically, during covid, they went to 18 trillion, and they took $5 trillion of assets, and is more than they normally take. at the normal time, it was the worst time to take investments. it is not surprising to see that it was conservative and dealt with well. some got aggressive, and it is no lger about uninsured deposits, but is more about the money and what are they going to do to pay people to keep deposits because no one is worried about deposits deposit defaulting. they wonder if they are getting

a fair rate. >> they could be facing years of banks being unprofitable for a long time. >> i think that is right. i think it is a wide. , and is a tale risk. i don't think tale risk, as one comes through, and it becomes available for sale, it will drag prices down, bring another one into that. another domino effect. you have to work on that. the fed has to be careful. they have to be careful about causing pressure because that will basically create a domino effect. >> will be talking about this for years. >> years. mortgages were sold at 2%. we will be talking about this for decades. people are not going to sell their houses. >> the running joke has been for a lot of people, the best asset and the mortgage. >> who is going to sell their house? who is going to sell their house unless they are worse to move further job and something out of their control happens. ask who is going to sell their

house with a 30 year mortgage on it with a rate of two to three sent? x that is been one of the ironies. homebuilders are doing well because they can build a new house because there is a weird phenomenon about mortgages. >> then there is a question about the engineering where people pass this along. i don't know. taking a step back, i wonder how much this is normal. how much you get a washed out bank, and how much is different. how much is this something that is a unique distortion. >> and have no idea what normal is anymore. what is normal russian mark >> we don't know. we've had this discussion for 10 to 15 years. >> this was a calculus exercise. this was the first or second derivative of a rate change, and peter was out front on this, that was truly historic red if you have yields in a major way, in a daze rosenberg way, this is a self adjust price up and you'll down. no one is looking for that. no one is looking for that. you talk 3% mortgages print what about 3% mortgage? >> that's one thing.

we've never experienced these asset purchases until 2008. i don't think we have any idea how those affect asset prices, so people like to convert how much cute year qt is in a basis point. we have no idea. qt goes much more directly to asset prices. we continue to look at the fed balance sheet, and the stock market. >> they are heated about this. >> just stop it now. >> you know it normal is? it's when you go to the industry and wall street. whatever date that was. >> very true. >> will have to speak to the airport leaders. >> will have to tell you about that. >> just like i have to pay. it's always the same. >> guy say thank you smirk i no idea about snakes and letters print >> i know ideas. >> makes no sense. it is history. exit goes back to the roche and all of that. next did they slide down snakes? no. >> i am 43. >> i'm 43. >> limit kid soft. >> they show up and i learned

something original time. >> they got soft. >> you should come in. >> this is what the governor was talking about. this is what he was talking about. >> chutes and ladders. >> what is happening in education these days? x chutes and ladders. stick some snakes on that. this is a conversation for another time. economy securities. thank you. equity is positive 0.4%. this is bloomberg. >> keeping up-to-date with news from around the world, this is the first word with lisa mateo. resident biden house speaker kevin mccarthy postponed their meeting on the debt limit. that was set for today. the delay signals that progress has been made and talks between staffers ended up averting a catastrophic default. the president says he will meet with other congressional leaders next week it house was public and have passed a border security package. the legislation would ensure fewer people could claim asylum and a lot more migrants in detention facilities.

it has no chance of passing the democratic-controlled senate. the bill is passing on the same day that the pandemic europe border restrictions ended. that increase migrant arrivals. twitter appears to be getting a new chief executive. there are multiple reports that elon musk is in talks to hire the head of a global advertising and partnership at nbc universal to be the first social media plan arm ceo. linda? reno joined the company in 2011 after two decades of turner broadcasting. muska said he will become the chief technologist read i am lisa mateo. this is bloomberg.

>> the only good outcome is one in which congress acts. global markets and american households and businesses need to see that we have congress committed to paying the bills. if congress fails to do that, it really impairs our credit rating. we have to default on some obligation. that is something america hasn't done since 1789. we shouldn't start now. >> we would have to default on some obligation with very little transparency on what that obligation might. janet, the u.s. secretary trip treasury at the meetings.

live from eric city, welcome to the program. good morning. the equity market is positive by 0.0%. a lift to close out the week. let's see if this sticks going into the weekend. future is positive. higher by three basis points. on the tenure, there has been a discussion. between the president of the night states in the treasury secretary about which obligation that might be. >> hierarchy? >> i don't think there are contingency plans in place. >> for this conversation last hour, i think are dead on. we don't know the process between the secretary of treasury and the president. i am unclear on the back and forth and how it works, given the other advisors the white house. with ron, it was easy. he ran things, but i'm not sure. >> they are clearly unwilling to be transparent about this. the negotiation purposes from my standpoint are not hypotheticals. it is ridiculous to me, just the idea that you don't have a

treasury secretary that has had this discussion. i can't get my head around that area that would be irresponsible as a policymaker not to have those in place, or not to have those discussions, weeks away from the ex state. >> if they are considering using the 14th amendment of the constitution to keep going, there are discussions, and they are making plans and they don't want to talk about them, and we are going to basically have to be used to that. this political theater outside, the real talks in the room. >> a brief insight with emory horton, are bloomberg washington correspondent. in japan, this is on the west coast of japan come away from tokyo, but with a focus on the g7 finance ministers meeting. i am actually fascinated by secretary of treasury, and exceptionally experienced economic flavor dynamics prayed she invented the word slack within the modern economic jargon.

we also have a president with years and years of legislative experience. that is a powerful combination. how are they -- we get back to washington, how will they move this process, given the experience? >> we know from secretary ellen, which he spoke about at the g7 is that when she gets back she will be meeting with ranking executives. what was interesting is that recently, she only spoke to business leaders in different sectors of the american economy. she hasn't spoken to banking executives about the debt ceiling's and she first put out that letter in january. she wants to learn from them about thanks. obviously, we know that jamie dimon told francine lacqua that he is set up a war room, and the president of the united states has only been there for half a week because then he is coming here in japan to meet with leaders at hiroshima for the g7 ministerial meeting, so the

negotiations on the applicable front are happening with his staff and the legislative staff of speaker mccarthy. that is really who will be able to hammer out the steel, that is why part of the recent this meeting today that was today is postponed. they think they are making some progress on the staff level before they sit down with all of the principles. but as you said, biden really likes to tout himself as an epic dealmaker and spent years in the senate. he worked with mitch mcconnell when he was vice president to get a deal done, and the treasury secretary has a great relationship. can they finesse this with pressure on bank exec gives and him being able to get a deal done? you will have to wait and see. >> in your discussion, with the treasury secretary, did you get a sense of what the contingency planning might look like if we go through the x state? >> i didn't because we pressure on this a number of times and

there is an assumption that she herself is in the room for that in 2011. that it would prioritize debt payments. that there would be a payment. when i asked her about this, she said she had not discussed the contingencies. but at this moment, it is unclear whether they will service the debt which would be quite catastrophic, or if things like social services recipients, individuals that are not on social security, individual think and a paycheck from the government, for this president, it will be very politically unattainable for him to want to pay bondholders in china and not those americans that are waiting for a social security check. >> the one of discussion additional financial stretch has been china, and quickly, there is a feeling at the market, that

perhaps, there is a mending of ties between the u.s. and china with a number of meetings. with outreaches. what is your sense about janet yellen and whether she plans to go to beijing, who she plans to meet with, and what the timeline is >> i think off the heels of this meeting, which we've learned from jake sullivan vienna, two years -- two days they sat together, it could open up a sequence as the secretary described of u.s. officials going to beijing. she says that she will go at the appropriate time, but she told the financial times that she is waiting for her counterpart to be replaced, and now it is who lee fang, and the issue is that this is been in place for weeks, and they have yet to even speak over the phone, so there has been no contact yet from the highest individual in washington, and the highest individual in beijing. but she says she plans to go, but they have yet to have a

conversation. this is part of the angst you hear from other countries did you want to make sure that the two yard -- largest economies in the world are communicating and at this moment, those conversations have been fraud. on the heels of this vienna meeting, and jake sullivan, that could open up doors for more conversations between secretary yellen and the commerce secretary bryson go as well as antony blinken who has to go, but will be postponed because of the alleges spy balloon. >> to wrap things up, mention a previous hour, but there were a bunch of leaders with proms at home. not just the president of the united states, but the french leader with a rise over the last few month in paris. he try to distract us from that from the speech. he remember that interview? with politico. a great interview. we'll talk about that another time, but what can they agree on a date g7 level. what is the position of strength? >> yes. it is very interesting because they have the finance minister

coming out and they hope he makes a mature decision, but everyone here is concerned about the debt ceiling in washington, and for them, that is one of the biggest economic risks in the financial system. at the same time, with the united states trying to shore up allies as they go after china, the number of economic ways. the latest is going to be about outbound investments. that's what they want to focus on and hiroshima. that is difficult when what is front and center and top of mind in every leader here is whether they will be able to pay the bills in a month. >> great to catch up. from this conversation. one of the hardest working people i know in the business. just fantastic. janet yellen read a little earlier. >> you can point out the romance of flying to the other side of the world for six hours or eight hours. i've done it. it's no fun. there is just brutality. >> nothing romantic about it.

absolutely brutal. >> is that your idea of romance. i think -- that is off next week. >> i'm in japan. airport, car. car, airport. i went to japan. >> squeeze some of that in between? >> we have goldman coming up next. looking forward to the conversation grew the chief economist just around the corner. equity market at 0.35% on the s&p 500. just little higher with three basis points. the 1001 is at 377. from new york, this is bloomberg.

at morgan stanley, old school hard work meets bold, new thinking, ♪ to help you see untapped possibilities and relentlessly work with you to make them real. ♪ we moved out of the city so our little sophie andcould appreciate nature.you to make them real. but then he got us t-mobile home internet. i was just trying to improve our signal, so some of the trees had to go.

i might've taken it a step too far. (chainsaw revs) (tree crashes) (chainsaw continues) (daughter screams) let's pretend for a second that you didn't let down your entire family. what would that reality look like? well i guess i would've gotten us xfinity... and we'd have a better view. do you need mulch? what, we have a ton of mulch.

>> would you like to share that now? >> i'm not alone in this. people are sick of living together so they are moving out. let's move on. we have a great guest. >> thanks for that. looks like this on the s&p positive point 3%.

again the bond market -- looking at the bond market. inflation in the right direction for some bringing yields down the last couple of days. up three on the 10 year. in the fx market, a euro a break of 1.09 against the dollar. we are negative currency. bits of euro weakness through the week. lisa: what i'm looking at in movers are user date is almost entirely artificial intelligence mentions. that is the argument that if you strip out the gainers due to artificial intelligence, there will be negative returns on s&p 500. nvidia of 96% year to date.

microsoft up almost 30%. alphabet 32%. their theory is due to the excitement around chat gpt and how much artificial intelligence would change the universe. i find this fascinating that without this u.s. stocks would be down. i find it compelling given this has been the one hot trend. jonathan: we've heard analysts say google is doing a better job of pr compared to the other players. don't you find that ridiculous that it is about who is doing a better pr job? lisa: it shows people will trade on hope. this is a part of the enthusiasm of creating something new. google realized they were not doing good enough advertising job so they came out and do a better advertising job. tom: i have the same separatism

but my brother is a fancy computer guy -- skepticism but my brother is a fancy computer guy. jonathan: mk up 96% -- meta of 96%. governor michelle bowen saying to raise interest rates further and hold them higher for longer if inflation does not goal. i team over at goldman still calling for a policy saying -- pause saying supportive, the sub down looks durable, inflation soft and somewhat further and the strength in used car prices likely temporary. tom: in the last 48 hours it is change. it shows you how humility is in order here. what is a key point you have on

humility at the moment? the things you made right and the things you made wrong in the first five months of 2023. jan: mostly things have evolved the way we thought, at least in the labor market, labor market is key and the rebalancing we are seeing is encouraging. with job openings coming down and employment rate staying low. in the tactics of fed policy, i would've thought a pause in march with me since, and we thought that was the likely outcome. i think now let's he moves he is in order as we go into -- humility is in order. we are reasonably set up in this inflation process underway.

tom: the markets are in short-term looking for -- does goldman sachs extend the x axis, the healing of the pandemic? jan: by june of 2024, our baseline has rebalancing in labor market completed at that point. inflation down from, right now we are at 4.5%, by next year i think we will be below 3%. i think we will be in different place. in terms of the funds rate, i expect we still be close to where we are now. our baseline forecast is that the funds rate stays at five for the next year or so.

risks to that on the downside. it is much more likely you gulf 25 from three but i do think -- go from t fiveo -- 523. jonathan: they say is stocks rally big over the summer, debt limit issue sorted, what is the fed do in the fall? what would that mean for you? jan: it will point to a higher funds rate and the market is below the current level in forward pricing. holding would already be have some impact but he may need additional hikes. i do not think it is particularly likely if we see ongoing adjustments, if we see

adjustment in inflation and labor market and there's going to be more tolerance for easier financial conditions and stronger growth. but there is a limit for it. it depends on what is driven by. if it is driven by a stronger economy than no. if it is driven by fed messaging that they are less willing to cut relative to the market's expectations and i would view it as tightening. lisa: people are waiting for something big to happen because they are impatient. i'm curious when is the next shoe to drop? jan: we had decline in house prices in second half of last year. we have seen some stabilization in 2023 so far. i would not expect parliament not a major shock -- borrowing

not a major shock. significant -- i would not expect a sharp drop in house prices from here. there are still some erosion happening. some of that is because like behind reality somewhat but would not expect that to be a big shock. lisa: was a banking crisis resolved and now it is a slow bleed of reality of higher yields or something percolating your keep an eye on especially if people priced out some of the rate cuts? jan: our view is the banking turmoil is going to be a drag on growth. we have said 40 basis points or so. jonathan: how did you come up with that? jan: the primary approach was to look at past changes and lending

conditions in fed senior loan officer survey making assumptions about where that goes and then feeding that into our model which also includes financial conditions then getting the extra effect over and above what you normally expect in tightening financial conditions environment. i would say so far will have seen in the surveys has been less pronounced, less of a tightening than expected. now the question is is it just delay door are we seeing a smaller -- delayed or are we seeing a smaller impact. they're still pressure in the market. the last chapter probably has not been written yet but now we are still estimating 40 basis points. lisa: the economy to be slow burn of reduced lending,

tightening credit standards or a sudden shock? jan: a sudden shock because a slow burn a lot of other factors in the economy that can offset the slow burn. policy can react to it. clearly something that happens suddenly the large size is much more difficult to manage if you're in economic policy maker. i go with the shock here. tom: there is a guy named o'neill, the red goldman sachs -- they were at goldman sachs. made his name on mortgage equity withdrawal. we brought of the new housing dilemma. we have an america of 2.6% mortgage is in and they are never ever going to sell. what is your team say about the house and economy of america? this is where you got your fame.

what is -- does your team say about people locked into mortgages? jan: the housing bubble was central in pre-2008 economy. it is not been central in the recent economy. it has been important. it has been a big boom as somewhat of a bus and mortgage equity withdrawals did pick up in 2021 to levels that were appreciable, not dramatic, and mortgage equity withdrawals coming down since the peak of the cycle has been a drag on growth. specifically on the lock in from 7% 30 year mortgage rates versus 3% the people took mortgage rates at as a part of the slow burn. it probably at the margin

reduces mobility somewhat. the research on those issues have been somewhat makes so that is why i'm putting in this cautious terms but i do think it probably is at the margin more negative for mobility until my time has passed. jonathan: are you avoiding debt ceiling conversations with clients? jan: i talk about what clients want to talk about of course. jonathan: as a top of mind? -- is it top of mind? jan: it is top of mind for a lot of people. it will remain top of mind. it probably will go up until the wire just looking at the political dynamics and it is unclear how exactly it is going to be resolved. our baseline is that is going to be a resolution very close to the exit date -- x date and

ultimately get some spending cuts or caps but we did not expect anything as large as what we had in 2011. jonathan: legacy -- chuck schumer says republicans must take default off of the table. we heard earlier overnight there's going to be a delay to the meeting between the president and speaker of the house. from new york, this is bloomberg. lisa: keeping you up-to-date with news around the world. with the first word, i am lisa mateo. secretary yellen says the only satisfactory solution is for congress to raise the debt ceiling. she spoke to bloomberg in an interview. >> if congress does not raise the debt ceiling, we face economic and financial catastrophe, one way or the

other. that is why our focus is on making sure congress does raise the debt ceiling. i feel that is something we are going to succeed in doing and we are working hard to make sure that gets done. lisa: she's in japan for meeting of g7 finance ministers. global news powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ ♪ (upbeat music) ♪ ( ♪♪ ) ( ♪♪ ) ( ♪♪ ) -awww. -awww. -awww. -nope. ( ♪♪ ) constant contact delivers the marketing tools your small business needs to keep up, excel,

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you've been a real rock star. rock star? what do you know about rock stars? billy idol? i mean where's the skin-tight leather? my shoes are leather. where's the unnecessary zippers? that thing! billy, rock star is just how doug feels when he uses workday. thanks, rory. i'll show you rock star! be a finance and hr rock star. workday. for a changing world. billy idol just stole your golf cart! >> actual default. that is potentially catastrophic you can go through million ways but everyone -- i do not think it is going to happen because it's catastrophic and the closer

you get to it you have panic. jonathan: jamie dimon on potential for a default but ultimately gets address because the market will start pricing in potential for default. that's how it works. get tension, pain and politicians get their act together. lisa: i hate this. if nobody loves it, why are we doing this? i'm not saying there's not a reasonable discussion to be had about where people spend their money. but to hold u.s. hostage as a result of this, and political extravagance -- shenanigans is frustrating. jonathan: a default position you believe you can get more supported by fighting the people on the others a -- other side. on this matter i think no one wins.

everyone looks ridiculous. tom: totally agree. what are we going to do about twitter? jonathan: getting a new ceo, i hear. tom: where are they going to be in six months? six years? have we nailed down a new ceo? lisa: there are rumors. tom: speculation. lisa: it is more than speculation. jonathan: the report -- lisa: it is the head of advertising and a pretty big gate where he's looking for legitimacy -- get where he is looking for legitimacy. tom: give us some clarity. i look at where we are with twitter and i think everyone in their own way is exhausted by the last year of twitter. what is a new ceo going to do if

there is a new ceo? >> has been reported by wall street journal that linda, the head of advertising at nbc universal in talks to take over as ceo. elon musk will stay on as chief technology officer. she is a person who sits down with advertisers and says, and advertise on our platform. ultimately elon musk still going to be running the lion share of the company. we have seen a mass exodus of advertisers since he took the reins, concerns about content. he himself has been in the room and reporting that did not always have a brilliant effect in the meetings. it is an interesting possibility if she does get the job. tom: in my feed it went from better adverts to garbage adverts and now there's almost no adverse -- ads.

jonathan: i get people fighting. lisa: i get animal videos. jonathan: what does that say about me? people fighting. lisa: i get puppies. jonathan: are you suggesting linda is going to come on board and be the head of ad sales with the glorified title? alex: it looks a little bit that way. twitter is a massively influential company but the business she runs at the moment generates an excess of $10 billion a year. twitter pre-elon had revenue of $5.5 billion a year. nbc universal ads products not just for nbc universal platform. if you are on apple news and you see an ad on their it is served by nbc you.

there are some things twitter can do in improving is add product. the quality of the ad. it is not have great advertising targeting because it is not know much about you. it is not know as much as meta does. there's going to be a piece of that she is coming in, improving the data quality, may be concerning for users, it is better when it comes to thinking about the revenue of the user, the amount of ads you can serve them. lisa: do you get a sense of what the vision is for twitter? tucker carlson and also he is going to have a live show on twitter with respect advertising then you have the head of nbc universal coming in. is there something going on

with what the future twitter will look like? alex: let's assume elon musk has a clear vision of what twitter is going to look like. there's a lot of talk about the super app which will be an equivalent to what what we chat does in asia. if you're going to get to a super app product, you need to have loads of developers building the apps for your platform. if you are developer and you're faced with a choice of putting something for android, apple's ios, or whatever facebook is coming up with in metaverse, these are products that have potentially hundreds if not billions of users going for the 280 million users on twitter less appealing. tom: you are an expert at the digital ad dynamics. dynamics of the last 90 days is outright bloody.

do you suggest a longer timeline to digital advertising challenges or is there a shorter duration? alex: there are a lot of short-term challenges right now. there come off the back of huge changes in digital advertising ecosystem. i hate that word. in terms of cracking down on privacy. it is in a little bit of flux. that is why facebook is trying to get into the metaverse so you control the space -- it can control the space. right now it is the worst point because of the macro economic conditions. there are things that can be improved going forward. it is not as though his letter to be around for a long time. jonathan: alex, thank you for the update. the current leader of twitter has been pushing a sufficient base model and is now reportedly

hiring someone who runs ad sales at nbc universal. the challenge of creating a platform for developing a platform and producing content, they go down that route, in a world where people desire -- then the outrage of having the former president of united states on cnn and the amount of outrage off of the back of that. the former president more than 70 million people voted for the last election, going to major network in the states, and of course, there are bound to be lies and false whose, that is to be expected but it is a former president with more than 70 million people but abraham and the amount of people are raised cnn is amazing to me -- but the

outrage and the amount of people mad in he and his is amazing to be. -- cnn is amazing to me. lisa: what happens when you have tucker carlson making statements that get people annoyed. how much do you get involved and become pseudo-information network chance way broad cable network? tom: they said it is not that the former president was with anyone at cnn it was the format of a town hall meeting clearly with an audience preselected for him. jonathan: it is outrageous that people that voted for the president? tom: the atlantic was adjusting to the same thing but have it be him and the reporter to get more information out of it. i do not have any opinion on it. i do think there's an elephant in the room that was underreported.

time magazine dropped their subscription program this month and to me, time magazine dropped their subscription model is the news under reported in digital space. jonathan: that was the first point. i'm wonder what it means for the blue? it is hardly every endorsement of a major product push for elon musk and twitter. tom: i've been listening to experts on this. have a fountain pen and dipping the ink. jonathan: nice. old-school. he equity market positive 0.3% on the s&p 500. live from new york city, good morning to you all. this is bloomberg. ♪

>> what has prevented monetary policy from fighting on the economy was all of the -- biting on the economy was all of the fiscal rejections.

>> mission is not accomplished on inflation that is a good reason to pause. >> investors are pricing in rate cuts and that is not something we see. the fed is not there. they do not have the ability to do that with inflation where it is. >> this is "bloomberg surveillance." tom: good morning everyone. on a friday, it is reset friday on radio and television. debt crisis after they are. comments from jamie dimon. comments from janet yellen. jonathan: only the middle of may. not even two weeks into this mess. tom: it feels like we are four weeks into may. jonathan: brahma was trying to wrap up the year. tom: it is exhausting.

i heard from jamie dimon yesterday. everything is a battle including the banking crisis. jonathan: there's always something to worry about whether it is the banking crisis or the debt ceiling debate. we have seen this one coming a mile away. it is been on the arising, ignore it. the talk start and you're like please, stop. it is just starting. tom: pack west just opened ugly. it is still there whether it is the debt ceiling or a banking crisis. that is the lead. jonathan: pack west got hammered on the back of their own indication that deposits are starting to roll over off the back of stories out of their including they were in talks with other companies, investors. it seems we have gone from one thing that to the next but have

not moved away from that issue around the banks. you start to see the stock break 460. i said it was a double-digit name a couple mondays ago. it is 460 in premarket. tom: a lot of people calling for the end of the crisis. there are people, generally in the zeitgeist saying that was harsh, it is over. baloney. it is not over. lisa: there's a lack of confidence. jan hatzius was about the slow burn. my question is if we are in a slow burn how does the market deal with it? it is used to big catalyst events. this use the following the fed -- it is used to following the fed. now we have uncertainty. we have economic data. this is unusual market for someone who has grown up under the offices of monetary policy and only that. jonathan: i love a bramo run.

sometimes it feel so rehearse. i know they are not. there is no script to confirm. let's go to the price action. yields up three basis points. 34177 on the 10 year. 1.08 on the euro. tom: two year yield. i think we have to go lower. jonathan: euro side of this. we got people lining up to say ecb will go further, the economy is robust. the risk is all right here in america, banks and debt ceiling, they see data come out of europe and you're thinking, and adjusting. -- and you are thinking, interesting.

the euro story can break down quickly. tom: if you go back to the orlando sentinel from a few years ago, you can talk about a sterling ballerina and the ballerina career that was legit in what the parents at the cameron dawson is have a fallback. her fallback has been sterling strategy. chief investment officer. tell me about the ballet we are in right now. ballet is a path that tough business -- is a tough business. cameron: ballet always ends in a wedding or a death. so i think that is what we're looking at this cycle which is are we going to have a recession or not and that is why the market has been flat because we are in the world where you know there are risk of recession of high, but we're not seen the white of the ice in hard data

and we continue to have the sideway chop. jonathan: do you operate with the assumption we will get one? cameron: this year is the operative word. it can lean more into 2024. the interesting thing is the precise moment economists and while market expecting recession to hit, cuts to hit, is when equity market has earning starting to really celebrate. that is a big schism for the market. jonathan: do you have a terrible market window -- do you have the tradable market window? cameron: you probably trade on technicals, momentum, and positioning and sentiment. those can drive the market in short-term and is in medium-term were fundamental start to matter. when we look at the 4200 level there is a risk we move higher, i say risk because people are not position for it, that is the pain trade we do not get above

42 and may not be justified by fundamentals in medium-term, but i could get us above that and make it very big pain trade. lisa: what happens if we do not get a catalytic event? did market stay in this rain? -- do the market stay in the range? cameron: reminds you of 2007 because the writing was on the walls. it was not until 2008 that we started to see unemployment take up -- tick up and the fed react to that. it is like watching paint dry which is what we have to think of this in two time frames, short-term german by momentum indicators and medium-term -- short-term driven by momentum

indicators. lisa: there's a question about this is not to thousand eight and people are talking about that. is this leading to some sort of fissure that is going to lead to massive valuation drops or is it not? is it going to be something chin to the recession of your? cameron: indexing to the extreme is not helpful. the reality is we are likely going to see some slowing in loan growth and that coincides with slowing in economic activity. it should be expected small banks and utilizing longer that 8% last cycle will see that slow in response to that. that will have real economic impact and it is not been priced in. jonathan: i agree with you because you agreed with me. people will want to benchmark to something though. what should you benchmark to? cameron: it is somewhere between

affluen -- 2018 experience where we did not have a recession and extreme of. 2008 in 2016 got close to recession. we flew close to the sun and we were able to avoid in that scenario. that is probably a good parallel to say we're the earning risk be? we have some recession but not as deep as 2008. tom: you are on the high ground on florida. as the economy boomed there it legit? is it a symbol of optimism in america we underestimate? cameron: i always consider florida beta on the economy because their discretionary spending on florida and his to have more pronounced boom bust cycles than other states. always we were in a boom there is the notion that, this time is

different, it is never going to end but i'm hearing people leave places like miami because they're getting priced out. that may be the first indicator that the sum of this high beta flying parts of the economy, are starting to feel the pinch of price pressure. tom: i look at the damage out of there and my whole thing is corporations will adapt and adjust given cards dealt and that is what i see right now. how's that going to play out this year? cameron: that's what we saw in first quarter. that is how earnings came in better than expected. we saw corporations adjust. the thing interesting to watch as if inflation does roll over and falls, that means revenue growth is going to fall. that usually leaves to margin pressure, regardless of what you do on the cost side as you lose the incremental margin dynamic. tom: honeywell with the banner,

they do and 8% revenue growth. no one had ever friended and when they come back to 6%, it is meant to be the game changer. jonathan: thank you. i should have done ballet. my poster is awful. is that where your posture comes from? lisa: it is all in the core. any discipline whether it is martial arts or to play -- martial arts or ballet. jonathan: this is magical. -- this was magical. on the debt ceiling, that conversation coming up shortly. on the s&p 500 equity futures positive .3% up a little bit.

yields higher by three basis points. 3.41. we are light on data. what they got? lisa: university of michigan survey. jonathan: i will not be running out of the building at 9:56. i will wait for that. lisa: you are full of understatements. i'm going to be watching it. jonathan: you can tell me all about it on monday. from new york, this is bloomberg. lisa: keeping you up-to-date with news around the world. with the first word, i am lisa mateo. president biden and house speaker kevin mccarthy postponed the meeting on the debt limit that was set for today. the delay signals progress had been made in talks between staffers and adverting a catastrophic u.s. default. mccarthy says the president will

meet with him and other congressional leaders next week. house republicans have passed symbolic border security package. legislation will ensure fewer people can claim asylum in you as and lock more magnitsky detention facilities. -- more migrants in detention facilities. twitter appears to be getting a new chief executive. there are multiple reports that elon musk is in talks to hire the head of global advertising and partnerships at nbc universal to be social media platforms next ceo. she joined the company in 2011 after nearly two decades at turner broadcasting. elon musk says he will become chief technology officer at twitter. mike lynch has been extradited to the u.s.. he faces criminal fraud trial for the sale of his autonomy -- he is accused of dressing up the

software company to induce hp to buy it for $11 billion. a year later hp wrote down the value of the deal by 8.8 billion. global news powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

>> if congress does not raise the debt ceiling, we face economic and financial catastrophe, one way or the other. that is why our focus is on making sure congress does raise the debt ceiling. i feel that that is something we are going to succeed in doing and we're working hard to make sure that that is done. jonathan: janet yellen is sitting down at the jeep seven -- g7 leaving the spotlight on congress to get something done. there is meant to be meeting today between the president and speaker mccarthy. that is been postponed.

tom: we talked about mid may, late may, and that. this is a late may story at the first week of june is when easter -- panic sets in. we have to wait and see to get the calendar data set. jonathan: it is fair to say that would market does not capture panic. still around -- equity futures positive .3% going into the weekend. tom: looking at the vix and it a miracle given what is the index -- angst. thank you for joining. we are focused on secretary treasury in japan. i wanted the green on the energy all of us are seeing the mexican

border -- -- imagery all of us are seeing on the mexican border. does anybody in washington care about the images we are observing? ed: absolutely. the question i always ask is this going to change anything from a legislative perspective? we could see title 42 specific piece of legislation. however, i do not think politics are there immigration reform. anytime we do have a crisis we see an uptick in conversation but right now the politics, especially in republican primaries, do not lend a conference of solution, which the economic impact because a lot of the conversation is what

does that do for labor force participation? what does that do for jolts job data will receive open jobs? conference of immigration form -- reform is a part of that conversation. tom: what is the calendar look like to the end of may? does anything get done to may 31 or is that not going to happen? ed: i'm not sure may 31 is the day. i do think near-term what we are focused on is what happens before president biden gets on air force one and goes over to asia on wednesday. there might be a freak out if there's not a deal then but i dug into the numbers, bipartisan policies center x date, that's tells me june 1 is a important deadline, but a soft deadline and that is what i hear people in d.c. telling me. we get to makes -- if we get to

june 15, might be able to get to june 30, if you get to june 30 euros 145 million -- there is one to $45 million freed up. d.c. trying to create a crisis so something can get done now but recognizing there may be more leeway on the back and so may be pull forte of negotiations because people are not sure june 1 is the date. lisa: i'm hearing we will talk about this for three months, at least, as people try to ramp up attention and not hit the mark. were talking about privatization of payments will be. janet yellen does not want to talk about hypotheticals but i'm sure they are talking about it. what are chances u.s. pay social security checks over full faith and credit of u.s. treasuries? ed: if we are in that scenario,

two things will happen. one, a market correction. this was a be forcing mechanism on d.c. -- that is going to be a forcing mechanism on d.c. and a part of the reason that been able to get this done. two, i do not know the by administration it will send out social security checks over buying -- paying interest on the debt because they can be a huge leverage on them -- for them. where in the world where seniors have not gotten payments they have been promise, that is a crisis and i do think from biden perspective, that is a part of were heating he has a strong hand, trying to make sure it this is as clean as possible. mccarthy cannot give him that deal. that is why we have a problem now. lisa: this is -- credibly frustrating -- this is an incredibly frustrating conversation.

the discussion is what can we give towards our policy makers, to the politicians to say it is a win and the other guy is terrible? how much is that the duality of what is going on in washington? ed: that is how washington works. the good thing about the debate, and i agree with you, it is one of the most frustrating parts of my job, it is so unproductive, generally, and gives people sour on washington dc -- gets people sour on washington dc. on any negotiation yet expand the pot so part of the expansion is is there an opportunity to expand economic growth? is there an ability to do energy permitting reform? we have inflation reduction act . the step one -- that is step one.

maybe instead of cutting spending or having a percentage cap maybe we can focus on what is the deficit reduction over the next 5-10 years. does the think -- that is a political think democrats come into agreement with. by denice a talk about how much deficit has been down under his residency. still much higher than any one or want to see but that is an easier part of the conversation rather than coming to a percentage cut or growth that comes with harder choices down the road. it is offramp that each side is looking for to avoid default because they are not looking for default, that is why believe there will be a solution. jonathan: lisa is losing it. you have tell me keep brahma on the rails. you're not happy about this, are you? lisa: it is frustrating.

there are real issues that should be discuss. they try to dumb down the conversation in the public and it upsets me because we have real issues and rub people to have to deal with it. it is for both sides. why can't there be an honest discussion of details and trust people will pay enough attention? tom: i'm going to go back to yesterday. want to ramp up -- you're going to wander off, right? jonathan: i'm going to stay. no, i'm joking. i was going. tom: what we heard yesterday on the bank of england was absolutely stunning. it was eloquent about a throwback. the built in austerity of dialogue in the united kingdom, to me, it is enduring.

it is not go away. he was people to spend -- he is begging people to spend less money. it is a joke. but it is completely un-american. jonathan: you said something earlier this morning that stuck with me. everyone right now has their own problems. u.k., u.s., france. take your pick. here is your promo. chris harvey of wells fargo. that conversation coming up in the next hour on bloomberg tv. taking you into the opening bell with equity futures up by 20%. from new york, this is bloomberg . ♪

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tom: good morning. you're reading over the weekend the sample. this american economy. chris harvey will join. really interesting to see what chris harvey says about repricing equities 4154. i've around that up to 4200. futures up 10. the vix under 17. lisa: some people are saying does not actually reflect some of the volatilities. but i will argue you see bond volatility coming down as well.

tom: two year yield down as well. the teacher prepared for the weekend -- will get you prepared for the weekend. you say follow the bond market. explain this to our audience. why follow the bond market instead of the stock market to try to make a judgment about what stock by next? >> good morning. follow the bond market in terms of the outlook. the bond market is much more sensitive to incoming economic data than the equity market. earnings are for the equity market. the bond market seems to sift these things out more quickly than the equity market.

there is almost embedded optimism in equities relative to the bond world and is more than inverted yield curve, it is just looking at the risk overall, looking where 10 year yields is trading relative to where we are going and what inflation expectation and with expectations embedded in that. tom: import prices, exports prices. giving me disinflation here. i did not want to oversell it but may be data coming out moments ago. david rosenberg saying he sees inflation cycle broken. he published that 20 minutes ago. that is the mood here. lisa: there seems to be consensus inflation is trending lower. but there is not consensus but whether it will trend lower and

is becoming a trench in the psyches of the american people. how much are you doing that as a concern? expect is that prices will go up in a faster pace? kathy: that is the risk. that is what the fed thinks about most. it gets embedded and inflation -- into inflation excitations. consumer start to act as if it it is the new norm. now we are looking at something, forget the percent, we are lucky. -- if we get the 3%, we are lucky. we will see what the inflation expectations are as consumers weigh in. we've not seen that. that is the good news. we are see elements of disinflation. the problem is it is not happening quickly. that increases risk of that

eventually people start to accept this and becomes the norm. lisa: want to get your view on what cameron dawson was talking about, it reminds her of 2007 and 2008, the ease of the backdrop of the fed that astray significantly a slowing economic growth -- do you think that is true? people gotten complacent? kathy: very different backdrop of course but similar in that the bond market has been flashing recession warnings for a well and i know everybody is getting tired of talking about it. but that is what happens. eventually it his earnings and then realization -- hits earnings and then realization in equity market we are headed to a downturn. it is not going to be a soft landing. there are delays.

it can be anywhere from a few months to three years before the inverting of the yield curve. tom: nationwide has such a 50 state of view and all the heritage of ohio and midwest as well, are we colored being within reason codes in new york or l.a. or miami and washington? the whole citi centric view versus what you see coast-to-coast. kathy: that is a great question. right now, really across the country you're in similar characteristics. there is a tight labor market and there is concern, whether you talk about farmers in midwest, or you talk to manufacturers in the midwest or

on the east coast. there's concern of uncertainty. understanding is when the fed raises rates, things tend to slow down or maybe things break like we saw with the banking system. there is this concern just broad base. the farmers are also asking what is the outlook? and we are seeing some things. it is many issues. it is the labor force we keep coming back to. when is that going to change? when do we see some reprieve on the wage front? tom: this is important. dennis chastises me because i do not look at commodities enough and i'm talking about the stocks across the mid west. it is not copper what do farmers of america say when i see corn moving from eight dollars a bushel to six dollars 32 send? -- $6.32? kathy: you hope as you get

disinflation and if they lose pricing power, because that is a part of it, you hope the wage pressures and that is what they are facing, not the input, not even the commodity prices. it is really there wage pressures and like of workers. -- lack of workers. tom: it is embedded into wages and petroleum. agriculture there is disinflation to corn. the answer is we are not back to where we were pre-pandemic. we have a long disinflation way to go to get food prices back to normal. lisa: people have accepted it. profits of companies are actually expanding and that was cpi coming in hotter than a ppi.

and put prices this infighting faster than the prices people are being charged in grocery stores and at the mall or wherever. tom: you are circle groups to go over tomatoes in the meadow can create are you coming cornflakes in cornflakes -- you were hysterical a couple months ago over tomatoes in a tomato can create are you counting cornflakes in cornflakes? are we seeing the pushback you would expect or is this the discussion we are working through stimulus money and it is still slashing in the system when people do not realize? kathy: it is the latter. i've been surprised by the resilience in labor market and consumer but the estimates 500 billion of excess savings related to the pandemic. it is not just the upper also

those who have that -- upper households who have that. we still have travel revenge spending that would take place throughout the summer. let's assess things and see where the consumer is and how they feel. they do not like higher prices. the labor market starts to continue to crack they will have less ability and less willingness to accommodate higher prices and i think that is the key. what happens with the labor market? lisa: i want to wrap up with around fed speak entities to move markets considerably and now a kind of doesn't anymore because we do not know and each view is a view based on certain data that could change. are you cleaning less and less from the rhetoric -- -- less and less from the rhetoric of the federal reserve? kathy: i think your point is

well taken. the markets have turned a deaf ear and that is why we continue to have the disconnect between forecasts. the bond market still looking for rate cuts relative the second half of the year where the federal reserve forecasts is hawkish. they are saying we are not sure we are quite done tightening. we do think they are. you think they can pause but the inflation numbers the esa little bit but they're not coming down sharply -- these little bit they're not coming down sharply. tom: thank you. nice overview. somebody mentioned, plan to gdp -- atlanta gdp nowhere near recession number. apple, how much is a $3 trillion

apple, $191 per share -- these 20 stocks, maybe 40 stocks, they keep performing and up you go. you go up $20. that's 11%. lisa: this year has been interesting. it has been difficult but at the same time the gains a certain stocks really mask some of the turmoil under the hood. that is interesting. the leadership of these names whether it is artificial intelligence, there's a question around whether it can continue and everything else can depart. how long can that divergence continue before there's larger pain or is this the model of 2023? tom: that is a set of worries that is out there. this goes back to early morning, i was very conscience -- barely

conscious then the basic idea is it is exhausting doing this every week. i think i was exhausted last week. and the year before. this is been a little calmer. lisa: it have been a lot of potential risks, potential catalysts. tom: coming up as a special treat, he is private with the hong kong banking corporation. if you care about gold, this is the world's authority. james steel next. lisa: keeping you up-to-date with news around the world. with the first word, i am lisa mateo. joe biden and kevin mccarthy continued to hammer deals on the debt ceiling after meeting between the two leaders and other conventional member set for today was rescheduled until next week. the postponement is a sign that

staff talks are showing progress. lawmakers are trying to avoid a default on payments. treasury secretary janet yellen the only satisfactory solution is for congress to raise the debt ceiling. she spoke to bloomberg in an exclusive interview. >> if congress does not raise the debt ceiling, we face economic and financial catastrophe, one where the other. that is why our focus is on making sure congress does raise the debt ceiling. i feel that that is something we are going to succeed at doing and were working hard to make sure that that gets done. lisa: yellen is in japan for a meeting of g7 finance ministers. donald trump appealing a verdict that found him liable for sexual abuse and defamation. trumpet lawyer says the jury

should not have been allowed to hear the so-called access hollywood tape. the founder of softbank group is now personally on the hook for about $5.2 billion. on does he up at the company. it is after the company's vision funded of inter-fiscal year with a record $32 billion euro loss. global news powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

if you wake up thinking about the market and want to make the right moves fast... get decision tech. for insights on when to buy and sell. and proactive alerts on market events. that's decision tech. only from fidelity. >> i think if gold can establish itself before 2000 for the first time in history they'll be the first victory for commodity bulls since that post-covid run-up. if you look at gold versus pretty much all fixed income

whether it is long-duration, short duration, high-yield credit, high-quality credit, gold has outperformed the last five years. gold has been in a stealthy bull market. tom: really underscoring their focus on gold right now. we have underplayed it here but it is easy to miss. we need to start focusing on the lift in gold. it is been under talk about on the show. we're going to have to start focusing on it about the year. lisa: you will -- even though we do not bring it up, lots of guests are. potentially a catalysts is what james steel was saying with respect to potential upside in gold. he wrote gold is holding about 2000 u.s. dollars and give the impression i be likely to press and challenged record highs.

the debt ceiling issue and possibility of standoff in washington continuing to the point of a u.s. default may be winning focus from the frailties of u.s. regional banking sector is the eyes of gold investors. the shift in potential crises from banks to debt crisis. tom: that might be the short crises but the underlying on gold and james steel is authoritative on this with his work at the economists and only the high ground in research before a long 10 year -- tenure at hsbc. i want to go to the big picture right now. the demand of gold. who is moving it up? is it a secret? why is gold going up? james: there is no secret. although gold market can be opaque and i think it is

sometimes not as visible as other markets. tom: he knows every gnome of zürich. james: we have had absolutely standout central-bank demand all of last year. while above -- almost double the previous record. that's continued to the first quarter of this year and we've had very strong retail and coin demand, which is lasted up until early this year. that is beginning to tear off a little but i would describe the 15 month rally we have seen as a combination of physical demand in berkeley sector and standout central-bank -- coin sector and standout central-bank. the market has rallied in the face of liquidation from the exchange traded funds.

we have a sit down -- went down several millions this last year and it is unusual because it shows the institution sector did not trust the gold rally. i suspect that is because they look beyond rising inflation to the anticipation response from central banks and thought rates are going up, gold will go down but retail market did not make a connection -- that connection. tom: you're looking at the fundamentals of gold. if get through the triple top, what does james steel scope and scale of where demand will take gold? are you going 2600? and early 80's bridging shift of gold moving higher? james: you really touched it as

far analysis on where gold can go. near term situation looks quite bullish between the combination of geopolitical stress, regional bank issue which was away and comes back again. gives gold another boost their we draw back. and the debt ceiling impasse. all of that can take us up in near-term, no doubt, possibly to the point and beyond the record high of 2075 but as you go on your take into perspective what fiscal market is going to do which is somewhat 50% of all the demand in the world located in india and china. a 10 gram bar which is the favorite bar in india is over 60,000 rupees. that is very high. that is very expensive. god's purchase -- gold's

purchase not necessarily by the individuals. dressing imports in india for the liberal data contract -- from the available data contract. i suspect it will contract in china. if that physical gold which normally would have gone to india and china, it has to have a home. so the investment side has to keep buying. tom: that is a bramo household. lisa: i think it is more like goldplated tenant -- tint. how much of the demand on the market side removed from the physical side is sort of people fleeing crypto assess that were once the replacement -- asset that were once the replacement for commodities that no longer are? james: gold in -- the gold has

had a resurgence in popularity because it consistently shows itself to be a good safe haven. it consists only shows itself to be a portfolio diversifier. other things come up and crypto may be a good thing to buy and i would not say a or negative about it, but it is not a portfolio diversifier, and it is not a safe haven. deshawn is -- it has shown from his volatility that is not. we have never saw movement in market share towards crypto. he seems to be treated separately and not impinge too much on gold. lisa: you talk about china and india being huge drivers of the demand. is discussion about pricing commodities not in dollars? james: in general, for many commodities or transactions that

been discussions here and there. that may touch on the dollar in general which may be element in central-bank buying. were not in the camp of the dollarization -- de dollarization but that is not to say every single bank in the world wants to keep the same percentage of dollars they have now. a very good way if you do not want to commit to another currency, very good way for central-bank to get little bit out the dollar, but i commit to euro or the yen -- but cannot commit to the euro or the yen is to by billions. tom: i got to ask you. give me the gold silver linkage right now. the silver have any value here relative to gold? james: yes, it does. we're positive on the

supermarket. your approach -- the silver market. you get a lot of recycling. there is great deal then go back into the pharmacist and goes out as a bar. the difference -- the beauty of silver is that half of it is for industrial demand. just those areas -- -- a demand for this year is sluggish but we do think silver demand initially will perform over twice the rate of global industrial production growth and that is because it is being used on all the new things. tom: do you have visibility on what china is doing with the goldberg? you mentioned it is opaque. we have a knowledge what china is doing in the buying and selling of gold? james: we do know what the imports are and the demand has been exceptional. the data is good.

they have a predilection towards buying gold. there's a cultural affinity and i suspect the barrier will be priced. tom: some the most when you buy -- what is the market when you buy gold at tiffany's? ace opened the new store -- they just opened the new store. james: any jewelry in the west is a high markup that you're paying for the artistry the overhead. this is a difference between jewelry in asia, the emerging world, where the markup is lower which is why egg is translated -- which is why eight gets translated. jonathan: it is too long. thank you for joining us. can we survive this week? lisa: i do not know. jonathan: will be here next week. join us on the radio and television as well.

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jonathan: let's get you to the weekend, your equity market is just about positive and the countdown to the open starts right now. ♪ >> everything you need to get set for the start of u.s. trading. this is bloomberg, the open with jonathan ferro. ♪ jonathan: live from new york, coming up, mccarthy biden meeting delayed and janet yellen dressings that limit as one fed governor keeps the door open for more hikes. we begin with the big issue