>> this market, i think is trying to figure out do we get some sort of soft landing? >> we are seeing some elements of an equation. the problem is it is not happening very quickly. >> there is some precedent for these cycles taking quite some time. >> our expectation is that when the fed does start to cut, they will start cutting aggressively. jonathan: let's get your week started. good morning. for our audience worldwide, this is bloomberg surveillance

alongside tom keene and lisa abramowicz,, i'm jonathan ferro. talks will resume on the debt ceiling tomorrow between mr. mccarthy alongside resident biden. some soothing words over the weekend from brainerd over the economy saying this. "the staff is seriously engaged." tom: the key word here is staff. these are the people doing the tough negotiations. excuse my gasping over the debt ceiling. lisa: [laughter] tom: the answer is it will get done. it is a normal process to get there. i predict they will kick the can down the road. jonathan: we hope we are making some progress. secretary ellen spoke to the team in japan at bloomberg.

we could get -- janet yellen spoke to the team in japan that bloomberg. lisa: the tax receipts were not as fruitful as people expected. it creates a bit of an ambiguity. the negotiations are continuing to make progress. they have until friday and then everyone is on vacation forever. tom: do they do that in england? jonathan: they do a little bit of that. tom: this was 150 years ago. there is a huge american tradition of traveling. that is where the schedule came from. jonathan: and they stuck with it. they can fly now but it is still

vacation forever. a wonderful start to the week. lisa: you do not want to continue this? hold on. we heard from her and it was politically constructive. jonathan: we did not hear much from her when she was federal reserve either. you have both gone quiet, but you know where i am going with this. he didn't really talk much. tom: we want to hear more from dr. brainerd because of her economic chops. people whether they agree or disagree, it is like miss congeniality? she is miss cumulative. jonathan: she is in a really

important position. lisa: she said talks are actually quite constructive, and that goes against this feeling that president biden isn't going to negotiate unless everything is off the table. jonathan: positive 0.3% on the s&p and the bond market yields a little bit higher. lisa: it was a market mover because of the five to 10 year expectations surging to the highest going back to 2012. are we seeing inflation becoming on more -- becoming unmoored? do we see something roll over here in a more meaningful way? last month we got a surprise to the upside, but we are seeing

economic data come in slower than expectations. home depot as well as target and walmart report tomorrow. the new york fed will release its first quarter household that and credit report. -- household debt and credit report. michael mckee will have a conversation with rafael bostic. they will talk about the state of play. jonathan: you do not sound jealous at all. good morning. we will sit down with stuart kaiser out of citi about an hour from now. the nasdaq is up 8%, the russell is down 11%. he called it a very odd pattern. can you square that circle?

>> it is a continuation of what we have had year to date, a concentrated rotation into growth relative to what the market is starting to perceive as a p great environment. right now we are just talking about the debt ceiling. i'm not sure you actually want to talk about it but it is important. i'm interested in how the stock market is reacting to that debate versus the cdl's and the bills. tom: we started the show clumsy because it is a really comes a time. if i take a three moving average long study, that is averages have come in to a shocking point of 2/10 of a percent, 0.0024

differential on those rates. what do our viewers do when they see a convergence of this level? sebastien: we are in for some volatility. you look at the cds, which you have talked about on the show, it shows the default risk for the u.s., according to the market is higher than brazil's, mexico's, greece's. it is twice what it was back in 2011. . no one wants to hold the t-bill. lisa: are you saying that stocks need to selloff in order to represent the risk you see represented everywhere else in the market? sebastien: i think the market could selloff. the interesting part of this is that it could be a tactical

buying opportunity. the next 12 months in 2011 the market was up 29% so i think short-term technically it could be, trade. longer-term, i think this debate hurts fiscal spending. you pull back on fiscal spending, you issue more bonds, that places upward pressure. lisa: the problem with this argument, and i think of this is why we are all frustrated is because that is what everyone says. everyone is going to hang on tight until we get there. where is the conviction in that risk-taking preposition at a time wednesday were kaiser is talking about the most painful volatility downdraft you have seen going back to the 1980's? sebastien: in our asset allocation profile --

portfolios, we are positioned for pullbacks in markets. we take a 12 month horizon. i think of this situation like the four horsemen. you have the yield curve, which is here, you have plummeting pmi's, then you have credit tightening, the discussion on this lewis, that may be then new -- the sluice. then there is unemployment. you're still not seeing it in the data. you put it all together, the price earnings ratio -- i am an asset allocator. right now we are leaning toward the bond investor. jonathan: what you see on the horizon is ever bonds, bad for stocks.

sebastien: in our asset allocation portfolios we. have syntactical levers we can pull. , we are pulling back on equities relative to bonds and putting it in cash. the yields on the short end of the curve are more interesting. we are underweight stocks. when you went through the market returns here today to mention that small caps were not doing as well as large-caps for example there are opportunities where they are pricing in a high lending scenario. think quality small caps, if they are managed by a skilled, active manager. jonathan, your question is what does it mean? we are underweight stocks, not by a lot. we are adding risk into the portfolio through contrarian

positions here. jonathan: contrarian would be -- are you going to get to any of that at all ? sebastien: that is all about selection. on the small caps side we like, quality small caps. jonathan: this was fantastic. sebastian page there. when you dig into it, selectively taking some risk there. lisa: i am ceiling this feeling right now. what i am hearing is that people are going for the bigger regional banks they're parsing through all of this. it just shows that people want to take risks. jonathan: i think what you are suggesting with the debt ceiling in mind is that this needs to

get worse before it gets better, and if it gets worse, that is the solution for it to get better. that is how you end up in this game of chicken with the s&p 500. tom: in the 14 stores this morning, the regional banks once again cannot get a bid. it is not drama but pac west cannot get a bid this morning. jonathan: the s&p 500 is down something like 0.3%, clearly shaking off the drama elsewhere. if you are waking up this morning, good morning and welcome to the program. this is bloomberg surveillance. futures are positive 0.29%. >> in turkey there could be a runoff in an election that is testing president erdogan's two

decades in power. primary results show erdogan with a lead of almost 2 million votes. a runoff would put him up against his opponent who has the largest backing of opposition parties. there is a big challenge to the royalist backed establishment in thailand. the move forward party wants to change a law that restricts criticism of thailand's powerful monarchy. resident biden and senator mccarthy met again to try and overcome -- if the borrowing limit is not raised, the u.s. could default on its debt. mccarthy has said that any change to the limit is contingent on a deal.

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lisa a.: congress is about to come back. tom: nick bloom is doing the math on work from home. look at president biden, i guess he is doing work from home in delaware. d.c. suite of -- the c-suite officers are right behind him. what we will be right now, and i am really on monday. what are retail sales, tomorrow? we can do that with julie norman.

there is a laundry list of things to talk about. i think we will get to the debt ceiling. professor norman, i want to talk about how all of a sudden the idiosyncratic is not idiosyncratic. what we will rationalize this morning is the idiosyncratic monday. argentina, total chaos, turkey, on election, thailand, an election. how does the idiosyncratic not become idiosyncratic? >> this is more common than we think. all the time we see changes happening around the world that have ripple effects. this week many in the u.s. and nato are watching turkeys elections closely.

turkey, being a key member in nato and a shift from erdogan's power could change how that relationship looks in terms of turkey's, ukraine -- in terms of turkey's relationship with russia and ukraine. tom: is that where we are heading in this election, a study of autocracy and democracy in america? it is removed until it is not. >> biden has used that language a lot of using this democracy versus autocracy. we have seen this playing out for quite a while. it is often a mix of both. thailand is somewhere where we have seen different waves of protests and uprising. we saw a pro-democracy vote this week. turkey is a good example of a

place where we have seen authoritarianism creep in further into what was and still is a democratic country. lisa a.: how is this debate heading into the g7 meetings next weekend? julie: the g7 will be in japan this year, which is notable i think as most eyes are looking towards the pacific, again towards china. we may hear more pointed language around china in particular, at least some more pointed language around china's economic coercion and trying to get a better sense of synergy across the g7 members. usually the segment -- the summits are light touch. china and russia are continuing to be big questions, and the

synergy of the g7 and other close partners will be key. lisa a.: there is some discussion about the president not going to the g7, if we cannot get some progress on the debate which, is going on in washington dc. what is the potential implication of that? julie: it is possible biden would not go or would go virtually. it is my understanding that he is still planning to go. usually, biden does well in these multilateral settings, especially getting the sense of cooperation across allies. this is a point he usually likes to be present in the front lines four. everyone is clear about the reality of what is going on in washington. my senses that there will be meetings early on in the week. there could be business -- if

negotiations -- lisa a.: we talk about how there is complacency in stock markets, and others are saying the same, that no one will blink here in the markets because we have seen this story before. is this seem different to you -- does this seem different to you? lisa m.: -- julie: we have this "they have always figure this out in the past," sense, but i the same time our politics are very different now than they were in 2011 the last time we saw this kind of face-off. even if you have a strong negotiation and breakthroughs between biden, mccarthy, and the other senators, can they get their caucuses to go along with it. leverage in leadership looks

different than it 10 -- than it did 10 years ago. jonathan: it is wonderful to get your perspective. things are different this time to a certain extent, but the outcome at the moment that most people forecast remains the same. tom: on the set of issues we have, that is entirely true and that is why we get into this odd, odd monday we are in. i go to the convergence of the equity market, which is the absolute range bound. we do not know which way we will cut, waiting for things to turn out like we perceive they will turn out. jonathan: what julie was alluding to hear was mccarthy and the difficulty he may have getting any agreement through the house.

whatever they agree between themselves, the president, him and other leaders in congress, that may be difficult. lisa a.: there are two conversations going on in any room. what practically may be done, and then how they can come up with political wins for their constituents to prove that they were not taken advantage of. greater discussion is headline not get egg on my face? kevin mccarthy is trying to keep that unity within the house. jonathan: who wins out of all of this? lisa a.: nobody. tom: i hope we win out of it some sort of commission. the way we win is a commission out of it that is mandated from the beginning to get something done. i think i am dreaming. lisa a.: to me a win would be if people realized they wanted to

be more functional, fewer talking points, and they wanted to understand what fiscal responsibility means, what you want to fund, what you do not want to fund, sort of a more technocratic approach. jonathan: both of you send so hopeful. [laughter] you are both dreaming. that was really special. lindsay and steve shortly. retail sales tomorrow, we get some earnings through the week then on -- tons of fed speak in the mix too. from new york, this is bloomberg. ♪

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jonathan: welcome to the program in your week started with equity futures just about positive on the s&p 500. some comforting works over the weekend on the debt ceiling. they're moving forward. look your equity market positive. 0.25% on the nasdaq 100. yields are higher across the curve by one basis point. 3.9978 and the two-year you yield.

jp morgan making headlines over the weekend, reaffirming their stance and to saying this. "the activity upswing at the beginning of the year is unlikely to transition in the second half. we believe the time has come to close the trade on the overweight eurozone." tom: i go back to nominal gdp. i do not see the nominal gdp. if you get some form of disinflation, may be a substantial amount of disinflation, nominal gdp comes down. that makes everything harder to do. is europe able to do that with a war going on as well? i would not be so optimistic. lisa a.: the interesting thing is the actual data is coming in

anecdotally, potentially with a bearish tilt going forward, and yet the european commission came out overnight and talking about how -- at what point do you start seeing the tea leaves? jonathan: i thought we already had the slews of europe. i always wait for the european commission to come out with their forecast and then go the other way. lisa a.: [laughter] jonathan: bloomberg is sitting down with a number of people this week. lindsay piegza saying this, "the committee has indicated a

willingness to move to the sidelines in june and still may do so, however, the latest price data does not make the case for the fed." tom: she joins us now, chief economist at stifel. how close are we to recession? >> the fed has done a very good job of continuing to support the economy while raising rates and trying to tame inflation. this delicate balance has allowed the consumer to stay afloat, which pushes out our recession call to the end of the year. we do expect a downturn, but with the resilience of the consumer, year to gdp could surprise to the upside, leaving the first half of the year more robust than expected offsetting, even if we do some

downturn in the second half of the year. tom: how much of america is advantaged by that, and how much of america is really struggling right now? i got all sorts of studies from bloomberg and others that say there are a lot of people out there struggling. how narrow is this prosperity? lindsey: i think it is narrow. when we look at how the consumer is spending, a lot of the factors supporting this level of expenditures are temporary factors. consumers are still relying on state and local stimulus. they are turning to credit card debt to supplement their spending. the consumer is on fragile footing, but they are proving resilient temporarily and because of that resilience,

businesses who were overly optimistic in the first quarter have to reverse course and increase production in q2, significantly contributing to topline growth, or if they don't and we see a growing disconnect between demand and supply, that will slow the level of disinflation we have seen in this economy so far. this puts pressure on the fed to keep raising rates. lisa a.: why is it bad to see slower disinflation if that disinflation gets us back to that 2% level? lindsey: it is not but it is predicated on that -- does it get us back to that 2% level? the momentum is minimal, well under what the fed had expected at this point in the cycle. if the fed stops or moves to the sideline and allows expectations to pick up, like we saw in the last survey. that could reverse some of this

improvement. the pace of disinflation is not as important as the market buying into the fed's resolved to continue along the pathway so that leads us back to our 2% target. lisa a.: i was struck in -- stricken by the price reports, and how much of the price people are passing on to consumers. they are increasing their margin profits. consumers are not pushing back and pricing power is so extreme for some companies can keep jacking prices up even well beyond what their production costss are. lindsey: costs are still going up, but businesses are passing on that and more to consumers. consumers are proving resilient. they are able to tap into some,

stored wealth allowing businesses to pass on that cost increase. consumers are increasingly accepting of that level of inflation, but it will all come down to the consumers' ability to make decisions in the marketplace. tom: so translate that into retail sales tomorrow, to get right down to what we will see you tomorrow in retail sales. lindsey: when we look at this on a monthly basis, consumer spending is volatile. consumers are shifting the goods and services in their basket, something they do when they are concerned about their financial footing. we expect that maintain -- volatility to be maintained going forward. looking at this on a year-over-year basis, we have

seen a significant loss of momentum from double digit growth in the aftermath of the pandemic, now to a very minimal but welcomed 2% level. tom: what is your run rate on real gdp and nominal gdp summer into autumn? are you part of the 2% statistic, may be 5% nominal gdp? lindsey: if we see a rebuilding of inventory, businesses stepping up their production, it is realistic to ca 2 handle -- see a 2 handle in q2. ew could see -- we could see sub 1%. jonathan: i feel like we have been saying that for 12 months. tom: at least a year. to be fair, it is easy to

second-guess people that it is not that it is a wrong call. it is getting the x axis right. jonathan: that is not always the case. there will be a recession at some point. lisa a.: [laughter] tom: i give deutsche bank immense credit for this. they said there is a recession. jonathan: the bank of america card data points to relatively benign slowdown. have we have -- do we have this window where the economy remains resilient, and somewhere out there there is a slow down? i remember people sitting here saying that by the end of, last september the slow down would be so obvious the fed will have to pause. here we are. lisa a.: we don't understand what is driving this inflation.

people underestimated how much the stimulus was still sloshing around the system, how much consumers could keep spending, and they cleared out their credit decks so they could keep spending. when do they stop spending? tom: i would do the technology overlay on credit. do we really know what credit card dynamics is? i adore the bank of america data, but do we understand how people are borrowing now because of all of these fintech-y things out there? jonathan: we all have faith in a slow down. it is not just economists that have that faith now. this came from governor jefferson going into the weekend, a presumed future fisa chair. this core inflation is taking place at a slower pace than

expected, but it is still likely ahead of us. they are starting to get comfy with this idea that it is still on the horizon. lisa a.: granular data shows a slowing. it is happening really slowly. if it happens really slowly and companies are going to jack prices up, will we have people use to inflation? are people readjusting to this being the new normal? that is a huge problem for the federal reserve. that is a risk and spoken. -- an unspoken risk. tom: i am looking at the tv screen. 4.154 -- round that up, that is 4.200! phil caray, he founded pioneer

company. phil caray said nominal gdp and the inflation overlay it brings are bright lights, which make everyone look good, everyone feel good. the nominal gdp is coming down, but what is it coming down to? lisa a.: does it feel good? tom: it feels good. jonathan: based on 'bramo's face, i don't think she thinks it feels good. lisa a.: i'm just saying! jonathan: you know when you are no longer at the fed, and you say what you think, the same is true for united airlines. tom: can he get into the united club?

i know scott!~ let me in! jonathan: everyone has got access now. you just need a credit card, you spend a lot of money on it, and you are in. on new york -- in new york, this is bloomberg. lisa m.: keeping you up-to-date with news from around the world, i'm lisa mateo. the fate of turkeys president hangs in the balance as he looks ahead to a runoff election in two weeks. early results show ardo on a lead of 2 million vote -- show erdogan with a lead of 2 million votes, which is not enough to avoid a runoff. valletta mayor zelenskyy meets with prime minister rishi sunak --president valletta mayor

zelenskyy meets with prime minister rishi sunak today. the european commission has significantly raised its outlook for european inflation. it forecasts price growth of 2.8% in 2024. economic growth forecasts were also increased. i'm lisa mateo and this is bloomberg. ♪

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that inflation we are still seeing core inflation to a high level. i believe that across 2023 and 2024 the ecb can take the steps needed to get inflation back down to a level where it will not be the challenge that it is today. jonathan: that was paschal donohoe you speaking earlier to maria. we will look at retail sales tomorrow and target warmer earnings later on in the week as well. looking at equity futures now, there is no drama here. hearing all of the right things over the weekend from lael brainard. the staff are engaged, referring to the staff level talks around the debt ceiling. we will get to the higher level talks tomorrow. those talks resume in 24 hours.

tom: it is staff level. will they be fancy people sitting on a fancy couch in the oval office? i'm not sure. jonathan: that is precisely what we get tomorrow. lisa a.: the staff has not been sleeping and not going on vacation. they are not leaving washington dc. they will be working around the clock. they were all missing mother's day as they worked around-the-clock, which is what you have until you have this grand meeting of fancy people in the oval office. jonathan: we are all excited, tom. tom: i am not. it is going to happen, they will work it out, they will do it like they do in brussels. joining us now from brussels, maria tadeo here on an odd monday. there are 8, 9, 10 stories.

how confused is brussels, particularly with the overlay of a her thick battle in ukraine? maria: there are two big stories today. we talked about the inflation problem. we have -- if you talk to officials today, they will tell you they are focused on turkey and ukraine. over the weekend you had president zelenskyy on a major diplomatic push. he was in italy, germany, yesterday he was in france, and today he is in the u.k.. a a lot of the focus here has to do with the counteroffensive. preparation for the nato meeting in july that will be incredibly important. tom: what is the significance, and i will suggest was buried over the weekend in the news, but nevertheless germany acted

on funding ukraine. reef us on the importance of that event. maria: that is an excellent point. this was the biggest package germany has provided for ukraine to date. it is 2.7 billion euros. the language coming out of olaf scholz was completely different. a lot of the blame between the tense relationship between russia and germany has fallen on the social democrats. olaf scholz came out in ukrainian and said "glory to ukraine." there are more weapons coming into this country, but also the symbolic nature of it. it would show that germany is now willing to spend big with a shift in policy. with it comes a relationship

with ukraine and russia. in the words of president zelenskyy, " germany is a good friend of ukraine." lisa a.: volodymyr zelenskyy is heading over to the ok now. there has been a shift over the past few days. we have heard reports of the ukraine shooting down a fighter jet that belonged to russia. we have heard of them reclaiming territories occupied by russia. does it feel like there is a tipping point going on in what has otherwise been sheer drudgery? maria: the people i speak to, what they say is we need to be careful. the ukrainians say one thing, and the russians point to a different piece of information. when you look at this counteroffensive, everyone is

watching for this. a lot of ideas of whether ukraine can be successful will rely on this counteroffensive. on italian tv, president zelenskyy repeated "th is not the timei to talk with vladimir putins. there is nothing to talk with vladimir putin about. to get to peace we need to have a successful counteroffensive." jonathan: in brussels at the moment, can you tell us how they are responding to the election that took place over the weekend, and the potential runoff we are set to see? maria: this one is one that they watch very closely, because this is at times a partner to the eu, but there have been tensions particularly with some members of the eu. you know tensions flareup between the greeks and turks at times. you talk about the war, the

green deal that erdogan was able to broker. the weapons that turkey bought from russia. they are instrumental when it comes to migration. ursula von der leyen said this is a crucial election. we closely keep an eye on it and everything is still open according to the president of the european commission. jonathan: toughest test in more than two decades, according to many people who know this area of the world better than we do. tom: can you imagine a u.s. president interviewing -- i have spent a fair amount of time in istanbul, and this is not the same. i don't think the west, a lot of people understand it is completely different than it was

in 2005. lisa a.: the implications for the region are significant. if you have a leader in turkey that is less authoritarian, and willing to bring turkey into the fold of the european union, opening up the idea of nato having a more cohesive -- that would be a game changer. a lot of people are looking at that as a potential key point giving the fact that the economy has been doing so well. jonathan: i think the one thing we are all waiting for is whether you get the return of monetary policy orthodoxy. things have been unorthodox over in turkey. i know you focused on this one headline we got out of argentina this weekend. they are set to raise interest rates 97% today. tom: i will give you the exact number.

i have 400,000 charts on the bloomberg. the most emotional chart is argentina. the black market reaches out approaching 500 pesos. it is beyond ugly. it this -- it is sustained lisa a.: ugly. lisa a.:inflation -- it is sustained ugly. lisa a.: inflation, 109%. monetary policy does not work at a certain point. you cannot fight 109% inflation by hiking interest rates. people are not using the currency anymore. jonathan: the black -- tom: thank you patrick gillespie and buenos aires.

one bar chart showed here is how much christina gore gave a has given argentina, and here is how much she has given everyone else. jonathan: we usually laugh off the i word but what happens in argentina is often a do syncretic. tom: i agree, culturally as well going back to the 20th century. i have been told i am an amateur at this big time, and i have been told it is cultural. lisa a.: at what point do you get fiscal discipline, if no one believes you and will elect you anyway? i remember that. it was the era where no one could default, and it was free money for forever. jonathan: i think it was i will hold it now, but ultimately i will get rid of it to someone else for a better price. lisa a.: the short-term is more

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encouraging. >> we are not seeing the whites of the eyes of it in our data. >> we struggled to get 2% inflation. if we get to 3%, we are lucky. >> this is bloomberg

surveillance. jonathan: live from new york city, good morning. this is bloomberg surveillance on tv and radio. i am jonathan ferro. your equity market is positive. retail sales tomorrow, from target and walmart. friday, we hear from chairman powell and ben bernanke this week. tom: that's an important conversation. what i would suggest is the last hour it was the clumsy us to our we've had in eight months. we will straighten it out right now. we have a guest coming up to talk about how narrow the markets are. that's the oddity. jonathan: the s&p 500 over the last three months up 1%. the nasdaq is up 8%. if you go deeper than that, the regional banks got hammered. they were down by more than 6%.

the s&p 500 held up for the well. lisa: i can't tell you how excited i am to talk to him. it has been one of the most painful periods of time for traders going back to 1980. this highlights the angst we keep feeling this people talk about arrange. tom: ac milan plays tomorrow. do you watch? jonathan: be nice to our next guest. he brought us gifts. you're going to be wearing the t-shirt. tom: it doesn't fit. jonathan: ok. ok. a young man it comes out of the youth team. he's the future of italian football. he goes on loan a couple of

times. ac milan get a hold of him. he's really positioned as a deep line playmaker. they play on this beautiful diamond and dominate european football. he goes on to win the world cup with italy. he writes that he doesn't feel stress at all. he woke up in the morning and played the playstation. he went out and won the world cup. tom: this is going down in flames. we've got to get to the price section. on the s&p 500, up by 0.4%. the bond market, keep it together. yields are up a couple of basis points. lisa: the manufacturing survey, there is some data coming out.

throughout the rest of the week, the specific names be reporting. i'm curious to see if we see any rolling over. 11:00, we have the new york fed releasing the household debt and credit report. the key here is credit card receivables. how much are they increasing as people fuel their expenditures with that. this is something they have a lot of room to do. how much can they keep doing it. we hear from the atlanta fed president. he is going to be speaking with michael mckee with -- where they are having their conference. they will talk about the road ahead. jonathan: an official welcome to the program. thank you for the murch. let's start with your note to came out yesterday. what do all of those different

performance figures tell you? what is the overarching story? >> people are conservatively efficient -- positioned. it is low risk stocks that are driving the market higher. if they are going to be in equity markets, they need to have a reason. this get you out of a five percent cash shield into a that is holly follow. tom: i noticed three moving averages have converge to 0.3%. you call it home on the painful range. what is the history to identify which way you go to get out of the painful range? >> it's a great question. it does feel like we are bracketed in. when you get up to that 4200 range, people are not comfortable at that level,

especially when they are clipping a percent coupon. mutual funds are very low data. expectations are so low. it is hard to surprise people to the downside. i think to the upside, people follow the fed mentality. to the downside it, the debt ceiling is more tactical. the u.s. growth data it would need to follow apart -- fall apart. lisa: i want to sit on this range. you talk about how if you look at what measure, it's the most painful range going back to 1980. can you talk about the incentive for anyone to just sit in cash? >> one of the big challenges, we

did a quick survey of our investors. two thirds said they wouldn't put money into equity markets unless they had more potential upside. you really need to offer them something. that's why we read into this valuation. a lot of people aren't comfortable with that type of upside level. we are bouncing into the ceiling and the floor. it has narrowed these technicals. that creates an uncomfortable moment. lisa: if there is more stability, will it give the catalysts the ability to find direction that has more conviction behind it? >> definitely. that's been a big contributor this year. upon volatility in the economic data itself, that has started to narrow. it is made the market more investable. it's hard to surprise people. it's hard to come out with

something surprising. that's what got us from 3800 to 4200. tom: the same as stewart kaiser, goldman sachs, the idea that earnings of surprise people. everyone had a gloom framework, it didn't happen. jonathan: you talked about the long time horizon, does one inform the other? does it mean slower growth in the future? >> only if it disrupts financial markets. if this was something persistent that impacted government spending, it would increase your recession risks. if this is more than a choppy market scenario, there won't be a huge impact. did we really disrupt this or

not? that's why people are on edge, the fed doesn't control it. if that tightens meaningfully, it is outside the fed control. tom: and our listeners, how should they own shares of apple computer? how do you comfortably own something that elevated? >> i think apple and the big 5-10 stocks are giving people angst for that reason. i think it's because you love the product and they probably have negative debt on balance sheets. if you're in the stocks, it is something you're comfortable owning. here today, we have seen inflow in three sectors. i think you would argue they have strong investment the maddox behind them. people are comfortable owning despite the risk.

in the near term, you're comfortable based on the quality. tom: the zeitgeist shows everyone is scared stiff. you know the metrics better than me. how do you adapt to that? >> that is why cash positions are high. that's why mutual fund data is low. that has raised the floor of the market a little bit. there is not much left to sell. this is the big question. how do you tempt people out of high-yield bond markets? i think the answer there is you need to have a single stock story. you create a huge amount of spending. you need the fed to stop and get this follow the fed it rally. that is not something we endorse. it is something people are teed up for. jonathan: we need to find out if

the fed has over tightens or under tightened. >> everybody saying this is great news, the market will do some of the tightening. we disagree with that. evie thought the fed needed to do 10 units of tightening and they are going to do eight, they don't control that too. that could be zero or six. that adds more uncertainty to the growth outlook that you are allowing the market to get help from the market. what that has done his help the rate aspect. it is added more uncertainty to the growth aspect. jonathan: morgan stanley said a similar thing. it gets so much harder when you outsource it to the credit channel in the way had has been done. -- it has been done. this is been great. tom: i think i can speak for lisa as well. we wake up every morning and every day i learn something. i had no idea who carlo was.

this guy, a long time ago for 33 billion italian lira. that is $17 million. jonathan: we let him go. we should never have done it. it was a miserable time. tom: what is he doing now? jonathan: he's retired. he was coaching. it didn't go so well. there was some spots that they could stuck with it. we should get him on the show. he played in new york. we will get him on the program. there is a great painting of him down in soho on one of the walls. this was great.

we have the debt ceiling joining us shortly. from new york, this is bloomberg. ♪ >> keeping you up-to-date with the first word. president biden and the house speaker meet again this week to break the impasse over raising the debt ceiling. a number of leaders will also take part in the meeting. if the borrowing limit isn't raise, the u.s. could default on its debt. mccarthy has said any changes contingent on a budget deal. there could be a runoff in their election that tested his two decades in power. preliminary results show him with a lead of more than 2 million votes. that's not enough to avoid a second round of voting. a runoff would have the backing of the broadest grouping of opposition parties. a big victory in thailand for pro-democracy parties.

that sets up the biggest challenge to the royal establishment since the military seized power a decade ago. they want to change a lot of research criticism of the monarchy. a big transaction in oil pipelines. they will buy magellan midstream partners in a cash and stock deal. it would create when the largest oil pipeline operations in the u.s. the price represents a 22% premium. global news 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg.

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i would characterize the engagement as serious, as constructive.

>> may be the most important week for mr. pruden since february of a year ago. he is fighting his military. he is fighting the mercenaries. it's happening in a battle that feels like the battle of the bulge in world war ii. >> it is quite a story. this weekend, zelenskyy got

assurances of military aid from western year. i think the big story is this horrible letty fighting that is gone on for months. he is leading to some advances by the ukrainian forces. that struck me over the weekend of film of russian soldiers fleeing it, it was like 1980 when they fled europe. that's a really dramatic story. tom: bring it back to domestic politics here. if there is a theme, is that an election issue? does that drift away to 2024? >> it's a long way away. i'm could inflame things. one of the things he inflame don was his lack of support for ukraine. that will run into significant

resistance among most republicans. lisa: this could be the most important story out there if russian troops are abandoning ship. has there been a shift in this war where ukraine is making headway that is underappreciated? >> it's hard to say. the first casualty of war is a truth. i do sense that a dramatic drop in morale, not just in the mercenaries, from the russian troops in general. lisa: we will be watching this really closely. the shift over in turkey, we have been talking about the debt ceiling limit. i know people don't want to talk about it because it's not a new angle. what do you make of the timeline we have for president biden before he heads off to the g7. we are shifting forward the timeframe based on a lack of tax

receipts. >> there is a risk of a fake cap, getting too optimistic. everybody is saying they had a good weekend. there is agreement on certain things like a cap on spending. that's encouraging to see. these are complicated issues that could take weeks to resolve. there won't be a deal on tuesday. maybe they are getting closer. after biden comes back, a good take a few weeks to iron out the details. i think they have to have an extension. tom: what does all of this mean for the pentagon? >> i think they are going to get an increase. out of fair going to get 10% in the next budget.

one of the reasons is biden's desire to spend more money on ukraine. tom: it's everybody's desire to spend it. there is a narrow part of the republican party that wants to be isolationist. we've dealt with this for our entire lives. it never gets any traction. it is through the pentagon budget. >> you've got a lot of republicans, not just lindsey graham. i think the center holds on this. jonathan: can you forecast what the economy might look like? do you have any best case? >> think you're going to see a

cap on spending. there are several of the things on the table now, including food stamps or federal benefits. tom: this is year two. everybody's got a theory and it drifts away. now we are 14 months into this. the theories are drifting away and it's -- jonathan: i heard it story in the journal. the biden administration is looking at an alternative to turbotax.

the story goes on to say democrats have been pushing for the internal revenue service to offer free online tax filing. they charge them for free public service. didn't we talk about this three weeks ago? lisa: yes. jonathan: shouldn't the irs be enough? if you want to have deductions, you should do the hard work to get those elections. basically you could have a template. if they give you the wrong numbers, what are they going to do? audit themselves? tom: there is a half that is very documented.

it's comfortable for this idea. there is another half led by people with less identifiable income and expenses. it is represented a by republicans. they don't want to change it. jonathan: some companies have an interest in not changing it. tom: how far back do you keep your returns? i am shredding this weekend. lisa: i have it all online. tom: i have no idea what's in it. i don't even know what's in there. ♪

i need it cool at night. you trying to ice me out of the bed? baby, only on game nights. you know you are retired right? am i? ya! save 50% on the sleep number limited edition smart bed. jonathan: i will give you the plus, free home delivery when you add an adjustable base. only at sleep number.

topline stuff on the equity market. retail sales tomorrow, target the day after. you get walmart on thursday. the nasdaq is positive. regional banks were hammered last week, down by 6%. the s&p 500 is just about negative. the bond market, you mentioned the two-year year. yields are up at basis -- four

point basis point. tom: over at barron's, he's calling it merger monday that's where we are. guess what? i've got $39 billion. lisa: that's right. you can see those shares are just not really doing that much. gaining 0.8 percent. i want to go back to the wall street journal story talking about how the irs could create its own tax service. not a lot of details. it would eviscerate the models of the tax pray -- preparation companies. i think of h&r block and intuit. how could this make it easier?

i think this is a fascinating case. would they take the liability a bad preparation on their books? you were talking about the new crest tie up, i have to think scale matters. much is this going to be seen on an ongoing basis as it makes more sense. jonathan: i'm surprised we are seeing it here. this is all about not just scale, but getting exposed. that's what new crest offers. lisa: it's a $19.2 billion deal. it is the australian rival happening. this is going to be an interesting deal. it's the largest producer in the world. tom: i think the size and scale,

these two transactions, it's the same with small business on 3rd avenue. it's all the same. jonathan: final word on the tax story. this is why people get so frustrated with washington. this is not the first time you seen it. these things often don't happen. i think that is a great shame. you can have something that is going to benefit a big part of society every year. it's not going to happen because you've got companies that don't want it to happen to make sure it doesn't. lisa: i will reserve judgment. that is what you expect they will do. they provide other services.

why can't we just do that? tom: it should be much much easier. as you mentioned, it's a little bit easier in the u.k. we need to recalibrate in the middle of may. we do that with our global head of fixed income. thank you so much for recalibrating with us this morning. how much cash should you have right now? are you in love with cash? >> when you look at the bond market, cash is our biggest competitor. when you look at 5% deposits, that is tough compared to what we can get in the bond market. we would argue there is a compelling argument to be invested in the bond market. looking at what's ahead of us in terms of the banking malaise, there is more cash than we have been. tom: the length of maturity is

much shorter than what retail does. his retail making a big mistake now? those are the old habits of another time? >> i think retail is doing -- acting very rationally. these have been at 7%. they remain quite low. they are putting it in cds and short-term interest-bearing money market funds. that's a 5% yield or so. they are forgetting the reinvestment risk. it's going to be important that over the next couple of years, rates may not stay here for a long time. you're going to want to lock in longer assets. lisa: he was talking about the painful trading range that has

paired a toxic combination of volatility. are you seeing the same kind of training ranges and certain fixed income instruments? is it more consistent, getting less volatile than it has been over the past 12 months? >> we have seen a wide trading range with more volatility at the front end of the curve. we also see more volatility in a corporate credit where that is getting much larger than it was last year. that may be the most important story of the year so far. it didn't matter if you were in treasuries or municipal bonds. what we are seeing this year is companies with better balance sheets are performing better. if you see what's going on with the banks, there performing more poorly. they are trying to be able to capture that.

that is the mission of the year. lisa: there is a debate, high yield spreads are too tight. they should be much either. there should be greater deterioration going forward. some people made same claim. it doesn't affect the angst you are seeing. the you think credit is the smart area? that is the area that the tea leafs,. it is optimistic. >> i think that's not the correct read. overall, there are opportunities in credit. if i look at the end exit 145 basis points, that is cheaper than the long-term average. when leverage on balance sheets are lower than before covid, i think spreads could go a little bit wider. it's important to know that's a much higher quality asset class. we have a lot of those higher

quality investment grade companies that are in the high yield markets. a lot of that his god smaller because the issuers have gone to the private credit market. i think it is priced to slightly rich. lisa: people are overplaying the idea of router credit tightening? you don't see the stress and some of the riskier companies. if you don't see stress with other relative valuations? >> i think the stress is there. you have to find it. it exists in private credit. it definitely exists in the commercial real estate market. we see that impact the regional banks. stress is there. it's not in the same pattern we

may have seen in previous cycles. tom: howard marks over the weekend with eft, talking about the private markets and that. he is worried about some of the opaqueness there. from where you set, do you have a clear view of what private credit is doing? >> we don't have the visibility we have. we can get you a couple more percentage points of yield. you don't have to market to market. when the high-yield bond market was yielding 3.5% and you could get six and private credit, that was almost double. it was attractive. today, most of the private credit market is employee rate.

it's just above 5%. you're looking at double-digit borrowing costs. that is becoming harder for the companies to bear. it pushes default rates higher. tom: when do we see that? can you give us an idea when we see private credit begin to work out that changeable yield? >> i think it is starting to happen. the way we can see it is in the loan market. the faults are starting to rise. they were at a very low level last year. they are moving higher. when we see those defaults come through, the recovery rates are a lot lower than they were in previous cycles. that is a leading indicator of the private market. jonathan: thanks for that.

how many times have we heard people say credit spreads should be wider? you can get behind the reasons. lisa: this is a changed market from 20 years ago because of the private credit market, because of established companies that were downgraded. they have a big footprint. this speaks to the opaqueness of this market, this lack of reliable indicators. high-yield bonds are not screaming recession. tom: it's opaque. i think it's a huge deal. it reminds me of 1987. we had no clue what these algorithms were. nobody had a clue. jonathan: he is worth listening

to. tom: i think it's in her wheelhouse. it is something we don't talk about enough. lisa: he said there were plenty of opportunities. you are hearing about weakness in a credit and then you hear that coming out and saying it's a golden era. tom: good morning. would you just by the boston red sox? jonathan: they are not good. tom: again. jonathan: there is always something to do. we've got a trade this year. they just walk you how to open the account. is that the future of at goldman? lisa: i will make a bet with you that that's not the case. in all honesty, howard marks is

always investing. jonathan: you are there to make trades. that's the whole point. we are looking forward to it. ♪ >> keeping you up-to-date with the first word. the political fate of the turkish president hangs in the balance as he is heading for a runoff election. erdogan has a lead of more than 2 million votes, none of to avoid a second round. that would put them against the opposition leader. he has been in power for two decades. the ukrainian president meets with the british premise are. they will provide ukraine with air defense missiles and long-range attack drones.

to linsky met with leaders from germany and france. ford plans to lay off more than 1300 workers in china due to plunging sales. ford's market share in china has fallen by half since 2016. consumers are buying electric vehicles from tesla. ford says it's because are not competitive. global news 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight. >> you have huge demand.

it's equal to where we were in 2019. we have 20% fewer seats

available. with demand being so strong and exceeding supply, airlines are pushing affairs. we will continue to do so until there is pushback. jonathan: there has been very little pushback to it. from new york city, morning to you. your equity markets are positive. a list of bond yields as well by a couple of basis points. the big when is chairman power on friday. we have retail sales coming up tomorrow morning. tom: i think that is really speaking to it. there was something about the buoyancy to the consumer. that is what she sees in non-recessionary america. jonathan: they say that over at bank of america. it is still pretty robust. tom: one measurement we use is

united airlines is running at 130% capacity. they put you on a bus in boston. it is so successful that they don't have enough gates at newark. they have planes out. jonathan: i get upset when i land in europe and you have to take the bus. tom: with us on set as the former united airlines ceo. good morning, sir. >> with that lead in? tom: we had jamie dimon on the other day. you lived in real time, a medical issue and many people

said to handle it better than anybody. for ceos, what was the lesson you learned after horrific cardiac event. >> i learned i'd only been on the job for 37 days. it just confirmed that the organization were ready for guidance that would lead us back to where we are today. tom: the airlines have recovered. they got a massive bailout in the middle of the pandemic. and they paid back to the people that massive bailout? >> if i could take contention with the word bailout. the industry -- will issue the

airline to keep it going. we did get loans they are being repaid over six years. you're not allowed to do repurchases. we are still working through it. jonathan: much of that mess was unforeseen it. there been some pushback about whether you should've received any government loans whatsoever. are we in the position where shareholders get to learn the upside? they get the upside and the government does at the same way? >> we negotiated and having everyone is going to come out ok at the end of this. i think there will be anybody unfairly damaged.

it was not free. we had some really good conversations about what it would look like five years later. i would say no. lisa: the airline industry looks different now than it did for the pandemic. we were just talking about how the front of the cabin is first-class. there are three seats in the back you can get for some kind of high press -- price. is this the future flying? >> it is not. there are multiple platforms. united, we tried to put a lot in the back. there is plenty of entertainment. we have different arrangements. as we talk real estate, it's

very expensive. i tried to demystify some of those things. we really aren't in the business of trying to make you uncomfortable, late. lisa: definitely, you can sense that. there is this feeling there is no better example of wealth inequality than flying. if you pay enough, you can go first and get these extra things. you have to walk past them to sit in your little seat. those are so much more profitable now. the most profitable ever, the seats in the front of the cab rather than the back. >> i don't think we are most profitable. before the pandemic was the most profitable time and was a nice array of products.

through increased climate, people got where they needed to go. that combination was a good level of supply. that was creating the profits. the field is always a ball. equities will always be affected by that. tom: i want you to address something really emotional. i want you to talk about chairman and chief executive officer. he handles a number of duties. what is the experience of the efficacy of the chairman ceo being one person. >> i think it depends on the company and the industry.

i have seen at work both ways just fine. i don't know there is -- we tend to lean one way or the other. having been separate from my perspective, i think the separation makes sense. the things we face as public companies are significant. it's good to have the division of authority. jonathan: you know where i'm going. that day the passenger was dragged off the plane it, how you responded at the time. what were the lessons learned and for anyone who might find themselves in a similar position. >> it was a point in our tenure. the biggest lesson, it's never too late to do the right thing. our initial response actually

involved in any a what you saw. my response created the issue. it blew up. we were one of the first global brands to have a social media issue. we tried to find someone else. going on tv a couple of days later and taking it personally. jonathan: we can say this was the right thing, when did you know we got this wrong? >> in the middle of the night before i went on national tv, i highlight my upbringing and my heritage and the things that influenced us. in the middle of the night, i looked upstairs for some guidance. i knew i wasn't going to try to blame the carrier. tom: you've got newark.

you are boxed out of jfk. is this the future of united states airlines? everybody is going to be fighting for a shortage of gates? >> there are methods and procedures that can be implemented if we are willing to do that. that would mollify the issues. this is not someplace we own. it is one of the most difficult places to operate. the slightest oversight -- tom: can we get more flights to italy? >> we can go on. tom: that is one race.

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>> i think the rate hikes from last november haven't hit the economy. >> what will have to happen for them to actually cut rates will

be for them to see cracks in the labor market. >> the labor market is key. >> we know the risk of recession is high, but we are not seeing the whites of the eyes of it in the hard data. >> we struggled to get 2% inflation. if we get to 3%, we will be lucky. tom: good morning. lisa abramowicz, jonathan ferro, tom keene on radio and on television. all sorts of news flow. jon, we have to go to michael mckee's favorite week of all time. there are 537 fed speakers this week. bostic alone speaks 2 times. jonathan: let me go through the list for you. bostic, logan, bullard, bostic. tom: that does not include brainard over at the white house! jonathan: by the end of the week

we may have a decent picture of where policy is going? tom: no. that would be the answer. they are in the color band we have been talking about all morning. i see it with a two-year midrange yield, just moments ago .o42%. jonathan: chairman powell, who will we get? will we get a governor jefferson, which is all long and variable lags and maybe we are done here? tom: it will be interesting to see. they will meet, paul and bernanke in honor of john williams dying young. you go to where we are with lombok and williams and then go on to blanchard of a reduced r

starred. will we get back down to a lower rate, a lower yield regime? all of these fuzzy concepts though -- jonathan: all of these fuzzy concepts though. tom: lisa, can we believe in a six-month the goal? no one is looking for the yield structure short-term to move higher. lisa a.: the person who we should have asked about that is lindsay piegza because she forecasts a 6% fed funds rate. with respect to do tightening and r start, they take a dartboard, and r starred, you take a dartboard and throw it, you are likely to -- tom: let me start with you.

we got it wrong. with the bank of england last week,, citigroup, we got it wrong, there are these other factors going on besides conventional bowtie economics. it is not working. there are other issues like technology, pandemic, a war in ukraine. jonathan: there are plenty of things we got wrong. one of the bigger issues we got wrong is just how much this economy could tolerate higher interest rates. it was unthinkable for so many people to follow the ecb for a long time. that this ecb could get up to 2, 3, 4 and the economy would not collapse? maybe that is in our future. the right now it has been surprising for a lot of people. tom: alex wrote in axios over the weekend. the economy went before covid

ended. lisa a.: and we are still here and it is not coming down. it does not matter when. if it does not calm, at what point do the inflation expectations become more entrenched? tom: 4200 spx, 35,000, nasdaq 100. it is horrific. tom: -- jonathan: right now at the upper end of it on the s&p 500. yields a little higher by three basis points. some soothing words over the weekend from some officials. we are at the crunch point. at the higher level talks will resume tomorrow between the president and speaker mccarthy. tom: maybe they will do that on monetary policy as well. make sense of this. distill down the nuveen view,

the constructive view into the end of this year. >> good morning. i think first of all there are a lot of crosswinds going on here. there is plenty for the market to digest here. that is arguably what is making it interesting. we feel with the fed hiking cycle over or nearly over the main market is shifting away from anticipating what the next move will be for the fed towards more working around what are the concerns around recessions? what is the path of inflation? i think the market will now focus more on that as opposed to what is the next move from the fed? that is what we are trying to focus more in on. we are constructive as we looked at fixed income in the long-term, but we are more

cautious on the near term. there could be some more spread widening. we keeping a close eye on the debt ceiling uncertainties. jonathan: let's go out from -- take a pic of your end, all the way out to the 30 year. do you anticipate growth slowing and a fed that is done? anders: overall we have become more neutral on duration. we have settled downi more of a -- down in more of a trading range. the 10 year is the most comfort we have. we will all be in this 3.75 range for a bit. the 10 could end up at 3.25 by years end. a little more stable backdrop.

the front end, given the different paths we are dealing with, we are a little more uncomfortable there, and we certainly think that the 30 year is too far out. in the middle part, but all in all we are finding more comfort going out in the credit space and taking more risk on that side versus on the durations side. lisa a.: how fragile is this market to the idea that inflation truly is sticky, that we are not going back to a 2% reality in the next few years? i ask this as this divergence opens up between forward breakeven rates and consumer expectations. do you raise this as a potential tail risk when so many people are gleaning comfort induration? anders: inflation and recession risk are the two things we're

most believe focused on. we believe inflation has peaked. . to your point there is a mismatch between the consumer side, coming in at 3.2%, hiring expectations more broadly. that number tends to, get revised down at times so perhaps higher than it truly is. compare that to the breakevens, which have been stable to lower. we are seeing a divergence between what the market is expecting, what we are seeing on the consumer side, and that is the mismatch that we went to see it get more of a stable environment going forward. all in all, we are in the camp that inflation is staying stickier than expectations,

which is why we are not expecting the fed to move anytime soon. we think the fed will remain focused on that part, and while we are seeing cuts being priced in, in the markets by your's -- years and, we expect that to be -- year's end we expect that to be too optimistic. lisa a.: are you suggesting i -- jonathan: don't call me either. lisa a.: honestly when things fell apart, he will be like "if you take a look at is a potential risk, but it is not that big of a deal." this has been the feeling we have gotten with the confidence induration from so many fund managers. to me it is fascinating. tell risks be with aim -- jonathan: even with this nonsense, even with this big,

big debate in washington dc. i said big question, i think it is the only question that matters for any fixed income traders. i asked are you buying or selling treasuries? tom: i agree on the duration. it is nonlinear. all of the focus in the media is that the benchmark 10 year used to be the 30 year, and all fed speak -- can i talk about what we have not spoken about today? we have to do another week of bank repair confidence. i don't know how that goes this week other than to say "we have a pretty good economy. i guess that helps>" sometimes it is what is not said. over the weekend nothing was said about the banks. jonathan: it is a business model

problem from now on. costs are higher, assets are in a tough position. the outlook for profits has gotten tricky as well, even the reason to buy. lisa a.: there is no discussion of the change in bank deposits we got on friday. another $13 billion klein in bank deposits, just this -- decline in bank deposits. jonathan: not just the return of capital, it is another weekend of people sitting around the table with their families, getting advice, and saying "we should buy some t bills." didn't you have this conversation at home? lisa a.: i may have had this conversation. [laughter] jonathan: -- tom: did you see the way that miss abramowitz went after him

on economy sitting on airplanes? lisa a.: have you ever flown economy with children? tom: she only flies business class. jonathan: this is bloomberg. lisa m.: keeping you up-to-date with news from around the world, i'm lisa mateo. president biden and speaker mccarthy meet this week to try and break the impasse around raising the debt ceiling. congressional leaders will take part in tuesday's meeting. if the bar is not raised, the u.s. could default on its debt. in turkey there could be a runoff election that is testing president erdogan's two decades of power. preliminary results show him with a lead of more than 2 million votes but that, is not enough to avoid a second round of voting. a runoff would face him --

in thailand a big victory for pro-democracy parties in sunday's parliamentary elections. it sets up the biggest challenge to the royalist backed establishment since they seized power nearly a decade ago. the move forward party wants to pass a law that will repeat -- wants to repeal a law that restricts criticism of thailand's monarchy. i'm lisa mateo and this is bloomberg. ♪

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>> the fed has done a very good job of continuing to support the economy while raising rates and trying to tame inflation. this delicate balance has allowed the consumer to continue to stay afloat, which pushes out our recession called to the end of the year. jonathan: what she said there was interesting, but 'bramo's story -- tom: you have to go sports. lisa a.: [laughter] let's just move on. tom: we have to introduce you before you can talk. lisa a.: [laughter] tom: look, jon --

jonathan: he is never going to come back. tom: let's bring in damian sassower now. lisa a.: it is good to see you! [laughter] tom: the whole ad thing in sports where they show the action during commercial breaks, do think it would work for surveillance? >> for surveillance, yeah, maybe i could be in a sound booth and i could play music like the howard stern show, so whenever you say things your audience is used to hearing, i can play a sound. tom: explain why damien is here. jonathan: front and center, the prospect of a runoff, something erdogan has not had to deal with in recent times. how important is this? >> do we really think that erdogan is not going to be around in 2 weeks from now? do the markets really believe that? the chp are the centrists going

to the runoff against erdogan. erdogan has nine lives. that country is financed by middle east and russian money now. for me, this is nothing ne-yo. this is a man who has -- nothing new. this is a man who has nine lives. it will be difficult to displace him. lisa a.: here is my question. we all think of this as a potential positive shift for turkey, if there should be some sort of surprise, or the status quo if erdogan remains in office. is it status quo war is it something different if he remains after all of the years of power? >> the populace is really voting with defense, they are voting with national security. the economy and inflation are all out the door. this is about the kurds, the

migrant crisis, 85 million people of their people are kurdish. that is what is -- lisa a.: you mentioned the monetary policy here and john was talking about this earlier how there was an unconventional approach that erdogan has taken which is in response to inflation you cut interest rates because that will bring inflation down. will that shift after this election? damian: it would, obviously if the chp wins, but erdogan has nine lives. he does not seem like he will shift in terms of monetary policy and the way the economy is being managed. he has complete autonomy to do whatever he wants. we expect more interventions. there has been $150 billion in interventions from the bank of

turkey to support the currency. tom: all of these idiosyncratic opportunities, the one that has not moved to me is thailand. it is a huge deal not only for thailand, but for southeast asia. stability -- is there a big figure move here that has not happened yet? damian: there is. it is not due to the idiosyncrasies of what is going on in thailand. look at russell s&p ratios. look at gold oil ratios. all signal very late cycle, and of cycle. if we are there then the carry trade unwind is after that. the thai baht, if we see a reverse of what we have seen to date, it is the thai baht. jonathan: for nonsufficient --

tom: for not sophisticates like me we go back to the thai baht pre-pandemic. damian: it is kind of fair value over the last five years, but it could as low as 30, 29. tom: i completely made that up. lisa a.: [laughter] damian: the funding currencies are a good trade, if he knew think it is an and of the world scenario. jonathan: can we throw in argentina? damian: we will see another 600 basis points after 1000. jonathan: close to 100% interest rates. what is going on there? damian: there to factor currency, the unofficial rate is down 35% on the dollar year to date, so the currency is meaningless. tom and i were just talking

about patricia who was leading in the polls there. she is proposing a by monetary policy where it is along the lines of peru, a dollarized economy. the white house is not talking to the fernandez administration. lisa a.: argentina may be an idiosyncratic story. i want to talk about turkey and thailand. are we seeing a shift to more democratic types of government in these markets? damian: i think they are making a last-ditch effort. we have seen that, populist shift certainly in latin america. to see something pivot more towards a democratic based political regime like we are seeing in thailand is novel. it is amazing. in tricky we are seeing a little bit of that.

there is so much in turkey to prevent democracy from really getting its footing there. that is the real issue there, unfortunately. jonathan: starting with turkey, ending with turkey. mr. mattis, used to follow him plenty when i was in london, he said this -- " those expecting the fed to make a reverse on interest rates will be disappointed." lisa a.: there is the election, and who will actually win in the end but then there is also how quickly can you make an about-face given it is politically sensitive. if people have to pay more to borrow money, it becomes rather complicated from a populace standpoint. jonathan: the issue in argentina is brittle. tom: the summation -- argentina is brutal. tom: idiosyncratic does not

really capture what damien said, which is the size of help that has already been given is truly unimaginable. they have basically bet the house on helpinh argentina and got slapped in the face. jonathan: collin marden of charles schwab, chaudhuri -- lisa a.: you cannot move on like that! [laughter] carry-on. tom: you know what i learned today? jonathan: please, someone learn something here. tom: i had no idea of the midfield of aventis, years ago which was -- it was like babe ruth and lou gehrig. contee was the coach and there was a guy you introduced me to.

there was the doll. --there was vidal. was that the best midfield out there? jonathan: i think that was the team that came undone against barcelona. tom: it is completely foreigners, but it is like lou gehrig and ruth. it is extraordinary. jonathan: please tell me you know who andre lois. tom: i do! jonathan: we will get him on the program. we will work that out. big fan of bloomberg surveillance! lisa a.: [laughter] jonathan: what? [laughter]

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tom: retail sales tomorrow. we will talk about that tomorrow. a little bit of lift to yields. two year -- 3 basis points on the 10 year yield. a little higher yield regime there. i had a sudden print of 69 handle on west texas intermediate. lisa, retail sales tomorrow, we

have not talked enough about it. it is what it is. it is the state of the consumer. lisa a.: target and walmart are coming in on thursday. the empire manufacturing survey, which gives the first read on manufacturing of any of the surveys for new york came in at negative 31.8%. it was expected to deteriorate, but not nearly as much as it did. how much does this fly in the face of the optimism we saw the prior week before this, sense that perhaps it was short-lived? this is the biggest decline going back to october, so really a sense that not all things are sanguine. tom: 'bramo is keeping us going here. that was at least 45 seconds ago. 3.9789%, we have moved 4 big

figures on the two year yield dust off that buffalo new york shock. lisa a.: this idea of the long end variable lags are taking hold. some of the data continues to ripple through. it has been the debt ceiling front and center with biden and mccarthy planning to meet, the two of them the romantic oval office meeting you talk about, tom. lara rhame weighing in on her perspective on it. "my expectation is that we will eventually raise the debt ceiling. my concern is that it will occur only after we have accidentally tripped into technical default due to miscalculation on one or both sides." tom: i'm going to go back. lara rhame knows i can do this. we are down through 2 standard

deviations of weakness on the empire manufacturing statistic. it is a tertiary number. the fact is it moved the market this morning. the fact is it is wrapped around this fiscal ballet in washington. how unpredictable is it out there? lara: right now because there is a vacuum of other big news, i think we are seeing these smaller data points really have outsized impact, and that is a big move. what we are seeing is that current data looking still pretty solid but the forward-looking stuff is starting to get more concerning. my expectation, and you guys know this for a long time now, as i have been saying recession probably at the end of this coming year. given that that is my expectation, i would expect to see some of these things begin to deteriorate now. jonathan: what tools are you using at fs investments to

determine which way we move in the colored band we are in right now? lara: the tools we are using really are for managing for either side of that band . volatility in the treasury market is acute. it is not visible at the actual moment, but the fact that we got the index at its highest level this year, not during the pandemic, not during covid, and really peaked now is something we need to pay attention to. i think the problem for me, for every investor's it could break in either direction. the problem with the debt ceiling negotiations is that even though it puts treasuries at risk, the market reaction is to buy treasuries. it is a safe haven. there is a chance we could move lower in yields off the back of some disappointmenton the debt

seat -- disappointment on the debt ceiling. you still have got inflation. i am in the camp that it will not go back to 2%. i think there is another upside surprise in the inflation data. the tools are designed around managing for the fact that it is highly uncertain, which side it will break to right now. lisa a.: there is a lot there to unpack, and i want to get to this idea that you could see inflation breakout to the upside, but given a sense that you feel there could be a technical default, the technical default could create a real issue. is that what could send yields lower? is there a longer-term consequence to such a technical default? lara: there is a longer-term consequence. it has been building. we have seen globally the dollar erode somewhat as a reserve

currency. that continues to be a drumbeat told not in quarters or weeks, but in years. things like the debt ceiling are a self-inflicted wound on dollar sovereignty around the globe. when you think about what that means, the u.s. has managed to have this position where we can issue debt because we are the global reserve currency and we are the global bond oasis in times of concern. looking ahead, you risk a world where treasury yields could move higher. the fed is not going to go back to 0 anytime soon, and you are really looking at the forward dynamics of debt payments looking pretty difficult in the u.s.. it is all gearing towards higher, long-run run debt. not this year, that is something we will be dealing with going forward. it will be a big election issue.

the point is near term we have some downward pressure on yields, but we have this longer-term pressure secularly. we have no treasury liquidity! that is a real concern. lisa a.: you talk about there could be aa surprise in inflation to the upside. this index plunged. doing the calculations bloomberg did them. . how does this dovetail with the idea that we could be surprised by how resilient the pricing pressure really is? lisa m.: -- lara: i think we need to be aware of the empire manufacturing data, but it is one piece of a lot of regional numbers that we look at. i want to focus the conversation on the fact that inflation in the u.s. is really consumer driven. right now companies are writing off a wave of euphoria

where they are able to take more pricing power. we will be watching earnings closely because we have seen a lot of consumer-based company's feed that pricing power. that keeps inflation. that is another part of this entrenched inflation piece. i think the manufacturing numbers are important. given the importance of the household in our economy, that is the real source of it. tom: lara rhame with fs investments. do i really want to know the two year yield it is captured nicely on tv with a plunge. lara, the derivative special is douglas cass. thanks for watching this morning. he notes that we are starting to get to data points which become tell effective. you are an expert on this. we get out from the normal bell curve and with things like the

empire manufacturing we get some instabilityies in the tales that -- instabilities in the tails that elevate risk. lara: the uncertainty around banking, which has mysteriously fallen off the radar of markets but we need, to pay attention to that, the fact that the debt ceiling, the timing is uncertain which means that any kind of derivative structure, normally we think of these things as very time-relative and the timing is so uncertain that i think it makes it all very hard to really structure something clear around an end date. tom: link in your dollar call to fs investments economic. can you make a call? lara: near term we are facing

some potentially fresh dollar weakness. that is because the debt ceiling frustration is going to weigh on the dollar. i think right now the fed clearly being done while other central banks have more room to go, and finally the fact that we are still dealing with some banking headwinds are all conspiring to be a headwind for the dollar. i think the question is how far does that go in a world where if there is some inequality we could see the dollar have a limited decline. tom: lara, great to be with us this morning. lisa, i went to go back to the instability that doug kass was alluding to there. the empire manufacturing is a tertiary statistic. it is very good math out of buffalo, new york.

we why are w -- we have to ask ourselves, where we focusing on a statistic? it is getting stressful. it is not pandemic stressful, but it is nejra in their -- nudging there. lisa a.: the theme of today has been painful trading range. that is what people are saying. it may be a tertiary data point, but there is nothing else. people will trade on it. something else will give you a completely opposite read in terms of both strength and inflation. what do you do if the tail risks are potentially inflation going much higher, or much lower if we get some sort of deterioration in the economy or some kind of

debt ceiling debacle. tom: what you do to frame the optimists is corporations adjust, people adapt, people adjust, the consumer keeps going for any number of reasonss. i will go to the optimism on inflation-adjusted incomes. perhaps that provides the oomph against non-gaussian -- lisa a.: i can't believe companies are bragging about how much they can raise prices above inflation. that speaks to the stickiness of inflation. jonathan: coming -- tom: coming up for you nationwide janno lieber of the metropolitan transportation association. lisa m.: ukraine's president volodymyr zelenskyy had meeting

with premise to rishi sunak today. the u.k. will be providing ukraine with hundreds of new long-range attack drones. >> the moment of challenges, the moment for our society, for our people, for our soldiers, the moment is tough. thank you for this package you have prepared. it is huge. canit -- it can save the lives of our people. lara: russia insists it is cutting oil production. at the same time its oil flows continue to rise. almost all of russia's oil is going to china and india. the political fate of turkeys president hangs in the balance as he may be headed for a run off election in two weeks. polls show erdogan with the lead

of more than 2 million votes which is not enough to avoid a second round. that would hit him against the opposition leader. erdogan has been in power for 2 decades. vice media has struck a deal to sell itself to creditors. that underscores the huge fall of the news upstart that was once valued at $70 million. munro capital has agreed to buy vice's assets and assume significant liabilities. global news, powered by more than 2700 journalists and analysts, on lisa mateo and this is bloomberg -- i am lisa mateo and this is bloomberg. ♪

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valuation of what he 200. 10% of the 4200 and all of a sudden -- valuation of 4200. jonathan: -- tom: stern kaiser, really on fire today of citigroup. you ventas and italian football as well. that is good swag. it is march. we will ask him back. what was there is you have to be in the game. david co. talk was on friday. he is 36% in cash -- david kodak was on friday. he has 36% in cash. lisa a.: as we trade between this range, what will be the post-pandemic rebound of other asset classes? i think of commercial real estate, especially in some of the bigger cities where we are returning to work, but not fully yet. that is a question, and unknown

hanging out there that lurks beneath the surface of these public markets. tom: we are going to focus now. for those of you internationally and national, this is coming to a city near you. we will focus on new york city. let me get your attention. there are 789 ridges in new york city. i can't believe i am saying that -- 789 bridges in new york city. i can't believe i am saying that. janno lieber joins us. i will go to one incident. i cannot get up madison avenue anymore. when does the congestion end? >> you know, you said it exactly right, tom. congestion, we have to do something about it. there is no choice. ambulances cannot get the hospitals. tom: yes!

>> it is out of control. what new york is doing is we are leading the nation. we are saying it is time to do something about it. stockholm, london, singapore, we will put it and to affect. we do not have a choice. it is time to take aggressive action to save the planet. tom: it is so important here. i bring this up living near mount sinai where the ambulances cannot get to the 101st street emergency room. i want to go to the rapidity of this. london fix to this, other cities have dealt with this, it has been a failure in mexico city or manila. how fast can you clear up the congestion in this marvelous city? janno: we have the federal approval almost done.

we have been at this for a couple of years now. the trump administration would not let us deal with the environmental crisis. the biden administration allowed us to get started two years ago. we have hit the milestones. we will start building out the infrastructure, the cameras, the sensors, to do it all in about one year. then you and i will watch as it starts to take effect. jonathan: my amateur -- tom: my amateur take on this is he said the cameras word. london is cameras driven. new york is not. lisa a.: how much is this an effort to bailout a subway system that has struggled through a pandemic, and has not seen its ridership come back? janno: there are operating budgets. we have an $18 billion operating budget. we dealt with that with the governor's leadership in the current budget year. we have dealt with it for a 4-

year plan period. congratulations to governor hochul. the wit -- public transit is the lifeblood of our region. for new yorkers it is like air and water. we cannot survive without it. the money from congestion pricing by contrast will go to our capital budget, which allows us to maintain this 100-year-old plus system. stuff that old wants to fall apart. you have to invest in it. it is a $1 trillion asset. lisa a.:lisa a.: how is the infrastructure changing? ridership has not come back to its pre-pandemic level yet. there is a question about whether it will as a result of the work from home trends and the emptying out of certain parts of the office space. how do allocate to a system that

is struggling with a lot of issues right now, whether it is elevated crime, the general buildup of filth -- i am a native new yorker, so this is something i have seen over the years. how much will you try to remedy that? janno: let's get straight on the safety issue. a crime -- crime on the subway system is down 10% from last year. given the rise in ridership during that time, it -- we are back to where we were when the pandemic began in terms of crime on the subway. we are not ashamed of our safety record at all. lee says question is on the money. how do you get people back to normal life? interestingly, if you go apples to apples with pre-covid, we are close to adp percent. work from home is a factor. it is what has pushed us down --

close to 80%. work from home as a factor. it is what has pushed us down. we are on the move. we are very much rising. we have had 4 million rider days. it is headed in a good direction. tom: i sit on fifth avenue, and it is a privilege to sit on fifth avenue. i count the number of people on the city buses. sometimes i see 4 people, sometimes i see 12, but many of those buses are empty. how do we fund free bus writing so that the bottom quintile of people in new york city can service the upper quintile? it is an outrage that we do not fix the transportation system of the poorest people in new york city? how do we do it? janno: the key is to have transit remain affordable. i think you are right.

i don't know if free everything is the right answer, but transit is one of the few things that makes new york city affordable. it is like 10% of the cost of owning an automobile. t is one of the things -- it is one of the things that allows us to support our working and middle-class new york community. the buses in midtown, a lot of people can walk faster than the bus can go because of the congestion. i grew up riding the bus. i am convinced people will come back when we pick up the speed, congestion pricing, camera enforcement will improve that. tom: what do you know about the lincoln tunnel? the tunnel system in new york city is an outrage. some of the hours of the day. i am getting older watching this. when do we get another tunnel to relieve the burden? what can you do about it? janno: honestly, i don't want to

disappoint you, but i am not here to advocate for expanding the access of automobiles and trucks into our central business district. every time we build new capacity, it just fills up. what we have to do is build more and better mass transit. it is the way that we can continue to grow our economy and the population of our central businesses, workers and residents without environmental consequences. tom: an update in the experiment for -- janno liebe is with the mta. it is a differential with london. lisa a.: traditionally you can rank cities according to who has the worst traffic. it really hinges on how good or bad their public transit system

is. if they do not have an effective public transit system, you can see people getting stuck in traffic for 2, 3 hours. that is a problem for anyone who wants to live there. suddenly, the whole lifeblood is disrupted because of the pandemic, and there is an ambiguity about how much will naturally come back with commuters. it is an existential issue that is facing many of the big cities. tom: basically, manhattan is a parking lot. not to make a joke about it, but you look at the old photos and there were lanes open. janno: there is also -- lisa a.: there is also a question of if you charge $23 for someone to come into the city, will they come? will this impede an interboro connectivity? tom: coming up we will have the transportation experts.

stay with us. bostick in the 2:00 hour. good morning. ♪ these days, our households depend on the internet more and more. families grow, houses get smarter,

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>> live from new york city, good morning. just about positive on the s&p 500, the countdown to the open starts now. >> everything you need to get set for the start of u.s. trading, this is bloomberg the open with jonathan ferro jonathan: live from new york, coming up biden and mccarty to resume talks this week as secretary yellen repairs to offer an update, the president since we have not reached the crunch point yet