>> the retail stock activity has been dreadful. >> the last four to five months people have been underinvested, they need to put money to work. >> i think investors should be a bit cautious. >> the market believes the fed will have to cut before the end of the year. >> the only way the fed cuts rates this year is if there is a recession. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: this is "bloomberg

surveillance." one stock is absolutely flying. nvidia is up by 25% in the premarket, adding serious weight to the market cap. tom: it is a game changer. i am not smart enough to tell you what it means in generative ai and faster computing, but it is truly game changing even if you don't care about the big seven stocks lifting everything up. this is different from what microsoft or google does. jonathan: all raising their price targets on the stock. 11 billion reasons to stay long. an unprecedented influx of orders associated with ai. barclays says that this was at least a quarter early. extraordinary in magnitude. lisa: evercore said what can we say other than just wow. they blew out of the water expectations. we are looking at one of the biggest one-day increases in

market history. we are looking at a valuation for this company with a fraction of the sales of amazon that is the same almost as amazon.com. is the hype more than the actuality, number one. number two, what is the potential risk? you will get on my case, but what is the risk with the to -- with the tit-for-tat going on with china? jonathan: compare it to intel, the chipmaker is six times the size of intel that had twice nvidia's national revenue last year. this is about growth and people are excited about the growth of this company. tom: it is growth, but a strategic discussion about the length of the model. in the cloud computing space, it is clear there is a five-year window of growth. i think they said yesterday that they see a more persistent, predictable growth in generative ai. i came away with the idea as a

complete amateur that all of a sudden ai is not a bubble or something to chitchat about. that these people are minting revenue and margin from it. jonathan: in a major way and quickly. looking forward to catching up with bloomberg intelligence later this hour. in this bond market, 10 consecutive sessions of yield climbing at the front end of the curve. 50 basis point move over the last 10 sessions. this is interesting going into this debt ceiling impasse. treasuries are not rallying. tom: i said, is this real? did you take the vacation off? no, this is tangible tomorrow. tomorrow and friday into a three-day weekend. you see it in the bond market and in this idea of convexity in foreign exchange with accelerated tendency towards a strong dollar and fx bouncing off that. lisa: yield increase with the debt ceiling debate, and i don't

know how much of this is just this feeling that perhaps the fed will skip the next meeting in terms of a rate hike but will hike in july, that seems to be more on the table. there seems to be a feeling that the banking crisis is over, perhaps it was never a banking crisis, and people are getting back to that issue than focusing on the debt ceiling. jonathan: dollar stronger, the euro against the dollar, 10714. really interesting stuff going into data a little later. this is how the stage is set. the s&p 500 on the nasdaq doing ok. you can thank nvidia for that one. positive 0.7%. yields up a single basis point on the 10-year. there it is on the screen. lisa: it is shocking that the dollar is strengthening in light of some of the potential default of this nation and potential watch for downgrade.

we are also watching and 8:30 initial jobless claims followed by pending home sales for april. at 10:00 a.m. we get information about the emergency borrowing from the federal reserve, key to see if the banking crisis is over or never happened. curious to see if we see any tick up in jobless claims. i don't see how people are going to talk about rate cuts with any conviction by year end. posco and gap after the close. retailers have done well this year, and i think this is a conundrum amid the gloom everyone has been talking about. up 15% is by the fact people are talking about recession. we do get fed speak in case you are worried about not hearing from federal officials. we will hear from the richmond fed president and the boston fed president. jonathan: looking forward to it. joining us as the chief investment officer at raymond

james. let's break this into two. we can talk about the debt ceiling, i want to talk about this riproaring rally. is that something that you want to fight or participate in? >> we want to participate. take continues to reinvent itself over and over. the latest generation will be ai. as you look at the visibility of earnings you see a strong earnings coming. i think that that's important because a lot of people say that tech has gotten expensive. when you start to factor in how much tech has been able to beat their earnings, i think it is not as expensive as people think. i think the trend will continue. lisa: is it big tech or all tech? is it time to go into some of the smaller text that are not as profitable? larry: they are much more diverse than big tech companies. 20 years ago tech was one trick ponies with one product, one

piece of software/hardware and they had to fight the upgrade cycle. now they are more diversified with plenty of seeds planted to generate earnings going forward. i continue to like the big names. from the index level, that is what drives the index. you have to be there. tom: because you are down south, i want to go to ron desantis and the conference call with mr. mosque that ran like a raging swiss watch. discuss the second half of the third presidential year. larry: i think it is important because what tends to happen in the markets is that momentum begets momentum. if you look at the strong circuit we've had this year, the first 100 trading day, today is the 100th day of the year, the rest of the year tends to be strong. if you look at this presidential election cycle that you are referring to it is from june

until the end of this year. historically, 92% of the time, the market continues to be positive and that has been consistent through this third year of a presidential term. it's fairly strong. tom: does cash at 4.8% competition for your bullish view? larry: more competition. at the beginning of this year we were more positive on the equity markets with an upside a 15%, but clearly we've had a rally and the upside is around 6%. it has clearly become more competition, but i still like the equity markets longer-term for people with a long-term horizon. jonathan: larry, the debt ceiling debate at the moment. larry: i still think that what is going on in washington is still pretty much noise, right? i think that putting the u.s. on watch by fitch is another warning sign across the bow. i think at the last second we

get a deal. if we don't i think that the downside in the market is probably 5% to 7%. i always say that the fourth arm of the government is the stock market. it will come to the rescue. we see the downward movement in the equity market, that will bring people back to the negotiating table and we will get a deal done and move forward. lisa: is there a signal that you are seeing dollar strength despite the concern of a u.s. default? this is flying in the face of people questioning the preeminence of the dollar as the global currency. does it prompt you to go more into the dollar? larry: i still think that the dollar will continue to be the dominant currency. i don't see any other currency out there that can really challenge it. this is not a new story. people have been talking about the dollar being challenged with the yen in the 1980's, the euro in the 1990's and 2000's. i think that the two factors out there are wen yu focus -- are

wen yu focus on the euro the u.s. will have better, more dynamic growth going forward. we are looking at range bound versus the euro between 105 and 110. that is where it continues to be. tom: he is way too optimistic for 6:09 a.m., way too optimistic. jonathan: it is not so much about the u.s. dollar for me, it is the treasury. the question coming into all of this is if things get messy are you a buyer or seller? traditionally you are a buyer of treasuries. it is intriguing what is happening at the front end of the curve as this is playing out. 10 consecutive days of 50 basis points into the front end as this has been playing out in washington. lisa: if you look at the maturities that come due in 21 days, for example, you see yields of almost 7%. no one wants to own these and take that risk.

that is on an annualized basis so they aren't getting that yield, but people are concerned about taking risk. it still seems like risk. tom: i understand that this will break and there will be claims at the top that will elevate. until that happens, do we have to frame out 6% full faith and credit paper? very few people are there. jamie dimon is there, but very few people are looking at this sealed move. 3.75 percent on a 10-year, debt crisis over, we move on, where does it go? jonathan: the same problem you start the year with. risk it cuts both ways. the upside and the downside. just acknowledging that risk cuts both ways. in europe, that is fascinating to. you have the surprise index come the economic data coming in relative to expectations rolling over aggressively in the last

month or so and that has been captured in the fx market. at the same time you have inflation sticking in the year up an u.k. more specifically. the u.k. faces the prospect of raising interest rates into a weaker european economy. that's problematic. we go back to the story of late last year when we saw the riproaring strength in the u.s. dollar as a backdrop. gilts are around those levels. lisa: you have germany falling into a technical recession. to your point, hiking into weakness is the base case after all these people were talking about europe getting out of some of the slow growth and accelerating. jonathan: fascinating, almost confusing, moment for macro and the global economy. we are trying to address some of that with j.p. morgan asset management in the next hour. welcome, equity futures are doing nicely. nvidia is absolutely flying in the premarket up 26%. ♪ >> keeping you up-to-date with

news around the world with the first word. nvidia is on track to beat apple for a record single day market gain. shares are surging in premarket after the company's bullish forecast boosted confidence that the chipmaker can keep its business thriving by focusing on artificial intelligence. if the gain holds, the value would rise by 219 billion dollars to an all-time high of 970 $4 billion. that would top apple's 191 billion dollar hop one day in november. ukraine is gearing up to begin the anticipated counteroffensive as it receives the necessary weapons and equipment from allies. that's today from a top adviser to the ukrainian president zelenskyy. he spoke exclusively with bloomberg. >> we will further be preparing the counteroffensive and soon we will be ready with the support of our partners who are delivering us and continue to deliver as high level artillery, ammunition, tanks and

armored vehicles. as soon as we get it we will start this counteroffensive. definitely it will have results. lisa: also dismissing the hungarian prime minister statement that ukraine cannot win the war with russia. migration to the u.k. went to a record last year according to the office of national statistics. an estimated 600 thousand more people moved to the u.k. then left. that is up from 488,000 the previous year. the numbers will put the pressure on prime is -- on prime minister sunak who has pledged to limit the flow. i am lisa mateo and this is bloomberg. ♪ advancing flight for future generations. ♪ welcome to a new era of flight.

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>> they want to spend $30 billion more than this year. i will not put a bill on the floor that spends more money next year than this year. >> house republicans are determined to either extract deep, painful cuts that will hurt the health, safety, and well-being of everyday americans or crash the economy. jonathan: so, things are going really well.

speaking to foxbusiness as the war of words continues on the debt ceiling. i reality check overnight warning that the u.s. credit rating may be at risk. fitch still expects a resolution to the debt limit before the x -date but risks have risen that the debt limit will not be raised or suspended before the x -date and the government could miss payments on its obligations. risk is running in the wrong direction, and that is the conclusion of a lot of people. tom: there will be updates today i'm sure and we will get headlines as they stagger into their ever-so-long weekend. i'm not sure when you return to washington to create further damage. all of a sudden, we crash towards june 1, you have to watch secretary yellen about cash on hand. jonathan: that is next week. tom: where is your number now? 60 gazillion.

let's say it goes to 28 gazillion. that is a big deal. that is the money on hand to pay the obligations and the only response is how the conservative republicans react, nothing else matters. that's all there is to it. i want to make clear on a thursday that the markets are on the move. we will stay on theme with the politics in new york. and with a wonderful perspective, we can go five different ways but i think that we have to stay on the distance to june 1. when you hear x-date, i'm going to assume that was not in your textbooks. >> june 1 is soon. this is around the corner. with a long weekend ahead of us not only in the united states but in the u.k. the world is watching this and and if br

inkmanship is to force someone's hand we are seeing that with the credit rating, tom. tom: i assume many could care less about the foreign responses to the debacle. to pick one group, conservative republicans holding their speaker, explain what the foreign response, the ramifications of that is too conservative republicans and america. leslie: you are absolutely right that this is inside congress, certainly on the extremes of both parties, to be fair. very much a domestic issue. there are plenty of people in the u.s. government that are well aware of the international ramifications. you know, one of the very interesting things, if we do get to a deal, which i think many of

us who look backwards assume we will, as uncertain as it feels now, it might actually be something that forces a degree of bipartisanship and forces the middle the compromise. we are hearing that it might take as many as 100 democrats to get the bill passed. that is interesting in the current political context that you get the middle saving this coming from both parties. if you look at the polls, americans want to see a deal but they are very divided along partisan lines of what they think that that should entail. republican voters think that spending cuts -- they bought the line that spending cuts are important, and democratic voters have bought the line that it's party is suggesting. lisa: it hasn't been a secret how i feel about this discussion, that it is exhausting and irritating to an nth degree to hear about it year

after year. a resolution one way or another or what kind of fiscal cuts to u.s. spending, is there a new wave of austerity percolating out, not just in the u.s. but globally, that will be driven by some of these debates and the u.s.? leslie: maybe. i would say that we do not live in an age of austerity. we live in an era of a different kind of globalization where people expect the state to do a lot more. in the united states they expect the state to do more than they ever did before. there is a focus on a new industrial policy where there is a demand for a response because they have been told, for many years now, that they are losing out. we are seeing, even in the current discussion, that there are certain things protected, social security and medicare. defense will be protected because the republicans do not want to see cuts there. one of the key questions is,

how, if we get to a post deal, which i assume we will, this conversation will take place in context of an intense political season. we are leading up to the primary. talking about spending cuts at a general level might sell with many fiscal conservatives, but when you get into the weeds and you talk about education, housing, or transportation, these are things that americans have been promised will get better. infrastructure is defined broadly now. it is not just roads, it is all of these things, digital access. that requires a sense that there will be spending, not cuts. lisa: to underscore what you said, there is a belief on wall street that whatever happens it will probably be negative for growth because it will lead to some level of restraint. you are pushing back saying

that's not the case? if anything this is a prelude to expansion with political dressings that people don't see it that way? leslie: i think that it is an unresolved issue. we are in a time when there is a push for spending and public investment and there is the belief that that will come from the market that has been unsettled. the pandemic has unsettled it. the argument that donald trump really invested in a certain part of the american public, that they have not been well-served, has really created the basis for a view that the state, the government, needs to look after the people. we are living through, maybe not at the level of what actually gets delivered, but certainly at the level of public expectation a very significant change in the american electorate. jonathan: what an 18 months we have coming up. i have the number for you.

it has risen over the last couple of days come the treasury cash balance is $76.5 billion. it is worth pointing out that two thursdays ago that was north of $130 billion, and that same week it was pushing 200 billion to start that week. things have come down rapidly. we have discussed that it is very lumpy. you can have days when things climb and then go back down. at the moment the latest data, the balance is at $76.5 billion. tom: a guy at 60,000 feet, heavyweight budget guy, there is this visceral thing. they were at the washington-san diego padres game. the washington senators beat the padres. they have to go to the treasury today and cut checks.

that is the visceral part of this. they said there -- what was the number? $76 billion. and they actually cut checks. that is the end result of this mumbo-jumbo from the white house. lisa: did they cut the checks at the baseball game? just trying to understand the relation. tom: they wake up and they go to the cash room in the treasury -- jonathan: i am trying. take it away. tom: at the bank of england they wheeled the gold and notes in the cash room. jonathan: they still do that. it happens on a thursday. walking across the road with all of the gold. it is amazing to see. you see it. [laughter] at the counter or on the go, save 20% with the lowest transaction fees and keep more of what you make. start saving today at godaddy.com

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jonathan: for anyone who is thinking about making a trip to bank station to look at the gold coming out of the bank of england, don't do that. it's not going to happen. maybe a few centuries ago. equity futures on the s&p 500 are positive because of this one name, nvidia. it's absolutely flying in the premarket. up by 27%. it is a big stock noun that makes up about 2% of the s&p, close to 6% of the nasdaq 100.

this is what is happening at the index level on the back of this, big moves for you. the nasdaq 100 up by 1.9% because of the enthusiasm around ai that is bleeding into the other ai names. lisa: to be honest, the nvidia orders for their chips absolutely completely blew out the expectations. there is something tangible, but the hope underpinning this is that this will be a transformative moment akin to the internet 40 years ago. tom: the multiples, nvidia has a 15 multiple looking forward versus apple with a 28 multiple. this is a premium-priced growth story. jonathan: people are excited about the growth that it could produce. barclays, 500. i've gone through some of these calls already. citi, 11 billion reasons to stay longer.

many of you are perhaps staying longer for good reason. the bond market, 10 consecutive sessions of yield climbing. this is number 10, up by four or five basis points from close to 390 to 440 or 442. it is a big change over the last 10 sessions encouraged by some of the fed speak. but not all of it, a real split in the latest minutes. some are ready to start, several ready to hike in june. we will see what happens between the june 2 payrolls, 13th cti, and hopefully some did ceiling resolution -- the debt ceiling resolution. this is the vanilla euro-dollar. down from 110.95 all the way to 107.29. lisa: this to me is the story of the moment. the first half of the year has

been defined by a flight into the riskier markets, the non-u.s. domiciles. do we see a sudden reversion? especially in the face of a debt ceiling debate it flies into the face of logic. tom: i am hearing more of bring it home from equity markets looking at u.s. versus international. some of that is a stronger dollar call. this is a briefing for those with equities, bonds, and commodities. currencies is the deepest market . we are joined now, writing incredibly short and terse strategy for citigroup. the second derivative is fancy fx talk for acceleration. i see lots of convex curves in foreign-exchange. is it convexity with instability, or are things unraveling when you look at 42 currency pairs? >> i don't think that they are unraveling. it is most likely about people

having very low conviction. one of the reasons that people have refrained from the trades that we went through in q4 and q1 has been china. there is no question. the april data that came out of china was broadly based and very soft. i think that everyone is revising lower global growth expectations. there is a nice chart which we produce the latest piece that basically shows you an amazing correlation between euro-dollar and u.s. the rest of the world expectations for 2023. the first nine months, it moved in favor of the u.s.. euro-dollar was going down. q4 and q1 it moved against the u.s.. now it has stabilized and is

spiking in favor of the u.s.. there is some resilience in the u.s. data. potentially, coupled with the understanding by the markets that the fed may not actually overdo it. that mix is what is allowing bond yields to go higher but at the same time equities to stay resilient. jonathan: it was an interesting divergence within the economic data within the united states and abroad in europe, china to some extent, too. services pmi. the data around services is resilient. manufacturing is ugly, almost recessionary levels. what do you make of the distinction? vasileios: in general, the manufacturing pmi's -- i would say that all of the soft serving data, but predominantly manufacturing pmi's have overstated moves in the actual data in the economy, real gdp

growth. we are still facing, we are not entirely out of the bottleneck woods. there are still a lot of issues in german production. for example, car manufacturers when they are being faced with new orders for cars. they typically take 16 to 18 months to produce.when you are ordering a new car in europe it will take 16 to 18 months to get a delivery of the car. there's definitely an issue. look, the economy reopened from the pandemic and this was largely going to be a services-led recovery. i would take the deterioration manufacturing with a slight pinch of salt, but there is no denying that clearly it is services that is driving the economy right now. lisa: what could cause a break out in this range given some of the backdrops? vasileios: in euro-dollar? lisa: in europe.

when you talk about the delivery times of cars, a car executive says that the truck drivers were ukrainians who were constricted back to ukraine so they weren't able to transport parts. when do these inflationary-type of pressures because something that could be something of a pain trade? vasileios: i think for the euro-dollar the pain trade will be for real money accounts to the downside. what i mean is that currently leveraged headphones are pretty much neutral. the real money accounts are quite long euros, but they initiated these longs around 105. trading between 107 108 if they are ok-ish they may close some long positions. if we gravitate to 106, there will be a lot of angst by asset managers and potentially a sizable reduction of longs that

could potentially accelerate the move downwards. lisa: it is not your base case? what gives you confidence? vasileios: i think that -- a number of things. first of all, the balance for the eurozone has improved immensely. that is down to natural gas prices by and large. trading around 30 or even below 30 euros per megawatt hour. that has created a massive turnaround in the current account balance of euro. there is a net positive structural demand for euros out there. that historically has correlated well with euro-dollar. the other thing that i think that will play out as a tailwind is the ecb. i think it is underpriced. there's a lot of wage growth pressure in the pipeline. only in april we had an agreement with 3 million workers

from public unions who agreed to 7.6% for this year and 4.5% for next year. others are probably going to want to mimic that. my bottom line is in contrast to the u.s. where inflation shocks make their way relatively quickly into the wages, in the euro zone they take time. there is growth in the pipeline. the services sector is strong and there is still excess savings. i think, for me, the terminal rate should be at least 4%. we can go to 4.25%. i think that that is going to be an additional tailwind. i think what made us curb our enthusiasm on europe, on euro-dollar where we initially said it was going to 115 and now we think it will be around 107, is that it is being deprived from tailwinds from fading chinese. tom: euro-dollar, dollar-yen, i

throw out the dollar and we have euro-yen. if it gives away strong euro and weak yen or the other way strong yen weak euro. vasileios: around 150. tom: so we are there? vasileios: you are opening an interesting debate about yen. tom: their monetary policy, failure of it. vasileios: this has been a discussion internally. everyone says that it is natural almost instinctively you think about yen if you fear a material slowdown. the problem is the carry is painful, it is simply painful. every discussion that i've had with clients is that they are perfectly happy to play the ranges, dollar-yen, for example, 137, 1 38, but they don't want to hold onto positioning betting

on a hard landing, for example, because it will kill them before the hard landing materializes. you know, fundamentally is an undervalued, yes, massively undervalued. is it going to be a safe haven in case of hard lining? yes. would you position in favor of that with cash? no one seems to want to do that. jonathan: some of that was depressing. thank you very much. tom: you get a real window into the complexities with the yield curve control and how the people are like, i just don't have the courage to enter the trade weak yen. jonathan: did you have the courage to buy this and stick with it, nvidia? the stock is up by 27%. bear in mind that this was a 755 million dollar name at the close yesterday, so we are adding 200 billion u.s. to the market cap of this company off the back of

this blowout forecast for revenue. it is driving equity indexes much higher come the s&p and nasdaq. you can see the outperformance versus the small caps. it is clear this is down to one thing. lisa: what is mind-boggling is that the shares have risen by more than 100% this year, already on a moonshot. that one stock trading like a penny stock although it is one of the biggest market capitalizations in the s&p and nasdaq tells you where we are. jonathan: jaw-dropping guidance heard around the world, the ai revolution has begun. bloomberg intelligence is coming up next. live from new york city, good. equities futures is pushing higher. this is bloomberg. ♪ lisa: keeping you up-to-date with the first word. the european union has frozen more than $215 billion in

russian central bank assets since moscow invaded ukraine. eu nations reported the new numbers following the sanctions package which forced banks to divulge information on the size of their holdings. the eu wants russia to pay for the reconstruction of ukraine. germany suffered its first recession since the start of the covid-19 pandemic. europe's biggest economy saw first quarter outputs shrink zero point 3% from the previous three months following a half percent drop between october and december. the government says that lower household spending on food, clothing, footwear, and furnishings was responsible for the week data. a chinese state sponsored hacking group gained access to infrastructure organizations in guam and the u.s. according to a new report from microsoft, which says that the group is likely trying to disrupt critical communications in the event of a crisis. microsoft says that the hackers have been active since 2021. guam has become an increasingly

important military hub as tensions with china ramp up. the singapore deputy tri ministers says that the widening rift between the u.s. and china appears to be irreconcilable. at a speech, he says that the situation has become more dangerous amid tensions between the two sides with the taiwan strait coming the region's most dangerous flashpoint. local news powered by more than 27 hundred journalists and analysts in over 100 20 countries, i am lisa mateo and this is bloomberg. ♪

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>> if you look at tech, it continues to reinvent itself

over and over. the latest generation will be ai. as you look at the visibility of earnings, you continue to see a strong earnings coming. i think that's important, because a lot of people say tech has gotten expensive. when you factor in how much tech has been able to beat their earnings, i don't think it is as expensive as people think. i think that trend will continue. jonathan: that story is captured by one name, nvidia. in the premarket absolutely flying close to 27% higher. 386 in the premarket and analysts are loving the guidance from this company. jaw-dropping guidance heard around the world come the ai revolution has begun. a lot of people bringing toward a ton of demand and growth for this name. a $755 billion stock potentially adding 200 billion u.s. dollars in market cap in today's session. tom: this stock is up 50% plus

per year. this is not a one quarter flute, a one-day fluke. this is a stock that has delivered and delivered and delivered before this. jonathan: up more than 100% this year. it is only may. the best-performing name on the s&p 500, absolutely flying. tom: we are amateurs, he is not. nvidia analyst at bloomberg intelligence for a very important conversation. i have a bunch of questions, but let me start with the addressable market over the next decade. there has been pretty good work on this. is it like the cloud where it seems never ending for nvidia excellence? >> i think so. what they have done well is they have gone beyond the narrative of nvidia being just a chip company and they have proved in the way that they have gone

about their product launches. now they have been partnering with the hyperskillers, especially microsoft, and it is an application on top of microsoft cloud which is how you consume generative ai. the addressable market is north of one trillion dollars simply because when you look at how these services are deployed, the underlying infrastructure, that will become a much bigger portion of overall spending. let nvidia continue with that. i don't think aws is on board with that strategy or google, but microsoft is, and that is what is working with them in terms of that cloud. jonathan: what was amazing about yesterday was the timeline. that this demand seemed to have already appeared in their near term outlook for the current quarter and beyond. do you have a sense for where this has come from? how they were able to monetize it right now? mandeep: i think what is very

clear right now is intel has given up its leadership when it comes to being the primary chip at the data center level. cpus used to be the main ship that you would need to run a server. guess what? going forward you will need a lot more nvidia gpu's. nvidia has bundled their networking gp use, which is all in one package. which is the beauty of how you consume things on cloud. clearly that shift from cpus to gpu's is very visible now in terms of the trend. that is sustainable. it's not going away anytime soon. lisa: the company's forecast for sales was 53% higher than analyst estimates. where did the surprise come from? mandeep: that is a real surprise in terms of what they saw 90 days back versus last night. clearly, the generative ai wave is catching up.

everyone now wants to invest in this. the other aspect is the supply side. last year we were in a supply crunch situation where nvidia was one of the vendors. now that supply has normalized, they can make a lot more of these and satisfied that insatiable demand on the data center side. i think that the supply chain easing is helping them and it is visible in their gross margin. the gross margin is close to 70% next quarter. you are seeing that gross margin expansion on the back of very high demand, which is a very good sign. lisa: i hate being a negative nelly but i wonder where china plays in, as there are certain bans being placed on what non-us companies can sell to china with respect to highly capable chip technologies.at what point does not become a headwind or challenges the

runaway valuations of nvidia? mandeep: it happened to micron this week. right now there are export controls around nvidia chips. to my mind they are under shipping on the data center side, so the demand is higher which is somewhat reflected in the guide. still, if the china market is huge for them, and they asked -- and the export controls would increase come that would hurt them but i don't think that nvidia is the only company that is hurt in that scenario. tom: 12 months in a 50 time earning, it is not that big of a people company, 70,000 or whatever the employment is. maybe they aren't to take out candidate, but why doesn't big-money take up 10% or 15% of this? out five years or 10 years? to me it is a no-brainer. mandeep: well, i think the part of it has to do with how the market is positioned right now.

there are certain pockets that are in high demand because of the ai wave, and there are certain segments in a mode where they are inventory clearing. clearly, you will see a rebound across different chip segments at different times. now, it is anything to do with generative ai that is doing well, and there is good reason in terms of transformative aspects. jonathan: can we finish on where tom started essentially? how do you value some of these companies at the moment? mandeep: look, i think for a stock like nvidia a lot is priced in. when you deliver this, it is hard to be negative simply because, as i said, they are under shipping demand on the data center side and it will double in the next two years. it will grow into its valuation.

any slight miss, and we have seen this with semi companies, they can have a monster like this or they can miss big as well. i don't think it will happen to nvidia in the next couple of quarters, but that is a risk if the hyperskillers develop their own chip. three customers are buying 50% of their chips, the cloud customers. if they make their own chips, or anything along those lines come that will hurt the stock. jonathan: thank you. on the back of the success of nvidia, a stock that we were waiting to deliver earnings yesterday on the guidance absolutely amazing. the stock is flying in the premarket up 26%, 20 7%. equity futures on the s&p 500 up by 0.6%, the nasdaq 100 come as you might expect, is flying too a few hours away. lisa: they were priced to

perfection last night so they . it seems like buy first and justify later is the way to go with a lot of these technology shares. tom: that is more basic and friendly. nvidia is more fancy and high-powered. apple, microsoft, mandeep knows the names better than me, how can you not buy a 10% or 15% in this company to get out 3 or 4 years in this ai belief if you really believe in it? jonathan: it will cost $150 billion by the end of today, potentially. tom: if blackrock ends up owning the transaction. the bottom line is that they own the high ground. how could warren buffett not climb on board? lisa: potentially this will be the biggest one-day move in market capitalization in market

history. the previous record was apple with a one-day move. this could potentially blow that out of the water. how do you make big moves on something that is already valued at an incredible rate? we have no clue. it is throwing a dart at the dartboard. jonathan: can you tell us more about the studio? you have a studio? what is the studio? tom: this is wonder stuff. i have a mac pro. jonathan: the music studio? tom: something i never would have imagined owning five years ago, let alone 30 years ago. you put stuff into it. there is a black box, a thing that you put in, that is competing with nvidia. lisa: does every song that you create have this soundtrack, the bloomberg surveillance music? jonathan: you have a recording studio at home now? tom: yeah. i have had one for years.

this one is just fancy. jonathan: i have to renegotiate my contract. a recording studio at home? i would retire.

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>> the retail stock activity has been dreadful. >> people have been so underinvested in the last four or five months. they need to put money to work. >> i think investors should be cautious here. >> the market still believes the fed will cut before the end of the year. >> the only way the fed cuts this year is if there is a recession. >> this is bloomberg

surveillance with tom keene, jonathan ferro and lisa abramowicz. jonathan: we've got big move to talk about, live from new york city this morning, good morning, good morning or our audience worldwide, this is bloomberg surveillance. nvidia absolutely flying, up by 27% premarket. it added 200 million dollars to its market cap. tom: this is an industry that can aggregate at a two years or five years or 10 years and more. i would suggest that it's a shoot story -- that it's a huge story but how as a rollover to its competitors and customers? shock is the only word that matters. jonathan: the number started to pour out on what the future might look like. lisa: we are in this universe and supposed to be in recession

and we are not and supposed to be heading into something dramatic, the fed is supposed to be killing all the demand for big tech and all of a sudden, people cannot get enough and there is a fomo that's causing mega trek -- mega tech names to trade like penny stocks. tom: 24 hours ago, we had word that china would fall into the pacific ocean and all of tech would die. jonathan: a slight generalization. tom: there is no conviction. we are going from story to story. nvidia at least seems to be a true tangible growth story around a hugely debatable thing, ai. i don't know what it is but generative ai is what they do and i guess there is a belief in it. the numbers speak for themselves. jonathan: are we on the brink of a melt up or melt down? in the meantime, you are saying

i don't know. the nasdaq is up 30% year to date on the back of some of this. lisa: goldman sachs tracked the fact that active mutual funds have lagged behind their index. everyone was talking about dig -- big tech falling out of bed but they are underperforming at a greater than usual pace and do they buy nvidia now? tom: we are going into june and we have the whole dead thing to worry about. june 30, someone might start writing their midyear review about june 10. jonathan: consensus positions everywhere are getting eaten alive. tech going up in the dollar going back to $1.07 and the rate cut calls, what's left to be up? lisa: if you have faith in it, it will probably go up.

that's what people are saying and you have this dissonance between people saying by it and everyone is looking to put cash to work and you have the other side of the scale and saying don't jump on the train. jonathan: equity futures now are just about positive on the s&p 500. going into the opening bell, equities are up in the bond market, yields look like this, yields are up by two basis points on the 10 year. lisa: we will get some economic data today at 8:30 p.m. with initial jobless claims followed by pending home sales and information on banks are continuing to borrow from the federal reserve lending facility and jobless claims are key to understand. are there cracks starting to form? we are getting retail earnings and got best buy was shares

flying up more than 4%. they beat expectations, they beat their earnings-per-share and they are getting rewarded even after a significant move year to date. costco and gap after the close. a couple of fred -- fed presidents will give their discourse. morgan asset management now. are rink of a melt up or melt down? >> money market purchases have been made this year and u.s. equity demand flows are down $58 billion this year. we are talking about a story with nvidia were folks came into the year thinking here comes the recession. the fed has to cut and that has not happened.

if you are expecting a fed rate cut, you are expecting a traumatic event. you are expecting a recession, you are expecting a regional bank story and that's not what we are expecting. i think it's hard to be underweight equity in this environment. after 2022 where there was nowhere to hide, we are saying let the data do the work. if we go into this soft landing scenario which we expect coming you don't want to be light and equity. the flows are going into cash and cash is a is competitor right now. lisa: what does diversification look like with tech trading like penny stocks? >> i will not save growth over value but find the quality in the market, find the earnings. when we came into this year, we were saying how do we find companies that don't necessarily need a regional bank loan?

we are trying to find companies that are high free cash flow and high quality and that is part of the story of what's working. lisa: that's a great story so how do you know what quality is? is nvidia quality? they've got revenues but does their valuation really get justified by the potential that's unforeseeable? >> it's emblematic of the story. we are not saying to buy them but go find the companies we think can outlast tighter financial conditions. there is no way that the fed is going to be easing financial conditions anytime soon with companies like delta saying we have record advance bookings this summer to fly. so the consumer is there. the nasdaq is up 20%, there is no way the fed is easing. these are the things we are thinking about. you cannot be underweight stocks here in environment where the

soft landing scenario for us looks more appropriate than the hard landing. the only time you could get a hard landing is if inflation accelerates from here in the fed has to take the federal funds rate up through 6%. it's a low probability event for us. stevie wonder is a commencement speaker this year. tom: the thing that i would note is that we are all resetting the terminal rate. we got wonder stocks trading 50 times forward volume. it can make you nauseous and the only solution is to extend your terminal rate and extend your horizon. how are you handling that at j.p. morgan? >> are you referring to the terminal federal funds rate? tom: i'm looking out three years and seven years.

>> the rate that we are expecting is five-5.25 percent by the end of this year but longer-term, we have about a 2.25% value on the 10 year treasury. this is a bond story because you know have the benefit of duration at your back. over the next decade, that's an important story. tom: does that duration benefit tech? >> it benefits long-duration equity. we have a trend growth in the u.s. of about 2% which puts a fair value on growth higher than where it is today. that's an important theme. we have our 60/40 portfolio at 70% since 2010. you are talking about a 9% achievable rate on a balance fund over the last decade.

jonathan: we brought up diversification, am i going to get risk mitigation qualities from treasuries? things look a little difficult in washington, d.c. and treasuries are selling off for 10 straight sessions, what is that? >> that is pricing out premature easing. the next move we think the earliest it could be is 2024. that's why i say cash as our biggest competitor because people think it's up 5% fed rate and reinvestment risk is real but treasuries are going to protect you in the soft landing scenario or the hard landing scenario. the soft landings in areas inflation falls faster than growth but that's not today's trade. do not be underweight equities today where the consumer is still very strong into the

summer. jonathan: great to catch up, good to see you. some big moves in this market now, the front end of the yield curve, looking at nvidia in the premarket, flying by over 20 4%. -- 27%. it's a one trillion dollar market cap. lisa: that's insane. a one-day move like that on such a big stock, this would be the biggest ever one-day increase in market capitalization in u.s. it holds. tom: coming off the shock of yesterday afternoon, it hasn't pulled back. it is steaming through the late-night and the premarket. jonathan: two shockers yesterday afternoon. did you tune into the twitter space yesterday with elon musk? tom: i haven't because i don't know how to use spaces. jonathan: i was kicked off the

app about 10 times. did you try this? i gave up. it wasn't working out. tom: do you think they would have known that upfront? it's like 200,000 people and you say what happens if they show up and somebody must have known. jonathan: we often forget how campaign started and i think people will forget this in a rush. . it was so bad it was good because so many people would wake up and talk about this one thing, the governor desantis presidential launch campaign did not want. it was preparing to launch with elon musk. you had the likes of bidens and ministration coming out on twitter and saying basically it linked to his campaign. the response is amazing. tom: anne-marie was listening to it. jonathan: she will join us in a moment.

the governor of florida gets into the race. lisa: keeping up-to-date with news from around the world with the first word -- ukraine is gearing up to begin its anticipated counteroffensive as soon as it receives the necessary weapons and equipment from allies. that's from a top adviser to ukrainian president volodymyr zelenskyy. he spoke exclusively with mayor -- with maria todeo. >> we are preparing the counter offensive as we get delivered artillery and battle tanks and armored vehicles. as soon as we get it, we will start this counteroffensive and there will definitely be results. lisa: he dismissed the hungarian prime minister that ukraine cannot win the war with russia.

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>> you want to spend 30 billion more than they spent last year. i will not put a bill on the four that spends more money next year than this year. >> house republicans are determined to either extract deep, painful cuts that will hurt the health, the safety or the will be of everyday americans or crash the economy. jonathan: that's the minority leader hakeem jeffries and house majority leader kevin mccarthy

speaking about the debt ceiling negotiations which are going nowhere. no sign of any worries on the equity market. the s&p 500 is posited by 0.6%. there is a surge in a single name, nvidia up by 27%. you are adding $200 billion. lisa: this is a moonshot. what does this say aboutfomo ? are people more scared of missing out at this point? tom: i think it goes beyond that. it is a strategic realogy -- reality that strategic technology is killing it. you mentioned the nasdaq is up 1.84% and how to the other 20 stock to do the nasdaq 100? i really wonder. jonathan: the psychology of this is interesting because you get

caught if you are not in this, you were wondering do i need to get into this now? remember the quote from last week, it would be different for the stocks to melt up before the hard landing and that's what people are nervous about. they will look back to certain themes that they missed out on. maybe this is really the next big thing that needs to be allocated. some people will wake up feeling that today. tom: i strongly agree when i think we will see how it opens up. anne-marie hordern is with us right now. she knows serious conversation in washington happens at the ballpark or over a three day weekend. they've got a long weekend to come to jesus, where will the

debt talks to be tuesday morning? annmarie: a long weekend ahead and republicans, the house members will be leaving town. what potentially people are thinking about because speaker mccarthy said we could potentially see a deal over the weekend come together by this weekend, maybe this is a chance they could get something before the weekend because speaker mccarthy will be giving the house 72 hours to review it and then come back and vote. this would be a positive development in the debt negotiations. fitch put the u.s. on ratings watch maybe that's the final impetus to make sure these individuals are getting in the room and hammering it out but it's starting to look more positive but i am a little bit jaded because last weekend when i was in japan, there was also this hope and the president landed and was with speaker mccarthy and that would be like the final version of this and they would have a deal in principle. a lot has to be wait and seen.

it white house source said they would meet every single day so let's see if they me today. let's see what they do before the weekend. tom: the washington post leads with democratic party unrest. they are upset with the white house getting it wrong. i assume that's a natural feeling. what to liberals in the democrat party think about what their leaders doing at the white house? >> we need to see within the final agreement. what many progressives are concerned about is that the white house would be giving away too much to get this deal over the finish line. for the white house, what would be catastrophic and the worst thing would be if there actually was a default. they were feeling the heat and they said they wouldn't negotiate about the debt ceiling and they clearly are negotiating about it, negotiating the spending to lift the debt ceiling. i guess they are looking at the

worst outcomes and negotiating and lifting the debt ceiling looks much better in their eyes. they don't want a default on the president who is running again for office. lisa: with ron desantis on twitter, once people had gotten beyond what is twitter space, they were greeted with a blank windows and other technical glitches. how big of a potential liability is this for ron desantis given the mockery from other candidates? is this something were no publicity is bad publicity? >> i think the news cycle is very quick so potentially they will talk about this moment next week, probably not. what is telling is that the morning after this highly watched candidate made his

announcement, 26 minutes late because of these technical glitches, we are actually talking about the event failure rather than what the governor said and how the governor wants to run a presidential campaign. from the new york times, they stated executive confidence courts the -- courting the messages is absent. it was a conference call from hell. this is how the media is picking this up and this is how his challengers like the former president are picking this up. they are calling this a failure. we have to see how he does in the next few weeks. jonathan: this reminded me of the cyber truck with bulletproof windows? and they threw a rock through it? remember the following day? disaster, terrible.

the orders for the cyber trucker more than one million. i don't see any difference. lisa: this is pretty bad. jonathan: my view this morning is that the people who will never talk about this are now talking about it and they like to talk about it because in their minds it failed. the media take is so predictable. they will all be talking about it. governor desantis will go around and do a bunch of interviews with big networks and then focus on the substance of what he says and more and more people will get to know him and get on his side if they want to buy a sarver just by a cyber truck. tom: one quick question, i think the governor of florida is anti- woke. i think the former president is anti-woke. is there a distinction there? annmarie: this is something that

the governor said multiple times last night at least the moments i could log on and tune into this twitter space about going after the woke campaign. what the desantis team tries to establish is that they are a more trusted version of the trump world. it's trump without the drama and you continuously hear them try to reiterate that message because they don't want to lose that base, that core the trump has been building up. they want to be the next trump without the drama to make sure he can have the big donors. yesterday within an hour, what the fundraising brought in was about $1 million which is pretty standard. the likes of steve schwarzman, these individuals at the moment on pause with the santa so the next few weeks will be very telling. jonathan: anne-marie, thank you.

you can see how seriously his competitors are taking this run, the fact that you had the campaign of the president, the campaign of the former president all taking shots as this played out in the next 12 hours and it tells you how highly they regard this potential competitor in this race. lisa: your point is well taken and that there is this debacle but there is a whole host of attention and it will continue to be on him as people take it as a train wreck. kathy schwab will join us next -- kathy jones will join us from charles schwab. the nvidia stock is up by almost 28%. from new york, this is bloomberg. ♪

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jonathan: live from new york city this morning, good morning, good morning with nvidia in the premarket higher by 28%. a new session high for that name, absolutely flying. this is what it means for equity futures, the nasdaq 100 is up by 1.9%. the nasdaq with a 5-6% weighting for nvidia. this will breathe life into the other ai themes out there.

you've got the underperformance in the russell right now with -0.4%. i want to sit on the bond market for a second. i can't believe how little this has been talked about -- for 10 straight sessions, yields have been climbing higher at the front end, up by five basis points in today's session on the 2's. 50 basis points higher in 10 days. tom: the 10 shirts i look at are the same as the two year yield. five-year libor up 10 days in a row. the 30 year mortgage popped yesterday, way above 7.0. the two year yield observation which i agree with goes to other yield studies. jonathan: there are other asset classes as well.

you have the story of high yields eating into the rate cut story and breathing life into the u.s. dollar again. this currency pair against the euro has come down from $1.11 down to $1.07. lisa: if it's hard to get macro themes, it's just as hard to get micro themes. you were talking about nvidia and the share move might be the biggest in terms of an increase in market capitalization in u.s. history if it holds at these levels, surging 28%. the key question is, do we have a sense of how many people are flooding back in after having missed this this year? is this a matter of fomo? a pretty big move but there are losers and that highlights is

that even with an industry that, it's hard to make an accurate prediction. snowflake has software tied to cloud computing and it cut its guidance of those shares are down more than 13%. cloud computing related to ai and not necessarily getting traction. american eagle down more than 18% after cutting the full-year forecast. the retail segment, you have the haves and have-nots but this is an interesting moment where people cannot get a handle on the narrative and that's why you were seeing big share moves. shares are down more than 11% on dollar tree after they missed expectations because of margin compression. their margins were lower and sales increased. we saw this during the pandemic where inflation was crimping some of the lower end discounters simply because they did not have the capability to offset it with price increases.

jonathan: we can validate a story with the retailer. lisa: if you are having trouble understanding the macro, good luck with the micro because it confirms everything depending which one you pick. jonathan: we had fed minutes yesterday and more fed speak today, the richmond fed president and boston fed president coming up later. kathy jones of charles schwab has this to say -- tom: this is a study, at the end of the quarter june 30 is what to do with qt. what do you believe about cutaneous what should you do? joining us now is kathy jones

who does all thirds of good work including knowing piano from julliard. you emphasized something which is a barbell strategy giving the fed uncertainty. describe what a barbell is an -- and what the best barbell to lift now? >> it's dividing the maturities of your holdings between short and intermediate to long. one reason we think a barbell make sense right now tactically is that you have a lot of pressure on short-term risk -- rates, you get a lot of yield and that gives you some optionality with what to do and reinvesting. if you skip that area that's priced for the fed to cut, that's where you are probably vulnerable to a repricing if the fed doesn't cuts. then we want to go out longer because we still believe the

narrative that the economy will slow. it's a tactical way to work in this environment. tom: she didn't give me how long? do i go out to five years or 30 years? >> no 30's. you could do up to two years and maybe a little bit less. then 5-7. tom: this is real bond talk over risky investments. jonathan: we watched the fed minutes yesterday, quote, several participants noted that if it developed along the current outlook and firming after this may not be necessary. some participants based on their expectations, the progress of returning inflation to 2% will

be unacceptably slow. lisa: please go on. jonathan: i will stop. is some more than several? >> there is obviously a range of opinions. this differs from the last couple of times when everybody was on board with the anti-inflation narrative. we didn't hear a lot about some or a few concerned about the leg impact of tightening and that we are starting to hear that. it sounds like there is a lot of people on the fence now. jonathan: let's say no action in june, would your base case be a hike after that? >> i think they probably try to hold all your but next year cut. lisa: right now, we are seeing this issue where july is becoming increasingly likely. is the next move a cut or a hike but right now, people have been

saying eight cut and now they say a hike. is there a corollary? jonathan: you can drive yourself nuts with this. i get the sense you could come to a compromise on the committee and the june meeting and say let's skip june and get additional information and make a call in july. the hawks out there are behind the idea and are willing to make the compromise. june to payrolls, june 3 cpi and i can imagine you get a rate hike. what do you think we need to see june 2-june 13 to put the hike back on the table and convince the several who think we should stop and maybe they need to go again. >> i think it would come down to the size of the payroll increase like service sector payrolls. then average hourly earnings and

you have to couple that with the work week. we've seen a work we that has slowed down and that means aggregate income starts to slow down. even if wages are climbing and people are getting fewer hours, we will have a large aggregate income coming down so i think they will parse that carefully. you would have to see a pretty big payroll number, above 250 again with rising wages and then a bad cpi number. that could put us back in the hike area. lisa: how hard is it to the fed to communicate not moving, not necessarily being indicative rate cuts in the year? you can see that in the minutes and hear that in their comments, very determined to say this is just a momentary pause, not a pivot, not a change in direction, just on hold for the moment waiting to see. i think they work hard to community just to communicate that. lisa: do you think they've been

successful in their committee case and and cohesive strategy? >> i think it's been a mixed bag to put it nicely. i think communication has been fraught -- it reflects a lot of different views and maybe that's fine, maybe that's the point. the volatility we see at the short and reflects the fact that it's not clear to the market on a day-to-day basis where the fed is coming from. tom: i am down in fort worth for the charles schwab challenge, the great colonial golf tournament and i got cash. i walk in the door today, where is my most efficacious real yield? inflation-adjusted yield. >> when you are looking at five year treasuries or so, i look at the tips breakevens, more than two years, real yields are climbing pretty fast.

if you look at tips as a way tom: if you get 150 and a 10 year real yield, what is that say to you? >> i think that's good but if you can lock in real yield and have the nominal yield just for cpi, is not a bad deal. tom: is jonathan going for real yield on friday afternoon? jonathan: that's a tough booking. getting people to come in at 1 p.m. friday. that was so difficult. i was always happy to get out of the office. not that i would ever do that. kathy jones, thank you. that was great during covid.

that's happening at companies. i'm not saying it happens here but it happens in other places. tom: my grandfather is a good golfer in one of his heroes was a guy named ben hogan who had a tough childhood and he invented the modern game. he was in texas, fort worth which is different than dallas. they have this itty-bitty golf course down there and i don't much about it because i don't play golf. charles schwab single-handedly saved ben hogan. jonathan: a beautiful swing. we need to golf now. tom: i was in it for years but i don't play. i'm taking notes from you. jonathan: storytime with tk next would be great. tom: what to they call the third hole?

brian wieser is coming up. jonathan: we've got this. tom: it's thursday. lisa: keeping you up-to-date with news from around the world with the first words -- house speaker kevin mccarthy's optimism that white house and gop negotiators will reach a deal in time to avert a default to satisfy analysts. fitch ratings plays the united states aaa credit rating on watch. mccarthy said yesterday, deal is still possible before june 1 and that's a date by was treasury secretary janet yellen has worn the u.s. could run out of money to pay its bills. nvidia is on track to be apple for a record single day gain. shares are now surging in premarket at the company's bullish forecast boosted confidence that the chipmaker

can keep thriving its business by focusing on artificial intelligence. if the gain holds, its value would rise by $219 billion to an all-time high of $974 billion net would top apples $991 billion gain in one day. phil ackman says hindenburg has outed the way billionaire carl icahn runs is publicly traded company. he also suggested shares have room to fall after tumbling wednesday to the lowest level since 2009. he said icahn enterprises reminds him of the family office that blew up in 2021. global news powered by more than 2700 journalists and analysts in over 120 countries, this is bloomberg. ♪

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manufacturing pmi will understate moves in the actual data in the economy to real gdp growth. we are still facing, it -- we are not entirely out of the bottleneck. jonathan: cool to catch up with citibank. let's get to the latest price action in the equity market. on the s&p 500, equity futures are positive by 0.6%. a major lift off the back of this on nvidia up by 28%. if we get to about 32.4 percent, that's a $1 trillion market cap for this name, more than $200 billion in market cap added after robust guidance or is it blowout? just amazing. the market cap number is 755 from the close yesterday so add

on what we got overnight. tom: this is not a $1 trillion comparison to other trillion dollar companies like microsoft. those are j norma's companies versus nvidia. the surge here, forget about overnight, in the last 345 years, out of the pandemic, it comes roaring back. it's a small company jonathan: in terms of revenue, yeah but in terms of growth, people are lining up for this. if you are just tuning in, comparing it to the size of intel, you got a chipmaker six times the size of intel and the company had more than twice the annual revenue last year. i get that and it's about the story of the moment which is why people are so interested in paying up for it, big time. tom: intel is where you get you middle disability involved.

-- humility involved. you get free cash flow that didn't work out. jonathan: i'm with you. tom: let's talk to somebody expert on the strategy and realities of media moving into the technology, not so much on nvidia but maybe last night's stressful moment for elon musk. brian wieser joins us now. you have a lot of experience of how you get there. i think it's called twitter spaces? jonathan: yes. tom: what i would notice is the san francisco building authority talks about the twitter hotel because elon wanted everybody literally to sleep at the headquarters. explain how you get to last night's debacle over what elon musk brought over the last 12 months. >> it's always a surprise when you lay off almost all of your

staff and think your building doesn't work. that was why they had so many extra staff, one of the reasons. i think it's a symbol -- it's as simple as that. they don't have a platform that works at scale anymore. tom: they can rebuild it back but how did they get here? they could've gone weeks in advance that if he put 200,000 people and jonathan ferro on twitter spaces, it will crash, right? >> you are right, the problem is we are seeing elon musk's ability to run advertising business is not particularly good. that's why the hope is that the new ceo can push them back. he needs to move away from the business and let her run it. lisa: the public discussion rent elon musk and his twitter adventures has been ridiculous.

the quiet conversation among the media companies is can we cut people to that degree and still have a functional operation? that was the feeling with a lot of media giants. you saw a lot of proposed cuts in certain select places. how much is that a reality versus a fiction built out of hope? perhaps this is an extreme example but with ai on the other tools, perhaps there is some truth to it as well. >> i don't know that there is. technology begets the need for more people more than anything else. we've seen this in programmatic advertising. they are automating so many decisions to drive digital media over the last 15 years. it requires more people in this way agencies have been constant recently. it takes more labor, not less to do this kind of work. jonathan: tv is difficult i can tell you. i know how hard people work behind the camera for me to be able to talk to be engaged on

camera with you for this to go out through radio as well. it's incredibly complex but there was one person nervous last night. governor desantis will go on the media circus but if i was tucker carlsen watching this play out last night, would he be nervous based on what he saw? >> exactly, most media partners who require the probability of a platform working or going to be very reluctant to go to twitter now. i think this would help the new ceo to push elon musk to the site is much as possible. there are people who know had to build media visits is that they are not at twitter right now. jonathan: this is an individual, tucker carlsen was dominant in his hour with multiples of other networks at times, 3 million

people nightly. when i looked at the numbers yesterday, we were talking several hundred thousand. what kind of numbers can the likes of tucker carlsen expect to attract on the platform? >> twitter will be limited now. you too can handle millions of people of the same time and there are many prop -- many platforms that can, platforms that invest in infrastructure. lisa: what is it say in terms of being the place for new content not just with sports but also in the direct consumer news business. how much do you see that becoming a probability given the challenges and given some of the concern around social media being regulated like a media company? >> that's a separate issue. can you run a media business in

a digital platform that has millions of current users? yes, that works now. this is not 10 years ago when it was a challenge. the bigger issue for tucker carlsen for example to be on twitter, does that dissuade advertisers? probably. does it raise risks around various other forms or concerns for brand safety? absolutely. i think the technical issue is separate from the content issue. jonathan: why is that the right way to do that? >> i think the new ceo is not a surly the person who can do it. nbc universal has a fantastic lineup of people working behind the scenes. they are we'll just really well-regarded and i think that's where the optimism comes from. jonathan: i don't see elon musk

saying anything about stepping back from that side of the business. >> you are correct but the goal is that the new ceo needs to encourage him to step back. [laughter] jonathan: let me put you on the spot. are you still on the south side and the stock was public, based on what you told me, would you have a buy or sell rating on a checkup >> it's hard to imagine being positive about twitter as a stock at the current valuation. there is no way it's worth what they say it is now. jonathan: thank you. tom: bold answer. jonathan: a tough moment for that company. tom: as you said, the basic idea is they hired her from nbc universal and she brings in people. so elon dismantled it and she will restructure it? that's pretty much the 3x5 lisa:

card summary. she was also an advertising executive. how do you get the advertisers back to a platform that's going through a changed identity at a time when there is a question around contents? tom: he has to step aside. there is no indication he will step aside. jonathan: she is absolutely phenomenal. the fact that he's willing to take her on board. it's not the kind of movie would make unless you were willing to step back. that doesn't look like someone you can manage and be the puppeteer. there will be some tension there and he is encouraging that. lisa: maybe just put him over there. jonathan: i've never met her but i've heard from people, she seems to be a pretty straight talker.

i don't think she will dance around it. we will see what develops. i have no exposure to it and no skin in the game. it's not a public company anymore and the risk is on him. ♪

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>> if you look at the evaluations, they are not where risk reward is compelling.

>> when we are looking at the curve, we feel like it is mispriced. >> this is pretty classic late cycle behavior. >> we are seeing strong demand for a -- particular services. >> this is bloomberg surveillance with tom keene, jonathan pharaoh and lisa abramovich. >> thursday into the weekend, it is a very active thursday with a sea change in technology. nvidia is the story and moments ago, the nasdaq 100, the nvidia 100 2.05%. tom: you can jon: you can --jon: maybe even higher. tom, 25 in june.

tom: we have more speakers today? the answer here is it is based on consumption and jobs and with claims coming out here in 29 minutes, there is no indication of unemployment out there. when i say that, people get upstate -- upset but claims are pretty good. jon: this economy is divided. manufacturing is in great and services is robust. most people will tell you that the headline level, this market is tight and even if they do stop at five, they will stay there and that is where there is -- some contestants --consensus. tom: i would link it into the stickiness and we talked about this yesterday or the day before. we were transitory before.

how sticky we are and that means a better nominal gdp and that means better sales which is how nvidia is on fire. lisa: this is the confusion. we came into this year thinking big tech rate stops -- they are everything that you want them to be. that is basically big tech universe and everyone has missed out and that is what you see in terms of mutual funds. why would the fed move away from tight policy given the fact that the preeminence of artificial intelligence and the hope of technology increasing productivity is turbocharging excitations of growth? tom: where are we in the parlor game of gaming rate cuts? lisa: there has been a feeling

we are pricing out a banking crisis and you are seeing yield of two year treasuries going back to before svb collapsed. we are not fully back there at a time when you are seeing nvidia blow expectations out of the water and other companies like ralph lauren do the same. tom: this headline from the wall street journal. jon ferro is an expert. disney in talks to buy comcast memorial -- minority stake in hulu so hulu can sustain the rollout we have in streaming? jon: espn is a part of hulu and hulu is a joint-venture between a group of companies. disney need to take out comcast to complete the whole effort and you wonder what would happen with hulu and espn. you can get this deal work you get -- deal where you get espn in hulu and disney+ together and

it cost you $90. tom: somebody said espn to espn plus is a $20 stop pop to disney. jon: what is clear is that things have changed in the last six months in a massive way. this race to get subscribers and throw money at content, things have changed. tom: our guest is too good to be true. nvidia left. --lift. jon: features up and yields higher on the 10-year, 3.7458. i are a little bit this morning by a couple basis points. tom: inversion -65 basis points. it is wonderful to have diane amoa, chief investment officer

at kirkoswald asset management. you people say be in em. every paper says you have to hedge. to hedge or not to hedge is the core issue with em. how do you hedge em right now? diana: i am assuming we are talking about hedging, the currency risk. tom: i would go either way you want but in financial media, no one talks about this reality. diana: the reality is when you look at performance in emerging markets, it has been resilient. two things that have been notable, realized volatility in emerging market currencies and emerging market fixed income has been lowered and other markets. inflation -- it's much stickier while in the emerging market things appear to have peaked but there was support coming through in a weekend dollar.

if you hatched out your currency exposure, you would have been regretting it because for the most part em effects have done well. you want to have to em duration and it is a trait that works in multiple scenarios. the outlook for emerging currencies for the next few months might be less clear-cut but if you have a range bound dollar, i suggest you not hedge in that. jon: it is about 8:00. when we talk about em, who are we talking about? [laughter] diana: where are we talking about the fall? jon: the u.s. diana: there's a go but the classic definition were argued u.s. does not qualify for an emerging market about what we

are seeing with the default talk, is raising some red flags and rate -- making emerging markets looking not too bad. jon: i have a simple em test. if things get bad in a country, do you buy or sell the debt? in developed markets, would you do when things get bad, you buy the debt. in em, you sell it. what is happening with treasuries right now? i know it is at the front end, the bulk of it but treasuries is sounding up -- off and has been the last few days. diana: the thing that is interesting with the u.s. market, there is dislocations within front end paper. around the june paper, we are seeing dislocation in pricing and that is the fact that there is no cross default -- they can default on a paper without it

affecting the rest of the curve and markets are trading that way and that assumption is if you do get a technical default, it will be a short-lived story. it might tip the economy into recession so you are seeing this inversion in the curve where people are buying safe haven duration just to hedge against this outcome. lisa: for people who might consider some of the developing world emerging markets, and some people on this end might make that suggestion about u.s. other people say what about nvidia? and relate this to the bid of u.s. stocks over the past decade as being a huge driver, how do you play that story at a time were emerging markets have gotten a bid up this year and people are realizing there is something left in the u.s.? diana: if you look at the performance in u.s. equities, there is a huge amount of dispersion within that so it is not one trade for the whole of

u.s. equity markets, there are specific themes that are structural the adaptation of ai. what is that doing with various companies, that is here to say --stay. look for some of these more resilient stories that are going to play out irrespective of whether be going to a recession and from a em perspective -- whether you are talking about things like ai, electronic vehicle adaptation, the drive to more a sustainable sort of manufacturing, that is a commodity thing that will be a longer-term story. lisa: how do you understand a valuation where a time -- at a time were some stocks are trading like penny stocks at a time where they are at a trillion dollar valuation? diana: markets don't know what to do with equities and we have been talking about going from recessions to default. people are jumping on the stories that are sustainable.

evaluations, it is hard to say it is based purely on fundamentals and -- not wanting to miss out on the winners. jon: if you look at all the cash out there and i don't mean typical investment but private equity, the jack number is amount of cash has been raised. do you assume it will float to equities or does it stay like a brick in cash? diana: i don't think we are in the world where equities is a no rain or play especially when you have interesting yields in fixed income and for investors, that's probably the consideration whether you are looking are cast yielding close to 5% or even duration in certain parts of the market. there is money on the sidelines but i think the days of buying equities blindly because you have easy money and conditions behind us and investors will look at a more balanced portfolio. jon: diana romo of kirkoswald

partners. growth has been ok and inflation was to hide so what decision do you make? you can hike rates, that is easy. then you start to get to the em story that diana has been talking about. then you have a tough decision to make as a central banker. you make a mistake, hike, what about now? tom: are you restrictive or super restrictive? what we know is that we are not accommodative and the trend -- in europe, that goes under play. jon: in the u.k.? tom: yeah. jon: jay bryson coming up. looking forward to that jobless conversation in new york. this is bloomberg. >> i am lisa matteo.

the european union has frozen more than to $15 billion in russian central bank assets since moscow invaded ukraine. the nations reported the new numbers -- which forced -- the eu wants russia to pay for the reconstruction of ukraine. pressure is mounting on rishi sunak on news that migration to the u.k. search to a record last year. an estimated 606,000 more people moved to the u.k. and left -- van left --than left. a chinese state-sponsored hacking group has gained access to infrastructure stations in guam and elsewhere in the u.s.. that is according to a report by microsoft which says the sloppy trying to disrupt critical

communications in a event of a crisis. guam has become an increasingly important military and strategic hub as tensions with china ratchet up. today marks three years since george floyd was killed at the hands of many annapolis police. president biden is marking the anniversary to urge congress to enact meaningful police reform. the president says he will fight for police accountability and urge lawmakers to honor floyd's legacy. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa matteo and this is bloomberg. ♪

>> you look at the polls, americans want to see and deal but they are divided along partisan lines on what they think that should entail and republican voters thanks spending cuts, they bought the line that spending cuts are important and democratic voters have bought the line it's party is rejecting. jon: i don't like playing this game but this game is pretty exceptional with this morning, nvidia up 30% in the premarket

so this is a session high. the game i'm talking about is the trillion dr. -- dollar market cap game. for the number you might be interested in, if you get to 32.1 4% higher, that is a $1 trillion market -- cap of this country. this is not the normal $1 trillion watch. this is a to -- historically, that is absolutely canonical -- phenomenal. lisa: if this holds, they will gain more market capitalization increase than any other company in the u.s. history. even apple, amazon and all of these behemoths that have proven themselves to be at the epicenter of american culture. jon: the market cap of intel is $120 billion. tom: nvidia has compared -- is

compared to google and the rest of them. how unusual this is, look at the standard deviation move and the weekly chart which is maybe what the pros would use, it is a 3.6 standard deviation move other -- up to where we are now. a trillion dollar company, i have never said that. what i am saying right now, i have never stated that the stock would pop on a weekly -- weekly standard deviation. jon: moves like that are associated with much smaller companies. it is phenomenal to see moves like that. tom: this is a joy, douglas holtz-eakin has done serious work on the debts and that deficit. i won't demean him asking about oval office discussions but i

will ask him about where we are with the congressional budget office and president of the american action forum. you go where the cbo goes, which is to try to estimate our growth rates of revenues which i think it -- is called taxes and spending. where of those light passes going to eat --be after the debt crisis? douglas: regardless of what deal is struck, it will put the tiniest of debts in the fiscal cap -- challenge. the problem is in the spending programs. there is room to raise more revenue and that is off the table so we are not addressing issues that face the government and the budget and until we get serious about slowing the growth rate of the big spending programs, they grow much faster

than revenue ever because we will. tom: we need a commission with people with z in their names. we are not talking about that. why not? douglas: this is politics. that is all there is to it. the issue is not the debt ceiling. it is not the fault, there is you and nana be --unanimity -- there has never been the political wherewithal to stabilize it which i think it's the necessary condition for the u.s. and we haven't talked about it. if you think back to the

president -- his budget said let's end up the war of global terror. the only thing they said about the federal budget, the rich didn't pay their fair share. the biden administration came in with a more -- a more -- enormous plans to expand spending so the american people can be excused for not understanding we have a big problem and we do. it is time they are told that and addressing is what we have to do next. lisa: as one person said from chatham house, -- they're going to get fewer benefits and there seems to be a shift on both sides of the aisle to add it whether it is expect to investing in technology or investing in infrastructure or whether it is just the spending we already have in place, and doesn't seem likely that we will see restraint in the future

regardless of what comes in the budget. what is it -- your view in terms of what it would take to get people to care about the debt limit which doesn't seem to matter? douglas: they shouldn't care about the debt limit will stop the -- debt limits. --limit. they should care about the fact that the spending sees the revenues as far as the eye can see. they should care more about the fact that because the entitlement spending is paying all the revenue, there is an money for real investments and we are squeezing out national security, education, and that is a serious problem for having a prosperous future. they should care about the fact that those big programs are taking the money and are not financially sustainable. social security ago bankrupt in

10 years and some camp land -- some cannot plan their retirement. lisa: what is your sense of the tax revenues? we have been talking about how among the it has been. how much of this is a lack of investment in brs and a lack of text collection -- in the irs and a lack of tax collection. douglas: it is an organization whose culture is deeply broken. it is time to get brs back to his job which is to collect the taxes effectively. we decided everyone should be a refundable tax credit. they were not built to do that and they struggle with it. identifying submission and getting it staffed up are all essential. great jon: jon: to catch up. --jon: rates to catch up. jobless can't -- claims are

coming up. some breaking news on jobless claims. we have been following this story closely. >> there has been some feeling that massachusetts was overstating the number of jobless claims because of fraud and the state has confirmed that. over the past three months, about 14,300 jobless claims to many and backdrops the number of jobless claims by 171,000. the data we will get will be significantly lower and it is because of fraud in massachusetts so it will be hard to parse out what the jobless claims situation is. other states have reported the possibly of fraud which raises the question about jobless claims in general and how that -- valuable they will be as a predictable of the labor market. jon: we went from 192 to --190

to 244. >> the number of people claiming jobless claims that are fraudulent would adjust the vector down. there was an adjustment up from the 190 because of seasonable -- seasonal adjustment factors -- factors that will be there but we had 242,000 last week and subtract 14,000 from that and it would look like a big drop. jon: i imagine it you have this information, you might make a couple changes and the actual number is going to drop next. you will get the animal -- the analysis with michael mckee. the print up next. ♪

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tom: bloomberg surveillance. we are adjusting here. jon ferro adjusted the vector this morning. you will be working on a lot of good stuff. we are looking at claims and if you're just joining us, michael mckee giving us the great work of someone in washington over what claims would be. it is a different claims report than the usual because it will

be adjusted and mike mckee will adjust for us. are you able to accomplish this feat? michael: it reminds me of airplane, what is the vector, victor? jobless claims are down from the prior week's initial release of 242,000 but we will see what the actual revision is going to be because as we mentioned, massachusetts reported fraud in its initial claims numbers, about 14,300 a week had been added in an over the course of 12 weeks, that is 35000 and the revision goes to 225,000 from last week. we actually go up by 4000. if you want to figure out what that means for the economy and

the markets, go ahead. lisa was struggling to do that but it suggests problems with jobless claims as a canary to tell us about the labor market. tom: if we look at the second view of gdp numbers coming up. michael: we see the second report, first revision, 1.3% for the first quarter and that is up from 1.1 percent initially reported and it looks like a lot of that is consumer spending of 3.8% versus 3.7%? we will check the details of that to see how many -- it does suggest that we are seeing stronger growth in the u.s. and everyone -- then everyone had participated. tom: 43% -- 4.43%.

lisa: it is lower than the session highs and i don't understand why is -- it is not more. there is a question on why we are now pricing in rate cuts by the end of this year. tom: i have never bought it for a minute. lisa: if we use these as some sort of measure, then it signals an employment market that is chugging along just as strong. tom: that has value but to look at the second look at gdp, i will look at 1.1 less for is a 5.5 nominal fake gdp number and that is adjusted to 5.5. i think that is a big leap. there is a third look. michael mckee is only one that looks at that but help me here with the -- personal consumption taking up in the second look. michael: this is spending had

been very low was revised up to 1.4 percent. overall, the economy going into the second quarter he was running a little bit stronger than had been initially thought which suggests it may not be unrealistic that we see we see reasonable growth in the second quarter. the alanna fed gdp number, is way too preliminary but it has is going at 2.9% in the second quarter. lisa: i reliable are these data points -- how reliable are these data points? michael: we saw a lot of fraud during the pandemic and that really pushed it up a lot. we had 20 million jobless claims and now we are saying half that. we don't know and a lot of these jobless claims systems in the

states, found out they are running on very old computers and they don't have a good verification system. states have chopped spending on it and they have very few people verifying who are getting the benefits so it calls into question the whole jobless claims structure, a rather rickety structure. we saw continuing claims not revised. they were over one million. very little change in that suggests that a few of those who will follow. -- a few of those people fill out --fell out. tom: right now, we get interesting gdp revision perspective from jay bryson, chief economist at wells fargo. do you get value out of a second look at the gdp? jay: there is a little bit of

value in the sense on what you get in the second release is the first estimate of gross domestic income, the income side of the national accounts that should be the same thing as gdp. you get some of that and you also get corporate profits which are important for the economy. i look at more the income side of things, on the second look then i do in terms of demand components. lisa: how data-dependent can you be if you cannot rely on data? jay: you are always flying blind in this economy and what i would say to that is there is a lot of choppiness and noise out there. the big issue here -- picture here and terms of the economy is that it expands continuously. the labor market is holding in there and i -- we know that inflation has come down but it remains elevated and that is the

real narrative that we have to manage to at this point. lisa: the narrative has been all over the place as we have been trying to track and i am wondering whether this idea of immaculate disinflation moved to rapid inflation, and suddenly it will go away. is the market underpricing the risk of having to worry about inflation for a longer period of time, forcing the fed's hand more? jay: there is something to be said for that. at the end of the year, the rate cuts price in their. some way to make sense of that would be, the market isn't in good at making precise estimates up probabilities. one way to look at that is a low probability of a big move at the end of the year because something has gone up, whether it is the debt ceiling or something else. if that doesn't happen, i think there is a good possibility that -- for there is a possibility

that you could get stuck at an inflation rate higher than 3%. i don't think the market is priced for that because i do not think the fed will be cutting in that situation no would they be probably -- nor would they be probably on hold. tom: that estimates -- on the demographics, the movement, the fabric of this nation. do you believe in a rolling recession? we are aggregating in even to be silliness of an e. mber estimate of the dreaded r word. jay: i think it depends on your definition of a rolling recession. i tend to think of one as hitting different sectors at different times. housing clearly slumped last

year and that -- there's evidence to just sit -- there is evidence to suggest that it is stabilizing. the thing that is holding is consumer spending and if you go forward, if you do have weakness in housing and manufacturing, you could see job losses and that could then bleed over into consumer spending. you could have not all sectors going down at the same time but you could have, as you talk about, this rolling recession going on. tom: the smartest thing i heard today, lisa brock -- lisa abramowicz, on airlines. lisa: it is personal consumption. i do wonder going forward, whether we do see some sort of seismic shift going -- coming down the pike for the u.s. given nvidia and ai and tech giants never left for dead and suddenly

revised their greatness -- do you think this is a last -- a lasting trend for jobs and gross domestic products? jay: absolutely in the way i think about is ai is a potential productivity game changer. i don't want to get too dramatic but industrial revolution, maybe it is not that but it is kind of like when we first went to the networking of consumer -- computers and the internet. it is even bigger than that. the issue is not only is it a productivity game changer, it has profound social and political implications and that will last for years. tom: thank you for joining us. jay bryson of wells fargo. thank you to our washington team for the reporting on the massachusetts claims fraud.

the easy answer is nvidia and the nvidia 100, i like that. nvidia 100 up 2.05% to two point 05% and the demands we are seeing is almost 1.44 22 -- two year yield, the twos and attends final spread finally moves to a vegan. 70 basis points is not the same as 60 basis points. lisa: people are pricing out the idea of rate cuts and pricing in be idea that the fed will raise rates for longer. when it comes to the debt ceiling, we have tried to touch at it from a distance but we do get information. kevin mccarthy said they worked past midnight to get a deal done. i said there are issues remaining any he is speaking to reporters. parsing the urgency of getting

something done, the feeling of progress with trying to make sure anyone -- everyone can present some into their constituents that the stomach them look bad. tom: red hats, beer, i will let the speaker picked the beer. we can gracefully get through memorial day weekend and tuesday, there is a solution. lisa: they will get together and have a barbecue and figure it out. cap we all just get along? tom: soldier into delaware as a president? right now, 4.43% on an important to year yield. markets on the move. good morning. ♪ >> with the first word, i am lisa matteo. kevin mccarthy's optimism that

white house and gop negotiators will reach a deal in time to avert a default did not satisfy analysts. mccarthy said a deal as possible before june 1 and that is the date by which janet yellen has warned the u.s. could work --when out of money to pay bills. germany has suffered its service -- first recession since the start of the covid parent -- pandemic. that followed a half percentage drop between october and december. the government says lower household spending on food and furnishings was responsible. nvidia is on track to beat apple for a record single date market gain. shares are surging after the company's forecast boosted confidence that the chipmaker can keep its business writing by focusing on artificial intelligence.

if the game holds, it would rise to an all-time high and that would top apples high. lawrence wong says the widening rift between the u.s. and china appears to be on record siebel -- appears to be on reconcilable. --unreconcilable. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa matteo and this is bloomberg. ♪

>> the retailers stock activity has been dreadful. if you look under the surface,

retail companies' stop performance, all the cyclicals under the tech side of the skew to be index is driving things to the ground and telling you that that economy is slowing unconditionally. tom: we think --tanks wells -- thank wells fargo for the best and brightest. let me say in the tech space, we continue to advance with nvidia leading the way and we talked about this morning. it is up 1.8% on the nasdaq 100, now up 2.25%. we had to medicate . bramo. given that against the 10-year yield basis point. lisa: i was surprised that the move wasn't bigger at the outset

when we got the data. the jobs market byzantine to be cracking. consumption is good and gdp revised upward and you are looking at it to year yield that has to price out some of the pessimism that came in after the potential regional basting crack -- banking crisis. they are the highest going back at one point two 2009. tom: there is a shift here. we like to use the word grind, the 10 year yield 1.25% and we are earlier for one of her good guests that this is a resistance point. it was someone from citigroup where we are breaking out back into a higher range on some of these yields. the 10 year, 1.52%. the headlines, they look at the 10 year will yield at "balance of power" and we will look at their of the woods.

mccarthy says not everyone will be happy with the debt deal. that sounds like he is telling people this is what we got. lisa: let's see if he can wrangle everyone to vote for it. tom: they will work 24/7 on the deal. go with me on this. your "balance of power" tonight on the debt dealer -- deal, seems to be moving on real time. the nasdaq up 2.3%. she is excellent on the consumption, seeing a second look at the gdp. jennifer bartashus joins us now. i hate this tile. she is only expert on aisle 3, 5, 9, and 14 at a big box. what a bunch of baloney. she is wonderful on the state of retail. complete walmart to ralph lauren

to tiffany's to dollar tree. some of them together on the strength now, that you have learned, on retail america. jennifer: people are descending into value and chasing value and wherever there is value, based on euros -- your perception, that is where retailers are doing well. people are trading down into essentials and saving money for splurges, whether that is experiential or travel. things like that but the consumer is definitely behaving in a completely different matter than they were a year ago. lisa: how much is this evidence of a k shaped recovery or session, simply because the higher end of stores are able to raise margins at increased margins and the lower end gets crimped much more. jennifer: it is playing out that way and when you look at the higher end companies, they are

able to pass through but even the higher end consumer are trading into areas where they can save money. you heard walmart saying people are shopping at groceries for walmart. they can have more of their discretionary income so they can spend on the more interesting things they are interested in but it is getting to be harder and harder environment for anyone who plays in that value customer segment. lisa: we are watching to year yield rise considerably on the heels of better-than-expected jobless, good downside surprise and a sense that the labor market is strong. what with -- have we heard from retailers in terms of wages that they are required to pay staffers to keep their stores employed? is it a concern? do they have to pay up? do they not have enough labor? jennifer: it is an issue where they don't have enough labor. it is a competitive environment

for labor now and the pressure to increase wages on an annual basis is not a betting. we have seen retailers talk about investing and waging their -- raising their hourly wages even more to stay competitive. when people leave, you have to hire and train and it is often cheaper to pay them more in the short-term that the long-term -- band the long-term -- short-term than the long-term. tom: all of that starts with buoyant revenue, units and price which leads to nominal gdp. we talk about sticky inflation. his sticky -- his sticky inflation and better revenue growth good for walmart or is it -- his sticky inflation bad because customers are being

harmed by it? jennifer: sticky inflation is good is -- if it is a reasonable rates. when inflation is consistent and within the three-five range, it is easy for retailers to manage and it is easy for consumers to absorb but when it becomes sticky at a higher rate, it becomes a real challenge because the retailers need to be able to provide value and consumers pushback harder on where they spend their dollars? tom: thank you so much. jennifer bartashus, definitive on where we are spending our money across america. our further lift to the markets, 2.29%, make that two point 27% on the nasdaq 100 and lisa is watching all the different maturities and i guess we have to go on a 12 basis point on the to year yield, rounded up 4.50%.

lisa: this is the year where narratives go to die and i am watching the nasdaq take up near session highs. remember when they use -- this used to be the most interest rate sensitive area and it is now no more. to me, i take a step back. what do we do with this mess? we can see the fed not having any incentive to cut rates. we are not seeing the labor market cracking. how much can we really get a sense of whether this is growth and basically as soft landing versus the fed being forced to do more to curtail some of this momentum? tom: what you are seeing is a curvature to a nasdaq 100 and this is convexity, not the convexity i use but we will go with that and i wonder if the

curve you are seeing up off nvidia is a short cover? there are people out there that don't believe in the nasdaq and you wonder how they responded at 4:00 yesterday when romaine bostick said, this is not normal, and are they out there covering their shorts, driving up an accelerant matter, driving up? the nasdaq 100? lisa: goldman sachs putting out report that active mutual funds -- simply because they have been avoiding tech. tom: this is really important. 3, 2, 1, apple is underowned. they are under owned by institutions. lisa: -- 15 percentage points

underweight apple. this according to goldman sachs so if there is not an incentive to buy, tom, you're not wrong forces --wrong. . tom: the twos, tenants, vanilla spreads and the difference in the moonshot and the 10-year yield and even the 10 is elevated this morning, 70 basis points and we have seen a plunge to further greater inversion, that oddity in the two stand spread --twos tens spread. it is time to talk to ira jersey. on a shifting bond market. we will shift to this, we are in the memorial weekend, no we are not. huge activity today and into tomorrow as well. we will be with you tomorrow to look at this bond market and what is nvidia going to do first tomorrow?

lisa: i think you will hear from some of the executive cheering. they will prepare for the barbecue with something extra special. tom: love to hear this. stay with us on bloomberg. good morning. ♪

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jonathan: this market is absolutely fascinating. equities mounting up. treasuries at the front end melting down. 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.