>> the problem will be when people realize look at these inflation numbers, they are going up instead of down. >> inflation will be higher than it was the last cycle. >> we hear from the fed officials in line with the data is that they are starting to get frustrated. >> we're still pricing the fed cutting before anyone else and i don't understand that. >> our forecast is so i'm pretty sure we will be in a small recession later this year. >> this is bloomberg surveillance with tom keene jonathan ferro and lisa abramowicz. jonathan: closing out the month

of may, live from new york city, good morning, good morning for our audience worldwide. this is bloomberg surveillance on tv and radio. your equity market is just about negative on the s&p 500. a monster outperformer year to date from that nasdaq 100 relative to everything else. tom: it's led by nvidia and we decided we don't own nvidia so it's a lousy may but it's about the nasdaq that's outperforming but the backdrop is fascinating when you look at the economics. inflation in france coming in lower and spain coming in lower and the news from china today is underreported against that nasdaq boom. jonathan: pmi last night dropped from china below 50 now, unsettling for those looking for a big rebound in the connie.

we've been watching the euro, this negative information pushing -- pushing back against the consensus that this is where the growth would be in china. it would benefit europe and things are starting to roll over. lisa: it's hard to understand the international import was -- impulsive some kind of china slowed down. at this point given the downsized surprise in china, went to they start stimulus again and do they and does it matter for global growth? does it continue to be a domestically driven game? tom: this is not going to be something -- i would look sunday evening at 7 p.m. lisa: it's hard to get conviction right now and that's the reason people are piling into a couple of ai names.

they are continuing to stay defensive. jonathan: that is so sad. lisa: i love you, too. jonathan: it's not just nvidia, meta, amd, salesforce, tesla. just on tesla, i read a fantastic piece yesterday, it's all about fidelity, cutting the valuation of twitter but the last line of the story should have been the first line because the last line of the story was this -- despite twitters issues, elon musk wealth is up more than $48 billion this year. here we are throwing mud at elon musk because he paid $44 billion for something that's worth nowhere near but his wealth is up more than $50 billion. i get it but it's funny to me to see the last line of the story which should have been the first line.

lisa: it probably underscores what people feel and why everyone is potentially going after him because he was -- if he was getting kicked in the head, people would say maybe that's enough. jonathan: he's doing ok. better than ok. your equity market in the s&p 500 is negative point 2%. on the nasdaq, we've been flying this year. yields come back down on the bond market. there is the move on the euro, back down to $1.06. tom: oil is 68 dollars $.19. you will get a 67 print here at some point. it all rolls back to china which has to be the theme today. jonathan: pmi's coming in softer? lisa: that will be the theme going forward to understand how much disinflation takes hold.

we haven't mentioned the debt limit. that's part of the reason why i took time up at the house is voting on the debt limit deal. how much of a pushback is there from the freedom caucus? also ron desantis coming out against this and how must've this factor into the presidential election. jolts data comes out at 10:00 a.m.. i came back for the fed speak which includes the boston fed president and michelle bowman and patrick harker and fed governor philip jefferson, curious to see whether there is any cohesive -- jonathan: once that debt ceiling deal passes, you will have lots of issues. tom: i didn't understand the memos.

there is a lot of money coming in in short term paper. this is your world, the short term paper versus benchmark, 181 basis points near that 191. jonathan: it's exciting to come back for the ship -- for the fed speak. we talked about the outperformance of the nasdaq and good morning to you. any reason to believe that ends anytime soon? >> no, i think you have another sense of american exceptionalism taking home -- taking hold. ai was something that we didn't know it was necessarily coming but that's something you can understand. there has also been this flight to quality trade that is helped growth stocks. we were locked in. it was so bad i had to watch an episode of bridgerton. lisa: i like bridgerton. jonathan: probably one of the

worst things he would have to do. lisa: i totally disagree. tom: it's like the guy in succession. >> which one, tom? on the other site of it, you had this scenario were banks were under stress. companies with these forges balanchine's were surprise this year that has driven high quality tech to being that defensive trade again. i would say we were surprised at the defensive trade in the wake of the bank stress. here we are with american exceptionalism in the equity markets. lisa: could you and up with a range bound s&p 500 but the conservative trade, the defensive trade getting upended as some of the names rallying as big tech loses steam? a lot of churn underneath the

hood, slamming everybody out of their positions? >> if you have superhigh conviction now, you are not paying attention. this has been a slow moving economy and market. what we believe is that we are headed toward slower growth. you are seeing that in europe now and seeing that in china with the collective impact of rate hikes and inverted yield curves. is it a continuation of this rolling recession that we've been on that keeps you in this range bound environment or does it rake into a classic recession? that's very much the open question. we don't know the answer and the answer to your question depends on that. if it's a rolling recession, you can see growth continue to lead the way and you could see bond yields at her range bound and the spreads don't widen and the fed doesn't cut that much or anytime soon and you get your 5% in cash in your growth stocks in

those the only games in town. if it breaks into a classic recession, bond yields fall, you got a bond trade, spreads widen which opens you up to a positive credit trade down the road and you will see more pressure in the equity market and that's why we are watching the small banks and small businesses. however that breaks will tell you which direction you are going. lisa: what's the message from commodities now? >> they are telling you global growth is slowing. if you look at what the commodity market is telling you, it's either meaningful disinflation on the horizon or outright recession risk. if you look at some of the numbers out of china and europe, i think you are starting to see those economies rake toward the more classic recession. in the u.s., is taking longer but the economy is resilient. there is more excess savings, more excess stimulus in the u.s. so we may be headed that way

which is not clear but it certainly is not happening as quickly as it is the rest of the world. jonathan: the stock market is not the economy. there is a key line you use -- american exceptionalism in the equity market. we had a decade of that. europe doesn't have nvidia. are we setting up for the same thing again or is it too premature to tell? >> at least over the medium to long-term. if you want to break down economic growth, it's how many babies you have for bring in and how much do you innovate? when you look at the u.s. demographic, you've got 30% working age population declines over the next 30 or 40 years for europe and china and japan. the u.s. doesn't have that. the u.s. has 10% population

growth projections over the next 20 or 30 years and you are the center of the world whether it's ai or robotics or other things were blockchain, you name it, it's starting with u.s. intellectual capital. you are taking a long-term bet on which economy will lead the world. and which stock market will be rewarded for that. it's absolutely the united states. it's the only major economy that has the combination of robust working age population growth and transformative innovation. i don't think that changes anytime soon. jonathan: equal weight s&p, market cap s&p, nasdaq 100 -- if you had to run an index right now, what would it be? >> i think you are bar billing -

belling on the equity side. the defensive dividend payers like the dow jones like dividends is a good place to be in then you have to pick some cyclical part. markets rally on fed pauses and even if the recession is to follow, what is the risk asset you want to own? it's not cyclicals. it has been international for us. i would like it to be growth going forward but i will not pay these multiples. story here is you by growth in any meaningful pullback, you sell cyclicals on any meaningful rally. jonathan: steve, good to catch up. a big line there, u.s. exceptionalism, is it making a comeback with nvidia higher? tom: it's a huge deal.

i can't wait to see the mathematics of active versus passive june 30. jonathan: equities are slightly negative, from new york, this is bloomberg. lisa: keeping you up-to-date with news from around the world with the first word -- the debt limit deal heads to a house vote today after squeaking through house rules committee by a 7-6 margin. the congressional budget office estimates the deal would cut deficits by 1.5 trillion dollars over a decade. house speaker kevin mccarthy has dismissed threats from republican hardliners to remove him from his job. foreign ministers of the nato countries began a two day meeting in oslo to discuss the ukraine bid to join the military alliance as well as how to boost spending. french will speak and is expected to emphasize the importance of the nato role in europe. u.s. urged serbia and kosovo to

immediately de-escalate tensions in northern kosovo after clashes injured dozens of peacekeepers and protesters. the u.s. secretary of state blamed kosovo's prime minister for unnecessarily inflaming ties with the minority serb community. he urged the newly elected mayors to avoid working in predominantly serbian towns where violence erected this week. global news powered by more than 2700 journalists and analysts in over 120 countries, this is bloomberg. ♪

>> i'm not sure what in the bill they are concerned about. it has savings of $2.1 trillion. it's a major victory. i understand people can get upset of walking through the debt ceiling but this is a house, a senate i presidency. >> we will make sure that country does not default but we will also make sure that kevin mccarthy and my colleagues on the other cited the aisle uphold their end of the bargain which is simply to produce a

sufficient number of votes. jonathan: house speaker kevin mccarty and hakeem jeffries speaking yesterday. wall street hoping we could just move on and hopefully we can. we could have about a little bit later in the house as they are passing a key procedural hurdle. there's going to be a balloon and t-bill issuance? there is a ramification of the silliness in washington to our world. jonathan: which will be hundreds of billions of dollars of t-bills. some people think that will be ok and some people think it can exacerbate existing tensions which are in the banking sector competing for capital with banks. i can imagine you are thinking about the other side of the trade a little bit more. we had someone from columbia who sent them of this yesterday who thinks this will be ok and we will get through it, no big deal. lisa: most people do which is

why the distortions haven't gotten exacerbated budget inc. about this banking stress, you see the biggest capital flight in 50 years. what will this do? tom: this friday when the report comes out, we may see further deposit flights. i just wonder, the flows are in place. jonathan: i will not make the call. loretta messer is worth reading. she talks about making another move next week and she doesn't see the conditions for a pause. payrolls on friday, cpi the day before and we will see what we get. we talked to citibank. he says .4% month on month and cpi gets it done for him. tom: we will give you the coverage on friday. right now, we speak expertise

with wendy schiller, one of our most popular guests. professor, there is the scene in the movie lincoln with daniel day lewis and sally field and tommy lee jones steals it as thaddeus stevens. there is all the drama and the emancipation proclamation all that. history is repeating itself, it seems like that now. who is the thaddeus stevens on the hill that will get this done? >> i think the democrats essentially and hakeem jeffries has to deliver. he says we need 150 republican votes and we will have to hold up but the white house has a democratic occupant and you have to save the present and the economy so the democrats led by hakeem jeffries will have to step in if the revolt on the republicans grows much stronger. tom: joe manchin got a pipeline in the summits of what will they

give the house liberals to get their vote? >> they will not need that many liberals. they will not need the most left-wing of the caucus. they may or may not give them a pass and say you don't have to go down this road because the most left-wing will say the moat -- the most right wing is not voting for this so why should we? that's the concern, the snowball effect. if you give some people a pass not to vote for this bill, how many more people do you give a pass and does your majority collapse? i don't see that happening. i think there are enough confirmed republicans, enough that hakeem jeffries will only have to get a certain percentage of his caucus and moderate democrats will need to vote for this and show that they are willing to contain the federal deficit. lisa: what does the west virginia national pipeline have to do with fiscal responsibility? >> is the way or do our

budgeting. we have a congress that is geographically apportioned and is bicameral. you have different incentives for senators versus house members, smaller population large geography states that have natural resources. this was the structure create a long time ago. it doesn't really fit at all. we are stuck with our huge federal government and federal budget. i can go way back attached to the debt ceiling and it was budgetary policy. this is not the way you want to make policy for a government this large. lisa: government came out and said it might reduce the deficit by rounding error but longer-term, slow growth does not address the real pressing

fiscal concerns with respect to certain programs that will be unsustainable. what's your view on that? is this lipstick on a pig? >> i don't know if i would go that far. at least two thirds of the federal budget, over $7 trillion, that is entitlements for built-in spending, defense spending, programs you cannot touch there facing some insolvency concerns, social security, medicare. nobody touches those programs. congressman go near them. they are doing a few things to trim the work requirements and make it stiffer to get some social welfare programs but the big ticket ones are not being touched. until those are tests, the federal budget will continue on this growth trajectory which means we will spend more than we take in every year. the debt will just keep growing particularly if you cut the irs which collects revenue which helps balance our federal spending.

tom: you mentioned graham rudman. why can't we get a commission done that has some strength to get to a good resolution? >> i think the republican party has strategically decided that being anti-federal government across the board is winning them votes and keeping their base roiled up and that's partly involving federal spending. some states a republican governor said we won't take federal money. they are now saying we don't want the money and we will not provide the services the money would help us provide. you are seeing a larger trend, a dipper trend in the republican party that is rejecting federal authority. this is part of it so if you can cut spending and that becomes a big ticket item, you want credit for that. you want congress to do that you want to be in a room to say you can cut spending because that gives them a talking point that

resonates among their base. jonathan: for how much longer do you think speaker mccarthy will be speaker mccarthy? >> democrats have said they will keep this guy afloat. they have already said if his own party rejects him, we will find the votes to keep him. the alternative could be significantly worse for the democrats and president biden. mccarthy looks like a guy will get the most basic things done and he seemed to have grown into the role. i see some democrats, maybe those who will retire perhaps in 2024 but they will come to his rescue which they have said pub jonathan: publicly. not exactly a ringing endorsement, democrats will support mccarthy. >> democrats should be aware because these splits in the republican party is what we also saw with john boehner and paul ryan. yet donald trump one and a huge

served -- a huge surge of republicans so it doesn't tell you anything about the republicans to get behind their candidate in the next election. jonathan: that's not what i was implying. i meant for kevin mccarthy, it's hardly a ringing endorsement from the moderate republican party for him and the fact that he needs to rely on democrats to remain speaker mccarthy. tom: i cannot state how ronald ragan invented how you run on the outside and then run through the middle. lisa: i'm not sure of pride is a big concern of his. how many votes did it take? 15? jonathan: something like that. lisa: he's not looking for a ringing endorsement.

jonathan: equities in the s&p 500 little negative on the s&p 500 this morning. dan week go by 0.3% on the nasdaq 100 which was on a three day winning streak. we are slightly negative right now. month to date, the nasdaq 100 is up i more than 8% this month. the eighth -- the equal weight s&p 500 is up as well. that's three months of

outperformance year to date. let's look at the bonds. the two before today on the month was higher by 44 basis points. it's trim some of that. remarkable to see those gains in the equity market in the nasdaq and big cap tech with those moves in the bond market at the same time. tom: -80 basis points yesterday. we've seen or read inversion. i'm going to go to the three month tenure, the high-yield t-bill as compared to the economic slow down 10 year yield, 181 basis points. jonathan: for a moment this was boring and then it got interesting particularly in the fx market with the lift in yields. place that prove foreign-exchange you have a stronger dollar and we co--- in a weaker euro and pmi's

disappointing and manufacturing a whole lot softer but led by what's developing in china relative to expectations for a big boom. the euro hasn't seen $1.08 for a week now. $1.06. tom: we are committed to international economics. we did imf covers recently including speaking to the managing director. eric martin was reporting on the bombshell five-year view of 3% global growth. i'm still not used to that report from the imf, thank you for that report. today, duncan wrigley of pantheon, he comes out and says china needs to export disinflation. we so that banner when alan greenspan was running the show and william lee joins us now. let's start with greenspan 101

-- is china and their slogan going to export disinflation and deflation? >> china cannot export much of anything now but i hope what they do is disinflation for the rest of the world. the chinese recovery has really faltered we can see that it not only is manufacturing down but consumption is on its way going down as well. unemployment rates are at 20%. china is not good shape night noun. we are looking around and seeing what will pull china out of the doldrums. tom: what are the degrees of freedom that autocracy has when they are supposed to provide stimulus? >> it's pretty limited. not only is the federal debt out of control but the municipal level debt is out of control. the general channels for fiscal policy have been through the government to try to hire more people and build more projects and stuff like that but right now, they can't do that.

the amount of fiscal policy we have is truly limited and monetary policy, you have low rates but people will stay there and not borrow. where will they spend the money in order to make money in the future if demand is slow? china right now is snowballing into a fairly bad static plateau. lisa: it's -- has it been priced in or not? >> one of the things we have to look at is where is it being priced? we talked at the milken conference that a lot of investors going to china are going to private markets and we can't see a lot of that. one thing that everyone made clear is they need a good service the need someone to guide them through to find new investment opportunities. investors say they are getting good bargains because the slow down is affecting valuations in the public and private markets.

will you get the kind of returns you are hoping for? there i have my doubts. the possibility of technological change is also not going to be there because policy has been and site innovation, anti-technology and it's hard to see that changing. lisa: that's what we pointed to earlier as far as the tech indices. there is a huge wafer occasion between the two. has this been priced and in terms of the impulse that china had on europe? the euro has, for its earlier highs. >> the remembyi is weaker than it has been. the fx market is very short term. our investors pricing and growth opportunities over the next five years? are they putting the marginal dollar into china or somewhere else?

more often than not, it will be somewhere else very tom: you've got a great ability to move away from the pacific rim and the three cities we focus on all the time. what does the rest of china look like with the unemployment rates that are being reported? >> that's a great question. until now, i would have said the prospects for any kind of innovation or any kind of employment growth will come out west. the milken study for the grading disc rated performing studies in china landed onshain dou is a small innovation hub and we stand by those numbers but the numbers get dated and i'm not sure if even out west the innovation hubs can give the employment they hope for. tom: we've been here before and beijing always blinks and moves away from a totalitarian mindset , the autocracy of president xi and they moved to some form of liberality and capitalism. you say it will not happen this

time? i have to duck because he's throwing stock. >> president xi blinking could involve different wrinkle. he will rely on nationalism and militarism and some expansion of hubris into the rest of asia. he wants asia to be the currency area for the remembyi so these are the kind of place we should look for any kind of resuscitation of chinese nationalism. they will try to instill pride in the chinese people without giving them jobs that will be a cute trick. lisa: what does that mean in terms of international business? jp morgan is being diplomatic but had a pro china speech. how much can you cad coupling ari willingness to exacerbate that on the chinese side in light of the economic challenges?

>> we have a lovefest with u.s. ceos going back to tim cook and out elon musk. jamie dimon is slick to say i'm a true american and i'm a patriot so when you vote for me, remember that. going forward, we will see more of that because the people who are in china have to maintain their business and contain what they gain. the marginal dollar and americans thinking of going to china, what will they see and i think they will see a lot of opportunities in korea and the quad country surrounding china. that's where a lot of the innovative industries are moving to. lisa: you were talking about the stagnant plateau. what is the stagnant plateau in china? what is the rate of growth that will be the new normal and drive demand for the luxury goods that

have gotten bid for goods which have driven people to the downside this year? >> the official number is a five handle for growth going forward and we will likely see more like a three handle. with populations stagnant, any kind of massive productivity growth can't get them above three. jonathan: market participants will be interested in the next move on stimulus to get the pmi back above 50. that's not what the leader of the chinese comet's party will be focused on. they will take a multi-decade view and will be far more interested in the kind of fiscal moves they make to stimulate more investment in certain parts of the economy that will be highly competitive with the united states and europe come up a tickly is the u.s. re-trenches and refuses to do business with the chinese government. what are you focused on with regards to that? >> if you look at where the chinese art meeting, they are not with meeting with defense

secretary austen so they are not talking military. we know what they are doing their does not positive for the u.s. but they will meet with gina raimondo, the commerce secretary. they're hoping for some action on the tariffs and cutting the semiconductor restrictions and their information blackout will leverage what our -- what our investors see. they will shape the story for global investors. it's wonderful investors cannot resist coming but in order to do the due diligence, they require information and that's being restricted as we speak by the chinese government. going forward, i don't see that changing. jonathan: clarity, transparency, how do i know what the unemployment rate actually is in china? measuring it is hard enough but when we hear youth unemployment at 20%, how bad is it echo >> it is that bad or worse and if it wasn't, we were -- we would hear

more about informal data but we see companies being wound down by the government and we see due diligence companies being queried by the officials. the chinese are making it clear that we will feed you the information you need but it's from us. jonathan: bill, good to catch up as always. it's been a tough year for the equity market in china. hang seng is down by more than 20% from the peak so we are in a bear market in some parts of chinese equities. you compare that to the nasdaq this year and that wasn't meant to be the way this played out in 2023. it was meant to be very different in the equity market. tom: it was predicted to be 6% but now it's modeled down to 3%. i don't think anybody believes the bombshell but a tendency toward 3% global growth affects

china more than any other nation. lisa: how do you create a valuation for some tech prowess if you are basically forcing tech companies to break and reduce certain aspects of their company? how do you innovate with that? alibaba has to spin off their cloud computing so how do you invest in certain things. how you create consistency that allows for investments to compete especially without stimulus? jonathan: there was a story we put out the last week or so that you could see some rate cuts, you could see some fiscal stimulus that targeted a high-end manufacturing. when you see those headlines if they cross, that will not be about getting pmi above 50 again , there is something more strategic than that. tom: we will talk about this, this is not going away. jonathan: cfra on nvidia coming up next.

lisa: keeping you up-to-date with news from around the world with the first word -- >> the debt limit deal heads to a house vote today after squeaking through the house rules committee by a seven-six margin. jpmorgan chase chief executive officer jp -- jamie dimon says he is optimistic about it. >> i wish one day we get rid of the whole debt ceiling thing but i understand it's a democracy and people of different opinions of what we should be doing and is just one tool for one party to get the other party to the table. i'm quite optimistic there and i do applaud the fact that they sat down and got something done. lisa: the nonpartisan congressional budget office estimates the deal would cut deficits by $1.5 trillion over a decade. north korea has confirmed an effort to launch a military spy satellite into orbit failed earlier today. the official news agency reported a rocket crashed into the yellow sea after losing propulsion in the second stage

of the assault -- the assent. the launch initially prompted missile alerts in japan and south korea. pyong yang says it will attempt another soon. goldman sachs is planning more job cuts. the third round will affect less than 250 people and will include the firms more senior employees. earlier this year, it had a limited about 3200 positions, and barking and one of its biggest ever round of layoffs. global news powered by more than 2700 journalists and analysts in over 120 countries, this is bloomberg. ♪ >> [speaking foreign language] ♪

i need it cool at night. you trying to ice me out of the bed? baby, only on game nights. you know you are retired right? am i? ya! save 50% on the sleep number limited edition smart bed. plus, free home delivery when you add an adjustable base. only at sleep number. >> i don't know how many times ai was mentioned ring the earnings season but it was some

astronomical amount and everyone is latching onto it. i think we need to be cautious going forward. i think there is so many unanswered questions and i don't think you put all your eggs in the ai basket but you have to have exposure knowing it will be part of the future. jonathan: you know when you get a briefing from pr as a ceo, you know it sounds like. just mention ai and wants the stock go higher. beyond nvidia, it's names you wouldn't associate with this stuff. we've been doing this for ages they say. lisa: doesn't this feel like what happened with cryptocurrencies in general with respect to blockchain? you had operators mentioning blockchain and their stocks would surge? nvidia says we have more ai and everyone says yay. jonathan: the challenge back then was to try and draw a distinction between the frenzy,

angst going too far and the real innovation that will be with us. lisa: last night, the kids were studying and they all run their tests through a chatgpt paradigm to see what grade they would get. the teachers are doing this as well. then they get a great and they know whether they have to work harder not. this is being weaved into the daily existence of so many people. jonathan: they are grading based on this? lisa: i have heard anecdotally that this has happened. if they've got a lot of students, they can run it through chatgpt. jonathan: it's amazing. tom: we ran math scores through chatgpt and it started smoking. lisa: i asked them if it's a tool to substitute or is this

just to help and make you better? all of them say to make you better so i will remain optimistic. tom: lisa is completely overwhelmed by how much education was lost during the pandemic. futures are -10 and the vix has been solid for the last few days. where is the euro? jonathan: we are at one 06.76. tom: there is a lot going on this morning. there is a complete breakdown in oil. that's american oil, $67 per barrel. we could get back to two dollars per gallon gas. right now, we will talk nvidia with angela zinos at cfra who has the courage to write what everybody's thinking which of

the only way you can justify this is to extend your timeline. you go right out to 2024 and you say with a 25% growth pop, you are buying a 40 multiple stock. why don't you extrapolate to 2025? >> i think you can. there is no danger with extrapolating those numbers out right but gp use will increasingly represent a bigger percentage of dollars with these cloud companies. over the next 3-5 years, the annual growth rate for gp used specifically like nvidia on the accelerated side of things in the cloud can grow in annualized pace north of 25%. that can get you to an eps growth rate over time for nvidia

north of 20%. if you are a believer that the top line for this company candid continue to grow. tom: are there other nvidias out there? >> we wrote a piece back in late march about the biggest winners of the generative ai within the semiconductor industry and we talked to for names -- we pointed to for names and they were nvidia and amd is another. the other two names are more network conductivity names -- conductivity. we think broadcom is highly underappreciated. lisa: what is a tech company now and which ones can take advantage of artificial intelligence? amd is clear-cut or nvidia but

what about meta-, what about other companies that could potentially gain from the productivity of investments of artificial intelligence. how do you value which companies will gain in which won't? >> that's probably the most important question we get from investors right now. from a monetization perspective, who will be the biggest winners in this boom. it's a tough question to answer. the easy answer now is on the semiconductor side of things and the infrastructure side and playing that and that's where the action has been in recent weeks. when you are more forward-looking, we look at the larger cap stocks. microsoft is clearly at the top of the list in our view with copilot out there in the potential to see significant pricing power, we think the line of sight is highly visible were over the next decade, there

should be a clear winner. other names like alphabet and meta-we think will be tougher calls. that's why you don't see the multiples to the extent where you see the microsoft's of the world. the big reason is, will they get the roi potential or get the advertising from this ai boom? we think there are positives out there but i don't think it's as clear as a name like microsoft. lisa: you can believe this story and anyone who says anybody is using this has to be something of a believer or at least an open recipient of this information but to have some naysayers about the valuation saying the rally you have seen so far, 31% in big tech stocks so far this year is a test has a risk of petering out. they say positioning is such that it is rife for profit-taking. do you play into that?

do you think anything like that will just be a buying opportunity? how do you play the tactical ride up that cannot continue at this pace? >> in terms of the performance, we think they will be some sort of ai fatigue potentially in the coming weeks. that said, we remain big believers that the valuation is not as extended as many people think. especially as you look toward 24 basis points for names like nvidia and others where they are within their 5-10 year ranges. when you think about the growth tied to a number of these names, i .2 names like a microsoft and others. it is a risk to the downside on the estimate. there is probably upside

potential to the estimates. we want to be behind these names that are ai related and you kind of want to have a basket of names, not put all your eggs in one basket and you want to avoid any pullbacks. it's definitely gotten a bit hot especially on the semi side of things. the four names we highlight it continue to be the biggest winners in the names you want to buy. jonathan: some people feel like they have to be long. 49 buys 8 holds and one guy who couldn't care less. do you sense the so-called career risk associated with this and how quickly it's moving? isn't it pressure that you have to be long? >> that's a great point. i think there is always risk on that side of things.

we are fundamental by nature and to us, the fundamentals are screaming buy right now and you continue to pound the table on these type of names. especially on nvidia when you look at the multiples in the low 40's and then you look at the growth tied to it, 3-5 years and you look at how early we are and you are a believer of autonomous vehicles or what have you, there is risk to potentially having to sell to be tactical in nature rather than beating the table on the longer-term outlook on these areas. i think that's what you need to do for investors out there now. jonathan: always great to hear from you, thank you. the pressure year to date must be huge. tom: the pressure end of year for people behind this, are at

record levels. jonathan: emily rowland of john hancock is coming up next. ♪

>> the problem is going to be when people realize, look at these inflation numbers and their coming up. >> inflation is likely going to be higher than the last cycle. >> what you're hearing from fed officials is in line with the data. >> that bit i don't understand. >> i am pretty sure i will put

this in more recession later this year. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramovitz. jon: live from new york city this morning, good morning. this is bloomberg surveillance on tv and radio. i am jonathan ferro. your equity markets is slightly down on the session. the s&p 500 doing ok. this has been the big distinction so far this month and year to date. when you strip out the muscle of big tech, takeaway nvidia and meta. there is a struggle there you cannot see at the level of the nasdaq 100. tom: the diversions here are amazing and tomorrow we will have several names go away. june 1, we will not do it today but the answer is, these are profound trends and you listen to mr. zino. these are trends he suggests endures out one year up to three

years. jon: most people listening hoping that we don't talk about that debt ceiling story. the payroll is on fire. -- on friday and then onto the federal reserve and if you are looking to fed speak, the cleveland fed president says one more hike. lisa: she has been on the hawkish side but her talking about one more hike -- shows what we see in markets where there is a feeling going that they could have more time. here is my key question heading into june? arbery at an inflection point. opsware economic says yes we are and all the drivers in the first half of the year, whether it was china or resilience in consumer spending are set to roll over. if that is true, what happens to indexes? this is the conundrum of the economy on one side and markets

on the other. tom: you can see it in --jon: you can see it in the underperformance of chinese equities. the reopening trade stymied in october. i am with you. the breakdown in the european story is the one to take in -- my attention and anticipation on maybe we have the pushback of the idea of this is where the growth will be and this is where the equity market gains would be. the story has been challenged and we heard from -- the line that we talked about. arbery going back to u.s. equity market exceptionalism? the problem a lot of people have listening to this is that they have a struggle on their hands. in the u.s. equity market, are we on the brink of a melt top or a melt down? there is no conviction consensus. tom: the consensus has been some

sort of marginal moved to -- where you find value in emerging market bonds. time after time, you end up with some soup of resilient dollar, stronger dollar, diminished growth expectations off of what was look at six-month before and that is where we are right now. i will go to the imf bombshell of april 6. are reframing out 3% global growth. technically -- jon: for many people who have booked a vacation to europe, based here in america, you probably want to watch -- all one of five watch. the right be some euros -- there might be some euros that need to be paid. the broader market story, equity futures on the s&p 500 shaping up and we look at this, negative

by 0.2%. yields is down four basis points and the 10 year is 3.64. lisa: we are going to get the house vote on the debt limit deal and we are not sure when it will come out. it is expected to press -- pass and the senate has to take hold and has to get through before the june 5 dropdead date. we are watching every single year duration. we get jokes data --jolts data at 10 a.m. the -- at 2 p.m., the fed releases the page --beige group -- book. i am curious to see whether there is a vibe where there she is truly a outlier because she seems like more of an outlier than everything else. you have a bit more of a willingness to push back on the idea of rate cuts but very few

people are saying it looks like we need another hike and we do need to tighten more. there seems to be more of a reticence around the edges and a pushback from some members. jon: if you want to identify some consensus, you mentioned pushing against cuts and they don't want to commit to up. lisa: especially because we don't know which way things will break. the disinflation story, the china story, we get the disinflation story out of italy and the distant -- out of plants -- france. italy comes and surprises to the upside with respect to inflation and how do you get a handle on what is going on? jon: if you're interested in the views of jp diamond -- jamie dimon, we will play some of that for you. jamie dimon on the debt ceiling and china and u.s. interest rates. we will catch up with emily

roland, co. chief investment strategist at john hancock investments. i have been speaking to you all year and you pushback against the euro euphoria. you remain committed to the growth equity story and the united states over the rest of the world. are you sticking with it? emily: we are absolutely and it feels like markets are getting the memo in terms of the macroeconomic environment. we are looking at decelerating growth as you have mentioned, disappointing data overnight in china. he saw japan industrial production and retail sales disappointing and you see this big rotation into yours -- u.s. markets and that has been exhibited by the cost asset action. you are seeing the dollar get a bid and this massive rotation into u.s. quality growth stocks which we have talked about for some time so that has key locations for portfolios

especially when you think about some of these trend following strategies. japan, they have bought euros based on the price, and you may see that reverse and exacerbate some of the flows. tom: you will get me in trouble mentioning the trend following strategies. i am glad you mentioned japan. those were shocking numbers. within this, the sticky inflation. everyone is doing real analysis but we live in a nominal world. will we be surprised by ok revenue growth that supplies blue chips? emily: inflation has helped these companies that have a lot of pricing power, especially companies have -- that have high operating leverage. we think it is going to be hard to sustain that going forward. bottom line costs are elevated, whether that is the cost of capital and wage growth is

elevated. they are fine with that going down and demand is starting to slow. we have seen that way back in the supply chain when you look at the i -- supply index and new orders. i know everyone has a favorite leading indicator but that is ours at john hancock and that will put pressure on margins and cost companies to defend their margins going forward and that will result in the unemployment rate rising. we haven't seen that happen yet but we think that is something that comes in the next quarters. lisa: there has been a growing team about this inflection point that we seem to be coming upon, not just because we are halfway through the year but some of the main drivers in the first half are shifting. do you see that as well and what are the features of? the inflection? point emily: some of the main drivers have been supporting the market. better weather in europe that

cost massive rotation into european equities and cost -- because the dollar to weekend -- weekend --weaken. you are seeing some of those things shift. as this rotation comes back to the u.s.. the economic data not great across the globe but it is better in the u.s. which is a big shift over the last couple quarters. stronger dollar, bid for treasuries. we think those are where the opportunities are from here in the market action from the past couple of days to us makes a ton of sense given the fact we are in a decelerating growth environment and recession is likely to unfold. jon: thank you. emily roland of john hancock investments. we have gone to extreme levels back to late september. euro-dollar, the single currency dropped to about 95.

106 point -- 1.0677. i don't see anyone suggesting we can go to those levels but these levels surprise people to because there were because to get back to 1.15 on the euro. remember when i went to london and every guest lined up to state the ecb will hike more than the federal reserve this year. they bade mel -- they may well do. the story has changed. tom: i've mentioned this. emily -- emily roland mentioned the slowdown in japan an obvious data in tokyo and china and europe and this brings back within a terrible war, the idea of innovation, the buoyancy and affirmance of europe, is that belief still there? lisa: i would type is to china. how much of the enthusiasm of the upside subplot -- surprise in your -- europe -- how much

would it went out -- run out? tom: it is a dominant german field. --feel. i suggest lagarde the others of your would have to worry about the many domestic stories of europe more than china will stop it will be like, what are we doing in finland. jon: agreed. with regards of -- to china, there was a misunderstanding. manufacturing was not shut down. michael of jp morgan coming up in 20 minutes -- bob michelle of jp morgan coming up in 20 minutes. >> with the first word, i am lisa matteo. the european central bank is heading the final trust of its interest rate hike -- hiking.

the vice president spoke to bloomberg. >> we have received from several countries, the info is good and they're going in direct direction. we have run a really important part of germany and we are entering into the final stretch. >> the ecb released its financial stability report today. jamie dimon says jp morgan case will be in china and a good times and bad times -- in good times and bad times. he says he doesn't for cad coupling between the west and china -- he does not cad coupling between the west and china -- he does not see a decoupling between the west and china. >> his remarks come as china and u.s. relations are in their worst in decades.

the test the ceo met more government officials on the second day of his trip to china, having have -- having had his first visit before the pandemic. must is expected to tour the tesla shanghai factory today. at hacking group has broadened its targets to asian countries. says the perpetrators doubt dark pink infiltrated targets in five new nations and using sophisticated malware and fishing emails. 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. ♪

>> i am not sure what people are concerned about. it is the largest savings of $2.1 trillion we have ever had. >> these are major victories and i understand people are upset about walking through a debt ceiling but this is the house and the senate and the presidency. >> we will make sure the country does not default but we also are going to make sure kevin mccarthy and my colleagues on the other cited the aisle uphold their end of the bargain which is simply to produce a sufficient number of votes. jon: requested effort to spin on

capitol hill. -- classic effort to spin on capitol hill. hiking -- hakeem jeffries catching up with our colleagues. is about shipping the optics. house democrats will say we will not default now because we will bailout our republican colleagues will not agree with the deal. we will see -- you see how this will go. lisa: when you take a look at the suspended -- the substance of the bill, you can look at how the sausage is made in respect to west virginia with the pipeline. they will try to spin this as a victory. it is an interesting morning -- moment of really, cross political winds. tom: it is wednesday. annmarie hordern dictated that we have four day work weeks.

she is here and she is exhausted like we all are. i want to go to the foolishness of this all. the washington post has bishop the eighth congressional district of north carolina, saying, "this is a career defining moment." this guy won with 69.9% of the vote in the last correctional election. our dominic -- dominant republican congressman during moderate republican congress people under the bus? >> there is a schism among the republican party the house floor but they expect 150 of them around that number and this is what hakeem jeffries told us last night. that is what he is expecting republicans to come and vote for this bill. there is the house freedom conference and they had a press conference and you had one of them talking about a reckoning

that he wants and this is why you hear swelling of this idea that there will be a motion to vacate figure mccarthy because they wanted deeper spending cuts but by and large, the majority of the republican say we understand and we only control the house. democrats control the senate and they control the white house and in that environment, we are still able to get a deal and they wanted back. -- they want to back mccarthy. this is a divide within the party but that divide has been there for years. tom: i want to go back to these x number of republicans standing up and if the boat was the other way, it would be the x numbers of progressives as well. i have no real escalation -- recollection of the past -- putting at risk their party and their speaker. to you and your study of this, is this a modern occurrence that

these basically southern congresspeople are putting at risk their party? annmarie: they are leaning into some of the rhetoric we have seen from the former president which does have a huge hold on the republican party about 30%. it is about -- it was the former professor -- former president who has been silent on the that deal -- that deal --debt deal. we know he has been in touch. it is that rhetoric he said is if -- when if they don't get that deep spending cuts, they should default and that is the tone many on the far right are taking. tom: one person in south carolina, over 60% of the vote. i wonder what they're doing to the moderate republican ruth. -- group. lisa: that feeds into the point

that you brought up with ron desantis slamming this bill. kevin mccarthy -- not necessarily kevin mccarthy. how much is a move to the middle not the dominant theme when you take a look at the republican and the emigrated -- democratic party's? that --annmarie: that is how it goes. if you win the primary and you go to the general, you try to be as smart as you can. some of the issues -- is when you -- he bashes the debt ceiling bill, he was a member of congress at one point and voted to increase the debt ceiling without the deep spending cuts that he is now talking about. this could also hurt them but this also makes sense. they are all trying to play to a base. the former president has 30% of

the republican party and anyone else -- trying to challenge him is trying to knock at that 30% and trying to be someone they think the rest of the republican party can coalesce around. abigail: we are hearing about new entrants into the republican party including chris christie getting into the game. what does this tell you, not necessarily about chris christie potentially winning but respect to the field? annmarie: i think axios reports that he plans to announce as early as next week. there was reporting about a super pac building behind him. we are a long way off from the new -- the u.s. election. you will see more names start to come into the race. i think it is a? -- a question mark on governor desantis. you see have -- you have seen

mega donors hit pause on him and there seems to be concerned whether it is not -- him taking on disney and him back trading -- backtracking on the invasion of ukraine and that makes they hair on republican hocks --hawks start to rise. others are saying maybe is there -- maybe there is a path for me and it is not just chris christie. he actually was a huge trump ally and now he bashes him and does not agree with the former president but others, there is reporting that lend youngkin is also taking a second look at potentially getting into the race. jon: you have trump in the coalition of that with the republican party and they are all diluting each other. at some point, don't they have to get around the table and decide who is the challenger?

dani: one of the most interesting things --annmarie: one of the interesting things governor sununu told us is what is important about 2024, when you get out? open the field. let's have a proper debate but no one to get out so that everyone can coalesce around someone else that is not the former president. the issue they all have is the former president sucks of the oxygen room -- in the room. the former president is going to iowa and he is having a town hall. very difficult for everyone -- anyone to -- tom: what is chris christie pulling? --polling? 2%? dani: --annmarie: i see a very very narrow margin for here -- him.

jon: it can be brutal. tom: the best thing annmarie hordern said his selections -- we have 14 republicans -- lisa: i'm going to announce right now that i am not going to run for office. jon: i know someone who might. jamie dimon. " maybe one day i will serve my country in one capacity or another." you leave the bank and you have all those shares and become the treasury -- the treasury secretary for a heartbeat and make the trade. it is beautiful and tax-free. he is a patriot. be serious. ♪

oh booking.com, ♪ i'm going to somewhere, anywhere. ♪ ♪ a beach house, a treehouse, ♪ ♪ honestly i don't care ♪ find the perfect vacation rental for you booking.com, booking. yeah.

jon: equities closing out the month of may, just a bit softer. today, better than what anybody anticipated. on the nasdaq 100 this morning down by 0.2%. on them up up by -- on the month up by a percent. the market cap waited -- this has been developing and we have talked about this. this move in the nasdaq has been developing even with this move in the two year.

take a look at treasuries, the euro has come up. the fact that we are at 4.42. we have managed to grind out a game of -- again of more than 8% on the nasdaq 100, you can thank the likes of nvidia. think china for a weekend your -- out weekend --a weakened euro. we see it again anytime soon? based on the coming -- and coming information we get from china -- on the incoming information we get from china? lisa: we get the opposite? we are looking at specific names. nvidia has soared 31% over the past three sessions. it is taking profits. you can feel that turn that will not drive the market and that is perhaps you are seeing saw units

in the market. hp enterprise are down on the year. they had second quarter revenue and quarter forecast below expectations but it is the have and have-nots. there are pretty big losers underneath the tech story. avis is up after deutsche bank recommending people by. what i find interesting is the turn. the stories that people are looking to pounce on maybe for a day or two days for a valuation story and not necessarily because of the fundamental -- what this is called is a market that does not have a clear direction even if you have a clear view on the economy, it is not clear that the market will court here with that based on -- will cohere with that based on the drivers of the market. jon: the sticker price is never

the price physically in europe. -- particularly in europe. you go over to europe, it will always be a problem and it will never be the sticker price. lisa: you have all the fees and the extra added insurance. if you will do that, and that is another feet. --fee. if you crash the car, you are screwed. jon: if you get into the parking lot, family of five fear of 500. cleveland fed president speaking to that -- the financial times and says -- here are good news. bob michele saying we are going to get a pause. the good news from up -- bob

michele it's it sounds like his boss agrees with them. -- the good news from -- for bob michele is it sounds like his boss agrees with him. >> take a pause but i do think it is possible they will raise more. jon: take apart -- a pause? he is ready to go. tom: he looks mellon like. did you see bob michele's undersecretary? joining us is bob michele. i want to go back to 1984. you are a youngling at bankers trust. this is way back. the basic ideas that we used to clip coupons. would you be sitting with jamie dimon saying we can make coupon and total turn right now? bob: i cannot tell you how

relieved i am not to hear him tell me that i should be preparing for 7%. [laughter] i will take what i can. we argue for a posten that should relax the markets. this is the time where you click coupons because yields have reset materially higher from where they were at the end of 2021. when you look at real yields in the bond market, they are the highest level going back 17 years. we are going to get some capital appreciation on top of the coupon clipping. i am looking for close to double-digit returns on the bloomberg aggregate over the next -- jon: this is a key --tom: this is a key statement. mr. jamie dimon knows what a s&p blue book is. you try to buy bonds for a price up yields down. which kind of bonds will give you the best pop to get your doctoral --your double-digit

return? bob: we are intermediate government -- certainly, it intermediate government -- certainly, intermediate government bonds look good to me. it is going the other way. we do think that we are going to see 3% across the coupon curve by the end of the summer and the five-year seems to be the sweet spot so we like that and we like high-quality credits so we are going to investment grade corporate. we are seeing oversee -- overseas investors return to the investment grade corporate bond market. tom: fulton to the disinflationary deflationary chinese impulse. jon: for people who are not familiar with what drives -- why is that the sweet spot for you? bob: it gives you a couple

things. it gives you a reasonably high level of yield. it is not cash. cash is sitting out there at 5% but that is the cash-strapped at this type -- the cash trap at this time of. the cycle your cash -- the cycle. you have lost all of that and then the yield curve starts to adjust to a central bank that is cutting rates. we think we are going to be in a recession by the end of the year and everything that has happened this year tells us end of the year recession. that first fed rate cut in september and i know the recent data throw some of that into speculation. not in our book. jon: five-year in the treasury market. ig, and some -- tons of demand coming from abroad. high-yield.

within your call, does it make sense to be buying high-yield and taking on more credit risk at a time the fed will be cutting rates? bob: i am listening to the conversation at the start about the equity market and how we are isolating nvidia and a couple things have driven this rally. there are other things that are lacking. i am a bond guy, which makes me a equity market expert. [laughter] i see a lot of what is going on in the equity market and high-yield market and we have parsed through this. what you are looking at is the triple seat universe is 8000 -- 1000 basis points over. the double d universe is in -- the different differentiation is occurring. this is different from where we were in august.

whenever we hit 600 basis points over, most of the market was about 600 basis points over. that was probably the time to take a shot over the near term. now is not. the market is telling you there is differentiation beneath the surface. investors are seeing cracks forming and they're trying to get out of the way. lisa: you said things are playing out as they should to get to a recession by the end of the year and get the fed to cut rates by september. does that mean we will see a rapid deceleration in some of the economic data that we haven't seen yet? bob: absolutely and we talked about this. from the last fed rate hike until recession, it has historically averaged about a 13 month period so the long end variable takes time. we are getting into a year and a quarter and we are going to start hitting the window when the 475 -- 475 basis --four 75

basis points are going to hit. the higher cost of everything, that is causing them to rededicate where this spending goes to so that catch-up is coming and some of the inflation data we are looking at, europe, overnight or this morning, came in soft. it really surprised to the upside but everything seems to be slowing down. the one thing that seems to have gone over -- under the radar, look at the bloomberg commodities index. it was 140ish about a year ago and it is below 100 now and the trend is diving south at a rate you only see headed into recession so the weakness is there. the cumulative and lack are catching up. lisa: a lot of people pushback

at commodity being a signal right now and this time they say it is different. here is the issue, people same because of china and the and ability to get that right and because of russia and their willingness to pump much more than their allotted amount to get money to fund the war. you are seeing distortions in the commodity market that do not comply with what they are seeing on the ground. how much are you using this as a key signal to see where we should be? bob: you have low input -- unemployment in the u.s.. everyone is talking about 3.5% unemployment. everyone is talking about wages have gone up and there is stickiness to core inflation. everyone is talking about consumers want to spend on travel and leisure. the demand is there but if demand is at a high enough level, you will see commodities prices pushed higher. people are spending on things and buying things.

it is not at a rate that sustains itself with the amount of supply. begot paramedics -- the bottlenecks have cleared. jon: we will talk more about this. bob michele will be sticking with us. the whole curve back down to 3% in these cuts come in in september. tom: i would say it is an outlier call. i think people are nurtured by the high heels and maybe they drift away with the debt ceiling but we will talk about this. jon: your two-year at about 4.42 and the equity market, midsession lows. from new york, this is bloomberg. ♪ >> given you up-to-date with news from around the world, with the first word, i am is -- lisa matteo. that debt limit deal has to a

house vote today. jpmorgan chase chief executive officer jamie dimon says he is off the -- optimistic about it. >> i understand it is a democracy and people have different opinions about what you should be doing and it is one tool for one party to get the other party to the table. i am optimistic there and i applaud the fact that they spoke and got something done. >> office estimates the deal will cut deficits by $1.5 trillion. the u.s. called for surgery and kosovo to de-escalate -- and protesters. u.s. secretary of state antony blinken blame" -- kosovo's prime minister? he urged -- to avoid working in

predominantly serb towns where violence corrupted. the national intelligence service says north korean authorities are intensely collecting overseas medical information for top ranking officials with insomnia, including details on medication used to treat it. north korea has confirmed that an effort to launch a military satellite into orbit failed. they reported a rocket crash into the yellow sea after losing -- losing proportion. pyongyang says it will attempt another launch soon. i am lisa matteo. this is bloomberg. ♪

how can you sleep on such a firm setting? gab, mine is almost the same as yours. almost... just another word for not as good as mine. save 50% on the sleep number limited edition smart bed. plus, free home delivery when you add an adjustable base. only at sleep number. >> when we do visit a country, we are therefore the citizens of

the country and we are there hopefully through good times and bad times. if you have more uncertainty, some incurred by the chinese government, it is good not to change foreign investment which has gone up surprisingly. it will change the people here. their confidence and ability to invest. china will do what they think is good for themselves. jon: jamie dimon back in shanghai. that the only one this week. -- not the only one this week. tesla's elon musk in china as well. tom: we should go. jon: isn't it nighttime? tom: a sunsetting. jon: how romantic. tom: i was looking at the hong kong building once and i saw the rain coming in at would be lovely to be informed. that is not rain but smoke.

jon: you told me that. old jokes recycles -- recycled. lisa: yes they have. [laughter] tom: john, save me. euro is 1.0682. jon: what do you want me to say about it? just going today, looking -- look at the time where the data dropped and you can see the euro. tom: we continue with bob michele, what a pleasure to have them for the entire half hour. i want to recapitulate what you said in a previous section. you are looking in the vicinity for labor day for a 3% market. no one listening or watching believes you. that is a massive price up, you'll down. -- yield down. bob: we talked about during the

break, 2008. march to june 2008, the five-year treasury went from 220 to 3.7 five quarters of a percent. you can have these countertrend selloffs in the market but the broader trend is growth is coming down, inflation is coming down, the peak in inflation and bond yields was last year. we will have lower highs and lower lows. tom: that fulton to the stunning headline from john williams of the new york fed looking into the lower rate regime. jon: i want to talk about what is happening in the property market. it is one of the things we can see in commercial real estate. we can all see it, what is developing in cities and

elsewhere in the country and you speak to professionals in the market who know about cre. they tell me everything is ok. there is no crisis. what do you see? bob: i see an imbalance. i traveled through the u.s. a lot this year. i have been to nine cities, suburban office space demand is very high but when you go into the central business districts, the officers are empty and those used to be flagship properties -- the offices are empty and those used to be flagship properties before covid hit. in 2019, i think of the reit's that were put together. what you wanted to see in their west central district business office space, it was 99% leased. there is someone in peace buildings now but the leasing rate has dropped from 99 to --

99% to 85%. the rear pressure comes in and evaluates it for that -- the re-appraiser comes in and reevaluates it for that. remember the some prime residential real estate market? it is so small. it doesn't mean anything. i am hearing the same garbage about central business district office space. it is significant and it was the flagship trophy properties and these buildings are largely empty in too many cities. lisa: the pushback when i hear from people when i raises concern is that this time is different because the leases are much longer. it will take time for them to roll over so there is capital locked in. a lot of the reevaluation has been happening in a very control way -- controlled way. how do you pushback in the sense that this is not necessarily going to be as low rolling

appreciation that will be controlled that will force the downturn to accelerate in the fed to cut rates? bob: the cost of carry is too great at some point in time and i think about houston property in the early 80's when everyone talked about, oil price collapse. if you could afford to carry this property, you could make a ton of money. guess what, you couldn't. people were going to the sale of their homes and writing checks were somebody to take their house. -- for somebody to take their house. at some point, you get tired of carrying the property. we are seeing some of that already where you see property owners -- holders say, here is the level of debt and here is what the -- i think the property is work. here are the keys and good luck to you. lisa: there is an issue on whether you think that commercial property devaluation

is going to be what triggers the fed to cut rates. bob: it is not just commercial property. there are a lot of other things going on. the regional banking system is on life support. many of the regional banks have their entire securities portfolios on repo to the fed at par. they are trading in the 90's and they have the cash at par sitting there. those are in the water and now with the federal home loan bank so they have cash to meet deposits around close. we will know in two months when we get bank earnings what is happening. my impression there is -- is that there is still outflows at the regional banks. be don't know how the regional banks will offer rate -- we don't know how the regional banks will operate --

the third is just the cost of funding corporate america. you had an incident pool of free money available for several years. url below investment grade barber, slap a 5% credit because on and there is your 5% borrowing rate and now you are in the double digits and more of that will be willing through. -- rolling through. i look at the commodity index and i do think inflation will fall off a cliff and i think the fed has this wrong. jon: huge amount of -- is going to come. but everything you have said, is that a problem -- with everything you have said, is that a problem? bob: it should not be. maybe that will give us another avenue to invest. jon: we need to do this more

often. come into the studio again. more guests around the table for a couple laps. lisa: i think they come to midtown and they talk about the prices -- the crisis in commercial estate because they are all emptied out. tom: my anecdotal is it is at least the string -- the same if it has not gotten worse. it is stunning to drive through midtown. jon: they like to look what is happening in the subway and with the volume looks like there. i see the offices. there is no one around. lisa: they are going out to eat. that is exactly it. people are still going back to the cities in droves but not the offices. jon: i see them all the time it on the weekend -- time on the weekend. the restaurants are still packed.

the offices are not. bob, we will let you go. i love the banks who say we have to get back to work. i saw a wonderful take on this, get back to work but it comes to banking and a couple branches beauties -- because you don't need to do banking in person anymore but you do need to do banking in a person within the bank. if you are the client, the customer. you don't need the branch anymore. if you work, you have to be there. lisa: you are hearing frustrated people. jon: the culture is important. lisa: oh, boy. ♪ >> the resilient head 69 winners

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>> economy is in a weird spot. >> laissez the markets play out

as you expect them to play out. >> we are concerned about the equity market because it has had a strange run. >> u.s. economy is in a different place than the rest of the world. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa ambramowicz. tom: good morning. a china slow down. a commodity slow down the. bob michele looking for 3%. leading the way in the commodity slow down, american oil $67.53. nothing else has to be said today. jonathan: germany out with inflation coming in below expectations and south of the previous month. you put it together we still have a six handle of cpi over in germany. the pressure will be on the ecb

to hike again june 15. tom: they're going the right way in france, spain, and now germany. japan out with a slower set of economic data today. that is the trend of the morning against audio and the weaker euro. jonathan: growth is going with it. manufacturing south of 50 now. in contractionary territory in china and europe. that is what we have it euro 106. tom: what is fascinating is the response. you have fed speakers today. the response from europe. the response from christine lagarde. how does beijing respond to this given the politics of the moment? lisa: how much ammunition they actually have. we heard they do not necessarily want to increase the debt limit. jamie dimon was positive

continuing to be diplomatic. they might be more targeted with respect to how they stimulate specific industries. larger takeaway is yes inflation but as you're talking about slower growth. are we on the tipping point? i go back to the tipping point as a moderation and immaculate disinflation. jonathan: if a massive distinction between manufacturing data. that is true in europe, united states, and in some ways in china. lisa: perhaps as a reason why you saw it silly surprise to the upside with respect to how much deflation was coming -- italy surprise of the upside with respect to how much a the disinflation. jonathan: still pandemic economics. we have this massive pull forward of demand of certain

things. goods we want to buy stuff. when the push shall demand for services. -- we had to push out demand for services. it is kind of crazy. services are screaming let's go hike. manufacturing screaming let's go cut. how that settles out in coming quarters going to be the story ultimately for the year. lisa: forward-looking. american air came out and increase its expectations for its earnings because of exactly that trend. you take a look at what is going on in the economy space. it does raise a red flag that is hard to ignore. tom: nvidia under $1 trillion. 394 we are down yesterday. it is amazing how 24 hours ago is about ai and take another looking at the global slow down to april 6 and what i and f

called for. jonathan: it is a part of the same story? tom: yes. jonathan: we are all searching for growth the last 10 years and refounded in equity stories and that was the story the last decade with low level growth, inflation. what has been curious about this year's who came into the year -- we kept going on about how we eaten away consensus views. year-to-date tech not going to do well. last year was ugly. guess what? eltek, ripping. that is where you want to be. china come equity market, bear market. the dollar gets short. the longer euro. the euro back down to 1.07. lisa: can i apologize to everyone watching just throwing things at the screen.

tom: tomorrow we have our -- that is what the data is. you see it in dxy 1.42. jonathan: nasdaq 100 up 8% and some. on the s&p 500 similar move. we pull back on violence. down four basis points. tom: you have to write a midyear review, what you do here? how do you change from 1231 after the surprises of the first five months of the year? >> i'm going to have chat gpt write the first paragraph of my midyear review then i will write the second one and or third back to our clients to tell me which one they think is a better job. we're in a transition period. very going to have earnings

recession in the back half of the year. i know people in financial service industry talk about the back half of the year. it is never now it is always the back half xyz will happen. it is clear earnings have to come down from where they are. mark is pricing in 2024 than it is 2023. looking past potential pause, potential hike. looking past the debt ceiling. this is all about next year at this point. that is the reason why the markets are behaving the way it is. investors are looking to next year. lisa: what are people getting wrong? i say this with humility. i'm wondering from your vantage point, where the framework could be off? alex: there's a brought narrative the market is up.

it is true. the s&p is up nicely this year but it is probably the thinnest rally we have seen forever. couple minutes ago i was on my bloomberg and i put in spw index gp go that is the equal way -- if you look at the index, it is negative for the euro from last night. s&p the market cap is up 9.5 with equal weighted is basically zero. that is a 10% spread. the people are missing -- there you go -- that is the future is, never mind. people are missing it is not the market that is up come it is a handful of companies. there are attractive opportunities outside of things that have moved and i would argue it is may be early but time to fight the momentum and look at other areas that should benefit over the next 12 months. lisa: are you going more into bonds?

the idea we could end up at a 3% level for the entire yield curve with people piling into bonds. the fed cutting rates by september and a full-blown recession underway the end of the year. do you take that view as well? alex: full-blown recession is probably a bit overstated. your original question are you going back into bonds, we never left bonds. we have weathered the storm in bonds and have enjoyed the rally since last fall. that is the secret not a lot investors appreciate. that have been quite strong the last seven months. if you look at was going on in bond market today, yields are much juicier than they were year ago. municipals have come of the board. you're to be very picky in corporate. very selective around credit. there is a risk of a deep

-- we will be in recession. our view of gdp u.s. as a negative on it. but it is physically a zero. to get a zero for the full year means the back half is a recession. our view is the strength of the labor market is much stronger and the other negative forces and we muddle through and we get through to the other side. jonathan: it is amazing to see 3.4 state unemployment in america. we have to leave it there. the difference between the outperformance and market cap s&p. nasdaq 100 up 8% this month. s&p down 3% month to date. that is 11 points about performance. a single month. tom: by no means am i saying by wholesale.

i look at procter & gamble and walmart. huge multiples given their revenue growth. solid nature of what they god. take a troubled company. we know 3m is troubled down 62% from there 2018 high. there is no bid on this thought. pricing back to 2013. you can enjoy 3m this morning under a 10 the multiple. is that how you describe a value? i am just saying with security selection what is really the value of a 12 multiple? you have to be careful. jonathan: a certain stocks were multiples do not seem to matter at all like nvidia which is absolutely flying. on biomarkers we catch up with a blackrock in the next hour. we have an interesting call. fixed income is back. the income part of fixed income

is back but do you get inverse correlation to risk assets to diversify the portfolio? on the bond, yes fixes come -- what is he saying further down the curve because he thinks inflation is going to be sticky and the federal reserve will not bail people out with rate cuts. he saying the 10 year would not give performance the same way. i find that interesting. lisa: it goes against with bob michele is talking about but the fear that 60/40 would not work people are sticking with the belief of looking for diversification other ways. jonathan: equity futures little bit negative on the s&p 500. lisa: keeping you up-to-date with news around the world with the first word. the debt limit deal heads to a house vote today after squeaking through the house rules committee by 7-6 margin.

the nonpartisan congressional budget office estimate the double cut deficits by $1.5 trillion over a decade. u.s. house speaker kevin mccarthy has dismissed threats from public and hardliners to remove him from his job. u.s. and european allies urge caution on whether ukraine should have the right to strike inside russia. the supporting ukraine are taking stances on how it should be back moscow's invasion. u.s. has publicly lead against the strategy of attacks within russia. for ministers of the nato countries began a two day meeting where they will discuss ukraine's bid to join the military alliance as well as how to boost defense spending. u.s. average serbia and -- to de-escalate tensions in kosovo after clashes injured peacekeepers and protesters. antony blinken blamed kosovo's prime minister government for

quote unnecessarily inflaming ties with minority served community. to avoid -- by demonstration officials are divided over how aggressively new artificial intelligence tool should be regulated. some white house and congress department officials support their strong measurements proposed by european union for ai products. meanwhile u.s. national security officials and some in the state department say aggressive regulation will put u.s. as a competitive disadvantage to china. global news powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

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different opinions about what we should be doing and it is one tool for one party to get the other party to change so i'm optimistic there and i am hopeful that a set down his spoke and got something done. >> i think it is going to happen. jonathan: it goes to a vote in the house and jamie dimon thinks the vote will pass as do many other people. he is in china and not in the united states and most ceos share their view right now that this think will pass. tom: after the vote yesterday. 7-6. it is the same as tenants to whatever. it pass. jonathan: i think jamie dimon alluded to this that this is become the mechanism to have a negotiation about the budget in america because we do not often do that. white house comes with the budget and everyone is like whatever. tom: fiscal policy does not

matter in elections. that is tattooed to everyone's brain both side of the aisle. first tuesday in november that deficit budget is not up the chain of issues. jonathan: it does not seem to matter where you are in power. seems to matter where you are out of power. have you noticed that as a trend? lisa: nobody wants to come out and say we will cut your social security checks. that is political kryptonite but there is this issue and were going to hear this more how much is it going to be a talking point this time around. tom: the congressman of wisconsin brian style joins us now. i'm going to go back to the election of 2018. you want with 51 percent of the vote. you have done better in recent elections like 6%.

i want you to comment on the conservative republicans and what they are doing -- the public is at a more middle of the road, one of the damage being done by the strident republicans to those more in the middle of the road? bryan: this vote is going to be -- you're going to see there are some members that are going to allow perfection to be the enemy of the good. all of us would like to see us get our true fiscal house in order is to u.s. this bill is only a step in the right direction. it is the largest spending cuts we see in u.s. and has work requirements. it helps workers get back to work and does this without raising taxes. there are some people that would like to see a perfect bill but if we have a good bill have to vote for it. tom: in washington imposed yesterday that said the republicans have a narrow majority in the house.

can you expand on that power in washington with president after this budget debate? can you get there with donald trump november 2024 to move beyond a narrow majority in the house? bryan: what we're going to see now is a lot of voices coming to the table and i think the one that will be successful as the candidate is going to talk about the future of u.s. about how we will grow the economy and address the fiscal situation we are in. we'll have a number of voices at the table. i think we need to dramatically change course in washington and following two years of dramatic increases of spending. lisa: a lot of people talk about the real discussion being its ultimate and whether social security checks by the be reduced. medicare medicaid receives less funding. are you putting those things on the table in your discussion about further fiscal restraint? bryan: in this bill we are only

dealing with 11% of the federal budget. one point $5 trillion in savings for the american people. it is a entitlement programs that are driving cost higher. this is an opportunity to bring democrats and republicans to the table to address those programs and protect medicare for generations to come. it will need bipartisan approach. canada is talk about the reforms going to be needed. -- for the canada's to talk about the reforms is going to be needed. lisa: wendy schiller said kevin mccarthy will remain speaker of the house simply because the democrats will back him if the republicans will not appreciate it will be some cohesive voice that is better than the alternative. does that concern you? kevin mccarthy warming speaker but perhaps only at the behest of democrats were concerned about the alternative?

bryan: i disagree with the analysis. i do not think he will see a motion to vacate. we have a robust family conversation last night into the late hours of the evening talking about this legislation and while it is true there are republicans who would like to see a better bill, they think they could get a perfect bill, at the end of the day, everybody in the room recognizes this bill is a step in the right direction and they are appreciative of the republican negotiating team that moved to the ball forward. we started with the president saying he was going to refuse to negotiate. he went to delaware. he would often japan. at the end of the day, we came back. tom: you sound like paul ryan on an off day. what i am hearing in zeitgeist is democrats are taking a victory lap because they got what they wanted, moderate republicans like you are saying let's get this done and move on.

you have people trying to block this and shut down the government. i got to go back -- was go from boehner to brian to mccarthy. what is a speaker have to do now not to be paul ryan, john boehner? >> i think republicans are quite unified in the house right now. it shows why we passed the limit save grow out. people cross u.s. estimate -- underestimate the ability for republicans to come together unify and pass a bill. president biden did not think we could do it either. we came together. the republican conference in the house is quite unified to address spitting challenges we face. -- spending the challenges we face. tom: the speaker ship here is under real threat. it comes up suddenly. did it come up suddenly for paul ryan? it was our thing fine and then

you are his aid and then he's under threat by the republicans? bryan: i was working in private sector for some time solve not on capitol hill for 20 years before i ran for office. you see at the end of the day these things can rise on occasion. if you talk to the public and members we are unified in house of representatives. everyone recognizes this is a good bill there is just some conservative and republican members that would like to have a better bill. jonathan: i'm just a spectator watching this play out for a long time in u.s. and abroad. every single time we get into this debacle we raise the debt ceiling again. whether that is a republican president or democratic president, it is the same outcome, we the debt ceiling. you heard jamie dimon come in from the break there saying i wish one day they would get rid of the debt ceiling. why do we still have it? isn't

it somewhat embarrassing for the president to go abroad to places like japan to the g7 to try and lead the global effort on the bunch of issues to then be looking back and had this debacle playing out at home? bryan: as he divided government there are few opportunities to negotiate spending reforms needed every particularly when exec at of authority has grown dramatically. in this bill we address the fact that the president try to alter student loan payments. that never went through congress in the first place. based on executive overreach what we have so few opportunities to get spending under control. this negotiation allows us to actually bring president of the table and have a conversation about how we get spending under control. this is overall a good bill

moving us in the right direction. jonathan: don't you see where this is going? were out of time so if you want to continue the conversation come back another time. if it is like were in the process of manufacturing crises to do what you are explaining pervert the confidence in the country -- and at some point it will revert the confidence in the country. we have to leave it there. these are big issues and they are not going away anytime soon. tom: i'm trying to get a measure a speaker mccarthy risk as you move forward. he had a good day yesterday. jonathan: all of that coming up in 30 minutes. ♪

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tom: both are surveillance -- this is "bloomberg surveillance.". in the next hour you may see west texas intermediate. are you going to see a 66 handle? $67.12. $66 a barrel is where you have to go a oil again. lisa: how many people have come on the show and said it is a technical trade? it is no lack of demand. but that is really the issue. all of a sudden you have bob

michele and others saying the clients you have seen in broader commodity sector is telling us -- declines you have seen in broader commodity sector is telling us something. tom: right now before we get to blerina uruci with t. rowe price michael mckee will give us a brief here. you lectured me years ago pay attention to jolts survey. are we seeing the market crack? michael: we hope so. we saw a decline in the number of job openings last month. two months ago. it is somewhat old data but we are expecting another decline. that would be good news for the fed which is thinking that the high level of job openings is one reason we are still seeing a lot of pay increases for workers because it is hard to find them. if it continues to go down then

that should take pressure off. it is still a long ways to go to we get to pre-pandemic level. lisa: they've been talking about going raising rates will more time before pausing or taking a breather. is that becoming more of a consensus now that there has not been a fuller shakeout in these smaller sector? michael: it does seem to be more consensus but voters, fed voters who have spoken are evenly divided. i think you will see friday and cpi report jobs on the 13th will be -- i would not go to the bank to what is in fed funds futures argument that there is a 65% chance of a rate increase because that can change depending on the data. it does look like most people at the fed leaning in that

direction. lisa: i want to get your view on the debt ceiling debate respect to the economic ramifications. we have not talked about that much is the student loan repayments that have been flagged. wada star in a couple of months time as a result of the deal. -- student loan repayments that will have to restart in a couple months time as a result of the deal. michael: it is probably the biggest thing in the debt ceiling package that would affect the economy because the overall numbers are pretty small but we could see a compressed period of declining domestic spending if people who are spending the average 300 $69 a month payment on something else right now have to start sending it back to the government lenders. but it is also been pointed out that when they ended the supplemental foodstamp program, when the end it some of mental childcare tax credit we thought that would happen and the effects were smaller.

it is possible it is not have a major impact on the economy right now and it will be hard to he's out in terms of other things that been going -- tees out in terms of other things have been going on. tom: blerina uruci joins us. on the shifting ties of the american economy. do you have hit any handle on second-quarter gdp yet? everyone is winning a recession but what is t. rowe price call on where we are on growth right now? blerina: it feels like were going to get another quarter of positive growth at least the components i take more signal from which is consumer spending and personal consumption. we have had a lot of volatility in the inventory data and that trade never all we look at consumer spending in u.s.

economy that has been holding up. a lot of people expected the shift in spending from goods and services but we are continuing to see the economy that both components remain strong and u.s. consumer goes out to spend. tom: one of our themes its return to american exceptionalism. the country by country they seem to be slowing down widely anticipating by imf. at t. rowe price is america the place to be because of economic growth? blerina: i think we saw that last year and i think the theme continues that the fed was able to increase interest rates faster and sooner here than other central banks because of the resilience of the economy. u.s. consumer has been strong. i do think the direction of travel for the second half of the year is one where a ton of headwinds are gathering momentum

so u.s. economy is going to slow as well and we are seeing signs of the labor market starting to cool down. all those things are going to play out -- u.s. would not be as strong in second half of the year as it was in the first half. lisa: wells fargo ceo was speaking at a conference and he talked about credit card spending being up 10% so far this year. debit card spending is about applied the people are out there spending in a significant way -- about the flat people are spending as he is an efficient way. what are you looking at that points to something that is softer, perhaps an inflection point to a lower growth rate? blerina: i think a lot of what is happening last year was labor market was adding jobs in aggregate hours and income was growing fast. even faster than inflation. we look at average hourly earnings that was surpassed by

the rate of inflation but payroll a look at must not. the payroll proxy has been declining because job growth is down but more importantly hours worked are declining faster than employment. that it -- this is important. the other one is excess savings story. we were talking a lot about it as the pandemic ended at whether that was a wealth fact or it is going to be spent by consumers. it turned out last year consumers continue to spend the excess savings buffer and i think that is going to run out at the end of this year. both of those and then you add fiscal impulse which is slightly negative but it is adding to the momentum that is dragging the economy down. all those factors make meat less optimistic about u.s. consumer later in the year. lisa: i am wondering whether you think the momentum we currently

have based on all of these indicators is enough to avoid recession and make a recession and probable because there is still be savings, they're still the power to go out and spend. blerina: it is certainly possible that we can get a soft landing but i think historically with this combination of factors of high inflation, fed tightening, the 20 training -- liquidity training. what happens in the labor market is key. we'll get the jolts data later today. one scenario could be soft landing in the labor market that we need purely through closing vacancies which is something governor while has been discussing since last summer. i think what we have seen so far more consistent with a soft landing in labor market. tom: we are talking about lower

yields. price up, you'll down and there is a debate about this. you're in interesting seat at t. rowe price managing gazillions of dollars. the overarching theme linking your economic with your portfolio managers price up, you'll down in bonds? -- yield down in bonds? blerina: a lots of factors have been affecting yields in recent days about looking at the two year for instance from september to date has been in the range of four to 4.5. for most of the time what is it telling us? market is buying the story that yields will be higher for longer but probably we are quite close to the peak in interest rates. from here i do not think there is that much upside for yields. tom: i think this is a profound idea. bullard and others are talking about higher rate regimes and

others -- the calendar is moving forward. what we hear from bob michele, blerina uruci is something in january or late last year and they are now saying we will compress this in four or five months. lisa: how much does he have to do with china reopening? i want to end of they are to get your thoughts on how much the disinflationary place people are talking about accelerating stands from a china which real but it does not seem to be as people expected. blerina: i think china economic growth story looks different than it did 10 years ago. i do not think they are going to drive economic growth as they did and i think this has repercussions for global inflation and global demand for commodities. i think we're seeing that play out. tom: thank you so much. maybe a softer tone than we

heard from bob michele. are we lucky on this day of china data? we say we lucky but you know it is our team doing it. we take a surveillance nap and a surveillance snap and the team is working 20 47. having leland miller come up is exceptionally fortunate today. lisa: how much is this just manufacturing not keeping up and services continuing to chug along? you can bring it up and i think it is a good one. is there an inability or complete reluctance by the chinese government to offer up stimulus? tom: i'm in the camp do not have a choice because of the mandate of the kind of a gene, kind of politics they are. they got to keep people employed. someday i will be wrong on that they had keep people employed. lisa: from a global perspective, how much that please out to the global economy is as opaque as

the reopening has been. this is one of the reasons feeding into the uncertainty you get with a lot of economic views. tom: and i think about calling on a lower reader g. let's remind ourselves 10 year yield 3.67%. where's going to be labor day? on and on you go to price up, yield down. coming up the conversation of the day on china. we have william lee earlier. leland miller of china beige book. must listen, must watch for global wall street. lisa: keeping you up-to-date with news around the world with the first word. jamie dimon says j.p. morgan chase will be in china in both good and bad times remain

committed to doing business in communist party rule the nation. ceo of the biggest u.s. bank also says he does not foresee a decoupling between u.s. and china. >> over time there will be less trade. it would take years for these things take place but it would not be a decoupling. the world will go on. lisa: the remarks come as china u.s. relations are at their worst in decades. photos obtained show elon musk at a restaurant in beijing. the ceo of tesla met with china ministers for industry and information technology. he is expected to port tesla shanghai factory later today. south korea says north korean leader may be suffering from a sleep disorder. national intelligence says north korean authorities are intensely collecting overseas medical information for top rank and officials with insomnia including details on medications used to treat it. north korea has confirmed an

effort to launch military spy satellite into orbit failed. the official news agency reported a rocket crashed into the loc after losing propulsion in second stage of the ascend. the launch initially prompted missile alerts in japan and south korea. it will attend another launch soon. -- attempt another launch soon. global news powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

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there hopefully for the good and bad times. if you have more uncertainty -- is not going to just change -- nothing they should assume it will continue. it would change people here. their confidence to invest and do things. tom: jamie dimon in shanghai with our steve. a great interview on the optimism of banking forward on the pacific rim with the head of jp morgan. lots of conflicting trends today. neil dutter who has been optimistic and correct on a non-recession america looks at what bob michele said and michael says rates are coming down, inflation will come down and what that means is the income we make will be more valuable, inflation-adjusted incomes will expand. that has been a core optimistic foundation. lisa: return of the bond boom

and it is the key question. we talk about the opposite view saying longer-term bond yields are not go down as much and it goes down to the believe inflation is sticky or not? that is a big the base right now where there's not a consensus. tom: if you are part of global wall street and particularly everything that has to do with investing in america, here is your chinese conversation of the day. william lee was with us earlier with caution on difficult chinese data this morning. leland miller flat-out disagrees. you are more optimistic. what is the data you see in china that leaves you to pacific rim optimism? leland: optimism is a strong word but i think people have gotten to gloomy.

earlier in the year there is this explosive chinese recovery and it will happen fast and a lot like america's, that was never in the carts. china had to get over covid. we are starting to see in april and may whether there's going to be more recovery. the latest data has been bad. the stuff we are seeing has been better than what the government has been putting out. we are not seeing the worrying falls that have perpetuated the gloom. we are not there. tom: dr. lee talks about innovation which comes from a more strident autocracy in beijing. given the changes you see off of the party congress, is this a chinese leadership that can still use traditional monetary and fiscal stimulus to ghost the

economy? leland: the economic model still relies on the impart. there is a lot more restrain and constrained for being able to do it in a way they did before. i think there are elements that as things get worse they will have more pressure to stimulate. i think the mistake is people think they are not stimulating. we have seen policy support this year. we are seeing rates sliding. we are rejections falling which means government has been more permissive in credit revision. it is not nothing. they have not been building and building to assimilate growth. i think they want to stay away from that but they are supportive on monetary side. policy support is there but not in -- what it was in the old days. lisa: you have said people have been to gloomy on china. where are underestimating restraint really is? leland: there are two places. people are shaking up over the

manufacturing pmi. we'll look at manufacturing data we're not seeing gloom. messick orders are ok. foreign orders -- domestic orders are ok. foreign orders are ok. look at the consumption recovery everyone has been expecting but have not seen, we are starting to see elements of that. the problem is it has been uneven. we are seeing better data you may then we saw in april which is better than march. we are seeing another recovery so many people are realistically expected early this year but we are seeing a recovery that is there and defies a lot of this total pessimism in markets over china's economy. lisa: how much of the recovery is in domestic spending and the international spending? and economy contained in china does not percolate the same way traditionally chinese economic activity did. leland: that is a positive

story. most of this is coming from domestic demand. you look at our inflation gauge. showing more domestic demand. our domestic orders are up. it is a relatively weak global economic environment. manufacturing and china doing like gangbusters for years. manufacturer is doing ok and we are seeing retailers services do better each and every month. as long as you calibrate your expectations this is not the massive disappointment that everyone is making it out to be. we need to see the data through june and will make a better call. lisa: how does that affect your longer-term view of growth? he was saying he sees potentially below 5% of this year but and going down to a 3% level on annual growth perspective. do you take the same kind of you? leland: absolutely.

this is cyclical bounce back. we are seeing -- it is reasons why 2023 growth will be better than 2022. better base of comparison to work off of. it is not change the long-term story. the long-term story is of a significant structural slowdown. we have been talking about the numbers to percent, 3% for years. but not people are taking it seriously. -- but now people are taking it seriously. tom: take us away from pacific rim. what is the people's reaction in china to unemployment? leland: i think the major issue is with slowing growth you're going to need to be transitioning jobs from traditional ones to new ones. it does not seem to be a great a long-term plan for doing so.

the question is what is chinese government care most about you? they care about jobs, employment , and stability. they're going to have to be providing. you have to create economic growth to do this. if you're just biting down the hatches, it will not do it. tom: competing with vietnam or more prosperous korea? what is the shortest path to success for beijing to create marginal jobs? leland: they think they're competing with korea and japan. there still competing a bit with vietnam. are you able to make that transition without social strife hitting along the way? this is a dicey proposition. it is a hard thing to do. if you no longer have high levels of growth and no longer relying on property build outs and infrastructure build outs to drive growth, you're trying to transition to a higher level

economy. it is not all clear they can do this without problems along the way. this is why i think people are worried about china medium and long term. tom: leland miller thank you so much. great to have you on. today we say thank you to stephen engle in hong kong his conversation with shanghai with jamie dimon of jp morgan. i am watching here and it makes for good tv theater have gone down in flames. i need a $66 print on west texas intermediate. they can get it. 67.06. i do not know how to go opec plus here. i do not know what the supply microeconomics is to boost lease price -- to boost the price. lisa: you know who does note? chat gpt. there is article came out. they are higher chat gpt to

handle -- which i think is pretty much on brand. that is why i am hearing from people who are in school. tom: can i go and do math? take the longest series i have which is saudi light series back to the 1950's pre-nixon and all that. i look at the collapse of 1986 and you compare that move to now and it equates to 40-41 dollars a barrel. we are basically halfway there to 1986 kind of feel and a plunge in oil. we are nowhere near the agony yet but there it is. lisa: how does riyadh handle russia? tom: will that will kennedy and our world-class team discussed this. it is a theme here into juniper you'd tomorrow on the program sell in may and go away.

we will have that for you completely. stay with us through the day. this is "bloomberg surveillance." ♪ look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star. hi, i'm ozwald. hello ozwald. pam, you are a rock- i wasn't going to say it. ♪♪ when i was his age,

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the month of may? closing out the month with good gains for nasdaq. figure weakness counting you down to the opening bell. the countdown starts right now. >> debriefing you need to get set for the start of u.s. trading, this is bloomberg: the open with jonathan ferro. jonathan: live from new york, debt limit deal headed for a