>> demand is starting to slow. we are seeing that in the supply chain. >> are investors pricing in growth opportunities over the next five years? >> this has been a slow-moving economy and market. >> what we have seen so far seems more consistent when the soft landing in the labor market. >> we think we will be in a recession by the end of the year. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramovitz. jon: welcome to wall street where a month feels like a year. good morning. this is bloomberg surveillance

on tv and radio. i am jonathan ferro as we close out may and kickoff to. --june. got out to jim reed of deutsche bank. ck reminding us that person public was taken out by -- first republic was taken out by jp morgan. tom: i thought bob michele of jp morgan was riveting and 80 -- in his view of this. that is a huge 44 june -- story for june. june one, there is a wall of economic data. we have an early jobs friday tomorrow. jon: yesterday, with sword --whi p sword. jobs data, job openings was surging and fed speakers came out. don't call it a pause. it upsets them.

>> the eyes them, we have a manufacturing recession that is not great and fed officials come out and what is data dependency me? you have been on this but the data doesn't matter. if we get a hot jobs report tomorrow, does it make a difference? jon: what did governor jefferson say? if we do pause, we mean skip and then skip means we could hike again that it doesn't necessarily mean that it is a peak rate of the federal reserve. will the market see it that way? lisa: right now, what you're seeing baked into the fed futures market are basically, there is going to be no hike this month and there's going to be a 25 basis point hike in july and cuts later. jon: data will put some over the line -- push them over the line. tom: i am interested in china.

yesterday's china dynamic was more important -- jon: thanks for listening to us. tom: i don't agree with any of this bet parliament spark -- this fed parliament stuff. several hedge feeds, bloomberg's george lee of our markets team in their summary of all the researching investments in china. jobs reports friday and china reopens sunday evening. jon: when is the -- where is the growth engine going to come from. lisa: what does that mean for europe? these are all the stories that are hard to get a handle on and going back to where you began, the idea that a month feels like a year, think of all the narratives we have gone through each week and here we are halfway through at an inflection point with the fed showing that the risks right now to the downside and they are aware of that so we have to wonder what are they looking for?

jon: the last three minutes felt like a year. equity futures on the -- china in the bond market your time by three basis points. why do you never listen to us? tom: the media parler game and all of the fed speech, it is not like it is a face -- waste of time, it is a slave to the data. claims and tomorrow's data is more important. jon: is that why you stop reading the fed speeches? you can tell. lisa: we are talking about the data dump and let's get a sense of what are we -- we are expecting. ism infection pmi's at 10 a.m. and i'm curious to see whether that reflects the dallas fed data. we are hearing from patrick harker at 1 p.m., whether he

does or cash double down on the skip or pause. we have banking executives speaking at a conference and this will be interesting especially in light of the acquisition we have forgotten about, first republic. we will hear from john walton, bill down jacket from pnc and brian moynihan and retail earnings, macy's, dollar general and curious to see on the lower end and lululemon after the market. i like lululemon. jon: there's something wrong with that. lisa: --jon: there is nothing wrong with that. lisa: is it --jon: is it on its way out? lisa: that is what i hear. jon: they are trying to push it out of midtown. tom: spx flat.

jon: you are not listening to us. tom: nasdaq up 8% and 500 basis points up over equally weighted nasdaq. no comment. i have never been in a lulu. jon: i'll mention to them, the s&p 500 marginal gains for the month of may and the nasdaq is lying. you have been clear having equity risks. kenny tells what -- can you tell us what you have been adding? >> i we were underweight in the fund for most of 22 -- 2022 and that proved to be the right thing. you have been adding back and the thesis is simple. the economy has proven resilient and we have spoken on the reasons, the labor market and access consumer spending.

we have for q1 earnings was sparked -- results and corporate america is doing all right and in a averment where nominal gdp will hold up a lot at her and we think there is an opportunity to add back on weakness, what we have been focusing on a stable growth and high quality growth. we are looking at companies that can generate risk consistency, margin consistency, low leverage that is very profitable and that is what we have been focusing on. tom: are there a lot of those companies out there. maybe you are doing it off your iphone but there are a lot of companies out there that give you better quality free cash flow growth? russ: there are. the market has been focusing on tech and parts of texts that are most leveraging is ai and there

are a lot of things we like but there are other parts of the market. you can talk about defense and luxury good factors. we are finding that there -- a lot of companies made in big u.s. space that are giving you quality cash flow is likely to hold up even if we do see some snow in the back half of the year. lisa: my favorite part about your note is that it sounds risk on, the idea that we have been adding to equity risk. you see opportunity and you read the rest of it, the economy is decelerating, we are going to have issues. perhaps recession is not a foregone conclusion but is there an interesting conclusion here that equity risk in some of these companies with all of the caveats is a safer bet than certain slices of the bond market? russ: that is a good way of putting it.

we have been adding equity risk back but adding it from a bear -- a very underweight position last week -- year. the point you made is a good one. you think about what has done well in this environment where you have many thinking -- a mini banking crisis. you have concerns about the debt ceiling. the companies that produce solid earnings grounds of outcomes. if you have a drawdown in the market, you will see these things take a hit the long-term, 18 months out, these are places not so much to hide but to weather what is likely to be a slowdown in what is still likely to be an averment with some uncertainty around how far the fed will go. lisa: we were talking about whether bonds will provide be offset or if some of these cash flow stocks are the new offset in a moment where 60/40 doesn't have the automatic dependency.

russ: i don't think 60/40 is what was made to be last year. in the aftermath of svb, you have to be positive in 2022 and flip back to negative. it will be a little more. -- little more varied. at the fed is going to talk about going further, you will see the stock bond correlation flip more than it did for the last 10 years. it is a matter of having good high-quality -- in the poor -- portfolio. this is the attribute we think is moped -- most important to portfolio. jon: it seems like you're in the zone when things are going right. i read this note. even your hedges are working with equities flying? what is the goal position.

-- gold position? russ: the gold does a couple things. if we see the back half of the year, real rates are declining. gold responds well. the dollar up looks like to have peaked. the other effective -- factor, whether we are talking about the uncertainty of china, the ongoing conflict in ukraine and the debt ceiling, one thing gold tends to work well as as a tale hedge when people worry about the wheels coming off. jon: roscoe strip -- roscoe strip --russ -- a blackrock. -- of blackrock. tom: what is fascinating is gold and euros, gold and yen.

jon: we haven't talked about the debt ceiling debate. 314-117 through the house with ease. speaker mccarthy calling that a bit of a win. when more definite cats vote more for this then republicans? lisa: this'll will a hard sell in the political theater sphere. jon: coming up next, heidi crebo-rediker of international capital strategies. >> give you up-to-date with news from around the world, i am lisa matteo. iran has reinstalled monitoring equipment. even as his engineers added stock to stockpiles of uranium.

the findings by the iaea reduces the likelihood arrival face century when they discuss the nuclear program. credit suisse bankers are suing swiss financial -- financial bankers. they say they are suing over the right down over so-called contingent capital rewards. the bonuses were based on bonds, wiped out in the emergency rescue of credit suisse. nvidia ceo is said to be heading to china this month to meet with tech executives. companies on his are terry a -- itinerary includes bytedance. the u.s. house has passed a debt limit deal struck by speaker kevin mccarthy and joe biden to avoid a u.s. default. lawmakers from both parties join

to approve the bill wednesday night. >> there has been a very good votes in the house of representatives. i hope we can move the bill quickly here in the senate and bring it to the presidents desk as soon as possible. >> the deal drew opposition from planks of both parties. objections of conservatives could force debates in the upper house. 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. ♪ ( ♪♪ ) ( ♪♪ ) ( ♪♪ )

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jon: tonight, we all made history -- >> tonight, we all made history. this is the biggest cut any savings this congress has ever voted for. >> there has been a very good vote in the house of representatives and i hope we can move the bill quickly in the houses -- senate. jon: senate majority leader chuck sumer and speaker, and mccarthy passed the vote with ease. as senator schumer pointed out, potentially a vote on friday and into the weekend and onto the

president's desk. tom: one person thinks the senate will be -- it -- they slow it down and block it up. there was a brilliant article. it is thursday. it is not claims thursday. it is agreed upon adjustments thursday. beautiful chart. here is where we are. we are saving a lot of money. let's pull that puppy back over 24 months and the answer is to me, with the singular katz research in the u.s. -- new york times, we are doing nothing here. lisa: let's agree to disagree on how to deal with the big problems and come up with window dressing to put on tops we don't have. tom: two years out, we are going to re-addressed it -- readjusted. it is almost like the british

government. jon: not quite. this is the new world. the manufacturing crisis and you negotiate the budget. we will see this again and again. tom: bring the banner of again and on radio, it is too good to be true. it is agreed upon adjustments thursday. they agreed upon adjustments down the road and there's something else to say. we are going to go on from the budget and trying to move away from that. heidi crebo-rediker is with us. she is riding on much is she can on what we talk about -- talked about yesterday. that is china. if the china slowdown for real -- is the china slowdown for real? >> you have a lag in data and some revisions and i don't know if we understand that the data coming out of china is accurate in part because they are coming

out of a very significant covid lockdown. think back to when we were publishing our data and revising it after covid. i think it is too hard to focus to adjust one number. our focus on the youth unemployment younger -- number as a serious concern. tom: you have a great transatlantic and transworld, language -- linkage between europe and china and you say tv to the rescue for china -- ev's to the rescue for china and a lot of doubt from china will be solved with -- growth. this got that -- discuss that. heidi: i got back from europe and china was a key part of all the conversations because of the u.s. trading technology council, with secretaries antony blinken and others, we saw a focus just

on the main bone of contention which is that the subsidies for ev's in the u.s. are not offered to eu automakers because of the china components to the vehicles. you have this muscle memory of trade negotiators, going after what is going on between the u.s. and the you -- the eu and have china exporting more vehicles and more autos that are chinese. a striking uptick in ev's. tom: there is the analysis, whoever is out on twitter trying to figure out when elon musk's airplane lee shanghai. -- leaves shanghai. lisa: i have to go into the

conversation that you are having in europe which is what are the subsidies going to look like particularly when it comes to the recent tech driven investments in u.s. were promising to make? that anything change. was any of the have to of some of those programs removed from the agreement we got from the debt ceiling or was it that adjustments that came in after the fact? heidi: one of the great things about being overseas is that you did not have a lot of focus on the debt ceiling, as opposed to living in 24/7 here. the focus on u.s. politics was driven by trump. in looking at the numbers of the upcoming elections, whatever deals being struck between the u.s. and the eu, are they up for grabs if trump were to win the presidency? trump played out prominent role in concerns on whether or not there was a need for europe to hedge negotiations.

i think that is why we did not see contestants, the same kind of consensus we saw at the g7 and other meetings in the past two weeks with our negotiators in europe. lisa: what does that mean with respect to europe's -- u.s. and european alliance with respect to china, if there is a tepid receivable of the united states with ambiguous leadership? heidi: the u.s. seems to be in line with the eu commission. there are 27 different member countries and all of them are playing out -- how they perceive weakness versus strength and need to hedge. you have to have unanimity, it was in full display perfectly in china, and you don't have that in the eu where you do in asia. jon: you have the commission and

you have macron. that is why things have been confusing. lisa: yes and emmanuel macron is saying, we will strike a deal with you. let's go to beijing. it is like what are you doing? i wonder how much reticence there is to partner with the u.s. and a light of some of the recent subsidies, and volatility. do you think there is a micron issue -- micron issue --emmanuel macron issue? jon: that is me trying to be diplomatic. heidi crebo-rediker there from the council of florence -- foreign relations. there is an opec-plus meeting into the weekend. this is from bloomberg and a whole host of organizations. has everyone's attention.

lisa: there are some put -- potential news outlets invited but it is on even -- it is unclear if they will go. what are they doing? they are likely going to put cuts that will be implemented to get the price of. what are they trying to message? tom: just before we went to air, edward morris published in citigroup, opec plus and its "ma rket power." he has gotten this call right and he says they are struggling with what is their market power and i wonder if that is where this blockage of news organizations comes from because they're petrified about how to get their message coherent and how to get their message out without the journalism goes into questioning policy. jon: opec-plus and the countries

that make up the cartel are not known for their free and open press in their own countries. lisa: it's not like the media outlets are going to go and speak to people in the room so what are they playing up -- at? what is the single --signal. jon: some media organizations on the outside texting delegates. tom: the key phrase is simple. it is happy it glosses -- javier's fault. jon: equities are slightly positive. from new york, this is bloomberg. ♪

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jon: the scores are in for the month of may. the s&p 500, features in june pushing higher. for may, just about closed out may with a monthly gain on the s&p 500, on margin or third month of gains on the s&p. nothing marginal on the nasdaq 100 almost 8% to close on the month. on the russell, positive. nvidia through may that almost $250 billion to the market cap

of that company. how impressive is that? tom: i think a lot of other things lifted up as well and what is interesting is one year trailing selling may. nasdaq up 7%. the dow flat, and a little negative so it has been a one year churn year. jon: your two month, they look at this right now. trim that monthly advanced from yesterday's session and right now 4.4464. something like 40 basis points on the two year. pricing out cuts is the right way to put this as opposed to pricing in hikes. there is will -- real weakness in the data in china and europe. looking at the single currency, the euro against the dollar shipping up as 1.0709.

it is down 3% on the currency -- that is the worst month this year and it is the worst month going all the way back to april of last year. tom: can we all agree it is the surprise of the year? i think everyone has been looking -- jon: there has been many. doubts about the fed, they may hike again. lisa: surprise of the week which is basically a year when it comes to 2023. jon: i remember when everyone said by the banks. remember that? lisa: that was good. jon: there is a lot of fed speak recently. president harker ahead of the time period.

he is sounding more and more like a fed first chair and the committee together. the risk consensus on the committee is no cuts and if we skip june, we are not calling it a pause so you can see how the language is shifting and if you wanted to find consensus on the committee, you can see where chairman powell can find the consensus. tom: they are all looking at the data. they are slaves to the data. we had randy carson are -- randy carson are -- randy kroszner on. jon: the emphasizing cpi, and emphasizing that we can skip june. tom: can we get existential? what does --

jon: they dial one 800 wall street journal. tom: that was the stephen wright moment. it is our immense pleasure to speak with alan ruskin. his notes are absolutely fabulous and you can get them through deutsche bank. you have an absolutely trillion on m2 dynamics -- an absolutely brilliant --paragraph on m2 dynamics. alan: we will see dated today that shows that productivity was extremely weak in q1. and also on eight training basis and that weakness in

productivity translates to higher unit rate cots -- costs. output is relatively weak relative to employment. that is part of the week productivity story so it adds up to nominal gdp doing better than real gdp at this point. some of this i think is this natural overhang from the m2 growth. it has something like 30% m2 growth above trend, i year ago and that is down to 20% overhang thanks to weaker m2 growth that we have seen recently but that is propping up the nominal numbers. it doesn't ultimately pay you to print money. it doesn't generate real gdp growth. tom: the real gdp growth is the recession game.

your colleagues have been brilliant on this. one person has arguably the single best recession delay call of the last 18 months. reframe that now. i am not saying agree with him but at least frame out the alan ruskin recession to come. alan: i have been on the opinion that given the overshoot in inflation, even if we have a mild recession, i will still call that as a soft landing scenario. i know it is semantics but i think we are on track. we do need to see some weakening in the labor market and everything we have solved from the opening stated yesterday suggest employment will remain relatively resilient so you have this weird dynamic where employment is relatively strong compared to output and i think you are seeing weakness and the manufacturing sector worldwide. that is another story. we are still on track to

something that starts recession/ shallow recession but it is not looking like a deep recession unless we get some sort of nonlinear event like the banking sector prices -- crisis taking hold in a proper credit crunch. jon: you mentioned manufacturing. manufacturing pmi's worldwide, europe, china, south of 50 contractionary. it screens rate cuts. you look at services which makes up the bulk of some economies is replaced -- is robust. dollar weakness, to dollar strength and as you look at things, heavily broken that trend? is this something new and if it is in where there's that new engine of dollar weakness come from? alan: i think it is deferred dollar weakness. the whole idea about divergence trade that worked against the

dollar where the euro -- the fed was on hold and china was going to reopen and strength we would expect there -- we did expect there. all of that hasn't materialized. -- a lot of that hasn't materialized. the u.s. has been more resilient than anticipated and what you are seeing on the exchange rate is elective of what you're seeing on interest rate spreads. that story is taking its cue the relative growth story. it depends on where the fed goes. fed hike in june, it seems let -- less likely after yesterday's comments but if they hike in june, they will be down 105 on the euro-dollar. lisa: you have this really

interesting point in your latest note where you were saying there is little risk of over tightening. that does not seem to be the theme we are hearing in the fed speak that has been coming out every day. can you explain that, what that means as to where is -- policy should be and what it will likely be and what that means for longer-term inflation? alan: we all have our own numbers but if you look at the bloomberg numbers, you look at six-month financial conditions, 12-month financial conditions, if anything, they have eased rather than tightening. the tightening needs to come from something like the credit side. you're not seeing it in terms of credit crisis particularly. maybe some markets are tightened and close and up -- and closing up. you are not seeing -- it is a non-binary -- nonlinearity

event. maybe the federal reserve, which has some distinct advantages is -- and those more on the banking side, excluded you need -- that holds the key as to rather financial conditions tightening materially. it looks like they were tightening starkly. a couple months ago and now much lesser. jon: wonderful to get here you. alan ruskin of deutsche bank. but talk about moving fast and breaking things. the fed has moved quickly and some things have broken but the economy has moving --moved slower than anticipated. we are going to do more. the end of august, we need to cause pain and if we don't, that means more pain down the road. unemployment is 3.4% going into payrolls tomorrow and when we

started in may, we were coming off the banking turmoil of regional lenders and we work anticipating aggressive tightening in a financial conditions. it is happening much more slowly than people anticipated. lisa: the pressure to buy is still there under the surface and i thought that michelle bowman affected that well, the fed governor, when she said what you can see is that any kind of loosening of financial conditions, any kind of decline in mortgage rates re-up the search into housing. they cannot kill it with rates that are much higher, more than dollar -- double where they were on average and this indicates to them better -- there is an axis that has been beaten under the system. jon: balance of risk has shifted. -- the balance of risk has shifted. asking that question now, where it is very -- asked them that

question now, where do they stand on that? lisa: how much can they really have conviction at a time when bear are the lack affects -- when there are the lack affects. jon: sympathy for the fed? where is the real bramo? lisa: it is not sympathy for the fed but sympathy for the fourth -- flight. --plight. jon: comes in with the entourage. ed: and being yelled at for being happy --lisa: and being yelled at for being happy. jon: i think the audience would handily agree with me. tom: there you go. dive in. jon: 7:30. let cf deborah cunningham has

any sympathy for the federal reserve. lisa: come on. i am sympathetic to the plight. jon: interesting. >> give you up-to-date with news from around the world, with the first word, i am lisa matteo. you can't -- ukraine's capital was hit by missiles overnight. nato foreign ministers will discuss ukraine's bid to join the military alliance at a two-day meeting. ukrainian president volodymyr zelenskyy made an uninspected appearance at a summit in neighboring dover -- moldova. solesky says he will hold bilateral meetings at the european committal -- union committal suspect -- summit.

one person says despite an environment of great pessimism, europe's voting -- all this endeavor was the creation of the bank. he spoke to bloomberg. >> also proved the historical trend. we started with 11 countries and now we are 20 countries. in my eight years, i welcomed five new countries so there is something underlying which is really strong. >> vice president -- says the ecb is in this -- final stretch of hiking interest rates with further this -- decisions to be dive dependent. 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. ♪

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i keep advising them that they will be ouching. they did ouch. [laughter] i would tell them watch out. jon: the saudi energy ministers speaking to francine macro. it is always the shorts i we are unhappy about. it is always the shorts. nothing speculating about being long but being short. lisa: if there are speculators, how will they justify the production cuts they have to implement if there is no fundamental basis to where we are? jon: if you look at the fundamentals, one person did a good job breaking this down. inventories are shrinking. you have weaken -- weekends data out of china. tom: at the bloomberg commodity

index, it has been a weakness for commodities. this is a real joy. this is the conversation of the day on opec-plus. we are thrilled he could join us with bloomberg opinion. i want to cut to the chase and i don't want you to speak for bloomberg and other organizations about the back-and-forth of opec plus. i don't think that would be appropriate right now but i do want you to speak about your essay about the aramco allusion out there. a brilliant piece of the illiquidity of aramco, that speaks to an opec-plus that wants to play by its own rulebook. what is that rulebook to get the price of oil higher? >> what opec has been trying to do is cut production. i would argue they are putting production because they believe

they have too much speculation into the market and they are not targeting oil prices and they are trying to increase investments into the oil industry for future oil demand. the rulebook of opec is to keep prices as high as they can. it used to be $50 and $70 and now opec is trying to keep prices the closes they can to $100. they have not been able to do so, not so much for the demand which doesn't look great for oreo but it doesn't look too bad. there is lamoreaux coming from places -- there is a lot more oil coming from places. tom: i went back and did a study of the collapse of 1986, seared into the memory of all of opec and particularly saudi arabia. it gets us down to a barrel of $42 a barrel, are they worried about the ghost of 1986 are

other times we have seen oil slide? javier: i think that is prescient on the memory -- present on the memory of any saudi arabian minister. they think -- speak about the stakes of 86. i don't think we are facing a sent -- situation similar to that. the demand growth for the next two-three years looks relatively ok but it is a question of what is the price of oil to bounce the market and that is closer to $70 than it is to $100. the other big problem for saudi arabia is that we have had called inflation. we are looking at nominal prices for oil but the chasing power of a barrel is lowered today. you are importing goods, it is a lot less then five years ago and 10 years ago. though $70 are feeling very much like $50 a few years back.

lisa: we started a conversation talking about the gathering in vienna where certain news outlets are not invited. it seems like there is concern or disagreement with the message that has been getting out there. what does opec-plus not like in terms of messaging? javier: i think they don't like low prices. they like higher prices. they don't like to see numbers of russian production that are much higher than they would like to see and they would like to try to convince the market that everyone is cutting production as much as they are saying. news organizations like bloomberg report things we have -- as we see it and we have not been invited to attend the meeting. i have been covering almost every opec meeting for the last 23 years and it is our first. we will still continue cover it -- covering it.

lisa: we will be in vienna. i am concerned -- and is production of oil, what is the meeting going to be like in terms of the tenseness between russia and saudi arabia? javier: i think everyone will try to put up brave face in vienna this weekend. i believe -- agree that the production cuts are happening and tried to put a spin into the market that things will tighter. if you look at the bounds for the second half of the year, it looks better for opec and even what the actual russian oil and venezuelan oil and more barrels coming from here and from iran, things will look better in the market will tighten into the second half of the year. it is surprising because it is not like a panic situation. my big surprise is it is almost essential panic inside opec when

the market is trading quite healthy and close to $75 a barrel. javier: how much --lisa: how much is the panic about their selling to russia, and stealing some of the business that opec used to rely on? how much is that tension on the plate here that has to do with china and where demand is an wife demand has in him -- in pricing as much as people thought? javier: it is true that russia is selling more oil into china and india than they used to but it is also true for opec countries including saudi arabia. the european market is the new home. russia is not selling in europe so the saudis have captured market share. they are losing market share in asia and read -- and winning berkshire and europe. it is a balancing act.

tom: you are a world expert in all of the investment that goes into it. there are a number of essays under their purview in bloomberg opinion where prices and the motivation to invest in hyper carbons. is the prices -- is the price shattered enough where we will see a dearth of investments in oil? javier: price -- or some investment to be posted -- for some investment to be posed. it is a combination of the price and also a new mentality in the industry that shareholders come first and the industry -- we have seen that on shale. we will see the growth of the

shale industry and it may mean that likes of saudi arabia can produce more oil going into 2025 and onwards. prices have calmed down enough that investment into the industry will start to suffer. jon: you get to decide. re: congratulating sophia or not --? javier: can i pass on that one? jon: i will take a pass too. congratulations. lisa: inserting? jon: two teams that don't play. severe doesn't play attractive football. it is quite defensive. lisa: are you just asking for hate mail? . romaine: lots --jon: lots of them. i can take this risk. tom: i watched the other day for 10 minutes and it is all i could take.

they are all falling down. everyone was falling down. i can't -- americans -- jon: they are probably still in bed. lisa: do you know that females other players don't do that? jon: did you have the data for that? lisa: there is data for that and they do fewer sort of takeouts simulated. tom: what do you think about the long minutes at the end of the game? it is eight minutes? is that a big deal? jon: they need to work out how much time it is wasting. the ball is not on the pitch enough. they're working out how to address that. tom: when they set up for a corner kick, they never put the ball on the white nine -- white line. jon: it has to be slightly over the white line. tom: they are always cheating it. jon: the risk of will there. tom: we will talk balls and

strikes in the next hour. jon: tracy gremillion -- mcmillion from wells fargo joins us next.

>> demand is starting to slow. >> the question is, are investors pricing and growth opportunities of the next five years? >> what we have seen sophia seems more consistent with a soft landing and labor market. >> we think we will be in recession at the end of the year.

jonathan: there is something in retail. is this a story about macy's or the economy? good morning. this is bloomberg surveillance. i'm alongside tom keene and lisa abramowicz. the outlook from the department store, absolute the stock performance and the price. tom: there has been some enthusiasm. you know what? it is as simple as this. -8% per year over the last 10 years. it has been a midmarket train wreck. jonathan: demands weekend.

macro pressures on the consumer. i assume that gets worse. it is very difficult to get a broad understanding of what is going on with the retailer right now because they are ton consumers is not great. lisa: we heard from nordstrom's and it was better than expected. how much is this also ordering the wrong types of stuff in a pandemic economy. all of these different trends. the bottom line is this. they are seeing something very significant in terms of getting. there has to be this question of, is this on the lower end of discretionary spending? jonathan: this is their full range outlook. they had seen 367 411.

down by about 12% right now. just pulling back from session highs. positive by 0.2%. if you look at the bond market, treasuries higher by a couple of basis points. lisa: we get some economic data. all of this to really get a sense of what the noise is and what the signal is. within the data and in the earnings. we enervate what he said yesterday about a pause, a skip, whatever you want to call it.

this is at the conference. very curious as to what they have to say about the consumer. the idea that macy's downgraded their expectations and sales, they are expecting to be 22.8 billion versus the prior guidance. that, simi valley signals perhaps a very specific trend that we are not seeing in places like nordstrom but signal a softness out there. a higher end of retailer, curious to see what comes from there, but nordstrom shares are up today. this is the confusion. is this an easy story or a broader issue? how much is this really an issue of strategy when the economy is in transition?

jonathan: you take a look, look at the airlines, go to an airport, super busy. lisa: i did not say i had sympathy for the fed, but i understand the difficulty in discerning what the trend is when you have retailers coming out with projections. tom: it speaks to america and the challenges. this is middle america, midmarket america, trying to get these banners up. talk about the profit of retail. nvidia, $.40 on the dollar. those are the profit machines everybody is focused on. you have macy's at $.39 on the

dollar before a lot of other expenses come out. it is almost 68%. this is about mid-america flat on its back. jonathan: we planned year assuming that the consumer would be challenged. demand trends weakened further. that stock is getting hammered. tracy, do you think that is the story about macy's, that it is a story about this economy? >> it is probably both, a story about the bifurcation of the consumer. they have purchasing power in the bottom do not. we are seeing much higher credit card rates. much higher auto loan rates, and that is hurting the bottom and the consumer.

there is this mountain of cash that consumers had on their balance sheet, and that is starting to dwindle now. tom: you are talking about a consumer dwindling away. are they dwindling away into a recession? >> we think so. we think this is a recession postponed, not canceled. as the mountain of cash dwindles , it should decline at an accelerated pace, especially as we see student loan payments starting to resume. there will be more of a fiscal drag and we do not think the fed will come in and rescue markets. we do not think that they will be cutting this year. lisa: what data are you focused on? >> that is very true.

the data is very mixed, and that is not an uncommon turning point in the markets. we are watching may burn market news. labor markets are still very strong but they are starting to slow down. tomorrow payrolls have 235,000 jobs added, but we have seen three months and a row of said 260,000 jobs added. that is the first time since the pandemic that we have seen the payroll slow that much. lisa: the data, it depends on what your bias is. other people say, what are you talking about? we saw a survey that blew all expectations out of the water. you can see help wanted signs and every window in the country. what are you looking at a show this market slowdown?

is everybody looking for it and finding it in places? is that what we should focus on? >> it really looking at the traditional indicators, seeing that they are pointing towards a recession, seeing a fed that is convinced that they need to continue to slow the economy. actually, those jobs numbers and the survey are not in use for the fed. tom: we had deep into the jonathan ferro year. how do you reallocate on a 60-40 strategy? >> fixed income relative to equities and we would be up in quality and both of those groups. we like large caps over small caps. we have moved markets back to

neutral. we short-term and long-term in investment over high-yield. jonathan: is there a bias towards the u.s.? >> there is a bias in that we have overweighted the u.s. market, but we are starting to add money back to european markets, mostly on valuation and that the dollar has probably peaked. we think that the dollar has probably peaked because the u.s. is probably near the end of its typing cycle. we do not think that the euro zone is near the end of its tightening cycle. the japanese economy as well has been performing fairly well at the japanese markets. they have been performing fairly well. they could see --

jonathan: what explains the strengthening? everything you have sent has been true, consistently through the year. >> the dollar does tend to move up once a debt ceiling deal is reached. we think that is behind a lot of it, but in the eurozone, i think there is something there as well , as germany has tipped into recession. jonathan: tracy, thank you. a lot of people come on like tracy and they talk about how they are going to do more than the federal reserve. we still have ground to cover on rates. less about that and more about the potential damage that will be done to the economy from the cumulative tightening already in

the pipeline. this is my view on things and not his, but what you are seeing is that the u.s. economy is denting up to rate hikes better than europe is based on the weaker data we are seeing so far. lisa: it is monetary policy versus economic growth, and i think that has been attention, which has made it confusing to figure out the right direction. tom: we own it, they do not. jonathan: exactly. i can get use on healthy stocks, if you fancy it. up next, we will catch up and washington dc. the debt deal passes the house and is now on to the senate.

>> as jonathan just mentioned, the house passed debt limit passed by -- past would impose restraints through the 2024 election. lawmakers from both parties approving the bill wednesday evening. >> tonight, we all made history because this is the biggest cut and savings this congress has ever voted for. >> that measure now goes to the senate for approval. a vote might happen as soon as today. serbia's president called for the removal of new mayors. a newly appointed mayors started to take up their post. tensions escalated when protesters clashed with police and troops, leaving peacekeepers and dozens of protesters

injured. amazon agreed to pay $30 million to resolve to be cases. in the first case, the company did not take enough steps to protect the privacy of users of the ring doorbell. the second involves alexa powered speakers that collected information about children under the age of 13 without their parent's consent. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo and this is bloomberg. ♪

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>> tonight we made history because this is the biggest cut and savings this congress has ever voted for. >> there has been a good vote in the house of representatives. we can move the bill quickly and the senate and bring it to the president's desk as soon as possible. jonathan: chuck schumer pointed out that it is onto the senate after a vote in the house, passing with ease, but with a lot of help from democrats. a good deal in the eyes of a lot

of people who voted for. more democrats voted for it then republicans. tom: the focus might not be on the zeitgeist right now, but certainly tomorrow in the weekend. jonathan: you think this has the potential to drag? tom: i am not an expert on this. i'm listening to the experts. they say, there are a lot of reasons to slow this down. jonathan: should i be worried? they just want to move on. tom: the tone is, we are moving on. lisa: you should always worry, number one. you should always worry, but it is a longer-term worry now.

agreed to disagree. jonathan: the surveillance newsletter comes out, so here is the plug. go to bloomberg.com and you can sign up for that newsletter. tom: do a little thing at the bottom like a footnote. newsletter has been a huge success. this is a lisa project. jonathan: i'm pretty sure everything that lisa does is a success. tom: it has really worked out. lisa: [laughter] tom: speaking of interns, bloomberg washington is always a great place to do your internship.

emery, i have a bunch of questions. i have to go to margot and the new york times. i love this phrase. agreed-upon adjustments. to get to the election of november 2024, to get to february? agreed-upon adjustments mean that what mccarthy said is a fiction. where is the outcome of this? >> a lot of it has to do with debt ceiling bills. this is what will happen in the spending process, in the appropriation meetings. this is about government spending. obviously, this could be more fudge. when asked about what is happening next, he said, we need to continue this right and make

sure that we are getting rid of wokism and get rid of some of this higher spending we are seeing. this is why many people are poking holes into how much this deal would reduce the budget. i believe in that new york times article that says more like one trillion. what is interesting is how the wall street journal frames and. they said it sounds like a lot but that simply means that the federal debt will rise to around 115% instead of 119%. that is if you assume that the trump era tax cuts are united after 2025. it is a slice of a slice because they are not going after the big parts of spending.

tom: what is rand paul going to do to block this process? i get it, but is he really going to gum up the machine? >> there are other individuals who at least one their amendments to be heard. tim kaine of virginia has had some harsh tones and criticism from the white house because of the pipeline that is in this debt limit bill. these senators went to make sure that they can have their amendments on the floor, but mitch mcconnell has done this how many times now? he could see a vote as soon as today. i would say he has been working

the phones to make sure he can get everyone in mind. there is this idea of jet fumes. it is close to the weekend and they have had enough of this. they have been thinking about how this will end up when the treasury was using extraordinary measures to pay the bills. they are ready to go home. there is also the potential that a lot of this is being done in the background, and they might get out of here before sunday. lisa: this dentist going over to trump and saying, you are trying to lead? what is your view on the debt ceiling? i already said something about it. >> and pretty sure everyone on the republican side he wants the nomination has come out against the debt ceiling, barring the former president, but we already

know what he has had to say about the debt ceiling. his comments have changed dramatically. when he was president, he said it was crazy that anybody would use the debt ceiling as leverage. and then he said, it should be used as leverage when i am not president. but that he also said recently that republicans should go up and default to get with they want out of this. his tune has changed a number of times, but talking about what ron desantis is saying, the former president is now touched down in iowa and giving a town hall but sean hannity. i'm sure this question will be asked to get this final idea. jonathan: is it desantis? >> i have a lot of italian

friends and family asking me why he is pronouncing his name differently. depending on who you talk to -- the governor is saying d santos -- desantis. his wife has pronounced it differently as well. leave it to the governor to decide how he wants to say his name. jonathan: i think they need to agree on that beforehand. tom: desantis? jonathan: desantis. >> it is how much you emphasize. some people are saying that he wanted to sound more american. obviously, his last name is italian in origin.

tom: i am looking at the markets here. jonathan: a great note this morning. the great resignation, is it over in america? beneath the surface, and actually fell back. lisa: it was a -- it was confusing data, suggest ignore it for a month. jonathan: i cannot keep up. ♪

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jonathan: equities and -- up in may and june. big runs again in the nasdaq. the third consecutive month of gains. the tech trade is far less clean. that is the problem. he tweeted this l, where that performance has come.

lisa: a 5% well-off, but it does not really matter. it seems like that is the tree. jonathan: up 20 basis points. yields are back up right now. just to kick off a brand-new month with yields a little bit higher. just want to touch base with the euro briefly. talking about more rate hikes. we are coming off of the back of the worst month for the euro, going all the way back to april. tom: i agree that the euro focus is driving. both of them are pretty fragile

against the dollar. jonathan: a break. down about 0.5%. who knows where we had going this year. if you want to make a fool out of somebody in the market, ask for a forecast. tom: she just unloaded those barrels out. jonathan: still ongoing, i think summing it up, you had it shrinking and then you have data that has been weaker out of china. not all of them, but some of them. he did all of this demand coming through. crude is not taking off the same

way. lisa: oil has been the epicenter . i wanted to take a look. macy's, we talked about the appointment. they now see a -- they saw as much as four dollars. they talk about inventory and the weaker economic situation, but we still see people buying airline tickets and we still see people borrowing more on their credit cards. tom: the margins were fine. clearly, it seems like a unit demand issue. >> they were downgrading that they were trying to move some of their inventory. weaker than expected

macroeconomics, saying that people are spending less. on nordstrom's side, they delivered at or than expected did earnings. talking about optimism, doing better than previous track records show. all of these retailers are talking about a weaker than expected macroeconomic act drop where people are being more selective with their discretionary spending. is this an issue of who can manage it better versus challenging whether the backdrop truly is weakening? jonathan: they always talk about the backdrop when things are bad. if you have ended up with excess industry and need to do markdowns, that will differ in different places.

they were trying to make sure that they had the right amount of inventory. lisa: it was confusing. everybody sat around in sweatpants and then you couldn't find dress pants anywhere. and then everybody went back to lululemon, which is what josh -- which is why i am interested in what they have to say today. jonathan: is this a sponsorship here? lisa: no. pick your brand, whatever you want. it is going in and out of style. tom: is lululemon in now? jonathan: go. lisa: is this sarcasm? there are some potential competitors at this point.

another athletic brand. jonathan: this conversation is going places, tom. tom: saving as now. if you are at wall street, stop what you are doing. it is those pesky market funds. an expert on this. federated among others, they owned the high ground in developing the concept. first question, easy. our money market funds safe, given the debt crisis? >> before we start that, let me tell you that i am not wearing lululemon, but may be some

nordstrom's. i do like the service side. safety and soundness. it is there. diversification is high. high quality securities, very shortly average, maturities. you are talking about high liquidity and the securities that are being purchase and collateralized. or the government with treasuries and agencies. tom: it was sacrilegious and un-american. what is the basis point pickup? do you think it will continue to boom? >> all of our products are yielding over 5%. that is a pretty substantial

pickup, when you look at some banks. those who are not necessarily all that excited about it -- there is a substantial pickup, when you go from deposits, uninsured deposit, specifically come into money market funds, where you have market rates. lisa: how far are we in that transition into money market accounts that pay 5%? we hear about the greatest outflow going back 40 years. >> it happened over a year ago. i do not think it has picked up need in earnest. a peak in rates is the --

reached and then they start to decline. generally speaking, when you look at where money market funds gather, the most amount of assets versus deposit is in a flat to declining rate environment, not in a rising rate environment. what made it different is that we came off of zero. zero was held by the banks while it was not held by markedly. that made a difference. >> at a certain point, if you get an acceleration, a could have a pretty material effect on the broader economy. can we say we are halfway through? is it going to be more significant than what people have expected? do you think it will be gradual until the fed started cutting

the rates more significantly? >> gradual. i do not think anything happens overnight because generally speaking, these are retail accounts. retail is usually sticky and it takes a little more time for processes to occur. i do not think it is a flight syndrome that occurs and destabilizes. it is something that is ultimately gradual and assimilated into what is happening. if money market funds continue to gather cash with the amount of treasury bills ask to be issued in the market, we once a lot of availability for purchasing those bills and cash

flow into government money market funds. that will certainly aid in the process. jonathan: deborah cunningham, thank you. wonderful to hear your contribution. tom, we chide to talk about this essay. investment risk down the road's -- down the road. the risk associated with cash, let's talk about that. the month is up, ok. you get the money back. and then what do you do? think about reinvesting. keep doing that, 5% and 5%. the face the risk of not having the 5% there anymore, and it is very divided at the moment lock in rates for about five years.

that is where he thinks the sweet spot is. the total return of that, if you do get that cycle and rates come in. tom: it is all about total return. a grizzled veteran, eclipsed the coupon and he is adamant that you will see it begin to get back those bond losses. lisa: i'm just curious as to whether it is going down. jonathan: there is a huge debate about this. getting out of cash is a much different decision, especially when you see these in the nasdaq. chuck on acs earnings, coming up. >> keeping you up-to-date with

news from around the world. the mayor says at least three people were killed by missiles, including two children by degree. ministers will discuss nate -- the bid to join the alliance. go to musa linsky made an unexpected appearance at a summit in moldova. it is taking place less and a dozen miles away, which hosts russian troops on the border. he will propose setting up a coalition of patriots. bank president says despite an environment of great pessimism, europe's boldest endeavor was the creation of the bank. he spoke on the ecb's anniversary. >> improved that something that

has been important -- we are now 20 countries. i welcome five new countries. there is something underlying. >> the ecb is in the final stretch of hiking interest rate. global news -- global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i lisa mateo and this is bloomberg. ♪

>> the u.s. consumer has been strong, but i think the direction of travel is one where

a ton of headlines are gathering. the economy is going to slow. we are already seeing signs that the labor market is kind. jonathan: looking at macy's this morning. negative in the premarket that pretty dreadful for the outlook. we are down close to 9%. they are talking about a consumer this morning, tom. don't really see that in the airline or the labor market. we do not see it with other retailers as well. please call this a mystery wrapped in an enigma? lisa: it is the retail sector. it is choose your own adventure. jonathan: decent this morning. we will talk about that this morning.

tom: chuck, we love having him on. it is about this cursing of a cold to a sash -- hold to a bye. does macy's become a cell? -- sell? >> macy's is doing well on many different fronts. macy's is a victim of the circumstances right now. you alluded to it. with inflationary pressures out, budgets are constrained. i do not personally think that macy's is a sell. we since that the guide for the year, that the outline was too optimistic. we are seeing that to a degree, but acs is still doing a lot of good.

tom: the fact is that they have been a trademark for years. do you have enough faith in management, in their strategy to say, i have a three or five year vet. higher than macy's, even if it is not that 60 or 70? >> it depends on what happened the next couple of years. they did lower guidance by 25%, which is a big cut. the stock had been under pressure and this was discounted to a degree, that when you unpack the guide, the holiday order still looks impressive. this might not be the last cut on guidance right now. jonathan: you were brilliant last time we spoke. i think what we are all trying to work out is, what is this

about acs? that is it about the economy? which? is this amy's these story or a story about the economy? >> both macy's and dollar general, if you think about dollar general customer is on the low end and macy's is at the high-end, see you are seeing weakness on both sides of the board. we talked about that a couple weeks ago. it is really people preferring needs versus wants. lisa: you said macy's caters to high-end. is that really the case where is a russian of identity, whether they are high-end or low in kind of shoppers? west side look at macy's as more high-end. but you look at a company like

hardware, the most from year company that we cover and you are seeing weakness there, so consumers are getting strapped right now. lisa: do you think this is a temporary phenomenon? you think it will go back to buying seth again? >> i do. i think there will be a time. i am not a travel, that people are over slurred now. i think at some point, you will see some allen's across-the-board. >> we have been talking about this over the past couple of months, how difficult it is to know if people want to go back to the office, stuff to go out on town, how you parse out this moving train cycle? >> it not easy and i'm glad that is not my job but i'm glad macy's has done a good job over

the years, knowing where the trend will be. that is why people like us price. the leads are much shorter in duration. knowing what will be hot and what will not eight to nine months out is really difficult. that is why these department stores have struggled over the past decade. tom: our department store is dead? west side do not think they are dead, but certain models are better than others. i do think that the team, particularly their cfo has done a really good job managing inventory. other companies have struggles. getting foot traffic into the stories has been elusive for a really long time and i do not know how they fix it.

tom: i find this absolutely important. it is just a lack of traffic into the stories, so what is your single best buy within retail right now? it is -- is it a combined department feel were is a specialty stock? >> the best are walmart and costco. sometimes boring can be good. posco is the best retailer and covered. it checks all of the boxes. there is no better time to own walmart than right now. given how difficult everything is out there, they are doing a lot of really good things. the key theme is that they lead with price. what consumer out there does not

want lower prices? jonathan: that is the place to be. when was the last time you went to a macy's? tom: a long time ago. i'm just looking -- i have another banner to bring up. it is simple. costco, a tenure-track. macy's, -8% per year. do the math. lisa: nordstrom has really made the variance of a department store something pacific and modern. that is the question with acs. what are they going to do with that? are they going to be in the posit where they try to order things online, word go and buy it on the spot? it is a different story to tell.

[indiscernible] i'm just saying, they have services. tom: third avenue gets more jim. it gets worse and worse -- gm -- jam. it gets worse and worse. jonathan: there are a lot of banks up there avenue. it is kind is he. new restaurants opening up and then there is a dead zone. a bunch of hotels that never reopened. lisa: it was basically that wall street moved east. the pool is shrinking. will it come back?

tom: the tech employment in new york, there was a wonderful art -- a wonderful article showing employment data. we underplay the tech employees as a general rule. lisa: amazon was protesting. they said, we want to work from home. they are being mandated to go three days a week and they are not happy about it. >> welcome back to a special rule in garros update. from tennis channel, i am airing cursorily. -- coming through against daniel , carlos alcaraz won the mash-up.

alcaraz is on course to meet novak djokovic in a semifinal in paris. ♪

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>> investors are seeing a crack's forming and they are trying to get out of the way.

>> we see this in europe and china. >> china is not in good shape and i think we are looking out and seeing what will will china out of this? >> the u.s. will not be as strong in the second half of year that it was in the first half. >> this is bloomberg surveillance with tom keene jonathan ferro, and lisa verdun what's. -- lisa. tom: good morning. thanksgiving day parade macy's challenged and troubled. it will be an interesting call to see what they do. jonathan: is it a story about macy's or the u.s. economy? the estimate is 39,000. and are they that bad for the

consumer? tom: it is a roll up. march 2005 goldsmith, lazarus, macy's is a conglomeration of middle america. and even though the fancy people are doing well. there is a recession. jonathan: is it diet? yes, is it debt? tom: it is the perception of the public. i'm not an expert, but there seems to be a lot of traffic in specialty stores versus serious damage in macy's. if you are just joining us, the macy's headline, i will not go into it now but there was significant line by line the my there. jonathan: the adjusted etf previously seen 67 -- that is

when you know you have a problem when they are not near the high range. tom: we have claims coming up here in 28. and from june, what we see from ism? jonathan: golden casket, chuck ron, a discretionary session. a manufacturing recession as well. in the u.s. as well. lisa: this is why it has been so confusing. if you look at the recession, the guidance for dollar general, macy's, looking negative. you look at airlines and the southwest coming out and increasing their forecast. you can see people are still traveling around and eating out. how do you hear the idea with this view coming out with

layoffs quadrupling this year and compare that from 3.5% unemployment rate. tom: job numbers are important. the survey has dipped down to 195. is not a big difference but it is directional into tomorrow's report. jonathan: 200 k with unemployment at 3.4. still a decent read. if i said take a guess, i often reflect on the speech from chairman powell, but i said take a guess in august back of last year when he was talking about jacking up rates, if we guess going into the summer of 2023 that on them limit would be around 3.5% a lot of will which have left. -- laughed. lisa: lisa: he says the pain is

going to come you will believe it when you see it. -- lisa: he says the pain is going to come and you will believe it when you see it. it is a process. tom: with the debt ceiling what are we watching today? jonathan: for the house and onto the board and hopefully in the senate. tom: we have red and green on the screen. nasdaq 14,300 the nasdaq up .8% -- 8% in may. jonathan: relative outperformance from the nasdaq versus the s&p the snp fairly squeeze out the month of gains. the nasdaq up by 7%. tom: new york city workers can work remotely two days a week. officials say. jonathan: two days a week is kind.

but at the same time they say if one needs to get back to work -- lisa: here is the back story they said everyone needs to get back to work and they said i quit. they could not hire enough people. it is a time where they want to get everyone back to the office and be fully staffed. tom: somebody had a long piece on childcare in the last 24 hours. the charts are frightening. this is a huge issue. we did not have time for that right now. it is our chief market strategist that we are and of your essay, victoria where you talk about how the fight is to have your clients in of it well antigen meant not throw in -- wealth management not throw in the towel. victoria: you're talking about all the different elements going on in the market. a lot of it is fighting against each other. you have one element of the

market, tech, ai related tech names that are strong. you are emphasizing the difference between the nasdaq, the s&p, and the people waited rick -- equal weighted s&p. and we have the widest margins we have ever seen. at some point they have to come back together. we do not want to sit on the sidelines and have a narrow breadth in our portfolios. we want to have diversification. do not throw in the towel, but find element that you think can do well in a volatile market. in an economy we think will slow at the end of this year and supported somewhat by a can rumor. manufacturing coming down but sam -- savings rate discretionary income holding strong. there are those you will can work with but you have to be choosy. lisa: what it we learn in the

first few months of 20 23? victoria: that is a loaded question. we have the equity market that is not reacting the way they have historically. you have is going to the brink again on the debt ceiling. that is probably like we have seen before. pushing it to the limit and causing the market to react the way that it has. pushing up short-term yield to 5.2 5% or 5.5%. driving people into the short-term treasury market out of the equity market. this is different this year because we walked into an economy with a different manner with the pandemic then we have for supporting the consumer. i believe we have learned that you have to be cautious. you have to be tactical in this market, but i also think we learned you do not want to jump in and out all the time. use your fundamental analysis to build strong portfolios.

lisa: where do you fall on the debate whether inflation will rapidly decelerate headed to the end of the year or it is sticky? this has been the core disagreement among jp morgan of the world and blackrock of the world. where do you fit in this? lisa: i'm leaning toward we will have sticky inflation. we are on a downward trajectory possibly, but we have core cpi numbers holding steady or moving up for the last few months. we have the sticky component and it will not just be housing. although you look at zillow rent those are up over the last month area housing is rebounding. michelle bowman said the rising and housing cost is working against on what they are doing on working against inflation. it will be a sticky number. it will come down slowly. i don't think it will be enough for the fed. i cannot say there is a zero probability that you can get

more rate hikes from the fed. tom: tell me about 60/40 right now. i've been looking at the numbers beginning to chew on it. i don't get it. are you overweight equities or high-end bonds? victoria: the 60/40 was the go to for everyone. you have to be more tactical than that now. the breadth in the market being so narrow, it is hard to have a 60% allocation and have it outperform without having high concentration and the names which is not something we want to do. we think it should be -- you should be adding bond allocations. we had a client call us last week saying there was another $2 million and we want the short-term treasuries to take advantage of the yield. you have to be careful with reinvestment risk when you put all your eggs in that basket. but put a little heavy weight the short end, have some on the

longer end to lock in yield for the longer. and we -- may see a mild recession later this year. jonathan: if you have that money to spend, make it happen. throw that at the t-bills. that his life is in it to mark playing with gold -- that is the life isn't it? playing with gold. i'm going to get $2 million and throw out at some t-bills. lisa: that is what you do every night. tom: i run on money right now and it is brutal. it is no fun. jonathan: it's pretty fun. tom: if you are not in 12 selected winning aries or guesses, or whatever not fun. lisa: this is the year that macro trading has died. it is hard to get the calls right.

when you look at the micro trade and specific names. stock selection, you are seeing different stories pop up. maybe that is a lot more fun than it has been when the fed is like we will tell you to buy and everyone goes out to buy. our they say sell and it never happens. jonathan: having a great time. beating up consensus positions. that is what you love. this move in the euro in the last month -- tom: we have sting england here in 30 minutes. jonathan: have it close to 105 or 106 with -- 1.06 on the euro. and from new york, this is bloomberg. >> now keeping you up-to-date with news from around the world. here is the first word. i'm lisa mateo.

ukraine capital was hit by missiles overnight. three people were killed at least including two children by debris. ukrainian president made an unexpected appearance at a summit in the neighboring town. -- russian troops are on the eastern border of ukraine. zelenskyy says he will hold bilateral meeting of the european community summit where he will propose setting out a coalition of patriots. and -- there is a discussion to join the you create -- ukraine alliance. france and germany are split over the appeal. germany is urging more caution about discussing membership in light of russia's ongoing or area -- ongoing war. the debt deal by speaker mccarthy and president biden, to avoid default. both parties will vote on the

bill. 314-117. >> there's been a good vote on the bills. i hope we can move quickly in the senate and bring it to the president desk as soon as possible. >> a debt deal may happen as today. global news 24-hours a day on air and on bloomberg originals, powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo. this is bloomberg. ♪ >> we are getting close to a point where we can sit a little bit with the policy. i do not know it's actually yet,

but i am in a camp increasingly coming into this meeting of thinking that we really should skip, not pause, i do not like the word pause, but skip and in -- an increase. jonathan: philadelphia -- harker president. i don't like the word pause but we can skip and increase. i don't think it is therefore -- their fault but the market pause may be the next step toward cutting. that is something the fed reserve does not want to communicate. they wanted to lean against this and get it priced out. lisa: if i had said that you would say you are getting soft. jonathan: i have said it before. lisa: what is the difference honestly. any tricky spot with the market that is going to be counterproductive. an economy is uncertain. jonathan: for many reasons we

can talk about the reasons later but there's some data on it. with mike mckee. mike: this will lean against patrick harker yesterday. adp comes in at 278,000 jobs for the month of may. that is higher than the 170 that analyst asked acted. the april number revised down to 291,000 from 296. that is neither here nor there. we do not look at adp as a predictor for the jobs report friday. in this case, they have been coming in lower for the most part. the nonfarm payrolls number. this is something to keep an eye on here. we were wondering how strong the economy is. jonathan: jobless claims coming out in 14 minutes. don't you feel sorry for them at the fed reserve. the yield is up right now.

how should we read claims here in a minute. with the disruptions to the data of the last few months? mike: basically what you have to do is look at the trend as opposed to the number. the numbers have bounced around a bit. we should be seeing a rise in claims if the economy and labor market are slowing down. we cannot say that we have seen them yet. if you get the same kind of numbers we have been getting, it looks like the labor market will be really strong. still going into the fed meeting june 14. jonathan: claims will be 13 minutes away. tom: i looked at the 14 day moving average but the fraud hangs over it. the data is a fully employed america. to discuss that is bill dudley. former bloomberg opinion,

missed. -- bloomberg opinion columnists. inc. you for joining us. you said the clash back to london is calling. did they have to wait for the data or can they get out front? bill: there going to have to take a pause. they have characterized it as a skip because they think they probably have to do more and we will see that in the summary of that prediction. we will see one or two additional rate hike for 2023. the economy has not slowed much at all. you look at the forecast for the second quarter it is one point 9%. as you were just talking about, the markets --[indiscernible] tom: bullard at indiana

university's uses his economics to say we can use this to avoid a recession. do you agree? l: it will be hard to avoid a recession if the fed has pushed the bar up ia meaningful amount -- by a meaningful amount. every time it has risen by one percentage point since world war ii. when we have a recession. 12 out of 12 so i'm betting against a soft landing this time as well. lisa: the implication that the fed has not accomplished much and they should go further with hiking rates or skipping a pause, that perhaps that is not the right approach. what is the consequence to that? you expect this to accelerate inflation our -- or keep it higher for longer? bill: it does not matter if they hike verse -- in june versus

july. but they are using the language of skip rather than pause. they don't want the markets to think that they are finished because they did not want the stock market to rally. if that were to happen, that would mean impulsive monetary policy would be more stimulative which would be counterproductive to what they are trying to do. lisa: the data is confusing. when you look at earnings and macroeconomic input, what are you looking at to highlight that there is strength and the lag effects will not take care of it? bill: i think the labor market is the key thing to focus on. what is happening with the tightness of the labor market and over yesterday that showed and in is in number of unfilled jobs. we have one point eight unfilled jobs for everyone under laid worker area -- every one unemployed worker.

and i think wage inflation needs to be 3% not 4% or higher. so i think labor market wages will be key drivers of the fed feeling more comfortable they are on track. lisa: people say we are seeing disinflation and it may happen more rapidly headed to year end. from your vantage point, the longer it takes does it create stickiness that people are under appreciating or is it that they need to get back to their goal. it to remove the tax from lower income individuals in particular. bill: a i think it will be a drawn out process. i think they are not concerned about how long it takes as long goes inflation expectations stay. inflation expectations could be on a curd -- unanchored and i

can make the fed job more difficult. tom: we are not thinking too hard today, i don't need multiple decimal points, but i am curious of your math on a slower china and exporting disinflation or deflation. we've seen this over the years as a theme. will they adjust our lives as they are exporting price decline? bill: i think what will happen is we will see at the end of the day they want to have growth. growth generates jobs and jobs create political stability in china. so i think we will see more stimulus out of china. we are already having goods disinflation. the problem with the u.s. in the services sector. china may add a little bit to that but i do not think it is meaningful in terms of changing the inflation outlook. tom: do you need more data

points for inflation services? bill: we will see declines in shelter prices as measured by the person of consumption. we knew that would happen with a lag in the lag is about to arrive. but the problem is that it is indicated in services inflation it includes shelter. as we see in the course -- core pce deflator's, we are stuck in the challenge of four 8%. it is not calling, it is -- it is not calling, it is basically flat. -- it is not falling , it is basically flat. tom: i think that is what we call stickiness. jonathan: for those are on vacation, the euro is at 1.06. the dollar is stronger with the euro weaker on the back of this robust data. the yield is higher by three

basis points on the front in the. 4.44. -- points on the front at 4.44. lisa: that may create more pressure for the fed. do you think it is a foregone conclusion that regardless of what the data is or the jobs report, they will not hike rates this month? there trying to signal, they are not done, but they are not data-dependent for this meeting? bill: i think the data would have to be strong to convince them to move at the june meeting. with monetary policy, the belief should not be influenced by the strength of labor. i would be surprised at this point that they would go ahead and do that in the june meeting.

but july seems likely. jonathan: it felt like a rallying cry from the presumed fed chair. bill, thank you. bill dudley bloomberg opinion columnists. the most -- data dependence the most meaningless phrase in the fed reserve. lisa: they got thrown out. jonathan: it means whatever they wanted to mean. lisa: which data? the date of the next month? how much data will you have in your input? jonathan: how data dependent are they? mike: they are data-dependent they are more hawkish in terms of a june rate move. i think part of what may be going on as they wanted to knock down the perception that they were locked into a rate increase. because if they didn't, the data came, they would not be able to tell us what they think of cpi if the data came in softer.

it would be harder to turn the market that way. they would keep giving them options. i watch the fed funds you cheers we went from -- fed fund futures we are at 29%. even though we have a strong up. jonathan: deemphasizing the incoming information between now and june 14. in the next hour michael contopoulos and kathy jones with charles schwab will be joining us coming up in about 30 minutes from now. this is bloomberg. ♪ ♪♪ ♪when the day that lies ahead of me♪ ♪♪ ♪seems impossible to face♪

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tom: bloomberg surveillance into claims and lisa abramowicz tells the advisory group limited visibility at macy's. not a scathing note but it's a market perform tough year ahead note. lisa: that's what people are readjusting to with those shares lower at this point by 4%. tom: you wonder if there will be claims from maces as they right size. we turn to michael mckee on the anticipated weekly dated and other stuff as well. mike: including unit labor costs and foreign productivity.

we see nonfarm productivity down 2.1% but had initially been reported as 2.7% negative. a slight improvement there and unit labor costs initially reported at 6.3% comes in at 4.2% so that is a big change. it'll be interesting to go under the hood and see why they changed. jobless claims is the number everybody has been following. we talk about the trend, 232 for the last week. the week prior was revised up to 230 so almost no change in claims and it doesn't look like the labor market is getting any weaker. we've had three numbers, the jolts numbers, the adp numbers and the claims numbers strong. if you were a betting person, the ism employment number comes

out at 10 comey would probably be marking up your payrolls estimate. the private payrolls estimate right now is 164. with adp coming in at 278, that's more than 100,000 different so someone will be really wrong. tom: have you ever seen it like this where it's coming out of a pandemic in the biden stimulus and all the rest, have you ever seen the cacophony sense of it? mike: we haven't seen the fed give up -- cacophony that we have now. the divisions among fed officials for quite some time, the data are in all different places. the fed is in all different places. as economists and monetary policymakers, you think of

what's happening after the financial crisis when everybody kept expecting strength and it was slow. now we are expecting slow because that's what the models are suggesting and it hasn't happened yet. tom: we will continue to do market check today in the 10 year real yield comes in quiets scent. lisa: you so jobless claims coming in lower than expected but pretty much in line but showing its slower but that's not what the market is responding to. it's responding to the revision of the unit labor costs are yields are significantly lower even though on the margins, this points will labor market that would be strong and signifies the bias to a fed on hold on a fed that doesn't want to go further that seems to be was getting price into the market. mike: this is also first-quarter

data so we are now two months into the second quarter so it's old numbers. it still makes the case that maybe inflation could come down. lisa: that seems to be what people are banking on. that's where the bias is. what is your view on the incredible revisions, the degree to which the data was wrong and has to get revised in another direction? has this been seen before? mike: we get revisions because the data is incomplete when they're first published but we are seeing big revisions because of the various statistical agencies are having trouble with seasonal adjustments out of the pandemic. tom: the distortions are still there. we will go beneath the headline data in the early june jobs report tomorrow. the chief economist at

nationwide mutual insurance joins us now with the some of this strange economy. we've got retail like macy's today in a statement flat on its back and we got other parts of the economy doing better than good. do you aggregated together or are you looking at two or three or five america's? >> good morning. i think you hit the nail on the head. we have to bifurcate and differentiate among different consumer buckets. you got the upper middle income, upper income households, the labor market is strong and earnings are strong in the labor market is doing well and housing prices are holding in there and still a lot of pent-up demand on services. let's not forget savings. there is a related savings that were fueled during the pandemic

so it's still feeling pretty strong. you will see the impact from inflation and interest rates and the bottom half of consumers are feeling the pressure here. lisa: does this add to an economy that slowing substantially where the lag affects will take hold or one that people are missing the forest for the trees, stronger than what people are anticipating? >> it's been difficult to call. the path of the economy is tiny but we are in the camp that it's delayed but still coming. we look at the leading economic indicators and they are still pointing to a recession. stronger consumer spending and the labor market remains for now. the fed will be inclined to

raise rates and eventually the fed will be successful. they got to cool down the labor market and consumer spending and cool down inflation so it may take longer than they would like. lisa: yesterday, it was a different tone for philip jefferson of the federal reserve. they basically signaled a willingness to skip this next meeting and not raise rates and wait for the leg affects. is that the right approach that if they stay on hold, this is where rates should peak and you will see that slow down that will eventually bring inflation a lot lower? >> our baseline is that they do pause and hold it there. the risk is even if they skip the june meeting, they could come back in july and raise rates. they are assessing things. underneath all of that getting

beyond data dependence, we can debate whether they truly are data dependent but it's clear they have a tightening bias. doesn't mean they will necessarily tighten they will tighten before they cut rates. tom: adp published today in our economics team has a huge observation that wage growth is slowing. substantially. do you agree with that? is wage growth really coming down and even with lower inflation it will be problematic in terms of real wage growth? >> we see it more gradual. we will see what the data brings us tomorrow but all of the signs we are seeing is that the labor market is still pretty tight and demand for workers especially certain sectors that are strong so i think it's a gradual

process area same thing with inflation. the pressures are still there for workers. the supply is not really come in line with demand at this point. it will just take a while for that to play through. looking at the productivity numbers and labor costs, not the idea that maybe we are seeing wage growth competition come down and those were the figures that were provided lower. tom: columbus, ohio, unemployment rate, 3.40%. how can you talk of cutting rates given that single statistic? i just get it. lisa: this is the issue especially if there is 16 states where the unemployment rate is a lot higher. that divergence is something bluebird intelligence picked up on yesterday were the wanted to 16 states that have already

basically entered recession with material increases in their unemployment rates. how does that complicate the whole dynamic when you have such a bifurcated picture with some people experiencing a recession in a tangible way now? >> it is very difficult. the post covid economy just has skewed differences across sectors and the economy rapidly. it makes it difficult for the fed to make a good call. the service sector is very buoyant. that's what they are stuck with. tom: adjust your nonfarm payroll statistic for tomorrow off of adp claims. will you lift that up? >> we don't do that.

it hasn't been a great correlation. we are above consensus for what that is worth. certainly, we could have had a lower number but economists have been missing on the downside. we are comfortable with about 200,000 we think things are slowing but we are not seeing recession in the labor market yet. tom: well we didn't really make news but sort of kind of like news. lisa: tom: michael mckee makes news. down in flames. thank you for the non-news. she's got a great handle on the dynamics. we have our own bias in new york and outrageous real estate costs here. it's healthy to go to the internet and look at the unemployment rate of wichita for

the unemployment rate of four worth. it's informative. lisa: i was glad you brought up the wage disinflation, the cost of employment coming in, people have not given up on the immaculate disinflation story yet. that's becoming clear with some of the data we are getting today despite the strengthen labor market. tom: wichita, kansas is a ticket lower than columbus, ohio. if you care about the dollar, stay with us, stephen englander from standard chartered is next. futures are flat, this is bloomberg. ♪ lisa: keeping you up-to-date with newsmen around the world -- the house passed debt limit legislation that would impose restraints on government

spending through the 2024 election. lawmakers from both parties joints to approve the bill 314-117 wednesday evening. >> tonight, we all made history because this is the biggest cut in savings this congress has ever voted for. lisa: the measure now goes to the senate where approval is virtually certain. mitch mcconnell says about may happen as soon as today. the serbian president called for the removal of new mayors in northern kosovo after the flareup started last week as the newly appointed mayor started to take up their post in northern kosovo and tensions escalated monday when serbian protesters clash with kosovo police and nato police leaving 30 peacekeepers in dozens of protesters injured. elon musk private jet has departed shanghai wrapping up his first visit to china since the pandemic that included meetings senior government officials and a late night visit to the tesla shanghai factory.

in out video, he was shown waving to the workers and thanking them for being at the factory late at night and he congratulated the staff on their amazing work. amazon has agreed to pay just over $30 million to resolve two cases brought on by the ftc. in the first case, the agency says the company did not taken a step to protect the privacy of users of its ring video doorbell and the second case is the alexa powered speakers which the justice department says collected information about children under the age of 13 without their parents consent amazon disagrees with those claims. global news powered by more than 2700 journalists and analysts in over 120 countries, this is bloomberg. ♪

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>> i think the dollar has probably peaked because the u.s. is probably near the end of its tightening cycle but we don't think the eurozone is at the end

of its tightening cycle. the japanese markets have been performing fairly well. they too could see tighter monetary policy as the year progresses. tom: tracy with wells fargo is talking about a dwindling consumer and we see that it macy's today but lisa nailed this this morning. i'm looking at andluv near 20 and i get a 16 rebound in a big rollover in the share price. the headlines come out there is lkuv with southwest today. lisa: they expect profits in the second quarter higher. the big takeaway is people are still going to southwest enters the using this airline despite the debacle over the winter holidays. that rebound is really what has

been surprising, demand over memorial day weekend was incredibly strong and capacity is up 50% and people continue to fly. this flies in the face of exactly what you are saying, people pulling back and buying new shirts or some and then lie around the country instead area tom: we will see a lot of other reports on this i'm sure. spx is fractionally higher. yields are 4.30 nine on the two year. the 310 year spread is challenging at 178 basis points and we are watching oil, $68.42 on west texas intermediate. lisa: they are happy with their

messaging. tom: is very delicate. have we been banned? lisa: not bad, they extend invitations to different specific journalists and non-from bloomberg, reuters or the wall street journal have received invitations to one of the first in person vienna meetings that they've had in a while. this comes as they are concerned about short-sellers or whatever else is keeping prices lower. tom: stay tuned to bloomberg news and bloomberg opinion for our coverage of hydrocarbons. we will have all that coverage removed from the halls of vienna. this is a joy for global wall street, they will stop at 8:49 a.m. and listen to the number one cross rate strategist in the world.

i want you to tell me how your xl spreadsheet adjust to china slow down and the information of cross rates, what is the china slow down signal? >> i think it's an important issue. the chinese slowdown and the slowdown in europe have removed some of the impetus near-term for dollar weakness. even though we tend to focus on what the fed is doing and the u.s. economy is doing, for there to be broad dollar weakness, we need economic outperformance and the rest of the world. in some ways, the bigger shock of the last month is how soft the data outside the u.s. has been in addition to the u.s. numbers being ambiguous. i think to get to real dollar weakness, it's not enough for the fed to pause for the u.s. data to be soft enough there are no further hikes.

you would see -- you would need to see the rest of the world improved. tom: underplayed in the last 10 days has been japan. not only the inflation dynamic and nominal gdp in real gdp but also their creative monetary policy. is there a tradable move on yen with either massively strong or the shock of a weekend off of economic weakness? >> it depends how deep your pockets are. we think the yen will appreciate. we think the data in japan have been improving on the alpha side and the inflation side. plus there are signals from the doj and japanese officials. plenty of people have been burned if you put the trade onto early. there is a lot of risk there in those ups and downs are pretty serious. lisa: the dollar has been driving a lot of the action globally.

we started with tracy mcmillan of wells fargo's saying how she sees the dollar peaking. you say you likely have seen perhaps a different trend because you have to see outperformance and the rest of the world. do you disagree with the idea of a peak dollar? >> it depends if you mean the dollar is in a v-shape which the recent data doesn't support. the dollar may not -- maybe not going higher from here is ok but of all that changes is that we are less worried about the fed and u.s. inflation, i think what you will see is a carry trade put on which is very specific. you cut off the upside tilt to u.s. rates it means all countries that have higher interest rates will be retracted and that's not abroad dollar downturn. lisa: is this a fun environment

to be a macro trader? >> uh, no. we all want to see trends that we can jump on. we love to see a trend where we don't have to be the first to jump on it but it goes long enough that we can make money on it. tom: what it amounts to is i need a big figure speculation em and frontier, more normal. is there a big fun opportunity out there? >> in the short-term, if the numbers keep on coming in suggesting that maybe the fed will be done, i think the brazil's of the world and in the as of the world in indonesia, all those areas tend to look attractive. yen will probably go up a little but the rates so far not doing

anything and we need a signal from japan. in terms of carry trade's, that would be the first stop the market would go to. tom: does the indonesian currency playoff $73 brent? can you fold in a hydrocarbon gas with a speculation on something like there currency? >> i don't think it helps. there are a lot of crosscurrents in that part of the world. the fact that part of asia trades with everybody and you are seeing oil going in and out in the key price coming in at a high price. it offset some of the impacted weakness. broadly speaking, i would stop with the rates trade.

the energy trade is secondary. tom: stephen englander, thank you very much. if i talk like that, i can pretend i have a red for rory -- read ferrari. lisa: i'm looking out the story on the terminal sing hiring at u.s. companies tops forecast another one that planned layoffs has quadrupled so far this year. but those two together and it is a soup. it is a mystery wrapped in an innate my. there is a difficulty in understanding which data quite to put the in just to put the emphasis on. tom: a mystery wrapped in an enigma. olivia blanchard's wonderful book is my summer reading. the basic idea is professor blanchard talks about other factors out there. the overlay and the time

continuum is there is technology out there and all that but it's coming off the biden stimulus and the immovable thing in this book is there is this thing which equals the biden stimulus and we are all reacting to it. that's what we are covering each and every moment. lisa: the amount of money is taking longer to move through the system that many people thought. i think that what is the underestimating feature propping up consumer spending. we are seeing some softness in other areas. futures are flat and the vix is 17.43. a timely interview with some of expert on america's debt, or deficit and fiscal policy, jason furman, former chairman of

economic advisors. that will be in the 4:00 p.m. area. this is bloomberg. ♪ when i was his age, we had to be inside to watch live sports.

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jonathan: let's get june started, live from new york, your equity market is unchanged on the s&p 500. the countdown to the open starts now. >> everything you need to get set for the start of u.s. trading. this is bloomberg, the open with jonathan ferro. ♪ jonathan: live from new york, the debt limit deal passing the house with ease and some fed officials suggest a break from rate hikes even as the jobs data co