>> growth is going to slow from here. >> we have a slowdown coming. potential recession. >> inflation is going to come down but it remains elevated. >> potentially meaningful downside. >> we do think something else will break between now and year end. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. jonathan: can you sing of canada? can you sing that? tom: it's a good question though. oh canada. jonathan: blame canada for the

smoke live from new york city this morning, good morning. this is bloomberg surveillance on tv and radio alongside tom keene and lisa abramowicz i'm jonathan ferro. blame canada. i think we need to talk about the bond market first. blame canada for the surprise rate hike following a rate hike from the australian bank. tom: central banks like surprise. an expert on this the bottom line is surprise is always more efficacious for a central bank. the answer is they surprised yesterday and you wonder do we skip, pause, or light a bonfire june 14. jonathan: they communicated a conditional pause in january and

delivered this line yesterday. it was not suit -- restrictive. people ask themselves is that's statement in chairman powell's future? lisa: if they committed to a skip what is that mean in this has been the past few weeks of pricing out rate cuts and i think that has been the name continues to be the theme now just to hide what the fed go? tom: they can't get back to washington the situation this morning is extraordinary and i really want to lead where it's grim. philadelphia. it is so bad in philadelphia compared to what we are living in new york. the ratios of this, i have an offspring in china so he taught me how to keep track of this stuff on iphone and the answer is it is an measurably grim. when do the fires stop in québec?

jonathan: 9.4 million acres of burnt land according to the canadian database double the size of new jersey we are talking about a lot. tom: we don't need to do the weather forecast. rob carolyn is scheduled to join us he has been a strong supporter over the years but the scale of it if the wind shifts, this is a distant memory? jonathan: kind of shocking the last 24 hours. a bit softer yesterday on the s&p 500. if you look at the bond market yesterday yields adjusted higher right now this is short of 380. there we go 38012. lisa: and the ratchet up seems to be a theme as we are expecting to get more data showing the economy is resilient.

8:30 a.m., they are still pretty low even the people are concerned about recession in some sort of tightening. curious to see if that changes today. the invest conference does continue. tom: really looking forward to this. there's a new book out. scott patterson wrote the setup. lisa: very much looking forward to that interview i believe it's around 10:30 a.m. also tcw will be speaking. i think this is interesting because of the backed up to the pricing out of rate cuts is a banking crisis that's over. that seems to be the theme suffer 30 p.m. when we get that balance sheet as well as discount lending can we count the bank crisis is over as the fed's balance sheet is back to where it was? tom: glad we did this this is the heart of the matter.

they are looking at qt is the tipping point were we go in the third quarter. jonathan: if they want to tighten many policy they better do that. chief market strategist for our audience this might sound like a little bit of a dire workout regime but it's not it's about markets. you said light and tight, walk me through what you want no? >> don't blame us for everything. light and tight basically means keep a little extra cash and be a little bit more on the defensive side. i've been hopefully every clear -- very clear every time we've been on. economically i sobered expect of recession. ultimately there is three stages

of a market decline. first, good news is bad news. it means the fed is going to get tight. we saw that in 2022. then you get bad news is good news because you get a rally and we saw a couple of those but ultimately if you do go into a recession, bad news is bad news. the market goes down and that is when you want to be poised to attack. right now i think there's this great hope that there is this soft landing into me this is worst case scenario. tom: the equity markets, you've been so good about the same we are not going to be cautious until we see recession. do you see recession and is that the cause for your caution? >> it has been. i constantly hear, all right, smart guy. they don't say smart guy. where is this recession? you've been talking about it for the last six months. my friends admit davis when you look at the six months treasury

yield curve which is the widely followed euro curve is directly there is a lovely time -- there is a leadtime now the variability is about eight months to 21 months. 21 months was before the great financial crisis. we are about 9.5 months into it. don't you think around the 11, 12, 13, 14, 15 everyone is saying where is the procession you've been talking about it for a while and eventually it did come. it always is coming from credit. this time, you did a great job showing the qt, the balance sheet. bank failures and that his systemic risk in baking was not the issue it was lending. if lending standards are tight if the financial markets are still mixed at best especially relative to a year ago and you're already full unemployment

where are you going to get the incremental money to have a sharp birthweight? -- growth rate. lisa: it may be on the table at some point betty keeps getting pushed out. what does it mean to be defensive you sawtek selloff because it was interest-rate sensitive again. >> so defensive to me is not tech stocks it never has been. i would not have been levered long in that space with ai i don't think that for us, most portfolio managers you can't be along just those eight stocks according to last thursday you had eight of the 11 sectors down more than 2% for the year so sometimes we kind of do this as made-for-tv but when you talk about the strong market you have to say ok what market are you talking about? are you talking about the broad

market which is having a little bit of a rally you're getting this a little bit better rally on the hopes that you can avoid a recession but defensive to me is health care, utilities, this consumer staples that will typically hold off when you have with topline slowdown. lisa: how concerned argue that you are seeing a growing number of people go into risk year securities, go into the ai stories ahead of some probably problematic. do you feel people are getting lured in just before the kill? >> just before the kill, i don't know if i would raise it that way but yes you have people daytrading with zero data options. to me, that's just simply gambling. you have so many different factors and again it's this idea of ok worst the recession. ultimately, we are doing nothing

different. the shortest duration as it wasn't going back to the 1960's. tom: what's your target on the s&p? >> i stopped doing it. here's what i give you all give you this and this goes into kind of the new metric -- tom: is not a philosophy show was the target? >> i'm not going to give you one but i will give you been earning estimates of $120 -- $110. if you look at the current price of the s&p 500 it's too high. when you look at the earnings yield, it's more like 5%. when you're getting almost 5.34% on the six months. you don't have to get a big downside bet you don't have to make a big upside that. it's a very unclear environment.

it's like the skyline in new york right now with wildfires when you don't need to make a bet i don't force it because what happens is when i do and it looks wrong i capitulate too quickly because they don't have a high conviction level. when we do go into a recession and if the market responds with bad news becoming bad news i want to be in a position to attack it which means a little bit extra cash but not overly defensive, not armageddon. tight relative to the benchmarks with the little underweight in make a cap. jonathan: came close to giving us a price target. tom: let's do the math. >> you're good at math right? [laughter] tom: and 11 multiple on it. jonathan: thank you. appreciate it as always. don't worry we are going to talk about this. not just because of this corbett

because of the business deals here. arguably one of the greatest football players ever going down to miami and tom the profit sharing deals that we can see with adidas and also with apple so we've got this big old two-year deal. to be streamed on apple tv, tom and it's going to be a profit sharing deal. that's amazing. tom: basically he's going to a minor link team. jonathan: and turning down big money to do it. turning down big money. whether he wants to is a different story. in the next hour the president route constructive on this equity market on why this might be the mother of all mountaintops the conversation just around the corner. you just about unchanged, this is bloomberg. >> keeping you up-to-date with news from around the world with

first word, and lisa mateo. some 230 square miles of ukraine seven region is underwater two days after the destruction of the dam thousands are being evacuated. it's held by ukrainian forces while the rest is russian occupied territory. kyiv is assessing the humanitarian, economic, damage that western leaders announced as a war crime. deepening gloom is gripping russia's elite. sources say many within the political and business elite are tired of the war and wanted to stop the fadeout putin will halt the fighting. president biden vetoed a bill issued by congressional republicans. biden's executive action would

forgive up to $20,000 in federal student loans for some borrowers but the battle is far from over as the plan still faces justices in the supreme court. apartments in manhattan are being snapped up at the fastest pace in nearly a year. appraiser miller samuel say it's listed for 35 days. despite the higher cost for rent. global news 24 hours a day. powered by more than 2700 journalists and analysts in over 120 countries. and this is bloomberg.

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>> what we need to do now is figure out how do we make sure

the relationship instructed to with the challenges in the future. that's what were going to be talking about. >> years ago another prime minister went to church and came here. >> that's a great foundation. it's great to be here. jonathan: the british prime minister and speaker kevin mccarthy in washington. i understand seeing the president as well. tom: that was mccarthy's best meeting yesterday. it's gonna be a long truly historic clients. lisa: you think. [laughter] jonathan: talk about winging it. i guess we will build on that. lisa: it did feel like i say nice thing, you say nice things we are doing well ok.

jonathan: scream at the press to get out. everyone get out, clear out. ok. welcome to the program the s&p 500 slightly positive going through the data jobless claims coming up in about two hours. so for the labor market looking ok depending on what data you look at. if you look at the payroll survey things look pretty decent if you look at the unemployment rate things are starting to maybe. beckett 380 on the u.s. 10 year. following the central bank out of australia with a surprise rate hike this week. just reintroducing some of the risk around next week maybe. economists their calling correctly that canada will hike interest rates. so calling for a hike of 25 basis points next week from the

fed. tom: it goes to data dependency. why are they going to decide now about what they're going to do they're going to wait for the inflation data wait for other data is willing eating claims on the dynamics are jonathan: cpi tuesday that's the next hurdle. tom: the 10 year yield we are all watching. imagine a 4% tenure. right now on ukraine and she has been so dead on, tina ford among the tragedy -- on the tragedy for global insight. can you imagine a dam raking in the damage to curse on and southern ukraine? did you see that coming? >> we know that these kinds of tactics are pretty consistent with russia's kind of scorched earth and infect the ukrainians

told us that the russians had mind the dam. so we should have been prepared for something like this. we are in a very critical phase as we are in late spring with ukraine's offensive much-anticipated, they keep denying kind of hushing up when it's happening. this is really consistent with the fog of war. that's very much where we are at this stage i've the conflict. tom: how does this change against the state of ukraine in the war in to cure the relationship of ukraine to their allies? >> it's a setback. of course the ukrainian defense ministry and president zelenskyy are soft peddling that. morale remains remarkably high, trip morale and citizens. they are evacuating people.

they'll deal with humanitarian consequences but you seen for example the water supply from the dam is important according to the iaea for cooling the nuclear plant which is something that i've been talking about. below threshold actions would constitute an escalation. this is what investors are watching for, of course. is the were escalating in a meaningful way without there being spillover? certainly the risk temperature now is much higher but let's also bear in mind that ukraine, in terms of its military preparedness is in a much stronger position then it was this time a year ago it's at the leopard tanks it's got -- in fact the first nato supply tanks seen on the battlefield were french. so they are trained now in

defensive maneuvers but the pressure on the success of this offensive is extremely high. there's no question about it. the patient's is running out although the show of strength in terms of support for ukraine it remains very high defying a lot of international observers. but there is no doubt in my mind that everybody wants to see ukraine gain leverage. lisa: a lot of the focus right now is on the alliances and that's the reason why some people, not us obviously, i am wondering if you think that is of interest in any way playing the vanilla conversation. >> apart from being so cringe he. lisa: just in general is there anything you're expecting to hear?

>> for sure they will announce a show of unity and will announce the plans to continue arming and training ukraine that is a given. what the u.k. prime minister is not going to get is the digital trade deal/rare minerals narrow trade deal that he's hoping for. remember he's a prime minister of a government on two points behind in the polls. the u.k. has selections next her as well as the united states. he's a prime minister in a weak position. the relationship is frequently -- frankly less of the strategic priority than when u.k. was one of the important members of the union and had a lot of other fellow free-trade powers standing along it. i think sunak will be disappointed. but he will still come away with

something to show from his visit. jonathan: how does it stand up for the need for military support in places like europe? the mainland and the situation with ukraine? >> this is really important and i want to emphasize it for your international audience. even if there is a labor government next year and i'm not making that call despite the very pronounced lead in the polls, a lot can happen. you're not going to see a change away from the u.k. stands any support of the ukraine. of this, we can depend. jonathan: global foresight, tina, thank you. a visit from the prime minister in washington dc were going to catch up with the meteorologist later about the smoke in new york city. we need to catch up on the pgas live golf tie up.

major league soccer in the united states. i was trying to describe to you on the commercial break what it could look like in major league baseball. can you imagine and i know the network situation is a mess but let's say there was one network and let's say it's espn and came up with some kind of profit sharing deal with aaron judge which essentially was subsidizing the payroll of the new york yankees how do you think the other franchises would feel? it's amazing to see something like this develop. tom: there are others wait out front on this. i think certainly pga liv goes into that. it's a desperation of the old days are over. the captured audience is over and what do we do? you have to call out the players as you mentioned. jonathan: trying to --

>> negotiated. per game be. profit taking. jonathan: i think there is a decent argument a player with that status has this transformative impact on the franchise. a way that single player in baseball or american football does not. tom: i don't know i just got a message here. spurs is on a short list. jonathan: alex webb joining us later to have a proper conversation about this. stocks right now just about positive from new york this is bloomberg.

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jonathan: lots of messages from east london this morning. congratulations wes him i just didn't want to explain to tom at the conference leak was. congratulations, he knows where i'm going with this. i'm not going anywhere with this. equity market just about positive on the s&p this morning the nasdaq 100 drop, a big drop. biggest one-day drop going back to late april. finally apparently bond market move did matter to the text of

really story. the two-year this morning for 5651. yield up a little bit, up a lot yesterday. the surprise rate hike from canada followed by a second one from straley a. we may get some surprises in the fed future as well. the bank of canada was communicating additional pastas that sound familiar? tom: is there such a thing as a conditional skip? jonathan: a conditional skip? a conditional pause? i was talking about this. are we sufficient restrictive? tom: i'm all with bank of canada on this. jonathan: you think surprised? just make an announcement and move on? tom: yeah. jonathan: do you have the luxury of doing that if you're the federal reserve? second-tier central bank. when you're a second-tier

central bank you have the luxury of delivering surprises. i don't think you have the same luxury if you're the chairman of the federal reserve. tom: not only on central banking but also on fires that have gripped the nation in particular the northeast. we are thrilled to bring you our senior vice president he has done weather for bloomberg joins us again on television and radio. when do fire, when does the fumes move on? >> it's going to move on this weekend. we are in the stagnant pattern with upper-level lows in the northeast. we should see a bit of improvement. jonathan: how does this compare to the rest of the world what were going through right now. >> new york city has the worst air quality in the world off the scale for particulate matter floating through the air. jonathan: have you ever seen

anything like this in your career? >> no you have to go back to may 19 of 1780 to have anything of any precedents and that was called the dark day wildfire smoke because people to have to use candles at noon. it's been a long time since we've seen something like this. tom: one final question before we move on do you have any ability to say this will be repeated for the summer when you look at canadian whether on all about the fires can this happen again? >> a could happen again. my hope is that this next upper-level low that moves in monday through wednesday is going to bring rain eventually to parts of québec and ontario and help with some of those fires. jonathan: it's wonderful to get your perspective on things. tk some seriously crazy smog in new york city.

waking up this morning coming to work you can smell it. tom: oh yeah. and i noticed the dogs, there suffering. we should point out the airlines, i don't have an update right now but incoming flights were challenged. jonathan: some were delayed yesterday for obvious reasons. tom: let's continue on now and we do so with jeffrey you is sitting with all sweeney yesterday. he is senior market strategist it's a quiet period but it's not a quiet period. i'm going to ask a question to start. equities bonds currencies come out of this where is your and go focus? >> my single focus is the residual cuts that the market is intent on pricing heading into next of january. lisa: we talked about the fog as

being a metaphor for of a lot of the uncertainty we have it's unfortunate and inconvenient but i wonder how much this lack of can action makes you have that's much more conviction in cass -- cash. the less-expensive not longer having said that there is one dynamic seemingly coming through people not having more cash because of the applications are just so low right now. and the institutional investors that we custody for astarte to push. they are still looking at valuations. it could be a bit more benign then we give it credit for. lisa: in the next half-hour we will speak about the mother of all melt ups. increasing amount of cash is actually being fuel for this

mother of all melt ups. it could be coming. >> the fundamental allocation story of the second half of the year can we dare to visage a soft landing? if we get to year and there are still payrolls around 250,000, core pc i think that is a good environment. if that translates to stability and earnings growth this will and cash on the sidelines why not push cash back? jonathan: i feel right now there's two different views either you sit in cash and take five or you go to ai and chase hopes and dreams. is there something in between right now? >> that's the one asset class i have conviction on globally by think it's emerging-market. a lot of interest and right now benefiting from a u.s. story. i think a china stimulus is

coming as well. i see credibility in that region. we always know that's the real rate story. that time, there could be ut three if not higher. jonathan: china stimulus, what are you expecting? >> the benchmark from a few years ago that is the baseline. but to really make a difference on the data fed on top of that there needs to be a shift in expectations. there was this fear that things could still go back to where they were a few months ago but that clearly is not the case right now. they're supposed to be a governmental push. they can leverage, they can add that to their balance sheets. de-, d lifting. tom: the last 24 hours has been just extraordinary. how do you treat the ims

cautious five-year? do you just instantly say i want to be suspect of that and carry on more optimistic view? >> i think global gdp china's own growth forecast will go back to march when they came up with targets. that was considered conservative at the time especially if we take into account the rebounds coming through but if that is a warning signal i think it's the impetus for governments to spend. tom: the street has this. he's far more optimistic of the domestic chinese experience. he says it will even come over to specific groups is this the mother of all opportunities? >> i wouldn't say it's the mother of all opportunities but given the last three years china has always been an afterthought because of other factors. there is an opportunity there as

well but having said that going to the physical story that is something i worry about globally. i just upgraded upward to the u.k. i'm pleased going with the stimulus right now. he saw what happened in turkey before the elections. new stephen pushing through stimulus. to be honest even the debt ceiling be fiscal consolidation should we say was barely anything. so central banks, they need some help. lisa: they didn't make any progress in cutting spending whatsoever. putting this together this is time of media reviews and there were a number of high conviction rates in the first half that were absolutely demolished. what are some of the conviction trades heading into the second half that you're concerned about? i think about the ones you talked about, ai and cash. >> do we want to think is that

you do have the innovation story but is there an effect in their? i think that is something to bear in mind. going back to my earlier point about fed cuts need to be priced out. one conviction we have is the narrative about no cuts for major central banks at all. until the second half of next year were as that is not something that is pricing. the consistent inflation and physical is only going to make that worse. we've got quite a few elections coming up as well. that's where bond yields will be even be looking at 10 years at 1.5%. jonathan: that's interesting. looking forward to 18 months of politics and financial market volatility potentially. it's amazing to see the central

banks born about fiscal stimulus. you hear it from the ecb as well. they're uncomfortable with the natural support for paying energy bills. tom: my takeaway is this is important what he just said here about not extending the rate cut derby now but getting onto the second half of next year. jonathan: the 2024. we've been talking about this for weeks now we just spent six months beating up on consensus positions coming into 2023 coming into 2023 the rate cuts had depressed them out. it was about short the dollar, the long europe, china can a call that a recession now with that revised data? >> let's see where the forecast starts. jonathan: three quarters of

negative growth. think about the china conversation we've gone from reopening burden to stimulus any six months. lisa: the big fear that i have is that you get central bankers in the fiscal policy makers especially with election cycles if they keep coming out and saying we have to keep spending they have to respond. jonathan: it can lead to high yields. tom: the key thing is the timeframe. jonathan: good to see you, buddy. equities on the s&p 500 from new york, this is bloomberg. >> keeping you up-to-date with news from around the world with first word, i'm lisa mateo the mayor of new york has told residents to stay indoors or where and n95 mask if they go outside as the most polluted air

in decades like it's the region. wildfires continue to ravage tracts of forest in canada sending smoke more than 1000 miles southward. it's the worst wildfire season in canada's recorded history. kevin mccarthy called on votes for the remainder of the week and sent lawmakers home. the blockade by a band of 11 ultraconservatives heightened tensions among republicans following the speakers backing of a compromise with the white house to effort a u.s. debt default. the speaker said he was blindsided by the revolt. brian armstrong says the sec has started to change its tone in its question of the company last year. he told bloomberg the firm had forthcoming but was unfortunately met with silence. >> this was not unexpected we've

been in discussion with the sec for a long time. even before we were a public company we shared with them how we ran our business, how we cut our staking program, and through a large number of dialogues they allowed us to be the company we had many discussions with them in the last year when their tone started to change. >> the sec has widened down its crackdown on crypt. global news 24 hours a day. powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo and this is bloomberg.

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>> the ai has dominated the portfolio for five or six months. if it's as big as i think it is

nvidia is something you will want to on for two or three years, not 10 months. maybe longer. jonathan: an absolute clinic from stanley drunken miller there. he likes to play short because he enjoys it but ultimately that's not where the money is made. tom: i want you to sit on the digital replay of this a good 20, 30, 40 minutes. there is some interesting stuff and all that. he is absolutely radiant on the mathematics of shorting. it is a required lesson for anybody young on wall street about the entertainment of shorting versus actually not losing money. jonathan: that's the point he said you can lose a hundred percent. you go short, you can lose a whole lot more. tom: there is some real high

points within this conversation. capital markets and all you need to know is microsoft he is an expert on this. i want to get away from all the blather on ai, chatgpt, i'm hearing some real authenticity. what's it mean on the income statement from microsoft five years out? which margin line are you focused on and at what will be the delta of improvement due to ai? >> thanks so much for having me. when it comes down to how this flows the great thing with microsoft is there's many different ways that they win, right? it shows up on ad share because of the commercial rates on ai. now you bring an interesting point because i think there is the whole backend and by utilizing generative ai themselves you get all sorts of

savings on r&d with significantly higher developer productivity, better sales and even some gna leverage. it hits in a potentially negative way on the gross margin. if you're looking purely on a margin perspective, because the amount of storage and resources necessary for generative ai are significantly higher in what we see with traditional cloud. however, there's also the dollar uplifts a looking at this from a purely eps or dollar net income basis all of this there so much more that microsoft can charge for these generative ai workloads or any sort of embedding. so they serve all the tbs in the long term even if it means -- tom: i get may be revenue pop at the top but if i've got $.68 on the dollar on the growth margin,

what are those dynamics three or five years out? have you been able to quantify that yet within all the hoopla? >> it's still very early to be able to tell that. i will say our own models, we've been thinking about this. we went from 90% gross margins to 75% gross margins as your average. in reality, we may see a move from 75 percent gross margins to 60% gross margins across the board but there's also this big uplift we saw. i think we see the similar up of so even if the margins end up being lower they may be flat at the end of the day your over all profit dollars and your overall will go up. lisa: what's a distinguishing feature is all i need ether it

runs on energy and thus the physical reality of it uses generative ai and chatgpt is the physicality. what are some of the application use cases? i think about for example the goggles that we just saw from apple and how that might be the future of computers, the personal computer. what are you envisioning in terms of the archetype we should be looking for to understand the companies that will benefit on the hardware and software of it. >> absolutely. whatever cases you can imagine as it relates to enterprise software those are going to be. different three to five years from now. we can scratch the surface of what's going to happen but i think the bigger thing we have to take a look at when it comes to enterprise software you talk about virtual reality being is the potential for the future. that's entirely a possibility. i think generative ai is the primary way in which we will

actor -- interact with software. we all remember what happened when we went from the command line interface to qe. i think we will see a similar shift. we don't want to see who's really going to be a beneficiary of this. it is absolutely microsoft. i think not only they have softer solutions that benefit from this like copilot, openai services, office 365. it enables others to embrace generative ai along with some of the hardware on potentially building on arrival to nvidia is gpu. it's hard to not see microsoft as the beneficiary of this in a big way. i still think there's not even a price in stocks today if we want to go and say who else can benefit from this i really think

it's the large platform vendors that have a lot of data, have a lot of history with their customers and have the use case already sketched out. i would think about companies like salesforce companies. that have that but also have the touch point with the customers and the customer data that can really supercharge the way in which customers get value on the platforms. lisa: you're talking about how you see there's a by an opportunity how to use her to put valuation figures around some of these names? do you ask now -- by now ask later? >> unfortunately were not doing that we are absolutely trying to figure out and quantify revenue and ultimately you know net income, profitability does matter at the end of the day. what we try to think about is a

couple things. what can this drive in terms of additional monetization and uplift in terms of what we can collect from customers. what can this lead to any terms of competitive displacement, question -- where can we get additional that leads to additional profitability and think about all of those sort of things and that really quantifies what is the ultimate free clash to uplift at the end of the day and had is it plug into the dcf model? it may be too early, it may be a little bit but i think we have to have the framework. otherwise we end up with situations companies that aren't doing ai and the stock has doubled over the past month. but not figuring out how does this plug into it. jonathan: great to catch up.

nvidia, the stock is up by 156% year to date. plenty of disruptions to flights any the last 24 hours connected to the wildfires in canada and the smoke we have seen come through the united states and if last couple of days. this from the faa, incoming flights grounded on low visibility. the headline just coming in. tom: if i was in the north east. there is no other way to put it numbers are truly unimaginable. new york city is unhealthy and philadelphia is hazardous. thus the language being used. jonathan: if you are flying this morning expect disruptions. inbound flights to laguardia grounded. lisa: i believe the reports are that it's going to get potentially worse throughout the

day. and then it tom: will get better. tom:you nailed it yesterday. lisa: i will say the emotional impact you talk about your dogs and kids and other people, you know people who have already live through the pandemic is pretty significant. tom: school got canceled, yankees cancel baseball. jonathan: are you emotional about the baseball cancellation? tom: we can't do this. were going to have a street thinker something. jonathan: are the kids happy about that? i might have been thrilled by that. tom: is you have homework? yes. did you do it? no. jonathan: clearly. move on. tom: i am definitely pasting it. jonathan: he's constructive on this equity market we get to an

equity market in just a moment. right now coming absolutely nowhere from new york this is bloomberg.

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>> i absolutely think growth will slow from here. >> we have, we believe, a slow down coming. >> inflation is coming down but it's going to remain elevated. >> there is a lot less upside left in this valley and potentially meaningful downside. announcer: this is "bloomberg surveillance" with tom keene,

jonathan ferro and lisa abramowicz. jonathan: the smoke-related disruptions continued this morning from new york city. good morning. our audience worldwide, this is "bloomberg surveillance". lisa abramowicz and tom keene. i am jonathan ferro. the faa saying the inbound flights to lagarde you have been grounded due to low flight visibility. saw some of this yesterday. the faa slowing some traffic. tom: philadelphia i am going to suggest is worse. washington is a little bit better. it is very variable. not a zip code to zip code. that is too narrow. it is almost county to county. there is variability. it is not malaise. that is my weather thing. i am tossing it to you to give us the five-day forecast.

[laughter] jonathan: it has been phenomenal to experience. step outside, the eyes are burning. you can taste it in the air. these wildfires paint the skies orange in new york and beyond. it -- lisa a: it feels like getting another global crisis. i say this as a native new yorker. there is an eerie calm. people are all wearing masks. things slow down. that is a visceral response in addition to burning nostrils. tom: i have a new respect for delhi. i go 70 miles outside shanghai to a town i cannot pronounce. i say what is the town like? he says it is one of china's 14 pittsburghs. in a fancy hotel, they had a gas mask that the weather people in new york are showing right now. i have a new respect for what

shanghai lives everyday with a rating of 80 or 90 or 100, or delhi at 160. this morning, new york at 223. jonathan: the faa saying inbound flights to laguardia grounded on low visibility. just look outside the window and you can see the lack of visibility. let's get to market price action on the s&p 500. just slightly negative, a touch slower and softer. yields are lower. up by a single basis point this morning. lisa a: this is the single thing especially as we look around the world at things rising in response to a 1 2 punch from bank of canada and bank of australia. if we do not tick up, how much to people price in an active fed that they will will potentially

raise rates despite the skip or jump, whatever you want to call it? john waldron, naseem to lead and katie koch -- nassim and katie koch. curious to see the data that comes out at 4:30 p.m. in response to lending and with spec to the balance sheet. jonathan: the president of the identity research is joining us now. i love the notes to last couple weeks. the mother of all melt ups. are we closer to a melt other than a meltdown? >> i think we definitely had a melt up in the ink stocks as you have been highlighting. these stocks have taken over the market in recent weeks. it started with the banking crisis in march when we started

having the banking crisis, financial took a dive. even energy to dive on fears that things were going down. it cannot be good for the economy. but people still wanted to be in the markets and they ran into the megabanks because they have cash, cash flow, and good business. i think the markets will brought them back to the financials. right now, we have uncertainty concerns about whether there may be another rate hike but the economic outlook is still pretty good. once people get more comfortable with the financials, i think the market will brought in in that direction. tom: you have had a sense of victory laps over a lengthy career. in october, ed yardeni said climb on board the bottom in the market. you are up 19% from your october low. the triple leverage in your fund is at 57% on returns since

october. the answer here, i want you to talk to people who missed it. they did not listen to could pour and did not listen to been labor or ed yardeni. talk to the people who missed this rally. how did they get on board? >> i am still optimistic the market will move higher by the end of the year and into next year. next year is the environment of the market is increasingly thinking about discounting. earnings are going to be better. however, we have had a heck of a move and it has been in these large-cap stocks. as i said, look for where there has been laggers. there have been some in financials, energy and even in industrials. in addition to the melt up scenario, for mega caps, i have

also been monitoring the situation for construction in the u.s. and it is absolutely booming for nonresidential construction. i think it is about to boom for infrastructure. i think industrials are another place to be. lisa a: are we saying the 4600 targeting currently have may be conservative if this bears out? what do you say to people who push back on this? and those who decide to throw in the towel and go into equities? that will give the fed more ammunition to hike rates further and kill things off more quickly. >> i think the federal reserve officials have been saying for quite some time that they want to get the interest rate, fed funds rate, to a restrictive level. i think 5.5% is proving to be restrictive. there has been banking crises. you have seen surveys of the loan officers saying they are tightening lending standards.

i think they are where they want to be and i think we have to factor in quantitative tightening as well as the tightening of lending standards which probably amounts to at least another hundred basis points. if the funds rate is five -- 5.5%, i think it is effectively 6%. lisa a: but if that is not enough to slow growth and you are seeing the housing market reignited and all types of some sort of recovery and manufacturing sectors that have been eaten up, doesn't this go against the idea that it is restrictive enough to bring about inflation to the real the fed would like? >> inflation has been coming down. maybe not as rapidly as some people it has proven to be quite transitory in durable goods and nondurable goods where we have stickiness or persistence in

services. we know that rank inflation in the row row has come down dramatically which is likely to mean we get down to something like 3% or 4% asian by the end of this right now we are at 4% to 5%. i am optimistic this can come down well on his own without any more restriction. i think a lot of the inflation was pandemic related. there was a shock and has been aftershocks and i think we are normalizing. tom: you're talking about a broadening market. help me with package goods. some are trading at 19, 20 or 21 times earnings. am i still supposed to acquire shares in these companies? i am dazzled by the idea of buying new shares in 21 multiple that has a slow single digit revenue rose. >> the bears have been right about the fact that we have never seen a situation where a

bull market that got started with multiples at fair value -- they are the forward pe of the s&p 500 with 16.1% on october 12 when the markets bottomed. that is troubling to a life people. the reality is that if you take off the medic have eight, which are unusual stocks, you get a multiple of 16 so it is closer to fair value whereas with them, you are at eight or 18.5. i think you need to slice and dice the stock market and look for where the value is right now. it is beating of financials that seem to be pretty good values. it shows a discount of what we are seeing with on shoring and building the chip plants. electric vehicles and battery plans and so on, as well. i think there are still opportunities in the market. jonathan: great to catch up to

it remains constructive. ed yardeni of yardeni research. check out what we have done on the nasdaq and the s&p 500. the nasdaq is 20% gains. on the s&p 500, 20% gains. tom: -- jonathan: still a struggle. there are a lot of people who think at the moment that they will struggle because the headwinds around profitability are going to be difficult for the time being. tom: 30 minutes ago, the washington times service says weather is worse than yesterday. for those driving, traveling and moving today. jonathan: from the wall street journal, this is fascinating. china and cuba have reached a secret agreement for china to establish an electronic, eavesdropping facility on the

island. that according to u.s. officials familiar with highly classified intelligence. tom: i have the memory of my parents hiding the newspapers during the bay of pigs. they did not want little tommy and his sisters to see it. i remember feeling the tension. i am not equating this to bay of pigs. but we are morning tv's you can do that. jonathan: the wall street journal sending -- saying cuba to host secret chinese spy base focusing on the united states. we have annemarie this hour. tom: is she in person? jonathan: she has not left. and because we have these flight disruptions, maybe she will never leave. she just entered the studio. tom: she went to the yankees game last night. she hung out with aaron for

hours. jonathan: citi's kristin bitterly joining us. this is bloomberg. lisa m: keeping you up-to-date with news from around the world. with the first word, i am lisa mateo. bank of america's chief executive officer brian moynihan says higher capital requirements will impact lending, following reports that large u.s. banks may have to boost capital by an average of 20%. >> the thing about this whole dialogue as they have this agreement to extend a period of time so we should not have to deal with this for a while which is critical because the u.s. has to be the beacon of stability. at times, when the discussion is going on and you traveled the world, everyone gets fixated on it because the u.s. is the benchmark. if it goes kaput, it is a row problem. there is a lot of activity in the planning for it. it would be better if it did not

go on. lisa m: he spoke with bluebirds david westin at a conference in new york. kim kardashian says she is looking forward to the foundation she is building with the other founders of skype partners. >> i am most looking forward to my relationships with the founders. i am fascinated to hear their back story. i am a storyteller. i am so excited just to have the opportunity to help them win. lisa m: she presented her debut private equity fund to a crowd of investors in berlin at the super return conference. i am lisa mateo. this is bloomberg. ♪ ♪ three nights, esg... the broker will take your bonds. -diversification, futures, options. fiduciary. leverage. [whispering] -frothy markets. psst. virtual real estate is a lock. ♪ cold hard cash ♪ j.p. morgan wealth management knows the world is

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and stay out late with. it can even happen to the person in the mirror. opioid use disorder is a disease that can happen to any of us. it's possible recovery can happen to any of us, too. >> we have to address, how do we make sure we do everything we can to help ukraine win but we

have to make sure we are not wasting dollars. we are going to have $35 trillion worth of debt in two years. we have to make sure germany and france do more than their fair share. let's look at legal aid that will help ukraine win, not just have another prolonged war that goes on forever and ever. jonathan: feels like the latter at the moment for the ukrainian people. centre rick scott on balance of power yesterday. let's check in on balance of power. equity futures just about negative. eu higher by single basis points. much higher in yesterday's session as we get another surprise rate hike. the first in australia and the second out of canada. plenty of surprises out of canada the past couple days. the wildfires painting the sky orange. the last 20 minutes or so,

inbound flights to laguardia have been grounded although visibility. they have been slowing traffic into new york city airports the last day or so. tom: we saw yesterday that new york at one point was limiting and coming. i saw one tweet that across america, it is 20 minutes delayed in coming. you nailed this yesterday saying it is a movable feast. as a general statement, it seems to get worse and worse. lisa a: i am not a weather expert, i am just reading the reports that say it was coming in and settling as the afternoon goes on. there is a real question about the disruption as people are not able to be outside. schools even cancel events and classes. tom: i want you to bring our next guest who was so special. as you get out the map and look at google and taiwan and the distance to china.

it can vary but the answer is that will be the equivalency over something that is going to be talked about nonstop. jonathan: story just breaking within the last hour that china and cuba have a secret agreement to establish an electronic secret intelligence base. annemarie joins us. what do you make of that? annmarie: it is concerning given the proximity of cuban to the u.s. what is this mean for china? it could potentially monitor things like emails, phone calls and satellite transmission. the u.s. will be concerned about this because this is china asserting more power very close to the border. tom: does this derail the

secretary of state's trip to china? annmarie: i don't think it derails the trip because the biden administration is desperate to sit down with their counterparts and make sure they're having dialogue. tom: this china want to sit with us? annmarie: they do but it makes it awkward for the u.s. to say yes to meetings there is a new export control banned -- ban on them. right now, the secretary of state plans to go and would be going in the coming weeks. he was always going, even when u.s. officials knew there was a spy balloon line over continental u.s. the trip got derailed because the optics became so toxic when it became public. lisa a: this is one of the most fascinating moments of this political cycle. among the people, there is a

feeling as hawkish as you can get of good on china. the biden administration is trying to soften things to get breathing room. how much can they fight against that? how much are they losing if they shrug off the creation of a secret spy balloon in cuba? annmarie: this gets difficult especially going into 2024 because every presidential nominee is going to ask about china and everyone wants to get as hawkish as the next. or you will go to capitol hill and talk to individuals on the select -- select committee. the biden administration's actual deliverables on china have been hawkish. we have seen more from the end the trump administration. the tariffs were kept in place. it would be hard-pressed to find anyone to take a tough -- to

want to go toward with china. jonathan: inbound brown straw and delays also possible at kane in europe. tom: i don't know if this affects annemarie. jonathan: that is the latest from laguardia. here is the latest on the potential flight disruptions. inbound flights to laguardia grounded although visibility. just getting an extra headline from the faa. inbound brown stock possible at jfk, new york and philadelphia. lisa a: this comes as joe biden was giving a bunch of a it to justin trudeau in canada. he was delivering firefighting

aid. do we have a sense of what effort is being placed on that front? annmarie: the u.s. has deployed more than 600 firefighters and support personnel. they expect the u.s. to continue to send some of that support. tom: i don't want to play weather guide but there is a jordan norma's -- huge low that will not move. the fires were here before so maybe it is just a freak low. what are we going to do? send firefighters up there? annmarie: they are. tom: do they have grizzly bear repellent? annmarie: i am not sure. [laughter] that is outside of my bounds of expertise. what we do know is meteorologist said this could be more likely

in the future that we see more fourth fires and it can start to descend as we see in new york. washington dc is getting much worse today. tom: i am dazzled by the house. have 11 ultraconservative congresspeople who basically have said on a procedural rule, which i really do not understand, we are going to let the minority democrats run the house. that is the distillate of a frozen house. let it go that high tim:. is maccarthy heading out the door based on these 11 ultra-right congresspeople? annmarie: are not saying we want the ultra right to run the show. tom: there is 11 of them, that is not power. annmarie: what speaker mccarthy will say is the five to 11 individuals are trying to the entire congress hostage to get

what they want out of him. all of this goes back to potentially what promises were made during the teen rounds of the speakership earlier this year. the 11 are very upset with how the debt negotiations went down. they do not think the caps on spending was enough and they want to see more. at the end of the day, we had more democrats so this plays into their hands. tom: is this skill east of louisiana trying to do a round with senator mccarthy? not come out the door and skill east -- scalise takes over. annmarie: we are not there yet but punch bowl news had a interview with stevens gillies. he says i do not want -- no with the agreements are but whatever they were, they think they need to get resolved. obviously, a tale as old as time

in washington. it is kind of like john and tom. jonathan: is that with this is? why are you surprised? it is politics. french democrats running the white house? hasn't this been the argument for at least two years. in washington dc, there are french democrats are basically -- fringe democrats are in charge of who gets into the white house. annmarie: that is the thinking of people in the congress. aaron judge is still in recovery mode and hopefully will be beating the red sox friday. ♪

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jonathan: august 20, i can get you tickets for the new york red bulls versus d.c. united or $25 each. a couple weeks later, august 26 against miami, and the start at several hundred u.s. dollars. the difference one man can make to a sport in america. tom: when you see these kinds of announcements, just the gate helps pay for it. jonathan: just amazing. of course, we discussed lionel

messi going to miami. tom: explain why he is the best guy in the world but why he is still so dominant at his age. jonathan: he is older. it is coming towards the end of his career. clearly though he will be the best player in his late. the gap in terms of talent between what happens in europe and here is still big. he is an incredibly talented football player. you can see that as soon as he burst into the scene as a teenager. there are certain players that come onto the field and you watch the confidence they have any way they moved move towards the goal. sometimes players go onto a team and get the ball and are scared and pass back immediately. this guy was nothing like that. you knew almost immediately that he was special. tom: is this money looking for an international exposure or an

american exposure? jonathan: both. more so in the u.s. to begin with. we have done this back in l.a. in the 70's and have done this with back of the last few years. you think about the deal michael jordan did with nike all those years ago. matt damon and ben affleck did a wonderful job putting it into a movie. think about the revenue-sharing deal they did with nike and selling sneakers. the very idea that now we might have that, according to the athletic this morning, with apple tv. they sell season passes for major league soccer. you might have a profit share in agreement with lionel messi. this is why also bring up the ticket prices, bramo, because that is the difference you can make. you can charge several hundred with one player joining the roster. lisa a: the taylor swift effect.

this is a rockstar. what i find interesting is this is competitive with the middle east money that has been coming into the export. this is a direct rebuff to them saying that will pay you $400 million to come up here with us and them saying no thanks, i want a stake in this. jonathan: adidas might have to move here as well. it is her point that will work out just how prolific -- that we will work out how prolific this could be for apple from adidas. it is how we get into wages from miami, whatever they are. lisa a: at this point, how much is it interesting to you? david beckham running this team? that the two of them are teaming up to create a new dominant in the field? jonathan: at the end of his career, he wanted access to buying a franchise in l.a.

i am a romantic when it comes to sports. i wanted to see beckham back at barcelona. it is a shame that did not happen. but he wants to do a new thing and creates a new legacy. i think the deal with apple tv is something we need to take a closer look at and what this could mean for sports going forward. if you are the braun james and you think you are it in the nba or you are aaron judge and you think you are it, do you want to share that stuff? equities right now on the s&p 500 look like this. futures slightly negative on the s&p and nasdaq as well. yields up off the back of the price rate hike from the central bank in canada. 4.56 on the two-year yield. 3.8 zero on the 10-year yield. i call it recession. i know some do not like to call it that.

the euro is 1.0735. lisa a: i am curious about what we have seen over the past few sessions which is the smaller regional banks have had a revival in a significant way. the kbw regional banking index is up 23% -- 26% since previously. pacwest bancorp is along for the ride. people are talking about bank hikes and potential for more jamie dimonism. manchester united shares, if you take a look, are popping as a result of the fit bid from qatar. it has been going on forever. they were up 2.3%. i wonder how much this is man city wins. how does manchester push back? this is the story as the middle east and oil money comes in and

dominates a lot of majors work. jonathan: i think there is a hope from supporters and fans alike that they take the highest offer and get rid of the club. i am talking about the tampa bay buccaneers. there is a hope they will just step away. it was a fear that they would hang onto a minority stake. this has been driving for months. i can guarantee that we will get jobless claims in about an hour. looking ahead to next week, cpi data tuesday ahead of the fed decision on wednesday. invesco weighing in saying we believe the more optimal or playable after the fed's act -- palatable path for the fed is actually to hike in june and then more clearly communicate their are comfortable with the level of restrictiveness at this point and want to wait a full quarter to access incoming data. so data over every three months instead of every two months. tom: christina cap manning joins

us now. it portfolio manager and global debt at invesco. it is not that sure knows is ambiguous. do you manage for coupon or total return? >> with the fed, they have changed their messaging and have always kind of been in the camp that the bar is for them to go in june unless data changes. the messaging the last two weeks has shifted this. the message is that in some sense, it is more palatable especially if you look from the global bank because the fed does not want to be resent so -- responsible for the global bank. those that have moved early and want to adjust feel like they are handcuffed by the fed. tom: what is the duration on price up or price down global debt? >> treasuries look fair here.

it is a range bound market. what is interesting in the u.s. is actually tips. five-year real yields are at 1.70. we do not view this hard landing deep recession camp but it actually should perform in this environment as well. at 1.70, i think this provides a good place to park some duration because we have moved a lot. lisa a: how disruptive would it be if the fed did not skip and they raised rates next week? >> that is, in some sense, the more palatable option. a week ago, we were pricing in that. this change in language from pause to skip and trying to say that a positive not mean that cuts are imminent -- a pause does not mean that cuts are imminent. i think it is more important for

them to go in june then july. you only have one payroll and one cpi. do you really have a lot more context about the markets in that time? that is hard. lisa a: this it makes sense for you to see the fed hiking next week and also be bullish on credit, bullish on -- even if it means the fed will be more aggressive? >> in terms on is the fed bullish on the markets or if you are? lisa a: if you are. >> the markets has imminently looked for a slowdown in the consumer, and look for a job payroll -- job creation and payroll to fall off. we have not seen that. what we find, in an easing cycle that passes through to the markets much more quickly than on a hiking cycle, so there are

lags. we need to be able to transition from just looking at current data to assessing these lags. there still is data dependent. john, you have said before that isn't it always data dependent? of course. lisa a: are you saying it is to seem to go into higher rated securities? >> we prefer a macro rest rather than credit products. within the products, mortgage looks industry -- interesting. we would be more biased in credit than over high yield but the more compelling lover we see already macro levers and affects the most over rates. tom: the reality for our viewers is not a lot of data dependent for strategists. the reality is it is down 17% from the good times in bonds. they have come back 6%. we had someone the other day

that says 80% is the new part. do we need to reset our bond view, thinking we are not going to get back to the glory a number of years ago in price? >> it is a different world. we are in a world with higher inflation and we have reset. i do not think you 35 year bond rallied we had in one direction makes sense. tom: is the 35 year bond rally dead? >> i think we are in different environments. i think inflation is here to stay in more meaning away. that does not mean 8% or 10% inflation. we have come down. even if you are talking 0.3 risk or zero point five risk, versus the consensus, you are still running at 5% headline. that is not the fed goal. jonathan: kristina campmany of invesco, really revealing.

listening to the chairman at pimco, talking about accepting something. that is a real change. whatever the something might be, and just saying that this is where we are, we want to get back towards to percent but just carrying on without actually being at 2%. tom: there was a brilliant portfolio a couple years ago. it is not to percent. it is one point x percent -- 1.x%. that is a huge debate. jonathan: last year, deutsche bank comes out early and call for a u.s. recession and has not changed that call sense. we will talk about the dates and back into the of it. we catch up with matthew lizette he in about 50 minutes time. lisa m: keeping you up-to-date with news from around the world. with the first word, i am lisa mateo.

some 230 square miles of ukraine's southern kherson region is underwater, two days after the destruction of a dam. almost one third of the flood zone, where thousands are being evacuated, is held by radiant forces while the rest is underbrush iq i territory. kyiv is assessing the territorial and ecological extent of the damage which is considered a war crime. uber wants to go electric. the ceo says the ride-hailing giant will need support from both drivers and riders. >> teslas are the highest selling cars in terms of electric vehicles by a mile. at the same time, we want electrification to happen. we need ford out there, gm out

there, etc. lisa m: president biden has vetoed a deal by congressional republicans designed to repeal the student debt cancellation plan. joe biden's congressional -- presidential action would forgive up to $20,000 from student loan borrowers. global news, 24 hours a day, on-air and on "bloomberg quicktake", powered by more than 2700 different journalists and analysts in over 120 countries. i am lisa mateo. this is bloomberg. ♪

>> one conviction we have a cyst higher for longer narrative globally.

and potentially no cuts from major banks until at least the second half of next year. that is not priced in because of the sticky inflation. the school will only make this worse and we have a few elections coming up over the next 18 months. jonathan: what an amazing conversation. the senior strategist at bny mellon. the electoral risk around fiscal policy which is something central banks may have to be focused on in the coming 18 months. flight delays expected across airports in the new york city area including philadelphia. look out for that. latest news earlier this morning that flights were grounded at laguardia. for the market, not much news to talk about. the s&p 500 a little softer. continuation of yesterday a little in the bond market.

3.8070 on the 10 year yield. chairman powell does not like to surprise. let's see if they do just that next week. andrew hollenhorst is sticking with it. still thinks a hike next week. let's see if you will stick with that after cpi tuesday morning. we need to discuss a phenomenal deal between lionel messi, one of the greatest if not the greatest players in major league football, and apple tv. tom: for those who do not follow this -- kids walk by with the argentinian sure on, which i guess i get but i do not. multiple sources involved said earlier this week that the american soccer league and apple have discussed offering mr. massey -- mr. lionel messi a share of the revenue generated head.

i cannot believe the detail. new subscribers to the mls subscriber past. jonathan: that is amazing. they have $18.5 billion deal with major league soccer. i am talking about apple tv. clearly they think this can go somewhere. tom: it is a whole new world because banning was -- venting was banned -- betting was banned until recently. jonathan: alex joins us from bloomberg in the city. how big is this deal for lionel messi and what presence -- precedents are we seeing here? alex: they intend to sign a deal. they are working out the details. the report is that not only could apple do a revenue-sharing deal on the new subscriptions

that come to the mls to get past they offered through apple tv+, it's also through adidas which is the boots sponsor for lionel messi himself. they make all the jerseys in the mls. it is a potentially massive deal if you get a slice of that. there has to sort of been precedents for this before. when beckham joined the mls years ago, he had the opportunity to get franchise rights for 25 million dollars, reported at the time, and an undefined future day. when he finally did it a decade later, franchise rights were selling for $300 million. he converted a 25 million dollars stake tenfold. they are candy in the mls of attracting big players without massively breaking the salary caps. lisa a: there is a distinction

with apple with this idea that one of the distributors of the sport is having an active role in helping foster who will be playing on the fields and who will be in the roster. how much will this be somewhat of a template versus a runoff or some of these streaming services that want to get in on the sport as capturing the eyeballs. it is possibly the one thing keeping afloat the traditional plug in media. alex: i think lionel messi is an exceptional case. he is largely the greatest player of all time. a lot of people would struggle to say they want the same deal as messy -- lionel messi. in other sports where streamers have rights, whether it is ufc or something else, they will try to get a chunk of the growth -- revenue and might make a documentary. this also gives them a cut of some streaming dollar and apple tv+ has got a messy documentary

that lionel messi is an affinity from. a slice of a template there. tom: james at the guardian did a nice summary around two months ago of the mls in america that has not really -- that the mls in america has not really cut through. of all the media analysis you do, is this just rich guys playing or is there a legitimate leak out there that rich guys -- people will care about? alex: i did analysis a few months ago where you look at the franchise value. if the pace of which the franchise rights value is accelerating, you tally this against the pace of which rights in nhl, which is the host directly fourth biggest major league sports, mls is on track to overtake it in the decade.

it is starting to bite at the heels of nhl. nhl is still quite a big bigger and has more games. this is a real business. one final thought is unlike other football or soccer leagues, because there is no revenue last relegation or promotion, there is revenue-sharing evenly and it is safer than manchester united. you have better visibility into the earnings profile. tom: did alex webb just announced that manchester united is getting relegated next year? jonathan: we are witnessing these guys are not athletes but content providers. a great example of that over the last couple years has been liberty media by formula one and what they have managed to do on netflix. what you are seeing with apple and lionel messi is not as an athlete but someone who can

provide content they can sell. lamb -- lionel messi says i want a slice if i am going to bring that. think of ryan reynolds owning wrexham. he did not think of that as owning a football club but as having a streaming service, amazon, who will pay him money. tom: you agree this is not just rich guys playing but that this is a legitimate future? jonathan: this is not the same as the saudi money. the saudi issues about soft power and sovereign states getting a foothold in very popular sports. what you are seeing in mls between lionel messi and adidas and apple is this building on the legacy of what michael jordan did with peers but now for -- with sneakers but now for global media. we did this with wrexham and ryan metals -- ryan reynolds. tom: cheers to everyone who watched the air jordan movie.

we had to go out and buy two pair of air jordans. jonathan: how good was that? tom: it was great. a good movie. jonathan: building on the legacy of michael jordan's mother who had the intelligence to push for that deal. alex webb, thank you. alex weather of bloomberg. tom: is as on daily. jonathan: he is welcome to discuss anything. spin the wheel, wherever it lands on. lisa a: ♪ [laughter] jonathan: t cairo let, spin the wheel, wherever it -- tk ro ulette, spin the wheel, wherever it lands.

tom: you have seen the weather. faa cancels ground stop at laguardia. i don't even know what ground stop is. jonathan: just like the grounders garden. next. ♪

(♪♪) this is the lexus variety of electrification... inspired by, created for and powered by you. ♪

>> i think the recession story is off the table at this point. >> we are not going to have a recession here, we are in a

surprise recession. >> i am not convinced we are going to be able to see growth with the kind of resilience we are seeing now. >> economy in the u.s. remains on robust footing at the moment. >> at the moment the u.s. is not our favorite region. announcer: this is "bloomberg surveillance." tom: good morning, everyone. jonathan ferro, lisa abramowicz, and tom keene. difficult weather conditions in new york city. we are monitoring the airports. this fire, the smoke we have had come in through the day. we will stay focused on claims at 8:30, and far more on the state of the market. midyear outlooks are out. we are overwhelmed with beautiful documents about what to do. jonathan: overwhelmed and beaten up by the last six months. just a bunch of consensus views

of shredded. europe outperforming, tech is going to be bad, tech absolutely ripped. hello apple. take your pick. australia, canada, what does the future hold for the federal reserve? do we get the same thing from chairman powell in six months time? do they have to restart interest rate hikes because we are not sufficiently restrictive? that is why some people were spooked yesterday. tom: you saw the many divergent opinions we had here. we are going to really address this head-on with jp morgan private bank here in a moment. given the view to the fed, it is for the people on the sidelines, how do you get into the game? jonathan: comfortable in cash at 5%? still comfortable in cash at 5%, and then it goes higher and all of a sudden you have missed out on a 30% rally on the nasdaq?

tom: lisa, brief us on 5% t-bills. it is this uproar that we are going to die in the next 90 days because the debt crisis is over and t-bills are going to do this or that. lisa: that was a narrative that died on monday. [laughter] potentially we could get a sucking sound of liquidity out of the market because of t-bill sales, and then people had nothing else to talk about. people have put that storyline aside. it is this larger issue. everyone has moved on from the stresses of the fact that ring deposits cost something and people are now going into t-bills and going out of those deposit accounts. the lack in lending is really unclear now and people do not have a sense of what that slow train looks like. tom: that is a two-part economy. we have some guests talking about a buoyant america and others, a huge set of gloom out

there centered around housing and mortgage rate. i see it in the buying of puts, the betting on markets going down. jonathan: yesterday with an economist, just said the post-pandemic distortion is still here. we pulled forward physical demand of things in a pandemic, pushed out demand for services. still witnessing that demand for services now, re-engaging with things like tourism. no sign of that slowing down anytime soon based on what the airlines have been telling us. tom: we will talk about the black swans out there right now. i don't even know where to begin on the day. i'm going to go to a near-4% 30 year bond. once again yields rising in the distance. jonathan: we should also go to the importance of round numbers. apparently we do not like 4300. we like 40 to 99, but cannot

hold that for long. monday, 4299.28. can we break 4300? tom: tony dwyer, 2200. i'm kidding. [laughter] he did not want to give us a estimate. jonathan: it was 11 times earnings? i think that is what it was? [laughter] tom: last time he was on the show. what we are going to do right now is move on. we will continue to give you airline headlines, given the horrific conditions on the west coast. philadelphia hit hardest. right now this is really important. if you want to know at the margin, listen carefully to kristen bitterly, head of north american investments at citigroup global wealth. there is a sentence in the usual blather you released today, which is, are you playing defense or are you being on the

sidelines? that is a perfect metaphor for the emotion right now. kristen: i think that is exactly right. there is this feeling that you are either all in or out of the market. you are either all in t-bills and sitting in that 5% or somehow chasing and finding a defensive in tech stocks. something we have done from the beginning of the year is, we have been balanced in terms of our fixed income portfolios, where we are fully invested but we are picking our spots in terms of quality. when you look at the performance of something like that year to date it is high single digit returns for a balanced portfolio. it is not the 25% of the nasdaq, but certainly strong returns today. jonathan: with sonali basak we talked about the possibility of recession, ai, and nvidia. can i put in the same bucket some of these tech names with consumer staples? kristen: i would love to hear

that in detail. when we talk about what has happened within the market more broadly i do think this concentration -- and everyone is talking about this. this is not a new story. there are seven stocks representing more than 100% of the gains. it is not a uniquely u.s. story. there is 10 companies representing 85% of the global gains. what does that tell me? it tells me the market is rational. where the money has been going into has been these mega cap companies with strong free cash for generation, the ability to fund growth, not dependent on credit markets, after balance sheets in order, and a lot of them have raised guidance. lisa: given there is rationality but you don't want to play that because you cannot predict the ai future, are you starting to say the rational plays of regional banks, of generally financials, areas that have gotten beaten up are looking good again? kristen: that is one of the themes and our outlook, this

coming rotation within equity. we have been playing defense. have been invested in global dividend growers. some of the areas we have been adding exposure, something like mid-caps. looking at the valuation differential, trading at about a 28% discount to larger cap. you have to be selective. this is not a broad brush. one profitable companies, just like you want profitable country -- profitable companies in large cap. you can find opportunities going down the cap structure. lisa: one thing we have been talking about is the weight of people who have been hiding in t-bills, to go into nvidia, to go into big attack, to look for those double-digit returns and not be happy with single-digit returns, even if they look good on a risk-adjusted level. you have been talking with clients. what are they saying? how much pressure are you

getting to get more with respect to earnings? kristen: everyone is asking, is tech a buy? bringing it back to the ai conversation -- because we have to, right? that is the dominant conversation right now. there are fabulous companies out there, but they are valued at an extreme level. in terms of making money is really that differential. some of the areas that, if you think of the net beneficiaries of ai, concentration has been in those mega cap companies. but then when you look at areas like cybersecurity, it is going to have to come along for the ride, one of our trends is investing in longevity. a beneficiary of this technology for you have not seen that type of valuation and the funds come into those areas. those are ways to be invested but not a pure play. jonathan: what is special about 4300 on the s&p? kristen: i don't think anything is special about 4300. jonathan: what is it about 4299?

kristen: once we hit that appreciation level and all of a sudden it would turn into a true bull market, we have to look at whether you are in the camp of higher for longer or in the camp we could see a cut at the end of this year, if there is some type of recession ultimately and it has to signal we are going to see further contraction within earnings. the outlook right now is too rosy. coming into this year without we were going to see a 10% contraction in earnings. we think it is going to be about a 6% based on a strong q1, but still a contraction. tom: this conversation is 15 years ago. i'm not used to my normal conversation that was in the cfa curricula. it is shocking to hear this. oh, a normal conversation after 15 years of oddity. we are all recalibrating. jonathan: 15 years of 0% rates?

tom: yeah. the sharpe ratio didn't work. we all made it up as we went. what is important is, all of the focus of the media, the financial press, is on short squeeze, stuff i don't even understand. do you know what it is about? the bill dooley world, -- the bitterly world, do you have the courage to get off the sidelines? that is the heart of the matter. jonathan: the cash trap. kristen, thank you. kristen bitterly, citi global wealth management. just latest on the east coast air crisis. i think we can call it that. this blanket of heavily-polluted air covering much of the east coast, likely to linger until tuesday. tom: that is a bombshell. this is a real adjustment. this is from the u.s. weather protection group over at noaa.

these are the pros. they have all the tools, all the whizzbangs. zack taylor and others extend this out from saturday out to tuesday. they say they will be elements of less or more, but all of a sudden we need to reframe this. jonathan: expecting some flight cancellations today, some delays in new york city and beyond. philadelphia as well. look out for that. i just caught matthew luzzetti walking in. we will catch up with him in about 20 minutes time. on "the open" seth carpenter, amanda lynam of black rock. all of that coming up. this is bloomberg. >> keep you up-to-date with news from around the world. the federal aviation administration says inbound flights to look already have been grounded due to poor visibility, and further ground

stops are possible at jfk, newark, and teterboro. in philadelphia the region faced worst air quality in the u.s. today as the impact rippled south. large swaths of the northeast and mid-atlantic are experiencing unhealthy levels of pollution, while the weather service warned of deteriorating conditions into alabama and georgia. president joe biden offered additional support to fight those blazes as the effects of the smoke blanketed some of the cities with an apocalyptic hinge, forcing officials to urge residents to stay indoors. new york state plans to distribute one million n95 masks. the federal administered -- federal aviation administration -- twitter cofounder evan williams, and one of the most critical members of the founding team, jason goldman, had a few words about the direction of their former company. they spoke with bloomberg about elon musk's takeover and how the brand will survive. >> i think that is hard.

i think brand recovery is much harder and now the brand is very linked to elon. anyone can make a new twitter or better twitter. it is just a whole new paradigm on the internet, and lots of people are trying right now. lisa m.: they also spoke more about silicon valley's new era of austerity and the future of social media. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm lisa mateo, and this is bloomberg. ♪ ♪

conventional thinking delivers conventional results. at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. ♪ because investing isn't one size fits all. ♪ allspring. purposefully divergent.

>> we are at the beginning of a very classic late cycle, late cycle debt crisis when the

supply-demand gap, and you are producing too much data and you have also a shortage of buyers. tom: ray dalio of bridgewater, and of course the founder there. he is in some levels of retirement. maybe he will help the new york soccer team compete here. i really want to say that coming out of the pandemic with all of the opportunities of getting people together it is an extraordinary bloomberg invest conference. mr. and miller yesterday making headlines, moving the markets. today there is a guy from goldman sachs, mr. waldron. katie coke will join from tcw, the west coast powerhouse. i will speak to my good friend naseem to lab. scott patterson has killed it with chaos kings. i may launch it to the book of

the summer here, but this is outstanding. can't really say enough about it. we are going to die into -- dive into it. we are also going to cover the markets. the bond market. our bond panel over the last two days will be led by ira jersey. he joins lisa and i this morning here. i want to get to the omg we are all going to die, and that is not messi in miami. it is t-bills after the debt crisis that is going to be an overwhelming flood of t-bills and the market funds will not sop them up and crisis will ensue. ira: we have seen so far is that there has been quite strong demand for the t-bills coming out. because going into the debt ceiling crisis and because of it the treasury department actually reduced the amount of bills

outstanding. with all of the money flowing out of bank deposits and into money market mutual funds to get higher yields, there has been a lot of demand for that paper. there probably is a point where bills have to be much cheaper in order for mutual funds to care, but we are not there yet. i think the next week's options will be strong. lisa: yesterday the bank of canada, and canada in general, really set the action. one of the things the bank of canada did was they raised rates even though they were not expected to. we saw the reserve bank of australia. it raises the question of whether we could see something similar from the federal reserve next week. do you give any credence to those kind of discussions? ira: it is not completely out of the question. we have an interesting dynamic now. do i think the federal reserve should hike interest rates? i don't think they have to, but i think the federal reserve is worried about the inflationary environment we have in the fact

inflation has not inclined as quickly as they had hoped. when we get the cpi report from may on tuesday morning, right when they are about to start their meeting, that could signal if that comes in hotter, or if you wind up getting a .5 on headline cpi on a month-to-month basis, it's possible the fed could say we have to hide. because if they do not hike the market is probably going to say, every they are done. lisa: what has changed? it is one week, everyone is talking about, we are going into recession, we are just seeing the beginning of it. the next weekends, we are missing the boat, you are seeing the lag effects of the stimulus from the pandemic has shifted so violently? ira: nothing. that just shows how fragile people's sentiment is right now and how undecided a lot of investors are in whether or not the federal reserve's 500 basis points of interest rate

increases is enough or not. we are at the point -- and this happens when you reach the top or the bottom -- is a, will they or won't they? they have not cut interest rates to zero. when interest rates are on the upside there still is that wiggle room that the federal reserve might decide to take. i think what the market is mispricing, if we were to talk about the short term, is if the fed is on hold, does decide not to hike next week, july is not a done deal. the market is pricing for the fed to be a done deal. i think it is more like a 50-50 in july. tom: to remind people, this is ira jersey, where the world stopped long ago at credit suisse over shocking minutia, which i think i studied and flunked on a number of exams.

ira's legitimate adult on this stuff. do you frame 6% yields, 6.1 percent for faith in credit yields? ira: i think it will be very difficult for longer-term yields, like 10 year yields to get up to those levels. even if the federal reserve board to hike to 6% -- tom: and stay there. ira: they would have to stay there for a very long time. you still only get ten-year yields up to 4.5% to 5%. as soon as the fed stops the market is going to always be pricing for interest rate cuts later. the question will be, to what magnitude and what that terminal floor is. tom: witness t-bills in the last couple of weeks. the foreigners always came in and rescued for demand -- with the man for our paper. we literally would try to model the greenspan delta there.

why won't that repeat again? ira: it could, and you are seeing that in private investors. you have to break out what is going on with some of the foreign dynamic. on the panel later today that is one of the questions i want to talk -- lisa: you are doing great, keep going. ira: it is the dynamics between central banks, who are not yet full out buyers of the short end of the yield curve, as you were alluding to, and private investors, foreign investors buying the long and, that tend to buy more 10 year, 30 year debt. i think that is why you have some of these yield curve dynamics we are seeing. there is no reason why that won't continue, because you still have the u.s. as relatively cheap, so yields are higher here in the u.s. than they are in a lot of the rest of the world. lisa: tom said something i thought was fascinating when we were speaking just a couple of minutes ago. this is a conversation we would

have been having 15 years ago. this is something people keep saying. suddenly for the first time in two decades the fed does not matter as much. this is not about where they push rates, this is not about accommodation. how much is that driving the theses you are hearing from investors as you talk with them? not necessarily, the fed is going to do this, this is our benchmark, but more, we can play this in the short term because we have no idea what is going to happen? ira: it is the no clue aspect of market dynamics that are the issue. the federal reserve hiking another 25 or 50 basis points is less important than the fact they already hiked 500. you can take the federal reserve a little bit out of the market. i think there is a lot of questions about what is going on with the banks, what is going on with the financial sector? going back to the rebuild of the treasury's cash balance might create more volatility in the markets. we all remember september 2019

when reserve balances got to what i called the tipping point. some people call it the lowest common level of reserves, but let's call it the tipping point. once we get to that tipping point you can see significant volatility in funding markets. that will creep into risk asset markets and we wind up with a lot of volatility with the federal reserve comes important again. the fed will have to do something because they created this issue artificially by having so many reserves. tom: stay with us. this is just out in bloomberg news reports that hamilton bermuda with signet jewelers, signet ceo says couples buying lower-priced engagement rings. there is an economic tell whether if i have ever seen it. lisa: we saw it with respect to people -- it is a significant investment, and it seems like the straight

down is happening in more sectors. it feeds into this theme. people are deciding where they to spend their money. they may travel more, but that does not necessarily mean they're going to buy a cartier ring. tom: we are not going to buy a cartier ring, are we, ira? there are little things here that get into the growth. we do not have time to continue with ira, but these are important things. with the signet/lou now/diamond ring person says is just as important as what some fed president says. lisa: absolutely. it is telling you there is discretion to feed into the market. tom: stay with us. claims, next. this is bloomberg. ♪

we moved out of the city so our little sophie

could appreciate nature. but then he got us t-mobile home internet. i was just trying to improve our signal, so some of the trees had to go. i might've taken it a step too far. (chainsaw revs) (tree crashes) (chainsaw continues) (daughter screams) let's pretend for a second that you didn't let down your entire family. what would that reality look like? well i guess i would've gotten us xfinity... and we'd have a better view. do you need mulch? what, we have a ton of mulch.

tom: "bloomberg surveillance," worldwide. jonathan ferro preparing for the next hour. i will have naseem taleb. lisa, we have to talk about the fog out there. it is not fog, it is really serious. people with headaches, people really affected all across the northeast. lisa: in business is closing early as well because people are trying to protect themselves and their workers. this comes at a time where we are getting news that it is going to be may be until tuesday before the weather patterns change. this has been your weather

report. this is serious for a lot of people, and it highlights nature of the interconnectedness, the worst wildfires canada has ever seen. tom: washington affected. they are of air quality is a little better than new york, but is not saying much. philadelphia is hazardous. also hazardous is going to michael mckee for the claims data when it is not there. have you seen it, mike? mike: it is a bit of a problem. [laughter] maybe the smoke has asked lisa: yeah, breaking news. [laughter] mike: maybe they laid off the person that is supposed to put it into the system. 261 thousand. , so a significant change in the number of jobless claims. that is about 30,000 more than we had in the prior week. i'm looking for the revision that comes over more slowly. 1,000,500 700,000 -- not claim

gets paid and not everybody stays on jobless claims, so that is not unusual, but 261,000 is a fairly impressive number in the sense of, we are looking for a decline. he was the revision. 233,000. it is a gain of 28,000 in the week. it is one week, and it is not worth changing all of your views on the fed and markets faced on one week's data. lisa: let's do it anyway. [laughter] mike: yeah, tom is going to do it anyway. this is the start of a trend that is good news for the fed in a sense. tom is whispering. they do not want to see people lose jobs, but they expect the labor market to weaken. tom: where is the number for you in your head? i'm looking at two standard deviations out. we had a pandemic slide, massively range-bound, and now

for the second time we have breached two standard deviations up. is it a jump condition? no, but we are getting there. where is the number in your head where things change? mike: i don't know necessarily there is one, because the jobless claims are riddled with problems, which we discovered during the overall pandemic. but significantly higher, some are closer to 300,000, i suppose you would start saying it is moving in that direction. the question is, is this a one-off the last time we went out -- like we saw the last time we went up big, or the start of a trend? tom: the yield space moves in. the dollar, fractionally. what else, lisa? lisa: you can't really make a call on the fed with one report, and yet essentially that is what people are kind of gaming out in the market. that basically this takes the fed, all things being equal, off

the table. basically, two-year yields falling significantly. you are seeing the dollar index hit intraday highs. you are seeing the euro gain considerably versus the dollar. this is basically saying it takes pressure off the fed. that is the big message from an upper revision to a jobless claims. mike: it does take the pressure off the fed next week a little bit. we will see what happens with cpr. this justifies them maybe not moving. tom: michael mckee, thank you so much. looking forward to inflation analysis next week. joining us now is one of the key calls within the bloomberg surveillance world. it is rare you get someone to give you a statistic or directional call and also throw a date on it. matthew luzzetti at deutsche bank had the courage to do that a long, long time ago. they said there is going to be a slow down, some form of recession, but it is going to be out there.

he nailed that call. get an update this morning. let's go to the timed element now. which week, which day, which i would do we get a recession? matthew: that timing is always very difficult. tom: i will let you name a month. matthew: we are still q4. we kept the recession timing in q4. i think it is based on we have seen the fed tightening very aggressively, you have seen conditions tightening. have seen some breadcrumbs within the labor market data of some softening. i would be cautious about this morning's data, just because there are seasonal adjustment issues. if you look at last friday's jobs report showed the permanent job risers -- job losers rising. i think that is an important indicator. as you look for the consumer, you have student debt payments coming back. we think it is a consumer that looks a lot weaker by the end of this year. lisa: what gives you confidence? especially since people have

been pushing out this date again and again? matthew: i don't think you want to express any -- much confidence on any month or quarter. the consumer has proven to be resilient, but unfortunately for the fed so has inflation. that was kind of our expectation as you go back to last year. it was that the labor market was strong, and therefore inflation was going to be more persistent and the fed would have to move more aggressively. i think the fed skips next week, barring a big upside surprise to cpi. i also think they hike over the next several meetings. lisa: if they go through with that kind of shift, do you expect a meaningful move up in longer-term yields, or basically people say maybe this is a sign this federal reserve is willing to accept inflation that is a 2 .something? matthew: you get this upward shift in expectations because the market interprets it as they

are losing commitment to that 2% objective. they will want to tone down that notion. even from the doves you have heard they want to skip, but they want to be clear this is not the peak of the tightening cycle. that there is likely the potential for more hikes to come. tom: we have given short shrift this week to the crew who say, look, we are going to disinflate . you have the courage to put a date on it, year end, 2024, december 2024, some kind of sub-3% inflation. how does our world change with 2.6% inflation? matthew: it is all about how you get there. we for our forecast are at 2.25%. tom: nobody is mentally pricing that in now. matthew: if it is an immaculate disinflation in the market stays where it is, that is a fantastic outcome for the economy. it is a recession that is needed

to get you there, if it is a labor market that needs to weaken, it is a different dynamic. the fed, their own forecasts have shown the need for summer session and a rise in unemployment it is clear the staff have come to that conclusion as well. we still hold that view, that they do need this economy to slow materially, the labor market to weaken, to get close to 2%. tom: he goes back to oil years ago, dynamics. i have wage growth coming down, but i have inflation screaming down to 2.x%. can we have a recession with actual real wage stability or real wage growth? matthew: i think what you will see is wages will come down materially as the market weakens. that is part of the fed's game plan. it talk about wages being a very important in put into that core services component. we think it is an important

input into rental inflation. to get back to 2% sustainably, i think you need a softer labor market, and the fed needs wage growth to come down closer to that metric, at 3%. lisa: do you think if they go again in july that the fed is done after that? matthew: i think there is still upside risks. everybody has been consistently surprised, and those surprises have been in one direction, which is inflation is stickier, labor market, stronger, consumer, a bit more resilient than anticipated. you don't want to discount the serial correlation in those surprises. could we get more? it is possible, which could push the fed to raise rates. lisa: beyond 5.5%? as we head into this midyear point and people write their outlooks, is there anything you are changing, shifting, second-guessing from the first

half that you think will be a driving theme heading into the next six months? matthew: it is the potential that this cycle takes longer to play out and that therefore the recession doesn't come by the end of this year, later. a key has been that we have pushed back the timing of rate cuts. we are in march of next year, in part because the unemployment rate takes longer to get there. i think just one important counterfactual is that if we had not had these banking stresses emerge it looked likely that the fed was going to raise rates in march. i think they would have done so in may. we would probably be 50 basis points higher now. the question is, our credit conditions tightening enough to offset that? tom: what is the counterfactual of china? what did they do? the struggles they seem to be having, how does that change the american model? matthew: certainly the global growth impulse people are expecting from china is seemingly not there as much as anticipated.

i think the real concern from an inflation perspective in the u.s. has been that not only have services elevated, we have seen core goods also bounce back. last month was all about used cars. you want to discount that, click go back, it was broad-based. it was household furnishings, it was medical goods. even in that category where we have confidence. tom: tell me you are not walking back to the office? matthew: i am. tom: it is deadly out there. lisa: do you have a mask? matthew: you guys have some in the lobby. i will grab one. i will leave one for you. tom: matt luzzetti walking across central park. what do you call the building? matthew: the deutsche bank center. [laughter] tom: very exciting. we will do something over there sometime. that is really what it has come down to, lisa. should the kids walk five blocks? i don't know.

they are healthy, but still. lisa: they are healthy and still coughing, they still come back with burning nostrils and fall on the couch and go to sleep. tom: the first time i went to beijing i was ensconced in the saint regis. they got me a car to go to the office. i'm like, i'm like matt luzzetti, i can walk. it took six hours for my brain to recover from the pollution and walk. six hours. i sat there in the office with a screaming headache. lisa: i'm going to blame that tomorrow when i come in. just taking too long to recover. tom: we will get the surveillance bentley to take you home tomorrow. that is all there is to it. green on the screen. claims, higher. stay with us. this is bloomberg. lisa m.: keeping you up-to-date with news from around the world with the first word, i'm lisa mateo. some 230 square miles of ukraine's southern region is underwater two days after the

destruction of a dam. the regional governor says almost one third of the flood zone where thousands are being evacuated is held by ukrainian forces, while the rest is in russian-occupied territory. kyiv is assessing the damage of the disaster and western leaders -- that western leaders denounced as a war crime. former chief brexit negotiator offered some insight into the post-brexit landscape for the u.k. and eu. he spoke with bloomberg. >> the concern at the king of the road, there is an economic reality. we are now in two markets. u.k. and eu. the reality is that the eu single market has 450 million consumers and citizens. that is a reality, and the u.s.,

china, india, they know this. lisa m.: u.k. prime minister met with business leaders and politicians ahead of a visit to the white house today. house speaker kevin mccarthy called off votes for the remainder of the week and sent lawmakers home. a revolt by republican hardliners halted business in the chamber for a second day. a blockade by 11 ultraconservatives heightened tensions among republicans following the speaker's backing of a compromise with the white house to avert a debt default. the speaker said he was blindsided by the revolt. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm lisa mateo. this is bloomberg. ♪ the people on our team and in our family. it can happen to the people who serve us and the people who served. the people we work late with and stay out late with.

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and, you know, taking shots at the pga and vice a versa, that is not constructive for the game. tom: henry kravis, really quite heated yesterday. a really interesting conversation with jason kelly. i will be with naseem to lead in the 10:00 hour. i tried to make it a two hour conversation, and -- but, i don't know, we will have a good conversation with naseem to lead -- nassim taleb. chaos kings, scott patterson writing this up with all of his work, and it is really extraordinary. on golf now, it would pay to talk to somebody who actually understands sport.

john garamendi is the democrat from sacramento, but far more than that he is someone at berkeley who was second team all-american in football. he is someone who had a legit football prospect with the oakland raiders. he said, no, i'm going to go over to the peace corps with the love of my life to ethiopia, and that was the end of his football career. he did so well in california politics. tenant governor and insurance commissioner. he joins us here on the combat of modern sport. i can imagine the saudi's wanting to buy the dallas cowboys, or something like it. compare your analysis of this golf transaction, regulation, and monopoly with shock of if the saudi's or someone wanted to buy the dallas cowboys. rep. garamendi: actually that kind of thing has happened in the soccer leagues of the world. the super-wealthy, some of them from the middle east, do own one

of the key soccer teams in europe. so, yes, it does happen, but this situation in golf is unparalleled. what has happened is that the leagues, the pga and european lakes, have formed a monopoly, and they do not pay american taxes. they can come into the united states, make billions, which is certainly the pga at least has $1.5 billion in annual revenue, and considers itself a charity and does not pay corporate or any taxes at all. we are going to end that piece of it. with regards to monopoly, if i wanted to be a professional golfer i have no choice now but to bend my knee to this new monopoly. if i wanted to sell golf clubs where i had a golf course, i've only got one choice. i might have to take whatever they offered to me. tom: gauge the bipartisan support. it is so different about

garamendi, is he has been in the depths as insurance commissioner in california. it is the worst job in california. explained to me how you're going to garner bipartisan support against the lobbying of the golf people, and frankly the lobbying of all, basketball, hockey, and the rest. rep. garamendi: hockey, basketball, and the rest did have the same exemption. over the years, beginning almost a decade and a half ago, those exemptions were eliminated, and they do pay taxes based on their net income. so there is only one left, and that is the pga it considers itself to be a charity, does not pay taxes on income. they are exempt from corporate taxation. we are to end that. i think we have a good shot at it. interestingly, in the 2017 republican trump tax cut, this tax exemption in the early

drafts of that will is there to be eliminated. a fellow whose initials were j.n . contacted the president or somebody in congress and said, no, you cannot do away with the tax exemption. it was removed in the final version of the tax bill. it has been floating around for a long while. the elimination of this exemption. my staff, or one of my legislative staff guys, he wakes up in the middle of the night and tries to identify the worst tax loopholes, and this was on his list. he pulled it out yesterday and said, why don't we run with this and eliminate this tax loophole? lisa: there is a larger issue here as well when it comes to u.s. relations with the middle east. with some of the areas that are trying to plow into a lot of the major sports that people really depend on, including golf. i'm wondering how much pushback you are getting from within your

own party? especially at a time when tony lincoln is meeting with nbs, trying to work out some peace deal? how much are people willing to poke the bear in this instance? rep. garamendi: he ought to do more than poke the bear. it angers me that we are forced to bend our knee to mbs, to saudi arabia, that has the worst human rights record perhaps in the world, and we know has assassinated, and then hacked up a journalist who was critical of saudi arabia. we should never ever put ourselves in the position of being subservient to anybody, and certainly not saudi arabia. just keep in mind, they have stuck the united states in the world with an increase in petroleum prices just in the last week they decided to cut their production, the result of which is america is going to wind up paying more for the fuel

we consume. at the same time this merger is going to give saudi arabia access to the american market, access to american money, and not have to pay taxes. that just really pisses me off. lisa: your point, how much you have support from other members of the congress at a time when they do not want necessarily opec-plus making another cat, they do not want a continuation of these cuts, they do not want oil prices to continue going up. how did they gain leverage at a time where might be equally angered as you, but might have these other interest as well? -- interest as well? rep. garamendi: let's put it this way, if saudi arabia thinks it can run a business in america and not pay taxes, something is wrong with that equation. that is exactly where the situation is today. we as americans ought to say,

fine. if you like this merger -- i do not -- but if you like this merger, go ahead. you are part of the system and you are going to pay taxes, and that is that. you are not a charity by any stretch of the imagination, and this loophole, this gros tax loopholes simply has to end. tom: congressman, 10 years or so ago you honored a golfer named jack nicholas. put in legislation in the house. i'm not sure how it came out, but i want you to comment on palmer, nicholas, and the sportsmanship that is out there. i saw that at oak hill a couple of weeks ago. it sounds like because of greed and money we are blowing up what we knew. what can your shop on capitol hill do to get out in front of this? rep. garamendi: well, there are

two specific issues at play here. one is the tax loophole, which my legislation would close, and this new monopoly would then have to pay corporate taxes, as with any other corporation. that raises a whole other question about american corporations that do not pay taxes, we will let that go for a while. the issue is one of competition. and what has been created here is an international monopoly on professional golf. that raises very, very serious questions of competition, or no competition. as i said, if i wanted to be a professional golfer i could have chosen to play golf in europe or in the united states, or in this new league. now i have one choice. i'm going to have to take whatever this new league offers me, and i have no negotiation opportunity. similarly, if i have a golf

course, trump's golf course, he could have gone and negotiated with two different leaks for the use of his golf course. now he is going to take whatever they offer him. he has no choice. i would expect congress to take that up, and if we don't, certainly the european union should. tom: congressman, thank you so much. the gentleman from sacramento, john garamendi. all american football as well. these guys, if they have done college sports or pro sports, they do not talk about sports the same way mortals like you indicted. -- like you and i do. you mentioned a horrific issue with washington post and saudi arabia, and that has to be a huge part of the dialogue. interesting morning. markets want to lift. there is a sort of red and green on the screen now. the 10 year yield was in substantially earlier, three

point 79%. stay with us, nassim taleb in the 10:00 hour. morning. ♪ good night! hey corporate types. would you stop calling each other rock stars? you're a rock star. you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star. hi, i'm ozwald. hello ozwald. pam, you are a rock- i wasn't going to say it. ♪♪ when i was his age, we had to be inside to watch live sports.

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jonathan: live from new york city, good morning. whipsawed by surprise rate hikes and soft economic data. equity futures right now just about positive and the count onto the open start now. announcer: everything you need to get set for the start of u.s. trading, this is bloomberg the open. with jonathan ferro. live from new york, coming up, global bond markets shaken