Bloomberg Surveillance 6/02/2022: Fighting Inflation, OPEC's Next Move

>> WE THINK JUST WE NEED TO GET AT LEAST OR PERCENT AND IT'S DIFFICULT TO DO THAT WITH PRECIPITATING A RECESSION. I THINK INFLATION HAS BECOME GIVE THE FED THE ABILITY TO NOT PROPEL THE U.S. INTO A RECESSION. >> AS FAR AS ENERGY, FOOD, INFLATION EFFECTS ALL THAT STUFF >> THIS IS BLOOMBERG SURVEILLANCE. JONATHAN: LIVE FROM NEW YORK CITY FOR OUR AUDIENCE WORLDWIDE ON THE GOOD MORNING AM A THIS IS BERG SURVEILLANCE ON TV AND -- THIS IS BLOOMBERG SURVEILLANCE ON TV AND RADIO. THERE IS A STORM COMING. TOM: JAMIE DIMON LIGHTENED IT UP AND SOME OF THAT WAS IN OUR INTERVIEW IN LONDON. JP MORGAN DOES A LOT OF FANCY WORK, A LOT OF MATH AND A LOT OF ALGEBRA AND THEY ARE LOOKING FOR HIGHER OIL PRICES. JONATHAN: THEIR CHIEF EQUITY STRATEGISTS IS STILL VERY POLISH -- BULLISH. THAT'S A HEAVY LIFT ON THE BACK HALF OF 2022. TOM: IT'S WONDERFUL TO SEE THAT DIVISION AT ANY MAJOR BANK IN ITS ALWAYS PART OF THE DEBATE AND ITS HEALTHY. IT'S BEEN SAID THE RECESSION GOING WAS WRONG. THEY ARE ADAMANT OFF OF THAT ECONOMIC DATA, THE ISM DATA. IT'S NOT THAT BAD STUFF JONATHAN: JOB OPENINGS CAME IN PRETTY HIGH LET'S TALK ABOUT CRUDE OIL, DOWN MORE THAN 6%. WE MIGHT GET MORE OUTPUT FROM RIYADH AND THE PRESIDENT MIGHT MAKE A TRIP TO SAUDI ARABIA SHORTLY. LISA: HE WILL BE GOING ON A NATO TOUR LATER THIS MONTH AND IT MIGHT INCLUDE A STOP IN SAUDI ARABIA TO INCREASE PRODUCTION. THEY ARE TALKING ABOUT HOW SAUDI ARABIA MAY CONSIDER INCREASING PRODUCTION IN RESPONSE TO A DECLINE IN OUT FROM RUSSIA. HOW MUCH DOES THIS MATTER? I THINK THIS IS ONE OF THE KEY ISSUES. HOW DO YOU TRANSLATE THAT INTO LOWER PRICES AT THE PUMP AHEAD OF THE RETURN? JONATHAN: HOW DO YOU RECONCILE YOUR FOREIGN POLICY GOALS WITH YOUR DOMESTIC TROUBLES? THE FOREIGN POLICY OBJECTIVE, THEY NEVER TALKED ABOUT IT OPENLY BUT IT'S ALMOST TWO ISOLATED AROUND PRINCE SAUDI. THEY TALKED ABOUT IN THE EARLY DAYS OF THIS ADMINISTRATION AND SECRETARY LINCOLN WOULD BE SPEAKING TO HIS COUNTERPART. FAST FORWARD INTO 2022 AND CRUDE IS HIGH AND GAS RISES ARE UP SO A BIT OF A CHANGE. LISA: HAVE WE GONE FROM THE BUYING PAN INTO THE FIRE? TRYING TO BUDDY UP WITH ANOTHER REGIME THAT HAS WASHABLE TACTICS AND HUMAN RIGHTS VIOLATIONS. THERE IS AN ISSUE OF WHAT YOU DO IN THE NEAR TERM TO STAVE OFF PAIN AND THAT SEEMS TO BE THE CALCULUS IN WASHINGTON, D.C. AND ALSO IN BERLIN. JONATHAN: WE'VE GOT A LOT TO GET THIS MORNING. LET'S START WITH THE PRICE ACTION. WHERE IS THE NASDAQ? THAT WAS JUST FOR YOU. WTI IS OVER $112. LISA: 8:30 A.M., WE GET MORE OF A READ ON THE ROUTE MARKET. OPEC-PLUS IS WHINING TO ME VIA VIDEOCONFERENCE. WILL IT LAST MORE THAN 30 MINUTES AND HOW DOES IT LEAD INTO THE PRICE OF GAS? THE AVERAGE PRICE IN THE UNITED STATES HAS CLIMBED TO NEW RECORD HIGHS DAY AFTER DAY, NEAR -- NEARLY $4.70 SO HOW QUICKLY CAN REDUCTION ROUTE PRICES TRANSLATE TO REDUCTION IN THE COST OF REFINED GOODS AND GETTING THAT CREW TRANSLATED INTO JUST GETTING THAT CRUDE TRANSLATED INTO GAS. THE JOB OPENINGS, I MORE INTERESTED IN THE FOLLOW ON TO THE JOB OPENINGS DATA WE GOT YESTERDAY. IT CAME IN A LITTLE BIT NEARLY TWO JOB OPENINGS FOR EACH UNEMPLOYED AMERICAN. WE ARE NOT SEEING THE VOLUME OF PEOPLE GETTING HIRED INCREASE ALL THAT MUCH. HARD TO TRANSLATE THIS DATA BUT IT INDICATES THIS IS AN INCREDIBLY TIGHT LABOR MARKET AND IT'S NOT LOOSENING MATERIALLY. THE PRESIDENT MET WITH HIS ADVISERS AHEAD OF THAT NATO MEETING. I WANT TO HEAR WHAT THEY SAY ABOUT SAUDI ARABIA BECAUSE THAT WILL BE THE MOST INTERESTING PART OF THIS TRIP CONSIDERING THE FACT THAT IT'S AN ABOUT-FACE FROM WASHINGTON, D.C. IN THEIR ATTITUDE TOWARD RIYADH. JONATHAN: I WILL GIVE YOU 30 SECONDS. TOM: IT'S NOT JUST THE CAMBRIDGE WAY STEP EXPLAIN THIS TO OUR AUDIENCE. JONATHAN: I'M NOT PLAYING RURAL CORRESPONDENT FOR THE NEXT FEW DAYS. YOU EXPLAIN. YOU KNOW WHAT TOM SAID? THAT'S WHERE THEY GET THE BEACH VOLLEYBALL? TOM: FOR THOSE OF YOU ON RADIO, THERE IS ALL THAT POMP AND CIRCUMSTANCE FOR THE QUEEN'S JUBILEE. JONATHAN: IS THAT THE EXTENT OF YOUR INSIGHTS? TOM: LET ME HAVE A TANG. JONATHAN: I'M SURE YOU HAD MORE THAN ONE TANG THIS MORNING. LET'S GET TO THE HEAD OF TECHNICAL AND MACRO STRATEGY. A GERMAN 10-YEAR IS MAKING A NEW HIGH FOR THE YEAR. FOR THE PEOPLE MAKING THE CONCLUSION THAT WE'VE SEEN THE HEIGHT OF INFLATION AND A PECAN YIELDS, CAN WE SEE THAT WHEN THE -- WHEN WE SEE THIS DEVELOP IN EUROPE NOW? >> WHEN WE TRAVEL AROUND AND TALK WITH CLIENTS, THE MOST CONSENSUS VIEW ON THE STREET IS THAT WE'VE REACHED THE MOMENT OF PEAK INFLATION OR PEAK YIELDS. THE ONLY PROBLEM WITH THAT IS THE MARKET IS NOT JUST THE GERMAN 10 YEAR YIELD, LOOK AT THE AUSSIE AND U.K. AND FRENCH AND ITALIAN. ACROSS THE BOARD, THE GLOBAL BOND MARKET HAS NOT BOUGHT INTO THIS IDEA OF PEAK INFLATION OR PEAK YIELDS. PEAK INFLATION IS AMOUNT PROBLEM. THAT WILL SORT ITSELF OVER TIME BUT THE REACTION OF THE MARKET IS WHAT WE CARE ABOUT, THE REACTION IS THE STORY. TOM: WHAT IS THE REACTION TO THE OPENING OF CHINA? >> I THINK YOU WILL GET ANOTHER BID IN THE COMMODITY COMPLEX. I'M NOT SURE THAT'S GREAT FOR EUROPE. IT'S A CATCH-22. WE WANT INFLATION TO COME DOWN BUT WE HAVE CHINA WITH A PMI READING IN CHINA WHICH WILL INDICATE MORE EASING. WE HAVE SEEN THE CHINESE YUAN START TO WEAKEN SO I WONDER IF IT REIGNITE SOME OF THE INFLATION FEARS. YOU HAVE CPI RUNNING IN THE LOW 80'S AND I CAN'T THINK OF ANYONE THINKS IT'S GOING TO BE HIGHER A YEAR FROM NOW. EVERYONE THINKS IT WILL BE LOWER. I DON'T THINK THE BOND MARKET IS FIND THAT STORY. LISA: WHAT IS THAT MEAN IN TERMS OF THE ALEUTIAN OR ERRORS SIDE? -- IN TERMS OF THE BULLISH OR BEARISH SIDE. >> WE'VE SEEN THE GROWTH PART OF THE MARKET UNDERPERFORMED GOING INTO THIS DRAW DOWN. I SUSPECT WHAT IT MEANS IS IT WILL CONTINUE TO UNDERPERFORM ON THE OTHERS. THERE ARE RALLIES AND GROWTH STARTS -- AND TECH. THEY GET SMALLER AND THAT PART OF THE MARKET. THE MARKET HAS SAID THIS IS NOT YOUR LEADERSHIP ANYMORE AND THAT'S THE MESSAGE WE WANT TO REACH. JONATHAN: WE ALL HEAR THE SAME VOICES IN ENERGY. WE HAVE HAD A MASSIVE MOVE THIS YEAR AND A BIG MOVE LAST YEAR, HOW ARE WE STILL TALKING ABOUT A SEGMENT THAT HAS RIPPLE LORD OVER THE LAST TWO YEARS -- THAT HAS RIP-ROARED OVER THE LAST NEW YEAR'S? >> ENERGY IS OVERBOUGHT BUT NOT OVERGROWN. 40% ABOVE THE 200 DAY MOVING AVERAGES THE MOST EXTREME READING WE HAVE SEEN 40 YEARS AND IT COULD CONSOLIDATE OR CORRECT FROM THAT STUFF IT'S 5% OF THE S&P 500 SO TO SAY IT'S OVER WHAT IS A BRIDGE TOO FAR. WE THINK ABOUT THE CULTURE OF THE MARKET OVER THE LAST DECADE WITH THE CORPORATION OF ESG, WE HAVE PUSHED INVESTORS AWAY FROM ENERGY. I DON'T KNOW HOW IT CAN BE OVER OWN. WE LOOK AT THE LARGEST ESG FUND IN THE WORLD AND ITS CORRELATION WITH S&P 500 IS .99 STUCK WHEN YOU THINK ABOUT INDEX RETURNS, THAT'S FOR SOMETHING LIKE ENERGY IS 5% OF THE S&P, I STILL MAKE IT'S UNDER OWN. JONATHAN: GREAT TO HEAR FROM YOU. TOM: I THINK IT WILL BE A PLAY AND NO ONE'S TALKING ABOUT ROTATION STUFF AS YOU MENTIONED WITH JP MORGAN, THIS IS THE RAGING RESET IN THE MIDYEAR. I'M SUGGESTING MIDYEAR STARTING 30 DAYS IN ADVANCE, JUNE 1 AND HERE WE ARE. JONATHAN: LISA: LISA: HOW MUCH IS THIS BECOMING THE BASE CASE AS THE ECONOMY IS NOT FORCING THE FED TO BE MORE AGGRESSIVE? WHAT HAPPENED OFF THE BACK OF THAT DATA YESTERDAY? TOM: 306 ON THE 30 YEAR BOND. 2.92%. 500 PEOPLE USED TO PARK THEIR CARS ON THE YIELD. IT WAS A GREAT PERKINS IN 1997 SO WE NEED GREAT PERKS ON BLOOMBERG SURVEILLANCE. I WILL WAVE US OUT. THIS IS EMOTIONAL. RITIKA: KEEPING YOU UP-TO-DATE WITH NEWS AROUND THE WORLD. THE PRICE OF OIL FELL AFTER A REPORT THAT SAUDI ARABIA WILL PUMP MORE CRUDE STEP THEY HAVE INDICATED TO WESTERN ALLIES THAT THEY SHOULD RUSSIAN OUTPUT DECLINES FINANCIALLY. OPEC COALITION IS MEETING TODAY DAY. PRESIDENT BYNUM IS LIKELY TO VISIT SAUDI ARABIA THIS MONTH AS SOARING GASOLINE RISES ARE AFFECTING HIM POLITICALLY. HE WOULD MEET WITH THE COUNTRIES AFFECTED RULER. -- EFFECTIVE RULER. PRESIDENT BIDEN HAS BLAMED HIM FOR THE MURDER OF THE WASHINGTON POST JOURNALIST. FACEBOOK IS ENJOYING MULTIBILLION-DOLLAR ADVERTISING. THE CHIEF OPERATING OFFICER IS STEPPING DOWN FROM ADVERTISING. SHE WAS SUPPOSED TO REIN IN LARGE-SCALE MISINFORMATION. RUSSIA SAYS IT'S READY TO SETTLE CLAIMS ON BONDS AFTER MISSING A $1.9 MILLION INTEREST NAME AND -- $1.9 MILLION INTEREST PAYMENT. A FAILURE TO PAY YOU POINT APPEARED ON CREDIT DEFAULT SWAPS. IN TULSA, OKLAHOMA, A GUNMAN KILLED FOUR PEOPLE AT A MEDICAL OLD INCOME OF THE LATEST IN A SERIES OF MASS SHOOTINGS IN THE U.S. THE GUNMAN APPARENTLY KILLED HIMSELF BUT IT'S UNCLEAR WHAT LED TO THE ATTACK AND POLICE SAID THEY WERE ON THE SCENE THREE MINUTES AFTER GETTING THE REPORT. >> GETS HURRICANE. IT'S KIND OF SUNNY AND THINGS ARE DOING FINE AND EVERYONE THINKS WE CAN HANDLE THIS AND THAT HURRICANE IS RIGHT OUT THERE DOWN THE ROAD COMING OUR WAY, WE JUST DON'T KNOW IF IT'S SUPERSTORM SANDY. JONATHAN: JAMIE DIMON MAKING SOME HEADLINES. WHAT DID YOU MAKE OF THAT YESTERDAY? TOM: MAGNITUDE IS THE ISSUE AND ECONOMICS IS A GREAT DIVIDE WHEN THEY START TALKING MAGNITUDE STOP HE GIVES YOU THE MAGNITUDE OF THE HURT AND BUT ONE OF THE ISSUES FOR CHAIRMAN POWELL IS YOU DON'T HAVE A HURRICANE AND WHAT YOU GET IS A LONGER-TERM INFLATION STOP IF YOU DON'T GET THE CATHARTIC RECESSION, WE GET INFLATION WHICH CRUSHES THE MIDDLE CLASS. JONATHAN: WHY DON'T WE SAY THERE ARE STORM CLOUDS BREWING? TOM: I GIVE GREAT CREDIT TO LISA FOR INTERVIEWING BRIAN MOYNIHAN TO TALK ABOUT THE BANKING BUSINESS. THE CEOS WANT TO GO MACRO. JONATHAN: I THINK THAT WAS A SUBTLE DIG. JAMIE DIMON CONCLUDED ABOUT WHAT HE'S DOING AT THE BANK AND THE CHALLENGES THEY FACE AND MAYBE LINING UP RISK WITH THE BALANCE SHEET. LISA: LET'S BE HONEST, JAMIE DIMON USUALLY COMES UP AS A STATESMAN OR TRYING TO BE A FIGUREHEAD RATHER THAN A LEADER OF A BANK. IT DOESN'T INDICATE WHERE HIS ROLE SHOULD EVOLVE. PEOPLE WOULD LIKE TO SEE SOME PREDECESSORS,. TOM: LISA TALKS ABOUT A FIGUREHEAD SO LET'S GO TO THE JUBILEE IN LONDON. IN THE FRONT ROW, SEPARATE FROM THE ROYALS IS THE PRIME MINISTER. IS HE ON THE EDGE OF TERESA MAE AND THREATENS? JONATHAN: YOU WILL BE THE MOST TO MAKE ME THE ROYAL CORRESPONDENT. TOM: IS HIS JOB REALLY THREATENS? JONATHAN: IT'S UP TO HIM WHETHER HE WANTS TO RESIGN OR NOT. SOME PEOPLE WOULD LIKE TO SEE HIM STEP DOWN AND OTHERS STILL SUPPORT HIM. LISA: TOM IS TRYING TO GET YOU TO COVER THE JUBILEE? JONATHAN: WHERE DO YOU WANT TO TAKE THIS? TOM: THE PRESIDENT IS RIVETED TO THE JUBILEE AS WELL BUT THERE IS NO JUBILEE AT THE WHITE HOUSE. WHAT WE NEED TO TALK ABOUT THURSDAY? DOES HE NEED TO SHAKEUP THE WHITE HOUSE ON THE SUNDAY TALK SHOWS? >> THERE HAS BEEN MURMURS ABOUT WHEN THERE MIGHT BE A WHITE HOUSE STAFF SHAKEUP FOR A WHILE NOW STEP YOU SEE THE WHITE HOUSE IS RESPONDING FRANTICALLY TO A SERIES OF CRISES. THE PRESSURE HE HAS FACED LACK OF ANSWERS FROM THE WHITE HOUSE ON WHY, THE PRESIDENT DIDN'T KNOW MORE WHEN THE FDA SHOULD HAVE TOLD MORE ABOUT THE BABY FORMULA SHORTAGE AND ALL OF THAT SEEMS TO LEAD TO THOSE QUESTIONS. I'M NOT ENTIRELY SURE AT WHAT POINT THE PRESSURE BUILDS ENOUGH SO THAT SOMEBODY'S GOT TO GO. AT THIS POINT IN THE PRESIDENCY, IT'S BEEN DOMINATED BY RESPONSES RATHER THAN FULFILLING HIS VISION AND RESPONDING TO CRISES. HE HAS NOT EXPRESSED FRUSTRATION WITH ANYBODY OUT RIGHT IN PARTICULAR. LISA: HOW UNUSUAL IS THE FEELING THAT THIS PRESIDENT, THIS ADMINISTRATION IS CONSTANTLY BEHIND THE EIGHT BALL WHETHER IT'S INFANT FORMULA OR GAS PRICES OR INFLATION AND WHETHER IT'S HOW THINGS ARE DEVELOPING ON THE LABOR FRONT? HOW MUCH DO YOU GET THE SENSE THAT THIS -- THAT THIS IS A UNIQUELY BEHIND WHITE HOUSE? >> I THINK IT'S NOT THAT UNUSUAL FOR THE NEWS CYCLE SURROUNDING THE PRESIDENT TO BE RESPONDING TO CRISES. THAT'S ESPECIALLY IN THE ENVIRONMENT IN WASHINGTON RIGHT NOW. EVEN A FAIRLY MINOR CRISIS COULD BE RIGHT -- JACKED UP INTO SOMETHING BIGGER INTO THE MIDTERMS. THE SET OF CIRCUMSTANCES RIGHT NOW ARE PRETTY EXTREME. OBVIOUSLY, THERE'S NOT A LOT OF HISTORY TO GO BY WITH HOW YOU RESPOND TO THE OPENING UP DURING A PANDEMIC STEP IT'S A DIFFICULT SET OF CERTAIN DANCES IT'S NOT UNHEARD OF FOR THE PRESIDENTIAL NEWS CYCLE IN RECENT HISTORY TO BE DOMINATED BY PRETTY NEGATIVE NEWS AND STRUGGLING TO RESPOND TO CRISES. LISA: THERE IS THE ISSUE OF WHETHER THE PRESIDENT WILL HEAD TO SAUDI ARABIA TO HAVE COMMUNICATION AND A BETTER RELATIONSHIP TO INDUCE MORE OIL -- MORE OIL PRODUCTION FROM THE REGION. HOW IS THAT LAYING IN WASHINGTON? >> I'M NOT SURE HOW MUCH PUSHBACK THERE IS GOING TO BE FROM DEMOCRATS IF THERE IS AN EASING OF THE RELATIONS BEEN BEEN JUST BETWEEN THE PRESIDENT AND SAUDI ARABIA. THERE IS SOME LEFTOVER ANGST OVER THE KILLING OF JAMAL KHASHOGGI IN A NUMBER OF PEOPLE WHO SUPPORTED THE PRESIDENT'S INITIAL VIEW THAT HE WOULD ONLY DIRECTLY COMMUNICATE WITH THE CROWN PRINCE. IT'S NOT AN ISSUE THAT LAWMAKERS ARE RINGING UP OVER AND OVER AND. IT'S A BIT SAD TO SAY BUT FOR YEARS HAVING PASSED, IT'S NOT SOMETHING WHERE THE POLITICAL PRESSURE HAS CONTINUED SO MUCH THAT YOU EXPECT A MASSIVE AMOUNT OF PUSHBACK TOWARD THAT. THERE MAY BE SKEPTICISM BUT WE ARE NOT YOUR BUNCH OF PREEMPTIVE PUSHBACK FROM ALLIES OF THE PRESIDENT RIGHT NOW. JONATHAN: GREAT TO CATCH UP STEP CRUDE IS LOWER THIS MORNING BY 2.5%. TOM: BRENT CRUDE IS 100 $13 AND WE WILL SEE WHERE THAT GOES. WE HAVE NOT TALKED ENOUGH ABOUT THE RESILIENT DOLLARS SO LET'S BRING IT TO FX. IT'S BEEN EIGHT THE RATER BUT I'M WATCHING DEEPEST MARKET TO SEE SOME OF THE TONE AS WE LOOK AT THE JOBS REPORT. JONATHAN: LOOKING AHEAD TO NEXT WEEK, LOOKING AT YIELDS IN GERMANY, NEW HIGHS FOR THE YEAR THIS MORNING? LISA: WE TAKE A LOOK AT WHAT PEOPLE ARE GETTING OUT OF THE ARE SEEING THE LIKELIHOOD OF IF THE BASIS POINT RATE HIKE AS SOON AS SEPTEMBER IN EUROPE STEP THIS IS AN UNHEARD-OF REALITY. EVEN MEMBERS OF THE ECB ARE CONSIDERING THIS ON THE HEELS OF WHAT WE SAW FROM CANADA YESTERDAY STOP HOW CAN YOU NOT LIKE THE CANADIANS? THEY SET THE TONE. TOM: THEY NEED DEFENSE AND THE POWER PLAY WHICH IS JUST NOT THERE. JONATHAN: WHAT ARE YOU TALKING ABOUT? TOM: HERE WE GO. THE BALCONY SEATS ARE COMING UP HERE. JONATHAN: NO REAL DRAMA THIS MORNING WITH YOU CHOOSE JUST ABOUT POSITIVE ON THE S&P 500 AND THE NASDAQ. JP MORGAN THINGS WE CAN RECOVER THE YEAR TO DATE LOSSES ON THE S&P 500 WHICH IS 17% SO YOU CAN EXPECT QUITE A RALLY IF YOU BELIEVE THAT BY THE END OF THE YEAR. ONE INGREDIENT FOR THAT RALLY'S STIMULUS OUT OF CHINA. TOM: WE MENTIONED THAT EARLIER, I 100% AGREE. I THINK THAT IS THE PLAN ON CHINA REOPENING. IT'S NOT THAT GLOOMY OUT THERE WITH THE DOW DOWN 10%. LOOK AT THE DAMAGE AND THE NASDAQ. JONATHAN: A BIG MOVE ON THE NASDAQ LAST WEEK. THEY THINK THAT'S IS -- THAT'S A TEMPLATE FOR THE REST OF THE YEAR STEP I'VE GOT A LOT OF MESSAGES YESTERDAY. TOM: IT'S HEALTHY. I GOT QUESTIONS ABOUT THE JUBILEE. JONATHAN: WE WILL TALK ABOUT THE BOND MARKET IN GERMANY WITH YIELDS MAKING NEW HIGHS FOR THE YEAR. 10 YEARS BACK TO $2.90 AND ALL OF A SUDDEN WE ARE TALKING ABOUT 3% AGAIN. A LOT OF IT IS COMING BACK OFF OF THE IDEA THAT THIS FEDERAL RESERVE HAS MORE WORK TO DO. TOM: WITH THE JUBILEE, WHERE HAVING A ROYAL TAKE THIS MORNING. JONATHAN: ENJOY YOURSELF, I WILL GET TO CRUDE OIL. THE FINANCIAL TIME FOR 40 THAT SAUDI ARABIA COULD GETTING -- COULD BE GETTING READY TO PUMP MORE CRUDE OIL. MAYBE THIS PRESIDENT IS THINKING ABOUT A VISIT TO RIYADH LATER THIS MONTH. IT'S PERHAPS A LOOSENING OF THE COMMODITY MARKET. TOM: ONE ANALYST IS LOOKING FOR A GREAT BARGAIN BETWEEN MR. BIDEN AND THE ROYAL FAMILY IN SAUDI ARABIA STEP SENIOR ECONOMIST AT WELLS FARGO. LET ME TALK ABOUT FULLY EMPLOYED AMERICA. WHICH AMERICA IS FULLY EMPLOYED? >> WHEN YOU LOOK AT WHAT PART OF AMERICA'S FULLY EMPLOYED, THE JOB DEMAND WE ARE SEEING IS BROUGHT BASED. WE SEE IT ACROSS VARIOUS SECTORS WHETHER IS THE PROFESSIONAL SERVICES AND IN TERMS OF SOME OF THE LOWER PAYING SERVICE SECTORS WHERE WE HAVE SEEN THE HOURS GOT AN OVERALL, WE LOOK AT THE UNEMPLOYMENT RATE WHICH IS BROADER AND INCLUDES THOSE PART-TIME TIME FOR ECONOMIC REASONS. THAT IS NEAR RECORD LOWS AS WELL SO BY AND LARGE, I THINK YOU ARE SEEING A TIGHT LABOR MARKET RIGHT NOW. TOM: I'M GETTING TOLD BY PEOPLE THAT THE CHAIRMAN OF THE RESERVE ONCE THE UNEMPLOYMENT RATE TO GO UP. WHO IN AMERICA SHOULD LOSE THEIR JOB SO THE UNEMPLOYMENT RATE GOES UP? >> THAT'S WHY IT'S POLITICALLY SENSITIVE AND WIFE FED OFFICIALS WILL NEVER OUT AND SAY IT. THEY DO NEED THE LABOR MARKET TO COOL AND THAT WILL PROBABLY COOL THE UNEMPLOYMENT RATE AND COOL SOME OF THE INFLATION PRESSURES. WE WILL GET AN UPDATE ON LABOR SERVICE TRENDS. IT WILL EAT -- EITHER BESTIE COMPRESSIONS AND MARGINS AND THE NET INFLATION IS AFFECTED BY THE LABOR MARKET STUFF THEY CAN IMPACT THE LABOR PORTION OF INFLATION. LISA: WHICH ASPECT OF THE LABOR REPORT WILL BE MOST IMPORTANT TOMORROW? >> I THINK A LOT OF IT WILL BE FOCUSED ON PARTICIPATION. THE HEADLINE MATTERS IN TERMS OF HOW MANY JOBS WE ARE ADDING IN WITH THE CASES RELATIVE TO AREAS LIKE BUT SO MUCH OF THE JOB OUTLOOK AND HOW TIGHT THIS LABOR MARKET IS AND HOW MUCH TIGHTER IT COULD GET COMES DOWN TO WHAT WE SEE ON THE SUPPLY FRONT STOP WE SAW A STEP BACK AND PARTICIPATION LAST MONTH. WE EXPECT PARTICIPATION TO TREND HIGHER AS SOME GROUPS HAVE BEEN HOLDING BACK WORKERS. AS THINGS CONTINUE TO EASE AND SOME OF THE FINANCIALS GROW, I THINK WE FEEL THE PRIME PARTICIPATION RATE HAS RECOVERED WHITE A BIT BUT THERE IS QUESTION HOW MUCH FURTHER THAT COULD GO AND HOW MUCH SLACK THERE IS LEFT ON THE FED TO ALLEVIATE SOME OF THE CURRENT TIGHTNESS. LISA: LAST, PEOPLE WERE TALKING -- ABOUT A POTENTIAL CAUSE IN FED RIGHT SINCE IT -- BUT -- FED RATES IN SEPTEMBER. INFLATION IS CONTINUING TO BE SUSTAINED BUT INCREASING PARTICULARLY IN THE SERVICE SECTOR. HOW DO YOU VIEW THE FED ACTION IN RESPONSE TO THIS ON THE LIKELIHOOD OF A FED PAUSE LATER THIS YEAR? >> I THINK THE LIKELIHOOD OF THE BED PAUSE IS VERY LOW. LOOK AT WHAT WE ARE SEEING OUT OF THE INFLATION IN THE LABOR MARKET STUFF THOSE ARE STILL RED HOT AND I THINK WE'VE SEEN OFFICIALS AGREE ON THE FACT THAT THEY WON'T BE ABLE TO EASE OFF THE BRAKES UNTIL THEY SEEK INFLATION REDUCE IN A DEFINITIVE MANNER AND I DON'T THINK WE WILL SEE THAT UNTIL LATE THIS YEAR. I THINK WE WILL SEE HEADLINE CPA'S TALK AROUND 8% THROUGH OCTOBER WHICH MEANS THE FED WON'T DO THAT TILL NOVEMBER. TALK OF THE FED PAUSING I THINK IS PREMATURE. JONATHAN: THE IDEA OF SEEING INFLATION COME DOWN IN A DEFINITIVE MANNER, WHAT IS THE NUMBER BEHIND THAT? DO WE UNDERSTAND THE THRESHOLD? >> THEY HAVEN'T TOLD US AND IT'S GOING TO BE DRIVEN IN PART BY COMPOSITION BUT IT WILL MATTER WHAT'S HAPPENING WITH THE CORE. IF IT'S ELEVATED TO THE POINT OF ENERGY AND FOOD, THEN I THINK IF THEY ARE SEEING THE COURT DECELERATE, THEY MIGHT FEEL BETTER ABOUT A SLOW DOWN. I DON'T THINK IT'S ANY ONE PARTICULAR NUMBER THEY HAVE TO SEE. I THINK IT'S GOING MORE ON A TREND AND NEAR THE 8% RATE WE ARE STUCK AT. JONATHAN: THIS IS PRETTY VAGUE IN THE CALLS ABOUT FED PAUSE, WHAT IS BEHIND THEM? I THINK IT WAS RAPHAEL BOSTIC LAST WEEK THAT MADE THE POINT THAT MAYBE THEY WILL HAVE A PAUSE. HE HAD LIMITED INTEREST IN THAT. TOM: IT'S ALL DATA DEPENDENT. YOU DO THE CALENDAR ON INFLATION WERE WORDS AND THAT'S THE MAJOR THING HERE STOP THE JOBS REPORT AS PART OF THE DUAL MANDATE OF THE FED AND THEY ARE MASSIVELY DATA DEPENDENT. WE WERE TALKING ABOUT JACKSON HOLE YESTERDAY THINKING THAT SOMEWHERE WE NEED TO BE SO COULD THAT BE A BIG MOMENT FOR THIS FED? >> JACKSON HOLE ALWAYS HAS A LOT OF ATTENTION GIVEN HOW QUICKLY THINGS ARE MOVING WITH THE MARKET AND THE ECONOMY AND FED POLICY. HE COULD BE A FORUM FOR ANOTHER BIG INDICATION OF WHERE THE FED GOES. WHEN WE LOOK AT WHERE WE WILL BE IN AUGUST, I WE WILL STILL BE DEALING WITH WHAT WE HAVE TODAY STEP WE ARE SEEING AN ELEGANT A DEGREE OVEN NATION AND AN OVERLY TIGHT LABOR MARKETS ARE NOT SURE HOW MUCH OF IT SHIFT IN FED TONE THERE WILL BE. A LOT COULD CHANGE IN THERE IS LIKELY TO BE A LOT OF FOCUS IN AT LEAST SOME GUIDANCE ON WHERE THE FED COULD GO BUT I DON'T THINK THE CIRCUMSTANCES WILL BE ALL THAT DIFFERENT STEP JONATHAN: THANK YOU. LISA: A LOT OF PEOPLE AGREE WITH HER BUT YOU ARE NOT NECESSARILY SEEING THIS IN THE MARKET AND THERE IS A PAUSE THAT PEOPLE HAVE ASKED ARIANS. HOW MUCH CAN WE GET TO THE AGGRESSION WHERE THE FED IS SAYING THEY WILL HAVE THIS AND WHAT DOES THE DATA CONFIRM? JONATHAN: THE FORMER NEW YORK PRESIDENT SAID I WOULD NOT PUT TOO MUCH STOCK ON IT. HE SAID THE FED WILL HAVE TO PUSH BEYOND THE FEDERAL FUNDS RATE. TOM: SOME SERIOUS CLOUT THERE. ONE OF THE BIG DIFFERENCES WITH BILL DUDLEY IS HE HAS GONE THROUGH THE PRESSURE OF FORECASTING. THERE IS A CERTAIN HUMILITY TO WHAT HE DOES RATHER THAN TOSSING OUT MEDIA FRIENDLY STATEMENTS. WE GO TO JACKSON HOLE AND WE ARE WORKING ON IT NOW AND WE WILL SEE WHAT HAPPENS. YOU ARE GOING FOR TAMMY LAMA BOOTS BUT YOU SHOULD GO FOR THE LEVIATHAN -- TONY LAMA. JONATHAN: DO YOU WANT TO EXPLAIN WHY I NEED THESE SHOES? LISA: HE'S CRITICIZING YOUR WARDROBE. TOM: YOU CAN DO A FULL ENGLISH IN LONDON STUCK JONATHAN: OK, I'M NEVER GOING TO FORGET LISA SAYING MUSH. DO YOU WANT TO TAKE IT BACK ON THIS JUBILEE CELEBRATION? LISA: I DON'T WANT TO TAKE THAT BACK, IT WAS REALLY GOOD. PEOPLE TALK ABOUT AVOCADO TOAST IN THE UNITED STATES. TOM: ACV MILAN TAKEN OUT BY REDBIRD AND THIS COMPANY DOESN'T BY A MAJORITY, THEY ARE GOOD AT GOING IN AND BUYING A HUNK. THEY'VE GOT THE FED WEIGHT LINKAGES WELL BUT I WONDER IF THIS IS THE FUTURE OF'S WARTS. JONATHAN: A SHOUT OUT TO ELLIOTT MANAGEMENT, WOULD THOUGHT THAT THERE HEDGE FUND WOULD END UP OWNING A FOOTBALL CLUB AND IT HELPED TURN THE TEAM. HERE IS A TWEET FOR YOU. WE DO IT JUST FOR YOU. A LITTLE MORE FOR YOU IN THE NEXT SEGMENT. AND THE SEGMENT AFTER THAT AND THE ONE AFTER THAT. WHERE IS THE LOVE? TOM: YOU HAVE TO DO IS SHOW AND IN ANY GIVEN SHOW, 42% OF THE PEOPLE HAVE TO HATE YOU. JONATHAN: THIS IS BLOOMBERG. ♪ RITIKA: KEEPING YOU UP-TO-DATE WITH NEWS AROUND THE WORLD, THE PRICE OF OIL IS FALLING TODAY FOLLOWING EVERY OR THAT SAUDI ARABIA HAS INDICATED THEY WILL PUMP MORE CRUDE OIL SHOULD RUSSIAN OUTPUT DECLINE STEP IS DUE TO AN INCREASE IN SANCTIONS AND PRESIDENT BIDEN IS LIKELY TO VISIT SAUDI ARABIA THIS MONTH. SARIN GAS PRICES ARE HURTING THE PRESIDENT POLITICALLY. CHINA IS FACING GROWING PRESSURE TO HELP CASH-STRAPPED PROPERTY OWNERS. THEY HAVE NOT BEEN LIVING TO -- LEAD LENDING TO THE INDUSTRY. IN VIRGINIA, A JURY SIDED WITH ACTOR JOHNNY DEPP IN HIS LAWSUIT AGAINST HIS EX-WIFE. THEY AFFORDED HIM $10 MILLION AMID ALLEGATIONS ABOUT HIM ABUSING HER. THE JURY FOUND THAT AMBER HEARD WAS DE FAMED BY ONE OF JOHNNY DEPP'S LAWYER AND AWARDED HER $2 MILLION. GEMINI TRUST IS CUTTING 10% OF ITS STAFF .GLOBAL NEWS, 24 HOURS BLAME THE JOB CUTS AND WHAT THEY CALL CRYPTO. IT RAISED $400 MILLION IN VALUE THE COMPANY IS 7.1 GLOBAL NEWS, BILLION DOLLARS. 24 HOURS A DAY AND ON BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. THIS IS BLOOMBERG. >> AS WE GET TANGIBLE EVIDENCE THAT INFLATION IS RETREATING, WE CAN LOOK AT REDUCING IN THE FUTURE YEARS, MAYBE LATE 2023 OR 2024. JONATHAN: THE ST. LOUIS FED PRESIDENT, THE IDEA THAT WE COULD REDUCING THE LESSEE RATE IN 2023, THAT'S NEXT YEAR. TOM: DEUTSCHE BANK COMES OUT WITH A RECESSION CALL AND I WILL GIVE THEM SOME SLACK ON THAT. WE'VE GOT THE FED PRESIDENT DOING THE PARLOR GAME OUT A YEAR AND A HALF. AT LEAST I CAN SAY THAT'S ORIGINAL. JONATHAN: IT'S ORIGINAL TO TALK ABOUT BRINGING DOWN INFLATION. AND PERHAPS DO THAT BY THE END OF THIS YEAR AND TALK ABOUT INTEREST RATES NEXT YEAR. SHOULD THAT BE PART OF THE CONVERSATION? TOM: WE HAD TO MOVE BEYOND SMOKE RINGS AND THE NARROW MUNICATION STRATEGY OF ALAN GREENSPAN STEP TO ME, IT'S OUT OF CONTROL. LET'S GO TO LONDON AND PROFESSOR NORMAN WILL JOIN US BUT ON RADIO, YOU NEED SOME PAGEANTRY STOP THEY ARE TROOPING BACK AND FORTH ON THE BEACH VOLLEYBALL COURT OF 2012. 240 HORSES ARE INVOLVED. THEY ABSOLUTELY NAILED THAT SHOT STEP 14 OF THE LADS ARE FROM COVENTRY, GROWING UP WITH JONATHAN FERRO. JULIE NORMAN JOINS US NOW AND WE WILL DO AN EXPLANATION STEP HOW DOES A JUBILEE FIT INTO THE TOTAL POLITICAL CHAOS I READ EVERY DAY OF THE UNITED KINGDOM? >> I WOULD SAY THERE IS A SENSE OF RESPITE THIS WEEKEND FROM THE POLITICAL TALK THAT'S BEEN PLAGUING THE MAJOR PARTIES. WE HAVE HEARD A LOT ABOUT U.S. INFLATION BUT U.K. INFLATION IS UP ABOUT 9% BUT IS NOT COUPLED BY GROWTH. PEOPLE AROUND LONDON HAVE BEEN FEELING THE POLITICAL STRIFE AND ITS TWO YEARS OF LOCKDOWN AND COVID SO I THINK THIS WEEKEND, PEOPLE ARE READY TO CELEBRATE. TOM: LET ME SEGUE TO WHAT YOU JUST SAID WHICH IS THE CITY FOCUS OF OUR MODERN TIMES. EVERYTHING IS ABOUT LONDON PROSPERITY AND EVERYONE ELSE IS FLAT ON THEIR BACK AND EVERYTHING IS ABOUT PARIS PROSPERITY AND EVERYONE IS FLAT ON THEIR BACK STOP THAT'S MODERN POLITICAL ECONOMICS, THE STRENGTH OF THE CITY, ISN'T IT? >> IT IS TO A CERTAIN EXTENT AND I HAVE SEEN THAT IN THE U.K. STEP SIX OUT OF THE EIGHT AREAS HAVE NEGATIVE GROWTH. IN MOST OF THE COUNTRY, REALITY IS DIFFERENT THAN IN THE CAPITAL. I THINK THAT IS UNDERAPPRECIATED BY A LOT OF LITTLE PARTIES AS WELL AS US IN ACADEMIA. WE SEE IT IN THE U.S. AND HERE AND MANY OTHER PARTS OF THE WORLD. JONATHAN: WHAT ARE THE POLITICAL LESSONS IN THE U.K. AS FAR AS POLICY? THE LINES HAVE BLURRED BETWEEN LEFT AND RIGHT STEP THE OPPOSITION IS ACCUSING THE CONSERVATIVES OF BORROWING THEIR OWN POLICIES, WHAT DO YOU MAKE OF THAT? >> IS INTERESTING BECAUSE THERE IS A BIT MORE COST SPILLOVER THAN EVEN IN THE U.S.. MANY AMERICANS WOULD LOOK MORE PROGRESSIVE AT TIMES. IT'S A SITUATION WHERE I THINK YOU HAVE A WEAK OPPOSITION AND LABOR HAS NOT BEEN ABLE TO REORIENT THEMSELVES AROUND ANY KIND OF STRONG LEADERSHIP. IT'S CREATED A SYSTEM WHERE TO RELATIVELY MODERATE PARTIES ARE IN POWER AND NOT A LOT OF PROGRESS. THERE IS MORE CALLS FOR BORIS JOHNSON TO STEP ASIDE FROM HIS OWN PARTY MORE THAN ANYWHERE ELSE. IN THE UNITED STATES, THERE'S MORE OF THE TWO-PARTY BACK AND FORTH BUT NOT AS MUCH WITHIN. LISA: HOW MUCH HAS THE U.K. SET THE TONE SO WHEN WILL WE SEE SOMETHING SIMILAR IN THE U.S.? >> THERE HAS BEEN EFFORTS THAT HAVE BEEN PUT IN PLACE IN THE U.K. EVEN UNDER THE CONSERVATIVE GOVERNMENT SINCE THE START OF COVID THAT WE WOULD NOT HAVE SEEN THIS DECOUPLING IN THE UNITED STATES BECAUSE OF THE EXPECTATIONS HERE. EVEN IF THE POLICIES HERE WERE, I THINK IT WOULD BE RISKY AND CREATE PRESSURE. TOM: NOW JONATHAN FERRO, WITH GREAT RESPECT, SHOULD THE QUEEN PAY A WINDFALL TAX? JONATHAN: WHAT ARE YOU SUGGESTING THAT SHOULD LOOK LIKE? TOM: I THINK IT'S BEEN UNDERPLAYED FOR DECADES AND DECADES, THE ACCUMULATION OF WEALTH OVER THE YEARS, NOT OVERTLY BUT JUST THE FACT THAT THEY OWN HALF OF THE GROUND. WHAT PORTION OF HEATHROW DO THEY OWN? SHOULD THEY BE PAYING A WINDFALL TAX IN TRYING TIMES FOR THE UNITED KINGDOM? PLEASE. >> I'M NOT SURE ABOUT THAT ONE. I THINK THE QUEEN WILL ENJOY HER WEEKEND. IN TERMS OF THE TAX SYSTEM, THERE ARE THANKS THEY CAN PUSH HERE AND THAT PEOPLE IN THE U.K. EXPECT AND IT'S SOMETHING THAT IN THE U.S. WOULD PROBABLY NOT FLY AT THE SAME LEVEL. JONATHAN: VERY DIPLOMATIC, THANK YOU. I WENT THROUGH THE POLLS THIS MORNING, SHOULD WE CONTINUE TO HAVE A MONARCHY AND 61% SAID YES BUT IF YOU GO BY AGE GROUP, 65 PLUS, 81%. IF YOU GO TO 18-24 YEARS OLD, IT'S AS LOW AS 31% AND THAT'S WITH THE FUTURE LOOKS LIKE. TOM: I AM FASCINATED BY IT BUT PART OF THE MATTER IS, WE ARE THE COLONIES. LISA: YES, CORRECT. WHERE AM I SUPPOSED TO GO WITH THAT? I DON'T KNOW ANYTHING ABOUT THE JUBILEE. TOM: CAN WE GET MORE BEEF EATERS IN THE TANG? LISA: I DID NOT PUT IT IN MY BRIEF. I THOUGHT ABOUT IT. JONATHAN: IT'S A DISTRACTION IN FUTURES LOOK LIKE THIS ON THE S&P 500. TOM: JONATHAN: CRUDE IS UP INTO REPORTS OUT TODAY AND ONE SUGGESTING THAT THE PRESIDENT COULD VISIT RIYADH LATER THIS MONTH STEP IT SUGGESTS WE COULD GET HIGHER OIL OUTPUT OUT OF SAUDI ARABIA. THAT'S PLAYING ON THE CRUDE MARKET THIS MORNING. TOM: IN 17 MINUTES, CHRISTIAN MALIK WILL JOIN US TO FRAME OUT HOW COMMODITIES AND HYDROCARBONS PLAY INTO THE STRESS. JONATHAN: YOU HAVE TO ASK HIM IF THE HURRICANE IS COMING STEP TOM: YES, I WOULD ALSO WANT TO KNOW IF HE WILL CELEBRATE THE JUBILEE. JONATHAN: FUTURES UP 6/10 OF 1%. A NICE MORNING AGAIN. FROM NEW YORK CITY, THIS IS BLOOMBERG. >> I THINK THE FED IS VERY OPTIMISTIC THEY WILL SEE LOWER LEVELS OF INFLATION, BUT THEY WILL NOT SEE 2% ANYTIME SOON. >> I THINK WE NEED TO AT LEAST GET TO 4%, AND THAT IS THE PROBLEM. IT IS DIFFICULT TO DO THAT WITHOUT PRECIPITATING A RECESSION. >> I DO THINK INFLATION HAS PEAKED. THAT WILL GIVE THE FED THE ABILITY TO NOT TIGHTEN INTO A RECESSION. >> INFLATION HAS NOT PEAKED, EVEN THE CORE LEVEL. INFLATION HAS NOT PEAKED. >> THIS IS "BLOOMBERG SURVEILLANCE" WITH TOM KEENE, JONATHAN FERRO, AND LISA ABRAMOWICZ. JONATHAN: LIVE FROM NEW YORK CITY FOR OUR AUDIENCE WORLDWIDE, GOOD MORNING. THIS IS "BLOOMBERG SURVEILLANCE ," LIVE ON TV AND RADIO. ALONGSIDE TOM KEENE AND LISA ABRAMOWICZ, I'M JONATHAN FERRO. EQUITY FUTURES UP 0.5% ON THE S&P. MORE DATA STILL TO COME STATESIDE, AND THE DATA SO FAR, SO GOOD. TOM: IT IS GOING TO BE INTERESTING ON CLAIMS AND ON JOBS DATA TOMORROW, AND MAYBE YOU GET A REAFFIRMATION OF RECESSION. MAYBE NOT. THE GLOOM CREW IS FLAT OUT WRONG. THE FED IS FIGHTING THE LAST WAR. JONATHAN: YOU SAW THE REACTION IN THE MARKET. YIELDS HIGHER, TREASURIES LOWER. THE CONCLUSION, THE FED HAS MORE WORK TO DO. TOM: DOLLAR RESILIENT AS WELL. HAVE WE BROKEN THROUGH? NO. IS THERE ANY DRAMA AND THE DATA CHECK THIS MORNING? NO. BUT WE HAVE A REAL REVERSAL IN THE GLOOM. JONATHAN: IN WTI AND BRENT, WE CAME SO CLOSE TO ONE JUNTA $20 IN WTI -- TO $120 ON WTI. LISA: A DECLINE IN OUTPUT FROM RUSSIA. HOW DO YOU GAUGE THE TIME -- GAUGE THE DECLINE GIVEN THE FACT THAT A LOT OF THEIR OIL IS FLOATING ON SHIPS TO CHINA RIGHT NOW? AT WHAT POINT IS THIS WILLINGNESS A TIT-FOR-TAT WITH THE U.S. GOVERNMENT? HOW MUCH DOES THIS DEPEND ON PRESIDENT BIDEN HEADING TO RIYADH TO MAKE PEACE WITH THE LEADER OF SAUDI ARABIA? JONATHAN: HOW MUCH DO SOME OF THESE OIL CALLS DEPEND ON CHINA BY MORE CRUDE FROM RUSSIA? JP MORGAN CAME OUT WITH THIS LINE. "CHINA NEEDS TO INCREASE PURCHASES OF RUSSIAN CRUDE BY ONE MILLION BARRELS A DAY. IF THAT DOES NOT HAPPEN, BRENT CRUDE COULD AVERAGE $122 IN THE SECOND QUARTER, PEAKING AT $136 IN JUNE." THAT IS PAINFUL. LISA: WE TALK ABOUT THESE CORPORATE EXECUTIVES COMING UP WITH THIS QUESTION OF WE HAVE NO IDEA WHAT IS GOING ON. HOW MUCH AVAILABILITY -- HOW MUCH VISIBILITY DO WE HAVE WITH TANKERS TRYING TO MOVE UNDER THE RADAR? JUST TO GIVE YOU A SENSE OF THE UNCERTAINTY IN THE DIRECTION OF OIL PRICE. JONATHAN: JAMIE DIMON YESTERDAY MAKING THIS POINT. I THINK IT IS WHERE THE EMPHASIS LIES. WHAT DO YOU DO IF YOU THINK STORM CLOUDS ARE ON THE HORIZON? YOU BRACE. THAT WAS HIS POINT. TOM: THE CORPORATIONS ARE GOING TO ADAPT. I WOULD REALLY MAKE A POINT HERE OF THE COMMODITY MOVE YOU MENTIONED, BLOOMBERG COMMODITY INDEX, FRANKLY BETTER MASS DID NOT GO OUT TO A NEW HIGH YESTERDAY, BUT DOUG KASS IN FLORIDA NOTES CRV, WHICH IS OLD-SCHOOL, THAT DOES BREAKOUT TO A NEW HIGH. JONATHAN: EQUITIES BREAKING OUT LITTLE BIT, UP 0.5% ON THE S&P. ON THE NASDAQ 100, UP 0.6%. LISA KEEPS CALLING THESE NICE MOVES. JUST NICE MOVES. LISA: NO, YOU WERE THE ONE WHO CALLED IT THAT. JONATHAN: VERY FRUSTRATED, LISA. JUST LET ME GET TO THE BOND MARKET. IT IS A DAY OF CELEBRATION FOR THE QUEEN. [LAUGHTER] LISA: I AM GOING TO QUOTE YOU ON THAT. JONATHAN: YIELDS UNCHANGED AT 2.91%. LISA: A DAY OF CELEBRATION. 8:30 AM, OPEC+ MEETING VIA VIDEOCONFERENCE. HOW LONG DO THEY ACTUALLY MEET FOR? IS THERE MORE OF AN INDICATION FROM SAUDI ARABIA THAT THEY ARE PLANNING TO INCREASE PRODUCTION TO OFFSET A DECLINE FROM RUSSIA? HOW DOES THIS TRICKLE OUT INTO GAS PRICES? THERE HAS BEEN THIS DISCONNECT BETWEEN CRUDE AND THE REFINED GOOD. IN THE U.S. WE ARE SEEING GAS PRICES CONTINUE TO CLIMB TO RECORD HIGHS. HOW MUCH FURTHER DOESN'T HAVE TO GO AND HOW MUCH CAN LOWER CRUDE PRICES IN THE NEAR TERM REALLY CHANGE THAT DYNAMIC ALL THAT MUCH? EIGHT: 30 A.M., U.S. INITIAL JOBLESS CLAIMS. HOW MUCH DOES THIS FOLLOW WANT TO THIS FEELING OF TIGHTNESS WE GOT YESTERDAY WITH THE JOLTS DATA, WITH THE JOB OPENINGS DATA? TWO JOB OPENINGS NEARLY FOUR EVERY UNEMPLOYED AMERICAN. WHERE ARE THE WORKERS? WHEN ARE THEY GOING TO COME BACK? WE ARE STARTING TO SEE BUSINESSES SAY WE DON'T EVEN NEED THE WORKERS, WE ARE JUST GOING TO CUT THOSE POSITIONS AND PERHAPS, EVEN SOME OF THE PEOPLE WE HAVE HIRED, WE ARE OVERSTAFFED FOR THE MOMENT WE ARE IN. YOU START TO SEE THAT TICK UP IN THE JOBLESS CLAIMS WE GET? PRESIDENT BIDEN MEETING WITH NATO SECRETARY GENERAL JENS STOLTENBERG. ALSO JOINING THE MEETING IS JAKE SULLIVAN, NATIONAL SECURITY ADVISOR. TALKING ABOUT THE NATO SUMMIT. I WANT TO HEAR ABOUT RESIDENT BIDEN HEADING TO RIYADH. HOW PROBLEMATIC IS THIS GIVEN THE FACT THAT THERE'S BEEN A HUGE RIFT BETWEEN THESE NATIONS AND THERE HAS BEEN A FEELING THAT THE U.S. SHOULD NOT GET TOO COZY WITH THE CROWN PRINCE MOHAMMAD BIN SALMAN? HOW MUCH DOES THAT END UP BEING A STICKING POINT, OR IS THERE SOMETHING MORE GLOBALLY FROM NATO? JONATHAN: YOU HAVE TO BELIEVE THAT HE IS JUST DROWNING OVERWHELMINGLY IN DOMESTIC ISSUES, AND THAT GAS PRICE EVERY MORNING, WE TALK ABOUT IT WITH EMORY EVERY SINGLE -- WITH ANNMARIE EVERY SINGLE MORNING, IT IS A PROBLEM WITH HIM. LISA: SO DO THEY TRY TO BAND TOGETHER TO TRY TO BRING SAUDI ARABIA BACK INTO THE FOLD BECAUSE OF THAT NECESSITY? JONATHAN: THANK YOU. BIG WEEK AHEAD. KATHY JONES JOINS US NOW, CHIEF FIXED INCOME STRATEGIST AT CHARLES SCHWAB. FOR ALL THIS TALK OF PEAK INFLATION, PEAK YIELDS STATESIDE, ON THE OTHER SIDE OF THE ATLANTIC, CAN YOU MAKE THAT CALL YET? KATHY: I DON'T THINK WE ARE QUITE THERE JUST BECAUSE EUROPE HAS BEEN LAGGING THE U.S. IN TERMS OF THE CYCLE, BUT I DON'T THINK THEY ARE FAR BEHIND EITHER. THE EXPECTATION FOR TIGHTER POLICY IN EUROPE. I THINK THEY ARE LAGGING US, BUT I DON'T THINK WE ARE QUITE THERE YET. TOM: THE YIELDS THAT WE SEE ARE A COMPLETE MYSTERY OUT TO THIRD QUARTER. WHAT DOES YOUR TOP END LOOK LIKE? HOW FAR UP TO YOU FRAME YIELDS COULD GO TO? KATHY: WHEN WE ARE LOOKING AT THE SHORT END, WE ARE STILL LOOKING AT THE FED TIGHTENING 50 BASIS POINTS IN THE NEXT TWO MEETINGS AND PROBABLY THEN SWITCHING TO ABOUT QUARTER-POINT INCREASES IN THE FALL. WE SEE THEM TOPPING OUT PROBABLY IN THAT TWO AND THREE QUARTERS AREA. WHEN WE LOOK TO THE 10 YEAR, OUR EXPECTATION IS THE UPPER END IS THAT 3% TO 3.25% AREA. YIELDS CONVERGE ACROSS THE CURVE. WE ARE SEEING A LITTLE BUT OF INVERSION FROM FIVE TO TENDS. LISA: WE ARE TALKING THIS MOANING ABOUT THE TWO-SIDED ARGUMENT WITHIN EACH OF THESE HOUSES OF X AND BEYOND'S, OF WHETHER WE ARE TO CLUE ME OR TOO OPTIMISTIC ASKED -- TOO GLOOMY OR TOO OPTIMISTIC. YOU CAN TAKE AT 3% 10 YEAR YIELD, BUT THE PAST TO GET THERE IS ONE PAVED BY A FED THAT ESSENTIALLY HAS TO END THIS CYCLE, HAS TO CREATE A DOWNTURN. KATHY: IT CERTAINLY IS THE WAY THAT THEY ARE TALKING RIGHT NOW AND HAVE TO TAKE THEM SERIOUSLY. IT IS PRETTY MUCH ACROSS THE BOARD YOU ARE HEARING THE NEED FOR TIGHTER POLICY. I THINK THAT THE CYCLE REMINDS ME OF THE EARLY AG'S -- THE EARLY 1980'S. TOM MIGHT REMEMBER THIS. YOU HAD HIGH INFLATION, RELATIVELY HEALTHY ECONOMY, AND THE IDEA WAS TO REALLY GET THAT INFLATION DOWN. VOELKER AT THE TIME CAME IN AND JACKED UP RATES UNTIL WE HAD RECESSION. SO THAT IS KIND OF THE RISK I THINK IF THE FED GOES REALLY HARD TO HEAR, BUT THAT IS CERTAINLY NOT THE INTENTION THEY HAVE. JONATHAN: HOW ACHIEVABLE ARE THESE FORECASTS OVER AT THE FEDERAL RESERVE, UNEMPLOYMENT AT 3.5% THIS YEAR? HOW ACHIEVABLE IS THAT? KATHY: I WOULD SAY THAT IS ASPIRATIONAL. [LAUGHTER] IT WOULD BE SURPRISING TO ME IF YOU COULD HAVE THE KIND OF MONETARY POLICY WE ARE GETTING WITH HIGHER RATES AND QT ALONG WITH A GLOBAL TIGHTENING CYCLE AND STILL KEEP UNEMPLOYMENT NEAR 3.5%. JONATHAN: DO YOU THINK THEY SHOULD RENAME THE SUMMARY OF ECONOMIC PROJECTIONS FEDERAL RESERVE ASPIRATIONS? KATHY: I THINK SO. THEY ARE NEVER GOING TO FORECAST FAILURE, RIGHT? JONATHAN: SO TRUE. TOM: SHOCKED. KATHY: THEY HAVE TO FORECAST WHAT THEY HOPE HAPPENS. JONATHAN: THANK YOU, KATHY JONES OF THE SCHWAB CENTER FOR FINANCIAL RESEARCH. THE ASPIRATIONS OF THE FEDERAL RESERVE. TOM: THERE'S NOT MUCH TO TALK ABOUT HERE. THEIR ASPIRATION IS TO WAIT AND WAIT. EVERY CENTRAL BANK DOES THIS. IT IS ALLAN MELTZER 101. WHAT IS INTERESTING, AS WE HEARD FROM VICKI LEAVY YESTERDAY, AND THIS GOES TO JAMES BULLARD, EVEN IF THERE IS A WHISPER OF TARGETING, THAT FORCES THEM TO MOVE HIGHER. JONATHAN: DO YOU LIKE THAT LINE, THEY WILL NEVER FORECAST FAILURE? PLENTY OF PEOPLE DOING THAT FOR THEM. LISA: I WOULD SAY THEY HAVE A CREDIBILITY ISSUE IF THEY DON'T ACKNOWLEDGE THAT AND INDICATE THAT THAT IS A HIGH LIKELIHOOD. THAT IS WHAT WE ARE HEARING A LITTLE BIT MORE FROM PICTURE JAY POWELL, BUT THAT IS A CONUNDRUM. THEY CAN FORECAST FAILURE, BUT IT FAILURE IS A SLOWDOWN IN THE ECONOMY, ISN'T THAT KIND OF THE GOAL RIGHT NOW? WHAT IS FAILURE RIGHT NOW? JONATHAN: THE POLICY OBJECTIVE WAS TO TIGHTEN FINANCIAL CONDITIONS IN A WAY WERE WE DON'T HAVE HIGHER UNEMPLOYMENT, WE DON'T GET A RECESSION. THAT IS REALLY TRICKY. LISA: ESPECIALLY BECAUSE RIGHT NOW THAT INFLATION IS NOT COMING DOWN ON ITS OWN. THE LABOR MARKET IS NOT SLUMMING ON ITS OWN MATERIALLY IN A WAY THAT THEY CAN GET THE FED ANY COMFORT. WHAT DO THEY HAVE TO DO TO GET TO THAT END? JONATHAN: LOOKING FORWARD TO THE COVERAGE THROUGH THIS MORNING. WE WILL HAVE A CONVERSATION ON CRUDE MORE SPECIFICALLY WITH JP MORGAN ANY MOMENT. WTI BACKING AWAY FROM $120 EARLIER IN THE WEEK. EQUITIES DOING OK, UP 0.5%. IT IS THE OVAL -- IT IS THE OIL MARKET ONCE AGAIN THE COULD HEAR ATTENTION. AT FT INDICATING THE SAUDI'S COULD BE GETTING READY TO BOOST OUTPUT. WE HEARD FROM DOW JONES EARLIER THIS WEEK, AND HEAR FROM BLOOMBERG, A MEETING POTENTIALLY BETWEEN THE PRESIDENT AND THE CROWN PRINCE IN RIYADH. TOM: THE MEETING IS IMPORTANT AS A SYMBOL. YOU WONDER THE CALCULUS, THE ROYAL CALCULUS THE SAUDIS WILL HAVE. JONATHAN: ANYMORE TO SAY ON THE ROYALS? TOM: NO, WE ARE GOING DOWN THE STREET. I THINK THEY ARE ON THEIR WAY. JONATHAN: THAT IS THE COVERAGE OF THE JUBILEE. THEY ARE GOING DOWN THE STREET. TOM: YOU, ME, AND LISA. JONATHAN: STICK AROUND FOR MORE OF THIS. [LAUGHTER] IS THAT THE PROMO? THAT IS THE PROMO FOR OUR JUBILEE COVERAGE. THEY ARE GOING DOWN THE STREET. A FAMILIAR ONE WAS A BIG HOUSE AT THE BOTTOM. THEN THE FAMILY COMES OUT ON THE BALCONY AND WAVES AT A FLYBY. TOM: THANK YOU. JON, SUCH A REPUBLICAN. JONATHAN: THIS IS BLOOMBERG. RITIKA: KEEPING YOU UP-TO-DATE WITH NEWS FROM AROUND THE WORLD, WITH THE FIRST WORD, I'M RITIKA GUPTA. THE PRICE OF OIL IS FALLING FOLLOWING A PAIR OF REPORTS THAT SAUDI ARABIA HAS INDICATED IT IS READY TO PUMP MORE CRUDE DUE TO INCREASING SANCTIONS. PRESIDENT BIDEN IS LIKELY TO VISIT SAUDI ARABIA THIS MONTH. THAT COULD LEAD TO AN INCREASE IN SAUDI OIL PRODUCTION. SOARING GAS PRICES ARE HURTING THE PRESIDENT POLITICALLY. SHERYL SANDBERG HELPED TURN FACEBOOK FROM A STARTUP INTO A MULTIBILLION-DOLLAR ADVERTISING POWERHOUSE. SANDBERG IS STEPPING DOWN AS CHIEF OPERATING OFFICER OF META PLATFORMS AFTER 14 YEARS. SHE SERVED AS THE HIGHEST PROFILE FACE OF THE COMPANY NEXT TO CEO MARK ZUCKERBERG, BUT WAS CRITICIZED FOR THE COMPANY'S FAILURE TO REIN IN LARGE-SCALE MISINFORMATION AND PRIVACY BREACHES. RUSSIA SAYS IT IS READY TO SETTLE CLAIMS ON BONDS THAT WERE JUDGED TO HAVE BREACHED THEIR TERMS AFTER REACHING AN INTEREST RATE PAYMENT. IN IS AN ATTEMPT TO ENSURE A PAYOUT WORTH POTENTIAL HE BILLIONS OF DOLLARS. FAILURE TO PAY OCCURRED ON CREDIT DEFAULT RUSSIA BLAMES FOREIGN COUNTERPARTIES FOR THAT DELAY. IN TULSA, OKLAHOMA, POLICE SAY AMEN KILLED FOUR PEOPLE AT A MEDICAL BUILDING. THE GUNMEN APPARENTLY KILLED HIMSELF. IT IS UNCLEAR WHAT LED TO THE ATTACK. POLICE SAY THEY WERE ON THE SCENE ABOUT THREE MINUTES AFTER GETTING A REPORT. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND ON BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I'M RITIKA GUPTA. >> THE LABOR MARKET IS THE TIGHTEST BASICALLY AT HAS EVER BEEN. YOU CAN SEE THAT IN THE RATIO OF JOBS TO PEOPLE UNEMPLOYED. WAGE PRESSURES WILL ACCUMULATE AND THAT WILL KEEP THE INFLATION ABOVE THE 2% OBJECTIVE. JONATHAN: THAT WAS BILL DUDLEY, FORMER NEW YORK FED PRESIDENT. ON THOSE JOB OPENINGS, 1.9 FOR EVERY UNEMPLOYED INDIVIDUAL IN THIS COUNTRY RIGHT NOW BASED ON THE DATA OUT YESTERDAY. FROM NEW YORK CITY THIS MORNING, GOOD MORNING. FUTURES POSITIVE 0.5% ON THE S&P. OUR ATTENTION MUCH OF THIS MORNING SO FAR ALL OVER THE PLACE, BUT IN THE MARKET IT IS ON CRUDE. $112 WTI. KEEP GOING BACK TO THOSE REPORTS FROM BLOOMBERG AND THE TEAM IN WASHINGTON POINTING OUT WE COULD HAVE A MEETING BETWEEN THE PRESIDENT OF THE UNITED STATES AND THE CROWN PRINCE LATER THIS MONTH IN RIYADH, SAUDI ARABIA. THE OTHER REPORT OUT OF OPEN WITH THE FT -- OUT OF "THE FT," THE IDEA THAT THE SAUDIS ARE PREPARED TO DO MORE IF WE NEED THEM TO. TOM: YOU WONDER HOW OPEC+ IS IN THREE MONTHS OR SIX MONTHS. WE ALL WONDER ABOUT A GALLON OF GAS AS WELL. WE ARE PLEASED TO BRING YOU CHRISTYAN MALEK, GLOBAL ENERGY STRATEGIST AT J.P. MORGAN SECURITIES. I WANT TO GO TO JAMIE DIMON'S ANNUAL REPORT OF APRIL OF THIS YEAR, HIS LETTER TO SHAREHOLDERS WHERE HE TALKED ABOUT THE PRECARIOUS NATURE OF THE GLOBAL ENERGY SUPPLY. THAT SUPPLY IS EASY TO DISRUPT. WE SHOULD ALSO KEEP IN MIND THAT AS A PERCENTAGE OF GLOBAL GDP, OIL IS ONLY ABOUT 40% OF WHAT IT WAS IN 1973, BUT IT IS STILL ESSENTIAL AND CRITICAL. MR. DIMON HAS STATED THERE IS SOME LEVEL OF HURRICANE OUT THERE. IN YOUR 100 PAGE TREATISE, YOU DON'T USE THE WORD HURRICANE, DO YOU? CHRISTYAN: WE DON'T USE THE TERM HURRICANE, A FANTASTIC ANALOGY BY MR. DIMON. THE KEY HERE AS WE LOOK INTO THE FUTURE, WE SEE A WORLD THAT IS SHORT OIL WELL BEFORE WE NO LONGER NEEDED. WHEN WE THINK ABOUT THE DEFICITS , IT IS ALL POINTING TOWARDS A SITUATION WHERE BASICALLY, THERE WILL BE NO SOLUTION AROUND MITIGATING HIGHER PRICES, AND PARTICULARLY HIGH INFLATION ACROSS ENERGY. WE ARE BASICALLY SHORT ALL FUELS, AND THE ONLY ONE THAT IS AVAILABLE EVEN IN LIMITED CONTEXT IS OIL. TOM: AT WHAT PRICE BRENT CRUDE PER BARREL DOES THE INVESTMENT INCENTIVE CLICK IN WITH A VENGEANCE? CHRISTYAN: I THINK THE OIL PRICE HAS TO BE OVER $100 FOR A SUSTAINABLE PERIOD. I THINK CREDIBILITY OF THIS ASSET CLASS, COVID CONCERNS, RECESSIONARY CONCERNS MEANS YOU SEE A BIT OF PARALYSIS IN THE C-SUITE. MANAGEMENT DOESN'T WANT TO TAKE ON A 10 TO 15 YOUR PROJECT WITH THE RISK OF OIL COLLAPSING, AND THAT PARALYSIS MEANS WHILE THE FAIR VALUE COULD BE CLOSER TO $80, MANAGEMENT TEAMS, INVESTORS ARE LOOKING FOR A PRETTY BIG PREMIUM IN ORDER TO QUALIFY. OF COURSE, YOU'VE ALSO GOT THE PRESSURE FROM YESTERDAY, WHICH ALSO DOESN'T HELP IN THE CONTEXT OF INVESTING IN LONG-TERM PROJECTS BECAUSE IF YOU DO THAT, YOU NEVER KNOW IF YOU WILL BE IN THE PENALTY BOX IN A FEW YEARS. LISA: GIVEN THIS LACK OF INVESTMENT MORE BROADLY, IS THE MARKET OVERPLAYING THE IMPACT OF SAUDI ARABIA INCREASING PRODUCTION? CHRISTYAN: ABSOLUTELY. WE ARE RUNNING TO STAND STILL ON THEIR CAPACITY. ASHER ON SPARE CAPACITY. -- STANDSTILL ON SPARE CAPACITY. YOU MENTIONED THE 1970'S CRISIS. ONE OF THE THINGS WE SHOULD ATTEMPT TO GET IS THAT WHEN WE ARE AT RECORD LOW BARRELS OF CAPACITY AS WE ARE NOW, ADDING BARRELS DOESN'T REALLY HELP MITIGATE OR HELP THE SITUATION. ALL YOU ARE DOING IS EFFECTIVELY LOSING THE LAST LINE OF DEFENSE. IT MAKES VERY LITTLE DIFFERENCE WHETHER YOU ADD BARRELS WERE NOT A MIND THAT IS WHY I THINK IT IS PROBABLY LIKELY TO KEEP YOUR POWDER DRY AS PROBABLY THE MOST APPROPRIATE STRATEGY AT THIS POINT. JONATHAN: ONE FACTOR THAT SOME COLLEAGUES OF YOURS HAVE POINTED OUT IS CHINESE DEMAND FOR RUSSIAN CRUDE, AND THAT IF THEY DON'T FILL THE VOID AND BY THAT RUSSIAN CRUDE, WE COULD HAVE EVEN HIGHER CRUDE PRICES. CAN YOU WALK ME THROUGH THE INFLUENCE OF THAT? CHRISTYAN: ABSOLUTELY. BETWEEN PRODUCTION AND EXPORTS, PRODUCTION HASN'T MOVED LOWER OVER THE PAST FEW MONTHS. HOWEVER, EXPORTS ARE VERY LOGISTICALLY CHALLENGED. IN TERMS OF THE REACTION FUNCTION, I LOOK AT IT THIS WAY. IF WE MOVE INTO A HIGHER PRICE SCENARIO AS WE ARE CALLING FOR AN WE ARE SHORT EVEN MORE BARRELS, AND COUNTRIES NEED ENERGY THEY CAN'T GET THEIR HANDS ON BECAUSE THEY HAVE EFFECTIVELY RUN OUT OF OTHER FUELS, THAT WOULD CHANGE THE REACTION FUNCTION TOWARDS GETTING HOLD OF OIL, AND THEY MAY NOT HAVE ANY OTHER CHOICE BUT TO SECURE THOSE BARRELS, IN THE EVENT THAT THE ALTERNATIVE COULD MEAN ACTIVITY WINDING DOWN, POTENTIAL SOCIAL UNREST. SO IN OTHER WORDS, WE SHOULD EXPECT ELASTICITY FURTHERS BARRELS IN THE EVENT OF THE ALTERNATIVE IS MUCH WORSE. JONATHAN: WALK ME THROUGH HOW TO PLAY THIS FOR THE EQUITY MARKET. WHAT IS THE BEST WAY OF PLAYING THIS? CHRISTYAN: THE BEST WAY TO STAY THIS -- TO PLAY THIS IS STAY IN BULLISH ENERGY EQUITIES. AS OPEC ADDS BARRELS, SAY THEY DO, WE COULD SEAT WE WILL PRICES AT THE FRONT END MOVE LOWER, BUT HISTORICALLY ADDING BARRELS AND REDUCING SPARE CAPACITY IS CONDUCIVE TO THE BACK END OF THE CURVE. THAT IS WHERE ENERGY EQUITIES LIVE, AT THE BACK OF THE CURVE. IF THEY CAN HAVE MORE CONFIDENCE THE BACK END OF THE CURVE IS GOING TO PAUSE ABOVE $80, BY VIRTUE OF THE FACT THAT IF YOU LOOK INTO THE FUTURE THERE ARE SO FEW BARRELS OUT THERE, THAT MEANS THAT SHOULD GIVE CONFIDENCE FOR INVESTORS TO BUY THE EQUITIES BECAUSE EQUITIES TRADE OFF THE BACK OF THE CURVE, AND THAT IS WHERE THE LEASE CONFIDENCE IS. SO WE STAY BULLISH EQUITIES AND BULLISH COMPANIES WHO ARE MOST GEARED TO WEAR OIL AND GAS PRICES COULD BENEFIT AND RETURN THAT CASH BACK TO SHAREHOLDERS. WE HAVE SEEN 30% IN THREE YEARS. JONATHAN: A MONSTER RALLY IN THIS EQUITY MARKET IN THAT PARTICULAR PART OF THIS EQUITY MARKET. GREAT WORK, AS ALWAYS. LOVE CATCHING UP WITH YOU. FROM J.P. MORGAN SECURITIES THERE ON THE PATH FORWARD, THE ROAD AHEAD FOR THIS OIL MARKET. TOM: CAN'T SAY ENOUGH OF THE REPORT. GET THE REPORT. WE PROTECT THE COPYRIGHT OF ALL OF OUR GUESTS. GET IT FROM J.P. MORGAN. WHETHER YOU AGREE OR DISAGREE, IT IS THE THOUGHT-PROVOKING REPORT. IT CREATED A HURRICANE. JONATHAN: WE TURN NOW TO OUR ROYAL CORRESPONDENT TOM KEENE FOR THE LATEST ON THE PARADE. TOM: IT IS REALLY INTERESTING, THE IMAGERY WE'VE GOT OF THE PARADE, BUT THE QUEEN HAS BEEN ALONE ON THE BALCONY. WE WILL TRY TO GET THAT SHOT FOR YOU HERE. ALL BY HERSELF. IT REALLY SPEAKS VOLUMES ABOUT THE GENERATIONAL SHIFT HERE THAT YOU AND YOUR FAMILY HAVE LIVED. JONATHAN: LISA, WHAT ARE YOU LAUGHING AT? IT IS AN IMPORTANT MOMENT. LISA: IS IT? THE QUEEN'S ALONE ON THE BACK ANY. THEY ARE WEARING HATS ON HORSES. TOM: SHE WILL BE JOINED BY THE MINIONS IN A MOMENT. JONATHAN: THE MINIONS? IT'S A CELEBRATION, GUYS. LISA: SHE'S NOT ALONE. SHE'S ACTUALLY WITH SOMEONE ON THAT BALCONY, JUST LETTING YOU KNOW. JONATHAN: THIS IS WHERE IT'S AT FOR THIS COVERAGE, ISN'T IT? THE DUKE OF KENT WITH THE QUEEN. JONATHAN: LIVE FROM NEW YORK CITY THIS MORNING, GOOD MORNING. HERE'S THE THURSDAY MORNING PRICE ACTION, ABOUT AN HOUR AWAY FROM THE ECONOMIC DATA AND AMERICA. FUTURES POSITIVE BY 0.6% ON THE S&P 500 GET IN THE NASDAQ 100, UP 0.7%. YIELDS, ALL OF THIS CHATTER ABOUT PEAK YIELDS, PEAK INFLATION, THE GERMAN TENURE YIELD PUSHING 1.23% EARLIER THIS MORING. WE HAVE NOT SEEN THE HIGH OF THE YEAR. MAYBE WE ARE GETTING CLOSER TO IT. YOUR U.S. 10 YEAR, 2.91%. 3.20% BACK ON MAY 9, AND ELEVATE SUDDEN HAVE ANOTHER LOOK AT 3% ON THE TENURE YIELD. TOM: WE ARE NOT THERE YET, BUT TO BE HONEST, IT HAS BEEN A LEAP UP. THE DRAMA IS NOT THERE. YOU WONDER WHERE THE DRAMA WILL BE MONDAY MORNING AFTER THE JOBS REPORT. JONATHAN: FRIDAY MORNING, JOBS DROPPED. A LITTLE BIT LATER, MORE ECONOMIC DATA. THE REACTION SO FAR HAS BEEN PRETTY CLEAR. THE DATA AND AMERICA PRETTY DECENT. THE ISM MANUFACTURING, A NICE UPSIDE SURPRISE. JOB OPENINGS COME DOWN. STILL ELEVATED. THE QUITS RATE SPEAKS TO THAT STORY. 1.9 JOBS AVAILABLE FOR EVERY UNEMPLOYED PERSON IN THIS COUNTRY RIGHT NOW, ACCORDING TO THE DATA IN THE U.S. THE STORY IN THE BOND MARKET LOOKS LIKE THAT. IN THE COMMODITY MARKET, CRUDE LOWER. WE BACK AWAY FROM $120 AGAIN. $119 98 SINCE THE HIGHS OF THIS WEEK, AND THEN WE PULL BACK. SEVERAL REPORTS THAT MAYBE OPEC+ COULD PUSH AWAY RUSSIA AND COME TO THEIR OWN AGREEMENT ON BOOSTING OUTPUT. THAT GOT A BOOST ON A STORY FROM "THE FT" SUGGESTING THAT MIGHT BE WHAT WE GET FROM SAUDI ARABIA. THEN I THINK THE POLITICS IMPORTANT HERE, JUST THE IDEA FROM THE TEAM HERE AT BLOOMBERG THAT WE COULD GET A MEETING BETWEEN THE PRESIDENT OF THE UNITED STATES AND THE CROWN PRINCE MOHAMED BIN SALMAN OF SAUDI ARABIA. TOM: IT WOULD BE A BIG CHANGE. I THINK IT HAS BEEN WIDELY ANTICIPATED. WE WILL SEE WHAT HAPPENS. I'M JUST GETTING USED TO $100 OIL. I WATCH MY MUST, CALIFORNIA -- WATCH MAMMOTH, CALIFORNIA. IT HAS EXPLODED FROM $6.90 A GALLON UP TO ROUGHLY $7.30 A GALLON. WE HAVE NEVER FRAMED THAT IN AMERICA. JONATHAN: WE JUST SPOKE TO CHRISTIAN MELICK OF JP MORGAN, VERY BULLISH THE ENERGY STORY, VERY BULLISH THE NAMES THAT PRODUCE THOSE GOODS. CITI TAKE THE OTHER SIDE OF THIS. YOU KNOW THIS WELL. THAT IF WE FACE A REAL DOWNDRAFT OF ECONOMIC GROWTH, WE HAVE NO BUSINESS IN TRIPLE DIGITS. TOM: FRANCISCO BLANCH SCHEDULED TO BE WITH US LATER TODAY. JONATHAN: WTI, 112 DOLLARS. THAT IS ACROSS ASSET PRICE ACTION. HERE'S A GLOOMY LOOK AT SOME SINGLE NAMES. LISA: LET'S TALK ABOUT SUPPLY-CHAIN DISRUPTIONS. THAT IS WHAT WE ARE SEEING IN HEWLETT-PACKARD ENTERPRISES. IT IS A HARDWARE AND SOFTWARE COMPANY, AND IT CAME OUT WITH EARNINGS YESTERDAY AFTER THE BELL, TALKING ABOUT SUPPLY CHAIN DISRUPTIONS REALLY IMPEDING THEIR FULL-YEAR FORECAST. THOSE SHARES DOWN NEARLY 5% AHEAD OF THE OPENING BELL. PFIZER IS DEALING WITH THAT SHOT FOR KIDS UNDER THE AGE OF FIVE FOR COVID. STILL YOU ARE SEEING A BIT OF SOFTNESS THERE, AND YOU HAVE ALL YEAR, WHICH IS INTERESTING CONSIDERING THE FACT THAT WE SO HAVE COVID AROUND HERE. CHEWY, 18% GAIN BECAUSE THEY ARE SELLING LOTS OF STUFF TO PEOPLE WHO STILL HAVE PETS AND HAVE TO FEED THEM. TOM: CHEWY IS THE OFFICIAL FEEDER FOR THE ROYAL CORGIS. LISA: I HIGHLY DOUBT THAT. I'M GOING TO GO AHEAD AND DOUBT THAT IS TRUE. WE ARE ALSO LOOKING AT OIL STOCKS RIGHT NOW, NOT TO DISCOUNT THAT IN ANY WAY, SHAPE OR FORM. I WANTED TO LOOK AT SOME OF THE BIG OIL COMPANIES AND HOW THEY WERE DOING IN LIGHT OF THE FACT THAT YOU ARE SEEING A DIP IN CRUDE, ABOUT A 2.5% TO 2.6% LOSS IF YOU TAKE A LOOK AT WTI OR BRENT. SHARES OF THE BIG OIL PRODUCERS IN GENERAL ARE NOT DOWN AS MUCH. OCCIDENTAL IS DOWN MORE THAN 2%, BUT CHEVRON AND EXXON DOWN BETWEEN 1% AND 1.7%. HOW MUCH DOES THIS REALLY INDICATE THE CHRISTYAN MALEK VIEW OF THINGS, THAT THIS IS STILL THE HAVEN EVEN IF YOU THINK THE CITI ED MORSE VIEW HAS SOME CREDENCE. THIS IS THE BEST HEDGE AGAINST INFLATION AT A TIME WHEN IT SEEMS LIKE COMMODITY PRICES ARE GOING TO GO UP OVER THE LONG-TERM, DESPITE SOME BARRELS COMING BACK ONLINE PERHAPS FROM SAUDI ARABIA? JONATHAN: WHAT DID CHRIS VERRONE SAY THIS MORNING? OVERBOUGHT, NOT OVER OWNED. LISA: I WOULD AGREE WITH THAT. A LOT OF PEOPLE WAITING FOR CAPITULATION FROM THE ESG CROWD TO SAY MAY WE HAVE TO BUY THESE. AT WHAT POINT DO YOU SEE THAT TO HAVE THIS PARTICULAR COMPONENT BECOME A BIGGER ONE IN THE S&P THEN IT HAS BEEN OVER THE PAST DECADE? JONATHAN: THAT WASN'T THAT GLOOMY, TOM. THAT WAS NOT THAT GLOOMY AT ALL. LISA: ARE YOU DISAPPOINTED? JONATHAN: NOT AT ALL. TOM: SHE'S FIRED UP ABOUT THE JUBILEE. JONATHAN: TO BE HONEST, I DON'T THINK SHE IS. TOM: TEAM COVERAGE HERE WILL CONTINUE TO LOOK TO LONDON. JONATHAN: THEY CAN'T WAIT. TOM: JOINING US NOW, MEGAN GREENE, SENIOR FELLOW, HARVARD KENNEDY SCHOOL. IMPORTANTLY IS THE IDEA HERE OF USING THE QUEENS ENGLISH. YOU DO THAT WITH THE UTAH DESK WITH THE WORD AWKWARD -- WITH THE WORD AWKWARD. YOU SAY OUR AWKWARD RESPONSE TO INFLATION ON A GLOBAL BASIS IS INTERESTING. HOW AWKWARD IS THE FEDERAL RESERVE AND JEROME POWELL RIGHT NOW? MEGAN: THE FED IS IN A TOUGH SPOT. WE ARE FACING INDICATORS SAYING THAT GROWTH IS REALLY SLOWING AT THE SAME TIME INFLATION IS WAY TOO HIGH BY THE FEDS STANDARDS, BY EVERYONE'S STANDARDS, SO THE FED IS STUCK KNOWING THAT A LOT OF THE DRIVERS OF INFLATION ARE SUPPLY-SIDE AND THAT THE FED CAN'T REALLY DO MUCH ABOUT IT, SO THE FED IS HAVING TO HIKE RATES AND WILL HIKE RATES TO NEUTRAL VERY QUICKLY, WHICH IS AROUND 2.5%. THERE'S A WAYS TO GO BEFORE THE END OF THE YEAR, AND THEN I THINK THE FED IS REALLY STUCK. THEY'RE GOING TO PAUSE, RECOGNIZE THAT ANOTHER 200 BASIS POINTS IN HIKES IS A LOT FOR THE ECONOMY TO ABSORB IN A SHORT PERIOD OF TIME AND SEE WHERE THE DATA IS. I THINK IT IS ABSOLUTE CONSENSUS AT THE FED THEY WILL JUST GO STRAIGHT TO NEUTRAL, AND THEN I THINK THEY WILL WAIT AND SEE AS THE REST OF US WILL HAVE TO DO AS WELL. IN ALL OF MY CONVERSATIONS WITH INVESTORS, THERE'S BEEN A REAL SHIFT IN FOCUS AWAY FROM JUST TALKING ABOUT INFLATION TO JUST TALKING ABOUT GROWTH OVER THE PAST TWO WEEKS. THE CONCERNS ABOUT A RECESSION ARE REALLY INTENSE AMONG INVESTORS, AND ACTUALLY I THINK PREMATURE. I DON'T WE ARE GOING INTO RECESSION IN THE NEXT 12 MONTHS. IT IS THE 12 MONTHS AFTER THAT I AM WORRIED ABOUT. JONATHAN: OVERWHELMINGLY THE FOCUS IS ON SOME OF THE OUTPUT DATA. WHAT DID HUMAN OF THE ISM FOR MANUFACTURING YESTERDAY? NOT EXACTLY IN LINE WITH WHAT WE HAVE SEEN FROM SOME OF THE REGIONAL FED INDICATORS. MEGAN: I HAD AN INVESTOR RANT AT ME YESTERDAY THAT ALL OF THE DATA IS CONTRADICTORY AND THEY DON'T KNOW WHAT SIGNAL TO READ OUT OF THE NOISE. I THINK WE ARE ALL FEELING THAT WAY. BUT I THING THE ISM THAT WAS FAIRLY POSITIVE. IT SURPRISED ME ON THE UPSIDE AND SUGGESTS WE ARE NOT CAREENING TOWARDS A RECESSION. THE CONSUMER ACCOUNTS FOR 70% OF OUR GROWTH IN THE U.S., AND CONSUMER BALANCE SHEETS ARE LOOKING PRETTY HEALTHY IN AGGREGATE. OF COURSE, THE BOTTOM QUARTILE BY INCOME DOES NOT LOOK THAT GREAT. THEY BURN THROUGH THEIR CASH BUFFER. BUT THE REST OF AMERICANS HAVE A BIG CASH CUSHION. COMPANIES ALSO HAVE A HUGE CASH POSITION BUILT UP, SO EVEN AS RATES GO UP AND RISK IS ALL ON THE DOWNSIDE, IT IS GOING TO TAKE A WHILE TO BURN THROUGH ALL OF THAT CASH BEFORE WE REALLY START TO SEE INDIVIDUALS AND COMPANIES RETRENCH, AND THAT IS WHAT DRIVES US INTO RECESSION. IT IS ALSO WORTH POINTING OUT WITH THE JOBS DATA COMING OUT ON FRIDAY THAT WE HAVE 11.5 MILLION UNFILLED JOBS. A TO CAP CACHET -- A TICK UP IN UNEMPLOYMENT IS THE BEST INDICATOR OF RECESSION. I JUST DON'T SEE THAT. LISA: WHY WILL THEY POTENTIALLY BE MORE PATIENT AND HIKE RATES ENOUGH AND THEN PAUSE? MEGAN: I THINK THE FED KNOWS THAT THEIR HISTORY IN TERMS OF ENGINEERING A SOFT LANDING IS PRETTY POOR, AND IN THE PAST, EVERY TIME THEY HAVE ENGINEERED A SOFT LANDING, UNEMPLOYMENT WAS ACTUALLY MUCH HIGHER WHEN THEY STARTED, SO IT IS MUCH MORE LIKELY THAT UNEMPLOYMENT WILL PICK UP THIS TIME AROUND IS GIVEN THAT IT IS AROUND 3.5%, NEAR HISTORIC LOWS, AS OPPOSED TO ANY PAST, RUN UP LIMIT WAS ALREADY HIGHER. THEY DON'T WANT TO CAUSE A RECESSION, AND THAT IS WHY THEY ARE FINE GOING TO NEUTRAL. THAT IS JUST TAKING THEIR FOOT OFF THE GAS PEDAL A BIT. BUT ONCE THEY GET TO NEUTRAL AND THEY HAVE TO GET INTO ACTUAL, SIGNIFICANT TIGHTENING, I THINK THEY ARE GOING TO BE A LOT MORE CAUTIOUS. JONATHAN: MEGAN GREENE, THANK YOU. LOOKING AHEAD TO PAYROLLS TOMORROW, 3.6% ON UNEMPLOYMENT, LOOKING FOR A MOVE DOWN TO 3.5%. THAT IS YOUR MEDIAN ESTIMATE SO FAR. LISA: FROM AN ECONOMIC PERSPECTIVE IT IS MOVING IN THE RIGHT DIRECTION. FROM THE FED'S PERSPECTIVE IS MOVING IN THE WRONG DIRECTION. THIS IS THE POST-POLL, -- THE PUSH-PULL, MEGAN SAYING YOU JUST HAVE TO WAIT, OTHERS SEEN MORE URGENCY TO GET AHEAD OF THIS BEFORE BECOMES MORE ENTRENCHED. THAT IS THE POLARITY FOR THE U.S. CENTRAL BANK THAT I THINK IS IMPORT TO DISCUSS. JONATHAN: WE CAN DISCUSS THE PROJECTIONS, OR AS KATHY SCHWAB CALLED THEM, THE FED'S ASPIRATIONS. THEY ARE AT 3.5% YEAR-END. 3.5% ON THE LIMIT YEAR-END AGAIN NEXT YEAR, AND 3.5% THE YEAR AFTER THAT. WHAT DID OUR GUEST SAY ON THE SHOW SEVERAL MONTHS AGO WHEN WE CAME OUT WITH THOSE PROJECTIONS? I BELIEVE DIANE SWONK CALLED IT "FANCIFUL." TOM: I JUST TO GET IS A PARLOR GAME, AND WITH THE UNCERTAINTY WE HAVE RIGHT NOW, I JUST DON'T EVEN WANT TO GO THERE. I WOULD STATE, AS WE HAVE HEARD FROM A NUMBER OF GUESTS THIS MORNING, NOT A SMALL MATTER IS THE OPENING OF CHINA. I THINK THAT HAS BEEN UNDERPLAYED. I KNOW "THE ECONOMIST" HAS A FEATURE ON THE RAMIFICATIONS OF POST LOCKDOWN CHINA. JONATHAN: OUTSIDE OF THE COMMODITY MARKET, WHERE DO YOU THINK IS UNDERAPPRECIATED AT THE MOMENT? TOM: THE UNCERTAINTY THAT IS OUT THERE, PEOPLE PUT THEIR PANTS ON ONE LEG AT A TIME. THERE IS WAY TOO MUCH CERTITUDE RIGHT NOW. I THINK THE LEVEL OF UNCERTAINTIES PLURAL IS HUGE NOW. JONATHAN: MIGHT BE BACKING AWAY FROM THE SHUTDOWN. THEY ARE NOT BACKING WAY FROM THE APPROACH, THOUGH, ARE THEY? LISA: THE NEWS OUT OF HONG KONG THAT THEY ARE STARTING TO QUARANTINE AGAIN IN THE SAME KIND OF WAY. HOW MUCH DOES THIS INDICATE BASICALLY NO SHIFT IN THE ZERO COVID POLICY THAT PERHAPS THIS IS A PAUSE IN SOME OF THOSE LOCKDOWNS, BUT NOT TAKING IT OFF THE TABLE ENTIRELY? JONATHAN: FRONT PAGE OF THE EDITORIAL OVER IN CHINA TODAY, "GREAT ACHIEVEMENTS HAVE BEEN MADE IN THE DEFENSE OF SHANGHAI," IN THE PEOPLE'S DAILY NEWSPAPER. TOM: "PIGGY BLINDERS -- "PEAKY BLINDERS," THEY HAD THE DERBY IN THERE. IS THAT ON SATURDAY? JONATHAN: HAVE YOU BEEN WATCHING "PEAKY BLINDERS?" TOM: NO, I KNOW YOU ARE A FAN. IS THE EPSON DERBY AS BIG AS THEY CONDUCT EATERY -- THE KENTUCKY DERBY? JONATHAN: NO, WE HAVE THE GRAND FINALS. CAN YOU DO A "PEAKY BLINDERS" ACCENT? EURO-DOLLAR, A BREAK OF 1.07 EARLIER. FROM NEW YORK, THIS IS BLOOMBERG. RITIKA: KEEPING YOU UP TO DATE WITH NEWS FROM AROUND THE WORLD, WITH THE FIRST WORD, I'M RITIKA GUPTA. THE PRICE OF OIL IS LOWER TODAY. A REPORT FROM "THE FINANCIAL TIMES" THAT SAUDI ARABIA IS READY TO INCREASE PRODUCTION IF RUSSIA HAS TO CUT BACK SUBSTANTIALLY DUE TO SANCTIONS. RESIDENT BIDEN IS LIKELY TO VISIT SAUDI ARABIA THIS MONTH. HE WILL ALMOST INEVITABLY MEET WITH THE DEFECT A RULER, CROWN PRINCE MOHAMMAD BIN SALMAN ON, WHO HE HAS SHUNNED SO FAR. THAT MAY PAVE THE WAY FOR AN OIL PRODUCTION BOOST. IN UKRAINE, THE CENTRAL BANK HAS MORE THAN DOUBLED ITS BENCHMARK INTEREST RATE IN AN ATTEMPT TO STEM INFLATION IN THE WAKE OF THE RUSSIAN INVASION. OUR IN COSTS WILL RAISE FROM 10% TO 25%, THE HIGHEST AND ON THE SEVEN YEARS. IT WAS THE FIRST RATE HIKE IN FOUR MONTHS. INFLATION IN UKRAINE SOARED TO 17% IN MAY. MORE THAN 2/3 OF THE POPULATION PROBABLY HAVE COVID ANTIBODIES, ACCORDING TO THE WORLD HEALTH ORGANIZATION. THAT MEANS THEY HAVE EITHER BEEN INFECTED OR VACCINATED. STUDIES SAY THAT PEOPLE WHO HAVE BOTH BEEN INFECTED AND VACCINATED HAVE THE BEST PROTECTION AGAINST SEVERE OUTCOMES. CHASE COLEMAN'S TIME AT GLOBAL MANAGEMENT HAS LOST NOW THAN 50%. TIGER GLOBALS MAIN HEDGE FUND PLUNGED IN THE FIRST QUARTER. THEY CUT SOME OF THE BIGGEST TECH LOSERS, BUT ADDED OTHERS. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND ON BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I'M RITIKA GUPTA. THIS IS BLOOMBERG. ♪ >> THE BUSINESS CONTINUES TO BE THE BUSINESS IT HAS BEEN FOR THE LAST DECADE. SHERL -- SHERYL RAN THAT VERY WELL, EXCEPT FOR THE GOVERNANCE PART HAVE TO QUALIFY THAT. YOU CAN'T SAY ANYTHING OVER WOMANLY POSITIVE OR NEGATIVE ABOUT SHERYL SANDBERG. SHE WAS AN ASTONISHINGLY EFFECTIVE LEADER WHO HAD A MAJOR BLIND SPOT. JONATHAN: AND SHE IS ON THE WAY OUT. THAT IS THE AUTHOR OF "THE FACEBOOK DEFECT." THE OVER WOMAN CONCLUSION IS THAT FACEBOOK TODAY IS WHAT IT IS LARGELY BECAUSE OF THE INFLUENCE OF SHERYL SANDBERG. THE PROBLEM IS, EMBEDDED IN THAT CONCLUSION IS BOTH AN INSULT AND A COMPONENT. DEPENDS ON WHAT YOUR -- AND A COMPLEMENT. DEPENDS ON WHAT YOUR PERSPECTIVE IS. TOM: WE ARE ARRANGING 82 GUN SALUTE FOR THE QUEEN COMING UP IN ABOUT SIX MINUTES AT HYDE PARK. YOU WONDER, WOULD THERE BE A GUN SALUTE ADMIN LOW PARK FOR AN EXITING SANDBERG? JONATHAN: IF YOU HELD THE STOCK SINCE IT WENT PUBLIC, MAY BE. NOT OVER THE LAST 12 MONTHS. TOM: DOES THE STOCK GO UP BECAUSE OF HER? JONATHAN: A MASSIVE PIECE OF THAT, AN AGGRESSIVE PURSUIT OF AD REVENUE IS BECAUSE OF THAT ONE INDIVIDUAL, WITHOUT A DOUBT. TOM: TRUE PERSPECTIVE FROM BRIAN WI ESER, GROUPM PRESIDENT OF BUSINESS INTELLIGENCE. WHO WILL REPLACE SHERYL SANDBERG? BRIAN: IT IS CLEARLY NOT JUST ONE PERSON REPRICING WHAT SHERYL SANDBERG HAD AS A ROLE. HER RESPONSE ABILITIES WERE REALLY JUST ARE DID OVER THE LAST FOUR OR FIVE YEARS IN PARTICULAR. TOM: I THINK IT IS A MYSTERY OF HOW MR. ZUCKERBERG RUNS THE SHOP OR GET IT IS ELON MUSK, ELON MUSK, 24/7. HOW DOES ZUCKERBERG RUN FACEBOOK, AND WHAT KIND OF SHERYL SANDBERG DOES HE NEED NEXT? BRIAN: IT IS INTERESTING, FIVE AND MORE YEARS AGO, PEOPLE LIKE ME WOULD HAVE BEEN DEBATING JUST HOW MUCH IN CONTROL WAS MARK ZUCKERBERG. BECAUSE SANDBERG DID HAVE SO MUCH POWER AND AUTHORITY OVER SO MUCH OF THE BUSINESS. THE REALITY IS THIS WAS ZUCKERBERG'S BUSINESS AND REMAINS HIS. AT THE END OF THE DAY, PEOPLE ARE GOING TO EXECUTE WHAT HE WANT TO SEE HAPPEN. LISA: THERE WILL BE ALL SORTS OF SPECULATION AS TO WHY SHE IS LEAVING NOW. SHE SAYS SHE WANTS TO WORK MORE ON PHILANTHROPY, SHE ONCE TO COMMIT HERSELF TO HER NEW STEP CHILDREN, ETC. IS THERE A MORE MARKED SHIFT IN META THAT PERHAPS DOES NOT JIVE WITH THE NUTS AND BOLTS APPROACH SHE TOOK? BRIAN: I THINK THEY ARE CLEARLY TRYING TO MOVE IN DIRECTIONS DIFFERENT THAN ANYTHING SHE WORKED ON. THAT IS NOT A REASON TO MOVE ON, THOUGH. I THINK THERE HAS BEEN ENOUGH SPECULATION THAT I CAN ONLY SAY IS PROBABLY AS ACCURATE AS ANYONE ELSE CAN SAY IN TERMS OF WHETHER SHE WOULD HAVE MOVED ON HAD CLINTON WON THE ELECTION IN 2016. MAYBE THERE WOULD HAVE BEEN REASONS TO DO SOMETHING SOONER BECAUSE OF ALL OF THE CHALLENGES THEY HAD. AT THE END OF THE DAY, I DON'T KNOW THAT IT IS THE CHANGE OF BUSINESS THAT IS CONSIDERED A CATALYST FOR THE CHANGE, BUT I THINK IT IS CLEAR THAT ZUCKERBERG WANTS TO MOVE THE BUSINESS IN A DIFFERENT DIRECTION. THE ADVERTISING IS EVERYTHING FROM A REVENUE PERSPECTIVE. IT IS STILL A REALLY IMPORTANT MEDIA PARTNER. BUT AT THE END OF THE DAY, IT IS NOT THE THING THAT ZUCKERBERG IS FOCUSED ON. HE'S FOCUSED ON CONNECTING PEOPLE, FOR GOOD AND FOR BAD. LISA: DO YOU THINK SHERYL SANDBERG HOLDS A LOT OF THE BLAME FOR EMPHASIZING AD REVENUE , AND FRANKLY JUST VOLUME AND TRAFFIC, OVER A LOT OF SOCIAL CONCERNS WITH RESPECT TO THE INFLUENCE OVER ENTIRE SOCIETIES, AS WELL AS CHILDREN? BRIAN: THERE'S A SAYING, SUCCESS HAS 1000 FATHERS OR MOTHERS. THE OPPOSITE IS PROBABLY TRUE. I THINK THE CONSEQUENCES ARE WIDELY DISTRIBUTED. THE THINGS WE HAVE SEEN OUT OF FACEBOOK ARE NOT JUST ONE PERSON'S SPONSOR BILL IT. YOU COULD SAY IT IS MARK ZUCKERBERG'S. BUT THERE ARE SO MANY FACTORS AT PLAY I DON'T THINK YOU COULD PIN IT ON ONE PERSON. JONATHAN: THE ELEPHANT OF THE LAST 12 MONTHS IS THE PERFORMANCE OF THE NAME. IT HAS BEEN TERRIBLE, BRUTAL. HYPER SANDLER OUT THIS MORNING, CUTTING THE PRICE TARGETS ON SNAP COME ON PINTEREST, DOWNGRADING TO NEUTRAL FROM OVERWEIGHT OFF THE BACK OF WHAT THEY SEE AS SLOWING DIGITAL ADVERTISING SPEND GIVEN THE HEADWINDS OF THE INDUSTRY. WHAT DO YOU MAKE OF WHAT IS GOING ON AT THE MOMENT FOR THIS NAME AND OTHERS, EXPOSED TO THE WORLD THAT SHERYL SANDBERG HELPED CREATE? BRIAN: I THINK THE ISSUES ARE ONE OF EXPECTATIONS. WHERE DO YOU DIVIDE AND DISTRIBUTE THE BLAME FOR THAT ONE? I THINK THE REALITY IS THEY HAD THIS RIDICULOUSLY STRONG PANDEMIC. THEY DID SO MUCH BETTER THAN YOU COULD HAVE REALISTICALLY EXPECTED. THEY DID CATALYZE SOME GROWTH, BUT I THINK THEY CAPITALIZED IN CIRCUMSTANCES THAT WERE WAY OUTSIDE OF THEIR CONTROL. THE DIGITIZED NATION -- THE DIGITALIZATION OF THE ECONOMY DURING THE PANDEMIC WAS SOMETHING THEY BENEFITED FROM. I THINK TOO FEW PEOPLE APPRECIATE JUST HOW DIFFICULT THE COMPARABLES WERE FOR THE FIRST QUARTER OF 2021 WHEN THEY SLOWED DOWN TO A SINGLE-DIGIT GROWTH RATE WHEN THEY GREW ALMOST 50% AT THE SIZE THEY ARE AT. SO THERE ARE MISMATCHED EXPECTATIONS. I AM SURE THE COMPANY HAD MISMATCHED EXPECTATIONS TOO, BUT THE INVESTORS CERTAINLY DID. JONATHAN: WHAT DOES ALPHABET GET RIGHT IN THAT WORLD? BRIAN: FIRST OF ALL, THEY ARE MORE EXPOSED WHERE THE ECONOMY IS AT THIS MOMENT IN TIME. THERE'S MORE OF A SKEW TOWARDS SERVICES RATHER THAN PRODUCTS. THAT HELPS. THEY ARE LESS DEPENDENT ON E-COMMERCE BASED REVENUE THAT FACEBOOK WAS DEPENDENT ON. I THINK AT THE END OF THE DAY, AND THIS GOES TO A BIGGER ISSUE, GOOGLE HAS GONE THROUGH AN EXTRA GENERATION OF MANAGEMENT. IT IS NOT AN INDIVIDUALLY CONTROLLED COMPANY FOR PRACTICAL PURPOSES. IT IS PROFESSIONAL MANAGEMENT THAT IS AN EXTRA GENERATION DEEPER, IF YOU WILL. SO THERE IS MORE DIVERSIFICATION . THEY ARE JUST BETTER EXPOSED TO WHERE THE ECONOMY IS IN GENERAL. JONATHAN: WONDERFUL TO CATCH UP, AS ALWAYS. RYAN -- BRIAN WIESER THERE GROUPM. ALPHABET, THEY CALL IT THE START OF THE SHOW. TOM: THIS GOES WITH DAVID TO PATRICK JOINING BLOOMBERG THIS MORNING TO THE DAY THEY WENT PUBLIC. FACEBOOK NOW IS DOWN TO A 17% RETURN OVER LIFE OF FUND PER YEAR, AND THEY ARE THREE STANDARD DEVIATIONS OFF THE TREND. I DON'T CARE WHO YOU ARE. IF YOU ARE A CEO, THAT IS ACCEPTABLE. -- THAT IS ON A CUP DOUBLE. JONATHAN: THE LAST -- THAT IS UNACCEPTABLE. JONATHAN: THE LAST 12 MONTHS HAVE BEEN BRUTAL FOR THAT NAME. LISA: YOU HAVE COMPANIES NOT ADVERTISING AS MUCH BECAUSE THEY DON'T HAVE THE GOODS TO ACTUALLY SELL. WE HEARD THIS AS AN EXCUSE FOR SNAP, THAT BASICALLY SUPPLY CHAIN DISRUPTIONS ON THE LACK OF SUPPLY HAS LED SOME COMPANIES TO PULL BACK WITH THEIR ADVERTISING REVENUE DESPITE THE INCREDIBLE DEMAND. HOW MUCH IS THAT GOING TO BE A PERSISTENT THEME? JONATHAN: FUTURES UP 0.5% ON THE S&P. ON THE NASDAQ, UP 0.7%. THE PRICE ACTION DEVELOPS AS FOLLOWS GOING INTO THE OPENING DELL AND A LITTLE -- THE OPENING BELL AND A LITTLE BUT OF DATA THIS AFTERNOON. THE TREND YESTERDAY BUT HE CLEAR. UPSIDE SURPRISE ON ISM MANUFACTURING DROVE YIELDS HIGHER, TREASURIES LOWER. EVERY TIME WE GET A STRONG DATA POINT, THE FED HAS GOT MORE WORK TO DO IN THE MINDS OF THIS MARKET. TOM: ABSOLUTELY, BUT WE HAVE HAD SOME WEEK DATA POINTS AS WELL. I THINK IT IS INDETERMINATE RIGHT NOW. I THINK WE WILL SEE THE BEGINNING OF TWO DAYS OF DATA THAT MATTERS. THERE'S NO QUESTION ABOUT IT. JONATHAN: ON TO PAYROLLS TOMORROW MORNING. BIG FOCUS FOR US TOMORROW MORNING -- BIG FOCUS FOR US, A REPORT HERE AT BLOOMBERG THAT WE COULD HAVE A MEETING BETWEEN THE PRESIDENT OF THE UNITED STATES AND THE CROWN PRINCE OF SAUDI ARABIA, MOHAMMAD BIN SALMAN. A REPORT OUT OF "THE FT" THAT THE SAUDIS ARE GETTING READY TO PUSH OUT A LITTLE BIT MORE. >> WE HAVE NOT SEEN THE RECESSION MANIFEST IN THE MACRO DATA YET, SO WE STILL THINK THERE'S A PATH FOR THE ECONOMY TO HAVE A SOFT RATHER THAN A HARD LANDING. >> THESE ENERGY COSTS, FALLING INCOME, WE WILL BE IN A RECESSION WITHIN THE NEXT SIX MONTHS. >> WE HAVE A LABOR MARKET THAT IS UNPRECEDENTEDLY TIGHT. THE FED NEEDS TO OPEN THAT UP OR ELSE -- WILL IT COMMIT LATE. >> THIS IS "BLOOMBERG SURVEILLANCE" WITH TOM KEENE, JONATHAN FERRO, AND LISA ABRAMOWICZ. TOM: GOOD MORNING EVERYONE. ON RADIO, ON TELEVISION, WE WELCOME YOU TO AMERICA IN NEW YORK ON A DAY OF JOB CLAIMS AND ONTO THE JOBS REPORT. WE ARE DATA DEPENDENT. JONATHAN: AND WE ARE LOOKING FOR MORE DATA LATER THIS MORNING, THE ADP REPORT ABOUT 15 MINUTES AWAY. ONTO JOBLESS CLAIMS AT 8:30 EASTERN COME ONTO TOMORROW MORNING, IT: 30 EASTERN, WITH A PAYROLLS REPORT AND AN UNEMPLOYMENT RATE PREDICTED BY MANY TO COME DOWN TO 3.5%. TOM: THE TREND OF THAT TO 3.5% IS AWAY FROM WHAT THE FED REALLY WANTS. MANY PEOPLE TALKING ABOUT A NEED FOR A 4% UNEMPLOYMENT RATE. MOST AMERICANS DON'T AGREE WITH THAT. JONATHAN: YOU HAVE SEEN HOW THIS MARKET IS DIGESTING THE ECONOMIC DATA. YOU GET A STRONG DATA POINT, THE ISM MANUFACTURING. YOU GET TREASURIES LOWER, YIELDS HIGHER. THIS FED HAS MORE TO DO. TOM: WE'VE GOT TO GO TO HYDROCARBONS, PARTICULARLY WITH CHRISTYAN MALEK JOINING US IN THE LAST HOUR FROM JP MORGAN. DIMON SAYS IT IS A HURRICANE OUT THERE, AND THE HURRICANE STARTS WITH $113 BRENT CRUDE. JONATHAN: THIS WHITE HOUSE HAS BEEN IN THE MIDDLE OF THAT HURRICANE FOR THE WHOLE YEAR SO FAR. THE HURRICANE FOR THEM IS INFLATION. HIGHER CRUDE PRICES, HIGHER GAS PRICES. THE REPORT FROM THE TEAM AT BLOOMBERG SUGGESTING THE WHITE HOUSE, THE PRESIDENT OF THE UNITED STATES COULD BE MEETING WITH THE CROWN PRINCE MOHAMMAD BIN SALMAN IN RIYADH, SAUDI ARABIA. I THINK THAT IS A REALLY IMPORTANT DEVELOPMENT IN THE LAST 24 HOURS. TOM: WHAT IS SO INTERESTING HERE IS THE UNEQUAL APPLICATION OF 8% INFLATION ACROSS SOCIETY. IT IS NOT FAIR, IS IT? LISA: NO, IT HITS THE LOWEST INCOME THE HARDEST. HOW DOES THE FED DEAL WITH THAT, ALSO WHEN THE ON EMPLOYMENT RATE RISES? THIS HAS BEEN A CONUNDRUM FOR A LONG TIME, AND THIS IS A SOCIALLY CONSCIOUS FED THAT IS A LOT LESS SOCIALLY CONSCIOUS OUT A TIME WHEN INFLATION IS THE MAIN ISSUE. HOW MUCH ARE THEY GOING TO BASICALLY PUT YOU WANTS ASIDE PUT NEW WANTS ASIDE -- PUT NUANCE ASIDE AT THEY SAY THIS IS THEIR FIRST AND FOREMOST ISSUE? TOM: SHERYL SANDBERG WOULD NOT KNOW CREDIT IF IT HIT HER OVER THE HEAD. AN UPDATE ON CREDIT VERSUS FULL FAITH AND CREDIT. LISA: THERE'S ACTUALLY BEEN A RALLY, AND THIS GOES TO THE WHOLE FEELING THAT YOU'RE GOING TO GET NOT NECESSARILY A SOFT LANDING, BUT A BETTER FEELING. YOU SAW THAT IN RISK ASSETS. IT IS SUCH A NICE FEELING. JONATHAN: A NICE MOVE, WASN'T IT? [LAUGHTER] LISA: IT WAS SUCH A LOVELY MOVE. THERE'S THIS ISSUE MEGAN GREENE WAS TALKING ABOUT, THAT THE FED HAS TAKEN LESSONS FROM PREVIOUS HISTORY AND BASICALLY WILL JUST RAISE RATES TO NEUTRAL AND THEN WAIT. DREW MATUS OF METLIFE SENT ME A MESSAGE SAYING WHEN YOU MISS THE BUS, YOU DON'T JUMP ON A MOVING ONE. BASICALLY, THEY GOT IT TOO LATE AND NOW THEY ARE TRYING TO FIGURE OUT HOW TO CATCH UP, AND THEY HAVE TO REALLY THREAD A NEEDLE THAT IS ALREADY PRETTY NARROW. HOW DO THEY MOVE FORWARD? TOM: HE GOT A CHECK, A LARGE DEVALUATION IN THE BRITISH POUND SINCE THE BEGINNING OF THE QUEENS R -- THE QUEEN'S REIG N. JONATHAN: A NICE MOVE IN THIS EQUITY MARKET AGAIN. LISA KEEPS SAYING THAT EVERY MORNING, NICE MOVE. LISA: HONESTLY, CAN WE SET THE RECORD STRAIGHT? JONATHAN: PLEASE DO. LISA: YOU WERE THE ONE THAT SAID NICE MOVE, AND I LAUGHED AND SAID NICE, SO NICE, NOW IT IS MY COMMENTARY? JONATHAN: I THOUGHT YOU THOUGHT IT WAS A NICE MOVE, NO? YOU DID NOT THINK IT WAS? TOM: THE SHOW HAS COME TO A COMPLETE HALT. [LAUGHTER] JONATHAN: DID YOU NOT THINK IT WAS A NICE MOVE? TOM: LET'S SAVE THE SHOW RIGHT NOW. GIVE ME SOME JUBILEE ACTION. THEY ARE DOING A FLY OVER HERE. THEY ARE LANDING AT HEATHROW, COMING IN WITH BRITISH AIR RIGHT NOW. OF COURSE, THE ROYAL FAMILY AND THEIR ROYAL OFFSPRING ON THE BALCONY. JONATHAN: I BELIEVE WE ARE GOING TO HAVE A FLYOVER OF 70 ODD AIRCRAFT FOR EVERY YEAR OF THE QUEEN ON THE THRONE. TOM: CHARLOTTE, LOUIS, THEY ARE STYLING. JONATHAN: PACKED OUTSIDE OF BUCKINGHAM PALACE. TOM: JUBILEE COVERAGE HERE WITH PRINCE CHARLES, THE DUCHESS OF CAMBRIDGE. THIS IS THE WAVE I'M GOING WITH. IT HAS BEEN WORKING ALL MORNING. JONATHAN: THE ROYAL WAVE. YOU HAVE BEEN PRACTICING THAT. PEOPLE OFTEN REACH OUT TO ME AND TALK ABOUT HOW MUCH PREPARATION DO YOU HAVE TO DO, AND I WILL SAY WE DO A LOT OF READING. I KNOW WHAT YOU WERE DOING THIS MORNING IN THE MIRROR. JUST THAT. [LAUGHTER] TOM: THIS IS REALLY WORKING ON RADIO, BUT I WAS GOING TO GO WITH THE QUEEN MOTHER LOOK. JONATHAN: THE ITALIAN INFLUENCE IN MY FAMILY IS SOMETHING ELSE. THAT'S HOW I GREW UP. [LAUGHTER] TOM: WOULD YOU LIKE TO ADD ANY MORE TO THE JUBILEE? WE WILL CONTINUE HERE WITH THE PAGEANTRY. WE THANK QUEEN VICTORIA STREET FOR THEIR SERVICES THIS MORNING IN COVERING A MOMENT FOR QUEEN ELIZABETH II. BRIAN NICK IS LIKE, WHEN DO I GET SOME AIRTIME? JOINING US NOW, CHIEF INVESTMENT STRATEGIST AT NUVEEN. IN EQUITIES, PEOPLE ARE TRYING TO GUESS A BOTTOM. IN THE BOND MARKET, HOW DO YOU GUESS A BOTTOM WHICH LEADS TO PRICE UP, YOU'LL DOWN -- PRICE UP, YIELDS DOWN? BRIAN: WHAT WE NEED TO SEE IS THE DATA COMING IN THAT IS STRONG, BUT NOT TOO STRONG. NUMBERS WE GET THAT SHOW THE ECONOMY IS SLOWING, BUT NOT CRATERING INTO RECESSION, JUST SORT OF NORMALIZING, THAT OF THAT IS TAKING PRESSURE OFF THE FED, TAKING UPWARD PRESSURE OFF THE 10 YEAR, AND THAT IS THE RELEASE POINT FOR RELIEVING ON THE EQUITY MARKETS, CREDIT MARKETS, AND WE KNOW WHAT HAPPENS TO FED FUNDS FUTURES AS WELL. WE START TO SEE A DOWNWARD MOVE THERE, MAYBE SOME OF THOSE 50 BASIS POINT HIKES FROM LATER THIS YEAR GETTING PRICED OUT, LOOKING MORE LIKE 25 OR EVEN A PAUSE, AND THAT IS THE RELEASE VALVE ON THE PRESSURE THAT I THINK IS WHAT IS GOING TO MARK THE TOP FOR THE 10 YEAR ON THE BOTTOM FOR THE S&P 500. WE MAY HAVE ALREADY SEEN IT, BUT THE MORE DATA WE GET FROM THE ISM AND THE JOLTS DATA YESTERDAY, THE MORE WORK THE FED IS GOING TO NEED TO THING ABOUT DOING. JONATHAN: I LOOK AT THE ECONOMIC DATA AT THE MOMENT AND THERE SEEMS TO BE SOMETHING FOR EVERYONE. MENTION THE ISM MANUFACTURING, THE JOB OPENINGS. OTHERS POINT TO THE REGIONAL FED PRINTS AND SAY THINGS ARE NOT AS STRONG AS THEY SEEM. HOW DO YOU PUT TOGETHER THAT CONTRADICTORY ECONOMIC DATA WE ARE GETTING IN AMERICA? BRIAN: WE HAVE A CONFLICT BETWEEN THE SOFT SURVEY DATA RIGHT NOW AND THE HARD DATA. PEOPLE ARE -- I ALWAYS BELIEVE THE HARD DATA, BUT I THINK JOB SECURITY IS REALLY THE NAME OF THE GAME HERE. IT IS NOT JUST THE JOB MARKET, THE UN-IMPLEMENT RATE, THE JOB OPENINGS. MOST PEOPLE WHO WANT TO BE WORKING ARE WORKING AND PROBABLY HAVE GOTTEN A BIT OF A PAY BUMP, BUT ARE PAYING HIGHER PRICES AT THE PUMP, HIGHER RENTS. WHAT GIVES THEM THE CONFIDENCE TO CONTINUE SPENDING ON EVERY THING ELSE AND KEEPING THE ECONOMY MOVING? VERY FEW LAYOFFS AND INVOLUNTARILY SEPARATIONS STILL ONGOING. IF WE SEE DESTRUCTION IN JOB OPENINGS, BUT NOT AN ACTUAL JOB CREATION, I THINK THE CONSUMERS CARRY US THROUGH BECAUSE IF YOU ARE RELATIVELY COVERED OF YOU WILL BE ABLE TO STAY IN YOUR JOB, EVEN IF YOU ARE NOT ABLE TO EASILY FIND ANYONE, YOU'RE PROBABLY GOING TO KEEP SAVING AND CONTINUE TO KEEP THIS ECONOMY MOVING. LISA: FROM A MARKET PERSPECTIVE, IS THIS A GOOD OR BAD THING THAT THE CONSUMER SO HAS A LOT OF CASH READY TO GO? BRIAN: IT IS DEFINITELY A MIXED BAG, BUT A GOOD THING NOW THAT THE FED IS DELIBERATELY RAISING RATES QUITE QUICKLY TOWARDS SOME SEMBLANCE OF NEUTRAL. WE WOULD MUCH RATHER CONSUMERS HAVE CASH ON THE SIDELINES, BUT THAT IS NOT TRUE ACROSS THE BOARD. IF WE LOOK AT THE LOWER END OF THE WAGE SCALE, WAGE GROWTH HAS BEEN TYPICALLY BETTER IN THESE TYPES OF JOBS, BUT THE ACCUMULATE SAVINGS HAS PROBABLY BEEN SPENT MUCH MORE QUICKLY AND WE ARE SEEING PEOPLE DIP INTO BORROWING AND ARE MEDICALLY LOWER THEIR SAVINGS RATE, SO IT'S A MIXED BAG ACROSS THE SPECTRUM, AND THIS IS ONE REASON WHY WE PREFER TO BE IN THE WITH ECONOMY VERSUS OTHER PLACES WHERE FOOD AND ENERGY PRICES BITE A LOT MORE, YOU HAVE NOT SEEN THE WAGE INCREASES TO MATCH THE PRICE INCREASES, SO IN EUROPE THEY HAVE NOT HAD HIGH WAGE GROWTH. THEY HAD THIS IN KIND OF INFLATION WE HAVE. THAT MEANS THE CONSUMER HAS ALREADY COME OUT OF THIS A BIT WEAKER THAN OURS IN THE U.S. JONATHAN: J.P. MORGAN SAID YESTERDAY DESPITE THE STEEP SELLOFF, WE BELIEVE MARKETS WILL RECOVER YOUR TO DATE LOSSES AND RESULT IN A BROADLY UNCHANGED YEAR. WHAT HAS TO GO RIGHT FOR THAT TO HAPPEN, AND IS THAT SUMS AND YOU CAN GET BEHIND? BRIAN: I REALLY WANT TO BELIEVE THAT VIEW. WE ARE DOWN 13% OR 14%. TO SEE THAT RALLY OVER THE BALANCE OF THE YEAR ON THE S&P WOULD BE WONDERFUL. I THINK IT PROBABLY NEEDS TO HAPPEN HERE THAT YOU GET SOME SORT OF THREADING THE NEEDLE FROM THE FED. PROBABLY 50 BASIS POINT HIKES OVER THE SUMMER AND DECELERATING TO 25 OR NOTHING BY THE END OF THE YEAR, AND NOT HAVING THAT HAPPEN IN THE CONTEXT OF A DRAMATIC WEAKENING IN THE ECONOMY. SO CONTINUE TO FALL IN JOB OPENINGS, CONTINUED JOB CREATION , JOB SECURITY FOR PEOPLE WHO HAVE RISING WAGES AND FALLING GASOLINE PRICES WOULD BE NICE, BUT IT DOES NOT SEEM AT THAT IS GOING TO HAPPEN IN A DRAMATIC WAY ANYTIME SOON. I THINK THAT IS WHAT GETS US TO THE CONFIDENCE, WHEN WE GET TO THAT SEPTEMBER HINGE POINT THAT THE FED CAN TICKETS FOR OFF THE BRAKE A LITTLE BIT. WE'VE ALREADY SEEN THE CREDIT MARKETS ARE BEHAVING BETTER. WE THINK THAT MIGHT BE SORT OF A HALF MEASURE FOR INVESTORS WHO WANT TO GET A LITTLE RISK ON BUT DON'T WANT TO TAKE THE FULL RISK OF BEING EXPOSED TO ANOTHER EQUITY DOWNDRAFT. CREDIT MARKETS ARE POLICE PAYING YOU A COUPON. JONATHAN: BRIAN NICK WITH AN ELEGANT WAY OF SAYING NO. IT IS GOING TO BE VERY DIFFICULT. THAT WAS VIEW. I LIKE THAT. WAS THAT FOR ME? TOM: IT WAS. JONATHAN: I LIKE THAT. GOING TO DO THAT FOR THE NEXT FEW DAYS. THAT WORKS OUT, TOM. TOM: AN IMPORTANT NOTE HERE. FOREIGN-EXCHANGE TELLS YOU SO MUCH. STERLING TO DOLLAR, WE ALL KNOW THERE HAS BEEN A DEVALUATION OF POUND STERLING DOWN TO 1.26 OVER THE SPAN OF THE QUEEN'S CORONATION. FROM 12.24 DOWN TO 1.20, WHAT DOES THAT SAY ABOUT THE STRENGTHS OF THE SWISS FRANC? JONATHAN: IT SAYS A LOT ABOUT IT. I THOUGHT IT WAS BEAUTIFUL. WAIT FOR THE EXCESS -- FOR THE FX ANALYSIS. YOU WANT TO WAVE US OUT? TOM: BOY GEORGE IS DOING THE CLAPPING WITH THE MOTHER, THE DUCHESS OF CAMBRIDGE. JONATHAN: TOO CLOSE TO THE COMMUNIST PARTY. TOM: THAT'S MORE LIKE THIS. LISA: ELBOW, ELBOW, WRIST, WRIST. LET YOUR PEARLS. TOM: WHEN WE GO TO SHANGHAI FOR THE PARTY CONGRESS, THREE OF US ON THE BALCONY OF THE PEACE HOTEL, WE WILL BE DOING THIS. JONATHAN: I AM FAIRLY CONFIDENT THAT IS NOT HAPPENING. RITIKA: KEEPING YOU UP TO DATE WITH NEWS FROM AROUND THE WORLD, WITH THE FIRST WORD, I'M RITIKA GUPTA. THE PRICE OF OIL IS FALLING TODAY FOLLOWING A PAIR OF REPORTS ACCORDING TO "THE FINANCIAL TIMES." SAUDI ARABIA IS REPAIRING TO PUMP MORE CRUDE DUE TO INCREASING SANCTIONS. AND WHILE, PRESIDENT BIDEN IS LIKELY TO VISIT SAUDI ARABIA THIS MONTH. THAT COULD LEAD TO AN INCREASE IN SAUDI OIL PRODUCTION. SOARING GAS PRICES ARE HURTING POLITICALLY. SHERYL SANDBERG HELPED TURN FACEBOOK INTO A MULTIBILLION-DOLLAR ADVERTISING POWERHOUSE. SANDBERG IS STEPPING DOWN AS CHIEF OPERATING OFFICER OF META PLATFORMS AFTER 14 YEARS. SHE'S THE HEIL PROGRAM -- SHE STOOD IS THE HIGHEST PROFILE FACE OF THE COMPANY TO MARK ZUCKERBERG. RUSSIA SAYS IT IS READY TO SETTLE CLAIMS ON BONDS THAT WERE JUDGED TO HAVE BREACHED THEIR TERMS AFTER MISSING $1.9 MILLION IN INTEREST PAYMENTS. IT IS AN ATTEMPT TO AVOID AN INSURANCE PAYOUT BUT IN JULIE WORTH BILLIONS OF DOLLARS. THE CREDIT DERIVATIVES DETERMINATIONS COMMITTEE SET FAILURE TO PAY OCCURRED ON CREDIT DEFAULT NEW DATA SUGGESTS U.S. HOUSING SUPPLY HIT A TURNING POINT LAST MONTH, ACCORDING TO REALTOR.COM. HOME LISTINGS INCREASE FOR THE FIRST TIME IN THREE YEARS. THE NUMBER OF ACTIVE LISTINGS ROSE 8%. STILL, LISTINGS REMAIN MORE THAN 2% BELOW THEIR LEVEL TWO YEARS AGO. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND ON BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I'M RITIKA GUPTA. THIS IS BLOOMBERG AREA -- THIS IS BLOOMBERG. >> RUNAWAY INFLATION AT THE GAS PUMP AND THE GROCERY COUNTER HAS MEANT THE LEAD INDICATOR FOR RECESSION OF THE LAST SIX RECESSIONS IN THE UNITED STATES, IF THE UNITED STATES IS NOT CURRENTLY IN RECESSION, THESE FOOD COSTS, THESE ENERGY COSTS, FALLING INCOME, WE WILL BE IN A RECESSION WITHIN THE NEXT SIX MONTHS. JONATHAN: THIS CRUDE MARKET AND A WHOLE LOT MORE IN THIS ECONOMY. EQUITY FUTURES ARE POSITIVE BY 0.4%. ABOUT A MINUTE AWAY FROM ADP DATA. CRUDE, $114.59, DOWN ABOUT 0.6%. WE WANT TO GO THROUGH THINGS PIECE BY PIECE. WE HAD A REPORT FROM "THE FT," SUGGESTING THE SAUDIS MAY BE READY TO BOOST MORE. MOMENTS AGO, THIS HEADLINE. OPEC+ TO DISCUSS ADDING 600,000 BARRELS A DAY TO THE OIL MARKET IN JULY, ACCORDING TO DELEGATES. THIS PROPOSAL AGAINST A SCHEDULED 430,000 A DAY INCREASE. TOM: I BLEND IN AGAIN TO BLOOMBERG COMMODITY INDEX, WHICH IS UP NICELY THIS MORNING. NOT QUITE TO THE MIDDLE OF APRIL NEW HIGHS, BUT THOSE INDICES BLENDED OIL AND AWAY FROM OIL ARE PUSHING UP TO RECORD HIGHS. JONATHAN: CLEARLY THIS MARKET WANTS TO SEE MORE FROM THIS CARTEL. WE ARE DOWN 0.6 PERCENT OR 0.7%. IT IS A DOWNSIDE SURPRISE, 128,000. THE PREVIOUS NUMBER, 247,000. SETTING US UP KIND OF FOR PAYROLLS TOMORROW MORNING. THE PREVIOUS NUMBER, 428 THOUSAND. THAT IS THE DOWNSIDE SURPRISE ON THE ADP REPORT. LISA: DO WE CARE? DOES ANYBODY CARE? HONESTLY, ADP DATA HAS BEEN INCREDIBLY VOLATILE. PEOPLE TEND TO NOT REALLY TRADE OFF OF IT, WHICH IS THE REASON WHY IT IS VERY HARD TO READ. ARE PEOPLE GOING TO TRY TO MAKE SOMETHING OF THIS? SURE, BECAUSE THEY ARE LOOKING FOR DATA AND SAYING THEY ARE DATA DEPENDENT, BUT HONESTLY, WHAT CORRELATION HAS THERE EVER BEEN BETWEEN 80 P.M. JOBS? THAT'S BETWEEN ADP AND JOBS -- BETWEEN ADP AND JOBS? JONATHAN: I THINK MOST WOULD PROBABLY AGREE WITH WHAT YOU JUST SAID. IF WE GET A DOWNSIDE SURPRISE TOMORROW, IS THAT INDICATION OF WEAKNESS OR JUST THE FACT THAT LABOR MARKET GAINS ARE GOING TO MATURE ANYWAY? SHOULD WE BE MORE FOCUSED ON WHAT HAPPENS WITH ON THE LEMON AND WAGES? TOM: WHAT I WILL LOOK AT IS UNIT LABOR COSTS. I KNOW IT IS DATED, Q1 THEN ALL THAT. I WILL LOOK AT UNIT LABOR COSTS TO SEE HOW THEY ADJUST. LISA: A TERMINAL USER DID RIGHT IN SAYING WE CARE ABOUT ADP, SO I STAND CORRECTED. I FOUND A PERSON WHO CARES ABOUT ADP. I SEE YOU. JONATHAN: I'M SURPRISED YOU FOUND ONE. BY ALL MEANS, RIGHT IN. I WOULD OKTA FIND MORE THAN ONE. EQUITY FUTURES UP 0.5%. JUST CHECKING OFF THE BACK OF SOME DECENT DATA, YIELDS ON THE TENURE RIGHT NOW UP ABOUT 0.5% ON THE TENURE TO 2.91%. TOM: AS YOU PREPARE FOR THE REAL YIELD, SO ONE THING IT WAS FAR MORE IMPORTANT THAN "BLOOMBERG SURVEILLANCE." BUT THE REAL YIELD WITH A 0.2 6%, THAT IS CERTAINLY NOT GOING IN A GLOOM DIRECTION. THAT IS FIRMED UP, IS HOW I WOULD PUT IT. JONATHAN: ONE THING WAS THE CONSENSUS VIEW, DON'T FIGHT THE FED. WE ALL THOUGHT THE FEDERAL RESERVE WOULD BECOME AN AFTER INFLATION, HAMMERING INFLATION AND DRIVING REAL YIELDS HIGHER IN A MUCH MORE MATERIAL WAY. I HAVE TO SAY, IT KIND OF STALLED OUT RECENTLY. WHAT ARE WE NOW, POSITIVE 25 BASIS POINTS? MAYBE NOT AT THE LEVELS PEOPLE EXPECTED. TOM: WE WILL HAVE TO SEE. WHAT WE HAVE TRIED TO DO IS INFORM YOU ABOUT THE COMMODITY PRICES YOU ARE LIVING. OUTFRONT FIRST WAS FRANCISCO BLANCH. I REMEMBER THE DAY A NUMBER OF QUARTERS AGO WHERE HE SHOCKED THE WORLD OVER $100 A BARREL. HE HAS PROVIDED REAL INTELLECTUAL LEADERSHIP ON TRYING TO FIGURE OUT WHERE THE NEXT GALLON OF GAS IS GOING TO BE PRICED. THANK YOU FOR JOINING THIS MORNING. I WANT TO GO TO THE HEART OF YOUR NOTE. YOU'VE GOT A BIAS UPWARD IN PRICE, AND YOU ARE LOOKING AT THE PRICE RESPONSIVENESS, THE PRICE ELASTICITY OF DEMAND. ARE WE GOING TO SEE DEMAND DESTRUCTION AS OIL MOVES UP, OR IS IT INELASTIC? FRANCISCO: HIGH PRICES ALWAYS FIX HIGH PRICES, SO WE ARE CERTAINLY GOING TO SEE SOME DEMAND DESTRUCTION. ONE OF THE CHALLENGES, YOU MAY RENUMBER THIS WHEN WE WERE TALKING ABOUT THESE ISSUES, IS THAT AS PRICES GO UP, GOVERNMENTS TEND TO USE FUEL SUBSIDIES AS A TOOL TO KEEP PEOPLE HAPPY. SO WE ARE SEEING A CURTAILMENT ACROSS MUCH OF EUROPE. WE HAVE ALSO SEEN SOME U.S. STATES DOING THE SAME THING. MEXICO, MANY EMERGING MARKETS. AS PRICES GO UP, GOVERNMENTS STRIDE TO REDUCE THAT ELASTICITY, AND THEREFORE YOU END UP GETTING MORE ON THE WHOLESALE MARKET, WHICH IS KIND OF WHAT WE HAVE SEEN SO FAR. THE OTHER BIG ISSUE OBVIOUSLY IS THAT WE HAVE, AS I LIKE TO SAY, THE MOTHER RUSSIA OF ALL SUPPLY SHOCKS. IT IS JUST A VERY BIG SUPPLY SHOCK. TOM: BRIAN MOYNIHAN IN DAVOS WAS EXCEPTIONALLY POSITIVE ON THE RESILIENCY OF THE AMERICAN CONSUMER. DO YOU CARE ABOUT THE PRICE ELASTICITY AND DEMAND DESTRUCTION AS GASOLINE GOES TO SEVEN DOLLARS A GALLON? FRANCISCO: I DO CARE, BUT IF YOU LOOK ACROSS THE WORLD, AND THIS IS PROBABLY ONE OF OUR MOST POPULAR, THE ENERGY SHARE OF GDP , ACROSS THE WORLD IT IS ACTUALLY QUITE HIGH, ALMOST BACK TO THE IRANIAN REVOLUTION LEVELS FOR THE ENTIRE PLANET, IN TERMS OF WHAT WE SPEND ON ENERGY, DIVIDED BY THE PRICE AND NOMINAL GDP. BUT IN THE U.S., THE TWIST IS THAT YOU HAVE NOT HAD THE GLOBAL GAS AND POWER CRISIS WE HAVE SEEN IN EUROPE, THAT WE HAVE SEEN IN ASIA, SO THE U.S. IS ENDURING NATURAL RECORD HIGHS ON GAS PRICES. AT THE END OF THE DAY THE U.S. IS NOT FACING THE SING KIND OF ENERGY PRICES IN AGGREGATE THAT THE REST OF THE WORLD IS SUFFERING FROM, SO ISAAC THE U.S. IS A LOT LESS EXPOSED, PLUS ALSO REMEMBER THE DOLLAR IS VERY STRONG, SO THAT MEANS AMERICA HAS BEEN INSULATED ALSO MORE THAN OTHER COUNTRIES THAT ARE FACING THIS INCREDIBLY STRONG DOLLAR AND STRONG COMMODITY PRICES. WHICH IN MY MIND ALSO SHIELDS THE U.S. FROM THE VAGARIES OF ENERGY PRICES. SO I THINK WE ARE GOING TO SEE RECESSIONS, BUT THE QUESTION IS WHERE AND WHEN, AND THE U.S. IS PROBABLY AT THE BOTTOM OF THE LIST IN TERMS OF THE COUNTRIES THAT WILL BE IMPACTED BY THIS SKYROCKETING ENERGY PRICES. LISA: THERE'S A LOT TO UNPACK THERE. I WANT TO FIRST TO GET YOUR SENSE OF HOW CLOSE WE ARE TO A FULL-BLOWN 1980'S STYLE OIL CRISIS. FRANCISCO: WE ARE NOT THAT FAR. I THINK WE HAVE SEEN GLOBAL GAS AND POWER PRICES ALREADY IN THE PAST 12 MONTHS THAT STARTED WITH THERMAL COAL IN CHINA. REMEMBER, THE MOST EXTENSIVE ENERGY COMMODITY HAS REALLY BEEN THERMAL COAL AND NATURAL GAS. WE ARE AT 400 BARRELS A TON OF THERMAL COAL, TWICE THE LEVEL OF WHAT WE SAW IN THE FINANCIAL CRISIS IN 2008, WHEN OIL WENT TO $147 A BARREL. $400 A TON, ABOUT $100 PER BARREL OF OIL EQUIVALENT. SO $115 AIN'T EXPENSIVE WHEN COAL IS AT THE SAME LEVEL. WE HAVE SEEN NEARLY $500 A BARREL OF NATURAL GAS PRICES, SO THAT IS WHAT THE REAL ISSUE IS. OIL IS YET NOT IN CRISIS. IT COULD GO INTO CRISIS, AND I THINK THAT IS THE REAL PROBLEM HERE WITH THE WAY SANCTIONS MAY BE IMPLEMENTED. HOW MUCH RUSSIAN SPY TO BE IN OF THE LOSING, AND HOW CAN THAT IMPACT THE SUPPLY AND DEMAND IMBALANCES HERE? JONATHAN: I WOULD LOVE SOME REAL-TIME ANALYSIS ON THE HEADLINES WE ARE GETTING FROM OPEC+, INDICATING THAT COULD BE DISCUSSING AN ADDITIONAL 600,000 BARRELS A DAY AGAINST THE SCHEDULED 430,000. ALSO SOME MEDICATION THEY MIGHT DECIDE TODAY ON JULY AND AUGUST HIKES. I WILL TELL YOU WHAT THE MARKET IS DOING OFF OF THIS. IT IS A RACING LOSSES. CREW DOWN 0.6%. THE BDI BACK TO ONE HUNTER $14 50 SINCE. WHAT IS YOUR READ ON THIS KIND OF HEADLINES? FRANCISCO: MY READ IS THAT OPEC+ DOES NOT WANT TO BE BLAMED FOR OIL PRICES SKYROCKETING ON THE BACK OF THE EUROPEAN SANCTIONS, SO THEY ARE TRYING TO INCREASE PRODUCTION AND MITIGATE THE UPWARD PRICE PRESSURES, BUT REMEMBER, WHEN HIS BIGGEST CHALLENGES IN THIS MARKET IS THAT IT DOES NOT HAVE THIS CAPACITY. IT IS ALSO THE SECOND LARGEST REFINED CONTROLLING EXPORTER, AND 40% OF THE DIESEL THAT GOES INTO THE CONTRACT, THE MOST IMPORTANT DIESEL CONTRACT IN THE WORLD, IS ACTUALLY RUSSIA. SO YOU'RE TAKING A LOT OF SUPPLY OUT OF A VERY TIGHT MARKET, AND UNFORTUNATELY WHEN YOU DO NOT HAVE THE REFINING CAPACITY AVAILABLE, THERE'S NOT THAT MUCH THEY CAN DO. THEY CAN TRY TO KEEP A LID ON CRUDE OIL, BUT THAT IS NOT NECESSARILY GOING TO HELP THE PRICE OF GASOLINE. JONATHAN: JUST A FINAL WORD FROM YOU ON THE TOPIC, OPEC CAN'T DO ANYTHING SEEMINGLY TO INFLUENCE THE PRICE OF THINGS ACCORDING TO WHAT YOU JUST SAID BECAUSE OF REFINING CAPACITY. WHERE DOES IT LEAVE THE ADMINISTRATION IN THE UNITED STATES AS THE PRESIDENT GEARS UP FOR A MEETING WITH THE CROWN PRINCE? WHAT CAN THE PRESIDENT DO HERE IN AMERICA? FRANCISCO: I THINK WHAT WE HAVE SEEN, RELEASE A LITTLE BIT OF SPR. THE SPR HAS BARRELS AVAILABLE WHICH ARE BEING RELEASED TO THE MARKET. I THINK THE CHALLENGE HONESTLY IS THAT WE ARE TIGHT ON EVERY FRONT. I THINK PERHAPS WE SHOULD BE THINKING ABOUT RATIONING MEASURES. MAYBE STOP SUBSIDIZING FUELS, BUT MORE IMPORTANTLY, THING ABOUT LIMITING SPEED ON HIGHWAYS. JONATHAN: USING THAT IS WHERE THIS COULD GO AND -- YOU THINK THAT IS WHERE THIS COULD GO IN THIS COUNTRY? FRANCISCO: MAYBE NOT IN THE U.S., BUT CERTAINLY OTHER PARTS OF THE WORLD I THINK ARE GOING TO HAVE TO END UP SEEING SOME DEMAND RATIONING. I THINK SO. I THINK WE ARE GOING INTO DEMAND RATIONING ON THE BACK OF THESE MEASURES. JONATHAN: A LONGER CONVERSATION NEEDS TO BE HAD. TOM, CAN YOU IMAGINE THAT HAPPENING HERE? TOM: I CANNOT IMAGINE IT HAPPENING HERE. WE UNDERESTIMATE HOW SOPHISTICATED, DENSE, AND HUGE THE U.S. ECONOMY IS. TO THE BEGINNING OF THE CONVERSATION, WHEN FRANCIS GO BLANCHE TALKS ABOUT THE GOVERNMENT SUPPORT FOR THEIR PEOPLE ON HYDROCARBONS OR WHEAT, THAT IS THE TIP PRICE. THERE'S A MOMENT WHERE THE PRICE OF OIL PRECLUDES THAT GOVERNMENT SUPPORT. THAT IS THE POLITICAL TENSION. JONATHAN: CAN YOU IMAGINE THE POLLS IF THAT TOOK PLACE? LISA: NO, ALTHOUGH WE ARE SEEING THAT IN NIGERIA. THEY HALTED CERTAIN AIRLINES IN ORDER TO AVOID HAVING EVEN HIGHER FUEL SURCHARGES. JONATHAN: EQUITY FUTURE SHAPING UP AS FOLLOWS. POSITIVE .4% ON THE S&P. THE NASDAQ UP .5%. THE ADP REPORT OUT MOMENTS AGO WITH THE DOWNSIDE SURPRISED. UNIT LABOR COSTS COME IN PUNCHY. THE PREVIOUS READ 11.6%. CLAIMS WITH THE RIGHT KIND OF DOWNSIDE SURPRISED. 200,000. AS I SAY, THAT IS THE RIGHT KIND OF DOWNSIDE SURPRISED ON JOBLESS CLAIMS. THEY START TO KICK A LITTLE BIT HIGHER OVER LAST FEW WEEKS. YIELDS IN ABOUT ONE BASIS POINT. TOM: A NEW LOOK ON UNIT LABOR COSTS, FROM 11.6% UNIT LABOR COSTS OUT TO 12.6%. THAT IS GOING IN THE WRONG INFLATION WAY. I AM SORRY. THERE IS GOING TO BE A LOT OF DATA. IT IS REALLY IMPORTANT. JONATHAN: YOU LOOK AT THE DATA NUC EASY CLAIMS GOING LOWER, YOU SEE THE INFLATIONARY COMPONENT TO THE STORY. I KNOW IT IS THE FIRST QUARTER. IT SPEAKS TO WHAT WE ARE TALKING ABOUT. THE FED HAS WORK TO DO. LISA: THERE IS NO SIGN OF A JOB MARKET THAT IS LOOSENING UP MATERIALLY. THE FACT WE ARE SEEING CONTINUING CLAIMS DROPPED TO THE LOWEST BACK TO 1969, YOU COULD SAY BECAUSE PEOPLE ARE NOT ELIGIBLE FOR UNEMPLOYMENT BENEFITS. YOU CAN ALSO SAY PEOPLE ARE NOT GETTING LAID OFF. THEY'RE GETTING REEMPLOYED. HOW MUCH DOES THAT FACTOR INTO WHAT WE'VE HEARD FROM THE FEDERAL RESERVE? TOM: YOU GO BACK TO 1969? LISA: CONTINUING CLAIMS ARE THE LOWEST SINCE 1969. I AM PUTTING THIS INTO PERSPECTIVE IN TERMS OF A HISTORICAL PATTERN. JONATHAN: THAT SOUNDED LIKE A YES OR NO QUESTION. LISA: I APPRECIATE THAT. JONATHAN: TOM LOOKED LIKE HE CANNOT HEAR US. TOM: I WAS ASKING ABOUT THE QUEENS BAG, IT GOES BACK TO 1969. I WAS NOT ASKING ABOUT CLAIMS. STEVEN RICCHIUTO RIGHT NOW. LET'S GET IT OUT OF THE WAY. THE RECESSION CALL. WHERE IS IT? STEVEN: WE HAVE A HARD LANDING CALL. WE ARE DOWN 1.5%, NEGATIVE GDP IN THE FIRST QUARTER. WE THINK SECOND-QUARTER GDP IS BELOW 1.75%. WE THINK GDP EVERYWHERE IS BELOW THE CBO ESTIMATE. THAT IS A GROWTH RECESSION. IS IT POSSIBLE WE GET ANOTHER QUARTER OF NEGATIVE GDP? THE ASK. WE WILL NOT HAVE A RECESSION. THERE ARE NOT FUNDAMENTAL IMBALANCES TO GIVE US A CLASSICAL RECESSION. TOM: ARE WE AT A POINT WHERE THE FED SHOULD JUST RAISE RATES? JUST COME OUT AND GET IT DONE NOW SO WE CAN MOVE ON, OR DO THEY STAY ON A MEETING SCHEDULE? STEVEN: THEY WILL STAY ON A MEETING SCHEDULE. FORWARD RATES HAVE MOVED DRAMATICALLY. FORWARD RATES WILL REVERSE SOME OF THE TITANS AND START TO UNFOLD -- SOME OF THE TIGHTENING AND START TO UNFOLD BACK WHERE THEY WERE. JAMES BULLARD KEEPS PUSHING THE ENVELOPE TO THE END OF THE YEAR. THE MARKET IS GETTING AS CLOSE TO 3% BY THE END OF THE YEAR. THAT IS DISCOUNTED INTO THE MARKETPLACE. YOU ARE SEEING A UBIQUITOUS IMPACT IN TERMS OF THE INTEREST-RATE SENSITIVE SECTORS. YOU ARE SEEING IT IN AUTOS AND HOUSING. GETTING BACK TO LISA'S QUESTION, WHEN YOU LOOK BACK AT QUESTION -- WHEN YOU LOOK BACK AT HISTORY YOU SEE SMOOTH PATTERNS, BUT WHEN YOU LIVE THROUGH THEM THEY ARE MUCH MORE DISCONTINUOUS. FURTHER INTO THE SUMMER YOU WILL SEE THE DISTANT TICKET -- THE DISCONTINUOUS DROP FROM THE KEY MOTIVE EFFECTIVE THE RATE HIKES. LISA: SO FAR, IF WE ARE SEEING WHAT THE FED IS GOING TO DO PRICED INTO THE MARKET, IS IT WORKING? WE HAVE ANY EVIDENCE IT IS WORKING? STEVEN: YOU HAVE TO SLOW THE DEMAND-SIDE TO SLOW THE MARKET ENVIRONMENT. PAYROLL IS AT BEST A COINCIDENT INDICATOR. TO THE EXTENT YOU ARE TAKING AGGREGATE DEMAND DOWN, YOU WILL HAVE SEVERAL QUARTERS OF BELOW TREND GDP. THAT WILL HAVE AN IMPACT ON THE LABOR MARKET, IT WILL JUST NOT HAVE AN IMPACT ON THE LABOR MARKET AS QUICKLY AS MARKETS WOULD LIKE. WHEN YOU LOOK AT WHAT IS HAPPENING IN TERMS OF THE MARKET BETTING THE FED WAS REACHING INFLATION POINT, THAT WAS TOO PREMATURE. THEY TOOK OUT SOME OF THE RATE HIKES FOR THE END OF THE YEAR AS A RESULT OF THAT SPECULATION AND I THINK THAT SPECULATION WILL BE REVERSED AND MORE RATE HIKES WILL BE DISCOUNTED AS WE GO FORWARD IN THE NEXT COUPLE OF MONTHS. LISA: THERE IS A LOT TO UNPACK. I AM LOOKING AT THE IDEA OF A FED PAUSE WHEN WE HAVE TO WAIT FOR THE DATA TO SHOW AND WE ARE GETTING SOME SORT OF SLOW DOWN TO INFLATION. THERE IS NOT THE POLITICAL WILL FOR THE FEDERAL RESERVE TO BE PATIENT. HOW MUCH MORE AGGRESSIVE DELAY HAVE TO BE GIVEN IT WILL TAKE TIME FOR THERE TO BE ANY AFFECT FOR WHAT WE ARE DOING? STEVEN: THIS BECOMES AN INTERESTING THING YOU LOOK AT THE TIME IT TAKES. WE ARE VERY INPATIENT WHEN YOU CONSIDER THE FACT WE HAVE A FISCAL TIGHTENING, A CURRENCY TIGHTENING, A MONETARY POLICY TIGHTENING, AND WE ARE ALREADY SEEING ABROAD AFFECT ON INTEREST-RATE SENSITIVE SECTORS. WE ARE ONLY SIX MONTHS IN. THAT IS A SHORTER LAG THE NORMALLY OCCURS. OVER THE NEXT COUPLE OF MONTHS YOU WILL SEE THAT MOMENTUM OF THE DRAG INCREASE. THAT IS WILL BE NECESSARY TO TAKE THE LABOR MARKET DOWN TO TAKE THE INFLATIONARY PRESSURES OFF THE EQUATION. INFLATION WILL NOT COME DOWN QUICKLY AND THIS GOES BACK TO TOM'S POINT ABOUT THE NONFARM PAYROLL NUMBERS. THERE WILL BE A ONE TIME PERMANENT UPWARD ADJUSTMENT IN PRICES AT ONE TIME PERMANENT UPWARD ADJUSTMENT IN COST. THE QUESTION IS ARE THOSE UPWARD ADJUSTMENTS IN PRICES GOING TO BE VALIDATED BY AN ADJUSTMENT IN WAGES? MY ANSWER IS NO BECAUSE THE FEDERAL RESERVE WILL CRUSHED ECONOMIC DEMAND AND BECAUSE THEY WILL DO THAT WAGES DO NOT CATCH UP TO WHERE PRICES HAVE GONE AND HOUSES WILL BE LESS WELL-OFF COMING OUT OF THIS THAN GOING INTO THIS AND THAT MEANS THE ECONOMY WILL BE THAT MUCH WEAKER COMING OUT OF THIS. TOM: YOU AND I HAVE SEEN OPEC AND THEN THERE WAS OPEC 2 AND THEN THERE WAS 1986. EVENTS TAKE OVER. CAN WE SEE THE SAME KIND OF SHIFT WHERE OPEC SAYS ENOUGH? STEVEN: I THINK YOU CAN. EVERY BOOM IN OIL PRICES IS FOLLOWED BY A BOSTON OIL PRICES. IT IS A FUNCTION OF THE MARKET MOMENTUM. IT IS A FUNCTION OF THE POLITICAL ENVIRONMENT, IT IS A FUNCTION OF THE EFFICIENCIES CREATED IN A SYSTEM TO DEAL WITH THE HIGHER PRICES AND THIS WILL EVENTUALLY HAPPEN. WHETHER IT HAPPENS IN 2022 OR 2023, I'M NOT SURE, BUT IT WILL HAPPEN. TOM: THE STEVEN RICCHIUTO FAMILY HAD A VW DIESEL. EVERYONE SENT THEIR THERMOSTATS AT 45 DEGREES AT NIGHT, AND THEN OPEC BLEW IT UP. LISA: WEAR A SWEATER. WHAT IS THE PRICE POINT FOR GASOLINE BEFORE WE START TO GET SOME SORT OF SENSE OF CONSUMER SPENDING? STEVEN: I THINK YOU ARE ALREADY STARTING TO SEE IT. THE NUMBER OF THE REPORTS WE ARE SEEING IN TERMS OF WALMART AND TARGET SUGGESTED IT. THE PREVIOUS BEIGE BOOK SAID A FEW RETAILERS WERE STRONG TO NOTICE CONSUMERS WERE PUSHING BACK ON PRICES. THIS TIME HALF OF THE DISTRICTS REPORTED THE DISTRICTS WERE PUSHING BACK ON THE PRICING POWER AND RESHUFFLING WHAT THEY BOUGHT TO DEAL WITH THE PRICING ENVIRONMENT. YOU ARE ALREADY STARTING TO HAVE THE IMPACT. IT IS NOT IN THE MACRO NUMBERS. IT SHOWS UP IN THE COMPANY DATED BEFORE THE MONTHLY MACRO NUMBERS. GO THROUGH THE TECH COMPANIES. WE JUST HAD HP LAST NIGHT. THERE ARE A LOT OF COMPANIES THAT HAVE BEEN DOING THIS. WHAT SURPRISES ME IS THE BOTTOM UP STREET ANALYSTS HAVE NOT CUT THEIR EARNINGS ESTIMATES. OUR EARNINGS TRACKER LAST MONTH WAS POSITIVE .2%, WHICH MEANS NOBODY DID ANYTHING. EVERYBODY IS HOLDING THEIR NUMBERS THE SAME AND I THINK GIVEN THE MACRO STORY THEY WILL HAVE TO TAKE THE NUMBERS DOWN. JONATHAN: SUCH A GOOD POINT TO FINISH ON. STEVEN RICCHIUTO. CAPITAL ECONOMICS COMING OUT WITH A NOTE. "THE ADP REPORT POINTS TO A DRAMATIC SLOWDOWN IN PRIVATE PAYROLL EMPLOYMENT GAINS INMATE, BUT GIVEN THE SURVEY SURPRISINGLY POOR CORRELATION WITH NONFARM PAYROLLS, WE CONTINUE TO EXPECT THE LATER WILL SHOW A 300,000 WHEN THE REPORT IS RELEASED TOMORROW." TOM: IN LISA'S DEFENSE, CAN WE STOP EMPHASIZING IT? I BELIEVE MICHAEL MCKEE WOULD TELL ME THE MATH DOES NOT WORK. JONATHAN: LISA? LISA: WE TALK ABOUT DATA DEPENDENCY. CAN WE START STRIPPING OUT CERTAIN DATA POINTS AND SAY THEY ARE IRRELEVANT. THANK YOU FOR THAT EDIFICATION. JONATHAN: YOU WANT ANY MORE TIME? WE CAN SAY IT IS RELATIVELY SPEAKING LESS IMPORTANT THAN THE NUMBERS WE GET TOMORROW. I WILL BE DIPLOMATIC FOR ONCE. OUT OF OPEC, THAT MEETING HAS STARTED AND THEY ARE LOOKING AT MAYBE INCREASING THINGS BY 600,000 BARRELS A DAY INSTEAD OF THE SCHEDULED 430,000 ACCORDING TO DELEGATES. THEY MIGHT DECIDE ON JULY OUTPUT AND ON AUGUST HIKES AS WELL. SOME OF THE LATEST FROM DELEGATES SPEAKING TO OUR TEAM. THAT IS THE LATEST FROM OPEC. JONATHAN: WHAT DID FRANCISCO BLANCHE JESSEE OF BANK OF AMERICA? THIS IS SO IMPORTANT TO KEEP GOING OVER AT. YOU HAVE AN OIL ANALYST SAYING IT DOES NOT MATTER WHAT OPEC DOES IF THEY BOOST OUTPUT BY 400,000. ULTIMATELY THIS IS ABOUT REFINING CAPACITY AND THROUGH SUMMER THE PRICE AT THE PUMP FOR THE CONSUMER IS GOING TO BE PROBLEMATIC. LISA: YOU HAD ANOTHER OIL ANALYST SAYING THEY ARE USING THE BARRELS THEY HAVE, BUT THAT JUST MEANS THERE'LL BE FEWER RESERVES FOR LATER BECAUSE THERE IS NOT THE INVESTMENT. THAT IS THE MAIN ISSUE THAT WILL KEEP DRIVING A TIGHT OIL MARKET. TOM: THE QUEEN. GOT TO GO. THE QUEEN AND THE DUKE OF CAN'T. JONATHAN: -- THE DUKE OF KENT. JONATHAN: THAT WORKS. TOM: I LOOK LIKE I'M 86 YEARS OLD. JONATHAN: YOU LOOK GOOD ON THE BALCONY. I WILL PUT THE JACKET BACK ON AND GO OVER TO THE OPEN. THAT STUDIO IS A LITTLE FULLER THAN THIS ONE. I WILL CATCH UP WITH EMILY ROLAND, TONY DWYER, AND CHRIS HARVEY AS WE COUNT YOU DOWN TO THE OPENING BELL. FROM NEW YORK, THIS IS BLOOMBERG. RITIKA: THE PRICE OF OIL IS LOWER TODAY AFTER REPORTS IN THE FINANCIAL TIMES SAUDI ARABIA IS READY TO INCREASE PRODUCTION IF RUSSIA HAS TO CUT BACK SUBSTANTIALLY. PRESIDENT BIDEN IS LIKELY TO VISIT SAUDI ARABIA THIS MONTH AND WILL ALMOST INEVITABLY MEET THE DEFECTIVE RULER THE CROWN PRINCE, WHO HE HAD SHUNNED SO FAR. THAT MAY PAVE THE WAY FOR AN OIL PRODUCTION BOOST. IN UKRAINE THE CENTRAL BANK HAS MORE THAN DOUBLE INTEREST RATES IN AN ATTEMPT TO STEM INFLATION. THAT IS THE HIGHEST IN ALMOST SEVEN YEARS. IT WAS THE FIRST RATE HIKE IN FOUR MONTHS. INFLATION FELL TO 17% IN MAY. THE U.S. SUPREME COURT IS FACING A HISTORIC CASE BACKLOG. THE COURT IS DUE TO ISSUE 33 OPINIONS IN THE FINAL MONTH OF ITS CURRENT TERMS. THAT IS THE MOST IN MORE THAN 70 YEARS. AMONG THOSE ARE RULINGS THAT COULD EFFECTIVELY OUTLAW ABORTIONS IN TWO DOZEN STATES AND PUT MORE HANDGUNS ON THE STREETS. THE MAN WHO SHOT AND WOUNDED PRESIDENT REAGAN IN 1981 WILL BE UNCONDITIONALLY RELEASED JUNE 15. JOHN HINCKLEY HAS BEEN LIVING IN VIRGINIA UNDER A NUMBER OF RESTRICTIONS SINCE 2016. A JUDGE SAYS HE IS NO LONGER A DANGER TO HIMSELF AND OTHERS. HE SHOT THE PRESIDENT AND THREE OTHERS OUTSIDE A WASHINGTON HOTEL. 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 AM RITIKA GUPTA. THIS IS BLOOMBERG. >> WHEN THERE IS OPTIMISM, WHEN THERE IS GREED, WHEN THERE IS RISK TOLERANCE, THAT IS A VERY DIFFICULT CLIMATE FOR THE VALUE INVESTOR TO FIND BARGAINS. NOW THE PROSPECT OF RETURNS OF MANY ASSET CLASSES ARE HIGHER THAN THEY WERE A LITTLE WHILE AGO, AND A MUCH BETTER CLIMATE FOR THE BARGAIN HUNTER. TOM: HOWARD MARKS OF OAK STREET CAPITAL. A PIERCING INTERVIEW WITH LISA. WHAT DAZZLED ME IS WHEN HE TALKED ABOUT THE HURDLE RATE FOR THE METROPOLITAN MUSEUM OF ART IN SAYS IT WAS 5%, MAY BE IN THE NEW REGIME THEY CAN TAKE OUT 7% A YEAR. LISA: MORE THAN 7% BECAUSE IF YOU TAKE A LOOK AT HIGH-YIELD BONDS, THE AVERAGE YIELDS ARE 7% OR EVEN HIGHER. DOES IT MATTER? A BIGGER QUESTION IS DOES IT MATTER IF YOU CAN GET MORE YIELDS IN AN ENVIRONMENT WHERE INFLATION IS THAT MUCH HIGHER? THE TAKE IS BASICALLY THE SAME. TOM: HOWARD MARKS OF OAKTREE. WE WILL MOVE ONTO TO AN INCREDIBLY IMPORTANT ESSAY BY BARRY RITHOLTZ, HOST OF MASTERS OF BUSINESS. WE ARE THRILLED HE COULD PULL AWAY FROM THE WATCHING OF THE JUBILEE COVERAGE IN LONDON. I THOUGHT YOUR NOTE WAS SPECTACULAR ABOUT RECESSIONS STATE-BY-STATE. YOU HAVE THE COURAGE TO GO GRANULAR AND DO A LOT MORE ANALYSIS THAN THE CHIEF PUNDITRY. DOES MISSISSIPPI HAVE A RECESSION OR DOES MONTANA HAVE A RECESSION? BARRY: NOT ONLY DO THEY NOT HAVE A RECESSION, BUT THEY ARE EXPANDING BY THE MOST THEY HAVE EXPANDED IN QUITE A WHILE. IF YOU LOOK AT THE PHILADELPHIA FEDERAL RESERVE INDEX OF STATE COINCIDENT INDICATORS ACROSS ALL 50 STATES, EVERY STATE IN THE UNION IS EXPANDING. YOU HAVE ALL 50 STATES WHO NOT ONLY ARE NOT IN A RECESSION BUT ARE SEEING THEIR ECONOMIES GROW. IF YOU LOOK AT THE HISTORY OF RECESSIONS GOING BACK 30 OR 40 YEARS, LONG BEFORE A RECESSION STARTS YOU START TO SEE THAT NUMBER GROW FROM 50 STATES TO 45, 35 STATES. YOU DO NOT HAVE A RECESSION START WITH ALL 50 STATES IN AN EXPANSION, INCLUDING 20 20'S PANDEMIC. THE ECONOMY SLOWED IN A NUMBER OF LOCATIONS BEFORE THAT PANDEMIC BEGAN. TOM: WHAT IS THE HISTORY OF PUNDITS GETTING WRONG HOW CORPORATIONS ADAPT IN INFLATION. THE COLLECTIVE MEMORY OF OUR VIEWERS ON INFLATION IS ABOUT 5% UNDERSTANDING WHAT REAL INFLATION IS. THE FACT IS CORPORATIONS ADAPT. BARRY: THIS IS A CLASSIC EXAMPLE OF GEORGE SOROS'S IDEA OF REFLEXIVITY. WHEN SOMETHING HAPPENS THAT IS A CHALLENGE TO CORPORATE AMERICA OR THE MARKETS FOR THE ECONOMY, EVENTS SUBSEQUENTLY ADAPTED TO THAT. MANAGEMENT CHANGES, THE FEDERAL GOVERNMENT WILL RESPOND. THIS IS PART OF THE REASON WHY PROJECTING OUT, FORGET EVEN TWO YEARS, SIX MONTHS OR 12 MONTHS. CHALLENGING BECAUSE IT IS ALL BUT IMPOSSIBLE TO TELL WHAT IS GOING TO HAPPEN DURING THE INTERVENING WEEKS AND MONTHS THAT ARE GOING TO CHANGE THE TRAJECTORY OF THE ECONOMY OR CHANGE THE TRAJECTORY OF THE STOCK MARKET. IT IS IMPOSSIBLE TO TELL FROM A STANDING POINT, CALL IT THE THREE BODY PROBLEM IN ASTROPHYSICS, THERE ARE TOO MANY VARIABLES TO FIGURE OUT WHAT IS GOING TO HAPPEN DOWN THE ROAD. LISA: GIVEN THAT CORPORATE EXECUTIVES HAVE CHANGE THEIR PROJECTIONS OR WITHDRAWN FORECAST, YOU TOOK A -- YOU LOOK AT S&P GLOBAL YESTERDAY, HOW WELL CAN COMPANIES ADAPT OR IS THIS A NEW ENVIRONMENT OF DIS-ADAPTATION BECAUSE THERE IS A BIG UNKNOWN? BARRY: I LOVE THE IRONY OF THE COMPANY IN CHARGE OF GUESSING WHAT FUTURE CREDIT AND EARNINGS WAS GOING TO LOOK LIKE HAS NO FORWARD RECOGNITION. THE REALITY IS THEY NEVER DO. WE ARE NORMALLY MORE COMFORTABLE PRETENDING. THAT IS THE WHOLE TROPE ABOUT UNCERTAINTY. THE FUTURE IS ALWAYS UNCERTAIN. WE COULD LIE TO OURSELVES MOST OF THE TIME. WE SEE TWO THINGS WITH CORPORATE AMERICA. THE LACK OF DISABILITY -- THE LACK OF VISIBILITY, LIKE THERE IS EVER VISIBILITY, BUT I ALSO NOTICED AN UPTICK IN INSIDERS BUYING THEIR OWN STOCK. THAT IS A WELCOME SIGN. IT DOES NOT MEAN WE ARE AT A BOTTOM. WE SEE INSIDERS START BUYING, IT TENDS TO SUGGEST THE WORLD IS NOT COMING TO AN END. TOM: BARRY RITHOLTZ, THANK YOU VERY MUCH. STATE-BY-STATE ANALYSIS OF RECESSION. JOBS TOMORROW. THE STIR BAIT -- THE SURVEY IS STILL AT 3.5% UNEMPLOYMENT RATE. LISA: IT WILL KEEP GOING DOWN. THERE ARE COMPANIES LOOKING TO HIRE. AN ANALYST CAME OUT WITH THE NEXT ONE NATION OF HOW ADP CAN BE USEFUL. HE DUG INTO SMALL BUSINESSES AND TALKED ABOUT THE SECOND MONTH OF DECLINES IN TERMS OF JOBS ADDED. THE WAY HE INTERPRETED THIS IS THESE COMPANIES ARE HAVING A TOUGH TIME COMPETING WITH NEWLY ELEVATED WAGE BAR SET BY ITS COMPETITORS. HOW MUCH WILL THIS BECOME A THEME? SMALLER BUSINESSES HAVING A HARDER TIME MANAGING THAT KIND OF WAGE INCREASE. TOM: I GET THE IDEA, $22 AN HOUR, WHATEVER THE WAGE WAR IS, BUT WHAT DO SMALL BUSINESSES DO A MILE OR 10 MILES FROM THE AMAZON WAREHOUSE? LISA: THERE IS A QUESTION OF HOW MUCH WE GET A REDISTRIBUTION OF MARKET SHARE, EVEN MORE TO THE BIGGER COMPANIES. HOW MUCH OUR COMPANY IS GOING TO SAY IT WE CANNOT HIRE PEOPLE AT THESE COST, WE WILL HAVE TO FIGURE OUT A WAY TO MAKE DO, AND AT WHAT POINT DOES THAT SLOW THE LABOR PROGRESS? TOM: LISA ABRAMOWICZ AND TOM KEENE. WE CONTINUE OUR COVERAGE TOMORROW. JOBS DAY. ALSO WE DIP INTO THE SERVICE AT ST. PAUL'S CATHEDRAL FOR THE QUEEN'S JUBILEE. LISA: HOW WILL YOU PREPARE FOR THAT? TOM: I WILL READ MY CHRISTOPHER WRAY AND ARCHITECTURE. LISA: DO YOU HAVE A HAT? YOU SHOULD WEAR A HAT. TOMORROW'S JOBLESS REPORT IS ONE OF THE KEY REPORTS WILL BE GETTING. I AM LOOKING AT THOSE JOBS NUMBERS FOR SOME SENSE OF WHAT THE FED CAN CLING TO FOR THAT PATIENTS SO MANY PEOPLE THINK CAN HAPPEN AS WE GET TO NEUTRAL. TOM: THIS IS AN INTERESTING MARKET. WE WILL CONTINUE ON RADIO AND TELEVISION. THOMAS PETRIE, ONE OF THE MOST KNOWLEDGEABLE ON AMERICAN OIL AT THE 12:00 HOUR.

Channel: Bloomberg Television

Views: 18,472

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Id: TSEnWoR3-pw

Length: 137min 8sec (8228 seconds)

Published: Thu Jun 02 2022