US GDP at 1.1% | Bloomberg Surveillance 04/27/23

>> QUITE FRANKLY, I LOVE THIS MODEL RIGHT NOW. >> WHAT DOES THIS DO IN TERMS OF FINANCIAL CONDITIONS MORE BROADLY? >> EVERY TRADITIONAL INDICATOR OF RECESSION IS FLASHING RED. >> I THINK WE ARE ON A SLOW BLEED INTO THE RECESSION. >> THE ODDS FAIRLY FAVOR THE U.S. ECONOMY GOING INTO A RECESSION IN THE THIRD QUARTER OF THIS YEAR. >> THIS IS BLOOMBERG SURVEILLANCE WITH TOM KEENE, JONATHAN FERRO AND LISA ABRAMOWICZ. JONATHAN: WHAT WRIST SESSION JACK -- WHAT RECESSION? GOOD MORNING, THIS IS BLOOMBERG SURVEILLANCE. YOUR EQUITY MARKET IS POSITIVE BY HALF OF 1% ON THE S&P 500. THE DEBT CEILING DEAL WITH REPUBLICANS IN THE HOUSE AND WE WILL TALK ABOUT THAT LATER IN A BIG WIN FOR SPEAKER MCCARTHY WITH A FACE-OFF WITH THE PRESIDENT OF THE UNITED STATES. WE NEED TO START WITH THE TECH RESULT. META, FACEBOOK GETTING IT DONE. THEY CALL IT THE YEAR OF EFFICIENCY AND I WASN'T EXPECTING A YOUR GROWTH AND THAT STOCK IS UP I MORE THAN 11% IN THE PREMARKET. MARK ZUCKERBERG PUTTING OUT GOOD RESULTS. TOM: WE DO AMAZON TODAY AND ONTO APPLE AND THIS IS BECAUSE CONTROL. THESE GUYS HAVE NEVER BEEN THROUGH THIS AND THEY ARE WONDERING HOW TO CUT COSTS. THE ANSWER IS, THAT'S THE STORY AND LEARNING HOW TO BE PRUDENT. IT'S A PRUDENT ZUCKERBERG. JONATHAN: THAT'S THE YEAR SO FAR. WE'VE HAD OUT RALLY ON THE BONDS AROUND 70%. A REBOUND IN GROWTH. LISA: NOT JUST THAT BUT ALSO GROWTH WITH RESPECT TO THE USER BASE. I WAS STRUCK BY THE FACT THAT 3 BILLION PEOPLE EVERY DAY ON AVERAGE USE THE META-PRODUCTS INCLUDING FACEBOOK, INSTAGRAM AND WHAT'S AT. 3 BILLION PEOPLE IS SHOCKING SO WHEN PEOPLE CALL FOR THE DEATH OF META, THAT'S NOT THE CASE. THEY MENTIONED ARTIFICIAL INTELLIGENCE. JONATHAN: THAT GIVES YOU AN EXTRA DOLLAR IN THE PREMARKET, ON COURSE TO BE THE BEST PERFORMING STOCK IN THE S&P 500 BY THE END OF TODAY. POTENTIALLY, THIS STOCK RIGHT NOW IN THE PREMARKET THROUGH 230 IN THE PREMARKET. AMAZON WILL REPORT AFTER THE CLOSE BUT WE HAVE TO TOUCH ON FIRST REPUBLIC. A STRUGGLING FINANCIAL INSTITUTION LOOKING FOR A SOLUTION, THE STOCK WITH THE SMALLEST OF BOUNCES UP 3%. TOM: A GREAT CREDIT TO THE FINANCIAL MEDIA IS THE LACK OF DISCUSSION OF SHOWING THE OPTIONALITY FORWARD FOR THE GOVERNMENT AND FOR THE OTHER BIG BANKS. I'M NOT HEARING ANYTHING FROM THEIR MANAGEMENT WHICH I FIND JUST BIZARRE INCLUDING THE CONFERENCE CALL. IT'S JUST ZERO MESSAGING FROM THE MESSAGE -- FROM THE MANAGEMENT AND I WILL TALK TO GERARD CASSIDY ABOUT IT BUT IT'S BORDERLINE IRRESPONSIBLE. JONATHAN: THAT'S HOW WE STARTED THE WEEK, NOT IN A GOOD WAY. YOU DO AN EARNINGS CALL AND WE DIDN'T TAKE QUESTIONS ON THAT CALL. THERE WAS NO Q AND A. LISA: IT'S ONLY GETTING WORSE BECAUSE THERE'S NO PATH TO GET SOME SORT GUARANTOR LIKE THE GOVERNMENT. THE TUG-OF-WAR HERE IS THAT THE FUNDAMENTAL PICTURE FOR MANY OF THE COMPANIES REPORTING IS NOT THAT BAD. THE BANKS ARE SORT OF THE OTHER SIDE OF THE TUG-OF-WAR WHICH IS HOW MUCH DOES THAT OFFSET POTENTIAL UPSIDE SURPRISE. TOM: THERE IS NO CLEAR PATH BECAUSE WE ARE NOT DOING IT LIKE WE USED TO DO IT. THEY USED TO DIAL ONE 800 GOVERNMENT AND SAY YOU ARE OUT OF BUSINESS AND YOU NEED TO RESTRUCTURE. WE ARE TRYING TO FIGURE OUT HOW JAMIE DIMON WILL NOT GET HURT. I WENT TO THE FIRST REPUBLIC BRANCH ON MADISON AVENUE YESTERDAY. I WALKED BY AND WAVED. JONATHAN: THE THANKS OF BEEN VILIFIED SINCE THE FINANCIAL CRISIS. YOU SO WHAT HAPPENED TO J.P. MORGAN. WE BASICALLY TOLD THEM DON'T DO THIS AND NOW WE WILL TURN AROUND AND SAY CAN YOU DO US A FAVOR AND TAKE US OVER? TOM: $30 BILLION WILL CREATE SOME SORT OF EQUITY IS ASIAN? I DON'T GET IT. JONATHAN: THIS STOCK IS UP BY ABOUT 2.8% FIRST REPUBLIC IN THE PREMARKET. MORE DAY TILL LATER. LET'S GET STRAIGHT TO IT. LOWER ON THE TWO-YEAR IN THE 10 YEAR IS 3.46. LISA: BECAUSE OF THE BID INTO TREASURIES IT WILL BE INTERESTING TO SEE WHETHER WE GET THE DATA AT 8:30 A.M. WITH JOBLESS CLAIMS IN THE FIRST QUARTER GDP. MANY PEOPLE ARE LOOKING TO THAT AS A POTENTIAL TELLTALE SIGN OF RECESSION OR NOT. I'M MORE INTERESTED IN POTENTIAL JOBLESS CLAIMS BECAUSE DO WE SEE THIS GRIND HIGHER? THAT GIVES A SENSE OF WEAKENING IN THE LABOR MARKET. THE TECH GRAIN CONTINUES WITH EARNINGS FROM AMAZON AND SNAP. AMAZON SHARES ARE UP ABOUT 25% WHICH IS NOTHING COMPARED TO META BUT THAT'S A BIG GAME AND YOU ARE SEEING SNAP UP MORE THAN 10%. INTERESTING TO SEE WHETHER THE ADVERTISING STRENGTH AT META CONTINUES INTO SNAP AND WITH AMAZON, THE RETAIL SEGMENT IS IN FOCUS. AT 4:30 P.M., MY FAVORITE INDICATOR, THE FED'S BALANCE SHEET DATA, HOW MUCH HAS COME IN BUT ALSO, DISCOUNT WINDOW LENDING DATA. THIS IS THE TUG-OF-WAR WE ARE TALKING ABOUT WITH THE BANKS ON ONE SIDE AND TECH EARNINGS, PARTICULARLY THE ONES WE GOTTEN TO BE STRONG. WHICH WILL TIP THE BALANCE WHEN IT COMES TO EARNINGS? TOM: SHE NEVER THOUGHT SHE WOULD BE LOOKING AT THIS. JONATHAN: LOOKING FORWARD TO IT. WE HAVE THE CIO OF CROSS MARKET INVESTMENTS, GOOD MORNING. LET'S LOOK AT THE NUMBER SO FAR. DOUBLE-DIGIT PRICE INCREASES AT KIMBERLY-CLARK, PROMPTLY -- PROCTER & GAMBLE AND PEPSI. LOOKING AT THE NUMBERS FROM TECH AND CLOUD SPENDING IS DECENT AND MICROSOFT OUTSPENDING, PRETTY DECENT. WHAT RECESSION? >> THAT'S THE MOST ANTICIPATED QUESTION IN HISTORY. I AM DISAPPOINTED THAT FULL-YEAR ESTIMATES FOR THE S&P 500 ARE NOT GOING UP AFTER ALL THIS GOOD NEWS. MAYBE THEY HAVE STOPPED TAKING THE NUMBERS DOWN BUT THEY ARE NOT MOVING UP. ESTIMATES ARE STILL TOO HIGH AS WHAT THAT POINTS OUT. THEY GAVE ME MORE THAN EXPECTED IN THE FIRST QUARTER BUT THAT MEANS I'M TAKING SOMETHING OUT OF Q 2, 3 AND FOUR. SLOW DOWN THE SLOPE ON US AND THOSE LEADING INDICATORS ARE LOOKING TO SLOW DOWN TO A MILD RECESSION AND I DON'T SEE HOW WE ESCAPE IT AND YOU'VE COVERED THE SYSTEMIC RISK IN THE FINANCIAL SYSTEM. HANDICAPPING THAT IS DIFFICULT. I WANT TO COME BACK TO WHAT YOU SAID EARLIER, MCCARTHY PULLED A VICTORY. HE ONLY LOST FOUR REPUBLICANS AND THAT WAS AMAZING. NOW, THE BURDEN IS ON THE DEMOCRATS TO COME TO THE TABLE AND HAVE A CONVERSATION. TOM: CAN I HIDE OUT WITH BOB DOLE CAUTION? >> THAT'S CERTAINLY A WAY TO DO IT BUT THE MULTIPLES WHERE THEY ARE, NOT JUST FOR TECH BUT YOU MENTIONED THE SOFT DRINK AND SAFE -- STAPLE COMPANIES. THERE MULTIPLES ARE IN THE MID 20'S. I'M NOT SURE THAT'S A GREAT DEAL SO THE DEFENSIVE AREAS ARE MOST TECH NAMES HAVE CERTAINLY HAVE A BID AND GET EXPENSIVE. I LOOK AT MY SCREEN AND SEE THE S&P 500 PE RATIO 5.5, TRAILING ALMOST 19 GOING FORWARD IN THE NUMBERS ARE PROBABLY TOO HIGH. IF INTEREST RATES AND INFLATION WERE TO COME OF THIS PROBABLY A GOOD VALUATION BUT I STRUGGLE WITH WHERE WE ARE. WE PAID THE PRICE OF BEING BEARISH LAST YEAR. YOU MENTIONED MCCARTHY'S A GO THERE. DOES THE DEAL WE SAW IN THE HOUSE, EVEN THOUGH IT HAS NO CHANCE OF MAKING IT AND SEEING THE LIGHT OF DAY GIVE YOU A CONFIDENCE THAT THE U.S. CAN AVOID A DEBT CEILING TO PRICE THAT OUT AS A POTENTIAL TAIL RISK? >> IT DEFINITELY INCREASES THE PROBABILITY WE GET SOMETHING DONE. HAD THAT FAILED YESTERDAY, WE ARE NOWHERE WITH NEITHER PARTY HAVING ANYTHING ON THE TABLE. REPUBLICANS HAVE AN INCREDIBLE VICTORY AND PUT IT ON THE TABLE AND DEMOCRATS HAVE TO COME BACK WITH SOME KIND OF CONVERSATION WITH PROBABLY RAISES THE PROBABILITY WE GET SOMETHING DONE IN THE 11TH OR 12TH HOUR OR MAYBE THE 13TH HOUR. JONATHAN: WE SEE NO INDICATION THAT THEY WILL DO BUT YOU SAY THEY HAVE TWO. >> IT NEVER HAPPENS UNTIL IT HAS TO HAPPEN. I DON'T THINK EITHER PARTY WANTS TO BE BLAMED FOR DEFAULT OR A DECLINE IN THE DOLLAR BECAUSE OF THE POTENTIAL DEFAULT. ALL I'M SAYING IS THE ONUS IS NOW ON THE DEMOCRATS TO HAVE A CONVERSATION. JONATHAN: IS IT YOUR IMPRESSION THAT THE DEMOCRATS OF THIS WHITE HOUSE ARE LOOKING TO SEE SOME MARKET PRESSURE BUILD TO GAIN SOME LEVERAGE OVER THE REPUBLICANS? >> IT'S POSSIBLE. COUPLE OF FOLKS IN CONGRESS HAVE SAID THAT MALAISE 48 HOURS, GIVE US A SMACK IN THE FACE IN THE MARKETS AND MAYBE WE WILL COME TO THE TABLE. JONATHAN: DO YOU FIND THAT FRUSTRATING IS A MARKET PARTICIPANT? IT DRIVES ME ABSOLUTELY INSANE. POLITICIANS ARE WILLING TO INVOLVE FINANCIAL MARKETS AND USE THAT AS A POSITION. >> IT'S THEIR TOY. JONATHAN: DON'T YOU FIND THAT RIDICULOUS, TOM? I FIND IT IRRESPONSIBLE. THAT'S NOT A POLITICAL STATEMENT, IT'S POLITICIANS ON BOTH SIDES OF THE AISLE TRYING TO PLAY GAMES WITH MARKETS. TOM: AT FIRST REPUBLIC AS WELL, THE KEY WORD IN EVERY REPORT AND FIRST REPUBLIC WHICH GOES TO THE POLITICS OF THE NATION IS WEALTHY, THE BASIC IDEA THAT EVERYTHING TO DO WITH FIRST REPUBLIC IS WEALTHY CLIENTS JUMBLING MORTGAGES BUT THERE IS HUGE POLITICS IN OUR DAY-TO-DAY NEWS GRIND AND FINANCE AND AND HOW THE STOCK MARKET TRADES. JONATHAN: LET'S FINISH THERE BRIEFLY, THERE IS A FEAR ABOUT THE EARNINGS. WE CAN TALK ABOUT TECH OR FINANCIALS BUT LOOKING FORWARD, LEAD INDICATORS ARE TERRIBLE. FIRST REPUBLIC HAS THE DEBATE OVER BROADER BANKING ISSUES THAT WILL LEAD TO SOME KIND OF CREDIT CRUNCH. WHERE ARE YOU NOW? >> THE SYSTEMIC RISKS ARE ALWAYS THERE AND JUST HIGHER THAN USUAL NOW. THE FED TOOK RATES FROM ZERO TO FOUR--- 4.25% IN FOUR MONTHS SO THERE ARE CONSEQUENCES. IT NOT JUST SILICON VALLEY BANK OR SIGNATURE AND WE GET UP AND DUST OURSELVES OFF INTO THE SUNSET. THERE ARE MORE CONSEQUENCES. THEY MIGHT BE ANOTHER FINANCIAL INSTITUTION OR TWO BUT MY VIEW IS IT WILL INCLUDE A MILD RECESSION. JONATHAN: UNBELIEVABLE TO THINK THAT EARLY MARCH, FIRST REPUBLIC IS IN THIS POSITION. LISA: AND POTENTIALLY BANKRUPT NEXT WEEK. IT'S THE PUSH PULL OF PRIVATE INVESTORS, WILL THEY BE LOOKING TO COME IN AND CAN THE GOVERNMENT BAIL OUT THIS BANK IF THE PEOPLE THEY ARE ESSENTIALLY BAILING OUT ARE THE BIG BANKS THAT CONTRIBUTE $30 BILLION TO DEPOSITS TO KEEP US AFLOAT ON THE BEHEST OF THE GOVERNMENT? WHAT DOES THAT DO TO THE NEXT TIME THEY SEEK A LIFELINE? JONATHAN: WHAT IS IT ABOUT THIS INSTITUTION THAT IS GOTTEN THESE BIG LENDERS TO DEPOSIT A LARGE SUM OF MONEY? TOM: I CAN'T ANSWER THAT. YOU KNOW WHERE I STAND ON THIS. YOU HAVE TO GET THE SURVEILLANCE SCORECARD AND I WILL NOT EDITORIALIZE IN FRONT OF AIRGAS. IT'S A MARKETING SCHEME. HOW ABOUT THAT S&L CRISIS? JONATHAN: GREAT TO SEE YOU, WE APPRECIATE IT. YOUR EQUITY MARKET IS POSITIVE, UP 0.4%. FACEBOOK RALLYING HARD ALL YEAR AND THIS MORNING, IT'S ON TO AMAZON LATER. LISA: KEEPING YOU UP-TO-DATE WITH NEWS FROM AROUND THE WORLD WITH THE FIRST WORD -- HOUSE SPEAKER KEVIN MCCARTHY'S DEBT LIMIT BILL HAS SQUEAKED THROUGH WITH -- STARTING A STANDUP WITH PRESIDENT BIDEN. THERE WAS DISSENT FROM PET FELLOW REPUBLICANS TO PASS HIS FIRST BIG TEST. IT WILL PUT PRESSURE ON THE PRESIDENT TO OPEN TALK WITH THE GOP TO AVOID A PAYMENT DEFAULT THIS SUMMER BUT THE PRESENT SIGNALED HE WON'T GIVE IN TO REPUBLICAN DEMANDS. GERMANY IS IN TALKS TO LIMIT THE EXPORT OF CHEMICALS TO CHINA THAT ARE MANUFACTURE SEMICONDUCTORS. BERLIN WANTS TO REDUCE ITS ECONOMIC EXPOSURE TO BEIJING AND CHANCELLOR OLAF SCHOLZ IS TRYING TO BALANCE GERMANY'S INTEREST IN CHINA WITH NATIONAL SECURITY AND HUMAN RIGHTS CONCERNS. META-PLATFORMS REPORTED QUARTERLY REVENUE AND USER GROWTH THAT BEAT ESTIMATES. BECAUSE THIS ACCOMPANIES A PRIVATE DIGITAL AD SALES REBOUNDING. THEY ARE POURING MORE MONEY INTO ARTIFICIAL INTELLIGENCE IN SHARES OF META-UP 74% THIS YEAR AFTER RECORD 64% DROP IN 2022. IN TURKEY, ILLNESSES PROMPTING PRESIDENT ERDOGAN TO CANCEL A PLANNED VISIT TO A LANDMARK NUCLEAR PROJECT. HE HAS REMAINED OUT OF PUBLIC FUSIONS LATE TUESDAY WHEN HE FELL ILL DURING A LIVE TV INTERVIEW. NEXT MONTH, HE FACES HIS TOUGHEST ELECTION SINCE TAKING POWER IN GLOBAL NEWS 2003. POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN >> I THINK SILICON VALLEY BANK WAS A SPECIFIC CASE IN TERMS OF CIRCUMSTANCES. IT HAS HIGHLIGHTED AN ISSUE WITH SOME OF THE REGIONAL BANKS IN THE U.S. AND THAT WE WILL SEE CONTINUED TO PLAY OUT IN A SMALL NUMBER OF NAMES. WE'VE SEEN FIRST REPUBLIC OVER THE LAST COUPLE OF DAYS, IT WILL NOT BE SYSTEMIC IN ANY WAY. BUT THERE WILL BE REPERCUSSIONS. JONATHAN: THE BARCLAYS CEO WITH SOME GOOD THINGS TO SAY ABOUT BARCLAYS THIS MORNING. BOND TRADING IS GETTING IT DONE IN THAT STOCK IS UP BY MORE THAN 4% IN LONDON TRADING. WELCOME TO THE PROGRAM. GOING INTO AMAZON AFTER THE CLOSE LATER, AND U.S. GDP THIS MORNING WITH YIELDS UNCHANGED ON THE 10 YEAR. EURO-DOLLAR IS UNCHANGED BUT A NEW HIGH FOR THE YEAR IN YESTERDAY'S SESSION ON EURO-DOLLAR, JUST SOUTH OF $1.11 YESTERDAY AND CAME CLOSE TO THAT. THE EQUITY MARKET IS POSITIVE BY 0.4%. THE NASDAQ IS GETTING THE TECH EARNINGS THAT EVERYONE IS LOOKING FOR. TOM: THIS IS A NICE STATISTIC -- HE SAID IT'S NARROWER THAN I THOUGHT. HE'S TAKES SEVEN BIG TECH STOCKS OUT. I THINK THAT SHOWS THE IDIOCY AS WE GO INTO AMAZON THIS AFTERNOON. JONATHAN: THE BIG QUESTION IS WHETHER THE EARNINGS WOULD VALIDATE THOSE MOVES. TO SEE FACEBOOK/META UP AS MUCH IS IT IS THIS MORNING BY 11% IN THE PREMARKET AFTER DELIVERING GAINS OF MORE THAN 70% FOR THE YEAR SO FAR, TO SEE A BOUNCE LIKE THAT AFTER EARNINGS IS PRETTY IMPRESSIVE. TOM: IT MOVED MICROSOFT THE OTHER DAY. IT'S LIKE MOVING AN AIRCRAFT CARRIER IN NEW YORK HARBOR. WE ARE ALL RIVETED BY THE DAYS OF FIRST REPUBLIC. OUR NEXT GUEST HAS DECADES OF EXPERIENCE AND THE QUIET OF MANAGEMENT AND BOARD ROOM WHERE THERE ARE TOUGH DECISIONS TO MAKE. HE IS WITH RBC CAPITAL MARKETS. I'VE NEVER SEEN ANYTHING LIKE THIS, THE LACK OF COMMUNICATION OF THE MANAGEMENT TEAM AT FIRST REPUBLIC, THE CONFERENCE CALL NOT GOOD AND EVEN THEIR COMMUNICATING OF DIALOGUE WITH THE GOVERNMENT AND OTHER MORE SOLVENT BANKERS. ARE YOU SURPRISED BY THEIR SILENCE? >> THANK YOU FOR HAVING ME ON THE PROGRAM. I WOULD SAY THAT THEY ARE AT A CRITICAL STAGE RIGHT NOW. THEY ARE BEING ADVISED BY SOME VERY SMART PEOPLE AND I THINK IT'S A STRATEGY THEY HAVE CHOSEN. I WAS SURPRISED ON THE EARNINGS CALL. IT WAS A 15 MINUTE CALL AND I THINK A BETTER STRATEGY WOULD HAVE BEEN TO RELEASE THE EARNINGS. CERTAINLY TALKING TO THE PUBLIC IS NOT SOMETHING THAT SHOULD BE PURSUED AND THEY ARE NOT DOING THAT BUT HOPEFULLY, THEY ARE TALKING TO HIGH-LEVEL OFFICIALS IN THE GOVERNMENT AND THE FEDERAL RESERVE TO TRY TO RESOLVE THIS ISSUE. TOM: YOU HAVE LIVED AND DIED WITH OTHER BANK FAILURES, HAD THE RULES CHANGED WHERE THE GOVERNMENT DOESN'T HAVE A FUNCTION LIKE WE WERE TRAINED IN SCHOOL? >> I THINK THE GOVERNMENT ALWAYS HAS A FUNCTION BECAUSE IT'S A REGULATED INDUSTRY AND THE GOVERNMENT GUARANTEES DEPOSITS UP TO $250,000. THERE WILL ALWAYS BE GOVERNMENT INVOLVEMENT BECAUSE THE GOVERNMENT IS GUARANTEEING THE DEPOSITS. IT HAS CHANGED OVER THE YEARS. LISA: WHAT'S THE CHALLENGE FOR THE U.S. NOW? IF THEY THEY'LL OUT THE BANK TO FACILITATE A SALE TO A PRIVATE BUYER, THEY WOULD BE BAILING OUT THE BANKS THEY HAD COME TO THE TABLE AND DEPOSITED $30 BILLION WITH FIRST REPUBLIC. IF THEY DON'T, THIS BANK COLLAPSES AND PROLONGS THE STORY OF REGIONAL BANK WEAKNESS. WHICH IS WORSE? >> IT'S A TOUGH DILEMMA FOR THEM. THEY ARE STUCK BETWEEN A ROCK AND A HARD PLACE. AS YOU POINTED OUT, THE CHOICES ARE NOT FAVORABLE. IT'S SOMETHING THEY HAVE TO WEIGH AS TO WHICH HAS THE LEAST NEGATIVE IMPACT TO THE INDUSTRY AND THE GENERAL MARKET. THE INVESTORS DON'T GET BAILED OUT AT ALL BUT IT'S THE DEPOSITORS. THE INSURANCE LIMIT IS WHERE THE FOCUS IS. LISA: WE'VE SEEN THIS TUG-OF-WAR IN MARKETS WHETHER IT'S THE TECH GIANTS REPORTING FANTASTIC EARNINGS AND OTHER DISCRETIONARY COMPANIES AND ON THE OTHER SIDE, THERE IS AN OVERHANG OF POTENTIAL WEAKNESS IN REGIONAL BANKS THAT COULD CONTINUE. IS THAT ENOUGH TO OFFSET STRENGTH ELSEWHERE? IS WHAT YOU ARE SEEING NOT ENOUGH TO GIVE YOU CONFIDENCE THAT THEY WILL MATERIALLY PROVIDE THE CREDIT AND IMPULSE THIS ECONOMY NEEDS NOW? >> THE FED HAS BEEN VERY CLEAR THAT THEY ARE IN MONETARY TIGHTENING. SINCE APRIL OF 2022 THIS IS BEEN GOING ON.DEPOSITS AND THE BANKING SYSTEM ARE DOWN ALMOST $1 TRILLION. DURING QE DURING THE PANDEMIC, THE FED BALANCE SHEET WENT FROM UNDER $4 TRILLION TO ALMOST $9 TRILLION BY THE FIRST QUARTER OF LAST YEAR. NOW THEY ARE TAKING THOSE DEPOSITS OUT. THEY NEED MONETARY POLICY TO STIMULATE THE ECONOMY AND THAT'S NOT THERE BECAUSE THEY HAVE TO FIGHT INFLATION. INFLATION HAS TO COME DOWN AND ONCE IT COMES DOWN, HOPEFULLY THE FED WILL STOP RAISING INTEREST RATES BUT BACK OFF QT. JONATHAN: JUST TO BE SPECIFIC, IS THERE A REAL RISK FIRST REPUBLIC LOSES ACCESS TO THE FED FUNDING? >> THERE IS A POSSIBILITY OF THAT. YOU NEVER RULE ANYTHING OUT. IN THEIR PUBLIC STATEMENTS, THEY HAVE INDICATED THEY STILL HAVE ACCESS AND STILL HAVE LOANS AND SECURITIES TO PLEDGE. WE HAVE NOT HEARD ANYTHING OFFICIAL FROM THE FEDERAL RESERVE. FROM THEIR PUBLIC DOCUMENTS, THEY STILL HAVE ACCESS BUT IT IS LIMITED BECAUSE OF THE AMOUNT OF LOANS AND SECURITIES THAT REMAINED THAT COULD BE PLEDGE FOR THAT TYPE OF BORROWING. JONATHAN: WHAT WOULD LEAD REGULATORS TO CLOSE THAT ACCESS TO THEM? >> IF THEY THINK THE SITUATION IS SO DIRE THAT IT'S BEST OFF TO STOP ALLOWING THEM TO HAVE ACCESS TO THAT SOURCE OF FUNDING BECAUSE IT WILL CAUSE LESS LOSSES TO THE FBI SEE OR THE FEDERAL RESERVE. -- FDIC OR THE FEDERAL RESERVE. JONATHAN: MAYBE WE ARE GETTING CLOSER TO THAT MOMENT, THANK YOU FOR BEING WITH US. THIS JUST IN, WELLS FARGO SAYS WE STILL EXPECT TO SEE 3700 ON SPX WITH A 10% CORRECTION FROM THE INTRADAY HIGH IN THE PORTFOLIO SHOULD BE DE-RISKED AND EXPECTATIONS MODERATED. TOM: THEY OVERLAY THAT WITH WHAT I THOUGHT WAS THE SHOCK OF YESTERDAY, FRAMING OUT A SUB-1% GDP THIS MORNING. STEPHEN STANLEY HAD A PIERCING NOTE THIS MORNING OF THE MAKEUP OF AMERICAN ECONOMIC GROWTH FIRST QUARTER. JONATHAN: NEXT WEEK, PAYROLLS OR AROUND THE QUARTER. -- AROUND THE CORNER. HERE WE ARE AGAIN, ANOTHER FED MEETING JUST AROUND THE CORNER. LISA: WHICH IS POSSIBLY MORE IMPORTANT. THEY MIGHT SAY THEY DON'T HAVE AN UNDERSTANDING WHICH IS WHY THESE PERIPHERAL DATA POINTS COME OUT BEFORE THE FED MEETING AS WELL AS TOMORROW WE GET PCE WHICH WILL BE IMPORTANT. HOW IS PROGRESS HAVE WE MADE IN FIGHTING INFLATION? TOM: THIS IS AMAZING. THESE GUYS GO 200 MILES PER HOUR. THERE IS NO THURSDAY OR FRIDAY PRACTICE, THEY JUST START SATURDAY FULLTILT. JONATHAN: I DID NOT KNOW THAT, IS THAT TRUE? TOM: THERE IS NO THURSDAY OR FRIDAY. JONATHAN: YOU HAVE FALLEN IN LOVE WITHFUTBOL. TOM: WHO ELSE IN FORMULA ONE HAS A NASH RAMBLER? JONATHAN: WHO HAS ONE? TOM: NO ONE, TRUST ME. JONATHAN: THE EQUITY MARKET IS JUST ABOUT POSITIVE THIS MORNING, GOOD MORNING TO ALL OF YOU. THIS IS BLOOMBERG SURVEILLANCE WITH EQUITIES UP BY 0.4% ON THE S&P 500 -- ON THE S&P 500. THE BONDS ARE BASICALLY UNCHANGED. WHAT A FINISH IN THE FX MARKET, THE EURO AGAINST THE DOLLAR JUST BELOW ONE DOLLAR $.11 YESTERDAY. THIS MOVE IN META IS PHENOMENAL. YEAR TO DATE, UP MORE THAN 70%. THERE HAS BEEN A RALLY, 233 IN THE PREMARKET AND UP MORE THAN 11% AND ZUCKERBERG HAS CALLED THIS THE YEAR OF EFFICIENCY. THEY HAVE A REBOUND IN GROWTH AND THE APP BUSINESS IS LOOKING OK RELATIVE TO WHAT WAS EXPECTED. TOM: THE STUDY OF MANAGERS IS FASCINATING. THE GREAT MISJUDGE WAS THIS KID -- WHAT WAS THE MOVIE OUT OF HARVARD? THE ZUCKERBERG MOVIE FROM YEARS AGO? LISA: THE SOCIAL NETWORK. TOM: WE ARE ALL SOCIAL NETWORK ANALYST AND WE GOT THIS WRONG. EVERYBODY GOT IT WRONG INCLUDING ME. JONATHAN: THE ESTIMATE WAS 382 AND EPS CAME IN AT 4.91. THE ESTIMATE FOR THE FIRST QUARTER OF ADJUSTED EPS WAS THAT LOW. LISA: AND THEY RETURNED $1 BILLION IN DIVIDENDS AND BUY BACK SO THEY ARE GENERATING RETURNS TO THEIR SHAREHOLDERS. PEOPLE ARE TRYING TO REINVEST IN THE PHYSICAL WORLD. JUST TO GIVE YOU A SENSE OF HOW THIS BREAKS DOWN, FIRST QUARTER ADJUSTED OPERATING INCOME WAS $3.34 BILLION IN THE ESTIMATE WAS $1 BILLION LOWER THAN THAT. THAT GIVES YOU A SENSE OF HOW MUCH THEY OUTPERFORMED. HOW MUCH FURTHER CAN THIS GO AND IS THIS DEPENDENT ON NORTH AMERICA? HOW MUCH DOES THIS REALLY HINGE ON THE IDEA OF FOOD PRICES REMAINING HIGH? JONATHAN: TO GIVE YOU THE TOP LINE, REVENUE FOR THE FIRST QUARTER 15.8 BILLION DOLLARS. THE STOCK IN THE PRE-MARKET IS MARGINALLY HIGHER, UP 0.8%. TOM: $4 BILLION FREE CASH FLOW PRE-PANDEMIC. IT'S A MALAISE. THAT'S ALL I SEE. WE'VE GOT TO GET TO OUR WONDERFUL GUEST BUT I'M GETTING EXHAUSTED BY THE GLOOM. THEY MADE 13% PER YEAR FOR THE LAST 18 YEARS. JONATHAN: IT'S NOT A BAD BUSINESS. TOM: I THINK THIS GDP CALL TODAY IS IMPORTANT. JONATHAN: 8:30 A.M. AND LOOK OUT FOR CLAIMS AS WELL. WALL STREET IS OUT WITH A FORECAST IN JP MORGAN LOOKING FOR 2.6% QUARTER ON QUARTER GROWTH. THE BOTTOM OF THE PACK IS LOOKING FOR ZERO POINT 8%. TOM: THIS IS DIFFERENT AND SHOWS YOU THE NUANCES OF EACH HOUSE AND EACH DIFFERENT CHARACTER. WE'VE TALKED ABOUT AN ARCH FED CALL WHICH CITIGROUP NAILED WITH HIGHER INTEREST RATES BUT THIS MORNING, WE TURN TO THE NATIONS GROWTH. IT'S REAL SIMPLE, YOU LOOK AT BOEING WHICH WE SAW WITH AIRCRAFT DYNAMICS AND DURABLE GOODS IN THE LAST 48 HOURS AND YOU SAY THIS IS A BOEING GDP REPORT, NOT A BORING GDP REPORT. YOU GO POSITIVE? >> THAT'S RIGHT, IT'S A GREAT POINT YOU BRING UP THAT WHEN YOU LOOK AT THE SHIPMENTS OF DURABLE GOODS, CAPITAL GOODS AND WE TEND TO LOOK AT CORE MEASURES OF THESE THINGS. AIRCRAFT IS REAL PRODUCTION. THIS WILL SHOW UP IN GDP SO THERE IS SOMETHING GOING ON HERE. THESE Q1 NUMBERS ARE BACKWARD LOOKING. WE ARE ALL WATCHING JOBLESS CLAIMS FIGURES TO SEE IF THAT TELLS US WHERE WE ARE GOING. IT IS HARD TO SAY THE ECONOMY IS NOT STILL EXPANDING. IT LOOKS LIKE EXPANSION WILL CONTINUE TO THE SECOND QUARTER AND THAT WOULDN'T BE BIG NEWS OTHER THAN ITS IN CONTRAST TO A NARRATIVE IN THE MARKET THAT A RECESSION IS RIGHT AROUND THE CORNER. JONATHAN: THE TWO YEAR YIELD IS 3.5% AND CHAIRMAN POWELL OPENED THE DOOR TO 50 BASIS POINTS AND THEN BANKS STARTED TO FAIL. YOUR RESEARCH WEEK AFTER WEEK HAS BEEN SO CONSISTENT AROUND THIS IDEA THAT THE FED IS STILL GOING HIGHER. FROM MY PERSPECTIVE, YOU AND THE TEAM OF UNDERPLAYED THE POTENTIAL FOR THIS BANKING CRISIS, IF YOU CAN CALL IT THAT BECOMING A BIG DEAL FOR THIS ECONOMY. EVERY NOTE I READ IS THE SAME FROM YOU. WHITE IS THAT A POSITION OF UNITY AND YOU BELIEVE THE BANKING STRESS OF THE LAST MONTH OR SO IS NOT GOING TO BE A MAJOR ECONOMIC ISSUE FOR THE FED TO BACK AWAY? >> WHEN WE TRY TO FORECAST WHAT THE FED WILL DO, WE THINK ABOUT GROWTH, WE THINK ABOUT INFLATION AND WE THINK ABOUT THE FINANCIAL STABILITY ISSUES. THE FRAMEWORK THAT WE HAVE IN PLACE WHICH HAS WORKED WELL IS TO SAY AS LONG AS GROWTH AND FINANCIAL STABILITY ARE OK -- NOT THAT THERE ARE NO ISSUES AROUND GROWTH OR NO CONCERNS,, WE JUST HAD THE SECOND LARGEST BANK FAILURE IN THE HISTORY OF THE UNITED STATES -- BUT IF THAT IS SUFFICIENTLY CONTAINED IN IT WILL NOT SLOW THE ECONOMY SAY HALF A PERCENTAGE POINT OR MORE AND WE DON'T THINK IT WILL, THEN YOU GO BACK TO INFLATION. IT IS A FED THAT HAS A MANDATE OF PRICE STABILITY. WE ARE AT FULL EMPLOYMENT SO THAT PRICE STABILITY MEANS YOU HAVE TO GET POLICY RATES HIGHER. I WOULD POINT OUT THAT POLICY RATES ARE NOT ESPECIALLY HIGH NOW. IT CERTAINLY THE CASE THAT RATES MOVE HIGHER QUICKLY BUT IF YOU LOOK AT CORE PCE, WE WILL SEE IT FOR THE FIRST QUARTER PROBABLY AROUND 4.7% AND POLICY RATES ARE ABOUT THE SAME. WE JUST GOT POLICY RATES BACK TO WHERE THEY ARE EQUAL FOR THE LEVEL OF INFLATION. THEY USUALLY NEED TO GO BEYOND THE LEVEL OF INFLATION. I THINK THE DATA WILL HAVE THE FED HIKING. THESE ARE NOT COMFORTABLE HIKES. DO WE KNOW THERE WON'T BE FURTHER FINANCIAL STABILITY ISSUES? THERE PROBABLY WILL BE BUT IF THEY ARE CONTAINED ENOUGH AND NOT OF THE NATURE TO SLOW DOWN THE ECONOMY TO SLOW DOWN INFLATION, THEN THE FED STAYS THE COURSE. LISA: THIS ASSERTION THAT WAS PUT OUT THAT CORE CPI, TAKING OUT SHELTER IS ALREADY BACK TO THE 2019 RANGE. WE ALREADY GOT BACK TO CLOSE TO A MORE COMFORTABLE FED. >> STEVE IS MY FORMER COLLEAGUE. LOOK AT THE NON-SHELTER SERVICES. PCE INFLATION WHICH IS THE FED'S PREFERRED INFLATION GUIDE OVER AND ABOVE CPI, YOU STILL SEE SERVICES RUNNING STRONG. WE KNOW WE HAVE STRONG WAGE GROWTH. WE'VE SEEN AVERAGE HOURLY EARNINGS HAVE SLOWED DOWN A BIT AND I THINK AVERAGE HOURLY EARNINGS IS TELLING US THE RIGHT STORY AROUND WAGES WHICH WOULD BE REASON TO BE HOPEFUL. WE GET THE EMPLOYMENT COST INDEX TOMORROW AND I CANNOT HIGHLIGHT HOW IMPORTANT THAT INDEX IS. IS THE GOLD STANDARD LABOR COST MEASURE. WE SAW IN THE ATLANTA FED WAGE TRACKER THAT WE LOOK A LOT STRONGER. IF YOU HAVE THIS WAGE PRESSURE AND IF YOU HAVE PRICING POWER, THESE FIRMS ARE TELLING US THEY STILL HAVE PRICING POWER, HIGHER WAGES PASS ON TO HIGHER PRICES AND YOU STILL HAVE AN ISSUE WITH INFLATION. LISA: HOW DOES FINANCIAL STABILITY PLAY INTO THIS? IT'S BEEN THE RED HERRING FOR EVERYBODY WANTS TO AGREE WITH YOU BUT CANNOT. >> I THINK THAT'S AN ISSUE FOR THE MARKET. AT THE END OF THE DAY, WE CANNOT KNOW FOR CERTAIN OR ANYTHING FOR CERTAIN IN MARKETS. WE HAVE TO SAY WHAT IS THE MOST LIKELY OUTCOME. WE WERE EARLY TO SAY THAT THE MOST LIKELY OUTCOME AROUND THIS BANKING STRESS -- I WILL USE THE TERM STRESS NOT CRISIS -- IT DID NOT BECOME SOMETHING THAT IS SYSTEMIC. I THINK THAT IS STILL WHERE WE ARE. WE'VE TALKED ABOUT THIS ISSUE ON THE LIABILITY SIDE OF THE BANK, NOT ON THE ASSET SIDE OF THE BANK BALANCE SHE. -- EACH. THERE IS A RISK YOU CAN GET A BROADER CONTAGION AND THE LIQUIDITY FACILITIES AND REGULATORY TOOLS ARE IN PLACE TO PREVENT THAT. THE BIGGEST CASE IS THIS IS NOT SYSTEMIC AND I THINK THAT'S WHAT WE'VE SEEN SO FAR. CAN WE RULE OUT SOME PROBABILITY THIS BECOMES A BIGGER FINANCIAL STABILITY ISSUE? YOU CANNOT RULE OUT THAT PROBABILITY BUT WE HAVE TO LOOK AT THE MARKET AND SEE WHAT'S RELATIVE TO THE PRICE. THEN IT'S MORE OPTIMISTIC FOR THE U.S. ECONOMY. JONATHAN: WHY DO WE USE THAT WORD CRISIS SO MUCH? WHY ARE PEOPLE RELUCTANT TO USE IT WHEN FINANCIAL INSTITUTIONS THIS LARGE GOING UNDER? >> GREAT QUESTION, I THINK WE ARE DISTINGUISHING BETWEEN SYSTEMIC AND IDIOSYNCRATIC. IF IT'S A LARGE AND A FINANCIAL INSTITUTION, OF COURSE THERE WILL BE SOME KNOCK ON EFFECTS FOR THE BROADER ECONOMY. IT'S NOT THAT THERE IS NO MACRO STORY HERE BUT BECAUSE WE USE THE TERM PRICES FOR 2008, CRISIS HAS A SPECIAL MEANING. THIS IS NOT. 2008 JONATHAN: THANK YOU SO MUCH. EVERY SINGLE THING THAT HAPPENS IN MARKETS GETS BENCHMARKED TO THE EXTREME WHICH IS 2008. THERE IS THIS RELUCTANCE TO USE WORDS LIKE CRISIS BECAUSE IT EVOKES 2008. DOES THAT FRUSTRATE YOU IN ANY WAY? LISA: WE HAVE DILUTED THE MEANING OF CRISIS. IF YOU'VE GOT BANK FAILURES IN A TIGHTENING IN LENDING STANDARDS, IS THERE RISK WE ARE NOT CONSIDERING THAT ENOUGH? SOME HAVE SAID THIS WILL REALLY CONTRACT CREDIT AND IT'S A FLOOD OF DEPOSITS LEAVING THE SYSTEM THAT WILL HAVE MATERIAL IMPACT. PEOPLE ARE ABLE TO RECOGNIZE THAT BECAUSE IT CANNOT BE PUT UNDER THE WORD CRISIS. TOM: UCLA HAS A LEGENDARY COURSE CALLED GROWTH THEORY 164. THE BOTTOM LINE IS WE HAVE FORGOTTEN CREATIVE DESTRUCTION WITHIN FINANCE. CHRIS WHALEN IS EXPERT AT THIS AND THE BASIC IDEA IS THAT AFTER 07 THERE IS THIS NEW IDIOCY WE CANNOT CLEAR MARKET SO WE JUST FESTER. ARE THERE ZOMBIE COMPANIES AND ZOMBIE BANKS AND ZOMBIE FINANCES? JONATHAN: THIS HAS BEEN BURIED SINCE THE FINANCIAL CRISIS, THE IDEA THAT ALMOST EVERY SINGLE FINANCIAL INSTITUTION IS SYSTEMICALLY IMPORTANT NOW. TOM: IF WE ARE GOING TO DO AUSTRIAN ECONOMICS, WE HAVE TO GO REMOTE FROM VIENNA. JONATHAN: THE CENTRAL BANK THERE HAS THINGS TO SAY. TOM: BIG TIME. JONATHAN: MICHAEL NATHANSON ON META-NEXT, THAT STOCK IN THE PREMARKET FLYING. LISA: KEEPING YOU UP-TO-DATE WITH NEWS FROM AROUND THE WORLD WITH THE FIRST WORD -- AFTER MAKING A FEW ADJUSTMENTS TO HIS DEBT LIMIT BILL, SPEAKER KEVIN MCCARTHY'S PLAN HAS PASSED THE HOUSE. THE VOTE NOW PUTS PRESSURE ON PRESIDENT JOE BIDEN TO BEGIN TALKS WITH REPUBLICANS OVER THE DEBT LIMIT TO AVOID A POSSIBLE PAYMENT OF ALL THE SUMMER. THE PRESIDENT HAS SAID IT HAS NO CHANCE OF BECOMING LAW. A FEDERAL APPEALS COURT HAS REJECTED DONALD'S LATEST ATTEMPT TO STOP FORMER VICE PRESIDENT MIKE PENCE FROM TESTIFYING BEFORE A GRAND JURY. THE PANEL IS INVESTIGATING WHETHER CRIMES WERE COMMITTED BY THE FORMER PRESIDENT AND HIS ALLIES AS THEY TRIED TO UNDO JOE BIDEN'S 2020 ELECTION WHEN. CHINA IS ENCOURAGING COMPANIES TO BOOST HIRING WITCHES UNDERSCORING WORRIES OVER THE LABOR MARKET AND STIRRING UNEMPLOYMENT AMONG YOUNG PEOPLE. CHINA WILL PROVIDE SUBSIDIES TO EMPLOYERS THAT HIRE GRADUATES AND YOUNG PEOPLE WHO ARE STRUGGLING TO FIND WORK. TRADERS AT BARCLAYS DID BETTER THAN EXPECTED IN THE FIRST QUARTER WITH A SURPRISE INCREASE IN FIXED INCOME REVENUE WHICH HELPED OFFSET DEALMAKING FEES AT THE BRITISH BANK. IN AN INTERVIEW, THE BERKELEY CEO WAS ASKED WHETHER THE U.K. WAS LIABLE TO THE SORT OF KSM U.S. BANKS JUST WENT THROUGH. >> THE U.K. HAS BEEN MORE INSULATED FROM THAT DEPOSIT FLIGHT ACROSS BANKS THAN CERTAINLY THE U.S. HAS BEEN WITH THE REGIONALS AND THE BIG BANKS. HAVING SAID THAT, OUR DEPOSIT FRANCHISE GREW ABOUT 10 BILLION POUNDS IN THE QUARTER AND A LOT OF THAT WAS ACTUALLY CORPORATE'S PUTTING DEPOSITS WITH US. LISA: BARCLAYS ROSE 9% IN THE U.K.. GLOBAL NEWS POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES, THIS IS BLOOMBERG. >> IN A WAY, FACEBOOK IS BACK TO THE ONE WE USED TO KNOW WHICH JUST GREW INCESSANTLY AND RELIABLY FOR A LONG TIME. THE BIG PICTURE IS ADVERTISING IS STRONGER THAN EXPECTED, NOT ONLY FOR THEM BUT POSSIBLY THIS COULD BE A MACRO ECONOMIC SIGNAL. THIS IS SUCH A FUNDAMENTALLY GLOBAL COMPANY THAT IF THEIR ADS ARE DOING BETTER THAN ANYBODY EXPECTED, THAT IS ENCOURAGING. JONATHAN: THAT'S THE BULL CASE FOR THE BROADER ECONOMY. THAT'S THE LATEST NUMBERS FROM META WHICH THEY CALL THE YEAR OF EFFICIENCY. IT MIGHT BE A YEAR OF GROWTH AND A REBOUND FOR THE AD BUSINESS. WHAT HAVE WE GONE THE TABLE NOW? THE CLOUD BUSINESS AT MICROSOFT LOOKS OK IN THE BROADER STORY FOR SOME OF THE CONSUMER COMPANIES LIKE KIMBERLY-CLARK AND PROCTER & GAMBLE AND PEPSI, DOT WILL -- DOUBLE DIGIT PRICE INCREASES WITHOUT PUSHBACK WHICH PAINTS A GOOD PICTURE OF THE ECONOMY NEW PUT THAT AGAINST THE LEADING INDICATORS IN THE ECONOMY AND YOU'VE GOT DOOM AND GLOOM ON THAT SIDE. TOM: THE PUSH AND PULL IS ABOUT PROFITABILITY. THE DAY FACEBOOK WENT PUBLIC, ONE OF THE GREATEST CAUSE OF EVER HEARD IN THE HISTORY OF SECURITIES, AND WE FORGET, THIS IS LIKE THE APPLE SERVICES PART OF APPLE, THERE EBITA MARGIN IS MODELED AT $.48 -- $.43 ON THE DOLLAR. THE PROPHET MACHINE THEY CAN BE IF THEY KEEP IT GOING, LISA'S KIDS ARE GLUED TO INSTAGRAM, THEY KEEP IT GOING. JONATHAN: THE NUMBER TWO STOCK ON THE S&P 500 THIS YEAR, META-UP 20% AND IT COULD BE THE NUMBER ONE STOCK IN THE S&P 500 LATER TODAY, HIGHER BY 11%. TOM: LET'S TALK TO A SECURITY ANALYST ABOUT THIS, MICHAEL NATHANSON. HE HAS LOOKED AT THE NEW ZUCKERBERG EFFECT. YOU NAILED IT IN YOUR NOTE AND WHAT I SEE IN TERMS OF THE MATURITY OF THIS GENERATION, IS MR. ZUCKERBERG WANTS TO BE A SERIOUS TECHNOLOGY COMPANY. IS THIS A SYSTEMIC SILICON VALLEY SHIPS? >> I THINK IT IS. I ASKED HIM LAST YEAR IF IT'S A SOCIAL GRAPH THAT HE BUILT AND HE SAID IT'S A TECHNOLOGY COMPANY THAT MOVES FAST AND CHANGES THINGS. WE HAVE TALKED ABOUT META-OVER THE YEARS. THEY HAD TO PIVOT AWAY FROM A COUPLE OF THINGS HURTING THEM. THEY ARE A TECHNOLOGY COMPANY AND THEN MARK BECAME MUCH MORE AGGRESSIVE AND RUTHLESS ON COST CONTROL. PEOPLE THOUGHT HE WAS NOT GOING TO CUT COSTS AND IT HAS TAKEN OUT $12 BILLION IN SIX MONTHS AND THAT'S EXTRAORDINARY. THEY ARE ACCELERATING BY $11 BILLION AND THEN COST CUTS. TOM: LOOK AT THIS ON A BROADER BASIS, WE HAD YOUR COLLEGE -- COLLEAGUE IN CRIME ON THE OTHER DAY. YOU GUYS FOLLOW THESE CHILDREN FROM OUT OF THEIR DORMS TO THE MODERN EUROPE. OUR -- IS NOW WHEN THEY ARE GROWING UP? >> I THINK HAVING A FOUNDER WHOSE ENTIRE LIFE WORK IS CAUGHT UP IN THIS, THAT'S THE PAY OFF YOUR GETTING. HE WAS NOT GOING TO LET THIS COMPANY DIE AND HE TOOK STEPS. THIS IS THE EVOLUTION OF HIS LEADERSHIP. TOM: WE FORGET HE IS 38 YEARS OLD. WE ARE TALKING LIKE HE IS 65, HE IS A KID. LISA: AND NOW HE'S PROVING HIMSELF IN THE ACTUAL BREAD-AND-BUTTER EARNINGS. YOU INCREASE YOUR PRICE TARGET TO $295 FROM 275. WHERE IS THE EXTRA PROFIT GOING TO COME FROM? >> IT WAS A REVENUE STORY. LOOK AT THE GUIDE FOR THE NEXT QUARTER AND REVENUE GROWTH. IT WAS BETWEEN 2% AND 10% ON THE UPSIDE AND WE ARE AT FIVE RIGHT NOW. WE TOOK OUR NUMBERS UP 8%. FOR THE REST OF THE YEAR, YOU PROBABLY HAVE DOUBLE DIGIT GROWTH THE REST OF THE YEAR. WE WERE ALWAYS ABOVE THE STREET WITH OUR PRICE TARGET BUT NOW THE REVENUE STORY IS STARTING TO KICK IN. LISA: IS THERE A DIRTY SECRET THAT'S BEEN EXPOSED FROM SOME OF THESE TECH GIANTS THAT THEY DIDN'T NEED AS BIG OF A FOOTPRINT AND THEY DON'T NEED AS MANY BODIES BECAUSE THEIR EXPENSES ARE LOWER? >> THAT'S A GREAT POINT, THAT'S A DIRTY SECRET. BACK WHEN WE COVERED MEDIA AND IF THERE IS A GREAT AD CYCLE, THEY DIDN'T HIRE MORE PEOPLE. LOOK WHAT HAPPENED IN 2022 AS REVENUES WERE RAMPING, THEY HIRED MORE PEOPLE AND IT WAS A BENEFIT TO THEM. THE AD REVENUE CAME THROUGH BUT NOW, THESE COMPANIES ARE GOING BACK TO PRE-PANDEMIC STAFFING LEVELS. THE REVENUE BASE IS COMING BACK. IT MAY SOUND CRAZY BUT WE GOT MORE BULLISH ON META AND ALPHABET AS WELL. THEY ALL LEARNED A LESSON WHICH IS THE OVERSTAFFED AND THEY CAN CUT WITHOUT HITTING THE TOP LINE. LISA: GIVEN THE FACT YOU INCREASE YOUR EARNINGS, HOW MUCH DOES THAT INCLUDE THE POTENTIAL BANNING OR SALE OF TIKTOK AND THE READTHROUGH IMPLICATIONS FOR META-AND SNAP? >> NO BANNING OF TIKTOK IN HER THOUGHT PROCESS. TIKTOK IS ABOUT $10 BILLION REVENUE BASE. THAT WOULD BE A HOMERUN. WE HAD NOT CONTEMPLATED THAT BECAUSE IT SEEMS SO FAR REMOVED. WHAT THEY'VE DONE WITHREELS IS THEY'VE QUICKLY ADOPTED THE BEST PART OF TIKTOK. WE SAW THIS IN THEIR BUSINESS MODEL AND QUICKLY ENGINEERED A SOLUTION AND NOW THEY ARE STARTING TO MONETIZE THE SOLUTION. I BELIEVE TIKTOK IS TAKING SHARES. JONATHAN: IT'S AN AMAZING STORY, AND $88 STOCK AND YOU'VE GOT MICHAEL NATHANSON TALKING ABOUT 300. >> WE STUCK BY THIS THING. THE REVENUES WERE SELF DESTROYED. THEY HAD BASICALLY HIT BY APPLE WHICH CHANGED THEIR DIFA SIGNIFIERS ON THEIR MOBILE SYSTEM AND THESE GUYS HAD TO PRODUCE R WHICH IS NOT MONETIZE. EELS THEY BELIEVED ZUCKERBERG WAS AN EMPIRE BUILDER AND CUT COSTS. SOME SAID THIS GUY DOESN'T UNDERSTAND WHAT'S HAPPENING BUT TO ME, IT WAS ABOUT SELF-CREATED REVENUE CRISIS. THEY HAVE NO ENGINEERED THEMSELVES PAST THAT. THAT'S WHAT WAS SO INTERESTING IS THAT THIS WAS NOT CYCLICAL. 2021 WAS SO GOOD, THEY HAD A HARD TIME LAPPING THAT YEAR R AND THENEELS OCCURRED SO ALL THESE THINGS HIT THE STOCK. JONATHAN: THERE WILL BE SOME PEOPLE WHO DON'T HOLD THIS NAME WHO LOOK AT THIS IS SOME KIND OF CYCLICAL SIGNAL. YOU JUST SAID MAYBE LAST YEAR WASN'T CYCLICAL SO IS THE SUCCESS THIS MORNING CYCLICAL? IS THAT A BROADER SIGNAL ABOUT THE CYCLE? >> NO BECAUSE ALPHABET IS A BIGGER COMPANY AND THEIR RESULTS WERE OK BUT NOT LIKE THIS. THIS IS A SEPARATE CYCLE TIED TO META AND WHAT THEY TRIED TO DO LAST YEAR. JONATHAN: A GREAT CALL, THANK YOU. 88 IN EARLY NOVEMBER. TO HIS POINT, THERE IS THIS FEELING THAT ZUCKERBERG LOST IT AND DIDN'T UNDERSTAND THE IMPORTANCE OF COST DISCIPLINE AND CHANGE THE NAME OF THE COMPANY AND TOOK HIS EYE OFF THE BALL AND NOW WE HAVE A TURNAROUND. LISA: IT'S COMING TO FRUITION NOW EVEN WITHOUT TIKTOK OR ARTIFICIAL INTELLIGENCE. IS THE QUESTION OF 3 BILLION PEOPLE USING ITS PLATFORMS EVERY DAY ON AVERAGE. THAT'S A GAME CHANGER AVENUE -- AND THE REVENUE PRODUCER. TOM: JEFF BEZOS IS 55 AND YOU WONDER IF AFTER THE TYCOON THAT YOU WILL GET THE SAME SHOP THIS AFTERNOON WITH AMAZON. TWO THIS IS SOMETHING I THINK MICHAEL WOLFF, PEOPLE HAVE BEEN WAITING FOR THIS FOR 15 YEARS. JONATHAN: THE STOCK IS FLYING, UP MORE THAN 11%. A LOT OF 38-YEAR-OLDS THIS MORNING ARE FEELING YOUNGER. LISA: IS THERE SOMETHING YOU WANT TO SAY? JONATHAN: HE IS A KID. LISA: THAT IS THE STORY. THE FACT THAT THEY FIGURED OUT THEY DIDN'T NEED AS MANY KIDS IN THEIR PLAN IS KIND OF A GAME CHANGER. TOM: WE LOOK AT THAT WITHIN THE BLOOMBERG SURVEILLANCE TEAM. YOU OVER THERE, WE HAVE A LOT OF STAND AROUNDS. WE HAVE INTERNS. WE ARE GOING TO RIGHT SIZE. MAYBE LEFT SIZE. JONATHAN: DEAL WITH IT, LISA. TK HAS BEEN TRYING TO GET IT INTO DOUBLE FIGURES FOR AGES. >> QUITE FRANKLY, I WOULD LOVE THIS RIGHT NOW. >> THE BIGGER QUESTION IS WHAT DOES THIS DO FOR FINANCIAL CONDITIONS MORE BROADLY? >> EVERY INDICATOR IS FLASHING RED. >> I THINK IT WILL BE A SLOW RECESSION. >> THE ODDS FAVOR THE U.S. ECONOMY BEING IN A RECESSION IN THE THIRD QUARTER THIS YEAR. >> THIS IS BLOOMBERG SURVEILLANCE. JONATHAN: S&P 500 REPORTING THIS MORNING. IT IS ANOTHER BUSY MORNING. GOOD MORNING. THIS IS BLOOMBERG SURVEILLANCE ON TV AND RADIO. ALONGSIDE LISA AND TOM. I AM JONATHAN FERRO. THE STOCK IS ACTUALLY FLYING. THE -- THE STOCK IS PRACTICALLY FLYING. TOM: WE LOOK AT THE TECH COMPANY CATERPILLAR, IT IS NOT JUST TECH, IT IS -- WELL EXECUTED COMPANIES ARE DELIVERING DIVISION BY DIVISION SURPRISES AND REVENUES. THIS IS WHAT I TALKED ABOUT. COMPANIES ADAPT. JONATHAN: 491 ON THE S&P 500. LISA: HOW MUCH IS THIS GOOD INVESTMENT AND HOW MUCH BIT IS BECAUSE THERE IS A REINVESTMENT LAND. -- PLANNED. THERE IS A ROLLING RECESSION IN PLACES OF STRENGTH AND WE THIS. YOU PUT IT ALL TOGETHER WE HAVE A TUG-OF-WAR BETWEEN WINNERS AND LOSERS. IT GIVES YOU A SENSE OF HOW WRONG PEOPLE HAVE BEEN. JONATHAN: WE HAVE MORE DATA AT 8:30 EASTERN TIME. AND 248 IN THE SURVEY WE SEE CLAIMS TAKING HIGHER. THAT GOT PEOPLE'S ATTENTION. LISA: THAT IS WHY I'M WATCHING THIS MORE THAN FIRST QUARTER GDP. IT IS BACKWARD LOOKING. THIS IS MORE FORWARD-LOOKING. THE TICK UP IS MODERATE. THERE IS NOT A SCREAM THAT THERE IS A SERIOUS PROBLEM, BUT THERE IS AN INDICATION OF STRENGTH. TO OPEN JOBS FOR EVERY UNEMPLOYED AMERICAN. JONATHAN: S&P 500 UP .6%. THE 10 YEAR YIELD HIGHER BY A SINGLE BASIS POINT. 3.46 OF 17 -- 3.4617. LISA: WE GET THE INITIAL JOBLESS CLAIMS NUMBER AND THE UNEXPECTED STRENGTH OR WEAKNESS THAT POSSIBLY FUELS THE BEARS OUT THERE ARE TODAY. THE AFTERMARKET WITH THE TECH GIANTS CONTINUE. AMAZON AND SNAP REPORTING. I'M CURIOUS TO SEE IF SNAP SEES THE IMPROVEMENT IN REVENUES THAT WE SAW IN FACEBOOK. BUT WHETHER THIS IS A POWER OF GAINING MARKET SHARE BY THE FACEBOOK PARENT. ALSO, AMAZON, HOW MUCH DO YOU SEE THE PRICING IN THE MARKET WITH 25% GAIN CONTINUING WITH RESILIENCE. I THINK AMAZON MAY BE MORE INTERESTING BECAUSE OF UPS AND PACKAGES WERE LOWER. THEY EXPECT THAT TO CONTINUE. I LOOK AT THE FED'S BALANCE SHEET AND SEE HOW MUCH IT HAS COME DOWN. I LOOK AT THE DISCOUNT WINDOW LEND DATE FROM THE FED. HOW MUCH ARE BANKS STILL TAPPING THIS? WHAT IS THE STORY OF TUG-OF-WAR WE SEE IN THE MARKETS. JONATHAN: OR IF WE STAY ELEVATED. IT IS THE LATTER POINT THAT HAS EVERYONE'S ATTENTION. LISA: AND HOW MANY PEOPLE ARE TURNING TO LONGER-TERM EMERGENCY HUNTING. PEOPLE ARE PART EMERGENCY FUNDING. DOES IT GO PUBLIC OR BEYOND? JONATHAN: MICROSOFT UP 23% YEAR TO DATE. META BY THE END OF THE DAY COULD BE UP SOMETHING LIKE 80% YEAR TO DATE. AND THAT WE SPEAK WITH EMILY ROLAND CO-CHIEF INVESTMENT STRATEGIST AT JH INVESTMENTS. WE ARE LEARNING THAT TECH IS DEFENSIVE. >> YES, IT SEEMS LIKE THEY ARE DOING A SPIKE RIGHT NOW WHEN IT COMES TO Q1 EARNINGS RESOLVE. WE EXPECTED FOR A WHILE FOR THERE TO BE QUALITY GROWTH. WHEN YOU THINK ABOUT THESE COMPANIES THEY HAVE A LOT OF CASH ON THE BALANCE SHEET, THEY HAVE GOOD CASH FLOW AND THEY BROADLY RECOGNIZE THAT REVENUE IS GOING TO BE HARDER TO COME BY AS WE HEAD INTO THIS DECELERATING GROWTH ENVIRONMENT. THEY MANAGE COST AND THEY DEFENDED THEIR MARGIN, WE ARE SEEING THAT COME THROUGH HERE IN EARNINGS SEASON. WE ARE NOT SURPRISED TO SEE EARNINGS WITH TECH IN LEADERSHIP. TOM: WHERE IS THE FEAR OF MISSING OUT ON THIS? IS EVERYBODY ON BOARD WITH TECH INSTITUTIONALLY OR IS IT UNDER OWNED? >> I THINK IT IS UNDER OWNED MANY GUEST ON YOUR SHOW HAVE TALKED ABOUT TECH BEING OVERVALUED. PE GETTING CLOSER TO 40 TIMES EARNINGS DEPENDING ON THE MEASURE YOU LOOK AT BUT THE REASON WE SEE TECH OR REASONABLE STILL IS THAT YOU HAVE TO LOOK AT THE ENTIRE REGION. EARNINGS ART -1%. IF YOU DO THE MATH -- EARNINGS ARE -1%. IF YOU DO THE MATH THERE IS LITTLE RISK. WE THINK THIS VALUATIONS MAKES SENSE IN THAT CONTEXT AND WE THINK TECH IS UNDER LOVED. TOM: DO YOU DIVERSIFY OR GO MORE NARROW? SEQUOIA A NUMBER OF YEARS AGO WANTING AN X NUMBER OF STOCKS. BUT WITH CATERPILLAR IT IS A TECH STOCK, WHEN WE HAVE TOO MANY STOCKS SHOULD BE BE IN FEWER VECTORS AND INDIVIDUAL SECURITIES? >> I THINK THERE IS A DANGER THAT TECH CANNOT CONTINUE TO DO THE HEAVY LIFTING FOR THE ENTIRE MARKET. WE WANT TO DIVERSIFY AWAY FROM THAT. WE HAVE MORE EXPOSURE TO CYCLICAL PARTS OF THE MARKET. MET CAP VALUES HAVE BEEN A FAVORITE PART OF HOURS. WE LOOK TO THAT TO CLAIM THE ON SHORING THEME. WE FUNDED THE ALLOCATION IN THE CYCLICAL PARTS OF THE U.S. EQUITY MARKET WITH AN UNDERWEIGHT TO EMERGING MARKET EQUITIES. WE LOOK AT IT FROM A HOLISTIC PORTFOLIO STANDPOINT. WE HAVE AN OVERWEIGHT IN SOME AREAS. WE STRUGGLE WITHOUT A LITTLE BIT AS WE SEE A RALLY IN THE EMERGING-MARKET EQUITIES PARTICULARLY AS WELL AS EUROPE BUT WE BELIEVE THE U.S. IS THE BEST PLACE TO GET QUALITY. LISA: WHAT ABOUT THE FLIPSIDE OF WHAT TOM SAID. THE IDEA OF FOCUSING ON STOCKS. WHEN YOU HAVE A PUSH POOL OR BIG STOCKS CARRYING OTHERS WHY NOT GO BACK TO THE INDEX? IT IS SUPPOSED TO BE A STOCKPICKING MOMENT BUT IS IT WHEN YOU HAVE TECH GIANTS? >> IT IS A MOMENT WHERE MANAGERS CAN SHINE. YOU SEE THE CONSTANT RATION -- CONCENTRATION IN THE INDEX. IT IS AN OPPORTUNITY FOR THEM TO DIFFERENTIATE THEMSELVES. WE WANT TO BE DIVERSIFIED AND OWNED BIG TECH NAMES BUT WE ALSO LOOK AT BIG CAP VALUE AS A WAY TO BENEFIT. WE LOOK AT HEALTH CARE SECTOR AS ANOTHER FAVORITE IN THIS MARKET. AGAIN, WE WANT TO BE PATIENT. WE WANT TO REALLY THINK ABOUT OWNING DIFFERENT PARTS OF THE EQUITY MARKET. OWNING BONDS. WE DON'T THINK -- WE STILL THINK FIXED INCOME COULD DO MORE HEAVY LIFTING IN THE PORTFOLIOS. WE ARE LOOKS TO -- LOOKING AT THIS FIXED INCOME EVER TIGHTENING. THE FED TIGHTENING HAS YET TO IMPACT THE EMPLOYMENT MARKET. IT IS GETTING TIRING TREADING WATER TO PARTICIPATE IN A MARKET THAT IS VERY RESILIENT, BUT BEING PATIENT AS THE LATE CYCLE DYNAMICS PLAY OUT. LISA: YOU HAVE MENTIONED IT IS A DIFFICULT TRADE TO BE OVERWEIGHT WITH THE U.S. AND YOU HUNG ON, I HAVE YOU HUNG ON BASED ON THE FACT THAT SO MANY PEOPLE SEE THE U.S. GETTING WEAKER FASTER THAN EUROPE. LI>> WE USE PSYCHOANALYSIS AS A KEY INPUT TO MAKING OUR DECISION. WE LIKELY CA RECESSION UNFOLD IN THE BACK HALF OF THIS YEAR -- LIKELY SEE A RECESSION UNFOLD IN THE BACK HALF OF THIS YEAR. EUROPEAN EQUITIES ARE OUTPERFORMING, THE DOLLAR BEING WEAK OR PLAYS A BIG ROLE IN THAT, BUT IT IS UNUSUAL TO SEE A LEVEL OF THE SYNCHRONIZED GROWTH. EVENTUALLY WE SEE IT SYNCHRONIZING AGAIN AND WE SEE A GLOBAL RECESSION LAYING OUT. -- PLAYING OUT. AND EMERGING-MARKET EQUITIES HAVE NOT REALLY KEPT PACE. SINCE THE BEGINNING OF THE FOURTH QUARTER OF LAST YEAR, EUROPEAN EQUITIES ARE OUTPERFORMING EMERGING MARKETS BY 15%. THAT IS A MAGNITUDE WE HAVE ONLY WITNESSED ABOUT 5% OF THE TIME GOING BACK TO THE 1990'S. IT IS REALLY UNUSUAL LEADERSHIP COMING OUT OF EUROPE VERSUS EM. WE THINK THE DYNAMIC CHANGES AND THE GAP CLOSES AND AGAIN YOU SEE THE MARKET ACTING IN UNISON GLOBALLY. JONATHAN: U.S. STOCKS OF 80% TODAY. IT'S PHENOMENAL. THANK YOU, EMILY. LUXURY PLAYS. WE HAVE LEARNED TECH AMERICA DEFENSIVE -- AND LUXURY IN EUROPE ARE ABSOLUTELY FLYING TODAY. TOM: THEY ARE ALL FLYING AND THEY BEGIN TO PERCOLATE. CHINA HAS ALL THE EASY MONEY TO BE MADE. I HAVE NO IDEA ON THIS AT ALL BUT WHAT WILL GO ALONG WITH MH AND THE REST OF THEM? BUT I HAPPEN TO BE IN ON A STORY YESTERDAY, AND IT SHOWS THE FRAGILITY OF A GIVEN BUSINESS PLAN. THE STORE WAS CALLED GUCCI AND THEY ARE IN DESIGNER TURMOIL. THEY HAVE A NEW GUY COMING IN RADICALLY DIFFERENT FROM THE LAST GUY. JONATHAN: WILL HE BE HEADING TO THE FLAGSHIP TODAY? TOM: I THINK MISS IS KEEN IS WORKING ON THIS BUT IT IS INTERESTING WHEN YOU ARE IN TOKYO AND HERE AT THE HOTEL IT IS SOMETHING LIKE ON 5TH AVENUE AND IT IS ALL BRAND-NEW. JONATHAN: HUNDREDS OF MILLIONS THEY HAVE SPENT ON THAT REPORTEDLY. TOM: I HAVE NO IDEA HOW THEY WILL RECOUP THE CAPITAL COST. JONATHAN: I THINK THEY HAVE ALREADY RECOUPED THAT. THEY SECURED THE DEAL AROUND $16 BILLION WITH A $400 BILLION DISCOUNT. TOM: DO THEY OWN ALL FOUR CORNERS? I THINK THEY OWN THREE OF THE FOUR CORNERS. I CAN'T REMEMBER WHO IS ON THE SOUTHWEST CORNER. JONATHAN: BASICALLY ON FOR -- ON 5TH AVENUE NOW. TOM KNOWS. DO YOU THINK CHINA WINS THIS? TOM: I HAVE NO OPINION ON THAT. JONATHAN: JOINING US IN THE NEXT HOUR WITH NOTHING TO SAY ABOUT THIS. WE TALK ABOUT TECH CRUSHING GEAR EARLIER THIS WEEK. AND OTHERS UP AND -- UP 11%. WITH U.S. EQUITY MARKET. THIS IS BLOOMBERG. >> NOW KEEPING YOU UP-TO-DATE WITH NEWS FROM AROUND THE WORLD. HERE IS THE FIRST WORD. I'M LISA MATEO. MCCARTHY'S BILL HAS SQUEAKED THROUGH. FELLOW REPUBLICANS DID NOT PASS THE FIRST BIG TEST PUTTING PRESSURE ON THE PRESIDENT OPENING TALKS WITH THE GOP TO AVOID DEFAULT PAYMENTS THIS SUMMER. BUT THE PRESIDENT SIGNALED HE WILL NOT GIVE IN REPUBLICAN DEMAND. GERMANY IS LIMITING THE EXPORT OF CHEMICALS TO CHINA THAT IS USED TO MANUFACTURE SEMICONDUCTORS. IT WANTS TO REDUCE ITS EXPOSURE TO BEIJING. THEY ARE TRYING TO BALANCE GERMANY INTEREST IN CHINA WITH NATIONAL SECURITY AND HUMAN RIGHTS CONCERNS. TRADERS AT BARCLAYS ARE DOING BETTER BEEN EXPECTED IN THE FIRST QUARTER WITH A SURPRISE RAISE IN FIXED INCOME REVENUE. THAT HELPED OFFSETTING DEALMAKING FEES AT THE BRITISH BANK. AND IN AN INTERVIEW WE ASK IF THAT U.K. WAS LIABLE FOR SOME OF THE THINGS THAT THE U.S. BANKS HAVE JUST WENT THROUGH. >> THE U.K. IS MORE FLEXIBLE TO THOSE IN THE U.S. HAS BEEN. IN THE REGIONAL AND BIG BANKS. HAVING SAID THAT, [INDISCERNIBLE] A LOT OF THAT WAS ACTUALLY PEOPLE AND CORPORATE PUTTING DEPOSITS WITH US. >> COST IN THE U.K. ROSE 9% DUE TO INFLATION. GLOBAL NEWS 24-HOURS A DAY ON AIR AND ON BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. >> THEY HAVE NOT FIGURED OUT THE DEBT LIMIT YET. I WILL BE HERE TO --WHETHER OR NOT THE DEBT LIMIT GETS EXTENDED. THAT IS NOT NEGOTIABLE. >> WE ARE WAY AHEAD OF THE DEBT LIMIT. THE SENATE COULD PASS OUR BILL. OTHERWISE, WE HAVE DONE OUR JOB. JONATHAN: SPEAKER MCCARTHY GETTING IT DONE. A LOT OF PEOPLE DID NOT THINK HE WOULD. COMING TO AGREEMENTS WITH PRESIDENT BIDEN WE WILL SEE HIS RESPONSE ON THAT. NO SIGN THEY ARE WILLING TO COME TO THE TABLE AND NEGOTIATE YET. BUT FROM GOLDMAN ON TAX RECEIPTS THEY ARE PUSHING BACK ON THEIR CAP -- DEADLINE. THEY SAID IF THE REMAINING RECEIPTS STAY ON THIS TREND THE TREASURY SHOULD BE ABLE TO CONTINUE TO MAKE ALL SCHEDULED PAYMENTS UNTIL THE END OF THE LIE WITHOUT AN INCREASE IN DEBT I MET. TOM: I BELIEVE THERE WAS A LIFT AS WELL. I LOOKED AND SAID REALLY? SO THERE WE GO. THE DYNAMICS WERE FACING THIS THIS SUMMER. AND AN UNCERTAIN FALL AS WELL. RUNNING US IS CAMRY. FORGET ABOUT ALL THE BLABBER LIKE THE HOUSE WILL BE DEFEATED IN THE SENATE. I GET ALL OF THAT. BUT WHERE WILL WE BE ON LABOR DAY? >> THAT'S A GREAT QUESTION. AT THIS POINT, WE DON'T REALLY KNOW EXCEPT FOR THE FACT WITH SPEAKER MCCARTHY'S VICTORY YESTERDAY WHICH MANY WERE GUESSING HE WOULD NOT BE ABLE TO GET THROUGH, HE HAD 15 ROUNDS TO BECOME SPEAKER, THIS WAS ONE VOTE AND HE WAS ABLE TO CONVINCE HIS CONSTITUENTS TO VOTE. THIS LEADS TO A CONVERSATION OF PRESIDENT BIDEN AND SPEAKER MCCARTHY TO DISCUSS WHAT THEY WILL DO ABOUT THE DEBT CEILING. AND THERE IS A BIT OF NUANCE INTO WHAT PRESIDENT BIDEN SAID YESTERDAY. THIS WAS IN THE ROSE GARDEN AND HE'S FOCUSED ON THE U.S. RELATIONSHIP WITH SOUTH KOREA. HE DID NOT SAY REPUBLICANS, SHOW ME YOUR BUDGET. HE SAID I NEED TO MAKE SURE WE WILL NOT DEFAULT. POTENTIALLY SOME SUNLIGHT ON WHETHER THE TWO MEN WILL STRIKE AT THE AGREEMENT. TOM: I CAN MAKE A JOKE ABOUT THE BLOOMBERG SURVEILLANCE TAX BILL AND THE CONTRIBUTION BUT ARE WE OVERTAXED? WITH THE BASIC IDEA IN WASHINGTON ARE WE PAYING A LOT OF TAX HISTORICALLY? >> I'M NOT SURE IF YOU'RE OVER TEXT. I HAVE NOT SEEN YOUR W-2 FORM, BUT WHAT WE SEE WITH THE LATEST RECEIPTS FROM THE GOLDMAN NOTE THAT JOHN REFERENCED IS A WEEK AFTER THE TAX BILLS WERE DONE THE CHECKS GO ALONG SIGN THE PAPERWORK AND THEY ARE FINALLY BEING PROCESSED. IT DOES LOOK LIKE THERE WERE MORE RECEIPTS THAN THEY WERE EXPECTING AND THAT IS WHY THEY HAVE WISHED BACK THE DATE TO JULY AND OTHERS WERE POTENTIALLY SAYING JUNE. TOM: I THINK THIS IS SO IMPORTANT. IN ENGLAND, THERE IS A TRANSPARENCY ABOUT THIS. IN AMERICA THERE IS THIS TEXT, THAT TEXT, AND THE OTHER TEXT, AND THAT IS WHERE THE REPUBLICAN -- THIS TAX, THAT TAX, AND THE OTHER TAX. THAT IS WHERE THE ANGST COMES FROM. LISA: WHAT WE HAVE TO GIVE UP TO MAKE THIS DEAL? >> WE HAD TO GET THE BRAKES BACK IN THE BILL FOR BIOFUELS AND THAT IS MOSTLY FOR THE MIDWESTERN REPUBLICANS. HE ALSO HAD TO ACCELERATE THE WORK REQUIREMENTS TO NEXT YEAR INSTEAD OF 2025 FOR THOSE IN MEDICAID. THE THING THAT HE REALLY DIDN'T GIVE UP WITH HIS CONFERENCE IS THAT HE LET ON THEY CAN MAKE CHANGES. HE CAME OUT AND SAID THIS IS WHAT THE BILL IS AN THEY MADE ZERO CHANGES AND A FEW HOURS LATER THEY WENT IN TILL WEE HOURS OF THE MORNING THEY WRAPPED AT AROUND 2:00 IN THE MORNING. BUT DEMOCRATS ARE SAYING IS THAT MCCARTHY HAS OPENLY SHOWED HIS HAND AND THEY HAD TO GO BACK -- HE HAD TO GO BACK ON HIS WORD. HE SAID HE WOULD NOT CHANGE THE BILL AND THEN HE DID JUST THAT. BUT THAT -- BUT AT THE END OF THE DAY, HE WAS VICTORIOUS. WHAT THE WHITE HOUSE, WHAT I THINK THEY WERE TRYING TO DO WAS THAT WE NEED A CLEAN DEBT LIMIT. AND THEY THOUGHT THEY WOULD NOT COALESCE AROUND ONE BILL. GIVEN THE FACT THAT INDIVIDUALS HAVE VERY DIFFERENT IDEOLOGIES ABOUT WHAT THE BUDGET SHOULD LOOK LIKE. HE WAS ABLE TO DO THAT IN ONE VOTE. REALLY NOW THE BALL IS IN THE WHITE HOUSE COURT. BECAUSE THIS IS DEAD ON THE -- DEAD ON ARRIVAL IN THE SENATE. LISA: I'M CURIOUS OF IF THIS MEANS MCCARTHY HAS WRANGLED PEOPLE TOGETHER AND IF IT WILL LEAD TO A CLEAN RESOLUTION. WE HAD A GUEST ON EARLIER SAYING THAT THEY THINK THIS WILL ACCELERATE THIS RESOLUTION. AND IT MAKES IT MORE LIKELY. DO YOU AGREE? THE PEOPLE YOU SPEAK WITH IN WASHINGTON THINK THAT IS THIS KIND OF STEP? >> IT DOES MEAN THERE NEEDS TO BE ANOTHER CONVERSATION AND NEGOTIATION. THE DATE IN JULY IS PRETTY SOON. SPEAKER MCCARTHY IS GOING TO ISRAEL FRIDAY, THERE IS A RECESS, AND THEN THEY COME BACK. THERE IS NOT A LOT OF TIME GIVEN TO THE FACT THAT WE ARE IN SPRING GETTING INTO SUMMER. BUT WHERE THIS BECOMES TRICKY. IF THE BIDEN ADMINISTRATION DECIDES TO NEGOTIATE WITH THE SPEAKER AND GET CLOSE TO THE FRONT, IS HE ABLE TO MAKE SURE THAT ULTRACONSERVATIVE SIGN-UP IN THE END? BECAUSE RIGHT NOW IT IS NOT A BILL THAT PRESIDENT BIDEN OR ANYTHING ON THIS BILL THEY WILL BE ABLE TO GET THROUGH. THE STATEMENT FROM THE WHITE HOUSE SAYS THAT REPUBLICANS HAVE PASSED A BILL THAT HAVE CUT EDUCATION, HEALTH CARE, PUBLIC SAFETY AND OTHERS THERE IS NO CHANCE THIS WILL BECOME LAW. EVEN IF THERE ARE NEGOTIATIONS MCCARTHY HAS TO GIVE UP A LOT IN THE BILL. AND IT DID A POTENTIALLY CALL A NO CONFIDENCE VOTE ON HIM? THAT IS WHEN I THINK THINGS WILL GET VERY DRAMATIC. JONATHAN: WE LOOK FORWARD TO THE COVERAGE LATER ON BALANCE OF POWER. 5 P.M. EASTERN TIME. AND SENATOR TINA SMITH JOINING US LATER. TOM: ON BEHALF OF THE PEOPLE IN THE UNITED STATES OF AMERICA I AM EMBARRASSED WE HAD TO WALK THROUGH THAT FOR YOU. IT IS NOT LIKE THAT IN ENGLAND? THAT IS BRILLIANT WHAT AMORY JUST DID, THE EXPLANATIONS. FROM MY CHILDHOOD, THIS IS JUST CHILDISH. THERE IS NO OTHER WAY TO -- IT IS RIDICULOUS. JONATHAN: I HAVE TO MAKE THIS POINT THESE ARE PARTISAN TALKING POINTS. IT IS CHILDISH ON BOTH SIDES OF THE AISLE THE WAY IT HAPPENS EVERY SINGLE TIME. EVERY CONGRESS REGARDLESS OF WHO IS IN CHARGE COMES TO A DISAGREEMENT AND THEN WE HAVE THIS WHOLE SPIN AROUND DEBT LIMIT. AND I DON'T UNDERSTAND IT. I DON'T GET IT. ULTIMATELY IT IS THINGS THAT SHOULD BE SOLVED AT THE POLLS GO INTO THE ELECTION AND THEN CUT SPENDING IF YOU WANT TO. ISN'T THAT HOW IT SHOULD WORK? LISA: THE PROBLEM IS HAVING A DEBATE ABOUT WHERE WE SPEND OUR MONEY IS NOT SELLING IN TERMS OF POLITICAL POINTS. THE ASPECTS THAT MAKE A GOVERNMENT RUN WELL IS NOT NECESSARILY WHAT PEOPLE WANT TO GET INTO. SO THERE ARE TALKING POINTS THAT END UP BEING MORE SOCIAL ON BOTH SIDES. IT IS DIFFICULT TO GET A CONSENSUS AND AN HONEST LOOK AT HOW TO MAKE THINGS FUNCTION WELL. TOM: AND I JUST SENT ANNE-MARIE A NOTE IN THE BACK MESSAGE SYSTEM SAYING THAT WAS PHENOMENAL WHAT SHE EXPLAINED. IT WAS REALLY CLEAR HOW -- A SUMMER OF 2 MILLION -- A SUMMER OF JUVENILE UNTIL LABOR DAY. AND TELL ME WHEN WILL WE GET A DECISION ON THIS? LISA: THEY SAY JULY IS THE D-DAY NOW. WILL THAT GET PUSHED OUT? WILL IT START GETTING PRICED INTO THE MARKET? IS THAT WHAT WE END UP WITH? I WAS LOOKING AT ONE MONTH T-BILL AND THREE-MONTH T-BILL ONE-MONTH HIRE SINCE 2007 YESTERDAY. NOT BECAUSE OF RATE HIKES BECAUSE OF THIS. TOM: I HAD A MEETING WITH THE HEAD OF THE IRS 8-10 YEARS AGO. WITH BIRD. AND -- WITH BLOOMBERG. IT WAS A REPUBLICAN THAT SAID THEY WANT TO DIMINISH THE TAX AGENCY OF THE UNITED STATES OF AMERICA. THEY SAID THAT WAS THE THEME AND PHILOSOPHY. JONATHAN: AND YOU MAY WANT TO SIMPLIFY THAT -- THERE IS NOTHING SIMPLE ABOUT IT. JONATHAN: LIVE FROM NEW YORK CITY, HERE IS A CHECK OF THE PRICE ACTION ON THE S&P 500. POSITIVE TIME -- POSITIVE BY .6%. THE NASDAQ HIGHER BY .95%. FACEBOOK AND META GETTING IT DONE. WE WILL TALK ABOUT THAT IN A MOMENT. THE 10 YEAR, TWO-YEAR, AND 30 YEAR DOING NOTHING. JUST TO BREAK THE LEVEL ON THE TWO-YEAR -- 10 YEAR 3.4560. SOME OF THE FED NUMBERS COMING IN SOFTER. WE GET JOBLESS CLAIMS COMING IN LATER. IT IS ABOUT JOBLESS CLAIMS FROM HERE OR DOES IT CONTINUE TO CRACK AND OFFER A LEADING INDICATOR OF WHAT IS HAPPENING WITH THE LABOR MARKET? LISA: THAT IS WHAT PEOPLE ARE LOOKING AT. WE WERE THINKING THIS IS TOO NOISY AND NOW IT IS POTENTIALLY AT HER VAN Q1 BECAUSE THE TIMING IS MORE IMPORTANT. WHAT WE ARE LOOKING AT IS META THAT HAS RISEN AS MUCH AS 12% IN THE PREMARKET TRADING. THEY REPORTED SECOND-QUARTER REVENUE LEAVING EXPECTATIONS IN PROFIT ACROSS THE BOARD. 3 BILLION USERS ON EVERY SINGLE DAY USING THE PRODUCTS OF META. THIS IS NOT A STORY OF THE BIGGEST TECH BEHEMOTHS, EBAY IS UP MORE THAN 3%. THE IDEA OF PEOPLE USING COLLECTIBLES AND MANUFACTURED ITEMS AS BEING MORE DESIRABLE THAN OTHER GOODS. IN VERN NATO REALTY TRUST --VORNADO REALTY TRUST. ON ONE HAND TECH GIANTS CONSOLIDATING POWER AND ON THE OTHER HAND REAL ESTATE STRUGGLING. THIS COMPANY IS DOWN OR THAN 13%. TOM: YOU ARE REALLY READING INTO THIS. WHAT IS YOUR OBSERVATION OF WHERE WE ARE AT THE END OF APRIL IN COMMERCIAL REAL ESTATE? LISA: IT IS A LONG PROCESS BECAUSE A LOT OF THE LEASES HAVE LONG EXPIRATION DATE. THAT SAID, IT IS LIKE A PRETTY VALUE HAS GONE DOWN SIGNIFICANTLY. THIS IS A POINT OF CONCERN GIVEN THE CONCENTRATION OF THE ASSETS ON BANK AND SMALL BANK BALANCE SHEETS. JONATHAN: I THINK YOU FRAMED IT PERFECTLY. WHERE'D WE TAKE THE SIGNAL FROM THE EARNINGS THIS MORNING. TEXT TELLING YOU SOMETHING I TALKED ABOUT THIS EARLIER, SAYING CAN YOU TAKE A CYCLICAL AWAY FROM WHAT YOU SAW FROM META WITHOUT REBOUNDING. LISA: HE SAID NO THERE IS A STORY ABOUT THE COMPANY. YOU GET SIGNALS FROM UPS IN THE PACKAGE VOLUME COMING DOWN. YOU LOOK AT DISAPPOINTMENTS IN OTHER AREAS AND IT IS SPECIFIC WITH CONSOLIDATION IN POWER. AND THAT IS GIVING A MUDDY SIGNAL. TOM: THOSE COMPANIES ADAPT. WHEN THE GUIDANCE IS NOT GOOD WHAT DO THEY DO IN THE NEXT 10 DAYS? WHATEVER MEETINGS THEY HOLD TO FORGET ABOUT FOURTH OF JULY AND GET TO JUNE. JONATHAN: WE HAVE TO WORK OUT WHAT WE GET WITH THE FINANCIAL SYSTEMS. TOM: I FIND -- I STRONGLY AGREE. JONATHAN: WE HAVE NOT GOTTEN OUR HEADS AROUND THE PROCESS JUST YET. YOU SEE STABILITY IN THE FIXED INCOME, WE SEE THAT COMING IN LATER AND WE SEE THAT FED BALANCE SHEET THAT WE FOCUS ON LATER THIS AFTERNOON. THE VIEW FROM ME IS THAT YOU GET TIGHTER LENDING STAFF -- STANDARD THAT HITS PART OF THE ECONOMY AND REAL ESTATE IS PART OF THE CONVERSATION. LISA: YOU CAN FEEL THE TUG OF WAR MARKETS. IT IS A QUESTION OF HOW LONG TECH CAN BOOST EVERYTHING ELSE AND HOW LONG YOU CAN SEE THE DRIP IN THE REGIONAL BANKING SECTOR. IT RINGS EVERYBODY -- IT BRINGS EVERYBODY IN WHEN YOU GET A HEADLINE ON IT. THAT INDICATES HOW TENSE THIS IS. JONATHAN: WE HAVE BIG GAINS IN MICROSOFT IN AMAZON YEAR TO DATE. APPLE AND OTHERS AND WE ARE STILL IN THE RANGE OF 38 AND THE S&P 500. TOM: YEAH. IT IS NOT ALL BOOTS -- BOATS RISING. AND THAT APPEALS TO MY ADDICTION TO THE INDEX FUND AND IS IT AN INDEX FUND AND WE HAVE TO ALL GO TO AN INDIVIDUAL STOCK AND OWN NVIDIA, FACEBOOK, AND I CAN HAVE A TRADITIONAL NAME PORTFOLIO THAT WOULD BE GOOD. JONATHAN: I LOOK FORWARD TO THAT. TOM: WE ARE MOVING FORWARD WE HAVE DEBORAH CUNNINGHAM AT FEDERATED INVESTMENT MANAGEMENT JOINING US. WE HAVE A 23 TRILLION DOLLAR ANNUAL GROWTH WITH THE SHIP GOING THROUGH THE WATER. WE HAVE 5.1 TRILLION DOLLARS IN MONEY MARKET FUND ON THE LAST REPORT. EDUCATE OUR AUDIENCE ON RADIO AND TV ABOUT WHAT $5 TRILLION IN MONEY MARKET FUNDS MEANS. >> I WOULD SAY PROBABLY TWO THIRDS OF THAT, MAY BE OF 70% ARE IN GOVERNMENT SECURITIES. THEY ARE INVESTED IN PARTS OF AGREEMENTS BACKED BY GOVERNMENT SECURITIES. THEY INVEST IN TREASURY SECURITIES AND TREASURY BILLS. ALTHOUGH THE TREASURY FLOATERS ARE A BIG COMPONENT AS WELL. THE HOME COMPONENTS MAKE A BIG PART OF THE GOVERNMENT MONEY SIGNED. THE OTHER ONE THIRD IS NONGOVERNMENT SECURITIES. YOU'RE TALKING ABOUT PRIME FOR THE MOST PART WHICH IS HANK'S CDS AND THE BANKING SYSTEM PAYS -- PLAYS A HUGE PART IN THAT. -- BANKING CDS AND -- IN THE BANKING SYSTEM PLAYS A HUGE PART IN THAT. TOM: IT'S A HERITAGE THAT GOES BACK. I COME TO THE DELICATE QUESTION DO WE HAVE A RISK OF -- IS THERE INSTABILITY IN THE MONEY MARKET SPACE WHERE WE NEED TO WORRY ABOUT MOVING UNDER 1.00? >> THAT IS NOT A CONCERN AT ALL. GENERALLY SPEAKING, WHEN THERE ARE INTEREST RATES THAT ARE STABLE, CLOSE TO WHERE WE ARE NOW, WE THINK THE FED WILL GO ONE MORE TIME, BUT WE ARE NOT SEEING 100 OR 200 BASIS POINT INCREASES IN OUR FUTURE AT THIS TIME. AT SOME POINT, PROBABLY NOT THIS YEAR BUT EARLY NEXT YEAR, GENERALLY SPEAKING THAT PUSHES THE ONE DOLLAR UP NOT DOWN. BUT NOT TO A POINT WHERE IT CHANGES OFF OF THE TWO DIGIT OF 1.00. AND THE OTHER SITUATION YOU COULD HAVE WITH CREDIT DETERIORATION. GOING TO THE BANKING SECTOR ARE AGAIN IT IS A LARGE SECTOR WITHIN THE MONEY MARKET SPACE. THAT IS ALSO SOMETHING THAT, DESPITE ISSUES WITH SILICON VALLEY BANK, AND THE NEWS ARTICLES LATELY WITH FIRST REPUBLIC, THE LARGEST EXPOSURES IN THE MONEY FUNDS ARE QUITE HEALTHY. THEY HAVE STELLAR BALANCE SHEETS TO DEAL WITH THINGS LIKE COMMERCIAL REAL ESTATE ISSUES. ULTIMATELY, THE SYSTEM IS VERY HEALTHY AT THIS POINT. IF YOU LOOK AT THE LARGER SECTOR, AGAIN, TREASURIES, GOVERNMENT AGENCIES, THE DEBT CEILING IS OUT THERE. IT WILL NOT CAUSE A 1.00 DEVIATION BUT IT WILL BE NEWS TO CONTEND WITH. WE HAVE TO DEAL WITH IT IN THE MARKETS EACH DAY. LISA: YOU'RE THE PERFECT PERSON TO SPEAK WITH. ON THE CREDIT SIDE THERE IS RESILIENCE AND STRENGTH AND CREDIT WORDINESS -- WORTHINESS UNDERPINNING THIS IN THE BANKING SECTOR. ON THE DEPOSIT SIDE WHICH YOU HAVE A VIEW INTO DEPOSITS ARE LEAVING BANKS WITH HIGHER YIELDING SHORT-TERM INSTRUMENTS. DO WE HAVE A SENSE OF HOW MUCH THAT IS GOING ON? THE DEPOSITS FLYING OUT OF BANKS ONLY CONTINUES WITH THE STABILIZATION WE ARE HEARING ABOUT. >> IT STARTED BACK IN MARCH. WHEN YOU LOOK AT THE FED AND BANK BALANCE SHEETS, DEPOSITS HAVE BEEN LEAVING THE BANKING SYSTEM SINCE MARCH 2022. AMAZING THAT COINCIDES EXACTLY WITH THE FED STARTED INCREASING RATES. HAVING SAID THAT, SILICON VALLEY BANK AND PEOPLE LOOKING INTO DEPOSITS A LITTLE MORE CLOSELY KICK STARTED IT A LITTLE MORE. THE VELOCITY OF THAT CHANGING HANDS AT THIS POINT SPEEDING UP, I DO NOT THINK IT IS PROBLEMATIC FOR THE BANKING SYSTEM. THEY WERE OVERFUNDED FOR A WHILE WHICH IS WHY THERE ARE LARGE SECURITIES BALANCES ON THE BANK BALANCE SHEET. THEY WERE NOT MAKING LOANS WITH THOSE DEPOSITS, THEY WERE BUYING SECURITIES IN THE MARKET. LISA: LISA: WHAT IS THE READTHROUGH OF THIS IF IT CONTINUES TO ACCELERATE? WHAT SCOPE DO WE SEE OUT OF THE BANKING SYSTEM? HOW DO WE SEE THE ONGOING PRESSURE OF THE POTENTIAL SALE OF SECURITIES AND THE CREDIT WORTHINESS IF THERE IS LESS CREDIT EXTENDED? >> I THINK ANOTHER $1 TRILLION OUT OF DEPOSITS INTO FUNDS IF WE ARE TALKING ABOUT THE SITUATION WHERE THE FED REACHES 5.25 PERCENT OR SO. AND THEY STAY THERE FOR SIX MONTHS OR SO. I THINK THAT IS AN EASY LIKELIHOOD THE EXTRA $1 TRILLION. IF YOU LOOK AT THE POTENTIAL FOR THE BANKING SYSTEM TO WELL, MAYBE THERE IS SOME OF THAT -- TO SELL, TO BE THERE IS SOME OF THAT. BUT WHEN YOU LOOK AT THE PORTFOLIOS, IT DOES NOT MAKE IT A REAL PROBLEM FOR THEM AND TO THE EXTENT, THAT FACILITY EXPIRES WITHIN A YEAR. ULTIMATELY, IT IS THE FED DECISION TO THINK ABOUT IF THEY SEE THAT IS PROBLEMATIC. THEY COULD EXTEND IT ANOTHER YEAR. I DON'T THINK IT IS A BIG PROBLEM. FOR THE LARGE MONEY BANKS AND REGIONALS, MAY THE SMALLER GEOGRAPHIC BANKS HAVE ADDITIONAL ISSUES WITH THAT, BUT THE LARGER PORTIONS OF THE BANKING SYSTEM I DO NOT THINK IT WILL BE A MAJOR PROBLEM. JONATHAN: ALMOST AS SOON AS THE FACILITIES RAN DOWN THERE WAS A CONVERSATION ABOUT THEM BEING EXTENDED. DEBORAH CUNNINGHAM THANK YOU FOR JOINING US. YESTERDAY OUR GUEST SAID THIS. HISTORICALLY FROM THE -- THE AVERAGE IS 13 MONTHS. IF WE SEE THE LAST RATE HIKE WILL BE IN MAY AND BY NOVEMBER AND DECEMBER YOU WILL BE AN A RECESSION. MIDWAY TO A RECESSION THE FED CUTS RATES AND THAT IS HOW WE GET TO SOMETHING LIKE SEPTEMBER. TOM: I GO TO AT HYMAN HERE WRITING ON EARNINGS, HE STICKS WITH THE RECESSION CALL AND HE GIVES THE YIELD BACK UNDER 3%. THE DIAMOND AND -- HYMAN AND STEVE MAJOR ARE TWO DIFFERENT AVENUES BUT STILL. MAYBE IT IS FIRST REPUBLIC BANK, WHAT DOES IT DO TO CREDIT? LISA: AT THAT POINT YOU HAVE TO IMAGINE THAT CREDIT IS EXPERIENCING WEAKNESS. IT IS THE ECONOMY THAT CALLED WOLF. SAYING WE WILL HAVE A RECESSION. EVERYONE IS SAYING THAT AND OUTPERFORMANCE. HOW MANY TIMES CAN PEOPLE KEEP THEY HANG IT? BUT THAT DOESN'T MEAN IT IS NOT GOING TO HAPPEN. JONATHAN: I SAID THAT MEDA IS THE STOCK THAT PEOPLE LOVE TO HATE AND --META IS THE STOCK THAT PEOPLE LOVE TO HATE AND TECH SEEMS TO BE THE SECTOR THAT PEOPLE LOVE TO HATE. RESILIENCE IS THE KEY. EQUITY MARKETS UP .05%. >> KEEPING YOU UP-TO-DATE WITH NEWS FROM AROUND THE WORLD WITH THE FIRST WORD I AM LISA MATEO. MAKING ADJUSTMENT TO THE DEBT LIMIT BILL SPEAKER MCCARTHY'S PLAN HAS PASSED THE HOUSE. IT PUTS PRESSURE ON JOE TO BEGIN TALKS WITH REPUBLICANS TO AVOID A PAYMENT DEFAULT THIS SUMMER. THE PRESIDENT SAYS IT HAS NO CHANCE OF BECOMING A LAW. RAY DALIO WARNS THAT THE RELATIONSHIP BETWEEN THE U.S. AND CHINA IS IN A RISKY PERIOD. IN A POST, THE FOUNDER OF BRIDGEWATER ASSOCIATES SAID THE TWO COUNTRIES ARE ON THE BRINK OF WAR. THE SITUATION WILL GET WORSE AS THE U.S. HEAD INTO AN ELECTION YEAR. HE CITES DISPUTES OVER TAIWAN AND RUSSIA HAVE THE REDLINES. THAT GUARD'S MEN CHARGED WITH THE MOST DAMAGING INTELLIGENCE DISCLOSURES IN A DECADE ALSO TRIED TO COVER HIS TRACKS. IN A FILING THE GOVERNMENT ACCUSED JACK TO SHARROW OF DESTROYING COMPUTER EQUIPMENT AND URGED AN ONLINE ASSOCIATE TO NOT TALK TO INVESTORS. HE HAS A DETENTION HEARING TODAY. THE BREAKDOWN THAT DISRUPTED SOUTHWEST FLIGHTS IN DECEMBER IS STILL HURTING THE CARRIER. THEY REPORTED A WORSE THAN EXPECTED LOSS IN THE FIRST QUARTER. THEY CANCELED MORE THAN 16,000 FLIGHTS. CEO BOB JORDAN SAYS THAT DEMAND FOR DOMESTIC AIR TRAVEL REMAINS STRONG. GLOBAL NEWS, -- GLOBAL NEWS 24-HOURS A DAY ON AIR AND ON BLOOMBERG ORIGINALS, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. I'M LISA MATEO. THIS IS BLOOMBERG. ♪ >> WHAT BECAME MUCH MORE AGGRESSIVE WAS THE COST CONTROL. PEOPLE THOUGHT HE WAS NOT GOING TO CUT COST. HE HAS TAKEN ABOUT $11 TRILLION OUT OF LADIES IN THE LAST 12 MONTHS. THAT IS EXTRAORDINARY. THE COMBINATION OF ACCELERATING REVENUE AND COST CUT. I THINK IT IS A $300 STOCK. JONATHAN: THAT IS THE CALL FROM MICHAEL NATHANSON. MIKE WAS COMMITTED TO THIS AND AT RALLIES ANOTHER 12% THIS MORNING, META, ON TOP OF ANOTHER RALLY YEAR TO DATE. ABSOLUTELY PHENOMENAL. ON 235. THIS MORNING. FACEBOOK. TOM: YOU COVERED THIS IN YOUR EARNINGS REPORT. LET'S GO FACEBOOK TO AMAZON TODAY AND IT IS ABOUT CUTTING COSTS. LISA: IT IS A MORE DIFFICULT STORY TO PARSE BECAUSE THERE IS A PHYSICALITY OF MOVING PACKAGES FROM ONE PLACE TO ANOTHER. A PHYSICALITY THAT HAS CHALLENGED EPS. AMAZON IS THE MOST INTERESTING OF BIG TECH TO ME BECAUSE IT IS A NONCYCLICAL STORY BUT IT IS VERY MUCH THE UNDERLYING ECONOMY. TOM: WE WILL HAVE TO SEE. AND THIS IS IMPORTANT. WE HAVE AN UPDATE WITH MEDICINE AND WALL STREET. WE CAN DO THAT WITH A GUY THAT IS JOINING US. RYAN WEISER IS PART OF BLOOMBERG SURVEILLANCE -- BRIAN WEISER HE IS A PART OF BLOOMBERG SURVEILLANCE. AND MARK ZUCKERBERG SAID THIS IS A SERIOUS ZUCKERBERG. IS IT ABOUT THE GROWTH IS OVER AND IT IS A SINGLE ROYALE OF -- REALITY FOR ALL THE DIGITAL PEOPLE. >> YES AND THAT WILL BE HARD FOR INVESTORS TO ADJUST TO. YOU CANNOT KEEP GROWING IN DOUBLE DIGITS AND YOU ARE NEARLY HALF OF ALL ADVERTISING TO GOOGLE AND FACEBOOK. JONATHAN: HOW DO YOU -- >> I WROTE ABOUT YEARS OF EFFICIENCY. JONATHAN: DO YOU THINK THIS IS A NEW NORMAL OR TOO BIG? >> BUSINESSES NEED TO CONTINUE TO FOCUS ON EFFICIENCY. LISA: THIS IS VERY CONCERNING TO ME FROM AN ECONOMIC PERSPECTIVE WHEN YOU THINK ABOUT HOW MUCH THE TECH STAFF SUPPORTED IN SIRE -- ENTIRE CITIES AND ECOSYSTEMS. WILL THE STAFF THAT LAID OFF UNTIL IT IS A SKELETAL CREW AKIN TO WHAT WE SEE IN TWITTER? >> THEY COULD GROW INTO THEIR SIZE SO TO SPEAK. IF THEY MANAGE THEMSELVES WELL. -- THEY WILL GROW BUT DOUBLE DIGITS IS A THING OF THE PAST. LISA: WHAT ARE YOU LOOKING FOR IN TERMS OF HOW MUCH MORE THAT CAN DRIVE GAIN? >> I THINK INVESTORS WILL HAVE TO RECONCILE THEMSELVES THAT DOUBLE DIGIT GROWTH WILL NOT BE A THING AT LEAST FROM ADVERTISING. THERE ARE OTHER BUSINESSES. THERE ARE OTHER PERSONALIZATION OF ADVERTISING WHICH IS A PRECURSOR TO OTHER THINGS AS AN EXAMPLE. AND IT CAN BE APPLIED ELSEWHERE. TOM: FROM TRADITIONAL TV MORE THAN ANYONE I KNOW HAS SAID TRADITIONAL TV IS NOT DEAD. ARE YOU STILL SAYING THAT? >> I WAS SAYING THAT. BUT IT MAY HAVE CHANGED. THE REALITY IS YOU SEE COMCAST NUMBERS THIS MORNING DROPPING ANOTHER 2 MILLION VIDEO SUBSCRIBERS. TOM: WHERE IS COMCAST IN FIVE YEARS GIVEN THE SINGLE DIGIT, WHAT WILL THEY DO MOVE FROM ONE SINGLE DIGIT TO ANOTHER SINGLE-DIGIT? >> BROADBAND IS A GREAT BUSINESS. INFRASTRUCTURE SERVICES IS A GREAT BUSINESS BUT THE PAYMENT ADDING SUPPORTING TELEVISION BUSINESS NOT SO MUCH. LISA: WHAT DO YOU EXPECT WITH AMAZON? THIS IS TO ME THE MOST INTERESTING STORY BECAUSE IT IS NOT ABOUT HOW MUCH MORE BUSINESS THEY CAN CONSOLIDATE IT IS THE BUYING AND SELLING OF PACKAGES THAT WAS INFLATED IN THE PANDEMIC. DOES DESERVE THE 25% POP IT HAS THIS YEAR. >> IT IS A CELLULAR ORGANIZATION. THEY HAVE WAYS OF REINVENTING HIMSELF IN A WAY THAT I DO NOT THINK IS WHITE -- REINVENTING THEMSELVES IN A WAY THAT I DO NOT THINK IS WIDELY APPRECIATED. THE ADVERTISING BUSINESS WILL CONTINUE TO DO WELL. THEY HAVE A LOT OF GROWTH FROM THAT. THIS IS SOMETHING TO KEEP IN MIND WITH FACEBOOK AND META AS WELL. CHINESE GROWTH. IT HAS BEEN A BIG DEAL OF GROWTH WITH AMAZON AND FACEBOOK AND META. TOM: FACEBOOK IS AT A 19 MULTIPLE AND I HAD NO IDEA THAT COMCAST WAS TRADING AT A MULTIPLE. THOUGH I DO. -- NO IDEA. >> CHINA IS THE SECOND BIGGEST MARKET FOR FACEBOOK AND META. THEY HAVE ADVERTISERS IN CHINA SPENDING MONEY OUTSIDE OF CHINA. IT IS AMAZING. I HAVE BEEN HARPING ON THIS FOR ABOUT 10 YEARS AND THEY FINALLY STARTED TALKING ABOUT IT ON A EARNINGS CALL YESTERDAY. JONATHAN: FACEBOOK IS NOT IN CHINA BUT CHINA WANTS TO ADVERTISE ON FACEBOOK? WOW. >> YES. LISA: THIS RAISES A QUESTION ABOUT TIKTOK THE BENEFIT THAT META COULD GET IF THE U.S. BANDS IT. AND THE CHINESE PART OF IT GOES AWAY AND THIS IS A MASSIVE PART OF THEIR BUSINESS. >> YOU HAVE TO PAY ATTENTION TO SHIPPING COST AS WELL IF YOU CAN CONTINUE TO SHIP AT A LOW COST FROM CHINA TO THE U.S.. THAT WOULD IMPACT ADVERTISING FOR FACEBOOK. LISA: THIS IS MIND BLOWING TO ME BECAUSE WE TALKED ABOUT CHINA BANNING THE DEVICES AND SOCIAL MEDIA PLATFORMS THERE. THE U.S. HAS TIKTOK HERE AND IT IS PREEMINENT. AND YET, CHINA STILL HAS A SIGNIFICANT PRESENCE IN THE SOCIAL MEDIA THAT IS AMERICAN THROUGH ADVERTISING THAT CONNECTS IT TO THAT DRAMATICALLY. >> AMAZON ABOUT 50% OF THEIR MARKETPLACE COMES FROM CHINESE VENDORS. LISA: HOW MUCH WILL THAT INCREASE AMAZON'S TAKE AWAY WHEN WE GET THAT AFTER THE BELL IN A WAY PEOPLE DO NOT APPRECIATE. THIS IS A CHINA SENSITIVE STOCK. >> THEY DO NOT TALK ABOUT IT. JONATHAN: WHAT DO YOU MEAN THEY DON'T TALK ABOUT IT? THERE MUST BE A REASON. >> WE CAN SPECULATE IN THE LAST DECADE. IT COULD BE A HUGE SOURCE OF GROWTH BUT THEY NEVER TALKED ABOUT IT IN AND EARNING GROWTH. IT IS BARELY MENTIONED. JONATHAN: WE ARE IN THE POSITION TO SPECULATE. WHAT DO YOU THINK THE REASON MIGHT BE? >> POLITICAL SENSITIVITIES. LISA: YOU DON'T SAY. JONATHAN: THEY DON'T WANT THE SPOTLIGHT ON THEM. >> I THINK THAT IS PROBABLY IT. TOM: WE WERE TALKING EARLIER ABOUT THE GENERATIONAL SHIFT AS ZUCKERBERG TALKS ABOUT A SERIOUS TECHNOLOGY COMPANY. WILL WE HAVE SERIOUS ADVERTISING COMPANIES? >> THERE ALWAYS HAVE BEEN SERIOUS ADVERTISING COMPANIES. REMEMBER HOW THE BROADCASTING NETWORK -- EVEN NOW. TOM: HOW IN GODS NAME DID THE BUD LIGHT THING HAPPEN? WHERE'S THE COMMAND IN CONTROL. YOU ARE AN EXPERT IN THIS. WHERE WAS THE REVIEW CONTROL WHERE SOMEBODY'S THREE LEVEL UP GOING MAYBE NOT. >> HERE IS THE THING I DO NOT KNOW THE POLITICS OF THE INTERNAL DECISION-MAKING BUT IT IS SAFE TO SAY THEY WANT TO BE MORE INCLUSIVE AS A BRAND. DO THEY REALLY WANT TO BE A MORE INCLUSIVE BRAND OR DID THEY JUST THINK THEY WANTED TO BE? THERE IS A GAP BETWEEN THAT I THINK. JONATHAN: ELEPHANT IN THE ROOM. THE SHINE AWAY FROM BOOZE THE KIDS ARE NOT DRINKING. THEY TRIED IT WITH CIDER AND HARDEN SELTZER THEY ARE TRYING TO COME UP WITH WAYS TO GET KIDS TO DRINK. >> THERE SO MUCH MICROBREWERY BEER OUT THERE. JONATHAN: THINGS ARE CHANGING. TOM: AND I AM IN SUPPORT OF IT. JONATHAN: BUD LIGHT IS INTERESTING BECAUSE WILL -- TYPICALLY WHAT WE SEE I DO NOT WANT TO GET IN THE CULTURAL'S OF THE COUNTRY BECAUSE I HAVE NO INTEREST BUT USUALLY THE BACKLASH COMES FROM THE PROGRESSIVE LEFT AND IT DOES NOT COME FROM THE RIGHT AND THE BACKLASH CAME FROM THE RIGHT THIS TIME. >> THINK OF NIKE AND -- THE ISSUE IS THAT NIKE STUCK WITH WHAT THEY ARE PROJECTING THEY CARE ABOUT. JONATHAN: CANCELED CULTURE IS A LEFT-WING AND RIGHT-WING IMPACT ON CULTURE. IT IS INTERESTING. LISA: IT'S BEEN GROWING ON THE RIGHT SIDE AS WELL. YOU SEE THIS WITH RESPECT TO THE BSG AND SOME OF THE PUSHBACK FROM INVESTMENT FIRMS. JONATHAN: IT HAS NOT BEEN DESIGNATED WITH THE CONSUMER IN A PRONOUNCED WAY. LISA: FAIRPOINT. JONATHAN: YOU'RE RIGHT TO BRING THIS UP. >> THE BIGGER ISSUE IS THAT BRANDS LIKE INVESTORS NEED TO HAVE CONVICTION ABOUT WHAT THEY ARE DOING. WE SAW THIS WITH WHERE THEY WENT INCONSISTENT. THAT IS A BAD THING AND THAT CAN KILL YOU. TOM: THIS IS WHAT WE WANT, EXPERTS ON THIS STUFF AWAY FROM ALL THE HOT AIR. JONATHAN: META YOU WANT TO TALK ABOUT THEM UP 11 -- EURO EQUITY MARKET UP 0.5 PERCENT. WE APPRECIATE IT, BRIAN WIESER. >> THE FEDERAL RESERVE WILL BE FOCUSED ON THESE TRADITIONAL INDICATORS AND WE WILL NOT GET RELIEF FROM THEM. WE ARE ALL WATCHING JOBLESS CLAIMS FIGURES TO SEE IF THAT IS TELLING US WHERE WE ARE GOING. I THINK IT ALL POINTS TO A RECESSION, I THINK THAT'S THE MOST CREDIBLE CASE. ALL OF THOSE INDICATORS POINT TO A SLOW DOWN,/RECESSION. I DON'T SEE HOW WE AVOID THAT. TOM: JONATHAN FERRO, LISA ABRAMOWICZ AND TOM KEENE. LISA IS GOING TO BE LOOKING AT CLAIMS, I AM LOOKING AT GDP AND BOY IS THERE A DIFFERENCE ON THE STATE OF THE AMERICAN ECONOMY. JONATHAN: I WILL BE LOOKING FORWARD TO AMAZON BECAUSE BIG TECH IS GETTING IT DONE THIS WEEK. DO YOU WANT SOME GOOD NEWS? THEY TALKED ABOUT FIRST REPUBLIC, IT IS NOT IN THE RADAR. SOME BIG UNDERSTANDING QUESTIONS. TOM: I AM LOOKING AT THE BLOOMBERG TERMINAL, THE VOLUME IS WAY LESS THAN YESTERDAY. IF YOU ARE IN INSTITUTIONAL RETAIL, WHAT DO YOU DO AT 9:31? IS IT OFF THE RADAR? NOT FOR JANET YELLEN IT'S NOT. LISA: THE SECOND THERE IS A BAD HEADLINE ABOUT REGIONAL BANKS THE MOOD SHIFTS. THE STRENGTH IS COMING FROM TECH GIANTS, OUR PERFORMANCES FROM CONSUMER FACING COMPANIES. HERE WE ARE AT THE PRECIPICE OF SOMETHING IN THE BANKING PIECE OF THAT IS WHAT PEOPLE ARE KEYING INTO TO DETERMINE HOW TO SWING THEIR MOVES. TOM: FIVE POINT 47, MOMENTS AGO 5.42 ON FIRST REPUBLIC. IN EDGING DOWN THERE. JONATHAN: THIS MONTH HAS BEEN AMAZING. A TRIPLE DIGIT NAME AND NOW IT IS 550. TOM: I THINK THE STOCK PRICE SPEAKS VOLUME. THERE IS ALL THIS NAVAL GAZING WITH INTEREST RATES. AS STOCKS COMES DOWN, PEOPLE GET CLARITY OF THOUGHT. JONATHAN: YOU HAVE FINANCIAL STRESS OVER THE LAST SIX WEEKS AND THEN YOU HAVE GDP AND THE FEDERAL RESERVE WILL COME AROUND NEXT QUICKLY. MAY 3 FOR THE FEDERAL RESERVE, THEN YOU HAVE PAYROLLS. WHEN THEY LOOK AT THE DATA, THEY WILL HIKE INTEREST RATES 25 BASIS POINTS? LISA: I CAN IMAGINE THEY WON'T BECAUSE OF ONE DATA POINT. THE HOUSING MARKET IS SHOWING SIGNS OF REBOUNDING. IF THEY LET UP OR SEE A DECLINE IN INTEREST RATES. PEOPLE GO BACK OUT AND TAKE LOANS OUT AND BUY HOMES GIVES YOU A SENSE OF HOW MUCH POWER THERE IS UNDERNEATH THE ECONOMY. TOM: I'VE NEVER HEARD HER THIS OPTIMISTIC. LISA: OPTIMISTIC FOR THE ECONOMY BUT PESSIMISTIC FOR THE LONG TERM. IF YOU HAVE THAT STRENGTH THE FED HAS TO HOLD THINGS THERE, THE MARKET IS NOT PRICE FOR THAT. TOM: I WANT TO LOOK AT AMERICAN OIL IN THE VICINITY OF $69 A BARREL, 74.56 ON AMERICAN WEST TEXAS. JONATHAN: YOU SAW THE MOVE YESTERDAY ON BRENT CRUDE IN LONDON AT 80, 70 EIGHT DOLLARS NOW. YOU TAKE AWAY THE OPEC+ GAINS ON . IT SPEAKS TO THE ECONOMIC WEAKNESS PEOPLE ARE ANTICIPATING. LISA: MAYBE OPEC+ WAS ACTING ON WHAT THEY SAW ON THE RECOVERY IN CHINA. TOM: IN THE MASTERCARD EARNINGS, THEY ARE TALKING ABOUT RESILIENT CONSUMER SPENDING AND DAVID ROSENBERG SAYS WE SAW THAT IN JANUARY AND NOW IT'S EVAPORATED. LISA: PEOPLE ARE NOT UNDERSTANDING WHERE THE CONSUMER IS GOING. I KEEP GOING BACK TO MCDONALD'S, PROCTER & GAMBLE, KIMBERLY-CLARK THAT RAISED PRICES BY 10% AND ARE STILL SEEING THE SAME KIND OF SALES. THERE IS A RESILIENCE ACROSS THE BOARD. TOM: RIGHT NOW, WE ARE BRINGING IN A GUEST. I WANT TO BRING IN ANDREW SLIMMON, AND I GUESS HE IS GOING TO SEE HE HAS NEVER SEEN IT LIKE THIS. JONATHAN: ANDREW SLIMMON JOINS US NOW. ANDREW: MY HEAD IS SPINNING, IT'S A TOUGH ENVIRONMENT. IT'S ALWAYS TOUGH, THE MARKET IS NEVER CLEAR. IT'S A CONFUSING TIME, THE CONSUMER STAYS REMARKABLY RESILIENT BUT FINANCIAL CONDITIONS ARE TIGHTENING AND THAT WILL AFFECT MANY BUSINESSES AND THAT'S THE PUSH/PULL. DO YOU LEAN TOWARDS THE CONSUMER OR TIGHTENING CONDITIONS? NUMBER OF PEOPLE ARE TALKING ABOUT SLOWDOWNS IN THE ECONOMY, THE S&P SITS AT 4100. THAT'S INCREDIBLE TO ME. LISA: YOU HAVE BEEN BULLISH, ARE YOU GETTING MORE BEARISH? ANDREW: I HAVE BEEN BULLISH ONLY BECAUSE WE CAME OFF OF PAST PESSIMISTIC YEAR. THE MARKET PREDICTED A DOWN EARNINGS YEAR. BUT THE MARKETS HAD A GOOD FIRST PART OF THE YEAR, WE ARE MOVING INTO THE SUMMER. THERE IS NO QUESTION IN MY MIND THAT THE EARNINGS COLLAPSING SCENARIO WILL RETEST THE LOW. THAT SCENARIO IS RUNNING OUT OF TIME. MARKETS PRICE IN A RECOVERY OF HER EARNINGS WHICH SHOULD HAPPEN NEXT YEAR AND IF THEY TRADE TO A HIGH MULTIPLE WILL NOT RECOVERY, THAT'S HISTORICALLY WHAT HAS HAPPENED. I WOULD BE SURPRISED IF WE GET ANOTHER LEG UP IN THE SECOND HALF OF THE YEAR. TOM: YOU WERE AT PENNSYLVANIA STUDYING WITH LARRY SUMMERS FATHER AND I AM SURE YOU WENT THROUGH THE NIFTY 50. IF WE GOT A NIFTY SEVEN OR 20, DO YOU RUN A PORTFOLIO THAT'S LESS DIVERSIFIED? ANDREW: THIS SCARED ME. YOU KNOW THERE IS AN AREA OF THE MARKET THAT'S GETTING AN EXTREME RELATIVE TO THE REST OF THE MARKET BUT IT LOOKS LIKE IT WILL GET MORE EXTREME. I KNOW VERY BIG COMPANIES HAVE A BIG TIME GROWING. -- HAVE A TOUGH TIME GROWING. GOVERNMENTS BEGIN TO CAUSE A PROBLEM WITH GETTING ACQUISITIONS. THOSE ARE ALL THE SEATS THAT BRING DOWN THESE TOP COMPANIES BUT THAT IS NOT HAPPENING YET. YOU NEED TO OWN SOME EXPOSURE BUT YOU HAVE TO LOOK UNDER THE SURFACE BECAUSE THE REST OF THE MARKET HAS BEEN LEFT BEHIND. TOM: APPLE, ARE YOU PREDICTING THAT WITH APPLES INCOME GROWTH THAT THE GOVERNMENT WILL STEP IN AND STAND IN THE WAY OF BIG TECH? ANDREW: YOU ARE ALREADY STARTING TO SEE IT. THEY ARE QUESTIONING THE DOMINANCE OF THESE COMPANIES BUT THAT DOESN'T MEAN THESE STOCKS CAN'T DO SPECTACULARLY WELL. THIS IS A LONGER-TERM ISSUE. WHEN YOU HAVE A WAITING OF THESE LARGE COMPANIES AND GOVERNMENT START TO TURN AGAINST THEM, THAT'S A BAD COMBINATION BUT IT DOESN'T NECESSARILY MEAN THEY WILL BE BROUGHT DOWN. LET'S LOOK AT GENERAL ELECTRIC, AT&T, THEY ALL GOT TO BE THE BIG DOGS AND THEN SOMETHING HAPPENED . I REMEMBER MY DAD SAID TO ME, WHY WOULD I EVER SELL GENERAL ELECTRIC? LISA: WHICH IS SIMILAR TO TECH. YOU MENTIONED A CRISIS IN THE INKING SECTOR. WENT TO SUB BECOME THE DRIVING FACTOR IN MARKETS THAT HAVE ONE EYE ON IT? ANDREW: YOU HAVE THIS CRISIS EARLY IN MARCH, THE MARKET DROPPED TO 3800 AND LOW AND BEHOLD THE ECONOMIC DATA SAID THE BANKING CRISIS WASN'T SO BAD IN THE MARKET RUNS AT 4100. THE FLIPSIDE, IT'S COMING DURING EARNINGS SEASON AND THEY ARE NOT QUITE AS BAD AS YOU POINT OUT. SOME OF THE CONSUMER STOCKS WERE EXPECTATIONS WERE BROUGHT DOWN, THEY ARE SURPRISING. I THINK WE ARE IN THIS RANGE. I DON'T THINK WE WILL BREAK OUT OF IT. I DON'T SEE A BIG RETEST IN THE WORLD. PEOPLE ASK ME ALL THE TIME, WHEN IS THE RETEST COMING? I THINK WE WILL CONTINUE TO KNOCK AROUND THE RANGE AND WE ARE BACK TO THE CRISIS FOCUS. I DON'T SEE A BREAK OUT UNTIL LATER THIS YEAR. I THINK THE MARKET WILL IN THE YEAR HIGHER THAN 4200. WE WILL LOOK BACK AND SAY ANOTHER EXAMPLE OF A YEAR POST A BAD YEAR WHEN EXPECTATIONS WERE THOROUGHLY WASHED OUT. JONATHAN: DO YOU REMEMBER THE FIRST OF THE YEAR? FIRST HALF DIP IN THE SECOND HALF RIP? NOBODY TALKS ABOUT THAT ANYMORE. LISA: AND THEN IT BECAME THE RIP AND THEN DIP AND NOW IT IS THE RIP AND THE RED. JONATHAN: BEEN SOME STEALTHY RALLIES OUT THERE. THANK YOU BUDDY. IF YOU LOOK AT AMAZON, IS SUB 20%. NOBODY IS TALKING ABOUT IT. TOM: IS THIS A FEAR OF MISSING OUT SUMMER? THE GREAT AMERICAN TRADITION PARENTS WOULD SAY TO THEIR KIDS CAN YOU PLACE CON SCHENECTADY? JONATHAN: CAN YOU SPELL IT. TOM: NO. JONATHAN: THE EQUITY MARKETS ARE UP POINT 64%. FROM NEW YORK, THIS IS BLOOMBERG. LISA: KEEPING YOU UP-TO-DATE FROM NEWS FROM AROUND THE WORLD. BLOOMBERG HAS LEARNED THAT GERMANY IS IN TALKS TO LIMIT THE EXPORT TO CHEMICALS IN CHINA THAT IS USED TO MANUFACTURE SEMICONDUCTORS. CHANCELLOR OLAF SCHOLZ IS TRYING TO BALANCE THEIR INTEREST IN CHINA WITH NATIONAL SECURITY. TRADERS OF BARCLAYS DID BETTER-THAN-EXPECTED WITH THE SURPRISING INCREASE IN REVENUE. BERKELEY CEO WAS ASKED WHETHER THE U.K. WAS LIABLE TO THE CHAOS THAT U.S. BANKS WENT THROUGH? THE U.K. HAS BEEN INSULATED FROM THE CRISIS BETWEEN BANKS. HAVING SAID THAT, OUR DEPOSIT FRANCHISE GREW 10 BILLION POUNDS AND A LOT OF THAT WAS CORPORATE'S PUTTING DEPOSITS WITH US. LISA: COSTS IN THE U.K. ROSE 9% DURING INFLATION. FOR THE NEWS POWERED BY POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I AM LISA MATEO AND THIS IS BLOOMBERG. >> HISTORICALLY FROM THE LAST RED RATE TO THE RECESSION IS 18 MONTHS. WE SEE THE LAST RATE HIKE IN MAY AND THEN MIDWAY THROUGH RECESSION THAT IS WHEN THE FED STARTS CUTTING RATES. JONATHAN: TALKING ABOUT THE POTENTIAL OF RECESSION RATE CUTS AND WHY HE THINKS EVERY MATURITY FROM TWO-YEAR TO 30 YEAR WILL BE A 3% OR LOWER OVER THE NEXT SEVERAL MONTHS. LOOKING AT YOUR ECONOMIC DATA 30 MINUTES AWAY. S&P 500 POSITIVE BY .6%. YEAR YIELD UNCHANGED ON THE 10 YEAR AT 3.4485. TOM: ARE WE READY FOR THE CAPITAL GAIN? IF WE GET MICHAEL'S CALL, THE PRICE UP ON THE BLOOMBERG TOTAL RETURN AGGREGATE INDEX IS UNREAL. IT'S STUNNING. JONATHAN: YOUR IDENTIFYING ANALYSTS BY THE FOOTBALL TEAM THEY SUPPORT. I WOULD LOVE TO HEAR TK POSITION ON THE GUNNER'S GAME. WHAT'D YOU THINK ABOUT ARSENAL VERSUS MAN CITY? TOM: THERE IS NO EQUIVALENT TO MAN CITY AN AMERICAN SPORT. I LOOK AT THEM AS 11-15 PEOPLE THAT SEEM TO BE DRAMATICALLY BETTER THAN THE SECOND, THIRD, FOURTH GAME. JONATHAN: THE QUESTION PEOPLE WITH ASK, LET'S IMAGINE THERE WAS U.S. FRANCHISE THAT WAS EFFECTIVELY OWNED BY A SOVEREIGN STATE WITHOUT ALL OF THE SPENDING CAPS. HOW WOULD SOME OF THESE OTHER TEAMS COMPETE WITH THEM? THAT IS THE CHALLENGE OF LEADS, REDFORD. TOM: I LOVE THAT YOU DO THE RELEGATION THING. THAT WOULD HELP BASEBALL AS WELL. WE HAVE 10 MINUTES OF IMPORTANT FINANCIAL DATA AHEAD. MR. JEREMY'S STRETCH JOINS US THIS MORNING. I GUESS THE VECTOR IS GDP DOWN, WHAT IS THE DOLLAR DO OR WHAT DOES IT INDICATE WITH THE GDP VECTOR SOUTH? JEREMY: HOW FAR SOUTH ARE WE GOING TO GO WITH THIS? THE ESTIMATE WAS -- AS LONG AS WE SEE A NUMBER 1.5 OR HIGHER, THEN THE DOLLAR PROBABLY DRIFTS SLIGHTLY LOWER. IF YOU SEE 1.5 OR LOWER WE WILL GET FURTHER WEAKNESS AND PRESSURE ON THE DOLLAR. WE HAVE SEEN WEAKNESS IN TERMS OF THE SURPRISE INDEX AND DISAPPOINTING DATA AS WELL AS THE ASSUMPTION THAT Q2 IS CONNECTED. IS THE FED GOING TO CONTINUE THROUGH TO THE HIKE WE EXPECT NEXT WEEK? TOM: WE PARSE THIS MOVER THAT MOVE BUT IT'S ABOUT MAKING A BIG FIGURE SPECULATION. WHERE WOULD CIBC DO THAT NOW? JEREMY: I THINK IN THE CONTEXT OF THE DOLLAR, WE HAVE BEEN LOOKING FOR A CHEAPER DOLLAR FOR A WHILE. IN THE CONTEXT OF THE NARRATIVE, WITH THE HIGH ON THE EURO YESTERDAY, WE SEE THE GDP PROVING RELATIVELY SUBSTANTIAL AND WE COULD SEE A CHANCE FOR A EURO RALLY. POTENTIALLY INTO THE 1.11. I THINK THE OTHER BIG CONTEXT IS TO LOOK OUT FOR MATERIAL MOVE IN THE DOLLAR AGAIN. - YEN. WE COULD SEE A FLIP TO THE DOLLAR YEN AS WELL. JONATHAN: THIS STORY IS ALL JUST 15 MINUTES AGO, ALLOW ME TO SHARE WITH YOU. FED RESERVE CHAIRMAN JEROME POWELL HOW TO CALL WITH RUSSIAN PRANKSTERS POSING AS THE UKRAINIAN PRESIDENT ACCORDING TO A VIDEO SHOWN ON RUSSIAN STATE TELEVISION APPARENTLY THINKING HE WAS SPEAKING TO THE UKRAINIAN LEADER. HE ANSWERED QUESTIONS ON INFLATION AND THE RUSSIAN CENTRAL BANK. THERE ARE SEVERAL CLIPS, UNCLEAR IF THE FOOTAGE WAS ALTERED IN ANY WAY. THIS LINE COMES FROM A FED SPOKESPERSON TODAY. CHAIRMAN POWELL PARTICIPATED IN A CONVERSATION WITH SOMEONE WHO REPRESENTED THEMSELVES AS UKRAINIAN PRESIDENT. NO SENSITIVE OR CONFIDENTIAL INFORMATION WAS DISCUSSED. THERE IS THE CONTENT OF THE CONVERSATION WE DON'T KNOW WHAT HAS BEEN ALTERED OR NOT. THE FEDERAL RESERVE HAS SAID A FRIENDLY CONVERSATION. .2, HOW ON EARTH DID THIS HAPPEN AT THE FEDERAL RESERVE? MIKE: IT SEEMS THAT THESE PRANKSTERS HAVE DONE THIS QUITE OFTEN. CHRISTINE LAGARDE PARTICIPATED IN A CAR -- CALL WITH THEM. THEY HAD SOME WAY OF GETTING PAST THE SWITCHBOARD AND OBVIOUSLY THE FED WILL BE LOOKING AT THAT TO MAKE SURE IT DOESN'T HAPPEN AGAIN. LISA: THIS GOES TO THE SECURITY AND VETTING THAT THE FED IS PUTTING UP AND THERE HAS BEEN A LOT OF TIME ABOUT SLOPPINESS WHETHER IT'S THE OVERSIGHT OF SVB OR YOU DON'T KNOW WHO YOU ARE TALKING TO. IS THIS SOMETHING FREQUENTLY RAISED OR IS THIS A REAL CONCERN? MIKE: IT IS HARD TO KNOW. THIS IS A UNIQUE SITUATION AND WE DON'T KNOW HOW THEY GOT THROUGH. THIS IS SOMETHING THAT CONGRESS COULD LOOK INTO AND ASK QUESTIONS AND PROBABLY SHOULD ASK QUESTIONS AND THE INSPECTOR GENERAL AT THE FED SHOULD BE ASKING QUESTIONS. I THINK IT'S TOO EARLY TO JUMP TO CONCLUSION ABOUT HOW THIS HAPPEN GIVEN THAT THEY HAVE DONE THIS WITH OTHERS BEFORE. THERE MUST BE SOMETHING THAT THEY ARE DOING THAT GETS THEM PAST THE GATE. MORE IMPORTANTLY, IS WHETHER POWELL DISCLOSED ANYTHING. IT IS PROBABLY IRRELEVANT NOW BUT AT THE TIME IT COULD'VE BEEN. THE FED SAYS NO, THEY THINK THE VIDEO WAS EDITED. TOM: POWELL PROBABLY HAD A CERTAIN SILENCE WHEN YOU ASK A QUESTION AT THE FED. THE REPORT MAKES CLEAR THERE WASN'T TOO MUCH TALKED ABOUT IN THIS EVENT. GROWTH IN AMERICA IS NOT A PRANK EVENT. EXPLAIN WHERE BOEING CAN ADJUST GDP? HOW IS IT POSSIBLE THAT BOEING CAN MOVE THE NEEDLE FROM A DOWN WHERE'D VECTOR TILT AS YOU MOVE TO SOMETHING MORE CONSTRUCTIVE? MIKE: AS YOU KNOW FROM YOUR MANY PURCHASES OF BOEING JETS. THEY DID HAVE A GOOD MONTH IN THE MONTH OF MARCH. THE QUESTION IS, IS IT ENOUGH? THE FEELING IS SNOW. GDP WAS REVISED DOWN SIGNIFICANTLY TO JUST OVER 1% FROM 2%. JONATHAN: MICHAEL MCKEE, WE WILL HAVE THAT DATA COMING UP IN A FEW MINUTES TIME. GDP IN JOBLESS CLAIMS. MICHAEL TOM: BLOOMBERG SURVEILLANCE, THERE ARE SIX SIMPLE LINES UPDATED HERE FROM INITIAL JOBLESS CLAIMS ONTO THAT FIRST LOOK AT AMERICA'S FIRST QUARTER GDP. THE PRICE INDEX, REAL GDP ALL OF THOSE DIFFERENT NUMBERS THAT WILL COME OUT. HERE TO HELP US ON THE POWER GAME OF THE AMERICAN ECONOMY. MICHAEL MCKEE, TWO IMPORTANT TRENDS HERE. MIKE: JOBLESS CLAIMS, 230,000, THUS A DROP FROM 245,000. WE ARE SEEING ALL OF THESE LAYOFFS SHOW UP, IT LEAVES THE FED WHERE WAS WITH THE IDEA WE HAVE A FAIRLY STRONG LABOR MARKET STILL. WE DON'T KNOW WHERE WE ARE GOING BUT AT THIS MOMENT WE HAVE A STRONG LABOR MARKET. GDP COMES IN WORSE THAN EXPECTED. 1.1%. THE FED MARKED DOWN THERE NUMBER WHICH HAD PEOPLE TALKING ABOUT THE POSSIBILITY OF THE LOW 1% GROWTH RATE. IT WAS 2.6% IN THE MONTH BEFORE, IT'S A SIGNIFICANT SLOWDOWN. PERSONAL CONSUMPTION COMES IN AT 3.7% UP FROM 1% THE MONTH BEFORE. LOWER THAN ANTICIPATED WHICH WAS .4. WE WILL BREAK DOWN THE REST OF THE NUMBERS. I WILL LET YOU LOOK AT THE MARKETS AND I WILL SEE WHERE THE NEWS WAS ACTUALLY MADE IN THIS GDP NUMBER. TOM: I WENT TO THE TWO YEAR YIELD UP SEVEN BASIS POINTS. THE BASIC IDEA OF A BOND MARKET MOVING OFF INFLATION DATA AND BOY IT LABOR DATA. LISA: THE SHORTER-TERM TREND OF LABOR MARKETS HANGING IN THERE NOT SEEING THAT INCREASE. THE REVISION ARE IN LINE WITH LAST WEEK WHERE WE SAW JOBLESS CLAIMS. WHAT IS THE INSENSITIVE -- INCENTIVE FOR THE FED NOT TO RAISE RATES? WE ARE WATCHING THE 10 YEAR AND TWO YEAR YIELDS. YOU ARE THE ADULT IN THE ROOM, HOW IMPORTANT IS THIS NUMBER OR DO YOU WAIT FOR THE SECOND AND THIRD LOOK OF REVISIONS? MIKE: YOU'RE GOING TO LOOK AT THIS NUMBER BECAUSE IT'S WHAT PEOPLE HAVE TO WORK WITH AND WHAT THE FED WILL HAVE GOING INTO ITS MAY 3 MEETING. THEY WILL BE LOOKING AT THE MOMENTUM OF THE ECONOMY WHICH IS SOMEWHAT DOWN. CONSUMER SPENDING WENT UP AND WE ARE ALL TALKING ABOUT THE CONSUMER GETTING EXHAUSTED BUT CONSUMER SPENDING ROSE FROM 1% TO 3.7. IT'S BUSINESS SPENDING IS JUST A .7% AND THAT WAS UP 4% IN THE FOURTH QUARTER. A SIGNIFICANT DROP OFF IN BUSINESS SPENDING. I AM LOOKING TO SEE WHERE THE NUMBERS ARE IN INVENTORIES AND TRADE AND I HAVEN'T GOT THAT YET. GET BACK WITH ME AND I'LL HAVE THAT FOR YOU. CHANGE IN PRIVATE INVENTORIES, THEY FALL BY 2.26%. STOCKPILES WERE DRAWN DOWN SO WE ARE SEEING A DECLINE THERE AS WELL. NET EXPORTS WERE BARELY CHANGED, JUST .1%. WE DIDN'T GET A BIG CONTRIBUTION FROM INVENTORIES AND WE DIDN'T GET A CONTRIBUTION FROM BUSINESS BUT IN TERMS OF THE OTHER COMPONENTS, NOT BAD SO FAR. GOVERNMENT UP .8% WHICH IS BETTER THAN LAST MONTH. TOM: 4% ON THE TWO YEAR YIELD. LINDSEY PIEGZA AS WITH US NOW. I WANT TO ASK YOU THE SAME QUESTION, FIRST LOOK AT GDP, WHAT WILL THE SECOND AND THIRD BOOK LOOK LIKE? LINDSEY: WE WILL GET THEM PERIODICALLY MOVING FORWARD THROUGH THE NEXT SEVERAL WEEKS. THIS WILL SET THE TONE. THE FIRST LOOK IS VERY IMPORTANT . WE EXPECT SOME REVISIONS BUT THIS SETS THE TONE FOR WHAT THE EXPECTATION OF THE U.S. ECONOMY WAS AT THE START OF THE YEAR AND IT TELLS US TWO THINGS. WE ARE LOSING MOMENTUM FROM WHAT WE SAW AT THE END OF LAST YEAR BUT THE ECONOMY IS STILL PROVING RESILIENT DESPITE THE FACT THAT THE FED IS ENGAGED IN AN AGGRESSIVE UPWARD PATHWAY TO TAME INFLATION IN THE CONSUMER, FORGET ALL OF THE OTHER DETAILS, THE CONSUMER IS THE BACK BONE TO THE ECONOMY AND IS PROVING RESILIENT. LISA: WE HAVE SEEN THIS THROUGH THEIR EARNINGS, I FEEL LIKE A BROKEN RECORD. CONSUMERS HAVE ABSORBED IT AND ON THE MARGIN, COMPANIES SAY WE WOULD RATHER RAISE PRICES, HOW LONG CAN THAT LAST? LINDSEY: IT CAN LAST ANOTHER MONTH OR TWO MONTHS, IF WE LOOK AT DEBT RELATIVE TO PERSONAL INCOME WE ARE TALKING ABOUT A DECADE LOW. I'M NOT ADVOCATING CONSUMERS TO TAKE ON CREDIT CARD DEBT BUT IF THAT IS WHERE THEY NEED TO GO, THERE IS ADDITIONAL ROOM TO GROW THE BALANCE SHEET BEFORE IT BECOMES A RED FLAG. LISA: A REAL BREAK IN THE CYCLE IS WHEN JOBLESS RATES GO UP. WE ARE NOT REALLY SEEING THAT. MICHAEL MCKEE WAS TALKING ABOUT BUSINESS SPENDING COMING DOWN. THAT WAS THE REASON FOR THE WEAKNESS IN GDP. HOW LONG BEFORE THAT TRANSLATES INTO JOB BECAUSE STUCCO LINDSEY: WE ALSO SAW A DRAWDOWN IN INVENTORIES. THAT WILL CONTRIBUTE TO Q2 GDP. WE WILL HAVE TO KEEP AN EYE ON THAT BUT BROADLY SPEAKING, BUSINESSES ARE ANTICIPATING A SLOWDOWN IN THE ECONOMY. AND THEY RESPONDED IN KIND ACROSS THE FIRST FEW MONTHS OF THE YEAR. MIKE: I HAVE THE DOLLAR FIGURES, INVENTORIES AND THE FOURTH QUARTER SHRANK BY 1.6 BILLION IN THE FIRST QUARTER WHICH IS EXTRAORDINARILY UNUSUAL. SO BUSINESS STOP PRODUCING AND STARTED SELLING OUT THEIR WAREHOUSE. LISA: OUR COMPANIES MORE BEARISH THAN CONSUMERS ARE LETTING ON. LINDSEY: WE WERE ANTICIPATING THE CONSUMER TO HAVE A PULLBACK AT THE START OF THE YEAR BUT WE FOUND CONSUMERS ARE WILLING TO TURN TO CREDIT CARDS, DRAW DOWN THE PANDEMIC SAVINGS AND A SPUTTERING OF STIMULUS THAT PROVIDES ADDITIONAL SUPPORT TO CONSUMERS. TOM: NOMINAL GDP, A .5%, AND NOW I OBSERVED 5.1%. DO YOU SUBSCRIBE TO A NOMINAL GDP BEFORE WE GET TO NORMAL? LINDSEY: I WOULD SUSPECT IT'S AROUND 1.8% LONGER-TERM ONCE WE SMOOTH OUT THESE CYCLICAL MOVEMENTS. THE U.S. ECONOMY FALLS INTO A DOWNTURN IN THE RECOVERY OF THE LONG-TERM ECONOMY. TOM: ON YOUR INFLATION YES, AS THIS NOMINAL GDP DECLINE FROM THE PANDEMIC WHERE WE GET A 4% TOPLINE GDP? LINDSEY: 2% REAL PLUS 2% INFLATION. THAT IS A REALISTIC EXPECTATION WITHOUT SIGNIFICANT GROWTH IN PRODUCTIVITY. WE WILL STRUGGLE TO SEE A REAL RATE OF ACTIVITY ABOVE 2% FOR SOME TIME. LISA: THIS IS THE CONUNDRUM MARKETS HAVE BEEN STRUGGLING WITH. YOU WANTED TO BE GOOD BUT NOT TOO GOOD. RIGHT NOW, WE ARE PRICING IN A 4.2% FED FUNDS RATE. WILL THAT BE ENOUGH TO BRING DOWN INFLATION? LINDSEY: WE KNOW HISTORICAL CYCLES THAT THE FED NEEDS TO RAISE RATES ABOVE PEAK LEVEL OF INFLATION. IT WILL NEED POLICY FIRMING TO GET UP NEAR 6%. IF WE SEE TIGHTER CREDIT CONDITIONS DO SOME OF THE FED'S WORK AND PULL DOWN INFLATION FASTER THAN MAYBE IT DOESN'T NEED TO RAISE RATES AS HIGH. WE ARE NOT SEEING THAT ORGANIC CHANGE AND WITH INFLATION WHERE IT IS IN THE SOLID LEVEL OF ACTIVITY, THE FED NEEDS TO CONTINUE TO MOVE FORWARD RAISING RATES TO TAME INFLATION. MIKE: INVENTORIES IN THE CUP BACK IN BUSINESS SPENDING, EXPORTS AND IMPORTS WERE LITTLE CHANGE. WE DID NOT GET A MAJOR CONTRIBUTION EITHER WAY. TOM: WHAT IS INVENTORY? LINDSEY: YOU PRODUCE GOODS BUT THEY ARE SITTING NOT BEING SOLD YET. MIKE: IT'S THE VALUE OF THE GOODS THAT HAVE BEEN PRODUCED BUT HAVE NOT BEEN SOLD. ALL OF THE CARS PARKED OUTSIDE OF AUTOMOBILE MANUFACTURERS WAITING TO BE SHIPPED OFF TO DEALERS. LISA: BUSINESSES HAVE BEEN PESSIMISTIC BASED ON WHERE AMERICAN CONSUMERS ARE. CATERPILLAR SAYS 2020 THREE WILL BE BETTER THAN ANTICIPATED. THEY DID NOT HAVE ITS MUCH INVENTORY AS THEY NEEDED. RAISING QUESTIONS ABOUT HOW MUCH THEY WILL HAVE TO PRODUCE LATER. MIKE: THEY WILL BE TALKING ABOUT THIS BECAUSE OF CONSUMER SPENDING IS STRONG AND THERE ARE NOT ENOUGH GOODS, THAT CONTRIBUTES TO INFLATION AND THAT COULD AUGUR AN INCREASE IN PRODUCTION IN THE FUTURE. TOM: WE COULD DO THIS FOR THE SECOND, THIRD, FOURTH REVISION AS WELL. INTERESTING ECONOMIC WORK. THE INVENTORY DECLINED IS UNSUSTAINABLE. STAY WITH US, FUTURES UP .4%. LISA: AFTER MAKING A FEW ADJUSTMENTS KEVIN MCCARTHY'S PLANNED HAS PASSED THE HOUSE. THE VOTE PUTS PRESSURE ON JOE BIDEN TO BEGIN TALKS WITH REPUBLICANS TO AVOID A PAYMENT DEFAULT. THE PRESIDENT SAID IT HAS NO CHANCE OF BECOMING A LAW. BILLIONAIRE HEDGE FUND MANAGER SAYS THE RELATIONSHIP BETWEEN THE U.S. AND CHINA IS IN A RISKY PERIOD. THE TWO COUNTRIES ARE ON THE BRINK OF WAR AND THE SITUATION WILL GET WORST AS THEY HEAD INTO AN ELECTION YEAR. DISPUTES OVER TIME ON RUSSIA OR POTENTIAL REDLINES. U.S. PROSECUTORS SAY THE U.S. NATIONAL GUARDSMEN TRIED TO COVER HIS TRACKS. HE DESTROYED COMPUTER EQUIPMENT AND URGED ONLINE ASSOCIATES NOT TO SPEAK WITH INVESTIGATORS. THE FOUNDER OF THE BLOOD TESTING COMPANY THERANOS WILL STAY OUT OF PRISON A LITTLE LONGER. SHE WAS SET TO START HER 11 YEAR SENTENCE BUT THEY PUT HER DATE ON HOLD UNTIL THEY CAN RULE ON HER REQUEST TO STAY FREE WILL SHE FIGHTS HER CONVICTION. BERLIN WANTS TO REDUCE ITS ECONOMIC EXPOSURE TO BEIJING. OLAF SCHOLZ IS TRYING TO BALANCE GERMANY'S INTEREST IN CHINA WITH NATIONAL SECURITY AND HUMAN RIGHTS CONCERNS. GLOBAL NEWS POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I AM LISA MATEO AND THIS IS BLOOMBERG. WHAT IS THE PROBABILITY OF A RECESSION THIS YEAR I WOULD HANDICAP IT AT 70% OR SO. A SOFT LANDING IS NOT OUT OF THE QUESTION BUT GIVEN THE FACT THAT THINGS APPEAR TO BE SLOWING OUT THERE. THE MANUFACTURING SECTOR HAS STALLED BUT CONSUMERS ARE STILL HANGING IN THERE. TOM: SOME THINGS WILL STICK OUT. THE FIRST LOOK AT GDP, WELLS FARGO WITH THE MORE CAUTIOUS TONE. I GUESS IT CODIFIES MAY 3 BUT WE ARE LOOKING AT FOMC DECIDING ON WHERE TO GO AT THE NEXT FED MEETING. LISA: CONSUMERS KEEP SPENDING, THAT'S A CONUNDRUM WITH THE FED. COMPANIES ARE NOT KEEPING UP WITH THE PURCHASING. TOM: I THINK WE UNDERESTIMATE THE POST-PANDEMIC QUALIFICATIONS. FROM FIRST REPUBLIC TO BIGGER ISSUES LIKE BOEING AND AIRCRAFTS. IT'S TIED INTO A POST-PANDEMIC DYNAMIC. LISA: THE FACT THAT DEPOSITS GREW DURING THE PANDEMIC. THEY GREW DURING A PERIOD WHERE PEOPLE COULD NOT SPEND ANY GAVE MONEY FOR FREE FINANCING. HOW DO WE UNDERSTAND THOSE FRAYED EDGES AS PEOPLE TRY TO READJUST. MITOM: WE HAVE MICHAEL MCKEE GETTING READY FOR THE NEXT HOUR. IRA JERSEY WITH US, WE TALKED BEFORE WE CAME BACK ON AIR YOU ARE LOOKING AT JUNE 14 WHAT IS THIS INFORMATION SAY ABOUT SUMMER FEDERAL RESERVE MEETINGS? IRA: THE FEDERAL RESERVE WILL REMAIN CAUTIOUS. WE TALKED ABOUT ALL THE BANKING ANGST AND FIRST REPUBLIC AND POTENTIAL CREDIT TIGHTENING LATER IN THE YEAR. AT THE SAME TIME, THE FEDERAL RESERVE IS GOING TO BE KEENLY FOCUSED ON INFLATION. YOU STILL HAVE SOME INFLATIONARY DYNAMICS. SOME OF THE DEFLATOR'S WERE HIGHER-THAN-EXPECTED. THEN YOU GO INTO THINGS LIKE THE WAGE DATA AND SEES SIX PLUS PERCENT ANNUALIZED INCREASES IN WAGES AND SALARIES OVER THE PAST SIX MONTHS AND SAY LABOR STILL HAS PRICING POWER. THE SERVICES SECTOR HAS NOT ROLLED OVER YET IN TERMS OF HOW MUCH BUSINESSES WILL HAVE TO INCREASE PRICES. THE FED WILL STILL BE CAUTIOUS AS TO HOW HARD IT HAS TO FIGHT AGAINST INFLATION. LISA: THAT IS WHAT THE MARKET IS EXPECTING WITH THE PEAKS BOND RATE WITH 4.2% NEXT YEAR. SHE STILL SEES THE FIGHT GOING UP TO 6%, CAN WE EVEN KNOW? IRA: IT IS DIFFICULT TO HAVE A DEEP CONVICTION AS TO WHERE THE TERMINAL RATE WILL BE. MY VIEW IS THAT THE FED WILL HIKE ONE MORE TIME, MAYBE TWO. WE WILL NOT SEE A 6% HANDLE ON ANY OF THE BED MEASURES. THEY DO PRE-COMMIT TO STAYING THE COURSE AND MAINTAINING RATES AT 5.25", 5.5 FOR THE REST OF THE YEAR. YOU WIND UP PRICING OUT SOME OF THOSE CUTS THAT ARE PRICED IN TO THE MARKET. THE FED DOES NOT WANT TO GO TOO FAR WHERE THEY CAUSE A DEEPER ECONOMIC SLOW DOWN LATER. THEY WANT TO FIND A SWEET SPOT WHERE THEY CAN SLOW THE ECONOMY BUT NOT CAUSES DEEP RECESSION AND GET INFLATION LOWER. THEY SAY WE WILL ONLY CUT IF THE UNEMPLOYMENT GOES UP AND HEADLINE INFLATION IS BELOW 3%. IF THEY DON'T WANT TO PRECOMMIT, THUS WHAT IT WILL TAKE FOR THE MARKET TO PRICE OUT SOME OF THESE BECAUSE THAT EASE FINANCIAL CONDITIONS. LISA: DO YOU THINK THE FED HAS EVER BEEN MORE INTERESTED IN THE BALANCE SHEETS OF BANKS TO MAKE POLICY? HOW MUCH OF THIS IS BEEN LOOK AT THE DATA THAT COMES OUT UP 4:30 AND WE WILL DETERMINE OUR POLICY FROM THERE? MIKE: I DON'T THINK THEY WILL DEFINE IT ON THE BANKING SYSTEM SOLELY. HOW UNIQUE IS FIRST REPUBLIC? THEY HAVE AN OVERWEIGHT LOAN PORTFOLIO, THAT MANY OTHER BANKS DON'T HAVE AND WE SAW A RESULTS FROM THE BIG BANKS. IT MAY NOT BE THE BIGGEST DEAL OUT THERE. I REMADE THE POINT ABOUT INCOMES. THAT IS PROBABLY GOING TO BE MORE IMPORTANT TO THE FED BECAUSE THOSE INCOMES WILL MAKE THEIR WAY INTO SOMEBODY'S BANK ACCOUNT. INCOMES WERE UP SIGNIFICANTLY. PERSONAL DISPOSABLE INCOME ROSE 8% BECAUSE PEOPLE GOT PAY INCREASES IN TAXES WERE LOWER. TOM: I WANT TO GET IRA AND HERE, THIS IS NEIL DUTTA. HE HAS BEEN POUNDING THE TABLE SAYING THIS IS MORE THAN A STATIC ANALYSIS. INFLATION ADJUSTED DISPOSABLE INCOME, DID YOU JUST SAY IT WENT UP? BUT THE FINANCIAL MEDIA IS SAYING THAT THE REAL WAGES GOING DOWN BECAUSE OF PERNICIOUS INFLATION AND YOU TOLD ME INFLATION ADJUSTED DISPOSABLE INCOME IS GONE UP? MIKE: THIS IS AN AVERAGE OF EVERYBODY'S INCOME. DIFFERENT STRATA OF INCOME, SOME PEOPLE ARE RUNNING AHEAD OF INFLATION AND SOME PEOPLE ARE NOT. THE QUESTION IS, WHERE ARE THE MAJORITY OF PEOPLE? RIGHT NOW THEY SEEM HAPPY WITH THE FIRST QUARTER SAVINGS. TOM: I WANT TO GET IRA BACK IN HERE. 5.1 3 TRILLION A MONEY MARKET FUNDS, EVERYONE IS MAKING MICHAEL MCKEE'S DISPOSABLE INCOME. OUR MONEY MARKET FUND SAFE THIS MORNING? IRA: SO MUCH OF THEIR MONEY IS THAT THE FEDERAL RESERVE AT THE REVERSE REPO FACILITY. A LOT OF MONEY IS NOT GOING INTO T-BILLS THAT MATURED IN JUNE, JULY AND AUGUST BECAUSE PEOPLE WORRIED ABOUT A DELAYED PAYMENT. EVERYONE IS BUYING A ONE MONTH T-BILL. MONEY FUNDS WILL NOT BREAK THE BANK. AT THE SAME TIME, THEY HAVE GOTTEN VERY SHORT. I LOOKED AT THE DATA FROM THE MONEY MARKET FUND PROVIDER AND THE AVERAGE MONEY MARKET FUND IS ONLY 17 DAYS MATURITY. TOM: THAT IS THE STATISTIC OF THE MORNING. THAT'S A LONG-TERM CD. MICHAEL MCKEE, THANK YOU S WELL. REPORTING ON THE STATE OF THE AMERICAN ECONOMY. SHOULD WE SCRAMBLE OUT AND GET THAT 17 DAY MATURITY? LISA: THAT IS WHAT YOU WILL GET IN POSITIVE GAINS IN CASH. 4.03%, WE STARTED AS LOW AS 3.92 ON THE TWO YEAR YIELD. IT WILL MAKE IT TOUGH FOR THE FED TO TAKE ANY KIND OF PAUSE. TOM: UNLESS THE TWO GUYS FROM RUSSIA SHOW UP TO ASK QUESTIONS AT THE PRESS CONFERENCE. JUNE 14, JULY 26, HOW DO WE GET TO SEPTEMBER 20? LISA: I THINK NOBODY KNOWS. PEOPLE DON'T KNOW WHICH DATA TO LOOK AT. IN TERMS OF HOW MUCH THE FED WILL HAVE TO FIGHT, THEY THINK PEOPLE ARE LOOKING FOR THE NEGATIVITY IN NOT SEEING THE POSITIVE. TOM: I WILL MENTION DEAL DUTTA WITH THE GREAT CALL ON WHAT INCOMES DO IN THE DYNAMICS OF INFLATION. MICHAEL MCKEE MENTIONED THAT OPTIMISTIC STATISTIC. NOMINAL GDP IS ABSOLUTELY CRITICAL AS AN ANALYSIS RIGHT NOW.

Channel: Bloomberg Television

Views: 70,149

Keywords: Jon Ferro, Lisa Abramowicz, Tom Keene

Id: _WaG3aI3O3Y

Length: 146min 25sec (8785 seconds)

Published: Thu Apr 27 2023