>> tech continues to crush it at basically every angle. >> nothing wrong with tech, these companies have a lot of cash. it is just everyone is in love with them. >> earnings are earnings and cash is cash. that is what people are looking at. >> the fed is in the rearview mirror and we are focused on other things. we are willing to trade rate cuts for earnings growth. >> this is "bloomberg surveillance surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: lisa is back. good morning, good morning. this is "bloomberg surveillance"

wrapping up april with a month of losses potentially on the screen. down more than 2% on the s&p for april. the small caps have been absolutely hammered the end of march, the rotation is coming, a big downdraft for the small caps so far this month, snapping five straight months of gains for equities on the s&p 500. bramo, april has been a bumpy ride. lisa: partly because that is the sound of the narrative breaking -- or maybe the narrative shifting. he basically said higher inflation is fine for stocks and earnings. if yields stay here it will be ok, everything is fine. yields are high for the right reasons. are they? that is the angst you are feeling. jonathan: the bond market, breaking up the 10 year. the two-year, high by 35 basis points. the 10 year up by more than 40.

i remember a few conversations we had this month. just a few. steve said that this federal reserve wants to count interest rates.he said that this data is not cooperating. the data this month has not cooperated. annmarie: which is why all of the guests told us yesterday that this week's fed meeting will be a snooze fest. he will basically take earnings growth, which we had 80% beating estimates, overfed cuts. -- over fed cuts. jonathan: u.s. exceptionalism. that shifted into the prospect of peak u.s. exceptionalism. china better than expected. the top four eurozone economies, all beating expectations for first-quarter gdp. do you sense that the tide is starting to turn a little bit? lisa: that the scenario over there is rhyming with scenario over here. gdp hotter than expected and inflation incrementally in germany and france coming in higher than expected as well.

it raises the question, does this give the ecb room to cut rates and be stronger? i'm surprised we didn't see more of a reaction in the euro. i thought this is something you could see strength pop in. annmarie: this will be a huge tailwind into the ecb cutting rates in june if the economies are already down. yes, everyone will want to talk about germany because they are the ones that were coming out at the moment. it is the peripheral. it is southern europe we've seen the bank out of the pandemic having to do with tourism and the fact that they were not as reliant on russian oil and gas. for years they have been more dependent on renewables. jonathan: china, the commodity market things have started to wake up time. iron ore to the biggest month since 2022. is this a turn across commodity markets? lisa: so many people coming out saying that that is a positive

because that means they will hit their 5% goal. talk about overcapacity and oversupply. it's coming from the industrial side. a lot of economists say they should put more money into this. guess what that will do. this raises the question of, if you see their margins being crunched because the government is funding it, it raises -- jonathan: that is inflation that the world needs and europe and america wants? no? lisa: it is on sale and we are not saying thank you this time. that is where we are at. jonathan: -0.1% pulling back on the s&p 500 just a touch. down more on the month so far. yields of by single basis point on the 10-year. coming up, we will check in with evercore ahead of amazon earnings, israel-thomas talks, and a former fed economist saying that a stronger economy shouldn't delay rate cuts. we will begin with our top story

of corporate america beating expectations. bloomberg reporting that 80% of companies have outperformed so far. evercore looking to earnings in the fed decision tomorrow saying that while the phase out of the baseline is being met with rocket volatility and a correction, doesn't mean the end of the cyclical bull market. good morning to you. your note this morning got the attention of me and lisa and the title in the question. all of these critical events, the earnings, the data, takes a backseat to win the media pops the question to jay powell out the presser. could you see the next move being a rate under any circumstances? when that question is asked by someone no doubt like mike mckee, how does he answer it? julian: we have had an overabundance of things. an overabundance of growth. the strength is probably better

than anyone could have expected given that you've had soft spots in the rest of the world. and as you address getting better, also, inflation has been hotter than expected. so, the perverse logic of financial markets is, it is entirely possible that the fed chair could lead us to a path where there is a little bit more tightening of financial conditions. answering that question, which ultimately gives you the room, several months hence, to make that rate cut. we think that there could be some volatility on wednesday. lisa: are you saying this is a fed chair that wants to reduce market selloff? julian: i don't think that he would be incredibly unhappy about it. again, this is the conundrum where they have gotten themselves stuck into because of the success of the dovish pivot in a lot of ways warding off a potential downturn.

from our point of view, we have always thought that it has been at heineman's court. that last mile in inflation has to be accompanied by slower economy. lisa: how much did the pivot last year because inflation to be stickier and push the fed further from their goal? how much of a selloff do you think that the fed needs to get back on track with 3, 2, or even one rate cut this year? julian: i don't think that there is a coincidence that when you look at april and everyone has talked about the statistics of the month of april, an election year being a positive month, and low and behold we have gotten what we got last year essentially when rates approached 5%, stocks stall ed. you can frankly get a scenario when markets correct in both time and price and we wind our way down. the fact that the animal spirits

have been somewhat contained in the month of april is going to end up ultimately working in the fed's favor. jonathan: would you like a recipe for bearishness from chef marco? the growth policy trade-off could move away from goldilocks with a risk of concentration reversal, to steep for earnings acceleration. it is a long list. what are you the most concerned about? julian: the concept of being incredibly concerned about a drawdown like last year is a bit of a red herring. an average drawdown in an average non-recession year is 13%. we were spoiled by last year. we only went down 10%. the vix is 14% versus a average of 19.5. we should be used to tomorrow volatility. when we think about everything going on in the world and we

think about what we will have to do on november 5, it's not surprising that we get that volatility. we think that we get it and we think that it is going to be ok for markets. lisa: i have a lot of time for your recipes. bear ratatouille. jonathan: chef marco. lisa: we have different recipes coming together and some people are talking about the recipe this week for risk outside of the fed meeting. we had a litany of people opening the show saying that the fed was less relevant, even if someone pops the incredible question. it is about earnings and some of the employment data we get. could that be more of a risk in a significant way? or ultimately this comes down to rates and people aren't admitting it? julian: if you look at the day to day, there is no doubt earnings have had a day-to-day

affect. ups and downs. frankly, the greater correlation has been what positioning looks like. the stocks with massive amounts of shorts have seen better reactions. we have seen gaps in some of the major names. stocks where there are not shorts in places like industrials, trucking in particular, where there is the potential that their message is going to be that the economy will slow later into the year or next year, you have seen poor reactions. when you think about it long-term, and this is why despite our view of a correction phase we are optimistic. earnings drive stocks and earnings by and large are not great but ok enough. annmarie: you mentioned volatility, you are embracing it, how do you position for it? julian: there is a trident true

track record of sector -- tried and true track record of sector outperformance between the last fed hike and first cut.the first cut continues to get pushed out in time. communication services and the more defensive sectors like health care and consumer staples, which, in fact, if you start seeing higher rates have that dampening effect on animal spirits, on sentiment, those will start to perform even better. the other thing that we want to do is fully embrace what we call the ai revolution. the problem with that for a lot of people is that there has been an unbelievable amount of volatility in these stocks in recent weeks for the upside and the downside. what you do is you buy stocks and you use options hedges so you can sleep at night. jonathan: that is helpful. thank you. particularly when you drop 10% on any given day on nvidia for no given reason. dollar-you and, let's talk --

dollar- yen let's talk about that. yesterday we broke 160 briefly. the gap lower has been a mystery. the wall street journal initially reporting there was intervention based on their sources. we have been waiting for the data. lisa: the data says that according to some of their accounts it shows about ¥5.5 trillion worth of intervention in their currency. that is about $35 billion. we are looking at a trial balloon. how much can they do for their money as they try to get ahead of a federal reserve and get control? what is successful? the jury is out because this is basically buying time before you get something more definitive on the u.s. side. jonathan: you mentioned the close out at deutsche bank. the bank of japan needs to engineer an expedited hiking cycle similar to the post-covid experiences of a central banks to put a floor or ceiling on top

of dollar-yen. lisa: we have heard from the bank of japan a lack of willingness to do so. they're counting on the fed in the meantime coming out a little more dovish then the market is expecting, which some people think is possible. are they trying to see, how much bang can we get jonathan: for our buck? jonathan:when mike mckee pops the question in tomorrow's news conference the make of japan is hoping that he says no hikes. lisa: will you, fed chair j powell, possibly think about making a yen? jonathan: no. that is how that proposal is going to go. thank you, sir. your bloomberg brief with dani burger. dani: the hsbc chief executive is stepping down. he was at the job for nearly five years. the board has started the formal process to find a successor. quinn said we have to give 100% if not 120 percent. and that doesn't necessarily

achieve a balance in life that i wanted. he is leaving at a high. reporting a beat on profits at 83 billion-dollar buyback. it is also been a busy week for paramount global with the company's ceo stepping down replaced by three senior executives. also paramount reporting first-quarter earnings that beat estimates helped by the cbs broadcast of the super bowl in february and, dare i say, taylor swift's appearance. sky dance media is negotiating a deal for the company of this seems more likely with bob out. boeing raised $10 billion yesterday in a bond sale to ease financial strains. it attracted $77 billion in orders and the demand was helped by boeing dangling a strong yield premium, but it is a sign that the u.s. credit market is wide open despite a shift that more insatiable demand for issuance than prospects for boeing's credit.

that is your bloomberg brief. jonathan: we will catch up with dani in 30 minutes. that proposal felt like an awkward fan cam at basketball. have you seen those videos where you are on one knee and the girl runs off? it is very upsetting. lisa: that populates the automatic algorithm in your twitter feed? jonathan: i get women running away. next, the cease-fire on the table. >> in this moment, the only thing that is standing between the people of thousand and the cease fire is hamas -- the people of gaza and the cease-fire is hamas. they have to decide. jonathan: good morning. ♪

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jonathan: live from new york city, good morning. equity futures on the s&p 500 are down by .1%, down on the month by 2.6% so far on the s&p. the fact that that is the biggest monthly loss in september shows how good things have been for the equity market over the previous five months. yields higher up to 4.63. crude is well behaved, to end in the low 80's. 80 2.82 positive by 0.2%. a cease-fire on the table. >> the quickest way to bring this to an end is to get to a

cease-fire and the release of hostages. hamas has put forward a proposal that is extraordinarily generous on the part of israel. at this moment, the only thing standing between the people of gaza and a cease-fire is hamas. they have to decide and they have to decide quickly. jonathan: urging hamas leaders to respond to a proposed temporary cease file seeing the release of israeli hostages and a delay of the invasion of offer. -- of rafa. getting your perspective as always. we have heard this story a few times and it has been false storms. do you get the impression that this time is different? >> it is different. we are approaching an inflection point. israel completed its final preparations for an operation.

the administration states that its concerns regarding humanitarian impact of the operation have not been squashed, but israel is reaching a point where it decide whether to go or not. a deal is made that involves a number of significant concessions. israel has lowered the number of hostages it is seeking, increased the number of palestinians it will release, and a cease-fire that provides hamas with a victory of survival.the next few days will be quite important. annmarie: why would hamas say no to the deal on the table? norman: the deal is important because it allows survival, but at the same time hamas has to decide in the -- in itself, as it lost the ability to provide pressure? if it decides it faces a life-and-death moment with an israeli attack it will be more

likely to accept the deal. if hamas believes further concessions are likely it will not approve this offer. annmarie: is a cease-fire a cease-fire? or does it just me that it is on pause in terms of the raw for -- in terms of the roth invasion? norman: i think that there are three different perspectives. the entire israeli cabinet believes that it is important to eradicate the hamas leadership and ability to be military force. even for those who support the cease-fire in israel's capital are looking for something. the united states is looking for a temporary deal to extend into a permanent cease-fire. hamas is looking for the withdrawal of all israeli forces from gaza and its return to power in a permanent cease-fire environment.that is the dance taking place at

present. lisa: you're at the world economic forum special meeting in riyadh. that is the place to answer the question i had while i was reading reports about who will fill the void when israel pulls out in the cease-fire? will it be qatar, saudi arabia, the united arab emirates? norman: none of these partners are willing to take the lead in such an effort. it is not a good thing to have palestinians shooting at aerobic forces or international forces. they're looking for some sort of u.s.-led process by which they can participate in some way to allow the palestinian authority to reassert itself in gaza and the west bank.it is not entirely clear that the palestinian authority authorities are prepared for that. the palestinian president spoke at the world economic forum. his comments were -- let's say that there was not a lot of new there and not a lot of

indication that he has the capacity. a conversation among diplomats in riyadh have been intensive and extensive on the issue. lisa: you're saying if the cease-fire, temporary pause, whatever you call it is effectuated that u.s. troops could be on the ground keeping the peace in gaza? norman: very unlikely. u.s. forces are very unlikely to be involved in any on the ground effort. the biden administration has been consistent in that regard. the problem is, no other entity is willing to step in. there have been discussions of an international force, but those discussions haven't gone anywhere. this is a work in progress and a critical issue to be decided. annmarie: anytime you have antony blinken in saudi arabia, everyone starts whispering about the idea of normalization. are we any closer to that between riyadh and jerusalem? norman: no, but we are no further away either. the saudis have made their

position clear looking for a finite, clear, concrete path to palestinian statehood and that must be worked out by the various diplomats involved. until that happens and they see that that is going to occur in a manageable manner they are unlikely to agree to restoration or normalization of relations with israel. jonathan: thank you for making time with us. i know that you have a busy evening ahead of you are the former senior intelligence official. in the commodity market crude on the month is higher by 1.2%, which is marginal related to what is taking place so far this month. people are saying that this is a new middle east. 's have been drawn around the confrontation around israel and iran. here we are with crude higher by 1.2%. lisa: there was the specter of direct confrontation between iran and israel that was taken off of the table and maybe the de-escalation gay people confidence we weren't going to see true oil disruptions.

we are higher on the fact that inventories have been taken down. there are fundamental reasons to have feeling that we could see higher prices unrelated to what is going on in the middle east. annmarie: people are starting to erode the political risk they put into the price and global surprise have not been hit.there has been a tremendous amount of missiles flown back and forth, but actual supplies have not been hit. until that happens we won't see this market takeoff. jonathan: you can see the reluctance of this administration to do anything that disrupts global supply. equities if you are tuning in, welcome, equity futures down by just 1/10 of 1%. plenty to target about -- plenty to talk about in the fx market. the boj accounts point to what they call the yentervention. lisa: do you think that you could use it for other things too? jonathan: what like?

lisa: you're going to bring that into the conversation, doing another yentervention? jonathan: i guess it doesn't work, does it. most signs point to yen intervention. lisa: i killed it for you? jonathan: i think it died. this is bloomberg. ♪ hey you, with the small business... ...whoa... you've got all kinds of bright ideas, that your customers need to know about. constant contact makes it easy. with everything from managing your social posts, and events, to email and sms marketing. constant contact delivers all the tools you need to help your business grow. get started today at constantcontact.com constant contact.

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jonathan: the month of may is around the corner, closing out april with -2% on the s&p ended similar move down on the s&p. amazon later this afternoon, apple on thursday, you'll get 10% of the index reporting earnings across two names. the equity market. the bond market looks like this. the first day of the fed's two-day policy meeting commences, concludes tomorrow afternoon. the yields are higher by almost a basis point. 4.9830. lisa: it is a long-term trajectory that i find the most interesting about the narrative shift in april. people are talking bout that may be rates aren't restrictive and could stay around for longer time.

if the federal reserve indicates that anyway, if there popped the question and indicate the wrong answer, how big of a selloff could we get it people have truly come around to the idea the earnings are resilient enough to keep this going with rates where they are? jonathan: given that chair powell knows what question is coming, does he fumble it or not? lisa: in the past i would have said no way, but in the past he has fumbled it. i will not weigh in. annmarie: he needs to practice. jonathan: let's talk about the euro. posited by 0.1%. under surveillance this morning, the euro zone exits recession with better than expected gdp data to start the year end consumer prices rising 2.4% year-over-year. and improving germany as it faces a troubled industrial sector. the troubles persist, but relative to expectations surprises in germany, france, italy, and spain, the right kind

of surprises this time around. lisa: you put it well when you said, is this the u.s. becoming less exceptional? is this a broadening out where growth is coming in better than expected but inflation is stickier than expected. the euro doesn't know what to make of it and neither do we. it is a question of, is this not just a u.s. story? jonathan: the euro has been dazed for months now. the world coming down to the u.s. or the u.s. coming down to the world. annmarie: better when you look at china and europe. china, you do see emphasis on exports, which makes you think, what is happening on the domestic front? where is the domestic demand? an imf official said it is not overcapacity. they do need to do more when it comes to their domestic demand. jonathan: the americans have a

different perspective on that issue. the euro, carmakers, nothing good about it at all. headwinds for ev's. all reporting disappointing sales. elon musk is planning hundreds more job cuts with two more senior executives set to leave tesla. that stock is down by 2%. the mercedes first-quarter earnings down by one third. volkswagen down by 20%. lisa: electric vehicle demand is down across the board, even in europe. the idea we are talking about china, overcapacity, the imf saying no, this be the first time president xi will be coming to europe. where is he going may 5? france, serbia, hungary. buy our cars. this has been an area less immune to the exports from china at cheaper price points. will they get some division between the u.s. and europe?

or will this be focused on the eu. annmarie: china, europe, the u.s. are where sales are when it comes to ev's so china and europe need to start buying more for the car companies be doing better and you can see that across the board in the oil sector. jonathan: an attempt to open more factories and get the brand -- are people going to buy the brand in places like america? byd, is that going to take off? even if they are really cheap, is that going to take off? lisa: not in the u.s., but may be france, serbia, and hungry and that is why xi jinping is over there. annmarie: in italy they are potentially looking up opening a plant but they ditched belt and road. the iphones, the luxury appeal of brand, similar with byd. it is not the same in western minds as a tesla. jonathan: may 5, the chinese leader heading to europe.

secretary of state antony blinken continuing his trip in the middle east making stops in jordan and israel urging leaders of hamas to accept the deal to release israeli hostages and delay an invasion of rafah. this is his seventh trip to the region since last october. there is a sense that this time i be closer to a deal? annmarie: secretary blinken said that this is the most generous deal that israel is putting on the table.i was talking to a lot of individuals from the region and you have representatives from the united states, cutter, and israel in cairo today. yesterday the president got on the phone. a lot of pressure from the united states all of these countries to accept this deal. jonathan: let's turn back to foreign exchange and the yen falling against the dollar following new accounts from the boj indicating that it likely intervened on the currency yesterday. joining us, is it efficient even

if they did intervene in this affects market? >> thank you for having me. i always enjoy coming on your show. my short answer would be, no. i can't go back to monetary policy divergent since and that has been driving dollar-yen higher especially with the latest round of fed hawkishness coupled with the bank of japan. the market did not disappoint. i am disappointed that the bank of japan did not think this out or doesn't appear to have thought this out clearly. how the weak yen wasn't impacting inflation yet. until something happens on the fed side, it gets more dovish and cuts rates, or on the japan side, there stuck and more hawkish hike rates, i can only see dollar-yen going higher. jonathan: crisis, currency

crisis, what would a crisis look like and you think we have the ingredients for one? win: short answer, no. i think -- markets are always looking for the next shoe to drop. strong dollar is a problem for many countries but isn't a crisis. if we start to get dislocations in other markets, the u.s. treasury markets, something wider than the exchange rate we could start talking about crisis, but i don't see the seeds. it is a strong dollar issue. it isn't just japan. korea is complaining. i don't see anything like a typo record emerging soon. the movements haven't been that large or disruptive yet. but it is worth keeping an eye on.

lisa: the idea $40 billion, $45 billion of yen intervention is it significant in the scheme of things but the idea of hiking rates is more significant. does this put this back on the table for the bank of japan in a more material way? win: they did such a dovish fold last week that i was shocked. the currency markets were looking for something more hawkish. first, the next step would be more hawkish forward guidance. the markets only priced in 50 or 60 basis points of tightening over two years which is very shallow. the bank of japan's guidance hasn't helped. overnight, we had soft data for march that underscores the bank of japan is being cautious. you can't have your cake and eat it too. if you're going to be dovish she will have a weak currency. if you want to really put a floor under your currency you will have to hike rates. at this point, i think that the bank of japan is gun shy.

last time that they try to hike rates japan fell back into a recession, so i understand why they have been so cautious. there are so many moving parts i don't know if this policy path has been well thought out. lisa: a real question we have been asking all morning is the idea of, is this basically the u.s. exceptionalism running out of being exceptional and the rest of the world coming to the same place where growth is stronger and inflation is stickier? that means higher rates globally where central banks cannot lower rates nearly as much as many people expected? is that basically what you are looking at in this mishmash of foreign currency moves that have left us scratching our heads? win: the problem with foreign-exchange is it is not an absolute story it is a relative story. u.s. exceptionalism is absolute in the sense that growth is multiples of what we are seeing in europe or elsewhere. i would say that one thing i did

get wrong in the last cycle is i think that the u.k. and europe, i thought that they would be in a much deeper recession. we are seeing the european data that was quite shallow. when i stepped back it is hard for me to get excited about europe. a lot of headwinds. europe is more dependent on china. we are negative on china despite some signs of life in the economy. we are not quite as exceptional as we were in the u.s. but remain liking the dollar higher. i think the fed will deliver a hawkish message tomorrow. you were joking earlier about if mr. powell can stick to script. i think you will have written on his hand, "don't say anything about cuts." [laughter] but always looking for some kind of dovish slip. i think if he wants to do an insurance cut or two this year the data won't allow him.

it is a waiting game to see how the economy evolves. jonathan: you said he will be hawkish tomorrow. what you think you will say? win: i don't think that he is going to say the h-word. hike isn't and his vocabulary at this point. he was a rate cuts will continue to be pushed out. earlier he said we will cut sometime this year, sometime this year, coming soon. but he can't say that. he will say the data are not allowing for a cut right now. we don't have confidence inflation is going to the 2% target relatively soon. these are things that fed officials talked about before the blackout period. i see a continuation of that. nothing is happened since the blackout period began that makes him have to change the script. 250 thousand plus jobs this friday, inflation remains sticky and higher.

it will be very difficult for the fed to deliver anything short of a hawkish message tomorrow. jonathan: you're basically describing a guy who will sit there with one hand, don't cut, don't say it. on the other hand, don't say hike either. this will be fun. looking ahead to the fed tomorrow afternoon. lisa: this feels like kindergarten. the h-word, the t-word, just sit there like a deer in headlights and say, hi, we are the fed. jonathan: lis it will -- it will be one of those news conferences where you reach for the notes. lisa: doesn't he want the selloff, to prolong the selloff to get inflation to a place where they can do the cuts they are looking for? if he is willing to do that, why not say the h-word. jonathan: if you said that it

august of 2022i would say that is what he wants. asking where financial conditions are if they are loose or tight. i am telling you he thinks that they are efficiently restrictive. lisa: john williams went there and john williams is dovish. he said the h word. i wonder if that paves the way for that to be washed off of his left palm? jonathan: benjamin netanyahu saying that we will not stop the war before achieving all of its goals among the backdrop of israel-hamas and expert suggesting we could be close to some kind of cease fire. going on to say, we will eliminate ham -- hamas battalions. annmarie: even if they get a deal on the table benjamin netanyahu is determined to make sure every last bastian of the hamas hold is eradicated. these kinds of comments as they

are sitting down in cairo, representatives, it could mean that the deal would be off. if cease fire is a cease-fire, but until what point? does this mean six months and potential israel recalibrate santa goes in? we will have to wait and see. jonathan: the objectives haven't changed according to the prime minister's office. let's get your bloomberg brief. dani: elon musk's wealth is once again climbing the rich list. muska gained more than 37 billion dollars in net worth over the next five days according to the bloomberg billionaires index. off of the back of news that he gained support for his assistance program in china, musk added $18.5 billion to his fortune yesterday and now has a net worth of more than $201 billion and is close to overtaking second place, jeff bezos. we are talking about returning to office. macy's has issued a mandate to corporate employees, get back to the office or face disciplinary

action. the company informed hybrid employees that they will need to be in the office for two days a week starting may 13. that is according to people familiar with the matter. macy's is giving employees a three-month grace time to move back to the new york city area and if they haven't returned workers will risk consequences, including termination. roku prices plunging by the most ever. they surged more than 100% this year alone but the price swings are becoming more extreme and fewer companies can maintain trading positions as the supply deficit made coco more expensive than copper this year and liquidity has drained from the market. jonathan: thank you. going into memorial day weekend. next, the fed's first cut. >> as the labor market gets into better balance that should slow

the rate of wage growth bringing back down the super core rate of inflation. that is what we are looking for in terms of the fed easing later this year. jonathan: that conversation is just around the corner. live from new york, this is bloomberg. ♪

jonathan: equity futures on the s&p 500 are pulling back by .1%, no drama in the equity market this tuesday morning with yields higher by single basis point on the 10-year. the euro advancing gdp a little better across the top four eurozone gdp economies: france, germany, italy, and spain. all doing better than expected. under surveillance this morning, slim odds for the fed's first cut. >> the labor market is getting into better balance in terms of supply and demand. as the labor market gets into

better balance that should slow the rate of wage growth, and that brings back down the super core rate of inflation. that is what we are looking for in terms of the fed easing later this year. jonathan: the fed's two day meeting is kicking off with the central bank widely expected to hold rates steady. a string of hot inflation trends and labor market setting the stage for jay powell to make a hawkish private. "the stronger economy does not complicate the fed's fight against inflation, nor is it a reason for the bank to delay rate cuts, notwithstanding 2024's bumpy start on inflation. there's reason to believe the trade-off is weaker now than in the past." let's go to the final point first. i would love to get thoughts on that. what forces are changing the relationship between demand and inflation? >> first and foremost, the pandemic came through the economy and disrupted us in ways we haven't seen in living

memory. this is fundamentally a different type of twist and turn , the ability of the economy to produce. one thing we unwound last year was that we had a notable labor shortage. people left at the beginning of the pandemic. last year we brought a lot of workers back. that is a big reason why the u.s. economy could grow and not push inflation of more. we could meet that demand. that is not -- when you have supply disruptions you have the opportunity to fix them. we largely did that with the labor market last year. you can get these two pieces together. it's unusual. usually demand is out of control and it is hard to get supply. this time we fixed things on the supply side. jonathan: it is impressive to see how that played out in the last 12 months. can we focus on the last three or four? the fed focused on the upside surprises at the start of 2024 initially describing them as bumps in the road and are now

starting to sound concerned. why shouldn't they be concerned by these positive, so-called upside surprises of the year so far? claudia: they should be concerned about everything. we are staring at every month of inflation data that comes out. we learned last week that january was a mess in terms of inflation picking up. we didn't see the path back to a real disinflation in march. i think that was the disappointment. that was one that powell released seemed to think that we would get back on track in march and we didn't. i get it, but there are a lot of pieces that are left in inflation, like the owners of equivalent rent, the vehicle services, the vehicle insurance. what level of interest rates do you need to get those down in a sustainable way? they're very complicated. they have the supply aspect. they are very backward looking. jonathan: what is the upside of fed chair powell saying the

sea-word -- c-word? is he going to talk about the t-word, transitory? if he talks about cuts, what is the benefit to him? claudia: there is none. if you open to smell there is all downside risk. we all want certainty. we look to the fed as some oracle, which we should not. thus what comes out of powell's mouth people want to hear what they want to hear, and often running they go. powell will aspire to be the most boring he possibly can tomorrow. i can't imagine the fed wants to move the market out less than two cuts. the september meeting where that could get started with two, they have five more cpi prints. that could be forever. we could be back into the why haven't they cut yet discussion. things could move fast.

what reason does he have to reset expectations? take a breath. this was disappointing. we don't know what comes next.he will emphasize data-driven . lisa: stay tuned tomorrow. tomorrow we will cover jay powell as he attempts to be the most boring guy in the history of the federal reserve. i'm curious as you talk about the idea of the fed being in a bad spot either way. they do have some communication that acts as monetary policy. there is a theory that if there was more of a protracted selloff in equity markets and risk markets, that could help the fed get to their goal of lower inflation. why do you disagree with that? claudia: the fed has really struggled. this makes sense. they have struggled to find tune forward guidance. it's hard to predict what the markets are going to do, what they are going to go off and running about.

powell has looked at this economy and said that interest rates are restrictive.we are putting downward pressure on the economy and you can see it in some interest rate sectors. do we want to be 25 basis points higher or 50? you are wading into territory where it can get away from you. i think that he will repeat that we are in a restrictive territory and there are ready to do whatever it takes to get inflation down. lisa: when you're talking about seeing the biting of the higher rates, we are seeing it from the highest companies reporting earnings delivering enough of a positive surprise that people are enthusiastic about the prospects for corporate america. you think the fed should err on the side of protecting small businesses and a host of consumers that are more affected disproportionately by higher rates at the expense of a higher long-term inflation rate in the united states? claudia: the fed's mandate is for the country as a whole. they are not set up to pinpoint certain groups of consumers or

businesses and say that we will give you relief on interest rates. they are focused on getting inflation down. we don't need to turn the cranks that much. we are within less than a percentage point of their goal. we are not at 5% of core inflation, core pce inflation, like we were before the disinflation started. we don't need to get too worked up about three months of data. yet, take it very seriously. if it gets stalled out this is a problem and the fed will adjust course. it is just swinging around this much expectations in markets feels overdone. jonathan: appreciate your insight. on the federal reserve and chairman powell, if he opens his mouth there is downside risk. date one of the two day meeting of the federal reserve, tune in

at 2:00 p.m. eastern tomorrow for -- lisa: the most boring guy. jonathan: i want to talk about the political calendar. bnp paribas saying that delaying the start of the cutting cycle until july, if you can call it that, while remaining of the view that cutting in september, we see the fed implementing the first cut in december. they pushed to july, they are it now to december. it keeps coming up again and again the importance of september and the lack of willingness to do anything at that meeting. lisa: given that historically it has always been a bad move right before an election. you have been talking about this since july or december. jonathan: equity futures were covering just a little bit softer. this is bloomberg. ♪

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>> there is very little room for the fed to be particularly dovish, quick, and terms of rate cuts. >> as long as we have a reasonably strong economy i think that the market can handle the fed staying steady. >> the market has started to game out the fed decision and take it off the table. >> they will still probably be able to cut this year. >> can they cut in september? if things slow down enough, yes. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: the second hour of

"bloomberg surveillance" starts now. good morning, good morning. equities recovering a little, equity futures negative by 0.0 4%. down hard on the month so far, but a little bit of perspective. yes, this is the biggest potential monthly law since the end of september, down by something like 2.6%, but really this is about the five months of gains previous to this, which were out of this world. lisa: the fact that we are down so little to me is telling given that we saw some pretty big misses on a number of the tech stocks. to me, the swinging around of the tech names is interesting. amazon is coming out after the bell. what if they miss on aws? jonathan: amazon, amazon on repeat. two days of apple on thursday. we did a whole segment with an analyst. lisa: i did watch it. i think everyone's talking about

-- jonathan: why do you tune in on your day off? lisa: because i love you and this is where i get information. it goes back to a fed chair powell will pop the question today. jonathan: it is all love and proposals now. lisa: yesterday, it wasn't going to matter what happens and today it is almost flipping the script. jonathan: let's talk about bearishness in the bond market. the two year and 10 year, moves of 30 plus basis points and moves a 40 plus basis points on the two-year and the 10 year. if i told you at the start of the month that that is the move we would get, more hot inflation prints and replies the yield curve higher, would you guess equities would only be down 2.6%? lisa: this has been the issue, the narrative shift around how much of higher rates can this equity market tolerate? it turns out, quite a bit. they are getting more bullish on certain risk assets because

rates are high for the right reason. how long does that last depending on a fed chair powell, who tries to be the most boring person on earth tomorrow, uses the h-word. annmarie: immaculate high for longer. this perennial goldilocks has given way to new inflation fears and that makes powell's job harder. he has said enough that this fed story this week is already in the rearview mirror. jonathan: backseat to the data and earnings later this week. amazon is really important after the bell. lisa: thank you. jonathan: i said that a few times. annmarie: are you paying for the subscription? jonathan: coming up, you heard him. we are joined shortly with stocks poised five months of gains. the upheaval of paramount. and the fed's path forward for credit. the top story is stocks are on because awaiting earnings come economic data, and a fed policy

decision with amazon kicking off things followed by the fed decision tomorrow. apple is on thursday and the jobs report on friday. solace alternative asset management, dan, how important is amazon after the bell? dan: i think that we need to talk more about it. jonathan: apparently. nan: it is one of the largest stocks with a few different touch points. aws being the crucial driver for the stock and his performance in the index and it's touch point with the consumer, etc.. i think any number of other companies, mcdonald's also reported, i think that the focus on those names does something of a disservice to the information that can be provided to a host of other companies. jonathan: do think the focus should be on the earnings or the fed? dan: now the focus is on the fed. the strong value we've had off of the low, why are we pausing

here? it comes in the context of the big rally of the low, but we are pausing because of the fed, inflation, and those concerns. earnings season has been going well enough, not awesome but pretty good, and right now that is the focus the fed meeting on wednesday becomes crucially important. i think he will be boring because he is the fed chairman and there is no other mode but boring. lisa: i find it interesting, frankly. dan: we find it interesting because we are nerds. a normal person would watch and think, this is the most boring thing ever. lisa: you said the ultimate level of rates won't matter, it is the adjustment period. guess what, you are going with the narrative that 5% in terms of where yields are now with benchmark rates, isn't that problematic for stocks? how do you those things with the importance and interest that i personally have been fed chair powell tomorrow?

dan: first of all, i share your interest and everyone else at the table does as well. you don't have a monopoly on being a nerd. don't take my word on interest rates. as this conversation has gone on i seem to be the only one on financial tv making the point that interest rates have gone straight up all year long. from 4.20 -- there has been an 80-basis point move. we have repriced. , everyone talks we were expecting six cuts and now it is only two maybe one. we are down a little bit, but no big deal. it has obviously not been a problem so far. i don't know why another 20 or 10 basis points is the straw across the proverbial camel's back. i think the stock market similarly has done well. i don't understand why getting back to your point about the short term -- i think that there is an adjustment period, a little uncertainty obviously.

inflation was stickier for a month more than we thought. we can say if you x this and it isthat -- this and that it is not that bad. i think that we need to hear what he has to say, how he characterizes the environment, before the market can resume what i think will be another push higher. lisa: do you believe that the markets rally at the beginning of this year off of the fed pivot late last year is actually responsible for some of the stickiness in the inflation data we have been seeing? dan: i find it difficult -- i think yes. how much of a contributor is difficult to prove in the data. i think in retrospect the enthusiasm for rate cuts before the data in the environment clearly called for it was probably correct. when i say probably, i mean even at the time there was a lot of

confusion about what is the rush. i think the rush is we want to cut rates before the election, sufficiently far enough from the election assuming the data cooperates. characterizing it in the way they had is probably not the best. in retrospect certainly, but even at the time you could have waited another month or two before you started getting enthusiastic about cutting rates in june. having done this, as we have, for a few decades now, the fear of markets, we don't want to be seen for playing markets. i find it silly. you could have gone another month or two before you started signaling we are interesting in reducing rates as soon as the summer.the rush to do it when they did was probably premature. annmarie: they rushed because they thought that the data was good then. the bumps, does that mean that that is a trend? three months of bumps? dan: the ultimate reason is they

thought that the data would continue moving. jonathan: we are following. dan: they thought that the data would go in a certain direction and it obviously has not. january and february were supposed to be an aberration. march was a little hotter. the pc has been better, and i think you can parse out the data and it is not as bad as the headlines have suggested, but neither is it good enough that you feel comfortable cutting as soon as the summer and that is the quandary in which they find themselves. the credit markets have been strong. i will say that as a traditional high-yield distress manager there has not in as much distress. you might not be surprised to hear that there aren't too many defaults, too many bankruptcy situations given how strong the economy has been.

there have been one offs here and there, but the default rate remains pretty low. cross credit it is a lot of finding thematic trades, not dissimilar to the equity market. we are spending a lot of time in the equity markets. the return potential seems more attractive on a relative basis. jonathan: why? dan: we have been optimistic on the energy space as a fund. from a return potential standpoint it has been more attractive to be positions in equities across the capital, across the market cap spectrum as opposed to credits. energy, distress, high-yield, not really a thing because we blew up the space, restructured, emerged, etc., etc. to get buybacks, etc., you can do well in the equity market and we have been happy with that performance. jonathan: we will have a conversation with blackrock later, but can you describe the

price action within high-yield? the are still supertight. is there worrying about the ability to refinance later this year? dan: lower credits have done better. in equity, the higher credits, the large-cap equities, have done the best. you see spread compression, outperformance on the part of triple c's, double b's, etc. speaking to the broader economic environment, but also the quality of the high-yield market is something that i'm sure that you have talked about with any high-yield manager who has come on here.the high your yield market, this is not your mom's high-yield market. it is much higher quality from a leverage standpoint, cash standpoint, everything is better today than it has been in most periods throughout history.

when most people say that a look at the high-yield market is telling you, y, z, it is hard to do that comparison to history not dissimilar to the equity market given the size of the large-cap banks. lisa: to put a bow on it, are you willing to say that all of the people are saying that this is a golden era for credit in the public space are wrong and equities hold a better risk-reward value? or are you saying that specific asset classes, like within industry, you are seeing better values in equities? dan: i look at things thematically. i almost joke at this point to say it is the golden age of private credit. in some respects it has been a golden age for risk assets. i think that that has borne out of the data, born out of the performance. i think you have a robust economic environment. the consumer has been strong. this is incredibly surprising. i don't think that one asset class is more attractive than another on a permanent basis,

although, typically, higher risk assets generate higher reward over time. i think at this moment in time for the last two years or so on a risk-reward basis we have been finding more opportunities in the equity space. it is not just energy. it is a lot of consumer focused stuff as well. one of the ways we positioned ourselves a couple of years ago, it was the focus on the dwindling excess reserves -- excess cash, consumer bank accounts that never made sense to us. the consumer always seemed strong. there was always the next shoe to drop and the next issue never came, so we found a lot of beaten up leisure and consumer-focused names to be extremely attractive. i think in a lot of respects they remain so today. i can't say specifically what they are, but i think it is not a secret some of the things that i'm talking about. jonathan: we won't ask. dan greenhaus, thank you.

let's get it updated on stories elsewhere. here is dani burger. dani: two traders in hong kong have left soft and. they discovered peerless bets that went undetected by the risk-management system. stockton did not lose money from the transactions but the trade could have cost hundreds of millions of dollars if there had been an intense market downturn. the chinese top climate chief is said to have had his first official meeting with his u.s. counterpart with tensions looming over issues from ships to cleantech. he spoke to the north asia correspondent in beijing. >> that is one worry. these climate change community. i definitely hope that the american people will support the government to stay in the climate change process, in staying in the paris agreement,

even past the election. dani: it is only going to get worse according to a new report from barclays for liquidity, functioning, and heighten volatility. it is the continuation of a trend underscored by the covid-induced dash for cash. increased treasury supply and complex dealer constraints, the strategist writing "the substantial supply of treasuries means that regulators and investors are fighting an uphill battle." jonathan: appreciate it. we will catch up with dani in 30 minutes. tesla's bumpy year. >> elon musk's opportunity to say i want to do this. you have seen the clashes between u.s. and china. to me this is a time to say i will change up this math for myself. jonathan: why more job cuts could be around the corner. live from nk city this

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jonathan: equity futures on the s&p are negative by 0.05%. the bond market yields higher by a single basis point. the 10 year, 4.62 81. tesla's bumpy year. >> elon musk saw an opportunity to go in and say i want to do this. you have seen the clashes that have been going on by the u.s.

and china. he is trying to put a foot in both sides and all of a sudden the ev's in china started to get less expensive and they had to drop prices. for me this is a way to say i am going to change up this math for myself, but also if i can be successful in this may be i get to be jonathan: the outlier. jonathan:fresh off of a breakthrough for it self driving unit in china, tesla is said to be considering more job cuts with two senior executives set to depart the company. co elon musk will dismiss everyone working for those executives with only a few set to be reassigned. we're joined now for more. that stock down 1.8%. craig, what do you think is going on? craig: this is a report by the information. we should credit them for this information. the two executives that they are getting rid of, of the two that are the most interesting to me is the executive in charge of their supercharger team.

this is a crown jewel within tesla. a company that has prided itself on not only making electric vehicles that people want to buy, but the infrastructure that will facilitate interest in electric vehicles beyond early adopters who are willing to try out something new and cope with experiences of having to wait for a plug. i think it is also interesting timing in that in the u.s., the rest of the industry has embraced tesla's charging standard that they have tried to make their proprietary plug open to the industry and get everyone on board with changing their pl ugs to fit with tesla. the rug is seemingly being pulled out from under the rest of the industry in that the person leading a 500-person team, according to the information, is gone along with

her team. jonathan: going through the numbers you have been going over this morning in europe, the mercedes first-quarter earnings down by one third, volkswagen down by 20%. are they struggling with the same issues tesla has been struggling with over the last few quarters? craig: yes and no. it is the case that the higher borrowing costs that elon musk has cited over and over as the reason for their slowdown is being felt by the whole industry. we are in a new era of -- back when the chip crisis was restricting these company's production they had more demand than they could meet. that is over. we are in a situation where everyone is producing more cars than they have demand for. that will mean pricing pressure. we have seen that more acutely with tesla where i would draw the distinction.

ev's in particular have had a much more substantial come down in price that has hurt tesla more so than it has damage the rest of the industry. lisa: china is the juggernaut that is producing more electric vehicles more cheaply and rapidly than anywhere else. how important is it for tesla that he got this in principle approval for the driver assistance system to be deployed in china? essentially, you have elon musk kowtowing to xi jinping because that is the only way this company can regain clout? craig: it was obviously a huge success in changing the narrative. we have been seeing day after day evidence of this company's earnings power falling apart. we've seen in the past few weeks tesla cut pricing in china again. analysts casting doubt as to if

there are any earnings left for tesla's china in their operations. there is the potential to get more incremental revenue out of each car that they sell, or their existing fleet to get people to pay for their driver assistance system. yet, there are questions about how long it will take for that in principle approval to be a hard and fast approval. there are questions about how much they will be able to charge.just as there's pricing pressure for the vehicles themselves in china, the driver assistance systems are pretty common in china. other car companies are charging nearly as much for this functionality as tesla has been charging in the u.s.. there is a question about how much of a revenue boost musk may be able to get out of this. annmarie: did he go to china for this reason because he wants to

show the united states that he can get approval somewhere? he is having regulatory issues in the u.s. craig: good question. it is the case he has been cozy with china going back many years now. this is a company that was the first car manufacturer that was able to set up shop in china without having to establish a joint venture with a local car company. that was huge. he was able to get red carpet treatment out of the then top person in the government in shanghai, who is now the premier of xi jinping's administration. for him to have secured that, gotten all of the help that he did during the pandemic keeping the factory open, it has been such a huge driver of tesla's success. this trip seems to send a signal to washington that musk remains

close with the ccp and is able to get preferential treatment, so it seems. -- so it seems, that other automakers haven't been able to pull off. jonathan: a lot of people have questions. how can he maintain this relationship with china at a time when we are all expecting ev's to be getting tariffed pretty hard later this year, chinese ev's coming into the united states? if the former president becomes the next president may be those walls will be even higher. how sustainable is this relationship? craig: it is a very valid question and we have to separate how much of the u.s. will go after tesla's operations in china. it seems unlikely that they would interfere with the company having some success in a foreign market. to your point, i think there is a question about how willing and

open washington will be for this to turn into a relationship where catl, the battery company in china, becomes even more of a supplier to tesla for the u.s. there is not interest in facilitating that. jonathan: thank you, sir. i just wonder how welcoming beijing will be when those tariffs start to climb. we will catch up with the story around paramount, expecting to replace the ceo. that conversation is next. ♪

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jonathan: a big day to day, numbers from amazon this afternoon. lisa: that was great. jonathan: i can do it again if you want. amazon later this afternoon. lisa: it's been a big deal. that's good. jonathan: thanks for the encouragement. the nasdaq is -0.1%. the russell is down by more than 5% on the month, brutal. repricing in the bond market this month, the two-year up by 30 basis points in the tenure up by more than 14. going towards payrolls, the estimate survey -- the estimate for friday is for around 250,000

, 240,000 which is pretty punchy. lisa: i think there is more of a focus on what kind of jobs there are. it's not just the number, it's what quality of jobs, what that pay looks like. could the average pay actually come in because there are lower wage kind of employment? this is the reason why it will be interesting to watch cpi coming out in about an hour as well as jolts tomorrow and other labor market data. jonathan: we will break that down about 60 minutes. ism manufacturing tomorrow, in some ways, sometimes the ism services index has more potential to whipsaw this market and maybe even payrolls. lisa: we saw the s&p global services come in and surprise much more significantly than any of the data. jay powell tried to be as boring as possible tomorrow. jonathan: that's the promo for our special fed covers tomorrow afternoon.

euro-dollar and dollar-yen, the euro at the moment is about unchanged at $1.07 and the data out of europe is better. they are doing better than expected in the euro is still in and around 107 -- $1.07. if i told you one dollar 57 cents a week ago, you might say it problematic. it's still a problem for the boj. how much of a problem it is i don't know. the ministry of finance has been very vocal about this and the boj's been very quiet and it seemed to be satisfied based on its communication with where policy is and where markets are. lisa: this is the reason why the market is not really believing they will intervene with any kind of conviction. that's the reason why people are willing to fight the foreign minister in the ministry of foreign exchange in japan because they haven't a strong

connection and we haven't seen that from the bank of japan. is it a victory for the yen to trade around $1.55 versus the $1.70 that people talked about last week. jonathan: dollar yen at the moment is one dollar 56. secretary of state antony blinken urging hamas leaders to quickly make a decision on israeli conditions for a temporary cease-fire. he did not disclose specifics but he said israel had been extraordinarily generous in their proposals. we talked about this a few times. there's plenty of speculation that we are closer to a deal than we have been in the past but we had some comments from the israeli leader about an hour ago which suggested the objectives have not changed. lisa: annmarie: if israel and hamas can strike this deal and based on reporting, they are meeting today to discuss this in cairo yet the president of the united states is putting

pressure on other countries in the middle east. the idea that we stop the war before achieving the goals, we will enter roff and the limited hamas. even if there is a deal, what does this mean for rafah? is the cease-fire for a few months or is the cease-fire a real cease-fire? lisa: there are many more questions than answers. we don't understand what that piece would look like or that nonmilitary action would look like at a time when there isn't willingness for anyone to step in and oversee it. jonathan: what's going on at columbia university? lisa: it sounds like there is a little bit more action with one particular building. jonathan: it happened at 2 p.m. yesterday. annmarie: some students were suspended and some students decided that they occupied one building on columbia campus. at the moment, they are still

occupying the building. jonathan: we will see how peace talks go at columbia university. you've got serious issues taking place in the middle east and you got this taking place at columbia university. lisa: it doesn't really feel comfortable and yet it is one of the biggest political debates in one of the below biggest political liabilities for joe biden. it's raise the question about universities being the heartbeat of intellectual thought at a time when people are arguing there is not actually an exchange of ideas going on in an active way but rather it's a lot of people who are kind of hunkered down and not wanting to discuss it. annmarie: this is difficult for joe biden in november because these are the individuals, young progressives that would vote for him and this is another reason why decides the humanitarian issue in gaza but domestically, is another reason why they want to get. this deal over the finish line jonathan:+ before christmas, it was nailed

when it was said this is not about freedom of speech, it's about preferred speech. let's turn to the federal reserve, day one of the two day meeting for the federal reserve, widely expected to keep rates on hold. we are looking for a hawkish tone from jay powell tomorrow. elsewhere, a people at paramount, shares are lower in the premarket as the company replaced the ceo with the management committee and they will lead the company as they negotiated potential deal with potential individual producer sky dance media. bloomberg intelligence joins us now. the big exclusive, the earnings call, can you describe what happened on the earnings call yesterday afternoon? >> thank you. this was unprecedented, this was the shortest call ever i've seen

in the history of media earnings, about eight minutes long. it was bizarre. there was the management committee that spoke briefly then you had the cfo delivering the results. there was absently no question from the analyst community and the investment community so it was really more not what was said but rather what was not said which tells us that a deal is imminent. jonathan: can you talk to us about the so-called management committee, this trio of executives? who are they and who do they represent? there were reports of the former ceo is not happy with this deal that was on the table. do we assume these three are happy with it? >> i don't think so, the leadership committee is kind of a stopgap arrangement. it's definitely transitory and it's not the long-term strategic direction that sherry redstone will take or that sky dance will take. the three executives are really

just the division chiefs at paramount so you have the cbs chief and chris mccarthy from mtv and some of the other networks and then you have brian robbins. they been leading the different divisions but you are right, bob bacchus vehemently opposed to sky dance deal. he protested against it with sherry redstone and that ultimately led to this ouster. lisa: will this make us more comfortable that this was a short call and we don't have a clear sense of the deal and we don't have a sense of who the permanent leadership will be going forward? >> i think it's pretty clear at this point, there is this looming deadline so may 3 which is this friday is when the exclusive negotiating period ends so they are looking to get something done right before that. that's why you had that whole leadership change and they are working hard and sky dance

sweeten their offer a little bit. they are now offering $3 billion of cash infusion into the country -- into the company to s wage investors and it looks like sherry redstone has said she's open to this majority of the minority vote which means she's actually allowing the nonvoting shareholders to have a say. this is a way to appease investors who have been very opposed to this deal from the get go. lisa: is there something away that we can take as a broader message as to what media looks like going forward? sherry redstone was concerned about bob package earlier because he didn't sell showtime and bae t -- nbt earlier. in terms of streamlining operations and developing popular content, is this a matter of simply jettisoning units that are not as profitable or is it about investing in original content or is it about being sold and done with it? >> parent dish paramount has

unique set of challenges. all of these companies were kind of faced with this difficult challenge of pivoting away from their linear tv network business to streaming and some comedies can do it better than others. disney has been fairly successful, warner bros. discovering that a fair amount of success. paramount is not really been that lucky. that's been one of the criticisms leveled against bob bakish. he managed to get 70 million subscribers on the paramount plus service but it's come at a huge cost. the streaming business has lost $5 billion. that's since its inception and it's highly doubtful it will ever be profitable. should paramount have even undertaken the streaming strategy in the first place? it's not the right strategy for everyone and not for paramount. they should have been a content arms dealer. that's the criticism against bob

bakish for doing what everybody else was doing. lisa: we hear about sky dance but what's the status of the apollo bid? >> i think there hasn't been any formal offer from them after that $26 billion offer which was rejected by sherry redstone. i think they are waiting for this may 3 deadline and then they will come out with a more concrete offer. rumor is they are working with sony to lift that offer a little bit, up from 26 billion to maybe $29 billion or higher. we don't know the details yet but we will hear from them later this week. annmarie: three feels like a crowd so who holds the power in this troika of ceos? >> i don't think it matters. ultimately, the powers held by sherry redstone. she calls the shots. jonathan: we've seen that

demonstrated quite clearly in the last few hours. thank you so much. the biggest thing potentially happening in media and the last week or so is the most obvious thing that should have taken place a long time ago which is the super bowl taking place on presidents' day weekend. roger goodell proposing for years and why isn't it held on presidents' day weekend? lisa: some people will have to wake up early the next day cannot watch the whole thing jonathan:. it's not just about me or you. it's like an all day breakfast at mcdonald's. it's obvious. the brit had to come to america to run mcdonald's and that makes sense. annmarie: all day breakfast in the united kingdom? jonathan: this is like the all day breakfast decision of the nfl. it's so obvious, get it done. lisa: is the goal to get more viewership? i think they did pretty well. jonathan: you would get even more this way. you can wake up in monday and do what you want. lisa: that's your ultimate goal

because you are a party animal. jonathan: a big partier, everyone knows that. let's get you a bloomberg brief. dani: i don't know what to say to that but what i will say is i can check summer earnings. samsung is up 1% with another case of ai powered earnings. the semiconductor division return profitability and income rose more than fourfold from a year earlier. demand for chips to develop ai has been insatiable as samsung says there are no signs it will let up this year. if ai is one unrelenting earnings boost, weight loss drugs are another. eli lilly shares or higher bite 6% in the market. it pulled in 517 million dollars of sales for the drug and it had similar success with this other weight loss diabetes drug. file lily shares gained 26% this year. walmart is abandoning plans to build out a network of low-cost

health clinics. it's said escalating costs and reimbursement challenges were to blame. they will close their telehealth business on walmart launch the initiative in 2019. last year, and promised to open more than 75 centers across the u.s. by the end of 2024. that's your bloomberg brief. i will send it back to you, party animal. jonathan: nobody believes that. i'm the first one in bed at 7 p.m. lisa: this guy goes to a bar and has peppermint tea. jonathan: that is a true story. everyone thinks you might be having a drink. lisa: you're getting wild. jonathan: getting ready to be back on air monday. who was sitting me next to me on the plane monday? lester holt. just to have a good voice monday for the audience, annmarie: some of us were asking

the president questions. jonathan: making the case for credit. >> the case can be made that we are looking at forfeiture and better financial help. i think credit has a space. jonathan: that conversation is just around the corner, live from new york, this is bloomberg. ♪

♪ jonathan: equities on the s&p 500 are negative by 0.1%. yields are slightly higher. later this morning, the employment cost index dropping at 8:30 a.m. for the first quarter and michael mckee will break that down later this morning. making a case for credit -- >> can fed terms, they are looking at tight spreads. the case can be made that we are looking at corporate switcher in better financial help than they have been historically.

i think credit definitely has a space despite how tight it is from an all in perspective, there is room for jonathan: credit in portfolios. investors are awaiting the fed decision tomorrow. the central bank will keep rates higher for longer. policy normalization -- she joins us now for more. this is brilliant, not all rate cuts are created equally and not all delays are either. is this a healthy delay? >> thank you for having me. so far, it seems like it's a healthy delays because it supported by growth. the longer these rate cuts are postponed, the more credence we get to the possibility of rate

hikes. that uncertainty around monetary policy is just not a great backdrop for credit and not about drop for m&a ordeal debt -- or dealmaking. its clarity on the macro we need, not necessarily a favorable macro in terms of rate reductions. the clarity is key and that's what we're focused on. jonathan: we've had a pretty resilient credit market in the face of repricing. what's behind that resilience? >> resilient growth is one of them and that's been important for speculative issuers. issuers have more of a cushion it can handle a downturn in growth and high deed -- and high-grade and growth not so much. we talked about the yield backdrop and spreads are tight but yields are really attractive in the context of the post covid era. if you are looking for yield, it's been an attractive area to deploy credit. you can deploy capital into credit but it's not been resilient across the board.

you earlier were talking about cc's, it's true they outperformed on a total return basis but that's largely been driven by rates because ccc's are less sensitive. if you isolate credit spreads which i argues a true measure of credit risk,ccc's have been lagging. it would suggest that triple sccc' shoulds be higher. on a spread measure which is isolating the credit risk has not kept pace with the tightening over all which is also true in the loan market. the market is efficient and tell you not all these companies can be higher for longer the same way. lisa: there is some concern about a lack of clarity about what what the path of rates will be and how punitive that could potentially be for companies. earlier this morning, we were talking about how michael mckee

will ask the fed under what circumstances can you imagine ever hiking rates or is that off the table? do you think that could really cause a massive dislocation in credit if he answers yes? >> two things i'm watching for tomorrow and one is is there an acknowledgment that we are at peak policy rates? maybe the chair wants to step back from overstating that. the other is how patient they will be to get down to their policy objective. how anymore months of this kind of middle ground of not sustained real acceleration but not declining inflation can they tolerate? that's what i watch for tomorrow. as it relates to credit, it will have implications but i would expect that theme of dispersion not widespread market disruption to remain intact. the interesting point so far this year is that over 30% of the defaults we've seen in 2023

has been repeat defaulters. these are companies that have previously filed and they are filing again or have previously competed -- completed a distressed exchange and they are doing another one. a lot of these companies under stress are not coming as a surprise to the market. so long as we have this higher for longer environment, what you would expect is the same troubled sectors like capital structures that were kept afloat by low rates but are not actually growing in an efficient way would remain under stress. does that cause broad market disruption? what could cause that is a sustained react just re-acceleration. lisa: we were saying earlier that this is not my mother's high-yield market. this has changed and essentially we are looking at something that has grown up and become better polity. has the risk migrated to better credit where you have a higher degree of less tested companies? >> i don't think the risk has migrated to private credit. in syndicated high-yield in

syndicated leverage loans, you can find vulnerable companies anywhere. what we are seeing is an overlapping of the addressable market between public and private credit where companies are demonstrated -- demonstrating access to both. ccc's, interest coverages one.1 times. for most of the credit market, we don't deal with a 25 or 50 point rate cut as significant but some companies need that and what the market is telling you is that on the margin, there will continue to be dispersion. i think there are some themes like the repeat defaulters we mentioned, loan only capital structures have been leading the charge in terms of defaults which is not surprising so there are pockets of vulnerability you can find but i don't think it's a wholesale shift in risk. jonathan: can you give us a

perspective on the all in risk? >> on a percentile basis, using the post financial crisis time, it ranks around the 80th or 90th percentile based on the region and the rating you are seeing. it's saying that 80 or 90% of the time, yields have been lower than where we are now. on the spread perspective, it's the exact opposite where we are kind of hovering around the 10 percentile. spreads have been wider-- jonathan: is it a good opportunity or not? >> this is a great opportunity. it's a great opportunity to deploy on an all in the yield basis but the opportunity for material spread tightening is pretty limited given that we are at 299. the average for high-yield is for 60. jonathan: do you see investors migrating to your world? we were talking earlier about

energy and the opportunity was better in equity than it was in credit. can you describe a similar dynamic? >> on the margin we see the opposite where we see equity investors take some chips off the table after some strong performance and deploy it into credit to lock-in yields. the conversation can go either way but it depends what the risk tolerance is. jonathan: we appreciate the depth, thank you. the big opportunity in credit and the risk on the horizon and companies who struggle if we don't get that rate cutting cycle anytime soon. lisa: you could see high-yield bond yields below 4% after 2021. 3.7% in yields and now they are 8%. that is the yield opportunity people are talking about. jonathan: a massive change, the third hour of bloomberg surveillance is around the corner.

we are looking forward to the big earnings story of the week, amazon. two names making up 10% of the s&p 500. annmarie: so violent after all of the earnings. these are $200 billion moves. jonathan: trillion dollar moves. tesla struck a deal with baidu in china, 50% higher off the back of that. lisa: i don't know what to make of some of these moves or the legitimacy. jonathan: is 10% the new 1% for some of these tech names? from new york, equities just about negative by 0.1%. you are watching bloomberg surveillance. ♪

and they're all coming? those who are still with us, yes. grandpa! what's this? your wings. light 'em up! gentlemen, it's a beautiful... ...day to fly.

>> maybe they continue to crush it at every angle. >> these companies have a ton of cash. >> when you have birthrates accelerate, they get anxious the.

>> that is what people are looking at. west mayor focus on other things. we are willing to trade rate cuts for earnings growth. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: beginning in 30 minutes time. it is important, just not that important. the index, 8:30 eastern time. far more important today are after the closing bell. the data starts to heat up. on jobless claims. lisa: it will be about how this comes together, whether it confirms the v acceleration inflation that we are seeing and how sustainable some of the

inflation we have seen really is. emory: north of what they are looking for, with jobs. after we had more than 300,000 last month. tearfully, how sustainable is the job market? i'm so keyed in about what this means for immigration in this country. really keeping a lid on inflation. jonathan: it is the compare and contrast of what is happening at payroll and what is not happening with wage growth. even though we are printing about 200 every single month in this economy. lisa: that is why the employment index coming out is so important. it is one of the key metrics that the fed looks at. it gives you the sense that disinflation with employment gets really challenged. jonathan: it begins in 28 minutes time. negative by 0.1%. quite a repricing so far.

some of that fades just a touch. better in mind through 470. big moves in april. lisa: what will give a sense of what we can really depend on when you have these massive moves and pretty substantial instruments. we moved yesterday on a refunding announcement from the treasury department that increased borrowing more than people expected. the market moved on that. it gives you a sense that people are skittish. jonathan: which frog? that is good. saying that they behave like small caps and treasuries behaving like penny stocks. coming up, on tech earnings

divergence. previewing our earnings. more earnings from big tech. i still see upside, but we will have to be driven by earnings growth from here. so far the upside has been narrow, but i expect it to broaden out as we have better participation from other sectors beyond the services. good morning. we are not talking about seven but five. >> apple and tesla have been a drag. it is the five stocks. if i look at the earnings, all of their earnings growth is five stocks again, so we are back that story that we had for two and a quarter years, where they are not giving as much to get excited about, but i think that will change as we go through the year.

part of it is, the only way that this demand for ai and technology can be sustained is if the customers get a return on investment. they are not going to continue pouring, unless they see benefits. how quickly do we see those benefits? do they show up? i'm a little skeptical and hopeful, but more importantly, as we look at the prospect of rate cuts, not just rate increases, shifting and statements in the market. the are seeing ongoing demand that has shifted and it should broaden earnings growth. lisa: a lot of people are talking about it. it got pushed out three months and then another three months. rea in purgatory until we get the sense that they are going to cut rate? >> i guess this is where the key

underlying inflation is. i fully recognize the first quarter. january, we thought, maybe it is a january anomaly. february was much better about march was crushing in terms of optimism. service inflation in the fourth quarter to 8.7 in the first quarter. 1.6 to 4.4. as we move through the year, you will in easing uptight. one of my favorite anecdotes, auto insurance has been 80 basis points of the 3.8% core cpi. 3.5% of the index. auto insurance will go up for the next six months but not at what was analyzed. lisa: what would you have to see and some of the numbers coming out?

going to the payrolls report on friday, but what you have to see to change your view? >> we want to see, back to the data, it is best -- one of the best metrics for wage growth. it also works better in terms of adjusting. it can be skewed. that one is probably less valuable. basically anywhere from 90 to 100 basis points meeting. it will spook the markets. questionable in terms of reliability. 65 to 70%. some people question if the data is reliable. i like to watch the rate. are people finding better jobs? is another anecdote.

friday, legally and see. we need 130 to 140,000 to keep pace with population growth. if we get more positive revisions, that will make me more nervous. if i take this alongside the data outside of europe this morning, upside surprises. positive commentary coming out of china. there is a risk of a v acceleration. annmarie: do you think europe and china i catching up to the u.s. exceptionalism that is petering out? >> that might be a little too optimistic. it is really great, but i do think there will be improvement. i think the case for the ecb cutting rates is a lot stronger. we are not debating whether europe is to be accelerating. it is clear there going from

zero to something low on growth. i think you are going to get 100 basis point rate cuts and very importantly, monetary policy decisions have a more immediate and undefined impact than the u.s. because a lot more of the household debt is floating rate. lisa: your base case is that you are going to get me cuts. what is the playbook, if you see that we acceleration and inflation and that case comes to play? >> i think the fed keeps rates where they are. i do not buy into the hawkish thesis at all. i think it is plenty tight in real terms. again, i appreciate the question, but when i look at the data, there is one part where there is a lot of uncertainty. if we look at the shelter inflation, we know that

inflation has basically declined sharply and has not shown up in the cpi but there is a lag. based on zillow, we know inflation has gone from 16% to less than 3.6% for the last nine consecutive months. we know that part of inflation is coming down. we know prices are going to be soft. what piece it together for basically 69% of core cpi, i know inflation is staying lower. i have a hard time with a thesis that overall, excel -- inflation is accelerating. i think we would be better off kissing on what is the base case? there has been a lot of progress. i think it is time for the fed to start focusing on the other leg of the mandate. the job market is strong, but if we could have 2.5% unemployment rate and still get to the target, that is what we should be thinking about.

jonathan: plenty of progress. plenty tight. how much evidence is there that it is a supply-side story and not a demand one. >> i'm glad that you went there. the consensus for 2024 is 2.4%. 2.4% for this year. there is a lot of optimism for economic growth. but there are signs of cracks. mortgage and credit card delinquencies are up. again, from a very low base. wall street journal this morning, there was another article about how many commercial real estate loans. and hundred 21 billion dollars. you will see defaults on commercial property. we saw another bank failure in the last week.

we will see more bank failures. there will be stories that come through that chip away at some of the optimism. it is easy to get caught up in the data to say, what tightness? but monetary policy asked with variable lags. i think we are going to see some of them come into play. corporate's actually find carrying these interests gets pretty difficult. jonathan: thank you. love a real-time conversation supported by bloomberg at the terminal. let's get an update on stories elsewhere. dani: expected to become the richest ever u.s. inmate. facing sentencing today after pleading guilty to money laundering and sanctions violations. he is expected to be worth three $3 billion.

his lawyers are arguing for probation citing a lack of precedent for incarceration. boeing raised $10 million. it will help to ees some of their financial strains. the outsize demand was helped by billing dangling the yield premium. it is a sign that the credit market is wide open. insatiable demand continues. goldman sachs is in talks. yet another major step in the efforts to pull back from consumer lending. the credit card unit had lost about $6 billion since 2020. they could strike a deal with gm as soon as this summer. that is your brief. jonathan: i always wondered why goldman could not come up with

it. you think luxury and you think goldman sachs. why did they try to go mass-market? lisa: my gut is that they are asking themselves that question in considerable amounts. you have to think, maybe they are trying to broaden out. so it can move and to get some of the other business. jonathan: i never thought mass-market, goldman. lisa: a lot of people would agree with you. jonathan: working towards a cease-fire. >> we are approaching an inflection point. it will have a cease-fire that provides hamas with jonathan: a victory of survival. that conversation just around the corner. in morning.

♪

jonathan: lisa has strong thoughts about domestic animals on farms. a tough story. if you're not familiar -- you would guess that it is probably true and it is. the top story in american politics right now. negative by -- yields about unchanged. 13 minutes time now. we will get the eci. under surveillance this morning, working towards a cease-fire. >> we are approaching an inflection point. the deal that is made involving significant concessions has increased the likely number of

palestinians released. it will provide hamas a victory of survival. the next few days will be important. jonathan: benjamin netanyahu vowing to launch with or without a deal. releasing a statement saying the idea that we stop the war before achieving our goals is without question. joining us now. greg, two hours ago we were hope we were close -- we hope we were close to a resolution. what are the prospects or chances of getting a deal today? >> not great, john. i think we have a ways to go. maybe antony blinken was right. there were some generous parts of the deal but nothing -- benjamin netanyahu was not going to sign this after all you have been through.

i still think there is a ways to go. annmarie: what is the biden administration's plan b? they have been trying to get this deal over the finish line. >> they will just continue the pressure with antony blinken. this has reached a point that the political damage to joe biden is significant. you have to conclude, based on joe biden's falling numbers that if the election were held tonight, trump would win, maybe even overwhelmingly. this is where democrats in washington are concerned that it may not just be the white house. it could be the senate in jeopardy this fall. annmarie: i vote over the weekend about his meeting with ron desantis. how difficult is it for him right now in terms of the cash that he was able to bring in?

>> i get the sense that the chemistry between desantis and trump is good. there are so intriguing names. one name is j.d. vance. i think he is the favorite but i think you have to say that -- annmarie: she was the one that you left off. even greg abbott gets a mention here. greg, why did she do this? why did she admit to killing a puppy on her farm? >> to kill a family pet and then to show that she is tough and is not going to back down. this was really tone deaf. i think basically her political career has crashed and burned in

the last 72 hours. annmarie: you have never seen the left and the right -- unite the way it has when it comes to the governor of south dakota. out of this list, who do you think trump once attacked? the vp could bring a voter base. who would be the best in terms of trying to expand his appeal to the american public? >> i would argue to expand his appeal, he has to take another look at haylee. wouldn't that be something if he persuaded her to join? they talk regularly and become very close. vance come a few years ago was a fuse critic of trump and now he is a big supporter. they do not need him for ohio. i think the republicans are in good shape. i would put vance as the number one contender.

annmarie: do you have an idea of when the trump team will come out and announce the pig? >> probably the day before the convention starts in july. he will just keep people on edge before he makes the announcement. i do not think he has picked anyone, in his own mind yet people need to get vetted. i think trump will wait until the very last minute. lisa: there is a question on both sides of, what is the mainstream for either of these parties right now. on one hand you have donald trump floating ideas of independence and threatening all kinds of potential tariffs and on the left is a question about what the protests on

universities means and how much that will be used by trump against them. can you give us a sense of who the ideal democrat is that represents the majority of the mcgrath and who the republican is? who represents the majority of republicans? >> i would say trump represents the clear majority of republicans, no doubt about that. the polls have shown a little bounce for trump. on the democrat side, it is difficult to say that there are a lot of first-rate offenders. there are several that would be intriguing and moderate, the big little story to me is the polling numbers. the polling numbers have taken a sudden dip provided in. i think they are in real trouble now. jonathan: some people are confident about the idea that there are independent centrists out there that just not decided.

the president's pitch, meet or democracy. democracy is on the ballot. let's make the right decision. we have heard that pitch repeatedly. they think the closer we get to november, the more it will land with independent centrists leaning his way. you believe in that? >> we will see. both of these candidates are infamous for their gaffs. we could hear trump talking more about controlling the federal reserve. there are all these wildcards that crop up. two numbers have stood out to me the last few days. young people turning against trump or against biden. if young people turned against biden like they are now, it will be hard for him to win because he is not doing well among hispanics or african-americans.

he has a big pulling problem there. i think it will take a very concerted effort to see biden pull this out because the other issue is that more and more voters are saying under no conditions will be vote for joe biden. the poll that showed that was quite striking. people are saying no, there is no way i could vote for him. i would vote for robert kennedy before i voted for him. jonathan: we will catch up with you in the next few weeks. hardly any politicians write their own books. they sit around a table and to say, give us an anecdote, a story about the time that you made a tough decision. can you imagine sitting there thinking, i have a good idea. they put it in the book.

all the advisors sat around the table, read the chapter and said, that will land really well electric. lisa: what would be even better is if you took the goat outback afterwards. jonathan: it is like, what are they thinking? you will see more gaffs between now and november. ahead of the federal reserve tomorrow, payrolls on friday. eci data just around the corner. ♪

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jonathan: they are still talking about the dog around the table. we are late to the story you know? equities right now down by 1/10 of 1%. employment cost index which lisa promised is the most important economic data point in the week ahead. of the day. correction, of the day. eci drops. told you it was important. here is my with more. mike: it is the wage, salary and benefit number. forecast was for 1% rise.

the previous month from wages and salaries increased for the year in march 20 conform. compensation cost over all were up by 4.2 percent. a decline in those numbers, so it does shows some progress but it falls into the category of not confidence building for the fed as they tried to decide when they want to get to cutting interest rates. jonathan: the opening bell is about an hour away. switching up the board and going to the two-year. back through. 10 year fi five basis points. getting closer again at 466 on a 30 year high. the euro pulling back at 106.93.

you probably want to see what is happening with the dollar-yen. that has broken back through. positive by 0.6%. the cost index coming in at 1.2%. the estimate was 1% flat. the last big data point going into the federal reserve tomorrow morning. lisa: it challenges the idea of disinflationary employment. it shows that wage pressures are still there and what you see is the two year yield which suggests that the fed will need to have a more hawkish tone tomorrow. jonathan: they will have the manufacturing number as well. i believe they will have the adp as well.

they will have more data elsewhere. how could this data change the conversations on the margin away from where we thought it was going a week ago? mike: it changes the conversation over a period of time. it shows we are seeing wage pressures in the economy coming down alive. they were down in the first quarter of the year and they had been up by a lot less or a lot more last year. there is still pressure out there. everybody kind of waits till friday to see what we really get. the numbers will be interesting. we will see what the employment figures are paring it is not necessarily something that they want to see as commodity prices rise but it will not change -- it will change wednesday.

jay powell needs to keep his mouth shut and not say much. i think that will be the bottom line for tomorrow. i would give him credit for that. if he says, i'm side, i've been told to keep my mouth shut, that would be great, wouldn't it? lisa: there has been a discussion around a lot of the nation rates we got out of the first quarter. certainly on the insurance side of things and a host of other metrics. is there anything that is technical about people getting wages in the first quarter anything like that? mike: not that i have seen in the numbers so far. " 1%. it was -- a year ago was 4.8%.

45.1% rather. we are seeing declines, but it fits into the narrative that we have seen that inflation has flatlined. it does not look like it is breaking out. story of continual inflation is taking a breather. why do they think that is? why do they think it will resume? jonathan: picking this data down. welcome to the program. employment cost index coming in a little hotter than expected. coming in at 1.2%. the price action and reaction to it, negative on stocks. on the nasdaq, down 5% on the month so far and this morning,

down another full percentage point and change. lisa spotted this straightaway. by three to four basis points. for now, this is the first move. we have breaking out for some authorities, including the japanese ministry of finance. positive on the currency pair. stronger dollar on the screen at the moment. the dollar is stronger. looking ahead to the federal reserve tomorrow. let's talk about the data that we just got. >> it is a 10 to a very bad

dream. evidence that the inflation data , the wage growth data is moving in the wrong direction to be consistent with their target. you got a lot of hints of that with the q1 inflation data. the saving grace might have been that if they showed continued signs of cooling, but putting all that data together will be very hard to not lean on little bit more hawkish into these figures for them to not see progress on inflation that they need to be confident to ease policy. lisa: we are looking at av acceleration where we believe there will be a vapid deceleration and a significant rate cut. does this make you rethink that?

>> you have seen the start of this year, gdp growth came a little softer than expected. i would call that a pretty strong economy. they are cooling but at pretty solid levels. they can have confidence that inflation moves back to target. lisa: some of the employment numbers have been entirely driven by immigration. we have gotten it without inflation. do you think that the data that strips out some of the wage adjustments we are seeing really presents a significant problem?

quest we get a lot of data through the corner on the labor market and wages. it is when you get to the employment cost index. that is by far the best measure and indicator because it controls for composition. it is not perfect. maybe they are seeing some distortions in the first quarter due to bigger gains but this is supposed to be the one the fed hangs its hat on to tell us where wages are going. annmarie: it's companies are keeping up with a higher cost, could this spell layoffs? ? we are seeing is that the labor market has been strong in terms of hiring. ages have been pretty good and that is fueling consumer

spending, which in turn is fueling more strength in the labor market. right now, we are not seeing much appetite for layoffs. more likely is that you get an environment where the economy stays resilient but inflation is stickier than expected. jonathan: can we talk about some of the numbers we are expecting to get over the next few days? friday payrolls. what is the team focused on? mike: we are focused on friday's payrolls because that will tell us how tight the labor market is and whether the wage pressure will continue. if we continue to get the same kind of job creation, unless there is a big addition to the labor force, it is something that the fed will be watching.

it has been coming down. the fed will be less concerned about that. less about the creation number that are going to attract the most attention from policymakers after their decision. jonathan: good to catch up with you. going into the federal reserve tomorrow. rob, you have north of 200,000. what is guiding that view? andrew tells us this all the time. >> we are expecting the labor market still hold up well. the idea of the economy slowing is that we are starting to see a few cracks. if you look at some of the small business indicators that we

track, they are looking worrying. it would argue that hiring is likely to slow a fair amount. that being said, they have been going against it in the first quarter. over 200,000 is a fairly strong number. that is kind of the basis for it, but right now it is holding up fairly well. lisa: there has been a debate about whether fed chair powell will be interesting at all or if he will answer the question of if a rate hike will be on the table. you think we are sufficiently restrictive. does it have to indicate some level of retracement simply because you need and economy with a market that really does

selloff? >> for the fed, you have heard them say that they would rather hang out at these levels for longer than to raise rates again. i do not think it is completely off the table. it would take something like an acceleration and a continued acceleration to really get that conversation on the table. i think they will say that they feel restrictive but they could hang out longer if they need to. lisa: he think he will come out and make people feel a little bearish? >> i think he will be a little bit boring. not to say the fed chair is ever boring. but basically saying exactly what we were seeing. that the economy remains resilient.

jonathan: just for the people who make the promos in the newsroom. a little bit later. take the guess that we had this morning. suggesting chairman powell should not even speak. good to see you, sir. nothing boring about the last 15 minutes or so. one point 2%. the estimate in our survey was 1%. yields breaking through 5% on a two year. let's see if that sticks. 5.0 on a 10 year come up by five basis points. yields are up and stocks are lower. down on the s&p 500. we briefly run through. back at 107 06.

right now, dollar-yen is back to about 157. a weaker japanese yen. let's get an update on stories elsewhere. here is dani burger. dani: ahead of the decision, something they are unlikely to get. a trade-off between cuts and currency depreciation. >> may see one or two may cuts. really, they are going to change their language. they need a positive real rates spread. there is a limit to what they can do. dani: you can watch every day weekly. the race for broadcast rights is

on. that is according to the journal. warner was unable to reach a new agreement before the exclusive negotiating period closed last week. amazon is running to receive some playoff matches. the caitlin clark matches are the most important. elon musk gained more than 37 billion dollars according to the bloomberg billionaires index. jan musk added 18 point $5 billion to his fortune yesterday alone. he is close to overtaking second-place jeff bezos. jonathan: up next on the program, amazon in focus. >> let's not forget that a big part of amazon is advertising.

it will be interesting to see how it evolves this year. jonathan: equity futures pool and back by 0.4% as we close out a messy month of april. from new york, this is bloomberg. ♪ a future where you grew a dream into a reality. it's waiting for you. mere minutes away. the future is nothing but power and it's all yours. the all new godaddy airo. get your business online in minutes with the power of ai.

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jonathan: some data about 20 minutes ago. 1.2% against the estimate of 1%. the margin will move lower down about .2%. up by a little bit on the front and. up by three basis points. with those high yields come a stronger dollar. again raking out. at the moment on the session,

positive by 0.6%. under surveillance, amazon in focus. >> a beat -- a big piece of amazon today, roughly $50 billion at the end of last year. interesting to see how it evolves. the strategy is some kind of an up charge. they have a built in audience. they do not have to pay much to acquire it. jonathan: analysts are expecting a sales jump. the results will also be the company's first. joining us now for more. what are you and the team looking for? >> advertising and services are

important for profitability. and those other numbers we are looking for. lisa: how much do you think that is cannibalizing from amazon? question i think expectations for amazon services is very high rate now. amazon does not have the same kind of relationship. the second thing is, the size of the services is extremely big compared to the other vendors. it is possible that they may be able to slightly beat them. people may not like that. that will be the biggest thing for us to focus on. lisa: what about when they were advertising on u.s. platforms? how much are you watching the

potential retracement of that spending? ? a lot of people, they are going straight to amazon and searching for products giving them the opportunity to monetize on it. that business has gone from nothing to over 50 billion at this point. it is expected to grow this quarter somewhere around 24, 20 5%. i think there will be a lot of discussion around it. one of the companies saying it is not doing it. it is very difficult to predict. jonathan: what is the move towards dividends that we are using for typical buybacks? where is that coming from?

>> either you buyback shares, which they all do -- the second area would be to give back money to dividends. jonathan: we cannot buyback our own stock, so let's introduce a new dividend. lisa: they are just looking for new ways. you know, amazon. jonathan: the week started 23 minutes ago we got data on the index. things got busy from there. the job openings report is still closely followed. you can talk about whether that data is good data or not but it is closely followed.

lisa: a lot of people focusing on the quits rate. the data has not been friendly to what the fed is looking to do. not exactly a nightmare, but it is a bad dream for the fed. it is hard to strip out. this is something they have looked at in the past. annmarie: to your point earlier, the fact that the supply side, potentially, it is not. jonathan: there is a great deal of comfort in these numbers and not getting carried away about wage growth. they are taking comfort from that. whether they should is a completely different debate. lisa: the biggest jump in a

year. above anybody else's estimate. at a time when people are really holding their hats. jonathan: earl davis has been phenomenal on the bond market so far. some interesting views on the federal reserve. lisa: they could see a fund may 6.5% with rate hikes coming back on the table. you cannot get any sense of what paradigm we are in. jonathan: point ice cold water over the news conference. i know i am meant to say this, but i disagree. i think it will be quite an interesting news conference. you have had news conference

after news conference where he has been able to refer to these upside surprises as bumps in the road. it is very difficult to do that anymore. fed officials start to think out loud about the prospect of staying on hold for a lot longer than they thought they needed to and may be considering the need for higher interest rates down the road. i do not think they are a base case of anybody's, but most interesting about how the chairman never gets difficult questions. that is a difficult question at the moment to navigate. lisa point get ready for a rip roaring valley. jonathan: that is the lisa promo. live from new york city, thank you for joining us. have a wonderful day. this is bloomberg surveillance.

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manus: a very good morning. it is count down to the open. top the bonds. these equities wobble. we will talk you through the moves as the countdown to the open kicks in right now. data coming in hotter than expected. equity futures lower as stocks approach the first monthly decline since october. counting down to the fed. >> we all want certainty. we look to the fed as some oracle and what comes out of his mouth, people want