>> i think the labor market is holding up fairly well. >> you will see in easing uptight. >> we need to draw a huge distinction between normalizing the market and weakness. cooks better balance in terms of supply and demand. >> we can't continue to see 300,000 jobs. i think we need to see a little stabilization. >> this is "bloomberg surveillance." jonathan: payroll report 8:30. good morning for our audience worldwide. this is "bloomberg surveillance." s&p 500 is positive. three month average on payrolls, 200 76,000. the estimate this morning for april, 240,000.

>> what is the distance between an inflationary narrative and something similar to goldilocks? that will be the key question. what is the difference in terms of how big the change has to be in the number for people to either be talking about gloom and doom or everything is perfect? annmarie: he said stagflation risk off. if it is north or at 225, goldilocks back on. jonathan: he does not detain stagflation. looking at apple. up i almost 6%. sales declined less than fearful. let's talk about the financial. the biggest stock buyback ever. $110 billion. the top five biggest buybacks in the history, it is apple, apple,

apple, apple, apple. lisa: is this a growth stock or value stock? is this a stock that has so much money and a company that has so much money the best thing you can do that is give it back? that will be a key question of how you value some of these names that have become more established in their upstart beginning. annmarie: it is a massive buyback but it is only 4% of total market capital of apple. richard windsor calls it fat whittle age versus fighting for survival. basically what this report shows, they are stabilizing and there is no growth. jonathan: is that what just happened? just to clarify. morgan stanley, going to get in trouble here, alleviated concerns about china, notable improvement in china jp morgan better than feared launchpad into the ai upgrade cycle. this is what it's about.

what today and bill in september? is that going to be the character over at the stop for the next six months? lisa: how much earning season as this been a measure of how much was baked into the stock price rather than what they delivered? they did not deliver any kind of gain. they expect a sales gain but you don't necessarily see this potential for gangbusters growth in china. the most competitive market in the world talking about how they are going to have to try to compete. it is an interesting moment in terms of a redefinition of a company that used to be absolutely skies away fighting for your life. jonathan: china's a bit of a mystery. we will talk about that in a moment with our guest. s&p is positive. these scores look like this going into payroll -- coming up on the program, chris verrone. pierre ferragu on apple's record-breaking buyback plan. in sarah house with the payrolls

report on deck. we begin with our big story, chris verrone saying this. at a minimum, be more discriminating as to what you own here and use any overstock rallies to reduce exposure to clear laggards as that listed starting to grow even longer. chris is with us. good morning. before we get to payrolls, what can we take away from apple this morning? >> where the stock opens today will be a big level. he broke -- it broke early this year and clearly will bounce there and open about 185 this morning. i would probably be more inclined to be a seller on that move or at least take some chips off the table. this was not a good trend going into these numbers. we are skeptical things rally and downtrends and apple fits that description. i would put microsoft in that camp to be fair. this is a stock people talk about as a leader. microsoft has not made relevant since november.

that is the fact. it made six-month lows versus the s&p. there is a subtle shift change that has been with us the last couple of months. i think it has become moreover in recent weeks. tech stocks are oversold. what you do on dowsers? i think you what to reduce your exposure. jonathan: equal weight versus theq's? >> that is starting to flash on my post of the narrative has been a lot of these tech earnings -- with google, microsoft. anything versus qqq, you are starting to see would people would least expect it is correct face, start shifting subtly. if you look at equally weighted tech, that broke about a 15 month relative performance of trend over the last few weeks. i want to be aware of that.

this is not an outright call to be a seller of tech but to be more discriminatory. this was easy in tech in the last year and a half. lisa: i was they can, how does this make sense given people expect rates to remain higher for longer? from a theoretical point of view , how does this make sense? >> i might politely disagree on the higher for longer here. you get such a clue to where the consensus is with the emails you get every day, what is talked about on financial media. lisa: us. >> i just heard stagflation. things have quietly stalled out. coming into this week, look very overbought. i think you have to see subtle clues the turn utilities. it is always a message when you have utilities moving with bond yields higher.

i have seen that a few times in our career. it is generally meant the move is closer to ending them beginning. i think the strike throughout the correction, one that appreciated things in this entire last five weeks, exit active rate. if yields were going to get away from us, is that what we would expect? started to see faltering the relative performance of tech. i at least want to be open to the idea we're close to the end of the move in yields than the beginning. i almost like a pariah suggesting that. lisa: i am trying to understand how this narrative has shifted. last year it was rate hikes are going to disproportionally affect tech, that the higher the rates go the worse for tech. if rates go down, that would give a boost to tech because evaluations and where they are at. now it is the opposite? >> i am skeptical of what narratives change to fit the price action. i think you have seen it with that respect on how yields

respond with tech. where i've seen it recently is this idea utilities are improving because they are in ai. that is silly. you've heard, utilities because the power demands, that sounds like narrative creep. maybe own them because there is a counter -- that seems to be more sense. when you start to get pockets of narrative creep, i think the rate tech one is one of those and maybe utility ai stories another. if you want ai, own ai. lisa: i can keep going with narrative creep and you can keep shutting me down. if the that is what to be cutting rates, it is in the face of weakness. today is a great example. it would get a number in the jobsite comes in substantially lower than expected, this makes rate cuts more likely on the table but why would you would to broaden out into more exposed stocks if that means a consumer is weakening? >> i think the market's perception of whether the economy or consumer is we

getting for strengthening, i will take that opinion over mine any day of the week. i want to look at things like industrials versus utility or -- to really get an understanding of the market, economy, consumer to be weakening. we have seen modest softness over the last five or six weeks. in the context of the uptrend. this begs a broader point, do i really want the entire call to pichai whether payrolls are when 25, 175, or 250 today? at the end of the day, we went into this correct but we went into this correct face and mid-to-late march fully confirmed bull market. i think you have to give markets the benefit of the doubt. irrespective of what the data looks like over the next 5, 6, 7, 8 weeks. we had oversold the last couple of weeks and i think there's been changes to sentiment. this obsession was stagflation and weaker growth has served to chip away at probably some of the bull sentiment that was out there.

jonathan: we will go to equities and then bonds and i will turn to foreign-exchange. it is 7:00 p.m. in tokyo. what are we looking from japan? the foreign-exchange? >> what a move in yen. career type move in yen this week. we have found the limit. we are at 153 and change this morning. in the spirit of what puts a top on yields, puts a cap on yields, that is another thing. dollar-yen has been so closely correlated to bond yields. the fact your seeing some type of a ship. in the face of record yen shorts , they better watch their back. jonathan: we had 160 on monday. to be at 153 is remarkable. i'm trying to work at the big issue for a lot of people, the end of u.s. exceptionalism and beginning of convergence, the end of divergence and the beginning of people starting to

pile into that trade. too soon to get excited? >> i thought something interesting happened last two weeks on that score. the ftse 100 u.k. come index with no tech, only 1% is tech. jonathan: guy johnson because it jurassic park. >> new all-time high. first to come out of this new correction and no tech. interesting clue. look what is breaking up in china, all of these basic resource stocks. that is a clue. i think there are little hints. it is a market that goes like it has one foot in old regime and one put in new regime and you're in a nasty bloody war to see who wins the heart and soul of this market. i am leaning more toward the stuff in the ground, the real stuff, basic resources, parts of the market that don't necessarily rely on tech to put value higher. lisa: do you think it is peak u.s. exceptionalism or the rest

of the world is building up to the united states? >> i will let far more intelligent people answer that. i will say the i think the idea the dollar is strong this year is a misconception. i know dxy is up but up against what? it is down meaningfully against gold. these have not been new real highs in u.s. equities this year. these have been nominal highs in u.s. equities. if you look at s&p versus gold, that is not come close to taking out the 2021 highs. that is not bearish or bullish. i want to be a little bit careful how we talk about dollar. i know looking at the chart when you say it is up this year people are bullish, i would be careful with that. jonathan: i am looking at g10 on the bloomberg terminal. it is against every single currency in g10, the dollar is

stronger but we should measure it against gold? >> i think when we are talking about fiat, it is who is slightly less bad than the other . i think when we are talking about stuff moving copper and gold, hard assets over financial assets, that is how i would approach currency. jonathan: interesting. chris, good to hear from you. chris verrone of strategic. let's get you up to speed. >> let's get a check on expedia and the premarket session, falling nearly 11%. bookings in the first quarter missed estimates and cut sales forecast for the year. yet another post-pandemic darling showing a slowdown in consumer's willingness in the u.s. to pay have been travel. booking, said reservations would slow, airbnb for its part had said it would be hard to match the 2023 season. amgen shares for their part are surging in the premarket, almost 14% thanks to their push into

obesity drugs. the ceo said he was very encouraged by a trial of a very experimental drug. if approved, patients would use a handheld autoinjector just once a month or even less frequent single injections compared to others that you have to take once a month and that potential competition has sent shares down more than 4.5% this morning. the second boeing whistleblower has died also a former quality auditor boeing supplier spirit aerosystems who raise concerns about the safety of the 737 max jet died two weeks after developing breathing problems according to the seattle times. in march, another whistleblower reportedly died from a self-inflicted wound. that is your bloomberg brief. jonathan: thank you. i've next, record-breaking buyback. >> there's going to be a lot apple is going to throw. i think potentially higher price points that part of that buyback was increase.

jonathan: a conversation of next. good morning. ♪ creates a logo, website, even social posts... in minutes! -how? -a.i. (impressed) ay i like it! who wants to come see the future?! get your business online in minutes with godaddy airo it's basically tennis for babies, but for adults. it should be called wiffle tennis. pickle! yeah, aw! whoo! ♪♪ these guys are intense.

we got nothing to worry about. with e*trade from morgan stanley, we're ready for whatever gets served up. dude, you gotta work on your trash talk. i'd rather work on saving for retirement. or college, since you like to get schooled. that's a pretty good burn, right? got him. good game. thanks for coming to our clinic, first one's free.

jonathan: equity futures positive on the s&p 500. the jobs report is just around the corner. 240 is the estimate in our survey. yields are a bit lower. 4.5671.

a record-breaking buyback. >> there is going to be a lot apple is going to throw out there. i think that is why there excited. i think potentially higher price points. again, driving live on the cash flow potential going into calendar 2025 and one that buyback was increased. jonathan: the latest come apple shares rising. second quarter results surprising to the upside things to better than expected sales in china. forecasting return to growth in announcing a record $110 billion share buyback plan come the largest in u.s. history. a neutral rating and 175 price target on shares of avril and joins us now for more, pierre ferragu. i want to go to sales. do you the sales declines are behind us? >> yes. i think policy enriching

stabilization. it doesn't look what we're going to see a major correction. i would say yes, the big line behind us. we're not going to have a significant change from where we are today. jonathan: jp morgan are talking about a launchpad into the ai upgrade cycle. how much of a launchpad do you see in september? >> i would be very careful about that. if you look at what people tell me, it doesn't look like it will be a cycle where generative ai is a revolution in terms of hardware. i think it is a revolution in terms of features. i have heard this argument asking moore whether we could

get into a nice cycle. i think it is too early to say and it wouldn't be prudent -- generative ai, how you get that into an iphone and create the well factor that really gets people willing to accelerate, we need to be convinced of what it would look like. jonathan: we are not convinced what is going on in china, either. there seems to be a disconnect between what is happening on the ground from the company and what independent researchers are seeing as well. what explains that distance between the company and independent researchers? >> it is very surprising. it is a major surprise. i thought we were clearly expecting to create a much lower point in china.

unfortunately, i don't have an one nation for you. it is something i will have to -- the next several days. how the disconnect could be explained. what we see is some chinese players coming back into the market, coming to the higher end of the market putting at risk the 20 million units -- out of lack of competition in china. did well in early weeks but did not convince consumers. that would be one explanation but we need more research. as i said, very significant surprise. lisa: tim cook saying that reality is different from what you may read at times about what we see in china.

this raises the question of how much apple needs to address xi jinping diplomacy and what the line is from authorities in terms of discouraging or encouraging people or allowing them to buy iphones going forward in the region or whether it even matters. in other words, how much you have -- how much you have to have clarity to have faith in the stock? >> normalizing a couple of shares -- the positive aspect, it doesn't create that much of a downside risk. i think the iphone is mostly like a standpoint. the only thing that can really create a surprise for me on the iphone is a significant cycle. and of course if that happens, it would have to be related to china -- the new features the

company is working on. that is where we stand. not much happens on the iphone front into we cd the cycle. my point is talking about september is too early. lisa: is this a growth stock or buyback basically afford and -- >> it is still a compounding struck. if you add up the kind of pricing power of the franchise, which means prices can go into low single digits every year, growth potential in services and excellent to very good buybacks come it is still -- compound earnings in mid to high single digits. that is a good compounder.

it is trading at 50% premium at the s&p name that had the same kind of gross potential outlook. it is an expensive compounder i would say. that is why we are very neutral. we don't see major issues where expectations are, it is just that compounds. annmarie: services was a relative bright spot for apple but they are dealing with a lot of regulation around the world. is there a ceiling on how much they could bring in from services? >> the ceiling is the right way to think about it more than downside risk. what you see the last two or three years, regulatory pressure

. basically, like, now the risk of the major plan down feels very odd. in the low teens with reviews from google. the stock continuing to grow even as the tech rate is coming down. the volume going up. all these things are nice, healthy, i would say love teen scores -- low teen scores. that growth is still very high quality. jonathan: you are one of the best. neutral on the stock, 175 price

target. in the premarket we trade at 183 and posited by close to 6%. coming up next, trade is moving up. theirry wizman joins us next to discuss on this payrolls friday. ♪

jonathan: town on the we come up on the session. s&p 500 is positive. nasdaq is positive. in the bond market, quite a turnaround this week. five consecutive weeks, yields have been climbing on a tenure maturity. lisa, we are about to snap that street. lisa: fed chair powell had a very big opening to come out and out=hawk himself, talk about how they cannot take anything off the table. they don't want to get this wrong. he basically said, you know what? the next move is probably going to be a cut but we got this as we heard bill dudley say. the stock market is betting the fed is going to cut rates much more quickly and the bond market

is and i think that is -- jonathan: the number one thing you will hear this morning around the payrolls report is going to be the phrase asymmetric risk, conversation we've had on this program the last couple of days following those comments from chairman powell in the news conference. i limited time to go to this for you. sudden weakness and implement could push for the fed to cut rates and would be less responsive to more upside to prices. the markets reaction function should mirror the fed's asymmetric policy reaction leaving assets more responsive to weaker than expected data than to an upside surprise. lisa: upside surprise, no hike because they took it off the table. downside surprise, cuts. they want to cut rates and that will give a boost to stocks, period, the end. jonathan: can spike off that number. we can get a different view in a moment maybe. i want to talk about dollar-yen. what a turnaround. had a little hick up on monday

on the way back down, three percentage point move in the past three sessions. very difficult to keep up. i keep referring to the time in tokyo, 7:31 p.m. in japan. lisa: if we get some sort of disappointing jobs, are they going to smack down all the short sales even harder and say, see? you guys are going to lose your shirts. to me, this is them trying to wake up volatility in a market that has been somewhat complacent that they are not going to step in because they have not stepped in. this is a question of how much pain has been inflicted to short this currency. i would be curious to see the numbers. jonathan: to a risk to this market big time this week. shares of apple gaining after announcing the biggest stock buyback in u.s. history, $110 billion. topping wall street projections, posting cells to cleanse in the last five of six quarters. is it the end of cell declines

through september? annmarie: they kind of said they see brighter times ahead. then talking about china being less terrible than everybody thinks? why is the independent data showing something different? kind of a mystery. annmarie: we are at what i feel is the start of tit for tat in terms of geopolitical relations in beijing and washington. if you work in the government, part of the chinese communist government in beijing, you cannot have an iphone. how much worse can that story get? tim cook says you only -- you all need to take a step back of the 90 day cycle. i see a lot of people moving into the middle class of china. we clearly have work to do. he says he thinks they have been through it the last quarter in the most competitive market so in the world. jonathan: i do love ceos on the call. less than 90 day cycle is a blowout number in which case -- ambassador cook? was that ambassador cook on the call or ceo of apple? lisa: i am not a conspiracy

theorist. jonathan: but? lisa: there is this question of elon musk kowtowing to xi jinping and getting some concessions from him. is there filling in china they want to lure international businesses so they cannot make it absolutely inhospitable? how much of they getting a nod from beijing they're not going to go further? i'm not saying that is the truth, i'm just postulating that could be behind it. jonathan: just thinking out loud. apple is up by 6% in the premarket. payroll report in about two hours. the median estimate in our survey, 240,000. goldman sachs the most bullish looking for 275. elsewhere, traders pulling expectations after the press conference was less hawkish than feared. this two day rally since january.

theirry wizman saying come as happen after march 20, we expected the fed speech and appearances coming up would be more hawkish and help bond yields up, not down. are you saying maybe chairman powell -- >> that is what i am saying. march 20, he got smacked in the face and a few weeks subsequent to the meeting. he was an ultra dub. i was a not this time. it was a surprise given people thought he was going to be hawkish. march 20, was an ultra ove. he got high inflation prints, strong data and he got a lot of the regional fed bank presidents and a lot of the other governors from the fed coming out in their speeches basically saying, look, we are not as dovish as the chairman. there might be a situation we may have to stay high for long. i think some of those fed

speakers even open up the prospect of a rate hike at that time. it is possible that in this discourse on wednesday, he was not reflecting the median view of -- july jonathan: let's get into that. >> policymakers. jonathan: will be speaking a little bit later with michael mckee and we will hear from john williams as well. where do we expect there to be division with what chairman powell said in the news conference, what topic do you think will be the biggest spread? >> jay powell has a neck for not talking about long-term and structural issues. he touched a little on immigration but that is really a short-term issue. it is reflecting what happened over the last year. i expect there are going to be some fed speakers who are going to speak to a little more of the structural themes. what is the implication of the globalization for inflation, what is the implication of demographics more generally in the baby boomers retiring, what is the implication of global

conflict for inflation? all of these things tend to be inflationary in the long term. i think there is a lot of hawks among the policymakers, the fed, who believe the long run a program policy rate should be higher. you can see that in the dispersion of the dots on the long run. -- long-run projections. i think that will come out of the speeches and these appearances. i think the market will realize, like they did on march 20, powell is a little taking his own path here and did not really reflect the tone. you can see the tone in the statement. the statement was clear, the fed was frustrated with the lack of ongoing decline inflation. that is what he chose to dis-emphasize or deemphasize. lisa: with all due respect, i feel at clarity from fed officials who have none. they're basically the same black box we are in, try to understand paradigm, understand what potential data we are getting mean.

i started talking about narratives i got slapped down so you can fit whatever your to view what into whatever data points you want. how much is this a market that will trade in much bigger range for every single economic fringe because we don't have some set paradigm set by fed officials or by the market? >> we do have a paradigm. it is maybe not what you want to be trading alongside. i know it is a terrible paradigm because it is not model-driven but is data-driven and forces everyone to react to the latest release of data as we will see today with the jobs report. that is unfortunate but i think you're living in a world where we have been buffeted by a lot of supply shocks, not just demand trends, in the last few years. i think because of that, the paradigm should ship to considering or what the supply side is doing. unfortunately, the fed does not have a model for that to the extent they have any models. they are still stuck in phillips

curve driven world and that seems to be a model much more driven were formed by aggregate demand stories and management stories. lisa: it is 7:38 p.m. in japan, a close watch on u.s. data over from japanese authorities trying to stave off the weakness of the yen. how much are they reintroducing an extra level of volatility and currency markets by trying to blow out the shorts, by trying to create a greater price fluctuation to make sure speculators can't really have an easy time of it? >> i don't think is what they want. i think they feel it is the traders who have introduced instability into the marketplace by virtue of their speculation in dollar-yen. believe it or not, by creating the short-term volatility, could be to produce medium-term stability or long-term stability . they take the speculative element out of the pair.

it is not in the central bank's interest, not this one, to be predictable. what i hate, especially, when economist look at what happened in the fourth quarter 2022 and say, the boj intervened twice so we should expect them to intervene twice again and maybe once they have intervened the second time it is over. that is not the way to think about it. if anything, they want to keep speculators on their toes because they will not fight the central bank, will not test the central bank. they will stay away, stay cautious. that will introduce stability in the longer-term. lisa: how much is their broader sense that what happens in the u.s. will dictate how far some of these other central banks can cut rates, how much they can potentially really manage their own economies rather than looking to the? >> this is a great question. they have to look to the fed because to the extent the fed acts the central banks don't can introduce volatility to the foreign exchange of these

countries. this is only pertinent if they are worried about volatility in forex trade or the levels their exchange rates have gotten to. i don't hear from the central banks these days, with the possible exception of the boj, that that yen has gotten too cheap, that they are concerned about the levels of currency. the europeans still would like to promote some competitiveness, especially vis-a-vis china if you're germany, potentially the u.s. if you are the other countries in europe that want to promote tourism or other service exports. i don't hear the europeans for example are concerned the euro has gotten -- it is not out there at the time. annmarie: our prior guess was saying he does not think the dollar is that strong right now. where you see the dollar at year? >> it depends on what the fed does. i differing every thing back to the fed but it is important. if the fed were to start cutting, i think the dollar eventually, maybe next six month, will start to fall.

a decline in the dollar versus the yen and the boj will not have to do what it is doing. but that is conditional on seeing some slowdown in the u.s. and some just punishment of what we've seen. jonathan: how bad is this nobody to be today? how bad does it need to be today to talk about rate because the summer? >> interesting because i think jay powell was trying to tell us not to look at nonfarm payrolls. he talked about immigration at the outset of his talk and he seemed to be making the point the reason we are having strong payroll is because we have strong immigration. if that is the case, you can't see strong payrolls as inflationary. instead, looking at other ancillary measures of job market like turnover in the job market, and keep in mind, wage growth in the u.s. if measured by the average hourly earnings, has not been very strong. it has been on a downtrend for

the last six months. if we get a low wage growth and a high payroll number, i think the market will accept what powell said and effectively become about that and we will not see an adverse reaction in the bond market. that is a view that pertains of the day. i think if the fed speeches come out in the next few weeks and they are more hawkish, we will see bond rising. jonathan: thank you, theirry wizman. equity futures are positive at the moment. let's get you not update on stories elsewhere. dani: u.k. mr. and his conservative party have suffered a major setback. labor won a key seat where they elected to replace a previous conservative mp that resign in scannell. the largest third-largest swing between the labor vote between world war ii -- the third-largest swing since world war ii in the labor vote.

deutsche bank is planning to double its aum or high network clients in asia and the middle east. there going to invest heavily in a boca future herons in the bank happened in those regions -- and a boca future hirings in the bank happen in those regions. we have an update on campus protests at columbia university. the school has reported 13 of the 44 people who occupied and barricaded themselves inside a campus building had no affiliation with columbia most of the numbers from city college of new york are similar. mayor adams had exit percent of protesters arrested were not affiliated with the school. -- 80 percent of protesters arrested were not affiliated with the school. jonathan: next, u.s. payrolls on deck. >> we can't continue to see 300,000 jobs. we need to see a little stabilization.

more than that, i think we need to see wages. that is the important part. jonathan: looking for 200 40 today. that conversation is next. this is "bloomberg." ♪ (♪♪)

(♪♪) what took you so long? i'm sorry, there was a long line at the thai place. you get the sauce i like? of course! you're the man! i wish. the future isn't scary. not investing in it is. nasdaq-100 innovators. one etf. before investing, carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com every second counts. 120 seconds to add the finishing touches. 900 seconds to arrange the displays. if you're short on time for marketing constant contact's powerful tools can help. you can automate email and sms messages so customers get the right message at the right time. save time marketing with constant contact.

because all it takes is 30 seconds to make someone's day. get started today at constantcontact.com. helping the small stand tall. jonathan: counting it down to the pay's role -- payrolls report. positive by 0.4% and up on the session, down on the week. in the bond market, yields are lower by two basis points. that has been quite the turnaround this week. euro is a bit of a snooze. the entertainment value is coming from the japanese yen, dollar-yen after a sneak peek of 160 at the start of the week. u.s. payrolls on deck. >> we can't continue to see 300,000, 400,000 jobs. i think we need stabilization. more than that, i think we need to see wages. we need to see wages sort of

continue to be on the decelerating path they had been. i think if we see both of that, there rates market and the equity market gets a little bit of confidence. jonathan: less than two hours away from the april payrolls report. sarah house and the team expecting a gain of 250,000, slightly higher than the median estimate calling for 240,000. writing "there are some chinks in the armor. resilient spending and robust economic growth to be supportive of further growth in payrolls." sarah house joins us. a more complete picture for us, please. what do payrolls look like a song -- alongside wage growth later this morning? >> we are looking for an increase of 202,000 in terms of payroll. still a very strong gain albeit a moderation from the trend we have seen the past three month or so. we are also looking for

moderation in terms of that trend in average of hourly earnings. it would bring the year-over-year rate down to 4%, the lowest we saw since the midsummer of 2021. expecting to see at least some further deceleration in terms of overall trend in average hourly earnings even astana wage growth does remain -- even though nominal wage growth does remain. jonathan: the wage growth story last year in california, raises minimum wage for fast food workers i think to $20 per hour. that took effect in april. how do i collate what impact that will have on the number -- how do you cac like the impact it will have on the number this morning? >> overall, minimal impact. these are some of your lowest paid workers in the economy so it takes very big increases in that segment. this is for only one state. i am not sure how big of an impact that will have in today's numbers.

we tend usually get amped up about these increases in the minimum wage but these are the lowest paid workers so it does not tenderly move that average. lisa: jay powell really does not like the word stagflation but others keep using it concluding bank of america with a said the difference between stagflation rate where you get a 125 type print with 0.4% wage growth is probably the worst case scenario for risk assets versus 225 and 0.2% wage growth which could confirm this goldilocks disinflationary employment. do you agree with that assessment, that that is how much -- how quickly we could have a narrative shift depending on these numbers? >> i think markets are looking for any additional information but as we know, payrolls and the average hourly earnings numbers can be pretty volatile. i think in order for that narrative to take hold, you would need to see multiple months of that. while we are looking for moderation of payroll gains, it is hard to see such an abrupt

shift, given that. some industries like leisure and hospitality, there is scope for catch up in hiring. strength in the secular hiring in areas like health care. there is catch up going on in government hiring. it is difficult to see that abrupt shift little load on a sustained basis here in the near term, but that is the worry given that we have had, relatively tight monetary policy for close to two years now. we keep waiting for that impact to hit the overall hiring numbers. annmarie: lisa: there is an asymmetry of what we get. no says the fed could possibly hike rates and we are not going to see any potential bake and of rates going much higher from here but they could potentially cut pretty quickly. if we do get a disappointing number. you agree with that? what would you have to see to start thinking about rate cuts sooner? >> i think you have to see that

lower in payrolls. we have seen other metrics of the labor market .2 some gradual softening, overall cooling like the job openings in turnover, like we've seen in some of the pmi's in terms of their hiring. the fact you've seen hiring in terms of the nonfarm payroll numbers remain so robust it has been hard to say the jobs market really is weakening. i think if you were to see a big move lower in terms of the payrolls, that was shipped i think the overall thinking in the jobs market, potentially keep it or at least put a potential summer rate cut back in play. it would take more than just a week april number. i think you would need to see that repeated in terms of the media next month. annmarie: this is a huge feed for this labor market. what kind of an implement rate would you think the fed get very nervous about, four point what? >> will hurd powell on wednesday

say he is effectively -- we heard powell on was a say he is not effectively concerned. this is by design by their stance on monetary policy. i think you probably need to be getting closer to at least 4.20 5% or 4.5%. the speed also matters. we have the unemployment rate move up from 3.4% close to a year ago to the 3.8% today. 3.9. it has been gradual. it is part of that slow normalization process. if you started to see the increase pick up speed, didn't i think that would send up some antenna and would make the fed a little bit nervous about the direction and the momentum we are seeing in the jobs market. annmarie: immigration is been a huge story enterprise a lot of wage concerns. at what point does it maybe become inflationary? there are still people out there in the market making money and spending. lisa: i think overall --

>> i think overall it to the jobs market, it is help for disinflation. when we think about the immigration and the rate of participation among foreign-born workers it tends to be higher. this is a population segment which tends to contribute more to the labor market versus the growing retirement age population, which is in the consumption years rather than production years. at least for now for the jobs market, i think it is still an encouraging aspect of a disinflationary trend in wage growth resuming here as we move through the year. jonathan: on this median estimate, the estimate is 240. that is the highest median forecast for payroll since september 2022. to some extent, please explain your own experience of this, have we been undershooting payrolls on wall street is such an extent that this month is the month where everyone starts adding an extra 25 k on top just

to make sure? >> i think we have been adding -- economist have been adding some on top of it given this undershooting pattern has been going on for the better part of the past two years. but it still has not been enough as we have seen the consensus under should the actual first print in 2021 of the past 24 months. i think we have been adding that in but at some point, we might overcorrect in that aspect. we will see if it is today. there has been acknowledgment the models are picking up in terms of the magnitude of job growth so there has been some add factor i know on our end from that. jonathan: sarah house of wells fargo. a little bit of transparency on how the sausage is made on wall street. lisa: i could tell where you're going with this come this idea if you're baking in more, are we more prone for a surprise because people are cracking up what the potential -- jonathan: how many times have we sat here at 8:30 a.m. eastern

time? lisa: people have been overwhelmed by the immigration story and we keep seeing that from a lot of research reports, raises the question of how are they managing for understanding the anaplan it rate? how are they understanding the entire labor market if the actual numbers are somewhat different and they have to tack on extra to account for what they don't understand? jonathan: they are struggling to understand. going into the payroll figures. we're counting it down. we will catch up and speak to morgan stanley stairwell. all of that still to come. bonnie is a little bit lower -- bond yields are a bit lower. this is "bloomberg." ♪

when people come, they say they've tried lots of diets, nothing's worked or they've lost the same 10, 20, 50 pounds

over and over again. they need a real solution. i've always fought with 5-10 pounds all the time. eating all these different things and nothing's ever working. i've done the diets, all the diets. before golo, i was barely eating but the weight wasn't going anywhere. the secret to losing weight and keeping it off is managing insulin and glucose. golo takes a systematic approach to eating that focuses on optimizing insulin levels. we tackle the cause of weight gain, not just the symptom. when you have good metabolic health, weight loss is easy. i always thought it would be so difficult to lose weight, but with golo, it wasn't. the weight just fell off. i have people come up to me all the time and ask me, "does it really work?" and all i have to say is, "here i am. it works." my advice for everyone is to go with golo. it will release your fat and it will release you. her uncle's unhappy. i'm sensing an underlying issue. it's t-mobile. it started when we tried to get him under a new plan. but they they unexpectedly unraveled their

“price lock” guarantee. which has made him, a bit... unruly. you called yourself the “un-carrier”. you sing about “price lock” on those commercials. “the price lock, the price lock...” so, if you could change the price, change the name! it's not a lock, i know a lock. so how can we undo the damage? we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. it's an amazing thing okay, that's uncalled for. when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop.

the idea that we have saved five million people's lives, it's overwhelming. it's everything. >> i think that markets have actually moved away from the soft landing idea. >> basically dismissed any notion that they would hike. so, the focus is on when they will cut. >> the market has been excited about the possibility of hikes. he closed the door on that clearly. >> the market is adapting to higher interest rates. it is a reasonable set up for equities. >> the market is beginning to get it that it is normalization of interest rates. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern.

jonathan: the second hour of "surveillance" begins now. equities futures higher by .3%. the next 12 hours, payrolls report 8:30 eastern. 90 minutes after that the ism services data. it is important. then we get the fed speak following chairman powell, sitting down with goolsby of chicago later this evening. the new york fed president, a stacked day into the weekend. lisa: especially after what a lot of people thought was a surprising press conference from jerome powell. there was a feeling from other fed participants that they were more hawkish than he let on. john williams entertaining the prospect of a rate hike. we didn't hear that from powell. he took it off the table. when do they or do they care? jonathan: what is it -- what does it take to range reduce the conversation? mark is thinking, maybe july could work. lisa: there is a feeling

increasingly baked into markets that it won't take that much. jay powell seem to say it will take a lot, we are on hold, concerned about inflation. the market said, really? that is where a lot of people are. jonathan: for the best part of two years we have looked at the numbers and said, another upside surprise on payrolls. 240, the bar is getting a little higher going into this. annmarie: the supply side of the labor market. you go to the cbo report and normally they would bake one million immigrants coming to the united states. it is 3.3 million of net immigrants arriving last year. what does that mean for the data in 2024? it is this new paradigm almost of the population growth, immigration growth in the united states. that is why you see forecasters saying we should probably add another 10k or 20 k. jonathan: it makes it harder and harder to understand this economy and the connection between what we are seeing on payrolls and not seeing on payrolls.

lisa: my mind is much, for a lot of reasons i'm sure. [laughter] jonathan: is this a therapy session? we are not live or anything. lisa: i will just get out of this before i go downhill. there is a question of, are we going with this rolling recovery and rolling recession that can push any material downside, or is it noise that is masking real weakness below the surface that we are seeing from a lot of companies and hearing on the conference calls? jonathan: we're talking about one of the biggest ones in this country. apple, up by 6% in the premarket. i don't want to talk about the engineering, the product innovation or lack thereof. i want to talk about the financial engineering. a $110 billion additional share buyback program. bramo, stunning numbers. a record in u.s. market history. lisa: if you add the market capitalization of ford and general motors together it is not as big as this one share

buyback. that is how big this share buyback is. they have done a number of other significant share buybacks. there's a history of all of the largest buybacks which are mostly apple. is it a growth company or -- what did you call it? annmarie: according to richard windsor, not me. this is basically a middle-aged company. lisa: if that is the case, don't underestimate that. a lot of people like what they see given that they are redeploying their money. jonathan: apple is having a midlife crisis. harley davidson, is that what we are doing? annmarie: you look at the share prices and the buyback and this is obviously assuaging a lot of investors' concerns about what's going on in china, their growth market. yesterday tim cook said, take a step back. jonathan, take a step back from the 90 day cycle and potentially look at the future of this market in china. i think that the future in china looks more gloom for these companies.

customers moving to homegrown brands. why would that stop? jonathan: i'm not sure that harley is happy being the poster child for midlife crisis. -- is that still a thing, people by a harley? lisa: what me to insult someone else? what about the apple vision pro, $3000? you couldn't be a young gamer, you would have to be wanting to experience a new kind of life. i don't believe in midlife crises. jonathan: you don't? this is going well, isn't it? the s&p 500, posited by .3%. you need to tell me what you mean by that. 1.0 745 on the euro, i'm still waiting. i don't think that i'm getting an answer.

jp morgan with the jobs report 90 minutes away. terry haynes ahead of secretary yellen's speech later. and we will catch up with bnp paribas and why he is downgrading meta to sell. the median estimate in our surveys calling for 200 40,000. jp morgan saying that i think a strong number is priced in. we will react more if it is a weak number, but i think the more important release is wages. a week number will keep the labor supply story alive. a strong number is bad for bonds and stocks. this word, asymmetry. can you talk about the asymmetric risk around this number? >> jay powell highlighted the asymmetry. when he was asked about the path for policy he said stay on hold if the soft landing continues and they could cut by a certain amount if inflation cuts down. i think that the fed reaction ultimately is the reaction

function. the fed reaction function is key. if they are worried about the employment side and inflation, he told us clearly through the press conference that compared to a year ago where they were concerned about inflation, the fact that inflation is so 3%, they care about the employment side. i think if you get one weak number it doesn't matter as much, but you get consumer spending slow down. i would argue that there are cracks. auto loan delinquencies are picking up. there are cracks in the economy. i think they managed to cut rates just enough to take off the edge. but what if they are not able to cut? i think that they can get more aggressive and cut more. that asymmetry isn't priced into the bond market. jonathan: talk to me how it should be priced. lisa has been brilliant separating the front and from the long ends. have we introduced the ceiling

into the front-end of the curve? priya: jay powell was very clear. i think that the fed doesn't have, and rightfully so, a lot of confidence as the wind will inflation look like it's going back to 2%? they have a lot of confidence that monetary policy is restrictive. they don't know how long they have to keep it there. there was not any talk of rate hikes. he was asked again and again. that is what creates the asymmetry on the front ends. the long end, how much should you get paid to take on duration risk? there is a lot of treasury supply and not a lot of net supply. when we talk about supply we should look at fixed income supply. i would say that that ceiling at the long end is a little higher than the front end because there's more that goes on. it isn't just the fed. even their there is a ceiling. if the fed cuts rates the 6 trillion in money market funds, which is good, will not feel that safe and good because the

reinvestment risk, the regret of, i didn't put this money to work when i could get 6%, i think that that starts to factor in. there is a bit of a ceiling on the long end, i would say that 5% is a good ceiling to think about. lisa: you don't think that people will get concerned about runaway inflation or the concern about a fed that is not going to do enough to bring us back to something that is a familiar paradigm, to invest in longer-term bonds? priya: between two and three what is 100 basis points on inflation? lisa: it depends on what you are buying. priya: the fed will always say that 2% is their target, but 2.5%, 2.8%, it is hard to argue that's runaway inflation. if wages are above 4.1% and we get 4.5%, that is consistent with 2% to 3% inflation. if that's the run rate of inflation, this could risk

inflation premium going up. i think that it puts a lid on that. if were talking about 4% to 5% inflation it's a different story, but i think that is where the fed will say, we are not going to cut rates. they are committed to this sub 3%. i think that they have a looser inflation target than they are suggesting. lisa: are you more bullish on bonds today than tuesday? priya: absolutely. there is a fine line between having confidence, or losing confidence that inflation is heading lower, and concerns that inflation will be heading higher. that is what i was watching for in the press conference. one day to print they can talk away. three of high inflation prints, with the fed say that they are losing confidence and inflation may be re-accelerating and looser financial conditions could result in re-acceleration where hikes come back? we heard from the fed they don't have a lot of confidence how long we keep rates here, but

they have confidence that monetary policy is restrictive and the next move is a cut. i think the last time that i was here i was saying, three in a row and maybe the fed starts talk about hikes. that's off the table. they put in a few hawkish elements. the way that the hawks have been quiet is to say that we will keep rates here for longer. let monetary policy do its work. you have to let a good wine breathe. i wonder if that is what the fed is saying, you have to let policy work? i think that they see the cracks. jonathan: the bottle of red is in the decanter, you let that one go. lisa: a few months. is that how long you age your wine? jonathan: i'm asking what you do with wine. sorry. bramo is fired up about red wine. i know where this weekend is going. are you saying that people are starting to understand that reinvestment risk is real and they are starting to look further out along the curve, or that once they do start cutting interest rates, that is when

people start to wake up? priya: i think that you wake up when the money market falls, that's when you get the wake-up call. i think that markets are forward-looking. what i was getting concerned -- i have to say, in the last month, do people start worrying about hikes? if i'm trying to move out the curve if they are hiking i will get more in my front in. if the hike risk or distribution, they have completed the distribution and hikes are off the table, then i can look at the forward curve plus look at how much the markets repriced. we went from six to seven cuts to less than two cuts this week. as a pricing right now, we are less than two cuts. there are still a lot of months to the year. i know they can't cut into an election. they set us up, they let the data talk, and i don't think that they are politically motivated. they can absolutely cut all the way up until november. the market pricing tells me that if you look at how much we've

repriced, you are supposed to move out the curve. we've seen the flows into ign high-yield. jonathan: we will have that political conversation in a few moments. the s&p 500 posited by .3%. let's get you an update with your bloomberg brief. dani: daimler trucks dropping 5% in the morning session. i spoke with the ceo earlier and he told me that europe demand is waning and they may have to slas h, but north american is still healthy. he said inflation pressures weren't broken because of wage inflation. what he said are still tight labor markets. >> it is still tight. we have in our factories, re-suppliers, it is still not in a good position. consistent shortages despite fairly high wages. dani: you can watch bloomberg

brief every morning at 5:00 a.m. eastern. u.s. authorities are taking a closer look at consumer complaints overpayment platforms, including zelle. it joins jp morgan and acknowledging there is behind the scenes interest from regulators about how banks are handling fraud claims, disputes, and more from these payment companies. democratic senators including sharad round have publicly called on zelle to clarify policies and broaden consumer protections in the event of fraud. the nba's close to signing a record broadcast deal for $76 billion over the next 11 years. to put that into context, that is three times the size of their current deal. a framework for deals with disney and amazon have been worked out according to people familiar who said that it would be surprising at this point if either conversation fell apart. before this some experts questioned if the nba was seeking too much. clearly, that's not the case. there is still strong demand for

live sports and aggressive bidders like amazon have pumped up the payday. jonathan: more from dani in 30 minutes. defending the fed's independence. >> if you take away fed independence investors will get jittery, markets will throw a cold bucket of water on the president if he tries to do that. jonathan: that conversation is next. live from new york, good morning. ♪ (grunting) at morgan stanley, old school hard work meets bold new thinking. (laughter) at 88 years old, we still see the world with the wonder of new eyes, helping you discover untapped possibilities

and relentlessly working with you to make them real. old school grit. new world ideas. morgan stanley.

jonathan: it is payrolls friday. looking like this on the s&p 500 posited by .3%. the bond market yields are lower by single basis point, your 10-year, 4.57. under surveillance, defending the fed's independence. >> it's not going to work very well. i mean, it is going to be obvious that it's not working if

you take away fed independence. investors are going to get jittery, inflation expectations are going to go up, the dollar is going to tank. happily, for better or for worse, markets will throw a pretty cold bucket of water on the president if he tries to do that. jonathan: the latest, treasury secretary janet yellen is set to deliver remarks later this afternoon defending the independence of the fed following a report in the wall street journal that donald trump's allies outlined proposals that would give the president more direct influence on the central bank. terry haynes had this to say. the treasury secretary giving nakedly political speeches makes investors a little more nervous or invites investors to take janet yellen a little less seriously. terry, it is wonderful to catch up with you. before we get into the nature of janet yellen's comments, can we get into what she is defending and where that comes from? the wall street journal report, i've not heard anyone come out

on the record and make this suggestion. what did you make of the initial report from the journal? terry: i think what happened with the general report is that they got a bunch of staffers all elbowing each other to try to impress the boss and are coming up with all kinds of ideas. so, that's what you get. the reality of it -- i'm always happy to front run ken rogoff -- i wrote on sunday what rogoff said on tuesday, that the likelihood of this happening is close to zero. in a practical sense, the funders that trump is trying to court right now are not going to take well to the idea of trump pushing fed independence. it is going to royal markets, to say the least. in a constitutional sense, the fed is not trump's to deal with,

not a fourth branch of government. the fed's powers come from congress. when you think about congress, congress is going to defend its institutional, constitutional powers. the likelihood of someone attacking a fed independence successfully from the white house is slim to none. lisa: let's go to your note ahead of janet yellen speaking at the mccain institute. you say that she traded in the reputation for a much diminished one of a foot soldier in bidens army. doesn't the market already view her as that given that we've seen almost this evolution of former fed chair janet yellen to political treasury secretary janet yellen hunter biden? terry: i think so to some extent, but there are always people who say janet yellen said this or that, like it matters. her performance in office, no disrespect, but her performance is one where she set out to defend policies that someone

else is putting together, by and large. that is not a good look. this friday's speech is being touted as the economics of democracy. it is meant to sound like an echo of the threats to democracy that the biden campaign is going on all about. whatever else you think of a senior united states policy official, they shouldn't be set out there to mimic campaign points, because that doesn't create confidence in policy, in the administration. annmarie: you said something i want to pick up on. that she is a policy taker not a policymaker. isn't that this entire white house? terry: biden, like any president, has pluses and minuses. one big minus, and i have thought this since 2020, it has

been a line running through my commentary, is that successful presidents people who are more peers than anything else. in past administrations many had peers. even carter, who is thought to have had a failed presidency, nominated paul volcker at the fed. treasury secretary's have generally been people who are peers and can advise presidents. this president has staff, literally. a lot of the former staff are now in positions of serious authority. this means that you don't have anyone to give you a bs detector, and bs detectors are very important in politics and in business. biden right now doesn't have that, never has had. jonathan: next time we will talk to you before we talk to ken, i promise. terry haines.

priya, you touched on this. some people believe we cannot cut in september. september 2012 before an election, why can't we cut in september? priya: they have a mandate trying to keep the soft landing going which is why they're telling us that hikes are off the table. before september i think that a few things have to happen. wages have to decelerate, you have to have the next couple of cpi prints becoming weaker than the last three, and signs that growth is slowing. at that point, he said 4.23 on the unemployment rate. the fed looks at the totality of the data. we are at 5.5 on the funds rate. i think that the bar isn't that high for them to start to cut. we talk about next year and i more conflicted. we have an election and we could have pretty different fiscal policy.

i don't know how much they cut on a soft landing. but in september, 5.5%, they get a few things going, they could start the process. jonathan: no one wants to touch 2025. annmarie: because how can you imagine what it is? lisa: some say that we will have inflation if we have tariffs in the united states. priya: we could have tax cuts expiring, and you could get a reduction in consumer spending. tariffs i would say is a price level shock, a problem for consumers. it won't be consistent inflation, it will be a supply-side shock in terms of prices. i think if the taxes expire, if the tax cuts expire, the fed is cutting more. lisa: it is a balm to hear you speak compared to the shouting match in d.c. you're talking about numbers, outcomes, trying to take the hysterica out of the screaming match that we hear in other

places. can you strip out the noise when it comes to the deficit? that is something that janet yellen will speak about in her speech. terry haines saying that this is a problem unintentionally bringing attention to the deficit. priya: the deficit, we have enough cash in the front and. if you are getting 6% in corporate, 9% in high-yield, that money is coming in. it is also coming into the treasury market. i think where it becomes an issue is fed independence which i think is political posturing, a preview between now and november and may be beyond where the fed will be under attack and we have to take a step back and say, can fed independence actually get challenged? i'm not sure everyone is on the same page in either party. i think at that point people are going to look at the deficit. and then we come to what happens postelection? i would argue that physical space is less now than in 2016.

do the tax cuts expire or get extended? jonathan: this was great, it is wonderful to see you. if i had a list of people on wall street who were the least excited about the election, bramo is up there. top three. lisa: you think so? i bet that a lot of people would join me. jonathan: from new york city? i bet they would. this is bloomberg. ♪

food isn't just fuel to live. it's fuel to grow. my family relied on public assistance to help provide meals for us. these meals fueled my involvement in theater and the arts as a child, which fostered my love for acting. the feeding america network of food banks helps millions of people put food on the table. when people are fed, futures are nourished. join the movement to end hunger and together we can open endless possibilities for people to thrive. visit feedingamerica.org/actnow

jonathan: stocks are lower, 60 minutes from the jobs report. equity futures down 5.4 percent, down by 0.7 on the nasdaq, softer on the russell,. down on the week as well, up on the session. in the bond market, big levels, 5% all the way back to the 4.80's. 4.56 50, down another basis point this morning. eci feels like a lifetime ago. lisa: he didn't even talk about it. i'm talking about jerome powell. why didn't he bring in eci coming in hotter than expected, their key metrics for wage inflation? we ask priya, do you think you can be more bullish on bonds than before the press conference

? unabashedly, unreservedly, absolutely. jonathan: have we put a ceiling on a two-year? yes. arguably also on the 10-year. 5% for both? lisa: it seems like this fed wants to prioritize a soft landing more than any kind of percolating heft under the surface. to me, that's a shift that the market has taken notice of. i don't know how that correlates with the idea of a broadening out in the rally and some of the smaller cap stocks getting bid, because wouldn't that imply more weakness under the hood than we are seeing? jonathan: we can talk about what is happening with corporate america. consumer confidence, dana peterson is saying that confidence retreated further in april reaching its lowest level since july 20 22 and consumers became less positive about the current labor market situation and more concerned about future business conditions, job

availability, and income. that doesn't scream bloomberg, and that's a word that has been used a lot around here. lisa: a lot of the earnings calls don't scream bloomberg, and we've been hearing about that quite a bit. how much do you lean into those qualitative data points versus taking these headline numbers that show a robust market? jonathan: i love economists, it is not anecdotes it is real data. lisa: if you have a lot of orchestrated conversations, you can put them into an excel spreadsheet and map them out. it is data. jonathan: eight: 31 in tokyo, let's check out dollar-yen. down one third of 1%. we did this around the federal reserve meeting, what happened straight after the news conference? . lisa: and of the bloomberg news aside points out that it's a holiday in japan. it's a great time to intervene because it's a quiet time so you can have more bang for your buck. watch out for excitement in this

phase. jonathan: a week of yen strength against the u.s. dollar. an hour from the u.s. jobs report, the median calling for a print of 240 k. bank of america warning that a weak print could be a stagflation signal raising risks of a selloff in stocks. let's quote michael directly. payrolls that come in south of 125, an average hourly earnings north of .4%, stagflation trades continue winning. that is the mix he's looking for. lisa: he says if it is to 25 or higher average hourly earnings by less than two tents percent it would be goldilocks and risk back on. he is putting these markers in the sand of where potential you will hear more people coming out and having whispers of stagflation or maybe screams if you get someone 25. or if it will be the goldilocks, soft landing, off to the moon. jonathan: didn't he ban the

word, stagflation? lisa: no stag, no flation, i lived through the 70's, cut it out. he can say whatever he wants but the market is concerned there is a toxic recipe that will call their hand on some level with the emphasis on keeping the soft landing concept afloat if inflation remains hotter. jonathan: let's turn to apple, big mover in the premarket with shares rising by something like 5% to 6% through much of this morning. the company announcing the biggest stock buyback and history, also posting better-than-expected results in china. "the worst is now behind apple in china." that is the question we are all asking not just for the geography but the broader sales growth story. there hasn't been much in the last 12 months. lisa: i want to understand the why behind the comments between tim cook and the cfo of apple.

if there is a material shift in china's stance to apple because they want to reach out more to american and international companies, that is interesting. which companies pass the bar to be bellwethers for the rest of the industry to try to support the economy, or is this basically a head fake as they do something else? we don't have a real understanding of where the growth will come from and why. jonathan: meta, hit with a rare underperform rating from bnp paribas. a 360 price target saying that meta has no new revenue streams to replenish its resources, which will continue to be drained by its metaverse adventures. we prefer genai peers with a clear path to monetization including alphabet, microsoft, salesforce, and oracle. what is it about the path to monetization that you don't believe in at meta? stefan: there are three concerns. they will have to spend more to get there on genai.

to be up to 40% this year. consensus doesn't have much growth from there to 2026 to weep your capex will be higher than expected. they're not really freeing up investment by cutting elsewhere. we have the year of efficiency, but what we are seeing from other peers, whether it is apple cutting the ev business or microsoft scaling back microsoft surface hardware sales, they're carving out investment areas for genai. with meta we are seeing the opposite. the third thing as you mentioned is on monetization. we are seeing microsoft, 4 billion in revenues. we think 10 billion next year from azure and copilot combined. google, workspace subscriptions, google cloud enterprise services, genai search monetization. for meta, the revenue is coming from facebook and instagram. yes, there are monetization opportunities from whatsapp, but it is very early days and that

will take time. jonathan: achieving victory will take massive capex and meta may be depleted. would you change your view if they backed away further from the metaverse stuff? stefan: we would have to reevaluate, but that is part of our thesis. those investments looked to be accelerating from here. , ironically when you look at google they have the other best business which they get a lot of grief about, but losses are declining. they are down 10% over the last 12 months to about one billion a quarter for reality labs it is going in the opposite direction. you have 4 billion of quarterly losses on average over the last four quarters and that is likely to accelerate.if remove those 20 billion in losses that changes the cash flow outlook for the company. lisa: 63 buys, three holds, three cell ratings.

you are among the three cell ratings. how difficult is it as an analyst to put a sale on a company that a lot of people have a lot of love for? stefan: to be honest it's not easy. it is important to say that for all of these companies, they are great companies and meta is another great company, but as you discussed with apple and other tech stocks, there are times to own them, times not to own them, and for some of these companies who go through massive investment phases, specifically thinking of amazon and meta, you typically haven't wanted to own them during those periods of investment and you do want to own them in periods of harvesting. we have seen that with meta over the last couple of years. the stock is up over 400%. we have seen that with amazon as well. it looks like both companies are moving back into that investment phase. right now the market thinks that that is oh -- that is ok,

they have learned, they will manage the efficiency side of the equation and drive investments for future growth. lisa: there is a theme where spending can be good. capex spending boom can be the appropriate thing to do if it's on the right types of operations. are you pushing back saying in general during investment cycles they are not going to have the cash to give it back to you, so probably going to underperform? stefan: a bit of bothstefan:. absolutely investing is good and the genai investments are good. we are seeing the core ai investments already paying offer meta through improved recommendation engines and content for users through ad targeting and measurement for advertisers. i think that genai is the right way to go in terms of investments. the monetization mechanism isn't clear yet. it will take time. i think reality labs, the market would like to see the company say that we still believe and it but it will take more time to

play out than we originally anticipated. so, we are going to move some of that spending towards ai and that is where we have some concerns near-term. annmarie: you prefer genai. what company do you think is doing it well if you do not like meta? stefan: it is not a question of not liking meta, just that they have further to spend to catch up when you look at the proprietary silicon that they are developing for model training at inference. this is something that google has been doing for seven years with their gpu's and aws has been doing for years. amazon will have their chip available in the second half of this year, which will probably drive more consumption of amazon web services platform. there is more investment to come. when you look at google, it is trading at a discount to meta. one of the reasons that these stocks traded on discounts is because they have been perceived to be one trick ponies, just

advertising. we are seeing with google 25% of sales from prescriptions from consumption, 120 5 million subscribers for you to premium services,, 8 million subscribers for youtube tv, and google cloud business which is gaining recognition with enterprises is still trading on a discount. we think that as they continue to diversify the revenue streams they will see the valuation with meta flip. we think meta could go up to 5% with google falling to 4% free cash shield. jonathan: looking ahead to this number trying to get a read on the u.s. consumer, most of the major companies in your coverage have reported earnings. i want to understand from your perspective what state the economy is in right now. if you can strip out the secular growth themes and focus on the cycle, what strength do you see? stefan: we published yesterday our bnp paribas global cloud scanner at survey of 100 software buyers.the

way that we characterize it is things are rolling along the bottom. they are not getting better or worse in terms of enterprise technology spend. slightly better in the u.s. with large enterprise and slightly more cautious in europe and with small businesses. on the consumer front it is not great. amazon said the same thing last week. we upgraded shopify yesterday and we think that their results will be good enough to see some revenue growth acceleration. to your point, a lot of the growth trends continue to power through. what is exciting is it is not about genai yet. the numbers today are from the core businesses which remain healthy. genai is yet to come and those valuations a reasonable considering they're not factoring in the contribution yet to come. jonathan: let's do it again soon. the latest on meta, a rare underperform. lisa: i liked your question about what have we learned. he said, we are rolling along the bottom. that indicates a different

picture than what we are hearing in terms of optimism and boom times and a late cycle. rolling along the bottom would indicate more of an early cycle because you only have up to go. that is a very interesting take. jonathan: negative by about one quarter of 1%. here is your bloomberg brief with dani burger. dani: a second boeing whistleblower has died. a former quality auditor at a boeing supplier spirit air systems died two weeks after developing breathing problems according to the seattle times. the employee raised concerns about the safety of the 737 jet. in march another boeing whistleblower reportedly died from a self-inflicted wound. the drama is continuing in the bid for paramount global. this time, it is apollo and sony making an offer. $26 billion, all cash. it is described as an nonbinding expression of interest. paramount has been in exclusive talks with sky dance media, but

a number shareholders protested the offer saying that it gave controlling shareholder sherry redstone a sweetheart deal. that period of exclusivity is scheduled to end today. ferrari is using the miami grand prix as an opportunity to unveil a new sports car and boast a top speed of 200 miles an hour. it will cost more than 400 thousand dollars and it is inspired by ferrari's touring cars of the 1960's. deliveries will begin by the end of this year. if they want a marketing moment, have lewis hamilton show up in that thing this weekend. jonathan: i'm not sure he can do it yet, but when he can those things will sell. we accept gifts. we don't accept gifts, i'm told. just in case anyone was interesting in sending me one. a cheeky 400k, what is that between friends? annmarie: they can send it for a test drive and then you send it back. jonathan: a permanent test

drive. we accept gifts? we don't. counting down to the payroll report. >> if you were to see a move lower in the payroll that would shift the overall thinking in the jobs market and potential summer rate cut back in play. jonathan: you don't think that they would allow a cheeky ferrari as an exception to the rule? lisa: i suspect that you will get a toy for ari kara. jonathan: looking forward to the grand prix this weekend. we accept tickets. lisa: we don't. stop. jonathan: the federal reserve countdown is behind us and the payroll countdown continues. 45 minutes. the number, 400 k. ♪

jonathan: just to reiterate, we do not accept gifts. i'm glad we cleared that up. lisa: we may or may not have gotten in trouble. jonathan: trouble with

management. come on, jokes going into the weekend. get a grip. s&p positive by .5%. the fx market, i said i didn't make that better. counting down to the payrolls report. >> it has been hard to say that the jobs market is weakening. i think that if you were to see a big move lower in terms of the payrolls, that would really shift the overall thinking in the jobs market. and, potentially, keep it where at least a potential summer rate cut is back in play. it would take more than just a weak april number. jonathan: less than one hour from the april payrolls report. expecting a gain of 250 thousand jobs in consensus with wells fargo, jp morgan, and bank of america. we expect continued strength in april, the pace slowed slightly from recent months. the forecast is likely

consistent with marginal cycling in the labor market. -- marginal slackening in the labor market. sensitive to the downside, i wonder if you agree with this line. after powell took hikes off the table, downside risk to yields are magnified by downside risks in today's jobs report. are we sensitive to the downside this morning? >> i do agree. i think chair powell has been dismissing stronger job gains because we don't know how many jobs we can add to the economy without it being inflationary. when chair powell laid out the two paths for policy, higher for longer or cuts and what could drive more aggressive cuts is a faster deterioration in the labor market. the onus is on the labor market for more cuts. jonathan: what is the source of the downside based on the information we have in front of us? what could the possible source of downside be? sarah: it is hard to see meaningful deterioration. upside in the first quarter was warmer weather so we got stronger construction jobs and

stronger retail, which is a question because retail sales haven't been very strong. we could get quite a bit of payback and that could shave off 50,000 if we get more downside on those two components. lisa: how do you understand the rhetoric that we hear from companies that is less optimistic, less rosy than what we are hearing from headline numbers? how do you understand that discrepancy? sarah: we are seeing pockets of the consumer deteriorating and where they are spending but the overall picture is healthy. households are spending on services and not goods. we have been saying that goods would be weak. that is captured in companies in the stock market where in the broader economy -- we are a services economy. 70% of consumer spending is on services. we are saying that price and unit growth is under pressure for retail. people don't want to spend on everything anymore. interest rates are high and lending standards are tight. the other thing is the lower in consumer which has been in recession for over a year.

we are seeing that come through in the company dataware in the leisure space hotels are not doing as well, grocers, people are not dining at mcdonald under going back to grocery shopping. there are pockets that are doing better and others that are doing worse. if you look at services spending it is up 4% on the quarter. extraordinarily strong. lisa: i'm trying to understand if we can bank on the high-end consumers supporting the overall economy while there is essentially a recession for lower end consumers.it can come together and this is the bottom. that is what we were hearing from an analyst who covers the tech space. do you see that we are rolling along the bottom with these shifting sands and we will come out the other side on an upswing? sarah: i think we are rolling through the bottom. the upside will come when the cuts happen and that will ease up the credit market and allow lower and middle income

houses to spend more and allow for more churn in the housing market. they will be spending more on their home and that stimulates the economy significantly. the top 20% income distribution drive a percent of consumer spending. they run the economy in a lot of ways. if they want to keep spending, if they spend at a solid pace, that's enough for us to chug along without a recession. annmarie: if the data doesn't come in time to give powell the confidence to cut but the lower end consumers already in a recession, how much damage is it to those individuals if this is prolonged? sarah: it is tricky because powell has to act on the aggregate data. overall gdp numbers are strong and payrolls are strong but the lower end consumer has been under pressure from a lot of reasons.we have been talking about why the aggregate consumer would fare better in the cycle than in previous ones. the biggest is fixed rate debt. 90% of debt is a fixed rate debt

and that is not the reality if you are a homeowner where half of the debt is on a revolving rate.if you look at the household , it is better in this cycle than in previous cycles because of the saving buffer. the ratio of debt to savings is lower, but it is for the households that saved. the middle and higher income households are sitting on a lot of savings. powell is in a conundrum where the best thing he could do is keep a strong labor market so real wages go up. that is what matters the most for the lower income houses. we have a long way to go on real wage levels for low income houses but we are on the recovery. annmarie: let's talk about the upswing in immigration. how do you think about this? sarah: immigration basically means that the economy is bigger, near-term potential labor growth is stronger, near-term potential gdp is stronger as well. we estimated the number of jobs you can add to the economy without moving unemployment,

255,000 because of how strong immigration growth is. that means that if we get a handle on payrolls we should think that that is actually a possibly weak print which is crazy when we used to think that breakevens were 150,000. jonathan: is this getting harder to understand? sarah: totally getting harder. jonathan: i remember the estimates, the lowest 200k and the high was 500k. it was throwing darts with a blindfold. i wonder how easy it is to understand what is happening in this economy? sarah: it is tricky because the immigration flows were happening last year but we didn't figure it out until two months ago when the cbo came out with estimates. we have been reading the economy wrong in 2023 and now we have a better sense. what i worry about as well be are getting a lot of immigration growth and it's helping to support jobs and overall gdp, what about skill frictions, geographical frictions? typically you see immigrants

work in agriculture, construction. those are not the hot industries right now. we are seeing more hiring in food services, leisure, and hospitality. you need to make sure that we're the labor supplies coming matches the demand and that will be the question for how high the unemployment rate goes this year. lisa: how fragile are soft landing? that the consumer can keep spending as a low income consumers flat on their back? sarah: at this point it is hard for me to see, given everything that we know, a hard landing scenario playing out anytime soon. the hard landing scenario could come in 2025 if the fed has kept rates too high for too long and they react to late. what could come with that is core services are stickier, we see rents re-accelerate and that worries the fed, and then we get to a scenario where they waited too long. chair powell says that the lags

are longer than they thought so we may get a big impact into 2025. there is still a risk management approach where the affluence he does have to cut to stimulate the economy at some point. where we are now the recession risks are still fairly low. jonathan: things are super complex right now. the team of morgan stanley is looking for 250 at. 8:30 eastern the median estimate is 240 thousand. coming up, the former fed governor and the really at mohamed el-erian. that is your third hour bloomberg surveillance just around the corner. lisa: this is why i don't believe in midlife crises. they are rolling crises, rolling recessions, they are similar. jonathan: who is this message to? lisa: just general. jonathan: this is bloomberg. ♪

tamra, izzy, and emma... they respond to emails with phone calls... and they don't 'circle back', they're already there. they wear business sneakers and pad their keyboards with something that makes their clickety-clacking... clickety-clackier. but no one loves logistics as much as they do.

you need tamra, izzy, and emma. they need a retirement plan. work with principal so we can help you with a retirement and benefits plan that's right for your team. (jennifer) the reason why golo customers have such long term success let our expertise round out yours. is because we focus on real foods in the right balance and benefits plan that's right for your team. so you get the results you want. when i tell people how easy it was for me to lose weight on golo, they don't believe me. they don't believe i can eat real food and lose this much weight. the release supplement makes losing weight easy. release sets you up for successful weight loss because it supports your blood sugar levels between meals so you aren't hungry or fatigued. after i started taking release, the weight just started falling off. since starting golo and taking release, i've gone from a size 12 to a 4. before golo, i was hungry all the time and constantly thinking about food. after taking release, that stopped. with release, i didn't feel that hunger that comes with dieting. which made the golo plan really easy to stick to.

since starting golo and release, i have dropped seven pant sizes and i've kept it off. golo is real, our customers are real, and our success stories are real. why not give it a try? you're probably not easily persuaded to switch mobile providers for your business. but what if we told you it's possible that comcast business mobile can save you up to 75% a year on your wireless bill versus the big three carriers? you can get two unlimited lines for just $30 each a month. all on the most reliable 5g mobile network—nationwide. wireless that works for you. for a limited time, ask how to save up to $830 off an eligible 5g phone when you switch to comcast business mobile. don't wait! call, click or visit an xfinity store today. when you show generosity

of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. we have been able to reach over 100 million people impacted and affected, and at risk of hiv. the rocket fund takes all of the work that we're doing, all over the world, and looks at the most effective ways, to get resources to them, to get services to them. the idea that we have saved five million people's lives, it's overwhelming. it's everything. >> right now i think that the labor market is holding up fairly well. >> you will see the labor market showing an easing of tightness. >> we need to draw a huge distinction between re-normalizing and weakness in the labor market. >> the labor market is getting into better balance in terms of supply and demand. >> we can't continue to see 3000 to 5000 jobs.

we need to see a stabilization. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: it is payrolls friday 30 minutes away. the third hour of surveillance begins now. live from new york city, good morning, good morning. your lineup for the next 60 to -- 60 minutes, the former fed governor, jeff rosenberg of black rock, mohamed el-erian of queens college cambridge. looking for 240 k, the median estimate according to our colleague, the highest median forecast before payrolls going all the way back to september 2022. lisa: you asked sarah and she said you have to add in an extra 225 k to get up to speed which shows how little everyone understands this labor market that has been buffeted by a bunch of different trends. jonathan: listen to these numbers. three-month average, 27 six. today, 240.

goldman, 275. a whole group around 250. annmarie: we heard from sarah wolf that to 25 per month is breakeven even though they are expecting a little under that. you can see how robust the labor market is. it looks like everyone is looking at wages because if you want to look at what's going on in inflation you need to see if the strong supply in the labor market -- jay powell said if he sees a strong pace of immigration is that putting a lid potentially on wages? jonathan: citi, this morning, downside risk, sensitive to the downside. after powell took hikes off the table and this week's meeting, downside risk deals magnified by downside risks in today's jobs report. asymmetry i think is the word of the last couple of days. lisa: this is something that andrea has been at least saying out loud, but a lot of people seem to be agreeing because you can see a bringing forward of rate cuts.

you said they're bringing it forward to november, which doesn't seem feasible or like it's that soon, however it highlights how much this changed things in terms of people's understanding of the fed's reaction function and what it would take. jonathan: you start the year with seven cuts priced into the market all the way close to a single cut before the federal reserve meeting this week. it could swing the other way depending on the data. the consensus position on wall street is that you can't get cuts in september. i don't understand it. we have qe3 in september 2012. if the data is there and that led us to that position through the summer, why can't they cut? lisa: if we see weakness that justifies a cut and it is enough to cause some kind of a pivot or turn -- jonathan: pivot on a pivot on a pivot. lisa: wouldn't that be negative for risk assets? wouldn't that highlight weakness that everyone shrugs off and says that it's just a pocket here, pocket there, but it all

comes together in a good way? jonathan: this conversation could change in either direction at 8:30 a.m. eastern positive by four tens of 1%. thursday down on the week on the margin on the s&p 500. yields have been lower through most of the week. i said earlier this morning that eci, employment cost index, came in with an upside surprise taking yields higher. that data point feels like a lifetime ago. lisa: especially because jay powell didn't address it. can they cut unless there is weakness? people are discounting that. are we cutting for the right reason? i go back to these narratives and understand that we were told at the top of the show that that was silly to do. however, it's hard to understand from a theoretical standpoint framing what's going on right now. jonathan: the jobs report around the corner. it is 25 minutes away, looking for 200 40 k. natalie of ubs saying that rate

cuts are delayed not canceled and the fed put is alive, which should help support equities. we recognize equities could stay choppy near term, but we believe the broader uptrend will persist. nadia, why is fed put alive and well? nadia: chair powell made it clear saying it is unlikely the next step will be a rate hike, so that should provide a floor to the market. he is pointing to the employment numbers, any signs of weakness in the job numbers will cause the fed to move forward and reduce monetary policy and begin the cutting campaign. we think that the fed will likely start to cut in september. not because of the economic environment being weak, but more so because we think inflation will start to back again on the disinflationary trend back towards a 2% target next year. jonathan: have had lots of bond strategists tell us how bonds would respond to any given number telling us that the bond

market would be more sensitive to a downside surprise than an upside surprise because they believe that after chairman powell reestablished the reaction function of the federal reserve it puts a lid on yields. does it mean the same thing, more responsive to downside than upside surprises, or is it good news is bad news and bad news is good news? nadia: at this point good news is good news and bad news is good news to a point. at the end of the day what matters for equity is the growth backdrop. we don't want that too much. if economic growth can continue to hold in there, that should be enough to sustain the equity markets. the earnings season itself has been quite positive. we think that that will help the markets resume its upward trend in coming weeks. and then you have buybacks coming back to the market. lisa: the level of confusion and lack of conviction is shocking to me because we are at the point where we cannot figure out where to place things, and neither can the fed and they have been vocal about that. how much does that contribute to your expectation of a great

degree of huge price swings on some data? how do you prepare yourself for a level of volatility that we haven't seen but on the broad market sphere but see an individual stocks were you get to trillion dollar company swinging 13% and a couple of hours? nadia: we think that the market is likely to remain choppy here. the market is looking for some clarity around inflation. we can get that in the next couple of weeks when we get pce. we want to see how much of that first quarter hotness was due to seasonal factors or catch ups. we need clarity on that. we will be passed the blackout for buybacks. overnight we saw a huge announcement in terms of buyback, so large that when you think about it is more than -- a market cap of 80% of the s&p 500. corporate's are big part of their story. we think that it typically happens that investors take a few weeks after the earnings to absorb all of the information,

lisa, and digest and analyze it. we think that that will happen. once they see that we have corporate earnings that have grown at double-digit rates, that will encourage people to step in and by this market. lisa: with respect to the buybacks, how much do you follow them? you can't understand the macro, so you put that aside and you look if you are buying back the size of ford and gm combined plus a couple other companies. you say that that's good, we were going to go for value, let's just follow that? nadia: it is important to some of these stocks. the reality is up against a big buyer, but we don't just focus on buybacks. it is an increment a positive, but overall what is at the end is what is happening with corporate earnings. this earnings season we are seeing the rest of the market, that 493, they are growing again, lisa, for the first time in over a year. we expect that the broader now as we get to the rest of the year.

particularly outside of tech, which we continue to like, we are super excited about industrials. we have been talking to clients about looking at ai through an industrial lens. all of the spending that is happening for data, a tremendous amount of spend. these companies are at the forefront, the epicenter of the data center buildout. lisa: chris said, no, this is silly. if you want to own ai own ai. if you want to own utilities, own utilities for utilities. you don't agree? nadia: that's different. utilities are catching a bit from the ai trade helping them to overcome the headwinds of higher rates. but the industrial companies, you think that there is a bottleneck around getting an ai gpu chip, guess what, when i talk to industrial analysts, he tells me that there is a huge bottleneck around large transformers needed to be able to download power from the grid to these data centers to be able

to cool them. it takes two to three years to get one. annmarie: mary these two stories together, ai and the print we are waiting for. how much are you seeing in these companies using ai actually mean that they can have a little less human workers? nadia: you are seeing improvement inefficiencies. we've heard companies talk about improving efficiency at 80% and so forth. that will have implications for the job market going forward, but as we have seen with past technological changes, it means that jobs are shifting. it doesn't mean that it will be detrimental to the job market. at the end of the day we want to be more productive and use our skills in ways that support the overall economic environment. we think that you will see a shift but it won't be too disruptive to the job market. jonathan: how do you want to play the broadening out? nadia: we are looking at health care. again, some secular trends, you look at the numbers that we saw

this past week in some of the obesity names, and despite stronger demand constraint is holding that growth, supply constraint. we should have more capacity coming online this year and that should help even boost the topline more for some of these diabetes and obesity companies. the reality is that we are seeing new data from some ongoing trials with companies i won't name, but you know what i'm talking about. it isn't just the two top companies in obesity. you have the potential other players coming in subsequently. jonathan: not just eli lilly and novo. i can say that for you. speaking to robert of bloomberg intelligence last night, one of the best, you should reach out to him, apple rewarded shareholders with more than 839 billion dollars since 2012. that number after yesterday is higher. lisa: it is a shocking amount. nadia said that it's bigger than 80% of the market capitalization at the s&p 500. at this point, how do you view this company? is this a growth stock or are you counting on them just to --

jonathan: that is the equivalent of a boeing or a lockheed martin. lisa: both of them combined depending on how things go. jonathan: i think that we all need boeing to get better. s&p futures positive by positive one third of 1%. here's your bloomberg brief with dani burger. dani: it is probably worth checking on apple given the buyback up 6%. it also defied some of the worst of the gloom. let's be honest it also raised questions on the china sales versus weaker third-party channel checks. the 110 billion, to be fair, it topped the 100 billion the prior record, which was also apple. dan ives is along on apple voting that betting against cook and cupertino in an ai driven super cycle and 110 billion dollar buyback is the wrong move for investors. shares of coinbase on the other

hand are sliding down more than 4.5 even though it had a first quarter peak. it's trading volume and downloads have surged in january, but analysts point out that that was largely to be expected with the record run-up in bitcoin. on the other hand, there are potential regulations, dropping transaction revenue that overshadowed the beat. i might have one of the companies that nadia mentioned but didn't name. amgen surging in the premarket thanks to their push into obesity drugs. the ceo says that he was encouraged by a trial of their experimental obesity drug. if approved amgen said that patients would use a hand-held autoinjector once a month or even less frequently -- less frequent single injections. ozempic you need to take once weekly. that potential competition has sent novo shares down 4% this morning. jonathan: she won't confirm or

deny. appreciate it. payrolls come in the most important since the last until the next one. lisa: basically every time. i love how analysts say that it is one number in a number of numbers. some of the commentary on the street is it will be wild, expect huge vol. jonathan: that should be the promo for the next 15 or 20 minutes. it will be wild at: 30 p.m. eastern the jobs report is just around the corner. >> the unemployment rate has been below 4% for two years. as the process of normalization continues, it is hard to get worried about how it is evolving. jonathan: live from new york city, good morning. ♪

jonathan: the scores on the board on the i -- on the s&p 500, equities positive by zero point 4%. yields are lower down two or three basis points, 4.5527.

how different that screen looks compared to where we were after the employment cost index earlier this week. lisa: when people were still talking about rate and oui her jay powell talking about the potential for no cuts or a lot of cuts. it seems right now people are wondering, how quickly can we cut rates and will this rate confirm that? jonathan: the two-year was at 5%. the 10 year is now at 4.5 five. under surveillance the jobs report is just around the corner. >> it is hard to get too nervous about the health or state of the labor market. it looks like we are still looking healthy, the foundation for the economy is solid.i think that we need to draw a huge distinction between green normal eyes and of the labor market and weakness of the labor market. the unemployment rate has been below 4% for two years. as the process of normalization continues, it is hard to get worried about how it is all evolving.

jonathan: the april payrolls report is moments away. the median estimate in our survey of bloomberg is calling for 240,000 jobs. a former fed governor joins us to discuss. the last time that we spoke ahead of this number you said that the focus should be on wages. is that still the case? >> definitely. you can see from jay powell's remarks that he is laser focused on what the labor market means for inflation and the productivity numbers came out not as strong as they had been from before. the productivity numbers aren't strong, that means that it's hard to have continued 4% wage growth. the inflationary down to 2%. jonathan: how strong is the relationship between headline payrolls growth and wage growth? randy: so, it is a reasonable but not perfect relationship. a lot of it has to do with expectations. where do people think inflation will go and making up for lost time over the last couple of

years where inflation was much higher than wages and people are still saying that i need to catch up because it is so expensive for me to put food on the table for my household. lisa: are you surprised that in light of that jay powell did not talk about eci? randy: i don't think that he wants to emphasize one particular number too much, but that is one of the things that they are thinking about. the most important input price in the entire economy is the wage. lisa: do you think that this is a legitimate reason to take rate hikes off the table? why do you have confidence to take that potential risk out of the markets expectations in light of data points that have shown hot wage inflation? randy: he is hoping that it's not going to be an uptick. we have seen the inflationary come down very significantly but stall. we talked about this last mile

problem, getting down to the 2%. he is thinking that we are still in restrictive territory but he doesn't want to be too restrictive because he wants the labor market to be as strong as it can be, bringing us to 2%. the immaculate disinflation that goldilocks scenario. lisa: this piggybacks off of the conversation that we were having with sarah wolf of morgan stanley where she said, part of the calculus is that lower income families are pretty much struggling, pretty much in recession.he wants to keep the labor market as strong as possible so at the next leg they can catch up. how much do you think that is behind what some people are interpreting as a prettied up this -- as a pretty dovish message? randy: he wants to keep the labor market strong for all the different groups, but that is an important focus. in 2020 they came out with her average inflation targeting approach. they emphasized trying to keep

the labor market running harder to help people at the lower end. i don't think that that has been forgotten. annmarie: what do you make that the conference board is concerned not about inflation so much with u.s. consumers but concerned about wages and potentially their next job? randy: i do think that there are some signs that the labor market is starting to slow a little bit. certainly, the number of unemployed workers per job opening has changed a bit to make things less sanguine for the markets. we will see what happens with this employment report. i think at some point we will see the job markets slow. anecdotally i have been getting more and more feedback that we are seeing that not only at the lower end of the market that at the high-end of the market. lisa: do you think that the headline figures are masking weakness under the hood? randy: it could be. we need to look into the details of the numbers to see what sectors, what pieces are

strength and weakness. so, i think things overall look pretty good. so far, we have had something close to an immaculate disinflation without any uptick in the unemployment rate and inflation coming down from almost 9% two, depending on how you measure, 3%. that is a pretty good record so far. lisa: how much conviction do you have in the soft landing versus the prospect of a hard landing? that this weakness is actually going to suddenly materialize at a time when the fed has not yet cut rates? randy: i think, as you have heard me say before, not soft or hard landing, but hard-ish landing. at some point you will have to pay the piper. at some point you will see the unemployment rate move up. part of this is because fed policies only become really restrictive relatively recently if you look at the inflation-adjusted interest

rate, the real interest rate. it is only become positive over the last six months or so. the same thing for wage growth. real wage growth had been negative and now it has been positive only after the last six months. that is great for families but less desirable for firms to be hiring people when they have to pay them 4% more and can only sell things at 2% to 3% more. given the typical logs of nine months to 18 months, towards the end of this year you will see the unemployment rate tick up. i do think that you will see a slowdown. jonathan: i understand the logic, consumers lose confidence, corporations lose pricing power, and you reach for the lever that no one wants to. it happens in cycles. they lay people off. there was a feeling out of the pandemic that there would be hoarding of labor because of trouble hiring. randy: i think that i would look

for -- well, look at the overall numbers that we have been seeing now. more lower wage inflation. that would say that people aren't pushing as much as they were. also, less quits, which we have seen. people seem to be less certain about the market. you had the great resignation. everyone was willing to quit because they knew that they could move somewhere else and get paid more. we aren't seeing as much of that. these are the beginning signs of at least less heat in the labor market. jonathan: enjoyed this, always fantastic. the former fed governor breaking it down for you. six minutes from the payrolls report. mike mckee, you will be breaking down the number. walk us through what you are focused on this morning. michael: two things. the first thing to get everyone's attention -- jonathan: i believe that we lost

that line. are you back with us? carry on, please. michael: they invented the internet out here, so it doesn't work. we have 240,000 is the economist consensus, the highest since september of 22. economists are betting on a fairly strong number. the whisper number is 244. everyone is leaning in the direction of strength. if we don't get that, that will cause a reaction on wall street because people are looking for that slowdown that jay powell is talking about. the other figures are average hourly earnings. do we see a difference that suggests that we are seeing wage pressures? we got that in the eci last week. jonathan: we apologize for the technical connection. we will reestablish that and get it set up for in five minutes when the payrolls drops. i think it 10:30 eastern there

is goolsby and williams sitting down together this evening responding to this. so, a fantastic line of of guests on bloomberg. also, the fed reaction following this number that drops in and for minutes. 240 is the estimate, the median estimate. mike mckee will break it down. mohamed el-erian and jeff rosenberg reacting. the jobs number drops next. ♪

i don't want you to move. i'm gonna miss you so much. you realize we'll have internet waiting for us at the new place, right? oh, we know. we just like making a scene. transferring your services has never been easier. get connected on the day of your move with the xfinity app.

can i sleep over at your new place? can katie sleep over tonight? sure, honey! this generation is so dramatic! move with xfinity.

jonathan: the jobs report, 20 seconds away. the scores going into it look like this. equity futures positive by .4%. on the nasdaq, up by .6%. in the bond market, the 2-year yields lower by two basis points. on a 10 year, down three or four basis points. the estimate in our survey, 240,000. mike mcgee can break it down. hey, mike. mike: jon, we seem to have some good news, at least as far as wall street is concerned, thinking that maybe the economy would slow, and one hunted 75 thousand is certainly slow compared -- 175,000 is certainly slow compared to what we have seen in recent months.

303,000 has come down to 175,000 this month. i'm looking for the change here, but the employment -- unemployment rate goes up a little bit, 3.9%. change in private payrolls, 167,000. we have really come down, almost half of what we had last time. the unemployment rate, 3.9%. average hourly earnings, only .2%, which is going to be seen as very good news. there is some statistical reasons and number of economists thought it could be hotter, which pushes average hourly earnings below 4%, which may be the first time since the pandemic. weekly hours, 34.3. that is down from what we had the prior month. the labor force participation rate is unchanged at 62.7%. manufacturing payrolls, up 8000.

there were zero jobs expected, so manufacturing may be making a bit of a comeback. overall, 175,000, -2000 for revisions, which had to come out of probably the march numbers, because april revised up. i will dig into this and you guys can tip the brains to tell us what it all means. jonathan: there is a character from a fairytale you are going to hear a lot about today. goldilocks. this is what it looks like. 175 thousand, decent but not too high. if wall street could have made up these numbers, wall street would have come up with these numbers. wages a little bit softer. guess what the market is doing? rallying. we often say the first move is not necessarily the right one, but this makes sense. we are up to 1% on the s&p 500. up by more than 1.3% on the nasdaq. if you switch of the board and get to the bond market, we have talked about the asymmetry

coming into this number. that if it was lower than expected would move this market more than if it was higher than expected. it is. yields are lower by 14 basis points on the front and. you are now seeing the low 4.7 0's. on a 10 year, the eci report, the employment cost index feels like a lifetime ago. we have gone from 4.70 down to 4.4669, and down 11 basis points on the session. it is a double-digit move across the curve, and hello, tokyo. in japan it is about 9:3 3 p.m. friday evening, and i can tell you the ministry of finance is happier with this one. brammo, i think we call that the right kind of downside surprise. lisa: it is everything the fed would want and then some. you have lower-than-expected

wage inflation, and a number that is cool but not too cool. estimates were revised upward, so it is not this goldilocks type of feel, but to me the asymmetry point you have been bringing up, absolutely nailed it. what we were going to get is a big rally or bigger rally. right now it is the bigger one. jonathan: we are up by 2% on the russell. the opening bell, a little less than 60 minutes away. here are the numbers. 175,000 is the number. the estimate was to 40,000. looking at unemployment, it comes in at 3.9%. and wage growth month over month, .2%. the estimate, .3%. to react, here is the lineup. mohamed el-erian alongside jeff rosenberg. your reaction to this one? mohamed: you said it. a goldilocks report that would

please the markets. i'm not particularly surprised on the miss on job creation, because we have been running at very high levels for the year. a monthly average of 251,000 before this one. i'm a little surprised on the wage, .2%. that is the one that surprises me. but overall it is a goldilocks report. jonathan: at first look how would you explain that? how would you explain this continued strength in payrolls growth and this softness in wages? mohamed: i know how it will be explained. it will be explained by a new entrance into the look -- into the labor force at a much lower level. i'm surprised it has made that much of an impact. that is something one needs to look at much more closely. lisa: jeff rosenberg, i love your take on this. are you celebrating also? do you think this is a reason to buy or a lot of noise from people who are looking for any direction at all? jeff: i think jonathan said it.

this could not have been scripted better. this report runs the tables for a good report. it is really just about how bearish we got, jonathan mentioned it, the eci, expectations in front of wednesday's fomc. some of this is positioning. you had a lot of bearishness, so people put shorts on. this is a good report across the board for validating what we heard from jay powell on wednesday that, kind of things are going to slow, don't get overexcited. it is a little bit of that over excitement on the short side that is being writing -- running out of the markets. lisa: does it concern you with that we saw the unemployment rate tick up? mohamed: does it concern me? yes, because people are losing

their jobs. let's not forget we have had 27-straight months of the unemployment rate below 4.4%. we have not seen that since the 60's. we have been an exceptional economy. does it surprise me? no. but if the increase accelerates, that would really worry me. member, especially at the low income side wages are key to consumption and economic growth. pandemic savings have been run down. credit card balances have been run up. wage income is absolutely critical -- critical to the well-being of this economy. 3.9% is still a good unemployment rate. when i would not want to see it get close to 4.5% anytime soon. annmarie: this softer print, is this enough for people to start talking about cuts this summer? mohamed: i suspect that what was pushed back to december got pushed, you know, i don't know

which way we go. i pushed forward to november before this, and after chair powell this will take us to september. there is a bigger issue, and others can speak to it much better than i can. this volatility we are seeing in the end for -- interest rate structure. it is causing havoc elsewhere in the world, when u.s. rates swing as much as they do on a short-term basis. this volatility, which we are continuing to see in rates, risks breaking something elsewhere. that is what we've got to keep an eye on. jonathan: the next stop for this conversation, may 15 is when we get the cpi report. jeff, let's talk about that. how much expectations have swinged. i remember the conversation we had with aberdeen. we have gone from seven cuts to one. arguably by the end of today we

will be talking about two again because of this job sprint. what do you make of that? out quickly we have gone from one direction to the other in rate pricing? jeff: it is because the fed has abandoned forecast-based monetary policy, right? we basically have had a very bad experience with trying to forecast inflation, so we have abandoned forecasts and we reacted to the data. and we are reacting to the data because the fed reacts to the data. and it is very hard to know where that data is going. we have had cereal degrees of surprises, and we are continuing to see those surprises. that is why there is this heightened degree of volatility. the fed is no longer willing to provide a forecast, to stick with its forecast, to give the market a clear trajectory. so we are really forced to react and change those expectations for timing based on every other -- every single data point. jonathan: mohamed, you have said

this every time we have spoken on payrolls fry white, a lack of a strategic anchoring concert -- contributing to this whip sewing -- whip-sawing. in the financial times i saw your recent article. chairman powell is right, not for the reason he believes. can you talk to us more about that? mohamed: i wanted to reach out and hug him through my computer, because he just said what i have been saying, which is the fed got on the roller coaster of reacting to high-frequency data. and therefore we have a very reactive fed. what does that do? it amplifies the volatility in the market. so, there is a concern that the fed is overly data-dependent. i think that overly data-dependent stance is what

might end up leading us into a fed policy mistake. i hope we don't get there. that is why a strategic view is necessary. i suspect if you want to take a strategic view would not have validated the market's overreaction from going from seven cuts all the way to one. some people even say you are going to get a hike. you would have said, no, this economy is slowing in a gradual fashion. that's not push it into something more dramatic. and you would stick to your two to three cuts this year. but this fed is data-dependent, so i don't know where they are going to end up? lisa: jeff, what is your take on that? that whipsawing narratives in markets is creating a headwind to how this plays out, and to the fed achieving their soft landing? jeff: it is a headwinds, but we also have to see the other side of this, that the equity market has been much more resilient to

these shifts in the interest rate narrative. when you think about financial conditions and the transition of market volatility into the real economy, it is mostly going to happen from the equity side. not to say that interest rates and credit spreads don't matter, but we are talking about volatility among elevated rates, base rates of borrowing in an environment of muted and compressed credit spreads. the marginal easing and tightening is coming from the equity side. and there the story has been much more about the numerator, much more about the secular growers, the incredible earnings we are seeing. as long as the rate picture stays bounded, unlike what we have had over the last two years with these huge swings from fed policy, inflation, uncertainty, i think you can mitigate some of that transmission of the volatility we are talk about as a result of the fed's policy shift into the real economy,

because you are not really seeing it transmitted through the equity market. lisa: do you think there is a challenge to the broadening outbreak? that this could cause a something to break outside the united states at a time where a lot of people are saying the u.s. is no longer so exceptional? does this challenge that? jeff: there are certainly challenges. jonathan highlighted the yen reaction. the fx component of interest-rate divergences. you always have those degrees. i think what we have seen, though, is a remarkable degree of resiliency in the global economy. i think we talked on wednesday about the differences in emerging-market sensitivity to fed policy this time around. really much more about a function of the change and the more traditional policy approach happening in emerging-market central banks, much more credible policy dampening some of that pass through.

i think you have, certainly, the core interest rate volatility, you look at the move index it is now between 150, 200, much higher interest rate volatility. that has its problems. we are seeing less pass-through in some of these more traditional areas, and the can mitigate some of this concern about the effect of the policy uncertainty from data dependence into the real economy. taking way what mohamed said, you still have the potential there for a policy mistake as a result of no longer anchoring to forecast-based policy. jonathan: let's reach for dollar-yen. talk about that move. it has been phenomenal. moments ago we had a 151 handle. right now holding on to 152. go from the highs of monday. 160.17. from there you have seen a move

of more than five percentage points. yen strength big time. i have mentioned the time in tokyo is 9:4 4 p.m. going into the weekend. walk away going -- into the weekend going good. lisa: they could walk away or lean in. we were little intervention now when they are in a holiday and you are getting a tailwind from u.s. economic data. you want to be speculative? good luck. jonathan: i don't know if this move sticks, but i'm sure they want it to. how happy do you think authorities are abroad? mohamed: certainly the japanese are very happy. between chair powell's more dovish than expected press conference and today's number, a lot of the pressure has been relieved. like you say, we were at 160 on monday, and we are risking another disorderly move. i suspect that around the world people will feel some relief.

you have emerging-market economies that need to cut interest rates from a domestic side, but are afraid of the consequences for their currency. yes, jeff is right. have been resilient so far. that degree of resilience has come down a lot. we should not test them too much. we have the ecb that wants to diverge for good reasons. it wants to diverge from the fed. it keeps telling us we are not fed-dependent, but knows there is a limit. for the rest of the world, it is about the movement in the u.s. yield curve. it is about what u.s. rates are doing. for the u.s. economy i agree with jeff, it is about the equity market. but for the rest of the world it is about what u.s. yields do. jonathan: the conversation has been dominated over the last month with words like exceptionalism. you have written about it. divergence. there will be some people excited about the prospect of convergence. that maybe we have seen the peak of the u.s. dollar, a peak in

u.s. yields. do you think those conversations after one job sprint are a little too premature? mohamed: totally premature. there is three elements to this behavior. one is growth performance. two is the manner in which it is investing in the future. and three is its ability to get away with a fiscal stance that other countries cannot get away with. in order to get convergence you would need convergence on all three. we are not going to get convergence on all three. the u.s. is going to remain exceptional. it's growth performance may not outpace others as much as it has, but it is the only major economy in the west that is seriously investing in tomorrow's engines of growth. and because of the role of the dollar it can run an irresponsible fiscal policy longer than others can. jonathan: they retain the

privilege for acting recklessly a little longer. it is a downside surprise but these numbers are pretty exceptional. lisa: that is why people are saying it is goldilocks. essentially this is not a market flat on its back. this is not a labor market grinding to a halt. it is one that is moderating. that is what people are going to say. and it is when wage pressures are not as great as some people had feared. jonathan: let's put some numbers on that. if you are just joining us, welcome to the program. 175,000 was the number. the median estimate was to 40,000. the previous number a lot higher than this, of course. the previous number sparked a conversation about whether we were running things too high. the unemployment rate comes in a little bit higher at 3.9%. the wage growth figure, average hourly earnings month over month, .2%. that is a downside surprise. the read across is obvious in

financial markets. equities had a look at this and ran away high. much higher. up by 1% on the s&p 500. the nasdaq up by 1.6%. you turn to the bond market, this is precisely what we have been talking about throughout the whole of this morning. the potential for a small downside surprise to generate a big move lower in bond yields. that is what you've got. a double-digit move at the front end. down nine on a 10 year. we have mentioned foreign-exchange are ready, but as you might expect the dollar is weaker against the bulk of g10 this morning. dollar-yen, 152.38 on a week we have had a look at 160. an unbelievable turnaround. mike mckee, you have had about 20 minutes to go over this one. what jumps out at you? mike: the interesting thing about unemployment -- and i will reassure mohamed a little bit with this -- is it was a very little move.

you have to go out three digits to see what happened. unemployment rose by 3.865%, which rounds up to 3.9%. we are at about 21 hundredths of a percentage point higher in unemployment. 63,000 people were unemployed, according to the household survey. 21,000 additional people were employed. the difference is that two hundredths. the fed has been looking for that. the other thing that stands out his that it looks like march -- april, rather, was a real outlier. not only was the number revised up there, march was revised lower and we have seen changes in the unemployment rates. last month black unemployment skyrocketed. now a comes back again. it is down to 5.6%, an eight

basis point drop there. it looks like april was an outlier with its strength, and march brings us back into the pattern where we are starting to slow down. so, other interesting numbers. governments lost jobs. transportation and warehousing gained a lot of jobs, and they had been losing jobs. construction was up, 9000. manufacturing, 8000. it is a broad strength in the economy, but at lower levels. jonathan: mike mckee, you are sitting down with goals be later. what is the first question after this one? mike: you know, in the past jay powell has said they get the numbers in advance when they have a meeting that week. i want to find out if that is true, because that might explain why he was so dovish and confident that inflation would continue to fall, even though wall street was having a bit of a heart attack.

so, that, and then where does he think inflation is going to go? and why? is it monetary policy pushing inflation down or are we going to see these one-off ski popping up? jonathan: looking forward to the conversation. still with us, jeff rosenberg hand mohamed el-erian. mohammed, what are you looking for from the fed speak going into next week? mohamed: first want to thank mike for reassuring me and thank him also for wearing blue after the mets' big win yesterday. that is really important. look, i would like to hear other federal officials reiterate what chair powell said. lisa: what about you, jeff? is that basically your takeaway too? you are now going to wait to hear what other fed officials are going to say i'm an otherwise it seems like this is the same place we were before? jeff: i think this is going to,

you know, kickoff the narrative about long and variable lags to the downside. and what a remarkable shift. bookmarking week, the beginning of the week was accelerating surprise to the upside, hawkishness. now you be on the downside. it drives the narrative the other direction. this fed is anchored on a couple of things. that is what i want to hear about. number one, this concept that it is about long and variable lags they are worried -- lags. they are worried about those lags, and this creates asymmetry. they believe this policy is sufficiently restrictive. i don't hear enough about the implication of financial conditions. impacting that degree of perceived restrictiveness. this is going to ease financial conditions. that is the flipside. you are running monetary policy with financial conditions in the driver's seat, not interest

rates. sometimes when the market gets ahead of itself it is too much of a good thing. those impacts, that assessment is what i want to hear. jonathan: we will see where these prices close at the end of today. jeff rosenberg of blacklock -- of blackrock alongside mohamed el-erian of queens college. the median estimate was to 40,000. we got 175 thousand. only three economists south of 200,000. we talked about this today. conditioned by upside surprises. everything started to climb higher. that was your downside surprise, and they have been rare. lisa: i'm not sure what to make of this. the only thing i can make of this is, this was a market coiled to move. whether it sticks is going to be a key question. i want to understand the composition issues that went into average hourly earnings to understand where the job gains were. annmarie: i know we talk a lot about this means -- about what

this means for the fed and chair powell. look at the jobs market. where is this jobs market going to be six months time, before the election? jonathan: i want to give a shout out to the team at citi, who were looking for a downside potential today. we are talking about asymmetry. repeatedly over the past few days. shout out to them. so far, so good. this swings we have seen in the market this week. we have mentioned this already. the cost employment index feels like a lifetime ago. the numbers we saw on monday on dollar-yen, 160, the levels we have seen on yields, at the front end, 5%, all the way back down. this narrative is it swinging from one point to the other repeatedly, whipping so

sensitive to incoming information every single month, every single day. lisa: and how much does that challenge the broadening out on -- the broadening out idea if other countries are depending on u.s. stability to gain trajectory? it also is there some kind of tightening effect of the wild swings, or is it without any consequence because earnings will continue to do what earnings do? jonathan: this conversation has been anything but stable this year. this conversation will continue on monday. here is the lineup. keith lerner of truest. we will cannot -- we will catch up with veronica clark. have a wonderful weekend for all of you at home. equities rallying by more than 1% going into that opening bell. 34 minutes away. from new york city, this was "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.

manus: from new york city, a very good morning. we are going to cap you down to the it is the slowest jobs growth in six months and a double digit drop in twos. the countdown to the open kicks in right now. coming up, it was a downside surprise in the u.s. payrolls reports, sending futures higher and treasury yields lower. apple announces the biggest buyback in u.s. history. we begin with a big issue. the jobs data in the usa. let's get to mike mckee to break these numbers down. wages were lighter on their feet. good morning. mike: good morning. it is a good