>> welcome to bloomberg markets. i'm sonali basak. traders are moving on bets the fed will cut september after the u.s. labor market posted smallest game in -- gain in six months the markets are at least. the s&p 500 is up more than 5100 on the day up more than 1.1 percent. still down on the week. a little exuberance, more in tech stocks.

the nasdaq 100 is up about 2% on the day. the two year yield is fighting stability around 480 two into the week, seven basis points lower on the day. even today's volatility does not show you how crazy it has been, about 5% days ago. the 10 year yield around 450, seven basis points lower. the equity side, apple posting a stronger than expected sales last quarter predicting a return to growth in the current quarter despite a drop in revenue. the board approved $110 billion of a share buyback, the largest in u.s. history. expedia shares are following -- falling after bookings missed estimates first quarter cutting sales forecast for the years. weakness in vrbo. and in the amgen ceo says early results from a study of its experimental obesity drug.

amgen is up more than 12% on the day. the job support misses putting a 20 24 interest rate cut back in play for the fed according to investors. mike mckee asked the former st. louis fed president jim bullard about the fight against inflation in the wake of the jobs miss. >> it's a good problem to have. the committee has been very successful. the economy is growing at a good pace. the labor market is very strong in today's report, a little softer than the last time. but still a very solid report. inflation is above target, but mark -- not nearly as much as it was. most people think it will head back to target going forward. >> for more let's bring in the pimco chief u.s. economist tiffany wilding.

it is kind of like a national holiday these days for bond traders looking at the bond support. when you saw softeners in the labor market it was pretty stark relative to what expectations were on the consensus. when you see this weakening, what is the risk things we can at a faster pace than people expect? >> it is funny. when we look at labor market data in more detail today we see what was a still reasonably solid report underlying all of the bond market reaction today. look at the details. government jobs have been quite strong. they were surprisingly weak. that contributed to a decent amount of the miss. we think the data will be revised. the government can be a little sketchy in how they report. it does tend to get revised. this was a headline payroll number a little above 200 k.

ultimately we are still seeing pretty solid trends. on the three months moving average basis we are above 250. a little under 250 on a six month moving average basis. that is a labor market i would say is quite strong. when we look around, there is not clear indication to us. certainly, things are slowing, moderating a little here. but, they are not falling off a cliff by any means. if you look at labor market data and the context of what has been very strong growth in the u.s., final domestic demand growth, a key indicator of what underlying demand is in the u.s. has been growing at about 3%, above measures of potential. if anything, when i look around, i c a u.s. economy that is quite strong. i think the bond market reaction today, if anything was a story about positioning and about the fact that even though we have a strong economy, even though

inflation is stuck above target that the fed is a long way from hiking rates. they could still be delayed. we expect them to show us they will be more delayed in cutting. at the same time, they are not prepared to hike at this point. i think the bond market may have gotten a little over its skis pricing data. that is why you are seeing it come out of yields today. sonali: it's a drastic move, not just through today but the whole week, or at least, the last two days of the week. how far over their skis are these investors bidding the bond market up now? when do you expect the first cut? tiffany: when we look at our core pce forecast, if you look at a reasonable monthly pace between now and the end of the year, call it .2 on a month over month basis, you are getting to

a 3% year-over-year rate at the end of the year. i bring that up because you have to have surprisingly weak inflation reports here to get at what was previously the fed forecast, two point six for the year. the 3% level of core pce is starting to get a little tricky in terms of optics for cutting. we still think the fed will be delayed here. delayed the back half of the year. we think they will get one done probably. when the sep comes out in june, absent surprisingly weak data between now and then, we still think they revise up their inflation forecasts and with that take out one or probably two rate cuts. sonali: when you think inflation data will look better at this point? given that the horizon has been pushed out, in your view, do you think there is a significant risks that still stand in the inflation story and where do the risks come from the most at this

juncture? tiffany: good question. when we look at the various underlying components, you have goods pricing. core goods pricing. that has a lot to do with global supply chains and what have you. a lot of the good news from the repair of global supply chains resulted in outright goods deflation last year. that, plus commodity price. that is done. we are seeing the acceleration of in goods prices at the same time services aren't coming down as quickly. yes, labor markets are getting into better balance. but they are still tight. core services like shelter inflation, that the fed has been using as a euphemism for wages, that is still running strong. you also have shelter inflation coming down much more slowly than anyone expected. all of that suggests inflation can be sticky. we are not out of the woods yet.

under the fed will hike, or at least, is not likely to hike, they might not be cutting as quickly either. >> are you having a conversation about a potentially higher or neutral rate at this point? we were talking to kkr and at the idea about the resting heart rate for inflation is a perennial thought they bring up with investors. do you believe inflation to some degree is higher than the 2% expectation? tiffany: yeah. the underlying neutral rate of inflation is i guess what you mean. what we have calculated is where we think the underlying trend in inflation is absent additional labor market weakening. if you have an employment -- unemployment rate shooting up at the going down into recession you will get inflation moderating. when we try to estimate those models and look at that, we found inflation absent any

further easing in the labor market, inflation looks like it is closer to 3% to us then it is to 2%. we have been saying that maybe the fed is ok with that as long as it is to point something. if they can still get a two handle on it they are comfortable cutting rates ultimately. it's kind of a strategy all law the opportunistic disinflation strategy of the 90's where they won't necessarily push the economy into recession to get the last mile, they will just let it hang there. we still think that is the case and even with more sticky inflation they will cut. they will try to get at least one in this year. sonali: it is surprising to see how knee-jerk bond reactions have been too sometimes, economic data that would not have been critical in prior cycles. thinking through the next week or so, the next couple weeks, let's call them tradable moments. some of the data you would consider most important thinking through this story, what would they be?

tiffany: obviously it will be inflation data. all eyes will be on that and we will get cpi data and pce data at the end of the month as usual. also, continuing to get a gauge on the strength of the consumer and how strong consumption growth continues to be. this has been the true outperformer this cycle. we should argue -- could argue that residential investment growth and broader investment growth slowed as you would expect with higher interest rates and what really saved the cycle was the fact that the consumer was still doing well. obviously there are wealth effects there. the consumer is not really being hit by higher interest rates. many consumers have locked in low rate mortgages. we still think there is some room. the consumer balance sheet is quite strong. consumers have more room to leverage up here. yes, credit card balances have been increasing. consumers have a lot of wealth

in their house and they are ok extending a little more. i think the party on that side can keep going for a little longer here. >> the american consumer is the hero of 2024. thank you for your analysis on a busy job stay today. next, we switch gears to talk about coinbase topping estimates first quarter. crypto demand sores and executives are cautious of a selloff. we hear from the cfo next. coinbase, as we know, can navigate the volatility. they have been for the last 10 years. we will see what is next. this is bloomberg.

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>> this is bloomberg markets. i'm sonali basak. it's time for the stock of the hour. coinbase revenue doubled first quarter in the wake of the rise of crypto prices and bitcoin etf's. the c-suite is urging caution going forward if there is a downturn in crypto sentiment. earlier we spoke to the going base cfo. listen. >> it is important to zoom out when talking about crypto. we see volatility day-to-day, week to week, month to month. over the last decade bitcoin has been the top-performing asset against all asset classes. we really focus on long-term trends. it is important to note when you look at all passive prior bull runs where you see price appreciation over time there has been intra-week, intraday, intra-month corrections to price. coinbase prepares for all environments. we are prepared for volatility. we have navigated this incredibly well over the last 10 years. it is just another day in crypto. it does not mean the long-term

does not continue to be as rosy as it was last week. ed: just another day in crypto does not carry with sonal and i because we have sleepless nights and never ending days of crypto. i get that volatility is a driver. we understand that. particularly, considering your customer base. there must be a psychological, sentimental element as well. take the news flow of light. a spot bitcoin etf and a half thing -- halfing have dominated headlines. due to those headlines dominate activity for you on the platform? alesia: absolutely. with the demand of bitcoin etf's it's natural to then see the price go up. it's natural to see elevated activity. crypto has been headline driven over the last decade. what is exciting to us is we now have the material part of our

revenue coming from non-trading activity. we have seen growth in our subscription and services through the downturn of 2023, through q1 where it was at 36% and we generated over $511 million of subscription services. and we are excited for the next wave of crypto adoption on chain. we are seeing the idea that we can now have base as alayer two do faster cheaper foundations giving the idea we might drive into payment. historically, speculative trading is very headline graven -- driven. but there is much more to crypto and we are excited about what we can do with our platform. sonali: ed ludlow joins us live from san francisco, the host of bloomberg technology. when you think about she was saying it's interesting. coinbase was up on the year so far, down on the day. how do you think about how the downturn in crypto ultimately impacts coinbase trying to diversify? ed: diversify being the key

point. there are so dependent, frankly, on the state of crypto markets more broadly. we had this a bigger picture academic discussion about the underlying technology. principally, blockchain. for them it is just an asset class. volatility in either direction is kind of good. i thought it was interesting, the data, the consumer transaction revenue doubled quarter sequentially. but, it is still institutional driving volumes. look at the sell side notes. they seized on that. they go, actually, even though the stock is down, they are tracking ahead of what the broader market activity is showing us now. >> it's weird because on one hand you have institutions showing up, at least by the numbers and then they have base that caters to the court crypto community. at the end of the day is wall street supposed to save the day for crypto? or well, frankly, the meme stock

trader? i enjoyed -- ed: i enjoyed the interview. i had not undervalued -- interviewed her before. she is an interesting cfo. she is by the numbers but also has a good grasp on the industry and market. staying in my lane, her answer was basically technology. database and the brats of the coinbase offering is very easy to transact. back to your earlier point, diversify and what you can do irrespective of whether you are a retail trader, consumer customer, or institutional. >> she did not give direct numbers. she just said by creating the platform it brings more users and users that to create more trading opportunity as well. it goes back to the trading, doesn't it? ed: showing the long-term chart, clearly, coinbase has been on a run. stocks down 3% in the session.

that's a bit harsh because they did really well. the net income number $1.2 billion. one year ago they were losing money. something is going right. i think that she in particular is running a pretty tight ship. the problem being, going back to the beginning of the conversation, that if you are writing a crypto trading platform you are beholden to what is happening in crypto markets. so if things get boring or dull it might get back for them too. sonali: almost 50% of analysts recommend the stock, -- recommending the stock recommend a hold on coinbase. bloomberg technology cohost ed ludlow, thank you for staying late in san francisco. we appreciate your time. happy friday. next we talk about blackrock pointing the finger at boaz weinstein as he looks to remove blackrock as a manager of six funds. boaz has been pointing the finger at black rock for a while as well. the story is next on today's wall street week. it is a story that has been on

fire for months. we talk about that next. this is bloomberg.

>> this is bloomberg markets. i'm sonali basak. it's time for wall street week. looking at boaz weinstein's push to remove blackrock as a manager of a number of funds. joining us is bloomberg's justina lee. so much of this is borne out of the story were a few days ago blackrock sent a message to thousands of clients saying your fund is under attack. with the idea here of weinstein going after a number of their funds. explain the dispute and how it got to the point that blackrock is mourning their own clients about this. justina: maybe we can start with what the products are. they are a bit like a mutual fund, except they are run like a

company in that they are also lifted. they also have proxy battles. what is going on here is for a while boaz weinstein and his hedge fund has been trying to oust blackrock as the manager of these products saying they have essentially given investors a really bad deal. of course, blackrock is fighting back saying boaz is all about serving his own interest because boaz has a stake in these funds himself and wants to take them in a particular direction. you can really see from the latest blackrock message that the battle is heating up. >> the latest message says if saba or to succeed it might appoint itself as an investment advisor and fundamentally disrupt the fund objectives and strategies to enrich itself. of course, weinstein's fund has fought back as well. weinstein himself in an interview said they need to show a cost to illegally entrenching themselves to protect their management fees while doing terrible things to shareholders.

and, the funds themselves, the blackrock funds, have a track record of horrible performance. that is according to weinstein. how bitter has it did -- has the dispute gotten? justina: really quite bitter. they have even gone to court over a lot of these proxy battles. basically, what the case is is that if you look at the funds, they have been trading at a discount to their asset value. he thinks that is a sign of mismanagement. there are a lot of actions you can take. turning the fund into an open ended fund. that can close the discount. what blackrock is pointing to is that there have been cases where saba has taken over some of the closed funds by winning these battles. they have completely changed the fund's character. they added crypto. they added stocks. i think it is kind of turning pretty bitter.

sonali: really quickly here as well, this is not unique to blackrock. justine and, with the equity markets changing as they are to incorporate more closed-end funds, etf's, all sorts of fund structures in a shrinking public market, is this the new activism? justina: we have seen this worldwide. boaz weinstein has even waged similar battles against u.k. closed-end funds. i think the issue here is that we have got into a macro trading point where interest rates were going up and it endangered a lot of closed end funds and at the same time, as you point out, etf's have been the big trencher. i think that closed end funds at the same time, structurally, are facing an issue. what is their role in a world where everyone can easily pile into an etf? there is also a question about the future of the structure. sonali: justina, thank you for staying late for us covering

this story, the first red on the bloomberg terminal today. i am sonali basak and this that's it for bloomberg markets today with exuberance back in the markets both for stocks and bonds. we will see what the next week brings. first, stick with us through the close. that does it for bloomberg markets today. this is bloomberg.

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