john welcome to first word news. the ukraine present has a prize meeting with u.k. per my minister today. the british government said it will provide ukraine with hundreds of air defense missiles and hundreds of long-range attack drones. >> in a moment of challenges, the moment for our society and our people especially for our soldiers, the moment is tough, difficult and thank you very much this package you prepared. it's what can save the lives of all of our people. thank you so much. john: u.k. home secretary is

ramping up pressure on the prime minister to client down on immigration. unfettered arrivals to the country posed a threat to what she calls the national character of the u.k.. statistics should show record arrivals. they said the numbers must come down. turkey will hold a run-up what dez vote later this month to see a president gun will extend his presidency into a third decayed. -- third decade. the country was headed for a runoff disappointing investors. president biden and house speaker kevin mccarthy will meet tuesday to try to break an impasse of raising the debt ceiling. they confirmed this in the last hour and if the borrowing limit does not raise, the u.s. could default on its debt and mccarthy says any change is contingent on a budget deal. global news powered by more than 2700 journalists and analysts in over 120 countries, this is bloomberg.

♪ jon: welcome to bloomberg markets. matt: let's get a quick check on the markets. we are looking at gains on the s&p 500 about 0.1%. the yield is rising on the 10 year to 350 and change. the dollar index is coming back down a little bit. it's been pretty reliable and nymex crude, little bit of a rebound. that rebound has been held back by these debt ceiling talks. we've had four weeks in a row of drops for oil and you would've expected may a bigger rebound on this monday.

we haven't reached any conclusion yet on the debt ceiling talks and president biden will meet with congressional leaders tomorrow. jon: we will see how the broader market reacts to that. we've been watching other asset classes like bitcoin. it has advanced today in is helping some of the crypto related stocks. we will continue to track magellan midstream, the huge pipeline deal making a big that which is helping magellan shares but it's hurting one oaks stock. we are watching nrg shares with elliott looking too big it -- to do a big shakeup in the boardroom investors like on that because nrg shares are higher by 2% and reports of the speedier merger talks are helping out western digital which is up more than three dollars per share. matt: we will continue to cover

the m&a action on this monday. it's negotiations over the u.s. debt ceiling that's putting investors in a holding pattern. earlier, it was said that people might be too optimistic about breakthrough. >> these are complicated issues that could take weeks to fully resolve. i think there won't be a deal tuesday, that's out of the question, maybe a, that they're getting closer but after biden comes back from his asian trip, it could take a few weeks to iron out the details. therefore, i think they have to have an extension. jon: let's bring in janet henry from hsbc. the debt ceiling is one of a series of global economic stories we ultimately have to watch. when you look at the outlook for the economy this year, what's top of mind for you? >> it's about the debt ceiling and how that could cause tremors even though it's in a holding

pattern the moment. globally, there are various issues. we know that europe six months ago, everyone thought it would be in a significant recession but actually, it started on firmer footing helped by the warmer weather. china was not quite as strong as many in financial markets had hoped of the start of the year, they hope for a strong recovery that it's still building in china. we got a lot of big issues and we got three large regions of the world on seemingly different growth paths even in the course of this year, not to mention what will happen in 2024. matt: let me ask about the long and variable legs. - lags. we haven't even felt the rate increases in the u.s. so far but nobody would've believed the ecb

would get rates to 3% or 4% especially without causing a deep recession and that has happened. how long are the monetary policy lags going to be. >> about lags are in norma's. i was one of the people that if you asked me in 2020 with the ecb get to 3%, i would've said it's an exceptionally low probability. even within europe, the lags of monetary are different. france and germany are tied into long-term interest rates and you take a 20 year mortgage at six or 20 years but that's not the case in spain. so you've got variations even within europe area in europe as in the u.s., it's not just about the flow of credit. you can look at the last 20 years and has been about the flow of credit closely related to the timing or us of some kind of recession or hard landing but remember, we have had a huge stimulus with massive

quantitative easing. fiscal stimulus in 2020 and 2021 and 2022 and 2023 and with a lot of these tax credits regarding u.s. actions in european retaliation, the tax credit is not just about the flow of credit, it's about the fiscal support and the stock of stimulus that does not yet find its way into the real economy. we have a very protracted cycle. it's not your typical short recession, we had weeks of trend growth in 2024. jon: you talk about some of the differences economy by economy but what about within the actual labor markets within these economies? what are the differences? >> within the advanced economies, we know were policy stimulus has come through whether it was europe or the u.s. it was about supporting labor incomes one way or another. there were shorter shipped

schemes in europe and tighter plans in the u.s.. you didn't get that in some of the emerging economies, particularly in asia. asia has not got a shortage of workers that europe and the u.s. has got and although participation rates is significantly above pre-pandemic levels, they do have demographic challenges and there are a lot of structural rigidities of people getting labor market protections and multiyear pay deals. hey growth may come down a little bit but it's likely not to come down to a rate that's not consistent with getting back to 2% inflation. the u.s. has been better in that wage growth has slowed. 4.5% pay growth is not consistent with getting back to 2% inflation. we don't hear as much about inflation anymore but getting

from five- to 2% matters usually on the labor market. because of structural rigidities, it's not a simple supply and demand issue. matt: how much of this inflation is structural now? one of the huge subjects we been covering is reassuring or friend shoring, grain production, at least putting a mirror image of that production somewhere else we don't get stuck in the same situation we had during the pandemic. does that effectively killing the deflationary impulses we had from chinese production globally over the last winter just 10 or 20 years? >> we know it of the moment, a lot of inflation indicators, high frequency cyclical indicators are leaning in the right direction and we've seen good surprises come sharply lower. they are falling slightly on

year on year terms. we know friends charges have fallen back and there is de-stocking so you have that cyclical downside pressure on inflation. i think the structural story has changed, not necessarily forever. oh if a lot of it is reassuring it leads to automation and productivity over the longer-term, it could actually lift growth and lead to an improving growth inflation trade-off. for the next 3-5 years, a lot of this is demand, spending on climate change in spending tax subsidies on industry supporting investment. the government supported supporting demand at a time when the central banks are trying to slow demand in order to lower inflation to an acceptable level. we are in a different era for growth and inflation, lower growth, higher inflation, than what we been used to in the last decade. jon: for those who want to talk

about when we might see a reversal on rate hikes and talk about the possibility for rate cuts, let's take the u.s. versus europe. what are your expectations going forward? >> it depends which part of europe. usually it's the ecb but i would be mindful that even in europe, we got economies like sweden which is effectively in recession. it's had a massive housing market crash but it's still got very entranced inflation and they are tightening policy but they may still cut rates by the end of the year. for the fed, i don't think we will get rate cuts this year. i think it will take longer to weaken labor market. we have unemployment slightly above 4% by the end of the year but rising through 2024. we don't have rate cuts until the second quarter of 2024 but or the ecb, not only are they likely to raise rates more than the fed but given our outlook,

sticky inflation because of structural rigidities in the labor market. they will matt: change the euro-dollar trade flows? when we see the ecb, are they thinking about cuts in houses that change the relationship? >> if you think about the other drivers and park the debt ceiling issue, i think about the currency. our currency strategists think the dollar will weaken a little bit further. they've never been in the $1.20 camp and had it had a view of one -- $1.15. is the eye that the fed cuts rates and the ecb doesn't but the ecb does not continue to raise rates much beyond the federal reserve so a bit more reinforcement for euro

appreciation it makes three edition of may reach a point where reaches policymakers but with -- but a lot depends on what happens with domestic demand and in particular wages. the ecb believes wages are already at service sector inflation are fearful that inflation will become entrenched and are already looking at the accelerating inflation expectations. matt: thank you in great having you here. global chief economist at hsbc. speaking of the lag effective rate increases, at least seven large companies filed for chapter 11 bankruptcy protection in less than 48 hours. it's a breakneck pace of restructuring that include vice media as well as kkr backed envision health care. the first thing to break was regional banks and now we are starting to see a string of

bankruptcies. maybe this is central bank policy having an effect. jon: and also, it has to do with a particular industry but when one player has challenges in going through the process, it opens the door for others to go. this is a range of different companies but you are right, the reality of where we are and where rates are for many companies dealing with challenges, maybe not a surprise to see a number of companies racing to get their situation under control and going through the bankruptcy process. matt: we will continue to watch bankruptcies. it could be a new turn that we start to throw around as we cover rising rates in if we have a debt ceiling issue, we can expect that number to increase drastically. we will discuss the state of the economy through the lens of one canadian company.

we are joined by a heavy equipment company and they are getting into the salvage business as well. this is bloomberg. ♪

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jon: this is bloomberg markets. it's time for our stock of the hour. richie has has changes his name to rb global. the company which is known for selling heavy equipment at auctions has been quite busy. the big news was the closely watched acquisition of iaa that sells used vehicles and that was completed in march and joining us is the ceo of rb global. thanks to have thanks for being here. this is a deal many were

tracking now you had a chance to talk a little about how things are going. how would you characterize the integration so far? >> thank you for having us on. we are off to a great start with integration. we have an integration office, we have targets well-established. we set the goal of 100 $20 million of cost savings by 2025 and even though we only had 11 days in q1, once we completed the deal, we announced we are already $15 million of the way there. we are excited about how quickly things are moving. matt: talk to us about all your businesses. you've got ritchie brothers which is auctions, you just bought iaaa and i just looked at some dodge challenger hellcats which have been damaged minimally and then you've got dealt planet which i looked at in the past when shopping for humvees or big army trucks.

it's a wide array. >> it is so we set out a vision in 2020 that we communicated to investors and analysts about becoming a marketplace for industrial equipment and no vehicles. the idea becoming a marketplace is that you will have transaction solutions. ritchie brothers auctioneers and all the rest, you will have services. we have ritchie brothers financial services, data business where you can facilitate parched -- parts purchasing through dealers and idea of the marketplace is that it puts all that together and makes it easy for customers to do business with us. jon: given that you have rebranded and gotten to the finish line but there was so much attention on this deal but do you see yourself potentially looking for more deals as you

push down this road further? >> we have committed to our shareholders that we are committed to this vision of marketplace and we will do it through organic growth and have been driving that significantly. we just announced we only iaaa grew in double-digit revenue. we said we would always look at m&a if we could get there quicker than anything we can do organically and we like businesses that are profitable and growing. and if it brings talent into the fold, we appreciate that as well. the iaaa deal took our leverage

up, we are a little below the average left -- leverage ratio and we will be paying that down to a place where we are more comfortable and then looking at the art of the possible for growth. jon: during theiaaa process, you had shareholders speaking out. do you feel like investors are on board with the strategy? have they move on to asking questions where the economy goes from here? >> for sure, they want to know what we will do from here. there were questions about the deal and it was a huge acquisition for this company. one thing our shareholders know is that ritchie brothers and iaaa are cyclical and countercyclical so if the economy goes up, pricing goes up and we do well. if it goes down and people need

liquidity, we do very well, even better. we are prepared. we are on both sides of that coin so we obviously want great things for the economy. if it is not to be globally then rb global is the place for investors regardless. matt: fascinating business, thank you for coming in. there is a lot more to go over. the ceo of rb global. coming up, we will talk about why the eu approved the microsoft deal which is $65 billion but was vetoed by the u.k.. do they get a lift from the eu? we will discuss that next. this is bloomberg. ♪

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it's worth. how about $69 million -- $69 billion. that's what microsoft got was regulatory approval on that activision deal with the eu gave its thumbs up which is welcome news for microsoft considering the u.k. and the ftc in the u.s. of already created massive roadblocks for this deal. matt: in the u.k., they are concerned about this and maybe more than other countries because so many people in great britain play call of duty. that is the biggest product that activision sells. that's what microsoft will be getting a hold of. it's a global, multiplayer video game that just attracts a ton of activity. the question is, is the eu approval going to make it easier for microsoft to go back to u.k. regulators and say give us another chance? jon: it seems like it will be a long road ahead but it gives them a fighting chance is the

market responded to that today. speaking of the markets, we continue to watch a day where the s&p 500 has been basically around the flatline and we will watch the market tone. this is bloomberg. ♪ these days, our households depend on the internet more and more. families grow, houses get smarter,

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romaine: a firehose of comments from monetary policy makers, the oscillations you are seeking financial markets. romaine bostick era bloomberg's world headquarters, kicking you off to the close on this monday afternoon. let us take a quick check at the markets, we talk about s&p 500 that has been rage bound, another flat open. when you take a look at the price action since the open, illustration of a lack of conviction when it comes to the market. materials, financials and energy are thet