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00:00> > YOU HAVE ALL OF THE THREE WORLD'S BIGGEST ECONOMIES SUFFERING FROM THE SHOCKS AT THE SAME TIME. > > WE ALSO RUN THE RISK OF A SECOND REPRICING LOWER IF WE SEE DEMAND DESTRUCTION WILL BACK. > > WE COULD SEE PRICES PEAKED BACK UP AS WE MOVE INTO THE THIRD FLOOR -- THIRD QUARTER. > > I WONDER IN JULY WHETHER THE FED WILL HAVE THE STOMACH TO DO ANOTHER 50. > > THE STORY HERE IS PRETTY CLEAR. THE FED HAS BEEN WAY BEHIND THE CURVE. > > THIS IS "BLOOMBERG SURVEILLANCE." JONATHAN: HERE IS THE BOUNCE. WILL IT STICK? FROM NEW YORK CITY, GOOD MORNING, GOOD MORNING. THIS IS "BLOOMBERG SURVEILLANCE." ALONGSIDE TOM KEENE AND LISA ABRAMOWICZ, I'M JONATHAN FERRO. FUTURES OF THE .8% AFTER THE PAIN OF YESTERDAY. TOM: THE PAIN OF YESTERDAY AND 2022, AS WE MENTIONED, JON, YOU ARE LOOKING FOR THE HOPE AND PRAYER OF BLOOM TO SCRIPT BLOOM DESTRUCTION. JONATHAN: HSBC NOT BUYING IT. THEY ARE FIRMLY RISK-OFF. THEY THINK IT IS COMING IN THE NEXT THREE TO SIX MONTHS. TOM: I GET A BUNCH OF NOTES YESTERDAY TEARING THE STRATEGISTS APART. WHEN THE FACTS CHANGE, I CHANGE. THAT IS WHAT IS GOING ON RIGHT NOW. PEOPLE ARE READJUSTING. I WOULD SUGGEST THE FIRST STEP IS TO WAIT FOR THE CATHARSIS, AND A LOT OF PEOPLE SAYING WE REALLY HAVE NOT SEEN THE AGONY YET. JONATHAN: I HAVE BEEN SURPRISED BY HOW FEW ON THE SOUTH SIDE HAVE ADJUSTED. LISA ABRAMOWICZ PUTTING OUT THE NOTE, WE STAY PRO-RISK AND UNDERWEIGHT IN BONDS AND CASH. HAVE BEEN WRONG OVER THE LAST 12 MONTHS. LISA: CAN YOU BE SURPRISED? HE IS SORT OF A SEPARATE CATEGORY OF WALL STREET WILL END GOING TO COME OUT AND REAFFIRM WHAT ANGLE YOU ARE GOING TO TAKE? THE STORY IS BECOMING NUANCED, AND I THINK GOLDMAN SACHS IS -- DAVID KOSTIN SAID BASICALLY, EVEN IF YOU DO GET SOME AVOIDANCE OF RECESSION YOU ARE STILL GOING TO GET A DOWNSIDE IN STOCKS. THAT SEEMS TO BE THE MAIN CONSENSUS RIGHT NOW. JONATHAN: I WOULD'VE EXPECTED A MAY CALL FOR -- A MEA CULPA. WEEK AFTER WEEK AFTER WEEK SAYING BY THIS, AND THIS HAS BEEN MONTHS NOW. THIS HAS BEEN RELENTLESS. LISA: THE EARNINGS HAVE BEEN GOOD. THE FUNDAMENTALS STILL LOOK GOOD. HOW CAN THEY SAY WE ARE GOING TO CHANGE OUR TUNE BASED ON BELIEF WHEN NOTHING HAS CHANGED? IT IS A BELIEF THAT HAS CHANGED, NOT NECESSARILY SOMETHING PEOPLE ARE SEEING IN THE DATA. SOME PEOPLE POINT TO WINNING CONSUMER SPENDING, BUT IF YOU LOOK AT THE EARNINGS YES THERE IS SOME DECELERATION. JONATHAN: YOU SOUND ALMOST BULLISH. LISA: IT IS NOT BULLISH, IT IS THE REASON WHY THERE IS SO MUCH DISAGREEMENT IN PEOPLE -- SO MUCH DISAGREEMENT. TOM: WHAT IS GOING ON HERE IS THE HOPE AND PRAYER OF GLOOM DESTRUCTION. FORGET ABOUT DEMAND DESTRUCTION. WE ARE LOOKING AT SURVEILLANCE GLOOM DESTRUCTION. THIS MORNING I GO, LOOK AT THE RESULTS. I LOOK BACK 40, 50 YEARS. THE DRAWDOWN IS REALLY NOT ALL THAT BAD. IF WE -- HAVE WE HAD A COUPLE OF HARSH WEEKS? YES. SORRY, IT IS NOT GLOOM, IT IS NOT CATHARSIS. JONATHAN: DON'T TRY TO PAINT ME AS THE GLOOMY ONE. TOM: JOHNNY, WHAT IS PROFOUND HERE IS THAT PRINCE CHARLES IS SITTING IN FOR THE QUEEN, HAS DIMENSION THE MARKET. JONATHAN: I DOUBT IT, BULIMIA FINISH THE THOUGHT. IT IS EASY FOR THE SOUTHSIDE TO KEEP SAYING WE ARE OVERWEIGHT. THE TAPE IS DOING THE TALKING FOR US RIGHT NOW. THE S & P IS DOWN 16% YEAR-TO-DATE. THE NASDAQ 100 IS DOWN 26% YEAR TODAY. BONDS HAVE BEEN BATTERED. PEOPLE WITH MONEY IN THE MARKET ARE LOSING OUT. WHEN I SIT HERE AND SEE THE SOUTHSIDE KEEP SAYING WE'RE STILL OVER RIGHT -- OVERWEIGHT, WHAT GOOD IS THAT OVER THE LAST FIVE MONTHS? TOM: I'M GOING TO DRAMATICALLY SKEW YOUR THOUGHT TO THE BOND MARKET. OUR GUEST HAS TERRIFIC SCOPE AND SCALE. YIELD UP, PRICE DOWN. THE PRICE DOWN IN BONDS IS JAW-DROPPING. JONATHAN: THE EURO DOES BOUNCE BACK. ON THE S & P 100 -- ON THE NASDAQ 100, UP. THAT WAS THE STORE YESTERDAY FOR ME, THIS TURNAROUND IN YIELDS. LISA, ALSO ON THE FRONT END. LISA: I WAS GOING TO SAY THE SAME THING. THAT WAS THE STORY FOR THE FIRST TIME IN A LONG TIME. THERE WAS A BIT OF FLIGHT TO SAFETY TO BONDS. DOES THAT TELL YOU WE ARE AT THE BEGINNING OF CAPITULATION OR WE ARE AT THE NEXT LEG DOWNWARD BECAUSE PEOPLE ARE CONCERNED ABOUT THAT GROWTH? YOU WILL BE WATCHING THAT THROUGHOUT THE DAY. HE WAS WHEN I'M WATCHING, TREASURY SECRETARY JANET YELLEN IS TESTIFYING TO CONGRESS. THIS IS GOING TO BE FASCINATING, ESPECIALLY HEAD OF THAT PRESIDENTIAL SPEECH LATER THIS MORNING. BECAUSE THERE HAS BEEN REPORTS FROM BLOOMBERG THAT HER STAFF AS WELL AS JANET YELLEN HERSELF HAS TAKEN ISSUE WITH THE CHARACTERIZATIONS OF BEING OVERLY ROSY FROM THE WHITE HOUSE WITH RESPECT TO TRANSITORY INFLATION OR HOW MUCH YOU COULD ROLL OVER AND OF THE MIDTERM ELECTION. TODAY WE GET A SLEW OF FED SPEAK. LORETTA MESTER AMONG THEM SPEAKING WITH MICHAEL MCKEE COMING UP TODAY AT 11:00 A.M. OTHERS INCLUDE JON WILLIAMS, RAPHAEL BOSTIC, AND FED GOVERNOR CHRIS WALLACE. WHAT ARE THEY GOING TO SAY? JON, ARE WE SPENDING TOO MUCH TIME TALKING ABOUT THE FED WHEN IT IS KIND OF OUT OF THEIR HANDS? IT COMES DOWN TO GEOPOLITICAL EVENTS AND NOT SO MUCH WHAT THEY CAN SAY ABOUT A 75 POINT BASIS POINT RATE HIKE OR NOT? WE DO GET THOSE PRESIDENT BIDEN REMARKS ON INFLATION TODAY AFTER WE GET GAS PRICES CLIMBING TO THE HIGHEST LEVELS ON RECORD ACCORDING TO THE LATEST REPORT. BASICALLY THIS GOES TO THE JAVIER BLAS POINT. EVEN IF WE DO GET A DECLINE IN OIL PRICES IT WILL NOT NECESSARILY TRANSLATE TO LOWER GAS PRICES BECAUSE OF THE COST OF SOME OF THE OTHER PROCESSING METHODOLOGIES. JONATHAN: THAT IS GOING TO BE A TOUGH SPEECH. THANK YOU VERY MUCH. TK, YOU FOLLOW THAT SO CLOSELY. THE PRICE AT THE PUMPS GETTING HARDER. TOM: JON, DIESEL, DIESEL, DIESEL. THIS IS NOT SOMETHING MOST OF OUR VIEWERS LOOK AT, BUT THE DIESEL LEAP IS FACTORS WORSE THAN GASOLINE. THAT IS A HUGE DEAL. JONATHAN: LINDA DUESSEL JOINS US RIGHT NOW. THE NEWS ON EARNINGS AND ECONOMY IS GOOD. MARKETS DON'T CARE. COULD YOU BUILD ON THAT FOR US? LINDA: THE MARKETS DON'T CARE BECAUSE THEY ARE FOCUSED ON THIS ONE THING. THE FED IS GOING TO RAISE INTEREST RATES, INFLATION IS GOING TO RUN AWAY, AND BUT WHAT WE FORGET IS WE ARE BOOMING. I WAS THERE IN THE 1970'S WHEN WE HAD STAGFLATION. YOU HAVE INFLATION AND PEOPLE USING THEIR JOBS. WE JUST HAD A STRONG JOBS REPORT. NO THERE ARE TWICE AS MANY JOB OPENINGS AS THERE ARE PEOPLE TO FILL THOSE JOBS. SO, YES WE THINK WE ARE GOING TO HAVE A PERSISTENT INFLATION PROBLEM VERSUS WHAT WE HAVE BEEN ACCUSTOMED TO FOR 40 YEARS, BUT NOW WE ARE SEEING SOME OF THE BABY BEING THROWN OUT WITH THE BATHWATER. TOM: LINDA, YOU HAVE A TERRIFIC SCOPE AND SCALE. HE HAD AN ACADEMIC THIS WEEK FRAMING BONDS BACK TO 18.42. YOU TAKE IT BACK TO -- 1942. HOW DID THE 10 YEAR YIELD NOW GET BACK TO AUGUST 1788? LINDA: THAT IS REALLY COOL, BECAUSE THE BOND YIELD AROUND 3% HISTORICALLY IS NOT A HIGH FIGURE. THIS IS SOMETHING THAT IS CONFUSING TO ME. START WITH THE FED FUNDS AT ZERO, WHICH WAS UNUSUALLY LOW FOR A LONG PERIOD OF TIME, AND WE ARE HAVING ANGST ABOUT 50 BASIS POINT HIKES. IF WE AT FEDERATED HERMES THINK THEY'RE GOING TO REACH 3.25, MAY BE THE 10 YEAR BY THIS YEAR, THAT IS NOT A TERRIBLY HIGH FIGURE, HISTORICALLY, BUT IT IS HIGHER THAN WHAT WE HAVE SEEN BEFORE. SO THE ECONOMY CAN CONTINUE TO DO QUITE WELL, I THINK, EVEN AS INTEREST RATES RISE. LISA: LINDA, WHEN WILL STOCKS CARE ABOUT THE ECONOMY DOING SO WELL? LINDA: FIRSTLY THINK WE REALLY HAVE TO FLUSH OUT -- AND I AM DISTURBED ABOUT WHAT I HAVE BEEN READING, PARTICULARLY AFTER YESTERDAY'S CLOSE WHEN WE SAW BIG DECLINES IN THE HISTORICAL DARLINGS OF THIS MARKET, BUT ALSO COMMODITIES AND ENERGY. WE ARE STARTING TO SEE CAPITULATION OUT THERE WHERE I HAVE BEEN READING A LOT OF WALL STREET PEOPLE TALKING ABOUT THE YES, THAT IS GOOD, BUT IT IS 34 IN THE VIX. WITH THE DAMAGE THAT HAS BEEN DONE WE NEED MUCH MORE OF A HIT THAN WHAT WE HAVE HAD. BUT IF EVERYBODY IS SAYING THAT, I HAVE TO WONDER IF WE ARE GOING TO GET THAT, AND IF MAYBE WHAT WE SHOULD BE DOING IS LOOKING IN OUR SHOPPING LIST AND BUYING SOME THINGS, PARTICULARLY ENERGY, WHICH IF YOU LOOK BACK 15 YEARS IS STILL THE LEAST EXPENSIVE ON A RELATIVE PE BASIS OF ANY OF THE SECTORS. IF WE GET ONE INKLING THAT THEY ARE OPENING UP IN CHINA, THE SECOND LARGEST ECONOMY IN THE WORLD, THEN ENERGY PRICES COULD START GOING BACK UP. WE ARE HAVING CAPITULATION IN PARTS OF THE MARKET AS WE SPEAK. JONATHAN: LINDA, WONDERFUL TO CATCH UP WITH YOU. LINDA DUESSEL OF FEDERATED HERMES. ENERGY ON THE S & P 500, WAS DOWN YESTERDAY. YOU TAKE THE MOVE IN ENERGY, YIELDS LOWER, LISA, THAT IS WHAT A GROWTH SCARE LOOKS LIKE. THAT IS WHAT YESTERDAY WAS. LISA: WHICH CHALLENGES THE IDEA THAT THIS IS RATES-DRIVEN. THAT THIS IS SOMETHING THE FED IS GOING TO HIKE INTO, BECAUSE ESPECIALLY AT THE FRONT END, THAT BASICALLY IS SUGGESTING YOU ARE GOING TO GET SOME CAPITULATION FROM THE FED. I KNOW YOU SAW THIS AS WELL. TALKING ABOUT CREDIT SPREADS, THEY WIDENED THE SUBSTANTIALLY YESTERDAY. THIS IS WHAT PEOPLE HAVE BEEN WAITING FOR. ARE WE GETTING THOSE CREDIT FEARS STARTING TO BUILD IN THE FAITH -- THE PHASE OF GROWTH CONCERNS? JONATHAN: THAT PARTICULAR CANARY IS JUST WARMING UP ITS VOCAL CORDS. TOM: WE ARE THERE. I THINK IT IS A REAL DISSERVICE FOR US TO GAME OUT WHAT IS GOING TO HAPPEN NEXT OTHER THAN, AS YOU MENTIONED, THERE IS A MODEST INFLATION REPORT TOMORROW WHICH MAY ADJUST PERCEPTIONS. JONATHAN: I'M NOT EVEN GOING TO PRETEND I HAVE TOMORROWS PRICES, BECAUSE I REALLY DO NOT. FUTURES UP .8% ON THE S & P. NASDAQ UP BY .3%. WE WILL CATCH UP WITH DAVID STUBBS IN THE NEXT HOUR. LOOKING FORWARD TO THAT. FOR OUR AUDIENCE WORLDWIDE -- IT IS ANOTHER BEAUTIFUL ONE IN NEW YORK -- THIS IS BLOOMBERG. ♪ RITIKA: KEEPING UP-TO-DATE, I'M RITIKA GUPTA. PRESIDENT BIDEN SIGNED INTO LAW A MEASURE TO MAKE IT EASIER FOR THE U.S. TO SEND WEAPONS AND SUPPLIES THE UKRAINE. THE LEGISLATION CUT RED TAPE BUT DOES NOT INCLUDE ADDITIONAL FUNDING. THE PRESIDENT HAS ASKED CONGRESS FOR $33 BILLION IN AID. SANCTIONS ON RUSSIAN OIL WILL BE HIGH ON THE AGENDA TODAY WHEN ITALY'S PRIME MINISTER IT'S WITH PRESIDENT BIDEN AT THE WHITE HOUSE. HE RESOLUTELY ASKED SANCTIONS, DESPITE HIS COUNTRY'S RELIANCE ON RUSSIAN ENERGY. HE HAS ALSO BACKED SENDING HEAVY WEAPONS TO UKRAINE, EVEN THOUGH LARGE PARTS OF HIS COALITION OBJECT. DEMO THE PHILIPPINES FERDINANDO MARCUS JUNIOR HAS BROUGHT HIS FAMILY BACK TO POWER AFTER HIS DICTATOR FATHER FLED THE COUNTRY. WITH ALMOST ALL OF THE RETURNS COUNTED, MARCOS WON ABOUT 59% OF THE VOTE. HIS RUNNING MATE, THE DAUGHTER OF OUTGOING PRESIDENT RODRIGO DUTERTE J. U.S. RETAIL GASOLINE AND DETAIL PRICES HAVE SET A RECORD AVERAGE, ACCORDING TO AAA. AVERAGE GASOLINE PRICES HAVE HIT $4.33 A GALLON. AMERICANS ARE EXPECTED TO DRIVE MORE THIS SUMMER THAN IN 2021, DESPITE THOSE PRICIER GAS PRICES. IT IS THE MOST EXPENSIVE AMERICAN ARTWORK EVER TO SELL AT AUCTION. A SILKSCREEN OF MARILYN MONROE BY ANDY WARHOL SOLD FOR $195 MILLION. THE WINNING BIDDER WAS A DEALER WHO BUYS ON BEHALF OF CLIENTS WHO WOULD LIKE TO REMAIN ANONYMOUS. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND ON QUICKTAKE BY BLOOMBERG, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. I'M RITIKA GUPTA. THIS IS BLOOMBERG. > > OVER THE LAST 20 YEARS YOU NOTICE ALREADY PRETTY AGGRESSIVE MOVES. I DON'T THINK WE NEED TO BE MOVING EVEN MORE AGGRESSIVELY. I THINK WE CAN STAY AT THIS PACE AND THIS CADENCE AND SEE HOW THE MARKETS EVOLVE. JONATHAN: GOING TO SEE MARK MCKEE CATCH UP WITH RAPHAEL BOSTIC. FUTURES BOUNCING BACK A LITTLE BIT, UP .8% ON THE S & P. ON THE NASDAQ WE ADVANCE BY .13%. INTRADAY YESTERDAY THROUGH 320, THEN LOOKING TO BREAK THROUGH THE DOWNSIDE. LOOKING FORWARD. LISA WENT THROUGH THIS EARLIER. WILLIAMS OF THE NEW YORK FED SPEAKING AT 7:40 EASTERN. WE WILL HEAR FROM BOSTICK, TK, THERE IS A LOT LINED UP. WHO BLINKS FIRST? TOM: THIS IS NOT A SMALL IDEA. THIS IS NOT A SMALL IDEA TO DISCUSS THIS MORNING. THERE IS AN ASSUMPTION THIS CUTS BOTH WAYS. THEY LET IT RUN INTO SOME REAL DAMAGE, OR AS YOU SAY, HOW DO THEY MESSAGE THIS? I DON'T HAVE A GOOD ANSWER, BUT THE RADAR IS UP. I THINK IT IS GOING TO COME FROM THE CHAIRMAN, OR MAYBE EVEN FROM SECRETARY YELLEN WITH HER EXPERIENCE. JONATHAN: OVERWHELMINGLY THE CONSENSUS IS THEY DO NOT BLINK. THAT IT IS 50 BASIS POINTS AT THE MAC -- AT THE NEXT MEETING. NATURAL CONDITIONS RIGHT NOW DOING A LOT OF HEAVY LIFTING. A LOT OF PEOPLE PUSH BACK AGAINST THIS, BUT WE HAVE SEEN IT BEFORE. THE TEST OF THE FED IS BUILDING ALREADY. TOM: THE TEST OF THE FED IS A FRONT AND CENTER, AND WITH INFLATION REPORTS TOMORROW WE ARE ON TOP OF THAT FOR YOU. RIGHT NOW IN WASHINGTON, JOE MATHIEU JOINS. THRILLED TO GET HIM UP HERE IN THE EARLY MORNING. I DO MY RESEARCH AND GO TO WHAT MATTERS NATIONALLY, AND THAT IS THE GREAT BENCHMARK OF THE 16 OUNCE STRIP STEAK AT BURNS'S STEAKHOUSE IN TAMPA, FLORIDA, CHECKING IN AT A NEW $59. YOU WONDER WHEN THAT GOES TO $65 ITSELF. THE PRESIDENT IS GOING TO ADDRESS THE 16 OUNCE STRIP STEAK AT BURNS, EXCEPT IT IS NOT FUNNY FOR MOST OF AMERICA. THEY HAVE BEEN PRICED OUT OF BEEF. JOE: THAT IS TRUE, SO YOU BETTER NOT OVERCOOK THAT THING. THIS IS SPEECH TODAY, THIS WHOLE CONVERSATION, THIS IS GETTING TO BE VERY DIFFICULT. IT REMINDS ME OF A SCENE FROM ROCKY THREE, WHEN THEY ASK CLUB OR LINE FOR HIS PREDICTION FOR THE FIGHT. MR. T ANSWERED WITH ONLY ONE WORD -- PAIN. THAT IS WHERE WE ARE IN THE WORLD. THE PRESIDENT KNOWS THIS. HIS JOB IS TO SAY HE FEELS YOUR PAIN, AND TODAY WE GET A PREVIEW AS THE PRESIDENT STARTS TO BEAR DOWN ON INFLATION. WE'VE BEEN TALKING ABOUT IT FOR NINE MONTHS OR SO, BUT IT IS NOT JUST CATALOGUING WHAT THIS ADMINISTRATION HAS DONE. PLAYING THE CONTRAST, PLAYING IT AGAINST WHAT HE CALLS THE ULTRA MAGA AGENDA PROPOSED BY RICK SCOTT. HE IS NOT EVEN THE LEADER OF THE SENATE, BUT THIS IS WHAT THE WHITE HOUSE HAS DECIDED TO CHOOSE AS A FOIL, AND HE WILL BE UP THERE TODAY. PLAYING THESE TWO ALTERNATIVES TOGETHER. TOM: JOE, YOU ARE TOO YOUNG TO REMEMBER THIS. YOU WERE DONE AT HAPPY HOUR AT CASINO BY THE SEA. SOME OF US LIVED WITH INFLATION NOW. ARE WE GOING TO GET A SILLY PROGRAM FROM THIS ADMINISTRATION? JOE: I'M NOT SO SURE. I THINK THIS IS GOING TO BE A CONTRAST PLAY AND ALSO A CALL ON CONGRESS TO START PASSING PROGRAMS YOU AND I HAVE BEEN TALKING ABOUT FOR THE BETTER PART OF YEAR. GOING TO SAY, PRESCRIPTION DRUG PRICES, EXTENDED CHILD TAX CREDIT, RIGHT? A LOT OF THE STUFF THAT WAS IN THE BACK BETTER PLAN, HE'S GOING TO SAY I'M WAITING ON CONGRESS. REPUBLICANS WILL TELL YOU IT IS THOSE VERY PROGRAMS THAT WILL ACTUALLY AMPLIFY INFLATION. SO THIS LOGJAM, WITH SIX MONTHS TO VOTING, IS NOT LIKELY TO BREAK ANY SOON. DEMOCRATS ARE PLAYING WITH THE IDEA OF AN -- OF A RECONCILIATION BILL BUT THINGS ARE DIFFERENT. LISA: THERE WAS A STORY THE COP MY ATTENTION ABOUT INFLATION BEING SO BAD DEMOCRATS WANT TO SEE THE PRESIDENT DO MORE AHEAD OF THE MIDTERMS. IN, IT TALKED ABOUT JANET YELLEN AND DISTANCING THEMSELVES FROM THE WHITE HOUSE AND WHAT THEY VIEW AS AN OVERLY-OPTIMISTIC VIEW OF HOW MUCH INFLATION WILL COME DOWN AND HOW QUICKLY. TO MAKE OF THAT DISSENT IN THE WHITE HOUSE? JOE: I'M NOT SURE. I TALKED WITH TWO MEMBERS OF THE PRESIDENT'S COUNCIL OF ECONOMIC ADVISERS LAST WEEK. I KNOW YOU WERE GOING TO TALK WITH CECILIA ROUSE THIS MORNING. YOU ARE TALKING WITH HEATHER BOUCHER OR JARED BERNSTEIN, THEY KNOW WHAT IS GOING ON. AS PART OF THEIR JOB TO PROJECT A BETTER DAY THAT IS COMING, BUT I DO THINK THERE IS A SENSE OF REALITY AT THE WHITE HOUSE IT IS JUST DIFFICULT AS THEY ATTEMPT TO KNOCK TALKED ON THE ECONOMY, IT IS DIFFICULT TO GET A SENSE OF WHERE WE ARE GOING. THEY ARE STILL CONVINCED THAT COVID DEMAND, THE SHIFT FROM SERVICES TO GOODS, ARE THE PRIMARY DRIVERS OF INFLATION, AND THE LIKE TO DEFER TO THE REST OF THE FEDERAL RESERVE. IF YOU ARE JANET YELLEN YOU PICK YOUR OWN SPOT HERE. LISA: THERE IS ALSO THE ISSUE OF GAS PRICES AND THE FACT THIS ADMINISTRATION HAS COME UNDER FIRE FOR NOT SUPPORTING THE FOSSIL FUELS INDUSTRY MORE AND DOING AN ABOUT-FACE AND SAYING, THIS IS A NATIONAL SECURITY CRISIS. IS THERE ANY SHIFT IN THE WHITE HOUSE ON THAT FRONT OR ARE THEY GOING TO TRY TO MESSAGE IT AS BEING PART OF THIS EQUATION AS WE TRANSFER TO A GREENER, FOSSIL FUEL-VERRILLI -- FOSSIL FUEL-FREE FUTURE. JOE: WE ARE GOING TO HEAR MORE TODAY WHEN THE PRESIDENT SPEAKS. THE ADMINISTRATION HAS RUN INTO A LOT OF ISSUES AFTER NOT MAKING A LOT OF FRIENDS IN THE OIL PATCH AND ENCOURAGING THEM TO DRILL MORE AS A PATRIOTIC MOVE. THEY HAVE BEEN MORE QUESTIONS ABOUT WHETHER THEY SHOULD HAVE FINANCIAL INCENTIVES TO DO SO, HAVING BEEN FELT LIKE THEY HAD BEEN DEMONIZED BY THIS ADMINISTRATION. TOM MADE THE COMPARISON TO PROTEIN AS WELL. AS THE WHITE HOUSE TAKES A LOOK AT THIS, STARTS TALKING ABOUT THE COST OF BEEF, THE COST OF PROTEIN, CHICKEN, AND OTHER FRUIT, AS A SIDE EFFECT OF CONSOLIDATION, POINTING OUT THE BIG FOUR, THIS IS THE HEAVY HAND OF THE BIG FOUR MEATPACKERS AS OPPOSED TO TAKING ANOTHER ROUTE HERE, MAYBE FINDING NEW WAYS TO UNLOCK INDEPENDENT PROCESSING AND RELATE WITH PEOPLE ON WHAT IS AN -- A PAINFUL EXPERIENCE AT THE GROCERY STORE. JONATHAN: JOE MATHIEU, GREAT TO CATCH UP WITH YOU. THE ULTRA MAGA PLAN, TOM. THE PUSHBACK FROM THE PRESIDENT COMING. TOM: SOUNDS TO ME LIKE A TRIAL BALLOON. WE ARE SIX MONTHS TO THE ELECTION. I THINK THE TROUBLING'S ARE GOING TO COME FAST AND FURIOUS. JONATHAN: THE PUTIN HIKE WAS A TROUBLE IN. DO YOU THINK THAT HAS RESONATED? TOM: NO. I DON'T THINK IT HAS WORKED EITHER. I SHOULD POINT OUT A VERY EMOTIONAL NOTE THIS MORNING ON A FRAGILE MR. PUTIN YESTERDAY IN MOSCOW. DOUG WAS ESPECIALLY SHARP THIS MORNING. JONATHAN: WE HAVE SOME PRICE ACTION TO WORK THROUGH. YESTERDAY WAS BRUTAL, TODAY A BIT OF A BOUNCE BACK. UP .9% ON THE S & P. THE NASDAQ UP 1.44%. SOME INTERESTING MOVES IN THE BOND MARKET AND WE WILL BREAK THOSE DOWN. JONATHAN: LIVE FROM NEW YORK CITY THIS MORNING, GOOD MORNING. FOR OUR AUDIENCE WORLDWIDE, AFTER THREE DAYS OF LOSSES WE HAVE A BIT OF A BOUNCE. WILL IT STICK? UP .9% ON THE S & P. IF YOU BREAK DOWN THE MOVES YESTERDAY IT IS INTERESTING TO TALK ABOUT THINGS THAT ARE NOT JUST RELATED TO TECH. LET'S TALK ABOUT ENERGY. THE BIG MOVER OF THE YEAR WAS THE BIG LOSER OF YESTERDAY, DOWN BY MORE THAN A PERCENTAGE POINTS . TECH DOWN ABOUT FOUR PERCENTAGE POINTS. IT WAS A REAL GROWTH SCARE TO SOME OF THE PRICE ACTION, AND NOT JUST IN STOCKS. I WANT TO LOOK AT THE YIELD CURVE. LAST WEDNESDAY HIGHS OF THE YEAR, 2.8 FIVE. YIELDS DOWN BY MORE THAN 10 BASIS POINTS AT THE FRONT END YESTERDAY. I THINK THAT TELLS YOU SOMETHING ABOUT THE DISTINCTION WE HAVE GOT TO DRAW BETWEEN THE PRICE ACTION RECENTLY -- YIELDS HIGHER, BONDS DOWN -- AND WHAT WE SAW IN THE LAST 24 HOURS. A HINT THAT MAY BE THE MARKET BACKED AWAY FROM THE FED A LITTLE BIT AND INFLATION EXPECTATIONS CAME DOWN. LISA: THAT IS PERHAPS WHY YOU ARE GETTING A BIT OF A BY THE DIP TODAY. SOME PEOPLE WERE SAYING WHEN YOU SOLVE THIS PRICE ACTION, WHEN HE SAW BONDS RESPOND TO THIS MENTALITY, THAT MIGHT BE THE SIGN WE ARE STARTING TO GET MORE OF A WASHOUT. JONATHAN: WILL IT CARRY ON, TOM? JUST A FEW SIGNS. TOM: THE DATA IS THERE, AND THE DATA DEPENDENCY IS THERE. YOU'RE GOING TO GET A DOSE OF THAT TOMORROW, BUT I WOULD SUGGEST YESTERDAY FRAMED OUT JULY 27. JULY 27 IS ANOTHER DAY TO FOCUS ON. JONATHAN: THE NEXT FED MEETING AFTER THE NEXT FED MEETING? TOM: THEY ARE NOT GOING TO RAISE 50 CHECKUP THEY HAVE TO RAISE 50, THEY HAVE A PLAN. THEN WHAT? JONATHAN: THAT IS WHY I AM STILL LOOKING AT THE FED SPEAK. I'M NOT SURE EVERYONE HAS FULLY CAPITULATED ON THE IDEA THAT THE FED IS NOT GOING TO STEP IN WHEN THINGS GET BACK. WE ARE ABOUT TO FIND OUT WHAT BRINGS THAT FED OUTPUT OUT OF RETIREMENT. IS IT THIS? LOOK OUT FOR THE FED SPEAK TODAY. WE WILL KEEP TESTING THINGS AND FIND OUT. TOM: WE ARE GOING TO LOOK AT THE LITMUS PAPER. THE CALIBRATION ACROSS -- ATHANASIOS FABRICATORS -- ATHANASIOS FROM NIKITA'S -- ATHANASIOS VAMVAKIDIS IS AT BANK OF AMERICA. CONGRATULATIONS ON THE BANK OF AMERICA CALL. -- I WILL CUT TO THE CHASE. NOW WHAT? ATHANASIOS: I THINK WE SEE EVEN FURTHER DOLLAR STRENGTH SUPPORT FOR THE DOLLAR REMAINS VERY MUCH SO. THE FED IS THE MOST HAWKISH OUT THERE, DEALING WITH AN OVERHEATING ECONOMY, AND THEY ARE LIKELY TO HIKE MUCH MORE THAN THE OTHER CENTRAL BANKS. PRESSURES IN THE U.S. ARE LABOR MARKET IMBALANCES. WE DON'T SEE THE SAME IN EUROPE. MOST OF THE OTHER ECONOMIES ARE DEALING WITH NEGATIVE SUPPLY SHOCKS. IN THE EURO IN PARTICULAR. THAT IS RELATED TO THE WAR IN UKRAINE. THAT SLOWING OF THE CHINESE ECONOMY THAT IS AFFECTING MUCH MORE EUROPE THAN THE U.S., OR IN THE CASE OF JAPAN, WHERE THE BANK OF JAPAN IS ACTUALLY HAPPY TO SEE WEAKENING. OR IN THE CASE OF THE BANK OF ENGLAND WHERE THEY ARE HIKING BUT THEY ARE APOLOGIZING. TOM: I LOOK AT THE REGIME CHANGE MAY BE TO COME AND WHAT IS NOT MENTIONED HERE IS THE DISPARATE FEEL OF CANADA'S STORY AND A TURKEY STORY. I GET IT, THEY HAVE NOTHING TO DO WITH EACH OTHER, BUT DOES THIS SIGNAL CURRENCY PAIRS AWAY FROM THE MAJORS? ATHANASIOS: IN EMERGING MARKETS WHAT IS INTERESTING IS WE HAVE SEEN THIS STRONG DOLLAR RALLY, BUT THE POSITIONING IS NOT ADJUSTED YET. THE MARKET IS SHORT EM, WHEN IN THE PAST WHEN WE HAD THE DOLLAR AT THIS LEVEL POSITIONING IN EM WAS MUCH SHORTER. I THINK FROM THIS POINT OF VIEW -- AND THIS APPLIES FOR ALL RISK ASSETS HAVE NOT SEEN -- WHICH HAVE NOT SEEN THE CAPITULATION -- WHAT WE HAVE SEEN IN THE LAST TWO OR THREE WEEKS IS A REALITY CHECK THAT WE ARE IN A NEW REGIME IN WHICH INFLATION IS LIKELY AT HIGH LEVELS. IT IS LIKELY TO DROP FROM CURRENTLY HIGH LEVELS, BUT WE DO BELIEVE INFLATION IN ADVANCED ECONOMIES WILL BE ABOVE 2%, AND CENTRAL BANKS WILL KEEP TYPE POLICIES AND MOST LIKELY THEY WILL FACE A DILEMMA -- DO THEY KEEP TIGHTENING TO BRING INFLATION DOWN TO 2%, RISKING MUCH HIGHER MARKET VOLATILITY, OR ARE THEY GOING TO BLINK? JONATHAN: FOR THE ECB ON JUNE 9, THEY HAVE NOT EVEN STARTED. WHAT YOU HAVE BEEN SUCCESSFUL AT IS ANTICIPATING THE -- THAT WHAT IS GOING ON WOULD MEAN EURO WEAKNESS. OTHERS HAVE SUGGESTED THIS ECB IS GOING TO HIKE INTEREST RATES AND THEY ARE LOOKING FOR EURO STRENGTH. WERE THEY GETTING WRONG? ATHANASIOS: I THINK THE JOB OF THE ECB NOW IS INCREDIBLY DIFFICULT. WE BELIEVE THEY WILL HIKE STARTING IN JULY. BROADLY THIS IS WHAT MARKETS ARE PRICING. THE MARKET IS PRICING FOUR, MAYBE WE WILL HAVE LESS, BUT I THINK THAT EVEN AFTER WHAT MARKETS ARE PRICING, IT IS STILL NOT TIGHT ENOUGH, AND THE ECB CANNOT ACTUALLY FOCUS JUST ON INFLATION, BECAUSE THEY ARE DEALING WITH MANY SUPPLY SHOCKS, AND THEY ARE ALSO CONCERNED ABOUT -- THIS WAS THE LEVEL IN 2018 AFTER THE ITALIAN ELECTIONS. THIS IS SOMETHING THAT SHOULD MAKE THE ECB CONCERNED. THE BOTTOM LINE IS, THE ECB CANNOT BE AS HAWKISH, BECAUSE THEY ARE DEALING WITH ALL OF THESE VULNERABILITIES. THIS SUGGESTS THE EURO IS LIKELY TO BE WEAK. LISA: IT IS WONDERFUL WHAT WOULD -- WE WERE TALKING ABOUT BOND YIELDS. ONE REASON YIELDS HAVE GONE UP IS IT HAS BEEN SO DIFFICULT FOR EUROPEAN AND JAPANESE BUYERS TO HEDGE OUT SOME OF THIS UNCERTAINTY IN THE FX MARKET. DO YOU SEE IT BECOMING MORE COST-EFFECTIVE TO HEDGE AT THIS UNCERTAINTY AND BRING BUYERS BACK IN A WAY THAT COULD BE SUPPORTED IN THE U.S.? ATHANASIOS: THIS WE BELIEVE IS ONE. VOLATILITY IS TWICE AS HIGH NOW AS EARLIER IN THE YEAR. IT IS LIKELY THE FED'S VOLUNTEER -- VOLATILITY WILL REMAIN HIGH. THERE IS STILL TREMENDOUS UNCERTAINTY. WE HAVE NO IDEA WHAT POLICY WILL LOOK LIKE IN THE U.S. AND EUROZONE IN THE YEARS TO COME. ALL OF THESE ARE FACTORS THAT PAID A COMPLICATED OUTLOOK. IN SUCH AN ENVIRONMENT WHEN YOU HAVE UNCERTAINTY, MARKET VOLATILITY, BUT THE FED IS HAWKISH, THIS HAS TO BE BULLISH FOR THE DOLLAR. LISA: WHAT HAS LIQUIDITY BEEN LIKE? WE JUST HEARD FROM THE FED TALKING ABOUT CONCERNS FROM THE MARKET, LIQUIDITY DRYING UP. WE HAVE SEEN SUCH MASSIVE SWINGS THAT WE HAVE NOT SEEN OVER THE PAST COUPLE OF DECADES. HOW EASY IS IT DEFINED A DEEP MARKET IN THE DEEPEST MARKETS IN THE WORLD? ATHANASIOS: THERE IS NO PROBLEM WITH FX AND ACQUITTED A -- AND LIQUIDITY. I THINK THE FED IS TRYING TO FIND AN EXCUSE. THEY ARE CONCERNED ABOUT MARKET VOLATILITY, SO THEY WILL FOCUS ON INFLATION, THEY WILL TRY TO ADDRESS ANY LIQUIDITY PROBLEMS, BUT WE DO NOT SEE ANY LIQUIDITY PROBLEMS, AT LEAST IN THE FX MARKET. IT IS WAY TOO EARLY FOR THE FED TO BLINK. THEY JUST STARTED. THEY HAVE TO FOCUS ON INFLATION, AND FOR NOW IGNORE THE FACT THAT THE MARKET IS WAITING, THE FACT OF CENTRAL BANK POLICY. JONATHAN: QUICKLY GO THROUGH YOUR PRICE TARGETS. EURO-DOLLAR, 1.05. COULD YOU GO THROUGH THOSE THREE? WHAT ARE YOU LOOKING FOR? ATHANASIOS: THE PROBLEM WE HAVE IS THE FORECAST. I WOULD SAY THAT THE RISK IS THAT EURO-DOLLAR COULD GO TO 1.20. THESE ARE RISK SCENARIOS, BUT IF THE CURRENT MOMENTUM CONTINUES WE WILL BE AT THESE LEVELS IN A COUPLE OF MONTHS. JONATHAN: YOU SOUND LIKE A MAN WHO IS ABOUT TO CHANGE YOUR PRICE TARGETS. COME BACK SOON. [LAUGHTER] ATHANASIOS VAMVAKIDIS, BANK OF AMERICA SECURITIES. TOM: TO EXPLAIN TO OUR AUDIENCE, THEY HAVE RIGID RULES IN THEIR LEGAL DEPARTMENT. THEY CANNOT TELL US WHAT IS COMING. THEY CANNOT GET AHEAD WITH THE MEDIA OF WHAT THEY PUBLISH IN PRINT TO THEIR CLIENTS. JONATHAN: BUT WE GET A FEEL FOR IT, TOM. TOM: I GOT A FEEL FOR IT. JONATHAN: DEAD ON WHEN IT COMES TO THE SINGLE CURRENCIES. JUST A FANTASTIC CALL. TOM: ATHANASIOS HAS BRIAN ON LINE TWO. JONATHAN: DON'T DO IT. THAT EURO STORY, MORE SPECIFICALLY, CAUGHT A LOT OF PEOPLE OUT. LISA: ESPECIALLY AS WE TALK ABOUT PARITY AND HOW MUCH THE ECB CAN ACTUALLY DO. LET'S SAY THE ECB IS MORE DOVISH THAN WHAT PEOPLE EXPECT. WHAT IS THE RESPONSE IN THE EURO? DOES THE EURO LOSE THAT MUCH MORE TRACTION VERSUS THE DOLLAR OR IS THAT POTENTIALLY SUPPORTIVE, BECAUSE THAT MIGHT GIVE A GREATER RUNWAY TO THE EURO REGION ECONOMY BECAUSE THERE RAISING INTO A SHOP? JONATHAN: THE PROBLEM IS IT IS LOSE-LOSE IF YOU BACK OFF A FOR ALL THE WRONG REASONS, AND IF YOU LEAN IN A LOT OF PEOPLE START TO THINK ABOUT THAT OUTCOMES. LISA: I THINK THE DRIVERS OF INFLATION ARE GOING TO BE IMPORTANT IN TERMS OF WHERE THE BLINKING HAPPENS. JONATHAN: ATHANASIOS JUST SAID, THIS FED IS NOT BLINKING ANY TIME SOON, IN THEIR VIEW. 1% ON THE S & P. FROM NEW YORK CITY, THIS IS "BLOOMBERG SURVEILLANCE." ♪ RITIKA: KEEPING YOU UP-TO-DATE WITH NEWS FROM AROUND THE WORLD, I'M RITIKA GUPTA. PRESIDENT BIDEN SAYS VLADIMIR PUTIN BELIEVED HE COULD BREAK UP NATO AND THE EUROPEAN UNION WITH THE WAR IN UKRAINE. HE TOLD A FUNDRAISING EVENT NOW HE WORRIES PUTIN DOES NOT HAVE A WAY OUT OF THE WAR. PRESIDENT CALLED THE RUSSIAN LEADER "A VERY, VERY CALCULATING MAN." PRESIDENT BIDEN WILL HIGHLIGHT HIS EFFORTS TO CURB INFLATION TODAY. COMES A TIME WHEN SOARING PRICES THREATEN DEMOCRATS' EDGE CHANCE OF HOLDING ONTO CONGRESS. THE PRESIDENT WILL DRAW A CONTRAST WITH A REPUBLICAN PROPOSAL. CHINA IS TIGHTENING PANDEMIC RESTRICTIONS IN SHANGHAI AND EXPANDING A MASS TESTING SUITE IN BEIJING. MORE PEOPLE ARE BEING SHIPPED OFF TO ISOLATION CENTERS UNDER A NEW DEFINITION OF WHAT IT MEANS TO BE A CLOSE CONTACT. THE COUNTRY AVOIDED A LITTLE MORE THAN 3400 -- REPORTED A LITTLE MORE THAN 3400 INFECTIONS. BELOW THAT 30,000 -- $30,000 THRESHOLD AS THE WORLD LARGEST DIGITAL COIN WAS DOWN 55% FROM ITS NOVEMBER HIGH. MICHAEL MONOGRAPHS EXPECTS TO -- EXPECTS THINGS TO GET WORSE BEFORE THEY GET BETTER. GLOBAL BANKS ARE PULLING AWAY FROM THE MARKET THEY HELPED CREATE FOR BLANK CHECK ACCOMPANIES. GOLDMAN SACHS IS ENDING ITS INVOLVEMENT WITH MOST -- MOST OF THE SPECIAL ACQUISITION PURPOSE -- A ACQUISITION COMPANIES. THE SPAC GRACE HAS FOLDED IN PART TO REGULATIONS. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND ON QUICKTAKE BY BLOOMBERG, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. I'M RITIKA GUPTA. THIS IS BLOOMBERG. > > WE HAVE A PERFECT STORM OF WEAKENING GLOBAL GROWTH IN ALL REGIONS. IN THE U.S. YOU HAVE THIS TIGHTENING OF FINANCIAL CONDITIONS. IN EUROPE WE HAVE THE WAR. I THINK WHAT BROKE -- OF THE CAMELS BACK WERE THE COVID LOCKDOWNS. JONATHAN: THINGS GET WORSE IN CHINA. FROM NEW YORK CITY THIS MORNING, GOOD MORNING. HAVE A BOUNCE BACK ON THE S & P 500. UP .9%. YESTERDAY, A CLOSE BELOW THAT LEVEL ON THE S & P 500. THE FIRST SUCH BREAKING CLOSE GOING BACK TO MARCH 2021. CRUDE DOWN AGAIN, 1.01 ON WTI. AND A DOWNGRADE ON CHINESE ASK -- ASSETS FROM THE BLACK WALK -- FROM THE BLACK ROCK TEAM. IT IS NOT JUST ABOUT THE LOCKDOWNS IN CHINA. TK, TAKE A LISTEN TO THIS. THIS IS ALSO ABOUT BEIJING'S TIES TO RUSSIA. WARNED INVESTORS COULD FACE MORE PRESSURE TO AVOID CHINESE ASSETS FOR REGULATORY OR OTHER REASONS. I FIND THAT INTERESTING. TOM: WE SPOKE TO THE WHITE HOUSE ABOUT THE MACHINERY OF DOING SANCTIONS, AND NOT THAT EVERYBODY'S GOING TO GO AFTER CHINA, BUT IN A PARTIAL WAY THEY'RE GOING TO HAVE A LARGE EFFECT. I WOULD ALSO NOTE DOLLAR RESILIENCY, BUT AWAY FROM YEN, AWAY FROM EURO. THERE IS SOME OTHER NOISE GOING ON IN THE FX MARKET. RIGHT NOW, HE HAS GIVEN US RESILIENT OPINION AND SCIENCE ON THIS COVID PANDEMIC. WE ARE THRILLED TO BRING YOU AMESH ADALJA, JOHNS HOPKINS CENTER FOR HEALTH SECURITY. ARE WE GETTING A NEW BOUT OF COVID? I LOOK, CASES UP, HOSPITALIZATIONS UP, DEATHS NOT SO MUCH. IS THERE SOMETHING NEW WE NEED TO WORRY ABOUT IN JULY OR AUGUST? DR. ADALJA: WHAT WE HAVE TO WORRY ABOUT IS THE FACT THERE ARE MORE CONTAGIOUS VARIANCE. BA.2 IS THE MOST TRANSMISSIBLE VERSION OF THE VIRUS. YOU COUPLE THAT WITH PEOPLE BACK TO THEIR ACTIVITIES, YES YOU ARE GOING TO SEE CASES GO UP. WHAT YOU HAVE TO KEEP AN EYE ON IS WHAT PERCENTAGE OF HOSPITAL CAPACITY ARE THEY AT? FROM THAT STANDPOINT I THINK WE LOOK GOOD. CASES ARE ALWAYS GOING TO GO UP AND DOWN, THIS VIRUS IS GOING TO BE WITH US. TOM: CAN WE HELP WITH AN INITIAL BOOSTER, A THIRD SHOT, AND THERE I SAY WE ARE GOING TO BE DISCUSSING THIS SUMMER, A FOURTH SHOT, A SECOND BOOSTER? DR. ADALJA: WE DON'T REALLY HAVE AN OPTIMAL BOOSTER POLICY. WHEN IT COMES TO BOOSTERS THIS IS THE ORIGINAL VERSION OF THE VACCINE AND WE ARE FIGHTING A VIRUS THAT HAS MUTATED SEVERAL TIMES. WHAT WE SEE IS OUR VACCINES ARE HOLDING UP REALLY WELL AGAINST WHAT MATTERS, SERIOUS DISEASE, HOSPITALIZATION, AND DEATH, BUT THEY ARE NOT AS ROBUST A PREVENTING INFECTION ANYMORE. ALL I DON'T -- I DO NOT BELIEVE BOOSTING IS GOING TO DO MUCH. DOES THE VACCINE NEED TO BE UPDATED, WHAT IS OUR STRATEGY? IS IT TO GET PEOPLE OUT OF THE HOSPITAL? THAT IS HOW THE BOOSTER STRATEGY SHOULD BE FORMULATED. NEED NEWER VACCINES THAT ARE BETTER THAN THE CURRENT VERSION WITH WHAT WE HAVE NOW. LISA: WE ARE TALKING ABOUT NUANCES HERE IN THE UNITED STATES AND IN EUROPE. IT IS A DIFFERENT PICTURE IN CHINA. WHAT WOULD HAPPEN IF XI JINPING ABANDONED ZERO COVID, FROM A HEALTH PERSPECTIVE? DR. ADALJA: IT DEPENDS UPON HOW THE POPULATION REACTS. WE KNOW THEY HAVE A LOW VACCINATION RATE, ESPECIALLY AMONGST THEIR HIGH RISK POPULATIONS, WHICH IS PARADOXICAL. THAT WOULD MEAN HOSPITALS MAY GET INUNDATED. WHAT THEY HAVE TO DO, WHEN THEY PIVOT OFF OF ZERO COVID THEY HAVE TO VACCINATE THE POPULATIONS, THEY HAVE TO START USING ALL OF THESE TOOLS, LIKE MONOCLONAL ANTIBODIES AND RAPID TESTS, TO MITIGATE WHAT IS GOING ON. YOU HAVE TO MAKE SURE HOSPITALS CAN -- WE KNOW CHINA CAN MAKE HOSPITALS IN A WEEK -- NEED TO MAKE SURE THEY HAVE CAPACITY TO DO WITH IT. THAT IS THE SOLUTION, BECAUSE THE VIRUS IS A GOING AWAY AND CHINA CANNOT ISOLATE FROM THE WORLD FOREVER. THAT IS THE ONLY SOLUTION YOU HAVE WITH A RAPIDLY-SPREADING VIRUS LIKE COVID-19. LISA: FROM A HEALTH PERSPECTIVE WHAT DOES IT DO TO HAVE AN ENTIRE NATION UNDER VACCINATED AND NOT DEVELOPING HERD IMMUNITY THAT OTHER REGIONS ARE? WHEN IT DOES REOPEN IS THERE SOME SORT OF EQ BASIN RISK OR MUTATION RISK THAT COULD EVOLVE IF YOU GET A MASS UPSWING IN CASES IN A SPECIFIC REGION EVEN AFTER THE REST OF THE WORLD HAS TRIED TO MOVE ON? DR. ADALJA: ANY TIME THE VIRUS CAN SPREAD UNCHECKED THERE IS ALWAYS GOING TO BE A RISK OF NEW VARIANTS. WE HAVE SEEN THAT IN SOUTH AFRICA, EVEN IN THE U.S.. THE GOAL HERE HAS TO BE TO GET THE POPULATION VACCINATED, AND WE WILL DEAL WITH THE VARIANTS AS THEY COME. WE HAVE TO KEEP ABREAST OF THOSE VARIANTS AND STUDIED THOSE, BUT I THINK THE ZERO COVID POLICY IS SO BAD AND SO DISASTROUS THAT IT HAS TO BE MOVED FROM, AND WE HAVE BEST PRACTICES THAT COULD BE USED. THEY DON'T NEED TO STICK TO THIS ANY LONGER. TOM: IN MAY 1 OF THE GREAT JOYS OF THE STREETS OF NEW YORK IS TO SEE NEWLY-MINTED GRADUATES AND UNDERGRADUATES WALKING AROUND IN ROBES. YESTERDAY SIX OR SEVEN NEWLY MINTED MD'S FROM MOUNT SINAI WALKED BY ME. WHAT ARE THEY WALKING INTO IN HOSPITALS? ARE THEY WALKING INTO STAFFED HOSPITALS, STAFFED DOCTORS, STAFFED NURSING WITH A NEW ATTITUDE, OR ARE THEY WALKING INTO HOSPITALS BASICALLY IN CHAOS? DR. ADALJA: HOSPITALS ARE NOT IN CHAOS. I WORKED AT THE HOSPITAL LAST WEEK AND I WILL BE THERE THIS WEEKEND. THEY ARE NOT IN CHAOS. WE ARE IN A MUCH BETTER PLACE. I SEE VERY FEW COVID-19 PATIENTS NOW. HOSPITALIZATIONS ARE UP, BUT IS NOT WHAT THEY WERE DOING THE DECEMBER 2021 PERIOD WE HAD WITH COVID. IT IS NOT SOMETHING THAT IS COMPLETELY DISRUPTIVE. WE DO HAVE STAFFING ISSUES WITH NURSING PARTICULARLY. HOSPITALS ARE TRYING TO ADJUST, BUT IT IS NOT ANYTHING LIKE WHAT WE SAW IN THE PAST. I THINK THE HOSPITALS ARE IN GOOD SHAPE, ALTHOUGH WE DO HAVE SHORTAGES BECAUSE OF THE SHANGHAI LOCKDOWN. CAP SCANS ARE NOT AVAILABLE BECAUSE OF WHAT IS HAPPENING. JONATHAN: DR., THINK YOU AS ALWAYS. DR. AMESH ADALJA OF THE JOHNS HOPKINS CENTER FOR HEALTH SECURITY. THE SICK, I THINK YOU ARE TRYING TO GET TO THE RIGHT ISSUE. WHAT DO WE FACE HERE? PERPETUAL LOCKDOWNS? WHAT BREAKS THIS? LISA: FROM A POLITICAL STANDPOINT IT SEEMS LIKE VERY LITTLE, BECAUSE THEY ARE JUST CRACKING DOWN HARDER IN TERMS OF TRYING TO KEEP INFORMATION, AS WELL AS ISOLATING PEOPLE WHO HAVE HAD ANY CONTACT. THEY CALLED THE PEOPLE -- THEY CALL THE PEOPLE TASKED WITH ENFORCING THIS THE BIG WHITE, THESE PEOPLE ENDEMIC DOWNS THAT TRY TO IDENTIFY ANYBODY WHO HAS HAD CONTACT WITH ANYBODY ELSE. HOW DO WE GET OUT OF THIS? AND IF WE DON'T, WHAT IS THE CONSEQUENCE TO AN ECONOMY THAT IS ALREADY STRUGGLING WITH SHORTAGES OF GOODS? JONATHAN: SUPPLY CHAINS, YOU HEARD DR. ADALJA, STRUGGLING TO ACCESS CERTAIN SUPPLIES. I WOULD SAY THAT EXTENDS WORLDWIDE. TOM: WORLDWIDE, AND HEATING UP WITH A PASSION. ON CHINA, I WOULD SUGGEST CHINA PROS I TALK TO PUT ALL OF THEIR FOCUS ON NOVEMBER IN THE PARTY CONGRESS. JONATHAN: THAT IS LATER THIS YEAR IN THE FALL. SO MAYBE NO CHANGE UNTIL THEN? TOM: I'M NOT SAYING THAT. I'M SAYING THERE IS A CALENDAR DATE FOR ESTHER XI JINPING TO FOCUS ON. JONATHAN: FUTURES UP .8% ON THE S & P. FROM NEW YORK,, DAVID STUBBS OF JP MORGAN. > > YOU HAVE ALL OF THE THREE WORLDS BIGGEST ECONOMIES SUFFERING FROM THESE SHOCKS AT THE SAME TIME. > > WE ALSO RUN THE RISK OF A SECOND REPRICING LOWER IF WE SEE DEMAND DESTRUCTION ROLLBACK. > > COULD SEE PRICES PEAK BACKUP, COMPLICATING THE PICTURE FOR THE FED. > > I WONDER IN JULY WHETHER THE FED WILL HAVE THE STOMACH TO DO ANOTHER 50. > > THE FED HAS BEEN WAY BEHIND THE CURVE. > > THIS IS "BLOOMBERG SURVEILLANCE." JONATHAN: THIS MARKET NEEDS A THERAPIST. FROM NEW YORK CITY, GOOD MORNING, GOOD MORNING. FOR OUR AUDIENCE WORLDWIDE, ALONGSIDE TOM KEENE AND LISA ABRAMOWICZ, I'M JONATHAN FERRO. FUTURES UP .8%. THERE IS A BOUNCE. WILL IT STICK? TOM: WITH A LITTLE BIT OF HOPE AND PRAYERS. MAYBE IT IS A SHIFT ON THE FED GUESSING GAME, BUT AS LISA MENTIONED, EARNINGS ARE BETTER THAN GOOD AND STRATEGISTS READJUST. JONATHAN: WE LOOK FORWARD TO CPI TOMORROW. THAT IS THE MAJOR ONE FOR THIS MARKET. TOM: I AGREE. IT IS GOING TO BE INTERESTING TO SEE. I KNOW YOU ALREADY KNOW THE NUMBERS. I'M STILL NOT USED TO AN EIGHT-FIGURE. JONATHAN: WE ARE LOOKING FOR ANOTHER ONE TOMORROW. WALL STREET WILL LOOK FOR ONE THING, AND THE NEWSPAPERS WILL GO WITH SOMETHING ELSE. LISA, THE FRONT PAGES -- AND I WOULD ARGUE THIS ADMINISTRATION TOO -- WILL LOOK FOR DECELERATION. WALL STREET WILL BE LOOKING MONTH ON MONTH. TOM: THEY -- LISA: THEY ARE ALSO GOING TO BE LOOKING AT THE COMPONENTS. WHAT IS DRIVING ONGOING INFLATION? I'M WONDERING HOW MUCH OF THE NEW SEARCH IS DUE TO SUPPLY CHAIN DISRUPTIONS. WHETHER THAT CHANGES THE STORY FOR A FEDERAL RESERVE WHICH IS TRYING TO FIGHT DEMAND-SIDE INFLATION. CANNOT DO MUCH ABOUT THE SUPPLY-SIDE UNLESS THEY CRAM HOW MUCH GROWTH THERE IS. JONATHAN: IS IT ENOUGH TO CHANGE THE TONE OF WHAT IS HAPPENING? LISA: I HAVE TO GO BACK TO THE COMPONENTS. IF YOU START GETTING A MECHANICAL PEAK BUT YOU SEE REAL MOMENTUM IN WAGES, REAL MOMENTUM IN RENTS, HOW COULD THEY JUSTIFY NOT HIKING QUICKLY INTO THAT? HOW CAN THEY CHANGE THEIR TOWN? ALSO IF WE DO NOT GET A SIGNIFICANT DECELERATION, DOES THAT CHANGE ANYTHING IF YOU HAVE INFLATION RUNNING AT 7%? JONATHAN: A TON OF FED SPEAK COMING UP. EQUITY FUTURES RIGHT NOW, A LITTLE BIT OF A BOUNCE. SOME REAL PAIN IN THE NASDAQ 100 OVER THE PAST FEW DAYS. THE NASDAQ NOW UP BY 1.2%. YIELDS YESTERDAY LOWER AND NOT HIGHER, PARTICULARLY AT THE FRONT END. TODAY ON TANS, DOWN A BASIS POINT. JUST ABOUT HOLDING ON TO 3%. LISA: HOW MUCH THIS REALLY IS THE FOCUS. BOND YIELDS GOING DOWN IN TANDEM WITH EQUITIES SELLING OFF. A LOT OF PEOPLE THINK IT IS A GOOD SIGN. THIS IS TRADITIONAL RISK OFF. DOES THIS SIGNAL SOME SORT OF SHIFT, SOME FLOOR IN HOW LOW THINGS CAN GO? TODAY JANET YELLEN IS TESTIFYING TO THE SENATE. SHE IS GOING TO BE TESTIFYING IN A SESSION CALLED THE FINANCIAL STABILITY OVERSIGHT COUNCIL ANNUAL REPORT TO CONGRESS. HOW MUCH DOES SHE STRIKE A SLIGHTLY DIFFERENT TONE THAN PRESIDENT BIDEN WHEN IT COMES TO INFLATION AND HOW LONG IT WILL LAST? HE IS COUNTING ON IT TO ROLLOVER BEFORE THE MIDTERMS. TODAY WE GET THAT FED SPEAK. LORETTA MESTER IS GOING TO BE SPEAKING WITH MICHAEL MCKEE AT 11:00 A.M. OTHERS INCLUDE JON WILLIAMS, RAPHAEL BOSTIC, AS WELL AS CHRIS WALLER. DO THEY GIVE AN INCLINATION TO THE QUESTION JON WAS TALKING ABOUT? WHAT IS THE PUT COME IN? AT WHAT POINT TODAY SAY, WE ARE NOT GOING TO RAISE RATES AS MUCH OF THE MARKET EXPECTS. HOW MUCH DOES IT MATTER WHAT THE COMPONENTS OF INFLATION ARE, WITH SUPPLY-SIDE INFLATION VERY DIFFERENT AND PEOPLE HAVING SO MUCH MONEY TO SPEND AND DEPLOYING IT? AT 11:30 A.M. WE DO GET BOARDS FROM PRESIDENT BIDEN ON INFLATION. HOW DOES HE DEAL WITH GAS PRICES THAT ARE RISING TO NEW HIGHS, EVEN OF THE PRICE OF GAS HAS BEEN COMING DOWN AND THE PRICE OF OIL HAS BEEN COMING DOWN? HOW DO WE DEAL WITH REFINERIES? HOW DO WE DEAL WITH INVESTING IN FOSSIL FUEL SET A TIME WHEN THEY'RE TRYING TO PUSH A GREEN AGENDA? JONATHAN: I WONDER IF THEY WILL TALK ABOUT THIS MARKET TOO. HE WAS THE STOCK THAT LOOKS UGLY. PELOTON WAS DOWN 60%. IN THE PREMARKET IT IS DOWN ALMOST ANOTHER 17 PERCENTAGE POINTS. THEY ARE JUST SAYING ALL OF THE WRONG THINGS RIGHT NOW. REVENUE COMES IN SOFTER THAN EXPECTED. THEY ARE ALSO SEEING A SMALL INCREASE IN CANCELLATIONS DUE TO A SUBSCRIPTION PRICE HIKE. NOT WHAT YOU WANT TO SEE AND IT IS STILL FALLING. TOM: MY WORKOUT IS SURROUNDED BY IMMERSIVE TECHNOLOGY. THEY HAVE IMMERSIVE TECHNOLOGY. JONATHAN: WE JOKE ABOUT IT, THEY DON'T WORK ANYMORE. SHOW ME THE MONEY. TOM: THE MONEY IS, THE DAY ABOUT MY ELLA TOM I ENJOYED A 93% DRAWDOWN AS WELL. DAVID STUBBS IS SO CHISELED, HE IS ON THE PALATINE ABOUT 11 HOURS A DAY. JONATHAN: HE JOINS US NOW. DAVID, WE WILL NOT TALK TO YOU ABOUT YOUR WORKOUT REGIME. WE WILL TALK TO YOU ABOUT THIS MARKET. IT HAS BEEN BRUTAL. I WANT YOUR THOUGHTS ON WHAT HAS HAPPENED AND HOW YOU ARE ALLOCATING CAPITAL RIGHT NOW. DAVID: IT HAS BEEN BRUTAL FOR EQUITY AND DEBT. WE HAVE SEEN IS THE CREATION OF SIGNIFICANT VALUE IN THE FIXED-INCOME SPACE. WE ARE NOW STARTING TO MOVE SOME OF OUR CASH, OUR SHORT-DURATION FIXED-INCOME OUT OF THE CURVE. YES, YOUR BOND YIELDS COULD GO HIGHER, WE HAVE ASYMMETRIC RETURN PROFILES IN THE GOVERNMENT BONDS AROUND THE WORLD. YOU COULD LOSE A COUPLE OF PERCENT IF WE SEE BASIS POINTS UP FROM HERE, BUT IF WE DO SEE A GROWTH SCARE OR RECESSION NEXT YEAR INTO 2024, YOU WILL GET A DOUBLE-DIGIT RETURN ON THOSE GOVERNMENT BONDS. WE ARE CALLING NOW FOR ADDING A LITTLE BIT OF DURATION IN PORTFOLIOS. ON THE EQUITY SIDE WHAT WE ARE SEEING IS A BIT OF A MORPH FROM THE FEARS OF WHAT THE CENTRAL BANKS ARE GOING TO DUE TO THE FEAR OF THE GROWTH SLOWDOWN. WE HAVE SEEN EARNINGS BE PRETTY STELLAR. THEY HAVE BEEN UPGRADED AROUND 2% IN THE PAST FEW MONTHS. OBVIOUSLY THE QUESTION FOR NEXT YEAR IS, CAN THEY HOLD IN? TOM: DAVID, WONDERFUL TO HAVE YOU IN OUR STUDIOS. I WANT TO TAKE YOU THROUGH A JP MORGAN TIMELINE VERSUS A ROBINHOOD TIMELINE, EACH IS WHERE THE MARKET WAS EIGHT MONTHS AGO. YOU DID ONE OF OUR INTERVIEWS OF THE YEAR LAST YEAR ON TECHNOLOGY AND WHAT WE DO NOT SEE OUT THERE. ONE OF THE THINGS WE DO NOT SEE IS THE SEEDS OF DISINFLATION. DISCUSS THAT. DAVID: I THINK WE ARE ON THE CUSP OF A MULTI-YOUR UPGRADE CYCLE ACROSS CORPORATE AMERICA AND THE CORPORATE SECTOR ACROSS THE DEVELOPED WORLD, OR A RANGE OF NEW TECHNOLOGIES ARE GOING TO COME IN TO AUGMENT AND REPLACE LABOR. YOU HAVE TIGHT LABOR MARKETS I THINK THAT IS GOING TO LEAD TO THIS INFLATION AS WE MOVE THROUGH THIS CYCLE. THEN YOU ROUND UP PRODUCTIVITY AS WELL. THAT IS EXCITING, BUT HERE IS THE PROBLEM. THAT TAKES A WHILE. IT TAKES A WHILE TO INVEST, IT TAKES A WHILE TO INTEGRATE THESE SYSTEMS. WE HAVE HAD SUCH A PERSISTENT COST PUSH, INFLATION ISSUE FOR CORPORATIONS. EARNINGS HAVE BEEN STELLAR. A FEW YEARS FROM NOW I'M SURE THESE IMPROVEMENTS WILL BE GETTING IN. BETWEEN NOW AND THEN, UNFORTUNATELY I THINK WE HAVE QUARTERS OF MARGIN COMPRESSION. THAT IS WHAT THE EQUITY MARKET IS WORRYING ABOUT, BUT I THINK IT ALSO OPENS UP THE POSSIBILITY WE ARE SEEING AN ENTRY POINT FOR CERTAIN TECHNOLOGIES, CERTAIN PROVIDERS OF THESE NEW TECHNOLOGIES, WHICH IS GOING TO SET US UP FOR EXCELLENT RETURNS AND THE NEXT FEW YEARS. TOM: CRITICAL, AS ALLUDED TO IN MR. DIAMOND'S LETTER, THIS IS NOT ABOUT THE PANDEMIC AND TECHNOLOGY GETTING AHEAD OF ITSELF BECAUSE IT HAD TO. WERE LOOKING AT THIS AS A MUCH MORE PERSISTENT AND STRUCTURAL INDUSTRIAL SHIFT? DAVID: I THINK THOSE ARE TWO VERY DIFFERENT THINGS. THERE WAS A HUGE AMOUNT OF INVESTMENT BROUGHT TO DO WITH THE PANDEMIC. IF YOU LOOK AT PHYSICAL TECH SPENDING, IN TERMS OF INVESTMENTS IN THE GDP REPORTS THEY ARE STRONG. THEY COULD BE SOFT IN THE NEXT COUPLE OF QUARTERS BECAUSE OF THAT BOUNCE, BUT WHAT WE ARE TALKING ABOUT HERE IS MOVING INTO A NEW REGIME OF TIGHTER LABOR MARKETS, WITH SHORTER SUPPLY CHAINS, OF A DESIRE TO MAKE THINGS CLOSER TO HOME. AND THE NEED TO DO SO AT A COST EFFECTIVE PRICE WILL FORCE PEOPLE TO ADOPT ELEMENTS OF AUTOMATION, NOT JUST IN MANUFACTURING, BUT IN THE SERVICE SECTORS AS WELL. LISA: ASIDE FROM SPECIFIC POCKETS OF TECH, ARE YOU PREPARED TO SAY WE HAVE SEEN THE BOOK OF SELLING AND IT IS A GOOD TIME TO ADD RISK MORE BROADLY? DAVID: IF YOU LOOK AT THE SENTIMENT IN MARKETS, IT IS OBVIOUSLY INCREDIBLY BEARISH RIGHT NOW. WE HAD NUMBERS WE CALCULATED ON THIS. USS SENTIMENT ACROSS VOLATILITY, PRICING, ETC., IF YOU BUY AT THESE LEVELS YOU USUALLY GET A 7% TURN VERSUS 3% AT ANOTHER TIME. A TRADABLE RALLY. IS IT LIKELY? SURE IT IS. YOU JUST NEED A CATALYST FOR THAT, A SOFT CPR PRINT TOMORROW COULD BE ONE OF THOSE. A HOT ONE WOULD BE PRETTY TOUGH FOR THE MARKET TO TAKE. BROADLY, THOUGH, I THINK WE ARE IN A PERIOD OF MORE VOLATILITY THAN RETURN. WE HAVE TO GET PAST NOT ONLY THE TIGHTENING OF CENTRAL BANKS, BUT ALSO THE IMPACT ON GROWTH . FULLY THAT IMPACT IS MODEST INFLATION -- MODEST, INFLATION EASES, AND YOU HAVE THIS FABLED SOFT LANDING. THE SCARY PART IS IF GROWTH SLOWS SIGNIFICANTLY, INFLATION IS MORE STICKY, THEN THE GROWTH NEXT YEAR IS GOING TO BE MEAGER AND FEARS OF RECESSION WILL PRESSURE RISK ASSETS. JONATHAN: THAT IS THE PROBLEM RIGHT NOW. WHAT DO WE GET? DAVID, ALWAYS GREAT TO CATCH UP WITH YOU. TO RETURN TO THAT PELOTON STORY, WE ARE DOWN 17.5%. WE HAVE ALREADY TAKEN OUT THE PANDEMIC GAINS FOR THIS STOCK. THIS LINE FROM THE CEO, LISA, TALK ABOUT A COMPANY WRONGFOOTED. THE BALANCE SHEET HAS BEEN MANAGING INVENTORY. WE HAVE TOO MUCH AND THAT INVENTORY HAS CONSUMED AN ENORMOUS AMOUNT OF CASH. WHAT A CHANGE IN FORTUNES FOR THIS COMPANY. LISA: IS IT AN OUTLIER OR ONE OF THE EXAMPLES OF HOW MUCH IT BRILLIANCE THAT WAS DURING THE PANDEMIC? IT IS SHOCKING TO SEE PEOPLE TALKING ABOUT SEX AND THE CITY ISSUES THEY HAD WITH SOME ADVERTISING. JONATHAN: WHAT? LISA: REMEMBER THAT EPISODE WITH CHRIS AND HE DIED ON THE PALATINE? -- PALATINE? -- PELOTON? JONATHAN: THIS LINE, TOM ASH [LAUGHTER] LISA: JUST GOING TO MOVE ON. JONATHAN: THINLY CAPITALIZED. TO LISA'S POINT, IS THIS A PELOTON STORY, OR OTHER OTHER PALATINE'S OUT THERE? TOM: IN THE OLD DAYS MAYBE THEY WOULD NEVER HAVE GONE PUBLIC. $4 BILLION OF TOTAL REVENUE, THE MARGIN -- MARGIN IS NONEXISTENT. IS THIS A PUBLICLY-TRADED COMPANY WITH A PERSISTENT CASH FLOW? MAYBE. WHEN I AM ON MY PELOTON I GET A EXHILARATING MOTIVATION. LISA: IT CARRIES OVER TO THE MORNING. JONATHAN: WOULD YOU ALLOCATE ANY OF THIS -- ANY OF YOUR CASH TO THIS STOCK? PELOTON DOWN 17.5% IN THE PRE-MARKET. EQUITY FUTURES UP. WE HAVE A BOUNCE. FROM NEW YORK CITY, THIS IS BLOOMBERG. ♪ RITIKA: KEEPING UP-TO-DATE WITH THE FIRST WORD, I'M RITIKA GUPTA. PRESIDENT BIDEN WILL HIGHLIGHT HIS EFFORTS TO STEM INFLATION IN A SPEECH TODAY. IT COMES AT A TIME WHEN SOARING PRICES THREATEN DEMOCRATS'S CHANCES OF HOLDING ONTO CONGRESS. THE PRESIDENT WILL DRAW A CONTRAST WITH A REPUBLICAN PROPOSAL TO RAISE TAXES. JUST IN TIME FOR SUMMER DRIVING SEASON, U.S. GASOLINE AND DIESEL PRICES HAVE SET A RECORD, ACCORDING TO AAA. GASOLINE PRICES HAVE HAD $4.37 A GALLON. AMERICANS ARE EXPECTED TO DRIVE MORE THIS SUMMER THAN IN 2021. PRESIDENT BIDEN HAS SIGNED A MEASURE DESIGNED TO MAKE IT EASIER FOR THE U.S. TO SEND WEAPONS AND SUPPLIES TO UKRAINE. THE LEGISLATION CUTS REDTAPE BUT DON'T -- BUT DOES NOT -- DOES NOT INCLUDE ADDITIONAL FUNDING. SHARES OF PALATINE ARE FALLING. THE FITNESS COMPANY REPORTED THIRD-QUARTER REVENUE THAT MISSED ESTIMATES AND ITS OUTLOOK. REVENUE WAS WELL BELOW EXPECTATIONS. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND ON QUICKTAKE BY BLOOMBERG, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. I'M RITIKA GUPTA. THIS IS BLOOMBERG. > > YOU HEARD MY PRESIDENT SEVERAL TIMES. HE SAID WE SHOULD HAVE THESE NEGOTIATIONS. MY PRESIDENT IS READY FOR THESE NEGOTIATIONS. UNFORTUNATELY WE DO NOT EXPECT PRESIDENT PUTIN TO BE A PART OF THESE. JONATHAN: ALWAYS GREAT TO HEAR MARIA TADEO CATCH UP WITH IHOR. FUTURES POSITIVE .6%. WE FADE A LITTLE BIT HERE. STILL POSITIVE ON THE NASDAQ, UP 1.4%. PELOTON, DOWN 16.8% AND JUST SAYING ALL THE WRONG THINGS RIGHT NOW. A MISS ON EARNINGS, A MISS ON REVENUE TO BE SPECIFIC. A MISS ON THE GUIDANCE AS WELL. GOING FORWARD THEY SAY INVENTORY IS EATING UP CASH. IT IS LEAVING THE COMPANY THINLY-CAPITALIZED. TOM: IT IS REALLY STRUGGLING. WE ARE GOING TO GET MORE STORIES LIKE THIS WHERE PLANS BLOW UP AND LAW UP IN DIFFERENT WAYS. CAN WE SAY THAT PELOTON IS OLD NEWS RIGHT NOW? IT IS NOT THAT WE DID NOT KNOW THE SPECIFICS HERE. JONATHAN: THERE IS NOTHING NEW ABOUT THIS, BUT I THINK IT IS INTERESTING. YOU HAVE A COMPANY SEEING GREAT DEMAND, SO THEY BUILD UP INVENTORY, AND HERE WE ARE, DEMAND IS GONE. JUST NOTHING LIKE WHAT IT WAS. IF YOU SEE THE PANDEMIC STORY, GREAT STORY, THE LIKES OF CATHIE WOOD AND OTHERS WHO LIKE THESE KIND OF NAMES, THEN ALL OF A SUDDEN THEY GET FADE. THAT IS WHAT WE ARE DEALING WITH. LISA IS TALKING ABOUT HOW MANY PELOTON'S ARE OUT THERE, THAT IS THE DYNAMIC WE ARE TRYING TO THINK ABOUT. TOM: INCLUDING THE TWO IN OUR LIVING ROOM. JOINING US NOW JOE MATHIEU AND MARIA TADEO. WE LOOK TO MARIA TADEO FOR A MORNING BREEZE. MARIA, I WAS SHOCKED TO GET THE RESEARCH NOTES FROM INTERNATIONAL RELATIONS AND THOSE MORE WALL STREET-Y ON THE SPEECH OF MR. PUTIN AND HIS FRAGILITY. HOW IS HIS HEALTH DISCUSSED IN BRUSSELS? MARIA: TOM, YOU HAVE TO BE VERY CAREFUL ABOUT THAT, BECAUSE WE KNOW THAT THERE IS NOT A LOT OF INFORMATION. THE RUSSIANS, OF COURSE, SAY THAT IS COMPLETELY A NO GO. THE IMAGE OF PUTIN, THE MAN WHO IS A MILITARY GENIUS BUT ALSO IN GOOD HEALTH. YOU DON'T KNOW ANYTHING ABOUT HIS PRIVATE LIFE AND HE SIMPLY WON'T GO THERE. WHEN YOU LOOK AT THE EUROPEAN INSTITUTIONS, I WANT TO BE INCREDIBLY CAREFUL. AFTER VLADIMIR PUTIN IS NOT CLEAR WHAT WILL HAPPEN TO RUSSIA. THE BIG THING EUROPEANS WANT TO AVOID IS NOT REPEATING THAT MISTAKE OF A PRESIDENT BIDEN, SUGGESTING THERE SHOULD BE REGIME CHANGE. LISA: WHAT ARE THE NEXT STEPS FOR THE EUROPEAN UNION WITH RESPECT TO THIS OIL BAND WE DO NOT HAVE DETAILS ON? MARIA: I THINK THIS IS ANOTHER BIG MESS FOR EUROPE. IT IS THE SAME OLD STORY. THE POLITICS, THE ENERGY, SECURITY, DEFENSE, THE OIL ARE ALL CONNECTED. TODAY YOU HAVE URSULA VON DER LEYEN, WHO LEADS THE COMMISSION, ON A PLANE TO SEE VICTOR PORTLAND TO CONVINCE HIM HE SHOULD APPROVE THIS EMBARGO. AGAIN IT IS A TRICKY SITUATION WHERE THE POLITICS, THE INTERNAL DYNAMICS OF THE EUROPEAN UNION PREVENT QUICK ACTION. THERE IS DEBATE IN EUROPE AS TO WHETHER OR NOT THIS PRINCIPLE OF UNANIMITY SHOULD BE DROPPED. REMEMBER, THEY HAVE TO AGREE. THE THING IS AGREED UNTIL EVERYTHING IS AGREED. THAT IS HOW BRUSSELS WORK. INCREASINGLY THERE ARE VOICES WHO SAY WE HAVE TO DIG IT. WE ARE TOO SLOW. LISA: WE ARE HOURS AWAY FROM PRESIDENT BIDEN'S SPEECH. WHAT HAS STUCK SO FAR THAT HE HAS TRIED? JOE: THAT IS A GOOD QUESTION. YOU WILL HAVE AN OPPORTUNITY TO PICK THROUGH SOME OF THE THINGS THE ADMINISTRATION HAS TRIED. IT IS PRETTY OBVIOUS THAT AS MANY SWINGS AS THE ADMINISTRATION HAS TAKEN HERE IN IS NOT REALLY MADE CONTACT WITH THE BALL. THEY LIKED TO TALK ABOUT THE PUTIN PRICE HIKE, BUT ENERGY PRICES WERE SOARING BEFORE THE WAR BEGAN. INFLATION WAS AN ISSUE BEFORE WE EVER STARTED TALKING ABOUT UKRAINE. TODAY HE'S GOING TO SUGGEST THAT -- OR URGE CONGRESS TO PASS A LOT OF IDEAS THAT HAVE NEVER BEEN ABLE TO PASS BEFORE. BUILD BACK BETTER. THINK EXTENDED CHILD TAX CREDIT, LOWERING THE COST OF PRESCRIPTION DRUGS. THERE IS GOING TO BE URGENCY, BUT THERE IS A REASON WHY THEY DIDN'T PASS LATCHED -- LAST YEAR AND IN A MIDTERM ELECTION IT DOESN'T LOOK LIKE THEY HAVE GREAT POTENTIAL TO MOVE EITHER. TOM: SWINGING BACK TO THE FORE IN FRONT OF MR. BIDEN, THE BOTTOM LINE IS HE NEEDS HELP FROM BRUSSELS. HOW ALLIED ARE THE ALLIES RIGHT NOW? HOW IS THAT PERCEIVED IN WASHINGTON? JOE: YOU'RE GOING TO SEE AN EXAMPLE TODAY WITH MARIO DRAGHI VISITING THE WHITE HOUSE. THAT IS GOING TO BE A UNITED FRONT. THEY MAY NOT AGREE ON EVERYTHING. ITALY HAS A MUCH DIFFERENT RELATIONSHIP WITH RUSSIA, BUT THAT IS GOING TO BE AN IMPORTANT OPTICAL PRESENTATION FOR THE WHITE HOUSE. THE PRESIDENT IS STILL ASKING FOR MONEY. IT WAS SOME DAYS AGO HE ASKED FOR $33 BILLION IN THIS LATEST -- AND THIS LATEST WAR FUNDING HAS BEEN BOGGED DOWN IN A CONVERSATION OVER COVID RESPONSE FUNDING. AT THIS POINT IT LOOKS LIKE THEY'RE GOING TO BREAK THEM APART. PRESIDENT BIDEN GAVE IT THE OK. HE SAID, I REALIZE WE DON'T HAVE THE VOTES, STRIP IT AND LET'S PASS THAT HUMANITARIAN AID AS A CLEAN BILL. AS WE UNDERSTAND, ACCORDING TO THE PENTAGON, THE ADMINISTRATION WILL RUN OUT OF ITS AUTHORIZED DRAWDOWN MONEY IN NINE DAYS. JONATHAN: JOE, THANK YOU. TOM, WOULD YOU LIKE TO THINK MARIA? TOM: MARIA, THANK YOU. JONATHAN: THANK YOU, MARIA. I'M SCARED TO SAY MARIA'S SECOND NAME NOW. MARIA: YOU GOT IT RIGHT. JONATHAN: WE APPRECIATE IT. TOM: AND JAVIER AS WELL. MARIA: THAT WAS TERRIBLE, TOM. [LAUGHTER] DON'T. A LOT OF PRACTICE. JONATHAN: MARIA, I WILL CATCH UP WITH YOU LATER. THANK YOU. SOUND ON WITH JOE MATHIEU AT 5:00 P.M., WITH MARIA TADEO JOINING HIM. THEY ARE GOING TO HAVE SOME FUN. TOM: ITALY, GERMANY, TO THE MOON. MR. DRAGHI JOINS THE WHITE HOUSE AND YOU HAVE BEEN WORLD-CLASS ON THIS. ITALY TO GERMANY 10 YEAR, DOUBLES OUT TO TWO PERCENTAGE POINTS. THAT IS A REALITY MR. DRAGHI FACES. JONATHAN: THE ECB MEETING WAS GREAT. THAT IS THE MARKET. LET'S TALK ABOUT THE POLITICS. ITALY'S RELATIONSHIP WITH RUSSIA HAS BEEN DIFFERENT THAN THE UNITED STATES. IT IS WORTH REMEMBERING THAT ONLY A NUMBER OF MONTHS AGO WHEN WE HAD A MASSIVE RUSSIAN TROOP BUILDUP ON THE BORDER OF UKRAINE AND MANY PEOPLE WERE ACCUSING THE RUSSIANS OF PREPARING TO GO INTO -- IN, AND THE RUSSIANS WERE DENYING THAT, THE ITALIAN BUSINESS LEADERS WERE LOOKING FOR A MEETING WITH PUTIN TO TALK BUSINESS. THAT IS HOW MUCH THINGS HAVE CHANGED. THERE IS A FEAR THAT MAYBE THEY WILL SNAP BACK. THAT PERHAPS THEY STILL COULD. I KNOW THAT IS NOT THE CONSENSUS VIEW, BUT STILL THAT FEAR RETURNS. TOM: IT NEEDS REPORTING FROM ROME. A SURVEILLANCE ROAD TRIP. JONATHAN: WILL YOU PRACTICE YOUR PRONUNCIATION OF ITALIAN NAMES? TOM: NO. I HAVE TO GET THROUGH THE SPANISH NAMES FIRST. [LAUGHTER] JONATHAN: JUST DON'T. JUST DON'T. FUTURES UP .1% -- .5% ON THE S & P. THIS IS "BLOOMBERG SURVEILLANCE." JONATHAN: COMING UP THE BACK OF A THREE-DAY LOSING STREAK ON THE S & P, WE HAVE A LITTLE BIT OF A BOUNCE. ON THE NASDAQ, UP 1%. THE NASDAQ YEAR TO DATE BATTERED, BRUISED. YESTERDAY DOWN MORE THAN 8%. THAT GROUP ON THE S & P 500 MUCH LOWER. COMMODITIES DOWN TOO. AN INTERESTING MOVE AT THE FRONT END OF THE YIELD CURVE WE NEED TO KEEP TALKING ABOUT. 2.5775%. LAST WEDNESDAY, 2.85%. YIELDS LOWER AGAIN TODAY BY A BASIS POINT. TENS ARE BREAKING 3% NOW, 2.9987%. IT STARTS TO GET INTERESTING. IT IS NOT JUST ABOUT EQUITIES DOWN, BONDS DOWN. I WOULD LOOK AT BREAKEVENS. BREAKEVENS STARTED TO GO THE OTHER WAY AS WELL. YOU KNOW THE CALCULATION BEHIND THIS. TAKE THE YIELD OF THE INFLATION, SUBTRACT THAT FROM THE CLOSEST NOMINAL MATURITY, TAKE THOSE YIELDS, PUT IT ALTOGETHER, THAT YIELD, THE IMPLIED INFLATION RATE, THAT IS COMING BACK IN. THOSE ARE INFLATION RATE EXPECTATIONS. GROWTH DOWN, INFLATION DOWN, GROWTH SCARE IN YESTERDAY'S PRICE ACTION. LISA: PERHAPS THE FED WON'T BE ABLE TO GO AS MUCH AS PEOPLE PREVIOUSLY EXPECTED. THAT IS WHAT WE ARE SEEING BAKED INTO A MARKET THAT IS INCREASINGLY CONCERNED. HOW MUCH IS THIS BECAUSE THE INFLATION WE ARE SEEING IS COMING FROM SUPPLY CHAIN DISRUPTIONS, WHICH IS NOT LONG-TERM INFLATIONARY? THAT IS MORE STAGFLATIONARY, MORE CONCERNING FOR GROWTH, AND THAT REALLY UNDERPINS SOME OF THE MOVES WE HAVE SEEN. JONATHAN: THIS IS NOT A JUDGMENT OF THE FUTURE, JUST AN OBSERVATION OF THE LAST 24 HOURS, BUT IT IS NOTABLE THAT THIS IS GOING THE OTHER WAY. TOM: WE WILL GET TO KATHY JONES IN A MOMENT. THE FOREIGN EXCHANGE MARKET IN A JUMBLE. TWO REPORTS IN THE LAST 10 MINUTES, ABRAHAM REB ARI AT CITIGROUP REFRAMES A STRONG DOLLAR AND ALSO SAYS YEN QUIET SENT UNTIL -- YEN WE HAVE SENT -- YEN QUIESCENT UNTIL A 135 LEVEL. WHERE IS THAT SCOPE AND SCALE IN THE BOND MARKET? WE DON'T HAVE AN ACQUITTAL INTERVIEW IN THE BOND MARKET LIKE STRATEGISTS ARE GUESSING AND FOREIGN-EXCHANGE. JONATHAN: THAT'S THE CROSS ASSET PRICE ACTION. LET'S GET YOU SOME SINGLE NAMES OF STOCK MOVERS IN THE PREMARKET. LET'S GET TO ROMAINE. ROMAINE: THE MACRO STORY DRIVING THE EQUITY ACTION, BUT RAISING A LOT OF QUESTIONS AS TO WHETHER PEOPLE ARE OVERLOOKING THE MICRO. APPLE IS DOWN 16% NOW FROM THAT ALL-TIME HIGH. A COMPANY WITH $95 BILLION OF FREE CASH FLOW, $100 BILLION IN NET INCOME, AND A P/E RATIO THAT IS SMALLER THAN MORE THAN HALF THE MEMBER'S OF THE NASDAQ 100, NOW NEAR OVERSOLD CONDITIONS. YOU ARE SEEING A BID COME BACK INTO THIS MARKET, ONLY UP ABOUT 1% AFTER SLIPPING UP 8% OVER THE PAST FEW DAYS. IT WILL BE INTERESTING TO SEE WHETHER THESE STALWARTS OF THE MARKET CAN REASSERT THEMSELVES. DO YOU PUT APPLE IN THE SAME BASKET IS UPSTART, DOWN 52% RIGHT NOW? THIS IS THE LENDING PLATFORM, BASICALLY SAYING IT'S GOING TO HAVE TROUBLE MEETING ITS GUIDANCE FOR THE YEAR. THIS IS PRETTY MUCH ACROSS THE BOARD ON THE MAIN METRICS. HIGHER INTEREST RATES, AND YOU TALK ABOUT THE FACT THAT LOAN GROWTH, LOAN BALANCES ARE CREATING A RISK SPECTRUM HERE. AFFIRM DOWN ABOUT 14%. SO IF I ALSO LOWER IN THE -- SOFI ALSO LOWER IN THE PREMARKET. NOT PROVIDING ANYTHING NEW. THOSE SHARES DOWN 41% HERE IN THE PREMARKET. THE COMPANY ALSO SAID SOME DEAL IT HAD WITH AN UNNAMED GROCERY STORE CHAIN IS AFFECTING ITS EARNINGS. SOME SHIFT IN HOW THAT COMPANY RECOGNIZES. PELOTON NOW DOWN ALMOST 25%. I'M NOT GOING TO REHASH THE NUMBERS, BUT I WANT TO POINT OUT THE INVENTORY NUMBERS ON THIS ARE ABSOLUTELY ASTONISHING. GO BACK TO JUNE 2020, INVENTORY IS SOMETHING LIKE $200 MILLION ON THE BALANCE SHEET. AS OF MARCH, YOU WERE AT $1.4 BILLION ON THE BALANCE SHEET. THE COMPANY SAYS DON'T WORRY, WE WILL SELL ALL OF THAT. THIS IS MORE THE CASH FLOW ISSUE RATHER THAN A STRUCTURAL ISSUE. INVESTORS NOT BUYING IT. TOM: ROMAINE BOSTICK, THANK YOU SO MUCH. RIGHT NOW, KATHY JONES, CHIEF FIXED INCOME STRATEGIST AT THE SCHWAB CENTER FOR FINANCIAL RESEARCH. A GIVEN BOND ETF'S DOWN 16% AT PRICE, 19% ANNUALIZED, BIG LOSS. I WOULD SUGGEST THE BOND MARKET HANDLES PRICE DECLINE AND A BOND BEAR MARKET DIFFERENTLY THAN THE EQUITY MARKET. WHAT ARE YOU OBSERVING FROM SCHWAB CLIENTS AS THEY ENJOY PRICE DECLINE? KATHY: WELL, I AM NOT SURE THEY ARE ENJOYING PRICE DECLINE, BUT WHAT WE ARE SEEING IS INVESTORS TRYING TO TAKE ON A LITTLE MORE INCOME BY GOING INTO LONGER DURATION BONDS. THIS HAS BEEN OUR CALL RECENTLY, SUE SARTRE GRADUALLY -- RECENTLY, TO START GRADUALLY ADDING DURATION AS YIELDS GO UP BECAUSE YOU HAVE THE OPPORTUNITY NOW TO GET SOME RELATIVELY ATTRACTIVE COUPONS AT PRICES THAT ARE OFTEN BELOW PAR, SO THAT MEANS NOT ONLY THE OPPORTUNITY TO EARN MORE INCOME IN A PORTFOLIO, BUT ALSO POTENTIAL CAPITAL GAINS. LISA: WHERE IS THE BIGGEST OPPORTUNITY WHEN YOU TALK ABOUT THOSE COUPONS? IS IT IN CREDIT, THE RISKIER THE BETTER? OR IS IT IN FULL FAITH AND CREDIT U.S. TREASURIES? KATHY: I WOULD SLICE IT A LITTLE BIT MORE CAREFULLY THAN THAT. THERE ARE TWO AREAS WE REALLY LIKE. ONE IS MUNICIPAL BONDS YOU CAN GET ON A TAX-EQUIVALENT BASIS FOR A VERY HIGH INCOME EARNER. NORTH OF 5% IN HIGH-QUALITY MUNICIPAL BONDS. WE ARE OK WITH INVESTMENT GRADE, BUT WE WANT TO STAY A LITTLE MORE CAREFUL BECAUSE WE DO THINK WE ARE GOING INTO OR WE ARE IN PART OF THE CREDIT CYCLE WHERE WE WERE SEE SOME -- WHERE WE WILL SEE SOME FURTHER SPREAD WIDENING. WE ARE NOT CRAZY ABOUT HIGH YIELDS BECAUSE THIS IS THE PART OF THE CYCLE WHERE HIGH-YIELD USUALLY DOES MOST POORLY. PEOPLE FORGET IT IS NOT THE BEGINNING OF THE RATE HIKE CYCLE , IT IS USUALLY THE END OF THE RATE HIKE CYCLE WHEN THE ECONOMY IS STARTING TO WEAKEN THAT YOU START TO SEE THOSE HIGH-YIELD SPREADS REALLY GO BACK. LISA: WE SAW A PRETTY BIG MOVE IN SPREADS YESTERDAY IN THE HIGH-YIELD SEX OR -- THE HIGH-YIELD SECTOR, WHICH IS SOMETHING NEW TO GET AND YET SUDDENLY, WE SEE SOME SORT OF INDICATION HERE. IS THIS JUST THE BEGINNING OF A WIDENING OF A PROTRACTED SELLOFF IN CREDIT, OR IS THIS BASICALLY SOME SORT OF MINI CAPITULATION THAT WILL BE BUYABLE FOR INVESTORS? KATHY: I THINK IT IS THE FORMER AND NOT THE LATTER. WE HAVE SEEN CCC'S REALLY UNDERPERFORM FOR QUITE A WHILE RELATIVE TO THE HIGHER END OF THE HIGH-YIELD MARKET, BUT AS WE GET INTO HIGHER RATES, YOU ARE STARTING TO SEE THE IMPACT ON CASH FLOW FOR THOSE WEAKER COMPANIES WITH WEAKER BALANCE SHEETS, MAYBE NOT AS GREAT AT CASH FLOW. THAT IS ONE REASON WHY WE DON'T LIKE LOANS AS WELL NOW, SIMPLY BECAUSE WE ARE STARTING TO SEE THE EFFECT OF INTEREST RATE INCREASES. THAT IS PROBABLY ON THE ABILITY TO MEET THOSE OBLIGATIONS ON WEAKER CREDIT. SO DEFINITELY WOULD NOT BE CHASING HIGH-YIELD AT THIS STAGE OF THE GAME. TOM: THERE IS A RELIGION IN THE EQUITY MARKET THAT IF YOU GO DOWN CORRECTION BEAR MARKET OR WORSE, AT SOME POINT YOU GROW YOUR WAY BACK TO WHERE YOU WERE IN THE MARKET HIGH. THERE'S LONG SPANS WHERE THIS HAS BEEN A CHALLENGE. HOW DO YOU DO THAT IN THE BOND MARKET? IF I AM X PERCENT DOWN FROM DECEMBER OF 2020, HOW DO I GROW MYSELF BACK WITH YIELD IF I DON'T HAVE ATTENDANT GROWTH UNDERNEATH IT LIKE I HAVE IN STOCKS? KATHY: WELL, IT DEPENDS. IF YOU ARE HOLDING INDIVIDUAL BONDS AND YOU HOLD THEM TO PAR, YOU ARE STILL GOING TO GET YOUR PRINCIPAL AND YOUR INTEREST PAYMENTS BY DEFAULT ALL THE WAY ALONG. SO YOU EARN WHATEVER THAT CURRENT YIELD WAS WHEN YOU BOUGHT THE BOND. IF YOU ARE IN A BOND THUD, USUALLY TAKES LONGER, BUT WHAT WILL HAPPEN IS THE MANAGER IS REINVESTED FOR HIGHER INCOME, AND ON A TOTAL RETURN BASIS OVER TIME, ASSUMING THAT RATES DON'T GO SKY HIGH FROM HERE, WHICH WE DON'T THINK IS LIKELY, YOU EARN YOUR WAY BACK WITH THE INCOME. JONATHAN: THANK YOU FOR BEING WITH US THIS MORNING, KATHY JONES OF THE SWAB CENTER FOR FINANCIAL RESEARCH. CITI JUST PUBLISHED, "HAVE WE REACHED PEAK INFLATION, PEAK HAWKISH NESTS? THE EQUITY MARKET SELLOFF AND FED OFFICIALS PUSHING BACK AGAINST 75 BASIS POINT HIKES RAISES QUESTIONS ABOUT WHETHER WE HAVE REACHED PEAK HAWKISH MISS -- PEAK HAWKISHNESS. WE SEE THE POTENTIAL FOR A FED TO TAKE ANOTHER HAWKISH STEP, GUIDING TO A HIGHER TERMINAL RATE AT AN UPCOMING MEETING." THAT IS THE CITI VIEW OUT THERE THIS MORNING. TOM: THAT IS THE X AXIS ON INFLATION. GO BACK TO I THINK IT WAS ELLEN'S AND THEIR OF MORGAN STANLEY, TRYING TO DEFINE TRANSITORY AS ONE QUARTER, TWO QUARTERS. WE ARE OUT AS A CONSENSUS OPINION THREE AND FOUR QUARTERS, AND THEY SHOVE THAT X AXIS OUT. WHAT DO YOU DO IF YOU COME DOWN TO 4%? JONATHAN: 4% WHEN? WE PUSH THIS OUT FURTHER. DOES THE FED HAVE TO GO FURTHER TOO? LISA: IF THE FED DOES GO FURTHER, WHAT DOES THAT DO TO CORPORATE DEBT? WHAT DOES THAT DUE TO THE TRILLIONS OF DOLLARS OF DEBT THAT HAS BEEN BORROWED FROM A GOVERNMENTAL AS WELL AS CORPORATE LEVEL FROM WHEN THE PANDEMIC STARTED? REMEMBER WHEN WE WERE TALKING ABOUT HOW THE FED COULDN'T RAISE RATES THAT FAR BECAUSE OF ALL OF THE DEBT THAT HAS BEEN INCURRED IN EACH SUCCESSIVE CYCLE? WHAT IS GOING TO HAPPEN NOW? NOW THAT WE ARE TALKING ABOUT INFLATION AT SUCH A HIGH LEVEL, THIS IS WHAT PEOPLE ARE WRESTLING WITH. IT IS UNPRECEDENTED. TOM: I WAS NOT RUDE WITH KATHY JONES LIKE I WAS WITH MARIA TADEO, BUT ON A GIVEN BROAD BOND ETF, I NEED TO MAKE 5.9% COUPON PER YEAR TO GET BACK TO THE HIGHS OF THE SUMMER OF 2020. WHERE AM I GOING TO FIND A 6% TOTAL RETURN IN BONDS RIGHT NOW? JONATHAN: ESPECIALLY WITH THIS INFLATION OUTLOOK FROM THE FED. HERE'S A GOAL FOR YOU. NEW YORK FED PRESIDENT WILLIAMS SAYING RIGHT NOW THEY SEE INFLATION EASING CLOSE TO 2%, THE FED'S GOAL, IN 2024. TOM: THERE IT IS. THAT IS THE JAN HATZIUS VIEW, FOLKS. JONATHAN: WE'VE GOT TO WAIT A WHOLE LOT LONGER TO SEE THAT. > > THIS IS "BLOOMBERG SURVEILLANCE" WITH TOM KEENE, JONATHAN FERRO, AND LISA ABRAMOWICZ. -- LONGER TO SEE THAT. ALONGSIDE TOM KEENE AND LISA ABRAMOWICZ, I'M JONATHAN FERRO. THIS IS "BLOOMBERG SURVEILLANCE ." RITIKA: KEEPING YOU UP TO DATE WITH NEWS FROM AROUND THE WORLD, WITH THE FIRST WORD, I'M RITIKA GUPTA. SANCTIONS IN RUSSIA OWN OIL WILL BE ON THE AGENDA TODAY WHEN ITALY'S PRIME MINISTER MARIO DRAGHI MEETS WITH PRESIDENT BIDEN AT THE WHITE HOUSE. HE RESOLUTELY BACK SANCTIONS DESPITE HIS COUNTRY'S RELIANCE ON RUSSIAN ENERGY. IN FINLAND, THE PARLIAMENT'S DEFENSE COMMITTEE HAS CONCLUDED THAT THE COUNTRY SHOULD JOIN NATO. FINLAND STARTED ON THE PATH JOINING THE ALLIANCE AFTER ITS NEIGHBOR RUSSIA INVADED UKRAINE. THREE OUT OF FOUR FINNS NOW SUPPORT JOINING NATO, UP FROM JUST ONE OUT OF FIVE BEFORE THE INVASION OF UKRAINE. FERDINAND MARCOS' HAS BROUGHT -- FERDINAND MARCOS' SON HAS BROUGHT THE FAMILY BACK TO POWER. TIGHTENING RESTRICTIONS AND SHANGHAI AND EXPENDING A MASS TESTING SWEEP IN BEIJING. MORE PEOPLE ARE BEING SHIPPED OFF TO GOVERNMENT ISOLATION CENTERS, UNDER A NEW DEFINITION OF WHAT IT MEANS TO BE IN CLOSE CONTACT. THEY REPORTED THE LOWEST 80 TOTAL -- LOWEST DAILY TOTAL SINCE MARCH 16. PFIZER HAS AGREED TO BUY BIO HAVEN PHARMACEUTICAL FOR $11.6 BILLION IN CASH AGAIN IN A GROUP TO TREATMENT FOR MIGRAINE HEADACHES. AND WHILE, BIO HAVEN SHAREHOLDERS WILL GET ONE HALF OF A SHARE OF THE NEW BIO HAVEN, WHICH WILL RETAIN SOME OF THE COMPOUNDS AND DEVELOP AND. THAT COMPOUNDS IN DEVELOPMENT. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND ON BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I'M RITIKA GUPTA. THIS IS BLOOMBERG. > > THE REALITY IS WE HE THICK ABOUT WHAT RUSSIA IS DOING IN UKRAINE, IT IS A KEY CONTRIBUTOR TO SOME OF THE PRICE INCREASES WE ARE SEEING IN ENERGY AND IN FOOD. TODAY RUSSIAN SHIPS ARE BLOCKING THE AFFINITY OF -- THE ABILITY OF FOOD TO GET OUT OF UKRAINE. YOU HAVE SEEN ENERGY PRICES RISE BECAUSE OF THE GEOPOLITICAL UNCERTAINTY. WHAT WE ARE TRYING TO DO WITH OUR SANCTIONS IS TO END THAT INVASION AS QUICKLY AS POSSIBLE. JONATHAN: THE U.S. DEPUTY TREASURY SECRETARY. THE PRESIDENT SPEAKING LATER ON THIS MORNING, 11:30 EASTERN TIME. LOOKING FORWARD TO THAT. FUTURES UP 0.7% ON THE S & P. ON THE NASDAQ 100, UP 1.2 PERCENT. YIELDS LOWER. A GAIN BY TWO BASIS POINTS. A BREAK OF 3% ON THE 10 YEAR. TOM: NO QUESTION ABOUT IT. HERE'S THE QUESTION OF THE DAY AS WE GO TO JAVIER BLAS ON OIL, WITH A QUESTION YESTERDAY THAT WENT VIRAL WORLDWIDE TO GLOBAL WALL STREET. HIS COMMENT, "THE TRADITIONAL RELATIONSHIP BETWEEN CRUDE AND REFINED PRODUCTS IS BROKEN. DIESEL TRUCK OIL HAS FALLEN TO A 30 YEAR LOW. OIL DISTILLATION BASSETT HE HAS FALLEN, THE LARGEST DECLINE IN 30 YEARS -- WE'LL DISTILLATION -- OIL DISTILLATION CAPACITY HAS FALLEN, THE LARGEST DECLINE IN 30 YEARS." HOW DO YOU CENTER ON A BROKEN REFINERY MECHANISM, A BROKEN REFINERY PROCESS? HOW DOES THAT GET FIXED? JAVIER: IT IS VERY DIFFICULT. AT THE MOMENT IT SEEMS WE HIT THE REFINERY WALL. WE DON'T HAVE ENOUGH REFINING CAPACITY THAT WE CAN USE. THERE'S A STILL REFINING CAPACITY, BUT IT SEEMS OUTSIDE OUR REACH. THERE'S A LOT OF REFINING CAPACITY IN CHINA. SO WE NEED BEIJING TO RELAX EXPORT CONTROLS OF FUELS SO SOME OF THE REFINING CAPACITY OF CHINA CAN BE USED. BUT OTHERWISE, I'M AFRAID PRICES ARE GOING TO HAVE TO WORK THEIR WAY INTO REDUCING DEMAND, AND THAT IS A LOT OF ECONOMIC PAIN. TOM: WHERE IS THE PIVOT POINT ON BRENT OF THE MANY EXPERTS YOU SPEAK TO? JAVIER: I THINK LET'S NOT FOCUS ON BRENT. WE CAN FOCUS ON THE COST OF REFINED PRODUCTS BECAUSE NOW THE GAP BETWEEN BRENT AND WHERE REFINED PRODUCTS ARE TRADING IS SO LARGE THAT IN REFINED PRODUCTS, WE ARE ALREADY THERE. WE HAVE SEEN DEMAND INSTRUCTION IN MANY PARTS OF EMERGING MARKETS FORGET IT IS ALSO A QUESTION OF THE DOLLAR. WE ARE BEGINNING TO SEE DEMAND DESTRUCTIONS IN AFRICA. IN NIGERIA, THE AIRLINES ARE STARTING TO GROUND ALL THE FLIGHTS BECAUSE THEY SIMPLY CANNOT AFFORD JET FUEL ANYMORE. LISA: WE ARE LOOKING AT RECORD HIGH GAS PRICES IN THE UNITED STATES. HOW MUCH FURTHER DO THEY HAVE TO GO BASED ON THE PEOPLE YOU SPEAK, GIVEN THIS ISSUE WITH REFINED GOODS, NOT JUST SIMPLY THE PRICE OF OIL? JAVIER: EXACTLY, RECORD GASOLINE PRICES AT THE RETAIL LEVEL TODAY IN THE UNITED STATES. ALSO, LET'S NOT FORGET, RECORD PRICES FOR DIESEL. I THINK WE ARE BEGINNING TO HIT THE DEMAND INSTRUCTION LEVEL ALSO IN THE UNITED STATES, BUT THE PROBLEM IS WE ARE GETTING INTO THE SUMMER SEASON, THE DRIVING SEASON, AFTER TWO YEARS OF COVID. EVERYONE WANTS TO GET OUT AND ENJOY THE COUNTRYSIDE, EXPLORE, SEE FAMILY. SO I THINK WE CARRY ON FOR A FEW MORE MONTHS, AND THEN THE DEMAND DESTRUCTION REALLY HITS IN SEPTEMBER, WOULD PROBABLY ALSO WE SEE A LOT OF SLOW ECONOMIC ACTIVITY. LISA: IN ABOUT FOUR HOURS WE WILL HEAR ABOUT PRESIDENT BIDEN TALKING ABOUT INFLATION. IS THERE ANYTHING THIS ADMINISTRATION CAN DO TO ACTUALLY ACCELERATE SOME OF THE MANUFACTURING SO THAT WE CAN HAVE A SUPPLY-SIDE RESPONSE TO THESE HIGH PRICES? JAVIER: THE ADMINISTRATION CAN HELP WITH THE RESPONSE FOR OIL PRODUCTION, BUT THAT IS ALSO GOING TO TAKE TIME. IT TAKES AT LEAST SIX MONTHS FOR ANY RESPONSE TO HAPPEN. ON THE REFINING SIDE, VERY LITTLE CAN BE DONE. JONATHAN: WHEN THEY TALK ABOUT PRICE GOUGING, WHAT DO YOU MAKE OF THAT? JAVIER: THAT IS THE TYPICAL THING THAT POLITICIANS IN THE UNITED STATES AND IN EUROPE SAY WHEN THEY DON'T HAVE ANY OPTIONS AND THEY NEED TO BLAME SOMEONE. THERE IS NO PRICE GOUGING. ONE OR TWO PETROL STATIONS OR GAS STATIONS ARE TAKING ADVANTAGE OF THIS FOR SURE, BUT IT IS REALLY -- IS IT REALLY WHAT IS DRIVING THE MARKET? NO WAY. IT IS JUST A SIMPLE EXCUSE. JONATHAN: DID WE GET THAT RIGHT, TOM? I THINK WE DID. MARIA IS GOING TO WRITE IN. JAVIER HAS NEVER COMPLAINED. IT IS MARIA I WORRY ABOUT. LISA: BUT HE DID TRY TO CORRECT US, JUST TO EXPAND WHAT IT IS. JAVIER BLAS. JONATHAN: WE WILL KEEP LEARNING ON "BLOOMBERG SURVEILLANCE." FUTURES UP 0.7% ON THE S & P. IN THE NASDAQ 100, UP A LITTLE MORE THAN 1%. WE WILL KEEP COMING BACK TO THIS CONVERSATION ABOUT CRUDE. CRUDE. CREW RIGHT NOW, $102 ON WTI. TO JAVIER'S POINT, THAT IS NOT WHAT PEOPLE ARE PAYING AT THE PUMP. THEY ARE PAYING SOMETHING ELSE. TOM: I'VE GOT A JET FUEL PRICE HERE. IT IS A DOUBLE. YOU KNOW WHAT I AM REALLY WATCHING WORLDWIDE? RICE. RICE IS THE THING TO WATCH. THAILAND RICE, INDIA RICE. THOSE ARE THE THINGS THAT ARE GOING TO BREAK THE BACK OF THE FOOD CHAIN. JONATHAN: FOOD PRICES ELSEWHERE PROBLEM AT A COME TOGETHER WITH WHAT IS HAPPENING WITH ENERGY. WHERE ARE WE, $4.33 A GALLON ON AVERAGE IN AMERICA? LISA: EVEN HIGHER THAN THAT AS WE MOVE TOWARDS THE SUMMER MONTHS. WE ARE NOT EVEN AT PEAK DRIVING SEASON YET. THIS GOES DIRECTLY TO THE FOOD PRICE, AND FRANKLY, TO OTHER INFLATION WE ARE SEEING AS WELL. HOW MUCH DOES THAT CONTRIBUTE TO THE INFLATIONARY SURGE? FOOD IS A SEPARATE ISSUE, BUT OIL AND GAS, BASED ON THE TRANSPORT, AS A MUCH MORE GLOBAL EFFECT. IF YOU DON'T GET THAT COMING OFF SIMPLY BECAUSE OF REFINING CAPACITY, NOT JUST EVEN OIL SUPPLY AND DEMAND, HOW MUCH DOES THAT EXACERBATE WHAT WE ARE ALREADY SEEING? JONATHAN: THE PRESIDENT AT 11:30 EASTERN. YOU'VE HEARD THE POINT ABOUT PRICE GOUGING AND WHAT JAVIER HAD TO SAY IN RESPONSE TO IT. THERE'S THE POLITICS, AND THE HARSH REALITY OF WHAT IS HAPPENING ON THE GROUND. THESE ARE COMPLEX ISSUES. LISA: THE OIL COMPANIES REPORTED THEIR SECOND-BIGGEST TAKE-HOME PROFIT AFTER -- TAKE-HOME PROFIT EVER, AND THEY WERE NOT GIVING MUCH OF IT INTO INVESTMENT. THEY WERE JUST GIVING IT BACK TO THEIR SHAREHOLDERS. SOME PEOPLE MIGHT SAY THIS IS BAD POLICY OR THIS MIGHT GO AGAINST WHAT THE PRESIDENT WANTS , BUT OTHER PEOPLE WOULD SAY THIS IS GOOD ECONOMICS. THE PRICES WILL COME DOWN. THERE IS A SHIFT AWAY FROM FOSSIL FUELS. WHY SHOULD THEY INVEST? WHAT IS THERE BANG FOR THEIR BUCK AT A TIME WHEN THERE'S A LOT OF YEARS UNTIL THEY GET SOME SORT OF RETURN ON WHAT THEY ARE INVESTING? JONATHAN: IT SOUNDS A BIT CLICHE, BUT AS ALWAYS, THE SOLUTION TO HIGH PRICES IS OFTEN HIGH PRICES. TOM: THAT IS ABSOLUTELY CORRECT. I JUST LOOK AT MY INFLATION-ADJUSTED SAUDI OIL CHART OF SOME NOTE OVER DECADES AND DECADES, AND WE ARE JUST ABOVE THE SECOND OPEC WAVE CUSP ON INFLATION-ADJUSTED OIL. I DID NOT KNOW THAT. JONATHAN: TO FOLD THAT INTO THE PRICE ACTION OF THE MOMENT AND THE PRICE ACTION OF YESTERDAY WHICH WAS INTEREST IN ABOUT YESTERDAY IS THAT WE HAD ONE OF THOSE DAYS WHERE WE HAD THIS FLESH OUT IN COMMODITIES, THIS FLESH OUT OF WHAT HAPPENED WITH COMMODITY EQUITIES, THE ENERGY PRODUCERS ON THE S & P 500, AND WE HAD INFLATION EXPECTATIONS COME IN, NOT BREAK OUT. THAT WAS A CHANGE. I'M NOT SAYING IT IS GOING TO CONTINUE, BUT IT WAS INTERESTING TO SEE THAT JUST YESTERDAY. TOM: IT IS THE BATTLE THAT IS OUT THERE. JOHN WILLIAMS LEADS ON IT, WITH A VIEW OUT TO 2022 AND 22 ANY THREE. -- AND 2023. HE HAS A VERY CONSTRUCTIVE PAST BACK TO SOME FORM OF NORMAL PRICE CHANGE. JONATHAN: LISA SHALETT OF MORGAN STANLEY, LOOKING FORWARD TO CATCHING UP IN ABOUT FIVE MINUTES' TIME. THE PRESIDENT OF THE UNITED STATES SPEAKING AT 11:30 EASTERN TIME. > > WE HAVE A PERFECT STORM OF WEAKENING GLOBAL GROWTH. > > DON'T PANIC AS YOU SEE THIS SEA OF RED. > > I DON'T THINK THIS IS TIME YOU CAN GO HAND OVER FIST IN THE BOND MARKET. > > WE HAVE NOT YET BEEN CONVINCED THAT WE ARE GOING TO SEE OUTRIGHT RECESSION. > > MARKETS HAVE BEEN MAY BE TOO AGGRESSIVE IN THE SHORT-TERM AND NOT THINKING TOO MUCH ABOUT WHAT HAPPENS NEXT YEAR AS WELL. > > THIS IS "BLOOMBERG SURVEILLANCE" WITH TOM KEENE, JONATHAN FERRO, AND LISA ABRAMOWICZ. TOM: GOOD MORNING, EVERYONE. ON RADIO, ON TELEVISION, EVEN FULL-DAY BEFORE AND INFLATION REPORT. THE PRESIDENT WILL REPORT IN THE 11:00 HOUR THIS MORNING. JONATHAN: 11:30 EASTERN TIME, TRYING TO PUSH BACK FEARS ABOUT INFLATION AND ULTIMATELY PUSH FORWARD THEIR IDEA THEY CAN DO SOME THING ABOUT IT. FOR THIS MARKET, NOTHING ELSE MATTERS. CPI TOMORROW. TOM: WHAT IS IMPORTANT IS THE NEW PERVASIVE VIEW AFTER TALKING WITH JAVIER BLOSS ABOUT HOW IT IS SPREADING -- JAVIER BLAS ABOUT HOW IT IS SPREADING THROUGHOUT THE SYSTEM. JONATHAN: THAT IS WHAT IS INTERESTING ABOUT WHAT WE SAW YESTERDAY. TREASURIES ADVANCED, YIELDS DROPPED. WE TALKED ABOUT UPSIDE RISK TO INFLATION. YESTERDAY MUCH MORE ABOUT DOWNSIDE RISK TO GROWTH BECAUSE OF WHAT HAS BEEN DEVELOPING THIS INFLATION. THAT IS A NEW DEVELOPMENT FOR THIS MARKET, WITH ENERGY EQUITIES STRUGGLING INSTEAD OF RALLYING. YIELD MOVING LOWER INSTEAD OF CLIMBING. TOM: UNDERSCORED BY JOHN WILLIAMS IN COMMENTS MOMENTS AGO, JOHN WILLIAMS, PRESIDENT OF THE NEW YORK FED, MAKES VERY CLEAR HE'S GOT A 2% GROWTH RATE, AND THIS INFLATION COMES DOWN, BUT HE'S GOT A THREE YEAR HORIZON. JONATHAN: HE'S GOT THE WRONG YEAR, HASN'T IT? IT IS 20 HUNTING FOR -- IT IS 2024, AND THE LIKES OF CITI THINK THIS WILL STICK WITH US FOR LONGER. THEY ALSO BELIEVE THAT ENDPOINT IS GOING TO BE HIGHER THAN MANY PEOPLE BELIEVE. TOM:TOM: LET'S GO NARROW HERE, VALUE ADD WITH LISA ABRAMOWICZ. TO YOUR WHEELHOUSE AWAY FROM FULL FAITH AND CREDIT, WHAT DID MERE MORTALS IN THE BOMBER COULD SAY? -- IN THE BOND MARKET SAY? LISA: THEY WERE STARTING TO MOVE AWAY FROM RISKIER CREDIT ANY MORE SIGNIFICANT WAY BASED ON THE PRICE ACTION. KATHY JONES WAS SPOT ON WHEN SHE WAS TALKING ABOUT THE FEAR RIGHT NOW AMONGST SO MANY CREDIT INVESTORS, WHICH IS THAT THIS NEXT PHASE OF RATE HIKING IS GOING TO LEAD TO THE GROWTH SCARE'S, IS GOING TO LEAD TO MORE OF A PROBLEM WITH CREDIT WHICH IS OFTEN A CANARY FOR THE REST OF THE RISK COMPLEX. TOM: THE IMAGERY OF A BUSY DAY FOR ALL OF US IN ECONOMICS, FINANCE, INVESTMENT. THE INTERNATIONAL RELATIONS RECOVERING. MR. DRAGHI, MR. BIDEN IN SOME FORM OF MEETINGS HERE, AND THEY HAVE TO FOCUS ON MR. PUTIN. JONATHAN: I WONDER WHO'S GOT THE HARDER JOB RIGHT NOW. WOULD MARIO DRAGHI RATHER BE THE ECB PRESIDENT? I THINK THAT ECB JOB IS MUCH HARDER NOW. MUCH HARDER THAN IT WAS WHEN HE WAS THERE. WHEN HE WAS THERE IT WAS JUST ONE MOVE. LET'S SEIZE. LET'S LET'S EASE -- LET'S EASE. THIS YEAR, I HAVE NO IDEA WHAT YOU ARE FACED WITH. TOM: THANK YOU PRINCE CHARLES, AND FOR THE QUEEN THIS MORNING WHICH ONE TO 3.31 ON STERLING. TO ALL OF THE INTERVIEWS WE HAVE, IF WE CRACK ONE OF FIVE ON NERO -- CRACK 105 ON A EURO, WOW. STILL 33.48 ON THE VIX. JONATHAN: 10 YEAR YIELD BREAKING 3% EARLIER THIS MORNING. WE BROKE THROUGH 20% IN YESTERDAY'S SESSION AND YIELDS RACED LOWER. THAT IS INTERESTING. AT THE FRONT END, SAME KIND MOVE. OLDS LOWER, NOT HIGHER. YOU'VE GOT TO PAY ATTENTION TO THAT. SOMETHING HAPPENING HERE IN THE LAST DAY OR SO THAT HAS NOT HAPPENED IN THE LAST FEW MONTHS. YIELDS ARE COMING BACK DOWN. AGAIN, I JUST WANT TO REPEAT, THIS IS NOT SOME KIND OF JUDGMENT ABOUT WHAT I THINK IS GOING TO HAPPEN IN THE FUTURE. IT IS JUST AN OBSERVATION ABOUT SOME THING HAPPENING NOW. IT IS NOTABLE. TOM: IT IS. WE WILL HAVE TO SEE HOW IT UNFOLDS. WE WILL HINGE EVERYTHING ON A STUDY OF INFLATION TOMORROW. LISA SHALETT IS WITH MORGAN STANLEY WEALTH MANAGEMENT. SHE HINGES EVERYTHING ON HAVING A PLAN AND THEN HEAVEN PER BID -- HEAVEN FORBID, STAYING WITH THE PLAN IN TIMES OF STRESS. WHAT IS THE PLAN, AND HOW DO YOU HAVE THE COURAGE TO STAY WITH IT NOW? LISA S: I ACTUALLY THINK, AS RADICAL AS THE LAST WEEK HAS BEEN AND VOLATILE AS THE LAST WEEK HAS BEEN, THERE'S AN ELEMENT OF IT THAT IS SOMEWHAT PREDICTABLE. WHAT I MEAN BY THAT IS THAT THE MARKET HAS FINALLY GOTTEN TO THE POINT WHERE IT HAS DIGESTED THE LEVEL AND DEGREE TO WHICH THE FED IS GOING TO BE HAWKISH, BUT THEY HAD NOT YET REALLY FAST FORWARDED THAT TO WHAT ARE THE PROBABILITIES THAT THE FED CAN REALLY EXECUTE A SOFT LANDING. SO WE KNOW FROM HISTORY IN THE POST-WORLD WAR II PERIOD, THE FED HAS TIGHTENED ROUGHLY 14 TIMES. 11 OF THOSE EPISODES HAVE RESULTED IN A RECESSION, AND ONLY THREE TIMES HAVE WE PULLED OFF A SOFT LANDING. THIS IS A FED, AND JEROME POWELL ADMITTED THIS, THAT IS OPERATING AGAINST A BACKDROP WHERE THERE IS AN EXTRAORDINARY DEGREE OF DIFFICULTY. NOT ONLY IS THE MACRO ENVIRONMENT, BUT THEY GEOPOLITICAL ENVIRONMENT IS COMPLEX. THE FED ITSELF IS TRYING TO DO SOMETHING THAT THEY HAVE NEVER DONE BEFORE, WHICH IS SIMULTANEOUSLY RAISE RATES AND REDUCE THE SIZE OF THE BALANCE SHEET. TO ME, YESTERDAY WAS VERY MUCH SOMETHING TO BE EXPECTED, THAT EVENTUALLY WE WERE GOING TO GET A GROWTH SCARE WHERE EVERYONE STARTS WORRYING ABOUT THE FACT THAT WE MIGHT IN FACT HAVE A HARD LANDING. WHILE WE CONTINUE TO BE IN THE CAMP THAT SAYS WE DON'T SEE AN EMINENT RECESSION, THE REALITY IS THAT GROWTH MAY SLOW MUCH FASTER THAN FOLKS BELIEVE, SO IT IS NOTABLE TO YOUR AND JONATHAN'S POINT THAT FINALLY THE BOND MARKET IS GETTING ON THE BANDWAGON, MEANING STARTING TO WORRY LESS ABOUT UPWARD MOVES IN INFLATION AND POTENTIALLY BEGINNING TO THINK ABOUT DOWNWARD MOVES IN INFLATION, WHICH ARE A REFLECTION OF WEAKER GROWTH. JONATHAN: TWO-PART QUESTION. IT SOUNDS LIKE YOU EXPECT MORE DOWNSIDE IN EQUITY PRICES, BUT THE SECOND PART, IF WE HAD THAT DOWNSIDE SELLOFF, DOES HE CARRY COME OF THE NATURE OF THE SELLOFF CHANGE? LISA S: I THINK THAT IT DOES BECAUSE WE START TO GET A LOT MORE DEFENSIVE. IT IS WHY BONDS ARE FINALLY GETTING A BID HERE, SO I THINK THAT DEFENSIVE TRADE THAT UNWOUND THE LONG-DURATION STABLE GROWTH STOCK TRADE THAT WAS REALLY UNWINDING FIERCELY LAST WEEK STARTS TO GET A BID. IT IS WHAT DO I WANT TO OWN IF THE ECONOMY IS GENUINELY SLOWING. LISA A: SO YOU ARE BASICALLY SAYING BIG TECH IS A BRIGHT SPOT FOR THE NEXT COUPLE OF MONTHS. LISA S: I WANT TO BE REALLY CAREFUL BECAUSE I DON'T KNOW THAT I THINK BIG TECH IN ALL CAPS IS, BUT I THINK LONG-DURATION ASSETS ACTIVELY SELECTED ARE THE PLACE TO BE. SO WE HAVE BEGUN TO ADD DURATION. WE STARTED THAT ABOUT THREE OR FOUR WEEKS AGO. ALBEIT IT WAS EARLY, AND MANY OF OUR CLIENTS WHO BEGAN TO HEAD BACK INTO BONDS HAVE NOT HAD A GREAT THREE OR FOUR WEEKS, BUT WE DO THINK THAT TRADE MAY BEGIN TO WORK, AND SOME OF THE HIGHER QUALITY GROWTH ORIENTED NAMES ARE CERTAINLY WORTH LOOKING AT TODAY AND BUYING, AND THAT IS WHAT WE ARE ADVISING OUR CLIENTS TO DO. LISA A: SOME PEOPLE HAVE TALKED ABOUT THE UNWIND OF CERTAIN NONPROFITABLE TECH COMPANIES AND OTHERS AS THE BURSTING OF A BUBBLE. I TAKE A LOOK AT PELOTON THIS MORNING. THE SHARES WERE DOWN 92% FROM THE PEAK EVEN BEFORE GOING INTO TODAY. THE SHARES GETTING MASSACRED RIGHT NOW IN PREMARKET TRADING AFTER THEY REPORTED THEIR EARNINGS. IS PELOTON A ONE-OFF, OR IS THIS SOMETHING THAT IS ENDEMIC, THAT HAS NOT BEEN FULLY BEATEN OUT OF THE SYSTEM? LISA S: I THINK WE ARE STARTING TO GET THERE. ON THE STOCK SIDE OF THINGS, I THINK WE CERTAINLY HAVE. WHAT IS INTERESTING IS AMONG THE OTHER PROFITABLE TECH COMPANIES, THE STOCKS MAY ACTUALLY HAVE LED IN THE CREDIT MARKET NEEDS TO CATCH UP AND BLOW SOME OF THESE CCC AND JUNK SPREADS OUT EVEN FURTHER. BUT FROM A STOXX PERSPECTIVE, YOU ARE -- A STOCK PERSPECTIVE, YOU ARE PROBABLY GETTING TO THE POINT WHERE THERE'S ENOUGH PAIN IN THE STREETS WHERE THESE VALUATIONS START TO LOOK A LITTLE BIT BETTER. THE KEY ISSUE, HOWEVER, IS TO RECOGNIZE THAT COMPANIES AND INVESTORS ARE NOW LOOKING AT COST OF CAPITAL. THAT MEANS TO WHAT EXTENT HAS COST OF DEBT GO NOT -- DEBT GONE UP AND COST OF EQUITY GONE UP, AND BOTH HAVE GONE UP IN THIS RISING RATE ENVIRONMENT AND THE POLICY PIVOT. JONATHAN: LISA SHALETT, AWESOME AS ALWAYS. THANK YOU. THAT POINT AT THE END THERE, EQUITY LED AND THE PAIN IN CREDIT, IS STILL TO COME -- THE PAIN IN CREDIT IS STILL TO COME, WHAT DO YOU MAKE OF THAT? LISA A: BASICALLY, CREDIT HAS BEEN MUCH MORE IMMUNE THAN USUAL BECAUSE OF HOW MUCH COMPANIES LOCKED IN DEBT FOR A VERY LONG TIME. THEY HAD SILENCE BALLOT -- THEY HAD SOLID BALANCE SHEETS. THERE'S A PROLONGED PAIN IN THE BOND MARKET THAT WILL NOT BE SEEN UNTIL YEARS FROM NOW WHEN THEY HAVE TO FINANCE THE COST OF CAPITAL. YOU ARE NOT GETTING THE SAME REACTION FUNCTION AIR. I THINK IT IS FASCINATING. HAVE WE LOST SOME OF THE INDICATIVE TOOLS OF HOW WE GAIN WHAT IS GOING TO COME NEXT IN THE NEXT PART OF THE CYCLE? JONATHAN: HERE'S POINT TWO OF THAT CONVERSATION. IT IS AN OBSERVATION. DAVID STUBBS OF JP MORGAN SAYING BY THE BOND MOVE, AND LISA SHALETT TURNING AROUND AND SAYING THAT IS A RELIGION OF THE GROWTH DIFFICULTIES STILL DO COME. AS YOU GET THAT CHANGE AND IT DEVELOPS EVEN FURTHER, THE NATURE OF SAVE -- OF SELLOFF IN THE EQUITY MARKET, THAT CHANGES TOO. TOM: THIS IS ABOUT YOUR BELIEF CONSTRUCT. THE CALL IT A SET UP. YOU HAVE A SET UP AS A BELIEF OF EDUCATING -- OF EXECUTING A TRADE. BUT THE REAL ISSUE IS YOU HAVE TO HAVE A BELIEF SYSTEM OF WHICH TO INVEST IN. THAT IS REALLY WHAT IS BEING ASKED IN HERE. JONATHAN: I THINK WE'VE BEEN TESTED MORE THAN ONCE. YOU GET COMFORTABLE WITH AN IDEA, AND THEN THIS MARKET PUNCHES YOU IN THE FACE. YIELDS LOWER BY THREE BASIS POINTS ON THE 10 YEAR. FUTURES POSITIVE 0.9%. I WASN'T TALKING ABOUT MARIA. [LAUGHTER] SHE DID THE SAME THING, I'M SURE. THIS IS BLOOMBERG. RITIKA: KEEPING YOU UP TO DATE WITH NEWS FROM AROUND THE WORLD, WITH THE FIRST WORD, I'M RITIKA GUPTA. PRESIDENT BIDEN WILL HIGHLIGHT EFFORTS TO STEM INFLATION TODAY AT A TIME WHEN SOARING PRICES CERTAIN DEMOCRATS -- THREATENED DEMOCRATS' SLIM CHANCES OF HOLDING ONTO CONGRESS. IN THE U.K., PRIME MINISTER BORIS JOHNSON VOWING TO RAMP UP PRESSURE ON WHAT HE CAUSED VLADIMIR PUTIN'S CRONIES BY DRIVING DIRTY MONEY OUT OF THE COUNTRY. JOHNSON SET AN AGENDA THAT IS ALSO HEAVY ON ELECTORAL PRIORITIES, INCLUDING CUTTING WAITING LISTS AT PLANDEMIC IT -- AT PANDEMIC HIT HOSPITALS. PRINCE CHARLES STANDING IN FOR THE QUEEN, SAID TO HAVE MOBILITY ISSUES. BRITISH AIRWAYS OVERHAULING MY LINDEMAN -- OVERHAULING MANAGEMENT. IT HAS PUT NEW EXECUTIVES IN CHARGE OF OPERATION TECHNOLOGY AND CUSTOMER SERVICES. THE AIRLINE HAS BEEN FORCED TO CANCEL 10% OF ITS FLIGHT SCHEDULES BETWEEN MARCH AND OCTOBER BECAUSE OF STAFF SHORTAGES. A BIG TRANSACTION AND THE DRUG INDUSTRY. PFIZER HAS AGREED TO BUY BIO HAVEN PHARMACEUTICALS FOR $11.6 BILLION IN CASH TO GAIN AN APPROVED TREATMENT FOR MIGRAINE HEADACHES. MEANWHILE, BIO HAVEN SHAREHOLDERS WILL GET HALF OF A SHARE OF THE NEW BIO HAVEN, WHICH WILL RETAIN SOME OF THE COMPOUNDS IN DEVELOPING. IT IS THE MOST EXTENSIVE AMERICAN ARTWORK EVER TO SELL AT AUCTION GET ON MONDAY NIGHT, A SILKSCREEN OF MARILYN MONROE BY ANDY WARHOL SOLD IN NEW YORK FOR $195 MILLION. THE WINNING BIDDER WAS ART DEALER LARRY GEKKO. > > THE FIRST THING THAT IS ON MY MIND IS THAT INFLATION IS TOO HIGH, AND WE NEED TO ACT DEFINITIVELY AND PURPOSELY TO TRY TO GET THAT UNDER CONTROL. I THINK IF YOU LOOK AT WHAT WE HAVE DONE SO FAR IN THE LAST TWO MEETINGS, WE HAVE REALLY STARTED THAT PROCESS. JONATHAN: THAT WAS RAPHAEL BOSTIC, THE ATLANTA FED PRESIDENT, SITTING DOWN WITH BLOOMBERG'S MIKE MCKEE. . WE WILL HEAR FROM BARGAIN, WALLER, KASHKARI TODAY. THE S & P ADVANCING 0.9%, THE NASDAQ UP TO 1.6% -- UP 1.6%. JULIAN EMMANUEL WRITES IN, FRIEND OF THE SHOW. THE 10 YEAR YIELD BACKING OFF 20 BASIS POINTS IN THE LAST 24 HOURS. THANK YOU, JULIAN. TOM: IT IS A TO MULCH WAS TIME, TO SAY THE LEAST -- IT IS A TO MULL TO US -- A TO MULCH WAS -- A TUMULTUOUS TIME, TO SAY THE LEAST. JOINING US IS CECILIA ROUSE, CHAIR OF THE U.S. COUNCIL OF ECONOMIC ADVISORS. DID YOU HAVE THE FELDSTEIN VERSION? CECILIA: I'M DATING MYSELF, I HAD THE AUTO X -- THE AUTO ECKSTEIN. TOM: OTTO ECKSTEIN WOULD SAY PARSE THE DATA. WHAT PART OF IT IS THE FOCUS OF THE PRESIDENT THIS MORNING? CECILIA: THE PRESIDENT IS FOCUSED ON THE WHOLE OF IT BECAUSE HE UNDERSTANDS THE COST OF FOOD AND GAS AND THE PRICE OF EVERYDAY ITEMS FOR THE AMERICAN FAMILY. HE COMES FROM A FAMILY WHERE THAT WOULD BE MEANINGFUL IF YOU HAD TO PAY MORE FOR A TANK OF GAS, SO HE'S FOCUSED ON ALL OF IT. TODAY HE IS GOING TO LAY OUT HIS PLAN FOR ADDRESSING PRICE INCREASES. OF COURSE, HIS ECONOMIC ADVISOR, I AM FOCUSED ON THE PART ABOUT CORE INFLATION WHICH IS NOT FOCUSED ON GAS AND FOOD. THAT TELLS US MORE ABOUT WHAT THE FEDERAL RESERVE CAN CONTROL AS IT TRIES TO ADDRESS INFLATION, AND ALSO THE PARTS THAT ARE MORE ENDURING AND THAT ARE MORE CHALLENGING TO ADDRESS. THE PRESIDENT IS FOCUSED ON THE WHOLE OF IT BECAUSE THAT IS THE REALITY FOR AMERICAN FAMILIES. JONATHAN: THE WHOLE OF IT IS POLISHED -- TOM: THE WHOLE OF IT IS POLITICIANS HAVE TO COME UP WITH A PLAN. WHAT IS THE PLAN? CECILIA: FROM DAY ONE, THIS PRESIDENT HAS BEEN FOCUSED ON GENERATING AN ECONOMY WHERE THERE IS SUSTAINABLE GROWTH THAT WORKS FOR ALL AMERICANS. AS HE LIKES TO SAY, HE WANTS TO BUILD IT FROM THE BOTTOM UP AND THE MIDDLE OUT. THAT IS WHAT UNDERLIES THE AMERICAN RESCUE PLAN. IT WAS IMPORT TO GET SHOTS INTO ARMS AND FOR HOUSES AND BUSINESSES TO HAVE RESOURCES TO GET THROUGH THE PANDEMIC. NOW HE IS FOCUSED ON INFLATION, SO HE UNDERSTANDS THAT WE NEED TO ADDRESS GAS PRICES. MUCH OF THE GAS PRICE INCREASES A LATE HAVE BEEN BECAUSE OF THE WAR, RUSSIA'S WAR AGAINST UKRAINE. THE PRESIDENT, AND TRYING TO EASE THOSE PRICES, HAS RELEASED HISTORIC LEVELS FROM OUR STRATEGIC PETROLEUM RESERVE IN CONCERT WITH OTHER COUNTRIES SO THAT TO DATE, THERE HAVE BEEN ABOUT 240 MILLION BARRELS RELEASED WORLDWIDE. IN ADDITION, HE IS URGING GAS AND OIL COMPANIES TO INCREASE THEIR PRODUCTION DOMESTICALLY BY USING EXISTING LEASES AND INCREASE THEIR DRILLING SO THAT WE CAN GET MORE OIL ON THE MARKET. BUT HE ALSO IS FOCUSED ON REDUCING LONG-TERM COSTS FOR FAMILIES. THAT IS THROUGH, FOR EXAMPLE, REDUCING PRESCRIPTION COSTS, BY ALLOWING MEDICARE TO NEGOTIATE PRICES, BY ADDRESSING CHILDCARE COSTS, BY ADDRESSING THE COST OF HOUSING. THESE ARE POLICIES AT WE KNOW WILL HELP INCREASE OUR ECONOMIC GROWTH, AND SURE THAT IT IS MORE BROADLY SHARED, AND IN THE PROCESS, REDUCE THE COSTS FOR FAMILIES. BUT HE WANTS TO DO SO IN A DEFICIT REDUCING WAY. HIS BUDGET LAST YEAR, HE REDUCED THE DEFICIT BY $300 BILLION, ON TRACK TO REDUCE IT BY $1.5 TRILLION THIS YEAR, AND HE DOES SO BY INCREASING TAXES ON OUR VERY WEALTHIEST. LISA: WITH RETROSPECT, WITH HINDSIGHT BEING OUR, WAS IT A MISTAKE IN MARCH OF 2020 12 ISSUE $1400 CHECKS TO EVERY AMERICAN WHO QUALIFIED? CECILIA: IT IS SO HARD TO GO BACK AND DO RETROSPECTIVE BECAUSE IT IS HARD TO IMAGINE THE COUNTERFACTUAL. ZANDI HAS TRIED -- MARK ZANDI HAS TRIED TO DO SO, AND LOOKING AT THE PANDEMIC POLICIES, HAS ESTIMATED THAT HAD WE NOT ACTED, THIS GOES BACK TO CARES AS WELL, INCLUDING THE AMERICAN RESCUE PLAN, WE MAY WELL HAVE FACED A DOUBLE-DIP RECESSION IN 2021. WE WOULD BE FACING ELEVATED UNEMPLOYMENT TODAY AND WE WOULD NOT HAVE HAD THE ECONOMIC GROWTH THAT WE HAD LAST YEAR, WHICH IS WHAT PUT US ON A PASS FOR MORE SUSTAINABLE GROWTH GOING FORWARD. SO THE AMERICAN RESCUE PLAN WAS AN INSURANCE POLICY. WE DID NOT KNOW HOW LONG THIS PANDEMIC WAS GOING TO REMAIN A CHALLENGE. WE NEED TO GET SHOTS INTO ARMS SO WE COULD RETAIN OUR LIVES -- WE NEEDED TO GET SHOTS INTO ARMS SO WE COULD REGAIN OUR LIVES. IT IS A CONSEQUENCE OF HELPING FAMILIES AND BUSINESSES GET THROUGH THE PANDEMIC WHEN WE WERE FACING SUPPLY CHAINS WHICH COULD NOT QUITE HANDLE THAT SUSTAINED DEMAND. LISA: HOW MUCH DOES INFLATION HAVE TO COME DOWN BEFORE THE END OF THE YEAR FOR THIS GROWTH THAT WE ARE SEEING TO BE SUSTAINED, FOR THAT NOT TO REALLY CURTAIL SOME OF THE MOMENTUM WE ARE SEEING IN HOUSEHOLDS? CECILIA: WHAT IS IMPORTANT IS THAT WE MAINTAIN OUR ECONOMIC ACTIVITY, AND WE DON'T WANT THE INFLATION TO BECOME SPIRALING OUT OF CONTROL, AND FOR INDIVIDUAL HOUSEHOLDS TO BECOME UNDERWATER. SO WE NEED THE FEDERAL RESERVE'S MANDATE, PRICE STABILITY AND FULL EMPLOYMENT. IT IS YOUR HEADER, JAY POWELL, EMPHASIZING HOW THE FEDERAL RESERVE IS ON IT. THAT IS WHAT THEY ARE FOCUSED ON AS WELL. THE PRESIDENT WOULD URGE CONGRESS TO CONFIRM HIS NOMINEES SO THAT THE FEDERAL RESERVE BOARD HAS ALL HANDS ON DECK TO FULFILL THEIR DUAL MANDATE. THAT IS WHAT IS GOING TO BE MOST IMPORTANT. WE SEE THAT INFLATION EXPECT PATIENTS ARE ANCHORED, SO WE ARE OPTIMISTIC THAT THE FEDERAL RESERVE CAN DO ITS JOB. MEANWHILE, THE PRESIDENT IS ALSO FOCUSED ON DOING WHAT HE CAN TO EASE THE PAIN AT THE PUMP AND ENSURE THAT FAMILIES CAN PAY A REASONABLE PRICE FOR GAS. HE'S FOCUSED ON FOOD PRICES AND ADDRESSING THOSE COSTS THAT FAMILIES FACE EVERY DAY ON THAT ARE SO IMPORTANT FOR THEM. JONATHAN: CECELIA, THANK YOU, CHAIR OF THE WHITE HOUSE COUNSEL OF ECONOMIC ADVISERS. WE KNOW WHAT THE PRESIDENT IS FOCUSED ON. NOW WE NEED TO SEE THE PLAN OF THE POLICIES, AND TODAY COULD BE AN IMPORTANT STEP. TOM: WHAT I DID NOT GET TO TALK TO DR. ROUSE ABOUT, AND SHE IS TRULY ONE OF OUR BEST OUT OF PRINCETON, IS THIS IS THE ECONOMIC REALITIES WE HEAR IN EVERY INTERVIEW BUTTRESSED UP AGAINST THE POLITICAL REALITIES. SHE MENTIONED OTTO ECKSTEIN, WHO WE TRAGICALLY LOST AT A VERY YOUNG AGE TO CANCER. I REMEMBER THAT WHEN I WAS IN HOSPITAL -- IN HIGH SCHOOL OR MAYBE A BIT ON FROM THERE. IT WAS AT A TIME OF 5% INFLATION, AND IT WAS ONE OF THE REASONS IT BROUGHT DOWN LBJ. THIS PRESIDENT HAS THE SAME PRESSURE AT 8% INFLATION. WHAT DO YOU DO WITHOUT SLAMMING THE COUNTRY INTO A RECESSION? THAT IS THE HEART OF THE MATTER. JONATHAN: WE DON'T KNOW WHAT THE COUNTERFACTUAL IS, BUT WE KNOW THERE WERE SEVERAL WARNINGS. LARRY SUMMERS WARNED AT THE TIME, MOHAMED EL-ERIAN CAME OUT LAST SUMMER IN SAID WIND DOWN QE , AND THIS FED IGNORED IT ALL. TOM: THEY GET A VICTORY LAP RIGHT NOW, PARTICULARLY PROFESSORS SUMMERS, BUT THE ISSUE IS POLITICALLY, HOW DO YOU DO THIS? THE ECONOMIC MUMBO-JUMBO ONLY GETS YOU SO FAR. HOW DO YOU DO THIS POLITICALLY WITHOUT TAKING JOHN WILLIAMS TO PERCENT DOWN TO 1%? JONATHAN: FUTURES UP ABOUT 1% RIGHT NOW. WE'VE GOT A BIT OF A BOUNCE ON THE NASDAQ BY 1.6%. YIELD DOWN BY FOUR BASIS POINTS. YOUR 10 YEAR, 2.9947%. JONATHAN: THIS TIME TOMORROW WE WILL BE SECONDS AWAY FROM A REALLY IMPORTANT INFLATION PRINT. THAT IS NOW 24 HOURS AWAY. FROM NEW YORK CITY THIS MORNING, GOOD MORNING. FUTURES UP 1% ON THE S & P. AND THE NASDAQ 100 WE ARE POSITIVE 1.6%. YIELDS ARE LOWER BY FIVE BASIS POINTS THIS TIME ON THE 10 YEAR TO 2.9849%. TOM: THE YIELD DYNAMICS, TO ME IT IS A FLUTTERY THING. EVERY TIME I LOOK AT THE SCREEN, THE RED AND GREEN MIX OF THE YIELD MARKET IS A DIFFERENT STORY. I REALLY DON'T KNOW WHAT THAT SIGNALS FOR TODAY. MAYBE IT IS WAIT FOR TOMORROW. JONATHAN: THE ONLY THING I CAN SAY ABOUT THE MOVE IN YIELDS IS THAT EVERY TIME WE HAVE BROUGHT UP THE STORY AROUND IT, THEY MOVE THE OTHER DAY, AND QUICKLY. YESTERDAY MORNING, 3.1% TODAY -- 3.20%. TODAY A BREAK OF 3%. TOM: LISA MENTIONED THE CORE CPI TOMORROW. I THINK THAT IS ON THE COUPLE. JONATHAN: THE MONTH ON MONTH FIGURE -- THAT IS UNACCEPTABLE. JONATHAN: THE MONTH ON MONTH FIGURE IS GOING TO BE CRITICAL. TOM: AND THE MAKEUP OF IT AS WELL. RIGHT NOW WE DO GO GLOBAL, AND IT IS WONDERFUL TO HAVE WITH US AGAIN, FROM CITIGROUP, NATHAN SHEETS, GLOBAL CHIEF ECONOMIST AND FORMER UNDERSECRETARY OF THE TREASURY FOR INTERNATIONAL AFFAIRS, WAS PUBLIC SERVICE AT THE FEDERAL RESERVE SYSTEM AS WELL. WONDERFUL TO HAVE YOU WITH US. I WANT TO GO TO STANLEY FISHER, WHO YOU HAD AN ACQUAINTANCE WITH AT M.I.T. A NUMBER OF YEARS AGO. SUDDENLY, THE U.S. CENTRAL BANK HEAD IS CENTRAL BANKER TO THE WORLD. HOW CLOSE IS JEROME POWELL TO BEING CENTRAL BANKER TO THE WORLD? NATHAN: THAT IS CERTAINLY TRUE DURING TIMES OF STRESS, WHEN GLOBAL MARKETS ARE UNDER DURESS AND UNDER PRESSURE. THEY NEED DOLLARS. SEVERAL INDICATIONS OVER THE LAST FEW YEARS, THE FED HAS STEPPED UP AND PROVIDED THAT. BUT SIMILARLY IN AN EPISODE LIKE WE ARE IN RIGHT NOW COME OVER CENTRAL BANKS ARE STRUGGLING WITH IS TRULY EXTRAORDINARY SET OF SHOCKS, AND AT INFLATION ENVIRONMENT UNLIKE ANYTHING WE HAVE SEEN IN DECADES, THE FED IS PRETTY MUCH SETTING THE TONE. AS THE FED HAS SHIFTED MORE HAWKISH, THAT OPENED THE WAY FOR A LOT OF CENTRAL BANKS TO BE MORE HAWKISH AS WELL. TOM: ONE OF THE STRESSES BACK TO 2006, WE HAVE A WEEK SINGAPORE DOLLAR WHICH IS USUALLY A CROWN JEWEL OF TIGER ECONOMIES. TELL US WHAT THOSE ECONOMIES DO AFTER THE EASY DECISION TO DEFEND BY RAISING RATES. NATHAN: THE FED IS MOVING, AND AS THE FED MOVES IN THE U.S. ECONOMY IS UNDER PRESSURE, STILL IT IS BETTER THAN THE REST OF THE WORLD. YOU ARE SEEING THE DOLLAR STRENGTHENED. THERE’'S BEEN A DEBATE ABOUT HOW MUCH TRACTION THE FED IS GETTING IN FINANCIAL PROTECTION, BUT MAKE NO MISTAKE IT IS GETTING TRACTION ON THE DOLLAR, AND THAT HAS ECHOES THROUGHOUT THE REST OF THE WORLD. U.S. STRONGER CURRENCY IS HELPFUL FOR US IN FIGHTING INFLATION, BUT THE WEAKER CURRENCIES WHO ARE ON THE OTHER SHY TO THAT ARE INFLATIONARY IN THOSE COUNTRIES AND MAKING THE CHALLENGE FOR THOSE CENTRAL BANKS EVEN MORE ACUTE. IN ADDITION, FOR MANY EMERGING MARKET ECONOMIES, IT CREATES TENSIONS IN THEIR BALANCE SHEETS GIVEN THEIR EXPOSURES TO DOLLARS. SO IT DOES CREATE, AS YOU SUGGEST, SOME DILEMMAS FOR THESE CENTRAL BANKS AND MAY FORCE THEM INTO FURTHER RATE HIKES AT TIMES WHEN THEY DON'T WANT TO HIKE RATES. LISA: HERE IN THE UNITED STATES IN ABOUT 24 HOURS, WE ARE GOING TO GET THAT CPI PRINT, EXPECTED TO COME IN AT 8.1%, DOWN FROM 8.5% IN THE PRIOR READ. HOW IMPORTANT IS IT TO LOOK AT THE COMPONENTS OF WHAT IS DRIVING THIS INFLATION? WHAT IS YOUR PROJECTION FOR HOW WE CAN UNDERSTAND THE GRANULARITY OF THIS REPORT? NATHAN: I THINK THAT LOOKING UNDER THE HOOD IS GOING TO BE CRITICAL. WE ARE EXPECTING A 0.4% MONTH-TO-MONTH READ FOR CORE, SOMEWHAT LOWER FOR HEADLINE. BUT WHEN I LOOK AT UNDERLYING COMPONENTS, I JUST HAVE A HARD TIME BEING TOO OPTIMISTIC ABOUT THE INFLATION OUTLOOK. I THINK IN THIS ENVIRONMENT WITH HIGH COMMODITY PRICES, SUPPLY CHAIN PRESSURES, POTENTIAL FURTHER DISRUPTIONS AS WE ARE TOLD OF WHAT IS HAPPENING IN CHINA TO SUPPLY CHAINS, IT IS NOT A POSITIVE ENVIRONMENT FOR GOODS PRICES. THERE'S A LOT OF INERTIA IN SHELTER AND MOTOR EQUIVALENT RENTS -- AND OWNER EQUIVALENT RENTS. THAT IS NOT LOOKING LIKE A POSITIVE PICTURE. FOR SERVICES, YOU'VE GOT A RED-HOT LABOR MARKET AND WAGES MAY NOT HAVE RISEN QUITE AS MUCH AS HEADLINE CPI. IT LOOKS TO ME LIKE PRESSURES ON SERVICES PRICES IS LIKELY TO BE PRETTY DURABLE AS WELL. SO I THINK THOSE COMPONENTS RIGHT NOW ARE JUST NOT VERY ENCOURAGING, AND TELLTALE OF LONGER LIVED INFLATION. LISA: SO DO YOU THINK WE HAVE SEEN THE PEAK? NATHAN: MAYBE IN SOME ARITHMETIC SINCE, YES. IS THIS THE PEAK FOR TWELVE-MONTH HEADLINE INFLATION OR EVEN TWELVE-MONTH CORE INFLATION? POSSIBLY. IS IT LIKELY TO BE ON A BIT OF A DOWNWARD TRAJECTORY, AND ONE THAT AT THE END OF THIS YEAR, OUR EXPECTATION OF THE MEASURE OF CORE PRICES, BE THEY PCE OR CPI, IS STILL LIKELY TO HAVE A HANDLE WELL ABOVE FEDERAL RESERVE TARGETS? IT IS REALLY MORE LIKE MY COLLEAGUES HAVE SAID, MORE LIKE A PLATEAU. TOM: HOW MUCH CONTROL -- LISA:HOW MUCH CONTROL DOES THE FED REALLY HAVE OVER THIS INVOICE NERI IMPULSE, IF SOME OF IT -- IF SO MUCH OF IT IS COMING IN ADDITION TO WHAT WE ARE SEEING IN CHINA, TO WHAT WE ARE SEEING WITH THE OIL MARKETS? HOW MUCH CONTROL CAN THE FED REALLY HAVE? NATHAN: THIS IS THE CRITICAL QUESTION. PAUL VOLCKER TAUGHT US IN THE 1980'S THAT IF THE FED IS AGGRESSIVE ENOUGH, IT CAN MOVE THAT DEMAND CURVE SUFFICIENTLY TO TAME INFLATION, BUT THAT IS A VERY PAINFUL PROCESS, AND I THINK ULTIMATELY TO GET OUT OF THIS WITHOUT A RECESSION, THE FED IS GOING TO NEED SOME HELP FROM THE OUTSIDE WORLD. WE ARE GOING TO NEED TO SEE SUPPLY CHAINS IMPROVE AND COMMODITY PRICES COME DOWN. TOM: TOM: THE COMMON FEATURE -- TOM: THE COMMON FEATURE OF CITIGROUP ECONOMICS IS RESPECT FOR THE DATA. DO YOU TAKE COMFORT IN IMF OR WTO MOBILE GDB GUESSES NOW, OR IS IT AN IMPOSSIBLE TASK -- OR WTO GLOBAL GDP GUESSES NOW, OR IS IT AN IMPOSSIBLE TASK? NATHAN: WE HAVE A TENDENCY TO TRY TO FORECAST LANDINGS WHERE INFLATION EASES DOWN, GROWTH SLOWS SOME, AND WE AVOID RECESSION. THE REALITY IS THE OTHER OUTCOMES ARE JUST SO MESSY, IT IS HARD TO FIGURE OUT WHAT THEY LOOK LIKE ON PAPER. SO WE WRITE DOWN THESE SOFT LANDING SCENARIOS, AND THERE IS A PLAUSIBLE PATH TO A SOFT LANDING, BUT RIGHT NOW THE INFLATION RISK, EVEN THE STAGFLATION RISK IS QUITE APPRECIABLE, AND THOSE KINDS OF FORECASTS DON'T HELP ME SLEEP A WHOLE LOT BETTER. TOM: ARE WE AT ANY POINT WERE RETURNED TO A NOMINAL ANALYSIS FROM A REAL ANALYSIS? ARE THINGS SO OUT OF WHACK WE WOULD LITERALLY GO BACK PRE-ARTHUR BURNS? NATHAN: AS INFLATION SURGES, WE HAVE TO START THINKING ABOUT THE NOMINAL'S AS WELL AS THE REALS. TO BE CLEAR, I THINK AT THE END OF THE DAY, HOW DOES THE FED CONTRACTION, AND THE FED HAS TO GET TRACTION -- HOW DOES THE FED GET TRACTION? AND I THINK THE FED HAS TO GET TRACTION GETTING REALS. HOW MUCH ARE THEY GOING TO HAVE TO PUSH INTEREST RATES POSITIVE IN REAL TERMS TO GET TRACTION ON THIS THING? IN THEIR SEP FROM A COUPLE MONTHS AGO, THEY SAID JUST A LITTLE BIT POSITIVE. THAT IS NOT CLEAR TO ME AT ALL, THAT WE NEED A SUBSTANTIALLY POSITIVE REAL RATE. SO SOME STAGE IN GOING ON IS GOING TO BE CRITICAL FOR THE FED TO BE MORE REAL. JONATHAN: NATHAN SHEETS OF CITI. THAT IS HOW DIVIDED THINGS ARE, THAT YOU'VE GOT A GROUP OF INDIVIDUALS WHO THINK PERHAPS IT GOT TO GO ABOVE 2%, TO 15%, GET RESTRICTIVE. OTHERS DOUBTING WHETHER THEY CAN EVEN GET TO 2% BASED ON WHAT IS HAPPENING RIGHT NOW. LISA: HOW MUCH DO WE HAVE TO DEPEND ON EVENTS THAT ARE WELL OUTSIDE OF FED'S CONTROL? THAT IS WHAT NATHAN WAS TALKING ABOUT THAT REALLY FACTORS INTO THIS BELIEF. PEOPLE WHO THINK THE FED IS NOT GOING TO GET THAT FAR OFF SO THINK GROWTH IS GOING TO SLOW DOWN ENOUGH AND YOU WERE GOING TO SEE SOME RELIEF IN SOME OF THESE INFLATIONARY COMPONENTS. OTHERS SAY THERE IS JUST TOO MUCH MOMENT, UNDER THE HOOD. JONATHAN: AN AWESOME LINEUP FOR YOU IN THE NEXT HOUR ON BLOOMBERG TV. TROY GAYESKI OF FS INVESTMENTS IS GOING TO BE JOINING US. DAN IVES OF WEDBUSH AS WELL, AND JULIE BEALE OF KAYNE ANDERSON RESNICK. A LOT TO BREAK DOWN. TOM: I AM PARTICULARLY FOCUSED ON DAN IVES, ON HIS REAFFIRMATION OF TECH RESILIENCY HERE. AS DAVID STUBBS SAID, IF YOU ARE LOOKING OUT A THREE YEAR, FIVE YEAR VIEW, THAT IS COMPLETE YOU DIFFERENT THAN TRYING TO GAME THE FED TO JULY 27. JONATHAN: WE HAVE BEEN LOOKING AT THE CARNAGE YEAR TO DATE, DOWN 25% ON THE NASDAQ 100. WHAT A MOVE. LISA: HAS THIS BASICALLY BEEN CAPITULATION? I WAS LOOKING AT SOME FORECASTS, INCLUDING FROM PETER OPPENHEIMER, WHO SAID IT IS TIME TO COME IN AND START BUYING. HOW MANY OTHER PEOPLE LIKE DAVID STUBBS ARE SAYING MAYBE IN THE SHORT-TERM, BUT OVER THE LONGER TERM, HOW MUCH DO THOSE GROWTH CONCERNS START TO REAR THEIR HEADS AS WE HEAD TOWARDS THE END OF THE YEAR? JONATHAN: WHAT IS INTERESTING IS IT WAS BONDS. THE 10 YEAR DOWN ANOTHER STEP IN BASIS POINTS RIGHT NOW -- ANOTHER SEVEN BASIS POINTS RIGHT NOW. LISA: WHICH CATCHES MY ATTENTION BECAUSE PEOPLE ARE LOOKING AT THE REACTION FUNCTION AS A HAVEN WHICH IS NOT SERVED FOR THE BULK OF THIS YEAR. JONATHAN: WE WILL BE WITH YOU TOGETHER TOMORROW TO GO THROUGH THE INFLATION PRINT. FOR OUR AUDIENCE WORLDWIDE, EQUITY FUTURES BOUNCE BY MORE THAN 1% ON THE S & P. ON THAT ASSET 100, ALMOST 2%. YIELDS ARE LOWER, NOT HIGHER. BONDS ARE STRONGER. THEY ARE DOING OK. WE ARE DOWN SEVEN BASIS POINTS. 2.9653% RIGHT NOW. HEARD ON RADIO, SEEN ON TV, FOR OUR AUDIENCE WORLDWIDE, THIS IS "BLOOMBERG SURVEILLANCE." RITIKA: KEEPING YOU UP TO DATE WITH NEWS FROM AROUND THE WORLD, WITH THE FIRST WORD, I'M RITIKA GUPTA. SANCTIONS ON RUSSIAN OIL WILL BE HIGH ON THE AGENDA TODAY WHEN ITALY'S PRIME MINISTER MARIO DRAGHI MEETS WITH RESIDENT BIDEN AT THE WHITE HOUSE. DRAGHI RESOLUTELY BACK SANCTIONS DESPITE HIS COUNTRY'S RELIANCE ON RUSSIAN ENERGY. HE HAS ALSO BACKED SENDING HEAVY WEAPONS TO UKRAINE EVEN THOUGH LARGE PARTS OF HIS RULING COALITION OBJECT. INSULIN, THE PARLIAMENT DEFENSE COMMITTEE HAS CONCLUDED THE COUNTRY SHOULD JOIN NATO. FENLON STARTED ON THE PATH TO JOINING THE ALLIANCE AFTER ITS NEIGHBOR RUSSIA INVADED UKRAINE. THREE OUT OF FOUR FINNS NOW SUPPORT JOINING NATO. IN THE PHILIPPINES, FERDINAND MARCOS JUNIOR HAS BROUGHT HIS FAMILY BACK TO POWER 36 YEARS AFTER HIS DICTATOR FATHER FLED THE COUNTRY, WITH ALMOST ALL OF THE RETURNS IN THE PRESIDENTIAL RACE COUNTED. MARCOS WON ABOUT 59% OF THE VOTE. HIS RUNNING MATE IS THE DAUGHTER OF OUTGOING PRESIDENT RODRIGO DUTERTE. CHINA IS TIGHTENING PANDEMIC RESTRICTIONS AND SHANGHAI AND EXPANDING A MASS TESTING SWEEP IN BEIJING. AS PEOPLE ARE BEING SHIPPED OFF TO GOVERNMENT RUN ISOLATION CENTERS UNDER A NEW DEFINITION OF WHAT IT MEANS TO BE A CLOSE CONTACT. THE COUNTRY REPORTED A LITTLE MORE THAN 3400 INFECTIONS MONDAY, THE LOWEST DAILY TOTAL SINCE MARCH 16. SHARES OF PELOTON PLUNGING. THE FITNESS COMPANY CUT ITS REVENUE GUIDANCE AND SIGNED A DEAL WITH JP MORGAN CHASE TO BORROW FIVE YEAR TERM DEBT. THE RESULTS SUGGEST PELOTON'S COMEBACK EFFORT IS STILL A LONG WAY FROM TAKING HOLD. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND ON BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I'M RITIKA GUPTA. THIS IS BLOOMBERG. ♪ > > WE DON'T WANT THE INFLATION TO BECOME SPIRALING OUT OF CONTROL AND FOR HOUSEHOLDS TO BECOME UNDERWATER, SO WHAT WE NEED, THE FEDERAL RESERVE MANDATE IS PRICE STABILITY AND FULL EMPLOYMENT. MEANWHILE, THE PRESIDENT IS ALSO FOCUSED ON DOING WHAT HE CAN TO EASE THE PAIN AT THE PUMP. TOM: CECILIA ROUSE, CHAIR OF THE WHITE HOUSE COUNSEL OF ECONOMIC ADVISORS, TALKING THE LINE OF THE PRESIDENT TOWARDS A VERY IMPORTANT SPEECH THIS MORNING IN THE 11:00 HOUR. BLOOMBERG WILL GIVE YOU FULL COVERAGE OF THAT SPEECH ON RADIO AND ON TELEVISION AS WELL. CECILIA ROUSE STUDY IN YEARS AGO THE DIFFERENCE BETWEEN SOLVENCY AND LIQUIDITY. HERE WITH A TOUCH ON THE QUIDDITY, CRITIC UP TO -- ON LIQUIDITY, KRITI GUPTA. KRITI: THEY ARE NOT SAYING IT IS FUNDAMENTALS, BUT IT IS TECHNICALS REALLY DRIVEN BY LOW LIQUIDITY. YOU CAN SEE THAT WHEN YOU COMPARE THIS TO VOLATILITY. THAT IS ME TO MY CHART OF THE DAY, VOLUME GOING BACK A YEAR. YOU START TO SEE THIS UPTREND. AS VOLATILITY INCREASES, VOLUME DOES, TOO. THAT IS NO SURPRISE. BUT COMPARE THIS TO WIN -- TWO WHEN YOU DID SEE A VIX OVER 30. VOLUME TURNOVER WAS MUCH HIGHER, SO THAT REALLY SPEAKS TO THIS IDEA THAT THE LIQUIDITY JUST ISN'T THERE. PEOPLE ARE NOT GETTING THE MARGINS THAT THEY REALLY WANT FOR THIS TRADE, AND WHAT IT IS DOING IS DRIVING THIS MAJOR SELLOFF, TODAY BEING THE EXCEPTION AS WE SEE A BIT OF A TECHNICAL BOUNCE. TOM: THANKS SO MUCH. LISA ABRAMOWICZ AND TOM KEENE LOOK AMONG ALL OF YOU ON RADIO AND TELEVISION -- AND TOM KEENE WELCOMING ALL OF YOU ON RADIO AND TELEVISION. RIGHT NOW, BARRY RID HOPES -- BARRY RID HOPES -- BARRY RITHOLTZ. THE CLIENTS OF WEALTH MANAGEMENT WALK IN THE ROOM AND YOU NEED TO DISPLAY A SELF-CONFIDENCE. HOW DO YOU FORM A SELF-CONFIDENCE NOW THAT GETS YOU, YOUR CLIENTS COME OUR VIEWERS, OUR LISTENERS TO 2023? BARRY: WELL, WE CHEAT. WE DON'T START DISCUSSING LONG-TERM INVESTING IN VOLATILITY AND DRAWDOWNS NOW, WHEN WE ARE IN THE MIDST OF A PRETTY SUBSTANTIAL -- WE LET CLIENTS KNOW THIS IS A FEATURE, NOT A BUG OF VOLATILITY. WE REPEAT IT OVER AND OVER AGAIN IN 2021. NO MORE THAN A 5% DRAWDOWN ON THIS VOLATILITY IS THE ABERRATION. IT IS UNUSUAL. HIGH VOLATILITY IS THE NORM. REGULAR 14%, 15% CORRECTIONS IS AVERAGE. 13 .6% GOING BACK TO 1950 IS AVERAGE. SO ENJOY 2021, BUT EXPECT MORE VOLATILITY IN THE FUTURE. I'M FOND OF SAYING THE TIME TO READ THAT CARD IN THE SEAT ACT IS NOT WHEN THE ENGINE FALLS OFF THE WING AT 30,000 FEET, BUT WHEN YOU ARE SITTING ON THE TARMAC WAITING FOR THE CHANCE TO LEAVE FOR JFK. TOM: ONE OF MY GREAT MENTORS JOHN TEMPLETON, WHO WAS VERY KIND TO ME AT A YOUNG AGE, HAD A WONDERFUL PHRASE IN THAT TENNESSEE ACCENT. TOM, SHARES ARE ON SALE. WHY DO WE HAVE TROUBLE BUYING WHEN TEMPLETON SEES SHARES ON SALE? BARRY: WELL, IT IS NOT LIKE WE ARE GOING TO THE SUPERMARKET AND BUYING MILK AND EGGS, AND WHEN WE CONSUME THEM THEY ARE GONE AND WE ARE NOT HAPPY WHEN PRICES ARE HIGHER THE NEXT TRIP TO THE SUPERMARKET. WHEN WE WON STOCKS -- WHEN WE OWN STOCKS AND BUY MORE STOCKS, ANYTHING YOU'VE BOUGHT OVER THE LAST EIGHT MONTHS IS PROBABLY BELOW WHAT YOU'VE PAID FOR IT, SO PEOPLE HAVE A VERY HARD TIME. THIS IS A TEMPORAL CHALLENGE. PEOPLE HAVE AN INCREDIBLY DIFFICULT TIME PICTURING THE WORLD 10, 20 YEARS FROM NOW, WHICH IS WHAT 90% OF OUR CLIENTS COME OUR INDIVIDUAL INVESTORS, 10% ARE INSTITUTIONS, AND EVEN THOSE INSTITUTIONS ARE THINGS LIKE FOUNDATIONS AND ENDOWMENTS, SO THEY HAVE A REALLY LONG TIME PERSPECTIVE. IT IS VERY CHALLENGING TO THINK ABOUT 2032 OR 2042 WHEN THURSDAY WAS SUCH A DISASTER. THAT IS THE CHALLENGE FOR INVESTORS, TO PULL THEMSELVES OUT OF THE MOMENT AND PROJECT FORWARD. LISA: I'M GLAD YOU TALKED ABOUT THE TIME HORIZON. IT IS ONE THING IF YOU'VE GOT 20 YEARS. IT IS ANOTHER IF YOU'VE GOT THREE OR FIVE OR SIX YEARS. YOU SAY IT IS SORT OF THE SAME THING THAT WE HAVE ALWAYS SEEN, THAT VOLATILITY IS A FEATURE, NOT A BUG. IS THIS TIME, HOWEVER, UNIQUE FOR THE FED WITHDRAWING STIMULUS, ACTUALLY TIGHTENING POLICY THE SAME TIME CENTRAL BANK'S AROUND THE WORLD ARE DOING THE SAME AND MOVING AWAY FROM UNPRECEDENTED POLICIES AT A TIME OF SUCH ECONOMIC UNCERTAINTY? BARRY: I WOULD NOT SAY UNIQUE, BUT I WOULD SAY RARE. THE LAST TIME WE SAW A YEAR WHERE BOTH THE S & P 500 AND THE BOND INDEX WERE DOWN DOUBLE DIGITS WAS 1980, 1981, 40 YEARS AGO. MOST OF THE TRADERS OUT THERE DON'T REALLY KNOW WHAT A RATE HIKING ENVIRONMENT IS LIKE AND ARE TOTALLY UNFAMILIAR WITH INFLATION. THIS IS BEFORE MOST OF THEM WERE BORN. FORGET BEFORE THEY HAVE BEEN ON TRADING DESKS. SO IT LOOKS LIKE THIS IS UNIQUE AND NEVER HAPPENED BEFORE. YOU GO TO THE HISTORY BOOKS, TO THE CHARTS AND THE DATA, AND IT TELLS YOU THIS HAS HAPPENED BEFORE. IT IS NOT A COINCIDENCE THAT LOOKING BACK TO 1982, 1981, THAT WAS NOT THE WORST TIME TO BE IN EQUITIES OR BONDS. WHAT IS DIFFERENT TODAY IS ALL THE FISCAL STIMULUS WE SEE COURSING THROUGH THE SYSTEM AND THE FACT THAT WE ARE STARTING FROM ZERO AND REOPENING FROM A PANDEMIC CLOSURE. SOME THINGS ARE SIMILAR, SOME THINGS ARE WILDLY DISPARATE. TOM: THANKS VERY MUCH. GREATLY APPRECIATE IT TO MORNING. LISA, BUT A JUMBLE. I GUESS IT IS A DAY OF A BOUNCE, BUT WE ARE WAITING FOR THE NEXT NEWS ITEM TO FALL. LISA: HONESTLY, I THINK WHAT WE ARE SEEING IS THE BOND MARKET ACTUALLY GETTING A FLOOR. WE ARE SEEING THAT BID INTO BONDS, PARTICULARLY AT THE LONGER-TERM. THIS TO ME IS THE MOST NOTABLE ACTION IN THE MARKET. JON WAS TALKING ABOUT IT. WE HAVE ALL BEEN TALKING ABOUT IT THIS MORNING. EVEN AS STOCKS SOLD OFF YESTERDAY, YOU SAW BONDS MOVE IN THE OTHER DIRECTION. ARE PEOPLE STARTING TO SEE VALUE IN RATION -- IN DURATION? WE'VE HEARD IT FROM ANALYSTS, BUT WE ARE STARTING TO SEE IT IN THE MARKET. HOW MUCH DOES THAT CHANGE THE NARRATIVE TO A GROWTH MARKET INSTEAD OF A RATES CARE? -- A RATE SCARE? TOM: WE WILL SEE WHAT THAT IS. WE NEED TO REAFFIRM THE GUYS REALLY LOOKING FOR A WIDE SET OF RATE INCREASES FORWARD. LISA: I'M STILL THINKING ABOUT WHAT DAVID STUBBS OF JP MORGAN SAID, THAT THE CPI PRINT TOMORROW COULD REALLY CHANGE THE NARRATIVE. IF IT IS SOFT, HOW MUCH COULD THAT CAUSE A RE-RATING IN THE MARKET IN TERMS OF GROWTH SCARE'S IN THE FED NOT HAVING TO DO AS MUCH, VERSUS IT COMING IN HOT, SHOWING THAT MOMENTUM WE WERE HEARING FROM NATHAN SHEETS OF CITI, SAYING THEY ARE GOING TO HAVE TO GO FARTHER, AND EVEN IF THEY STAY WITH 50 BASIS POINT RATE HIKES -- EXCUSE ME, I WILL GET MY WORDS OUT, FOR CONSECUTIVE MEETINGS, THAT IT IS GOING TO BE A LOT OF MEETINGS IN A ROW THAT THEY WILL HAVE TO DO IT. TOM: WE SHOULD POINT OUT THAT MR. HOLLENHURST WORKS FOR MR. SHEETS AT CITI. DRAGHI IS AN ITALIAN, FULL FAITH IN DISTRESSED CREDIT, THAT HAS SEEN THE SPREAD WIDE AND OUT AS WELL. WHAT IS GENERAL CREDIT DOING BETTER THAN CORPORATE CREDIT? LISA: WE ARE CONTINUING TO SEE SPREADS WIDEN. PEOPLE ARE GETTING CONCERNED ABOUT THE PROS WE HAVE SEEN IN EQUITIES, AND PEOPLE ARE SURPRISED THAT IT IS GAINING STEAM NOW. TOM: THE PRESIDENT IN THE 11:00 HOUR. ON BLOOMBERG RADIO AND

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'Bloomberg Surveillance Simulcast' Full Show 5/10/2022

Tom Keene, Jonathan Ferro and Lisa Abramowicz have the economy and the markets "under surveillance" as they cover the latest in finance, economics and investment, and talk with the leading voices shaping the conversation around world markets. This show is simulcast worldwide on Bloomberg Television and Radio. (Source: Bloomberg)

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Bloomberg Markets
"Bloomberg Markets" is focused on bringing you the most important global business and breaking markets news and information as it happens.
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