>> there are areas of the global equity market that have priced and what we think is the worst case an area. >> at least some of this inflation is temporary and will start to ease. >> i think the job of the fed is to show they can bring inflation down. >> we are very sensitive to a little bit of loosening of this fed vice we have been caught in. >> this is not a fed that once to do shock and awe. this is a fed that wants to control the marketplace, let the medicine take hold. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone.

jobs day tomorrow, the fed day yesterday. this morning, history at the bank of england, and that wraps into all of global wall street. you have lived it. governor bailey in a very small chair speaking to the british people. jonathan: and looking to engineer a soft landing on a very small landing strip as well. that is a tough task for this governor right now. forecasting at the bank of england double-digit inflation by year-end and potentially a contraction in the economy next year, and a bank of england rate setting committee that just does not know what to do this year. tom: within that is the dissent. governor bailey does not agree with the calls for a far bigger move. fine. is that is sent normal -- that dissent normal? jonathan: policy movers essentially saying they want to be done for the next couple of meetings. three wanted a bigger move today. what is in clear to me is how much distance there is between the three that wanted a 50 basis point rate hike today in the two

that wanted to stop. i wonder how many of those three, if they had that there 50 basis point rate hike, would have been on the same page as those who want to stop now and wait and see. either way, you have a classic central banking dilemma when you have upside risk to inflation and downside risk to growth. it is terribly difficult to know what to do, and that is the position this governor is in today. tom: entry sheets will join us in a moment. you get lucky sometimes. lisa abramowicz, this alludes to something you have talked -- you have talked about. we heard it from chairman powell yesterday, making it up as we go to neutral versus forget about one and done. maybe it is two and done at the boe. lisa: basically, are they going to raise less than the market is currently pricing and because of this dilemma they are facing? a question underscoring a lot of what governor bailey is talking about, or wage increases good or bad? he said one of his hedge stations -- his hesitations for

raising rates too much right now is because he does not want to curtail real wages. even though there is tightness in the labor market, is that a bad thing or a good thing in order to soften the blow from some of these higher prices? i think that is the dilemma as they try to take some of the moment amount of the economy, but not so much that it exacerbates the pain. tom: intraday sterling, 1.2381. jonathan: just to see it with a 1.23 handle is quite something. a breakdown this morning, 1.2398, at one point -9%. futures ok, down 0.6 percent. we had almost a 3% move yesterday, so this is just a little bit of a correction on the s&p. on the nasdaq 100, negative zero .8%. the dynamic the bank of england is confronting is the dilemma the ecb has to confront as well. euro-dollar back to 1.555 -- 1.0555. tom: andrew sheets joins us with his brown mathematics, chief

cross asset strategist at morgan stanley. do the math. at one point it is about policy along the time continuum. how is bailey's time continuant different from powell and christine lagarde? andrew: it is really nice to be here with you. i think you put it rightly, these are three central banks with slightly different challenges. i think with the u.s. you have a clearly strong economy, and i think that is more of a classic challenge of central bank policy that is trying to slow a strong economy where employment is very strong and where a lot of that inflation is coming through the core parts of the inflationary channel. for the ecb it is different. the inflation is a lot less and the core elements of cpi. the inflation is a lot more being driven by energy and food prices, and the risks to the economy are this very binary geopolitical risk to the energy

markets, more so than probably traditional slowing of fiscal policy or other factors. i think when it comes to the ecb, there is a low bit more flexibility. you also have a negative rates scenario, unlike the bank of england and the fed, getting out of negative rates is something we think to be broader buy-in to . i think the bank of england is in the toughest position of those three banks. it has a weak economy. u.k. growth is some of the weakest in the g7. it has a large current account deficit, unlike the euro zone, and you have very high inflation, higher inflation then you have had in the euro zone comparable to the u.s. i think we are seeing it come through the currency markets, and i think markets could continue to apply a higher risk premium there, given those higher challenges and uncertainties. jonathan: the bank of england is effectively communicating that a

soft landing is the stuff of fantasy. do you think that is true of the united states too? andrew: not necessarily. i do think that the u.s. does have some shocks to its inflation or backdrop that are already unique or being driven by geo-political risks abroad were being driven by supply chain concerns. so i don't think it is unrealistic to think that the inflation numbers in the u.s. 3, 6 months from now are coming down, which would mean that the wage picture starts to show real wage growth again. that all starts to look a little bit better. you've also already priced in a 1994 style hiking cycle in the u.s. i think it is fair to say that soft landings are difficult. they are less likely than more likely through a lot of hiking cycles, but i don't think it is impossible. i think the important element here that we probably don't talk enough about is that the fed is only part of this story. the other half of it is what

fiscal policy is going to do, how fast will it contract, how do the u.s. midterm elections affect that. we are a ways from knowing how that will affect policy in 2023. lisa: we talk about the potential for stagflation. how long can the u.s. remain the only one, the only major economy that is avoiding a stagflation like kind of environment, if you have the bank of england addressing something very similar to that, as well as the ecb? andrew: it does put the u.s. in a difficult place because i think the ecb, as you correctly mentioned, the u.s. being the strongest house in the neighborhood is leading to a lot of dollar strength, which is only tightening u.s. financial conditions further. so it is not just the u.s. economy is facing a more hawkish fed. it is also facing a much stronger dollar in those fed interest rate increases and dollar strength that are both

doubling up on slowing the economy down. so that is a challenge that the fed is going to face. that is one of the reasons why we do not think that the market is underpricing the fed. we think the market currently pricing the terminal rate around 3.25% is bubbly right. part of that is while the dollar is also a lot, which will slow the economy, but it is going to be important that growth elsewhere picks up. it is going to be important especially in europe, where our base case is for quite reasonable growth this year, but use to have this enormous uncertainty around the energy security picture, which mix it hard to have as much confidence and that forecast as we would like. lisa: how does this equate into some kind of strategy? are you buying longer-term treasuries on this conviction that you will get a slowdown? are you doubling down on u.s. assets? andrew: we do think u.s. 10 year rates are pretty fair at current levels. we would no longer be underweight in treasuries.

we think around 2.90%, 3% on the 10 year when you have already priced in a 1994 style hiking cycle, and when we think growth is going to slow in the u.s. with all of this tightening of financial conditions, as inflation also moderates, that seems pretty reasonable. so i do think a lot of investors have been underweight ration, correctly, but we sent this is now a time to start moderating that position. i think this is also an environment very well-suited for oil and for energy to outperform within the commodities complex. we think the oil curve remains very backward dated, which means investors are paid very well to hold oil. if with about inflationary risk, it is very hard for us to see those happening in any way that does not involve higher oil prices over the medium term, so that is another asset class that we think outperforms on a broad cross asset basis. jonathan: wonderful to catch up with you, as always.

andrew sheetz of morgan stanley, essentially saying that the long and has peaked for now. lisa: basically saying what we are looking at is what is going to be a slowdown because of what is going on, and frankly, this fascinating confluence of events , we've got a strengthening dollar that is tightening policy as much as some of the rate hikes. i don't think we have made enough about that at a time when dollar strength is incredibly resilient. jonathan: seeing some dollar strength right now against one particular currency. sterling, 1.2410, a move of 0.75% on the day. tom: 12% of the acclaimed dxy intellects did ask -- the acclaimed dxy index. there's some other factors going on here, including yen, which has not moved, but as andrew sheets talked about, you wonder where currency comes in as a release valve for these oddities in the system of economic slowdown, and yet we've got to raise rates. never seen it. jonathan: i know you are focused

on crude too, tom. tom: this is a huge unspoken deal, to see diesel do what it is doing in america and in war-torn europe, and a gallon of gas, i'm sorry, it is creeping up. jonathan: acknowledging these problems at the back of england, the governor communicating to the people of the u.k. that we face a problem, and he understands the pain they are going through. and part of that is the energy price story. lisa: how do you then adjust monetary policy to deal with that? that is not exactly something that can influence. they can't pump more oil at the bank of england. jonathan: it is really difficult right now to set policy in a world like this one. paul sankey is going to join us shortly. great asked on the commodity market, founder and lead analyst at sankey research, next. this is "bloomberg surveillance." ritika: keeping you up to date with news from around the world, with the first word, i'm ritika gupta. opec has agreed to raise oil

output by the expected 432,000 barrels a day for june. still, most countries in opec+ are struggling to keep pace with the rising output allowances. elon musk has won the backing of some of his biggest investors for his proposed takeover of twitter. according to a filing, he secured about $7.1 million of new financing commitments. the investors include binance, brookfield, and qatar holdings. the bank of england has raised interest rates to their highest levels since the financial crisis, plus it warned the economy is on course to shrink under pressure from dental -- from double-digit inflation. the increase was backed by six of the bank's non-policymakers. the other three wanted a half-point hike. ukraine's president of volodymyr zelenskyy is trying to crowd fund the war and is announced ukraine has launched an online platform to raise money from

anywhere in the world. he said that together, the war with russia can be stopped, and what russia has destroyed can be rebuilt. the canadian e-commerce company posted profits that beast -- profits that beat estimates. it is the company's largest acquisition ever. 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. ♪

>> due to inflation and to covid developments, particularly in china, these developments have exacerbated greatly the challenges already faced in the u.k. and many other economies from a series of adverse supply shocks we continue to face. monetary policy therefore must navigate a narrow path between the increased risk from elevated inflation and a tight labor market on one hand and a further hit to activity from reduction in real incomes on the other. jonathan: that is the tough spot this bank of england governor is in right now. that was andrew bailey a moment

ago saying that no one advocated for a 75 basis point increase. let's be clear, that is not having quite the same effect that chairman powell had saying the same thing just yesterday. equity futures this morning negative zero point 5% on the s&p. a monster move higher yesterday on this 500, the biggest one-day rally going back to 2020, up almost 3%. yields coming in just a little bit, not even a basis point now to 2.937%. the euro as a whole lot weaker, the dollar a whole lot stronger after yesterday's move. the big movie is pound sterling, down by 1.9%. that is a weaker pound sterling in a big way. tom: i would suggest to get every second of value we can that the deputy governor of the bank of england, truly one of the giant lights of united kingdom economics, and governor

bailey, they would like to listen to paul sankey, founder and lead analyst at sankey research, with an absolutely blistering note for a two hour conversation. i want to go to the nitty-gritty of your expertise, which is you link henry hob and lng into a net gas -- a nat gas explosion in profit and price. paul: u.s. production is not reacting to high prices, so a lot of our normal elasticities are simply not there, and the other key one is that coal prices are very high and coal inventories are very low. so the u.s. price has gone to $8.50, btu at a 50 year high. the reason obviously is europe is cutting off russian gas, and as a result they have to import as much as they can.

they were dependent on the spot market, so they don't have long-term contracts, and as a result they are having to buy lng from a buyer, from someone who had already bought. tom: put it into scale, it is now eight, and mr. sankey said we should enjoy $20. let's look at the united in the man united states, a gallon of gas. i understand jon drives a little car over there, but it is up 26% to united kingdom $5.79. you say the profits are out there for big oil like you have never seen in 30 years. it goes back to juergen and the prize, the whole thing. what is a gallon of gauze going -- a gallon of gas going to cost in three to five years >> -- in three to five years? paul: i think we will hold 100 and dollars -- $110 to $150.

over time, the more russian oil and gas we would lose. now we are focused on may 9 for the key date in russia to celebrate the victory over the nazis. we are wondering what is going to happen, but that could be a key, whether putin declares victory, whether in not -- whether or not he goes to full, all-out bombing. we are watching that pretty carefully. what we do know is that russian oil and gas is effectively gone from the market, and that is a very big view for markets, which were already tightened before this hiking. lisa: all of this goes to how much people can keep betting on oil companies, especially when there is insert about how much gas prices, oil prices are going up, while at the same time there is this uncertain backdrop in the

macroeconomic picture. shell just reported record profit. we have seen this time and time again. there's all this regulatory scrutiny. paul: that is the number one concern of the clients. the investors in oil worry that the government won't tolerate 10 or $20 henry hub gas because of u.s. consumers. but the government is very weak. they don't have an energy policy , and they have a couple of key senators, joe manchin obviously, who oppose any kind of interference with markets, and it is complicated to interfere in the gas market. these guys are selling gas directly by contract through processing hubs, and to shut that down as a government would be difficult without legislation, and without

legislation it is difficult. they're kinda powerless. there's not much they can do, and that is why it is such a crazy environment because the money they're going to make is going to be enormous. it will infuriate people come aboard are you going to do about it? jonathan: paul, thank you. paul sankey of sankey research. brent, 1.1182, up 1.5%. wt -- brent, $111.82, up 1.5%. tom: with a feeling of powerlessness, the fed trying to be an institution where we are in control and the bank of england as may be a little more honest and saying we are really not sure the power that we have. that's sort of navelgazing, but i wonder the difference in language. jonathan: problematic for me to do, although i'm happy to do so if you wish. they are being transparent at

the bank of england about the future in a way is not. tom: they are engaging in debate, which is true of all of economics. the heritages there. let's be honest. a much more fractious and visible discussion of england. to one of our guests who mentioned it, what does this mean for ecb? what lesson do they take from the tumult today? jonathan: the challenge for the ecb, they are at -50 basis points on the depot rate, so they are already at a much lower interest rate setting than the fed and the ecb was. -- and the bank of england was. they've got to talk about engineering the first rate hike. we know that get this is the question i had as soon as the bank of a none hiked in december. it is how far are you going to take this. how far can you take this? here we are with a challenge from the growth outlook. tom: sterling breaking down now,

new weakness. jonathan: it is ugly. tomorrow we have a jobs report in the united states of america, and we will catch up with the chief economist of adp next. from new york, this is bloomberg. ♪

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jonathan: live from new york for our audience worldwide on tv and radio, this is bloomberg surveillance. your equity market, -.6% on the s&p. on the nasdaq down .75%. economic data coming out. let's cross over to michael mckee. michael: it is not directly related to tomorrow's jobs report, but the number of people filing for first-time unemployment benefits goes up a significant amount. up to 200,000 from 185,000. a 15,000 gain. that is statistically insignificant, basically. it tells you there are still people looking for unemployment insurance. this was not a reference week

for jobs. tomorrow's numbers are not going to be affected by this. the other number that is out today is nonfarm productivity down 7.5% in the first quarter. that is from a six point 3% gain in the fourth quarter. it shows you the swing in gdp made a big difference in productivity. unit labor costs rise 11.6% after rising 1% in the fourth quarter. let me check. that is the most since 2020, which is going to be because of the pandemic. i will have to see what the lowest -- what the highest is in terms of unit labor costs before that was. lisa: 2014. michael: 2014. at this point it looks like companies are paying up and getting less for it. michael: let's get a clinic on

that. while you were yammering away i went to unit labor costs and a fancy chart. the longer term moving average cost get us back to the early 1990's. what does that say know about wage inflation that we may see tomorrow? michael: the numbers suggest we probably will see continued wage inflation. also the fact the employment rate is forecast down to 3.5%. we may not see a lot of gain in the labor force. we are expecting wages to go up. jay powell says the labor market is extremely tight. you want to go back to the 1990's. alan greenspan raised interest rates 300 basis points and we did not have a recession. instead we got a very long and strong expansion.

i guess there are two paths we can follow from here. jonathan: payrolls on friday. cpi next week. one of the estimates from morgan stanley. 8.1% down from 8.5%. away from payrolls into cpi, what is the focus for you? michael: it will be the poor rate. we know we will see energy and food price pressures continue, especially with ukraine and russia. is the core rate slowing down? we saw that with the pce numbers. if the core rate is moderating that would give the fed some hope their interest rate increases would have some effect. we also want to look at what housing is doing. that will take a long time to come down. jonathan: awesome work yesterday. great to see you back in the room in the news conference.

isn't that good to see, to get them back together again? it is a reunion for economists in washington. tom: we are seeing that in all sorts of things and it does speak to the optimism. the gentleman from st. louis has an optimism of resilient american economy. jonathan: the gentleman from st. louis is scheduled to speak tomorrow alongside governor walla. just to go through the data, 200,000, upside surprise, still very low for initial jobless claims. lisa: this is concerning for the fed at a time you have tightness in the labor market not being reflected in the numbers the way they have traditionally. the fact that it is on the wrong way up, we are getting an acceleration in wages, is this a good thing right bad thing? as we saw from the bank of

england you need wage increases so people could keep up with the price of inflation. that could exacerbate how far inflation can go. tom: with adp, their chief economist, nila richardson joins us. i am looking at the cpi that jonathan just mentioned. we migrated from 6.5% to 6.1 percent on the survey on core inflation. 114% of our audience on radio and tv think people like michael mckee, jonathan ferro, tom keene and the rest are not saying that is a good friend. how much -- is a good friend. -- is a good trend. how much does that have to go down? nela: i think we will stay on the edge of our seats until we see the core inflation go down below 3%. i think we cannot take it as a

foregone conclusion that it moves down in a straight line. many on your show have said the fed can only do so much, this is a supply-side issue as much as a demand issue. we might see inflation bounce around even in the core rate. comfort is below 3%. lisa: you think people interpreted yesterday's press conference correctly? nela: no. i don't. [laughter] i think it was way too easy for the fed, and their job is to make it look easy. it is not what markets do the day after the press conference, it is what inflation does months from now. the numbers michael mckee just read are concerning. productivity went down, wages went up. that is not the place the fed wants to be. they want if wages are going up it means the economy is getting more productive, not because we

have a supertight supply shortage. that is the concern. wages may not boost inflation, but wage growth may stick around longer than anyone is expecting. lisa: another thing people picked up on from jay powell yesterday is he still sees the target rate around 2% to 3% in terms of how far they will raise rates. do you think that is something we can take at face value what you think there is more willingness to go beyond that into a tightening that is what people are pricing in earlier this week but not now? nela: i think for now in terms of the fundamentals which are strong and where the fed is guiding towards, i think that is appropriate. i'm always struck by the comparison of 1994. we are still in the school zone

in terms of rate hikes. we are not on the open highway. what the fed is trying to say is they can maneuver a soft landing given we are starting from such a low point on the federal funds rate. tom: you are at indiana university which i believe is the stomping ground of james bullard. indiana is an acclaimed mathematics and economic combine. there is a different view in indiana. it is an optimism america can heal and move on away from the elites on the east coast. is that still in place? can we technologically move on and move forward like that indiana optimism? nela: i will have to note that governor waller is also an iu affiliate so we have a good representation in the federal reserve system. i think the optimism around

innovation and productivity is warranted. that is what makes the wage gains good for the economy. that is what leads to profitability. we have seen a big uptick in innovation just to get through the pandemic. a lot of things that were expected into the future such as e-commerce and automation has been pulled forward. can the economy build on that momentum on those gains to keep that productivity moving? tom: i love that we have nela on. there is not enough midwest freshwater representation in the economic discussion. you get guys like jerome powell who are a beast of finance on the east coast. jonathan: we have to run. nela richardson of adp. thank you very much. to nela's productivity down, unit labor costs -- to nela's

point, productivity down -- tom: there is one ratio, sterling, dollars sterling, than there is other relationships that are two fractions, than there equity relationships that are five fractions. productivity is the moving parts of three different relationships. three different fractions. what nela is saying is the dynamics of those three moments our unit labor costs are going the wrong way and productivity is going the wrong way. the efficiency of the american economy. it is not the right kind of productivity, the right kind of dynamics within that relationship. jonathan: it is problematic. lisa: the last time we saw unit costs of labor rising at this kind of pays, twice in 2004 and

i cannot find anymore going back decades. this is giving you a sense of how historic the wage gains have been, how historic the labor costs have been at a time when we are not seeing more for it. this is not what they want to see. tom: this goes back to professor roemer yesterday. this phrase, total factor productivity, and as ms. richardson just stated, the pandemic sped it all up. jonathan: payrolls estimates 380,000. coming up, lisa hornby will be joining us on the market, fixed income company everything with the vet yesterday. also jonathan golub of credit suisse and chris harvey of wells fargo. from new york, this is bloomberg. ritika: keeping up-to-date with news from around the world.

billionaire larry ellison is one of the well-known investors agreeing to back elon musk's purchase of twitter. a saudi prince has agreed to rollover his current investment in twitter. opec and its allies are great on a small monthly increase in production at a time when global markets are likely to get tighter because of the eu's proposed ban on russian oil. ratified a 432,000 barrel a day increase. analysts doubt the alliance will be able to deliver even that month. in the coronavirus death toll probably climbed to almost 50 million people in its first two years. that is one out of 500 people worldwide. it is more than twice the figures from individual governments. warren buffett is boosting its back on occidental petroleum.

berkshire and previously built up estate and more than 40% of the company. the best performing stock on the s&p 500 during the first quarter. bmw posted first quarter profits that beat estimates. german automakers have been hammered by the semiconductor shortage so they have shifted production to higher-margin models. bmw deliver 6% fewer cars but revenue rose over the previous year. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

>> u.k. gdp growth is expected to slow sharply over the first half of the forecast period.

that reflects the significant adverse impact of sharp rises of energy and good prices on most u.k. households. tom: the governor of the bank of england with a very difficult task ahead for the unique economy that is the united income. it was not that he shot to the world of finance, it is the dissent. lisa abramowicz, it was a dissent not seen yesterday at the fed. lisa: this is been a very difficult path for the bank of england and they have a very different trajectory than at the federal reserve because they cannot count on saying there will be growth next year, seeing actually a contraction, even amid hiking rates. tom: is appropriate to end this hour with marc chandler. his book "political economy of tomorrow" looks at the astrology of the foreign-exchange system. he is chief market strategist at

bannockburn. i want to go back to 1992. i believe john major and the modern collapse of the british financial system, yes, there were a few other moments along the way. compare and contrast what is coming for governor bailey and what john major dealt with in 1992 with the sterling collapse. marc: in 1992 the u.k. was part of the exchange rate that limited how much the sterling could move. now the u.k. has been limited by that band and sterling has collapsed. yesterday chairman powell talk about channing -- channeling paul volcker but i think it is governor bailey who is doing it. the bank big whit is forecasting contraction in the gdp next year and will be stagnant in 2024. not only hiking rates, but they

also announced that starting in september -- tom: what will be the lessons. marc chandler, how does the ecb, in a more conservative block at the ecb as represented by the buddhist bank, how do they respond to what we let -- by the bundisbank, how do they respond to what we have seen this morning? marc: i think the hawks are pressing for a july rate hike. the swaps market had it priced in. at 25 basis point hike in july. this is a different theory in the sense that is all the factory orders and germany. weaker than expected in france. europe as a whole looks like it is headed for a recession. lisa: is that being priced into the euro? marc: i know a lot of people are

critical that the fed is behind the curve. i think they are playing catch-up. it is not just that the fed is behind the curve. look at sweden, who said they will hike rates -- the same thing from other central banks. i think all the major central banks are behind the curve. in their defense, it is a pandemic. and then the russian invasion of ukraine, and then the slow down, the cove induced slowdown in china. it is more than anyone would've expected. there's nothing in our experience that would've prepared us for this. lisa: a lot of people are talking about the potential for recession in europe. the bank of england seeing a high likelihood in england and the united kingdom. in the u.s. there seems to be a consensus that is not the near-term forecast, there is so

much momentum underpinning the strength. you think that is overstated or you think people can bet on that, leading to more dollar strength? marc: i think we will get more dollar strength and tomorrow we will get the jobs report in the u.s.. i've seen estimates fall but we are still talking about 280,000 increasing jobs. it is hard for me to receive a recession. we are going to have a slow down. i see it later this year and into next year, not so much in the next quarter. we have a sharp contraction in q1 gdp but that was statistical because of trade and inventory. sales to domestic purchasers was a relatively robust number. tom: all of us begin foreign-exchange and banking by watching julie andrews and mary poppins. let's be honest.

dick van dyke stole the show. there is a view of the bank of england of the fidelity and mutual bank, the bank in the movie mary poppins. we have moved on from that. a new central bank that is supposed to have a new social construct. is that social construct getting in the way of making tough decisions? marc: look what they just did. they hiked rates. they voted in favor of the rate hike. three of them wanted a 50 basis point rate hike knowing the cost of will be crushing the consumer and businesses in the u.k.. i do not see the business as some sort of giveback to the social consciousness. what i see happening is in mexico where a packed was announced with businesses to limit the price increases of 24 common products.

tom: we have to leave it there. on short notice, marc chandler with bannockburn. i love the tapestry mr. chandler puts to the history and social aspects of all of this financial blather we do. when i'd know is all of this -- what i know is all of this is shown first in the fixed income market. how do you preserve dad on price and on guilt adjust what has been wrought in the last 48 hours. lisa: how do in stagflation? this is frankly a situation some people, the second u.s. public pension came out and said there is no good trade when it comes to stagflation. everything fails. going forward, most people are saying in the u.s. we will avoid that. people are saying is looking less likely in europe and the u.k. how do you situate yourself in a

perilous moment? tom: can we have a moment of silence for lawrence summers. let's be quiet. a moment of silence for lawrence summers. he is a pinyon a. -- he is a pinata. claudia psalm went after him the other day. when you say -- when you see the action, i am sorry, policy and economics meet up with a crushing force every once in a while. lisa: although we did not really have an understanding of what the dissenters were going for. this is what jonathan was harping on, saying where they trying to frontload as many as possible and then be done with it and create a shock or were they saying we needed to be more aggressive? tom: i think you're absolutely right. the joke is it is not one and done it is two and done.

the calendar is a complete difference from jay powell and the reaction function of the neutrality versus the let's go we saw this morning. thank you to guy johnson helping in london as well. stay with us. this is bloomberg. ♪

jonathan: we are taking away some of the rally. nasdaq down about 1% after rallying big time in yesterday's session.

the countdown to the open starts right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. jonathan: live from new york, we begin with the big issue. powell burying 75 basis points. >> he took it off the table. >> it is just a repricing of the degree of inflation panic. >> 75 basis points, that reeks of panic. >> you saw a massive relief rally. >> eventually the fed might have to hike more. >> ultimately they need to slow the economy. >> they need to move in