>> the story remains the same. strong labor market. >> i think it will weaken. this is why the fed needs to act. >> if the fed can navigate this path i think you'll see equity markets move higher. >> you have to give them credit for pivoting and they can pivot again. >> is a pivotal moment for fed policy. >> this is "bloomberg surveillance." jonathan: five straight weeks of losses. from new york city, good morning. live on tv and radio alongside tom keene and lisa abramowicz, i'm jonathan ferro. equity futures down another 1.9%. tom: what we can say across three hours over the preshow preparation and starting surveillance this morning, it is a situation that deteriorates.

we will get out 34 vix in a moment. bitcoin under 33,000 joining the party. jonathan: big moves there and in the equity market and foreign-exchange as well. dollar index the strongest since 2002. tom: we are very dollar centric, and by that i mean foreign-exchange centric. turkish lira blowing through 15. the immovable force is the 10 year yield, 3.18%. did we get to 3% of a cup of coffee ago? jonathan: 3.20% now. the five-year the highest since 2008. we are pushing ahead to the big one this week, cpi this wednesday. lisa: looking forward, is that going to be something we see decelerate, this idea perhaps the fed will get a reprieve from that? we are talking about the idea of

risk not stemming from the fed, stemming from supply chains out of china, stemming from oil prices that are searching having to do with ukraine. that is hard for the markets to deal with which is the reason we are getting these tightening ramifications. jonathan: "avoiding recession is our base case but markets will have to confront the rising probability of one regardless." lisa: and howdy do that after a market has been made by a federal reserve -- suddenly not having you back and the website action does not have to do with a lot of people say out of washington. tom: the fed put has been well and truly retired. we will talk to michael purves about this. i guess there is a new regime and there is a repricing going on. in historical context is it a bear market?

on friday many stocks hammered. you look at the indices and you say where is the immediate catharsis? have we seen catharsis yet? i don't think so. jonathan: can we make the case the worst of this is done? credit, yes there has been damage done, but spreads of not blown out in a massive weight like we might have seen a couple of years ago. that is intriguing from my perspective. lisa: every morning i look at spreads on investment-grade and high-yield to gauge do we start surprising credit risk. how do we get credit risk when we have capitals that do not have near-term majority. the next wall is not until 2025. at that point is credit reflective of real risk? if borrowing costs rise, does it matter? jonathan: that is the question a lot of people in fixed income are asking. futures on the s&p and nasdaq

into negative territory. on the s&p down 1.8%. yields are higher on the 10 year. in this session we had a little look at 3.20%. yields are higher by five basis points. the dollar the strongest back to 2002. euro-dollar -.1%. lisa: so may questions, are we there yet, have we seen catharsis? we will be talking about that with that incredible roster of guests. deutsche bank's george joining us. u.s. deputy secretary of the treasury joining us, wally adeyemo. i'm curious to hear about what the u.s. next steps are in terms of sanctions for russia but also with respect to china. and matt of barrel lynch and the bank of america about how much

is already priced in with respect to treasury yields. is there a nonlinear move from 3.5% on the 10 year to 4%? at 8:00 we get atlanta fed president raphael bostic with michael mckee talking about some of the guidance. i want to know what they think about the market reaction to fed chair powell's press conference last week. at 2:00 meta is opening its first physical store in california. you can go and live in a universe that is far more certain that the one we currently live in. the reason i'm interested is not that. it is because shares are down nearly 40%. nasdaq shares down more than 20%. where does the growth come from for these growth names given how much has been priced in and given what we are seeing in china. jonathan: the problem is some of these names are still generating decent growth, and yet they are

being absolutely pummeled in the stock market. tom: this is important. i think there's a lot of growth out there and you wonder what you will do. we will not give investment advice, but friday there seems to be two markets, those of profit, holding on, and a lot of others. before we get to our wonderful guest, the bloomberg dollar index since february 24, up 6.7%. the call of the year -- jonathan: michael purves will join us. michael, can you make the case for the end of multiple re-rating in this equity market? michael: bye-bye math -- by my math we have pivoted about 3.5 pe points year-to-date off those lifetime highs at the end of last year. by my math if we are going to a

3% to 4% 10 year yield, by my math we get to another 1% to possibly two pe points and by that point i think we are done. my bigger question is the process at volatility conditions right now are extraordinarily robust and dynamic. you guys were talking about the shocks from supply chain, the shocks from oil, which the fed has limited ability to address. one of the things is that will only reinforce this very high rate volatility. it is not just rate, it is rate volatility. if the cross volatility is that high, there is so much dust in the air, so much uncertainty. i think it will make dip buying

-- there always traders that will come in for a quick play, but larger more strategic commitment to the market. i think dip buying will be very challenging. tom: there are different michael purveses. the math michael purves has just pointed out cross asset correlations. i adore your paragraph going more narrow on cross stock correlation. it is not there, is it? michael: it has been low, and part of that comes down to the fact that if you are long energy stocks, long material or steel stocks, you were doing well. if you are long some of the big tech names, you were not doing so well. it was not risk off the way you had -- most of the selloff this

year we have not had that 2010 or 2011 binary, we are risk on today or risk off and everything is down. it was much more nuanced. certainly the cross stock correlations have been increasing, and will probably be increasing today. jonathan: awesome to hear from you. michael purves of tallbacken. take a look at the bond market. also over in europe. we talked about this over the last week, this italian 10 year bund spread north of 200 basis points going into the ecb meeting next month. this takes some getting used to, not only the 10 year at 3.20 but germany. last summer the yield on the 10 year was -50 basis points and

here we are positive 118. lisa: we have seen a complete retracement of the negative yielding universe and we have to talk about what would happen if that happened or if it would never happen, and we had a complete about-face in terms of evaluations in the debt market. this is why we keep saying where is the capitulation? we have seen a lot of pain. it does not seem like forced selling types of pain that raises questions about financial functioning. jonathan: think about where all of the weight of the capital investor has been over the last 10 years. we have been talking about bonds in the tech stocks. i've heard people talking about the tech story unraveling. the bond market story is unraveling. the ecb pulling back, the fed pulling back, and we are seeing levels we have not seen in a long time. tom: this is important. i'm clearly in the camp that fixed income leads to equities. you learn that by losing money.

sometime tell me about the time i lost money on amazon and lehman brothers and holly guthrie on the collapse of amazon off of their bond paper. bonds lead, and at your peril in the equity market you ignore fixed income analysis like bloomberg "the real yield" which you can see at 1:00 p.m. jonathan: something has changed. typically when we talk about growth risk before, the curve was flatter, yields were lower. tom: a different regime. jonathan: the framework that worked in the last 10 years is not working now will stop lisa: people are worried about inflation. jonathan: 3.18 on the 10 year. from new york, this is bloomberg. ritika: keeping you up-to-date with news from around the world. vladimir putin justified his faltering invasion of ukraine as

a battle comparable to the fight against nazi germany. he spoke at the annual victory day celebration in red square marking the defeat of germany in 1945. he says the conflict in ukraine and the nato members setting the country weapons was inevitable and president zelenskyy responded on twitter, saying the russian army is dying not defending their country but trying to occupy a number. the dollar dominance continues. extended gains into a third day. china's lockdown accelerating inflation and the worsening outlook for global growth has boosted demand for the dollar as a haven. in the philippines polls indicate the son of the late dictator marcos is elected president today. he has been helped by a barrage of online propaganda painted in the martial law years under his father as a golden era. his main rival says there is concern over malfunctioning

voter counting machine. in sri lanka the prime minister has resigned in the wake of protests over the plunging economy. demonstrators have been demanding he and his brother, the country's president, quit. the prices of everything from medicine to gasoline are soaring. sri lanka is near bankruptcy. 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. ♪

>> declaration of victory would not make peace in ukraine because the ukrainian people will never surrender. the fighting will continue and that is the risk. that is a prolonged simmering conflict. that is why we should do our utmost to bring a quick end to this conflict. jonathan: rest mucin, the former nato separate -- rasmussen, former nato secretary-general. negative across the board. on the s&p 2%. the yield curve is interesting. talking about a growth scare and higher inflation. the front end we are seeing yields lower five basis points on the two year that on the 10 year yields higher by four basis

points. tom: more data checks. i do not know where to go other than to say the 10 year yield of 3.17, it is a repricing. jonathan: 2018, the highest since. tom: vicks through 34 is critical. 34.14. maria tadeo in brussels. we spoke to her about the festivities in moscow. annmarie hordern in washington, considering a gallon of gas within two sense of the march 10 peak. what is difference this time with record high gas prices versus march 10? annmarie: first, we have the g7 saying they will move to band russian oil. obviously waiting for the eu to react to that and try to get their ducks in a row.

that will play into the geopolitical risk premium on the global market. if you want to know what is going on in the oil market, look no further than the latest opinion piece. he talks about refining capacity. you have 1.5 barrels of refining capacity wiped off the market because of self sanctioning. before the pandemic you had refinery starting to wind down. the margin from wti to jet fuel, gasoline, diesel first trucks -- diesel for trucks, all of this is expensive. the saudi oil minister talking about it. tom: distillate is my new word. prices in europe and america are even worse than regular retail gas. full been this hydrocarbon analysis with this stunning defeat of olaf scholz in the

election over the weekend. maria: if you look at what happened in that election yesterday -- if you look at that election yesterday, the issue is for olaf scholz, he is caught in the middle. he says we want to help ukraine but we do not want to escalate, you want to help financially, but we do not want to help with weapons. he talks about going after russia and russian oligarchs but he is still buying gas. it is a very tepid in between response that does not yield anything. many would criticize him for being too soft, others for being too cautious. he has not found his line. that is the problem. he is caught in between too many issues. the legacy from angela merkel

continues to weigh on him. he was a finance minister. he is a chancellor who is still trying to find the right tone but he is clearly struggling. lisa: this conclusion from the leaders of g7 nations, coming out and committing to banning imports of oil from russia. is there any clarity in that proclamation? maria: yes, it was a statement that was completely ended because the europeans are still working on this oil embargo for themselves. this was a statement that sounded great and was the counter narrative to victory day , but the substance was not there. when you look at the europeans, there is always the internal politics that makes this difficult. you have countries like hungary and the czech republic and slovakia who push for exemptions. european officials believe there will be a deal, but this

statement by the g7 lack substance. the fact the vector europeans do not have a deal took away the shine. jonathan: meanwhile we get comments from the president tomorrow ahead of the cpi print. how will he tried to get ahead of what is expected to be another robust print? annmarie: he is also probably likely going to speak about it today. he will talk about a lot of eligibility -- a lot of eligible americans getting high-speed internet access. tomorrow, this is another curious timing on behalf of the administration, cpi is due on wednesday and i guess the president wants to get ahead of it. the white house official says he will detail his plan for working families in contrast to the approach of republicans to raise taxes on american families and threaten to sunset programs like social security, medicare, and medicaid.

clearly the administration wants to get ahead of the data. it is curious he would not just begun wednesday. jonathan: can you tell us what ultra maga means? ahead of the midterms. annmarie: that is individuals 100% in the camp of make america great again, which is former president trump's side of the republican party. tom: john, would you say goodbye to maria. jonathan: i was going to check in with maria quickly and see if she was ok. can you tell us what tom has been saying and what are you meant to say? maria: i did not even make the sound he makes. [laughter] what i do know is how you would say it. i do not think i can replicate the sound. tom: how are you supposed to pronounce tadeo? maria: in spanish it is tadeo.

jonathan: can we have that clip and put in the year end highlights? i am nervous saying maria's name now. tom: how do you pronounce tang? jonathan: you just have another drink. futures down 2% on the s&p, on the nasdaq down 2.6. if you're just tuning in, five weeks of losses on the s&p, the longest losing streak back to 2011. lisa: this is honestly what people are wondering, when you get capitulation. last week this has been an interminable year, but it feels like it just drags together. how much have we seen true capitulation? lisa: what will trigger it? jonathan: margin calls -- tom: margin calls. i need an emu export.

jonathan: i love how lisa says people did not want to get out of bed when bramo is just talking about lisa. [laughter] lisa: i'm talking about myself and the third person. jonathan: stocks down 2% on the s&p. this is bloomberg. ♪

jonathan: the longest losing streak on the s&p 500. five straight weeks of decline as we hit we six we are down. session lows are down by 2.7%. it gets worse and worse as the session grows older. here is the bond market story. we have seen highs since we haven't seen since 2008. if you go back to 2018, the high was 323.73. these are big moves.

tom: let's go back to the equity markets. on the intraday chart on the nasdaq 100, down 2.7% on the futures. this morning, you have to sit on the futures. we have long convexity on the future. what that means is you've got a curve to a lower price on nasdaq futures. jonathan: we are making new session lows with equities and bonds. the dollar index which tracks a basket of currencies with a heavy lean toward the euro is stronger go bank -- going back to 2000 two. this hasn't been talked about enough, the weakness in china,, the momentum in the u.s. dollar and the fact that the lockdown

in china and sanctions in russia are stymieing dollar growth. a one percentage point move in the fx market is considered a big move. in china, a managed currency. it's more than notable. tom: they are repricing it to a weaker you on and it's one of the tools they have of a different management of a process you see than any other currency. i look to other em like korea and pacific rim. korea is a free market proxy of beijing dynamics. jonathan: dollar-china six dollars 72.

single names of stocks are moving this morning. lisa: good morning, what's happening is sell what you can, not necessarily what you want stuff that's leaving some of the highest beta and popular tech stocks to lead the way down. shares are down nearly 3%. nearly 40% decline in amazon down almost 40%. massive declines as people take a look at what's ahead and where the growth will come from especially with a consumer that is paring back and uber is an interesting story, down nearly

3% despite the fact that we saw a reported memo saying they will cut costs around marketing and other issues so they are looking into that to try to generate more cash rather than growth. not a positive actor. we talk so much about the retail trader getting the retail traders who got in at the beginning of 2020 have lost all their money and then some and we are seeing that again today. gamestop is getting terrorized here, down more than 50%. down 4% on the session. ford was selling shares a discount and they are down nearly 3%. jonathan: have you been surprised by how few bill -- how

few people have talked about the equity market? lisa: you hear it on the edges and you say -- and they say the bubble has burst. they say it has more to go and i think it's an point. is there and unraveling of a reassessment and are we shifting into unraveling right now where people are saying these valuations cannot last? i think that shift in sentiment has happened over the next few weeks. tom: i think you look at the data and there is a new allocation to the market and it will come off of what central banks do. anybody who's looking at you like, good luck with that. i look at our strategists and forecasters and i say good luck. gold is down $24 indicates the sweat that's out there today. jonathan: people believe we will

see a year-over-year we can inflation. how much longer will this story go and how much more neutral can the fed go? tom:tom: a moment of silence for michael wilson who is a genius. what we will do is look at what's in michael rosenberg's classic textbook currency textbook. it's $299 and the hard cover edition. is one of the founding members of currency. i am thunderstruck by just by your behavioral analysis, explain the behavior you are studying that get you to a call

on euro and the dollar? >> we just need to start from the global growth environment. that's what's been driving the market over the past few weeks. you have a perfect storm of weakening global growth in all regions. the u.s., you have a huge tightening of financial conditions and in europe, we have the war and the straw that broke the camels back was the china lockdowns, you have all of the three world's economies suffering from these shocks at the same time. demand is bringing down expectations and that's what's driving and the moment including the u.s. dollar where you have a situation of lower global growth but rates are rising very significantly and that's what's been supporting the stronger dollar over the past few weeks. we need to see in inflection.

either china, europe or the u.s. needs to change the current market environment. jonathan: if you change the euro-dollar call -- >> i am still keeping my optimistic european call. i think the market is to pessimistic on your looking to the next three to six months. there is a number of things the markets are on domestic made in stock first one is fiscal policy. if you crunch the numbers, more than half of the income shock has been disrupted by europe and that's not what's going on in the rest of the world. then you got the reopening dynamic. your never reopened after omicron. it's holding up much better than expected and you have the labor market, the european labor

market is stronger than the u.s.. we think the ecb goes in july. i think the market has come to pessimistic and growth expectations. europe has the best forward earnings guidance out there. i think europe will end up rebounding. lisa: what is already known? [indiscernible] if you look at >> price action, you see the euro turn across a number of other currencies. it's a risk off environment if the euro slips. you are under the hood to see european performers. you have a couple of

lags. if you think about dollar strength, we know the fed has been tightening but now the dollar has responded. the ecb coming into view. jonathan: this has been a tough trade so i'd like to catch up in the next couple of weeks. this one has been difficult for a lot of people. looking for the stronger euro and that has been a massive struggle recently step lisa: there has been positive signs in the fiscal spending. we are getting an acceptance of spending money that has nothing to do with the pandemic for military spending, green energy spending and this is a new shift which should be justified by the

pandemic. jonathan: president lagarde rejected calls by staff at the ecb to leave their salary improvements. she understand yet she understands it they are disappointed but the adjustment must be reasonable. tom: you wonder how they are writing in the same letter. the wage negotiations in europe must not be underestimated. jonathan: remember the line from governor bailey? he said perhaps don't ask for a big pay rise. lisa: because basically you get a pay cut. jonathan: it's uncomfortable when central banks have to talk about this stuff. the nasdaq is down about 2.5%.

from new york, this is bloomberg. ♪ ritika: keeping you up-to-date with news around the world. vladimir putin defended his faltering invasion of ukraine at the annual today celebration and says the russian military is defending what our great grandfathers fought for. president zelenskyy said the russian army is dying. the u.s. first lady jill biden it a surprise visit to ukraine when she crossed into the western part of ukraine where she met with displaced children and the wife of volodymyr zelenskyy. the timing coincided with mothers day. the u.s. government had a record tax fall this spring.

text collections since the start of the fiscal year in october are running at a record high at 43% over 2019. polls indicate the sum of ferdinand marcos will be elected as a president in the philippines. he's been helped by online propaganda. his main rival says there is concern over malfunctioning of the capital machine. this is bloomberg. ♪

>> the fed doesn't often manage to bring down inflation without

triggering at least a small recession stop i think when you have inflation and a labor market this tight, trying to bring inflation dine dez down in that context will be hard to do without a brief recession. jonathan: that's the former fed governor. that's the atlanta fed president in about 15 minutes from now. good morning, equity futures are down boeing dez by 1.9% on the s&p 500. looking ahead to cpi wednesday. cpi inflation is the most important data released this week. we expect a 0.4% reading to show underlying inflation is not slowing materially despite the mechanical drop in your on your readings. the year-over-year story, if it

wasn't last month, maybe this month the month on month reading is where the thrust of this market will be. tom: into the wednesday inflation report. speaking of the ecb, we have a focus on europe with a chart. kriti: a scary precedent when you talk about the growth story you were discussing. markets are globally selling off but the u.s. economy is somewhat insulated from that. you cannot say the same about europe. there is an index of credit default swaps otherwise known as insurance. those swaps are topping 100 basis points. the last time it has done that were cross that threshold was march of 2020. it was the start of 2016 coming off that tightening and growth years in china and going back to 2013 with the sovereign debt crisis in europe. this is not a nice spot and is

not necessarily inflation step it comes down to the war in ukraine. tom: that's front and center on food prices as well step the resignation of the leader of sri lanka and these are the dynamics we face in early may. all of europe is confronting mate nine with perspective. you and i were talking about the wonderful anne-marie slaughter and the needs to get to some form of eastern european integration. how do we get from a non-integrated europe to an integrated europe in this new europe? >> this is a conversation that needs to happen and it's excellent. it's going to be difficult to do that in the current moment.

even getting to some sort of idea of how their will be a negotiated sentiment, the unity across the west and the drive-by finland and sweden potentially to move into nato means the unintended consequence of all of this could be a hardening of a line between east and the west that will stay with us for a lot longer than this war. that would do none of us any favors as we look ahead. tom: the general talked about our holiday from history. we have gotten used to the end of the holiday for those what you watching from london? >> there are multiple things we are watching. we are watching the fight on the ground as moved to the east. are we seeing a serious

conversation on how to bring this war to a close? most people are pessimistic how it's running. they say could run for several yields. what will the stated goal be? that will require some indication that russia can come to the table but some indication that ukraine will come to the table and this is affecting the western partners backing ukraine. they are not signaling any intent that looks like it makes that kind of negotiation possible. it feels a long way off. at the same time, we are seeing the push for sanctions moving forward with more sanctions from the u.s. and the u.k. on professional services and export controls but we are not seeing the energy sanctions.

europe is struggling with that. i think the numbers are 44 billion euros worth of imports into the eu of energy since the war began. a lot of mixed messages coming out of the west despite the tough rhetoric. lisa: as russia holds the military parade and we are from vladimir putin, can we look at how much europe has solidified its union and its power? is there a substantial reshipped back to western power or has that been overstated? >> i don't think it has been overstated. the u.s. has doubled down and its commitment to nato and europe has come in very strong. sweden and finland are looking to join europe but there is a question of effectiveness. russia has not had the success that it wants but the war

continues. in a couple of weeks, we will hit the three month mark. the cost globally is extremely high. the highest prices paid by ukrainians but there needs to be some realistic and pragmatic solutions that can bring the war and the associated cost to a close sooner rather than later and that feels very remote car -- in part because the west is so strong and we have mixed messages coming out stop the british defense secretary is talking about containment and we have a conversation out of the u.s. about weakening russia. it's not yet clear exactly what the aims are of the west end of nato. they need to be articulated in a way that's clear and aligns and with some notion of the pain the

ukrainians are facing in the needs to be some sort of message about what ukraine will have to be willing to consider in order to get to a peace agreement and that's important. in the medium and long-term, it's letting the people in russia understand that they have a future, as part of the european security arrangement, that this is an effort to put putin back in place is essential but it's not a war on the people in russia. jonathan: we are fortunate to catch up with you. crude this morning is negative 2.8%. we are down to 106 .65. coming up, bloomberg's michael mckee sitting down with the atlanta fed president and that conversation is coming up shortly with the s&p down by

1.7%, just off session lows. yields are higher by five basis points on the 10 year. from new york city on tv and radio, this is bloomberg. ♪

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>> the whole point of what the fed is trying to do is to be inflation. >> what they are trying to say is they are on the case of inflation. >> we expect inflation to escalate3. >> we look around the world and everybody waited too long. >> we're looking at the next few months as higher interest rates. >> this is bloomberg surveillance. tom: good morning, an