p.m. 4 : so ♪ ♪ >> there's certainly a lot of moving pieces in the economic outlook. >> we've seen a lot of froth come out of the market. >> the market is trying to find a level. >> these numbers obviously are too hot. >> the federal reserve has not been forceful enough in stating for the just what their goal is, 2% inflation but the means to achieve that goal. announcer: this is bloomberg surveillance with tom keene, jonathan ferro and leasta abramowicz.

jon: good morning. this is bloomberg live t.k. is taking the day off to watch the darby. carnage out there, lisa. it gets worse. lisa: this is a growth concern more than a rate concern. and you're seeing this because as you get carnage, a bit of a haven trade. jon: the yield is down. i was talking about the carnage in the past 24 hours. netflix year to date down 72% and facebook down 34% and tesla down 30% and microsoft down 23% and google down 22%. apple down by 18% and in the premark for some names it gets worse not better.

lisa: i saw on twitter, the size and scope, most ever since 2008. is it 2008? it hasn't felt quite like that but perhaps 2000. 2002. when you get certain names that fall out of bed completely and there's a repricing within specific parts of the mark. we've not seen a wholesale financial market collapse as of yet. the question is are the risks building slowly as you get a max exodus. jon: the theme to build on is the wealth destruction we're seeing through those names through the equity mark and something you've been covering the last couple days, through crypto, too. lisa: the fact of the matter those invested in crypto currency are mom and pop and retailers and have been putting the money in the market at the bottom of the pandemic and feeling the pain. kailey: more than $6 million has been wiped out. if you bought into the nasdaq at any point in 2021 you've lost

money and at some point for the american consumer that's figo matter. jon: put it together and the nature of the move and the market asset lisa, it has the traits after growth scare and changed somewhat from a inflation scare to a rate scare and the bond market is speaking. kailey: that's the takeaway, we've reached the pivot point people have baked in a fed tightening cycle that will be robust and getting to the other side testify and saying what's next? what's going to save this market at a time the global economy is slowing and frankly these price pressures are not going to abate whether oil prices or the china lockdown. jon: we're negative 3% on the s&p and the nasdaq 100 is down again by more than 1%. negative 1.1%. the euro is breaking down and we'll talk about that later. the currency negative .8% and the euro-dollar holding on to 1.0430. and we went down 10 basis points

on a 10-year 281. kailey: we were at 320 and people saying could we get to 4% in the 10 year yield in the near term and we've gone down and people are saying we saw peak yields and this is very much as you are saying as we've been talking about all week a growth scare coming to the floor and rate scare moving to the back. 8:30 a.m. we get the latest on u.s. economic data and the p.p.i. producer price inflation and how much does that surprise to the upside after yesterday's c.p.i. the initial jobless claims we get at 8:30 and want to see what the trend is given the fact we've seen the u.s. unemployment rate fall to the lowest levels going back in history and certainly prepandemic when people say that unemployment rate has to rise in order to reduce the froth in the labor market. do we see signs of that and see it moving in the other direction and does it give us a sense the fred is -- fed is that much further behind the curb and then we get the usda agriculture

supply and demand report and normally we don't talk about this but it is the most important we'll talk about because food price inflation has risen to a record high and we want to see how much shortage there is in corn and soybeans and what could be the physical yourself that result and we -- fissure and we get a treasury auction of notes and how much do we see an ongoing flight to safety in debt that's been left for dead the past few months given the fact people are worried about longer term growth and worried about the consequences of a downturn in the near term and reversion to an even lower trend of inflation and growth. jon: yields down again. kailey, 285 the amount of two year last week and back to 257 down seven basis points, the 10 year the high of the week 320 and back to 282, down nine basis points and these moves are more than notable. kailey: they've been remarkable

and what driven them as well and seeing break evens coming in substantially so inflation expectations are coming lower and reinforce this is is no longer about the fed reigning in inflation but what happens as a result of that. to get inflation under control do you ultimately have to cause a u.s. recession and what a flattening yield curve is signaling to some extent. jon: 210, 26 basis points on the day. mark howard joins us from citi market asset at bnp paribas, people have lost a lot of money and confidence is battered. what do you tell those people today? mark: just like you did, jon than, it's been brutal and likely to remain brutal for a while when you look at the cross market activity as of late and the migration of these worries from the rate market, the currency market into the equity market back to the rate market and now creeping into credit and as lisa knows all so well, when

you start to see it give up in the credit market is when you worry about the real economy and add to that what we got yesterday which was a broadening of the inflation concern out of the producer sector into the service sector, it means that the consumer is going to feel this longer as the year plays out and the important narrative is it the fed isn't going to save the day the consumer has to and looks like the consumer is not going to be as robust as many hoped for so i tell people you've got to steel up for rough ones ahead. kailey: this market is moving incredibly quickly and people said speed matters. at what point does the pace start to scare you and worry people about some sort of financial market breakdown? mark: it worries when you see financial intermediaries have measurable problems and we haven't seen it as yet but like

kailey was saying we're watching the crypto space carefully because we don't think the crypto winter is like the last couple winters. there's more players in the market and more sophisticated players in the market and sure, many of the people hurt have been smaller mom and pops but there are more sophisticated players in there today than there were 2-4 years ago and can move markets aggressively and not just in crypto but in their hedges against crypto and the price action we've seen recently in equities and rates. don't just look at the currency markets when you think what people are doing in crypto, but you have to look at the rates market and some of the safe haven trades may be offset hedging from crypto. leigh-ann: crypto stories are somewhat out of the mainstream of the financial markets, their own asset class. at this moment we're seeing $200 billion wiped off the crypto currency market according to some estimates.

but a columnist rates another question and says it's a bigger concern for the broader financial markets because it raises an issue of what fissures happen when you have money market funds trying to sell treasuries as liquidity that lost so much value and fail to come up with the same amount they've promised their investors. are you starting to see concerns on that level on some sort of systemic level? mark: we've not but that is something to flag to monitor and we've not seen it specifically in our flows or what we look at in the internals but yes, there are concerns about market structure within treasuries, for example that's been flagged by regulators and others. but there's a lot of focus on that. i think i worry a also bit, slightly differently which is the seepage of the worse in the block chain architecture and

pricing of the platforms and forms into the ecosystem in a way we haven't seen before. in a year or two or three years ago. because they're one of the biggest investors in this rapid growth space. there are other sectors even biotech which has taken a pounding and the broader growth sector which has been hiring a lot of people not just the pell tons of -- pelotons of the world but a whole host of them and employers will start to reverse and we're seeing it and that will affect the real economy in ways later this year. lisa: the record loss is remarkable. talking about pain through asset classes what would you be looking for as a signal for a

meaningful bottom or entry point? mark: three more rate hikes from the feds. how about starting q.t., one of jonathan's favorite narratives going back a couple months ago and we haven't kicked in on that. we want to see the removal of accommodation and there will be dead cat bounces and relief rallies but that's not going to give me solace. we need to see the fed get serious about withdrawing accommodation and we've seen triple c's gap up, with a we call decompression within the credit space and we need to see more of that, not just in high yield but the investment grade market and that to me will be a sign you've gotten closer to a turn but we haven't gone very far there yet. jon: it's starting. mark howard of bnp paribas. consensus, 350 the next meeting

and 50 after that. wells fargo just published in order to tamp down inflation we believe the fed will raise rates at a aggressive pace and 50 in june and 50 in july and 50 again in september. kailey: honestly yesterday's c.p.i. print gave nothing anything to feel comfortable about because we did not see the degree of deceleration many hoped for. jon: things are extremely uncomfortable. futures down .6%. with lisa ablack wits and t.k. with us tomorrow. from new york this is bloomberg. . laura: with first word news, i'm laura wright. crypto currency continue with the declines and the collapse of the stable coin triggered a flight from many digital tokens and bit coin fell below $26,000 before rebounding and backers of tara u.s.d. are trying to shore up the token. the british economy contracted

in march, gross domestic product fell .1% in february and the cost of living forced consumers to cut back their spending and throwing doubt on the bank of england's ability to keep raising interest rates and putting pressure on the prime minister boris johnson's government to respond. policymakers at the federal reserve say pressure after a more than hostile inflation report. so far officials are sitting with their strategy to raise interest rates by half a percentage point at each of their next two meetings. said the fed president, finance at the half point moves are a bench mark for now. senate democrats were blocked in an attempt to enshrine abortion rights in federal law. all republicans and one democrat, joe man chonn of west virginia kept the bill from reaching the floor. chuck schumer wanted to put republicans on record just as

the supreme court is poised to overturn the landmark roe vs. wade decision. global news 24 hours a day and a bloomberg quick take powered by more than 2700 journalists and analysts in more than 120 countries. i'm laura wright. this is bloomberg.

president biden: right now america is fighting on two fronts, at home, inflation and rising prices, abroad is helping ukrainians defend their democracy and feeding those left hungry around the world because russian atrocities exist. putin's war has cut off critical sources of food. jon: the president of the united states speaking a few times already on inflation. from new york city, good morning. futures negative on the s&p and down 3/4 of 1% on the nasdaq and yields were lowered by nine basis points, 28245 and some reflecting a growth scare is gripping the market with commodities lower, crude 1 .04 and negative 1.62%. the president in a statement yesterday mentioned the fed.

these were the words that acknowledged the federal reserve and an and but and i agree with chairman powell the number one threat is inflation. i'm confident the fed will do its job with that in mind. what did you make of that? kailey: he's giving the go ahead to tighten things as much as possible but shifting the blame and is a punt to basically say it's their job to rein in inflation and will have the spot light to them and look to them for a reason it's not going down if it doesn't. jon: does this feel like the blake tour. >> blame the fed and geopolitical solutions and the lockdown but won't be a good look in terms of how we got here regarding the policies and there's a big debate how much the stimulus checks added to this and it seems like they're trying to get ahead of it and addressing it head on and doing studies of it.

jon: assess that conversation with maria and jeff. what is the plan? we talked a lot about it the last couple days, lay it out for us. jeff: on inflation you're right to note the president is looking to the fed a lot and serves as a sort of it's somebody else's job line. a scattered shot planned aside from that. they'll talk about a bill that would increase taxes in the way the democrats have talked about and would be a much longer term issue obviously as it relates to inflation. jack: they'll talk about meat processing companies and gas prices and other things that they can do here or there. but the legislative outlook is very limited on what the president can do and so you're going to continue to hear him talk about a scatter shot approach on his own end but very

frequently looking to the federal to really hit the crux of the inflation issue. lisa: we talk about president biden and his view on inflation and how these portraying this, is it really just him and how much dissent is there within the administration about how the president should be approaching this both in rhetoric as well as in action? jack: in actions, there's not enough dissent -- there's not that much dissent because their options are very limited. there is a push now and then from democratic lawmakers who want a gas rebate. there's the discussion about a gas tax holiday. again, they're very limited there because they can't just snap their fingers and do something without republican support. in terms of rhetoric the president has talked about trying to get out on the campaign trail more. naturally he'll do that as we get closer to the midterms but there's a bit of a sense among democrats broadly their hands are tied to a very significant

extent because they're waiting to see exactly what happens in ukraine and hoping they'll have more of a global economic reopening and move past the pandemic but there is an understanding that a significant amount of this is out of the president's hands in the short term. lisa: on that subject on the war in ukraine and resulting embargo on russian fossil fuels the u.s. put in place. the headline out of the i.e.a. today russian revenues are up 50% despite that because there are buyers out there and europe hasn't put an embargo in place yet. how much is the focus on energy at the g-7 meeting where you are in germany today? maria: the g-7 meeting that was supposed to start in weissenhaus in two hours time. when you look at gas, forget about it. it's not going to feature majorly in the discussion. when you look at the oil embargo, at this point it's

almost an embarrassment for the european union. there was a g-7 communique that came out on sunday and the europeans are working on their plan they announced a week ago and we don't have a deal on it. the other big focus will be that relationship with ukraine and i should note that demitra, the ukrainian foreign minister will be here participating in the g-7 meeting and moldova prime minister will attend the meeting and a lot of it will focus on the financial needs for ukraine and the country need on a monthly basis hard cash $5 billion to $7 billion to payic basic expenses and then it will be about nato and the e.u. nato is not going to happen for them but how about the european union? jon: if you're ever going football broadcast correspondent in life be the european correspondent, the european tour continues.

lisa: are you enjoying your time on the beach there? maria: i would say yes but the fact the weather here changes by the hour. the food in germany is a little bit hmm-mm. they're all germans and hate me right now. my cameraman is not happy about this at all. jon: take her out of spain but can't take the spain out of her. that's the story, the food is -- anyway, having a blast. he wrote to me this morning and talked to me about the refining issues. this is really important stuff now. a lot of people waking up and seeing the price of gas and diesel, looking at the s.p.i. release, but lisa, you have to

convert the crude into something and to do that it's about the refiners and he's concerned about refining capacity and concern about prices and availability. lisa: he was talking about the i.e.a. report and never heard language they used like the shortage of refined goods and how much they're divorcing themselves from the underlying price of oil and how much will that be the driver particularly because that's what consumers feel and we don't feel the spot market. jon: in a massive way, lisa nailed it. down 3/4 of 1% on the s&p, yield to lower nine basis points on a 10-year 2.8299. the volatility it's fair to say continues. heard on radio and seen on tv this is bloomberg surveillance.

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jon: live from new york city, good morning on tv and radio we pull back, the s&p down half of 1% and the nasdaq down .8% and the s&p down 17 percentage points and the nasdaq 100 down

27. it's been that bad beneath the surface and the even bigger losers which used to have a monster cap and now less so. in the bond market things are changing up and we need to talk about it. it looks like a growth scare, down another nine basis points on a 2 .8299 and the high this week is 320 and reached that level and came all the way back. on a two year the high last year 2.85 and come back to another five basis points to 2.5839 and are we questioning how far the fed can take this. in foreign exchange it used to be in f.x. and a d.o.j. that would do nothing and dollar yen on the move. 1.2875 and down .9%. and this is more representative of the class risk aversion move and starting to build in another way compared to where we may be.

lisa: we're getting a growth scare and how is shakes out remains to be seen and you're seeing it in the traditional currencies and how long can this last? is this a breather or something more substantial? what you're seeing is treasury yields going in. are we seeing buyers start to come in from japan or is this a fluke, people pushing out their shorts to get ahead of whatever comes next. jon: the dollar index the strongest since 2002. the euro is in a lose-lose position at the moment and euro-dollar 1.0433 and there's a meeting of the e.c.b. june 9 and is a tough spot for the e.c.b. to be in. they hike and people talk about the recession and they don't hike, they talk about inflation getting out of control and the euro headed further south. seems to me if they don't hike it's europe euro negative and if they hike it's euro negative and is the consensus on the street and why people don't want to buy it. lisa: i was going to say exactly

that. there was a story on bloomberg the consensus is to get to zero and beyond and positive base rates in europe by the end of the year and should be a euro positive if you believe in the mechanisms of strengthening the economy. all of this, are we there yet is basically the sentiment? are we at the end of capitulation or the beginning of capitulation that will lead to at least some washout to give stability. and a partner and long time adviser to the likes of the federal reserve, the i.m.f., the world bank. joe ann, you're looking at this scenario, are we there yet in terms of capitulation. on joann: the market is on edge and there's real risk that has people conscious and started with rising interest rates in november and now it's shifted to more concern about real economic

activity risk and the data out of the united kingdom with the declining g.d.p. has people concerned we so see a global economic slowdown and valuations have come in quite a light and people will look for opportunities to be repositioned for a longer term appreciation but may be rocky for a while but the valuations have gotten very attractive. jon: here's the good news, i'm told you could hear that and the bad news, i couldn't. hard to respond in an interview when i can't hear joannp. we'll come back to you but at least the audience heard the answer to lisa's question, so i'm told. lisa: you can write in and tell us the most important points. jon: lisa, as we reset, we did it 30 minutes ago, we're talking about real wealth destruction

now and if you go back over the last couple years as people stood in the green in the money but this is feeling really bad right now. you'll look at your statements and see the losses in the equity market and losses in crypto, and you'll look at your bills. the utilities. just to go through the numbers in c.p.i., the utilities were up 30.7% from a year ago the most since 2008, shelter costs month on month for a third straight month of 0.5%, the most since 2005. lisa, these are real issues and when people start talking about a cost of living crisis it's not a stretch and not being too dramatic and what it feels like for a lot of people. lisa: right. you're seeing it borne out in equity markets in specific pockets. you talk about the rerating in risk. jonathan mcgallum talked about valuations and what's expensive and what's cheap and basically what's been expensive is still

somewhat expensive in terms of big stocks but you're seeing in the tech space some carnage. it's shocking people aren't swooping in and buying the bee theme otts that people thought were a safe trade a month ago. at what point does it become good again? jon: wages down for a 13th straight month in april. that's a problem for this white house. joanne feeney. i'm told you can hear us and i might be able to hear so you let's take a shot at this. the wealth destruction, the timing of financial conditions, the markets are always trying to anticipate things and sometimes they're wrong and sometimes they're right. when do you expect the damage done in the market to translate to damage in the economic data? # joanne: it's like all data is bad data these days, whether it's a good sign like inflation slowing down or whether it's a good sign like imports being very high which is a strong signal of consumer demand but the market is simply on edge and

they are clearly running to safety as we're seeing in some of the stock moves you described. but investors i'm finding are taking a different view depending on how they're positioned. we're hosting our annual meeting in hoboken and we have over a hundred of our adviser partners here, talking to them at the reception, maybe alcohol helped but aren't as worried as i expected them to be, maybe because some of our leading strategies for them are income oriented, high dividends and stable companies with really strong balance sheets and makes them comfortable and able to ride out the volatility in the market and won't be true for all investors and they'll have to wait longer i think. lisa: talking about the specific companies, i notice amazon is on your list that you sent in. that's a stock down 37% year to date and trading at levels we last saw, i believe in april of 2020, like the pandemic didn't

happen. what do you make of the price action and are investors getting something wrong? joanne: that one is over done and many of them. people responded badly to the slowdown and clearly would be the case after the pandemic and pretty much a lot of it is behind us in terms of spending patterns but what people are overlooking with amazon is the cloud business. amsson services is the biggest profit generator for many years to come with over 35% growth for many years to come. that's one where we didn't buy it until quite recently because valuation was too high and think that will be a place investors turn to to ride out perhaps if we get a stronger slowdown in growth or perhaps a recession, the companies exposed to cloud will see their demand grow multiple years and investors will want to be there to build in some recovery particularly over the long term in their portfolios.

kailey: what other area the valuations come in enough it's safe to buy at this point? joanne, amazon is like a tech or consumer discretionary but companies like broad com and stallworth and cloud computing and software as well and companies like qualcomm provide chips for smart phones but are providing chips to automobiles and industrials, connectivity is spreading, another long term trend that will grow over time and sell the chips and the intellectual report that make very high -- properties that make very high margins. a good place to go if we end up in a cyclical recession and you want to own companies with secular growth. jon: the good news is everyone can hear you, joanne feeney. mohammed on twitter moments ago and we'll catch up with him on bloomberg tv and what he had to

say, growth concerns are compounding the unsettling effects of inflation and liquidity worries and the continued large wealth is triggering market functioning worse as we keep an eye on volatile gapping bond market. that's been the story the last few months, hasn't it? kailey: now we ask to where the fed put. and it was asked yesterday and answered the experts are concerned about financial market conditions and watching that as they all are. at what point do they care enough to back away from some of the rate hiking plans before it even starts? if we price in the ramifications, do they come in and make good on them or back away? jon: the fed put is not dead but in retirement and what brings them out? kailey: what happens is it you see further deterioration and wealth destruction at the same time wealth is not coming down at a quick enough pace because maybe the peak is in but it's about the downward slope and

eventual plateau and how long it takes to get there. inflation is still at a five handle the end of the year, will the fed be comfortable tapping the brake pedal once again or does it feel like it needs to accelerate the tightening of policy and how do you balance those two things happening simultaneously. jon: how much inflation they'll tolerate at year end if growth is decelerating the way some in the market anticipate. the other issue as well, the point been made at t.d., we'll see damage not based on what they've done because the fed hasn't done much and q.t. hasn't started but about whether the markets anticipate and financial conditions tightened with mortgage rates through 5% and as preset, no one is borrowing the fed fund rate and bond sold off and mortgage prices, you've seen the cost of mortgages and we're

seeing the tightening. lisa: we're not seeing it translate in the economy yet and saw that with the inflation print yesterday and raise as conon drum and if the mechanism is markets do they need to go higher. jon: equity futures down .7%. good morning to you all, this is "bloomberg surveillance." ♪ laura: keeping you up to date with first word news, i'm laura wright. in north korea kim jong unordered the company on long down and north korea always denied it had cases and claims doubted by outside experts. the country also refused vaccines from the outside world. russia's oil revenues are up 50% this year despite trade restrictions following the invasion of ukraine.

according to the international energy agency roughly earned nearly $20 billion each month this year from combined sales of crude and products. still the i.e.a. said new sanctions could change that. the pentagon is negotiating to buy a tank busting drone that would be sent to ukraine, the california based company makes the switchblade 600 which could fly more than 24 miles and linger over a target for more than 40 minutes. the pentagon already committed to send at least 700 smaller shorter rain switchblades to ukraine. the senate added a third nominee of president biden to the federal reserve board and confirmed jefferson and the vote was 91-1 and today's democrats will confirm jerome powell for a second term. hsbc has begun a internal analysis to help robust a proposal to cut off the asian

preparations and comes from the bank's largest shareholder which wants to improve returns about 65% of hsbc's pretax profits last year came from asia. the bank argues much of that is mostly the business of western climates. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 27 countries. this is bloomberg.

♪ >> restore confidence and do your job. if you keep underpromising what is required, then i think there is a risk to your credibility down the road. jon: the bloomberg opinion columnist and senior adviser to bloomberg, william dudley. features down 1% and the nasdaq 100 a little down one one full percentage point and 2 .8335 is

the trend the last four days. lisa: growth scare, where do you find the havens and the dollar continuing to strengthen which is all tightening for the fed in ways problematic for the global economy and perhaps a bit more in the u.s. economy. jon: the cost of living crisis as well. kailey, the cost of renting at the moment. i don't want to make it too new york centric but saw the data on manhattan this morning. it gets worse and not better. kailey: it's gotten worse for three months. three months of record rent prices in manhattan and am officially priced out and moving to brooklyn because i had no other choice but speaks to a shelter inflation problem in the u.s. and when you have rents going up and mortgage rates going up as well which in a theory is a problem for people who want to buy, what do you do? jon: numbers up 6.2% from the previous records set in march, up 30% from april of 2021. lisa: this isn't a supply chain issue and want to point it out and is important because it was

a big component of the c.p.i. print yesterday and the biggest increase in rent inflation going to 2006 and biggest increase in airline prices ever and up 18% month over month for airplane tickets. how much will that be what concerns the fed because this will have a stickier feel to it. jon: the problem for the fed. a chief economist from e.y. joins us. greg, where you see inflation year end, the fed sees it something close to 4, what do you see it at? greg: i expect inflation 4% looking at a p/e gauge but likely to have a handle on core c.p.i. and both will be sticky. as you highlighted you have some categories of spending going up in prices. housing is a key component where we're seeing home price inflation feeding through to the c.p.i. index and rent and the cost of owning a home going up

and probably will move past 5% on a year over year basis and health care costs rising and the likes of food being strong and leisure and hospitality prices also rising as there is robust demand and likely due to summer. still upward pressures in terms of inflation though we may be past that significant peak in inflation. lisa: is the fed having any effect on the inflationary pressure how it jawboned markets into a tighter financial condition? greg: there are three factors that will drive inflation lower. the first is there will be cooler demand growth as we move towards the latter part of this year especially against the backdrop of this past week and help ease the supply pressures. you'll also see easing of supply itself and then the fed is pressing hard with strong guidance that will threaten monetary policy and continue to do so if there is a slowdown in economic activity.

you have rate hikessant q.t. and all factors will weigh on credit and will weigh on financial conditions which will have an effect on economic activity. i do thinking interest rate sensitive sectors will feel the hit from tighter financial conditions and higher cost of credit but that won't happen overnight and take time to see the actual cooling and spending and then the impact on inflation. lisa: given the fact what we're seeing in markets now is people pricing in a growth scare and not just the fed raising rates more than they previously expected, do you think it's premature we won't see the growth scare for longer than people are pricing in? greg: yeah, i think we have to be quite clear in terms of the global picture. we have a fragile global recovery and the likes of china suffering from a property slump as well as zero covid policy and europe which is facing a double hit from the war in ukraine and

higher energy prices likely susceptible to inflation and the u.s. is leading the pack with a fairly robust economy to date and fundamentals remain quite strong and still see people spending and we'll see a hot summer in terms of travel and seeing it in airports but there is going to be a cooling of economic activity as we move towards 2023. the talk of a recession or slowdown is not something for today but probably something that is likely to become more of a risk as we move closer to 2023 and the economy will be at stall speed and therefore more susceptible to external shocks. lisa: in theory that's a problem for airlines raising the price of tickets or the likes of disney which did really well in parks on the quarter they just reported because people are still going on vacation but at what point does that exercise discretionary spending stop being the case. you mentioned china and there are growth concerns that feed into that but also inflationary ones and supply issues. how much will that show up in

the p.p.i. data not just today but as we move forward so long as that remains the case? greg: i certainly think what's happening around the world is affecting inflationary conditions and the upside effect from the fact we have supply disruptions around the world and the zero covid prices in china is leading to new eruptions in terms of manufacturing and assembly activity which is affecting the domestic economy in china but also affecting the rest of asia and the world via the disruptions in supply chains. but in the end what really matter is how strong demand is in the u.s. for u.s. inflation dynamics. we still have an inflation backdrop that is pro cyclical and when we see a cutback in spending we cee loor inflation and seen it in used car prices and should be a key driver of inflation going forward and an easing of supply chain conditions would help ease the inflationary pressures but that's not likely to happen

overnight again but likely to be a process that will take multiple months and quarters before we start to see some easing precious yourself on that front. jon: thank you, buddy. gregory daco of e.y. parthenon. can we talk about the airlines. so pleased you brought it up. airfares up 18.16% on a monthly basis not a year over year basis but a monthly basis. lisa: it covers the gas prices and the diesel prices, that will about cover it and then some. we talk about not only the airline tickets going up but planes getting canceled. just the idea if they don't have a completely full flight then they will cancel a flight and basically push people to another one. that's happening. you're getting the idea of shortages of staff. but airline tickets seem to have no ceiling for how quickly they can raise them and capacity is still pretty much at maximum based on what they're offering in flights. jon: a built in out. can you think of another

industry where prices erupt this much and customer service is down just as much? can you think of another industry? i can't. lisa: i don't think i can, jon and speaks to pandemic related pandemics in that you do have so much pentapody manned people are willing to shell up and you have a labor supply problem and those two forces coming together simultaneously are as evident anywhere as they are in the airline space. jon: i spoke to a c.o. of an airline and spoke him about it and he says you haven't been flying with us and i didn't want to embarrass him because i have. kailey: now you are. jon: if you remember the conversation, it happened on air and can you work it out. futures down down .9%. from new york, this is bloomberg. ♪

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>> there is certain a lot of moving pieces in the outlook. >> we seen a lot of froth come out of the market. >> i think the market is trying to find a level. >> these levels are too hot. >> the federal reserve has not been forceful enough in stating not just with the goal is of 2% inflation, but the means to ac t