>> the risk right now is equity so far, the derating that happened is functional values. >> companies were extremely expected in that is how they have been. >> financial markets have a tough time discounting things likely to happen or may happen in the distant future. >> this delicate balancing act is when the fed has to balance. >> we have to wait a little bit does he with the fed is doing is the right thing. >> this is bloomberg surveillance with tom keene jonathan ferro, and lisa abramowicz. tom: good morning, everyone. jonathan ferro, lisa abramowicz, and tom keene on a friday, an exhausting week setting up for weekend reading and we will the in dallos, switzerland week. jon ferro, a better jonathan: jonathan: take this morning. jonathan:jonathan: this morning but not on the wii, seven weeks of losses. on the session up by about 1% and the question i keep hearing us repeatedly, have we seen the

capitulation? tom: no. jonathan: we'll capitulation is fed capitulation. it is a systemic event, unappointed rising. that is what is required first. tom: an important reading for the weekend, what is so important is that is linking in the economics for the market performance but even looking at the market, we cannot talk about capitulation with the vix at 28.62, we are miles away. jonathan: people are waiting for something north of 30 approaching 40. this week, people were spooked about the target numbers. because it was surprising but because the market was so surprised by them. this in terms of the reaction, to see stocks down 25% because of that, up of the back of a store we all thought we understood and also thought was increasingly well priced, i think that was a shock for some people to find out that maybe it was not. tom: the tea leaves are out there like pakistani rupee, turkish lira, and the rest, but

they are underpinning to the lack of capitulation is resilient dollar and somewhat of a quiet bond market in the new bond volatility. jonathan: the biggest story and i think it will resonate with people, we have a cost-of-living crisis around the world, growth heading in the wrong direction, inflation heading in the wrong direction, we have not experienced that in the del valle up -- in the developed world in a long time. the europeans, that is the one to watch because they are the leading edge of this. they have to hike into a weaker economy. at the next meeting for me, june 9, a lot of usher for president lagarde to find the right path forward and i'm not sure there is one. tom: i'm glad john mentioned this because i have been remiss on this today and do the week, 9% is my statistic of the week, maybe on the edge of double-digit inflation in the united kingdom. difficult german production inflation data today out of germany. we are also becoming used to it. we are rationalizing high inflation in america. lisa: 1970's continues to be the

benchmark, unnecessarily seeing a repeat but today u.k. confidence read came out lowest levels going back to the 1970's, just because of the dynamic that john and you are both talking about. how much do we see this painted a similar picture in the united states or how much is it distinction with momentum people keep talking about the distinct -- that distinguishes the u.s. from other nations? tom: since the first time since time began i'm almost on the same page with credit suisse -- with jonathan golub . dr. schwab says history at a turning point in for me, my phrase, my theme for davos is davos at the end of the holiday from history, the holiday from history is so over and this is underplayed this week because ukraine is such a grind right now. this news in international relations fulton to our markets.

jonathan: i won't be at this event. i wonder from your perspective historically, you and i have been there a lot together, it is usually completely divorced from reality. do you sense next week will be different? tom: i sense it about every seven years davos is overtaken by the new slow and why would that not be this time around? all the mumbo-jumbo is swept away by the news. jonathan: i'm looking forward to your coverage through next week. futures positive on the s&p by a little more than 1%, nasdaq up by 1.5 percent. yields higher by three basis points on the 10 year. a bit of quiet out there, it welcomes quiet, peace and quiet for now at least. futures largely boosted a little bit at least by would happen with china. tom: let's jump into it right now. the gentleman who knows the pubs are behind the mark into april and may and maybe we will look for it not to cubs baseball but maybe what our federal reserve system will do, james b yunker

was founder and president of the uncle reach search. jim, what will you -- be uncle research -- >> there's a fundamental shift going on, probably the biggest story no one talks about is this whole work from home phenomenon is something real and it is something that will last. a recent study said only a percent of the offices in manhattan are back to full-time in everybody else's either work from home or hybrid. i think it was behind target numbers too. they have an inventory build and a lot of stuff people don't want to because when you shifted your patterns of work and home, you shift your consumption basket. i do not think we are ready to knowledge that that is happening and that is keeping the economy offsides and keeping a friction in the economy and inflation higher than it would otherwise be. jonathan: what does that tell you about this week? does that highlight the struggle c-suite is having in the economy and two, does it signal a weakening of the economy because we traded on the latter and not so much on the former? jim: yeah.

we are trading on a weakening of the economy and you also have seen it and things like the bank of america survey where all of a sudden monetary tightening monetary policy and global recession have surpassed inflation as the number one tail risk for the first time in many months and everybody is now worried about of global slowdown. and i am too. but then they come to the conclusion that the fed and other central banks will have to pause or pull back on the tightening after some round of additional tightening in the june meeting and maybe july meeting. i do not see that. i see the central banks as committed to trying to rein in inflation and if you want to put it in market parlay, the fed puts is about unemployment and inflation statistics. it is not about what level of the s&p do they change at, it is what level does inflation have to come down to or maybe unemployment have to rise. i don't think people at least wall street are ready to accept

that as an answer. they think the fed will stop because they are having a lot of pain but a lot of people that have to live on a fixed income, that is the fed is focused on. lisa: translate your view into a market call where a lot of people are saying buy the dip in bonds and they see a peak in yields because of what you are seeing because they believe central bank -- saying because they believe central bank's will pause and we can move back to some sort of normal we remember. what is your view? jim: it's possible we saw the high last week at 320 on the 10-year note but i would probably bet not. what i think we are seeing now is a flight to quality. the stock market has been so volatile as of late that it is really trading, the bond and stock market are trading is one. if you can see a serious rebound in the stock market, you are right, we will have the seventh down we can a row, if we had two up weeks in a row and you did not see bonds make a run back at

320, then you have a chance of saying we have seen the high but i have a feeling that once the stock market finds its legs and a tems a traced rally, yields will go back up again. i understand the argument for 320 tenure being the high of the year and i'm just not sold on it. lisa: where do you think we really see that capitulation? can you elaborate more on the balance of buyers, of some of these bonds, and what people might not be understanding fully? jim: there has been at least in the statistics not a whole lot of capitulation erie looking at the future statistics and surveys of managers, there is nothing there that suggests we have ever gotten to an extreme short or underway position to begin with. it has been a year of real pain for fixed income managers. i suspect they are still holding out hope that the slowness in the economy will get the fed to stop and that is why they are trying to make the case for a turnaround into rally in bonds,

but i still think that capitulation is to come. whenever you have seen throughout the last 50 years, whenever you have seen yields go up as much, where total returns in the bond market including price fall this much, i always like to say the bond market does not peak in yields until something changes. so it is usually bond yields go up a lot and something big happens like a recession or like a financial crisis or a serious slowdown in the economy at a minimum and then the peak in yields. if last tuesday was the high in yield, you would say we had one of the biggest rises in yields or biggest declines in total returns and tuesday they peaked and that was the end of it? i'm not so sure that will be the case this time. jonathan: awesome to hear from you. thank you, jim bianco of bianco research. some of this has been pretty random, talked to a lot of people on fixed income. at any given day you can move 10 to 15 basis point and move the treasury markets and on any given day without much of a catalyst.

tom: i mentioned this earlier. i thought michael collins was brilliant with beauchamp. the verbal of a bond bear market is different from the verbal of a market. people are making it up in bonds, not as i go but literally hour-by-hour. jonathan: to that point, and you can speak to this, we have seen a lot of corrections over the last few decades, we have seen a few bear markets along the way. how many people can say they have experienced the bond bear market? very few can say they have worked through that. tom: back to the 1970's. you do a log chart of the total return index and take the credit level, i don't care. the answer is this is very 1978-1979. jonathan: you said it, it is very 1970's. tom: late 1970's, there is a difference. it was before k pop. .

lisa: i think there's a larger point about liquidity and the issue of the incredible swings you see in conviction and where that stability comes from. this is supposed to be the deepest market, most liquid bond market in the world. what happened to that liquidity? jonathan: mohamed has been saying that over the last few months. futures are positive by about 1% on the s&p and on the nasdaq, up about 1.5%. from new york city, this is bloomberg. ♪ ritika: keeping up-to-date with news from around the world with the first word, i'm ritika gupta. president biden arrived in south korea and underscored the importance of resolving the global semiconductor shortage. the president toured a chip factory for a model when the company plans to build in texas. the white house says texas parts mean good paying jobs and more resilience in the supply chain. more eight is on the way to ukraine and a group of seven finance meet -- finance

ministers meeting in germany to guarantee the short-term finances of its government. that is according to germany's finance minister. the u.s. senate has passed an aid package for ukraine with more than $40 billion and sent it to president biden for his signature. the administration said it was providing ukraine with another $100 million in military assistance. berlin is the third european country cut off her russian -- from russian and natural gas. finland is refusing to pay in rubles. this will probably have a limited impact on the global economy. in china, banks have taken a step aimed at boosting the ailing economy that cut the key interest rate for loans by a record amount during the primary would reduce mortgage costs and they help counter weak loan demand. another robot for boeing trying to get airlines in china to resume flying the 737 max.

china eastern airlines outlined several actions it needs to take before operating the max again. amongst them, more pilot training and modifications to the aircraft. boeing continues to work with aircrafts. -- with those airlines. global news, 24 hours a day, on air and on "bloomberg quicktake," powered by more than 2700 journalists and analysts in over 120 countries. i am ritika gupta. this is bloomberg. ♪

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bring on today with comcast business. powering possibilities™. at fidelity, your dedicated advisor will help you create a comprehensive wealth plan for your full financial picture. with the right balance of risk and reward. so you can enjoy more of...this. this is the planning effect. >> in the short-term it is inflation and in the long term we need sustainable growth for all of our economies. we have to rehabilitate our growth in a sustainable way. it is for all g7 member states or g-7 countries that keep -- countries. the key priority to fight inflation. jonathan: good to catch up from the german finance minister earlier this morning. from new york city, good morning. futures are positive on the s&p by little more than 1%.

on the nasdaq up by 1.4%. tom: very good. the vix is under 30, 20 .70, some quiet we see in the market for this historic week. right now, in an important conversation, we will go to jonathan ferro and a moment but i want to slip in one question for the united kingdom's secretary of state for business, energy, and industrial strategy, me, john, and the rest of the nation enjoying 9% inflation. i next guest is with us celebrating liverpool's dominance and more than any staying -- anything understands the gridlock of british politics. other a decade of go of gridlock nation. what is the level of gridlock right now, minister, in terms of dealing with 9% inflation? >> it is a huge challenge. it is a global challenge. we had a pandemic, we had lockdowns across the world, we had a huge surge in demand when

the lockdowns were eased, and now we have this unprecedented situation in ukraine, first time in 70 years that we are seeing an actual war in europe. so these are unprecedented times in the british government is very much decided to help consumers help people in the u.k.. we had a good announcement from the chancellor in february about the kind of help he was willing to give andy and the prime minister said they are looking to help people more. jonathan: let's talk about that and whether the consumer, people of the u.k. are feeling that. the petrol retailers were talked recently about the concern that the fuel was not being passed on in a meaningful way. what is the response? >> we are looking that still. i think it is very wrong of petrol, the four courts not to pass on the reduction.

i think we are seeing there is some behavior change and there is a lot more they can do and axley help out. jonathan: yet you are against the windfall tax. why is that? >> i have always been against the tax, i think they're arbitrary and discourage investments. and when you look at the companies that invest in the north sea, it's a very cyclical business. when they make the money, they tend to make a lot of money and when they lose they make big losses. they are not supported when they do make those losses. jonathan: you are worried and the u.k. it was star investment but gp was asked whether he would change any spending plans because of a tax and he said " there are none that we would not do." isn't that good news? he want changes spending plans. he is telling you. >> you can speak to bernard directly yourself, i'm not her what he was referring to but there is no doubt other players in the industry say any kind of

windfall tax would deter future investment. that is pretty obvious. they need fiscal certainty. they do not want rabbits out of the hat so to speak. jonathan: i just wanted to jump in with something the chancellor said too. the chancellor said what i want to see is significant investment into the u.k. economy to support jobs. to support energy security and i want to see that soon rate if that does not happen, no options are off the table. the prudent response from any chancellor is not to take things off of the table but i want your view on that. i want some goals, i want to understand what investments you want to see from these players and over what timeframe because if we are going to wait for these guys, they have a 10 year time for the spending plans, we will be out a decade and say ok, maybe we should do a windfall tax right now. what is the timeframe and how much spending do you want to see over what time? >> i'm not going to quantify it but we want to see real spending. there is evidence they are doing it. if you look at our program from

carbon capture, blue hydrogen production, shell and bp are directly involved in that in northeast of our country. of england. they can see that there's a huge opportunity in terms of green investment, and that is exactly what the kind of investment the chancellor wants to see. as you say, the chancellor is right to say all options are on the table. every chancellor i've known since i've been an mp has always said that. there is no way he will take options off of the table ahead of the budget. tom: doctor, you enjoy a phd from an economic history from the university of cambridge. you know the history of this and the simple history is windfall profit taxes do not work, period, it is well documented. but as johnny alludes to, there is a generational trust that has been broken between corporate elites and the people. how do you guarantee, given the lack of trust, a process here

that helps the people of the united kingdom? >> that is why the chancellor was clear that they have to invest in the u.k.. we want to see their ambitions realized. tom: do you need it in writing? is it so urgent and needs to be codified, to be in writing? >> i think the commitments are already there. i'm not sure we need any sort of legal documents or because i legal documents. what they understand is that these new technologies, the decarbonization, all that stuff, needs investments and it creates jobs and he will also know that we are very interested, focused on leveling up. that is giving opportunity to areas of our country in the u.k. which, in the last few decades, have been under invested. so bp and shell and others know that our commitment to leveling up and commitments also to

decarbonization means the business investment needs to happen and they are aware. they also know as the chancellor side, if they do not step up to that plate, they could well be subject to windfall taxes. i think that's a reasonable conversation. jonathan: a final question on the final point, to understand what people are going through now, they listen to this conversation and you have a company, bp, engaged in buybacks and i'm not here to say that is the wrong thing. they refer to themselves as a catchment scene when all prices are climbing -- cash machine when all prices are climbing. we have the government saying we don't want to do that. you are saying that. you understand how deeply uncountable that might be for people who cannot pay their energy bills this month? >> it is really difficult, but the investment helps people. people have pension plans, they want to have jobs, they want to have energy security. so i come as an energy minister saying please invest in our energies by but i will give you

a windfall tax. that does not make sense. in order to protect energy supply, we need investments and in order to have investments, we need a stable fiscal situation. we cannot simply threaten people or have arbitrary windfall taxes. having said that, the chancellor is responsible for the budget and not taking any options off the table. jonathan: and he would not be the first chancellor to do it because we can go back to the conservative chancellor of 1991 who did something similar. thank you. thank you sir. kwasi kwarteng of the u.k., the secretary of energy and business. what a difficult moment for a lot of people. tom: it is not only a conversation and the united kingdom, i think you will get a rinse and repeat in america in months. jonathan: live from new york city for our audience worldwide on tv and radio, this is bloomberg. ♪

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jonathan: live from new york city this 20, good morning on tv and radio for our audience worldwide, we have a little balance, a rally, whatever you want to call it on the s&p, a buy one will -- up by more than

1%. yields unchanged now on a 10 year, 283's .70 -- 283 point 70. equities on partially for many of you done on the week as well. for a seventh straight week. it has been pretty ugly out there. tom: almost as ugly as in liverpool. john riley joining us, chief economic advisor but on a friday before the close of football, lisa and i opened this up for full discussion with a gentleman from north end and young pharaoh as well. jon ferro, the only player i remember from my youth was gerard. jonathan: you love him don't you? tom: i don't understand why i loved him but i loved him and i want you to talk about sunday and for america why steve gerard really matters. lisa: there's a great subplot on sunday. jonathan: sunday you have manchester city on top of the league, manchester city wins and it is all over. manchester city playing aston

villa and aston villa a coach by cbg, the former captain of liverpool. that is a nice little subplot going into sunday's games. >> and add to the fight to of the key players for aston villa are former livable players in denny innings and philip continuo, who are arrested against burnley yesterday and you've got a potential chance for those two, if they hold city, they will deserve winners metals from liverpool. jonathan: that's a big game, not just for manchester city buffer some of those people at aston villa as well. in things up sunday, until eastern time, 11 eastern, all of the games at once, the final games of the year played simultaneously. it is great to see. jonathan: is there a -- tom: is there a soccer bar in davos? jonathan: i'm sure you'll find one. tom: with all the clutter. lisa: yeah, there's one.

[laughter] i'm good. i wanted to talk about john's writing in the atlanta fed. fine, but i want to talk about the fed. bear with me, let me take a quick move over there and then you guys can talk about football and i will let you go to the pub together. i'm curious though, especially after being in the atlanta fed concept recently there is a believe in markets of the fed will recognize the slowdown we are seeing in some of the data and respond by pausing and not raising rates as much. this seems to be opposite the rhetoric from fed officials. what was the scuttlebutt when people were talking to you, when they were not on camera and on the podium? what did they say when it came to their frustration with markets and belief in a fed push? >> what is remarkable is they do not pay -- fed officials do not pay anywhere near as much attention to the markets as we

do on a day-to-day, sadly minute to minute, basis. you have to think, where were the markets in the fourth quarter of last year. before the fed had made its pivot, they were seeing little interest rate action from the fed this year and they overshot fed guidance this year to get to the point where it was almost half a point every meeting and now markets are pulling back a bit. i think the fed is looking -- they have laid out the game plan. we want to get rate hikes underneath our belt and we are going to get 50 basis points in june, 50 basis points in july. that picture to the september meeting and that is the key meeting for short-term interest rates, all about inflation persistence at that point. and if inflation has ebbed sufficiently, they will look for any opportunity to dial back i think on the rate hikes and slow

to quarter plant rate hikes. but the experience people have had with the fed and the last 20 years or so will not particularly help guide the fed because it is different because we have late 1970's and early 80's style inflation -- early 1980's style inflation. we have not had that in the last 40 years. so market responses to the fed, equity market responses to the fed are not -- we are not going to see the same kind of sensitivity of the fed to market moves as we have had when inflation was not a problem. lisa: it actually is probably appropriate you guys started the conversation talking about football and people would rather talk about football than this because it is basically the same story for a number of weeks now and basically the fed is going to do it, saying it is on autopilot and let's reconvene in september and see what happens. it is a quiet day for data. going forward, what will change this narrative? is there a data point or series of them that you are looking for to really guide into september?

john: it is the persistence of inflation, lisa. the fed -- all of my interactions all of my reading, the fed is serious about getting inflation back towards the 2% target. the price is, they do not know what it will take to get there. there is something of an odd narrative coming from fed officials when they talk about 2.5% being neutral because that is the long run neutral rate when inflation is back at 2% target rate. right now, inflation is much higher. underlying inflation is somewhere around 4% probably. we need to get back to neutral and it will have to get a little crisper -- little restrictive. neutral once inflation is defeated and that is putting the cart before the horse when defeating inflation but they are insistent they will get moved towards the 2% target.

so the opportunity to dial back will depend how much inflation has fallen over the summer and i think the chances are that inflation does not add as much as the fed -- ebb as much as the fed is hoping. the broad-based nature of the price increases and we calculate in the last cpi report for example, there was 63% of the items within cpi rising to 6% or faster rate over the last year. so that is very broad-based persistence. that is the first thing. the second is inflation expectations by the public and they are holding in longer-term expectations by their fingernails and yesterday we had the philadelphia fed reporting tenure inflation expectations by businesses had gone up from 3% to 3.5%. people see food increases and sadly this conflict in ukraine has terrible humanitarian

dimensions but the main economic time engine for the u.s., may well be higher if you -- u.s. may well be higher because of the impact on food and fertilizers. that is repeat shopping every week you see prices rise. tom: i want to go back to david, john writing on ages and ages ago. the bottom line is may for whatever reason you are -- your worry back then has happened. we are so far from any constructed taylor rule right now, it is unthinkable. we are hanging onto it, inflation expectations by our fingernails. what do institutional leaders do took well the fear of higher inflation expectations? what is the prescription to keep us hanging on by our fingernails? john: i think what we really need is a new monetary policy framework strategy. i think one area --

tom: targeting? you will go news the -- go new zealand on me? john: the fed had a 2% inflation target. it was missing gauged by the low-end by a few tenths of a percentage point so they adopted a strategy to raise inflation. and raise it above 2% by a marcher in amount by some time. and kit -- margin amount by some time. and careful what you wish for, we have it above 2% for a prolonged period of time and what is the strategy? they need to really reassure the public in various ways, not just in fed terms, that they are serious in getting inflation down because it terms out inflation is not the stimulus to economic activity that the fed helped, at least modern inflation. it is hard to hold a 2% but the public eight inflation. jonathan and i have talked about this a lot about what our mothers think about us and neither of our mothers think inflation is good for them when

they see what is happening in the utility bills. tom: talk about that right now. you and ryding are living this in real time. jonathan: the family chat was lighting up with petrol prices going up. when mom and eyes -- what moms are experiencing, for those listening in, i will pay it, and i'm sure john will to end things are getting tougher people. what we saw this week from retailers was a shift in where they are spending, i'm not sure if we saw a drop off in how much they're spending though because when i hear from the airlines, the airlines are talking about how robust things are, how resilient the consumer is, price tolerances still there. what is your read on that? john: i think that is right. companies are having difficulty managing an inflationary environment, an environment where there are severe labor shortages. we need more workers and this is a weekend fortunately and across new york city where we will see

those future workers appear as you see all the graduates on the street and that is great and hopeful for the future but right now we are in an environment of labor market constraints and those constraints are causing companies difficulty in managing their businesses. so i think the story of the week was more of a margin story than a consumer spending story. april retail sales were fairly sprightly numbers. april industrial production looked quite strong. even if housing starts were flat on the first quarter and that is the most interesting sector of the economy, i think all these fears that this is about demand shortages are misplaced. there is tremendous access demand, almost two job openings per worker. that is good news for those graduating this weekend, but if we take demand out of the economy, we are taking excess

demand out. my fears of recession in the short run are very low. the problem is longer-term with these inflation expectations become embedded. jonathan: 15 seconds on the clock and finish were restarted. results sunday, production? john: liverpool win and aston villa holds to a draw with drupal still on. jonathan: there we go. john ryding, thank you. features positive 1% from new york city, this is bloomberg. ♪ ritika: keeping you up-to-date with news from around the world with your first word, i'm ritika gupta. president biden is in south korea where his immediate focus was on the semiconductor shortage that has dragged on the global economy. the president toward a factory of some of the biggest chipper doctors in the world. bloomberg has learned president

biden is considering a meeting with saudi arabia's mohammad bin salman . the president avoided contact with the crown mints -- crown prince over the murder of jamaal khashoggi. according to bloomberg economics, china's economy will grow to percent this year doing part two coronavirus lockdowns in the u.s. economy is likely to grow 2.8%. china's goal of around 5.5% this year was the lowest ever set. the largest maker of agricultural machinery reported quarterly sales that were below estimates. the company says higher costs had any impact on farmers with related to the invasion of ukraine helped elevate prices of food and feedstock leading farmers to put off investments in machinery. shares are plummeting in premarket trade and the discount retailer cut its outlook as estimates were missed following a similar move i calls, target, and others. global news, 24 hours a day, on air and on "bloomberg quicktake," powered by more than

2700 journalists and analysts in over 120 countries. i am ritika gupta. this is bloomberg. ♪

>> this delicate balancing act is what the fed has to navigate and all central bankers have to navigate and everyone is afraid they will get it wrong. chances are they will get it wrong. tom: i global chief executive officer, chief investment officer, don't want to give her a promotion on a friday it would ruin her weekend, and glad she could join us this morning. lisa abramowicz and tom keene, we thank you for being with us. yours of 36. creta group to with a chart to

stagger to the weekend. ritika: we have to talk about president biden going to asia. one of the reasons he is doing that is to look into the issues and supply chains at the core of it or crux of it is the semiconductors and that brings me to my chart of the day where we look at the philadelphia semiconductor index, stocks index and we keep it simple. a two-year chart shows the powerful rally you've seen in chip stocks and goes higher, higher, higher, and a lot of it is driven -- driven by the chip shortage, the ability to pass on more costs to consumers and if you look year today, you see a pullback. some of this will be the macro risk off sentiment and the other part is how many companies will not be able to keep up with terms of capacity and are facing perhaps the fears of some of the demand. tom: shifts the heart of all of it as well. thank you so much. ben evans is a managing director of medley global advisors and person i had the most in the

racket. the reason is he writes nicely long memos that are forced to be read. lisa and i hated with a passion but we are thrilled he can join us this morning. the china note was mesmerizing and at the bottom end of your note, it is shocking the rebound you call for. when and how big will be the rebound of china? >> we think it is happening as we speak. so the shanghai lockdown is easing in some parts, but it is an infrastructure lead rebound. it may not lead what we saw the u.s. of the sharp like v-shaped but in china terms, it is obviously significant. the way they shut down is nothing what we did, like an industrial shut down by keeping factories open for foreign companies. by the end of the day, i think it is a rebound that is meaningful and at least in

global markets. there's another story that this whole situation we have seen this week, the global reopening, that is the china story. tom: my shock of the week the size the inflation numbers out of europe was newcastle australia: which is basically unmeasurable in such a moonshot. is that one indicator of what is to come for an august or november china? >> that is for sure. i think china demand for commodities is a theme that will come back. it is not abated from the negative sentiment, the equity markets of knowing there's a recession coming in the united states, so -- tom: lisa, this is a massive part of a jigsaw puzzle that no one has an answer to and ben is clearly polarized here with a huge rebound but the china

mystery to me is the biggest of all mysteries. lisa: and how much does this plead intosibly more persistent inflation versus resolution to supply chain? how do you parse out a recovering china into the current moment where we see somewhat of a slowdown on the peripheries but also the inflationary push taste in supply chain disruptions. ben: if you take the supply chain index from the new york fed, they put that out a few days ago and it showed the contribution of china of increasing the pressure on supply chain globally. that i think is lingering still here, even though the opening of china is upon us and in the quarter that will happen, the supply chain pressure is not easing so you have the fact this is inflation and to the early discussion with gas, people trying to figure out how tight conditions have to be for inflationary to really roll down. i thought it was interesting and puts the commodity announcements we have done, you offset a loss

as a result of tiny conditions but an energy shock that is very strong there. lisa: do you think this actually calls for the fed to get more aggressive than people think by the back end of the year because you do not have any slowdowns and you get a reigniting of some of the momentum allowing inflation to be more persistent? ben: i think that is the tone from the federal reserve we are hearing. i thought power was quite resolute in the journal interview of being really committed to sustain this path, unlike others who came in and said maybe we can moderate it over time. most of the fomc seem to be coming around with what powell things, we have to continue until we get meaningful inflationary sets, and that is upward stabilization.

the fed to get to a second inning by the end of the year. tom: that is baseball talk, second inning. lisa: i appreciate that. tom: thank you so much. it is ben emons. francine took the gulfstream back after ken griffin interview. you and i will stagger over there, and i'm absolutely fascinated by how this davos confronts the new running lisa: and how does it regain some sort of narrative over an issue that is a big question mark for everyone. how do you do with inflation at a time where you have people worrying about whether they want to go on the extra trip and others worry about -- worrying about whether they have food to eat. tom: and we heard this as well, the holiday from history is over. lisa, safe travels as well over there and we have got a guest

list and we will keep the guest list quiet because there is a lot of give and take of schedules and meetings and all. we are trying to get steve grant to come down. i don't know if we will be able to pull that down. lisa: one of the big questions is the new globalization or polarization in different powers. i know you are like saying wow, she totally blew over that perhaps but what did you expect? did you think i would engage? tom: all next week i don't think you will engage. [laughter] lisa: i'm just kidding. honestly i think there are big questions, aside from football which i would give you ample time to talk about with all of our wonderful guests. there's an issue on how we deal supply chain's and a new reality at a time when there are new poles of power and this i think is underpinning a lot of people's view on more persistent inflation. tom: this goes back to my book of the year, putin's world and

she does not predict this but she brings up the idea here of a return to yalta, of an america, of china and really a re jiggering of things with the president visiting saudi arabia. lisa: and we come offeree of tell sales during us into hard numbers. it is a margin story for a lot of companies dealing with higher inflation, supply chain disruptions. i will point do they continue to go to an inflation story versus a stagflationary type of story? tom: the inflation story to me is a huge deal. we underplay europe inflation this week which is really shocking as well. we are steeled for a weekend of travel and we will join you monday, is it? lisa: i thought you are asking -- it is friday right now. monday we will be there. ♪

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>> good morning. for our audience worldwide, we are heading for a seventh straight week of losses, and looking to take a bite out of those losses at the open. the countdown starts right now. >> everything you need to get start for the start of trading. this is bloomberg, the open. with jonathan ferro.