plexus -- >> we need to see it slow. >> we expect a slowdown. that is what is needed and that is what the fed is wanting. >> i think that they are going

to slow. >> it was the moment it. jonathan: good news is bad news. from new york city this morning, good morning. this is bloomberg surveillance come alive. i am jonathan farrell. i know it frustrates you. tom: john has been decades and decades participating in the game. he comes out on the high levels of negativity that are of right now. did we see that with a vengeance? jonathan: we saw that. it was not exactly inflationary.

unemployment was stable and wages were disappointing, in some places. tom: you look at all bonds, equities. you have a different view. jonathan: that is the issue. tom: roger e.r.a. gave a bad review. lisa, what did you say? lisa: we will see. i am looking at the key question. have we priced in the federal reserve? have we priced in how hawkish they will eventually be? this really underscores how much of that has been baked in and how much there can be destruction to market as they come to the realization that the

fed is not going to back off. >> can you imagine how foreign that would sound to you? that somehow good news is bad news? lisa: we all see it when we go out. we fill our gas tanks and we see how much higher the gas prices are. is it good news for the upper class or is it good news for everyone? right now, it is not good news, so i think that would be relatable to many people. jonathan: yield the big ones at the treasury market. the inflation report just around the corner. looking very closely right now. up .5%.

lisa: it comes after saudi arabia raised prices on shipments to asia. it is raising learns about how much back after the beginning of driving season with gas prices at a new record high of more than $4.85. how do we deal with this, given the fact that you are starting to see people pulling back in discretionary areas, in response to the base prices going up almost everywhere in their lives. force johnson is facing that no-confidence vote. how much is that affecting policy? it is not clear. frankly, there is angst over what is happening.

a keynote presentation of the conference. it is important this year. shares are down this year. what can they indicate, in terms of innovation to highlight growth, aside from the valuation story and aside from being hit i the fed? jonathan: a 12 month price target. just to go through it for apple. lisa: people are bullish. jonathan: that is why they are. tom: in defense of everybody, there are a lot of other reports out. everybody is tweaking. forget about growth value. sarah will be graded out this.

it is profit versus no profit. jonathan: look at some of the hiring practices. let's start here and work our way through it. >> i'm not sure we have seen it. i think there is a limit to where yields can rise. you have a lot of debt. higher rates makes it more expensive. you can affect the short end of the curve, but the long and acts of -- end acts accordingly. i do not know how much higher we can go than what we have seen before. i'm not sure we are seeing that

yet. it depends on where earnings go. you have seen the compression, but you have not seen much of a drawdown on earnings. tom: is there any value as to what i just spoke to john about, trying to sort out which profitable companies to acquire? >> absolutely. the difference between having free money and money sloshing everywhere is that the company that have been able to borrow money at almost no cost and continue to fuel topline growth will have a much harder time doing that. we are trying money.

lisa: have we priced in federal withdrawal of stimulus? >> the bad news means the fed will come back to their rescue. it completely changes that. last decade since the financial crisis, you have seen every time that the things got bad enough. you could argue whether raising interest rates can affect the price of oil. in the end, with inflation this high, it is difficult for the fed to change its reaction function when investors are ecstatic -- are expecting what will happen. jonathan: that sounds like a situation.

>> it depends on how badly margins get compressed. there are a lot of things driving the earnings pictured. you have seen the first wave. now the question will be, can earnings hold up in this situation? that employment cost index is not as robust as people have been afraid that it will be. we need to see wages rising, especially at the lower end. when does that start to come through? lisa: given the lose lose prospect, how do you hedge? >> you look at a variety of different instruments. there are different ways of hedging. it is making sure that they are not the kind of companies that

will be most affected by the problems you are seeing right now. you need to be showing that you can make money in this environment and continue to make money. if you can grow your money -- the growth -- people will never walk away from growth, completely. it has compressed, somewhat. i think that people still want to look for growth, but it has to be profitable. you still have the ability to generate good earnings and good return. jonathan: a nuanced field. tom, you have been very focused on tech. cutting forecasts.

hirings will slow. microsoft hitting the brakes on several divisions. amazon -- that was the key of the quarter. we have seen it across companies. tom: it was a huge buildout. the new ceo has to manage away from the pandemic. i will go to the lyft. maybe this year they will have a positive cash from operations. they are running on a margin. you cannot compare lyft to the others. i do not like the way that we do that.

i take your point on that. jonathan: morgan stanley will join us. a slightly different view. yields are a little higher by two basis points. the inflation report is just a few days away. this is bloomberg. ♪ >> keeping you up-to-date with news from around the world. in the u.k., rebel members have forced a confidence vote following a series of scandals. they will needed to force force johnson from office.

saudi arabia is signaling confidence. they have hiked prices more than expected. whale with rebounding demand. a tightening market after the invasion of ukraine. taking another step towards returning to an normal. public transport will remove -- will resume in those parts of the city. north korea has set a record for the most rocket launches in a single year. eight short range missiles were fired. speculation that he may be preparing. investment management is one

thing money over the chaos and the nickel market. they are chant -- challenging the decision after a massive short squeeze. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

>> january 2020, lever carrying billions of people. it was a huge drop. it was really challenging. the first thing is cash because we were burning tree hundred to 400 million a month.

>> yes, inflation is a problem. the fed is independent and taking action, and you're starting to see that, but we see

a robust economic recovery, in large part due to the president's leadership. jonathan: good morning. futures are positive. they have very upfront and open about saying that the fed is independent. but you do not hear the independent bit. for me, i think highlighting the fed's independence while saying that they need to control inflation -- they contradict each other. >> i think that adults get that the fed is independent. they can articulate. then we go to fed independence, but the bottom line is that chairman powell and the vice chairman as well have to get in

front of senators and congressmen come and get yelled at. that is where we are heading here. jonathan: they are becoming a penny onto. i think many others have done the same. tom: i know you are on top of it. lizzie, does the vote count today? >> he has already been in to downing street, but no. the vote beat -- the vote will be between 6:00 and 8:00 tonight. it means that we have hit that number. tom: who are these guys? in america, we have an understanding of conservative or

republican clicks. who are these people going after the prime minister? >> that is what we do not know. they have a minimum threshold, calling for a vote of no-confidence, but we do not know how far beyond. it could be made up of all different cliques. that will be interesting to find out. how bad is the situation for the conservative party? you just got to this point where they have clearly realized that boris johnson may not be the vote winner that they thought he was. lisa: how much of this is about party game and saying that everybody has to stay home for the holiday while he holds a party during the peak of covid, versus people being angry about where inflation is and angry about the cost of living?

>> and has been weeks among speculation of this vote of no-confidence. the party eight scandal is the straw that broke the camel's back. you have surging inflation, but let's not forget that this goes all the way back. scandal, again and again in westminster. it has been one thing after another that has led to this moment today. >> i will share some of this with our audience. you are trying to win a system that is entirely foreign to our constitution and law, but you are no president and have no -- just frame how vocal and public some of this has become.

>> jesse norman also said they have been lurching from crisis to crisis, that they have no sense of mission. you could argue that it is because of the pandemic. of course, the war in ukraine is another thing that has gotten in the way, but will -- what will be interesting is what boris johnson is promising, to get the mission back on track because there is so much that they will want to see delivered before the next general election. so that they can go back and say, this is what they can do. jonathan: what is the policy shift that we should be anticipating? >> it will be interesting to see if we get even more response to

the living crisis. you had another packet of measures, but we had a expecting to see more rate hikes. the other thing that markets care about is whether he will bring forward a general election. that is a big risk. jonathan: i am talking in very narrow terms. tom: this is a prime minister, under my understanding, acting presidential. what does that mean? jonathan: he is in the position that he is in because he is an mp. that is the way the system works. last week, you asked me if the

prime minister would resign and i said that was up to him. now you start to go through a process where it is taking things out of his hands a little bit. even if he gets past the vote, there will be immense pressure on him to step aside. if the conservatives went to the people in the u.k., they would find it somewhat more difficult than they found it in late 2019. tom: this is from the times in london. i know that you are impressed that i read the times in london. but they go over the votes of margaret thatcher, john major and teresa may, where they all won. they won by 50%, i guess.

jonathan: once you have a large part of your party come out and say they have no confidence in you, it does not look good. even your own party does not have the confidence in you to go forward from here. if they went to the polls today, would they go -- would they do well? a lot of people do not think that they would. for them to do better, they would need a new prime minister. the next election will be several years away. tom: you are not supposed to say that. you are supposed to say, it could be in weeks. >> it is up to them, tom. tom: i'm just looking for a road trip. jonathan: there is no other reason to cover this story. not really. this is bloomberg. ♪

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jonathan: equities hired. we have a nice move in the s&p. the debate continues on the

bullish side. cutting a price target. still looking at the s&p. then you have the bank of america. coming out to say no until the fed is done. what will it take for them to be done? mike wilson says, when we can test the 400 on the s&p, maybe by late august. last week, a 20 basis point move. the questions you have been asking. buehrle, 2020. tom: what happens when we get a trio one 10 year? jonathan: we think about going through the highs of the year again. it has been a little bit of a challenge over the previous few months.

over in europe, we started on the german 10 year yield at almost 20 basis points. right now, positive. this morning coming very close. a whole lot higher. a little bit lower this morning. many people -- just the consensus view, expecting the ecb. tom: you can see the tension. it hates around 140. that is a big deal. it gets you back to strong year of and week -- weak yen. jonathan: you might be able to stay awake for the conference. that is across the price action.

single names. lisa: good morning. i was going to say that there are some nice moves here. thank you for building that up for tom. you might be able to stay awake is a good description. i imagine. the wall street journal reported that china was wrapping up their investigation into this right hailing company. there is a speculation that china is moving away from some of the crackdown on some of their tech companies, in the response to the weakening economy. shares up two point 5%. it is fueling a lot of the tech movement also in china and globally. tesla -- who knows what is going on with tesla. up about 3% after an assertion that he was going to cut staff.

salary staffers may not move around. i cannot make any sense of this. can you? jonathan: i cannot. anytime i say anything on the matter, you get abuse for it anyways. we will stay out of it. >> i will not stay out of it. it is shifting around, massively by a founder who is cryptic at best and misleading at worst. that is a major issue for people. jonathan: he wrote a very nice piece on this over the weekend. one rule for him, seemingly and another for someone else. tom: i have been saying it for years. david, buy me a martini. by me and onion instead of an

all of lisa: that conversation and david grubb. it is important that we are watching apple shares. where they will announce the ipad. shares are up. it is significant because we are talking about valuations. can you engender some sort of enthusiasm? will the next iphone get people buying more? tom: i think it is a nice report, don't you? lisa: there is so much greed. real quick, amazon, their shares actually went through today. you are seeing those shares are even less. i know that tom was advocating for that. shares are up almost 5%.

jonathan: lisa could not even pretend to be excited about that last story. tom: wiseman has been one of the great watcher is out there. i have to rip up the script and get defined from you, the magnitude of china coming out of lockdown. is it overplayed or under lady? >> i do not think it is underplayed, but keep in mind that coming out of a lockdown, it is not a derivative of what covid is doing. there is a certain, pragmatic impulse today to chinese policymaking. you are seeing it not just in

regard to how they want to come out of lockdown, but you are seeing it in other aspects of policymaking. what happened overnight with the decision to dismantle the common prosperity measures of last year , the regulatory burden and speculation, doing away with that and coming into a new era for china. i think that is really the story, more so than the lockdowns. the lockdowns are wharton, but part of a bigger story. lisa: pragmatism leading to what? the dollar perhaps reaching a peak. do you agree? >> i agree that the dollar might be peeking, but i do not think it is because people get growth in other parts of the world. i think that the more important

thing that is driving the dollar lower in the second half of the year is the tightening that we will see from other central banks. we are seeing it from the bank of canada. these banks are opening -- are hoping to catch up. it is the main theme behind the dollar weakness, not necessarily growth outside of the u.s. 250 basis points -- that is not really what the market has priced. they think that there will be a 50 basis point hike in the month of october because it coincides with projections. i think they are pricing a two thirds possibility. i would say that is a little too aggressive. that should not change the story. the direction towards monetary

policy by the end of the year. tom: there is going to be a central banks response. there is a partition between raising rates for all the different reasons. but there is an international growth that is in trouble. what did they do? do they follow the fed? >> the group in trouble -- maybe we are talking about japan, but we think that they will raise interest rates. it is within their control policy, but eventually, they will get them. at least, rhetorically, they will move their. the boe and u.k. are a little more troubled because the

stagflation area issues might be a little bit more pronounced, but even here, the bank of england is as committed. the only question is how much, but they are catching up. the fed has given very strong guidance about what they are going to do. the fed, the rest is follow-through. for the other central banks, they are adjusting guidance. it is based in the hawkish direction. it will continue until they fulfill on those promises by raising rates. jonathan: it is great to get your view, as always. i cannot get used to this. we just had a full cycle where the ecb did not hike at all.

no interest rate hikes. the last one was 2011. each year these kinds of calls and strong conviction on hikes. i am really struck by it. i just cannot get used to it. we had 10 years of central banks committed to low rates. they were trying to engineer higher inflation and now they are hiking rates and they do not want a weaker currency. we have been conditioned by the former and we are still trying to get used to the latter. tom: the polarities you is a traditional view. alexander stubbs of finland has been very good on establishing that. not one or two. she has four or five

constituencies. lisa: what is shocking to me is that it did not cause more destruction. it is fascinating to me. tom: the vortex. jonathan: she did. tom: that was to her children. jonathan: from new york, this is bloomberg. ♪ >> keeping you up-to-date from -- with news from around the world. the prime minister boris johnson is fighting for his job. forcing a confidence road at -- vote after a series of scandals. it will give the party a chance to end weeks of speculation and take the party forward.

it may make sense to lift tariffs on some products to ease inflation. household goods and pet -- bicycles could be exempted from duties. president biden will take executive action to boost the solar industry. it will provide support. he will announce a tariff that will allow them to continue using foreign-made equipment while u.s. any fracturing ramps up. chinese regulators can map up their investigation of the company and restore the main app to mobile stories. in france, the military reenacted and gathered to mark the anniversary of the d-day

landing forces. they eventually ousted the occupying forces. this is bloomberg. ♪

>> we would not want them to open the floodgates right away. they are already seeing elevated prices. we would not want to see a spike and commodities. >> that is what we have seen in many places. from new york city this morning, good morning. a little more than 1% higher on s&p. keep talking about the main event of the week.

the inflationary report. tom: it is a big deal. there is some real angst there, versus the number. what do you have? >> we have to talk about this possibility of china reopening. we have to look at what has been driving stocks lower. the dynamic, we are looking at a chart that looks at the 40 day correlation. it was negative by a lot.

they are both risk assets, both rallying together. tom: nasdaq moving higher as well. what we know about covid is that it moves around. right now, the east coast of america is doing better, but the national numbers are stunning, well hundred -- well under 300 deaths a day. good news in china as well. i noted in the south china morning post that on the mongolian china border, they have covid, they are in lockdown. how much is there an improvement in covid, and china? >> no doubt it is hard.

the aggressive restrictions clearly work. those restrictions are being eased. your point, the virus has not gotten away. people are allowed to go to the cinema again and restaurants. , -- restaurants. they have to undergo testing every 72 hours. it seems like this will keep a lid on the disease. hong kong is giving a warning actually. we are seeing an uptick. the group has gone backwards on some of its restrictions. i think better news, for sure,

but there are a lot of questions about the approach. lisa: some are saying that perhaps this will relieve some of the supply chain obstructions. they are basically trying to get ahead of the next potential lockdown. >> we know that production will get ramped up. we know that on the ground, things are getting better, but there is a question mark over the longer-term impact and industrial supply chains. there has been evidence already that orders have shifted. obviously, that has been a long going trend, but it has

accelerated. on public record, the chambers of commerce for germany, britton and the u.s. are questioning the covid strategy. their members are relocating out of it. a big bounce in trade and production, but then the question is -- what will the longer-term ramifications be? jonathan: what is stopping them from dialing? >> three shots are approved, both safe and effective. it is not clear why china has not employed that. but a bigger issue is that they

have not vaccinated the elderly population to the extent that protect them from the disease. this is why there is a fear in circles that the health impact would be quite significant. i think the view with china is that the vaccines are effective. jonathan: how has a commonest country failed to vaccinate the older part of the generation? >> given the control on the population throughout the

pandemic, restrictions on movement and everything we have seen recently, a lot of people have asked, how come we have this vulnerability of the elderly? i think a lot of people will watch to see if that will improve from here. from hong kong, we get a similar story. omicron arrived and it was a significant impact. it is improved to do the same in china over the coming months. jonathan: tom, i was surprised by that. an authoritarian dictator can enforce a decision on the population. tom: there is actual pfizer and moderna, and then there is pfizer and moderna in china,

which has been problematic, to say the least. the other is the initial chinese vaccine. across all three, they are not getting to the older people. jonathan: all we have seen the last couple years are reopened, stop, start, stop, start. lisa: many countries are rethinking whether supply chains are. china has a foothold in the market, but you are seeing that shift. jonathan: awesome conversation coming up. going into that, equity futures higher. from new york, this is bloomberg. ♪

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