>> i think europe is falling into a recession. it is tightening the central bank for the first time in a long time. >> do we see those hawkish comments? >> there is a narrow problem between an inflation problem and a growth problem. >> i think you could see a bear market rally. rather than a full on rally.

>> this is "bloomberg surveillance." tom: red and green on the screen. a look at the selloff in equities yesterday, in preparation for 90 minutes from now. lisa: in preparation for higher, short term yields, whether it is in the united states or europe. it doesn't seem like there is anything to create a pause. tom: curve flattening, some people writing about new curve envision -- in version with the two year yield. yesterday was a vengeance off week euro, we saw a curve flattening. lisa: we continue to see it this morning. a deeper inversion, the 510

spread, i am not going to bore you with different numbers. tom: please. inflation report, things are incredibly report and. how about that option yesterday? lisa: it was important, the hotter inflation is now, and the more it persists, people are projecting slower growth they are day harder landing. people want duration in a pinch, that is what we are seeing. people project the fed, inflation itself. what that does to economic growth. tom: the only option matt miller cares about is looking for a barracuda from another time, used cars, maybe they are ebbing, other things aren't in inflation. matt: i would give an arm for a cuda, for sure. people talk about inventory and inflation.

kathy woodward said to worry more about deflation more than inflation, she has seen the biggest outflows of any etf this year, any family of kyiv. we are seeing extreme shortages in anything that needs chips, anything that needs commodity input like cars, washing machines. households durable goods, vehicles, still are on the loss. tom: a vignette on international relations into the weekend. some mysteries for europe and this war in ukraine. mr. putin, a prewar level is meeting with a new leadership of turkmenistan. this is important, far out on his southern and eastern front. this gives all, particularly for those of you on bloomberg radio, an update on mr. putin's health. people are looking at this daily, they gauge the health of

mr. putin. we give you the images without comment. lisa, i think we've got to get to a morning brief. it has got to center around this 8:30 report. lisa: a decline across the board in markets. we saw a -- between the s&p and nasdaq, it is persisting. euro containing -- continuing to depreciate. it is now below a 106 handle, we had a 1.05 handle. the ecb came out yesterday, what some people viewed as a hawk is -- hawkish message. 10 year yields lower, interesting because the short term yields is higher. that curve, flattening. the key point is 8:30 a.m., the key data point of the week,

month and beyond. how much do we see a deceleration in inflation when you strip away energy, food. we expect it to decline to 5.9% in may as people were expecting? doesn't matter? real wages have declined deeper and deeper into negative territory. the american budget is declining , which is adjusted for inflation. the wages are not keeping pace with inflation. 10:00 a.m., we get that number. the u.s. consumer sentiment survey data comes out. the expectation is for it to continue in this way. president biden will attempt to address the concerns people are feeling, addressing supply chain issues at the port of los angeles. how much can he do, given the concerns and the factors,

whether it is china or russia's war in ukraine? tom: as he wakes up early in los angeles, ed lowell will join us. now, we speak to jane foley with rabobank. she is there head of foreign exchange strategy. i have got to go to the relationship, a partial differentials now. in the last 24 hours, is the dollar stronger, or the euro weaker? jane: i think we've got a weaker euro. you might think it is strange, the ecb was much clearer than normal in their caucus -- there hawkish message to hike 25 basis points by july. i think the message here, what they didn't say. there is a new word associated with europe and the ecb, fragmentation. we have had press reports the last few days, the ecb would

give us clearer messages about what they would do to stop peripheral spread -- on spreads from widening. they did not. they were invasive, there wasn't much in that. the message was, they are going to carry on hiking. they are not prepared to do a lot to stop the spread widening. that is a concern for investors, a concern about the outlook for the european project. until we have or message on that front, i think the euro looks vulnerable. lisa: this is the existential threat for peripheral region in a world of hurt, even as the core manages to deal with the inflationary headwind. at what point, at what spread, at what yields do you get the most concerned about the euro project? do you see a more material weakness with the euro and dollar? jane: we were concerned about real fragmentation.

we would be talking about parity. perhaps it is early. it is likely the ecb and lagarde will come up with something in the next few months. if they don't, the market is going to be concerned. we have got to look at the economics. how risky are the economics? are they in a position where -- lots of other factors would have to come into play for that to happen. it is the price of gas. certainly, if europe were to announce a full embargo on russian gas by the end of the year, that would create an additional stress. we would have to have a lot of other factors come together before we got really worried. for now, the fact the ecb appears to be accepting back from its support from a bond in the periphery is a concern. matt: in terms of what we would see, in terms of factual

fragmentation -- don't you think the ecb showed their lack of tools yesterday? what could they do to fight in plantation -- inflation if they are so worried about fragmentation? jane: we sell reports they would come up with funds to buy peripheral bonds. if there were concerns about fragmentation, the likelihood is, the fact this fund existed could be enough to reassure investors to keep euro -- here spreads in. i think that is what the market will be looking for in the next couple of meetings, hopefully by july. we need to hear they are working to put this together, more guidance on that front is what investors need. they are worried about inflation, lagarde made that clear. that means they need to be hawkish. if it takes them balance from -- it takes balance from the ecb. tom: the better index, broader

index, one point four standard deviations -- 1.4 standard deviations off the trading partner, what does this inflation report mean today for the broader emerging markets? jane: for the broader emerging markets, they are sensitive to what the fed could or could not do in terms of interest rates. more interest rates five's, the more aggressive pace, bad for emerging markets. i think this is what the cpi index will help us know. how do we reach this peak inflation -- have we reached this peak inflation scenario or not? some of the factors you were just talking about, how hard is inflation affecting consumer confidence? is it meeting people are spending less at this point? tom: thank you so much. this goes with what you and ms.

foley were talking about, not just the 8:30 report, the ann arbor and university of michigan report. i am looking at the one data point. five years out, five years out from that, the inflation guesstimate. lisa: how sticky is it? how tractable will this come, a self-fulfilling prophecy? how self-fulfilling is an inflation if consumer sentiment starts to weigh dramatically? consumers account for 70% of the u.s. economy, that becomes a series economic problem -- serious economic problem. tom: is high inflation good for the banks? lisa: wow. that is a really deep question. of sensibly, if rates are higher , and demand is increasing and real wages are. that is not happening.

because of that, it could become a headwind. tom: critical if we come from 8% to 1%, we get demand come back in and recession fears to end. we will have to see. this is interesting, and roughly one hour from the most consequential inflation report in ages. this is bloomberg. ♪ ritika: the biden administration is trying to advert another inflation logjam at the busiest seaport. president biden in support of los angeles today, the white house is watching talks on a new union contract for 22,000 west. workers. u.s. supply chain still suffering pandemic disruptions. u.s. secretary austin on the lines of a major security forum,

both countries are prepping their competing visions for -- the u.s. is hoping to use the form to establish guard rail to prevent competition from getting out of hand. the meeting comes as a war in ukraine continues, beijing's struggle with economic pressures at home. shanghai will briefly lockdown the city this weekend for mass testing. covid-19 cases continue to emerge, causing more disruptions and a disruption on growth. officials are testing to move out any silent transmission of the virus, a key tool in china's covid zero protocol. a bidding war for the rights to stream indian cricket matches, a company has to result from a heated competition from one of the world's most popular -- content.

the rights have been estimated to fetch $7.7 billion. global news 24 hours a day, on air and on "bloomberg quicktake." powered by more than 2,700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

>> what worries me, you are not going to like this, the month print will be worse. i think those who boldly said inflation is coming down may have to change their mind. tom: mohamed l area and --

el-erian, talking about the past forward on an inflation report. joe mathieu returns after a discussion in the last hour of the january 6 hearings we saw last night. joe, i want to take the chairman of the hearings, thompson of mississippi, and take it to the inflation report. we are hugely skewed, the three zip codes in new york, two zip codes in washington. mr. thompson of bolton, mississippi, west of jackson, mississippi, is looking at rents will up and up, $600 a month, outrageous. explain for our fancy audience, the outrage of your washington over inflation moving from what

appears to be a very low price, and up substantially. >> imagine coming from a town of roughly 500 people as he described last night, the impact that would have on the community here. the present is going to get to some of this today -- the president is going to get to some of this today. he is spent -- scheduled to speak from the port of a -- l.a. to tackle the inflation issue. and will have good things to say, apparently about the supply chain. there is 20 something ships. we are on the thresholds of what could be a major strike by 22,000. workers, which bloomberg are reporting on today. that could be facing that with the recombined opening of china, more bottlenecks in the supply chain. housing is a component of inflation, energy is a component. put those together, you will get

a story at 8:30 as to how bad things are. tom: north dakota, minnesota, median rent, up 35% year to date. lisa: a far cry from when i lived there. i have to take a look at the transformation of some of these regions. that as the democrats try to paint and ability to combat inflation. what is the message they are starting to coalesce around ? joe: it is become a more deliberate message. when you hear from the president's economic advisers, they eliminate between what the administration is doing and can do, and what -- and the fed is going to take care of the rest. we are hearing about the chip act, the china competes act, it has been stuck on capital hill for a year. there is this idea to strip down

build back better, we started hearing the word reconciliation. democrats know, they probably only get one more swing at the ball. you get in a row with joe manchin, he has talked about re-engaging on this. what he and kyrsten sinema can't approve of, some suggest they should have done a year ago. as we creep up on the midterm elections, democrats are talking about things like lowering prescription drug costs, extending the child tax credit, giving democratic candidate something to talk about on the trail. lisa: the january 6 hearings, a notable aspect was the discussion the u.s. has to get its own house to have a credible presence to get unity on a global stage, this comes with respect to russia and ukraine, but also when it comes to dealing with inflation, it is not just isolated to the united states. how much of that is what politicians on the demo --

democrat and republican side are looking for, and international cooperation to push this forward? joe: that is the goal. the administration likes to remind us that it is a global phenomenon, there is nothing special about american inflation. this is driven by the pandemic, the war in ukraine. the president is trying to take a whole of government approach with our partners on not just inflation, but also immigration. the problem is, there are so many stakeholders not at the table at this summit this week, they watered down any kind of diplomatic or admissions statement that comes from this summit. he president and his economic advisers continue to try and frame this as a global phenomenon, not something that is special about america, despite what you are hearing from republicans on capitol hill. matt: one of the issues the

president fought on was climate change. lisa spoke with someone earlier, every time gas goes up, people ride bicycles. is anybody in washington saying, this is a good thing, six dollar gas. we want to stop using fossil fuels. joe: i know where you are going there. i do not know if anyone is saying it out loud. that is not going to resonate with anyone in a positive way. there are progressives on capitol hill who are concerned that the idea the biden administration turning back to oil companies in this country and asking them to drill more, the fact is, these climate provisions have been slow down by what we are dealing with. that reconciliation bill i referred to that joe manchin would sign on to will include supply meant provisions, whether it is carbon capture or something else that might impact the electric grid.

it is something democrats hope they can show later this year that they haven't taken their eye off that ball. tom: thank you, gray she -- greatly appreciate it. the senator from west virginia, mr. manchin, this shows the huge disparity between the rents we look at and others. charleston, west virginia, rent is under $1000. still, up a painful 35% in that income category. lisa: it is a patchwork of stories. in less urban areas that saw prices go up more, people come back, prices everywhere are going up dramatically. the year over year increases, stunning. the reason why joe mathieu says nobody wants to talk about gas prices being longer-term, and easier way to move into that transition, on the lower income side, people are getting

hammered by those higher gas prices. it is about the budget, budgets do not allow for the price of gas at six dollars a gallon and beyond. tom: can we mention we have had curve flattening this morning? the big drop in equities, a continued movement on tuesday and from .31 down to .17. lisa: how much does that remove growth longer-term, and reduce the sector of runaway inflation? how much of this is fed credibility? tom: some of the dynamics we are looking at, one hour away from a critical inflation report. coming up, go to long beach, california. this is bloomberg. ♪

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tom: one hour away from a key inflation report. lisa is going to start out with futures, euro speaks volumes. lisa: it speaks volumes about the volumes about the pictures of inflation and growth in the u.s. and europe. i am going to pretend to be jon

ferro and romaine, i'm going to be jon. to me, the interesting note is not the magnitude of the moves. rather, the diversions between s&p and nasdaq. we have seen for so much of this year, the nasdaq underperform, the most we have seen going to dow, bobble, the snb. we are seeing a shift as growth concerns weigh heavily, nasdaq futures up .1%. s&p futures down .1%, not huge moves, but notable. a lot of this is fueled by the bond market, getting relief on the long end. 10 year and 30 year bond yields coming in, that two year yield continuing decline. yield curve flattening, to .86% -- 2.86%. the fed to be more aggressive with their moves as longer-term growth projections coming in, that 30 years standing out after

an option stronger than expected -- auction stronger than expected. yields down 3%. tom: dr. marion mentioned, this idea looking to the second, third, fourth inflation report is key. lisa: each report becomes important, not only for the u.s., but the euro region. yesterday, the ecb came out indicating they would hike rates the next few days, leaving a 50 basis point rate hike on the table. euro getting dollar -- euro getting weaker against the dollar as the session goes on, how much does this have to do with a lack of commitment to urgent movement by the ecb?

how much of this has to deal with what jane was talking about? an existential project given the fact peripheral projects are starting to blow out, there is no concrete plan. i think we are going to be talking about that more frequently. now, i'm going to be romaine bostick and get you movers. to me, wearing the -- nearing the lowest levels. shares up $6.42, speaks volumes. twitter shares, haven't been talking about this, but they came out and called elon musk's love. they said, you want this data on the spam? here, you can have it, but you cannot avoid a billion-dollar fee. i want to take a look at the tech sector and look at the flight quality, we see green across the board. apple, that, they spoke, -- meta, facebook, all up .7%.

big tech a haven yet again. tom: thank you so much. joining us now for an important interview for those overweight or over hoped on technology. daniel suzuki, richard bernstein definitive, i cannot say enough about richard bernstein's classic book, "dial investing -- style investing." you people are heated that technology is a valued trap. why is it? daniel: there is a lot people are saying, things have gotten cheaper. obviously, they have. that is the argument you could've made three months ago, six month ago. that was the same argument they had people making from the early stages of the tech bubble in

2000. it has to come to the fundamentals, province, quiddity, sentiment. the sentiment perspective remains the most well loved of the market. despite volatility, they are seeing influence in many areas of the market. they are calling it the biggest beneficiaries of the liquidity boom. liquidity goes the other direction, that has become a major headwind for these areas. people have this impression these are defensive areas of the market, they are not cyclical. that was the case in the pandemic, but if we go through the run of the mill economic slowdown, their earnings are in a slowdown. you are seeing the results. it is probably not be time to jump in. tom: any partition among tech, or throw them out with the bathwater? dan: they have different profiles and valuations.

the thing that aligns them is that they were all huge beneficiaries of the riot up here, the last few years, there were massive flows coming to these parts of the market, whether they were higher-quality names or lower quality names. that boosted its rising tides for these votes. as those tides come down, i think that is going to sink all ships. you saw the same story in 2000. look at the intel, cisco, microsoft, oracle. those were the names back then everybody said were rocksolid industry leaders that were not going away. that didn't stop them from going down 80% before finding the bottom, and basically not making your money back for another 15 years. i think that is the same story. seven years ago, apple traded less than 10 times it got up to 30 times. that rising tide, it benefits all of these companies.

matt: what do we need to price in or see to show that everything is priced in? you could argue apple goes the way of nokia, but shirley not argue that -- surely not argue that google doesn't have competition, or amazon. dan: the big difference in terms of the growth outlook from here to 20 years ago, they are all competing with each other across these different verticals. 20 years ago, they were growing in their own respective natures. now, they have their streaming platform, and app store, web stores, they are all competing on all these different verticals. that is going to make that growth outlook increasingly tough. in terms of the signs to look for that we have reached the bottom, the valuations have to come down more. the gap between those areas of the market and the rest of the market needs to close.

it is not just the valuation story, we are talking about the bubble. the bubbles pervade society and continues to. the point you know we have gotten through this capitulation is where people are not interested. a number of these tech investment vehicles, the number of tech dedicated segments on tv, the number of flows you are seeing through assets, he will see those decline, some of those heroes go to villain. that tells you we are far away from capitulation. lisa: there are people that agree with you. we saw fund flows and u.s. stocks. bank of america's michael hartman talked about these numbers and said the u.s. is a couple of data points away from a technical recession, saying we are basically there, we just do not realize it. do you agree and see a material downside on a broader level for the broad indexes?

dan: mike is a friend of mine. always someone you should listen to. what is interesting is the note he put out last night was the opposite story, they are taking money out of cash. i think the cash story is a dynamic that is different this time of round -- this time around. when you see a huge influence of cash, it is usually coming from stocks. the story this time around, they are afraid of stocks, but also afraid of bonds. you're getting that story, it is not just the stock story, it is a normal asset class story. the normal part about the recession, the risk of eventual recession is a rising. what is clear from the data the last few months, this economy is not falling off a cliff today. it is resilient. eventually, those risks are rising. for the here and now, people are

getting too pessimistic to early. tom: thank you for the brief with richard bernstein and advisors. i have got the x y off to new strength, we have got to revisit yen. bloomberg news had an update on the institution in japan monitoring ian, 183.86. euro cannot get a bid. lisa: they cannot get ahead of the concerns of the peripheral region blowing out and losing steam, how are they going to coalesce around a higher rate without torpedoing that economy? this idea that japanese officials are coming out and getting concerned, at least verbally, about how weak yen is becoming. this goes to the question matt was asking, what is a strong currency good or bad for a country? we used to think week currencies

were good. now, we are not cleared. tom: 2.86%, two year yield up 3%, 3.04%. i got a benchmark to three-year, 3.1%. lisa: that is the reason it went to option -- auction. matt: how was the three year auction? lisa: it was weaker. i am curious to see this inflation report, how much people decelerate spending in certain areas, or example, airline tickets. tom, that is a habit of yours. tom: they have come down a little bit, i look at new york, lax, it has come down. we will maybe get more data on

that with this report and the weekend as well. at 8:30, michael mckee joins us with important -- an important view of the inflation report, then we speak to esteemed economists. red and green on the screen. this is bloomberg on bloomberg radio and bloomberg television. ♪ ritika: ukraine clenching new loan program, according to the country's finance chief, invading russian forces pushing its budget and national reserve. the financial minister tells bloomberg the key to these -- long-standing donor, talks about a eight package are underway. a possible visit by the president of china provides -- may provide more momentum.

he may join a ceremony to swear in a new leader as well as celebrate 25 years of chinese rule, the enterprises index has gained, outperforming every major benchmark in the world. more than two years after the coronavirus pandemic began, there are questions as to how it started. a top organization saying more information and research are needed to look into the probability that china was the initial source of the outbreak. there should be further study for markets identified as another source. harboring even the lowest level in 30 years, that after states -- credit sweep shares lost half their value since their peak in march last year, losses stemming from the troubles of the hedge

funds and the arcadia hedge fund. global news 24 hours a day, on air and on "bloomberg quicktake." powered by more than 2,700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

>> we expect to raise the key ecb rates in september. the calibration of this rate increase will depend on the updated medium turn -- term inflation outlook. if itsists, or deteriorates, a larger increment will be appropriate at our september meeting. tom: christine lagarde talking about the medium turn -- term, you will almost never hear the phrase medium term among

american economics. we go medium, short and long-term in 30 minutes with the most exceptional important report. matt miller in for jon ferro. right now, we digress. we go to the port of los angeles , that barely describes this morning our more than ancient president as he will stand on the uss iowa and tried to bring a summit of america's to a better place. ed ludlow joins us. i think it is remarkable to see the public service in the atlantic and pacific of the uss iowa of decades and decades ago, and no, forget about it, it is a new america and a new pacific. what does the president want out of the summit of america is to show across the pacific?

ed: his focus has been on western leadership. you look at the commentary he made in his remarks about the west, potentially could be a leader in all things freedom, all things capitalism, all things progress. the western world is not pulling its weight, you talk about the iowa, what we expect from biden at the port of los angeles is hiding talks, specifically dialed into inflation. he has been talking all week long about how ways we can tackle inflation, solve logjams in the past 18 months or so. for him, outside of his role as international leader, his just pressure point at home is inflation and how it is hurting americans. tom: is the inflation report in 40 minutes overwhelmed, manufactured summit of america's? ed: you broke up. tom: the summit of america's, is

it overwhelmed, all the planning around today's festivities? ed: i think for our global radian -- radio audience as well, bidens approval ratings, the downward trajectory, the inflation, upward trajectory. we face a real global story around what is happening in the movement of goods from a to b. what is fascinating in the context of inflation, we have signs that demand is there. we have learned that from the latest earnings season from corporate america and retail. the thing outside of america, china is coming back online. there factories are turning out consumer goods that have not been able to make their way here. we are in racing mode at the port of los angeles, that volume to come through the port. that is why he is zeroed in on the impact of what that would mean for higher prices. matt: bloomberg television has

been covering the port of los angeles very closely, caroline and romain were out there. is the port running at full capacity right now? we are worried about a strike, right? ed: the port has set consecutive records for volume. the port of los angeles, along with the port of long beach, has made the bulk of container movement in and out of the united states from an import, export perspective. in june 2021, they did a -- 10 million units. in the context of inflation, container rates have come down. the bottlenecks we have been talking about, the way they manifest themselves is the bottlenecks impact the available supply of containers. when there are fewer containers, shippers have to scramble to

find alternatives and pay higher prices. we are down 27% from a container price from its september. if there is an impasse between the longshoremen's and the warehouse union and the pma, that will disrupt the ability to containers move in and out of ports. that impacts supply and leaves goods around the world facing higher prices. lisa: what can the los angeles port to do unilaterally, and how much of this is a global issue? ed: they haven't answered that well. the port will tell you, we are going to speak to the ceo and executive director later, they are going through this modernization program where new technology, autumn is asian, is making it more efficient. truck drivers will tell you it is not the case. what biden has been doing is putting pressure through two men, labor secretary and

transport secretary. he said to them, you get the parties together and get this sorted. a prounion president, these longshoremen who are well-paid, in some cases, a longshoremen can earn $100,000 a year in l.a. and have benefits. they are seeing the pinch of inflation just like everyone else. it is difficult working conditions because of the pandemic, intense volumes passing through this port, volume passing through five available lanes. what you see behind me is the main channel, one of only five available. 10 lanes of volume trying to -- fit in a space of five. you think -- we think bidens message should a will be, this is important, get your act together. tom: deutsche bank or the

importance of the ecb decision yesterday, the idea of what it means for a constructive u.s. dollar. lisa: even if they raise rates and accelerate pace, they are dealing with the potential existential threat to the euro area, as well as slowing growth, which is a different victor than the united states. how much can the fed go before growth concerns start dollar dominance? tom: matt, explained to us why we have six dollar a gallon gas, which would be cheap in germany. is there a gallon of gas angst in germany in continental europe? matt: i moved back here in january, right before the pump prices went up. i was paying on average over the five years i lived in berlin, six dollars to seven dollars a gallon. it has gone up there, but they do not need to drive as much as we do. they have public transportation that links cities, towns,

villages. there are more options in germany than there are here in the gigantic united states of america for getting around. tom: i've got more questions, we will try to get back to that in the next 35 minutes. and inflation report, michael mckee doing what he does best. we are thrilled to tell you that michael dart out will join us after mr. mckee, he is focused on the nominal economy and top line cpi. he is always part of the surveillance dialogue, jim paulson will attend, chief investment officer, lisa wheaton's. inflation report in early four minutes -- 34 minutes. ♪

close the key question -- >> the key question is