>> hunger crisis in the horn of africa is intensifying with the lives of hundreds of thousands of children at risk. more than 1.7 million children urgently need treatment for acute malnutrition. in somalia alone, almost half the population will confront crisis level food insecurity. the situation is triggered by demonstrating -- devastating drought and made worse by the russian invasion of ukraine.

the port is past the worst effects of the pandemic. >> we are past the worst of this. whether it's the stacks of ships , for the month of may, we will move 970,000 container units. it will be our third best month in history. the cargo keeps going because the consumer keeps buying. >> president biden is at the port today. a collapse of negotiations with dockworkers threatens stoppage. a change in flight restrictions

-- senior administration official says the change will take effect june 12. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. >> welcome to bloomberg markets. taylor: to say that this morning's picture wasn't important is a major understatement. i want to start with the top line of the screen. it's all about cpi and inflation expect tatian's. accelerating the new cycle hi.

where does peak inflation go? on the year-to-year basis, 8.6%. then we get consumer sentiment from the university of michigan. huge record low when you're thinking about the frustration around the average american, average canadian and fresh cycle highs. where we are seeing some of those inflation expectations as well. what that means for these markets, the worst two days we have had within the s&p into years since june of 2020. you are seeing a massive increase in the two-year yield. you are well above 3%. then of course un-inversion trying to get there on the five and 30. with the s&p 500 trying to hide the lows we saw in may, many of

the stocks that have bounced off the lows are back down again today. a lot of the technology names, when you look within the s&p 500 outside of a few safety plays, it's hard to find winners today. canada shall fight under pressure. etsy is also down. then you add into that hard-hit names with outlooks that are not crowdpleaser's like docusign that is off 25% so far in this trading session. taylor: new west inflation rising to a 40 year high. that's adding even more pressure to the federal reserve. some traders are saying even odds that the fed will make a three quarter percentage point rate hike in july. >> we see inflation continues ripple through. >> the drivers of inflation.

>> everybody knows inflation is going to be sticky. >> inflation is going to be sticky at a higher level. >> more clarity from the fed is what is needed. >> the fed has more work to do. >> rates need to go significantly higher. >> between 50 and 75 basis points. >> can the fed pause in september? we know the answer is no. >> i don't think anybody thinks were going to get out of this without interest rates being significantly higher than they are right now. taylor: joining us now to discuss is our guest a u.s. economist. what is the most concerning datapoint that we got in the cpi this morning? >> there are several sectors that have really accelerated now when it comes to inflationary pressure. one is getting a lot of

pressure, the single largest component within the household inflation index. it has really been a new arrival to the inflation story. it is tracking the overall trend in prices higher and it moves slowly. the fact that it has risen slowly and it is expected to remain high for several months means that as we look forward, there isn't a lot of relief in sight. we could say things are transitory, but when you put the whole picture together the reality is inflation is bubbling up from every sector of the economy and this is the latest into the biggest. jon: all of those voices we just heard, a lot of references to the federal reserve as we look ahead to the next week. some were expecting that we could see 75 basis point move by the fed. what are you going to be watching for? >> i see the larger probability of a 50 basis point rate move

not 75. this definitely does put 75 on the table. we need to reiterate that for at least through the third quarter, the fed is on an aggressive rate hike schedule. this is important because rate hike expectations hit markets quickly, but they take a long time to figure in the economy. we are already seeing some signs that the labor market may have it's very most strong peak. in reality, it takes quarters for fed rate to impact the economy. the economic data still looks solid, but the risk they're going to over tighten and we get concerned about some kind of greater economic contraction in

2023, 2024, this is the uncertainty that is causing so much volatility. taylor: the rate hikes we were getting last month and this month maybe won't be felt in economics until the fourth quarter of this year. your spot on in highlighting the lag. is 50 if the 50 enough? >> when we look at the way fed rate hikes can impact inflation, concerned that inflation is now becoming entrenched is so critical. we are seeing wages rise but not as fast as inflation. real wages continuing to fall. the wage component becomes really important. the labor component becomes important. at the end of the day, we are still dealing with global issues causing inflation that the fed can't control through rate hikes. to me, when i look ahead i still

see the terminal right around 3.25 at the beginning of 2023. the fourth quarter, they will become more data dependent and possibly slow the tightening. you will have to grit through quite a few rate hikes and the risk of the fed continues to stay on extremely hawkish footing especially in the face of strong inflation data is very high. that's why we continue to look for volatility, risk premium that is higher. jon: always great to get your perspective. thank you for joining us today. the conversation going on the markets. joining us now is the director of research at universal. it specializes in risk mitigation. as we watch the s&p 500 got real

close to testing the loads we saw in may and we have seen the nice bounce. it feels like a day when people trying to reprice the risk. what would you say about the environment right now? >> you have to look at what's going on in the environment. the main driver is the spike in inflation and subsequent fed action rate hikes. there's a overriding concern that the fed is behind the curve. they failed to withdraw stimulus as the economy began to recovery from the fallout of the pandemic. on a deeper level, what we're saying is a massive asset bubble. it was created by over a decade of easy money and stimulus. in terms of the current environment, the s&p has fallen

from the high in december. what's a little unusual is the volatility index has stayed in the tight range through all of this between 20 and 35. it is nowhere near the type of levels with seen in volatility for example march of 2020 with the global financial crisis. you can characterize the drawdown as a slowly grinding correction rather than crash. the warning here is we have seen this before. during times of market stress. taylor: what do you do with portfolios to protect against the risk that you described? >> we specialize in a hedging strategy, it has been continuously refined and evolved from strategy developed over two decades ago by our founders. it has a long and successful

track record, but it has evolved continuously. our goal is to provide our clients with a high degree -- to protect against black swans. it's not meant to protect against 10% or 15% correction. it's the second leg down that we are concerned about. the call that in 2008 the s&p was down 20% and stayed there for entire year from the summer of 2007 to 2008. now, -- them the bottom fell out. that's where our strategy is designed to protect. jon: you mentioned 2008, the folks in our live blog noting the two instances of 2008 and 2000 where you have a sizable

number of central bankers trying to make moves on rates, that the u.s. ultimately finds itself already in a recession or is on its way towards one. if we were on our way or already there with that surprise you? >> we have to go back 40 years to see what we are seeing now. the 60/40 paradigm has not worked this time around. this has been warned about for several years. you can't have yields go to zero then expect bonds to provide adequate protection against stocks. the concern is that -- are we entering stagflation like the 70's? is the fed not doing enough to prevent that? on the other hand, will they panic and overreact and turn it into a recession? there's a myriad of risks facing

investors right now. taylor: what do you see is the more likely of the risks? >> it's hard to get a read on inflation. i think it's worse than what is projected by a cpi number of 8.5%. rent is up 30%. food and gas and up. i'm leaning toward this is going to stay high hunger. there is -- hunger. we had a wake-up call today. taylor: his credit in a bubble? -- is credit in a bubble? >> one analyst view is that we are in the most massive credit bubbles in history.

i think there are some highly respected people in the markets that are saying the same thing as well. taylor: big conversations we are having. coming, president biden is set to speak soon from the port of los angeles. set to hit on the inflation reports and the supply chain snags and the persistent challenges that have not abated. we will be at the port next. stick with us. this is bloomberg. ♪

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taylor: you are taking a live look at the port of los angeles. president biden is set to make comments on the supply chain, inflationary concerns that continue to persist in this economy. i want to bring us some commentary from ed ludlow who is live at the port. what are we expecting to hear from the president on a huge cpi date? >> inflation is not coming down quick enough and the administration will act to bring it down. it was interesting because oil and what the u.s. can do the energy industry. the question is what is the president doing with the supply chain on the ground? i am being told that the labor secretary and transportation secretary are both very active having daily calls with the port

of los angeles. backlogs here at the port, a lack of container space at a time when you get robust wealth, huge consumer demand helping to drive up prices. in the background, you have the longshoreman's union and the warehouse workers union in talks. if the talks are not successful, there will be further disruption at terminal island and that impacts the supply into container prices and we see inflation start to come up. the driver in the cpi is food, rent, gas. here at the port things are improving and we don't want to go back to a situation where things unravel. jon: we will see if the president talks about those labor issues. he has had relationships with some of the labor leaders.

in terms of what you have learned today, you did speak with the port chief, the executive director about supply chain issues. what more can you tell us? >> the executive director made two observations. volumes are still a record. the second thing is china is coming online. it's not forget there have been disruptions to the supply of goods coming into the united states from china because of the government induced lockdowns as they did a sweeping wave of covid testing. the port state operational, but now the goods are becoming available. traditionally peak container season is in july and retailers start to prepare for the holiday season. we hear peak container season will be in june. in other words, it's going to get crazy in the next early days here. the last point is that supply

chains are just that, chains. in the conversations i am, a lot of people are winning the anger at america's rail network and saying it's all good getting the containers off the ships, but when it gets to the rail it stops. quickswitch take a listen to the president. pres. biden: as we used to say in the senate, i hope you excuse the point of personal privilege. i think he must be related closely to a friend of mine. anyway, thank you. i want to say a few words briefly about the january 6 hearings that were highlighted last night. the insurrection on january 6 is one of the darkest chapters in

our nations history. brutal assault on our democracy, the attack on law enforcement, some live -- some losing their lives. it's american ash important the american people understand what truly happened and to understand that the same forces that led january 6 remain at work today. it's about our democracy itself. we have to protect our democracy. it sounds corny, we were all raised in the school of democracy and we'll have to protect. i never thought it was going to be this straightforward of a challenge for it the rule of law matters in democracy. we are seeing how the battle for the soul of america has been far from one. we can unite and defend this nation democrat and republican allowing no one to place a dagger at the throat of our democracy. that's what the throat -- that's

what the hearings were all about. i didn't get to watch them, but i tell you there's a lot going on. the reason i'm here. thank you, sal and jean and mario and mayor garcetti of los angeles and the mayor of long beach who i expect to soon be the congressman of long beach. [applause] you guys did a heckuva job when i came out here a couple of years ago to try to get things moving. management, labor, elected leaders. as well as at the time, we also had governor newsom pushing hard as well. we have two excellent senators. alex you're not looking any worse for wear. [applause] you're looking awful good.

you've always looked good compared to me. for the fire to this. alan and i have been working on this for a long time. we just had a meeting and we have to change it. we can't give up. we have to turn this corner. don, you are the real deal. i will get you into trouble, but thank you for sticking up for me. we have a labor secretary, i'm his translator he's marty walsh from boston. he always has your back. i had an uncle who used to say joey, you are labor from belt buckle to shoe sole.

he is labor from his forehead to the tips of his toes. today i would to speak about my top economic priority, fighting inflation. i understand americans are anxious for good reason. i was raised in a household when the price of gasoline rose, it was a discussion at the table. it made a difference. we've never seen anything like vladimir putin's tax on food and gas. america should understand our economy has unique strengths that we can build on. the job market is as strong as it has been since world war ii notwithstanding inflation. we added another 390,000 jobs last month. 8,700,000 new jobs since i took office. an all-time record. [applause] unemployment rate is near historic lows. millions of americans are moving up to better jobs and better

pay. families are carrying less debt on average in america. they have more savings than they have had and we are doing it all off cutting the federal deficit by $1.7 trillion this year and $320 billion last year. one of my friends talking about the debt and deficits, -- [laughter] that's another story. it's the largest decline in american history. because of the progress, america can tackle inflation from a position of strength unlike any country in the world because every country is getting a big piece of disinflation worse than we are. make no mistake about it, i understand inflation is a real challenge to american families. today's inflation report confirmed what americans already

know. the food price hike is hitting america hard. gas prices at the pump, energy and food prices account for half of the monthly price increases since may. inflation outside of energy and food moderated for the last two months. not enough, but it has come down. we need to come down much more quickly. my administration will continue everything we can to lower the prices to the american people and the congress has to act. one of the key ways to fight inflation is by lowering the cost of moving goods through the supply chain. when i first started to talk about the supply chain year ago, the american people understand. the supply chain isn't a part of their jargon every day, but they understand fully now. if you can't get the material needed to build a product whether it's automobile or whatever, it makes it difficult

to be able to move. that's called supply chain. that's why i have been focused on ports. last fall, ports around the world work injected -- congested due to the pandemic. we brought together poor operators, shipping companies, and labor to ease the bottlenecks. over the holidays, 97% of all the packages were delivered on time and on shelves when you went shopping. we weren't going to have anything on the shelves, but you all did it. [applause] on time with minimal delays. delivery times are quicker than they were before the pandemic. today, there are about 40% fewer containers clogging the docs for a long time then there were last november. this may was strongest month and the port of los angeles history. we are helping to fund

improvements. because of what my friends in congress have done, we passed the infrastructure bill and we are funding major new initiatives on the docks. the rail systems, the port of long beach is moving more quickly. port electrification so communications and communities can breathe cleaner air because they are electric machines that are not generating gas, coal, etc.. we continue to expand capacity of the ports. this is a time we took a different approach to trucking. last december, we brought together industry and labor to tackle problems facing truck drivers. it took double the number of commercial driver licenses being issued by the states in order to speed things up. we sped up the creation of apprenticeships allowing drivers