>> investors digesting it slew of central bank decisions, stocks catching up to the bond market. i'm kriti gupta with our global audiences, bloomberg: markets starts right now. ♪ kriti: into price action here, risk off for most of the equity market volatility in the stock market is correct -- catching up

to the bond market. as down 2.8%, over 3% earlier. a lot of those losses, where a lot of those pains are is in the nasdaq. the russell 2000 had a slew at close, huge when it comes to taking it on the chin. 10 year yields not doing a lot in terms of the broader volatility context, 10 year yield up about five basis points. how much of this is cashing out of bonds in the stock market? we talk about yields we have to talk about the dollar because that is going to be the story. especially as we have the boj overnight, earlier this morning, a lot of these questions are does this continue to be the trend? let's circle back to the equity story, devon further. we just mentioned our equities reporter, i'm curious about what all of this means in terms of capitulation and how much

farther we can actually go when it comes to finding a bond. >> right now, looking where the s&p 500 is trading, not far from where bloomberg intelligence is pricing in an potential recession. the s&p 500 driven by risks about the recession, market trading, inflation and how that affects corporate earnings. trainer say nothing really changed after the fed meeting, more of -- yesterday. kriti: it almost seems like going into the meeting, stocks were very comfortable with the 75 basis points ideal. maybe this might be the fed claiming control. the new factor in these other central bank decisions, ecb, bank of japan after the close, pick your poison, pick your central bank. i have to ask how all about factors into the equity investors. >> exactly, because this is not just a u.s. problem we're

looking at inflation. it is a global problem and central banks are raising to combat what is happening with high prices especially with national banks, but with the bank of japan overnight, there are indications there could be new key policy but now you see the move, whether or not we are going to see what's going to happen with the bank of japan, if they get more aggressive, it shows you how clearly inflation is becoming a global problem right now. kriti: so what is the pivot? what gets people to hop in and say we are confident the s&p 500 is going to end positively? jess: one problem is the earnings on the fundamental side. they're still elevated and looking at the year-end target for the s&p 500, 4600, a lot of strategists looking for those to come down but also capitulation and volatility, still around 33 even during the selloff and ahead scratcher to a lot of people, but looking at what was

happening during the dot pop-up head of the global financial crisis in 2008 and where it is trading if you are looking at the 20 day moving average is more elevated during those periods. what volatility are saying is you have not seen that -- whether it is earnings revisions going down dramatically, and the dollar is going to have a lot of impact on corporations, to nationals like microsoft warned recently, how it's going to affect revenues overseas. the nose are already there with the federal reserve and inflation, the unknowns are going to be what we potentially see could capitulate the market. kriti: people say maybe we are already there, maybe we are not. it is bifurcation in this market that is perhaps scary is for an equity investor. jess, we thank you. central-bank action this week, major repercussions, especially in the fx market.

a touch on the fallout. >> we are not going to see active intervention in order to generate a stronger currency but we will see central banks taking into account the impact of policy on the currency and how they can generate that lower reported inflation. my look at the currency because that's not going to be the main tool. but you are axum -- absolutely right, central banks are going to be looking for more comfortable in recent years. kriti: we should talk about headlines, lagarde saying limit on bond spreads, the ecb taking the anti-fragmentation reproach. will christine lagarde and the ecb broadly be able to keep that? she's been vocal about saying it is not the ecb's job to close those but we are preventing the anti-fragmentation, what tools

can they use? we will keep you updated on the entire story, the euro appreciation, the strength against the dollar, we will circle back to that story and brought it out and let's bring in the perfect guests president and founder of macro policy perspective. a fascinating career at the federal reserve as well and broader economics, we thank you for joining us. let's start there in terms of what do you make from the divergence you are seeing on the federal reserve versus the ecb versus boj? how to the global economy is deal with these separations? >> while you have been pointing out in the show that the tensions, we are in an integrated global capital market. if the fed goes a lot faster that will strain and make the jobs of the other central banks harder. i agree with your other guest, it is not a currency war but the divergence that are starting to

be material for central banks, so it is a very tricky environment to navigate and the hardest part of it all is that the latest, biggest burst of inflation is a supply-side phenomenon from the war in ukraine, it is not something that can be addressed -- if you're going to address it by cooling-off the monetary policy, that is a hard landing for the economy. you have to bring demands down a lot, you have lower supply constraint environment. so i think the risks have escalated rapidly over the last couple of months, given we added this more dynamic to the mix. in an inflationary environment, the fed does not feel like they have room to navigate and address the nuance of inflation. kriti: we know the fed mandate,

ecb mandate is that inflation story. but i have to ask how much of the central bank jobs is a surprise to the market right now, the federal reserve 75 basis points or the swiss national bank coming out with the basis point hike, how much of this has to surprise the market to reenlist some of that investor confidence? julia: i am not sure. the fed decided they needed to signal a more aggressive move in response to incoming data. i think we are already in an environment where markets are recalibrating to these new realities. they are recalibrating to the reality of much higher interest rates and more difficult trade-offs in terms of profit and as we saw with the market reaction to the cpi data, the market already knows, higher

inflation, higher policy, i am not sure how much we do need to actually surprise the markets to get with we are going. but these markets are on noticed --on notice and paying attention to every data point. kriti: speaking of every data point, how much recession risk should we be pricing in? you have markets that are completely collapsing on the idea that the economy may not be able to our jet -- able to digest these massive moves, but we are not necessarily supporting that with the data. we are still seeing slowdowns but we are not seeing the outright job losses, the outright layoffs you perhaps saw in previous recessions. how much is the market overreacting? julia: time will tell. returning from an insured market, they will move higher today and we see jobless claims come up from lowe's but they are still low overall and it is

still been extra nearly strong even though they have moderated to some extent. so generally speaking, when we look at them labor market indicators that are required to indicate the economy, we are a long way from those types of instigators. we would need to see a very rapid slowing in job gains in the coming months, which might materialize. we might get that. the market turmoil, all of the plot might make companies more cautious in adding a company and we are in the midst of recovery and labor force which is patient so more people, less hiring, we could see a return that is noticeable in the coming months. but recessions typically start a quarter to three quarters down from a pronounced -- now we see a pronounced slowing and the

unemployment rate started to rise. it does not seem like it is at hand and we still have quite the buffer on this in terms of income gains that come from having a good job in solid wage increases. kriti: julie coronado, thank you for joining us -- julia coronado, think you for joining us. go to mark upton with the first word. mark: i am mark crumpton with first word news. the leaders of germany, france, italy and romania pledged support for ukraine to become a candidate to join the european union after talks with president zelenskyy showing unity in the face of russia's invasion. they travel overnight by train and were accompanied by romania's pressure -- president and showed solidarity ahead of expected recommendation from the european commissioner that ukraine be granted candidate status.

foreigners turned up at this year's st. petersburg international economic forum. in the past, it drew major global leaders and executives. local businesses tended a slew of sessions about the need to become self-reliant. including russian-backed separatist republics in ukraine and wreps that is from the taliban. top officials say russia is bearing up better on sanctions than initially feared as the country faces unprecedented international isolation over the invasion of ukraine. senior european officials see little chance russia will use global food pressures by striking a deal to let ukraine zoom crucial brain exports. -- grain experts. they say there's leverage against key allies. government and intelligence officials say united nations facilitated negotiations are still struggling to make process does progress. president putin and the invasion

of ukraine has triggered a spiral in food prices about the world. the house committee investigating the january 6 21 insurrection on the u.s. capitol will focus today on the pressure then president trump put on then president -- then vice president pence to not certify the election win. mr. trump was repeatedly warned his plans were illegal. the hearing may include testimony from trump aids that when mr. trump learned writers debating the capital recalling for him, he responded by saying pence deserves it. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 27 hundred journalists and analysts in over 120 countries, i am mark crumpton, this is bloomberg..

>> i think they have backed away from that a little in this meeting. the fact that they dropped a critical sentence indicated they are not certain they can do this. that is an indication they think they are running the risk of a recession. kriti: this is bloomberg markets, i am kriti gupta. does jeffrey lack a -- that was jeffrey lackey about the fed and a soft landing for the economy. the s&p is down 3.2% but what is driving it? fundamentals, technicals, let's bring in chris murphy, derivative strategy. thank you for joining us. what is driving this move? on monday we had a narrative,

hedge funds were dumping everything, is that what story say? >> i would describe it as resignation. we are in a point where we understand this is going to be a slog, the next six to 12 months, it will be tough like you said with the fed trying to navigate this landing, less panic. i understand that hedge funds are dumping everything but there have been reports that there were pretty much very much gross into this week, the last couple of weeks we mentioned the argument still happening, we are seeing more volume this week but it does seem like everyone knows we are in for a tough run, mostly d growth but not a lot of buyers. kriti: 30 to handle on the vix, i have to ask about liquidity. how much of these moves are being magnified because of a lack of liquidity?

>> every time volatility moves higher you will see less quiddity. i would not say things are dislocated. you can look, of course to percent, 3% moves lower, those are certainly not all and it's not how you would put it as we would expect, but it is been higher and number of times even in the past year. we are not necessarily seeing the dislocation. we are more seeing consistent spelling, not necessarily as much panic as resignation and a lot of investors, even the hedge fund community are d growth to amount. his retail going to follow, institutional stuff, who knows? that's the way i would describe it. kriti: you look at the russell 2000, almost 5% decline on the

index, this is not what a healthy selloff looks like. is there a fear in the market that something is going to break? we get the boj decision tonight, a lot of questions but what that might look like and with the ripple effects might be, what could break in this market, that is when you see the vix spiking up 40, when you see panic indicators. if i knew what exactly what was going to break, i would be all over it, but i think there is an increased risk of something, whether liquidation, more selling for a big institution, a company bankruptcy, that is what you're going to see. we have had a linear selloff, a repricing, higher rates, moving lower over the course of the year. if we all of a sudden get some capitulation, liquidation type of event, you see these indicators going into capitulation territory.

you start to be confident that we are closer to finding a bottom but in the absence -- absence of that, more of a grind is what we are in for. kriti: chris murphy, i wish i could pick your brain for an hour. super helpful, thank you as always for joining us. so ahead, the latest details on the yuan muska twitter meeting, that conversation next, this is bloomberg..

kriti: this is bloomberg: markets. i'm kriti gupta. check on the markets, s&p 500 down 3.2%. russell 2000 taking it even harder. look at what the dollar's doing, the dollar train story, such a hallmark of these markets, right now weakening. a lot of this is going to be the

expectation of more euro strength on the back of an ecb rate hike, you know the swiss national bank earlier today on the ecb with the surprise rate hike. the first in 15 years. the question is is the ecb going to follow and how quickly, how much of it margin will they follow, how do they see some of that pricing, expect more of those ecb hike, the euro falling especially pushing the dollar and we will keep you apprised of all the markets, a major stock mover, elon musk addressing twitter employees at a companywide meeting for the first time since agreeing to buy the company for $44 billion in late april, joining us with more is ed ludlow. it has been a fascinating coverage of this. i have to praise you for leading our coverage on the terminal. i feel like we do not learn that much here. ed: the main takeaway is that

elon musk did not, and i underscore did not, explicitly state that he intends or had the commitment to the deal. in reporting going to this meeting, he intended to do that, he was not even asked the question by the cmo who was moderating and aggregating questions for the start. so was the first thing. otherwise we got deep insight into what his plans for the platform are going forward. kriti: let's dive into those plans. summing that stood out is the goal for one million daily active users, he pointed out earlier, 2059 million is where we are at and how do we get there? ed: to talk about some of the changes on the revenue side for example, he was supportive of advertising, saying it still has a place for twitters business according to sources, but he talks about the merits of this instruction model. something that caught my eye or

right here is that twitter should charge users to verify who they are. he would not ask twitter users to necessarily reveal their entity, but in making a payment that is a verification in its own right and that is one way of dealing with bots. whether twitter is a subscription or an ad model, he is concerned about bots the less and essentially the goal is to make twitter an expensive platform, requiring some form of payment that disincentivizes bought activity. kriti: we will keep everyone updated on will be here a lot, ed ludlow, thank you, coming up in that conversation, ed ludlow will be back with details as we go over that in the next couple weeks. one more check on the markets, the selloff here is getting stronger and stronger, 3.3% decline even on the 10 year yield, muted, but you are still

seeing the risk off mood. inflation is this theme of the day, 10 year yields up only four basis points so the context of the volatility we have seen 1720 point basis hikes moves on the day. a lot is dislocated, the correlation just not working. we will keep you up-to-date on all this, i'm critic up to, this is bloomberg. ♪

mark: with news around the world, i'm mark crumpton. several european countries fast-track -- support fast tracking ukraine to become part of the block, leaders from italy, germany, romania and france visited kyiv today. the leaders of france, germany, italy and lavinia received a tour. as