♪ >> the fed will be able to slow demand sufficiently. >> the fed is changing their policy narrative so quickly. >> that is focused on inflation.

>> the market is between inflation concerns to recession concerns. >> i think jay powell is trying to finesse that you cannot go wobbly on the resolution to tackle inflation. announcer: this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. lisa: looking forward to a consumer sentiment reading. good morning. this is "bloomberg surveillance" with tom keene. kailey leinz without. how fragile is the data we are about to get? tom: the data is critical. this is looking at five years and the guesstimate is another five years and the question is inflation finally anchored as it has been predicted or is it unanchored and that squishy concept. what it means is a lot of uncertainty within the market.

we certainly heard that this morning. lisa: uncertainty is the word of the year and the word of the moment in light of the fact that we hear this optimism some jim bullard about earnings, consumers, the strength of the u.s. economy in light of a rally into bonds that indicate slowing growth and something more recessionary. try putting those two ideas together. tom: this is about resiliency. goldman sachs is looking for a tad bit american economy in q4, what he is suggesting is the system is in place including the balance sheet of individual household of businesses where we can maybe have a shallow recession which is that resiliency that bullard leads with. lisa: we are looking at perhaps the first week of gains for u.s. equity market but they are not broad-based when it comes to looking under the hood. it indicates a bit of caution. kailey: shifting into defensive areas of the market like

healthcare and technology which has benefited from the fact that yields are moving lower whereas the higher movement in yields has put pressure on some of the high multiple stocks but it is so nation and -- so nacient. we are talking about a sector of the index that is down on the year. lisa: when you talk about 40 on the vix, you have been talking about it for a couple of weeks now. amy ceeo roman -- amy silverman was brilliant talking about an increasing amount of hedging activity. at what point does it get broken in the face of the vix? tom: the vix right now 28.77 which is comforting. let's call it from 32 to 29. 40 is distant. we have heard this from many guests, the tone that is out there is optimistic. gerard of rbc capital markets on

the west coast said the tone was pretty good. kailey: the markets were off a little bit of earlier highs. we are looking at 0.7% gains for the nasdaq and the s&p. the bid into bonds fading a bit. we are seeing yields higher, down 3.12% on the 10 year. on the 10 year, similar move. very well put. crude is interesting. we saw a slip yesterday after crude had sold off in light of some of the recession worries. this push-pull between supply and demand and what could be coming down the pike when it comes to a downturn. i really do think that the question of the moment is of the -- if the bond market rally is a good thing or a bad thing. have we seen revenge of the 60/40 portfolio that people have not been seeing for this year so

far. michael bell, global market strategist at j.p. morgan joining us. what is your view? will we see a persistency to the rally or a relationship between bonds and stocks from here on out? michael: i think bonds have become more a lot -- a lot more attractive. the housing market cannot really handle mortgage rates going up much more than they have already. to me that suggest that we are probably nearing the peaks. we could probably go a little bit higher. they will not move materially higher than where they are at the moment. i think that will cause problems for the housing market and that caps out how high they can go. tom: in the fractious debate of j.p. morgan, compare and contrast housing in england from

housing in america. do you people combine them together or are they truly distinct? michael: i think they are quite different because in the u.s. you have 95% of people on relatively long-term fixed rate mortgages whereas in the u.k., about 17% of people are on track mortgages and another about one third are at two years a l ess. the u.k. will feel the interest rates a lot much more quickly than the u.s. would. however, the u.s. is not completely immune to higher interest rates because 95% of people are fixed. it means the vast majority will not notice interest rates going up but who does notice, the people who are moving homes. from then, the 30 year mortgage rates go to 5.75 today.

at those kind of levels, if you look at the cost of buying a house and bear in mind house prices have gone up 40% since the end of 2019 in the u.s., the amount that it would cost the average household to buy the average house today has approximately doubled over the last couple of years. that is why even though the u.s. is much more resilient in terms of most people not feeling those higher rates, housing transactions will come under pressure because of these high rates. that is what caps out. kailey: you will not find the house hunting anytime soon. as we talk about how high bond yields go, does that form a bottom for the equity market? how close are we to that? michael: i think it depends ultimately on whether we end up getting a recession or not because we have seen valuations come down and valuations now

with the exception of some of the growth stocks in the u.s. which is still about 21 which is really remarkably high given how fast stocks have fallen already so far this year, the value sector of the market trading on about 13 in the u.s. and equities outside of the u.s. trading on 10 to 12, valuations look pretty reasonable. the big question now is given analysts forecasting the earnings will grow this year, is that too optimistic in the face of potential recession? if we get a recession, there will be a further downside as expectations need to come down. with the markets down is much as they are year-to-date, it will be hard to sell at these levels and buy back in cheaper. you have to have a high degree of confidence that you can find the bottom if you think you will be able to do that. i think it makes sense to be neutral on this at the moment.

lisa: it is now time in the week where we talk about feelings ahead of the sentiments from the university of michigan. consumer sentiment in the united kingdom came in at the weakest, the worst going back half a century. is there a lack of cohesion right now between the feelings and the fundamentals in the equity markets? michael: if you look around, the michigan survey and the u.s. and the u.k. and europe, you've got near record lows of consumer confidence. consumers are feeling the squeeze from higher prices and they are facing the fact that their interest rates are going up as well. if that is out of line with what the markets are pricing, not particularly. look at the share price of retailers right now. absolutely hammered across the world. i think the market is not complete unaware of this risk

that you will get a pullback in consumer spending. the question is how much further has that got to go and whether we end up in recession or not. tom: thank you so much. greatly appreciate it. jp morgan asset management. moments ago, the first read of the weekend. there is no other way to put this. our wonderful david pin was literally at the top of my reading pile this weekend which is "mining in bitcoin and crypto." most four -- almost $4 million in bitcoin coming to the bank of international settlements. kailey: it speaks to the liquidity issue that the entire crypto complex is facing but for these minors, many of them have piled on the debt. they are now in serious crisis as we have seen crisis for cryptocurrencies come down to the point where they have to offload some of their stake in these coins, actually selling bitcoin in order to be able to provide enough liquidity to continue operations.

a lot of it also comes back to the inflation story and the higher energy prices story because it costs a lot to keep these mines in operation. they consume a lot of energy. tom: i have to go to kailey on this. we are talking thermodynamics and you killed it at uva years ago. what is a crypto minor? kailey: a crypto minor is how you get the transactions in cryptocurrency. someone has to do a bunch of complicated math on a computer to make it work. there is movement especially on the blockchain toward proof of stake in which that process is a lot less complicated. you have to put up your own stake in order to process a transaction. in theory, that makes the whole thing more energy-efficient although that upgrade keeps getting pushed further and further out so there is a question of whether or not we get it. was that really wonky? tom: it was very wonky. i would suggest a t-bone or new york strip. i don't know which.

right there was a clinic on my skepticism. i will be blunt, read david pin at bloomberg. it is a brilliant story. i do not know what to say about that. it is brilliant. futures up 30. this is bitcoin. good morning. ♪ ritika: it is being called the biggest breakthrough in u.s. gun safety in three decades. descendant voting 65-33 to approve bipartisan legislation that will include background checks, secure school, and give states money to fight gun violence. it is expected to pass the measure. it passed after the supreme court issued a landmark ruling that could mean more guns on the streets of big cities. in the u.k. in it is the boris johnson has suffered a major election upset. he lost a key prominent seat in

southwest england. it is the first time that the constituency has voted conservative since it was formed 25 years ago. the liberal democrats won the seat. stock prices have crashed back to where they were at the start of the war in ukraine. that could bring some relief to food inflation that is squeezing consumers. wheat, soybeans, oil, and sugar have retreated in recent weeks. the bloomberg agriculture spots contract for the work week since 2011. shares of twitter are higher on premarket trade. user data this week to elon musk who wants to by the company. the data includes real-time information that allows him to to determine how many users are actually users. the data was being supplied -- the data being supplied just was not enough. 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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girls, i said “bedtime”! >> yes we can. the changes we are seeing taking place in economic performance are to be expected. all of these changes were acknowledged by ministers in the commission, by the ecb. it is a risk, but we can avoid it. tom: the euro group president speaking on meetings this weekend in europe.

we have to squeeze this in. it is too important. bullard of st. louis in europe with ubs looking for a 3.5% offense fund rate. pricing at 3.5%. that is a big deal. that is optimism. lisa: this is coming away from that 4% fed funds rate people were looking for. andrew from citigroup reiterated yesterday how much to see people easing off of their expectations for how far the federal applico. tom: two year yield yanks back. up seven basis points. 10 year yield, 3.11. this is an immense joy right now. shahab jalinoos is global head of affect strategy at credit suisse and joins us this morning. i want to go to the magnitude of your calls. i want to go weak in well out past 140 -- i want to go weak yen will let past 140.

strong euro swissie. why do we get these magnitude of moves in foreign exchange? shahab: we are seeing the end of central banks using balance sheets to manipulate where fx rates trade. you are seeing fx rates react to that. japan is trying to stay the course as long as possible. that is what we are seeing reflected. tom: is it a big enough shift coming off of balance sheets dynamics after world war ii? shahab: it does not need to be as big as that to have significant effects. let's put it that way. in the euro swiss cross, it is. easy to imagine that going down to 97, even lower in the weeks to come. tom: what does it do to a

mcdonald's hamburger? asking for a friend. shahab: it is a good idea to think about those things. they will get more expensive. but that is not something that is worrying the s&p at this point. tom: that top takes out at $20 for a number two value meal. lisa: i sure that there is some personal experience in their. i wonder how much you are looking at to yield as we were just hearing from j.p. morgan and how much does that mean peak dollar. how much are these two measures trading in tandem? shahab: it has definitely been the case that rate differentials and the u.s.'s much higher yields have been helpful for the dollar but there is more to the dollar story than yields. on the trade side, there has been very big shifts in trade dynamics that need to be recognized. right now we have the euro area with a trade deficit.

we have japan moving rapidly in the same direction as well. the currencies likely the euro and the yen were backed. the energy price shift has changed that dynamic materially. on the u.s. side, you have record exports. you will be needing 200 billion dollars of agricultural exports in the fiscal year for the protections from that side of the story. when you put all that together, to me there is more to the dollar strength story than rate differentials. kailey: how does this translate into the big crosses whether it is to reading or in general how strong the dollar can get? shahab: the dollar looks strong compared to last five years. if you go back much further, the dollar has been a lot stronger for a variety of reasons. the key point i would make is it is not the same dollar as the last time euro-dollar was at

1.05. when you have trade deficits as a problem, you need capital inflows into your area already net basis if you will have a currency deficit. that is something that has been missing. the u.s. has been a capital exporter for many years. the new value proposition that the euro needs to offer at this point in time seems to avoid going down and i think that is absent right now. kailey: let's move from europe to the island next to it. we have u.k. consumer confidence data earlier today showing the lowest in 48 years of data. clear concern around inflation, the cost-of-living, the possibility of refreshing -- possibility of recession. how does that readthrough through to your view on starlink? shahab: we think sterling will go lower. eventually a move through the level. the problem for sterling, you have the same trade story

development that invented for the euro. it is not lightyears of a weak pound have created big trade services are very competitive exports. that has not happened for a variety of reasons. you have a currency that is not really have any reason to go up right now. even when you think about the bank of england, the market is pricing in the 50 basis point hikes consecutively. they are a few ahead of us and get the bank of england -- yet the bank of england is pushing against that negative and makes it difficult to figure out what his price tag. when you put the factors on the table, it is going to go slower. tom: i have more questions. you have to go. but please come back soon, if you can. these are some abrupt calls from shahab jalinoos. a different landscape for all of us. investors, including jerome powell with the kind of moves that credit suisse is talking about. mr. bullard with headlines coming up fast and furious.

emails, tom, forget about the mcdonald's burger in switzerland. he talks about the bank of japan and the impact of the new carry-on key burger -- teriyaki burger and what it means to the whole domestic system of japan. kailey: it is not just the burger. was i 20, maybe 19? japan. i just want mcdonald's and i am greeted with a huge coaster of chocolate covered french fries. it is a sang. would you -- it is a thing. would you ever put those two things together? tom: no. lisa, we have bombs on the move. i am sorry. we have a higher yield regime. what is the why? lisa: why have we seen such a rally this year? this month. it has been a complete selloff

this year. this month, it has been a breeze. when do we give it all back? do we go to a michael bell to yield position or do we look at a replacement of higher inflation come of an aggressive fed and the same narrative we have abandoned. tom: do we see curve inversion on the spread? lisa: people are looking later this year whether it happens again today, i will leave that to you to decide. tom: i will wake up after a nap and maybe we will see it. three basis points between the two yield and the 10 year yield. stay with us. this is bloomberg. ♪

tom: "bloomberg surveillance" good morning. blue on the screen. optimism. help me with yields here. i need help on the data check. we were under 3%. we are now at 3.07%. where will be be at three -- 3:00 this afternoon? lisa: yields on the front end

rose by one percentage point which is an astronomical amount in proportion to where it has been. it has come in 50 basis points within the week. how much more can we see going forward? i am also looking at 10 year yields also indicated upward. the why? i don't know. maybe it is the st. louis fed chair president jim bullard coming out and saying he wants it frontloaded. others had many jumpy markets. tom: jumpy markets and lots of really good conversation today. this is not only the conversation of the day on fixed income from bloomberg surveillance but indeed for the week and can i dare say for q2. ian lyngen is out of minnesota and the cross in school of finance -- the karlsson school of finance is definitive. the theme of capital markets and rights absolutely the most dense notes of fixed income dynamics on the street. we are thrilled he can join us

in the studio today. welcome to bloomberg. i will cut to the chase. forget about the y-axis. moving yields. the mystery of the x-axis as bullard talks about frontloading. give us the nuance to the pro audience of the x-axis dynamic, the first and second derivatives of the time change we will see. ian: i think this is the most important conversation invited -- conversation in financial markets. how can bullard be talking about a 350 terminal rate when the reality is that two-year yields are trading at or below 40%? it really -- trading at or below 3%? it comes down to the moving window. what the market is saying is you might hike now, but you will have to start cutting much sooner than prior cycles. tom: global sacs economics talk about core cpi and the idea that

we did not have a real understanding of the rate of change of how core cpi is going to come down. do you share that uncertainty? ian: i certainly do. i would add one nuance and that is all inflation is the same at this moment for the fed. headline inflation, core inflation, they have made no distinction. it is interesting because in the past they would always focus on core inflation over headline because it was less volatile but the realities of higher energy prices, higher food prices, and the fact that inflation has become the political touchstone at this point, makes all inflation equal and i think that will change but not until the midterms. kailey: it is to grades and to yields. have we already gotten past that? are we at a place where you can decide that it is an active -- accurate characterization of what we have seen? ian: i said the same thing once we got to 320. at 350, the logic holds a lot

better but the reality is there is going to eventually be demand for 10 and 30 year paper and we have not seen the key investor classes of japan. there are certain parts of europe, really come in and start buying treasuries and when we do, that will be worth 35 to 45 basis points. that gets you back below 3%. the curve more inverted and the market even more worried about a recession. kailey: is this supportive for risk assets? is the market going to get more worried about recession and could potentially have to reduce their estimates for margins and profits? ian: that is again, one of the key uncertainties. i would normally say yes, you have a less aggressive fed, lower rates, you should have a good set up for risk assets. but this fed is behaving much differently than we might have otherwise anticipated. so we could see the possibility of a recession increase but the fed instead of having the

traditional response just push forward and say 3.5, we will get there. we might push it into a recession but it is worth keeping the decades of hard won credibility as an inflation fighter for the fed for this one cycle. kailey: the fed already has a credibility problem and that the bond market is misleading the fed -- misreading the fed. who is asleep? ian: if you look at breakevens, what you can see is that inflation expectations continue to move lower and lower and that is a vote of confidence in the fed's ability to control inflation and forward inflation expectations. one thing can be said, the tips market is not asleep at the moment. kailey: jim bullard has said that the tips pricing is pretty much right on at the moment.

as we put this together, the market has confidence in the fed's ability to fight inflation. what it has less confidence in is what the ultimate result of that inflation fighting is, how deep a recession will be when and if one arrives. what is your assessment and what that means for how low we could see yields going? ian: i think at this point the conversation is where we are just coming off of a negative real gdp print for q1 which was -1.5 after revisions right now. gdp for the second quarter is tracking at zero. if we have a repeat of the higher-than-expected inflation profile in the u.s., we could dip below zero for real growth in the second quarter and that would make a recession a very near-term event. caveat, that is not the same type of recession that the market is talking about. the market is worry about a real recession with higher unemployment, that we actually

see an aggregate hit to nominal demand and that is not where we are yet. tom: as part of your work, ian lyngen joins us. you and i have never seen these bond losses. i am fascinated and honored to ask you this question which is get away from the nuances. the bottom line is the total return index. it is -12%. how does bond psychology change if people are looking out to 2024, 2025, 2026 to catch up? ian: an important aspect of bond losses in the treasury market is to keep in mind who the major players tend to be. tom: people taking a loss. ian: a lot of the people taking a loss are attempting to match their index but everybody has been short. on paper, it is a significant loss but a good portion of the investment community has fared reasonably well. tom: what about mere mortals?

they opened up their statement from capital markets and say profanity about lincoln. the real world out there. this is a market we have never seen. it is worse than vocus bond market. ian: a person at home opening their statement, what they are really going to be thinking is mortgage rates are almost 6%. that might be the problem. a little bit of pain in terms of the opportunity to invest in higher treasury yields is one thing but as the ramifications of the fence tighter monetary policy continue -- the feds tighter monetary policy continue to push into the housing market, that is where we get worried. kailey: how much is your to yields thesis hedging on this idea that the inflationary numbers are transitory, that we had this transitory narrative guiding investors and the federal reserve? ian: i think the peak narrative is based more on the hawkishness and the aggressiveness of the fed.

regardless of how inflation plays out, what we know is that a lot of what has occurred at least over the course of the last six or eight months has been a function of distortions created by the pandemic, the supply side on the energy sector, and now food inflation is very material. fast forward to this time next year, the year over year inflation principal will not be as high. that does not mean it was transitory, but the fed was that much more hawkish or in fact, prices moderated just based on demand. kailey: while we are fast forwarding to fast forward to tonight 5 a.m. we get the consumer numbers. is the bond market going to latch onto this intimate read how bad it is and what that means for growth prospects or the inflation expectations and what that means as to whether or not the fed will have to be more hawkish for longer if that is becoming interest in the economy? --, entrenched in the economy -- becoming interest in the economy? -- becoming entrenched in the

economy? ian: most of those have been going the wrong direction for there to be any additional confidence. i think we will focus on confidence over inflation expectations because the fed has communicated that they will do everything it takes to keep inflation anchored. tom: very quickly, do bonds have catharsis? we think about stocks going down. does that happen with bonds? does everybody sell at the same time? ian: there does tend to be key moments of capitulation in one direction or the other and right now as i mentioned, the vast majority of the market is short treasuries. there will be a point where people wake up and they say i do not want to miss out on these higher yields. tom: wonderful to see you. we protect the copyright of all of our guests. ian lyngen with us today.

lisa, you continue the discussion in the next hour. lisa: we will be speaking on the open with invesco, chief fixed income strategist. i am excited to have this conversation of have we seen peak yields. is this because of aggression from the federal reserve and if that is the case, how much has stock markets price this in? if that is the case, real hawkishness sparing a particular downturn or stocks being really true to the downturn in margin. tom: a toxic brew of hawkishness. will we see inversion today or monday? who knows. 3.71%. 2.71 basis points. the curves are flattening this morning. two year yield all over the place. higher yield by six basis points, 3.07%. the equity market continues a generous left. day after day, the nasdaq, i

cannot give you the 12,000 item. 11,800 on the nasdaq. of 0.8%. stay with us on radio and television. this is bloomberg. ♪ ritika: keeping you up-to-date with news from around the world, i am ritika guida. action by the senate and the supreme court have underscored the divisions overcome policies. this inadvertent 65 to 63 -- the senate voted 65-33 to combat gun violence. it came hours after the supreme court issued a landmark ruling that could means more guns -- could mean more guns on the streets of big cities. congress contacted the white house after the 2020 election seeking pardons from president trump. that is according to video testimony played by the committee investigating the january 6 insurrection. the congressman included matt gaetz, scott perry, and mel

brooks. wall street biggest banks announced billions of dollars to investors that passed the federal reserve test to their ability to reach down market turmoil. banks such as jp morgan, morgan stanley, and goldman sachs could handle a recession. in the u.k. consumers are starting to crumble in the face of soaring prices. the government says the volume of goods sold in stores so 0.5% -- fell 0.5%,. another report says consumer confidence in the u.k. has led to a record low this month. europe's travel chaos is about to get worse just as the summer vacation period gets underway. canceling 3100 flights after a wave of coronavirus infections led to staffing shortages. chappell has rebounded dramatically in europe. that has projected the cancellations and lines lasting

hours. 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.

>> i think powell is trying to finesse it. it is not clear for him what the terminal rate is right now. he has to continue to guide the market toward hawkishness. he cannot go wobbly on the resolution to tackle inflation. tom: greg staples, head of north american fixed-income. really important comments on fixed income and we thank ian lyngen of capital markets as well. to get your weekend started to think about the next six months, kriti gupta with perspective, what are you talking about? kriti: we are talking about

euro-dollar. if you look at the 12 months forward, euro-dollar spread, the bond market is pricing in going 12 months down the road essentially in mid 2023. for the radio audience they are pricing in 43 basis points of negative rates. in 2023, at least for what the current bond market is pricing in, they will expect some recessionary pressures to which they expect that the federal reserve will have to act using some of those rate cuts and that is what this chart holds. whether that actually happens is another story. significant developments that have been increasing. tom: this is a abramowicz territory. we have no comments on this. thank you. my head is spinning over all of this baby -- babble. kailey: it has been hard to

follow for weeks and months. i do not know of any of us can find a narrative around this bond market or this equity market. tom: we will see. we have had a lot of important conversations but we have saved the best for last. this is series. the airlines are a mess. we are honored to bring you a senior research analyst at cowen helane becker. i'm going to ask the question that every single listener wants to know including ms. keene. is this turmoil at airlines risking the wonderful safety record of commercial airlines? helane: not at all. the u.s. and worldwide airlines pride themselves on being safe. safety first. that is the most important thing and i think that will be the case going forward. the issue with delays and

cancellations is another. tom: item not want to make jokes about this. we all have our own stories on this. let's start with the pilot shortage. they are not going to fix this by labor day, are they? helane: not at all. think about it this way. over the past two years, approximately 10,000 pilots retired and left the profession. the industry needs to hire to replace that just to get back to where we were in 2019. that is 10,000 pilots right there. they are about 2000 pilots retiring annually. when you think about replacing those 10,000 plus the additional 2000 that we need just to replace retiring pilots and pilots on top of growth, we estimate needing 15,000 pilots this year, another 5000 next year, again in 2024. so you are looking at 20,000

pilots over the next three years. we just do not turn that many out. kailey: you have a labor shortage that is leading to these problems, leading consumers like me to look at all of these headlines of flights, thousands of them canceled every weekend and i see how much ticket prices are still going up. i am looking at that saying i'm going to take the train. when will this exacerbate the issue? tom: excuse me. is helane becker your travel agent? is that what you are doing? are you booking a flight? kailey: as an airline analyst, she analyzes consumer sentiment around airlines. to this point, airlines have had success in passing on higher fuel costs through the mechanism of raising ticket prices but as americans pay more for their own gasoline, how long can they really do that? helane: exactly. you make very good points.

not only is it higher gasoline prices to get to work, it costs many people twice as much as six months ago. then you have higher food costs and so on. this is a major problem. prices are going up and we do not see them going down because you do not have enough staff and it is not just pilots. people do not realize that the u.s. has not trained any air traffic controllers for two years. they are on the hunt to find more. i think i looked at the numbers yesterday and we saw something like 4000 air traffic controllers are needed. it takes four years to train an air traffic controller and then another two years for experience. we are short them, short pilots, shortstaffed at every airport and ticket prices are going up. you are right. there is a point at which

consumers are going to say enough. we cannot take this anymore and we will stop traveling. and the airlines are pushing the consumer into that direction, our state -- aren't they? there aren't as many flights available and when there are not as many seats and demand, they have to raise ticket prices and people opt out. . to your point, they either train or drive. not that driving is cheap, but exactly so, they make other choices. tom: i know you love united airlines. are you going to move yourself based on this drama? helane: we are always reviewing your rating based on valuation. tom: no one is listening. give me some moves i can work with. helane: we review our ratings on a daily basis based on valuation and what we think the airlines can earn.

we still have the airlines profitable this year and next for that matter. we are hoping that costs are cut or at least flatten out. tom: helane becker, thank you. great of you to come to us on a friday. helane becker of cowen and all the challenges out there. as i was watching bitcoin move down, why does it go down on a weekend? does everybody step away? kailey: it is such an unusual phenomenon. so much of the price action comes when u.s. equity markets are closed. i wish i had a clear reason why. i don't have one but it is interesting phenomenon. this weekend in bitcoin has been much more boring. tom: let me do a data check. 10 of 5 a.m., one hour and -- 10:00 a.m., one hour and 10 minutes. i know it is coming late. stay with us for the michigan inflation expectations.

we will be looking at that year futures up 25. yields reversed, higher yields. what is great in television is when someone in the control room has a talk in my ear for the first time and understand the weight and pressure. we are thrilled at bloomberg to say that rachel from wellesley has survived the last 10 minutes. we welcome her into the trenches of "bloomberg surveillance." stay with us. inflation expectations, michigan, in 64 minutes. this is bloomberg. ♪

>> from new york city for our viewers worldwide, we see possibly the first up week in four weeks. the countdown to the open starts right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg, the open" with jonathan ferro. ♪ lisa: we begin with the big issue. >> we are probably in a slow patch. >> going to be really difficult for the fed to hikras