>> i do not think we are turning a corner until the market knows we've definitively avoided a recession. >> i think we might still see some upside surprises. >> we are trying to digest with the federal reserve is telling us. >> this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa

abramowicz. jonathan: live from new york city, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. as g7 leaders confront similar problems. tom: just in the last 20 minutes we started to see the markets, all sorts of little tweaks and nudges across the terminal indicating a return to what we saw two or three weeks ago. they will return home to the same challenges. jonathan: central bankers are confronting them. we are from president lagarde we will hear from chairman powell. the speech was interesting, laying out what they have to do and opening up for a bigger move down the road. you'll hear a lot more of that in the future. set to go 25 basis points in july. the door is open to move away from that and maybe go further

down the road. lisa: frontloading is a word we will hear again and again from the san francisco fed president talking about how the 75 basis point rate hike is on the table. they got it so wrong and this is spooking everyone that they misunderstood how sticky inflation would be. don't want to let it get entrenched. jonathan: looking for 8.6%. a little bit earlier this morning, do you want to give us more color on that. tom: i don't mean the leaders were sent -- i mean the punditry. absolutely first rate here in the coming moment. that's the kind of people want to listen to. not the parlor games about what

the fed will do three meetings out. what is needed here is not a mea culpa, it's a brama cupla, where you are worried about what you said and you have to reaffirm your worry and gloom. lisa: i'm gloomy and neurotic. jonathan: there's no me a call puffer lisa. bonded -- not a mere culpab -- mea cupla for lisa. tom: listen the last 10 years, up 16% per year in europe only 9.7% if you take up 10 best days

in the last 10. jonathan: if anyone's wondering why we're in separate studios maybe you can work that out. i think you need a vacation. [laughter] nasdaq 100 up. good morning to you. yields with a lift as well put up another five basis points. 3.2 490. as we start to ease the quarantine restrictions in china. lisa about two years behind the rest of the world. lisa: whether this is some sort of relief from the zero covid policy remains to be seen. saying oil really the main driver of inflation. it's not entirely the main driver. the s&p, price index. we have seen it rising at a

record pace. unbelievable to see a 20% increase in the price of a home. how much we see that cooling-off and how much that has consumer confidence. how much does this diverge. the survey which is shown a record to deterioration in how people are feeling. we haven't seen the same kind of negativity in the consumer confidence numbers partly because doesn't reflect as much on oil and gas costs people are experiencing. how much is that continue versus perhaps more. the u.s. is planning to sell seven-year notes. the 5-year note auction did not go well. how much do pro -- do investors boycott this. these have been trading with yields are higher than 10 year notes for tent -- for months now because of the lack of liquidity in the longer term horizon. which investors come to the

table at a time such as this. jonathan: you've done a tremendous job of explaining this. the highest yield on the curve is the 20 year. what's going on with that maturity? lisa: a relatively new reintroduction of the 10 year and you don't have as big of a market of people trading within it. it highlights the lack of liquidity we keep hearing from investors that underpins the uncertainties particularly with the direction of yields. jonathan: let's get to the head blackrock investment institute. they've had their outlook forum recently. your conclusion as you sit around the table for blackrock. >> good to be with you. that was two days of pretty intense discussion. we've been building up to that.

but we're in a new regime in the way we think about it now is in time we will appreciate that. you go back to the mid to the mid-2000 there was a debate of this remarkable feat we've managed to define inflation and output. we were debating why. policymakers were taking credit for this. the alternative proposal we are proposing we've been lucky. i think with 20 more years of experience. i think you're in a world now it's different. one that's going to be driven by supply a lot more and that creates a much sharper trade-off and we will see a pickup in macro. this is really persistent and that is a much more complex world. so i think that's the main key

takeaway and then from there. >> in particular whether you also see peak yields given the supply constraints that could drive prices higher on a more -- level. jean: we think we are set up for markets to receive incoming information very hawkish play. that's can it be the bias. once we get data that comes in and get some relief i think we will look through this. i think this will be with us for the next few months. i think there will be a central bank -- i think we will see the front end of the curve continuing as we see the pressure go up and recession risk build up. until we see a bigger -- from the central banks. lisa: with that backdrop it

sounds like you're in the camp of profit margin compression. it's not exactly goldilocks scenario. where is the haven if bonds and stocks are potentially under pressure in this new volatility. jean: we do not see a goldilocks situation on the table. we hope to see stability eventually come to pruitt -- fruition. so we need to be more careful tactically. we are positioned cautiously. we don't see the rally is something you want to participate in this juncture and bonds will be continue under pressure. more cautious, more longer term horizon we will see -- if

there's a recession it won't be a massive recession. we will be looking through this from a longer-term perspective. looking beyond the one year and beyond. until we get there it will be feeling more painful in the portfolios. jonathan: next month or next week at the moment. thank you as always. tk, at the moment it is difficult to just get out beyond the summer. tom: it's really important. a fervent about of literature in 2004 and also some important work which puts -- which said there is a sacrifice to inflation stability, and the key question here for people who is

actually first rate. easily could run the bank of canada someday. the absolute critical distinction is when we get done with bringing inflation down to the easy level. say 5% or 4%, then watch. these guys are out front thinking about what happens when we get to this arbitrarily 5% inflation. that will be a huge deal at jackson hole. jonathan: they don't want to talk about it, tolerating anything above two. tom: central bankers do not. and to be fair in the game, a can come out and say look politicians calm down will go from a percent and 9% down to 5% and then take a victory lap did jonathan: what will they tolerate? tom: i'm getting go there

talking about 3% and 2%. james bullard. jonathan: jackson hole was going to be an interesting one. we will be there. futures up a half of 1%. are you the new stylist? lisa: he already bought me l.l. bean. jonathan: what is that? lisa: tom, what is going on. jonathan: futures are up. good morning to you. this is bloomberg. >> keeping you up today with news from around the world. china has made its biggest shift yet in its covid zero policy. this after beijing and shanghai said they have no new locally transmitted covid infections for

the first time since february. runaway food inflation may be down soon at least temporarily. commodities falling after a surge that pushed up the price for everything. the agriculture spot indexes on track for its biggest monthly drop since 2011. fears of giving way to optimism that there will be huge harvest. 46 people were found dead in a semitrailer. a perley the victims of heatstroke. another 16 were taken to hospital. authorities suspect they were migrants. texas is seen a surge in immigration over its border with mexico in recent years. last year, companies to find the pandemic to go public at a record pace. market volatility and fears of a downturn have brought an abrupt end to the party. thick -- companies raised a combined 4.1 million

less than 6% of the record sell rate in the first half of 2021. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta, this is bloomberg. ♪

>> we expect to raise the key interest rates in september and in the medium-term inflation outlook persists and deteriorates, larger increment will be appropriate at the september meeting. if the inflation outlook does not improve we will have

sufficient information to move faster. jonathan: that was the ecb president, really important point in that speech earlier this morning. you will hear from her again tomorrow with governor bailey and chairman powell. francine lacqua will guide us through the coverage. like the ecb's version of jackson hole. over the last few years, the ramped that up. >> but not paper driven. it's a lot more about the debate of the moment where jackson hole, there's a difference there. jonathan: i think our audience will want to hear some of these headlines pray allies send weapons to ukraine so they can defend, not attack. it does not favor listing russia as a state sponsor of terror. on crude he said the situation with oil prices is unsustainable. he is speaking right now. jonathan: this is -- tom: it is

a confusing set of messages. annmarie hordern is in germany. joining us now, maria taddeo in madrid. i've got to rip up the script. i'll be as direct as i can. macron, allies send weapons so ukraine can defend, not attack. we have seen in the last 12 hours a horrific missile attack between kyiv and crimea of a shopping mall. when do we lose this sophomoric idea that we are defending in ukraine? >> that is the entire issue for the ukrainians. they away say the sanctions between the attack on the counter -- distinction between the attack and counteroffensive -- offensive. at this point ukraine is defending its territory the best

weight can but it needs more prayed for allies they still continued to fear that russia could signal or interpret this as escalation. but i would also say to add up on the works of manual macron he did say what happened at that shopping center is "the russia is now using terror. he did say this is terror and once again it's a war crime. he used that phrase. so there isn't ambiguity when it comes to that. it's just the issue of does it get to the point where you arm ukraine so much that russia will say you are now co-belligerence so anything in nato is fair game. tom: how close are we to that? i am absolutely baffled by its a war, it's not a war. all the rest of it. think americans heads are spinning on this. how close are we to actually saying it's a war? >> there is no question that it

is a war between russia and ukraine. the question is is evaline else going to jump in. we've seen repeatedly the united states says they won't fight boots on the ground for that's the signal vladimir putin wanted to get from the americans. they will supply the weapons but they're not in a fight for ukrainians. for the europeans it's the same. emmanuel macron said is a little bit of irony is every european country has agreed they do not want to be co-belligerent in this. when you see some eastern europeans, countries of poland and the baltics will tell you it only takes a second for this to escalate but countries are germany and france are very scared of it. they want to help ukraine but not fight the war themselves. >> one thing they are exploring is a cap on the price of russian crude. this is interesting because tomorrow and the next couple of days we will hear from nato leaders who were set to criticize china and at the same

time it's very difficult to see how a tap on russian crude prices would work without participation of china. walk me through it. how is this going to work? >> again this is just an idea and they are continuing discussions of ideas. there's no set price of the cap would be paid no timeline of when they would implement it and how the mechanism in actuality would work. you bring up a really good point. china and india, which is bringing in a lot of russian crude for a very cheap discount would have to sign on to this. the second part is russia would have to sign on to it. they would have to say they would be willing to take that cut, which the west wants to be closer to how much it costs them to produce it. a lot of moving parts in here. it means the west would have to get china on board for this. jake sullivan set on monday to reporters that the next few

weeks potentially will have this phone call conversation between president biden and xi jinping. if i can say one other point about nato, can you believe where we are now in 2010 when they came out with this document that guides them for the next decade. china wasn't even mentioned and russia was called a partner. it's a complete 180 at nato in madrid. >> building on this idea of how do you enforce these measures with russia and china. olaf scholz saying he expects china not to undermine russian sanctions prayed how difficult is it to even determine what that means given some of the vagaries here and the lack of cohesion on even supplying russian oil. >> it's to be very difficult because again, china has this unity forever with russia.

they have a new strategic statement. we have chinese officials who really have not condemned the war at all. they are leaning more into that support of president putin. we should also note the cap for china and india would be very cal -- would be very helpful. that would be cheap oil from russia. at the same time if it is going to undermine president putin, that can affect other parts of beijing and new delhi's relationship with russia, it will be hard to get on board they need to get insurance companies and shipping companies on board with this. this type of mechanism when you look at russian natural gas going into europe, but how in actuality is the mechanism like this get translated to the market. it's incredibly difficult. the french president doesn't want to stop at russian crude. he's calling for caps on oil

worldwide. try to get the golf on board with that. jonathan: is there too much risk after this? >> i'm going to stay through one more hit for you but i'm going to be joining maria. we have some plans. jonathan: just wondering what was going on here with maria and amh in madrid together. trouble. i think there's going to be trouble. >> we have a whole friday night planned. jonathan: just trying to tease some of that out on the chopard lisa: you are trying to wind up tom. jonathan: a particular nightclub on friday in madrid that's hosting maria and anne-marie. i'm just trying to get them to reveal slowly through the next couple of days. this is bloomberg. ♪

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jonathan: good morning to you all on tv and radio. up 6/10 of 1% on the s&p. on the nasdaq up by 7/10 of 1%. a cut from citigroup in the last 12 hours. they think the second half could

be a rally in store for the thing the risk reward is better. they think earnings will be better. another loan. maybe in some parts of the market to recover all the losses in the second half from the first half because expectations are so bad. morgan stanley says where are those weak expectations because of the company level the analysts haven't started downgrading the earnings yet in a material way. things are pretty divided on wall street. counter of this view that everything is gloomy because it is a bit of very constructive on this equity markets into the second half. >> i think our team for booking optimists here. there's more optimists than particular the weekend gloom. as you get a thursday and friday out on the internet there's a lot of world coming to an end and a whole bunch of people pushing against that. i'm going to go back to my core theme which is corporations will adapt as we saw from federal express six or seven days ago.

jonathan: if there is a fear out there there is a fear that that's the next shoe to drop. we will be on top of that i think july 14 is when things kick off. let's look at the bond market quickly. we backed away, and now we are backing up again on the tenure by four basis points. this gets more interesting tomorrow prayed we hear from chairman powell on friday. for the ecb we've already heard from president lagarde. you will hear from her again tomorrow. euro-dollar will be about inflation at the end of this week. inflation coming up on friday and it could come in in and around 8.5%. unicredit going for 8.6%. right now euro-dollar, off the weakest point of the year but still pinned down at these levels trying to work out what's in store for eurozone for the rest of this year. >> watching dollar-yen as well.

we are nowhere near that but nevertheless. weaker yen would be a surprise for the week. we are not there yet. lisa: i want to see how much demand there is especially overseas. peak inflation ideas are getting challenged by the number we could get on friday and beyond. jonathan: are you excited for that? lisa: you think it is valid, right. jonathan: i think we spend every single show trying to think -- try to convince him it is important. >> here is something that's important prayed all eyes on china right now. major movers in the market on the upside scene to have the first major listing -- lifting of those covid restrictions. most of the big gainers in the

premarket in the u.s. are travel stocks that would benefit the most from those. companies that have a big presence in macau all rallying here on the day up about 7% here in premarket. u.s. airlines like united and american also higher. trip.com up, this is a travel company based in china and its primary customers are outbound china travelers. they are seeing a boost from this prayed we will keep an eye on travel stocks as well. nike came out with earnings. those shares are down in the premarket. they say their china business is not doing well at all. they said basically about 60% of the china business has been affected by the covid shutdown and he could take as much as three weeks to get everything back up and running. that's when all the restrictions are relieved. there's been a growing swell of national -- a shift away from

nike and chinese made brands. we want to stay on the china theme. second biggest volume. we are learning joffrey capital take a major stake in this company from its chinese owner. a shift in the majority ownership i should say for the shares higher in the premarket. the biggest volume mover out here in the u.s. is robinhood. robinhood shares down in the premarket. they rallied on the back of that bloomberg scoop. the crypto exchange was looking into the idea of buying robinhood. later coming out with a statement saying there is no active, day discussions to address the substance of the bloomberg article. as whether he was actually interested in it at all. the shares have been moving around as people try to figure out what he's going to do. we of the results of those bank stress tests from last week.

last night we got the announcement by the dividend buyback and shareholder returns. boosting their dividends and buybacks will jp morgan and citigroup stand in their path. morgan stanley up 3%. tom: an incredibly important conversation. co-chief investment officer at fixed income prayed someone with decades of perspective from morgan stanley on the ups and downs of the golden age of fixed income. thank you for joining us. a blended idea. we are down on price and bonds. you write of the golden age and saying it's over. can we get a hail mary for the bond market like we did out to the eisenhower disinflation for and five years later where it's been price up, yield down. >> we have a little ways to go. there's all this talk around

peak inflation and i think those terms are being conflated in here. you can have this peak inflation and then not go peak hawkish in us. there's all this sensitivity in the market where inflation is going to show signs of coming down and that means the bull market begins for bonds which means the fed doesn't have to tighten this much. what it's missing there is the persistent nature of inflation that might cause the fed to actually hike even more. lisa: you think people are underestimating how sticky the inflation is and how committed the fed really is getting the inflation rate down to 2% in short order. gregory: i'm not sure where inflation will land. i think that's the challenge

prayed that's the difficulty. but i'm pretty sure the fed is extremely focused on inflation. that's what investors have missed which this is a voelker-esque type of fed where they are clearly focused on getting inflation down and they are not going to throw away 40 years of credibility which we know matters a lot over the medium to long term. they are not going to throw that away just because the markets are telling them. >> to take that a step further does that mean the fed won't tolerate easing financial conditions anytime soon and what does that mean for how you put money to work? >> i think the financial conditions picture has been much stronger than i think the fed anticipated. i think financial conditions have to worsen. i think that the natural path

here. yes you had really big moves thus far. i understand that where there's more value in the market today than there was six months ago, absolutely. but for example we had this internal poll we conducted with almost 300 of our investment specials and 76% of those folks believe we will have a hard landing and in europe at the most 90% believe there's a hard landing. so the point being there still a lot of risk out there on this hard landing. jonathan: financial conditions have to worsen. can you give me an idea what that would look like and where to look for it? greg: i do believe risk assets have been keeping up more. and of the now on earnings, that should be the focus but we are coming off this type of environment.

all this operating leverage embedded in capital structures. so if you actually see a slowdown in revenues, that's can i have the opposite benefit that we saw coming out of the pandemic. i worry about risk assets, both equities and credit here. i think there's more room to go. a high probability i think at least of a hard landing. i am not convinced we are priced for that. jonathan: how much cash are you carrying? what does your picture look like into the end of this year? greg: we have increased our cash levels on the margin, it's more around the liquidity in the market which is something that should be focused on as well. you are seeing liquidity and fixed income which is much more volatile picture.

so we are getting more defensive. we have been getting more defensive. we have taken our long-duration down where it continues to move our high-yield exposure down. we've been underweight on emerging markets and we are hiding out in short duration products. i think the ultimate trade here sequencing of the trade is long-duration before your long risk assets. and so the volatility makes it difficult to make your points. but to me, the duration trade is going to be the best here. >> fascinating stuff as always. thank you for being with us. lisa if there's a headline there it's a pretty obvious one. the team thinks financial conditions have to worsen. lisa: and they are trying to get

liquidity to get ahead of that and when they go back into risk it will start with duration. not with the idea companies are getting into a better situation. >> coming up the chief u.s. economist. an important week for u.s. data and hear from chairman powell once again. this is bloomberg. >> a russian missile attack on a shopping mall has killed at least 18. authority see dozens more were wounded and more than 30 are still missing. they called the attack in war crime. in california, the state senate has passed legislation that would allow the public to sue firearm manufacturers for harm caused by gun. -- guns prayed it's designed to permit lawsuits despite federal law which immunizes gun makers

from civil liability. it's part of a package targeting gun violence the california governor has promised to fight. nato is set to label china a systemic challenge when it outlines its policy guidelines. we've learned the u.s. led alliance will highlight beijing's deepening partnership with russia. still nato won't go so far as to call china and adversary. elaine maxwell finds out if she will spend the rest of her life in prison. the federal judge will sentence maxwell on charges she engaged in a scheme to lure and groom young girls for sexual abuse by former boyfriend jeffrey epstein. credit suisse is seeking to emerge from two years of scandal . the swiss bank is promising to boost its business with rich clients and cut costs by simple find technology. they plan to grow its wealth management by focusing a priority markets. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700

journalists and analysts in more than 120 countries. i'm ritika gupta, this is bloomberg. ♪

>> i do believe we reached peak inflation. inflation will start to come down as conditions tightening and central banks normalize rates but we won't get to 2% without a significant damage. jonathan: philip hildebrand on peak inflation. year-over-year a thought we had done that a few months ago and we got last month. look out for that. futures on the s&p up six tens percent. yields on the 10-year year up for basis points. my inbox full of emails about --

because of lisa's mention of it earlier this morning britt camping and hiking gear at l.l. bean. lisa: what did you expect? >> it sounded like coffee. lisa: i think it's important prayed we should all be outfitted in camping gear. jonathan: camping gear at jackson hole. tom: pausing the show to inform the lad of l.l. bean. the stores open 24 hours a day, 306 to five days a year. long ago and far away you had three sets of some form of l.l. bean boots in your college closet. and john, i just think it screams john. he's got to where the 16 inch l.l. bean classic boots. jonathan: there expensive -- they are expensive. i was looking at this.

the amazing thing about u.s. broadcasting, you couldn't do this without saying their other good stores to find camping and shelter. jonathan: there's only -- tom: there's only one l.l. bean. jonathan: there we go, we are done. tom: this is on >> >> a sneaker company. i should just say we don't wear boots in texas but we do in virginia where we got a rude awakening of how cold it can get in the northeast. l.l. bean coming in handy. also coming in handy as nike. we know the stocks across the borders taking quite a beating but nike is interesting and it's taken an extra beating. a lot of this has to do with the china question. china exposure front and center in their earnings they reported today saying sales from china

dropped in the last quarter. they are worried about the macro risk going forward. it's weighing on their forecast and you can see where that's been reflected in shares. what you're looking at his nike shares relative to the s&p 500. when the line goes up, nike is outperforming. when it's down it's underperforming. so far it's underperforming the index year-to-date. a lot of that is because the chinese exposure by the starbucks, mcdonald's have similar flows to china. tom: i'm -- particularly over the last three days, a note of gloomy couple days ago. there's no other way to put it. jonathan: a load of price target cuts across a range of retailers yesterday. i think it was walmart, target, restoration hardware. tom: on the reality.

and the reality is the inventory of nike is up some 23%. where do you put all of those sneakers? do they have warehouses to the brim? are they taking amazon warehouses and using them to store michael jordan sneakers the john wears every weekend? >> i don't think they have a warehousing problem. i think building -- it's higher than we expected because they didn't want to run out of sneakers through the pandemic. i'd be more concerned of the inventory was elevated on the apparel side. i think the demand there is very strong in the apparel inventory has been overbuilt. that would be more concerning because we do continue these in china and we also have sales falling in north america. north american sales was down 5%

for the quarter. >> how much of we priced in the margin compression we are expecting to see? looking at the retailer index, a down nearly 30% this year. how much more do we have to go given the in certainty and gloom goldman sachs highlighting in the fact we are dealing with margin compression but a more discretionary consumer? >> i think we could have some severe margin compression and the second half. if you think about the inventory coming on board from the supply chain pickup coming and finally and stored in warehouses. consumer demand for now is still pretty strong but inflation builds as they begin to pull back spending. you could have more inventory than what your contemplating today.

that's across-the-board and that can be subject to firm rush the second half -- tom: how do you clear inventory? is it just price customer do you just market down and out it goes? poonam: you can liquidate it, you can mark it down. jonathan: helpful if you can move it. at the moment a lot of this is backed up. thank you very much. huge transit problems. i go a step further just from nike. a bright spot direct to consumer has been really good. tom: i do not really understand why that's not can i continue to get stronger and stronger. direct to consumer to me is the future. i would point out the air jordan one lows, and ac milan colors. jonathan: i'm not sure that's

quite my style. lisa: he is into the whole resale market. tom: he buys them and he resells them. lisa: he'll work on making sure they don't get any creases. jonathan: so he will wear them. lisa: occasionally and then he feels guilty. jonathan: i'm tried to work out what the business model is. lisa: there's a very big markup and if you get a rare one. tom: lisa can you get day trade to go into a pair of l.l. bean boots. lisa: i think we are moving away from that and we will try to shift into other interests. jonathan: what light? lisa: we can discuss that in the break. jonathan: i'm just interested. i want him to day trade. lisa: at the same time when your kid is walking like he is wooden peg legs so he doesn't get creases and figuring out how to iron with a wet cloth, it's

good. tom: all good. jonathan: this was a better than good segment. you don't get to take it back on live. up five of 6 -- five or 6/10 of 1%. yields a little bit higher up four basis points. china easing some quarantine rules, not sure how material that is but crude likes some of that. with tom keene, lisa abramowicz, i'm jonathan ferro. for audience worldwide this is bloomberg surveillance. ♪ today's challenges require real insights, to get to tomorrow's opportunities. ( ♪♪ )

what can we expect in the coming year? this has been a record- shattering year for m&a. five trillion dollars in deal value. and we're still very bullish on the deal market for 2022. in this kind of climate, what are you advising clients to focus on? we really think companies need to elevate their risk management processes and also scenario planning. what's your outlook, kim, for the 2022 labor market? organizations really do need to take a pivot on their lens of their people and talent from a cost center to make that a value creation center. for key insights into what matters today and what lies ahead for business, this is real time business with ey.

>> every single major spike in