ritika: i am ritika gupta with first-order word news. the mood at 10 downing street is grim and tearful as the prime minister fights for his political life after an onslaught of resignations from his government. five more junior ministers resigned today in a coordinated attempt to inflict maximum pressure on johnson. he spoke before the committee. pm johnson: the job of a prime minister is to keep going. ritika: the prime minister has lost almost 30 people from his government.

bloomberg learned the u.s. and allies have talked about trying to cap the price on russian oil between $40 and $60 a barrel. they are aiming to limit revenue while limiting the impact on their own economies. the u.s. is weighing potential enforcement tools, including more restrictions on shipping companies and sanctions on banks and financial institutions that facilitate above threshold. children that lack permanent legal status are watching a federal appeals court that could determine whether they can remain in the country. the dreamers are part of the 2012 program under barack obama called the deferred action for childhood arrivals. texas says it was created illegally. a panel is hearing arguments today. one million pilgrims are converging on saudi arabia's holy city today, the largest since before the pandemic began.

it is far less than the 2.5 million that traveled in 2019 for the pilgrimage. one of the world's largest gatherings. global news 24 hours a day on air and on quicktake by bloomberg. powered by more than 2700 journalists and analysts in over 120 countries. i am ritika gupta. this is bloomberg. jon: i am jon erlichman. welcome to "bloomberg markets." kriti: i am kriti gupta. this comes with the stock market. it is only down 1/10 of 1%. it was only down half a percent at session lows. how much participation is there in the market or is this anticipation for the fomc meeting?

look at the 10 year yield, up nine basis points. not the volatility we have seen the last few weeks but a pretty big move as we see the yield curve inversion. we discussed that ahead and as we see the yields higher the dollar following suit. that is the key story, not just dollar strength, but euro weakness and pound weakness driving the greenback higher. with that you see the way of the commodity complex. that is the top line story with the crude picture down 1.7%. jon: below $100 a barrel and the recession risk a reality for energy stock investors. we have been watching this in the canadian market. the dominant energy trait for the first half where stocks were up more than 40% since the end of may have lost half their value. we are seeing that reflected on the dow and s&p today. you have chevron and going back

to the dynamics we have been watching, after that rough ride for technology the first half of the year, investors are hanging around adobe and nvidia. something to watch. kriti: absolutely. we go from markets to politics. turning to the u.k. where the prime minister's government is continuing to unravel. he is vowing to fight on. pm johnson: the last thing this country needs is elections. the only thing will be the general election two years from now. kriti: this comes as the committee did not change the rules around the tory leadership contest. the decision whether he faces a no-confidence vote will be next week if they get the resignation. guy johnson is joining us live. where do we actually go from here? talk about the candidates that could succeed boris johnson if

he does resign. guy: let's deal with the latter issue and then the former issue. we are in a bit of a hiatus right now. kriti, the 1922 committee looks like it has kicked the can down the road. it will have a vote next week. it will them potentially vote on the rule change that would allow it confidence vote. you have a series of very senior government ministers about to meet with boris johnson and the message from those ministers to boris johnson will be, you need to step down and you need to do it right now. this is the same way margaret thatcher was ousted at her long tenure. it will be interesting to see if boris johnson falls the same way. in terms of those who could replace him, it is a very wide list. there are a number of names that are on that list, two of them on

the screen, both of whom kicked this off last night. but there are a host of other names. part of the problem has been this is why mp's have not replaced boris johnson earlier. there has been no obvious successor. that issue needs to be faced. it could be a long, drawnout affair. we will see what happens but it could take months before we find out who the new prime minister is. jon: that is what i was going to follow with. if you have this growing list of mp's and the ministers have done what they have done, and the prime minister is sticking to the town he has, how does that timing work in terms of his ability to stay on his messaging when you are hearing from the mp's and the ministers that have resigned? guy: what might happen is that boris johnson is forced from office. that could happen tonight or the next few days.

what you will have is a caretaking government that can be led by dominic raab, the justice minister, and that would exist in power for a month or two. during that process you would have the re-selection of another prime minister. in the u.k., it is a parliamentary system, i.e., we vote for the local mp's. they then choose who the party -- prime minister is going to be. that would be the process. the mp's are picking two candidates. those candidates would be delivered to the members of the conservative party, not just the mp's. they would then vote on who it would be and we end up with a new premised are. you could end up with the situation where boris johnson goes and a long, drawnout selection for his replacement. in the meantime, you have a caretaking government. that is the most plausible

scenario in the u.k. jon: a lot to watch. thanks as always for your reporting. guy johnson joining us with the latest. the rest of europe, meanwhile, growing more convinced the euro breaking parody with the dollar is imminent as recession risks gloom on the horizon. let's get perspective on the currency front with kristine aquino. she is joining us now. what can you tell us about the dynamics at play right now? kristine: i think this is a combination of that deterioration and the fundamental picture in europe. also added to that, worries from the central bank regarding that growth picture. really making it a tough job for christine lagarde and her colleagues to balance runaway inflation with what is looking to be a growth slowed down if not a recession the next few months. and then, the unique situation

that europe is in in that it is exposed to the russia-ukraine war which is still energy supplies in europe. all of these are combining to really deteriorate the sentiment on european assets and it really is the euro burying the brunt -- bearing the brunt. kriti: let's talk numbers. parity is on the horizon. calls from earlier talking about going as low as $90. i am curious how the u.k. and the cable rate factors into all of this. kristine: i think this contributes to the ultimate result which is extended dollar gains. the euro was the big story of the dollar strength yesterday, but now the pound doing its own thing and adding -- an excuse

for the greenback to powering higher. the pound is weakening for other reasons given the backdrop guy johnson was highlighted. the weakness in the pound based on u.k. politics, weakness in the euro based on the deterioration, really is amounting to this runaway dollar strength. we are staring at the 20 year high for the dollar index unless there is anything that can relieve the pressure on either major currencies, adding to greenback strength. it looks like we are imminently approaching that 20 year high for the dollar soon. kriti: certainly something to watch. kristine aquino out of europe, we thank you. let's go from fx to nontraditional. let's talk crypto. a week after suspending trading, voyager digital filed for chapter 11 bankruptcy. we bring in eugene yang.

welcome. this is after a series of other, i want to say liquidations, coming out of three arrows capital. how much more can we see? how systemic is the issue when it comes to the cryptocurrency ecosystem? >> thank you for having me. we are seeing a series of liquidation. the number of big crypto lenders in the industry have suspended. voyager suspended deposit traded and they filed for chapter 11 bankruptcy protection. there is a report coming out from the default of three arrows capital and the broader backdrop of the collapse of cryptocurrency prices that has been dropping since earlier this year. we are looking to see if there is going to be more impact on smaller vendors.

we know the cofounder of the crypto exchange fdf said that he expects a lot of the smaller crypto exchanges will run into further problems. we have seen the biggest crypto lenders that have taken a hit and we are waiting to see if there is more impact hitting the smaller players. jon: helpful context on a story we will watch. the bloomberg reporting on what the account holders ultimately walk away with. we will continue to watch of that. yugi yang on the voyager story. quick break and when we come back, summer camp for billionaires. the annual gathering in sun valley, idaho. this is bloomberg. ♪

kriti: this is "bloomberg markets." i am kriti gupta with jon erlichman. global media executives are gathering in sun valley, idaho for the annual conference. sonali basak joins us for the latest. you got the best assignment because sun valley is gorgeous, although raining. talk about what the theme is like given the market environment we are in. sonali: great question. perfectly sunny right now and you have investors and ceos trying to be sunny about an environment that is getting more difficult. we talked to an investor this morning saying the consumer is strong enough and that is not

impacting the company's here or we invest in yet, but that may turn on a dime. for now, they are holding onto the consumer story as a reason to keep investing or believing in the story. another thing i must also mention is despite what is happening in the markets, a lot of the conversation we are hearing here has to do with the political and social environment. behind closed doors there are conversations that involve the supreme court decisions, for example, and what they call employee activism. disney is one of the companies where you see a presence here. the former ceo and the current ceo, we know about their dispute with florida's ron desantis. it will be interesting to see how politics will shake out during the course of this week. there are a couple of days left. it is an interesting mix of tensions in the market and the broader environment and how these ceos navigate this time.

jon: one of the takeaways from my time at sun valley, you always have to stay hydrated. it looks like if the sun keeps up, you will have to do that as well. you think about the tech and media elite gathering, a different tone. a year ago netflix could do no wrong. these days questions around the road ahead. along with the recessionary risk. are you getting the sense on how that might influence the kinds of deal or talks that come out of the gathering like sun valley? sonali: even though valuations have been depressed i would point out there have been whips on equity markets that make it hard to do deals. there is turmoil in the market but they have a robust footprint. now they have to figure out how to make that work for them rather than adding on additional large assets. we have already seen big deals this year.

allen and company, which throws this, usually you see a lot of media deals. there are a lot of interesting entrepreneurs here outside the scope of that. we will speak later on to west eden, we will talk about energy. i will also say partnerships. the ceo of the firm of walmart. the ceo of nasdaq, coinbase, but those are companies you can imagine really create a partnership coming out of rather than large-scale takeovers. 23andme ceo will speak to ed ludlow later on. last year they had the partnership with lemonade. not huge deals but these are deals that are helping companies navigate a paradigm shift in the economy and reach more customers

in a cost-efficient way. jon: connecting those dots. great reporting. we look forward to more and some great interviews coming up. that is sonali basak joining us from sun valley. minutes from the u.s. federal reserve june meeting. we talk about what likely the market will focus on in the next 15 minutes. this is bloomberg. ♪

jon: this is "bloomberg markets ." i am jon erlichman with kriti gupta. time for what it is worth. the latest model shows there is a 38% probability of a u.s. recession the next 12 months, up from 0% months ago. we are getting the fomc meeting at the type of the hour and risk

is something the fed must deal with. kriti: kriti: let's discuss that. from an investor perspective, who better than gene tannuzzo from columbia threadneedle. $700 billion the firm. the investor perspective on these fomc minutes, is it really going to change anything or give us insight into what we are going to hear in a couple of weeks? gene: perhaps we get a little insight. i think what we want to know is 75 basis points already baked in for the july fed meeting. the market is pricing in 70. we think 75 basis points is likely because that gets you to the convenient level of 2.5%, which is what the fed considers to be neutral. they desperately want to get to a neutral position. outside of that we are looking

for a lot of clues around how much slowing they are really seeing in the broad economy even though the unemployment rate continues to be low. i am not sure there is going to be as much language in the minutes as investors might expect. jon: if we see this hawkish tone, we have investors are gravitating in the stock market. you have seen what has been happening with the beaten up technology stocks. you are gearing up for a second half where you are starting, i would imagine, to give a fresh set of eyes to investment-grade

debt, even if we have hawkish tones? gene: that is right. it might sound counterintuitive, but if you look at it now, the fed is in a position where it needs to move quickly to restrictive territory. if you think, don't fight the fed, we want them to be successful in bringing interest rates into restrictive territory. that is going to slow the economy. that is different than recent cycles. we are seeing that evidence already. if you look at the long end of the yield curve at 3%, the fed's is at 2.5%. that is half a credibility gap. that closes as the fed raises rates on the short end them. as they bring short interest rates higher we will see that move aggressively, but the longer end has time to move down. this is an environment we should move to more significantly inverted yield curve, not this flat yield curve today. that should be an attractive environment for longer maturity debt like investment-grade credit, municipal bonds, that have already seen negative returns 10% to 15% depending on the segment. kriti: 30 seconds. it is hard to time a recession. is the market getting it wrong?

gene: i think the best indicator of recession is credit spreads. if high-yield credit spreads are above 800 basis points, it is likely you are in recession. but from the bond investors' point of view, that is useless. we want to wait until they are wide and by them -- buy them. we are cautious on lower quality credit because we think the fed is pushing to tighten financial conditions. those could widen once we hit the time they are flagging this is recession. that is when you want to be carefully getting back in. we are preparing for the next stage and in the second half of the year we will get that in high-yield. kriti: gene tannuzzo of columbia threadneedle, we will keep an eye on that. interesting when we talk about the markets what they are pricing in. the s&p 500 flat even as we talk about recession fears. even as we look at the 10 year

yield that price action has turned around. we are going to keep an eye on this, especially the dollar strength and the fx space. for jon erlichman, i am kriti gupta. this is bloomberg.

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caroline: 2:00 p.m. in new york, 7:00 p.m. in london and we are live from headquarters. i am caroline hyde. romaine: i am romaine bostick. taylor: i am taylor riggs. romaine: we are counting down to the fomc minutes. potential insight into what we get out of the july meeting weeks away. here is our own michael mckee. mike: no real surprises in this set of minutes in mid june when they met. they saw a strong economy plagued by covid