>> the market is really pushing the fed right now. saying how much longer can this great hiking cycle lasts. >> anything that sense the economy is taken out of the economy. take a deep breath, and don't be so negative on risks. so far this year, we think that the economy will be able to withstand higher interest rates. >> right now, i think we can say, we are not currently in a recession. >> this is bloomberg surveillance with tom keene,

jonathan ferro, lisa abramowicz. >> live from the nation's capital, worldwide, the morning. this is bloomberg surveillance. life on tv and radio, along with tom keene, i am jonathan ferro. where you want to begin? >> across to fanta, to the united kingdom, at a very lonely over 10 downing street. >> we are supplanting joy in july, out the window waiting for the prime minister. maybe were going to see him in 30 minutes, but we don't know the theme, we don't know what he will say. uncertainties for the a kingdom, and i might point out, as an aside, for mr. joe and see in grain, it is substantial. >> he is been a solid partner that he would confirm that. on the prime minister's exit, he is going to walk down the road. what we don't know is how long that road actually is, because they're up reports in the last 30 minutes that perhaps, he will try to stay on as a caretaker p.m., and don't you dare ask me

to define what that means for this country in the u.k.. >> the original process bounces back, but it is different than america. how does labor and mr. sturmer react at this moment? >> the sequence of events will be as follows. the prime minister will engineer and exit. it is out of his hands. but there will be a leadership contest. there will be immense pressure from the opposition, and the rest of parliament, to push for election. >> cannot be dramatic like season seven of the crown to save the queen steps in. >> how can i take you seriously when you say things like that. >> this is a crisis moment. we have a queen who is fragile. there's a prince of wales who may step in and make the election. >> when you are in the crisis, and i know you're trying to get me in trouble, but i'm going to stress two things. there is a mechanism to deal with this in the u.k.. it is not an original moment. we have seen a times. two, i don't think the rest of the country right now, that's an islet at what is happening in

the u.k.. the rest of the country, and the country we are in. the rest of the world. for the rest of the world, looking into the night kingdom, with a hierarchy of problems right now, for the rest of the world, >> wait a second. to your point, it is entertainment. >> political entertainment you tell me, for the british public, is it entertaining? perhaps so. how century. but their bills to pay, as we head to the month. energy prices are going up. if i'm going to u.k. right now looking at what is happening at parliament, i need someone to deal with this. some of the criticism that has been leveled at this government, you can see it in the research notes. the lack of fiscal support for the pain that some people are going through with energy prices. what i'm trying to understand, is trying to understand whether we get that school shift for the next government, or if they have the capacity to engineer that. what we have with our all it -- global wall street audience is a little bit of a sterling rally

today, but i still see great uncertainty out there in the data. >> were done at 120. rochester. 115, down to 110. >> through parity as well. >> what are we doing, weren't porting inflation, or facing the prospect of a weaker currency, and no one can tell me with any conviction as to whether the rate hikes will actually mean a stronger euro. >> after this quickly. it is so important. ecb looking towards the next meeting, and seeing they have a fragmented theory about a fragmented theory. wexner going to wipe up the balance. >> we have a name for the fragmentation tool. they have a name for it. i'm not sure they have any idea. >> are you on speaking terms when you sit that close together in washington? >> we are. i can tell you took a few drinks last night to get us this close. >> a cigar for this one. >> are we dating ourselves right

now? >> are you and i dating wes mark are we dating? >> data. were not dating. one step at a time. >> ok. >> is like love filing. >> the futures on the s&p 500. >> i haven't been watching this is available on hulu. other streaming devices, maybe. futures on the s&p 500, just a little bit higher at 99 handle. it has moved it how quickly? >> is moving a lot, but joe biden disrupt the price of oil. >> the national economic council director will join us. do you really think they're going to celebrate the gas prices? do you think they're going to do that? . just before that and the president goes to the middle east and asked the saudi to boost more oil, they're going to say, we are happy with the trajectory of things. >> out the trajectory, but

nuances along the way for a beleaguered white house. look at the ratings. >> how me messages i'm getting. anyways. let's get to the morning briefing. >> located lee. >> it is time for a briefing. you thought one thing was happening. now the something else is happening. >> that is the resignation statement from boris johnson, and the ecb minutes account from the june policy meeting. according to bloomberg, they don't have any clarity around the fragmentation tool, even if they have a name for, so we may not get that, but we could get some insight into how they are thinking about a basis point move, especially, considering the euro was at its weakest level since 2002. it traded at the one-to-one handle. hiking rates, that will actually help that story. and then, jobless claims here in

the u.s.. 230,000 is the print expected, but we have seen a tick up in recent weeks, so how does that set the stage for the payroll support tomorrow, considering the federal reserve is so focused on inflation and seems to be ok with the labor market softening up, and speaking of the federal reserve's, we will hear from christopher waller and jim bullard speaking it separate events at 1 p.m.. this is an updated take from the minutes we got yesterday, which is of or three weeks old. how is thinking about, as we get closer and closer to the july meeting. >> thank you. very much. we may hear from the prime minister, potentially, in 25 minutes, according to sky news. 730 eastern time, maybe 1230 local. at the end of the day, who does. >> i don't think anyone knows. we are listening to reports that, perhaps he is considering staying on as a caretaker the and. ask i don't know if the apparatus is like an united states of sowa messages is out and the first women's. you usually work it out from there. we need to talk about this market, we can do that. the managing director of world

creek groove. let's start here. >> the everything pain portfolio it is anything working in 2022? you talk to uncertainty, just as much in the markets. there are three themes that everyone is talking about, and used to be short-term themes. now it will affect the portfolio for two or three or or years. slowing global economy, monetary tightening, and the impact from the ukraine what -- russia war. $100, 95. it doesn't matter. >> you might be too young to remember 78, 79, the bear market that you people advised unquiet money. you would never seen bond losses like this. how disquiet money to cover in bonds, price up, you'll down? what is the mechanism to do that. thank you for calling me young. i appreciate that. i don't know if my colleagues will be as flattered.

a lot of us can remember some of the pain points in the markets. one of the fixed income market is that we are looking closely at where the 10 year yield is going to go, what timeline we have, and how we start to manager fixed income. >> you have full faith and credit. >> for now. we have not seen a ton of signs of distress, but there are a lot of embassies were looking at, metrics were looking at to see if the corporate on market is starting to move. >> how would you describe it? we've taken it out in 2018. 550 through those levels. that is enough to pivot to a clearly different world and inflation level. how do you judge what is stressful this time, compared to stressful then? >> we have the benefit of investing in a lot of strategies, so were looking to see what is the underwriting? has it loosened? where will the cracks be? we are looking at wide spreads

over 500 basis points in the last few months. were looking to see the relative opportunities, and if you're getting paid for that it there will be risk. but it would have to double if we want to see a huge loss in the high-yield portfolio. is this the right time to step in? i'm not saying we're doing anything right now, but it is a wait-and-see moment and we will have to wait and see where things shake out, but there are pockets of opportunity were going to see, and we don't have to worry about credit risk in the way we have to worry about ration? >> what are you worried about. you stress were not doing anything right now. why not #>> is inflation. that is clear from the fed. they're looking at inflation, and everything hinges around consumer demand. we have a huge earnings season coming up. july is going to be a bellwether of inflation expectations, what our company is seeing, corporate pricing and. q1 is good. everyone can admit to that. q2 is not as good. q3 expectations will be worse.

if consumer demand starts to fall, we will see pain in the market, and we want to see the market shake out a little more, in pain, before we see real investments. >> heritage of rock creek, that is natural gas. she owns the high ground of dynamics of gas and the hydrocarbons as well. what is your response to the surge living in continental europe about natural gas? it is standard deviations out, isn't it. >> energy conflict are in a different world, and there are ton of investment opportunities come as you have heard for much before terms of natural gas, in terms of the tailwinds for renewable energy. there is so much that we can look at, in terms of the next five to 10 years, and we are as its name folios to take advantage of that, and unfortunately, europe is taking the pain in the interim. >> you are advising to meet with

president biden here can you be optimistic that l and g can rescue europe by december? >> not by december. i think that is a heavy task. >> i think everything that is going on, within russia, europe, it dictate whether europe comes out ahead at the end of the year, but we are not bullish on

europe, despite valuations that is because of geopolitical tensions and energy products. how can you be over in your today? wax that is a question a lot of people have. the rate differentials may not even matter to your the price of

gas. >> you know where i feel in this rate differentials and spreads. >> thank you. what a great morning. i'm sorry it wake up sorely. >> thank you so much it there were questions as to whether they agree to a 7:00 a.m. slot. >> we need to explain the store audience. new york, we are rocking it at 5 a.m.. >> what time are you up? >> justin terms of getting a city started. >> washington -- 830 is earning. a 30's route. it 30's route. thank you very much. we understand that in 17 are a team's time, for british officials, the prime minister will be walking through number 10 downing street to deliver --. we get to hear from him potentially. 1230 local time. >> that's in about 17 mins. i'm pleased are taking this seriously. >> it's a serious moment, but how does this play in the midlands. this is a serious moment. do you sense that the nation is riveted to this? >> out is way that they one in the last election. >> and 2019, a lot of people atop put faith in the conservative party for decades and decades. have they been rewarded? many people would suggest they have not. >> we have seen recent few elections, and maybe the queen will call for general election. >> already trying to call trouble we will hear from the national economic council. this is bloomberg.

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>> a great personality. that is what it feels to a large sector of the electorate. that is a strength. it is also his weakness. what has gone wrong is he is

unable to understand how a very large sector of the electorate feels about indiscretion. jonathan: the reaction to the prime minister's current dilemma in the united kingdom. that is robert haywood. the leak analyst. from washington dc, good morning. i am jonathan anil -- jonathan ferro. looking at economic data little later. jobless claims. on to tomorrow, payroll friday. equity futures are evading it by .25%. on thursday, it is becoming for. on the yield, a basis point at 2.9372. i don't think you can get away from this. the euro two dollars 1.101. that's a big change. >> i would lump in there, we do not often do that, but a breakdown of the london metal change. breaking down, and plunging. jonathan: these things are happening in commodity markets with china open and shut, and

locked down. tom: we reported the bond thing today, but i don't have the data in front of me. the bonds and china are liquefying the economy. that is a strategy. jonathan: will we see more of that? will there be a downside in commodities in the economy? tom: the politics and china are very important. jonathan: with regards to the politics of china, we need to talk about this administration on china, and whether we see a removal of tariffs. it was the story. i haven't heard anything less 24 hours. -- in the last 24 hours. tom: bring in our next guest. jonathan: this is a beautiful thing. in washington come alongside of us. we have heard nothing in the last 24 hours on this, at least i have not. you have. where are we? >> still to be determined.

the president has been given a number of options. there are massive divisions in the ministration. you have those that are saying they will lose all their leverage, and you have others like the secretary who have said they want to reconfigure the trumpet euro tariffs. the issue is that tariffs would not be lifted. they would be things like basic consumer goods, sweaters. this is not going to impact his biggest problem. higher food costs, gasoline. tom: no one america -- in american media has a better understanding than you do. i'm serious. in this historic moment, there is a special relationship. how do we support a fractured prime minister, how do we support the primary process in another country? >> i don't see anyone in the white house coming out and saying anything bad about yours -- boris johnson today. we maintain a special

relationship between washington and london, and we are here to support the british people. we always will be. remember, joe biden was campaigning. he said that boris johnson was an emotional and physical clone of donald trump. they had a lot of hurdles to get through, but at the end of the day, they have supported each other, and i would say to of the biggest things was the august deal. the nuclear summary defense pact. stepping up with sanctions against putin. president zelenskyy is in love with boris johnson and what he has done, but there is also been moments where they have had exit each other. i don't really recall the withdrawal from afghanistan, but boris johnson said that could've been done better. at the end of the day, the relationship is what is important. not just individuals. tom: nine minutes until we possibly hear from the prime minister. stay with us. we have lucy this morning. paint the scene for this historic moment in the making and. -- in the united kingdom. >> the podium is just been set

up in number 10 downing street. the officials are lining up. you can hear loud. here we go. or maybe it is not. let me tell you, there were reports that were worrying. boris johnson might not stick to the script. we are expecting him to resign. the question is whether he will stay on as a caretaker prime minister. they are saying that he may not do that. he has a personal reason why he is resigning. but he is starting to make interim appointments, so there may be a surprise with the speech. i know you like a tidbit. it boris johnson goes immediately today, his tenure would've been shorter than theresa may. if he carries on as a caretaker prime minister until october, then he would beat her. but in any case, it is a humiliating and for a prime minister who started with a

landslide election victory. the biggest since margaret thatcher. jonathan: lizzie with bloomberg. as you can imagine, a lot of people are competing outside of number 10 downing street. there down to be technical proms but we are six mins away. they are doing a soundtrack -- sound check, we will hear from the premise are. we know where this is heading, but we don't of the timeline to get there, that's what we have to figure out the next 10 to 20 minutes. tom: let's paint it for the american audience. he mentioned earlier, the territory between the tories and the rich, and labor is a stereotype. up in the north. it was shocking how forced johnson, with his leadership, it was shocking how well the conservatives did defeating corbyn in labor. those districts are now gone from the conservative party. is that a safe statement? jonathan: they are going. that will be chipped away at. heard from the tories about 15

minutes ago, and what he said about the personality, he said it was a double edged sword. the reason this premise or is in trouble, the reason some people found him appealing, it was off-the-cuff and loose and fluid. people like that kind of thing, but ultimately, can you run a government that way? you can clearly not run that in a haphazard way. we are sitting here with the same problem. trying to understand the ideology of this prime minister -- it is determined to see difficult thing to do. tom: twice in our coverage, including with tina fordham, this is a guy who wanted to be presidential. explain how odd his presidential is from the prime ministerial of tony blair, on. jonathan: i would be offering my opinion and endorsed nephew. tom: were all friends. lizzie is at 10 downing. jonathan: the premise or went for an election and ended up

with a -- much bigger majority than people expected. i will not give my opinion on that. that was a conservative party with a big majority that wasn't just concentrated on the south of the country print at the north of the country as well. the prime minister believes that is an opportunity for him to do something big. the problem that a lot of people have is that the opportunity has not been used. tom: we'll have to see. moments away. an extra ordinary moment. jonathan: 20 seconds way. we'll go to a commercial break, and after that, we might hear from boris johnson. number 10 downing street, potentially, on the other side of the break. from washington, d.c., this is bloomberg.

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♪ jonathan: live from the nation's capital, i am jonathan ferro. with tom keene, i am jonathan ferro. we will be catching up with officials from the white house. the focus for the moment for us and many others on this door right here, number 10 downing street in london, the united kingdom. any moment now, the prime

minister, boris johnson, will walk out of that door, approach the podium, speak into the microphone and offer what many believe will be the road to his exit. tom: for those of you worldwide, it was truly an. did you see this -- an original crisis. did you see this coming? jonathan: a lot of people did. we have seen this before. the british people have a mechanism for dealing with this. the prime minister exit, there will be a leadership contest, there will be a huge push that we get another election. here is the prime minister, boris johnson. p.m. johnson: it is clearly now the world of the parliamentary conservative party that there should be a new leader of the party, and therefore, a new prime minister. and i've agreed with the chairman of our backbench mp's that the process of choosing

that new leader should begin now. and the timetable will be announced next week. and i have today appointed a captain to serve until a new leader is in place. i want to say to the millions of people who voted for us in 2019, many of them voting conservative for the first time, thank you for the incredible mandate, the biggest conservative majority since 1987, the biggest share of a vote since 1979. and the reason i have fought so hard in the last few days to continue to deliver that mandate in person was not just because i wanted to do so, but because i felt it was my job, my duty, my obligation to you to continue to do what we promised in 2019. and of course, i am immensely proud of the achievement from the government for getting brexit done, for settling our

relations with the continent for over half a century, reclaiming the power for this country to make its own laws in parliament, getting us alter the pandemic, delivering the fastest vaccine rollout in europe, the fastest exit from lockdown. and in the last few months, leading the west in standing up to putin's aggression in ukraine. let me say no to the people of ukraine that i know that we in the u.k. will continue to back your fight for freedom for as long as it takes. and at the same time, in this country, we have been pushing toward a vast program of investment in infrastructure and skills and technology, the biggest in a century. if i have one insight into human beings, it is the genius, talent, and imagination are evenly distributed throughout the population, but opportunity is not.

that is why we must keep leveling up, keep unleashing the potential of every part of the united kingdom. and if we can do that in this country, we will be the most prosperous in europe. and in the last few days, i have tried to persuade my colleagues that it would be eccentric to change governments when we are delivering so much, when we have such a vast mandate and when we are actually only a handful of points behind in the polls, even in midterm after quite a few months of pretty relentless pledging. one economic scene is so difficult domestically and internationally. i regret having not been successful in those arguments. of course, it's painful to be able to see through so many ideas and projects myself. but as we've seen westminster, the hurting sticks -- the herd instinct, when the herd moves, it moves. no one is remotely

indispensable. are brilliant and darwinian system will produce another leader equally committed to taking this country forward through tough times. not just helping families to get through it, but changing and improving the way we do things, cutting burdens on businesses and families. and yes, cutting taxes, because that is the way to generate the growth and the income we need to pay for great public services. enter that new leader -- and to that new leader, i say i will give you as much support as i can. and to you, the british public, i know that there will be many people who are relieved and perhaps quite a few will also be disappointed. and i want you to know how sad i am to be giving up the best job in the world. but thems the breaks. i want to thank all members of

my family who have had to put up with so much for so long. the support you have given our police, emergency services, and of course, fantastic nhs, who are critical moments helped to extend my own period in office, as well as our armed services and our agency that is so admired around the world and our conservative members and supporters whose self was campaigning makes our democracy possible. i want to thank the wonderful staff here at chequers and fantastic prop force, detectives, the one group, by the way, who never leave. above all, i want to thank you, the british public, for the immense privilege that you have given me. and i want you to know that from now on until the new prime

minister is in place, your interests will be served and the government of the country will be carried on. being prime minister is an education in itself. i have traveled to every part of the united kingdom and in addition to the beauty of our natural world, i found so many people possessed of such boundless british originality and so willing to tackle all problems in new ways -- old problems in new ways that i know that even if things can sometimes seem dark now, our future together is golden. thank you all very much. thank you. jonathan: nobody is indispensable, including this prime minister. the prime minister of the united kingdom, boris johnson, resigning, tom. telling us just moments ago that

we will have a timetable for this leadership handover potentially sometime next week. tom: i felt very foreign there, very much from a distance. i was shocked at the language i heard in the house of commons. was he let down by some of his government? jonathan: i think he let down himself, tom. when we really think about things, the reason people resign is because of a poor judgment of character. if he was let down by someone else, ultimately, what he's being accused of is that he already knew what this individual was about, he already knew the allegations against this individual, he was aware of them. for many people, that was the reason they resigned him the last 24 hours. tom: what does he do today, what does he do tomorrow? what i would suggest is an original caretaker prime minister role. jonathan: he talked about his commitment to ukraine and fighting against what he

believes is russian aggression in ukraine and supporting the ukrainians to fight against them, and perhaps that support will be needed for years, tom, not just months. it's important departments or camera and suggested the british people, as a country, will be behind that effort beyond prime minister boris johnson as prime minister. tom: did here apologize about the specifics? jonathan: i heard many things, i did not hear an apology. what i did here is "i regret." i did not hear an apology. can we get some coverage for you? we can do that with francine lacqua london. your reaction to what you've heard in the last 10 minutes? franson: well, good morning to you both. i think this is a very strong speech. this is a prime minister that was focused. he talks about regret but he does not apologize. people really and you can sense the atmosphere, it is tense, it is palpable at westminster.

outside downing street, they wanted to know the timetable of when the prime minister would actually step down. he has said he will stay on until a new leader is found. this could take weeks, this could, of course, take months. the initial plan was to get it done by october. speaking to mp's, they want him gone now. this is different from theresa may, when she stayed on as caretaker. this goes to his character. tom: francine, more than anyone i know, you have interviewed the players involved in this drama. which individual are you most focused on for this thursday and into the weekend? first of all -- francine: first of all, we need to look at a contenders list. there are about 7, 8 people who are in pole position.

they are very different, charismatic, some are considered a safer pair of hands. i think it's a bank of england. if you look at the cost of living, rampant inflation, a 40 year high, and the pressure they have without trying to tilt this country to do procession, you don't have a government, you don't really have a government that's working. 10 minutes before the speech appointed a number of ministers, secretaries to take over. if you are the bank of england, you see this avoid politically and you wonder what that means for your economy. jonathan: francine, you would have to figure out whether we get a shift in fiscal policy. at this point, it's probably impossible to do so. you are in contact with the bank of england in a way that we are not. what are you expecting this bank of england to do in the future? francine: well, i mean, the problem, jon,, as you say we actually have no idea of fiscally what will happen.

we were expecting a speech, originally, boris johnson, rishi sunak. it was boris johnson and the newly appointed chancellor for next wednesday. now that boris johnson has resigned, even if he stays on as caretaker, we are not going to have that speech. fiscal policies completely upended at the moment. you don't know exactly what they would do after the wage increases for public policy. so how do you set interest rates in this kind of environment? you and i also talked about this, the bank of england guiding the market talked about being more forceful. we heard from the chief economist that there may be needing to hike interest rates at a bigger pace. when you don't have a working government, when fiscal policy is up in the air and you don't know whether taxes go up and down, how difficult is it to set monetary policy for an economy that you don't fully understand? jonathan: incredibly difficult. francine, great work over and

westminster, as always. francine lacqua on the latest with the british prime minister announcing his resignation. here in washington, d c is bloomberg's annmarie. this prime minister criticized for his conduct domestically. you have talked about how he has been received on the international stage. walk us through piece by piece the legacy of this prime minister on the international front. annmarie: just getting back from the g-7 bavarian alps, he was almost the class clown of the g-7. he's picked up on hot mics saying we need to show proven we are tough, to cover pecs. it was almost a little bit of fun and games and i think that's how he's perceived by international leaders. but again, they have to work with the united kingdom, especially the united states, a special relationship. they will not make this personal. they want to make sure they are there for support of the people and the next leader. tom: the war is not stopping, the struggles of brussels is not

stopping. what is the timeline you perceive for them to fix this problem? it cannot be much more than days, right? annmarie: fix the u.k. problem or fix ukraine? tom: fix the prime minister problem. annmarie: there is a slew of candidates. we don't know who the frontrunner is. he's going to have a meeting thursday with his interim cabinet and decide how they are going to continue the next few months. tom: how do they do this? annmarie: the issue is, is going to become a lame-duck. house his he get anything -- how does he get anything done? jonathan: domestically, there will be pressure for a change. the prime minister has gone out of his way to suggest there would be no deviation in policy. tom: we are trained, civics 101 in america, there's a president, there is a vice president, i believe it's the speaker of the house and then annmarie and i

flunk the five people after that. what's the equivalent in your world? jonathan: this is not a presidential system. annmarie: it's a parliamentary system. jonathan: it is not a presidential system. you will change the leader of the conservative party, change the prime minister. to expect a deviation in foreign policy at this point, i would be shocked. if you had any deviation whatsoever on the key issues of this moment. if you're the ukrainians waking up and the prime minister's got, i cannot speak for president zelenskyy but he's on the record repeatedly talking about his partnership with the prime minister, how close they are, how thankful he is. how worried would you be that we are going to get a change of course? annmarie: the ages not stopping. boris johnson has something very charismatic and special with president zelenskyy. while you have olaf scholz wanting to continue his dialogue

with putin, boris johnson was not on that page. he came out emphatically bashing president putin. tom: foreign minister for the nation, issue one of the candidates? jonathan: possibly. throw everyone's name and said that. no idea. you have to put yourself forward. the conservative mpwill decide between themselves how to' whittle that number down. annmarie: remember 2016, everybody thought it was going to be boris johnson and michael gove -- jonathan: had something to say about it. i think british politics at this point is impossible to predict. annmarie, good to see you. annmarie: i ordered you bacon. tom: what's so sad, this is where we are with all the history, i looked at the menu, room service, there's no tang. jonathan: i wonder why. tom: i was absolutely shocked. we are going to digress from a

truly historic moment. we will continue our coverage from london. we just saw an effect upon sterling. a student of british politics, a student about the markets, he's global head of foreign-exchange analysis at citigroup. good morning. how do you link pound sterling gyrations into the u.k. politics of the moment? >> great to be with you, tom and jon. we think politics matter at this moment. they matter for the british public, they matter for the international community, but they definitely matter for financial markets as well. unfortunately, that uncertainty that will linger over who will be in charge of the british government is yet another negative. but i should stress that the drivers of the sharp depreciation in the pound, 12% or so this year against the dollar, they have not really been political, they've been in the context of broad dollar strength. it's been the economic weakness of the u.k. that's been driving that double-digit inflation and

also the fact that u.k. growth has been among the lowest in the g10 and there's no change in sight. we think this is an aggravating factor but we don't think that politically develop its would drive the pound in any particular direction. as you see, today, may be the resolution of uncertainty is a slight positive, even though we do not think that will last. tom: where are the points that you see in currency pairs would suggest policy intervention of a dollar too strong? give us your idea on europe as compared to dollar or sterling compared to dollar or even dollar compared to you and. where is your target point where there would be policy intervention? >> well, we think that there two types of policy interventions. we think the most relevant element of the so-called rivers currency wars is that as exchange rates have been weakening, while inflation has

become a bigger concern, that spin forcing central banks to intend to tighten policy faster. we see this across the g10 so that part of intervention is already with us. we've seen many central banks at least up the pace of rate hikes to 50 basis points, which is now the norm. when it comes to actual fx intervention, the bar is much higher and it's particularly high if these economies are a part of the g20. we still think the yen is the most plausible among the majors. we think that's also 1.40 in dollar-yen. it looks less and less likely that we will get there in short order. for now, we think the points of intervention are far away in the major currencies. but we've seen a number of emerging-market currencies, of course, being intervened in. usually, you would expect more fx intervention in those currencies and we think that would find its continuation as we think more dollar strength is still in-store.

jonathan: if you are just turning in, about 20 minutes ago, we heard from prime minister boris johnson announcing his resignation. many of you have been anticipating that moment, the pressure building on him, the momentum building. what we don't know is the timetable for this leadership transition, the prime minister singh moments ago that we would get one perhaps next week. looking at this affects market -- fx market, we have been trying to work out whether central bank rate hikes are positive or negative to sterling or the euro. what we know, it's almost guaranteed in our future right now, is that the ecb will hike interest rates and that the bank of england will likely hike interest rates. what i don't know is whether that will be supportive or have the opposite effect on the currency or not. what's your interpretation of that? >> so, as you say, it's in fact not at all straightforward. when you see central banks hike rates. because in the context of a

stronger economy, it's an unambiguous positive. in places like the u.k. and the eurozone, you are really trying to address multiple challenges and you're picking the lesser of at least two evils i many casesn. you have to hike rates while keeping fragmentation and control. and the case of the u.k. -- growth is likely to slow even more. i think we will come to a point where the -- is so weak that rate hikes will be stabilizing. in the short-term, we don't inc. rate hikes can do much at all to bring the value of their currency up. jonathan: thank you. abraham rob ari of city. the currency weakness seems to beget currency weakness. tom: i'm going to partition it out as citigroup and others do. you've got g3, euro, yen and dollar and the new go to

developed economies. also off of that is something that we have not spoken of and i think is off the radar and that is em dynamics. exceptionally fragile. it was sri lanka most visible. but in india as well, efforts in the last couple days. the em dynamic now something into july we are at risk of ignoring. jonathan: let's get an update from brussels. i want to get the european response to what took place about 25 minutes ago. maria: well, it's very muted. we really have not heard from any major leader reactor this. when you look at the european institutions, they've set in the past hour nothing in principle changes, we stick to our rules, which as we look at the details of the deal that we signed and we will continue to defend those. a lot of this is this idea that europeans like to play up, this is another day u.k. politics. it is very messy. brexit unleashed forces that have made the u.k. very

unstable. and makes a bilateral relationship between the eu and u.k. unstable by nature. but they do watch and they clearly care about. the other thing that i presume they will be paying attention to is the woman or man that replaces boris johnson. this will reinforce their thinking that they should not be flexible when it comes to changing the deals or parts of it. they believe, imagine just two weeks ago, mr. schatz coverage had agreed to reopen the irish protocol. who see going to negotiate within the next two weeks? who's that person he needs to deal with in the u.k.? it reinforces these idea from the europeans that we sit tight and don't move. tom: maria, with a trip from bavaria to madrid, across all of the chaos of european politics, the shock that adam posen mentioned earlier on some autocracies in eastern europe and such. now,, this historic moment for the united kingdom.

how would you suggest mr. putin sees this through the russian prism? maria: yeah, and he will see what looks like, in principal, ms. ukrainians love boris johnson, alongside the polish, he is definitely top one. they love him, they love the way talks about russia, they love the fact that he is so tough on vladimir putin. if you ask the average ukrainian, do you know who boris johnson is? they will tell you yes. i'm not sure if you ask about mario draghi or olaf scholz in germany. for the russians, they will look at the political mess. the reality is, behind the scenes, nothing will change. the sanctions, they stay on. the policy is not change, presumably. for the russians, it's the weapons flow going into ukraine, which for the time being, nothing is going to change on that front. in reality, not a lie is going to change overnight. jonathan: maria, thank you, as

always. in brussels, maria tadeo. that last point gets lost on a lot of people how well appreciated he is in that country and ukraine by the ukrainian leader, zelenskyy, as well. tom: he's touched on the spirit. one of his heroes, winston churchill, he touched upon within all of his study of history as well. i think a lot of americans don't appreciate this. we need to make this clear, there's some distinctions with president trump. this guy was a real student. he was, you know, superb intellect. jonathan: we will move away from the united kingdom and back to the united states. we will be catching up with the council of economic visors. all of that coming up over the next couple of hours. we need to talk about policy here at home in the united states and how they tackle problem number one. and problem number one is inflation. tom: inflation. jonathan: without a doubt. tom: and how it folds into all the rest of the story but

inflation. jonathan: i said i thought the timetable might be on their side, that as this year progresses, that this inflation story may kind of whimper out a little bit. a lot of people on the same page. here we are midpoint of the, i cannot give them that animal, tom. tom: this is going to show the separation of core versus headline inflation. the american public does not care about core inflation. jonathan: you cannot beat core. you cannot travel to work on one inflation. with tom keene, i'm jonathan ferro with futures up on the s&p 500 and crude, maybe this is a welcome one for this administration, sub $100, $99. this is "bloomberg surveillance ." ♪

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♪ >> the fed keeps going 75 basis points for an indefinite period, we will have a recession soon. >> the fed may need to slow down its rate hikes sooner th