>> the pressure is on the adhere , that you have an overheating economy. >> perhaps it is not slowing at which is anticipated. >> watching the fed and whether they will link. what they need to know consequences will come with this is bloomberg surveillance. jonathan: live from new york city, this is bloomberg

surveillance. i am a long ride tom keene and lisa abramowicz. tom keene apparently going away again next week. we'll get to that later. futures down .5%. thursday, jpy -- jp morgan earnings. tom: combine them all together and things are so topsy-turvy. a little bit of a sermon about new variant. where are we going to be for the sunday talk shows? i'm sorry. the uncertainty is extraordinary. it has to go higher. not only that, but when 07.62.

138 yen is unimaginable. lisa: it raises russian. but we have not seen it in risk assets. even as we see the fastest pace going back decades, we have not things break down, except in the margin. jonathan: do you think the boj can all tough here? lisa: the thought is that they can do it on their own terms before they move away in terms of the yield curve. i am not going to weigh in further than that other than to say this has been one node of stress.

jonathan: we are on the same page. this was desirable for the japanese authorities and here we are, and it is anything but. tom: the way that i think it would answer this -- it is not the vector but if you get a baited chain. you have that over the last five months, but does it get worse, or do we stay on some form of an eligible trend? jonathan: futures are down. we talked about the data this week. retail sales on friday. more than 20 basis points. we touched on the fx market now let's talk about.

a lot of talk this morning about china. lisa: they do track a number of variant cases. how much are we looking at this being a consistent story? also, very much with oil and gas today, the routine scheduled to shut down. there are fears that it will not come back. the euro could go down to 95. 0.95 versus u.s. dollar. i do wonder how much of a threshold will indicate that there is further downside. andrew bailey is taking on financial stability in front of the house of commons. how much? i am also looking at the pound

declining today. below that mark, how low can it go? it is also not desirable to have a strong current income if you look at the dollar. is it enough to attract investors to buy on? u.s. treasuries are playing. i know you will be watching this very closely. you are seeing yields in the front remaining high. how much to be ea consistent be there as you expect some sort of slowdown or even a recession? i am watching that yield curve. jonathan: 1:00 p.m. and you are sleeping. one hour a day.

i do not get that phone call, ever. it is a quote for you. even the current x exit path what we -- with e interest rates well into next year. the fixed income joins us right now. walk me through why you still believe that we could raise further hawkish surprises. >> they thought being sick as is as the market expects. currently, i would they we are going to get an patient number higher this week. getting close. we might trickle a little bit above this month. it is a big number and it will be difficult to end the year below eight. my concern is that regardless of where we are on bad funding that

it not going to be enough. market current these are already pricing in rate cut next year. we will actually be the fed getting closer, but it will not been on a dime because it does need to get ration out of the system. this happened once before the 19th and be. they backed off to and inflation came back. lisa: this is a bold call. where is it most mispriced that we will see patient come down versus what you are expecting? let's looking forward, we are

seeing short-term rate pricing and the second half of next year. that, to me is a mispricing. i do not think that at current levels, they are cheap. i think they are's will rich. the market is counting on the fed being in a position to cut rate once we get the slowdown in the economy, which staircase acting and hoping for. if inflation does not come down, i do not that they can cut rate. tom: i was given a private meeting with sir john templeton which began a relationship over decade. he said that there would be a shortage of on.

that was a lonely call. is the great moderation over? a morningstar fixed income manager of the year. can you say that we have broken through the training of the great moderation? >> i think that the great moderation happened at a time when government and central banks were not coming off 15 years of various forms of qt from central banks. government, three or four years of fiscal policy. do i think that shortage of bonds -- it will eventually come back again, but for the next three to five years i do not be a shortage. jonathan: what is the big market

call for you? >> it is much more volatility coming forward. we had the market rally 60 basis point. these are not done. they are not ready to make that call to jump into risk asset jonathan: 7.5 tapers and year in inflation. ladies. it is something that the governor elf was pushing back again, but they do not want to make that same date. they had to down rate hike after this one. lisa: this is a market that has not woken up to that

possibility. the market call was interesting. a lot of people are going into risk asset. i looked at this red that investors earn. it has come in a lot. people are piling in to this day because they feel like the yields are high. you have things moving around much. jonathan: it is recovering quickly. tom: the persistency is a huge story. it is calculus monday. come on. elon musk is going to delaware. it is a cake walk. no idea what she will run into. i think --

jonathan: 3.05. from new york, this is bloomberg. >> keeping you up-to-date with the first word. shares of twitter are falling today as the company prepares to go to court. bloomberg has learned that a finding could happen as soon as today. in the u.k., the foreign secretary the latest to replace boris johnson as history. she wrote that start cutting taxes from day one and joins other candidate in the race.

the risk of a recession is growing, putting. the rising cost of living is taking a toll on business and consumers. president biden is the administration is still discussing action on chinese import. meanwhile, the president and chinese leader is to weaken the coming weeks. antony blinken spoke with the prime minister over the weekend to lay the groundwork. 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. this is bloomberg. ♪

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>> the president being thoughtful about this. he knows that he has to think about doing everything he possibly can to provide any relief to erase. to do it in a thoughtful way that a strategic and most important to him and all of us, without hurting american worker. jonathan quan from new york city

this running, good morning. i am jonathan fair. futures look like this. down .5%. yields down a couple basis point after seeing a seriously. that volatility is here to day. tom: finally catching up with the weak euro, but i would say that the team, as you are trying for the economic data is, what will be the duration of this series? jonathan: it could be sticky. others are more optimistic. the growth figures are undesirable.

tom: we heard this in washington. he says, what will it take to have a talk? one full percentage point by the fed. -- jonathan what i am not going to pour hot water over that is based off of a very long data point. tom will and always looking at surveys. emily joins us with government. there was a planned trip abroad. let's talk about the and where he should visit. where is the biggest headache, political the in america? might i suggest georgia? >> georgia would be a good choice. i can answer that russian a number of ways. georgia will one of the states

that this ride whether they will keep the senate. ohio is another one. there are a lot of things that biden be doing. the democrat and resident biden, what is happening is that there is dissatisfaction across the nation. i talked to a number of planned to vote the democrats again come november, but they are not happy with the direction that things are taking. it could keep people from going to the pool. tom: going those ticket. two years from now. i have yet positive,. let me talk about the president. how quickly is the resident walking away from the liberal?

>> it was very interesting to see communication from defending the job that biden has done. this is something that they have been a lot of concern from the party saying he is not doing enough. they said a lot of these are additives that with mainstream, but at the same time, they are saying that they might end up enacting in order that would allow for abortion to happen nationally again. you kind of happy messages coming out of the white house, and this is what they are trying to do. they need to make sure that they are appealing to their base, but also moderate democrat.

it is hard to crack a message that will appeal to those group. it leads to this disjointed message. lisa: does this lead to an ineffectiveness? i talked about this with a host of bills set to be passed over what president biden initially opposed to help the economy. >> i think that lies more in the hands of congress. they have been working behind this on exact health care and medicare solvent, on climate and taxes, both corporate and global , to see if there is a way. they still have this vehicle where they can pass major

legislation with only democrat voting way. they need to make sure they do not really any progressive the house, but when i talked to lawmakers, they say, if we could get something point, it would be a. there is an eagerness to do something about this, but the clock is running out. they will depart for all of august and after that, things that even more difficult to pass more items. we are keeping a close eye on the legislation. it all needs to happen within the next three weeks, so congress has a lot on its plate. jonathan: we just got email ahead of your interview this morning. i'm looking forward to with the base case is, but he did talk about the downside.

coming up a little bit later. tom: the question is, in this earnings is income how far are we, along? that can be a source of analysis for the next few days. a little bit better. >> we have a max drawdown of 20%, if we look at his projection. is that more optimistic than what other people are seeing? it does seem to strike me that people are increasingly looking for opportunities. it tells you something about where we are.

jonathan: i would never accuse you of being for bearish. >> thank you. tom: what is a veteran investor? quest it is somebody who has been around for a while. lisa: are you implying that i met something else? jonathan: i'm not sure what is wrong with him this. you are upset. ok. tom: please, get in there. jonathan: do you feel better? tom: i feel better. ♪

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jonathan: a big week ahead. jp morgan, coming up on thursday. retail sales in america going into that choose negative. on the nasdaq last pulling back by three quarters of 1%. it is basically everything right now.

on friday, suggesting that we could have an avalanche of earnings provision. we had that conversation. this is what she had to pay about inflation and what it means the bond market. inflation is still close to 8%. for that reason, she thinks that the fed be aggressive and that the volatility in the bond market is going nowhere. we had a move higher. it is very different clothes to keep up with this bond market, at the moment. it is moving in one direction. you take a look at the euro for the japanese yen and it is there to.

tom: it is a distinction. it is very simple. there was an election there off of the shock. it would be shocking. jonathan: wherever you look this morning. as you pointed out, e.m. as well. good morning. >> thank you. you have been trying to talk about this all morning. let's talk about it. twitter and the saga that keeps on going. not so fast. you need to buy the shares. basically, they asked a they will not do it. what are some down with? telling us about $30 a share

because of all of the back and forth. he would have to pay a billion dollars and a potential best case scenario. those shares are lower. alibaba -- this got my attention. down almost 4%. just how much does this indicate a tightening regardless of the backdrop over in china? that leads me to the other stocks that i am watching. we talked about copper earlier in the show. definitely sending negative signal. down 2.3%. well off of the live.

tom: thank you so much. we are about ready to go through what we saw on friday. ace money leg up here. this is timely with dollar restraint. a great interest in money and commodities. i'm going to go to one important idea, which is that this time is different and that we are far along in the tightening cycle. what does that mean jerome powell? >> i think the danger is that a tight too much for financial market. the underlying economy and labor market can with and a fair amount of more tightening. there is also a wobbling. it is the combination of the

withdrawal and interest rate. and my that would be that at some point in the next few months or the next few weeks, we are headed for some sort of financial accident or a break in the market. tom: we are old enough that we remember the little red book. we were writing essays from a time of crisis. everybody had to be look at the time and this was fisher on the world. when you see any other number of current, what does that? quest it is not like 1997 and 1998. i would say more than the other

policies, the private thing is other developing market against the dollar. this sort of ability of the dollar to suck up all available liquidity. i think europe is more likely to be at the heart of it than asia. jonathan: when you say that nothing will break say that, what does it look like? you have anything in mind? >> it is very sharp with a number of asset. we have loaned ourselves off the equity market and there are very unpleasant losses people. i think the danger that we have

a -- i think credit is what we have to watch now. i think that 2022 has the ability to impose the sorts of losses on people that they cannot with. jonathan: what is the difference? the aggressive white and who would it be for? quest you look at market prices and you cannot make sense of them. you can hardly recognize it. most of what we have so far has been understandable with lots of earnings and inflation. as they did in sober seven. in 1987 -- -- october 1997 -- in

1987. lisa: it raises the question of when the fed steps in. how did they come in and back away, even in the face of some dislocations that you asked? >> i think they take whatever success they can and you make it over a period like that and the fed is looking forward to doing something different. i think the fed has different mandate that it balance is. we all understand that there is an implicit mandate to keep our system functioning at a

tolerable level and i think that there are price levels force needs of movement by which the federal reserve would be forced to do some thing. you have the bank of japan and other is. lisa: it will be a trend of the fissures that we have. what is the potential contagion area? quest it is difficult to say. i think europe was a mess going into this and continues to be a mess. it has the strain of russia -- tensions with russia and rationing of energy. that does hard to look a lot like the needed 1970's, where it was not just inflation that you

had to deal with but a shortage of energy available and consumer purposes. europe has poor political leadership. the ecb is not a incredibly viable central bank. for many it is currency. if we had anything lower, that is the vision that you need to watch out for. jonathan: what are you buying right now? >> yes will be patient with energy. i still think that has value and as cannick will, i think we want to be more aggressive. i think about precious metals still having potential. we are a lot less long today the

movers asked months ago. recent strength to become less long than we were a month ago. this looks like one of those times that whatever your mandate allows you to do, take it down some more cautious level than a normal market environment. lisa: talking about a fisher big enough. how big does it have to be? the euro, that being the next epicenter of a crisis really highlighting the angst in that region. jonathan: if you want some doom and gloom, that was it right there. tom: it speaks to the tension.

jonathan: is this because lisa came back? did you guys arrange the guest list this morning? tom: it is a bruschetta. it is a easy bruschetta. -- crazy bruschetta. jonathan: what are you talking about? are you talking about lisa's trip to greece? did she get you a gift? ok. i have to go. from new york, this is bloomberg. ♪ >> keeping you up-to-date with news from around the world. separate disruptive battle over the future of twitter. she was found today after elon musk walked away from his deal to buy the company. twitter plans to do less -- sue

elon musk. results constrained then for the japanese minister of the democratic party. a skintight version of what was once a multitrillion dollar overhaul. the key is west virginia senator joe manchin who lacked an earlier version of the package. hoover tried to lobby politician as part of efforts to and globally. they are among those reporting.

this is bloomberg. ♪

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pnc bank: see how we can make a difference for you. >> from the moment we do not ask back negative growth for next year. any adverse scenario, which has to do with the negative surprise, we might have a session next year. jonathan: that was the ecb governing council member. good morning tom keene and lisa abramowicz. futures are down. we are down and the main event is in the exchange market. 100.89. down on that current. the dollar index has gone back to levels we have not since

2002. this morning, very close to 108 in the dollar index. tom: keep talking and we will get there. i would suggest that it is a major current the index. the yen is behind it. you look at the difference today as the young joint the parade. there would be more year in something that we have underplayed today. there is a lori and maybe some more strident. will kennedy join. it barely describes the hurting on an hourly basis. in a broad commodity market, i

have to go to the issue of the moment, which is natural gas in europe. i am curious about the generational subsidy in egypt. i we at eight point where people government subsidies to tumors and businesses for energy? >> i think you are already starting to either. 600 pounds or something this winter to subsidize our utility bills. that is something that has, all over europe. governments are terrified about the hit that they will take this winter. we are probably going to more action from tax layers money back to tax payers to take the edge off, but it will not be able to make up for all the pain. in the u.k., we are likely to be

a huge leap again. tom: you have a second home, the way that you are traveling lately. i does it smoother for zoomers than any europe, where every anecdotal evidence i have, it is a utility stream to zoomers of shocks? >> gas is being exported, which is being -- pressure on the system. gas prices have risen, but they are cheaper. ukraine or, flows into europe have fallen through the main pipeline. we are not filling up our reserves like to. there is no idea of how we can replace that gas.

it is providing this enormous shock to the industry. jonathan: we are going to get a repeat of that reader this year, but we are all inking about later this year, trying to anticipate what happened, and i am trying to figure out if we go to a four day work, is that the direction of travel for you? >> i think the point is that we need to do something to manage demand. there are conversations with users about how to incentivize them. that will be part of the conversation, but it is really bad. one way to do that is to have a

four day week. we saw that in the 1970's the nuclear power crisis. we went to a three day week. these kind of things will come onto the table. lisa: it is already happening on the edges in germany. especially in terms of how high they can turn the heat and curbing usages as they tried to gird up enough gas. >> i think you will he demand was on. people will turn down the thermos at or be worried about turning on their heating. there are very high energy and said. we have seen them using a huge

amount of power. we will see more of that, without a doubt. it definitely spreads through. jonathan: it is mary landy? -- land? tom: it is just like downton abbey. jonathan point i have no idea where this going, but thank you, as always. i believe i am pronouncing this correctly. we are getting close to the 108 here.

>> this is important. right now, it matters one goes back to the summer. 20 years. radio has the advantage right now. what is important is the makeup of the euro. in the bloomberg index, much broader. that is my annual banner. lisa: basically saying that given the 16% initiation in the dollar, plus or minus, given

where it is right now, it translated into an 8% headway for earnings. this is not being accounted for. we have heard from companies morning about a strong headway from the dollar. jonathan: enjoy your sunday. futures are down. enjoy your monday. coming up shortly in the next hour from new york, this is bloomberg. ♪

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>> what you have is a market that is laser focused on getting recessionary signals. >> there is going to be risk in the market. >> the market is expecting the fed to push us into recession. >> the economy is slowi