>> until the end of the year, a hiking path. >> they are kinda facing a different inflation daemon then they are used to. >> they are moving rapidly into restrictive. >> no matter how troubled the u.s. is, there are other countries in worse shape. >> at the end of the day, u.s. has much higher risk from the conflict in europe. announcer: this is "bloomberg serveillance: early edition" with tom keene, jonathan ferro and lisa brummel it's. -- alisa abramowitz. tom: tuesday looking to thursday and it is real simple. jon, we've got to look to ecb and america has to pay attention. this time it is not a snooze fest. jonathan: not at all. the ecb may be taking a page out of the fed's book by t and up a

a few days before the meeting. the fact that president regarding going to recognize that according to the european union, they don't think nord stream one is coming online. you've got a pretty messy recipe for the european economy this year. tom: of course, that folds over to the fragmentation. we need to stop right now and explain the hope of this policy. italy, higher yield. germany, lower yield. some type of manipulation some of europe takes the price change on new estimates. jonathan: basically, ron -- close-ish. kind up with this new tour. they haven't actually put that altogether yet. it is going to be interesting

for more reasons than one. tom: philip lane is more than qualified. -- is able to say to christine the garden, who picks up the risk if you give italy a free lunch, right? jonathan: we need to understand a range of things. it sounds to me they are making it up as they go along. at what point do you say that it is an unjustified winding spread in italy? do you have a number in mind? velocity, the rate of change, the speed of the move? i don't know the answer to that and maybe they are coming up with the answer to that themselves. tom: kailey leinz is with us today as lisa abramowitz is on the edge of everest. i look at where we are, the ecb is the focus, but it is also earnings season. the first calculation of actual earnings growth.

maybe it won't be that bad. kailey: that is the question, will we see a continuation of young able to pass on higher input costs, retaining margin? is that going to start changing if the demand picture starts to change? it is something we are going to continue to look for color on as well as the idea of fx headwinds. we had multiple companies citing the dollar as a reason they won't be as stellar. apple selling higher, what message does that send? tom: i've only flung to this equation three times. 40 times nine over five, combine that. plus 32 equals 104. did i do ok? jonathan: are you doing degrees centigrade into fahrenheit? tom: a public service. jonathan: why do i have to translate everything you do? tom: this is what we never memorize because we are americans.

jonathan: saying the temperatures are still climbing, maybe not the record. are we done that the weather now? tom: no. what is sad about this is it turns into a viscous search. that strategist at morgan stanley. futures of 33 with a nice liftoff yesterday. in this july, my head is spinning. give us the keel of your strategy right now. what is the thing keeping you on a straight and narrow path into q3 and q4? >> great to be here with you. a key messages patients. we arc -- patientse -- patience.

we are in a bear market. i think the market has made good progress on the asian front when we start to see inflation breakeven's come down. the market is clearly getting more comfortable with a long-term and vision story. i think we've made good progress in pricing and more from the fed, but there is still a growth slowdown ahead of us, and not enough of that is reflected in the price. there is that good progress, sentiment is more negative, both of those things are good. i think we want to see more signs that we are closer to growth and we have seen more resetting in earnings that dictations. jonathan: you touched on the answer to this question. he said we are in a bear market. how do you know when we are not in a bear market and when you get to that point, is often too late? andrew: it is a fair point. if we think about dynamics of the bear market, and obviously the scale of the drawdown the alibis, the nature of the market leadership which is very defensive.

there is the fact that we've seen certain conditions that often go along with bear markets, policy tightening, curve inversion, declining pmi. but you are right. by the time the economic data really turns, usually it is too late. interns are things we are looking for, i think pmi's being below 50 is usually a better indication that the market is closer. i think we would like to see more signs that analysts are cutting numbers more aggressively which is usually a sign that sentiment is getting a lot more cautious signs that individual investors are getting a bit more negative on the market. we are making progress on that front but we are not quite there yet. jonathan: looking for that relative outperformance on the way down and hopefully some absolute positive returns. you guys are focused on defensive. some people might hear that and start to gravitate toward some of the tech names. i want you to really define what

you mean by defensive. >> we've been thinking about defensive in the traditional utilities staples. those have become more expensive sectors. it is never great. i think it is a sign of how difficult this market is that the places to hide have become more expensive, which makes it more difficult to hide in them. we still think the market will gravitate and pay increasing premium for those sectors as growth risks continue to abound. we think also that the market is under positioned in those areas still. those are areas where we are least worried about growth slowing down because the demand is relatively not cyclical. health care could actually benefit as demand shifts from goods to services.

health care is very exposed to a lot of services-type spending. that is currently still where our u.s. equity strategy team is , where we think investors could still find out-performance, but it clearly has become more expensive as the market has declined. kailey: that is what you're buying in equities. what else people have been buying over the course of the year so far is commodities and the dollar. how close are we to the peak of those? andrew: we think the dollar could still rise further. we think the dx y will move up to about 112. relatively sharp near-term move that our foreign-exchange team is expecting on the back of the fact that we think the bed is much more likely to be complied rate expectations than the ecb. we will ultimately raise the risk that the ecb won't be able to hike as much as the market expects. on commodities, i think it

remains a story of energy versus metals. on the energy side, we still think further gains are possible especially against the forward curve which is implying large price declines. i think the metals case remains much more challenging. a lot more of that is driven by uncertain chinese demand. jonathan: you've got to go back to the early 2000 for that kind. tom: yeah, you do. maybe i will do it here, which is not an em index, but what does that mean to the bloomberg dollar index? we haven't talked about it in the last day. malaysia, india, and somebody else i can't remember, but they are all ending away. they are still stable, but many of the currencies have not given up the trend of weakness. jonathan: the turkish lira down

24%. the hungarian down 14.6%. polish down 13%. a lot of european names. tom: i do get that. while you were going on there, i think it is later this week, you look at apple as a profit machine. they bought that $403 billion of shares modeled over five years. moving from $67 billion in 2019 to a model $91 billion a year and a half out. i don't think enough is made about the bank that we saw and other selected companies. they move so far beyond the pandemic. jonathan: which is how much the outstanding flow of apple has been reduced.

it has just become a cash machine. tom: these companies are just moving right on. jonathan: futures up three quarters of 1%. positive against the dollar by 1%. this thursday from a beautiful new york, this is bloomberg. ♪ >> keeping you up-to-date with news from around the world. replacing boris johnson and the turkish prime minister. another vote today will whittle the field from four to two. temperatures in the u.k. reaching records today. that is 102 degrees fahrenheit. the heatwave is projected all across the country. trains have been delayed or canceled and workers have been stranded at home. and risk asset levels during the

global financial cycle. growth and profit expectations set to an all-time low. china reportedly will fine -- more than $1 billion according to the wall street journal. the company to restore its main -- to --. investors have been -- china launched last year into potential violations of security. -- and doesn't have enough information about span and robot accounts. the company urged a judge to hold a trial as soon as possible. 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.

this is bloomberg. ♪

>> they will have to bring nord stream one back by the end of october. otherwise they will have to -- the mess technique. you've already seen germany putting measurements to utility companies. this is just a start. >> things will get worse for europe, we've heard that a lot. the chief analyst energy aspect, good morning to you. higher by seven tens of 1% by the s&p. nasdaq 100 up three quarters of 1%. we save just a little bit, a huge turnaround going on over the last three days. the eurodollar, back to 102.41. tom, just keep on saving that dollar move over the last few days. tom: many, many big figure moves. 108 down to 106.6. as i said earlier, i am more

focused on the macro, what are they going to do, where are we going to be on friday? jonathan: tuesday, microsoft announces. wednesday, facebook. tom: are we doing a special? jonathan: we are doing our special, yeah. tom: right now we are going to digress with david. he is president of the world bank and with his work over the years, a student of detail. at the world bank which is surrounded by experts much like the united nations, the services of -- out of greece and out of the united states. david is exquisite on this

linkage of energy to food to fertilizer. and fertilizer is something we are not talking enough about. the world bank is focused on this linkage. david: that's right, and we have a lot of experts, as you mentioned. the linkage is pretty tight. the world is going for two major shifts, one on the interest rates and bond yields that you talk a lot about that affects the currency values, and on energy, it is reducing the dependence on russia, which is a huge shift for the world and it + think several more innings to really get it right. -- it adds. right now, europe is drawing in natural gas from around the world. tom: does the world bank have any form of dialogue or new dialogue with russia and mr. putin?

david: no, that is not what we are doing. yesterday i met with the prime minister of moldova right here in this room. we talked about the major shifts going on. the electricity grid, the natural gas sources are being shifted away from russia, and that is where the world is heading right now. kailey: as we talk about where the world is right now and the prospect of natural gas flow to europe being cut off if nord stream one does not resume operations, we have to keep in mind that also happens against the backdrops of record temperatures in the u.k. climate, a very real issue. as we talk about investing in some of these sources for energy, does that not risk setting us further behind in the long term on climate? issues which we know affects lower income countries more dramatically than others. >> natural gas is cleaner than

other fossil fuels and nuclear is cleaner. very clean from a carbon dioxide standpoint. i think the world has to really prioritize what it is doing with regard to the climate change issues. one of the things we are finding that we are putting out that is very significant, country by country is the things that they can do to protect themselves and to be more efficient in their development. integrating climate and development that i think is the way forward. kailey: investing in development. let's talk about what else you think is vital here. what other debt relief efforts do we need to see right now? david: this is of major importance for the world because if interest rates are going up, the debt was already too burdensome. experiencing currency depreciation which causes inflation, and they also have

lots of international reserves. the debt reduction efforts have really been stalled for some years. we know that there are countries that have unsustainable debt. there is not really a process to reduce that debt. we saw that at the g20 just completed last week. i am hopeful that sandia may be able -- some via -- zambia may be able to get debt relief, so that gives some kind of hope with massive reduction of debt for some of the poorest developing countries. otherwise, poverty rate goes up and the instability you are seeing in these countries worsens. jonathan: you touched on the most important point. the biggest killer is poverty. do you think the west needs a bit of a reality check about the speed at which it can move away from fossil fuels, given the concerns that you have?

david: i think there has to be a prioritization of energy policy in the west that includes massive increases in production of less carbon-intensive energy sources. that may lead the world to nuclear and natural gas because natural gas has the added benefit of reducing fertilizer, the cross yield that is so important for poverty and reduction and malnutrition. we have to have a direction on that. right now, europe is buying up global sources of natural gas and importantly, the world is shifting back to coal and even to fuel. every day i meet with global leaders is countries are either selling coal to europe or are themselves shifting back and more carbon intensive energy sources in order to try to keep the electricity grids running. it is a very practical effort by

the world bank, this major shift in energy and an interest rate. jonathan: i just want to get your thoughts on an important topic. the world bank president. tom come economic nationalism very much front and center when it comes to energy supplies later this year. tom: what i would say, and this all goes back to russia 20, 30 years ago, you can think as hard as you can about this, you can listen to people, but the bottom line is you never see it coming jonathan:. jonathan:true. down a little more than 1.5%. futures positive 6/10 of 1%. a little sprinkling of economic data coming right up. in new york, this is bloomberg. ♪

so many people are overweight now and asking themselves, "why can't i lose weight?" for most, the reason is insulin resistance, and they don't even know they have it. conventional starvation diets don't address insulin resistance. that's why they don't work. now, there's golo. golo helps with insulin resistance, getting rid of sugar cravings, helps control stress and emotional eating, and losing weight. go to golo.com and see how golo can change your life. that's g-o-l-o.com.

jonathan: you should see how fast -- runs into the studio to get ready to prep these economic data points. futures up 6/10 of 1% on the s&p. on the nasdaq, up by about 7/10 of 1%. mike, you've got the numbers in front of you?

>> i don't. you break them down and i will try to figure out why this computer is not working. jonathan: down about 2%. looking for a median estimate of two percentage points. we were looking for negative two point 7%, we got -0.6%. make of that what you will. worse than expected,. and that is the overall question here, how long are builders going to be able >> to expand given the fact that >> demand seems to be falling off rather rapidly? it does suggest that we are going to be slowing down and the question which will be answered later this week, the existing home sales, is up. when does all this have an

impact on prices? prices have been going up new matter what which surprises people due to the fact that mortgages are higher. that is eating into cpi and causing inflation on the core level to rise. the question is can we get that down? when does the higher mortgage rates and affordability start to impact the markets? but we did see a really, really bad drop in the homebuilders index yesterday. they are getting pessimistic. jonathan: what of the i typically between house prices coming down and rental prices getting hit? >> it is kind of difficult. what the government does is they ask you what you think your house would rent for, and that is how they tried to figure out what the cost of housing is. rent prices are obviously available and we see them going up, but you don't move every week, so you don't really notice

the changes in the same way you do with gasoline. so they could take 6, 9 months to get into the system. the estimates are we're going to see this kind of change going forward for some months and housing. housing will still be contributing to inflation for a while. kailey: to your point on the homebuilders sentiment data that we got yesterday, the lowest rating since may of 2020, the chairman is fantastic. holders holte -- builders hall construction because the cost exceeds the market value of the home. are you surprised without quickly things have deteriorated in a housing sector that was so hot for so long? michael: not really. some mortgage rates rise perhaps faster than anybody anticipated because they have jumped to a range we haven't seen in a while.

we have seen the mortgage applications go down quite a bit. now the next step is to watch the employment numbers and we will watch construction workers. if they start to lose their jobs, that would be the first indication that higher interest rates are pushing up on unemployment, and maccabee key for the fed. link your idaho event to what we may see in the end of august. >> the general feeling of the rocky mountain summit in iowa was that the ceos and economists really did not know what was going on. they have a bad feeling about things, jobs have been strong. there is a net spent between gdp and gdi that doesn't give a

clear picture of how the economy is doing, and yet inflation remains higher. the question is what is jay powell saying? he is probably going to write his speech at the last minute given we are waiting on even more inflation and jobs data. michael: -- sitting next to him, helping him. tom: i did that once. i said pick the maroon carpet, that is what i want. jonathan: a tenths of 1% on the nasdaq 100. tom: this is a great joy, and perfectly timed. what you need to know, in the absolute best of 2008-2009, he was the lone voice saying there will be recovery and we will get back to three and four gdp.

it was volatility, but it was remarkable how he said patience will recover. john talks about a mutual fund manager survey. you know the economic data as well as anybody. can you look out to better times? >> i think you need to remember, i think that the most likely scenario remains to navigate through without going into recession. there are parts of the economy already in recession, talking about already taking it on the chin. but the key to continued growth in europe for the consumer, there is a firewall that continues to grow in the recession. there is a fire and the firewall

stops under pressure. having said that, i am certainly a lone voice. ceos, investors, the man on the street, people think we are going into a recession. jonathan: you mention headlines over the next -- last couple of days. how does that actually transpire? how does that, about? >> you can see from my hairline, i see a lot of recession and i've never seen anything like this. generally, no one has predicted a recession that we know. but at the end of the day, a recession is a loss of faith. it is the consumers losing faith that they are going to hold onto their jobs, businesses losing faith that they are going to be able to sell whatever they have. it is a loss of confidence.

yeah, i think if we are all pumping ourselves up for a recession and being very pessimistic, the odds are that we lose faith and go into a recession. in my mind, we all seem to have our hand on the door. if there is another loud noise out there and we are so skittish and so nervous. tom: you should see the moody analytics bunker. wall-to-wall going back 30 years. mark, you talk about the confidence of the consumer. what about a corporation? a steady stream of not outright job cuts, but hiring for some of the most cash flow abundant companies out there like apple, just getting on the market, a little bit more cautious. i'm wondering if you see that more broadly into the labor

market in the near term. michael: that is by design, right? the job market creating a lot of jobs. that will exacerbate the raising price pressure. raising interest rates with every intent of slowing growth, slowing down job creation. as that is happening, you would see layoffs begin to pick up. by the way, we are coming off incredibly low levels of layoffs. i don't think i'm dreaming this number, i think i calculated that the number of layoffs this year are probably very close to record lows. tom: all want to know, and i know it is a delicate issue, but you are the one to go to hear. on the revised reports we are going to see, tell us about that.

what is the new abp employment survey going to look like? >> i don't really have any comments on that, i don't know what they have planned. tom: i thought maybe jon had the secrets. jonathan: i think he is telling you he will continue to her. michael: i am not speaking. jonathan: the interview went successfully. he was very wrongly done in 2008-2009. you remember. and zandi said this country will recover. it is led by 69%, 70% consumer. jonathan: i had a lot of people write in about a bank of america fund manager survey. just how many people are forecasting a recession?

this is the most we saw since early 2020. the l.a. 2009 period, march 2020. a lot of people are saying look at these data sets and these opportunities. one reply that is important, coincided or precipitated a massive move in central-bank stimulus chant. this time around, they don't have the space to do that. i know it is difficult, man, but put that to one side. we would probably be talking about nec being, the potential for rate cuts in the european central bank. tom: we're coming off a natural disaster and even with the new variant. i'm sorry, it is still coming

off like a pandemic. jonathan: it is difficult to understand what we are seeing right now. it is something you should rate into -- read into with maybe a recession on the horizon. features of seven tens percent. numeral catch up with greg in the next hour. from new york, this is bloomberg. >> the european central bank made a bid for raising interest rates for the first time in more than a decade. they may inflate by double the quarter-point outline. see prices surging and all-time highs. the drive in the senate to quickly pass up to $2 million in incentives for americans has picked up steam in congress. chuck schumer says that

democrats and republicans are hashing out the final details. on the larger bill intended to make the u.s. look more like china, president xi jinping and bedtime european leaders to meet him in beijing and is still waiting for that respond. the prime minister reports is fake news and the invitation went out to annalee. the world biggest manufacturer of hydraulic -- is almost sold out. 340 $4 million charge related to expanding on business in prussia. and the u.k., the temperature just keeps rising. that is 104 degrees heron height -- fahrenheit. the heatwave is disrupting life

all across the country. things have been delayed or canceled and schools have closed early. 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. "bloomberg serveillance: early edition" -- this is bloomberg. ♪

>> this relentless uncertainty about how aggressive the fed is going to be moving my 75 basis points. no end in sight in inflation rolling over. that is what is causing interest rate volatility to drop 74% from last year. jonathan: j.p. morgan asset management really, really smart. i love talking to him about the revenue dynamics. really looking at a model pretty through revenue growth. maybe earnings growth which is

not all that bad. right now in the ratios of the moment, in equities. >> as we dive deeper into it, we have to look at the disconnect in the market. wondering what the actual profit picture looks like. for the radio audience, we are looking at two lines here. one is going back six or seven years. the other is eps, and traditionally, the two lines go hand in hand. until you get to this year where you have this massive year today pulldown. etf still hovering at those record highs. the take away is that perhaps some of these estimates have caught up to the market a little bit, but traditionally they actually lag what these prices are. is the market overreacting? tom: right.

i'm sure there will be many others out here. netflix tonight, tech in the next week as well. now, an important conversation. real money wealth management. our people coming up and saying proverbially "go to cash? >> every time we bring on a new client we explained to them that risk and reward are two parts of the same coin. everybody would be fabulous knowing about investors.

you get paper and taking risks, you get paid for other people behavioral issues, and you get paid for writing out the signs. if it was easy, everybody was wealthy. tom: i am way more modern than that and that as maybe where the debate begins. should i washed a traditional pr do have do further define valuation? >> and always makes me laugh when people complain about uncertainty. nobody knows what is going to happen. but if it is going to happen, we know exactly where to put out and that--

despite the block, we're sought record hiring asked quarter wording. a little spot software. first patent in the year and multiple -- all multiple. it is not going to really print q3 earnings. kailey:kailey: is there a 9 -- line between economic recession and earnings recession? can we get one without the other? jonathan: sure, you can have a gross session where -- but me

remind you, we have had zero rates for a decade. what is going on now is much more pandemic/care than the fed. if the fed succeeds in reducing the rate of growth and judging the unabated hunger for houses, cars, we start moving back to services economy. you can see the growth earnings come in, but not out of recession. on the other hand, you absolutely can have earnings stay fairly robust and end up with a mild recession. but you lose and some of the consumer discretionary and technology we've gained in energy and some of the big banks have made that clear that finance is not necessarily going to go on.

kayley: if you were to give me a rate of optimism, how are you feeling? >> i don't believe we are in a recession yet. just really don't understand what the definition of a recession is. and i was hopeful that we got have a soft landing. monday, that view changed when the fed announced they are going 75 basis points. it is hard to see how the rate that high-end the pronoun that we were going to see enough that is really going to be turning on the brakes. california housing -- and july is the peak of the homebuying season -- just fell 21%.

another 75 basis points and the odds go from -- i think the bloomberg recession forecast was 38%. i don't know if it is going to be anything more than mild, but my hopes for a recession are beginning to wane. tom: thank you so much. futures of 39. dad futures up. what matters is that the data come dao and dowdy uw. kailey: for those who do not know, doa is a decentralized tone is organization. it is not anything related to the dow jones industrial average. that is definitely something that we have talked about on crypto.

at the summit which is happening all day, i will be speaking with -- -- tom: i know my invitation to the bloomberg crypto summit, i think that was delivered on plain stationery. the dow of 38 points. stay with us on this crypto day. this is bloomberg. ♪

jonathan: higher on the s&p. the countdown to the open starts now. we begin with the big issue, corporate america preparing for a slowdown >>. >>you have a