kriti: bloomberg markets starts right now. ♪ kriti: we have a stock market rally on our hands. the s&p 500 is up .6%, good news for anyone worried about extreme moves to the upside. the nasdaq is nearing a 1% gain. tech is leading the way from a sector composition. the only loser today will be energy. to see that in the market across cyclicals, defensive's, that's good news.

especially when it comes to whether or not this rally is sustainable. that is something we will come back to with our guest, steve parker in a moment. we see a little volatility down seven basis points on the 10 year yield. treasuries taking a hit. how much of that is a reaction to the ecb? the dollar is not doing a time. the euro is not doing a ton. flat on the session. they were spiking earlier on. we will dive into the dynamics there. the commodities hedge a lot of traders were piling into. it became a little bit of a momentum trade. take into account the recession fears, the growth fears. potentially an accelerated problem when it comes to natural gas in europe. you are seeing brent crude 104 taken early down 2%. today the big market event was a historic move by the ecb raising

rates for the first time in 11 years by larger than expected. ecb president christine lagarde spoke after. >> we decided to raise the key three interest rates by 50 basis points and approved their transmission protection instrument. all members of the governing council rallied to the consist us -- the consensus of 50 basis points. economic activity is slowing. russia's aggression towards ukraine is a drag on growth. we expect inflation to remain undesirably high. owing to continued pressure for energy, food prices, and pipeline pressures in the pricing chain. kriti: we are joined by marcus ashworth of bloomberg opinion that says the ecb crisis plan is refusing to convince. convince them of what exactly?

the tool was interesting news -- introduced today, the trends rotation -- transportation protection instrument. what can they really do here? even though we did get the criteria. walk me through what this means. marcus: it's gibberish, just nonsense. if you look at the conditionality, you look to what the conditions are. why would anyone who has these conditions want to qualify for a bailout? the fact they have kept it to themselves in the ecb to determine means equally what happens if germany says no, nothing will happen. that is what the markets look through. at the end of the day it may be unlimited, but it is also likely

unusable. like omt it is designed to never be used. the markets look to this end go, that's too complicated. it's clearly designed to never be utilized. at the same time they hike rates by 50 basis points. that shows that there was a deal done to get this so-called safety net put in place. they have given into the hawks. the wrong thing to do was scrap the forward guidance, particularly for september. that was the thing that was going to keep the euro up. the euro went down again. kriti: let's talk about the italian government.

yields skyrocketing today. elections are coming up september 25. that goes close to a budget for the eu in october. what does that mean for italian spreads? >> they can hopefully get a government and a budget through. hopefully, that process will be fairly smooth. there is a reason they never really have elections in the autumn. particularly because of this budget crisis that would typically happen in the spring. this was going to involve a proper election process. it is about time there was a directly democratic leader of italy. however, was the markets like may not be the saw -- the calm and sensible character of mario draghi. that has been keeping the bond

market and the brussels european commission allowing budgets and it deficit details and giving 200 billions effectively to europe, to italy, under mario draghi's careful guidance to help it get through the pandemic effects. that will be hardly questionable now -- highly questionable now is a new government does not fulfill the criteria the ecb has made very clear and stringent. that can be a very difficult situation. kriti: back to the market, the spreads, the euro. a 101 handle on euro dollars now. not long ago you are seeing calls for as low as 90. what happens next for the euro. how far does it fall? marcus: i suspect it will have another go at parity. we get further bad news on russian gas supplies. it will be difficult for the ecb over the summer. they will have to all of a sudden come out again and say, well, when we said we would not

give any guidance on september, well, here is some guidance. we are going to hike down by 25, by 50. they have put themselves in the situation of having not done the job properly today. on the face of it they must have closed their meeting, well done, us. we hiked by 50 basis points and we have a potential unlimited mechanism. i realized it was a big compromise. the euro did not get the protection is needed and it will fall again, i am afraid. kriti: that is something we will keep an eye on. bloomberg opinion marcus ashworth, check out his opinion b.i. opinion go. we will check with -- stick with insight on the ecb and bring in the one and only steve parker head of advisory solution at j.p. morgan private banking joining us from the jp morgan offices. we missed his presence in studio. steve, let's start with where markets left off here.

the contagion potentially that might result from the lack of ability, the lack of, i want to say, worthwhile this of the cpi instrument the ecb introduced. what does this mean further ripple effect coming out of europe? steve: architect been uncertainty -- uncertain around the ability to fight contagion in europe for a long time now. that's why european markets traded at the discount they do. i think the reality is clients and investors will be more concerned around the general trajectory of global macro factors like inflation, like growth. that will be a bigger determinant around sentiment and the feelings around what the ecb will be able to accomplish. kriti: does this take into account gas flows of that stopped earlier this week for maintenance, restarted from russia to europe. we are talking about a major cost-of-living crisis in europe

a couple months ago this was a recession story i felt was isolated to the continent. now we are talking global recession that could be months away. are you in that camp? steve: the odds of inflation have increased and inflation remains persistently higher. i don't think the question is about recession or not. i think it's likely we see a recession later in the year. the question is, is it a mild or severe recession? we think there are enough circuit breakers in the market when you think of the strength of the consumer, the corporate sector, and how well telegraphed the potential recession has been , that will probably keep us, if we see recession in the mild camp. a lot of that paid has been already felt by markets. kriti: speaking of recession, the 210 version will be key. right now we are looking at -20 in terms of a virgin. -- inversion.

i am looking at more pleased to get us to that procession point. the labor market, the housing market, a general decline in consumer spending ability? what is the smoking gun? steve: i think the labor market will be one of the key issues to watch. to this point, the growth we have seen in the labor market, the strength we have seen their is inconsistent with what we have consistently -- traditionally seen around recessions. because of that, the consumer is still in really good shape. on top of that, you have high savings rates. cracks in the labor market i think begin to weigh on consumer sentiment. that could tip us into recession. we don't see that being the case. kriti: how do you play it looking at a stock market that seems to have had a fairly good run. is the bottom in? steve: it's amazing. the last 10 days we have seen and inflation burned over 9%. we have seen the ecb hiking rates for the first time in 11

years at the have rallied and rates are down area this reinforced -- are down. this reinforces what we talked about last time. markets don't move on good or bad. they move on better or worse. you have to consider sentiment ended data relative to expectations as of the thing that will incrementally move the market. sentiment today has gotten really pessimistic. we have seen a crescendo of concern. the recent fund manager survey expectations around economic growth, profit growth at all-time lows. cash levels at their highest level in over 20 years. funded levels at their lowest levels in equity allocation. the bar has come down significantly as it relates to surprises. i think that sets us up but in chile for the near term in markets. we are not as out of the woods early to the back half of this year. but with a slightly extended time horizon, we think this is a good time to be getting

invested. kriti: how do you hedge against risk, what's your go to? steve: for additional government bonds are more interesting. traditionally that tends to be a safety hedge with higher levels of rights. that's a good opportunity. if you are really bearish you are probably concerned around inflation and that brings you to the energy and commodities space to area kriti: that is something we will keep our eye on steve parker from j.p. morgan private bank. let's head to bloomberg first word news with mark crumpton. mark: president biden says he is "doing great." he tweeted a picture of himself working from the white house following a positive covid diagnosis. the president is experiencing mild symptoms and has begun taking pfizer's capsule bid treatment. first lady tested negative.

president trump's inaction as an armed mob attempt the u.s. capitol -- attacked the u.s. capitol will be the focus of a second primetime hearing today by a house committee investigating the january 6 21 insurrection. virginia democrat elaine laureate says the committee will present its case for more mr. trump was "derelict in duty." are for -- derelict in duty for about three hours. this will be the last hearing. senate democrats are considering a bill to decriminalize cannabis, removing marijuana from the federalist of controlled substances and sent up -- set up prevention programs for kids and adults under 21 and impose excise taxes that would go towards communities hit hardest by drug enforcement. senate majority leader chuck schumer says the majority of americans now supported legalizing cannabis. the world health organization's emergency committee is meeting today to consider for the second

time whether to declare monkeypox a global crisis. some experts say a coordinated response will be tough because of different outbreaks in different countries. african officials are treating the epidemic as an emergency. experts in europe assay in north america the virus is mild and it does not warrant an emergency declaration. global it is 24 hours a day on air and bloombergquint take powered by more than 27 hundred journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg.

♪ kriti: shares rallying after it posted better than expected second quarter profit and raised its outlook for the year. the marlboro cigarette maker plans this year to close the deal to acquire swedish match for $16 billion despite opposition to the move from activist investor elliott investment management. joining us is the ceo of philip morris international. thank you for joining us.

let's dive in. i want to start with the russia question. how much is your exit from russia going to cost you? >> well, it is more complicated than anyone would think. you try to match expectations of various stakeholder growth. you have governmental institutions, regulators. it's pretty complicated process. we are working hard to conclude our presence in russia. but, i do not think it will happen in that timeframe of the next quarter. but, i feel that year end when we should be close to the time when we can connect with russia, russia was an important market for us, the seventh largest by retail value in the world.

we have a 20% of it -- 27% share of that market. but the conditions of operating in russia, the supply chain, the restrictions on growth, the -- that is driving us to the conclusion we will need to rearrange our relations in russia. kriti: is there any indication of where the operations that are publicly pulling out of russia, what region do you intend to focus set in? jacek: we have excellent growth in asia and in europe. we are opening in the u.s., a very attractive market for us. we have no presence today in the u.s.. we have opportunities in asia and the european union region

and hopefully soon also the u.s.. obviously, the investment we have made in russia, it is sad that you need to leave that much of a hard worker behind you. kriti: a $16 billion deal is in the work to buy swedish match. you have elliott activist management looking to block that deal, building a stake in your shares. how concerned are you about the viability of the deal given how opposed elliott is to it? jacek: obviously, this presents 40% premium. add the share price of swedish match.

i remained optimistic we would be able to conclude a transaction at that price. kriti: are there other deals you are looking at in cases that deal is not able to go through? jacek: we always allocate capital especially with regards to strategic opportunities which enhance our geographical presence. the technical capability of swedish match is fitting into the geographical presence in expanding our portfolio. our aspiration is to, by 2025, be predominantly for product. swedish match candidate celebrate our kriti:. let's talk about supply chain issues. it is something i have felt in recent months has fell by the wayside a little. specifically, issues for

semiconductors for tobacco devices. where you getting them? what problems are you facing? jacek: electronics are very dependent on asia and china. surprisingly, the bottlenecks for the most part of last year have improved this year because we have better visibility with regards to finland. we are not out of the woods yet, but it's enough for us to increase our commercial activities in america. we saw the results over the first quarter, the second quarter of the year. we can increase the user acquisition. this obviously builds a very good base with trajectory. kriti: when we are talking about the chip space in particular, you mentioned a lot of it comes from china and a broader asia, as is true for a lot of companies.

the u.s. is looking to build more domestic capacity. there is a bill now in the senate to do that. is there indication you would move your supply chain when it comes to moving chips specifically to the u.s.? jacek: we have a lot of move entering the u.s. market in a more meaningful way and would be glad to tap into domestic electronics in the u.s. absolutely. kriti: philip morris ceo jacek olczak, thank you. if is bloomberg.

kriti: this is bloomberg markets. i'm kriti gupta. was leading? is not taxed. it's not energy. it's all a bit.

-- it's not tech. it's not energy. it's all of it. we are looking at s&p 500 member is trading above their moving average. it has been fluctuating until recently when it dropped below the key level and spikevax. that's a good thing. you want that sustainable rally to continue. is the entire market rallying or is this purely a haven bid for foreign investors? -- ford investors? specifically when it comes to the energy space, a commodity specific hedge people are using when rates are perhaps needing tech. -- hitting tech. the s&p 500, does this mean a sustainable rally or a sustainable market head? that will be the key question. we will dig into that in the coming hours. for now, more insight on the challenges ahead for christine lagarde and the ecb as the central bank raises its key

interest rate by 50 basis points. that conversation is next. this is bloomberg. this is xfinity rewards. our way of showing our appreciation.

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fairly broad equity rally. i am kriti gupta. ♪ the green on the screen, brett is the key when you talk about sustainable rally, or is it the opposite? we will dive into that, whether or not the stock market is whether that's ready to move forward, but that is where the action is happening. on market down, euro-dollar not doing anything despite the ecb. and brent crude down 2%.

not that big of a move. the big macro event today was the move by the ecb, raising rates for the first time in 11 years, a 50 basis points hike. christine lagarde spoke earlier. >> we expect inflation to remain high. we need -- continued pressure from energy, food houses, pipeline prices in the best in the pipeline check -- pricing chain. kriti: jamie, a fascinating and historic day and it comes to the market. since 2011, 50 basis on the table, the highlight was the transmission protection instrument. how effective is it? >> you are right to raise the question. the tpi is designed to deal with

specific problems which are probably not the problems in the ecb currently faces. what is going to be difficult this summer? the formation of the italian government, higher bond yields. scheme drafted by the ecb is specifically designed not to deal with that sort of problem. there is still a lot of risk left on the table. i would expect the ecb markets to engage in again over the summer. kriti: let us talk about some of the other issues. you have a big commodities problem. russian gas close have already been halted and restarted and it comes to europe. that problem is going to get amplified. 50% cut on the table. walk us through the implications. -- 15% cut

jamie: russian gas flows have turned back on but there is uncertainty about whether that will continue. the russian gas business, there is no long-term cost to cutting out the gas supply early. there will be further disruption. the european commission is expecting further disruption. that is why they have encouraged 15% reductions but we have seen resistance. spain, greece do not want to do this cut. they think the problem is germany's energy policy. what this has exposed is that if further risk in european community has been broached. kriti: we talk about this risk in european unity at the same time that we talk about

anti-fragmentation. italian elections, september 25th, coming up against that budget to the eu. what does that mean for italian spreads? jamie: the big risk here is that we have a government in italy which is hostile to the eu, wanting to spend more, rightly or wrongly, and does not want to to enact the reforms that draghi has orchestrated. if you have the situation where you have this sort of government in italy, the tool that the ecb has used will not be able to be deployed. there is no backstop other than military transactions. that comes with a huge stigma.

it is unlikely to be acceptable to italians. the crisis has not gone away, there is no tool to deal with the problem. investors are not going to wait around. kriti: we also have a debt problem, specifically with periphery countries, italy at the center. are we going to see a repeat of the 2011 sovereign debt crisis? jamie: it comes down to politics. there is another way you can get to a crisis and that is if you have long-term interest rates, global interest rates at higher levels. it takes rates of 3% to 4% to get inflation under control, under that circumstance, it does not look sustainable. there are more ways to get to a crisis than just italian

politics in the euro zone. the ecb is not equipped with the tools required to do that. kriti: not exactly a vote of confidence, but we thank you as always. back in the u.s., joe biden has tested positive for covid. he is really porting -- is reporting mild symptoms. training means annmarie hordern. what do we know? what is the -- what are the risks? >> the president said he is doing great. he named off lawmakers he is in touch with. today he was supposed to go to pennsylvania to talk about gun safety. yesterday, he was talking about provisions he wants to take to fight climate change. all of this after a five-day trip where he was shaking a lot of hands israel and saudi arabia.

the president has been out and about, the white house has known the rest. they have had plans in place if you were to get covid. one official said today is a normal day at the white house at 2:00 p.m., we will hear from the press secretary as well as the covid response coordinator. from what we know, the president is isolating. he will go into every meeting he can via zoom. he is on paxlovid. until he tests negative, he will not resume duties in person. kriti: what can we find out at the press conference? annmarie: i imagine update as to what he is feeling at this moment as opposed to what we heard from his position. he said the president was experiencing t, a runny nose -- some of fatigue, a runny, dry

cough. we will get news on how long his treatment will go on, other logistics, trips he was supposed to take. kriti: annmarie hordern on top of all things biden. thank you. a look at some of the other top stories with mark crumpton. amanda: --mark: the country is set to hold early elections on september 25 -- italy. the president has his own parliament after mario draghi resigned. the election follows draghi's decision to bow out after losing support from three key allies on wednesday. boris johnson's leadership set to end in september. now he faces the prospect of not being able to sit with conservative mp's.

a parliamentary panel is looking at whether johnson lied to lawmakers over the parties held in downing street during the pandemic. if he is found guilty, voters will decide if they still want him as an mp. president biden expects to speak with china's president within the next 10 days. the administration is considering whether to lift tariffs on chinese imports in an attempt to ease inflation. relations between the u.s. and china have gotten worse over beijing's refusal to condemn the russian invasion of ukraine. the u.s. house has passed legislation that would protect the right to obtain contraceptives. the bill heads to the senate, where passages seems unlikely. democrats say it is part of a series of bills meant to get lawmakers on the record on

issues related to pregnancy and abortion. global news 24 hours a day on-air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. ♪

kriti: recession fears, rising inflation, ukraine taking a toll on tech companies. many rethinking staffing and some rescinding offers and doing layouts. let us bring in martin harris from i believe san francisco.

thank you for taking the time. we've heard from apple, google, microsoft. they are slowing down plans on heavy -- on hiring and these are the heavyweights. what more can you tell us? martine: microsoft is instituting a hiring freeze indefinitely. google is pausing hiring for the next two weeks. it's ceo has said they are not immune to economic headwinds. apple also slowing hiring. meta is cutting hiring by more than 80%, spotify by 25%. there are dozens of companies announcing hiring the slowdowns. kriti: let us talk about the timeline. google's freeze was just for two

weeks, apple is freezing hiring for some teams. when might this kid into full gear or return to normal? martine: we will see more announcements to come. i spoke with the ceo yesterday. they had some layoffs last month, 100 people. they are bracing for the recession and do not know. they are trying to manage economic choppiness day by day. we will see more announcements. kriti: it is almost ironic that we were talking about this war for talent in silicon valley but at the same time about wages is starting to come down, the idea that paying extra to retain talent, maybe that is losing steam. you are take? martine: we do not know.

it is strange. the market for talent is tight but they are letting go. a lot are not letting go of engineers. they are expensive to recruit. kriti: martine paris telling us about tech. airline stocks showing some of the biggest losses today. american and united outlining plans for 2022 as the industry grapples with disruptions. sheila, let us talk about flight capacity. they are going to cut it by 10%. how does that help their bottom line? sheila: i just came back from

london. i was at a big tradeshow. i went early because i saw headlines about heathrow and i give kudos to american airlines for getting me there without can asian. united is cutting capacity because they want to keep their pricing level. they want to keep customers happy and do not want a bad reputation. as one of the key takeaways. revenues are 7% above 20 levels but capacity is still below -- 2019 levels but capacity is still below. kriti: let us talk about the supply side of the equation. specifically when it comes to labor, a lot of these airlines have been in negotiation with pilots. american and united had had these discussions about increasing salaries into 2024 but delta is saying they are

looking to hire and train more pilots going into the next couple of years. is that too little, too late? sheila: we think it will get worse between now and 2025. one is increases with the weight, partially from network carriers, but also those expanding their fees. the second reason we will see this pilot shortage exhaust itself is they mandatory retirement age is 65. we will see a whole host of pilots retire. we think the shortage right now is 7% for commercial airlines but it will grow to 15%. the days of $40,000 pilots are over.

-- has a message at side of 3%. you could see additional inflation on top of that, with one being salaries. kriti: these are issues that are plaguing airlines across the board, but out of the five nature airlines, is there anyone getting a better handle on these issues? sheila: our favorite pick is delta. one reason is that premium pricing model, which they could continue to do. they are going to have the on the recovery. united also have some benefits, given that the next leg of the recovery is international. we are seeing corporate improve but international is the next leg. united has had a big portion of

its fleet, the triple sevens with some engine issues, that will be back in the fleet. others are on order. but the faa has not yet approved that aircraft. but that will help united out. kriti: we thank you as always, educating us on airlines at this crucial time for travel. coming up, bank of america ceo says inflation is peaking. he makes of the spending power of the u.s. consumer and what he expects the fed to do next.

kriti: this is a bloomberg markets. now that the ecb has made its rate hike, attention shifts back to the fed.

earlier, brian moynihan spoke with us. brian: the fed is raising rates quickly, which is the two of they have and also -- tool they have and also being transparent. the rate of increase in certain areas has tipped over, but there is still work to do. at the end of the day, the fed's toughest job is it is trying to slow down and economy with strong employment, strong wage growth, strong spending. that is unusual to see all at once. the u.s. being one of the strongest economies, they have a tough job ahead of them but they are raising rates and changing the balance sheets and telling people what they are doing. we are seeing the markets and just. >> you are looking into the u.s. economy, getting a sense of where it is do we think inflation has peaked? brian: it would be different for

different areas. in some areas, the rate is starting to tip over, but in some areas, wage growth is strong. economists would say it is peaking. our team says the fed will continue to raise rates. the research team at bank of america made a call on the rear end recession a few weeks ago but it is a slight one. it is more the impact of the fed raising rates and slowing the economy. peking is probably more appropriate. kriti: that was brian moynihan speaking with david westin. let us get to a bloomberg business flash. ford has secured enough battery supply to build more than half a million electric cars annually by late next year.

that is a huge increase over 2021. it has -- that has become a key competitive battleground in the ev market. boxed stone cashed out of big deals in the second quarter -- blackstone cashed out of the deals in the second quarter. that was driven by 29 million dollars in real sales. blackstone, net loss of $29.4 billion. amazon's move into the health care market -- it will buy primary care company one medical. they operaten182 medical offices in 25 markets in the u.s. it was green on the screen, the s&p 500 was up almost .5%. it is up only .3% now.

the psx for our bnn audience is down quite a bit, does not have that tech advantage the way nasdaq does. nasdaq is up .6%. 10 year yield hovering around 3% , down about nine basis wanes. almost a sigh of relief. a plot of that is the reaction going -- a lot of that is the reaction going from the ecp -- ecb. sentiment falling back to the u.s. treasury market. this will be significant in the coming days, especially on the sector basis. being only expect her right now that is in negative territory is the energy space. new york accrued at $96. the dollar is flat but is it flat for long?

ticket with us. the close is next. millions have made the switch from the big three to xfinity mobile. that means millions are saving hundreds a year on their wireless bill. and all of those millions are on the nation's

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doing great. he tweeted a picture of himself working from the white house following his covid diagnosis. he is experiencing mild symptoms and has begun taking paxlovid. jill biden has texted negative. the european union imposed more sanctions on russia, including a ban on gold imports and tighter export controls on high technology goods. the eu says these sanctions send a signal to moscow that we will keep the pressure height. bloomberg has learned that t