>> it would take a lot to stop mobilizing for oil. >> pretty dangerous territory. arguably some policy mistakes. >> they hope they can hike without triggering a deeper downturn. >> the risk of the markets is we talk ourselves into a recession. >> the ecb is being tough. all central banks are at the moment. >> this is "bloomberg

surveillance." jonathan: hiking in the weakness. that is the ecb right now. live from new york city, good morning. this is "bloomberg surveillance" on bloomberg and radio. futures negative. .25%. what a messy time for global markets. tom: a lot of news coming out on a friday. there's a vote on european confidence. i wonder how that comes over on what we will see next week. jonathan: down 30 basis points this morning. across europe it is not great. not terrific. i describe it as pretty poor. u.s. bmi a little later -- pmi a little later. we hear from all the big tech heavyweights. tom: i know kailey is looking at those. next week is widely anticipated.

i take issue with the idea of comparing what we see next week with snap yesterday. jonathan: you are not the only one. tom: kailey leinz is with you. tom: planning crypto tuesday? kailey: i'm always planning crypto. i'm paying attention to snap. is that important macroeconomic indicator? companies not wanted to spend on online advertising because the environment is deteriorating. slowing in hiring. something we're hearing companies talking about. what does that indicate? jonathan: the paper plane in a windstorm. we have to see how facebook and google standup. i said that. i said earlier as well. you seem to have ignored it. kailey: does not count of it comes from you. jonathan: ok. fantastic. hopefully we can catch up next week.

nasdaq down by .5%. five or six basis points on a 10-year. in europe, not great. euro-dollar -.6%. crude down 1.5%. kailey: the unwinding of price pressure in commodities something to keep an eye on. speaking of central bank responses, we got a rate cut from the bank of russia about an hour and a half ago, 30 mexico. it's friday -- 30 minutes ago. it's friday. cutting rates down 8%. economists were expecting 9%. 150 basis points when we were expecting 50. the cumulative total is 12 basis points since april. inflation is not going to be up as much. very different economic outlook that we saw back in february.

also at 8:00 a.m. new york time, results from twitter. we were talking about the advertising headwinds. how much is that weighing on the company? there will not be a conference call because they are in a battle with a legal -- a legal battle with elon musk over that takeover. we will not get much commentary around it. 9:45, preliminary july pmi in the u.s. after weak pmis out of europe and a little weaker economic data. will we get a disappoint on these numbers as well? jonathan: given the execution problems at twitter in the last couple of months, is that a paper plane with holes in it? tom: complete mystery here. i don't have a read on that. i'm looking at an absolute confirmation of a travel boom

witnessed through american express. extraordinary numbers with new guidance. forget about the numbers. the real mystery is what does this travel boom do into the end of the year? that is one of the great mysteries in the q3 and q4. jonathan: revenue up 23% to 25%. they recently saw 18% to 20%. here's a quote for you. we are at the crossroads between the end of the commodity run at the beginning of the bond market road to recovery. that comes from emily roland. what do you mean by the bond market road to recovery? emily: we are seeing signs global economic growth is the celebrating at a rapid clip here . evidence over the past few days with economic data in the u.s. initial claims rising. the philly fed plunging. leading economic indicators barely hanging on. now the pmi data in europe

confirming europe is likely in a recession or very close to one. we see this broad environment where economic growth is slowing. usually in the late cycle period bond yields fall. bond yields have been seeing this massive backup over the course of 2022. we think now is the time to lean into high quality bonds. #buybondsandchill. you need mortgage-backed securities, treasuries, investment-grade corporate. we would take it right now. tom: what is the character of this equity bull market of the last six weeks? emily: we have seen a couple of narratives driving this. the breather the dollar is taking. the dollar coming back a little bit. there's a narrative building we have reached maximum capitulation here, meaning any seller that wants to get out has

gotten out. we would be careful with that narrative. there's a few things that usually happen when you start to call for more durable bottom. high-yield bond spreads. 489 basis points right now. they have to blow up more. earnings estimates are leveling off. we want to look for those to actually rollover. we have to actually have the recession. there's a lot of markets that are pricing in a recession. we still have an employment at 3.6%. we still have consumer spending elevated here. we have to experience the recession before we can call for more durable bottom. we are careful about leaning into the rally. kailey: on the subject of earnings, a big week for those next week, are you saying there is too much optimism out there on corporate profits? emily: yeah. when we look at estimates for 2022, just over 10%.

we think that is likely really optimistic. we are looking for a low single-digit growth. not terrible. the bar is pretty low. there's optimism run earnings. what companies are doing is finding every lever they can to generate cash flow. we see this deceleration starting to hurt corporate earnings. the tightening of the fed is putting into the system needs to be felt by corporations. they is some room to go there. we think leaning into higher quality companies, ones with great cash flow, lots of cash on the balance sheets, that is what you want to do in a late cycle period. quality has gotten crushed this year. i don't understand why we are seeing a rotation into it. that is where we would lean into for the back cap of the year. jonathan: his europe investable in 2022? emily: you have to be real careful there. growth clearly slowing. earning estimates rolling over.

getting very defensive and europe, owning quality and embracing areas like utilities, infrastructure, health care. from an index construction standpoint, if you own europe, you own economic tentative at the. not what you -- sensitivity. not what you want to own in a recession. jonathan: a tough moment for europe. we will say it 1000 more times this summer. before the ecb meets again in september. tom: the dollar down 14% from the peak. an idea. it is not like a tech play. i agree on europe. it's a mystery. i don't pretend expertise. we need to catch a with david. jonathan: on the banks? without a doubt. tom: we were supposed to be in frankfurt yesterday for the next

meeting. jonathan: do you want to go in september? we can spend the whole of september in europe with the italian election. 44 economists on whether the -- where the fed peak will be. re-75 early next year, then a pause before the end of the year. tom: the interns come in on friday. years ago the interns never showed up on friday. jonathan: why are you saying that? tom: i think it's great the interns come in on friday. they are here this early. they are hung over, but you know. jonathan: is there a reason you mentioned that in response to what is said about the fed peeking? tom: sorry, jon. once again i was not paying attention. jonathan: thank you. futures down by .3% on the s&p. nasdaq around .5%.

kailey, if you wake up and what price action, i would say that the german bunds. what is that telling you now? kailey: the ecb just hiked 50 basis points at a time a very dire economic outlook for europe. the pmis contraction territory on the composite in germany, composite and services. btp yields down 19 basis points. tom: italy, germany. i'm sorry, it has not come in. it is still severe. jonathan: without a doubt. detailing yields are coming in today is positive. the problem is, the epicenter of the price action is weak european economic data. tom: the epicenter of italian price action is gucci at the bottom of the spanish stairs.

jonathan: online shopping for gucci. tom: kailey is not online shopping. jonathan: what is the worst indicator of what is going on right now? tom: the number of shares empty at the bar. jonathan: from new york city, this is bloomberg. ♪ ritika: keeping you up-to-date with news around the world, i am ritika gupta. social media giants are on track to lose $69 billion since yesterday's close. concerns about the outlook for online advertising for the sector. that saw a major slowdown in the ad industry and a reduced rate of hiring. gina raimondo warns the u.s. cannot keep relying on taiwan for semiconductors. in a speech, she said congress

needs to pass legislation to court domestic production of high-end computer chips. she called the $50 billion packets a sputnik moment. . -- since the pandemic lockdown of early 2021. a survey of managers size 17-month low. service sector growth, stalled. and the u.k., -- and there is to become the next prime minister. according to a survey of conservative party members, 62% say they would vote for trust. turkey says an agreement to allow shipment of ukrainian grain will be signed today. grain shipments have been

stalled as the ports have been blocked since the russian invasion that led to reductions of an increase in world hunger. 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. i am ritika gupta. this is bloomberg. ♪

>> i think it's important for us to show support for taiwan. i also think we have -- none of

us said we are for independence when it comes to taiwan. that is up to taiwan to decide. jonathan: that was nancy pelosi, u.s. speaker of the house. good morning. futures are negative on the s&p and nasdaq. this is from mohamed el-erian on the fed. it seems to remain the central bank in advanced economies it is most prone to using a phrase in the former chancellor of the exchequer rishi sunak, fairytale economics. it is the most systemically important of the central banks. mohamed firing this morning. tom: an important essay and something we will play off of here, not only today but through the weekend and into next week. jon, we have to set up the fed meeting next week. i have to after the desperation we saw from the ecb yesterday. jonathan: 75 basis point seems

to be the story. we could wake up on monday to another rally of 50 to 100. tom: i'm looking at german yield right now. jonathan: finally. thank you. you are getting on board this morning. kailey: executed is online shopping. jonathan: took an hour and 20 minutes for tom to log into the terminal. tom: i did not darken the door until 5:54. that was the real problem. this is a personal note and it has to do with the courage of lee zelman. he was accosted in new york. i have a major acquaintance with him. we used to measure the size of the beverage at waiver bar we were showing our legal drivers license to. it was the vfw.

we would say let's go halfs. to fancy brats would hang out with the middle class of fairport, new york. this is along the erie canal. joe mathieu joins us on the summer of discontent for the middle class. i don't know the details of the attack on the candidate for republican governor in new york. he is safe. that is fine. we have a summer of middle-class discontent. how does washington play that? joe: adam kinzinger was correct when he said there is more violence coming. this is a terrifying moment and i'm glad you brought it up. it is not getting enough attention. he tried to stab him on stage. zeln -- is he all right -- he is all right. after all we saw with shinzo abe, following january 6.

this is not a business for the faint of heart. based on what we are seeing in the january 6 committee, there are a lot of things you might not want to know happened that day. tom: partition how the democrats and republicans each have a different middle-class. what is that distinction between speaker pelosi's middle-class and former president trump's? joe: great question. the democratic middle-class, through the eyes of speaker pelosi and joe who talks about when he was growing up and his dad said the middle-class class needs a little bit of breathing room. we hear that a lot. they think the progressive build back better agenda is in fact what is needed here. child tax credits and so forth that they are not getting lower prescription drug prices. the republican middle-class says no. in many cases let's bring back donald trump and get back to growth here, back to tax cuts. that will be the conversation people will need to use to

decide when they go to the polls in november. kailey: speaking of conversations that last a long time, build back better is something we have talked about for how long? does it even exist anymore? it seems like little fragments of at the initial legislation was intended to be. joe: it will be a shadow -- i will not say its former self because it never really existed. the massive to truly dollar plan that never got through congress late last year -- to trillion dollar plan. -- $2 trillion dollar plan. i have said this before. no one is talking about it. for expanded subsidies, enhanced subsidies for obamacare put in place during covid. they expire at the end of the year. until now there has been no plan for democrats to extend them. they want to use the reconciliation bill as an opportunity. now we have a president with

covid there is still the matter of covid funding. 10 to $20 billion requested over six want to go has still not seen the light of day we were told therapeutics will start running out. kailey: biden campaigned on getting the pandemic under control. is the white house putting that on the back burner? it does not seem like there is effort getting people vaccinated. it seems to have faded into the background. joe: they did take the opportunity to say the president is not in the hospital because he is fully vaccinated. they did urge people to get the vaccine now. it's extremely important. but why is what is changing. one year ago president biden said these vaccines will keep

you from getting covid. yesterday it was clear that was no longer the case. people who get vaccines could still be infected and they said everyone at some point will. it is just your symptoms will be lower. that will be the message going forward. a lot different than a year ago. jonathan: good to catch up with you, joe mathieu. we have to get back to the bond market in germany. because of what happened with economic data and the energy issue, when the pmis come out, the difference between expansion and contraction is 50. the composite is 48. a 48 handle on the pmi. tom: i agree the movement from a 0.77 two 0.43 is precipitous. i felt yesterday with the lengthy ecb conference we took. that is there is a war going on. we are all struggling with the

fact we are distant from the war. we are on war footing in europe. jonathan: a lot of this is un forecastable. the euro is weaker and the two-year is much lower. the headline crossed earlier. since 2008. big, big moves, tom. tom: what if we break through to new levels? you are putting something out on twitter when i was just getting into the office. jonathan: coming up, thierry wizman will join us on this mess and europe. this is bloomberg. ♪

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jonathan: three-day winning streak on the s&p 500 ended friday. we are negative a quarter of 1%. we came close to 4k yesterday. snap numbers awful. kailey will go through them. in 30 minutes we get twitter

numbers. i will get to the bond market. tom: maybe they sold some bitcoin. jonathan: tesla. 10-year down seven basis points. off the back of the economic data in europe this morning. look at germany. the two-year yield is down 25 basis points. think about that. the data in europe is just bad. up 50 on the pmi. that is contraction territory. that is why you see german yields plummet. tom: they don't have an mber. jonathan: the market will do the math for them. the numbers don't look good. we have to figure out the upcoming data. tom: we need to travel there to do some research. jonathan: i know you want to go to the meeting in germany.

tom: the bank of france meeting. jonathan: the number one issue is the gas flowing from russia into europe. right now you can't forecast that. but we need to understand is how the ecb will react to that if we get a negative supply shock on energy in europe this year. how do they react to higher energy prices if they are worried about second round effects? they just keep hiking and economic weakness, or is there a tipping point later this year? tom: they are a central bank adapting to a were fitting. they talked about how the united kingdom has to figure out a war footing like europe. they are all trying to do it. there is a war going on, epsilon in the equation goes to the moon. jonathan: we are on the same page. tom: we are? jonathan: what i keep stating is what we have to figure out. what happens if -- if the gaskets shut off? -- gas gets

shut off? work out what the data means. you cannot say you are data-dependent and go meeting by meeting has the market tries to figure it out because the ecb gets to pick and choose every other meeting. they comes out two days before the says we will go up 50. that is not how this is meant to work at all. the euro no weaker by .7%. -- now weaker by .7%. kailey: a lot of snap, a lot of downside for snap. the stock was down 70% ahead of its earnings results. it is down another 30% in premarket trading. absolutely brutal as the remedy disappoints because of a slowdown in online advertising spending. in theory that has a readthrough to other companies depended on the online ad revenue. pinterest, meta lower.

twitter also down 2.5%. how much do we see similar advertising trends affecting them? there's a lot of noise because of elon musk's takeover or maybe not of that company. there are other earnings move are seeing pretty big declines. the biggest revenue miss going back to 2013 is down 12%. seagate data about 12% after its forecast disappointed. one positive story. we are talking about week economics. american express raising its revenue growth outlook to up to 25%. previously it was only a 20%. look at the numbers and the quarter just reported. record spending on the part of american express customers. volumes of 30%. part of that is because prices are higher. people are still spending and using leverage to do so. a very interesting conversation

to have as american excess rises 4% in premarket trading. tom: really appreciate that. this is the joy --thierry wizman joins us. jon wants to focus on europe. it is front and center now. i have to go back to what you and i did years ago, the unraveling of currencies we see in emfx, the pacific rim, and then asia, malaysia -- are we harkening back to august of long ago? thierry: the emerging markets are not really a blog. -- blob. it is not as if brazil has the same dynamics as indonesia and china. there's a lot of variation to what they depend on for their terms of trade, where they get funding from. i hate to overly generalize

about them. i can tell you that with commodity prices now sliding, which is a different situation we had in the first quarter of this year when they were generally rising on the back of the war driving commodity prices up, i'm concerned about those emerging markets that are overly dependent on commodity prices to support terms of trade. brazil for example. columbia, chile, southeast asian markets, south africa as well. if we talk about emerging markets not overly dependent on commodities, china for example, i'm not too concerned. we have to make a distinction. those emerging markets based on commodities and those that are not. tom: jon is focused on the collapse of yields in germany. economic contraction the middle war. -- amid a war.

thierry: i think the greatest concern now is what you were guys were talking about, the prospect of people seeing rationing in electricity and europe if we do not get the natural gas flows restarted. there's another problem which is climate resiliency, also eating into their reserves of natural gas. we may be facing a situation where in the winter we don't have enough natural gas. politicians and policymakers will anticipate that an ration of well ahead. that could start anytime. the extent of the weakness in the pmis were so significant in july because these companies are concerned they will not have the electricity to produce. if they don't, what is the point of hoarding machinery if you cannot run them in the next few months? that is the greatest concern. with regards to the ecb, it is anyone's guess. i agree they were too ambiguous

in the communication yesterday with respect to what kind of data they are watching. the weakness we are seeing in the euro this morning has to do a lot with the fact there is ambiguity with respect to what the ecb is watching. jonathan: we are clueless to their reaction function. that's the problem. it gets very difficult to buy the euro. that means weaker inflation. it was still unviable -- unbuyable through the rest of the year. do you agree? thierry: i do. we don't see where they are short of a diplomatic solution to the war. the war has so much to do with european growth right now. especially to the prospect of rationing and the applications it will have an industry. if they ration, they will russian industry, not households. that would be a political disaster.

they will shut down factories, four days a week instead of five. that's a scenario that will hang over this market until we get clarity and resolution on the natural gas flows. that is dependent on a resolution to the war. kailey: i tried hard to listen to every word that christine lagarde said yesterday. they were very few things i felt were worth transcribing. one of them being we are moving from one go to zero. a couple of seconds later she goes on to say what is the neutral setting? at this point in time i don't know. do you know? we have an understanding of how high the ecb could hike rates given everything you just laid out for us? thierry: economist think we could get a rate above one some time in the early part of next year. we are starting to have doubts. the reason has to do again with the prospect that if we get electricity rationing in europe

we will see much lower growth in the second half of this year. it's the road to ruin. you have stress on the italian market coming from too many speculators saying they should make a run, a speculative attack on italian bonds. those two things have the capacity to deter the ecb from going all the way up to 1.25 by the beginning of next year. what christine lagarde was trying to say when she invoked the idea they are data dependent is exactly that. they do not know how they are going to respond to a situation where inflation continues to go up but you have financial stresses in the credit markets at the same time you have a collapse in sentiment and the outlook for new orders continues to deteriorate. jonathan: you nailed it. i don't know how they will sponsor the data. thierry wizman, thank you. tom, that is the difficulty we

all have with the ecb right now. tom: no question about it. the ambiguity is the word. not only the english part of it but the economic part of the use of the word ambiguity plays it out. the german yield is a precursor for a simple observation. when and how does euro visit below parity? jonathan: just 24 hours of the hawks took control of the ecb. dripping in mystery and every beauty and be will have 50 basis points and let's try to do that again in september. tom: the markets corrected september and model that out. i can't emphasize enough the look back we do is just wrong. they are always driving forward. jonathan: i can't emphasize some of the weakness in the euro is not just about the economic data. it is because it is such a lack of understanding about how this ecb will respond to that data.

the biggest risk factor this year for europe, that gas gets turned off from europe. we don't have to respond to that. that is tough. futures are down by just. .2% from new york, this is bloomberg. ♪ ritika: keeping you up-to-date with news from around the world, i am ritika gupta. trump insiders told the january 6 committee the president ignored pleas to call out the mob storming the u.s. capitol. the panel held a prime time hearing thursday night. members cast the former president's in action as a desperate ploy to hold onto the presidency. the white house is confident president biden will avoid the worst of the coronavirus thanks to vaccines and a therapeutic drug. the president is experiencing mild symptoms and has begun taking paxlovid. he will isolate at the white

house continuing his duties. lawmakers in taiwan are said to be hurt and confused by the filaments in washington over a possible visit by house speaker nancy pelosi. it would be the first by house speaker since 1997. the u.s. military does not think it's a good idea. china has warned pelosi against going to taiwan. in new york state, a republican candidate for governor was attacked at a campaign event. a man with a pointed weapon tried to drag him to the ground. he was subdued. no one was hurt. the attack took place outside the city of rochester. american express 31% to a record. they raised their forecast. amex customers cap spending on travel despite mass cancellations and long waits at the airport. the expenses rose more than expensive, 32%. global news, 24 hours a day, on air and on bloomberg quicktake,

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>> currently there is a trickle of gas supply going through nord stream one. whenever a no -- we never know of this will continue for a month. in europe the border between stagnation and a significant recession is whether or not we have access to russian gas. jonathan: one of the biggest risk factors into the second half of the european economy. chief economist at axa investment management. good morning. on the nasdaq 100, down by a pop .2% -- by about .2%.

-- .3%. a big break lower in german yields off the back of what is happening with the economic data. nord stream 1 back on line at 40% capacity compared to the news of this week. better-than-expected. the risk factor is this could the dental any percent in the next event. tom: i would watch that in the next coming hours. julian lee is joining us, oil strategist said bloomberg. jon ferrow's focus on this. what is the distinction in the nord stream debate, and the turbine debate, the pushing of hydrocarbons across great distances debate? what is the distinction you are studying? julian: the thing i'm looking at

is the levers of uncertainty president putin is wielding. that is on-again, off-again gas surprised through nord stream. well they keep up with this current level of 40%? will they go down again? will he start messing around with crude oil exports? we are seeing crude being shipped much longer distances than it was in the past. we are seeing -- well we see russian flows going to asia, we are seeing compensating flows coming in the opposite direction as well. i think the big thing with oil at the moment is buying up the demand-side uncertainties. covid coming back again in china.

uncertainty over european economic growth. against the supply uncertainties around russia and will the opec-plus countries agreed to further output increases they meet at the beginning of august. eyes will focus on that next week. jonathan: as far as the european gas consumption is concerned what is the list on the voluntary demand cuts floated earlier this week? julian: they are still out there. there is clearly a need for this. whatever happens with russian gas flows europe will have to get its gas consumption down. i think that will be the u.k. as much as continental europe. the sooner we start doing that collectively, the less severe the cuts are going to have to be. if we keep burning gas at the current rate right up until the start of the winter, things are going to get very tricky as the

temperatures get colder. the sooner we start curtailing gas consumption, the less deep we will have to make those cuts. kailey: onto the subject of oil, i'm looking at wti prices down 18% from their peak last month. we have seen a massive cooling in the oil market. a lot of the conversation shifting to potential cooling and demand as the economy is slowing. earlier this week you put out an opinion that said opec is wrong about its demand forecast. we are still not going to have enough supply to meet it. is the market getting the supply and demand balance wrong? julian: there's a number of things that either the market isn't fully getting right or perhaps the forecasters are not getting right. if you look at the opec forecast, they are talking about 2.7 million barrels a day of demand growth next year.

an incremental requirement for crude from opec is about 1.4 million barrels a day from where they are now. that will be very difficult for them to do given capacity limitations. the other big concern, and this is a concern the u.s. treasury has is that the market isn't fully pricing in the potential impact of the eu sanctions on russian oil. in particular, the upcoming ban on insurance on tankers carrying the crew that could push prices up significantly. tom: what is your view on oil out six months or year? one group is up, up and away. another group going maybe not. what is it? julian: i hesitate to try to call it even a month ahead, let alone six. my feeling is that if you buy

into the up, of narrative, you will find yourself on the down, down, down narrative. as oil prices rise that is going to put much more pressure on the economy as it has every other time we have seen oil getting up above $120 a barrel. i think of oil does go up, it's probably not sustainable. jonathan: julian lee on the energy situation. one more thing on london. british airways has just avoided another strike potentially taking place. they have come to a deal with that when union. tom: you are more up to speed. jonathan: 8% pay raise, a one-off bonus and a reinstatement of shift pay. it was backed by 75% of workers. tom: the think i don't

understand, if the planes are jammed and they are getting revenues -- jonathan: can the airport service what the airline wants to do? tom: i learn something new everyday and i have to say given this week, our team has been outstanding. the bookings have been better than good. on the break i have no idea boston beer with the future down component because of this thing called heart seltzer. -- hard seltzer. kailey: white claw. jonathan: not a fan. the hard seltzer category is still murky. the stock is down 9%. tom: down 74% from the peak. did you see it as a peak boom last year? kailey: but there are all of a

sudden 8 different -- 80 different brands at whole foods. jonathan: it exploded in a massive white. tom: gary cooper. "high noon" or something? jonathan: i don't get the rules about where you can it cannot buy alcohol in this country. tom: what is the rule about buying at the grocery store? jonathan: a lower alcohol content. kailey: malts or something. jonathan: this has helped everyone out. tom: encyclopedic. jonathan: twitter earnings are coming up. futures down. we recover just a little bit. ♪

>> a bit more weakness, cracks and consumer housing market. >>