heidi: good morning.

annabelle: we are counting down to the major market open. shery: the top stories this hour, u.s. markets and brace for a fed rate hike. stop hitting a 2022 low. heidi: slashing at the annual profit outlooks, the biggest retailer's baffling blow to inventory as inflation hits demand. shery: nord stream gas line jolting gas markets. under pressure at the asian opening, we have a volatile session with the s&p 500 gaining around the technology stocks.

we had oil rebounding, still below the $100 a barrel level. concerns about tight supplies and concerns about the fed led demand outlook and demand reduction we could see. we head into a recession, traders bracing for the technology earnings. a pce number, a number four markets. not surprising the 10-year fell below that. we saw some upside, we saw a plunge in yields of around 30 basis points. we are up around 2.8%. after hours, check walmart, and a pint of more than 9% after they decreased -- the decline of more than 9%. $17 trillion of earnings reporting this week. i'm mostly in the tech sector. -- mostly in the tech sector.

people are more optimistic about this earning. we talk about citigroup, the consumer spending remains resilient. markets are pricing in a lot of the bad news. heidi: this is wait and see mode, we saw trading volumes while all of the 20 day moving average. gdp information is coming out of korea. we are expecting a slowdown from the first quarter. you mentioned the earnings actually in europe, it is the biggest we get. take a look at european stocks, we are on track for the best week since december. there key technical levels we are watching as well. we have the 100 day moving average we are keeping a focus on and the downtrend that has been in place since january.

this is a bullish signal, there is a lot of risk on the horizon. heidi: one of them has to be the top risk of energy. we count down to the key wonder demand months. we saw the respondent as we saw the presumption of the passive gas -- pass of gas. nord stream is a 20%, gazprom saying that turbine issues are behind the reduction. we have the pipeline operating on a limited rate after maintenance efforts. this is coming as we have no way of telling how long the cuts will stay in place. shery: disruptions in the oil and energy markets leading to more inflationary pressures. we seem will see more pressure from china -- we will

see more pressure from china. a closed loop operation, restricted situation to control covid-19 at a time when this includes foxconn, the next generation apple iphone. wreaking havoc around the world and perhaps even giving more concerns to inflation as well. heidi: it has reverberated inflationary impacts being seen beyond china's borders. we saw the u.s. talk session withdrawal, traders bracing for a hawkish fed. inflation and the risks of a recession, let us bring out andre and kathleen hays and mike. does the lack of conviction continue to dominate this market?

what do we see as a trading theme going into fed week? >> i think we need to put this in context. before volume and volatility, liquidity is low because of the northern european summit. that is exacerbating the choppiness in the market. at a time or you do have the reasons you mentioned and of course this big technology earnings that investors operating for the looming, a large over the market. they are expecting a slowing of revenue, slowing advertising, and also slowing consumer spending. that is on top of the gige economy companies. we have the fed coming up and i think everyone is not expecting

the 70 -- now expecting the 75 basis point. what chair jerome powell will say. there is a lot of uncertainties, things that the market and traders are bracing for. this is of course later in the week. annabelle: when markets were still relieved to have the fed's and put, we see the debate whether it is for the markets or economic health. what is the best course for the federal reserve? >> two high-profile wall street strategists were highlighted in a very important blue brick story today. morgan stanley and jp morgan, they have completely different views. sticky inflation will keep the fat on a hawkish path. they will hike right into a

recession. you will not get a bullish stock signal. jp morgan sees inflation peaking now or soon, labor market softening. it can move to more bonds and a balanced path. they see a better chance in the second half of the year. what about u.s. recession risks? it is up 47.5%. moving up according to our latest bloomberg survey. according to the forecasters, these people determine the recession, they look at at incomes. you can see the net chart, some things are weaker, but no recession imminent. a big question in europe is after the 50 basis point rate hike last week, that debate continues. we see the hawk from the ecb.

we see him saying that the frontloading from last week may not be over. he expects to see a significant september rate hike, not exactly a dove, but another individual from the ecp says it is step-by-step in a gradual way. the german business sentiment closely watched, it fell to the lowest since the pandemic. you see german probability up to 70%. you see why the hawk-dove debate is continuing at the ecb as well. heidi: we have heard about the downsizing of the gas to europe. how much worse could it get? there should be stockpiles of what expected to be a cold

winter. >> everything we spoke about is a perfect storm for a global recession and how much worse it can get forecast prices and energy and electricity prices. going up more than that in one year. the key significance is if you look i european natural gas inventory, they are 20% higher than they were last year. this is before we know about the major cut off from russia. when russia cuts also apply they need money, too. i think if you look back at this from the future, we are seeing significant demand. the new york times cover showed how european leaders are encouraging people to cut back demand by 15%. they do not have to, it will because of prices. europe is an outlyer --

outlier, this was up. now it is down almost 15%. everything is going away. shery: a lot of volatility. that is our top stories today. let us get to vonnie quinn. >> china says it is getting seriously prepared for how nancy pelosi's visit -- for nancy pelosi's visit to taiwan. the trip to asia could come days after an expected call between president biden and xi jinping. china is forcing some of the biggest companies to operate within a closed loop for seven days as the manufacturing hub battles a covid outbreak. operations are limited to employees living within a closed loop or bubble, allowing a little to no contact with other

people. president biden's doctor says his covid-19 symptoms have almost completely resolved. the president is expecting some residual nasal congestion and minimal hoarseness. he has tested positive for the virus last week. he was treated with paxlovid. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. heidi: we will talk about where bitcoin is headed, as it lingers near the $22,000 level. katie stockton joins us. shery: i global advisor sees a bigger risk event of the fed meeting more tech earnings. this is bloomberg. ♪

>> i think on june 16, we fell down to 3666 on a closing basis which was 3000 points higher than the ending in 2009. i think i was the bottom. as we have seen commodity prices coming down, we have seen a slowing in the economy which i think will help to moderate inflation.

shery: u.s. stocks bottoming out. let us bring in our next guest who is more concerned about gdp and a bigger risk than the fed. managing director of global macro strategies. good to have you with us. we have seen data weakening faster than we have expected. how are you thinking that backwards looking economic data could be more of a risk for the market this week? >> hello. i think that there are a few ways to think about it. gdp number is going to be a contraction. look at the consensus on bloomberg, people do not think it will be immediate function of gdp -- be a function of gdp. maybe that inventory rebound is somewhat keeping us out of the

region. gdp is not close to zero in that contraction. they are all going to be very keen on china -- not trying to talk us into this recession. the focus is even more on the interest rate has to go higher to combat inflation. it will drive gdp into a negative. you see earnings coming out, it shows when inflation is doing to spend take. this is where i think it is a bigger risk. the fed can surprise, but it seems the number is still very uncertain. it will be contracting. it is also an exciting moment. there is a big psychological impact of markets i think compared to the gdp now. heidi: you mentioned at walmart, we have take giant reporting

this week as well. we have had a lot of volatility recently. tech is going at the moment, what is the outlook of the space? >> look at amazon reacting to walmart and you see that there is negativity there. whatever walmart has detailed negative will be negative for amazon. kindly negative through google or facebook. in that respect, earnings forecast earnings are the name of the game here. spending in itself is projected to be up this year, most of the growth rates have come up so hard, they are bottoming. a rise in eps growth in the next two quarters.

the bottoming process is happening based on what investors are looking at. i am not so negative on these earnings per se, understanding how you see amazon and google react to this, there is economic effects coming through. heidi: there is a lot of risks globally at the moment, look at the energy crunch in europe as a result of russia going into winter or the property crisis in china. how much attention are you paying to these macro factors? >> the first one is the move from gazprom impacts european energy prices. instantly, it is fragile. if we do get this crunch of gas in the fall and there is not enough -- they have to ration even more than proposed, the political discord is already developing around the number of

15% rationing. that would be a risk we send to markets in that respect. there is a fair bit of effort on the chinese government and china boosting the infrastructure spending. people are very fluid in the systems. we see the property crisis as something domestic in china that the chinese government is trying to resolve. i am not sure if it is systemic to global markets. heidi: it could be contained, it speaks to the larger growth model driven by property and household wealth. does that change the longer term opportunities when it comes to china? >> it could be because this crisis has shown that just like we did after the financial crisis, it was a major blow to growth. also china, as much as china

keeps it at 5.5%, they suggest that growth eventually is down 5% or lower. that is potential growth. i do think expected returns in the emerging markets, on the other hand, you have emerging markets on inflation, tightening the loss. that may be an opportunity in bonds and inflation also is on the control. growth productions with asia is actually very positive. dish projections in asia is actually very positive. shery: it is great to chat. do not miss our coverage of this fomc decision, the fed decides wednesday in new york.

coming up next, we get more on the profit outlook for the second time this year. the need to lower prices to clear out inventory. this is bloomberg. ♪ what if you were a global bank who wanted to supercharge your audit system? so you tap ibm to un-silo your data. and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers feels like a million bucks. let's create smarter ways of putting your data to work. ibm. let's create

>> we have breaking on the buyout. bankers are discussing new ways to sell chunks of the $15 billion financing to soften potential losses. we are seeing credit conditions remain in challenging after the financing was underwritten back in january. a sharp increase in interest rates. credit suisse and goldman sachs of pushed back the timing of this leverage alone to september varied we will have more details on the bloomberg for our viewers. shery: i warning from walmart,

the -- a warning from walmart, citing the need to lower prices to lower inventory. a big drop in the credit rating. >> dropping almost 10%, the shock to the market, this is a harsh reality check of how consumers are cutting back on spending even for necessities as prices soar. walmart says adjusted earnings are going to fall as much as 30% in the current fiscal year. two months ago the company said it would only dip 1%. that is your shock. here is a quote from the ceo, the increasing level of viewed -- food and fuel inflation is influencing how customers spend. they are cutting profit outlook for the quarter and into the fiscal year. they are expecting a headwind in

the second half based on currency rates. the guidance cuts are emerging as the result of building up inventories after yields -- years of supply chain constraints and booming demand. now that life is returning to normal although covid is still with us, a lot of retailers are increasingly stocked with supplies that are unwanted merchandise in this time of predictable consumer demand. heidi: a rivalry among retailers lingers as well. >> amazon, tesco tumbled in sympathy with walmart and we had minor retailers as well. dollar general, dollar tree, the discount related retailers falling. walmart is falling and following target. all of these major retailers have seen their stocks come under pressure year to date.

amazon is reporting at the end of the week. some are projecting that the home industry is heading for an ugly july reporting season and one analyst point out that walmart was shared by early back to school buying but that could be an indication that people are buying well ahead of the school season because they are concerned prices could go even higher. heidi: let us get a quick check on the latest business flash headlines. apple has announced a where discount in china. the company will take up to $89 off of the price for four days. the economy struggles as covid lockdown's have buffered a sales of smart phone brands. boosting manufacturing, the ceo elon musk has called tesla's new

plant a friday -- a financial money furnace. semiconductors are forecasting strong revenues driven by demand for components used in cars. the quarter revenue will be three point 35-3 $.5 billion beating analyst estimates. looking at crypto, bitcoin is back with an is recent trading range ahead of the fed. questions about whether it is bound to fall. this is bloomberg. ♪

>> european central bank may not have big interest rate increases over the hike. the rate increase in september also needs to be quite significant. they are trying to reduce inflation that is already more than four times the target. russia is reducing the flow of gas to germany. gazprom says it will cut to 20% of capacity due to maintenance issues. only one of six major turbines remain in working conditions. it heads towards the winter months. in britain, they are pledging tougher stances on china and becoming the next prime minister, the former chancellor says china is a threat to britain, proposing measures to reduce beijing's influence. they want to crack down on

chinese owned companies and social media giant tiktok. >> we should be cracking down on those types of companies. should be limiting the amount of technology exports we do to authoritarian regimes. >> u.s. federal prosecutors have charged nine people with insider including a former conus ex-president. they were accused of passing information about deals to a friend and splitting the great profits. a former republican congressman is accused. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. heidi: we are focused on the fed rate decision. shery: a bunch of earnings coming up this week. one strategist is already calling the bottom before u.s. stocks. let us bring in annabelle for the morning calls. annabelle: this is someone is

saying that we have seen the worst of the bear market. this is a pretty big statement given that we have the fed rate decision to come and a huge slew of magnetek earnings as well ahead of us. he did manage to narrow it down to a specific date. >> i think that on june 16, we slow down to 3666 on a closing basis which was 3000 points higher than the intraday low we had 82,009. i think that was the bottom. we have seen commodity prices coming down, we have a slowing in the economy would i think will help to moderate inflation. annabelle: the deciding factor is earnings season. the numbers are holding up

against the move we see in the stock market. it puts him in the minority because we had the bank of america survey. money managers are cutting to the lowest levels since the crisis. most people see the s&p 500 hitting 3300 rather than rallying to the 4500 mark. heidi: is there any consensus? annabelle: we actually have jp morgan is saying one thing and morgan stanley another. a morgan stanley says it is too early for the fed to start tightening policy here. we could see another allow off at the stocks. the focus is on inflation and they say that we are not passed the peak of the price pressures. jp morgan is saying that we actually have seen the peak of inflation and we could actually see a fed pivot from here. we have the challenging activity

indicators, scion of labor market softness coming through as well. we could see the softening of policy sharing. shery: a man who corrected= as correctly predicted the u.s. financial crisis, says we are heading into a protracted recession. the world cannot count on physical power or china to bail it out this time. -- fiscal power or china to bail it out this time. >> i beg to disagree. there are many reasons why we have a severe recession. a lot of zombie corporations, household governments, they built out during covid. during the 1970's, the debt

crisis, deflation, there was a demand shock and a credit crunch. this time we have a stagflation. with this time around, we go into a recession by tightening monetary policy with no fiscal faith. it is totally delusional. >> can china come to the rescue if we see a resurgence in asian growth? >> if china was to go father -- grow faster, they have policies that are against economic growth. distributing wealth and income, a backlash against the private tech sector, the chinese

policies are going to change. they would be lucky if they have 4% growth, likely lower than that. >> a lot of people look at the lack of leverage akin to what we saw leading up to the 2008 crash and they say that alone will allow the recovery to be quicker and allow the downturn to be more shallow. where do you see leverage that could be unwound or be unwieldy? it could actually cause what you are looking for? >> there is leverage in the corporate sector, the ratios are very high. it is through the banks, after the global financial crisis, it has has a rise significantly off of the financial system. the leverage of out and you name it. those spreads are already whitening. if you have a severe recession,

corporate first. shadow banks, many sovereigns are in trouble and how far the housing sector there is a low income, it is fragile. then there is unemployment. even the housing sector is divided. >> the financial sector has led the other sectors. thinking about the 2000 eight boston and the 2009 recession, is this time different? we see the economic downturn before the markets wake up to the reality they are talking about and respond? >> the economic downturn will lead to severe debt distress. you will see the corporate sector, parts of the shadow bank system, the housing sector. you see some sovereign in travel. the trigger for financial

distress will be the recession. it will be severe and protracted and it will be a vicious cycle. shery: speaking with bloomberg. let us get back to crypto and midpoint. the lows continue to linger near the closely watched wendy to thousand dollar level. our next guest says that the primary trend is lower and the long term is growing. katie, great to have you with us. you focus on the technical analysis. what is that tell you about what the next phase is and does what the fed does this week, does it have an impact? >> we are in a bear market cycle when it comes to cryptocurrencies. if you look at equities markets, and has been across the board. -- it has been across the board.

perhaps a bottom would be put in place. we say that because we have a short-term overbought condition having returned within the context of the long-term downtrend. that downtrend is supported by negative long-term momentum. is it mathematical indicators that we use that gauge momentum and it is not only to the downside on the monthly charts, but growing. we want to be respectful of the downtrend while they have a hold on the market for a in particular, it did poke its head above the 50 day moving average. we had residual resistance that is an overhang on the chart and that is roughly $25,000. it is being tested or mind around $19,000. that range is down to 18,300. that is an important zone.

heidi: when it comes to the creek and cohort, you see them moving broadly in unison. are there ones that look more resilient than others? >> we do track the relative strength from a bottom-up perspective within the cryptocurrency markets and we are looking for strength and weakness. what we have found is because it is a bear market cycle, correlations are really very high. you cannot find relative performance to the upside in the downside and the higher cryptocurrencies which of course tend to be much smaller cap than bitcoin. not something that is necessarily sustainable. we feel that once a trend is reinterred, that is when you will be able to differentiate between the good fundamentally

strong cryptocurrencies and investment. shery: where is crypto going for much of july? >> there is a crypto trend -- countertrend move in bitcoin. we saw a risk off positioning which means that bitcoin has been overall this year a source of outperformance versus ether which is treated as a higher risk profile. that pullback is associated with the over slimmed-down. after that happens, we will see the rotation back from either into bitcoin. shery: you are overall short-term neutral, is that correct? what would lead you to a parish by? what would you have to see? >> we have been short-term

neutral for a couple of weeks, looking for the consolidation phase to ultimately year an overbought cell signal. our indicators reflect price momentum. when we feel it is leaning enough to justify the break, we think it could happen within days, i will move to that posture. it is within the context of our intermediate and long-term bearish posture. that is dictating our positioning. shery: good to have you back. coming up next, apple is discounting prices of the topline line i phones and accessories in china. the rear promotion coming up. -- rare promotion coming up. this is bloomberg. ♪

heidi: we continue to monitor the impact of covid zero, that strategy is still in place in china. you see it in supply chains, playing out again. when asked many of the companies

-- china asked many of the companies to operate in a closed loop system. they are closing the major hub after a covid outbreak. telling employees with thinning -- they are telling employees to live within a closed bubble. reducing unnecessary interactions. this again throws another element of what this means for output for inflation as well. shery: foxconn says operations in the area remain normal. they have a bigger production site in another city. we have seen a business confidence plummeting to a point where pessimism is so big. look at this chart. you see how businesses have transferred a record amount of

funds overseas in june, some of it is becoming -- comic because of dividends, another is hesitance of doing business in the country and dollar strength. we do have earnings on thursday and also rare retail promotion off of the products is coming to china. apple is offering four days of discounts on the top tier iphone. what is this about? >> you said apple earnings is later this week. do you know what date the promotion starts? shery: data store already? -- did it start already? >> it starts the day after earnings. isn't that interesting? you are talking about the lack of consumer spending, lack of business confidence, economic issues in china. this is some sort of hint that the china numbers are not going

to be as hot as some people may be expecting or wanting. what better way to make an offset than being able to showcase this sale. these discounts a day after. i think that two may go together. heidi: you have been watching this brand and the way it has been built for such a long time, what does it mean in terms of brand destruction? pricing has never been an element into why apple products have been hot and in demand. >> this is not something i have seen. as we all know in china they have singles' day which is a popular chopping holiday. alibaba has that, in the u.s. we have black friday. a one off four day set of

discounts across three major product lines, apple watch, iphone, and airpods would all go together, that is unique. these discounts are not major by any stretch of the imagination. $90 discount, converting to $20 discount on airpods. this is coming at a time when it makes me think it has to do with the economy. this is tied to an annual shopping event and there is no need to clear inventory. there is three months and change before the new items go on sale. the pro line will remain on sale even when the 14 comes out at a lower price. the airpods those came out a few months ago. the apple watch and iphone, those remain on the market.

there is no date this is tied to, this is totally random and there is no inventory reason. shery: you are putting this into context for us. we have been talking about the slowdown in hiring also for apple at a time when under that other companies are cutting job -- apple at a time when other companies are cutting jobs. where is consumption to go? >> they need to reallocate their spending a little bit. when they do the spending and hiring slow later this year, i think they will continue to hire aggressively and augment -- in augmented reality and autonomous systems. where they will take a step back is are the key hardware products that are still selling and are their bread and butter. i think those will remain

stagnant along with the company software. they'll keep investing in other areas. one thing we are hearing about earnings is that the one growth area year-over-year will likely be in services. the iphone and other hardware is probably flat. heidi: the latest on apple. tune in to bloomberg radio to hear from the big newsmakers and get in-depth analysis from the daybreak team. listen 80 via the apgar bloomberg radio. -- listen in via the app or bloomberg radio. ♪

heidi: the federal parliament is resuming for the first time since the election victory in may and nine years of conservative rule. it is also the most diverse parliament in the country's history. the current casino is opening after receiving a conditional approval. it has been on hold since late 2020 out for public inquiry uncovered fraud -- broad government failings. they are screening any packages from indonesia and china for

blackfoot disease. shery: investors are weighing bids for the discount of 30% from the april value evaluation. i $30 billion loss in value, concern over the chinese fashion retailer slowing growth. weaker sales and criticism of the record may impact the timeline and the dollar value. quarterly profits, the impact of falling product places -- prices as it fell to $700 million. 19% from a year earlier. tata expects input costs to remain volatile. they share sank during the quarter, not helped by weaker chinese demand. fourth-quarter earnings came in short of estimates, costs rose

30% but revenue was up 25%. the company ceo says the firm remains resilient and it will invest in new technology. we are speaking to the ceo later this morning. that is 10:00 -- 10 minutes past 11:00. we watch walmart in after hours, they tumbled after the cutting of the profit outlook. citing four needs t -- siding needs to cut prices to clear inventory. the u.s. consumers are shifting to spending on necessities and made soaring inflation. -- amidst soaring inflation. heidi: coming up, the ceo tells

us why jerome powell is facing a similar challenge to the one that a former fed chair faced in the 1970's as he looks to tame inflation. a deeper look into the dollar strength. it is the dollar strength that continues to be the focus given that we have pulled back when it comes to the dollar strength that we have seen. we into the fed decision will be quite interesting. we see weakness when it comes to risk currencies. the yen is holding at the 1.36 level. we continue to monitor some of the potential systemic overflow from the ongoing property and mortgage payment crisis and the economic slowdown more broadly for the chinese economy. this is bloomberg. ♪

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