>> it looks to me as though the economy is doing fine now, but it is going to slow and

inflation is going to slow significantly. >> you have an inflation situation that looks more persistent, more problematic. >> all of these high prices are chipping away at the consumer. >> in his -- the earnings estimates are still not reflect thing and economic slowdown, so those definitely need to come down. >> whether we are going into her session, or what i would argue is pretty surely we are doing so. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning everyone. jonathan ferro, lisa abramowicz, and tom keene. we stagger away from a fed meaning -- a fed meeting and pivot away to any number of stories. earnings this afternoon and inflation, it is going to disappear. don't tell germany moments ago, and 8.5% statistic. jonathan: brutal. we look for cpi in europe as well, which potentially pushes them to hike again into economic weakness. the fed has got to do something

about it potentially later this year, which forces some people to believe maybe they back off from hiking interest rates much further. tom: bavaria up 8% year-over-year. absolutely shocking. a shocking fed meeting yesterday. we recalibrate into today and we stagger in this hour to an important gdp look. jonathan: 8:30 eastern time. it is not that binary. are we seeing signs of weakness? yes we are. will it spread? potentially. that is what we've got to keep our eye on. look out for jobless claims. read straight weeks they have been ticking higher. will it be week four? tom: thierry wizman will join us from a quarry -- from macquarie. an important date for president biden. lisa: you will be speaking with presidency of china -- he will be speaking with president xi of china. how much does he push for a

victory lap of sorts after getting together legislation that has been talked about for months, supporting the chip industry in the u.s., as well as fighting inflation, the act? jonathan: solid branding. lisa: it used to be build back better, and now we are doing something about inflation. tom: we haven't talked about this. did the credit space pivot off of the fed yesterday? lisa: you some -- you saw the same rally you saw and stocks. i like what peter said of bleakley advisory. he said now in a pitch black room, trying to find the walls, that is forward guidance from the federal reserve. what did you observe from the friday meeting? jonathan: in the eye of the beholder, we define the meeting by the intraday price action and we often find that a couple of days later. that was a mistake. we've got two cpi prints, a jackson hole meeting before than x meeting.

i've got no idea where we are when we get to september. tom: my data check starts with the one-year trailing dow, -8%. spx, -9%. nasdaq, -18%. an improvement there to say the least. jonathan: we are off the lows. lisa has gone through the earnings for apple and amazon. the s&p down by 0.3 percent. yields in a couple of basis points, 2.7666%. that german cpi data is not going to help the cause in europe at all. rose own cpi coming up over the next few days, and we've got euro-dollar -0.8%. tom: james foley just reiterating may be down to 0.95%. right now we do a little bit of theory here. this is what you get wrong in october of your freshman year in any undergraduate course. you go down in flames on gdp and gdi. thierry wizman here with some

careful analysis, global interest rate and currency strategist at macquarie. we all got in our brain gdp. you say forget about it, look at gdi. what is gross domestic income? thierry: income generally is the receipts that the factors in a reduction economy earned. it could be labor, landlords, companies by way of their profits, the interest to collect on their accounts. what are the factors of production earned as income? in theory, income should be equal to production. these are theoretically the same thing. what you produce, you sell, and then you earn income. but statistically speaking and because of data issues, they are not always the same, and it turns out that in the first quarter, gdi actually rose even though gdp fell. fed governor chris waller made an important point to say even though we had gdp falling in the first quarter, we did not have

gdi falling, and he concluded from that that may be the economy is not as bad as some people might think when they look at gdp. tom: this is really important, particularly for the president this afternoon. if gdi says we are not in recession, is that an elitist number? is gdi skewed towards the haves? thierr not necessarily. that would only be the case if there's a problem with data collection, a problem with sampling that skews the measure of gdi. in the sense that the mistake that might be made, the discrepancy created in the process is not necessarily biased. tom: bring us down from 60,000 feet, please. jonathan: if we are seeing significant strength in the economy, what does that imply about how far they are willing to take interest rates? thierry: it definitely implies they are willing to take it higher. first of all, the arbiter of whether we are in a recession or

not does like to look at income concepts. if incomes are strong, it is going to make a stronger case for not calling a recession early. it is the same thing with the fed. if you look at the fed, they like to look at broad concepts of economic activity and performance and certainly income, including especially wage income, which is driven by employment. lisa: how do you have any conviction about rates or currencies given the, as peter put it, they are in a dark room trying to feel the walls? thierry: the unique thing here is everyone is. ultimately what is going to drive things like rates or fx is the relative growth concepts. europe is also going into a slow down, but if i can make the case for an idea that we are going into a more significant slowdown

in the u.s., i can make a strong case for the euro staying near parity and potentially going below it, so i cannot necessarily know how deep these recessions will be, but as long as i know one country will have a deeper one, i can still make a call on things like foreign-exchange. lisa: what is the most important data you are tracking over the next couple of weeks? thierry: we had about 13 tightening cycles in the u.s. since the 1950's, and every single one of them coming out of the fed has been associated with a pmi that has dropped below the 50 line, indicating a contraction. we are not there yet, but the manufacturing pmi in the u.s., we are going to get the july number in just a few days, and i suspect it is going to be below 50. if that happens, i think you will see more calls for the idea that we are entering a recession in q3, but not q1 and not q2. jonathan: the ecb is in a dark room getting punched in the face. i wonder how much further they can take interest rate hikes.

if you can identify significant strings and the u.s. and you can't do it in europe, what does that mean for an ecb facing the em dilemma? thierry: we spoke about this a few days ago. christine lagarde said they are watching the data, but she did not say which data they are looking at, inflation or growth. i suspect in the short-term it is still inflation. i don't think they can pivot that quickly. i think inflation is going up in europe even though there are signs it is stabilizing and potentially coming down in the u.s. because europe has a problem with energy. that is obvious to just about anyone. it is not just the cause of the inflation, it is also the cause of the slowdowns. what is driving the sentiment indicators to the depths we have seen. i think in the short term she will still be more responsive to inflation than the growth outlook, but maybe by the end of the current quarter or the end of q4 there will be a pivot. i think it is more q4 than q3. tom: if we do a road trip to melbourne, we have to take thierry with us. jonathan: how did we get from

frankfurt to melbourne? tom: well, macquarie is australia's wonderful back, so we have to take dr. wizman with us. jonathan: when is this taking place? tom: in the deep summer of australia. we come back from davos, and off we go. jonathan: i'm not sure if lisa signed up for this come on a 20 were our flight with you and i. terry wiseman of m acquarie. you will not catch me on a cruise. i have no interest in that. i have no interest in that all. this cpi print, thank you to terry wiseman -- two thierry wizman of macquarie.

tomorrow we get an early read of cpi in the euro zone. i imagine there will be some people looking at this forecasts. tom: taking neutrality, that gets you from 8%, 9% inflation, how do you grind down to 7%, then down to whatever? as powell mentioned time after time yesterday, their 2% mandate. to me it is a three-part analysis in what is absolutely stunning here, the timeline of that. nobody has a clue. jonathan: the ecb still at zero after a hike. have you seen these numbers from royal caribbean? lisa: evidently nobody is going on a cruise, and you guys are not alone in that. royal caribbean coming out, third quarter eps is estimated at five cents to $.25.

the estimate was $.89, and they expect a net loss this year. tom: we could do a cruise from st. petersburg to miami. jonathan: i will still take a miss. hard pass. no interest at all. lisa: anything else? jonathan: can you imagine seeing the same people every single day, and you are stuck on a boat? come on. tom: you just sit by the pool. jonathan: you go on vacation to avoid people. you see the same people every day. lisa: look at those markets. jonathan: look at those markets. from new york, this is bloomberg. leigh-ann: keeping you up to date with news from around the world, with the first word, i'm leigh-ann gerrans. a few minutes from now president joe biden will speak with china's president xi jinping. the phone call takes place at a time of increasing tensions between the two countries. china is unhappy that house speaker nancy pelosi may visit taiwan, which china considers part of its territory.

there is a surprise agreement on capitol hill. democratic senator joe manchin struck a deal with senate majority leader chuck schumer on a tax, energy and climate bill that will enact major parts of president biden's agenda, such as a minimum corporate tax and allowing medicare to negotiate drug price cuts. it also requires holding oil and gas lease sales in alaska and the gulf of mexico, which could undercut clean energy focus. jetblue has agreed to buy sprint airlines for at least $3.8 billion in cash. the deal comes less than a day after sprint ended a pending merger with frontier because of a lack of shareholder support. the deal is likely to face stringent review by antitrust enforcers in the biden administration. meanwhile, southwest airlines reported second-quarter profit that beat analyst expectations. more people boarded planes and ticket prices were higher, but southwest still grappling with high costs and delays in

aircraft deliveries from boeing. 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 think the catch up phase and the phase of getting to

neutral is over and we are in a new phase. at some point the committee will slow down, and that is a reasonable picture of how the next few meetings in the next few months will play out. jonathan: that was largely the interpretation of this market yesterday. that was the former atlanta fed president. good morning. futures -0.3% on the s&p. on the nasdaq 100, negative zero .7%. what if someone new is watching or listening? lisa abramowicz, tom keene, and jonathan ferro. yields lower by a couple of basis points. do you know how many times i have been told that? ridiculous. yields in two basis points. gdp 12 month away. tom: let's go over the nicknames before we get to the senator. jonathan: let's leave the senator from louisiana waiting. tom: do you know what my nickname was because i drank a chocolate breath urge -- chocolate beverage before tang?

bosco. so you can say bramo, bosco. jonathan: i am not sure that is going to stick in the same way. tom: we will pay attention to the economic might of the nation. he is dr. cassidy, and he's truly one of our most accomplished politicians, whatever your politics. bill cassidy joins us of louisiana now. i want to go back to your work with the senator from arizona a number of years ago as you tried to hone benefits for the children of america. after the surprise announcement last night from mr. schumer and what the president will speak on today, telus the common ground you and senator sinema have on taxes and this piece of legislation. sen. cassidy: sinema has been very skeptical of increasing taxes upon business when we might be entering into a recession, and i am not sure

entering recession is exact lay the right time to create this and this uncertainty and investment uncertainty. that tends to prolong a recession. so i can't speak for her, but i imagine those might be her thoughts. tom: the issue of taxes, and i know it is a gop idea, which is we all understand the internal revenue service is flat on its back. what is the cassidy prescription to help the irs bring in the fair share from all americans? sen. cassidy: the irs has gotten $500 million for upgrading their technology, and yet somehow, whenever they come before us, they say they need more money to upgrade their technology. so it is a little difficult to understand what the issue is. of course, they say if they have more money to audit high income americans, they can find those who are in tax-sheltered. cbo does not estimate the increase from that quite as generously as the democratic

party does. so in a sense, that is something which has to be discovered. lisa: the practical concerns about whether more money will help increase revenues, but then there's the bigger picture issue with this inflation fighting bill, as they have been branding it. how much are you on board with what is proposed here in terms of supporting new renewable energies and trying to get more energy independence in a way that could fortify against what we are seeing right now? sen. cassidy: the bill came out last night at 10:00 p.m., 725 page bill, so i have not completely reviewed it. it is going to increase tax credits for electric vehicles. right now that is a subsidy to the better off. it is taking money from those who are struggling, driving 15-year-old pickups not because they choose to come of it because they cannot afford to buy another, and it is transferring those who can afford to pay $70,000 for a brand-new f-150 electric pickup truck. that is kind of a reverse robin

hood. taking from those who are less well-off and transferring it to those who are more. that is kind of a centerpiece of what they are billing. we are a little bit skeptical. lisa: what is your proposal in order to expedite some sort of transition to renewable energies, as well as lower inflation from the supply side, which was the goal of the chips bill, but also this bill? sen. cassidy: i've called for in operation warp speed where we would actually begin to, just like we did with covid vaccines, instead of doing one thing, then another, then another, always waiting for a previous agency to solve a problem, let's line things up where you do things in parallel. permitting is an incredible problem for renewable and traditional energy. until the federal government gets permitting more efficient, we are never going to get any of this accomplished. that could shorten costs, shorten time in which to deploy.

one part of my operation warp speed proposal is let's permit in a way which expedites as opposed to kills new projects, be they traditional or renewable. tom: i've got 14 more questions, but i've got to go to a cassidy defense of dr. fauci. i want to go to your expertise on covid and the liver enzyme that comes out of this horrific disease. i want you to defend dr. fauci right now and the medicine that got us through this pandemic. what is the next step this nation needs to do given endemic covid? sen. cassidy: covid is now endemic, not pandemic. president biden, who is 78-year-old old and frankly appears a little frail, gets covid after being vaccinated and boosted twice, he does pretty well, as best as we know.

that tends now to be the thing. historically you start off with a pandemic that kills everybody -- not everybody, but many people -- and then it decreases its pathogenicity. so i think we can expect this to become like seasonal flu and a little bit more. your vaccine. you have a baseline of immunity. you do better. tom: what do you say to the critics of dr. fauci? sen. cassidy: he got some things wrong. he said it would take three to 10 years in order to vaccinate. they were very delayed in admitting that previous exposure granted immunity. i asked him point-blank to do so and he said yes. i think the vaccine mandate for people who have been previously exposed and therefore somewhat immune was overbearing government. on the other hand, we have to take a hats off to the nih which found she -- which fauci

directed for rabidly braying not to bear. jonathan: i've got 10 seconds left. is that a yes or no to that bill mention is agreeing to? sen. cassidy: i may know. -- ima -- shyam a -- i am a no. jonathan: thank you. ddp four and a half minutes away in america. mike mckee is going to break down the details for you and why, over the last week, this has become very political. your 10 year, 2.7849%. euro-dollar -3.4%. this is bloomberg. ♪

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jonathan: we are 10 seconds away from gdp data and america, much anticipated over the last week. equity futures, -0.25% on the s&p. on the nasdaq, down 0.6%. mike mckee ready to break this one down for you. a bit of data out, but not the one we are waiting for. michael: we are just getting it now.

the second-quarter gdp is a -0.9%. we are down 0.9% on the headline basis for gdp. still looking for the breakdown. we'll get that to you in just a second. initial jobless claims comes in at 256,000, which is just slightly above the previous week. we have to caution that we are in this period now of auto plant retooling, shutdowns, things like that. seasonally hard to adjust in the month of july, so we are not sure what that means yet, but it isn't overall good news. we are getting the breakdown now in terms of gdp, and we see personal consumption up 1%. it was up 1.8% in the first quarter. the gdp price index, 8.7%, which is no surprise.

that is a quarterly number. it is not going to be the number the fed is going to be watching. they will be taking a look at tomorrow's number two find out whether we are making progress or not. the gdp drop reflects declines in private inventory investment, residential fixed investment, and federal government spending. nonresidential fixed investment down a bit. but the increase in exports we saw in the increase in personal consumption help to balance that out, but it is still a negative number. until unless we get a revised number, we are going to be looking at this as the second consecutive quarter of contraction, which is not a real definition for a recession, but it is going to be a hard thing for janet yellen her news conference today to talk against. if you had senator cassidy on now instead of five mexico, he

would be crowing about how terrible the economy is. jonathan: down eight basis points on the two-year. i think you can all read between the lines here. there's a belief we got some weaker data, the fed has to back away even more. the 10 year yield down about three basis points as well. equities were negative, down much more so now. on the nasdaq 100 we are down 0.9%. mike, you know what the rest of today is going to be like. is this going to be a political debate or an economic one? sen. cassidy: it is going to be a political debate. it could be an economic one to the extent that it tries to inform people or people on wall street try to decide what it means for the fed, but i don't think it means a whole lot in terms of the september meeting because that is september 21. we are a long way away from that and much could change between now and then. it is going to be a political debate because one party is going to accuse the other party of running the economy into the ground, and that is something we

are going to be debating. nonresidential fixed investment was down 0.1%, so not a lot of decline, but it was up 10% the prior quarter, so business spending definitely pulled back. one other number everybody has been interested in is the difference between goods and services. services spending up 4.1% for consumers, where goods spending down 4.4%. so we are seeing that shift that everybody expected into services . not enough to overcome the decline in overall goods spending, but it doesn't why retail sales are weaker and spending is not as bad. tom: the illusion for our listeners and viewers is disposal -- is disposable personal income with all of that money illusion, and real disposable personal income went down 0.5%.

which do fancy people at jerome powell look at, our nominal inflation, or a pre-grim real number? sen. cassidy: they are going to pay attention to the pretty grim real number because they are trying to get rid of the inflation part of it, but the end blake -- but the breakdown is much more important. it tells you where the money comes from, which we don't see that often. we don't have the breakdown for gross domestic income, but that is the thing everyone has been wondering about. in the first quarter it was up 1.8%. when we saw the decline overall in gdp. that will come in the next release, so we've got to wait on that. real final sales to the message purchasers -- to the mystic purchasers -- two

domestic purchasers, that is a good measure to look at the effects of inventory and trade. in this case it is not good news and is a decline, so the economy clearly slowed in the second quarter. jonathan: you can see why the administration has tied themselves in knots talking about it. we will hear from the president a little bit later. five minutes ago, the scheduled start time of a talk between president xi and president biden. futures are -0.2%. we turn around now on the nasdaq by just airplane 3%. equity markets bouncing back. at the front end, not much has changed. we stay lower by nine basis points on the two-year. it is the second consecutive quarterly contraction. pair that with 9% on cpi and the optics are pretty brutal. tom: we've got to talk quickly about the two-year yield plunging into 2.91%. jonathan: backing away, and it adds to the move we saw yesterday.

td had gdp at -1%. -0.9% was the print. tom: jonathan pingle joins us now with ubs. do you look at this as gospel, or do you believe it will be amended in a second and third look? jonathan p: gospel is a little strong. these numbers do revise. i think the key takeaway, chair powell tried to downplay this a little bit yesterday in his postmeeting press conference, but going back to what mike said , and we have been pointing out, for q2, the guts of the report just look weak. real personal consumption expenditures rising 1% is soft. coming into this year we all thought abundant household savings, pent-up demand, tailwinds would be more of a support. to your point earlier with prices eroding real incomes, the consumer has just shaped up much

more sluggishly than expected, and that i think is the main takeaway from the q2 gdp report. lisa: this is stagflation all over, the idea that we are seeing inflation remaining high and going higher with that gdp price component coming in at the hottest going back to 1981, at the same time you're getting what some would call a technical recession of two straight quarters of negative growth. how much can the fed back away from their rate hiking as the market has been believing at a time when inflation is not showing signs of coming down all that? -- all that quickly? jonathan p: i thing it is very hard for the fed to walk away. yesterday was a really interesting meeting. chair powell came out swinging with tough talk against inflation and his prepared remarks. left the door open for another 75 basis point rate hike. but the broader message was that they were transitioning to a slower pace of rate hikes, which is fair. they are moving on to this

second stage now that they have brought policy to a more neutral level, but inflation remains too hot for them to think they are going to stop. we are expecting a 50 basis point rate hike and have been for some time. there's just too much inflation in the pipeline for them really to relent yet. jonathan f: with the greatest respect for economic historians, doesn't matter from your perspective whether this is called a recession or not? two leases point, pair that with 9% inflation, it is problematic, isn't it? jonathan p: i think that is right. the mbr does set a threshold for how broad the weakness is. it has not shown up in payroll employment yet. also a certain amount of the severity. right now, as much as consumer spending has been weak, it is positive and we are just chugging along. q1 in the report was held down

by a lot of the noisy components coming off a very strong q4. i would downplay a little bit technical recession signal, but the fact of the matter is this is the problem with the q2 report. the q2 report is weak for domestic demand. it is the u.s. stuff that looks weak in q2, and that does not really bode well looking ahead. jonathan f: do you see this spreading to the labor market, and how quickly? one thing we will hear from the at adminstration is that the consumer is holding up, things like the labor market is still strong. do you see it roaming that way through the next quarter? jonathan p: we have a pretty meaningful slow down in payroll employment. we would make a case that it has been sort of artificially supported somewhat in recent months. you have seen substantially more weakening in an agile claims, the household -- in initial claims, the household survey

data. we are looking for payrolls to at some point in the third quarter run under 200,000 a month as part of that slowing on the way to further slowing in q4. jonathan f: do you wish you had not adjusted your forecast yesterday that was pretty much on the money? [laughter] tom: bedform, jon. bedform -- bad form, jon. bad form. jonathan p: we were pretty close in getting the declines, and altogether the components are structured the way we expected, so i am pretty happy. jonathan f: the original estimate was basically on the money. anyway, it is good to catch up. jonathan pingle there of ubs. we got a lot of upgrades yesterday based on the data. some were very close to what we got. there we go, a second consecutive quarter of negative growth in america. mike mckee and i are going to break down those numbers for you again in the next hour. tom: i am going to go away from the talk here. gross private domestic investment cratered. there's no other way to put it.

jonathan f: subadra rajappa is going to weigh in on all of this in just a moment on bloomberg tv, and about 20 minutes' time. on the s&p we are off about 0.25%. down eight basis points on the two-year. leigh-ann: keeping you up to date with news from around the world, with the first word, i'm leigh-ann gerrans. there is a deal that breaks a long deadlock on major parts of president biden's economic agenda. democratic senator joe manchin and senate majority leader chuck schumer have agreed on a tax, energy and climate bill that calls for a 15% corporate minimum tax and will allow medicaid to negotiate drug price cuts. manchin blocked expanding the local state -- the state and local tax deduction known assault -- known as salt.

the second ore of state has unveiled a deal to release wnba star brittney griner and another american in russia. consumers and businesses are haunted by fears of an energy shortage in the ecb's first rate hike in more than a decade is feeding concerns that a recession is near. for the first time in at least 17 years, comcast's internet business added no new customers last quarter. that has shares falling today. comcast also says that subscribers to the peacock streaming service stayed relatively flat. money-losing service had seen a surge earlier this year due to the olympics. 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'm leigh-ann gerrans. this is bloomberg. ♪

>> the risks of doing too little are quite a bit greater than the risks of doing too much, so the will probably overdo it a bit because they have to be sure they will be successful in getting inflation back down to 2%. they will just keep tightening for a bit longer. tom: bill dudley with us yesterday on a superb fed show. next to our team for putting that together. the former president of the new york fed, it is a raging debate off of the economic data we just saw. the president with president xi right now speaks when?

lisa: he speaks at 2:30 p.m. tom: they are managing a negative message on gdp. the headline for me is basically investment in america disappeared. i am sure that will be addressed in some form with the politics of the moment. we've got to note the tape goes up. radcom and al green on the screen, as we saw yesterday off the fed meeting. lisa: this sort of perverse dynamic where you see yields go down, price climb, and you certainly see that for the two-year yield. how much does this force the fed to back away versus not in this tech legionary environment -- this stagflation era environment? tom: we are going to pivot to one of the most inspired appointments as commissioner of the securities exchange commission. the democrat obama appointed hester -- hester pierce.

it is a pleasure to talk to her, with her economics from the george mason university. honored to have you with us today. the huge frustration i hear of people looking at the collapse of that coin of 65% is where is gary gensler and the sec. give us an update that you feel on the urgency of the sec to intrude in the free market known as bitcoin. hester: tom, it is great to be here. i think we can't determine whether to participate or not from a regulatory perspective based on price, but i will say that all of the activity in the markets of late has focused regulatory minds in washington, so maybe we will get some regulatory clarity finally around crypto. tom: you and i studied kenneth rogoff of harvard university. he said regulators any number of years ago get out front. we spoke recently to professor

rogoff, and he was thunderstruck at how slow global regulation is. why is there a tentativeness to address a currency down 65%? hester: i think one of the reasons there has been tentativeness is just it is difficult to figure out how it fits into our existing regulatory framework and whether we need to make changes. but i think there has also been in washington a bit of a desire to see crypto just this appear, and i think people are realizing that that is not likely to happen, so maybe that will help people to think about where regulation is appropriate. as you said, we have to bear in mind that people should be free to engage in transactions when both sides are willing to engage in that transaction, so there needs to be a good reason for a regulator to step in the middle of that. lisa: balancing free trade, balancing freedom of financial innovation with the threat of fraud or the threat of some sort

of financial instability. to that point, people hoping it is going to go away, it has become even more intertwined with the financial system in different aspects. how systemic has it become, and i don't mean from the actual transactions of crypto assets, but the chipmakers, the banks that have crypto trading arms? do you have a sense of its cloud in the financial footprint? hester: i still think that crypto is quite small, and so we have seen some problems in recent weeks and i don't think those have flowed into the traditional financial system. but they are reminders that if you do things in the crypto world like over leverage or over expose yourself to a particular counterparty, you can get into trouble, and those problems can be very severe. it is a good lesson for people to have while crypto is still relatively small. lisa: how different is it to offer up regulation or try to control certain markets in a

constructive way during a bull market versus what we are currently in, and a bear market? hester: i think in some ways it is easier because people are more open to the idea that maybe we need to have better disclosures, maybe we need to have rules of the road here. so i actually think it is easier. it has been a good reminder to people that the number doesn't always go up. tom: help us here. i am going to touch on james buchanan, the laureate of your george mason, on the calculus of robinhood. a lot of us are worried that our children are on the couch with our laptops out, daytrading because the trading is free, and yet all the adults tell us know, the trading is not free. what does the sec desire in this modern high-speed world of free trading? hester: i have to say that i can't speak for the sec, i can

only speak for myself, but i think retail traders in the united states have it better now than they have ever had it. whatever we do, we need to bear that in mind. we need to not change things for the worse for retail. i think there is real value to allowing people to choose among business models, and there are some people in washington who would like there to be high commissions so that people would not trade, but that seems sort of counterintuitive to me. tom: thank you so much for joining us. hester peic -- hester peirce is an sec commissioner. what i notice away from the themes the president will talk about, business investment off of a cliff. lisa: that is what we are seeing from companies in their anecdotal reports, that they will curtail spending. you are seeing that from company to company, and now you are seeing that in the data. right now, the soup of uncertainty is making it very

difficult. i don't see how people are viewing this as giving the fed a green light to back away from rate hikes which is how it is being treated in markets. tom: massive curve dynamics since yesterday. the twos-tens spread was -31 basis points. we have basically halved that down to -17, -18 basis points. it is really dynamic now, linking what the fed will do into our economic data. lisa: dynamic is one word. we are all sort of in a dark room trying to feel for the walls. that is what forward guidance is now from the federal reserve, at a time when we are facing something we have not faced for 40 years which seems like all of the contours of stagflation. how does the fed respond and how queenly does it take for inflation to come down tomorrow? the eci may be the most important data point of the week because it will give a sense of how sticky it is when it comes to employment and the cost of

hiring people. tom: and off the wages and benefits analysis of my favorite eci goldman sachs, they look for wage growth to really become quiet sent over the next 3, 4, five quarters. really want you to pay attention to bloomberg on radio and television through the day. it is not a quiet summer thursday, to say the least. all of this culminating with our analysis of amazon and particularly mark gurman and his analysis of apple computer. we will look for that after the 4:00 hour. right now, a little bit of a lift to the equity markets. s&p futures flat. dow futures at -20. stay with us. this is bloomberg. ♪

jonathan: good morning, good morning. a second straight negative quarter in america. i hate this debate. the countdown to the open starts right now. >> everything you need to get set for the start of u.s. trading, this is "bloomberg the open," with jonathan ferro. jonathan:fr