board. stocks, down. bonds, down. i'm kriti goofed up -- gupta. a quick check on the markets here. like we said, it's risk off across the board. the s&p 500 is down. looking at the nasdaq, losses are magnified. take a look at the yield, 302 on the 10 year yield. it's the highest level on the 10 year yield going back to july 21 with intraday volatility. keep an eye on brent crude it on the chin. wti trading at one driver with the dollar up .6% and the

strength is enormous with inverse correlation being something to keep an eye on. we already talked about the tech story magnifying the losses and we are seeing some of the magnifying in the retail names. gamestop, amc entertainment, bed, really taking in much more significantly when it comes to the selloff and after the bell, it's down in line with the broader market, coming back down to valuations. earlier we spoke to the head of macro research. take a look at what she had to say. >> over geopolitical periods, like the fall of the berlin wall, the ratios adjusted. in the short, 20th-century with a cold war and more supply-side driven shocks, you had two world

wars. we are not going back to a cyclically adjusted ratio like we did in that period. kriti: let's bring in more insight with david, the head of u.s. equities at global wealth management. thank you as always for joining us. i want to pick up their, the question of valuations with p/e ratios picking up in light of the rally that we have seen in the month of july and through early august. is it sustainable? yeah, -- david: it's hard to see much more expansion from here. earnings for the s&p 500 and looking back historically, the only time the market has gotten higher than that in the last 25 or 30 years is when real rates were negative, which they are

not right now, or real growth in profits above 10%, which is not where we are either. it will be challenging to see further expansions on a sustainable basis given how much rewriting higher we have seen -- re-rating higher we have seen. kriti: a slowdown but not an outright contraction. at least that seems to be the take when you look at economist across the board. not forecasting a real recession until the end of 2023. i'm curious how much -- curious, how much of what the stock market is facing relates to the rest of the world. don't you buy american when the world's suffering? what's going on here? david: that's definitely true. in europe, we all know the issue that europe is contending with respect to energy supplies and inflation. china is dealing with covid.

but the u.s. is dealing with fed tightening. obviously, the market is getting more encouraged that we are seeing some slowdown in inflation and we think it will continue but the fed will still likely continue to be tightening and i think it is pretty early to think about the fed starting to cut rates. i think they will want to see a real sustained improvement in the inflation picture. i think what it means is we are going to start seeing a slowdown in the economy and slowdown in corporate profits. it may not be a recession but what equities would really like to see is re-acceleration and i think that is some time away. kriti: honing in on fed tightening, all eyes are on jackson hole this week. despite the liquidity issues and the tightening, what about the

idea that the market can handle the hikes that the federal reserve is throwing its way? what does the market need to show for investors to really believe and say that the rally is going to be a sustainable one? david: kriti, i think it comes back to the whole notion of corporate profits. the market can handle a higher fed funds rate, as long as it does not to really change the outlook for corporate profit growth. when it arises from an extraordinarily low level into something more neutral, from here the fed is going to be getting into more restrictive territory and by design it is trying to slow down the economy and ultimately that will lead to a slowdown in corporate profit growth. the case from here is that inflation collapses pretty quickly and corporate profit

growth is better than expected and that doesn't seem to be the most likely outcome. i think all the leading indicators we are looking at suggest that corporate profit growth will continue to slow. the fed quarterly survey of loan officers showed 24% of banks are tightening lending standards and in that time -- kind of environment, you should see basically no early -- no earnings growth into next year and it comes down to the level of profit growth over the balance of 2023. kriti: david, those profits face some pretty tough costs. the rates around the stimulus that was pumped into the market, what does corporate america really need to turn around and get that recession out-of-the-way first before we see the pivot? david: we don't have to see a recession. there is always ebb and flow

within the business cycle but we need to see some sort of reacceleration i think any business cycle. that would lead to an improvement in a pickup and corporate profit growth. it doesn't seem likely in the next few quarters. we know that inventory has been building throughout the sector. the housing market is slowing down. it's hard to see how that turns around to get more positive anytime soon and we should see a slowdown in capital spending as well. i think it really does come down to the reason that markets do well after a fed pivot is sometimes because the market is starting to anticipate the corporate profit reacceleration and i think that will take some time to unfold. kriti: well, we will see if that happens. david lefkowitz, thank you as

always. time for the first word news with mark crumpton. mark: prime minister justin trudeau says that canada is potentially willing to ease regulatory hurdles for building infrastructure to export liquefied natural gas to germany but only if it makes sense to do so. the german chancellor is on a three-day trip to canada. here is the prime minister during a news conference. >> canada will position itself to be the key supplier of energy to the in a net zero economy. that means investments in hydrogen. more investments in critical minerals so that we can be a reliable partner on that. mark: the chancellor and prime minister were expected to sign a deal to provide clean nitrogen to germany. president biden spoke with european leaders looking to revive a european deal with iran

. the united states is considering a response to the position from tehran on the latest proposal. the u.s. reportedly wants to calm fears of israel through a possible deal and the u.s. set that they agree with israel, iran can never acquire a nuclear weapon. the united states and south korea have begun their biggest joint military exercise in five years after taking a break on large scale drills that failed to lead kim jong-un to make concessions. the exercise will involve thousands of troops and will formulate a response to an invasion in north korea. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. ♪

kriti: this is "bloomberg markets," i'm kriti gupta.

energy prices rising as there is a supply cut bling through the market in germany. power prices surging. let's bring in our correspondent to help us break it down. thank you as always for staying late and making the time for us. she is of course joining us from berlin. the eu and olaf scholz wanted to cut dependency on russia by going down to 80% by the end of the year. how are they doing? >> they have almost been forced to cut the dependency because we do here, basically, at the end of the month, the eight -- maintenance work and austria one, when it might start, no one knows whether the russian gas will flow and already now it has been reduced.

yes, germany is at a rapid speed basically reducing its capacity on russian gas and oil. kriti: as a solution, tell us about the comeback of nuclear energy. germany has shut down some of those plants. are they bringing nuclear power back into the picture? birgit: that is exactly now being discussed. basically by the wintertime they need to fill up their storage and at the moment they are at 80%. the government is now looking for alternative resources. basically they are pleading to deliver lng. trying to get gas from norway and asking for cuts. the government is looking at a scenario where they know they are not able to fill the gap very quickly in the short run.

they are therefore considering for the time being keeping nuclear plants running and the decision is expected at the end of this month. kriti: birgit, walk us through the worst case scenario for the average german citizen? how could this play out if olaf scholz is not able to secure the supply? birgit: worst case scenario, it can always be extreme. there is the situation that on the one hand during the winter, people are sitting in the cold. that is obviously not going to go down well with the electorate and the popularity of the prime minister. and the people are burdened by extra costs. they are already facing rising energy bills and are asked to pay an extra levy on top with the overall inflation we are seeing. there is on the one hand the

immediate impact of the energy crisis and then the cost-effective. -- cost effect. in the wintertime there will be unease at least and it will be a difficult political period. kriti: pressuring the euro once again, dropping below parity. birgit, thank you once again. speaking of olaf scholz, he's in canada as part of a three day trip as a push to find alternative sources of gas. take a listen to what he said in mulch we all. -- in montreal. >> we are doing a lot of investments to diversify supply and be are doing it as fast as ever possible. never has such an infrastructure been built in germany in such a short time. kriti: let's bring in our

bloomberg canadian government reporter. thank you as always for joining us. let's start there, how much infrastructure and capacity does canada have to come to the rescue of europe? >> a lot of the discussion on this trip will be about longer-term solutions. the agreements are around hydrogen that can be produced by wind farms, critical minerals used for electric vehicle batteries. in the shorter term, germany needs gas and it's not clear if canada can help with that. there is a lot of concern among german officials around how long the regulatory process would take to get something like that built. right now it's not clear that canada can do much in the next couple of years to help germany with their energy crisis. walk us -- kriti: walk us through those potential hurdles and the prime minister saying

they could be eased. what does that look like? david: the problem -- brian: the problem here is that some of the regulatory process is going to have to happen at the local level. there is a terminal importing lng on the east coast and the most likely project being expanded to export lng, but you would have to upgrade pipelines to do that. the pipelines run through quebec and the northeastern united states it it might be outside of the jurisdiction of the federal government. i do think that the trudeau government wants to do what it can to help. it's not clear that they will be able to smooth the process enough in the short term. kriti: you use that crucial word, smooth the pipeline. in the united states we don't have the terminals for the u.s. to ramp up production.

they are in the process but they cannot actually do it. dive into that little bit, what it could look like between canada and of the united states in terms of getting pipelines en route. brian: the most likely scenario right now is going to involve the u.s. shipping more gasoline into world markets into the extent that canada goes through lng and into the world markets, it helps, every little bit helps and canada is trying to do that right now. west coast, the lng export terminal is coming on line next year and what germany could use is direct gas exports from canada. there is a chance it could happen. i don't think it's dead. but it is not looking right at the moment. kriti: talking about a dependency that needs to be cut

by the end of the year, brian, one last question. what is the next step we are waiting for from president trudeau? brian: if exports are going to happen, to do -- trudeau and other ministers have said there needs to be a business case for it and the potential terminal they are looking at is owned by a spanish energy company and if they decide there is a business case for it, it could happen. but they are waiting for that due diligence. to see if it is a commercially viable product. kriti: thank you as always, brian. still ahead, the biggest port in the u.s. -- u.k., at a halt after a thousand worker docs right. -- dock strike. this is bloomberg. ♪

kriti: this is "bloomberg markets," and today's number is $800 million. one estimate of how much trade disruption is expected from the u.k. port strike as 2000 dockworkers go on an eight day strike. their largest port for handling containerized exports and imports. we have the details. >> this is a significant moment in the summer strike. this is their biggest container for and about 4 million containers passed through every year. the estimate is that they hundred million dollars worth of freight is going to be -- $800 million in fright -- freight will be affected. we have got double-digit inflation here in the u.k. in terms of how disruptive it

could be, merck could already have to reroute three vessels and they are monitoring 11 more, adding to delays and costs as it looks like it may take 24 days to clear the backlog. fourth officials are saying pork is operating at less than 10% capacity. a force, disruption is the whole point of a strike. unions are here to send a message. they have already rejected one settlement that would have paid less than the inflation we are seeing here in the u.k. and the bosses at the fort say that the pay rise is to cover the -- at the port say that the pay rises to cover the whole of the year and that they will reissue -- revisit next year. in the meantime, there is the risk that the workers through a wage hike spiral contribute to the inflation and they are trying to shield their members

from it through the strike. bloomberg news. kriti: that is of course a conversation taking place around the world. labor strikes have been issued with companies like dear -- starbucks and even the port of los angeles. we have talked about energy prices, food prices, shelter prices. what about wage inflation? something the federal reserve is likely to address. let's get a quick check on the marketeer. the s&p 500 continues to sell off. looking at the nasdaq, selling down. the 10 year yield, 302. the common theme is strength in the bloomberg dollar index, up .6%. we will keep on top of the how will your business adapt to change? you could hire an office full of peyton mannings.

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>> now keeping you up to date with news from around the world. prime minister justin trudeau says canada is potentially willing to ease regulatory hurdles for building infrastructure to support liquefied natural gas to germany, but only if it makes economic sense to do so. german chancellor scholz is on a three-day visit to canada as part of a push to find alternative sources of gas in order to end its dependence on russia. >> we are decreasing imports and we are taking a lot of interest to become independent of imports of gas from russia. so we get our gas from the western ports of europe. >> chancellor scholz and prime minister trudeau were expected to sign a deal with canada to supply clean