>> stocks are taking on the chin. we welcome our bnn and bloomberg audiences, for it starts right now. >> let's dive into the market action. we are seeing chairman powell's comments on the equity market, due to some scary lows. the nasdaq took it on the chin, and the s&p 500 is not far behind. let's take a look at the bond market and it is not doing much. it is those jitters that we saw. it is it what was priced and collectively? that is the two-year yield.

it was the highest, going back since pre-covid. this is eight curve inversion, and how close we are getting to the reception level of -50 basis points. we will keep you apprised on that, but let's hit some micro-news. apple hit session lows. this comes after politico reported there may be an antitrust suit coming from the doj. as we get more information, we will share it with you right here on bloomberg television. we are joined now from jackson hole. this is the policy correspondent from jackson hole who has been all over this howell news. thank you for joining us. it is still a stunning view it let's talk about what we learn. he has been saying this nonstop. they are going hard on inflation. is anything change? >> was seems to have changed is the market finally got the

message. they've been saying, as pointed out, it was going to raise rates, and we are not going to immediately start cutting rates, and we will go to a restrictive level and stay there for a while. many people, particularly in the markets, they didn't seem to believe him, so today, he said his message would be short and direct, and it was. there was pain in the economy, but we knew it would bring inflation down, so a sickly, they did whatever it took it we seen equity and bond market reaction, but when you look at the futures, they are still rising in 2023. we will have to see the data come in as the fed has its next meeting. whether that changes or whether they start to absorb what was said. >> a lot to digest. let's talk about the other part of the equation. it wasn't really mentioned. is that a bigger concern?

>> i got a note from walt, who runs mortgages, he said the big news is that the spread compresses. that is because they did not mention mortgages. he did not suggest they were going to start selling mortgage bonds. the market relax, and the feeling was that the fed will be affecting the pricing. that's not going to happen for now. they did the non-comments, and it had an effect on one market, but they're not ready to talk to several fed officials over the past couple days off the record, and none of them think it is time to address qt. they want to get up and running, and the cap is on treasury. it only starts september 1, so we will see how it affects markets. >> we are joined from jackson

hole. thank you as always. in addition to signaling interest rates are going to remain high, and for a while, the fed chair address just how it will affect the labor market, making a key reference to take a listen. >> the employment costs are bringing down inflation, and they are likely to greece with the way. high inflation will become more entrenched. >> a successful disinflation of the 1980's follows to lower inflation. a lengthy. of monetary policy was needed to stem high inflation. it starts the process of getting inflation down to low and stable levels. they were the norm until spring of last year. our aim is to avoid that outcome by acting with resolve, now. >> we're joined now with more insight. megan green, global chief

economist and senior fellow at the harvard kennedy school. she joins us from jackson hole. thank you as always for joining us. we want to zoom in on the reference that chairman powell made. something the markets have compared to 70's, but i am concerned about what happens after the 80's rid their recessions in the first part of the decade. are we concerned about a repeat of that dynamic. >> i think that is why chair powell referenced it several times to recognize the fed is looking at that, they have learned a few lessons. one is that as said, they are not going to relent until the job is done. that was an absolute message that i'm not sure has been offered before. second, start and stop policy that we've experienced acting

now be resolutely and better. he admitted there would be pain, which is as close to a recession's were ever going to get. it does suggest that chair powell is taking on the lessons, and he is intent on implementing them here. >> and other part of the speech, is that they will hike to restrictive territory and stay there for a while. a while seems like a vague term. is this a story of months, years, decades? it will depend on the data, inevitably. none of us can know that now. particularly, given how over the map the data has been. soft data has been pretty abysmal. our data has held up. we will get more job data over

the next several months. i think what chair powell signaling is that while the markets were pricing in a pivot next year, rate cuts, they are not going to happen unless the data justifies it, and that would be a surprise. i don't think we have any more insight. we also don't have any insight on what restrictive means. embers of the fomc have a different sense of their neutral is, overall. in aggregate, it seems like 2.5%, but it could be higher or lower than that it could determine what restrictive is. it will go into that territory, but were not sure how far. that is a big unknown. that will depend on the data. >> a term that has come to my attention is a job full perception. one where you don't need to see widespread layoffs. i'm curious about what that means in terms of how deep the recession will look labor market stasis type.

--. >> i'm sorry i couldn't understand. >> i will repeat. full recession. that comes to mind. what happens to the death of the reception at the labor market stasis type. >> chair powell said that inflation happens a lot. it is more borten to the fed than the fed than labor market. i think is something he was clear on. he said unemployment would take up. they hope it will not take up much, but it will not cause a pivot. that was the message. nothing is going to cause a pivot. it explains why the equity market is falling. the other markets have absorbed this without lot of movement. >> i will put you on the spot. pushes ahead to the september meeting. market is saying it be 50 or 75. how much difference do those extra basis points make?

what >> i think it will make a big difference just in terms of the signaling of it more than anything else, the basis points hike will be aggressive. 50 basis points has a historical precedence, and the markets were evenly distributed between the two before that. now, they are skewed a little bit towards 75 basis points, but i think as we get closer to neutral, two &, the upper band of the policy rate, we will see it move slowly, just because there's so much uncertainty about where neutral is, how the economy absorbed the high-speed seen, and how much they can hike with activity dipping us into a significant recession going forward. my view would be 50 basis points, but this is a hawkish speech, and the market as tipped towards the basis points. it is signaling that matters more. >> we thank you as always for

your time into her inside. let's get to the first word news with mark crumpton. >> thank you. the justice department has released and redacted version of the affidavit that led to a judge to approve a warrant to search president trump's home amir locke a. large sections of the document are blacked out, but it is still expected to offer glimpses into the doj's investigation into mr. trump's handling of classified material and presidential records, as well as the government's justification for the august 8 search. two chemicals would be designated as hampstead -- hazardous substances under a rule. the epa is proposing today. it moves industries and industrial facilities and federal facilities one step closer to viability to pay for the current or past releases of the compound.

they may present a substantial danger to human health or welfare or the government or environment. for the third time, a congress member is visiting taiwan. tennessee republican marsha blackburn is on a three day trip to the island, and is likely to further test washington's ties to beijing. they visited taiwan in two weeks later, edward markey let a bipartisan delegation to taipei. california is the first government in the world to effectively ban gas powered vehicle sales by 2035. the california air resources board has voted unanimously to adopt a plan that mandates 100% zero emission and hybrid plug-in vehicle sales. the rule will likely also be adopted by 15 other states, and signed on to the existing zero emission vehicle program.

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>> this is bloomberg markets. the market reaction after chairman powell's comments is brutal for the equity market. we are hovering year 2.4%, and barely a whisper on the nasdaq which is shy of 3%. we are coming up with strong volume as well. that is conviction selling print let's get the latest on the market selloff read more contacts, and during us now is the equity reporter. also, the bloomberg intelligence race strategist. the stock market is getting hit hardest. why is the bond market taking a bigger hit. >> i think the bond market is around 4%, and maybe a little bit over, a little bit less.

the 10-year note has not move very much, but the 2-year note has retired. we saw that in june. the market is saying, hey. we have a fed hike for a. of time, but eventually, the reserve will have you ease substantially because the economy is going to falter a bit. it is not as early as we had an pricing from a couple of weeks ago. more flattening of the yield curve. >> the flattening as an inversion story, and that is crucial fight -- crucial as well. that may mean something for these recession calls. we see a recession reversion, as highlighted, with basis points, but how far are we from going even deeper to a folder in -200? >> that would be above 5% to see

that inversion, but with this inversion, you may see that over 30 years. -65 basis points, and that is for 2-year note to keep climbing up to around 3.75 to 4%. the 10 year yield just doesn't quite keep up even though yields move higher. this goes high for the 10 year yield. it is really an inversion that will determine how high two-year yields go. that is very highly influenced by how far and how fast the fed's. >> the high is interesting in the time we are talking about the treasury market. this talk about the stock market. i'm confused. walk me through this. diffie chairman has indicated he is going to be more hawkish, and going tougher on patient, potentially pushing back or delaying an inevitable recession, shouldn't the stock

market be happy about that if it is trading on growth prospects? why is it selling off? >> this is a head scratcher because leading up to this, there were already expectations that it was going to be hawkish. what is happening here? i am getting indications that this is a buy the rumor sell the news, but another thing is the recalibrating of expectations in how vast and big the fed will go with rate hikes. especially with the september meeting. when investors really try to dissect the rhetoric pal uses. they might see a potential peak as far as the fed getting a dovish till after september, but also, the speed of the 10 year yield moving. at the beginning of august, at a certain went, we are hovering around 3%, and that is a good sign, but it is been rising they have percentage point.

if that continues, and even near the peak in june, 3.5%, that would be a big pain went for technology, and for growth stocks, and you are seeing a communication service and they are all down. >> is interesting. to be so that together with the cues or lack thereof, is taken from the bond market, and they love to say that they are smarter than equity traders, but are they in this area when you don't see a bond market telling you about this? >> again, people are trying to parse what is going on, and a lot of traders i've talked to do not think this is a big friday to watch. it is also next friday because they will get a payrolls report for august. as you remember, that number came in, and there were 500,000 jobs. now, there are three 2000 jobs with on ointment 3.5%. that hurts as far as tightening financial conditions.

even beyond today, with what it looks like, obviously, the inflation indicators look at average hourly earnings. what that means for inflation, i think that is the next big catalyst that investors are focused on. >> a lot to digest. very quickly, i have to ask if it works the other way around. if you are not seeing a major selloff, does ink courage popping into the bond market? >> that is one of the big examples of the yield curve. people are moving from stocks to bonds. another reason why they are not doing well is because of what is going on in your. the expectation is for may and june. when the fed got more aggressive, they were much more aggressive than thought, and that was calibrated to rid >> equity reporter here. we think you both for your time. and your insight as always. we pivot to politics next. a highly sensitive affidavit

used to get a search warrant. those are made public. what does that mean for president trump. we will dive into the details next. this is bloomberg.

>> this is bloomberg markets. the fbi affidavit was used for a are lago estate. a portion was redacted, with an impartial look at that. that is with joe mathieu. with the factor of probable cause, it is black that. what did we actually learn from this document? >> that's a lot of stuff we want

to read. the justice department doesn't want any of this to be unsealed to protect. names of witnesses, and law enforcement officials. those who have not been charged -- this allows us to see a topline summary, it will, what wrong to this investigation. what was in the 100 pages from those boxes of documents that were recovered in the year. check this out. 67 documents marked as confidential. 92 marked a secret did 20 marked as top-secret, and some include markings that indicate they have intelligence from or in eavesdropping. the affidavit reads that there is probable cause to recognize national defense information, and it remains at the emesis which opted the search at we

have 30 seconds here. walk us through the reaction from the resident. >> he spending time on the website, and a lot of posts before and since then. >> nothing mentioned nuclear. a total public relations subterfuge from the fbi, and the doj. and our close working relationship regarding turnover. he goes on to say, justice -- judge reinhardt should not have allowed a break in of a home. he will remind you that the guy did not breaking through they had a search warrant. the entry was facilitated by the secret service. next >> developments we will keep an eye on. thank you. thank you for being on top of the story. we're looking at the s&p 500, once again. closing at those session lows. down about 10. 49 on s&p. in s&p, and the bond market is struggling once again. the 10 year yield, but you're

seeing that move on the front entry is something we will in ion, as the trading day moses and i'm pretty good for. this is very.

>> the most crucial moments of the trading day. this is bloomberg markets, the close. with caroline hyde, romaine bostick, and taylor riggs. >> it is 2:00 p.m.. 7:00 p.m. in london. we are live. this is bloomberg markets the close. >> i'm katie. >> the stocks are sending a clear message that rates will stay high. that's on top of a market expecting a caucus ecb. taylor has the latest on