also note that the director of national intelligence review these documents to see if there any national security issues brought about by their living in a box at mar-a-lago for month-to-month will continue. the case against donald trump will be on ice while the special master figures it out. >> unfortunately, good news in you cannot just pick somebody and give them that job. the teams from the doj that got the labor market can be bad news their hands on those documents because the fed will have to respond more. >> this will not significantly had to receive additional security clearances so they would be allowed to read what they had found. change the trajectory of the fed. >> that was the core messaging whomever is brought forth to be special master will likely need from jackson hole, there will that same level of clearance. lisa: there is a bigger question not be rate cuts in 2023. >> this is bloomberg that stems from that thursday speech with president biden surveillance with tom keene, jonathan ferro, and lisa calling out the mega extremist abramowicz. which re-ignites the donald jonathan: bramo is back, that is trump versus anyone debate into the midterm elections. is this working for the the headline. democrats? joe: it is supposed to be that is the good news. that is where the good news advantage democrats. ends. if you ask the democratic this is bloomberg surveillance. national committee, they want to

alongside tom keene i'm jonathan run against donald trump even ferro together with lisa though he is not on the ballot. abramowicz. he may as well be on the ballot. futures up on the s&p 500. look at the rally trump held in after the long weekend we hit pennsylvania. he is helping to drive a lot of the ground running. tom: i was watching the markets the discourse. over the weekend. how do voters clear through the we could spend the entire show muck? on foreign-exchange. things are moving. you have the aftermath of roe v. the news flow is extraordinary. jonathan: mike wilson of morgan wade which is very difficult to quantify and will likely increase democratic turnout, stanley cutting his earnings then you have the trump-biden forecast. "we think the next several ultra mega thing. quarters will contain some of we are in a confused time as the the most significant downward revisions to forward eps forecast we have seen in the past several cycles." general election begins post labor day. tom: he says we will cut eps lisa: there was a question about the support for backing ukraine, further. we will see a lot of that going both ways. but the sanctions in russia. i would expect some of the bulls how much support is there domestically to help europe to to go the other way. jonathan: hard to be bullish continue waging a counteroffensive versus russia right now. for lockdowns in china. given what is going on in ukraine? joe: that support remains now we are starting to see the intact.

relief, the plans get bigger and there are concerns of war fatigue and heating bills going bigger from european up. governments. lisa: the question is have we that'll be a major factor for seen the bottom? europe. right now we are seeing every worst case scenario play out, how about in england where people are prepared to fill the tanks for heating oil and how whether it is lockdowns in china long have we been doing this, how many billions have we spent on weapons? , how much do we see the energy this will be a messaging shutdowns in europe getting worse? challenge for the white house to keep american voters on board have we seen the bottom of this while they try to keep the getting priced in or have we not alliance abroad together. jonathan: joe mathieu, thank recognized this is a worst-case you. scenario for a severe number of looking forward to the show later. things? jonathan: worst-case is the base weekdays at 5:00 p.m. eastern time. case. how much worse can it get? how do you keep european allies on the side and european we have a euro-dollar call looking at 90? electorate on the side with this with the pain that is starting to build? lisa: you are not in a number of this is from citi before we had places. it italy there was a poll showing 51% of those polled did the plans from liz truss. cable could fall to 1.05. not support the sanctions on russia at this point because of where heating prices were going. jonathan: more people are at what point does this become calling for parity for the something more mainstream and pound, not just the euro because

of some of the proposals and start pushing back against the approaches? concerns of deutsche bank of a this is not the majority yet but slight of foreign investors not it has to be on the margins a willing to fund a deficit at lot of politicians are dealing with. time liz truss talked about tax jonathan: energy bills in italy cuts while also increasing are facing a 91% jump from a expenditures. year ago. how does this play out? jonathan: matt miller put it the bloomberg team did a wonderful job breaking this well when he talked about 75 down. basis point hikes. german electricity jumped 185% not just the fit. in august. those are big figures. tom: as greg valliere said, it looking ahead to the ecb and the bank of england. we heard from catherine mann yesterday. is a war. that teed up a big move. tom: mann was simple, the one of the quiet stories is the war continues. jonathan: it is the sanctions in response to that war that have driven these issues. acclaimed economist of the massachusetts institute of technology and she says the rope to lisa's point, can you keep is fraying on anchored expectations. the best research comes from mr. the electorate on-site as things get harder for the winter? tom: february 24 with deutsche navarro at citigroup, you remember him, 18% inflation was bank. there'll be a massive fiscal the splashy made six weeks ago. impulse. energy costs, rebuilding, there the fiscal proposals of prime minister truss are the same will be a major fiscal impulse across europe.

jonathan: the question we are amount of cash call in the last asking this week is whether the eight years combined. bond market is wide open for jonathan: lisa called it. that kind of large-scale relief we are discussing. lisa: who pays for it? you wonder whether we start to see tensions off the back of we are looking at a fiscal these plans. response at a time funding is if you're just tuning in, let's not free. hit the ground running. tom: it gets paid for with the futures bouncing back .6% on the leakage of foreign-exchange and s&p. inflation. jonathan: weaker currencies. on the nasdaq up .7%. bruce caffrey of jp morgan will yields higher six basis points. lay in. we will join him later in this crude a little bit softer, down program. this is .2%. lisa: the focus in europe. that is where the crisis is, that is where the change in leadership is in the united kingdom. liz truss expected to deliver a speech around 11:30 eastern time. perhaps you will outline her plan for a 130 billion pound issue. how do you support some of the household budgets rather than allowing them to climb? what you are seeing the pound is

a reprieve of a direct downward trend. how much do you get a feeling of concern about the spending plan, especially without plans to raise money at a time of such dire projection. today in the united states the senate returns. they'll be talking about a lot of issues, confirmation of judges, trying to get back rolling after a month recess. how much is gas still front and center? it continues to decline for another set of days. it has been near 80 days straight of declines in the price of oil. how much does this give support for the democrats into the midterm elections. just nine weeks until those elections. at 10:00 u.s. data. how much do we see it continuing to come in. some expectations are for the lowest levels back to the peak of the pandemic. this is the issue we are not talking about.

pst. girl. you can do better. opec-plus increased some of its at least with your big-name wireless carrier. production over the weekend. with xfinity mobile you can get unlimited for $30 per month on the nation's most reliable 5g network. -- decreased production because it is worry about the lack of they can even save you hundreds a year on your wireless bill over t-mobile, demand globally out of china and the u.s.. at&t, and verizon. how much is that a theme into the winter? jonathan: just a coincidence wow. i can do better! yes you can! i can do better, too! now you really can do better! that after the g7 agrees on oil cap cuts to russia you get opec switch to the fastest mobile service - xfinity mobile. now with the best price on two lines of unlimited. cuts and the nord stream pipeline getting shut down? just $30 a line. lisa: you are still seeing oil prices go down. that is concern about demand destruction and the weakness of growth, not supplies coming offline. that is fascinating. jonathan: joining us now is been laid lurk -- is ben laidler is your job to tell us how you can be bullish in a moment like this. ben: when everyone is on this race to the bottom of who can get more bearish and who can

have the more outlandish forecast that tells you where market psychology is right now. however bad you think this is, that is not it. inflation fever is beginning to break. you have corporate consumers that are remaining remarkably resilient. it will not last forever. the u.s. economy is re-accelerating. it is not about to plunge into recession. we have gasoline prices coming down. the consumer will wind up with more money in their pocket. i think this is a market which is talking itself into a funk and a little but of less bad news goes a very long way. tom: the research dump this morning is off the chart.

i want to congratulate you on your etf and passive investment research piece. i have to stay on markets this morning. buried in your note is a single line that the bond market is speaking, the bond market is saying companies are fine. discuss that. ben: that is exactly it. when we look at earnings expectations, they are following, but they are still jonathan: losses on the s&p 500 very healthy. corporate profit margins are last week. following at record levels. from new york city we are bouncing back, up .9%. default rates are at record on the nasdaq, up about 1%. lows. companies use the last crisis to mike wilson cutting the earnings refinance. that is the message you are estimates. getting from the corporate bond market. spreads have widened. he said it could be 3400 on the s&p and we could see that in q4. the company is finding it difficult refinance, but spreads here is the bond market picture. are very tight versus historical on friday a lot of people call levels. i am the equity guy stop you are this the goldilocks jobs report. participation improving. getting these messages, if you wages softer.

choose to look for them, that robust payrolls growth. are telling you small prints we took out some of the front have been nimble and resilient end, up six basis points. and default rates are low, and the overwhelming takeaway is the whether they are ready to whether the slow down. lisa: a lot of people say the fed has more work to do. in the bond market yields have corporate bond market is not the same weathervane it used to be been searching. because of how much companies unwinding some of the moves at termed out some of their the front end. maturities. i want to explain things over have we priced in the ramifications for u.s. companies last month. from a deep european recession, sterling still weaker for percent. which is becoming the base case cable at 1.15 right now but for an increasing number of wall street firm? ben: what happens if you don't yesterday morning 1.15 -- get a deep european recession? 1.1444. scrape -- citigroup talking 1.5 there are no good policy choices. on cable. every single government will the numbers we are talking about come out with some gargantuan package to cut the link between , 100 70 billion pounds worth of gas prices and electricity prices or cap those prices. relief to help energy and what will that do? businesses and provide relief to that will soften the recession consumers. through the winter and bring down inflation. that is about 5% of gdp. that will store up some pain for tom: absolutely. further down the line -- but i

there is wonderful essay in the think in this race to the bottom for market expectations, i think financial times driving this, this wall of money coming our people looking at the real way will do more to soft and income of fact. i will not give a course. that in the near term. lisa: you are saying fiscal the answer is they blow sterling support will come in if there is through parity, which is a deep recession. who will finance that when you unimaginable. jonathan: you and lisa were are already seeing yields climb? ben: fields probably climb a talking about that. little bit further but these are we see both over the last month. still low yields by historical context. we will see hi how -- we will yields at the front end up more than 100 basis points. see how high yields go if the team a bloomberg breaking the numbers down. inflation fever is breaking and the biggest move through august. inflation starts to come down and economies keep softening. jonathan: ben laidler, we 3.15 on the two year. i believe the bank of england meeting is a year or so away. appreciate your time. yields have been surging tom: thursdays ecb will not be a already, particular in the u.k.. the two year had its biggest monthly jump in yields. snooze fest. we will pause with the head of lisa: at what point are we global economic research for jp having a risk premium bake in because of this concern of a morgan with so many things to talk about and frame where we fiscal deficit that foreign

investors will not fund. are through the litmus paper of a system which is when does this become an foreign-exchange. increasing concern that leads to we harken back to all of the calls for imf bailouts and all work over more than half a sorts of things in the financial times piece. century, onto jacob frenkel who jonathan: listen to the plans was working for jp morgan for coming out of the u.k.. years and then onto ken rogoff 170 billion sterling toes like that. and i would throw you in as well. the number for consumers to we will talk to you about what freeze energy bills is 130. foreign-exchange signals. the other plan was a 40 billion what does foreign-exchange signal and is it the ultimate sterling energy eight package. tom: and for americans, we go release valve for these fiscal and monetary stresses? bruce: the simple thing deep into the united kingdom. foreign-exchange is signaling i would say we forget how small right now is the u.s. economy is the united kingdom economy is. faring better than the rest of the world and the fed has more work to do. these are huge numbers on a per capita basis. we are seeing the dollar moving i go to citigroup which did a up. tour de force note. what is interesting about the the cash call in the gilt market dynamic is we have moved from a world where we have been worried about a u.s. led global is combined eight years of recession to now one where the previous commitments. jonathan: this was not like the combination of european energy pandemic when the bond market was wide open. this is different. and china weakening is now the

futures up .6%. more significant problem. coming up, looking forward to tom: you are like me in the catching up with troy gayeski in basement with your chemistry set long ago. about 50 minutes. good morning to you all. there were all of those little chemistry things we made. this is bloomberg. your chemistry set right now is ritika: keep you up-to-date with japan. they are failing in the theory news from around the world. liz truss has recently become that keeps getting tested and tested by the market. when is there theory of limiting the uk's next prime minister after winning the conservative party leadership and dropping to bond illiquidity, when does that end? bruce: the story in japan is plans to aid households and businesses with energy bills. the proposals could cause close interesting. the continued purchases of to $200 billion. assets is probably the justice department is counterproductive at this point considering to appeal a decision on -- the judge has granted the and unsustainable. former's request to have a the dynamic of the bank of japan special master, neutral third letting the inflation story run through, trying to establish a party review the papers. the judge who was appointed -- more sustainable rise in inflation mix cents. the problem in japan as they are also temporarily block the government from using the getting stuck in this mode of documents in its criminal investigation. saying they are continuing to the opec-plus rally has fizzled out.

oil fell after -- a modest keep interest rates paid close to zero in which the dynamics 100,000 barrel a day cut. are requiring something different. i would like to see the move lockdowns and china are weighing on demands and so are higher away from why cc targets but key interest rates. policy rates unchanged to keep russia may face a longer and deeper recession as the impact the inflationary dynamic moving of u.s. and european section through the system and away way spreads. they need. lisa: japan is an island of its bloomberg has learned an internal report -- two of the own. three scenarios so contraction the rest of the world's hiking rates into weakness and we are accelerating. seeing that with the federal reserve. they see the economy returning to the prewar level only at the to a bigger degree, the ecb end of the decade. which is expected to raise rates the drugstore cvs is expanding by 75 basis points on thursday. how much are we looking at the fiscal and monetary impulse beyond its retail origins. working against each other in creating a lot of pain we are not pricing in? bruce: i think the ecb needs to global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more get policy rates towards neutral than 120 countries. i am ritika gupta. in a world where they certainly this is bloomberg. ♪ have recession risks but they also have significant inflation concerns. keeping policy rates at zero does not make sense.

we think they will move 75 basis points. the fiscal policy in europe, europe and china are both moving in the other direction, i think this is the right thing to do against the backdrop of what is a huge hit to household and business incomes. the consequences of that are we believe the ecb will move policy rates up to something like 1.5% even as the european economy suffered through this winter. lisa: 1.5% by the end of this year? bruce: that's correct. lisa: let's talk about what kind of downturn we are expecting from that. there needs to be some sort of deceleration activity in order to bring inflation under control. what kind of deceleration is required in europe and the u.s. to bring inflation back to something like the target for central banks? bruce: i think that is the rub. to say if we avoid a damaging

recession dynamic in which labor markets weekend, the combination of tight labor markets, changing wage and price setting processes , some things that will happen in the global economy that will not return to normal suggest you will get inflation down a bit but you will not get it down enough. i do not think the move back to 7% unemployment in the euro area which is our forecast of a mild recession, i do not think we move up to 4% unemployment rates in the u.s. will be enough to do the job. i think central banks are starting to understand that. they are not there yet. part of the problem is we will need much more significant adjustments in labor markets to contain inflation. tom: with that said, very important. where does it become more difficult for central bankers.

one of my problems as everybody is stressed out about the now and i'm like the now is not the point. where out there is where the stress comes in for monetary decision? is it this year? next year? bruce: it comes when policy stances are restrictive and labor markets are turning soft. that is one of the interesting things in the u.s.. last friday's report does not to just the labor market is soft. once you get policy into a restrictive stance, which the ecb is far away from but the fed is starting to move towards and you see the effects of tight monetary policy, that is when the choices become more difficult. we are not there yet for the fed in terms of the labor market, we are not there for the ecb in terms of policy stance. i think we get there sometime early next year and that is when

you will have more difficult choices. we think the fed will stop close to 4% in the ecb will stop close to 1.5% to take stock of what they have done. lisa: what kind of unemployment rate are you expecting that is required to bring inflation under control in the european region as well as the united states? bruce: let's be careful. the move from 9% inflation down to 4% or 5% will happen with energy markets normalizing, with the slowing we have seen in global growth taking goods pressures off. you get that without having to do anything. the question is getting that down to two. in that context i would argue you need to push the u.s. unemployment rate up above 5% and probably push the euro unemployment rate towards 8%. that is not going to happen without something we would call a retrenchment.

jonathan: short and shallow does not fit in there? bruce: first of all, that is hard to achieve, to gradually move the rate to 4% is something that would be hard to do but not impossible. to get the inflation picture back in the model with a 4% unemployment rate, a mild growth phase, that is not what history suggests will do the job. getting from 9% to 4% or 5% is a done deal given where energy prices are, given what is happening in global manufacturing. jonathan: bruce kasman, thank you. thoughtful stuff. the other additional thought i >> we need to show we will have is whether this is more than one year thing, more than one week. particularly in europe. deliver over the next two years. that has been floated by

politicians in europe. i will deliverable plan to cut the shout ceo talked about that. taxes and grow our economy. i will deliver on the energy what if this is five winters? that is a big problem. crisis, dealing with people's lisa: if they have to completely energy bills but also dealing rejigger the energy grid that with the long-term issues we will be a huge problem with a have on energy supply. jonathan: we are striving to see lot of disagreement on how to do that. there is the question about nuclear power in germany the plans. that was liz truss. delaying the roll off of some of look at these numbers. those plants. coal had been left for dead as 130 billion plus another 40 dirty energy and now prices are billion. going to the highest on record in europe. for household energy bills. how do you rejigger a grid when you are trying to be aware of $40 billion for small environmental concerns. jonathan: another reason people businesses. are bearish and i go back to the that represents the annual nhs budget. conversation 40 minutes ago, can that is a proposal from the you be bullish right now, and he said i think you answered your prime minister. own question. tom: the ratio analysis is tom: a lot of bloom. important. the projections are negative finally the renminbi nears seven projections. bramo is negative projections. yuan. jonathan: just this morning?

we are almost there. lisa: it is a constant. jonathan: interesting market this tuesday morning. tom: negative projections are futures up .8%. when you say get out of bed, you on the nasdaq up .9%. have to go to school. get out of bed now. yields of four basis points. ritika: keeping you up-to-date euro-dollar unchanged, up .1%. with news from around the world. euro-dollar .90 938. the u.s. justice department is deciding what to do next in the tom: a common theme of labor day case of those documents taken from donald trump's home. a federal judge has granted the as -- how was your beer this former president's request for a special master to be appointed to review the documents. weekend, joe? the judge also temporarily block joe: we like to call it the bay the u.s. from using the waters where i come from. tom: we could go on. documents its criminal investigation. the justice department has not said whether it will appeal. we do not have enough time. the prime minister of ukraine is i was trying to short out a confident european leaders will keep sanctions on russia despite judge in florida, mar-a-lago, the turmoil they face in the energy markets. and buried in the reports is the he stepped to bloomberg's maria tadeo in brussels. >> we can see understanding from justice department has the right to appeal. european leaders that we are in what will appeals court say to a

single federal judge appointed by the former president? a war. joe: maybe i will see you in the we have absolute understanding supreme court. jonathan: is that where this is russia is blackmailing european heading? joe: there are questions about politicians and we have a sure and says from european politics executive privilege. the court has not come down on that they will favor ukraine. this. ritika: the prime minister also can he former president in this case evoke executive privilege said ukraine's allies should do against a sitting presidency? what they can to help end the war quickly. that is a big question that has yet to be answered. in the u.k. come in coming from apparently we are going forward mr. liz truss has drafted plans with the special master, if only to freeze energy bills. to slow things down. that is a legal strategy we've seen before from donald trump. according to document seen by this is the part where it is bloomberg, the freeze could cost ahead scratcher. as much as $150 billion over the next 18 months. liz truss is also planning a $46 teams are made up of third-party neutral members who can review billion support packages for these documents the same way a businesses. special master would. global news 24 hours a day, on air and on quicktake by donald trump has no trust for bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. that and that is why you and i i am ritika gupta. are talking. this is bloomberg. tom: to summarize for those who ♪ are talking, this will be a

legal process. it is not about one judge making a final decision. joe: that's correct. 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

♪♪ energy demands are rising. and the effects are being felt everywhere. that's why at chevron, we're increasing production in the permian basin by 15%. and we're projected to reach 1 million barrels of oil per day by 2025. all while staying on track to reduce our carbon emissions intensity in the area. because it's only human to tackle the challenges of today to help ensure a brighter tomorrow.

>> the best chance for consumers is pulling back on consumption. high prices tend to do that. there is no way there can be replacement of gas in europe without there being a phenomenal drop in demand. jonathan: that is the unique problem the europeans appear to have. that was ed morse of citigroup. futures bouncing back .75% on the s&p. on the nasdaq bouncing back .8% after three weeks of losses. yields of four basis points. tom: now we will look at commodities. i am walking through the prices.

john was talking about the political crisis in europe. tensions exist in the hydrocarbons. what is important into september is what has not happened, which is food inflation has subsided worldwide. she is expert on food inflation. we will talk to her about the hydrocarbons story. honored to have you on, particularly about what has not happened, which is food inflation. wheat, corn, rice did not take off. is there risk we could see food inflation in those emerging markets? >> the peak was in march after the ukraine invasion. as with oil and food commodities, we saw a ramp-up on exports from all origins and that provide short-term supply.

k we did fall too , -- we did fall too soon, but august we did see supply risks. in europe, 500 euro drought. that has caused some damage and we did see a spike in grains in august. now what you are seeing is the risk period is probably behind us. i feel like food inflation has abated but by the time it gets to emerging markets, when you look at the supply chain issues, freight, and the rate at which the middlemen pass off i think you will see a slower food inflation, but not terrible right now. tom: dovetail your brent call into where it really matters for

the rest of your commodity analysis, food inflation. those two points. is a $120 a barrel? when does brent become germane for food inflation. kona: the food inflation rate -- the food inflation link is huge. fertilizer costs are so important provide the next crop sustainability. we are seeing -- because we cannot afford the gas prices. that will have an impact on next year's crops. shorter-term, energy drives the fuel cost and the cost of bringing the brazilian corn crop -- this requires diesel. energy at $90 per barrel is very significant and it is not likely food prices will go all the way to the bottom.

we are not going to go rocketing down because we have underlying cost pressures that will keep climbing slightly higher. lisa: this highlights on board the energy story is and underpinning the inflationary story across the board, there was a report out saying energy bills for european households may surge by 2 trillion euros to account for 15% of europe's gdp. at what point are we looking at something that is one vendor -- one winter versus two versus three? kona: is a nightmare. i think governments will do what they can to make sure it is one winter, but this will be the most severe. i think the nord stream outage will cause risks. the fact of the matter is they cannot afford another winter like this. it is impossible to allow that

to happen. they will have to invest in supply, whether it is renewable, whether it is nuclear. demand destruction essentially means you need to create a recession. it is not going to be easy, but i cannot see next year being as intense as this year would be. lisa: where is the peripheral supply? there is so much pushback to even keeping nuclear plants open in germany. you talk about coal. that flies in the face of esg requirements. how active have european leaders being in sourcing some of these energies? kona: they have not been. they have been sleeping in this is been a massive wake-up call. our new prime minister liz truss, all of the esg concerns seem to be going out the window. she is going for nuclear and all

of the fossil fuels. in tandem with renewables, to be fair, but they want everything now and nothing will happen now, not when governments are so stretched. if you will windfall tax the energy sector, that is going to further deter supply of investment. it is challenging. jonathan: one of the best. great to catch up with you. lisa, this is the number one question for this program. we were about to put together a massive fiscal effort in europe and we are all asking the same question. is the bond market wide open to finance it? lisa: and what happens if it is not and you start to get yields surging after decades of yields being so low, companies financing themselves in that type of environment. what you do it at time central

banks have to raise rates to punitive degrees to keep inflation under control. this is a new era in one of the most pressing concerns facing us. jonathan: and the pandemic we had low inflation, we were cutting rates, we had qe, now we have high inflation. very different backdrop for this bond market to stomach the fiscal response these are trying to provide. tom: it was a medical war against the pandemic. this is an actual war with tangible commodity changes, what you see in every war. i would suggest the fiscal expansion, one number i saw was 8% of gdp in the united kingdom, it is always the same story. it gets fixed, the issuance of paper, and then you see it in inflation and you always see it in foreign-exchange. jonathan: currency weaker,

yields higher. futures up 27 on the s&p, up .7%. if you're just tuning in, we bounced back on the nasdaq, up three quarters of 1% on the nasdaq. going into an ecb meeting this thursday looking for something like a 75 basis point hike, 50 basis points. chairman powell speaking on the same morning. we will hear from him on thursday. what is that about? lisa: i have no idea. jonathan: from new york city, this is bloomberg. ♪

>> unfortunately good news in the labor market can be bad news because the fed will have to respond more. >> this is not going to significantly change the trajectory of the fed. >> we have heard from the fed we are like the to be higher and tighter for longer. >> the core message from jackson hole is there will not be rate cuts in 2023. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. jonathan: good morning, good morning. this is bloomberg surveillance on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro.

futures bouncing back on the s&p , the nasdaq up .75%. tom: this is a global tuesday and a global tuesday is currencies in revolt. they are the litmus paper of the system and they are screaming fiscal stress. jonathan: fiscal relief as the topic of discussion in europe. $130 billion potentially from liz truss and then $40 billion to help small businesses. that is 170 billion sterling, a lot of money in the u.k.. how does the bond market finance it? tom: the answer is yes. they can always finance it. every single war gets financed. it is the question of what happens after that. that is the question of united kingdom productivity. if they have to go out on a 10 year plan what is the productivity of the nation? jonathan: how high does that

you'll need to go, how much weaker does their currency need to get? lisa: and how unsustainable is that rate for a global economy that has taken on so much debt? this is the distinction between now and previous bouts where they're needed to be borrowing to pay for a war or a pandemic. we are looking at economies that have already tacked on so much debt it becomes a different order of magnitude than it has been in the past. jonathan: the quote of the morning comes from mike wilson at morgan stanley to kick off your week with a bearish tilt. mike wilson says on his earnings forecast cuts. "we think the next several quarters will end up considering some of the most significant downward revisions to the forecast we have seen in the last several cycles." that is a big call from mike wilson, looking for minimum downside of this equity market,

3400 on the s&p which he thinks will come in q4. lisa: we are looking at someone who has been bearish and people will say he is an uber bear but he is getting more bearish as time goes on, even as the rest of the world used to his predictions at a time there's been a worst-case. we have not even talked about china, continuing this feeling of global recession. jonathan: the worst case of the start of the year has become the base case. the question is how much worse can it get? is it time to lead in the other direction? tom: i am doing the math while you are going on with the doom and the bloom. mike wilson is modeling spx, down 14%. that is a big bold move and that is the move to something. jonathan: that number could be even lower if we get a deep recession. i will go through the numbers later. futures up .75% on the nasdaq.

on the s&p up .7%. yields higher five basis points on the 10 year. crude down .5%. the fx market all over the place. this tuesday a bit of calm for euro-dollar. .90 932. lisa: the dollar index creeping up as there is this feeling the dollar continues to be a haven as the rest of the world yields -- of the rest of the world reels. liz truss will be delivering a speech today, probably around 11:30 eastern time. perhaps we will get more details on the plan she has to support households as you see energy bills poised to climb significantly. how do you freeze them where they are. how does this translate to the british pound? tom, calls for parity not of the euro but of the pound with the

dollar as there does have to be a relief mechanism in order to finance the increased budget deficit to deal with this crisis. today the u.s. senate is returning after labor day although talking with joe mathieu it sounds like they have not returned yet considering the quiet after the labor day holiday. we are still looking at oil and gasoline prices going down. we are seeing crude prices go down even after opec-plus said they will cut supply. this is a question about demand. if you're coming supply and you see prices go down, how much is this a statement of deceleration in economic activity and how much does this feed into the mike wilson call of lower earnings ahead. at 10:00 we get the u.s. services sector for the month of august. there is an expectation it could fall to lowe's not seen since the heart of the pandemic. at what point do we need services to get back to get the

economy of the united states with enough momentum to move away from the doom and gloom. jonathan: if the senate comes back does amh come back? tom: was there a citing? lisa: i do not regret big. tom: i have 142 days left before the end of the year. jonathan: work it out. troy gayeski joins us now. you ask yourself your own questions so i will read some of them out. could you take advantage of the recent nonsensical bear market rally? did you use the recent decline in bond yields to lighten up on duration? did you? troy: depending on the strategy we layered in more defensive calls we sold and we sized up our basis short which is short pass-through's and long treasuries because that could be a long trip.

we knew the fed was going to be winding down their balance sheet. the spreads why did the first six month of the year and we will reload that trade into weakness that has worked out fairly well for us. tom: as the xiaomi from m.i.t., it is good to see you with the physics from inertia. what is the inertia you are fighting in the equity markets? tory: the reason we use the term inertia is we have been shot by how much inertia there has been. it was fairly obvious the fed would tighten. things have gotten even worse than we thought with the russian invasion of ukraine, china's covid zero policy, and much higher inflation forcing the fed to tighten. the concept of inertia is things have been so good for so long and people have been bailed out time after time there has been very little movement to get more defensive this year in portfolios despite what was

going to be a more challenging environment for 60/40 than we've had over the past 12 to 13 in the past 20 to 40 years depending on your time arising. lisa: when will you know the bottom has been reached? the pessimism has been price did and we have moved away from the momentum we have seen over the past few months? troy: one of the differences between this downturn and most of the downturns you have had qe came about is it will be much harder to identify a viable bottom. during the pandemic once the fed flooded the zone with liquidity and fiscal stimulus showed up you are certain the bond was in and you could buy aggressively. if you go back -- once janet yellen decided to only hike once and there were multiple tests. it will be much harder to identify a viable bottom. at some point when you get the s&p and that 14 to 15 time --

there is light at the tunnel of inflation, re-achieving 2% to 3% which will not be until the end of 2023. until then you want to be in the northwest quadrant. you want to protect capital, mid single digits to high single digits returned to protect capital and eke out something much more modest compared to what all of us enjoyed at the end of the gfc. jonathan: who cuts rates first? the fed or the ecb? troy: ecb. the weakness in their economy is clear and present. the u.s. has had much more labor market shock it is not getting hit as hard on the energy cost. the ecb in the near term will tighten, but it is highly likely eurozone can avoid a recession in the near term. in the u.s. recession risk is elevated compared to three to six months ago, but that is over

more of a six month to 12 month time horizon because the labor market stays resilient in the face of global weakness. jonathan: this is what wei li of blackrock told our clients -- this is pretty close to the worst outcome. most people on board with that. try to answer this looking at united states and europe. when you start to lead the other way with this gloom around europe, because i'm not sure how much worse it gets. troy: it is very dangerous to step in front of trends that are this powerful. when you talk about the drivers of this, whether interest rate differentials, growth differentials, the massive energy shop, universal systems can start nibbling, and i recommend going through quantitative systems, but in the meantime there are so many other things to do whether it is commercial real estate debt or low beta strategy funds,

stepping in front of a freight train can be a painful exercise. the old attitude, the trend is your friend. he do not want to fight it too hard. jonathan: and this is a big way. i've asked him much it could get for europe and it keeps getting worse. thank you, troy gayeski of fx investments. where we are now versus where we were. the greatest example is the federal reserve. at the december meeting when they put out the fed funds forecast -- in the last projection from june it was 340. we will see where it is when we get the september projections. it gives you an idea of how much has changed. lisa: the end of the year the projection for close to 4% interest rate in the united states. jonathan: from 90 basis points in the december report to may be

a four handle. good morning to you all after long weekend stateside. this is bloomberg. ritika: keep you up-to-date with news from around the world, i am ritika gupta. liz truss officially becomes the next prime minister today after winning the conservative raise leadership projects and she is drafting plans to aid households and businesses. the proposals could cost close to $200 billion. the justice department is considering whether to appeal a judge's decision regarding documents seized from donald trump's home in florida. the judge has granted the former president's request to have a neutral third-party review the papers. the judge, who was appointed during the trump administration, also temporarily blocked the government from using the documents its criminal investigation. russia may face a longer and deeper recession as the impact of the u.s. and european section spreads. bloomberg has viewed an internal

report for the russian government. two of the three scenarios so a contraction accelerating next year mid in the economy is returning to prewar levels only at the end of the decade or later. california has narrowly avoided having to propose blackouts due to heat wave. officials warn the states power grid faces a bigger test today. power demand could reach an all-time high as businesses and schools reopened after the long labor day weekend. cvs keeps expanding beyond its retail origins. it has reached a deal to provide signify health for $8 billion in cash. other bidders included amazon and unitedhealth. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

♪♪ energy demands are rising. and the effects are being felt everywhere. that's why at chevron, we're increasing production in the permian basin by 15%. and we're projected to reach 1 million barrels of oil per day by 2025.

all while staying on track to reduce our carbon emissions intensity in the area. because it's only human to tackle the challenges of today to help ensure a brighter tomorrow.

>> we have and will continue to have that economic strength to give people the cash they need to get through this energy crisis and i know liz truss and this compassionate conservative government will do everything we can to get people through this

crisis. jonathan: we can all agree on the word choice, crisis. that was the outgoing prime minister boris johnson. we will hear from liz truss a little bit later. with tom keene in lisa abramowicz i'm jonathan ferro. futures up. we bounced back in the s&p, on the nasdaq up .7%. yields are up. in the fx market, for once, bit of calm on euro-dollar. unchanged. .90 934. tom: what do prime minister's do in the united kingdom? what did churchill do? jonathan: they can carry on being members of parliament. i believe theresa may is in parliament. they go back -- tom: they go back to congress. jonathan: that is because your mp. you become the leader of the party. tom: they go back to congress.

jonathan: not quite. are we going to go over that system thing? tom: it is cool she can go back and be a house or senator. jonathan: because she is still mp. i'm not doing this. tom: are we getting rid of barda and the premier league? jonathan: they have to fix this. i agree. tom: we agree on something and we can move forward with joe mathieu. a missile just launched describing a folly known as the budget process in modern washington. it used to be there was an appropriations committee for fiscal year 2023. they have 12 or 21 bills. they have passed exactly zero. our budget system is broken. what has happened this week? joe: more kicking of the can.

you're supposed to have the 12 appropriations bills. i can hear our friend rick davis screaming regular order as we have this conversation. this irks lawmakers that have been around. there are lawmakers that have never seen a budget in the traditional sense. lawmakers are coming back now and they need to craft a spending plan. the government runs out of money at the end of september. they will likely kick the can with a continuing resolution and bring us to mid-december. the question is what to they attached to that bill that is a big part of the conversation this morning? tom: i look at the process and it seems to be just worse training. is that all this is is the leaders doing legislation, not chairman or committees? joe: that is exactly right. that is a pretty good description.

you passed the wonk test in washington. how about some of the pieces of legislation we are talking about with regards to same-sex marriage. that could be attached to a spending bill. that will irk some lawmakers and lead to a debate in washington. the house be back next week and that is when it gets real. lisa: where is the esg agenda for this administration and the budget considering the energy independence desire for this nation and the fact that coal is going gangbusters in europe and oil prices have come off a little bit but still very much in the forefront. joe: this is a complicated scenario for this white house and i'm not sure how to answer. prices are driving everything. if you look at joe's approval ratings they are tracking the price of gas very closely, in inverse relationship, almost like nothing else matters.

while the white house is celebrating 80 days of lower gas prices, they start talking about the esg program climate change in the most recent bill that was passed. the inflation reduction act. some of them start to sound the same after a while. the question is how do we get through winter? we will have a climate agenda at the white house but it is blunted by reality. just like the europeans are worried about winter, we are as well. we are worried about the rest of the summer. this will be the biggest drain on the electric grid in california history. the heat wave that has involved the west has crated a massive demand for energy and it runs counter to what the white house is trying to do. even when elon musk talks about this, this is the man behind the most successful electric car company, we need more gas now as we continue to press forward with our climate change initiatives. lisa: how much support is there

in washington to increase gas exports to the region? joe: that will also be driven by the reality. i asked three members of the white house economic team over the course of last week about this, specifically do we have the spare capacity to help? the answer is very vague. we will do whatever we can but we have our own needs at home. the news from opec that challenges us as the white house issued a statement saying we do whatever it weekend to break down the price of oil. sharing with other nations may or may not be part of that. jonathan: joe mathieu, thanks for that. sound on on bloomberg radio weekdays at 5:00 p.m.. futures on the s&p up .6%. tom: i am watching the yen to new weakness, back to 1998, nearing 1.4 -- nearing 142 on

the yen. jonathan: in the world like we are in right now, one of the big trends would be you to take something to hide beta with global growth and get longer yen against that currency and that is not working out. look at the chart of aussie yen. tom: i've looked at it twice today. it is buttressed up. you can think as hard as you want, and when you get the multicurrency systems you never know which one will give way. jonathan: one thing we do know is based on jackson hole the ecb is willing to keep hiking rates and tolerate a recession. the federal reserve is willing to keep on hiking rates and may be tolerate the same and the boj has no interest in doing any of those things. lisa: and they are doubling down on that. tom: i think when the facts change they will amend those theories.

i do not know what i expect other than i love this phrase, frontloading. lisa: there have been a number of theories. until the dollar weakens it will be tougher the bank of japan to move away from some of their prognostications, which is what they really want to do. jonathan: futures up .6% on the s&p. on the nasdaq up .7%. counting you down to an ecb rate decision this thursday and another address from chairman powell later this week. from new york, this is bloomberg. ♪

to finally lose 80 pounds and keep it off with golo

is amazing. i've been maintaining. the weight is gone and it's never coming back. with golo, i've not only kept off the weight but i'm happier, i'm healthier, and i have a new lease on life. golo is the only thing that will let you lose weight and keep it off. who loses 138 pounds in nine months? i did! golo's a lifestyle change and you make the change and it stays off. (soft music)

>> live from new york city this morning, after three weeks of losses, just a small bounce back. up about 6/10 of 1%. talked a little bit to mike wilson over at morgan stanley. looking for some significant revisions and still says we have not seen the lows of this market. could see that still. yields lower on friday. a lot of people said

unemployment, higher. wages a little softer and still some robust payrolls. over the last month, we've done a lot of work in the market. we've just had the biggest monthly high into year yields on record. the two-year over the last month, 120 basis points. the 10 year, up 92. lisa has been asking the important question all morning. 170 billion sterling of aid to offset the energy crisis. how will refinance it? weaker currency, high yield?

and how difficult is it going to be this time around to do the same thing they did back in the pandemic. we were cutting rates and we had qe. now, we are hiking rates. tom: in many parts of the world, that is the key thing. what really strikes me coming off labor day is how discrete and alone the united states is. all these other places are going to use the war inertia or the asia-covid lockdown inertia and the u.s. is alone in its excellence jonathan: it is a lot of the central banking world, the doj. that tells you why. tom:tom: those publications are just absolutely extraordinary.

there is no other way to put it. is 150 unimaginable? i'm not so sure. jonathan: one percentage point on that currency. lisa: it really is a macro morning and let's just put that into focus especially have the ecb morning on thursday and the contrast this time plunging 14.4% and the open as a result of the death of the cfo, tragically dying. gamestop, another memestock declining. people sort of questioning whether the stock is coming down that particular sector. some people thinking that the retailer may struggle because of the increased covid lockdowns in china.

it is going to make it very hard for certain aspects of the market to really rejuvenate. also when you are taking a look at markets, again, it is a rather quiet morning. fedex shares down 1.6%. the concern here is the macro concern, a decline in volume for packages being sent around how much do we see this bleeding out into the transport sectors as a result of trade, of economic activity? tom: it will be interesting to see it again with 25.70. it is a nice list of the market this morning. this global head of macro strategy, that academics of

butterflies flapping which has to do with the research of little things happening out there. which butterflies are you watching this morning? >> it is huge, and a lot of people sooner or later, the question is when. >> why should america care about running first and second? >> global markets feel this.

if the doj does back away, you will see a very strong forecast medium going into u.s. markets. i feel pretty good about long volatility pressure. jonathan: we are through it at 100 45, and then 150. what kind of numbers are you thinking about? >> we are almost in another region, pretty difficult to say in the last 12 years. confidence levels right now are very, very low. lisa: given the concerns that people have about rates rising in the euro region, the issue in

japan if it is going to lead to a lack of buyers for u.s. treasury, are you pushing back against the consensus trade of a couple months ago to buy duration? > i think it is interesting. the ecb is poised for something like 170 basis points. sounds pretty aggressive. it is really a median, way off race. think about the scenario. a lot of very unhappy people. maybe in that particular case, it is the bond duration. but think about the rate for the fed cycle.

lisa: let's hone in a little bit on what you just said. when do we reach that? next year? how long will we keep it there? >> in terms of the market prices, the market will bump that up. it is probably somewhere in the march to june. as far as the expectation, the reality of the fed pushing -- lisa: has this been priced into the equity market? >> i will say that generally speaking, it is not --. jonathan: i love that.

like, good to catch up unemployment down 5%. the much deeper downturn, just sitting there thinking as he told michael? does he know it? based on what bruce cashman said about the economy. he was talking up 5% unemployment inflation back down. that is not a bullish equity market fairytale we have been told. lisa: in fairness, taking a step back, you are seeing disagreement, pretty violent disagreement, which is healthy considering it is really hard to know what is going to happen that said, hard to see how a 4.5% interest rate in the u.s. priced in this month is really

getting priced into the equity market, let alone the current market. jonathan: we're still off the lows of july 5, as far as i can see. haven't really tested them yet. i think we can all see things have gotten worse, not better impaired to a people expected six weeks ago. there have lisa: been some support in europe, something that is offset some of the pain in others, but it raises a good question. our people already pricing in the bottom of something that hasn't transpired yet even if some people say we are looking at the worst case scenario? jonathan: to build on something said moments ago, if the ecb has stepped away from rate hikes, lisa and i have gone back and forth, does that help your currency? tom: that is really well-said.

a lot of these moments spoke to ambiguity, whether the line goes one way or the other. it is a region at war and christine lagarde and the leadership will have to deal with. i would suggest what you will see is currencies give way and what the germans fear most, this is my first question. the heritage of europe and declining incomes is totally different than the new world optimism. jonathan: from new york city, futures up half of 1% on the s&p. nasdaq up. there was an ecb rate decision coming up later this week on errors they. chairman powell is going to speak at a conference at 9:10 eastern time.

make sense of that. futures up half of 1%. this is bloomberg. ritika: the u.s. justice department is deciding what to do next in the case of those documents taken from donald's home. a judge granted the request for a special master to review the documents. justice department has not said whether it will appeal. in the u.k., energy bills at or below the current level. cost as much as 150 billion dollars over the next 18 months. planning a 46 billion dollars support package to lower entry

bills. one of the suspects in the stabbing death of 10 people has been found dead. they also believe a second suspect is also injured. in china, lockdowns. meanwhile, the city has suspended a stay-at-home order for wednesday. bed, bath & beyond stocks are plunging following the death of the cfo. he fell to his death on friday. he was one of the executives who provided details about the company's turnaround plan. 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. this is bloomberg.

>> what they do has to get people back into the real world post-covid as a reminder that the government cannot solve every problem. that is not how -- the only way to protect our standard of living, to protect peoples' welfare is to ensure high levels of productivity and strong economic growth. jonathan: from one crisis to another in the u.k., that was philip hammond, the former u.k. chancellor from new york city this morning. i'm jonathan ferro, futures holding on the s&p. yields high, tom, up six basis points. tom: right now a three dollar conversation with lisa, jon and i, a senior fellow at cfr.

very importantly, there was a painting owned by one, a beautiful imagery of the caribbean. anyways, i think he won that painting 30 years ago today. and all i can say is that is the arcg0fe -- arch-fear for next year in the united kingdom. jonathan: it is always the first trade that broke the bank of england but it is pretty well-reported by now that the architect by now baked time. the original architect, i believe, it's from --, which is cool.

tom: three decades, thank you for joining us here. does liz truss face dynamics like the united kingdom faced dirty years ago? -- 30 years ago? >> back in 1992, that curbed her demand where they knew that the exchange rate mechanism of the time, because britain was in recession, they can get away with it. it could go down 15% in one shot.

they are both up all night whether they could get that prospect. there isn't just one breaking. tom: is it true your father was a united kingdom ambassador in germany and it was a time of volatility, to say the least? are you looking at the currency markets and seeing the release now for a system buffeted by a war in ukraine ? >> we think of exchange rate is being shock absorbing. a very strong dollar, that is

going to be a bit of a benefit for the rest of the world. a very weak position because there is uncertainty, goldman sachs, particularly. exports from britain and attractions. jonathan: there have been a few numbers here. 170 billion sterling. have you thought much about have big that is? the scale of that, and what it could mean for bond markets across europe?

> this fiscal response, now we are getting right back into a new kind of shock, and price shock, we just going to call for another round. i haven't got the numbers in my head as to whether --, but this will come on thursday, i believe. now we are going to learn more, and it is not clear how much the market need to finance. it may take in even weaker currency about to happen. jonathan: back in the pandemic, policy from fiscal sorties

complemented each other. this time it feels like it is in conflict. what do you think about things like a growth and inflation with these kind of dynamics? > as you say, it was an assertion whether you could be there and you were not afraid of being punished in terms of high inflation. central banks have to regulate. the ecb is going to raise her interest rates and the bank of england is going to have to tighten, too. as we say, the two engines are going against each other and it is going to be tougher. jonathan: is this a one-off winter, or do we have to give up the repeat next year?

>> i am pessimistic in terms of the geopolitics of the or. ukraine cannot accept the idea that it is -- in a permanent way, so it is determined to win that bank. neither can just say that is ok, we are going to negotiate. it could go on indefinitely. on the other hand, we have to remember that with the inflation shortage, the first friend of the energy crisis spike up, that curbs inflation. i don't think it is socialism ongoing.

the conversation jonathan: jonathan: needs to continue very soon. a very, very different policy picture this time around. tom: the separation here for me is the war in ukraine. centennial addition, it is simple. a brutal essay on vladimir putin. jonathan: wake me up when september ends. from new york, this is bloomberg.

when people come, they say they've tried lots of diets, nothing's worked or they've lost the same 10, 20, 50 pounds over and over again. they need a real solution. i've always fought with 5-10 pounds all the time. eating all these different things and nothing's ever working. i've done the diets, all the diets. before golo, i was barely eating but the weight wasn't going anywhere. the secret to losing weight and keeping it off is managing insulin and glucose. golo takes a systematic approach to eating that focuses on optimizing insulin levels. we tackle the cause of weight gain, not just the symptom. when you have good metabolic health, weight loss is easy. i always thought it would be so difficult to lose weight, but with golo, it wasn't. the weight just fell off. i have people come up to me all the time and ask me,

"does it really work?" and all i have to say is, "here i am. it works." my advice for everyone is to go with golo. it will release your fat and it will release you.

lisa: there is still a lot of avoidance in this labor market. >> inflationary regime, the fed, the down market. we continue to see the surprises. >> a slowdown into the fall, which is my belief we will start having a recovery in 2024, but it is just too early to say that

this is the time with a bear market is over. announcer: this is" bloomberg surveillance" with john keene, jonathan ferro and lisa abramowicz. tom: exceptionally busy tuesday morning. a new prime minister of the united kingdom. in the markets, a new currency regime. jonathan: we have got a weaker currency in japan. and more recently, a weaker currency in the u.k. this is going to be a big fiscal effort and there is a big question about how they are going to finance it. tom:tom: what is going on here, particularly the linkage of bonds, higher yields, lower bond prices. it does come back to a resilient united states. chairman powell speaking thursday, another economic event. jonathan: and the news

conference if we look at it later to accommodate the u.s. data, i am not sure how helpful that is. we get the ecb decision on thursday and then we get a news conference and somewhere within that news conference you get chairman powell separately. right now, the u.s. energy issues are nothing like the energy issues in europe. for that matter, there are a very different growing set of issues, and i wonder how that shapes perceptions and opinions, forecasts. jonathan: and the caution that i am hearing this morning on bloomberg surveillance, lisa, to me, it all comes back to real economy analysis. in what i don't understand is if you haven't -- if you give inflation, real incomes go down. lisa: a labor market wasn't

destroying at the united states, didn't see the same kind of fiscal response. how does that factor into the growth outlook for unemployment rates picking up to a much more significant degree than people are currently forecasting? tom: i want to do one thing here before we jump into the data and that is to go to your united kingdom and the symbolism of a new president and the crazy system, some people say she has a five day window. what is that about? jonathan: people think she has already come up with a plan. 130 billion sterling. here is another. 40 billion sterling energy aid package for u.k. businesses. that is about 5% of gdp to address one winter. one winter. in that one winter could become two and could be a whole lot well.

never mind this one, can they repeat the act if they need to? long ago and far away, 1.1573. up 7/10 of 1% on the s&p. talking about those high yields now. up five basis points on treasury. the drama around nord stream 1 the last couple of days. basically, unchanged on the session. fruits off the lower, about $.70. tom:tom: right now, the chief

investment officer, what we can do here is dive into the idea of what you actually do. how do you affect investment given all of the turmoil that is out there? are any of those cash right now? >> you are getting on a six-month deal now with a very limited duration. yes, but park it somewhere safe. one thing we do always advise even when things feel very dark, it is never a good investment strategy. you have very, very smart people that when you start to see these losses, they just take it. tom: the next 90 days in investment is something i heard

in the dregs of august, which is trying to find scale. you and i have three or four good ideas, but it is so hard now to get scale in vestment, to get belief across x number of equities come across different portfolios. i would be you scale if you have got a fair amount of money? >> if you want to be in the right places, i think it is amusing every time we see strategists and volatility and honestly i think it with the fixed income that surprised everybody this year. i do think on investment, there are market that are going to do better than others. let's be a little more concentrated. value, dividends. put your stock where you are going to have a little bit of a bunker mentality.

we are not a hedge fund, we are not trying to trade every single day. but if you were to look at the world a understand everything you own in what kind of risk you have, understand your timeframe as an investor. you just have to emotionally get ready that maybe you shouldn't look at it every day and definitely don't panic. honestly, panic is one of the biggest risks to investors right now. you have the conviction to hang onto your stocks. jonathan: i don't take offense, i just draw the line at stock aversion go for it. tom: she is from texas a&m. football is the american football. jonathan: we are going to be

u.s. football? no? >> it is definitely a religion down here and this year the a&m is 100% national champions. jonathan: i will try to get to a down south later this year. i want to talk about the pain still to come. if we do have a longer time horizon, you leadership to come from the next cycle. is it too premature to make that call? >> this is a classic cycle. you are going to have this contraption. during this contraction, you look at the health sectors, and i still don't mind a little bit of energy. one thing i think it's fascinating is that energy prices or energy stocks go up a little bit from oil prices.

the energy sector was actually still positive in august. i think a lot about is the way u.s. energy companies are giving back to shareholders. the fiscal dividends, the buybacks. even at 86 when we think there is a very -- a lot of very profitable energy companies, we are doing about one million barrels of gasoline. you are going to see the demand as we see regression -- recessions are typically bad, shutting down again. sometimes it feels like groundhog day, where we can't get out of this. and then when everything feels terrible is when you want to start buying some longer-duration equities. but you don't necessarily want to hold assad stronger, higher beta.

lisa: quickly, have the u.s. stocks priced in the european recessions, the strong dollar? >> we are kind of playing groundhog day, what will pull the markets down. the fed raising rates, you still have a huge headwind. i think the energy crisis that is brewing is something investors cannot ignore. we are interdependent with each other. this may be a crisis that drags on. we are going down as low as possible. ever since we started building it up in the 70's and 80's, we are back down to levels we have seen how long can you stand it to continue, we will have to see. jonathan: victoria, always good to catch up.

extrapolate out the negativity currently. it is worth a conversation. are you ready to talk about this next week? tom: i think it frankly comes back to the war. i still love how certain media are tracking the days of the war. i totally take your point on the extension of this and i just wonder the separateness of america. texas a&m. jonathan: how do we get tickets to that? tom: the only one i know in our orbit, kailey leinz. she is so wired. i hear that jonathan: is the

closest you get to european football in terms of atmosphere. go into a college game in the south. am i right? lisa: come and see. uva is not alabama. jonathan: do we have a uva connection? lisa: a good clarification. from new york, this is bloomberg. ritika: keeping you up-to-date with news from around the world, the justice department is considering whether to appeal a decision regarding documents seized from donald trump home. they argue the former president's request to have a special master would be --. the judge was appointed during the trump administration temporarily block them from using the documents in the

criminal investigation. liz truss officially become the uk's next prime minister today. she is announcing plans to aid businesses to lower energy bills. but the bills could cost $200 billion. an energy crisis is getting worse in germany. the government reversed policy moving to keep two weeks of pipelines alive. germany has agreed to export more electricity to france. the french will send gas to germany when it is needed. cvs keeps expanding beyond retail origins. global news on air and on bloomberg quicktake. this is bloomberg.

>> coming toward another winter like this is simply impossible to allow to happen. we are going to have to target renewable, a combination of demand and production.

but that essentially means you need to create a recession. jonathan: more trouble brewing. the head of research giving an estimate. tom keene, lisa abramowicz and jonathan ferro. the nasdaq 100, up around 80 points. euro-dollar, unchanged. here comes another one. over 75 basis point hike from the ecb. it is probably now the more likely outcome. tom, join the club. tom: this is really important. edward, why am told is looking to get back to 4%. jonathan: and then what if you are right? if we get the kind of disruption in the european economy, tom, then what for the ecb? tom: that is right where i wanted to go. there is a story, will kenzie

joins us this morning in london. will, to round the sound, and i am sorry that we missed you on your trip this morning, the arch fear here looking at rotterdam coal is that united kingdom that returns to the agony of the 1920 and the 1930's. that time of a real income slow down. is that a reality for the energy impulse? that we can see in the united kingdom a legitimate, long-term reeling from decline? >> you are going to feel people but what has happened this morning is the new prime minister, that looks like she is

going to introduce a huge intervention. it is going to cost well over one here billion pounds. -- 100 billion pounds. jonathan: it helps the energy target ease -- companies and it is not targeted in any shape or form. are you thinking about the prospect of an ecb crash twice, not once? ritika: that is the problem, if you just track energy prices, do nothing to make up the demand problem. we haven't really had that conversation in the u.k. if you don't let prices rise, people keep using clean energy as they have been and that means prices and demand are likely to

stay high and will come in high on their own. what happens in the spring? we don't know where we will be. but clearly by offering support now, it is going to be a pretty open-ended promise because you are not going to get places only two years away from elections. lisa: if you didn't look at the twitter comments, the potential wrath inflicted upon the pound as a response, people say it is truss' fault. how much does that and the lack of the interdependency of the two regions really play into the energy story here? >> i think it is a huge issue. it may be a part of the broader weakness in the pound. we talk about energy, the european were markets remain connected as they have been.

that power connected between the u.k. and the e.u., we are still working. i think people over-complicate this issue sometimes. at the end the day, the energy crisis is having us erupt because vladimir putin took the position of stocks in europe. jonathan: the policy response to that was exacerbating the issue. when you look at the support in general across europe right now, across countries, are you seeing any fragmentation, any breakdown in that report the policy response to this or? will: we have seen some things over the weekend, most notably in the public. it is going to be a tough winter and they have got to get through this, and that is why you're seeing the kind of information that we are seeing. but also, what we saw over the

weekend in germany where they had that package. as i said before, is not happening. tom: is prime minister truss a war prime minister? jonathan: there is a war, but she is not directly engaged in it. would you say the u.k. is at war with russia right now? it's a wartime. please jump in. will: i think what we are seeing this week is the economic war between the west and russia. and we've seen that escalate this week. i think both sides are working out how to get through the winter. on the one hand, russia will

break european resolved. on the other hand, huge financial power to get them into this. it jonathan: is an ugly, ugly lincoln contest, that is for sure. i love catching up with you, you know that. thank you, sir. it is expensive, it is going to be difficult. much, much harder to try to do this twice. lisa: the reason i mention to brexit is the reason the currency can be a pressure valve because it is not part of the european region trying to assess this in real time together. it is relevant in the isolation of the u.k. economy at a time when the interdependency could be helpful in terms of scale. jonathan: $130 billion for consumers and $30 billion for

businesses. lisa: let's say that is the plan now. what happens in a year? what then? jonathan:jonathan: you have to imagine it is slightly different. seeing which way europe goes on this, it could be getting very expensive. jonathan: in the next 24 hours, we get more data on that. this is bloomberg.

as a business owner, your bottom line is always top of mind.

so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts. saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities. ™

♪ jonathan: live from new york city this morning, good morning. futures positive 23. 6/10 of 1% on the s&p. the president is trying to get a celebration of the inflation reduction act. there you go. looking ahead to that. september 15 is when we get that data for the month of august. tom: we haven't talked about this at all, but off the jobs

report, frankly, the inflation report is equally as orton. jonathan: without a doubt. the fed chair talks about the totality of the data. the totality over the last week has been better than expected. consumer confidence is more robust. take your pick. tom: through thursday, there will be an ecb meeting. it is always good to have jon ferro with us because he has a little bit of experience with the three dollar lunches. is there going to be a three dollar lunch for that critical meeting? jonathan: won't need a drink after this one if we get that 75 basis when hike. even a month ago, didn't expect a move that big. tom:tom: still unmanageable. right now, we march to a bigger view of the foreign exchange

market. eric nelson is out of the exclusive economic program at wake forest. he is with wells fargo as a macro strategist. thank you so much for joining us on short notice. eric, i want to talk to you about a shift that always happens under crisis, fixed or floating. we go from a rate analysis to looking at slows. when do flows matter in the news in the united kingdom? >> i think we are already there, especially with the u.k. but also in europe. it has continued to be a problem which i see most fiscal writers from the u.k., from europe, it

is really going to hinge on back stocks. the ecb, that they miss transmission protection instrument, will that be discussed? i think that will become an ever-increasing focus for the market. tom: chris writes of a dissertation on this. i would suggest, eric, that people ignore balance payments. in japan, it has to be like a foot on the ground. japan is basically a broken for exchanged sea isn't it? >> there is not enough focus on my opinion -- in my opinion on japan's situation. that is about 400% year-over-year.

right now, the yen weakness is as much about the central bank as the energy increasingly becoming more of an energy story. lisa: how far can the dollar strengthened before it becomes a massive liability? >> this is such an important question, i'm glad you brought it up. we look back to the mid-80's, coordinated intervention. we've got a long way to go in the levels before the fed treasury starts to get worried. right now, the dollar strengthens. but that's forward, u.s. manufacturing starting to see those. you lisa: rolled off these numbers that are actually

getting contraction in other places. that 90 euro mark, also a margin. i am trying to wrap my head around how disorderly those moves could be. is this just a slow grind, weaker and weaker? you have to wonder at billy -- what point they really come to an agreement. essentially 10 base figures in the span of a month. and i think you can see some action here in the next couple weeks. for the euro, i think it will be more of a grind. when >> you talk about the prospect of coordinated intervention, it must speak to

what strength that takes. is that something bigger than that? what is it? >> in some cases they could be in relation to it because of the currency. the doj efforts to stand against weakness until the treasury and fed stepped in, you had a pretty standard reversal. it is potentially concerning to seafood food prices, energy prices rise and there is coordinated action. if it happens, it won't happen for quite some time, but i don't think we can assume it is not going to happen. the u.k. need a stronger currency, they can't buy one. why don't you just come down to the treasury and get secretary

yellen to make that call? >> that would probably be the most important player. we will certainly factor that into the calculus. tom: -- we speak right now -- jonathan: when you go through, you hear a whisper. open up 150, and that is kind of the way you think about it. at a certain point, you start to distrust the doj. you go back to the late 90's, the do date -- doj did was they waited to intervene, trying to make it even larger, pushing on a string. we could see that happening over the last couple of weeks.

lisa: when you talk about the fact that it really has to be the u.s. decision, it hinges on one of the things more painful for the u.s. that is to possibly coordinate some action. what is that level? >> i don't know if it is so much a level of the broader conditions. the more emerging-market crisis, the food and every situation become more concerning globally. the global price of the u.s. dollar is one of the most important factors in the macro economic environment. so huge, and a think if you're looking at a very precarious situation, even more precarious than we are in now, you have to do something. you pick your vintage, or is this time different? >> every crisis is different but so far it has been mostly the same.

at least down grades. of course, as the pain continues, we start to get buried. but we are not quite there yet. congratulations on that call earlier this year, thank you. cleaned our way through it pretty quickly. jonathan: the people going the other way have been quiet. we need to remember it is not just so much the factor, is the speed, and it is a big figure time performance.

jonathan: what we went to a moment ago, in and around i kind of effort. waiting for that next catalyst. lisa: the 75 point basis point rate hike, will it actually create a little pop, or won't it? and if it doesn't, then what? that could be a catalyst in and of itself. hiking into weakness isn't enough to give a boost to a currency that is responding more to economic outlook than it is to monetary policy. i think it is a tricky one at a time when, as eric was saying, u.s. is doing ok. when does the pain and the rest of the world become strong enough for the u.s. to respond more than two the inflationary outlooks driving the economy? jonathan:jonathan: you want a strong currency.

not everyone can have one. who wants to give up their strength? i'm not sure anyone wants to right. my response to the doj, do you need help? tom: the central banks are going to provide leadership and critically, they are going to be completely data dependence and not even in politics. what does the governor of the bank of england do, given a new prime minister that by some reports as a five day window to act? that is not in the textbooks. jonathan: i would say that the projections last time around did not include 170 billion pounds of aid. she is going to join us for more shortly. that conversation up in about 90 minutes time on bloomberg tv.

live from new york, on tv and radio, this is bloomberg. ritika: keeping you up-to-date with news from around the world, it is official, liz truss has become the new british prime minister. queen elizabeth came out to swear in a new governess. the two met in scotland. the u.s. justice department is deciding what to do next in the case of donald trump's home. a federal judge has granted the former president's request for a special master, a mutual third-party to review the documents. the justice department has not said whether it is going to appeal. the prime minister of ukraine is confident that european leaders will keep sanctions on russia

despite the challenges they face in energy markets. >> from european leaders, we have a sherman from european politics. -- assurement. ritika: -- keep fighting for a long period. 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. this is bloomberg.

>> unfortunately, good news in the labor market can be good news because the fed has to respond more. the fed is still going to be debating 50 or 75 basis points and i think he could end up very close to four by the end of the year. tom: leading our coverage on friday, randy crossan are, hugely valuable for us. 25.63. right on tuesday, foreign-exchange. a weaker yen, a stunning 142.28. tom: just surging cut -- lisa: just surging, what would

that do to the currency? tom: right now, gloom. ritika: a lot of gloom. just not abating when it comes to the stock market. remember, we are coming out after labor day. the expectation is that volume is really going to pick up. but so far if you look at this chart for a radio audience, it is just going down, down, down. it has been for the last year or so. the question is, does that continue ahead of the seasonably bearish month? september has been pretty horrible for the stock market. maybe this time will be exception. tom: toxic brew.

masters of businesses and podcast, also an important book out on the financial crisis. in the trenches of looking at performance in investment. earlier this morning, benjamin was on and we did not have time to get there is important note on the complete outperformance of index funds over active. it is absolutely stunning. there is ets double their size from 28 team. it continues, doesn't it? >> it is just an extension of a trend that dates back to the 2000. my theory is between the analyst scandal and the accounting firm and ice -- i view spending and all of that, at a certain point, mom that we have had enough. and then they said we don't want to play this game. the only way to win a game that you're up against a much smarter, stronger opponent is to not play. and so they said the hell with

stock picking it, we are just going to index and it has been incredibly successful for them. lisa: it has been. there is a question whether that will change or move forward. > we keep hearing that. every time there is inflow and outflow, it is just wait for the next fill in the blank. the next recession, the next crash, the next pullback. and it hasn't happened. this has been an unusually good year for active, but half of active is slightly outperforming their benchmarks. but most of the time, it is less than that. you know, maybe some factors are going to work their way in. i spoke with the bloomberg

intelligence etf analyst and it seems the general trend is toward the passive. maybe that is 50, 60, 70%. some factor funds, small-cap value, whatever. that seems to be a big trend amongst investors. lisa: i know that you are a stalwart of the big hold and stay investment in the market thesis. right now, we are facing shocks unlike we have seen in decades. we are looking at japanese yen the weakest going back to 1998. how did that change the investment thesis? >> remind me who forecast those events and then positioned themselves in the hands of it? some tiny percentage of investors managed to get that right. but they are few and far between and it is hard to see them do that consistently over time that

is why a lot of them constantly find themselves getting burned. very often these big events that people try to adjust around, it is reflected in the stock price. it is hard for any individual to beat the collective wisdom of the entire marketplace. very smart people, lots and lots of firepower. very few people can. tom: i've got about eight more questions here. i've said that before and been wronged, so i've got to be careful. thank you so much. it is back to work, it is after the summer, get into the habit. very, very important. lisa, i really don't know where to begin but i think i can make a statement that is a little inflammatory. the yen is in freefall. lisa: it seems to be falling

pretty dramatically. it is the new post-1998 low. how much are we looking at some sort of breakdown in a system where there aren't a lot of levers to be pulled? this is something we have been talking about with the possibility of a 90 level. because where else is the pressure going to be relieved? tom: the bloomberg total return index, there is a set of them. on price, we really haven't broken down the new, higher yield, lower price. but we are getting there. maybe this week. lisa: particularly on the short end of the curve. what you are seeing is a real bifurcation between the long and and short-term rates seeing some of the biggest rises they have seen in a coordinated fashion going back decades forever.

that is something that people are looking at. how much can the ecb raise rates by potentially 175 basis points by year end? tom: really interesting across equities, bonds, currencies and commodities. this is going to be very exciting tomorrow in the ecb meeting, and who knows from the united kingdom and from tokyo as well. this is bloomberg. stay with us. >> another special u.s. open update for bloomberg tv and radio from tennis channel. it was an amazing day for two americans at the u.s. open francis tf up clinched the biggest win of his career they victory over rafael the dull. the losses the spaniards first of the major after 16 straight quarters.

and firth american to reach the elite eight at the open 2018. and just about -- just cap a hula over petrick event of a. the new yorker moving onto the quarters at a grand slam for the first time in her career. and don't forget, tennis channel live at the u.s. open has all the news you need from the big apple and you can watch it there at 9:00 a.m. eastern.

>> this is bloomberg the open with jonathan ferro. jon: live from new york city, we began with a synchronized mass for the global market.