glal economy is in a very weak phase. >> it is no surprise to see the around the lack of an effort to curtail demand in this country. all we have had so far is a big effort, i say all because it is market is more optimistic. massive, to support people's >> clearly now they have sent ability to pay the bills but the signal they are going after doing little to curtail the demand. lisa: progrowth. inflation first and foremost. >> this is bloomberg it is just progrowth. you help spend and borrow less surveillance with tom keene, jonathan ferro, and lisa money and don't worry about balancing the budget. abramowicz. jonathan: you think cpi tuesday that is the theme we have heard >> the depth of the recession and a lot of people are saying it is different than europe, it from london is a bit weird? lisa: it is. will probably end up shower the is different than any kind of economic theory. one we feared. jonathan: from london for our tom: what does tuesday look like audience worldwide, good after the funeral of this queen? morning. this is bloomberg surveillance. how does the debate go in future slightly positive. tuesday? jonathan: i think almost a bit of a bounce. immediately. we will hear from the government a four day winning streak into tuesday. tom: cpi around the corner. and then we will hear from the bank of england. tom: i would take it down to our kit jukes with us in a few team coverage. our entire team has been looking minutes. at the sausages and a general -- i would suggest this is a different inflation report. it is the magnitude we could and a generous dollop of sauce. see.

jonathan: it is less degree into two price rises for the sausage roll. the federal reserve position. jonathan: you know how many they lisa: and we do not have fit sell a week? officials speaking. 2 million plus. it will be interesting to see lisa: is looking up greg's how markets react considering people are prepped for 75 basis points. tom: last night over a beverage sausage rolls to try to figure out how to weave it into here. [laughter] ♪ john said tom, you are in a silent period. jonathan: it would not be the first time we've had a big upside surprise on cpi and someone broke the quiet period with a lead to a decision. i am not saying that is going to happen. most people looking for a softer print. lisa: whether we see a new wall street journal article or not, it seems pretty clear. i could name the reporter. there is a question of whether we see any kind of reaction. i think it is more interesting that despite the hawkish nest bacon in some

purveyed equities at a time there so much uncertainty and concern. tom: we are still mourning the death of queen elizabeth. king charles will travel to ireland. republic of ireland 9.1% inflation. this report is of global interest. jonathan: without a doubt. whether it is 50 or 75 it is not the story at the moment. for this fed the story is 2023 and all of the pushback he received against rate hikes. lisa: and then you have the market which is saying we do not buy it. bank of america put out a note and i love the title. the title was how to trade this rally even if you don't believe in it and it sums up where we are at. people think we hate this. it makes no sense from a fundamental perspective. jonathan: let's whip through

some of the price action. equity futures shaping up as follows. equities firmer .4% on the s&p. yields back in four basis points to 300-3157. yesterday we came very close to 360. we are seeing -- lisa: we are seeing the dollar the best litmus paper. the best litmus paper for the mood on inflation. people seem to think inflation will be softening. at 8:30, the reason why this is a global report is because it sets up the world's biggest economy and where because it is so well-known about gasoline prices. we are looking not at the headlight that includes that figure, but other aspects of the world that are not continue to increase, particularly even in the united states. today queen elizabeth's coffin

travels to buckingham palace. this is incredibly poignant and has affected a lot of people because it is a woman who for 70 years led a stage through eras in which women were not as recognized. i say this because she was thought of as a mother figure and grandmother figure but she was also very powerful it is interesting to see the tributes poor and. at 1:00 the u.s. is planning to sell $18 billion of bonds. this matters. jonathan: i know it matters, you know it matters. lisa: it is like clockwork, they sell bonds, who cares, but this matters because the rolloff of the balance sheet is starting to gain momentum. is there going to be a much smaller pool of investors going to sweep in, especially of real yields rise. it matters. jonathan: kit jukes is with us.

jonathan: i think she got decent sleep last night, finally. as a main street bank, jonathan: may be a few hours pnc has helped over 7 million kids develop their passion for learning. and now we're providing 88 billion dollars to support underserved communities... ...helping us all move forward financially. pn- [announcer] imaginen mahaving fuller, thicker,. more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. short. they're personalized to match your own natural hair color and texture, so they'll blend right in for a natural, effortless look. call in the next five minutes and when you buy 500 strands, you get 500 strands free. call right now. (upbeat music) >> the depth of the recession which is looming is probably kit, walk us through what you going to end up shallower than what we could have peered. and the team are looking for. kit: lisa put it quite well. >> businesses are starting to roll over. >> it is still clear the global the headline is going to come down. the poor could be pernicious. economy is in a very weak phase. the main feature of the u.s. >> we have been the most economy right now is it is doing better than anybody thought it would be doing now six months surprised to see the margin is ago. the cycle is persisting. more optimistic than fed commentary. >> they have sent the signal the labor market is still tight. the ism data is robust. they are going after inflation first and foremost. >> this is bloomberg we know the fed will slow it. we just have to debate how much surveillance with tom keene, jonathan ferro, and lisa above 4% they have to go to slow it and then we worry that if abramowicz. jonathan: live from london, good they slow enough you get a hard landing later. morning, good morning. the narrative at the moment is this is bloomberg surveillance on tv and radio. soft landing increase in globally, but the difficulty for equity futures positive going into the cpi report 90 minutes the u.s. is the inflation data away. shows in the entrails is the tom keene is counting down and how many different languages?

lisa: i think 25. more they have to slow the economy with rate hikes now, the tom: google translate to the more the uncertain lags will rescue. i am enjoying our business focus bite us in 2023. tom: we were talking about the today. we pause in the morning for the makeup of inflation. queen. a serious event. service inflation. it gives us the luxury of you have a brilliant sentence in focusing on what we do. your note that we do not on the data. understand the formation of that is front and center for all inflation, how we come about of us. lisa: a lot of people are inflation. what is different? kit: most of history inflation wondering how much deceleration we will see on the top line. the other non-energy, nonfood is about goods, it is about wars costs, how much of a increasing? and pandemics, food shortages, andrew hollenhorst put it and then the rebuilding. beautifully. we went through the postwar until you see a broad-based period, unionized labor without decline in the pace of inflation it is not going to get the fed's globalization. attention. now we have a diverse labor jonathan: that is the story for force, of global economy. 2023. we have an energy crisis, we have food crisis, we are some market participants need to work out the difference between grabbing at straws for what the 50 and 75. do you think today is the

70's told us about inflation, difference between 50 and 75? trying to understand the 20 tom: i am exhausted by it and i 20's. a lot has changed in the way wages are formed, the way people was exhausted by it month ago. work, the way prices get you look at the makeup of decided. inflation. we know there is a lot of i will go back to block and inflation now because there is too much money,, -- too a few tackle, basic stuff, the world of david rosenberg, i will not goods -- so we have inflation focus on the financialization debate. now. jonathan: shelter is absolutely how that comes back to target, other than whacking the economy killer. lisa: they have not been rolling with a hammer, we are not sure. lisa: people said the u.s. lead out. there are some areas where there in inflation because they lead is starting to plateau. if you look at 12% or 50% rate in fiscal stimulus and had increases. people purchasing goods at a tom: did you see home time workers cannot sustain that. furnishings? is it sticking to europe? the rosenberg subdivisions they i keep hearing about fiscal come out at 8:30, michael mckee spending plans, whether the looks at all of this stuff and united kingdom, whether the what i know is home furnishings, mainland, continental europe, as they are not. you take a look at energy efforts to shore up housel they have one of the beautiful balance sheets. talking about boosting some of artworks, they look great on bloomberg radio.

home furnishings with a stupid the fiscal spending while also number. cutting taxes while also facing jonathan: the weakness in the off with a much higher rate u.s. dollar, to see sterling at interest regime. how do you base this off with europe leading on the fiscal 117 at one a leak -- what a week ago we were looking at 114. stimulus and inflation? lisa: here even seeing the kit: what you see from the japanese yen strengthen. jonathan: kind of. lisa: this is a story about fiscal stimulus is a program to protect people from the impact of the specific energy price increase. you are giving people money and disinflation and people getting excited about the potential, maybe we have seen peak giving money for the people we inflation. jonathan: jonathan: perhaps. got energy from so the peoples available disposable income futures on the s&p positive .6% slows enough to not slow the economy too much. going to the cpi report. in most goods and services we yields lower, negative four will crash and burn as a result basis points. of that. bear in mind at the front end we came close to 360. we have over 5% wage growth. we will have double-digit then we backed away by couple of inflation. basis points and we are doing we are not going to be spending that again this morning. lisa: peoples inflation like crazy in bars and restaurants for the next nine months. expectations are coming down and would we protect the economy and we saw that from the new york federal reserve survey which we increase the chance of a soft

showed inflation expectations landing. falling. we are looking for the 8:30 u.s. globally we still have a difficult problem because we are struggling to get output up fast cpi and for the month of august. enough to cope with what we have already done. jonathan: lisa mentioned the i am focused on the nonenergy, the nonfood costs, how much have fund manager survey from bank of america. one of the most crowded trades they declined and plateaued. going back to november 2020 when we will also be tracking queen it was about long u.s. tech. the moves we have seen, can you elizabeth's coffin, which is give me an idea about the traveling from st. giles cathedral to buckingham palace durability of this move? kit: it tells you a lot about with all of the tributes poured in and the royal family walking behind her. positioning. at 1:00 we get the u.s. selling there is a euphoric reaction to positive news from ukraine. $18 billion in 30 year bonds. ukraine news is good. i am interested in this even though tom is not. this is good news with higher volatility. it has happened before, it will happen again. both wings of the outcome of this conflict is more likely as that will be his response. i will say this is a very a result of this. interesting moment because the it is not a comfortable rollup of the federal reserve balance sheet is gaining steam. environment. the dollar can weaken with people talking about soft do you get more concern on the part of investors about a lack landings. of fed put or a lack of fed

we are willing to look through buying. something which you cannot jonathan: it qt and not q. week. analyze as anything other than a volatility increasing event. jonathan: good to see you. that also has consequences for the fiscal conversation. equity futures are positive. lisa: how do you finance a lot the dollar weaker. that will be the story going of these fiscal spending into the cpi. programs at the same rates that lisa: the dollar is weaker as do not become unfeasible and reach the rate you were talking people say everything is priced in. about? jonathan: are you looking forward to the option? this shows the dollar has drawn overdone and the japanese yen tom: the surveillance nap is will get back up. global. jonathan: we take one about that you're seeing a little bit of yen strength. time. jonathan: i can hear the doubt mona, let's start here. in your voice. lisa: kid shoots put it -- kit a conversation about whether this rally is just the bear juckes, but it, vladimir putin market rally we witnessed in the summer. what is the difference? mona: this rally is driven by -- jonathan: the chancellor anticipation of the number we will get at 8:30, which is a cpi print that will likely be below referring to them formerly the last month.

finance ministry that they were too focused on balancing the headline inflation likely to come down given what we are books and now focused on growth. tom: for so they say. seeing and gas prices and oil prices. all eyes will be on the core there is always a constraint. jonathan: for american figure. shelter and rent tends to be audiences, it is confusing. stickier. is it the growth us is we are getting offside to lower airline fares. we are probably poised for a supply-side advocat like larry kudlow talks about? do we know? decent number at 8:30. i don't know if we know the the story for the rest of the year is what direction of travel will inflation go. quality of the kind of policy it the fed wants to see not just is. jonathan: massive spending and tax cuts with double-digit one print lower, they want to inflation. perhaps more on the horizon. lisa: over to you, foreign see two for three or four prints lower. investor. jonathan: that is the question. if the fed can pause and tom: is cpi tuesday? financial condition start to ease, that is what we would a jonathan: he is loving it. more sustainable rally. until then we think volatility is more likely. tom: you have a huge advantage from london, this is bloomberg. with the representation of edward jones, they are nationwide. how crushed are the clients of

lisa: ukrainian forces have edward jones by this on a recaptured more than 2300 square national -- by this unimaginable miles in the east and south of the country this month according to president volodymyr zelenskyy. 8% or 9% inflation? mona: there are several pockets he said ukrainian troops are continuing to push forward. of this country still suffering meanwhile ukraine is appealing from inflation. for more weapons to build on its success. you think about the segmentation of the population. in europe natural gas prices those of the lower end of the fell for a third day to a seven-week low. spectrum, those living the european union is pushing paycheck-to-paycheck are feeling the 8% inflation to a larger ahead with its market intervention plan to ease the worst energy crisis in decades. extent that comes up in the grocery store bills, that comes the eu wants to cut power up in the gas pump. demands and cap excessive the good news is it is a very revenue of companies producing tangible move lower and we are electricity from sources other seeing it in gas prices at the than gas. pump, even parts of your grocery president biden is trying to store bill are looking better. capitalize on a sudden stretch of positive economic news. a little bit of optimism, and we his goal is to turn the democrats biggest liability into are seeing that come out and economic metrics when you think an election year selling point. about inflation expectations not the democrats bid to retain being anchored higher and moving control of both houses of in the right direction lower. congress has been boosted by when you look at things like the falling gas prices and signs ism prices paid index for both inflation may be easing. goldman sachs does not see china manufacturing and services rolling over dramatically.

shifting its covid zero policy when you look at the supply this year. chain indices heading downward. in a report published today we think momentum is moving in goldman says that stability will the right way. be preparing -- will be things like a cooling housing prevailing a narrative in the lead up to next month's key market, a potentially cooling labor market, they will take communist party meeting. more time to show up in the covid containment measures have figures, but we hope to see that intensified in recent days. towards year end. ubs plans to raise the dividends lisa: are you all in on soft for this year by 10%. the swiss bank also expects landing? mona: soft landing will still share repurchases will exceed a target of $5 billion. depend -- this is an ubs is returning capital to unprecedented fed cycle. investors after calling off the $1.4 billion acquisition of the fed does not have a great track record. wellsprings. global news 24 hours a day, on 11 of the last 14 cycles ended air and on quicktake by bloomberg, powered by more than 2700 in recession. journalists and analysts in more than 120 countries. i am lisa mateo. we are going up to a 4% terminal this is bloomberg. rate. ♪ there is a lag giveback from such dramatic fed rate hikes to the real economy. we anticipate a slowing economic momentum below trend for sure as we head towards year end. the probability of a full on recession remains low.

if we enter a downturn we do not see the scope for a deeper prolonged recessionary environment. jonathan: mona mahajan, we have heard that several times. always great to catch up with you. this soft landing, this argument got fuel from the payrolls report a number of fridays ago when the participation rate climbed, unemployment climbed, payrolls were still robust. that is just one data point. i will say this. this is the important part. this is about the journey towards 6% or 5% on inflation? ♪♪ energy demands are rising. and the effects are being felt everywhere. the journey from 5% towards target, which is 2%, is a that's why at chevron, different effort. we're increasing production in the permian basin by 15%. the fed is telling you, to and we're projected to reach 1 million barrels convince you we are back on trajectory towards two. of oil per day by 2025. we have to get rates up and stay there and wait, and we have to all while staying on track to reduce our carbon emissions intensity in the area. wait longer. lisa: the fear right now as they

because it's only human to tackle the challenges of today will go back to the 1970's, they to help ensure a brighter tomorrow. will move too quickly to loosen up financial conditions and loosen up monetary policy, and that he will get a resurgence because some of the dynamics have not been healed, and this goes to the question of understanding inflation that is different from the 1970's but feels much more pervasive that it has a long time. jonathan: this is what mohamed el-erian wrote about, the risk of a flip-flopping fed. tom: you may not get a flip-flopping fed. jonathan: jay powell saying he wants to avoid that at all costs. tom: i take great issue with the idea that american capitalism and the people of american cannot operate in a higher yield environment. they can. the 1970's was terrible. to move up to some form of neutrality and wait and monitor and see what happens is certainly doable. tom: one argument against that

comment i think this will resonate with lisa is the debt load. it is the increase in the debt load, predict lee on the sovereign, not just in america but worldwide. lisa: the argument against that, some people say it is crippling. you have a lot of countries that are trying to borrow. on the flipside the debt is with nations and not with households and that is a big difference. jonathan: is where the short and shallow idea comes in. in the next hour scott clements will join us. thank you. are you going to count us down in french to cpi? tom: un. jonathan: what language do they

speak in venezuela? 8% is still a real number. even a seven handle israel, too. cpi just round the corner. this is bloomberg. lisa: keeping you up-to-date with news from around the world, i am lisa mateo. ukrainian forces have recaptured more than 2300 miles in the east and south of the country this month. that is according to president floating near zelinski. he says ukrainian troops are continuing to push forward. bloomberg has learned germany will provide $68 billion in loan guarantees for struggling energy companies. the money will come from a font set up to help companies cope with the economic hit from the pandemic. germany is at the center of europe's energy crisis and there is concerned there'll be a wave of corporate bankruptcy. president biden is trying to

capitalize on a sudden stretch of positive economic news. his goal is to deter the democrats biggest political liability into an election year selling point. the democrats bid to retain control of both houses of congress has been boosted by falling gas prices and signs inflation may be easy. >> inflation may rise further in the latest inflation data comes out of 8:30 new york time. the near term. ubs expects share repurchases will exceed a target of $5 like all components added to the high number, energy price billion for 2022. ubs is returning excess capital to investors after calling off inflation is standing at close to 40%, illustrating the the $1.4 billion acquisition of magnitude of relative -- wells front. jonathan: the executive board global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more member of the ecb rather hawkish than 120 countries. i am lisa mateo. over the last couple of weeks or this is bloomberg. so. ♪ going into the cpi print to stateside, futures positive .5%. yields lower by four basis points.

backing away across the curve, especially on two, after coming close to 360 on the two year. the dollar showing weakness, the euro strength. tom: it is important to go into the real yield explosion we have seen and discussed the yields are pushing higher, but at the same time breakeven and the slope and the inertia force of various measurements of inflation, the so-called breakevens is tangible. jonathan: lisa has been talking about it. inflation expectations rolling over. lisa:, is that the story behind the dollar? how much is that the story behind some of the risk appetite tom:? tom:i think it is directly linked to risk appetite. jonathan: people talking more and more about the soft landing. tom: i think the question is where does inflation migrate?

the real question is what to do with 7%? right now we rip up the script. joining us is maria tadeo in brussels on america and the efforts in ukraine. a spectacular article in the new york times talking of u.s. defense at cachet and how we are helping ukraine with a tactical effort of their response to the russian invasion. from where you sit, how much is america and the other western nations at war with vladimir putin? maria: at war, they are not, and we are very careful to tell you we are not belligerents, we are not actively participating. we all know ukrainian forces use weapons delivered by allies. they say we have to do this because this is a country that is being attacked. ukraine did not initiate this war. we know intel has been key for

ukraine. we should also remind ourselves this battle is being fought and won by ukrainians. they have proven to be ineffective army. they took the lessons from the annexation of crimea and they have been on the battlefield more effective than many thought. in hindsight you see a lot of the early estimates about ukraine were wrong. this is a professional army that knows how to fight. tom: there has to be an assumed number of bodies russian needs to hold territory or to advance. it is an enormous number. what is your working number of the size of the military russian needs to make this work? maria: to meet that is the key question. if you follow russian media at this point, especially after what happened on saturday, they talk about how do we escalate, how do we respond to this?

a lot of the talk is we have to go from special operation to full war, and that means conscription, you have to tell russian men you have to go in die for your country. the issue, this is what vladimir putin has been careful not to do, when you are underpaid, when you have had a month training, when you're 18 and you are watching reality tv that looks like a war and then you were told to go fight against a professional army in ukraine, maybe that could spark social tension. this is why vladimir putin has to be careful to shield the public opinion and say they will not be conscription for the time being. lisa: at the same time you are seeing a preparation for nato nations with more conflict with russia. i think about the germans plucked from asian of their effort to become -- the german proclamation to become the military leader in europe. how is that going considering the huge departure from where

they've been over the past few decades. maria: it is a huge departure. we know the history lesson is they do not want to be a military power. this is a country that still has major war guilt. it comes up many times in conversations with german politicians. this has been a u-turn. a lot of countries in eastern europe will say i believe it when i see it. this is an army that has been >> now -- has been able to underinvested for a long time. they believe it when they will see it and they start to see money going into the army. jonathan: maria tadeo out of mitigate the loss of the gas brussels on the latest of the war in ukraine. prices that may become more complicated into 2023. this is something we've talked about of last couple of days of jonathan: we cap need out of the whether it actually makes a difference for policy, whether the sanctions would go away if cpi report in about an hour. we resolve this tomorrow. we caught up with -- we count lisa: basically, in a nutshell, you down to the cpi report in about an hour. no, it will not. andrew hallman horse looking nobody thinks everything will be brave -- andrew hollenhorst

fine, that natural gas will start throwing through nord stream 1. looking for a 75 basis point hike. a 5% move on the s&p. however, does it potentially remove some of the tail risk? yields lower, down five basis that is what people are talking about. points to 331 on the u.s. 10 jonathan: coming up later, we'll year. once again dollar weakness. catch up with andrew hallman euro-dollar 11 82. horst, the chief economist at on sterling, 1.17 through much citi. of this morning. tom: dow futures up over 200 andrew hollenhorst. tom: i am counting down. points. jonathan: 30 counting down to? vix 23. interesting to see what the vix does at 8:30. you have a lot more numbers that. right now maria tadeo is in brussels and joining us here with the view of st. paul's cathedral, lizzy burden joins 75 is what andrew hollenhorst is looking for. us, back from buckingham palace lisa: it is not just about what as the ceremonies for the queen move forward. happens at the meeting next it is a topic of the city, the week. you are saying that earlier. new chancellor of the exchequer you are saying it is going to be and some would say a purge by the new prime minister. what happens next year. this is a tricky moment because this is not equivalent in america.

you have a first-class guy out deceleration and some of the key of trinity cambridge who has inflation components does not mean we are out of the woods. we are still talking about an 8% been shown the door after 30 years of civil service to this headline number. nation. let's start, why was he shown we are not exactly in that safe territory. jonathan: tom is still counting. the door in the truss purge? tom: the breakfast place? lizzy: he goes all the way back jonathan: give already told me to gordon brown. it is the place. we just had breakfast. liz truss is making a statement. tom: we could eat breakfast. she said she is taking on the lisa: on air? orthodoxy at the treasury and the bank of england. jonathan: the food here is out -- tom: the food here is outstanding. jonathan: congratulations to the as one former government team that put together this set. economic put it to us it is a symbolic decapitation. late night into early morning. tom: we are in a hugely historic this is showing there is a new ruler in town but it leaves a part of london. queen victoria street and behind huge power vacuum at the top of us is st. paul's. the treasury at a time when you jonathan: very cool. have double-digit inflation, and live from london, with tom keene the worry is you are dismissing tom's follow-up but what about who will county down to the cpi all of the other people in the

treasury for the most employable report. lisa: for second breakfast. in the civil service who will now choose to quit. tom: your opinion on this? jonathan: knows what else. futures positive. this is bloomberg. ♪ jonathan: i think what lizzy is saying starts with boris johnson on his way out the door, you would ever that parting speech about the treasury. it seems like you laid the groundwork for liz truss to follow up. lizzy: the thickness will be actual alignment. this will be the closest alignment since the osborne-cameron days. that is what liz truss wants, and surely that is a good thing in an economic crisis, right? jonathan: it depends what you want to do. lisa: it also depends how much you support your economy. maria tadeo, i would love to get the compare and contrast with the european plan versus the u.k. plan for energy, which is to give aid in the u.k. for households. in the european union there is a

focus on curbing demand, directly targeting the demand and taking money from the profits of the big oil conglomerates. how much -- what details do we know? maria: we are about to find out because this is happening behind the scenes at a beaded led by ursula von der leyen as we speak. you hit the nail. it will be about taxation. they want to call it solidarity and contribution from fossil fuel companies and power generators that do not use gas. it is a story about demand disruption and what they say is pst. girl. you can do better. when supply is tight but also at least with your big-name wireless carrier. very expensive what you need to with xfinity mobile you can get unlimited for $30 per month do is use less power. to be the thing to watch for is on the nation's most reliable 5g network. the percentage, what kind of they can even save you hundreds a year production are they hoping to on your wireless bill over t-mobile, at&t, and verizon. get in the obvious question is how you implement it? wow. i can do better! yes you can! it is pure -- it is clear police i can do better, too! now you really can do better! will not show up to your house switch to the fastest mobile service - xfinity mobile. to see whether you're turning

off the heat. this is a question about big now with the best price on two lines of unlimited. just $30 a line. european buyers and big european companies. when people come, they say they've tried what is the incentive to get lots of diets, nothing's worked them to participate in demand destruction? or they've lost the same 10, 20, 50 pounds it is not just at any time of day. over and over again. they want to see it at peter they need a real solution. time's because this is when the i've always fought with 5-10 pounds all the time. bill is the highest. jonathan: it depends how long it eating all these different things and nothing's ever working. goes on for before people start checking thermostats. i've done the diets, all the diets. before golo, lizzy, the criticism people have i was barely eating but the weight wasn't going anywhere. level at this government is this the secret to losing weight and keeping it off government is not doing what the europeans are doing which is is managing insulin and glucose. curtailing demand, they have golo takes a systematic approach to eating come out with a massive fiscal that focuses on optimizing insulin levels. we tackle the cause of weight gain, -- do expect there to be some not just the symptom. policy to curtail demand around when you have good metabolic health, energy consumption? lizzy: it does not look like weight loss is easy. i always thought it would be so difficult this. to lose weight, the package is not targeted in but with golo, it wasn't. not asking people to turn off the weight just fell off. the lights, as they are in european cities. i have people come up to me all the time and ask me, we still have all of this "does it really work?" unnecessary energy consumption. and all i have to say is, "here i am. it works." my advice for everyone is to go with golo.

it is a blank check, the u.k. it will release your fat and it will release you. energy bailout. javier blas said it is the biggest short on the wholesale gas electricity market because it is a blank check, and documents bloomberg has seen say it could cost 200 billion pounds. that is the major criticism, along with truss throwing out the windfall tax and it will lie on borrowing. jonathan: perhaps it is not a one-off. lisa: they plan to do this in perpetuity. at what point afford investors say we are out? jonathan: yields up. lisa: another way to say yields up and currency is weaker. jonathan: we have talked about 75 from the ecb, the 75 we might get from the federal reserve next week. the day after it the bank of england's turn. tom: you just mentioned

jonathan: live from london, good culturally is different and the united kingdom is radically different than the structures of europe and america. morning. it is a separate and discrete counting you down to cpi debate away from powell. tuesday. tom keene doing alive plopped jonathan: is this just the down count -- countdown clock. beginning for this u.k. government? the intervention last week around energy, some people might you can hear it every now and then. what number are you on now? make the argument that reduces we are doing it in different intervention. languages. if you're to believe what this chancellor is about to do along with this prime minister, yields coming in a couple of perhaps that is another reason basis points. negative four basis points. for this bank of england to go more quickly. lisa: especially when you add on euro-dollar positive .4%. the unemployment figure we got earlier this morning. unemployment falling in the u.k.. this sounds like good news. lisa: it is a smaller workforce "we maintain appropriate stance. economic dan and investing getting higher wages. position -- then central-bank there are not enough people to fill the jobs. rhetoric and the data appears to tom: i happen to wonder by the be increasingly supportive of a soft landing." bronze hotel the night of brexit soft landing is the buzz word. when john was doing 15 hours in tom: the new phase. a row. jonathan: true story.

jonathan: i'm hearing more about tom: is this a nation affected a soft landing. lisa: that is because of the by brexit? lisa: we do not have 15 seconds deceleration in inflation which is why you are seeing more dollar weakness. the question is is inflation to talk about that. jonathan: lizzy burden and maria deceleration sufficient to give tadeo, thank you. people some sort of say? futures up .7%. jonathan: dr. waller says no. from london, this is bloomberg. i am trying to be serious. ♪ governor waller said no, he was pushing back. tom: he pushed back with great force. we should say this is a nation in morning. jonathan: that will come in waves. it will hit over the head on monday when we have the funeral service. tom: lizzy burden reporting from buckingham palace, little bit of lightness as the nation prepares for a funeral on monday. we prepare for a funeral for

andrew hollenhorst if he gets the inflation call wrong. he has been incredibly bold on a move to a higher interest rate regime. not so much how important is the cpi call this morning, but how does it relate to the cpi calls 30, 60, 90 days from now? andrew: i think that is the key question, not exactly what we get this morning, it it is widely shared expectations we will have a softer print in august. we had a softer print for july. the question is where is underlying inflation. the atlanta fed has a great dashboard and underlying as a business owner, inflation measures, all of these your bottom line is always top of mind. so start saving by switching to the mobile service indicating about 5% inflation, designed for small business: comcast business mobile. some above 6% inflation. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network.

if you look through the underlying inflationary with no line activation fees or term contracts. pressure, and it goes back to can we get a soft landing, we saving you up to $500 a year. have a tight labor market, we and it's only available to comcast business internet customers. have labor costs that are rising , that will show through to so boost your bottom line by switching today. higher prices. comcast business. powering possibilities. ™ jonathan: you think we are still underestimating the persistence of this story? andrew: we went through that last summer when we saw softer print and there was a lot of optimism we could be seeing inflation that was transitory. we have to be careful about not letting hope triumph over the reality of the situation. we all hope for a soft landing. i would hope that is what the economy can achieve. there is a possibility of achieving that. you will hear fed officials that emphasize that. it is a possibility, not a high probability. probably not the most realistic outcome.

jonathan: i want to ask you where inflation will be 12 months out. you have a decent idea of what the threshold is for this federal reserve to look around and say that is enough? andrew: one thing that has been useful is we have heard from a lot of fed officials, we had chair powell speaking at jackson hole being crystal clear about the desire to bring inflation down. how do you operationalize that? we heard from vice chair lael brainard last week saying i need to see several softer inflation prints, and in fed speak several means more than a couple. we may see two months of inflation. a series of softer inflation prints, and very important you see this broad-based. that is part of the lesson of last year or of inflation data that you have to look at the

problems. what you want to see is services , rents that are slowing down. we know house prices have slowed down. jonathon: the inflation report there are reasons to think you could see softer readings as we move into 2023. in america 60 minutes away. a rally in this equity market way too early for the fed to declare victory. continues to build. lisa: you think, and i hate over the last four days, higher by about 5%. yields are lower by about five saying this, do you think a soft landing looks more likely basis points. let's call it 331 on a 10-year because of how much prices have rolled over so much more than people previously expected? andrew: the issue is how broad code -- 10-year. across the curve, yields are is that decline in prices? lower. in the market, once more, all we are talking about certain categories of goods and it is that dollar strength. not that surprising given we had excessive demand for goods, and going softer, weaker, negative now that that demand is moving against the euro-dollar. tom: how rationalize 4200 spx? and shifting into the services sector, what i am increasingly

concerned about his upward price pressure for services. we are not a million miles away. we saw airfares that went up significantly. dear member q2? we will come off of those highs. maybe we'll to see a decline we were all worried about q3. jonathon: and them we rallied. again. tom: are we going to do it the question for me is are we again? jonathon: we will see if slowing down in a broad-based sense. this is just certain goods. chairman powell pushes back. we will ask you question i do not know if that is sufficient to say underlying something along the lines of inflation has slowed. saying financial conditions of even on the goods side we are what we need to get back on talking about shortages of energy and natural gas in europe. target. lisa: we had bear, them bold. we are talking about a potential railroad strike later this week in the u.s. there is acute upside risk to more bear than bowl. goods inflation we should be aware of. -- bill -- bull. lisa: based on your projections, where do you see inflation ending next year? have you tried this rally? it people are trying to game out basically summed up where we the likelihood of getting to a are. tom: is it good news or bad news 6% handle 8% handle by this year. that mark cabana is with us? what about 2023? andrew: no question we will we were certain it was good still be elevated. news.

it is 2023 when you look for mark cabana of bank of america, inflation to come up further. we see a pass for headline writes very brilliant, terse notes. mark, what is the sealer inflation and various measures of core inflation to get down into the 3% range. sentence of your research note this morning? >> that the fed is probably that would be quite an accomplishment if the fed was able to return inflation, which going to overdo it. would still be above target, but we have seen them very hawkish, a closer to target around 3%. with the labor market strength we have seen. that has caused us to revive our the issue is it looks to us to get there you will need at least path for the fed. we will be 4.25%. we think the fed will try to -- this idea we will bring down stick to this higher for longer mantra. they are going to see it inflation. you look atlanta fed wage softening in economic data. the tightening they are putting trackers. in today will risk overdoing it there is a lot of pressure in in the future, and that will probably result in a recession wages. and increase unemployment to 5%. it looks hard to us to see 3% inflation numbers without a significant loosening labor market. tom: if the dynamics of the the tighter they are today, the more likely they will have to behavioral movement from 8% or cut over that period of time. 9%, let's say it's nonlinear, we are about to get a reasonably the linearity or that was

invented by alan greenspan of a constructed ppi print. measured path, we have almost we think we will see headlines become onboard by that. over a month by month basis. -- we have almost become this is the type of inflation unmoored. the fed needs to see. how unmeasured is our response this will be the start of a trend lower in inflation. to inflation? andrew: quite unmeasured in the the fed is sounding very, very hawkish. we do see that the fed may said to have central banks trying to do two things, and overdo it. we do see risks that there is a this is true in the u.s. andrew globally. recession next year. we do see risks that there will one component is trying to get be continued headway more policy rates up to a level more broadway. -- more broadly. consistent with where inflation jonathon: do you have a decent is running. you usually think policy rates understanding of what the threshold is? usually need to get up around >> right now, it seems very, the level of inflation. that is leading to larger hikes. the second issue is credibility, very high. if i had to point to one and you're going into these meetings with markets looking indicator and only one, i would point to the labor market. it really seems like the fed for what you will do, the public wants to see material softening looking at what you will do. in the labor market. it is the messaging as well as they are probably somewhat cautiously optimistic behind the policy action. closed doors that inflation will that is part of why you are be moderating.

seeing a string of 75 basis most economists think that these point rate hikes. it is to catch up to where policy rates should be, but it is also to send that message. expectations, they debate this. the market also anticipates we have chair powell through his this. but the fed probably won't trust that until they see the labor rhetoric. markets softened more next week we will see fit meaningfully. it certainly seems like the fed is dead set on ensuring that officials try to do that through their policy. jonathan: andrew hallman horst, labor market slowdown. good to catch up -- andrew they will keep rates as highs it takes in order to get that. hollenhorst, good to catch up. that just increases the risk of a hard landing or a recession in i know you're looking for 75 the future. i think they are focused likely right now more singularly on the basis points. the policy maker is saying one labor market. certainly, that is where we have thing. seen stronger data over the july the markets are just looking for the downshift. period, over the last month or let's face it. two. that is what has really caused them to shift their tone and i think you're going to get a become more hawkish. lisa: a lot of people are signal of the downshift in this news conference. lisa: could if they do, what expecting the cpi print to be kind of economic pain has to lower, not higher and it gives accompany that? the sense that there is an inflationary feel. what could cause the fed to move how much of that is actually due away from raising rates and actually lower them? to the tightening in monetary

policy? >> we think a lot of it has to it would have to be economic pain they see causing problems. do with lower energy prices. i heard you earlier on this program talking about the very it might make them a little more important distinction between comfortable. jonathan: -- tom: i did my headline drivers, goods drivers, and services drivers. we think that the fed wants to second breakfast. see a little bit more of easing this parlor game of getting rates up. on the services side. lower oer, lower inflation with this is a modern insanity. jonathan: it is increasingly the travel sensitive sections of frustrating, what is happening. the economy. we think that is what they're going to be looking for. the fed is trying to maintain financial conditions to bring no doubt the tightening conditions we have seen is playing part of the broad inflation back towards target. economic consideration that is the problem is every time you get a sniff of some kind of soft underway. if you look, financial landing, financial condition conditions are a bit tighter. start to loosen. i would not say that it is lisa: this is the reason why we had people saying it is game notable by any stretch. i do worry that this is a fed theory. that once to see even more either the fed wants us to tightening of financial conditions, in order to have faith that they will be able to believe they will be hawkish but achieve their 2% inflation target.

they will not actually be hawkish. certainly, there is a risk with in europe you have the ecb still the fed continuing to sound saying they do not see a hawkish, and that is a headwind recession and everyone else is for risk assets. doubling down on it. lisa: another way to translate blackrock's wei li came out this is to say they might want with a note saying there is a stocks to go down a little more to give comfort. recession, the energy costs are there is a question of how long going to cause a recession. jonathan: it is difficult for a it is going to take for the full effect of the tightening to be born out in markets and economies. policymaker to forecast a recession and say those words out loud. i think the only one who has by the time they start seeing the effects, it will be too late done it is the one right here, to turn around too quickly. the one just around the corner, how much will the runoff of the the bank of england and governor balance sheets tightening that bailey. tom: are they just around the is accelerating this week really corner? turbocharge some of those effects? is that the guy that waved at >> you are certainly right. me? jonathan: you think governor we are seeing the fed tightening bailey saw you? tom: i think he waved at me. kicking into high gear here, with broad based expectations jonathan: did you remind you the for another 75 basis points and decision is next week? the increase in the balance tom: is down to the fed, which sheet runoff, up to the maximum is a big deal. jonathan: futures positive. amount. to date, we don't think that qt cpi just around the corner. has had much of an impact.

this is bloomberg. lisa: keeping you up-to-date we are still somewhat cautiously optimistic that over the next with news from around the world couple of quarters, the qt with the first word, i am lisa impact is not really going to be mateo. the ukrainian president is particularly heavily felt on the market. claiming success for his forces in the counteroffensive's. part of this reason is because we do think that there is excess so wednesday says ukrainian troops -- president zelenskyy liquidity in the banking system. banks are still holding a lot of says ukrainian troops have captured more than 2300 square miles. excess, unwanted reserves. russian forces have hit ukraine's energy infrastructure, leaving people in the dark. qt helps them get rid of those. inflation in the u.s. slowed for the early stages of qt, we don't the second month in around. think those will be very consequential. there is unlikely to prevent the the time we get to the first fed from delivering another half of next year, maybe q1, we jumbo interest rate hike. in a bloomberg survey the think you will start to see more bank deposit competition. economist forecast and 8.1% rise that will be driving short-term in prices last month from a year earlier. the consumer price index comes interest rates moderately higher. that is probably going to bite a out of 8:30 new york time. little bit more. we do think the qt matters. it is probably just going to bloomberg has learned the take a little while before it justice department has subpoenaed dozens of president starts to bite. tom: i want you to help jonathan trump's former campaign operatives and allies. ferro here. it is part of an effort to he is doing this chart here on collect information related to friday on his way out.

the plot overturn the 2020 election. it will be a great view at the a lawyer calls it a fishing expedition. airport. the twitter whistleblower who right now, a nominal yield was warning of security flaws moving, and this is stunning. will take his case to congress. there is an initial force with his testimony could further complicate the legal battle between twitter and elon musk. the breakevens that is an act of elon musk is trying to back out god. what does that mean for lower of a $44 billion agreement to breakevens right now? >> it means policy mistake. acquire the social media company. the testimony comes on the same the fed is tightening in day twitter shareholders are set to vote on the deal. anticipation that inflation will remain persistent and they feel global news 24 hours a day, on like they really need to be air and on quicktake by aggressive in order to bring it bloomberg, powered by more than 2700 down. journalists and analysts in more than 120 countries. i am lisa mateo. but it strikes us that certainly this is bloomberg. ♪ the tips market is not reflecting elevated expectation of runaway inflation. if anything, the market continues to believe that fred is credible. it is not just the tips market. it is also inflation expectations surveys. we saw that clearly in the new york fed surveys yesterday. inflation expectations are declining as the fed ramps up

there hawkish in us. that is doing in the rates market is causing real rates to rise. that real rate rise matters more for the broad set of financial conditions. if industries are rising just because inflation is elevated, that should have a fairly limited impact on broader financial markets. but if real rates are rising, that has a much more meaningful impact. it packs a heavier tightening punch into markets more broadly. that is what we are seeing. the higher the real rates rise, the greater the potential the economy starts to show signs of moderating and that financial conditions will start -- will continue to be tight or continue to be challenged. things like that or what the fed is going after. we do worry to some extent that the fed is going to go too far too fast. we think that it will become more inverted as a result of this. we do think the more tightening they do today, greater the risk they will have to cut tomorrow. again, it is somewhat ironic in

the higher for longer mantra that the fed has been putting out. this aggressiveness today really increases the chance that the fed will be cutting in 2023 and 2024. jonathon: when you speak to the rest of the team, have you been surprised by the equity side? has this led to lower equity markets, given they are rallying again? >> we have been somewhat surprised by that. part of this may be due to conditioning. part of this may be due to an expectation that inflation will moderate and that that will allow for the fed to pivot a little bit sooner. very similar to what we saw in the early summer, some of that equity market rally and credit spread, again, if financial conditions continue to remain around these levels, it just makes the risk that the fed feels like they need to tighten by more and frontload it, in

order to get that sustained tightening of conditions in order to slow the economy and bring down inflation. jonathon: mark, fantastic. a bit of a clinic there. mark cabana, thanks america global research. a war between the equity markets. >> basically, the more the equity market shrugs off the fed [crosstalking] jonathon: you of this, don't you, tom? tom: it's great. i am looking at the bloomberg financial conditions. the last couple of days have pushed against were chairman powell wants to go. [crosstalking] jonathon: up .7%. equities up. lisa: [laughter] thank you.

♪ >> keeping up-to-date with news from around the world. ukrainian president volodymyr zelenskyy is claiming success for his counteroffensive. he says ukrainian troops have now recaptured more than 2300 square miles in the east and south of the country this month. russian forces have hit ukrainian infrastructure, leaving thousands of people in the dark. inflation in the u.s. have probably slowed for the second month in a row, but that is unlikely to prevent the fed from delivering another jumbo interest rate hike next year. economists forecast and a .1% rise in prices last month from a year earlier. the consumer price index comes down at a: 30 new york time. >> where in the camp inflation will accelerate. the justice department has they will raise rates by another subpoenaed dozens of former president trump's campaign 75, pushing the funds rate to operatives and allies. it is part of an effort to three. that is 300 basis points in six collect information related to

months off zero. jonathan: they have america's the attempt overturn the 2020 election. of those come the new york police commissioner, calling it fundamental fixed income at blackrock making the point we a fishing expedition. have a lot of work in a short amount of time at this federal reserve as they play catch up to bring inflation down. a fire has quickly started a equity futures going to the cpi report firmer. search for someone to take over yields are lower by four basis points. one company. the euro is stronger. the dollar is weaker. becoming ceo in 2016, the four divisive gates of the s&p causeway expedition has been a into tuesday. four days of gains back to early huge legal headache. i am mark crumpton, with bloomberg's "first word news." -- [no audio] july. lisa: things remind people a lot global news 24 hours a day, on air and on bloomberg quicktake, of july because there's not a powered by more than 2700 journalists and analysts in over lot of liquidity. 120 countries. this is bloomberg. tom: i think it is a short ♪ recovery, but it has to be more than that. is it like june where you go up and go down, or is there something different this time? jonathan: hit on the head by

this federal reserve and neel kashkari. perhaps this market should not be rally. tom: there are a lot of bears that say that was harsh. let's look at oil with regina mayor, steeped in all of the game theory at rice university. i want to focus on the game theory of president biden and one chart which is our so-called strategic oil reserve. the proper scientific word is the volume we have in reserve has truly cratered. what does that mean for america? regina: i think we've reached a tipping point where it is time to focus on refilling the strategic petroleum reserve because it is at an all-time low. i think we are out of the woods from a u.s. energy price pressure that was driving inflation and the things politicians were worried about

coming into the midterms and i was surprised that we see gasoline prices consistently go down and down that i believe if anyone was taking my advice it is time to start focusing on restocking and getting it a little above where it is today. tom: can you tell me how much a gallon of gas will go up as president biden restocks that reserve? $.20 a gallon, $.52 a gallon? regina: i think we are out of the woods on gas prices. i think we are done with summer driving season, refineries are up and running again, i am less worried about what that would do immediately to gas prices. i will say that what the administration did with regard to releasing fuel from the spr was one of the key things the energy industry will say made a

material difference in the summer peak season when we had gasoline prices at their peak in june. lisa: that is the story in the united states. you're in portugal and we are in london and the focus is on energy and is a very different concerned because it is not all gasoline or crude, it is natural gas, it is some of the issues with nuclear energy in france. from your perspective, is the plant coming to shape from the european union of trying to cap demand while also providing profits from the energy companies to households, does this make sense, doesn't feel feasible? regina: the eu has made quite a bit of progress. we have seen european gas prices drop, it is 40% off its peak august 26. it is still eight times higher than normal. gas storage is up 84% and it is

slightly above where it is expected to be. countries have been working on securing as much supply as possible. now they are looking at packages to reduce demand and cap what that would do to household incomes. it will cost a lot of money. national budgets will be strained. there will be a lot of different things that happened. i would not say they are out of the woods because if it is a cold winter and you see asian demand coming back in, that is don't like surprises? [ watch vibrates ] proactive notifications from fidelity keep you tuned in all day long. where things get really critical. so when something happens that could affect your portfolio, not out of the woods, but the things they have been doing are you can act quickly. that's decision tech, only from fidelity. having a measurable impact. lisa: a measurable impact in that we are seeing natural gas prices come down. is that in fact going to lower them further, or is it going to >> there is a lot of momentum still in the core. keep them here, keep it to a persistent crisis rather than i think this one rating is not

going to be enough to dissuade something that is much more acute and immediately needing to be addressed? the effect from the large regina: we are not out of the movement in the next meeting, woods. even if it is a bit softer. i think the pullback is probably jonathon: the director of economic studies at an overemphasized with what is happening in ukraine. i think there is exuberance about what happened and some institution. people thinking the war might be over and we can stop weaponized got into that cpi report just around the corner, a: 30 eastern -- we can stop weaponizing gas. time. i do not see that at all. tom: 75 basis points is a good i see the eu working on a comprehensive package to work on statement of a strong america. demand and supply. jonathon: if it remains buoyant no doubt it will have a material and strong. we discussed many times that i impact on the economy. executives in portugal energy am alan -- i imagine a balance costs are $1 billion over the check. tom: we will change the dialogue expected energy costs. here. this is a day that we move away all of that will have a material impact on earnings, to the ceremonies for the death of the queen of england. competitiveness, they will shut down factories because it is too expensive to run them. jonathan: we're already seeing this is from belfast in northern ireland.

that and we could see more going it is substantial. deeper into winter. giving us perspective today on regina mayor out of portugal. paris is stephen carroll, who that is the problem for the europeans, we will see a wave of industry shutdowns as we go joins us from bloomberg news. deeper and deeper into winter. what did brexit do to king i think it is unrealistic to expect them to be able to tackle this problem fully. charles's northern ireland? it is whether they can next winter or the one after that. >> a change things across lisa: not just an issue of ireland arguably irreparably. curbing demand in the near term and trying to help households. it is not -- it is also an issue of how to build out the in 2011, it was a high point for infrastructure. anne-marie was talking about how relations. a lot of it is coming from the united states which creates new the queen open her speech in irish with four words. alliances at a time there is questionable leadership in a lot of different places in the world. jonathan: and new complaints if the u.s. consumer has to carry out gas. many have been directly in favor of their relations with ireland. one of the biggest complaints exit changed the game because i've heard since we've been here in london is the complaint you now have very different trade relations with the way northern ireland functions. they are a special place where they are continuing a single market, trading rules with the

u.k. is still an issue. it is something the promised or has focused on as well. it is now a question of irish unity back on the table in a way that we haven't seen before relations had been cemented on the island of ireland. the question being asked more now than ever thought before. tom: he studied with a great italian at the university of chicago, who is wonderful on american capitalism. how do you define irish capitalism? >> if you think about of the companies [crosstalking] that have headquarters here [crosstalking] [crosstalking] if you asked them, they say no. their taxes raising 12.5%. tom: does that [crosstalking] >> is still underway.

it is rising to the european level now because it seems to have gone off the radar. it is still an effort led in paris that they are trying to create structure for this. we know that france has been pushing very hard for this and it is a really big step for them to get countries like ireland on board for a minimum corporate tax. they had agreed on the minimum taxation elements, but there still isn't political agreement everywhere. you need a global deal for it to be effective. one country cannot try to outbid the other. jonathon: can you talk to us about the popularity of the monarchy in northern ireland? >> is probably the one place in the united kingdom or the monarchy is not necessarily going to be universally welcome, although relations have improved significantly over the years. this is charles's 40th visit to the island. it is interesting because it is the first time that there is

someone from the republican tradition in northern ireland at the moment not there for their own political difficulties. the idea of having someone standing up last week and paying tribute to queen elizabeth as a gracious leader. they did not attend events held in northern ireland, loyal to the british monarch, but there leaving things in northern ireland today. lisa: with respect to the region, the question of unity has been seen throughout the past couple of days. can this monarch be a uniting feature at a time when there is that kind of skepticism or do you think there will be this feeling, this desire, for continuity enough to get people a different perspective? >> i'm not sure the queen as uniting figure ever held that

much sway in northern ireland. argument have been made in recent years with the number of visits of acquainted northern ireland, seeing a positive relationship there. it may be the same for charles. he doesn't really have a relationship with the place, but this is a political matter around the monarchy as well. jonathon: fantastic to see you in person. thank you for being on the show. tom, another phase in the sequence, going forward to next monday. tom: next monday at the funeral service, mr. biden will attend. i would prepare the hundreds of thousands scheduled to walk by the queen's casket. i would prepare for something equivalent to what we saw in 1963 in the united states. this should be an extraordinary turnout of world leaders. jonathon: overwhelming. lisa, you and i went through westminster and into the palace of the we can. can you imagine monday? london

right now is packed. lisa: it is packed. i think they have brought in 10,000 police officers to london. in a number of troops as well, to help with crowd control. i love the article in the "wall street journal" about police asking people to stop cutting through barriers at buckingham palace because they are not disposable. jonathon: i would say rather selfishly, football is being canceled. you mention the resources. tom, a lot of these football matches kick go-ahead [crosstalking] because it takes away from [crosstalking] [crosstalking] some fans want to pay tribute to the queen. tom: but they will starting next tuesday. jonathon: a lot of games canceled. there are a lot more important things. lisa: you wanted to go to said games, so that might factor into that. [laughter]

[crosstalking] jonathon: inflation, 8%. [crosstalking] tom: it was weird for more cabana, talking the bank of america line. this is about parsing away from the financial away -- financial is a, away from goods and inflation. as mr. cabana mention, this would be a huge deal. jonathon: the word, i think at the moment, is persistence. that is for energy. that is something we could use as well for the federal reserve and inflation. how long will this persist? lisa: not only shelter, but also employment. when you take a look at the restructuring of the labor market, how much of that is going to be sticky, with people to manning higher wages and not coming back to the workforce as quickly? [crosstalking] it is in new york city. jonathon: fantastic. had to get it right, make sure.

we are 35 minutes away from inflation and america, looking for something in and around 8%. we will see if we are on call month on month. this is bloomberg. ♪

♪ >> the last two weeks we've really seen an influx of behavior. >> inflation needs to push high. >> we are in the camp that inflation is going to decelerate. >> the fed is going to see a real slowdown in the labor market. >> just changing the timing of things. announcer: this is "bloomberg surveillance" with tom, jonathan ferro and lisa abramowicz. jonathan: live from london and our audience worldwide, good

morning to you, thanks for watching "bloomberg serveillance" live on tv and radio. featured on the s&p up 7/10 of 1%. tom: i was anticipating inflation, what kind of magnitude did we get, the headline data? jon, i would go right away to the data margins on goods and services. that dynamic is critical. jonathan: the headline, year-over-year, the bigger picture, very focused on month over month. lisa: i think you can go even further than that. they are going to be looking at wages. they are going to be looking at services. they are going to be looking at the granularity of each

component. jonathan: and when they take in the totality of the data, 75. lisa: pretty much everyone is saying that. it is 75. if it came out as 50, that would be viewed as incredibly dovish, even though it is a massive height. jonathan: and that is with the markets focus on. tom: i'm going to move on. i'm going to move to november and in 2023, we have no clue. jonathan: bank of america is not saying the session for next year.

talking about rate cuts. rate cuts after the fact, has the skull too far? lisa: this is sort of a conundrum. there is some pain that you haven't necessarily seen priced in. this is the mike wilson view over at morgan stanley. here comes the earnings revision. tom: if you do that, all of a sudden a normal 4% growth becomes 4.6%, and that is of marginal over revenues. lisa: the margin compression, if you start to see wages, basically consumers pushing back on the prices. tom:

-- jonathan: are you in trouble? no idea where the dow is. lisa: months to go. jonathan: you mentioned mike wilson, that means we got umoja -- mention jp morgan. much more of that in the data. what do you make of that? lisa: he can laugh because he is a perpetual bull. i am perpetually bearish in my outlook. i mean, it is not that i am bearish -- jonathan: realistic. lisa: i am realistic with a little bit of skepticism. moving on, the point is really about the soft landing, it is not just him.

jonathan: it is never about whether things are good or bad for markets, it is about whether they are better or worse. lisa: and it is multifaceted. it is airplane tickets. it is cars. now the question is services. tom: socially looking into all this mumbo-jumbo, it is oer. that is a huge part. jonathan: i love that viewers know what we are talking about. tom: i'm frontloading it to get out in front of whatever comes our way. jonathan: the chief investment

strategist during this now. scott, what are you looking for? scott: i think we are going to get further evidence that inflation actually peaked in june. what is really important are the ingredients more so than the headline. we will be continuing to see relief particularly on the goods and services. what we are anticipating is more relief in energy and we are seeing that in the underlying commodities market. probably more important than any of the numbers would be the fair -- narrative the fed draft surrounded. that would provide some insight into whether or not the fed is contemplating -- dare i use the word tapering in november and december to set back the 50 basis point, 25 basis point hike with this tightening going by early. so all the english majors are

going to parse the fed commentary next week, probably more so than econ majors look at the numbers themselves. tom: -- hotel in regency, the same debate that there always is now, you can't fix the bottom. are we overburdened with cash right now as we invest in 2025? >> our clients are playfully invested in cash. investors in general are very long cash. i would consider that a contrary indicator. in terms of unspent fuel or assets on the sideline, characterize it however you want. i think that is fuel for the market when the narrative begins to improve. if we actually get some increasing inflation, increasing

cost, that is closer to the end of this tightening cycle. the beginning, there was plenty of cash out there to put behind them. lisa: so are you bullish? scott: i would say we are. that is not a statement about september returned or even the end of the year, but we are looking at a lot of opportunities in equities that have been unfairly pushed down in the rest of the market, particularly in the first half of this year. there are plenty of opportunities for people building portfolios in the long run. that is investing comment, not a trading comment. jonathan: can you tell us where stocks are getting? scott: we keep those a firm secret that there is a lot more opportunity in the mid-cap and

small-cap domestic space. in general, the smaller companies are more geared toward domestic economic activity, and they are less exposed to the strength of the dollar which i think will be the big story as reports begin to come out. jonathan: scott, one final point on small caps. what of the two things. foreign currency back into the u.s., the difficulty in china -- the difficulty in europe. lisa: they are the first to start recovering.

jonathan: -- actively manage them. tom: a brilliant summation of the failure of -- management. jonathan: the more you hear about it, the argument here is this is the moment. if you believe in the mechanics of the index based on the s&p 500 -- tom: if you are running an index fund off the dow. lisa: -- active management.

i do think two year point factor investing has been catching on. [over talk] tom: jon and i are just sitting on the other side of st. paul's cathedral. jonathan: we are going to talk about opec's latest report. [laughter] >> news from around the world, this is first word. a look at the latest inflation

numbers for the u.s. less than 20 minutes from now. inflation data slowed for the second month a new row, but that is unlikely to prevent the fed from delivering another jumbo interest rate hike. economists forecast 8.1% rise in prices last month from a year earlier. ukrainian forces have recaptured more than 2300 miles in the east and south of the country so far this month. that is according to volodymyr zelenskyy. meanwhile, ukraine is -- on its recent success. u.s. retailers will see slower sales growth this holiday season because of inflation. increased in holiday sales. prices are expected to drive more consumers online. the single out passenger jet could be certified this month according to look him media.

a commercial flight from 14 years after development began. and ubs plans to raise dividend by 10%. ups is returning capital to investors after the acquisition of wealth front. 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.

>> shifted to points from

inflation better than expected. inflation has to be an absolute basis lower. the chance for expectations away from 2%. >> coming up, -- steve investment officer. seven tens of 1% on the s&p 500. yields are coming down. once again, what you're witnessing this morning, what you have seen over the last few days, euro-dollar with half of 1%. fruit positive. tom: jon mentioned earlier a monthly inflation data will be

available this year and a good 11 minutes as well. conversation of the day or the week on oil. $150 per barrel, there is an outline, the head of energy strategy. yes, the prices cut away, but the underlying fundamentals exist. is it just simply -- flat on the back? >> you have -- in terms of the trajectory of demand. continuing to exacerbate supply outlook.

future production, particularly the majors. essentially kicking the can down the road in terms of the fundamentals. in the meantime, ultimately taking advantage of some of the slowdown we have seen. >> when we spoke with the last time, we spoke about this inability for a lot of oil producers to actually produce enough oil. that has really not factored in that potential shortfall. saudi arabia being the nation which produces oil increasing production by more than 11 million barrels per day, basically showing the capacity to increase output, does that give you any confidence? >> what you have is essentially --.

subsidizing the market in your price. that is a limited amount of reserve. but the reality is we can't just rely on opec and saudi. logistic supply chain issues, it is amazing. you've put it back together again and it is just not as effective. and then you are left with everybody else. they are doing everything but investing in oil, and that is particularly because of all the uncertainty.

that they've more lines, it can't be just opec. we are going to see a structural deficit that can't be managed quickly enough to ensure. lisa: does anything make you question a super cycle thesis at a time when you have got morgan stanley moving away from some of the previous forecast and actually cutting the near-term outlooks, crude prices. are you doing the same, or are you doubling down? >> we are probably in the last encampment. doubling, tripling the revision. i think there is a degree of confusion as to where demand was in the median term.

we still believe the market was continuing to grow. if that is right, and we have a shortage of all fuels, it can't be coal, it can't be gas. it basically means we are going to see a reflex and oil significantly higher. tom: i think we have to speak of the complement of europe and the hope and prayer of finding energy in the next 12 months, the next six months, maybe even the next six years. do you have an optimism in your piece that plans on keeping you warm this winter?

we've had 90% recast capacity. the issue is not this week and next week. and then we start the think how can we actually, structurally fix this? if anything, i am more concerned of at how you go into the second half, how we manage as china comes back in some ways -- if you have lockdowns, then we will have deficits in europe and energy which is why we startled to take numbers down on demand. all we can see his oil demand,

particularly for the cheapest fuel. -- of jp morgan security. are we going to have to face another winter of this? that is basically the argument. can you imagine the energy price in a world if we didn't have covid question >> and literally sit on my coffee people at home in the walk-up 100 piece chicken. it is a global essay and it is global dynamics. -- when we get to the reality comes the reality -- away -- 4.5 minutes away now. thanks for that.

futures positive. yields down.

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jonathan: the report underway, diving into the equity future, -- 1%. yields are lower on the 10 year. the euro-dollar, 101.68. waiting for that report to come out. isn't that the case? it is coming out a little bit higher than anticipated, a 10th of 1% toward the month of august and the headline number in less than 0.1 negative reading. a little bit higher, we will check it in the details. the court, which matters more to a lot of people, 6/10 of 1%,

that is double last month and double what is expected, pushing the year-over-year rate to 6.3% from 5.9%. last month the expectation was for a sick .1% move. bad news on inflation here, everybody was kind of expecting defending anyway. quick look at what some of the increases come from. this was supposed to be the big wildcard, gasoline down. now, it is only up 25.6% over the year. that is probably one of this -- disappointments in this number. there was a forecast that they would be down as much as 1% in the index, so that is another

disappointment. prices do not fall as much as the wholesale price index, and then the shelter, the rent component that everybody has been concerned about that keeps rising even faster up 7/10 of 1% after a half a percent move last month and year-over-year basis, costs of 6.2%. we are a long way from seeing that inflation is conquered and has peaked, and so the fed has still more work to do. a 75 basis point move. thank you. thank you for telling us that news conference. lisa looking at equity markets lower. another negative by 1.35%.

the work we are doing with the front-end of the yield curve right now, price increase. yields much, much higher. which begs the question for the meeting after and the meeting after, do we go back down to 25, or do we stay at 75 basis point? a lot of officials are saying they want to keep rates probably close to 4% for a while. if you wanted to see a persisting string of economic data, data points in the federal reserve. month over month, the change the conversation. -- just with an four -- tom: just within four basis points.

basically, plus 200, 400. a huge disappointment. what was the landing we had earlier this morning? jonathan: soft. fed chair jay powell and the governor, the federal reserve, this is exactly what we are talking about. lisa: this is not about fed officials, this is about american markets. the market heading up to what the fed is looking at, and that will be the discussion for the remainder of the day. i think that is what is going to drive the trading edge. jonathan: equities down, about an hour away. we talked about that move to the front-end of the yield curve. that is the fresh i, the

treasury market. the chief economist over at wells fargo standing by. you are forecasted for a much, much hotter cpi trend. >> if there is any doubt at all about 75, they are definitely going 75. we thought they would be stepping it back to 50 in november. at this point, he would say 75 is certainly on the table. tom: how do you take this data over the real economy? what do the numbers signal about potential slowdown in economic growth? >> there's two things going on. one is that inflation is going

to continue to into nominal income. if you're looking at real, disposable income year-over-year, at least in july, it was down 3.7%. you can't continue to have consumer spending grow. the second part, it is sending the fed into overdrive. soon they will make a policy mistake and if we are talking 75, 75, they're going to eventually put that economy into recession. "bloomberg serveillance" why do most -- >> why do most of all forecasters get this wrong? >> we were above consensus but we were not at 0.6. i think the big thing here that is for the pushing and a lot of this, and this is why it is going to be hard to bring inflation down in the near term,

we also know what has happened over the last year or so. housing phrase he had exploded. the problem is it is going to continue to come in as well. that is going to keep inflation rates elevated for the much more foreseeable future. jonathan: with two or three inflation reports to rethink the trajectory of rate hikes. do you think this really disrupts their ability to say we would go in a different direction? >> obviously, we've got a lot of data coming out, so we will see. but if they want to see two or three soft print in a row, 75 obviously is on the table. we will see what happens to the real economy.

if edc slowing in the real economy, maybe -- supersize rate hikes in play. jonathan:jonathan: can you tell me where you expect to see unemployment by year-end? we are all trying to work out whether or not the mandate is coming into more conflict as we get closer to year-end. >> you're looking at unemployment rates around 3.7% or so. i think that is still a very, very tight labor market. we see deceleration and contraction and that kind of activity, i think that is when we see unemployment rate died to move. at the end of this year, i don't think the fed is slowing down at

that point. >> what does -- say about the initial force of -- inflation? do we blow that up and say -- or 6.9% inflation? >> our view that inflation starts to recede last year is predicated on air view that you do have a recession. if you do have a recession, what you see is goods prices as well as service prices. anything that is good here is that we have not had inflation expectations become on more -- unmoored. that is a good thing, because if that does become unmoored, that

creates its own dynamic as well. people started put forward their expenditures, asking for higher and higher wage increases as well. tom: jay bryson will wells fargo. i am doing the math in my head, help me out here. 2.5%. jonathan: 100. this disrupts the idea that the fed can back away at any time, same time. >> a whole new dialogue. diving into the inflation. the between service dynamic and group dynamic. >> did looks like services are starting to pick up some speed

here. services let energy rise by 6/10 of 1% after a forecast last month and services are up 6.1% over the year. so we are seeing prices start to rise and you can see it in a number of areas. interestingly, angelique -- education, college tuition, that was up half a percent. a fairly strong increase for that category. you would know something about that, tom. we are also seeing motor vehicle insurance of 1.3%. that is an ongoing issue. an airline fare fell. we are losing a little of the benefit from that. so you're seeing services rise. i do want to mention, somebody asked me this morning if we could mention this because it matters to senior citizens. the consumer price index for urban wage earners was up 8.7%.

we will have to see what the average numbers come out to be first septembers numbers come in, but that will lead into the social security, 8.7%. i am going to focus on this market. -- much harder than anticipated and you can see had the market is reacting. equities really low and yields really punching high at the front-end. > when with the last time we could say that? and has been a while, quite a while. more than a decade.

-- can i just say yes, and the reaction, and the number of people, that is what we were hearing. >> you are asking the right question. tom: -- comes back to economic growth and that is an investment gleaned from his short-term bond market. what should we watch in your world? what will give us the signals of the shot report? >> i think it is that two year yield that you were just contemplating and the global

financial crisis. back in 2007, we had continued to price for the federal reserve. the question still is how high do they go and how long can they are in there. it is really just one report, but when you get one report again and again, one has to look at things like service prices continuing to grow. if there was a fast worried that inflation is going to stay below their 2% target, some investors that i've been talking to are questioning whether or not they could actually keep that 2% target as their guideposts. that maybe they need to be at two point 5% or 3% or have some range between two and four because we are in a bind meant where it is very likely that inflation is going to stay above

2% for several years, and that means that they are not going to hit the target unless they get interest rates more to the market pricing. >> but they are not doing that right now. topping off a 4% sales fund rate likelihood early next year. how mispriced is that in markets right now >> the market is priced for around the upper band to be about 4%. in my view, the upper band eventually will be around 4.5 bloomberg economics is that higher than that. directionally, i think that the market needs to start pricing for somewhere above 4%. you're not quite there yet. but that will be a signal that

we are getting there, and we are getting there quickly. tom: they also add medical care as part of his core services. can you talk to me about this move we are seeing? you picked up on it. we are basically at 3.70 now. we are not far away from it. how much upside do you think there actually might be on a two-year based on where it is now? >> our year end products predicated on the idea that the fed is going to hike. we will have to rethink that view unep big way. two-year yields are going to be much more sensitive to what the fed is doing and eventually, the

10 year yield is going to really lag behind. i do think that the 10 year yield will eventually start to rally so the yield curve will just invert more and more. tom: the fed, how do they change the dialogue? >> i don't think that they have to change the narrative very much at all. large parts of the market had to believe. all the investors that i talked to ari two camps. one is that the fed is way behind the curve. they have to go 100 basis points and keep going. we have another group of investors saying the fed can't go much beyond because pricing

and recession. everything centers around maybe what we are pricing right now but you have these two very different views and as people shift from one to the other, who are seeing these very big moves in markets. and liquidity has been pretty poor as well because of structural issues going on in the treasury market, see you are going to continue to see these moves on a pretty regular basis at the sentiment shift so significantly. >> thank you. next week -- tom: we are living this, and --. this rental --

how do you substitute -- jonathan: mortgage cuts. also, a lot of people are left with more than others. lisa: you would think that would tighten the labor market or the housing market. but in fact, it increases the cost. tom: we had caused today in services for queen elizabeth, members of the wonderful team. one of them on bloomberg radio, bloomberg television. opinion describes this market over the near -- institutional

-- wonderful to catch up with you. -- in the inflation of the world --? >> -- to my mind, one number, no one can measure properly. everyone -- it is a reality check. and that is all for for the u.k.

and emerging-market. it is a very bad place. the u.s. is going to overdo it. jonathan: let's talk about it. the bank of england. we can just call it what it looks like it is, which is a little bit of a war. -- that has gone away, this new government -- investments -- other central banks do because

consumer -- in this country. >> it is not 1.14, and that is the good news. we've all got that long list of people to think about. lisa: going back to 2007, this really raises questions from the international perspective about central banks only hiking to keep pace with the united states and not because their economy necessarily needs it. i do wonder from this perspective where we are going

to see a reversion to great cuts more quickly in europe, in the united kingdom, because there is not the strength to back it up. >> the pain in the u.k., in europe, we've got so much problems coming through on the german economy. and that is the problem. at some point, they might stop fighting. >> credit suisse, you are an expert. >> i think credit suisse is just --. i would have to go back and get rid of the rich culture.

>> -- bond shares -- 75. yeah, bingo. inflation came in -- this market was focused month over month. that means equities lower, around 2%. negative three quarters of 1%,

up by six or seven basis points. if you think about -- -- and they are going to hold it there. tom: 700 doubtful weeks, most of that she -- dow points, most of that in the last 20 minutes. j.p. morgan asset management. -- mentioned --.

tom: look at the nasdaq mentioned earlier. jonathan: -- equity market. america -- equity market. the camdenton the open, we are 35 minutes away. this -- count to the open. we are 35 minutes away, this is bloomberg. -- countdown to the open.

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>> this is an extended addition of "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. jonathan: canning you got to the opening bell, good afternoon from london. equity futures dramatically lower, down by 3% on the s&p 500, negative by 2.9 on the nasdaq off the back of a harder than expected report from america. tom: let's go to the states with annmarie hordern.

i really what you have the size how many people got this wrong and one loan voice at jackson hole nailed it. jonathan: chairman powell himself. everyone else has followed him. this market, some participants ignoring that communication, waiting for the stock lending. some of the data spoke to that, this data points did not. lisa: that is why i find it fascinating, the knee-jerk reaction of the markets is as fascinating as it is. people believed the fed was wrong and they had a right. there were disinflationary tales and you will see inflation slow -- or decreases lower than it has. jonathan: it will be interesting to see how the white house response to this. the month over month numbers have come in hotter than anticipated. we talked about the front page of the newspaper with headline numbers. jonathan: you said even within

month over month you need to go deeper. does this is big to a store that is fading anytime soon? lisa: it came in double where people had expected. this comes at a difficult time when president biden is about to campaign on the fact that they're getting inflation under control and people are less worried about inflation. they pointed to gasoline prices. jonathan: i wonder if they're rewriting some of those. equities down, yields up. the 10 year the yield is much higher. tom: moments ago, and massive moment for these markets in the years we have been doing this, the 10 year real yield it 1.00%.

jonathan: -- for. risk assets. does remind us of where we were in 2018 when the equity market collapsed. yields, spreads from credit were much wider than where they are now. lisa: for years there was no alternative, now there is an alternative because you are getting yields as income from these. that is the real takeaway. jonathan: mike mckee will join us now. this is not the number many people were looking for. michael: some people were thinking that way on wall street but let's go through the numbers making you three so gloomy. the month over month cpi comes in .1%. the core is the one you're are talking about, up .6%. the forecast was .3%.

we see the corbett rise to 5.9%. i assume president biden will not talk about the core rate. cap his part of the bargain, it fell. food has not reversed. people were thinking when commodity started to fall in july we would see a drop in food prices, we don't. we don't see a fall in shelter prices. rent is up. used cars were down but on a wholesale basis the expectation was that might be down as much as 1.5%. no selloff of inventory, they are still rising .2% on the month. a month ago you had someone on who said the fed is going to be determined to get up to restrictive territory. as we watch what is happening in

futures markets, people pricing in 75 for the september meeting and a possibility of 75 for the november meeting, you can see the fed in the past has always raised interest rates above the level of cpi, both cpi and core. as you see on the right there, they are a long way from that. we need inflation to come down or the fed rate to go up before you are probably going to see more success of bringing overall inflation lower. tom: very quickly, if i was having a brave rich of my choice -- having a beverage of my choice at jackson hole, what would they say is the distance to neutrality? is a november? is it next year? michael: generally the feeling is they want to be there by the end of the year. that gives them two more meetings to do it then you have to define what neutral is, some

think 3.5 percent, others think around four. i can also point out that you probably helped because supply not keeping up with demand with those beverages of your choice. alcoholic beverages up .9% and august. jonathan: i can tell you that is a true story. i am sitting with a pot of tea and tom is on martini number four. with the lack of breakfast, that is impressive. tom: thank you. jonathan: equities down and s&p up 2%. we were of about 5%. krishna: jay powell laid it out from a policy standpoint. nothing else really changed that much. inflation is high and they will

continue to tighten. if you are looking for convict -- for a pit, -- for a pivot, you are probably getting all of that back. the fed is looking to get to 4% higher. they will get there either this year or early next year. the real question for the market is how long do they stay at that terminal rate north of 4%? and will they. because of something breaking? looking at this month's number and contrasted with last month's number, we did not have as much of a reason to be optimistic last month. this month we probably projected too much. there is not a reason for us to be that pessimistic. inflation is going down but not at a pace of the fed is comfortable with and that is what the market has to deal with. lisa: what is your sense of when

it is a good time to go into debt, to go into duration? saying we have seen the highs in the 10 year because we are going to get to 4% or beyond and that will lead to inflation getting under control. do you see a sense of that now with the cpi? krishna: the credit markets are probably a lot more vulnerable than the equity markets for the simple reason that we really don't know at what level the fed is going to stop and how long they will steer. that is not a very conducive environment for holding credit assets. i think there will be a time but it is not today. equity markets, you can make the case valuations have come down.

it probably wont be such a bad bet given the upside. in the bond market, you don't have that at the moment. lisa: a lot of people say stock and bond markets have been moving in lockstep. that has driven a lot of the activity. what is your pushback to say equities can still be a haven win -- instruments are at the precipice of the volatility? krishna: if you look at the last few weeks, the equity markets did reasonably well despite bond markets selling off. 30 odd basis points raised in rate. equities held up reasonably well. i am not saying equities are not vulnerable. what i am saying is given the potential upside from any change in the environment, equities can capture that upside in bonds. it is far riskier. tom: very importantly, and this

is to institutional wall street, we are going to see new lows in price for the various bloomberg aggregate indexes. what is going to be the blood on the streets institutionally of new lower bond prices with higher yields? krishna: i think from a longer-term perspective, we did not have much of a choice other than owning equities. that option is being created. at some point we will get to terminal rate. at some point the fed will pivot . they may not be at their lows yet, but bonds are becoming a much more viable asset class than they have been over the past five or 10 years. if you go back, what a world

once is a good bond with a high enough yield. if they can get that, they don't care about equities. we are getting closer to that. jonathan: getting closer to the fed next week. everyone is going to say .75%. what do you think the forecast is going to look like? we do need to refresh some economic projections. krishna: -- more optimistic than they should have been and a lot of commentators have chided them for that. i think that would probably still be true. the big question is what do they do over the next few meetings and how quickly do they get to the terminal rate they are striving for? in today's dentist is any indication, they should probably hurry up -- if today's is an indication, they should probably hurry up. my expectation would be rate

increase expectations have to be brought forward. that is what the fed wants to do, they want to get to the terminal rate as fast as they can and hopefully hold it. whether they will be able to hold it is a separate question altogether. jonathan: thank you. krishna memani there. going into the federal reserve next week, we better fit this in because someone is asking. no fed speak. lisa: we might get something from one reporter at the wall street journal. what they are saying -- they have been very deliberate and focal and united saying we are going to hike rates. jonathan: and people have chosen to ignore them. some of the economic projections we get to next week, do you expect to see inflation-adjusted higher, growth lower? tom: they will manage the

message and it will all be vector based and they will do the gradual approach. i want to look at the right now which is under no circumstances -- we are going to get a -1000, the fix up to big figures. institutional wall street is looking at these markets on the move. jonathan: the s&p 500 down by more than 200% -- by more than 2%. going into the opening bell, just a few minutes away. we will look at the price action and speak to and h down in d.c. about what the white house might have to say about this.

jonathan: we are 13 minutes away

from the opening bell and equities are down hard. -2.5% on the s&p 500. the nasdaq 100, down three full sentence -- 34 percentage points -- three full percentage points. now to an recorder and. how will the president respond to this one? leigh-ann: he will be gathered with stash annmarie: you -- annmarie: he will be gathered with governors and mayors conduct about the inflation reduction act. they knew this was going to be one of the biggest issues. this has money going towards climate change, corporate tax if you make over $1 million, and lowering the cost of medicare. how will the president be able to stick with that message with the fact that inflation today is higher?

the one piece of spin they will want to grapple with is that they worked all summer to bring gasoline prices down from where it was at the june peak to over five dollars per gallon to just under four dollars per gallon now. that was the one bright side of this report. it is less than two months away from the midterm election, republicans are going to harp on this. tom: which party is advantaged by sustained inflation? annmarie: that would be the republicans going into midterm election. they are the ones who can say inflation is not coming down, it was not transitory, something that the treasury and the white house told us it would be. the republicans want to make sure this message is top of mind of voters and consumers, higher food prices, higher electricity bills. kathleen is coming top natural gas and electricity is higher. all of this -- gasoline is

coming down but natural gas and electricity is higher. this is not a live issue. we saw between district in new york, we saw that in kansas. there was a wall street journal poll that says the economy is number one for voters to go to the polls. number two was abortion and reproductive rights. number three was inflation. lisa: thank you so much. i am sure there will be a reset and it is he president biden tries to double down after the latest data. esty dwek joining us now. we are seeing nasdaq down to point that percent, a reset is the idea of disinflationary we thought would take hold but it didn't. are you rethinking any of your positions? esty: it was never going to be a

straight line down. we have a number of inflation data points still showing that disinflation is happening. the core print today was not fantastic and we are seeing the disappointment in markets, especially because we had expectations the last couple of days that ramped up the markets. from a positioning perspective, we have pbs tomorrow, we have michigan numbers coming at the end of the week. we had inflation expectations the last couple of days showing us those have come down sharply. disinflation trend is going to continue but today it is going to be ugly. tom: peter berkemeyer has one of the isolated incidents come health insurance is up over 20% year-over-year. jonathan: services. without a doubt. we have this tug-of-war between

financial conditions, the data and how the fed is responding to it. investors are hoping this goes away and next year is smooth sailing. what is your message to people who doubt the role of this federal reserve? esty: there clearly is not going to be a pivot anytime soon. jackson hole dispelled that idea completely. anything close to a pivot would mean we are going to stop hiking. that happens at some point -- in 2023. that number is going up with november expectations rising. the fed is not going to blank. inflation is gradually coming down, lower than anyone would like. the result is going to be a very permanent. tom: where do i hide? this report was not what i expected.

where do i hide to direct myself into 2023? esty: i think is a bit too early to say that the entire end of the year is going to be bad. at some point we are going to have some improvement in markets. for the time being, it seems like the dollar is a great place to hide. the swiss franc, you were talking earlier about the swiss national bank coming in with those hikes. you are making something in cash. a lot of investors are going to be happy to fit in cash and wait for the picture to improve over the next couple of weeks. jonathan: esty dwek of flowbank bank -- of flowbank. a message just a moment ago from a bloomberg terminal subscriber, "there goes goldilocks." i sent looking at that one data

point, it spoke to the feed, the inflation report has wiped the floor. this fed has more work to do. lisa: i think of something ira jersey said, specialties -- especially with quantitative easing ramping up. we will have to go out and pay people more to put their deposit with them. at what point do we get people to sparking their money in their checking account because you are actually getting something for it. jonathan: where it qt fit in? lisa: it is interesting because this week it is starting to accelerate. we have not seen much effect of it yet. will we start to see the ramifications of that early next year? jonathan: every time i checked we are a little higher, 374 on a two-year. what are we now, four or five basis points away from a high on

the tenure? basically all summer people saying that a june 14 hi was the high. lisa: we will look at the yield curve inversion after a better, lesser inversion couple of weeks ago. tom: bad news is bad news. jonathan: without a doubt. tom: people tell me interview to interview, look for acceleration and lower prices. no one believes it is there. everybody is going no, bonds are different. jonathan: it has been tough. tom: to our listeners and viewers, it is tangible. they are not doing fancy pants stuff. jonathan: david kelly of jp

morgan. we can ask him. ♪ how will your business adapt to change? you could hire an office full of peyton mannings. what's up, peyton? good morning, peyton. hold for peyton. they'd huddle.... welcome to the peytonverse. such a visionary. game plan... you go. no, you go! and call audibles... double our investment in omaha! omaha! omaha! omaha! or you could use workday. omaha. the finance, hr and planning system used by over half of the fortune 500. for a be-agile-like-an-mvp world. workday. for a changing world.

jonathan: live from london for our audience worldwide, we are seconds away from the opening bell. that is your opening bell from the united states. equity futures getting absolutely hammered, down boy two point 5% -- down by 2.5%. the effects markets, the dollar is stronger. euro-dollar just above 1.0022. yields up by seven basis points on a 10 year. 342.73. you have to go back to 2007 4 those levels. price action with some movers at the open, let's get to abby. abigail: we have this risk off

day, a bearish tone. the s&p 500 headed to its worst day. it has everything to do with the cpi report, hotter than expected. that means yields are higher. the key driver, the dollar, stronger. .9%. -- up .9%. those drivers weighing on big tech. apple and nvidia are lower as yields are higher. valuation comes into question. jp morgan and chase are not benefiting. that is because the yield curve is coming in. the action is on the short end so that is weighing on the bank. we had a reversal in oil because of that dollar shooting higher. that has pushed oil lower. we also have the energy sector lower. the reaction felt knee-jerk but it is holding on for an hour. let's see if it makes it to the first half hour of trading. jonathan: as i set the start of

the year, the yields will be where they are and the fed will get rates were it is, and higher next week by .75%. lisa: we were talking about this yesterday. this has been the trade -- because it has been accompanied by weakness that has to be engineered in order to achieve a decline in that inflation. jonathan: the overwhelming consensus right now is that it is not going to be tremendous. we can talk about the survey right now with kailey leinz. kaylee -- kailey: they call it super bearish, a record 52% of those surveyed were under equity -- are underweight equities and overweight cash. the growth's partitions are browned and a all-time low, 72%

expect a weaker economy with most expecting in a recession since may of 2020. typically that level of bearishness is bullish. bank of america says the short-term -- is up. as for the most crowded trades, no surprise once again come along dollar is topping the list, 56% of investors give that answer. that is the most extended position since long u.s. tech in 2020. compare that to just 20%. you also have short treasuries and long growth in there as well. as for the biggest risk, inflation fitting today given the hotter than expected cpi report is number one followed by hawkish national banks. equitable refreshing -- recession moves this month from the number four spot to the number two spot. jonathan: miserable.

thank you. that is the angus -- that is the english version for anyone who could not translate that. [laughter] tom: the resemblance to hugh jackman is a shortened. [laughter] jonathan: that bearishness, does that explain the previous four days and the data point for got? tom: i suggest it mentions to managers fighting for their careers through the end of the year. this is plural -- this is brutal. you will see if through of the total review aggregates, price lower. we have never seen this before. jonathan: achieve global chatter just at a, david kelly. the response to it? david: it is warmer than

expected but cannot going to call .1% of inflation presses -- the trend is there. markets are overreacting to this. in particular, there is a big chunk of inflation, 32% is in shelter and that is up 7% -- that is up .7%. that is driving the underlying resilience. nobody -- there are parts of inflation hanging on but it is important to recognize the economy is colluding and a lot of things are cooling off. we should not get messed up by the fact that it was a little higher than consensus. the big story is inflation is actually coming down. lisa: that is convenient for a lot of the bulls and yet the

story people are seeing right now is that the hope was we would see investors inflation, we would get the fed not raising rates as much as they were saying. how can you mimic is this? what parts of the market are most overreacting? david: mentioned financials. what i think is going on his people think the fed is more hawkish. i think that is true. the fed will have more reason to go 75 basis points next week. the bank of england will do the same. i think the fed will leave the door open to more of an increase in november than anticipated, maybe 25 basis points. i think we will get about .2% in september, energy prices will be done month over month in september also. we will see the airline fare down a little bit more.

lodging will come down more. i just think we are overreacting to this. inflation was worse than expected but the big trend is coming down. financials are overreacting, i have no problem with the 10 year treasury. i think that is okay. the assumption is it is going to get worse -- the assumption it is going to get worse i think is wrong. lisa: what about big tech? we are seeing a 3.1% decline on the nasdaq and it is a knee-jerk we saw go lower. do you push against that? david: the issue is that there were a number of things that were overvalued. they never assumed a normal value of -- normal value of interest rate. now we are back to normal value which is negative for growth stocks. we are standing in high valuations.

i do get that. i think it is more of a return to rationality. i am glad to see some of the people bearish. that will help us to do better over the next few months. tom: what do you see among corporate earnings? before the beginning of what corporate earnings were doing, how are corporations adapting to america's inflation? david: it is difficult. last year we had a spectacular year for earnings. this year we would be lucky if we get out with a positive earninga year-over-year -- positive earnings year-over-year. the reality is we have this growth in wages, that israel. companies can either pass it on or not. it is hard to pass it on and i think that will squeeze margins.

i think we could end up with negative rates next year. tom: like everyone out there, i have a real estate jump of what ever geography i am looking out. doesn't everybody go out today and market the price of their house for sale? david: yes. and it takes a long time for the market to clear it. the reality is the average mortgage payment on a new home has gone up 60% in the last year. that when i blame the federal reserve on. they stayed so low for so long. tom: i think this is absolutely profound. i cannot say enough about what is out there on homeownership

and how it moves over to rent. this report is a game changer. jonathan: core inflation hotter than expected and shatters one of the stinkiest parts of the report when it comes to inflation. david, i appreciate what you're saying about things getting better, perhaps, not worse. but when he think about what the fed will do, okay talk about what you expect they will do? they told us about responsible information. tell us about what he thinks that is what you think that means they will. david: they will go 75 basis points next week. but i do think in a statement, they will acknowledge the fact that inflation has cooled but that discounted the points are not enough to cause a trend. they will put enough guys in there to give them face to go 50 basis points in november. i think they will want to set it up that way.

they want to put in a hawkish move but give themselves the opportunity to put it in more dovish language. this shelter thing, it is a long lagging problem of inflation. how does higher interest rates help deal with a shelter inflation problem? it stopped people from building houses, how do you bring down rent? the one thing keeping inflation high is that they think they can fix belief by pushing up interest rates. tom: there you go. jonathan: perhaps that is a question for the news conference next week. at the end of the day, they holds the data they are responding to. that is it. until they turn around and say this is partial inflation we cannot do anything about it -- that is not what they are saying. lisa: people have priced in the

likelihood of a hike in november. this speaks to what the fed is probably going to signal which is everything is still on the table. tom: in the last 20 minutes, the bloomberg financials index has shown more optimistic. jonathan: the s&p 500 is less than 2%. 12 minutes into the session, yields are much higher. we have to push back from the federal reserve after the rally of june and july, from mid june into july and onto august. i imagine we are all preparing for the push again as next week's meeting. lisa: may be in their segments, the market will hear tea leaves out there. it seems like they want have to guard the -- want have to guard the market anywhere. jonathan: that is the whole point of sitting out thankfully communicated reaction function,

that you should not be out there talking all the time. you just have to say this is it, this is how we respond to oncoming information. lisa: they cannot say they are not going to hike rates because the market will become accommodative and they want to change their goal. tom:'s sterling goes to 1.14, three bedroom, four bath, like $60 million -- $16 million. francine: -- [laughter] jonathan: the equities are down. i s&p 500, we count more than 6%. the conversation continues. this is bloomberg. ♪

pres. biden: we have seen

hopeful signs of progress on inflation as well. the price of gas, it has gone down $1.30 since the start of the summer and continues to go down. i said last spring our top economic priority was to bring down inflation without givingi p all the gains american workers made last year. but there is more to do. jonathan: that is for sure. that was yesterday. we will hear from the president later this afternoon coming off of hot cpi data. 20 minutes into the session, equities lower by 2%. on the nasdaq, lower by more than three percentage up all the gains american workers made last year. points. ann marie, we are from the president of 3:00 eastern time. annmarie: that is right. he will be talking about the inflation reduction act. most of this street is hot right now.

it did come in worse than what is expected. what's the president has been leading into, as you heard him talk about yesterday, the fact that they are seeing inflation start to flow. -- starting to slow. one bright spot in this report the white house is going to spin is the fact that gasoline was above five dollars a gallon in june. right now it is hovering above read dollars $.70. this is -- hovering above $3.70. this is the work they have been doing. at the same time, how much is he really going to be able to sell this point when you have core? inflation higher we have food higher and rent higher. where less than two months away from the midterm election. lisa: we have seen 90

consecutive days of declining gas prices which is what you are talking about. we were talking earlier with regina meyer and she was saying how though the inventories have gotten and they have got to start rebuilding, which will probably create the opposite effect. annmarie: i was listening to that interview and what her concerns are is we need to start rebuilding the -- a big question about that is at what price is the u.s. going to be willing to start buying oil? they want to try to fill it up at a much cheaper price. the other big question is that this release they have, and it has been a slow drip in terms of how they duty drawdowns, it ends in october. there is the question of do this lower down into the winter or is there going to be another potential other half of it?

tom: thank you so much. we continue with david kelly of jp morgan. i want to go to my chart of the year which is a comparison of japan, europe, u.s., the nominal gdp. if we get a slower disinflation, if we get elevated disinflation, how does that change the difference between real gdp and the inflation component? what does that mean for the businesses of america? francine: i think both -- david: i think both are going to come down. we get a revision to the past five months of gdp data. growth might have been strong at the start of this year but it is coming down. over the next year, next 12 months, we would be lucky to get 2% real gdp growth. maybe add on another 3%. talking about 4%, a little over

4% nominal gdp growth. that is less than we have been seeing the last year. as nominal gdp growth has gone down, that means it is going to be tough for companies to deal with. lisa: that is why we are saying revenue and earnings downgrades. tracking those downgrades and how they have come in. at an accelerated pace you have expressed optimism consistently. i think this is interesting. what is going to be the pivot point for market participants to get confidence in a rally that is not loved and quick to reverse on a day like today? david: i hope the federal reserve would feel comfortable enough on the progress we have seen with inflation and scared enough with what was going on with the economy that they would signal the next move will be less traumatic than the last move. as soon as we go to 50 basis point rise, people begin to

figure out the fed is going to have to turn here. longer-term, you think this economy can operate at or above 4%? i don't. margaret terms are just as much in demand in this economy. they will tend to slow. this economy down i think the federal reserve will have a hard time holding the rate above 4% if they decide to push it there. that is something they have to think about, they don't want to be cutting rates next year. they don't want to do that, but if they go too high they will have to cut next year to stop the economy from going into recession. jonathan: you said this was an overreaction. if it is, what would you buy right now? david: i would short the u.s. dollar. the dollar is surging too much

and i would be buying financials and probably tech. people figure the fed is going to eventually crack your. then i would want to get ahead of that trade. jonathan: thank you. david kelly, j.p. morgan asset management. he is lending the other way, we like that. 3% on the nasdaq and down 2% on the s&p. tom: there was a small street in boston years ago and down the road was the legend, phil caray of pioneer funds. david channeled him. it was he who talked about declining revenue growth even this cycle. that is what i am watching for in the earnings season into next year. the world changes when you move away from the bright whites -- the bright lights of inflation. jonathan: equity markets are softer and a bond market is

softer, too. yields are much higher. this is quite a move of the back of his inflation report. you can say the equity market is not an overreaction because we were up 5% over the last four days. maybe we are taking some of the heat out of that move. 373 .92 on a two year yield in america. lisa: the has level back to november 2007. the debate is about if this economy can withstand 4% interest rates long enough. that might be one of the biggest dividers between bulls and bears. people must be able to say the fed can hold think there for longer than you think. that is a bearish case. the bullish case is that they will have to reverse quickly. jonathan: thank you to the team again with this beautiful site with this absolutely beautiful backdrop in london. tom: are we here tomorrow?

jonathan: we will be here tomorrow as well. tom: well i.b. you tomorrow? jonathan: you are supposed to be. down negative three percentage points on the s&p. to our audiences worldwide, this is bloomberg. ♪

>> from of the world -- from the financial centers of the world,

this is "bloomberg markets." alix: it is 30 minutes into the u.s. trading day. here are the stock market stories we are following. prices are too hot to handle and inflation has jumped higher. that leaves general hikes. the market is fully priced in