>> stocks under pressure, completely natural before fed day. bloomberg markets starts right now. kriti: let's dive into the market action. looking at the s&p 500, down by 1.5%, some pain in the stock market, but there's always happens before fomc day. what happens next is crucial. right now it is sell the rumor, buy the news. take out the bond market, that

is where things are -- check out the bond market, that is where things are getting scary. we have potentially 75 basis points tomorrow and in november. 394 on that two year yield, getting closer to 4%. compare that to the terminal rate and we have an interesting discussion on our hands. with that move in yield, the bloomberg index hovering around five tents of 1%. and commodities falling, down by 1.5% on the oil story. brent crude trading with a 90 handle, in line with the equity market. back to the equity market, earlier we spoke with anna han, about the market outlook. listen in. anna: things may not be as bad as feared. one of the things we are watching is this season, how outlooks are going, but from the earlier quarter so far it was

not so great. i think we are hoping to see that margins and growth kampeter out for the rest of the year and be somewhat not the worst news. on top of that, with bigger risk, the assets will be the energy crisis in europe and how midterm elections go. kriti: that will be the crucial question, what comes after fomc day. let's bring in a global investment strategist to answer that question elyse ausenbaugh. ,anna was talking about the idea that earnings are where the next leg of movement will come. at the end of the day, saying that things are not that bad. do you agree? elyse: so far, they have been holding up better than expected, but we are still $10 below with the street is currently estimating.

that is based on the fact that we see growth slowdown continuing to accelerate, especially with a fed that has continued to maintain this hawkish bent, and that is not something we expect to change between now and at the end of the year. i will say the sooner companies recognize the tailwinds and we get more pre-announcements, like we have over the past week, that could be good news because it could allow earnings estimates to move lower and finally given investors the chance to focus on what comes after that. kriti: i am curious about how that goes in the face of funds -- here. the idea that if you have a recession on the horizon in europe, you have a chinese economy, or even an asian economy broadly that is not as enticing as it once was, especially what is happening in japan, why not just hop into the u.s. stock market? isn't that the trade that has

worked in all past recessions? elyse: yes, and those headwinds are why the u.s. is the preferred equity market. recently, we have got more excited about the prospect for u.s.-made cap equities, in particular, because of the regional exposure that they have that's more domestically or originated, and the fact that you have a valuations buffer at this point and at the sub asset class usually is one of the first to rebound, once markets find their footing and turnaround. kriti: it sounds like that does not take into account the actual recession calls. it sounds like it is taking into account relative strength, so what can you do if we actually hit a recession? you see the criteria, what do you do then? elyse: we have been pounding the table on adding to core fixed income all year, and this current rise in interest rates we have seen from the inflation data is giving investors another bite of the apple to do that.

even if the fed comes out more hawkish than expected, depending on economic projections, it could end up meaning that the long and stay -- end stays anchored. and it could give us a compelling entry point for income generation along the way if the recession scenario does indeed come to fruition. kriti: but does the strength of the dollar not phase you? it is a crowded trade. but it is a trade that is working. what happens when it comes back into the bond market and a stocks? elyse: it is embedded in our forecast. corded today it is up like 5%. our rule of thumb is for every 10% in they increased in strength of the u.s. dollar, it represents about three bucks of earning per share for the s&p 500. that's a factor that we believe earnings estimates are about $10 too high for next year. and in the bond market, i think

that it is a matter of finding the relative yields, where they are most attractive and getting that defensiveness and safety to take advantage of the fact that the u.s. dollar remains the reserve currency of the world. kriti: i could pick your brain for another hour or so. thank you. elyse ausenbaugh. we will have you back on the show, thank you for your time. now here is your first word news. mark: russia is trying to cement its grip on ukraine. the kremlin is moving quickly to stage annexing regions that it still controls. we spoke with -- on the sidelines of the yuan general assembly in new york. >> both referendums do not have any legitimacy, and therefore they do not change the nature of the conflict. this remains a war of aggression.

ukraine is an independent nation in europe. and this will further worsen the situation, and therefore we need to provide more support to ukraine. mark: ukraine and its allies have announced the referenda as illegal and two countries are likely to recognize the results. hurricane fiona went through the -- islands today with maximum sustained winds of 115 miles per hour. it has already dropped a heavy rain on the dominican republic and puerto rico, causing flooding and landslides. at least two people have died. forecasters saying the storm will strengthen into a category four hurricane as it approaches bermuda on friday. the country's largest subway station is taking a step to crackdown on crime underground. new york city will install surveillance cameras on all 6400 of the subway cars.

the governor says that there will be two per car, paid for from the department of homeland security and the nta. there has been a string of high profile incidents on the rails, including a shooting in brooklyn that left 23 hurt in april. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. ♪

kriti: this is "bloomberg markets." ford has joined in those warning about macro challenges rippling through the economy. the automaker says inflation is pushing supplier costs $1 billion higher than expected. ford expects adjusted earnings to be below what was reported last quarter. what is interesting to me about this is there is a lot of bad news, nobody likes paying one

$1 billion more, but they will still meet forecasts. ed: yes and we look at the stock reaction and wall street seems to see you then news that ford reaffirms its for your guidance and does not believe them. we are down 11% on the stock, heading for its biggest drop since january of 2011. it's a one-two punch for them because it is the higher input costs of $1 billion but ultimately they will have money left on the table because of the breakdown in the supply chain that continues to be there, between 40000 and 45,000 vehicles sitting on a parking lot somewhere. and while ford says it is confident it can make up those sales in the fourth quarter, the street does not believe them. kriti: walk us through the actual issues are with ford. they are talking about 45,000 vehicles that are potentially not going to beat fully built, and on top of that they are trying to get into scale on ev. ed: part of the reaction is the types of vehicles they are talking about, higher-margin

suvs and pickup trucks. they did not state which cars are missing. we know from general motors in july when they talked about similar issues, the semi conductor shortages are an ongoing problem. on the input cost aside, when you have a shortage of parts, and remember when we talk about supply chain it is in terms of costs, but it is also logistics. and the solution to make of the shortage of something is to pay more to get there faster, and that is a big problem for ford, and it has talked about it being a big contributing factor to that $1 billion. kriti: we were showing the one-year chart of ford, what gets it to that peak that we saw in january? ed: interesting question. general motors's chart is similar. it had a 50% drop through july. but it rebounded as the ev story picks up pace.

this is about whether the street believes it can turn it around in the fourth quarter. ford was confident that those 45,000 vehicles will get the parts they need and that will be sold, and they reaffirmed their guidance. whether that happens in the fourth quarter is the question. but this is serious, the biggest drop since january of 2011 is no laughing matter and clearly ford will have to demonstrate to investors a can turnaround the supply chains, and get the story focus to back on electrification. kriti: and when the earnings do actually fully come out, how much of this is actually going to be priced in versus how much is the stock is the stock going to get overreaction, as we talked about in the earnings story. ed ludlow walking us through ford. lipstick with the auto story, because it is not just earnings that you want to watch, sometimes it there is dealmaking. an ipo in garnering enough orders to cover the 9.4 billion euro offering multiple times

over within just a few hours at porsche. you have been beating the drum on how ford's volume has been on both sides of the atlantic, so explain how this porsche ipo is doing so well. sonali: it is harder in europe than in the united states, but in a tough market you are seeing one of the biggest listings you will see in a long time in europe. early in the offer period, the carmakers come in going through september, you see that it is coming through on valuation. but remember, it is still electric carmaker that we are talking about. and -- a luxury carmaker that we are talking about. there's robust demand for something that is a unique asset, and it opens a question

for some future share sales for an asset like this in the future. muted ambitions, but a clear anchor for investors on how the early interest comes together. you have the return investment authority, norway's fund committing as much as seven point -- as much as 7 billion euros. so, global investors are getting in on a rare deal in a tough time in europe. kriti: i was asking matt miller, who is a car enthusiast, about the idea that who is actually buying a luxury car right now in europe in this environment and he said it is a little bit more than that. there is a history, porsche tried to overtake volkswagen back in the day because volkswagen is a behemoth. but i am curious, put this in context. deal volume broadly has been taking a hit. is porsche an isolated story or

do you actually see this setting a trend? sonali: it is an isolated story. it is nice to see an asset that is coming back with robust the demand early in its offering process. we are watching certain offerings, if you will come across of the world and how they will do, especially risk assets. but in the luxury world, this is more isolated than other types of assets, and again it is one of the biggest listings, not just in a tough time but ever for europe. the last time we saw a flotation this big was glencore in 2011 when they raised 9.9 billion essentially to go public. so this is a very rare deal. time will tell whether it will open the market up a little more. but unlikely it will open it up significantly given the headwinds we see. kriti: that is something we will be watching. sonali, we thank you.

one more corporate story, shares of nike are lower today after barclays downgraded the company from overweight to equal weight and cut the price target to $110 a share, down from $125, head of their earnings release next week. one of my favorites is joining us now, our very own equities reporter, bailey. walk us through the pain that barclays sees. bailey: they are not only sounding the alarm on rising inventory. nike reported their inventory, but there are concerns about a strong dollar. nike drives about 60% of sales from outside of north america so when the dollar is strong it weighs on demand. at the third issue is the chinese market, so in china they are sticking to the zero covid policy, so people are not going out to spend money on new shoes trying to impress their friends. it's not just ahead of the earnings, it is really looking at the mid to long-term over the next 12 to 18 months, giving it

is a stock already down. it's down 34% over the past year and down 40% this year. kriti: the inventory store is still playing a role. we have heard it from a variety of people. does it apply to nike? bailey: it does, because not only do they have pent up inventory in their factories, they are worried about footlocker, dick's, that have a backlog of nike shoes that they have to put on sale to get out the door. not only are they dealing with their own issues, consumers right now are inflation and they are not buying new shoes. and their stores are working through backlogs. it's then playing out of the supply chain issues that we saw about a year ago when we had so much demand and not enough things to be sold, now we have the inverse where there is too much product. kriti: our former bloomberg opinion carl missed wrote an amazing column about a year ago where she said that nike supply

chain for a pair of air jordans, it used to take 40 days to get from china to the u.s., and that has tripled a 120 or something like that. ho longw expect the supply chain issues to last for retail broadly? bailey: it will continue to get worked through. with a zero covid policies in china you are worried about things being shipped out.a nd we have an energy crunch. right now, i do not have a particular answer for how long it will be. kriti: you do not have all the answers? bailey: i don't, but it will continue to be a story as we get into 2023. kriti: we will see if it is transitory or if it sticks around. bailey, thank you. still ahead, world leaders are gathering this week in manhattan for the united nations general assembly. high-level debates on the agenda, ukraine. we'll hear from the nato secretary-general, next.

this is bloomberg. ♪

kriti: this is "bloomberg markets." we did get headlines here from the ecb president, and something we have already seen in the markets, but still worth mentioning. president lagarde saying the inflation outlook will determine rate hikes, but what caught my eye, she says she expects to raise rates further over the next couple meetings. they say the ecb has frontloaded the rate hikes, but also saying the euro area is not seeing the demands overheating like the u.s. is, saying they will not allow a lasting inflation problem and still talking about the risk of a wage price spiral, but still remains contained that so far. right now real reaction. -- now, no real reaction.

but it is certainly to be watched. it let's go to international headlines, the nato secretary general says that russia's plan to hold elections in four territories in ukraine and formally annexed them "does not have legitimacy." he called for continued support from allies and also commented on sweden and finland joining the organization. he spoke with bloomberg at the united nations. >> both referendums do not have any legitimacy, and therefore they do not change the nature of the conflict. this remains a war of aggression by russia against a sovereign nation in europe, ukraine. and this will only further worsen the situation. and therefore we need to provide more support to ukraine. >> we have already seen impacts of a policy on societies and

economies across europe, across the world, actually. how sustainable is this or how long is nato prepared to send weapons? >> we have to support ukraine as long as it takes, because the alternative is much more dangerous for all of us. we have to understand it goes beyond ukraine. of course, we will provide support to them because we have a moral obligation to support a sovereign nation in self-defense, but this is a lesson learned. that they can use military power and achieve their political goals. that makes us more vulnerable. it will make the world even more dangerous. therefore, it is in our interest to help ukraine. kriti: that was the nato secretary-general and our very own anne-marie were doran speaking at the united nations

general assembly. i want to check on the markets. the s&p 500 is down by 1.8%. the nasdaq down by 1.6%. that is it for me. this is bloomberg. ♪ pst. girl. you can do better.

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mark: here's the first word. i am mark crumpton. the united nations secretary-general gave a stinging assessment today of the state of the world and affairs, and urged the majority of world leaders to take action on a range of issues from climate change to inequality on the war in ukraine. he was the first person to speak at the opening of the united nations general assembly, and he did not hold back. >> the united nations charter and ideals it represents are in jeopardy. we