>> we are going to see tightening into the middle of next year. >> it is unsustainable to have the fed hiking rates, with the economy growing. at that point, it is going to move the market now. >> the european energy crisis and midterm elections. >> i do think slowdowns could be more significant than many economists are expecting. announcer: this is bloomberg surveillance with john keane, jonathan ferro and lisa abramowicz.

jonathan: live from new york city for the audience worldwide, that is not going to catch on, is it? good morning, good morning. live on tv and radio alongside tom keene and lisa abramowicz. we are looking for another 75 basis point hike. tom: markets very dynamic this afternoon. we start strong with dominic any moment. i'm going to push it aside for the real yield. everyone out there noting that finally, the real yield matters. jonathan: the 10 year bond hasn't changed for two days, the first time since 1999. before we get carried away. the doj has gone nowhere, it seems. tom: everybody's afraid they are going to act to make the yen stronger. what that could speak to is a shift in the last few days.

and i'm sorry, this will affect the press conference this afternoon. that has got to get everyone's attention at the press conference. jonathan: it has got our attention already in a massive way. the middle of march, about zero. six months later, basically at 3% a little bit later on. we went from the end of 2015 at zero, three years later up to 2.25%. think about how much it took last night over three years to get there. and this time, about six months, or even more. lisa: are we there yet? how high are they going to go? inside i cringe and feel like this is a completely moving target that doesn't reveal any real information but nonetheless, people have been targeting that and it will be

guiding the markets about how much we talk about a 4.75, and that we heard from bob michele on your show yesterday. jonathan: 4.5 treasuries. 750 basis point spreads, and he is basically saying wait for the recession, have patience. lisa: what is interesting to me is he looked at the divergence when it comes to credit, when it comes to the fact that you are finally getting to the real yield point. 8% on the credit. he is saying just wait. to your point, he could go up to 12%. this really shows how difficult this situation is, really seeing the scenario for decades. jonathan: it comes back generations. he said the people that lived in 1980 had a very different in about where this would be heading. tom: i strongly, strongly agree.

there is a generational memory here that a lot of people don't have. it is new territory for a huge percent of the viewers and listeners. jonathan: futures up by about one third of 1%. on the nasdaq, up 1/10 of 1%. so many messages this morning about fed day performance. in the last 18 months, the s&p 500 index has risen past eight of the last 10. lisa, i think a lot of people are aware of that now. lisa: i think if people are going to look past this, it is quite different considering the people usually take two weeks to really understand the things fed chair jay powell actually says. people don't adjust until he realized he is serious about it. we are going to get some things today. it is what i am watching. the banks as well as others,

testifying before the house financial committee. a lot of this will be trying to get things right for different advertisements, so how much to begin your real assessment of how much inflation is biting into the average consumer? we are going to hear a lot of questions about inflation. going to ask the banks what can we do about this? really, there is hurt that is spreading more rapidly than perhaps the real-time data really could capture. today, day two of the u.n. general assembly. we are discussing whether that is appropriate. lisa: president biden speaking at 10:35, and he is meeting with liz truss. what did you call it? jonathan: i have no idea, i am just suggesting what it might be.

lisa: a couple of her plans this early, ingratiating her with a lot of economists. at 2:00 p.m., there is a decision here on wednesday. real yields, yes, but the dollar dynamics. the dollar strengthens the most going back to 2002. the european situation getting a little bit worse. how much does this cause disruption? jonathan: appreciate it. joining us now, just a fantastic lineup today. we can kick things off right now with macro strategy. at the epicenter of your work, you are expecting inflation to fall so much more quickly than people expect. why is that your position? >> the main thing on the inflation side is profit margins

expanded. with all of the cost inflation that has actually been passed through, prices have gone up even more because of an extension. about 4% or so of the cost and profit, that actually means a soft landing has cut back on those profits. without necessarily having to fire people as you might otherwise have been. what they end up doing, they end up tolerating very brief productivity, very strong employment. it is a soft landing. ironically, raising real interest rates. tom: if all central banks are exposed by definition, what is their post -- best and most efficient policy given the

nature of inflation and sharp disinflation? what is their best practice right now? >> i mean, it is tough. the u.s. for example, the housing market has interest rates but the interest rate impact, their variant -- wasn't very much extraction. i think it will take time. i think the message from the fed is that policy rates, those are things they need to get up, they have to keep them there, which is probably the message. it is more about getting through the level of restriction and just being patient to convince people that they are taking -- for their own good and things

will at some point mobilize. >> a tough landing doesn't mean the fed doesn't have to raise rates. what it means is that the employment as inflation comes down, quite a lot. whether you think that a hard landing, whatever that means, may be gdp growth. you have a more optimistic view than most. >> i think the hard landing story kind of links to real gdp,

and a very sharp increase in unemployment rate, perhaps in profits. you just don't get the big increase in unemployment. profit margins are the main thing. if they might have been over 200, they come down toward trend for the hard landing that comes much lower. a complete disaster. financial conditions are going to stay tight for a while, a bit frustrating. there are nuances to the differences between hard and soft. jonathan: thank you for joining us today. i mentioned that chairman powell is addressing this. he is lisa: going to talk about the need to get rates higher,

able to keep going depending. perhaps more than halfway if you are taking a look at the pushback. he is going to have to come out and be hawkish. otherwise, lots of undermining the credibility. jonathan: chairman powell talked about the pain last night. and in that paragraph, he talked about pain, i just wonder if it is captured by the forecast today because in the previous round of forecasts, it wasn't. tom: i don't believe in the dot plot. this time it matters, we make the exception. we break that down, it really matters. lisa: are you going to be looking at the dot plot? that doesn't matter. tom: the forecast today really matters. jonathan: i am proud of you, tom.

tom: it is a disgrace and it reminds me of pj thomas, hooked on a feeling 40 or 50 years ago. jonathan: thank you. good to have you back. in new york, this is bloomberg. >> keeping you up-to-date with news from around the world with the first word, i'm lisa mateo. vladimir putin declares a fight to the debt as the u.s. and its allies as he calls on major expansion of the war in ukraine.

he says that the u.s. and its allies want to destroy russia. ukrainian counteroffensive in the last few weeks has dealt russian troops there worst defeats. the federal reserve raises interest rates today to the highest level since 2008. and the forecast with further increases. but a third straight meeting, policymakers are expected to raise rates by 75 basis points. jerome powell is expected to stress inflation near a 40 year high. the bank of japan is trying to capitalize on pressure on yields before a policy decision later this week. -- has emphasized his determination to maintain a black bottom interest rates. british prime minister liz truss reportedly will cut the rates on stamp duty according to the

times of london. the newspaper says she will announced measures friday as part of a budget to stimulate the u.k. economy. 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.

>> -- and therefore change the

nature of the conflict. therefore provide more support to ukraine. jonathan: from new york city this morning, good morning. handing it down to a fed decision just about positive, a quarter of 1% on the net -- s&p, on the nasdaq. the dollar stronger, 99.25 at the russian leader mobilizes even more troops. tom:tom: years ago i was in a hotel in chicago with the giant of game theory. one of the six people simply said nowhere like this morning does this matter.

you have a wonderful history here based out of london. how do you respond to the threats of nuclear war from mr. putin? >> he is upping the ante once again. we've seen him do this before, but clearly he is making this move as he sees ukrainian forces make inroads in ukraine. i mean, we are talking about the size of delaware and rhode island. now he is going to have these sham referendums that he said he always wanted to have, and by doing that, he is calling that reservists and making a play to the russian people. saying i am prepared to take it to that threat level that will

make everyone incredibly uncomfortable. tom: every military expert i've spoken to says it is just a threat, he would never do anything. every single guest says it is unthinkable. but we have been in this spot before, haven't we. >> right, and he has done the unthinkable. what i would say is from someone who really understands, the reason he did not think putin would ever go on nuclear weapons is because he was not sure if his military would carry it out. and at that point, his reign would be over. >> talking about the united states response, the potential for them to be, for example, sent over to ukraine as a possible response to an escalation by russia. how united have people seemed in

your discussions at the u.n. general assembly? >> at this moment, incredibly united. what else can you say? he is telling all of the west to be on guard. do not call my bluff. those were his wars last night. what you have of the united states, the native secretary-general, all of these leaders especially this week alongside the u.n. general assembly having almost a new, fresh unity. that for all of this week going into this meeting, the big question is whether or not they were able to remain into the winter. this almost forces their hand to make sure they can make that case to their own economy. lisa:lisa: looking right now at natural gas prices higher on the back of this news, you see the crude going higher on the back of this news. what is the case for why this is really happening given it a lot

of the bad news that is really happening? >> more geopolitical risk. if there is a nuclear war, basically the markets are watching. they thought potentially at some point there could be peace negotiations, especially with ukraine taking up some of his territory and a very intense counteroffensive. also, we need to really unwrap what is going to happen this winter in europe. and what we are hearing right now overnight, germany has taken -- and nationalized it. they are still trying to make sure they have enough natural gas to get them through this winter and obviously the following fall and winter. jonathan: you expect them to address some of these issues? >> 100%. the president is going to make a speech about something we for it and talk about before.

democracy, and the naked aggression according to a national security advisor in terms of what russia is doing in ukraine. he is set to talk about the principles of our country that pushes back against aggressors who seek to violently attack. he is likely going to call out russia which is on the security council which makes me question, can the u.n. really do anything? jonathan: this just came in some moments ago. are you going to stop calling tom keene tk now? tom: no, you can call me tk, jon. my mother calls me tk, so i hear the love.

my father calls make hey, you. coverage in london, important to all of us. frankly, i had to drill deeper into the culture of london and so i migrated on the move up and my word, it was team coverage from london. that was my view. john, explain the majesty of three goals in 13 minutes. >> that is how you get a play, you put him on the bench. those first two goals and that hetrick were absolutely awesome. can you describe the moment, your first english premier league? tom: they were all arsenal fans. i don't understand.

you complained about low-scoring games. tom: it was fascinating to see. i saw penalty shots stopped, taken back. but what i really saw with british people. it was stunning, john. when they sang god save the king. jonathan: best sport in the world. tom: best sport in the world. lisa: repeat after me. best sport in the world. tom: thank you, spurs. thank you, arsenal. lisa: what the heck happened?

>> getting some price action. you are all familiar with the statistics. bloomberg is breaking them down for you. this market has married. the nasdaq positive.

massive changes. came very close to 4% in yesterday's session. 12 months ago at 21 basis points. we just keep adding more and more. the 10-year also. it has not just been in the u.s. we can take a look at the 10 year treasury. remember, we started the year in negative territory. it is something that sticks out like a bit of a sore thumb. they have kept that tapped.

tom: this is 3.5, germany 1.9, japan 0.3. it really speaks the impossibility. jonathan: can they continue to sit this out? what would happen if the boj abandoned that story? tom: it has to be played out. again, right now you are at 143.90. jonathan: the rest of the year. tom: we will continue right now. look for us this afternoon. we are ready for this. peter joins us.

i'm going -- i might be wrong on this. thank you so much for helping us today. i want to go to the deutsche bank. it is something that you have done for decades and decades. for chairman powell, is he going to be overcome by this? >> one thing is to deal with inflation. a strong dollar is adding to inflation pressure, just about anywhere you look, at this point. it will probably drive the dollar further.

tom: re: at will equilibrium? do we become restrictive? >> it is depending on where inflation is. my colleague did a great piece last week. you have to add, not just the inflation picture but the tightness of the labor market. the labor market, which may see it running above 5%. we obey beyond the metrics.

not least of which -- jonathan: let's dig into that. the push bag -- they basically said, how can we live with 4.5, let alone five? >> the economy is going into a recession here. middle of next year, perhaps a little bit sooner. we will have to ease up on the market. you cannot bring down vacancies by themselves. it will have to get above 5%. for financial conditions, there

has been a reversal for the august numbers, but we have further to go. it will get into a restrictive ranch. >> early this morning, it was put out, revising it downward from 0.3% of decline, basically a deeper recession in europe. >> in europe, it is not just the inflation problem, but they are cut off. nord stream 1 has had a major impact.

from germany coming down to 4% next year. they put out a very nice piece. they are somewhat affected by the cutoff. that is my -- modest, but it is not enough at this point. the inflation problem is going to be there. it will continue in this tight labor market. lisa: i am trying to gauge the depth of the recession. you are also looking at unemployment, not only how long rates will stay there, but how long we will be in a higher

employment kind of environment. >> we expect growth to slow noticeably next year. production was up substantially but that is shifting over to services. we will see a slowing. they will begins a rundown with consumer spending by the end of next year. we are anticipating negative growth in the second part of next year. another negative in the fourth quarter. beginning to come back in 2024. it is -- the fed begins to reverse course because that

slowdown will reverse course. tom: is the recession spread evenly across america? can others escape its grasp? >> there is always a way. there is a wide branch of income distribution. it will be more on the job front. that is part of this. given that it will be consumer driven, it will be more broadly based. but yes, this will be a broad-based recession. jonathan: that might have been

close to 5%. i wonder. they ultimately need to factor in higher employment. there is a lot of work to be done. tom: all you need to know are that they are nonaccelerating. it is something that people enjoy on exams, but it is the quiet point to get the slowdown done. jonathan: there is unemployment at 3.7. tom: they do not have that luxury.

they have to spend -- spin a message. lisa: i want to see what they are. every different analyst i have spoken to has been able to withstand better rates because individuals had not taken on as much debt. all of these things that make it a less easy transition, forcing the fed to go further. how will they recognize that? jonathan: that will be a key feature around the federal reserve a little later. a key feature joining us right after the fed decision.

it will catch up with us after the conference tom: it will be massive. first question from me is, are they making it up as they go? jonathan: this is bloomberg. >> keeping you up-to-date. i am lisa mateo. threatening to escalate the war in ukraine even further. vowing to use all means necessary. also hinting at the use of military weapons. the fed is ready today to hike again and to send a hawkish message.

policy -- that would bring rates to the highest level since 2008. jerome powell is like lite my home that he believes rate hikes are needed. borrowing cost will rise more in the months ahead. the ecb has taken major steps to tackle inflation. the master in the donald trump case are skeptical about some arguments. pushing back that they did not need to detail highly sensitive records. several documents were classified. 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.

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>> we saw high instances due to speculation over the situation that were now backing off of that. 120 barrels -- $120 a barrel was too high for the supply demand situation. we are seeing that back off. jonathan: counting down to a fed decision. up on the nasdaq 100. the euro is weaker.

i can tell you the swedish currency is getting battered again and weaker against the u.s. dollar. the count yesterday with 100 basis point hike. he said a continuation of the selloff and the fed tightening path will maintain significant pressure on the norwegian currency and swedish currency as well against the dollar. many banks share the same concern. hiking into a slow and struggling to get any traction in the market. tom: a billion paper from the peterson institute is about watching 30 and 40. there is a value at looking at

the rest. you have to look at all of these pairs dynamically. jonathan: there is a similar experience at the moment with the u.s. dollar. it is not their problem yet but everybody else's. tom: particularly a shock to the nation commodities. just brilliant, something that we do not talk enough about. the impact on commodity nations, commodity em -- how large is it? >> huge. if you think about a few months ago and the war began, everything went up. energy and grain all went up.

inflation rate started in the u.s. with the higher u.s. dollar and that caused the whole commodity elevation to collapse. tom: my training is always to pivot to indonesia and brazil on the dollar strength. are they of interest? >> yes. and for present think of stock commodity. what we see today is a strong dollar beginning to leak in. it is putting pressure. but it is not just that. i think the way they are

reacting, they are becoming a recessionary story. it is lisa: as europe faces off with a catastrophic winter, depending on the meteorologist report that we get, i wonder if the answer is what germany is doing with energy companies. does that help support in any way? or does it put a band-aid on the actual bill that some of these companies are facing? >> in my opinion, it is a band-aid. we have a supply demand crisis.

i cannot see germany rationing like that. on the supply side, i do not see them investing or allowing more natural gas to come out. i do not see them fundamentally answering. i think this could go on for a wild. >> there is a question highlighted many times, the years that we face off with this lack of supply in the face of demand. what is your view on those? ? time, what is going to happen is

that they will continue with this pressure. you will become more efficient. that will happen with time. overnight, you are not going to get that. they have to materialize the action. you can start relying less on natural gas and russia. it is a problem that will not be fixed overnight. jonathan: thank you, as always. perhaps even longer for many officials in your. that is something that they have to confront.

lisa: it is completely different, so how did they come up with a cohesive plan, especially with such different political interest. jonathan: i find the u.k. situation fascinating to see what the new prime minister will do. it is. let's see what happens there. tom: they are seeing a little. there is a little sprinkling off the death of the queen, the new king and a new government, but does she have the support of her family -- of her party? jonathan: i think she has the support of the party, but does she have the support of the country? would she get the mandate that this party is going to do the coming months?

tom: this is not year-to-date. i took it from january or february. jp morgan emerging market index down. they have done 8% or 9%. the u.k. is down about 17%. jonathan: futures are positive. on the nasdaq, up .1%. a federal reserve decision, where they are set to hike rates again by 75 basis points. this is bloomberg. ♪

>> we will see tightening into the middle of next year and quantitative tightening continuing in the background. >> it is unsustainable to hike rates, doing qt with the economy slowing. >> that is not going to help the market. >> i think that the slowdown

could be more significant than they are expecting. jonathan: one rate hike around the corner. good morning. this is bloomberg surveillance on tv and radio. i am jonathan ferro. the consensus, another 75 coming right up. tom: this is not a restrictive wednesday. you might get that in the last two meetings of the year, but even with this move today, we are nowhere near finished. jonathan: will day forecast -- tom: they are a public institution. their number one goal is to

control the message and not instill fear. jonathan: he talked about pain that might have to develop. lisa: that is something that people are looking for. i'm curious if they reflect the pain felt around the world. they probably will not talk about that, but it has to be a middling point. considering some of the pushback that they have gotten from the world bank. jonathan: some tough spots for them. lisa: they had a bond purchasing program overnight to support pay rate is.

the first time it has happened since 1989. it is surprising to me that they have not given away a new weakness. he said people are scared to go against the bank of japan and against resolve to keep things where they are. but right now, what a ticking time bomb. jonathan: they have not traded for two days. tom: they are doing a theory. but there is no published background. all of the studies, never read a paper that shows that theory could work. jonathan: good morning to you all. up almost .8%.

it has not been the trend. it has been yields higher. on a two year, we can close. lisa: people expected a lot from this meeting and beyond. people want to understand if it could be closer to the projection. they are heading to the hill to testify. many are curious to hear what they have to say about inflation . are they getting more restrictive and how often they are lending, considering that people will have a harder time paying it back for basic day-to-day costs? traffic is significantly clogged

up. president biden will be speaking and meeting with uk prime minister. here is how that meeting will go. with respect to northern ireland , as well as british trade policies, but this pushback about fiscal policies. is there some sort of coherence with the u.s. support of the u.k. heading into a potentially difficult winter? the rate decision followed by a press conference. a lot of questions. you are talking about whether they would acknowledge the weakness. that is if we get inflation down. we are looking at a dollar with the strongest going back. yes, this is a british story,

but it is also a federal reserve story. is it a positive? what it does to the rest of the world will eventually rebound. jonathan: i have been enjoying the daily strategy report. lisa: do you really want that? we can keep going. you have barriers on all of the roads. tom: they let me out eight blocks away from our office and the police stopped me. i had a tantrum and i said, do you know who i am? they put me in the police car and drove me to the bridge. jonathan: do you know who i am? on the way to new jersey?

tom: i had to walk back to our office. lisa: ok, guys. all right. oh. i know. jonathan: futures are up on the s&p. global cio joins us. this is what you are looking for. do you expect to get that guidance today? >> the fed continues to be focused on the emerging data. we think it is almost a certainty and we do think that 50 is more likely that the problem is that as long as they keep seeing can tractable pressure through the data, they will be compelled to act decisively. tom: where do i hide?

factor analysis, diversifying into subsets. where do i hide if i'm worried about what not to do right here? >> the best place is cash. we have actually taken that cash position to 10%. we are a little bit more balanced and underweight. lisa: which bonds? you see those yields going-here or are you talking corporate credit? >> much more focused on corporate credit. we are in a neutral position. we actually are concerned that

we will have a much more aggressive fed. we have a little bit of optionality, if we are off on that. tom: are the dynamics with earnings or free cash flow or is this about a diminished revenue story? >> at this time, we do not feel like corporations unnecessarily under pressure. they actually are due to the environment doing well. they are able to reconfigure their models. we had a lot of downgrade when he came to covid. the fundamentals are not necessarily prickly. until you know what terminal

rates are, it is hard to know how to discount. jonathan: the reason i ask this is every time we rally and get a host of people to say this is not what the fed is wanting, we are capped. when does that change? >> i was a little surprised to see this as well. you sort of have people -- perhaps some of it is rebalancing. but it is also a little bit of the fear of missing out again. if we do have a recession or a contraction, is still an unsettled market and it is quite large. jonathan: thank you for being with us. a problem that many people have this -- have with this market.

basically said we will be capped here. lisa: i hear that neil has been watching that very closely. jonathan: he said that quite loudly. lisa: he said, we would be happy to see stocks selling off a little bit more. actively reflecting or perhaps not reflecting as much. tom: if you get rates back to where they are, in the last number of days, what we have been living, we are finally back to gravity. can i suggest that life goes on? rates go up? jonathan: i am with you.

tom: there were so many leaders. jonathan: [laughter] we are going to talk about that. join us in 50 minutes. life from -- live from new york. >> keeping you up-to-date with the first word. vladimir putin declares it a fight to the death with the u.s. and its allies. it is calling reserve troops and a major escalation on the war in ukraine. he said that the u.s. and its allies want to destroy russia. the ukrainian counteroffensive has dealt russian troops its

worst defeat since the early months of the conflict. the federal reserve is poised to raise interest rates. there will likely be another increase. jerome powell is expected to stress the resolve. the bank of japan is trying to cap upward pressure before a policy decision later this week. they announced a bond buying operation. the boj governor has determined that they will maintain rock-bottom interest rates even though many nations are increasing them. the latest takeover. it is that values at $10.8 billion.

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close our policies regarding this have changed.

having said that, we harkens earned about the ambitions, coerced -- coercive behavior. jonathan: a great conversation. we are live with tom keene and lisa abramowicz. basically yields come down. much stronger. just about holding on to 99 now. that euro weakness off the back of some strong words from the russian leader. tom: we will continue to monitor that. showing 24 to 27.

we will continue now on russia and their leader. in february, i announced my book of the year. with all that is going on, how would you judge what i'm going to call the hard bite of russia or the center of russia, or what i call the liberal left of russia? >> they get in line. what happens if you do not. they have domestic politics. we spoke about that yesterday. they came up in february and said that we should recognize a separate entity. also the head of the communist party said we should be calling this a war after the counteroffensive that could lead to vladimir putin to make these moves because he can put them on

the ground in these territories. tom: maybe this is an unfair question, but in your reporting, i know what a reservist is in tulsa, oklahoma but what about in the mountains? >> it is individuals joining the russian military. they are also using a lot of contractors in this war. they are not going for full-fledged conscription. this is putting the backs up of russians every day, russian individuals. mystically, this will be a little more challenging for vladimir putin. lisa: is there any overlap with the fact that xi jinping just met with him and this move is possibly calling up reservists? >> it is the first emailed that i woke up to from a viewer.

remember, it was earlier this year that these leaders said that there friendship has no limit. you have a seminar, a military seminar. xi jinping is telling them to prepare for war. you have a kyoto newspaper saying it is a party congress that is critical for xi jinping. he will be talking about plans for reunification with taiwan. these items were discussed. he is talking to beijing and that is really it when it comes to peer potential friends at this moment. lisa: what is the u.s. doing in response to xi jinping? >> the policy has not changed, but we heard for the fourth time from the president against ago a

little bit more off script when it comes to taiwan. that interview, it was astonishing what he said. he was asked, unlike ukraine, would you send u.s. personnel military? and he said yes. he could not have been more direct. jonathan: reporting this morning. he thought that was going to side. come on. before we get completely derailed, this is turning out. one-way flights from russia. destinations where russians can enter without a visa. tom: it is very fluid. i am looking more and more at

the european generalist coverage from other sources as well. i think it is off of the american radar, slammed in this morning, obviously. it bears the most careful scrutiny. jonathan: absolutely. they are treating it as such. in escalation. lisa: it is vladimir putin doubling down about what he can do. it raises an issue. emory has touched on this very well. it is different when you have to go to war versus sitting there and listening to the propaganda about what the war is accomplishing. i wonder if some of the issues are affecting the votes when it comes to russia and china, just based on the fact that they are heading into a people's congress meeting.

from a social perspective, during a lockdown. jonathan: expectations are lowered. i saw your note and now we are getting real about what a recession is going to look like. lisa: it is pretty depressing. it was depressing to see them downgrade their forecasts. saying that there is potential for further downside because of the potential for a cold winter. how much does this get affected? does it affect the gas supply? jonathan: can we compare that to the forecast? tom, you have deutsche bank saying that it would be negative 2.2. they were asked a lot about this in the news conference. she said it was not in the base case but should it be in the

base case? for most people, it is the base case. tom: we are moving in real-time and the list of german yields is a different quality of lift up and america. there is a lack of technology-based. jonathan: future positive. basically unchanged on this fed decision day. decision day. we wi your dedicated advisor will help you create a comprehensive wealth plan for your full financial picture. with the right balance of risk and reward. so you can enjoy more of...this. this is the planning effect.

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jon: live from new york city this morning, good morning. here's your equity market, -- nasdaq -0.3%. can this market rally as chairman powell brings out the

--? we were at 21 basis points on a two-year. yields come in at about .5% of a basis point. the big change over the last two months. yields so much higher in the u.s. and elsewhere. look at what has happened with the bond market and what has happened, i should rephrase that, look at what hasn't happened with the bond market. at about 25, 20 six basis points. look at what has happened with the currency. we had this great percent move. tom: 144 .17 is a huge deal.

just in the last 10 minutes ago. you look at a level 145, 146. jon: they are still struggling. look at sterling. even with the risk factor, one hundred basis points hike. the dollar right now getting some kind of traction in the market. even if you are doing what the bank of japan is not doing. tom: 113 point 05, 112. in our travels over the last three days, we have finally broken through on the index. bloomberg total return, united states average index. all the bonds, new low price on the index through the june low. jon: looking forward to a

conversation with michael collins. hey, lisa. lisa: we have been talking a lot about companies adapting and adjusting and how they are dealing with the situation they are faced with. it highlights to me how they are doing this. that is cutting jobs at the corporate level. take a look at gas, -- take a look at gap. shares down 4% year-to-date. it just announced it is cutting 500 corporate jobs in new york, in asia. this comes after the partnership with the former kanye west, downgrade with the full forecast in august. how much has this raised retail? then let's take a look at boeing. a manufacturer of planes. they have said they are going to outsource some of their accounting jobs to india. more than 27%, so far years

dating. it shows how people are trying to reduce costs in different creative ways like cutting jobs, perhaps outsourcing. they are still hiring some engineers locally. it is a come biz, -- come biz, a housing market has been -- there shares down more than 70% year-to-date. it said it was going to be cutting jobs, particularly in the technology spear. you have been talking about adapting and adjusting. that is what we are seeing from chair jay powell. tom: with gap, something really important is one of the ideas that the risk-free rate, the

zombie companies finally go out of resistance after a 12, 18 years this. lisa: corporate credit, have we really accounted for some of that pain in that market, considering the fact there has been a repricing. potentially, there could be more to come. tom: we continue right now on this corporate credit with michael collins, senior portfolio analyst for --. price is very down. what is the significance of new low price on the aggregated indices? michael: it has been nowhere to hide this year and fixed income. in our shop, we have three big things right.

taking our long positions down to neutral. we have been generally little on the dollar. with the big trend down in prices. bond prices are down, below par. for the first time i can think of in my career, we are seeing bonds across the board, all of our portfolios trading at big this point -- big discounts to par. they end up back at par. you have this really positive, long trend opportunity in fixed income which we haven't had for well over a decade. tom: i look at the mantra of the year yield, explain to mere mortals why the real yield matters. michael: that is the world's

discount rate. i am always surprised would people say, 'i cannot believe stocks and bonds are both selling low at the same time. ' you wait to see private debts and other bonds that haven't sold off because they are not marked to market every day. wait for those shoes to drop. with the law's rate, which is real treasury yields, goes up as much as it have, a couple hundred basis points, all asset prices have to come down. the question really is have a come down enough at this point. jon: we caught up with michael of jp morgan yesterday. he said not yet, patients. treasuries need to get somewhere close to four point hikes. any of that resonate with you right now? would you take the other side of

that trade? michael: i will take a little bit of the other side. i think we are much closer on the right side. our view is the rates are going to crest and come down and credits rising and equity will continue to widen somewhat before they settle down. i think we are really getting close to a point where there is a likelihood of the fed end. most of the central banks are over shielding significantly on the upside and having to reverse course. they know the whole concept of the pipit. now people are pushing that aside. as they keep pushing these rates up, at the same time, global global -- global growth risk and earnings are coming down. the falls are probably going to go up. geopolitical risk continues to elevate. inflation, globally, is boiling

over. -- is going lower. in a year from now, i think it will be a lot lower. central banks are jacking up rates. that is a real recipe for a big reverse. on the right side. on the credit side, i think you're right. earnings, we have a lot of work on earnings expectations going forward. i think they are going to keep going down. people don't talk enough about the dollar and the impact on that for u.s. companies, for competitiveness. the labor cost continues to put pressure on margins. you are starting to see layoffs finally happening. there is a little bit more downside before you jump in with both feet. lisa: i wonder if you could give us a sense of how you play the conviction behind -- but also acknowledging what you see coming? michael: you stick with

higher-quality credit. presumably, a big shock of analysts. that is our bread and butter. this is an opportunity in the market where everything is in unison, to some extent. there are a lot of relative opportunities. you can buy really high quality credits, have really big yields, peak spreads, there is a lot of opportunity there without taking a lot of credit risk. we have taken our credit risk down. the yield that we are seeing across the board and bonds beyond the high quality bond, portfolios we manage are really big. you don't have to take a lot of credit. ultimately you want to do that to down in credit. jon: even on the 10 year, at 350? michael: yeah, we are dead neutral here.

that is going to be the big first trade out of the gate. maybe you have to wait for today. the fed is going to be hawkish today. they have done a good job. typically, the day the fed meets, the day jerome powell speaks, the rates go up. they do a good job of getting investors off the ledge a little bit. a lot of it is priced in and the markets are based -- are braced for it. there will be opportunity in the next couple of quarters to get long-term duration. jon: thank you, mike. a sequence of what he finds with four others. tom: the sequence, i thought it was really intelligent from mike collins. what was the sequence?

jon: four to come this year. not much. can you run a portfolio of the treasury? tom: that is a really important point. jon: this is bloomberg. ♪ lisa: keeping you up-to-date with news from around the world. i am lisa mateo with the "first word". hinting at the use of nuclear weapons. moving quickly to annex parts of ukraine occupied by russian forces. the fed expected to hike rates again.

third meeting in a row, policymakers expected to raise interest rates by 75 basis points. that would bring rates to the highest levels since 2008. chair powell is likely to --. speaking in frankfurt, the ecb has taken major steps to cap inflation. she expects to raise interest rates further over the next several meetings. china says it has the patient's to bring taiwan over -- bring taiwan under its control. he says they realize the future is in unification. in taiwan, showing skeptical views for beijing. officer doug ramsey was arrested on charges after he bit a man's nose at a college game -- a

college football game in arkansas. 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. i am lisa mateo. this is bloomberg. ♪

>> i thought the 4%, they certainly will by the end of this year. i think they are going to have to go high at the beginning of next year, then i think they will pause. i don't think they will slow down the rate hikes. jon: that was megan green, lobo chief economist at cairo institute. morse -- more people looking for the 4% rate. the nasdaq 100 by a little bit

more --. news conference with chairman powell forecast. tom: former vice chair richard clarida will join us here in a number of hours. vincent reinhart as well asvincent reinhart -- as well as vincent reinhart. he is chief economist. vincent reinhart invented modern resort -- modern research in washington and has terrific perspective on forecast. vince, thank you so much for joining today. i went back and i did a google search of the fed rates an indian number of days of --. when does the central banks stop fearing to go the other way? vincent: right now, it is easy

for central banking because they are so far away from their inflation goal. one power wakes up in the morning and says inflation is too high, he worries as he goes to bed at night, inflation is still too high. it will get harder when you have to top out where you raise rates. close to the goal and unemployment rate is rising. tom: we are sort of used to higher interest rates. we have all been there before. does the media and the guys wall street, do they overplay the world is coming to an in? vincent: the fact is, we have been here before.

the fed goes to tightening sales and loosening cells. they have been in tightening sale that will last longer. we will have to go higher. this time next year, we will be talking about how long will the fed be --? lisa: the end rate for fed funds to be at 5%, we are hearing more people call for a greater likelihood of that kind of rate backdrop for a long. of time. do vincent: you agree? vincent:vincent: yes.

chair powell play to the -- generally when the chair -- is higher, it tells you the committee is going up. they have to go above their natural rates in order to create some slack. the base is rising. that base is probably higher. lisa: what do you expect the unemployment rate to be in those projections? how much more of a potential recession case do you see starting to leak out from the fed today? vincent: i would expect the rate to go up.

i would expect a decline. it would be worse than what they say. rather than the unemployment rate -- i would expect to see unemployment rate up 4.5 percent. there forecast, i would expect unemployment rate to be higher next week. jon: vincent reinhart of dreyfus and mellon. too early to see that today, lisa, in early projections? lisa: from a strategic point of view, people are going to be looking to see what they pullback at the bank of england. it doesn't matter if they reflect that in the fourth projection because there is a

general sense that they bring costs lower, and they bring rates higher. they are going to extrapolate what you want from that. jon: the last few summary of economic projections we had from the federal reserve, she called them aspirational. tom: four-week moving average on the jobless claims, 224,000. that is so far from a 5% unemployment rate. jon: that is the point the chair is making. to get inflation lower, you need rates much higher. that is their position. tom: every airline is packed. i don't know if the airline is going to make money.

jp morgan saying, here is where the consumer is now. they have got a tough task here on this show are going to play out. jon: at morgan stanley, have been right on this equity market. tom: the equity market is at 26.7. you might get a 30 on vix. the damage is in the bottom -- is in the bond market. the institutional mask -- the institutional mask is losing money daily in the bond market is immeasurable. i have never seen it in my life. jon: last week, we both thought the same thing. we have had the rates sharpened. lisa: what is the redo to job cuts?

the path to get to that greater area in the labor market, we talk about a 4.5 to 5% unemployment rate. how quickly are these getting downgraded? some of these companies that are coming out, are these outliers? or is that going to be much more --? jon: matt from morgan stanley joins us next. with tom keene, lisa abramowicz, jonathan ferro, seen on radio and

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♪ >> it has been the engine here, the strength of the labor market, the strength of the consumer. >> the june 17 low is not that far away from here.

>> i'm not convinced that the data is going to see new lows for the back end of the year. >> the rate will overcome the rate of inflation. that is when the fed has done enough. announcer: this is "bloomberg serveillance: early edition" with tom keene, jonathan ferro and lisa abramowicz. tom: on fed day, so much to talk about. richard will join us, the former vice chairman of the fed with coverage today. how about a switch from the fed to the stock market with mike wilson coming up. there is a lot of mystery. jonathan: mike has got it right, dead on. now, look for the earnings concern. we are starting to see that with companies like fedex. >> what i notice is the bloomberg total return index.

new lows breaching what we have seen. the bloomberg index down 17% from the peak. there is nowhere to hide. jonathan: looking for close to 5%. the high yield going somewhere close. waiting to be patient, waiting for a recession. tom: i said who is that woman? lisa, expert on the spread market. lisa, the spread market always says so much. what is it saying this morning? lisa: it is just getting around the edges without getting carried away and there is pricing in because it is still far below some of the hype of the other times when we see not only rate hiking, but also credit fears. when does this process go directly to mike wilson?

we've seen that play out in certain equities. jp morgan asset management. jonathan: the equity research in investment. the bond market has spoken recently. read between the lines. tom: i'm going to get the data check going. we need to get to mike wilson. on a radio, on television. it is a litmus paper in the system. the yen up fractionally. weakness in sterling. jonathan: this snapshot of foreign-exchange right now, the dollar stronger against everything with the exception of the swiss franc. euro-dollar -6/10 of 1%, just about holding onto 99.

yields down three basis points, so much higher recently over the last few weeks. futures just a bit firmer. tom: it is so true that the media, the financial media says are you right or wrong? you failed, you were done. there reality is the way strategists are used on wall street, no one has given more in the last 12 month then michael wilson, chief equity strategist at morgan stanley because it has been a consistent message of the where the future. what i know is you mentioned it is picked over. i can't find scale. there is not enough to choose from. where do i hide?

>> the market is picked over because this is where we are in the evolution of the bear market. when the markets began, things that are kind of ridiculously priced as more evident. late last year, began almost a year ago. it is like being on a water ride. just kind of waiting for some story, moving forward. we are more in that second camp because the view on earnings is so negative. the spread between our forecast and the actual forecast moving bonds up, it has never been wider. the only time it has been this wide is 2008 and 2001. obviously they are not coming

off the gas on their hawkish and us, and nor should they. i wouldn't be surprised if we get some relief led by the bond market. maybe stocks come around one more time, but the ending is all about the earnings now and we are just not optimistic. jonathan: 50% probability. 40% probability. coming off this recess on twitter, a lot of people want to know what is the 10%? that is the mystery. it is just not that probable. november we said it is pretty unlikely, so worst-case, 20%.

but it is kind of this soft landing for the economy. however, that is not a soft landing for earnings. we think you don't make new lows in the case, but naturally, at 3900, the risk reward is probably on the downside. and i want to make it clear, this is the part of the bear market where you should be looking for something that you want to own coming out of this. some are priced appropriately, but clearly fedex, that wasn't priced. everybody knows this is already priced. they are all risk tolerance, all work.

we think it is premature for that, but we are getting closer. lisa: there is an issue with how long this is going to last. talk of the lost decade of profits on headline level for the s&p just based on the fact that yields are going to remain higher, inflation is going to be greater. do you agree, or do you think we will rebound on the other cited this? mike: i think we will get your rebound but air view for a while now is that we've moved out of the monetary policy dominant world to a fiscal-dominant policy world. what that means is that the fed is no longer smoothed over the edges we had historically because inflation, while maybe it is going to come down, it is not going away. what is going to happen is that

you're going to clear the expectations on growth and then have a reseller ration driven not only -- receleration driven by more aggressive this policy. it is interesting to note fiscal policy, we have this debt forgiveness program here, we have this stimulus in the u.k., equivalent to $1 trillion in u.s. economic standpoint. it is kind of interesting with inflation. but the fiscal policy is working counterproductively to the monetary type. -- monetary tightening. it is not all bearish. there will be a time even the monetary can do its job that the ecb, the main job is to be funding the government.

there is similar to the 40's era. jonathan: just one question and i think it is lost in the conversation. it is not just about you and the team. something you do like in this equity market, something that has worked. mike: i think the stock has been terrific in that scenario, universal. they never had that because there's concerns about things like that. but health in general, it is an area of the market where you have pent-up demand, technology has been here, consumer goods. for whatever reason, it still trades really cheaply. this goes back to that idea that there may be fear about pricing controls and things like that to me, that has a lot of exposure.

energy companies, -- the overall message with the message of defensive earnings stability, operational efficiency and metric that has been working nicely and i think will continue to work in this bear market. jonathan: it has been working. congrats to you and the team so far, absolutely brilliant. mike wilson of morgan stanley. tom: what is important is how they dovetail. i really can't say enough about the nature of morgan stanley research. i love how they are argumentative and visibly argumentative. you saw that moving from transitory to a more difficult

inflation. jonathan: futures up for tenths of 1%. heard on radio, seen on tv. this is bloomberg. >> keeping you up-to-date with news from around the world, vladimir putin declares a fight to the debt with the u.s. and its allies. he's calling on 300,000 resumes troop -- preserve troops in a major operation. he says he will not rule out the use of nuclear weapons and that the u.s. and its allies want to destroy russia and have dealt russian troops there were feet since the early months of the conflict. the federal reserve's fourth to raise interest rates today to the highest level since 2008. and there will be further increases.

the third straight meeting, policymakers are expected to raise rates by 75 basis points. they chair jerome powell is expected to resolve current inflation that is near a 40 year high. the bank of japan is trying to tap upward pressure on foreign policy decision later this week. it announced an unscheduled bond buying operation. the doj governor has emphasized its determination to maintain interest rates even the many other developed nations are increasing them. the slowest pace since the start of the pandemic. metropolitan development with a number of the country -- just 3.8% between march and september. that giant has already closed or delayed plans for dozens of warehouses. 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.

>> i think it is unsustainable to have the at hiking rates at a very rapid rate, with the

economy slowing. at some point the fed will have to shift or go into a deeper recession than we may already be in. jonathan: charles schwab is going into that decision later this afternoon. on the nasdaq, up 1/10 of 1%. central banks will have to do more, putting pressure on valuations. activity disappoints quickly, could also be bad for this risk asset. tails you lose, heads i win. tom: can we stay in london? amid the sadness for england, max was our glorious guest. jonathan: this is a highlight at the same time. lisa: anyone else?

thank you, thank you. let's go around the room. tom: and also, this is what it says. right now, michael mckee with us here as we go forward into the fed meeting again. wonderful. mike, i have such a respect for your ability to throw down. i just am unable to do it. which of the forecast, which of the dots with the item you would look for first when they released that stuff this afternoon? >> well i think we are going to be looking at the median got which does come out as well as on the dot plot because what people want to know on wall street is how fast are they going to get to terminal and what do they think terminal is? the third question, how long is it going to stay there?

all three questions will be sort of answered in one ride on the economic projections. we will also look at unemployment because there hasn't been a forecast under that dot plot, and that sort of tells you what they think is acceptable in terms of unemployment. if it follows the book and unemployment goes up. so far, they haven't had a whole lot of luck pushing that. tom: we just showed the dot plot, it looks like a winnie. mike mckee, beyond that, they will be the questions today, what does he not want to say in the press conference today? >> he doesn't want to say anything about a possible -- one way or another. he doesn't want to suggest in any way that the fed is going to back off, at least for a year, maybe longer. we will see in the dot plot how

one they keep rates up. you can look at the future prices, they are starting to cut rates in may of 2023. that is exactly the feeling the fed doesn't want to encourage. they want people to get rates up and keep them there until inflation goes down. lisa: does the fed have a serious credit ability problem? michael: i don't think so. the comment you were leading in with about heads i lose, tails you win, it is kind of an admission that the fed is going to do what it is going to do, and they are looking at how that is going to impact asset classes. but they do need to follow through. if they were to back off at any sign of weakness in the economy, then they would have a credibility problem. but so far, when you look at the expectations, they are relatively anchored, actually coming down in the bed.

these people have bought into the fed program at this point. lisa: one of the biggest unknowns right now is how long is going to take for this economy to truly feel higher rates. it is important because some people argue that the fed won't know if they dramatically overshoot until it is too late. how much are people gaming out the length of time, the duration it takes before we start to see the ramifications of a 4% rate? michael: you've got sort of two camps out there. one that thinks the fed can maybe bring this around because there will be a mild recession developing later next year, and others who think they have already gone too far and we are going to be in the teeth of a recession fairly soon. but the problem is the data they watch to see where they are is backward-looking and the effects of the policies is forward-looking with the lags. they've got to try to extrapolate between the two, and

it isn't easy. that is a question on my list for jay powell. how are you going to know where you are and whether or not you've gone too far? they have always said we know how to deal with inflation so if inflation went up too high, we would know what to do, we could pick it right away. but what if the opposite is true? the economy starts to really fall and the fed doesn't know that is happening yet. jonathan: thank you very much, looking forward to the news conference. we talked about that, didn't we? a lagging indicator. lisa: basically, that is the issue at a time when you are starting to see the fedex of the world come out and say things are moving so quickly they have to readjust the forecast. some of us might be dealing with the specific issues that has to do with fedex and fedex alone, but we are also seeing it from other companies. if that relevant for the fed? does that data track? jonathan: you'd be surprised

with the upcoming highs remaining larger inside of the neutral policy rates. a less likely outcome would be deciding the policy rate increases will slow report at some point. >> and also the market is going to be watching and we are going to correlate all of that in on equities, bonds, currencies, commodities. moments ago, i would suggest off russia and putin, but we are at a point where the dow is on the cusp of breaking. we are not there yet, but can you imagine dollar strength into the press conference? jonathan: i can, i can see it right now. euro-dollar just coming off. levels that we mentioned at the start of the year, i would ask

since yesterday. lisa: if that is right, you said i've watch that one our interviews this year. i said 150. and guess what? we are not at 150. jonathan: let's get it, 143.98. euro-dollar just holding, 7/10 of 1%. this is bloomberg.

♪ jonathan: live from new york city this morning, good morning to you. about half of one person on the s&p 500, and futures up on the nasdaq. yields pushing lower by four basis point on the 10 year. just about holding on to 99. that comes to -6/10 of 1%. shout out to twitter, putting

the bear in the bowtie. what a way to start the day. tom: we could do that. i think the podcast network is good. a digital product over the years. becoming more and more important including a podcast, we are working on that every day, now that we have the return. right now, we return to what start of the program years ago. actually spending 24/7 on something narrow and excellent read inflation, the brilliant work. one of those years ago was michael pond, head of global inflation research. far more accurately, he is truly expert with the assumption on full facing credit and he joins

us today. michael pond, if i look at the rio yield and it is two partial differentials of a nominal yield and some measure of inflation, which matters right now? >> it is the real yield that matters and it has moved up a lot. the market was not really buying into the fed resolve to hike rates enough to slow the economy, putting inflation down. since jackson hole, real yields have sort, particularly at the front end. now they are above 1%. the markets have really accepted the hawkish tone of the fed. tom:tom: if you agree with me on that, from the -300 basis point conversion to a positive 164 basis points.

that is a hugely linear jump. how do other asset classes react to the michael pond world? michael: a lot of higher yields are not supported by strong growth. the fed has become much more hawkish trying to slow the economy. that is in part by risk assets have been on the back foot since jackson hole. so the fed is trying to get the economy in a position where inflation comes down, as down it can take for a little bit and then goes back up. but we think we are years from that. that that result is strong here, that was clear at the jackson hole speech by fed chair powell. channeling risk assets have responded, but now, perhaps they overreacted. obviously we will get a message

from the fed on the hawkish side, but markets are already prepared for a very hawkish side. >> might be prepared for a hawkish fed, there is a question of how quickly that leads to economic deterioration. but i want to sit on this idea right now of what it means to have a localized special reserve, particularly at the highest level going back to 2011. do you foresee ever again this federal reserve going back to zero interest rate? michael: it is very possible. we thought that the market was pricing in too high, strong fed cuts in the next year. that was taken out as appropriate, but if you look at the housing market and see the broader economic outlook, then we could be in trouble here. the fed would have to respond.

we think we are not likely to enter that regime, but it is certainly possible. as we enter a recession, the fed has to backtrack and send rates way back to zero. lisa: this is sort of the big tension right now bond markets. the 10 year yield at the highest level since they have been going back years and years, and yet some people including fixed income earlier saying it is unclear because there could be more. is this the last time we will see real yields of this level because the state is poised to make some sort of turned in the future? michael: that 100% depends on the path of core inflation readings and the labor market. that is why the fed is reacting so hawkish lee here. -- hawkishly here. some parts have begun to slow,

but the latest trend was 0.6, and labor markets clearly remained quite robust at 3.7% unemployment rate. the fed really needs to see a slowdown in the monthly pace of inflation, particularly encore, and the beginning of the labor market. the chair talked about inducing pain in the economy. again, channeling volker in order to get inflation down. the fed has to do a lot more to get the economy going. tom: you embrace the dual mandate, and i get that. talking about jobless claims, maybe the chair will bring that up today. he's got another mandate, which is a stop against political realities. if we get a barclays sort of recession, does that become a third mandate for this chairman? michael: the fed is absolutely

trying to make sure it retains credibility, particularly when it comes to inflation pricing. one of the reasons why is being so hawkish here is to make sure that inflation expectations don't get out of control. that is when the fed fears inflationary spiral or inflation is high, people expected to be high, and it just -- on itself. one of the things they are trying to do is make sure that high inflation itself doesn't lead to high asian expectations. when you look at surveys from the fed or the university of michigan, the fed is doing a good job on that front and it able to ignore any political issues with the slowdown. tom: i'm sorry, politics matters here. is going to matter for bank of england, chairman powell. jonathan: i disagree. how did they convince people that having unemployment is a

price worth paying for lower inflation. how difficult do you think this is going to get? michael: the dots, if you well, -- if you will come will, with so important today. one of the things we will be looking at is the unemployment rate. the s&p is supposed to be the economic outlook under a path of perfect monetary policy. if the rate remains elevated in the forecast, back a signal to the market that they are willing to tolerate decently higher unemployment rates in order to get inflation down. that is the message that the fed has been sending, but we will believe you looking at the s&p to confirm that. lisa: i wanted to know what your projection is for how quickly inflation will come down. at the end of this year, at the end of next.

michael: we are fairly optimistic that it will start to move forward, particularly with the reading in part because of recent tpi, but even beyond that, we see commodities and shipping rates. we found that many price cuts, wages are keeping inflation high, and that is the key to inflation going lower and lower. lisa: just quickly, what are we talking about in terms of levels? what are the odds? michael: we think we will certainly come down from that when it comes to inflation in part because of the strong decline in vaseline prices. but the court can remain sticky. we may be slow in inflation readings but certainly well above. jonathan: thank you. coming the trading floor. wasn't that fantastic? tom: a memo today, pond is on

surveillance. jonathan: beautiful. tom: the guardian in london, one of the great authors and thinkers of economics in your united kingdom, he resurrects some ronald reagan, tripled -- trickle-down economics. is that what we are observing? jonathan: it was pretty skating. tom: this is out there in real time. for our american listeners and viewers, what goes on tomorrow has a profound effect on what goes on in america. i meant the sudden start.

lisa, the economic consequences of years past is the headline of that piece. lisa: he put this up on twitter. he said he has done many interviews, discussing disastrous economic policy. and he said that they are in total disarray but it seems never in my 50 years of doing economics i have never seen anything like this. jonathan: the two that we have heard of, the one that we heard of in the last 24 hours was on producing duty, housed in the u.k. club, and that is a different level, how much that property cost. let's see what the complete package actually looks like. tom: looking with expert yesterday, it is lengthy came out a day late. jonathan: you can go on stamp

duty. just google it and have a look at how much you have to pay. that is real money. i mean it is real money to begin with. tom: is real money sterling? a stronger dollar in the next equity market. yields are lower. looking forward to a fed-described special a little bit lower. do not miss it when the former fed chair is in the studio with three of us, working on the decisions. isn't that just fantastic? tom: he is only here to see branmo. jonathan: from new york, this is bloomberg.

lisa mateo: vladimir putin threatening to escalate the war in ukraine even further. calling up 300,000 reserve troops in valentino's all means necessary to defend russian territory. he also talked about the use of nuclear weapons. meanwhile, the kremlin is moving to -- by russian forces. the fed ready today to hike again and to fend off hawkish numbers. policymakers are affected to raise interest rates by 75 basis points. that will bring rates to the highest level since 2008. jerome powell likely to describe why he believes rate hikes are needed to tame inflation. borrowing costs will rise more in the months ahead. the ecb has taken major steps to tackle inflation, and she says to raise interest rates further over the next several meetings.

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.

>> there is some thought that we are getting to see hawkish miss but it is the earnings that are going to move the market. tom: the equity markets, so much insight, particularly with the foundations. before we moved with massive united nations general assembly, lisa, i think we got a look at what is moving in the market. just one idea off of what jon was mentioning. on the bank of england tomorrow, if you take the sterling and you extrapolate it out, the weakening has been so rapid that we see a 1.10 99 extrapolation

in a couple good british coffees. i find that extraordinary. lisa: the fact that people are talking about the potential parity at a time when there is a one-two punch of an economic -- forcing the bank of england to raise rates that has endless spending and tax cuts is leaving a lot of people wondering where the foreign investment is going to come from. tom: of course, the federal reserve coverage, vice chairman we choose to give us expanded comments. i'm sure he will be delicate there. right now, it is a delicate moment for anyone. i will not mince words. michael bloomberg who signed my paycheck has been a world leader in saying forget about the big picture and look at the smaller, tactical realities. he provided leadership in paris a number of years ago on this, the mayor of paris. he does again today with the

cries, covering the story as part of selected panels. francine, this is the effort of the prince of wales. he is distracted. what did prince william bring to the innovation summit? >> this is about rallying the troops, about finding innovation in the real world economy. it is about getting funding to the right place and the overarching idea is that yes, we see more and more climate actors, we see more in the economy. but if you are a leader in world poverty, inflation, this may not be for you. tom: how is this change because

of the war, because of the surging energy? not the threat to esg, but the idea of climate debate due to the price of commodities? how does it change the summit? >> it changed things enormously. the biggest story to come out of the u.n. in general will be laid out. some of the groundwork no longer tied to go to that meeting. again, if you look at energy, if you look at certain parts of the crisis, there is more concern in the united nations director general yesterday that climate still needs to be less front and center. the other question is that of course comic chain -- king charles iii attended the funeral

of his mother queen elizabeth which was a real spearhead in this. they even have an energy minister that is not the biggest champion of climate change ever. lisa: how has the shortage in commodities, or maybe not the shortage, the higher demand caused commodities to be necessary for the innovation of cleaner energy? >> [indiscernible]

some of the transition economies into something greener. the fact of the matter is that the government has not prepared for this. this time, and there is commitment from private and public partnerships, is really ramping up. again, it is about making sure that these policies are --. tom: francine, thank you so much, greatly appreciated. in the time that we've got left here, i think we have to frame back to the absolute umoja is

2022. a great observation that we are not even to neutral yet. lisa: just to give you a sense of that, more than a dozen central bank meetings will be held in the next 24 hours as we look at all of these nations dealing with something very new for the past decade or two which is inflation. one way to look at this regime change is to look at japan, $1.9 trillion of negative yield. that was $18.4 trillion. tom: these are flows of money in the flow is destabilized. just from the beginning of the

year, the fx industries which is more complex and 8% appreciation. those are big figure numbers in foreign exchange before the united nations and frankly, for chairman powell. lisa: 25% appreciation of the japanese yen is a more violent example here. especially the emerging nations. the fact that those commodities are paid for. tom: that is what i will watch here at 2:00 p.m.. what will you watch? lisa: i will see how much people are expecting the fed to stay

out in front of inflation and also just in terms of risk appetite, how much have we priced in. tom: i did not realize that, lisa. lisa: the greatest conversion going back decades. tom: i will have to look at that. i failed. maybe i will get it right by 2:00 p.m. this afternoon. again, we are honored that -- will join us in the 2:00 p.m. our. our. - [announcer] imagine stay having fuller, thicker,

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jonathan: it is fed decision day, here we go again. the countdown to the open starts now. >> everything you need to get set for the start of u.s. trading3+ this is bloomberg, the open, with jonathan ferro. jonathan: live from new york, we begin with chairman jay powell. >> they will go ahead and take 75 basis points. > another 75 basis point

hike.