>> this market is showing it is

discounted most to what it is expected thing. >> when it comes to tightening, the fed sees the most impact. >> inflation may have peaked, but the dissent is going to be gradual. >> this is bloomberg surveillance with tom keene jonathan ferro and lisa abramowicz. ♪ tom: good morning. 30 minutes away from an important inflation report that could move markets. it is important, you mentioned december another inflation study before the fed meeting. jonathan: i imagine the story could change going into the fed meeting. we have two prince, one today and 1/13 and the fed meeting december 14. we have got to work out what they think is going to look like. tom: we are up 105 percent even with the pullback in a gallon of gas. in the last 12 months, a gallon

of gas even with a pullback, up 11%. jonathan: that is a story for headline inflation. the problem the fed has. the problem we have following this story is that 12 months ago it was good and budget, it was the supply side story, the pandemic. 12 months letter -- later, goods, services, shelter. that is why it is more problematic. tom: with election, it is local. shelter is local. we --in new york city, the market is real. across the nation, there is a surreal element to it. lisa: local with respect to income. what you are seeing, even in new york city, your seeing the luxury apartments going for bidding wars. the rest of the universe apartments are languishing. there is real divergence emerging and you are seeing that around the country. tom: added up. it makes about a third of inflation shelter. that is the general guideline.

the overlay on food, which is 9%, whatever that is -- is a dine are ms. part of the picture --china or ms. -- girnormous part of the picture. lisa: i am trying to parcel out anybody going to trade on this today. -- that is been what has happened every single time. jonathan: that is always the way it is. that is the way it always will be. as we look around the world right now, we could see inflation rolling over. we can see the labor market cracking in places. we just have not seen it the official aggregate data in quite the same way. that is a problem. tom: data check to year yield, 4.6%. what does the two year yield do off this inflationary report? jonathan: off the payrolls report, we threatened to break 4.80.

who knows. the fed has told you they are going to go slower but further with fed funds. that is my question. how much scope is there to push the terminal rate much higher than it is? you need the inflation story to accelerate to engineer that problem. tom: the acceleration could be up or down. what no one is looking for today is the tick-up in inflation. a small tick-up in inflation would be big news. jonathan: we have read the report, wrong, wrong, wrong has been the news all year long. tom: dxy 113, back to 111. jonathan: euro dollar has been counting down to parity the past week or so. -.6%. tom: we will have to see.

joining us now, patrick armstrong, chief investment officer. what will you look for in 26 minutes? >> it is the direction of services and shelters is going to be the swing. i think economists have a good handle on where goods prices are. commodities have rolled over. it is harder to forecast and has been a wild card. shelter is the biggest contributor of the general direction of non-goods and services. jonathan: how much scope is therefore a high terminal rate? based on what is priced already? patrick: i cannot see it with the u.s. economy supplies to the upside next year. my base case as the u.s. economy is flirting with recession, probably a mild recession, that is going to come with job losses that fed hike set created. i do not see how the fed is going to be willing to keep hiking when joblessness starts rising. job situation is robust in

america right now. if you fall into a recession, that is going to change. i do not think the fed is going to get past 5% unless something changes. lisa: are you getting exhausted parsing through these reports, trying to get a sense of the thesis going forward, even craft some narrative for 2023? patrick: i think you can get into the moves on each month on month inflation friend -- inflation print. you see no deceleration from the services side of things. shelter keeps going up, mortgage costs keep going up. if you want to pass on higher mortgage costs, rent. looking for direction and rate of change, those things will be the leader of inflation and i think the fed probably does pause before it hits the start. just because as inflation is falling, probably the u.s. economy is weakening. you've got to look at it, it is the direction of change and

movement and the individual subcomponents that matter. lisa: phil from j.p. morgan said, since the summer, he has been building his cash position for 10% of his portfolio. have you been making similar moves since the summer, since we got some indication from the fed that they were planning for perhaps a higher terminal rate than expected? patrick: i have not gone into cash. i left short ration prints. on bbb plus, single a corporate bonds from banks, you were getting a 6% yield maturity. there is next to nonexistent he felt risk on these big banks. you are getting a premium where the two year yield is. cash gives you something now, it didn't give you anything. short duration corporate bonds give you better bang for your about -- your buck. tom: what is the unleavened -- unlovedness on stocks right now? patrick: at the end of

september, everyone was gloomy. that set the stage for a strong october rally. markets and sentiments dictated by price. as markets have risen since the end of september, people are pessimistic but probably not as much as they were at the end of september. general pessimism, anything not quite as bad as what people expect maybe hitting the floor under equities and risk assets. lisa: after we get cpi, we are going to hear from the philadelphia fed president, dallas fed president, kansas city fed president. who matters to you? do you listen to this fed speak, does it alert your view? patrick: it definitely colors the view. they've got their views on where policy should go. i think we are going to probably get hawkish rhetoric out of the fed for the coming few months. they will want to show that got a handle on inflation because they know when the economy gets

tough, they want to frontload things and fight inflation now while the job market is still strong. even if the fed is going to pivot, they are not going to talk about the pivot right now. jonathan: final question for me, can you really deliver 400 basis points of hikes in eight months and then say the price was 25% move for the s&p 500? take a step back from it all sometimes and look at the screens. i am wondering where the pain really is. is this it, or is this the calm before the storm? patrick: i am cautiously optimistic on equities right now. the feds destroyed multiples on equity markets. the earnings outlook is the risk. if you can find companies that have resilience, profit urgency and can defend those profit margins, i am a buyer of those companies right now. the overall index as a whole is going to face headwinds, it is not going to be massive rallies. companies that deliver earnings

growth have multiple contractions, so earnings will drive stock prices. jonathan: thank you. headwinds of the index level, we have had that conversation how many times now over the last week or so? seriously, again and again. lisa: this comes down to tech, what we are seeing. i saw one article about amazon is the first company to have lost a trillion dollars of market. it built that up over the past four years and it was taken away in a heartbeat. how much do we see that lead into and create -- i hate to talk about the lost decade. jonathan: it is fine to talk about that. we should have that conversation. they are not unheard of. lisa: i agree. that is what some people are talking. jonathan: we have got to work out how quickly it takes to bounce back from that. to reshape the industry. the media. when it comes to eyeballs at --

eyeballs, ads, >>. how far does it go? tom: the operative word there as quickly, they have got to move that light speed. jennifer out with this inflation report in 19 minutes. i am stunned. take up the fancy people. average rent in manhattan is $3850. the average income calculation to pay that, you need 154 thousand dollars in income. that is how twisted this inflation is. granted, looking at an auto market of new york city. jonathan: who are the fancy people? for a lot of people across the country, if you need $154,000 a year, your part of the fancy people. tom: the other part of fancy is shocking. top 10% luxury fancy stuff --a month. up 13%. it is surreal. we lose scope and scale every

day on this. jonathan: we are lucky we have you to bring us down to earth. get us in touch with the common man. tom: i am. jonathan: live from new york city, cpi 19 minutes away. this is bloomberg. ♪ lisa: control the u.s. senate comes down to three races where boats are still being counted. each party needs to win two of those states to secure majority. georgia, arizona, nevada still in play. the race in georgia is headed to a runoff next month. neither democratic incumbent rafael warnock or republican herschel walker have received 50% of the vote. some republican leaders are moving on from donald trump and are embracing florida governor ron desantis as the party's best hope for the white house. desantis was reelected tuesday and racked up votes in democratic strongholds.

at the same time, some of the former president trump's favorite candidates suffered humiliating defeats in house and senate races. the pentagon estimates well over 100,000 russian soldiers have been killed or wounded during the war in ukraine. the chairman of the joint chief of staff general also estimates there have been 40,000 ukrainian civilian casualties. he says the potential stalemate and fighting over the winter could lead to peace talks. in china, the government has reiterated its support for the covid zero policy. more precise and targeted control measures against the virus. according to the state run news agency, beijing will try to minimize the impact on economic and social developments. new twitter owner elon musk has emailed staff for the first time in -- and warned them of difficult times ahead. he wrote there is no way to sugarcoat the message about the economic outlook. he said remote work will no

longer be allowed and employees are expected to be in the office for at least 40 hours a week. global news 24 hours a day, on air and on "bloomberg quicktake." powered by more than 2,700 journalists and analysts in more than 120 countries. i am lisa mateo. this is bloomberg. ♪

>> i think inflation may have peaked, but the dissent is going to be gradual and far from steady. i think at the end of the day, you are looking at key components which are now the cat is out of the bag, they are significantly higher. jonathan: how sticky is inflation going to be on the way back down? cpi print in 12 minutes. equities marginally higher through most of this morning on the s&p, up .3%.

yields lower down to basis points on the 10 year, down 4.0 7%. dollars stronger against the euro. euro-dollar, ..951. tom: thrilled he could join us for an extended time. the language is sufficiently restrictive. what will you learn about sufficiently restrictive in 11 minutes? >> thanks for having me. it is good to be in person. i think in terms of sufficiently restrictive, we know a lot of inflation data is lacking. i think the fed took account of that in their last fmc statement, talking about the lag defects and cumulative tightening they have done. that is an independent condition in terms of stepping down. when you look at the economy overall, we have not seen the labor market slow.

it is still tight. the persistent elements of inflation data remain elevated. i think when you look at the u.s. economy trackers for gdp in q4 are bouncing back, particularly with auto sales picking up. i do not know if we are going to learn much about sufficient data with this data, doesn't mean the fed steps down in december. i think we are going to have to see more jobs reports, jolts reports and what is happening with the consumer. jonathan: why can't it fall as quickly as it rose? what is it about this inflation story that prevents it from happening? matthew: the nature has changed over the past year. initially, it was narrowly confined. it was about supply constraint. everybody talked about used car prices being the key driver. today is so broad-based. at the end of this day, what is median cpi telling us -- those are good measures of broad-based inflation. those have been elevated. i think what you are seeing is

on the services side, rent and oa are are persistent. some items in the service ascot are going to be persistent. i think it is consistent with a labor market today that is tight, unit labor cost growth trend is negative. jonathan: what would you say to the people listening now who say i am seeing a different story, layoffs at big companies, i am seeing price declines in retail because of inventory per rate i am seeing freight get hammered in a way that is divorced from the story of 12 months ago. what do you say to those people? matthew: we all expected we would see it in the goods data. what i would look for today, are we seeing household furnishings coming off of peril? to get confidence that is going to show up in the inflation data. what we have heard from a lot of companies, consumers are not as price incentive as they were before. from the labor market side, i do not want to over emphasize what

we are seeing with big tech. it does not represent the u.s. economy. when you look at the jolts data, initial jobless lames data, everything looks tight. lisa: i am looking now at the cleveland fed now cast for inflation, which a lot of people have said has been dead on. it still has basically innate handle for november cpi. i am thinking it will take time, but the fed doesn't have the luxury of time. given how slowly it is coming down, is the fed destined to break the back of this economy because there is no whether way to do it? matthew: we think so. it is a question of, what do you think the nature of inflation data is today? can we get closer to the fed target with unemployment rate rising to 4%? the research we have been doing suggests we are going to see a sharper raise -- rise in the on up limit rate. i do not think the labor market can come into better balance with job openings coming down.

as job openings come down, we will see layoffs pickup and the unemployment rate rise. that is the most likely path to get price stability. lisa: the election. i know people are shrugging it off as a non-affect. it does raise the inability for this government to create a physical response to counterbalance anything. we have been talking about that for a while. how much does that affect the duration of the downturn you are expecting, as well as the depth? matthew: we should look at the economy today. there is a lot of latent stimulus out there. household balance sheets with somewhere between 1.75 and 2 trillion hemolytic excess savings. we are seeing state governments stimulating inflamed today. i think there is still a lot of latent stimulus. from my perspective, that tells me the economy will be more resilient in the long term. i think you are right on the other side of this. if we get the recession, it does

mean no doubt, fiscal policy is less responsive. we think monetary policy will be likely less responsive. you have the tail risk about the debt ceiling. does that bring fiscal retention back in? jonathan: do you know how much we like you? we like you so much we gave you mike mckee's seat. he is about 1000 miles away. i am looking at him. good morning. michael: we are looking for a slight increase of headline number by .6 on the month, after .4 on the last month. because of energy. the core is expected to drop a little bit, 5/10 increase from 6/10. those are not going to be great improvements, but i want to point out i am not looking at year-over-year numbers. that includes data from 12 months ago. it -- what the fed wants to see is the sequential decline in the month over month numbers. if you are looking at the core, you do not see that yet.

if we get a drop to .5, that is a big increase and still something the fed is going to be worried about. this is the first drop in several months. tom: 20 seconds. what is this item you are going to look at besides shelter? michael: service prices. mac has the right view. goods prices are going to come down. service prices are going to be the issue. we take that apart to see, is there something in there the fed can influence? jonathan: that is a big debate. can they influence what we are seeing? tom: what does inflation subside down to, headline? inflation to me 5% is unacceptable. jonathan: if we get down to five, do we have a different conversation with the federal reserve? they are going to keep hiking until they are convinced we are back towards target. i do not know how much

information they need to be convinced of that. lisa: for now, they are going to keep hiking until they get down death 2. what happens if you see the dual mandate come into question more and you see unemployment rise? do they say, we do not want to cause undue pain to the economy? tom: i do not think so. jonathan: that is not what they want to signal. it is different to what they way -- they may well do. long equities at the moment for many people, this fed wants to signal such a hawkish policy stance even to an economy many people will anticipate will roll over. lisa: they are basically saying, stocks, please go down. jonathan: chairman powell said as much. cpi next. this is bloomberg. ♪

jonathan: inflation data in america seconds away. equity futures up .25$ on the s&p 500. michael: it comes in pretty much as forecast. a little lower on the headline

number. headline and core coming lower than forecast. a good report. it is going to be interesting how the market reacts. cpi on a month over month basis up point 4%. pushes the year over your number 4.7%. the core comes in up .3%. the forecast was up .5%. year-over-year -- a significant improvement in data that wasn't expected by the markets. the last six or seven months, the numbers have come in stronger than expected. this this is first time we have seen something worse -- lower than expected. good news there. what are the markets doing? i look at the numbers for the individual categories. jonathan: exploding higher. a big downside to price on cpi. welcome downside surprise on cpi.

equity markets up to .5% on the s&p 500. you can guess where the bond market is. at the front end of the curve, down 19 basis points. friday after payrolls, we had to look at 479. back down to 439. on a 10 year, down 12 basis points. tom: i have never, i mean never, seen the equity market futures move like that off a first print. i have never seen that lift. jonathan: we will get you the intraday tart -- intraday charts up. euro-dollar up .6%. you've got a much stronger euro. across the board, weaker dollar off the back of this. downside to price on cpi, equities up, yields lower. break down the composition of this one. michael: we did see gasoline prices rise by 4% on the month,

which is no surprise. the big declines come in used cars. down 2.4%. apparel down .7 percent. that was expected. shelter costs go up by .8%, that is more than we have seen in the last three months. went up .7%. owners equivalent rent up. owners equivalent down a little bit from prior months, .8% rise. airline fares down 1.1%. motor vehicle insurance continues to rise, 1.7%. we are seeing categories we anticipated on the good side going down. categories on the services side rising. the bad news, tom will appreciate this, it is going to be a long, cold winter in new england. not because the red sox were terrible. fuel oil up 19.8%.

that is an issue. tom: the challenges in the northeast. how does this report change the fed speak, lisa has reported on that we see today? matthew: i do not think it changes it at all. michael: you go back to the standard disclaimer of economics in one month's data do not make a trend. it does tell them they are in the right direction. it underscores the idea that maybe they can take a bit of -- i do not know what word to use is, i do not think it is a pivot to go down to 50 basis points. lisa: step down. michael: thank you. step down to 50 basis points, they will be justified in the markets view. we got a lot of fed speak today. we will get a instantaneous reaction to what has happened. lisa: how much are we looking at at the areas that didn't accelerate as much as expected, those kinds of deceleration's would continue?

is there a sense of any kind of trend in in the areas you have been parsing through? michael: that is the problem. you cannot call it a trend. there is not anything that has been consistently going down. with the supply chains starting to normalize, we should see that going forward. food up .6%, it was up .8% past two months. maybe that is the beginning of a trend, especially with the ukraine grain shipments continuing. we are going to have to wait and see on this. i think you can probably anticipate goods prices will go down. matt mentioned earlier construction supplies and household goods, furniture and bedding down 1.2%. window coverings down 1.2 percent. floor coverings down one point 4%. a lot of that furniture comes from china. maybe that suggests we are seeing an improvement in supply

chains as inventories build up. jonathan: thank you is noise. there is hope this morning off the back of that data point this is the beginning of something. december 3 team for is your next cpi print. a day later, you get projections. this morning, backing away. backing away from the idea the fed is going to go 75 basis points after that print. equities higher on the s&p by 2.8%. nasdaq 100, much higher. yields on the front end of the curve, down almost 20 basis points a two-year. when did we last see a move that large? tom: in the upper teen years -- up-teen years i have done this, i have never seen that. ever. jonathan: on a 10 year, down 15. tom: we do not want to waste a second. matt, i look at core cpi.

you have got to be kidding me. to use a fancy phrase, this is a teense-weense move. there is no way there is a vector here. what number do you need to see where you have jon ferro's level of --? matthew: when you look at the underlying elements of this data, there is support there. there is the equivalent of rent coming off of it. we saw health insurance inflation come down. you saw goods deflation as everybody anticipates we were going to see. apparel prices down. household furnishings coming up. the underlying elements of this report card are good. they are supportive. there is evidence we are moving from peak inflation, down lower. where do we end up is the question. tom: to jon's point on vector

6-ish, core inflation. at what point do you see -- say the aero is pointing down? how much moves do you need to move core to say, vector in place? matthew: we cannot look at year-over-year data. i think it is about the month on month pricing, the market is right to focus on that. in those prints, we have gotten several broad-based salvation in a lot of those categories. i would expect medium measures look better today. it does support defense -- what the fed is leaning towards, a downshift in december. into next year, february and march is about maintaining deceleration and will you begin to see the labor market come into better balance? lisa: we are seeing the market downgrade the expectation for a 75 basis rate hike in september.

how much does that change your assessment of how far the fed will have to go if we get an ongoing downshift in the inflation reads? if we get another softer than expected print in december, does that cause you to rethink a recession and that it is going to be deep? matthew: the big if it is if these continue. no doubt, if you see these come off, it is supportive for the fed not having to get too much higher levels. our terminal rate has been at 4.9%. that seems like a reasonable view at the moment. we wrote a piece yesterday, there is focus on financial conditions and with equity markets taking off, there will be focus on, our financial conditions easing in the way that chairman powell doesn't want? it is a good leading indicator when you see tightening of lending standards on commercial lending industrial loans, commercial real estate -- we

have seen a material tightening their. has the fed done enough, how much more do they need to do? the bank lending channel tells us you may not have to have a materially higher terminal rate than introduced. jonathan: 20 basis point move in some parts of the curve on the market. this gives the fed the space to do what they were going to do anyway, which is back away from 75 basis point hikes. if the fed had this data going into the last meeting, with that conference been different? matthew: i do not think so. i think the worry is when you downshift you ease finance or conditions in a way like we saw in july. that is counterproductive to the fed's perspective. this is one data point. there are encouraging elements within this data point. i want to emphasize that. the fed needs to see more to say he can't decelerate from 50 to 25 and hit pause at some point.

i think this helps them, but it is not conclusive evidence they can peek up at 5% and be fine. jonathan: they will not have the hope the fed backs away from 75 and goes back to 50. we get data like this on december 13. they are hoping the second piece of communication from chairman powell gets readdressed so it is slower. maybe 25. yields set higher. does this remove the risk or help remove the risk terminal rate -- the terminal rate those higher than where is priced right now, is removed? matthew: i think some context around those comments were lost. the terminal rate was 4.6 from the median. up from 380. i think he was saying, higher than projected what they said in september. the market went -- >> higher than priced already. matthew: he was guiding

something higher than where they were in september, not necessarily something materially higher than what the market was pricing at the time. lisa: a viewer once you know your view as we got the cpi report. we got an initial jobless claims and continuing claims tick up to 1.49 million per it how much are we looking at increase in unappointed rates that people have perhaps not priced in fully? matthew: they are the best real-time indicators of recessions. there has been difficulty in interpreting that data. prior weeks, you have seen this uptick take place. it was not in the nsa data. there is caution because it has been difficulty seasonally adjusting the data post-pandemic. if you continue to see that rise, it is something that tells you the market is going to we can. jonathan: this was awesome. going into the print, coming out of it. this summer 13th, put --

december 13, put it in your diary. a massive move lower in treasury yields, down 19 basis points. that triggers a move in the fx market. yields lower, dollar weaker. look at this move in the equity market. exploding higher on the s&p 500. futures up to .9% on the s&p. nasdaq 100 futures with that move-in bond yields, up close to 4%. three point 75% right now. tom: month over month matters. most of us rarely get that. if you regress month over month from the peak of 2021, you do not get to 0.3% until early 2024. jonathan: wall street is focused on month over month call, to look for signs for deceleration.

you need to see another one. tom: exactly. lisa: i do not think they are waiting for another one. i think they are moving now. jonathan: jp of jp research coming up. christian armani and -- of academy on crypto. all in the next hour. ♪

>> i could care less what bitcoin trades for, who trades it. if you are stupid enough to buy it, you will pay the price for it. you could trade it $100,000 before it trades to zero. the only value of bitcoin is for the other guy will pay for it. tom: jamie dimon and the iif talking about bitcoin. i think we know he has been clear about that within his annual letter at jp morgan.

lisa, got to get to markets. ian lyngen publishing, looking at core unbounded basis. 0.272%. which is how you get the market enthusiasm. lisa: the market enthusiasm is almost 30 basis points you are seeing the two-year-year-old decline. it is moving, just dramatic of how fast and how far the fed has to go. tom: short squeeze analysis this afternoon at 4:00 p.m. short squeeze in bitcoin going the other way. not so much on bitcoin, she will be with bitcoin this afternoon. sonali, i want to focus on the humbling nature of this crypto move. this crypto debacle for wall street firms. they have to be shaking in their seats today. sonali: word is crypto money intersect with real money? ftx, the hole in their balance

sheet is about $8 billion. bigger than the size of the entire market value of robinhood today. it is a lot of money that is being asked. where is that money? tom: the split for me is bitcoin chat, teller chat and blockchain. his blockchain a transactional, digital threatened by this bitcoin price debacle? sonali: only as far as future investment that could go into it. if you look at future investors and other things that went bust this year, sequoia had to million dollars in ftx. alan howard, southbank, analysts are trying to figure out what the exposure was after sequoia has written there stake down to zero. how much money is left to invest after that? lisa: what is your sense in terms of discussing where the shoe was going to drop next is going to come from? is your senses a lot of losses haven't been recognized or are

offset with sales? sonali: dozens of firms will fail on the back of this because they have had accounts with ftx and can no longer get that money back those are potential brokerages, people. lisa: i think the distinction for the contagion aspect for the individual who sold a bill of goods with respect to certain crypto stories going bust now, versus institutional investors who are going to have to sell, who might have leverage with triggers contagion. how much of that story is yet to unfold? sonali: a lot of it. we do not know how many firms will continue to face pressure on the back of this. to your point, where does the contagion come from and where does it get worse? tether, we did see them decouple in the past 24 hours. those are stablecoins, tied to the u.s. dollar. circle, the head of circle put out an entire tweet thread the other day -- tom: no idea what circle is.

sonali: stablecoin. tom: no idea what stablecoin is. sonali: assets tied one to one to trash -- u.s. treasuries. lisa: is this the problem of regulators? a lot of people are saying with stablecoins pegged to the u.s. dollar, show us dollar, show as you have the assets, show us you are an alternate source of this. regulators were hands off. how much lies in those hands? sonali: a lot is what it comes down to. for stablecoins themselves, that is the most direct link to the u.s. financial system and other currencies around the world. tom: bloomberg conversations about the lack of reservations. is that the moment where the big banks get together and call one 800 gensler and say, would you guys get your act together? sonali: they will probably say, i told you so. tom: i get the i told you so. this was billionaire gaga chit.

am i right that this warning, people are being crushed in this debacle? sonali: it is not just today. it is not just bankers saying get a handle on it. if you are a u.s. base exchange, you are saying money has moved offshore. finance is not based in the united states. ftx was not based in the united states. how is the u.s. supposed to get a handle on its system when so much of it is not in the country? tom: put a cork in my mouth. it would be unfortunate what i will have to say. lisa: gaga, google, millionaires -- googoo, millionaires. tom: rafael -- saw the best thing coming. lisa: there were sophisticated investors who went for it and that is the reason people are thinking about the contagion aspect and how this plays out in a bigger level. why people said that was one of

the reasons for the big selloff yesterday and the day before in risk assets, equities and did not see a bid or treasuries. sonali: real people are losing real money at the end of the day. tom: at 1:00 p.m. this afternoon, a special on bloomberg. sonali will join us for important conversations on where are we right now on the path from 65,000 down to the big market pop, 16, up to 17,000 on bitcoin. looking at that. spx up three point percent -- 3.1%. that will be interesting to see. the market reaction, let's go to the bond market where there is a readjustment price up, you'll down. lisa: you are seeing people price in fewer rate hikes and lower terminal rate as a result of the softer than expected cpi print. i am looking at the two year

yield coming in more than the 10-year yield. does this start heat into people feeling the fed will pull back and allow inflation to run higher for longer? ultimately, it matters less when you start seeing below -- this is something you have talked a lot about, going back to 5%, 4% inflation. where is it ok and livable and not at the forefront? tom: i did not get clarity on this today. i did not get clarity on how we move onward at 5% core, 4% or, 3% core. i am going to suggest 99.9% of the fed is going to say 3% core inflation is not acceptable. lisa: they are all going to say that. the market may be pricing something different. i am watching the longer end, do people move away from this idea we are going back to that 2% level for a long time because of a lack of conviction by the fed to stay high for a long time? tom: with the gloom out there,

someone holding 10% cash we heard today -- i am going to get into the healthy nature of a short squeeze where everybody goes oops. it is a oops rally today. lisa: traders are saying, nope, not going to see it. that is why you see it fly in the equity space. ms. the down days, ms. the updates. tom: the vix with a vengeance. a wild statistic as we continue to move to the market, opening the vix 23.81 in two big figures. that is a lower inflation, big move. stay with us. do not forget our crypto event at 1:00 p.m. this is bloomberg. ♪

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jonathan: that right there was the right kind of surprise. live from new york city this morning, good morning. when was the last time you saw some price action like this? the countdown to be open starts right now. >> everything you need to get set for the start of u.s. trading, this is bloomberg be : the open, with jonathan ferro. jonathan: