>> we welcome bnn and bloomberg audiences. i am john hyland. a surge in covid infections in beijing as china warns it faces a big jump after scrapping most testing and isolation of infected patients. in a breakthrough discovery, moderna cancer vaccine will reduce the risk of melanoma death. the findings provide the first real evidence of benefit for an mrna cancer therapy. >> cancer is not a death sentence.

it will be a disease in five or 10 years like diabetes or heart failure. you have drugs to be able to help you lead a normal life and that excites me. john: the two therapies cut the risk of death or recurrence 44%. airbnb released a study revealing a race-based discrepancy in approval ratings. guests perceived to be black had a 91.4% acceptance rate while those as white had a 94.4 acceptance rate. this includes data from an initiative in 2020 partnership with the online racial justice organization color of change. in the u.k., the government's warning of disruption in the nhs. nurses and annuals drivers are preparing to go on strike in the run-up to christmas. 600 members of the armed services are being trained to drive ambulances. public-sector workers are demanding pay hikes that keep pace with inflation. global news 24 hours a day on

air and on quicktake by bloomberg. powered by more than 2700 journalists and analysts in over 120 countries. i am john hyland. this is bloomberg. jon: i am jon erlichman. welcome to "bloomberg markets." kriti: i am kriti gupta. we started with green on the screen. a cpi report encouraged buying into the equity market and we paired a lot of those gains. we are still in the green with session highs 3.2% on the s&p 500. look at this. not only are stocks going up, so our bonds. the idea is a repricing of what the fed policy rate might be. we will dive into that with michael mckee. as the yields comes down, so does the dollar. weakness by about 1%. the flipside is you are seeing a boost into commodities.

the move lower in equities is not translated into oil, brent crude about $81 a barrel. jon: a lot of those energy stocks higher on the day. what has been interesting is the cool off we have seen in technology stocks since the opening bell. meta, the parent of facebook, was up 6.5% and now 4.5%. the cool off has not been helped by the continuing selling pressure in tesla. right now, the ev player's shares down 3%. the market cap was around $500 billion today. crown holdings up over 3%. the company avoiding a proxy fight with carl icahn, so investors are encouraged. as john was telling us, investors are very encouraged that cancer vaccine update from moderna. a 25% spike in those shares today. kriti: not all of it pegged on

cpi although that is where i want to go. the u.s. inflation report signaling the worst has passed. here's what our guests had to say. >> you look at the headline numbers and you look at core, better-than-expected deceleration. >> policy is working. everything the fed has been doing, as difficult as that has been. inflation data shows us it is going the right direction. >> it is not just the magnitude of the moves but the speed. >> investors did not think inflation was going to come down as fast as economists were forecasting and now it is even faster. >> what went up fast is coming down faster than most people thought. >> this is not the time to get complacent. there is a lot more to do. jon: let's dig deeper into the cpi report with economic policy correspondent mike mckee and jes s minton.

july buy my inflation has peaked baseball cap? mike: you can probably buy inflation has peaked but put on the back, we are nowhere near where we want to be. we are still at 7.1%. 6% for the core and we are targeting 2%. that will be the message from jay powell tomorrow at the news conference. we are dialing back the amount by which we are raising rates, but we are still raising rates and we are going to continue to do that as necessary and keep them there for a while. i think the guest you had on that said, this is no time to be complacent, that is the core of the message. kriti: jess, let me bring you in. i am curious what this means for the market reaction. we saw massive pop over on cpi. jess: we are seeing the broader markets come off of those highs

but when you are looking at riskier corners of the market, like technology, growth shares are higher. when you dig deeper in the cpi data it was this good versus services story. you are seeing the inflation, the easing is on the goods side as supply chains improve. on the services side, it is sticky. when i was speaking with portfolio managers the tricky part is how to position going into 2023 when you are looking at these consumer focused stocks. when you are looking at staples or discretionary, those are lower. when you look at the broader equity market underperforming corners, how do you position toward those corners when you are seeing what is happening with inflation? even just airliners today with jetblue, they have that warning about the travel demand. and bringing up concerns about consumer spending, buster holiday shopping season.

they are buying up technology and growth shares today or over the next week. but when it comes to the longer-term trajectory that is the tricky part. we will get more indications from the fed tomorrow. kriti: you want those tech stocks on your side to make sure this is a sustainable bull market rally. jess minton and michael mckee nailing it with the cpi take. let's continue with a true expert. veronica clark joins us from citigroup global markets. she is an economist. give us your initial take on the cpi reaction. i feel like markets are celebrating. are you? veronica: a little bit. we are moving in the right direction and i think the fed can sleep easier tonight relative to the alternative if we had a pick up in inflation. i would be cautious that if we have learned anything over the last year, it is not to get optimistic too soon inflation is coming down. if you look at the details of this report, you are seeing

strength in service inflation but also in these non-shelter services. jon: to mike mckee's point, the wording always matters when it comes to the fed chair. as we look toward that fed decision tomorrow, how does he address today's inflation report if it comes up? veronica: i think the most important thing for him to say is the fed's job is not done yet. we had two softer reports in a row but that is not enough data for the fed to be convinced we are getting sustainably back to 2%. we also had a strong unemployment report that is going to be important. kriti: when we are looking at the market pricing it is not just the equity market but the fed swaps. off the back of today's cpi numbers he saw them pricing at peak policy rate of 4.8% in may 2023.

it seems the markets are pricing in a 25 basis point hike in february and a slowdown, or perhaps no hikes, into the summer of 2023. what do you make of that? veronica: i think the market is getting complacent and really wants to believe in the low-inflation story. we really have not changed our assessment of underlying inflation in the last couple of reports. that means we have not changed our assessment or how high the fed needs to go. we still think policy rates can get to 5% or 5.5%. but we are not expecting cuts for 2023 which the market is pricing in. jon: since you also cover what is happening in canada, the bank of canada governor yesterday gave his final speech of the year. he tried to paint a long-term picture on the inflation side just set some new expectations. even though the bank appears to be cooling on the pace of rate

hikes. there are some big macro factors that may change the story of inflation, but they are still committed to the 2% target. do you anticipate more commentary long-term in nature from the fed as well? veronica: that could be interesting. it was interesting to see them yesterday talking about structural changes in goods markets that could make goods inflation higher. i do not know if we will hear more from powell tomorrow about that. the focus is going to be near term what the fed is going to do in february. it is a worry for central banks that may inflation is higher now. kriti: veronica, let's put you on the spot. if we are going into a more deflationary mindset going into 2023, is it a no-brainer, is it a done deal that the deceleration in inflation is only going to get faster? veronica: no, absolutely not. if we are looking at the details of inflation, maybe we get more

weakness in december. but if anything, it looks like goods prices, which used car prices have been a deflationary drag, those could stabilize by early next year. you still get strength in shelter prices and you get that pickup and other service prices. you could see stronger prices into 2023. kriti: you heard it here first. veronica clark, citigroup global market economist. coming up, ftx co-founder sam bankman-fried is arrested in the bahamas over a criminal indictment. we dive into the story. this is bloomberg. ♪

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kriti: this is "bloomberg markets." i am kriti gupta alongside jon erlichman. let's get to the ftx collapse. sam bankman-fried has been arrested in the bahamas after the u.s. justice department filed a criminal indictment. there is a news conference for the top of the hour. the sec authorized civil charges alleging he defrauded investors of $1.8 billion. on capitol hill, the financial services committee has been holding a hearing on ftx. the new ceo answered questions about the collapse. >> not sophisticated at all. sophisticated in the way they were able to hide it from people. frankly, right in front of their eyes. but this is not sophisticated whatsoever. this is plain old embezzlement. kriti: wall street reporter

sonali basak joins us alongside ben bain. sonali, give us the latest developments. there is a lot to divest from different places. out to you? sonali: there have been questions asked about john ray and the accounting that was made up for in the days of to losing lots of customer assets. they do not know they can get it all back. this is getting fairly political as well. when you look at how the house financial services committee looks at this, there is disagreement between the role the sec should like an crypto enforcement. you also have representative william timmons asking whether it would have been helpful in a case like this to have a sworn testimony before an indictment,

before having him arrested. that is an interesting dynamic. sam bankman-fried was supposed to testify virtually and then was arrested last night and therefore was not available to testify today. it sat heavy on these lawmakers looking for answers for constituents. if you look through the indictments and the complaints from the sec, you get a lot of information separately outside of these hearings as to what went on ftx in the years leading up to 2022 when he stepped out as ceo. sam bankman-fried that is. jon: these lawmakers leaning heavily on what john ray had to say, who has rarely minced words. let's play a little more of what he had to say during the testimony. john: literally, there is no record-keeping whatsoever. in the absence of record-keeping, employees would communicate invoicing and expenses on slack, which is a

way of communicating for chat rooms. jon: ben, let's bring you into the conversation. the fact that you have the criminal charges last night, the arrest last night and then this morning the action by the sec. can you walk us through what we know about the sec's path towards their point this morning? ben: yeah, that's right. things really started to unspool last night. the attorney general announced they had arrested sam bankman-fried in the bahamas, where he had been living. this was after the u.s. criminal authorities, the manhattan prosecutors effectively, had filed an indictment. we saw that indictment

unsealed moments ago with a charges. the sec early this morning in the u.s. sued and brought its own civil case, alleging sam bankman-fried essentially defrauded investors over years to fund his lavish lifestyle. it is really remarkable. sam bankman-fried and ftx charmed washington. sonali was talking about capitol hill. a lot of lawmakers in that hearing if they had not received donations from ftx or sam bankman-fried, they certainly had -- their colleagues had or received advice on how to regulate crypto. he also met frequently with regulators down here, including the sec about how crypto could be regulated. he presented himself as the good guy, the straight shooter that got a bad reputation. it is a remarkable fall from grace. it culminated over the past 24

hours. kriti: it looks like a lot of the litigation is going to be focused on san bankman-fried but let's talk about the company. ftx is under new management, for lack of a better term. how does the company have to deal with the liabilities and legacy of san bankman-fried? ben: we heard a little bit today, the back and forth in the way that john ray, who is now ftx's ceo, sonali was discussing the video clips. he says the mismanagement of using slack to talk about expense reports. he is in charge of restructuring and fighting creditors who want to get some money back. jon: sonali, to bring you back into the conversation,

especially since we have already seen media interviews by san bankman-fried and he put his views out there, where do we go from here? sonali: you can see why he might've wanted to put his views out there. a lot of what we are seeing brought on by the sec and department of justice, you see a lot of what they say against what san bankman-fried initially said. for example, his oversight and responsibility as it pertains to alameda, what he knew and did not know and how he was involved related to ftx. you have some of these regulatory agencies saying there was an unlimited credit line between alameda and ftx or ftx to alameda in regard to customer funds being used to fund a lavish lifestyle. all of that money was used for real estate and there is a lot of worries about the price of that real estate and where it goes from here.

venture investments where an entire industry is questioning the money they take and the money they gave and who they give it to. and the third point on the lawmakers who had taken money from him as well, a lot of questions. in the hearing today, you definitely heard a lawmaker or two bring up this idea that not just san bankman-fried but his deputies and the money they gave and where they got that money from, via loans or other means, to then give to the political system, all of these are under question. let alone the fate of ftx and how it gets customer money back. jon: thank you very much. a lot to continue tracking. ben, our thanks to you as well. as we are watching the clock, we will wait for that news conference over the next 10 or 15 minutes. we are going to take a quick break. when we come back, united airlines sliding. on pace for the worst day since

july. we will talk more about what is weighing on the entire sector. this is bloomberg. ♪

jon: this is "bloomberg markets ." i am jon erlichman with kriti gupta. time for today's for what it's worth. we are focused on the number 100. 100 boeing 787's that united airlines bought. we caught up with the ceo. scott: 60 or 70 of the aircraft will replace the 767. the 350 will be a place for the longer haul 777, which did not

retire until the end of the decade. jon: outside of that order we are seeing weakness for some of these players within the airline sector because jetblue's comments on demand have started to rattle investors. kriti: i think that was what was so interesting about the boeing deal. the idea that they are really investing for the long haul. 100 planes is not a small investment. to talk about jetblue warning of that weaker than expected demand relative to a player like united, it feels interesting, almost contradictory. jon: and thinking about that fed decision tomorrow and the balancing act on the economy when you have a sector where there is starting to be enthusiasm around continued travel activity based on commons from the ceo's. and people trying to figure out the cooler economy and the impact on the airline industry. kriti: economy and the

impact on the airline industry. kriti: something we will keep an eye on. and keeping an eye on for the indictment of san bankman-fried at the top of the hour. stick with us for that. for jon erlichman, i am kriti gupta. this is bloomberg. ♪ it's official, america.

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romaine: the market has got the cpi report they wanted and the reaction, nah. scarlet: it was excited initially. romaine: the high of the day was 9:55 a.m. this morning. that is how swiftly things change as people started to look past this and wonder what is in the future, particularly the short-term. scarlet: maybe everything is rethinking everything. romaine: to put this into perspective, the s&p