>> the economy is not as interest rate sensitive today as in the past. >> as soon as we saw -- 50 basis points is unlikely. >> it is going to take a while -- to gain the credibility of the market. >> a soft landing is difficult. >> the bond market is screaming tougher times lay ahead. announcer: this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. tom: good morning. tom keene, jonathan ferro and lisa abramowicz. into a full hour session on

recession. jonathan ferro on assignment. recession signals abound. lisa a: this has been a massive narrative shift. we saw it slowly and then all at once. we saw the sense markets could keep rallying despite all the rate hikes. suddenly, it reset. tom: on the radio, you caught it guess the recession friday. we have a great set of guests to start your week in conversation. adam posen will join us later. richard haass will join us later. let's go through the tea leaves. can we start with oil? well under $70 a barrel. $68.75. lisa a: we have been playing this game with the yield curve.

going back to 19 whatever, the german yield curve going back to 1990 two. looking at all these signals of recession that have been there but people were able to ignore them and say ai. now, they can say maybe this is over its skis and even that cannot save us. tom: the vix yesterday confounded everyone. i will try to work on this from monday and tuesday of next week. yesterday, the vix gave us a lot of volatility. a bull market. 12.73. lisa a: market study analysts said there have been distortions of an indicators of volatility due to some positioning out there. does this mean there is less volatility, or does this mean it is being expressed in other places? people are not gloomy but the narrative has shifted from no

landing to a landing. tom: we will have to see how people reset off switzerland moving and norway moving. the shock of the united kingdom. futures are giving a negative feel on a soggy week. s&p 500 futures right now are for fourth 03 -- 4403. i mentioned oil. brent crude is $73.50. can you imagine a $69 brent crude price? what with this mean? in the currency space, a slightly stronger dollar. right now, 1.0863. lisa a: to put this into perspective, european equities have seen their longest strike of -- streak of losses going

back to december. we are seeing a shift that is not just central bankers talking about further late -- rate hikes. tom: bramo, on twitter with an important quote from kirsten. "the only way to get inflation down to 2% is to question man." -- z'crush demand." lisa a: raphael bostic is coming up. he has been dovish. 7:30 am is that speech. 1:40 pm, loretta mester, cleveland fed president. this is potentially going to be the key data point. u.s. manufacturing and services pmi for june. it was ugly in europe, particularly in france, where they are projecting recession.

service pmis is rolling over. this is one of the key moments to watch in the u.s. today, the republican faith and freedom coalition kicks off in washington, d.c. then, you get a sense of all the different 2024 aspirational presidents. the former president donald trump will be among them. and x vice president mike pence. upward. nikki haley, chris christie, and ron desantis are among those. tom: it looks like hollywood squares. i am looking for nipsey russell to run at any point. we are going to focus on the debate over the conversation on recession. we have been wrong for 18 months over recession as a society. joining us is greg bonnell, u.s.

head of equity and strategy at bnp paribas with serious study at liverpool. >> you have been a bear for the market all year. we think headwinds are going to catch up with us. it has been positioning that is the driver for the markets over the last four to six weeks. tom: why is there a bid on stocks? is there a camp out there like you? you are really weird about risks and hedging the optimistic risk. you have been wrong. wise the market going up? >> the view that there is going to be a recession has been the consensus calling you can see it reflected in positioning. the clearest call is the cftc data and you can see this by client type or investor type. the leverage funds are essentially sure fuzz and have a position greater than 150

million. the pain trade has been higher for longer. we saw this when the market broke 4200 and an exuberant squeeze higher. this has been coupled not just by a short squeeze but also by people coming back into the markets in a more speculative matter. you can see some retail indicators, ai, bull indicators are tracking cool volumes. lisa a: it feels like when you come home to one of her family members who have been in a good mood and all of a sudden you feel the pall of a bad mood. [laughter] hold on. tom: friday therapy with bramo. lisa a: it feels like this today with the markets. there is a pall of a bad move. do you think this has >> legs? > i think the medium-term

move is this is recession was could drive a deeper drawdown. in the next week, we have a large technical selling flow coming up. that can see the move we see this week accelerate into next week. if that continues into the next month, it comes back to fundamentals of monetary policy, and what the fed will do in july. lisa a: is the selloff in your view going to be concentrated at a time when janet yellen is saying there needs to be a slowdown in consumer spending for a decline in inflation? or do you think it will be in the high flyers and tech stocks that led the way up? >> i think we might have different layers of what is driving the selloff. i think if you see the fed hike next meeting, titan liquidity, you will see a -- titan

liquidity, we will see -- lisa a: this feels like a slow rate train because we have not shifted to armageddon. you have shifted to 3% to 5% pullback at least what michael hartnett says from bank of america. is this the feel you get as well? >> in the short-term, yes. we spoke about selling flows and when you see this, it tends to manifest in a shallow selloff. it does not indicate you are going to get ferocious moves in the short term. if you accelerate during q3, that could be something much more deeper. tom: is there any optimism that corporations can adapt to a widely anticipated reception -- recession? >> i think so. ai has been much talked about.

at the moment, it is a very narrow name but that is a tell for the market. when you look at corporate earnings revisions, the story was a large downgrade cycle. the last season we saw, we saw some smaller downgrades we have seen for a while. i think people will be trying to see what the outlook is, and whether you are going to see a more stable environment. the stuff in the pmi data will manifest in war downgrades. tom: it is fascinating. it seems like monday was ages ago. it has been an absolutely unique week. lisa a: you raised a good question which is companies have been adapting and adjusting. how much are you going to see surprise when this is the most telegraphed recession in the history of the world?

greg, correct me if i am wrong. the change this week seems that people are resetting their expectations or how high inflation could stay and how high central bankers are able to go and willing to go with the nc of the economy. do you think this is a game changer? >> i think potentially the view from our economics team has always been the policy makers the fed and u.s., will have to hike until they can make a slot in the labor market. what is important for stocks is even if workers -- if corporate's are in position for this, it has been in telegraphed recession. tom: what is your chart? >> 3400. we have one of the lowest targets and it is predicated on this. tom: are you on speaking terms

with carl? >> yes. it is a slowdown in terms of real growth and also inflation coming down. tom: so it is a nominal gdp story. this is important because nominal gdp comes in because both real growth and earnings inflation go down. this gives you 3300? >> yes. a top-down slow down but then market pressure compels this. lisa a: what this call screams to me is earnings of nvidia, earnings of microsoft, earnings of meta that somehow disappoint. tom: this screams to me that bramo book greg boutle. where is jonathan ferro to save me? i am drowning in the gloom. [laughter] lisa a: it is a trigger to get all the way down to 3400. you need to selloff big tech

names. >> to get to 3400, you need a more correlated selloff. if you get recession, we think cyclicals will leave all the way down but we also think there will be broader participation in the selloff. we think larger cap tech is defensive but it is still cyclical. some are exposed to consumers and some are exposed to capex cycles. if you see consumers, you think this will translate to tech down. tom: thank you for joining us. greg boutle from bnp paribas. lisa a: there is a shift. you can feel it. we walked in and it was hanging over the office that something changed. people were not saying fomo and everything would breathe upward forever and a day. tom: switzerland, norway, united

kingdom. it was the idiosyncratic realities of turkiye. well-timed. i think the finance minister of turkiye which for damien salazar to come on before he puts out headlines. turkiye moments ago at headlines after a horrific 48 hours for the currency. round up, we are nearing 26 lire . it is true that things are unraveling. he says turkiye will process gradually. stick with us, adam posen later. ♪

(sirens) [due at target in 5!] copyt. make a hard left down the alley. network's got you covered. [please confirm requesting back-up.] -changing route. -go. roadblock ahead. ...back up, back up... reverse! reverse! next level moments, we're 30 seconds out. need the next level network. [north corridor, hurry!] -coming through! -or 3, let's go. the network more businesses choose. transplant received. at&t business. >> we have to get inflation back to target and have stability. we have raised interest rates to do this. the economy has been more resilient and stronger. we have very low unemployment

but it leaves us with inflation looking much more persistent. we thought inflation was going to come down but there are signs it is more persistent. tom: the governor of the bank of england decidedly not declaring victory yesterday. the british press is on fire this morning over the 50 basis point lift in interest rates. very different real estate dynamics there. but this will mean for the u.k. it is for an center. lisa a: did you hear any bailey -- andrew bailey's comments? it was workers, ask for fewer raises. and companies, do not try to expand your profit margins. tom: we do not have the time to do this. we have to keep this short but we are going to dive into this. daily is saying stuff that cannot not be said in washington

-- andrew bailey is saying stuff that cannot be said in washington. i will translate. irresponsible rate increases lead to inflation. the thud was the u.s. falling off its chair. lisa a: and the thud of people in the u.k. being -- getting ready to protest. it was the let them eat cake moment. how much do we get this fixed off versus he is speaking the truth? inflation is going up, maybe if he just took more pain, what is the reaction than that? tom: damian sassower is driving into 2025 trying to look ahead, particularly into cheap emerging markets. a credit strategist at bloomberg intelligence. i have to talk about the turkish experiment.

it is unraveling. is it a john hopkins unraveling of hyperbolic depreciation or is there a measure of unraveling to it as simsek tries to right the ship? >> i am quite inspired by the move yesterday. 650 basis points is a big move. for those who thought it would happen at once, good luck. this is going to be staged. we are going to get 650 now, and make it 650 next month. with 40% year-over-year inflation in turkiye, we still have a way to go. we are almost at 26 handle on turkiye lira. morgan stanley was the only one at the upper end, calling for 28 by year end. we are close to it. how much further does dollar try

have to go? it remains to be seen. tom: in your world, there are usually two debt systems to a troubled friends economy country which is a domestic system and the salvation of a foreign system of debt, usually wrapped around dollars. is that system rogan for ankara? >> the difference between bank lending and positive investment. banks cannot survive with this discrepancy much longer. here's the thing. we talked about the dollarization. there is voluntary and nonvoluntary de-dollarization. at turkiye, i call it nonvoluntary. there are people hiding out at turkish banks. policy is not changing anytime

soon. the condition is still there. people are not believing what is going on with simsek but it is a step in the right direction and i am relatively inspired. lisa a: inspiration means something and buying means something else. do you see an opportunity for turkish lira or are you just saying it is nice they did this? >> with turkish sovereignty of tds, we were at 3200 but we have come all the way back. i still think there will be pain ahead. you want to talk about pain, look at where volatility has been and where you are going. the shift in the data ranging from inflation concerns to both concerns is messy times. anyone calling for new highs in the s&p, we may get it but i would not trust it. i would be sitting on my hands.

lisa a: a lot of people in the market talk about how anyone likes to inflict the maximum pain on investors. the turn this year was to go into the emerging world and i'd assets. you can see this with respect to all areas. will that reverse because we are seeing a decline in the rate hikes and even rate cuts in the developing world? will the eu and u.s. continue to double down on those markets? >> yesterday, we posted our emerging markets session. people fall or -- people far smarter than i. she said it was all about the fed. we have seen norway, canada, and the u.k.. also intro banks are shrinking their value seats. at what point do they roll over or not? we will not figure this out on

today's call but the reality is the pain traded markets and inflation does not go away. even 5.25% on fed funds. we never thought you would be here buts are looking for 6%. lisa a: youd earlier this week, we talked tor scheer about how the market is moving past the fed. did that change this week? have side tables for a week or two weeks or three weeks where the fed -- perhaps for a week or two weeks or three weeks where the fed was quiet. >> fundamentals don't matter. you can trade on fundamentals but certainly not on currencies and rate. it could take decades for evaluations to manifest in these markets. you cannot train values in these

markets but you can trade carry which matters. rate differentials batter. china is a funding currency now which has an inverted orange strip. when people go to places like brazil, mexico, colombia, all of these are overvalued at levels we have not seen in years. that is not just me talking but some people on the panel yesterday who are far smarter than i. we are in this area where values come off. and so it does not work, people will press that back. tom: damian sassower. he worked from home after working from city feel last night. did you go? lisa a: i did not. tom: i can see you there somehow. doug down in florida knows the alabama getaway at citi field. i should have been there. that is my favorite. lisa a: are you a deadhead?

tom: i was not but when i heard alabama getaway, it was exquisite. there is craft. was also craft published moments ago. he agrees with greg bonnell and has a cautious view of where we are heading --greg boutle and has a cautious view of where we are heading. he says recession tendencies are becoming more likely. lisa a: one thing you list over -- we glossed over is the dollar signs. the dollar of here's like the euro going back to march. this is a significant move when people are pricing in the fed and looking at you this elsewhere. -- at weakness elsewhere. tom: it is important that you are coming up on the midyear and everybody is justifying their

existence. we are beginning to see economic studies come out. what i would focus on is what the said which is all predicated on earnings cracking into earnings reports what you mentioned, july 14. lisa a: that is jp morgan. tom: once again, it is a very traditional and financial study, which is you have to wait for earnings. richard haass is scheduled to be with us with the council of foreign relations. coming up. stay with us. this is bloomberg. ♪ ♪ ♪ the vehicles are all-electric. the feeling is all mercedes.

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tom: bloomberg surveillance. good morning. jonathan ferro on assignment. lisa abramowicz and tom keene on a friday to get into the weekend. we are thinking about where you are. without question, the tide has turned in 48 hours at least internationally to a guess the recession tone. as greg boutle stated from bnp paribas, we have been doing this for a while. lisa a: it is the reason people began to strike this off and realized maybe it was not going to come. that is the reason why people did not believe it would come anymore but the central bankers said you have more work to do.

tom: cashman out with a british lovefest --kasman with a british promotion lovefest. saying what do you get wrong in a medical event that gave us the shock along with president biden's stimulus of a far more resilient ecosystem than anyone expected. lisa a: one of the most unprecedented aspects was the rolling recession narrative. the idea that one sector could experience pain and another could experience incredible strength, and then it flips. which is the reason i am waiting for the pmi data today which comes out. do we start to see the pain of recession ease up as you did? tom: there is a domestic feel we will address right now but we are going to keep our eye on

everything. you wonder what china does sunday evening our time. lisa a: we have had the straight week of losses that is the biggest for global stocks at least going back three months. european strike -- the european union had the biggest string of losses going back to december. you heard from loretta mester -- we will hear from loretta mester and raphael bostic. michelle bowman was speaking yesterday and said, "i supported the fomc's decision last week to hold the federal funds rate target range study and to continue to reduce the fence security holdings. however, i believe that additional policy rate increases will be increasing over time." they said they need to go again which is sort of what we heard from jerome powell as well.

tom: i am a joke about the speakers but i agree the speaking term here forward is going to be important. lisa a: especially lisa who is calling for more fed funds rates based on that she was seeing. lindsay, why is now and today different than two months ago when everyone was talking about recession and it was nowhere in sight? >> it is different now because the fed message has been more clear. the markets was anticipating the fed would move to the sideline in the need to assess the real impact of earlier policy initiatives on the real economy but historically, the fed has struggled to breathe in after -- reengage after moving to the sideline. demarcus said the fed may be nearing the final peak -- the markets said the fed may be nearing the final peak. but the fed said you were simply

taking a temporary breather. even fed officials that supported a positive happen clear that inflation is still elevated and the fed will need to reengage potentially as early as next month. tom: the importance of its people -- of stifel is a midwest field. it is a terrific bloomberg story out this morning on this commercial real estate debacle. forget about this. what does your scenario, above 6%, due to the american housing market, earning -- ownership and rental? >> it will be difficult. this will undermine affordability and valuations. it is a hit to the residential and commercial mark. the bigger risk is the fed loses

its resolve in the face of this weakness. as you heard from howell, it will be painful for households continuing to face higher interest rates. the bigger risk is households continue to face an erosion of purchasing power by allowing inflation to become entrenched. it is a short-term pain to get the long-term game for the economy -- again for the economy. tom: can be partial differentiation of goods dis-inflation make up for a sticky of service disinflation? >> it cannot because the consumer shifted back to the pre-pandemic preference for services. during the pandemic, americans were forced to stay inside their homes and were buying electronics, goods, and anything to keep ourselves and families entertained. now, we have shifted back toward

a preference for services of going out to eat, traveling and getting your hair done. it is the service component primarily driving risk to face higher prices which will continue to drive the fed to raise interest rates to tackle inflation. tom: in her brilliant observation of getting your hair done, in my , i want to come back as one of those people that dyes women's hair. lisa a: why wait for the next life? you can start training right now. tom: she just mailed the observation of the day. do you know what this costs when three women go to the hair place? there are zeros to the left. lisa a: that is very specific. what happens when you go to a restaurant in machen is a little too far to the left? [laughter]

you talked about how you need to see consumer spending roll over a bit to inflation down. we heard from andrew bailey at the bank of england and his prescription as people need to stop asking for high wages and companies need to stop being so greedy and increasing their profit margins that strong during the pandemic. what you think? >> i think the unprecedented nature of the pandemic led to a number of different inflationary variables. we see supply-side inflation, demand-side inflation, corporate inflation, deemed "greed-flation" with a decrease in profit margins. this also goes to the growing costs of cpi and what you are passing to the sumer. there is a very complicated numbers. the fed raising rates at still

in low level will not get inflation under control. their primary concern is that wage prices spiral. because we are paying people to stay on the sideline and there is still lingering fear of the pandemic or inability to find a work-life balance, regardless of the reason, we are seeing millions of workers on the sidelines with legal assistance desk which leave businesses -- on the sidelines which leave businesses demanding workers. the fed is trying to tapped out on the need for demand and level of investment to slow the economy. the fed is looking for a slow down. not necessarily an outright recession. but the fed wants to see the economy slow because only then can you see a slowdown in the demand side of the economy equation which is the only side

the fed can control. lisa a: i will go out on a limb and hear that workers would hear andrew bailey and say i guess i will ask for a bigger wage. janet yellen said in an interview with bloomberg that the eyes of a hard landing or recession have gone down because of the resiliency -- that the odds of a hard landing or recession have gone down because of the resiliency. the only way to get inflation to 2% is to quest demand and slow the economy. is this the reason why you do not believe we can get a soft landing because in order for them to get to where they want to go, they have to make more progress than they have showed any signs of making? >> absolutely. the notion the fed will back off from further policy tightening if you do see a slow down his backwards thinking. the fed is trying to slow the economy. when we see the first negative

print, i think this will bold in the fed that earlier policy initiatives are having the intended effect. we may not see an extremely deep or prolonged downturn in the u.s. but we need to see the slow down and first negative print which we are still expecting by the end of the year, despite the earlier resilience of the consumer in the first half. tom: i will get you out in front of the great adam posing because you are good at this. i would go to northwestern university. if you ever sit in a course with robert gordon? >> i did. tom: robert gordon thinks this discussion is insane. the is andrew bailey is living some keynesian redo from a previous entry about wage dynamics. there is a lot of american economics that says this is nuts, right?

>> it is a difficult argument because you are seeing traditional metrics that scares resources in the labor market. in less you see a meaningful pullback and demand -- unless we see a meaningful pullback in demand for workers, or a significant influx of supply. we are pulling sideline workers back into the labor force. unless you see these dynamics, i do not find a case for fighting the cleaning if somewhere we can see rates relax and would allow the fed to get back to the 2% level of inflation. tom: this is why dr. lindsey piegza is on. she has a clinic on there versus what we heard from governor bailey yesterday. market clearing and it was like a tour de force of midwest theory.

lindsey piegza, students of the fruit robert gordon, along with jim klassen. -- student of the great robert gordon along with jim glassman. i did the sweet thing this week and a woman whose husband is a fan of the program -- i mean, that is the only way they let her in. exactly. get a life. she said a really important question which is, are we supposed to have higher unemployment? is it good to have higher unemployment? or to chastise wage increases? lisa a: the uncomfortable tension is the idea that if you take some pain and uncertain pockets, and some people say he will shoulder the pain, you will lessen the pain in the long-term of how high inflation can go and what this will do to the economy

and buying power of the lower income sectors. but who will volunteer to take the pain and agreed to take a lower wage or will be the company to take a lower profit? it does not work that way. which is the reason that lindsey piegza or you called it microeconomics. tom: this is a huge part of the debate with adam posen after what he did with the telegraph a few days ago on a future of 6% interest rates. the raging debate we are having, people are saying tom, what is your opinion? my opinion is the immovable force of a medical crisis and stimulus. we have all this battle -- babel including from lindsey piegza. we are still talking about the impute of this massive amount of money into the global system. lisa a: if you give people a

chunk of cash and they go out and spend it, the cash goes into businesses and then they spend it. this is what people were actually expecting. helicopter money. tom: no question about that. that was brilliant. coming up, international relations. richard haass, president of the council on foreign relations. please stay with us. features deteriorating half a percent. futures down 23. on radio and television, this is "bloomberg surveillance". ♪ (sirens) [due at target in 5!] copy that. make a hard left down the alley. network's got you covered. [please confirm requesting back-up.] -changing route. -go.

roadblock ahead. ...back up, back up... reverse! reverse! next level moments, we're 30 seconds out. need the next level network. [north corridor, hurry!] -coming through! -or 3, let's go. the network more businesses choose. transplant received. at&t business. this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight. somebody would ask her something and she would just walk right past them. she didn't know they were talking to her. i just could not hear. i was hesitant to get the hearing aids because of my short hair. but nobody even sees them. our nearly invisible hearing aids are just one reason we've been the brand leader for over 75 years. when i finally could hear for the first time, i started crying. i could hear everything. call 1-800-miracle and schedule

your free hearing evaluation today. >> i am sure the civilized world will not let russia when the war because it is about substantial things and the world security system. from my side, ukrainians have no

intention that you will lose this war because it is about our existence. tom: the prime minister of ukraine in a piercing interview with maria tadeo yesterday in london. trying to look forward to recovery but a difficult war still at hand. part of the international relations are committed to worldwide. lisa abramowicz, and tom keene. jonathan ferro is on assignment today. i cannot say enough about the recession tone to equities, bonds, currencies and commodities. see this. oil is down 1.5%. this is american oil. $68.48. lisa a: all of a sudden, you see the inverse correlation between stocks and bonds reassert itself. it is just a brief second so it is hard to say too much about but suddenly the idea of lower

rates and recession longer-term is not positive for stocks. tom: one time, 10, 12 or 13 years ago, i cannot remember, i had nothing to do. i thought i would go get a free glass of wine for richard haass. i want to park avenue and went into their wonderful though thing. richard haass walked out. he did something that was like, so what? he introduced a new website for the council on foreign relations. he and his team were at least five, if not eight years ahead, of everyone else in the digital media game. i cannot say enough about the council on foreign relations website. right now, roger ferguson is on a reset of where the fed should head to on interest rates. in the introduction of ambassador haas, heirs of

georgetown on what we do not know about india. richard haass. effexor ayers of -- professor ayers of georgetown is listerine on what india wants to do with the united states. we saw president modi at the white house. is it affection? >> it was not in terms of what india will do going forward with the u.s. it is a fast-growing economy and one of the most populous countries in the world but there are some important buts. it still gets most of its arms from russia and is buying copious amounts of russian gas. it is a reminder that india always hedges in foreign policy. there is growth in economic relations but as everyone who would come on the show will tell you who does business, it is extraordinarily tough to gain

access. there is a lot of happy talk about the u.s. and india. tom: is it just too far away? is it like a patrick o'brien novel on the others of the world? [laughter] >> no, i don't think that is the issue. it is also driving things is domestic policies. india is the wealthiest community of any other community in the u.s. it is just difficult. we did not have a great tradition of cooperating with india and people are hyping it. which is not to say there is not something there. there is growing strategic operation in trade and vestment, but i think people are exaggerating the upside. lisa a: in the meantime, during the conversation of president biden and president modi, he

said it was not a big deal. do you think this was enough to quell some tensions he reignited? >> the presence may have thought he was helping him but if you are the guy in -- president may have thought he was helping him but if you are the guy in charge of china, you may not want to be told you are not in charge. at the end of the day, china is worried, not about what president biden said, but about export controls and so forth. they want to play limit. come november, president xi jinping wants to be with president biden so my guess is they will overlook the latest diplomatic incident. lisa a: heading into this year, you were among the people saying it is one of the most fraught times we have ever seen on a geopolitical stance. do you think fraught times have abraded and we have moved away or do you think people are just

taking a pause and focusing on things like the fed and bank of england and will be reminded of geopolitical pressures later on? >> i cannot give the answer you want. the tensions have not gotten any less. the possibilities of what happened with russia, europe and ukraine have not gone away. united states and chinese relations are still searching for a floor. we are tired of the middle east but the middle east is not tired of us. i is still on the break of desperate -- iran is still on the brink of nuclear war. i think there is extraordinary violence issues. we have done nothing on climate really to go. i see no evidence the world is becoming a more stable place in the year of what you might call geopolitical revival. tom: summer reading at congress

in the house of representatives and a fractured senate, everyone needs to review her bill of obligations. it is a superb, short effort. this is the book to throw at the offspring when they are mouthing off on their provo rio -- on their proverbial language. how are you doing on capitol hill? is anyone reading your book? >> that is the most interesting look endorsement i have ever seen in my life. i think a lot of people in congress know there is something wrong. the american democracy is off the rails. there is not a consensus on what to do about it. as i go around the country talking about the bill of obligations, people know it. it resonates.

where interest in civics in our schools and reviving public service. we somehow lost our way. i am somewhat encouraged. we are not their insight on what to do but there is under acceptance that we really do have a serious problem on our hands which transcends any single issue with politics. tom: richard haass, thank you so much. from the council on foreign relations. it is certainly the weekend to read him for the second half of 2023. i welcome roger ferguson, the chairman of the federal reserve, as he talks about clearance have. also by steric parents talking about, can we get back -- also vuce chaur ckarita -- vice chair ca poplarita talking about, can

we get back to that? lisa a: the bank of england will raise rates to six and a quarter, going back to 1998 implying 1.25% of further rate hikes. tom: adam hose and is leading on this a few days ago in the telegraph. maybe this is a seachange this weekend into friday and july as all of a sudden more people are saying 6%. lisa a: you point to the housing market and rightly so. there are different interest rate profiles for different countries. in the u.k., there are not 30 year mortgages like they have in the u.s.. they do not see a real-time increase in their payments on the heels of this type of rate increase. tom: that is a huge change we

saw with a 50 basis point idea. i have to go to oil. now down one dollar. i don't know what the response is from opec-plus but it has to be tangible. they have shown their cars. can you get will kennedy on today? he is probably work from home or from brighton beach. lisa a: i don't think you have time for them to even inquire. ," well he has a huge staff. the answer is -- tom: he has a huge staff. the answer is with oil, you have barely mentioned the twos-tens spread at 102 basis points. on a monthly chart, all you need to say is the word never. we have never been there with a full percentage point difference between the two year and the 10-year. stay with us. this is "bloomberg surveillance". ♪

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when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. we have been able to reach over 100 million people impacted and affected, and at risk of hiv. the rocket fund takes all of the work that we're doing, all over the world, and looks at the most effective ways, to get resources to them, to get services to them. the idea that we have saved five million people's lives, it's overwhelming. it's everything.

that tougher times lie ahead. this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. good morning, everyone. jonathan ferro, lisa abramowicz and tom keene, bloomberg surveillance from new york on a friday. ferro on assignment.

we'll give you details on that in the 8:00 are we need a brief you know an 8:00 hour is like i think tom: things on friday are different. when central banks change, we change. the one thing that has not changed is this recession friday. there is no question about it. the intensity is here. there is a lot going on. futures are -23. switzerland, norway, and huge announcement on the u.k., truly an uproar about that. as you stated yesterday, all of a sudden 6%.

lisa a: there is still determination from central bankers to get things lower. tom: oil has given us tension. $68 30 cents. we will talk about the curve evasion later. just in the last 48 hours, off the central bank, readjust if you will. there is serious dislocation within the market into the weekend. lisa a: where have you been so far this year? we have been hard landing and soft landing. then all of a sudden, it was no landing again. are you heading back to hard landing? this is the week where we shifted narratives. you might say it is gobbledygook

but it is what drives some of the sentiment around the edges particularly for investors who decide to cash in chips. tom: i thought greg boutle was brilliant with great respect to his derivative abilities. he made clear the left tail of the curve is substantial. lisa a: especially given you are seeing derivatives. this idea that in france, we saw services rope and youth the line into contractionary territory. this is a shift. do you see the same in the u.s. at a time when people are counting on consumers to keep spending? tom: i looked at the red sox against the twins yesterday so i missed the yellen story. lisa: certainly more optimistic

saying in an interview with embarq that she sees a lower chance of recession but does add that we need to see consumers top sending so much. tom: old bailey. lisa: my odds of it go don't inflation is coming down i'm not going to say it's not a risk because the fed is tightening policy. inflation coming down is not the same as getting back down to 2%. tom: anybody can say the disinflationary vectors in place there is just a question of your belief in what the timeline is. it varies. lisa: if you have this bifurcated recovery or some cylinders running at a hundred and others idling along in this rolling recession starts to consolidate was something a little more connect it that becomes a problem. tom: pretty lonely in here all i

can think of is farro's safety. brisk has features. i think we are going to see a lot more of this. you will adopt. we will adjust. lisa: if you're bullish out there and think companies can adapt and adjust please send tom notes of love. tom: why don't you brief us here lisa:. lisa:let's discuss it cleveland fed president at 1:40 p.m. 9:45 a.m. this is my key statistic of the morning u.s. as simply global. do we see a similar trend in the

u.s. trying to roll over finance tomorrow the republican faith and freedom coalition conference begins. it's a two day affair and all of the likely's are joining the pageantry of potential nominees. tom: i'm really glad you chose to do this because i was not aware how quick the debates are upon us and i guess august 23, something in that vicinity. but it's just not that far away. on radio its hollywood squares. there's a guy named trump down in the lower right corner. there is some unknowns here. you start to go ok why are they running. and it's, you know, this is for a politically where is henry horton? lisa: i don't know. it's also going to be former

president trump and former vice president by spence which i imagine might be a little awkward area tom: that will be something in the hallway. as we talk to people really cautious this morning let's talk to someone decades of experience with the team. she was lights out last time she was on. are you guys bulls or bears? it's such a federated are you bulls or bears, linda? >> good morning. it's hard disabled's or bears when you talk about what kind of lending were having. we've been saying we will have a rocky landing and that does include the rocky landing and it would've been a lot rockier in the stock market as we were expecting to me be even test those lows if we didn't have the ai narrative that went on and the run-up in the big stocks.

as we all know underneath the surface the stock is only applicable percent here today. lisa: do you think this is a tipping point in understanding how far central bankers are willing to go and what that means for a lot of revenues that have done pretty well this year? ask i don't particularly think so. i think they made a big move over in the u.k.. thank goodness are in the u.s.. we have always said that we will do you to bring inflation down. if we take the fed at their word is going to be higher for longer. we have said that for a very long time. the question is will they call victory at 3% because if they do we make it out of this this to rocky landing. if they don't they will tighten into a real recession. lisa: you don't think really anything has changed? we are in the same place we were two weeks ago.

is this a time to look for some of the weakness and say all right we can step back in? >> it's about the narrative shifting. i get hundreds of emails a day from our wall street source seems like everybody got a memo at a moment that said ok now we are overclocked now it's time to take some money off the table. why? and the technicians are out there saying me be 4200, we test 4300 on the downside. july is a week month. you can use all these statistics an essay with going on in our economy read the economy is very strong. people fail to appreciate the seal the amount of stimulus i just read a statistic this illiquid assets are $4.4 trillion greater than what they were at the end of 2019. we were doing just find at the end of 2019.

tom: this is really important here. the essay outlined below wall of money and the rest of it that animals like are dealing with. as all this market about a join or first order condition which is a wall of money trying to find a warm spot? >> it's very much a huge piece of it. that form money is not just looking for a place to invest. it's spending and particularly on services it will be interesting to see what the pmi says. housing confidence has been very strong here lately airline information that and i just saw this the other two days ago airline information is strong for this summer. recession is too early. tom: i don't want you to talk a

specific portfolio but if i'm looking at a federated portfolio and we are in the old days you had two or three or 4% let's say on a prospective basis is elevated up a groove to 8% or 10% are you forced to sell these big tech companies when they become so big? >> we have portfolios that are stock bond portfolios across the spectrum and we have our objectives. there is no particular requirement that each manager will have an objective that says once it gets above a particular level may be 5% or so. then they may want to trim some of it because it gets to be out sized this is one of the reasons managers have had a difficult time beating the s&p vizier. you can't hold as much. tom: linda, thank you.

the responsibility of actually being in the market with your 401(k) but if you're triple leveraged right now it's a to a one. lisa: you know. tom: i'm trying to fight the roofs those right the first ticket. i just can't pull the trigger. it's too much stress particularly i look at 4400 is down half of a percent. lisa: we were remiss yesterday we did not discuss the story that i think has legs in many different ways you know meta is trying to come up with some sort of twitter rival. they've been talking about this there is a long running feud between elon usk and mark supper -- zuckerberg elon musk challenged mark zuckerberg to a

cage fight. did you see this? tom: did ed ludlow put you up to this? lisa: mark zuckerberg said let's go because he's training in some sort of jiu-jitsu or judo or something and all i can say is really like masks response. he said i have this great move of the resort paleo top of my opponent and do nothing. tom:'s facebook actually going to pull this off? lisa: you're talking about the twitter platform. tom: i can bore people with the story of how i got involved with twitter but i can state categorically it's changed there is no question about that. lisa: i would agree with that. which is the reason people are lucky for some potential competitor are produces point out that elon musk and mark

zuckerberg were dead serious about the cage fight. they proposed las vegas as a potential place a cage fight between the two leaders of tech companies. during the gains for u.s. equity markets. tom: they're going to have a cage fight on price-to-earnings ratio. facebook we are looking at 23 level and tesla it's not a 23 level. lisa: it's like 50. tom: stay with us. too much math. this is bloomberg surveillance.

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>> we had an incident that caused confusion you might say. terry lincoln had a great trip to china. i expect to meet with president

xi sometime in the future. i don't think it's had any real consequence. tom: a little bit of video for you this morning the president of the united states walking back from a delicate moment. i don't have the exact bridge in front of me but he alluded to the traded d word. lisa: he talked about not only referring to xi jinping as a dictator but he didn't understand or know about the spy balloon over the u.s. sort of the 12 punch that didn't get a good reception in china. tom: the founder of bloomberg news i think this is something john nichols strongly believes in. move the bodies around and particularly moved experienced bodies around. enda curran lived pandemic hong kong and we are thrilled he is in washington. economy reporter and washington

nationals fan joins us this morning. how is the view different from washington then from hong kong? you wake up in the morning how is the view different? >> i've been struck by the focus on industrial policy since moving here, tom. i've been struck by the sense of urgency in trying to get the economy can additive again on the world stage especially against china. the only talking point, where investments should go how to compete and semiconductors and chips and electric cars although that discussion is very real here. i think in china and that part of the world this is that they have advances in have moved on but coming to the u.s. there's a sense of catching up because the they really need to. tom: yesterday with the team brilliant reporting on ford motor company and even the wall street journal with an editorial today on this. nine good chilean dollars to

agillion dollars. i mean new american industrial policy. >> of course you could argue that the u.s. emulating china in similar respects. china has led national champions for decades now that was the whole industrial policy there. three clusters of industry build up expertise and sell and expert to the world and that's how they managed to get such a good run they gave up on combustible motor cars that have had such a good run on electric vehicles and the batteries of course so trying to emulate power and think that's lame it's causing some tension in the broader western world. the u.s. is adopting this industrial policy which many are saying is going to trigger a global race. rather of course than embracing

open and free trade. it's a contentious one but the u.s. feels it has to. lisa: it's ironic that you're talking about the u.s. in some ways emulating what china did. when china did this to spur growth and the u.s. is concerned about too much growth spurring inflation it seems as if industrial policy is at odds with curbing inflation. how are policymakers dealing with that? do they care? >> the point we were trying to make there is so much going on in the u.s. economy. there is also $1.25 trillion worth of money that is supposed to go into infrastructure the it roadways are clean energy. that is causing a law of demand for labor and construction and materials rated we did have a pull push force going on. right here right now jerome

powell this week has made the point that the u.s. might just be able to pull off a soft landing. cool inflation, whatever is blowing up the labor market that seems to be where things are right now whether or not he can hold onto that a few months from now. lisa: how many more workers does the united states need to affect that type of industrial policy? >> some sectors complain of worker shortages. some of those, i spoke to a manufacturer last week. in other parts of the labor market there is some softening. recruiting agencies speak about that. some of those positions once advertised as vacant are being taken off the market. some companies are finding staff so i think it's a tight labor market but the experts are saying there is softening coming. tom: the correlation of all the central bank actions clearly the

tone of the week is multiple central banks acting. from where you sit with the global mandate of the correlated or discrete? >> i think they are just racing to catch up. by now it was expected that inflation would be under control of these kind of emergency style rate hikes. that's clearly not the case. with warnings of more to come all the central banks around europe have been saying the same. australia paused will have to hike again. i think the point is that the inflation cycle isn't over. this massive global cycle of raising interest rates isn't over. no one is sure where it's going to end. central banks have to get inflation under control but going too far can fish the economies over the edge i feel

like we are at a delicate point now. tom: one final observation and i know it's awful but the washington nationals, they are out in the west coast with the san diego padres. you have to stay up for that. >> i'm all in for it tom. tom: washington nationals, padres. after a real public service one of the moments from the pandemic was stephen major outlining is huge and successful responsibility on mistress rates -- interest rates. he moved from london to hong kong and outlined his process of quarantines, plural over like a year-and-a-half. it was just stunning, the hardship that people like enda curran and others have gone through. lisa: staying in a hotel with

people all dressed in white suit to come and sawyer news every couple hours not able to go outside this has been a reality that points to your discussion of our review that -- are we there yet? this really speaks to what we have been talking about. the fed is going to have to address demand and he looks at how much inflation is being driven by demand. he said it's actually sticky. supply-side has come down traumatically. tom: that's where they can control it. that's the one thing central banks can really get their handle on. there is a lot of theory thrown around this morning we are going to address that with the substantial interview with adam posen coming up in the next hour. we are not going to make it like a boring academic lecture.

but the answer is all these break our testing stuff that's in the textbooks they all worked with, except the pandemic wasn't in the textbook. that's the dynamic between supply economics, supply driven economics and demand driven economics. one word to encapsulate, no one has a clue. lisa: everyone is hoping they can take a little bit of pain. spend a little bit less and we can bring inflation lower. ask for a little bit lower in terms of wages and maybe we will ok. it's not going to work like that. if it's a wholesale decline that's going to be a problem for a lot of people who are going to lose their jobs. tom: given the commercial real estate we actually this is jack lew the market. we clear the market after the pandemic debris and we move on

from there. that's ingrained in the american psyche. we were making jokes about robert gordon in northwestern. you the market and move on. lisa: how far are we from clearing the market? that, i think is the mystery. tom: i'll go with that. adam posen coming up. fixed income expert michael collins. let's listen for global wall street. good morning.

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tom: bloomberg surveillance. jonathan ferro on assignment. lisa abramowicz and tom keene here. i am looking up to see if the red sox will possibly win a game before july 1. 50-50 chance. bramo is writing the bloomberg surveillance newsletter. it is out. it is in english. how long does it take you to write it? lisa: piece by piece and we do it as the show goes on and we have a fantastic team. tom: the intern stepped up. lisa: we have a fabulous team. tom: -- lisa: it highlights the

whipsaw we have felt. central banks out, central banks in, people are excited, people are sad. tom: we are making jokes about it but it is a reaffirmation of the session. lisa: we just had the worst weekly loss of global stocks going back three months in the long streak of losses in european equities going back to december. tom: the vix was a 12 handle, we are back to 13.6. let's go through the yield space. 4.75% -- six basis points on the 10 year. the vanilla spread, 2-10 spread is enough to give our next test -- our next guest heart palpitations. we will let him deal with that with a glass of tang. lisa will talk to us. she starts with the stock i do

not own because i believe someone told me elon musk was going to go bankrupt 90 days ago. that did not work out. lisa: maybe a cage match could change your mind if he does get together like mark zuckerberg. 115%. those shares lower .8% after being downgraded by three brokerages including morgan stanley. has not -- has it moved too far too fast? tom: is it a cell or a week-old? downgraded from a strong buy to a buy? lisa: is a game but we are seeing it playing out. i will say the big shift for tesla is it an auto manufacturer , is that the infrastructure play for electric vehicles and charging stations? tom: somebody this week looked

at the market share we would see on tesla out five years and eight craters because there are 47 people that want their business. lisa: they want to take their business over but they are also giving them business. ford and gm are using their charging stations. you talked about the loan they are getting from the government to create three battery factories. shares are about .4% lower. the wall street journal putting out a story about a new round of layoffs at ford with cost-cutting still a preeminent concern. tom: we met with the cfo of ford. i thought he was very direct about the psychology has changed at the auto companies. it reminds me of the airlines 10 or 15 years ago. is there going to be a change in responsibility ratios? that seems to be what we are talking about.

lisa: the efficiency of artificial intelligence that can reduce staff. people been talking about how used-car prices have come in. carmax a 4.6 percent gain as their quarterly earnings exceeded all wall street estimates. basically figuring out ways to increase profits even in the midst of softness. tom: kmx, they retail automobiles. richmond, virginia. 30,000 people. lisa: lisa: is a used-car operator. tom: i did not know. they were doing well. they cratered and now they are coming back. lisa: the story is that used-car prices went bananas, and then they had a reset. some people say they might start a turnaround. they are still managing to earn profits.

tom: carmax, thank you. that was absently brilliant. the fixed income market. michael collins joins us. what is this wreck -- what does this curb inversion mean to you? how does your world change? michael: good morning. the dilemma, one of the reasons the markets are so confused and everybody is confused about the economic trajectory is the typical models, the traditional leading indicators like the slope of the yield curve, all of the empirical evidence, the surveys are all pointing to recession, pending recession doom. the problem is from the bottom up, fundamental analysts, we pride ourselves at the bottom up analysis. our view is a lot of time the

analysts tell the economists what is going to happen. if you look at the world from the bottom up and all of these companies in all of these industries and the housing market and the auto market, the banking system, it is hard to find the areas where you will see a collapse in demand, in lending and a surge in default. we are splitting the difference and assuming growth will slow. you will have moderation in growth. there is really low risk of a deep recession. tom: within that analysis do you load the boat on garbage corporate or high-yield distress or do you take the middle ground of a quality corporate versus full faith and credit? michael: it is the latter for sure. what happens at this point in the cycle is all of the central banks have a tight policy. it does start to bite it is starting to bite the weakest

governments and you're seeing the most levered credits, the ones exposed to floating rates, whether they are loan issuers or commercial real estate borrowers, they are striving to get hit. those are the areas you want to be careful with. the good news is the higher quality of the market are still for sale. they are offering tremendous spreads to sit up in quality and print six handle coupons while you wait. lisa: a lot of people have come on the show and they say he has come up with a theory and you hold it for a longer time and you try to ignore the noise, and we say gag, yeah, but our job is to gauge the mood swings. today there is a material shift after a week of hawkish speak from central bankers around the world.

does that shift your view? the sense that we are gaming out 6.25%, that the fed is going to possibly go even two more times this year? michael: this happens every fed cycle. the markets have these blowups. credit spreads rally. we have just seen that. there is enthusiasm at the end of the fit hiking cycle that the economy is doing good. the reason the fed is able to continue hiking is because the economy is doing good. it does well until it doesn't. we are probably at one of those precipices where we are peaking in optimism and sentiment. you'll start seeing a slide. you'll will start seeing problems emerge, cracks start to increase. growth and inflation will be lower six months from now than they are today. the point is it will not be one

of these existential credit crises we have become accustomed to experiencing. you wait and you have to be patient and you wait for the cracks and then you jump in. look at the regional banks. we have been underweight regional banks. a lot of them just issued the big super regionals. those are the types of things you have to be patient for. lisa: is not 2008. everyone was looking for a 2008 corollary. what are you looking for in terms of a selloff to make high-yield bonds look attractive ? michael: the mistake a lot of folks are making is they are looking at all the historical relationships. they are looking at high-yield spreads and a typical recession out to 800 basis points or 1000 basis points. in today's world that would be a 15% yield which is armageddon. they expect high-yield defaults

to hit 10% because they are looking at old models, looking at past recessions where you had a lot of leverage and a lot of excesses in credit buildup. you do not have that. a 600 spread is the new 800. if you get into the fives you are buying some spread. tom: let's go into quality. i looked at the apple of 2033. the apple piece out 10 years is .5%, 59 basis points over treasuries. the company was not invented over bloomberg surveillance, it was invented over bond analysis. is apple debt faith and credit? michael: the amount of cash some

of those big tech companies have is amazing and apple is at the top of the list. in fixed income land, a lot of those tech companies are the aa 's and aaa's, the old exxon and banks of yesteryear. they have so much cash, they could pay off all of their debt tomorrow. the spreads are tight. there is no value there. we do not own those. we are underweight that sector in the bond market and focus on the areas you can get more spread. you can sell apple at 59 basis points and by a aaa rated cielo at almost -- clo at almost three or four times. that is a homerun. tom: michael collins, you bring me to tears. mike is at a golf course.

mike calls in and he says thanks for mentioning the why it function. and i tear up when we talk about the original yield analysis function. one day there is a thing on the desk, what is this, it is a bloomberg and you can do duration and convexity in no time, like before lunch. lisa: your kids do the thing when you start crying and they look at you curiously. they give you this judgmental look. tom: judge mental. -- judgmental. lisa: the s&p lower about .5% after we have seen a soggy week. one of the more notable shifts in tone so far. there was a story that caught my attention. we were talking about argentina and some of the developing world's and there is a story that dollars are so scarce right

now in argentina that some companies are turning to the chinese yuan. that is what they can get their hands on. china has ambitions to broaden its currency in international trade and this is an opportunity to do so. tom: this is a huge deal and sensitive with conversations on air and off air in our recent visit to the irrational monetary fund. it is different than turkey. one dollar is worth 252 pesos. a cup of coffee ago it was 100. the depreciation is permanent and steady. bloomberg has this functionality, the blue dollar, the black market, 510 pesos is a dollar. that is a truly moonshot. the private market is deteriorating worse than the public. lisa: does that function make you to europe as well?

tom: it does not make me tear up like the why it function but it shows the country by country fragility these nations are dealing with. lisa: and how some nations are trying to exploit this to broaden their influence. tom: on the domestic basis we will move forward. lisa erickson joining us. we will talk to her about the allocation into midyear and into 2024. stay with us. this is bloomberg. good morning. ♪

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senate, not the house. a little testy about what we will do to not repeat the silliness we saw before. i have an opinion but i will not give it. lisa: but? [laughter] it was interesting to hear about these comments ahead of next week's stress test results. we get a sense of how much fragility has been eradicated from the banking system versus persisting into a second quarter of greater malaise. tom: is the stressed test going to talk about marketing plans will you give billionaires 1% mortgages to give a gazillion dollars to sit on your balance sheet? lisa: i am guessing that will not be part of it. should it be? that could be part of the discussion we have. tom: that would be in the ether and forward as well. futures -21. there is a deterioration three days in a row. tom: yesterday -- lisa:

yesterday there was a positive pop by the end of the day. tom: the vix is up to 18, almost 20. not. lisa: you did see a reprisal of valuations yesterday. today feels different because of the bloom led by europe. tom: i agree. this is international show. we will have adam posen for a substantial time. lots to talk about with him. tons to discuss. we will take a look at american real estate as well. right now, this is a really important interview because financial media, and i'm as guilty of this as anyone, we love to talk about bulls and bears and the separation. lisa erickson, senior vice president at u.s. bank wealth

has written the single most balance research note i have seen in months. i congratulate her on that. the hardest thing to do in this business is the boredom of balance. it is not what people want to talk about. they want an opinion. thank you so much for your courage to be balanced. how lonely do you feel being balanced in equities and bonds? lisa e.: thank you for your kind words. it can be a lonely position to be balanced. we think it is neutral but we think it is the right position. as you point out we see the risk and rewards as being on an even scale right now. our best advice to clients is to have a neutral weight to whatever you would typically have long-term in both equities and fixed income. tom: if you are balanced in

equities, audi 27 stocks that are the market right now, how can you be balanced if the s&p 500 is so imbalanced? lisa e.: the rally this year has been a little bit lopsided and that has given some concern as to whether it is a durable bull market. the encouraging thing is as we look at the technicals what we have seen in recent periods, the fact that the rally is broadening. we have seen some of those cyclicals and small caps pullback in the last few days. that broadening has given some encouragement to us and also on the positive side of the ledger we are seeing some green shoots in economic activity. while overall macro activity is slowing, what we are seeing is when we look at the trend, which is more recent data relative to

the 12 month average, we are seeing less worse performance. lisa: somebody will be listening to this and throwing stuff at the screen and saying to do not pay attention to the central bankers determined to kill the positive momentum. that will change the game. does it for you? lisa e.: that is one of the risk factors on the negative side of the ledger. inflation remains in their sites and they need to continue to be strong in terms of targeting those price pressures. that is a concern because we are not clearly at the end of the tightening cycle and because as they pointed out, there is a lag in variable affect of past increases on economic activity. tom: -- lisa: tom asked the question of what does balance meet at a time when the s&p and the nasdaq are anything but balance.

what does it mean at a time when the balance has shifted in terms of risks on the long end versus the short end? lisa e.: we are allocating a standard position clients would have within fixed income, and in terms of positioning and in terms of the maturity sector we are advocating clients continue to think about moving more to a neutral position to the benchmarks. rather than loading up in the short end where those yields are very attractive, also thinking about the forward moves. while central banks are hawkish, we have come a long way in the past year. they are closer to a potential pause and pivot. moving closer to the benchmark and being closer in maturity to the benchmark make sense. tom: what do you do in equities? you just buy the well share 5000? how you allocate balance across small, mid-cap, large-cap,

across growth, cross value, and even a factor like international investment? lisa e.: we would advocate being closer to that balance or neutral position as well as u.s. compared to international stocks. the reason is when you look across the globe you have similar forces we have just been discussing in the u.s. across those different captures as well as internationally. staying at that position and looking for the future opportunity is the best place to be right now. tom: is outside your purview but i will ask anyway. you have an s&p target? lisa e.: we do. we expect the s&p to continue to move up on the back of increased earnings and hopefully stable valuations. as we look at those second-quarter earnings reports and the possibility of rebound in the second half of 2023, we

will continue to revise those estimates. when we look at what has been going on in terms of the first half of the year, it has been encouraging. consumers and companies have been more resilient than the consensus expected. tom: lisa erickson, this is a high point. thank you so much. how strange was that? that is the most centered conversation i have had in 18 months. lisa: it builds on what we heard from michael collins. he was saying even if there is a downturn it will not be 2008. there is still resilience. you can think about going in and buying because of consumer spending. if that is the case the concept of fair value and balance and how you shift at a time when people are looking for the big 2008 call. lisa: -- tom: the heart of the matter, i will support gina martin adams.

what we heard from lisa erickson, i will not tell you what to do, you have to decide, are you a market timer in some way, whether three years or three minutes, or are you just going to participate in the game , moving the chess pieces around a little bit? i think about where we are. june 30 coming up. how many people have missed what i am calling the rally. maybe i ought to call it the erickson rally. how many people have biz this move because they were not in the game? lisa: and how many missed it because it may have already peter. this from michael hartnett of bank of america. he says the early signs of investors fleeing from tech stocks after what he called in 1999 like rally formed a baby bubble. basically the technology sector sought $2 billion of outflows,

the largest in 10 weeks through june 21. there is the other side of the equation where people are saying they beat as run too far, too fast. tom: apple has cratered. i think it hit a record high yesterday. i'm not sure. i do close of 187 on apple. it is down a little bit, $.22. the number of opinions we are getting. my head was spinning yesterday. there was so much going on. lisa: the narratives are not linear. people are not discussing on the same planes. tom: we will keep driving the conversations forward. we are already working on next week. june 30 and the move to the third quarter of 2023. on the litmus paper of the system, mark mccormick, td securities. adam posen in the next hour. ♪

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>> we have a deflationary trend being recognized in equity markets. the spending categories are showing some softness. there are so hope you can get inflation down with employment

remaining strong. the market has to have constants. this is bloomberg surveillance with tom keene, jonathan farrow and lisa abramowitz. lisa: the euphoria phase. this is bloomberg surveillance on television and radio. jonathan farrow is on vacation and he will be next week as well and then returning to us. he is not on assignment. it's quiet can't? tom: i didn't know he was on vacation this is the first i have heard of this. lisa: there seems to be a shift in town today. tom: he is really on vacation? how un-american. i hope he is having a good time. which island is he on this week?

apparently he's near naples. lisa: euphoria has shifted in markets and there's a different tone right now with respect to people giving out recession. central banks in the forefront as we look at much higher rates. tom: we are making jokes about this and we hope jonathan farrow is having fun on assignment. into the weekend, we are on recession watch. this hour we will meet with mark mccormack and then to go to doctor posing for a lengthy two-part interview sets us up to go. where are we now off of what governor bailey brought? lisa: how much do central bankers have to curtail demand? people are still spending. the stimulus, the long and variable lags that are percolating through the economy.

how much do we end up was central banks having to curtail it to end the cycle of money coursing through the system? tom: i think what you will see is careful country to country analysis. the united states cannot be compared to these other countries. i had no idea that bloomberg has norwegian salmon prices. it's like a hockey stick. it is an inflationary moonshot for norway. that is a big deal over there versus the enormous united states economy. lisa: it seems like tom keene just discovered bagels and lox and how much the prices have increased. the amount of food prices have come down you have these bifurcated bowls where inflation will conduct intricately.

you dead on about adam posen being an important conversation. where do we get down to targeting a 3% inflation rate? so they don't have to afflict the pain. tom: were talking about coasting down but dr. posen says that were not heading down. we will end up with the higher interest rate regime. lisa: the pain train had been up for equities for everything else in right now, it seems to be reserved -- reversing. not with respect to like a wholesale eradication of gains. the dollar in particular, a marked move compared to the euro. tom: apple hit a record high, is

a terrible pullback. lisa: we will bring in mr. mccormick to save us. tom: mark mccormack head of fx, i would love to get your sense on the paint trays around the world right now and in particular with the dollar being stronger? mark: all of the stuff you're talking about with disinflation what's driving markets overall. the pain train and fx is the carry trade. if you compare it the carry trade to the total return of the dollar is supposed performing strategy. one thing that we see in quantitative tools as there is no consistent driver and fx. yesterday we had a few high ratios and we are all over the place now. we do not have the same global inflation impulse across every country that we had last year.

a single factor that drove inflation was international, this year it's moving back to domestic drivers. that's a perfect point when you're looking at the rba, bank of england, they are not dealing with the same inflation. this makes the markets confused. there is a wide divergence in rates in rates ng 10, growth relative to emerging markets. so that's where everyone is focus. lisa: it seems like there has been a shift with europe and it's been happening over the past few weeks but crystallized in these pmi's. the chancellor jeremy hunt saying inflation is the top priority. they are looking to raise rates because the pound is weaker. europe also seeing inflation higher, the euro is weaker.

is this a theme you can hang onto? mark: there will be countries, like the housing market, a lot of people in effects, there is a knee-jerk from last year. that played well and hide, sharpe ratios. this year is different. if you look at the dollar it has equal sensitivity to growth and safety factors. when you think about norway, sweden. it's great that inflation is rising and they have to tighten rates but norway is trading at a massive discount. you go to sterling, sterling is overbought. it is expensive. as been -- were getting to

the place where rates can be prohibitive for growth given the housing market in the u.k.. if markets go higher that's not good for sterling. lisa: this is wonderful, what is your target on sterling? mark: we would like to have a little higher in the months ahead, 130 is our target. the disinflation during forces we see coming from the u.s. are more powerful and we think the fed is done. we think macro volatility will stabilize. global economy is late cycle not recession and that rotates capital outside of the u.s.. we like sterling lower relative to other currencies but it gets a boost from a weaker dollar because we see the u.s. becoming weaker. we don't see the fed hiking again. tom: you mentioned a foreign

exchange market which was a massive ambiguity in 2003. what's your read on history? how to separate? how does that clear from that ambiguity? mark: i think the key thing that's confusing for all of us is the data dependency narrative . it's a euphemism for confusion because i know a lot of people focus on what central banks say and they're trying to follow stone language but their language is irrelevant because the data is creating the context of what they said -- if what they say is meaningful. we have to shift out of the regime and the most important thing we've had as a consistent focus on inflation. if we know inflation is depressing and we show inflation surprises and other general inflation traders, we are ended this inflationary environment globally.

what we need to cede to move into one phase of the next is whether or not the global economy moves into a recession and we get the rate cuts or whether we are in a soft landing where we get rate cuts but we go from restrictive to neutral. that will be the pivot point for us and it comes in the second half of the year because receive the u.s. economy slowing significantly and this inflationary forces moving aggressively. will get this later this year, where out of the high inflation environment but there is a shift. lisa: was your highest conviction right now? mark: values so we're short new zealand versus brazil. brazil we have a nice carry trade going on. we don't see the ecb cutting as

quick as the market. we have strong growth in brazil. were looking at relative value. the pco e is easing restrictions, we are looking from stimulus to china and were looking for ways to sell that against countries like india, korea as the ship narrative is changing and thailand has seasonality around. tom: thank you so much, we greatly appreciate that with td securities. we have such an informed audience. just extraordinary. jason just kills it as he adds values from oslo to bergen. there is a new tax on salmon in norway. this is a huge deal. it split the country into. it's a substantial tax on

agriculture of this enormous business in norway and you can't look at the salmon inflation as discrete. lisa: i wonder what happened to all the taxes that were placed into certain imports? tom: ask christian friedland of canada, she will tell you. thank you jason, he has a phd in fish from the university of maine. standard reports 500, -6/10 percent. lisa: does the fed matter or does it not matter? we heard from mark mccormack, not so much. look at the data. but which data? tom: i'm going back to first principles here. it's an original set of beliefs, and this leads up to our

conversation with adam posen. the theories that we construct our belief sets like dr. posen or me. our theories are being tested right now. lisa: aaron turner put out this new ratio that suggests the cloud of worker versus the company has come in. you are seeing less leverage by workers. he compares the level of quit to lay off and it's gone back .75 and 2021 and 2022. you are seeing microsoft's under the surface that hint at something that could be the soft landing narrative. tom: the macro economic foundations are what were talking about including with labor share and labor flat on

their back for 15 years and the pandemic gave them some strength. lisa: i would offer and suggest that these dynamics could make a more significant difference than andrew bailey saying don't ask for as much a week could kill the problem. tom: i woke up last night worried about the pose and conversation i'm so intimidated. stay with us for the next half hour, we will give you adam posen from the peterson institute and a former member of the bank of england. good morning. ♪

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>> we will get inflation back to its target and to do that we can't continue to have the current level of wage increases. we can't have companies hoping to rebuild profit margins which have prices going up their

current rates. we expect inflation to come down and it's important that price setting and wage setting reflect that. the current levels are unsustainable. tom: the governor of the bank of england. .5 percentage increase in england. it's been one of the shocks of the week. right now what we will do is what we do best is give you an informed debate on the issues. in joining us now is adam posen president of the peterson institute of international economics. he is one of our great american scholars on germany. as macon green trots over here, adam posen years ago. two days ago you said we would

see 6% interest rates by central banks and particularly by the bank of england. will that crush the united kingdom's economy? adam: it's going to hurt, there's no question. thank you for having me back. the issue is that from the start from this inflationary period the governor has been talking as though they would not have to raise rates even though they kept raising them. they kept talking as though they had to go much further. from the start, you had u.k. from 2021 that had the worst aspects of the u.s. labor market and the exposure to the energy shortage crisis from russia. and post political shenanigans

with five prime minister in seven years. it never made any sense that the u.k. would end up with the lower terminal rate for his central bank tightening then the fed and ecb. tom: i will get the theory out of the way. there is a blistering article but within it he alludes to the idea from half a century ago of a research program where you have a set of beliefs going and you stick with their research program right or wrong. does the bank of england have a flawed research program and do they need to amend it pronto? adam: i fear they have taken too seriously some of their models. all central banks have investment in their models but one of the good things about the bank of england when i was there

during the financial crisis and the other central banks you realize under those circumstances you put the model aside. you don't use it if it's not realistic. unfortunately, the bank has been relying on mistaken assumptions and worldviews. first, there was no erosion in the credibility of the macro policy regime post bragg said, post politics which is clearly not true. second, if there was going to have a real income shock which they did rightly call, that would lead to a decline in nominal wage growth and that was clearly mistaken and i and other former members are pointing this out as an error at the end of 2021 and therefore cost. they did not come off that until recently. i'm not conceptual like ambrose.

i think over the last year and a half, two years they stuck with some model assumptions that were publicly question and some of the external members also questioned it. lisa: are there parallels with the u.k. and the u.s. and the federal reserve which is on the precipice of a pretty key moment? adam: it's fair to draw the parallel, just with the labor markets, it's worse in the u.k. in this instance because it took the federal while to change their view on inflation. a bunch of us were beating the drum for them to do that in 2021. but they did significantly change by the summer of 2022 and from the testimony they don't have a full strategy but they are aware there is trend

inflation, it wasn't transitory stuff. i think the fed got out of its own weight and some degree. lisa: were discussing this concern about whether the fed can get down to a 2% inflation rate without causing pain that people are unprepared for. something you raised a while ago is that it's better to get to a 3% rate and be more comfortable with that. where are you now with what the fed has done and where it is heading based on how is raise their rates so far? adam: i would love for chris waller to be right. i would love to see vacancies come down without unemployment rising in the pass-through from all the previous shocks to be weeded out and not have to have a much higher rate. i think that's a bad gamble. i am more hawkish than some of

my colleagues on this. even though i'm known as inflation dove. i see us as having such tight labor markets and such trend inflation persisting that you are going to need real contraction in the credit markets to get where you need to go. lisa: what is required in terms of how rates -- how high rates have to go with credit markets that are still resilient? adam: one way to look at it, we have finally spreads between different classes of bonds, government borrows versus private sector borrowers. we haven't seen spreads be that wide until recently. similarly, however you want to compute what the real interest

rate is, we are just now getting to feel it. we are only now getting to type policy -- tight policy. since employment has stayed sturdy amongst the rising rates it tells us that the amount of monetary policy is insufficient. what we've done over the past few months has been sufficient but i'd rather err on the side of timing more. tom: we have time for one more question and will bring you over to the next half hour. this conversation is so important. it is real simple, there is a whole school of thought with dis-inflationary sector some place, do we get back to 2% in the next section.

right now, are you suggesting that we misjudge how we extend the x axis of these interest rates and we will see a 5% or 6% while out into 2024? adam: i think they will get above 5.5 by the end of the year and it will remain there until the second quarter of 2024. unlike some other people, i think the risk is more that they may have to do more than that and not so much that they will have to do less than that. tom: adam posen from the peter son institute. where will these central banks reset well into 2025. this is the dialogue, it affects everything we do in finance. the banking system and our

investments. it's not the short term is some is where are we and 20 26, 2027, 2028 given the follow line. lisa: we will carry on this conversation on the open. victoria fernandez, aaron kennon. tom: pozen driving the market slower. this is bloomberg surveillance. ♪ the vehicles are all-electric. the feeling is all mercedes. the choice is all yours.

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tom: bloomberg surveillance good morning to all of you on radio and television. central banks have been moving rates. real gloom about recession you can see in an oil. what we are doing, were talking to a cross-section of people and we've seen the views on equity markets some huge caution, blinding neutrality from the world bank and we are driving the conversation forward wrapped

around theory under question. this is been a joy with adam posen and with me as well is michael mckee are international economic policy and theory correspondent. a question for you, how bad has theory been blown out the window? that future central banker like. mike: i listen to adam and he's right. it's not just the bank of england all economist work off of models that have worked for 20, 20 5, 30 years and are not working anymore. some discarded those earlier than others. certainly you could say the fed did not, the bank of england did not. but they are now adjusting to

varying degrees. what do you do? where do you go out the model doesn't work? you can try to figure out why and reassess the model. tom: we will continue with adam pozen, the president of peterson international. in a raging debate led by your work with your colleague we will get back to a 2% but you disagree. what has changed and where we are heading within this new level for fed rate policy? adam: i don't think much is changed from the spirit of the conversation that you and michael have had. i think more needs to change. central bankers have repeatedly

been saying, two means to. and then some saying it might be better to stop at three but we can admit it now. my belief which is part of my belief when we were designing narratives in the first place is the point of inflation targets was to communicate in a credible way to the public. between the choice of saying you're going to to but then taking your time about it. then review into your times in a minute you're not going to do it. it is not preferable to saying were only going to three and this is a virtue of how bad things are. if you take us down from 8-3 you're still pretty credible. tom: what's the venn diagram of adam posen and a rules-based

john taylor? adam: the part of it i would like to keep has always been what i call discipline discretion, what mertinak he would say constrained discretion. is intermediate between pure rules and discretion. professor taylor has been right over the past few years but i'm not sold on the idea of the rule. what i'm sold on is the idea that you can't deviate from the target without explaining yourself and adapting the target. i don't know about a venn diagram i think we both agree you need a lot more disinflation than we've had, the fed was behind the curve but it's not because he did not have the roles. it is because they have the wrong idea. mike: if i can follow up on the idea of raising the inflation

target, do you have a lot of confidence that 2% is wrong or 3% will fit the economy that comes out? it seems like we don't really know. we don't have a good grasp on where inflation is going and how fast. adam: that's a fair question. i want to go back to one basic point which is when we talked about the inflation target. we thought inflation targets would be reset over time. as i started saying that, around 2004, 2005 we made a mistake because people treated these inflation targets like change rate targets they were scared to move them. there was too much convergence among different central banks all on 2% and that reinforced it.

whereas you should be adapting inflation to target the reality. not every minute but every single year's to make it realistic. to me, there's no question that the higher inflation target would be better. when charge used to talk about a 4% target, now he's in favor of the three rather than a two. i believe it should be moved is needed. i think there is no harm in seeing three because he will still be credible to some plating from where we are now to three and you won't have to go through the major pain of squeezing that last bit out of inflation. mike: let me ask you about forward guidance. the fed like the idea at various times but now they are having trouble communicating with marcus because are unable to say

what they are going to do next. does side effect problem? a market problem or just forward guidance as well as they thought? adam: it's never worked as well as they thought. the first time i left jackson hole in 2012i wrote that forward guidance would never worked well. every bank since then bears that out but it doesn't mean you just wander around and randomly say here's today's data. a look at the bank of england and the issue for me is not that they made the wrong hikes but they just kept saying this is the last one, will probably not needed anymore. it's not about forward guidance but that they communicated the wrong forecasts. i think the fed or the bank of england has to say our forecast

was wrong, we're shifting to this forecast. this forecast may be wrong too but this is the best guess and therefore you should expect x. you will not be able to do forward god is like you did in the crisis because i was meant to substitute for policy. it was not meant to be a standalone tool. tom: i want to get back to fed policy. thank you for being so generous with your time. what michael mckee will see in the press conference looking out 6, 7 meetings? what would you suggest would be the market, the real estate reaction if we get to posen rate levels. tom: thank you for giving me so much surveillance time. i think the market will be negative but i don't think in the u.s. it will be disastrous. as you guys have repeatedly

talked about, this is been an incredibly resilient market. in equities and in residential real estate, the loss has not been not marked. construction continues. going back to what we were saying earlier, you are going to need some kind of capitulation because -- as the side effect of being actual tightening of credit conditions. it doesn't have to be disastrous because we don't have the same fragility. as we have had in past cycles. tom: a great segment on the historic collapse of switzerland watch industry. that's how esoteric the partisan institute can get. one thing percolating is that new bout of american exceptionalism. is america exceptional?

adam: and a lot of social ways he has, our racial divisions, our nativism, these are all things under debate. those are not under debate and other high-end economies. in our economy, the economist had a great future talking about ways in which the u.s. economy powers ahead. it remains to be seen how much of that is sustainable whether some of this fiscal. whether there is some special sauce to the urban innovative parts of the u.s. economy and services intact that others have not been able to replicate and we have to take that as a lesson? tom: thank you so much for a substantial midyear discussion.

what do you make of all of this might? there is a debate wrapped around theory. we could throw in all of these where these in giants, none of this is in the textbooks which is what were talking about. mike: if we take a longer view, thus a history of economics. we see economic developments we had not seen before and economist come up with new theories and we could start with adam smith and go forward from there and get to john maynard keenan's and now we have new economics and there is a lot of evolution in economics and there is always to debate about whether it's a real science or a social science. i think it's a learning by doing. tom: if we get a posen world

will you guys ask about of the blowup of the real estate market? mike: it has been asked and the chairman says we are monitoring it and we don't think it's going to be a problem and there are some differences. it's like the muni market, each muni bond is different in each real estate loan is different. some are offices, summer shopping malls. offices are in big trouble. over time is going to be a problem? that's something the fed needs to watch. tom: the s&p is down .7%. good morning everyone, bloomberg surveillance, we welcome all of you here. we are trying to grapple with the shock and all of how wrong

michael mckeen has been exceeded by how wrong i have been all year. have you ever seen so many people be so wrong as we have been from 12-31-22. mike: a lot of people have been really bright. i haven't seen this kind of split not only from analysts but the fed. while we haven't seen a significant distance from the fed this year and their public comments they are making clear that there are 2, 3 camps at the fed. raise rates, hold and watch and we don't know. that is something we haven't seen in quite some time and when you listen to jay powell this week. he was, i don't want to say

wishy-washy. he would say the majority thinks that if the economy develops than may be we need to do. as opposed to alan greenspan he would say this is what were going to do and this is what we need to do. tom: he is really looking at the majority of like a council basis. michael mckee, this is wonderful. we will do this for another week into the third quarter. michael mckee has turned the market slower. s&p down .7 5%. this is bloomberg. ♪ ive our money. and i have been eating all these stupid chia seeds! i could totally live to be 100! why do i keep taking such good care of my- since we started working with empower, we're able to get all our financial questions answered, so we don't have to worry. so you never- no. never. join 17 million people and take control of your financial future to empower what's next.

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>> as we continued to see borrowing costs rise, interest rates rise this will undermine affordability and valuations. this is a head to the residential and commercial market. the bigger risk is the fed loses its resolve in the face of this

weakness and allows inflation become entrenched. tom: she was absolutely brilliant today framing out higher interest rates. adam posen gives it a theory, they say get used to it. we will dive into the zeitgeist this weekend we have a team of bloomberg news experts really look at real estate. we will do that right now. the world's empty office building. it is a time bomb. a time bomb developing across the world. defaults are stretching across major cities, property values are bringing the commercial real estate market to a precipice. that is from john gilson and her team here, solid reporting on some of the obvious geographies. we will take a different tack

right now. for those of you renting and looking at investment where you are scared shift of the next six months. an expert on this is brad dillman chief economist of cortland and atlanta. they do all kinds of sunbelt, multifamily stuff. this is a guy out of washington and the economics of geography. this is a cottage industry of the london school of economics and he is one of their esteemed graduates. how bad is the geography of our multi-family investments right now. we use the phrase timebomb. is your world a timebomb? brad: to the degree of might be it's a slow-moving one. there are a number of factors here.

coming out of the pandemic, we had interest rates in the eviction moratorium, in the context of zero interest rates a lot of multifamily supplied. could this compounded to an issue, yes. tom: i'm fascinated by what you see. cortland is looking at this on a five minute basis. are you actually seem rinse level out or rent this inflation? could that be possible? asking for 20 million people in tri-state new york, they don't believe it. brad: the data has been that were in a disinflation during rent growth environment, it peaks since last summer. one thing we have seen his new leases, we are looking at new leases and existing leases that

are going to renew. new leases for a think it unit have started to increase again at the same time that documents see my drop off. it looks like rent growth could re-expand again. tom: help me with the knot in my backyard. what's a typical family size? how many units is a typical portland property? brad: 250, is suburban midrise in sunbelt mostly. tom: what's the knot in my backyard level, is it stuff to build this stuff? brad: the suburbs have never been more accommodating when it comes to multifamily. if you look at the construction, the percentage in the severances caught up. tom: the problem is brad answers short questions.

he thinks he is on tv. you're allowed to expand. i want you to expand on your optimism of multifamily housing over the next two years. all we get a new york is gloom on real estate. are you optimistic about multifamily development? brad: no, i'm not in the reason for that is the market. to get a loan is too stiff right now. if you look at multifamily's and the five unit and up space. it will be smaller product, 10 units, 40 units in places like knoxville. this kind of product is still underway. tom: july 26 is a fed meeting. if they act, it is probable that

they will find a new rate regime at a higher level. what is that due to multifamily real estate and for that matter, commercial real estate that you study across america? brad: just by keeping financing costs tied, it has an impact on values. we already see an impact on liquidity's. it will make further construction more difficult and will lead to some distress. it appears the distress will be in construction and the financing plays, maturities and the 20, 25 range. if they stay high like that and we had a new regime that the fed funds rate will be at three, 4% and perpetuity, we would need to see an inflationary environment that corresponds with that. we would need to see rent growth or cheaper inputs in the building process. tom: on bloomberg surveillance we are talking to brad dillman

where they do multifamily housing at cortland. i want to go demographic on you, i will be the only one left on the island of manhattan. everyone else is moving to florida. it is not a cliche or is there something truth that we have to move down to atlanta braves baseball? brad: it feels like everyone is moving to florida. when we see some of this information, the migration to the sunbelt has slowed a little bit. we look at the census and cell phone records. people are so moving but it has slowed down. something we don't talk about is immigration. immigration has kicked off coming out of the pandemic. when you look at the foreign-born adult population in

increased 5 million which is bigger than the population of new zealand or oregon. this is a story for gateway markets like atlanta will see more emigration proportionally than they would historically. tom: everyone in new york city is talking about this, the expense of some of our urban areas. there are other issues, crime and that, i get it. there is a study of what our kids are doing. just cortland have vengeance from the younger crew who is moving down to a cortland multifamily to rebuild their lives? brad: i don't know as far as people moving interstate. we have seen people say that we have been a beneficiary of people moving out of state.

not so much that they have to do it, we don't have clarity on that. tom: thank you so much, you're generous with your time. early morning in atlanta and this is completely my fault. we don't cover municipal bonds. we give short shrift to multifamily housing which is done. some other things we don't look here with this economic investments two. brad dillman with the clinic on multi-family housing. we are seeing rent disinflation across this country. i can assure you that no one in manhattan or in the five boroughs is considering rent disinflation. in the market, the deterioration of the tape, this is front and

center, is a recession watch worldwide. the launch has changed, futures are -35. vapes, i give up. 13.76 on the fix. oil is under $70 a barrel. west texas intermediate is that $68. the dollar is stronger on a fractional basis, bitcoin at 30,000. on wall street we we have romain bostic looking for celtic season tickets. with steve pagliuca of the boston celtics and ruchir sharma. this is bloomberg surveillance, good morning.

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>> for viewers worldwide, i am lisa in for jonathan ferro. this may be the end of the winning streak as we see a soggy finish to a soggy week countdown to the open starts now. >> everything you need to get set for the start of u.s. trading. this is bloomberg the open, with jonathan barrow. >> coming up, global stocks heading for the biggest weekly decline in three months. bonds getting a boost. growing recession acts. a central bank sustaining with the big issues. whatif