the risks facing transmission. purchases are not restricted. tpi will allow the governing council to more effectively deliver on its price stability mandate. in any event, the flexibility and reinvestments coming in the pandemic emergency purchase program portfolio remains the first line of defense to counter the transmission mechanism related to the pandemic. the details of the tvr described in a separate press release to be published. you will get that later. 50 basis point hike. on the euro, a spike higher by half of 1%. 1.0230. yields still higher in italy by 18 basis points. the 10 year higher by 20 basis points. kailey leinz, your thoughts on the back of this one? it looks like a loose definition of anti-fragmentation talk from the ecb. kailey: i think i got a description but not necessarily an understanding. people will be asking for more clarity from christine lagarde at that press conference starting at 8:45. you are definitely seeing the reaction in the bond market. the spread is narrowing now. the move in the euro is stronger on the back

tom: still looking for a little more clarity on the details of this tpi tool. yields lower both at the front and long end, down by about four basis points. five basis points, the italian tenure at 3.49. madison faller stays with us. we will get more of her calls after the break. coming up, tech stocks get knocked down in extended trading after snap sales disappoint. tech invoke is next. -- tech in focus next. this is bloomberg. ♪ tom: welcome back to the open. happy friday. seeing losses around zero .1% across european equities. futures on the s&p looking lower by 0.2%. nasdaq down by 0.6%. snapshots parent company snap plummeted 27% after disappointing revenue raised concerns about the outlook for online appetite. meta and pinterest fell on the news. it was the second time they had a selloff. joining us is madison faller. what is your assessment of the tech sector? you say there are opportunities in reasonably priced parts of tech. where are we in some of the multiple impressions and how concerned are you about the earnings we are seeing come through? guest: th

alix: in the tpi readout it said it could by private-sector securities. it could consider. is that a good idea or bad idea? peter: i don't know. i would have generalized. central banks, the u.s. central banks intervened in the bond market. the government bond markets in europe. in private bond markets as well. i think central banks are used sometimes, under exceptional circumstances, to intervene. this really should be exceptional. here we talk about problems in certain jurisdictions, in certain countries. that makes it difficult, and there are a number of criteria. i think the ecb is going to come with a general signal that they could also intervene in private on markets, but i don't think that is useful. it does not hurt much, but it is not necessary. alix: it is like a huge net, there are still a lot of holes. peter, thank you very much. always appreciate your commentary. peter praet, thank you very much. mario draghi's government is over. dealing with banks during the italian debt crisis. marina broglie will be joining us next. this is bloomberg. ♪ alix: mario draghi off

it was unanimous on the 50 basis points, on the tpi. ristine lagarde also laying out four clear criteria for meeting that framework of the tools set out in the press release as well. she really pounded away every question about italy, whether she was concerned they could apply for this, whether it was applicable to them, going so far as to not say "italy," saying instead "the country to which you are referring to." alix: private securities could be considered. i thought that was pretty interesting. also, the fact that the euro exchange rate factored into their decision to hike 50 basis points. what have we learned about that? >> you have got to wonder that she said it not once, but twice, the fact that the euro was leading to higher inflation, among other factors. it would not be surprising if we get closer to parity to see more verbal intervention. it is clear that this is maybe even something that is pushing the hocks and the doves 50 basis points. it is also clear that they are leaving themselves a lot of discretion, whether it be to

alix: so it raises the question for me what's changed and i wonder, may be the tpi tool that the ecbas is better than thought. they can handle the spread widening. maybe they can handle the energy crisis in the winter. is there anything to that in terms of why they went so hawkish today. >> i think it's not very complicated. i think inflation fears are not good. the economy has been more resilient on this with some market analysts were thinking, myself also, the unemployment rate is quite low there some wage pressure. i think we should look at the simple analysis that inflation is too strong for the ecb to act. my concern is that the guidance on rate as been quite strong. and the intention you see it's not the intention to further dampen demand in a situation with the project with already to negative figures. this i think is a bridge too far. guy: peter, have inflation expectations and the euro zone become -- now. >> i think they are quite well behaved. and surprisingly given the inflation shock that we had so they are on the upside for us and the ecb basically wants to give a strong

dani: at the same time, we have the tpi protection tool. safety net is supposed to be there for italian bonds. does this just show us it is a market that is very ready and willing to test that? >> before yesterday's meeting, markets were actually relatively calm when it came to italy. potentially now, with this very surprisingly strong guidance around rates that unsettled markets somewhat. dani: the ecb does have a different market environment, as does the u.k., where labor is really the question. it is a very difficult labor market. how does andrew bailey's task different when it comes to that? what is the fine needle that he needs to thread? given how extremely challenging this labor market is. >> one of the contrast on the market versus the u.k., i think the key difference is that we saw the pickup in wage growth in the u.k. coming through much earlier than we did in europe. the part of the story is the fact that participation rates were essentially available in the u.k., and it has shrunk more than in the euro zone. it still hasn't recov

the deflationary funk, since 2011. a 2.3% number in terms of tpisignal we have made the shift to inflation. oil prices are rising as our metal prices. anchor: positive prices coming early. tom: the higher prices, good news for china's factories. offsetting some of the higher wages. wee of the higher costs talked about as well. factories putting up their the environment of stronger demand. it means of course of their earnings will go up which means they can pay down some of that corporate debt. what it means in terms of broader chinese inflation, they expect chinese inflation to hit around 6% in the third quarter of 317. broader picture of the inflation of the global economy at a time when donald fiscals expected to up and infrastructure spending. we could see a broad pickup in inflation. good news for the likes of the ecb and mario draghi. good news for the boj. not so good for the consumer. in terms of where the pb oc stands, analysts could expect them to tighten at a moderate rate. numbers expected in a little under one hour in beijing. yvonne: j

with regards to the tpi instrument, the ecb has bought a lot of credibility with that.it means performing the next government, our expectation is forming this government wouldn't be as easy as many expected once the election result was announced. it's likely we are in for a few more weeks of volatility there. but i think the key thing investors are focusing on is the budget, and the fiscal position. whatever happens domestically with the political tractor up -- backdrop, our sense is you will not see much deviation from the budget that has been laid out by the previous prime minister, mr. draghi, so i think markets can take assurance that as long as we don't see deviation, we don't see big moves in the btp market. francine: dean turner, chief eurozone and u.k. economist at ubs joining us this morning. eu leaders gather in brussels, on the agenda, sanctions on iran and energy. this is bloomberg. ♪ francine: we'll talk about energy crisis in europe, but yen breaking through 150 per dollar for the first time since 1990. it is a very important psychological level, we did he

anna: on what did you make of the tpi tools, the transmission protection? have seen it described as containing a lot of constructive ambiguity, and how much latitude there was in christine lagarde's own description. i'm sure it makes sense more to others than it does to me, but is it going to be enough, that tool? ella: we are on the people of the 10th anniversary of draghi announcing whatever it takes, july of 2012. this is probably as far away as possible, and i think it was designed to be ambiguous because the council is not keen on having to trigger that. they are being political at this juncture, because if you are trying to fight spreads widening in spain, france, and italy, how do you justify what part of it is political in nature? having said all of that, faced with a lot of pressure, we believe probably the ecb will choose to protect italy. at this juncture, we need to get ahead of the election, which means they are probably vulnerable here. alix: this is interesting he. the absolute level of yields are lower, at length 3:31 for italy, and german 1

romaine: did you see the interview from the tpi cap ceo? you can't take risks unless you are in the office -- is that the gist of it? sonali: it's an interesting idea. you see people bringing the traders back and many banks, there are essentially war rooms being made for these traders who needed to be there because things are happening so quickly. but the question comes up again as you have folks like j.p. morgan warning of year and funding stresses, the worry about the underlying market makes you want your people close by and on call. romaine: do you plan to go out and stand outside these banks once again and corral these people? sonali: next week, there are two conferences -- there's salt and that digital asset conference wringing in people from all over the world. so while this week is very muted, next week, there will be people running around. romaine: i hope it doesn't rain on them. coming up on this program, we will talk about the european union trying to phase out internal combustion engines by 2035. lamborghini looks to the fed up it

that inflation rates, the tpi, that key rate, to remain at or around 4% for a while. high inflation for a considerable time. that is the problem. they thought they might see inflation started to use, -- to ease. now they see 4% inflation. they are acknowledging that it is an issue into the government has the same problem. the new president coming in in may, the new finance minister, they all know that they have to fight inflation. the problem is they want to spend money. that is where they might get tough. but for now, the bank of korea for today is good for a while. it is clear, tighten rates, fight inflation. david: kathleen hays in new york and husband almond and singapore. just a final note in singapore, that big move. you're sending the currency up, not just against the dollar, up against pretty much everything will currency in the world right now. bloomberg really visualizes this move for you. there you go. that's not it. i promise we will take this for you. let's get to your first word headlines with vonnie quinn. vonnie: the u.s. is sending ukraine $800 million

maybe we can get through it therefore they can raise rates now and the instruments they have like the tpi to deal with fragmentation, they have more faith and it now than a few months ago so they can be this hawkish. guy: one was saying the ecb to go deep into restrictive territory if needed. but is a really big shift in the narrative and in terms of the language. the market got its arms around that story yesterday. the question of the day, how bad does it get? let's kick it around. we're hearing from ecb speakers today and they are really reinforcing the message we got from christine lagarde yesterday. the market coming into yesterday was nowhere near that kind of language. how bad could it get for european assets? >> if you look at the italian premium gauges the gauges how much risk we are saying in italy for example, the market is trying to respond perhaps aggressively to be message and they're finally listening to policy members who are saying we are not stepping down, inflation is the biggest goal even if session comes ahead. i don't think we will have to worry as much about session

the tpi is designed to deal with specific problems which are probably not the problems in the ecb currently. what is going to be difficult this summer? the formation of the italian government, higher bond yields. scheme drafted by the ecb is specifically designed not to deal with that sort of problem. there is still a lot of risk left on the table. i would expect the ecb markets to engage in again over the summer. kriti: let us talk about some of the other issues. you have a big commodities problem. russian gas close have already been halted and restarted and it comes to europe. that problem is going to get amplified. 50% cut on the table. walk us through the implications. -- 15% cut jamie: russian gas flows have turned back on but there is uncertainty about whether that will continue. the russian gas business, there is no long-term cost to cutting out the gas supply early. there will be further disruption. the european commission is expecting further disruption. that is why they have encouraged 15% reductions but we have seen resistance. spain, greece do not want to do this cut. they think

think the tpi cap is they are, they have been spending the last five years trying to reduce the pay butt they have been the deal, they are buying the business from icap and said they will keep going and may be cut a further. -- isis the voice still the business still compelling well? you have compliance, is it still a compelling part of the business for these types of companies? they are not many left. will: it is the tp icap tradition. definitely compelling for them. pool --age worker average broker pulled in 27,000 pounds. there is money still to be made there. vonnie: does this mean big layoffs in london? : not big layoffs but some overtime. -- theses at tp ica bosses at tp icap get used to the new desks they bought and they work out who they want to keep, get rid of, who is making profit and who is coasting. vonnie: is there a lot of overlap? are the two businesses similar or are they disparate that they can be joined and synergies will not create much havoc? will: the businesses are very the deal is about happiness many brokers under one roof as possible, and you actually have the

then, to make sure to ensure periphery doesn't turn into something of a mini crisis, to ensure the tpiactivated and is credible going forward. that is quite a lot of movement from the ecb. anna: can i pivot to the u.k.? we have seen actual real yield today, and eye-catching forecast from goldman sachs that inflation could get to 22% in the u.k. where do you think inflation gets, how high do rates have to go, how quickly in the u.k.? peter: my models would point to similar numbers from city and goldman. i would ask, last week, there were assumptions going into the estimates. those banks are providing, that city was providing. it was based on estimates, accurate estimates. bearing in mind, it is likely to be extending the cap from 3d and a half thousand pounds above -- three and a half thousand pounds above 7000 pounds in or around march of next year. that leads through into all aspects of the u.k. economy. the thing that worries me the most about the u.k. economy's ability to turn into an inflation spiral is the have such a dramatic trade apposite and negative current account allen's. i

the main question regarding tpi and the criteria that they set out, they are vague, and christine lagardethey would use discretion and judgment to assess whether that criteria has been met and to activate tpi or not. that means markets are likely to test the result. we think particularly in the context of uncertainty on italy. we think the spreads will widen further from here. tom: you are currently saying 3.36 on italian spreads. this following the lowering of the outlook by s&p on italy. jari stehn, always excellent walking us through the fed. managing director / chief european economist, goldman sachs. thank you. credit suisse places its embattled ceo. a third straight corley loss. do not miss our interview, next. this is >> it is very clear whens are not there, people are asking questions, but i have a clear mandate. my mandate is execute the strategy, risk management, and be here for our clients. we are back to business as usual in here to serve her clients. tom: that was the outgoing credit suisse ceo, thomas gottstein speaking last month and davos, reiterating his confidence in his

we've yet to test the effectiveness of the tpi. as they do more hikes and get more widening. turally you would expect bonds are rising and we are seeing a strong reaction from the two-year bond. guy: what is the euro doing in this scenario? we have a trait shock at the moment for the energy is priced in dollars. it is germane when we think about the inflation risk and growth risk will be this year. what do you think it will look like? skylar: so a really big portion of what happened to the euro is what happens to the dollar. so put simply the u.s. has had two major growth advantages this year. limited exposure to russia ukraine and elevated energy prices being limited exposure as well. one or both of those affect every other developed market. notably for europe it's russia ukraine. i think going forward for a dollar downside you not only need a slow tightening but an impetus elsewhere. you've got to the middle of that dollar somehow through china and we are definitely seeing more positive signs in terms of getting more positive on covid, on property, we are getting negative su

the tpi may end up needing to be used if i am wrong and italy decides to try to paint outside the lines. kriti: you went exactly where i wanted you to go, the tug-of-war between fiscal and monetary authorities. the u.k. has been the poster child. we have seen elements in the u.s. as well. to what extent is this an actual threat to the effectiveness of what some center banks are trying to accomplish? megan: it is a huge threat, particularly in europe. european governments will have to spend more. through this winter, and more broadly, next winter, when it will be more difficult for europe to refill its storage without russian energy. if european governments have to spend more, then, that will be inflationary. that undermines what the ecb is trying to achieve in hiking rates and withdrawing accommodation to lean against policy. i think what we saw in the u.k. is a sign of things to come for the rest of the developed world where governments will try to spend more. the markets will be the disciplining factor. central banks have to step in and paper over liquidity issues, paper over market i

if we suddenly see a shock and increase in volatility, because the issue i have is, i'm not sure the tpiill be a very effective tool. if it is actually put to use than i think it could be very problematic. yes, if you are going north of 5% that will create some attention, but i think probably the biggest sure btp story will be the story for 2023, actually in the short-term term and a lot of people are very narration italy, a lot of people are short. if the political news is better you could see italy may be trading a little bit better in the next couple of months. sonali: is the risk of a gas shut down -- a russian gas shut down -- priced into the markets here? much risks does that pose over a multitude of assets for italy? mark: we already know this, no more russian gas, right? nord stream is gone and europe is not getting any more russian gas. thankfully, reserves are largely full. i think speaking to the guys at the commission in terms of the energy agency, i think the main theory is if we have a really cold winter, a statistically-cold winter, we will see further curbs, more blackout

carl: pdi have a lot more volatile than the tpi. tend to be dominated by services. gather the pdi into the cpi, it doesn't jessica biel and downside risk -- it seem to be a downside risk. 2.2, headlines, we're looking at .1. we think this conflation crosscut will go on a little bit longer. scarlet: how much of a drug is that on cpi? carl: energy prices and on the terms are in positive territory, that is actually adding to inflation. however, it will only month on month change, it looks that energy prices are falling more than what they usually do, at least gasoline prices are falling more than they usually do in the month of . the margin energy will be a mild drag on the month-to-month change. fed saying we have to wait for the weaker readings to drop out of the year on year. , this is a month thing. you just expected to be by the end of the year. at what point do we see if the into the numbers? carl: the jets effect is not showing up. -- jobs effect is not showing up. we certainly have not seen it yet. thatu watch core cpi good, is where the dollar will have the tra

the year. japan will be a different story as they wait to see if it moves from deflation to inflation, continuing. kathleen hays joins us in studio. >> let's start with japan, we have japan's tpi month of march. showed survey manufacturers are getting more upbeat on output prices. ppi is seen march rising 3.4%, year over year. let's look at this simple chart. it has the headline ppi and cpi. this gives us a nice view of the trend. look how much producer and wholesale prices have come back. up to that 1% level, expected to rise to 1.4%. bloomberg intelligence sees 1.2%, but still, making headway. the governor spoke to the japanese parliament 24 hours ago, saying he sees inflation continue to rise in a virtuous circles of rise -- rising prices and wages. giving a very optimistic view. also yesterday in tokyo, and inflation-linked bond sale was the most massive since 2013. presumably in part that core cpi will be expected to rise. also because the bank of japan will be buying more of these. kind of a supply and demand question. china's cpi and ppi are the big ones. ramy: they are doubting the reflation trade. it came as a jolt, right? is actually job openings and labor turnover,

the company. many may not recognize what tpi cap is, but it has quite a history. some characters behind it. to 2016, you had rivals in london. one headed by michael spencer, who wanted to sell the voice part of that to its rival, which made the company tpi cap. next group was what was left. you will remove read the beginning of the year, cme in chicago announced that they would be purchasing that company. so important company for the financial sector. mark: joe, thank you. vonnie: we want to get to capitol hill, where kevin cirilli is with senator johnson of south dakota. is brett kavanaugh going to be able to get confirmed? >> i think you will, but we have a process to go through and we want to make sure we do that in a deliberate way said that he gets a chance to make his case, have his record examined, to meet with senators and ultimately have a hearing where he will answer the hard questions, a debate on the floor and also a vote. my guess is, based on what i know, that he will get confirmed. kevin: what you want to ask him? >> with every nominee, i am interested in their judicial philos

if you look at the tpi, it's been 3.5%. it's one of the least appreciated areas of inflation.for the average household. brendan: every fed has its own indicator. top headlines. vonnie: police released surveillance video showing a man suspected of killing nine people in that attack on a south carolina church. it's a white man in his early 20's he walked into a church in downtown charleston and started shooting. six women and three men were killed. it's a historically black church and police are calling this a hate crime. >> a white male, younger white male. between 21 and 25 years of age. approximately 5'9" in height. he has on a distinctive sweatshirt that has markings. the vehicle you will see has a very distinctive front license plate. vonnie: the fbi is joining the investigation. all the victims are black. among them, the pastor. european finance ministers once again trying to solve the greek debt crisis. if they are in luxembourg discussing a possible bailout. greece may not be able to pay its bills if rescue funds are not released. there's speculation greece might seek he

the biggest issue with tpi is not of a technical nature. it is political. it is definitely not something that would protect government's against their own mistakes. that is the issue. if you could come up with a situation where the market is punishing a state for things which it has not even done or announced, then tpi is fully there. if they are doing stuff that is triggering a rational reaction by the market, gpi is probably not the right instrument. so far, the news we have from italy is the new government, we don't have one yet, they want to be prudent. if they don't make a big announcement that would make the ecb nervous, they could benefit from tpi. there is a relationship with the market that can build with that. lisa: i can hear your voice in my head. it is very loud right now. he is saying ok, they will talk about political risk and the peripheries, what about the fact germany is the biggest risk to the entire european economy? what's the answer? how is this situation different, both the political considerations and from distinguishing from the euro

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geoffrey: i think europe -- they have the tpi's to manage any spread widening. e last few weeks or so. i think qt will take place in europe when the market is ready for that. on rate hikes, that is where europe is one step behind the rest of g10, i think that is protected in euro-dollar. with the latest inflation prints, i think they need to accelerate. jonathan: i am not going to explain with the prawn sandwich brigade is. thank you. geoff is a united manchester fan. back in the days, the manager of manchester united football club, the atmosphere at the stadium was dreadful. he referred to those fans as the prawn sandwich brigade. the wealthier crew unpacked their prawn sandwiches and didn't make too much noise. he wanted more noise, more support in the stadium, a bigger atmosphere. tom: we have the same thing here. i am critical of the new york yankees. when they play a fabulous team, all the empty seats from the prawn sandwich club. i give steinway credit for this, a down fancy to sit in the same chair. jonathan: empty corporate seats drives me nuts. the u.s.

jonathan: can the bond vigilantes in europe make a comeback or will tpi stop that from happening? >> i think the ecb is going to give the best try to avoid -- and support italy, for example. i think they have come back and it is a big challenge. jonathan: your world of bond vigilantes. how many years ago was that? tom: it was a long time ago when there was not a bear market like this. that was a walk in the park compared to where we are now. jonathan: in many ways, the week begins tomorrow, not today when we get earnings from her soft and alphabet. lisa went through all of the economic data we get through this week as well. tom: we are trying to make monday eventful as well. i think with out question, the conversation this morning was stephen englander. how many people disagreed in the game? the answer is seven out of 10? jonathan: it looks pretty divided down the middle. others looked at it and said i see evidence of this being stickier. lisa: this is the toughest market i can imagine. the factoring into the supply-side constraints, it is many different areas of the supply-side ma

posted a net loss for the quarter driven by efforts to shed its africa unit that moves past the tps scandal. -- tpivestment bank in our advisory business and that underwriting, equity underwriting, we have a great quarter, the first half of its year was one of the best result bank has had in that part of her business. credit-rating did quite well. in rates and currency, we are, we were down in the second quarter. we have made some recent very important hires. get that corrected, but overall, i think the investment bank had a pretty good quarter. >> you're still happy with the extent to which you back to the investment banking business at barclays and you think you have taken enough action to turn the performance around? room forll have improvement, we are clearly very pleased with the strategy we set out in terms of the transatlantic and consumer apartment -- consumer and investment banks. we are number one investment bank and the u.k. with a market share of over 10% in the second quarter. so we like the business, it is important to the overall strategy. we will continue to invest in our investment

the ecb. we have not talked about tpi. jonathan: what did marcus ashworth call it, to predict italy? tpi? tom: the first thing i looked at this one was italian spreads, which i guess are ok is how i would put it this morning. jonathan: futures are ok, up 0.4% this morning on the nasdaq 100. yields are higher by five basis points. 2.80% on the 10 year. crude higher than 1%. euro-dollar, 1.0223. welcome back, bramo. lisa: it is good to be back. today is going to be a huge game changer for a slew of reasons, the first being these big tech earnings we are talking about. alphabet, microsoft, meta, amazon, why is pinterest there? i am not sure. [laughter] sorry, i am just going to be honest. i know tom really likes pinterest. tom: dow component. jonathan: is that another bellwether for you? tom: it is, exactly. lisa: wednesday we've got the rate decision and press conference. how much do they talk about not only inflation and out of they are looking on at that friend versus what they are seeing in the on employment picture? how much can unemployment rise before they respond to that in addition t

the same for spreads, tpi is a powerful instrument to cope with be unwarranted fragmentation in the financialts that are not justified by the economic fundamentals. we need to monitor all the situation, but one variable or another is not decisive, whether we have a fragmentary market. i don't think we have fragmentation issues at the moment in the euro area. dani: i have to wrap this up where we began, you talked about the energy crisis and its impact in europe. this week we have seen more stress coming to the fore, nord stream pipelines going down, alleged sabotage on the part of russia to those systems. are we sitting on the precipice of another about of -- bout of energy driven inflation? gediminas: i think i lost connection. dani: i'm afraid we have lost his sound. gediminas simkus, governor of the bank of lithuania, celebrating 100 years of the central bank. let's shift to the corporate world and the macro impact, totalenergies ceo has told bloomberg its russian interest may come to an end as tensions escalate in the war in ukraine. he says it is game over for russia. >> when you have wh

the tpi report is due. if you have a bloomberg terminal, be sure to check out tv .ch us online, check out our charts and graphics, interact with us directly. tell us your thoughts on bitcoin and gold. this is bloomberg. ♪ alix: and just about a half-hour, we will get a slew of economic data. we are obviously keeping a close eye on the inflation data. the chicago fed president spoke about inflation in a speech yesterday, saying low expectations for keeping inflation down may not be temporary. he said the impression that 2% is a ceiling, our communication should be much clearer about our willingness to deliver on a symmetric inflation outcome, much different -- a greater chance of inflation at 2.5% in the future than what has been communicated in the past. michael mckee, are you back here again? michael: it has been argued for years that it is not a target. the role of has been in recent months about whether inflation targeting, whether you're deliberately trying to get above 2% for a while will make up for all the time united below 2%. f administration -- the current

the reflation trade, they would have pointed to china. this very constructive view on china. they would have told me to look at chinese tpi's. ok at the trajectory. things are starting not to roll over dramatically, but flatten out. for our viewers and listeners, looking at the reflation trade, give me the view on china. jim: china had a great first quarter, but china's overall objective is stability in the economy. they have the ability because they have their hands in so many in the economy to toggle credit growth. they had a good first quarter, now they are scaling back credit growth of it. they are very focused on stability, and they have done a great job. you can see that to the currency action. jonathan: can you have that reflation trade, that steeper curve story still on without a buoyant china? >> absolutely you can. part of it is thinking what will the fed do with the balance sheet. let's face it, when the fed starts reducing the size of its balance sheet, the treasury will have to make up for that lost funding. they will have to increase issuance. coupon sizes are going up, and that in and of itself could cause prem

perspective of the likely way they would be looking at this is their ability to intervene in the bond market through their tpi, those measures already in place. that is the most effective way for them to target. we look at energy shock. there are capacities to cartel that inflation is limited. we are seeing the stagflation inflation starting to emerge. alix: is the first bank of payment going to have to be the ecb because of the specific energy crisis? is the ecb going to pivot first? does that make the european market more attractive? laura: we have to take a step back and look at the big three. that is most likely to be the case that the european central bank will pivot first. we are starting to see the data deteriorate. eventually, we do think the ecb will focus on those growth concerns. as we look toward the fed, we do think at this point we are not yet seeing meaningful sign of the duration on the economic front. the bank of england has acknowledged that they do in fact -- in the u.k. it is not a catalyst at this point to enter as a european asset. i do not think that is going to be a 2022 story. i have

core cpi, we exclude the price of brent, 1.6%. headlines tpi over 1%. k underneath the surface, we are looking at more and more signs that inflation pressures are starting to build. you will what's that report this thursday to see if it gets so high the fed might have to act. you can check the chart at the terminal. betty: possibly heading to that 2% overall. ok, mark. mark: can i say that is the most lying joe has ever done. he has never done four lines. lines joe the most has ever done. two months ago today, the world stockmarket hit a bit of a boat. -- bump. as you know, we have seen a rebound since then. i love my anniversaries so i don't let us check out to see who is the best-performing equity assets since from 11, 2016. is uphe all country world by 11.8, the best-performin stock and evolve and 94 we track is the rts index in russia. it is up by 34%, rising with the price of oil. russia relies on energy sales for about half of its budget. the best-performing stock in europe is actually euro banking. i thought this was a bank that has basically lost

guest: first of all, let me say index,e consumer price usually the foreign exchange rate affects tpi i inflation on a 12 month timeline. the japanese inflation began last summer, now we are feeling the full impact of the higher and the inflation will remain until the first quarter of next year. regarding inflation, we will continue to see a week number four tpi inflation coming -- inflation. on the a hand, consumption, it is puzzling. we are seeing a very good labor market performance, including an increase in employ people, but they're still -- there is still data showing the consumption is fluctuating. it is not growing very fast. we have to think about the household sector, mainly because of the long-term situation. ramy: we will leave it there. thank you. come with still to the japanese open just minutes away. yvonne: stocks, we could see s yvonne: more disappointing data from japan. the latest rating comes below expectations, and the outlook is gloomy. ramy: the tax gaze remains at a time in two years, suggesting continued stabilization and reducing the prospect of more stimulus.

steepening of the yield curve, and the pivot to qt.it all comes down to the strong economic data we continue to get. strong cpi, strong tpi, and look at this. 3.8% on retail sales erase some of the losses we saw in december. we are pushing forward into a strong consumer economy. that was the markets wrap. "what'd you miss?" starts now. caroline: i'm caroline hyde. the surprise, the u.s. consumer spending surging in the start of the year for the most in 10 months. . we saw gains despite that red hot inflation. how sustainable is it and how are consumers turning to debt and credit card bills? they jumped sharply last quarter. romaine: the data has been erratic. there it was a surprise drop in retail sales. 3.8%, almost two percentage points above what the fed was looking for. these are not adjusted for inflation, so some of these increases could be that people were paying more for things, not necessarily that they were buying more, but we did see bumps up in terms of e-commerce and people buying things online. furniture sales were through the roof. look what you get here, 3.8%. that's a big deal because we know energy price

an hour -- granted, we are not -- $15 an hour, granted, we're not were 60% of the american workforce was unionized that had tpiator clause is built into the contracts, but when you hear walmart and mcdonald's come amazon all talking about $15 an hour wage, that becomes a little more persistent in my view. jonathan: jack, have to leave it there. jack ablin, cresset capital chief investment officer. want to turn to brent crude. $71 a barrel. the smallest move lower, iran says the nuclear deal differences are solvable. they might be solvable. the smog tom: on the screen, it sticks out like a sore thumb. we have seen a lot of statistics. is anybody out there is a thought leader, i'm asking you, as a thought leader, do you see anyone framing $80 a barrel? jonathan: when i think of a thought leader, i think of jeff currie. tom:, on. jonathan: because of the demand shock. we are facing the demand shock right now. everywhere you look, you see it. the ism data yesterday. lisa, talked about autos earlier on this morning. on a production. the struggle to find the chips to produce the autos, the struggle to find workers t

the transmissions protection? that hasn't been activated. tpi is meant to work like omt. ber omt. one of my favorites. jonathan: draghi came up with omt. that was the great, whatever it takes moment in 2012. omt was never activated. tom: the one that was better than any of them was eie i/o. lisa: omg. [laughter] tom: it is alphabet soup. people making it up as they go. lisa: trying to offset some financial stability concerns and social concerns in a place like the european union will also -- while also combating inflation. is it an impossible task, and how much is inflation going to cooperate? i think that it's the under punning -- underpinning of the bulls and the bears. the bears say, this is a structurally higher inflationary regime and you will see the bond vigilantes come out. tom: correction of the month was ahead of the dutch central bank leaning over into the middle of the interview and saying, stupid inflation. the netherlands is not 11%, it is 17%. is the 17% old news? jonathan: double-digit cpi. can we say we have seen the peak in eurozone inflation? i think peo

japan is top, china on the bottom tpi. 8% roughly inflation going back to 2011, 2010. f out of deflation at the factory gates. deflation going back to the summer of 2015. when people talk about this reflation trade, it is good you have these two economies in asia right now. especially when you look within the markets themselves. that is pricing power when it comes to these big, old school industrial's in both countries, old school is a relatively loose meaning and you talk about corporate japan. right, we have the fed, the boj this week. have a look at the new normal inn it comes to the spread the 10 year death of each country. let's take you back to 2012 come the spread between the japanese 10 year and the u.s. ten-year. for the most of 2014, the spread was capped at 2%. hyder dollar, 2.5%. we bumped her head on that ceiling. ?here do we go from here what is the catalyst that will break us out of that? people are pointing to the dot plot, but when you look at how it bond markets are pricing, doesn't seem everyone is convinced we will get three hikes this year. isthe mo

governing council is ready to adapt and adjust your instruments to preserve the monetary policy transmission. we think about tpi when we hear about this. i would like to know whether you think it can be used when banking tensions start to jeopardize the transformation of monetary policy, and whether you are fully equipped with your toolkit to consider to adjust the base of the reduction of the holdings of securities under the asset purchase program, the qt? >> first, on monetary policy transmission, i will be giving a speech soon about monetary policy transition and the first leg of monetary policy transmission and the second leg of monetary policy transmission. all i can say is we are beginning to see transmission of our monetary policy through the credit channel. if you look at rates, terms and conditions, the impact of the demand of financing on the part of corporate's and households, we are beginning to see transmission of our monetary policy. which is what we expected. tpi, transmission policy instrument was precisely designed to make sure that monetary policy would travel and move all the way to all membe

they say 2.55% over the next year. no more tpi for lloyd's. no more payment protection insurance from lloyd's. as i say, that's different to rbs and barclays. rbs and barclays both putting aside more money for payment protection this week. lloyd's up 3%. the biggest conundrum is this. there is not going to be a huge amount of liquidity in the bond market. domestic german figures are going to be out. in london, late breakfast, short days. we are back up here. start of the week europe up 0.5%. you've got dropping prices, rising yields. in germany, all around europe you are seeing this reevaluation of risk, and still, the euro -- foreign exchange driven by interest rate differential. that is more or less the point. the euro rose by over 3% this week. you are seeing yields rise in europe. you are seeing the bond prices fall. up we go. 1.1245 is where we are on the euro-dollar trade. this is one of the strongest months that we've seen. we are straight into may. april was one of the strongest months we've seen in almost 4.5 years. they must be happy

the producer price inflation. there had been some concern that went tpi came off the highs we saw in december last year he could way into industrial profits but that doesn't seem to be the case. concerns that momentum is stalling continue to be proven wrong. one is never wrong, only temporarily interrupted. the senate rejected a simple repeal of obamacare. the failed amendment similar to the affordable care act repeal that passed congress in 2015 and was then be towed by then-president barack obama. earlysenator still in the stages of an unpredictable floor debate on health care and there are a significant doubts that republicans can muster the votes needed to pass any kind of deal. there will be an all-night boat later next week that could feature dozens or even hundreds of amendment. manus: inflation remains below target even as the economy picks up steam. with the details, here is mike mckee. the fed confirms wall street expectations. concern about inflation and a strong hint about balance sheet timing. the committee expects to begin and lamenting its balance sheet normalization program relatively soon, providin

the markets. tom: in bloomberg opinion -- "tpi -- to protect italy." jonathan: great to catch up with you. that seems to be the take away after that ecb news conference -- people's heads spinning. my head was about to explode. if i hear cpi too many times today, i think it will go that way. tom: an acquaintance of a family member had a monograph from 1945 in oxford of john monet. nothing has changed since then. nothing more in the political effusion off the memory of world war ii. i thought lagarde did well given all the conflicting politics she faces. jonathan: the euro weaker. futures down a little bit after a decent run at gains. from new york, this is bloomberg . ritika: keeping up-to-date with news from around the world with the first word, i am ritika gupta. u.s. social media giants are on track to lose $49 billion since yesterday's close. concerns on the outlook for online advertising for the whole sector appear that sees a major slowdown. commerce secretary gina raimondo warns the u.s. cannot relying on taiwan for semi conductors in an to an annual security forum. she called the $50

really the one we need to watch is u.s. tpi and the ecb thursday, and the world cup starts thursday as well. rishaad: and of course we have meetings on the sidelines taking place with various people and vladimir putin. mark, thank you. you can find more on thattory at the markets live blog. you can get a run down in one click and analysis from bloomberg's expert editors. it is well worth looking at. quick check of business flash headlines. for 17by the hsbc chief billion dollars into expanding key asian markets and improving technology has failed to inspire investors. growth modet into after restructuring targetin hong kong in southern china in particular. push: gentiles anti-smog making plans to announce a merger. regulators want to combine oil and gas pipeline assets owned by three energy giants before the northern winter. one path is for private capital injection ahead of an ipo. rishaad: speaking of i the o's, chinese smartphone maker considering raising half of its proposed $10 billion ipo from mainland investors. they may

matching actually are assumptions that we had about six months ago for inflation in the u.s., for u.s. tpid 2.3%, 2.4%. haslinda: so what are the risks in the market then? >> i do believe, i really do believe that the biden plan has no question about the 9% of gdp, it is really big. a big plan. with a big stimulus, it brings big risks. i believe, if the plan, a $1.9 trillion stimulus package, a wage increase of about 20% per year over the next four years, more inflation than the actual cost. 2.4% in terms of inflation. the forecast is already above consensus if biden's plan gets approved, then inflation would be increasing further. the biden plan is one thing. the other thing is the fed and stimulus which will remain very accommodative at the same time. haslinda: what do you make of the trajectory of the economic recovery. when you take a look at the u.s. jobs data, it shows perhaps just how fragile it is. >> i totally agree. it shows how fragile it is. still, the job market in the u.s., 10 million jobs have not been recouped since the pandemic level. going bigger in terms of the fiscal st

the market when it comes to debt sustainability concerns. they have flexible reimbursements of their pandemic program. they have to standby facility, relatively new tpich was created when the ecb started and just raising interest rates last year. they're still the omt which was created during the debt crisis in 2012. between all of those different layers and safety nets, the ecb is very confident that a debt crisis can be kept in check. alix: thank you so much both of you. wonderful set up to what is going to look very difficult. thank you so very much. coming up, more on the market impact of the ecb's decisions. this is bloomberg. ♪ tom: let's continue our conversation on central banks. in our question on the day, to what extent these terminal ranks that we are getting closer to, it seems and how that will feed through to these asset markets. joining us now is steen jakobsen . they see 5% terminal rate being held for about six months. what is the terminal rate you are starting to price for and what would a six-month hold at the kind of level due to these equity markets? >> i like the whole concept that the premise is that we are at terminal rate whi

euro cannot even get a bed because i do not understand the reaction function of the ecb and i do not understand what tpiand i have no idea what happens with gas supply. that is why people think that the euro is still unviable. tom: absolutely. begin right now our coverage into a july 27 federal reserve meeting which in sequence with the last one and might be in sequence with the next one is historic. a student of this, a history of the nation's economics is a former richmond federal reserve president, jeffrey and we are thrilled that he can join us this morning. i want to go back to one of my heroes, a gentleman from washington university of st. louis, douglas north, who codified the word ambiguity and also did a careful study of the dynamics, the movable parts of our economy. all of our listeners, all of our viewers are drowning in the dynamics of our economic world, how do we get control of it? jeffrey: it has to do with getting injured -- getting inflation down. it is the -- it is the institution with a unique control of the monetary condition of the united states together with fiscal authorities the

the chinese? a policy that is controlled devaluation of their currency delivering that tpi inflation when they get the currency is weaker. the commodity is higher up. i am sure they will continue and managed depreciation of the currency. i'm much happier face because it is going well. indicatedtsche bank another 7% lower in the next two years. that sounds like a hefty move. is that more or less than your opinion? >> that is more than i would have thought. i think 10% would do quite a lot to get the capacity back. in the u.k. -- they don't want to lose control. a controlled depreciation that does not ruin global relations. it stops. the currency in real terms gained huge amounts in the last decade. it is slowly giving back some of those gains which helped. this is a controlled movement. policymakers do not want big shocks. anna: watching closely will be the u.s., japanese, and other emerging market economies in asia. a note from city today talking about how more you on weakening could trigger selling. yuan is a big part of the basket. let alone what it does to korea, malaysia, taiwan and so on. slo