we will be above the fed's target clearly. i do not think the fed will get a handle. they need to slice out what inflation is driven by demand and what inflation is risen by supply by factors that the fed cannot do anything about. the san francisco fed came out with a paper recently showing that half of inflation was driven by supply-side backers that the fed has no tools to address. a third was demand-side factors. the fed does not have to raise so aggressively. i am more dovish. jonathon: this is a tough question to answer. you have touched on several aspects of the answer. ultimately, what is restrictive to the fed? what you think the setting is to get to that restrictive stance? megan: the fed estimates that the neutral rate is 2.5%. above 2.5 percent is restrictive and it is appropriate for the fed to hike beyond the neutral rate in order to bring inflation down. the balancing act is that the fed wants to bring inflation down without dipping us into recession. that is going to be difficult for them to do. i think they will need to get to a four handle to lean aga

lets than an hour from the fed announcement, in your view is the fed making the right move, given the impact on your business >> i think the fed mandate, diana, has been quite clear. certainly with economic housing broadband such a driver, housing is going to feel this. ed think the fed is acting swiftly. i think we all expect to see an additional 75 basis points today. i think the sooner we move through this, honestly, the better we are. >> your cancellation rate jumped nearly doubled, so it means you're sitting on a lot of supply how will you deal with that going forward in will prices come down? >> diana, i think to start with, when you look at the cancellation rate, i think looking at the year-over-year numb, increase is probably the wrong baseline even at the cancellation rate that we reported today, this is still so much lower than historic averages, for as long as i've been in this industry. honestly when i look at our 10.8% cancellation rate, i feel really good, especially when it's like 3% of our starting backlog. we have taken a proactive stance with our backlog you know, be

i think the fed will decide what the data says the fed is likely to do.hery: the pace of the running of the balance sheet will accelerate over the next few months. you are a bond market participant for a long time. what impact is not going to have? >> it is a concern. more in terms of market functioning. in the bond market we do see a great deal of ill liquidity. unprecedented illiquidity. i think it reflects us pulling back of the fit buying treasury securities. the market has to learn how to function without a significant buyer in the marketplace. i think it is going to be creating additional challenges for market function away from the market trying to digest the inflation and economic slowdown kind of trade-off if you will. it is absolutely important, markets need to stand back on their own two feet. shery: it is good to have you with us. you can get more on that story on today's addition of daybreak. go to dayb , you can customize your settings so that you only get the news on the assets that you care about. this is bloomberg. ♪ shery: we are cou

. >> we expect the fed to hike rates more aggressively. . >> the fed has been driving the car looking through the rearview mirror. >> the economy is slowing in the fed is saying that is collateral damage. >> companies and consumers need to get ready. >> we think they can keep going. >> we don't have any notable downward revision. >> we have had a ton of downgrades in the last when he for hours. joining us to discuss is greg peters, fs investment and kathy jones of charles schwab. kathy, this question a few times this week, we had market volatility and are getting economic weakness from the perspective of the federal reserve, is that a feature or bug? kathy: i think we agree it is a feature but they admitted driving the economy to a point where demand slows down, to me that is the goal and implicit in that is a risk of recession , rising on and plumbing, and they have adopted that. inflation is their target and their commitment to getting it down no matter what happens. i think there were questions early on as to whether they really meant it. i think now the market believes they do. jo

the fed to visit?nt: at that point, it will be important, the other part of the dual mandate. if inflation has come down, it probably means the unemployment has gone up. as they get closer to their goal, they can get closer to their other goal, maximum employment. in our forecast, we think the fed declares victory a little earlier. remember, paul walker did, too. if inflation is noticeably lower in 2023, the fed will connect dots that says it is lower now than it was six months ago and six-month before that. now is the time to worry about activity. however, you don't get the slowing of activity if you don't get the decline in inflation. jonathan: a clinic from you as always, thank you. looking forward to consumer sentiment survey data. mike mckee will break that down. you were in the conference with chairman powell. you asked about the journey. what did you make with what he had to say. michael: it is interesting, vincent is more pessimistic about where the fed is. powell admitting they don't know wher

the fed is ready to go once again. over to you, chairman powell. >> chair powell. >> with the fed meeting next week. >> the fed is going to stay right on top. >> powell has made that clear. >> kind of locked in. >> a lot of central banks are frontloading the rate hikes. >> 75 basis hike. >> you're not expecting forward guidance from the fed. >> some of this is messaging. >> keenly aware. jonathan: joining us now. the weaker data that we saw this morning on pmi out of europe and specifically in the united states, is that part of the fed's grand plan? >> i think the fed like all of us have been seeing the data have been weakening in several different places, in the u.s. when you look at some of the underlying data the labor market, the pmi data, when you look at the investment, when you look at the new orders -- particularly the services, i do think particular negative with the reopening after covid and the economy i think shift from people's behaviors. they start to travel more and doing more, i think we were expecting

yesterday, it was like, the fed needs to go 100.arket is giving them the green light to go 100. now, we are walking that back. i'm wondering, do we get to 4% bullard was talking about? if we get to 4% by the end of the year and stay there, what does that look like? the markets don't seem to be pricing something like that into the market yet. randall: i think it is likely the fed will get to the 3.5% to 4% range unless there is a shock. there could be something that intervenes. i think given where they economy is going and if it goes in that direction, they will be in the tightening part of the cycle. -- rate will go -- unemployment rate will go up. i think that is going to be doing part of the job for the fed as unemployment rate goes up, the lower demand, certainly with higher interest rates that is having an impact on the housing markets, on investment. you are going to have this one to punch of a slowing economy, and the fed taking credit away. i think we will get to that range, and hopefully it will be a relatively soft landing.

raises recession risk. >> the fed is keenly aware of that -- >> the economy is slowing but the fed wanted to slow. >> you have an overheating economy. lisa: in the soup of recession talks, joining us to discuss is cameron dawson. -- dawson, morgan's are presented, and a representative from goldman sachs. start with cameron. airing the swell of recession talks, has become an inevitability? cameron: given the fact the fed is committed to raising rates rapidly and tightening beyond -- it is likely recession is in the next all months. its import and we consider the retail sales data from today or jobs data from last week. those big come in stronger but they tend to be lagging indicators. it is likely we start to see deterioration of that data eventually but it does signal we are not already in recession. that the consumer has not fallen off of it yet. but again, because the fed is committed to tightening policy as much as it is, it does seem we have some kind of recession, be it shallow, if we get one. lisa: it seems like a number of fed members pushed back in the discussion for the quiet per

forward to the july 27 fed meeting what does the jobs report mean to the fed meeting? 75 or 50 beeps? jonathan: 75 is the view from -- cursed. the fed president argued we could have that soft landing. i'm not sure how many people see it that way anymore. for percent on fed funds, but ultimately, a recession in the not-too-distant future. tom: we are confident -- the confidence is not there. the michigan confidence numbers and the others are, grim is the right word. how can we have a strong economy and grim confidence numbers? kailey: the dismal conference -- confidence numbers haven't translated to a serious reduction in activity. you are starting to see some sign of spending slowing down, but that is the fact of the matter. sentiment indicators are waning, the activity is not yet. the fed is not vocus on just the sentiment read, they are looking at inflation expectations. that is why -- comes to matter so much for this market. tom: the litmus paper is the foreign exchange market. it has helped us this week gauge emotion, gauge trend. what we've got a dollar on as we'v

fed funds rate.a rate where it looks like inflation and the fed funds rate are basically the same for some period of time. but at the same time, the market is very skeptical of that at the moment, and thinking that we might actually be in a technical recession right now, we've certainly seen a significant growth slowdown in real economic activity. so the market doesn't think that the fed is going to be able to get to that 3.5%, much less upwards of 4%. kailey: right now we're trading closer to 2% on the 10-year than 4%. which one do you think we're more likely to see first? ira: i think on the 10-year, we have fair value right around 3%, and there's always some variability in that, like our model has an error range. 2.7% is a very important technical level right now. we've tested that twice. if we break through that, then 2.5% certainly is the next stopping point. will we see it near term? i don't think so, but i do think that we may have seen the highs for this cycle in the 10-year, and really what

fed chair powell's fed conference minutes away, 13 minutes, to be precise joining us now is former michiganrederick, thank you for being here >> i'll get your reaction which is pretty much what you expected and one of the new york papers brett stephens where he was criticizing leadership globally, boris johnson, the german chancellor and one of the most critical words of all the fed chair powell he said the chairman who last year flubbed the most important decision of his career is that too harsh an arces isment of the fed chair's actions last year? it so this is something i've been actually saying for over a year. the fed has a mindset that a policy framework that was mysteriously flawed and they assumed that the philips curve is debt and there is strong evidence that if you hibernate and if not preempted it would come back again. so this is not a top benefit you have to look at the initial phase in covid that was an excellent performance and if the fed÷■ really had blown it, the good news, i think■is the fed realizes that they've blown it they won't say that, think, and they're now doing

how much is this the fed view versus a fed that is not looking for nuance. it is for inflation. it is still worried about the picture of having to deal with inflation and then they get it down far enough and they ease off. what happens if they lose all credibility? tom: can you tell me what you've seen in the credit markets? what is happening in the dynamics of credit? >> honestly, we've been looking at a rally, that has been dramatic. at seems to be the theme. last week was an incredible rally. it is poised to be the best month for riskier credit in the united states going back to march, april, may of 2020 when the fed was really stepping out with their survival programs. how much are we hearing about earlier versus something that is more sustainable, given the profile of these companies that have financing for years to come? tom: she seems to be the one, but it is absolutely amazing how strategist not even micro-adjusting, but just trying to keep up with the gastimates in the news flow. jonathan: it is a big week for earnings. those big tech companies make up 20% of the s&p, 4

this fed doesn't want to do that. charles: right. >> and the way you avoid that pain is by killing inflation early. the longer you wait the worst the cure. charles: but did they wait too long anyway? in other words, sticking with the transitory narrative, did they miss their opportunity not to make a mistake or as harsh as they want to? >> yeah, look, normally, when i say normally, anytime in the last 35 years you start to see signs of a recession and the fed's manuel says at that point you go to wait and see. you stop with the rate hikes, wait and see a few months of data, you decide if you should next ease or tighten. they can't do that anymore. they have to wait for the inflation numbers come down. they have to aggressively tighten until then. when we have inflation 4%, between three and four, they can wait and see. that is months away. charles: the last week or so, a lot of folks have said that. i don't know if there is some sort of hint, some fed official, maybe bostick when he said they would hike a couple times

we begin with pricing out the fed. >> we are beginning to here some signs of the fed have it. >> the signs of the fed pivot. >> there are two reasons to price the fed pivot. >> whether or not there is a recession -- >> we are still at great risk of a recession. >> the second argument is chair powell in his unscripted remark said we are neutral. >> the pivot everyone is talking about. >> we still see core inflation accelerating. >> the fed is pivoting here. >> powell endorsed this message of data dependence. >> they are feeling enough optimism of the markets. >> the market is looking for a pivot. >> where the markets are pricing now is not right. >> financial markets seem to be pivoting prematurely. >> even the fed itself don't know what to do in september. jonathan: and we don't know either. our guests join us, and also mino to run out the week. more important to fed rates this federal reserve, growth or inflation? >> it has been an ethics battle this week between downside risk to growth and upside risk to inflation. i will admit the downside risk to growth probably won this battle b

john: i think it is clear the fed has signaled they want to get a positive, inflation-adjusted fed fundsate. next year, the fed has until the and of 2023, assessment of the median fund rate, against a backdrop of a 2.6% inflation forecast. it is extremely unlikely that inflation, this year expected to run 5.25%, will slow so much. let's say inflation runs at 3.5% next year, which is more likely. then you are looking at a fed funds rate that make it to 4.5%. is that a mistake? it may be, but remember, what if the fed makes a mistake? i say the mistake was already made last year when the fed continued to ease into a rising inflation problem. now they have to correct the problem. they don't have a model of inflation that works. they want to see a compelling reduction in inflation. that probably means they will over tighten the fed funds rate, and that is where you get the recession problem. tom: john ryding, let's cut to the chase. jonathan ferro and i will be in washington this week, speaking with adam posen, who suggest that 3% is the new 2%. where is the new 2%? john: the new 2% should b

jonathan: it is fed day. from new york city to our audience worldwide, good morning, good morning, this is "bloomberg surveillance," alongside tom keene and lisa abramowicz, i am jonathan ferro. tom: yesterday was nuts and today was nutsier. i cannot convey the friends you see on the screen. it is at 2:30, chairman powell will try to maintain control of the dialogue. jonathan: expected to raise rates 75 basis points. what are you looking for? . tom: over at evercore, he said are we going to ca volker raj -- are we going to ca hawkish tilt? i wonder if he will surprise and walk away from that. jonathan: september feels like a long time away at this point. lisa: the data is moving so quickly and these earnings have been inconsistent. not really showing a real picture that goes one way or the other. how much does the fed chair recognize some negative data we have seen? how much does he give a nod to that versus inflation is our number one concern? jonathan: we talked about the data point that is google ad revenu

haidi: does the fed -- shery: does the fed have enough time to telegram a 75 basis point hike or moren the last time you hike to more, there were a lot of questions about the credibility of the fed, and does that even matter at this point? loretta: i think our credibility is that we showed at the last meeting that we are responding to not one data report -- and i know that was kind of the report. wow, that one report made them move. again, it was looking at the plethora of data, all of the data coming in, and recognizing that in this environment, given what the data is pointing to, we needed to be more aggressive. i think that enhances our credibility, it does not detract from our credibility. but i take your point in that we don't want to do things that are not communicative. we want to make sure that we are communicating as clear as we can how we are judging policy and what our rationale is for moving policy rates up. i was fully on board with 75 at the last meeting because data moved in the direction that suggested we have got to go faster and we have to move to what would even be

how politicized is the fed? the fed has been politicized for some time and i don't want to go too far but we've gone from a dovish fed many people think were late to the inflation acknowledgment, saying it was short-term to now where they are really kind of putting on the gas to raise rates. to say that politics didn't play a role in both of these, i think would be missing the point. jonathan: so well said, andy blocker of invesco. white house put an instant -- a statement yesterday saying -- we will continue to give the fed the right space, or something like that. we already between the lines. lisa: there was also other nuances in that statement including the focus on core cpi -- core cpi. they say headline cpi is more important now and we've seen that in anecdotal situations but the president said core cpi is coming down and that's good. he tries to soften a pretty bleak message. jonathan: the economic council director for some of those speaking points. your-dollar has been breaking down. negative about one ha

it's not made up by the fed. if senator warren wants to change the fed's mandate, chairman powell is executing on instructions he has been given to go after and try and have normalized employment growth and normalized prices at 2%. he's not making up the rules by which we play. >> i asked you the last time you were here whether you are a buyer on the powell presser. the last time you said yes higher thanks to this month's rally since the last meeting >> based on what you heard today, it's clearly on the more bullish tone i think companies that have been punished by the market, there's still value in the markets the answer isthe answer i gave you a month ago. i'm more of a buyer today than seller >> because there are cheap prices and you like the way the fed is going >> the fed seems to be forecasting there's 100 basis points as we have stayed we don't know what's coming next year but it feels like the impact of higher rates are in the system. they're slowing down we know they're slowing down in certain markets. s

that is the real issue for the fed. concern is, while inflation might moderate on a year-over-year basis for the four pitiable -- the foreseeable future, it is easy to believe they could settle above the 2% target without aggressive action. nominal wage growth in the u.s. depend on which measure you look at is between 5% and 7.5 percent. we are getting the q2 employment cost index friday, an important measure of where rage -- wage growth is. see increased evidence that both firm and consumer inflation expectations on the longer-term are both becoming unanchored. all of that suggests the debate now for the fed is how quickly can they normalize and tighten policy to make sure inflation does not end up well above their target in the next 12 to 18 months? kriti: you mentioned financial conditions earlier but they are already in restrictive territory. they have been near to date and definitely since march when you saw the extra move from the stock market. to what extent have financial conditions really already done the job f

how do you think the fed response to that? thomas: the fed has to continue to tighten.ther they continue at the pace they are going at worst they slow down that is the real question. i think the peak is likely to be 350 or 375. they are going to go another 350 basis points in the next meeting and then possibly cite -- and then possibly slow that down. nominal gdp is so high. lisa: i am struggling to understand the rationale of the junk bond traders that have pushed up evaluations -- pushed up evaluations and the biggest monthly gains in decades. how does this make sense in a scenario of hiking into weakness and dealing with stagflation? thomas: it comes with the fed's lack of the use of the balance sheet. when you use the balance sheet to fund monetary policy, you put more of the strain on main street. the fed has said we are not going to use the balance sheet, it will be a passive tool. lisa: i am looking at the balance sheet which checked out into -- people are talking about quantitative tightening and it has begun. are you basically saying you are going to feel it on

how high will the fed go? and with a recession, will the fed keep raising rates?e is how investors responded to the latest survey. >> we think the dollar can still rise further. the dxy will rise 112. >> the fact that the ecb is going to be increasing their interest rate and shoring up the euro. >> in some ways our expectations call for the leveling off of the dollar relative to other global currencies. >> i don't think there are expectations among fed fund futures that the policy rate will rise by more than 75 basis points. >> the broader dollar may be reaching its peak year. >> there are some things on the horizon which would -- which could cause the dollar to pull back. >> there is a possibility that the euro-dollar could fall back towards record lows. anna: mixed views. joining us now is garfield reynolds who has been thinking about this extensively. let's deal with the interest rate differentials. the ecb has started hiking rates. does that add some impetus to those that think the dollar has peaked? garfield: the fed gets to return serve this week. it is cert

the fed is in a no-win situation.t some point they decide to call it a victory and they try to cut back in terms of age but i think that is next year, not this year. >> sounds like you expect global geopolitics to continue to play an outside wall. is that in terms of energy but also tension between the u.s. and china? >> yes. energy we talked about i would say is also part of the u.s. and china relationship. in terms of president biden being asked at the press conference about speaker pelosi making a trip to taiwan, they have indicated that the u.s. military has advised against it. this is essentially increasing the risk with a remark like that because what it means is that the chinese will have to follow-up and if the speaker cancels, we will add in a very precarious situation and i think what chinese risk in my opinion, that is something that is on the global scale. the chinese investments by global investors have to be thought of as an individual security risk. you have to consider the country risk involved in bein

i talk to people all the time, is the fed credible? the fed totally missed this and all this stuff.ut if they continue to hike and we get this in the first or second quarter of next year, then you are in an environment where people have sticker shock not only on the inflation side, but the interest aside, and that will incentivize some people to maybe save more instead of spend. those are the dynamics. the reason why you increase interest rates. you make borrowing more expensive and then you make it easier to say. so you have actual spending dynamics that might shift some of those inflation expectations over time. are they unanchored now? it's hard to say. i don't know if they are unanchored yet, but people are obviously concerned. you need to see things like gasoline prices. that's one reason why what is going on in the commodity market, energy in particular, is so important. that's the one price that just about everyone in the united states sees once a week when they fill up their cars. when you fill up your car for $100 today and it was $50 a couple of weeks ago, that is the kind

shery: coming up, more on the fed's second big rate and the post fed rally.om james of creflo capitol discusses his top traits and other opportunities in commodities. that is it for daybreak australia, this is bloomberg. ♪

so a much more aggressive fed. i hate to quote myself but what you were talking about earlier, that's the problem i think michael farr has it right, it's not up, down, it's the uncertainty that matters you can't put a floor in this whole darn thing until you have a little more certainty. when the fed says we need several months of declining inflation in order to sort of get an idea of where we're going and how we're doing it, you've got to restart counting today for the next inflation report. >> that's what gets me to throw a huge bucket of cold water on the idea that some have been putting forward that the fed is knotted going to have to go as much as once thought in september even, that you could go 25 maybe in september and that is why some are sticking to their lofty targets, steve, for the s&p 500 for the end of the year it's all predicated on the fact that the fed is not going to have to do as much as initially was thought. i want to know about that, but also this idea of an intermeeting move in august. can t

. >> the market is expecting the fed to push us into recession. >> the economy is slowing, but the fed wants it to slow, so i think all of the recession talk is a little bit premature. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. jonathan ferro, lisa abramowicz, and tom keene. the three of us back together again, at least for a number of hours. that is a good and beautiful thing. lots of economic data this week. no one cares. right now it is about the markets. strong dollar speaks volumes. jonathan: cpi wednesday, retail sales friday. right now, front and center, strong dollar. euro-dollar, a break of 101. where are we heading now on dxy? 108, maybe even higher. tom: george sarah vallas making clear this is foreigners hoarding dollars in cash. these are not strategic moves. jonathan: right now, they don't want euros. they certainly don't want yen, and they don't want sterling. i'm sure they would quite like a strong currency. tom: a glorious four hours straight with me and jon and all that, as you hear the previou

we don't know what data the fed is looking at.k and he said they are looking at inflation and they want to see compelling evidence. what is that? probably month over month improvement in inflation heading downward. they are looking at labor supply and demand, but not all data, apparently. there's plenty that says jobless claims and unemployment is moving in the wrong direction. we do not know the fed's reaction function as much today as even 48 hours ago. that is going to make a lot more market volatility, a lot more two-sided conversation. we will have a lot of ted officials speaking to both sides of the argument. the clarity that happens next will be very significant. if you are wondering what to look at, i am in the same boat. jonathon: i can sense the frustration, so let's address it. what do they need to do better? >> i don't think it so much frustration, but you are making harder the job of what to do next. the fed's job is not to make my job easier, it is to come pain -- it is to contain inflation and provide an outlook. bu

so how the fed communicates that fed pivot that people are pricing in is going to be very key today. david: how did they do that, with inflation -- let's say goes down. it will still remain above 2%. for at least 12 months. markets, though, because things are softening right now, compared to the day that the u.s. released that very hot inflation report about two weeks ago, markets have pared back expectations of how high the fed will go this year from about 210 over four meetings to 180, which includes a 75 that we will probably get in the next few hours. let's bring in kathleen hays. this concern over aggression causing a u.s. recession. how much will that feature at this meeting? kathleen: it will be all about inflation. recession will come in -- when the fed takes five or six paragraphs to describe what is going on in the u.s. economy, they may note that in some way, yes, risks are rising, but what they are really going to stress is how high inflation is and how difficult it is going to be to bring it back down. and fighting inflation is their number one job. you just mentioned th

. >> the fed doubles down on jumbo hikes. jerome powell saying another rate hike is it -- is possible while denying the u.s. is in a recession. treasuries advancing, they begin higher against the dollar. u.s. chipmakers get closer to a windfall in government money. david: am supposed to be doing the market update and the lights are about to turn on. there we go. the lack of forward guidance hopefully will offset the lack of lights we have previewed we will get to that nuance in a bit. as you can see, this weakness is suddenly coming through in the u.s. dollar, led by the strength were seeing in japanese currency, opening up a window for another matter all together. yields are continuing to fall. australia with a 20 basis point drop on the short end maybe because of that inflation makes we had yesterday. so it is a risk on session, i've yet to look at evidence of how much conviction the move is. yvonne: i think jay powell is probably patting himself on the back, talking about the supersize jumbo hikes and dropping the forward

but i may fed watcher now. you watch the fed a lot and everybody does because how can you do what you do without watching the fed? i feel like you have taken me into a gray area. i want to be as specific as we possibly can. it sounds to me like you do not agree with mark newton that the essen people hit a new low. is that right? >> scott -- >> i want to pin you down. you have a different view but it sounds to me like you are not dashing that you're not fully on the same paige with mr. newton . >> i will give you two part of a consistent answer. one is that i think that structure lows are in. i want to buy any weakness. but to the point of mark, if there is a tactical rise in yields which does hurt tech which that will push tech lower, we might see another downdraft. even mark wants to buy that weakness because he thinks we are going to make the low for the bear market sometime in july. for your viewers it is really how are you going to react to that low. i would be buying that low. i would be buying tate keir -

we have the fed here. they have said they're going to do whatever the need to do for inflation. >> right now, the market is giving the fed a green light to go to a 100 basis point at the july meeting. >> the fed is focused so much on the headline inflation is that they are losing track of the momentum. >> went risk assets are moving this fast, they take over data. >> the market is pricing in a much higher mobility of recession. >> this is bloomberg surveillance with tom keene, lisa abramowicz. >> good morning. it is a friday to get you through the weekend. through july, to the fed meeting on july 27. lisa, i don't know where to begin. let's begin with slow china. iron ore is down 53%, and copper is down 34%. >> i'm so glad you talked about this. the chinese government is pushing out official data that confirmed the slowdown we are looking at. it is shocking to see the slow down, but more shocking to see people reflect that with some accuracy, highlighting this question they are facing right now. tom: all o

with the fed minutes coming up in the aftermath and conversations. >> and finally qualcom on that board. >> you mentioned that semis are starting to peek up a little bit. qualcom hasn't been given its justice for the amount of diversification it's doing in the revenue stream that should change >> it's been a pleasure to be with you that's going to do it for us on "the halftime. "the exchange" starts right now. >>> thank you, david in for kelly evans and here's what's ahead voyager digital filing for bankruptcy is this ripple effect going to take out more players in the crypto industry. prices now at $96 a barrel we're going to look at whether the heat decline may mean prices are there stay and we're an hour away from the release of the minutes of the latest fed meeting what they were saying as they agreed to hike rates by three quarters of a percent and what clues does that give us to what they might do next dom. >> trat that market might be in a holding pattern, given what we're anticipating to see later on at 2:00 p.m. eastern time the s&p, dow and nasdaq, it's been a fairly tight tra

what the fed once the markets today.he fed has no choice but to surprise the market with aggressive inflation calls. they will not go to 100, i think they will stick to the guidance of 75 and think about another hike in the next quarter. anna: 75 and then one of the big questions is, what is the guidance look like? sunaina: i think it will be the 50 to 75 basis point range. we have got to watch the language closely. they have to get out ahead of this and say we will do whatever it takes. anything other than that will be a trigger for markets to go bearish again. anna: we were celebrating just yesterday 10 years since those words from a different central banker, from mario draghi. how much should we rely on the guidance from the fed, given there is a long period between this fed meeting and september. we have all the tension building around energy markets. sunaina: everyone is watching the leading indicators of inflation. the last couple months have been interesting because you see some flattening, it is too early to tell

lisa: the problem is if the market goes ahead of the fed, so much further than the fed would like. perhaps we are ticking boxes now, but i can happen in a somewhat sudden fashion. all the sudden the market turns and economy turns and the fed finds itself to type. how much -- too tight. there are signs that certain aspects of inflation are softening, i.e. walmart, without inventory glut, having to price it down. jonathan: how do they acknowledge the weakness we are seeing in this news conference? how does that tee us up for september? lisa: they will look at the weakness we are seeing and say this is what we need to see but the inflation is still there and that needs to be how we combat. this is what people will be looking at after the fed meeting. at what point does the conversation change to how much the unemployment rate has to rise before the fed talks about the labor market mandate. jonathan: and is it rising when they get to september? alphabet is higher by 3.7%. on the nasdaq 100, up 1.4%. yields are in, a basis point or so. the euro showing a little bit of strength. crude ba

now the fed has to correct that.ong-term, the key to whether we have no recession, which i think is unlikely, a mild recession were deeper session is how inflation expectations adjust. people view for credibility high. the fed will have to do less. the recession may not be as deep. if inflation expectations build -- we have seen a little bit of a head fake. the recession will be deeper. that is all they consequence of inflation. in cpi terms it is running at 9.1% year-over-year here in the u.s. it is running at 8.6% year-over-year in the ecb with some of the ecb's peripheral countries, latvia, lithuania, estonia seeing rates close to or above 20%. kriti: so much to digest here, john ryding. we will have to have you back soon. we thank you as always for your time. time for bloomberg's first word news with mark compton. mark: the house january 6 committee is planning where hearings in september. they want to see missing text from the secret service, as well as testimony from former trump advisor steve bannon. additiona

the fed said they will be data-dependent.ot a bad cpi report yesterday which increases the odds they go more aggressively in the future. and then they will be watching to see how other economic indicators fall. there are some signs the economy is slowing. certainly a small uptick in claims today that may stage a broader slowdown in the market. we are seeing commodities, off to some extent prayed that will reduce inflationary pressures and we are also seeing a pretty meaningful deterioration in consumer business sentiment along with consumer spending. we see that clearly in the b of a credit card data. we think we will see a pretty big mess on retail sales tomorrow and if the data does indeed slow along these lines than the fed can dial back and in september they can do 50 or 25. they can do 75 depending on how the data comes in. they will have more flexibility in the trajectory once they get to around 3%. we expect it will ultimately slow things down. >> are we sure the mild recession will be enough to fully eradicate inflati

fed funds could be peaking around 4%. we could be seeing inflation peaking or when the fed thinks they declared victory over inflation or rehab the recession -- or we had the recession. by mid next year people are going to start cutting and that is what the markets are starting to price in. david: is we want to tell you about, the who giving their take on monkeypox. last few minutes or so, japan has issued in their scale a global level one travel warning. i know that sounds like something. as far as the scale is concerned, that means the japanese nationals residing in the country are advised to stay alert. it is basically the government telling you to pay attention to what is going on. some of these health care related stocks seeing a bit of a bid today. yvonne: here we go again. can we get ahead of this unlike what we saw with covid if we can avoid that scenario with monkeypox. with markets, that is something top of mind. you take a look at the week we have had with global stocks, it is looking pretty good. stocks have s

the fed will be cutting here as early as next year? >> if that is what the market bets on after this week's meeting you can expect a bigger inversion of the yield curve in the u.s.. if people do think we are priced in for the hikes for the short end of the curve, then really the pressure will shift to the long and the 10 year to the 30 year, people be pushing the rates lower because they think the risks of the recession is getting greater, it will happen sooner, and maybe even the fed will be going by the middle of next year and starting to lower. that is what we are certain to see, much more pressure on the curve inversion. david: i was going to ask the opposite. is there anything we can hear from the fed, bark, -- mark, that would lead to east of the curve? -- steepening to the curve? >> yes. if they come out and say they are really worried about inflation and they need more work to do, we may be talking about 100 basis point hikes rather than 75 basis point hikes. there is room for jerome powell to be hawkish if he wants to be. if h

fed to debt gdp ratios are so high.we do induce a recession the real risk out there is, you have a lower tax receipts and higher interest expense, which is also not a pretty picture. as an active manager what you want to do is stay nimble and humble. now focus on data, which is going to be volatile. kailey: chair powell has said they need to be humble as well. what does that mean you want to buy? in the environment you are describing, in theory higher rates mean you necessarily don't want to be owning, but may you want that cash flow. so what do you do? barbara: a great question. we are net short and have a mountain of cash to buy great opportunities. we do not think we are there yet. we have initiated two long positions all year. the barrier to entry to get into our fun right now is so high. what is an attractive opportunity? we are talking about companies trading for the cash on their balance sheet. that kind of upside/downside skew is the margin of safety i am willing to take. otherwise we have been generating on the

so i think what the fed is mainly focused on is labor market and wage.y really want to see that growth being very definitively slower. i think they have used words like clear and convincing evidence. >> so what do you think happens to the economy from here what do two consecutive three quarters of a -- three-quarters of a percentage point hike in interest rates do to the economy? >> well, we've seen a little flavor of what it does to the economy. to the point you made earlier, some of the spending oriented data show that the economy is slowing. obviously we'll see housing slowing as well. remember, all of these things generally starting from a very, very strong beginning. so the momentum is still positive but what the fed wants to see is demand coming down to better match supply and so what we have to see there is things like spending slowing, housing slowing, and then over time they want to see the unemployment rate rise somewhat, not dramatically, but rise to be above the current 3.6 level, somewhere over 4 perhaps, so i think that's what they're looki

jonathon: the fed rakes 75 -- the fed raises 75 basis points. the fed's objectives are more difficult to achieve. pricing and cuts undoes the efficacy of hikes in the first place. lisa: he even put a number to it. a 5% to 10% market rally would cause the fed to see that was going against what they are trying to do and cause them to give guidance, even though they are not giving guidance, that they don't want to see that. how much does it become just a tourney? i think that is what people are looking at. maybe that's why frances donald called it frustration. tom: it is from two different worlds. we do economics, international relations, demands, politics as well. what you just saw there was the denny harvey pivot, coming from two different parts of this industry, and giant economist and an incredibly competent -- competent chris harvey said the same thing. there is a point you pitted the risk on, and that may continue what we have seen. jonathon: they are not alone. that has been the market interpretation not just the last 24 hours, but the last

i'm dom chu in for tyler matheson with courtney reagan this afternoon we are moments away from the fed'serest rate meeting. you can see there just about hovering near fractionally down territory. we'll see what happens let's get right out to ylan mui with the latest there. ylan >> the minutes of the latest fed meeting show that officials agreed that another rate hike of 50 to 75 basis points would likely be appropriate at its meeting later this month officials also acknowledge that there could be an even more restrictive stance that could be appropriate if inflation remains high the minutes show that fed officials will worry about inflation becoming entrenched and that was debated several times in this document many participants view that as a significant risk officials believe that the fed's cred usuality can shift market expectations toward a policy stance and they view raising rates as the legislative mandate. fed officials repeatedly highlighted the disparate impact that inflation is having on low and moderate income households and officials also noted that there could be some clouds

matthew: thinking about the fed trajectory, what the fed needs in order to back down from the hawkisht, they need clear evidence that the labor market is turning. i don't think you get that today. they will need evidence that inflation is slowing. we expect month-to-month for core cpi. those two data points together when the fed releases their new expectations index later this month, those things keep them on track. jonathan: when this data pours out slowly, i've been waiting for something that hasn't developed rid we get this strong headline print. wages don't accelerate, what do you make of that? that's been the story. matthew: we've been them surprised -- been surprised by the unemployment rate. we see more weakness on the household survey front. you've seen labor force participation, that brings some uplift on the unemployment rate and prevents it from declining. that's been an important element. you still have the labor market that looks tight on all metrics. job openings are really high. the vacancy yield, this is near a record low level. the labor market still looks very tight

let's start on the fed hawks. we continue to hear more backing about the bigger sized hikes. >> more important that this comes just one day after we got the minutes from the fed june meeting where they made it clear that they need to get the restrictive, they are not concerned about recession as they are about bringing down inflation. chris waller, he along with jim bullard both backing the 75 basis point hike. let's listen to how he said simply put. >> we need to move to a much more restrictive setting in terms of interest rates and policy. we need to do that as quickly as possible. i am definitely in support of doing another 75 basis point hike in july. probably 50 in september then after that, we can debate whether or not to go back down to 25. inflation does not seem to be coming down, then we need to do more. >> the markets are worrying about recession, not these two hawks. the fed can pull this off cleanly. jim bullard says 75 basis point rate hike would make sense. they have to get to neutral expeditiously.

michael: the fed has to try and do its best. this is a particularly unusual time for all of this to be happening because we don't have specific problems that the fed can watch the indicators like an inventory over bill and try to work its way down. they will focus on inflation and try to get that down and if it comes down, then maybe they don't need to go as far with interest rates and they can see whether they need to cut or not. the question is, are the markets getting too far ahead of themselves? we won't know that for a while either. nobody is going to know and that is the problem. tom: katie, when it comes to the equity markets, something with a big question mark over it. whatever you describe it as, the uptick we have seen across the equity space globally since mid june and how you fold the into the conversation around the fed and inflation outlook. how concerned are you that this is falling apart? katie: it has been curious to see that bounce, whatever metaphor you want to use. many have said you will see a lot of pressur

i think the fed goes meaning we above 4%. we are going to gay recession and people debate whether it is going to be a deep recession or not. who knows, but i would not like to be too aggressively positioned going into that type of environment. jonathan: that is how quickly this consensus has moved. heights to a long and shallow recession. matt: long and shallow. jonathan: i thought it was short. tom: whatever. jonathan: we understand according to "the washington post," a second meeting could be with the chinese counterpart later this week. germany approving a bill for energy bailouts. matt: you heard robert, the green leaders saying that energy could be germany's lehman brothers moment. they are going to do maybe a $9 million bailout of unilever, or the subsidiary of the scandinavian natural gas company and passmore of the costs along the consumers. german inflation looks like it has turned over a little. but it is going to go right back up with that. jonathan: i did the walk of the newsroom and dropped by tom's desk to see w

do you think then the fed, how far off, how far away is any fed pivot around the weakness in the data given the political pressure built. meghan: i think that's a very important question. i would say that we are beginning to hear signs of the pivot. right? how really endorsed the message of data dependence. not a like march 2 higher policy rates -- not a blind march the higher policy rates. they will have to be more thoughtful here about whether or not they can continue to deliver supersized rate hikes. we saw the market can interpret -- market interpret the message that way yesterday and that steepening of the treasury curve is really reflecting that. the uncertainty around what the fed is necessarily going to have to do. alix: at the same time you refer a summary of economic ejections from the last meeting with rate hikes when the market isn't expecting it. i get to some extent why it took a dovish lead, but what's the room for the hawkish surprise now? meghan: it's going to come down to the inflation data and employment data. two more cpi releases, two more payroll reports, that's

it was the fed -- what we talked about before a major signalling change from the fed. in other words, you know how people refer back to 1970 when is the only time the first six months of the year we're worse than now the fed had already started easing in september, october of 1969 that's why you get the second half recovery. so the consistency is you don't retest, i made this mistake in 2020, you don't retest when the fed is fully backing and easing already. >> but we're expecting a plot more rate hikes, right we haven't seen any signs from the core of the fed that they are pivoting even if the market is starting to move on >> it's interesting. as you know, there is two ways that rates move up you have market driven rates and in this psyccycle what is diffee fed told wrus they thought the term nat rate was quickly. guess what the two to ten year did? it went right there. so you already got the affordability index and housing, having come down really hard so that is tight that is already shutting down the housing and real estate market but threaten is also the variable

get back to the fed.erome powell is set to deliver the largest bank increase in decades today been the central bank is expected to raise interest rates by 75 basis points for a second straight meeting. joining us is mark mobius. an expert in all things e.m. in particular. let's start with your view on the debate as to whether or not the fed ends up pivoting or keeping the bid between its seats and it comes to inflation. does it charge ahead to its target or does it pivot in the face of weaker data? mark: i think they will have to keep on raising. at the end of the day the playbook is they have to have interest rates that are higher than the inflation rate. and with inflation now and 9% that means they have a long way to go. i don't see how they can last up without really going against what they've been thinking for so long. i think it will be a big race going forward. guy: the -- alix: the market is not looking at that in the moment. the rhetoric is definitely there but the price action tells us a differe