'Bloomberg Surveillance Simulcast' Full Show 8/08/2022

We expect an eventual slowdown, but it has not arrived yet. We are not watching the economy fall off a cliff and this is exactly the time the Federal Reserve needs to act quickly. We can see areas of the economy where they are very successful in areas where they need to continue. They have to continue raising rates. I just think we have to be careful about the level of rates we get to. There is this path to a soft landing. I don't see why people think it's such an elusive thing to achieve. This is Bloomberg Watch with Tom Keene Jonathan Ferro and Lisa Abramowicz.

Hello, everyone. Jonathan Ferro. Lisa Abramowicz. Tom Keene. On the radio. In TV. It's Monday. There are two days left until CPI Wednesday. We'll beat you to death all weekend. Kailey Leinz replaces Jonathan Ferrell. He goes to the atolls for a day. Lisa, what an extraordinary weekend legislation in Washington. Greg Valliere fell out of his chair. It really was a turning point for a lot of people, both with respect to some of the proposals and also with respect to what they do going into the midterm elections, especially when I was driving on the highway and I saw that gas prices in some places were under four dollars a year. gallon after costing up to five dollars, you combine it with a legislative victory and suddenly people are betting on a potentially different prospect.

Result of this midterm election cycle after a spectacular labor report. So what Lisa is really about is the analysis of declining headline inflation or core inflation. Let's be clear: the Bloomberg survey raises core inflation. This is the great enigma at the moment. On the one hand, we have the general CPI that is going to fall and gasoline prices that are falling. How much does that fuel consumer sentiment? On the other hand, that core because it is sticky. What does that mean about how far the Fed needs to go? You know, on Friday we received this employment report.

Everyone applauds the fact that it seems unlikely that we are going to have a recession. People don't count on a Federal Reserve the size of Volcker, which could also be the result. Much of his posts over the weekend. And it's good to start. David I'm sorry. He will soon be with us with his optimism about share ownership. Kelly, an open question for you with your weekend reading. Where is the focus? Bonds or shares. That's a very good question, Tom. I think a lot of the action has been primarily in the bond market in recent days. Yes, there has been a stock rally that really continues today in a way that didn't necessarily happen on Friday.

But the bond market has been absolutely confused Tom when I look at a yield curve and I voted for 41 basis points over spreads on Tuesday the 10th. There is obviously a short-term repricing as there is a higher expectation that the Fed will go to move 75 basis points in September. September is still a long way away. We have a lot of data ahead of Wednesday's CPI. One of the most crucial. Yes. Well said. I really agree with that. That people were miles away from a belief in September and certainly at the November meeting as well. I have to go fact check right now.

Kelly help me here. I'm going to prison, lady number two, 10. And I'm sorry, Kelly. It's extraordinary. Negative 42 basis points. The call of the summer from a T.D. strategist Securities and that quick investment. You know, I loved someone who said that what we're seeing now is warp speed reversal. I think it was Emmons' coin. Kelly, what do you see in the data? Yes. Well, the most inverted yield curve since 2000, Tom, is certainly notable. What's interesting is that you are starting to see more resilience in the stock market futures in positive nine and a half point territory this morning.

How much can't realistically hold up, Tom, if we're talking about a Federal Reserve that's going to be more aggressive and the turnaround that the stock market has been waiting for isn't necessarily going to happen anytime soon. And of course, it's interesting to see that the returns actually move a little bit lower on the day they were below 280 in the holding. Peter Scheer, Slater's people, will also have to keep an eye on global Wall Street. The governor you don't know, Federal Reserve Governor Michele Bowman, who is the governor of the community bank, may be less visible among the others, but she is nonetheless important and looking for unequivocal evidence that inflation is going down.

We start with an ambiguous report from Monday. So. Well, I'll give you an unequivocal morning fact. I came in this morning and looked at what to expect today and said I was going to do a Tom Keene. It will be the week at the beginning of the week on Wednesday. So let's start there. On Wednesday we come to the ISE CPI and this will really be the topic, of course, the CPI. How do you know that. Oh thanks. I know you'll make fun of me for it later, but what you can see is bouncing, bouncing, surging.

And we're much higher than we've been historically in terms of the consumer price index. If you start to see the core continue to rise, to what extent does that indicate that the Fed has a lot more to do and that it really has to fight this kind of errant inflation that is sticky and goes way beyond some of the temporary gas issues? and food. On Thursday we will make the United States lie. People die. And the reason this is particularly compelling is because it's the prices they pay at factories and manufacturers. How much does it continue to rise and rise at a faster rate than the CPI?

This goes towards everything. Morgan Stanley's Mike Wilson says that "we will see reduced profit margins," that these prices rise at a faster rate than consumer prices, which cannot continue much longer without at least seeing reduced profit margins or a continuation of the CPI. And on Friday we gained feeling. It should improve, especially considering the fact that gas prices have dropped and the University of Michigan sentiment survey tends to reflect that. However, just to give you an idea of ​​where we are, we have had the lowest consumer confidence in history and the data goes back to the 1970s.

How much can we revive and what does this really tell us about where the market is going? feeling at a time when people are worried about inevitability? It was easier for those of you who are in the radio. It's an oscillating chart from 40 years ago. And we men here immerse ourselves in consumer sentiment Lisa. And it really speaks to the fact that both Americas are on the rise. Job report 560000 plus trained with reviews. And this has been the problem. We have two Americas where people at the top end are still spending on consumer discretionary and the businesses they serve are doing well.

And then there are people who are going from paycheck to paycheck with a real paycheck that is shrinking at a rapid rate. How do you deal with the current prospects of this errant inflation that moves from one area to another? Futures take the VIX twelve points below a solid 22. That's impressive. Twenty-one point eight zero. Let me go to the drawing we're looking at right now. Let's frame it. David Sabi loaded the boat on the bottom and, in mid-June, he should say with a rise of 13 percent, against Dow a little less, up to 10 percent. And the NASDAQ's lamentable resurgence up 19 percent says it all.

He is the great optimist of the Midwest. David Sabi joins us on Quora. David, you've always been in the market. He believes he has to participate in American stocks to prosper. Are you

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y invested now or are you somewhat bitter or are you more than half invested? Tom I didn't load the boat in mid-June, but I just thought the most attractive valuation sentiment was very bearish. These tend to be very good signs when talking to companies anecdotally, whether at a conference or on an earnings conference call. I thought the tone of the message was better than the price Wall Street was pricing stocks, and companies thought the same thing: that their valuation was attractive and that it was a good time to be a net buyer.

But he didn't load the boat. But today I am more committed. The theme of David's weekend research that relates to his work is that if inflation goes down, that means nominal GDP goes down and the fuel portion, the inflation portion of corporate income, becomes a little bit minor. Is that something to study and fear? No. I think the main point you should study is that it seems like the magic line is 4 percent for inflation. When inflation rates are below 4 percent, stocks are the best long-term inflation hedge when inflation is around 4 percent. It's problematic. We need to get there.

The Federal Reserve still needs to do more. Disinflation is and always will be simply a monetary event. All the stimulus that the Fed and the fiscal authorities put into the Fed needs to work more. I think the entire stock market accepts this and we will continue to make near double-digit returns over the next two years. David, in some of your research you talked a little bit about how to deal with legislation passed over the weekend by Senate Democrats. How much does that change the picture when it comes to companies buying back their shares when it comes to fiscal policy and issues beyond monetary aspects?

Lisa, it's just in terms of policy, you get a letter grade D, maybe a letter grade F. I have 32 stocks in the mutual fund. I co-manage. I am buying these companies because I believe they are good capital allocators with the cash flow they generate. Let's take two names as an example to criticize the stock buyback tax. Mary ISE in Windham is expanding its rooms. That means they are hiring people to build those rooms. They are increasing the dividend and they are buying back shares and they are deciding how to best allocate that capital in the interest of the shareholder.

And I think starting to tax stock buybacks is just a mistake because you're hurting investors like they're police officers, firefighters, workers that I manage money for. It is simply bad policy. But could the Inflation Reduction Act really reduce inflation, David? Or you don't believe it. No, i do not do it. I think it has to be where the Fed continues to do what it's doing. They are still behind the curve. ISE inflation remains, by far, our biggest problem. It is a tax on the purchasing power of consumers. I don't know how this bill manages to control inflation, except if it is the lever that ultimately leads us to a recession.

Maybe that will reduce inflation at the margin, but it has to start and end with the Fed and the money supply really being fair. You just crushed it this morning, David. It is. Is it a bill that can be harmless? And that's just political legislation ahead of the midterm elections. I don't think Tom is harmless. I think, at the margin, it hurts our ability to grow and compete. We have already stimulated the economy almost 40 percent since March 2020 with monetary and fiscal stimulus. Why spend even more? Why tax even more? U.S. tax rates are now less competitive for our foreign competition.

I don't think that's the solution. If we want to think about good earnings growth, good job growth will translate into good returns for investors in the stock market. David I'm sorry. Thank you very much for the report for this morning's encore. We don't even get into the mid-cap small cap, which is their wheelhouse. We will do it another time. You will do it. I look at the markets here and the silence here of mid-August in the heat of New York. And that's how many people, including me, missed the stock rally in mid-June. Yes. Which islands are pregnant? 13 percent gain for the S&P from the low we saw in June.

It has been an incredible demonstration that has been relatively silent because no one believes it. Good. How many people are really going to believe it after it continues to hold up instead of continuing to backtrack and say that people need to keep reducing their profits and their profit margins? And that has been the tone on Wall Street, at least for now. We have to see that we don't even mention oil here much below that one hundred and twenty-four dollar level. How about US oil at 88.26 per barrel, down 75 cents? It is interesting to see that a real tilt towards $80 this week would be a big surprise.

Gold under 18 according to the Dow Jones 1794 at seven o'clock. Peter Scheer is still with us on radio and television. This is Bloomberg. Keep you updated on news from around the world with the first word on marriage could come. Senate Passes Historic Fiscal Climate and Health Care Bill Giving President Bidena victory in their internal agenda. Still, the move is a shadow of the $10 trillion plan Progressive hoped for more than a year ago. The bill now moves to the House, where the Democratic majority is expected to approve it on Friday. And in a surprise change at the top of private equity giant Carlyle Group, Kaesong Lee has resigned.

Lee's five-year employment contract was set to expire at the end of the year. Bloomberg learned that Lee and Carlyle's board had clashed over the contract in recent discussions with the company's co-founder. Bill Conway will take over as interim CEO. Hong Kong has reduced the amount of time travelers entering the city must spend in hotel quarantine from seven days to three. That's bigger than they expected. Ease Abbott's strict travel restrictions. But Hong Kong remains an outlier in a world that has largely returned to pre-pandemic movement. And China's trade surplus hit another record in July, surpassing $100 billion. Exports rose a better-than-expected 18 percent from the previous year.

That's good news for the world's second-largest economy. Still, economists warn that the increase in exports probably won't last forever. And Softbank has reported a record quarterly loss of $23.4 billion. The selloff in global tech stocks continued to hit his investment portfolio of vision funds like Uber. Meanwhile, Softbank has begun talks to sell its assets. manager Fortress Investment Group Global News 24 hours a day on air and on Bloomberg Quicktake powered by more than two seven hundred journalists and analysts and more than 120 countries and of which 10 could arrive. This is back. The Inflation Reduction Act that this Democratic majority in the Senate has accomplished what many others have come to Washington promising to do but ultimately failed to deliver.

And I am very confident that the Inflation Reduction Act will endure as one of the defining feats of the 21st century. He's the senator from Brooklyn. Chuck Schumer there, of course, Senate Majority Leader taking a victory lap after a marathon night for Bloomberg Disclosure. Is Steve Dennis falling asleep on Capitol Hill all night? Someone who knows how to stay all night. Well, that could be Jack Fitzpatrick. Let's get right to it with Kailey Leinz and Lisa Abramowicz this morning. Jeff Fitzpatrick knows all the Memorial Union nights at Arizona State University, where he performed some of them.

Jack, let's start with the basic idea. Is this any way to govern a country? Why are we doing something so childish? We're all up late passing important legislation. If you ask senators, even the ones who take advantage of that process, the whole voting process as a branch is not something that anyone has specifically thought of as a good idea. It's something everyone hates. But now that it's part of the process, they use it. He tells you that this goes through the whole arcane budget reconciliation procedure and that there are certain things that can pass the Senate with a simple majority.

It is based on a 1974 law that was not actually created for that purpose, but was repurposed for that purpose. And so when you watch them vote on dozens of amendments to torture each other in an entire night, it's really a sign of the way the Senate's rules have become twisted over the years. And it's not something anyone really approves of. That's how it is. So let's talk about what's in the bill: a minimum corporate tax. There is also a 1 percent tax on share buybacks. Medicare also has the ability to negotiate drug prices and credits for electric cars.

A lot of different things Democrats say are some of the biggest efforts to address global warming that we've made to date. What about what is no longer colored about why Christian cinema eliminated the tax on carried interest? Because that seemed to be a big sticking point. That was, I don't know if she would call it a big sticking point, but it was one where she sort of interfered with her colleagues and that was where the last minute negotiations were. And they just agreed to put it out at a certain time. Those conversations got to the point where she backed off and it didn't generate much income.

There wasn't much open debate about the merits of that measure alone. But it is a measure that, if it is a bill that raises more than $700 billion in revenue over the next decade, would be responsible for about $14 billion. So it wasn't something that was a deal breaker for someone like Senator Manchin who wanted some deficit reduction. And ultimately, anyone could have vetoed this bill when there is a 50-50 Senate. So when Senator and Senator Cinema said that was something she wanted to eliminate. In the end, people agreed to just take this to the finish line. If you were listening to David Sauerbrey earlier, he was referring to a money manager who is basically protesting certain components of this bill, particularly some of the excessive taxes that are going to be levied on corporations.

What is the Democrats' rebuttal and why won't this slow the momentum that so many people think is a recession? For starters, Democrats face a pretty tough challenge: confronting concerns of a recession but also inflation. Senator Manchin pushed them as hard as he could to get something done that would reduce the deficit in the name of reducing inflation. Now, will it have that much of an impact on inflation either way? No, there's really no reason to believe that. But they had the conversation about the deficit. And honestly, I think if you listen to what President Biden often says, if you're on Wall Street, you're going to do pretty well under this administration.

Democrats have long talked about raising taxes on corporations and higher-income earners. They didn't even get everything they wanted. But we shouldn't be surprised that a Democratic Senate with a Democratic administration accomplished something to raise corporate taxes to some extent. Well, it may not be a Democratic Senate much longer. At least that's the thinking heading into the November midterms, Jack. Does this bill change anything about that calculation? I'm skeptical that this will change that much. The economic effects of a bill like this are not something that happens immediately. You know the priorities that Democrats were pursuing in climate spending.

Something like this is a much longer term problem. You're seeing that polls

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that voters are concerned about the state of the economy right now. How inflation has affected them. This doesn't do much in the short term. It could be a major long-term achievement that the Biden administration ends up being very proud of. Big picture, but in a matter of months between now and the midterm elections this is not the kind of thing that would have a massive effect. Jack goes further than where Kelly was on the first Tuesday in November. If the Republicans take the House, if the Republicans barely get 50 50 V.P. or any majority of the Senate.

Can they reverse some or all of this legislation? It would be very difficult to reverse this. I'm talking about a tax bill where Republicans won the trifecta. They want to win the House, the Senate and the White House and then use the same budget procedure to pass their own legislation, which, as we have seen, is very difficult if they win in the House or Senate midterm elections. A big part of that effect will be that they will have committees that will be able to investigate the kinds of oversight issues that you see in Congress, but they would have a very difficult time reversing this without the president.

Take a nap and take the

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photo today. Jets Fitzpatrick was Steve Jones. Dennis, I should say working all weekend on this important legislation. You know, Lisa, I think it feeds into the bond market. And to be honest. Wall Street ignores this type of legislation. To be fair, if you look at where this bill is compared to the original best reconstruction, it's about a tenth the size, give or take, depending on which headline number you want to look at. And a lot of people look under the hood and say, "Okay, there are some provisions that will really change things in certain industries." But in general it is not that significant.

Terry Haynes said something over the weekend that basically said you know this isn't exactly going to shake the world even though the Democrats basically want to advertise it as such. Still, the things being done in Washington are notable at a time when this wasn't on many people's radar. Part of the radar is job training. Politics is always about jobs and Caylee. Still in shock from what we observed on Friday with the reviews. Half a million jobs created. What machine! Absolutely a spectacular report. And it wasn't just about the strength of the labor market. Tom, in terms of nonfarm payrolls, wage growth figure also exceeded expectations.

And that in particular may be even more important for the Federal Reserve. Are we going to start looking at wage gains and maybe it will be more important than just the headline CPI figure? Fifty-two percent chance that Kailey Leinz won't

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up tomorrow. Lisa has announced that the week doesn't start until Wednesday. Maybe. Stay with us friends. You have a briefing heading into Wednesday. You can do that. Joyce Chiang President of J.P. Morgan Research. This is Bloomberg. Bloomberg Surveillance says good morning Lisa Abramowicz and Tom Keene John Farrow leaves tomorrow. I think he's on Hall's one-day horse for John Farrell.

Kelly is standing in line with us this morning. Lisa, let's look at the markets. Its futures were up 12. Dow futures were up 85. The VIX remained solid below twenty-two to twenty-one point seven. Lisa, what do you see in the bond space? Honestly, the stillness is really surprising compared to the highs we saw on Friday for the two-year yield, which is what I'm looking at, three point two percent there. You're seeing a little bit of variation across the board as people reassess how far the Fed is willing to go. Also the weakness of the dollar, which I think is fascinating at a time when the Federal Reserve will have to act quickly.

To what extent is this a global shift toward perhaps an aversion to talking about recession or perhaps the United States avoiding the worst-case scenario? Lisa and Kelly want to talk about the short term here, of course, getting to inflation on Wednesday and then the Federal Reserve meeting on September 1. I'm going to talk about the long term and I can do that with Joyce Chiang, president of Global Research J.P. Morgan, who I really don't like because she published a seven-page special with a giant Phil Swagel Mike Parolee helping John Laws and the rest of J.P.

Morgan on the fiscal state of the country. Joyce I have to read every word of this report. And it's a path to the year 2052. Nobody talks about this except you. How ugly our fiscal policy is for the nation in 30 years. It looks pretty ugly Tom. I mean we're looking at debt levels that will reach a record high. We are close to 100 percent and we are going to one hundred and seventy percent. One hundred eighty-eight percent. And if we take a look at our view, 10-year Treasury yields will be five and a half percent by the end of the decade.

In terms of debt, we are well above 200 percent of GDP. And this is going to raise real questions about fiscal sustainability and the trajectory of the debt. If we see that interest rates continue to rise because the CIO, in a 10-year view, is using three point eight percent for its Treasury bond yields. You know, Tom, we have three point thirty-five percent by the end of the year. You know you have a great set on this call. The only one who looks tanned and rested by the way is Rolly. And we know that you know that he lives a comfortable life.

Let's start with Rollie's tan and rest. Do we have the productivity and spirit of this economy? Joe Stiglitz's small growth rate allows us to get out of this conundrum. Well, you have to look at the productivity for the first half of the year and as Mike says, it was an atrocious decline of almost 7 percent and we're looking at pretty poor productivity going forward. So you take whatever metric you know. Larry Summers, Jason Furman and you look 10 years from now and, from our point of view, you find yourself in something that seems really unsustainable. And I think this is a conversation that will start right now because the real conversation is still going on.

What part of the cycle are we in and what type of landing is neither hard nor soft? Yes. We are waiting for an eminent recession, but we have to analyze the potential growth that there will be in the future. And we only have one and a half percent in the future. Alright. Joyce, that's exactly why I wanted to go. If we could put this moment in30-year track record. What would it look like? Would it be a tipping point to add more debt before the tsunami or would it be a tipping point towards some kind of higher inflationary regime because of the geopolitical context and the reissuance that we are seeing by many companies?

Well, look, there are the rich who underpin globalization, but we're also talking about the poor demographic. And that's kind of a trend that we're seeing in Europe and China as well. But it is reducing potential growth. And we add that to what we consider labor productivity, which is overly optimistic in the congressional budget line. And that's really a key reason why we think potential productivity growth will be lower going forward. On top of that, we see increases in rising Treasury yields. So, if you look at where we are with the primary deficit, it reaches levels that really point to debt sustainability.

When we look at debt service and this is, take a look and yes, you will actually know that healthcare spending will increase due to demographics. And this is one of the reasons why many people are confident about investing in longer-term Treasuries because they say there is no way that this nation, given all its debt, can allow yields to rise to a level persistent due to debt sustainability before entering the market. the theory of that. I want to go to the moment we are in because we are seeing a lot of pessimism on Wall Street. A lot of the analytical notes basically say that people are too optimistic.

Manifestation doesn't really count. It's a bear market rally. And then you could see how the rally continued to bleed, gaining strength. Which explains this huge divergence between the tone among Wall Street's top analysts and the tone among traders in the trenches. Well, we have seen bear market rallies in March and then the market sold off again. And that is the question: where are we now? Look, it's clear that the Federal Reserve has a lot more work to do. And I think we're all looking at what's going to come out on Wednesday with the CPI numbers. Now it only has the forecast at eight point seven percent.

I mean that will still keep the TV on high alert. And we're 75 basis points in our forecast for what the Senate needs to do. And still 25 basis points in November and December. But a terminal rate that we were talking about, you know, three and a quarter, we now think could rise to three and three-quarters percent before we really see inflation concerns subside. Now it is not typical inflation, it is structural inflation. So it's wage growth, but also rent inflation, that's sort of north of 7 percent. Wage growth is still worth 5 percent. So that's what we'll focus on in the next few days.

I think a soft landing will be difficult. Immaculate disinflation scenario. I think it's going to be very difficult for that to work well. And we'll obviously be keeping an eye on the inflation data on Wednesday, but we'll be looking at it through the lens of the jobs report we got on Friday, which showed an incredibly strong labor market and yet increasing wage pressure on the economy. However, that strong jobs report contrasts with some weaker data we've seen elsewhere. And I wonder if a coherent message can be drawn from the economic data we're seeing now. We have reached this part of the cycle with excess savings and that has actually been a real cushion in developed markets and also in emerging markets.

But that excess savings is going to hinder. So in the third quarter of the year we have only 1 percent growth in the United States. That's what we're seeing. But there has been very strong wage growth. The labor market is very strong. Consumers also maintain it due to this excess savings with which they enter the cycle. But you're going to figure some of that out by the end of the year. So I think we also need to look at what's happening outside of the United States and where we have Europe's numbers falling. China's Rufus is disappointed with the stimulus.

And also, remember that E losses in the month of August have very, very poor liquidity. I mean we're heading into some of the worst months for liquidity, where liquidity is really amplified positively and negatively. So we are at a point in the cycle where there is no imminent recession. But I just think that liquidity will also accentuate these movements. We could see that very hectic markets are seen in the head. Well, Joyce, you mentioned China and obviously we consider it from an economic point of view, but there is a geopolitical risk to consider and we see continuous drills going on in and around Taiwan.

How do you see the tension between potential further US-China decoupling of the world's two largest economies and what that will ultimately mean for the trajectory of the global economy going forward? Look, when we think about decoupling, we have to think about what is desirable and undesirable. And you really have to separate the global manufacturing center from some of these issues that have much more to do with national security and critical infrastructure. But that's quite complicated. And that's what Taiwan, the United States, shows us when we look at just the supply chain concerns, because we have a lot of the supply chain that actually moves through the Taiwan Strait.

And when we look at this and review what the precedents are from 199596, when there were these types of tensions, there was a liquidation in the financial market, but not much impact on the real economy. Economies are now much more integrated between Taiwan's dependence on trade with Hong Kong and China and also the global supply chain. So I think this is a complicated moment. I'm not so sure these military exercises will stop as quickly as people expect them to. George, I want to go back to your wonderful tax essay. Friends, you can understand that J.P. Morgan is truly a tour de force with CBO Joyce's Phil Swagel.

A simple question for our radio listeners. They are television viewers. Is the United States becoming like France? Look, what we are doing will really affect future generations if attention is not paid to the fiscal and debt rejection trajectory we were working on. Debt servicing costs will double here and reach record debt levels we have never seen before. Simply put, this fiscal outlook is unsustainable. Then you could compare it to. Perhaps you could compare it with Japan in terms of debt ratios. But I think it's really a time to look at what to do, especially if we see Treasury yields continue to rise, because all of this happened when we were at zero Treasury yields.

But you can really see how this can change over the course of a decade. We are not talking about 50 years. Josh Chang thank you very much. A tour de force for J.P. Morgan, as always, okay, at least I haven't done the work on the H 15 series, which is like from Volcker to now with

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faith and credit and I choose a duration. But one wonders where performance breaks down when we climb higher and more persistently. I have grown old waiting for that moment. This is the problem. Many people talk about a 4 percent federal funds rate.

Even some Federal Reserve officials are talking about persistently high inflation for years to come and people are increasingly convinced to invest in long-term Treasuries, driving yields lower. Exactly. Because of what Joyce Chang just said, if this nation is faced with such massive debts, it cannot maintain Treasury yields at 4 percent, 5 percent, 6 percent because the carrying costs become onerous. And this really supports part of that conviction. The only conviction that is being seen in the markets right now would be that they would clean up the market and improve the fiscal stance. And that would come. I am clearly referring to one of the great surprises of the last, I would say, 18 months.

Witness California being in the state of New York, frankly, it is flourishing. The tax revenues have surprised everyone. If that's true. And, of course, there will be changes to tax policy if the bill passed in the Senate over the weekend is supposed to pass the House. But of course, this is a much more muted change in fiscal policy than the Biden administration originally envisioned. However, that 1 percent tax on share buybacks could have implications for this stock market. Well, David, I'm sorry, get to that. We'll have a lot of different opinions on this throughout Bloomberg here in the stock buyback derby.

Maybe Cupertino's Mr. Cook will weigh in on that, too. Alright. So possibly it's the way and we see Mark Gurman reporting on Apple. They are going to an evening in September. Lisa demands seven new things from Apple while trying to get a road trip to Cupertino. Yes Yes Yes. We need that. Eighty-eight dollars technology. Always Emily Chang. This is Bloomberg. Good day. Keeping you up to date with news from around the world with the first word answers you were able to get about President Biden and his party finally being victorious. They've been waiting for the Senate to pass Democrats' Landmark health care and tax climate bill.

The House is expected to approve the measure on Friday. Here's a scaled-down version of the $10 trillion plan that progressives had sought more than a year ago. Now the question is whether he can give Democrats a boost ahead of the November legislative elections. San Francisco Federal Reserve President Mary Daly suggested that a half-percentage point increase is not locked in at the next policy meeting. Daly told CBS News that the central bank is far from successful in reducing inflation, as Friday's strong jobs report reinforced support for another 75 basis point rate hike by the Federal Reserve. China's signal that non-forestry activity in Taiwan was continuing after drills announced following House Speaker Nancy Pelosi's visit.

The Chinese military says it conducted naval and anti-submarine strike exercises today. The recent maneuvers near Taiwan have been the most provocative in decades. The United Nations Atomic Safety Agency has warned that there is a real risk of a disaster at a nuclear plant in Ukraine. Hours after that warning, Ukrainian officials said Russian forces bombed the area around Europe's largest nuclear power plant. Ukraine says Russian projectiles landed near spent nuclear fuel. Moscow blamed Ukraine for the incident. And Warren Buffet bought the dip in the second quarter. His Berkshire Hathaway took advantage of the market decline and was a net buyer of shares worth nearly $3.8 billion in purchases that made only a slight dent in his cash.

Paul Berkshire had one hundred and five thousand four hundred billion dollars at the end of June. He is barely moving from one hundred and six billion at the end of the first quarter. Global news 24 hours a day on air and on Bloomberg Quicktake by more than two seven hundred journalists and analysts and more than 120 countries. I'm rich and I could go back to this. We're far from done yet. That's the promise to the American people: we are far from gone. We are committed to reducing inflation and will continue to work until that work is completely completed.

Some guy got married this weekend to Daley. They are making waves with the San Francisco Federal Reserve. She is one of the truly great stories of the American economy and has been very visible here as we move from forward-looking guidance to data dependence. Lisa, how do you think we're doing with that data dependency? I thought it was a very Guyton-like weekend. That's what I was going to say. We move from future orientation to future orientation. That's a little different. And under the guise of data dependency, at what point are we actually looking at the data and what data?

Exactly. Yes. It will be interesting to see. We welcome you all. John Farrell free for today. I received a notice at the Naples airport and at AP in Italy. Lisa, they have selected delays. So maybe one day the casts will be a little longer to watch. We will find it carefully here from Capri to Naples and back to the New York League. Kailey Leinz draws the shortest straw and joins this morning right now. Lisa actually talked about this as something of great interest to Reedus and she joins us. She is chief analyst at Energy Aspects. Lisa, why did you bring Amrita Sen here to talk about the microeconomics of that declining gallon of gasoline?

Yes. So it was shocking, right? There have been 50 days in a row in which gasoline prices have fallen and the real trigger for oil prices has been the decline. VoiceThis US report that showed gasoline demand was even lower this summer than it has been since the 2020 pandemic-era crisis. So I read several notes and read over the weekend saying that this number doesn't make sense. It makes sense to you. No, and we don't believe the numbers accurately represent what gasoline demand is in the United States. So only a couple of things are correct. We've already had summer.

We've talked about this before. It is simply low liquidity. Coverage of producers is also being carried out. Therefore, there will be very sharp movements in prices and there will always be liquidations in August. So that's the backdrop against which we're operating. And to your point, then we get some of these gasoline footprints that start or just prove to people that they think we're already in a recession or we should be in a recession. But if you look closely at these numbers, the weekly agreement comes out saying that two or three weeks ago that number was also very, very poor.

I made a small improvement two weeks ago. And then last week there was a big drop. But then a couple of things about that. If we look at vehicle miles traveled, the June data point, which is the final data point, actually shows that vehicle miles traveled increased compared to 20 19. If we look at ethanol, about 10 percent is mixed with gasoline. And if we add up the ethanol figure from the weekly numbers, we actually see that gasoline demand is about 9 million barrels per day, not eight point six. As the EIA says, there are a lot of factors I can talk about, but two of them are the most compelling where we have proven data as to why these weekly numbers are not accurate.

Mark Gurman Mérida what is the implication here. We have seen gasoline prices drop in the United States for 54 consecutive days. It is unheard of in terms of the trajectory that we are seeing oil prices now solidly below ninety dollars per barrel without treatment in the Max night. Where should oil prices be based based on what you see in the raw data? So recent gas prices have dropped much more on the supply side. We have had petrochemical weakness, particularly in Asia, as China continues to go in and out of lockdowns. That has allowed a large amount of naphtha in particular to be available for blending with gasoline.

So it is not a demand problem. It's a supply problem. But in terms of where the prices should be. I think that in the short term we can continue to weaken. Refinery seasonal maintenance is approaching. This is always a weak period for crude oil. I don't expect to see a sudden increase in prices, but when winter comes, especially if after November the first of November the SPRO stops. The Russian or European embargo on Russian crude oil also begins on December 1st. There is the China Party Congress, which should allow, we believe, at least some easing of Covid restrictions.

The market is going to tighten very, very quickly. Therefore, we maintain our forecast of more than $120 on our part. Wow wow wow. And we don't want to talk about demand. We spend all our time on the supply side, looking first and second at routers and looking for something tangible that we can get our hands on or at least believe we can. We can't do that with demand. For example, Saudi Arabia. Actually, let's look at the dynamics of the second derivatives of oil and gas demand. Yes, absolutely, and I think the lawsuit is precisely what you mean because it is much more difficult.

They spend a lot of time together, especially in Saudi Arabia. This is one of the main reasons why the group's production increase was simply phenomenal: 100,000 barrels per day. The uncertainty is too much for them to come and add a lot of oil. Imagine if we really went into recession again. Not that we believe it. Then they would have to recover that oil. Well, Amrita, how much oil could OPEC plus realistically produce? I mean how much excess capacity is there really? Or that this is something else that they actually recognize as correct. That the group really outside of the JCC doesn't have much available capacity.

And I also really want to highlight the difference between excess capacity and said capacity. Many of our conversations with member countries will say yes, surely we can increase by 3,400,000 barrels per day for four to six weeks, as long as we actually have to remove the fields for maintenance. That is not excess capacity. Excess capacity, something that can be recovered in 30 days and sustained. Good. That is something that is done in the very short term but that does not really allow them to meet. Let's say Libya goes offline, but if you can only increase oil supplies for four weeks, that doesn't solve the problem.

And I think that's one of the main reasons why Prince Abdulaziz in particular has been very cautious about adding barrels back, because if you can't sustain it, you lose control of the benefits. I am reading to value a lot. I appreciate it a lot. This morning I thank you very much. Amrita Sen with energetic aspects today. You know, Kelly? I watch this play on oil and it's so deep how it falls on Wednesday's inflation call. Yes. At least the headline. And you're also seeing it with food prices. Food prices fell according to the UN index, the biggest drop in July we have seen in years.

Now we return to the levels seen in January. So at the supermarket gas pump, in theory, those things are easing up. Then it comes to underlying inflation and that is a more rigid inflation. And we expect that core metric to remain popular. That's what the Fed is going to have to look at to stop it right now. I'm Bloomberg Surveillance and it's something we love to do and that is promoting the intellectual component of silence. Ted Love is Suzanne of Global Blood Therapeutics of the acclaimed Haverford Foot program and Martin Molecular Biology, I believe, through Yale Medicine.

And he and Djibouti were eliminated this morning by Pfizer Lisa. This is one of the companies working as hard as they can on something new and modern. We only have 100 years of knowledge about sickle cell anemia. Now something general. His sickle cell disease is extraordinary. Take 400,500 employees as an example. But Lisa, this is a big deal for molecular biology and it's a six-year dose of 50 dollars and 50 cents a share, a four and a half billion dollar transaction. And it's a big problem when it comes to microbiology. It's also a big deal because it's one of a series of transactions, particularly in the healthcare industry, that we've seen and continue to see.

CBS is also potentially a play for health's expansion into home health care. There is a lot going on at a time when the bidding market is practically free. That June silence you're talking about in the stocks above is also causing distress or also bottoming at the 60 level. Dow 21 futures are up 139. VIX is holding steady below 22. This is Bloomberg. Stay with us. We expect an eventual slowdown, but it has not arrived yet. We are not watching the economy fall off a cliff and this is exactly the time the Federal Reserve needs to act quickly. We can see areas of the economy where they are very successful in areas where they need to continue.

They have to continue raising rates. I just think we have to be careful about the level of rates we get to. There is this path to a soft landing. I don't see why people think it's such an elusive thing to achieve. This is Bloomberg Watch with Tom Keene Jonathan Ferro and Lisa Abramowicz. Hello, everyone. Jonathan Ferro Lisa Abramowicz Tom Keene on radio and television. It's Ferro merger Monday, all the excitement is lost. The lines for John went down today, at least we think he's stuck in an airport somewhere in Italy. Lisa, I'm sorry I broke the script.

Forget inflation. It's merger Monday. It's fascinating to watch all these deals come together. Whirlpool pays $3 billion in cash for Amazon's waste disposal division. That's the latest we've heard from Pfizer as well. We're also hearing about a deal with CBS. So many offers after the tranquility of the previous months. We had seen the capital markets freeze. They are opening strongly with the rally we have seen in stocks and the rally we have seen in small bond transactions. And I really have to say that I see it in the media as if it were a waste disposal business.

Baloney. Come on Lisa. This is what's in your sink. They are selling out and putting more emphasis. Get rid of this dog. I have quiet series at home. You know, he eats the olive pits. But the bottom line is that these are again transactions of opportunity. And here is the message Lisa. Corporations are adapting, whether it's Pfizer or Whirlpool. Expect an I. You live in New York City and have a garbage disposal. I mean, honestly, this is a completely different situation. Honestly I want to say it's my own experience because usually every time I go to BND air they have a garbage disposal.

I get very excited. Look this is interesting. It comes at a time when there is a real ambivalence, especially on the part of CEOs, who want to match inflation with macro, considering the fact that they have all this uncertainty and are still using the cash for these acquisitions as a nice powerful statement. I should finish that thought. Don, the one hundred and eighth mayor of New York, knows that I have a great series and a lead reader that I installed myself. Drips. Let's remember where we are now in terms of inflation. And part of the animal spirit of this merger on Monday is the nominal GDP, where the spirit and good corporate profits are.

Well, part of the animal spirit in this stock market, Tom, also has to do with the notion that the Federal Reserve is going to turn a corner eventually. But we saw a bit of a shift in that thinking on Friday when we got that spectacular payrolls report that now priced in about an 80 percent chance of another 75 basis point increase in September, which, yes, is a long way off. But the CPI data we get on Wednesday could be extremely formative in that decision. Stronger. Come on, Kelly. You are the source of wisdom here. You in this deal last night at 2 p.m.

Seattle Washington four thousand four hundred people Alva La. They provide sales tax management here on Merger Monday and Vista Equity buys that company for 90,350 a share in cash. So that makes him who Lisa is. Four deals were announced and we've announced or rumors this morning, which is pretty typical for a merger on Monday. But this is an anomaly. Inflation

2022

. Let's get back to normal right now. We have futures up 20, Dow futures up 137. And the VIX with that move 10 big figures of thirty-two and twenty to twenty-one point five six on the VIX right now. So it's a good move here.

The percentage move in the Nasdaq 100 draws my attention up to almost seven-tenths of a percent in the yield space. The headline for me is Continuous Investment. The professionals who wrote about this over the weekend scored a negative 43 basis points. Oil. Thank you Amrita Sen reaffirming one hundred and twenty dollars. Brent crude oil at the moment. Brent is under that by a modest twenty dollars. Lisa, what do you have? Yeah, and I have to say this morning has been really fascinating because Joyce Chang came out and talked about too much debt and how that's going to make yields potentially lower in the long run because that's going to slow down growth and at the same time, will maintain lower performance. to not be functional.

And she said Wednesday that we have an idea of ​​how high inflation is right now and what the Federal Reserve might have to do to reduce it. We get the US July CPI. We will be looking at the headline number. The expectation based on the survey is eight point seven less than nine point one percent. That track record is good. How much is it going down? It's still a pretty heady number: eight point seven. However, underlying inflation. How much does that continue to increase? Are you eliminating energy, eliminating food? How much do you get when rents go up and medical costs go up?

We have errant inflation moving into those areas. On Thursday we will have an idea of ​​what is happening with the prices that factories, mills and manufacturers pay. However, July PPE Eye in the US has risen to record levels and has risen well beyond where we are seeing consumer prices. How much does this play into Mike Wilson's view of things where you see margins squeezed and continually squeezed and people are behind Tom in what they expect? And this for me. I think it's something very important. Well, friends, it is very important to see a bear come outlike Mike Wilson and smartly rethink caution here.

Bank of America's Savita Subramanian does the same. Lisa just moments ago, John stole the job and he absolutely nailed it. Ali says there are still more steps to go in a big bull market position, of course, about it cold. And both sides stand firm. The bulls and the bears and telling everyone that you are missing the boat. And this is really faith based. Yes. On Friday, how much faith do people have that they will be able to hold jobs and fill their tanks with the University of Michigan's August Consumer Sentiment Survey? Does this confirm the feeling that we're certainly seeing in other anecdotal data that people are feeling a little better?

Speaking of missing the boat, it's a good time to turn to Peter Shery Ahn, head of macro strategy at Academy Securities Academy, which is based in Annapolis. And of course, it's a Wall Street store with a huge military band. Peter, I would be remiss if he did not tell you about his board's esteemed public service and his views on what we are seeing in the Pacific Rim and Taiwan. Has that affected his call across the market? Yes. One thing we are very focused on is that we have 17 retired generals and admirals who serve as our geopolitical intelligence group and about 50 percent of the company or background.

First, it is something very near and dear to our hearts. But I think we're seeing the escalation of what China is doing and it doesn't necessarily become military, but it plays into the theme that we've been seeing China separate from the rest of the world becoming much more introspective. And China will continue to develop relations with autocratic nations at the expense of its dealings with the West. Peter, how much do you believe in this rally? We've seen a 13 percent gain in the S&P since that mid-June low. To what extent do you consider this an illusion at a time of so much geopolitical and inflationary uncertainty?

Who would I say? I think it is wishful thinking that I said that with the VIX going down to twenty-two, I would like to have the idea of ​​​​buying calls and plants until the end of the summer. There is so little liquidity that either side could get traction, as it appears at the moment. Once again, the bulls are gaining ground, especially after we survived Friday. But excess inventory is still a big concern for me. And I'm a little suspicious about how good Friday's jobs data was. Suspicious because it won't turn out as solid once we get the reviews.

Pedro. Yes, already in the last four months there has been this big disconnect between the establishment survey, which is the main number, and then the household survey, which looks at the unemployment rate there, about one point eight million at one point eight millions of different jobs. in the last four months, which is quite important. So if households were to start confirming what we're seeing in the establishment, that would mean the unemployment rate is probably much lower, which will put pressure on the Fed or we'll get some revisions. And I suspect this might be more establishment reviews.

And I'll post a little more light online with other anecdotal evidence about jobs. Does that mean it's more in line with the Fed's pivot narrative? Yes, I think the Federal Reserve will have to pivot. I think the Federal Reserve has already gone too far. I think we are seeing inflation plummet. I think we see supply chains taking care of themselves. But it's the fact that the consumer seems to be trying to buy things at a discount that is seeing margin pressure. I think all of those will be relatively. I don't know if we have reached the point of being deflationary.

Good. I think that by the end of this year we will no longer be talking about inflation. Peter, Monday is inside baseball. That's what you do when the Padres get swept by the Dodgers. So let's go there. Peter, I think I just heard you say that you want to do a college trade because we can go long or short. You and I remember a long time ago when you were into a six-option trade and Peter Scheer would do an iron condor or something like that. Can you be creative with the options now or do you eat it all and it's premium?

You eat a little and premium. But again, as you mentioned, it all goes back to 22. So this is pretty low considering the daily losses. So I think you can trade your way out of this. Pete, to what extent will a Fed turnaround be positive for stocks or negative? I think at first it will be more negative. I think the realization that the market has not been affected by the Fed is going to turn around because they have pushed too hard. So I'm definitely not in the soft landing camp. I think we went too far. I think we're seeing the consumer turn around.

I think you're seeing inventories increase. So when people realize we're going to have to pivot first, we actually do it. Yes. We meet. I think that's the stage we're at. But then reality will hit us: we have to be very careful about what our future profits will be like. And it's very encouraging to see this type of merger on Monday because we are seeing that companies will accept new valuations. And I think we're far from done, especially in the High Flyers, where they want to get paid X, the buyers are Y, and we have to figure it out.

And I think that's unfortunately going to be closer to why lower prices could come to fruition. Peter Shear thank you very much. I appreciate it a lot. With Academy Securities or particularly the update and your thoughts on what's happening in the Pacific Rim. Lisa. No surprise here. He is a president who may want to push for a victory lap. This is a president. Of course, I think he is Covid free. Two negative tests Lisa. Yeah, I remember when I heard that in January, I think it was. And you know you get one and you're like, what now?

And then you get two and you feel so much better. In Delaware we can hear from the president at 8:00 a.m. Yes, he will leave Delaware around eight thirty in the morning. He's at his beach house in Rehoboth. And he will fly to Kentucky to visit some of the flood victims there. How much does it really talk about a bill's victory? He hasn't done it yet. He has proof. He has to talk about it. How much does it cost? He also talks about gas prices. Because that's perhaps going to affect things more than anything else when it comes to the midterm elections, considering how quickly they've come.

I mean it's really dramatic Tom. Really is. But where does the level to which the nation reaches comfort both Republicans and Democrats? Kelly, you know, listen, I mainly said the state of Fargo, where he drove 50 miles for a quart of milk. But other than that, listen, I don't even get in a car anymore. Kelly, you're living in this dream. I mean we have to return less than three hours before you can breathe a sigh of relief. Oh well, things are looking better. Three dollars may be a bit ambitious. I will say that I bought a car last week.

Then I'll be filling my tank more. Yes, I moved to the transformation from Manhattan to Brooklyn. Yeah, but the thing is, she got you. She bought the BMW with the tilted seat where you know I can't sit. I mean you know it's like a sport. You know, a lot of the cars that Tom Keene fits into probably think there's like three Marines, three and the whole couple. Stay with us. This is Bloomberg. Keep you updated with news from around the world with the first word I am rich. CAC said the Senate passed a landmark fiscal climate and health care bill that gives President Biden a victory on his domestic agenda.

Still, the measure is a shadow of the $10 trillion plan that progressives hoped for more than a year ago. The bill now goes to the Senate and the House, excuse me, where the Democratic majority is expected to approve it on Friday. A surprise change at the top. Private equity giant Carlyle Group CEO Kaesong Lee has resigned. Lee's five-year employment contract was set to expire at the end of the year. The Bugs learned that Lee and Carlisle's board of directors had clashed over the contract in recent discussions. Company co-founder Bill Conway will take over as interim CEO. Hong Kong has reduced the amount of time travelers entering the city must spend in hotel quarantine from seven days to three.

This is a greater-than-expected relaxation of its strict travel restrictions. But Hong Kong remains an outlier in a world that has largely returned to pre-pandemic movement. And Pfizer agreed to buy global blood therapies in a deal valued at about five point four billion dollars. That will give Pfizer one of the few approved treatments for sickle cell anemia. The disorder affects 20 million people, including many of whom Aflac and Softbank have reported a record quarterly loss of twenty-three point four billion dollars. The selloff in global tech stocks continued to hit his investment portfolio of vision funds like Uber. Meanwhile, Softbank has begun talks to sell its asset manager Fortress Investment Group Company 24 hours a day on air and on Bloomberg Quicktake powered by more than two seven hundred journalists and analysts in more than 120 countries.

And which one it could reach. This is Bloomberg. The current debating government is trying to manufacture a crisis over a practice that has been in place for decades. It's really up to Beijing to decide whether to rejuvenate. Whether China's rejuvenation will evolve with international respect or international condemnation. Important words from a representative of Taiwan on Face the Nation on CBS this weekend. And, of course, we continue to monitor that story. I think the current plan to be with us from Hong Kong here is at least a major adjustment. Thank you. Have fun leading our oil coverage for this moment as Mr.

Curry adapts to Goldman Sachs. Yes, and then we've seen it pretty consistently, although we still see the line backwards. But what we're seeing is that people are reducing their short-term goals because of everything we've seen. The declines are really gaining strength despite the supply shortage we keep talking about. Tom Keene. Yes, we see it right now. Let me give you those numbers here. Goldman Sachs from 135 to 18. But for next year they remained at 125 in M. And with energy aspects they really give us the same message here a few moments ago, always with the same messages. Jack Fitzpatrick of the Bloomberg government.

Jack I spent a good part of the weekend analyzing some of the mathematics of the big surprise: the Latino vote, the Hispanic vote, shifting from Democrat to Republican. I chose an area whose geography I know well. Thanks to Boulder and see you there. And that's Pueblo Colorado east of Colorado Springs. It is shocking how the Republicans have taken over the Latino vote in selected geographies. How does that change Washington in November? It definitely lives up to one's expectations in November. Help Republicans in the midterm elections. I also think that in the big picture, besides picking up some interesting races here and there, it makes Republicans feel a lot better about their presidential chances in the next presidential race.

Florida, especially, you know that Hispanic voters in the United States are not a monolith. If you're talking about a major swing state that hasn't been so swingy lately, look at Florida. There are Cuban Americans there who are particularly conservative, people who have been really open to Republican arguments about Democrats leaning toward socialism, as Republicans would call it. It's probably an even bigger factor heading into 2024 than it was in the midterms. But we've seen it play out in the midterms and primaries. I mean Greg Jarreau, who is terribly skilled at this, has been phenomenal. Wasserman, of course, owns the high ground.

And I thought Mike Allen from DAX this weekend actually had an expanded note on this. Isn't the Senate enough to decide in November, Jack? It's very difficult to say. I agree. There are so many factors that influence the Senate, you know? I think one overriding factor that we still don't know exactly how it's going to play out in the Senate elections is actually the response to the Supreme Court's Dobbs decision. And we don't know to what extent that will outweigh other concerns. I'm not sure exactly to what extent changing expectations about how Hispanic voters specifically will play out in the Senate elections.

But in the long run it's something Republicans should be happy about. It's just that these midterm elections are difficult to pin down considering the president's struggles and his popularity. But while enthusiasm grows among Democrats, especially in the Dobbs ruling, we still don't know what the main story of the midterms will be. Obviously the Republicans feel better than the Democrats. But there are somecontradictory narratives at this time. I will give you another narrative that is contradictory and could be a potential factor and that is gas prices. We've been talking about this all year, but particularly today, when we get a 50 fifth in a row, maybe if we continue the streak of falling gas prices in the United States.

It's enough. Tom, this previous question is that just lowering gas prices to an average of four dollars a gallon is enough to make people feel better enough to give Biden a break on inflation. I would be skeptical that that's good enough to make people feel really good about the economy. It is better for gas prices to go down than to go up, obviously. And having a long streak is a good thing, but it's not particularly low. And yet, if you look at the polls on how people feel about the state of the economy and how Biden has handled the economy, the result is quite negative.

There is reason to believe it will potentially improve between now and November. But that is not enough time to anticipate that the situation will really change right now. Overall, the economy and voters can put this all together and the economy is a net negative for Democrats right now. OK, so if it's not enough to essentially change the economic trajectory as Americans feel it, is it enough for any other type of legislative victory for the Biden administration and the Democrats? Or will what we saw over the weekend really be the extent of it? This would be a big challenge for the Biden administration to campaign on this bill that just passed the Senate.

I don't know if that again will have an economic effect in the short term that changes things for them between now and the midterm elections. It's not an easy road for Democrats from here to the midterms, but this bill, as well as the chip bill that the president is supposed to sign into law tomorrow. The fact that they got them in the span of a week and a half is a big problem for Democrats, more of a long-term issue than something that will turn them around immediately before the midterms. But those will really be two of his main accomplishments that they will campaign on, as well as the infrastructure bill that was passed earlier.

Jack, thank you very much for the report, especially on the Latino vote, as we approach November. And until 2000 24, at least I have been waiting for this announcement to be published a few moments ago by NBER. You know them as recession indicators, but also as an excellent research opportunity for everyone interested in the economy. Moments ago Dartmouth's Lisa David Blanchflower with Alex Bryson and Jaxon Sperling released an updated working paper not on unemployment in the United States, but on underemployment. Blanchflower is heated because we got our analysis wrong, especially when it comes to linking wage inflation. She Basically she talks about a slack that we may not be tracking in the market?

And that's why the job market is not as strong as people say. That's been her argument for a long time and why she believes the Fed is making a mistake by going too fast in withdrawing it. It is a partition versus a homogeneous study in the partition there are part-time people who want to be full-time people. Blanchflower would say that is definitive and much more of America than anyone wants to see when all the courses of study are grouped together. Part of the excellent job report we saw a few days ago features a great team being advanced.

This is Bloomberg. Good day. Bloomberg's Monday watch ahead of inflation was a huge data point on Wednesday, some would say it's bigger than the jobs report we saw on Friday and look what it did. John Farrell is free at least today. We are not sure. Where will it be tomorrow? I think it's stuck at the Naples airport near Capri, but the delays and all that Kailey Leinz stuff today, at least now, has the futures up 16, 18. A few moments ago, the VIX went down from 22. Call my attention. And I want to mention something that we have been negligent about in the last 90 minutes and that is that the dollar dynamics with enormous resistance to the dollar outside of the jobs report today shakes with a level of 1 of 6 in VIX while the Euro 1 at 1 93 and yen 134 78.

Just to look at the major pairs, you should know that the Turkish lira has 18 lira to the dollar, seventeen point nine and six Turkish lira. I think that was enough added data. I think I can offer a little fact check here. John will be stuck in Caffrey all week, it will be a permanent effect that we will have the privilege of having Caylee with us all week unless she escapes, but because he is thinking, "My God, do you know if John comes back from Korea , which he won't So Tom just to give that little clarification I thought I would be home for a day Yeah, that was an American area two weeks ago He's your pin. some of the stocks we've been talking about all morning what Merger Monday is like, which is fascinating because it hasn't been Merger Monday in quite some time.

Let's look at some of the merger CBS Health is talking about buying Signify. as they expand into home health care and you can see Signify stock rise more than 16 percent ahead of CBS open stock. A small change of about a quarter of a percent. stand out. And really the Emmerson story is that Whirlpool is going to buy those shares from this company with an increase of just over 1 percent. That's not the story. The story is that Tom Keene has a garbage disposal unit in his New York City apartment. So I'm going to take all my cucumber peels to your apartment and we can get a waiver on that.

Yes, I will do it. I will try. Also in the news today is the bill that was approved by the Senate and is now headed to the House. We could see Tesla and Revere benefiting from some of the potential EV credits. Tesla shares a point six percent revision that has been completely hit. I mean take a look at those stocks. They have been absolutely decimated. An increase of one point four percent, a fairly nominal move considering how far they have sunk and globalized. What are your choices. Tom, you were talking about this earlier. It really is a fascinating deal.

Pfizer plans to buy this company that has some innovative treatments for sickle cell anemia at a time when many people are looking for new advances in the pharmaceutical industry. After Covid. It's interesting to see that right now. And fixed income will boost Mark Cuban ahead of US rates strategy in Bank of America global research. This is a timely update on where we are and where we are headed. Mark let me continue with the general question here. In his investigation this weekend he writes what the distinction is in Bank of America's vision. So Bank of America's view has been very cautious on the outlook, expecting to see a slowdown in the labor market and ultimately seeing that weigh on consumer spending and business spending. .

However, the data we got on Friday was incredibly strong, much stronger than we were and the consensus was anticipating much stronger than anyone else on the street, as that had been anticipated. And it questions how quickly we will ultimately see that slowdown. If the job market is really that resilient and this relates to Superman's severe work on the stock market, it is. Well, Mark, there is a big gap between those who expect a Fed outcome of a 4 percent increase and those who expect a Fed outcome of 2.5 to 3 percent. How do our listeners and viewers actually interpret this massive deviation in perspectives?

Yeah, well, like the Federal Reserve, unfortunately I think investors have to rely a lot on data. Right now, what the data shows us in the US is that we are not yet seeing enough of a slowdown for the Federal Reserve to decide to abandon policy. So the Federal Reserve, as he has noted, will continue to raise interest rates. Now we think about 50 in September. Another 50 in November. And then December 25th before they are finished. This represents 125 basis points of additional increases this year. It seems like the market is anticipating something similar, but the question is how long the Federal Reserve will be able to keep these rates elevated.

The market is certainly skeptical. Prices and cuts in the second half of next year. And we think that's right. We also wonder how sustainable these high levels of short-term interest rates will be. And that is one of the reasons why we see the curve so inverted. It seems like the curve certainly agrees with this notion that the Fed may be able to raise rates today, but that will mean a slowdown tomorrow. And it's not going to be sustained. The Federal Reserve will have to make cuts at some point to prevent the economy from slowing too much.

Mark, I'm glad you mentioned investing. I have the yield curve in front of me right now and I'm looking at over 42 basis points. That's how high the two-year yield is compared to the 10-year yield. This typically portends a recession in just nine months. Where do you see this basically as a predictor of some type of recession? How much time do we have? Does the depth of the yield curve inversion mean some kind of significant slowdown or its magnitude? Therefore, it certainly indicates that the Federal Reserve will not be able to maintain the level of short-term interest rates that the market is currently implying and that we consider clear and unambiguous.

As you will notice, investments often precede recessions, but not always. There's a great phrase in the bond market, something like the yield curve is predicted in 10 of the last five recessions or something like that. So that's not always the case, but it tends to be a good indicator that things will slow down. And what it clearly indicates is that the Federal Reserve will not be able to maintain the very high level of short-term interest rates for that long. And we certainly agree with that. Recession or not, we can debate whether we believe we are headed towards one.

But regardless, the yield curve certainly indicates that the Fed will not be able to maintain these levels for that long. I am a little confused. I have to say that I'm trying to put together this idea that you think the numbers were too high for the jobs report and that they need to come down. He believes the Federal Reserve is going to turn around next year. What's going to turn them around if we see the CPI potentially sitting at even eight point seven percent, which is the consensus that's still well above that 2 percent level? Yes. So we think the labor market right now is very strong.

Inflation is very high. But the most important thing is that what will make the Federal Reserve turn around is that both of those things are going to go down. We believe that the Federal Reserve will be able to generate a slowdown in the labor market. We believe that the tightening of financial conditions that we have already seen is likely causing employers to reconsider the cap and employers to reconsider their hiring plans. We believe that will manifest itself over time. It will also impact the consumer and help reduce the high inflation we see today. And it will allow the labor market to relax to some extent.

But look, those are two fundamental pillars of our opinions. And if we're wrong, then the overall level of rates has to be higher in the economy. But we believe that we will indeed see that slowdown. We don't think it will be that far away. That's what will ultimately allow the Federal Reserve to pause and ultimately move on to rate cuts late next year. OK. So until we get to that point where we have some clarity on whether or not the Fed has accomplished what it set out to do, how much volatility can we still expect to see in the bond market?

Because it has been dramatic to say the least. I know it's been exhausting. I think it's been a grueling 20 22 for everyone, really in the financial markets and especially in the bond market. But we do expect that, as the Federal Reserve sees some signs that the economy is slowing. We think we will see interest rate volatility begin to moderate, at least peak, and eventually decline. The fixed income market actually moved in that direction a bit after the July FOMC meeting, where Powell indicated that they will likely move more slowly once they are above their perceived level of nominal neutral.

We still think the Federal Reserve is predisposed to do that. Having a Fed that ultimately slows down even if that means 50 basis point rate hikes in September or perhaps November will help dampen overall volatility untilthere is more clarity on the overall economic outlook. Look, it's not unusual to see elevated economic volatility and see really mixed messages in the data. When we read this part of a cycle where we are near the end of a broad expansion and we believe that as we see clearer signs that acceleration is upon us, the Fed will be able to signal that they will start to slow things down and, Ultimately, that will reduce implied volatility and create volatility in fixed income.

Okay, so if the overall movement is going to be moderate, what is the trajectory going to be from here? Mark, if you're talking about getting to three and a half, three, three-quarters percent by the end of the year, where does that put the tenth year? Yes. So for our 10-year forecasts, we think they will end the year right around here. We have been on The View that it is trending to end the year at two point seventy five percent and that the curve will probably be at risk of inverting further at least in the short term.

Once again, the Fed signals that it really wants to raise rates to slow the economy and then ultimately you will get the result you want. And that will mean that they will probably cut it further through 2024. Therefore, we think that the trends will stagnate a little at these levels. And we have been encouraging clients to go long because a slowdown is coming. The Fed will succeed and that will only limit the degree of stress they can ultimately achieve. Well, let me ask you a historical question about that. I'm looking at the acceleration of investment, Mark, going back to June 1980.

If we get the velocity of investment that you're talking about, it's Powell as Volker. So look, Powell wants to be like Volcker and wants to ensure price stability. He doesn't necessarily want to engineer an economic slowdown as sharp as the one Volcker needed to achieve. But he will do whatever it takes to make inflation moderate. Now, the good thing is that the market and consumer surveys in general suggest that the Federal Reserve remains credible. I mean look at the tipping market. The tip market is not discounting any concerns about rampant inflation today. Good. We will receive another Amish survey update on Friday.

The most recent reading on the matter suggested that five-year inflation was also expected to be somewhat limited. And because of that, the fact that the Fed is seen as so credible that it actually helps them, they probably don't have to go to the same lengths that Volcker went to. But I think Paul would really appreciate the comparison of him to Volcker if it means he has those inflation-fighting credentials. Mark thanks for the update. Marcos Gurman. It was Bank of America's global investigation with a real caution, I would say, also in stocks and bonds. Futures are up 18 Dow futures are up 116.

The VIX is moving here with a level of 21 which also catches my attention. And yes in the performance space. Wow, three point to three percent. Washington's two-year performance. Libby Cantrell at time 30. This is Bloomberg. Keeping you up to date with news from around the world with the first word on risky visceral screening. President Biden and his party finally got the victory they were waiting for. The Senate passed the historic Democratic fiscal climate and health care bill. The House is expected to approve the measure on Friday. It's a scaled-down version of the $10 trillion plan that progressives have sought for more than a year.

Now the question is whether he can give Democrats a boost ahead of the November legislative elections. Join us. All that military activity in Taiwan continued beyond the drills announced after the visit of the Speaker of the House of Representatives, Nancy Pelosi. The Chinese military says it conducted naval and anti-submarine strike exercises today. Recent drills near Taiwan have been the most provocative in decades and Egypt has mediated to end three days of violence between Israel and Islamic Jihad. The fighting left 44 dead in the Gaza Strip and sent thousands of Israelis to shelters to avoid nearly a thousand rockets fired at Israel.

The confrontation began last week when Israel killed an Islamic Jihad leader. Good good good. For Anderson Electric's waste disposal business and a $3 billion transaction in the business known as In Sync. And Rita makes garbage disposal products, instant hot water faucets and water filters. Whirlpool said last month that demand for appliances has fallen and will likely remain subdued this year. Warren Buffett bought the dip in the second quarter. His Berkshire Hathaway took advantage of the market decline and was a net buyer of stocks, reporting $3.8 billion in purchases that made only a slight dent in its cash drop.

Berkshire had one hundred and five point four billion dollars at the end of June, barely moving from one hundred and six billion at the end of the first quarter. Global news 24 hours a day on air and on Bloomberg Quicktake driven by more than two seven hundred journalists and analysts in 120 countries that they could access. This is revenge. Differences between Taiwan and the mainland must be resolved peacefully. And what we have seen China do in recent years is move away from peacefully resolving differences to doing so coercively and potentially forcefully. Secretary of State Anthony Blinken is touring China.

He has been very, very forceful. It has been interesting to see a first meeting with Mr. Marcos Junior in the Philippines included. It is certainly a historic moment to see Marco take the leadership of the Philippines after many years. About China right now and Lisa read more about China this week. And I was more focused on the kids and you know how they did with South Hampton and your garbage disposal. Yes. The surprising thing about Lisa was that Ferro was in the game. And you know she texted me from the Marmite box while she was trying to understand.

You know I have a ticket for you somehow. My my box. Is it the Marmite box? So it's good to see that. Four to one are the smallest. Make it happen. So, Lisa, why don't you start with Mr. Curran in Hong Kong about the disruption in China? We've also been talking a lot about what's going on with airstrikes in Taiwan or not. The airstrikes in these raids are carried out to send a warning shot in retaliation for Nancy Pelosi's visit to Taiwan and the end ensues. And, of course, our Asian correspondent for everything related to the economy.

The most interesting aspect of the weekend for me was the trade balance data that suggested a record trade surplus for China even though US imports are falling. What gives. Why does this represent strength at a time when all other signs point to weakness in China? So you're right Lisa. It was a surprise. There is no great figure for Chinese exports, as you mentioned, and some of it is attributed to the post-lockdown rebound that is still underway. So we know that you know supply chains have been improving. The factories were once again operational and centralized. So someone has been blamed for that.

There is also talk of solid demand, such as in Southeast Asia, for example in other parts of the region. But still, it doesn't quite fit with the indicators that we're getting into in the future indicators, for example, in the ISE PMI, some of the analysts, I think, were Pantheon today pointing out that, actually, part of this It could be due to China's energy. exports and marking the total number. But regardless of how you look at it, many people are still saying that the good story for goods from China will cool in the second half of this year and will probably cool quite sharply, reflecting global inventories and interest rates. and inflation worldwide.

So you know a big surprise in China's export history, some devil in the details. But I don't think anyone really expects it to stay that strong as we approach the end of this year. Yes, pantheon data highlights that China is exporting a lot of petroleum products to Europe and Japan and other Asian nations. The United States is supposedly a net importer of Russian oil and could be experts in its excellent products and accept arbitration. All that aside, there is a question as to whether the PCC will move away from zero Covid after November. This is something that Joyce Chang was talking about and what some readers were saying in terms of increasing oil demand and increasing some of the uncertainty at the end of the year.

To what extent is Hong Kong a model for this versus an outlier as they move to curb some of the quarantine requirements? Well, that's a great question Lisa. So we had movement under quarantine restrictions in Hong Kong, let's say it has now been reduced to three days in a hotel and then four days of self-monitoring with some conditions attached effectively now. So a headline would say that this is clearly positive for Hong Kong and will help mobility help residents here. But still, like you're still quarantined for three days and the rest of the world, a lot of the rest of the world has moved on.

Much of the rest of the world's financial centers have moved on. There is a debate about how this is happening, how China and allowing Hong Kong to go down this path are using Hong Kong as a kind of petri dish. Well, we do know that from above and as president she came here a few weeks ago. She noted that Hong Kong has some room for maneuver in this regard under the so-called one-country, two-country systems. So perhaps the authorities here are using some leeway, but there is a view that China is also comfortably watching what happens here as a model for its own eventual exit.

And a completely unfair question: Does China have a doctor who found Chee? I mean, who do you know, Butch CASSIDY and the Sundance Kid? Who are these guys who are really making Covid policy in China? They have their own prominent scientists to have the head of their own disease agency, just as the United States and others do, Tom said. And some of these officials, both current and former, have a fairly high profile on China's social media. But of course the big debate with China is fine, since it has to do with the scientific and health aspect.

But how much oceanic television has been driven by politics? And the policy is that China has reaped great dividends. A public health dividend and a Covid 0 economic dividend this year, at least this year, has been a great testament. But at the same time they are at a point where, if they let it pass, we will say like the Western world. So to speak, it's gone. So obviously they're going to face a pretty big wave of disruptive eggs. And, of course, the risk of death that this entails. But above all, we all know the story that the big Congress is the most important political event in decades.

The group says this will take place sometime later this year, perhaps in November. Obviously the authorities do not want a public health disaster to occur before then. So I think that's the transit point you need to make. The scientists are there. They have their opinion. But I think the main driver of this right now seems to be more politics than anything else. Well, and we know that the pandemic is not the only political problem for Xi Jinping. There is also turmoil in the real estate sector and how much more stimulus and support measures can realistically be expected before Congress considering that is the situation that seems to be deteriorating rapidly every day.

It does seem like it will be somewhat warm. I mean the statements we've heard in the survey that appear in other official comments indicate that the government is willing to tolerate some economic pain as long as it can keep things somewhat stable. So, do you know how to put a floor in the housing sector, which, as you say, is evidently not clear enough to have been done yet? But they are trying to put a floor in that sector, put a floor in consumer confidence and keep things going. Economists talk about a growth rate of perhaps 4 percent.

It is obviously much lower than it has been and will be well below the government's target, which is unusual. But still, even though it prevents the economy from falling into a hole by not receiving signals, it is a narrative of the old growth model that people talk about in China, where the government comes in and puts a lot of money into the economy, but spends left and right, perhaps on infrastructure. particularly as it has done in the past. That particular cycle doesn't feel like you're coming into town trying to manage or trying to navigate and you're trying not to fall further into debt reduction.

That is a problem for China's economy. And lotsThank you for the report on your evening and for coming with us here from Hong Kong. Lisa, in all of your weekend reading and as you dive into a week, particularly with Wednesday's inflation reports, there may be one phrase that stands out. This is on Peter Boockvar on Bleakly Advisory and this is on BBC Lisa. And this is Jet Blue boss Robin Hayes saying I now need to overhire. For me it is a fascinating phrase. Yes. About the labor economy that will come in the salary dynamics, basically talking about the big resignation, talking about attrition, talking about how, to have the qualified people they need, they can keep their planes operational so that they don't get stuck on the runway . to Atlanta instead of Puerto Rico it is necessary to have a bench full of potential people.

And you're seeing this across the board. How many people are companies going to avoid laying off during the recession in order to get all this trade? Mr. Hayes says to overhire. Absolutely fascinating. That quote just stopped me in my tracks. Thanks Peter Bouckaert for that. Futures went up 18 and became 24. Well, I guess it's a bull market. This is Bloomberg. Good day. It is important to recognize that when you are in bear markets, they do not fall directly. They have a ratchet. This valley could continue a little longer. But we pursue that and the markets seem to be more convinced that inflation is close to a peak.

Core inflation, which really represents how tight the domestic economy is, continues to rise. I think inflation is going to slow down organically. This is Bloomberg Watch with Tom Keene Jonathan Ferro and Lisa Abramowicz. It will merge on Monday ahead of CPI on Wednesday and the University of Michigan on Friday from New York City for a worldwide audience. Good day. This is Bloomberg Surveillance Tom Keene Jonathan Ferro Lisa Abramowicz John Farrell was out all week, not just today, and Kelly Lyons a lot. We are grateful to have her in the studio all week, not just today, and Tom Keene, where I am amazed at the stubbornness of this rally.

Despite the time I listen to you. It sounds like the sadness of Bram's people. Know what it is. Let's see it now. The persistence of the rebound is notable. As of June 16, P Even we had one point two percent. Sorry Lisa. Futures up 23. Yes. Or they will run out of triple cash leverage. There is no US Open. The wall of concern is to have legitimacy beyond September, beyond October, beyond November, when we begin to evaluate the Federal Reserve's turn. We begin to assess whether the labor market can retain the strength to see ambiguity in Jackson Hole.

And the ambiguity is framed in the Federal Reserve's parlor game, which is a terminal rate of two and a half two point seventy-five percent. And exit. Anna Wong, of Bloomberg Economics, between five and four point seventy-five percent. I'm referring to the cleverness here of Lisa in Q4. We have never seen it. Yes. Especially at a time when oil prices have been swinging so wildly. And I have to say, Kaylie, it's been one of the least told stories of the last few weeks with this rally. The idea that oil went from well above $100 a barrel, no matter how you split it, Brent or WTI, to below $90 is now heading even further down at the $9 high.

How much do we see that fueling this perception of falling inflation? Well, the headline yes, absolutely. And the same goes for food prices, which have also dropped substantially. Then it becomes the core of those tough price pressures that the Fed is going to have to deal with because what started out just as gasoline and groceries has expanded in this economy. This is something the Federal Reserve continually says we are not done trying to combat. We're going to continue to push to reduce inflation, which raises the question of whether the market is wrong if the Fed simply has some kind of communication problem.

But the yield curve inverted 43 basis points at this point on Tuesday. Tom, what did you do with him? Read a sign that basically says that by the end of this year we are going to end those hundred and twenty dollars a barrel and that the SPDR will withdraw. You are going to bring China back online because they are going to get rid of zero Covid to some extent or at least soften it and suddenly the scene changes. Let's take a moment, Elise, because I think this is really important here. Reaffirm who. Jeff Curry with a 120-ish call for 2023 also at Goldman Sachs.

The main complaint of those seeking higher oil prices is on the demand side. It is not the romance of what Saudi Arabia is doing in Russia. You already know. It's about demand and, in particular, emerging market demand. Covid will do it and China will do better in some ways and that will increase oil demand. That is the core of his thesis. Well, now we're watching how that plays out in this persistent earnings momentum. And just going over some of the gains over time that he was talking about earlier. We're seeing it continue to rise heading into the open, with the Nasdaq up seven-tenths of a percent.

The S&P is doing a little less well, but it's still up almost six-tenths of a percent in this Monday rally that you really have to get into. We're really deepening our understanding of Tom Keene's garbage disposal, which he owns, and Whirlpool's purchase of Amazon. We are seeing that the 10 years continue to decrease. And Tom, you've been talking about this two point seven nine percent at a time where the two years well above the 12 percent curve inversion feed into some of that now for a single, more important data point. Before we get to Matt, generally speaking, Lisa has 43 basis points.

Let me define that right now for those outside of global Wall Street. The difference in performance between the two years and the 10 years, which is point four three percentage points, Lisa knows you move the decimal point. She did it years ago in Chicago constitutional law. Lisa help me move. Guy Johnson NYSE is over hundreds and 43 basis points on him is what Randy Kroszner would say. Yeah, well, what we're looking at now is a little less than half a percentage point. That's the shaking of the wall. When you walked into Booth School years ago, the walls shook.

I'm not sure where to go with that Tom. I really don't remember it. But I will say that we have someone who can look back on that yield curve and give us an idea of ​​how low it can go and how negative, how inverted and what the meaning behind it is. Covering all things fixed income, Matt Burrell is head of investment grade North America and senior portfolio manager at INVESCO. And Matt, how much are you looking at this yield curve and feeling a little uncomfortable with your investment given the optimism that you're seeing in earnings and certainly in the credit space as well as stocks?

Good morning, Lee said it's been a really interesting time for rates and I always find it funny when our traders refer to days like today as seeing further flattening of the curve. And what I'm saying is that it's actually flattening out or we're just getting more invested. Because at this point, when you are already negative, you are actually not flat and you will become even more negative. So when I look at the rate curve, it tells me that over a one-year period the Fed has more work to do, but over a longer period of time people believe that the Fed is going to get things done and we'll see bonds from the Fed. 10-year Treasury.

Kind of stay anchored around these 2 highs every time we get to 3 percent. We think it is a good period to buy the economy in general. I'm actually still doing pretty well. The numbers you saw on Friday were good. And the big question now is whether it will always be good. Good. And I think he is absolutely right. Right now, for the Fed, what is good for the credit market is good. And we didn't want jobs to plummet. We didn't want the economy to collapse. And we had a really good number on Friday, which keeps us pretty good at things.

So what gives people the conviction that we're going to get back down to 2 percent so quickly, which is what you're seeing in the Fed funds futures and what you're seeing at least in the future interest rate swaps. How confident are you that they will do it without collapsing the economy? Basically, the fundamentals of why credit maintains and recovers to such an extent. So we're seeing some interesting things, particularly from corporations, which you would normally expect to start pulling back right now, start cutting jobs and stop investing. But we are actually seeing corporations investing ex capital in certain particular places.

Good. It's going up. So, we're looking at inventory management spending, we're looking at supply chain spending, we're looking at renewable energy spending and batteries and things like that. So there are a lot of different ways that companies spend money, which is good because otherwise you would start to feel like this inflation was going to be a very difficult time for them to overcome. But they are spending money to cut costs. And once this finally happens, that will flow. It will be good in the long run for overall inflation. And we feel that the Federal Reserve is going to be aggressive.

They will be ahead of this. The economy is going to slow down, but not enough to see demand for your clip. You will see more of the supply coming back into balance with overall demand. On the topic of the offering, what are your expectations for the issuance as we move into the rest of the year? Mate. So corporate issuance has been really strong and investment grade over the last month has been basically nonexistent high yield just last week. On Thursday we had the big metal business. Yes, that is a big market. The first time they issued 10 billion dollars, demand exceeded 30 billion dollars.

So you get a new high name, a high rated name performed very, very well from a demand standpoint. The high performance market. Supply in the high-yield market is down about 70 percent so far this year. So basically it's been close. We didn't see two deals at the end of last week to sign another one. So maybe we're starting to see things thaw. I think there's enough demand now to start seeing offerings in your market on the investment grade side. It has been mainly the banks. The banks keep coming and have really been flooding the market, which is adding interesting value.

It's kind of a value trap all year round because they keep issuing more. But in general, I would say that at some point banks will run out of issuing issues and we should start to see credit spreads. They are firm. OK. And the last question, just as we're talking about a Federal Reserve that you say is going to continue to be aggressive, is the specter of a recession looming in the future bringing defaults in this cycle, or do you think the risk of that happening? Is it relatively low? given the position of strength from which we came.

So I think we won't see significant drops. We really won't see any downgrades, probably until early 2023. And that goes back to my previous statement. Good is good. You know that companies do not fail to meet their obligations because there is too much employment. That just doesn't happen. So we're in a period of time where yes, it's not that Goldilocks would prefer to see wage inflation be a little bit lower. But as corporations invest and hire, that won't lead to defaults. Now if the power were to drop completely, you know they've been in history, but we also wanted a much better place in power than we had in 2015 and 2018.

Matt Brill thank you very much. I really appreciated it this morning. One member collaborates with Invesco. Thanks again Lisa. This is below the headlines, but it's really important to the Apple community. Our Mark Gurman has the authority when it comes to reporting tone and has an absolute tour de force in his message that went viral this morning. In tech, Lisa only goes to the cut of the two brats, I mean the kids at Abram's house, the new thing I see is scheduled for September, OK. I think that's the news you and I need to know if we're being watched.

I just need it right now. You know, I look at September and there's AOS I. But here Lisa is a really big deal. Germond put all his radar on something called a stage director. This is a mystery. The stage manager is a big mystery in the Apple Q3 Q4 and this is a compendium of software that is, by the way, problematic. It's the first time I've heard of it. Stage director. Maybe he's a

surveillance

stage manager. Road. He doesn't beat around the bush. He says this is disputed. They are fighting. Well, this is the right question.

How much is part of this?weakening that we have seen in certain sales that Apple has produced? To what extent is this due to certain models not being as popular in the face of a secular slowdown in those purchases? They have held up very well. They exceeded expectations. But that sale in China where the prices of certain products dropped was really notable for that very reason. So how much for future products can be the home run that the previous ones make a day to check here. You know, Oil s 88 27 and West Texas Intermediate, we need the stock market to be green on the screen.

Brando has long futures up 24. Dow futures up 151. We are up seven tenths of a percent. NASDAQ fell below the VIX twenty-one point forty-nine. This is Bloomberg. Stay with us. Stay up to date with news from around the world with the password. I'm Jessica Gupta. The Senate passed a landmark fiscal climate and health care bill, giving President Biden a victory on his domestic agenda. Still, the measure is a shadow of the $10 trillion plan that progressives hoped for more than a year ago. The bill now moves to the House, where the Democratic majority is expected to approve it on Friday.

A surprise change at the top of the private equity giant Carlyle Group. CEO Kaesong Lee has resigned. Lee's five-year employment contract was set to expire at the end of the year. Bloomberg learned that Lee and Carl ISE's board of directors had clashed over the contract in recent discussions. Company co-founder Bill Conway will take over as interim CEO. Hong Kong has reduced the amount of time travelers entering the city must spend in hotel quarantine from seven days to three. This is a greater-than-expected relaxation of its strict travel restrictions. But Hong Kong remains an outlier in a world that has largely returned to pre-pandemic movement.

Pfizer agreed to buy global blood therapies in a deal valued at around $5.4 billion. That would give Pfizer one of the few approved treatments for sickle cell anemia. The disorder affects 20 million people worldwide, including many in Whirlpool Rabbi Emmerson Electric's waste disposal business and a $3 billion transaction. The company known as incinerator makes products for garbage disposal. Instant hot water taps are moved to filters. Whirlpool said last month that demand for appliances has declined and will likely remain subdued this year. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than two seven hundred journalists and analysts and more than 120 countries and which could reach 10.

This is Quebec. Now we are seeing unambiguous wage inflation after this. There is no acceleration in this number after the ECI after the Atlanta Fed. By all reasonable measures of core inflation, we have inflation of plus or minus 5 percent. The path from 9 percent to the mystery of 2 percent. When Lawrence Summers, former Secretary of the Treasury of the United States, president of Harvard, I must also mention a modest knowledge of economics and talk there about the glide path and what we do. Choose your number 5 percent or 6 percent, etc. Lisa Abramowicz. Tom Keene. Jonathan Ferro free today. I guess at the end of the week I thought it would just be one day hauls.

What do I know? Kailey Leinz is with us right now. Let's recalibrate Wednesday's inflation report with Dana Peterson. She is the chief economist of the Conference Board and has all the ability of the Conference Board to analyze a different set of data that exists. And I want to go. Dana, I know Lisa is really focused on working for the economy, but I want to heed your call for the Federal Reserve to put restrictions in place after Jackson Hole. Are we going to calibrate for September 1 after Jackson Hole? Do we just need to get to Wyoming before we can watch the Federal Reserve meeting?

Well, Wyoming is certainly beautiful, but I think the Fed is certainly data driven. Let's get several more readings on inflation. Another employment report certainly updates us on GDP. And I think the Fed will look at all of these indicators to determine whether or not it needs to raise another 75 or 50 basis points. But I think whatever it is, the Fed will continue to raise interest rates until they reach a level that's really close to inflation. Let's do the math here. If it's 175 rhythm movements, 250 rhythm movements, which is a stick, I understand it. But what is the. So what.

Whether one move or two moves is a precursor to restriction. It matters. Well, I think just going above 3 percent in the Fed funds rate is a restriction. And you know we can sit down and discuss it. But I think the fact that we don't do that in policing. The Federal Reserve has been raising rates so aggressively and so quickly. You know you will certainly feel restrictive. We are already seeing that this is reflected in the GDP data. Dana, do you buy the data we get? On Friday we heard from Peter Shear. I just said before that the data does not seem to be consistent with some of the specific granular inputs on the ground.

So do you think a much lower revision will give a less rosy picture of the labor market? Well, I mean it is. I mean how much you can revise down. This is a staggering number recorded. More than half a million jobs were created in July. It would be a huge downward vision. And whatever your visions are, they will probably be minor. What the labor market tells us is that we still have a very strong labor market. Many people are seeing their salaries increase. Many people are being hired, especially those in-person services that have difficulty finding workers.

It is truly surprising what we are seeing. And I don't think the numbers lie to us. So let's talk about what we heard from Peter Boockvar, which I thought was really fascinating: Tom mentioned that people overhire and that companies are scarred by what happened after the pandemic, when they laid off a lot of people and then had to hire staff that simply weren't there. To what extent will that be a persistent theme throughout what happens in the next cycle? We believe the labor shortage is here to stay. Much of its demographic. There are more people retiring from the labor market than there are young people available to fill those jobs.

We also have very strict immigration policies in the US that make it very difficult to find labor outside the country. And there are still many people who had problems with childcare. Many people don't want to have two out of every three jobs. That's why they are trying to find jobs with higher salaries. We think this is going to be a problem even beyond what we think will be a brief recession in the U.S. Well, so what does that mean for the persistence of upward pressure on wages? Well, certainly, if inflation remains elevated and the Federal Reserve struggles to return to the 2 percent inflation target, we believe there is probably already the possibility of a wage price spiral when comparing the CCP deflator to the ICE.

They both move together. And that's really a challenge that the Federal Reserve is trying to avoid with its actions. But obviously their actions have a delayed effect. It will take a while for us to see the real impact, as evidenced by how strong Friday's payrolls report was. So can the Fed act fast enough to be able to get it under control and under control? Or are we going to be looking at a situation where this finally ends up out of the hands of the Federal Reserve? Well, I think the Federal Reserve is acting as quickly as it can.

I mean, aside from raising rates every month, I've certainly been in every meeting since March. They have addressed that interest rates have increased. And I think the Federal Reserve is doing what it can. But, as you said, monetary policy has a lagging effect. We'll first look at the effects on things like mortgage rates and the housing market and then consumer spending and then inflation. And so it will take some time. But I know we think the Fed can probably do its job and do things in terms of bringing out inflation. Dani Burger do it. Oh yeah.

Are any rent or home ownership measures getting in the way of your plan? I mean, how can housing be such a costly, persistent crisis that it simply hinders your best outcomes? Well Shirley, housing is a big driver of inflation right now for consumers in the US and certainly as home prices continue to push up new and existing home valuations. That will appear in yard 0 and of course will be rented with a delay. And that really presents the challenge for the Federal Reserve. Dan, I have to leave it there. Dana Petersen thank you very much. I appreciate it a lot.

Where the least is the conference panel, Liz, I presented last week. For me it is a single and only major problem. It's not about the haves and the have-nots. It's about both. It's about where you put your bedroom, where you put your living room. Where will you live. And it is a national crisis. We saw home prices rise substantially. They are starting to cool down. But there is a lag effect in the time it takes for that girl to rent. And the more unaffordable housing prices have become, especially with mortgage rates, the more people want to rent, which is why they can continue to go higher and higher before reaching that breaking point.

You're seeing it not just in places like New York City but all over the country. I mean, Kelly, I'm looking at the bank rate right here and I'm guessing it's gone up. But I regret that in February we were between 4 percent and 6 percent and we have fallen powerfully to five point six percent. That's not enough. Yes, and it's still significantly higher than if you were looking to buy a home six months ago. It comes back to the issue of affordability. And while we're having that conversation with Dana about salaries, people are demanding higher salaries. People don't earn enough to keep up with inflation, even with the wage increases we're seeing.

And at what point, obviously, we're starting to see that reflected in the housing data. But what's the point of that starting to appear in everything else? People just aren't as tolerant of the higher prices they face. Sorry, it's a round number. The Nasdaq has risen a hundred points. Thirteen solid 13,000 Dow points. It's not like the Dow Jones Industrial Average. How much is theBaja a Tom. It's up. The Dow Jones is up 141. But I want to say I'm sorry if I'm not in it. It is a bull market. This is Bloomberg. Bloomberg monitors a bull market. Lisa Abramowicz is with us to give us team coverage here with Nasdaq futures which is a non-taxable site.

Sorry, Lisa, it melted. Ferro would say it's a meltdown. You are, you are British. British accent Oh God. OK. You can write about his Marmite references in a British accent. But I would say that it is a BOVESPA. It is an advantage. I would say this is a persistent rise in terms of valuations despite all the pessimism. Mike Wilson, but also Goldman Sachs analysts, come out and say that profit margins are going to shrink. So we're seeing the S&P up a lot of cents per cent on the NASDAQ eight cents today, even with the two-year yields going up so significantly and going up so significantly.

Ryan hands Kailey Leinz's emails to Joe Weisenthal and says, "Hey, stupid West Texas under 88." I mean, that gets your attention. Eighty-seven is not eighty-eight dollars per barrel. It absolutely is, especially when we see gas prices going down in the United States for 50 days now. Tom, obviously, that helps the Biden administration politically. The question is how sustainable it is. When before there were people who told us that oil was going to rise to $120 a barrel again because supply is still very limited. That is the question. Futures are up twenty-six. It's always an important conversation with Libby Cantrell, PIMCO's head of public policy strategy.

But this morning, after the landmark legislation, she's also really critical. We are through. Libby Cantrell could join us here at our global headquarters. Libby, I want to get to the point. How do you process thousands of pages of legislation? Well, that's a good question. And fortunately, Washington is quite adept at doing so. Most bills tend to be hundreds, if not thousands, of pages. But I think this underscores how quickly this bill was able to be put together to pass the Senate. Both passed the House later this week and quickly signed into law is that a lot of these ideas have actually been percolating inWashington for years.

Let's consider drug prices in terms of allowing Medicare to negotiate drug prices with drug companies. That's a concept that has literally been percolating while I was in Congress in 2003. So, in a way, a lot of these ideas have already been engraved. However, we can implement two laws immediately. The big question, of course, was achieving that unity, that unanimity among those 50 senators on the question I asked Jack Fitzpatrick. Can Republicans take it away if they win the House and Senate? Can you remove it? It will be very difficult. And I think what we've seen, even with the Trump tax cuts, is that it's very difficult to take away things to take away benefits, particularly on something like drug pricing for Medicare.

That's something that works incredibly well. More than 80 percent of Americans support that provision. Older people especially tend to vote for what is difficult for them to take away from them. And then on the climate issue, as a reminder, 400 billion dollars of its tax incentives for the production and consumption of this type of clean energy. Good. You know all that is also quite difficult to eliminate. And most of them last 10 years. Then I looked at combining Medicare and Medicaid for the federal budget. Thanks Robert Jamison for helping from Washington and not with a 65 and LBJ, but approximately with Nixon.

We've gone from 1 percent of GDP and we're actually getting closer to 6 percent of GDP for those two programs. I did not know that. This is really fascinating and one of the reasons it's been such a big problem. And of course, I looked at the drug company's stock before I openly thought it would tank because it was going to get less revenue from Medicare. They are not Libby, which raises the question of what the tangible effect of this bill will be on investment. Even if you know that David Sour was earlier calling out some of the concerns about taxes on stock buybacks as well as the minimum corporate tax imposed.

Are there any companies in a full reading that are not being discounted or is this not as significant a move in terms of profit reduction as some would say? Is Lisa your comment on pharmaceutical companies? And they actually got a little lifeline over the weekend because one of the most important provisions that would have been included in the bill that would have required pharmaceutical companies to negotiate with private insurers over pharmaceutical pricing was actually removed from the bill. law due to some parliamentary verbiage did not qualify for the so-called reconciliation bill. Maybe that's why we're seeing a bit of support from those with those names this morning.

But overall I don't think we should overstate the impact of this bill. I think there will invariably be winners and losers, like the pharmaceutical industry, obviously because of some of those provisions. Even so, some of the companies that have been able to take advantage of this type of accounting income still persist in technology. The corporate tax rate as an arbitrage will also lose out. And then you know the big winners, obviously, renewables, which are the renewables that are really discounted. So I think the macro impact or even the sectoral impact has probably already been largely priced in.

But in general and in my world, I don't think the political impact has been taken into account. I think this is a big help to the Democrats who really needed it. Good. The price of gasoline and Joe Biden's disapproval ratings on the generic ballot have been major obstacles for Democrats heading into the midterm elections. And here they are. Here they can come in at the last minute and really campaign on the fact that they can govern and they can get a big part of their agenda that they campaigned on in 2020, which was the climate part. So, Libby, what's the market read in terms of whether the Democrats keep the Senate?

If the Democrats don't lose much of the House, which seems to be the sentiment that is being increasingly speculated about. Yes. So I think at least the widespread view that the Democrats will lose the House is probably correct. If you look at history since World War II, the party in power has lost an average of 25 seats in the House. He does it too. The past is prologue. Democrats face an uphill battle, but margins there do count. You know, I think our view is that they could lose maybe as few as 10 seats or as many as 50 seats, depending on voter enthusiasm.

What's really happening in sort of October is the end of the November buildup. And that margin does matter because, in the long run, that means they'll lose fewer seats and then they can take back the House in 2024. But in the Senate, and we've been saying this for a while, it's much more important. more like a jump between two. The Senate tends not to be such a national election because, of course, only a third of the Senate seats are up for re-election. In fact, Republicans have had a tougher map this cycle. And some of the candidates running on the Republican ticket in battleground states like Georgia and Pennsylvania, perhaps even Ohio, are less experienced, greener and, as a result, perhaps less likely to win, even when the state national mood is really positive. much more favorable to Republicans.

So I think the bottom line is that the House will probably lose for Democrats, at least at this point. But the margin does matter. The Senate is much more of a toss-up. Finally, in terms of the kind of political implications, as long as Republicans take back just one chamber, that means Biden's legislative agenda for the next two years is probably dead or at least frozen for a while. There is still some chance of bipartisan legislation being adopted around technology and some other areas, but it is likely frozen. So from a market perspective, that's really what people will focus on.

But again, people like me are focusing a little bit on the long term and kind of reading for 2024 in particular. Well, Libby, you mentioned voter enthusiasm a moment ago. I wonder if there is a lesson to be learned from Kansas and the abortion vote there, with the turnout we saw. Is the galvanizing effect that some social issues like abortion can actually have on voters approaching midterms, beyond just the macroeconomic environment, being underestimated? Yes. Again, this is another piece of good news that Democrats have had over the last few weeks, of course. Voter turnout in Kansas was much higher than expected.

That ballot initiative lost by almost 20 points. Now, there are some idiosyncrasies that I think are perhaps difficult to extrapolate from Kansas on a national level. But I think that's what I think it is for Democrats there. His big conclusion is that this is a galvanized and galvanizing issue. Now, an important distinction, of course, is that there was a particular issue that was on the ballot versus simply what is known because in midterm elections, which are more general, more candidates appear on the ballot quickly. And this is completely unfair but it is unfair. Monday is fine, we have this huge legislation.

Is this the window for President Biden to say that he is a one-term president? I highly doubt he will do that. Yes, I mean the theory theoretically. Sure. I think he won't do that, especially before the midterm elections. But Tom's a good point because he'll probably have to decide if he's actually going to run for 2024. Soon after. Remember that the debates begin in June of next year. So we need to have a pretty good idea. It is as if the British were pharaohs upon returning if you are referring to that British republic. Come on, Lisa. The British like to do it earlier.

Trusting and all that and living is putting pressure. With debate you know that the debate started in June. Yes ok. Yes. Twenty nineteen. Ready. How many people will be on stage? Who knows. Two people. Look, I think if I believe President Biden doesn't win, we're going to see a very open, potentially messy, rock-and-roll primary on the Democratic side. And the same thing about the Republicans last time it was not good. Exactly. I think it will be the last time I am alone on one side. Good. So let's go. The British Butlers. I know. But it's also a parliamentary system, Tom.

You know it. I mean this is what parliament already knows. Many things really like. If I dont know. Thank you Isabel. Value that. It's not. No, it is not a parliamentary system. So you want a road trip to London. That. Are you serious. HARLOW Fairer parliamentary situation in Myanmar. Let's go with mom. Let's go to them. I'm saying let's go with the mermaid. Lets go to the market. Sorry Lisa. The biggest story today is a negative 44. Reversal beeps in the 2s 10. I mean, it's screaming the way it's heading towards 50 basis points. We have just gone through miseries of prayer.

Ask for a 40 basis point investment and you will see that the two-year yield continues to rise and the 10-year yield continues to fall, at least on a relative basis. So we're talking about that. Coming soon to the Open with Michael Cushman, global fixed income CIO at Morgan Stanley. We also have a host of other guests, including Stuart Kizer, leaving to go to their other show. It's by John Farrow. I'm writing A Monkey Goes on Capri. Airbus is the open one. If wonderful. Kailey Leinz and Tom Keene and Remo too. Stay with us. Keeping you up to date with news from around the world with the first answers you get about President Biden and his party finally winning.

They've been waiting for the Senate to pass Democrats' landmark fiscal climate and health care bill. The House is expected to approve the measure on Friday. It's a scaled-down version of the $10 trillion plan that progressives had sought more than a year ago. Now the question is whether he can give Democrats a boost ahead of the November legislative elections. China indicated that military activity around Taiwan was continuing after exercises announced following the visit of House Speaker Nancy Pelosi. The Chinese military says it conducted naval and anti-submarine strike exercises today. The recent maneuvers near Taiwan have been the most provocative in decades.

And Russia has told diplomats it is ready to host international observers at a Ukrainian nuclear power plant that was attacked last week. United Nations atomic inspectors have said there is a very real risk of a nuclear disaster at the plant. Ukraine still believes there are around 500 Russian soldiers in and around the site. And the largest meat companies in the United States are affected by inflation. This is hurting sales of beef and chicken. Tyson Foods reported quarterly earnings that missed estimates. The company says higher prices are leading shoppers to opt for cheaper cuts and limit restaurant visits.

And Softbank CEO Masayoshi Son promises widespread cost cutting after a record $23.4 billion loss. The Tokyo-based company lost large amounts of that money in its Vision Fund investment arm, depressing the value of holdings such as DO Rush and Kupang. Frank has also lost over six billion dollars to the weak. Again, globally it's 24 hours a day over and over again. Bloomberg Quicktake powered by more than two seven hundred journalists and analysts and more than 120 countries. I'm sure you could come back to this. Yes, headline inflation will fall primarily because energy prices will fall, but core inflation, which really represents how tight the national economy is, continues to rise.

And don't think we've reached the top on that. Ellen Zentner Fascinating. With Morgan Stanley dovetailing Mike Wilson's caution and his measurement of the undestroyed U.S. economy but everyone on pause on Friday for a jobs report. Lisa, we haven't talked enough about that now. I mean, I'm sorry 500 or a thousand were while her and Caylee. I'm sorry. I'm clearly exhausted here this morning. Ferrell a day trip and I'm devastated. Caylee 500000 plus is an amazing statistic. It was that it exceeded expectations. There was also higher-than-expected wage growth. Tom, that's a strong labor market that in theory gives the Fed permission to be as aggressive as it says it will be in reducing inflation.

Making the reading we get on Wednesday and the core CPI in particular even more crucial. I don't even know why we are here today or tomorrow. We should arrive on Wednesday. I think it has been interesting. And again there is a little Merger Monday theme and people see a frozen social look at a set of smaller transactions andnow a bigger transaction. And I mean a bigger transaction has been the amount. Well, let's stop right now. We have the president here in Robert after Covid, where he and Dr. Biden will board Marine One and go up to Delaware Bay and transfer from Rehoboth to Dover Air Force Base for a sombre trip to Kentucky.

All the challenges you've seen in Kentucky and the flooding here. Perhaps Senator McConnell, after this important legislation, will greet the president to see that too. The president over Marine One in Delaware right now is not over Marine One, but someone who is looking at the strong dollar that Marine One can afford. Star Meyer, head of research and effects strategy at HSBC. And I won't beat around the bush: HSBC, with absolute leadership in terms of a strong and resilient dollar in recent years. When will the dollar surrender? Not yet. Not yet. And it is interesting. There have been a few times where people have tried to say that maximum inflation is maximum economics.

That's how it is. And you know they were wrong on Friday. It is possible that this Wednesday they will be wrong again regarding the US CPI. But all we hear from the Federal Reserve is to be patient. We want to see the inflation figures. We need them to come down. And yes, I think they are calling it early. Lisa Kelly has some important questions here. But you know, what I would really like to focus on is the effect of this resilient dollar on E. Hong Kong's HSBC has a huge view on E. How does EMI survive a resilient or even stronger dollar?

This is a really complicated environment for GM because there is a strong dollar, there is a tightening by the Federal Reserve and there is also a global economic slowdown. As you know, many times in the past we have seen the Federal Reserve strengthen its economic strength and not turn it into global economic weakness. So this is a really problematic combination for emerging market currencies. You can't find a couple of local winners, but as a universe, you know it's a very difficult environment for them. To me, Lisa Kelly is why Damian says they are so important right now.

I mean, I really can't say enough about it. Yes. His work at Bloomberg Intelligence is definitely crucial coverage right now, Tom. Lisa Kailey Leinz I'm enjoying my new name. Daria, when we talk about the dollar, is it about the strength of the dollar or the weakness of everything else? That is the backbone of your calling. It's a very good decision. Yeah, well, it seems like it's all about the dollar, right? Every conversation we have about currencies, with the odd exception, the Bank of England drags its feet and the ECB intervenes too. But we always come back to the Federal Reserve.

We return to the non-agricultural sector as we return to the US CPI. In that sense, I think the dollar is at the center of evaluating the effects. The second thing, and I think it's something that people are getting wrong, is that the dollar is the core of the cold. That doesn't mean that the US economy itself is at the core because we have to think about what's happening with economic growth outside the US, what's happening with real incomes outside the US. US and it is that global slowdown that is supporting the dollar even though the US economy is also slowing.

And that is the mistake that the dollar can make. They have been saying that the American economy is going to slow down. The Federal Reserve will have to stop the dollar's slowdown. But the reality is that the dollar does well when the global economy is under pressure. Well, of course, one of those economies under pressure is actually the Eurozone and also the United Kingdom. You mentioned the BSE and the ECB. Realistically, any increase from those central banks. Can they support the currency if they are weakening substantially? Well, the first question is yes. I think we'll do more hiking.

I think they recognize that they have to do something to reduce inflation, but it doesn't translate in the traditional way into monetary policy. I would say no because, as you point out, they are doing it because of economic weakness. But actually, regarding the Bank of England, frankly, I think they have been sincere. And saying, "Look, if we want to reduce inflation," the side effect of that is probably going to be unpleasant, it's going to be a prolonged recession. Everyone else in the G10 tells us that we are going to make inflation go down. We're going to settle for the soft landing.

Please, do not worry. I mean, maybe it's the right thing to do, but that's it. You know since then that it is a narrow path, but everyone predicts that you will land on this narrow path. So, in my opinion, congratulations to the Bank of England for being honest. Starting a course won't help. Good. But I think it sets expectations perhaps more realistically. Yes. At least they are being honest. Obviously we have already seen the parity between the euro and the dollar. Do you realistically think we could see it on the table? Good. I don't think we'll get that low.

I mean everything I would love to do because I get paid in dollars and I have kids in the UK, but it won't be as generous a plant for me. You know that the dollar is overvalued or at least rich against various currencies. Euro. I think you know that we can get below the 95 cent parity without that valuation. The elastic band is particularly unpleasant. But to talk about parity compared to cable would be an exaggeration. I mean maybe 115 116 it's plausible, but I don't think we'll get much further. Not far. You already know some calamity. The difference in this conversation is that we're free-floating back to the crises of the '90s, except it's not.

Does the renminbi float freely within its band or is it fixed within its band? He is a teenager and let me explain. You have a teenage daughter. So you know quick jobs taking notes. Daria, you know that China wants to have a free floating currency, an internationalized and liberalized currency. But, as a teenager, you want to go out into the world and experience the world. But if they misbehave, if you leave, and if they misbehave, they will punish you, you know, and that's what happened. So if they are made to think the forex market is misbehaving, they massage, then dodge, then grind the coin.

I would say that lately the renminbi has for the most part been left to its own devices. Yes. And behave and. And it's been important because it's been a somewhat useful anchor, at least in the Asian context. But I think maybe we expect a little more from the Chinese economy. Remember that three months ago there was a lot of talk about an acceleration policy in the second semester. And that's kind of like. I mean, where are you and HSBC very quickly? Where do you and HSBC propose a framework in which China does not gain escape velocity but at least moves the vector of GDP growth?

Well, I think it's already happening on a small scale, but it's less on a large scale than people might have anticipated. It is very oriented towards flexibility. And then we're not going to have that great masterpiece. Good. Well, here's the big encouragement. And, of course, we are not understanding that, but we are understanding this continued erosion of growth expectations in other parts of the world. So, net, everything, I mean, it's like a lower following. Kelly Lisa John. I mean Mandarin, I mean Hong Kong, with the age of the HSBC team this could work well in Hong Kong.

I think that could be the dream team. The dream team. Steve Major, Darryl Mayor, the rest here at the Mandarin and Harper Lee Kelly. I think it works, you know? Alright. Road trip, road transport, some captain's bar. There we have it, Amara. Thank you so much. With HSBC futures up 27. Good morning.