Transcripts For BLOOMBERG Bloomberg 20240703

Market is positive by 0. 2 percent on the s p 500. Hours away from chairman powell and the News Conference. Tom it is a different it is changed outlook to the press conference that it was 48 hours boko ago. Jon it is not seven, it is six. It is not seven. The bad news, it is 6 inflation in the u. K. Lisa this is a positive but how much of a positive. The key distinction is the core measure came in much more than expected so stripping out food and energy, how much will we be talking about the difference between core and what you feel when you go to the store . Tom we are there when we are slicing and dicey like David Rosenberg. What you do with inflation and disinflation but the Central Banks torah centralbank story with me jon the highs going into this bad decision, crude we are right their own crude so the headline versus core conversation, how do they navigate that in the News Conference . Lisa at a certain point, oil feeds into that, the question is how much is this driven by demand . Can you be bullish on oil without being bullish on the economy and are you seeing the growth which is the reason why people say yields are going higher and oil is going higher but it is doing so because there is that demand and strength. Tom the heart of the matter gloom crew has gotten it wrong, there is a resiliency to corporations and market arches offense working in a new Interest Rate environment. I looked at the 10 year real Interest Rate, it is that 1. 9 x level, to go to 2 will be a change. Jon are you throwing shade at grandma bramo . Tom i am not throwing shade. There was inflation in the crumbs i put out the farthing, and it didnt go as far as it used to go. Jon amazon, holiday hiring, bramo, 250,000 logistic workers. Lisa to me, this is important and there are people who say this is because more of the shopping is going online. Maybe people dont want to drive because gas is getting expensive but you are looking at a robust projection for the Holiday Season at a time where people are worried for that savings cushion supposedly going away, where is that . If amazon is hiring that many more workers and offering 1000 3000 versus. Bonuses . Jon lets turn to the price action come on the s p 500 this morning, good morning to you come up by 0. 2 on the as a fee, yields pulling back. 0. 2 percent on the s p, yields pulling back. If you want to blame something, the move started after canadian cpi, which was down to canada and a yesterday session. Lisa they came in lower than expected, similar to the u. K. The focus will be on the that decision followed by jay powell s press conference. A hawkish posh would pause is what we will be talking about. We are going to be here. 1 30 p. M. Eastern or 6 30 p. M. Heat british time. Jp morgan Ceo Jamie Dimon speaking at the Detroit Economic Club at 1 p. M. And i and curious how much they indicate that strength has further room to go. Do they push back against that at a time where it seems like you are getting raises and can push forward . Jon i am interested in the fact that it is in detroit. Lisa president darren, president jamie dimon, do you think he is going to do this . How much will he wait in on this . We have earnings from fedex which has gotten abu sofar this year from yellow and ups as some negotiations there with the unions. I am curious on what they say about the labor. Jon joining us now is then laser ben laisler. You are the master of what can go right. What could go right . Ben do you want me to give you the whole list . Jon is it that long . Ben wrote this a lot better than it was and core inflation continues to fall and i am comfortable that that will continue. That is taking the biggest risk off the table. The fed will have to keep hiking. That is gone and the earning cycle is turning up and it doesnt have very much to do with the real economy, it is very tech lead, inflation is falling off to take the pressure all Profit Margins and probably the third and least important one is that the economy is hanging in there so look forward to next year which i think will drive the Fourth Quarter rally. Dump return to double digit Earnings Growth and the fed and the rest of the world calls Interest Rates and keeping valuations have. Tom i want to gotom twoyear process. The dovetail is important. You saved the role wall of worry remains high. In 2018, what was your process to push against the wall of worry . What is the process to stay bullish and resilient . Ben you have to look at what really matters. There is always a wall of worry in the day it isnt, we are complacent. We are worried about bond yields, 4. 4 , even though we are getting no validation uaw strike, a third of u. S. Manufacturing is autos but we probably need a slow down and you can say the same about potentially a Government Shutdown. It is an on off the road unorthodox they way to slow the economy but maybe that is what we need. Lisa i specialize in worry and i will tell you herpes person after person, have come on the show and displayed a lack of worry. Does any of the stuff catch her eye and make you think that maybe we could see some of the side effects pick up next year . Ben it is likely. But now the atlanta fed is nearly 5 . Unheard of and that will slow from here, the impact of 5 fed rates is coming. It is delayed because corporates are refinanced and mortgage holders have 30 year fixed rates but it is coming and the slowdown will come except it is a southland soft landing. Lisa are you saying the slowdown has been price in but do you see it coming in the prices in a certain pockets, not in the text in the u. S . Ben the market is nibbling at them but they are not running away with you and that is your biggest tell, the market doesnt think the growth story is sustainable and this keeps me in wrong direction and i know some wrong direction assets have been a tough slog but i believe the underlying pressures of inflation will ease. Stay long techs and bonds. Jon stay out of europe . Ben for now but europe will be the surprise next year. Germany is miserable right now but give six months and im sure we will talk about the german economy. Jon is that an ethics trade or equity trade . Ben it is probably equity trade. Waiting for the cuts tom im has been very good on this, the leverage luxury john has been very good on this, the luxury pullback. Have we had a correction even if it is not a market spx correction . Have we had a substantial enough correction where we say there is value . Ben we are seeing it. We are seeing you mention amazon, people are shopping online and they want to save money and they are shopping less for luxury and less in department stores. Credit depended items so there is a lot going on under the surface and you are seeing that play out and eight luxury and you are seeing that play out in luxury. Jon what are you hearing from tom what you hear from institutions what are you hearing from institutions . Ben as have been late to this party and the rally institutions heavily to this party and the rally. Retail has been out front and never gave up. Jon why is that . . Tom why is that . Ben sentiment has moved a long way. To the extent people are bearish, what are the reasons, you have a fourthquarter catch of and people look at the year ahead and think do they really want to be carrying 5 cash . Tom that is the classic laidler lisa farm. Lisa laidler charm. Lisa is that basically what that means, anything that comes in disappointing come up the balance of risk is we cannot do anything . Ben i think they will do 25 basis point less insurance hike. I am not writing champagne open if inflation rate is only a 6 in the u. K. It is a step in the right direction, market straight on the incremental data point and they will watch their weight and everyone is data dependent. If the amount the numbers dont come through, maybe there is a hike there but the base case is one more hike and they are done. Jon ben laidler there. Rishi sunak, the risk Prime Minister under pressure supposedly because he is going to push up the ban of gasoline vehicles back to 2035 instead of 2030, the first question i have this morning, who is next . It is the reality check for everyone. Tom it is almost their secondary theme on this that day wednesday because it is important to see the retreat of police in the u. K. , it has taken be the excesses out. Lisa our practical level, the policy uncertainty for big auto manufacturers continues and ford came out and said we are making this you Huge Investment on electric vehicles, you have to stay the course with your incentives and plans. Tom there is a lot of electric vehicles in london. Jon they are expensive. How are we having conversation of a cost of living prices at the same time Patrick Armstrong coming up in the next hour. Your equity mocked equity market positive, from london, good morning. The first law of thermodynamics states that energy cannot be created or destroyed. but it can be passed on to the next generation. when the day that lies ahead of me seems impossible to face a lovely day lovely day lovely day lovely day a bank that knows your business grows your business. Bmo. Oh booking. Com, im going to somewhere, anywhere. A beach house, a treehouse, honestly i dont care find the perfect Vacation Rental for you booking. Com, booking. Yeah. I dont think this one is going to be a major oil strike either. I think we are going to find the demand response pretty quickly to these price hikes and it slows down oil prices, come back down dramatically , not dramatically but they come back up. Jon the commodity market we are 0. 8 on brent. The call on this program earlier this week, amrita sen looking for triple digits. On the equity s p 500, positive by 0. 2 . On the 10 year, 4. 3427 and we are down a single basis point and there is move in crude. Tom still elevated to say the least and they are 18 shades of crude above that including brent crude. Because of time, we will get to this. He is encyclopedic on global oil, his book, won all sorts of words and he joins us here with this great effort for bloomberg news. Javierm my book of the year javier, my book of the year. The single best chapter is ns huge clarity on saudi arabia. What does the new saudi arabia look like in terms of oil . What is mbs doing on oil we need to know about . Javier when you think of the new saudi arabia, you think of the two words used for saudi arabia today, saudi first. That shaped oil and geopolitical shapes oil and geopolitics. On that sense, they really want to keep prices as close as they can to 100. They say they dont target oil prices. The truth is they do target oil prices, do supply demand and inventory and they are trying to keep prices as close as 100 and that is what is good for saudi arabia and that is why it is called saudi arabia first. Tom that will reduce demand . If we have a dollar gasoline in the u. K. , if we have five dollar plus gas in the u. S. , does it reduce demand . Javier they could reduce demand and contribute to higher inflation and higher Interest Rates and lower Economic Growth so the saudis have played a difficult game of how hike they cant get without triggering the negative consequences and so far, it has been good for them and their is talk about wake up demand. This recession and a wall street that has been coming for the last couple years, demand is fine. Demand has increased your on your by about 2 million borrowers away a day. The saudis are running on Interest Rates but so far is working for them. Jon are you seeing saying they have a high tolerance for economic stress abroad . Javier i think so. The saudis well will have acted. At the moment, they are not picking up the phone the way they used to because they have put in it all i think that if the u. S. Is suffering, the saudis will say you need to do something about it. Jon what do you think underpins that change, that breakdown in the phone call they used to happen between the white house and rhia . Javier saudi arabia needs the money. He needs the money. Jon it is finance . Javier a lot of it is finance and a lot is national politics. I was going to react earlier this year and there is a new capital emergence. There were 60 construction cranes. Lisa it raises the question, if they are looking for targeting 100 a barrel, does that mean oil prices can remain high even without the growth to underpin it . Basically saudi arabia will cut production enough to achieve that regardless of the backdrop . Javier the economy cycle will always play a role. If the economy leaders weekends this year, the saudis will have to accept lower prices. That in part goes to accommodate a huge increase in uranium production, not making much noise but iran is the secondlargest source of Incremental Oil supply into the market so the saudis have accommodated that and they capped production. They are going to try to Keep Oil Prices as close as 100 as they can and lets not forget, for saudi arabia and the benchmark they can, the price is already at 100. Lisa there is a question about other areas of election, in particular, the u. S. Which has been serving a record amount of production and there has been question about how much that cant increase. How much is that a swing factor that can alter the price . Javier we have seen the price of wti and texas has gone above 90 and we need to see an increase in the recount in the u. S. But fairly, there is a question whether we will see more u. S. Production at the moment when we are beginning to see a plateau. Tom we are in davos. Javier bloss walks in and the room falls silent and in the table, there is someone of bank of america and she has her s p call today. She did really it mathematics on esg. Is there a new esg . When you see richie sunak in london capitulate, is there a new esg . Javier we saw esg 18 months ago and i call it a bubble. We have seen Prime Minister rishi sunak waffle on the commitment on net zero and im i think we will see more leaders it will be costly. The easy part has been gone. Until now, it was winwin, green and cheaper and now it is more difficult. It is a lot of tradeoffs and it will be green but more expensive and we have not yet had that conversation with the voters. We said everyone to everyone this is great and it will save the cop the climate and now it is a different conversation. Jon a question i asked this morning, who is next . Who will push out some of these charges targets . Javier we have seen japan within the g7 and i think that germany and france have really jon javier blas of bloomberg. This from goldman, k Interest Rates happy. They save the wheel we want to keep rates on hold tomorrow, consensus for tomorrow is a hike from the bank of england, 25 basis points and we spoke to one guest who suggested you get a hawk in, they may go to 50. Maybe after the downside supply surprise as the bank of england ask away. Lisa if you think about it, this is counterintuitive. If inflation is coming down, shouldnt it be stronger . This is where the currency differentials are raising questions. Jon it leaves the estimation, you lose the rate support and at the twoyear down 13 basis point and sterling weaker off the back of it. Tom you are paid in sterling and you care about it. [laughter] we have someone on the other day talking about parity, you turn white. Jon air t on the eurodollar, not sterling parity on the eurodollar, not sterling. Your equity market more broadly on the s p, positive by 0. 2 , if Federal Reserve decision later on the bank of england tomorrow, Goldman Sachs has no hike says no hike. At pgim we can help you rise to the challenges of today, when active investing and disciplined Risk Management are needed most. Drawing on deep expertise across the worlds public and private markets in pursuit of longterm returns. Pgim. Our investments shape tomorrow today. So, youve got the power of xfinity at home. Now take it outside with xfinity mobile. Like speed . Its the Fastest Mobile Service around. With the best price for two lines of unlimited. Only 30 bucks a line per month. Thats hundreds in savings a year when you wave bye to the other guys. All on the most reliable 5g network nationwide. 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Since starting golo and release, i have dropped seven pant sizes and ive kept it off. Golo is real, our customers are real, and our Success Stories are real. Why not give it a try . Jon new price target from bank of america, 4600, up from 4300. More on that upgrade later, on the nasdaq features positive here by 0. 4 . Several central centralbank decisions coming. The thing that changed over from the boe. Bowman the first out of the gate to say we are done, no hike come tomorrow morning. Lets turn the the bond market. To guilt in america in in the treasury market north of 5 and close to circling highest. A new cycle high on the 10 year, short of that now. Down a basis point or two. I want to finish on foreignexchange, the euro is shaping up as follows against the dollar, 1. 07 and positive by 0. 2 . That is the cost the process of pricing and the fed expected to hold rates at todays 2 00 p. M. Decision. Chair powells News Conference kicks off at 2 30 and our coverage begins at 1 30. Lets bring you the lineup. Citi, alongside someone of bank of america believe we have one more to come here. Tom some real eclectic calls not only on the real economy but also on the rate guess that everyone is making. I am fascinated you mentioned i am fascinated you mentioned super mania subermanian. Cpi coming in at 6. 7 yearoveryear versus the 7 expected. Sterling weakening to the lowest level since may and paring back of hiking bets goes to Goldman Sachs. For the u. S. Audience, it is important tom for the u. S. Audience, it is reported to triana lake triangulate. It is important to triangulate. Jon i dont think the answer to that is as obvious as you think. This morning, you lose some of the rate support and the front end of the curve rallies and the sterling weeks off we get off the back of it but do we have a better outlook of growth on the back of the bank of england . Tom one person what this was with beth was with us this afternoon. He said this is a long way out and we are waiting and we have been wrong about a u. K. Slow down and you look at the the tdp input to class list to newcastle, of the game last night, jon there will be no conversation of that. Instacart easing in this morning trading after getting as much as 12 in tuesdays debut. Semiconductor designer on raising 5. 2 billion last week in the biggest listing of the year, can you take any signal from this . Tom i believe it was zero hedge, great chart great charges three charts. Great charts. For both of these companies, very different. This is about the first conference call. Jon less quarterly earnings. Tom do you think they understand they have to go on the phone and explain what is going on . Jon i think arm understands that and instacart has to figure that out. Tom we are having fun today. It is an extended day in london and it has been wonderful and our team put together a great and eclectic set of voices for you to frame out the past 22024. Elsa lignos is usually qualified. Its usually qualified is hugely qualified. Can you call a distant disinflationary trends get . Friend yet trend yet . How many months or quarters do you need to establish a disinflationary trend . Not the dated dependency the media is focused on, one surgical point but what is your timeline to save trend in place . Elsa it is also the composition of inflation because we have seen headline inflation come off on Energy Prices and taking back up as we saw in canada. We are focusing on the court measure, what is happening to the demand direct driven components of inflation in are those weakening enough that to signify that we will get to tom he looks at this and i love what he says about plainvanilla inflation. His family in asia is living people like you and these elites, do they look at plainvanilla inflation . Elsa that is the important part about the current rise in Energy Prices because for all that Central Banks like to look through that and focus on core inflation, it headline inflation goes up and comes down and goes up again because oil prices and Commodity Prices dont come off, what does that mean to your average consumer . Their lived experience is prices keep going up. Jon we got the note from the Goldman Sachs team on the bank of england suggesting we are done when inflation is in bahai six in the high sixes. Why are we talking about the bank of england being done when inflation is in the high sixes . Elsa the bank of england looked at high inflation about inflation being outside the target band and they were happy to leave [indiscernible] it is that which is the difference, they are happy to look through it because they feel like their policy is working. Jon someone was in your seat yesterday and he suggested bank the bank of england has a communication problem, do you agree . Elsa it is hard to say they dont. This is a particular he difficult time to be forecasting and the economists have struggled. From the bank of englands perspective, the message seems to change every month rather than sticking to the data dependence and measure. Tom you speak 14 language and i want you to talk about the physics of resting lagardes speech in jackson hole. You live the ecb theory, the ecb process. Is there any hope and prayer that the ecb can get away from the data dependence ec she surprises she despises . Elsa not really and you have so many competing views in the government counsel. They have the announcement last week and they came our voices say, we wish we had done more and there it is that can coffin these it is that cacophony of voices tom what i find fascinating here is the simplistic american view of the bank versus portable. It is richer and more complex. Christine lagarde has no chance on this. There is no chance that they will take a more holistic, longer trend in a policy. Jon one person, not a consensus builder, he would believe the council into a corner and say we are doing this. Lagarde is a consensus builder but she gets a and easier time because jeremy and she gets an easier time because germany people make out it was a deal between doves and hawks and the hawks i am hearing from, they are not that hawkish on the ecb, are they . Elsa they are less hawkish than they used to be because germany is feeling be weakness but one person had to do that because it was a crisis situation and that forced his hand. We are not really there now. Jon i teased this earlier when we were assessing sterling and lisa was asking a question regarding the u. K. And sterling. How important are right inferential for Currency Pairs . What does it mean . Elsa i agree with lisa bet it is ambiguous and i heard from people trying to talk up sterling as i carry trade. As a carry trade. The fact that i said earlier, you remove the tail risk up stagflation, that is a good thing and from up policy credibility perspective, it is good that the bank of england is seemly getting inflation under control. Jon they go, elsa lignos, you are here. What is your question from for chairman powell . Elsa i am interested to hear about his runup in Energy Prices. Tom what does the wonderful wonderful to see you and thank you for stopping by. What did she say about this move to 100 . Elsa she has been bang on the money with the core and now we are there, it is less obvious that we can continue further from here but she is open and talking earlier in the year, markets were ignoring it and ignoring the supply cuts and the reduction cuts. Jon can jay powell ignore this later this afternoon . Elsa it is a very short intermediate. Into marriott intermediate period between now and september. Jon who is this more important to . Elsa ultimately the bank of japan are not doing anything anytime soon. I would be concern in the ecbs position. You have the regional difference between u. S. Energy prices and european. Tom we are staggering beyond noise and brick beyond doisen berg. Is the ecb a more mature institution are or are they making it up as they go . Elsa they have been through several prices but the fact that it is the court feeling the week is. Tom john mentioned that. Jon are you going there yet . Elsa we had 104 year end forecast. We have 102, that we . Get to parity could we get to parity . Sure. Jon we are trading at 107 and 104 was a call at the start of the year and go back to the start of the year, the happy talk around china we opening and what it might mean for europe. That is not the story going into year end and lagarde talk about that at a News Conference at ecb. China reopening, lower Energy Prices, they have gone and developed into headlands headwinds. Tom what audience needs whose to Pay Attention to, there is a movable feast. We are literally making it up as we go and it feels like the people putting the show together, we are making it up. Jon the week began today and chairman powell, the decision from the fed. No change expected. The forecast will be closely watched. Then it is onto the bank of england tomorrow and back of japan friday. Bruce kasman joins us next. The from the city of london, good morning live from the city of london, goorning. Oh searchable, verified reviews. Thats better than the ham, and ive never said that. Booking. Com booking. Yeah if youre trying to get a view of the whole organizational Financial Health and youre trying to do that through multiple systems, that makes it very, very cumbersome. Its not just tech, its not just people. Its how they Work Together to provide that experience to the customer. As a finance organization that is what you want to do. Jon three big days coming up, the Federal Reserve later this afternoon, the bank of england tomorrow and onto the bank of japan on friday. On the equity market, futures positive by 0. 2 . Yields coming in a couple basis points. Tom the price action that matters is getting decent tickets on arsenaltottenham in on sunday. This is the only city in the road where i religiously take taxicabs and if you mentioned a soccer game on the taxi, that is entertainment. I have had so much fun. Bruce kasman coming up in seconds on a important conversation with the doctor. I had so much fun last night following a boring 00 game. It wasnt boring and what is the symbolism that newcastle survived . Jon it is pretty impressive and to go to a stadium like that for some players, they probably thought they they probably didnt think they would play an occasion like that and to walk out to 80,000 fans and surviving that. It is completely different terms of statistics but they got out of it alive. Tom tom they do it again at newcastle. Jon the challenge you got, when you are new to the sport, understanding the tension of european football so you can enjoy it. Tom its a nationality and cities . Jon the tension between the two jobs clubs. I was always told that americans didnt like european football because it was too slow and lowscoring. I look at american football and the ball is hardly in a play in play. What is the difference . I will get so much hate mail. Tom what we hate about english football is everyone falls down and get hurt. Jon they need to clean that up. Tom there is your football moment for the day. As john mentions, the week starts today for and for bruce kasman, it is not it does not. He will put out his weekly prospects, the ways things are moving that could be daily prospects. Bruce kasman, what will you miss is what will you listen for from Jerome Powell today . The issue, when the fed stays on hold and continues to maintain bruce the issue, when the fed stays on hold, how in this discolored, when we talk about the confidence that they are done here and i think they will maintain that and they will give some sense of progress on inflation. I dont think we will get a strong message and i dont think it will tell us that much in a world in which the data will decide what the fed will do over the next few meetings. Tom our optionality, our ambiguity, our degrees of freedom buttresses up against the potential calling of the potential gdp. You have the lowest do you have the lowest statistic of potential gdp . Bruce there are two things and one, which is most important, is potential gdp is low but cyclically, there are a number of forces that have raised what Interest Rate is consistent with stabilizing inflation and stabilizing utilization rates so that is what is operational for the current environment. The second point, mike and i havent writing about the hints that u. S. Supplyside performance is improving. We have been running to 50,000 a month on labor surprised supply we have a running 250,000 a month on labor supply this year. It is too early to get confident but it feels that u. S. Supplyside is improving. Tom i know you and bob michele are not on speaking terms but the few times you have to get together and dovetail your economics into bob micheles fixed income which i believe his price will be against you, can you make a deal call again sealed, do you against yield, can you make a yield call . Bruce the economy is not a material threat of going into recession anytime soon so i think 4 10year yield, 5 policy rates will be with us for a while. Jon you touched on it and i think it is an important aspect, i mentioned the Federal Reserve conversation today. The extent to which the labor market has rebalance, do you think that rebalancing is close to complete . Bruce no. We have a tight labor market and we have elevated Wage Inflation. We are seeing good sides on the labor market that things are moving in the right direction but whether we get all the way back to what is consistent with the fed achieving its inflation prop target, i think it is not determined. It is more likely that things stick at a level that is going to keep the fed uncomfortable over the next year. Jon does that mean low unemployment with elevated inflation or higher unemployment with elevated inflation because one makes is a lot more toxic than the other. Bruce it is most likely the Unemployment Rate stays below 4 and i think it is likely that Wage Inflation stays 8 or higher and i think it is likely be environment, the fed will not have the opportunity to ease and the question is whether or not that restrictive stance over time undermines what is still a Pretty Healthy u. S. Private sector and eventually causes an end to the expansion or whether the supplyside improvement, whether some other sports carry us along here and put us to a path to a soft landing. I think it is a close call here on how the environment plays out in the next year or two. Tom what is so important here is that there is a pandemic was a pandemic, are we beyond the pandemic and beyond supply side studies . Tom i hope we are bruce i hope we are beyond the pandemic in terms of the direct economic activity. That is what some of the normalization going on in Service Sectors are about and we are not quite done. We are getting closer to the end and we are dealing with the voracious of this pandemic on a lasting basis and a couple of them are the damage done to the supplyside globally and i also think the health of the private sector sheet which is a really weird thing to say comes as a bad event on the pandemic. Tom can china export disinflation or deflationary trend . What this jp morgan see up domestic china exported out across the world . Bruce janet is exporting deflation and goods pricing to the rest of the world. Chinese production is picking up. You see import prices in europe and the u. S. From china going down sharply. We think Global Industry is starting to pick up, china is benefiting from it so i think the chinese economy will be weak but not hit the fears of a real disaster that people expect. I think Global Industry is picking up and china is going to keep a lid on global goods Price Inflation among other things except for oil. Jon i want to do housekeeping. Can we play with the dot plot and get out to 2024 . What do you think the dot plot will look like later this afternoon . Bruce the most important is 2023 and it looks like you will have a divided committee. It is a close call. Regardless of that and regardless of big changes in the forecast of 2023, the 2024 forecast will have closest close to 100 basis points of easing and it will have a big drop in inflation and an aspiration that we get an unemployed rate of two. 5 without inflation. Jon and you dont buy it . [laughter] bruce i am skeptical. Jon thank you for the update. Bruce kasman on the outlook and the take away, hire for longer and there is interesting word bruce used, aspirational . Tom i dont get give a damn about the dots because a lot of our audience and global wall street cares. Jon Patrick Armstrong joins us next. From london, this is bloomberg. se fue la luz pero todavia tenemos wifi para hacer las tareas. ¿y eso es algo bueno . Wifi y estudiar. Buenisimo. Wifi y pedir una pizza online seria buenisimo. Presentamos storm ready wifi. Solo de xfinity. Ahora puedes mantener una conexion confiable durante apagones, con datos celulares ilimitados y bateria de respaldo de hasta 4 horas para mantenerte conectado. Obtenlo solo con xfinity. El hogar del 10g network. Enterate mas hoy. That doesnt look like we have a major issue with the economy at the moment and the economy has been relatively azalea resilient. 2024 should be a better year for earnings with the market. Inflation is coming back down towards where the fed would like it to be. Higher for longer means it is going to be further tightening here in the real economy. This is bloomberg surveillance with tom keene, Jonathan Ferro and lisa abramowicz. Jon that that decision later on this afternoon the fed decision later on this afternoon. This is bloomberg surveillance live on tv and radio. Bramo stepped off. Your positive by 0. 2 , lifted equity market, hours away from chairman powell, the press conference and the lovely forecasts you look forward to. Tom but i will look at is the dot plot what i will look at is the dot plot it is showing a resiliency, act an equity market, big amount of money that says they will believe in the fed. Servetus super medium servetus super medium Savita Subramanian the bottom line is there is an enthusiasm here away from country to country domestic politics. It is a positive ferment here in these meetings. Jon bruce is on the high for longer page and how we reference the dot plot and projection over the Federal Reserve, he used the word aspirational and said it was as relational to look at next year and expect inflation to come in without too much damage to the labor market and that is a man that does not believe we can get inflation down towards 2 without pain in the market. Have we made process in the labor market, . Yes . Tom bruce kasman says he doesnt think we go about 4 . I will say that is the oddity of the cycle and that is what the fed has to deal with, the duo mandate has become a single mandate. They are ecbish looking at rates, inflation. Jobs, that is fine. Jon ecb this week. We are positive by 0. 2 on the s p and yields are coming in down two basis points on the 10 year, 4. 34 07. Sterling is weaker against the dollar, 1. 2364. Tom i will do that later but the answer as we dive into the brief here is there is disinflationary tendencies out there and people say, i dont really care about it, there rationalize this inflation. Rationalize disinflation. Jon plenty of questions about projections they were released in bed the scp. The bank of america cfo speaks at 7 15 eastern time. The bank of america financial ceo conference and jamie dimon speaks to the Detroit Economic Club at 1 00 p. M. Given the tension of this labor market is in detroit right now. Tom he will be there. We didnt talk about this in the last hour but we will talk about this. There are many people out there that wish that dimon will migrate to washington to be bankerly. He is in the crucible of the American Labor movement. Jon shall we reflect of what the uaw said yesterday . Every labor unit is fighting against the billionaire class. Tom that is quite a statement. That sets of this tension of wall street and main street that Speaker Pelosi highlighted and many others as well and i dont think it is a small matter that a fortress dimon wonders into detroit to talk about the labor markets. Jon just a earnings after the bell after the market close and we will get earnings from fedex. Joining us to round the table, Patrick Armstrong. Good to see you. Our things good or just terrible . Patrick things are pretty normal and everything feel so different to how it was but we have inflation on the track down to something that will be sub 3 here and i dont think it will fall to the feds mandate. You probably thought you would go to 2 to the u. S. Economy next year in Interest Rates at 5 on the two year and that is pretty normal. We are in an environment where things are normal. I think inflation are going to is going to prove persistent and sticky with intermittent spikes because the big picture issues are population and protectionism from the government and that is inflationary by nature. Unions may come back like the 70s and jobseekers having some power and that is inflationary but you have disinflationary forces from china and fed policy at a point where it is restrictive. That is normal. Tom your charm is your truly cross as it. Asset. Patrick what we have done over the summer months is that we marginally reduce are equities that drifted into overweight. We have moved marginally underweight now. Not so much that we are worried about equities. We are getting telling compelling returns on tips. You are getting a 2 real yield and inflation is a risk in the long term but i am getting the direction their if we fall into a recessional and see lower yields as a concessional. Tom talk to our audiences. How does Patrick Armstrong utilize the 10 year inflationadjusted yield or the fiveyear inflation tested adjusted yield . How do you use that as a tool to adjust market inflation . Patrick my view is that we will have persistence about that market inflation. I am having having to get a two yield at 10 . I like duration there but you are being compensated by higher yields and we talked about jamie dimon, jp morgan bonds, im getting 6 on the two year. Tom that is a chris whalen moment. Jon a lot of people were getting jacked up on rvmh. He stepped away. You away you stepped away. Tom the pandemic patrick the pandemic is obesity and diabetes in the u. S. Tom bernstein was out what the no overnight same we have ratios of luxury back to 2008. Patrick i sold lvmh in march. I bought in october in the Previous Year when it was 21 times and that is a small premium to the market multiple. Tom we dont do much equity chat because who cares . The answer, what you heard from Patrick Armstrong is a clinic on how you bracket a beloved dominant stock. Jon we were talking about it. You kept ms. Patrick i dont want to move against what is the spending power of High Net Worth individuals and the immunity to input prices. One person talked about inflation hurting spending power of people but the input prices are things that are hurting massmarket retailers. Tom what is the distinctive feature of the family . Bloomberg intelligence deborah aikens brilliance on this and she sings that out a few names. What is the m is model that makes them different from other Luxury Brands . Patrick the Leather Goods profit is incredible. People pay up for that and there are waiting lines of queues. Jon we touched on it briefly. We are already up 40 this year and the stock has been climbing for five consecutive years. Can you spend a couple minutes outlining how big this opportunity is . Patrick it was a vanity drug. It is a vanity product. Tom as a worked it has not worked. [laughter] tom tom they patrick they spend money to look good. That expands the potential market where you are not just getting vanity uses but health uses which may be insurable. Heart and stroke disease. It the market. It is an expensive mark private. Jon im not sure where we are right now versus lvmh but at one point, it was bigger . Patrick it is basically the same right now. Tom can there be european exceptionalism without technology . Tom it is buoyant to say the least. Patrick it is exceptionalism is very clear in the u. S. And technology and europe can compete in health. Tom are you buying big oil . Patrick i love it. We have more oiled tom single best buy, big oil . Patrick efg. Jon if you are tuning in, welcome to the program come on the s p 500, we are positive fight 0. 2 by 0. 2 . That is going to take place later on this morning. Some amazing calls from patrick. Novo nordisk. Tom the thing about patrick, what is right about the cross as that view he takes all the time and mentioned yesterday, everyone has to recalibrate where the q4 outlook, december 30 ending q3s may be as important as the year end output outlook. Jon for the Federal Reserve, they are market to market. We know the fed that and the fed has to update the forecast to take account. Tom thank you for breaking up the dots. Lets review this. We heard this morning that the 23. Has value. There is a 24. Is there a 25 dit . Jon 42023, the medium for 2023, there is a medium dot. Is it just this idea that inflation comes in and the feds focus on real rates and wants to maintain the restrictiveness . Tom looking out that far, postpandemic, can you look that far have been postcovid supply and demand dynamics . I dont think you can. Jon we will look at detroit and the potential between uaw and the victory and we will get the latest we will look at the big three. Oh, booking. Com somewhere, anywhere. I just want to lie motionless in a chair booking. Com, booking. Yeah hey corporate types. Would you stop calling each other rock stars . Youre a rock star. You are a rock star. No more calling coworkers rock stars. Look, its great that you use workday to transform your business. But it still doesnt make you a rock star. So unless you work with an actual rock star. Hi, im ozwald. Hello ozwald. Pam, you are a rock i wasnt going to say it. When it comes to china, i want to be clear and consistent. We seek to responsibly manage the competition between our countries. We are for derisking, not decoupling with china. We will push back against intimidation and defend the rules of the road. Jon anders think that President Biden use addressing the United Nations General Assembly internet. Here is because the treasury secretary serious because the secretary treasury secretary went to china are you saying china is the risk . Tom the political football here is substantial and i think they are making it up as you go based on what china is doing and what the dialogue is. The meeting, Annmarie Hordern talked about the meeting in malta. It is an island in the mediterranean. They had a meeting. Jon if we can make that happen, maybe later on this year. If youre are joining us, federal this reserve decision later this afternoon. No change is expected. That news profits will not be a snooze fest. That News Conference will not be a snooze best. Yields are lower by two basis points. Tom it is a busy week in new york , and a the island up ahead. Annmarie hordern is in the heart of my head with the United Nations meeting. It was important. This morning in london, we have ignored, i have been wrong on this, we ignore detroit and the uaw. Who does the president need to today. When he gets up and doused when a hundred detroit, who does the president want to talk to on uaw strikes . Annmarie the white house has been talking to everyone. They speak to the u. S. The uaw president and also to the big three autoworkers. Friday and we will hear from the uaw president. That is the new date for the negotiations to look forward to to try to strike a deal or he is going to announce more walkouts and more plants. The administration is in a difficult position at the moment, not only is the former president going to head to detroit the day of the Republican Debate and stealing the show from everyone but the administration said they would be sending julie sue, as well as jean sperling, the liaison between the white house as well as the uaw and the victory big three. I was reading a political article yesterday. It is not about sending, are they going to be following trumps tail sending someone . The bigger issue is the fact that they said they will send these officials and that has yet to happen. Tom maybe it is the symbolism of the detroit leaders driving through washington. Maybe the president needs to get in his corvette and had to detroit. There is percolation in news. There was a Union Settlement in Canada Overnight and there is the idea that there is a to dental knock on effect of the strike where the automakers are shutting down other factories. Our those are those tea leave, do they have any impact . Annmarie i am sure sean fancies all of this but i am sure that sean fain sees all of this. They are going to be taking stock of all of this but he wants to use this moment to extract as much levers as he can from the big three auto companies. Tom where is the leverage . Jon pay at the moment. To expand on the political conversation, you get the sense from uaw that they are sick of politicians playing politics with their cause. This is what you heard from the uaw president yesterday. I will share this quote. Every fiber of our unit is being poured into fighting the billionaire class in an economy that enriches people like donald trump at the expense of workers. Is the former president still trying to go to detroit september 27 . Annmarie the report is still that he will go there. Trump won michigan in 2016, i state that the republicans have been unable to flit left since the late 1980s unable to flip since the late 1980s. Then trump lost it in 2020. This is a must win state for democrats. I will bring up the point that a lot of Union Leaders remember what trump said in 2015 when he was campaigning. When a number of automakers were talking about building facilities in mexico, especially putting liens or dollars and moscow, trump said why would you do that . Move to a better u. S. State where you dont have Union Leadership and get cheap later and cheap labor and people were relies they lost their jobs and they will go to the old factories and this deeply annoyed the uaw leadership. They said we are not being respected as a workingclass and middleclass and those memories, they are still front and center for a lot of these individuals. Tom i have to your important conversation today and as the gentleman from poland was speaking in polish, for me, it was lost in translation except there was attention in that conversation. Describe the tension that poland faces at this moment. Annmarie andrzej duda has been lifted by russias invasion of ukraine as a global station. He was this conduit between kyiv and western leaders and he had this very close laserjet web president zelenskyy. Relationship with president zelenskyy and he still does. Wire the president said what though polish president said said his only plea was stop doing this in the media. Some of the big friction comes down to the fact that we are not seeing a lot of ukrainian grain moving out of the black sea corridor so it is going into europe and they review some of these tariffs at first to make sure they can help ukrainian farmers but now he is saying are farmers are not making the money they need to be making because theres too much keep ukrainian grain here. Zelenskyy wants to take this to the wto so they are having a spat about ukrainian grain. There is the beta in the polish government about Financial Aid from the polish government to ukraine human ukrainian refugees in poland. In america, people are saying we are dealing with higher inflation and you are hearing this conversation around the globe, whether it is germany and poland. That is why you are seeing war fatigue. Jon this is a wartime president facing a unique situation of the leaders are not facing. He has been celebrated from the u. S. In the way he has spoken about the needs for his country. Do you get the sense that a lot of people, perhaps in washington, are becoming frustrated with zelenskyy in his approach to media . Annmarie we have been strong supporters of ukraine. Speaker mccarthy said yesterday that he has a lot of questions for president zelenskyy about where the u. S. Taxpayer dollars are going. The last time zelenskyy was in washington, he gave his joint address, this will be a huddle between lawmakers. Jon Annmarie Hordern, thank you. Thats us to work at the yuan the un. Equities right now positive by 0. 2 and coming up shortly, the brilliant Deborah Cunningham of federated hermes. This is bloomberg. Jonathan equities positive by 0. 2 on the s p 500. Our performance on the russell out performance on the russell this morning. It is a search. A surge. Tom small caps cannot get it going. Jonathan i want to turn to the bond market. Two year we have a rally in viewer. The u. K. Hot inflation print in canada lighting if a fuse on this market. Looking at that, you have to say, we have started to internalize higher for longer. Tom i strongly agree with that. We are beginning to internalize the structure and many of the different measurements we look at, it takes you back to 2008, 2007, dare i say before august 2007. When i look at every morning is the 10 year real yield. The answer is that so im going to look at as we go to the press Conference Today to see what the real yield does. Jonathan look at the nominal yield. That is not of 5 . North of 5 . I mentioned the rally, yields down. This move in sterling, sterling quicker off the back of that. The pound against the u. S. Dollar 1. 23 65. Looking at the inflation data in the u. K. , the good news it is no longer the 7 we expected. The bad news is the number still comes at 6. 7 yearoveryear. Core down, but is still 6. 3 . It is an inflation problem in the u. K. And we are still talking wage growth pushing 8 in United Kingdom. The pressure is still on the bank of england. Government has dropped the call for rate hikes and they think based on what we are hearing from london desk is that bank of england is done. If youre going to stay there, how long for with cpi where it is, wage growth where it is, how long are they going to stay at these levels . Tom it is a boom economy everybody has been wrong on. So idiosyncratic story. Part of it is brexit and the relationship with europe. I think United Kingdom needs a strong europe and it is not there. Jonathan it is not at all based on what we heard from president lagarde last week. 1. 0701 on the euro. The fed Rate Decision to 00 p. M. This afternoon. It is expected a bit more debate around what the bank of england will do tomorrow after u. K. Inflation unexpectedly fell. Goldman altering their call writing with todays data, two out of three indicators the committee has set out to monitor inflation persistence have now shown more progress than anticipated since the august meeting. We expect mpc to keep rates unchanged. Must go through the bank of england, is up to boj on friday. Tom she is on the mpc. I would suggest that she was say lets watch the data. To your point, change in vector versus level to everyone in United Kingdom is that level above 6 that is intolerable. Jonathan i am with you. We do not get any dissent at the Federal Reserve. Oil dipping this morning after a soaring summit rally. Summer rally. Approaching 100 a barrel of the last 24 hours on the back of supply cuts from opecplus. 93. 75 after a sniff of 95. Tom this has to do again with oil and caspian sea. It has to do with our it is the a just battle of the caspian stays georgia and the rest. Maria tadeo is the expert on this, but there was war tone yesterday which got us to saudi 97. And a gust of 95 on brent crude to be may detention has pulled back off of the caspian sea. Jonathan earlier today, basically said that high tolerance for economic stress abroad, they want to prices near 100. His opinion maybe it resonates but that is his view. Tom he works in the building. He is a heavyweight. Jonathan an update on uaw. Autoworkers weighing in on expanding their strike as negotiations for the choice automakers continue. The union set to hold a Facebook Live event at 10 00 a. M. Friday. Where they would discuss whether more will join the strike. Like we had last week, we have a deadline, noon eastern friday. For further progress, if we do not have that progress, ultimately two hours before that we get some kind of News Conference from uaw which may signal a broadening of the strikes. Tom it is not your father or your grandfather strike of union members. Are these companies the same companies in acting the same process as they did in 1958 . I do not think we know yet. Jonathan uaw changed their approach. This is targeting all three simultaneously. Tom theyre sophisticated to know the effect. One came out and said if you take out my factory, you take out michigan truck, you have to go out and there is this effect of 14 other factories. Jonathan tons of other companies down the supply chain. Theyll be hit by this as well. It is not just detroits big three. Tom we have a great team in detroit leading to coverage and will catch up with them throughout the day. This is an important conversation. Please lean forward. Deborah cunningham. Global equity market cio at federated. They admitted the Money Market Fund and she joins us this morning. What do you see in Money Market Fund flows . What are we doing as we migrate from banks to a higher yield Money Market Funds . Deborah we seen it in full force the course of the last six months. It began back in march of 2022 when the fed increase rates for the first time. You got most inclusive form, Money Market Funds would assets greater than 6 trillion. If you go back to the days post lehman, this is three times what the market was at that point. Certainly at it was in this Interest Rate environment. At five plus percent, Money Market Funds, especially for Retail Investor [indiscernible] tom a look at the index and it is so sobering. What is the better to believe, i know you did rates, how do you look through the cunningham prism and what are regional banks are doing . Deborah we do a lot of business with the Banking Sector from an investment perspective and a counterpart standpoint. We are always looking at the health of banks and what their activity in the market might be looking at. The largest and original banks regional banks seem to be healthy, even in context of commercial real estate portfolio. There seems to be a good mix of the better types of commercial real estate within those larger banks. Some of the much smaller, concentrated regionally geographically Smaller Banks that profile is not the same. I think what you might see this next cycle from banking perspective is more consolidation of some of the Smaller Banks and to some of the larger, regionals and super regionals to keep the market is the overhaul healthy since their what might be the next downturn from an economic standpoint. Jonathan we love your view on the Federal Reserve later this afternoon. Citi just published saying, dots will likely signal one further 25 basis point hike in 2023. The median. For 2024 they think over at citi is at risk arising. When you get those projections later, were you looking for . Deborah a skip, not a pause and i do think theyre going to emphasize november continues to be a live meeting. I would not be surprised to see Economic Projections in medium dot to go up 25 basis points more. Although inflation lowered the and was three months ago when the numbers came out, it is still firm and in the most recent information, cpi, rete sales are showing the consumer being strong and numbers playing through to mild increases. We would not be surprised. I agree the market may be reconciling with higher for longer, but i am not sure repriced in what we think is a real live meeting in november. Jonathan oil prices, ongoing uaw strike, renewed advance in house prices. How do you think the chairman navigates those three issues . Deborah i think all have to be addressed. The impact the consumer. The consumer from a Wage Inflation standpoint improving from Household Net Worth standpoint, but they are paying Higher Energy costs, higher food cost, higher shelter cost, and all that comes out of their discretionary spending. I think as the engine of growth to keep the economy above water, there is a little bit of a pull back on that from consumer standpoint. The chairman cannot ignore that. But are they going to be able marginalize and not raise Interest Rates by another 25 basis points . I think it will be a tough decision but one that will make the november meeting more in the limelight and focus for Interest Rates the next several months. Jonathan your view, youre not alone. Mike from bank of america on the same page. Deborah cunningham of federated. On the Federal Reserve. Welcome to the program. S p 500 about positive by a quarter of 1 . Into the bond market, yields a little bit lower by single basis point. I mentioned the research chief u. S. Economist at a citi, who had this to say, chair powell acknowledged recently soccer inflation and lower job openings, but emphasized vigilance given remaining upside risk to inflation on those three issues i mentioned including the rising in oil prices, ongoing uaw strike, renewed advance in house prices. What are you focus on . Tom im not focus on political story. I do not think if it the fed doesnt mandate off of that. I do see with house prices. I think i will watch carefully and the idea playing inflation in prints shocking rents shocking but the answer he had to get from the alphabet soup of inflation indicators to what our viewers and listeners are feeling. Powell knows that and he cannot go accommodative until he got more of a vector in place. It is not in place yet. Jonathan acknowledging progress. I do not think governor bill lee can declare victory. Tom no, but he eluded it alluded to it a couple of weeks ago. We are not in the last mile. Jonathan sarah house was right. The last mile will be to have. Coming up, cathie wood of ark investment coming up shortly. Live from the city, this is bloomberg. I think tank has room to go the next couple of weeks. Theres probably a window around q4 where i will move towards the value side of things. Get the bump in inflation in u. S. And how your and you want to refer for a couple months energy over tech but now tech has a way to go. Jonathan based on what we heard from max, it feels like god he likes forever. At least for now. If youre just tuning in, welcome. Equities doing ok. Going to this fed decision, cycle highs on the 10 year yield the last 24 hours. Dont basis point on the 10 year down a basis point on the 10 year. On the two your dancing around 5 . Tom got a look at inflationadjusted yields. Patrick armstrong was articulate about that. That is where he is finding protection but to see what the real yielded us off of the talk today and i agree with what we heard on november and focus december with the fed. Jonathan the risk of will more hi of one more hike. Tom mommy what we are doing. Remind me what we are doing. Jonathan 6 30 london time, we start with that special. Then the News Conference. Tom will be with you tomorrow for bank of england. Who is on friday . Jonathan boj. Tom we welcome all of you worldwide to a conversation. Cathie wood came out of usc a long time ago. Built an investment career quite different from others, not based on longterm solidity of a given portfolio, but capturing the trend going large and sometimes going down large. She holds court on the ark. I want to know with all you have been through the last number of years, are you going to shift to a more longterm strategy . Your claim is more shortterm. With new etf effort and what you are doing with are are you going to be ark, are you going to be untrained or invest more longterm . Cathie we always invest for the long term and will interrupted a very nice move in innovation, stocks was a massive increase in Interest Rates. 24 fold increase. All longduration assets, especially in 2022 were destroyed, including bonds which are usually a safety. They had the worst year since the 1700s. There is no way our strategy would have done well in that environment that i think what is happening this year is the market is starting to look over the feds move whether there is one more or not into falling Interest Rates. We started underperforming 2021 with the anticipation of rising rates and even more so the 2022. Tom i want to know how youre going to change the sobering quarters you have been through. What is the new approach to macro economics, pandemic economics . Cathie if anything, innovation Gains Traction during tough times. If you look at the reason our folios are outperforming this year, it is because they are gaining share see what is becoming a difficult environment. One by one we are going to earn our way back and it is about growth, margin expansion. Tom in the wall street journal they do they publish think, people with over 5 million and they believe in cathie wood, to a person retirees but innovation come about tech, about apple bought innovation, tech, and apple. Can you do the approach given the volatility you have seen . Cathie yes, i think your on the other side of the break massive Interest Rate increase was it astrological performance. We are ready for prime time. People are concerned about our strategy. The company would we just acquired because in london for all of europe and u. K. , their focus on global megatrends as well. Interest rates hurt everyone in that space. If we are right and rates are going to come down, at some point the next year, the market is discounting mechanism, then i think the muscle memory that hurt our strategy and has everything to do with telecom bust people thinking are we here again, note, what happened during the 20 years that ended in the tech and telecom bubble is the seeds for what is happening now. Tom the profitability of new tech is different than 2000 tech. Jonathan lets talk about electric vehicles. Is it good news for tesla what is happening in detroit . Cathie yes because if there is a strike, therell will be more production shortfalls. I think there is supply chain freed up. So we will have questions about that. I do not think it has anything to do with the strike. It has everything to do with the Consumer Preference shift towards better vehicles, electric, that are falling in price. Tesla leading that price decline bypassing cost the clients onto its customers. I think that is what is good for tesla. Jonathan the complaint we hear is people cannot afford the vehicles. Rishi sunak pushing back targets to get rid of all of these combustion engines to 2035. I would being unrealistic about the transition . Are we being unrealistic about the transition . Cathie we do not think so. The total cost of ownership in u. S. About electric vehicle fell below that of a gas powered vehicle about two years ago. Soon sticker prices. Jonathan does that include insurance . Cathie yes, it includes insurance. Local differences but yes, in u. S. That does include insurance. Tesla is so sure that its cars will have fewer accidents, if fatalities that it is willing to provide insurance so that does include everything. Tom you are at usc. You walk into capita group, land of an ark Mutual Fund Investment company and everything completely diversified. You go out and you say im not going to its spx, im going to out and do my own thing. People have prospered off of innovation and technology. How does that continue in america . Can you be less diversified and win five years out . Cathie you mentioned capita group and it is where i started my career and it is where i saw tremendous research and a longterm time horizon. We are doing with ark is going back to the future. My initial experience in the late 1970s when i was in college and we are doing deep research. First principles base. Tom you are away from and are square. What is your are square . Cathie the correlation of r performance to broadbased benchmarks is low per year for better or worse, what it tells our clients and prospective clients as we have a very good diversification strategy. Our funds, the active way if you compare to s p, the active way is less than 5 so good diversification strategy focused on companies that are going to transform the way the world works. We are looking at broadbased benchmarks. There are companies sustaining innovation like at apple, but they are not going to transform the way the world works from here. Our companies are. Jonathan cathie wood of ark invest. Thank you. Tom she has a new etf in europe and theyre bringing it into the ark model. Jonathan arezzo gallo coming up next are bouts of gallo coming up next. This is bloomberg. You got this. Lets go. Gobble gobble. Ive seen bigger legs on a turkey rude. Who are you . Im an investor in a fund that helps advance innovative sports tech like this Smart Fitness mirror. Im also mr. Leg day. 1989 anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. I go through a lot of pants. Before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. Hi, im jason. Ive lost 228 pounds on golo. Investment objectives, risks, charges, expenses so when my doctor told me i needed weight loss surgery, i knew i had to make a change. Golos helped me transition to a healthier, sustainable lifestyle. Im so surprised just how crazy my metabolism has fired up. I have a trust in golo cause i know it works. Golo isnt like every other program out there, and im living proof of it. announcer change your life at golo. Com. Thats golo. Com. If you get yields moving higher, probably in response to growth doing better. I worry more about eight yield induce issue. A yield induced issue somewhere. I didnt raise my outlook for a session risk from 15 to 25 . Were going to start to see in the growth outlook. This is bloomberg surveillance with tom keene, lisa abramowicz, and Jonathan Ferro. Tom good morning from our studios in london. Lisa on assignment here. We start strong for global wall street. We had to focus on this fed meeting coming up. It is a different fed meeting. Jonathan it is a different fed meeting for us and for others. We get forecast today. Unchanged is the call. It is the forecast would have discussion about. How do these forecast change . They have growth better. Growth will be evaluated higher. Inflation may be lower. What about the dot plot for 2023 and 2024 . Where they see Interest Rates going into year end . Where they see Interest Rates going into next year . Tom the idea were going to get from the effect of the uaw strike one of the worries that is out there. Andrew lines them up of citibank worries were you say up at a higher rate sa michael t stay up at a higher rate. A look for a calming voice. Jonathan those three issues citi talked about, crude, uaw strike ongoing, house prices recovering. They had the inflation data behind them. The incoming information to say it we have made progress. Can they declare victory in meeting like today . No, they cannot which will be deep story likely. Tom one of our themes here is this phrase anchored. Our Central Banks anchored . Do they have control of the moment or in england and is a different challenge. The level of inflation over here is different than in united states. Jonathan it is a problem for the bank of england. Of rbc, both said at the same thing. They think communication a bank not been good. They face a credibility problem. The call from goldman is no hike at all from the bank of england tomorrow morning. Big rally in u. K. Market and sterling weaker off the back of the data. Tom i want to say to the communication improved at the bank of england of jon ferro could be in the press conference that they have. They did not do them every time. That is the first mistake. Jonathan you get the forecasts. Youd like a regular meeting from governor bailey. Tom not really. Let me communicate to you the data check, Oil Pulls Back a bit. Near the caspian sea and surged to 95. Back a couple dollars but 90 is a difficult number for Jerome Powell. Jonathan equity session highs looking decent here. That is an upgrade from 4300. It is amazing to see the upgrade some people talk about potential for weakness. Tom when you have bnp paribas upgrading the junk conditioned to a new level from being very cautious, it is a different of great from the marginal upgrade. Jonathan that is true. Tom i think they can be different and nuance. We look at equities, bonds, currencies, commodities with dynamics of full faith and credit in credit market. Expert on this across all geographies is Alberto Gallo with andromeda Capital Management and joins us today to see from credit in europe. Jonathan why have i not heard the word speculation . I thought i would hear it every two minutes. Alberto the wage dynamics. There is an entrenchment in inflation where you see eight percent wage risers on ongoing basis and many negotiations forwardlooking raise so they are not increasing just one off but keeping increasing. Dynamics have changed. As Central Banks only say inflation is mandatory if inflation has gone back to target but calling transitory at a time is credibility issue. That is what the bank of england is dealing with. They cannot raise rates too much because of the over delivered situation in Property Market and household sector. It is a lose lose situation. The growth inflation it makes much worse and against this, we have consensus in market would just relax, low volatility, high equity valuations. At the beginning of the year everyone was very bearish, position for a session but today most investors, according to market surveys, are positioned for a soft landing. We have gone from one side of the boat to the other and we have worse growth inflation. Differential in growth between u. S. And europe is widening even more, we are seeing it but u. S. Is not in recession risk. Oil is a positive for the u. S. Inflation will be around 3 , but the economy can live with 5 . There is too many cuts price in for the u. S. Next year. Jonathan how do i invest in the world . Inflation acceleration risk on the others to the atlantic, where my meant to do . Alberto do not have a by everything. Work with qe, that kind of strategy will not work Going Forward because therell be more volatility, more new value so you have to be more tactical. In economy which has high inflation and a fed price for cuts, but not going to cut, which is what we think about u. S. You do not want to hold bonds. We still see potential for higher yields in u. S. In the middle of the curve come along and long end. The boe is the elephant in the room. In europe, people worry about the european high inflation. We are seeing a very muted situation. 4 hike by the ecb probably going to look like a policy mistake. There is a premium so we like to be in europe and in bonds, very selectively. In u. S. , we think bond yields keep going higher and spreads because they are too many cuts price for next year. Tom i was saved as an outlier view would say that is an outlier view. Alberto we can go wider. We talked about long bonds come along ratios probably the most popular model. Longer u. S. Investment grade of c quality has been popular but in the end. Tom this is crucial as you take a minority view. If i get price down, yield of, no one is looking for that, what will be the market ramifications of a new regime within higher yields across credit and full faith in credit . Alberto everyone is hoping for yields go back down and companies to be able to refinance, but if yields Interest Rates stay at five. The stock market is different from the economy. Large companies have termed out there maturities. If you look at highyield market which is smaller cuts, you need to see wider spreads. A rise in default rates. The stock market is complacent. Jonathan you have told us what you do not like. What do you like . I am assuming you not sitting in cash . Alberto we like some areas of european markets and some of u. S. Markets. We like ukraine. We think there is improvement there, slow, but the study. Theyre doing the right strategy. Theyre not during all resources at once, they are advancing slowly. It is an opportunity the binary risk of the war. We liked some countries going back into the invest universe like greece which has an investment of great ahead and we like some defensive sectors which in europe are pretty wellcapitalized. Jonathan i would like you to repeat it. You like ukraine . What does investing in ukraine look like . Alberto it looks like buying bonds that are essentially left for low recovery value. . 20 on the dollar beginning of the year and now . 30. Gdp in ukraine is not far off him where it was prewar because of all the support of foreign countries. Tom how do you buy a bill note or bond in ukraine . Do you have to be fancy . Alberto it is a distress traded by dollar security so it is like many other emerging Market Countries which are restructuring, but difference is [indiscernible] tom on highyield sprays, how many basis points do they widening out looking at a vanilla index of highyield spreads . Alberto around 400 bips but the difference is yields on the treasury are pushing much wider and spreads have not moved. If rates and yields go wider at some point, something can break in highyield market as Companies Need to refinance. Read looking for 450 or 500 to go back we are looking for 450 or 500 to go back. Jonathan andromeda Capital Management. Alberto gallo. Tom i was at a think last night with an umbrella and a drink and there talking about all the minium aluminum. Jonathan equity futures on the s p 500 just about positive by 0. 2 . Yields higher, then the lower. We have you talking about chairman powell later this afternoon. What is the guide here . Alberto i think his challenge will be to push back the expectations of cuts but into 2024 fed futures. We got over 100 bips of cuts. We have oil towards 100. We are seeing according to models around 3 headline inflation at the end of 2024 in u. S. Know that is above target but could be 30 bips how your if goes up 10 from where we are now higher if oils goes up 10 from marie are now. From where we are now. Jonathan Jonathan Pingle coming up. 2 00 p. M. Expecting no change but plenty of action when mike mckee has to open up the summary of Economic Projections and get outlook for growth and inflation and Interest Rates as well. The socalled dot plot for 2023, 2024 and perhaps beyond. Coming up, here Henrietta Treyz on the looming Government Shutdown. Tom it is real. Jonathan we are doing that next. From london, this is bloomberg. captivating music the first law of thermodynamics states that energy cannot be created or destroyed. but it can be passed on to the next generation. is not think anyone wins a shut down i do not think anyone wins a shut down. Ive watched shutdown at the shutdown, everybody loses. It cuts wasteful spending. Is secures the border. Jonathan House Speaker Kevin Mccarthy addressing criticism of a shortterm plan to prevent eight u. S. Government shutdown. It is that conversation all over again. A surge in the bond market briefly. 10 year 4. 34. Two year on a closing basis point yesterday, 5. 09 is the session. Backing away from those levels to about 5. 07 . We are talking about cycle highs on the front end. Tom i think you are on it here. We have seen some movement here in yields and west texas intermediate, i want to emphasize over in london our team is focused on the fed and will give you our usual coverage this afternoon. Thrilled to do that from london. Look for that. I think and i want to explain this what we are seeing is my able politicians and in london malleable politicians and in london we are seeing capitulate in the last 24 hours on the Green Movement in the United Kingdom. It is on the top of every newspaper. Jonathan perhaps it is part of the equation. I imagine it is. Convey some differences between him and the other parties sitting across from him but realistic in the since the transition will be harder and we make it out to be. The shifting away towards electric vehicles is not going to be that simple and for many people increasingly expensive. Cathie wood sat around the table and suggested prices cannot come down a lot more led by the likes of tesla. But lets look at what is happening with uaw and detroits big three, that Led Companies in a position to drive cost down given where labor costs may be the next four years and beyond . Tom to brink it to america bring it to america, we looking at Government Shutdown. Weve ignored the story. We will dive into it right now. Henrietta treyz. Washington post, house flounders. How foundering is our political system in america . Henrietta there on the ocean floor, chilling with the flounders. It has been a train wreck for nine months. It will continue to be that way. I would say, be mindful of the calendar. It is wednesday. We have 10 days before the Government Shutdown and it worth getting specific. That happens on a saturday. We really have 12 days to resolve this. That is a lifetime in d. C. It is the most effective way to watch. Tom i had a period where i realize i did not know much about american politics in 1890s and it is backed to the vast polarization, before teddy roosevelt, what i want to know is with the election coming up, do we get clarity or do you suggest more floundering, past november 2024 . Henrietta i think were going to flounder until 2024 november because were going to deal with the exact same margins of the house and senate for the rest of the period for the next election all the way through january 2025 and that is something to bank in here. If you do not believe there is a shut down happening by november, youre going to have to adapt in the same boat in december and probably in april and through the summer of next year into the elections. I think there are about five House Republicans who would happily shutdown the government for the entire period of time if they thought it would get them more Campaign Fundraising and attention. Jonathan i have an obvious question i would like to share it with you audience question. How much of the government actually shut down . Henrietta it is about 850,000 federal employees some of the average salary about 73,000. The bureau of economic analysis, department of labor not able to publish their data. That is disruptive for people watching that on the street. For projects not funded independently, so the Federal Reserve is funded independently so they will not have to worry but federal agency that operates via discretionary of congress, majority of them, will see their expire. Tom an anchor emails in do they shut down can we get back into the country . Henrietta you will get into the country of the faa employees decide to work without pay. Last time around 2018 the gordy a shut down and had a stoplight order because youre asking the faa employees leaving to say come in to work for free. Theyre not getting paid. The risk is real. Tom is Speaker Mccarthy working for free . What is his shelflife . Henrietta i do not think House Freedom caucus has the votes to oust Speaker Mccarthy. The motion to vacate a chairs exact opposite of the hurdle for Speaker Mccarthy that we saw in january. The bar to miss on the Freedom Caucus to get is on the Freedom Caucus to get mccarthy ejected. They probably get a 45 house members which is their whole caucus but that leaves 177 other House Republicans, who just voted to install this man, and there are no other candidates waiting to take his place for a thankless job. All that needs to happen and i think this is what some publications out of d. C. Are missing, hakeem jeffries, new m minority leader can allow his members to just vote present. And it is a way for democrats not to signal their support but force Freedom Caucus to show they do not have majority and not capable of governing the house. I think the motion to vacate peace underappreciated. How small the force Freedom Caucus has. I would love to see the vote and have mccarthy come out and shut them down. The faster that happens, the better. Jonathan want to finish on this, quote from uaw president , i was sure the quote again. Every fiber of our union what is going to look like month and in detroit september 27 former president talking about visiting under the same time we have debate gop candidates . Henrietta i think it is going to be fascinating to see trump may not show up for the debates yet again. See if there is fraction between the republican president ial candidates to see who wants to support labor unions, who want to support auto industry, and who does not. That was a huge deal. Mitt romney ran on the Campaign Platform of auto bailout not a good idea. The last time autoworkers embrace democratic president and they are true start was obama at the auto bailouts. I think Republican Party has a tricky narrative to define and biden continues to be at the table. Do not know that theyre moving the needle yet, i think the strike to still be going on the but trump will have to walk a fine line that alienates lots of public and platforms a lot of for and platforms. Jonathan Henrietta Treyz there. Coming up next, Jonathan Pingle of ubs and a new call on where they think this bank of england is on hold tomorrow. Details of that call of next up next. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Jonathan we need a countdown clock if we do not have one already from the Federal Reserve nondecision, unchanged is the call. We talk about that in a moment with mike mckee in d. C. Equity futures just about positive. The russell higher by half a 1 . We talk about the calls coming out of bank of america looking for 4600 year end. That call up from 4300 previously. A couple of revisions there and elsewhere as well. Bnp paribas earlier. Outside of equities in the bond market, the rally on the two year in the u. K. , bits of a rally in the u. S. We are down two basis points. We are looking at a cycle highs at the front end of the curve. All of that going to the Federal Reserve tomorrow. Tom Alberto Gallo was shocking there. David rosenberg in toronto. We take the view we just experienced phase ii of an extended bear market, rather than the beginning of a bull run phase 3 still lies ahead of this. That is from the greatness inflation the great David Rosenberg. Jonathan lets get to the u. K. Bank is done. Out with their call from mr. George but lee says the bank of england on hold tomorrow after the Bank Surprise the cpi so we thought downsize a prize on inflation it would mean potentially a coin flip. Nomara says no hike. Gottman says no hike. Jordan rose chester looking for 1. 22. Tom is it stagflation less growth as David Rosenberg loose to their . There is this trend off of data, i guess it is data dependency, but it really harkens how does it fold over to the growth call . Jonathan lisa mentioned this earlier this morning. If you get a better Growth Profile because the Central Banks back off, is that sterling positive or negative . She said it was ambiguous. Tom i go with the ambiguity. Lets dive into the fed meeting. Our full coverage from washington and london. Michael mckee joins us. For Jerome Powell, what is his chief ambiguity . Michael the fed does not know what is going to happen Going Forward which sounds silly because no one can predict the future or predicting is really hard especially about the future but there are number of things on the horizon that could mess up what the feds forecast Interest Rates will be Going Forward. You had the uaw strike. You have the war in ukraine. Student loan payments coming back. Russias war. Chinas economy. There are lots of things they did not notice going to have been so the best case for them is probably to sit tight. I do not think they move rates. The question is do they change the dot plot, do they suggest they do not need to cut more. I do not think they will do that either. Tom fed tradition as you get the last question because of your power and grace and heritage, if you have the first question today, what would it be . Michael i think logical first question how much confidence do you have in any think you are telling us today because there are so many possibilities to go that you have to wonder if people can put much stock in what the fed is forecasting. I think john was making a good point when he was talking about the pound. Currencies probably going to be where you see reaction this week on friday. It has been rising and is going to still be rising after the bank of england makes a decision, i think the bank of japan makes their decision and both following the fed. We may be at a bit of a turning point. The fed may become less relevant. Tom i think we just saw their mike mckee gets the last question. Jonathan since he published earlier this morning and im sure you saw the work, offered of three points, three stories, three dimensions to the inflation debate, oil prices, uaw strike, and house prices. How do you anticipate a chairman powell navigating those three issues . Henrietta oil for the moment he has to say we look through that because we do not know where oil is going. And for how long. We cannot Lower Oil Prices by raising Interest Rates. If it went on for a long time and the Inflation Expectations got unanchored, the fed might want to do something but theyre going to put it in terms of Inflation Expectations. House prices they know they have been rising in recent months but the house prices take a long time to get into the economy and into the data and now it looks like what we are seeing is still the clients from declines from the ones we have had for the past year. Uaw strike depends on how long it lasts. I would have added the government shut down because if the government shut down, they could be more people along with uaw, if it brought in strike were on Unemployment Benefits and that could mess up the numbers for unemployment and employment and make it harder for the fed to know what is going on. Jonathan payrolls a few weeks away. Mike mckee will be with us later breaking down this decision and the forecast as well at 2 00 p. M. Eastern time, our special coverage begins about 1 30 p. M. Eastern time. A special onehour program hosted in london. Tomorrow we are here for a global credit conference in london catching up with jim ze lter joining bloomberg surveillance. Tom that is going to be an interesting conversation and the assent of private equity, private companies. Jonathan stagflation the word alberto used for u. K. And europe and the process of accelerating inflation. In the united states. Tom lets begin the fed to coverage for this afternoon with Jonathan Pingle. On this fed i make a joke that it is ace this fast and as you say in your Research Note we are completely data dependent. What data is mr. Powell depended on . I think first and foremost i think it is the inflation data. I think this is one way in which you talk about ambiguity that chair powell today is not going to have the chairman greenspan ambiguity. He was clear in his jackson hole speech when he laid out the conditions for raising rates further. If they were prepared to do so if appropriate and all was good with inflation. Growth is too strong and put improvement in inflation at risk or labor market remains too tight and put inflation improvement at risk. If you have to of summaries statistics, i think it is the inflation data. Tom you survived working with fix income at a black rock an economist that is always link your world and Jerome Powells world and to what we see in Interest Rates off of this meeting. Jonathan p. i think going into this meeting based on the conversations we have had and are strategists it does seem like a lot of the commentary has people setting up for a hawkish skip or some sort of incrementally hawkish message. Im not sure that is going to be the case. All the information they have gotten has been positive since the june meeting, since the july meeting. Inflation is falling faster than they had written down in june. Nonfarm Payroll Employment has slowed. It has gone a long way towards slowing the way they want it to. Now after the cpi and ppi and other inflation data, we are tracking august core pce inflation at 3. 8 . That is already below therefore year 2023 projections from the june summary of economics projections. Fomc participants it looks like they have gotten good news on inflation without the economy rolling over. It looks to meet their on a pretty good spot with inflation falling faster than expected. Jonathan threepart story to that. A statement projections, News Conference. Would you expect may be a bit of a goldilocks soft landing in a statement perhaps forecast but ultimately the News Conference be vigilant more hawkish stance you might get from chairman powell . Jonathan p. i think the statement is going to have some changes but the real action is in sep and do tplot and how chair powell frames it in the conference. I do not think the sep quite as hawkish as a lot of projections circulating around. I do think in the press conference chair powell is going to say they are remaining vigilant. Just like you said in jackson hole, think he says committees prepared to raise rates further if appropriate. I do not think he commits to raising rates further. At this point they are data dependent. Willing to watch data come in and inflation better than expected. I think theyre in a good spot right now and happy with what is unfolding. Jonathan when someone stands up in the news and says chair powell, look at gasoline prices, commodities, energy, would he think the preprepared and certain front of him is . Jonathan p. i do not want to undo mike mckees a genius but i think they are at the point where they look through it and wait to see if it is more sustained move higher. Weve had cargoes where brent periods where brent has pushed up. We will see if it stays there. One of the problems they have with the Energy Prices at this time, they note if it stays there for one year, inflation is a growth rate so inflation will go to zero. So far, it looks like there will be modest passthrough in core pretty minimal so i think it is going to be their assessment for the moment. I think theyre going to look through it and wait to see if it does threaten the progress on core inflation. The big thing for them is going to be watching Inflation Expectations which thus far the most recent incoming survey and other data has look good. Jonathan we will see if mike mckee is allowed in the News Conference a little bit later. Jonathan, thank you. Mike mckee will be in the News Conference a little bit later. Welcome. S p 500 positive here by 0. 2 . Why keep going nowhere. The last yields going nowhere. The last 24 hours through 5 still. 10 year in for 30s. Only 30 year on the 30 year 440s. Tom theyre not elevated. It is a moonshot. I think this goes back draw the horizontal line from we are now and you go back and the answer is it is not august of 2007. Maybe it is 2008, 2009. Chairman powell goes into this meeting with a rate regime from our youth. Jonathan is that where he wants it to be . Tom i am optimistic about that. We had a lot of optimism. We adapt and corporations adapt and adjust to that rate. Apollo group miss were in a disinflationary trend. People get upset because they are looking at i o seven at the Grocery Store going aisle seven at the Grocery Store. Jonathan we are on the same page on this. Tom some breaking news here. A uaw organization, mercedes highend, that is the geography of the uaw strike is that what we are going to see on friday . Jonathan how much more this will we see announced by the uaw president by the end of this week with the Facebook Live event. From london, mark cudmore up next. Oh, oh, oh. Ill be the judge of that. Oh, thats nice. Oh searchable, verified reviews. Thats better than the ham, and ive never said that. Booking. Com booking. Yeah it looks like you have a divided committee. Romney is a close call. Regardless of that and big changes in the forecast for 2023, 2024 forecast the closest to budget basis points of easing, still have a big drop in inflation, it is still going to have an aspiration we get Unemployment Rate up to 4. 5 without a recession. Jonathan that line there was brilliant from bruce kasman of jp morgan ahead of Global Economic research. Aspiration. He called it aspirational. More on that later on when we get the fed call and the fat aspirations if you want to call them that and a summary of Economic Projections. Futures elevated positive by a third of 1 on s p. New highs for the year. 95 on brent. Wti just about in the 90s backing away by about one whole dollar. The headline in the bond market. I have to say it is hardly made any headlines. 10 year maturity. We have backed away from the levels but should we be talking about this more . Tom i think we should. Im going to watch be real yield. Goldman sachs going on bank of england to a no rate change or a hold. It is usually it makes it for a very interesting fed meeting this afternoon. Jonathan go and say no hike government says no hike tomorrow. Tom we have a listener and a viewer email in, guy from england. He says theres no football talk. Enough football talk. He wants equal opportunity in the got the line decathlon. Why dont we talk rugby . Jonathan i was a terrible rugby player. Tom it is huge. Jonathan it is a big deal. We go to rugby correspondent mark cudmore. Youre in singapore and you looking at rugby worldwide and you have ireland, south africa this weekend. Explain the majesty of that. Mark cudmore this is absolutely amiss. Ireland is really the number one ranked team. Written number one in the world. 15 game unbeaten streak. We got knocked out of every world cup at the quarterfinals. Never beyond sh. That stage. Im not worried about new zealand. I think ireland has a good chance but between those three teams i am not sure about the all blacks. Jonathan anything intimidating about the Central Banks the next 48 hours . Mark i have spoke with my views the last couple of years have been adamant yields go higher and everyone underestimating the consumer. U. S. Consumer finding off a cliff. They are bending the recession because talking about a soft landing at the exact time the consumer is off the cliff. I changed my view which is why have a vested interest in saying it is not broken up. Jonathan on a closing basis. 10 year cycle high. Intraday cycle high on the 10 year. Tv does not have to be this hard. Lets move on. What are you looking for . Mark i think the yields have peaked. Price action around that has been impressive. I think it will continue to see the curve steepen. The fed are hike once more this year. Two year yield can survive peak even another hike in november. They cannot if you get a hike and promise of more hikes to come but i do not think that is going to happen. And no one collated all along there is not going to be a recession anna wong has highlighted they are not be a recession. Do not think the fed everyone is geared up for a hawkish fed which is why we are at the cycle peak on yields at a closing basis across the curve because they are geared for a hawkish fed. I think the price action after this is yields come lower and dollar terms lower enter year end. Tom how does it focus into equity markets . How do you feel turbine dynamics down to the equity call . Mark i think if we are going to get two year yield peaks a couple months before u. S. Fi before recession. There is always not leading indicator but they normally with low significance of when the recession starts so we think recession starts four quarter you should look for peak in equity market around september, october. I made the mistake of thinking u. S. Equities would underperform. I capitulated and since then i have been bullish. I wonder whether ive missed it. Maybe take a showing deterrent is there but i think we get warmer hike. Tom what are modifications ramifications if prices come down and breakthrough to a lower price of aggregate debt with higher yield is anyone prepared for that . Mark no more prepared than they have the past years. Everyone longduration all year. Even though i think two year yield come lower because the economy turns, i think you continue pricing back the term premium, pricing in normalizing bond markets. Bond market is not been distorted and broken and because fiscal supply data go up. Were not going to curtail fiscal deficits. I think you see yield curve steepening the last six months. Tom i think we are and prepare if we get this low probability of price down through low price height high yields. Jonathan mark, thank you. Equity market on the s p positive by 0. 3 . The Federal Reserve a little bit later this afternoon. Bank of england tomorrow. Latest call from gold meant no change, there on hold. Inc. Of japan on friday. Tune in for 1 30 p. M. Eastern time for bloomberg surveillance fed special and will be joined by cathy jones looking for that Interest Rate hike again for the Federal Reserve in november. Tom it is going to be fun to be here for the bank of england decision. Do you get to stand out front like lizzie does . I can wear a blueberry trenchcoat. Jonathan you never done that before . Tom i never done that before. I do not agree with some of the zeitgeist that japan is off the map with yen at 147. Jonathan no restraint has been a big issue. Mike mckee was talking about that. Is it about the rest of the world or the u. S. . Tom it is about both. It is about longduration innovation play and we heard it from cathie wood as well. Jonathan i love what bruce kasman said referring to the forecast as aspirations. Tom what i would really focus on and he goes into all the different narratives and opinions we have come of this is still original territory. If you get out of the pandemic. I happen to believe we forget we are out of the pandemic. I happen to believe in pandemic dynamics. We are not free and clear from covid. It is original economics going on and because of that each and every of these three things are going to say the same think, where data dependent. Jonathan line of the morning for mike mckee, how many confidence that you have in any think you telling us today, his conference to chairman powell. Tom he goes as with 16 questions and they start in and do not want to go to michael mckee. Everybody in the press conference has an official name and at the end it is mike, what do you got . He has his list of questions. Jonathan as you, mike mckee breaking down the decision for you at 2 00 p. M. Eastern time, special coverage starting in about 1 30 p. M. From london, thank you for choosing bloomberg. Equities are up. Good morning. captivating music the first law of thermodynamics states that energy cannot be created or destroyed. but it can be passed on to the next generation. i am matt miller, and for my friend, jon ferro. We are looking at movement in the markets ahead of a fed decision, the countdown to the open starts right now. Everything you need to get set for the start of u. S. Trading. This is bloomberg the open with Jonathan Ferro. Matt coming up, chair powell in focus. The treasury yields pulling back from the highest levels they hit